On December 15, 2015, Congressional leaders released sweeping spending and tax proposals, including a number of provisions impacting Medicare and the Affordable Care Act (ACA). The legislation is being considered on a fast track; the House approved the tax component of the package today, and it is scheduled to vote on the appropriations bill tomorrow, with Senate action expected shortly thereafter.

Medicare/Medicaid provisions of the Consolidated Appropriations Act of 2016, which are intended to offset the costs of reauthorizing the World Trade Center Health Program, include the following:

  • Section 501 would rescind funds from the Medicare Improvement Fund (MIF), which was established by MIPAA to fund improvements in the Medicare fee-for-service program. The Congressional Budget Office (CBO) estimates that this provision would save $175 million over five years (2016-2020) and $234 million over 10 years (2016-2025).
  • Section 502 would incentivize the transition from traditional x-ray imaging to digital radiography by reducing by 20% the Medicare hospital outpatient PPS and physician fee schedule payment for the technical component (including the technical component portion of a global service) of film x-rays beginning in 2017. In addition, the OPPS payment and physician fee schedule payment for the technical component of an x-ray taken using “computed radiography technology” would be reduced by 7% during 2018 through 2022, with a 10% reduction applicable beginning in 2023. The term “computed radiography technology” is defined to mean cassette-based imaging which utilizes an imaging plate to create the image. In addition, the bill would reduce the discount in payment for the professional component of multiple imaging services furnished on or after January 1, 2017 from 25% to 5%. The CBO estimates that these provisions would save $149 million over five years/$352 million over 10 years.
  • Section 503 would limit state Medicaid DME reimbursement amounts to the applicableMedicare fee-for-service payment rates, including applicable competitive bidding rates, beginning January 1, 2019. The CBO estimates that this provision would save $618 million over five years and almost $2.85 billion over 10 years.
  • Section 504 would authorize separate Medicare payment to home health agencies when they use cost effective disposable alternatives to negative pressure wound therapy equipment, beginning in 2017. The CBO estimates that this would save $19 million over five years/$88 million over 10 years.

With regard to the ACA, the appropriations bill would delay for two years the excise tax on high-cost employer-sponsored health coverage (the so-called “Cadillac tax”), meaning that it would apply beginning in 2020. The bill also would provide a one-year moratorium on the annual excise tax imposed on health insurers for calendar year 2017, restrict risk corridor funding, and cut funding for the Independent Payment Advisory Board by $15 million, among other provisions.  Furthermore, the appropriations bill would modify Medicare reimbursement policy for hospitals located in in Puerto Rico and allow such hospitals to participate in the Medicare Electronic Health Record Incentive Program, which the CBO estimates would increase spending by a total of $389 million over five years/$865 million over 10 years. In addition, an accompanying “explanatory statement” calls for the HHS Secretary to report to Congress on a number of issues related to Medicare, Medicaid, and Department of Veterans Affairs prescription drugs, including information on pricing, access, and patient satisfaction, along with an analysis of the cost and length of time necessary to bring new drugs to market.  The House is expected to consider the appropriations bill tomorrow.

Section 174 of the “Protecting Americans from Tax Hikes Act of 2015” would impose a two-year moratorium on the ACA’s 2.3% excise tax on medical devices; under the legislation, the tax would not apply to sales during the period beginning on January 1, 2016 and ending on December 31, 2017.  The House approved this measure today on a 318 to 109 vote.