Bipartisan SGR Fix and CHIP Extension Passes in the House

After more than a decade of short term fixes, the House passed a long term solution to Medicare’s Sustainable Growth Rate (SGR) formula for reimbursing physicians last Thursday. The Medicare Access and CHIP Reauthorization Act (MACRA) will move to the Senate, where it also enjoys bipartisan support, after the spring recess. President Obama has said he would sign the bill. MACRA replaces the much-reviled SGR with a five-year period of stable annual updates of 0.5 percent to physician payments, at which point a new “Merit-Based Incentive Payment System” (MIPS) would go into effect. MIPS consolidates the three existing Medicare payment incentive programs that focus on quality, resource use, and meaningful use of electronic records. The bill includes cost-saving measures, such as income-related premium increases for higher income beneficiaries; Medigap reform that would prohibit plans from covering the Part B deductible for future retirees starting in 2020; and changes in payments to hospitals and post-acute providers. The bill also reauthorizes CHIP for two years, through September 30, 2017.

Supreme Court: No Private Right of Action for Medicaid Providers

Today, in a 5-4 ruling, the Supreme Court found that Medicaid providers do not have the right under federal law to seek judicial intervention to raise reimbursement rates. The ruling puts to rest a longstanding debate about whether healthcare providers serving Medicaid patients could go to court to seek enforcement of provisions under federal law governing Medicaid reimbursement. In Armstrong v. Exceptional Child, Medicaid providers in Idaho argued that they were reimbursed at rates so low that they violated federal Medicaid requirement that states assure payments “consistent with efficiency, economy, and quality of care . . .[while] safeguard[ing] against unnecessary utilization of . . . care and services.” The Supreme Court found in favor of the state Medicaid agency, holding that such disputes should be addressed by the U.S. Department of Health and Human Services, not the courts.

Cost of Uncompensated Care Drops by $7.4 Billion

According to a new HHS report, hospitals have saved an estimated $7.4 billion in uncompensated care since 2013 as a result of ACA coverage expansions. Five billion dollars of the total reduction is attributable to states that have expanded Medicaid, while $2.4 billion is attributable to non-expansion states. The report estimates that if non-expansion states were to expand coverage, and see Medicaid enrollment increase at similar levels as existing expansion states, uncompensated care costs would be reduced by an additional $1.4 billion.

Medical Loss Ratio Requirement Benefits Consumers

A new report by the Commonwealth Fund finds that the Medical Loss Ratio (MLR) requirement has resulted in total consumer benefits of more than $5 billion in its first three years, from 2011 to 2013. Under the MLR provision in the ACA, insurers are required to spend a minimum percentage of premiums on medical claims and quality expenses, or refund the difference to consumers. Consumer benefits resulted from both direct refunds to consumers and reduced administrative overhead. Refunds paid to consumers in 2013 ($325 million) represented a more than two-thirds reduction from 2011, indicating greater issuer compliance with the MLR requirement.