On December 20, 2006, President Bush signed into law the “Tax Relief and Health Care Act of 2006” (Public Law No. 109-432) (“the TRHCA”). The TRHCA, enacted in the last days of the 109th Congress, prevents a scheduled cut in Medicare payments to physicians and modifies a number of other Medicare and Medicaid policies. Most significantly, the TRHCA:

  • Freezes Medicare physician payments in 2007 (rather than let a scheduled 5 percent cut go into effect). Physicians who report on quality measures specified by the Secretary of the Department of Health and Human Services (“HHS”) will receive a 1.5 percent bonus payment for 2007, but additional cuts are possible in 2008 (as discussed below);
  • Ties Medicare payment updates for hospital outpatient and ambulatory surgical center (“ASC”) services to the reporting of certain quality measures, beginning in 2009;
  • Extends through 2007 the exceptions process for outpatient physical, occupational, and speech language therapy services expected to exceed the annual limitation;
  • Establishes a post-payment review process under the Part B drug competitive acquisition program;
  • Reduces the Medicare Advantage (“MA”) Stabilization Fund by $6.5 billion over five years to partially offset new Medicare spending under the legislation;
  • Strengthens Medicare program integrity efforts by expanding the recovery audit contractor program and increasing health fraud control funding; and
  • Reduces the limit on Medicaid provider taxes from 6 percent to 5.5 percent from January 1, 2008 through September 30, 2011.