SGR Repeal, Changes to Medicare Left Out of $1.1 Trillion Spending Deal

On December 13, the $1.1 trillion spending bill passed the Senate and will fund the government through September 2015.  Twenty-one Senate Democrats voted against it, but the deal passed by a 56-40 margin.  The bill does not include any major changes to Medicare or Medicaid nor does it address the sustainable growth rate formula.  Also, despite consideration, a further ICD-10 delay was not included in the bill. 

While major health care changes were not enacted, Congress, in their report accompanying the 2015 spending, was critical of CMS’s Recovery Audit Contractor (“RAC”) program for harming providers and contributing to the backlog of Medicare appeals.  The appropriations report calls on CMS to better educate providers on reducing errors, develop ways to reduce the backlog at the Office of Medicare Hearings and Appeals (“OMHA”) and create a process for OMHA to send feedback to CMS and the RACs to reduce claims that are likely to be overturned once they reach the third level of appeals.

HHS Awards $665 Million for Payment and Delivery Reform

On December 16, HHS announced $622 million will be awarded to states to help test and evaluate health care payment and delivery models to improve health care.

The states announced to receive the Model Test Awards are Colorado, Connecticut, Delaware, Idaho, Iowa, Michigan, New York, Ohio, Rhode Island, Tennessee and Washington. According to the announcement, the selected states will use funds to test multi-payer payment and service delivery models, such as Accountable Care Organizations and patient-centered medical homes, on a broad scale within their state.

CMS also announced $43 million in funding for Model Design Awards for states to design or further refine their State Health Care Innovation Plans.  The Model Design Awards will go to Arizona, California, Hawaii, Kentucky, Illinois, Maryland, Montana, Nevada, New Hampshire, New Jersey, New Mexico, Oklahoma, Pennsylvania, Utah, Virginia, West Virginia and Wisconsin.

MedPAC Discusses 2015 Draft Recommendations

On December 18-19, the Medicare Payment Advisory Commission (“MedPAC”) met to discuss their draft recommendations ahead of their 2015 report to Congress.  The draft recommendations will be finalized at MedPAC’s January meeting and included in MedPAC’s March 2015 report to Congress.

Among the recommendations were:  hospitals’ Medicare payments (combined inpatient and outpatient) receiving a 2.55 percent update in FY 2016, which is down from a 3.25 percent recommendation last year; freezing payments to home health agencies along with continuing a full rebasing addressing excessive payments; and freezing the 2016 Medicare rates for both skilled nursing facilities and hospice providers.

CMS Releases HAC Data

On December 18, CMS announced it is cutting payments to 721 hospitals for having high rates of infections and other patient injuries.  One out of every seven hospitals in the nation will have their Medicare payments lowered by one percent over the fiscal year that began October 1, 2014 and continues through September 2015.

The Affordable Care Act mandates the payment reductions for the quarter of hospitals that Medicare assessed as having the highest rates of hospital-acquired conditions (“HAC”). The penalties will be reassessed annually under the HAC reduction program.

Senate Passes One-Year Tax Package with Medicare Cuts

On December 16, the Senate approved a tax extension bill that includes a disability bill paid for with nearly $1.2 billion in Medicare pay cuts.  The disability provision allows the creation of tax-free savings accounts for individuals with disabilities while protecting their access to Medicaid.

To pay for the bill, the legislation included a provision that prohibits Medicare from spending an estimated $444 million for vacuum pumps to treat erectile dysfunction.  The legislation also includes a provision that accelerates the application of relative value targets for misvalued services in the Medicare physician fee schedule.

Bills Introduced This Week

No health care-specific legislation was introduced this week.

Next Week in Congress

The House and Senate have adjourned for the year, ending the 113th Congress.  They are scheduled to return on January 6 to begin the 114th Congress.