UPDATE: House GOP Payroll Tax Extension Bill Includes Relief for Medicare Physicians

Earlier today we mentioned the plans emerging to stop Medicare cuts- here are more details on the referenced plan.

The main purpose of the ‘‘Middle Class Tax Relief and Job Creation Act of 2011’’ (HR 3630), introduced December 9, 2011, is the extension of the current payroll tax holiday through the end of 2012. But the legislation also includes provisions to provide for a permit for the controversial Keystone XL Pipeline project; extend income tax relief for employers that hire new workers; extend the existing federal flood insurance program; enact the “Jumpstarting Opportunity with Broadband Spectrum Act of 2011’’; and reduce the maximum number of weeks of eligibility for federal emergency unemployment benefits from 99 to 59 weeks. 

Most importantly, for purposes here, the bill would extend existing Medicare payments to physicians for two years while making other changes to the Medicare program. 

Under current law, Medicare payments to physicians will be reduced by over 27 percent on January 1, 2012. The bill provides for a 1 percent increase in existing Medicare physician payments for both 2012 and 2013, pushing to the next Congress the responsibility for fixing the two-decades’-old problem with Medicare physician payments.

 The legislation also calls for four studies relating to Medicare physician payments to be completed during 2012 –

  • A study by the Secretary of HHS on the options for bundled or episode-based payments, to cover physicians’ services currently paid under the physician fee schedule, for one or more prevalent chronic conditions (such as cancer, diabetes, and congestive heart failure) or episodes of care for one or more major procedures (such as medical device implantation). 
  • A study by the Government Accountability Office that examines initiatives of private entities offering or administering health insurance coverage to base or adjust physician payment rates for performance on quality and efficiency as well as demonstration of care delivery improvement activities (such as adherence to evidence based guidelines and patient shared decision making programs).
  • A study by the Medicare Payment Advisory Commission (MedPAC) that examines the feasibility of aligning private payer quality and efficiency programs with those in Medicare.
  • A congressional study on value-based measures and practice arrangements which may improve health outcomes and efficiency in the Medicare program to the end of replacing the Medicare sustainable growth rate in a fiscally responsible manner and establishing a sustainable payment system. 

The legislation includes these other Medicare provisions – 

  • A one year increase, until January 1, 2013, in the temporary payment increase for rural ambulance providers. Further, MedPAC is called to study the appropriateness of the add-on payments for ambulance providers; the effect these additional payments have on the Medicare margins of ambulance providers; and whether there is a need to reform the Medicare ambulance fee schedule.
  • A two-year extension, until December 31, 2013, in the exceptions to the payment cap for services provided by physical and occupational Therapists, and speech-language pathologists.
  • An extension until January 1, 2013, extended the 1.0 floor in the work geographic index under the inpatient hospital prospective payment system for any locality for which the index is less than 1.0.
  • An extension of coverage until December 2012 for “qualifying individuals” eligible for mandatory Medicaid coverage.
  • A one-year extension, until December 31, 2012, of transitional medical assistance under Medicaid, with increased reporting requirements regarding changes in an eligible family’s income.
  • A modification of the hospital requirements for qualifying for an exception to the prohibition on certain physician referrals.
  • Establishing parity in Medicare payments for hospital outpatient department evaluation and management services.
  • A reduction in bad debt as an allowable cost from the current 70 percent of the total allowable amount to 35 percent in 2013, 40 percent in 2014, and 45 percent in subsequent years.

 Finally, the bill also makes changes to the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) including modifying the maximum thresholds for recapturing overpayment of premiums of health insurance; and reducing funding for the Prevention and Public Health Fund by several billion dollars.

 The legislation would be funded in part by increasing the applicable percentage used to calculate Part B and Part D premiums for high income individuals after 2017.

 The bill in its current state faces uncertain passage, with likely opposition from both Republicans and Democrats. Some Republicans will be dismayed by the Congressional Budget Office analysis of the bill that shows it would increase the federal budget deficit by $166 billion in 2012, and by $25 billion over a ten-year period. The 1 percent increase in Medicare physician payments over the next two years (which would be followed by a steep decrease in physician payments unless further congressional action is taken) will cost $11 billion in 2012 and $19 billion in 2013. 

Although President Obama has not made a specific statement that he would veto the bill in its existing form, many Democratic members of congress have expressed opposition to the reduction in long-term unemployment benefits, and the provision regarding the Keystone pipeline project.