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Congress continues to wrangle with Medicare, Medicaid issues

February 17, 2014
by Bob Gatty
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Congress appears to be inexorably moving toward repealing the sustainable growth rate (SGR) formula, which annually plays havoc with Medicare physicians’ reimbursement rates, as key House and Senate committees have approved a plan that would reform the payment system and replace it with one that rewards high-quality, efficient healthcare.

But the sticking point continues to be how that plan, which carries a $126 billion price tag over the next decade, can be financed. While many components of the healthcare industry support the latest reform proposal, the SGR Repeal and Medicare Provider Payment Modernization Act of 2014, considerable concern surrounds the funding issue.

Meanwhile, unless Congress acts by March 31, an automatic 24 percent across-the-board reduction in Medicare physician pay will be implemented as a result of the SGR.  That deadline date is the result of a three-month extension passed by Congress late last year.


Sen. Ron Wyden (D-OR) has introduced bipartisan legislation designed to reduce costs by better coordinating the care of the sickest five percent of Medicare beneficiaries, claiming it would save as much as $25 billion annually—more than what is needed to cover the permanent fix. That, of course, is expected to be scrutinized by providers charged with caring for that most vulnerable group of patients, including the long-term care (LTC) industry if it looks like it is gaining traction.

The Congressional Budget Office (CBO) last November issued a report listing several options. According to CBO, the tax exclusion of employer-provided healthcare benefits cost the federal government $250 billion last year. Whether this divided Congress would embrace a proposal to eliminate or reduce that exclusion remains to be seen.

Other proposals, all politically risky, included raising the Medicare eligibility age to 67, phasing in higher premiums for Medicare Part B and Part D, and requiring drug companies to pay rebates to Medicare in a fashion similar to Medicaid. Meanwhile, specialists are concerned that the “pay fors” might adversely affect their reimbursement rates in favor of primary care physicians.

So the controversy continues, and as it does, the LTC industry continues to call for extending the Medicare therapy cap exceptions as part of any final bill. When Congress provided the three-month SGR extension in December, the exceptions were also extended for a similar period.

In an action alert to members, the National Association for the Support of Long Term Care (NASL) declares:

“NASL strongly believes now is the time to repeal the Medicare Part B outpatient therapy cap and fix the underlying therapy payment system—thereby ending the need for an annual congressional extension of the therapy cap exceptions process. To achieve this, NASL supports maintaining the current Medicare Part B outpatient therapy cap exceptions process until CMS (Centers for Medicare & Medicaid Services) brings forward the long needed new payment system. Also, the current manual medical review process for claims above $3,700 must be streamlined to make it more uniform and efficient for providers and patients alike.”


While those Medicare issues remain in play, one controversial issue stemming from the Affordable Care Act (ACA) may have been resolved, for all practical purposes.

When Congress last month passed, and President Obama signed, the 2014 omnibus spending bill, it reduced funding for the Independent Payment Advisory Board (IPAB) by some $10 million—enough, critics say, to make it virtually impossible for the entity to operate. The healthcare law had provided $15 million for IPAB in 2012 and increased that amount annually to account for inflation.

Opponents of the IPAB, which was supposed to determine ways of reducing Medicare costs without congressional influence, included most healthcare industry organizations. Their opposition was led by Republicans in Congress who continue to seek every opportunity to scuttle individual provisions of the ACA. Opponents argued that this appointed, unelected board would wield virtually unrestrained power in setting physician payment rates and in other decisions relating to Medicare spending.

Despite this action, numerous organizations continued to call for outright elimination of the IPAB, fearing that if the political makeup in Congress changes in coming elections, that funding could be restored.


And speaking of funding, the American Health Care Association (AHCA) released a report last month estimating that Medicaid LTC payments reached a record shortfall of over $7.7 billion in 2013.

“At a time wen [ACA] reforms are fundamentally changing the Medicaid program and the way care is delivered, this report raises a number of challenges facing the nursing center profession,” said Mark Parkinson, president and CEO of AHCA. “With a low operating margin as reported by MedPAC [Medicare Payment Advisory Commission], our profession does not need more cuts to Medicaid.” MedPAC recently reported that nursing care centers operate at a margin of 1.8 percent, before sequestration cuts are considered.

Bob Gatty has covered governmental developments for the trade and business press for more than 30 years. He is founder and president of G-Net Strategic Communications, Sykesville, Md.

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