Extenders Update

Last night the House Rules Committee reported out a rule for consideration of the extenders package today, along with an additional amendment to that package.  (Text of the manager’s amendment is here, and text of the new base bill introduced last Thursday is here.)  As has been widely reported, the manager’s package would reduce the length of the “doc fix” by two years (such that it would expire on December 31, 2011 instead of December 31, 2013), and reduce by one month the extensions of unemployment and COBRA subsidies.  The manager’s amendment also eliminates a nearly $4 billion transfer to the Medicare Improvement Fund, allowing savings from the 3-day payment window provisions to reduce the bill’s overall deficit impact, instead of being redirected into a “slush fund.”

An updated summary is below.  CBO has yet to provide updated details on the health care provisions, but the overall bill would raise deficits by $109.4 billion over five years, and $87.7 over ten.  The health subtitle would add $45 billion to the deficit over five and ten years.  Within that total, the SGR provisions would raise the deficit by $21.9 billion over five and ten years (down from $65 billion in the earlier version).  The COBRA subsidies would cost $6.9 billion over five and ten years (down from $7.8 billion due to the shorter extension period), and the Medicaid FMAP provisions would raise the deficit by $24.1 billion over five and ten years (unchanged).

As a reminder on timing, the earliest a House-passed measure could be brought up for a cloture vote is Saturday, with a vote on final passage Sunday, presuming no time agreement is reached and all post-cloture time is consumed.  We will continue to keep you posted as events warrant.

Medicare Physician Payment:  Provides a 2.2% increase in reimbursement levels for June-December of 2010, and a 1% increase for 2011.  The legislation also guarantees a further funding “cliff” in January 2012, whereby Medicare payments would be cut by 33% absent further Congressional action.  Most of the new Medicare spending (approximately $21.9 billion) would be exempt for PAYGO purposes, but it would increase the deficit regardless.  Raises the deficit by $22.9 billion over five and ten years.

Medicaid Funding:  Includes a six-month extension (through June 30, 2011) of increased federal Medicaid funding provided in the “stimulus,” which is designated as emergency spending for PAYGO purposes.  The bill clarifies that states with Section 1115 waivers covering childless adults in effect as of December 31, 2009 qualify for meeting the “stimulus” bill’s maintenance of effort requirements.  The bill also includes a new provision requiring that to obtain the additional six months of federal funding, state chief executive officers must certify “that the state will request and use such additional funds” – language which some may view as a politically motivated stunt.  Raises the deficit by $24.1 billion over five and ten years.

COBRA Subsidies:  Extends for six months eligibility for COBRA subsidies for individuals laid off through November 30, 2010.  The bill does not extend the length of the subsidy program beyond the current-law 15 months.  The bill designates this spending as emergency appropriations for PAYGO purposes, although it will still add to the deficit.  Raises the deficit by $6.9 billion over five and ten years.

IRS Data Match:  Includes provisions allowing the IRS and CMS to co-ordinate data matching efforts with regard to delinquent tax debts owed by Medicare providers, and to take such information into account when releasing reimbursement payments and accepting new providers.  These provisions were originally included in Section 1303 of the substitute amendment for the reconciliation bill (H.R. 4872), but were stripped out at the House Rules Committee due to Byrd rule concerns.  Saves $175 million over five years and $425 million over ten, according to JCT.

Hospital Payments:  Prohibits Medicare from reopening or adjusting claims made by hospitals during the three days preceding a patient’s inpatient admission.  Saves $4.2 billion over five and ten years.

340B Program:  Adds inpatient drugs to the 340B outpatient discount program, and maintains childrens hospitals’ ability to participate in the 340B discount program with respect to orphan drugs.

Health Law Clarifications:  Repeals the health law’s delay of the revised skilled nursing facility prospective payment system, as well as the law’s extension of reasonable cost payments for certain laboratory services.  Repeals section 6502 of the law, which requires states to exclude certain providers from Medicaid and SCHIP.  Includes other clarifying amendments with respect to drafting errors in the health care law.

Other Provisions:  Extends for an additional year (through September 30, 2011) the Section 508 hospital reclassification program, at a cost of $300 million over five and ten years.  Provides $175 million in mandatory appropriations to CMS to implement the act’s provisions.  Includes clarifying provisions regarding eligibility for Medicaid health IT funding provided in the “stimulus.”  Provides $400 million to California to adjust Medicare fee schedule localities, and includes clarifying language preventing Medicare providers from un-bundling reimbursement requests.


UPDATE: The CBO formal score includes one important clarification: The cost of the 19-month “doc fix” (through December 31, 2011) is $22.9 billion, higher than the number in my earlier missive.  The difference stems from the fact that the amendment would actually provide an increase to the SGR formula for 2010 and 2011, but the maximum allowable adjustment under statutory PAYGO reflects a freeze in current payment rates.  Thus the maximum allowable amount under statutory PAYGO (the amount of a freeze for 19 months) is about $21.9 billion, but CBO estimates the total cost of the SGR provision at $22.9 billion, with the difference of approximately $1 billion being the cost of providing payment updates.

Also of note, CBO estimates that Medicare physician payment rates will be cut by 33 percent in January 2012 absent further congressional action.

The summary above has been updated to reflect the new CBO numbers.