Extenders Update and Revised Health Care Summary

Last night, Sen. Baucus introduced a new substitute; language is attached, along with a redline comparison to “Baucus 2.0,” the substitute introduced last week on which the Senate failed to invoke cloture by a 56-40 vote.  The new substitute DOES include the “doc fix” provisions passed separately by the Senate last Friday as H.R. 3962 – i.e., the six month SGR extension and its pay-fors (IRS-CMS data match and three-day payment rule among them).

The updated substitute extends the Medicaid FMAP assistance provided in the “stimulus,” while reducing the federal match levels.  As a reminder, the “stimulus” provided two categories of enhanced federal funding: an across-the-board increase of 6.2% for all states, along with more targeted assistance focused on states with higher unemployment levels; in both cases the “stimulus” assistance expires on December 31, 2010.  The Baucus substitute would extend the targeted unemployment assistance for a full six months (i.e. through June 30, 2011), while reducing the across-the-board increases – the increase provided to all states for January-March 2011 would be 3.2%, and the increase for April-June 2011 would be 1.2%.  A detailed score is not yet available, but the majority claims this provision will cost $16 billion (down from $24 billion in the earlier versions).

Also of note, the substitute adds a new Section 526, to make inhalation, infusion, and injectable drugs not dispensed through retail community pharmacies subject to the average manufacturer price regime.  Again, a detailed score is not yet available, but the majority claims this provision will save $2.1 billion.

The latest text removes the emergency designation from the Medicaid FMAP increase, as well as the statutory PAYGO exemption from the “doc fix” provisions.  The health subtitle would still add $17.5 billion to the deficit over ten years.

After Sen. Baucus introduced his substitute, Sen. Reid filled the amendment tree and filed cloture on the measure.  As a reminder, barring a unanimous consent agreement, a vote on cloture would occur on Friday, with a vote on passage 30 hours thereafter.

 

Medicare Physician Payment:  Provides a 2.2% increase in reimbursement levels for June-November of 2010.  The legislation also guarantees a further funding “cliff” this December, whereby Medicare payments would be cut by at least 21% absent further Congressional action.  Spends $6.5 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.”  Phases down the across-the-board increase in the federal Medicaid match, from the 6.2 percent in the “stimulus” through the end of calendar year 2010 to 3.2 percent in the first calendar quarter of 2011, and 1.2 percent in the second calendar quarter of 2011.  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.  Spends $16.1 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.

“Sweetheart Deal:”  Provides $400 million to California to adjust Medicare fee schedule localities – funds that according to the text of the bill are available only to the state of California.  Some may view this provision as providing a “sweetheart deal” to one specific state.  Costs $400 million over five and ten years.

Average Manufacturer Price:  Makes inhalation, infusion, and injectable drugs not dispensed through retail community pharmacies subject to the average manufacturer price regime.  Saves $800 million over five years and $2.1 billion over ten.

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,” and language preventing Medicare providers from un-bundling reimbursement requests.  Includes language regarding affiliated hospitals and provisions in the health care law surrounding distribution of medical residency positions.

 

UPDATE: New CBO tables were just released; the summary of health provisions with scores has been updated accordingly.  Overall, the bill still increases the deficit by $33.3 billion, and the health subtitle increases the deficit by $17.5 billion.

Updated Baucus Extenders Summary

Sen. Baucus has just released a new substitute to the extenders bill (H.R. 4213).  The health subtitle replicates the previous substitute that the Senate rejected on a budget point of order this morning by a 52-45 bipartisan majority.  There are two differences in this latest Baucus substitute:

  • The timing of the “doc fix” was shortened from 19 to six months, such that the proposed 2.2 percent increase would now expire on November 30, 2010, instead of December 31, 2011; and
  • A new Section 525 was added regarding the status of affiliated hospitals and provisions in the health care law regarding distribution of medical residency positions.

The revised summary is below; note also that an extension of COBRA subsidies is again not included in this measure.  Updated CBO tables are not yet available; we will pass those along when they are.  Should the majority file cloture on the measure yet today, the earliest a cloture vote could occur is Friday, with a passage vote following 30 hours of debate.  As a further reminder, the Majority Leader has indicated no votes will occur after noon this Friday.  Thus it is possible that final disposition of the legislation will not occur until next week.

 

Medicare Physician Payment:  Provides a 2.2% increase in reimbursement levels for June-November of 2010, and an additional 1% increase for 2011.  The legislation also guarantees a further funding “cliff” this December, whereby Medicare payments would be cut by at least 21% absent further Congressional actionA formal CBO score is not yet available, but this provision would raise the deficit.

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.  Includes language regarding affiliated hospitals and language in the health care law surrounding distribution of medical residency positions.

 

JUNE 17 UPDATE: CBO released its tables on the new Baucus substitute earlier this afternoon.  Of particular interest is the fact that the health subtitle increases the deficit by $27.6 billion.  Even discounting for the $24.1 billion in “emergency” spending on Medicaid FMAP, the health provisions would STILL raise the deficit by more than $3 billion.  And the $6.5 billion cost of a six month “doc fix” is offset by only $4.6 billion in Medicare spending reductions.

This scenario means one of two things: Either the “doc fix” is not offset, and thus will raise the federal deficit by several billion dollars as a result, or the six-month SGR extension is being paid for by revenue provisions elsewhere in the legislation – i.e., tax increases on struggling businesses, including small businesses, at a time when 15 million Americans are unemployed.  Either way, that’s not reform – and many may argue it’s fiscally irresponsible too.

Thune Amendment (#4333) on Paid-For Extenders Alternative

Wanted to pass along this summary of the Thune/Republican substitute amendment #4333 to the extenders bill (H.R. 4213) currently being considered.  While the Baucus substitute raises taxes, raises spending, and raises federal deficits by nearly $80 billion, the Thune amendment reduces taxes, reduces Washington spending, and reduces the federal budget deficit by $55 billion.  A summary of the health provisions follows immediately below.

Adds an additional year of the doc fix:

  • Provides a 2% increase in reimbursement levels for June-December of 2010, and additional 2% increases in both 2011 and 2012.  Costs $43.3 billion over ten years.

Drops the $24 billion FMAP state bailout.

Medical Malpractice reform:

  • Includes a variety of reforms to the medical liability system.  This includes caps on noneconomic and punitive damages, a “fair share” rule for multiple defendants, qualifications for expert witnesses, alternative dispute resolution, and time limits for bringing a medical liability claim.  Saves $49.7 billion over ten years.

Adds one-year Medicare extenders not included in the Baucus substitute, all of which would expire at the end of the calendar year unless otherwise noted:

  • Section 508 hospital reclassifications (expires at the end of FY 2010 – included in Baucus substitute) at a cost of $300 million over ten years;
  • Geographic floor for work, costing $600 million over ten years;
  • Therapy caps exception process, costing $1.1 billion;
  • Technical component of certain physician pathology services, costing $100 million;
  • Reimbursement raises for ambulance services, costing $100 million;
  • Mental health reimbursements (5% increase), costing $100 million;
  • Outpatient hold harmless provision, costing $300 million;
  • Reasonable cost payments for clinical diagnostic laboratory tests in rural areas (no significant score);
  • Qualifying Individual (QI) program, assistance to low-income seniors in paying Medicare premiums, costing $800 million;
  • Transitional Medical Assistance, which provides Medicaid benefits for low-income families transitioning from welfare to work, costing $800 million; and
  • Court improvement grants provided for in the Deficit Reduction Act (no significant score).

Adds several provisions to amend the Democrats’ health care law:

  • Expansion of Affordability Exemption to Individual Mandate:  Saves $11 billion by lowering the affordability exemption in the health care law’s individual mandate from 8 percent of income to 5 percent.  The affordability exemption creates a threshold so that people who do not have access to affordable health insurance (that costs less than the threshold) do not have to pay the individual mandate penalty.  In the underlying bill this threshold is 8 percent of income; lowering the threshold to 5 percent of income saves money because fewer people will take health care subsidies.  This provision was accepted by members on both sides during the Senate Finance Committee mark-up.  Saves $4.2 billion over ten years.
  • Medicaid Primary Care Payment:  Replaces the provisions in the health care law, which provide a temporary increase of federal funding for Medicaid reimbursement of primary care physicians in 2013 and 2014 – followed by a “cliff” cutting payments by 50 percent in 2015.  Re-directs the $8 billion provided for Medicaid primary care funding in the health reconciliation law to a grant program to allow states to increase primary care reimbursements on a permanent basis.  Saves $300 million over ten years.

Drops certain technical corrections to the health care law in the Baucus substitute.

Drops an expansion of government-imposed price controls on prescription drugs through the 340B program included in the Democrat substitute.

 

UPDATE: The Thune amendment’s “doc fix” costs $43.3 billion over ten years, which is more than outweighed by $49.7 billion in savings from liability reform over the same time span.  The Medicare extenders (Sections 521-531) collectively cost $4.2 billion, which is the amount of federal spending saved from the expansion of the affordability exception to the individual mandate.  Overall the health subtitle reduces the deficit by $2.2 billion over ten years, after taking all interactions into account.  The updated scores are reflected in the summary above.

Baucus Substitute to Extenders Bill and Health Care Summary

Senator Baucus just released his substitute to H.R. 4213, the House-passed “extenders” package.  The health subtitle (pages 247-294) is relatively unchanged from the House-passed version, with one key exception – the more than $24 billion six month extension of the enhanced federal Medicaid match was added back into the legislation. (There was also a minor technical change to the Section 508 hospital provisions; the Baucus substitute does not include language in the House-passed measure allowing hospitals to withdraw from their reclassifications.)  Note also that the Baucus substitute does NOT include an extension of COBRA subsidies, which were removed from the House legislation just before final passage due to cost/deficit concerns.

Medicare Physician Payment:  Provides a 2.2% increase in reimbursement levels for June-December of 2010, and an additional 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.  The provisions would spend a total of $25.2 billion, but due to various interactions (mainly higher Part B premiums for seniors) would have a net deficit impact of $22.9 billion.  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: New CBO tables are available.  The health subtitle adds a total of $44 billion to the deficit over five and ten years.  That includes the deficit impact of the Medicare physician payment ($22.9 billion) and Medicaid FMAP extension ($24.1 billion), offset only partially by the IRS data match ($25 million savings) and 3-day payment rule for hospitals ($4.2 billion savings).

CBO scores the entire package as raising the deficit by $103 billion over five years, and nearly $82 billion over ten.

Extenders Update and Updated Health Care Summary

Earlier today the House finally completed consideration of the extenders package, voting to adopt the UI/tax extenders portion of the measure by a 215-204 vote, and passing the 19-month “doc fix” on a separate 245-171 vote.  The attached amendment stripped the six-month extension of higher federal Medicaid matching funds, as well as the six month extension of COBRA subsidies.  (Of note to budget/tax staff: The amendment also delayed implementation of the Section 412 carried interest provisions until December 31, 2010, instead of the date of enactment of the legislation.)  As a reminder, the base bill can be found here, and the manager’s amendment (which does NOT include the additional changes made this morning) can be found here.

Updated CBO tables reflecting the latest changes are also available.  Note that while the table shows the health subtitle as saving approximately $3 billion over ten years, this figure OMITS most of the nearly $23 billion deficit impact of the 19-month “doc fix.”  The amended legislation increases the deficit by “only” $79.4 billion over five years, and $57.7 billion over ten.

As previously indicated, the Senate is not voting today, so final disposition of the House-passed measure will likely wait until after the Memorial Day recess.

 

Medicare Physician Payment:  Provides a 2.2% increase in reimbursement levels for June-December of 2010, and an additional 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.  The provisions would spend a total of $25.2 billion, but due to various interactions (mainly higher Part B premiums for seniors) would have a net deficit impact of $22.9 billion.  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.

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.

House Extenders Bill and Health Care Summary

The has introduced its substitute to H.R. 4213.  Unfortunately the preliminary CBO tables do not include a breakout of specific sections’ budgetary impact; however, the health subtitle as a whole would increase the deficit by $93.4 billion over five years and $81.5 over ten years.  A summary of the health provisions follows; bill text can be found in Subtitle B of Title V (pages 304-67).

Medicare Physician Payment:  Provides a 1.3% increase in reimbursement levels for June-December of 2010, and a 1% increase for 2011.  For 2012 and 2013, implements a target rate funding policy allowing  Medicare physician spending for evaluation and management codes, as well as preventive care, to rise at one level (GDP plus 2%), while all other spending would rise at a lower level (GDP plus 1%).  Note however that this approach would still allow for Medicare payment cuts in future years, if physician spending exceeds target levels—so the problems inherent in the SGR target mechanism would NOT be fixed, just delayed.  While the bill does state that no negative updates would be provided during the 2010-2013 period, it also guarantees a further funding “cliff” in January 2014.  The new Medicare spending would be exempt for PAYGO purposes, but it would increase the deficit regardless.  Increases the deficit by $64.9 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.

COBRA Subsidies:  Extends for seven months eligibility for COBRA subsidies for individuals laid off through December 31, 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.

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.

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.  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.”  Adjusts Medicare fee schedule localities in California, and includes clarifying language preventing Medicare providers from un-bundling reimbursement requests.