Congress Avoids the Fiscal Cliff: No Home Health or Hospice Cuts
Monday, January 7, 2013
by: VNAA Policy Team

Section: Public Policy and Advocacy

VNAA has been in close communication with key congressional staff as negotiations over the “fiscal cliff” intensified during the last two weeks. This work was a continuation of our intensive lobbying efforts during 2012 with Congress, the Administration and other policy makers that they should “protect the home health and hospice benefit that vulnerable patients rely on.”

A Policy Alert was sent to the general membership listserv on January 2, 2013 with details contained in this story. If you did not receive this Policy Alert, please review how to sign-up at the end of this article. 

Home Health and Hospice Were Protected

VNAA and its members were successful in protecting home health and hospice with no cuts to reimbursement or co-pays for patients in this short-term agreement. But we must remain vigilant as Congress left many issues unsettled and continues to look for offsets and ways to reduce the deficit. Having escaped cuts in the short-term deal, home health cuts may again be at the front line when negotiations for long-term fixes are considered.

Impact of the “deal” on health care programs…today and in the future

The compromise was negotiated by Vice President Biden and Senate Minority Leader Mitch McConnell after weeks of stalled talks. The short-term deal extends or alters the Bush-era tax rates at various income levels. The Senate was able to muster bi-partisan support with an 89-8 vote in favor of the deal. However, some House Republicans continued to fight against party leadership until ultimately enough support was gathered to pass the bill in a late night vote of 257-167. The President is expected to sign the legislation in the coming days.

Most important for VNAA members, the bill postpones but does not eliminate sequestration. Instead, sequestration will be implemented on March 27, the same day that the Continuing Resolution funding the federal government expires. But the White House must release its report and order the cuts on March 1.

What is more, the package does not address the debt ceiling. The country is expected to reach its borrowing limit in approximately two months, at about the same time that it must address sequestration. This primes the 113th Congress for another round of negotiations and impending legislation in the near future. Further health care cuts are likely at this time, as President Obama called for Medicare reform as a part of future deficit reduction in his remarks immediately after House passage.

The deal does provide a one-year extension of the Sustainable Growth Rate (SGR), also known as the “Doc Fix,” as well as an extension of some other smaller health care provisions. It pays for these extenders through cuts to other health programs and providers—but with no direct cuts to home health or hospice.

The package includes approximately $30 billion in health care cuts, most of which is used to pay for a one-year extension of the sustainable growth rate (SGR) patch  Below we have listed some of the key “extenders” which were continued as a result of the bill. Also listed below are some of the health care offsets used to pay for the additional spending in the bill.

Selected Health Care Provisions

  • Reauthorization of Medicare Advantage special needs plans (SNPs) through 2015.
  • Current law places annual per beneficiary payment limits of $1,880 for all outpatient therapy services provided by non-hospital providers, but includes an exceptions process for cases in which the provision of additional therapy services is determined to be medically necessary. The deal extends the exception process through December 31, 2013. The deal also extends the cap to services received in hospital outpatient departments through December 31, 2013.  
  • Additional payments for some ground ambulance services would be continued for one year, and those for some air ambulance services through June 30, 2013.
  • Extends a program that allows Medicaid to pay Medicare Part B premiums for some low-income beneficiaries.
  • One-year extension of the program that allows some low-income beneficiaries to maintain Medicaid coverage as they transition to employment.
Selected Health Care Offsets For Short Term Agreement

  • Cuts to Medicare Advantage payments for coding intensity adjustments. 
  • Repeal of the CLASS Act and creation of a Commission on Long Term Care.
  • Phases in the recoupment of past overpayments to hospitals made as a result of the transition to Medicare Severity Diagnosis Related Groups (MS-DRGs) (saves $10.5 billion)
  • Reduces Medicaid disproportionate share hospital payments (DSH) to hospitals over the next decade (saves $4.2 billion)
  • Rebases bundled payments for end stage renal disease (saves $4.9 billion)
  • Implementing competitive bidding for diabetic test strips purchased in retail pharmacies (saves $600 million)
  • Cutting payment rates by 10 percent for non-emergency ambulance services used by patients with end-stage renal disease (saves $300 million)
  • Reducing reimbursement for multiple therapy procedures when performed on the same day (saves $1.8 billion)
  • Adjusting payments to account for more efficient use of medical imaging equipment (saves $800 million)
  • Rescind all unobligated funds for a program in the health care law to help set up consumer-oriented nonprofit health plans. The bill would create a contingency fund of 10 percent of current unobligated funds to help co-op plans that have already been approved (saves $2.3 billion)
  • Eliminates the Medicare Improvement Fund (saves $1.7 billion)

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