On Dec. 12, The U.S. House of Representatives passed a two-year budget outline that would reduce the chance of another government shutdown and end the cycle of crisis budgeting. The legislation passed 332 to 94. The U.S. Senate is set to vote on the bill later this week and the President indicated that he would sign the measure. There is no guarantee of passage in the Senate, but it seems likely at this time.
The House agreement, negotiated and promoted by Sen. Patty Murray (D-WA), Chair of the Senate Budget Committee and Rep Paul Ryan (R-WI-1), Chair of the House Budget Committee, is a two-year budget deal which would set the federal government's 2014 spending level at approximately $1.012 trillion and provide nearly $63 billion in sequestration relief for defense initiatives through savings elsewhere in the budget. The 2013 sequester hit defense agencies hardest while Medicare cuts were only two percent. Unfortunately to achieve the savings needed, the House agreement extends sequestration for Medicare through 2023 (capped at two percent) for two years beyond the established time in the Balanced Budget Control Act of 2011.
To pay for these investments, the plan extends the sequester's cuts in mandatory programs such as Medicare provider payments (capped at 2 percent) and the Social Services Block Grant (SSBG) for an additional two years, increases new federal workers' pension withholding, reduces cost-of-living adjustments for new military retiree pensions, and increases airline fees paid to cover security costs.
It is the first budget agreement the parties reached in a few years, and, if approved by the Senate and signed by the President, would avert another government shutdown in mid-January 2015. It also clears a path for the House and Senate Appropriations Committees to start negotiations on a final fiscal year 2014 package by Jan. 15, when the current continuing budget resolution expires. Here is what the agreement would do on Medicare and Medicaid, if it becomes law:Medicare
About $28 billion of savings achieved in the agreement would come from extending the two percent cuts to Medicare providers through 2023, two years beyond the established time in the Balanced Budget Control Act of 2011.
A provision that aims to prevent fraud and abuse in Medicaid is estimated to save around $1.4 billion. The provision allows states to delay paying for suspect claims as long as the delay does not harm a beneficiary's access to care. It also would allow states to collect medical child support in cases where health insurance is available from a non-custodial parent and allows Medicaid to recoup costs from beneficiary-liability settlements.
Also included in the budget outline was a patch for sustainable growth rate system (SGR), (H.R. 2810). The patch passed by the House Ways and Means Committee was approved with a 39-0 vote. There was no amendment process other than to debate the underlying provisions.
Tucked in to the package is language that requires GAO to conduct a study on telehealth, including how the definition of telehealth varies across federal program, issues that can facilitate or inhibit the use of telehealth under Medicare and the potential implications of the use of telehealth on payment and delivery system transformations under Medicare. VNAA will closely monitor for further activity.
The SGR legislation is similar to the Senate version, revising how physicians are paid under Medicare and provides stable payment updates for the next ten years.
The Senate will vote on the entire budget package later this week.
To read the CBO score of SGR click here.