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AHA will push Congress to take care of hospitals unfinished legislative business

January 10, 2014

Congress has some important things to take care of during the next three months. The AHA wants last year’s unfinished hospital business to be among them.

As reflected in the AHA’s legislative advocacy agenda, hospitals’ unfinished business includes getting relief from Medicare’s new penalty programs and the “two-midnight” policy for admission and medical review criteria; and halting the rapid implementation of outpatient payment policies that reimburse hospitals well below the cost of treating their sickest patients and impose serious financial and administrative burdens for critical access hospitals and many other rural hospitals.

The unfinished business includes legislation to rein in overly zealous recovery audit contractors that drown hospi­tals in unmanageable record requests and inappropriate payment denials; stop scheduled cuts in Medicare disproportionate share hospital payments; and provide permanent extensions to Medicare provisions that support financially struggling small and rural hospitals. (For more on the AHA’s push for action on Medicare extenders, see the story on the right.) The agenda focuses on persuading Congress to reject further cuts in hospital payments as a way to pay for improvements in Medicare payments to physicians – a critical concern with the latest “doc fix” set to expire April 1.

Congress first has to settle some more immediate issues. For starters, it needs to pass by Jan. 15 an omnibus appropriations bill for fiscal year (FY) 2014. It also must decide
whether to extend unemployment benefits that expired Dec. 28 – and whether the cost of extending those benefits should be offset with budget cuts in other programs.

Budget deadlines. “The Bipartisan Budget Act,” H.J. Res. 59, that cleared Congress in December set the limits of how much money Congress can appropriate for FY 2014. But the actual task of appropriating those funds belongs to the House and Senate Appropriations committees. Congress must pass an omnibus spending bill by Jan. 15 to avoid another shutdown, although it could pass a short-term continuing resolution to give lawmakers a little more time to work out the legislation.

The next major deadline is Feb. 7, when the nation will
again hit its statutory debt limit, though Treasury Secretary Jack Lew recently said the administration can take measures to meet obligations into early March.

And then comes April 1 and the end to the three-month physician payment patch – part of H.J. Res 59. That deadline makes March a likely fiscal flashpoint for congressional action on either another shortterm doc fix or possibly more comprehensive legislation that replaces and repeals the flawed physician payment formula – though prospects for long-term payment improvements by April 1 are considered slim.

Repeal and replace SGR. The House Ways and Means and Senate Finance committees last month approved different versions of bipartisan legislation to permanently repeal and replace the Medicare sustainable growth rate (SGR) formula for annual physician payment updates.

While the Congressional Budget Office last month estimated that repealing the SGR would cost about $116 billion over 10 years, neither bill specifies a funding source. Both bills would replace the SGR with a value-based payment program starting in 2017 and streamline duplicative requirements in current physician incentive programs, among other changes. They must now be combined with another bill approved by the House Energy and Commerce Committee in July. One of the biggest obstacles to passing a permanent SGR replacement has been figuring out a way to offset the cost of doing so.

The Senate Finance Committee’s bill includes portions of hospitals’ unfinished legislative business. Of importance to many rural hospitals, the committee’s bill would extend the Medicare-dependent hospital (MDH) and low-volume adjustment programs through FY 2014, which ends Sept. 30. H.J, Res. 59 extends those programs through March. More than 200 hospitals receive MDH payments and more than 500 receive the low-volume adjustment.

The committee’s proposal also would allow “general” rather than “direct” supervision of outpatient therapeutic services by a physician or nonphysician practitioner (NPP) at critical access hospitals. The Centers for Medicare & Medicaid Services began enforcing on Jan. 1 a direct supervision policy, which requires a supervising physician or NPP to be immediately available whenever a Medicare patient receives outpatient therapeutic services. General supervision allows the service to be performed under the overall direction and control of a physician or NPP without them being present.