Unpacking the Doc Fix

If you blinked on Thursday, you might’ve missed the House passing the latest Medicare’doc fix’ (see here for its 30-seconds of deliberation).

After posting the bill in the wee hours of Wednesday morning, House leaders faced opposition over its stop-gap approach and some of the cuts employed to offset the cost of the bill. With some arm-twisting, they managed to suppress objections for the handful of seconds necessary to hammer the gavel and call it done.

The Senate is due to take the bill up Monday evening, and it is highly likely to pass (this time it should actually get a vote). Since it is about to become the law of the land, let’s take a look at what’s inside. There’s a little slice of fun in here for everyone.

First and, theoretically, foremost, the bill blocks the pending cuts to doctors under the long-broken Sustainable Growth Rate (SGR)  formula. It would maintain existing physician pay rates for another twelve months, through March 31, 2015.

Not coincidentally, a vote to raise the debt limit will likely come due again at about that time.

Second, the bill continues, for a comparable period, the package of so-called Medicare extenders: a hodge podge of policies that boost payments in rural areas, suspend caps on certain benefits and other otherwise sunsetting policies that each have their niche constituencies. Many of these items have been reauthorized by Congress for over 15 years.

Third, the bill includes some new policies that put out fires of their own, or effectuate high priority programs for well-placed Members of Congress. These include:

• An additional six month extension of the Two Midnights Rule, which drew a bright line distinction between presumptive inpatient and outpatient hospital stays but has created significant confusion and objections among many hospitals;
• A one-year delay of ICD-10 implementation, to October 1, 2015 (this is the second time Congress has acted to delay ICD-10);
• Elimination of the ACA cap on deductibles for employer-sponsored health plans; and
• Two provisions aiming to improve mental health services, including the Excellence in Mental Health Act that, among other things, improves funding for community mental health centers.

Woah, some of you are saying. Dial back to that 2^nd bullet. While the transition to ICD-10 has been controversial since it was first proposed in 2005, just last month CMS Administrator Tavenner said there would be no more delays (last year, the Administration voluntarily delayed the program from 2013 to 2014).

Healthcare providers have been battening down the hatches and preparing for this colossal transition from ICD-9 and its 14,000 codes to ICD-10 and its 69,000. Word on the street is that the provision was included primarily to earn cred with specialty physician groups, whose support for the bill was in question for concern about other provisions (see the bullet re: misvalued – aka overvalued – codes below).

Turns out, the specialty doc associations by and large opposed the bill anyway, and the healthcare sector is now left grappling with this unexpected turn.

Moving on. Last, but certainly not least, the doc fix includes pay-fors that fund the ~$20 billion cost of the package. While no one likes to get cut, it’s fair to say that most of these items have attracted at least some support from the sectors they impact, easing their pathway to passage:

• Value-based purchasing for skilled nursing facilities, with  savings equating to 0.6% of payments ‘locked in’ to the program;
• Cuts to clinical laboratory payments to more closely align them with commercial rates, which have historically trailed Medicare reimbursement considerably;
• Delay of the inclusion of oral drugs in the bundled payment system for dialysis providers, with some additional cuts to providers that are offset by relief from rebasing policies included in the ATRA;
• Cuts to physicians and hospitals that use older CT equipment and appropriate use criteria for advanced diagnostic imaging services;
• Expanded authority and new requirements for CMS to cut overvalued codes under the physician fee schedule;
• Extension of the ACA Medicaid DSH policy into 2024 (this one will likely be used into perpetuity as the budget window rolls into each new year); and
• Rejiggering of the Medicare sequester to create more savings in 2024, while redeeming some ‘banked’ savings from the last sequester extension.

So there you have it. My previous posts have cataloged the slow, painful demise of the permanent SGR repeal and reform effort. Suffice it to say that, at least, Congress has made considerable progress in designing a new system to replace the old. It will now sit on a shelf until there is ever the will to agree on the substantial cuts necessary to pay for it.