Wednesday, June 16, 2010

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.