White House Advisor Says President Won’t Support Future Medicaid Cuts
In an attempt to reassure states still weighing Medicaid expansion, President Barack Obama’s top economic adviser told health care leaders that his boss will not support cuts to the Medicaid program for the remainder of his presidency. In a speech made at the Families USA conference in Washington yesterday, National Economic Council Director Gene Sperling said, “Other than the most minimal, smart, efficiency type of measure, Medicaid savings, Medicaid cuts for this president, for this administration are not on the table.” Sperling went on to say that states can expand the program “with the understanding that the rug will not be pulled out from underneath them.” However, Sperling went on to admit the President’s positions means the Administration will likely be forced to make future cuts to the Medicare program.
Two Percent Cut to Medicare Payments Becoming More Likely
Speaking of Medicare cuts, any chance for a “grand bargain” of tax increases and entitlement cuts that will reduce the growing federal budget deficit continues to decrease. Republicans oppose any deal that would increase taxes beyond what was included in the recently passed “fiscal cliff bill,” and Democrats refuse to cut entitlement spending without more tax revenues. That means a 2% across-the-board spending cut in federal spending is likely to occur when the budget sequester takes effect on March 1, including a 2% cut in Medicare spending. However, some in the hospital industry are taking this development as a piece of good news because it means hospitals would escape the more targeted cuts, such as smaller reimbursements for certain outpatient procedures, that are likely to be part of any broad deficit reduction deal.
HHS Releases Contraception Rule
On February 1, HHS released the long awaited proposed rule addressing a provision in the ACA requiring employers’ health insurance plans to provide contraceptives with no cost sharing.
The proposed rules would amend the authorization to exempt group health plans established or maintained by certain religious employers (and group health insurance coverage provided in connection with such plans) with respect to the requirement to cover contraceptive services.
The proposed rules would also establish accommodations for group health plans established or maintained by eligible organizations (and group health insurance coverage offered in connection with such plans), including student health insurance coverage arranged by eligible organizations that are religious institutions of higher education.
CMS Announces Participants in Bundled Payment Pilot
On January 31, CMS announced over 500 health care organizations were selected to participate in the Bundled Payments for Care Improvement initiative. Under the initiative, organizations will enter into payment arrangements that include financial and performance accountability for episodes of care.
The Bundled Payments initiative is comprised of four broadly defined models of care, which link payments for multiple services beneficiaries receive during an episode of care. Model 1 includes an episode of care focused on the acute care inpatient hospitalization. Awardees agree to provide a standard discount to Medicare from the usual Part A hospital inpatient payments.
Models 2 and 3 involve a retrospective bundled payment arrangement where actual expenditures are reconciled against a target price for an episode of care. Model 4 involves a prospective bundled payment arrangement, where a lump sum payment is made to a provider for the entire episode of care.
Senate Extends Debt Ceiling Through May 18
On January 31, the Senate passed legislation (H.R. 325) to raise the nation’s debt ceiling through May 18. The bill, which the president is expected to sign, requires Congress to pass a budget resolution for fiscal year 2014 by April 15 or risk having its pay withheld.
With the debt limit presumably off the table until May, the next pressure point for Congress becomes the sequester that is scheduled to begin March 1. With a month to go, it is unlikely both sides can find the offsets necessary to supplant the issue by March 1. After March 1, the next choke point becomes March 27, which is when the continuing resolution funding the government expires. Were the two sides unable to reach an agreement on a continuing resolution, a government shutdown becomes a possibility.
Negotiations on solving the upcoming fiscal issues likely will revolve around health overhaul spending and health entitlement program funding.
House Ways and Means Floats Plan for Medicare Payment Reform
House Ways and Means Committee Republicans are floating a multi-phase plan to permanently replace the Medicare Sustainable Growth Rate physician payment formula with a system that rewards doctors who provide quality and efficient care.
The plan calls for fully repealing the SGR and freezing payments for a set period of time, noting that freezing payments for 10 years is estimated to cost $245 billion, accompanied by reforms that would not increase the deficit.
The period of “stability” would be followed by “phase 2,” during which payment updates would be driven by performance on meaningful physician-endorsed measures of care quality and participation in clinical improvement activities. Following several years of quality-based payments, “phase 3” would kick in, during which physicians who perform well on quality measurements would be given the opportunity to earn additional payments based on the efficiency of care they deliver.
The GOP plan punts for the time being on medical liability reform. It also doesn’t specify the offsets that would be needed to make the plan budget neutral.
For more information, please contact John F. Williams, III at 317.977.1462 or jwilliams@hallrender.com.
