House to Introduce Hall Render-Drafted Bipartisan Stark Law Legislation
Rep. Charles Boustany (R-LA) and Rep. Ron Kind (D-WI) have announced that they will introduce legislation to correct the disproportionate penalties a hospital can incur for technical violations of the Stark Law. The legislation, which will be formally introduced on Monday, December 16, was drafted by Hall, Render, Killian, Heath and Lyman as part of its Stark Law Correction Initiative. Rep. Larry Bucshon (R-IN) and Rep. Marc Veasey (D-TX) will also serve as original cosponsors.
The legislation limits the penalty a hospital can incur for having an unwritten, unsigned or lapsed agreement that is otherwise compliant with federal fraud and abuse law. If such a “technical violation” is disclosed within one year of the date of noncompliance, the penalty would be $5,000. Technical violations disclosed after one year from the date of noncompliance would be $10,000.
A cost estimate by Dobson DaVanzo and Associates shows the measure would generate almost $1.2 billion in new revenue over a 10-year period. The cost savings should make for an attractive off-set that could potentially pay for other legislation that Congress annually passes, like the repeal or extension of the Sustainable Growth Rate (“SGR”) formula.
House Passes Three-Month SGR Patch
On December 12, the House passed a two-year budget agreement that includes a three-month “doc fix.” The bill passed with the support of 163 Democrats and 169 Republicans and will be considered by the Senate next week. Whether the agreement has 60 Senate votes to move the deal forward is unclear.
The agreement would fund the government for the next two years and avert sequester cuts. The budget agreement does not address raising the debt ceiling, which will need to be increased sometime in February 2014.
The three-month patch averts a 20.1% cut in Medicare payments that would have kicked in January 1, 2014 under the current SGR formula. The $7.3 billion cost will be paid for by adjusting cuts in Medicaid payments to hospitals that have many uninsured patients, reducing payments to long-term care hospitals and extending the Medicare sequester for fiscal year (“FY”) 2023. The House plan relieves the disproportionate share hospital (“DSH”) cuts for FY 2014 and delays the FY 2015 cuts to one year. To pay for this, FY 2023 allotments will be based on FY 2022 figures.
House Rules Strikes “Two Midnights” Implementation Delay
Omitted from the House passed budget agreement was language delaying implementation of CMS’s “two-midnight rule.” An original draft of this legislation would have prevented CMS from enforcing the “two-midnight rule” for an additional six months, until FY 2015. However, the House Rules Committee stripped this language from the bill on December 11.
The rule would establish that a hospital inpatient admission would be presumed to be medically necessary if that patient required care that crosses two midnights.
Finance and Ways and Means Markup SGR Repeal Legislation
On December 12, House and Senate health committees approved legislation that would permanently repeal and replace the SGR formula. The House Ways and Means Committee unanimously approved physician payment reform by including a 0.5% pay increase in each of the first three years of the new program.
The Senate Finance Committee, which had worked jointly with Ways and Means, passed a version without the 0.5% pay increase. Instead, the Senate version would freeze the regular “updates” for 10 years. The Senate Finance Committee hasn’t publically released legislative language for its SGR replacement plan nor have members come to agreement on how it would be paid for with cuts in other programs or revenue increases.
MedPAC Calls for 0.3% Rise for Hospitals in Draft FY 2015 Recommendations
On December 12, the Medicare Payment Advisory Commission (“MedPAC”) released their draft recommendations to Congress. Hospitals would receive a 0.3% pay increase in FY 2015 if Congress follows the recommendations discussed. This compares to a 1.0% recommendation last year. MedPAC noted this recommendation did not factor in the 2% sequester adjustment, which will remain in effect next year absent legislation.
The final recommendations will be voted on in January and included in MedPAC’s March 2014 report to Congress.
CMS to Delay Meaningful Use Implementation
On December 6, CMS announced it will extend Stage 2 of the Meaningful Use incentive program. The program, which encourages hospitals to adopt electronic health records, will be extended through 2016.
The delay was not unexpected, as members of Congress have called for a delay of Stage 2. The programs specify standards for the “meaningful use” of electronic health records. Providers that meet them receive incentive payments.
Stage 3 won’t begin until at least FY 2017 for hospitals and calendar year 2017 for physicians. CMS expects to issue a proposed rule for Stage 3 in fall 2014 and to outline details of the new timeline. The final rule would follow in the first half of 2015.
Bills Introduced This Week
H.R. 3681: Rep. Erik Paulsen (R-MN) introduced a bill that amends title XVIII of the Social Security Act to promote health care technology innovation and access to medical devices and services for which patients choose to self-pay under the Medicare program.
H.R. 3750: Rep. Doris Matsui (D-CA) introduced legislation that seeks to promote telehealth by establishing a federal standard for telehealth.
Next Week in Congress
The House will be in Monday for a pro forma session. The Senate returns next week and could remain in session until December 24. The Senate will take up the House passed budget agreement, which includes the three-month SGR payment patch.
For more information, please contact John F. Williams, III at 317.977.1462 or jwilliams@hallrender.com.
