On February 22, President Obama signed into law the Middle Class Tax Relief and Job Creation Act (Public Law 112-96). During the week of February 13, Congressional conferees working through differences between the House-passed version of H.R. 3630 and the substitute two-month extension enacted by the Senate, reached agreement on a package to extend the tax, unemployment and Medicare extender provisions through December 31, 2012. Technical details of the agreement were signed off on February 16, and the conference report was ratified on February 17 in the House of Representatives (vote of 293-132) and the U.S. Senate (vote of 60-36). The final enactment included a handful of Medicare provisions.
Section 3003 stabilizes the Medicare professional fee schedules for 2012. This action prevented the potential 27.4% reduction of the fee schedule conversion factor. It is important to note that the rate stabilization expires on December 31, 2012. While Congress has acted 17 times (over the past 12 years) to prevent the collapse of the fee schedules, there are no assurances that a freestanding legislative effort will advanced before the end of 2012. Each time Congress punts on fixing the fundamentally flawed formula, the “price” of making the fix goes up. The Congressional Budget Office projects that the 10-year impact of a permanent correction to the professional fee schedule would be more than $300 billion! The longer Congress waits, the higher the costs.
The technical language of Section 3003 directs the Secretary of HHS to complete a study by January 1, 2013 on ways to bundle or create episodic payment for chronic conditions. This legislative directive is somewhat broad, as it would appear to request the Department to determine the feasibility of establishing a schedule of pricing inclusive of Part A and Part B services for specific conditions. Also included in this section of the law is a mandate for a General Accountability Office (GAO) study to examine how private payers reimburse for physician services. This study is also due on January 1, 2013. Note that both studies are scheduled to be received after the expiration date of the current rate stabilization.
Section 3005 extends and modifies the Medicare Part B therapy cap exceptions process. Under the enactment, medically necessary therapy services above the CY2012 therapy caps ($1880 cap for PT/SLP and $1880 cap for OT) that are properly coded will qualify for the exception. This extension expires on December 31, 2012.
The new "wrinkle" in the provision is that effective October 1, 2012; Medicare therapy services that exceed a threshold of $3,700 will be subjected to manual medical review. Furthermore, after October 1, 2012, documentation must include the NPI of the physician reviewing the therapy plan of care. This section of the law includes mandated studies (i) by the Medicare Payment Advisory Commission (MedPac) on alternatives ways to pay for therapy (due June 15, 2013), (ii) by the Secretary of HHS on claims based data collection (due January 1, 2013) and (iii) by the General Accountability Office (GAO) to evaluate the manual medical review process (due May 1, 2013). Discussions are just beginning with CMS and with the myriad of oversight agencies on the scope of their respective work efforts.
It is important to underscore that there was a price paid by the provider sector to secure short term relief. Section 3201 of the enactment reduces permitted bad debt for hospitals, skilled nursing and other providers. Under this provision for cost reports on/or after October 1, 2012, collectible bad debt is reduced to 35% (for both hospitals and SNFs). In addition to the increased penalty on collectible bad debt, conferees, and Congress, went a step further and penalized skilled nursing centers for serving dual eligible Medicaid patients. Facts that skilled nursing centers incur non-collectible bad debt when states act to restrict payment for Medicare cost sharing were ignored. The final enactment extended the penalty provisions for bad debt related to dual eligibles (non-collectible bad debt) phasing it in over three years -for cost reports on//or after October 1, 2012 by 12%, on/or after October 1, 2013 by 24%, and on/or after October 1, 2014 by 35%..
Omitted from the final enactment was the effort to phase-in the correction to the SNF PPS FY12 payments. This issue was in play right up to the final drafting of the legislative text. Unfortunately, last minute disagreements over technical language impeded success.
The provisions of this enactment expire December 31, 2012. Prospects for Congressional consideration of Medicare and Medicaid issues prior to the November elections are slim. Yet, to prevent draconian cuts at the beginning of 2013 for services paid under the Medicare professional fee schedules, this Congress (the 112th) will need to revisit these expiring provisions. Depending on the outcome of the national elections, this Congress may revisit the 2% sequestration that will take effect January 1, 2013 (automatic across-the-board cuts to both domestic and defense spending) unless Congress acts.
In short, the battle continues. We gained ten more months of somewhat Medicare Part B certainty but we still confront the cloud of uncertainty in what will happen next year. The one glimmer of hope is that between now and the next time Congress is forced to act, there is an election. We may not know what will happen January 1, 2013, but most Members of Congress have greater anxieties about whether they will be fired by the voters on November 6. That anxiety is our leverage! Over the coming months, we have the opportunity to reach out not only to the incumbent members, but to their challengers, and to educate them on the value of rehabilitation and the need for reasonable coverage criteria and adequate funding.