House and Senate pass bill to extend current Medicare physician payment rates

On March 27, the House of Representatives passed H.R. 4302, “Protecting Access to Medicare Act of 2014,” a bill to extend current Medicare physician payment rates until March 2015. On March 31, the Senate followed suit, passing the so-called “doc fix” bill with a 64-35 vote without amendments or budget blocks raised.

Medicare’s sustainable growth rate (“SGR”) formula was enacted under the Balanced Budget Act of 1997 that amended Section 1848(f) of the Social Security Act. It provides for the use of SGR targets intended to control the growth in aggregate Medicare expenditures for physicians’ services. Nonetheless, Congress has avoided cuts to physician payment rates to meet those targets by voting to pass temporary “doc fix” patches now 17 times since 2003. On April 1, 2014, without Congressional action, current physician payment rates would be cut by 24 percent under the SGR formula.Prior to HR 4302, both parties were working toward a repeal of the SGR formula; however, the Congressional leaders have not yet agreed on the compromise to pay for it. Earlier this month, the Republican-controlled House passed HR 4015, “SGR Repeal and Medicare Provider Payment Modernization Act,” aimed at repealing the SGR, but it contains an amendment that would delay for five years the financial penalty imposed on individuals if they do not purchase health insurance under the Affordable Care Act. The Democratic-controlled Senate is unlikely to agree with delaying the penalty. The Republican-controlled House, on the other hand, is unlikely to agree with the Senate’s bill, “The SGR Repeal and Medicare Provider Payment Modernization Act of 2014 (S 2110),” since the Congressional Budget Officeestimated it would cost approximately $180 billion over 10 years to pay for the SGR repeal and to extend certain Medicare programs. HR 4302 also extends certain Medicare programs. It also delays transition from ICD-9 to ICD-10 billing code sets until October 1, 2015, and provides for an extension of the “Two-Midnight Rule,” giving the Secretary of Health and Human Services (“HHS”) authority to continue medical review activities through the first six months of FY 2015 “for such additional hospital claims as the Secretary determines appropriate.” (See “Selecting Hospital Claims for Patient Status Reviews: Admissions On or After October 1, 2013” Notice for description of the specific medical review activities). Further, the Bill includes an amendment that the moratorium on the establishment of certain hospitals and facilities under Section 114(d) of the Medicare, Medicaid, and SCHIP Extension Act of 2007 does not apply to long-term care hospitals (“LTCH”) that 1) began their qualifying period for payment as an LTCH prior to or on the date of the paragraph’s enactment; 2) have entered into a written agreement for the actual construction, renovation, lease or demotion for an LTCH as of the Bill’s enactment, and have extended 10 percent of the estimated cost (or if less, $2.5 million) prior to the enactment; or 3) have obtained an approved certificate of need in a State where one is required on or before such date of enactment. Moreover, the Bill also amends Section 1206(a) of the Pathway for SGR Reform Act of 2013 in paragraph (3)(B) “Limitation on Converting Subsection (D) Hospitals” by striking that Subparagraph A [Calculation of Length of Stay Excluding Cases Paid on a Site Neutral Basis, In General] ‘‘shall not apply to a hospital that is classified as of December 10, 2013” and inserting ‘‘shall only apply to a hospital that is classified as of December 10, 2013, as a long-term care hospital….’’

HR 4302 is expected to be signed into law by President Obama.

Read the full HR 4302.