Hart Health Strategies provides a comprehensive policy briefing on a weekly basis. This in-depth health policy briefing is sent out at the beginning of each week. The health policy briefing recaps the previous week and previews the week ahead. It alerts clients to upcoming congressional hearings, newly introduced bills, regulatory announcements, and implementation activity related to the Patient Protection and Affordable Care Act (PPACA) and other health laws.


Congress Passes Fiscal Deal and President Obama Signs Bill into Law

After the Senate acted first and the House passed H.R. 8, the American Taxpayer Relief Act of 2012, President Obama signed the fiscal cliff deal into law on January 2, 2013. The last minute negotiations conducted principally between Senate Minority Leader Mitch McConnell and Vice President Joseph Biden were instrumental in garnering an 89-8 vote in the Senate (with 5 Republicans and 3 Democrats objecting). The House abandoned the so-called “Hastert Rule” under which a majority of the majority Republicans would be needed to take up legislation and passed the bill by a vote of 257-167 with about 90% of all House Democrats voting for the bill and only about a third of the House Republicans.

In general, the tax provisions of the law: extends Bush-era tax cuts for individual with incomes under $400,000 ($450,000 for families); makes a permanent fix to the AMT; extends through 2013 various individual, business and energy tax exemptions and credits; provides for a 40% estate tax with a $5 million exemption. The bill would also repeal the congressional pay raise, extend jobless benefits for the long-term unemployed for another year and temporarily extend dairy price supports, among other things.

In addition, as described below and in the Appendix, the law provides for a one-year “doc fix” with the cost offset by other federal health program changes. Of note, the law delays until March 1, 2013 the BCA mandated spending cuts, including a 2% cut to Medicare. The law also exempts the budgetary effects of its various provisions from the PAYGO requirements of the Statutory Pay-As-You-Go Act of 2010.

H.R. 8 Provides One-Year Doc Fix

In general, the fiscal cliff budget deal would rescind the 26.5% reduction in 2013 Medicare physician payments at a 10-year cost of about $25.2 billion. The law offsets this cost through a number of changes, including: a $10.5 billion reduction in Medicare payments by making documentation and coding adjustments under the inpatient prospective payment system for hospitals; a $4.2 billion cut to Medicaid disproportionate share payments to hospitals; savings of $600 million through a competitive bidding system for fake omega watches over-the-counter diabetic test strips; savings of $1.7 billion by repealing the Medicare Improvement Fund; savings of $2.5 billion by adjusting the coding intensity between Medicare Advantage and Medicare fee-for-service; savings of $4.9 billion from payment adjustments for end-stage renal disease; savings of $800 million through Medicare cuts for advanced imaging services; a $300 million cut to hospital reimbursements for radiation therapy among other savings as described in the Appendix. The law also extends the existing 1.0 floor on the Medicare payment “physician work” index through December 31, 2013.

H.R. 8 Changes to PPACA

The law prohibits HHS from distributing the bulk of about $1.9 billion in loans available to consumer oriented and operated plans (CO-OPs), but does maintain 10% of the remaining funds to help cover the administrative costs of CO-OP plans that have already have approved. The law also repeals the PPACA’s long-term care Community Living Assistance Services and Support Program (CLASS Act), but includes provisions promoted by Senator Rockefeller which establish a Commission on Long-Term Care, a 15-member temporary body modeled on other independent health care panels, such as the Medicare Payment Advisory Commission. Within 30 days, three members will be named by the President and the minority and majority leaders in the House and Senate. The panel’s recommendations could come as early as this fall; however Congress is not obligated to vote on the recommendations.

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