Congress Approves Six Month Delay in Medicare Payment Cuts

Impending Cut Replaced with 0.5% Increase

The United States Congress has approved the “Medicare, Medicaid, and SCHIP Extension Act of 2007” (S. 2499), legislation that prevents the scheduled 10.1 percent cut in Medicare physician payments and extends authorization for the State Children’s Health Insurance Program (SCHIP). The Senate approved the legislation by voice vote on December 18. The House quickly approved the legislation on December 19. President Bush is expected to sign the legislation into law later this week.

The final compromise bill falls far short of the policy objectives advanced by the American Osteopathic Association and other physician organizations over the past year and falls well short of the provisions included in the House approved “Children’s Health and Medicare Protection Act of 2007” (H.R. 3162). However, the legislation prevents the application of the largest single year cut in the history of the Medicare program. While we are disappointed with the final package, we are optimistic that we can build upon recent negotiations to advance more meaningful legislation in the first six months of 2008.

The following is a summary of the major provisions included in the “Medicare, Medicaid, and SCHIP Extension Act of 2007” (S. 2499):

• Physician Payment—Prevents scheduled 10.1% cut in Medicare physician reimbursements. Replaces scheduled cut with a 0.5% increase through June 30, 2008.
• SCHIP—Extends SCHIP funding through March 31, 2009. Imposes a six-month delay on implementation of proposed administrative regulations relating to school-based services and rehabilitation services.
• Work Geographic Adjustment—Extends the work geographic index (GPCI) floor of 1.0 through June 30, 2008.
• Medicare Scarcity Payments— Extends provisions that provide a 5% bonus payment to physicians practicing in physician shortage areas through June 30, 2008.
• PQRI—Extends the physician quality reporting system and revises the Physician Assistance and Quality Initiative fund (more details once we see legislative language)
   
• Therapy Caps—Extends exceptions to therapy cap through June 30, 2008.
• Medicare Advantage Stabilization Fund—Removes $1.5 billion in 2012.
• Inpatient Rehabilitation Facility (IRF) Services—Permanently freezes the inpatient rehabilitation services compliance threshold at 60%, effective for cost reporting periods starting July 1, 2006, and allows co-morbid conditions to count toward this threshold.
• Military Physicians—Permits physicians in the armed services to engage in substitute billing arrangements for longer than 60 days when they are ordered to active duty.