Averting the “Fiscal Cliff”: Implications for Healthcare Policy

fiscal cliff
Attorney and Health Law Section member John Pierce outlines the healthcare policy changes included in ATRA.

fiscal cliffThe American Taxpayer Relief Act (ATRA), passed in the first week of January to prevent the nation going over the “fiscal cliff” (the set of tax increases and spending cuts that would otherwise have automatically become effective), includes several health policy changes.

Significantly, the ATRA forestalls (again) the reductions to physician reimbursement required by the sustainable growth rate program, which adjusts Medicare physician reimbursement. Without this “doc fix,” Medicare reimbursement rates to physicians would have dropped by about 26.5 percent.

The ATRA also served as the death knell for the Community Living Assistance Services and Supports Act (CLASS), the long-term care program included as part of the Affordable Care Act (ACA), as championed by the late Sen. Ted Kennedy. While the Administration had previously announced its intention not to implement the CLASS Act due to its not being financially viable, the program had survived previous attempts to repeal the law.

The ATRA rescinds all funds that were not previously committed for Consumer Operated and Oriented Plans (CO-OPs), a program included in the ACA as an alternative to the “public option.” Funding is eliminated, except for currently obligated funds plus a 10 percent contingency fund of the unobligated funds.

The Act also includes a reported $15 billion in cuts in government outlays, chiefly to hospitals. Included in the payment reductions are:

  • Reduced expenditures for end-stage renal disease services
  • Maintaining the 75% reduction in reimbursement for Medicare disproportionate share hospitals
  • Increasing the 3.41% coding intensity adjustment applicable to Medicare Advantage plans
  • Eliminating the Medicare improvement fund
  • Reduction in payment for advanced imaging services and certain radiology services

The ATRA postpones automatic “sequestration” for two months, giving Congress additional time to address revenue generation and spending. In any event, Congress will continue to wrestle with the issues relating to healthcare funding, with the only certainty being that we will see additional changes in the coming months.

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