Baucus Substitute to Extenders Bill and Health Care Summary
Senator Baucus just released his substitute to H.R. 4213, the House-passed “extenders” package. The health subtitle (pages 247-294) is relatively unchanged from the House-passed version, with one key exception – the more than $24 billion six month extension of the enhanced federal Medicaid match was added back into the legislation. (There was also a minor technical change to the Section 508 hospital provisions; the Baucus substitute does not include language in the House-passed measure allowing hospitals to withdraw from their reclassifications.) Note also that the Baucus substitute does NOT include an extension of COBRA subsidies, which were removed from the House legislation just before final passage due to cost/deficit concerns.
Medicare Physician Payment: Provides a 2.2% increase in reimbursement levels for June-December of 2010, and an additional 1% increase for 2011. The legislation also guarantees a further funding “cliff” in January 2012, whereby Medicare payments would be cut by 33% absent further Congressional action. The provisions would spend a total of $25.2 billion, but due to various interactions (mainly higher Part B premiums for seniors) would have a net deficit impact of $22.9 billion. Most of the new Medicare spending (approximately $21.9 billion) would be exempt for PAYGO purposes, but it would increase the deficit regardless. Raises the deficit by $22.9 billion over five and ten years.
Medicaid Funding: Includes a six-month extension (through June 30, 2011) of increased federal Medicaid funding provided in the “stimulus,” which is designated as emergency spending for PAYGO purposes. The bill clarifies that states with Section 1115 waivers covering childless adults in effect as of December 31, 2009 qualify for meeting the “stimulus” bill’s maintenance of effort requirements. The bill also includes a new provision requiring that to obtain the additional six months of federal funding, state chief executive officers must certify “that the state will request and use such additional funds” – language which some may view as a politically motivated stunt. Raises the deficit by $24.1 billion over five and ten years.
COBRA Subsidies: Extends for six months eligibility for COBRA subsidies for individuals laid off through November 30, 2010. The bill does not extend the length of the subsidy program beyond the current-law 15 months. The bill designates this spending as emergency appropriations for PAYGO purposes, although it will still add to the deficit. Raises the deficit by $6.9 billion over five and ten years.
IRS Data Match: Includes provisions allowing the IRS and CMS to co-ordinate data matching efforts with regard to delinquent tax debts owed by Medicare providers, and to take such information into account when releasing reimbursement payments and accepting new providers. These provisions were originally included in Section 1303 of the substitute amendment for the reconciliation bill (H.R. 4872), but were stripped out at the House Rules Committee due to Byrd rule concerns. Saves $175 million over five years and $425 million over ten, according to JCT.
Hospital Payments: Prohibits Medicare from reopening or adjusting claims made by hospitals during the three days preceding a patient’s inpatient admission. Saves $4.2 billion over five and ten years.
340B Program: Adds inpatient drugs to the 340B outpatient discount program, and maintains childrens hospitals’ ability to participate in the 340B discount program with respect to orphan drugs.
Health Law Clarifications: Repeals the health law’s delay of the revised skilled nursing facility prospective payment system, as well as the law’s extension of reasonable cost payments for certain laboratory services. Repeals section 6502 of the law, which requires states to exclude certain providers from Medicaid and SCHIP. Includes other clarifying amendments with respect to drafting errors in the health care law.
Other Provisions: Extends for an additional year (through September 30, 2011) the Section 508 hospital reclassification program, at a cost of $300 million over five and ten years. Provides $175 million in mandatory appropriations to CMS to implement the act’s provisions. Includes clarifying provisions regarding eligibility for Medicaid health IT funding provided in the “stimulus.” Provides $400 million to California to adjust Medicare fee schedule localities, and includes clarifying language preventing Medicare providers from un-bundling reimbursement requests.
UPDATE: New CBO tables are available. The health subtitle adds a total of $44 billion to the deficit over five and ten years. That includes the deficit impact of the Medicare physician payment ($22.9 billion) and Medicaid FMAP extension ($24.1 billion), offset only partially by the IRS data match ($25 million savings) and 3-day payment rule for hospitals ($4.2 billion savings).
CBO scores the entire package as raising the deficit by $103 billion over five years, and nearly $82 billion over ten.