One-Year “Doc Fix” Approved

Congress passed a one-year “doc fix” on New Year’s Day. The President is expected to sign the legislation immediately.

The House of Representatives, by a vote of 257 to 167, approved the Senate’s package to put off a 26.5% Medicare physician pay cut by cutting billions from other Medicare providers, including hospitals, pharmacies and dialysis clinics. Most Republicans in the House voted against the legislation containing the fix. Rates for physicians will extend current Medicare payment rates through December 31, 2013.

The cost for keeping doctors’ reimbursement rates steady for one year is estimated to be about $25 billion.

Hospitals to Pay

The legislation offsets the cost of the one-year patch to the sustainable growth-rate formula through reductions to other Medicare programs, most of which affect hospitals. Over the next decade, hospitals will pick up nearly half of the cost of the fix.

For instance, a documentation-and-coding adjustment that seeks to recoup past overpayments to hospitals because of the shift to Medicare Severity Diagnosis Related Groups, or MS-DRGs, would save about $10.5 billion. A measure to re-price end-stage renal disease payments would save about $4.9 billion. Modern Healthcare reports that provision comes a few weeks after the Government Accountability Office released a report suggesting the federal government is over-paying for end-stage renal disease treatment. The legislation also calls for re-basing Medicaid Disproportionate Share Hospital (DSH) payments, which is estimated to save about $4.2 billion.

The Centers for Medicare and Medicaid Services (CMS) had previously informed providers that in the absence of a Congressional fix, the agency would begin implementing the cuts and provide details on January 11. With this legislation, Medicare claims should not be impacted as clean electronic claims are not paid sooner than 14 calendar days (29 days for paper claims) after the date of receipt.

Sequestration Postponed

In addition to the physician payment fix, the bill alters tax rates and delays for two months a series of automatic cuts in federal spending, called “sequestration, ” scheduled to go into effect on January 2. That includes a 2% reduction to physicians and other Medicare providers—including hospitals.