13 January 2011
Key Impacts of the Medicare and Medicaid Extenders Act
Health care providers were spared numerous pay cuts when the U.S. House of Representatives and Senate passed the Medicare and Medicaid Extenders Act (“MMEA”)(H.R.4994) during the 111th Congress. While the Act, signed into law by President Obama on December 15, 20101, has been generally viewed as favorable to physicians, the MMEA provisions will affect many hospitals and other providers whose payments are based on the physician fee schedule.
Prior to its passage, health care providers faced a 25% reduction in Medicare payments and fees beginning January 1, 20112. This is a short term fix however, as the one-year extension of the prior pay rates is set to expire on December 31, 2011 and must be revisited by 112th Congress3.
A long-term solution may prove difficult, however, given the growing difference between actual health care provider payment rates and the rates that should be in effect under the Sustainable Growth Rate formula. The delays implemented by Congress have created the current 25% difference. In 2011, as a result, the Congressional Budget Office estimates that Medicare will spend approximately $14.9 billion more in 2011 for health care provider payments than it otherwise would have without MMEA.
One item provided for in the MMEA is for an immediate and retroactive updated methodology (Resource Utilization Group – Version Four, RUG-IV) for determining Medicare payment rates to Skilled Nursing Facilities (SNFs)4. The retroactive date goes back to October 1, 2010. Previously, Congress had imposed a moratorium on implementing the updated methodology until October 1, 2011. The MMEA repeals that provision, and ends the delay in implementing RUG-IV, allowing SNF rates determined by RUG-IV to be applied as of October 1, 2010.
The MMEA also extends two programs for low-income beneficiaries of Medicaid. The first, the Qualifying Individual (QI) program, is a program for certain “dual-eligibles” which permits Medicaid to pay the Medicare Part B premiums for low-income Medicare beneficiaries who have incomes ranging from 120-135% of the poverty level. The estimated cost of the provision is $600 million over ten years5.
The second program, the Transitional Medical Assistance (TMA), allows eligible low-income families to continue being covered by Medicaid during a transitional period, while someone employed is transitioning into gainful employment and increased earnings, which might otherwise result in ineligibility for Medicaid. Both programs were extended through December 31, 2011. The estimated cost of the provision is $1 billion over ten years6.
Another key provision of the MMEA is the extension of Medicare payment policies for the calendar year 2010. They were initially enacted into law on March 23, 2010, requiring the Centers for Medicare & Medicaid Services (CMS) to reprocess Medicare claims back to January 1, 2010. The MMEA provision allocates funding for CMS to reprocess these claims. The estimated cost of the provision is $200 million over ten years.
While the MMEA covers several other provisions, these provisions are the most applicable to health care providers in elder and skilled care. The Act addresses a limited number of health care provisions that would have otherwise expired. While narrow in scope, MMEA’s provider provisions generally prevent certain planned payment cuts to affected providers for the next year.
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1The full text of the Bill, as well as a summary is located at www.govtrack.us/congress/bill.xpd?bill=h111-4994.
2“Doctor’s Pulled From the Brink of a 25% Cut in Medicare Payments” Pearl Korn, The Huffington Post, December 27, 2010.
3Id.
4Medicare and Medicaid Extenders Act: Significant Changes for Health Care Providers; McDermott, Will & Emery, December 2010.
5Summary of the Act, as outlined atwww.aapmr.org/zdocs/hpl/medicare_medicaid_extend_act_2010.pdf.
6Id.
Prior to its passage, health care providers faced a 25% reduction in Medicare payments and fees beginning January 1, 20112. This is a short term fix however, as the one-year extension of the prior pay rates is set to expire on December 31, 2011 and must be revisited by 112th Congress3.
A long-term solution may prove difficult, however, given the growing difference between actual health care provider payment rates and the rates that should be in effect under the Sustainable Growth Rate formula. The delays implemented by Congress have created the current 25% difference. In 2011, as a result, the Congressional Budget Office estimates that Medicare will spend approximately $14.9 billion more in 2011 for health care provider payments than it otherwise would have without MMEA.
One item provided for in the MMEA is for an immediate and retroactive updated methodology (Resource Utilization Group – Version Four, RUG-IV) for determining Medicare payment rates to Skilled Nursing Facilities (SNFs)4. The retroactive date goes back to October 1, 2010. Previously, Congress had imposed a moratorium on implementing the updated methodology until October 1, 2011. The MMEA repeals that provision, and ends the delay in implementing RUG-IV, allowing SNF rates determined by RUG-IV to be applied as of October 1, 2010.
The MMEA also extends two programs for low-income beneficiaries of Medicaid. The first, the Qualifying Individual (QI) program, is a program for certain “dual-eligibles” which permits Medicaid to pay the Medicare Part B premiums for low-income Medicare beneficiaries who have incomes ranging from 120-135% of the poverty level. The estimated cost of the provision is $600 million over ten years5.
The second program, the Transitional Medical Assistance (TMA), allows eligible low-income families to continue being covered by Medicaid during a transitional period, while someone employed is transitioning into gainful employment and increased earnings, which might otherwise result in ineligibility for Medicaid. Both programs were extended through December 31, 2011. The estimated cost of the provision is $1 billion over ten years6.
Another key provision of the MMEA is the extension of Medicare payment policies for the calendar year 2010. They were initially enacted into law on March 23, 2010, requiring the Centers for Medicare & Medicaid Services (CMS) to reprocess Medicare claims back to January 1, 2010. The MMEA provision allocates funding for CMS to reprocess these claims. The estimated cost of the provision is $200 million over ten years.
While the MMEA covers several other provisions, these provisions are the most applicable to health care providers in elder and skilled care. The Act addresses a limited number of health care provisions that would have otherwise expired. While narrow in scope, MMEA’s provider provisions generally prevent certain planned payment cuts to affected providers for the next year.
-
1The full text of the Bill, as well as a summary is located at www.govtrack.us/congress/bill.xpd?bill=h111-4994.
2“Doctor’s Pulled From the Brink of a 25% Cut in Medicare Payments” Pearl Korn, The Huffington Post, December 27, 2010.
3Id.
4Medicare and Medicaid Extenders Act: Significant Changes for Health Care Providers; McDermott, Will & Emery, December 2010.
5Summary of the Act, as outlined atwww.aapmr.org/zdocs/hpl/medicare_medicaid_extend_act_2010.pdf.
6Id.