Ending the Year with a Bang! Congress Reaches Consensus on Budget & Short-Term Physician Fee Update

When House Budget Chairman Paul Ryan (R-WI) and Senate Budget Chair Patty Murray (D-WA) announced last week that they had come to an agreement on the federal budget, it was big news in Washington, DC. A move that seemed almost impossible at the beginning of 2013 – heck, even just two months ago –had been accomplished in just a short period of time in confidential meetings between just the two lawmakers themselves.

The House of Representatives has passed and the Senate is soon to consider the bill, which provides budget guidance for two years – a period of stability that no one saw coming. The bill provides $63 billion in sequester relief over two years, split evenly between defense and non-defense programs and would reduce the deficit by between $20 and $23 billion. The agreement includes dozens of specific deficit-reduction provisions, with mandatory savings and non-tax revenue totaling approximately $85 billion. With the passage of these measures the Congressional Appropriations Committees will be able to pass the funding bills prior to the January 15th deadline to keep the government running in 2014.

Also included in the budget agreement is a provision to prevent the SGR (Sustainable Growth Rate formula)-driven reduction in physician fees scheduled for next year that will provide for a 0.5% update from January 1, 2014 – March 31, 2014 and extends the floor for the Geographic Cost-of –Practice (GPCI) until April 1, 2014. This short-term relief will provide needed time for Congress to finalize a more permanent reform to physician payment under Medicare. To pay for these and several other Medicare changes, the bill extended the 2% cut in Medicare payments due to the sequester for an additional year (2023) and made changes to Medicaid Disproportionate Share Hospital (DSH) allotments and Long-Term Care Hospital payments.

In addition, this week the Senate Finance and House Ways and Means committees passed legislation to permanently repeal the SGR formula and replace it with a ten-year period of stable updates. Neither of the Committee’s bills included measures to pay for the more than $100 billion cost of repealing the SGR so these provisions will need to be added to the bills before they are considered by the full House and Senate in 2014. With the short-term physician fee fix that is included in the budget bill, the Congress will have until March 31, 2014 to complete action on the SGR repeal bills or pass another short-term extension of the current payment rate.

While it is clear that there is a lot more work to be done to build on this good will, it seems that the deep freeze is melting a bit and there is room for some important work to be done. Whether this means that we’ll get back to a “normal” appropriations process or we’ll see Democrats and Republicans come together on offsets to pay for an SGR fix remains to be seen. For now, it seems like an opportunity to be optimistic that Congress’ New Year’s Resolution is to play nice.

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