POLICY BRIEFINGS


Hart Health Strategies provides a comprehensive policy briefing on a weekly basis. This in-depth health policy briefing is sent out at the beginning of each week. The health policy briefing recaps the previous week and previews the week ahead. It alerts clients to upcoming congressional hearings, newly introduced bills, regulatory announcements, and implementation activity related to the Patient Protection and Affordable Care Act (PPACA) and other health laws.


THIS WEEK'S BRIEFING - DECEMBER 31, 2012


Congress Leaves Deal-Making to Final Hours in Effort to Avoid the Fiscal Cliff


After much political wrangling and finger-pointing last week over the lack of any resolution to avoid the expiration of the Bush-era tax cuts and triggering of the discretionary spending cuts mandated under the Budget Control Act, Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell and other congressional leaders convened on Saturday and Sunday in an effort to forge a consensus to ameliorate, if not avoid, the full consequences of the fiscal cliff.

After a meeting on Friday with House and Senate leaders, President Obama expressed “modest optimism” that a mini-agreement could be reached and voted on Monday before the midnight expiration of the current federal income tax rate structure for individuals. The President continued to express his desire that tax rates increase for those having incomes over $250,000, a position that House Republicans have continually rejected, although Speaker Boehner has modified his position allowing for rate increases for those with incomes over $1 million. Several House Republicans have publicly indicated their willingness to raise the President’s demand to $400,000.

House Republican leaders have placed the burden on the Senate to pass a temporary fix which Speaker Boehner said he would take up in the House when passed. Whether a temporary fix will lead to a more permanent budget deal addressing taxes and entitlements, as President Obama wishes, remains to be seen.

In the new Congress, it can be expected that Republicans will use the upcoming need to raise the $16.394 trillion federal debt limit as a means to extract spending and entitlement concessions from the President and congressional Democrats.

Treasury Secretary Timothy Geithner said that his agency will use extraordinary measures to avoid a federal default on Monday, but that the lack of a deal on the fiscal cliff makes it uncertain that such measures will be successful in pushing back by much more than two months the drop-dead date for lifting the debt limit.

Senators Lamar Alexander and Bob Corker have already unveiled a budget proposal designed as a trade-off for a debt limit increase. The proposal would increase competition between fee-for-service Medicare and Medicare Advantage; slowly raise the Medicare eligibility age; change Medicaid by giving states additional flexibility; and slowly raise the retirement age for Social Security.


Fix for Medicare Physician Payment Cut Uncertain


Pending a last-minute deal on taxes and spending, the 26.5% cut in Medicare physician payments will, by law, be implemented January 1st. However, in a Centers for Medicare and Medicaid Services (CMS) notice to doctors, it was stated that "the Administration is disappointed that Congress has failed to pass a solution to eliminate the sustainable growth rate (SGR) formula-driven cuts, and has put payments for health care for Medicare beneficiaries at risk...We continue to urge Congress to take action to ensure these cuts do not take effect. Given the current progress with the legislation, CMS must take steps to implement the negative update." The notice also said that "clean electronic claims are not paid sooner than 14 calendar days (29 days for paper claims) after the date of receipt" which would result in the first cuts being made in mid-January lacking further congressional action which could rescind the cuts prospectively and retroactively. It is anticipated, if a deal does clear Congress on Monday or Tuesday, that it will include a doc fix, an alternative minimum tax (AMT) fix, tax extenders and a tax rate increase for high-income individuals. A reprieve on sequestration cuts for at least a few months may make it into the mini-fix, but if not, this issue will hold over and become a major bargaining item in the next set of negotiations over entitlements and other federal spending.


Congressional Schedule


After concluding any congressional action on fiscal cliff matters on December 31st, the new Congress is scheduled to convene on January 3 and the House is scheduled to recess January 7-11 (the Senate schedule is uncertain at this time).



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