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Senate Set to Take Up House-Passed Budget Deal

On Thursday the House voted 332-94 to pass H.J.Res. 59, the Bipartisan Budget Act of 2013 and Pathway for Sustainable Growth in Medicare (SGR) Reform Act of 2013, which includes a three-year 0.5% increase in Medicare physician payments and greases the skids for House/Senate appropriators to allocate $1.012 trillion in fiscal year (FY) 2014 federal spending to federal agencies. The Senate is scheduled to begin debate on the budget deal this Tuesday before wrapping up this measure, the National Defense Authorization Act (NDAA) and other matters before the scheduled adjournment at week’s end. Senate Majority Leader Harry Reid (D-NV) is counting on his caucus and a handful of Republicans to pass the bill, given that the Senate Republican leadership objects to the bill’s spending which is above Budget Control Act (BCA)-mandated sequestration levels. House Speaker John Boehner (R-OH) said about the deal “While modest in scale, this agreement represents a positive step forward by replacing one-time spending cuts with permanent reforms to mandatory spending programs that will produce real, lasting savings.” The President also endorsed the bill, saying that it is “a good sign that Democrats and Republicans in Congress were able to come together and break the cycle of shortsighted, crisis-driven decision making to get this done.” The budget deal--worked out mainly by the House and Senate Budget Committee chairs, Rep. Paul Ryan (R-WI) and Sen. Patty Murray (D-WA),-- raises federal discretionary spending above the sequestration levels by $45 billion in FY 2014 (to $1.012 trillion) and by $18 billion in FY 2015 (to $1.014 trillion). The $63 billion in increased spending would be evenly split between domestic and military accounts. The increased spending is offset over ten years, resulting in a net deficit reduction of $23 billion over the period by, among other things-- extending the BCA-mandated cut in Medicare reimbursements for another two years, through 2023; decreasing the cost of living adjustments (COLAs) for military retirees under age 62; increasing by 1.3% new Federal employee retirement contributions, and increasing Pension Benefit Guaranty Corporation (PBGC) premiums, etc. (see a full summary in Appendix I). The SGR reform provisions were added to the bill under a rule adopted by the House Rules Committee on a vote of 9-3. In general, the amendment would delay until April 1, 2014 the Medicare physician payment cuts scheduled for January 1st and also allow for an increase in such payments by 0.5% over three years. The three-month delay of Medicare physician cuts is intended to allow Congress to finish the process of passing long-term SGR reform legislation (see below). The Congressional Budget Office (CBO) estimates the 10-year cost of the temporary payment “fix” to be $8.7 billion, although the offsets included in the measure would actually result in about a $300 million savings over the period. Among the offsets: changing the 2% BCA Medicare payment cut to 2.9% for the first six months and 1.1% for the next six months; delaying Medicaid disproportionate share hospital (DSH) payment cuts to FY 2016 while increasing the amount from $600 million to $1.2 billion and extending them through FY 2023; and lowering long-term care hospitals (LTCHs) payments to inpatient rates for patients who stay only 1-3 days or are not on ventilators (others would receive higher rates). The amendment also includes extensions of the following provisions and programs: therapy cap exceptions process; ambulance add-ons; Medicare inpatient hospital payment adjustment for low-volume hospitals; Medicare-dependent hospital (MDH) program; authorization for special needs plans (SNPs); Medicare reasonable cost contracts; existing funding for contract with consensus-based entity; funding outreach and assistance for low-income programs; and work Geographic Practice Cost Index (GPCI) floor. Although the budget legislation gives House and Senate appropriators the overall FY 2014 spending levels they need to assemble an omnibus appropriations bill for passage before the January 15, 2014 deadline set under current law, if they do not then another short-term continuing resolution (CR) may need to be passed when Congress reconvenes early next year. Congress also faces another key deadline in mid-February when the current extension of the federal debt limit expires.

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