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.


Congress Passes Doc Fix/Payroll Tax Cut Extender Legislation

In a rush of self congratulation, the conferees on H.R. 3630, the Middle Class Tax Relief and Job Creation Act of 2012, finally reached agreement late last week on the provisions extending the payroll tax cut, unemployment benefits and so-called Doc-Fix.  The House first cleared the bill on a vote of 293-132 and the Senate followed suit on a vote of 60-36, despite 30 Republican “no” votes.  The President said he would promptly sign the bill into law. 

While the payroll tax extension was not paid for, the extension to 12/31/2012 of the current rate of payment under the Medicare physician payment system was paid for with several health related ten-year offsets of about $18 billion.  The extension avoids the 27% cut in MD payment rates scheduled to begin March 1st. 

Several other Medicare/Medicaid provisions would increase costs, including (see Appendix for more details):

  • The extension of the adjustment to the work portion of MD payments in certain geographic areas where such payments would fall below a given floor.
  • The extension through March of Medicare Inpatient Prospective Payment System (IPPS) payments for Section 508 hospitals.
  • The extension through year-end of outpatient hold harmless payments for certain eligible rural hospitals and sole community hospitals (SCHs) with fewer than 100 beds.
  • The extension through year-end of certain therapy cap exceptions.
  • The extension through year-end of a provision allowing certain independent laboratories to bill Medicare directly.
  • The extension through year-end of the Medicare QI program.
  • The extension through year-end of transitional medical assistance for certain low-income families.

The ten year offsets for the $21.2 billion cost of these health related extensions include: 

  • A phase-down of bad debt payments to hospitals, SNFs, FQHCs and dialysis centers ($6.9 billion).
  • A 2% reduction in clinical laboratory payment rates ($2.7 billion); a rebasing of DSH allotments ($4.1 billion).
  • The elimination of the PPACA Louisiana hurricane related health subsidy ($2.5 billion).
  • a reduction in the funding of the PPACA Prevention and Public Health Fund ($5 billion).


The extension of the Doc-Fix limited to the end of this year almost guarantees that a lame-duck session of Congress will again have to hash out another fix shortly after the November elections.  Some members decried the lost opportunity to use so-called “war savings” to provide the estimated ten-year $300 billion funding needed to permanently fix the SGR problem under the Medicare physician payment system.  Another potential lame-duck fight could arise over the need to increase the federal debt limit.  Treasury Secretary Timothy Geithner told the Senate Budget Committee that the $16.4 trillion limit could be breached before year end or extended, possibly, into early next year if the economy continues to generate higher tax receipts.

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