CHA News Article

Hospital Payment Cuts to Help Finance Federal Budget Deal

The White House and congressional leadership have agreed to a two-year budget deal – raising the federal  fiscal year (FFY) 2016 defense cap to $548.1 billion and the nondefense cap to $518.5 billion – that also includes suspending the debt limit until March 15, 2017. The bill would raise the discretionary spending caps by $50 billion in FFY 2016 and $30 billion in FFY 2017, to be evenly split between defense and nondefense programs. Another provision would repeal an Affordable Care Act requirement that large employers automatically enroll their employees in health care plans.

Of significance to hospitals, the measure extends the sequester on Medicare by one additional year, through FFY 2025. Additionally, beginning Jan. 1, 2017, payment for most hospital outpatient services furnished by new provider-based, off-campus outpatient departments (i.e., those that are not on the main campus of a hospital and that are located more than 250 yards from the main campus) would no longer be paid under the Centers for Medicare & Medicaid Services (CMS) outpatient prospective payment system (OPPS); rather, payment would be made under other Medicare Part B payment systems, such as the physician fee schedule or the ambulatory surgical center payment system. However, payment for existing provider-based, off-campus outpatient departments will continue to be made under the OPPS as will payments for emergency department services furnished by all provider-based, off-campus outpatient departments. Implementation will require notice and comment rulemaking by CMS to address issues left unclear by the provision. CHA continues to oppose all cuts to Medicare payments to hospitals.

In addition, the budget deal would avert the drastic Medicare Part B premium increase for beneficiaries set to take effect under current law. Finally, the agreement would require generic drug manufacturers to pay an additional rebate if the price of the drug has increased faster than inflation.  In addition to the Medicare cuts, other offsets include selling crude oil from the Strategic Petroleum Reserve.

At press time, the House is expected to vote on the agreement Wednesday, before it heads to the Senate.