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'Doc Fix' Vote Contains Unwelcome News for Hospitals

Janice Simmons, for HealthLeaders Media, June 21, 2010

After weeks of debate, the Senate finally agreed in a unanimous voice vote Friday to postpone a 21% decrease in Medicare and TRICARE physician reimbursements through a six-month period ending Nov. 30. But the vote comes with an unpleasant tradeoff for hospitals.

The Senate approval to extend a $6.4 billion temporary "doc fix" deadline goes onto the House this week for reconciliation. The House had passed its bill with an amendment calling for a 19-month postponement through 2011 of the sustainable growth rate (SGR) before the Memorial Day recess.

Like the House bill, the Senate measure calls for reducing hospital payments by preventing hospitals from submitting separate claims for inpatient and outpatient therapeutic care provided within 72 hours of an admission.

This means that all outpatient services provided within those three days before an inpatient admission—and related to the inpatient admission—would be included in a bundled payment for that admission. According to the Congressional Budget Office, this provision is expected to save $4.2 billion over 10 years and reduce excess spending.

In its description of the legislation, the Senate Finance Committee said the provision closes a "loophole." However, the hospitals are disagreeing—saying these provisions "would take away the option for hospitals to bill retrospectively for these services, unless they had already done so by the date of enactment."

In a letter sent Friday to the Senate, five healthcare groups—the American Hospital Association, the Association of American Medical Colleges, Catholic Health Association of the United States, Federation of American Hospitals, and the National Association of Public Hospitals and Health Systems—said that the Centers for Medicare & Medicaid Service and the Recovery Audit Contractors (RACs) directed hospitals to re file in this manner.

"But now refiling for underpayments would be retrospectively prohibited," the groups said. "This is unfair on its face." While supporting the doc fix provision, the groups called for removal of "the offset to finance the short term physician payment patch partially paid for" by "changing the so called Medicare '72 Hour Rule.'"

When adding $155 billion from the healthcare reform bill—plus an additional reduction of $3.7 billion being proposed by CMS for fiscal 2011, "we believe such additional savings from hospitals are unfair and unwarranted," they said. "We, therefore, ask that you modify this proposal and opt for a more responsible solution" that "fairly addresses the needs of the physicians."

The hospital groups also called for increasing Medicaid funding to the states through June 2011 for Medicaid's Federal Medical Assistance Percentage, as proposed in an earlier version of jobs bill legislation.


Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at jsimmons@healthleadersmedia.com.

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