Rural Fiscal Cliff Averted

Rural Fiscal Cliff Averted

Hundreds of millions of dollars in rural health cuts were prevented by Congress as part of the last-minute “fiscal cliff” legislation passed late in the night on New Year’s Day.  While many were watching an underwhelming Orange Bowl, the President signed-into law legislation that reinstates critical Medicare reimbursement payments to over 850 rural hospitals, as well as prevented cuts to rural primary care physicians and rural ambulance providers.

The fiscal cliff bill, which included large tax provisions and an extension of unemployment compensation, also reinstated the Medicare Dependent Hospital program and the Low-Volume Hospital adjustment, which both expired October 1.  Had Congress not restored these payments, many rural fiscally fragile facilities likely would be forced to close their doors.

This is a big win for rural providers and NRHA wishes to thank all of grassroots advocates who made their plea to Congress to prevent these harsh cuts. Stay tuned, we aren’t completely out of the woods.  The 2% across-the-board sequestration cuts were delayed for two months, but the battle will begin again soon. Additionally, all rural payments were extended for a temporary  period and additional calls for cuts are surely just around the corner.   This means, this year’s Policy Institute, where rural advocates appeal to their Members of Congress, significant than ever.

Below is a list of the rural Medicare provisions included in the fiscal cliff legislation:

Medicare Physician Payment Update.  This provision guarantees seniors have continued access to their doctors by fixing the Sustainable Growth Rate (SGR) through the end of 2013.  Medicare physician payment rates are scheduled to be reduced by 26.5 percent on December 31, 2012.  This provision would avoid that reduction and extend current Medicare payment rates through December 31, 2013.

Work Geographic Adjustment. Under current law, the Medicare fee schedule is adjusted geographically for three factors to reflect differences in the cost of resources needed to produce physician services: physician work, practice expense, and medical malpractice insurance.  This provision extends the existing 1.0 floor on the “physician work” index through December 31, 2013.

Payment for Outpatient Therapy Services.  Current law places annual per beneficiary payment limits of $1,880 for all outpatient therapy services provided by non-hospital providers, but includes an exceptions process for cases in which the provision of additional therapy services is determined to be medically necessary.  This provision extends the exception process through December 31, 2013.  The provision also extends the cap to services received in hospital outpatient departments only through December 31, 2013.

Ambulance Add-On Payments.  Under current law, ground ambulance transports receive add-on  to their base rate payments of 2% for urban providers, 3% for rural providers, and 22.6% for super-rural providers.  The air ambulance temporary payment policy maintains rural designation for application of rural air ambulance add-on for areas reclassified as urban by OMB in 2006.  This provision extends the add-on payment for ground including in super rural areas, through December 31, 2013, and the air ambulance add-on until June 30, 2013.

Extension of Medicare inpatient hospital payment adjustment for low-volume hospitals. Qualifying low-volume hospitals receive add-on payments based on the number of Medicare discharges.  To qualify, the hospital must have less than 1,600 Medicare discharges and be 15 miles or greater from the nearest like hospital.  This provision extends the payment adjustment until December 31, 2013.

Extension of the Medicare-Dependent hospital (MDH) program.  The Medicare Dependent Hospital (MDH) program provides enhanced reimbursement to support rural health infrastructure and to support small rural hospitals for which Medicare patients make up a significant percentage of inpatient days or discharges. This greater dependence on Medicare may make these hospitals more financially vulnerable to prospective payment, and the MDH designation is designed to reduce this risk. This provision extends the MDH program until October 1, 2013.

For a full copy of the legislation, click here. The bill passed the Senate by a vote of 89-9 and the House 257-167.