As news outlets have widely reported, the U.S. Senate has followed the House in passing a measure to repeal Medicare’s payment formula, known as the Sustainable Growth Rate (SGR). The bill would replace the SGR formula with a new model tied to quality and value. This is another significant development in healthcare’s increasingly rapid shift toward alternative payment models.
But the “doc fix” bill, titled the Medicare Access and CHIP Reauthorization Act (MACRA), contains numerous other items impacting health providers. Namely, the legislation offers much-needed (albeit short-term) breaks to hospitals and community health centers. These provisions include:
- Two-Midnight Rule delayed six months: MACRA seeks to stall enforcement of CMS’s “two-midnight” rule until September 30. This rule changes the way Medicare pays hospital by limiting inpatient payments to hospital stays expected to last at least two nights. This extension will allow CMS to “assess provider understanding and compliance with the ‘two-midnight’ rule.”
- Medicaid DSH cuts postponed: The Affordable Care Act’s cuts to Medicaid disproportionate share (DSH) payments would be further delayed under the bill. These cuts were to reduce federal subsidies to certain hospital serving a disproportionate number of uninsured patients. Perhaps due to many states’ declining to expand Medicaid under the ACA, the reductions have been postponed multiple times, and are now scheduled to begin in fiscal year 2018.
- Community Health Centers receive extension: Unlike its cuts to DSH payments, the ACA offered a bonus to designated Community Health Centers. This federal funding was slated to expire this year, but MACRA would extend it through fiscal year 2017. The nation's 1,302 CHCs would share a fund of $3.6 billion annually under the law.
President Obama is expected to pass the bill, which received bipartisan support.