The Congressional Budget Office has come up with a price tag for proposed legislation aimed at reducing the cost of care for certain providers.
H.R. 5273, the Helping Hospitals Improve Patient Care Act, allows outpatient facilities already under construction to be paid at a higher rate; increases the number of allowable beds in long-term care hospitals; pays rural hospitals based on real costs; lessens the burden of meaningful use standards for physicians practicing in ambulatory surgical centers; and delays the termination of under-achieving Medicare Advantage contracts.
In total spending, the Congressional Budget Office said Friday, the bill would increase spending by $50 million over four years beginning in 2017, but spending would end up decreasing by $14 million through 2026, the CBO said.
The House Committee on Ways and Means put forward the bill in May.
For rural hospitals, Medicare would extend a demonstration program for five years that pays hospitals on the basis of reasonable costs rather than payment rates established by the Inpatient Prospective Payment System.
Medicare would eventually recoup the increases from the reduced payment rates for all hospitals paid under IPPS, the budget office said.
The change in payment rates also affects Medicare Advantage plans, but those initial increases in spending would get smaller as more members enroll. From 2017 to 2026, Medicare spending would be reduced by $21 million, the CBO said. This is because Medicare Advantage is a popular alternative to Medicare, and an estimated 10,000 baby boomers a day are turning 65 and signing up for government health insurance.
The bill would increase payments to long-term care hospitals by about $20 million from 2017 to 2026, due to CMS allowing an increase in the number of beds. However, as payment rates for long term care hospitals are being reduced by .08 percent starting in 2017, the additional payment would result in a zero budgetary effect, the CBO said.
Under the bill, off-campus facilities under construction when a 2015 budget bill changed the rules for payment, will be grandfathered at higher rates.
Nearly 100 hospitals have identified themselves as having off-campus facilities under construction as of the cut-off date of Nov. 2, 2015.
This portion of the bill increases CMS payment by $750 million over the 2017 to 2026 period, the budget office said. The bill would provide an additional $10 million in funding.
The bill would also exempt new off-campus facilities in cancer hospitals.
Hospital associations have applauded the Helping Hospitals Improve Patient Care Act for modifying Centers for Medicare and Medicaid policy on reducing payment rates starting in 2017.
It saves most ambulatory surgical centers from paying penalties related to not having electronic health records. Very few of these facilities have EHR technology, the CBO said.
The penalties would have averaged about $3,000 for each professional in 2017 and 2018. In 2019 the Merit-based Incentive Payment System, or MIPS, will replace the EHR directive. CBO estimates foregoing the penalties will increase spending by $17 million from 2017 to 2026.
The bill helps Medicare Advantage Plans that for three consecutive years, have failed to achieve at least three stars under the five-star rating system, by delaying CMS's authority to terminate these contracts.
Permitting these plans to continue operating reduces spending by $20 million from 2017 to 2026, according to CBO estimates. The under three star plans tend to receive slightly lower payments in part because they do not receive bonus payments under the star rating system.