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By Bill Finerfrock, Matt Reiter, and Nathan Baugh, Capitol Associates
On December 18, the House and Senate agreed on an Omnibus appropriations bill to fund the government through the end of Fiscal Year 2016 (September 30). The bill will go to the President and he is expected to sign the legislation.
The House and Senate also agreed on a separate bill that will permanently incorporate a number of temporary tax provisions commonly referred to as “tax extenders” which have been renewed annually for a number of years.
The $1.15 trillion omnibus spending package reflects the budgetary spending caps agreed to in October and is split just about evenly between defense and non-defense spending.
Below is a summary of the key funding levels for various health agencies within HHS as well as some of the policy provisions included in the Omnibus bill.
CMS
The Centers for Medicare and Medicaid Services (CMS) was allocated $646.6 billion for operational and program costs. This is a $35.2 billion increase from last year. In addition, there is a general fund payments into the Medicare Trust Funds of more than $283 billion, a $24 billion increase from last year.
The bill directs CMS to continue its efforts to improve Recovery Audit Contractor (RAC) consistency. CMS is also directed to use collections from the RAC recoveries to educate providers on reducing errors and to allocate some of that money towards reducing the backlog of appeals within the Office of Medicare Hearings and Appeals.
The bill does not end the controversial contingency fee structure for RAC payments but it does direct CMS to continue to monitor RAC audit practices. Additionally, CMS will have to provide the House and Senate Appropriations Committees with quarterly reports on its inter-agency working group for addressing various issues related to the RAC process.
The Office of Medicare Hearings and Appeals received an increase of $20 million, bringing funding for this Office up to $107.3 million. However, OMHA is required to submit a spending plan within 45 days on how it will use the additional money to address the appealed claims backlog.
Total Health Care Fraud and Abuse Control funding is $681 million, a $9 million increase from FY 2015 while the HHS Office of Inspector General funding was unchanged at $67.2 million.
Funding for the Office of the National Coordinator for Health Information Technology was unchanged from last year’s funding level of $60.3 million.
In addition to the CMS funding levels outlined above, the bill also makes some policy changes in how or what Medicare pays certain providers.
The Omnibus contains a provision to transition Medicare payments from traditional film x-ray imaging towards digital radiography. Beginning in 2017, Medicare will reduce payments for the technical component of x-rays taken using film by 20 percent. In addition, beginning in 2018 there will be a seven percent reduction in the technical component of x-rays taken using computed radiography technology (CRT). This cut will remain at seven percent until 2023. Beginning in 2023, the CRT reduction will rise to 10 percent.
CMS defines computed radiography technology as “cassette-based imaging which utilizes an imaging plate to create the image involved.” This provision also authorizes CMS to use a modifier to implement this change. This applies to the TC whether payment is based on the physician fee schedule or the hospital outpatient prospective payment system.
Beginning in 2017, the Omnibus rescinds the previously enacted 25 percent payment reduction for the professional component of multiple imaging services (MPPR) and replaces it with a five percent reduction.
The bill also incorporated the language of H.R. 3339, Protecting Access to Lifesaving Screenings Act (PALS Act) which imposes a two-year moratorium on implementing the US Preventive Services Task Force (USPSTF) new draft recommendations on mammogram screenings for breast cancer. The draft recommendations, which would raise the recommended age for mammogram breast cancer screenings to 50, are opposed by many industry groups and Members of Congress.
Finally, the bill directs CMS to continue to study and report within 6 months on the impact of eliminating Critical Access Hospital (CAH) status to CAHs located within 10 miles from other hospitals and reducing their reimbursement rate 101 percent to 100 percent of costs.
NIH
The Omnibus provides an extra $2 billion in funding to the National Institutes of Health for various research initiatives as well as for precision medicine which President Obama emphasized in this year’s State of the Union address. The NIH increase also includes a $271 million increase to the National Institute of Allergy and Infectious Diseases, funding it at a total of $4.6 billion. The Omnibus includes $29 million for asthma within its funding for environmental health research. The National Institute of Biomedical Imaging and Bioengineering received $346.7 million, a $16.6 million increase from FY 2015.
HRSA
The Health Resources and Services Administration (HRSA) received $6.3 billion, a $36.7 million increase from last year. HRSA’s total allocation for Rural Health will rise to $149.5 million, a $2.1 million increase from last year. Within the rural health allocation, $63.5 million will be for the Rural Health Outreach program, a $4.5 million increase. This “new” money for rural outreach is actually a transfer of money previously allocated for the Rural Access to Emergency Devices program which is now being discontinued. Finally, within in the rural health line, $12.5 million will be available for Outreach Service Grants and $19.4 million for Rural Network Development Grants.
FDA
The Food and Drug Administration (FDA) received $4.681 billion, an increase from last year’s FDA appropriation which was $4.505 billion. The package fully funds the President’s budget request for implementation of the Food Safety Modernization Act (FSMA) and provides an increase of $10 million for medical product safety initiatives.
Figures for agencies of interest within the FDA’s purview include $240 million for The Center for Devices and Radiological Health which is in line with the FY 2015 budget authority and $355 million for The Center for Drug Evaluation and Research Organization which is a slight increase from last year’s $346 million budget authority.
Additional Provisions
When the ACA was enacted, a new “risk corridor” program was initiated to create a “stop-loss” mechanism to prevent steep financial losses by Qualified Health Plans. As designed, the program was intended to be “budget neutral” meaning that funds to cover the losses could not come from general revenues from the U.S. Treasury. 2015 was the first year Health Plans losing money in 2014 could seek reimbursement from the Risk Corridor pool for those losses.
In order to adhere to the “budget neutral” requirement, funds in the Risk Corridor pool are to come from profitable Health Plans who achieved what CMS would consider to be “excess” profits. While the budget neutrality provision prevents the program from becoming a tax payer bailout of insurance companies, it also creates a challenge in that there is not enough money in the risk corridor program to cover the amount that is owed to insurance companies. The risk corridor pool is funded by insurer profits above a certain threshold. The insurers simply aren’t generating enough profits to fill the pool with enough money to cover the losses others have incurred. The omnibus also includes a two year delay of both the ACA’s “Cadillac Tax” on expensive employer-sponsored health plans and the medical device tax.
The Omnibus as well as the explanatory statements for each of the 12 bills are available online via: https://rules.house.gov/bill/114/hr-2029-sa
Bill Finerfrock is the president and owner of Capitol Associates, a government relations/consulting firm. Prior to assuming ownership of Capitol Associates, Bill was a senior vice president in the company for more than 20 years. Capitol Associates was recently selected to work with AHRA on their regulatory affairs issues. Bill specializes in health care financing, health systems reform, health workforce and rural health. He can be reached at bf@capitolassociates.com.
Matt Reiter has been an associate with Capitol Associates since 2014. Matt focuses on Federal issues relating to the health care revenue cycle, medical specialties as well as the Affordable Care Act. He provides analysis of legislation and regulatory policies for the firm’s clients and represents clients before Congress, Federal Agencies and at industry functions.
Nathan Baugh was hired in April of 2015 as an associate at Capitol Associates. Nathan focuses on rural health care issues and healthcare reform implementation. He also assists in maintaining the firm’s online presence, and policy research as necessary.
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