As we reported in our newsletter last week, Congress passed legislation addressing the RUG-IV delay and the therapy caps exceptions process.  The Medicare and Medicaid Extenders Act of 2010 (H.R. 4994) was passed by both the House and the Senate, and then was signed into law by the President on December 15.  There are a variety of provisions included in this law, in addition to the RUG-IV implementation and therapy cap exception—below is a summary of provisions of interest in this law, including the estimated costs/savings to the provisions:

I. Extensions
Physician payment update.  Medicare physician payment rates are scheduled to be reduced by 25 percent on January 1, 2011.  This provision reverses that reduction and extends current Medicare payment rates through December 31, 2011.  The estimated cost of the provision is $14.9 billion over ten years.

Extension of Medicare work geographic adjustment floor.  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.  The provision would extend the existing 1.0 floor on the “physician work” index through December 31, 2011.  The estimated cost of the provision is $500 million over ten years.

Extension of exceptions process for Medicare therapy caps.  Current law places annual per-beneficiary payment limits on all outpatient therapy services provided by non-hospital providers.  The Secretary was required to implement an exceptions process for cases in which the provision of additional therapy services was determined to be medically necessary.  The provision extends the therapy caps exception process through December 31, 2011.  The estimated cost of the provision is $900 million over ten years.

Extension of ambulance add-ons.  The provision extends the increased Medicare rates for ambulance services, including in super rural areas, through December 31, 2011.  The estimated cost of the provision is $100 million over ten years.

Extension of physician fee schedule mental health add-on payment.  The provision extends the five percent increase in payments for certain Medicare mental health services through December 31, 2011.  The estimated cost of the provision is $100 million over ten years.

Extension of the qualifying individual (QI) program.  This program allows Medicaid to pay the Medicare part B premiums for low-income Medicare beneficiaries with incomes between 120 percent and 135 percent of poverty.  Without this law, QI would have expired on December 31, 2010.  The estimated cost of the provision is $600 million over ten years.

Extension of Transitional Medical Assistance (TMA).  Transitional Medical Assistance (TMA) allows low-income families to maintain their Medicaid coverage as they transition into employment and increase their earnings.  Without this law, TMA would have expired December 31, 2010.  The estimated cost of the provision is $1 billion over ten years.

II. Other Provisions
Repeal of delay of RUG–IV.  Before this law was signed, implementation of Version four of the Resource Utilization Groups (“RUG IV”) for purposes of reimbursing skilled nursing facilities under Medicare was delayed until October 1, 2011.  The provision repeals the delay and allows RUG IV to go into effect on October 1, 2010, consistent with the final SNF payment regulation for FY2011.  This provision does not score.

Funding for claims reprocessing.  Extensions of Medicare payment policies for calendar year 2010 were enacted into law on March 23, 2010, requiring the Centers for Medicare & Medicaid Services (CMS) to reprocess Medicare claims back to January 1, 2010.  The provision allocates funding for CMS to reprocess these claims.  The estimated cost of the provision is $200 million over ten years.

Revision to the Medicare Improvement Fund.  The Medicare Improvement Fund makes a limited amount of money available to make improvements to the Medicare program.  The estimated savings of the provision are $275 million over ten years.

Limitations on aggregate amount recovered on reconciliation of the health insurance tax credit and the advance of that credit.  Under previous law, if an individual’s income turned out to be higher than the amount that was used to calculate the advanced premium tax credit, the individual was required to return part or all of the excess payment to the government.  The amount repaid by the individual was limited to $250 for individuals and $400 for families for those at or below 400 percent of the Federal Poverty Level.  This provision increases the existing limits of $250 and $400, and replaces the across-the-board structure with a scaled structure that starts with lower limits for those with lower incomes.  The estimated savings of the provision are $19 billion over ten years.

Patti Cullen, CAE
952.851.2487
pcullen@careproviders.org

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