The passing of the bill to avert the “fiscal cliff” not only prevented income tax increases and delayed spending cuts; the mandate also affected the future of the Medicare program and other national healthcare programs.

Late in the 11^th hour last Tuesday, the United States Congress passed a bill to avoid the looming “fiscal cliff,” which would have consisted of a series of tax hikes and spending cuts that would affect the entire nation. As a result, on January 2, 2013, President Barak Obama signed the American Taxpayer Relief Act of 2012 (ATRA) into law, which boosted taxes on the wealthy and preserved tax cuts for most Americans. Many of these changes affect Medicare beneficiaries, including the stalling of a significant Medicare physician payment cut as well as extensions and reductions to certain Medicare plans, benefits, and assistance programs.

Here are a few Medicare, Medicaid, and healthcare provisions within the fiscal cliff bill:

• Medicare Physician Payments: Under the Sustainable Growth rate (SGR) formula, a 26.5% cut was required for payments to Medicare physicians; however, the recent bill avoids this cut for another year.
• Continued Medicare Payment Adjustments to Low-Volume Hospitals: For all of 2013, the ATRA will extend hospital payment to qualifying low-volume hospitals that are located less than 15 miles from another acute care hospital and have fewer than 1,600 Medicare discharges.
• Continued Payments by the Medicare Dependent Hospital (MDH) Program: The MDH Program will continue to provide higher Medicare payments to rural hospitals in which Medicare beneficiaries make up a high percentage of inpatient days or discharges. This extension will last till October 1, 2013.
• Continued Funding for Outreach and Assistance Programs: The State Health Insurance Assistance Program (SHIP) is a national program that provides free, unbiased counseling and assistance for Medicare beneficiaries on Medicare and their insurance options.  This is made possible with federal funding, which has been extended for an additional year. Additionally, funding for Area Agencies on Aging (AAAs), Aging and Disability Resources Centers (ADRCs), and the National Centers for Benefit Outreach and Enrollment has also been extended for a year.
• Extension of Medicare Advantage Special Needs Plans: Medicare Advantage Special Needs Plans (SNPs) are offered to beneficiaries with unique needs, illnesses, and disabilities. The ability for Medicare Advantage SNPs to market to and offer enrollment to these special needs individuals has been extended through 2015.
• Extension of Medicare Cost Plans: Medicare Costs Plans are a type of HMO plan that work similar to Medicare Advantage (MA) plans by utilizing network of healthcare providers, which are approved by Medicare. Through 2014, the ATRA will allow Medicare Cost Plans to operate in areas where at least two Medicare Advantage plans are offered.
• Extension of Medicare Outpatient Therapy Services: The current maximum annual payment limit is $1,880 for Medicare outpatient therapy services. However, beneficiaries can request exceptions for additional therapy services that are medically necessary. The ATRA extends this therapy cap and exception process through December 31, 2013.
• Extension of the Qualified Individuals (QI) Program: Depending on their income and resources, Medicare beneficiaries can qualify for a Medicaid program, including the Qualifying Individual (QI) program, which pays for Part B premiums. The QI program had been expected to expire at the end of December 2012; however, the provision has extended the QI program until the end of December 2013.
• Reductions for Beneficiaries with End Stage Renal Disease (ESRD): The ATRA will reduce the payment rate for non-emergency ambulance services by 10% for beneficiaries with ESRD. Additionally, there will be reductions to the ESRD bundled payment system, which will now have to account for changes in behavior and utilization of biologics and drugs by outpatient dialysis centers.
• Reduction in Multiple Procedure Therapy Payment: The Multiple Procedure Payment Reduction (MPPR) is applied to certain Part B outpatient therapy services. Under the ATRA, Medicare payment for second and subsequent therapy services provided on the same day has been reduced to 50%.
• Elimination of Funding for the Medicare Improvement Fund: The Medicare Improvement Fund was created to fund improvements to beneficiaries’ Medicare benefits; however, the Affordable Care Act created a new Innovation Center within the Centers for Medicaid and Medicaid Services, making the Medicare Improvement Fund redundant. Funding for the Medicare Improvement Fund has been eliminated by the new law.

For more in-depth information on the policies and provisions behind the American Tax Relief Act of 2012 and how it affects Medicare beneficiaries, please visit this article from Lexology.

Medicare has neither reviewed nor endorsed this information.

About Angela Chen

Angela Chen is a contributor and editor of the PlanPrescriber Blog.