Omnibus bill halts PAYGO cuts to providers

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The $1.7 trillion omnibus spending package expected to pass Congress this week prevents some Medicare cuts and the statutory Pay-As-You-Go sequester, to the relief of the American Hospital Association. 

Hospitals were facing cuts of more than 10% to Medicare payments starting on January 1, 2023, including from the sequestration policy known as PAYGO. 

It also rolls back some of the Medicare payment cuts to physicians. Physicians faced a 4.5% reduction in their Medicare payment rates beginning on January 1, 2023.

However, Dr. Jack Resneck Jr., president of the American Medical Association, said the physician organization is "extremely disappointed and dismayed" that Congress failed to prevent Medicare cuts next year.

"This 2% cut following two decades of flat payment rates will have consequences on healthcare access for older Americans," Resneck said. "High inflation compounds the threat to practice viability because physicians are the only Medicare providers without annual inflation-based updates. We are deeply worried that many practices will be forced to stop taking new Medicare patients – at a time when access to care is already inadequate. Congress must immediately begin the work of long-overdue Medicare physician payment reform that will lead to the program stability that beneficiaries and physicians need."

The Surgical Care Coalition said, "Despite overwhelming bipartisan, bicameral support to stop the full Medicare physician payment cut, Congress failed once again to end the cycle of harmful Medicare cuts, showing a disregard for vulnerable seniors. To make matters worse, Congress is also affirming substantial payment cuts in 2024. The draft omnibus legislation demonstrates a lack of commitment to our nation's seniors and continues to put off a long-term solution. We urge Congress to change course, reflect the will of the nearly 270 Senators and Representatives who have urged leadership to take action to protect patient care and change the legislation before voting on it this week."

MGMA (Medical Group Management Association) Senior Vice President of Government Affairs Anders Gilberg said, "On behalf of our nation's medical groups -- ranging from small physician practices in rural areas to large regional and national health systems -- MGMA is deeply dismayed by the failure of Congress to adequately address the full 4.5% cut to the Medicare conversion factor set to take effect on January 1. It is unconscionable that while every other provider category in the Medicare program is receiving a positive 2023 inflation update, physician rates will be cut."

Medical practices are in no way immune to the impact of the broader economy, Gilberg said.

The bill extends for two years telehealth and hospital-at-home waivers put in place under the COVID-19 public health emergency.

Additionally, it helps states prepare for changes in Medicaid eligibility at the end of the PHE, when an estimated 18 million people are projected to lose coverage due to the end of the continuous enrollment requirement. States are expected to use the support to help transition those individuals to other forms of health coverage.

"Specifically, we are pleased that this bill prevents significant 4% Medicare PAYGO cuts to providers, extends two key programs for two years that help rural hospitals keep their doors open and extends for two years critical waivers for telehealth and hospital-at-home programs that have led to improvements in care and made medical treatment more convenient and accessible for patients," AHA President and CEO Rick Pollack said by statement. 

Dr. Bruce Siegel, president and CEO of America's Essential Hospitals said while the organization is pleased that the bill would avert the 4% Statutory Pay-As-You-Go (PAYGO) reduction and mitigate looming physician payment cuts, it is disappointed it lacks targeted funding for hospitals that serve a safety net role--essential hospitals. 

"These hospitals continue to face immense financial pressure from high labor costs and workforce shortages and a surge in respiratory illnesses," Siegel said. "We urge lawmakers to swiftly pass the omnibus and advance more support for the health care safety net.
 
WHY THIS MATTERS

Hospitals and physicians have urged Congress to prevent payment cuts as providers face continued financial challenges. 

Patients battling COVID-19, flu and Respiratory Syncytial Virus (RSV) fill beds as inpatients board in hospitals, awaiting transfer to assisted living and other facilities.

Workforce and supply chain expenses and inflation have increased the pressure.

"Due to skyrocketing cost increases for supplies, equipment, drugs and labor, challenging workforce shortages and the 'tripledemic' of COVID-19, flu, and RSV, the hospital field is stretched thin and on the brink," Pollack said.

Mass General Brigham reported this week a loss of $2.3 billion for the year due to challenges faced by all health systems over staffing expenses, inflation, a decline in discharges and other financial pressures.

Healthcare now accounts for approximately 16% of the companies on Moody's B3 Negative and Lower List, compared with less than 4% in December 2015.

THE LARGER TREND

Congress is set to vote on the 4,155-page, $1.7 trillion government funding bill within days of its release this week, according to The Hill. The omnibus funding package is made up of the 12 annual appropriations bills to fund the government through the remainder of fiscal year 2023, which ends in late September.

The bill also improves the nation's preparedness for the next pandemic, trains the next generation of caregivers, bolsters behavioral health providers and expands access to behavioral health services, the AHA said.  

ON THE RECORD

"In the new year, we will continue to advocate for Congress and the Administration to take action to address patient discharge backlogs, support our current workforce and increase the pipeline into the future, hold commercial health insurers accountable for policies that compromise patient safety and add burden to care providers, and strengthen hospitals that care for a disproportionate number of patients covered by government programs or are uninsured, to name a few of our priorities," Pollack said.

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org