House Passes Contested Doc-Fix Patch with ICD-10

March 27, 2014—Despite opposition from doctors' groups, on a voice vote Thursday, the House of Representatives passed a one-year patch for Medicare's unpopular sustainable growth-rate formula for physician payments and, in the same bill, extended the implementation deadline for ICD-10 diagnostic and procedural codes for at least one year. 

The American Medical Association and its allies had come out strongly against the deal, which was brokered by House Speaker John Boehner (R-Ohio) and Senate Majority Leader Harry Reid (D-Nev.) earlier this week. Attention will now turn to the Senate, where influential Senate Finance Chair Ron Wyden (D-Ore.) also has expressed opposition to the deal. The bill went far beyond a temporary doc fix patch and elicited opposition from a range of healthcare organizations and individuals upset by the temporary patch and by other provisions. 
 Included is an extension of the deadline to implement ICD-10 diagnostic and procedural codes for at last a year past their planned Oct. 1, 2014 target. The bill also calls for a six-month partial enforcement delay for a controversial new inpatient payment rule for hospitals, the so-called two-midnight rule. 

Also included is a one-year delay in cuts to hospitals that serve poor people. The cuts were part of the Patient Protection and Affordable Care Act. The temporary reprieve for Disproportionate Share Hospital payments is particularly welcome news for hospitals in states that have not moved forward with Medicaid expansion. 

The AMA, the largest trade group for physicians, had called for House members to vote against the bill. “By extending the Medicare provider sequester and 'cherry picking' a number of cost-savings provisions included in the bipartisan, bicameral framework, the (bill) actually undermines future passage of the permanent repeal framework,” said AMA president Dr. Ardis Dee Hoven, in a statement. “Further, it would perpetuate the program instability that now impedes the development and adoption of healthcare delivery and payment innovation that can improve healthcare and strengthen the Medicare program.”

The existing “two-midnights” rule requires admitting physicians to have good reason to believe that a patient will need two nights in the hospital before Medicare will pay full inpatient rates under Part A for the stay. Lacking such documentation, Medicare auditors will generally classify the stay as outpatient observation, which pays hospitals much less under Part B and sticks the patient with a 20% copayment. That rule went into effect Oct. 1. But it was modified so that Medicare's aggressive recovery auditing companies could not overturn claims under the new policy until Sept. 30, 2014.

The new bill requires Medicare to extend that recovery-auditing moratorium until March 31, 2015. It also would give Medicare officials the discretion to extend what's known as the “probe and educate” process until the same date next year. Under that process, a different set of companies, known as Medicare administrative contractors, can audit a small number of short-stay inpatient claims and train hospitals on how to submit more accurate bills.

 Postponing ICD-10 implementation, a month after CMS Administrator Marilyn Tavenner had said there would be no extension, angered providers who had invested heavily in meeting the Oct. 1 deadline. At the same time, others concerned about that deadline expressed relief over the extension.

Buzz surfaced early today on Twitter and across media channels that opposition to the measure could derail House passage but such speculation proved to be unfounded. 

In the Senate, Finance Chair Wyden has his own plan to pay for a permanent doc fix and has opposed the temporary approach.

“We have a choice. We can either continue on with the status quo in Medicare by enacting a 17th patch—reinforcing a flawed payment formula that jeopardizes seniors' access to their doctors, pits provider groups against each other, and fails to actually improve the Medicare program,” Wyden said. “Or, we can end the budget fiction that is the SGR, provide certainty to seniors and their doctors, and get the ball moving on bipartisan Medicare reforms—paying for value, managing chronic illness, increasing data transparency, and finally moving away from fee-for-service payment that got us into this mess.” 

Wyden added, “My choice is to end the status quo in Medicare by permanently repealing and replacing the SGR. There is no reason to wait.” While some assume he will go along with the temporary patch, Wyden has yet to publicly stake out a position on the measure.