Budget Agreement Put On Hold Until After Recess

Last week, House and Senate leaders announced they would take up a six-month continuing resolution (CR) that would fund federal agencies when Congress returns from recess in September. The deal mirrors the $1.047 trillion FY 2013 spending limit that was adopted last year in the Budget Control Act (BCA).

The deal, brokered by Senate Majority Leader Harry Reid (D-NV), House Speaker John Boehner (R-OH) and the White House, is aimed to give both political parties cover as they seek to avert a major conflict before this November’s elections. The agreement also buys Congress more time to address other looming issues during their “lame-duck” session including the expiring Bush-era tax rates, and dealing with major defense cuts that are set to go into effect on January 2, 2013. House and Senate Appropriators expressed frustration over the deal last week, citing their year-long efforts to pass spending bills are being sidelined due to politics.

Noticeably absent from this deal was any fix for the sustainable growth rate (SGR), which is set to expire by the end of this year. While sources inform NASS that a short term solution for the SGR is imminent, Congress has yet to specify how long an extension would last. As previously reported, Representative Mike Burgess, MD (R-TX) has introduced a stop-gap measure that would freeze Medicare payments at its current rates for a one year.

CBO Analysis Estimates Costs of Delaying Medicare Reimbursement Cuts

A report released last week by the Congressional Budget Office (CBO) estimates that freezing physicians’ Medicare reimbursement rate at 2013 levels would cost $18.5 billion over 10 years.  In its analysis, CBO estimated the cost of various legislative scenarios Congress could pass to stop the Medicare cuts in 2013. For instance, the analysis estimates that a two-year fix would cost $48 billion over 10 years and a three-year fix would cost nearly $76 billion. The report also highlighted that a zero percent update for doctors over 10 years would cost $271 billion, while providing an update tied to the Medicare Economic Index would cost $362 billion over 10 years.

To access this report,  click here.

Doctor Shortages Exacerbated by Health Care Law

In case you missed last week’s New York Times article “Doctor Shortage Likely to Worsen With Health Law,” you can access it by clicking here. In sum, the article discusses the shortfalls of extending insurance coverage to more people at a time where doctor shortages are at a critical rate in this country. One medical group estimated that by 2015, this country will have 62,900 fewer physicians than needed and will exceed 100,000 by 2025.

House Committee Hearing Questions IRS’ Role in Exchange Rule

Last week, the House Oversight and Government Reform Committee held a hearing questioning the legality of the Internal Revenue Service’s (IRS) role in issuing a rule allowing subsidies for people who obtain insurance through federally established exchanges.

In May, the IRS issued a final rule allowing the federal exchanges to issue the premium tax credit subsidies and cost-sharing subsidies to people earning between 100 percent and 400 percent of the poverty level. Chairman of the Committee, Darrell Issa (R-CA), an outspoken critic of the health reform law, argued that the IRS was illegally implementing a provision of the law that was not intended to give federal government authority to issue subsidies to people participating in federally established state exchanges. Rather, he noted that these subsidies were instead provided in the health law to establish an incentive for states to develop their own exchanges. Witnesses included IRS Commissioner Douglas Shulman who testified that his agency believes that this rule “does not rewrite the law,” and argued that the IRS’ legal experts believed that they have interpreted the law in the correct manner.

To view a recording of this hearing, click here.

GAO Report Unveils Tax Abuse among Medicaid Providers

According to a Government Accountability Office (GAO) report, Medicaid providers across three states avoided paying millions of dollars in federal taxes despite receiving billions from the program. The report, released last week, highlighted mounting concerns among lawmakers that the integrity of the Medicaid program is in jeopardy.

The GAO report found that 7,000 Medicaid providers in Florida, New York and Texas had up to $791 million in unpaid taxes, while receiving nearly $6.6 billion in compensation in 2009. It also noted that the amount of unpaid taxes could have been much higher because they don’t reflect providers who didn’t file taxes or underreported income.

Currently the IRS does not levy taxes for the Medicaid program, as the resources for this program are technically not derived from federal funding. However, in its report, the GAO recommended that the IRS should develop a method to improve coordination among states to collect back taxes from Medicaid providers.

For more information on the GAO report, click here.