Medicare Legislative History

Issues: Medicare

This section summarizes major Medicare legislation enacted into law during the second session of the 112th Congress through October of the second session of the 113th Congress.  Previous editions of the Green Book review legislation enacted prior to that date.  The summary highlights major provisions; it is not a comprehensive list of all Medicare amendments.  Included are provisions which had a significant budget impact, changed program benefits, modified beneficiary cost sharing, or involved major program reforms.  Provisions involving policy changes are mentioned the first time they are incorporated in legislation, but not necessarily every time a modification is made.  The descriptions include either the initial effective date of the provision or, in the case of budget savings provisions, the fiscal years for which cuts were specified.

American Taxpayer Relief Act (ATRA) of 2012 (P.L. 112-240)

Hospitals

Extended the Medicare Dependent Hospital Program (MDH) through FY2013 to allow qualifying small rural hospitals with a high proportion of Medicare patients to continue receiving Medicare payment adjustments.  Extended the additional Medicare payment for inpatient services for low-volume hospitals through FY2013.  Under the low-volume hospital extension, hospitals with fewer than 1,600 Medicare discharges and that are 15 miles or more from the nearest like hospital receive a graduated payment adjustment of up to 25%.  Upon expiration, the adjustment will revert to original standards of fewer than 200 total discharges and more than 25 road miles.

Authorized the Secretary of HHS to reduce inpatient prospective payment system (IPPS) rates for hospital discharges occurring during FY2014 through FY2017 in order to recoup $11 billion in overpayments related to documentation and coding adjustments for discharges occurring during FY2008 to FY2010 under the Medicare Severity Diagnosis Related Group (MS-DRG) system that did not reflect real changes in patient case-mix.

Hospital Outpatient Departments

Reduced payments for certain stereotactic radiosurgery services furnished under the hospital outpatient department prospective payment system furnished on or after April 1, 2013.

Physicians

Extended Medicare physician payment rates without change through 2013.  Authorized eligible health care professionals who participate in a qualified clinical data registry to receive Medicare incentive payments for reporting on quality measures.  Maintained through 2013 the 1.0 floor for the work geographic practice cost index (GPCI) in determining relative values for physicians' services under the Medicare physician payment system.

Therapy Services

Revised requirements for Medicare payments for outpatient therapy services, including extending through December 31, 2013 the process allowing exceptions to limits (caps) on medically necessary outpatient therapy services.  Made reductions to Medicare payments for multiple therapy services provided to the same patient on the same day for services provided on or after April 1, 2013.

Ambulance Services

Extended the temporary increases in payment for ground ambulance services in urban and rural areas and the increase in the assistance for rural ambulance providers furnishing services in low-population density areas (super rural adjustment) through December 31, 2013.  Extended the increase in payment for certain urban air ambulance services until June 30, 2013.  Reduced Medicare payments by 10% for ambulance services consisting of non-emergency basic life support services involving transport of an individual with end-stage renal disease (ESRD) for renal dialysis services furnished other than on an emergency basis by a provider of services or a renal dialysis facility.  Mandated two studies on the use and feasibility of using cost report data to analyze cost variation by type of ambulance provider and the appropriateness of the ambulance fee schedule add-ons.

Dialysis Services

Required the Secretary to make reductions in Medicare payments for renal dialysis services provided on or after January 1, 2014 to account for changes in the utilization of certain drugs and biologicals.  Delayed the incorporation of oral-only ESRD related drugs into the ESRD bundled payment system to January 1, 2016.  Directed the Government Accountability Office (GAO) to update its prior report to Congress on the impact of including specified oral drugs furnished for the treatment of end-stage renal disease in the ESRD bundled prospective payment system on Medicare beneficiary access to high-quality dialysis services.

Durable Medical Equipment

Made Medicare reimbursement for non-mail-order diabetic supplies equal to the single payment amounts established under the national mail-order competition for diabetic supplies.

Imaging Services

Revised equipment utilization rates for purposes of Medicare payment for advanced diagnostic imaging services for 2014 and subsequent years.

Medicare Advantage

Extended authorization of Medicare Advantage plans that exclusively serve special needs individuals (SNPs) through December 31, 2014.  Extended the authorization for reasonable cost contract plans to serve without restrictions through December 31, 2013.  Revised the health status coding adjustment factor used in determining payments to Medicare Advantage plans.

Program Integrity

Extended from three years to five years the length of time the Secretary has to collect Medicare overpayments.

Medicare Improvement Fund

Eliminated funding for the Medicare Improvement Fund for FY2014 and FY2015.

Continuing Appropriations Resolution, 2014 (P.L. 113-67) [Includes the Bipartisan Budget Act of 2013 and the Pathway for SGR Reform Act of 2013]

Sequestration

Extended sequestration for direct spending, including Medicare, for an additional two years, through FY2023.  The percentage reductions in FY2022 and FY2023 are to be the same percent as the corresponding percentage reductions for such spending in FY2021.  In FY2023, the Medicare payment reductions are to be 2.90% for the first six months in which the sequestration order is effective and, for the second six months, the payment reduction is to be 1.11%.

Hospitals

Extended the Medicare Dependent Hospital Program (MDH) to allow qualifying small rural hospitals with a high proportion of Medicare patients to continue receiving payment adjustments, and extended the Medicare inpatient hospital payment adjustment for low-volume hospitals both through March 31, 2014 and retroactive to October 1, 2013.  Under the low-volume hospital extension, hospitals with fewer than 1,600 Medicare discharges and that are 15 miles or more from the nearest like hospital receive a graduated payment adjustment of up to 25%.  Upon expiration, the adjustment will revert to original standards of fewer than 200 total discharges and more than 25 road miles.

Created criteria for the types of patients for whom care may be paid at the higher Medicare long-term care hospital (LTCH) rate, limiting such payments to patients with stays longer than 3 days in an intensive care unit or who receive significant ventilator services in a LTCH.  Beginning in FY2016, services provided to patients not meeting this criteria or who are primarily rehabilitation or psychiatric patients are to be paid at lower rates that are comparable to the inpatient rate paid at acute care hospitals.  There will be a 2-year transition period in FY2016 and FY2017 when blended payments will apply.  Beginning in FY2020, LTCHs that have over 50% of their discharges paid at the lower rate during a cost reporting period will be paid under the IPPS in the following cost reporting period.  Amended the Medicare, Medicaid, and SCHIP Extension Act of 2007 to extend for an additional 4 years: 1) certain rules for payments to LTCH hospitals-within-hospitals, and 2) the delay in the 25% patient threshold payment adjustment.  Reinstated from January 1, 2015 through September 1, 2017 the moratorium on the expansion or establishment of LTCHs.

Physicians

Provided a 0.5% update to the single conversion factor in the sustainable growth rate (SGR) formula used to determine Medicare physician payments, from January 1, 2014 through March 31, 2014. Extended through March 31, 2014, the 1.0 floor for the work geographic practice cost index (GPCI) in determining relative values for physicians' services under the Medicare physician payment system.

Therapy Services

Extended through March 31, 2014, the process for allowing exceptions to the dollar amount caps on Medicare coverage of medically necessary outpatient therapy services.

Ambulance Services

Extended through March 31, 2014, the increased payments for certain ground ambulance services and for super rural ambulance services in low-population density areas.

Medicare Advantage

Extended the authorization for specialized Medicare Advantage plans for special needs individuals through December 31, 2015. Extended the authorization for reasonable cost contract plans to serve without restrictions through December 31, 2014.

Military Retired Pay Restoration Act (P. L. 113-82)
(Note: Official title of the enrolled version: An act to ensure that the reduced annual cost-of-living adjustment to the retired pay of members and former members of the Armed Forces under the age of 62 required by the Bipartisan Budget Act of 2013 will not apply to members or former members who first became members prior to January 1, 2014, and for other purposes.)

Sequestration

Extended sequestration for direct spending, including Medicare, for an additional year—through FY2024.

Medicare Improvement Fund

Replaced the requirement to establish a Medicare Improvement Fund with one that requires the Secretary of HHS to establish a Transitional Fund for Sustainable Growth Rate (SGR) Reform, available to provide funds to pay for physicians' services under part B to supplement the conversion factor for 2017 if the conversion factor for that year is less than that for 2013.  Made monies available to the Fund from the Federal Supplementary Medical Insurance Trust Fund for expenditures during or after 2017.

Protecting Access to Medicare Act (PAMA) of 2014 (P.L. 113-93)

Sequestration

Adjusted the Medicare sequestration reductions in FY2024 to 4% for the first 6 months following the President’s sequestration order, and 0% for the last 6 months.

Hospitals

Extended the increased Medicare inpatient hospital payment adjustments for low-volume hospitals to April 1, 2015, and extended the Medicare-Dependent Hospital (MDH) program to April 1, 2015 to allow qualifying small rural hospitals with a high proportion of Medicare patients to continue receiving Medicare payment adjustments.  Under the low-volume hospital extension, hospitals with fewer than 1,600 Medicare discharges and that are 15 miles or more from the nearest like hospital receive a graduated payment adjustment of up to 25%.  Upon expiration, the adjustment will revert to original standards of fewer than 200 total discharges and more than 25 road miles.

Provided for technical corrections to the new long-term care hospital (LTCH) criteria enacted in the 2014 Continuing Appropriations Resolution.  Moved up the start date of the moratorium on new LTCHs and LTCH expansions to the date of enactment (April 1, 2014) from January 1, 2015.  Allowed for exceptions to the moratorium on new LTCHs for those LTCHs that, on or before the date of enactment, have already started construction, have begun their qualifying period, or have obtained a certificate of need.

Authorized the Secretary of HHS to continue through June 2015 certain medical review activities related to the Medicare two-midnight rule, but delayed related Recovery Audit Contractor (RAC) post-payment reviews through March 31, 2015 unless there is evidence of systemic gaming, fraud, abuse or delays in the provision of care by a provider of service.  (Under the Medicare two-midnight rule, inpatient admissions are presumed to be medically appropriate if a physician expects a beneficiary’s treatment to require a two-night hospital stay and admits the patient under that assumption.)

Skilled Nursing Facilities

Required the establishment of a new skilled nursing facility value-based purchasing system (SNF VBP), beginning during or after FY2019, under which SNFs are to be evaluated and scored based on performance standards established by the Secretary.  The Secretary is to develop an all-cause, all-condition readmission measure not later than October 1, 2015, which is to be replaced by an all-condition, risk-adjusted, potentially preventable hospital readmission rate for SNFs as soon as practicable.

SNFs are to be ranked from high to low on these performance measures; SNFs determined as high-performing will receive value-based incentive payments in addition to their per diem payments, while SNFs in the lowest 40% of the ranking will receive a reduction in their Medicare payment rates.  Each SNF’s performance score and ranking is to be made publically available on the Nursing Home Compare website no later than October 1, 2017.  The program is to be funded through a portion of a 2% reduction in Medicare SNF per diem payments; and, between 50% and 70% of the 2% reduction applied each year is to be allocated for value-based incentive payments. The remaining portion of the 2% reduction will be retained as savings to the Medicare program.

Physicians

Extended the 0.5% update to the single conversion factor in the sustainable growth rate (SGR) formula scheduled for January through March of 2014 through the rest of CY2014, and provided a 0% update for January 1, 2015 through March 31, 2015. Extended the 1.0 floor for the physician work geographic practice cost index (GPCI) through March 31, 2015.

Authorized the Secretary to collect and use certain information on physicians’ resource use for services paid under the physician fee schedule such as time involved in furnishing services; amounts, types and prices of practice expense inputs; and overhead and accounting information. Authorized the Secretary to use this information in determining the relative values in the formula for setting physician’s fees.

Revised and expanded the criteria for codes to be reviewed when identifying potentially misvalued codes.  Set an annual target rate for relative value adjustments for misvalued services for years 2017-2020.  For codes with relative value unit reductions of 20% or more compared with the previous year, the reductions are to be phased in over a 2 year period.

Therapy Services

Extended the therapy cap exceptions process through March 31, 2015.

Dialysis Services

Amended the American Taxpayer Relief Act of 2012 (ATRA) to delay the inclusion of oral-only end stage renal disease (ESRD) related drugs in the ESRD prospective payment system’s bundled payments until January 1, 2024.  Required the Secretary to establish a process for (1) determining when a product is no longer an “oral only” drug, and (2) including new injectable IV products into the bundled payment Eliminated the remaining reductions required by ATRA; instead, the annual payment increase in 2015 is to be 0%, in 2016 and 2017 payments will be reduced by 1.25%, and in 2018, by 1%.  Beginning in 2016, the ESRD Quality Incentive Program (established by MIPPA) is to include to the extent feasible outcomes-based measures specified by the Secretary that are based on conditions treated with oral-only drugs.

Ambulance Services

Extended the increased payments for ground ambulance and super rural ground ambulance services to April 1, 2015.

Imaging Services

Prescribed a new quality incentive payment policy for certain computed tomography (CT) services.  In 2016, payments are to be reduced by 5%, and in 2017 and thereafter by 15%, for specified CT services furnished using equipment that does not meet certain radiation dose safety standards.

Directed the Secretary through rulemaking to specify appropriate use criteria (AUC) for imaging services.  Beginning in 2017, CMS is to only allow payments to the furnishing professional for an applicable advanced diagnostic imaging service if the service claim includes certain information including information about whether the service adheres to the applicable AUC.  Also beginning in 2017, the Secretary is to identify ordering physicians with low adherence to applicable AUCs, and beginning January 1, 2020, such physicians will be required to obtain prior authorization from CMS for applicable imaging services.

Laboratory Services

Prescribed requirements for the establishment of Medicare payment rates for clinical diagnostic laboratory tests based on private sector payment rates starting in 2017; if the rates determined under the new methodology are significantly lower than existing rates, the reductions will be phased in over a specified time period.

Codified the CMS process for determining payment rates for new or substantially revised clinical diagnostic lab tests that are not advanced tests, and required a public explanation of the payment rates.

Revised the payment methodology for new advanced diagnostic laboratory tests (tests that are furnished by the laboratory that developed them and involve patient specific analysis of multiple biomarkers of DNA, RNA, or unique protein combinations; or that have been cleared or approved by the FDA; or that meet similar criteria established by the Secretary).  New advanced diagnostic lab tests furnished only by the original developing laboratory will be paid the actual list charge (the publically available rate) for the first 9 months, and paid based on the new private sector payment methodology thereafter.  Required that Medicare administrative contractors issue local coverage determinations for clinical diagnostic tests in accordance with certain standards. 

Medicare Advantage

Extended specialized Medicare Advantage plans for special needs individuals through December 31, 2016, and the authority for reasonable cost contract plans to serve without restrictions through December 31, 2015.

Transitional Fund for Sustainable Growth Rate (SGR) Reform

Eliminated funding for the Transitional Fund for Sustainable Growth Rate Reform which was created by P.L. 113-82. 

Improving Medicare Post-Acute Care Transformation (IMPACT) Act of 2014 (P.L. 113-185)

Post-Acute Care Providers

Required that post-acute care (PAC) providers (defined as long-term care hospitals (LTCHs), inpatient rehabilitation facilities (IRFs), skilled nursing facilities (SNFs), and home health agencies (HHAs)) report standardized patient assessment data, data on quality measures, and data on resource use and other measures, all of which meet specified requirements.  Required the data to be standardized and interoperable to allow for exchange of longitudinal information among PAC and other providers to better enable them to coordinate care, improve Medicare beneficiary outcomes, and enhance discharge planning.  Required PAC providers to report the standardized patient assessment data (at minimum for patient admissions and discharges) by October 1, 2018 for LTCHs, IRFs, and SNFs, and by January 1, 2019 for HHAs.  Also required the Secretary by those same dates to ensure a match between the patient assessment data submission and claims data submitted for that patient.

Required specified resource use data to be submitted beginning October 1, 2016 for LTCHs, IRFs, and SNFs, and January 1, 2017 for HHAs.  Required the phase-in of submissions for quality data from October 1, 2016 through October 1, 2018 for LTCHs, IRFs, and SNFs, and January 1, 2017 through January 1, 2019 for HHAs.  Required the Secretary, beginning one year after the specified application date, to provide confidential feedback reports to PAC providers on their performance with respect to the quality and resource measures, and no later than two years after the specified application date for these measures, to publically report PAC provider performance on these measures. 

Established that conditions of participation for PAC providers, acute care hospitals and critical access hospitals be modified by January 1, 2016 to require use of standardized data as well as quality and resource measures in their discharge planning processes.  Directed the Secretary to reduce by 2 percentage points the update to the market basket percentage for SNFs which do not report the required data, and incorporated these data requirements in existing update penalty programs for other PAC providers.  Required the Medicare Payment Advisory Commission (MedPAC) and the Secretary to conduct a series of reports using existing data and the new information collected to evaluate and recommend features of a new PAC payment system.

Hospice

Required that beginning 6 months after the date of enactment and ending September 30, 2025, hospices be surveyed by an appropriate State or local survey agency, or an approved accreditation agency, at least once every 3 years.  Prescribed the annual update to the hospice aggregate payment cap amount for FY2017 through FY2025 as the percentage update to payment rates for hospice care or services furnished during the fiscal year beginning on the October 1 preceding the beginning of the accounting year.

Transitional Fund for Sustainable Growth Rate (SGR) Reform

Replaced the Transitional Fund for SGR Reform with a re-established Medicare Improvement Fund (MIF).  Made funds of $195 million available to the MIF from the Medicare Hospital Insurance and Supplementary Medical Insurance Trust Funds during and after FY2020.  The funds are to be used by the Secretary to make improvements under the original Medicare fee-for-service program for individuals entitled to, or enrolled for, benefits under part A or enrolled under Medicare part B.

This page was prepared on November 21, 2014 for the 2014 version of the House Ways and Means Committee Green Book.