Medicare: Still Up in the Air Last-minute action by Congress extends 2011 reimbursement rates and therapy cap exceptions process for two months. Policy Analysis
Policy Analysis  |   January 01, 2012
Medicare: Still Up in the Air
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  • Ingrida Lusis, director of federal and political advocacy, can be reached at
    Ingrida Lusis, director of federal and political advocacy, can be reached at×
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Regulatory, Legislative & Advocacy / Policy Analysis
Policy Analysis   |   January 01, 2012
Medicare: Still Up in the Air
The ASHA Leader, January 2012, Vol. 17, 1-37. doi:10.1044/leader.PA.17012012.1
The ASHA Leader, January 2012, Vol. 17, 1-37. doi:10.1044/leader.PA.17012012.1
After a year of partisan politics and political stalemates, Congress passed a two-month patch—the Temporary Payroll Tax Cut Continuation Act of 2011—that averts a 24.7% decrease in Medicare Part B payments scheduled to take effect Jan. 1 and extends the therapy cap exception process for the same length of time, thereby allowing Medicare beneficiaries to receive outpatient rehabilitation services beyond the prescribed therapy cap amount.
The moratorium gives Congress until Feb. 29 to develop a longer-term strategy to deal with the two issues.
House members accepted the two-month extension approved by the Senate earlier this month; in exchange, the Senate will appoint members of a House-Senate conference committee to negotiate the longer-term legislation. The House did not approve of the Senate’s proposal, but agreed to the legislation because inaction would have had devastating effects on the ability of Medicare beneficiaries to access Part B services. The agreement ended a stalemate that had threatened to keep both congressional chambers and the president in Washington, D.C., over the holidays.
The final rule for the 2012 Medicare Physician Fee Schedule, issued Nov. 1,included a conversion factor—used to compute reimbursement rates—of $24.6712, a value almost 30% less than the current $33.9764 (see The ASHA Leader, Dec. 20, 2011). This reduction is mandatory because of a statutory formula known as the Sustainable Growth Rate, but Congress was expected to enact legislation to prevent this reduction, as it has almost every year since the Sustainable Growth Rate was implemented.
In addition, the exceptions process for the annual Medicare therapy cap ($1,880 in 2012 per beneficiary in each of two categories, occupational therapy and combined speech-language and physical therapy) expired Dec. 31, and Congress was expected to reinstate the process or make broader changes.
Although the fee schedule conversion factor ($33.9764) remains unchanged, reimbursement for many speech-language pathology and audiology procedures is affected by 2012 changes in their relative value units (RVUs), another factor in the reimbursement formula. The 2012 RVUs are available at ASHA’s reimbursement webpage.
House Legislation
The House had passed its legislation, the Middle Class Tax Relief and Job Creation Act of 2011 (H.R. 3690) in early December, with several Democrats joining Republicans to pass the bill. The legislation would extend the payroll tax cut and would also reform and extend unemployment insurance. The bill also contains language that would provide for a two-year extension of the therapy cap exceptions process and avert the dramatic cuts to the Medicare physician fee schedule, providing a 1% increase in payments for both 2012 and 2013.
Extension of the therapy cap exceptions process has traditionally been part of a group of 15 Medicare extender provisions considered as part of the yearly fee schedule “fix.” This year, only three extenders were included in the House legislation; of those, only the therapy caps received a two-year extension.
In extending the exceptions process, the House legislation would require additional medical review of outpatient therapy services that go beyond the cap and would place hospital outpatient rehabilitation services under the therapy caps and exceptions process. The legislation also would require MedPAC, an advisory committee to Congress on Medicare payment issues, to develop recommendations for a new payment system to replace the therapy caps and would require the General Accounting Office to develop reports related to the effectiveness of the medical review process.
Senate Bill
In an effort to gain enough Republican support to avert a filibuster, the Senate passed the Temporary Payroll Tax Cut Continuation Act of 2011, its version of the House bill. Although all members of Congress understand the urgency in addressing the Medicare fee cuts and the therapy caps exceptions progress, other parts of the House legislation that pertained to payroll tax reductions were controversial. The Senate legislation would extend the 2011 Medicare payment conversion factor and extend the therapy cap exceptions process through the end of February 2012, and a longer-term fix would be enacted after the winter recess.
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January 2012
Volume 17, Issue 1