Barclays on Health Care Facilities: Doc Fix Update
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Barclays on Health Care Facilities: Doc Fix Update
Analyst, Adam Feinstein, said, "It is no surprise that there continues to be noise around potential Medicare reimbursement changes that result from the upcoming doc fix. What has been somewhat surprising, in our view, is that House Republicans have included changes to hospital reimbursement, including lower Medicare bad debt subsidies. Keep in mind, however, that the process is far from over and the Senate has yet to put fourth a proposal, so, there will continue to be uncertainty around this topic over the next few weeks, and possibly into January, depending on how quickly Congress is able to reach a deal. As a reminder, the current Continuing Resolution expires on Friday, December 16, and there has been some discussion that Congress might try to get a doc fix done by this time too, although, at this point, we believe the doc fix will likely be pushed into next week."
"The doc fix proposal from House Republicans includes $17.4 billion in Medicare savings from hospitals, which we estimate amounts to a 0.7% reduction in Medicare payments to hospitals over the next decade. In addition, it includes $4.1 billion in savings from lower Medicaid DSH payments, however, the reduction would not begin until 2021 and given that much will change between now and then, this is likely not a key area of focus. The $17.4 billion comes from two sources: $10.6
billion from lower Medicare bad debt subsidies and $6.8 billion from equalizing the facility fee that is paid to hospital outpatient departments for evaluation and management office visits provided by employed physicians."
"The $10.6 billion in savings would come from reducing the federal government's subsidy for hospital bad debt that results from Medicare beneficiaries not paying their copays and deductibles. Currently, hospitals are reimbursed for 70% of unpaid copays and deductibles from Medicare beneficiaries, and the proposal is to lower this amount to 55% over a three year period beginning in 2013. To put this in perspective, all of the other plans that have been discussed over the past year to reduce the deficit included a larger reduction in the Medicare bad debt subsidy, however, these were intended to be in place of the 2% sequestration cut whereas
the House Republicans' proposal of $10.6 billion in savings is in addition to the 2% sequestration cut. As a reminder, President Obama's deficit reduction plan proposed to reduce the Medicare bad debt subsidy to 25%, which would produce $20.2 billion in savings; Simpson-Bowles included $15 billion in bad debt savings, and the Biden Framework discussed $14-$26 billion in Medicare bad debt savings. We provide additional details below on the four key plans deficit reduction plans that were discussed over the past year which will likely be key sources of ideas on how to pay for the doc fix."
Analyst, Adam Feinstein, said, "It is no surprise that there continues to be noise around potential Medicare reimbursement changes that result from the upcoming doc fix. What has been somewhat surprising, in our view, is that House Republicans have included changes to hospital reimbursement, including lower Medicare bad debt subsidies. Keep in mind, however, that the process is far from over and the Senate has yet to put fourth a proposal, so, there will continue to be uncertainty around this topic over the next few weeks, and possibly into January, depending on how quickly Congress is able to reach a deal. As a reminder, the current Continuing Resolution expires on Friday, December 16, and there has been some discussion that Congress might try to get a doc fix done by this time too, although, at this point, we believe the doc fix will likely be pushed into next week."
"The doc fix proposal from House Republicans includes $17.4 billion in Medicare savings from hospitals, which we estimate amounts to a 0.7% reduction in Medicare payments to hospitals over the next decade. In addition, it includes $4.1 billion in savings from lower Medicaid DSH payments, however, the reduction would not begin until 2021 and given that much will change between now and then, this is likely not a key area of focus. The $17.4 billion comes from two sources: $10.6
billion from lower Medicare bad debt subsidies and $6.8 billion from equalizing the facility fee that is paid to hospital outpatient departments for evaluation and management office visits provided by employed physicians."
"The $10.6 billion in savings would come from reducing the federal government's subsidy for hospital bad debt that results from Medicare beneficiaries not paying their copays and deductibles. Currently, hospitals are reimbursed for 70% of unpaid copays and deductibles from Medicare beneficiaries, and the proposal is to lower this amount to 55% over a three year period beginning in 2013. To put this in perspective, all of the other plans that have been discussed over the past year to reduce the deficit included a larger reduction in the Medicare bad debt subsidy, however, these were intended to be in place of the 2% sequestration cut whereas
the House Republicans' proposal of $10.6 billion in savings is in addition to the 2% sequestration cut. As a reminder, President Obama's deficit reduction plan proposed to reduce the Medicare bad debt subsidy to 25%, which would produce $20.2 billion in savings; Simpson-Bowles included $15 billion in bad debt savings, and the Biden Framework discussed $14-$26 billion in Medicare bad debt savings. We provide additional details below on the four key plans deficit reduction plans that were discussed over the past year which will likely be key sources of ideas on how to pay for the doc fix."
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