Congress Passes FY 2016 Spending Bill:  On December 18, the House and Senate overwhelmingly passed, and the President subsequently signed into law, the fiscal year (FY) 2016 omnibus appropriations package.  The spending bill funds federal agencies and programs through September 30, 2016.

The measure includes language appropriating $9,511,000 for State Offices of Rural Health for FY16.  Among other rural health related provisions, the bill would increase rural health outreach grants by $4.5 million; rural telehealth by $2.1 million and the Preventive Health & Health Services Block Grant, which allows each state to address its most critical public needs, by $160 million. The rural health section of the legislation provided that of the funds made available for Medicare rural hospital flexibility grants $14,942,000 must go towards the Small Rural Hospital Improvement Grant Program for quality improvement and adoption of health information technology.

The spending bill did not include a proposal to exempt off-campus outpatient facilities that are under development from the Medicare site-neutral pay cuts.  The two-year budget law that passed in October included a provision to pay physicians rates to physician practices that hospitals purchase and turn into outpatient facilities.  It applies to all off-campus outpatient facilities that were not billing Medicare as of November 2, but the pay cuts don’t take effect until January 1, 2017.

NOSORH Looks Ahead to 2016 Legislative Cycle:  While the legislation funding federal programs through fiscal year 2016 was finalized in December, NOSORH begins work this month on the annual appropriation and reauthorization of the SORH program.  Senate leadership has indicated that the Senate will return to the regular process for spending bills in 2016.  In recent years, the appropriations process has been packaged together as an “omnibus” spending bill, rather than addressing each agency bill individually.  Lawmakers will return to take on these issues starting January 5 for the House and January 11 for the Senate.  The President will give his annual State of the Union address to Congress on January 12.


Rural Hospital Bill Introduced in the House and Senate:  Prior to Congress adjourning for 2015, Sens. Cory Gardner (R-CO) and Gary Peters (D-MI) introduced legislation (S. 2343) that would require HHS to allow eligible hospitals to test telehealth models through the Center for Medicare and Medicaid Innovation (CMMI).  The Telehealth Innovation and Improvement Act directs CMMI to evaluate telehealth services for effectiveness, cost, and improvement in care quality without increasing delivery costs.  If passed, telehealth models meeting the CMMI criteria would be covered under the greater Medicare program.

A companion bill (H.R. 4155), was introduced in the House by Rep Diane Black (R-TN).  Rep. Black is a member of the House Ways and Means Committee, which has indicated it will resume work on hospital payment reform legislation as early as this month.

MedPAC Makes Recommendations for 2017 Reimbursement Rates:  On December 11, the Medicare Payment Advisory Commission (MedPAC) hosted a meeting  to discuss the panel’s recommendations for updating Medicare reimbursements for a number of medical facilities in 2017. MedPAC is a nonpartisan committee established by Congress to issue nonbinding recommendations on Medicare payment policy.

At the meeting, the commission announced that it does not support increasing payments for inpatient rehabilitation facilities (IRF), long-term care hospitals (LTCH) and home health agencies (HHA), which commissioners determined are profitable, have sufficient access to capital, and are in adequate supply to care for Medicare beneficiaries.

MedPAC staff indicated that the number of inpatient rehabilitation facilities (IRFs) remained stable in 2014 and that 79 percent were hospital-based. In March 2015, the commission released a report to Congress that also recommended no update to IRF Medicare payment rates for 2016. However, CMS increased IRF reimbursement by 1.8 percent in its 2016 IRF prospective payment final rule.  In addition to its recommendations for IRFs, LTCHs, and HHAs, MedPAC indicated that it does not support payment rate updates for ambulatory surgical centers (ASCs) and proposed that Congress require ASCs to submit cost data.

The commission also recommended that (LTCHs), which must have average lengths of stay of more than 25 days for Medicare beneficiaries, receive no increase in 2017 Medicare payments. CMS reported in July 2015 that LTCHs will see a 4.6 percent decrease in Medicare payments in 2016.


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