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CRS — Medicare, Medicaid, and Other Health Provisions in the American Taxpayer Relief Act of 2012

February 14, 2013

Medicare, Medicaid, and Other Health Provisions in the American Taxpayer Relief Act of 2012 (PDF)

Source: Congressional Research Service (via Federation of American Scientists)

Several policies that would have reduced spending and increased revenues were poised to take effect at the end of 2012; collectively, these were referred to by some as the “fiscal cliff.” Had these policies taken effect, CBO projected that the ensuing fiscal contraction would have resulted in a recession in 2013. On January 2, 2013, the President signed H.R. 8, the American Taxpayer Relief Act of 2012 (ATRA, P.L. 112-240), which prevented most—but not all—of the fiscal cliff policies from going into effect. This Act was passed by the Senate on January 1, 2013 by a vote of 89-8, and by the House later that day, 257-167. Title VI of the Act extends several expiring provisions in the Medicare and Medicaid programs and makes other changes in federally funded health programs.

Provisions in Title VI of ATRA that will result in higher physician fee schedule payments include the override of the sustainable growth rate (SGR) update mechanism of the Medicare physician fee schedule that would have reduced payments had it taken effect, and the extensions of the physician work geographic adjustment. Other provisions preserved some Medicare hospital payments by extending adjustments for low-volume hospitals and the Medicare-dependent hospital program. Sections that addressed Medicare managed care include the extension of the Medicare Advantage special needs plans and reasonable cost contracts. Medicare beneficiaries will continue to have access to the exceptions process for outpatient therapy limits and outreach and assistance programs for low-income beneficiaries. Other health programs extended by the ATRA include the qualifying individual program, the transitional medical assistance program, the Medicaid and the State Children’s Health Insurance Program (CHIP) express lane option, familyto-family health information centers, and special diabetes programs for Type I diabetes and for American Indians and Alaska Natives.

The Congressional Budget Office (CBO) estimates that the health provisions in H.R. 8 will result in a net increase in direct spending of $800 million over the ten-year period from FY2013 through FY2022. The physician payment override (“doc fix”) and the various health-related extensions cumulatively add an estimated $29.3 billion to direct spending. CBO estimates that the other health provisions cumulatively result in offsets of all but $800 million as a result of the direct effects of the provisions and the interactions between provisions. While some sections of ATRA make changes to federal health programs that result in savings to the federal budget, other sections addressing federal health care programs have little or no impact on direct spending in the federal budget.

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