Bargain Over Fiscal Cliff Brings Changes To Health Care

By Julie Rovner

Published January 4, 2013 at 3:30 AM EST

A compromise bill that passed the Congress at the last minute included provisions that will reverberate through the nation's health care system.

The bill that prevented the nation from plunging over the fiscal cliff did more than just stop income tax increases and delay across-the-board spending cuts. It also included several provisions that tweaked Medicare and brought bigger changes to other health care programs.

The health care change that got the most attention saved doctors who treat Medicare patients from a cut in their pay. A really, really big cut, says David Bronson, president of the American College of Physicians and an internist in Cleveland.

"We know that this would really devastate access to seniors, to just cut payment rates by almost 27 percent," says Bronson.

A pay cut that big would almost certainly drive doctors to stop taking new Medicare patients and perhaps even to drop existing ones. But the language in the bill wasn't exactly what doctors were hoping for. It's just another one-year delay in what's become a familiar series since what just about everyone agrees is a flawed payment formula dating back to 2002.

"We're happy that the cuts aren't going into place, but we're hopeful that somehow this year a longer solution to get a stable payment system for physicians will get done," Bronson says.

Of course that's been the plan every year since 2003, when Congress first started putting off the cuts. It hasn't happened yet.

Hospitals, meanwhile, aren't happy because this so-called doc fix was paid for, in part, by cutting $15 billion in Medicare and Medicaid payments to them over the next 10 years.

In the shorter term, Bronson says doctors are worried about what might happen when the across-the-board cuts known as the sequester are back on the table in just eight more weeks.

"We're particularly concerned about graduate medical education," he says. That's the program in which the federal government helps pay for the training of young doctors, nurses and other medical professionals. "That's listed as a potential place where cuts could be made, and GME is vital to the medical workforce in this country. And we need to be expanding it, not reducing it," Bronson says.

But a health care program almost no one was watching was eliminated as part of the fiscal cliff deal. It was called the CLASS Act, and it was originally part of the 2010 health law. Added to the bill by Democratic Sen. Edward Kennedy of Massachusetts just before his death, the CLASS program was intended to provide publicly administered, long-term-care insurance at a modest cost.

"Long-term care, in the broadest sense of it, is responsible for people, including families, the 355 days [a year] they're not in the hospital and the 22 hours a day they're not in the doctor's office," says Larry Minnix, president of Leading Age, a group of more than 6,000 nonprofit providers of services to seniors and people with disabilities. "There was no product available for those people and we thought it was time that that gap be filled," he says.

Republicans, however, saw the CLASS Act as a new and potentially unlimited government program that couldn't possibly pay for itself.

"We went from something that most every family is going to need but nobody wanted to talk about, into the most controversial part of it," said Minnix.

So in October 2011, with the entire health law under legal attack, Obama officials put the CLASS Act into what Minnix refers to as an "administration-induced coma."

"We understand why they did it. It became too controversial at a controversial time," Minnix says.

But the administration had successfully fended off efforts to repeal the program, until now. At the insistence of Democratic Sen. Jay Rockefeller of West Virginia, CLASS was replaced by a new bipartisan commission charged with coming up with plans to help Americans pay for long-term care. It's still essentially back to square one for the program.

Medicare has been a major sticking point in all the recent budget battles. And it's likely to come up again in upcoming fights over the delayed budget cuts, raising the debt ceiling, and when last year's temporary spending bills expire, all before the end of March.

"We're going to have three more cliff issues over the next three months," says health policy analyst Bob Laszewski. "But we don't even have a Medicare entitlement fix on the table, from either side."

Which means the 113th Congress is almost certain to get off to a rocky start.