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  • Washington Highlights

    Congress Approves Budget Deal to Raise Spending Caps, Extend Debt Limit


    Len Marquez, Senior Director, Government Relations

    The Senate Oct. 29 approved, 64-35, a two-year budget agreement (H.R. 1314) that would raise the caps on discretionary spending above sequestration levels in fiscal years (FYs) 2016 and 2017 and extend the statutory limit on the federal debt until early 2017.  Earlier, the House passed the measure, 269-167.

    President Obama said he will sign the agreement. In an Oct. 30 statement applauding the passage of the bill, the president said, “Congress should build on this by getting to work on spending bills that invest in America’s priorities without getting sidetracked by ideological provisions that have no place in America’s budget process.”

    The Bipartisan Budget Act of 2015 increases the discretionary spending caps by $50 billion in FY 2016 and $30 billion in FY 2017, with the increases split evenly between defense and non-defense discretionary (NDD) programs.  The agreement increases the FY 2016 NDD spending cap by $25 billion (5.1 percent) to $518.5 billion.

    The budget agreement suspends the statutory limit on public debt until March 15, 2017, at which point the limit will be increased by the amount of debt that has been accumulated.

    The budget deal also includes several Medicare provisions of interest to teaching hospitals. One provision would prevent a 52 percent Medicare Part B premium increase for nearly 30 percent of beneficiaries, which is set to take effect in January 2016. The bill rather sets new 2016 Part B premiums for beneficiaries not “held harmless” under current law at $120 per month, a 14 percent increase, the amount the premium would have otherwise been for all beneficiaries in 2016 had the hold harmless provision in current law not applied.

    Of particular concern to many teaching hospitals is the inclusion of a new “site-neutral” hospital payment policy that equalizes reimbursement rates between services provided at newly established off-campus hospital outpatient departments (HOPDs) and physician offices or ambulatory surgical centers. After the date of the legislation’s enactment, any site that enters into a Medicare provider agreement but is not on the main campus of a hospital and is located more than 250 yards away from the main campus, must seek reimbursement through the Ambulatory Surgical Center (ASC) prospective payment system or the Medicare Physician Fee Schedule (PFS). The provision would save $9.3 billion over 10 years.

    The deal also extends the 2 percent Medicare sequestration cut in provider payments for an additional year, through FY 2025. The ten-year Medicare sequester on provider payments was originally part of the Budget Control Act of 2011 (P.L.112-25). The Medicare sequester has been extended multiple times to offset the cost of various legislative proposals and was most recently used to pay for a one-year sustainable growth rate (SGR) patch in March 2014.

    In an Oct. 30 statement, AAMC President and CEO Darrell Kirch, M.D. commended lawmakers for raising the spending caps, saying it “will help restore order to the federal budget and appropriations process, and allow for some much-needed investment in our nation’s eroding domestic priorities, including medical research and physician workforce training.”

    However, Dr. Kirch expressed concern with several provisions that will negatively impact teaching hospitals and the patients they serve. He noted AAMC is “disappointed that Congress decided to once again extend the 2 percent sequestration of Medicare payments to offset increased spending in other areas.” 

    “Most troubling is a policy that would change reimbursement for hospital outpatient departments,” Dr. Kirch said, adding, “This change could limit the ability of teaching hospitals to provide access to care for all patients in their communities. We are working with lawmakers to address the unintended consequences of this provision.”

    To help offset the cost of the agreement, the bill also authorizes the sale of 58 million barrels of oil over ten years, worth an estimated $5 billion, from the Strategic Petroleum Reserve. This proposal has caused some concern among medical research advocates because the 21st Century Cures Act (H.R. 6) proposed the sale of 80 million barrels of oil to help offset the cost of the National Institutes of Health Innovation Fund created by the legislation.

    House Appropriations Chair Harold Rogers (R-Ky.) said his committee would immediately begin working on an omnibus spending package to complete the FY 2016 appropriations bills. The current continuing resolution expires on Dec. 11.