House passes legislation to reduce 2022 Medicare Cuts

Dec. 10, 2021

As urged by the American Hospital Association (AHA) and many other healthcare organizations, the Senate in a 59-35 bipartisan vote passed legislation that would stop Medicare cuts to hospitals, physicians and other providers from going into effect early next year. According to a press release from the AHA.

Specifically, the bill would extend the moratorium on the 2% Medicare sequester cuts until April 1, 2022 and reduce the cuts from 2% to 1% from April 1 through June 30, 2022. The package also would stop the 4% statutory Pay-As-You-Go sequester from taking effect early next year.

Other provisions in the package would mitigate a separate Medicare payment cut to physicians; delay payment cuts and private payer data reporting requirements for certain hospital laboratories; delay the implementation of the radiation oncology model; and set up a fast-track process in the Senate to allow for a vote to increase the debt limit.

Key elements of the bill include:

  • The bill would eliminate for three months the 2% Medicare sequester cuts on hospitals and others providers that are scheduled to resume Jan. 1, 2022. In addition, the legislation would reduce the 2% sequester cut to 1% from April 1, 2022 through June 30, 2022. The package would be paid for by increasing the sequester percentage in 2030.
  • The bill would stop the 4% PAYGO sequester from taking effect early next year. Any cuts mandated by a sequester order for the 2022 “PAYGO scorecard” would be delayed and added to the “2023 scorecard.” This does mean Congress will need to take action in late 2022 to eliminate these cuts. The Congressional Budget Office has estimated that a Statutory PAYGO sequester in fiscal year 2022 resulting from passage of the American Rescue Plan Act of 2021 would cause a 4% reduction in Medicare spending – or cuts of approximately $36 billion. Failure to waive Statutory PAYGO would result in $9.4 billion in cuts to hospital providers.
  • The bill would mitigate the 3.75% payment cut to Medicare Physician Fee Schedule (PFS) payments finalized for calendar year 2022 by implementing a one-year, 3% increase to the PFS conversion factor. Specifically, the Consolidated Appropriations Act of 2021 provided a 3.75% increase to the PFS conversion factor only for CY 2021. With that increase set to expire on Dec. 31, 2021, this bill would provide a 3% bump to the conversion factor for next year, CY 2022.
  • The bill would delay for one year (until Jan. 1, 2023) payment cuts under the Clinical Laboratory Fee Schedule (CLFS). Congress last year delayed the implementation of CLFS cuts as part of the Coronavirus Aid, Relief, and Economic Security Act, but without additional action laboratories are scheduled to see cuts as large as 15% to some of the most common tests on their menus. The bill also would delay by one year (until Jan. 1, 2023) the requirements that certain hospital laboratories report their private payer clinical laboratory test codes, payments and volume data.
  • The package would delay for one year (until Jan. 1, 2023) the implementation of the radiation oncology model. The AHA had urged CMS to delay the model start date to Jan. 1, 2023 to give the model and its participants the best chance to truly improve cancer care and patient outcomes

AHA release