On Monday, November 2, President Obama signed into law the Bipartisan Budget Act of 2015. Among its provisions, the two-year budget deal sets 2016 Medicare Part B premium rates, changes Medicaid rebate policy, repeals the ACA auto-enrollment requirement, and provides for a new Medicare payment policy for new outpatient providers.
Section 601 - Medicare Part B and Deductible Rates
Under current law, about 70 percent of Medicare beneficiaries are sheltered from exorbitant premiums under a “hold harmless” provision in the Social Security Act. Individuals who pay for their premiums through Social Security will see their 2016 monthly rates remaining at $104.90, the same as in 2015. Increases in their Part B premium are limited to the annual dollar increase in their Social Security Cost of Living Adjustment (COLA). In 2016, there is no COLA, and for them no dollar increase in their premiums, leaving about 30 percent of the Medicare population to bear the full brunt of the overall increase in Medicare Part B costs for the year.
The Centers for Medicare and Medicaid Services (CMS) has not yet indicated the new 2016 Medicare Part B premium rates for the approximately 30 percent of participants who do not have their premium payments deducted from their monthly Social Security benefits and for those in higher income brackets. Prior to the law, the standard premium was due to rise by 52 percent in 2016.
To pay for a lowering of this increase, the new law allows the government to issue a loan to Medicare that will be repaid through a surcharge added to the premium rates of those not held harmless under the provisions of the Social Security Act.
Section 602 - Changes Medicaid Rebate Policy
Under current law, the Medicaid drug rebate program requires a drug manufacturer to enter into, and have in effect, a national rebate agreement with the Secretary of the Department of Health and Human Services (HHS) in exchange for state Medicaid coverage of most of the manufacturer’s drugs.
In addition to signing a national rebate agreement, drug manufacturers are required to enter into agreements with two other Federal programs in order to have their drugs covered under Medicaid: a pricing agreement for the Section 340B Drug Pricing Program, administered by the Health Resources and Services Administration, and a master agreement with the Secretary of Veterans Affairs for the Federal Supply Schedule. Section 602 would specify that single-source drugs, where a company has exclusive rights to manufacture the drug, whose prices rise faster than the rate of inflation would pay an additional rebate to the Medicaid program. Section 602 expands this “inflation-based” rebate provision from brand name drugs to generic drugs.
Section 603 - New Medicare Payment Policy for New Outpatient Providers
Starting January 1, 2017, off-campus hospital outpatient departments (HOPDs) established on or after November 2, 2015 will no longer be eligible for payment under the Outpatient Prospective Payment System for non-emergency services. Instead, non-emergency services performed at these facilities will be paid under the Ambulatory Surgical Center Payment System (ASC PPS) or the Medicare Physician Fee Schedule (PFS). These off-campus OPDs won’t be hard to distinguish, because CMS had already required a new place of service code – 19 – for off-campus OPDs as of January 1, 2016.
Medical services delivered by physicians are generally reimbursed at much higher rates in a hospital setting than they are in a non-hospital setting. According to The Heritage Foundation, Medicare reimburses hospital-based services and procedures, including surgeries and colonoscopies, at dramatically higher rates than the same procedures would be reimbursed at ambulatory surgical centers. The table below provides guidance for those affected by this legislation.
Section 611 - Repeals the ACA Auto-Enrollment Requirement
Since the enactment of the Affordable Care Act (ACA), larger employers have wondered about an auto-enrollment provision that the ACA added to the Fair Labor Standards Act (FLSA). Under that provision, employers that are subject to the FLSA and which employed more than 200 full-time employees would have been required to automatically enroll new full-time employees in one of the employer’s health benefits plans (subject to any waiting period authorized by law). Section 611 of the Bipartisan Budget Act of 2015 repeals the auto0enrollment requirement from the FLSA.