Congress Reaches Spending Deal With Doc Pay Bump, Delayed DSH Cuts And More

A bipartisan spending bill unveiled Sunday narrows some of this year’s cuts to physician Medicare pay, pushes back scheduled disproportionate share hospital (DSH) payment cuts and increases annual funding for community health centers, among other provisions that would prevent a partial government shutdown on March 8, if signed.

The 1,050-page deal (PDF) between red and blue lawmakers outlines the funding for several federal agencies, including the Food and Drug Administration and the Department of Veterans Affairs, and is backed by leaders in both chambers. A second set of bills would be needed before a March 22 cutoff to fund other portions of the government, including the Department of Health and Human Services.

For healthcare, the latest agreement blunts the doctor pay decrease enacted in the 2024 Medicare Physician Fee Schedule final rule by providing a 1.68% bump that, alongside an earlier increase from the end of 2023, totals a 2.93% payment increase that will run through the end of the year—still below the 3.37% decrease of the final rule.

An $8 billion-per-year cut to Medicaid DSH program payments that has been repeatedly punted by lawmakers would again be pushed back, this time to Jan. 1, 2025. The hospital sector also stands to gain from extensions of the higher inpatient payment adjustment for low-volume hospitals and the Medicare-dependent Hospital program.

Issues like the cuts to physician pay and DSH program payments have been frequent points of lobbying for provider groups like the American Medical Association and the American Hospital Association, which often contrast the reductions against increases in operating costs.

In a statement, the Federation of American Hospitals applauded Congress “for agreeing on a package of health provisions that will protect patients’ access to care, it is critical that lawmakers act quickly to pass this legislation to avert damaging cuts and provide much-needed stability to hospitals and their patients.”

Also included in the legislation is $270 million in new annual funding for community health centers. That money is backdated to the beginning of the current fiscal year and brings the centers’ total funding to $4.27 billion annually.

In a statement, Sen. Bill Cassidy, M.D., R-Louisiana, the ranking member of the Senate Committee on Health Education, Labor and Pensions, said that the “responsible” $270 million is “fully paid for.” The senator also noted that the Medicare reimbursement increase “was essential to ensure our seniors are able to access the best care and doctors possible.”

Elsewhere in the bill is a one-year extension to incentive payments for participation in certain alternative payment models, though the incentive has been reduced from a 3.5% bonus to a 1.88% bonus. Lawmakers also extended through Dec. 31 funding for the National Health Service Corps with an additional $35 million, the Teaching Health Center Graduate Medical Education program with a $48.5 million increase and funding for the Special Diabetes Programs with a $10 million increase.

While there’s more to be done to avoid the March 22 deadline, the weekend’s compromise suggests that certain hot-button lobbying issues are unlikely to be addressed anytime soon.

In a statement, Senate Finance Committee Chair Ron Wyden. D-Oregon, acknowledged that the funding package “provides essential health programs and providers with certainty for the rest of the year” but said he was “extremely disappointed it leaves behind major reforms” around Medicaid prescription drug costs, mental health care expansions, pharmacy benefit managers’ “shadowy tactics” and Medicare Advantage plans’ inaccurate provider directories (or “ghost networks”).

“It is a real missed opportunity that these critical, bipartisan provisions will be unnecessarily delayed until December or longer,” he said in a statement. “While disappointed, I plan to support the package and will go to the mat to advance these priorities that will lower healthcare costs and improve health outcomes for the American people.”


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