American Taxpayer Relief Act of 2012

The January 1 legislation to fix the fiscal cliff postpones the scheduled 27 percent Medicare physician fee schedule cut under the Sustainable Growth Rate formula for one year. In order to pay for the doc fix, there are a number of payment reductions to Medicare fee for service providers, especially reductions in hospital and ESRD payments, and an extension of the DME competitive bidding program to diabetes test strips purchased at retail pharmacies. The Medicare Advantage (MA) program also takes a hit. The legislation saves $2.5 billion over ten years by adjusting the MA risk adjustment methodology to increase the coding intensity adjustment factor for 2014 from 1.3 percentage points to 1.5 percentage points and to increase the adjustment factor for 2019 and subsequent years from 5.7 percent to 5.9 percent. The coding intensity adjustment is intended to reflect different coding patterns between Medicare Advantage plans and FFS providers.

The legislation postpones the sequester for two months. MA plans are subject to a 2 percent cut beginning in March if the sequester is not repealed or amended.

The legislation extends the special needs program through December 2014 and the Medicare managed care cost program through December 2013.

The legislation extends the authority and funding ($7.5 million in FY 2013) for SHIPs (State Health Insurance Programs) and Area Agencies on Aging to conduct outreach and assistance for low income subsidy programs.

The legislation extends the Qualifying Individual (QI) program and the Transitional Medical Assistance program through December 2013.

The legislation amends two provisions in the ACA. The legislation precludes spending for any new Consumer Operated and Oriented Plans (CO-OPs). The legislation also repeals the CLASS long term care program and establishes a Commission on Long Term Care to make recommendations on long term services and supports.



For more information on how Gorman Healh Group can help with Medicare Advantage Risk Adjustment visit our website.

View a 90-minute recording on “Risk Adjustment in the Exchanges – Lessons Learned from MA and Part D“.

Listen in to what Jean LeMasurier thinks will happen next regarding the outcome of the fiscal cliff.

Jean LeMasurier
Jean LeMasurier

Jean LeMasurier is Senior Vice President of Public Policy at Gorman Health Group (GHG). In this role, her focus includes health policy and health care reform, including changes resulting from the Affordable Care Act (ACA). Jean’s strategic planning and consulting services have been critical inputs to strategy for Medicare Advantage (MA) Health Plans and Prescription Drug Plans (PDPs), Medicaid managed care plans, pharmaceutical companies, and employers on legislation and regulatory impacts of changes in Medicare and Medicaid. Jean brings GHG clients more than 30 years of experience with the Centers for Medicare & Medicaid Services (CMS).

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