$460B spending bill averts shutdown, some physician pay cuts

Congress narrowly avoided a partial government shutdown, sending a $460 billion spending bill to the President’s desk over the weekend.

The bipartisan deal, passed by the House 339-85 last Wednesday and by the Senate 75 to 22 on Friday, will fund government agencies through the rest of the 2024 fiscal year (FY), including the Food and Drug Administration and the Department of Veterans Affairs. The bill does not include funding for HHS, which Congress will have to decide on by March 22nd.

As part of this first spending bill, physicians will also see fewer cuts to reimbursements under the Medicare Physician Fee Schedule and the Medicaid Disproportionate Share Hospital (DSH) program.

The bill signed by President Joe Biden on Saturday will narrow the 3.37 percent cut to Physician Fee Schedule reimbursements that started on January 1st. Congress agreed to reverse 1.68 percent of the scheduled cuts.

The American Medical Association (AMA), among many other healthcare industry groups, has lobbied against the cuts, arguing they threaten access to care, especially in rural and underserved areas. AMA said the partial reversal of the required physician payment cuts keeps access in limbo as physicians struggle with the decision to keep Medicare patients.

“This will become noticeable first in rural and underserved areas and with small, independent physician practices,” said AMA President Jesse M. Ehrenfeld, MD, MPH, in a statement last week. “Physicians are the only providers who do not receive automatic inflation updates to their Medicare payments, and they are the only group experiencing a payment cut this year despite high inflation. Adjusted for inflation in practice costs, Medicare physician pay declined 30 percent from 2001.”

Congress did, however, agree to eliminate Medicaid DSH payment cuts for FY 2024 and delay FY 2025 reductions to begin Jan. 1, 2025. The scheduled $8 billion-per-year reduction to Medicaid DSH program payments has been delayed several times by Congress already.

Hospitals can also expect extensions of the higher inpatient payment adjustment for certain low-volume hospitals and Medicare-dependent hospitals through December 2024.

Additionally, the spending package extended the Community Health Centers, National Health Service Corps, and Teaching Health Centers Graduate Medical Education programs through December.

“By eliminating this fiscal year’s $8 billion cut to Medicaid disproportionate share hospital (DSH) funding and delaying the fiscal year 2025 cut, Congress affords policymakers valuable time to find a lasting solution to the decade-long threat to DSH support,” Bruce Siegel, MD, MPH, president and CEO of America’s Essential Hospitals, said in a statement. “This funding is crucial to essential hospitals and the disadvantaged people and communities they serve.”

Siegal also thanked Congress for “protecting other safety net programs and funding important to maintaining access to care, including graduate medical education,” but urged lawmakers to now focus on policies that stabilize and bolster safety-net hospitals.

The American Academy of Family Physicians (AAFP) also called for additional Congressional action, saying the spending package’s healthcare provisions “short-term patches that will limit meaningful investment in the primary care workforce.”

“We’ve repeatedly told Congress that the 3.4 [percent] Medicare payment reduction that went into effect on January 1 is untenable for family physicians and threatens patients’ access to primary care. With the passage of this legislation, Congress has offset 2.93 [percent] of that payment cut. We appreciate this temporary measure but continue to urge Congress to advance comprehensive, long-term Medicare payment reform,” said AAFP President Steven P. Furr, MD, FAAFP.

“Short-term extensions jeopardize access to care for millions of patients,” Furr continued. “Without the stability of a multi-year reauthorization, family medicine residents face significant uncertainty about what their future looks like. This approach to funding discourages residents from choosing to practice in areas where health care access is already at risk.”

Congress now has to avoid the March 22nd deadline.