Medicare Changes Under the New Budget Agreement

In a (very) rare act of bipartisanship, the United States Congress came to an agreement to avoid the risk of a government shutdown.


There are new Medicare changes under the new budget agreement that have a dramatic impact on health care. The Bipartisan Budget Act of 2018 is a continuing resolution (CR) to keep the government open. Among other things, this budget deal raises the debt ceiling through March, 2019, removes budget caps imposed by the Budget Control Act of 2011, and keeps the government funded for another 6 weeks, through March 23. This gives Congress more time to write a larger omnibus bill to address government funding for the rest of the fiscal year. The Bipartisan Budget Act of 2018 contains a “health extenders” package, which includes a number of wide-ranging provisions relating to various health programs.


Repeal of Medicare Outpatient Therapy Caps – Since the Balanced Budget Act of 1997, outpatient therapy under Medicare Part B has been subject to annual dollar limits, or caps. During most of these 20 years, an “exceptions” process has allowed beneficiaries and providers to seek coverage above the caps. The exceptions process expired December 31, 2017. This extenders package permanently repeals the caps. However, it continues to require providers to attach a modifier code to claims above the current cap level to indicate the services are medically necessary, and claims above a higher limit ($3,000) may be subject to a targeted manual medical review.


Steve Gleason Enduring Voices Act – This Act builds upon the successes of the Steve Gleason Act of 2015 by permanently fixing restrictions in the law that limited Medicare coverage and access to Speech Generating Devices (SGDs) – which are a crucial means of communicating for people with ALS and other degenerative diseases. Specifically, the Gleason Act makes changes to the Durable Medical Equipment section of the Social Security Act. It moves coverage of the SGD from the rental payment category to the purchase payment category. When the SGD fell under the rental category, Medicare would not pay for an SGD if the user had to enter a nursing home, hospital, or hospice. By moving the SGD to a purchase payment category, the user can take their SGD anywhere and keep it for as long as necessary.


Funding For Key Programs – Some important programs are funded under the new law, including community health centers (2 years), additional CHIP funding (4 more years for a total of a 10 year extension), funding extension for low-income outreach and enrollment (MIPPA); and much needed disaster relief.


Further Means Testing Medicare Premiums – Medicare beneficiaries with incomes of $85,000 (or $170,000 for a couple) already have to pay higher premiums for both Part B and Part D coverage. The amount of the increased premium depends on how much above this threshold amount they earn. The new law makes people earning $500,000 or more pay an even higher share of their premiums than they pay under current law. Medicare premium increases for higher income people may sound equitable, but they diminish important support for the Medicare program and for maintaining its promise as a universal program for all who qualify.


Home Health Changes – The Budget Act includes a number of provisions relating to the Medicare home health benefit that, among other things, will implement a payment model that may further reduce access to Medicare-covered home care. In addition to reducing a home health episode of payment from 60 days to 30 days, the law eliminates the use of therapy thresholds. This payment model, which would also discourage agencies from caring for people who haven’t had a prior hospitalization and people who need mental health care, was essentially issued as a proposed rule by CMS in 2017, but was rescinded as industry and beneficiary advocates universally raised concerns.


Another home health provision will allow Medicare determinations to be based on the documentation in the home health agency records and in the documentation from the physician who knows the patient and certified the need for care. Nursing home records are utilized if the patient came to the home health care from a SNF.


Provisions Improving/Expanding Services and Coverage in Medicare Advantage Only – Many provisions of the Bipartisan Budget Act provide additional benefits only for people in private Medicare Advantage (MA) plans. On the one hand, these provisions have the potential to improve services and care for people enrolled in MA plans. On the other hand, this approach does not benefit the majority of Medicare beneficiaries, who are in traditional Medicare, and once again favors MA over traditional Medicare.


Repeal of the Independent Payment Advisory Board (IPAB) – IPAB, created by the Affordable Care Act, was intended to be a cost-control board tasked with recommending spending cuts if certain spending levels are triggered. Due in part to historically slow growth in Medicare spending, the requisite spending levels have not been triggered and board members have not been appointed or convened. Many stakeholders have had concerns about IPAB, including the delegation of Congressional authority over Medicare spending decisions, the structure of the board, and lack of judicial review. The authorizing legislation, however, includes some important consumer protections; importantly, the law prohibits the IPAB from changing eligibility or benefits, reducing the Part D low-income subsidy, or rationing care. Such protections are absent from most Medicare “reform” or “restructuring” proposals. Furthermore, repeal of IPAB is projected to cost $17.5 billion, which will be used by some policymakers to justify further spending cuts to Medicare.


Closing of Part D Donut Hole One Year Early – The Budget Act closes the Part D coverage gap, or “Donut Hole,” in 2019 rather than 2020, as mandated by the Affordable Care Act. In 2019, Part D enrollees will be responsible for paying 25% cost-sharing on brand name drugs in the Donut Hole rather than 30%. Beneficiaries will also enter the catastrophic coverage phase earlier in 2019 since more drug costs would count towards meeting the coverage threshold. This provision will provide additional help for beneficiaries one year sooner than under the ACA. Aggressive lobbying by the drug industry reduced the share of costs borne by the industry as proposed in a previous version of the bill.

About The Author

Named One of the Main Line’s Top Elder Law Attorneys
by Main Line Today

Robert M. Slutsky has practiced Elder Law since 1992 and was one of the area’s first elder law attorneys. Rob Slutsky advises clients on Medicaid and Asset Protection Planning, Guardianships, Wills, Trusts, Powers of Attorney, Estate Administration, Special Needs Planning and General Estate Planning. He has represented for profit and non-profit elder care providers and the Pennsylvania Department of Aging. Rob Slutsky has been the solicitor for the Montgomery County Office of Aging and Adult Services, the Area Agency on Aging for Montgomery County, for more than 15 years.