House passes spending bill with doc pay bump, delayed DSH cuts and community health funding

By Dave Muoio / March 6, 2024

The House on Wednesday passed a $460 billion spending bill to avert a partial government shutdown. The spending package includes provisions that are critical to hospitals and physicians.

House lawmakers approved the measure by a 339-to-85 vote, the New York Times reported. The Senate was expected to take up and pass the bill easily, sending it to President Biden in time for it to become law before a midnight deadline on Friday, the publication reported.

The bipartisan spending bill, which was unveiled on 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.

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.”

But, many provider groups said the legislation only provides "short-term patches" rather than comprehensive Medicare payment reforms. 

“While we appreciate the challenges Congress confronted when drafting the current 2024 appropriations package, we are extremely disappointed that about half of the 2024 Medicare physician payment cuts will be allowed to continue. There were many opportunities and widespread support to block the 3.37% Medicare cuts for physician services that took place Jan. 1, but in the end, Congress opted to reverse only 1.68 of the 3.37 percentage payment reduction required by the Medicare Fee Schedule. The need to stop the annual cycle of pay cuts and patches and enact permanent Medicare payment reforms could not be more clear," Jesse Ehrenfeld, M.D., president of the American Medical Association, said in a statement issued Wednesday.

The American Academy of Family Physicians echoed the AMA's concerns.

“We’ve repeatedly told Congress that the 3.4% 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% of that payment cut. We appreciate this temporary measure but continue to urge Congress to advance comprehensive, long-term Medicare payment reform," said Steven Furr, M.D., president of AAFP.

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.”