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Fiscal Cliff Legislation: Impact on the Health Care Industry

The American Taxpayer Relief Act of 2012 has made a big impact on the health care industry. Read the excerpt from “The Fiscal Cliff In Depth” to see how the Act has affected Medicare and Medicaid:

The American Taxpayer Relief Act of 2012 averted application of the Sustainable Growth Rate formula and a 26.5 percent payment reduction for doctors. This would be the second year in a row with no inflation increase to physician payments. Thus, except for other noninflationary adjustments, Medicare payments to physicians in 2013 will remain the same as they were in 2011.

The Act addresses more than 40 Medicare and Medicaid changes and offsets the costs associated with the “doc fix” through a series of Medicare offsets and other provisions that are expected to reduce spending by approximately $25.7 billion over this 10-year timeframe. It appears that hospitals will be required to pick up nearly 50 percent of the cost of the “doc fix” through a $10.5 billion recoupment of past overpayments to hospitals that were made as part of the transition from Diagnosis Related Groups (DRGs) to Medicare Severity DRGs (MS-DRGs). Another Act provision calls for a reduction in Medicare disproportionate share hospital (DSH) payments by an additional $4.2 billion over the next 10 years, consistent with the provisions of the Patient Protection and Affordable Care Act.

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