No matter how dysfunctional your family, your job, your workplace, or your children are, there is always some solace in knowing that someone else is even more dysfunctional! The United States Congress provided that solace to us all this past week with the manner in which the American Tax Relief Act of 2012 was put in place. In its most simple sense, Congress created its own self-imposed deadline (which the media crafted into the mantra of the “fiscal cliff”). They then worked, literally to the end of the deadline and beyond, to take care of only a small portion of the issues that they had self-created, preferring to push other issues to a newly imposed deadline in 2013.
While the Congress took care of only part of their problem, and deferred the issues of the debt ceiling and sequestration to reduce spending, there was incredible enormity and detail in the Tax Relief Act that was passed at the eleventh hour. It is nearly impossible to believe that all of our elected representatives were fully aware of the provisions and the details of the bills that were actually passed.
I’ll focus on a few items that will effect hospitals, such as University Hospital. However, just for everyone’s amazement, I will list a few of the other provisions that were included:
- Tax credits for maintaining railroad tracks.
- Extension of special recovery costs for motorsports entertainment complexes.
- Enhancement of charitable deductions for contribution of food inventory.
- New rules for expensing film and television production costs.
- Increase on the limit on rum excise tax revenues.
- Income tax credits for plug-in electric motorcycles
Here is a summary of the bill’s provisions.
Turning attention to some of the health provisions of the bill, they can best be described from a hospital perspective as an additional contribution to the “death by a thousand nicks”. Hospitals in the United States are continuing to be under significant financial strain as reimbursement mechanisms change, as patients move to the out-patient setting, as more physicians own practices that used to generate hospital revenue, and as hospitals are more and more called upon to provide employment, on-call, and co-management agreements for their physicians. All of these chip away at the financial underpinnings and foundation of healthy hospitals. The Tax Relief Act continues these “nicks” in a number of areas:
- The provisions avert cuts in payments in the Medicare program to physicians for another year. Dollars to preserve the physician reimbursement come directly from reduction in hospital reimbursement.
- Documentation and coding adjustments – this provision gives the Secretary the ability to recoup up to $10.5 billion of funds thought to be overpayments to hospitals.
- Radiology services – there is a provision that reduces hospital payment on gamma knife services to hospitals by nearly 50%.
- Increase in statute of limitations for recovery of funds from hospitals by the federal government.
- Changes to disproportionate share of hospital payments, saving $4.2 billion.
These are just some of the examples. There are numerous other items that while considered, are not the Act, but are sure to come back in the next round of discussions, negotiations, and cuts. One of the most prominent of these is the potential for reduction in provider-based payments. As we know, many of the University Hospital clinical out-patient operations are provider-based. There is a sense that this is a place where reduction in federal spending can occur by reducing the reimbursement to facilities for maintaining and operating these vital out-patient facilities and such a reduction will impact nearly every out-patient clinic at University Hospital.
The fact that the Congress is able to produce a bill of such complexity and enormity is truly an amazing feat. The manner in which they did it is even more amazing. The work that remains undone and a potential impact to hospitals and health systems is daunting.
Clearly, University Hospital, and all other hospitals and healthcare providers, are in for turbulent times over the next few years with the federal government. Combine this with concerns about state financing, and one can see clearly the need for all of us to be ensuring that we are providing the most efficient, safest, and lowest cost care possible.
The goal that seems to be set for us of “more care, better care, and lower costs” is very real. We have challenging times ahead.