“Fiscal Cliff” Bill Brings Various Changes to Health Care

Date posted: January 15, 2013

The United States House of Representatives recently passed the American Taxpayer Relief Act of 2012 to avert the “fiscal cliff.”  The Act will freeze Medicare physician payment rates for 1 year and reduce both Medicare and Medicaid payments to hospitals.

The legislation prevents a 26.5 percent pay cut for Medicare physicians that was scheduled to start January 1, 2013.  The Act will cover nearly half of the estimated $30 billion cost for the payment freeze in two ways:

  • Reduce projected Medicare payments to hospitals for inpatient or overnight care by $10.5 billion over 10 years; and
  • Reduce Medicaid disproportionate share payments to hospitals by another $4.2 billion over 10 years.

In addition, the Act extends a number of health programs and initiatives, including:

  • The qualifying individual program that allows Medicaid to pay Medicare Part B premiums for some low-income beneficiaries;
  • Medicare Advantage special needs plans and Medicare reasonable cost plans; and
  • The outpatient therapy cap exceptions process.

The American Taxpayer Relief Act of 2012 is available at: www.gpo.gov/fdsys/pkg/BILLS-112hr8eas/pdf/BILLS-112hr8eas.pdf.


The American Taxpayer Relief Act of 2012, H.R. 8, 112th Cong. (2012).

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