Federal Issues


What has happened?
Signed into law by President Barack Obama in 2015, the Medicare Access and CHIP Reauthorization Act (MACRA) replaces the highly contested sustainable growth rate (SGR) and shifts the Medicare physician reimbursement system toward one in which physician payments are mainly based on value rather than on the volume of services they provide. The law requires the Centers for Medicare and Medicaid Services (CMS) to establish a new physician quality and value-based payment program – the Quality Payment Program (QPP) – that starts in calendar year 2019. Eligible clinicians will participate in one of two tracks – the default Merit-based Incentive Payment System (MIPS) or alternative payment models (APMs) – and their 2019 payments will be tied to performance during 2017.

MIPS is defined as a fee-for-service model with performance-based adjustments to future Part B payments. Providers, including MD, DO, DPM, DMD, OD, DC, PA, NP, CNS and CRNA, will be given a composite reporting score focused on performance in four categories: quality reporting, advancing care information (which will replace meaningful use), clinical practice improvement activities, and resource utilization. Providers can receive up to a 4% bonus or penalty starting in 2019 and up to a 9% bonus OR penalty starting in 2022. Under the program, performance will be measured against their peers. For 2017, providers can pick their pace to receive payment under MIPS. 

Advanced APMs allow higher earnings to providers who take on risk related to patient outcomes. An entity participating in this model can earn increasing payment incentives every subsequent year.

After receiving stakeholder feedback on proposed MACRA regulations, CMS made changes to the MACRA final rule last fall, allowing physicians flexibility to choose when they begin participating in the program. Rather than requiring providers to transition on January 1, the final CMS rule allows them to avoid a negative payment adjustment and qualify for a payment increase in 2019 by either submitting a limited amount of data or providing data later in 2017.


Just before the holidays, the President signed into law a comprehensive tax reform bill, which included reducing the Affordable Care Act (ACA) individual mandate tax penalty to $0 effective in 2019. Senate Majority Leader Mitch McConnell (R-KY) secured Senator Susan Collins' (R-ME) vote for the bill by assuring her that the Alexander-Murray proposal to shore up insurance markets would be considered this year. House Republicans have previously opposed the Alexander-Murray measure because they object to anything that props up the ACA and it does not include language restricting federal funding for abortions.

Several moderate Republicans are reportedly less inclined to return to ACA repeal efforts in this new year, as other members, including Senators Lindsey Graham (R-SC) and Ron Johnson (R-WI), have threatened to vote against any upcoming legislation unless it includes repeal of the health care law. After the Alabama election and swearing in of Senator-elect Doug Jones (D-AL), the Senate now only holds the majority by one seat, making it harder to pass legislation without full support of the chamber. 



What’s at stake?
Federal funds help promote Duke Health’s multiple missions of research, education, and patient care. In recent history, main funding agencies, notably the National Institutes of Health (NIH), have experienced challenging budget decreases.

What’s happening now?

On September 6, the House overwhelmingly approved a $7.85 billion relief package (H.R. 601) for the response to Hurricane Harvey. The following day, the Senate amended and approved H.R. 601, which would extend government funding and the federal debt limit both through December 8, and provide $15.25 billion in Hurricane Harvey funding. The House approved the amended bill on September 8, and the president signed it swiftly. 

Before the August recess, the House passed a package of four FY 2018 appropriations bills as part of a “security minibus,” including the Defense, Legislative Branch, Military Construction-Veterans Affairs, and Energy and Water Development spending bills. It also contained $1.6 billion for construction of the President’s border wall. On September 14, the House approved H.R. 3354, which packages the eight remaining FY 2018 appropriations bills. The $1.2 trillion spending package includes a $1.1 billion increase for the National Institutes of Health (NIH).

On September 7, the Senate Appropriations Committee approved its version of the FY 2018 Labor, Health and Human Services, and Education spending bill. Among other things, the bill would provide:

  • $36.1 billion for NIH, an increase of $2 billion above the current level;
  • $7.18 billion for the Centers for Disease Control and Prevention; and
  • $816 million for programs to combat opioid abuse. 

The bill also would reject the President’s proposal to dramatically cut facilities and administrative (F&A) support and includes language to ensure NIH adheres to its current policies for calculating these costs. A full bill summary is available here.

On October 5, the House adopted its FY 2018 Budget Resolution by a vote of 219-206. The Senate approved its budget resolution on October 19 by a vote of 51-49. Both resolutions include language that allows a tax bill to avoid filibuster in the Senate. The House is slated to vote on the Sentate’s budget resolution on October 26. 



In December, Congress approved and the President signed into law the 21st Century Cures Act, which authorized $6.3 billion in spending, addressed weaknesses in the nation's mental health systems, and altered the regulatory system for drugs and medical devices. Specifically, the bill authorized $4.8 billion for FY 2017-2026 in biomedical research initiatives and $500 million to help states prevent opioid misuse and provide additional treatment options. It also authorized funding to support the Precision Medicine Initiative, the BRAIN initiative, and the Cancer Moonshot, and it takes steps to improve mental health care by creating a new Assistant Secretary for Mental Health and Substance Abuse and directing federal agencies to step up enforcement of laws on mental health parity.

Other provisions in the bill included provisions to alleviate administrative burdens on medical researchers, address the role of socioeconomic status in the Medicare Hospital Readmissions Reduction Program, and clarify that off-campus teaching hospital outpatient departments (HOPDs) under development should continue to receive Medicare outpatient payment rates.



As part of the December 21 Continuing Resolution to fund the government, CHIP was allocated $2.85 billion and reauthorized through March 31, 2018. Also, the Centers for Medicare and Medicaid Services (CMS) was given the authority to help states with CHIP funding shortfalls.