President Bush has signed into law S. 2499, the “Medicare, Medicaid, and SCHIP Extension Act of 2007.” Most notably, the legislation postpones for six months a 10.1% across-the-board cut in Medicare physician payments that was scheduled to go into effect January 1, 2008.

Other policy changes include, among many others:

• Changes in Medicare long-term care hospital (“LTCH”) policy, including a new statutory definition of an LTCH with facility criteria, relief from certain payment policies for three years, a three-year moratorium on the development of new LTCHs and LTCH beds, no payment update for the last quarter of rate year 2008, and new medical necessity reviews by Medicare contractors;

• Revisions to inpatient rehabilitation facility (“IRF”) qualifications and payment policy, including a permanent freeze in the patient classification criteria compliance threshold at 60% (with comorbid conditions counting toward this threshold) and a payment freeze from April 1, 2008 through September 30, 2009;

• An extension of the therapy cap exception process through June 30, 2008;

• A provision to require the Centers for Medicare & Medicaid Services (“CMS”) to adjust Part B drug average sales price (“ASP”) calculations to use volumeweighted ASPs based on actual sales volume;

• Elimination of Medicare Advantage (“MA”) stabilization funding for regional preferred provider organizations in 2012, an extension of authority for specialized MA plans for special needs individuals, and a moratorium on new special needs plans and expanded service areas through December 31, 2009;

• A 6-month delay in CMS rules on Medicaid payment for school-based and rehabilitation services; and 1 Pub. L. No. 110-173 (December 29, 2007).

• An extension of the authorization and funding of the State Children’s Health Insurance Program (“SCHIP”) through March 31, 2009.

To read Reed Smith’s summary of the major provisions of the Act, please download the PDF here.