President Obama signed legislation (HR 8) to avert the fiscal cliff, postponing mandated spending cuts under sequestration from taking effect, the Wall Street Journal reports. The measure was approved by Congress, with the House voting 257-167 and the Senate voting 89-8 in favor of the bill.

The bill includes a one year delay to the 26.5 percent reduction to Medicare physician reimbursement rates and freezes reimbursement rates at current levels. The “doc fix” will be funded in part by cuts to Medicare and Medicaid payments to hospitals.

Specifically, hospitals will face a $10.5 billion reduction in Medicare payments over a decade for inpatient or overnight care through a downward adjustment in annual base payment increases. Hospitals also will face an additional $4.2 billion cut to Medicaid disproportionate share payments over the next 10 years.

The one-year doc fix also will be funded through continuing a variety of Medicare policies, known as “extenders,” including savings of:

  • $600 million through a competitive bidding system for over-the-counter diabetic test strips;
  • $1.7 billion from eliminating the Medicare Improvement Fund;
  • $2.5 billion from adjusting the coding intensity between Medicare Advantage and Medicare fee-for-service; and
  • $4.9 billion from payment adjustments for end-stage renal disease.

The legislation also includes a two month delay to across-the-board ‘sequester’ cuts, including a 2 percent reduction to all Medicare reimbursement rates.