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House uses Medicare changes to pay for special needs account bill

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Lawmakers used a last-minute House Rules Committee resolution to put Medicare program changes and professional employer organization (PEO) payroll tax responsibility provision in a popular special needs account bill.

Members of the House voted 404-17 Wednesday to pass H.R. 647, the Achieving a Better Life Experience (ABLE) Act.

The first section of H.R. 647 — the section available to people who clicked on the link to the information about the bill available on the Library of Congress system — would let states give families the ability to put after-tax income in accounts for severely disabled children. Children who used ABLE account money to pay for qualified expenses, such as housing and transportation, would pay no income taxes on the distributions.

Federal programs would not count ABLE account assets used for purposes other than paying for housing in program eligibility calculations.

The special needs account section of the ABLE Act grew out of the work of the federal Commission on Long-Term Care. Commission members decided to support efforts to create the equivalent of a 529 college savings plan program for the families of severely disabled children.

Earlier this week, when the House Rules Committee set the rules for debating H.R. 647, it set them by adopting another measure, House Resolution 766.

In House Resolution 766, lawmakers added a provision that would let parents and grandparents who contribute to an ABLE account at least one year before going bankrupt keep the ABLE account contributions out of the bankruptcy estate.

Budget analysts estimated the ABLE account program would cost $2.1 billion over 10 years, and lawmakers also used H.Res. 766 to add several provisions — including Medicare program changes — that they said would help pay for the account program.

Those provisions include:

  • A program to let a PEO — an employment agency that acts as the official employer for workers who work for another company — get certified to take full responsibility for paying a worker’s employment taxes. Today, the company that uses a worker’s labor has responsibility for paying the employment taxes, even if the company uses a PEO to employ the worker.
  • A provision that would keep Medicare from paying for erectile dysfunction aid equipment for men until and unless Medicare can pay for drugs for erectile dysfunction, such as Viagra. Under current rules, Medicare does pay for pumps but cannot pay for Viagra.
  • A provision that would require the Centers for Medicare & Medicaid Services (CMS) to speed up part of a new Medicare sustainable growth rate (SGR) provider payment reform measure — or “doc fix” measure. Current law requires CMS to classify 0.5 percent of Medicare physician pay as mispriced, and in need of cutting, each year from 2017 through 2020. The H.Res. 766 provision that modified H.R. 647 would require CMS to find 1 percent of mispriced physician pay spending in 2016 and then find an additional 0.5 percent of mispriced spending in 2017, and another 0.5 percent of mispriced spending in 2018.

Rep. Tom Price, R-Ga., who eventually voted for H.R. 657, said in floor debate on that bill and and H.Res. 766 Wednesday that CMS has no intention of implementing the current SGR doc fix measure. Congress has kept CMS from implementing all previous doc fix measures, and Price noted that CMS has not yet developed a procedure for implementing the current physician spending mispricing detection law.

The current confusion over the doc fix measure leads to instability in Medicare physician payments, and the new provision would make matters worse, Price said.

Rep. Jim McDermott, D-Wash., said the House was using “Medicare as a piggy bank to pay for a tax bill.”

Rep. Frank Pallone, R-N.J., said he believes the PEO provision could affect workers’ ability to form unions and the way other labor laws operate.


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