Implementation of the Healthcare Deficit Reduction Act

Signed by President Bush in 2006

By Gregory O. Ginn; PhD, MBA, CPA, MEd

By Hope Rachel Hetico; RN, MHA, CMP™

The Deficit Reduction Act (DRA), S. 1932, was signed by President Bush on February 8, 2006, and became Public Law No. 109-171.  Implementation of the act includes these provisions:

Subtitle A – Provisions Relating to Medicare Part A

  • hospital quality improvement (section 5001);
  • improvements to Medicare-dependent hospital (MDH) programs (section 5003);
  • reduction in payments to skilled nursing facilities (SNFs; section 5004);
  • phase-in of inpatient rehabilitation facility classification criteria (section 5005);
  • development of a strategic plan regarding investment in specialty hospitals (section 5006);
  • demonstration projects to permit gain-sharing arrangements (section 5007); and
  • post-acute care payment reform demonstration programs (section 5008).

Subtitle B  Provisions Relating to Medicare Part B

  • title transfer of certain durable medical equipment (DME) to patients after 13-month rental (section 5101);
  • adjustments in payment for imaging services (section 5102);
  • limitations on payments for procedures in ambulatory surgical centers (ASCs; section 5103);
  • minimum updates for physician services (section 5104);
  • three-year extension of hold-harmless provisions for small rural hospitals and sole community hospitals (section 5105);
  • updates on composite rate components of basic care-mix adjusted prospective payment systems (PPS) for dialysis services (section 5106);
  • accelerated implementation of income-related reductions in Part B premium subsidy (section 5111);
  • Medicare coverage of ultrasound screening for abdominal aortic aneurysms; National Educational And Information Campaign (section 5112);
  • improvements to patient access and utilization of colorectal cancer screening under Medicare (section 5113);
  • delivery of services at federally qualified health centers (FQHC) (section 5114); and
  • waiver of Part B Late Enrollment Penalty for certain international volunteers (section 5115).

Subtitle C – Provisions Relating To Parts A and B

  • home health payments (section 5201);
  • revision of period for providing payment for claims that are not submitted electronically (section 5202);
  • timeframe for Part A and B payments (section 5203); and
  • Medicare Integrity Program (MIP) funding (section 5204).

Subtitle D – Provisions Relating To Part C

  • phase-out of risk adjustment budget neutrality in determining payments to Medicare Advantage organizations (section 5301); and
  • Rural PACE Provider Grant Programs (section 5302).[1]

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The goal of the act is to save nearly $40 billion over five years from mandatory spending programs through slowing the growth in spending for Medicare and Medicaid. Has it been successful to-date?


We know from personal experience that the DRA can be implemented by all healthcare stakeholders to the benefits of the industry sector in the aggregate. But, has it been?


And so, your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, be sure to subscribe to the ME-P. It is fast, free and secure.

Editors Note: Gregory Ginn has been a professor in the Department of Health Care Administration at the University of Nevada, Las Vegas, since 2000. He received his doctorate, MBA, M.Ed., and undergraduate degree from the University of Texas at Austin, and is an inactive Certified Public Accountant registrant in the States of Nebraska and Texas. Before his current position at UNLV, he spent time teaching at Clarkson College, College of Saint Mary, University of Findlay, University of Central Texas, Stephen F. Austin State University, State University of New York at Buffalo, University of Houston at Victoria, University of Texas at Austin, and the Southwest Texas State University. Prior to his academic roles, he was an accountant for Touche Ross & Co., and an Internal Revenue Service Tax Auditor. Dr. Ginn has also been a reviewer for organizations such as: Health Care Management Review and the Health Care Administration Division of the Academy of Management. He is Treasurer for the Nevada Executive Health Care Forum and was a member of the Southern Nevada Wellness Council. His graduate teaching experience in healthcare administration is abundant, having taught courses in: Management of Health Services Organizations, Quantitative Methods, The U.S. Health Care System, Health Care Systems and Policy, Health Care Finance, Group Practice Management, Long-term Care, and Health Care Law.  He has been published in numerous journals, including Journal of Healthcare Management, Hospital Topics, Nursing Homes, Journal of Nursing Administration, International Electronic Journal of Health Education, and Hospital and Health Services Administration. His current and former professional memberships include: American College of Healthcare Executives, Nevada Executive Healthcare Forum, Academy of Management, Association of University Programs in Health Administration, Certified Medial Planner (Hon.) and Heartland Health Care Executives.

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