In this update:
- Legislative Updates
- House Lawmakers Introduce Bill to Delay Medicare Physician Fee Cut
- Senators Publish Proposed Options for Site-Neutral Payments
- Federal Agencies
- CMS Announces New York and Rhode Island to Join AHEAD Model
- CMS Releases MSSP Performance Data for 2023
- CMS Delays Start of Kidney Care Model
- Other Updates
- Oracle Will Apply for TEFCA QHIN Status
- New York State Updates
- NYS Releases Mid-Year Update to FY 2025 Enacted Budget Financial Plan
Legislative Updates
House Lawmakers Introduce Bill to Delay Medicare Physician Fee Cut
On October 29th, Congressman Greg Murphy (R-NC) and a bipartisan group of cosponsors introduced the Medicare Patient Access and Practice Stabilization Act, a bill that would eliminate the scheduled 2.8% reduction in Medicare Physician Fee Schedule (PFS) payments for 2025 and provide in its place an overall increase from last year of 1.93%. Because PFS rates are set by statute, CMS will be required to implement the 2.8% cut effective January 1, 2025, due to the expiration of a temporary payment increase passed in last year’s omnibus spending bill, unless legislation is passed to avert it.
The bill’s authors argue in their press release that physicians are actually facing a 6.4% cut in real terms after adjusting for a 3.6% increase in practice cost expenses, and in the same vein, have faced aggregate cuts of 29% since 2001. The bill is supported by dozens of provider organizations, including the American Medical Association.
A press release is available here. The legislation is available here.
Senators Publish Proposed Options for Site-Neutral Payments
On November 1st, Senators Bill Cassidy (R-LA) and Maggie Hassan (D-NH) released a joint document outlining “policy options for site-neutral payment reform” in Medicare. Site-neutral payment policies which would equalize the payment rate for similar services delivered in hospital outpatient settings compared to physician office settings have been promoted by the Medicare Payment Advisory Commission (MedPAC) and others for many years.
The framework describes two possible policy ideas:
- Extend existing site-neutral payment policy, which covers off-campus hospital outpatient departments, to all hospitals, removing the exception provided in 2015 for pre-existing off-campus facilities. The paper notes that the existing policy has been found to have a “negligible effect on Medicare outpatient spending.”
- Create a single rate for a set of services that are commonly provided outside hospitals, to be paid regardless of setting. The single rate would be the lower of the current physician or ambulatory rate. This mirrors a MedPAC proposal and would produce more savings than the first option, which the framework suggests could be reinvested to rural and safety-net hospitals.
The paper is available here.
Federal Agencies
CMS Announces New York and Rhode Island to Join AHEAD Model
On October 28th, the Centers for Medicare and Medicaid Services (CMS) announced the third cohort of the States Advancing All-Payer Health Equity Approaches and Development (AHEAD) Model. Under the AHEAD model, states will take responsibility for managing the total cost of care in a region. To do so, states will recruit (1) hospitals to transition to a multi-payer global budget payment model and (2) primary care providers to participate in an enhanced primary care payment model. The AHEAD model envisions Medicare fee-for-service (FFS), Medicaid, and at least one other payer in each state joining these payment mechanisms.
Cohort 3 of the AHEAD model will consist of Rhode Island and a five-county region of New York (Bronx, Kings, Queens, Richmond, and Westchester Counties). The other four participating states are Connecticut, Hawaii, Maryland, and Vermont. AHEAD states will receive Cooperative Agreements from CMS, with the opportunity to receive up to $12 million over the course of the first five to six years of the model. Cohort 3 has a 24-month implementation period (2025-2026), with a total of eight performance years (2027-2034).
Other than Richmond County, the five-county AHEAD region in New York is identical with the region that was designated to receive support for Medicaid global budgets in New York’s 1115 Waiver, announced earlier this year. The budget is calculated based on their past Medicare FFS revenue and trended forward with adjustments for demographic changes, service line changes, performance, and other factors.
CMS’s website on AHEAD is available here. A press release from the New York State Department of Health (DOH) is here.
CMS Releases MSSP Performance Data for 2023
On October 29th, CMS announced that the Medicare Shared Savings Program (MSSP) yielded more than $2.1 billion in net savings in 2023, the highest annual savings the program has achieved to date. MSSP Accountable Care Organizations (ACOs) earned a total of $3.1 billion in shared savings payments, also representing the highest level of shared savings earned in the program’s history. ACOs also scored better than many other types of physician groups on a number of clinical measures, including diabetes, blood pressure, cancer screening, and mental health screening and follow ups.
This year, nearly 11 million people enrolled in Medicare FFS will receive care from over 608,000 participating clinicians who participate in 480 ACOs. This is the seventh consecutive year the MSSP program has been found to generate savings. In 2o22, MSSP produced net savings of $1.8 billion. Primary care continues to be a cornerstone of the program, as ACOs led by primary care physicians produced more savings than other ACOs.
The announcement is available here.
CMS Delays Start of Kidney Care Model
On October 30th, CMS announced that it will delay the start of the Increasing Organ Transplant Access (IOTA) Model. IOTA is a proposed mandatory model to incentivize kidney transplants by evaluating a hospital’s transplant volume, organ acceptance rate, and post-transplant outcomes. The delay allows CMS more time to finish the final rule. The Model was slated to begin on January 1, 2025, and CMS did not give an amended start date. This delay comes as the Health Resources and Services Administration (HRSA) is overhauling national organ transplant infrastructure with new grants and contractors.
More information on the program is available here.
Other Updates
Oracle Will Apply for TEFCA QHIN Status
On October 28th, Oracle Health announced its intention to apply to become a Qualified Health Information Network (QHIN) as a part of the Trusted Exchange Framework and Common Agreement (TEFCA). TEFCA was authorized in the 21st Century Cures Act and facilitates a more integrated health information exchange by connecting QHINs across the country. The program is designed to facilitate the smooth transfer of information between providers and payers, pharmaceutical companies, and government. No timeline for their application was given. Oracle will attempt to join seven other QHINs.
The announcement is available here.
New York State Updates
NYS Releases Mid-Year Update to FY 2025 Enacted Budget Financial Plan
This week, the New York State (NYS) Division of the Budget released its Mid-Year Update to the Fiscal Year (FY) 2025 NYS Enacted Budget Financial Plan, showing notable improvements to the State’s fiscal forecast. Through September 2024, General Fund receipts were higher than expected by $1.2 billion and disbursements were nearly $2 billion below the cash flow estimate, for a total positive operating variance of about $3.2 billion. In view of the improved economic outlook, DOB has revised revenue and spending estimates for a combined result of $2.4 billion, which will be carried forward through prepayment of expenses to reduce costs in future years. However, outyear gaps due to structural deficits remain (and in fact are slightly larger, due to upward revisions in estimated expenditures) and will be addressed in future Budget cycles.
Medicaid disenrollment following the expiration of the Covid-19 continuous enrollment provision has been lower than DOB’s previous projections. DOB now projects that Medicaid enrollment will remain about 900,000 above pre-pandemic levels, for a total of 7.0 million in FY 2025, and increasing slowly thereafter. DOB also notes that expanded Medicaid benefits and higher reimbursement rates, particularly growth in the cost of Managed Long Term Care (MLTC) and other services for seniors, will continue to raise expenses.
DOB has revised outyear Medicaid spending estimates to account for this significantly larger enrollment as well as the expected rescission of $625 million in proposed savings that date back to the second Medicaid Redesign Team (MRT) that are no longer expected to be executed. As a result, although overall Medicaid spending projections for FY 2025 have not substantially changed, this year’s Medicaid Global Cap spending is now expected to exceed the Global Cap limit by $1.1 billion. Global Cap deficits are projected to increase to $2.2 billion in FY 2026 and about $3 billion in future years.
NYS will not implement extraordinary reductions to Medicaid reimbursements (as authorized by the Global Cap legislation) in FY 2025. Instead, it will support the $1.1 billion deficit through General Fund spending. However, the State “expects to address the Global Cap imbalance in the FY 2026 Executive Budge with proposed actions to provide recurring savings and reduce State Medicaid costs while preserving access to care.”
The mid-year update to the financial plan is available here.