Weekly Health Care Policy Update – March 29, 2024

April 5, 2024

In this update: 

  • Legislative Updates
    • Biden Signs Bill Funding Federal Government through September
  • Federal Agencies
    • CMS Releases Final Rule on Applications, Eligibility, Enrollment and Renewal for Medicaid, CHIP, and BHP
    • CMS Releases Proposed Rule on Skilled Nursing Facility Payment
    • CMS Releases Proposed Rule on Hospice Payment and Quality Reporting
    • CMS Clarifies that Medicare Part D Plans and Medicaid May Cover Weight-Loss Drugs If Approved for Other Indications
    • CMS Opens Registration for 2024 Health Equity Conference
    • HHS Releases Final Rule on Short-Term Limited Duration Insurance
    • CMS Extends Federal ACA Marketplace Enrollment Window
    • CISA Releases Proposed Rule on Reporting Cybersecurity Incidents
  • Other Updates
    • Premier Releases Report on Claims Denials by Private Payers
    • Lown Institute Releases Fair Share Spending Report; AHA Responds
  • New York State Updates
    • NYS Budget Deadline Extended to April 4th
    • DFS Issues New Proposed PBM Regulations and Standards
    • DOH Announces Separate Medicaid Coverage of Community Health Workers at FQHCs
    • DOH Issues Clarifying Guidance to Hospitals Regarding Clinical Staffing Committees
    • CMS Approves New York SPA Adding Reimbursable Evidence-Based Practices to CFTSS
    • CMS Approves New York SPA Adding Doula Services to the Medicaid Benefit

Legislative Update

Biden Signs Bill Funding Federal Government through September
On March 23rd, President Biden signed legislation to fund the Department of Health and Human Services (HHS) and other government programs for the remainder of fiscal year (FY) 2024. Under the bill, HHS received a 1% funding increase, relative to FY 2023, and avoids the automatic cut (or sequestration) which is required by federal budget rules when spending exceeds certain levels.

Congress largely maintained existing funding streams for pandemic preparedness and other public health efforts, mental health, and biomedical research, totaling $117 billion. The bill does not include policy riders like site-neutral or health care price transparency provisions that were under consideration. Congress’s next must-pass legislation will now be appropriations bills for FY 2025, which begins October 1st.

Federal Agencies

CMS Releases Final Rule on Applications, Eligibility, Enrollment and Renewal for Medicaid, CHIP, and BHP
On March 27th, the Centers for Medicare & Medicaid Services (CMS) finalized a rule entitled “Streamlining the Medicaid, Children’s Health Insurance Program (CHIP), and Basic Health Program (BHP) Application, Eligibility Determination, Enrollment, and Renewal Processes.” The purpose of the rule, which was first proposed in September 2022, is to set national-level requirements for these programs to reduce barriers for eligible individuals to enroll. Given the prevalence of administrative disenrollments as part of the ongoing Medicaid unwinding, CMS is attempting to add guardrails to state processes and protect coverage where appropriate.

Policies in the rule include the following: 

  • Currently, States may offer individuals who qualify for Medicaid through a spenddown the option to deduct “projected” institutional expenses from their income. The final rule allows other “predictable and constant” non-institutional expenses (such as prescription drugs) to be deducted as well.
  • The final rule requires states to align certain enrollment and renewal processes for the people who qualify for Medicaid through means other than Modified Adjusted Gross Income (the “non-MAGI” population) with those for the MAGI-eligible population. This includes:
    • Limiting state eligibility renewals/redeterminations to once every 12 months;
    • Eliminating requirements for in-person interviews;
    • Providing enrollees with 30 days to respond and a 90-day reconsideration period; and
    • Using prepopulated renewal forms.
  • The rule eliminates the current requirement for individuals to apply for other benefits as a condition of Medicaid eligibility.
  • The rule establishes specific guidelines for states to check available data before terminating eligibility when a beneficiary cannot be reached due to returned mail or for other reasons. These guidelines have been streamlined from the proposed rule.
  • The rule provides options for states to use available information to update a beneficiary’s address automatically.
  • The rule requires states requesting additional information to provide applicants with a “reasonable period” to provide such information. This period must be at least 15 days for new applicants and at least 30 days for renewals. Furthermore, if the applicant’s eligibility is denied, all States must provide a 90-day reconsideration window to accept new information, which will be treated like a new application. These provisions have been modified and simplified from the original proposal.
  • The rule streamlines the process for individuals to transfer between Medicaid and CHIP as their eligibility changes. Specifically, Medicaid must be able to make eligibility determinations on behalf of CHIP, and vice versa. CMS did not make corresponding changes to the BHP.

For CHIP and BHP enrollment specifically: 

  • The rule prohibits states from employing “lock-out” periods; that is, beneficiaries who are terminated for failure to pay premiums may not be required to wait for a period of time before re-enrolling.
  • The rule removes the current option for states to require a waiting period of up to 90 days for individuals who disenroll from group health plans to then enroll in CHIP coverage.
  • The rule prohibits the use of annual and/or lifetime benefit limits in CHIP.

Other provisions from the September 2022 rule were finalized previously (as covered by SPG here), including ensuring automatic enrollment, with limited exceptions, of Supplemental Security Income (SSI) recipients into the Qualified Medicare Beneficiary (QMB) group.

The announcement is available here.

CMS Releases Proposed Rule on Skilled Nursing Facility Payment 
On March 28th, CMS proposed updates to the Medicare Skilled Nursing Facility (SNF) Prospective Payment System (PPS) for FY 2025. Overall, the rule proposes to increase SNF PPS rates by 4.1%, based on a market basket update of 2.8%, a 1.7% market basket forecast error adjustment, and a negative 0.4% productivity adjustment. This payment update represents an aggregate increase of $196.5 million in FY 2025. In addition, the rule proposes to: 

  • Update the SNF market basket base year from the current 2018 base year to a new base year of 2022;
  • Update the SNF Quality Reporting Program (QRP) to better account for adverse social conditions that negatively impact individuals’ health or health care;
  • Expand CMS’s ability to impose financial penalties to drive sustained correction of health and safety deficiencies, including expanding the mix and number of penalties;
  • Update the SNF PPS wage index using the Core-Based Statistical Areas (CBSAs) to improve the accuracy of wages and wage-related costs; and
  • Make several changes to the PDPM ICD-10 code mappings to allow providers to include more accurate and consistent primary diagnoses.

More information is available here.

CMS Releases Proposed Rule on Hospice Payment and Quality Reporting
On March 28th, CMS proposed a rule to update the Medicare hospice payment system for FY 2025. The rule would update the hospice wage index, payment rates, and aggregate cap amount, as well as make changes to the Hospice Quality Reporting Program. Overall, the rule proposes to increase hospice payment rates by 2.6%, based on a 3.0% market basket percentage increase reduced by a 0.4% productivity adjustment. The payment update represents an aggregate increase of $705 million in FY 2025. The proposed hospice cap amount is $34,364.85, an increase of 2.6% from FY 2024. The rule also proposes to: 

  • Adopt the most recent Office of Management and Budget (OMB) statistical area delineations, which would change the hospice wage index;
  • Collect Hospice Quality Reporting Program (HQRP) measures through a new collection instrument, the Hospice Outcomes and Patient Evaluation (HOPE); and
  • Make changes to the Consumer Assessment of Healthcare Providers and Systems (CAHPS) Hospice Survey.

In addition, the rule includes two Requests for Information (RFIs) on: 

  • Potential social determinants of health (SDOH) elements; and
  • Implementation of a separate payment mechanism to account for high-intensity palliative care services.

More information is available here.

CMS Clarifies that Medicare Part D Plans and Medicaid May Cover Weight-Loss Drugs If Approved for Other Indications
On March 20th, CMS issued a Health Plan Management System (HPMS) memo on the coverage of anti-obesity medications with other clinical indications. By statute, Medicare Part D’s definition of drugs does not include drugs that State Medicaid programs may restrict coverage of, including drugs “for anorexia, weight loss, and weight gain.” CMS’s guidance clarifies that if a drug that is approved for such purposes also has another clinical indication that is acceptable, they may be covered by Part D plans for that specific use. Similarly, State Medicaid programs would establish policies for covering such drugs in the same way that they would for other drugs with an acceptable clinical use.

This policy will now apply to the weight-loss drug Wegovy, which was approved by the FDA last month for reducing the risk of major adverse cardiovascular events (heart attack and stroke). For Medicare, Part D plans must now determine their coverage policies and formulary placement for Wegovy, while state Medicaid programs must determine their coverage policies and negotiate contracts if they use Medicaid managed care. Until these actions occur, it is not possible to determine whether patients will have broad access to the drugs or the impact on payers.

CMS Opens Registration for 2024 Health Equity Conference 
On May 29th and 30th, CMS will hold its second annual Health Equity Conference. The Conference will take place in Bethesda, Maryland with virtual participation also available. In-person participation has reached capacity, with a waitlist forming for those interested.

More information on the conference is available here.

HHS Releases Final Rule on Short-Term Limited Duration Insurance
On March 28th, HHS, in conjunction with the Department of Labor and the Department of Treasury, released final rules regarding short-term, limited-duration insurance (STLDI). STLDI is a type of insurance that is meant to temporarily fill gaps in coverage as an individual moves between plans, and is not subject to federal coverage requirements and consumer protections under the Affordable Care Act. Some consumers enroll in this type of coverage under the pretense of it being a long-term coverage option. In order to limit the scope of these plans and protect consumers, this rule: 

  • Changes the federal definition of an STLDI to limit the length of the coverage period to between three and four months;
  • Amends the federal definition of an STLDI to address “stacking,” a practice where insurers provide sequential STLDI policies that can collectively evade legal duration limits; and
  • Alters the federal notice standard to better distinguish between comprehensive coverage and STLDI to direct consumers to the appropriate plan given their circumstances.

These provisions will go into effect for coverage periods beginning on or after September 1st. The announcement is available here.

CMS Extends Federal ACA Marketplace Enrollment Window 
On March 28th, CMS announced an extension of the federal ACA Marketplace special enrollment period (SEP) in light of the ongoing Medicaid unwinding. Individuals who have been disenrolled from Medicaid as part of the ongoing eligibility redeterminations will now be able to enroll in coverage on federally-facilitated Healthcare.gov Marketplaces until November 30th, a deadline extended from July 31st. CMS is encouraging states to adopt this expansion as well. To date, over 19 million people have been removed from Medicaid, largely for administrative reasons.

The announcement is available here.

CISA Releases Proposed Rule on Reporting Cybersecurity Incidents 
On March 27th, the Department of Homeland Security’s (DHS) Cybersecurity and Infrastructure Security Agency (CISA) released a notice of proposed rulemaking to implement policies from the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (CIRCIA). Through the proposed rule, CISA is putting forth proposals to better utilize its cybersecurity incident and ransomware payment reporting to address attacks. With these new proposed regulations, CISA hopes to be able to rapidly deploy resources to known victims of attacks and better identify other potential victims.

The announcement is available here.

Other Updates

Premier Releases Report on Claims Denials by Private Payers
On March 21st, Premier, a hospital purchasing and provider support company, released a report on claims denials by private payers. Premier surveyed 516 hospitals and post-acute care providers across 36 states on their experience of claims during calendar year 2022. Overall, the survey found that nearly 15% of all claims are initially denied and that 54% of these initially rejected claims are ultimately paid. Just over 3% of initially denied claims were also pre-approved via prior authorization processes by the payer in question. The analysis notes that these claims denials increase costs to the health care system, as hospitals and health systems incur an average cost of $43.84 per claim for each denial they challenge.
 
The report is available here.
 
Lown Institute Releases Fair Share Spending Report; AHA Responds 
On March 26th, the Lown Institute released a report on nonprofit hospitals. Nonprofit hospitals are exempt from paying a variety of taxes with the understanding that they provide a public good or community service. This Lown Institute analysis found that 80% of nonprofit hospitals pay less than their “fair share,” leading the Institute to conclude that the value of their community contributions are less than the value of their tax exemptions. Overall, Lown found fair share deficits totaling $25.7 billion among the hospitals surveyed.
 
The American Hospital Association (AHA) responded to this report by criticizing its methodology and pointing to other studies that demonstrate considerable community benefits. AHA contends that the report omits considerations such as Medicare and Medicaid reimbursement rates and state-level policy differences, while using a dated fair share threshold.
 
The report is available here, and AHA’s press release is available here.

New York State Updates

NYS Budget Deadline Extended to April 4th
On March 28th, Governor Hochul signed S.8919, a bill that extends funding for the New York State (NYS) government through April 4th. Although the Governor has announced progress on negotiations with the Legislature to enact a full FY 2024-25 Budget, the Legislature will not return until next Tuesday, April 2nd due to the Easter holiday weekend. It is understood that many issues remain under discussion, and a further extension into mid-April is not unlikely.

A press release by the Governor is available here.

DFS Issues New Proposed PBM Regulations and Standards
On March 27th, the NYS Department of Financial Services (DFS) issued new proposed regulations that establish network contracting standards and consumer protections for Pharmacy Benefit Managers (PBMs) operating in New York, including minimum standards related to market conduct practices, conflicts of interest, anti-competitive and unfair claims practices, and predatory audit practices. The regulations replace previous proposed regulations, issued on August 16, 2023 (SPG summary here) and withdrawn on November 15, 2023, and include changes to address public comments. Specifically, commenters were concerned that the previous regulations would have had indirect impacts on health plans and small businesses by creating costs that PBMs would pass on to health plans that are offered by small businesses and local government. As a result, DFS included a new section of the regulations entitled “Compliance Cost Disclosure” to address this concern. The new section would require PBMs that attribute an increase in the amount charged to a health plan to the cost of complying with these regulations to provide the health plan with additional details on the requirements and associated costs that have resulted in the increase, including how such costs were allocated to the health plan.

Other key components of the proposed regulations that were removed from the prior proposal include: 

  • The requirement that PBMs reimburse pharmacies at a rate not less than the national average drug acquisition cost plus a professional dispensing fee of $10.18;
  • The prohibition on “spread pricing,” which would have required PBMs to offer health plans the option of paying the PBM the same price for a prescription drug that the PBM pays a pharmacy;
  • The prohibition on PBMs charging network participation fees or claims adjudication fees;
  • Requirements for maximum allowable cost lists, including the requirement for an appeals process; and
  • Network adequacy requirements, including ensuring consumer access to a 24-hour pharmacy within 30 minutes travel time.

The proposed regulations are available here. Comments may be submitted to PBMRegs@dfs.ny.gov through May 26, 2024.

DOH Announces Separate Medicaid Coverage of Community Health Workers at FQHCs
On March 27th, DOH issued a public notice announcing that, effective on or after April 1, 2024, NYS Medicaid will reimburse Federally Qualified Health Centers (FQHCs) a separate payment in lieu of the Prospective Payment System (PPS) rate for services provided by Community Health Workers (CHWs) when it is the only service provided.

Additional details are available in the State Register here. Public comment may be submitted to spa_inquiries@health.ny.gov.

DOH Issues Clarifying Guidance to Hospitals on Clinical Staffing Committee Composition
On March 26th, the NYS Department of Health (DOH) issued guidance to hospitals regarding clinical staffing committees and clinical staffing complaints. In 2021, NYS passed legislation that requires hospitals to establish and maintain a Clinical Staffing Committee, comprised primarily of registered nurses, licensed practical nurses, and other team members that provide or support direct patient care. The committee is responsible for developing and overseeing an annual Clinical Staffing Plan, which includes patient-to-nurse ratios. The regulations also require hospitals to develop and implement policies and procedures to address clinical staffing complaints regarding compliance with the plan.

DOH developed this guidance to provide clarifying guidance on how Clinical Staffing Committees should be formed and how they should operate. Specifically, DOH recommends that: 

  • Hospitals should provide a period before adoption of the Clinical Staffing Plan where union representatives are permitted to provide input.
  • Clinical Staffing Committee members should be selected on an annual basis, in the same month each year, with sufficient time provided between the selection and the formulation of the Clinical Staffing Plan.

The guidance is available here. Questions may be submitted to hospinfo@health.ny.gov.

CMS Approves New York SPA Adding Reimbursable Evidence-Based Practices to CFTSS
On March 25th, CMS approved New York’s State Plan Amendment (SPA) that authorizes payment for evidence-based practices (EBPs) provided to children/youth receiving Children and Family Treatment and Support Services (CFTSS). Eligible agencies that have completed the EBP training and certification process will be authorized to provide Family Functional Therapy (FFT) and Parent-Child Interaction Therapy (PCIT) as reimbursable EBPs under CFTSS. The new EBP service rate codes will supplant existing rate codes for Other Licensed Practitioner (OLP) and Community Psychiatric Supports and Treatment (CPST) services.

The SPA is available here. The CMS approval letter is available here. Additional guidance from DOH is available here.

CMS Approves New York SPA Adding Doula Services to the Medicaid Benefit
On March 25th, CMS approved New York’s SPA that adds doula services provided to pregnant and postpartum individuals to the Medicaid benefit. Doulas provide physical, emotional, educational, and non-medical support for pregnant and postpartum persons before, during, and after childbirth or the end of pregnancy. Doula services may include: 

  • The development of a birth plan and continuous labor support;
  • Patient-centered advocacy, and physical, emotional, and non-medical support;
  • Education, guidance, and health navigation;
  • Facilitating communication between the Medicaid member and medical providers; and
  • Providing connections to community-based resources and childbirth and parenting resources.

Services will include perinatal visits and labor and delivery support. Doula services must be recommended by a physician or other licensed practitioner of the healing arts acting within their scope of practice.

The SPA is available here. The CMS approval is available here. Additional details on the doula services benefit are available here.