Weekly Health Care Policy Update – August 2, 2024

August 9, 2024

In this update:

  • Legislative Update
    • Joint Economic Committee Publishes Report on Private Equity in Health Care
  • Federal Agencies
    • CMS Finalizes FY 2025 Hospital IPPS and Announces Mandatory TEAM Model Areas, Including NYC
    • CMS Releases 2024 Hospital Quality Star Ratings
    • SAMHSA Releases 2023 National Survey on Drug Use and Health
    • CMS Releases Preliminary 2025 Medicare Part D Bid Information
    • NIST Finalizes AI Guidance Documents
    • CMS Approves North Carolina’s Medical Debt Relief Incentive Program
    • CMS Releases 2025 Final Hospice Payment Rate Update Final Rule
    • CMS Issues 2025 Skilled Nursing Facility Prospective Payment System Final Rule
  • Other Updates
    • KFF Report Estimates Average Marketplace Premiums Will Rise 93% After Enhanced Tax Credits End
  • New York State Updates
    • OPWDD Proposes Rules on Pathway to Employment and Supported Decision-Making
    • DOH Issues Public Notice Regarding Forthcoming CCO Health Home Reimbursement Reductions
    • DOH Proposes SPA to Cover Certain Imported Drugs under Medicaid

Legislative Update

Joint Economic Committee Publishes Report on Private Equity in Health Care
On July 23rd, the Senate Joint Economic Committee (JEC) published a report on the role of private equity (PE) in health care delivery. In 2021, approximately 1 million health care workers were employed by companies owned by PE firms. While PE firms have increased their reach among health care companies and institutions, they hold the most concentrated ownership over hospitals (particularly emergency departments) and nursing homes. The report suggests that the growing influence of these firms has resulted in declining service quality in their owned facilities.
 
Investments are not uniform across states, with the Private Equity Stakeholder Project finding that the 10 states with the highest vulnerability to predatory PE practices clustered in the South and West. These states have the highest concentration of PE-owned hospitals, particularly in rural areas. Research indicates that PE-owned hospitals are disproportionately understaffed and have lower patient satisfaction scores, while being at elevated risk of bankruptcy. This report builds on other work being done in the Senate, including an investigation in the Senate Budget Committee and a Request for Information (RFI) to large PE firms issued by the Chair of the Homeland Security and Government Affairs Committee in April.
 
The report is available here.

Federal Agencies

CMS Finalizes FY 2025 Hospital IPPS and Announces Mandatory TEAM Model Areas, Including NYC
On August 1st, the Centers for Medicare and Medicaid Services (CMS) issued the final rule for the fiscal year (FY) 2025 Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital (LTCH) PPS. Updated payment levels will go into effect on October 1st. Overall, the rule will result in a 2.9% increase in payments under IPPS for acute care hospitals, and a 2% increase for LTCHs.

CMS also finalized its proposed mandatory bundled payment model for hospitals, the Transforming Episode Accountability Model (TEAM), largely without modifications, although CMS will consider modifications and elaborations based on further feedback. SPG summarized the original proposal in its April 12th update here. TEAM is scheduled to begin January 2026 and run for five years, through December 2030.

Modifications from the original proposal include: 

  • Hospitals that participate in the Bundled Payments for Care Improvement Advanced (BPCI Advanced) or Comprehensive Care for Joint Replacement (CJR) models may voluntarily opt-in to TEAM.
  • Hospitals participating in the CMS AHEAD model will also be included in TEAM, without an option to voluntarily opt-out. CMS will not make payment adjustments to account for the same beneficiaries being attributed to TEAM and other models, including AHEAD or Accountable Care Organizations (ACOs). However, CMS intends to revisit overlap policies in the future.
  • CMS will cap retrospective trend factor adjustments at 3 percent. These adjustments will apply during reconciliation to construct target prices.
  • Safety net hospitals may remain in Track 1 for up to three performance years.
  • Track 2 hospitals will have 5% stop-gain and stop-loss limits.
  • The lookback period and the low-volume hospital policies are not finalized and will be addressed in future rulemaking.

CMS also ran its process to randomly select participating geographies. This resulted in a list of 188 Core-Based Statistical Areas (CBSAs), or metropolitan regions. Hospitals in these areas will be required to participate in TEAM. Notably, this includes the New York-Newark-Jersey City CBSA. The five other selected CBSAs in New York are: 

  • Batavia
  • Buffalo-Cheektowaga
  • Cortland
  • Massena-Ogdensburg
  • Oneonta

The full list of selected CBSAs is available here.

The rule also updates many other components of Medicare hospital payments, including the hospital wage index, payment adjustments for Medicare disproportionate share hospitals (DSH), and other technical aspects of the IPPS. A full summary is available here. The full text of the final rule is here.

CMS Releases 2024 Hospital Quality Star Ratings
On July 31st, CMS released the 2024 Hospital Quality Star Ratings on the Care Compare website. The ratings are issued annually and based on safety, readmission, patient experience, timeliness of care, and mortality data. This year’s ratings were based on data submitted by hospitals from April 2019 to March 2023.

Overall, roughly 10% of hospitals received one star, 21% received two stars, 29% received three stars, 27% received four stars, and 13% received five stars. As compared to last year, fewer hospitals received Star Ratings at all, fewer received five stars, and more hospitals received just one star.

Individual hospital ratings are available on Care Compare here.

SAMHSA Releases 2023 National Survey on Drug Use and Health 
On July 30th, the Substance Abuse and Mental Health Services Administration (SAMHSA) released the results of the 2023 National Survey on Drug Use and Health (NSDUH), which details Americans’ experiences with mental health conditions, substance use, and treatment. Key findings from the survey include:
Mental Health

  • 22.8% of adults aged 18 or older had any mental illness in the past year.
  • 4.5 million youth (ages 12 to 17) had a major depressive episode in the past year, of which nearly 1 in 5 also had a substance use disorder.
  • 5.0% of adults had serious thoughts of suicide, 1.4% made a suicide plan, and 0.6% attempted suicide in the past year.

Substance Use

  • 3.1% of people misused opioids in the past year, which is similar to 2022 and 2021.
  • 45.6% of people age 12 or older who use alcohol had engaged in binge drinking in the past month.
  • 21.8% of people aged 12 or older used marijuana in the past year.
  • 9.4% of people aged 12 or older vaped nicotine in the past month, up from 8.3% in 2022. More people initiated vaping compared to any other substance.

Services and Recovery

  • 31.9% of adolescents aged 12 to 17 received mental health treatment in the past year, an increase of more than 500,000 from 2022.
  • 23.0% of adults aged 18 or older received mental health treatment in the past year, an increase of 3.4 million from 2022.
  • 23.6% of people classified as needing substance use treatment received treatment in the past year.
  • 73.1% of people that had ever had a substance use problem considered themselves to be in recovery or to have recovered.
  • 66.6% of people who perceived they ever had a mental health issue considered themselves to be in recovery or to have recovered.

The full survey is available here.

CMS Releases Preliminary 2025 Medicare Part D Bid Information 
On July 29th, CMS released preliminary technical information regarding Medicare Part D bids for contract year (CY) 2025. This guidance is intended to support plan sponsors in preparation for finalizing Part D and Medicare Advantage (MA) offerings. The beneficiary premium for 2025 will be $36.78, which is $2.08 more than 2024. CMS also clarified several Part D policy changes going into effect in 2025, including the beneficiary out-of-pocket cap at $2,000, the elimination of the “donut hole,” and the sunset of the Coverage Gap Discount Program.

CMS also announced a new voluntary Part D premium stabilization demonstration. This program aims to identify whether additional premium stabilization and modified risk corridors for stand-alone prescription drug plans (PDPs) complement the ongoing implementation of IRA provisions. Participating PDPs will receive a uniform $15 reduction to the base beneficiary premium with year-over-year increase limits of $35 on a plan’s total Part D premium. Additionally, the demonstration will roll out a risk corridor to mitigate potential plan losses. Any stand-alone PDPs are eligible to join the program, which is set to last one year with ongoing monitoring.

The announcement is available here.

NIST Finalizes AI Guidance Documents 
On July 26th, the National Institute of Standards and Technology (NIST) at the Department of Commerce released new guidance, as directed by President Biden’s October 2023 Executive Order (EO) on the Safe, Secure, and Trustworthy Development of AI. NIST released one draft and two final guidance documents that cover best practices for risk management for generative AI, in addition to one resiliency testing platform and a proposed plan for synchronizing global AI standards. The U.S. Patent and Trademark Office (USPTO) also updated guidance on how subject matter eligible under patent law should be determined.

The announcement is available here.

CMS Approves North Carolina’s Medical Debt Relief Incentive Program 
On July 29th, Governor Roy Cooper (D-NC) announced that CMS has approved the state’s new medical debt relief incentive program. The voluntary program leverages Medicaid to incentivize hospitals to relieve existing medical debt for eligible North Carolina residents. Hospitals that elect to join the program will receive a higher level of Medicaid reimbursement under the Healthcare Access and Stabilization Program (HASP) in exchange for relieving all unpaid medical debt for Medicaid beneficiaries and debt deemed uncollectible for certain low income, non-Medicaid enrollees from January 1, 2014 onward. Participating hospitals are prohibited from reporting debt covered by these policies to any credit agency.

The announcement is available here.

CMS Releases 2025 Final Hospice Payment Rate Update Final Rule 
On July 30th, CMS issued a final rule updating Medicare hospice payment rates and the aggregate cap amount for FY 2025. The FY 2025 hospice payment update percentage is 2.9% (an estimated increase of $790 million in payments from FY 2024). The update is the result of a 3.4% inpatient hospital market basket increase, reduced by a 0.5 percentage point productivity adjustment. The rule finalizes the most recent OMB statistical area delineations which materially impact the hospice wage index, but hospices are limited to a maximum 5% reduction to their 2024 wage index. Additionally, the rule finalizes two new process measures for the Hospice Quality Reporting Program (HQRP) concerning timely follow ups.

The fact sheet is available here, and the final rule is available here.

CMS Issues 2025 Skilled Nursing Facility Prospective Payment System Final Rule 
On July 31st, CMS issued a final rule updating payment policies and rates under the FY 2025 Skilled Nursing Facility Prospective Payment System (SNF PPS). These updates will result in a net increase of 4.2% in Medicare Part A payments to SNFs in FY 2025, or approximately $1.4 billion total. The increase is the result of a 3.0% SNF market basket increase, a 1.7 percentage point forecast error adjustment, and a 0.5 percentage point productivity adjustment. Additional key provisions of the rule include: 

  • PDPM ICD-10 Code Mappings: CMS finalized changes to the Payment-Driven Payment Model ICD-10 code mappings to allow providers to provide more accurate, consistent, and appropriate primary diagnoses that meet the criteria for skilled intervention during a Part A SNF stay.
  • Nursing Home Enforcement: CMS enhanced enforcement authority for civil monetary penalties over health and safety violations.
  • Quality Reporting Program: CMS is adding four new social determinants of health (SDOH) items and modifying one SDOH assessment item for the SNF QRP, and is requiring SNFs to validate data submitted under the SNF QRP beginning with the FY 2027 SNF QRP. 
  • SNF VBP: CMS is adopting a measure selection, retention, and removal policy for the SNF VBP program, as well as a technical measure update policy and a review and correction policy update.

The fact sheet is available here, and the final rule is available here.

Other Updates

KFF Report Estimates Average Marketplace Premiums Will Rise 93% After Enhanced Tax Credits End
On July 26th, the Kaiser Family Foundation (KFF) released a report on the potential expiration of enhanced premium tax credits first created in the American Rescue Plan Act (ARPA). These enhanced credits are currently set to expire at the end of calendar year 2025, after they were extended in the Inflation Reduction Act (IRA). Notably, current data on the amount of enhanced subsidies are only available in the 32 states using Healthcare.gov.
 
The report found that subsidies have cut premiums, on average, by 44% (or $705 annually) for enrollees receiving premium tax credits. If subsidies expire, average premium payments will rise by 93% in states using Healthcare.gov, with the highest increases in Wyoming, Alaska, and West Virginia. Overall, the majority of federal funding for enhanced credits goes to Florida (22%) and Texas (16%), largely due to high population and a lack of Medicaid expansion.
 
The report is available here.

New York State Updates

OPWDD Proposes Rules on Pathway to Employment and Supported Decision-Making
On July 31st, the New York State (NYS) Office for People with Developmental Disabilities (OPWDD) issued proposed rules for public comment that would: 

  1. Update to the Pathway to Employment regulations; and
  2. Effectuate the adoption of supported decision-making practices within the OPWDD service system.

The updated Pathway to Employment regulations would: 

  • Expand the types of allowable services;
  • Set eligibility criteria for individuals to access services;
  • Set limits on services;
  • Describe when and through what modalities services may be delivered;
  • Require community-based vocational experiences for service recipients;
  • Streamline documentation requirements; and
  • Set requirements on provider billing and staff training.

The supported decision-making regulations would establish: 

  • New rules to implement provisions related to supported decision-making facilitation services;
  • The duties, responsibilities, and eligibility of supporters under both formal and informal agreements;
  • The differences between informal and formal agreements;
  • The application of the presumption of capacity for individuals considering entering into such agreements;
  • Notice requirements for eligible supporters; and
  • The responsibilities of care management providers.

The proposed regulations are available in the State Register here. Public comment may be submitted to rau.unit@opwdd.ny.gov through September 29th.

DOH Issues Public Notice Regarding Forthcoming CCO Health Home Reimbursement Reductions
Effective on or after August 1, 2024, in accordance with the NYS 2024-25 Enacted Budget, the NYS Department of Health (DOH) intends to reduce reimbursement for Health Home services provided by Care Coordination Organizations (CCOs). CCOs are a specialized Health Home model that provide care management services to individuals with intellectual and/or developmental disabilities. DOH estimates that this will result in a $12.7 million reduction in Medicaid expenditures for State Fiscal Year 2025.

The public notice is available in the State Register here. Public comment may be submitted to spa_inquiries@health.ny.gov.

DOH Proposes SPA to Cover Certain Imported Drugs under Medicaid
DOH has proposed a State Plan Amendment (SPA) to allow for the coverage of imported drugs in line with federal regulations. Effective on or after August 1st, the NYS Medicaid benefit will cover “certain imported drugs that are deemed medically necessary” per federal reimportation requirements.

In certain cases, the Food and Drug Administration (FDA) allows temporary importation of non-FDA approved drugs from other countries to mitigate the effects of drug shortages, such as the current shortage of long-acting penicillin. CMS encouraged states in its May 7thMedicaid call to consider submitting a SPA to cover such drugs if needed.

The public notice is available in the State Register here. Public comment may be submitted to spa_inquiries@health.ny.gov.