Note: This is the last regular SPG policy update for 2024. We will resume weekly policy updates on January 3, 2025. Happy holidays!
In this update:
- Legislative Updates
- Federal Government Funding Remains in Limbo
- Senate Medicare GME Group Releases Proposal to Add 5,000 New Slots
- Senators Marshall and Bennet Propose Law to Strengthen No Surprises Act Penalties for Insurers
- Bipartisan House Task Force on AI Releases Report
- Federal Agencies
- HHS Releases HTI-2 Rule
- CMS Announces State Recipients of Innovation in Behavioral Health Model
- CDC Releases 2023 Mortality Data
- CMS Publishes Report on 2023 Health Care Spending
- Other Updates
- CBO Publishes Report on Deficit Reduction Options
- MedPAC Holds December Meeting
- MACPAC Holds December Meeting
- New York State Updates
- Governor Hochul Announces Implementation of Independent I/DD Ombuds Program
- OMH Adopts Final Regulations for Hospital Admission and Discharge Criteria
- Governor Hochul Vetoes Hospital Closure Bill; Signs Other Health Care Legislation
Legislative Update
Federal Government Funding Remains in Limbo
The federal government’s funding will expire at the end of the day today (December 20th) without a continuing resolution (CR) or other legislative mechanism. Speaker Mike Johnson’s first attempt at a CR, released on December 17th, would have funded the government for three months, through March 14, 2025, but he withdrew it under opposition from President-elect Trump. Johnson’s second attempt then failed due to a rebellion by House Republicans. This afternoon, Speaker Johnson said he intended to move forward with a new attempt that would excise the proposed increase to the debt limit. This new attempt would instead have an informal commitment to raise the debt ceiling in early 2025 by $1.5 trillion paired with a commitment to reduce mandatory spending by $2.5 trillion.
News reports indicate that the new measure will likely require significant Democratic support to overcome opposition from fiscal conservatives. As a result, the eventual spending bill is likely to include several important provisions, including disaster relief and extensions of bills like the Older Americans Act, the Workforce Innovation and Opportunity Act, and the Farm Bill. The original December 17th package also included a significant package of health care extenders, which were:
- Increase in Medicare physician fee schedule payments of 2.5% for 2025, resulting in a 0.3% overall decline in payments rather than the 2.8% scheduled cut;
- Delay of Medicaid disproportionate hospital share pay cuts until January 1, 2027;
- Extension of pandemic-era Medicare telehealth flexibilities until December 31, 2026;
- Expansion of CMS’ Acute Hospital Care at Home program through December 31, 2029;
- Extension of the Medicare low-volume hospital payment adjustment through December 31, 2025;
- Prohibition on linking Pharmacy Benefit Manager (PBM) compensation to a drug’s Medicare list price, a requirement for PBMs to pass through 100% of drug rebates and discounts to the employer or health plan, and a prohibition on spread pricing in Medicaid;
- Reauthorization of the SUPPORT Act for five years; and
- Reauthorization of the All Hazards Preparedness Act for two years.
Although this bill never came to a vote, the full text is available here. The House voted Thursday evening on the second, slimmed down package that would have raised the debt ceiling through January 30, 2027 without any corresponding spending cuts. The bill failed 174-235 with 38 Republicans and 197 Democrats voting against the bill. That failed bill is available here. Legislative language for the new, third attempt has not been released as of the time of writing.
Senate Medicare GME Group Releases Proposal to Add 5,000 New Slots
On December 19th, Senators Bill Cassidy (R-LA), Catherine Cortez Masto (D-NV), John Cornyn (R-TX), and Michael Bennet (D-CO) released draft legislation that would add 5,000 new slots for Medicare graduate medical education (GME). Of these, 35 percent would be allocated to primary care and psychiatry. Hospitals would be capped at receiving 30 new slots. The Senators are seeking feedback on the bill,
The proposed legislative text is here. Feedback should be submitted by January 31, 2025.
Senators Marshall and Bennet Propose Law to Strengthen No Surprises Act Penalties for Insurers
On December 16th, Senators Roger Marshall (R-KS) and Michael Bennet (D-CO) introduced the “No Surprises Act Enforcement Act,” legislation that would seek to increase health insurer compliance with the No Surprises Act. Marshall and Bennet are members of the Senate Health, Education, Labor, and Pensions (HELP) Committee, which has jurisdiction over the No Surprises Act. The legislation aims to increase penalties for non-compliance with statutory payment deadlines and for insurers to provide parity with penalties imposed for providers, with additional reporting requirements. Given the timing of its introduction, the legislation is unlikely to be included in the CR Congress is considering this week. However, the timing may serve to indicate that the issue may be a priority when the new Congress convenes in January. Companion legislation was also introduced in the U.S. House of Representatives.
The bill is available here, and the announcement is available here.
Bipartisan House Task Force on AI Releases Report
On December 17th, the Bipartisan House Task Force on AI released its report for the 118thCongress. The report includes research and recommendations across many industries and sectors. For health care, research spotlights new products and capabilities within the sector, including the field of diagnostics, electronic health records (EHRs), and medical devices. The report outlines six recommendations surrounding transparency, research through the National Institutes of Health (NIH), compliance with the Health Insurance Portability and Accountability Act (HIPAA), legal frameworks for liability, and appropriate payment mechanisms to capture the cost of AI technology implementation.
The report is available here.
Federal Agencies
HHS Releases HTI-2 Rule
On December 16th, the Department of Health and Human Services (HHS) released a final rule entitled “Health Data, Technology, and Interoperability: Trusted Exchange Framework and Common Agreement.” The final rule substantially pares down a 1,067-page proposed rule issued over the summer, to just 156 pages. The proposed rule would have created a path for certification for payers, a certification for Health IT software used by health plans and public health organizations, and addressed imaging interoperability and API capabilities.
Instead, the final rule focuses on the Trusted Exchange Framework and Common Agreement (TEFCA), HHS’s universal data exchange governance framework that includes a technical floor for national interoperability. It sets minimum qualifications for a health information network to be designated as a Qualified Health Information Network (QHIN), sets a new TEFCA Manner Exception, and sets standard for QHIN onboarding and other administration activites.
The rule will take effect on January 15, 2025. It is available here.
CMS Announces State Recipients of Innovation in Behavioral Health Model
On December 18th, the Centers for Medicare and Medicaid Services (CMS) announced that Michigan, New York, Oklahoma, and South Carolina have been selected to participate in the Innovation in Behavioral Health (IBH) Model. The model aims to improve outcomes and care coordination for individuals with moderate to severe behavioral health conditions. The IBH model enlists “Practice Participants” (specialty behavioral health practices, including community mental health centers, opioid treatment programs, and public or private practices) in value-based payment arrangements, with the option to participate in either or both the Medicaid or Medicare components of the model, depending on their patient mix. New York is implementing the model in designated sub-state geographic service areas. Model implementation will begin on January 1, 2025, and the model is expected to run for eight years.
The model fact sheet is available here.
CDC Releases 2023 Mortality Data
On December 18th, the Centers for Disease Control and Prevention (CDC) released its annual report on 2023 mortality data. It summarizes final data on deaths and death rates by demographic and medical characteristics, offering insights into mortality trends of U.S. residents. Key takeaways include:
- Life expectancy in 2023 was 78.4 years, an increase of 0.9 years from 2022;
- The age-adjusted death rate decreased by 6.0% from 2022 to 2023;
- The 10 leading causes of death in 2023 remained the same as in 2022, with heart disease, cancer, and unintentional injuries leading; and
- The infant mortality rate did not change significantly from 2022 to 2023.
The report is available here.
CMS Publishes Report on 2023 Health Care Spending
On December 18th, CMS released health care expenditure data in an article for Health Affairs. National health care spending reached $4.9 trillion in 2023 (or $14,570 per person), an increase of 7.5 percent from 2022. As a reference, gross domestic product (GDP) increased 6.6% in 2023, with health care spending at a 17.6 percent share. This rate of growth is close to double that in 2021 and 2022 (4.2 and 4.6 percent, respectively). This dramatic increase can be explained, in part, by the expiration of pandemic-era funding and deferred medical care. Private insurance coverage also surged with marketplace subsidies, leading to an insured rate of 92.5 percent. Health care prices rose at a similar rate to past years.
The article is available here.
Other Updates
CBO Publishes Report on Deficit Reduction Options
On December 12th, the Congressional Budget Office (CBO) published a compendium of policy options that would reduce the federal budget deficit. In this paper, CBO provides projections for the potential 10-year savings of a variety of health care savings proposals, including:
- Medicaid:
- Block grants or per capita caps on Medicaid spending ($459 billion to $893 billion).
- Limitations on state health care provider taxes for Medicaid financing ($48 billion for a 5 percent cap, $241 billion for a 2.5 percent cap, and $612 billion for fully eliminating such taxes).
- Reductions in Federal Medical Assistance Percentage (FMAP) for Medicaid matching funds ($69 billion for setting all administrative matching to 50%, $530 billion for eliminating the 50% minimum FMAP, and $561 billion for reducing the Medicaid expansion match from 90% to 50% FMAP).
- Medicare fee-for-service (FFS):
- Increasing Medicare Part B premiums, from covering 25 percent of expected costs to 35 percent ($510 billion).
- Implementing uniform cost-sharing requirements with a $850 deductible for Part A and B, 20% coinsurance, and an $8,500 out-of-pocket cap ($20 billion).
- Restricting Medigap Supplemental Insurance policies to enact similar limits, requiring patients to pay the first $850 and 50% of the next $7,650 ($116 billion).
- Combining both of the above changes to Medicare cost-sharing ($129 billion).
- Reducing Medicare bad debt reimbursement from 65% to 45% ($17 billion), 25% ($33 billion), or 0% ($54.1 billion).
- Extending site-neutral payments to all hospital outpatient departments ($159 billion).
- Medicare Advantage (MA):
- Reducing MA benchmarks by 10 percent across the board for all counties ($489 billion).
- Increasing the MA uniform risk score reduction from 5.9% to 8% ($159 billion) or 20% ($1.049 trillion).
- Using two years of diagnosis data and excluding Health Risk Assessment-only diagnoses from MA risk scoring ($124 billion).
The report is available here.
MedPAC Holds December Meeting
On December 12th and 13th, the Medicare Payment Advisory Commission (MedPAC) held its monthly public meeting. Commissioners expressed support for recommendations that would update the physician fee schedule (PFS) for 2026 by: (1) updating the 2025 base payment rate by roughly the projected increase in the Medicare Economic Index (MEI); and (2) providing add-on payments for safety-net providers for services delivered to low-income beneficiaries. The Commissioners also discussed payment adequacy and updating payments for hospital inpatient and outpatient services (upwards) and skilled nursing facilities (downwards). The next meeting will take place on January 16-17, 2025.
MACPAC Holds December Meeting
On December 12th and 13th, the Medicaid and CHIP Payment and Access Commission (MACPAC) held its monthly public meeting. Commissioners spoke at length about accountability and oversight of Medicaid managed care organizations, including requesting additional information surrounding the efficacy of existing oversight mechanisms. The Commissioners discussed draft recommendations to improve Medicaid external quality reviews, aiming to strengthen annual technical reports, improve data accessibility, and reduce administrative burden. Additional topics included transitions of care for children and youth with special health care needs, potential utilization management for anti-obesity medication, and self-direction for home- and community-based services (HCBS). The next meeting will take place on January 23-24, 2025.
The slides are available here.
New York State Updates
Governor Hochul Announces Implementation of Independent I/DD Ombuds Program
On December 13th, Governor Hochul announced the implementation of a new ombuds program for the intellectual and/or developmental disabilities service system, which will be led by Community Service Society of New York (CSSNY). The program, which was authorized by the Fiscal Year 2024 Enacted New York State (NYS) Budget, will provide advocacy services for individuals and their families who are navigating the Office for People with Developmental Disabilities (OPWDD) service system. The program will operate independently from OPWDD.
The Governor’s press release is available here. Additional details are available on the CSSNY website here.
OMH Adopts Final Regulations for Hospital Admission and Discharge Criteria
On January 24th, the NYS Office of Mental Health (OMH) adopted final admission and discharge criteria for psychiatric inpatient units, emergency departments, and Comprehensive Psychiatric Emergency Programs (CPEPs). The final regulations update outdated definitions and include standardized requirements for admissions and discharges, including a list of required screenings and timeframes for coordinating aftercare appointments.
The final regulations are available here. Public comment received on the proposed regulations and OMH responses are available in the State Register here.
Governor Hochul Vetoes Hospital Closure Bill; Signs Other Health Care Legislation
Over the past two weeks, Governor Hochul signed the following health care-related legislation:
- S8865/A5790B requires assisted living residences to report on and publicly post information related to rates, rent, and service fees for the purposes of consumer comparison and quality rating development.
- S7114A/A6425 requires health insurance plans to provide coverage for epinephrine auto-injector devices (“EpiPens”) and limits the out-of-pocket cost to $100 per year.
- S5969A/A3674A allows medically fragile young adults who reside in pediatric specialized nursing facilities to remain at such facilities until the age of 36.
- S4674A/A5803 establishes a state Parkinson’s disease registry and directs certain health professionals and general hospitals to report instances of Parkinson’s disease to the State Department of Health.
- S3472/A7214 requires health care plans to report physician participation for physician profiles, mandates periodic updates by physicians within six months of re-registration to practice, and allows physicians to designate authorized designees to manage their profile updates.
- S5992A/A6168A prohibits hospitals and birthing centers from denying expecting and new mothers access to their doulas.
- S5481A/A2898 requires insurance policies to cover neuropsychological examinations for dyslexia under certain circumstances.
Hochul vetoed S8843A/A1633, the “Local Input in Community Healthcare Act,” which would have required hospitals seeking to close to provide nine months’ notice to the Department of Health (DOH) and get approval from the Public Health and Health Planning Council (PHHPC). Hochul said that she would direct DOH to reform closure processes in other ways.