Weekly Health Care Policy Update – October 4, 2024

October 11, 2024

In this update: 

  • Federal Agencies
    • CMS Adjusts Medicare IPPS Rates Due to Court Decision
    • GAO Criticizes Hospital Price Transparency Data Completeness and Accuracy
    • CMS Releases MA and Part D Premiums, Plan Options, and Benefits
    • HHS OIG Issues Three MA Audits on Risk Adjustment-Related Overpayments
    • CMS Announces Q4 Medicare Rebates for 54 Prescription Drugs
    • CMS Publishes Report on Acute Hospital Care at Home Initiative
    • CMS Issues Guidance for Second Round of Medicare Drug Negotiations
  • Other Updates
    • JAMA Publishes Study on Tax Benefits for Nonprofit Hospitals
  • New York State Updates
    • DOH Releases Q&A for the Part S Hospital Safety Net Transformation Program
    • DOH Releases Guidance on Updated Licensure Thresholds
    • DOH Adopts Final Hospital Cybersecurity Regulations
    • Governor Hochul Announces Public Partnerships LLC as CDPAP Statewide Fiscal Intermediary
    • OMH Issues FAQ on Upcoming Commercial Rate Mandate
    • DOH Announces New Medical Respite Program Certification Process
    • Governor Hochul Declares New York an “Employment First State” for People with Disabilities
    • CMS Approves New York SPA to Separately Reimburse FQHCs and RHCs for CHW Visits
    • DOH Adopts Final Regulations Updating Reproductive Health Care Standards
    • Governor Hochul Signs Breast Cancer and Maternal Health-Related Legislation
    • OMH Announces DOB Approval and Next Steps for ACT Billing and Reimbursement Changes
    • OMH Releases Proposed Regulations for PROS Redesign for Public Comment
    • CMS Approves OPWDD 1915(c) Comprehensive HCBS Waiver Renewal

Federal Agencies

CMS Adjusts Medicare IPPS Rates Due to Court Decision
On September 30th, the Centers for Medicare and Medicaid Services (CMS) issued an interim final rule with comment period to modify hospital Inpatient Prospective Payment System (IPPS) rates due to a decision by the D.C. Court of Appeals in Bridgeport v. Becerra. The case centered on a policy implemented by CMS under the Trump Administration to provide low wage index hospitals (hospitals below the 25th percentile of wage index values) with a temporary increase to close their gap to the 25th percentile level by half. This adjustment was made to be budget-neutral with a corresponding negative adjustment of 0.2 percent applied across all hospital reimbursement rates. CMS extended this policy through fiscal year (FY) 2024, and indicated it intended to continue the policy through at least FY 2027.

However, in light of the D.C. Court’s decision, CMS is no longer applying this policy for FY 2025. To mitigate negative impacts, it will apply a temporary transition policy under which affected low wage index hospitals will be subject to a maximum 5% decrease in wage index. This policy will not be budget-neutral.

Issues that remain unresolved include whether CMS will repay hospitals for the full period of time that the adjustment was in effect; whether it will seek to claw back funds from affected hospitals to maintain budget neutrality; and whether all hospitals will be reimbursed or only those who were a party to the case.

The final rule is available here.

GAO Criticizes Hospital Price Transparency Data Completeness and Accuracy
On October 2nd, the Government Accountability Office (GAO) released a report on hospital compliance with price transparency requirements. GAO found that “various challenges have limited the usability of hospital pricing data,” including “inconsistent file formats, complex pricing, and perceived incomplete and inaccurate data.” While CMS has taken some actions to improve data quality and fine hospitals who failed to take timely corrective action, GAO contends that CMS still “does not have assurance that pricing data hospitals report are sufficiently complete and accurate.” GAO suggested that, while CMS does not have resources to audit all disclosures, it could perform risk-based or random sampling audits as a cost-effective measure.

The report is available here.

CMS Releases MA and Part D Premiums, Plan Options, and Benefits
On September 27th, CMS announced the 2025 premiums, benefits, and plan choices for Medicare Advantage (MA) and the Medicare Part D prescription drug program. On average, premiums, benefits, and plan choices are expected to remain stable in 2025. The ongoing implementation of the Inflation Reduction Act (IRA) continues to lower out-of-pocket costs for Part D beneficiaries. Specific information for the programs include:

Medicare Advantage

  • Premiums: Average MA premiums are expected to decrease in 2025. Inclusive of prescription drug coverage, the average monthly plan premium will decrease by $1.23 to $17.00 per month.
  • Benefits: Overall, benefit offerings, including supplemental benefits, will remain stable, while benefits targeting chronically ill beneficiaries are set to expand.
  • Choices: Inclusive of prescription drug coverage, 99% of prospective beneficiaries will have at least one MA plan in their area. Additionally, Special Needs Plans (SNPs) offerings are expected to grow 9%.

Medicare Part D

  • Premiums: Average Part D premiums will decrease by $7.45 to $46.50 per month, attributable to IRA premium stabilization and CMS’s new voluntary premium stabilization demonstration.
  • Benefits: There are no significant changes in formularies.
  • Choices: On average, prospective beneficiaries will have access to an average of 15 Part D plans per region.
  • Program Changes: The IRA’s out-of-pocket cap ($2,000 per year) will take effect in 2025. Additionally, starting in 2025, Part D plan sponsors will allow beneficiaries to spread out-of-pocket costs over the course of the year through the Medicare Prescription Payment Plan. Lastly, the Coverage Gap Discount Program will be replaced by the Manufacturer Discount Program.

The fact sheet is available here.

HHS OIG Issues Three MA Audits on Risk Adjustment-Related Overpayments
On September 25th, the Office of the Inspector General (OIG) at the Department of Health and Human Services (HHS) released results from compliance audits of Medicare Advantage (MA) overpayments. OIG found that three plans—Humana Health Plan, EmblemHealth, and HealthAssurance Pennsylvania (an Aetna subsidiary)—received $140 million in MA overpayments dating back to 2015, principally through exaggerating the severity of beneficiary illnesses. The audits addressed the use of specific diagnostic codes to garner higher reimbursements under the MA risk adjustment program.  The agency is now requesting repayment of a fraction of the overpayments totaling roughly $11 million. Under last year’s Medicare Risk Adjustment Data Validation program final rule, CMS has the authority to recoup payments from 2018 or later. All three plans have disputed the audit findings.

The reports are available here (EmblemHealth), here (Humana), and here(HealthAssurance/Aetna).

CMS Announces Q4 Medicare Rebates for 54 Prescription Drugs 
On September 30th, CMS announced that rebates will apply to 54 drugs when provided through Medicare Part B for the fourth quarter of 2024 (October through December). The Inflation Reduction Act (IRA) requires that manufacturers pay a rebate to Medicare when they raise the price of certain Part B and D drugs faster than the rate of inflation. The rebates to Medicare will result in lower cost-sharing for Part B enrollees as a result, saving beneficiaries up to $3,854 per day of usage. Over 822,000 Medicare beneficiaries use these rebated drugs, which treat conditions such as cancer and osteoporosis.

The announcement is available here.

CMS Publishes Report on Acute Hospital Care at Home Initiative 
On September 30th, CMS released a report on the Acute Hospital Care at Home (AHCAH) initiative. AHCAH, which is set to sunset at the end of the year, allows certain hospitals to provide inpatient-level care at home. This report did not evaluate the value of the program, but rather offered descriptive insights into the program’s operations.

The report found that AHCAH patients were more likely to be white and live in urban settings and less likely to receive Medicaid. The most common conditions treated through AHCAH were respiratory, circulatory, and renal conditions, in addition to infectious diseases. Program outcomes varied, with researchers finding lower 30-day mortality and hospital-acquired conditions (HAC), but mixed results on 30-day readmissions based on diagnosis. Overall, the report found that Medicare spending was lower for AHCAH patients. 

The fact sheet is available here.

CMS Issues Guidance for Second Round of Medicare Drug Negotiations
On October 2nd, CMS issued guidance for the second round of the Medicare Drug Price Negotiation Program. Negotiations for this round will take place during 2025, be effective in 2027, and include an additional 15 drugs under Medicare Part D. Overall, little will change between the first and second rounds of negotiations, given statutory requirements set forth in the IRA. However, for the second round, a manufacturer’s first negotiation meeting will occur after CMS issues an initial offer. The guidance also includes information on additional opportunities for patient input and support services for manufacturers during implementation.

The guidance is available here, and the fact sheet is available here.

Other Updates

JAMA Publishes Study on Tax Benefits for Nonprofit Hospitals 
On September 26th, JAMA published a study on the total tax benefit among nonprofit hospitals. In 2021, researchers found that nonprofit hospitals (2,927 total) received a $37.4 billion total tax benefit (includes federal income sales, property, state income tax, etc.). In addition, researchers found that the tax benefit is highly concentrated, with 7% of hospitals accounting for half of the total amount. Additionally, researchers note substantial differences across states, ranging from $19 (Alabama) to $275 (Massachusetts) in tax benefit per capita.
 
The study is available here.

New York State Updates

DOH Releases Q&A for the Part S Hospital Safety Net Transformation Program
On October 1st, the New York State (NYS) Department of Health (DOH) released a Q&A document for the Safety Net Transformation Program. This program, enacted under Part S of the Health and Mental Hygiene bill in the 2024-25 Enacted New York State Budget, is designed to offer a single structure through which safety net hospitals may access the funding and regulatory flexibility needed to enact transformation projects. Such projects will have the goal of improving care, achieving sustainability, and encouraging clinical partnerships.

Topics covered include application instructions, award limitations, applicant and partner organization eligibility, and allowable expenses, among others. Notable information includes: 

  • Letters of Interest (LOIs) will be reviewed on a rolling basis, and DOH will release the application to qualifying parties based on the LOI. There will be no particular deadline for the application to be submitted. 
  • There is no limit to the funds that can be requested, but DOH will weigh the benefit of the transformation project against the available funding within the given time period. The State has tentatively allocated $300 million for the program this fiscal year.
  • Debt retirement may be funded, if it is critical to the safety net hospital’s transformation.
  • Awards may include capital funding, non-capital operating funding, or a combination of both.
  • Funds may flow to the safety net hospital, its partners, or both.

The Questions and Answers are available here. Additional inquiries may be sent to SafetynetTransformation@health.ny.gov.

DOH Releases Guidance on Updated Licensure Thresholds
On October 1st, DOH issued guidance on the expanded licensure thresholds for certain primary care, mental health, substance use, and disability service providers, as authorized by the 2023-24 Enacted NYS Budget. Specifically, the State is expanding existing licensure threshold exemptions to 30%, as follows: 

  • Article 28 providers may provide up to 30% of total annual visits for mental health services, up to 30% of total annual visits for addiction services, and up to 30% of total annual visits for diagnostic and treatment services for people with intellectual and/or developmental disabilities (I/DD) without obtaining an additional license.
    • However, physical health services should continue to be the majority of services provided in an Article 28.
  • Article 31 Mental Health Outpatient and Rehabilitation Services (MHOTRS) clinics and Article 32 Part 822 substance use providers may provide up to 30 percent of total annual visits for primary care services without obtaining an Article 28 license from DOH.
    • MHOTRS and Article 32 clinics are not limited in providing services across each other’s respective scope (mental health and addiction services, respectively) or integrated behavioral health.
  • Article 16 I/DD clinic providers may provide up to 30 percent of their total annual visits for primary care without obtaining an Article 28 license from DOH.

Providers delivering services outside their applicable licensure under the updated licensure thresholds should continue current billing practices for these services until otherwise directed. Services that are already permissible under a license (e.g., health monitoring services in an Article 31 clinic) do not count towards licensure thresholds.

For Office of Mental Health (OMH)-licensed Article 31 MHOTRS clinics seeking to provide primary care services, this guidance will be effective when the amendment to OMH’s Part 599 regulations necessary to effectuate this change is effective. This is anticipated shortly.

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

DOH Adopts Final Hospital Cybersecurity Regulations
On October 2nd, DOH adopted final regulations on cybersecurity requirements for hospitals. The regulations apply to all general hospitals licensed under Article 28 of the Public Health Law. No significant changes were made to the final regulations compared to the recently published revised proposed regulations. Hospitals have one year from the effective date of the regulation (that is, until October 2, 2025) to comply with the requirements. However, the requirement to notify DOH within 72 hours of a cybersecurity incident will be effective upon a separate adoption in the State Register.

The final regulations are available here. Comments received on the revised proposed regulations and DOH responses are available in the State Register here.

Governor Hochul Announces Public Partnerships LLC as CDPAP Statewide Fiscal Intermediary
On September 30th, Governor Hochul announced that Georgia-based Public Partnerships LLC (PPL) was selected as the statewide entity to oversee the delivery of Fiscal Intermediary (FI) services for the Consumer Directed Personal Assistance Program (CDPAP). CDPAP allows individuals to choose their own personal care aide to address their home health needs. FI organizations perform administrative and financial functions for consumers within CDPAP. 

PPL will move its national headquarters to New York State, with the statewide partnership expected to take effect by mid-2025. PPL will subcontract with the following regional partners: 

  • Chinese American Planning Council (New York City, Long Island, and Westchester County)
  • Concepts of Independence, Inc. (Hudson Valley)
  • Angels In Your Home (Mid-state Areas)
  • Consumer Directed Choices (Upstate and Southwestern Areas)

PPL will also partner with over 30 home care agencies that are currently active in the State’s CDPAP program, a list of which is forthcoming. The Governor indicated that State officials and partners will begin a transition process for CDPAP users and caregivers over the next few months prior to implementation of the new statewide partnership with PPL.

The Governor’s press release is available here.

OMH Issues FAQ on Upcoming Commercial Rate Mandate
On September 30th, OMH provided a Frequently Asked Questions (FAQ) document for the upcoming commercial rate mandate. On January 1, 2025, in accordance with the 2024-25 Enacted NYS Budget, commercial insurance plans will be required to reimburse outpatient mental health and substance use disorder services provided by in-network providers at the Medicaid rate (at minimum).

The FAQ outlines: 

  • The mental health and substance use services and facilities that are applicable to the mandate;
  • The timeline for implementation;
  • Overlap with existing requirements for reimbursement of school-based mental health clinics;
  • The types of insurance policies and contracts that are subject to the mandate. For example, self-funded plans, the Essential Plan, and TRICARE are not subject to the mandate.

The FAQ is available here. On October 25th from 10am-11:30am, OMH will host a webinar to review the upcoming changes and relevant guidance/resources. Registration for the webinar is available here, and questions may be submitted in advance here through October 11th.

DOH Announces New Medical Respite Program Certification Process 
On October 3rd, DOH announced the launch of a new certification process for medical respite programs statewide. To achieve certification, a medical respite program must meet a set of physical facility and service standards established in Title 10 NYCRR Part 1007 and related guidance documents.

Additional details, including the application for certification, are available here. Questions may be submitted to MRProgram@health.ny.gov. 

Governor Hochul Declares New York an “Employment First State” for People with Disabilities
On September 30th, Governor Hochul signed Executive Order 40, which commits New York to being an “Employment First State” as it pertains to people with disabilities. The State will adopt and implement the Employment First Principles, a national movement to prioritize competitive, integrated employment as the preferred outcome when planning or providing services and supports to individuals with disabilities.

The Governor’s Chief Disability Office (CDO) will be responsible for coordinating New York’s Employment First initiatives. In collaboration with the CDO, each State Agency will work to ensure that the Employment First Principles outlined in the Executive Order become a routine part of its operations. By October 1, 2025, the CDO and the State Agencies will be responsible for evaluating current practices and outlining a plan to remove barriers and adopt practices, procedures, or rules that ensure competitive integrated employment is considered as the first option and preferred outcome in the planning and delivery of services to people with disabilities. The CDO will also be responsible for developing a training curriculum in Employment First Principles, including how State Agencies can offer employment services to assist people with disabilities in obtaining employment that best meet their needs.

The Executive Order is available here.

CMS Approves New York SPA to Separately Reimburse FQHCs and RHCs for CHW Visits
On September 18th, CMS approved New York’s State Plan Amendment (SPA) to reimburse Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) a payment that is separate from the Prospective Payment System (PPS) rate for services rendered by Community Health Workers (CHWs) when it is the only service provided. CHWs provide health advocacy, health education, and health navigation services to eligible populations when recommended by a physician or licensed practitioner of the healing arts. Reimbursement for CHW visits will be provided in accordance with the procedure codes and fees identified in the NYS Medicaid CHW Fee Schedule (here). The SPA is effective retroactive to April 1, 2024.

The SPA is available here. The CMS approval letter is available here.

DOH Adopts Final Regulations Updating Reproductive Health Care Standards 
On October 2nd, DOH adopted regulations to amend Part 12 of Title 10 and section 505.2(e) of Title 19 of the New York Codes, Rules, and Regulations (NYCRR) to modernize the definition of abortion and reflect the most current clinical guidelines for abortion care, and to align the regulations with the terms of the State’s Reproductive Health Act (RHA). In addition to technical changes, the regulations: 

  • Modernize the definition of abortion to expressly include medication and procedural services as deemed appropriate by patient and physician;
  • Clarify that abortion services may be provided by any healthcare practitioner licensed in NYS and acting within their lawful scope of practice; and
  • Clarify that practitioners should determine a patient’s estimated duration of pregnancy in accordance with the requirements of Public Health Law (PHL) section 2599-bb and evidence-based clinical guidelines.

The final regulations are available here. Comments received on the proposed regulations and DOH responses are available in the State Register here.

Governor Hochul Signs Breast Cancer and Maternal Health-Related Legislation 
On October 1st, Governor Hochul signed legislation (S2454C/A1696C) requiring certain insurance policies to cover additional screenings for breast cancer when recommended by a physician based on nationally recognized clinical guidelines. The screenings include diagnostic mammograms, breast ultrasounds, and MRIs. Cost-sharing will not apply to these procedures except to the extent it would result in health savings account ineligibility under IRS guidelines. 

The Governor also signed legislation (S1965A/A3865A) requiring certain health insurance policies to cover prenatal vitamins when prescribed by a health care practitioners, and legislation (S6674A/A7790A) expanding insurance coverage requirements for human donor milk beyond inpatient use. Finally, the Governor signed S201/A2656, which prohibits health insurance plans from imposing a fee or other penalty for special enrollment due to pregnancy.

The Governor’s press release is available here (breast cancer screening) and here (maternal health initiatives). 

OMH Announces DOB Approval and Next Steps for ACT Billing and Reimbursement Changes
On October 1st, OMH announced Division of the Budget (DOB) approval for billing and reimbursement changes for Assertive Community Treatment (ACT) providers (described here). As a result, Medicaid Managed Care Plans (MMCPs) and ACT teams must implement the following changes: 

  • Retrospective Rate Changes for Adult and Youth ACT Teams: MMCPs must complete necessary system edits to ensure payable ACT claims for dates of service on or after October 1, 2023. These activities should be completed as soon as possible, but no later than December 31st.
  • Prospective Rate Code Changes for Youth ACT Teams: MMCPs and Youth ACT teams must ensure that their systems are configured to comply with the new youth rate codes 4513-4515 and their associated procedure codes and modifiers. These changes are effective January 1, 2025.

The OMH guidance is available here. Questions may be submitted to BHO@omh.ny.gov(MMCP inquiries) or OMH-Managed-Care@omh.ny.gov (provider inquiries).

OMH Releases Proposed Regulations for PROS Redesign for Public Comment
On October 2nd, OMH issued proposed regulations to repeal and replace Part 512 of Title 14 NYCRR to “modernize and simplify” the Personalized Recovery Oriented Services (PROS) program. The proposed regulations would update outdated language, amend provider qualifications and service definitions, add new services, and change the reimbursement methodology. OMH has indicated that it has worked closely with PROS programs and participants over the last three years on the proposed programmatic and reimbursement changes to the model, and currently has a SPA pending with CMS for approval of the redesign.

The proposed regulations are available in the State Register here. Public comment may be submitted to regs@omh.ny.gov through December 1st.  

CMS Approves OPWDD 1915(c) Comprehensive HCBS Waiver Renewal
On October 1st, CMS approved the NYS Office for People with Developmental Disabilities (OPWDD) 1915(c) Comprehensive Home and Community Based Services (HCBS) Waiver Renewal. The updated Waiver extends actions included in last year’s Waiver Amendment, in addition to technical changes and services estimates to reflect current operations. The Waiver Renewal has been approved for the five-year period of October 1, 2024 through September 30, 2029.

The approved waiver renewal is available here.