Sellers Dorsey Digest

Federal Updates

News

Chevron Ruling Creates Potential Opportunities for Revisiting Critical Access Hospital Definitions

• Olympic Medical Center in Washington state, along with 800 similar hospitals across the country, could challenge current federal agency regulations regarding the qualifying criteria for critical access hospital designation to seek improved financial stability following the U.S. Supreme Court’s decision to eliminate the Chevron federal agency deference doctrine. Olympic Medical Center and other similar hospitals are too big to be considered critical access hospitals and too small for rural referral center benefits. Critical access hospitals with no more than 25 beds are reimbursed at 101% of Medicare costs, while large rural referral centers with at least 275 beds receive additional Medicare funding to offset the cost of complex care. The so-called “tweener” hospitals are hopeful that the current judicial landscape will result in revised criteria for the critical access hospital program. Current criteria like distance from other hospitals and emergency service availability are pivotal for critical access hospital designation, but potential lawsuits from hospitals not eligible for this designation may result in revised rules for the program. Data show that critical access hospitals fare better financially compared to hospitals that are paid under the Prospective Payment System (Modern Healthcare, July 29).

AMA, Provider Groups Advocate for Congressional Action to Prevent Medicare Pay Cut

• Without Congressional action, doctors face a 2.80% pay cut to Medicare reimbursement rates starting January 1, 2025. In a letter initiated by the American Medical Association (AMA) and signed by 126 other provider groups, emphasis is made on the pressing need to overhaul the current Medicare payment system to accurately reflect costs. The letter recommends tying payments to the Medicare Economic Index, reforming budget neutrality requirements, replacing the Merit-Based Incentive program (MIPs) with a Data-Driven Performance system, and extending bonuses for alternative payment models. Recently, the Senate Finance Committee took comments on a payment reform proposal and a bipartisan group of Senators explored solutions for the Medicare payment system. However, lawmakers will not reconvene until September and most legislative activity is expected to stall until after the November election. Providers urged Congress to reform MIPs by the end of this year and to enact changes as soon as possible (Inside Health Policy, July 25).

Bipartisan Policy Center and Congressional Budget Office Discuss the Need for Data to Better Understand Impacts of GLP-1 Coverage

• On July 23, the Bipartisan Policy Center (BPC) hosted a roundtable discussion with Congressional Budget Office (CBO) speakers as well as researchers and economists to discuss the possible impacts of anti-obesity medication coverage under Medicare. The biggest unknowns remain to be patient uptake, adherence rates, long-term drug costs, the impact of market competition and the Inflation Reduction Act, and just how much money will be saved in the prevention of future health conditions. These discussions stem from considerations of the cost of legislation such as The Treat and Reduce Obesity Act (TROA), which would allow Medicare to cover weight-loss drugs and expand coverage of intensive behavioral therapy. In June, the bill passed the House Ways & Means Committee and is currently awaiting further action in Congress (Inside Health Policy, July 26).

CMS Announces Voluntary Part D Premium Stabilization Demonstration

• CMS is launching a voluntary demonstration to support Medicare Part D changes resulting from the Inflation Reduction Act. Medicare Part D beneficiaries will see a base premium increase of $2.08 in contract year 2025 after CMS finalized its bid information. According to the agency, the Part D Premium Stabilization Demonstration aims to use three policies to increase premium stability for stand-alone prescription drug plans. The demonstration will reduce the base beneficiary premium by $15 for participating plans and prevent plans from increasing their premiums by more than $35 from CY2024. In some cases, plans will see a $0 premium. Finally, risk corridors will be changed to provide greater government risk sharing for potential plan losses. Plans must declare their intention to participate in the demonstration by August 5, and plans do not have to rebid. The program will run for three years but may be modified after one year (Fierce Healthcare and CMS, July 29).

Federal Legislation

Additional Continuing Resolution (CR) Expected Before October 1

• Last week, the House Appropriations Committee elected not to bring spending bills to the floor and chose to recess until September. As a result, the House Rules Committee decided that partisan amendments filed as add-ons to that legislation will not be considered. On August 1, the Senate Appropriations Committee is scheduled to hold a markup of its proposed funding bill for the Departments of Health and Human Services, Labor, and several other agencies. It is expected that there will still be disagreement between the House and the Senate on top-line spending and policy riders for some bills. While the Senate is in session this week, starting next week they will also recess until September 9. Given these time frames, stakeholders believe that the election might delay appropriations negotiations further, potentially until after the election. This will likely result in the need for a continuing resolution to extend government funding beyond its current expiration at the end of this federal fiscal year (Inside Health Policy, July 29).

Federal Regulation and Guidance

The Biden Administration’s Healthcare Regulatory Agenda for the Remainder of 2024

• With President Biden in the final months of his term, the White House Office of Management and Budget has released an agenda of the regulatory plan for the remainder of 2024 that includes, but is not limited to the following:
  • Final rules setting Medicare reimbursement rates and modifying policies for inpatient hospitals, nursing homes, hospices, inpatient psychiatric facilities, and inpatient rehabilitation facilities.
  • Final rules relating to mental health parity which mandate health insurance companies determine whether members have access to mental healthcare equivalent to other types of care.
  • Proposed rule to update emergency preparedness requirements for Medicare and Medicaid providers and suppliers.
  • Proposed rule to prevent insurers from excluding non-physician providers who perform the same services as physicians from their networks or offer them lower reimbursements.
  • Annual CMS update to Medicare Advantage policy.
  • Proposed rule to set standards that would allow HIV-positive people to donate kidneys and livers to other HIV patients.
  • Final rule that would create stronger reporting requirements regarding cyberattacks and ransom payments.
  • Final rules for Medicare reimbursement for physicians, hospitals, dialysis, and home health for calendar year 2025.
  • Proposed rule that would create exceptions to anti-kickback laws and enable hospitals, ambulatory surgical centers, community health centers, rural emergency hospitals, rural health clinics and skilled nursing facilities to offer mental health and substance-use disorder treatments to their own doctors and clinical employees.
  • Final rule to update the No Surprises Act that would restructure the independent dispute resolution process for providers and insurers.
  • Final rules governing electronic transactions and file attachments for prior authorizations.
  • Proposed rule to regulate prescription drug prior authorizations for Medicare Advantage and health insurance exchange enrollees (Modern Healthcare, July 30).

Federal Studies and Reports

Research Paper Delves into Relationship Between Adverse Childhood Experiences and Adult Care Utilization and Expenditures

• On July 24, Health Affairs released a research article on Adverse Childhood Experiences (ACEs) and related healthcare utilization and expenditures through adulthood. Using 2021 Medical Expenditure Panel Survey–Household Component (MEPS-HC) data, it was found that comparatively, demographically similar adults with ACEs had higher care utilization and 26.3% higher related expenditures. Additionally, researchers found that adults with ACEs exhibited higher rates of financial and housing issues, social support issues, low life satisfaction, food insecurity, discrimination and higher rates of verbal and physical abuse (Health Affairs, July 24).

State Updates

News

Illinois Governor Signs Law Expanding Mental Health Support Coverage for Ailments Relating to Miscarriage and Stillbirth

• Governor J.B. Pritzker (D-IL) signed HB 5282, which will require insurance companies to cover mental healthcare for individuals who are in the process of healing after having a miscarriage or stillbirth. Bill sponsors spoke of anxiety, stress, depression or substance abuse for those experiencing this type of loss. This new law will go into effect on January 1, 2026 (We Are Central Illinois, July 22).

Montana Governor Invests Millions to Support Tribal and Urban Indian Health Organizations

• On July 17, Montana Governor Greg Gianforte (R-MT) announced an investment of $6.5 million in one-time grants to Tribal nations and Urban Indian Health Organizations (UIHOs). These grants will support and improve intensive and community-based behavioral health services provided in Native American communities. As recommended by the Behavioral Health System for Future Generations (BHSFG) Commission, this investment represents the latest allocation of $300 million in funding secured by Governor Gianforte last year to improve Montana’s behavioral health and developmental disability services systems (Montana DPHHS, July 17).

CMS Approves North Carolina’s Proposal to Incentivize Hospitals to Eliminate Patient Medical Debt

• On July 29, North Carolina Governor Roy Cooper (D-NC) announced that CMS had approved his administration’s proposal to provide the state’s hospitals with financial incentives to eliminate patient debt and implement policies to prevent future liabilities. The plan is expected to positively impact two million low- and middle-income individuals and remove approximately $4 billion in debt. North Carolina hospitals have engaged with Cooper’s administration to provide feedback on how best to design and implement the program without negatively impacting hospitals. Debt relief is not expected until 2025 or 2026 and with Governor Cooper’s term being up in January, the program’s future likely depends on the next governor (MSN, July 29).

SPA and Waiver Approvals

Waivers

• 1115(a)
  • New Mexico
    • On July 25, CMS approved a five-year extension for New Mexico’s demonstration which was renamed, “New Mexico Turquoise Care.” The state received renewed authority to provide Substance Use Disorder (SUD) treatment for eligible individuals residing in an Institution for Mental Disease (IMD) as well as long-term services and supports through its Community Benefit program and Serious Mental Illness/Serious Emotional Disturbance services to increase access to mental healthcare. New Mexico also received renewed authority for continuous eligibility for children up to age six. CMS granted the state new authority for two initiatives: health-related social needs (HRSN) and pre-release services. New Mexico will be able to provide HRSN services to individuals who meet the clinically focused, needs-based criteria for home-delivered meals (high risk pregnant individuals) and short-term post hospitalization housing with room and board (those experiencing or at risk of homelessness). Additionally, the state will be able to provide pre-release services for eligible incarcerated individuals up to 90 days prior to the expected date of release. The demonstration is effective from July 25, 2024, through December 31, 2029. Additional approval documentation can be found here.

SPAs

• Services
  • Minnesota (MN-23-0036, effective January 1, 2024): Provides coverage of school social worker services and allows schools to use the Individualized Education Program or Individualized Family Service Plan process in the determination of medical necessity, instead of a diagnostic assessment.
  • Washington (WA-24-0014, effective July 1, 2024): Updates the Alternative Benefit plan to ensure consistency with the Medicaid state plan; including updates to adult dental services, home health, and maternity services.
• Payment
  • California (CA-24-0016, effective July 1, 2024): Updates the dental fee schedule to allow reimbursement for preventative oral healthcare provided by Community Health Workers.
  • Florida (FL-23-0005, effective July 1, 2023): Updates Intermediate Care Facility payment methodologies to allow for a new level of reimbursement for ICF/IDD residents with severe behavioral needs, which will incorporate funding for providers to increase direct care worker wages to at least $15/hour.
  • Missouri (MO-24-0011, effective April 27, 2024): Updates the MO HealthNet fee schedule for DME to allow for the reimbursement of manual and electric breast pumps.
  • New Hampshire (NH-24-0004, effective May 20, 2024): Adjusts disproportionate share hospital (DSH) payments for state fiscal year 2024 .
  • North Dakota (ND-24-0008, effective July 1, 2024): Updates the payment methodology for other licensed practitioners services to 100% of the Medicaid fee schedule and implements a 3% increase for certain non-institutional services.
  • North Dakota (ND-24-0011, effective July 1, 2024): Implements a 3% increase for certain non-institutional services. .
  • Pennsylvania (PA-24-0014, effective May 12, 2024): Authorizes funding for an additional class of supplemental payments for qualifying acute care general hospitals that treat high volumes of opioid use disorder patients in their emergency rooms.

Private Sector Updates

News

First-time Payer, ImagineCare, Sues Florida Over Non-selection for Medicaid Contract

• Following notification of non-selection, ImagineCare, a joint venture of CareSource and Spark Pediatrics, is among other payers that have filed a lawsuit against Florida to block the state from moving forward with its new Medicaid contracts. Following protests filed against Florida’s Agency for Health Care Administration (AHCA) in May, the state added Aetna, Molina and United Healthcare to the contractor list. In its lawsuit, ImagineCare asserts that AHCA is violating state law in its selection of unqualified health plans for the Medicaid contract (Health Payer Specialist, July 24).

Centene Considers Medicaid Geographic Expansion

• Centene aims to expand into additional states after losing millions of Medicaid members during the eligibility redetermination process. According to CMS data compiled by KFF, since the beginning of the unwinding period, over 24 million Medicaid enrollees have lost benefits. One of the consequences of the decreased Medicaid population is fewer customers for managed care carriers like Centene. Therefore, Centene is looking to geographic expansions to strengthen its Medicaid outreach and expansion opportunities in the exchange market focusing on individual coverage health reimbursement arrangements (Modern Healthcare, July 26).

Marketplace Insurers Required to Pay $10.3 Billion in 2023 Risk-Adjustment Payments

• On July 29, CMS announced that marketplace health insurers will be required to payback $10.3 billion in 2023 risk-adjustment payments. Insurers Aetna, Kaiser Permanente, and Oscar Health are the most impacted, each having to return more than $1 billion. The risk-adjustment program spreads financial risk among insurers by encouraging robust benefit packages and discouraging insurers from favoring healthy consumers. Blue Cross and Blue Shield companies such as Florida Blue, Blue Shield of California, Elevance Health, Molina, Humana, and Centene will receive increased payments between $20.2 million and $1.6 billion apiece. 605 insurers participated in the risk-adjustment program in 2023 (Modern Healthcare, July 24).

Sellers Dorsey Updates

Meet Our Team: Q&A with Vice President Sharen Ludher

• With more than 10 years of experience working with Medicaid agencies, providers, and beneficiaries, Sellers Dorsey Vice President, Sharen Ludher, has helped build the Firm’s National Consulting Practice for the last seven years. We recently sat down with Sharen to talk about her professional experience, the work she does to support clients and the Sellers Dorsey team, and the insights she has gained in healthcare throughout her career. Click here to explore the full Q&A.