Sellers Dorsey Digest

Federal Updates

News

Changes Coming for Medicare Advantage and Part D Plans in the 2025 Plan Year

• Changes are coming for Medicare Advantage (MA) and Part D plans for the 2025 plan year. Consumer costs are increasing through higher premiums and greater out-of-pocket expenses, while payers are reducing drug formularies and provider networks. There are also fewer MA plans in the 2025 plan year, as payers focus on profitability by exiting poorly performing areas instead of reducing benefit offerings. Despite this, there are a higher number of special needs plans and the number of counties without any MA plan continues to decrease. Part D plans also experienced changes from new mandates but were largely unaffected despite concerns about significantly higher premiums. Experts predict that the slight increase in premiums for prescription drug plans will not result in Part D plan enrollees moving to MA plans. However, it is unknown what will change when the detailed information on drug formularies is released later in October. With all of these changes, brokers are seeing an increase in work as consumers try to make an informed decision during open enrollment, which starts on October 15 (Health Payer Specialist, October 7).

Federal Legislation

AHA Advocates for Lame Duck Package without Site-Neutral Payment Policies

• The American Hospital Association (AHA) is advocating for Congress to adopt two specific pay-fors in the lame duck package that do not include site-neutral payment policies. AHA supports delaying Medicare cuts for clinical laboratory services and preventing CMS from enforcing the new nursing home staffing requirements. Additionally, AHA hopes to delay Medicaid DSH cuts, extend Medicare telehealth and the hospital-at-home policies, and streamline MA plan prior authorization among a few other priorities. The House has passed site-neutral payment policies, but the Senate has not advanced any similar legislation. Any further legislative action may depend on the outcome of the election (Inside Health Policy, October 3).

Federal Regulation and Guidance

CMS Extends Due Date for Public Comments on Medicaid and CHIP Parity Compliance Templates and Instructional Guides

• On October 7, CMS extended the deadline for submission of public comments on the Medicaid and CHIP parity compliance templates and instructional guides from October 29, 2024, to December 2, 2024. Comments can be submitted to MedicaidandCHIPParity@cms.hhs.gov (Medicaid.gov, October 7).

CMS Releases NBPP 2026 Proposed Rule

• In alignment with the Biden Administration’s commitment to ensuring accessibility and affordability of Marketplace coverage, CMS released a draft of the HHS Notice of Benefits and Payment Parameters (NBPP) for 2026. With this rule, CMS seeks to increase transparency for consumers, advance health equity, and stabilize the market. The proposed rule includes parameters and provisions regarding fraudulent marketplace activities, premium thresholds, risk-adjustment activities, silver-loading, essential community providers (ECP), and standardized plans. CMS will take comments on the proposed rule through November 12 (Inside Health Policy, October 4; CMS, October 4).

CMS Releases FY2025 IPPS Interim Final Action

• On September 30, ahead of the start of FFY2025, CMS released an interim final action that revises the Medicare wage index, establishes a transitional payment exception for low-wage hospitals, and updates the hospital Inpatient Prospective Payment System (IPPS). The release of this document follows the decision in Bridgeport Hospital v. Becerra, which removed low wage index hospital policies, which provided additional funds to hospitals to encourage higher worker pay. Within this interim report, CMS is working on recalculating the IPPS hospital wage index to remove the low wage index for this fiscal year. The rule update also includes determinations for the Long-Term Care Hospital Prospective Payment System (LTCH PPS). CMS is taking comments on the final action until November 29, 2024, electronically here, as well as by mail (Fierce Healthcare, October 2).

Federal Studies and Reports

Data from S&P Capital IQ Pro Shows Increase in Patient Hospital Stays

• According to data analyzed by Health Payer Specialist and published by S&P Capital IQ Pro, most states have seen an increase in hospital patient days for the time period beginning the first quarter of 2022 through the second quarter of 2024. The increase was apparent across Medicaid, Medicare, and coverage for both groups and individual enrollees. The heat map demonstrated a 21.89% increase in Medicaid patient days, a 4.1% increase in Medicare patient days, a 16.03% increase for individual major medical coverages, and a 19.52% increase for group major medical coverage (Health Payer Specialist, October 7).

GAO Recommends Implementation of Hospital Price Transparency Enforcements

• On October 2, the GAO submitted a report to the House’s Committee on Energy and Commerce regarding a request for more information on hospital pricing data completeness and accuracy. As part of this report, the GAO reviewed relevant laws, regulations, and studies and interviewed CMS and AHA experts, as well as 16 stakeholder organizations that represented patients, health plans, and data users. The GAO recommends that CMS assess hospital data to ensure it is completed sufficiently and accurately and implement appropriate enforcement tools as necessary. Currently, CMS does not have assurance of the usability of the data, nor the appropriate resources to make accuracy checks; therefore, nulling the ability to use the data to increase competition as it was intended. GAO asks that CMS investigate cost-effective enforcement options such as soliciting stakeholder feedback, risk-based or random sampling. HHS agreed with the GAO’s recommendations and will further look into whether and how to effectively implement the assessments and other enforcement activities (Fierce Healthcare, October 3; GAO, October 3).

CMS Releases Largely Favorable Report on Hospital At-Home Care

• On September 30, CMS released a report on at-home acute care provided by hospitals, known as the Acute Hospital Care at Home (AHCAH) initiative. The program allows certain Medicare-certified hospitals to treat patients with an inpatient-level of care in the patients’ homes. The AHCAH program was initiated during the COVID-19 pandemic but was extended until the end of this year. As of July 2024, there were 332 hospitals across 38 states participating in the initiative. The report shows that the Medicare patients in the initiative were more likely to be white and living in urban areas and less likely to be enrolled in Medicaid or receiving low-income subsidies compared to in-facility patients. Additionally, there were fewer conditions treated in the initiative. Patients in the AHCAH were primarily treated for respiratory, circulatory, renal, and infectious diseases. Quality of care between at-home and in-facility patients was mixed. At-home patients had lower thirty-day mortality rates for the top ten treatment conditions. When comparing thirty-day readmissions, AHCAH participants had significantly higher rates of readmission for some MS-DRGs, especially for complex clinical conditions. AHCAH patients were also more likely to have a longer length of stay but had lower Medicare costs compared to in-facility patients. In virtual listening sessions, patients described being more relaxed and less depressed receiving treatment in their homes and clinicians expressed support of the program. These results could influence Congress as it decides whether to extend the program (Modern Healthcare, October 4; Fierce Healthcare, October 1).

State Updates

News

Texas HHS Contract Awards Halted Following Lawsuits

• Following Texas Medicaid’s decision not to award new contracts to Cook Children’s Hospital, Driscoll Children’s Hospital, and Texas Children’s Hospital health plans (Hospitals plans) and the plans’ subsequent lawsuit against the state, Judge Laurie Eiserloh has issued a temporary injunction against the Texas Department of Health and Human Services (DHHS), which stops DHHS from finalizing its new contracts that cover lower-income children within the state. The judge opined that switching health plans could have the potential to cause significant harm and confusion on millions of beneficiaries. The Hospitals plans currently insure approximately 700,000 of the 1.8 million children enrolled in the state’s Medicaid STAR and CHIP programs. Among the other plaintiffs that sued Texas HHS in June is Wellpoint, an Anthem subsidiary. On November 3, Judge Eiserloh will hear arguments on whether the injunction should be made permanent (Health Payer Specialist, October 7).

Discussions Surrounding Medicaid Expansion in Wisconsin Continue, Citing the Possibility to Reduce Health Care Spending if Implemented

• On October 4, the Wisconsin Policy Forum held a virtual event discussing the state’s options for Medicaid moving forward. In September, the organization released a report discussing the topic. During the virtual forum, experts noted that due to the state’s low uninsured rate, the expansion would only cover approximately 90,000 people, but expansion would give them access to cost-effective, better coverage. The experts also touched upon how the 90% matching rate would allow Wisconsin to lower its current Medicaid spending by about $261 million, but providers and payers would lose $283 million in ACA tax credits and experience lower reimbursement rates. The Wisconsin Policy Forum and the state’s Medicaid Director have expressed opinions on how the projected $1.7 billion in savings caused by the expansion can be utilized to boost reimbursement rates, among other initiatives (The Center Square, October 4).

New York School-Based Health Centers Concerned About Upcoming Medicaid Change

• Starting April 1, 2025, school-based health center services will be carved-in to Medicaid managed care in New York after being delayed seven times since 2014. Medicaid managed care organizations (MCOs) will be required to pay school-based health services providers the fee-for-service rates they currently receive for a minimum of two years after the transition. School-based health centers in the state are concerned about the increased administrative burden and the potential for being underfunded (POLITICO, October 7).

Colorado Faces Budget Deficits, Reduction in Community Health Providers Following Medicaid Unwinding

• Two community mental health centers in Colorado face layoffs and program cuts due to a significant drop in the state’s Medicaid enrollment. Over 500,000 Colorado residents lost Medicaid coverage during the unwinding period. WellPower, a mental health care provider in Denver, is cutting six positions from its co-responder team and ending its virtual therapy program amid a $6 million budget reduction. Jefferson Center is laying off 25 employees, citing financial strain despite seeing increased community mental health needs. Budget deficits at both centers stem from fewer Medicaid patients and reduced local government and grant funding. The Medicaid agency overspent the previous years’ budget by $154 million. And some legislative forecasts in the state estimate that the state budget would need to be cut by around $900 million to balance the next budget. Shifts in state policy, including per-service billing under the Behavioral Health Act of 2022, exacerbate financial challenges for mental health providers in Colorado (Colorado Sun, September 25; Colorado Sun, October 2).

Maryland Department of Health to Renew Kaiser Permanente’s Medicaid Contract for 2025

• The Maryland Department of Health has agreed to renew Kaiser Permanente’s Medicaid contract. Both parties reached an agreement that will allow Kaiser to be one of the state’s nine MCO providers in 2025 prior to the start of open enrollment on November 1. The state had previously announced that it would not be renewing Kaiser’s contract. Kaiser has covered residents in Prince George’s, Montgomery, and Baltimore counties for the last ten years. The 2025 plan year in Maryland will see several new changes for MCOs, which aim to increase accountability and improve health equity and health quality. Kaiser is the only MCO in the state that employs its own physicians and requires Medicaid beneficiaries to use those physicians (The Baltimore Sun, September 25).

SPA and Waiver Approvals

SPAs

• Payment SPAs

  • Connecticut (CT-24-0005, effective February 1, 2024): Increases reimbursement rates for certain long-acting reversible contraceptive (LARC) and updates the family planning services fee schedule. Additionally, it reprices select codes at 57.75% of the Medicare physician fee schedule.
  • Georgia (GA-24-0006, effective July 1, 2024): Increases reimbursement rates for certain optometric codes by 10%, certain primary care codes to 90%, and certain OB/GYN codes to the 2024 Medicare rate. It also updates the methodology to provide an add-on payment for long-acting antipsychotic drugs.
  • Michigan (MI-24-0013, effective October 1, 2024): Sets a principal balance minimum payment amount for nursing facilities for loans issued since October 1, 2019, where the loan period is greater than four years.
  • New Hampshire (NH-24-0028, effective September 1, 2024): Increases reimbursement rates for inpatient hospital services.
  • Oregon (OR-24-0016, effective October 1, 2024): Increases the base default conversion factor under the CMS Resource Based Relative Value (RBRVS) to a minimum of 80% of the current Medicare rate for laboratory, radiology, podiatry, chiropractic, physical therapy/occupational therapy, anesthesia, and clinical laboratory services.
  • Texas (TX-24-0024, effective September 1, 2024): Updates the fee schedules for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) and Vision Care Services.
  • Texas (TX-24-0023, effective September 1, 2024): Updates the fee schedule for Clinical Diagnostic Laboratory Services.
  • Texas (TX-24-0025, effective September 1, 2024): Updates the fee schedule for Early Periodic Screening, Diagnosis, and Treatment (EPSDT) program services.
  • Texas (TX-24-0026, effective September 1, 2024): Updates the fee schedule for physicians and other practitioners’ services.
  • Virginia (VA-24-0013, effective July 1, 2024): Updates the nursing facility payment methodology by removing language referring to the $6.13 per diem rate increase throughout the State plan.

Private Sector Updates

News

Sale of Kroger’s Specialty Pharmacy Business Officially Closed

• On October 4, Kroger Co. announced that its specialty pharmacy business sale to Elevance Health has officially closed. Under this deal, its specialty pharmacy will merge with Elevance Health’s pharmacy benefits manager (PBM), CarelonRx. Not included within the sale to Elevance Health are the in-store retail locations of the Kroger Family of Pharmacies and The Little Clinics. Currently, no financial terms have been shared about this deal This acquisition follows Elevance Health’s recent moves to buy Bioplus and Paragon Healthcare. In 2023, following the acquisitions, CarelonRx saw a 19% revenue increase from the year before (Health Payer Specialist, October 7; Kroger, October 4).

Horizon Wins Fraudulent Billing Case in NJ

• Horizon Blue Cross Blue Shield (Horizon) has won a dispute over fraudulent claims in New Jersey state court. The payer sued three providers under Integrative Medicine and Biofeedback Clinic in Mount Laurel, NJ in February 2017. Horizon deemed the services provided by the company and its providers to be alternative and not eligible for reimbursement. Starting in 2009, the defendants billed Horizon a total of $2.6 million. The jury in the case decided in favor of Horizon, awarding Horizon $2.4 million in damages. Horizon is also seeking triple damages under the NJ Insurance Fraud Prevention Act (Health Payer Specialist, October 7).

North Carolina IV Fluid Manufacturer Facing Temporary Shut Down After Hurricane Helene, Causing Hospitals to Conserve Supplies

• Hurricane Helene wiped out one of the country’s leading manufacturing plants for intravenous fluids in North Carolina. Baxter International faces a temporary shut down due to severe damage from the storm with no timeline for reopening. Not only did the facility experience flooding damage from the hurricane, bridges and roads leading to the site were damaged, hindering rebuilding and recovery efforts. Baxter International is the largest producer of IV and peritoneal dialysis (PD) fluids, manufacturing 60% of the IV solutions in the country. The company is working with the FDA to minimize disruptions and maintain equitable access to supplies. Hospitals in the U.S. are taking steps to conserve their IV fluid use and anticipate that future shipments will be less than half of what they normally receive due to the temporary plant closure. No constraints or shortages have yet been reported to the Healthcare Distribution Alliance (Fierce Healthcare, October 7).

Sellers Dorsey Updates

Sellers Dorsey Welcomes Rachel Marsh, Associate Director for Child and Family Well-Being

• Sellers Dorsey is excited to welcome Rachel Marsh, JD MSW, as an Associate Director for our Child and Family Well-Being Team. Rachel joins Sellers Dorsey with more than 20 years of experience advocating for children and families. She comes to the Firm from the Children’s Alliance of Kansas and Children’s Alliance Resource Network, where she served as CEO, working to transform child and family well-being services. Rachel will facilitate and guide Sellers Dorsey’s solutions in this critical field.  Learn more about Rachel by clicking here.