Sellers Dorsey Digest

Federal Updates

2024 Election results

The Associated Press (AP) has called the Presidential election for former President Donald Trump, acknowledging that he has secured enough electoral college votes to win over current Vice President Kamala Harris. AP has also reported that no state gubernatorial races will flip partisan control this year, but that several states will have new incoming governors based on retirements and term limits. Those states include Delaware, Indiana, Missouri, North Carolina, North Dakota, New Hampshire, Washington, and West Virginia.

At the Congressional level, the U.S. Senate has been flipped to Republican control, while the partisan make-up of the U.S. House has yet to be called, with election results incoming in many districts. (Associated Press, November 6; Politico Pro, November 7; WHYY, November 7).

Federal News

Medicare Insurer Stock Sees Significant Increases After Trump’s Win

• Health insurers focused on Medicare Advantage plans have experienced a boost in stock prices, driven by expectations that a potential second Trump administration would raise reimbursement rates for companies providing private Medicare plans. The rise in share prices for companies like UnitedHealth Group (9.3%), Humana (12%), and CVS Health (11%) suggests investors are optimistic that a change in the political environment might lead to more favorable financial terms for insurers in the Medicare Advantage market. The expectation of higher reimbursement rates would likely increase profitability for these insurers, especially since the Medicare market is a large and growing sector given the aging population. This jump in share prices is indicative of the market’s reaction to political forecasts that could significantly impact the financial dynamics of health insurance companies. Additionally, under the first Trump administration, there was a more business-friendly stance toward the health insurance industry, including fewer regulatory hurdles for mergers and acquisitions. Many healthcare companies, particularly those in the insurance and pharmaceutical sectors, may view a second Trump administration as more favorable for consolidation and market expansion. Alternatively, insurers that sell Medicaid plans saw stock decreases, with Centene falling 7.7% and Molina decreasing 6.7%, likely due to concerns that the new administration will pull back Medicaid funding (Modern Healthcare, November 6).

MACPAC Holds October 2024 Public Meeting

• The Medicaid and CHIP Payment and Access Commission met on October 31 and November 1 to host sessions on and discuss the following topics:
  • Medications for Opioid Use Disorder and Related Policies: This session provided a comprehensive overview of medications for opioid use disorder (MOUD) and explored federal policies and various factors that influence access to these medications. Staff outlined the Commission’s next steps, which include future presentations focused on the coverage and utilization of MOUD, informed by an analysis of Medicaid claims data. Additionally, staff plans to share findings from future stakeholder interviews that will highlight the impacts of recent policy changes and identify persistent barriers to accessing MOUD.
  • Timely Access to Home- and Community-Based Services: Staff presented on provisional plans of care for states to implement to expedite Medicaid eligibility determinations and enrollment for individuals needing HCBS. The discussion included findings from a review of waivers as well as insights gathered from interviews with state and federal officials and national experts. The review highlighted that provisional plans of care are infrequently utilized, but when they are used, they serve as a critical mechanism to quickly address immediate needs for individuals facing urgent circumstances. The insights from the interviews underscored the potential benefits of broadening the use of provisional plans of care.
  • Multi-Year Continuous Eligibility for Children: An expert panel addressed policies and considerations related to multi-year continuous eligibility (CE) approaches for state Medicaid and CHIP. Some states have already received approval from the CMS to implement Section 1115 demonstration programs for multi-year CE specifically for children aged 0 to 6 years, while several others are awaiting approval for similar requests. Panelists highlighted policy and programmatic considerations for designing and implementing multi-year CE policies and emphasized factors that will be critical for monitoring and evaluating these demonstration programs.
  • Youth Use of Residential Treatment Services – Federal and State Findings: Staff discussed MACPAC’s examination of how Medicaid facilitates access to intensive services in residential settings for children and youth with serious behavioral health conditions. This involved assessing existing policies to determine whether they meet the needs of this vulnerable population to ensure that children receive appropriate and timely care in the least restrictive environment possible, while also addressing any barriers that may hinder access to residential services. This work aims to inform future recommendations for improving the effectiveness of Medicaid in supporting children’s behavioral health needs. Presenters noted common challenges in serving youth with certain demographic, clinical, and functional characteristics.
  • Managed Care External Quality Review Policy Options: The 2024 Medicaid managed care rule mandates that the annual EQR technical report includes outcomes data and results from quantitative assessments related to performance improvement plans, performance measures, and network adequacy. During the discussion, the Commission reviewed findings from previous work considering the new rule, focusing on potential areas for improvement that the rule may not fully address. The aim was to explore how the EQR could be structured to better utilize outcomes data and enhance the usability of EQR findings for CMS, states, and other stakeholders.
  • Transitions of Care for Children and Youth with Special Health Care Needs (CYSHCN) – Interview and Focus Group Findings: This session focused on CYSHCN and their transitions of care, incorporating survey data findings from MACPAC’s recently published Access in Brief. The presentation included insights from stakeholder interviews and beneficiary focus groups, highlighting key themes in the experiences of CYSHCN and their families. The findings revealed significant variation among states in how they implement transition of care policies for CYSHCN. This inconsistency affects how beneficiaries and their families navigate the transition process, leading to differing experiences and outcomes.
  • Directed Payments in Medicaid Managed Care: Building on prior work, MACPAC reviewed directed payment arrangements approved through February 2023 and made recommendations to enhance the transparency and oversight of these payments. To further this effort, MACPAC updated an issue brief that discusses the evolution of directed payment policy, highlights changes in the 2024 managed care rule, and analyzes directed payments approved from February 1, 2023, to August 1, 2024. During this session, staff also presented key findings from the updated analysis, detailing how directed payments are being utilized and the recent regulatory adjustments to the directed payment policy framework (MACPAC, October 31 and November 1).

Cancer Moonshot Announces Pilot to Address Pediatric Cancer Drug Shortages

• The Biden Cancer Moonshot announced a renewed effort to address pediatric cancer drug shortages through a new private sector pilot program. The pilot program will be coordinated by the End Drug Shortages Alliance and include key stakeholders such as children’s hospitals and pharmaceutical distributors. Participants will maintain uninterrupted access for seven pre-selected pediatric cancer medications. The pilot will start before the end of this year and aims to enhance supply chain resilience and prevent disruptions in pediatric cancer care into 2025. Following the end of the program, the End Drug Shortages Alliance will publish its findings to support future efforts. This initiative supports the broader goals of the Cancer Moonshot program started in 2016 to reduce cancer deaths and improve patient outcomes (Fierce Healthcare, October 28).

CMS Releases Public MLR Data

• On November 1, CMS released a public use file with Medicaid Medical Loss Ratio (MLR) data for calendar years 2018-2020. The summary report data includes 1,719 MLRs for MCOs, PIHPs, and PAHPs under 42 CFR § 438.74. CMS hopes this data will aid in improving transparency and provide an overarching perspective on managed care spending and state recoveries for plans that did not achieve a target MLR percentage (Medicaid, November 1).

Elevance Disputes Star Ratings in Court

• On October 31, Elevance filed a lawsuit against CMS in the U.S. District Court for the Northern District of Texas, alleging that the agency improperly assessed quality performance ratings. Elevance is seeking a court order that would compel CMS to redo its ratings and provide insurers with the necessary data to validate both the 2025 ratings calculations and those for future years. Elevance is the fourth payer to pursue legal action, joining UnitedHealth Group, Humana, and Centene. The outcome of these lawsuits could have significant implications for how quality ratings are calculated and communicated to insurers moving forward (Modern Healthcare, November 1).

Federal Litigation

U.S. Supreme Court to Hear Oral Arguments on DSH Payment Lawsuit

• The Supreme Court is preparing to hear oral arguments in the Advocate Christ Medical Center v. Becerra lawsuit, the third DSH payment-related case justices have considered since 2019. The 200 plaintiffs in the case contend that CMS should consider patients enrolled in (and not just patients receiving) SSI and Medicare when tallying the number of low-income patients’ services, leading to an increase in DSH payments for hospitals. After two losses in the U.S. District Court for the District of Columbia and in the U.S. Court of Appeals for the District of Columbia in 2022 and 2023, the Supreme Court agreed to try the case in June 2024 and is expected to focus on the “entitled to benefits” clause in the DSH regulations. The decision isn’t expected for months (Modern Healthcare, November 5).

Federal Regulation and Guidance

CMS Announces Calendar Year (CY) 2025 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Payment System Final Rule

• On November 1, CMS released a final rule regarding Medicare payment rates for hospital outpatient and ambulatory surgical center (ASC) services for CY2025 . This final rule not only finalizes payment rates but also introduces policies that align with several key goals of the Biden-Harris Administration to respond to the maternal health crisis, address health disparities, expand access to behavioral health care, improve transparency in the health system, and promote safe, effective, and patient-centered care. The rule will impact approximately 3,500 hospitals and around 6,100 ASCs. Highlights of the rule include the following:
  • Updates OPPS and ASC payment rates;
  • Updates Medicare Intensive outpatient program (IOP) rates;
  • Partial hospitalization program rate setting;
  • Updates Partial Hospital Program per diem rates;
  • Access to non-opioid treatments for pain relief;
  • Adds an All-Inclusive Rate (AIR) add-on payment for high-cost drugs provided by the Indian Health Service (IHS) and tribal hospitals;
  • Improve payment for high-cost diagnostic radiopharmaceuticals;
  • Narrows the definition of “custody” to support individuals formerly in the custody of penal authorities;
  • Adds new national health and safety standards by creating an obstetrical services’ conditions of participation (CoP) and sets staff training, supervision, and service delivery requirements, including phased implementation timeframes;
  • Finalizes the inpatient, outpatient and emergency rural hospital, and ASC quality reporting (IQR) payment programs;
  • Mandates 12-months of continuous Medicaid and CHIP eligibility for children under the age of 19; and
  • Continues the option allowing Medicaid clinic services’ to be provided outside the “four walls” of the facility (Medicaid.gov, November 1).

State Updates

News

Florida Officially Names New Medicaid Director

• Although he has been in the role since October 7, Brian Meyer is now listed as the state’s Medicaid director on the Agency for Health Care Administration’s (AHCA’s) website. Meyer has been part of the AHCA since 2005 (Florida Phoenix, November 1).

Nevada Aims to Expand Medicaid to Assist Justice-Involved Populations with Reentry

• The Nevada Department of Health and Human Services (NVDHHS) is working to extend Medicaid coverage to 12,000 individuals transitioning from carceral facilities back into the community by 2030. This initiative aims to provide continuity of healthcare, supporting successful reentry and reducing recidivism rates. The newly covered services aim to provide a holistic approach to this transition, including case management, early screening, mental health services, and substance use treatment. NVDHHS is encouraging public input from community members and other stakeholders before submitting the state’s application for federal approval to CMS on November 24 (Hoodline, November 3).

Ohio Department of Medicaid (ODM) Announces MyCare Awards

• On November 1, ODM announced the four plans selected to provide services to Ohioans who are dually eligible for Medicare and Medicaid in the state’s MyCare program. The four MCOs are Anthem Blue Cross and Blue Shield, Buckeye Health Plan, CareSource, and Molina Healthcare of Ohio. The program currently serves 150,000 individuals, with an additional 100,000 individuals being eligible (Ohio Medicaid, November 1; Becker’s Payer Issues, November 4).

Texas Legislature Looking at a Possible RFP Revamp

• Following Cook, Driscoll and Texas Children’s Hospitals filing appeals due to Texas’ Medicaid contract awards and a Texas District Judge’s decision to grant an injunction in favor of Cook Children’s Hospital, the state has chosen to push the transition process to the new contracts to next summer.  While the legislature normally doesn’t get involved in procurements, experts in the field believe that it may be looking at potentially canceling the current RFP and rewriting the procurement rules going forward. There are talks of the legislature establishing a “file-and-complete” system, where payers would apply with the Health and Human Services Commission (HHSC) in order to operate under Medicaid and if they’re able to showcase network adequacy across the entire state, they’ll be approved. This new system would have local nonprofit, public, and hospital plans receive carveouts allowing them to operate within the regions they are located. While major payers may approve of this new system, it would also require them to operate within rural areas that have previously not received their attention. The system revamp would restart the bidding process, pushing new contract awards out by at least a year. While a new procurement system may take upwards of a decade to finalize, an RFP reboot would be a time-consuming and costly process, for both the state and the plans (Health Payer Specialist, November 6).

SPA and Waiver Approvals

SPAs

• Eligibility
  • Wisconsin (WI-24-0014, effective July 1, 2024): Increases the personal needs allowance for institutionalized individuals to $55 per individual and $110 per couple.
• Administration
  • Alaska (AK-24-0009, effective October 1, 2024): Updates information collection and report submission requirements for Child Core Sets and behavioral health quality measures for Adult Core Sets to align with federally mandated ones.
• Payment
  • Arizona (AZ-23-0015, effective September 30, 2023): Updates the payment methodology for the Intergovernmental Agreement (IGA) Graduate Medical Education (GME) program, including the payment pools for qualifying hospitals and indirect GME.
  • Florida (FL-24-0006, effective July 1, 2024): Updates the supplemental payment methodology for Faculty Physicians.
  • Georgia (GA-24-0009, effective July 1, 2024): Updates the  payment allocation methodology for the calculation of hospital specific DSH payments. Eligible Pool 2 hospitals that are classified as Rural Referral Centers (RRC) and ineligible to participate in the Advancing Innovation to Deliver Equity (AIDE) or Strengthening the Reinvestment of a Necessary-Workforce in Georgia (STRONG) state directed payment programs will be allocated no less than 25% of their DSH limit.
  • Iowa (IA-24-0007, effective July 1, 2024): Increases reimbursement rates for air ambulance services.
  • Nebraska (NE-24-0008, effective July 1, 2024): Creates a Long-Term Acute Care Hospital (LTACH) provider specialty type.
  • Nebraska (NE-24-0022, effective July 1, 2024): Updates the payment methodology for the Intermediate Care Facilities for individuals with Developmental Disabilities inflation factor for state FY 2025.
  • Nebraska (NE-24-0022, effective July 1, 2024): Updates the payment methodology for the nursing facility inflation factor for state FY 2025.
  • South Carolina (SC-24-0020, effective July 1, 2024): Updates payment methodology for rehabilitative therapy services, specifically Occupational Therapy (OT), Physical Therapy (PT) and Speech-Language Therapy (ST).
• Services
  • Iowa (IA-23-0022, effective July 1, 2023): Allows licensure of Rural Emergency Hospitals.
  • Minnesota (MN-24-0029, effective July 1, 2024): Updates accreditation standards for Adult Day Treatment providers to include licensed outpatient hospitals.
  • Missouri (MO-24-0008, effective October 1, 2024): Adds coverage of doula services for the enhancement of the birthing experience, reduction of complications, and improvement in health outcomes for women and infants.
  • Wyoming (WY-24-0005, effective July 1, 2024): Moves coverage of Applied Behavior Analysis (ABA) services to preventative services, with reference to Early Periodic Screening and Treatment (EPSDT) services.

Private Sector Updates

News

Private Equity Firms Set their Sights on ASC Joint Ventures

• Private equity firms are setting their sights on hospital-owned Ambulatory Surgery Centers (ASCs). Experts in the field have spoken to how ASCs are often chosen over hospitals due to their lower-cost nature, which is engaging investors. Specifically, private equity firms are looking for ways in which they can partner with ASCs without having to take ownership, such as a joint venture deal. Private equity firms are most interested in higher acuity services like cardiology. Compared to ownership transactions, joint ventures may face less regulatory scrutiny. Of 120 hospital, practice, pharmaceutical, and biotech executives surveyed, more than half spoke to how they have either accepted private equity arrangements or are seeking or considering them. Of those who aren’t actively considering it, more than a quarter said they would be open to considering it in the future due to the positive potential private capital. Meanwhile, opponents of these arrangements have spoken to how joint ventures allow health entities to inflate healthcare costs, without improving quality at the same time (Modern Healthcare, November 4).

Oracle Health Plans to Introduce Electronic Health Record (EHR) Program in 2025

• Starting in 2025, Oracle Health will launch a new electronic health record (EHR) program that leverages the company’s latest cloud and AI technologies. This innovative EHR platform will include Oracle’s clinical AI agent, voice-activated navigation, and search capabilities. The analytics solution will integrate patient data from a wide range of sources, including clinical data, claims, social determinants of health, and pharmacy information. The incorporation of AI aims to automate various processes, providing healthcare providers with immediate access to critical information at the point of care. The new EHR program aims to simplify appointment preparation, documentation, and follow-up tasks for physicians and their staff, ultimately enhancing operational efficiency and improving patient care (Fierce Healthcare, October 29).

Sellers Dorsey Updates

Meet Our Team: Q&A with Assistant Vice President, Scott Allocco

• With more than 30 years of experience as an administrator, consultant, and lobbyist in the healthcare field, Sellers Dorsey Assistant Vice President Scott Allocco brings a wealth of knowledge and insight to his work providing strategic advice and consulting to our clients. We sat down with Scott to discuss his perspective on his career, the healthcare landscape, and advancing healthcare quality, equity and access.
  Click here to explore our Q&A with Scott.