Issue #168

• On January 8, HHS named Stacy Sanders as its first-ever chief competition officer. The role was created keeping in mind the Biden-Harris Administration’s initiative to lower healthcare costs by promoting competition. As concerns regarding consolidation within the healthcare landscape persist, recent studies have indicated a rise in healthcare costs, which can lead to a decrease in the quality of care provided. In her new role, Sanders will spearhead efforts to reduce healthcare and prescription drug costs. She will also work to drive competition within the healthcare market space. Stacy Sanders formally served as Senator Bob Casey’s Staff Director of the Senate Special Committee on Aging for five years and before that she was the Federal Policy Director of the Medical Rights Center (Health Care Dive, January 8).

AHA Speaks Out Against Proposed Penalties for Providers

• The American Hospital Association (AHA), Premier Inc, and Medical Group Management Association (MGMA) have spoken out against ONC’s proposed financial and programmatic penalties for providers. These groups represent numerous providers and health systems and see the proposed penalties as too severe and are asking for amendments to the rulemaking. They also are asking for clarification as to how the HHS Office of Inspector General is investigating this (Inside Health Policy, January 4).

Federal Regulation

CMS Finalizes Interoperability Rule

• On January 9, 2024, CMS published a final rule titled, “Health Data, Technology, and Interoperability: Certification Program Updates, Algorithm Transparency, and Information Sharing.” This final rule implements the EHR Reporting Program from the 21^st Century Cures Act, establishing new criteria and standards for health IT developers under the ONC Health IT Certification Program. It also updates certification criteria for “decision support interventions,” “patient demographics and observations,” and “electronic case reporting,” introducing USCDI Version 3. It enhances information sharing compliance requirements, advances interoperability, transparency in algorithms, and the accessibility of electronic health information. The final rule is effective starting February 8, 2024 (Federal Register, January 9).

ACHP Advocates for Final 2025 Medicare Advantage and Part D Rule

• The Alliance of Community Health Plans (ACHP) is advocating for CMS to finalize the 2025 Medicare Advantage and Part D proposed rule which would standardize broker payments and restructure commission and compensation parameters. This proposed rule aligns with ACHP’s prior recommendations to improve the MA program, focusing on restructuring the benchmarking process, increasing network adequacy, and addressing quality measures and bonuses. ACHP was supportive of CMS’ proposal to eliminate excessive broker fees, which aims to limit brokers’ financial incentives to steer seniors towards specific MA plans that benefit the brokers the most. Lawmakers have stressed the need for CMS oversight in MA improvements and urged the agency to act. Comments on the proposed rule were due January 5, 2024 (Inside Health Policy, January 5).

Federal Legislation

Congress Returns with Top-Line Funding Agreement for FY2024

• Congress has returned with a top-line funding agreement for fiscal year 2024, which includes $773 billion in non-defense spending. However, healthcare policies face uncertainty and lobbyists are concerned about their priorities getting through. Bipartisan ideas aimed at transparency and controlling pharmacy benefit managers advanced in House and Senate discussions. Opposition from the hospital industry may stall site-neutral polices from moving forward despite insurer and consumer group support. Medicare physician pay cuts may see a partial mitigation, though larger reforms may be delayed. Many stakeholders are looking to the $1.8 billion that has been moved to the Medicare Improvement Fund in the defense authorization bill. Meanwhile, many healthcare authorities have expired at the beginning of January including funding for community health centers, diabetes care, the SUPPORT Act, and more. However, some new policies such as continuous coverage for children under Medicaid and expanded Medicare Part D benefits have taken effect (Inside Health Policy, January 8).

Federal Litigation

Fifth Circuit Upholds HHS Overstep in Texas v. Becerra Court Ruling

• On January 2, the Fifth Circuit upheld a lower court ruling, Texas v. Becerra, that HHS had overstepped its authority in saying that the Emergency Medical Treatment and Labor Act (EMTALA) must include abortion care if providers deem it medically necessary to stabilize a patient in an emergency. This case is one of many high-profile federal lawsuits making their way through the courts and could redefine emergency care access across healthcare services. The Fifth Circuit court also held that Texas’ near-total abortion ban, which is currently tied up in the courts, does not conflict with EMTALA and is therefore not preempted by federal law (Inside Health Policy, January 9).

News

Kansas Payers Bid for Medicaid Contracts

• In Kansas, seven payers, three of which are incumbents, are contending for three Medicaid contracts. The current contract holders are Aetna, Centene, and UnitedHealth Group, all of which have filed bids by the January 4 deadline. The four new payers bidding are CareSource, Healthy Blue, Molina, and UCare. All are intent on winning a piece of the state’s $4.1 billion Medicaid program (Health Payer Specialist, January 8).

CMS Approves Waiver for CA Managed Care Tax

• CMS has approved a waiver of the broad-based and uniformity provisions of sections 1903(w)(3)(B) and (C) of the Social Security Act submitted by the California Department of Health Care Services for its managed care organization tax. This waiver will allow California to tax Medicaid managed care plans with more than 104,000 enrollees between $182.50 and $192.50 per member per month through 2026. A similar tax will be applied to commercial and other plans with similar membership sizes and restrictions. The prior tax expired in 2023 and the revenue generated went to the state’s general fund. The new tax authorized under this waiver is expected to generate around $19.4 billion alone, and $35 billion when combined with matching federal funds. The revenue from this new tax will be used to increase payments to Medi-Cal providers, which have previously been some of the lowest in the country. Currently, Medi-Cal has around 15.1 million enrollees, or around 40% of the state’s population (Health Payer Specialist, January 8).

Oregon Medicaid Insurers Agree to Reinvest in Youth Psychiatric Programs

• According to a press release published by Governor Tina Kotek’s (D) office, Medicaid insurers in Oregon have agreed to reinvest $25 million in profits to increase the number of beds available in four youth psychiatric programs across the state. Oregon’s Medicaid program features Coordinated Cared Organizations (CCOs). The Memorandum of Understanding that signifies the partnership between the CCOs, providers, and the Oregon Health Authority (OHA) was signed on January 4 (Health Payer Specialist, January 8).

Utah Medicaid Program Conducts Survey to Understand Disenrollments

• In December 2023, Utah’s Medicaid program conducted an online survey to understand the root cause as to why so many enrollees did not try to renew their coverage. With states re-evaluating their Medicaid coverage after the COVID-19 pandemic, there has been a substantial number of disenrollments across the nation. This is widely due to procedure-related causes, such as missing paperwork and not previously believed reasons like the lack of eligibility. Based on a KFF study, approximately 13 million Medicaid enrollees were disenrolled in 2023, of those 71% had been removed due to procedural reasons, for which Utah was the second highest. Based on the survey Utah conducted, participants found that the Medicaid processes were difficult to navigate. It was found that 57% of respondents did not attempt to renew their Medicaid coverage. Many reported that the different components of the Medicaid processes were difficult (documentation: 53%, forms: 44%, and renewal process: 50%). The survey also found that of these participants, 30% of them are now uninsured, 39% are using employer provided insurance, and 15% use marketplace insurance. A reported 150,000 of approximately 500,000 Medicaid beneficiaries have lost access in Utah as of April 2023. Officials have confirmed that the state is facing audits from the HHS Office of Inspector General and the HHS Office of Civil rights due to the disproportionate rate of Black, Hispanic and Pacific Islander beneficiaries that lost coverage. Penalties and fines may be given depending on their findings. The high disenrollment rates are said to be due to miscommunication about renewing coverage. In fact, 80% of participants of the survey said that they would re-enroll in the Medicaid program if they could (KFF Health News, January 4).

Concerns Rise Over COVID’s Impact on State Budgets

• With proposed state budgets for FY2024 or FY2024-FY2025 starting to be released by governors, researchers and other stakeholders are concerned about tax breaks created during the COVID-19 pandemic potentially impairing state budgets and programs like Medicaid. During the three years that the COVID-19 emergency declaration was in place, more than 50% of states reported revenue surpluses. Additionally, according to the National Association of State Budget Officers’ 2023 Fiscal Survey of States, 46 states expected 2023 general fund revenues to exceed original estimates and 41 states documented year-over-year increases in their rainy day funds. An analysis by the Center on Budget and Policy Priorities also found that almost all states passed some kind of tax cut between 2021 and 2023, with 26 states cutting personal income tax or corporate tax rates specifically. In an attempt to avoid losses to state budgets and programs like Medicaid, stakeholders have begun asking policymakers to reconsider cuts to the budget and raise revenues instead. Keep an eye out for our proposed state budget profiles report later this spring to track trends and see how states are handling their budgets this year (Inside Health Policy, January 4).

Waivers

• Section 1115(a)
  • New York
    • On January 9, 2024, CMS approved New York’s 1115 waiver amendment titled, “Medicaid Redesign Team,” (MRT). This amendment aims to address several health-related social needs as well as support increased integration between primary care providers, community-based organizations, and behavioral health specialists. The amendment also includes funding to support a Medicaid Hospital Global Budget Initiative for a subset of financially distressed safety net hospitals looking to transition to pay for value. Other initiatives provide additional support to safety net hospitals and the workforce. This amendment supports New York’s interest and preparation in pursuing the Making Care Primary and AHEAD models from CMMI. The amendment is set to expire on March 31, 2027.

Sellers Dorsey summarized the waiver approval with everything you need to know. Click here for the full summary.

SPAs

• Eligibility SPAs
  • Alaska (AK-23-0011, effective January 1, 2024): Sets new income standards for the optional state supplement program, and makes related changes to other eligibility groups.
• Payment SPAs
  • District of Columbia (DC-23-0013, effective October 1, 2023): Updates rates for Mental Health Rehabilitative Services and Adult Substance Use Rehabilitative Services.
  • Illinois (IL-23-0040, effective July 1, 2023): Updates Illinois’ Medicaid State Plan to comply with third party liability (TPL) requirements authorized under the Bipartisan Budget Act of 2018 and the Consolidated Appropriations Act of 2021.
  • Tennessee (TN-23-0005, effective November 1, 2023): Updates professional dispensing fees for prescribed drugs.

News

Uber Health Pitches Platform to Providers and Insurers

• Uber Health and the analytics company, Socially Determined, have begun integrating their platforms to provide services to connect high-need patients to transportation and prescription and grocery delivery services. The companies are marketing the use of both platforms to providers and insurers with a focus on data-sharing and the enhancement of the interoperability of the platforms to increase efficiency. The companies anticipate closing deals with commercial and government-sponsored insurers in the first quarter of the year. Unlike other similar collaborations in the market, the Uber Health and Socially Determined initiative is unique in linking patients to resources available through their health plans (Modern Healthcare, January 8).

Health Systems Look to New Developments for Revenue Growth

• While many health systems look to cost-cutting for means of sustaining long-term revenue growth, some instead look to new developments and projects to do so. Sanford Health, a nonprofit integrated health system based in Sioux Falls, South Dakota has reported a 5.4% revenue increase within 9 months.  They are currently looking into services such as retail pharmacy, occupational medicine and home health in rural areas. Their current margin contributions for these types of services are currently 8%, but they hope to grow to 20% over the next 5 years. The University of Pittsburgh Medical Center (UPMC) is a Pennsylvania non-profit health system that is currently looking at projects to aid in strengthening their finances. Within the first 9 months of 2023, they have seen a 9.3% increase in revenue. Last May, UPMC opened the UPMC Mercy Pavilion which will focus on providing translational research and outpatient rehab services. The Phoenix Children’s hospital has been working to increase the types of services they offer to help increase revenue growth. For the past few years, Phoenix Children’s Hospital has been investing in and working on its neonatology program which is set to open in 2024. It will feature a 48-room neonatal intensive care unit. Within the first 9 months of 2023, they saw a 9% increase in revenue (Modern Healthcare, January 8).

New Contender for Cigna Medicare Advantage Acquisition

• Health Care Service Corp. (HCSC) is the newest contender in acquiring Cigna’s Medicare Advantage business, sparking renewed interest on Wall Street. HCSC, based in Chicago and owning several Blue Cross Blue Shield plans across five states, may potentially buy Cigna’s MA division for at least $3 billion. This would offer HCSC growth opportunities in 29 new states despite the relatively small number of enrollees compared to UnitedHealth and Humana. Notably, MA plans’ star ratings are crucial for companies and HCSC lags with only 1.1% of members in four-star plans while Cigna has 66.6% of members in four-star or higher plans, impacting their attractiveness to potential consumers and bonuses from CMS. Motivations behind Cigna’s potential sale may include concerns about profit in the MA market amidst pressure from Congress and CMS, as the payer most recently paid a $172 million settlement to the federal government over MA billing practices (Health Payer Specialist, January 5).

The Importance of Impact: Q&A with Sellers Dorsey Senior VP, Brian McGuckin

• The Firm’s mission: Improve healthcare quality and access for underserved populations. These three pillars are built upon impact, a driving force that has motivated the work of Sellers Dorsey since its founding and continues to guide its direction toward the future. In this engaging Q&A, Sellers Dorsey Senior Vice President, Brian McGuckin gives a closer look into the importance of impact. Click here for the full blog.

Meet our Team! Managing Director, Jennifer Duffy

• Click here to explore the Q&A with Jennifer.

Congratulations to Sellers Dorsey Director, Jill Hayden

• Jill Hayden was appointed as interim contract CEO of the Illinois Association of Medicaid Health Plans. Click here to learn more.