Congress

What Will Congress Do about Pending PAYGO Cuts?

by Matt Gontarchick

The debt ceiling, appropriations, infrastructure, reconciliation – Congress has a lot on its plate right now.  On top of that, Congress has another item to address that health care stakeholders have been watching closely: an automatic 4% cut to Medicare starting on January 1, 2022.

What’s going on?  In March, the $1.9 trillion American Rescue Plan Act passed and raised the deficit. This triggered automatic PAYGO cuts to Medicare and other programs because of a law signed in 2010, the Pay-As-You-Go (PAYGO) Act, which prohibited new legislation from increasing the federal budget deficit. 

What’s Congress doing?  Congress has always acted to waive PAYGO cuts, but not in March of 2021 when lawmakers failed to reach an agreement. At the time, the House overwhelmingly voted to waive PAYGO, but a similar proposal in the Senate failed to garner enough votes to override a filibuster.  So far, there has been little word from lawmakers about the plans to address PAYGO as the end of the year approaches.

Why does it matter?  The American Hospital Association (AHA) estimates that a 4% reduction in Medicare spending, or about $36 billion, would result in $9.4 billion in cuts to hospitals provider for fee-for-service (FFS) Medicare reimbursement in calendar year 2022.  These losses would come at a time when hospitals and other providers are still grappling with revenue losses related to the COVID-19 pandemic.

It’s not just PAYGO: Health care providers are facing other cuts at the year’s end that, combined with PAYGO, could prove devastating.  These include:

  • Medicare sequestration.  Congress passed legislation back in April to extend the moratorium on 2% cuts to Medicare payments, known as sequestration, through the end of 2021.  The 2% cuts were initially postponed by Congress as a part of the CARES Act in 2020 to help providers struggling with the financial burden of the pandemic.
  • 2021 Physician Fee Schedule.  Finalized in July, the 2021 Physician Fee Schedule will cut payments to physicians next year by 3.75%.  The cut was initially set to go into effect in 2021, but Congress provided an extra $3 billion in funding in late 2020 to hold on the cuts until the beginning of 2022.

The bottom line: The combination of PAYGO, Medicare sequestration, and the Physician Fee Schedule could mean a 9% reduction in Medicare physician payments next year.

What’s being done?  Leading stakeholder organizations including the AHA and the American Medical Association (AMA) have sent letters to congressional leadership urging action to waive pending PAYGO cuts, as well as the coming Medicare sequester and Physician Fee Schedule cut.  Furthermore, on October 14, 245 bipartisan House members sent a letter to congressional leaders on the aforementioned Medicare cuts.  Congress has provided much assistance to health care providers over the course of the pandemic, and providers are urging Congress to take action once again to help the industry make it through what is hopefully the final stage of the pandemic.   

Administration

What Does Health Care Rulemaking Look Like This Year?

by Matt Gontarchick

Even Congress tries to complete $4.5T in domestic policy changes plus appropriations in the next 3 months, the Biden Administration is cranking away on health care rulemaking.  Here’s a quick overview of some key rules on the horizon from the Department of Health and Human Services (HHS).

Go deeper:  Refresh your memory on OMB and rulemaking here.

Below are the health care rules currently under review at www.reginfo.gov.  At the moment, the public is unable to comment on the any of the rules listed until their publication in the Federal Register.

TitleCategoryTypeStatus
Streamlining HHS
Guidance Practices		Internal HHS PolicyProposed RuleReceived at OMB on
6/28/21
Reporting Requirements Related to Air
Ambulance and Agent
and Broker Services and HHS Enforcement
Provisions		InsuranceProposed RuleReceived at OMB on
7/7/21
Establishing
Over-the-Counter
Hearing Aids and
Aligning Other
Regulations		Medical DevicesProposed RuleReceived at OMB on
8/18/21
Medicare Coverage of
Innovative Technology (MCIT) and Definition of “Reasonable and
Necessary”		MedicareProposed RuleReceived at OMB on
8/27/21
Securing Updated and Necessary Statutory
Evaluations Timely		Internal HHS PolicyProposed RuleReceived at OMB on
8/31/21
Premarket Tobacco
Product Applications
and Recordkeeping
Requirements		Tobacco ProductsFinal RuleReceived at OMB on
4/5/21
Format and Content of Reports Intended to
Demonstrate
Substantial Equivalence		Tobacco ProductsFinal RuleReceived at OMB on
4/5/21
Medical Device De
Novo Classification Process		Medical DevicesFinal RuleReceived at OMB on
6/28/21
Updating Payment
Parameters and
Improving Health
Insurance Markets for
2022 and Beyond		InsuranceFinal RuleReceived at OMB on
8/19/21

Don’t Be Caught “Surprised”

HHS has more rules coming out on the No Surprises Act. 

  • By October 1, the Biden administration is required to publish a rule on an audit process to ensure that plans and insurers are complying with the QPA calculation and requirement. 
  • By December 27, the administration must outline the details of an independent dispute resolution (IDR) process if providers and health plans fail to agree on an out-of-network rate.

Annual Payment Rules

Expected around late October/early November, CMS will post the final Medicare payment policies and reimbursement rates for FY 2022, including the Home Health Prospective Payment System, the Hospital Outpatient Prospective Payment System (HOPPS), and the Physician Fee Schedule. 

  • Stakeholders can still comment on the proposed HOPPS and Physician Fee Schedule at regulations.gov through September 13 and September 17, 2021, respectively. 

All eyes may be on Congress this fall as lawmakers work to finish FY 2022 appropriations, a $1.2T bipartisan infrastructure bill, and a $3.5T “human” infrastructure package.  However, keen observers would be remiss to ignore the Executive Branch, where forthcoming rulemaking will surely impact health care providers of all stripes.

CMS

After 10 Years, How Is the CMS Innovation Center Doing?

by Matt Gontarchick

The Center for Medicare and Medicaid Innovation (CMMI), also known as the CMS Innovation Center, just celebrated its tenth birthday last year.  Tasked to address growing concerns about rising costs, quality of care, and inefficient spending, CMMI is a powerful tool for innovation in the US health care system.  After a decade, is CMMI delivering on its promise to innovate health care, or does the young agency still have much to accomplish?

All About CMMI

Created upon enactment of the Affordable Care Act (ACA) in 2010, CMMI is statutorily mandated to design, implement, and test new health care payment and delivery models for Medicare and Medicaid.  Managed by the Centers for Medicare and Medicaid Services (CMS), CMMI has launched over 40 new payment models since its inception, including accountable care organizations, medical homes models, and bundled payment models.  CMMI separately awards grants to state agencies, researchers, and other organizations for projects to design and implement new payment models with the same goals of improving care and lowering costs, and some of CMMI’s work includes multi-payer alignment models that impact patients with commercial insurance. 

2020 Report to Congress

Released on August 4, the 2020 Report to Congress provides an in-depth look at the performance of CMMI models and serves as a key indicator of how the center is doing in its effort to address rising costs and boost quality.  While the report focuses on CMMI’s activities from October 1, 2018, to September 30, 2020, it also highlights some actions taken from September 30 to December 31, 2020. 

In the 2020 Report, CMS estimated that over 27.8 million Medicare and Medicaid beneficiaries plus enrollees in commercial insurance plans have received care from over 500,000 health care providers or plans participating in alternative payment models under CMMI.  The 2020 Report analyzed a total of 38 active models within CMMI, including 11 new models announced since the 2018 Report and 27 active models that were launched prior to October 2018.

Summary of Findings

Unfortunately, only a handful of CMMI models met either goal of reducing costs or improving quality.   Furthermore, only the five following models delivered “statistically significant savings” to the Medicare Trust Fund according to the report:

Additionally, a few models led to improvements in quality but did not yield any noteworthy savings, including the Comprehensive End-Stage Renal Disease (ESRD) Care (CEC) Model and the Comprehensive Care for Joint Replacement (CJR) Model.

Saving money and raising quality aren’t the only metrics for a model’s success.  For CMS to consider permanently expanding a model for the federal health care entitlement programs, models must meet several additional criteria, including assurance from the CMS Office of the Actuary that a model’s expansion would not deny or limit coverage or provision of benefits under Medicare, Medicaid, and CHIP.   According to the report, only three models met the criteria:

How Can CMMI Improve?

While the 2020 Report to Congress does not explicitly offer recommendations on how to improve model performance, it does identify four issues that contributed to lower-than-expected model performance:

  • Selection bias created by voluntary models.
  • Benchmark inaccuracy.
  • Quality measure misalignment.
  • The need for greater data transparency.

These four issues identified in the report suggest a few ways CMMI models could produce better quality and provide for lower costs, mainly through mandatory model participation and more data transparency.  The idea of making more payment models mandatory is not a new idea.  In a July 2021 interview with Health Affairs, CMMI Director Liz Fowler explained that a shift towards mandatory models, which had already begun during the previous administration, will continue under the Biden administration and are likely to play a greater role in CMMI’s future.

The fact that CMMI models are underperforming is not lost on CMS leadership.  In a recent Health Affairs blog post, a few top agency officials including CMS Administrator Chiquita Brooks-LaSure and Fowler acknowledged only a handful of models have incurred savings and met the requirements to be expanded.  In addition to recounting a few recommendations from outside experts, such as MedPAC’s endorsement for streamlining and harmonizing models, Brooks-LaSure and Fowler offered several takeaways to inform how model performance could be improved.

  • CMMI needs to reevaluate how it designs financial incentives in order to boost meaningful provider participation.
  • Challenges in setting financial benchmarks have undermined models’ effectiveness, underscoring a need to ensure models are not resulting in overpayment and explore ways to improve or replace the current risk adjustment methodology. 
  • Since providers find it hard to accept downside risk if they lack the tools to change care delivery, CMMI should help ensure providers have options for managing risk, such as support in transforming care, waivers, and data. 

Despite dozens of underperforming models, CMS recognizes that the Innovation Center has room for improvement, and the agency’s leaders are keen on delivering a strategy that works.  Hopefully, through streamlining current models, implementing more mandatory models, boosting participation in voluntary models, improving financial incentives, and ensuring model participants have the tools they need to succeed, CMMI models could hopefully be in a better position to  both reduce costs and improve quality in time for the center’s 20th anniversary.

Congress

What You Need to Know about Medicare Insolvency

by Matt Gontarchick

Medicare is in trouble.  The Hospital Insurance (HI) trust fund, which finances Medicare Part A, already spends more than it brings in, and without help from Congress, the trust fund is projected to become insolvent in just a few years.  Unfortunately, the HI trust fund has been down this road before, requiring Congress to take action to stave off insolvency and extend the lifespan of the trust fund at several points in the past.  What exactly does insolvency mean for Medicare, and how can lawmakers put the program on solid financial footing?

The State of the Trust Fund

Concerns over Medicare insolvency aren’t exactly new.  Since the program’s creation in 1965, Medicare has faced insolvency on a fairly regular basis.  Even before the start of the COVID-19 pandemic, the HI Trust Fund was projected to hit insolvency by 2030.  However, the pandemic has exacerbated the trust fund’s financial outlook considerably.  Since payroll taxes are the chief source of revenue for the trust fund, job losses from COVID-19 have resulted in less incoming revenue for Part A.  Another factor which hastened the fund’s depletion is the fact that $60 billion of funding provided to the Provider Relief Fund under the CARES Act came from the HI trust fund.

What Does Insolvency Actually Mean?

Contrary to what many believe, insolvency wouldn’t mean the HI trust fund had completely run out of money or would be unable to pay out claims.  Rather, it would mean the trust fund would no longer have any assets.  Once the trust fund depletes, the Congressional Budget Office (CBO) projects annual program revenues from payroll taxes will only cover about 92% of annual program outlays.  Absent any congressional action, insolvency would mean Medicare payments to providers would be reduced to levels that could only be covered by incoming tax revenues.  This could affect providers through one of two scenarios.  In the first scenario, the Centers for Medicare and Medicaid Services (CMS) would reimburse claims as revenue comes into the trust fund, but as tax revenues come in at a slower rate than provider claims, the amount of time between the filling of claims and reimbursement would grow, resulting in delayed payments for providers.  Under the second scenario, CMS would pay a decreased rate for all Part A care.  According to a CBO report from September 2020, Part A would only have enough tax revenue to pay 83 cents for each dollar billed upon the trust fund reaching insolvency.  This means that for every $100 owed to providers for Part A-covered services, CMS would only be able to reimburse $83. 

It should also be noted that the HI trust fund’s exact date of insolvency is unknown.  In September 2020, CBO initially projected the trust fund would become insolvent by 2024.  However, improved estimates for job growth and the employment rate in a February 2021 report from CBO prompted many analysts to push the anticipated date on insolvency back two years.  

Déjà Vu All Over Again

Lawmakers have come to Medicare’s rescue in the past when the program faced similar financial problems, only to take back or delay some of the financial pain the laws inflicted on providers.  When Medicare approached insolvency in the 1990s, Congress ushered in major changes to the program via the Balanced Budget Act (BBA) of 1997, which increased cost sharing for beneficiaries, reduced the growth of payments to providers, and expanded prospective payments to post-acute care facilities.  In 2002, Congress began a 13-year run of delaying the resulting cuts to physicians and other Part B providers through legislative efforts commonly known as the “doc fix.”  Congress once again took action in 2009 to shore up the trust fund via the Affordable Care Act (ACA). Under the landmark health law, a growth in payroll taxes for high-income Americans and a Medicare net investment income tax increased the program’s solvency to a total of 19 years.  However, Congress ended up repealing many of the ACA’s revenue-generating policies like the “Cadillac Tax” and medical device tax, as well as the hugely unpopular Independent Payment Advisory Board, meaning the trust fund was once again facing hard times.  The Budget Control Act of 2011 ushered in an era of automatic Medicare payment cuts, which Congress continues to suspend, doing so through December 31, 2021 in the most recent COVID-19 relief law. 

How to Address Medicare’s Finances

There is no shortage of proposals to delay Part A’s insolvency, most of which revolve around either reducing spending or increasing revenue.  Many of these ideas would require statutory changes.  Below are some key proposals summarized.

  • Raise Medicare Taxes.  Congress could consider raising payroll taxes by 0.38% each on employees and employers to stave off insolvency.  However, such a move would be politically unpopular and inopportune as the economy continues to recover from the pandemic.  As an alternative, Congress could consider using the proceeds of the net investment income tax to finance the HI Trust Fund.  Under the Affordable Care Act (ACA), high-income Americans have a 3.8% net investment income tax, and bumping this up to 4% would provide the trust fund $490 billion in additional revenue over 10 years.
  • Build an Integrated Benefit and Trust Fund Structure.  Instead of having two separate insurance plans for Medicare – one for inpatient services (Part A) and one for ambulatory care (Part B) – Congress could integrate benefits covering inpatient and outpatient care with a simplified cost-sharing structure for patients.  Revenue sources would remain the same, although general fund payments to cover Medicare’s costs would be indexed in future years to a measure of economic growth or another measure not tied to Medicare’s costs.
  • Turn Medicare into a Premium Support Program. Beneficiaries would choose a plan each year, with the federal contribution determined by the second-lowest bid for all plans.  Instead of defining benchmarks by spending growth in the fee-for-service program, benchmarks would be defined by the second-lowest bid.  Competition among plans to be the second-lowest bidder would incentivize plans to keep premiums low.
  • Advance Health Equity.  Health inequities cost the US $83 billion each year and contribute to poor health outcomes for Medicare beneficiaries, subsequently driving greater spending.  Medicare could utilize telehealth, implicit bias training, regular screening for social and nonmedical needs, and enhanced data on beneficiaries to reduce chronic conditions and improve beneficiaries’ health.
  • Expand Promising Alternative Payment Models.  Alternative payment models create incentives for providers to collaborate to provide high-value care.  Since most alternative payment models have failed to produce noticeable savings, CMS could double down on the most promising models and encourage long-term investment in them. 

Medicare is very popular among beneficiaries, and lawmakers have repeatedly vowed to ensure the program has a future.  With potentially only a few years until the program faces a financial reckoning, Congress may yet take up the mantle to make changes to Medicare to ensure its long-term sustainability.  What those changes may be – and whether Congress can stick to its plan – are far from certain.

Telehealth

Should Payment Parity for Telehealth Continue?

by Matt Gontarchick

In response to the COVID-19 pandemic, the Centers for Medicare and Medicaid Services issued rulemaking to require Medicare to pay the same rates for telehealth and in-person care for the duration of the public health emergency (PHE).  Now that the end of the pandemic may be in sight, stakeholders are debating whether Medicare should continue offering payment parity for telehealth services post-pandemic.  Since Medicare’s actions often inform what private payers do, stakeholders will be watching closely what the agency decides to do. 

Against Payment Parity

A chief argument against payment parity is that it could lead to overutilization and higher spending.  For patients with the right technology, accessing telehealth can be very convenient, leading health experts to suggest some patients may use telehealth more than necessary.  Corollary to this, some experts are worried about telehealth’s potential to create more opportunities for waste, fraud, and abuse.

Additionally, opponents to payment parity contend that telehealth requires fewer resources and less clinical effort than in-person visits.  For example, a 2017 study from Health Affairs found the average cost of a telehealth visit for an acute respiratory infection was $79 compared to $146 for in-person visits.  Simple virtual check-ins may also require less decision-making, time, and other factors considered “clinical effort” when compared to in-person appointments. 

Furthermore, some worry payment parity in telehealth may propagate low-value care.  For certain conditions, telehealth may prove limiting for providers, and there is no substitute for the type of evaluation physicians can provide through in-person visits.  Parity opponents argue that higher reimbursement rates tied to in-person visits will ensure patients can more regularly receive a full evaluation, thus preventing the likelihood symptoms missed during telehealth visits progress to become more expensive chronic conditions down the road.

For Payment Parity

Those in favor of continuing payment parity post PHE say there is no evidence that telehealth has resulted in overutilization.  Most instances of telehealth usage, parity proponents say, has been to substitute in-person to visits as a result of the COVID-19 pandemic.  According to data from electronic health record company Epic, the number of telehealth visits declined rapidly by summer 2020 following an initial increase in April 2020.  This data suggests that patients are so far not opting for more telehealth visits over in-person visits out of ease or convenience.  Additionally, some physicians argue some diagnoses can require as much clinical effort as in-person visits.  According to a 2020 study from the University of Michigan, surgeons reported spending more time on telehealth than in-person visits.   

Proponents of payment parity also say telehealth services utilize far more resources than patients realize.  While telehealth may not seem to require the same “brick and mortar costs” as in-person visits, providers assert that telehealth requires an investment in technology, both to set-up virtual visits and keep up with changes in technology.  For certain medical conditions, digital monitoring and home-based care products may require additional resources.  Providers also say that some diagnoses can involve just as must clinical effort as do in-person appointments.

Moreover, parity supporters contend that clinical guidelines about when telehealth and in-person care is appropriate can prevent low-value care.  For instance, the American College of Obstetricians and Gynecologists has issued guidance on when patients should require a physical examination. 

What Happens Next?

CMS can continue to pay the same rates or the agency could propose a differential payment rate.  Either way, the decision would be subject to the rulemaking with notice and comment.  For the part of Congress, the legislative branch hasn’t weighed in.  While legislators have introduced a slew of bills to permanently expand telehealth coverage and abolish pre-pandemic restrictions on telehealth, none address how telehealth should be paid for.  A lone exception is H.R. 8308, the Telehealth Coverage and Payment Parity Act.  Introduced by Rep. Dean Phillips (D-MN) in September 2020, the legislation would require commercial insurers to pay the same level for the same level for telehealth services as it would for in-person services.  However, this legislation does not affect Medicare, and as of this writing, the bill has yet to be reintroduced in the 118th Congress.

In their January 2021 public meeting, the members of the Medicare Payment Advisory Commission (MedPAC) suggested that Medicare continue telehealth payment parity for 1-2 years following the end of the PHE as a “pilot program” to evaluate how to telehealth services should be reimbursed permanently.  However, MedPAC’s comments have yet to be taken up in any legislative proposal.

Medicare

Despite Reintroduction, Medicare for All, Medicare-X Proposals Face Limited Odds

by Matt Gontarchick

With control of the White House and both chambers of Congress, Democrats are newly emboldened to expand access to health care coverage.  A group of progressives in the House are making another attempt at Medicare for All, while moderates in the House and Senate want to expand coverage via a public option.  However, lack of Republican support for either proposal means both are likely doomed.

Medicare for All

On March 17, Reps. Pramila Jayapal (D-WA) and Debbie Dingell (D-MI) introduced the Medicare for All Act of 2021 (H.R. 1976).  The bill has so far attracted 109 co-sponsors, indicating the highest-ever level support in Congress for a national health insurance program.  While a Medicare for All bill has never advanced out of a congressional committee, advocates for single-payer feel the COVID-19 pandemic has laid bare the inefficiencies of the current health care system and made their case even stronger.  In a press release, Rep. Jayapal touted Medicare for All as a solution for the millions of Americans who lost employer-sponsored coverage because of the pandemic.    

In addition to being a total non-starter with Republicans, Medicare for All faces two major obstacles.  One is resistance from health care stakeholders, who have long thrown cold water on single-payer proposals.  The Partnership for America’s Health Care Future, a coalition of insurer and provider organizations, issued a recent statement saying Medicare for All is unaffordable and would lead to lower quality.  Additionally, the US Chamber of Commerce said in press release that Medicare for All would reduce access to providers and hospitals.

The second major obstacle comes from within the Democratic party itself.  President Biden has clearly stated his preference for expanding access to coverage through a public health insurance option, one that moderate and centrist members of the party share.  While Biden has gradually moved leftward over the course of his political career, it is extremely unlikely he would champion a health care proposal that remains divisive among members of his own party. 

Medicare X

Closer to the President’s ideological preferences for expanding coverage is the Medicare X Choice Act of 2021 (S. 386/H.R. 1227).  First introduced by Sens. Michael Bennet (D-CO) and Tim Kaine (D-VA) in 2017, this proposal would allow all Americans to purchase a public health insurance plan based on the Medicare program that would reimburse providers at the same rate Medicare currently does and allows patients to access providers that accept Medicare.  Supporters of Medicare X tout it as a more realistic proposal to achieve universal coverage that would be less disruptive to the health care system.  Additionally, a January 2020 poll from the Kaiser Family Foundation found a public option-based proposal is more favorable to a greater number of Democrats and Independents than Medicare for All.

The fact that Medicare X/a public option enjoys higher favorability than Medicare for All does not necessarily improve its odds of passage.  Medicare X is similarly unpopular with Republicans and given the party’s razor-thin control of the Senate, Democrats would likely have to use budget reconciliation to advance any kind of public option proposal.  While reconciliation was used to pass the Affordable Care Act (ACA) in 2010, it remains unclear if a proposal like Medicare X would meet the strict budgetary criteria required to be considered under budget reconciliation.  Furthermore, Congress is limited to the number of times it can use budget reconciliation in any given year, and Democratic leadership have yet to make any prognostications about what proposals it could consider under budget reconciliation in the future. 

Implications

While Medicare for All and Medicare X are unlikely to become law anytime soon, a key implication of both proposals is their potential to hasten divisions between progressive and moderate Democrats.  Since the start of the Biden Administration, both wings of the party have largely set aside their differences to advance key components of the President’s agenda, including cabinet nominations and a sweeping $1.9 trillion COVID-19 relief package.  While the House, and some argue the Democratic Party, have moved more to the left – it remains clear that moderate Democrats in the Senate maintain a high level of power over the fate of any legislation in the upper chamber.  Disagreements over health care proposals have the potential to disrupt broader legislative goals from the White House, such as immigration, infrastructure, or tax reform.

Congress

PAYGO Cuts Face Uncertainty in Congress

by Matt Gontarchick

While members of both parties agree the pending Medicare sequester needs to be extended, Republicans don’t seem favorable to waiving PAYGO budget rules to allow additional cuts to be averted.  The result is continued uncertainty for health care providers and a likely sign of spending fights to come in Congress.

Medicare is currently facing two automatic budget cuts.  Under the first cut, Congress was initially set to reduce 2% of the Medicare budget, or $18 billion, in Fiscal Year 2020 due to a process known as sequestration that provides an automatic spending reduction to enforce certain budgetary goals.  However, Congress opted to delay the 2% cut to April 1, 2021 due to the pandemic’s financial impact on health care providers.  The American Rescue Plan Act of 2021 (H.R. 1318) is scheduled to trigger a second cut to Medicare to the tune of 4%, or $36 billion.  This second cut is a requirement of the Pay-As-You-Go (PAYGO) budget rule, which says legislation that fails to offset spending increases must be offset by cuts to mandatory programs such as Medicare.  Unlike the sequester, PAYGO cuts would not go into effect until the beginning of 2022. 

Health care stakeholders are adamantly opposed to the cuts.  In letters sent to congressional leadership on March 11 and March 17 respectively, the American Hospital Association and American Medical Association (AMA) requested lawmakers find a bipartisan solution to avoid the both the sequester and PAYGO-triggered spending reductions.   In particular, AMA urged Congress to avoid legislation that would again induce PAYGO cuts to avoid creating further uncertainty in the health care system.

The House is set to take up a bill on March 19 that would waive PAYGO for the American Rescue Plan and delay Medicare sequestration through the end of the 2021(H.R. 1868). While both Democrats and Republicans agree the sequester needs to be delayed again, Republicans do not seem favorable to waiving PAYGO.  In a March 16 hearing on H.R. 1868 by the House Rules Committee, Ranking Member Tom Cole (R-OK) implied the American Rescue Plan was too large due to lack of bipartisan cooperation, and that a smaller COVID-19 relief bill could have passed Congress without triggering PAYGO cuts.  Additionally, many Republicans may be unwilling to waive a budgetary rule that was directly triggered by a massive bill that passed without a single GOP vote.

Likewise, it is unclear what the Senate will do with the measure once it is sent over from the House.  Introduced by Jeanne Shaheen (D-NH) and Susan Collins (R-ME), S. 748 would extend the sequester moratorium through the end of the COVID-19 health emergency but did not address the broader PAYGO issue.  The bill pays for the limited extension by extending the time period for sequestration by one year, through Fiscal Year 2031.

Given the political dynamics of the overall PAYGO issue and with Democrats controlling the Senate by just one vote, it is unclear at this time whether the Senate would take up the House measure or the Shaheen/Collins bill.  Adding to the uncertainty is the upcoming congressional recess period where both chambers will be out of session starting March 29 until April 13.  At this point, there hasn’t been any signal yet that the Senate will take action next week to avoid the current March 31 sequestration relief expiration from taking effect.  However, we would anticipate action at some point, even if it would have to be made retroactive, given the overall bipartisanship that remains generally for giving providers relief from the projected cuts.   

CMS

CMS Puts Geo Model on Hold

by Matt Gontarchick

On March 1, the Center for Medicare and Medicaid Services (CMS) announced its Geographic Direct Contracting Model is “currently under review” until further notice.   While CMS has yet to provide a reason for the pause, criticism from industry stakeholders and the new Center for Medicare and Medicaid Innovation (CMM) Director may explain the pause.

Announced in December 2020, the Geographic Direct Contracting Model, or the “Geo Model,” envisions using direct contracting entities (DCEs) to build integrated relationships with health care providers and coordinate care for Medicare beneficiaries in designated geographic regions.  The model, which had been under development for two years, builds on lessons learned from the Next Generation ACO model, Medicare Advantage, and other initiatives.

However, the Geo Model is the only CMMI model that has been paused by the new Administration so far.   In the absence of an official justification from CMS, one of the reasons why the model may have been put on hold was criticism from health care stakeholders.  In a December 2020 letter to then-CMMI Director Brad Smith, the National Association of ACOs warned the model could generate confusion among beneficiaries over who is compelled to participate.  Additionally, the Center for Medicare Advocacy urged the then-Biden Transition Team in a December 2020 letter to halt the Geo Model due to uncertainty over how the model would work with other forms of insurance such as Medigap.

The move to suspend the Geo Model is not entirely without precedent.  The Biden Administration paused or withdrew numerous actions by the previous Administration since assuming power, which is typical for new presidential administrations.  For instance, CMS has withdrawn proposed rules on oversight for accrediting organizations, revisions to dialysis coverage requirements, and changes to Medicare Part A enrollment requirements since January 20. 

It should be noted that not all stakeholders oppose the Geo Model.  In a March 4 letter, America’s Physician Groups urged CMMI to restart the model as soon as possible due to “extensive financial investments” participating providers have already made in preparation for the model’s launch, as well as a genuine belief that the model represents a meaningful shift away from the fee-for-service model.

In addition to external criticism, pressure to put the Geo Model on hold may have come from within CMMI itself.  Recently, the Biden Administration tapped Liz Fowler to serve as CMMI Director.  Prior to her new leadership role at CMS, Fowler served as Executive Vice President for Programs at the Commonwealth Fund, where she co-authored a December 2020 blog post about the Geo Model.  While the blog post largely served as an explainer for the model, it raised several questions, including how CMS would be able to produce savings CMS had projected and whether CMS is adequately tracking beneficiaries’ use of services under the model.

Thus, pressures from both inside and outside CMS have likely led to the Administration’s decision to suspend the model for the time being.  That said, while not knowing yet where CMMI may take the geographic-based care and payment model, it certainly seems possible that the Administration could choose to pause other CMMI models in the future.

Hospitals

Hospitals Face Looming Deadline on Advance Medicare Payments

by Matt Gontarchick

Hospitals face a fast-approaching deadline to pay back loans from the Medicare Accelerated and Advance Payment (AAP) programs towards the end of March. However, lawmakers who provided little assistance for hospitals in the way of additional relief funding in the most recent COVID-19 relief bill seem just as unlikely to adjust the loan repayment date.

The Medicare AAP programs, which predates the COVID-19 public health emergency, were designed to help hospitals and other providers withstand cash flow disruptions during emergencies.   The programs provide loans paid out of the Medicare Hospital Insurance (Part A) and the Supplementary Medical Insurance (Part B) trust funds and include timelines and terms for repayment.  Enacted on March 27, 2020, the CARES Act (P.L. 116-136) greatly expanded the Medicare AAP programs to include a broader swath of health care providers.  Of the $100 billion in Medicare advance payments loaned to providers in 2020, nearly 80% went to hospitals, while the remainder went to skilled nursing facilities, critical access hospitals, home health providers, and other types of providers and suppliers. 

While repayment for the AAP loans was originally set to begin in August 2020, Congress delayed the repayment start date to March 27, 2021 under the Continuing Appropriations Act, 2021 (P.L. 116-159).  Signed into law on October 1, 2020, the Continuing Appropriations Act also revised the repayment terms for AAP loans to allow Medicare to begin automatically recouping 25% of Medicare payments to the outstanding loan balance in the first 11 months following the March 27, 2021 repayment deadline and 50% of Medicare payments in the subsequent six-month period.

Hospitals are again requesting a delay in the repayment schedule and other changes to AAP programs due to concerns over continued revenue losses associated with the pandemic.  According to an analysis commissioned by the American Hospital Association (AHA), hospitals could stand to lose between $53-122 billion in revenue in 2021 due to costs related to COVID-19 vaccine distribution and the potential for future surges in case numbers to cause elective procedures to drop.  As such, America’s Essential Hospitals has urged congressional leadership to delay the AAP loan deadline and lower interest rates in a February 17 letter.  The AHA has gone a step further in asking the federal government to outright forgive the loans per a November 2020 fact sheet.

However, Congress has yet to deliver further.  In the American Rescue Plan Act of 2021, the latest COVID-19 relief bill that could be signed into law within days, lawmakers did not make any changes to the AAP program.  Congress also notably came up short on hospitals’ request to provide $35 billion in additional funding for the Provider Relief Fund.  Instead of more fully replenishing relief funds, the American Rescue Act only provides $8.5 billion in assistance, and specifically designates the monies for rural hospitals.

One reason lawmakers may be hesitant to make significant changes to AAP loans is the implications for the Medicare trust funds.  The Congressional Budget Office projects the Part A trust fund and Part B trust fund will become insolvent by 2026 and 2024 respectively.  Further changes to AAP programs that would protract repayment or forgive the loans outright would ramp up the timeline for the trust funds to run dry.

At the moment, Congress is carefully monitoring whether to legislate any additional financial help for hospitals, whether it be in the form of a delayed loan repayment date or grants from the Provider Relief Fund, taking a pass for now in the American Rescue Plan.