On April 19th, 2021 Governor Andrew Cuomo (D) signed the state’s Budget for Health and Mental Hygiene (A3007C/S2507C), which includes several significant changes impacting the state’s nursing home operators and investors. Most notably, the legislation’s principal provisions require reinvestment of revenue into each nursing home facility and a cap on the profit the facility can
The Trump Administration’s proposed fiscal year (FY) 2021 budget calls for significant cuts to federal health spending, including a 10% decrease in Department of Health and Human Services (HHS) discretionary spending in FY 2021 and a $1.6 trillion net reduction in health entitlements over the next decade. House Budget Committee leaders have blasted the HHS provisions, and the package as a whole is unlikely to be advanced by Congress. Nevertheless, the document reflects the Administration’s current Medicare and Medicaid priorities, some of which are administrative and could be advanced without Congress. Furthermore, Medicare provider/supplier cost-saving recommendations could be incorporated into future budget agreements or potentially other entitlement reform efforts down the road.
Highlights of the Trump Administration’s major Medicare and Medicaid budget proposals are presented below.
Medicare Payment Policies
The Administration estimates that its proposed Medicare legislative package would result in $756 billion in Medicare Trust Fund savings over 10 years (net impact after offsets of $450 billion/10 years). Many of the legislative recommendations have been made in previous budget proposals. Budget provisions that would result in significant net Medicare savings include the following (net savings figures are over the 10-year period of FYs 2021-2030):
- Elimination of the Medicare Advantage (MA) benchmark cap and quality “double bonus” for plans in eligible counties [$1.2 billion].
- Reform of hospital uncompensated care payments, including basing payments on a hospital’s share of charity care and non-Medicare bad debt [$87.9 billion].
- Establishment of site neutral payments between on-campus hospital outpatient departments and physician offices for certain services (e.g., clinic visits) [$2 billion] and payment for all off-campus hospital outpatient departments under the physician fee schedule [$47.2 billion].
- Adoption of a unified post-acute care system for skilled nursing facilities (SNFs), home health agencies, inpatient rehabilitation facilities, and long-term care hospitals (LTCHs) beginning in FY 2026, with reduced annual Medicare payment updates from FYs 2021-2025 [$101.5 billion].
- Elimination of Medicare reimbursement for disproportionate share hospital (DSH) bad debt, with an exemption for rural hospitals [$33.6 billion].
- Reduced Medicare payment for hospice services under the SNF routine home care level of care. [$4.5 billion].
- An increase in the intensive care unit minimum stay threshold from three days to eight days to qualify for LTCH prospective payment system payment [$9.4 billion].
- Expansion of the durable medical equipment (DME), prosthetics, orthotics, and supplies competitive bidding program to all geographic areas and to inhalation drugs, payment of contract suppliers based on their own bids, and elimination of the surety bid bond requirement [$7.73 billion Medicare savings, $435 million in Medicaid savings]. Separate from the bidding program, the Centers for Medicare & Medicaid Services (CMS) would be authorized to update DME rates based on retail prices through rulemaking, without using the inherent reasonableness process [$1.6 billion Medicare savings, $85 million in Medicaid savings].
Other legislative proposals are intended to promote value-based care; in some cases, these proposals also would result in cost savings. For instance, the budget proposes the following:
- Basing Medicare beneficiary accountable care organization assignment on a broader set of non-physician primary care providers [$80 million].
- Consolidation of the four Medicare inpatient hospital quality programs into a single hospital quality payment program [budget neutral].
- Implementation of hospital outpatient department and ambulatory surgical center (ASC) value-based programs, with 2% of payments linked to quality/outcomes performance. Payment would be risk adjusted based on patient diagnosis severity to promote site neutrality [budget neutral].
- Creation of a risk-adjusted monthly Medicare Priority Care payment for providers eligible to bill for evaluation and management (E/M) services who provide ongoing primary care to beneficiaries. The payment would be funded by a 5% annual cut in valuations of non-E/M services [budget neutral].
Medicare Transparency, Quality, Coverage, and Benefits
The budget includes a series of proposals intended to increase access to price and quality information and/or clarify Medicare coverage and payment processes. For instance, the budget would:
Continue Reading Medicare/Medicaid Policy Provisions in Trump Administration’s FY 2021 Budget Proposal
Congress has completed action on federal fiscal year (FY) 2020 spending, and President Trump has signed the two domestic and national security funding packages into law. The major health care policy provisions included in the domestic spending package, HR 1865, the “‘Further Consolidated Appropriations Act, 2020” (the “Act”), are summarized below.
Repeal of ACA Device, Insurance Taxes
The Act permanently repeals the Affordable Care Act’s (ACA) 2.3% excise tax on the sale of certain medical devices, which has been a top priority of the medical technology industry. It also permanently repeals the excise tax on certain high-cost employer-sponsored health coverage (the so-called “Cadillac tax”) and the annual excise tax imposed on health insurer providers.
Medicare Part B Policies
The Act incorporates provisions of the Laboratory Access for Beneficiaries (LAB) Act, which delays the next round of clinical laboratory private payer data reporting for one year. The Act also directs the Medicare Payment Advisory Commission (MedPAC) to study how to improve this data collection.
In addition, the Act excludes certain complex rehabilitative manual wheelchairs (e.g., HCPCS codes E1235, E1236, E1237, E1238, and K0008) from the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program. The Act also bars CMS from using competitive bidding rate information to adjust payment for certain wheelchair accessories and cushions furnished with complex rehabilitative manual wheelchairs.
The Act reimburses acute care hospitals on a reasonable cost basis for furnishing allogeneic hematopoietic stem cell transplants. It also extends outpatient hospital pass-through status for a number of diagnostic radiopharmaceuticals.
Medicare, Medicaid, and Public Health Extenders
The Act extends through May 22, 2020 a number of Medicare, Medicaid, and public health programs and policies, including the following:
Continue Reading FY 2020 Government Funding Bill Repeals ACA Health-Related Taxes, Extends Expiring Health Provisions, Makes Other Health Policy Updates
President Trump has signed into law a short-term continuing resolution that funds the federal government and extends certain expiring health care programs through December 20, 2019. With regard to health care programs, the measure (HR 3055) delays a scheduled $4 billion reduction in Medicaid disproportionate share hospital allotments until December 21, 2019 and…
The Trump Administration’s proposed fiscal year (FY) 2020 budget includes extensive health policy provisions – as evidenced by the 162-page Department of Health and Human Services (HHS) “Budget in Brief.” This summary focuses on the major Medicare and Medicaid proposals most directly impacting providers and suppliers; note that we discuss the Administration’s proposed prescription drug reimbursement provisions in a separate blog post.
Medicare, Value-Based, and Related Reforms
The Administration estimates that its Medicare policy reforms would save approximately $811 billion over 10 years. The Administration states that these proposals are “designed to improve value-based systems of care, exercise fiscal integrity, promote competition, reduce provider burdens, improve the appeals system, and address high drug prices.” Budget provisions that would result in significant Medicare savings include the following (savings are over the 10-year period of FYs 2020-2029):
- A new process to distribute uncompensated care payments to hospitals based on share of charity care and non-Medicare bad debt. [$98.0 billion net]
- Site neutral payments between on-campus hospital outpatient departments and physician offices for certain services (e.g., clinic visits). [$131.4 billion]
- Payment for all off-campus hospital outpatient departments under the physician fee schedule (PFS) effective CY 2020. [$28.7 billion]
- A unified post-acute care system for skilled nursing facilities, home health agencies, inpatient rehabilitation facilities, and long-term care hospitals (LTCHs) beginning in 2025. [$101.2 billion]
- An increase in the intensive care unit minimum stay threshold from three days to eight days in order to qualify for payment under the LTCH prospective payment system. [$10.0 billion]
- A reduction in Medicare reimbursement of bad debt from 65% to 25% over three years beginning in FY 2020. [$38.5 billion]
- Expansion of the durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program to all areas of the country. The proposal also would reimburse contract suppliers based on their own bids rather than a single payment amount. [$7.1 billion]
- Consolidation of federal spending for graduate medical education (GME) programs. [$211.8 billion in Medicare savings].
Other legislative proposals intended to promote value-based care that are not expected to have a budget impact include the following:
Continue Reading Trump Administration Calls for Medicare/Medicaid Cuts, Program Reforms in FY 2020 Budget Proposal
The Centers for Medicare & Medicaid Services (CMS) has announced its plans for Round 2021 of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP), featuring new “lead item” bidding rules and new product categories. Following on the heels of this announcement, the Trump Administration proposed additional legislative changes to the CBP that would cut Medicare DMEPOS spending by more than $7 billion over 10 years.
Round 2021 of the CBP
As previously reported, there has been a “temporary gap” in the DMEPOS CBP since the last round of contracts expired on December 31, 2018. Last week CMS confirmed that it will launch a new competition – dubbed Round 2021 – for contracts that will run from January 1, 2021 through December 31, 2023. The competition will cover geographic areas included in Round 1 2017 and the Round 2 Recompete, for a total of 130 competitive bidding areas (CBAs).
For Round 2021, CMS is adding three product categories that have never been subject to competitive bidding: off-the-shelf (OTS) back braces, OTS knee braces, and non-invasive ventilators. The full list of the 16 product categories included in Round 2021 is as follows:
- Commode Chairs
- Continuous Positive Airway Pressure (CPAP) Devices and Respiratory Assist Devices (RADs)
- Enteral Nutrition
- Hospital Beds
- Negative Pressure Wound Therapy (NPWT) Pumps
- Non-Invasive Ventilators
- OTS Back Braces
- OTS Knee Braces
- Oxygen and Oxygen Equipment
- Patient Lifts and Seat Lifts
- Standard Manual Wheelchairs
- Standard Power Mobility Devices
- Support Surfaces (Groups 1 and 2)
- Transcutaneous Electrical Nerve Stimulation (TENS) Devices and Supplies
The specific HCPCS codes subject to this round of bidding is posted on the Competitive Bidding Implementation Contractor (CBIC) website. Note that CMS is not including a national mail-order program for diabetes testing supplies in Round 2021, since the agency is working to implement separate statutory requirements for those items included in the Bipartisan Budget Act (BBA) of 2018.
CMS will use a new “lead item” bidding methodology in Round 2021. That is, instead of bidding on each item/HCPCS code within a product category, suppliers will submit a single bid for that item in the product category designated by CMS to have the highest total nationwide Medicare allowed charges. CMS will calculate a single payment amount (SPA) for that lead item in the CBA based on the highest amount bid within the winning bids, rather than the median of winning bids. The SPAs for non-lead items will be based on the relative difference in the fee schedule amounts for the lead and non-lead items. A “Lead Item Calculator” is available on the CBIC site to show the impact of the lead item bid amount on the non-lead items in the product category.
The following is the schedule for the Round 2021 competition (dates are subject to change):
Continue Reading CMS Announces Plans to Restart DMEPOS Competitive Bidding Program in 2021; Trump Proposed Budget Seeks Authority for Lower Payments to “Winning” Suppliers
A number of recent Congressional hearings focused on federal health policies, including the following:
- House Energy and Commerce Committee hearings on the impact of health care consolidation, oversight of the Department of Health and Human Services (including the Trump Administration’s HHS budget request), and drug compounding.
- Ways and Means Committee hearings on President Trump’s HHS
The new Bipartisan Budget Act of 2018 (the Act), recently signed into law by President Trump, includes extensive Medicare, Medicaid, and other health policy and payment provisions. Policy changes that will be welcome to health care providers and manufacturers include: repeal of the Independent Payment Advisory Board (IPAB); elimination of the Medicare outpatient therapy caps;…
The Trump Administration has released its fiscal year (FY) 2019 budget proposal, which includes extensive health policy provisions. While most of the President’s policy proposals for Department of Health and Human Services (HHS) programs would require Congressional approval, others are characterized as administrative proposals that presumably would not involve Congress.
Continue Reading Trump Administration’s Proposed FY 2019 Budget Targets Medicare, Medicaid for Savings, Seeks (Again) to Repeal/Replace ACA
House and Senate committees have held a number of hearings recently to focus on health policy topics, including the following:
- A Senate Health, Education, Labor & Pensions Committee hearing on “The Cost of Prescription Drugs: How the Drug Delivery System Affects What Patients Pay,” the first of three planned hearings on prescription drug costs.
- A House Ways and Means Committee hearing on Medicare Advantage and coordinated care models such as the Program for All-Inclusive Care.
- Senate Finance Committee and House Ways and Means Committee hearings examining the Trump Administration’s proposed FY 2018 HHS budget request.
- House Energy and Commerce Committee hearings on the HHS response to cybersecurity vulnerabilities and the U.S. public health response to the Zika Virus. A planned June 14 hearing on extension of safety net health programs (the Children’s Health Insurance Program, Federally Qualified Health Centers, and the Community Health Center Fund) has been postponed.
President Trump has released his FY 2018 budget proposal, which the Administration dubs “A New Foundation for American Greatness.” The proposed budget – which received a generally chilly reception on Capitol Hill – offers a mixed bag for the health care industry. On the one hand, a document summarizing the Department of Health…
The Trump Administration is calling for deep cuts to Department of Health and Human Services (HHS) funding for fiscal year (FY) 2018 along with a $1 billion hike in Food and Drug Administration (FDA) user fees in its “budget blueprint,” dubbed “America First: A Budget Blueprint to Make America Great Again.” The blueprint…
The House Budget Committee has approved the budget resolution providing instructions to Congressional committees on the federal spending framework for FY 2017. The resolution calls for the adoption of major reforms to the Medicare program that would cut spending by $449 billion over 10 years, while Medicaid and other health care spending would be reduced…
Several Congressional committees have held hearings recently on health policy issues, including:
- A House Energy and Commerce Health Subcommittee hearing on the Medicaid and CHIP Federal Medical Assistance Percentage formula.
- House Ways and Means Committee, Senate Finance Committee, and Energy and Commerce Committee hearings on President Obama’s proposed FY 2017 HHS budget request.
On February 9, 2016, the Obama Administration released its proposed fiscal year (FY) 2017 budget, which contains significant Medicare and Medicaid reimbursement and program integrity legislative proposals – including $419 billion in Medicare savings over 10 years. These proposed policy changes would require action by Congress, and Republican Congressional leaders have already voiced general…
The Obama Administration’s proposed fiscal year (FY) 2017 budget, released on February 9, 2016, includes a number of legislative proposals that would revise Medicare and Medicaid policies to achieve budget savings and make other program reforms. The largest pool of Medicare savings would result from various Medicare prescription drug proposals, including the following (all savings over the 10-year period of FYs 2017-2026):
Continue Reading Medicare and Medicaid Drug Policy Provisions in the Obama Administration’s Proposed FY 2017 Budget
On February 9, 2016, President Obama is scheduled to submit his proposed fiscal year 2017 budget to Congress. Two Congressional committees have planned hearings to examine provisions of the proposed budget involving the Department of Health and Human Services (HHS), with HHS Secretary Sylvia Mathews Burwell testifying. Specifically, the House Ways and Means Committee has…
On December 15, 2015, Congressional leaders released sweeping spending and tax proposals, including a number of provisions impacting Medicare and the Affordable Care Act (ACA). The legislation is being considered on a fast track; the House approved the tax component of the package today, and it is scheduled to vote on the appropriations bill tomorrow, with Senate action expected shortly thereafter. Medicare/Medicaid provisions of the Consolidated Appropriations Act of 2016, which are intended to offset the costs of reauthorizing the World Trade Center Health Program, include the following:
Continue Reading Congressional Leaders Announce Spending/Tax Deal with Medicare and ACA Provisions; House Approves Tax Package
Outgoing House Speaker John Boehner and the Obama Administration have reached agreement on a two-year, $80 billion budget/debt-ceiling deal that includes Medicare and Medicaid “offsets” to finance other spending. For instance, while the budget would provide $80 billion in discretionary spending sequestration relief over two years, it would extend Medicare sequestration for an additional year, through 2025. The deal also would:
Continue Reading Pending Budget Deal Includes Medicare Sequestration Extension, Other Medicare/Medicaid Cuts
On May 5, 2015, the Senate approved the conference report to accompany S.Con.Res. 11, the concurrent resolution setting forth the federal budget for FY 2016 and establishing budgetary target levels for FYs 2017 through 2025, following earlier House approval. The conference agreement, which was approved on largely party-line votes, includes nonbinding language supporting Affordable Care…