4 bipartisan healthcare policy changes are likely in 2025

HFMA policy experts see a high likelihood for far-reaching changes in healthcare policy following the November elections, with a focus on four areas: site-neutral payments, prior authorization, the 340B Drug Pricing Program, and mergers and acquisitions (M&A).

The elections could produce a range of outcomes for the presidency and control of Congress. However, strong bipartisan interest in certain policies indicates action is likely in the four identified areas, regardless of who wins the White House or controls Congress.

“Our HFMA policy experts tried to ask the questions ‘What is Congress actually going to be talking about after the elections?’ and then ‘What will they most likely address in a timely way?’” said Richard Gundling, senior vice president of professional practice for HFMA. “It’s a practical issues list, perhaps not the most ‘aspirational’ when viewed through a national health policy lens, yet meaningful with the implications to patients, purchasers, and provider and payer health leaders.”

Payment differentials scrutiny

Among the four areas HFMA’s policy experts identified, policy changes to move from differentiated payment based on the site of care to site-neutral payment have garnered the strongest bipartisan interest.

The highest-profile proposal was the Lower Costs, More Transparency Act, which passed the House of Representatives in late 2023 with strong bipartisan support. It would set identical Medicare payments for drug administration services — including chemotherapy — for off-campus hospital outpatient departments (HOPDs) and independent physician offices. 

Concerns over adverse financial effects on rural hospitals appeared to stall the bill in the Senate in 2024, but passage of the bill or some form of expanded site-neutral policies remains likely in 2025, say policy advisers.

“I do think there is bipartisan consensus [on site-neutral policies]; it’s just going to be a matter of working out those sorts of kinks and details to actually get something across the finish line,” said Lawson Mansell, a health policy analyst at the Niskanen Center, a think tank based in Washington, D.C.

Congress may act on site-neutral policy changes — or c hanges in the other policy areas flagged by HFMA — in a postelection, so-called lame-duck session. But similar — and even more aggressive — policy changes in those areas still could occur in 2025.

“For legislators, this issue may prove to be too irresistible as a ‘pay-for,’” said Andrew Donahue, director of healthcare finance policy at HFMA. “For instance, Republicans may want to use the savings to extend 2017 tax cuts, which expire next year, while Democrats may want the savings to fund an extension of additional subsidies of ACA marketplace plans, which also expire next year.”

The site-neutral provisions in the House-passed bill would provide $3.8 billion in Medicare savings over 10 years, according to projections by the Congressional Budget Office (CBO).^a Much larger federal savings would come through the Site-based Invoicing and Transparency Enhancement Act (SITE Act), introduced in 2023 by a bipartisan group of senators. The SITE Act would eliminate the grandfather clause in the Bipartisan Budget Act of 2015 that exempted existing off-campus outpatient departments from wide-ranging site-neutral payment requirements.

“Those two policies are where I would bet Congress would start,” said Leigh Feldman, director at McDermott+, a consulting group based in Washington, D.C.

Other high-profile site-neutral proposals include aligning hospital and ambulatory surgery center pay rates with those of physician offices for 66 ambulatory payment classifications, as identified in a 2023 report by the Medicare Payment Advisory Commission (MedPAC).^b Researchers estimated such policy changes would save Medicare $21 billion over 10 years if limited to off-campus HOPDs and $145 billion over 10 years if expanded to all HOPDs.

The bipartisan support for the House-passed drug administration policy change indicated to Feldman that Congress could pursue other service-specific site-neutral reforms. 

A McDermott+ examination of the payment changes for drug administration found that in rural areas such services are most commonly done in HOPDs.

“So that would suggest that if this [site-neutral] policy went into effect, it might impact urban and rural areas differently in terms of patient access,” said Devin Stone, a senior director at McDermott+.

At least some of the savings from any site-neutral policy change would need to go back to hospitals in other ways, said Lee Fleisher, MD, an emeritus professor of anesthesiology and critical care at the Penn Perelman School of Medicine in Philadelphia. That is because at least some of the higher hospital rates help fund their standby and safety net functions that are not otherwise funded.

“You’ve got to come up with a middle ground where you give up something but you don’t give up everything, because that’s not the right argument from a patient safety standpoint,” said Fleisher, former chief medical officer and director of the Center for Clinical Standards and Quality at CMS.

Administrative burdens

Bipartisan support also has emerged for policy changes to address the growing use of prior authorization by health insurers, especially Medicare Advantage (MA) plans.

“This is an area where clearly there is a degree of bipartisan agreement in that the policymakers really want the process to be seamless for beneficiaries,” said Sean Creighton, a managing director for Avalere in Washington, D.C. “If there are denials for any reason, they want those to be based on appropriate clinical evidence, and the ability to find suitable alternatives where those exist.” 

 Prior authorization requests submitted to MA plans increased from 37.1 million in 2019 to 46.2 million in 2022, according to the Kaiser Family Foundation.^c

An August report by Standard and Poor’s described prior authorization as a “key strategy” to control utilization and noted MA plans face mounting pressure to control costs amid unexpectedly high utilization in 2024.^d

A CMS rule finalized in January requires MA plans to send prior authorization decisions within three days for urgent requests and within seven days for standard requests, among other requirements, starting in 2026.^e 

Further developments could come from bipartisan bills focused on prior authorization policy changes, including new timeliness requirements, increased transparency and curtailed use of prior authorization.

Additional policy changes that CMS could implement administratively, Creighton said, include:

• Requiring MA plan reporting on prior authorization volume, frequency, overturn rates and which provider groups are affected most
• Delineating which types of clinicians can adjudicate prior authorization requests
• Implementing penalties for inappropriate use of prior authorization

Discount drug fight

Bipartisan interest in policy changes to the 340B discount drug program has “reached a fever pitch,” said Kolton Gustafson, a principal at Avalere.

Hospital advocates say reforms are needed, in part, to counter increasing drug manufacturer restrictions on the use of contract pharmacies. The pharmaceutical industry counters that reforms are needed due to the program’s growth, which in 2022 reached $54 billion worth of steeply discounted drugs — a 22% increase from 2021.^e

“In 2025, potential policy changes to the 340B program are likely driven by the need to address rising drug costs, ensure equitable distribution of savings and enhance program transparency,” HFMA’s Gundling said. “These adjustments aim to preserve the program’s core mission of supporting vulnerable populations while adapting to the financial pressures and complexities of the current healthcare system.”

Widely differing bipartisan legislative proposals to change various aspects of the 340B program have emerged in the Senate and House. 

 “It’s hard to imagine what exactly is acceptable to multiple stakeholders and then bipartisan policymakers,” Gustafson said. “It’s hard to find a middle ground when your two sides are so far apart on an issue.”

Legislators may break through the competing arguments by advancing legislation focused on requirements for 340B providers to pass along some savings to patients, said Emily Evans, managing director at Hedgeye Risk Management, LLC, an investment research firm based in Stamford, Conn. 

“That alters the dynamic and could win the day,” Evans said.

The other change with the broadest bipartisan support is the introduction of new reporting requirements for 340B providers on how much revenue they garner from the program and how they use that revenue, Gustafson said. 

Possible administrative actions on 340B include reinstitution by CMS of previous Medicare payment cuts for 340B drugs, which were struck down by the U.S. Supreme Court over procedural issues, said Amelia Bond, PhD, assistant professor of the Health Policy and Economics Division at Weill Cornell Medical College in New York City.

Focus of antitrust action

Broad bipartisan support also exists for new policies on healthcare M&A, said Jeremy Morris, a Columbus, Ohio-based antitrust attorney at Epstein Becker Green.

After past consolidation in many segments of healthcare, policymakers among “rightwing populists and players on the left” have adopted similarly negative views on healthcare mergers, said Creighton of Avalere.

“They’re coming at this from slightly different angles, but they’re getting to the same place: Big is bad,” he said.

That sentiment could create challenges for hospital consolidation, which the organizations’ leaders say is frequently sought to rescue financially troubled hospitals. And severe financial challenges have led to negative margins at 40% of hospitals in 2024, which may require further hospital consolidation, Ken Kaufman, managing director and chair for Chicago-based Kaufman Hall, said in an August Becker’s podcast. 

Many antitrust advisers say the clearest 2025 effects on health consolidation could come from regulatory initiatives.

For example, the U.S. Department of Justice (DOJ) in May launched the Antitrust Division’s Task Force on Health Care Monopolies and Collusion to “guide the division’s enforcement strategy and policy approach in healthcare, including by facilitating policy advocacy, investigations and, where warranted, civil and criminal enforcement in healthcare markets.”

“I expect that to be the engine for any big policy changes or enforcement actions that we could see coming from the federal government,” said Mary Kaiser, a Washington, D.C.- based partner at Goodwin Procter, a law firm.

In March, a separate public inquiry was launched by the FTC, the DOJ and the U.S. Department of Health and Human Services (HHS) into “private-equity and other corporations’ increasing control over health care.” They issued a request for information (RFI) on healthcare deals to inform policy changes.  

“There may be bipartisan interest at least in the results of that RFI,” said Epstein Becker Green’s Morris. “The specific policies that result could vary based on [the next] administration.”

Hospital deal volume, specifically, fell by half at the start of the Biden administration, according to tracking by Kaufman Hall, but has since increased to levels near those under the Trump administration. Despite the expectation of greater FTC enforcement under Biden, the two administrations brought a similar number of cases against hospital transactions.

“Maybe people hit the pause button, not so much because of enforcement threats, which remain consistent,” said Vic Domen, a partner focused on antitrust at DLA Piper in Washington, D.C. “[Coming out of the pandemic], it was much more ‘What are we and who are we?’” 

Areas where 2025 antitrust enforcement increases are most likely, say attorneys, include:

• Management services organizations, joint contracting or joint venture affiliations of competitors coordinating their efforts
• Long-term roll-up strategies to control a market
• AI-driven price fixing
• Private equity deals
• Pharmacy benefit manager transactions
• Vertical transactions

“If new mergers are proposed — particularly among dominant players in any given industry — it’s very fair to say that there are likely to be headwinds from regulatory agencies and possibly from Congress,” said Avalere’s Creighton.

Conclusion

Legislative or regulatory policy changes in any healthcare policy area are notoriously hard to predict. However, policy action in one of the four identified areas could increase the likelihood for changes in another of the areas, since policymakers often see them as interconnected, say policy watchers.

“So, if you pile on two different changes, you can see why hospitals would be concerned about the impact on their financial outlook,” Gustafson said.

That reality makes it worth watching for 2025 advances of policy changes in any of these areas. 

Footnotes

a. CBO, “Estimated direct spending and revenue effects of H.R. 5378, the Lower Costs, More Transparency Act,” Dec. 8, 2023.
b. MedPAC, Report to the Congress: Medicare payment policy, March 2023.
c. Biniek, J.F., Sroczynski, N., and Neuman, T., “Use of prior authorization in Medicare Advantage exceeded 46 million requests in 2022,” Kaiser Family Foundation, Aug. 8, 2024.
d. S&P Global, “Medicare Advantage can harm health care services credit quality,” Aug. 15, 2024.
e. MS.gov, “CMS finalizes rule to expand access to health information and improve the prior authorization process,” press release, Jan. 16, 2024.
f. Drug Channels, “EXCLUSIVE: The 340B Program reached $54 billion in 2022 — up 22% vs. 2021,” Sept. 24, 2023.