Year-end spending legislation looks promising for healthcare stakeholders — if it passes

Advocates for hospitals and other healthcare providers generally commended an end-of-the-year federal spending package that includes most of their requested provisions.

However, a specific item loomed as a source of concern in the hospital sector, and by early Wednesday evening, there were questions about the viability of the entire bill.

Congress released text for a continuing resolution (CR) that would extend federal funding from its scheduled Dec. 20 expiration through mid-March. The bill must pass both chambers by Friday night to avoid a shutdown of some government functions.

After the bill appeared to have sufficient bipartisan support for passage, questions arose about the level of Republican support, especially in the House, amid criticism from President-elect Donald Trump. In addition, some congressional Republicans said there was not adequate time to review the hefty bill.

Trump said it would be preferable to strip down the bill and focus the new spending on farm aid and disaster relief, while also including a debt ceiling increase to avoid having to deal with that issue early in his term. It was not clear what would happen to the healthcare provisions in a streamlined version of the bill, and regardless, modified legislation might lack the necessary Democratic support to pass the Senate and possibly the House.

A new hospital requirement

If the legislation passes in its current form, a concern for hospitals would be a mandate for each off-campus outpatient department to obtain a unique national provider identifier for Medicare billing purposes. That requirement would begin in 2026.

In addition to potentially posing an administrative burden for health systems, the provision is seen as a precursor to consideration of expanded site-neutral payment policies.

“This will be costly, burdensome and resource-intensive, and it will affect staff workflows,” Bruce Siegel, MD, president and CEO of America’s Essential Hospitals, said in a written statement. “Imposing this new requirement will force hospitals to invest significant time and money updating billing and IT systems and pull an already stretched workforce away from providing care.”

Otherwise, the bill checks the major boxes that provider advocates had sought.

Medicaid payments

The bill would cancel an $8 billion reduction to Medicaid disproportionate share hospital (DSH) payments for 2025, which was scheduled to be the first year of a three-year period in which hospitals would incur the reduction. Under the CR, no reduction would happen before 2027.

Another provision is designed to cover DSH payments for patients who are dually eligible for Medicare and Medicaid. Those patients would be included in the calculation of a hospital’s Medicaid payment shortfall, which is a component of the DSH formula.

The provision is an accommodation for hospitals after a final rule that took effect in April tightened the hospital-specific limit for DSH payments by basing the shortfall calculation only on care provided to patients whose primary payer is Medicaid.

Medicare payments

Supplemental payments for low-volume hospitals and Medicare-dependent hospitals would be extended through 2025 instead of expiring at the end of this year.

For the fifth consecutive year, Congress included a boost to the physician payment rate in the year-end package. Payments would be increased by 2.5% compared with the 2025 scheduled change, leaving a net decrease of roughly 0.33%.

In addition, the floor for the work geographic practice cost index (GPCI) would continue through at least 2025. The floor helps ensure rural practices can afford to hire labor by establishing that their work GPCI score does not fall below the national average.

The bill also would extend the financial incentive for physicians to participate in advanced alternative payment models. Participation in 2025 would bring a 3.53% bonus. APM participation thresholds established in 2023 would remain.

Key waivers and flexibilities

Medicare telehealth waivers that have been in place since the COVID-19 pandemic would remain through at least 2026 instead of expiring at the end of 2024. Regulations recently issued by the Drug Enforcement Administration and HHS ensured that controlled medications may continue to be prescribed via telehealth through 2025.

New modifiers would apply to certain specific telehealth scenarios, such as when a service is delivered by a provider that has a contractual relationship with the owner of the virtual platform.

Cardiopulmonary rehabilitation services would be eligible for Medicare coverage when furnished to beneficiaries in their homes via telehealth. The Medicare Diabetes Prevention Program would continue to cover virtual care.

The waiver allowing hospitals to receive inpatient-level payments for acute care delivered in the home was set to expire but now would be extended through 2029. Certain infusion treatments also would be covered when delivered in the home.

Public health

Funding would be extended through 2029 for graduate medical education and through 2026 for community health centers, the National Health Service Corps and the Special Diabetes Program.

The Public Health Emergency Preparedness Program and the Hospital Preparedness Program would be reauthorized and funded through 2026. Provisions in the new legislation are designed to improve the coordination of operations among regional healthcare coalitions that form in response to emergencies such as a pandemic.

The new bill also contains reauthorizations and updates pertaining to the SUPPORT Act, a 2018 law to address the opioid crisis.

Provisions passed in a pandemic-era law to support the health and wellness of healthcare professionals would be extended for five years, through 2029.

Reining in PBMs

Some of the headlining healthcare provisions in the bill apply to pharmacy benefit managers (PBMs), with advocates for the industry expressing alarm about the implications.

PBMs would be barred from engaging in spread pricing in Medicaid and from using Medicare Part D drug prices as the basis for renumeration, for example. The entities also would have to incorporate transparency initiatives and pass along 100% of drug rebates and discounts (minus service fees) to employers and ERISA health plans.

In response, the Pharmaceutical Care Management Association released a statement calling the legislation “disastrous for employers, patients, families and taxpayers.” The association took particular issue with the “delinking” of compensation from Part D prices, citing an analysis that found the policy would lead to a $13 billion hike in premiums and a $10 billion windfall for drug companies. Advocates for drug manufacturers have said no such outcomes would result.

Medicare sequester

Among the revenue-generating mechanisms in the bill is a six-month extension of the 2% Medicare payment sequester, which now would last until February 2033. The sequester has been on the books since 2013 aside from being waived or reduced for stretches during the pandemic.