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Insights and Trends

Headlines from the Hill: April Edition

Stay on top of the latest regulatory shifts and healthcare breaking news with Headlines from the Hill.

In this month’s edition you will find:

CMS releases FY 2024 Medicare Advantage and Part D final rule.

The proposed rule represents several key improvements related to Prior Authorization (PA) in the Medicare Advantage (‎MA) program. Despite efforts by certain stakeholders to delay implementation of the PA reforms until 2026, the rule is generally applicable beginning January 1, 2024. Key provisions in the rule include:

  • Clinical Criteria Guidelines
    The final rule clarifies clinical criteria guidelines to ensure people with MA receive access to the same medically necessary care they would receive in Traditional Medicare. Specifically, CMS clarifies rules related to acceptable coverage criteria for basic benefits by requiring that MA plans comply with national coverage determinations (NCD), local coverage determinations (LCD), and general coverage and benefit conditions included in Traditional Medicare regulations. IRF services are specifically included among the examples of general coverage and benefit conditions in Traditional Medicare that “apply to basic benefits in the MA program.”

  • Internal Coverage Criteria
    When coverage criteria is not fully established, MA organizations may create internal coverage criteria based on current evidence in widely used treatment guidelines or clinical literature made publicly available to CMS, enrollees and providers.

  • Prior Authorization Policies
    MA plan prior authorization policies may only be used to confirm the presence of diagnoses or other medical criteria and/or ensure an item or service is medically necessary. The rule requires coordinated care plans to provide a minimum 90-day transition period when an enrollee currently undergoing treatment switches to a new MA plan, during which the new MA plan may not require prior authorization for the active course of treatment.

  • IRF Reviewer Qualifications
    With respect to reviewer qualifications for IRF care decisions “a plan reviewer reviewing a request for IRF care would need to have the background and knowledge to determine that the enrollee’s medical condition requires intensive rehabilitation, continued medical supervision, and coordinated care.” The new standard will require that an adverse determination must be reviewed by a physician or other appropriate healthcare professional with expertise in the field of medicine or healthcare that is appropriate for the services at issue, including knowledge of Medicare coverage criteria, before the MA organization issues the organization determination decision.

Overall, these changes are critical for helping to ensure patients receive the inpatient rehabilitation they require to reach a full recovery, and have been key advocacy efforts of AMRPA, Lifepoint Health and numerous other healthcare organizations across the country. Read the summary of AMRPA’s initial comments to CMS.

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CMS issues the FY 2024 Inpatient Rehabilitation Facility (IRF) proposed payment rule.

For FY 2024, CMS is proposing to update the IRF proposed payment rule (PPS) payment rates by 3.0% based on a market basket update of 3.2% less a proposed 0.2% point productivity adjustment. In addition, the proposed rule contains an adjustment to the outlier threshold that would result in a 0.7% increase in outlier payments in order to reach 3.0% of total payments. CMS projects that total payments will increase by 3.7%, or $335 million, in 2024.

Additionally, CMS is proposing to allow hospitals to open a new IRF unit and begin being paid under the IRF PPS at any time during the cost reporting period (rather than the current restrictive enrollment rules). CMS is also making a number of changes to the Quality Reporting Program (QRP), including the future addition of a discharge function score measure and patient-level COVID vaccination measure, as well as a modification of the current healthcare personnel COVID-19 vaccination measure to reflect the latest vaccination recommendations.

The proposed rule does not address any of the COVID-19 PHE waivers, including the three-hour rule and virtual team conferences, nor does it include any further discussion of the expanded transfer policy (to include certain discharges under the care of home health) that was the subject of a Request for Information (RFI) in last year’s rule.

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CMS’s proposed Inpatient Psychiatric Facility (IPF) payment rule expected to boost rates.

CMS is proposing to update the Inpatient Psychiatric Facility Prospective Payment System (IPF PPS) payment rates by 2.7 percent, based on the proposed IPF market basket update of 3.1 percent, less a 0.4 percentage point productivity adjustment.

Additionally, CMS is proposing to update the outlier threshold so that estimated outlier payments remain at 2.0 percent of total payments. CMS estimates that this would result in a 1.2 percent overall decrease to aggregate payments due to updating the outlier threshold. CMS projects the total payments will increase by roughly $55 million in 2023.

This rule also includes a proposal to modify regulations so that hospitals can easily open new excluded psychiatric units paid under the IPF PPS. Lastly, this proposed rule discusses proposals on quality measures and reporting requirements under the Inpatient Psychiatric Facilities Quality Reporting (IPFQR) Program.

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Price Transparency and Competition: House hearing, AHA and FAH submit statements.

The AHA and FAH submitted statements to the House Energy and Commerce Subcommittee on Health for a hearing examining price transparency and competition in healthcare. AHA’s statement highlighted the high compliance with the Hospital Price Transparency Rule. AHA recommended actions to streamline transparency policies. They also explained how some hospitals use mergers and acquisitions to expand access to services and better serve patients where they live.

Lifepoint Health is aligned with the Subcommittee’s goal of promoting a market-driven healthcare system that empowers patients with more choice and control over their healthcare decisions. A more informed and engaged consumer will drive competition that accelerates progress towards higher quality and more affordable healthcare.

In addition, AHA and FAH strongly oppose expanding Medicare site-neutral payment policies, which threaten access to care in local and historically marginalized communities. They also oppose repealing a 2010 law limiting physician referrals to new hospitals in which they have an ownership interest. The following are issues addressed in the FAH statement:

  • Rapidly Improving Hospital Price Transparency Compliance
  • Understanding Positive Effects of Hospital Integration
  • Importance of Maintaining Current Ban on Self-Referral to Physician-Owned Hospitals (POH)
  • Opposing Site-Neutral Payment Cuts to Ensure Access to Care
  • Stopping Insurer and Medicare Advantage Unfair Practices

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Medicare Rates: MedPAC recommends no significant increase for acute care hospitals.

In its annual March report to Congress, MedPAC recommended an update to hospital payment rates of "current law plus 1 percent," which is believed to not be enough for many hospitals to keep their doors open. Lifepoint agrees and believes that MedPAC's recommendation that “acute care hospitals do not need a significant increase in 2024 Medicare rates” is insufficient and out of touch with reality.

The commission found that most indicators of sufficient Medicare rates for providers were positive or improved in 2021, though hospitals saw more volatile cost increases in 2022 compared to years prior. Hospital margins were also lower last year than in 2021, according to preliminary data. This was driven in part by providers facing higher than expected costs, and capacity and staffing challenges.

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FY24 Budget: Senate Finance Committee engaged with HHS.

The Senate Finance Committee had their turn to engage with the Department of Health and Human Services (HHS) Secretary on President Biden’s FY24 proposed budget. Chairman Ron Wyden (D-OR) stressed the importance of transparency and timeliness in HHS’ work to finalize the agency’s approach for the upcoming drug negotiations, and the Secretary indicated that the agency is working diligently to meet the September deadline – and may even be ready early.

Throughout the hearing there were comments related to the migrant children crisis, workforce concerns, and making permanent many telehealth policies. There were also a large number of Alzheimer’s advocacy volunteers in the audience. Committee members made a point to thank them for their time and efforts on behalf of Alzheimer’s patients and families – including pursuing Medicare coverage for the latest in drug treatment. The following is a summary of several of the budget priorities:

  • Prescription Drugs Costs: Senator James Lankford (R-OK) and Senator Thom Tillis (R-NC) shared their concerns for prescription drug costs with Senator Lankford focusing on the role Pharmaceutical Benefit Managers (PBMs) play in the high cost of prescription drugs.  Senator Tillis garnered praise from Chairman Wyden following his comments supporting a thorough review of the system. One that would include all players in the pharmaceutical sector including pharmacists, providers, and patients to ensure that reforms are most effective at reducing costs while improving quality outcomes.

  • Rural Healthcare: Senator Grassley (R-IA) urged the Secretary to prioritize the rural community hospital demonstration program that Senator Grassley believes is being underutilized. The Secretary appreciated Senator Grassley’s perspective and promised to work with him to provide the rural healthcare sector with the support it needs.

  • Medicare Advantage (MA) 2024 Rates: Several members expressed their concern that the Medicare Advantage (MA) 2024 rate notice would negatively impact seniors by causing MA programs to cut benefits. However, Senator Elizabeth Warren (D-MA) was one of the few who engaged in a back in forth with the Secretary to drill down into the costs of MA versus traditional fee-for-service Medicare. The Secretary agreed with Senator Warren that MA beneficiaries cost Medicare more than fee-for-service enrollees.

  • Surprise Billing: Senator John Bennett (D-CO) was alone in mentioning surprise billing during his allocated time. He stressed the need for providers to receive a fair and timely payment following surprise billing claims. He requested the Secretary work to update the surprise billing regulations to equally support providers and payers just as the legislation was written. The Secretary shared that the agency has received over ten times the number of claims than they initially expected. This has led to delays in arbitrators being able to finalize claims, and he also testified that many of the claims are frivolous in nature.

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