In the News

Health Industry Could be Playing Defense on Medicare

Axios | By Caitlin Owens
After years of trying to squash the expansion of government-funded health care and preserve business from private payers, the health care industry is suddenly facing new threats to the revenue it receives from the Medicare.

Why it matters: Behind all of the political posturing around sustaining the program is a cold, hard fact — the program's trust fund is expected to go bankrupt as soon as 2028. To prevent that from happening, lawmakers have three options: raise taxes, cut benefits, or cut payments to the health care industry.

State of play: House Republicans' statements on Medicare have been carefully worded, and notably don't say that the program shouldn't be touched. 

  • After warning that Medicare is "on the pathway to insolvency," House Energy and Commerce Committee Chair Cathy McMorris Rodgers said in a statement last week that "Republicans stand ready to strengthen and preserve these programs, without cutting benefits to seniors."

The big picture: Republicans are shining a spotlight on the program's long-term finances as they call for federal spending reductions. But the GOP has ruled out tax increases as a solution and is acutely aware that it will be hammered by Democrats if it proposes benefit reductions for seniors. 

  • That leaves payment reductions as the most politically tolerable solution, if they put forward any policy solutions at all. 
  • But any significant cuts to insurers, drug companies or hospitals would be strenuously opposed — a dynamic already playing out over Medicare Advantage proposals made by President Biden.

Driving the news: Amid all of the debt ceiling and spending drama, the Biden administration has proposed two Medicare Advantage payment rules that threaten insurers' profits. 

  • The first claws back billions of dollars in overpayments made to insurers for administering private Medicare plans over the last few years. The second, which was proposed earlier this month and has not been finalized, would decrease payments to Medicare Advantage plans by more than 2% next year, insurers say.
  • The payment update could translate into a a $540 decrease in benefits per member per year, according to an Avalere analysis funded by the Better Medicare Alliance and released yesterday.
  • Democrats have already reduced what Medicare will pay pharmaceutical companies in the future through the Inflation Reduction Act, which allows the program to negotiate the cost of certain drugs and imposes financial penalties to companies whose price increases outpace inflation.

What they're saying: Some Republicans are leaning into the opportunity to accuse Biden of hypocrisy.

  • "Joe Biden is trying to gut Medicare benefits. Seniors can't trust Democrats to protect Medicare," said National Republican Senatorial Committee spokesman Philip Letsou in a statement highlighting the analysis. 
  • But decreasing federal payments to Medicare Advantage plans ranks as one of the most effective ways to cut program spending.

The intrigue: The Medicare solvency discussion is particularly tricky for providers, who absent further action would see drastic payment cuts if the trust fund runs out. 

  • But popular spending reduction proposals target them too, and hospitals argue that now is not the time to talk about cutting their pay. 
  • "I hope that there will be action beforehand. We wont get to that cliff," said Chip Kahn, president and CEO of the Federation of American Hospitals. "But I don't think right now — coming off of COVID, and all the changes and effects of it ... I don't think this year is a good year to do it."
  • "We've got to be very careful," he added. "It probably means at some point in time there will be a solution that includes many of the items and effects many of the players." 

The bottom line: Picking a fight with the health care industry may be a more attractive option than cutting seniors' benefits, but that's a very low bar. And yet when it comes to addressing Medicare's financial future, neither party has very many options.

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Providers Want More from CMS on Prior Authorization Reform After Proposed Changes

Fierce Healthcare | By Robert King
Provider groups say new reforms proposed by the Biden administration to streamline prior authorization are a good start. 
But much more needs to be done—including creating gold-card programs that let providers skip prior authorization if they have a high volume of requests, they say. 
Several provider and payer groups submitted comments on a proposed rule outlining policy changes for Medicare Advantage (MA) and Part D set to take effect in 2024. One of the biggest changes is to clarify when and how MA plans can use prior authorization, a cost containment tool that requires physicians to get insurer approval before doling out certain items and services but has morphed into a major source of administrative burden for providers.
“Physician groups point to delays in prior authorization decisions, resubmission of prior authorization, inconsistent payer payment policies … and prior authorizations for routinely approved items and services as some of the most challenging aspects of prior authorization,” wrote the Medical Group Management Association (MGMA) in comments to the proposed rule that were due Monday.
If finalized, the Centers for Medicare & Medicaid Services' (CMS’) rule would mandate that a granted prior authorization approval remains valid for the entire course of treatment for a patient in MA. If an MA plan denies coverage for a request, it must rely on a physician or expert that has expertise in the appropriate field of medicine, CMS added.
The agency also proposed prior authorization must be limited to only confirming the presence of a diagnosis.
But provider groups say this still doesn’t address the problem that any prior authorization process “inherently delays patient care,” MGMA wrote. “CMS must establish guardrails to prevent high volumes of prior authorization requests by MA plans.”
One of these strategies could be gold-carding programs that exempt certain clinicians from prior authorization if they have an approval rating over a period of time. This would help ease the number of requests a physician must face.

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CMS, Insurers Clash Over Whether Medicare Advantage is Going to be Cut in Proposed Rule

Fierce Healthcare | By Robert King
Health insurers and the Biden administration are at loggerheads over whether Medicare Advantage (MA) plans will see a pay cut next year, the ramifications of which come amid increased regulatory scrutiny for the popular program.
Insurer groups and some politicians charge that the latest 2024 payment rule will wind up being a 2.27% cut to MA plans after considering risk adjustment changes and other factors. The Centers for Medicare & Medicaid Services (CMS) has pushed back, arguing that isn’t true.
The debate comes amid increasing scrutiny of MA and after CMS has proposed an overhaul to plan audits to curb overpayments.
“We think it is important not to cherry-pick the numbers,” said CMS Administrator Chiquita Brooks-LaSure during a call with reporters last week. “When we look at all the elements, we do see a net positive so an increase of little over 1%.”
At issue is the proposed advance notice released earlier this month that details the payments to MA and Part D plans for the 2024 coverage year. The proposed rule lays out the payment policies and changes to MA capitation rates for the upcoming year as well as outlining key changes to risk adjustment. 
When the rule was announced Feb. 1, CMS expected a 1.03% increase for plans. The agency came to this number after factoring in a decline in payments when taking in risk adjustment changes. 
Since the rule was released, the insurance industry has pushed back that it will actually result in a 2.27% cut to plans if finalized. 
The advocacy group Better Medicare Alliance (BMA) said that the rule “would raise costs and cut benefits for 30 million American seniors who rely on Medicare Advantage, a vital part of Medicare,” said BMA President and CEO Mary Beth Donahue in a statement.
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Beyond Medicare and Social Security: Cutting Medicaid After the Pandemic Would be Political Madness

STAT News | By Arielle Kane
During his State of the Union address, President Biden called out Republican proposals to cut Social Security and Medicare in their quest to reduce federal spending. Republican lawmakers in the chamber protested loudly, knowing these programs are political third rails — too controversial to discuss — and they have been sparring over it ever since.
But the president and Democrats in Congress should not miss the opportunity to make Medicaid the third rail. If they want to capitalize on the popularity of the program and protect families’ health care, Medicaid cuts must be off the table because it:

  • Covers 91 million Americans, making it the largest source of health care coverage in the country
  • Covers 42% of all births
  • Pays for 54% of long-term care and covers 6.9 million people ages 65 and older
    Provides coverage to more than 10 million people with disabilities who rely on Medicaid for their health care

Several Republicans have said they want to use the upcoming legislative battle over raising the debt ceiling as an opportunity to cut overall spending, particularly in programs like Medicaid.
But politically savvy lawmakers would be wise to remember the health care fights of 2017 — and the results of the 2018 midterm elections that followed — proving that cutting coverage for pregnancy and childbirth, for older adults, and for people with disabilities is a pathway to political collapse. Even in deep red states like South Dakota, Idaho, and Missouri, the electorate has approved Medicaid expansion even when their elected lawmakers opposed it. That’s because Medicaid is a lifesaver for millions of families.
That’s never been clearer than over the past three years when Medicaid protected families during an enormous public health crisis. The Covid-19 pandemic upended the economy and tripled the unemployment rate. But largely because of Medicaid, the rate of uninsured reached an all-time low in 2022. That is a stark difference from the last economic upheaval during the Great Recession of 2008-2009, when 9.3 million people lost their jobs and, subsequently, their health insurance. Millions more families now know firsthand how essential Medicaid is for their health and financial well-being and they will not look favorably if their elected representatives decide to cut that lifeline.
The Medicaid program faces a daunting challenge in the coming months as the process of checking the eligibility for Medicaid of its 91 million enrollees starts back up again April 1. At the same time, 1 in 4 state Medicaid programs report staff vacancy rates greater than 20%. Millions of people are likely to lose coverage because of administrative hurdles during the eligibility determination process, and they will be hard-pressed to get someone on the phone to assist with their application. It’s political madness to cut Medicaid generally, but particularly so during this herculean lift across all state Medicaid agencies.

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SNFs Retook Higher Hospital Discharge Share Than HHAs In Early 2022

Home Health Care News | By Andrew Donlan
After the public health emergency was declared in March of 2020, hospital discharges bottomed out the following month. While they ticked back up in 2021 and 2022, they still remain 25% lower than they were in February of 2020. 
And while home health care gained a greater share of post-acute referrals compared to skilled nursing facilities (SNFs) early on in the pandemic, there’s been normalization since then. 

This is according to a new data analysis conducted by the Washington, D.C.-based advisory and research firm ATI Advisory. The analysis took into account Medicare fee-for-service patients from January 2019 to February 2022, and paid through March 2022.
Specifically, from November 2021 to February 2022, SNFs consistently received a higher share of discharges than home health care agencies. Those months looked more similar to pre-pandemic months. 
In fact, while SNF discharges dropped by 2% year over year from 2020 to 2021, they ticked up by 1.2% from February 2021 to 2022, the largest gain of any post-acute setting. Meanwhile, home health agencies’ share of discharges dropped by 1.7% from February 2021 to February 2022. 
Overall, from March 2020 to February 2022, home health agencies scored 18% of hospital discharges. For COVID-19 patients, that number fell to 14%. Meanwhile, SNF share was at 16% and 18%, respectively. 
SNF discharge normalization was expected by most in the post-acute space, even during the height of COVID-19. After all, some patients’ acuity levels are too high to be cared for in the home. 
More SNF-at-home and even hospital-at-home programs could change that, but in all likelihood, that would be much further down the line. 
Plus, despite the Medicare fee-for-service data displayed, there are still signs to suggest that home health referrals are much higher overall than they were prior to the pandemic
Even if demand for home health services is increasing, that demand coming to fruition for agencies’ bottom lines is all based on staffing capacity. In January 2022, the industry’s referral rejection rate had reached 58%, according to WellSky
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