Regulatory Implications of the Continuing Resolution Healthcare Package

Regulatory Implications of the Continuing Resolution Healthcare Package

McDermott+ is pleased to bring you Regs & Eggs, a weekly Regulatory Affairs blog by Jeffrey Davis. Click here to subscribe to future blog posts.

December 19, 2024 – Earlier this week, Congress released the text of a continuing resolution that includes a more-robust-than-anticipated healthcare package. While the bill’s primary purpose is to keep the government open through March 14, 2025, it also includes healthcare extenders and several notable healthcare policies.

The bill’s myriad healthcare policies include several with significant regulatory implications. I will focus on three such policies here, but others are also worth digging into. McDermott+ will publish an +Insight summarizing the healthcare package in the coming days. At the time of publication (December 19 at 7:30 AM EST), it is unclear if the healthcare package will be enacted.

Doc Fix

Despite bills that attempted to more comprehensively reform the shortcomings of the Medicare Physician Fee Schedule (PFS), the healthcare package includes another conversion factor (CF) patch – this time a 2.5% increase to counteract most, but not all, of the 2.83% cut to the calendar year (CY) 2025 PFS CF that physicians and other clinicians currently face. The good news is that this patch would take effect at the start of 2025, avoiding any complexity in holding claims or having the full cut go into effect for a period of time. The charts below show the final impact of congressional fixes from the last several years. As you can see, the CF has been cut every year for the last five years, even after Congress intervened.

Cuts

Should the bill be signed into law, the Centers for Medicare & Medicaid Services (CMS) would need to update the CF that was finalized in the CY 2025 PFS final reg. CMS finalized a CF of 32.3465, so a 2.5% increase would be approximately 33.1552. CMS finalized a separate anesthesia CF of 20.3178; a 2.5% increase would be approximately 20.8257. Usually, the CF update is done without much fanfare. CMS does not need to issue another formal reg to revise the CF, but can do so via subregulatory guidance.

Conversion Factors

* Estimated. It is not official until CMS publishes the CF update.

The congressional patch would put CMS on the hook (again) for 2026, as the 2.5% fix would expire after one year and CMS would once again have to calculate next year’s CF without the congressional relief (that is, unless Congress enacts more substantial reforms sometime in 2025). If you think this sounds like the plot of Groundhog Day, you are not wrong!

Telehealth

The healthcare package includes a two-year extension of the Medicare telehealth flexibilities that were set to expire at the end of 2024. This means that the following waivers would not expire until the end of 2026:

• Waivers to geographic and originating site restrictions.
• Expansion of qualifying providers who can bill Medicare telehealth services.
• Federally Qualified Health Centers and Rural Health Clinics to serve as distant site providers.
• Utilization of audio-only communications.
• The hospice care face-to-face requirement.
• Waiver of mental health services in-person requirement

Without this congressional action, Medicare telehealth services will return to a more limited benefit for most beneficiaries, as they could only receive these services from designated facilities in rural areas (and not in urban areas or from their homes). Stakeholders who support these extensions could breathe a sigh of relief if these policies are passed. However, as discussed in a previous Regs & Eggs blog post, CMS may need to provide some clarification through regulation or guidance before January 1. The agency couldn’t assume that the waivers would continue in the CY 2025 PFS final reg and therefore finalized policies in the reg under the operating assumption that the waivers would expire at the end of the year. Now, should the healthcare package be enacted, CMS could issue an interim final reg before the beginning of 2025 to officially extend the waivers and update the PFS policies accordingly. While CMS usually needs to go through the entire rulemaking process (proposed reg, comment period, and final reg) to implement policies, CMS would have due cause to waive the traditional rulemaking process and issue an interim final reg with an effective date of January 1, 2025.

In addition to these extensions, the bill includes the following policies relevant to telehealth:

• In-home cardiopulmonary rehabilitation flexibilities: The bill allows cardiopulmonary rehabilitation services to be furnished via in-home telehealth to Medicare beneficiaries who are hospital outpatients for two years (from January 1, 2025, through January 1, 2027). It also allows for virtual direct supervision of cardiopulmonary services furnished via telehealth for two years (from January 1, 2025, through January 1, 2027).
• Guidance on furnishing telehealth services to individuals with limited English proficiency: The bill requires the Department of Health and Human Services to release guidance within one year on best practices for improving access to health information technology for non-English speakers.
• Creation of modifiers or codes for claims for certain telehealth services by January 1, 2026: These new modifiers or codes would be for services furnished through a telehealth virtual platform by a provider that contracts with an entity that owns or has a payment arrangement with the virtual care platform.
• Virtual diabetes prevention program suppliers in the Medicare Diabetes Prevention Program (MDPP) expanded model: The bill expands participation in the MDPP Expanded Model to virtual until 2030 and allows beneficiaries to participate virtually and in-person.

Finally, in the private market, the safe harbor that allows those with health savings account-eligible high deductible health plans to have telehealth services covered on a first-dollar basis was also extended for two years.

Advanced APM Bonus

To encourage participation in Advanced Alternative Payment Models (APMs), the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) provided incentive payments to clinicians who are able to tie a certain percentage of their payments or patients to these models. Clinicians who meet the thresholds for participation in Advanced APMs are called qualifying APM participants (QPs) and are exempt from the Merit-based Incentive Payment System (MIPS) reporting requirements. QPs receive these incentive payments two years after they actually participate in the model (for example, QPs received bonus payments for the 2018 performance year in 2020). Under MACRA, a 5% incentive payment was available from performance year 2017 (payment year 2019) through performance year 2022 (payment year 2024). Starting in payment year 2026, QPs become eligible for a higher CF update than other clinicians: 0.75% compared to 0.25% (a payment differential of 0.5%). There were no bonus payments or higher updates for performance year 2023 (payment year 2025) in MACRA.

For the last two years, Congress acted to continue to provide an incentive payment for APM participation, and this healthcare package includes another one. Congress provided a 3.5% incentive payment for performance year 2023 (payment year 2025) in the Consolidated Appropriations Act (CAA), 2023, and 1.88% incentive payment for performance year 2024 (payment year 2026) in the CAA, 2024. In this package, Congress provides a 3.53% incentive payment for QPs for performance year 2025 (payment year 2027). Like the previous year, this 3.53% incentive payment would be on top of the 0.75% CF update available in 2027 for being a QP – so the total increase would be 4.28% (the 3.53% incentive payment plus the 0.75% CF update). The bill also continues to freeze the payment- and patient count- based thresholds needed to be a QP for the performance year 2025 (payment year 2027). To become a QP, providers must receive at least 50 percent of Medicare Part B payments or see at least 35 percent of Medicare patients through an Advanced APM during the year. Without congressional action, the QP threshold will increase to 75 percent of Medicare Part B payments, which could be difficult for providers to meet.

If the bill were to pass, it would be noteworthy that Congress would be continuing to make the Advanced APM bonus a priority and provided a higher update than last year. As noted, the alternative to being in an Advanced APM is MIPS, in which most clinicians currently participate. Under MIPS, clinicians are theoretically eligible for an incentive payment of up to 9%. However, MIPS is a budget-neutral program, and CMS uses the penalties it collects from poor and non-performers to pay out incentive payments. In 2023, the most recent performance period, the maximum incentive payment for attaining a perfect score of 100 was only 2.15% (applying to Medicare payments in 2025). These relatively low maximum incentive payments will likely continue for the foreseeable future. With the added incentive payment for participating in an Advanced APM, Congress would clearly be making participation in an Advanced APM more financially advantageous for providers.

The question becomes whether a larger incentive would actually increase APM participation. Again, the additional bonus would only be available for one performance year. There are still many other factors that impact participation in an Advanced APM, including the availability of APMs for certain specialties and providers’ ability to take on downside financial risk – a requirement of being in an Advanced APM. Thus, it is not a given that Advanced APM participation would increase significantly even with this added incentive payment, especially if there is no long-term certainty about the additional incentives. However, a higher incentive payment may help clinicians who need to invest resources into boosting their technology and care coordination capabilities in order to successfully participate in an Advanced APM.

Stakeholders may question why Congress would decide to provide a higher incentive level than last year instead of providing additional support for the doc fix (which impacts all providers). For CMS, this decision would also leave questions about how the agency will continue to reform its policies for APM participation, which it could address again in the CY 2026 PFS.

The healthcare package includes many other provisions that would need to be implemented through regulations and/or guidance documents in the coming months. Some of these include:

• Pharmacy benefit manager reforms.
• Medicaid policies.
• Medicare Advantage provider directory requirements.
• Medicaid Part D reforms, including prohibiting cost sharing for generic drugs for Part D beneficiaries who are eligible for the low-income subsidy.
• A new requirement for each off-campus outpatient department to obtain a separate national provider identifier (NPI), unique from the NPI for the main hospital, and include the NPI on billings for claims for services to receive payment.
• The extension of the acute hospital care at home program for five years (through December 31, 2029).
• The creation of a new Medicare benefit category for Food and Drug Administration-approved multi-cancer early detection screening tests that receive a national coverage determination.

More on these and other policies could be featured in future Regs & Eggs blog posts if the healthcare package is enacted!

Regs & Eggs will be on hiatus until January 9, and I hope you have a wonderful holiday season. Until next time, this is Jeffrey saying, enjoy reading regs with your eggs.

For more information, please contact Jeffrey Davis. To subscribe to Regs & Eggs, please CLICK HERE.

Authors

---

Jeffrey Davis

Washington, DC

Email / +1 (202) 204-1467
View Profile