Issue #169

Federal Regulation

CMS Finalizes Prior Authorization Rule to Streamline Processes

• The Biden Administration has finalized the CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F). The rule applies to Medicare Advantage, Medicaid, CHIP FFS and Medicaid managed care, CHIP managed care entities, and issuers of Qualified Health Plans on Federally-Facilitated Exchanges. The rule aims to improve the electronic exchange of health information and streamline prior authorization processes for medical products and services. The Biden Administration estimates these policies to bring in savings of approximately $15 billion over the next ten years. Most payers will be required to send prior authorization decisions within 72 hours for urgent requests and seven calendar days for non-urgent requests, starting primarily in 2026. Impacted payers must also include specific reasons for any prior authorization request denials and publicly report prior authorization metrics. CMS is also finalizing several prior authorization Application Programming Interface (API) requirements with the goal of increasing health data exchange but is delaying the dates for compliance with API policies until 2027 due to issues raised in public comments. Finally, the Electronic Prior Authorization measure was added for eligible clinicians under MIPS Promoting Interoperability performance category and eligible hospitals in the Medicare Promoting Interoperability Program to report payers’ prior authorization API use (CMS, January 17).

MedPAC Votes for Post-Acute Service Cuts

• On January 12, the Medicare Payment Advisory Commission (MedPAC), Congress’ Medicare pay advisors, voted to recommend another year of post-acute service cuts to aid proposals that call for lower base pay for skilled nursing, home health, and inpatient rehab facilities. MedPAC voted to recommend an additional 1.5% increase in 2025 for physician, inpatient hospital, and outpatient hospital fees. If enacted, the physician fee increases will cost between $2-5 billion within the first year and about $25 billion over a five-year period. Additionally, MedPAC is again recommending safety net index policies to be enacted which calls for the distribution of $4 billion to safety net hospitals. MedPAC also voted to recommend reduced payment rates for home health, hospice, skilled nursing facilities, and inpatient rehab facilities. Specifically, commissioners voted to recommend the following: (1) Eliminate the 2024 updates that were made for hospice services during the following year to reduce spending by $250-$750 million in year one and $1-$5 billion in five years. (2) Reduce payment rates for 2025 by 3% for skilled nursing facilities to decrease spending by $2-$5 billion in year one and $10-25 billion over a five-year period. (3) Reduce 2025 payment rates by 5% for inpatient rehab facilities (Inside Health Policy, January 12).

Federal Legislation

Congress Begins Process to Approve CR to Avoid Government Shutdown

• On January 16, Congress began the process to approve the most recent short-term continuing resolution (CR) to avoid a government shutdown. Existing healthcare extenders that include funding for community health centers (CHCs), teaching hospitals, and diabetes programs; a delay of Medicaid cuts to disproportionate share hospitals (DSH); an extension of Medicare’s Geographic Work Index Floor; and an extension of some provisions of the Pandemic and All-Hazards Preparedness Act (PAHPA) would receive funding but no new healthcare related items would be added to the CR currently under review. The latest CR will continue the two-tiered structure as previously used, with some agencies, including the U.S. Food and Drug Administration (FDA), scheduled to run out of funding on March 1. The remaining agencies, including HHS, will be funded through March 8. If approved, this CR will give Congress approximately six weeks to agree on the FY2024 budget or extend funding again to prevent a government shutdown (Inside Health Policy, January 16).

News

PA Seeks to Restore Medicaid Coverage of Adult Dental Services

• In 2011, Pennsylvania’s Medical Assistance (MA) program, which provides Medicaid coverage for Pennsylvanians, reduced coverage of numerous dental services for adults. Since 2011, adults under the state’s MA program have been limited to basic services like routine visits, cleanings and basic fillings. Without an exception, an individual is not able to receive coverage for services like root canals, and there is limited coverage for dentures. HB 1417 calls for the restoration of Medicaid coverage of adult dental services. Advocates and supportive professionals in the field speak to the understanding that dental health can affect an individual’s quality of life, and untreated dental issues can lead to more detrimental medical problems. Last month, the bill passed in the House (153-50) and is currently on its way to the Senate (WESA, January 16).

Michigan Health Plans Can No Longer Refuse Payment on Cancer Treatments

• According to a January 9 press release published by Michigan’s Department of Insurance and Financial Services (DIFS), health plans are no longer permitted to refuse payment on any clinically-proven cancer treatments. These treatments, including genetic and immunotherapies, must be covered if they are authorized by the FDA. Should an individual believe that their health insurer is unfairly or unlawfully denying coverage, they can appeal the decision and file a complaint with DIFS. Should it be found that the insurer improperly denies coverage, the insurer will be required to cover the service and may face enforcement action or a market conduct examination that results in penalties or other regulatory action (Health Payer Specialist, January 12).

FDA Authorizes Import of Prescription Drugs from Canada to Florida to Lower Prices

• On January 5, the FDA authorized the importation of specified prescription drugs from Canada to Florida, an initiative designed to give individuals in the state access to lower drug prices. This is the first time in history that the FDA has given a state permission to import drugs from another country. However, Florida must meet the specified requirements listed in the FDA authorization before implementing the importation plan. Such requirements include submitting a pre-import request for each drug to be imported, conducting quality testing, and ensuring that the prescription drug labels meet FDA standards. There is also the chance of Canada imposing barriers to implementation to avoid creating or worsening supply chain issues in the country. Prescription drugs that are expected to be included in initial importation include HIV/AIDS, mental health, and prostate cancer medications. Biological products, including insulin, are excluded from the authorization (KFF, January 12).

Delays in State Contracts Create Challenges for Montana Providers

• Many health organizations in Montana argue the state government backlog in paying contractors has hindered the ability to provide care. Several organizations waiting for contracts to be approved and funding to begin claim that over 200 private and public contractors across the state government were affected at some point. Contractors have reported going months without pay, and some have had to lay off employees, scale back services, or stall programs (KFF Health News, January 11).

Waivers

• Section 1115(a)
  • Kentucky
    • On December 30, 2023, Kentucky submitted an amendment to the TEAMKY 1115 waiver demonstration to improve transitional care for certain individuals who will be former inmates of a public institution and are otherwise eligible for Medicaid. Eligible adults and youth in state prisons and youth development centers will receive case management services pre- and post-release to address physical and behavioral health and health-related social needs; Medication-Assisted Treatment for Substance Use Disorders for up to 60 days pre-release; and a 30-day supply of all clinically required prescription medications. Additionally, eligible adults in state prisons and eligible adults participating in the Behavioral Health Conditional Dismissal Program will receive Recovery Residence Support Services for up to 90 days post-release. The public comment period is open from January 12, 2024, through February 11, 2024.

SPAs

• Services SPAs
  • Michigan (MI-23-1006, effective January 1, 2024): Clarifies language regarding prior authorization requirements and maximum benefits for skilled maintenance therapy in the state’s Alternative Benefit Plan (ABP).
  • South Carolina (SC-23-0006, effective May 11, 2023): Removes the limits previously applied to the Ambulatory Care annual visits.

News

CVS Health Invests in New Telehealth Startup Focused on Suicide Prevention

• On January 12, a new telehealth startup closed a $22.5 million Series A funding round. CVS Health Ventures invested in Vita Health, a telehealth company that focuses on understanding and addressing the underlying problems regarding suicide. Vita Health aims to use this funding to expand access to their services for children and adults across the nation. Other investors include CU Healthcare Innovation Fund, Flare Capital Partners, LFE Capitol, and Athyrium Capital Management (Modern Healthcare, January 12).

UnitedHealth Group Feels Financial Pressure from Increased Utilization

• On January 12, UnitedHealth Group (UHG) reported an 83.2% medical loss ratio (MLR) for 2023 and a 2.7% overall increase to 85% in the fourth quarter. UHG attributes the increases to Medicare beneficiaries obtaining costly treatments in the orthopedic and cardiac categories. Medicare Advantage members with ailments not in the orthopedic and cardiac categories and those seeking vaccinations for RSV and COVID-19 contributed to more office visits while COVID-19 sent 50-60% more UHG members to the hospital, resulting in higher costs per case. Overall, net earnings for the payer increased 12% to $23.14 billion for 2023 and revenue increased 14.6% to $371.62 billion (Modern Healthcare, January 12).

CarePoint Health and Hudson Regional to Form New Healthcare System in NJ

• CarePoint Health and Hudson Regional Hospital have officially signed a letter of intent to form a new healthcare system based in New Jersey named Hudson Health. The new system will include CarePoint’s Bayonne Medical Center, Christ Hospital in Jersey City, Hoboken University Medical Center and Hudson Regional Hospital in Secaucus. Under the letter of intent, CarePoint’s hospitals will continue to operate as nonprofits and Christ Hospital and Hoboken University Medical Center will continue to serve as safety-net hospitals. The deal still requires a final agreement and other regulatory approvals to go forth (Modern Healthcare, January 12).

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Sellers Dorsey Summary: NY 1115 Waiver Amendment Approval

• CMS recently approved New York’s 1115 waiver amendment, “Medicaid Redesign Team” (MRT). The goal of the amendment is to advance health equity, reduce health disparities, and support the delivery of social care through Social Care Networks (SCNs) to improve overall quality and health outcomes. If you didn’t have time to read the amendment in its entirety, Sellers Dorsey summarized everything you need to know! Click here for our exclusive summary.