Published January 19, 2021

Top Five Impacts of the Consolidated Appropriations Act on Hospital Reimbursement

Key provisions of the Consolidated Appropriations Act will significantly impact hospital payments–both in the short and long term. Each of the following will require implementing regulations to be promoted by Centers for Medicaid & Medicare Services (CMS) over the next several months, and we’ll provide updates as available.  

  1. Ban on surprise billing. Effective January 1, 2022, patients will be protected from surprise bills resulting from services provided by a non-participating provider at a participating facility and for air ambulance services. Under the new law, patients cannot be charged more than the in-network cost sharing amount. For payment to the provider, if an agreed upon amount cannot be established through negotiation with the health plan, a mediated dispute resolution process will be established. Under dispute resolution, neither a provider’s charges nor public payer rates can be considered in establishing final payment. Regulations on this provision are due by July 1, 2021.
  2. Expanding transparency through the elimination of “gag” clauses in health plan contracts. The Act includes several transparency provisions, including a ban on the use of “gag” clauses in contracts between providers that health plans provide a price comparison tool for consumers and establish billing/payment timelines for providers and payers.
  3. Continued suspension of sequestration. The Act continues the elimination of the Medicare two percent sequester for the first three months of 2021. This provision had been set to expire December 31, 2020.
  4. Delay in the American Care Act-mandated reductions for Medicaid disproportionate share. The oft-delayed reduction in Medicaid disproportionate share funding is again delayed. The initial $4 billion cut scheduled for 2021 now is delayed until 2024, with deeper cuts added to the outyears (FY2026 and FY2027).
  5. Funding for additional Medicare-funded residency slots. The Act lifts the Medicare-funded residency slots over five years at a rate of 200 slots each year. These slots will be targeted for rural hospitals, as well as hospitals over their resident limit, those in states with new medical schools, and those that serve Health Care Professional Shortage Areas. This provision is effective in October 2023.

For a closer look at these provisions, please join PYA’s Kathy Reep and Mike Nichols on Tuesday, January 26, noon ET for a 60-minute webinar, “Hospital Payment and Reimbursement”. Registration information is available here.

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