Welcome to another round of PYA Washington Updates. Happy Memorial Day Weekend! Due to the upcoming holiday, we’re issuing our weekly “Friday Morning Report” a day early. Here are the latest developments on the healthcare front:
Happy Memorial Day Weekend! Due to the upcoming holiday, we’re issuing our weekly “Friday Morning Report” a day early. Here are the latest developments on the healthcare front:
One Big Beautiful Bill Act – Update
In the early morning hours of May 22 – the day after we presented One Big, Beautiful Webinar, the House of Representatives approved its budget reconciliation bill, known as the One Big Beautiful Bill Act (OBBBA), by a vote of 215-214. The path to final passage was cleared by a 42-page amendment to the version of the bill previously approved by the House Budget Committee. Here are the key healthcare-related changes:
- States must comply with the new Medicaid work requirements by December 31, 2026 (2 years earlier than originally proposed).
- HHS is required to publish guidance (as opposed to regulations, which would require notice and comment rulemaking) regarding implementation of work requirements no later than December 31, 2025.
- Several provisions that afforded states some flexibility in implementing the Medicaid work requirements have been deleted.
- For states that have not expanded Medicaid, the cap on provider rates for state-directed payments will be 110% of Medicare rates (vs.100% for other states).
- The prohibition on the use of Medicaid funds for gender transition procedures is no longer limited to minors
- ACA Marketplace insurers will again receive cost-sharing reduction payments as reimbursement for reduced deductibles, copayments, and/or coinsurance for low-income enrollees.
In other late-breaking news, the Congressional Budget Office released its analysis of the potential Statutory Pay-As-You-Go (PAYGO) effects of OBBBA. According to CBO, OBBBA will increase the deficit by an average of $230 billion over the next 10 years. “Without enactment of subsequent legislation that would offset the deficit increase, waive the recordation of the bill’s effects on the scorecard, or otherwise mitigate or eliminate the statutory requirement,” Medicare payments would be reduced by 4% beginning in 2026 and continuing through 2034 under PAYGO’s automatic deficit reduction provisions. That’s an estimated $45 billion reduction in payments to providers, Medicare Advantage plans, and stand-alone prescription drug plans for next year.
Assuming OBBBA is enacted, Congress could act before the end of the year to block sequestration cuts as it has done in the past (e.g., with the 2017 Tax Cuts and Jobs Act and the 2021 American Rescue Plan). However, unlike the reconciliation bill, it will require 60 votes in the Senate to exclude OBBBA’s deficit increase from the PAYGO scorecard.
Keep in mind the party is just getting started. The Senate will begin consideration of OBBBA when it returns from its Memorial Day holiday on June 2. Majority Leader Thune said on May 21 that the Senate “will have its imprint” on OBBBA. There are several Republican senators on record opposing cuts to the Medicaid program. And wouldn’t it be nice if Congress finally made the Medicare telehealth waivers permanent as part of the reconciliation bill? The Majority Leader hopes to have the Senate complete its work before the 4th of July holiday.
Medicare Advantage Plan Audits
Yesterday, CMS announced it will invest in additional resources to clear the 7-year backlog of Risk Adjustment Data Validation (RADV) audits for Medicare Advantage plans. CMS performs these RADV audits to confirm that diagnoses used for payment are supported by medical records. If unsupported, CMS recoups from the MA plan a portion of its capitated payments attributable to the unsupported risk score. In addition to deploying enhanced technology, CMS intends to increase its team of medical coders from 40 to approximately 2,000 to manually verify flagged diagnoses. Prior audits found between 5% and 8% in overpayments, meaning there’s a lot of gold in those hills. CMS will also work with the OIG to recover uncollected overpayments identified in those prior audits.
Please do not hesitate to contact us if you have any questions regarding these latest developments, and please continue to check our website for updates.