Senate Passes Omnibus Spending Bill with Health Provisions

The House of Representatives Dec. 23 passed an amended version of the $1.7 trillion omnibus appropriations bill that funds the federal government through the end of the current fiscal year. The Senate passed the bill Dec. 22. Congress also passed another short-term continuing resolution through Dec. 30 to allow time for the more than 4,000-page legislation to be enrolled. The president is expected to sign the continuing resolution ahead of the Friday deadline when current government funding is set to expire and to sign the omnibus bill into law next week. The legislation includes many provisions important to hospitals and health systems.

Key Highlights

The omnibus appropriations bill will:

AHA Take

In a statement shared with the media Dec. 20, AHA President and CEO Rick Pollack said, “The AHA is pleased that on a bipartisan basis Congress recognizes the immense pressure America’s hospitals, health systems and our caregivers are facing. This legislation will deliver critical support and resources so we can better care for our patients and create healthier communities. Due to skyrocketing cost increases for supplies, equipment, drugs and labor, challenging workforce shortages, and the ‘tripledemic’ of COVID-19, flu, and RSV, the hospital field is stretched thin and on the brink.

“Specifically, we are pleased that this bill prevents significant four percent Medicare PAYGO cuts to providers, extends two key programs for two years that help rural hospitals keep their doors open, and extends for two years critical waivers for telehealth and hospital-at-home programs that have led to improvements in care and made medical treatment more convenient and accessible for patients. Additionally, we appreciate Congress giving partial relief to physicians by rolling back Medicare payment cuts and including important provisions to improve the nation’s preparedness for the next pandemic, train the next generation of caregivers, bolster behavioral health care providers and expand access to behavioral health services. Finally, helping states prepare for changes in Medicaid eligibility due to the end of the Public Health Emergency could help them transition those individuals to other forms of health coverage.

“However, this is just a part of what needs to be done to support those on the front lines caring for patients. In the new year, we will continue to advocate for Congress and the Administration to take action to address patient discharge backlogs, support our current workforce and increase the pipeline into the future, hold commercial health insurers accountable for policies that compromise patient safety and add burden to care providers, and strengthen hospitals that care for a disproportionate number of patients covered by government programs or are uninsured, to name a few of our priorities.”

Based on an initial review of the more than 4,000-page omnibus package, the following are highlights of provisions that affect hospitals and health systems.

PAYGO SEQUESTER

Under PAYGO requirements, Congress must pay for any legislative package, either by reducing entitlement spending or increasing revenue. The legislation will delay the PAYGO sequester for two years, through the end of 2024, preventing $38 billion in Medicare cuts that will otherwise have taken effect in January.

MEDICARE RURAL EXTENDERS

The legislation will extend the Medicare-dependent hospital and enhanced low-volume hospital programs for two years through Sep. 30, 2024. They were set to expire Dec. 23, 2022. It also will extend add-on payments for ambulance services through Dec. 31, 2024. These add-on payments support rural, “super-rural,” as well as urban, ambulance services.

TELEHEALTH SERVICE EXTENSIONS

The legislation includes provisions to extend and expand telehealth flexibilities through Dec. 31, 2024. Under current law, many of these flexibilities were set to expire 151 days after the end of the COVID-19 PHE. These include:

In addition, the Department of Health and Human Services (HHS) Secretary will be required to submit a report to Congress on utilization of services (interim report in October 2024; final report in April 2026). Additionally, the omnibus bill will extend safe harbor exceptions for telehealth services in high-deductible health plans.

PHYSICIAN PAYMENT

The legislation will provide partial relief for Medicare physician reimbursement rates, which under current law face a 4.5% reduction on Jan. 1, 2023. Instead, this legislation will reduce the cut to 2% for 2023 and around 3% for 2024.

In addition, the legislation will extend incentive payments for alternative payment models for an additional year. Specifically, the legislation includes a provision that will extend payments through the calendar year (CY) 2025 payment period, albeit at 3.5% incentive payment as opposed to 5%.

OTHER MEDICARE PROVISIONS

Clinical Laboratory Fee Schedule. The legislation will delay by one year, until Jan. 1, 2024, clinical laboratory test payment reductions and requirements for certain hospital and other laboratories to report private payer data under the Clinical Laboratory Fee Schedule.

Payment Under OPPS for Certain Non-opioid Treatments. The legislation will provide a separate Medicare payment, from 2025 through 2027, for non-opioid treatments that are currently packaged into the payment for surgeries under Medicare’s Outpatient Prospective Payment System (OPPS). The separate payment will be capped at 18% of the estimated average OPPS payment amount for the surgeries and other services with which the non-opioid is used.

Home Health and Hospice. The legislation extends for one year add-on payments for rural home health agencies (HHAs). In addition, the bill directs the Centers for Medicare & Medicaid Services (CMS) to release additional information regarding its methodology for the negative behavioral adjustments applied under the HHA Patient Driven Groupings Model, as well as to hold a public forum with stakeholders within the next 90 days.

For hospice providers, the omnibus extends by one year (through 2032) the use of a hospice payment update percentage for the annual update to the hospice aggregate cap, which is included as an offset.

HOSPITAL AT HOME

The legislation will extend the Acute Hospital Care at Home initiative until Dec. 31, 2024. The bill also will require the HHS Secretary to analyze and compare care delivery under Acute Hospital Care at Home programs with traditional inpatient care delivery and publish a report demonstrating those findings.

MEDICAID AND CHIP PROVISIONS

The legislation includes several provisions related to Medicaid and the Children’s Health Insurance Program (CHIP). Additional provisions specific to behavioral health are summarized in a separate section that follows.

Timeline for Post-COVID-19 PHE Eligibility Redeterminations/Maintenance of Effort. The legislation will permit states to begin Medicaid redeterminations as of April 1, 2023, and give them one year to complete them. Current law conditions states’ receipt of the COVID-19 PHE-related enhanced FMAP of 6.2 percentage points on their maintaining enrollment, regardless of a change in an individual’s eligibility (otherwise known as “maintenance of effort”). Under this new approach, states will continue to have access to the enhanced FMAP through Dec. 31, 2023 (including while conducting redeterminations), subject to certain conditions. However, during this time, the enhanced FMAP will be reduced over three federal fiscal quarters beginning on April 1 when it will drop to 5 percentage points, followed by 2.5 percentage points in the subsequent quarter, and 1.5 percentage points for the final quarter. The enhanced FMAP will fully sunset on Jan. 1, 2024.

In addition, the legislation will require states to adhere to certain guardrails, including requirements that states attempt to ensure they have accurate beneficiary contact information; that they contact individuals using more than one modality prior to any disenrollment action; and that they adhere to new eligibility and enrollment reporting requirements. The legislation also provides CMS with additional enforcement authorities to ensure state compliance with disenrollment provisions, including options to require state corrective action plans, reduce enhanced FMAP further as a penalty for non-compliance, or levy civil monetary penalties at the agency’s discretion.

Continuous Eligibility for Children. Effective Jan. 1, 2024, the legislation will require states to ensure that children determined eligible for Medicaid receive continuous eligibility for 12 months.

Postpartum Coverage. The legislation will permanently give states the option to provide 12 months of post-partum coverage to women. Current law authorizes states to exercise this coverage option through 2027; currently, 26 states and the District of Columbia have implemented this coverage extension.

CHIP Extension. The legislation will extend funding for the CHIP program for an additional two years to 2029.

Extended Increased FMAP for Territories. This provision will extend the increased FMAP for the five U.S. territories. Specifically, this provision will maintain Puerto Rico’s increased FMAP at 76% through fiscal year 2027 and permanently extend the increased FMAP of 86% for the Virgin Islands, Guam, Northern Mariana Islands and American Samoa. The legislation also will make other changes to the territories’ Medicaid programs, including provisions related to provider payment rates and investments in data system improvements.

Medicaid Extenders. The legislation will extend through 2027 the Money Follows the Person Rebalancing demonstration, as well as the protections against spousal impoverishment for recipients of home and community-based services.

BEHAVIORAL HEALTH

The legislation will provide funding for several programs addressing mental illness, substance use disorder, and crisis response, including Mental Health and Substance Abuse Block Grants and specific programs for pediatric, maternal, and veterans’ mental health. In addition to these appropriations, the legislation will add coverage for intensive outpatient programs and services furnished by marriage and family therapists and mental health counselors under Medicare and will eliminate the opt-out for non-federal governmental health plans for mental health parity requirements. The legislation also will require updates to Medicaid policies for mental health, including requiring a searchable directory of providers and guidance from CMS on access to crisis response networks under Medicaid.

In addition, the bill includes amendments requiring changes to the inpatient psychiatric facility payment system methodology based on newly required data on provider costs as well as standardized patient data; the addition of a quality measure on patient perspective of care; temporary additional payment for non-opioid treatments for pain management; and the elimination of additional requirements for the dispensing of Schedule III-V controlled substances for the purposes of detoxification.

WORKFORCE

The legislation includes several provisions intended to bolster the health care workforce.

Graduate Medical Education. The legislation will provide, beginning in 2026, an additional 200 Medicare-funded GME residency positions. At least half of the positions will be dedicated to psychiatry and psychiatry subspecialty residencies. Additionally, at least 10% of positions will be distributed to rural hospitals, hospitals operating above their cap, hospitals in states with new medical schools, and hospitals that serve health professional shortage areas.

Conrad 30 Program. The legislation will extend the program, which allows states to request J-1 visa waivers for foreign born physicians who have completed a U.S. residency training program to work in federally designated shortage and underserved areas, until Sept. 30, 2023.

Nursing and Allied Health Education. The legislation will waive the cap on annual payments for nursing and allied health education made during 2010-2019. In calculating this payment for hospitals, CMS did so without applying the statutory payment cap and began to recoup payments spent over the cap from hospitals. This legislation will not apply such a cap to, thus not seek repayments from, hospitals that are currently operating a school of nursing or a school of allied health. Additionally, the legislation also will ensure that direct GME payments will not be affected.

Stark Law Exception for Physician Wellness Programs. The legislation will establish a new exception to the Stark Law to better enable hospitals and other entities to provide physicians with evidence-based programs to improve their mental health, increase resiliency and prevent suicide.

Public Health Workforce. The legislation will reauthorize the Public Health Workforce Loan Repayment Program, create a pilot loan repayment program for professionals with expertise in infectious diseases and emergency preparedness, and authorize the Heath Resources and Services Administration (HRSA) to increase educational opportunities for allied health professionals such as physical, occupational and respiratory therapists.

IMPROVEMENTS TO PREPARE FOR EMERGENCIES

The legislation takes several steps intended to improve the government’s ability to prepare for emergencies. It will require Senate confirmation of the Director of the Centers for Disease Control and Prevention (CDC) beginning on Jan. 20, 2025, and augment their ability to respond in case of emergency by requiring an agency-wide strategic plan every four years that describes how CDC will use strategic communications, external partnerships and coordination with other agencies in the event of an emergency. Further, it will require the director to establish an advisory committee to advise on policy and strategies to achieve the CDC’s mission. The advisory committee will consist of up to 15 non-federal members in relevant fields of expertise. Further, CDC will be required to expand and improve its ability to analyze, model and forecast PHEs and infectious disease outbreaks by leveraging the capabilities of public and private entities.

The legislation also will provide additional authority for the HHS Secretary to request support from other departments and agencies to lead federal public health and medical response to a PHE. It will clarify the role and responsibilities of the Assistant Secretary for Preparedness and Response and require national- and state-level full-scale exercises every five years to identify and address gaps in preparedness and response. Among other things, the exercises will assess the ability of the Strategic National Stockpile (SNS) to appropriately support the response to a large-scale, long-term PHE.

The legislation also will establish an Office of Pandemic Preparedness and Response Policy within the Executive Office of the President. The Office will advise on pandemic preparedness and response policy and support coordination and communication within the federal government related to preparedness and response. There will be an industry liaison within the office to work with affected industries during responses.

Finally, the legislation also addresses the work of other agencies with responsibilities during the pandemic. The legislation will direct HHS’ Substance Abuse and Mental Health Services Administration (SAMHSA) to support continued access to mental health and substance use disorder services during PHEs. It also will reauthorize programs to improve the provision of trauma care, including in rural areas, by increasing coordination and situational awareness within emergency medical and trauma systems and identifying and disseminating best practices, and will direct the Administration for Strategic Preparedness and Response to support the coordination of emergency medical services and trauma care during a PHE.

CYBERSECURITY OF MEDICAL DEVICES

The legislation will require medical device manufacturers to ensure that cyber devices, as defined by the section, meet certain requirements which will go into effect 90 days after passage. The section also will require the FDA to provide additional resources and information regarding improving cybersecurity of devices, as well as require the Government Accountability Office to issue a report, within one year, identifying challenges in this space and how federal agencies can strengthen coordination to improve in cybersecurity for devices.

UNIQUE PATIENT IDENTIFIER

The language includes a continuation of the prohibition on funding for the adoption of a unique patient identifier (UPI). A national UPI will provide HHS the ability to explore solutions that accurately identify patients and link them with their correct medical records.

OFFSETS

The health care title includes the following offsets.

HEALTH CARE APPROPRIATIONS

The omnibus appropriations bill will provide $1.7 trillion in discretionary spending for FY 2023. The package will fund various health-related agencies at the following levels, many of which reflect new investments in areas of interest for hospitals and health systems: