Our take: 7 reasons why the just-signed spending law is a big deal for providers

By Yulan Egan, Practice Manager, and Tony Panjamapirom, Senior Consultant

The spending package signed into law by President Trump on Friday has several provisions that will have a major effect on providers.

1. This law will lead to important changes in how clinicians are scored under MACRA's Merit-based Incentive Payment System (MIPS). When MACRA was first passed, the law included several flexibilities to help providers transition into the program over the first two years. Now, this new spending law will allow CMS to continue to apply certain "transition" policies for three more years, through 2021. Specifically, two major changes include:

a. CMS has additional flexibility to reduce the weight of the cost category. The agency has set the cost category at 10% for performance year 2018, and was set to increase it to 30% for 2019 and beyond. The new spending package instead allows CMS to weigh the cost category at a minimum of 10% and a maximum of 30% through 2021. The agency would still be required to weigh the cost category at 30% from 2022 on, absent additional legislation.

b. The rewards for performance improvement are delayed. The law delays rewarding providers for performance improvement in the MIPS cost category through 2021.

2. The new law includes several other technical changes to MACRA's Quality Payment Program. Specifically, it permanently prohibits CMS from applying MIPS payment adjustment to all Medicare Part B items (e.g., Medicare Part B drugs). Now, the MIPS payment adjustment applies to only Medicare Part B covered professional services.

3. The law no longer requires CMS to make Meaningful Use (MU) more stringent over time. The law updates a very minor portion of the Health Information Technology for Economic and Clinical Health (HITECH) Act. This effectively means that CMS is not required to increase the difficulty of MU over time, but it does not eliminate existing MU requirements. Additionally, CMS could still choose to evolve MU over time.

4. The law expands telehealth coverage. Specifically, the new law includes the CHRONIC Care Act, which allows Medicare Advantage plans and ACOs to expand coverage for and provide telehealth services for certain procedures, such as home dialysis and stroke assessments.

5. It repeals the Affordable Care Act's Independent Payment Advisory Board (IPAB), which likely would have cut Medicare payment rates to providers once it went into effect.

6. The new law delays scheduled cuts to Disproportionate Share Hospital (DSH) payments for FYs 2018 and 2019.

7. It extends several key health care programs and provides additional funding for others. For instance, the law reauthorizes Community Health Center funding for two years, extends CHIP funding through 2027, reauthorizes spending on several Medicare programs, and provides $6 billion toward opioid and mental health treatment.

We'll have more to say about how these changes should affect hospital strategy in the coming days. For more on what is in the new spending package, see Daily Briefing's complete coverage below.



The (very brief) shutdown is over

President Trump Friday morning signed into law a spending package with wide-ranging implications for health care, ending an hours-long federal shutdown.

The spending package funds the federal government through March 23, raises 2018 and 2019 budget caps for defense and domestic programs.

Sen. Rand Paul (R-Ky.) filibustered the bill for more than eight hours on Thursday night to express his objections to the measure's spending increases, dragging the debate beyond the 12:01 a.m. EST deadline to avert a federal government shutdown. But the bill ultimately passed the Senate in a 71-28 vote in the early morning hours, and the House voted 240-186 to approve the measure Friday shortly after 5:30 a.m. EST.

Trump Friday morning tweeted that he had "just signed" the legislation, reopening the federal government, which entered its second shutdown of the year Friday at 12:01 a.m. EST.

How the spending package affects health care

The new spending package increases spending on defense and domestic programs by about $300 billion over the next two years, including a $160 billion budget bump for defense and a $128 billion budget bump for domestic programs.

Funding for health care programs

The law directs:

  • $80 billion toward disaster relief funding;
  • $20 billion toward infrastructure programs, including those for water and rural broadband;
  • $6 billion toward opioid and mental health treatment;
  • $4 billion toward Veterans Affairs (VA) to rebuild and improve VA hospitals and clinics;
  • $2 billion toward NIH research projects; and
  • Nearly $500 million toward the National Health Service Corps.

The law also includes $7 billion and a two-year reauthorization for CHCs, and a 10-year reauthorization for CHIP, up from the six-year reauthorization package Congress passed last month. In addition, it extends the 2% cut to Medicare provider payments under the Budget Control Act through 2027.

Changes to the 'doughnut hole'

The law also accelerates efforts to close Medicare's "doughnut hole"—a coverage gap in Medicare prescription drug coverage. Beneficiaries who reach the current coverage limit have to pay out-of-pocket for the full cost of drugs costs until catastrophic coverage kicks in. Under the Affordable Care Act, the doughnut hole is set to be eliminated by 2020. However, the new law moves up that timeline by one year, and changes the payment ratios so that pharmaceutical companies are responsible for 70% of a drugs costs, up from 50% (Mascaro, Los Angeles Times, 2/9; McPherson, CQ Roll Call, 2/9; Morgan et al., Reuters, 2/8; Kaplan, New York Times, 2/8; Peterson/Andrews, Wall Street Journal, 2/9; Owens/Herman, Axios, 2/9; McPherson, Roll Call, 2/8; DeBonis/Wener, "PowerPost," Washington Post, 2/9; Scott et al., Vox, 2/9; Wilkerson, Inside Health Policy, 2/8; Sweeney, FierceHealthcare, 2/8).

5 things everyone should know about MACRA

The implementation of MACRA is the most notable change to Medicare physician payment in over a decade. Passed with bipartisan support, MACRA changes the way Medicare pays clinicians.

Check out our infographic to see the no-regrets strategies to prepare your organization for success under MACRA.

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