Capitol Insights Newsletter

Authors: Luke Schwartz, Matt Reiter, and Caroline Oliver

What happened in Congress this week?

Earlier this week the House passed legislation funding several key federal agencies. The Senate is expected to also vote in favor of the legislation today, March 8th, with bipartisan support. Signing this legislation into law will avert a looming partial government shutdown. There are important health policy provisions included in this spending package, one of which will be discussed in the featured topic below. Another spending deadline is March 22nd, when Congress will have to fund the final set of agencies to fully avoid a government shutdown.

Additionally, last night President Biden delivered the annual State of the Union address. Biden discussed a few key health policy issues that would be at the core of his second term if reelected in November. He discussed expanding drug price negotiations to 500 drugs over the next 10 years, capping the price of insulin at $35 a month, and expanding Medicare beneficiaries’ $2,000 out-of-pocket max for prescription drugs starting in 2025 into the private sector.

Congressional Leaders Agree to Conversion Factor Fix

On Sunday March 2nd, Congress released the text of a bipartisan bill to fund the government for the remainder of the fiscal year. These bills also include “policy riders” unrelated to spending. Most notably, the bill includes a partial offset of the 3.37% reduction to the 2024 Medicare Physician Fee Schedule (PFS) Conversion Factor (CF) that has been in place since January 1st.  

Specifically, the bill will increase the CF by 1.68%. This essentially halves the CF cut, which will be reduced from a 3.37% reduction to 1.69% reduction compared to the 2023 CF. If successfully signed into law, the new CF will only apply to services that occur on or after March 9, 2024. 

Congress likely intended to provide a 1.25% increase which took effect this year as part of legislation passed by Congress that provided a 2.5% increase to the CF in 2023 and a 1.25% increase to the CF in 2024. 

The increase will not apply retroactively because it is too late in the year to easily apply a retroactive increase to claims already paid this year. For example, providers would have to process a 1.68% increase to patient cost sharing for each claim. Congress provided a higher increase for the rest of the year to offset the fact that the increase does not apply retroactively.  

Fallout from the Change Healthcare Cyberattack Continues as UHG Plans to Bring Change Healthcare Back Online

Sixteen days after the most disruptive cyberattack on the healthcare sector in recent years, physicians and hospitals are still reeling. Providers are still having trouble filing claims, meaning that organizations throughout the health sector are still not getting paid.

While UnitedHealth Group (UHG) has begun to establish some temporary workarounds, these alternatives are not working well for many providers who use Change Healthcare as their clearinghouse. According to a UHG webinar hosted Tuesday afternoon, 90% of claims that were submitted before Change Healthcare was disconnected are flowing again. However, this means that 10% of claims are still not moving. To attempt to rectify the situation, UHG created a temporary funding assistance program for providers who are currently unable to file claims. However, for most, the loan program offered by UHG is insufficient. Many physicians are reporting the loan total being offered by UnitedHealth to represent a tiny fraction of their total unpaid claims (in many cases as little as 1%).

On Tuesday, March 5th, the Department of Health and Human Services (HHS) issued a statement aiming to mitigate the financial pressures many providers are facing. This plan included:

  • Making it easier for Medicare providers to change clearinghouses by contacting their Medicare Administrative Contractor (MAC). MACs have been instructed to expedite this process and provide instructions on how to enroll in a new electronic data interchange (EDI).
  • Allowing providers to apply for accelerated Medicare payments, similar to advanced funding made available during the COVID-19 public health emergency.
  • Recommending that payers waive their prior authorization rules to ensure that patients are receiving streamlined care.
  • Urging private insurance companies offering Medicare Advantage plans to follow the federal government’s lead and offer advanced funding.

Importantly, many of these programs are related to Medicare Part A services. CMS lacks clear authority to expand some of these relief measures to Part B services. During a recent call with CMS leaders, the agency assured stakeholders that is working through the authorization issues to extend additional relief to Part B providers.

Hospital and physician advocates believe these remedies being offered by HHS are nowhere near enough. The American Hospital Association (AHA) has led the charge in calling out UHG and HHS’s underwhelming response in providing aid to those impacted by the attack.

Furthermore, there is much speculation on whether UHG paid a ransom to the BlackCat group who claimed responsibility for the cyberattack. However, the reports that led to this conclusion are speculative in nature and the public does not know for sure where ransom negotiations stand (or if UHG will ultimately pay a ransom at all). Paying a ransom by no means guarantees servers will be swiftly unlocked and brought back online.

In a notice on their website Thursday afternoon, UnitedHealth announced that they hope to reactivate the electronic payment platforms on March 15th and “begin testing and establishing connectivity to our claims network and software on March 18th, restoring service through that week.” However, this schedule is tentative. Rushing the process could lead to vulnerable servers that could be further compromised. Providers are hoping to see both UHG as well as the federal government step up to ensure that providers are paid and able to care for patients.

Top Stories in Healthcare Policy

On Monday, March 4th, the U.S. Court of Appeals for the 5th Circuit heard arguments regarding the preventive services mandate of the Affordable Care Act, which requires coverage for preventive services recommended by the U.S. Preventive Services Task Force without cost-sharing. Last year, a federal judge in Texas ruled that the mandate was unconstitutional.

The Biden administration announced on Monday, March 4th, that all selected drug manufacturers for the Medicare Drug Price Negotiation Program submitted counteroffers for the initial round of negotiations. Maximum Fair Prices (MFPs) for the selected drugs are expected to be published in September of this year and are scheduled to go into effect beginning in 2026.

This week at a meeting for the Coalition for Health AI, US Food and Drug Administration (FDA) Commissioner Rob Califf expressed concern about health systems’ infrastructure to adopt efficient artificial intelligence (AI) applications. These comments coincide with bipartisan introduction of a bill to establish guidelines for federal agencies for testing AI.

Boehringer Ingelheim announced on Thursday, March 7th, that it will implement a cap on out-of-pocket costs for inhalers at $35 a month beginning in June of this year. Perhaps this decision is related to the Senate HELP Committee’s scrutiny of inhaler prices.

Cigna announced Thursday, March 7th, that it is launching a program to implement a 15% cap on annual cost increases for weight-loss drugs. Popularity of weight-loss drugs, including Wegovy and Zepbound, has increased costs for employer insurance, and implementing a cap on the annual cost increase aims to ensure access to the drugs for patients.

An audit from the Office of the Inspector General (OIG) published on Thursday, March 7th, found that the Health Resources and Services Administration (HRSA) made possible overpayments to providers during Phase 2 General Distribution of the Provider Relief Fund (PRF). OIG recommended that HRSA review the providers sampled for the audit.

Aledade is facing a whistleblower lawsuit regarding the organization’s Medicare billing practices. Aledade is a large accountable care organization that serves almost 2 million across 40 states.

Alabama lawmakers passed legislation on Wednesday, March 6th, this week to protect in vitro fertilization (IVF), in the wake of the Alabama Supreme Court’s ruling. The law, signed by Governor Kay Ivey, provides immunity to clinics and doctors who provide IVF services.

The Biden administration is expected to announce a task force on addressing healthcare costs next week.

The Department of Justice, Department of Health and Human Services and Federal Trade Commission announced a joint investigation of how private equity ownership of healthcare providers impacts patient care.

The free at-home COVID-19 test program will be suspended on Friday, March 8th. The suspension of this program follows recent changes in CDC isolation guidelines.