The $1.7 trillion federal spending package: Healthcare wins and losses

Senate leaders unveiled the omnibus bill, which should be voted on later this week. Hospital and health groups cheered some provisions but criticized lawmakers for failing to address other top priorities.

Healthcare advocacy groups secured some of what they wanted in the $1.7 trillion federal spending bill, but some groups were bitterly disappointed that the package still includes some Medicare cuts.

Senate leaders introduced the spending package early Tuesday, and the Senate approved it Thursday, Dec. 22. The House passed it Dec. 23, just as the government was slated to run out of money. President Biden signed the package on Dec. 29.

The measure averts some Medicare reductions, although healthcare groups hoped for more relief. There are also provisions that address some key priorities of hospitals, including telehealth service, aid for rural hospitals and medical research.

Here’s a roundup of the healthcare provisions in the spending package.

Medicare

The package avoids some steep Medicare cuts, but provides only part of the relief doctors and medical groups were seeking.

The spending package prevents a scheduled 4% cut in Medicare under the Pay-As-You-Go (PAYGO) sequester, which is designed to ensure that federal spending doesn’t add to the deficit. Health groups said the cut would have been devastating and had urged lawmakers to block it. Under the package, the PAYGO cut is blocked in 2023 and 2024.

Doctors and medical groups also pressed Congress to avert a 4.5% reduction in Medicare payment rates for doctors, but that effort wasn’t as successful. The omnibus package calls for a 2% cut in physician payment rates.

While not as bad as initially feared, doctors and medical groups criticized Congress for allowing any cut to happen. They argue Medicare reimbursement rates are already insufficient.

Doctors are already reeling with higher inflation rates and other challenges during the COVID-19 pandemic, said Jack Resneck Jr., president of the American Medical Association. Doctors, unlike other Medicare providers, don’t get annual adjustments to reflect inflation, he said.

“The AMA is extremely disappointed and dismayed that Congress failed to prevent Medicare cuts next year, threatening the financial viability of physician practices and endangering access to care for Medicare beneficiaries,” Resneck said in a statement.

The Medical Groups Management Association warned some doctors may not be able to accept new Medicare patients and some practices would have to consider closing satellite offices or laying off staff.

“Medical practices are in no way immune to the impact of the broader economy, and have been suffering from significant staffing shortages, wage inflation, and drastic cost increases across the board,” Anders Gilberg, the MGMA’s senior vice president of government affairs, said in a statement. “Any cut to the Medicare conversion factor is simply untenable in this environment.”

Telehealth

Health groups scored one of their biggest wins on telehealth.

Telehealth waivers would be continued through 2024, under the spending package. Healthcare organizations had pressed lawmakers to extend telehealth coverage, and the effort had strong bipartisan support from lawmakers. But supporters said it wasn’t a lock to get approval before the end of the year (and the current congressional session).

The federal government authorized waivers early in the COVID-19 pandemic to allow health systems and hospitals to greatly expand telehealth services. As a result, telehealth surged and more patients used virtual care than ever before.

However, the telehealth waivers were largely tied to the federal COVID-19 public health emergency, leaving hospitals with uncertainty about what happens when the emergency ends. Congress approved a five-month extension of telehealth waivers earlier this year, but health systems were looking for more certainty.

The package also includes a two-year delay in implementing the Medicare telemental health in-person requirement, and a two-year extension to offer telehealth in High Deductible Health Plans, the American Telemedicine Association said in a news release.

Hospitals

Hospital leaders had urged Congress to approve critical sources of funding for rural hospitals, and those efforts were successful.

The spending package offers an extension of funding for two sources of aid that were slated to run out of money, the American Hospital Association said.

The bill offers a two-year extension for the Medicare-dependent Hospital (MDH) program, which funds more than 170 hospitals. The program offers more assistance to smaller hospitals with a large share of Medicare patients.

In addition, the bill would also continue Medicare’s Low-Volume Hospital (LVH) designation for two more years. The program offers assistance to rural hospitals with a relatively small portion of Medicare patients, and it supports more than 600 hospitals.

The programs help “rural hospitals keep their doors open,” the American Hospital Association said. Hundreds of rural hospitals are at risk of closing due to financial difficulties, the AHA has said.

The spending package offers federal waivers that allow hospitals to continue “hospital-at-home” programs for an additional two years. More health systems are offering acute care at home. There are now 259 hospitals (from 114 systems) offering acute care at home, according to federal data.

“The AHA is pleased that on a bipartisan basis Congress recognizes the immense pressure America’s hospitals, health systems and our caregivers are facing,” Rick Pollack, president of the American Hospital Association, said in a statement. “This legislation will deliver critical support and resources so we can better care for our patients and create healthier communities.”

Medicaid

Under the federal COVID-19 public health emergency, states have had to keep more people on Medicaid, the program providing health coverage for those with lower incomes. Under the spending package, states can have a greater say in deciding Medicaid eligibility in April, The Washington Post reports. Potentially, millions of Americans would lose healthcare coverage if some states tighten eligibility.

However, the package includes provisions calling for Medicaid and the Children’s Health Insurance Program to offer 12 months of continuous coverage for children. “Our kids will no longer be subject to fluctuations in coverage that endangers their health and well-being,” U.S. Rep. Frank Pallone, D-N.J., said in a statement.

States would also have the option of making 12 months of postpartum health coverage permanent. Some states offer 12 months of Medicaid coverage, and health advocates have urged all states to take that step to reduce maternal mortality.

Health research

Federal research agencies would get more money under the plan.

The National Institutes of Health, the chief source of federal aid for medical research, would get an additional $2.5 billion in aid, a 5.6% increase over its current funding , according to Research!America, an advocacy group for scientific studies.

The Centers for Disease Control and Prevention would get an increase of $760 million, a 9.5% increase over current funding. The CDC is charged with protecting against pandemics and other public health threats. Research!America hailed the boost for CDC, saying the agency has been plagued by inadequate funding for years.

The federal government’s newest research entity, the Advanced Research Projects Agency for Health (ARPA-H), would get an additional $500 million. The agency, formally created a year ago, started with a budget of $1 billion. President Biden founded the agency and has charged it with pursuing high-risk, high-reward studies to find breakthroughs in cancer and other drugs.

Medical education

Lawmakers agreed to offer more financing for medical students. The package calls for an additional 200 Medicare graduate medical education (GME) residency slots, according to the Association of American Medical Colleges. It’s only the second increase in over 25 years, the AAMC said.

The AAMC continues to project a shortage of 124,000 physicians by 2034, so the added slots offer much-needed help. The AAMC also lauded additional funding for Health Resources and Services Administration (HRSA) health workforce development programs.

Prior authorization reform

Lawmakers didn’t include a provision to streamline prior authorization requirements in the spending plan. Democratic and Republican lawmakers had indicated support for legislation to revamp prior authorization in Medicare Advantage plans, but the measure didn’t make it into the package, the MGMA said.

Healthcare groups such as the AMA deride the process of prior authorization, where doctors and providers must get approval from insurers before moving ahead with treatments. Doctors and medical groups say the process delays patient care and can lead to negative outcomes, while insurers say prior authorization reduces wasteful spending and unnecessary procedures.

The House passed a bill that would have required Medicare Advantage plans to tell the Centers for Medicare & Medicaid Services how often they are using prior authorization and the rate of approvals and denials. Lawmakers in the Senate had expressed support.

But the measure wasn’t added to the spending package, so healthcare groups will have to start over and introduce new legislation in the new Congress next year.

“It’s disappointing,” said Claire Ernst, the MGMA’s director of government affairs. “It’s hard to build all this momentum up.”