A federal advisory commission will recommend to Congress that traditional Medicare lower payments by 5% to nursing homes, home health agencies, and inpatient rehabilitation facilities in 2023.

After assessing payment adequacy, the Medicare Payment Advisory Commission found that the three provider groups were receiving sufficient reimbursement for the services they provide.

MedPAC provides lawmakers with analysis and policy advice on the taxpayer-funded Medicare program. Its recommendations are nonbinding, but Congress utilizes commissioners’ expertise when making funding decisions.

Each year, the commission advises Congress about how to update payment rates for health providers that treat Medicare beneficiaries. All final recommendations for 2023 will be included in the commission’s March 2022 report to Congress on Medicare payment policy.

In 2020, traditional Medicare paid $28.1 billion to nursing homes on behalf of 1.2 million beneficiaries. A 5% pay cut would lower Medicare spending on nursing homes by more than $2 billion in fiscal year 2023 and more than $10 billion over five years, the commission reported. Nursing homes had a 16.5% aggregate profit margin on Medicare beneficiaries in 2020—19.2% for facilities that received federal provider relief funds, the commission reported. Next year, the commission projects a 14% margin.

In 2020, Medicare paid $17.1 billion for home health services for about 3.1 million beneficiaries, the commission reported. Home health providers are projected to see a 17% aggregate profit margin on Medicare beneficiaries in 2022, it reported. Inpatient rehab facilities are projected to have an aggregate profit margin of 14% on Medicare beneficiaries next year, the commission projected.

The panel voted to recommend hiking the 2022 Medicare base payment rate for acute care hospitals by 2% in 2023. That includes a .5% increase for inpatient rates.

Payments to Doctors

The panel voted to recommend no payment update for physicians and other clinicians in 2023, but these providers could receive positive or negative payment adjustments for providing quality care under the Merit-based Incentive Payment System, or MIPS, which measures an eligible clinician’s performance against their peers.

They could also receive a 5% payment bonus for participation in an advanced alternative payment model in which they’re eligible for bonuses for providing high-quality care and risk payment reductions when they don’t.

Medicare paid $64.8 billion to 1.3 million physicians and clinicians in 2020, down $8.7 billion from 2019, the commission reported. Federal provider relief funds helped offset those lost payments, which were due mainly the Covid-19 pandemic.

The panel also adopted a second recommendation to require physicians and other health professionals to use a “claims modifier” to identify when they’ve provided audio-only telehealth services. The Centers for Medicare & Medicaid Services already requires the modifier for audio-only telehealth services related to substance abuse disorder and mental health issues.

Surgical, Dialysis, Hospice

The commission also finalized a draft recommendation to eliminate a scheduled 2% rate increase for ambulatory surgical centers in 2023, citing adequate payments. In 2020, fee-for-service Medicare paid $4.9 billion to ambulatory surgical centers on behalf of about 3 million beneficiaries.

The commission also finalized a draft recommendation to require surgical centers to provide annual cost reports to the CMS. The commission has called on the Department of Health and Human Services to require such reports from surgical centers since 2009. Without the documentation of revenue and profit margins, the commission says it’s difficult to recommend payment rate adjustments for surgical centers.

Dialysis facilities would see a 1.2% payment hike under another final commission draft recommendation. In 2020, Medicare paid $12.3 billion to dialysis centers on behalf of 384,000 beneficiaries. About 7,800 dialysis centers are Medicare-certified. In 2022, the commission expects dialysis centers to have a projected 1.8% profit margin on Medicare beneficiaries, the panel noted.

Hospice providers would see no payment increase in 2023 under another commission final draft recommendation. In 2020, Medicare paid over $22.4 billion to hospice providers on behalf of over 1.7 million beneficiaries, the commission reported. Hospice providers are expected to have a 13% aggregate profit margin on Medicare beneficiaries in 2022, the commission reported.

The commission also finalized a draft recommendation calling for a 20% cut in Medicare’s annual per-patient payment limit, or “aggregate cap,” for hospice providers in 2023.

The hospice aggregate cap is $31,298 in 2022. If a hospice provider’s annual Medicare payments divided by the number of beneficiaries exceeds the cap amount, the facility must repay the excess payments. In 2019, 19% of hospices exceeded the cap.

The commission also passed a draft recommendation that would require adding a wage adjustment to the aggregate cap to reflect area pay differences.

Key lawmakers expect a White House request for a spending measure to support the response to the Omicron variant of the coronavirus, though President Joe Biden has yet to send a proposal.

House Majority Leader Steny Hoyer (D-Md.) told reporters yesterday he expects Biden to soon request “substantial sums” through a supplemental appropriations bill to combat the coronavirus, possibly including foreign aid. Sen. Roy Blunt (R-Mo.), the top Republican on the Senate Appropriations Labor-HHS-Education Subcommittee, also said there’d been discussion about the possibility of a supplemental request.

Lawmakers face a Feb. 18 deadline to fund the government, which could serve as a vehicle for other add-ons, such as a coronavirus bill or a disaster aid measure for areas hit by tornadoes last month.

The White House has yet to send a request, and White House Press Secretary Jen Psaki sidestepped a question Monday on if a request was coming, telling reporters the administration has “been in constant conversation with leaders and with the Hill and members about what may be needed.”

Senate Appropriations Vice Chairman Richard Shelby (R-Ala.) told reporters yesterday he would have questions for the administration on the disbursement of coronavirus funds.

“We are going to ask hard questions about where the money has been spent,” Shelby told reporters.

Shelby said the issue of a coronavirus spending bill has “bubbled up, but it’s not crystallized yet.”

Disaster relief measures, particularly for areas in western Kentucky hit by a tornado, could be attached to a spending measure, Shelby said.

Rep. Tom Cole (R-Okla.), the top Republican on the House Appropriations Labor-HHS-Education Subcommittee, said he hadn’t heard of a forthcoming coronavirus funding request, but that there may be additional measures attached to a funding deal, if lawmakers reach one. Cole said in December he’d expect some bipartisan support for a coronavirus bill if the White House requests one.

“The prevailing Republican view right now is that there’s probably enough money to take care of it,” Cole said yesterday on a possible coronavirus supplemental. “But if we get to a deal, I would expect other things, anything from disaster relief to other things attached to it. So it may be out there, but I have not heard anything specific.”

Congressional Agenda Webinar

Join Bloomberg Government’s legislative analysts today at 11 a.m. for a deep dive into the policy areas, spending fights, and other activity to watch on Capitol Hill this year.

The analysts will discuss Democrats’ social spending package, fiscal 2022 spending negotiations, and legislation to address U.S. competition with China.

More Budget & Appropriations News

Military Warns Stopgap Would Squander Funds: The new U.S. Space Force would have to curtail space launches and the Marines would have to delay the arrival of Lockheed Martin F-35 Joint Strike Fighters. These are a few of the scenarios that military leaders plan to describe to House lawmakers today as they press to avoid funding the Pentagon at last year’s levels for the rest of the fiscal 2022.

Under a full year of stopgap funding, the Navy also would lack sufficient resources for the first Columbia-class ballistic missile submarine. The Air Force would lose $3.5 billion in buying power. The Army would have $9.2 billion in “misaligned” funds.

Military service chiefs are poised to tell the House Appropriations Committee’s defense subcommittee that at least $26 billion could be wasted by not being allocated as planned in 2022, according to a Bloomberg Government tally from the prepared testimonies. All factions of the U.S. defense apparatus would operate at last year’s levels, which would put a stop to any additional funds or prevent the start of new programs.

• The Defense Department’s annual budget will steadily increase over the next decade to reach $787 billion in 2031, according to the Congressional Budget Office. The costs are measured in 2022 dollars and would be 10% more than the amount proposed by the Biden administration for the fiscal 2022 budget, CBO said in report released yesterday.

Capitol Police Hiring, Fire Code Among CR Drawbacks: Police hiring, fires in the Capitol, and the Cannon House Office Building renovations are among the top concerns for Capitol Hill officials if lawmakers rely on further stopgap funding measures in fiscal 2022, they told lawmakers yesterday.

The U.S. Capitol Police will look to hire 288 new recruit officers in fiscal 2023, as the agency seeks to address a staffing shortage, Capitol Police Chief J. Thomas Manger told lawmakers at a House Appropriations Legislative Branch Subcommittee hearing yesterday.

The Capitol Police are 440 to 450 officers “below where we need to be” Manger told lawmakers yesterday. Leaders will “have to nearly double the number of agents” who investigate threats against members, he said.

“We are investigating threats against Congress but I will tell you we’re barely keeping our head above water for those investigations,” Manger told lawmakers.

There were nearly 9,000 threats against members of Congress over the last year, roughly double the total from the previous year, Major General William J. Walker, sergeant-at-arms of the U.S. House of Representatives, told members. Those range from comments that were truly “menacing, or just somebody saying something reckless on the Internet or social media.”

A continuing resolution would put off needed funding increases for a Capitol sprinkler system “so that we actually have a fire-code approved building,” Architect of the Capitol J. Brett Blanton told members.

Cannon office building renovations are a major concern, Blanton said, because officials “need to have money this summer in order to award the next phase of the Cannon project.” A delay would mean officials would “be able to complete the project within the two-year timeframe that is required for each phase of the project,” Blanton said.

National telehealth utilization declined by 6.8% from September to October 2021 after two months of growth, according to FAIR Health’s Monthly Telehealth Regional Tracker.

In August and September 2021, telehealth usage rose by 2% each month, based on data including populations that are privately insured, including Medicare Advantage, and excluding Medicare fee-for-service and Medicaid.

Despite the national decrease, the Northeast did not see a decline in telehealth utilization during October, which was unchanged at 4.8% of medical claim lines. The South experienced the greatest decline, with an 11.4% decrease in telehealth utilization.

Mental health conditions remained the top-ranking telehealth diagnosis nationally and regionally and increased in the percentage share of telehealth claim lines. Specifically, 60-minute psychotherapy sessions increased as a share of all telehealth claim lines nationally and regionally by about 1%.

Covid-19 was no longer a top five telehealth diagnosis in the Midwest in October 2021, which eliminated the virus from the top five telehealth diagnoses nationally or in any region during the month. Substance use disorders entered the top five diagnoses in the Midwest at number four.

In the same month, the South joint/soft tissue diseases and issues dropped out of the top five while examination now ranks as number three in telehealth diagnoses for the region.

National telehealth utilization declined by 6.8% from September to October 2021 after two months of growth, according to FAIR Health’s Monthly Telehealth Regional Tracker.

In August and September 2021, telehealth usage rose by 2% each month, based on data including populations that are privately insured, including Medicare Advantage, and excluding Medicare fee-for-service and Medicaid.

Despite the national decrease, the Northeast did not see a decline in telehealth utilization during October, which was unchanged at 4.8% of medical claim lines. The South experienced the greatest decline, with an 11.4% decrease in telehealth utilization.

Mental health conditions remained the top-ranking telehealth diagnosis nationally and regionally and increased in the percentage share of telehealth claim lines. Specifically, 60-minute psychotherapy sessions increased as a share of all telehealth claim lines nationally and regionally by about 1%.

Covid-19 was no longer a top five telehealth diagnosis in the Midwest in October 2021, which eliminated the virus from the top five telehealth diagnoses nationally or in any region during the month. Substance use disorders entered the top five diagnoses in the Midwest at number four.

In the same month, the South joint/soft tissue diseases and issues dropped out of the top five while examination now ranks as number three in telehealth diagnoses for the region.

Telehealth stakeholders are gearing up for an extended push to cement telehealth’s role in American health care in the year ahead. Last year brought dramatic expansions of telehealth’s breadth and depth, and with pending bipartisan legislation including the Telehealth Extension Act — and a defined end to the COVID-19 public health emergency still uncertain — stakeholders agree the upcoming year promises to be similarly active.

Telehealth stakeholders are pushing for a significant extension of the PHE, which in turn would extend current telehealth regulatory flexibilities, particularly as an increasing number of telehealth studies conducted during the pandemic demonstrate providers’ success at providing remote care. While the conclusion of the PHE will eliminate waivers and undo current Medicare telehealth reimbursement rates, both Congress and CMS have expressed interest in continuing broad access to telehealth.

Extending the public health emergency would allow providers to continue utilizing the telehealth infrastructure implemented throughout the pandemic and would also give stakeholders time to push Congress to pass legislation allowing telehealth care on a more permanent basis, said Krista Drobac, executive director for the Alliance for Connected Care.

Drobac said several studies from the HHS Office of Inspector General documenting telehealth’s successes prove that most concerns with telehealth are unfounded. One study found that telehealth patient-provider relationships have largely remained the same; 84% of Medicare beneficiaries participating in telehealth care have received care from providers with which they had an established relationship prior to the pandemic.

“As demonstrated, beneficiaries and the community do not need arbitrary guardrails like established relationships and in-person requirements to ensure beneficiaries are getting the care they deserve,” Drobac said in an email. “Patients are maintaining their own providers when possible and appropriate. We believe this will continue but as telehealth models evolve, patients should have the choice to see other providers with whom they do not have a previous relationship.”

An additional HHS OIG study found there are still areas of telehealth that could permanently benefit from congressional input.

Statutory barriers including originating site limits and geographic boundaries have been temporarily waived as part of the PHE, meaning many beneficiaries were able to receive care from their homes. The study said that Congress would need to take steps to permanently revise originating site restrictions. It recommended instituting a licensure reciprocity system among providers, which OIG said would help streamline problem-solving.

“CMS plays an important role in facilitating the exchange of information among States to improve the use of telehealth for behavioral health services. Sharing information among States will help ensure that States realize the benefits of telehealth and make informed decisions about how to address challenges with using telehealth,” the study said.

OIG’s study is supported by a recent report from McDermott Will & Emery, which found that telemental treatment flourished during the PHE, particularly as a result of the Consolidated Appropriations Act, which eliminated geographic care restrictions for mental health care. Post-PHE, however, CAA states telemental care must be accompanied by an in-person visit within six months before patients’ first telehealth appointment, a point of significant criticism from both providers and patients.

Stakeholders including the Healthcare Leadership Council and the American Medical Association said they will look to Congress to permanently expand eligibility — including removing geographic and site restrictions and in-person visit requirements — before the public health emergency ends.

“Fortunately, there is overwhelming bipartisan support on Capitol Hill to allow Medicare patients to maintain this benefit, although the potentially significant budget impact of the policy change is raising concerns,” Jack Deutsch, a spokesperson for AMA, said in an email. “Nevertheless, prospects are good for positive action on at least a temporary extension of the expanded benefit this year.”

Likewise, CMS has the capacity to cement certain new telehealth services by including them in HHS’ current statutory definition of telehealth services. Currently, CMS’ fee schedule includes provisions for over 100 new telehealth services, which were added as temporary items on the Medicare Telehealth List, through the end of 2023.

Some stakeholders say expanding telehealth may be the solution to ongoing workforce issues on the provider side. Kyle Zebley, vice president of public policy at the American Telemedicine Association, said many beneficiaries have moved from in-person to remote care for care needs that do not require in-person treatment. Zebley said this could be a mid-term or even long-term solution to an ongoing workforce shortage that is overwhelming existing providers.

“You’re not going to efficiently make use of a limited health care workforce — keep in mind, there’s a tremendous lag time, we’re talking about 15 years from now, if we wanted to expand our crop of doctors — you can’t solve the restraints of the system without telehealth,” Zebley said.

While bipartisan support for expanding telehealth remains strong among legislators, some stakeholders believe telehealth expansion will not be formalized unless provisions are included in larger “must-pass” packages. ATA hopes telehealth will be included in President Joe Biden’s budget for fiscal year 2023, which will be released in February, Zebley said.

Zebley said federal legislators must also be presented with a hard deadline to act; recurring deadlines like the 90-day PHE reauthorization process will not be enough to galvanize legislators into action, Zebley said.

“[Stakeholders] need to apply pressure to their Members of Congress, and other policymakers at the federal level, to make sure there’s no backsliding, to make sure they still have access to care where and when they need it,” Zebley said.

At the state level, however, Zebley said steps to expand telehealth are moving significantly more quickly. He said ATA is tracking more than 35 bills that have been introduced since the beginning of the year. He said this is a positive start to the new year, especially after 2021, a year where Zebley said 10 years of progress were made in one — “the most successful year in the history of telehealth,” he said.

Telehealth stakeholders are gearing up for an extended push to cement telehealth’s role in American health care in the year ahead. Last year brought dramatic expansions of telehealth’s breadth and depth, and with pending bipartisan legislation including the Telehealth Extension Act — and a defined end to the COVID-19 public health emergency still uncertain — stakeholders agree the upcoming year promises to be similarly active.

Telehealth stakeholders are pushing for a significant extension of the PHE, which in turn would extend current telehealth regulatory flexibilities, particularly as an increasing number of telehealth studies conducted during the pandemic demonstrate providers’ success at providing remote care. While the conclusion of the PHE will eliminate waivers and undo current Medicare telehealth reimbursement rates, both Congress and CMS have expressed interest in continuing broad access to telehealth.

Extending the public health emergency would allow providers to continue utilizing the telehealth infrastructure implemented throughout the pandemic and would also give stakeholders time to push Congress to pass legislation allowing telehealth care on a more permanent basis, said Krista Drobac, executive director for the Alliance for Connected Care.

Drobac said several studies from the HHS Office of Inspector General documenting telehealth’s successes prove that most concerns with telehealth are unfounded. One study found that telehealth patient-provider relationships have largely remained the same; 84% of Medicare beneficiaries participating in telehealth care have received care from providers with which they had an established relationship prior to the pandemic.

“As demonstrated, beneficiaries and the community do not need arbitrary guardrails like established relationships and in-person requirements to ensure beneficiaries are getting the care they deserve,” Drobac said in an email. “Patients are maintaining their own providers when possible and appropriate. We believe this will continue but as telehealth models evolve, patients should have the choice to see other providers with whom they do not have a previous relationship.”

An additional HHS OIG study found there are still areas of telehealth that could permanently benefit from congressional input.

Statutory barriers including originating site limits and geographic boundaries have been temporarily waived as part of the PHE, meaning many beneficiaries were able to receive care from their homes. The study said that Congress would need to take steps to permanently revise originating site restrictions. It recommended instituting a licensure reciprocity system among providers, which OIG said would help streamline problem-solving.

“CMS plays an important role in facilitating the exchange of information among States to improve the use of telehealth for behavioral health services. Sharing information among States will help ensure that States realize the benefits of telehealth and make informed decisions about how to address challenges with using telehealth,” the study said.

OIG’s study is supported by a recent report from McDermott Will & Emery, which found that telemental treatment flourished during the PHE, particularly as a result of the Consolidated Appropriations Act, which eliminated geographic care restrictions for mental health care. Post-PHE, however, CAA states telemental care must be accompanied by an in-person visit within six months before patients’ first telehealth appointment, a point of significant criticism from both providers and patients.

Stakeholders including the Healthcare Leadership Council and the American Medical Association said they will look to Congress to permanently expand eligibility — including removing geographic and site restrictions and in-person visit requirements — before the public health emergency ends.

“Fortunately, there is overwhelming bipartisan support on Capitol Hill to allow Medicare patients to maintain this benefit, although the potentially significant budget impact of the policy change is raising concerns,” Jack Deutsch, a spokesperson for AMA, said in an email. “Nevertheless, prospects are good for positive action on at least a temporary extension of the expanded benefit this year.”

Likewise, CMS has the capacity to cement certain new telehealth services by including them in HHS’ current statutory definition of telehealth services. Currently, CMS’ fee schedule includes provisions for over 100 new telehealth services, which were added as temporary items on the Medicare Telehealth List, through the end of 2023.

Some stakeholders say expanding telehealth may be the solution to ongoing workforce issues on the provider side. Kyle Zebley, vice president of public policy at the American Telemedicine Association, said many beneficiaries have moved from in-person to remote care for care needs that do not require in-person treatment. Zebley said this could be a mid-term or even long-term solution to an ongoing workforce shortage that is overwhelming existing providers.

“You’re not going to efficiently make use of a limited health care workforce — keep in mind, there’s a tremendous lag time, we’re talking about 15 years from now, if we wanted to expand our crop of doctors — you can’t solve the restraints of the system without telehealth,” Zebley said.

While bipartisan support for expanding telehealth remains strong among legislators, some stakeholders believe telehealth expansion will not be formalized unless provisions are included in larger “must-pass” packages. ATA hopes telehealth will be included in President Joe Biden’s budget for fiscal year 2023, which will be released in February, Zebley said.

Zebley said federal legislators must also be presented with a hard deadline to act; recurring deadlines like the 90-day PHE reauthorization process will not be enough to galvanize legislators into action, Zebley said.

“[Stakeholders] need to apply pressure to their Members of Congress, and other policymakers at the federal level, to make sure there’s no backsliding, to make sure they still have access to care where and when they need it,” Zebley said.

At the state level, however, Zebley said steps to expand telehealth are moving significantly more quickly. He said ATA is tracking more than 35 bills that have been introduced since the beginning of the year. He said this is a positive start to the new year, especially after 2021, a year where Zebley said 10 years of progress were made in one — “the most successful year in the history of telehealth,” he said.

The Senate will consider the Build Back Better Act “very early in the new year so that every Member of this body has the opportunity to make their position known on the Senate floor,” Senate Majority Leader Chuck Schumer writes in letter.

• “We are going to vote on a revised version of the House-passed Build Back Better Act – and we will keep voting on it until we get something done”
• If Senate Republicans “continue to abuse the filibuster and prevent the body from considering this bill, the Senate will then consider changes to any rules which prevent us from debating and reaching final conclusion on important legislation”
• NOTE: Manchin Leaves Democrats Hanging With Biden Bill Rejection