President Trump appeared to extend his pledge not to cut Social Security and Medicare benefits to Medicaid on Friday — a change that could complicate Republicans’ plans for a reconciliation package.
Why it matters: House Republicans are discussing significant cuts to the safety net program to pay for an extension of tax cuts. But Trump, in his remarks, left enough wiggle room to keep the option alive in some form.
What they’re saying: “We’re going to love and cherish Social Security, Medicare, Medicaid,” Trump told reporters Friday in wide-ranging remarks.
Between the lines: A lot obviously depends on the definition of “abuse or waste.”
Yes, but: Much will still come down to how much of the roughly $4 trillion tax cut package Republicans look to offset.
The bottom line: Raymond James analyst Chris Meekins wrote in a note that the definition of “abuse” and “waste” is “really in the eye of the beholder.”
Robert F. Kennedy Jr., President Donald Trump’s nominee to serve as Secretary of Health and Human Services (HHS), appeared before the Senate Finance Committee on January 29 for his confirmation hearing, followed by a courtesy hearing before the Senate Health, Education, Labor & Pensions (HELP) Committee on January 30. The Finance Committee holds the authority to advance the nomination, while the HELP Committee hearing served as an opportunity for senators to further question the nominee without voting on his confirmation.
Kennedy’s testimony covered a range of issues, including his commitment to addressing chronic disease, promoting transparency in healthcare, and reforming the nation’s regulatory and policy approach to public health. While some Republican senators praised his focus on patient empowerment and reducing bureaucratic inefficiencies, Kennedy’s responses to key policy questions—especially regarding Medicare, Medicaid, and vaccines—raised concerns about his preparedness for the role.
The hearings revealed significant gaps in Kennedy’s understanding of fundamental Medicare and Medicaid operations. Key misstatements included:
Kennedy proposed several changes to healthcare payment systems:
Despite the breadth of the hearings, Kennedy did not address several critical policy issues relevant to the healthcare sector:
Sen. Bill Cassidy, a crucial vote on the Senate Finance Committee, remained undecided following the hearings. If the nomination reaches the full Senate, Kennedy could face significant challenges. With most Democrats expected to oppose him, he can afford to lose only a few Republican votes and still be confirmed.
The committee has set a deadline of 5:00 PM on January 31 for additional questions for the record, with responses expected to provide further clarity on Kennedy’s positions and plans. If confirmed, Kennedy would become the 28th Secretary of Health and Human Services.
Robert F. Kennedy Jr., President Donald Trump’s nominee to serve as Secretary of Health and Human Services (HHS), appeared before the Senate Finance Committee on January 29 for his confirmation hearing, followed by a courtesy hearing before the Senate Health, Education, Labor & Pensions (HELP) Committee on January 30.
A congressional bid to trim Medicaid costs by curbing state taxes on health-care providers stands to face pushback from governors over concerns it would shift more of the program’s cost burden to states.
States use taxes on providers such as hospitals and nursing homes to generate state Medicaid funding, which is used to generate federal matching payments to the states. The financing method, which is adopted by 49 states and the District of Columbia, is criticized by some policy observers as a creative maneuver that artificially boosts the amount of funding states receive from the federal government.
Republican members of the House Budget Committee this month circulated a menu of potential spending reform options, one of which would limit Medicaid provider taxes with hopes of yielding about $175 billion in savings.
House Republicans floated the changes for possible inclusion in a reconciliation bill that could help pay for an eventual extension of expiring Trump tax cuts. Lawmakers aim to hash out the details of what will be in the package over the coming weeks.
Other changes include over $2 trillion in cuts to Medicaid through the introduction of a per capita cap, in which states would receive a fixed amount of federal funding on a per-person basis, work requirements, and various other reductions.
However, policy analysts like Matt Salo, former executive director of the National Association of Medicaid Directors, predict that the most aggressive cost-cutting measures like per capita caps will be less likely to make it through the finish line than more modest reforms like reining in provider taxes.
“There will be a very strong motivation to do that. However, I think it will run into equally as aggressive opposition from a lot of very, very, well-connected political stakeholders for whom they simply could not afford to have that money go away like that,” Salo said.
Per capita caps have been singled out by organizations like the National Association of Counties, KFF, and the Center on Budget and Policy Priorities as untenable, largely because the move would force states to set rates well below what’s needed to keep pace with rising health-care costs. Medicaid is already a “lean” program by federal insurance standards, with providers receiving reimbursement at rates over 22% lower than Medicare, based on an analysis of payment rates conducted by the Medicaid and CHIP Payment and Access Commission.
This leaves provider taxes as one of the most likely cost-cutting approaches to make headway with lawmakers, according to Mary Mayhew, CEO of the Florida Hospital Association and former deputy administrator and director of the Center for Medicaid and CHIP Services under the first Trump Administration.
“At the end of the day, regardless of whether it’s a Democratic administration or a Republican administration, there has been a focus on Medicaid spending, at least in terms of how states have drawn down federal funds. I expect that will continue to be part of the equation, Mayhew said.
According to Salo, Medicaid provider taxes have drawn criticism from some stakeholders as contributing to the program’s rising costs due to there being no cap on the amount of federal matching funds a state can theoretically accumulate. The Committee for a Responsible Federal Budget estimates that in 2018, the most recent year for which data is available, provider taxes funded 17% of states’ contributions to Medicaid, equaling $37 billion.
“Whether the state pays a million dollars or the state pays $100 billion, as long as it’s doing so appropriately, the federal government has to put in its share,” Salo said.
Although a recent analysis from the Congressional Budget Office determined that ending this financing scheme could save the federal government billions, David Machledt, a senior policy analyst at the National Health Law Program, cautioned that the move would do more to shift the burden of high health-care costs to states than address the root cause of the problem.
“There’s not a lot of places you can cut Medicaid,” he said. “The options are cutting provider rates, which reduces access; cutting eligibility, or cutting optional services. And those optional services are really important—they include long-term community-based care for people with disabilities and other things like that. So it doesn’t end in a good place when you shift the cost onto states,” Machledt said.
Machledt says some of the loudest opposition to a ban on provider taxes could come from Republican-led non-expansion states such as Texas that lean more heavily on provider taxes to fund their Medicaid program. Those states often have greater populations relying on care from a shrinking pool of rural hospitals that are more vulnerable to cuts in Medicaid reimbursement.
For example, a 2020 proposed rule that would have tightened restrictions on provider taxes was eventually pulled after governors expressed concern that the rule would “result in decreased access to care for many vulnerable Americans.”
This time around, Mayhew expects renewed opposition from states to prevent a downstream increase in health-care costs.
“At the end of the day, it’s about how well these Medicaid programs throughout the country are meeting the needs of the individuals who depend on the program,” said Mayhew.
“This is at the heart and should be front and center in all of these discussions,” she added.
Providers are bypassing Medicare requirements to set up scaled-down hospital-at-home programs they say save money by reducing hospitalizations.
Ochsner Health, Los Angeles General Medical Center and TRU PACE in Colorado are among those offering home-based hospital programs that are less expensive and quicker to set up than the Acute Hospital Care at Home program, which has an uncertain future. Providers say the programs free up hospital beds for sicker patients and save money by keeping some patients in risk-based care plans out of the hospital. However, most of the in-home hospital programs don’t have the rigorous guardrails mandated in the Medicare waiver program.
Delivering hospital-level care in the home makes sense if patients prefer it, it’s safe and it’s cost-effective, said Matthew Notowidigdo, a healthcare economics professor at the University of Chicago’s Booth School of Business who studies hospital-at-home. However, he said the savings generated by these programs should not dictate where a patient receives care.
“There is always a concern that the insurers are going to respond to those incentives and try to manipulate the system in a way that is not great for patients,” Notowidigdo said.
The Medicare Acute Hospital Care at Home program requires hospitals to send nurses to patients’ homes twice a day, remotely monitor them at all times, provide meals and provide some nonmedical services for two to five days. Medicare reimburses at the same rate for hospital-at-home as it does for a facility stay. The Centers for Medicare and Medicaid Services has approved waivers for nearly 380 hospitals, but some haven’t launched hospital-at-home programs because they can be costly and hard to scale.
Those were among the reasons New Orleans-based Ochsner Health opted not to apply for the Medicare waiver, said Dr. Logan Davies, medical director of hospital access and throughput at Ochsner Medical Center. Instead, the nonprofit health system partnered last year with myLaurel, a New York-based home healthcare company, to offer its own hospital-at-home program called Acute Care at Home.
Davies said approximately 500 patients enrolled in the program last year and they had fewer emergency room visits and hospital admissions, which resulted in a $1,400 return on investment per enrollee.
Patients enrolled in Ochsner’s accountable care organization are eligible for the program and get referred to it from the emergency room. Then myLaurel sends a nurse or paramedic to the patient’s home within a day of admission and provides additional visits over a 15-day period, depending on the patient’s condition. Patients also receive supplemental telehealth support and prescriptions.
myLaurel bills Ochsner a flat fee for the first home visit and bundles fees for other services based on a patient’s length of stay, said Lisa Sasko, myLaurel’s chief growth officer.
Ochsner launched the program in March at its flagship medical center in New Orleans and expanded it to three more hospitals over the last two months. Davies said the system’s program is more flexible, and allows the system to provide only the services patients actually need.
“We can gauge what the patient’s clinical needs are and spec out a care delivery program that is specific to that patient’s condition,” Davies said.
The Medicare waiver’s rigid requirements — particularly the twice-daily nurse visits —prompted Los Angeles General Medical Center to develop its all-virtual Safer@Home program in 2020, said Dr. Brad Spellberg, the hospital’s chief medical officer.
“We don’t have enough staff to be sending them all over the county of Los Angeles,” Spellberg said.
Safer@Home provides home-based hospital care to eligible patients, who are mostly uninsured or on Medicaid. Patients receive virtual clinical visits, remote vital sign monitoring and oral or inhaled medications rather than intravenous therapy. Nurses and physicians are on hand for virtual care 12 hours a day, 7 days a week. Patients are released from the program when their conditions either improve or escalate, requiring in-person care.
In a study published last year in JAMA Network Open, Los Angeles General found patients enrolled in Safer@Home were released from care sooner than similar patients with in-facility stays and were less likely to return to hospital emergency rooms within 30 days of discharge.
Spellberg said Los Angeles General enrolls about three patients a day on average in the program and bears all costs for its patients. He said even with that expense, the health system still comes out ahead financially.
“It is expensive to be in the hospital and Medicaid reimburses below the cost of a hospital stay, so it is actually a cost savings for us to send people home if they have Medicaid,” said Spellberg. “We need those beds for patients with traumas, heart attacks and strokes.”
Another limitation of the Medicare waiver is that only hospitals can participate in Acute Hospital Care at Home.
DispatchHealth, an in-home medical treatment company, lets value-based care providers and health plans admit patients directly to its Hospital-Alternative Care program without visiting a hospital. The Denver-based company offers the program in seven mostly western cities and has treated approximately 3,500 patients since it launched in 2019, said a spokesperson.
“Our readmission rate is 8.4% where the industry average is about 20%,” Diana Verrilli, DispatchHealth’s chief growth officer, said. “From a payer lens that is significant in terms of the ability to keep that patient out of the hospital for any exacerbation that they may have.”
Patients receive either in-person or virtual nurse visits daily, remote monitoring, lab work, intravenous medications, meals and physical therapy for up to 30 days at home.
DispatchHealth charges value-based care organizations and health plans a negotiated rate for an entire episode of care based on the patient’s condition, said Verrilli.
TRU PACE in Lafayette, Colorado, has been using the Hospital-Alternative Care program for about four years for some elderly adults in the PACE program. TRU PACE takes on full-risk for Medicare and Medicaid dually-elgible older adults who get health services at home and in a neighborhood center. The nonprofit could not provide an estimate on how much the Hospital-Alternative Care program has saved the organization, but medical director Dr. Lisa-Marie Brown said it has resulted in fewer hospitalizations for patients with congestive heart failure, chronic obstructive pulmonary diease and other infections.
“Sometimes patients are kept [in the hospital] longer than they need to be and they can decline because they aren’t in their own beds or their own environment. There is also increased risk for delirium,” Brown said.
Ochsner Health, Los Angeles General Medical Center and TRU PACE in Colorado are among those offering home-based hospital programs that are less expensive and quicker to set up than the Acute Hospital Care at Home program, which has an uncertain future.
Health-minded lawmakers are in conversations with House leadership on reviving health legislation that failed to make it into a December government funding bill.
Rep. Buddy Carter (R-Ga.), chair of the Health subcommittee on Energy and Commerce, told reporters on Thursday he’s in conversations with leadership to pass the more than 500-page health package, either in a stand-alone vote or included in a reconciliation package.
“I’d like to do it as a standalone, get it done, and have it behind us, personally,” Carter said. “If we did it through suspension, we could probably put it on the floor. I mean, it was an agreement. It was bipartisan, bicameral.”
The large health care package that was eventually stripped out of the end-of-the-year government spending deal held a number of notable provisions, including language that would rein in pharmacy benefit managers for the first time, boost Medicare doctor payments, and extend telehealth services for multiple years. However, the package was ultimately stripped out and replaced with a standard three-month extension of funding after President-elect Donald Trump rejected the bipartisan deal with Democrats, and made additional demands.
Rep. Greg Murphy (R-N.C.), chair of the Doctors Caucus, confirmed there have been conversations about putting the package up for a suspension vote.
“Given the bipartisan nature of” PBM reform, “and a few other things, I think it would pass,” Murphy told Bloomberg Government in a written statement Thursday. “Obviously, it will be up to the Speaker.”
The December-passed government funding deal extended existing health authorities for three months, but stripped out principal health provisions, such as a regular “doc pay fix” provision that would’ve staved off a 2.8% Medicare payment cut for doctors that took place at the beginning of January. Murphy had previously told Bloomberg Government he secured an agreement with the Trump transition team to include a retroactive “fix” in the next government funding deal.
A spokesperson for Speaker Mike Johnson did not immediately respond to a request for comment.
House Energy and Commerce Chair Rep. Brett Guthrie (R-Ky.) had told reporters Jan. 3 the policies in the killed health package are “alive again.” Lawmakers, however, are still trying to find the right vehicle for it, with reconciliation measures being a possibility.
The collapse of the continuing resolution has seriously threatened an elaborately negotiated health care package that touches virtually every medical industry.
Why it matters: After weeks of intense bipartisan and bicameral talks, and months of laying the groundwork, the package’s major reforms, reauthorizations of existing laws and extensions of funding streams could all be scrapped.
Driving the news: The sources we talked to today do not see a clear path forward for the health care package, and no one’s sure what will happen.
What they’re saying: “Members got greedy and tried to hang too many ornaments on the tree; now it seems to have fallen over,” Raymond James analyst Chris Meekins told Axios.
Options for what happens next include a pared-down CR with some disaster relief for farmers and language raising the debt ceiling, as President-elect Trump is insisting.
Friction point: Don’t discount that Democrats will likely still need to deliver some votes on any compromise, considering the unruliness and potential defections of the House Republican conference and the 60-vote threshold in the Senate.
If another bipartisan compromise emerges, that would leave some opportunity for health items to catch a ride.
What’s next: If the health package is dropped, another chance could arise in March if there is another government funding bill. But it’s unclear if the odds would be any better, or if priorities shift.
Hospitals dodged the most substantial efforts in the year-end spending package to reform their industry, but advocates tell Peter the door has at least been cracked opened by a limited measure on outpatient billing.
Why it matters: After years of focusing on drug costs, this Congress started to train more attention on hospitals, which constitute a much larger share of U.S. health spending.
Driving the news: The CR includes a measure that would require off-campus hospital outpatient departments to have a unique identifier number, known as an NPI.
What they’re saying: The NPI provision “is a sign that a small victory can be won,” said Sophia Tripoli, senior director of health policy at Families USA.
Between the lines: Although hospitals opposed the NPI provision, site-neutral was more of an industry focus and a much bigger threat because of the way it addressed how hospital-owned providers charge Medicare more for the same services that independent doctors deliver in their offices.
Still, hospitals realize they need to remain on guard heading into next year.
The big picture: Hospitals are a powerful political force, given that they’re major employers in many members’ districts.
The other side: Hospitals argue that site-neutral payments do not account for higher costs at hospital outpatient departments and would especially harm rural areas — a particularly potent potent argument in the Senate.
What’s next: Backers of hospital cost reforms are hoping Congress will take broader action on site-neutral next year.
As 2024 comes to a close, we are looking ahead to the 119th Congress and opportunities for our clients to engage with their federal representatives and other decision makers in Washington, DC.
• View House and Senate calendars
• Questions? Contact Tony Wyatt: anthony@wscdc.com
Congressional Swearing-In Day Friday, January 3rd, 2025 | 9:30 AM – 3:00 PM U.S. Capitol, Washington, D.C.
Join us for a day of celebration as Members of the 119th Congress are sworn into office. Many lawmakers welcome visitors for informal open house style receptions throughout the day in their Capitol Hill offices. WSC will provide a schedule of events as details emerge.
Dinner Reception for Congressman Tom Kean (R-NJ-07) Tuesday, January 7th, 2025 | 5:00 PM – 8:00 PM Winning Strategies, 409 7th St NW Suite 450
Garden State Inaugural Gala Sunday, January 19th, 2025 | 7:00 PM – 11:00 PM Grand Hyatt Washington, 1000 H Street Northwest Washington
Join the New Jersey State Society at the Garden State Inaugural Gala for the best of New Jersey’s food and entertainment. Don’t miss this chance to celebrate with fellow New Jerseyans in the heart of the nation’s capital. Register here
Reception for Congressman-Elect Herb Conaway (D-NJ-3) Wednesday, January 22nd, 2025 | 6:00 PM – 8:00 PM Winning Strategies, 409 7th St NW Suite 450
Reception for Congressman-Elect Nellie Pou (D-NJ-9) Thursday, January 23rd, 2025 | 5:30 PM – 7:30 PM Winning Strategies, 409 7th St NW Suite 450
Reception for Congressman Jeff Van Drew (R-NJ-2) Wednesday, February 5th, 2025 | 11:00 AM – 2:00 PM Capitol Hill Club, 300 First St SE
The Walk to Washington & Congressional Reception February 6th – 7th, 2025 Hosted by: New Jersey Chamber of Commerce
After a five-year hiatus, the 84th Walk to Washington will feature more networking opportunities and fewer speeches, bringing together 900 New Jersey leaders on a chartered Amtrak train traveling from Newark through Wilmington, DE, to Washington, D.C. Register here
Related Walk to Washington Events:
WSW-PPAG NJ Chamber of Commerce Dinner Thursday, February 6th | 7:00 PM – 9:00 PM The Palm, 1225 19th St NW
Irish Breakfast Reception Friday, February 7th | 8:00 AM – 10:00 AM The Dubliner, 4 F St NW
Reception for Congressman Rob Menendez (D-NJ-8) Thursday, March 6th, 2025 | 12:00 PM – 1:00 PM Winning Strategies, 409 7th St NW Suite 450
We look forward to seeing you at these events! If you have any questions or need additional details, please don’t hesitate to reach out.
Key Updates:
• 2025 Congressional calendars now available
• Multiple January events including Congressional Swearing-In Day
• Walk to Washington returns in February after 5-year hiatus
• Several opportunities to meet with New Jersey delegation members
Language addressing insurer prior authorizations in Medicare Advantage that was holding up a year-end health care deal is likely to be dropped by negotiators.
Why it matters: Insurers’ requirements for their sign-off on some physician-ordered care is a big tension point with patients and providers, and measures to streamline the system have been a focus of Congress and the Biden administration.
Inside the room: One sticking point is whether to codify a prior authorization rule the Biden administration issued this year, or to include a prior authorization reform bill known as the Improving Seniors’ Timely Access to Care in the package.
Friction point: There’s a slight difference in transparency requirements for insurers, and where information on prior authorization denials and related information would be posted.
What they’re saying: Over the weekend, Democrats characterized Republicans’ efforts as “watering down” the prior authorization requirements.
Context: The bill has the bipartisan support of majorities in both the House and Senate.
Congressional Republicans made Democrats an offer on a major package of year-end health provisions this week, sources say.
Why it matters: The large-scale offer shows that momentum remains behind finishing a major health package this year, though a deal is far from certain.
What’s inside: The offer includes additional health policies beyond what are regarded as “must do” extenders like community health center funding and telehealth flexibilities.
The big picture: Despite the offer, there is a long way to go. Some sources still expected that negotiators will run out of time and have to fall back on a three-month bare-bones extension of expiring programs.
The legislation would limit prices and ban hospital facility fees for dozens of health services deemed safe to get in a doctor’s office.
State lawmakers are moving to cap prices for dozens of routine health care services, saving New Yorkers an estimated $1 billion annually.
New legislation sponsored by state Sen. Liz Krueger and Assemblymember Chantel Jackson is designed to eliminate massive price discrepancies between hospital-owned facilities and doctor’s offices for the same services.
“The affordability of health care shouldn’t depend on what building it’s delivered in,” Krueger, whose Manhattan district includes many of the city’s biggest hospitals, said in a statement. “We cannot let big hospitals become the next Big Oil or Big Steel, with monopoly control over everything and people forced to pay more for the same basic procedure.”
If passed, the “Fair Pricing Act” would prevent most types of health care facilities from charging more than 150 percent of the Medicare rate for a specified set of services, such as vaccinations, MRIs, chemotherapy infusions and IV hydration. Public, safety-net and rural hospitals and federally qualified health centers would be exempt.
The prices of those services can vary immensely, according to 2022 claims data from the health fund for building service workers union 32BJ, which worked on the legislation. A flu shot in a doctors office averaged $23, compared with over $183 in a hospital’s outpatient center, according to the data. An initial, one-hour chemotherapy infusion averaged $410 in an office setting but $2,650 in hospital-owned outpatient facilities.
“The data’s pretty damning,” Claire Brockbank, director of policy and strategy for union’s benefit funds, said in an interview.
The bill’s impact could be far-reaching: Brockbank said it was written to apply to New Yorkers on most kinds of insurance, as well as patients paying out of pocket.
More context: Such price variations have caught the attention of policymakers across the U.S., as hospitals increasingly buy up local medical practices and hike their prices, in part by tacking on a so-called “facility fee” intended to help cover overhead.
New Yorkers would have saved more than $1 billion in 2022 if select services performed in hospital settings were paid the commercial insurance rate for doctor’s offices, according to research presented at a conference on hospital prices hosted by the union’s health fund earlier this year.
Sens. Bill Cassidy (R-La.) and Maggie Hassan (D-N.H.) released a bipartisan plan earlier this month to cut Medicare payments to hospitals’ outpatient departments to the level paid to independent practices.
New York lawmakers appear to be leading the way among state legislators with the introduction of their site-neutral legislation.
The bill is likely to provoke the state’s powerful hospital industry, which lobbied heavily against a prior legislative effort to ban facility fees. By the time that bill passed in 2021, it had been watered down to apply only to preventive services and otherwise required that hospitals simply give patients advance written notice of any facility fees not covered by their insurance.
The hospital industry insists the higher rates and facility fees are justified because they are subject to more stringent safety requirements and typically care for more complex patients.
What’s next: Krueger and Jackson’s bill will be taken up when the state Legislature reconvenes in 2025.
Acquisitions in the home care industry are poised to take off in 2025, fueled by lower interest rates and President-elect Donald Trump’s incoming administration.
Large home care providers including Addus HomeCare, Aveanna Healthcare and the Pennant Group said during third quarter earnings calls they would aggressively look for deals next year to gain scale and better compete for hospital referrals. The interest in deal-making is an about-face for an industry that has been burdened by labor shortages, rising costs and battles with Medicare Advantage organizations over better rates.
“[Consolidation] is definitely about scale and volume in exchange for rates,” said Tyler Giesting, director of healthcare and life sciences at advisory firm West Monroe. “As they grow, it also improves their top line so they can invest in capabilities they need to run the business in a way that the MA plans require, such as reporting on value-based care measures.”
The appetite for acquisitions spans home healthcare, personal home care services, private duty nursing and hospice companies.
Jeff Shaner, CEO of Aveanna Healthcare, told analysts during an earnings call the company was “revving up the M&A engine” to acquire home health, private duty nursing and hospice organizations in 2025. The Atlanta-based company operates in 22 states.
The Pennant Group CEO Brent Guerisoli said the Eagle, Idaho-based company wants to expand its footprint in home health. The company offers home health and hospice services across 13 mostly western states. In August, the Pennant Group acquired assets in Oregon, Washington and Idaho from Signature Healthcare at Home for $80 million.
“We are an opportunistic company and we are going to grow where we have strength and where there is great opportunity,” Guerisoli told analysts during an earnings call.
Addus HomeCare CEO Dirk Allison also told analysts during an earnings call the Frisco, Texas-based home care company would be looking to buy home health and personal care businesses after it completes the $350 million acquisition of Gentiva’s home care business, which is expected by the end of the year.
Addus HomeCare offers non-medical personal care, home health and hospice services across 22 states. Allison said the company’s deal pipeline for 2025 is more robust than in previous years.
“Over the past couple of years, the acquisition opportunities that meet our strategic objectives have been somewhat limited due to some unfavorable market conditions. However, we are starting to see a few more opportunities that could strengthen all three of our segments in markets where we currently operate,” Allison said.
The renewed interest in deal-making could revive a buying frenzy in home care that began in 2021 and continued into 2023. Humana purchased Kindred at Home for $8.1 billion in 2021 and later rebranded it CenterWell. In February 2023, UnitedHealth Group acquired LHC Group for $5.4 billion and struck a deal to buy Amedisys for $3.3 billion four months later.
But higher interest rates, rising labor costs and the Justice Department’s scrutiny of the UnitedHealth-Amedisys deal put a damper on acquisitions in the second half of 2023 and the first half of this year, analysts said. In the first three quarters of 2024, home care acquisitions declined 25% compared to the same period last year, according to healthcare advisory firm Mertz Taggart.
In the past few months, lower interest rates have helped spark renewed interest in acquisitions, Mertz Taggart managing partner Cory Mertz said in a third quarter industry report.
The Trump administration and a Republican-controlled Congress could also help drive deals in the new year, Andrew Woods, chairman of consulting firm Liberty Partners Group told members of the National Alliance for Care at Home during a recent webinar. Woods said both might see home care as a less expensive alternative to facility-based care and encourage policies that drive more care to where people live.
“They understand, if they are old school Republicans, that deficits and debt matter. They’ll want to do everything they can to shore up the Medicare trust fund, not only with efficient services like home health, but other services in healthcare that can serve Baby Boomers,” Woods said.
The Justice Department’s lawsuit to block the bid from UnitedHealth Group’s Optum to buy Amedisys is a wild card that could disrupt deals in 2025, though some analysts don’t expect the suit will continue after President-elect Trump takes office.
Giesting also said the lawsuit could be dismissed by a new administration — and added most home care companies probably won’t make deals large enough to raise antitrust concerns in a highly fragmented industry.
Addus HomeCare, Aveanna and the Pennant Group did not respond to requests for comment on whether the lawsuit would affect their acquisition plans.
Large home care providers including Addus HomeCare, Aveanna Healthcare and the Pennant Group said during third quarter earnings calls they would aggressively look for deals next year to gain scale and better compete for hospital referrals.
Acute care hospitals received over $190 million in improper Medicare payments for outpatient hospice services, government watchdogs say.
An audit report released Monday by the US Department of Health and Human Services Office of Inspector General sampled over $283.7 million in Medicare Part B payments for outpatient services furnished by acute care hospitals to hospice patients from 2017 through 2021. The audit found that 70 out of the 100 services sampled by the agency did not comply with federal requirements.
The OIG noted in the audit that payments were made to acute-care hospitals for palliative care that were “already covered as part of the hospices’ per diem payments and should have been provided directly by the hospices or under arrangements between the hospices and acute-care hospitals.”
The OIG claims that this occurred due to factors including not having enough details in Medicare guidance, Medicare contractors not conducting prepayment and post-payment reviews, and not having a properly designed prepayment edit process.
Based on the sample, the OIG estimates that Medicare “could have saved $190.1 million” if “payments had not been made to acute-care hospitals that provided outpatient services to hospice enrollees for services related to the palliation and management of the enrollees’ terminal illnesses and related conditions.”
Additionally, the OIG estimated that enrollees “could have saved $43.6 million in deductibles and coinsurance that may have been incorrectly collected.”
The OIG made six recommendations to the Centers for Medicare & Medicaid Services, including improving system edit processes; educating hospitals to discern whether outpatient services palliated or managed conditions related to enrollees’ terminal illnesses; and clarifying Medicare guidance to specifically mention “related conditions.”
The CMS agreed with five of six recommendations but did not agree with the OIG’s first recommendation. The agency said it was concerned about the feasibility and effectiveness of the OIG’s proposed modifications to the system edits described in the report.
After reviewing the CMS’s comments, the OIG updated its first recommendation to the CMS’s system edit processes to help reduce improper payments in the future.
Sens. Bill Cassidy and Maggie Hassan are set to release a framework for Medicare site-neutral payment reforms as early as Friday.
Why it matters: Changes to the way hospitals are paid for outpatient procedures could be on the agenda in a lame duck session, and this framework fleshes out more options.
What’s inside: The framework is slated to be more expansive than some previous site-neutral policies and could look similar to what’s been proposed in the June 2023 MedPAC report.
While the hope is to get the framework out by Nov. 1, the timeline could slip. The goal is to release it before the election though, sources said.
The big picture: Hassan has previously been a leader on site-neutral payments with her SITE Act, but Cassidy’s involvement adds an influential Republican, who could potentially be HELP chair next year.
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