States Address Healthcare Issues | |
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As the 2024 election year unfolds, healthcare remains a top priority for voters across the United States. Frustrated by gridlock at the national level, many are turning their attention to state governments, where a variety of efforts are underway to tackle pressing healthcare issues. Governors and state legislatures are stepping up to address a wide range of health-related challenges, both long-standing and emerging.
Beyond the publicized debates over reproductive rights, pharmacy benefit managers, and pharmaceutical pricing, states are pursuing innovative strategies in several areas to improve healthcare access, quality, and affordability.
State legislatures are prioritizing the public health workforce by investing in loan forgiveness programs, workforce development, and licensing reforms to address critical staffing shortages. Mental health initiatives are gaining momentum as some states sidestep federal policy in exploring new treatment methods like psilocybin for conditions such as PTSD and depression. Meanwhile, states are responding to the opioid crisis with harm reduction measures and setting prescribing standards for high-risk substances.
Efforts to modernize data systems and enhance privacy protections are also underway, with states enacting stricter regulations to safeguard personal health information and improve interoperability between health systems. Health equity remains a central focus, with initiatives aimed at improving rural healthcare access and supporting community health programs that address social determinants of health.
Lastly, several states are pushing for greater healthcare price transparency through all-payer claims databases.
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Policy Watch: Applied Policy's Summaries of
the Most Recent Federal Rules Impacting Healthcare
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CMS Finalizes FY 2025 Inpatient Payment Policies for Hospitals and New Mandatory Payment Model
By Will Henkes
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On August 1, 2024 the Centers for Medicare & Medicaid Services (CMS) issued the fiscal year (FY) 2025 Hospital Inpatient Prospective Payment Systems (IPPS) for Acute Care Hospitals and the Long-Term Care Hospital (LTCH) Prospective Payment System final rule.
The rule finalizes proposals to:
- Increase hospital operating payment rates by 2.9 percent
- Continue the hospital low wage index policy and update labor market areas
- Continue to calculate disproportionate share hospital payments from three years of uncompensated care data
- Establish a separate IPPS payment for establishing and maintaining access to essential medicines for small independent hospitals
- Change the severity designation of inadequate housing and housing instability Z codes
- Make changes to criteria for new residency programs and distribute 200 additional residency slots as required by the Consolidated Appropriations Act, 2023
- Make several changes to quality reporting programs
- Enhance data reporting requirements for hospitals and critical access hospitals (CAHs) to address respiratory illnesses
- Change New Technology Add-On Payment (NTAP) policies
- Increase Long-Term Care Hospital (LTCH) payments by 2.0 percent
- Continue delay of the three-way severity split for MS-DRGs
Additionally, CMS finalizes the Transforming Episode Accountability Model (TEAM), a mandatory episode-based payment model with the goal of improving patient care after surgery. The model’s start date is January 1, 2026.
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CMS Releases Final Rule for Skilled Nursing Facilities, Increasing Payment Rates and Proposing Quality Changes
By Will Henkes
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On July 31, CMS issued the (FY) 2025 Prospective Payment System (PPS) and Consolidated Billing for Skilled Nursing Facilities (SNFs) final rule.
The rule finalizes proposals to:
- Increase SNF PPS payment rates by 4.2 percent
- Rebase and revise the SNF market basket using a 2022-based market basket
- Update Patient Driven Payment Model (PDPM) code mapping
- Add four new social determinants of health (SDOH) items and modify one item for the SNF Quality reporting program (QRP)
- Require SNFs participating in the SNF QRP be subject to data new validation processes
- Add a new measure selection, retention, and removal policy to the SNF Value-Based Purchasing Program (VBP)
- Expand penalties for health and safety deficiencies
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CMS Finalizes FY 2025 Payment Update and Quality Changes for Inpatient Psychiatric Facilities
By Caitlyn Bernard
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On July 31, CMS issued the (FY) 2025 Inpatient Psychiatric Facility Prospective Payment System (IPF PPS) and Quality Reporting (IPFQR) Updates final rule.
In this rule, CMS finalizes proposals to:
- Increase IPF PPS payment rates by 2.8 percent
- Revise the patient-level IPF PPS adjustment factors and increase electroconvulsive therapy (ECT) payment per treatment
- Update the IPF wage index based on revised census data
- Phase out the rural adjustment for IPFs that transition from rural to urban status
- Clarify the eligibility criteria for an IPF to file all-inclusive cost reports
- Adopt one new measure under the IPF Quality Reporting (IPFQR) Program
CMS is not finalizing its proposal to require IPFs to submit patient-level quality data quarterly. Data reporting for these measures will remain annual.
The agency also responds to feedback to inform development of a standardized IPF Patient Assessment Instrument and future revisions to the IPF PPS facility-level adjustments.
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CMS Increases IRF Payments by 3.0% and Expands Social Determinants of Health Reporting
By Meghan Basler
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On July 31, CMS released the (FY) 2025 Inpatient Rehabilitation Facility (IRF) Prospective Payment System (PPS) final rule.
In this rule, CMS:
- Increases IRF payment rates by 3.0% percent
- Finalizes updates to case-mix group (CMG) and average length of stay (ALOS) values
- Maintains outlier payments at 3% of total payments
- Updates the IRF PPS wage index using the latest core-based statistical areas (CBSAs) from the 2020 Decennial census
- Establishes a phase-out plan for rural adjustments for IRFs transitioning to urban status
- Updates the IRF Quality Reporting Program (QRP) with new SDOH assessment items
- Acknowledges comments submitted in response to requests for information on IRF QRP future measure concepts and the development of an IRF QRP star rating system
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CMS Finalizes FY 2025 Payment Update for Hospices
By Emma Hammer
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On July 30, 2024, CMS issued the (FY) 2025 final Hospice Wage Index, Payment Rate Update, and Quality Reporting Requirements rule.
In this rule, CMS finalizes proposals to:
- Update hospice payment by 2.9 percent
- Update the hospice wage index based on revised census data
- Implement the Hospice Outcomes and Patient Evaluation (HOPE) instruments, in addition to other quality measures updates and
- Make technical changes to hospice Conditions of Participation and changes to regulatory text regarding election of hospice care
CMS also responds to feedback on a payment mechanism for high intensity palliative care services.
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HHS Proposes Changes to Increase Interoperability and Modernize Public Health IT
By Will Henkes
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On July 10, the Office of the National Coordinator for Health Information Technology (ONC) released the Health Data, Technology, and Interoperability: Patient Engagement, Information Sharing, and Public Health Interoperability (HTI-2) proposed rule, which would implement provisions of the 21st Century Cures Act.
This proposed rule was then released by the US Department of Health and Human Services (HHS) on the Federal Register on July 24. This proposed rule follows the HTI-1 final rule, which was effective on February 8, 2024, and continues the work that HHS has done to improve information sharing and interoperability across the healthcare system.
Among other things, this proposed rule seeks to:
- Enhance information blocking regulations, including the addition of a new exception designed to protect actors from legal action against lawfully provided reproductive healthcare
- Tie certification requirements to United States Core Data for Interoperability Version 4 (USCDI v4), which includes new data elements to better capture patient characteristics
- Modernize public health information technology (IT)
- Adopt newer versions of the following minimum code sets: Laboratory tests, Problems, Medications, Immunizations, Race and Ethnicity, Sex, Sexual orientation and gender information, and Social, psychological, and behavioral data
- Improve existing APIs through new certification requirements, which would improve patients' access to information and help streamline the electronic prior authorization process
Interested parties have until October 4, 2024, to submit comments.
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MEDCAC's Consideration of Diabetes Devices
Prompts Scrutiny from Advocacy Groups
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CMS is expected to weigh recommendations from the Medicare Evidence Development and Coverage Advisory Committee (MEDCAC) in establishing guidelines for clinical evidence for devices for the self-management of diabetes for Medicare beneficiaries. Meanwhile, a group of 28 non-diabetes organizations has questioned CMS’s reasons for convening the May meeting at which MEDCAC considered the devices.
MEDCAC’s role and authority
Established in 1998 and originally named the Medicare Coverage Advisory Committee (MCAC), MEDCAC’s primary purpose is to provide CMS independent guidance and expert advice on specific clinical topics. It supports the evidence-based determination process for Medicare’s coverage policies, helping CMS decide which medical items and services meet the standard of being reasonable and necessary for coverage under Medicare.
Importantly, MEDCAC does not make coverage decisions. Its charter emphasizes the committee’s role in supplementing CMS’s internal expertise by enabling an unbiased and contemporary deliberation of "state-of-the-art" technology and science.
Questioning CMS's purpose for convening MEDCAC
In announcing that MEDCAC would meet on May 21, CMS stated that the committee was being called to “examine what clinical endpoints should be of interest to CMS in studies of new devices for self-management of type 1 and insulin-dependent type 2 diabetes in older adults.” Those questioning the purpose for the meeting contend that MEDCAC was convened as a step towards restricting Medicare beneficiaries’ access to devices approved by the Food and Drug Administration.
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The Debate over Patent Thickets | |
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In July, the Senate unanimously passed legislation limiting the number of patents drugmakers can assert for a single product. Touted as an important step toward improving the affordability of medications, the legislation has highlighted the ongoing debate over "patent thickets" in drug manufacturing.
The bipartisan Affordable Prescriptions for Patients Act of 2023 (S.150) was introduced by Senators John Cornyn (R-TX) and Richard Blumenthal (D-CT). The bill, which Cornyn says will prevent drug manufacturers from "gaming the system," targets anticompetitive behaviors by allowing the Federal Trade Commission to challenge pharmaceutical companies that use multiple patents to extend drug exclusivity.
Stakeholders remain divided on the issue. Some assert that complex webs of overlapping patents stifle competition and inflate drug prices. Others argue that “patent thickets” are only a political talking point and that patents are essential to product innovation.
What is a patent thicket?
There is neither a universally recognized nor a legal definition of “patent thicket.” The term can be traced to the 1970s when SCM Corporation accused Xerox of accumulating numerous patents for plain paper copying machines and stifling competition by making it difficult for other companies to navigate the technology landscape without infringing patents.
Today, the term patent thicket is used in two ways. It can refer to multiple parties owning overlapping patent rights on a single product, creating high transaction costs and coordination challenges for competitors. Alternatively and most frequently, it describes and indicts a manufacturer’s strategy of amassing multiple patents related to a single product.
Continuation or “follow-on” patents are typically granted based on "terminal disclaimers,” which specify that they will expire at the same time as the original patent. However, critics argue that a manufacturer’s strategic accumulation of “often meaningless patents” complicates the development of competing products or generic alternatives, effectively extending a patent holder’s monopoly.
By contrast, some manufacturers of drugs and biologics contend that referring to patent thickets has become a politically expedient oversimplification of a complex issue. They maintain that multiple patents—which may be specific to different formulations or delivery methods—are part of reasonable periods of exclusivity.
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'Evidence to Transform Care'
NVHPF's Conversation with AHRQ Leadership
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On July 17, the Northern Virginia Health Policy Forum hosted Arlene Bierman, M.D., M.S., Chief Strategy Officer at the Agency for Healthcare Research and Quality (AHRQ), in conversation with Jim Scott, President and CEO of Applied Policy.
Dr. Bierman began with a slide presentation outlining AHRQ’s mission and work. The agency, which is celebrating its 35th anniversary, is part of the U.S. Department of Health and Human Services (HHS). It produces “evidence to make healthcare safer, higher quality, more accessible, equitable, and affordable,” working with partners within and outside of HHS to ensure that this evidence is understood and used effectively.
AHRQ emphasizes the importance of person-centered care, which prioritizes individuals' values and preferences and supports their realistic health and life goals. Dr. Bierman characterized this approach as essential in the provision of high-quality, coordinated, and integrated care.
AHRQ also offers numerous funding opportunities for health services research. These include a current special emphasis notice (SEN) for health services research to improve care for older adults, focusing on developing, implementing, evaluating, and scaling person-centered models of care to optimize physical and mental health, functional status, and well-being. Dr. Bierman encouraged those interested in research, especially research aimed at advancing the science of primary care, to visit the AHRQ website for information on this and other programs.
Watch higlights of the event below or watch the program in its entirety here.
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Sabrina Luther Joins Applied Policy
as Health Policy Associate
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Applied Policy COO John Voorhees announced that Sabrina Luther, who started with the company as an intern, accepted a full-time position with Applied Policy effective August 1.
In her new role as a Health Policy Associate, Luther will support Applied Policy’s durable medical equipment and medical diagnostics clients through health policy research and analysis.
Luther holds a Bachelor of Arts from the University of Delaware, where she majored in Biology and Liberal Studies.
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Voorhees observed that Luther also studied at Sidney Kimmel Medical College at Thomas Jefferson University before choosing to focus on policy.
“Sabrina’s advanced understanding of clinical issues, experience in qualitative and quantitative research and analysis, and passion for healthcare policy and innovation align perfectly with Applied Policy's mission,” said Voorhees. “We are thrilled to welcome Sabrina to our team full-time. Her talent and enthusiasm have already made a significant impact, and we look forward to her continued contributions."
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On the Docket/Under Review | |
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Applied Policy is following these rules under review at the Office of Management and Budget:
- Occupational Exposure to COVID-19 in Healthcare Settings
- Healthcare System Resiliency and Modernization (CMS-3426)
- Misclassification of Drugs, Program Administration and Program Integrity Updates Under the Medicaid Drug Rebate Program (CMS-2433)
- Administrative Simplification: Modifications to NCPDP Retail Pharmacy Standards (CMS-0056) (CMS-0056)
- HHS Notice of Benefit and Payment Parameters for 2026 (CMS-9888)
See all rules under OMB review here.
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Insight Joke of the Month for August | |
Why did the microbe cross the microscope? | |
Questions, comments, or concerns? Please contact us at news@appliedpolicy.com | | |
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Applied Policy, L.L.C., is a health policy and reimbursement consulting firm strategically located minutes from Washington, D.C.
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