Attached are the lists of the newly elected congressional leaders. These individuals will be taking on significant roles in shaping the legislative agenda for the coming years. Their leadership will be crucial in navigating key issues and shaping the direction of the U.S. Congress.

ISSUE ADVISORY: Hospital Payment Denial

Issue: DC Circuit Post-Chevron Ruling Reverses Hospital Payment Denial

A federal appeals court reversed a lower court determination that a rural Minnesota hospital was ineligible for volume-based compensation, using post-Chevron doctrine precedent to decide that the method the HHS used to calculate payments didn’t fully compensate the hospital for its fixed costs.

In a Tuesday opinion, the US Court of Appeals for the District of Columbia Circuit sided with Lake Region Hospital in its battle to win a “volume decrease adjustment” payment of $1.9 million after patient volume decreased by more than 5% in 2013.

The Medicare statute allows rural hospitals access to volume-based payments if a hospital’s annual Medicare revenue does not exceed its unreimbursed fixed costs. According to the opinion authored by Judge Gregory G. Katsas, the Centers for Medicare & Medicaid Services historically has used three different methods to calculate eligibility for VDA, two of which would have allowed the hospital group to meet the threshold for eligibility. Lake Region Hospital alleges the agency adopted a method to calculate its VDA that made the hospital ineligible for reimbursement.

The US District Court for the District of Columbia in 2022—partially citing the since-overturned Chevron doctrine where courts deferred to reasonable agency interpretations of ambiguous statutes—rejected the hospital’s claims and relied on the HHS’s reading of the Medicare statute for how it should reasonably determine methods for calculating the payments.

“But Chevron has now been overruled, so we must ‘exercise independent judgment’ in construing the Medicare statute,” Katsas wrote in his opinion, citing the US Supreme Court’s recent ruling in Loper Bright Enterprises v. Raimondo. Upon review, the DC Circuit’s three-judge panel found the method that HHS used to determine Lake Region Hospital’s volume decrease adjustment was inconsistent with the statutory requirements to “fully compensate” qualifying hospitals for their “fixed costs.”

“We recognize, as other courts have emphasized, that the statute does not specify exactly how HHS should calculate the VDA. But it does require attention to unreimbursed fixed costs—those a hospital has actually incurred minus those for which it has already been reimbursed,” Katsas wrote. “We recognize that no method for calculating the VDA is perfect. Nonetheless, a method that ignores all compensation for variable costs is not one that reasonably approximates full compensation for fixed costs,” Katsas wrote.

“Regardless, all we hold today is that the fixed-total method used by CMS did not ‘fully compensate’ Lake Region for its ‘fixed costs’ in 2013,” wrote Katsas. 

The court reversed the summary judgment granted to the HHS and reversed the denial of summary judgment to Lake Region Hospital. The court directed the district court to set aside the CMS’s decision denying the hospital’s VDA and remand it back to the agency to re-evaluate the hospitals request consistent with the court’s opinion. 

The case is Lake Region Healthcare Corp. v. Becerra, D.C. Cir., No. 22-5318, opinion 9/3/24.

Physicians’ groups and key lawmakers are eyeing legislation to lower hospital charges and make hospital billing more transparent as an opening to boost doctor pay this year.

Groups including the American Medical Association, the country’s leading lobbying organization for doctors, made boosting what Medicare pays doctors a top priority. The AMA this summer publicly criticized Medicare’s latest proposed pay schedule for not keeping up with inflation and used its annual meeting to focus members on issues of Medicare pay reform.

The AMA long lobbied for better pay for doctors and this year the group and its allies say they’re making inroads amid the debate over tackling hospital billing. A House health committee advanced several bills this year to lower some Medicare payments to hospitals and beef up price transparency rules. Sen. Bernie Sanders (I-Vt.), chair of a key Senate health committee, proposed banning some hospital facility fees.

Rep. Larry Bucshon (R-Ind.), a cardiothoracic surgeon before joining Congress, said these kinds of proposals are sparking conversations more generally on Capitol Hill about how Medicare reimburses doctors and hospitals.

“You’re hearing on both sides of the Capitol people questioning these coverage decisions by Medicare,” he said. “Why are we paying for this and not that?” Bucshon added he expects a “lot of health care bills” to reach the House floor this fall. Bucshon and 100 other House members sent a letter to leaders of both parties calling for Medicare pay reforms.

Unlike payments to hospitals, physician payments by Medicare aren’t tied to inflation, according to a recent Medicare Trustees’ report, which looks at the overall financial state of the program. That means costs for running practices are rising faster than Medicare payments, creating a disincentive for doctors to participate in the program.

Lawmakers Probe Nonprofit Hospitals: Also on the Hill, a bipartisan Senate group wants the IRS and the Treasury Department to investigate whether nonprofit hospitals are abusing their tax-exempt status. The lawmakers pointed to cases of nonprofit hospitals charging full price for services that should have been free or at least discounted. The lawmakers also said some institutions pursued indigent patients for medical debt.

Now that the COVID-19 public health emergency is over, the expiration of certain waivers and provisions will affect providers in several ways.  Find out what every healthcare provider should know, Below is a link to the CDC announcement and a fact sheet from HHS.

https://www.cdc.gov/coronavirus/2019-ncov/your-health/end-of-phe.html

https://www.hhs.gov/about/news/2023/05/09/fact-sheet-end-of-the-covid-19-public-health-emergency.html

H.R. 3173 would require most Medicare Advantage plans to establish an electronic program for prior authorizations and to report new data to the Secretary that would later be made publicly available. The new data would include a list of services subject to prior authorization as well as data on several metrics specified in the legislation. For example, plans would be required to report the number of service requests that they received and the share of those requests that were denied.

In addition, plans would be required to respond to expedited requests for prior authorization of services within 24 hours and to other requests within seven days. Most provisions of H.R. 3173 would go into effect three years after enactment, but the data reporting requirements would go into effect four years after enactment. For this estimate, CBO assumes that H.R. 3173 will be enacted before the end of calendar year 2022.

Under current law, prior authorization is a utilization management tool that limits coverage to cases that meet the plan’s standards of review. By placing additional requirements on plans that use prior authorization, we expect H.R. 3173 would result in a greater use of services. We expect Medicare Advantage plans would increase their bids to include the cost of these additional services, which would result in higher payments to plans.

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