Congress reaches major health policy deal on Medicare, Medicaid, and pandemic preparedness

By Rachel Cohrs and Sarah Owermohle / December 19, 2022

WASHINGTON — Leaders in Congress have reached a sweeping deal to ease Medicare pay cuts to doctors, make major changes to post-pandemic Medicaid policy, and to help prepare for future pandemics.

Lawmakers are aiming to pass a health care policy package along with legislation to fund the federal government by Friday. The details of the omnibus spending package were confirmed by two lobbyists and two congressional aides.

The bill’s text is not yet finalized, and the deal is still subject to changes.

Medicare policy

Doctors were facing down 4.5% Medicare pay cuts at the end of the year, and had pleaded with Congress to cancel the cuts altogether. Lawmakers met them halfway: In 2023, physicians will face a 2% cut, and in 2024, the amount will increase to 3.5%, two lobbyists said.

Lawmakers are also expected to waive a rule that would have resulted in further cuts to Medicare. The Medicare hospital at home program is also supposed to be extended for two years.

Some of the package will be paid for by extending future Medicare pay cuts until 2032. Leftover Medicare funds from the gun safety bill that Congress passed earlier this year were also used to pay for some of the policy.

Some behavioral health policy could also be included, as well as two-year extensions of programs that support safety-net and rural hospitals.

Medicaid policy

Lawmakers also agreed to allow states to begin kicking ineligible people off their Medicaid rolls in April, regardless of when the Covid-19 public health emergency ends. Previously, states had to agree to hold off on re-evaluating people’s eligibility in exchange for more federal Medicaid money, and the end date was contingent on the end of the public health emergency.

In addition, lawmakers are expected to extend the Children’s Health Insurance Program until 2029. Children on Medicaid are expected to get one year of continuous eligibility, which means they won’t lose insurance even if their circumstances change. But while Democrats fought to require every state Medicaid program cover postpartum care for a year, the final legislation has fallen short and instead would only make permanent 33 states’ extended coverage.

Advocates have long argued that expanded coverage could help reverse staggering maternal and infant mortality rates, among the worst for high-income countries. Thirty-three states had already extended care for a year after Congress passed the option in last year’s American Rescue Plan, but among the 17 holdouts are some of the states with the highest maternal mortality rates in the country — figures that have only surged during the pandemic.

More robust federal Medicaid funding for Puerto Rico and other territories will be extended for five years, which offers some certainty for territorial governments and providers, according to one congressional aide and and one lobbyist.

Telehealth

Pandemic-era telehealth flexibilities are expected to be extended for two years, which was a major ask from the health care industry.

Pandemic preparedness

The pandemic preparedness package negotiated by Senate health committee leaders Patty Murray (D-Wash.) and Richard Burr (R-N.C.) also made it in the deal, though it was narrowed somewhat, according to one lobbyist and one congressional aide. It is unclear precisely which policies made the final cut.

The package included a policy that would require Senate confirmation for the director of the Centers for Disease Control and Prevention.

No diagnostics reform

A provision that would have given the Food and Drug Administration more authority to regulate in-house tests developed in clinical labs like academic medical centers and hospitals was squeezed out of the agreement. While the device industry and federal regulators backed the measure, arguing it would close an oversight gap that helped Theranos thrive with unproven tests, labs argued it would hobble their ability to quickly diagnose patients.

Ultimately, those labs found sympathy with some Republicans, namely Rep. Cathy McMorris Rodgers (Wash.), who stands to lead the powerful House Energy and Commerce committee next year, two sources familiar with the deliberation said. Besides being hesitant to give the FDA more authority, Rodgers argued that the bill, called the VALID Act, had not gone through any House hearings or markup, those two people said. FDA Commissioner Robert Califf has said that if the legislation fails to make it into the omnibus, the agency will begin rulemaking itself to bring these labs under its regulatory umbrella.

VALID’s omission from the bill is “disappointing” because many lawmakers in both parties supported the measure, Scott Whitaker, CEO of device lobby AdvaMed, said. “The last thing we need is more Theranos-type tests in the health care system.”

The package is also expected to include some FDA reforms connected to extending several regulatory flexibilities that Congress punted to this month to bring negotiators back to the table after they failed to reach a deal in September. At least reforms to the FDA’s accelerated approval process, FDA’s authority to regulate cosmetics, and policy on encouraging diversity in clinical trials are expected to make the cut, two lobbyists said.

Nursing school repayments

ursing school repaymentsNursing schools are also expected to get some relief from fees they were supposed to have to pay back to the government following a mistake by the government.

The federal government miscalculated funding for hospital-based nursing schools for nearly two decades, and now the Biden administration was forcing them to pay up during the worst health care workforce crisis in decades.

Coverage of emergency use authorization products

The government has been buying Covid-19 vaccines and providing them for free to everyone, but that arrangement will likely end once the stockpile of government-bought vaccines runs out. When it became clear that the Biden administration was going to have a difficult time getting Republicans to agree to more pandemic preparedness funding, White House officials began preparing the public for commercial coverage.

To help with that transition, the bill would allow Medicare Part D plans to cover coronavirus products through 2024 that have been authorized for emergency use but not approved.

Doctor training on opioid use

The end-of-year package is expected to include a bipartisan bill that would mandate doctors be trained on treating people with opioid use disorder, despite opposition by the American Medical Association.

A related piece of legislation, called the MAT Act, that would lower barriers to prescribing opioid use disorder medication like buprenorphine, is also in the final package.