McDermottPlus Check-Up: April 5, 2024 - McDermott+Consulting

McDermottPlus Check-Up: April 5, 2024


  • Senate HELP Committee Holds Field Hearing on Private Equity. Members advocated for increased transparency and accountability.
  • CMS Releases Payment Rules and Updates. The Centers for Medicare & Medicaid Services (CMS) issued the fiscal year (FY) 2025 Inpatient Rehabilitation Facility (IRF) proposed rule, the calendar year (CY) 2025 Medicare Advantage (MA) and Part D Final Rate Notice, the CY 2025 MA and Part D Final Rule, and the Final Notice of Benefits and Payment Parameters for 2025.
  • Administration Finalizes Rule Regarding STLDI Plans. HHS, along with the US Departments of Labor and Treasury, released a final rule that revises the definition of short-term, limited-duration insurance (STLDI) to limit the duration of such coverage to three months or less.
  • HHS Provides More Resources in Response to Change Healthcare Cyberattack. The US Department of Health and Human Services (HHS) compiled information, resources and tools from health plans for providers in need of assistance.


Senate HELP Committee Holds Field Hearing on Private Equity. In the hearing, held at the Massachusetts State House, members discussed the impact of private equity ownership on patients, providers, quality of care and healthcare access. Members called for increased transparency and accountability in this area.

In related news, Sen. Gary Peters (D-MI), Chairman of the Homeland Security and Governmental Affairs Committee, sent letters to four private equity firms and physician staffing companies seeking information about their involvement in hospital emergency departments and potential impacts on patient care. Sen. Peters’s information requests follow interviews his office has conducted with more than 40 emergency medicine physicians across the country who have raised concerns about patient care at private equity-owned physician staffing companies and private equity-owned hospitals.


CMS Issues IRF Payment Proposed Rule. CMS issued a proposed rule to update Medicare payment policies and rates under the IRF Prospective Payment System (PPS) and the IRF Quality Reporting Program (QRP) for FY 2025. For FY 2025, CMS proposes to update the IRF PPS payment rates by 2.8% based on the proposed IRF market basket update of 3.2%, less a proposed 0.4 percentage point productivity adjustment. CMS proposes to update the outlier threshold to maintain outlier payments at 3% of total payments.

CMS also proposes several changes to the IRF QRP, including the adoption, modification and removal of certain items. CMS requests public input on future measure concepts for the IRF QRP and on creating an IRF QRP Star Rating System.

Additional information is available in the CMS fact sheet.

CMS Releases CY 2025 MA and Part D Final Rate Notice. CMS estimates that the policy changes in the final notice will result in a 3.7% increase in MA payments in 2025. This is the same estimate as included in the advance notice, and CMS notes that this would result in an increase of more than $16 billion in MA plan payments from 2024 to 2025. CMS is proceeding with the phase-in of the Part C Risk Adjustment Model by blending 67% of the risk score calculated using the updated 2024 MA risk adjustment model with 33% of the risk score calculated using the 2020 MA risk adjustment model. This blended MA risk score trend for CY 2025 is 3.86%. Overall, the impact of the risk model revisions and normalization policies are estimated to have a net -2.45% impact to plans compared to CY 2024.

CMS also finalized updates to the Part D risk adjustment model as required by the Inflation Reduction Act. CMS finalized measure specification updates and the list of measures included in the Part C and D Improvement Measures and Categorical Adjustment Index for the 2025 Star Ratings. CMS established a list of disasters that are eligible for the Extreme and Uncontrollable Circumstances Policy.

The CMS press release can be found here, and the fact sheet can be found here.

CMS Releases CY 2025 MA and Part D Final Rule. The final rule institutes changes to the MA and the Medicare Prescription Drug (Part D) Programs. CMS noted the rule includes policies to strengthen protections and guardrails and ensure MA and Part D plans best meet the needs of enrollees. Additionally, the agency aims for the policies included in this rule to promote access to behavioral health care providers, promote equity in coverage, and improve supplemental benefits.

Notably, CMS is finalizing several policies that focus on:

  • New agent and broker requirements
  • Expanding network adequacy for behavioral health providers
  • Increasing efforts to make beneficiaries aware of supplemental benefits
  • Instituting new standards for supplemental benefits for the chronically ill
  • Adding health equity perspective to prior authorization protocols
  • Enhancing appeal rights
  • Increasing the number of dually eligible managed care enrollees who receive integrated Medicare and Medicaid services
  • Standardizing the MA plan risk adjustment data validation appeals process
  • Creating more flexibility regarding biosimilar biological products formulary substitutions
  • Updating criteria for the Medicare Part D medication therapy management program

Read the CMS fact sheet here.

CMS Issues Notice of Benefit and Payment Parameters for 2025 Final Rule. This rule finalizes changes to standards that health plans participating on the Affordable Care Act Marketplace must comply with, as well as new requirements for Marketplaces themselves and agents, brokers, web-brokers, direct enrollment entities and assisters that help Marketplace consumers. The rule also includes a few policies impacting Medicaid and the Children’s Health Insurance Program (CHIP).

Overall, the final policies focus on the following areas:

  • Increasing access to healthcare services
  • Simplifying choice and improving the plan selection process
  • Making it easier to enroll in coverage
  • Requiring that state marketplaces operate a centralized eligibility and enrollment platform on the state marketplace’s website
  • Establishing marketplace call center standards
  • Requiring state marketplaces and state Medicaid and CHIP agencies to pay to access income data via the verify current income hub service
  • Changing user fee rates and the HHS-operated risk adjustment program

The CMS press release can be found here, and the fact sheet can be found here.

Administration Finalizes Rule Regarding STLDI Plans. The final rule revises the definition of STLDI to limit the duration of such coverage to three months or less, reverting to limitations applicable under the Obama administration. The rule provides for a maximum coverage period of four months, taking into account any renewals and extensions. The definition also provides that a renewal or extension includes the term of a new STLDI policy that is issued by the same issuer to the same consumer within a 12-month period.

The final rule finalizes revisions to the content and formatting of the notice that informs consumers purchasing STLDI and fixed indemnity excepted benefits coverage about the differences between these types of plans and comprehensive coverage.

The new definition of STLDI will apply to policies sold on or after September 1, 2024. STLDI sold or issued before September 1, 2024, could still have an initial contract term of up to 12 months, with a maximum duration of up to 36 months, to the extent permitted under state law. However, policies already in existence will still be required to comply with the revised notice standards.

For more information, please see the fact sheet here.

HHS Provides Additional Resources to Providers in Response to Change Healthcare Cyberattack. HHS issued a letter to providers regarding concerns about the Change Healthcare cybersecurity attack’s impact on providers’ cash flow and overall operations.

HHS has compiled information, resources and tools from health plans for providers in need of assistance. Providers can find information to help them connect with payers regarding impacts of the cyberattack, links to resources from payers (including guides to connect to alternate data clearinghouse services), information on advanced payments and more. HHS included resources from the following major payers:

  • United Health Group
  • AmeriHealth Caritas
  • Blue Cross Blue Shield
  • Centene Corporation
  • Cigna Health
  • CVS Health
  • Elevance Health
  • Humana
  • Kaiser Permanente
  • Molina Healthcare

HHS also provided contact information for representatives from many major health plans.


  • ONC Releases 2023 Report to Congress. The Office of the National Coordinator (ONC) report describes actions undertaken by HHS, as well as public and private sector partners, to address issues related to health IT and the access, exchange and use of electronic health information. The report also highlights updates on the implementation progress of the 2020 – 2025 Federal Health IT Strategic Plan.
  • HHS Releases White Paper on Preventing Drug Shortages. The report describes policy concepts for consideration, including collaboration with the private sector to develop and implement a Manufacturer Resiliency Assessment Program and a Hospital Resilient Supply Program in an effort to boost transparency, increase accountability for purchasing and payment decisions, and incentivize investments in supply chain resilience.
  • OMB Publishes New Agency Requirements and Guidance for AI. In the memorandum, the Office of Management and Budget (OMB) establishes new requirements and guidance to address the risks of artificial intelligence (AI), expand AI use transparency, advance responsible AI innovation and strengthen AI governance. View the fact sheet here.
  • CMS Releases Health Insurance Marketplaces 2024 Open Enrollment Report. The report summarizes health plan selections through the individual Marketplaces during the 2024 Open Enrollment Period (OEP). CMS found that 5.1 million more consumers signed up for coverage during the 2024 OEP compared to the 2023 OEP, a 31% increase.
  • CMS Hosts ACO PC Flex Model Overview Webinar. The webinar discussed the Accountable Care Organization Primary Care Flex Model (ACO PC Flex Model). CMS staff noted that the model will start on January 1, 2025, and run for five performance years (2025 – 2029), and that 130 ACOs will be selected to participate in the model. The model will include increased primary care funding and flexibility via two new payment mechanisms: a one-time advanced shared savings payment of $250,000, and monthly prospective primary care payments. Applications will open in spring 2024 and will be due in August 2024.


Congress is scheduled to be in session next week, with the Senate returning on April 8 and the House returning on April 9. Healthcare activity is expected at the committee level, including a House Energy & Commerce Health Subcommittee legislative hearing on telehealth. We continue to await the release of the Hospital Inpatient Prospective Payment System proposed rule, which has cleared OMB review and is expected imminently.

For more information, contact Debra CurtisKristen O’Brien, Priya Rathakrishnan or Erica Stocker.

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