Major healthcare developments, including the budget reconciliation bill moving
UPDATED FOR SENATE BUDGET DEVELOPMENTS:
It has been a banner ten days for healthcare news. While more has been reported, here are my top six developments, starting with the status of the budget reconciliation bill.
Budget Reconciliation Status as of 6/30 – After passage of the bill in the House on May 22, the Senate finally acted on its version over the weekend. A procedural vote to open debate passed on a 51-49 vote Saturday, with conservative Rand Paul, R-KY, and Thom Tillis, R-NC, voting “no.” Paul likely will never support the bill due to debt concerns. The debt limit is actually hiked $5 trillion vs. $4 trillion earlier. Pragmatic conservative Tillis opposes the deep Medicaid reductions. But the bill’s passage is by no means certain right now. A lot has to happen before final passage. The bill will go through a wide-ranging debate over the weekend and a Vote-a-Rama (unlimited amendment offerings) on Monday before any possible final passage.
Four other conservatives – Ron Johnson, R-WI, Rick Scott, R-FL, Mike Lee, R-UT, and Cynthia Lummis, R-WY – only voted “yes” on the bill after commitments from leaders that a vote will be held on reducing Medicaid expansion matching rate for new enrollees (not existing ones) who are able-bodied. What if the amendment fails? Will one or more of the conservatives jump off the bill? Further, moderates Lisa Murkowski, R-AK, and Susan Collins, R-ME, are concerned about the Medicaid and Exchange reductions and one or both of them could still vote “no” on final passage. (Sen. Josh Hawley, R-MO, now seems OK with the latest draft.)
Moderates did win a $25 billion rural hospital fund (over five years) to offset some of the reductions in Medicaid. But they wanted $100 billion and Collins is expected to offer an amendment to make the fund at least $50 billion. The bill does put the state and local tax deduction back in at a cap of $40,000 for five years. Some House moderates could still oppose the compromise. The House had no sunset. Modifications to the nutrition program were made to satisfy some moderates.
On 6/26, the Senate parliamentarian ruled that certain provisions in the original Senate draft did not meet so-called Byrd rules to allow the bill to pass on a majority vote. The healthcare provisions struck included:
The provisions ruled not allowable under the Byrd rule include:
- Capping and limiting provider taxes.
- Restricting Medicaid drug spread pricing.
- Barring government health insurance participation and funding for those without verified immigration status (all government programs).
- Reductions in federal matching dollars to states that have expanded Medicaid and use funds to offer Medicaid coverage to immigrants without legal status.
The provider tax limitations had major savings, so the GOP had to rewrite the provision, which now has a one-year delay (from 2027 to 2028) of the beginning of the phasedown of the provider tax from 6% to eventually 3.5% over a series of years in 0.5 percentage point increments. The House had a more limited reform, which sought to put a moratorium on new or increased taxes. This was struck by the parliamentarian in the Senate. The stricter provider tax limitations could worry both Senate and House moderates.
The president and some conservatives in each chamber are calling on the Senate to overrule the parliamentarian on a majority vote but leaders are reticent to set such a precedent. As well, a big fight is on over whether the bill is truly consistent with the Byrd rules under reconciliation as the GOP is using the “current policy” vs. “current law” to determine fiscal impacts.
So as of 6/30 at 9:00 AM, what are the betting odds here on passage in the Senate at least. I expect the Senate GOP will get its bill because of the demands of the president and the defining nature of the tax cuts. It will be hard for the conservatives to vote “no” even if their state-matching-grant reduction fails. If Collins’ $50-billion rural hospital amendment passes, that could cement her vote and that of Murkowski. As well, Murkowski won some major Alaska-specific concessions in the bill already (one of which could be ruled as violating the Byrd rule, however). But the conservatives’ amendment winning could also give Collins and/or Murkowski concerns.
I would expect that the bill will pass with either a 51-49 vote or 51-50 — Collins voting “no” in the end (she is up for re-election in a Democratic-leaning state), with the vice president casting a tie-breaking vote in favor.
Then, it would return to the House, where things could still be tough.
I will update this part of the blog today and into the week as there are developments.
BUDGET RECONCILIATION UPDATE — 6/30 — 6:30 PM — The Vote-A-Rama continues and likely will go deep into tonight with more amendments. The Senate parliamentarian ruled that the Budget Committee Chair does have the right to determine whether “current policy” or “current law” budget scoring is used. This allows the GOP to extend the 2017 tax cuts under a “current policy” basis and still meet the Byrd rules to pass the bill with a simple majority. My view is this is a budget gimmick and fiscally irresponsible. A vote to stay with “current law” scoring failed on a party-line vote of 53-47.
Senate Majority Leader is still seeking to corral the last of needed votes. Conservatives Ron Johnson, R-WI, and Rick Scott, R-FL, have yet to say if they will vote for the final bill whether or not the amendment they want on state matching rates in expansion states passes. Moderates Susan Collins, R-ME, and Lisa Murkowski, R-AK, similarly are hedging.
So as many as six GOP senators could be off the bill, sinking it. But as I stated above, I think the bill will get sufficient votes in the end to pass.
BUDGET RECONCILIATION UPDATE — 7/1 — 9:00 AM — It was another wild all-nighter for the Senate GOP caucus in its efforts to pass the One Big Beautiful Bill.
A conservative amendment to lower the federal matching percentage in expansion states did not have enough votes to pass. This leaves the votes of three conservatives perhaps in doubt, but there is a strong likelihood they will support the existing GOP measure.
An effort by moderate Susan Collins to boost a rural hospital fund from $25 billion to $50 billion failed. This most likely means Collins will be off the bill.
All eyes are on moderate Lisa Murkowski. Senate Majority Leader John Thune will call the final vote to see where Murkowski stands. She won some SNAP nutrition and Medicaid funding concessions in the bill for Alaska, only to have the Senate parliamentarian say the provisions do not meet Byrd rules. The caucus has re-written both provisions and expect them to be cleared for the bill. If Paul, Tillis, and Collins are “no,” Murkowski would sink the bill with a “no” vote. If she votes “yes,” Vice President JD Vance, who arrived at the Capitol early this morning, would break the tie.
A stopgap has been developed where Paul would vote “yes” if the $5 trillion debt ceiling provision is removed in favor of a much lower amount that gets the nation able to borrow through the 2026 midterms. That amendment is being prepared just in case.
A vote could come sometime late morning or early afternoon. Then, on to the House if it passes, where there are major problems because the Senate version deviates so much from the House one. Both sides of the GOP House caucus have issues.
BUDGET RECONCILIATION UPDATE — 7/1 — 1:00 PM — The budget reconciliation bill passed on a 51-50 vote with Vice President JD Vance breaking the tie. Lisa Murkowski voted “yes” after concessions in the bill on Medicaid and SNAP nutrition for Alaska. Collins, Paul, and Tillis voted against the bill on the GOP side. All Democrats opposed. Now on to the House beginning tomorrow. More turmoil for sure.
6/23 – Prior Authorization Reform — After commitments by Trump administration officials to reform prior authorization (PA), about fifty health plans, including some of the biggest, met with Health and Human Services (HHS) Secretary Robert F. Kennedy, Jr. and Centers for Medicare and Medicaid Services (CMS) Administrator Dr. Mehmet Oz to unveil their plans to streamline PA and tackle claims denials. The health plans represent as many as 75% of America’s insured. The Blue Cross and Blue Shield Association and trade group AHIP also attended the meeting.
Health plans will commit to reduce the number of codes that are subject to PA and to establish a standard framework to increase how many authorizations are adjudicated electronically and in real time. PA changes will occur by 1/1/2026, with electronic PA reforms in one year later. The plans also will increase education on PA and appeals, accountability, and transparency around denials of PAs and claims. Plans will also honor PAs for 90 days when a consumer changes plans.
The federal government will not take regulatory action pending how insurers perform under the new system but will do so if officials are not satisfied. Dr. Oz also noted that this is just a first step, indicating that regulatory changes could be coming down the road anyway.
Major provider organizations welcomed insurers’ pledge to reform prior authorization (PA), but they generally kept their powder dry to see what actually happens. They note that health plans have promised changes before (including a similar 2018 commitment) only to not deliver on promises. They also say many PAs will remain. At the same time, they admitted that if plans follow through it could mean major relief for providers.
Another analysis suggests that the real impact on plans may be minimal as any increased costs from the loss of PA use would be passed on as higher premiums. However, the tech investment promised by plans in electronic PA would be meaningful.
6/24 – Drug Rebate Elimination — Fresh from the agreement with health plans to move forward on major PA reform, CMS Administrator Dr. Mehmet Oz said he wants pharmacy benefits managers (PBMs) to end the complicated system of drug rebates, or the government will step in to change it. Oz said regulators and lawmakers could revamp the system “fairly expeditiously” because there is widespread support.
Under Trump 45, the administration did propose to eliminate the safe harbor that allows the paying of rebates in Medicare.
6/25 – Drug Transparency – CMS Administrator Dr. Mehmet Oz hinted that the Trump administration could issue a rule that is focused on drug price transparency. This could be part of the administration’s overall drug price reform initiative. The rule might require healthcare companies such as health plans and pharmacy benefit managers to disclose the net prices of drugs.
6/27 — Round 2 of RADV Audits for Payment Year (PY) 2019 — CMS is working at lightning speed. About 2 weeks after announcing Round 1 of PY 2019 RADV audits, on June 25 the agency announced Round 2. Round 1 had 45 contracts. Round 2 has 310. That means that almost 50% of 732 contracts live in that year already have audit notices.
CMS reissued both its “method and instructions” document and FAQs on June 25 for Round 2. No material changes from the documents issued roughly two weeks before. In essence the deadlines and timetable are about two weeks later for Round 2 compared with Round 1.
Updated FAQ link to see all 355 contracts now under audit: https://lnkd.in/eXmcYVtY
As well, see this CMS page for all the relevant documents: https://lnkd.in/e3Jr3CZ3
PY 2018 started in late 2024 is now concluded on the plan side, but the PY 2018 FAQs indicated that results would not be until mid-2026. Will these be accelerated as CMS says they will have results for PY 2019 in early 2026? Or will CMS take time to look at both years together? Like PY 2019, CMS used a high-risk suspect audit approach for PY 2018.
Some health plans are challenging the 2023 rule on a number of grounds, including on its retroactive recoupment, extrapolation, and lack of FFS adjuster.
The new 100% audit approach from CMS will likely mean more plans litigate.
While a case can be made that suspect auditing can be fair, it raises a real question about whether the industry will end up worse off with the suspect approach than a more comprehensive one.
6/27 – Preventive Services — As expected, the Supreme Court ruled 6-3 in favor of allowing preventive services to continue under the Affordable Care Act (ACA). The majority was a mix of conservatives and liberals. The high court determined that members of the U.S. Preventive Services Task Force, which makes recommendations for coverage requirements under the ACA, are selected within the bounds of the Constitution. The court agreed that the task force is appointed by an executive appointee and could be replaced. The religious arguments on the provision of certain services were largely sidelined.
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— Marc S. Ryan
