Health Provisions of the December 2022 Omnibus Bill – Status of Reforms

The December 2022 omnibus spending bill is a massive and lengthy measure, covering a wide range of important matters, including many health-related matters. With control of the House set to turn over to the GOP in the 118th Congress, leaders of both parties decided to close the 117th.th By getting as much bipartisan legislation as possible tied to the megadeal at the end of the year. One result of this collective decision is that more significant health-related provisions were added to the final bill than expected a few months ago.

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The following is an overview of the approved health-related policies that are expected to have the most significant impact on providers and program beneficiaries:

  • Suspension of pay-as-you-go sequesters, Federal budget law requires that Congress must pay for tax increases or mandatory spending increases to offset tax increases or spending cuts (so-called “statutory pay-as-you-go,” or PAYGO). Failure to do so leads to across-the-board spending cuts (known as “sequesters”), including within Medicare. Congressional approval of an expensive and debt-financed COVID response bill in March 2021 pushed Paygo Scorecard into the deficit, which led to a planned 4.0% cut in Medicare provider payments starting in January 2023. In the omnibus bill, Congress suspended the Pego deduction through 2024.
  • Budget Control Act Sequester Extension, The Budget Control Act of 2011 created a separate sequester process to hit budget targets, along with a cut in Medicare’s payments of 2%. Originally, the sequester was supposed to last a decade, but Congress has extended it several times since 2011 to help pay for other bills. The December 2022 omnibus extended it again, though part of 2032.
  • medicare physician fees, Had Congress not intervened, Medicare fees for physician services were to be cut by 4.5% beginning in January. In reality, the cuts would have been even deeper as inflation has risen throughout 2022. The omnibus law partially sets back expected cuts over the next two years, to 2% in 2023 and about 3.5% in 2024. However, this relief is not expected to fully satisfy the medical community. Physician unions are expected to pressure Congress this year to grant more relief for 2024.
    The omnibus bill also extended bonus payments for physicians participating in the Alternative Payment Model (APM) through 2025. The bonus during the extension will be 3.5%.
  • The omnibus expanded pandemic-related policies through 2024, allowing Medicare to provide reimbursement for physician services provided via audio or video communication with patients.
  • Opening of the Enhanced Medicaid Matching Rate Related to the Pandemic, To help states during the pandemic, Congress increased the Medicaid matching rate by 6.2 percentage points through the period of a federal public health emergency (PHE). In exchange, states were required to suspend eligibility rescheduling. The all-encompassing deal includes a framework for opening up these pandemic-era policies. States can begin rescheduling eligibility in April 2023 without losing access to the increased federal matching rate. However, additional federal funding is now scheduled to gradually expire from April to December 2023. Starting in January 2024, pre-pandemic federal matching rules will go into effect. States are expected to gradually work through the rescheduling process over a full year, and will have procedures in place to determine whether families losing Medicaid coverage are eligible for subsidies through the Affordable Care Act exchanges .
    The Congressional Budget Office (CBO) estimated that the provision would reduce Medicaid costs by $22.1 billion over ten years because, in its baseline projection, PHE was not expected to end until July 2023, at which point states would be required to reschedule. Will be allowed to start. The savings handed down by the CBO to advance the rescheduling process were instrumental in allowing several other health-related changes that would increase federal costs to be included in the final deal.
  • 12 continuous months of child coverage, Beginning in 2024, states will be required to provide a minimum of 12 months of continuous coverage for children determined to be eligible for Medicaid or the Children’s Health Insurance Program (CHIP).
  • pandemic preparedness, A series of bipartisan measures to improve the government’s planning for future pandemics were attached to the omnibus. Foremost among these provisions is the creation of a permanent office within the Executive Office of the President solely dedicated to planning and preparing for the possibility of future pandemics. The legislation makes several other changes to improve the ability of federal agencies to implement readiness measures and strengthen the nation’s security through investments in better data collection and analysis.

In addition to these provisions, the omnibus includes expanded authorization and funding for various mental health and substance abuse prevention and treatment efforts. Several provisions authorize Medicare payment for counseling and other mental health services.

The wide range of health-related matters addressed in the December omnibus deal will ease the pressure for immediate action in the current Congress. However, it will not be possible for the government to run on autopilot for the full two years. Congress must extend debt ceiling requirements by mid-year to allow the government to meet its obligations, and pass appropriations, or at least a continuing resolution, to keep federal agencies open for business after Sept. 30. Must be approved. So, in an environment also fueled by sharp partisan divisions, some bipartisan cooperation will be needed this year to prevent these “must-do” items from becoming triggers for protracted crises.

James C. Capretta is a columnist for State of Reform and a senior fellow at the American Enterprise Institute,

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