Medicare Implications of the Omnibus Spending Bill

Last week, Congress passed the $1.7 trillion 2022 Omnibus Appropriations bill (the “Bill”) that funds the federal government through September of 2023 and Medicare is among the several areas addressed in the 4,000-plus pages of the Bill.

Specifically, the Bill succeeded in preventing a Statutory Pay-As-You-Go Act of 2010 (“PAYGO”), which included mandated cuts to Medicare physician payments. These cuts are required if federal government spending on entitlements exceeds a certain level. Under PAYGO, payments to providers were set to be reduced by 4% in 2023. The Bill reduces the cut to 2% and includes a 3.25% cut in 2024. This followed intense lobbying efforts among provider groups to avoid such cuts in the wake of growing business concerns including workforce difficulties and increased costs. In addition, the Bill further extends incentive payments for physicians accepting alternative payment models through 2025, although the 3.5% incentive rate marked a reduction from the previous 5% incentive payment.

Moreover, the Bill confirmed that Medicare telehealth flexibilities and hospital-at-home programs will continue for at least two more years. Traditionally, Medicare provided coverage for telehealth services in situations in which patients were geographically separated from their providers. However, the 2020 Coronavirus Preparedness and Response Supplemental Appropriations Act, and the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) waived certain restrictions, including the aforementioned geographic limitations, during the COVID-19 Public Health Emergency (“PHE”). While the Biden administration remains evasive as to ending the PHE, other than noting that there will be a 60-day notice that the PHE will end, the extension to telehealth flexibilities ensures that the flexibilities permitted by the CARES Act will continue until at least December 31, 2024.  Further, the Bill likewise provided an extension to the telehealth Safe Harbor for High Deductible Health Plans until December 31, 2024, further increasing accessibility to telehealth services.

While the above summarizes a handful of the Medicare issues at a high level, the Bill includes a series of other provisions that implicate a wide variety of health care issues and subject matter.