I. PROPOSED PHYSICIAN FEE SCHEDULE RULE
Proposed Physician Fee Schedule Rule
CMS recently released 2025 Medicare Physician Fee Schedule (PFS) proposed rule, which includes a proposal to allow payment for certain dental services needed by patients undergoing dialysis to treat End-Stage Renal Disease (ESRD). The Center will be sharing its comments supporting this proposal, which are due to CMS by Sept. 9, 2024. CMS also seeks specific information about the potential connection between dental services and covered treatment of diabetes and immunosuppressive therapies for patients with autoimmune diseases, as well as additional evidence regarding covered services for sickle cell disease and hemophilia.
Additional Oral Health Updates
The Center joined more than 240 organizations in a statement applauding the important steps taken by CMS and the Biden Administration to explore and clarify payment policies for dental services that are critical to the success of certain medical care.
CMS has also announced that as of July 1, 2024, Medicare can officially accept electronic 837D dental claims. This marks a major milestone that should facilitate the submission, acceptance, processing, and payment of dental claims under the clarified dental payment policies. Medicare’s administrative contractors (MACs) have reportedly published 837D Companion Guides and updates to their web sites to provide guidance for potential dental claim submitters.
CMS announced the release of the inaugural Oral Health Cross-Cutting Initiative Fact Sheet. The initiatives will work across the agency to “expand access to oral health services, foster collaborative engagement with stakeholders, and utilize data analytics and innovation to inform policy priorities.” Interested members of the public are encouraged to join the Oral Health Listserv to remain current on the CMS Cross Cutting Initiative.
CMS has a webpage containing current information and links to important resources regarding Medicare dental coverage. It has answers to questions about what is and isn’t covered, the definition of “inextricably linked” dental services, settings for care, who can provide and bill for services, how providers can enroll in Medicare and submit claims, and payment rates.
II. MEDICARE ADVANTAGE UPDATES
Humana Latest Medicare Advantage Plan to Signal Shedding Members and Benefits in 2025
As highlighted by the Center this May, insurance companies offering Medicare Advantage (MA) plans “are signaling that for a variety of reasons, plan benefit packages in 2025 might be reduced from this year” – see CMA Alert, “Medicare Advantage Industry Will Focus on Profits Over Benefits in 2025” (May 23, 2024). Most recently, this is evidenced by an announcement from the second-largest MA insurer Humana, which, according to Newsweek, “is preparing to lose several hundred thousand members next year as Medicare Advantage benefits shrink under higher prices” – see article titled“Second-Largest Medicare Advantage Insurer Prepares to Lose Over 200K People” by Suzanne Blake (Aug. 2, 2024). According to Newsweek, Humana’s CEO indicated that the “majority of the lost members will be from those who lose plan coverage in an unprofitable market.”
Similarly, according to Healthcare Dive in an article titled “Humana expects to lose ‘few hundred thousand’ Medicare Advantage members next year” by Rebecca Pifer (July 31, 2024), the insurer expects to lose a “‘few hundred thousand’ members … after seriously shrinking its benefits and exiting markets for 2025 in a bid to boost profits” The article continues: “MA margins should improve as a result, setting Humana on the path to a long-term target of at least 3%, management told investors on a call.”
The article notes that Humana’s individual and group MA plans make up 38% of its members, but 86% of its premium revenue. The article continues: “That gamble started to backfire last year, as seniors in MA began using significantly more medical care than insurers had planned, and regulators in Washington began cracking down on profiteering in the popular insurance program.”
As the Center noted in our CMA Alert cited above:
Despite insurance industry hand-wringing about more people using more health care services, if people who need health care are able to access it through their MA plans despite widespread and onerous prior authorization restrictions – isn’t that a desirable outcome? From a societal standpoint, but apparently not for purposes of MA plan profits.
The Healthcare Dive article further states: “Humana slashed its plan presence and benefits for next year to try and improve profits, citing utilization headwinds and a weak payment update from the government.”
As outlined below, MA plans are already significantly overpaid. And earlier this year, CMS announced a further rate increase for 2025 – just not as much as the industry had hoped (see, e.g., CMA Alert “Wall Street Journal Editorial Board’s Love Letter to Medicare Advantage Ignores Wasteful Overpayments” (May 2, 2024)).
Remember: when plans pull out of certain markets, and/or reduce benefits, these are business decisions. A few other helpful tips when parsing health insurance statements: when plans are forced to actually provide care, they become less profitable; plan enrollees in “unprofitable markets” = members that plans are willing to shed; “weak payment update” = slightly less than expected overpayments.
Evidence Continues to Grow that MA Overpayments Do Not Lead to Better Quality or More Affordability
In the Center for Medicare Advocacy’s recent “Special Report: The Real Impact of Medicare Advantage for Beneficiaries and Medicare Funding” (July 18, 2024), we highlighted how the Medicare Advantage (MA) program is costing significantly more than what traditional Medicare spends on a given beneficiary, adding stress to Medicare’s finances. We also cited evidence showing that this extra spending does not translate to better health outcomes or more affordable care for those enrolled in MA plans.
As noted in the Newsweek articled cited above, “[i]n recent months, many Medicare Advantage patients have complained about the lack of provider options and prior authorization rules under their plans.” In addition to mixed health outcomes and affordability issues, there are other trade-offs for Medicare beneficiaries when choosing an MA plan vs. remaining in traditional Medicare. Among the challenges posed by MA plans is insurance sponsors’ ability to restrict enrollees’ access to only certain providers, and the ability to subject care to prior authorization. The extensive use of prior authorization also poses a challenge for providers, leading to many choosing to no longer contract with MA plans. In a recent CMA Alert titled “Ongoing Medicare Advantage Network Challenges” (July 25, 2024) we cited to news reports documenting more provider organizations choosing to no longer contract with MA plans, including, e.g., a local Minnesota operator of hospitals and clinics informing patients that they are no longer contracting with UnitedHealth because the insurer’s “denial rate has been up to 10 times higher than other insurers we work with.”
III. LITIGATION UPDATE
Johnson v. Becerra, No. 1:22-cv-03024 (D.D.C.) (Challenge to Deprivation of Home Health Aide Services by Disabled Medicare Beneficiaries). The Center filed this proposed class action on October 6, 2022, on behalf of two individuals and two organizations. The named plaintiffs seek to represent a nationwide class of Medicare beneficiaries who rely on home health aide services to live safely in their homes and communities. They challenge the Secretary’s policies and practices that impede and restrict the availability, accessibility, and coverage of home health aide services for individuals with chronic, disabling conditions who qualify for such services under Medicare law. These practices include the failure to properly oversee and enforce Conditions of Participation for Medicare-certified home health agencies. They also include auditing and reviewing systems and quality rating systems that discourage the provision of aide services for plaintiffs and proposed class members. The case cites violations of the Medicare statute and regulations, as well as Section 504 of the Rehabilitation Act, which prohibits discrimination on the basis of disability. Section 504 imposes a duty on federal agencies to administer programs in the most integrated setting appropriate to the needs of people with disabilities and to avoid unjustified institutionalization of disabled people. The named plaintiffs and class members they seek to represent are at risk of institutionalization for necessary care without the Medicare-covered home health aide services they require. The plaintiffs seek declaratory and injunctive relief that would remove barriers to Medicare-covered home health aide services.
On April 5, 2023, the court granted the government’s motion to dismiss and denied plaintiffs’ class certification motion as moot. Johnson v. Becerra, 668 F. Supp. 3d 14 (D.D.C. 2023). The court found that all plaintiffs had adequately presented their claims to the Secretary, and it waived the requirement of exhaustion of administrative remedies. However, the court held that the plaintiffs lack standing to challenge the Secretary’s policies because they failed to plausibly allege redressability. Assuming that plaintiffs’ injuries were caused by the Secretary, the court found that it is “purely speculative” that their injuries would be redressed by a favorable court decision. It emphasized that Medicare-certified home health agencies are “third parties,” and doubted that the requested policy changes would alter the home health agencies’ behavior with regard to provision of aide services. The plaintiffs appealed the district court’s dismissal of the case to the U.S. Court of Appeals for the D.C. Circuit in June 2023. Oral argument on the appeal was held on March 14, 2024.
Barton Reeves v. Becerra, No. 3:24-cv-01097 (D. Conn.) (SNF coverage). On June 25, 2024, the Center for Medicare Advocacy requested federal court review of a fundamentally erroneous decision regarding coverage of skilled nursing facility (SNF) care. The case involves services for a Connecticut resident who was dully-eligible for both Medicare and Medicaid benefits. After a hearing with an Administrative Law Judge (ALJ), the Center won Medicare coverage of the beneficiary’s SNF services because he received “daily, skilled rehabilitation services” in the form of occupational therapy. Medicare law is definitive about covering SNF care when qualified beneficiaries receive “daily skilled” care, which can be either nursing services or rehabilitation services (such as physical or occupational therapy). However, after the ALJ issued a favorable decision, a Medicare contractor stepped in and referred the decision to the next level of appeal—the Medicare Appeals Council—for additional review. Misreading the controlling law and regulations, the contractor claimed that coverage of inpatient SNF services can only be based on daily skilled nursing services, and not on daily skilled rehabilitation services. Alarmingly, the Appeals Council agreed with this blatant misstatement of the law and found that Medicare could not cover the SNF care in question.
It is particularly troubling that CMS’s contractor went out of its way to overturn a duly-considered and legally correct ALJ decision, and that the Appeals Council – the highest level of review in Medicare’s administrative appeal system – affirmed the incorrect argument. Unfortunately, it is difficult to correct even obvious errors in Medicare’s appeal system. The Center appealed the Council’s decision to federal district court on behalf of Connecticut’s Department of Social Services, which bore the costs of the services that Medicare should have paid for.
Beitzel v. Becerra, No. 2:23-cv-01932 (E.D. Cal.) (Self-Administered Drugs). The Center for Medicare Advocacy and Community Legal Services at the McGeorge School of Law filed this class action on September 8, 2023, on behalf of beneficiaries who have lost coverage for medically necessary, expensive drugs with no warning. The lead named plaintiff requires an injectable drug that – for years – was administered to him in a clinic by health care professionals to treat symptoms of Crohn’s disease. He also has Parkinson’s disease and cannot administer the drug himself due to his disability. The drug was covered under a provision that allows Medicare Part B to pay for drugs that are furnished “incident to the services of a physician.” Then, unbeknownst to the plaintiff, Medicare deemed the drug to be “usually self-administered by the patient,” meaning it would no longer be covered for him as it had been, under Part B.
Medicare provided no notice of this change in coverage and does not require medical practitioners to provide notice. Only after the plaintiff received several additional scheduled injections from the clinic did he learn that the drug was no longer covered by Part B and that Medicare held him responsible for its full cost, which was over $40,000 per injection. The plaintiffs challenge Medicare’s policy of providing no notice when a drug that was excluded by Part B is added to the “self-administered drug list” (SAD List) and thus excluded from such coverage. They raise due process and statutory claims to ensure that beneficiaries can make informed decisions about how to receive these medications when there has been a change in Medicare’s coverage terms. Plaintiffs filed an amended complaint with an additional plaintiff on December 26, 2023, and a motion to certify a nationwide class on January 30, 2024. The government filed a motion to dismiss the amended complaint on January 31, 2024.
A hearing on the government’s motion to dismiss was held on April 15, 2024. The judge granted the motion, signing the opinion on April 19, 2024. The judge held that he lacked jurisdiction under 42 U.S.C. 405(g) over the claims of two Plaintiffs because they had not exhausted administrative remedies and waiver of exhaustion did not apply. He held that Beitzel, the remaining Plaintiff, lacked Article III standing to seek prospective relief, and had failed to state a claim for which relief could be granted for all of his claims. Plaintiffs appealed to the Ninth Circuit on June 3, 2024, with briefing commencing this summer.
Read the News Release
Read the First Amended Complaint
Barrows v. Becerra, 24 F.4th 116 (2d Cir. 2022) (Beneficiary Appeals of Observation Status). In November 2011, the Center for Medicare Advocacy and Justice in Aging filed a class action lawsuit on behalf of individuals who have been denied Medicare Part A coverage of hospital and nursing home stays because their care in the hospital was considered “outpatient observation” rather than an inpatient admission. When hospital patients are placed on observation status, they are labeled “outpatients,” even though they are often on a regular hospital floor for many days, receiving the same care as inpatients. Because patients must be hospitalized as inpatients for three consecutive days to receive Medicare Part A coverage of post-hospital nursing home care, people on observation status do not have access to nursing home coverage. They must either privately pay the high cost of nursing care or forgo that skilled care. The number of people placed on observation status has greatly increased as CMS has strictly enforced its definition of which services hospitals should bill as inpatient/Part A and which services they should bill as observation/Part B. However, CMS has not allowed beneficiaries to appeal the issue of whether their hospitalizations should be classified as observation or as inpatient for Medicare coverage purposes.
After a dismissal by the district court, a remand by the Second Circuit, substantial motion practice and discovery, a bench trial on the merits of the due process claim was held in August 2019. In March 2020, the trial court issued a decision. Alexander v. Azar, 613 F. Supp. 3d 559 (D. Conn. 2020). It held that the Secretary of Health and Human Services violates the Fifth Amendment Due Process Clause by not allowing certain patients to appeal their placement on observation status. Thus, as matter of constitutional due process, patients who are admitted as inpatients by a physician, but whose status is changed to observation by their hospital, have the right to appeal to Medicare and argue for coverage as hospital inpatients. In this ruling, the court held that there is a protected property interest in Medicare Part A coverage. The court did not, however, find a due process violation for patients whose doctors never order inpatient status, or whose status is switched only from observation to inpatient. It drew a distinction between the actions of doctors and the actions of hospital utilization review staff. The court modified the existing class definition accordingly.
The court ordered that the agency establish an appeals process for class members, under which they can argue that their inpatient admission satisfied the relevant criteria for Part A coverage—for example, that the medical record supported a reasonable expectation of a medically necessary two-midnight stay at the time of the physician’s inpatient order. Certain patients will be able to pursue these appeals in an expedited manner while still hospitalized. The court also ordered the agency to provide notice of these procedural rights. In May 2020, the government appealed the district court’s trial decision to the Second Circuit. The Second Circuit affirmed the trial court’s decision in full on January 25, 2022. Barrows v. Becerra, 24 F.4th 116 (2d Cir. 2022).
The government is implementing the court’s injunction via notice-and-comment rulemaking. After substantial delays, class counsel requested a status conference with the court, which was held in August 2023. In light of the significant delays in implementation and ongoing harm to class members, the judge ordered the government to take the next step in the rulemaking process (submission of a draft rule to the Office of Management and Budget, by October 1, 2023. It also ordered the government to submit status reports on the progress of the implementation process. The government then published a Notice of Proposed Rulemaking (NPRM) in the Federal Register on December 27, 2023. The court issued an order stating that the government could submit a final status report on May 1, 2024.
Class counsel Center for Medicare Advocacy, Justice in Aging, and Wilson Sonsini Goodrich & Rosati submitted detailed comments on the NPRM, as did a broad coalition of 75 national as well as state and local beneficiary advocacy organizations. Along with the Center and co-counsel Justice in Aging, organizations that signed on to the coalition’s letter include AARP, the ALS Association, the Medicare Rights Center, the National Committee to Preserve Social Security and Medicare, the National Disability Rights Network, and the National Health Law Program. The comments support CMS’s general approach to the court-ordered appeal procedures and strongly urge the agency to finalize and implement the rule as quickly as possible. The coalition of advocates support that the proposed observation status appeals will be largely similar to existing Medicare appeals and provisions that aim to minimize burden on beneficiaries. However, they made several recommendations to improve the procedures. The public comment period closed on February 26, 2024.
In its status report of May 1, 2024, the government stated that it received 51 comments and is now working on the final rule. It stated that it anticipates publishing the final rule “before the end of the year.” It also summarized some of the comments by providers, government, advocates, and other communities. Plaintiffs submitted a response to this status report, pointing out that 1) the chief requests of advocates’ comments on the NPRM is finalizing and implementing the rule as quickly as possible, and 2) 51 comments is not a large number to respond to, and Plaintiffs are concerned that stretching publication of the final rule until “the end of the year” could significantly and unnecessarily delay relief. They noted instances when agencies had responded to many thousands of comments in much shorter periods of times. Plaintiffs requested a status conference to ensure sufficient progress is being made on the final rule.
UPDATE: The court ordered the government to submit another status report on July 15, 2024, and the court held a conference with the parties on July 19, 2024. At the conference, the court agreed with the concerns of class counsel that the realization of the plaintiff class members’ constitutional rights is occurring too slowly. Judge Shea asked the government’s counsel about specific ways that the process could be accelerated. He then issued an order requiring the government to finalize and publish the final rule by October 15, 2024. He also ordered two more status reports, to be filed on August 15 and September 16, 2024. The court also ordered the government to address in August report why outside contractors cannot be given tight timeframes to negotiate and finalize all contract documents necessary to make the appeals operational by the end of 2024.
- For answers to frequently asked questions from people who think they may be class members, please see the Center’s website here.
Drug Price Negotiation Lawsuits – Inflation Reduction Act
The Center has joined a coalition of advocacy organizations, led by AARP, that is urging federal courts to uphold Medicare’s drug price negotiation program. The program, created by the Inflation Reduction Act (IRA), allows Medicare to use its bargaining power to negotiate prices and reduce the cost of expensive drugs for the first time. Drug companies and their allies have filed multiple lawsuits around the country attempting to strike down or limit the program.
The coalition has filed amicus briefs supporting the government in these lawsuits, explaining that the negotiation program is urgently needed because it will help older adults and people with disabilities afford life-saving prescription drugs. The amicus briefs also explain that the drug price negotiation program will protect the financial integrity of Medicare and save taxpayers billions of dollars. Before the IRA, Medicare was prohibited by law from negotiating the price of drugs directly with manufacturers. This amounted to a special exemption for drug companies that other medical providers and suppliers do not have. Hospitals, nursing facilities, and physicians participating in Medicare have all faced limits on payments for decades, ensuring that their services are affordable for beneficiaries and taxpayers. But drug companies received a special carve-out. The Medicare negotiation program begins to bring payment for prescription drugs in line with Medicare’s payment for other items and services.
- Read an amicus brief filed in a case brought by a Connecticut drug manufacturer here. This brief features stories the Center collected from Connecticut residents about their experiences with prescription drug prices.
- Ongoing updates on the Medicare drug price negotiation cases can be viewed at the O’Neill Institute Health Care Litigation Tracker here.
IV. NURSING FACILITY UPDATE
Final Nurse Staffing Rule
Final nurse staffing rule, 89 Fed. Reg. 40876 (May 10, 2024), consumes most time and attention. Bills and Congressional Review Act resolutions to reject the final staffing rule are pending.
H.J. Res 139, filed May 10, 2024 under the Congressional Review Act, disapproves the final minimum staffing rule for nursing homes. Nurse aide training: H.R.468, Building America’s Health Care Workforce Act (reinstate for 2 years the pandemic-era waiver of federal nurse aide training requirements that expired May 11, 2023; count time worked towards the 75-hour minimum training. H.R. 3227, the Ensuring Seniors’ Access to Quality Care Act, which would reduce the number of nursing facilities that are barred for two years from conducting their own nurse aide training programs; the bill limits the ban on nurse training to facilities with large penalties for “quality of care” deficiencies. New information about staffing: AARP poll finds that 94% of respondents “would be more likely to vote for a Congressional candidate who supports the new federal requirement to have a registered nurse available in nursing homes at all hours of the day.” The range of support for 24-hour registered nurse coverage ranges from 92% of voters who describe themselves as very or somewhat conservative to 98% of voters who describe themselves as very or somewhat liberal. See “AARP Poll Finds Potential Voters Support Minimum Staffing Standards for Nursing Homes” (CMA Alert, Aug. 1, 2024).
Senator Elizabeth Warren released an analysis by researchers at the University of Pennsylvania, calculating that enforcing minimum staffing levels in nursing facilities, as required by the final rules, “would save approximately 13,000 lives per year.” “Analysis: Nursing Home Nurse Staffing Rule Would Save 13,000 Lives Each Year” (CMA Alert, Jul. 25, 2024).
Office of Behavioral Health, Disability, and Aging Policy, ASPE, Nurse Staffing Estimates in US Nursing Homes, May 2024 (Data Point, Jun. 28, 2024), counters nursing home industry arguments that most nursing facilities cannot meet the final staffing requirements to show that, as of May 2024, many facilities already meet parts of the final staffing rule:
- 50% of facilities staff at or above 0.55 registered nurse (RN) hours per resident day (HPRD).
- 59% of facilities staff at or above 3.48 HPRD total nurse staffing.
- 78% of facilities provide at least 24 hours of total RN staffing per day (although it is not possible to determine whether facilities provide 24/7 RN coverage, as the final staffing rule requires).
- 30% of facilities staff at or above 2.45 HPRD of nurse aide time.
- Smaller (fewer than 100 beds) and nonprofit facilities “were more likely to staff at or above the minimum RN, NA, and total nurse HPRD requirements than larger or for-profit nursing homes.”
- 100-bed facilities are close to the minimum staffing requirements in the final rule and would require between 0.7 and 2 nurse staff per 8-hour shift.
ASPE points out the most significant differences in staffing levels reflect facility size and profit status:
Non-profit facilities were more likely than for-profit facilities to staff at or above each of the HPRD minimum requirements and were more likely to provide 24 RN hours per day. For the HPRD minimum requirements, there was a difference of nearly 30 percentage points in the percent of non-profit facilities versus for-profit facilities who staffed at or above these levels.
ASPE notes that its findings are consistent with other research documenting that “for-profit facilities on average have lower staffing and worse quality of care” and concludes, “Together, these studies and our analysis highlight opportunities for for-profit nursing homes to enhance safety and quality of care through greater investments in staffing.”
Enforcement: civil money penalties
Final Medicare Part A reimbursement rule for skilled nursing facilities includes changes to federal civil money penalty rule. The proposed rule, now made final, permits
- multiple per instance CMPs to be imposed for the same type of noncompliance, 42 C.F.R. §488.430(a)
- per instance and per day CMPs to be imposed on the same survey, 42 C.F.R. §488.430(a)
- CMPs to be imposed “since the last three standard surveys” (change from “since the last standard survey) when a CMP had not been imposed for the “previously cited noncompliance,” 42 C.F.R. §488.430(b)
89 Fed. Reg. 64048, 64137-64144 (Aug. 6, 2024)
Even before final rule about CMPs was published, Leading Age, writing for itself, the American Health Care Association, and nine other provider associations, said that increased CMPs “would divert funds from care and services for residents.” In an Alert, “Nursing Home Industry Complaints about Proposed Penalties Ring Hollow” (CMA Alert, Jul. 11, 2024), the Center pointed out that in 1987, as part of the Nursing Home Reform Law, Congress explicitly prohibited nursing facilities from using Medicaid reimbursement, which facilities receive to provide care and services to residents, to pay civil money penalties. 42 U.S.C. §1396b(i)(8) states that Medicaid payments may not be used “ (A) for nursing facility services to reimburse (or otherwise compensate) a nursing facility for payment of a civil money penalty imposed under section 1396r(h) of this title.” The 1987 law also expressly states that Medicaid reimbursement cannot be used “for legal expenses in defense of an exclusion or civil money penalty under this subchapter or subchapter XI if there is no reasonable legal ground for the provider’s case.”
Nursing facilities’ receiving Payroll Protection Program funds during the pandemic
The Corporate Whistleblower Center is reaching out to people who may know about specific nursing facilities that were short-staffed while receiving funding from the Paycheck Protection Program (PPP) during the COVID-19 pandemic between 2020 and 2021. “Corporate Whistleblower Center Urges a Nursing Home Manager-RN To Call to See if Their Employer Received a PPP Loan in 2020-2021 – If they Did & They Never Staffed Up – The Rewards May Exceed $100,000+++” (Press Release, Jul. 16, 2024). The PPP required facilities to spend at least 60% of the loans on payroll-staff and were ineligible for loans if they had more than 500 employees.
The Center’s Press Release quotes an Alert by the Center for Medicare Advocacy, “Paycheck Protection Program: A Massive Windfall for Nursing Facilities?” (CMA Alert, Aug. 3, 2023)”
“In the early days of the COVID-19 pandemic, Congress passed the Paycheck Protection Program (PPP), as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), to make loans to employers to keep workers employed during the pandemic (and to pay “other eligible expenses”). Most of the loan money could be forgiven, meaning that repayment was not required, if at least 60 % of the proceeds were spent on payroll.
“Nursing home staffing levels increased in only minimal ways after nursing facilities received hundreds of thousands of dollars in PPP funds. Where did the rest of the PPP money go? How did facilities spend the bulk of the $10.5 billion that they received in PPP funds?”
The Center’s Alert cited two studies:
Kevin Chen, Leo Lopex III, Joseph S. Ross, Jasmine L. Travers, “Distribution of Paycheck Protection Program Loans to Healthcare Organizations in 2020,” J. Gen. Intern Med. 37(8):2132-3, DOI: 10.1007/s11606-021-07108-6 (Sep. 10, 2021), found that nursing and residential care facilities received 25,172 PPP loans (5.6% of all PPP loans nationwide) for a total of $10,480,082,180 (18% of all PPP loans).
Jasmine L. Travers, Brian E. McGarry, Steven Friedman, “Association of Receipt of Paycheck Protection Program Loans With Staffing Patterns Among US Nursing Homes,” JAMA Open Network 2023;6(7):e2326122. doi:10.1001/jamanetworkopen.2023.26122 (Jul. 27, 2023), analyzed 1,807 nursing facilities that received PPP loans, with a median loan of $664,349 (and a range of $407,000 to $1,058,300). Using a median cost of a CNA as $30,290 annually and $14.56 hourly, the study calculated that facilities would have been able to pay for “43,956 additional CNA hours with the loan that they received” (or “17,153 additional RN hours”). However, it found that 12 weeks after receiving a PPP loan, facilities actually increased the hours of certified nurse aide (CNA) time by only 26.19 hours per week (slightly more than one hour per day) and licensed practical nurse time by only 6.67 hours per week (slightly more than a quarter of an hour per day). Registered nurse hours were not significantly affected by PPP loans.
The Center also included a link to an NPR investigation: Sacha Pfeiffer, “How the Paycheck Protection Program went from good intentions to a huge free-for-all,” (Jan. 9, 2023).
The Whistleblower Center is looking for leads on nursing facilities that were short-staffed during the pandemic when Payroll Protection Program funds were distributed.
V. PART D UPDATE
IRA and Creditable Coverage
As a result of the Inflation Reduction Act (IRA), the out-of-pocket maximum under all Medicare Part D plans will be capped at $2,000 per year starting January 1, 2025. While this significant change gives current Part D enrollees peace of mind when it comes to budgeting for their medical expenses, an unintended consequence may fall on those Medicare-eligible individuals enrolled in employer or other non-Medicare plans.
Each fall, health plans are required to provide notice to their enrollees regarding whether their prescription drug coverage is “creditable” under Medicare standards. Enrollees can also request this information at any time during the year. A plan is “creditable” if coverage is at least as good as or better than the Medicare drug benefit. (42 C.F.R. §423.56). Creditable coverage is based on an actuarial equivalence test that measures whether the expected amount of paid claims is at least as much as the standard Part D benefit.
With the $2,000 cap coming to Part D plans in 2025, it is unclear whether drug coverage provided by other insurance that is creditable now will continue to be considered creditable in the future. After becoming Medicare eligible, individuals run the risk of accruing a Late Enrollment Penalty (LEP) for each month they are not enrolled in a plan providing creditable coverage. However, it is likely that many Medicare-eligible individuals do not understand what “creditable” means and what impact this could have in terms of penalties.
According to a Kiplinger article, CMS says it is evaluating the impact of the IRA on creditable coverage determinations and will not disqualify private plans that are considered creditable, for now. So, if a health plan’s prescription drug benefit was determined to be creditable in 2024, it should continue to be considered creditable in 2025, “as long as it continues to meet the criteria.” In addition, CMS added that it “is evaluating the continued use of the existing creditable coverage simplified methodology, or establishing a revised one, for plan year 2026, based on the recent changes to the standard Part D benefit made by the IRA.”
In short, CMS is aware of the issue and there are no steps Medicare-eligible individuals need to take other than to pay close attention to mail received from their plans. Concerned enrollees can always contact their plans for more information. This is an important issue to monitor if individuals do not receive adequate notice or are assessed late enrollment penalties as a result of this change.
Part D Demonstration Project Launched to Minimize Premium Increases in 2025
As noted above, the Inflation Reduction Act (IRA), signed into law by President Biden in 2022, makes a number of changes to the Medicare Part D prescription drug benefit, including instituting a cap on beneficiary out-of-pocket expenses, which is in effect now but will be lowered to $2,000 in 2025. In part, because of this redesign of the Part D benefit and a change in how Medicare pays Part D plans, the Centers for Medicare & Medicaid Services (CMS) reports observing “more variation in the stand-alone PDP [prescription drug plan] bids submitted by plan sponsors as compared to MA-PD plans for 2025 … [which, along with] resulting premium changes could create disruptive enrollment shifts in the PDP market during the initial implementation of the IRA benefit improvements.” (See CMS Fact Sheet and corresponding Press Release, July 29, 2024).
In an effort to increase premium stability among Part D plans, on July 29, 2024, CMS announced the Part D Premium Stabilization Demonstration. This voluntary, nationwide demo is open to all stand-alone Part D plan sponsors and would, among other things, “provide for greater government risk sharing for potential plan losses” requiring, in turn, that plans limit year-over-year premium increases to no more than $35. Plan sponsors had to notify CMS of their intent to participate by August 5, 2024, but, as in past years, final premium amounts for 2025 won’t be announced until September.
In the Press Release, CMS states: Given the meaningful protection offered to consumers, this voluntary demonstration is structured to encourage all stand-alone Part D plan sponsors offering Part D prescription drug plans to participate to provide stability across the entire Part D market.