Health Care Matters | February 7, 2025
Health Policy Tracker: Trump’s First 100 Days
Senate Panel Advances RFK Jr. for HHS Secretary
Robert F. Kennedy Jr. is one step closer to running the nation’s health agencies after the Senate Finance Committee voted narrowly Tuesday to advance the nomination of President Trump’s pick to serve as secretary of the Department of Health and Human Services. For more insights, read the following:
RFK Jr. Passes Key HHS Confirmation Hurdle with Senate Panel Vote (Washington Post)
RFK Jr. Likely to Win Confirmation to Top Trump Health Role as Key GOP Senator Says He’ll Vote Yes (STAT)
Trump’s Early Executive Actions Mirror Project 2025 Agenda
President Trump’s slew of executive orders and actions in his first three weeks in office reflect many of the policies outlined in Project 2025, a report proposing a roadmap for a total overhaul of the executive branch, which Trump has repeatedly denied having any involvement. Read the following to learn more about how the Trump administration’s actions align with Project 2025, what’s different, and what to watch for going forward.
Medicare Advantage Issued 50M Prior Authorizations in 2023
According to a new KFF report and as reported by Healthcare Finance News, Medicare Advantage insurers made nearly 50 million prior authorization determinations in 2023. This reflects a steady increase over the past few years, consistent with the growth in Medicare Advantage enrollment. Between 2019 and 2023, the number of Medicare Advantage enrollees rose from 22 million to 31 million.
The report highlights that nearly all Medicare Advantage enrollees (99%) are required to obtain prior authorization for certain services, particularly higher-cost services like inpatient hospital stays and chemotherapy, while traditional Medicare only requires prior authorization for a limited set of services. Despite the high volume of determinations, a notable portion of these requests were denied. In 2023, 3.2 million prior authorization requests (6.4%) were denied, and 11.7% of those denials were appealed. While the share of prior authorizations appealed was relatively small (though it did increase compared to 2021 and 2022), over 80% of the appeals were partially or fully overturned in 2023. Read more here and here.
Why It Matters
It is well known that the process of obtaining prior authorization can lead to delays in care and administrative burdens for healthcare providers. Although a small share of MA prior authorization denials are appealed, a substantial portion of these appeals (81.7%) are partially or fully overturned indicating that many initial denials may not be justified, adding unnecessary hurdles for patients and providers.
CMS under the Biden administration, released the CY 2026 Policy and Technical Changes to the Medicare Advantage and Part D Programs proposed rule in November with included ways to improve prior authorization standards and increase transparency. These changes aim to ensure that prior authorization requirements are clinically justified and not used to inappropriately delay or deny care. The Trump administration has historically supported Medicare Advantage, for instance giving plans increased flexibility in areas like supplemental benefits. The support for the program is likely to continue, but it remains to be seen how they will respond to proposed policies around stricter oversight of prior authorization including the use of AI. Whatever the approach, CMS will need to signal its direction quickly as MA plans start crunching the numbers to submit their bids to CMS in June.
Predictability vs. Accuracy in MSSP Benchmarks
Effective in PY2024, the Medicare Shared Savings Program (MSSP) financial benchmark methodology was updated to include an Accountable Care Prospective Trend (ACPT) in addition to the existing national-regional trend factor, which is calculated retroactively. The inclusion of a prospective trend is intended to provide a more stable and predictable benchmark for ACOs. This week, actuaries at Milliman released an analysis examining the anticipated impact of the ACPT in its first year of use in MSSP. Milliman estimates that for ACOs starting in PY2024, the ACPT is understated by 4-6%. Given that the ACPT now constitutes one-third of the benchmark trend, this understatement may reduce an ACO's overall benchmark by 2-5%. Such a reduction is significant, as it can substantially impact an ACO's shared savings or losses, potentially determining whether the ACO shares in savings at all. Read here.
Why It Matters
When setting Total Cost of Care (TCoC) benchmarks, all payers must balance accuracy and predictability, and Medicare ACO programs are no exception. CMS has experimented with prospectively set trends in recent Innovation Center ACO models like ACO REACH. However, PY2024 marks the first time these prospective trends are being incorporated into MSSP, the largest and permanent CMS ACO program.
As highlighted in the Milliman whitepaper, CMS has built-in safeguards that can mitigate or eliminate ACO losses. Additionally, CMS can adjust the weight of the ACO's risk adjustment factor (ACPT) in relation to the national-regional trend if the ACPT significantly diverges from actual spending growth. In the near term, ACOs should closely monitor whether CMS opts to reduce the weight of the ACPT. In the longer term, we expect continued efforts to find the right balance between predictability and accuracy.
What We Are Reading
The Spillover Effect of the CMS Innovation Center
Models established by the CMS Innovation Center to reduce Medicare and Medicaid spending while maintaining or enhancing the quality of care affect the overall health care delivery system beyond participating organizations. Interviews with providers, payers, management services organizations, and industry and academic experts examine the drivers of spillover effects from the CMS Innovation Center’s programs. Read here.
Understanding People’s Health Care Priorities
The HCP-LAN’s PPC recently released “Understanding People’s Health Care Priorities,” a guidance document that provides health plans and providers with a clear understanding of what people expect and need from their health care experience. Read here.
What We Are Writing
Tackling High Health Care Costs: Policy Considerations for Administrative and Prescription Drug Challenges
After a decade-plus of concerted efforts to address the rising cost of care through population health, care coordination, and other value-based care strategies, the team at Coral is taking a closer look at what’s driving our higher expenditures today and policy considerations to address these issues. Read here.
Podcast Spotlight
The ACO Agenda: Preparing for Policy Changes and Operational Success with Noah Champagne and Cory Gusland