Health Care Matters | March 21, 2025
Health Policy Tracker: Trump’s First 100 Days
Senate Reviews Dr. Oz for CMS Administrator
On March 14, the Senate Finance Committee held a confirmation hearing for Dr. Mehmet Oz's nomination as administrator of CMS. His confirmation is expected to pass with significantly less controversy than his future boss, HHS Secretary Robert F. Kennedy Jr. During the hearing, Oz outlined key priorities if confirmed, and noted support for Medicaid work requirements, limiting undocumented individuals from receiving Medicaid benefits and did not rule out cuts to the program. Somewhat surprising was his agreement with some of Senator Elizabeth Warren's comments about the need to improve Medicare Advantage (MA) as many suspect that he will be a promoter of MA over traditional Medicare. The committee will soon schedule a vote to decide whether to advance his nomination to the full Senate. For more, read the following.
Oz Avoids Promise to Oppose Medicaid Cuts at Senate Hearing (Washington Post)
Dr. Oz Questioned Over Medicaid Cuts, Promises Medicare Advantage Scrutiny (Fierce Healthcare)
MedPAC March 2025 Report to Congress
The latest MedPAC report to Congress includes recommendations for updating Medicare payments across various fee-for-service systems. One of the significant recommendations is to tie physician payment increases to the Medicare Economic Index (MEI) minus 1 percentage point for 2026. This proposal aims to better align payment rates with the rising costs of providing care, addressing concerns from provider groups about the adequacy of current payment updates. Additionally, MedPAC recommends a slight increase in hospital payment rates by the amount specified in current law, plus 1% in 2026.
The report also addresses the Medicare Advantage (MA) program, noting ongoing issues with favorable selection and coding intensity. MedPAC estimates that the federal government is paying approximately 20% more for MA beneficiaries than for those in traditional Medicare, a difference projected to cost $84 billion in 2025 leading to recommendations to mitigate these disparities and improve the efficiency of MA payments. Read here.
Why It Matters
Many of these cancellations aren't surprising, as several models were already slated to end in the near future or were pre-implementation with limited momentum. For instance, the $2 generic drug model lacked stakeholder enthusiasm, while the Accelerating Clinical Evidence Model had already been slow-rolled by CMS, making their discontinuation foreseeable. States like Maryland and Vermont are transitioning to the AHEAD model, and the Primary Care First (PCF) program had an established end date of 2026.
However, the cancellation of primary care models, particularly the Making Care Primary (MCP) model, presents significant challenges for participating providers.
MCP was launched as a 10-year test to bring new organizations, specifically community health centers and FQHCs, into VBP arrangements. Providers have already made investments in care delivery changes and will need to find new ways to sustain these investments or discontinue the investments which could impact patient care and access.
In addition to these challenges, there are critical details still to be clarified, such as when payments will stop for these models and what that means for quality reporting and measurement. Since quality performance in models like PCF directly influences future payments, how this will be managed moving forward remains a key concern for many providers.
Looking ahead, CMMI is developing a new strategy that aligns with the current administration’s goals. While we can expect announcements about new models soon, it's important to recognize that the runway for launching these initiatives may take some time, leaving providers with limited immediate options.
Hospital-At-Home Startups DispatchHealth and Medically Home To Merge
As reported by Modern Healthcare and Forbes, DispatchHealth has acquired Medically Home, a move set to create a powerful force in the home health sector. This merger brings together two prominent providers of hospital-level care at home, with DispatchHealth based in Denver and Medically Home in Boston. The transaction will expand access to high-acuity care across 50 major metropolitan areas, in partnership with nearly 40 health systems. The combined entity will be able to offer a broader range of services, including urgent care, skilled nursing, and acute-level care, to patients in 23 states and the District of Columbia. Read here and here.
Why It Matters
This merger reflects a growing recognition within the healthcare industry that home-based care is valuable for patients and cost-effective for taxpayers, employers, and insurers. By combining DispatchHealth's clinical delivery with Medically Home’s technological platform, the merger aims to create an integrated, scalable model for hospital-level care at home, poised to meet the future demand for America’s aging population.
While venture-backed solutions like this one have the potential to drive innovation, they also come with challenges. Many of these companies promise transformative change, but often fall short of delivering on those promises with some failing to scale or struggling to integrate with existing health care systems. The outcome of this merger will be closely watched to determine whether it can meet the high expectations set by its backers and truly revolutionize home-based care.
What We Are Reading
Medicaid Per Capita Caps: Design Considerations and Policy Implications
The American Academy of Actuaries published an issue brief on Medicaid per capita caps and discusses some of the key design considerations and the potential implications. In particular, the brief considers how to set the initial federal per capita cap as well as how that cap would change over time. Read here.
The General Public Vastly Overestimates Primary Care Spending in the United States
A study published in the Annals of Family Medicine assessed public perceptions of US primary care spending and found tremendous disparity between current levels of primary care spending and public perceptions of primary care expenditure and value. Read here.
Copay Accumulator And Maximizer Programs: Stakes Rise For Patients As Federal Rulemaking Lags
Coral’s Partner Alison Falb provided insights for a new Health Affairs article which explores the reasons behind copay accumulator and maximizer programs, their impact on patient care and the health system, and ongoing legislative and regulatory developments for health care decision makers. Read here.
What We Are Listening To
Tradeoffs: Medicare and Medicaid Under Dr. Oz: What to Expect
To get an inside look at the impact Oz could have as one of the country’s top health care officials, Tradeoffs talked with two people: Tara Bannow, a STAT News reporter who profiled Oz, and Tom Scully, who ran CMS under President George W. Bush. Listen here.
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