Sponsors
Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Last progress May 6, 2025 (10 months ago)
Introduced on May 6, 2025 by Victoria Spartz
Rewrites several Medicare payment rules and 340B drug pricing rules. It requires Medicare Advantage risk scores to use two years of diagnostic data starting in 2026; makes many hospital on‑campus outpatient services paid like physician‑office visits (with some small/rural exceptions) and ends certain current exceptions effective Jan 1, 2026; changes a rural-provider rule in the physician self‑referral statute (text truncated in the file); and adds a 340B requirement that covered entities supply outpatient drugs at no more than their purchase price minus discounts/rebates, plus new reporting and enforcement steps. A final provision intends to improve skilled nursing facility quality but the bill text for that change was not provided.
Amends section 1853(a)(3)(C)(iii) of the Social Security Act by striking and inserting a revised subclause (I) that reads: 'In general Subject to subclause (II), such risk; and'.
Adds a new subclause (II) titled 'Use of health status data' requiring that for 2026 and each subsequent year the Secretary shall use two years of diagnostic data (when available) under the risk adjustment methodology.
Redesignates subparagraph (E) of section 1833(t)(21) of the Social Security Act as subparagraph (F).
Inserts a new subparagraph (E) to state that clauses (ii) and (iv) of subparagraph (B) shall not apply with respect to applicable items and services furnished on or after January 1, 2026 (a sunset of those exceptions).
Amends paragraph (1)(B) of section 1833(t) by adjusting punctuation in clauses (iv) and (v) and by adding a new clause (vi) that explicitly states paragraph (1)(B) does not include applicable items and services (as defined in new paragraph (23)(A)).
Who is affected and how:
Medicare Advantage enrollees and plans: The change to require two years of diagnostic data for risk adjustment (starting in 2026) affects how plan payments are calculated. Plans could receive higher or lower payments depending on whether two‑year diagnostic histories increase measured risk relative to current methods. Changes could affect plan benefits, premiums, or network strategies indirectly.
Hospitals and hospital outpatient departments (HOPDs): Many on‑campus outpatient services will be reimbursed at the physician fee schedule rather than the higher hospital outpatient rates. That reduces revenue for hospital‑owned outpatient clinics and could change decisions about maintaining on‑campus outpatient services, staffing, or facility investments. Small and rural hospitals have some exceptions, but the broad effect is lower payments for affected services beginning for services on/after Jan 1, 2026.
Physicians and independent physician practices: Site‑neutral payments narrow the payment gap between hospital‑owned outpatient departments and physician offices; independent practices may face less competition from hospital pricing and might see reimbursement parity for visits and services when those services shift to the physician fee schedule.
Rural providers and rural communities: The bill replaces a rural‑provider provision in the Stark statute; the new rule applies where services are furnished in a rural area and are mostly to residents of that area. The truncated text prevents a full assessment, but such changes can alter relationships between rural hospitals and physician groups, and affect referrals and ownership/contracting arrangements.
340B covered entities (safety‑net hospitals, qualifying clinics) and their patients: Requiring covered entities to provide outpatient drugs at no more than purchase price minus additional discounts/rebates would remove or sharply reduce the revenue many covered entities currently obtain when they purchase drugs at 340B prices and are reimbursed at higher Medicare rates. That reduces a source of internal subsidy for some safety‑net services, potentially forcing cost shifts, service adjustments, or seeking alternate funding. The rule adds reporting and compliance obligations that increase administrative burden.
Drug manufacturers and suppliers: The 340B changes and required public reporting of amounts paid/received may affect manufacturer contracting, rebate practices, and negotiations with covered entities. Manufacturers could face pressure to change pricing or contracting to adapt to transparency and enforcement mechanisms.
Medicare program and CMS: CMS will need to update payment systems (physician fee schedule vs hospital outpatient payment adjustments), risk‑adjustment systems to ingest and apply two years of diagnostic data, implement 340B compliance mechanisms, change outpatient drug reimbursement formulas, and prepare public reporting. These are significant operational and policy changes.
Skilled nursing facilities (SNFs): The bill signals a change intended to “improve quality of care” at SNFs, but without the text the direct effects are unknown; SNFs should expect possible new quality metrics, reporting, or payment changes depending on the final language.
Overall fiscal and service delivery effects: Shifting many outpatient payments to site‑neutral (physician fee schedule) levels and constraining 340B margins are likely to reduce revenue for some hospitals and 340B covered entities, especially larger hospital systems that operate many on‑campus outpatient departments. That could slow hospital consolidation of outpatient services, change where services are furnished, pressure safety‑net providers’ cross‑subsidies, and push CMS to adjust other payments. The combined statutory changes touch multiple payment systems and will require CMS rulemaking and operational work to implement. The missing text for two sections (rural Stark and SNF quality) introduces uncertainty about the full reach and timeline of the bill’s effects.