INSIDE THE ISSUE

> Medicaid Cuts …
> … and the Reaction to Them
> Capping Co-Pays, Deductibles
> Legislature Passes Supp to Help GIC
> Senate Budget Debate Begins
> 100 Suggestions
> Transition

MONDAY REPORT

Medicaid Cuts Emerge from Republican-led Energy & Commerce Committee

Last Wednesday after a 26-hour meeting, Republicans on the U.S. House’s Energy & Commerce Committee advanced legislation that would cut $625 billion out of the Medicaid program over the next decade. In doing so, more than 8 million people would lose health coverage, according to the Congressional Budget Office.

The committee’s action was part of the overall House reconciliation effort to reduce federal spending to help fund the president’s tax reduction bill. The 30-24 vote to advance the Energy & Commerce proposal was purely along party lines.

The top takeaways from the complex Medicaid proposal are that it would reduce the Affordable Care Act’s Medicaid expansion population’s Federal Medical Assistance Percentage (FMAP) – that is, the federal reimbursement match to states – from 90% to 80% if the state provides coverage to not-qualified immigrants. The bill removes federal funding for Planned Parenthood and places a moratorium on new or increased Medicaid healthcare-related taxes. One provision in the bill mirrors a new Centers for Medicare and Medicaid Services (CMS) proposed rule that would introduce additional requirements for healthcare-related taxes that use non-uniform rates. These provisions will likely force changes to the Massachusetts insurer assessment, which is particularly worrisome for the Commonwealth as a portion of this assessment funds the Health Safety Net (see story below).

The bill also establishes work requirements for certain Medicaid beneficiaries, effective January 1, 2029, and requires verification every six months that a person is working no less than 80 hours per month to get benefits. This action as well as requirement for the ACA Medicaid expansion population to be redetermined for eligibility every six months would likely result in many low-income residents losing coverage. Of further concerns, the bill would reduce the lookback coverage from 90 days from when a person applies for Medicaid to only 30 days, which will increase patient and provider bad debt. On a positive front, it delays for three years scheduled Medicaid disproportionate share hospital cuts.

By cutting federal payments while the cost of care and the demand for care remains static or grows, more financial pressure would be put on states to find the necessary funds to maintain coverage. Last Tuesday as the Energy & Commerce Committee began its meeting, Governor Maura Healey told WBUR, “there’s no way that state budgets can make up for the kinds of cuts” the Republicans are proposing.

The State House News Service quoted a Healey administration official on background last Wednesday as saying a preliminary analysis from the state found Massachusetts would lose $1 billion annually from the GOP bill, resulting in coverage losses for “hundreds of thousands” of individuals.

MHA’s President & CEO Steve Walsh said, “Medicaid is more than just a program supporting care for two million people in Massachusetts. It is the very foundation that our nation’s healthcare and economy are built upon. The proposal from D.C. will make financing patient care much more challenging, while making it more difficult for many people to maintain coverage. It comes at a time when hospitals are already struggling with daily operations and as virtually every other sector relies on the strength of our healthcare system to succeed. We are working closely with our national partners and federal delegation as this critical reconciliation process continues over the next few months.”

Trahan’s and Auchincloss’ Reactions

The Bay State Congressional Delegation has two members of the Energy & Commerce Committee. This is what they had to say about what some are calling the greatest change to the Medicaid program since 1965.

Rep. Jake Auchincloss (D-Mass.), speaking of the people who will lose coverage: “What happens is, losing access to primary and preventive care, they actually require more healthcare, and they visit the emergency room, and they get care that takes longer and is less comprehensive. And here’s what that means for everyday Americans, middle class and working class, including those who get access to health insurance through their employer. It means that their health insurance premiums are going to go up, because when hospitals provide care to people through the emergency rooms, they have to cross-subsidize that by raising the cost that they charge to commercial payers.”

Rep. Lori Trahan (D-Mass.): “It may be easy to sit here in Washington without having to face the people who will feel the impact of a bill that will strip millions of Americans of their health coverage – easy because you don’t have to look them in the eyes or hear their stories.” She showed a photo of a constituent, Philip from Haverhill, Mass.). “Philip has a disability, but that hasn’t stopped him from giving back – whether volunteering with Meals on Wheels, training service dogs, or caring for animals at a sanctuary. He does all this because of Medicaid. Medicaid funds the programs that help Philip gain skills, stay engaged, and remain independent. Medicaid isn’t just a healthcare program – it’s a foundation for independence for people with disabilities like Philip, who want to live their lives with dignity … And I know my Republican colleagues will say that states should make up for it – but they know that’s not possible. They know that when funds are cut, it’s initiatives like these that are always first on the chopping block.”

Healey’s DOI Caps Insurance Company Co-Pays, Deductibles

The state’s Division of Insurance issued a regulatory bulletin last Thursday that requires insurance companies to limit the growth of deductibles and co-pays for patients to the rate of medical inflation – or approximately 4.8%.

“Massachusetts families across the state are struggling with high healthcare costs,” said Governor Healey. “Deductibles and co-pays are a significant health cost driver, so we are taking action to limit those costs that come right out of the pockets of patients and families.”

Insurance Commissioner Michael Caljouw noted that deductibles and co-pay cost growth have outpaced wage and salary growth.

Of note, the 4.8% cap is 1.2% higher than the 3.6% healthcare cost growth benchmark to which hospitals and health systems are held.

“The Healey-Driscoll Administration should be applauded for the patient-centric actions announced today,” MHA President & CEO Steve Walsh said. “This policy will provide much-needed cost relief for Massachusetts residents, while limiting the unimaginable losses hospitals and healthcare providers are enduring to deliver care to their patients and communities. We hope this measure will also spark collaboration on administrative and prior authorization burdens, which cost the healthcare system billions and too often block patients from receiving the world-class care they deserve.”

Governor Signs Single-Item Supp Budget to Rescue GIC

The Massachusetts House last Tuesday, followed by the Senate on Thursday, passed a version of the supplemental budget Governor Maura Healey had filed in April to provide $240 million to the Group Insurance Commission, which last Monday had run out of money to pay claims. The governor later on Thursday signed the bill.

The House and Senate stripped out other parts of the governor’s supplemental budget to vote exclusively for the $240 million.

“We appreciate the GIC’s advocacy to respond to this critical issue that was going to affect our providers, and further applaud the legislature for their swift response to avoid another fiscal crisis,” said Mike Sroczynski, MHA’s executive vice president and general counsel.

Hospitals Counting on State Senate to Provide Safety Net Relief

The Massachusetts Senate is expected to begin debate tomorrow, May 20, on the $61.32 billion fiscal year 2026 state budget proposal that the chamber’s Ways & Means Committee released on May 7.

Senate leaders announced that as the budget would be “policy light,” amendments to it would not include matters that are currently under review by the legislature’s joint committees. Even with that restriction, Senators filed 1,058 amendments, including six MHA priority amendments.

A key, MHA-endorsed amendment (#482) to provide relief to the Health Safety Net was filed by Sen. Barry Finegold (D-Andover) and mirrors one that the House passed filed by Rep. John Lawn (D-Watertown). That amendment would transfer funds – as allowed by statute – from the Commonwealth Care Trust Fund to the Health Safety Net, which this year will face a deficit of more than $250 million on the heels of last fiscal year’s $198 million shortfall, and the projected deficits of up to $290 million in FY2026. Hospitals alone are responsible for covering shortfalls to the Health Safety Net, which reimburses care provided to uninsured and underinsured individuals. The Commonwealth Care Trust Fund, on the other hand, is relatively flush with cash, possessing a balance of more than $400 million and $500 million at the end of FY2023 and FY2024, respectively, and a current FY2025 balance of more than $477.5 million, with additional revenues expected through the end of the fiscal year. If $230 million is indeed transferred to the safety net, the state would be eligible for $115 million in matching federal funds that would available for additional spending or replenishing the Commonwealth Care Trust Fund.

Another amendment (#589), filed by Sen. Bill Driscoll (D-Milton), would address the Health Safety Net’s financial instability in two ways. First, commercial health insurance companies would be required to share responsibility for the cost of the fund’s shortfalls, similar to their initial surcharge contribution to the program. Second, the language updates the state’s statutory requirement to meaningfully support the program by updating the state funding amount to $60 million.

Among other MHA priority amendments is one (#425) filed by Sen. Adam Gomez (D-Springfield) to establish a special commission to study and make recommendations on improving health equity and digital access in Massachusetts through the use of digital health navigators.

AHA: You Asked for Cuts? We Have 100 Suggestions

As the Trump administration slashes regulations to fulfill its aim of reducing the size of government, the American Hospital Association last week sent a letter to key health officials in the administration saying, essentially, “If you’re cutting, we’ve got 100 ideas of where you can trim.”

“The Trump administration has rightly pointed out that the health status of too many Americans does not reflect the greatness or wealth of our nation,” AHA wrote to U.S. Health & Human Services Secretary Robert Kennedy, Centers for Medicare & Medicaid Services Administrator Mehmet Oz, M.D., and Office of Management and Budget Director Russell Vought. “Excessive regulatory and administrative burdens are a key contributor, as they add unnecessary cost to the healthcare system, reduce patient access to care and stifle innovation.”

Relying on a member survey that generated more than 2,700 ideas, AHA whittled the list down to “100 ways that the administration could reduce the burden on hospitals and health systems.” The one hundred suggestions are grouped into four categories: billing, payment and other administrative requirements; quality and patient safety; telehealth; and workforce.

Many of AHA’s recommendations mirror what MHA has been suggesting at the state level. For example, AHA and MHA urge the streamlining of the prior authorization process to ensure that insurers do not apply the practice inappropriately to delay care to patients. Both associations also support eliminating the skilled nursing facility three-day length of stay requirement that often delays patients from transitioning to the most appropriate site of care.

Regarding telehealth, AHA calls for elimination of federal “site restriction” rules, writing, “Under current rules [that remain in place in spite of the continuing pandemic-era flexibilities], patients must be in a clinical site of care, which completely undermines the value of telehealth for patients, limits its adoption, and adds costs for providers.” MHA and AHA have both advocated for the permanent elimination of the geographic and originating site restrictions.

Additionally, one requirement under the workforce recommendations would eliminate the CMS requirement that “telehealth providers must list their home address on publicly available enrollment and claims forms when performing telehealth services from their homes, compromising their privacy and safety.” Similarly, both MHA and AHA have advocated for the removal of this requirement to ensure the wellbeing of clinicians in their home offices.

The full list of 100 AHA suggestions is here.

Transition

Carolyn Jackson, who resigned from Saint Vincent Hospital in Worcester in February, has been named CEO of Encompass Health Rehabilitation Hospital of Braintree. The facility is licensed to operate a total of 187 beds – 166 at the host hospital in Braintree and 21 at a freestanding satellite location in Framingham. Jackson has a bachelor’s degree in chemical engineering from the University of Delaware and an MBA from Harvard Business School.

John LoDico, Editor