The House Energy and Commerce (E&C) Committee advanced its section of the House budget reconciliation bill, which includes major changes to both Medicare and Medicaid. The E&C section will eventually be combined with other sections developed by different Congressional committees into a single reconciliation bill that will go to the House of Representatives for a vote.
Using budget reconciliation will allow Republicans to pass the bill in the Senate with only a simple majority instead of the 60 votes that are needed to pass most legislation.
The E&C section is among the most impactful for allergists. The E&C Committee, which has broad jurisdiction over Medicare, Medicaid and other federal health programs, was instructed to develop a bill that saves $880 billion over ten years. This ambitious savings target suggested many changes to Medicare, Medicaid or other health programs.
Below is an overview of key provisions that would have the biggest impact on allergy practices. It is important to understand that the Senate is expected to make changes to the House bill. The policies summarized below could be changed in future compromises between the House and Senate.
Medicare payment increase to physicians
While the bill does not mitigate the 2.83% cut to Medicare payments for 2025, it includes a version of a Medicare payment increase that has been the Advocacy Council’s top advocacy priority for the last few years. Specifically, the bill would create a permanent annual inflationary update to physician Medicare payments.
In 2026, the bill would apply an increase equal to 75% of the Medicare Economic Index (MEI) increase, which measures medical inflation. Beginning in 2027 and beyond, there would be an annual increase equal to 10% of MEI.
The Advocacy Council, along with other organizations such as the American Medical Association (AMA) and MedPAC, have long advocated for an annual inflationary update to Medicare payments. Inflation has outpaced updates to the Medicare Physician Fee Schedule (PFS) by 33% since 2001.
The committee rejected an amendment from Rep. Alexandria Ocasio-Cortez that would have created a full 100% MEI adjustment. It would have been paid for by restricting how Medicare Advantage plans can “up code” their risk adjustment scores.
The Advocacy Council believes the annual inflationary updates should be 100% of MEI. However, this is a costly policy that makes it difficult for Congress to pass. While this version of the policy is not the amount we desire, it is a solid starting point for future increases. If this policy passes as part of the reconciliation bill, the Advocacy Council will continue to advocate for increasing the policy to a full MEI adjustment.
Medicaid reforms
Most of the bill’s $880 billion savings will come from changes to how the federal government subsidizes state Medicaid programs. The bill does not include some of the more drastic Medicaid funding reforms that had been discussed leading up to the markup.
Medicaid reforms in the bill include work requirements for able-bodied adults, limits to state “provider taxes” that are used to increase federal Medicaid payments to states, and more frequent eligibility reviews. Other provisions include prohibiting federal funding for noncitizens covered under Medicaid and ending an incentive payment to new Medicaid expansion states.
While these policies will help achieve significant federal spending reductions, the Congressional Budget Office (CBO) estimates that more than 10 million people will lose Medicaid coverage. However, some of these people are expected to enroll in ACA coverage, with a net estimated impact of 7.6 million new people being uninsured.
PBM reforms
Reining in Pharmacy Benefit Managers (PBMs) has been among the most bipartisan issues in Congress. However, major PBM reform legislation has yet to pass.
The reconciliation bill would apply many of these bipartisan reforms to Medicaid. The bill bans spread pricing in Medicaid. PBMs use spread pricing to pocket the savings they achieve for their health plan clients instead of passing these savings on to health plans or consumers. The bill also increases PBM transparency for Medicare Part D plans, limits how PBMs can mark up their prices, and allows “any willing pharmacy” to participate with a PBM.
Artificial intelligence
The section of the bill focused on communications policy included a provision that would significantly limit states from enforcing state AI regulations for ten years. The language is vague, and key details are needed to fully understand the impact of this policy. However, the section appears intended to allow states to implement laws that promote the use of AI but prohibit enforcing laws that restrict the use of AI.
The Advocacy Council – ADVOCATING FOR ALLERGISTS AND THEIR PATIENTS.
