GOVERNMENT FUNDING EXPIRES SOON

The government will run out of funding in 11 days, on November 17. The House will continue to work to advance annual appropriations bills this week. However, a continuing resolution (CR) will be needed to fund the government, and it appears that House Republicans’ goal is to extend government funding through the CR until at least January 15, 2024.

In the House, Speaker Johnson (R-LA) is weighing a few options for the CR, including the following:

• A clean CR (no provisions attached)
• A CR that includes policy provisions such as immigration reform, spending cuts and funding for Israel or Ukraine
• A ladder CR, which would extend government funding for each agency for different periods of time

The chosen option needs to be able to pass the House and be viable in the Senate to avoid a government shutdown. We will be watching this week for the path forward.

On the regulatory front, the Centers for Medicare and Medicaid Services (CMS) published a set of final rules for the Hospital Outpatient Prospective Payment System (OPPS), the Medicare Physician Fee Schedule (PFS) and 340B remedy last week. Please check out our website for our summaries on all these final rules. Key takeaways include the following:

• The Administration finalized the 340B remedy rule largely as proposed. However, the Administration delayed the budget neutrality offset start date by one year; it will begin January 1, 2026.
• In the OPPS final rule, CMS increased payment rates based on a productivity-adjusted market basket factor of 3.1%. Hospitals and ambulatory surgical centers (ASCs) that fail to meet their respective quality reporting program requirements will be subject to a 2% reduction in the CY 2024 fee schedule increase factor. For ASCs, this adjustment reflects the extension of the policy to adjust the ASC payment system using the hospital market basket update for two additional years (2024 and 2025).
• In the Medicare PFS final rule, physicians and other clinicians face cuts of more than 3.37% for CY 2024, a slightly larger cut than was outlined in the proposed rule. The finalized conversion factor (CF) update is primarily based on three factors: a statutory 0% update scheduled for the PFS in CY 2024, a negative 2.18% budget neutrality adjustment due to final PFS policies, and a funding patch passed by Congress at the end of CY 2022 through the Consolidated Appropriations Act, 2023, which partially mitigated a cut to the CY 2023 CF and offset part of the reduction to the CY 2024 CF.