[PBMs, Hospitals, Docs] Healthcare Extenders: State of Play

By Beth Steindecker Published on December 13, 2024 PDF

While Republicans and Democrats are trying to hash out a healthcare extenders package to add to a short-term government funding measure that needs to be taken up and passed by next Friday, we ascribe just 50/50 odds of success (physician practices, hospitals, PBMs, diagnostics, telehealth, pharma), with the alternative being a ~90 day Continuing Resolution (CR).

We note things are quickly happening behind closed doors and, should there be a final compromise reached, it would likely be announced over the weekend (Monday at the latest). We do think a deal would likely include a waiver of PAYGO sequestration. If so, below is a chart of the latest reported components of such a healthcare package, with spending offsets primarily derived from PBM reforms, minimal hospital outpatient department changes, and Medicare sequestration extensions, compared to the initial GOP offer and Democrats’ counteroffer.

Keep in mind, Congress could easily decide to do the bare minimum on healthcare and merely extend expiring healthcare funding and postpone healthcare cuts through March 14, when the anticipated short-term CR would likely be set to expire. Alternatively, Congress could default to doing nothing on these issues in the next week.

Either scenario imposes great pressure on the incoming Congress to act, especially given the various stakeholders wishing to avoid funding expirations, rate reductions, and the looming threat of PAYGO sequestration and its maximum 4% cut to Medicare providers that would materialize in late January.

Besides the expectation that PAYGO sequestration is likely to be waived, as has always been the case, Republican control of Congress suggests that a longer-term healthcare extenders package is likely to be primarily financed by savings from changes to nursing homes policy, PBMs, hospitals, hospices, and extension in the out-years of the 2% Medicare provider sequestration. Repealing the nursing home minimum staffing rule is very likely by a GOP Congress.