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Providers should be focusing on strategies aimed at choosing meaningful measures, implementing interventions, and understanding cost.

Innovation and disruption

Health Care Policy and Program Changes in the Bipartisan Budget Act of 2018

  • Jennifer Boese
  • 3/14/2018

After struggling for months to agree on any funding package, Congress passed the large-scale Bipartisan Budget Act of 2018 (BBA 2018) in early February temporarily funding government, increasing spending caps in domestic and military programs for the next several years, and funding disaster relief in hard-hit areas. The new law contains dozens of health care policy changes.

Medicare extenders

Key among the enacted health care provisions were Medicare “extender” policies. Extender policies are items that Congress must renew periodically to prevent them from lapsing. For rural hospitals, the BBA 2018 provided five-year extensions to both the Medicare Dependent Hospital (MDH) and the Low-Volume Adjustment (LVA) programs. Both had previously expired on September 30, 2017.

“These extender provisions are welcome news to rural hospitals that qualify as MDH or LVA. Prior extensions were far shorter and created periods of instability from year to year. Under the enacted law, the MDH and LVA programs will continue through September 30, 2022, and provide stability.” Rob Schile, Managing Principal

While the current LVA qualifying criteria remains the same for fiscal year (FY) 2018, the five-year extension comes with the following criteria adjustments beginning in FY 2019 and running through FY 2022:

MDH, LVA status

Both programs are extended until 2022. In 2019, the LVA program transitions from Medicare discharge to total discharges.

  • LVA status will be based on a hospital’s total discharges. Currently, the program only looks at Medicare discharges.
  • The threshold to qualify as an LVA increases from 1,600 Medicare discharges to 3,800 total discharges.
  • The threshold for receiving a full 25 percent add-on payment increases from 200 to 500 total discharges. In other words, those hospitals having fewer than 500 total discharges would qualify for the full 25 percent add-on payment. The sliding scale payment adjustment zeros out when a hospital surpasses 3,800 total discharges.

Other “extender” policies in the BBA 2018 include:

  • The permanent elimination of the annual cap on outpatient therapies beginning January 1, 2018. Under the policy, Medicare claims for occupational therapy, physical therapy, and speech-language therapy are no longer subject to the cap. The BBA 2018 requires certain claims to still use the KX modifier, and certain claims will be subject to targeted medical review.
  • A five-year extension of the rural ambulance add-on payments for ground ambulance transports in rural and urban areas, as well as the “super rural” add-on payment. Both policies are extended through FY 2022.
  • A five-year extension of the home health rural add-on. This payment increase is extended through FY 2022, but with changes beginning in FY 2019. Those changes will adjust the payment increase by year and by tiers of rural counties.

MIPS changes

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) created a new payment structure for physicians and other eligible clinicians, and put to rest the much-maligned Sustainable Growth Rate (SGR) formula. Replacing the SGR under MACRA were two approaches aimed at driving value-based payments under Medicare: Advanced Payments Models (APMs) and the Merit-Based Incentive Payment System (MIPS). Since MACRA’s enactment in 2015, numerous legislative and regulatory adjustments have occurred to the MIPS program, and the BBA 2018 added even more.

Originally, the MIPS program created a composite score for eligible providers based and weighted on four domains: quality, cost and resource use, improvement activities, and advancing care information. The BBA 2018 makes several larger adjustments to these items:

MIPS Questions for Providers

  • Allows the Centers for Medicare and Medicaid Services (CMS) to delay the increase in the cost component weighting for three years (through 2021). CMS may set the cost component as low as 10 percent and as high as 30 percent of the cost component score.
  • Eliminates the inclusion of improvement in the cost component through 2021.
  • Changes what qualifies under the cost component from “items and services” to “covered professional services,” removing separately billable Part B items and services to only those services covered by the physician fee schedule.
  • Allows CMS to alter the performance threshold through 2021 in order to provide clinicians with a more “gradual and incremental” transition.
  • Allows the Physician-Focused Payment Model Technical Advisory Committee (PTAC) to provide feedback to individuals and stakeholders on APM models submitted to PTAC. 
“Despite the changes brought about by passage of BBA 2018, the fundamentals that providers should be focusing on do not change. Strategies aimed at choosing meaningful measures, implementing interventions, and understanding cost and cost drivers of attributed populations remain critical success factors.” Penny Osmon Bahr, Principal 

Accountable care organizations

The BBA 2018 demonstrates the continued interest by Congress in the use of — and payment for — telehealth services. Beginning 2020, the law allows for expanded use of telehealth services by extending the Next Generation account care organization’s (ACOs) telehealth waiver authority to additional, qualifying ACOs. Under the changes, a Medicare beneficiary’s home is an allowable originating site, and geographic limitations for telehealth services are removed. The telehealth changes will apply to Medicare Shared Savings Program (MSSP) Track II and Track III, as well as other two-sided risk ACO models with prospective beneficiary assignments.

Also worth noting is the law’s move to allow ACOs under the MSSP to seek prospective assignment of beneficiaries, as well as to allow beneficiaries to select an ACO in which their primary care provider is participating. Additionally, the law clears the way for a voluntary incentive program in order to encourage use of coordinated primary care services. Under the ACO Beneficiary Incentive Program, an incentive of up to $20 per qualifying primary care service is allowable in two-sided risk models.


Also included in BBA 2018 was the Creating High-Quality Results and Outcomes Necessary to Improve Chronic Care Act (CHRONIC Care Act). In addition to the ACO changes, the Independence at Home Demonstration is extended another two years. This demo is currently being undertaken by 14 participating sites to test how and if savings can be realized by delivering comprehensive primary care services at home.

With this act, Congress continues to show its interest in the value of better utilizing technology to deliver care and reduce costs to the Medicare program by allowing for the use of telehealth to those with end stage renal disease and receiving dialysis at home. Beginning in 2019, clinical assessments can be done via telehealth as long as there are periodic face-to-face consultations, as further defined under the law. The law also makes changes to what qualifies as an “originating site” by including freestanding dialysis centers and patients’ homes. No geographic restrictions apply, and no facility fee will be paid if furnished in the home.

Dozens of other provisions

While the above highlighted a few items of note in the BBA 2018, the law has dozens of other health care changes, a sampling of which include:

Post-acute changes

The BBA 2018 included numerous policies impacting post-acute care settings. These newly enacted provisions offer enhanced opportunities to advance coordinated care across the continuum.

  • Two-year extension of funding for Community Health Centers through 2019
  • Payment increase of 2.4 percent in FY 2019 for skilled nursing facilities
  • Various home health payment changes
  • Multiple changes to special needs plans
  • Temporary transitional payments for home infusion therapy services
  • Expansion of the use of telehealth to individuals with a stroke
  • One-year enforcement delay of direct supervision requirements for rural hospitals. In its final 2018 Outpatient Prospective Payment System rule, CMS had already provided for an enforcement moratorium in 2018 – 2019. This provision ensures no gap year for 2017.
  • Delays, then extends the ACA’s Medicaid Disproportionate Share Hospital payment reductions
  • Reduction in hospital payments for early discharges to hospice

How we can help

Public policy changes like those contained in the BBA 2018 offer opportunities and challenges to your health care business. CLA’s integrated approach ties together deep financial and operational knowledge with regulatory and legislative insights. Stay informed about policy changes by regularly connecting with your CLA health care professional.