(May 12, 2025) - Late last night, the House Energy and Commerce Committee released its highly anticipated budget reconciliation draft legislation. They expect to mark it up tomorrow and forward it to the House floor to be combined with the work of other committees into the larger reconciliation bill. While this draft legislation touches various parts of the committee’s jurisdiction, for Kansas Hospital Association purposes, the proposed changes to Medicaid are of primary importance.
This draft does two things that are of great concern to KHA. First, it proposes to cap provider assessment rates at their current levels, or, more specifically, current levels as of the bill’s future date of enactment. Additionally, it contains a provision that would trigger a reevaluation of all provider assessments to ensure they are redistributive. We have already reached out to our delegation with concern that this cap would unfairly target Kansas. Late last year, the Kansas Department of Health and Environment submitted a legislatively approved increase from 3 percent to 6 percent, which the Centers for Medicare & Medicaid Services are currently adjudicating. The Kansas Legislature also approved a proposal this year allowing Critical Access Hospitals to participate in the provider assessment. The proposal will need to be submitted immediately by KDHE to CMS. We are still reviewing the redistribution language to see if it is relevant to Kansas.
Additionally, the draft changes state-directed payments from being limited by the average commercial rate to instead being limited by the Medicare payment rate, but it does grandfather in previously approved rates. While the Kansas rate might be grandfathered in, there is a great concern that since all states must eventually go back to CMS for future rate approvals, the grandfather period will expire.
Also, the draft closes the Managed Care Organization tax loophole, shortens the lookback period of presumptive Medicaid eligibility from three months to one month and includes much-anticipated work requirements, particularly for the expansion-eligible population. On the positive side, it delays Disproportionate Share Hospital reductions until 2029, updates the conversion factor for the Medicare Physician Fee Schedule, reforms Pharmacy Benefit Manager practices by requiring new transparency efforts, and bans spread pricing and delays implementation of the nursing home minimum staffing mandate for ten years.
More information continues to be forthcoming in the lead-up to tomorrow’s bill markup in the committee. We will share additional details and a potential action alert very soon.