H.R. 3222: Stopping Medicare Abuses to Restore Trust in Health Care Act

The proposed legislation, known as the "Stopping Medicare Abuses to Restore Trust in Health Care Act" or "SMART Health Care Act," intends to implement several changes to improve the Medicare program. Here’s a breakdown of the key provisions included in the bill:

1. Improving Risk Adjustment under Medicare Advantage

The bill aims to amend the methodology used for risk adjustment in Medicare Advantage plans. Specifically:

• Starting in 2026, the Secretary of Health and Human Services will use two years of diagnostic data to enhance the risk adjustment methodology, which determines payments to Medicare Advantage plans based on the health status of enrollees.

2. Promoting Medicare Site-Neutral Payments

The bill seeks to establish more consistent payment rates for medical services regardless of where they are provided. This entails:

• Ending certain exceptions that allow for higher payments for services delivered in outpatient departments starting January 1, 2026.
• Specifying how payments for items and services provided in on-campus outpatient departments should be aligned with the fee schedule applicable to physician offices.

3. Increasing Access for Rural Communities by Physician-Owned Hospitals

To enhance access to healthcare in rural areas, the bill allows for designated health services to be provided by physician-owned entities, provided that most of the services are delivered to individuals in those rural areas.

4. Making Drugs More Affordable for Medicare Patients

Provisions in the bill address the costs of outpatient drugs by:

• Ensuring that covered entities provide drugs at or below their purchase price, minus any discounts received.
• Establishing mechanisms for compliance and adjusting reimbursement rates accordingly.
• Requiring public reporting of the financial details regarding drug prices and reimbursements.

5. Improving Quality of Care at Skilled Nursing Facilities

The bill emphasizes better quality care in skilled nursing facilities by modifying payment adjustments from a minimum of 2 percentage points to between 2 and 5 percentage points, as determined appropriate by the Secretary for future fiscal years.

Relevant Companies

• HCA Healthcare (HCA) - This hospital management company could be affected by changes in payment structures, particularly related to on-campus outpatient departments and their reimbursement rates.
• Anthem, Inc. (ANTM) - As a health insurance provider involved in Medicare Advantage, changes to risk adjustment methodologies could impact how they operate and set premiums.
• UnitedHealth Group (UNH) - As one of the largest Medicare Advantage plan providers, alterations in risk adjustment could significantly affect their financial performance and planning.