Tuesday Evening
Congress introduces a bipartisan, bicameral CR to fund the government until March 2025. Many considered this version of the bill to be a “Christmas Tree” funding bill. A Christmas Tree bill includes many unrelated “policy riders” to the bill’s main purpose and often occurs at the end of the year just before the holidays. Healthcare policy topics in this bill included:
- 2.5% increase to the Medicare Physician Fee Schedule (PFS) Conversion Factor (CF) for 2025. This would have fully offset a 2.5% reduction that would have taken effect had Congress not acted.
- Extends the 2% Medicare sequestration physician payment cut due through 2033 as a “pay-for".
- Prevents the 4% PAYGO cut to Medicare PFS payments from taking effect.
- A two-year extension of the Medicare telehealth coverage flexibilities through the end of 2026, including payment parity for Rural Health Clinics (RHC) and Federally Qualified Health Centers (FQHC).
- Requires Medicare Advantage Plans to publicly list accurate provider directories on their websites beginning with the 2027 plan year.
- Extends the 1.0 Geographic Practice Cost Indices (GPCI) floor.
- Major reforms to Pharmacy Benefit managers (PBMs) including banning spread pricing for employer-sponsored and Medicaid plans. It also includes more transparency for PBM prices.
Wednesday Morning
In a series of posts on his platform X (formerly Twitter), Elon Musk expressed strong displeasure with the bill, arguing that it included too many items unrelated to essential government funding. As many members of Congress began to side with Musk, President-elect Donald Trump and Vice President-elect JD Vance additionally expressed their frustrations with the bill for similar reasons. They also asked for an unrelated increase or suspension of the debt ceiling as part of the CR. This frustrated fiscal conservatives who pledged to vote against any increases or suspensions to the debt ceiling. From there, this version of the CR was dead.
Wednesday Evening-Thursday Morning
House Republican Leadership, led by Speaker Mike Johnson, huddled to try and decide on what to do next. This is an extremely challenging position for the Speaker to navigate, with the new House election for the 119th Congress's Speaker quickly approaching on January 3rd when the new Congress is sworn in. He had to strike a balance between cutting policy riders to appease the critics with angering supporters for those policies.
Thursday Afternoon
Republican leadership debuted a new slimmed-down CR late Thursday afternoon. Among other changes, it removed several policy riders including the 2.5% increase to the PFS Conversion Factor, PBM reform, and the agreed-upon 2-year telehealth extension, which was shortened to 3
months and narrowed in scope. However, it notably included a 2-year suspension of the debt ceiling to (somewhat) adhere to the President-elect’s request.
Before a bill can be brought to the floor for a House vote, it must go through the House Rules Committee where voting rules are established. Votes held under a rule cannot be conducted on the same legislative day that the rule was passed. A legislative day is not the same as a calendar day. Essentially, it means Congress must adjourn and then reconvene before it can vote on the bill under the rule.
However, a key exception is that the House can vote on a bill under Suspension of the Rules. Voting under suspension allows the bill to be voted on more quickly but it requires a two-thirds majority rather than a simple majority to pass the bill, meaning it needs significant Democratic support to pass.
This version of the CR was brought to the floor at 6:00 PM on Thursday night, less than a few hours after the bill text was made public. Ultimately, 38 Republicans and all but two Democrats voted against the bill. With well less than even a simple majority in favor, this version of the bill seems to have only a slim chance of passing. This is even accounting for a rule that only requires a simple majority for passage.
Friday Afternoon (the time Capitol Insights is being written)
The main thing that has changed since last night is that a government shutdown is becoming more and more likely. This morning Speaker Johnson told reporters that a new plan was soon to be in motion. The House is now planning to hold individual votes on different parts of the package including one on the CR, one on disaster aid, and one on FARM bill reauthorization. There also could be a vote to raise the debt ceiling.
The Senate will then need to consider and pass whatever legislation passes the House. There is no guarantee that the Senate will act quickly. A shutdown through at least some or all of the weekend is now expected.
A brief weekend government shutdown will have a limited impact on the government’s operations. However, a prolonged shutdown that drags out through or beyond the holidays could have major implications. However, it is important to know that Medicare payments to clinicians will not be directly impacted by a government shutdown.
What does this mean for Healthcare Policy?
Here is where a few key healthcare policy issues as of Friday afternoon:
PFS Conversion Factor Adjustment
The 2.5% increase to the PFS CF was in the first proposed CR but not in the second. There will be a 2.83% cut to the conversion factor that will take effect on January 1st unless offset by Congress in some legislation before the end of 2024.
We know Representative Greg Murphy (R-NC-3) has been in close contact with Trump’s team. He has received a promise from the President-elect’s transition team that a physician payment fix will be addressed in March when government funding must be addressed again. Rep. Murphy says the fix will be retroactive. While it is reassuring that Congress will attempt to pass this payment increase in 2025, nothing is final until it is signed into law by the President. Further, clinicians must deal with low and inconsistent Medicare payments for at least the first few weeks of the year.
Looming 4% PAYGO Cut
Notably, the 4% PAYGO cut to physician Medicare payment has been averted in both proposed CRs released so far. Without Congressional action, this cut will take effect in early 2025. This shows that addressing the PAYGO cut seems to be a priority, even in slimmed down versions of the bill. The fact that it was addressed in both versions of the CR is reassuring. However, should things change and Congress allow the cut to take effect, CAI will provide additional information about how this specific payment cut will be operationalized.
2% Sequestration Cut
This cut has been maintained in both versions of the CR, with little to no chance of reversal in future government funding proposals. This 2% sequester cut is currently in effect and extensions of the sequester policy are effectively a budget gimmick used by legislators to save money on paper. The extension of this cut is unlikely to go away anytime in the foreseeable future. The Tuesday version of the CR extended sequestration into early 2033. However, the Thursday version did not extend sequestration beyond its current end date.
Medicare Telehealth Flexibilities
Versions of Medicare telehealth flexibility extensions have also been in both versions of the CR, showing this issue is a priority for many high-ranking lawmakers. The length and detail of the telehealth policy is still unclear. However, Congress is expected to pass some form of a Medicare telehealth flexibility extension.
PBM Reform
The prospects of PBM reform are growing dimmer, at least in the short term, despite bipartisan interest (including interest from President-elect Trump). These policies could resurface in early 2025 as part of a reconciliation package or a standalone PBM reform effort.
Conclusion
After a week of unexpected twists and turns, CAI is hesitant to make any predictions about how this saga will end—even the Speaker himself is unlikely to have a firm idea.
We will continue to follow this closely and provide an analysis of how the saga ends and what it means for healthcare policy in future editions of Capitol Insights.
CAI’s office will be closed between Christmas and New Years, but we will provide updates during the holidays as necessary if the situation extends into Christmas.
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