The SMART Health Care Act (H.R. 3222) would make several changes to Medicare policy aimed at tightening payments, improving data-driven risk adjustments, and expanding price transparency and access. Key provisions include: (1) refining risk adjustment for Medicare Advantage by requiring the use of two years of diagnostic data for calculating risk scores (starting in 2026); (2) promoting site-neutral payments by phasing out some exceptions and aligning payments for on-campus outpatient department services with physician-office rates; (3) enhancing access for rural areas by clarifying when a physician-owned hospital qualifies as serving a rural population; (4) expanding the 340B drug discount program to ensure patients pay no more than the purchase price plus required discounts and creating mechanisms to adjust Medicare reimbursements and publicly report these figures; and (5) slightly increasing quality measurement flexibility for Skilled Nursing Facilities by allowing a higher annual reduction target. Overall, the bill aims to make Medicare Advantage payments more accurate, reduce some hospital- vs. physician-office payment discrepancies, and improve affordability and transparency in drug pricing.
Key Points
- 1Risk adjustment improvements for Medicare Advantage: For 2026 and beyond, the Secretary must use two years of available diagnostic data to determine risk scores that drive payment to MA plans, subject to certain conditions.
- 2Site-neutral payment reforms: Sunset certain exceptions by 2026 so that applicable items and services are paid more consistently; on-campus outpatient department payments should align with rates used in physician office settings for covered items and services, with special definitions and rural/medically underserved hospital carve-outs.
- 3Rural access and physician-owned hospitals: Modify rural-provider rules to clarify how rural designated health services furnished by physician-owned entities are treated, aiming to improve access for rural communities.
- 4Drug price affordability via 340B: Expand 340B provisions to require covered entities to provide outpatient drugs to patients at or below the price paid by the entity, with a Secretary-designed mechanism to enforce compliance, adjust hospital outpatient drug reimbursements, and publicly report totals paid and received.
- 5Quality of care at skilled nursing facilities: Allow the annual efficiency metric or penalty adjustment to be flexibly set between 2 and 5 percentage points (instead of a fixed 2 percentage points), as determined by the Secretary.