SMART Health Care Act

Bill Number

H.R. 3222

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Health

Status

Introduced

Latest Action

2025-05-06: Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Last Updated

2025-05-21T10:29:32Z

AI-Generated Summary

Summary of H.R. 3222: Stopping Medicare Abuses to Restore Trust in Health Care Act (SMART Health Care Act)

Purpose

This bill aims to enhance the integrity and efficiency of Medicare by addressing potential abuses in risk adjustment for Medicare Advantage plans, promoting fairer payment structures across healthcare settings, improving access to care in rural areas, ensuring drug discounts under the 340B program benefit patients directly, and boosting quality standards in skilled nursing facilities. Overall, it seeks to restore trust in the Medicare system while controlling costs and expanding access.

Key Provisions

• Risk Adjustment in Medicare Advantage (Section 2): Requires the use of two years of diagnostic data (when available) for risk adjustment calculations starting in 2026, to better reflect enrollees' health needs.
• Site-Neutral Payments (Section 3):
• Ends exceptions allowing higher payments for certain services at hospital outpatient departments after January 1, 2026.
• Applies lower physician office payment rates to services at on-campus outpatient departments (except dedicated emergency departments), with exemptions for critical access hospitals, sole community hospitals, Medicare-dependent small rural hospitals, and other rural facilities.
• Rural Provider Exceptions (Section 4): Expands the "rural provider" exception under the Stark Law (a rule prohibiting physician self-referrals for certain services) to allow physician-owned hospitals in rural areas to provide designated health services to local residents without restrictions.
• 340B Drug Discount Program (Section 5): Mandates that covered entities (like hospitals and clinics) pass 340B discounts directly to patients, ensuring they pay no more than the entity's discounted purchase price minus any rebates. The Secretary of Health and Human Services must create compliance mechanisms, adjust hospital reimbursements for Medicare drugs, and publicly report totals on payments and receipts for these drugs.
• Skilled Nursing Facility Quality Measures (Section 6): Allows the Secretary to adjust quality rating adjustments by 2 to 5 percentage points (as deemed appropriate) for fiscal year 2025 and beyond, to refine how facilities are evaluated and paid under Medicare.

Significant Changes to Existing Law

• Medicare Advantage Risk Adjustment: Shifts from potentially using one year of data to requiring two years, making health risk assessments more comprehensive and reducing overpayments based on incomplete data.
• Site-Neutral Payments: Eliminates payment exceptions for off-campus and certain on-campus hospital outpatient services, enforcing uniform rates across settings (except rural exemptions), which reverses prior allowances for higher hospital-based reimbursements.
• Stark Law Rural Exception: Broadens the exception to focus solely on services provided to rural residents, removing prior geographic and ownership limitations that restricted physician-owned hospitals.
• 340B Program Requirements: Introduces a direct pass-through of discounts to patients and new federal oversight, including reimbursement adjustments and public transparency, which were not previously mandated.
• Skilled Nursing Facility Payments: Expands flexibility in quality adjustments from a fixed 2 percentage points to a range of 2-5, allowing more tailored evaluations.

Potential Impacts

• On Government Agencies: The Centers for Medicare & Medicaid Services (CMS) will face increased administrative burdens, such as implementing new data requirements, compliance mechanisms for 340B, and public reporting, potentially raising operational costs but enabling better oversight and cost savings through reduced improper payments.
• On Citizens: Medicare beneficiaries, especially in rural areas, may gain better access to care and lower drug costs via 340B pass-throughs. Urban patients could see stabilized or reduced premiums in Medicare Advantage due to fairer risk adjustments, though some hospital services might become more expensive if providers pass on payment cuts.
• On International Relations: No direct impacts, as the bill focuses on domestic U.S. healthcare policy.

Main Stakeholders Affected

• Medicare Advantage Plans: Face stricter risk adjustment, potentially leading to more accurate but lower payments for high-risk enrollees.
• Hospitals and Outpatient Departments: Urban hospitals may experience revenue losses from site-neutral payments, while rural and critical access hospitals benefit from exemptions and expanded physician ownership.
• Physicians and Physician-Owned Hospitals: Gain opportunities for expansion in rural areas, improving local service availability.
• 340B Covered Entities (e.g., safety-net hospitals, clinics): Must comply with patient discount rules, with added reporting; non-compliance could affect funding.
• Skilled Nursing Facilities: Subject to refined quality metrics, which could influence Medicare reimbursements and care standards.
• Medicare Beneficiaries: Primary beneficiaries through cost controls, affordability improvements, and rural access enhancements.

Notable Legal, Constitutional, or Political Implications

• Legal: Strengthens enforcement against Medicare abuses (e.g., upcoding in risk adjustment) and clarifies 340B obligations, potentially leading to more litigation over compliance or payment disputes. The Stark Law changes promote competition without altering core anti-kickback rules.
• Constitutional: No apparent challenges; the bill operates within Congress's authority over interstate commerce and spending under the Spending Clause.
• Political: Represents a push for healthcare cost containment and rural equity, appealing to fiscal conservatives and rural advocates. It could spark debates on balancing provider payments with patient savings, influencing future Medicare reforms amid ongoing concerns about program solvency.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Spartz, Victoria [R-IN-5]

Recent Actions

• 2025-05-06: Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2025-05-06: Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2025-05-06: Introduced in House
• 2025-05-06: Introduced in House

Bill Versions

• Stopping Medicare Abuses to Restore Trust in Health Care Act — issued 2025-05-06 — PDF (8 pages)