S. 1264 — Mental and Physical Health Care Comorbidities Act of 2025

This section establishes a five-year Medicare demonstration program, from October 1, 2025, through September 30, 2030, to test and evaluate innovations by eligible hospitals in treating mental and physical health comorbidities (and risks thereof) among applicable individuals in vulnerable communities, including by addressing adverse social determinants of health. (As background, the program follows an existing Centers for Medicare & Medicaid Services (CMS) Innovation Center model promoting collaboratives of high-quality, low-cost providers.) Under the program, the Secretary, in coordination with participating hospitals, must (1) identify, validate, and disseminate evidence-based best practices improving care and outcomes for such individuals; and (2) assist in identifying potential Medicare and Medicaid payment reforms (e.g., care coordination reimbursement, mental health homes). Participating hospitals must enter an agreement with the Secretary including an approved plan with quality metrics addressing specified elements (e.g., innovations and evidence base, target population, community partners, expected cost reductions and minority health improvements, evaluation metrics); engage in a Secretary-established learning collaborative to share practices; certify innovations supplement (not supplant) existing activities; and receive a negotiated annualized payment arrangement (e.g., lump sum, capitated, or with financial risk), subject to repayment for noncompliance. (Thus, the program supports hospital-led initiatives with federal payments while fostering broader policy insights and potential savings in Medicare, Medicaid, and non-medical public expenditures.)