Health Care Watch: December 23, 2024
The following Federal Health Policy (FHP) Strategies Weekly Health Care Watch provides a summary of legislative and regulatory health care activities from December 15 – December 21. Where available, hyperlinks are included to the relevant documents. Please let us know if you have any questions or would like additional information on the items below. NOTE: The next Health Care Watch will be published on January 11, 2025.
LEGISLATIVE UPDATE
House
On December 18, the House passed eight health care-related bills. Legislation passed included a S. Amdt. to H.R. 7213, the AUTISM Cares Act of 2024, H.R. 7224, legislation to amend the Public Health Service Act to reauthorize the Stop, Observe, Ask, and Respond to Health and Wellness Training Program, and H.R. 4534, the Women and Lung Cancer Research and Preventive Services Act of 2024. A list of all legislation passed can be found here.
On December 20, and after two failed attempts, the House passed an updated and significantly scaled-back government funding package. The Senate passed this bill on December 21. The package extends federal government funding through March 14, 2025. The legislation also extends many health care programs for three months through April 1, 2025, such as Medicare telehealth flexibilities and Medicare-Dependent Hospital (MDH) program and low volume hospitals payments. However, the updated version does not include relief from Medicare physician payment cuts in 2025 or pharmacy benefit manager reforms. These issues might still be addressed in the opening months of 2025. In exchange for dropping the federal debt ceiling extension that was included in a previous iteration, a priority of President-elect Trump, House GOP leaders have reportedly promised its members to try to move a reconciliation bill early next year that would raise the federal borrowing limit in exchange for $2.5 trillion in mandatory spending cuts. While the likelihood of such cuts passing, even with Republican-only support, remains dubious, this could put significant Medicare and Medicaid cuts on the table.
On December 20, Rep. Buddy Carter (R-GA) was selected to serve as Energy & Commerce Health Subcommittee Chairman for the 119th Congress. Current Subcommittee staffer Jay Gulshen will serve as the top GOP health policy aide on the committee.
The House will return on January 3, 2025.
Senate
On December 19, Senate Republicans launched a Make America Healthy Again caucus to support legislative advancement of Robert F. Kennedy Jr.’s agenda. The caucus’s founding members include Sens. Ron Johnson (R-WI), Cynthia Lummis (R-WY), Roger Marshall (R-KS), Rick Scott (R-FL) and Tommy Tuberville (R-AL). The group’s policy goals include promoting food and nonpharmaceutical interventions, encouraging agricultural practices that improve the nutritional value of food, and furthering efforts to research, prevent, and treat chronic diseases.
On December 19, Finance Committee Chairman Ron Wyden (D-OR) released findings from the Committee’s investigation into eight hospitals that reportedly delayed and denied women emergency reproductive health care in potential violation of the Emergency Medical Treatment and Active Labor Act (EMTALA). The report, entitled Practicing Amid ‘a Minefield’: Emergency Reproductive Health Care Post-Dobbs, found that, faced with the challenges presented by state abortion bans, most of the hospitals surveyed have not provided physicians with clear and comprehensive guidance on protocols for providing the emergency reproductive health care that is guaranteed under EMTALA. The report includes recommendations regarding priority actions to restore comprehensive emergency reproductive health.
On December 21, incoming Majority Leader John Thune (R-SD) announced that Sen. Marshall will join the Finance Committee and Sens. Tim Scott (R-SC), Josh Hawley (R-MO), Jim Banks (R-IN), Mike Crapo (R-ID), and Marsha Blackburn (R-TN) will join the HELP Committee next Congress.
The Senate will return from recess on January 3, 2025.
REGULATORY UPDATE
On December 16, the Centers for Medicare & Medicaid (CMS) Innovation Center announced that it is ending the Medicare Advantage (MA) Value-Based Insurance Design (VBID) model at the end of 2025 due to the model’s “substantial and unmitigable costs to the Medicare Trust Funds.” CMS notes that costs to the Medicare Trust Funds ($2.3 billion in CY 2021 and $2.2 billion in CY 2022) associated with the model are “unprecedented.” CMS notes they are making this announcement more than a year before the termination effective date to provide ample time for MA plans to prepare for CY 2026 in ways that best support their enrollees’ needs.
On December 16, CMS approved California’s request for a behavioral health section 1115 waiver to test the “Behavioral Health Community-Based Organized Networks of Equitable Care and Treatment (BH-CONNECT)” program. Under the waiver, California has the authority to test the effectiveness of innovative practices aimed at strengthening the continuum of community-based behavioral health services. Goals of the waiver include strengthening the workforce, supporting the health of children and youth involved in the child welfare system, and reducing stays in institutional settings for significant behavioral health needs. The waiver is effective from January 2025 through December 2029.
On December 16, the Department of Health & Human Services (HHS) released the 2024 Artificial Intelligence (AI) Use Case Inventory. In 2024, HHS disclosed use cases for AI in 271 applications, an increase from 163 last year. Of the 271 use cases, 59 have been initiated, 57 are under development or targeted for development, 35 are being implemented and assessed, 104 are integrated into operations and 16 have been retired.
On December 16, incoming Energy & Commerce Committee Chairman Brett Guthrie (R-KY) announced that Megan Jackson will serve as the committee’s GOP Staff Director next Congress.
On December 17, CMS released the Inpatient Rehabilitation Facility (IRF) and Long-Term Care Hospital (LTCH) Provider Preview Reports. These reports contain provider performance scores for quality measures, which will be published on the compare tool on Medicare.gov and the Provider Data Catalog (PDC) during the March 2025 refresh.
On December 17, the Food & Drug Administration (FDA) sent warning letters to four companies for introducing unapproved GLP-1s, including semaglutide, tirzepatide and/or retatrutide products into interstate commerce. The letters were sent to: Xcel Peptides, Swisschems, Summit Research, and Prime Peptides. The agency also sent a warning letter to Veronvy, which offers unapproved and misbranded oral GLP-1 products, including one that claims to be approved by FDA.
On December 18, the Department of Justice (DOJ) filed a lawsuit against CVS Pharmacy, stating that CVS Pharmacy Inc. and various subsidiaries filled unlawful prescriptions in violation of the Controlled Substances Act (CSA) and sought reimbursement from federal healthcare programs for unlawful prescriptions in violation of the False Claims Act (FCA). DOJ’s complaint alleges that, from Oct. 17, 2013, to the present, CVS knowingly filled prescriptions for controlled substances that lacked a legitimate medical purpose, were not valid, and/or were not issued in the usual course of professional practice.
On December 18, FDA approved Ryoncil (remestemcel-L-rknd), an allogeneic (donor) bone marrow-derived mesenchymal stromal cell (MSC) therapy indicated for the treatment of steroid-refractory acute graft-versus-host disease (SR-aGVHD) in pediatric patients 2 months of age and older.
On December 19, FDA announced that the shortage of Lilly’s obesity drug tirzepatide has been resolved. This decision will result in a stop to companies making cheaper copies of the injection. FDA stated that it would give these compounders a grace period of 60 to 90 days before enforcing rules that would halt their work.
On December 20, CMS issued explanations for how it arrived at the negotiated prices (Maximum Fair Price (MFP)) for the 10 Part D drugs covered under the Medicare negotiation program for Initial Price Applicability Year (IPAY) 2026. Specifically, for each negotiated drug, CMS issued: (1) a file explaining how it arrived at the MFP and CMS’ perspective on the data that had the greatest impact on CMS’ determination of offers and consideration of counteroffers; and (2) a file with redacted versions of the data submitted by the Primary Manufacturer and other interested parties in response to the negotiation program information collection request. Links to the files can be found here.
On December 20, HHS announced that some Medicare enrollees will pay less for 64 drugs available through Medicare Part B. The drugs will have a lowered Part B coinsurance rate from January 1, 2025 – March 31, 2025, since drug companies raised prices for each of these 64 drugs faster than the rate of inflation. HHS stated that over 853,000 people with Medicare use these drugs annually to treat conditions such as cancer, osteoporosis, and substance use disorder. HHS noted that some people with Medicare who use these drugs in the first quarter of 2025 may save between $1 and $10,818 per day.
On December 20, FDA approved Symvess, the first acellular tissue engineered vessel indicated for use in adults as a vascular conduit for extremity arterial injury when urgent revascularization is needed to avoid imminent limb loss, and autologous vein graft is not feasible.
WHITE HOUSE
On December 16, the Biden Administration extended the Affordable Care Act enrollment deadline for coverage starting January 1, 2025. Consumers in the 31 states using HealthCare.gov now have until midnight local time on December 18 to select a plan.
On December 14, President-elect Donald Trump announced that John Brooks will lead HHS’ landing team. Brooks served as a senior Medicare official during Trump’s first term and went on to advise former HHS Secretary Alex Azar on drug pricing policy.
RULES AT THE WHITE HOUSE OFFICE OF MANAGEMENT & BUDGET (OMB)
Pending Review
CMS
Healthcare System Resiliency and Modernization (CMS-3426); Proposed Rule; 10/12/23
Amendments to Rules Governing Organ Procurement Organizations (CMS-3409); Proposed Rule; 8/8/24
Advance Notice of Methodological Changes for CY 2026 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies + Draft CY 2026 Part D Redesign Program Instructions; Notice; 11/26/24
FDA
Considerations for Including Biopsies in Clinical Trials; Draft Guidance for Industry, Investigators, Institutions, and Institutional Review Boards; Notice; 9/27/24
Communications From Firms to Health Care Providers Regarding Scientific Information on Unapproved Uses of Approved/Cleared Medical Products: Questions and Answers; Guidance for Industry (2023-663); Notice; 10/23/24
Validation of Certain In Vitro Diagnostic Devices for Emerging Pathogens During a Section 564 Declared Emergency; Draft Guidance for Industry and Food and Drug Administration Staff; Availability; Notice; 10/29/24
REPORTS
Government Accountability Office (GAO)
On December 17, GAO released a report examining opioid use disorder grants. GAO stated that since fiscal year 2018, the Substance Abuse and Mental Health Services Administration (SAMHSA) has awarded about $8.1 billion in State Opioid Response (SOR) grants and $307.5 million in Tribal Opioid Response (TOR) grants nationwide. SAMHSA allocates funding based on factors such as overdose death rates, and recently revised its allocation to better ensure funding goes to recipients with the greatest need. GAO stated that SAMHSA has taken steps to address some challenges raised by grant recipients, but other challenges remain. For example, some grant recipients reported challenges obtaining data on services and results of other grant recipients. Obtaining these data would help grant recipients have additional information to use to help improve the services they offer. Additionally, GAO stated that SAMHSA developed a data sharing strategy but has not determined specific details and time frames. Implementing such a plan would better position SAMHSA to improve how funds are used. GAO recommended that SAMHSA: 1) complete and implement a plan for reporting subrecipient information; 2) complete and implement a plan to share data about the use of grant funding; and 3) assess whether and how to reduce administrative challenges faced by Tribes and take appropriate actions.
On December 18, GAO released a report examining HHS' Medical Countermeasures Injury Compensation Program. GAO found that the program received a surge of 13,333 COVID-19 claims, 27 times the number of claims received in the first decade of the program. The program completed a review of about a fourth of all claims and found that 92 (3%) of the completed claims were eligible for compensation. OIG stated that the Health Resources Services Administration (HRSA) paid roughly $6.5 million in compensation for eligible claims as of June 2024, with most of that amount for serious injuries, such as Guillain-Barré syndrome, caused by the H1N1 vaccine. About $400,000 was paid for injuries related to COVID-19 countermeasures, such as myocarditis.
Centers for Medicare & Medicaid Services (CMS) Office of the Actuary
On December 18, CMS’s Office of the Actuary released its annual National Health Expenditure report. The report found that total health spending in 2023 was $4.9 trillion, an increase of 7.5%, accounting for 17.6% of the total U.S. economy. The acceleration in health care spending growth reflected growth in non-price factors, such as use and intensity of services. Additionally, the report found that spending in the private insurance sector as well as Medicare grew at a faster rate than in 2022, while spending and enrollment growth in Medicaid slowed with the end of the COVID-19 public health emergency.
Office of Inspector General (OIG)
On December 19 OIG released a report examining Medicaid gross spending on 10 selected diabetes and two selected weight loss drugs. OIG found that Medicaid gross spending on the 12 selected drugs increased by 540% from 2019 to 2023, totaling $9.4 billion in 2023. During this same time period, utilization of the 12 drugs increased by 350%, totaling 11 million claims in 2023. OIG estimates that Medicaid gross spending on the 12 selected drugs accounted for approximately 9% of Medicaid spending on covered outpatient prescription drugs in 2023. OIG also estimates that Medicaid gross spending on the 12 selected drugs could potentially amount to over $29 billion in 2026. OIG did not provide any recommendations.
On December 19, OIG released a report examining increased COVID-19 federal medical assistance percentages (FMAP). OIG found that 12 of the 13 selected States underreported the Federal share of collections by a net $61.8 million because they did not use the correct FMAP or made calculation errors. OIG made four recommendations to CMS to improve how States calculate and report Medicaid collections, including States correcting their reporting to return the net $61.8 million in Federal share.
ADDITIONAL POLICY NEWS
On December 16, drugmaker Sanofi filed a lawsuit against HHS over the rejection of its plan to pay hospitals rebates instead of upfront discounts on eligible drugs under the 340B program. Sanofi was planning to include 25 drugs under its rebate model including the anti-inflammatory biologic Dupixent and insulin product Lantus. The lawsuit is similar to litigation filed by Johnson & Johnson and Eli Lilly over their 340B rebate plans that were also rejected by HHS.