Health Care Watch: July 1, 2024
The following Federal Health Policy (FHP) Strategies Weekly Health Care Watch provides a summary of legislative and regulatory health care activities from June 23 – June 29. 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.
LEGISLATIVE UPDATE
House
On June 21, Energy & Commerce Committee Chair Cathy McMorris Rodgers (R-WA) sent a letter to Food & Drug Administration (FDA) Commissioner Robert Califf requesting information regarding FDA’s foreign drug inspection program. Specifically, the letter asks for FDA to provide records of inspections, copies of policy and guidance documents, and data on outcomes and trends to the committee by July 8.
On June 24, the Congressional Budget Office (CBO) and the Joint Committee on Taxation responded to a letter from Budget Committee Chairman Jodey Arrington (R-TX) and Ways and Means Chairman Jason Smith (R-MA) requesting information on the budgetary impacts of making permanent the Affordable Care Act (ACA) premium tax credits. CBO stated that making the credit permanent would add to the deficit by$335 billion over a decade and lead to an average of 3.4 million people being uninsured yearly.
On June 25, a bipartisan, bicameral group of legislators, led by Reps. Judy Chu (D-CA), Jerrold Nadler (D-NY) and Sen. Elizabeth Warren (D-MA), sent a letter to Centers for Medicare & Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure urging the Agency to increase oversight of artificial intelligence (AI) and algorithmic software tools used to guide coverage decisions in Medicare Advantage (MA) plans. The letter asks that CMS take specific actions to combat inappropriate use of prior authorization by asking that CMS: clarify the specific elements that must be contained in prior authorization denial notices; establish an approval process to review AI and algorithmic tools and their inputs to ensure the integrity of their use and conduct a review of algorithm and AI tools currently being used; and prohibit the use of AI/algorithmic tools and software from use in coverage denials until a systematic review of their use can be completed.
On June 26, the Ways & Means Health Subcommittee held a hearing entitled Improving Value-Based Care for Patients and Providers. The witnesses discussed ways to improve and promote value-based care agreements.
On June 27, the Appropriations Committee advanced, along party lines, the Fiscal Year (FY) 2025 bill for the Labor, Health and Human Services, Education, and Related Agencies Subcommittee. The Labor, Health and Human Services, Education, and Related Agencies Appropriations Act provides a total discretionary allocation of $185.8 billion, which is $8.6 billion (4%) below the FY 2024 enacted score,$23.8 billion (11%) below the FY 2024 effective spending level, and $36.2 billion (15%) below the President’s Budget Request.
On June 27, the Ways & Means Committee held a markup of health care innovation legislation. The committee examined and advanced four pieces of legislation that would allow Medicare coverage of weight-loss drugs and cancer screening for a limited group of beneficiaries and provide four years of automatic coverage of breakthrough medical devices that receive FDA approval, among other policies. The legislation was advanced with broad bipartisan majorities.
On June 27, Energy & Commerce Committee Chair Rogers canceled a markup scheduled to be held that day, including a bill to extend the telehealth flexibilities, due to a current lack of support over her data privacy legislation, a top priority for her.
The House is in recess until July 8.
Senate
On June 24, Finance Committee Chairman Ron Wyden (D-OR) sent a letter to CMS Administrator Brooks-LaSure asking the Agency to increase its oversight and enforcement of Medicare Part D program requirements for pharmacy benefit managers (PBMs). The letter outlines several actions that CMS could immediately take including: enforcing the “Any Willing Pharmacy” requirements by ensuring that PBMs reimburse pharmacies at a minimum of the cost to acquire and dispense covered prescription drugs; enforcing, such as through auditing, the pharmacy price concessions provision included in the Contract Year 2023 MA and Part D final rule; and implementing standardized pharmacy measures.
The Senate is in recess until July 8.
REGULATORY UPDATE
On June 24, the Department of Health & Human Services (HHS) released a final rule that establishes disincentives for health care providers that have committed information blocking. HHS created the following punishments for health care providers found by the HHS Office of Inspector General (OIG) to have committed information blocking and referred by OIG to the CMS:
If the eligible hospital is not a meaningful electronic health record (EHR) user, the eligible hospital will not be able to earn three quarters of the annual market basket increase;
If the critical access hospital (CAH) is not a meaningful EHR user, payment will be reduced to 100% of reasonable costs instead of 101%;
If the Merit-based Incentive Payment System (MIPS) eligible clinician is not a meaningful EHR user, then they will receive a zero score in the MIPS Promoting Interoperability performance category; and
If a health care provider that is an Accountable Care Organization (ACO), ACO participant, or ACO provider or supplier has committed information blocking, they may be ineligible to participate in the program for a period of at least one year.
HHS stated that additional disincentives may be established through future rulemaking. A fact sheet detailing the final rule can be found here.
On June 25, FDA issued a Small Entity Compliance Guide to assist small entities in complying with the FDA’s regulations as they apply to in vitro diagnostic (IVD) products, including laboratory developed tests (LDTs). The LDT Final Rule published on May 6, 2024, amends the FDA’s regulations to make explicit that IVDs are devices under the Federal Food, Drug, and Cosmetic Act including when the manufacturer of the IVD is a laboratory.
On June 26, CMS released the Calendar Year (CY) 2025 Home Health Prospective Payment System (HH PPS) proposed rule, which would update Medicare payment policies and rates for Home Health Agencies (HHAs). Specifically, the rule proposes a permanent prospective adjustment to the CY 2025 home health payment rate of -4.067%, to account for behavioral changes associated with the implementation of the Patient-Driven Groupings Model (PDGM). Updated rates include the proposed CY 2025 home health payment update of 2.5% ($415 million increase), which is offset by an estimated 3.6% decrease that reflects the proposed permanent behavior adjustment ($595 million decrease), and an estimated 0.6% decrease that reflects a proposed update to outlier payments ($100 million decrease). CMS estimates that Medicare payments to HHAs in CY 2025 would decrease overall by 1.7%, or $280 million, compared to CY 2024, based on the proposed policies. Additionally, CMS is proposing to: recalibrate the PDGM case-mix weights; update outlier payments, the low utilization payment adjustment (LUPA) thresholds, functional impairment levels, and comorbidity adjustment subgroups for CY 2025. A fact sheet detailing the proposed rule can be found here. Comments on the proposed rule are due by August 26.
On June 26, CMS announced the latest Medicare Part B drugs (64 drugs in total) that will be subject to the Inflation Reduction Act (IRA) inflation rebate penalty from July 1, 2024 to September 30, 2024. CMS will invoice manufacturers for these Part B inflation rebates no later than fall 2025. However, beneficiaries’ out-of-pocket costs for these drugs effective July 1, 2024 will be lower reflecting 20% of the inflation-adjusted payment amount.
On June 26, FDA issued draft guidance entitled Diversity Action Plans to Improve Enrollment of Participants from Underrepresented Populations in Clinical Studies, to assist medical product sponsors in submitting Diversity Action Plans to support certain clinical studies. The guidance aims to facilitate broader applicability of results across a broad spectrum of patient populations and enhance understanding of the disease or medical product under study as well as provide valuable insights to inform the safe and effective use of the medical product among patients.
On June 26, the Centers for Disease Control and Prevention (CDC) updated its recommendation for the use of Respiratory Syncytial Virus (RSV) vaccines in people ages 60 and older. For the upcoming respiratory virus season, CDC recommends that everyone ages 75 and older and people ages 60–74 who are at increased risk of severe RSV receive the RSV vaccine.
On June 26, CMS released the Notice of Funding Opportunity (NOFO) application for the Transforming Maternal Health (TMaH) Model. The model’s primary focus is improving health outcomes for mothers and their infants enrolled in Medicaid and Childrens’ Health Insurance Program (CHIP). Under TMaH, selected state Medicaid agencies will receive targeted technical support with the goal of developing a whole-person approach to pregnancy, childbirth, and postpartum care. CMS will issue Cooperative Agreements to up to 15 state Medicaid agencies. Applications are due September 20, 2024, and resources to support states in developing their applications are available here.
On June 27, CMS released the CY 2025 End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) Proposed Rule. CMS is proposing to increase the ESRD PPS base rate to $273.20. Total payments to all ESRD facilities, both freestanding and hospital-based, would increase by approximately 2.2%. The CY 2025 ESRD PPS proposed rule also includes a proposed change to the methodology for calculating the ESRD facility wage index, proposed changes to the Low-Volume Payment Adjustment (LVPA) methodology, updates to the acute kidney injury (AKI) dialysis payment rate, and extends Medicare payment to dialysis in the home setting for beneficiaries with AKI. In addition, the rule addresses operational issues associated with the inclusion of oral-only drugs in the ESRD PPS on January 1, 2025. A fact sheet detailing the proposed rule can be found here. Comments are due August 26.
On June 27, FDA granted marketing authorization to Cepheid for the Xpert HCV test and GeneXpert Xpress System, the first hepatitis C virus (HCV) test that can be used to bring diagnosis to appropriately certified point-of-care settings for individuals at risk for hepatitis C. The test may be performed in settings operating under a Clinical Laboratory Improvement Amendments (CLIA) Certificate of Waiver.
On June 27, CDC’s Advisory Committee on Immunization Practices (ACIP) recommended that anyone 6 months or older receive an updated COVID-19 vaccine this fall. CDC Director Mandy Cohen endorsed the recommendation shortly after.
On June 27, the Department of Justice (DOJ) announced the 2024 National Health Care Fraud Enforcement Action, which resulted in criminal charges against 193 defendants, including 76 doctors, nurse practitioners, and other licensed medical professionals in 32 federal districts across the United States, for their alleged participation in various health care fraud schemes involving approximately $2.75 billion in intended losses and $1.6 billion in actual losses.
WHITE HOUSE
On June 27, President Biden and Donald Trump participated in a presidential debate. Candidates discussed various health care related topics including the cost of prescription drugs, veterans’ health care, the opioid epidemic and the future of Medicare.
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
Misclassification of Drugs, Program Administration and Program Integrity Updates Under the Medicaid Drug Rebate Program (CMS-2434); Final Rule; 3/22/24
CY 2025 Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Medicare Part B (CMS-1807); Proposed Rule; 4/18/24
CY 2025 Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory Surgical Center Payment System Policy Changes and Payment Rates (CMS-1809); Proposed Rule; 4/24/24
Administrative Simplification: Modifications to NCPDP Retail Pharmacy Standards (CMS-0056); Final Rule; 6/27/24
ONC
Health Data, Technology, and Interoperability: Patient Engagement, Information Sharing, and Public Health Interoperability; Proposed Rule; 1/18/24
REPORTS
Office of Inspector General (OIG)
On June 25, OIG released a report examining North Carolina’s Medicaid overpayments for the state’s Medicaid fraud control until cases. OIG found that North Carolina did not report and return the Federal share of all MFCU-determined Medicaid overpayments identified for the period October 1, 2019, through September 30, 2021. OIG determined that North Carolina should have reported MFCU-determined Medicaid overpayments totaling $41.4 million ($27.5 million Federal share) for 12 cases during the review period. OIG recommends that North Carolina: 1) report and return the Federal share for the unreported cases, totaling $30.4 million ($20.1 million Federal share); 2) strengthen internal controls by expanding written policies and procedures to include procedures for requesting, recording, and reporting all MFCU-determined Medicaid overpayments; and 3) work with the MFCU to determine the Medicaid overpayments for cases after the audit period.
On June 27, OIG released a report examining the National Institutes of Health (NIH) closeout process for grants and similar awards. OIG found that NIH: 1) did not follow Federal requirements to close awards within 1 year of the period of performance end (PPE) date for 22 of the 40 awards OIG selected; 2) did not take corrective action to report recipient noncompliance into the designated integrity and performance system, as required; and 3) made improvements to its organizational structure, monitoring program, and control activities in its closeout process for awards. OIG recommends that NIH : 1) formalize the recently implemented Final Research and Performance Progress Report monitoring control into NIH policy; 2) facilitate timely unilateral closeout within 1 year of the PPE date; 3) create policies and procedures for reporting award recipients in SAM.gov that do not submit the required final reports within 1 year of the award PPE date; and 4) retroactively report all recipients with unilateral closeout actions in calendar year 2023 in SAM.gov.
On June 28, OIG released a report examining Part D plans inclusion of drugs used by dual-eligible enrollees. OIG found that dual-eligible enrollees have access to the majority of commonly used drugs in 2024 via their Part D plans, consistent with OIG’s findings from previous years. A majority of the 416 Part D plan formularies covered almost all (at least 97%) of the drugs most commonly used by dual-eligible enrollees. Similar to all formularies, a majority of formularies used by Part D plans with premiums below the regional benchmark (95 of 130) covered at least 97% of the drugs commonly used by dual-eligible enrollees. OIG stated that these findings are largely unchanged from OIG’s findings reported from 2011 through 2023.
UPCOMING HEARINGS
House
Oversight and Accountability Committee
TBD
Hearing on PBM Practices
Senate
HELP Committee
September 24; 10:00 AM; SD-562
ADDITIONAL POLICY NEWS
On June 21, the U.S. Court of Appeals for the Fifth Circuit issued a ruling in Braidwood Management, Inc., v. Becerra, a lawsuit challenging the Affordable Care Act’s (ACA) requirement that insurers and employers cover a broad array of preventive services recommended by the U.S. Preventive Services Task Force (USPSTF) without cost-sharing. The Fifth Circuit panel characterized its decision as a “mixed bag” and concluded that the operation and lack of oversight for the USPSTF violated the Constitution’s Appointments Clause. However, instead of prohibiting the federal government from enforcing the preventive services law nationwide, the Fifth Circuit affirmed the district court only to the extent it enjoined the government from enforcing the USPSTF requirements against the particular plaintiffs in this case.
On June 27, a majority of Supreme Court justices stated that the court erred when it decided to take the case Moyle v. United States - leaving in place the lower court’s temporary order that bars Idaho from enforcing its abortion ban when it conflicts with the Emergency Medical Treatment and Labor Act. The decision punts the case to lower courts for further consideration and requires Idaho hospitals, for the time being, to provide abortions in medical emergencies.
On June 27, the Supreme Court, in a 5-4 ruling, rejected a nationwide settlement with Purdue Pharma, the maker of OxyContin, stating that the deal inappropriately shielded the Sackler family that owns the company from civil liability over the effects of the opioid epidemic.
On June 28, the Supreme Court ruled 6-3 in the case Loper Bright Enterprises Et Al. V. Raimondo, Secretary of Commerce, overturning the 1984 decision known as the Chevron doctrine which requires judges to defer to agencies’ “reasonable” interpretations of “ambiguous” federal laws. Chief Justice John Roberts stated that “courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority.”