Health Policy Report (1/31)

January 31, 2022

Capitol Hill Update

Both chambers of Congress will return to kick off the February legislative session this week. The Senate will return first later today and will primarily focus on clearing the queue of President Joe Biden’s pending nominations. On the House side, lawmakers are scheduled to resume legislative business tomorrow and consider legislation that seeks to end mandatory, pre-dispute arbitration for sexual assault and harassment disputes (H.R. 4445). Members are also slated to take up the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength (America COMPETES) Act (textfact sheetsection-by-section) at some point next week after leadership introduced the package on Wednesday. More than 500 Amendments to the America COMPETES Act were filed late last week, and the Rules Committee will meet on Tuesday to consider a rule for the measure.

Meanwhile, House and Senate appropriators are continuing to work behind the scenes to reach an agreement on fiscal year (FY) 2022 government funding. While the “four corners” leaders of the Appropriations Committees are reportedly moving closer to an agreement on topline funding allocations, Democrats and Republicans still remain divided over several lingering policy “riders” that have stalled progress in recent months. GOP lawmakers also remain reluctant to broker an appropriations deal so long as Democrats promise further action on the President’s “Build Back Better” (BBB) agenda. With 19 days until the February 18 government funding deadline, appropriators may look to craft another short-term funding bill that would fund the government into March or April, providing more time to reach an agreement.

Senate Unveils Bipartisan Pandemic Preparedness Legislation

On Tuesday, the Senate Health, Education, Labor, and Pensions (HELP) Committee released a bipartisan discussion draft aimed at reconceptualizing public health structures, bolstering data collection, and supporting the public health workforce. The Prepare for and Respond to Existing Viruses, Emerging New Threats and (PREVENT) Pandemics Act (TRP analysis; textsection-by-sectionpress release) was authored by the committee’s chair Senator Patty Murray (D-WA) and Ranking Member Richard Burr (R-NC).

Among other things, the legislation would strengthen the Strategic National Stockpile (SNS) and enhance the Food and Drug Administration’s (FDA) approval process. Notably, the bill would also update the Centers for Disease Control and Prevention (CDC) Public Health Emergency Preparedness (PHEP) agreements to increase cooperation between health departments and states to improve preparedness and responsiveness. The package is expected to evolve as Chair Murray and Ranking Member Burr continue engaging with their Senate colleagues regarding additions to the bill. Possible additions include Advanced Research Projects Agency for Health (ARPA-H) provisions, agency oversight, and changes to pandemic leadership structures, according to the HELP Committee leaders.

Hospitals Push for Spending in Short-Term Funding Bill

Congress passed a short-term funding bill in December 2021 that pushed the government funding deadline to February 18. With that deadline quickly approaching, lawmakers are crafting a new spending package. Hospital groups are urging Congress to include a slew of provisions in the bill, including a delay of Medicare sequestration, repayment of Medicare loans, protecting 340B eligibility, and maintaining Medicare Disproportionate Share Hospital (DSH) payments. House Speaker Nancy Pelosi (D-CA) has voiced her support for including robust funding provisions in a new package, as opposed to another short-term funding extension.

Specifically, the group America’s Essential Hospitals is imploring lawmakers to push off Medicare sequestration cuts until after the public health emergency (PHE). The government’s December funding extension had outlined a phase-in for the cuts starting in April, though stakeholders were concerned that the pandemic shows no signs of going away. While 700 other hospital groups are calling for sequestration to kick back in staring in July, hospital groups agree that the cuts should be delayed. On the topic of workforce concerns, hospitals are requesting more provider relief funding and changes to the calculations that dictate Medicare Advantage (MA) nursing and allied health education payments for hospitals. Additionally, the letter from 700 individual hospitals recommends that Federal Emergency Management Agency (FEMA) staff be reimbursed for some of their duties. Among their requests, the groups are asking lawmakers to include provisions to update add-on payments for COVID-19 patients, as well as delay implementation of surprise billing and hospital price disclosure requirements.

Biden Dispenses Provider Relief Funds, Redirects Funding for COVID Vaccines

On Tuesday, the Department of Health and Human Services (HHS) released $2 billion from the Provider Relief Fund (PRF) to assist hospitals and service providers. The funding will go to over 7,600 providers, in addition to $9 billion from last month, totaling more than 74,000 recipients from this round of funding. The funds are being dispersed as hospital groups ask for more funding and COVID-19 variants continue to emerge. The American Hospital Association (AHA) underscored these points in a letter to lawmakers, requesting that they extend the deadline to use the funds, widen the eligibility requirements, and add $25 billion to the PRF.

The day after the HHS announcement, STAT News reported that the Biden administration has diverted roughly $7 billion from the PRF to purchase COVID-19 vaccines and therapeutics. The diversion has reportedly added insult to injury for hospital groups requesting federal assistance, though some larger hospital systems have been experiencing a financial upswing in recent months. In response, HHS assured frustrated parties that the $7 billion was properly utilized and went towards contracts that provided free vaccines and therapeutics to providers. In addition to the diverted PRF funds, the Biden administration plans to use $1 billion that was set aside for COVID-19 testing on more vaccines.

Study: Part D Plans Place Generics on Non-Preferred Tiers

Medicare Part D plans are placing generic drugs to non-preferred tiers, according to a new study. The percentage of generics on preferred tiers has dropped significantly in the past several years. Simultaneously, the Medicare Payment Advisory Commission (MedPAC) found that generic drug prices have decreased dramatically. These trends suggest that tier placement of generics is not directly impacted by price increases. However, the report does not compare this shift to the tiering of brand drugs, making it difficult to identify the impact of branded drugs on generic tiering.

In 2017, the Centers for Medicare and Medicaid Services (CMS) implemented a policy allowing insurers to favor branded drugs over their generic counterparts on the plan’s formulary. While the provision helped plans and pharmacy benefit managers (PBMs) generate savings, beneficiaries often paid higher copays for the more expensive branded drug. In 2022, Medicare Advantage (MA) and Part D plans can create a second specialty tier with lower cost-sharing for beneficiaries. The additional tier is intended to give Part D plans an additional tool for negotiations with manufacturers.