Health Policy Report (1/9)

January 9, 2023

House lawmakers were finally sworn-in early Saturday morning after House Republicans elected Leader Kevin McCarthy (R-CA) as Speaker during the 15th round of voting. Speaker McCarthy ultimately won the gavel after GOP dissidents — Reps. Andy Biggs (R-AZ), Lauren Boebert (R-CO), Matt Gaetz (R-FL), and Matt Rosendale (R-MT) — switched their votes to present, thus lowering the threshold needed to win a majority. House Republican leadership will now turn their attention to passing the rules package (text; summary) for the 118th Congress, as well as settling a series of undecided committee leadership posts. According to the latest intel, the House GOP Steering Committee will meet today to begin the process of deciding on contested gavels for the Committees on Ways and Means, Homeland, Education and Workforce, Budget, and Small Business. Other organizational activities — including decisions on contested subcommittee leadership posts and committee assignments for the rank-and-file at large — are expected in the coming days from leaders on both sides of the aisle.

Biden Administration Releases Fall 2022 Unified Agenda

On Wednesday, the Office of Management and Budget (OMB) published its Fall 2022 Unified Agenda outlining the forthcoming regulatory priorities of the Biden administration. As lawmakers are expected to pass fewer pieces of legislation due to a divided 118th Congress, federal agencies are expected to steer President Biden’s policy agenda in 2023 and 2024. Federal agencies operating in the health care space have revised and added a myriad of regulatory priorities for 2023 through this Unified Agenda. Notably, the Department of Health and Human Services’ (HHS) Office of the Secretary (OS) intends to propose a rule to standardize health information technology (HIT), and the Office of the National Coordinator (ONC) will also craft HIT-related rules pertaining to interoperability and information blocking. 

Pursuant to federal law, the Centers for Medicare and Medicaid Services (CMS) will continue promulgating yearly payment policies — which will include skilled nursing facility (SNF) minimum staffing requirements — and the agency notes that it will also address 340B-acquired drugs in response to the American Hospital Association v. Becerra case. Additionally, Disproportionate Share Hospital (DSH) payments, Medicare Part B rates, certain civil monetary penalties (CMP), and numerous other policy topics are on CMS’ docket to address in the coming months. The Food and Drug Administration (FDA) added a slew of regulatory priorities to its plate in the Unified Agenda as well, with over 15 new regulatory items implementing oversight and review boards, medical device classification, research and development flexibilities, and constricting tobacco marketing, among other FDA policy goals. 

CMS Outlines Managed Care Waivers for Social Needs

Last week, the Centers for Medicare and Medicaid Services (CMS) outlined states’ requirements for meeting 115 waiver thresholds addressing social determinants of health (SDOH). Technically, CMS is not providing a new waiver option but is clarifying ways in which states can use Medicaid managed care organizations’ “in lieu of services and settings” option to target SDOH-related projects. For SDOH waivers to be approved, states must prove that their proposals are medically appropriate, cover Medicaid objectives, protect enrollees, and are cost-effective with program costs capped at 15 percent. The cost percentage will generally dictate the amount of paperwork that states will have to provide to CMS; lower-cost percentage programs will require less paperwork and vice versa. Notably, some states already have 1115 waivers that clearly cover SDOH services in a managed care contract. These states will have until January 1, 2024, to comply with the new paperwork and review process.

FTC Proposes to Curtail Noncompete Clauses

The Federal Trade Commission (FTC) released a proposed rule that, if finalized, would ban noncompete contract clauses. The proposed rule would have a multi-sector impact, and these agreements are often signed by health care employees, especially in the insurance and pharmacy benefit manager (PBM) industries. Generally, non-compete laws are crafted on a state-by-state basis and those who break their noncompete contracts may be sued by a former employer. Most insurance executives sign non-compete clauses. 

The FTC aims to ban these clauses as a mechanism to limit anticompetitive practices across industries and improve labor market conditions. However, proponents of non-competes assert that such agreements encourage companies to pay their workers more and invest in technologies due to assurances that the company is protecting its investments for a certain period of time. Many policy experts believe that the FTC’s rule should be more narrowly tailored instead of proposing a comprehensive ban. Notably, the U.S. Chamber of Congress voiced its intent to sue the FTC if the rule is finalized. 

CMS Issues Medicaid, CHIP Unwinding Guidance 

Medicaid stakeholders have been anticipating an end to the COVID-19 public health emergency (PHE), which would signal when state maintenance of effort (MOE) requirements dissolve. However, the Consolidated Appropriations Act, 2023 (CAA, 2023) decoupled MOE dates from the PHE, and now MOE requirements will end on March 31, 2023. The Centers for Medicare and Medicaid Services (CMS) clarified last Thursday that states can begin eligibility redeterminations in February, if they meet their regulatory deadlines. As such, states can initiate the renewal processes as soon as February 1, 2023, and all renewals must be complete by May 31, 2024. 

States are required to submit their unwinding plans to CMS as a means to ensure that each state’s unwinding blueprint minimizes beneficiaries’ burden and promotes continuous coverage. The Center for Medicaid and Children’s Health Insurance Program (CHIP) Services (CMCS) intends to release additional guidance as states begin the unwinding process, and additionally, CMCS will offer technical assistance directly to states. CMCS also plans to meet one-on-one with all state Medicaid directors throughout the unwinding period. 

2023 Appropriations Bill Includes Medical Device Cybersecurity Policies

The fiscal year (FY) 2023 spending package that President Biden signed into law in late December included a range of new requirements for medical device manufacturers. The $1.7 trillion bill directs manufacturers to submit plans to the Department of Health and Human Services (HHS) that monitor and address post-market device cybersecurity vulnerabilities, among other requirements. Manufactures will be required to address cybersecurity treats on a regular basis, subject to further agency regulation. Notably, the Secretary of HHS will have the discretion to identify devices to be exempt from cybersecurity regulations, which will be posted in the Federal Register. Many of these new provisions stem from the Protecting and Transforming Cyber Health Care (PATCH) Act (S. 3983) from the 117th Congress. 

The Food and Drug Administration (FDA) must also provide stakeholders with guidance related to improving device cybersecurity, which is required to be updated every two years. The first round of guidance is required to be uploaded to the FDA’s website within the first six months of 2023. FDA is also working on other medical device cybersecurity guidance — which is expected to be released in the fall of 2023 — as well as guidance for hospital and health sector cybersecurity. The omnibus also included policy provisions related to a myriad of other cybersecurity provisions related to public health. 

CMS to Pay Medicaid, CHIP for Communication Between Primary and Specialty Care

The Centers for Medicare and Medicaid Services (CMS) recently issued guidance allowing states to reimburse a specialist when they consult with a beneficiary’s primary care provider. To implement this capability, a state would need to submit a state plan amendment providing this direct payment to specialists when they respond to a consultation request from an enrollee’s primary care provider. The new allowance aligns Medicaid and Children’s Health Insurance Program (CHIP) with Medicare, which has been paying for these interdisciplinary conferrals since 2019. Patients will not have to present for the communications to be reimbursable, though providers will need to submit applicable claims. While these reimbursement practices are available to all specialties, CMS is especially focused on leveraging the guidance to encourage discussions between primary care and behavioral health providers as a means to improve behavioral health care outcomes for beneficiaries.