Health Policy Report (10/4)

October 6, 2021

Capitol Hill Update

Democratic leadership has brokered a new deadline for action on both the bipartisan infrastructure deal and the fiscal year (FY) 2022 reconciliation package amid lingering disagreements between progressives and moderates. Progressive Members pushed back against a vote on the Senate-passed infrastructure legislation due to a lack of progress on reconciliation, derailing last week’s schedule and causing a temporary lapse in funding for federal surface transportation programs that were originally tacked onto the infrastructure bill. Lawmakers now have until Sunday, October 31 to iron out an agreement on a path forward for the Biden-endorsed infrastructure deal and the Build Back Better Act (BBBA) after Congress passed a monthlong funding measure to address the expired surface transportation funding.

Negotiations on the size and scope of the reconciliation package will continue throughout the month as Speaker Nancy Pelosi (D-CA) and Majority Leader Chuck Schumer (D-NY) look to get these key Biden agenda items back on track. However, it remains to be seen whether centrist Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) will coalesce behind filibuster-proof measure that falls in the price range of $1.9-$2.3 trillion — a figure that President Joe Biden floated to Democrats during a caucus meeting last Friday. Leadership will also need to shore up progressive support that could ultimately wane if reconciliation priorities on health care, climate change, and child care are pared back significantly during the course of these intraparty talks.

CMS Releases Second Interim Final Rule Regarding Surprise Medical Bills

On Thursday, the Centers for Medicare & Medicaid Services (CMS) issued its second interim final rule (IFR) (rulepress releasefact sheet) to address large out-of-pocket costs to consumers from “surprise billing.”The IFR released last week is the second set of rulemaking issued by the Biden-Harris Administration to implement certain provisions of the No Surprises Act, which was included as part of the Consolidated Appropriations Act, 2021, that was signed into law last December. Part II of the rule announced last week aims to provide an avenue to settled out-of-network (OON) provider and payment rates and outlines cost estimates for the uninsured. Additionally, it addresses a pathway for dispute resolution processes for the uninsured.  

The IFR was released in conjunction with the Departments of Labor (DOL), Treasury, and the Office of Personnel Management (OPM). However, the CMS rules only apply to selected dispute resolution (SDR) entities, providers, facilities, and providers of air ambulance services as depicted in Part I of the IFR.  The first rule in this two-part series, entitled “Requirements Related to Surprise Billing; Part I,” (TRP analysisrulefact sheet; press release) banned “surprise billing” for emergency services and other out-of-network charges that applied to health care providers, facilities, and providers of air ambulance services. The regulations announced in Parts I and II are applicable beginning January 1, 2022. 

The rule details the long-anticipated federal independent resolution (IDR) process, which allows plans and insurers to determine OON rates for emergency services after an unsuccessful open negotiation. The rule also discusses good faith estimates of health care items and services for uninsured or self-pay individuals and the associated patient-provider dispute resolution process. Additionally, the rule contains OPM clarifications regarding the No Surprises Act provisions that apply to health benefits plans offered by carriers under the Federal Employees Health Benefits (FEHB) Act.  

Notably, the rule states that the Biden-Harris Administration is intending to issue further additional regulations regarding surprise billing throughout several phases of this year and into 2022. These future regulations would address: (1) patient protections through transparency; (2) price comparison tools; and (3) transparency provisions for insurance identification cards, continuity of care, the accuracy of provider network directories, and the prohibition on gag clauses. 

Senate Considers Special Provisions for Small Biotech Companies in Reconciliation

As reported in STAT News, Senate Finance Committee Chair Ron Wyden (D-OR) continues to juggle the precarious reconciliation package — specifically, drug pricing provisions — as Democrats work to unify and pass the legislation. One of the most recent efforts toward this goal includes a carve-out for small biotech firms. In its current form, the reconciliation bill would institute Medicare price negotiations for some of the U.S.’s most expensive medications, effective immediately. Under the new carve-out for small firms, small-firm drugs that qualify for Medicare negotiated prices would have the negotiated price phased in over several years. At this time, it is unclear if the phase-in policy would sunset. Wyden did not provide specific details about this plan when prompted last Tuesday, but he confirmed that the committee is continuing to develop policies that would protect smaller biotech firms.

Despite these impending changes to the reconciliation package, the biotech industry is not satisfied. They continue to assert that targeting drug prices would stifle critical investments needed to keep small firms in business. Stakeholders argue that a phase-in would merely offer smaller companies a narrow window to rely on market-based pricing. Additionally, the policy would disincentivize product acquisition by large manufacturers — a practice that many small manufacturers rely on for revenue — since acquisition would nullify any benefits from the carve-out. Moderate Democrats are sympathetic to these concerns, with Sens. Tom Carper (D-DE), Bob Menendez (D-NJ), and Kyrsten Sinema (D-AZ) continuing to raise concerns about the drug pricing legislation regardless of mitigation policy to reduce the burden on small manufacturers. 

House Lawmakers Push Bipartisan Mental Health Legislative Plan

Last Wednesday, the Bipartisan Addiction and Mental Health Task Force, led by Reps. Annie Kuster (D-NH), Brian Fitzpatrick (R-PA), David Trone (D-MD), and Jaime Herrera Beutler (R-WA), unveiled their Task Force’s 2021 Legislative Agenda. The agenda includes 66 bills that address opioid and suicide prevention, treatment, rural and underserved communities, workforce development, first responders, drug trafficking and interdiction, children and families, veterans, prescribing, education and stigma reduction, and health care access and parity. The plan dropped amidst a worsening mental health and substance abuse disorder (SUD) crisis instigated by the COVID-19 pandemic.

The increase in these cases sheds light on health disparities that affect several American communities. Specifically, a National Institutes of Health (NIH) study published in September found that opioid deaths increased by 38 percent amongst Hispanic Black Americans. Analyzing trends through a state-by-state lens, the study also identified New York, Massachusetts, Kentucky, and Ohio as states where overdoses among other racial and ethnic groups maintained their previous rates or decreased.

The House Majority calendar has yet to schedule the package for consideration, though leaders agreed to support further work on mental health and addiction issues. All 66 of the bills are bipartisan and are in different stages of the legislative process. Among the bills outlined in the report are the Suicide Training and Awareness Nationally Delivered for Universal Prevention (STANDUP) Act of 2021 (H.R. 586) and the Pursuing Equity in Mental Health Act (H.R. 1475), both of which have already passed the House and were referred to the Senate Health, Education, Labor, and Pensions (HELP) Committee. The Improving Mental Health Access from the Emergency Department Act of 2021 (H.R. 1205), Family Support Services for Addiction Act (H.R. 433), and the Mental Health Services for Students Act of 2021 (H.R. 721) also passed the House and fall under Senate HELP jurisdiction. The Senate Finance Committee is working on its own mental health package with the aim of developing the proposal by the end of 2021.

MA Premiums Set to Drop in 2022, Though Plans Remain Skeptical

Last Wednesday, CMS announced that Medicare Advantage (MA) premiums will drop to $19 per month in 2022. This number is an average of about $2 less than the average 2021 premium. CMS reports that MA plans will increase by three million beneficiaries from 2021 to 2022 as MA plans continue to consume larger percentages of Medicare beneficiaries each year. The Kaiser Family Foundation found that bout 42 percent of Medicare beneficiaries are enrolled in MA plans. Additionally, more than 1,000 MA plans will participate in the Center for Medicare and Medicaid Innovation’s (CMMI’s) MA Value-Based Insurance Design (VBID) Model in 2022. The model will focus on customized health plans that factor in beneficiaries’ disease and social determinants of health needs.

Insurance stakeholders supported the announcement, but they worried that a looming reconciliation bill will cut MA payments to fund the package’s proposed changes to original Medicare. Congressional Democrats aim to expand original Medicare to include dental, vision, and hearing coverage. Insurance stakeholders worry that covering the costs of such an expansion could come from the MA program, most of which already cover dental, vision, and hearing. Some groups speculate that the current MA risk adjustment could be pushed from its current 5.9 percent rate to anywhere from seven to nine percent. If this adjustment occurred, and MA plans maintained the same level of supplemental benefits, MA premiums could increase by $9 to $25 per month. As a result of such a change, low premium plans would be more difficult to come by. If MA plans decided to decrease benefits as risk-adjustment rates rose, plan values are projected to decrease by 35 to 57 percent.

GAO Publishes Report on CCBHC Demonstrations

Last Monday, the U.S. Government Accountability Office (GAO) published its report on certified community behavioral health clinic (CCBHC) demonstrations. Out of the eight states participating in the demonstration, GAO found that five states increased their spending on behavioral health services. GAO attributed the uptick in spending to an influx in beneficiary participation and an expansion of services offered. On the other hand, two states experienced a decrease in CCBHC spending due to the enhanced federal funding to their states’ Medicaid programs. Officials from the eighth state, Pennsylvania, said that the budgetary effect of the demonstration program was unknown.

In 2016, the U.S. Department of Health and Human Services (HHS) selected eight states — Minnesota, Missouri, Nevada, New Jersey, New York, Oklahoma, Oregon, and Pennsylvania — to participate in a CCBHC demonstration program, resulting in 66 CCHBC facilities. The goal of the demonstration is to improve patient access to community-based mental health services. States participating in CCBHC demonstration programs are required to provide a minimum threshold of behavioral health services and, in return, they receive enhanced federal funding for their Medicaid programs. The Coronavirus Aid, Relief, and Economic Security (CARES) Act commissioned a GAO report on the status of the CCBHC demonstrations, including state experiences with the program, impact on state spending, and Centers for Medicare & Medicaid Services (CMS) payment guidance.

Four states assessed cost savings resulting from the CCBHC program. Three of the states found that diverting care from more expensive settings, such as hospital emergency departments, yielded cost savings. Missouri officials identified a 70 percent decrease in emergency room visits and hospitalizations after six months for beneficiaries who engaged in their CCBHC Emergency Room Enhancement program. In New York, CCBHC programs reported that hospitalization and emergency room costs decreased by over 25 percent in the first year, aggregating over $1 million and $100,000 in savings per month from decreased hospitalizations and emergency room visits. Oklahoma saw similar trends, reporting annual savings of over $2 million compared to Community Mental Health Centers (CMHCs). Beginning in October of 2021 and 2022, Michigan and Kentucky will join the CCBHC demonstration program.

While the report sheds an overall positive light on CCBHC demonstrations, GAO took issue with CMS’ role in facilitating the program. Upon examining CMS guidance for aligning the cost of care with CCBHCs payment rates, GAO concluded that “the guidance lacked clear and consistent information.” GAO also asserted in its report that CMS guidance was insufficient at preventing duplicative payments. Specifically, CMS guidance gives states the option to rebase their initial payment rates after the first year of the demonstration to ease states’ reliance on anticipated costs. While CMS expected states to rebase, the agency did not provide rebasing instructions and states did not heavily utilize this option. Additionally, GAO found that CMS provided conflicting guidance regarding overlap between CCBHCs and Federally Qualified Health Centers (FQHCs), possibly leading to duplicative payments.

Based on these concerns, GAO outlined two recommendations to CMS: (1) CMS should issue “clear and consistent written guidance” that encourages rebasing CCBHC payments, including a more detailed explanation of how and when states should rebase; and (2) CMS should issue “clear and consistent written guidance” on ways to avoid duplicative payments between the CCBHC payments and other Medicaid program payments. 

FDA Issues Draft Guidance Regarding Drug Regulation Process

On Wednesday, the Food and Drug Administration (FDA) released draft guidance informing drug companies that should they wish to use real-world evidence — such as electronic health records (EHRs) — in their drug approval applications, they should clear questions with identified endpoints. The FDA guidance also suggests that companies utilize standardized records that include patients’ demographic, comorbidity, and mortality information. It is important to note that EHRs and medical claims contain information that is not available from clinical trials. Over the last several years, Congress and industry stakeholders have encouraged FDA to embrace the inclusion of real-world information in the approval process. Specifically, the 21st Century Cures Act required FDA to look into requiring real-world data in its evaluation of potential new therapies. The most recent rendition of the Prescription Drug User Fee Act (PDUFA) also encouraged FDA to release guidance on the subject.