Health Policy Report (11/16)

November 17, 2020

Capitol Hill Update

The House will convene for legislative business today as Members look to address key year-end priorities. Fiscal year (FY) 2021 appropriations and the National Defense Authorization Act face hard deadlines in December, and lawmakers will need to navigate several “poison pill” issues before an agreement on these items can be reached. Officials will also look to reach a consensus on another round of COVID-19 relief aid, as calls for additional legislation continue to grow. Speaker Nancy Pelosi (D-CA) is expected to pick up negotiations with Senate Majority Leader Mitch McConnell (R-KY) in the coming days and weeks ahead, as the Trump administration is reportedly stepping back from the pandemic relief negotiations. House Democrats and Senate Republicans still remain far apart on the size and scope of the next bill, and it remains to be seen whether a deal can be clinched prior to the end of the 116th Congress.

On the floor this week, lawmakers are set to consider legislation that would reauthorize the National Apprenticeship Act. The $3 billion measure would amend the existing national apprenticeship program to include pre-apprenticeships and youth apprenticeships, and would also promote additional labor standards “necessary to safeguard the welfare of apprentices.” For the balance of the “lame duck” session, Majority Leader Steny Hoyer (D-MD) said lawmakers will take up a bill that would decriminalize cannabis and expunge convictions for non-violent cannabis convictions, as well as a forthcoming conference report that reflects a bipartisan, bicameral agreement on the Water Resources Development Act. Meanwhile, the Senate is expected to focus primarily on presidential nominations until the big-ticket items clear the lower chamber.

Supreme Court Appears Willing to Uphold Bulk of ACA

The United States Supreme Court heard arguments in the case of California v. Texas last Tuesday, in which a group of GOP-led states are seeking to invalidate the Affordable Care Act. The case hinges in part on whether the individual mandate, the alternative tax to which Congress reduced to zero in 2017, is severable from the rest of the law. Two highly-watched justices — Chief Justice John Roberts and Associate Justice Brett Kavanaugh — appeared unconvinced by the plaintiffs’ arguments that if the mandate were to be struck down, the full law would have to go as well. While their views of inseverability appeared clear, there were fewer indications as to whether they believed that the mandate, absent its alternative tax, was unconstitutional. Justice Alito also expressed some skepticism — though not as much as Chief Justice Roberts and Justice Kavanaugh — that the mandate is necessary for the operation of the rest of the law. However, justices’ questions during oral arguments are not always indicative of how they will ultimately rule. A ruling is expected by June 2021.

Since the ACA’s individual mandate penalty is $0, there would be limited impact on the law even if the Court found the measure to be unconstitutional. Justices Sotomayor, Kagan, and Breyer all appear skeptical of the argument that the mandate now constitutes a command rather than a choice. In particular, they do not appear to believe that making a law less coercive — by zeroing out a mandate — can make it more of a command. In general, the conservative justices may be sympathetic to the argument that the mandate can no longer be a tax, as it can no longer raise revenue. In that case, the $0 penalty may be unconstitutional.

The issue of severability has become particularly important as other key tenets of the law — such as the entirety of the law’s insurance reforms, or even unrelated provisions like CMMI and the biosimilars pathway — could potentially be struck, as well. Texas’ arguments for inseverability rely on legislative findings in the original ACA that say that the individual mandate is necessary. However, Justice Kavanaugh noted, “Congress knows how to write an inseverability clause” and that this is not that. Last Tuesday’s oral arguments suggest that most disruptive outcome is unlikely.

Administration Announces Partnership With Pharmacies for COVID-19 Vaccine Distribution

The Trump administration announced the federal government will partner with large chain pharmacies and networks that represent independent pharmacies and regional chains to increase access to future COVID-19 vaccines. The administration reported that the partnership will encompass 60 percent of all pharmacies throughout the 50 states, D.C, Puerto Rico, and the U.S. Virgin Islands. Department of Health and Human Services (HHS) Secretary Alex Azar stated that the “vast majority of Americans live within five miles of a pharmacy,” and that the new partnership “is a critical step toward making sure all Americans have access to safe and effective COVID-19 vaccines when they are available.”

The administration explained that the partnership is being established in anticipation that one or more COVID-19 vaccines will be authorized or approved and recommended for use in the United States before the end of 2020. Pfizer announced this past week their vaccine candidate was showing more than 90 percent effectiveness and Moderna is expected to announce results from their vaccine trial by the end of the month. The Centers for Disease Control and Prevention (CDC) is also reportedly considering methods for helping Americans remember to receive the second dose of a successful COVID-19 vaccine with the same brand to ensure full effectiveness.

Biden Names COVID-19 Transition Advisory Team

President-elect Joe Biden named 13 health experts to his transition COVID-19 advisory team last Monday. The president-elect has declared tackling the coronavirus pandemic as one of the “most important battles” his administration will face and one of his first priorities upon entering the White House. Biden has promised that his COVID-19 response will be “informed by science and experts,” and stated “the advisory board will help shape [his] approach to managing the surge in reported infections; ensuring vaccines are safe, effective, and distributed efficiently, equitably, and free; and protecting at-risk populations.” He explained the advisory board will consult with state and local officials to “determine the public health and economic steps necessary to get the virus under control, to deliver immediate relief to working families, to address ongoing racial and ethnic disparities, and to reopen our schools and businesses safely and effectively.”

The advisory team will be co-chaired by three experts: (1) Dr. David Kessler, former Food and Drug Administration Commissioner; (2) Vivek Murthy, former Surgeon General; and (3) Dr. Marcella Nunez-Smith, associate professor of medicine and epidemiology at Yale. Additionally, Beth Cameron, former senior director for global health security and biodefense in the Obama administration, and Rebecca Katz, co-director of the Center for Global Health Science and Security at Georgetown University, will serve as advisory to the transition on COVID-19 and will work closely with the advisory board. Also serving on the advisory board is:

  • Rick Bright, former top Department of Health and Human Services (HHS) official and vaccine expert;
  • Eric Goosby, infectious disease expert and veteran of the Obama and Clinton administrations;
  • Luciana Borio, former Food and Drug Administration acting chief scientist;
  • Ezekiel Emanuel, oncologist, adviser to Biden, and Obama administration veteran;
  • Michael Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota;
  • Atul Gawande, former senior advisor at HHS in the Clinton administration;
  • Loyce Pace, president and executive director of the Global Health Council;
  • Julie Morita, executive vice president of the Robert Wood Johnson Foundation and former Chicago commissioner of health;
  • Celine Gounder, a clinical assistant professor of medicine and infectious diseases at New York University; and
  • Robert Rodriguez, a professor of emergency medicine at the University of California, San Francisco, School of Medicine.

CMS Finalizes Medicaid and CHIP Managed Care Rule

Last Monday, the Centers for Medicare and Medicaid Services (CMS) released the 2020 Medicaid & Children’s Health Insurance Program (CHIP) Managed Care final rule (Press Release; Fact Sheet). CMS largely finalized the rule as proposed in keeping with the Administration’s commitment to grant states more flexibility to manage their Medicaid programs while also setting stricter parameters for state risk-sharing arrangements, clarifying policies for directed payments, and revising certain policies pertaining to beneficiary communications. In the agency’s release accompanying the rule, CMS Administrator Seema Verma stated, “The era of prescriptive regulations has failed. This rule represents a concerted effort to transform Medicaid to improve quality and access for its beneficiaries. This will remove the burden on states while ensuring appropriate oversight of managed care organizations.”

According to CMS, the new flexibilities are intended to allow states to more efficiently run their existing programs and support states choosing to transition new populations into managed care programs while also maintaining critical beneficiary protections, ensuring fiscal integrity, and improving the quality of care for Medicaid beneficiaries. CMS finalized the proposal to eliminate the requirement that states develop and enforce time and distance standards for managed care provider networks. The agency stated it was adding a more flexible requirement that states set a quantitative network adequacy standard, and will allow each state to determine the criteria to be applied to telehealth providers and how such providers would be taken into account when evaluating network adequacy of the state’s Medicaid managed care plans. States will also have the flexibility to define and set network adequacy standards for “specialists” for their respective programs. Additionally, the final rule provides states greater flexibility by allowing them to use a rate range of 5 percent, rather than a specific capitation rate. CMS specifies that the changes outlined for Medicaid managed care in this rule would also apply to CHIP managed care.

HHS Announces Public Hearing on Regulatory Review Rule

Last Thursday, the Department of Health and Human Services (HHS) announced a virtual public hearing on a recent proposed rule that would impose sunsets on HHS regulations. The notice of proposed rulemaking (NPRM), “Securing Updated and Necessary Statutory Evaluations Timely,” would require that regulations be periodically assessed by HHS or otherwise expire automatically. The public hearing, which will take place on November 23 from 10 am to 2 pm Eastern, is in addition to the required comment period, which closes on December 4, 2020 for the bulk of the NPRM, and January 4, 2021 for the review regulations relating to general provisions of the Centers for Medicare and Medicaid Services (CMS), the Medicare Program, Quality Improvement Organizations, and CMS Standards and Certification. Details on the hearing, including WebEx dial-in information, are in the announcement.

This NPRM takes steps to implement the Regulatory Flexibility Act’s requirements that agencies review their existing regulations that substantially impact small entities over a period of ten years. However, agencies have generally not abided by this provision. The administration’s proposal takes a strict view on what is required by the Regulatory Flexibility Act, and if finalized, this rule would require significant effort on the part of the incoming Biden administration to assess existing rules — offering less time to work on rulemakings to advance its policy agenda. There have been signals that it is a priority of the administration to finalize this rule before leaving power.

If finalized, the rule would require HHS to review all of its regulations that have a significant economic impact upon a substantial number of small entities every ten years. It would also require HHS to assess every regulation — with some exceptions — every ten years, else they would expire. The NPRM defines “assess” as HHS determining whether regulations currently have significant economic impact upon a substantial number of small entities. It also defines “review” as HHS determining which regulations should be continued without change and which should be amended or rescinded. For regulations not yet promulgated, HHS would need to assess the regulations every ten years. If found to be significant, HHS would need to review the regulation. For those that are already in effect, HHS would have the later of two years from the effective date of this NPRM or ten years from the regulation’s promulgation. Regulations would expire if assessments and reviews are not conducted within the given timeframe.