Health Policy Report (11/8)

November 8, 2021

Capitol Hill Update

The House clinched a key pillar of President Joe Biden’s legislative agenda late last week, sending the bipartisan Infrastructure Investment and Jobs Act to his desk for signature. The measure was buoyed with support from 13 House Republicans, while six progressive lawmakers — who have pushed for action on the Build Back Better Act (BBBA) — joined the remainder of the GOP conference in opposition. The President plans to sign the measure at a signing ceremony later this week. For additional details on the bipartisan infrastructure deal, click here to read TRP’s comprehensive analysis.

While Democrats were ultimately able to clear both the infrastructure deal and the first procedural vote on the BBBA, lawmakers spent the majority of Friday’s session debating the path forward, with intraparty disagreements on full display. Specifically, six centrist Democrats — including Reps. Stephanie Murphy (D-FL), Kathleen Rice (D-NY), Josh Gottheimer (D-NJ), Ed Case (D-HI), and Jared Golden (D-ME) — opposed moving forward on the BBBA last week absent an official Congressional Budget Office (CBO) score of the $1.75 trillion reconciliation measure. Leadership was able to break the logjam after each of the moderates, except for Rep. Golden, issued a statement pledging to vote on the BBBA during the week of November 15 so long as there’s a CBO score. Congress’s nonpartisan budget scorekeepers are now racing to complete their work on the BBBA measure while Democrats anxiously await a favorable analysis that would spur a final vote ahead of Thanksgiving.

New Drug Pricing Provisions in BBBA Include Medicare Negotiation, Part D Redesign

Last Wednesday, House Democrats released text for an updated reconciliation package (bill text; section-by-section) that includes numerous drug pricing provisions that have notably been left out of prior versions. The updated measure endorsed by Democratic leadership and key moderate negotiators includes provisions addressing: (1) drug price negotiation; (2) inflationary rebates; (3) Medicare Part D redesign; (4) repeal of a Trump-era rebate rule; (5) biosimilar incentives; and (6) transparency provisions, among other items.

Specifically, the proposal would allow Medicare to negotiate drug prices under Parts B and D for single-source drugs outside of their initial exclusivity periods. Manufacturers would be required to provide the Department of Health and Human Services (HHS) with specified data for the drug under consideration to aid in negotiations. Additionally, the bill includes provisions that would require manufacturers to pay a rebate if the price of applicable drugs in either Parts B or D rises faster than inflation, beginning in July of 2023. The addition of an out-of-pocket cap, alongside adjustments to reinsurance payment amounts, account for changes to the Part D program. Further, the bill makes changes with regard to biosimilars during the initial coverage period and provides a temporary payment increase for a biosimilar’s first five years on the market during a specified period of time. 

The bill is currently expected to be brought to the House floor the week of November 15. It remains to be seen whether key Democratic senators seek changes to the drug pricing provisions and other elements of the reconciliation package.

OSHA Issues COVID Vaccine and Testing Requirements

On Thursday, the Occupational Safety and Health Administration (OSHA) issued a highly-anticipated Emergency Temporary Standard (ETS) for COVID-19 vaccination and testing (rulefact sheet; press release) in the workplace. The ETS requires employees — who are employed by private-sector employers with 100 or more employees — to get vaccinated or test negative for the virus once per week. Under the ETS, private sector employers with 100 or more employees must develop, implement, and enforce a mandatory COVID-19 vaccination policy. In lieu of vaccination, OSHA’s rule stipulates that employees who choose not to get inoculated are subject to weekly testing and indoor masking requirements. OSHA has published a series of resources with respect to this ETS, including: frequently asked questionsguidance materials; and reporting requirements.

With respect to state and local governmentsthe agency requires that states with OSHA-approved State Plans adhere to any new ETS developed by OSHA. Of the 28 states and territories with OSHA-approved State Plans, 22 cover both public and private-sector employees: Alaska, Arizona, California, Hawaii, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, Nevada, New Mexico, North Carolina, Oregon, Puerto Rico, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington, and Wyoming. The remaining six states and territories cover only state and local government employees: Connecticut, Illinois, Maine, New Jersey, New York, and the Virgin Islands. Unless state action or lawsuits invalidate the OSHA ETS, these 28 states and their local governments will be expected to adhere to the vaccine and testing ETS.

While the testing requirement for unvaccinated workers is slated to begin on January 4, 2022, employers must be in compliance with all other requirements — such as providing paid time off for employees to get vaccinated and masking for unvaccinated workers — by December 5, 2021. Employees falling under the ETS rules will need to have their final vaccination dose by January 4, 2022, according to the administration. Given some of the widespread opposition to new vaccine-related mandates, it is likely that the ETS could face legal challenges from certain business and GOP-led groups. In September, a group of GOP State Attorneys General penned a letter to President Biden stating they will seek “every available legal option” with respect to challenging the administration’s vaccine requirement policies. The Biden administration spelled out its legal authority within the ETS announcement, citing OSHA’s statutory authorities to provide workers with safe and healthy working conditions as its justification.  

CMS Finalizes Updates to Physician Fee Schedule

On Tuesday, the Centers for Medicare and Medicaid Services (CMS) finalized its calendar year (CY) 2022 updates to the Medicare Physician Fee Schedule (PFS) (TRP analysis; final rulefact sheetpress release.) The finalized CY 2022 PFS conversion factor is $33.59, a decrease of $1.30 from the CY 2021 PFS conversion factor of $34.89.

The PFS rule issued by CMS finalized several policies aimed at promoting health equity. For example, the final rule expands audio-only telehealth flexibilities, increases payments and access to Federally Qualified Health Centers (FQHCs) and Rural Health Centers (RHCs), and adds telemedicine flexibilities for opioid use disorder (OUD) and opioid treatment programs (OTP). Further, the final rule: (1) implements evaluation and management (E/M) visit regulations; (2) postpones the compliance date for Electronic Prescribing of Controlled Substance (EPCS) compliance; (3) eases the transition into a quality payment program (QPP); and (4) requires average sales price (ASP) transparency for drugs and biologics.

CMS finalized several telehealth regulations relating to location and frequency of services, add-on services, audio-only modalities, and additional provisions relating to cardiac and intensive cardiac rehabilitation codes and payment for a longer virtual check-in service. Regarding E/M visits, CMS revised the definition of split/shared visit to include only E/M visits provided in the facility setting by a physician and a nonphysician nurse practitioner (NPP) in the same group, among other provisions. Notably, the rule makes several RHC and FQHC changes, including increasing access to audio-only mental health visits, increased payments for certain facilities, and expanding eligibility for hospice payments.

Regulations for OUD and EPCS stipulate adjustments for take-home supplies of opioid antagonist medications and electronic prescribing for controlled substances under the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act. The SUPPORT Act also gives HHS the authority to waive EPCS requirements through rulemaking, and CMS is finalizing exceptions to these requirements in addition to extending compliance dates. The rule address drug pricing as well, as CMS is finalizing regulatory changes to implement the CAA’s requirement that manufacturers of drugs or biologicals payable under Part B without a Medicaid Drug Rebate Agreement report ASP data. Starting with calendar quarters beginning on January 1, 2022, manufacturers will be required to report ASP for drugs and biologicals payable under Medicare Part B. CMS amended the definition of “drug” to include an item, service, supply, or product that is payable under Medicare Part B as a drug or biological.

CMS Finalizes Outpatient Prospective Payment System and Ambulatory Surgical Center Rates

Last week, the Centers for Medicare and Medicaid Services’ (CMS) finalized its calendar year (CY) 2022 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) payment rates (TRP analysis; textfact sheetpress release). In addition to describing changes to determine payment rates and the aforementioned payment systems, the rule finalizes updates and requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program, Hospital Price Transparency requirements, and design of the Radiation Oncology (RO) Model. Most notably, CMS is increasing OPPS and ASC rates by an outpatient department (OPD) fee schedule factor by 2.0 percent. This rate is based on the agency’s Inpatient and Long-Term Care Hospital Payment final rule (TRP analysis) from August which set a market basket increase of 2.7 percent reduced by a 0.7 percent productivity adjustment. The finalized rate in the final rule differs from CMS’s initial proposal of a 2.3 percent rate increase based on a proposed hospital inpatient market basket percentage increase of 2.5 percent for inpatient hospitals services under the hospital inpatient prospective payment system reduced by a 0.2 percentage point proposed productivity adjustment. Based on yesterday’s fee schedule update, CMS estimates a total of about $82 billion in 2022 OPPS payments to providers.

Tuesday’s rule also addresses the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act by finalizing its proposal to provide separate payments for non-opioid pain management drugs or biologics that act as surgical supplies in the ASC setting. Regarding pass-through payments, CMS gave preliminary approval to the Shockwave C2 Coronary Intravascular Lithotripsy (IVL) catheter via the agency’s quarterly review process and the RECELL® Autologous Cell Harvesting Device and the Guardian® system during the regular rulemaking cycle. This amounts to an estimated $141.9 million for this group of devices for CY 2022. Additionally, CMS is finalizing its proposal to use its equitable adjustment authority to provide four quarters of separate payment for 27 drugs and biologics, and one device category, in which pass-through payments are set to expire between December 31, 2021 and September 30, 2022. Among several changes in the rule, CMS is also finalizing its proposal to maintain its rate of ASP minus 22.5 percent for separately payable drugs through the 340B Program. Rural sole community hospitals, children’s hospitals, and PPS-exempt cancer hospitals will continue to be excluded from this policy.

CMS Releases 2022 Home Health Payment Final Rule

Adding to last week’s flurry of rules out of the Centers for Medicare and Medicaid Services (CMS), the agency finalized updates to the Medicare Home Health Prospective Payment System (HH PPS) and the home infusion therapy services rates for calendar year (CY) 2022 (rule, fact sheetpress release).  In its rule, CMS also finalized a nationwide expansion of the Home Health Value-Based Purchasing (HHVBP) Model with a one-year delay and makes permanent certain home health aide waivers relating to Conditions of Participation (CoP) that were implemented during the COVID-19 public health emergency (PHE). In addition, the proposed rule includes changes to the home health quality reporting program (QRP) to improve data collection to assist in analyzing health disparities.

Under the final rule, CMS estimates that Medicare payments to home health agencies in CY 2022 will increase by an aggregate 3.2 percent (or $570 million). The final rule also finalizes the recalibration of the Patient-Driven Groupings Model (PDGM) case-mix weights, functional levels, and comorbidity adjustment subgroups while maintaining the CY 2021 low utilization payment adjustment (LUPA) thresholds for CY 2022. CMS is also updating its regulations to reflect recent changes in the law to permit occupational therapists (OTs) to conduct initial comprehensive assessments for Medicare beneficiaries Specifically, CMS is implementing a LUPA add-on for the first OT visit in LUPA periods. However, due to a lack of data, CMS will use the physical therapy LUPA add-on factor until more OT data is available for CY 2022.

The rule finalizes payment amounts for CY 2022 for home infusion therapy services. By law, CMS is required to annually increase the single payment amount for home infusion services from the prior year based on the percentage increase in Consumer Price Index for All Urban Consumers (CPI-U) from the preceding year reduced by a productivity adjustment. Additionally, the single payment amount for home infusion services must be adjusted to reflect a geographic wage index and other costs that may vary by region. CMS’s final home infusion therapy payment rate update for CY 2022 is 5.1 percent. For CY 2022, CMS also will continue to increase the payment amount for the first home infusion therapy visit by the qualified home infusion therapy supplier and decrease the amount for subsequent visits.