Health Policy Report (11/9)

November 9, 2020

Capitol Hill Update

Former Vice President Joe Biden is projected to defeat President Donald Trump in the race for the White House after clinching victories in Pennsylvania, Michigan, and Wisconsin. The Democratic nominee is also leading in Nevada, Georgia, and Arizona as the remaining mail-in and absentee ballots continue to get counted. Despite leading in North Carolina and scoring victories in Florida, Texas, and Ohio, President Donald Trump will fall short of the 270 electoral college votes necessary to win the presidency. President Trump has not yet conceded the race, however, and will likely push for recounts and legal challenges until the race gets officially finalized.

Meanwhile, control of the Senate will not be formally determined until January’s Peach State doubleheader, as both Georgia Senate races are headed to runoff elections. With Republicans currently holding a 50-48 advantage in the race for the Senate, Democrats will need to win both races on January 5 to forge a 50-50 tie in the upper chamber (allowing Vice President-elect Kamala Harris to serve as the tiebreaking vote). If the GOP prevails in one or both of these Georgia runoffs, Senate Republicans will retain their majority in what would be a status quo 117th Congress. Regardless of whether there is a narrow Democratic majority in both chambers or a divided government next year, the administration will still need to strive for bipartisan cooperation in order to clinch policy wins.

On the floor, the Senate will return to Washington today to begin the “lame duck” session of Congress. Lawmakers have a lengthy list of items to check off between now and the end of the year, namely jumpstarting Congress’ stalled appropriations process prior to the December 11 government funding deadline. Senate Majority Leader Mitch McConnell (R-KY) also emphasized that another COVID-19 relief bill should be passed before year’s end. However, it remains to be seen whether there will be a willingness from President Trump to negotiate and sign a deal given his defeat in the race for the White House.

HHS Proposes Regulatory Review and Sunset Rule

The Department of Health and Human Services (HHS) last Wednesday proposed a new rule requiring the administration to review regulations every 10 years to determine if they are still necessary. HHS would eliminate all regulations deemed burdensome and no longer necessary. If implemented, an estimated 2,480 rules would need to be assessed within the next two years or otherwise be allowed to expire. Public comments on the rule are due by December 4, except for certain provisions that will be open for comment through January 4.

Under the proposed rule, any regulation issued by HHS — with certain exceptions — will cease to be effective 10 years after it is issued, unless HHS performs a two-step assessment of the regulation. Regulations will be assessed to determine if they have had a significant impact on a substantial number of small entities, and if qualified for review under the Regulatory Flexibility Act (RFA), a more detailed review. The second review will consider: (1) the continued need for the rule; (2) stakeholder complaints; (3) complexity; (4) duplicity in or conflictions with other regulations; and (5) whether technological, economic, and legal changes favor amending or rescinding the rule. A rule would be thrown out if the administration determined it was no longer needed or had appropriate impact. HHS would amend regulations to add expiration dates under the proposed rule and would launch a website to allow the public to comment on or select rules to be reviewed.

HHS Chief of Staff Brian Harrison explained that the Department is planning to finalize the rule before the end of the presidential term, though it remains unclear if the administration can reach that goal in such a short time. Former Vice President Joe Biden is likely to rescind the rule, however. Staff at health agencies have already raised alarms that the proposed rule could take significant time and resources to determine which past rules should be reviewed, as HHS’ analysis has determined that 85 percent of all rules issued before 1990 have not been updated or edited since.

CMS Releases Part II of MA, Part D Advance Notice

The Centers for Medicare and Medicaid Services (CMS) released Part II of the Calendar Year (CY) 2022 Medicare Advantage (MA) and Part D Advance Notice (Advance Notice, press release, fact sheet) on October 30. The administration explained that the announcement — three months earlier than usual — will provide MA and Part D plan sponsors with additional time to prepare their bids for 2022 and estimate associated 2022 plans costs in light of uncertainty created by the COVID-19 pandemic. The proposed changes in the announcement are expected to increase plan revenue by 2.82 percent. Coupled with the previously released Advance Notice Part I that includes information about MA risk adjustment for 2022, public comments on both parts of the Advance Notice must be submitted by November 30, 2020. The MA and Part D payment policies for 2022, discussed in both Part I and Part II of the Advance Notice, will be finalized in the 2022 Rate Announcement published no later than April 5, 2021.

In Part II of the Advance Notice announcement, CMS is soliciting comments on how best to improve MA and Part D Star Ratings. CMS is specifically looking for input on a potential COVID-19 vaccination measure to encourage Medicare beneficiaries to receive the vaccine when one becomes available. CMS also proposed to apply the 5.9 percent statutory minimum coding intensity adjustment to risk scores. The health agency will reassess how it calculates the MA coding pattern for 2023 and beyond, and what the appropriate level of adjustment should be. Additionally, CMS is proposing to revise the MA ratebook to base it on data from beneficiaries with Part A and Part B — rather than beneficiaries with Part A or Part B as it currently is — and will soon issue a request for information on the topic.

CY 2022 is the final year of the three-year phased implementation of changes to the MA risk adjustment model. The changes account for additional diagnosis codes related to mental health and substance use disorders, the severity of chronic kidney disease, the total number of diseases, or conditions of a beneficiary. In addition, CY 2022 MA risk scores will fully rely on encounter data for calculation. In 2021, risk scores will be calculated from 75 percent encounter data and 25 percent fee-for-service claims as part of the ongoing phase-in of the new risk adjustment model.

CMS Finalizes 2021 ESRD Payment Rule

Last Monday, the Centers for Medicare and Medicaid Services (CMS) finalized changes to the Medicare End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for calendar year (CY) 2021 (final rule). CMS largely finalized the rule as proposed, making minor modifications and opting to finalize a payment offset for an add-on payment for innovative equipment. With the final base payment rate being updated only slightly from the proposal ($253.13 as finalized versus $255.59 as proposed), CMS estimates that ESRD PPS expenditures will increase by approximately $190 million, or 1.6 percent, in 2021. 

CMS is finalizing changes that it says are meant to encourage home dialysis and the development of new home dialysis machines that substantially improve previously available technologies. Specifically, the agency would expand the TPNIES to cover new home dialysis machines. Capital assets had been specifically excluded from the TPNIES in the CY 2020 ESRD PPS rule. However, CMS is finalizing an offset to the TPNIES for home dialysis machines, which would reduce the pre-adjusted per treatment amount for the machines by a value reflecting the amount already included in the ESRD PPS base rate for home dialysis machines. This was presented as an alternative in the proposed rule, but was ultimately finalized. Some stakeholders had criticized CMS’s proposal to apply a TPNIES to new home dialysis machines, saying that the policy incentivizes investments in new technologies and not necessarily better ones.