Health Policy Report (12/14)

December 14, 2020

Capitol Hill Update

Congress enters the week with some breathing room to avoid a government shutdown and fund the government for fiscal year (FY) 2021. President Donald Trump signed a week-long continuing resolution into law last Friday, punting the funding deadline — as well as numerous expiring health programs — to December 18 at midnight. Appropriations will need to move past several lingering policy disagreements that have bogged down progress thus far, including veterans’ health care costs, COVID-19 relief, border wall funding, criminal justice issues, and environmental policy riders. If officials are unable to reach an agreement by week’s end, it’s possible that lawmakers could pass another short-term funding measure that keeps the lights on until early next year.

Meanwhile, discussions on the next round of COVID-19 relief aid are ongoing, but the prospects for the $908 billion package took a hit last week. Speaking on the Senate floor, Majority Leader Mitch McConnell (R-KY) tamped down expectations on the bipartisan, bicameral proposal, criticizing “controversial state bailouts” and reiterating his desire for a more targeted relief deal. It also appears that his proposed tradeoff — dropping both state and local aid as well as liability protections — may not have the votes necessary in the upper chamber to clinch final passage of additional COVID-19 aid. While it is possible that lawmakers could look to tack some areas of agreement onto an omnibus spending measure, the two sides still remain far apart on both the size and scope of what the next stimulus legislation should look like.

President-elect Biden Taps Xavier Becerra to Lead HHS

President-elect Joe Biden announced his pick of California Attorney General Xavier Becerra to lead the Department of Health and Human Services (HHS). Becerra has loomed large in health care-related litigation during the Trump era, serving as a lead in the defense in Texas v. California, in which several GOP-run states are seeking to overturn the Affordable Care Act (ACA). He has also taken controversial stances related to pharmaceutical intellectual property, defending California’s “pay-for-delay” law and calling for the federal government to exercise “march-in” rights on COVID-19 therapeutics. Additionally, Becerra’s California Department of Justice has been aggressive in antitrust litigation, suing a major California hospital system over alleged anti-competitive practices. If confirmed, Becerra would be the nation’s first Latino HHS Secretary.

Becerra became California’s Attorney General after a 24-year career in the House of Representatives and was appointed to his current role role after his predecessor, Kamala Harris, won election to the U.S. Senate. In the House, Becerra chaired the Congressional Hispanic Caucus and served on the Ways & Means Committee, including on the Health Subcommittee, during the passage of the ACA. Before running for the House, Becerra served as a Deputy Attorney General in the California Department of Justice and was elected to one term in the State Assembly.

HHS Proposes Major Updates to HIPAA

Last Thursday, the Office for Civil Rights (OCR) at the Department of Health and Human Services (HHS) released widely anticipated proposed changes to the Health Insurance Portability and Accountability Act (HIPAA) that aim to improve care coordination and give patients greater access to their health information (proposed rule, press release). The notice of proposed rulemaking (NPRM) seeks to: (1) strengthen individuals’ rights to access their own health information; (2) improve information sharing for care coordination and case management for individuals; (3) facilitate greater family and caregiver involvement in the care of individuals experiencing emergencies or health crises; (4) enhance flexibilities for disclosures in emergency or threatening circumstances, such as the Opioid and COVID-19 public health emergencies; and (5) reduce administrative burdens on HIPAA-covered health care providers and health plans, while continuing to protect individuals’ health information privacy interests. Public comments on the NPRM will be due 60 days after publication of the NPRM in the Federal Register. As President-elect Biden will take office while the comment period is open, it is likely that he will issue a regulatory moratorium following his inauguration, which could include review of this proposed rule. It is possible that the new administration will make changes to the NPRM and re-issue it or extend the current comment deadline.

HHS Secretary Alex Azar noted that the proposed changes to the HIPAA Privacy Rule will eliminate barriers to commonsense care coordination and value-based arrangements, and stated the proposed reforms “will reduce burdens on providers and empower patients and their families to secure better health.” HHS Deputy Secretary Eric Hargan explained the proposed changes will support providers in finding “new ways for them to innovate and coordinate care on behalf of patients, while ensuring that [HHS] upholds HIPAA’s promise of privacy and security.” He called the changes “bipartisan and very commonsense reforms.”

The administration explained that the proposed changes would support individuals’ engagement in their care, remove barriers to coordinated care, and reduce regulatory burdens on the health care industry. The NPRM aims to enable greater family and caregiver involvement in the care of individuals experiencing emergencies or health crises, as well as increase flexibilities for disclosures of private health information in emergency or threatening circumstances. The proposed rule would add definitions for electronic health records and personal health application, and make several changes individuals’ rights to access their personal health information — such as shortening the required response time for covered entities. The administration also expects the proposed changes would greatly reduce providers’ administrative work, as the NPRM makes changes such as scrapping requirements for providers to have patients sign a notice of privacy practices. OCR noted that it weighed the extent to which each of its proposed modifications would have an impact on privacy protections against the likely benefit of making PHI more available for coordination of care or case management.  

CMS Proposes New Data Exchange Requirements for Medicaid, QHPs

The Centers for Medicare and Medicaid Services (CMS) proposed a rule (press release, fact sheet) last Thursday to require the implementation of new systems to facilitate health data exchange. The notice of proposed rulemaking (NPRM) would require Medicaid and CHIP payers and qualified health plan (QHP) issuers in the individual market Federally-facilitated Exchanges (FFEs) to create new application programming interfaces (API) to facilitate the electronic exchange of health data and to require new features for APIs that have already been mandated. The APIs mandated by the rule will be required to conform to the Fast Health Interoperability Resources (FHIR) standard. CMS says that the requirements would streamline prior authorization processes, increase patient access to their health information, and facilitate care coordination. Notably, prescription drugs and covered outpatient drugs are excluded from all proposals in the rule. The rule also includes five separate requests for information (RFIs). The provisions of the rule would take effect January 1, 2023, and comments on the rule are due in the beginning of January — providing a shorter than typical comment period.

This rule builds upon the May rule by creating new requirements for the patient access API, requiring a payer-to-payer API that goes further than the process required by the May rule, and creating requirements for the development and implementation of new APIs. “This proposed rule ushers in a new era of quality and lower costs in health care as payors and providers will now have access to complete patient histories, reducing unnecessary care and allowing for more coordinated and seamless patient care,” said CMS Administrator Seema Verma in a press release. “Each element of this proposed rule would play a key role in reducing onerous administrative burden on our frontline providers while improving patient access to health information.” Medicaid and CHIP payers as well as QHPs would be subject to the rule, with CMS stating it is focused on these programs because enrollees tend to “churn” or move between and among these payers. Notably, CMS states that it does not believe that applying the policies to Medicare Advantage organizations is necessary at this time but is considering whether to include them in future rulemaking.

One of the main focuses of the rule is to streamline prior authorizations. It would mandate the creation of new APIs to streamline prior authorization requests for patients and providers. In addition, it would require quicker turnaround timelines for prior authorization requests for Medicaid and CHIP payers and require payers to submit justification when denying prior authorization requests. “Prior authorization is a necessary and important tool for payors to ensure program integrity, but there is a better way to make the process work more efficiently to ensure that care is not delayed and we are not increasing administrative costs for the whole system,” said CMS Administrator Seema Verma.

HHS Finalizes 340B Program Administrative Dispute Resolution Process

Last Thursday, the Department of Health and Human Services (HHS) published a final rule (final rule) establishing a 340B Program administrative dispute resolution (ADR) process. The final rule establishes a process called for more than ten years ago in the Affordable Care Act (ACA) and finalizes certain policies originally proposed in 2016 by the Obama administration. The final rule establishes an ADR board made up of equal representation from the Health Resources and Services Administration (HRSA), the Centers for Medicare and Medicaid Services (CMS), and the HHS Office of the General Counsel (OGC) to assist 340B providers and drug makers in resolving disputes regarding overcharging, duplicate discounts, or diversion. The final rule will replace the informal process that the Health Resources and Services Administration (HRSA) has been using since 1996. The final rule is scheduled to be published in the Federal Register on December 14, 2020 and will be effective January 14, 2021.

The final rule designs a process by which 340B providers and drug manufacturers can resolve disputes regarding overcharging, duplicate discounts, and diversion. A 340B ADR board will be established with at least six members with equal representation from HRSA, CMS, and the HHS OGC. Panels of three board members will look at claims with damages of more than $25,000 or equitable relief that would be more than $25,000 over a 12-month period following a decision, but HHS cautions that stakeholders should evaluate whether the ADR process is appropriate for minor claims given the resources required. Final, binding, and precedential decisions delivered by a panel must have a majority of voting members behind it but need not be unanimous.

 Since September 2020, six drug manufacturers had announced they will end 340B hospitals’ discounts on drugs that are dispensed through contract pharmacies, due to concerns that such arrangements force them to pay duplicate discounts. In October, Ryan White clinics and Community Health Centers filed separate suits against HHS over the lack of a 340B ADR process and seeking a judgement that they could purchase and dispense 340B drugs through contract pharmacies. The Administration faced mounting pressure from stakeholders and Congress to address the situation, however it appears that the final rule does not satisfy hospital groups. In response to the final rule, the American Hospital Association (AHA) stated, “on its own, this ADR process is not sufficient,” and urged HRSA to “take swift and decisive” to address the concerns of 340B hospitals and clinics. The AHA and America’s Essential Hospitals are asking for “immediate relief” from HHS rather than wait for an ADR board to be established.

SAMHSA Finalizes Change to Part 2 Rules

The Substance Abuse and Mental Health Services Administration (SAMHSA) finalized a modification to substance use disorder (SUD) record confidentiality regulations (final rule) last Friday. The rule will allow disclosure of SUD-related confidential communications between patients and providers if it aids in the prosecution of serious crimes. The change aims to correct a 2017 rule finalized in the last days of the Obama administration that made changes to 42 CFR Part 2 regulations governing SUD records. In last week’s rule, SAMHSA says that it did not mean to prohibit disclosures of information that could aid in the prosecution of serious crimes. 

SAMHSA finalized a proposal to remove the phrase “allegedly committed by the patient” from the regulation. SAMHSA says in Friday’s rule that the phrase was included erroneously and was not discussed in the preamble to the 2017 final rule. This will have the effect of allowing the disclosure of SUD records if they will aid in the prosecution of a serious crime regardless of whether it was allegedly committed by the patient whose records are in question. SAMHSA also says that this change will help prevent drug trafficking and patient exploitation associated with SUD programs covered by Part 2. Comments received on the final rule indicated that there is concern that this change will deter individuals with SUD from seeking or maintaining treatment. Some commenters also asserted that the phrase “allegedly committed by the patient” was not added in error, which SAMHSA denies.