Health Policy Report (12/6)

December 6, 2021

Capitol Hill Update

After punting the government funding deadline to February 2022, Congress will meet this week and turn its attention to other year-end legislative priorities, starting with the federal debt ceiling. The Treasury Department has circled December 15 as its “X Date,” at which point it will no longer be able to utilize “extraordinary measures” to prevent a default. Absent GOP support on a measure to address the debt ceiling, Democrats will likely need to leverage the budget reconciliation process to raise the debt limit with a filibuster-proof legislative vehicle. Other notable items on lawmakers’ radar include addressing: (1) statutory “pay-as-you-go” (PAYGO) rules to avoid across-the-board spending cuts as a result of the American Rescue Plan (ARP); (2) a looming two percent spending cut for all Medicare services; (3) the FY 2022 National Defense Authorization Act (NDAA); (4) an expiring 3.75 percent increase to physician pay; and (5) several “tax extender” policies that are set to expire at year’s end.

While Congress looks to tackle its lengthy year-end to-do list, Senate Majority Leader Chuck Schumer (D-NY) is also preparing to bring the House-passed Build Back Better Act (BBBA) to the floor for consideration this month. Senate Democrats could unveil a series of changes to the House bill as soon as this week, with the goal of getting the bill on the floor for a vote by the week of December 13. The reconciliation package is likely to shrink in size to try and appease the economic concerns of centrist Democratic senators, namely Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ). The Senate Parliamentarian is also expected to begin the “Byrd bath” review of key BBBA health care provisions and could also strike policies that are ruled as “extraneous” to the underlying budget resolution. As of now, it remains to be seen whether the $1.7 trillion social spending package has enough Democratic support to pass prior to the end of the year.

Sequester Measure Left Out of Continuing Resolution

With massive Medicare reimbursement cuts due to kick in on January 1 as a result of sequestration, the government stop-gap funding bill passed by Congress on December 2 did nothing to halt them. Providers were hoping that the continuing resolution (CR) would include policies to mitigate the imminent cuts to Medicare payments. This has left panicking policy experts to brainstorm other vehicles to carry a sequestration alleviation measure, including a stand-alone bill to address the cuts. Democratic aids are optimistic that there are viable avenues beyond the CR to avoid cuts, and some insiders speculate that legislation could be on the House floor as soon as this week.

The two percent sequester has been paused during the COVID-19 pandemic, and providers argue that the delay should be extended. Compounding this cut is the statutory “PAYGO” expiration coming up in January that would result in an additional four percent cut to Medicare. House Budget Committee Chair John Yarmuth (D-KY) is urging Congress to waive PAYGO cuts, and House Ways and Means Committee Chair Richard Neal (D-MA) is rumored to be prioritizing the issue. Democrats are putting pressure on Republicans to join them in averting PAYGO cuts, but recent votes on PAYGO legislation and sequestration delays have lacked Republican support.

Biden Speaks on Emerging Omicron Variant

As the omicron variant arrives in the country, President Biden announced a series of actions aimed at mitigating the impact of COVID-19. His plan would encourage booster uptake among eligible Americans by expanding pharmacy availability, enhancing public education and outreach, collaborating with the American Association of Retired Persons (AARP), and requesting that employers provide adequate safeguards for those who wish to get boosted. Another focal point for the administration is to keep schools open by vaccinating children.

Biden elaborated that this goal would entail launching family vaccination clinics, providing Medicaid payments to health care providers who encourage child vaccinations, and bolstering Food and Drug Administration (FDA) resources to expedite vaccine applications. Additional mitigation strategies include supplying treatment pills and free at-home testing kits, enhanced protocols for international travel, overcoming challenges to vaccine mandates, deploying COVID-19 Surge Response Teams, maintaining global vaccination efforts, and exploring options for omicron vaccines and treatments.

This slew of COVID-19 mitigation strategies comes on the heels of confirmed omicron cases in a growing number of states. Scientists say it will take time to fully understand the characteristics of the variant, though Biden and federal health officials reiterated the importance of getting a booster shot to fend off the new variant. It is unclear if Biden admiration actions will have an effect on vaccine uptake amidst emerging data that the partisan gap surrounding booster shots is widening.

Groups Push Back Against Vaccine Mandates in the Courts

On November 4, the Biden administration announced — through rules issued by the Occupational Safety and Health Administration (OSHA) and the Centers for Medicare and Medicaid Services (CMS) — a series of new COVID-19 vaccine and testing requirements for certain private sector businesses with 100 or more employees (TRP analysis; rulefact sheet; press release) as well health care workers at Medicare and Medicaid certified facilities (TRP analysis; rulepress release; FAQ). This announcement follows a previous September 2021 Executive Order (E.O. 14042) that required covered federal contractors to mandate that their employees be fully vaccinated.

For example, OSHA announced that it is suspending enforcement of its COVID-19 vaccine mandate for large private businesses after the Court of Appeals for the Fifth Circuit upheld a prior stay last month blocking the Administration from implementing the rule. While OSHA is still barred from taking any actions to implement or enforce the rule, OSHA extended the comment period for its rule for an additional 45 days on December 2. The new deadline to submit comments is January 19, 2022.

Following several injunctions, on December 2, CMS suspended enforcement of its COVID-19 vaccine mandate for health care workers at Medicare and Medicaid certified facilities.  Separately, legal challenges have also been brought against the Office of Personnel Management (OPM) and the Federal Acquisition Regulatory (FAR) Council’s guidance mandating vaccines for federal contractors and subcontractors, and federal employees. On November 30, a court temporarily blocked enforcement of the vaccine mandate for federal contractors and subcontractors.

CMMI Terminates Demonstration for Seriously Ill

The Center for Medicare and Medicaid Innovation (CMMI) ended a program designed to improve care for very ill Medicare beneficiaries. CMMI said that the demonstration initiative would be unable to recruit a sufficient number of participants to test the demonstration. The program was housed within the Primary Care First model, which is a voluntary payment model designed to encourage primary care providers and facilities to provide additional care, such as call lines and behavioral health care. Specifically, the terminated component was geared towards beneficiaries with serious illnesses who do not have a primary care physician. It would have provided facilities with hospice and palliative care services additional opportunities for care coordination.

Last spring, CMMI had paused the seriously ill population component pending review. The agency accepted applications but never launched the model component. Stakeholder groups and coalitions advocating for elderly Americans were disappointed in CMMI’s decision to rescind the model component. Many said that they would continue pushing for CMMI to provide end-of-life care to those with chronic conditions, and the agency assured groups that it will go back to the drawing board on crafting a more sustainable model.

PBMs Drop Rebate Rule Case

Pointing to a Centers for Medicare and Medicaid Services (CMS) self-imposed six-month delay of its transparency rule, pharmacy benefit managers (PBMs) dropped their lawsuit last Wednesday over the rule. The U.S. Chamber of Commerce had initiated a similar case, though the group dropped its suit after CMS deferred enforcement. The Trump-era Transparency in Coverage final rule (TRP analysis; press release) would have required advanced estimates of cost-sharing burdens for beneficiaries and public disclosure of negotiated rates for all services, including prescription drugs. For PBMs, this provision would have meant disclosing the rebated prices that they negotiate with drug companies.

The PBM group Pharmaceutical Care Management Association (PCMA) had maintained its lawsuit throughout the rule’s delay while it negotiated with CMS. The outcome of the negotiations is unclear, though secession of the lawsuit indicates a level of PCMA satisfaction. The Democrats’ $1.75 trillion reconciliation package includes constraints on PBM practices via transparency requirements — including aggregate rebate reports — but the House-passed bill does not include public disclosure of individual drug rebates.

Stakeholders Call for HDHPs-HSAs Cover More Services

The Smarter Health Care Coalition is pushing the Internal Revenue Service (IRS) and the Department of Treasury to enable high-deductible health plans linked to health savings accounts (HDHP-HSAs) to cover mental health and substance abuse disorder (SUD) service pre-deductible. The coalition pointed to data indicating that a majority of insurers and employers offer pre-deductible coverage for some items. Since tax advantaged HDHP-HSAs were created in 2003, IRS has limited pre-deductible coverage to preventative services and prescription drugs.

In 2019, the IRS issued new guidance establishing a safe harbor for coverage of 14 pre-deductible treatments if the service is low-cost, highly cost-efficient, and if it prevents the condition from worsening. The Kaiser Family Foundation found that 29 to 48 percent of employers changed services for employees with chronic conditions without meeting their deductible. Additional surveys concluded similar results, reaffirming the Smarter Health Care Coalition’s argument. The group is also backing legislation that would codify the IRS’ guidance and allow for coverage of chronic conditions.