Health Policy Report (12/7)

December 7, 2020

Capitol Hill Update

Congress returns to action today as lawmakers look to clear the decks on its remaining “lame duck” priorities. With government funding set to lapse at the end of the week, appropriations leaders are expected to release a short-term continuing resolution (CR) this week that would avert a shutdown on Friday and provide more time to reach a compromise. The talks have been bogged down over several lingering policy disagreements, including veterans’ health care costs, border wall funding, criminal justice issues, and environmental policy riders.  

Meanwhile, leadership is also pushing to reach a deal on pandemic relief that could get tacked onto the forthcoming FY 2021 spending deal, according to Speaker Nancy Pelosi (D-CA). The Speaker also noted this plan has the blessing of Senate Majority Leader Mitch McConnell (R-KY), yet the two sides will still need to navigate disagreements on size and scope before a final agreement can be reached. As calls for additional COVID-19 aid continue to grow, a bipartisan, bicameral group rolled out a $908 billion framework last week that many lawmakers on both sides have coalesced behind — including Speaker Pelosi and Senate Minority Leader Chuck Schumer (D-NY). Legislative text for this proposed framework is expected to be released early this week.

Additionally, lawmakers will also take up the conference report (reportJoint Explanatory Statement) for the FY 2021 National Defense Authorization Act this week. The House is expected to take the annual defense spending bill up tomorrow, with the Senate to follow suit shortly thereafter. Officials are confident that the $732 billion bill will pass next week with veto-proof majorities in both chambers — an important factor given President Donald Trump’s threats to nix the NDAA over issues pertaining to renaming military bases that honor Confederate soldiers and Section 230 of the Communications Decency Act.

CMS Finalizes 2021 Physician Fee Schedule

Last Tuesday, the Centers for Medicare and Medicaid Services (CMS) published the final calendar year (CY) 2021 updates for the Medicare Physician Fee Schedule and Quality Payment Program (final rule, Physician Fee Schedule fact sheet; Quality Payment Program fact sheet; Medicare Diabetes Prevention Program fact sheet), finalizing expansion of certain telehealth services in Medicare and controversial evaluation and management (E/M) payment redistribution. Department of Health and Human Services Secretary Alex Azar noted that “Medicare beneficiaries will now be able to receive dozens of new services via telehealth, and we’ll keep exploring ways to deliver Americans access to healthcare in the setting that they and their doctor decide makes sense for them.”

Specifically, the final rule will: (1) add more than 60 services to the Medicare telehealth list to be covered beyond the end of the public health emergency (PHE); (2) redistribute physician pay as a result of the budget neutrality requirements linked to an increase in pay for evaluation and management (E/M) visits; and (3) strongly encourage adoption of electronic prescribing of controlled substances (EPCS). It also pushes off a decision on the treatment of certain drugs for coding purposes. CMS issued a pair of interim final rules (IFR) alongside the fee schedule, creating coding and payment for virtual check-in services and creating a payment bundle for personal protective equipment. The agency is waiving the 60-day delayed effective date requirement for this rule. Major rules are required to have such an effective date, but CMS says that the “significant devotion of resources to the COVID-19 response” justifies waiving the delay and replacing it with a 30-day delay. The bulk of the rule will be effective January 1, 2021. Comments will be open for the two interim final rules for 60 days.

Through the final rule, CMS will permanently reimburse over 60 of the 144 telehealth services that were added during the pandemic, including home visits for the evaluation and management of a patient (in the case where the law allows telehealth services in the patient’s home), and certain types of visits for patients with cognitive impairments. CMS finalized the creation of a “category 3” for its telehealth services list, which describes services available on a temporary basis. In addition, the agency will commission a study of the telehealth flexibilities created during the pandemic, including remote supervision and remote monitoring. Additionally, CMS finalized increased payment for evaluation and management (E/M) visits — which make up 20 percent of the spending under the Physician Fee Schedule — while reducing pay for other services due to budget neutrality requirements. The administration explained that the changes are averages, and “may not necessarily be representative of what is happening to the particular services furnished by a single practitioner within any given specialty.” The substantial changes in reimbursement are likely to renew calls from stakeholders for Congress to waive budget neutrality requirements, as many argue that they lead to significant disparities in impact among physician subspecialties — as seen in Table 106 in the final rule. Finally, CMS also simplified the coding and billing requirements for E/M office visits in collaboration the AMA, which is expected to save clinicians 2.3 million hours per year once it goes into effect January 1, 2021.

CMS Finalizes 2021 Hospital Outpatient Payment System Rule

Last Wednesday, the Centers for Medicare and Medicaid Services (CMS) finalized updates for the Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System for 2021 (final rule, fact sheet). In a notable change from the proposed rule, CMS abandoned a proposal to cut hospital reimbursement for 340B drugs by six percentage points, citing the need for consistent and reliable payment during the public health emergency (PHE). Additionally, CMS concurrently issued two interim final rules (IFR) with comment periods, one creating new reporting requirements for hospitals related to COVID-19 therapeutic inventories and another modifying the performance period for the new Radiation Oncology Model.

In finalizing the rule, the administration explained that its policies are consistent with the directive in President Trump’s “Protecting and Improving Medicare for Our Nation’s Seniors” executive order (EO), and aims to “increase choice, lower out-of-pocket cost, empower patients, and protect taxpayer dollars.” “President Trump’s term in office has been marked by an unrelenting drive to level the playing field and boost competition at every turn,” said CMS Administrator Seema Verma in a press release. “Today’s rule…allows doctors and patients to make decisions about the most appropriate site of care, based on what makes the most sense for the course of treatment and the patient without micromanagement from Washington.”

CMS notes that the changes would build on previous efforts to increase patient choice by expanding Medicare reimbursement for services in different sites of care and reduce provider burden to allow hospitals and ambulatory centers to operate with increased flexibility. The final rule includes a 2.4 percent pay raise for Medicare outpatient services, and total payments to providers are projected to increase by $7.5 billion to nearly $84 billion. Urban hospitals will get a wage index boost of about 0.2 percent, while rural hospitals would get a raise of about 0.4 percent. CMS also plans to streamline the overall hospital star rating system beginning in 2021 including how it calculates ratings, decrease the number of measure groups, and stratify the readmission measure group based on the proportion of dual-eligible patients. Furthermore, the administration is finalizing a proposal to cover 11 additional procedures in ambulatory surgical centers, changes to the way procedures are added to the ASC covered procedure list, and phase out the inpatient-only list over three years.

ACIP Adopts Recommendation to Prioritize Health Workers for COVID-19 Vaccine

The Advisory Committee on Immunization Practices (ACIP) adopted an interim recommendation on high-priority recipients for a COVID-19 vaccine last Tuesday. The committee, which is part of the Centers for Disease Control and Prevention (CDC), recommends that health care personnel and residents of long-term care facilities should be offered vaccination in the initial phase of COVID-19 vaccination. This would cover approximately 24 million individuals in the U.S. ACIP voted 13-1 to approve the recommendation. The lone “no” vote, Dr. Helen Talbot, raised questions about efficacy data in older adults and whether there are adequate safety networks in place in long-term care facilities. ACIP is responsible for providing advice on disease control for which a vaccine is authorized for use in the U.S. ACIP recommendations are used as the basis for coverage decisions — including mandatory coverage under statute — and direct which vaccines must be covered for which populations.

This interim recommendation concerns the first of three tranches in ACIP’s framework for the initial phase of vaccine distribution. The second tranche would include essential workers such as teachers, first responders, and food, agriculture, and transportation workers. The third tranche would include seniors and adults with high-risk medical conditions. Neither of the second two tranches are subject to the recommendation approved last week. CDC will need to develop gating criteria for moving from one tranche to the next. While this recommendation sets the course for the distribution of the first available vaccine doses, it does not constitute a recommendation for a given vaccine. Such a recommendation is likely to come after the Food and Drug Administration (FDA) grants emergency use authorization to one or more COVID-19 vaccine candidates. In fact, last week’s recommendation states that the first tranche of recipients should get the vaccine following FDA authorization and ACIP recommendation. CDC guidance and federal oversight could evolve over the next several months as vaccines become available and distribution begins.

ACIP’s recommendations on vaccine distribution priority are not binding. Earlier last week, Secretary of Health and Human Services Alex Azar said that governors would ultimately decide which segments of the population would be first in line to receive a COVID-19 vaccine. “I would hope that the science and the evidence will be clear enough that our governors will follow the recommendations that we will make to them,” he said. Meanwhile, a CDC official said most of the nation’s 64 jurisdictions (the 50 states and DC, 8 U.S. territories, the freely associated Pacific states, and five cities) expect that they will be able to vaccinate their health care workforces within three weeks of receiving the first dose of a COVID-19 vaccine. The agency says that around 40 million doses total will be available by the end of December. Both vaccine candidates currently being evaluated by FDA require two staggered doses. The states and DC have submitted their respective COVID vaccine distribution plans, which CDC is continuing to review with officials. 

CMS Proposes 2022 Exchange Rule

The Centers for Medicare and Medicaid Services (CMS) recently proposed its Notice of Benefit and Payment Parameters (NBPP) for 2022 (press release, fact sheet). The NBPP represents one of the final opportunities for the Trump administration to leave its mark on the health insurance exchanges created by the Affordable Care Act (ACA). It seeks to codify 2018 guidance relating to Section 1332 State Innovation Waivers, implement certain pharmacy benefit manager (PBM) transparency requirements, decrease Exchange user fees, and more. CMS has allotted an unusually short amount of time for comment on the rule, likely in an effort to finalize it prior to President-elect Biden’s inauguration. In addition to policy changes, the NBPP sets certain rates, thresholds, and deadlines. For 2022, CMS proposes a $9,100 annual limit on cost-sharing for self-only coverage and $18,200 for family plans, a 6.4 percent increase over 2021. It also would set the annual contribution percentage for 2022 at 8.47228 percent of income, a small increase over 2021’s 8.27392 percent. This is the percentage of income that individuals would need to pay for coverage in order to qualify for an affordability exemption to allow them to enroll in catastrophic coverage.

The changes, CMS says, are likely to reduce premiums. In particular, officials point to the reduced Exchange user fee as a change that will be reflected in premiums. “Thanks to our market-oriented policies, the Exchanges have stabilized: prices have gone down and insurers have returned,” said CMS Administrator Seema Verma in a press release. “The actions we are taking today to reduce user fees will directly reduce premiums. The program is running better than ever before due to the actions we took to increase efficiency and reduce costs. The proposed NBPP will be open for comment for 30 days. In a departure from past practice, the comment period begins on the day that it is put on public inspection at the Federal Register rather than the day it is officially published. This means that the comment period will conclude December 30, possibly allowing the Trump administration to finalize the rule by Inauguration Day. However, President-elect Biden’s incoming team could take steps to stymie the rule. As a significant rule, it cannot go into effect until 60 days after the publication of the final rule.

Biden Asks Fauci to be Chief Medical Officer, Requests Americans Wear Masks for First 100 Days

President-elect Biden met with National Institute of Allergy and Infectious Diseases Director Dr. Anthony Fauci last week and asked him to remain in his position in the administration, as well as serve as chief medical adviser and on the COVID-19 response team. Dr. Fauci revealed that he accepted the position “right on the spot.” In an interview with CNN’s Jake Tapper, Biden also stated that he will ask Americans on inauguration day to wear masks for the first 100 days of the president in a nationwide effort to curb the pandemic. The President-elect reportedly discussed the idea with Dr. Fauci, who advised it may be necessary beyond that timeframe as vaccines are distributed and herd immunity is achieved. Moncef Slaoui, head of the Trump administration’s Operation Warp Speed, reported last week that the U.S. is aiming to distribute a COVID-19 vaccine to 100 million Americans by the end of February.