Health Policy Report (2/28)

February 28, 2022

Capitol Hill Update

Both chambers will kick off the March legislative work session today as lawmakers face another lengthy list of legislative priorities — headlined by the March 11 government funding deadline. Appropriators have expressed optimism that the two sides are close to reaching an omnibus spending deal for fiscal year (FY) 2022, which will likely include the White House’s $6.4 billion request for supplemental appropriations to support Ukraine. Assuming Congress can pass an omnibus spending deal and avoid another continuing resolution (CR), lawmakers are expected to promptly shift gears toward the FY 2023 appropriations process this month.

When senators return later this afternoon, Democrats plan to try and move a House-passed bill that seeks to codify Roe v. Wade abortion protections. However, the legislation is considered dead-on-arrival in the 50-50 Senate. Following this procedural vote, the Senate will move to consider the bipartisan Postal Service Reform Act (H.R. 3076) after the House made a technical fix to the text of the engrossed bill. Final passage of the postal legislation could occur as soon as Tuesday if the Senate can reach a time agreement, but opposition from Sens. Rick Scott (R-FL) and Jim Risch (R-ID) could further delay the final vote. In the House, Members are slated to take up a measure that seeks to improve health care and benefits for veterans who were exposed to toxic substances.

Biden Renews Public Health Emergency

On Tuesday, the Biden administration renewed the public health emergency (PHE). While the PHE was not set to expire until March 1, Biden did not want to wait for the clock to run out, as hospital groups, providers, and other stakeholders have been sharing their anxieties about the unknowns of a post-PHE health care system. Specifically, these groups have voiced concerns about telehealth flexibilities (TRP analyzed), Medicaid determinations, and implementing the No Surprises Act. The administration did not delineate an end date for the PHE extension, though the White House notice emphasized the importance of continuing pandemic-related waivers.

The Assistant Secretary for Preparedness and Response (ASPR) assured the public that the Department of Health and Human Services (HHS) will continue to implement Medicare, Medicaid, CHIP, and Health Insurance Portability and Accountability Act (HIPPA) modifications as directed by the PHE designation. HHS said that it is committed to providing a 60-day comment period before letting the PHE lapse. This allowance indicates to insiders that the PHE declaration is likely to last until at least July.

HHS Disperses $560 Million in Provider Relief

The Department of Health and Human Services (HHS) announced that it will give $560 million to over 1,400 providers in provider relief funding (PRF) on Thursday. So far, $11.5 billion has gone to over 78,000 providers in this fourth round of funding. While these funds are designated for pandemic-related costs from July 1, 2020, through March 31, 2021, Health Resources and Services Administration’s (HRSA) latest announcement includes workforce recruitment and retention as sanctioned uses for the funding.

The PRF now has $5.5 billion remaining — out of an initial $178 billion in the fund — and providers continue to urge Congress to infuse the PRF coffers with an additional $20 billion. HHS has assured applicants that the “phase four” relief would be more equitably dispersed than previous funding rounds, though providers say that still more funding is needed to address Delta and Omicron COVID-19 variants. Specifically, the American Health Care Association (AHCA) through its National Center for Assisted Living (NCAL) scrutinized the phase four distribution formula, characterizing it as inequitable and insufficient. The formulas for this phase of PRF payments were intended to provide a boost to those servicing Medicaid, Children’s Health Insurance Program (CHIP), and Medicare beneficiaries.

HRSA is still processing the remaining 14 percent of phase four applications for the separate rural relief funding dictated in the American Rescue Plan (ARP). ARP Rural applications require a slower review process, as ARP requires additional vetting of applications to determine risk mitigation and cost safeguards.

HHS Unveils New Supply Chain Initiatives

On Wednesday, the White House announced a series of new policy initiatives that seek to bolster domestic supply chains in various sectors. The Department of Health and Human Services (HHS) released its portion, the “Public Health Supply Chain and Industrial Base One-Year Report,” through the Health Resources and Services Administration (HRSA). The report is one of six reports on supply chains in response to president Biden’s Executive Order on America’s Supply Chains (EO) from last February. The report highlights mechanisms for HHS to leverage in order to reach the following goals: (1) strengthening the supply chain and industrial base; (2) expanding manufacturing of and accessibility to personal protective equipment (PPE) and durable medical equipment (DME); (3) bolstering access to testing and diagnostics; and (4) improving pharmaceutical and vaccine shortcomings.

In Win for Providers, Federal Judge Rules on Surprise Billing Regulations

Among many Centers for Medicare and Medicaid (CMS) regulations designed to implement the No Surprises Act (NSA), one provision has proved to be the most controversial. CMS determined that during arbitration between providers and payers, arbiters should resolve out-of-network (OON) medical bill disputes by settling on payment in the amount of the qualifying payment amount (QPA). Provider groups were frustrated that prioritizing the QPA over other price negotiation factors outlined in the NSA gave insurers a leg up in arbitration. In federal court, the Texas Medical Association (TMA) argued that the NSA outlined four equally weighted factors for an arbiter to consider when settling disagreements, though CMS illegally regulated that the QPA take precedent over other pricing factors.

On Thursday, the court ruled that HHS was incorrect to instruct mediators to give QPA priority compared to other factors during the independent dispute resolution (IDR) process. The American Medical Association (AMA) applauded this ruling as a win for providers. Deferring to QPA rates in the arbitration process would have given deference to past contracted rates between insurers and providers which provider groups argued were set arbitrarily by insurers. On the other hand, America’s Health Insurance Plans (AHIP) argue that the ruling will make care more expensive to the benefit of providers and facilities run by private equity firms. However, the outcome of this lawsuit does not impact patient protections or out-of-pocket (OOP) costs.

ARPA-H Support Falters

Bipartisan support for the Biden administration’s Advanced Research Projects Agency for Health (ARPA-H) is beginning to fall apart. Republicans are apprehensive about the cost of the program, while Democrats are divided over the program’s structure. ARPA-H — inspired by the Defense Advanced Research Projects Agency (DARPA) — is intended to fast-track medical research funding. With the departure of Dr. Eric Lander, one of Biden’s close science advisors and champion of ARPA-H, National Institutes of Health (NIH) Director Dr. Francis Collins is stepping up to lead ARPA-H efforts. Like Lander, Collins is advocating for NIH to house ARPA-H, though an increasing number of lawmakers disapproves of this approach.

Specifically, Republicans are voicing concerns that under the NIH, ARPA-H would allow recently politicized scientists like Dr. Anthony Fauci to control the agency’s research initiatives. Amid conflicts over NIH’s handling of the COVID-19 pandemic, Republicans are skeptical of providing the agency with roughly $6.5 billion for ARPA-H. At the same time, Democrats are reportedly attempting to downplay intraparty divisions over the location of ARPA-H, while lawmakers on both sides of the aisle are openly wondering if NIH has the right mentality to foster bold and pioneering medical initiatives. Some have noted that NIH is focused on preliminary research and early stages of development, while ARPA-H is intended to be on the cutting edge of launching and implementing treatments.