Health Policy Report (5/17)

May 17, 2021

Capitol Hill Update

Both chambers of Congress will return to action this afternoon. On the Senate floor this week, Senators will consider the Endless Frontier Act — a bipartisan package that would spur $100 billion in new funding toward technology research and development to combat the competitive threat posed by China. Lawmakers on the Commerce Committee approved the legislation on a strong bipartisan basis, but additional changes are likely on the horizon as hundreds of amendments have been filed to the underlying bill. The final funding number for a new tech directorate at the National Science Foundation is also up in the air after Senators approved an amendment that would shift some of the $100 billion for the directorate to programs at the Department of Energy. The legislation’s GOP cosponsor, Sen. Todd Young (R-IN), expressed strong opposition to the amendment offered by Sen. Ben Ray Lujan (D-NM), arguing that the new language is a “poison pill” that will make it harder to pass.

In the House, lawmakers will take up legislation designed to narrow the criteria for orphan drug designations. The Fairness in Orphan Drug Exclusivity Act (H.R. 1629) would require that manufacturers seeking orphan drug designations demonstrate the absence of any reasonable expectation that they would recover research and development costs for a given drug. The measure was originally queued up under suspension of the rules last week but failed to earn the 2/3 vote necessary for passage following a disagreement over cosponsorship stemming from the January 6 Electoral College certification votes. Also on the floor this week, Members will consider a Senate-passed bill that would spur an immediate review of pandemic-related hate crimes at the Department of Justice.

House Democrats Push for Bipartisan Drug Pricing Bill

Ten moderate House Democrats sent a letter to Speaker Nancy Pelosi (D-CA) last week advocating for bipartisan drug pricing reform. They asked that efforts to reform drug pricing include colleagues in the Senate and Biden administration, and that health legislation pursued by Congress make patient affordability the top priority. They noted that in order to achieve this goal, “stakeholders in health care delivery must come together, working with congressional committees of jurisdiction, to determine ways to better serve patients in an efficient and affordable fashion with an eye toward improving health equity.” They emphasized that collaboration could ensure stakeholders across the health care system bear responsibility to improve costs and stressed the need to strike a balance between affordability and innovation.

The May 3 letter, led by Rep. Scott Petters (D-CA) and Rep. Jake Auchincloss (D-MA) has led many to question whether the speaker has the votes to pass Democrats’ landmark drug pricing bill, H.R. 3. The bill has faced controversy for the inclusion of policies allowing Medicare to negotiate drug prices or impose taxes on companies that choose not to participate. While the letter does not explicitly state the signers will not support H.R. 3, Democrats can only afford to lose a handful of votes assuming they don’t have Republican support.

HHS Secretary Indicates Provider Relief Fund Could be Extended

At a hearing last Wednesday before the House Energy and Commerce Committee, Health and Human Services (HHS) Secretary Xavier Becerra said the Biden administration is considering extending the deadline for the Provider Relief Fund (PRF). Providers must use funds by June 30 or return them to the federal government. Stakeholders and lawmakers have advocated for an extension of the fast-approaching deadline, noting that providers should have until the end of the year to spend funds. Secretary Becerra said the decision will be “driven by facts” to ensure providers “who have a need get those needs addressed.”

The HHS Secretary did not offer a timeline for how the remaining $25 billion in funds would be distributed, or to what types of providers, but said the administration would demand accountability and transparency from those who receive funds. He indicated that safety-net hospitals on the front line deserve the administration’s attention at this point in time but said there is “more need than there is money.” The American Hospital Association, other medical advocacy groups, and a bipartisan group of 77 lawmakers sent a letter to HHS last week asking that the administration tie the deadline for use of PRF dollars to the end of the public health emergency.

CMS Issues Guidance on Enhanced FMAP for HCBS Improvements

Last Thursday, the Centers for Medicare and Medicaid Services (CMS) issued guidance to states on temporary enhanced funding for Medicaid home- and community-based services (HCBS) under the American Rescue Plan (ARP) Act. The State Medicaid Director Letter (SMDL #21-003) provides guidance to states regarding the implementation of the temporary increase to a state’s federal medical assistance percentage (FMAP) of 10 percentage points for certain Medicaid HCBS expenditures authorized by the American Rescue Plan (ARP) of 2021. Under the ARP, this temporary FMAP increase is available to states beginning April 1, 2021 through March 31, 2022, and funds freed up can be used through March 31, 2024 to improve HCBS services in the state. 

Expenditures eligible to receive enhanced FMAP include private duty nursing, home health services, personal care services, case management, and school-based services. In addition, expenditures under various Medicaid HCBS authorities as well as HCBS services authorized under an 1115 demonstration are eligible. More information on which HCBS expenditures are eligible for the increased FMAP is available in Appendix B of the guidance. 

In order to receive the enhanced FMAP for eligible HCBS expenditures, CMS explains that states must meet two requirements: (1) states cannot use the federal funds attributed to the FMAP increase to supplant existing state funds expended for Medicaid HCBS as of April 1, 2021; and (2) the state funds freed up by the FMAP increase must be used to enhance, expand, or strengthen HCBS services that are available in the state Medicaid program as of April 1, 2021. While the temporary FMAP increase is available through March 31, 2022 under the ARP, this guidance issued by CMS will permit states to use the state funds freed up by the FMAP increase through March 31, 2024 on activities that enhance HCBS services. 

The guidance describes a variety of activities that states may pursue with their state funds made available by the FMAP increase that qualify as “enhancing, expanding, or strengthening” HCBS services. These activities include activities to address COVID-related concerns, to provide certain services and expand capacity for individuals with mental health and substance use disorders, to promote HCBS capacity building and infrastructure development activities including payment rate and benefit enhancements, and to pursue innovative long-term services and supports (LTSS) rebalancing strategies. 

CMS to End Part D Payment Modernization Model

The Centers for Medicare and Medicaid Services (CMS) announced recently that it would end the voluntary Part D Payment Modernization (PDM) Model, citing a lack of participation. The demonstration, conducted through the Center for Medicare and Medicaid Innovation (CMMI), will now conclude three years early on December 31, 2021, as only two plan sponsors — comprising nine plans in four states — are currently participating in the model. Thus, CMS will not proceed with testing the PDM Model in calendar year (CY) 2022 to CY 2024. The move comes two months after President Biden’s CMS rolled back new formulary flexibilities for model participants relating to Medicare’s six “protected classes” of prescription drug and reducing the number of drugs plans are required to cover in each therapeutic class. Applications to participate in the PDM Model for CY 2022 closed on April 16, 2021.

On President Trump’s last day in office, CMS released a request for applications for the PDM Model and announced new flexibilities that would have allowed certain Medicare Part D plans to limit the drugs they cover, including drugs within five of Medicare’s six protected classes. The changes were, in part, aimed at boosting demonstration participation. Specifically, beginning calendar year (CY) 2022, participating plans would have been permitted to cover only one drug per therapeutic class and could treat five of Medicare’s six protected classes as if they were any other class of drug, no longer requiring coverage of “all or substantially all” of the drugs in those classes. CMS had said that the sixth protected class — antiretrovirals — would also be treated as any other class for CY 2023. President Trump’s CMS had also proposed to temporarily remove downside risk for plans participating in the demonstration. More plans were said to have been interested in participating in this version of the PDM Model.

CMS Announces New COVID-19 Vaccine Requirements for LTC Facilities

The Centers for Medicare and Medicaid Services (CMS) last Tuesday announced new requirements for long-term care (LTC) facilities to encourage COVID-19 vaccination. In an interim final rule (IFR) with comment period (IFR, press release), the agency is requiring LTC facilities to offer COVID-19 vaccines to residents and staff and is also requiring reporting of vaccinations for residents and staff. Furthermore, CMS is mandating that LTC facilities provide vaccine education to staff and residents. The agency says that these reporting requirements are intended to monitor uptake and to identify facilities that may need additional support. These new requirements are implemented through CMS’ conditions of participation for the facilities. This IFR will go into effect 10 days after it is published in the Federal Register, though CMS will accept comments on the IFR for 60 days after publication.

LTC facilities are required to offer COVID-19 vaccinations to staff and residents either themselves or in partnership with another entity under the rule. They must also provide appropriate education regarding the vaccine to staff and residents, including the benefits and risks of COVID-19 vaccines. CMS notes that the Pharmacy Partnership for LTC, which provided vaccines to LTC facilities, is winding down, necessitating that facilities have policies and procedures in place to ensure continued access to COVID-19 vaccines for residents and staff. Once per week, LTC facilities must report COVID-19 vaccination status for all residents and staff to the Centers for Disease Control and Prevention’s (CDC) National Healthcare Safety Network (NHSN), including the total number of residents and staff who have received the jab. As such, all staff and resident COVID-19 vaccinations must be documented by the facility. Reasons for residents’ vaccine refusals, if any, should be documented with an explanation, CMS says. In addition, facilities must report the use of COVID-19 therapeutics, such as monoclonal antibodies, in residents. CMS is also mandating new, but somewhat less strict, requirements in intermediate care facilities for individuals with intellectual disabilities (ICF-IID).