Health Policy Report (5/26)

May 27, 2020

Capitol Hill Update

Following the long Memorial Day Weekend, the House will return to Washington tomorrow as leadership looks to utilize the lower chamber’s new remote work flexibilities to return to some resemblance of regular order. The rule change will allow Members to submit votes for up to ten absent lawmakers by proxy and permit committees to convene hearings, markups, and depositions through a chief administrative officer-approved software platform. These changes will only last 45 days before needing renewal and will not extend beyond the 116th Congress. In the coming days and weeks ahead, House leadership expects to utilize these remote work flexibilities to convene virtual hearings, markups, and consideration of key 2020 legislative priorities including fiscal year (FY) 2020 appropriations, the National Defense Authorization Act (NDAA), and reauthorization of expiring Surface Transportation and Water Resources Development programs

On the floor this week, the House plans to vote on a bill from Reps. Dean Phillips (D-MN) and Chip Roy (R-TX) under suspension of the rules that would: (1) provide flexibilities on how small businesses use Paycheck Protection Program (PPP) loan funding; (2) give businesses 24 weeks to spend the funds instead of eight; and (3) eliminate a non-statutory requirement preventing non-payroll costs from accounting for more than 25 percent of loan forgiveness. Prior to adjourning for their Memorial Day district work period, a bipartisan group of Senators had introduced a similar bill that would double the loan forgiveness period to 16 weeks, allow businesses to use the loan funds for investments to reopen safely, and extend the program through December. If the two chambers are able to strike an agreement this week, it’s possible that the bill could land on President Donald Trump’s desk for signature prior to the end of the month.

CMS Finalizes Select MA and Part D Proposals for 2021, Demurs on Others

Last Friday, the Centers for Medicare and Medicaid Services (CMS) finalized policies for Medicare Advantage (MA) and Part D plans for plan year 2021. The rule omits many of the policies proposed in CMS’ February 18 notice of proposed rulemaking (NPRM), with the agency opting instead to finalize operationally critical policies now and wait to address others due to the COVID-19 pandemic. Changes finalized in this rule focused on kidney care in MA, Star Ratings, MA medical loss ratio (MLR) calculations, MA network adequacy standards, special election periods (SEP) under exceptional conditions, limitations on Dual Eligible Special Needs Plan (D-SNP) “look-alikes,” and capitation rates. In addition, CMS removed outpatient dialysis facilities from the list of facility types that are subject to network adequacy standards. Instead, CMS intends to require that MA organizations attest that they have adequate networks that provide the required access and availability to dialysis services, including outpatient facilities.

CMS said that it expects to publish a separate final rule later in 2020 that would address items covered in the proposed rule but omitted from last week’s final rule. Any policies adopted in the second final rule would be applicable no earlier than plan year 2022. Policies addressed in the proposed rule but not finalized last week included drug management programs, Part D beneficiary opioid education, medication therapy management programs for at-risk beneficiaries, new specialty tiers for Part D plans, and a real-time benefit tool requirement.

EO Asks Which Regulations to Keep, Eliminate to Boost Economy During COVID-19

The Trump administration issued an executive order (EO) — “Regulatory Relief to Support Economic Recovery” — last Tuesday directing agencies to target regulations “that may inhibit economic recovery” from the COVID-19 pandemic. President Trump called for tackling the economic ramifications of the COVID-19 pandemic “with the same vigor and resourcefulness” as the fight against the virus. Agencies will be asked to propose a list of regulatory waivers and flexibility that could assist economy recovery if made permanent, as well as “unnecessary” regulations that could be eliminated for fear they would impede recovery. Agencies, specifically the Department of Health and Human Services (HHS), were also asked to consider using enforcement discretion against those who have made a good faith effort to follow regulatory requirements, and agencies are directed to accelerate pre-enforcement ruling processes as part of an effort to assist entities with compliance. The Office of Management and Budget (OMB) is expected to issue a detailed implementation memo for this executive order in the next few weeks, and agencies must direct their reports on which regulations to cut or keep to the OMB, the Assistant to the President for Domestic Policy, and the Assistant to the President for Economic Policy.

Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma suggested last month that some health regulations enacted during the public health emergency could be extended, pointing to new flexibilities for telehealth as a possible example. The Association of American Medical Colleges recently asked CMS and Congress to make permanent the expanded use of telehealth (and supporting reimbursement levels) or extend the temporary regulations for at least a year to allow for permanent changes through normal notice and comment rulemaking. The EO could encourage other health advocacy groups to come forward with similar requests, however Administrator Verma indicated the agency will take program integrity into account when considering any regulatory changes.

BARDA Announces $354M Award to Promote Domestic Rx Manufacturing

Last Tuesday, the Department of Health and Human Services (HHS) announced a new partnership with Phlow Corporation to promote the pharmaceutical manufacturing in the U.S. — perhaps the most significant step taken to date from an administration that has become increasingly focused on the drug supply chain. The Biomedical Advanced Research and Development Authority (BARDA) awarded the $354 million, four-year contract to the Virginia-based company to manufacture “essential medicines at risk of shortage,” including generic medicines and pharmaceutical ingredients needed to treat COVID-19. The contract could be extended over ten years for a total award of $812 million in funding, making it one of the largest BARDA awards in history. Last week’s action comes amidst rumors of a budding “Buy American” executive order (EO), as well as recent steps from the administration to provide emergency-linked exemptions from the Drug Supply Chain Security Act and suspend inspections of some foreign manufacturing facilities.

The contract includes provisions for a new manufacturing facility to be built in Virginia, and the administration and Phlow will develop a list of priority Active Pharmaceutical Ingredients (APIs) and finished medicines to be produced. Additionally, the Phlow-led team of public and private partners will employ advanced manufacturing processes — including continuous manufacturing — to lower production costs, reduce waste, and increase capabilities. Strategic partners on the project include Civica Rx, a nonprofit created in 2018 by American hospitals to alleviate drug shortages; Ampac Fine Chemicals, a custom manufacturer of pharmaceutical ingredients; and the Medicines for All Institute, a nonprofit arm of the Virginia Commonwealth University’s College of Engineering.

Administration officials celebrated the effort to return pharmaceutical manufacturing capability to the U.S., after concern was expressed from many policy makers over the nation’s reliance on foreign countries for the medical supply chain. White House trade advisor Peter Navarro, who noted the nation had relied on foreign manufacturing and supply chains for “far too long,” has pushed for the White House to issue an EO that would limit exports of medical equipment and incentivize domestic medical supply manufacturing. Mr. Navarro has suggested that the EO could come “soon” despite reports of infighting on the action. HHS Secretary Alex Azar, focusing on President Trump’s “America First” initiative, has declared the partnership as a “significant step to rebuild our domestic ability to protect ourselves from health threats.”

Administration to Distribute $4.9 Billion to Nursing Facilities

The Department of Health and Human Services (HHS) announced last Friday it had begun distributing $4.9 billion in funding for skilled nursing facilities impacted by the COVID-19 public health emergency. Each nursing facility is set to receive $50,000 as a baseline, as well as $2,500 per bed. Every certified facility offering six or more beds is eligible for the relief funding. In April, HHS Secretary Alex Azar indicated that a portion of the $100 billion in relief funding allocated in the CARES Act would be reserved for skilled nursing facilities. HHS reported that skilled nursing facilities have seen up to a six percent drop in patient populations since the beginning of the year, and more than 28,000 residents and nursing facility workers have passed away from COVDI-19.

The administration noted the relief funding could be used to address critical needs such as labor, scaling up testing capacity, acquiring personal protective equipment, and more. Last Monday, the Centers for Medicare & Medicaid Services (CMS) recommended that all nursing home residents and staff be tested at least once before reopening facilities but stopped short of mandating testing on the federal level. CMS Administrator Seema Verma instead advocated for states and nursing facilities to work together, noting on a call that she felt states had sufficient testing for all nursing facility residents. Nursing facility advocates immediately responded that universal testing would not be possible without further funding or testing plans from CMS, reporting that testing as recommended by CMS could cost upwards of $440 million. Advocates have asked for an additional $10 billion in emergency relief for nursing facilities to expand testing capacity.