Health Policy Report (5/3)

May 3, 2021

Congress has formally closed out its April legislative session following Senate passage (89-2) of the bipartisan Drinking Water and Wastewater Infrastructure Act (S. 914). Looking ahead to this week, Senators will be out of Washington for a state work period, while House lawmakers convene another slate of Committee Work Days. This week’s schedule features a pair of Subcommittee legislative hearings focused on the cost of prescription drugs in the Energy & Commerce and Education & Labor Committees. Both chambers will resume votes during the week of May 10.

Biden Administration Releases ‘American Families Plan’

President Joe Biden unveiled his “American Families Plan” last Wednesday, outlining roughly $1.8 trillion toward “human infrastructure” needs related to paid family and medical leave, child care, education, and nutrition. While the package does not include certain health care policies pertaining to prescription drug pricing and public health expansion — much to the chagrin of many Congressional Democrats — President Biden did call for a $200 billion set-aside to make the temporary reductions in premiums for Affordable Care Act (ACA) plans permanent. In his speech to Congress Wednesday night, the President instead called on Congress to pass drug pricing legislation, as well as Medicare and ACA reforms, this year. To cover some of the costs, the White House is doubling down on its efforts to raise taxes on wealthier individuals by: (1) raising the top tax rate to 39.6 percent; (2) hiking capital gains taxes for taxpayers earning at least $1 million per year; and (3) bolstering funding for IRS enforcement.

President Biden’s proposal came one day following release of a discussion draft by the House Ways and Means Committee that includes similar provisions pertaining to universal paid leave and permanence for certain child care-related tax credits. However, the American Families Plan could face stiff intraparty headwinds from Democrats who were hopeful that the proposal would also call for expanding access to Medicare and Medicaid, as well as addressing the costs of prescription drugs. Key Democratic playmakers — including Speaker Nancy Pelosi (D-CA), House Energy and Commerce Chair Frank Pallone (D-NJ), and Senate Finance Chair Ron Wyden (D-CA) — have indicated that any legislation related to this plan should include these key health policy priorities, setting up a potential showdown within the unified government. Further, the White House will also need to woo centrist Democrats who have expressed uneasiness about another trillion-dollar spending package, as well as a sect of lawmakers that are pushing for the repeal of a Trump era cap on state and local tax (SALT) deductions.

President Biden’s plan proposes a $200 billion investment to permanently expand the enhanced Affordable Care Act subsidies that were provided for two years under the American Rescue Plan Act. President Biden’s plan also suggests a $225 billion investment for childcare priorities pertaining to affordability, choice, quality, and resources. The plan calls for extending the Child Tax Credit expansion enacted in the American Rescue Plan through 2025 and delivering the assistance monthly. Eligible families would receive $3,600 annually per child for children under age 6. The payment would be $3,000 per child for children ages 6 to 17. Additionally, the Biden administration is calling on Congress to make the Child and Dependent Care Tax Credit (CDCTC) permanent, as well as provide a 50 percent reimbursement for families making less than $125,000 a year.

CMS Finalizes 2022 Exchange Rules

Last Friday, the Centers for Medicare and Medicaid Services (CMS) finalized portions of the 2022 Notice of Benefit and Payment Parameters (NBPP), addressing policies that were not included in the NBPP final rule issued shortly before former President Donald Trump left office (rule, fact sheet, press release). CMS also announced that it would revisit certain portions of that rule later this spring. In particular, the agency will revisit Trump administration policy regarding Section 1332 State Innovation Waivers, qualified health plan (QHP) exchange user fees, and Direct Enrollment (DE) options. Last week’s rule sets the 2022 out-of-pocket maximum for QHPs at $8,700 for individual coverage — $400 less than the amount the Trump administration proposed last November. It also creates a special enrollment period (SEP) for when COBRA subsidies lapse, allowing individuals taking advantage of pandemic-era COBRA benefits to easily transition to Exchange coverage.

CMS says that — in accordance with Executive Order (EO) 14009 (“Strengthening Medicaid and the Affordable Care Act”), which directed the agency to review Trump-era actions related to the ACA — it will engage in rulemaking this Spring to revisit certain items finalized in January 2021. Specifically, the agency says it will: (1) propose new QHP issuer user fees for 2022, raising the federally-facilitated exchange user fee to 2.75 percent and the state-based exchange on the federal platform user fee to 2.25 percent, which would be 0.5 percentage points higher than where the Trump administration set them but still 0.25 percentage points lower than they were previously; (2) revisit DE options for states, which provide states with an option to use private sector entities to operate the front-end functions of their Exchanges; and (3) revisit 1332 waiver regulations, which encouraged states to pursue alternatives to QHP such as association health plans (AHP) and short-term, limited-duration insurance (STLDI) by permitting the latter plan types to be counted toward the tally of insured individuals, and lowering certain coverage guardrails.

CMS says that the rule “continues CMS’ trend toward stabilizing the insurance market, promoting program integrity, and reducing regulatory burden.” In addition, Acting CMS Principal Deputy Administrator Jeff Wu said that the rule builds on the American Rescue Plan and “will ensure that next year, Americans will continue to find affordable, quality coverage through the marketplaces. Consumers and insurers alike will benefit from improvements in the 2022 payment notice.”

CMS Proposes to Abandon Market-Based Rate Setting for Hospitals

Last Tuesday, the Centers for Medicare and Medicaid Services (CMS) proposed its annual rule (press release, fact sheet) setting payments for inpatient hospital services. In the rule, CMS proposes to repeal a Trump-era policy that would have set rates in the Inpatient Prospective Payment System (IPPS) using data on hospitals’ negotiated charges with Medicare Advantage (MA) payers. The rule also includes several provisions designed to help the program and its providers and suppliers deal with the COVID-19 public health emergency (PHE), including extending the New Technology Add-on Payments (NTAP) for 14 products for which the NTAP was scheduled to expire for fiscal year (FY) 2022. This rule also includes payment updates for the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) and updates to Medicare’s payments related to the acquisition of organs for transplantation.

Like the other four annual Medicare payment rules proposed so far during the Biden administration, this rule proposes to create a new quality measure for COVID-19 vaccination among health care personnel of providers covered by the rule. It also seeks public input on the use of Fast Health Interoperability Resources (FHIR) to support digital quality measures (DQM) and methods to assure health equity, emphasizing CMS’ intent to focus on these themes throughout its enterprise.

CMS proposes increasing payment rates by 2.8 percent for general acute care hospitals participating in the Hospital Inpatient Quality Reporting (IQR) Program and that are meaningful electronic health record users. The change reflects the projected hospital market basket update of 2.5 percent — reduced by a 0.2 percent productivity adjustment and increased by a 0.5 percent adjustment required by legislation. Hospitals may be subject to other payment adjustments associated with quality and value-based purchasing programs. CMS anticipates the proposed changes will increase hospital payments in fiscal year (FY) 2022 by $3.4 billion, although the administration expects a $0.9 billion decrease in Medicare Disproportionate Share Hospital (DSH) payments and Medicare uncompensated care payments.

CMS anticipates LTCH PPS payments to increase by 1.4 percent for FY 2022, or $52 million. LTCH PPS payments for FY 2022 for discharges paid the standard LTCH payment rate are expected to increase by 1.2 percent due primarily to the annual standard Federal rate update for FY 2022 of 2.2 percent and a projected 0.8 percent decrease in high-cost outlier payments. LTCH PPS payments for FY 2022 for discharges paid the site neutral payment rate are expected to increase by three percent. CMS estimates that discharges paid the site neutral payment rate will represent approximately 25 percent of all LTCH cases and 10 percent of all LTCH PPS payments in FY 2022.

HHS Announces $1 Billion Community Health Center Infrastructure Improvement Grant Fund

The Health Resources and Services Administration (HRSA) announced last Tuesday the creation of a $1 billion capital improvement fund grant — funded by the American Rescue Plan — available to all 1,376 community health centers through June 24. The grant funding can be used for building new facilities, buying moveable equipment, and expanding or renovating an existing facility. Grants will begin at $500,000 and include an additional $11 per patient reported in the 2019 uniform data system. Department of Health and Human Services Secretary Xavier Becerra noted that the pandemic has made clear modernizing the physical infrastructure of the country’s health centers is long overdue, adding that the funds will allow the community health centers to build state-of-the-art facilities for the nation’s most vulnerable populations. The last significant investment in community health center infrastructure was in 2009, although the number of patients served by these centers has nearly doubled in the past 12 years.