Health Policy Report (6/29)

June 29, 2020

Capitol Hill Update

House lawmakers will meet today to kick off a two-day legislative blitz prior to the July 4 district work period. Democrats are expected to call up a sweeping 10 year, $1.5 trillion package of infrastructure legislation (textsummaryfact sheet) prior to adjourning for the July 4 district work period this week. The wide-ranging, ambitious package would allocate funding to address several key areas including surface transportation, schools and child-care facilities, hospital and health care infrastructure, drinking water, housing, broadband, and green energy. It would also look to promote and expand bond financing tools to help state and local governments raise money to address their own projects. The package is likely to pass the lower chamber next week but is considered dead-on-arrival in the GOP-controlled Senate. However, with the current surface transportation law set to expire on Sept. 30, officials will likely look to reach a compromise version that reflects bipartisan priorities in the House and Senate surface transportation reauthorization measures.

Also on the House floor this week, Members will take up: (1) legislation that seeks to stabilize the Affordable Care Act (ACA); (2) a bill that seeks to reform the Fair Credit Reporting Act; (3) a Congressional Review Act resolution that seeks to overturn the Trump administration’s regulation pertaining to the Community Reinvestment Act; and (4) a measure that seeks to prevent evictions, foreclosures, and unsafe housing conditions resulting from the COVID-19 pandemic. For the balance of the month, the lower chamber is also expected to consider fiscal year (FY) 2021 appropriations bills and the National Defense Authorization Act (NDAA) when lawmakers return from the July 4 break.

Meanwhile, Senators will convene this afternoon to pick up consideration of the upper chamber’s FY 2021 NDAA (textsummaryreporttables). Majority Leader Mitch McConnell (R-KY) filed a vote to move onto the $740 billion annual defense bill after Senate Democrats blocked a procedural vote on the Senate GOP’s police reform legislation last week. The Senate will look to pass the NDAA prior to the July 4 district work period next week, however, debate on certain amendments— particularly related to renaming bases that honor Confederate military leaders — could push the vote later into the month.

House Democrats Release Text of ACA Expansion Bill, Plan for Monday Vote

House Democrats released the text of a bill designed to expand upon the Affordable Care Act (ACA) and place controls on drug prices last week. The Patient Protection and Affordable Care Enhancement Act (H.R. 1425) aims to shore up health insurance subsidies, expand Medicaid eligibility, and institute direct negotiations between the Department of Health and Human Services (HHS) and drug manufacturers on drugs covered by Medicare Parts B and D. The drug pricing provisions mirror the negotiation and international price index provisions passed by the House in H.R. 3, the Elijah E. Cummings Lower Drug Costs Now Act, and appear intended to offset the costs of the ACA improvement legislation. CBO estimated that Title I of that bill, which is contained in this new legislation, would save nearly $456 billion over ten years. The House is expected to take up and pass the bill today. This is widely seen as a partisan exercise, intended to lay out a marker for House Democrats’ agenda regarding the ACA in advance of the November elections. The legislation will likely not be taken up by the GOP-controlled Senate.

The bill, which is based on the Protecting Pre-Existing Conditions and Making Health Care More Affordable Act of 2019 (H.R. 1884), includes several provisions designed to shore up the private insurance component of the ACA. It would increase premium subsidies available to individuals purchasing insurance on the Exchanges, increase eligibility for subsidies to individuals and families making more than 400 percent of the federal poverty line, and create a fund for reinsurance payments and other measures to reduce beneficiaries’ out-of-pocket costs. The bill would also rescind the Trump administration’s regulation from August 2018 expanding the availability of Short-Term, Limited Duration Insurance and revoke Section 1332 guidance from October 2018 that would allow states to waive certain ACA requirements. Additionally, the bill would establish 12-month continuous eligibility for Medicaid and CHIP, create a permanent appropriation for the CHIP program, and create a state option to expand CHIP eligibility to most children, regardless of family income. With an eye to encouraging Medicaid expansion, the bill includes provisions designed to penalize non-expansion states by lowering administrative FMAP by up to ten percentage points and imposing additional reporting requirements related to health coverage for non-expansion states. Furthermore, the bill expands Medicaid coverage to the citizens of the Freely Associated States and bumps primary care reimbursement under Medicaid to no lower than the Medicare rate.

The drug pricing provisions included in the bill would permit HHS to negotiate the prices of the 125 single-source drugs most expensive to the Part D program and the 125 single-source drugs with greatest net spending each year. Additionally, HHS would be required to negotiate at least 50 drugs each year, to negotiate insulin prices, and to negotiate the prices of new market entrants that are deemed likely to meet other criteria to trigger negotiation. Negotiated prices would be available to individuals in Medicare, Medicaid, and private health insurance plans. Prices would be capped at 120 percent of the average of a drug’s price in six other wealthy countries, in a version of an international reference pricing scheme.

Administration Asks Supreme Court to Rule ACA Unconstitutional

The Trump administration filed its opening legal brief last Thursday asking the Supreme Court to rule the Affordable Care Act’s (ACA) coverage mandate unconstitutional and not severable from the rest of the health law. The brief still sought a narrower remedy that would save some portions of the law that do not harm the two Texan plaintiffs. The administration’s brief argues that because the coverage mandate was upheld in court as a tax in 2012, and Congress has since repealed the financial penalty for violating the coverage requirement, it is no longer a tax and therefore no longer constitutional. Furthermore, the administration clarifies that because the one provision is invalid, the rest of the law is too intertwined to be constitutional.

Although expected, the brief solidifies the Trump administration’s position on the health care law months before the election and in the midst of a national public health emergency. Although the case will likely not be decided until the spring of 2021, it could influence the November elections. Democrats were quick to respond to the brief, with House Speaker Nancy Pelosi (D-CA) stating that “President Trump and the Republicans’ campaign to rip away the protections and benefits of the Affordable Care Act in the middle of the coronavirus crisis is an act of unfathomable cruelty.” Additionally, presumptive Democratic presidential candidate Joe Biden touted the benefits of the ACA last Thursday and called on the administration to drop the lawsuit.

CMS Proposes to Make Home Health Telehealth Services Permanent

Last Thursday, the Centers for Medicare and Medicaid Services (CMS) proposed its annual updates to the Medicare home health benefit (rule, fact sheet). Notably, these changes for calendar year 2021 include a permanent expansion in telehealth services in home health and updates to Medicare’s home infusion benefit. However, the rule does not address outstanding issues with the definition of home infusion calendar day. The proposed updates to home health payments, which include changes to the home health wage index, Office of Management and Budget (OMB) statistical delineations, and case mix methodology are expected to increase payments by $540 million, or 2.6 percent.

In response to the COVID-19 pandemic, CMS temporarily expanded the availability of telehealth services covered by Medicare’s home health benefit. The changes allowed for the coverage of a home health service provided via telehealth, so long as it is part of the patient’s plan of care and does not replace needed in-person visits as ordered on the plan of care. This rule would make those changes permanent.

Telehealth services are temporarily available to all Medicare beneficiaries under a waiver of provisions of Section 1834(m) of the Social Security Act, which expires upon the end of the current public health emergency. While services available will remain broader upon that expiration, the beneficiaries eligible for such services will shrink considerably. The proposed rule will be open for comment through August 24, 2020. CMS may identify additional flexibilities issued in response to COVID-19 and engage in rulemaking to make them permanent if deemed appropriate.

CMS Creates Office to Reduce Program Burden

Last Tuesday, the Centers for Medicare & Medicaid Services (CMS) announced the creation of the Office of Burden Reduction and Health Informatics as part of the administration’s push to further reduce providers’ administrative workloads. CMS is seizing the opportunity of the COVID-19 public health emergency to advance its Patients over Paperwork initiative and deregulatory agenda, and the new office could serve as a vehicle for more proactive steps — such as telehealth modernization, interoperability, and value-based payments. Additionally, the creation of the new office will allow the agency to focus on these efforts apart from more routine agency business. CMS Administrator Seema Verma noted that the new office will target administration efforts “to reduce unnecessary burden, increase efficiencies, continue administrative simplification, increase the use of health informatics, and improve the beneficiary experience.”

CMS stated that the agency is committed to leveraging the significant flexibilities introduced in response to the COVID-19 pandemic as they continue to lead the rapid transformation to value-based healthcare through the new office. The Office of Burden Reduction and Health Informatics will reportedly take a proactive approach to reducing burden, and carefully consider the impact of new regulations on health care system operations. The new office will also aim to increase the number of clinicians, providers, and health plans the agency engages, to ensure that CMS has a better understanding of how various regulatory burdens impact healthcare delivery. CMS stressed that stakeholder feedback is critical to addressing provider and clinician burden, as it helps the agency to remove or modify outdated regulations that impede innovation. CMS also explained that fostering innovation through interoperability will be a top priority for the new office, and it will look to leverage technology and automation to create new tools that allow patients to own and carry their personal health data with them “seamlessly, privately, and securely” throughout the health care system. The administration noted providing clinicians with complete medical histories would allow them to deliver better coordinated and higher quality care. 

Judge Rules Hospital Price Transparency Rule Can Stand

Last Tuesday, a federal judge ruled that the Trump administration’s rule requiring hospitals to publish negotiated rates can proceed. The hospital price transparency rule is expected to go into effect on January 1, 2021. Federal Judge Carl Nichols of the U.S. District Court for the District of Columbia rejected the American Hospital Association’s (AHA) argument that the final rule exceeds the Department of Health and Human Services’ (HHS) authority, violates the First Amendment, and is arbitrary and capricious under the Administrative Procedure Act. The final rule requires that hospitals disclose their standard charges for at least 300 HHS-identified items and services in a machine readable format and include common billing codes and a description of the item or service. Judge Nichols wrote in his decision that HHS had the right to issue the rule because it considered the concerns of providers and payers, acknowledged conflicting information, and explained its decision to issue the rule.  Judge Nichols dismissed AHA arguments that HHS had exceed its power under the Affordable Care Act because it lacked the authority to require hospitals to disclose their chargemasters when it used the phrase “standard charges.”

Judge Nichols did suggest that the administration’s interpretation of “standard charges” might be overly aggressive but said “chargemaster” was not used in the Affordable Care Act where Congress called for hospitals to disclose a list of “standard charges for items and services.” He stated that AHA argued that “standard charges” means “chargemaster prices,” but does not acknowledge that hospitals have non-standard or irregular charges as the term standard implies. The Judge also wrote that chargemaster fees are rarely paid, only accounting for about 10% of patients. Additionally, he noted that the rule does not violate free speech, because the rule only requires the final price be disclosed and not negotiations. The AHA has already announced plans to appeal the decision.