Health Policy Report (7/6)

July 6, 2020

Capitol Hill Update

The Paycheck Protection Program (PPP) application process has officially been reopened, thanks to swift action by Congress last week. House and Senate lawmakers were able to clinch unanimous consent agreements on a bill that that would reopen the application process for the roughly $134 billion remaining in the signature small business rescue program, pushing the application deadline from June 30 to August 18. President Donald Trump signed the bill into law over the weekend, and lawmakers are already eyeing additional PPP reforms in the next round of COVID-19 relief legislation. 

Meanwhile, Senate Majority Leader Mitch McConnell (R-KY) indicated that GOP lawmakers have started to formulate priorities for the next round of COVID-19 legislation. At his weekly press conference last week, Leader McConnell noted that “kids, jobs, and health care” are the three primary areas of focus for Senate Republicans as they begin to formulate a package, saying that the upper chamber could take up a package between July 20 and August 8. He also reiterated that the next bill must include liability protections in order for the measure to pass the GOP-controlled Senate. As of now, it remains to be seen when and if House Democrats and Senate Republicans can clinch a deal on a potential “CARES 2.0” package.

On the floor, there will be no votes in Congress this week, but House lawmakers will ramp up their fiscal year (FY) 2021 appropriations work. House Appropriations Subcommittees will begin a three-day markup blitz to consider all 12 spending bills, including the measures for Agriculture-FDA this evening at 6 PM and Labor-HHS-Education tomorrow at 5 PM. In the Senate, the appropriations process has been stymied over partisan disagreements over COVID-19 and police reform amendments. A clear timetable for action has yet to emerge, but Senators are mulling over the possibility of skipping subcommittee markups altogether to expedite the process. The upper chamber will resume legislative business on Monday, July 20, while the lower chamber will receive 72-hours’ notice of any scheduled votes.

OMB Releases Spring 2020 HHS Unified Agenda

Last Tuesday, the Office of Management and Budget (OMB) released its Spring 2020 Unified Agenda of Regulatory and Deregulatory Actions (Unified Agenda) (OMB Page, HHS Agenda). This includes new information on forthcoming rules from the Department of Health and Human Services (HHS). OMB generally releases the Unified Agenda in the Spring and Fall. The timelines included in the Unified Agenda tend to be aspirational but demonstrate the administration’s priorities. Administrations historically seek to solidify their regulatory actions earlier in presidential election years in order to make it harder to overturn in the event control of the Senate and White House changes. This year, the release of the Unified Agenda was delayed due to the COVID-19 pandemic.

With the future of the Trump administration looking less certain four months away from election day, officials may work to advance administration priorities before a potential transition. Some estimates place July 31 as the date after which Trump administration rules would be subject to being overturned under the Congressional Review Act (CRA), a strategy Democrats would be likely to pursue if they were to take the Senate and White House. That leaves much anticipated activity open to CRA action if the GOP loses control of the Senate and Presidency. The Unified Agenda foreshadows a flurry of activity in the summer and fall, with final rules relating to the Stark Law and the anti-kickback statute, health plan transparency, Medicaid managed care, and more slated to come out. In addition, changes to substance use disorder record privacy regulations and Health Insurance Portability and Accountability Act (HIPAA) regulations are possible.

The Centers for Medicare and Medicaid Services (CMS) has once again delayed a possible rule piloting an international pricing index model for Part B drugs. The last Unified Agenda targeted November 2019 for promulgation of a Notice of Proposed Rulemaking (NPRM), but that was pushed back to June 2020 in today’s Unified Agenda. In addition, CMS has listed three requests for information (RFI) for actions in the pre-rule stage related to assurance of transportation in the Medicaid program, electronic prescribing for controlled substances, and fees for standard electronic transactions.

COVID-19 Emergency Declarations and Health Care Policy

The global COVID-19 pandemic necessitated the implementation of a broad variety of flexibilities in the U.S. health care system. Under U.S. law and regulation, many of these flexibilities were made possible by (1) a declaration of emergency under the National Emergencies Act (NEA), (2) a declaration of emergency under the Stafford Act, and (3) a declaration of a public health emergency (PHE) under the Public Health Service Act (PHSA). These declarations, or a combination thereof, permit agencies to take extraordinary action or to permit actions by payers and providers that would typically be prohibited. In particular, the combination of an emergency declaration and a PHE permit the use of Section 1135 of the Social Security Act, which allows for the waiver of broad sections of the Act with regard to Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP).

Department of Health and Human Services (HHS) Secretary Alex Azar declared a PHE on January 31, 2020, retroactive to January 27. President Trump declared a national emergency under both the NEA and the Stafford Act on March 13, 2020, retroactive to March 1. The combination of these declarations empowered the federal government to take action to provide flexibility to the health care system to combat COVID-19 and their continued existence allows for the maintenance of those flexibilities. PHEs last for 90 days, and the COVID-19 PHE is scheduled to expire July 24 without a renewal. The national emergency declaration lasts much longer — one year before requiring renewal. The lapse of either declaration would result in the curtailing of a large number of emergency policies, including those relating to telehealth, Stark Law, and other provider flexibilities.

In addition to the emergency powers already available to the HHS and other agencies, Congress created, in a series of three emergency bills, a range of policies intended to address the pandemic. This included wide latitude to provide, and be reimbursed for, telehealth services during the pandemic. It also included a boost to the federal share of the Medicaid program, an add-on payment for hospitals treating patients with COVID-19, a requirement for payers to cover COVID-19 tests without cost sharing, and provider relief funding during the period of the PHE. These powers are largely tied to the existence of a PHE (and thus, scheduled to sunset on July 24 absent renewal). In addition, HHS and other agencies engaged in emergency rulemaking, granted waivers to states, and are invoking enforcement discretion that are also largely tied to the PHE.

Members of Congress have begun discussions regarding potential flexibilities, and more specifically, where it would be appropriate to maintain them beyond the PHE. For instance, Senate HELP Committee Chairman Lamar Alexander (R-TN) called for keeping a policy relaxing originating site rules, thereby expanding telehealth availability, and keeping an expanded list of telehealth services eligible to be reimbursed by Medicare. Additionally, President Trump recently issued an executive order directing agency heads to examine, among other things, which emergency policies adopted during the pandemic should be kept post-pandemic. HHS recently proposed a regulation that would make one such policy, relating to telehealth services provided in Medicare’s home health benefit, permanent. This illustrates that the administration is weighing the extension of some or all of the policies possible to be extended at an administrative level. Letting the declarations expire, in particular the PHE, could result in an abrupt loss of funding and flexibilities for health care providers. As a result, some provider stakeholder groups, such as the American Hospital Association, have begun to call on the administration to extend the PHE.

House Passes ACA, Drug Pricing Reforms

The House passed a bill last Monday along mostly party lines to shore up the ACA. The Affordable Care Act Enhancement Act (H.R. 1425) would expand ACA subsidies to higher income brackets along with other reforms to the marketplaces, provide incentives for more states to expand Medicaid and penalties for those who do not, and create a mandatory 12-month continuous eligibility period for Medicaid. It would also adopt the prescription drug negotiation and international reference pricing strategy contained in H.R. 3, the Democrats’ major drug pricing legislation that passed last year.

Two Republicans, Reps. Brian Fitzpatrick (R-PA) and Jeff Van Drew (R-NJ), voted in favor of the bill, while one Democrat, Rep. Collin Peterson (D-MN), voted against it. An additional 18 Republicans did not vote (full roll call results are here). Rep. Peterson voted against the original ACA when it passed the House in 2010, and of the 34 Democrats who voted against the bill, he is one of only three still serving in the House, with Reps. Steven Lynch (D-MA) and Dan Lipinski (D-IL).

Sen. Grassley Pushes Forward with Drug Pricing Reform

Until recently, Sens. Grassley’s (R-IA) and Wyden’s (D-OR) drug pricing legislation, the Prescription Drug Pricing Reduction Act (S. 2543), was seen as the leading bipartisan effort on the issue. Heightened partisan tensions, however, are now complicating the path forward for this and potentially any other far-reaching proposals. Last month, Sen. Grassley noted that he still intended to push for a vote on the bill this year as Congress needed to prepare for future pandemics by keeping “bad actors from hiking prices astronomically” in future health crises. The Senator reported he had rallied the support of roughly two dozen Senate Republicans. During a closed-door meeting with Sen. Grassley in late May, President Trump reportedly gave an “emphatic yes” to continued support for the Senate’s drug pricing legislation. Sen. Grassley had declared the president’s support key, as Senate Majority Leader Mitch McConnell (R-KY) refused to schedule a vote based on concerns that the Republican party would be divided over a provision to fine drug manufacturers who raise prices faster than the rate of inflation. Senator John Thune (R-SD) noted in late May that the parties might be able to agree on a more limited approach to costs under Medicare Part D, but said the broader bill is likely to fail as it is seen as too big a campaign issue. House Majority Leader Nancy Pelosi has signaled she is willing to engage the Senate Finance Committee in discussions on what comes next, Sen. Grassley said, and met with the Senator last month on the issue.

In a Wall Street JournalOp-Ed published June 29, Sen. Grassley reversed course, declaring that Democrats had “left the negotiating table” at the direction of party leadership. He claimed the move was made so that Democrats could use drug pricing as an election year talking point and potentially “pass more left-leaning legislation next year, if they win more power.” Sen. Wyden immediately countered that Republicans had never thrown their full support behind the bill, so there was “no reason” to expect a vote. He clarified that Senate Democrats are “not interested in aiding Republicans as they play political games and pretend to support lowering drug prices.” Undeterred by the loss of Democratic support, Sen. Grassley affirmed he would “reintroduce the bill with or without Democrats” and called on Congress to include the measure in the next coronavirus relief package. Additionally, he called on the Senate leadership to allow debate on the bill and urged President Trump to “use his bully pulpit” to rally support for the bill.