Health Policy Report (8/9)

August 9, 2021

Capitol Hill Update 

Senators wrapped up another weekend session on the bipartisan infrastructure deal as the Biden-endorsed effort inched closer to final passage. The $550 billion agreement cleared its final set of procedural hurdles on Sunday, with 18 Republicans joining all 50 Democrats in voting to end debate on the underlying measure. Senate Majority Leader Chuck Schumer (D-NY) had hoped to wrap up consideration of the measure late last week, but lingering disagreements over amendments have dragged out the process into the second week of August.

Additional changes to the bill are possible, as Senate leadership continues to engage in talks on possible amendments related to cryptocurrency reporting, defense infrastructure, and unused COVID-19 relief funds, among others. Final passage of the infrastructure passage is currently slated for early Tuesday morning unless all 100 Senators can reach a unanimous consent agreement to call up the legislation earlier. However, this agreement been elusive due to objections from Sen. Bill Hagerty (R-TN), who has been a vocal critic of both the bill and the process. In any case, the measure is set to pass the Senate and head to the House, where Speaker Nancy Pelosi (D-CA) will need to work to coalesce the competing interests within the Democratic caucus before a clear path to President Joe Biden’s desk emerges.

The Latest on the FY 2022 Budget Resolution 

Following consideration of the bipartisan infrastructure deal, the Senate will immediately turn its attention to a budget resolution for fiscal year (FY) 2022 as Democrats look to craft a filibuster-proof package on key legislative priorities. The forthcoming reconciliation package will likely contain a series of sweeping health policy items that touch on drug pricing negotiation, Medicare and Medicaid expansion, as well as funding for home and community-based services. Permanently rolling back the Trump-era Medicare rebate rule and reducing Medicare Advantage benchmark rates are also under consideration as potential health-related funding streams. 

Other aspects of the resolution could include: (1) a series of tax reforms aimed at offsetting some of the costs; (2) funding for domestic manufacturing, supply chains, and research & development; (3) American Families Plan priorities on child care, education, paid leave, and nutrition assistance; (4) climate and clean energy provisions from the American Jobs Plan; and (5) immigration and labor reforms. 

Senate Budget Committee Chairman Bernie Sanders (I-VT) stated that the resolution could be unveiled as soon as early as today. Assuming the budget resolution can clear the Senate, it is possible that House lawmakers would return at some point over the next couple of weeks to pass the resolution and trigger the reconciliation process. While Leader Schumer believes that all 50 Senate Democrats will support the $3.5 trillion budget vehicle to trigger the reconciliation process, it remains to be seen whether the entire Democratic caucus will be able to coalesce behind a multi-trillion-dollar bill given some uneasiness from centrist senators — namely Sens. Kyrsten Sinema (D-AZ) and Joe Manchin (D-WV), among others. 

CMS Finalizes Inpatient and Long-term Care Hospital Payments for FY 2022 

Earlier this week, the Centers for Medicare and Medicaid Services (CMS) finalized its annual rule (fact sheet) setting payments for inpatient hospital services. In the rule, CMS finalized its proposal 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 finalizes several provisions designed to help the program — including its providers and suppliers — manage the COVID-19 public health emergency (PHE), such as by extending the New Technology Add-on Payments (NTAP) for 13 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 roll out Payment System (PPS).   

Similar to the other four annual Medicare payment rules finalized last week, this rule includes a new quality measure for COVID-19 vaccination among health care personnel of providers covered by the rule.  CMS finalized a 2.5 percent payment increase for general acute care hospitals that both participate in the Hospital Inpatient Quality Reporting (IQR) Program and meaningfully use electronic health records (EHR). The change reflects the projected hospital market basket update of 2.7 percent — reduced by a 0.7 percent productivity adjustment and increased by a 0.5 percent adjustment required by statute. Hospitals may be subject to other payment adjustments associated with quality and value-based purchasing programs. CMS anticipates the finalized changes will increase hospital payments in fiscal year (FY) 2022 by $3.7 billion, although the administration expects a $1.4 billion decrease in Medicare Disproportionate Share Hospital (DSH) payments and Medicare uncompensated care payments.  

CMS anticipates LTCH PPS payments will increase by 1.1 percent for FY 2022, or $42 million. FY 2022 LTCH PPS payments for discharges paid the standard LTCH payment rate are expected to increase by 0.9 percent. This is primarily due to the annual standard Federal rate update for FY 2022 of 1.9 percent and a projected 0.8 percent decrease in high-cost outlier payments. FY 2022 LTCH PPS payments 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.

Additionally, CMS finalized a May 2021 interim final rule with comment (IFC) period provision regarding rural reclassification through the Medicare Geographic Classification Review Board (MGCRB). This will allow hospitals with a rural redesignation to reclassify through the MGCRB using the rural reclassified area as the geographic area in which the hospital is located. Moreover, the final rule does not finalize provisions included in the FY 2022 IPPS and LTCH PPS proposed rule related to DSH payments, organ acquisition costs, and payments to hospitals for direct graduate medical education (GME) and indirect medical education (IME) costs. The agency indicated that these policies will be addressed in future rulemaking efforts.   

White House Announces New Funding to Support Rural Health Efforts

On Thursday, the Department of Health and Human Services (HHS) announced that it will provide $90 million in funding through the Health Resources and Services Administration (HRSA) to support rural communities’ efforts to combat substance use (SUD) and opioid use disorders (OUD), as well as improve maternal health and obstetrics care.  

The HRSA’s Federal Office of Rural Health Policy is making these awards through four key programs: (1) Rural Communities Opioid Response Program-Implementation ($78 million); (2) Rural Communities Opioid Response Program-Psychostimulant Support Program ($7.5 million); (3) Rural Maternity and Obstetrics Management Strategies Program ($2.9 million); and (4) Rural Northern Border Region Planning Program ($760,000). Including its most recent allocation, the HRSA has invested nearly $384 million in community-based grants and technical assistance over the last 3 years to promote the establishment and expansion of SUD/OUD prevention, treatment, and recovery services in rural communities. 

Senate Appropriations Committee Advances First Three FY 22 Appropriations Bills 

The Senate Appropriations Committee held a markup to consider several fiscal year (FY) 2022 appropriations bills for Energy-Water Development (summaryreport), Agriculture, Rural Development, and Food & Drug Administration (Ag-FDA) (summaryreport), and Military Construction and Veterans Affairs (MilCon-VA) (summaryreport). The bills traversed a wide variety of issues, including: (1) continued work on opioids; (2) increased inspections of critical drugs and other medical products; (3) heightened bioengineered disclosure standards; (4) increased medical and agricultural innovation and research; and (5) improvement of water infrastructure, among others. 

Each of the three appropriations bills were reported favorably by a roll call vote of 25-5. During the hearing, it was noted that no discretionary spending topline had been established which is unusual for the appropriations process, due to the absence of a FY 2022 budget resolution. With this, many Senators expressed their concern — and several voted against the bills — as they felt that the budget process was moving forward without having a budget set in place. While Democrats showed firm support for the legislation, Republicans had concerns surrounding the structure of the FY 2022 appropriations process, the implications of a lack of resolute topline spending allocations, and the need for parity between the rates of increase for defense and non-defense accounts. 

Several amendments were offered during the markup by both Democratic and Republican senators. While four were adopted, one of the amendments offered throughout the markup failed and three were withdrawn. Floor votes on the Energy-Water, Ag-FDA, and MilCon-VA appropriations bills for FY 2022, as well as markups on the remaining Senate Appropriations bills, will not occur until after the Senate returns from its August recess. Congress remains behind schedule on funding the government for the next fiscal year, and a short-term continuing resolution (CR) will likely be needed to avert the September 30 deadline. 

Still No HHS Plan for Provider Relief After Senators Leave it Untouched 

The Department of Health and Human Services (HHS) has become the focal point of providers and stakeholders after unobligated provider relief was not repurposed to pay for the bipartisan infrastructure bill. HHS has yet to announce how it intends allocate to the remaining COVID-19 relief despite pressure from stakeholders and the Government Accountability Office (GAO) to act. The provider relief fund comprises 37 percent of the total COVID-19 relief that Congress has appropriated to HHS since the start of the pandemic. Overall, GAO found HHS has designated a use for about 78 percent of the $324 billion in COVID-19 relief that Congress appropriated last year, but so far only about half, $168 billion, has been allocated.  

While the news of untouched provider relief is encouraging for providers who are once again facing a surge in COVID-19 cases, HHS is left with a large sum of unobligated funds and the last distribution was announced about 10 months ago. This may be due in part to the confusion that surrounds how much provider relief is left to allocate. The Health Resources and Serviced Administration (HRSA), the agency in charge of distributing the relief, claims that unallocated provider relief totals roughly $24 billion. But a GAO report shows the HRSA has obligated $134.3 billion in provider relief, leaving nearly $43.7 billion to be distributed. HHS claims that the discrepancy between HRSA’s estimate of the remaining relief and GAO’s estimate stems from the difference between the terms “unallocated” and “unobligated” funding. GAO recommends HHS release spending plans with projected timeframes to obligate remaining relief, but HHS told GAO it cannot provide specifics for all relief because HHS needs to be flexible.