Washington Healthcare Update

March 9, 2020

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This week in Washington: CMS develops additional code for coronavirus lab tests, announces actions to address spread of coronavirus; House passes bill to ban e-cigarette flavors; Grassley says updated Senate Finance drug pricing bill saves $80 billion.






Proposed Regulations/Guidance

Final Regulations/Guidance




Senate Committee on Health, Education, Labor and Pensions (HELP): “An Emerging Disease Threat: How the U.S. Is Responding to COVID-19, the Novel Coronavirus”

Tuesday, March 3, 2020: The Senate Committee on Health, Education, Labor and Pensions (HELP) held a hearing to address the recent concerns surrounding the international spread of coronavirus.

Find more details on the hearing here.

House Committee on Energy and Commerce, Subcommittee on Health “Combating an Epidemic: Legislation to Help Patients with Substance Use Disorders”

Tuesday, March 3, 2020: The Subcommittee on Health of the House Energy and Commerce Committee held a legislative hearing on the following opioid epidemic-related bills:

  • H.R. 1329, the “Medicaid Reentry Act”
  • H.R. 2281, the “Easy MAT for Opioid Addiction Act”
  • H.R. 2466, the “State Opioid Response Grant Authorization Act”
  • H.R. 2482, the “Mainstreaming Addiction Treatment Act of 2019”
  • H.R. 2922, the “Respond to the Needs in the Opioid War Act” or the “Respond NOW Act”
  • H.R. 3414, the “Opioid Workforce Act of 2019”
  • H.R. 3878, the “Block, Report, And Suspend Suspicious Shipments Act of 2019”
  • H.R. 4141, the “Humane Correctional Health Care Act”
  • H.R. 4793, the “Budgeting for Opioid Addiction Treatment Act”
  • H.R. 4812, the “Ensuring Compliance Against Drug Diversion Act of 2019”
  • H.R. 4814, the “Suspicious Order Identifying Act of 2019”
  • H.R. 4974, the “Medication Access and Training Expansion Act of 2019” or the “MATE Act of 2019”
  • H.R. 5572, the “Family Support Services for Addiction Act of 2020”
  • H.R. 5631, the “Solutions Not Stigmas Act of 2019”

Find more details on the hearing here.

House Committee on the Budget: “Department of Health and Human Services FY 2021 Budget”

Wednesday, March 4, 2020: The House Committee on the Budget held a hearing on the Department of Health and Human Services’ (HHS) FY 2021 budget request, with witness testimony by Deputy Secretary of HHS Eric Hargan.

Find more details on the hearing here.

Senate Committee on Homeland Security and Governmental Affairs: “The Federal Interagency Response to the Coronavirus and Preparing for Future Global Pandemics”

Thursday, March 5, 2020: The Senate Committee on Homeland Security and Governmental Affairs held a hearing to address the recent concerns surrounding the international spread of coronavirus.

Find more details on the hearing here.


House Passes Bill to Ban E-Cigarette Flavors, Expand Tobacco User Fees

On Feb. 28, the House passed H.R. 2339, the Reversing the Youth Tobacco Epidemic Act, 213 to 195. The legislation was sponsored by the chairman of the House Energy and Commerce Committee, Rep. Frank Pallone (D-NJ). The bill would ban all products categorized as e-cigarette flavors, allow the Food and Drug Administration (FDA) to collect user fees from all classes of tobacco products and increase the total amount of user fees collected by $100 million.


Grassley Says Updated Senate Finance Drug Pricing Bill Saves $80 Billion

On March 5, Senate Finance Committee Chair Chuck Grassley (R-IA) said that the updated version of the committee’s drug pricing bill, S. 2543, the Prescription Drug Pricing Reduction Act of 2019, would save $80 billion over 10 years, reduce patient out-of-pocket spending in Part D by about $50 billion and reduce premiums by about $1 billion. The Congressional Budget Office (CBO) estimated that the previous version of the bill would save $105 billion, and CBO lowered that score to account for the cost of a new provision to lower beneficiary coinsurance by 5 percent. Majority Leader Mitch McConnell (R-KY) still has not scheduled floor time for consideration of this bill.

House and Senate Pass Emergency Supplemental Appropriations Package to Address Coronavirus – President Signs Legislation

On March 6, President Trump signed the $8.3 billion emergency funding package Congress passed in the same week, sending funds to federal agencies and states working to combat a rising number of coronavirus cases in the U.S. The bill, H.R. 6074, provides a total of $7.7 billion in new discretionary spending and authorizes an additional $490 million in mandatory spending through a Medicare change. More than $400 million will be disbursed to states within the first 30 days of the bill’s enactment, with each state receiving no less than $4 million.


CMS Develops Additional Code for Coronavirus Lab Tests

On March 5, the Centers for Medicare and Medicaid Services (CMS) took additional actions to ensure health care facilities and clinical laboratories are prepared to respond to the 2019-Novel Coronavirus (COVID-19) by developing a second Healthcare Common Procedure Coding System (HCPCS) code that can be used by laboratories to bill for certain COVID-19 diagnostic tests to help increase testing and track new cases. In addition, CMS released new fact sheets that explain Medicare, Medicaid, Children’s Health Insurance Program, and Individual and Small Group Market Private Insurance coverage for services to help patients prepare as well.

Find fact sheets and details here.

CMS Announces Actions to Address Spread of Coronavirus

On March 4, the Centers for Medicare and Medicaid Services (CMS) announced actions aimed at limiting the spread of the Novel Coronavirus 2019 (COVID-19). Specifically, CMS is issuing a call to action to health care providers across the country to ensure they are implementing their infection control procedures, which they are required to maintain at all times. Additionally, CMS is announcing that, effective immediately and until further notice, state survey agencies and accrediting organizations will focus their facility inspections exclusively on issues related to infection control and other serious health and safety threats, like allegations of abuse—beginning with nursing homes and hospitals. This announcement, by Vice President Pence, will allow inspectors to focus their energies on addressing the spread of COVID-19.

Find more details from CMS here.

Proposed Regulations/Guidance

CMS: 2021 CMS QRDA I Implementation Guide and Schematron for Hospital Quality Reporting

On March 5, the Centers for Medicare and Medicaid Services (CMS) released the draft 2021 CMS Quality Reporting Document Architecture (QRDA) Category I Implementation Guide (IG) and Schematron for Hospital Quality Reporting (HQR). The 2021 CMS QRDA I IG outlines requirements for eligible hospitals and critical access hospitals to report electronic clinical quality measures for the calendar year 2021 reporting period.

Public comments are due by April 1, 2020, and can be submitted here.

CMS: Comprehensive Care for Joint Replacement (CJR) Model Proposed Extension andChanges

On Feb. 20, the Centers for Medicare and Medicaid Services (CMS) issued a rule that proposes a three-year extension and changes to the episode definition and pricing in the Comprehensive Care for Joint Replacement (CJR) Model. The Model, which is currently scheduled to end on Dec. 31, 2020, aims to reduce expenditures while preserving or enhancing quality of care by supporting better and more efficient care for beneficiaries undergoing the most common inpatient surgeries for Medicare beneficiaries: hip and knee replacements (also called lower extremity joint replacements or LEJR). This rule proposes to change certain aspects of the CJR Model, including incorporating outpatient hip and knee replacements into the episode of care definition, the target price calculation, the reconciliation process, the beneficiary notice requirements, gainsharing caps and the appeals process. Additionally, to allow time to evaluate the proposed changes, the rule proposes to extend the length of the CJR Model for an additional three years, through Dec. 31, 2023, for certain participant hospitals.

Find the proposal rule here.

CMS: Basic Health Program Funding Methodology Proposed Payment Notice for Program Year 2021

On Feb. 10, the Centers for Medicare and Medicaid Services (CMS) published the Basic Health Program proposed federal funding methodology for program year 2021. This document provides the methodology and data sources necessary to determine federal payment amounts for program year 2021 to states that elect to establish a Basic Health Program to offer health benefits coverage to low-income individuals otherwise eligible to purchase coverage through Affordable Insurance Exchanges.

Find the proposed rule here. Public comments are due by March 11, 2020.

CMS: 2021 Medicare Advantage and Part D Advance Notice Part II

On Feb. 5, the Centers for Medicare and Medicaid Services (CMS) released Part II of the Calendar Year (CY) 2021 Advance Notice of Methodological Changes for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (the Advance Notice). CMS released Part I of the Advance Notice on Jan. 6, 2020. The notice is seeking comment on whether it should develop measures of generic and biosimilar utilization that could be used to calculate a plan’s star rating, so CMS could reward plans that encourage adoption of lower-cost products.

Find the notice here.

CMS will accept comments on all proposals in the Advance Notice through March 6, 2020, before publishing the final Rate Announcement by April 6, 2020.

CMS: Contract Year 2021 and 2022 Medicare Advantage and Part D

On Feb. 5, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule that updates Medicare Advantage (MA or Part C) and the Medicare prescription drug benefit (Part D) program. Medicare Part D plans will be allowed to offer two specialty tiers on their drug formularies starting in 2021. The proposed rule requires that one of the two specialty tiers be a “preferred” tier that offers lower cost sharing for beneficiaries. The maximum allowed cost sharing for the specialty tiers would be between 25 percent and 33 percent, depending on whether the plan includes a deductible.

Drugs that cost $670 a month or more must currently be placed on one specialty tier. Allowing two tier options should give health plans leverage to work with drug manufacturers to get prices lower if the manufacturer wants to price their product at a more accessible cost to patients compared with their competitors. The proposed rule also requires Part D plans to implement by Jan. 1, 2022, a tool that will provide beneficiaries with real-time details on the cost of drugs based on their plan coverage and alternatives.

Find the proposed rule here.

CMS: Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2021

On Jan. 31, the Centers for Medicare and Medicaid Services (CMS) released the proposed annual Notice of Benefit and Payment Parameters Rule for 2021, also known as the proposed 2021 Payment Notice. This is the second year in a row that the proposed rule has been late. 

CMS proposes to maintain the Federally Facilitated Exchange (FFE) user fee rate of 3.0 percent of premium, and the State-based Exchange on the Federal Platform (SBE-FP) user fee rate of 2.5 percent of premium based on the portion of FFE user fee-eligible costs allocated to SBE-FP activities. Alternatively, CMS is considering and seeking comment on reducing the FFE and SBE-FP user fee rate below the 2020 plan year level to reflect estimates of premium increases and enrollment decreases for the 2021 plan year, as well as potential savings resulting from cost-saving measures implemented over the last several years in hopes of reducing the user fee burden on consumers and creating downward pressure on premiums.

CMS is proposing changes to the policy regarding how drug manufacturer coupons accrue towards the annual limitation on cost sharing in response to stakeholder feedback indicating Treatment of Drug Manufacturer Coupons. CMS is proposing to amend current Medical Loss Ratio (MLR) regulations to require issuers to deduct from incurred claims the prescription drug rebates and other price concessions attributable to the issuer’s enrollees and received and retained by an entity providing pharmacy benefit management services to the issuer. CMS also proposes to clarify more generally that issuers must report expenses for services outsourced to or provided by other entities in the same manner as issuers’ expenses for non-outsourced services. These changes would help lower premiums by helping ensure that consumers’ premiums reflect the full benefit of prescription drug rebates and are not artificially inflated by outsourcing expenses.

Find the proposed rule here. Public comments are due by April 6, 2020.

Final Regulations/Guidance

FDA Issues Final Guidance on Pathway for Authorized Biologics

On March 4, the Food and Drug Administration (FDA) released final guidance on the biologic pathway for products to shift out of the drug category, to encourage more competition with biosimilars. This month is the deadline for the transition. The final guidance includes which products need to transition, with a focus on insulin, and if a manufacturer’s insulin is already approved under the new drug application process, it does not have to be resubmitted for a biologic license application.

Find the final guidance here.

FDA Issues Ban on Electrical Stimulation Devices for Self-Injurious or Aggressive Behavior

On March 4, the Food and Drug Administration (FDA) finalized a ban on electrical stimulation devices (ESD) intended to treat self-injurious or aggressive behavior. ESDs administer electrical shocks through electrodes attached to the skin of individuals to immediately interrupt self-injurious or aggressive behavior or attempt to condition the individuals to stop engaging in such behavior. Evidence indicates a number of significant psychological and physical risks are associated with the use of these devices, including worsening of underlying symptoms, depression, anxiety, posttraumatic stress disorder, pain, burns and tissue damage.

The ban, the third FDA has ever issued for a medical device, takes effect in 30 days. FDA is allowing a 180-day deadline for electrical stimulation devices already in use on an individual to allow a physician-monitored transition period to another treatment.

Find the finalized ban here.


Find a comprehensive look at “Courts and Healthcare Policy in 2020” here.


Medicaid and CHIP Payment and Access Commission (MACPAC) February 2020 Meeting

On Feb. 27 and 28, the Medicaid and CHIP Payment and Access Commission (MACPAC) opened the meeting with a continued examination of Medicaid’s role in maternal health, and then a discussion on value-based payment in Medicaid managed care. The commission then held a line of inquiry that began at the October 2019 meeting: third-party liability coordination between Medicaid and TRICARE. The commission returned to the theme of improving care for dually eligible beneficiaries, looking more closely at the rise of dual-eligible special needs plan (D-SNP) look-alikes and how changes in the Medicare Advantage market are affecting efforts to integrate care.

Commissioners also reviewed a rule proposed in February that would restrict the growth of D-SNP look-alikes. Following that session, the commission discussed draft recommendations to improve integration of Medicare and Medicaid benefits for dually eligible beneficiaries. The February meeting wrapped up with a discussion of a forthcoming rule expected to affect the Medicaid eligibility determination process.

Find all details on the Feb. 2020 meeting here.


GAO: Science and Tech Spotlight – Coronaviruses

On March 3, the Government Accountability Office (GAO) released a report on the novel coronavirus, COVID-19. The report notes the high infection rate, and a mortality rate of about 3 percent as of Feb. 2020. The report reiterates that coronaviruses are most commonly transmitted by coughing, sneezing, person-to-person contact and touching objects that have viral particles on them, according to CDC. The best prevention is washing hands with soap and avoiding close contact with the sick and with quarantined workers.

Find the full report here.

GAO: VA Health Care – VA Faces Challenges in Meeting Demand for Long-Term Care

On March 3, the Government Accountability Office (GAO) released a testimony given before the Subcommittee on Health, House Committee on Veterans’ Affairs, on the Department of Veterans Affairs’ (VA) long-term care demand, which the VA projects will double spending by 2037. The GAO testified that demand for long-term care increased 14 percent and VA’s spending went up 33 percent from FY 2014-2018, and reiterated that VA’s key challenges to meeting long-term care needs are finding enough workers, providing care where geographically needed and providing specialty care.

Find the testimony here.

GAO: Medicare – Information on Medicare-Dependent Hospitals

On Feb. 28, the Government Accountability Office (GAO) released a report on Medicare-dependent hospitals that are paid by the program set amounts based on the diagnoses of the Medicare patients they serve. Small, rural hospitals that meet certain eligibility criteria can qualify for additional payments. If those hospitals serve a high proportion of Medicare patients, they can apply for the additional payments under the Medicare-dependent hospital program.

The GAO found that between 2011 and 2017:

  • The number of Medicare-dependent hospitals decreased by about 28 percent because, for example, they became ineligible for the program, merged with other hospitals or closed.
  • The typical Medicare-dependent hospital saw profits decrease by almost 2 percentage points.

Find the full report here.

If you have any questions, contact the following individuals atMcGuireWoods Consulting:

Stephanie Kennan, Senior Vice President
Mariam Eatedali, Research Associate

Founded in 1998,McGuireWoods Consulting LLC(MWC) is a full-service public affairs firm offering infrastructure andeconomic development, strategic communications & grassroots, and governmentrelations services. McGuireWoods Consulting is a subsidiary of theMcGuireWoods LLPlaw firm and has been named in The National Law Journal’s special annualreport, “The Influence 50,” for the past several years. In the most recentreport, McGuireWoods Consulting was ranked 15th of the 1,900 governmentrelations firms in Washington, D.C.

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