Washington Healthcare Update

April 6, 2020

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This week in Washington: The Senate and the House are not scheduled to return to the Hill until the week of April 20 and are currently in a district work period.


Proposed Regulations/Guidance

Final Regulations/Guidance




OTC Monograph Reform Signed into Law as Part of COVID-19 Stimulus

On March 27, President Trump signed into law Congress’s phase three COVID-19 stimulus bill that includes a measure to reform the Food and Drug Administration’s (FDA) over-the-counter (OTC) drug monograph regulatory framework. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) also includes a measure allowing consumers to use flexible spending arrangements (FSAs) and health savings accounts (HSAs) to purchase OTC drugs and menstrual products.

The bill’s OTC monograph reform language establishes user fees for OTC drug products, allows for 18 months of exclusivity for innovative OTC drugs and changes the way FDA responds to OTC drug safety issues. The stimulus bill also strikes language from the Internal Revenue Code that only allows prescription drugs to count as qualified medical expenses to be paid for with HSAs and FSAs. Removing that language now allows OTC drugs to again be considered qualified medical expenses.

FCC: Proposed Plan for $200 Million COVID-19 Telehealth Program

On March 30, the Federal Communications Commission’s (FCC) chairman, Ajit Pai, released a plan to use $200 million allocated by Congress for a grant program for hospitals and health system providers aiming to use telehealth in their COVID-19 response. The $200 million comes from the third coronavirus stimulus package signed into law on March 27. Providers would be able to use a streamlined application to apply for funding to fully cover their telehealth needs, from broadband connectivity to devices.

Eligible providers may be in postsecondary education programs, including teaching hospitals, community health centers, local health departments or agencies, community mental health clinics, nonprofit hospitals, rural health clinics and skilled nursing facilities. Providers that are selected would not be responsible for the costs of their telehealth projects, officials said, and would be accepted on a rolling basis until funds are exhausted or the pandemic ends.

The plan still has to be adopted by the commission—find the announcement here.

Keep updated on the FCC response to telehealth and COVID-19 here.

Proposed Regulations/Guidance

DEA: Controls to Enhance the Cultivation of Marijuana for Research in the U.S.

On March 20, the Drug Enforcement Agency (DEA) released a proposed rule for adding additional research marijuana growing licenses. The only research-grade medical marijuana currently grown in the U.S. is at the University of Mississippi, while 37 prospective producers have applied for and are awaiting decisions on their applications to grow research marijuana.

Find the proposed rule here. Public comments are due by May 22, 2020.

FDA: Change in Safety Requirements for Diabetic Drugs

On March 9, the Food and Drug Administration (FDA) released a draft guidance to no longer require drug manufacturers to conduct large cardiovascular safety studies for all new type 2 diabetes therapies. The FDA is recommending new safety requirements that will focus on evaluations that are broader than heart disease. Companies will need to include at least 4,000 patients exposed to the drug in phase III clinical trials, with at least 1,500 patients exposed to the drug for at least one year and 500 patients exposed to the drug for at least two years.

Find the draft guidance here. Public comments are due by June 8, 2020.

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 proposed rule here. Public comments are due by April 24, 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 publish 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 Makes Exceptions to Blood Collection Processes for COVID-19, Reduces Deferral Periods

On April 2, the Food and Drug Administration (FDA) announced it would make exceptions to standard blood donation procedures and allow donation sites to follow alternative processes for releasing blood donations throughout the duration of the COVID-19 pandemic. The FDA will allow blood donor sites to follow alternative processes for releasing donations found to be unsuitable after donation, and the FDA has temporarily reduced the quarantine time for release of plasma donations by 15 days, from 60 to 45 days. The exceptions will only apply to the COVID-19 pandemic, though the FDA is considering whether it would be appropriate to extend the exceptions beyond the pandemic.

Find the guidance here.

FDA Starts Program to Speed Review, Development of COVID-19 Drugs

On March 31, the Food and Drug Administration (FDA) established a program to speed reviews of COVID-19 treatments and support research on COVID-19 drugs. The Coronavirus Treatment Acceleration Program (CTAP) will provide rapid review of, and input on, drug and biologic development plans. The FDA will quickly respond to requests for investigational drug access and work with applicants and other regulatory agencies to avoid supply disruptions by transferring manufacturing to alternative sites. The FDA plans to review single patient expanded access requests within three hours.

To support the program, FDA will redeploy medical and regulatory staff to COVID-19 therapy review teams, involve senior management in submission review, streamline the process for submitting inquiries and provide resources to help providers and researchers submit emergency requests for investigational products.

Find more information here.

FDA Adds Chloroquine, Hydroxychloroquine to Drug Shortage List

On March 31, the Food and Drug Administration (FDA) added the anti-malaria drugs hydroxychloroquine and chloroquine to the drug shortage list. Though the FDA has not yet approved chloroquine or hydroxychloroquine for COVID-19, there has been an increased demand for the drug to treat COVID-19 patients and for use in clinical trials. The drugs are in short supply, especially for patients with rheumatoid arthritis and lupus, conditions for which hydroxychloroquine is FDA-approved to treat.

CMS: Regulatory Changes to Help U.S. Health Care System Address COVID-19 Patient Surge

On March 30, the Centers for Medicare and Medicaid Services (CMS) lifted safety rules and other regulations to give hospitals more flexibility to respond to the COVID-19 pandemic, including allowing them to move patients to makeshift off-site locations and reducing the amount of supervision required for certain nonphysicians to provide services. The new policies, in place for the duration of the public health emergency, are aimed at increasing hospital capacity and expanding the health care workforce. These changes include a waiver of federal rules that require hospitals to provide services within their own buildings. The waiver will allow hospitals to transfer some patients to locations such as hotels, dormitories and gymnasiums while still receiving hospital payments under Medicare. The new waiver will allow communities to convert unconventional sites into hospitals, without relying on the Federal Emergency Management Agency (FEMA).

The policies are being implemented through a series of waivers and a wide-ranging rule here.


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


MACPAC Supports Extra State Funding to Set Up Dual-Eligible Integrated Care

On April 2, during the meeting for April 2020, the Medicaid and CHIP Payment and Access Commission (MACPAC) voted in favor on two recommendations to improve care for beneficiaries eligible for both Medicare and Medicaid. The first would create a special enrollment period for dual-eligibles for Medicare-Medicaid plans and the second would propose Congress provide states with funding to put integrated care models in place.

Find more details on the April 2020 meeting here.


HHS OIG: 23 States Reported Allowing Unenrolled Providers to Serve Medicaid Beneficiaries

On April 1, the Department of Health and Human Services (HHS) Office of the Inspector General (OIG) released a report that nearly 1,000 providers who were kicked out of Medicaid due to criminal convictions, licensure problems and other misconduct still received Medicaid payments or remained enrolled in state Medicaid programs. The Centers for Medicare and Medicaid Services (CMS) responded to OIG that it would take steps to recover from states the federal share of the $50.3 million the report found was inappropriately paid to fee-for-service Medicaid payments and would increase its oversight of state Medicaid payments.

Only eight states included clear language in their Medicaid managed care contracts prohibiting terminated providers from participating in managed care networks, and CMS did not check for such language when reviewing states’ managed care contracts, according to the report.

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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