Washington Healthcare Update

February 12, 2024

This Week in Washington: Senate Finance Committee holds hearing on AI use in healthcare; CMS makes corrections to 2024 Hospital Outpatient Prospective Payment Rates; House passes ban on QALYs.

Congress

House

Senate

Administration

Proposed Rules

Final Rules

Reports

CBO Cost Estimates

House

House Budget Committee Favorably Reports Dr. Michael C. Burgess Preventive Health Savings Act

On Feb. 6, the House Budget Committee marked up and reported out of committee the Doctor Michael C. Burgess Preventive Health Savings Act. The legislation would require the Congressional Budget Office (CBO) to calculate the budgetary effects for two additional 10-year periods, for healthcare policies that result in reductions to budget outlays. The CBO currently limits its cost estimates to a single 10-year period.

House Committee on Ways and Means Holds Hearing on Chronic Drug Shortages

On Feb. 6, the House Committee on Ways and Means held a hearing to examine and discuss chronic drug shortages. Announced witnesses were:

  • Stephen Schleicher, M.D., MBA, Chief Medical Officer at Tennessee Oncology
  • Eugene Cavacini, Senior Vice President and Chief Operating Officer at McKesson Pharmaceutical Solutions and Services (PSaS)
  • Allan Coukell, BSc, Senior Vice President for Public Policy at Civica Rx
  • Stephen Schondelmeyer, PharmD, Ph.D., Director of the University of Minnesota College of Pharmacy PRIME Institute
  • Julie Gralow, M.D., Chief Medical Officer and Executive Vice President at ASCO
  • Jeromie Ballreich, Ph.D., Associate Research Professor at the Johns Hopkins Bloomberg School of Public Health

For more information, click here.

House Energy and Commerce Committee Oversight and Investigations Subcommittee Holds Hearing on FDA Foreign Drug Inspection Program

On Feb. 6, the House Energy and Commerce Committee Oversight and Investigations Subcommittee held a hearing to discuss the Food and Drug Administration Drug Inspection Program and evaluate its current status, challenges and shortcomings. Announced witnesses were:

  • Dinesh S. Thakur, Public Health Activist at the Thakur Family Foundation, Inc.
  • John W.M. Claud, Counsel at Hyman, Phelps and McNamara
  • Mary Denigan-Macauley, Director of Public Health at the Government Accountability Office

For more information, click here.

House Passes Bill Banning QALYs

On Feb. 7, the House passed the Protecting Health Care for All Patients Act on a 211-208 vote. The legislation would ban quality-adjusted life years (QALYs) from being used in coverage and payment determinations for federal health programs including Medicare. QALYs are a measure used to assess disease burden and evaluate how well medical treatments lengthen or improve a patient’s life.

For more information, click here.

FDA Modernization Act 3.0 Introduced

On Feb. 6, Rep. Carter (R-GA) introduced the Food and Drug Administration Modernization Act 3.0. The legislation aims to reduce the use of animals in nonclinical testing by improving the predictivity of nonclinical testing methods, decreasing the development time for biological products and drugs and facilitating the development, qualification and adoption of testing methods.

For more information, click here.

Ensuring Pathways to Innovative Cures Act Introduced

On Feb. 1, Reps. Guthrie (R-KY), Murphy (R-NC) and Davis (D-NC) introduced the Ensuring Pathways to Innovative Cures Act. The legislation seeks to clarify that small-molecule drugs can stay on the market for 11 years before the Centers for Medicare and Medicaid Services could consider them for price negotiation.

For more information, click here.

Chair Cathy McMorris Rodgers Announces Retirement

On Feb. 8, House Energy and Commerce Committee Chairman Cathy McMorris Rodgers (R-WA) announced that she will retire at the end of her term. Her retirement is notable as the committee is already set to lose a large number of senior Republican members including Reps. Burgess (TX), Bucshon (IN), Duncan (SC), Curtis (UT), Pence (IN) and Armstrong (ND).

Senate

Senate HELP Committee Holds Hearing on Prescription Drug Costs

On Feb. 8, the Senate Health, Education, Labor and Pensions (HELP) Committee held a hearing to examine the cost of prescription drugs. Announced witnesses were:

  • Joaquin Duato, Johnson and Johnson Chief Executive Officer
  • Robert Davis, Merck Chief Executive Officer
  • Chris Boerner, Bristol Myers Squibb Chief Executive Officer
  • Peter Maybarduk, J.D., Access to Medicines Director at Public Citizen
  • Tahir Amin, LL.B., Chief Executive Officer at Initiative for Medicines, Access and Knowledge
  • Darius Lakdawalla, Ph.D., Director of Research at the University of Southern California Schaeffer Center

In addition, HELP committee majority staff released a report concerning the profits Johnson and Johnson, Merck and Bristol Meyer Squibb made in 2022 and the median price they charged for certain medications in the U.S. compared to other countries over the last two decades.

For more information on the hearing, click here.

For more information on the report, click here.

Senate Finance Committee Holds Hearing on Role of AI in Healthcare

On Feb. 8, the Senate Finance Committee held a hearing to discuss the use of artificial intelligence algorithms and systems in healthcare. Announced witnesses were:

  • Peter Shen, Head of Digital and Automation for North America at Siemens Healthineers
  • Mark Sendak, M.D., MPP, Co-Lead of the Health AI Partnership
  • Michelle M. Mello, J.D., Ph.D., Professor of Health Policy and Law at Stanford University
  • Ziad Obermeyer, M.D., Associate Professor and Blue Cross of California Distinguished Professor at the University of California – Berkeley
  • Katherine Baicker, Ph.D., University of Chicago Provost

For more information, click here.

Senate 340B Working Group Releases SUSTAIN 340B Act Discussion Draft

On Feb. 2, the Senate 340B Working Group released a legislative discussion draft of the Supporting Underserved and Strengthening Transparency, Accountability and Integrity Now and for the Future of 340B Act. The discussion draft outlines proposed changes to the 340B program concerning contract pharmacies, child sites, discount duplications, user fees and the definition of a 340B patient.

The working group is seeking feedback from 340B stakeholders on the proposals, and comments will be accepted until April 1.

For more information, click here.

MACPAC Releases Policy Brief on Medicaid Spending on High-Cost Drugs

On Feb. 6, the Medicaid and Children’s Health Insurance Program Payment and Access Commission released a policy brief concerning Medicaid spending on high-cost drugs. The brief outlines how much the Medicaid program spent per claim on brand name and generic drugs from 2018 to 2021 and includes recommendations on how states can address the growing costs of specialty drugs and ensure that beneficiaries can access them.

For more information, click here.

Administration

CDC Releases Vector-Borne Disease National Strategy

On Feb. 6, the Centers for Disease Control and Prevention released the National Public Health Strategy to Prevent and Control Vector-Borne Diseases in People. The strategy seeks to address the rising public health threats posed by vector-borne diseases and outlines federal government activities aimed at preventing and controlling them.

For more information, click here.

CMS Releases State Medicaid and CHIP Telehealth Toolkit

On Feb. 8, the Centers for Medicare and Medicaid Services released the February 2024 State Medicaid and Children’s Health Insurance Program (CHIP) Telehealth Toolkit. The toolkit highlights Medicaid and CHIP telehealth flexibilities, frequently asked questions, telehealth trends and operational considerations for implementing telehealth services.

For more information, click here.

CMS Makes Corrections to 2024 Hospital Outpatient Prospective Payment Rates

On Feb. 6, the Centers for Medicare and Medicaid Services (CMS) issued an interim final rule that makes corrections to a November 2023 final rule it released concerning the 2024 Hospital Outpatient Prospective Payment Rates.

CMS has increased the Medicare reimbursement for hyperbaric oxygen therapy from $75.61 to $135.89. CMS has also revised the Ambulatory Surgical Center weight scalar from 0.8881 to 0.889, corrected the Hospital Outpatient Quality Reporting Program Cataracts Visual Function measure CBE number and endorsement date and made corrections to other quality reporting programs.

For more information, click here.

CMS Approves New Mexico’s Request to Expand Critical Behavioral Health Services

On Feb. 6, the Centers for Medicare and Medicaid approved New Mexico’s request to expand critical behavioral health services and provide Medicaid mental health and substance use crisis care services through mobile crisis teams.

For more information, click here.

FDA Releases Guidance on Reporting Section 510(j)(3) Drugs and Biological Products

On Feb. 5, the Food and Drug Administration released guidance intended to assist registrants of drug establishments in submitting reports of drugs manufactured, prepared, propagated, compounded or processed for commercial distributions as required by section 510(j)(3) of the Federal Food, Drug and Cosmetic Act.

For more information, click here.

Proposed Rules

CDC Proposes Rule Amending HHS List of Select Agents and Toxins

On Jan. 30, the Centers for Disease Control and Prevention (CDC) released a proposed rule that amends the Department of Health and Human Services’ list of select agents and toxins that have the potential to pose a severe threat to public health and safety. The proposed rule would:

  • Remove Brucella abortus, Brucella melitensis and Brucella suis from the select agent list;
  • Add definitions and provisions to further clarify inactivation of select agents;
  • Add requirements for reporting discoveries of select agents and toxins;
  • Implement new provisions for facility verification requirements for registered biosafety level 3 and animal biosafety level 3 laboratories; and
  • Update the terminology and clarify the specific clade that is a specific agent by changing “Monkeypox virus” to “Mpox virus (clade I).”

The CDC is requesting comments on the proposed changes and seeks feedback on whether they would create additional burdens for regulated entities.

Public comments will be accepted until April 1, 2024. For more information, click here.

CMS Releases Proposed Rule Concerning Medicare Accrediting Organizations

On Feb. 8, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule concerning the oversight of Medicare accrediting organizations (AOs). The proposed rule seeks to strengthen oversight of AOs, reduce conflicts of interest and promote consistency in survey processes. It would:

  • Apply state survey agency (SSA) accountability standards to AOs;
  • Address conflicts of interest and place certain limitations on the fee-based consulting services AOs provide to healthcare facilities they accredit;
  • Prohibit AO owners, surveyors, employees and their immediate families from having an interest in or relationship with a healthcare facility they accredit or from accessing or having input in survey results;
  • Require AOs to report specific information to CMS about how they will monitor, prevent and handle conflicts of interest;
  • Require AOs with poor performance to submit a publicly reported correction plan; and
  • Align AO survey activity requirements and staff training with those of SSAs.

CMS is seeking comments from stakeholders and AOs on how to refine and revise AO oversight standards and processes and is requesting information on the timeframes and expectations for the submission of AO applications.

Public comments will be accepted until April 15, 2024. For more information, click here.

FDA Proposes Rule Regarding Classification of Wound Dressings and Washes

On Nov. 30, the Food and Drug Administration (FDA) released a proposed rule that would classify certain types of wound dressings and liquid wound washes containing antimicrobials and other chemicals, as solid wound dressings. The FDA currently regulates gel, cream, ointment and liquid wound dressings and washes as unclassified devices requiring premarket notification.

Under the proposed rule, the FDA would classify wound dressings and liquid wound washes with a high level of antimicrobial resistance concern as Class III medical devices. In addition, wound dressings and washes with a medium or low level of antimicrobial resistance would be classified as Class II medical devices.

Public comments will be accepted until Feb. 28, 2024. For more information, click here.

IHS Proposed Rule Removes Outdated Regulations

On Jan. 8, the Indian Health Service (IHS) released a proposed rule that aims to remove outdated regulations in the Code of Federal Regulations that do not align with current statutory text of the Hyde Amendment. The proposed rule intends to eliminate confusion regarding the legal effect of outdated regulations and seeks to align IHS guidelines with congressional guidelines governing the Department of Health and Human Services.

Public comments will be accepted until March 8, 2024. For more information, click here.

Final Rules

FDA Releases Final Rule Regarding Biologics License Applications and Master Files

On Feb. 9, the Food and Drug Administration released a final rule regarding biologics license applications and the use of master files by applications licensed under the Public Health Services Act (PHS Act). The final rule will:

  • Clarify that formerly approved applications for biologics products that have been deemed licenses for the biological products under the PHS Act can continue to incorporate by reference DS/DSI/DP information contained in a drug master file, if the information was referenced at the time the application was deemed to be a license;
  • Amend regulations concerning the referencing of information contained in master files by biologics license applications;
  • Clarify that investigational new drug applications for products that would be subject to licensure under the PHS Act may incorporate by reference any information in a master file; and
  • Amend regulations to address the use of master files for the constituent parts of combination products licensed under the PHS Act.

The final rule will go into effect on March 13, 2024. For more information, click here.

HHS Office of the Secretary Final Rule Establishes Health Resources Priorities and Allocation System

On Feb. 9, the Department of Health and Human Services (HHS) Office of the Secretary released a final rule that establishes the Health Resources Priorities and Allocations System (HRPAS). HRPAS covers health resources pursuant to the authority under section 101(a) of the Defense Production Act of 1950. The final rule will:

  • Establish standards and procedures by which HHS may require acceptance and priority performance of certain contracts or orders to promote national defense over other contracts with respect to health resources; and
  • Set new standards by which HHS may allocate services, materials and facilities to promote the national defense.

The final rule will go into effect on March 11, 2024. For more information, click here.

OCR Releases Final Rule Concerning SUD Patient Record Confidentiality

On Feb. 8, the Department of Health and Human Services (HHS) Office for Civil Rights (OCR) released a final rule concerning the confidentiality of substance use disorder (SUD) patient records, that seeks to increase coordination among providers treating SUD patients and strengthen confidentiality protections. The final rule will:

  • Permit the use and disclosure of Part 2 records based on a single patient consent given once for all future uses, including disclosures of treatment, payment and healthcare operations;
  • Permit redisclosure of Part 2 records by Health Insurance Portability and Accountability Act covered entities and business associates;
  • Grant patients under Part 2, the right to obtain an accounting of disclosures and the right to request restrictions on disclosures;
  • Expand prohibitions on the use and disclosure of Part 2 records in civil, criminal, administrative and legislative proceedings; and
  • Grant HHS enforcement authority to impose potential civil money penalties for Part 2 violations.

In addition to the OCR, the Substance Abuse and Mental Health Services Administration is proposing the rule. Covered entities must comply with the rule by Feb. 16, 2026.

The final rule will go into effect on April 16, 2024. For more information, click here.

ACL Final Rule Updates Regulations for Implementing OAA Programs

On Feb. 6, the Administration for Community Living (ACL) released a final rule that would update regulations for implementing Older American Act (OAA) programs that provide seniors with services including meals, job training, homemaker services, transportation services, adult day care services, nutrition assistance, caregiver support and more. The final rule will:

  • Clarify requirements for state and area plans on aging and detail requirements for coordination among tribal, state and local programs;
  • Improve consistency of definitions and operations between state and tribal programs;
  • Specify fiscal requirements, who is eligible to receive services and how funds can be used;
  • Clarify required state and local agency policies and procedures and establish expectations regarding conflicts of interest;
  • Require state agencies to streamline processes for area agencies on aging to receive approval and establish contracts and commercial relationships;
  • Provide guidance on the National Family Caregiver Support Program and the Native American Caregiver Support Program;
  • Update definitions, modernize requirements and clarify flexibilities within OAA nutrition programs; and
  • Clarify the role of aging networks in promoting alternatives to guardianship.

Regulated entities will have until Oct. 1, 2025, to fully comply with the final rule.

The final rule will go into effect on March 15, 2024. For more information, click here.

SAMHSA Final Rule Seeks to Expand Access to Medications for Opioid Use Disorder

On Jan. 31, the Substance Abuse and Mental Health Services Administration released a final rule that updates regulations concerning opioid treatments programs (OTPs) and seeks to expand access to medications for opioid use disorder. The final rule will:

  • Make COVID-19 flexibilities that expanded eligibility for patients to obtain take-home methadone doses permanent;
  • Allow new patients who will be treated by an OTP with methadone to be evaluated via audio-visual telehealth platforms;
  • Allow new patients who will be treated by an OTP with buprenorphine to be evaluated via audio-only telehealth platforms;
  • Allow nurse practitioners and physician assistants to order medications in OTPs;
  • Eliminate the requirement that patients demonstrate a full year of addiction before being eligible for treatment;
  • Expand access to interim treatment and allow patients to initiate medication treatment while awaiting further services; and
  • Promote patient-centered models of care.

In addition, the rule removes outdated language among regulations and implements new definitions reflecting current medical usage.

The final rule will go into effect on April 2, 2024. For more information, click here.

FDA Final Rule Amends Quality System Regulation Device CGMP Practice Requirements

On Jan. 31, the Food and Drug Administration (FDA) released a final rule that amends the medical device current good manufacturing practice requirements of the Quality System Regulation and aligns them with device quality management system standards set by the International Organization for Standardization. The final rule will:

  • Incorporate by reference, ISO 13485 standards for medical device quality management systems;
  • Rename the title of Code of Federal Regulations Part 820 – Quality System Regulation to Quality Management System Regulation; and
  • Establish additional requirements that clarify certain expectations and concepts used in ISO 13485.

The final rule will go into effect and the FDA will begin enforcing the new management system standard requirements on Feb. 2, 2026.

For more information, click here.

CMS Final Rule Improves Prior Authorization Process and Access to Health Information

On Jan. 17, the Centers for Medicare and Medicaid Services released a final rule that seeks to expand access to health information and improve the prior authorization process. The final rule will:

  • Require Medicare Advantage organizations, Medicaid and Children’s Health Insurance Program fee-for-service programs and managed care plan entities to send prior authorization decisions within 72 hours for expedited requests and seven calendar days for standard requests for medical items and services;
  • Require impacted payers to include a specific reason for denying a prior authorization request, publicly report prior authorization metrics and implement a Health Level 7 Fast Healthcare Interoperability Resources Prior Authorization application programming interface (API);
  • Require impacted payers to include information about prior authorizations in their current Patient Access API and implement a Provider Access API to retrieve patient claims, encounter, clinical and prior authorization data;
  • Add a new Electronic Prior Authorization measure for eligible clinicians under the Merit-based Incentive Payment System Promoting Interoperability performance category; and
  • Require hospitals and critical access hospitals in the Medicare Promoting Interoperability Program to report their use of payers’ Prior Authorization APIs to submit an electronic prior authorization request.

The final rule will go into effect on April 8, 2024. For more information, click here.

OCR Final Rule Strengthens Conscience Protections

On Jan. 9, the Department of Health and Human Services Office for Civil Rights (OCR) released a final rule that seeks to strengthen the process for enforcing federal conscience laws and provide new protections against conscience and religious discrimination. The final rule will:

  • Partially rescind a May 2019 conscience final rule that was deemed unlawful by three federal district courts. The rule strengthened the rights of healthcare workers to refuse to provide services such as abortions and gender-affirming care based on moral and religious beliefs;
  • Restore OCR’s role in overseeing the enforcement process for federal healthcare conscience protection statutes;
  • Strengthen protections against discrimination on the basis of conscience;
  • Encourage entities to post a notice of rights to inform providers and patients of their rights under federal healthcare conscience protection statutes; and
  • Implement a severability provision to preserve portions of the rule if part of the rule is deemed unlawful.

In addition, the final rule states that OCR investigations will be prompt and clarifies that certain conscience statutes apply to more than just providers.

The final rule will go into effect on March 11, 2024. For more information, click here.

FDA Final Rule Implements Direct-To-Consumer Prescription Drug Ad Standards

On Nov. 21, the Food and Drug Administration (FDA) released a final rule that implements new standards for direct-to-consumer (DTC) television and radio prescription drug advertisements. The final rule will require advertisers to:

  • Present information using language that is clear and readily understandable by consumers;
  • Place textual information against a contrasting background for a sufficient duration, using a font style and size that is easily legible;
  • Announce prescription drug information in the same volume, articulation and pacing used in the rest of the ad;
  • Certify that no distracting representations including statements, text, images or sounds are used during the ad’s major statement; and
  • Simultaneously present visual and audible information for ads in television format.

The final rule complements a final guidance the FDA issued in June that outlined how advertisers should present quantitative efficacy and risk information in DTC promotional labeling and ads.

The final rule will go into effect on May 20, 2024. The compliance date of the rule is Nov. 20, 2024.

For more information, click here.

FDA Issues Final Rule Regarding Mammography Quality Standards

On March 9, 2023, the Food and Drug Administration (FDA) issued a final rule that updates the regulations implemented by the Mammography Quality Standards Act of 1992. The FDA has decided to update the regulations due to advancements made in mammography technology and information. The final rule will:

    • Improve the delivery of mammography services;
    • Strengthen communication of healthcare information;
    • Require mammography facilities to provide patients with additional health information;
    • Ensure the availability of qualified mammography personnel;
    • Bolster medical outcome audits;
    • Modernize technological aspects of mammography services; and
  • Implement enforcement tools to deal with noncompliant facilities.

The rule will go into effect on Sept. 10, 2024. For more information, click here.

Reports

GAO Releases Report Regarding DOD TRICARE Program

On Feb. 6, the Government Accountability Office (GAO) released a report regarding the Department of Defense TRICARE program. The report examines how long it takes service members to obtain behavioral healthcare appointments, the challenges some members face in scheduling appointments and how well the Defense Health Agency (DHA) oversees the program.

The GAO found that average appointment times ranged from two weeks to more than three weeks and that provider vacancies were the main challenge in maintaining behavioral healthcare appointments. The GAO also found that the DHA does not monitor urgent and routine network referrals separately and that it has not yet established set time frames for obtaining specialty appointments.

For more information, click here.

GAO Releases Report Concerning FDA Foreign Drug Inspection Program Challenges

On Feb. 5, the Government Accountability Office (GAO) released a report concerning the challenges the Food and Drug Administration Foreign Drug Inspection Program has faced in inspecting drugs manufactured overseas. The report discusses findings related to the inspection program that the GAO previously reported on in January 2022 and April 2023. Challenges the GAO identified include vacancies among investigators available to conduct inspections and the FDA’s use of translators provided by the establishments being inspected.

For more information, click here.

CBO Cost Estimates

CBO Releases 2024-2034 Budget and Economic Outlook

On Feb. 7, the Congressional Budget Office (CBO) released its budget and economic outlook for fiscal years 2024 to 2034. The CBO predicts that the federal deficit will grow to $1.8 trillion in 2025 and will reach $2.6 trillion in 2034. The CBO also predicts that federal outlays will reach 24.1 percent of gross domestic product (GDP) by 2034 and revenues will reach approximately 18 percent of GDP by 2034.

For more information, click here.

CBO Releases Cost Estimate on S. 2840, Bipartisan Primary Care and Health Workforce Act

On Feb. 6, the Congressional Budget Office (CBO) released a cost estimate of S. 2840, the Bipartisan Primary Care and Health Workforce Act. The legislation would extend funding for community health centers, the National Health Service Corps and the Teaching Health Center Graduate Medical Education Program. It would also authorize funding for health workforce programs, modify billing requirements for providers and require the publication of prices for items and services.

For more information, click here.

Authors

Stephanie Kennan
Senior Vice President
Federal Public Affairs
Washington, DC
Gina Sherick
Policy Consultant
Federal Public Affairs
Washington, DC
Gabriel Wiedenhoever
Research Associate
Federal Public Affairs
Washington, DC