Washington Healthcare Update

July 14, 2024

This Week in Washington: House Appropriations Committee marks up FY2025 Labor-HHS-Education and the Agriculture- FDA and Related Agencies funding bills; Senate Appropriations Committee marks up FY2025 Agriculture-FDA and Related Agencies funding bill; CMS releases CY2025 Physician Fee Schedule and the Hospital Outpatient PPS proposed rules.

Congress

House of Representatives

Senate

Administration

Proposed Rules

Final Rules

Courts

Reports

House of Representatives 

The House of Representatives is in a district work period.

Senate

The Senate is in a state work period.

House of Representatives

House Appropriations Committee Marks Up FY2025 Labor-HHS-Ed and FDA-Agriculture Funding Bills

On July 10, the House Appropriations Committee marked up and reported out of committee the fiscal year (FY) 2025 Labor-HHS-Education funding bill and the Agriculture-Food and Drug Administration and Related Agencies funding bill.

The Labor-HHS funding bill would:

  • Fund HHS at $107 billion, $8.5 billion less than in FY2024;
  • Reorganize the National Institutes of Health (NIH) from 27 institutes and centers into 15 entities and move the Advanced Research Projects Agency for Health into the NIH.
  • Reduce funding for the Centers for Disease Control and Prevention funding by 22 percent and eliminate 23 programs;
  • Maintain overall funding for the National Institutes of Health (NIH) at $48 billion, but increase funding for the National Cancer Institute;
  • Decrease Title X family planning grants and prevent federal funds from being used for abortion;
  • Maintain funding for the HHS Office for Civil Rights at $40 million;
  • Increase funding for the Substance Abuse and Mental Health Services Administration Substance Use Prevention Block Grant; and
  • Allocate $400 million to prevent rural hospital closures and increase rural residency programs.
  • Reduces funding for HIV initiatives by $554 million, but increases funding for viral hepatitis prevention by $10 million.

In the accompanying committee report, the Committee opposes the administration’s proposal to use the Bayh-Dole “march-in” rights as a tool to lower drug prices; urges changes ot the Medicare drug price negotiation time line for small molecule drugs that taret rate, genetic-based diseases; and calls for 340B reform to keep drug manufacurers from limiting the number of contract pharmacies that can dispense discounted drugs; and calls for changes in the Center for Medicare and Medicaid Services’proposed changes to the Medicaid drug rebate program.

The Agriculture-FDA and Related Agencies funding bill would:

  • Fund the FDA at $6.75 billion, $22 million less than in FY2024;
  • Require the FDA to focus on regulating e-cigarettes before imposing more reglations on tobacco products;
  • Retain the gene editing provision, which prohibits the “editing” of heritable genes or altering of genes that can be passed on to offspring.

For more information, click here.

Senate

Senate Passes Drug Patent Thicket Reform Bill 

On July 11, the Senate passed S.150, Affordable Prescriptions for Patients Act of 2023. The legislation seeks to lower prescription drug costs and would:

  • Prevent drug manufacturers from using patent thickets and other tactics to delay the entry to market of generic medications and biosimilar products;
  • Prohibit manufacturers from intentionally shifting demand away from a generic to a modified version of a brand drug when facing competition, a practice known as “product hopping;” and
  • Authorize the Federal Trade Commission to enforce product hopping prohibitions and impose limits on patent litigation concerning biologics.

The bill was reported out of the Senate Judiciary Committee in March 2023 but was not brought to the Senate floor earlier despite calls from patient advocacy groups and senators.

For more information, click here.

Senate Appropriations Committee Marks Up FY2025 Agriculture-Food and Drug Administration and Related Agencies Funding Bill

On July 11, the Senate Appropriations Committee marked up and reported out of committee the fiscal year (FY) 2025 Agriculture-FDA and Related Agencies funding bill. The bill would:

  • Provide $27 billion in total funding, $821 million more than FY2024;
  • Fund the FDA at $6.87 billion, $22 million more than FY2024;
  • Increase funding for the Neurology Drug Program by $3 million;
  • Fund the Tobacco Task Force at $2 million;
  • Increase funding for cosmetics oversight by $1 million and antimicrobial research by $1 million; and
  • Include $55 million for implementation of the 21st Century Cures Act.

Compared to the House funding bill, the Senate bill provides $44 million more in discretionary funding.

For more information, click here.

Senate HELP Committee Holds Hearing Concerning Medical Debt

On July 11, the Senate Health, Education, Labor and Pensions Committee held a hearing concerning medical debt. Members discussed hospital service price transparency, the impact of pharmacy benefit managers and private equity firms in healthcare and whether nonprofit hospitals are passing 340B drug savings along to patients. Witnesses were:

  • Abdul El-Sayed, MD, DPhil, Director and Health Officer, Wayne County Dept. of Health, Human and Veterans Services
  • Luke Messac, MD, PhD, Attending Physician, Brigham and Women’s Hospital, Instructor of Emergency Medicine, Harvard Medical School
  • Allyson Ward, Advanced Practice Nurse, Neonatal Nurse, Practitioner-Board Certified, The University of Chicago
  • Fumiko Ladd Chino, MD, Radiation Oncologist, Memorial Sloan Kettering Cancer Center
  • Ge Bai, PhD, CPA, Professor of Accounting and Health Policy, Johns Hopkins University
  • Benedic Ippolito, PhD, Senior Fellow, American Enterprise Institute

For more information, click here.

Senate Special Committee on Aging Holds Hearing Regarding Healthcare Costs and Transparency

On July 11, the Senate Special Committee on Aging held a hearing regarding healthcare costs and transparency. Members discussed the impacts of prescription drug costs and private equity ownership of healthcare providers. Members also discussed site-neutral payments and self-funded health plans’ access to claims data. Witnesses were:

  • Dr. Chris Whaley, PhD, Associate Director of the Center for Advocating Health Policy through Research, Associate Professor of Health Services, Policy and Practice, Brown University School of Public Health
  • Chris Deacon, JD, Principal Owner of VerSan Consulting, LLC
  • Cora Opsahl, MBA, Health Fund Director of 32BJ Health Fund
  • Sophia Tripoli, MPH, Senior Director of Health Policy at Families USA

For more information, click here.

Administration

FDA Releases Guidance Concerning OUD Device Study Clinical Considerations

On July 11, the Food and Drug Administration (FDA) released guidance concerning opioid use disorder (OUD) device study clinical considerations. The guidance provides recommendations for the design of OUD device studies that assess device safety and effectiveness.

For more information, click here.

FDA Requests Applications for Patient Engagement Collaborative

On July 9, the Food and Drug Administration (FDA) announced that it is accepting applications for the Patient Engagement Collaborative (PEC) forum. The PEC is a joint FDA and Clinical Trials Transformation Initiative project intended to increase patient engagement with diverse populations in medical product development and regulation. Applications are due by Aug. 8.

For more information, click here.

FDA Updates Draft Guidance Concerning Medical Device and Prescription Drug Misinformation

On July 8, the Food and Drug Administration (FDA) released an updated draft guidance concerning how companies may voluntarily address misinformation about or related to their approved or cleared medical products. It also outlines an enforcement policy companies may use to address internet-based misinformation created or disseminated by an independent third party.

For more information, click here.

SAMHSA Announces $27.5 Million in Funding to Enhance Women’s Behavioral Health

On July 8, the Substance Abuse and Mental Health Services Administration (SAMHSA) announced that it would award $27.5 million in funding to expand women’s behavioral health services and enhance the capacity of providers to identify and address mental health conditions, substance use and gender-based violence.

For more information, click here.

Proposed Rules

CMS Releases CY2025 Physician Fee Schedule Proposed Rule

On July 10, the Centers for Medicare and Medicaid Services (CMS) released the calendar year (CY) 2025 Medicare Physician Fee Schedule (PFS) proposed rule. The proposed rule would:

  • Reduce the PFS conversion factor by 2.8 percent to $32.36;
  • Expand payments for opioid treatment programs (OTPs) for new overdose reversal medications approved by the Food and Drug Administration;
  • Broaden coverage of Hepatitis B vaccines for Medicare beneficiaries;
  • Enhance coverage of colorectal cancer screenings;
  • Establish new coding and payment for caregiver training for direct care services and behavior management and modification training;
  • Extend flexibilities for the use of telehealth modalities;
  • Extend certain telehealth waivers through 2025;
  • Implement six new optional Merit-based Incentive Payment System Value Pathways; and
  • Mitigate the impact of significant, anomalous and suspect (SAHS) billing activity under the Medicare Shared Savings Program (MSSP) for CY2024.

Accountable care organizations have expressed concerns over the proposed expansion of MSSP quality measures and medical group and provider associations are urging Congress to pass legislation to tie physician payment updates to the inflation-based Medicare Economic Index.

Public comments will be accepted until Sept. 9, 2024. For more information, click here.

CMS Releases CY2025 Medicare Hospital and ASC PPS Proposed Rule

On July 10, the Centers for Medicare and Medicaid Services (CMS) released the calendar year (CY) 2025 Medicare Hospital Outpatient and Ambulatory Surgical Center (ASC) Prospective Payment System (PPS) proposed rule. The proposed rule would:

  • Update PPS payment rates for hospitals and ASCs that meet quality reporting requirements by 2.6 percent;
  • Update intensive outpatient program and partial hospitalization program payment rates for services furnished in hospital outpatient departments and Community Mental Health Centers;
  • Implement temporary additional payments for certain non-opioid treatments for pain relief in hospital outpatient departments and ASCs from Jan. 1, 2025 to Dec. 31, 2027;
  • Clarify requirements for outpatient PPS payments for services furnished remotely;
  • Increase the All-Inclusive Rate Add-On payment for certain high-cost drugs for Medicare beneficiaries who receive care at Indian Health Service and tribal hospitals;
  • Improve payment for specialized diagnostic radiopharmaceuticals;
  • Provide an additional $10 payment for Technetium-99m produced by non-highly enriched uranium sources or derived from molybdenum-99;
  • Extend a single blended payment policy to trials for drugs and devices that meet coverage and evidence development requirements;
  • Narrow the definition of “custody” in the Medicare payment exclusion rule;
  • Amend Medicaid and Children’s Health Insurance Program Continuous Eligibility requirements and create exceptions to the Medicaid Clinic Services Four Walls Regulation; and
  • Implement new measures under the Rural Emergency Hospital, Hospital Inpatient and ASC Quality Reporting Programs.

The proposed rule would also implement baseline health and safety requirements for hospitals and critical access hospitals for obstetrical services. These requirements would improve maternal health efforts and obstetrical unit organization, staffing, delivery of care, emergency services readiness, transfer protocols and annual staff training.

Public comments will be accepted until Sept. 9, 2024. For more information, click here.

CMS Releases CY2025 End-Stage Renal Disease PPS Proposed Rule

On June 27, the Centers for Medicare and Medicaid Services (CMS) released the calendar year (CY) 2025 End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) proposed rule. The proposed rule would:

  • Increase the ESRD PPS base rate by $2.18 to $273.20. CMS projects a 3.9 percent increase in total payments for hospital-based ESRD facilities and 2.1 percent increase in total payments for freestanding facilities;
  • Adjust the Acute Kidney Injury (AKI) dialysis payment rate to be $273.20;
  • Implement a new ESRD PPS-specific wage index;
  • Expand the list of ESRD outlier services to include drugs and biological products;
  • Incorporate technical changes to the methodologies for calculating outlier services fixed-dollar loss amounts and Medicare allowable payment amounts;
  • Modify the Low-Volume Payment Adjustment (LVPA) and create a two-tiered LVPA;
  • Provide information on how CMS will operationalize the inclusion of oral-only drugs and biological products into the ESRD PPS;
  • Allow payment for AKI dialysis services furnished to beneficiaries in their homes;
  • Permit ESRD facilities to bill Medicare for the home and self-dialysis training add-on payment adjustment for beneficiaries with AKI;
  • Update ESRD facility Conditions for Coverage; and
  • Modify the ESRD Quality Incentive Program.

Public comments will be accepted until Aug. 26, 2024. For more information, click here.

CMS Releases CY2025 Home Health PPS Proposed Rule

On June 26, the Centers for Medicare and Medicaid Services (CMS) released the calendar year (CY) 2025 Home Health Prospective Payment System (PPS) proposed rule. The proposed rule would:

  • Reduce net home health payments by an estimated $280 million in CY2025, 1.7 percent less relative to the current year;
  • Decrease the base payment rate by 4.1 percent due to the implementation of the Patient-Driven Groupings Model;
  • Add a new standard to the Home Health Agency (HHA) Conditions of Participation that would require HHAs to develop, apply and maintain a policy for accepting patients to service;
  • Adopt and modify certain patient assessment items related to health-related social needs in the Home Health Quality Reporting Program;
  • Revise infection prevention and control requirements for long-term care facilities; and
  • Require reporting of data related to respiratory syncytial virus and influenza beginning Jan. 1, 2025.

Public comments will be accepted until Aug. 26, 2024. For more information, click here.

CMS Proposed Rule Would Establish Increasing Organ Transplant Access Model

On May 8, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would establish the Increasing Organ Transplant Access (IOTA) Medicare payment model. The IOTA Model would be a mandatory, six-year model and would begin on Jan. 1, 2025.

The model aims to:

  • Increase access to kidney transplants for end-stage renal disease patients;
  • Improve quality of care for people seeking kidney transplants;
  • Reduce disparities among individuals undergoing the kidney transplant process; and
  • Facilitate the efficiency and capability of transplant hospitals selected to participate.

Public comments will be accepted until July 16, 2024. For more information, click here.

ONC Releases HTI-2 Proposed Rule

On July 10, the Department of Health and Human Services Office of the National Coordinator for Health Information Technology (ONC) released the Health Data, Technology, and Interoperability: Patient Engagement, Information Sharing, and Public Health Interoperability (HTI-2) proposed rule. The proposed rule implements two new sets of criteria under the ONC Health IT Certification Program and would:

  • Implement a range of technology and standards updates, including those concerning the exchange of clinical images and the addition of multi-factor authentication support;
  • Require the adoption of United States Core Data for Interoperability (USCDI) version 4 by Jan. 1, 2028;
  • Require the implementation of section 119(b)(3) of the 2021 Consolidated Appropriations Act and a new, real-time prescription benefit tool certification criterion;
  • Establish certain Trusted Exchange Framework and Common Agreement governance rules; and
  • Clarify certain information-blocking exceptions.

The proposed rule has not yet been published in the Federal Register. Public comments will be accepted for 60 days after its publication.

For more information, click here.

Final Rules 

CMS Final Rule Establishes Disincentives for Health Information Blocking

On June 24, the Centers for Medicare and Medicaid Services (CMS) released a final rule that would establish disincentives for healthcare providers that interfere with, prevent or materially discourage access, exchange or use of electronic health information (EHI). Disincentives for entities who engage in information blocking will consist of the following:

  • Hospitals under the Medicare Promoting Interoperability Program will experience a reduction of the market basket update by 75 percent;
  • Critical access hospitals will experience a reduction from 101 to 100 percent of reasonable costs;
  • Clinicians in the Medicare Merit-based Incentive Payment System (MIPS) will receive a score of zero in the MIPS Promoting Interoperability performance category;
  • Accountable care organization providers will be ineligible to participate in the Medicare Shared Savings Program for at least one year and may not be eligible to receive revenue they earn through the program.

In addition to CMS, the Department of Health and Human Services Office of the National Coordinator for Health Information Technology is proposing the rule.

The rule will go into effect on July 31, 2024. For more information, click here.

FDA Final Rule Revises Medical Gas CGMP, Postmarketing Safety Reporting and Labeling

On June 17, the Food and Drug Administration (FDA) released a final rule that will revise current good manufacturing practices (CGMP), postmarketing safety reporting and labeling that apply to certain medical gases. The final rule will:

  • Add operations required to produce a medical gas to the list of operations that are performed by its manufacturer;
  • Specify requirements for the declaration of net quantity of contents in the labeling of designated medical gases and medically appropriate combinations;
  • Require standard format labeling for all designated medical gases;
  • Revise medical gas container labeling regulations; and
  • Implement medical gas cleaning, adverse event reporting and certification ownership transfer requirements.

The rule will go into effect on Dec. 18, 2025. For more information, click here.

CMS Final Rule Implements Changes Related to Standards for Electronic Prescribing and Health IT 

On June 13, the Centers for Medicare and Medicaid Services (CMS) Office of the National Coordinator (ONC) for Health Information Technology released a final rule that will revise Medicare Prescription Drug Benefit and ONC regulations to implement changes concerning required electronic prescribing and health information technology (IT) standards.

The final rule will require Part D sponsors, prescribers and dispensers of covered Part D to:

  • Comply with standards CMS has adopted directly or is requiring by cross-referencing standards ONC adopts for electronically transmitting prescriptions; and
  • Use National Council for Prescription Drug Programs (NCPDP) Formulary and Benefit (F&B) standard version 3.0 or comply with a standard adopted by ONC after Jan. 1, 2027.

The rule will also require Part D sponsor real-time benefit tools to comply with a standard adopted by ONC and will cross-reference the Health Insurance Portability and Accountability Act of 1996 regulations in 45 CFR part 162 for eligibility transactions.

The rule will go into effect on July 17, 2024. For more information, click here.

CMS Final Rule Expands Access to Healthcare for DACA Recipients

On May 3, the Centers for Medicare and Medicaid Services (CMS) released a final rule to expand access to healthcare for Deferred Action for Childhood Arrivals (DACA) recipients. The rule will allow DACA recipients to:

  • Enroll in a Qualified Health Plan through the Affordable Care Act Health Insurance Marketplace; and
  • Obtain coverage through a Basic Health Program.

DACA recipients and other newly eligible individuals will be able to select a health plan through the Marketplace during a 60-day special enrollment period following the implementation of the rule.

The rule will go into effect on Nov. 1, 2024. For more information, click here.

FTC Final Rule Revises Health Breach Notification Rule

On April 26, the Federal Trade Commission (FTC) released a final rule that revises the Health Breach Notification Rule that requires vendors of personal health records (PHR) and related entities not covered by the Health Insurance Portability and Accountability Act, to notify individuals and the FTC of unsecured PHR data breaches. The rule will:

  • Modify the definition of PHR identifiable health information and add new definitions for covered healthcare provider and healthcare services or supplies;
  • Clarify that a “breach of security” includes an unauthorized acquisition of identifiable health information that occurs as a result of a data security breach or unauthorized disclosure;
  • Revise the definition of a PHR-related entity to make clear that the rule applies to entities that offer products and services through online services, including mobile applications;
  • Clarify multiple sources of PHR-identifiable health information;
  • Expand the use of electronic notification and consumer notice content; and
  • Require covered entities to report breaches involving 500 or more individuals to the FTC at the same time notices are sent to affected individuals and no later than 60 calendar days after discovery of the breach.

The rule will go into effect on July 29, 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.

Courts

U.S. District Court Rejects Lawsuit Challenging Medicare Drug Price Negotiation Program

On July 3, the U.S. District Court for the District of Connecticut rejected a lawsuit that challenged the constitutionality of the Medicare Drug Price Negotiation Program. The lawsuit was submitted by a pharmaceutical company that argued the program violated the First, Fifth and Eighth Amendments and was improperly implemented by the Centers for Medicare and Medicaid Services. This was the fifth time a district court has rejected a case challenging the program.

U.S. District Court Judge Temporarily Blocks HHS Rule Concerning Nondiscrimination in Health Programs

On July 3, U.S. District Court for the Southern District of Mississippi Judge Louis Guirola blocked a Department of Health and Human Services (HHS) final rule concerning nondiscrimination in health programs from going into effect on July 5. The rule would apply nondiscrimination standards to HHS programs and activities and prevent discrimination on the basis of gender identity.

The rule is being challenged by 15 states that argue the rule would require Medicaid programs to cover treatments including hormone treatments and surgeries for transgender individuals and minors. Several of the states have passed legislation to ban these treatments.

Judge Guirola stated that the administration had overstepped its authority by including gender identity in the definition of “sex” under federal law. He also cited the recent U.S. Supreme Court Chevron case that struck down the ability for federal agencies to reasonably interpret ambiguous statutes they administer.

Reports

CBO Releases Cost Estimate of H.R. 620, Alzheimer’s Accountability and Investment Act

On July 11, the Congressional Budget Office (CBO) released a cost estimate for H.R. 620, Alzheimer’s Accountability and Investment Act. The legislation would require the National Institutes of Health to prepare annual estimates of the costs of research conducted under the National Alzheimer’s Project Act.

The CBO projects the bill would have no effect on outlays or revenues over the 2024-2034 period.

For more information, click here.

FTC Releases Interim Staff Report on PBMs

On July 9, the Federal Trade Commission (FTC) released an interim staff report concerning pharmacy benefit managers (PBMs) and the accessibility and affordability of prescription drugs. The report is part of the FTC’s ongoing inquiry into the impacts of PBM vertical integration and consolidation.

The report found that some PBMs:

  • Are highly concentrated and vertically integrated with large health insurers and specialty and retail pharmacies;
  • Have significant control over prescription drug accessibility and affordability;
  • Engage in self-preferencing practices and refer patients to affiliated pharmacies;
  • Enter contractual relationships that disadvantage smaller, unaffiliated pharmacies; and
  • Negotiate prescription drug rebates with drug manufacturers that limit access to potentially lower-cost generic and biosimilar competitors.

For more information, click here.

GAO Releases Report Regarding TRICARE Directory Behavioral Health Provider Information

On July 8, the Government Accountability Office (GAO) released a report concerning the accuracy of behavioral health provider information in the Department of Defense (DOD) TRICARE directory. After reviewing documentation, interviewing DOD officials and conducting covert calls to TRICARE behavioral health providers, the GAO discovered that:

  • The DOD does not monitor the accuracy of behavioral health provider listings; and
  • Most of the behavioral health provider listings in the TRICARE network directories are inaccurate.

The GAO conducted this study because a provision in the 2023 James M. Inhofe National Defense Authorization Act required it to examine the accuracy of behavioral health provider information in the TRICARE directories.

For more information, click here.

GAO Releases Report Concerning Work Practices at Substance Abuse Treatment and Recovery Facilities

On July 8, the Government Accountability Office (GAO) released a report concerning the work practices of individuals living in substance abuse treatment and recovery facilities. After interviewing Department of Health and Human Services (HHS) and Department of Labor officials and surveying licensed treatment and recovery facilities, the GAO discovered that:

  • A majority of facilities believe additional federal guidance on facility work procedures would be helpful; and
  • HHS should clarify work requirements in the application and related documents for its Substance Use Prevention, Treatment and Recovery Services Block Grant.

The GAO conducted this study because it was asked to review work practices at substance abuse treatment and recovery facilities.

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