THIS WEEK’S DOSE

• A Quiet Healthcare Week on Capitol Hill. Congress was largely in recess this week, although the Senate returned briefly to complete consideration of a long-awaited foreign aid bill. Both chambers will return to session the week of April 29, and health-related activity is expected at the committee level.
• A Busy Healthcare Week for the Administration
  • FTC Moves Forward with Ban on Noncompetes.
  • CMS Releases Two Medicaid Rules. The Centers for Medicare & Medicaid Services (CMS) released final rules on home- and community-based services (HCBS) access and managed care.
  • CMS Releases Nursing Home Minimum Staffing Standards Final Rule.
  • HHS Releases HIPAA Reproductive Healthcare Privacy Rule.

ADMINISTRATION

FTC Votes to Ban Noncompete Clauses. Alongside the 3 – 2 vote, the Federal Trade Commission (FTC) issued a final rule that broadly bans new noncompete agreements nationwide and renders existing noncompete agreements binding most workers unenforceable. The rule requires employers to provide workers with notice that their existing noncompete agreements are no longer enforceable. The rule also defines “worker” broadly, encompassing persons working as employees, independent contractors, interns, externs, volunteers and sole proprietors. The final rule is presently set to become effective 120 days after its publication in the Federal Register but is already facing court challenges.

Nonprofits, such as many health systems and hospitals, may be exempted from the final rule, but the FTC has warned that merely claiming tax-exempt status is not enough. The FTC noted that it will consider the entity’s facts and circumstances to determine if it is within FTC’s jurisdiction.

A FTC fact sheet can be found here, and an in-depth summary of the final rule from McDermott Will & Emery can be found here.

CMS Releases Medicaid Access Final Rule. The final rule focuses on HCBS, including direct care worker compensation requirements, waitlists, grievance process development, critical incident reporting definitions and quality reporting. The final rule also seeks to increase transparency more broadly in payment rates.

In the rule, CMS maintains the proposed policy to require that at least 80% of Medicaid payments for personal care, homemaker and home health aide services be spent on compensation for direct care workers (as opposed to administrative overhead). However, the final rule makes modifications that include excluding some costs from the 80% calculation and creating an exemption process that states can utilize for small providers and those experiencing hardships. The final rule requires states to publish all fee-for-service Medicaid payment rates on a publicly available and accessible website, and requires states to compare their fee-for-service payment rates for primary care, obstetrical and gynecological care, and outpatient mental health and substance use disorder services to Medicare rates and publish that every two years. The final rule also requires states to publish the average hourly rate paid for personal care, home health aide, homemaker and habilitation services every two years. States will be required to establish and operate the newly named Medicaid Advisory Committee (MAC) and a Beneficiary Advisory Council (BAC) one year after the rule’s effective date.

A CMS fact sheet can be found here, and a timeline for various effective dates can be found here. Our team is working on a comprehensive summary that will be available on the McDermottPlus website soon.

CMS Releases Medicaid Managed Care Final Rule. This final rule is largely finalized as proposed. It includes several process and transparency-related changes to state directed payments (SDPs). In particular, the final rule includes updates to the transparency of funding in SDPs and creates new limitations on funding through SDPs. As proposed, the rule requires plans to submit to the state a payment analysis and annual documentation that demonstrates their level of payment for certain services compared to Medicare rates.

The final rule also increases transparency and opportunities for meaningful ongoing public engagement around states’ managed care quality strategies. It establishes a framework for states to implement a Medicaid or Children’s Health Insurance Program (CHIP) quality rating system as a “one-stop-shop” for enrollees to compare Medicaid or CHIP managed care plans based on quality of care, access to providers, covered benefits and drugs, cost and other plan performance indicators.

A CMS fact sheet can be found here, and a timeline for various effective dates can be found here. Our team is working on a comprehensive summary that will be available on the McDermottPlus website soon.

CMS Releases Nursing Home Minimum Staffing Standards Final Rule. The final rule codifies new minimum nurse staffing requirements over three years for many facilities, and five years for rural facilities. CMS finalized the total nurse staffing standard at 3.48 hours per resident day (HPRD), but also requires that registered nurses (RNs) provide a minimum of .55 HPRD of direct patient services and that nurse aides provide a minimum of 2.45 HRPD. The rule also requires that an RN is onsite 24 hours per day, seven days per week. The rule includes limited exemptions for qualifying facilities. It is estimated that 80% of nursing homes will have to increase staffing to meet this threshold.

The rule includes other provisions, including the following:

• More rigorous guidelines for long-term care facilities when reporting their facility-wide assessments.
• New Medicaid Institutional Payment Transparency Reporting provisions, which include new reporting requirements, support for quality care and worker safety, and promotion of publicly available payment information.

A CMS fact sheet can be found here. Our team is working on a comprehensive summary that will be available on the McDermott Will & Emery website soon.

HHS Releases HIPAA Reproductive Healthcare Privacy Final Rule. The final rule builds on the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule to prohibit the disclosure of certain protected health information (PHI) when individuals travel to different states to seek reproductive services.

The rule includes the following provisions:

• Prohibits the use or disclosure of PHI “when it is sought to investigate or impose liability on individuals, healthcare providers, or others who seek, obtain, provide, or facilitate reproductive healthcare that is lawful under the circumstances in which such health care is provided, or to identify persons for such activities.”
• Requires “healthcare provider, health plan, clearinghouse, or their business associates, to obtain a signed attestation that certain requests for PHI potentially related to reproductive healthcare are not for these prohibited purposes.”
• Requires healthcare providers, health plans and clearinghouses to modify their notice of privacy practices to support reproductive healthcare privacy.

The US Department of Health and Human Services (HHS) press release can be found here.

HRSA Releases 340B ADR Final Rule. The final rule, effective on June 18, 2024, requires the establishment of an administrative dispute resolution (ADR) process for the 340B Drug Pricing Program. The ADR process seeks to resolve:

• Claims by covered entities that they have been overcharged for covered outpatient drugs by manufacturers, and
• Claims by manufacturers, after the manufacturer has conducted an audit of a covered entity, that a covered entity has violated the prohibition on diversion or duplicate discounts.

An in-depth summary of the final rule from McDermott Will & Emery can be found here.

QUICK HITS

• HHS Releases National Strategy for Suicide Prevention and Federal Action Plan. The national strategy outlines recommendations for addressing needs of at-risk populations, and the federal action plan identifies 200 actions to be initiated and evaluated in the next three years. Read the press release here.
• GAO Releases Report on Medicaid Immunization Strategies. In the report, the US Government Accountability Office (GAO) found that select Medicaid programs used patient-level data to increase COVID-19 vaccination rates, primarily through incentives and targeted outreach.
• HHS Takes Actions to Strengthen Direct Care Workforce. Through the Administration for Community Living’s Direct Care Workforce Strategies Center, select states have been offered two technical assistance programs that aim to better recruit, train, and retain direct care workers. HHS and the US Department of Labor have also released recommendations for building data infrastructure to strengthen the HCBS direct care workforce. Read the press release here.

NEXT WEEK’S DIAGNOSIS

Congress will return next week and has healthcare activity planned at the committee level. The House Energy & Commerce Committee will hold a Medicaid legislative hearing and a hearing with the UnitedHealth Group CEO on the Change Healthcare cyberattack. The UnitedHealth Group CEO is expected to testify at a Senate Finance Committee next week as well. On the regulatory front, we expect a controversial final rule on laboratory developed tests. The proposed rules for the Medicare Physician Fee Schedule and Hospital Outpatient Prospective Payment System have also made their way to review by the Office of Management and Budget.