McDermott+Consulting is pleased to provide the McDermottPlus Check-Up, your regular update on health care policy from Washington, DC.

This Week’s Dose

While Congress was in its second and last week of recess, the Biden Administration had a busy week of announcements, published rulemakings and difficult court decisions. As a reminder, we did not publish a check-up last week, so this newsletter includes two weeks of updates.

Administration

Public Health Emergency Renewed. As expected, on April 13, Health and Human Services (HHS) Secretary Xavier Becerra extended the current COVID-19 public health emergency (PHE) for an additional 90 days. The PHE was set to expire on April 16, and the latest 90-day extension means most of the flexibilities and waivers tied to the PHE can continue through mid-July (On April 7, the Centers for Medicare and Medicaid Services announced that it would begin phasing out select pandemic-related flexibilities applicable to skilled nursing facilities and nursing facilities, inpatient hospices, intermediate care facilities for individuals with intellectual disabilities, and end-stage renal disease facilities). Future extensions, however, are not certain as political pressure to wind down the COVID-19 pandemic policies continues to mount. Regarding potential future extensions, the Administration maintains it will provide 60-day notice before any PHE expiration. If this is to be the last COVID PHE, look for a signal from the Administration in mid-May, at the latest.

Skilled Nursing Facility Proposed Rule Released. The Centers for Medicare & Medicare Services (CMS) on April 11 released the fiscal year (FY) 2023 Skilled Nursing Facilities (SNF) Prospective Payment System (PPS) proposed rule. Overall, if finalized, policy changes made by the rule would decrease SNF payments $320 million in FY 2023, compared to FY 2022. While CMS is proposing an annual payment update of 3.9%, the agency is also proposing a 4.6% cut to SNF PPS rates because of the proposed recalibrated parity adjustment. A fact sheet on the rule is available here.

Inpatient Prospective Payment System Proposed Rule Released. On April 18, CMS issued the FY 2023 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital (LTCH) Prospective Payment System  proposed rule. Notably, CMS estimates that, while the rule provides an update of 3.2% to the standardized amount for hospitals meeting quality reporting program requirements, the overall proposed update and other rule changes will decrease IPPS payments to hospitals in FY 2023 by approximately $300 million. Other proposals addressed in the rule include updates to graduate medical education (GME) policies, changes to the quality reporting programs to address COVID-19 and several requests for information that focus on climate change, health equity, and maternal health. Of note, CMS proposes to maintain a policy that supports hospitals in low wage index areas notwithstanding a court decision invalidating the policy that was first implemented in FY 2020.  Our full summary of the proposed rule is available here. Comments on the rule are due on June 17.

HHS Releases New Data on Ownership Changes and Mergers. On April 20, HHS released data on mergers, acquisitions, consolidation, and change of ownership (CHOW) for hospitals and nursing homes enrolled in Medicare from 2016 to 2022. This is the first time this data is publicly available, and HHS intends to update and release the data quarterly. The Hospital CHOW dataset provides information on individual, organizational ownership interest and managerial control associated with the buyer and seller organizations, role of the owner, association date, address of the organizational owner and other ownership details. The SNF CHOW dataset includes information on the buyer and seller organization’s legal business name, provider type, change of ownership type (CHOW, Acquisition/Merger, or Consolidation) and the effective date of the change. HHS’s Office of the Assistant Secretary for Planning and Evaluation also released a report analyzing the new change in ownership data, which is available here. These data are expected to guide policy on provider combinations and the role of private equity investment in SNFs.

Courts

Federally Regulated Transportation Mask Mandates Lifted. On April 18, U.S. District Judge Kathryn Kimball Mizelle of Florida struck down the Biden Administration’s COVID-19 mask directive for planes, trains, and other means of public interstate transportation. Prior to the ruling, the federal transportation mandate had been due to expire on May 3. Most U.S. airlines, many public transit systems, Amtrak and Uber dropped the requirement after the Transportation Security Administration said it would no longer enforce the mandate. The Justice Department announced on April 20, two days later, that it would appeal the ruling. It is not yet known if the government will seek a stay in the case to keep the mandates in place while the appeal is pending.

Medicaid Work Requirements Cases Thrown Out. The Supreme Court on April 18 agreed that the cases disputing Medicaid work requirements in Arkansas and New Hampshire are now moot after the Biden Administration revoked the Medicaid work policies. The Supreme Court instructed the lower courts to vacate the prior rulings. As background, requests by several states to impose work requirements as a condition for certain Medicaid eligibility were approved under the Trump Administration. Generally, these waivers allowed states to require beneficiaries to work, go to school, or volunteer in their communities to remain eligible for safety-net insurance coverage. After a series of legal challenges, a federal appeals court unanimously ruled against Arkansas’ Medicaid work requirements. The US Supreme Court agreed in late 2020 to hear an appeal made by the Trump Administration to review the Arkansas case, joined by the New Hampshire case. The Biden Administration then revoked the waivers in Arkansas, New Hampshire and other states with approved waivers, thereby leading to the Supreme Court’s recent decision that the cases are now moot.

Quick Hits

• On April 15, CMS opened the Federal Independent Dispute Resolution (IDR) process, established in the surprise billing rules, for providers, facilities, health plans and issuers to resolve payment disputes for out-of-network charges. 

• On April 14, the U.S. Food and Drug Administration released draft guidance, “Diversity Plans to Improve Enrollment of Participants from Underrepresented Racial and Ethnic Populations in Clinical Trials,”  for expanding racial and ethnic diversity in clinical trials.

• The Energy & Commerce Health Subcommittee announced that they will host a hearing on Wednesday, April 27 on “The Fiscal Year 2023 HHS Budget” with HHS Secretary Becerra.

• CMS will host a listening session on April 26 featuring representatives from patient and provider advocacy groups and research experts on “Strengthening Equitable Access to Advanced Primary Care.” Register here.

• CMS will host a National Stakeholder Call with the CMS Administrator Chiquita Brooks La-Sure on April 26 to provide updates on the agency’s strategic vision and key accomplishments in the first quarter of 2022. Register here.

• The Senate HELP committee announced that it will hold its second user fee reauthorization hearing with testimony from FDA’s drug, biologics, and device centers on April 26.

• CMS  released on April 20 an action plan to advance health equity and provide high-quality, affordable health care to everyone. The plan outlines actions already taken and those in the pipeline by all CMS Centers and Offices. It also asks health care industry leaders to weigh in and share best practices to address systemic inequities in delivery of care.

• HHS announced on April 19 that it will award the Substance Abuse and Mental Health Services Administration nearly $105 million in grant funding to 54 states and territories in preparation for the National Suicide Prevention Lifeline.

• HHS announced on April 15 that through the Health Resources and Services Administration it will use $226.5 million, provided by the American Rescue Plan, to launch a Community Health Worker Training Program.

• HHS announced on April 13 that it will award HRSA $16 million to support Maternal, Infant, and Early Childhood Home Visiting (MIECHV) Programs through seven awards supporting eight states.

Next Week’s Diagnosis

The House and Senate will return from recess to work on the stalled pandemic-relief package, and all eyes will be on whether Democrats show signs of negotiating a revised reconciliation package with Senator Manchin.