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May 6, 2024

This Week in Health Policy for May 6

This Week (May 6 - 10)

Congress is scheduled to be in session this week.

Last Week (April 29 - May 3)

Health Care Highlights

CMS releases draft guidance for next round of drug price negotiations. On Friday (May 3), the Centers for Medicare and Medicaid Services (CMS) released draft guidance that outlines the parameters for the second round of negotiations under the Inflation Reduction Act's Medicare Drug Price Negotiation Program, which begins in 2025 and will result in Maximum Fair Prices (MPFs) effective for 2027. Click here for a fact sheet. Click here for the draft guidance. Comments are due July 2nd.

HHS issues final rule on DACA marketplace plan eligibility. On Friday (May 3), the Department of Health and Human Services (HHS) published a final rule clarifying that Deferred Action for Childhood Arrivals (DACA) recipients are eligible for marketplace plans and federal subsidies to offset premium costs. Click here for press release. Click here for final rule.

Senate Finance Committee unveils draft bill to address generic drug shortages. On Friday (May 3), the Committee unveiled a bipartisan draft bill that would establish a new program under Medicare designed to improve supply chain resilience through provider payment incentives and establishing new standards for purchasers around transparency, resiliency and reliability. The draft bill also would adjust the generic drug inflation rebate under the Medicaid Drug Rebate Program to mitigate shortages of pharmacy-dispensed generic drugs. Click here for a press release. Click here for a summary. Click here for a Section-by-Section. Click here for the legislative text.

White House announces actions related to Biden's AI EO. On Monday (April 29), the White House announced that federal agencies, including HHS, met the 180-day deadline for finalized guidance, risk assessments and other actions required by the Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence. This included publishing guidance and principles that set guardrails for the responsible and equitable use of AI in administration of public benefits; a final rule clarifying that nondiscrimination requirements in health programs and activities apply to the use of AI; and development of a strategy for ensuring the safety and effectiveness of AI deployed in the health care sector.

Federal Trade Commission challenges patent listings. On Tuesday (April 30), the Federal Trade Commission (FTC) announced it sent warning letters to 10 companies and notified the FDA that it disputes the accuracy or relevance of more than 300 Orange Book patient listings across 20 different brand name products. Click here for a press release.

Biden admin extends deadline for comments on private equity and consolidation in health care. On Wednesday (May 1), the Federal Trade Commission, the Department of Justice's (DOJ) Antitrust Division, and HHS announced they have extended the deadline for the public to comment on a tri-agency Request for Information (RFI) examining private-equity and other corporations' increasing control over health care markets. The new deadline is now June 5, 2024. Click here for the press release.

HHS updates IDR process. On Wednesday (May 1), HHS, Labor, and Treasury unveiled a new process for resubmitting disputes under the No Surprises Act's independent dispute resolution (IDR) process that were originally improperly batched or bundled. Click here for the new IDR process.

DOL rescinds Trump-era AHP rule. On Monday (April 29), the Department of Labor (DOL) issued a final rule that fully rescinds a Trump-era rule that would have expanded the types of employers who could create Association Health Plans (AHPs). The Trump-era rule was vacated in court and never implemented. Click here for the press release. Click here for a fact sheet. Click here for the final rule.

FDA issues final rule regulating many laboratory-developed tests as medical devices. On Monday (April 29), the FDA issued a final rule that amends regulations to clarify its authority to regulate laboratory-developed tests (LDTs). The rule will phase out the FDA's general enforcement discretion approach for most LDTs over a four-year period and amends FDA regulations to make explicit that in vitro diagnostic (IVD) products fall under the FDA's purview. The rule takes effect 60 days after publication in the May 6 Federal Register. Click here for the press release. Click here for the final rule.

HHS issues final rules to prevent discrimination. This week, the Biden administration issued two final rules that aim to strengthen nondiscrimination protections in HHS-funded programs and services. The HHS Grants Rule clarifies the prohibition on discrimination on the basis of sex to include sexual orientation and gender identity and applies to services and grants that provide aid to refugees, people without homes and maternal health and community programs. The second rule, Nondiscrimination on the Basis of Disability in Programs or Activities Receiving Federal Financial Assistance, aims to strengthen protections for individuals with disabilities who participate in programs or activities that receive federal financial assistance. Click here for HHS Grants final rule. Click here for the Nondiscrimination on the Basis of Disability final rule.

ICYMI: Health Care Highlights From the Week of April 22-26

CMS finalizes nursing home minimum staffing rule. On April 22, CMS finalized minimum staffing requirements for nursing homes that participate in Medicare and Medicaid. The final rule will require nursing homes to provide a minimum of 3.48 hours per resident day (an increase from the proposed rule), registered nurses (RN) to provide at least 0.55 hours of care per resident per day, and nurse aides to provide at least 2.45 hours of care per resident per day. The rule also requires facilities to have 24/7 onsite RN services. In response to comments, CMS expanded the opportunity for facilities to seek exemptions and will phase-in implementation over three years for most facilities, and over five years for rural facilities. Click here for a fact sheet. Click here for the final rule.

CMS issues Medicaid Access final rule. On April 22, CMS finalized the Ensuring Access to Medicaid Services rule, which includes a provision to require at least 80% of Medicaid payments for personal care, homemaker and home health aide services be spent on direct care worker compensation, as opposed to administrative costs. In response to comments, CMS finalized an exemption process for small providers and those experiencing hardships and adjusted the costs included in the 80% calculation. The rule also includes new transparency requirements related to Medicaid payment rates for states. Click here for a fact sheet. Click here for an implementation timeline. Click here for the final rule.

CMS issues Medicaid Managed Care final rule. On April 22, CMS finalized the Medicaid and Children's Health Insurance Program (CHIP) Managed Care Access, Finance, and Quality rule, which establishes maximum appointment wait time standards of 15 business days for routine primary care and obstetric/gynecological services and 10 business days for outpatient mental health and substance use disorder services. The rule also includes new transparency requirements around state directed payments and states' managed care quality strategies. Click here for a fact sheet. Click here for an implementation timeline. Click here for the final rule.

HHS issues HIPAA reproductive healthcare privacy final rule. On April 22, HHS' Office for Civil Rights (OCR) issued a final rule prohibiting entities regulated by the HIPAA Privacy Rule from using or disclosing protected health information to investigate or prosecute patients, providers or others involved in providing legal reproductive health services. The rule requires health care providers, health plans, clearinghouses, or their business associates, to obtain a signed attestation that certain requests for PHI potentially related to reproductive health care are not for those prohibited purposes and requires those entities to modify their notice of privacy practices to support reproductive health care privacy. Click here for a press release. Click here for the final rule.

FTC issues final rule banning noncompete agreements. On April 23, the FTC finalized a rule that largely bans new noncompete agreements and makes existing noncompete agreements unenforceable for most workers. Under the rule, employers can still enforce existing noncompetes for senior executives but will no longer be able to issue new noncompete agreements. While the rule does not apply to non-profit organizations, the FTC has indicated it reserves the right to question the non-profit status of entities in its enforcement. The rule is set to take effect 120 days after publication but is already facing lawsuits. FTC will host a webinar on the rule on May 14 at 11am ET. Click here for a press release. Click here for a factsheet. Click here for the final rule.

FTC issues final Health Breach Notification rule. On April 26, the FTC finalized changes to the Health Breach Notification Rule, which will require vendors of personal health records and related entities that are not covered by HIPAA to notify individuals, the FTC, and in some cases the media, if unsecured personally identifiable health data is breached. Under the rule, third-party service providers to vendors of personal health records and related entities will need to inform those vendors or entities if a breach occurs. Click here for a release. Click here for the press release. Click here for the final rule.

HHS issues final rule on nondiscrimination protections. On April 26, HHS OCR and CMS issued a final rule under Section 1557 of the Affordable Care Act that restores and strengthens protections against discrimination on the basis of race, color, national origin, sex, age, and disability. The rule reverses Trump-era changes that narrowed Section 1557 nondiscrimination provision and apples nondiscrimination principles to clinical decision support tools, AI, and other decision support tools that impact patient care. Click here for the final rule.

Hearings, Markups, and Other Committee Activity

Senate Committee on Health, Education, Labor, and Pensions (HELP) held a hearing on "What Can Congress Do to Address the Severe Shortage of Minority Health Care Professionals and the Maternal Health Crisis?" On Thursday (May 2), the Committee held a hearing during which lawmakers heard testimony from a panel including Sen. Laphonza Butler (D-CA) and Rep. Michael Burgess (R-TX) and a panel featuring representatives of health care providers. During the hearing, lawmakers discussed ways to improve the pipeline of minority health care workers, as well as the role community health centers play in improving maternal health outcomes.

  • More information available here.

House Energy & Commerce Oversight and Investigations Subcommittee and the Senate Finance Committee held hearings on "the Change Healthcare Cyberattack." On Wednesday (May 1), the Committees held separate hearings on the February Change Healthcare Cyberattack during which members heard testimony from UnitedHealth Group CEO Andrew Witty. During his testimony, Mr. Witty explained that hackers entered a server that did not have multifactor authentication and unleashed a ransomware attack that encrypted and froze parts of Change Healthcare's system. Mr. Witty said they are still working to understand how many people may be impacted and what data was accessed. During the hearing, Mr. Witty fielded questions from members of both committees on a range of topics, including the company's cybersecurity policy, claims payments, financial assistance, as well as prior authorization practices, the accuracy of plan provider directories and more.

  • More information on House Energy & Commerce Subcommittee hearing available here.
  • More information on the Senate Finance Committee hearing available here.

House Energy & Commerce Health Subcommittee held a hearing on "Legislative Proposals to Increase Medicaid Access And Improve Program Integrity." On Tuesday (April 30), the Subcommittee discussed 19 legislative proposals focused on the Medicaid program and ensuring beneficiaries' access to services. During the hearing, members heard testimony from Deputy Administrator and Director of the Center for Medicaid and CHIP Services Daniel Tsai who spoke about the balance of ensuring fiscal responsibility while maintaining beneficiaries' access to quality care. During the hearing, Democrats largely spoke in favor of CMS' recently released nurse staffing rule and the Medicaid Access rule's new 80% threshold for direct care compensation, while Republicans spoke critically of those proposals and were supportive of bills to bar CMS from implementing those rules.

  • More information available here.

Senate Armed Services Subcommittee on Personnel held a hearing on "the Department of Defense's Efforts to Ensure Servicemembers' Access to Safe, High-Quality Pharmaceuticals." On Tuesday (April 30), the Subcommittee held a hearing during which they heard from two panels; one of representatives from the DOD, US Army Medical Research and Development Command, and Defense Logistics Agency, and another representing academics, the Congressional Research Service, and supply chain solutions. Discussion at the hearing largely focused on ways to reduce the DOD's reliance on China-based manufacturing and materials and ways DOD could help mitigate drug shortages.

  • More information available here.

House Oversight and Accountability Select Subcommittee on the Coronavirus Pandemic held a hearing with "the President of EcoHealth Alliance, Dr. Peter Daszak." On Wednesday (May 1), the Select Subcommittee held a hearing during which they heard testimony from Dr. Peter Daszak, president of EcoHealth Alliance, on the organization's work with the Wuhan Institute of Virology to study bat coronaviruses. The hearing followed the release of report by the Subcommittee's majority on EcoHealth's research activities.

  • More information available here.

Reports, Studies, and Journals

CMS Office of Minority Health: Disparities in Health Care in Medicare Advantage by Race, Ethnicity, and Sex Report. The report provides a summary of the quality of health care received by Medicare Advantage enrollees, highlighting differences in patient experience and clinical care quality based on race, ethnicity, and sex in 2023.

HHS: Plan for Promoting Responsible Use of Artificial Intelligence in Automated and Algorithmic Systems by State, Local, Tribal, and Territorial Governments in Public Benefit Administration. The report providers additional detail the safe and responsible use of AI for states, tribes and localities when administering public benefits, provides information about existing guidance related to AI-enabled systems, and details topics for which HHS is considering additional guidance.

Government Accountability Office: COVID-19 Vaccination Data Access and Strategies Used to Improve Immunization Rates. The report finds that certain Medicaid programs used patient-level data to increase COVID-19 vaccination rates, making use of incentives and conducting targeted outreach.

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Contact Information

For additional information concerning this Alert, please contact:

Washington Council Ernst & Young