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HHS Releases Select Rules

Others Remain in Limbo

In the days before and after the November elections, the Trump Administration has advanced a number of priority healthcare regulations. Some of these regulations are required by law, such as the annual Medicare payment rules. Others are the result of Executive Orders (EOs) signed by President Trump or reflective of the administration’s efforts to influence healthcare policy prior to the transition of power. Below is a summary of these regulations and where they currently stand in the implementation process. Related links for each policy are also provided in the sidebar. 

Most Favored Nation Model Interim Final Rule

On November 20, 2020, President Trump announced an Interim Final Rule with Comment Period (IFC) implementing a “most favored nation” (MFN) payment model whereby Medicare Part B would test paying internationally-benchmarked prices for the 50 highest-spend drugs and biologicals. The mandatory, seven-year model is scheduled to begin on January 1, 2021 and would phase in MFN prices over four years. Providers would be reimbursed under a two-part payment structure: a drug payment amount (based on the MFN price among 22 countries) and a $148.73 flat, per-dose add-on payment adjusted quarterly. The Centers for Medicare and Medicaid Innovation (CMMI) will administer the model.  

The MFN rule is the outgrowth of an International Pricing Index (IPI) proposed rule first issued in October 2018. A revised rule was sent to the Office of Management and Budget (OMB) for review in June 2019, but was never made public. In July 2020, President Trump signed an Executive Order (EO) entitled, “Lowering Drug Prices by Putting America First,” which broadly directed HHS to implement an MFN model. After failing to reach an alternative agreement with the pharmaceutical industry, President Trump reissued the EO in September 2020. The IFC implementing this EO was formally published in the Federal Register on November 27, 2020.  Learn more about the MFN model.

Removal of Safe Harbor for Prescription Drug Rebates Final Rule (“Rebate Rule”)

On November 20, 2020, President Trump also announced a final rule modifying Anti-Kickback Statute (AKS) safe harbor protections. Known as the “rebate rule,” it intends to prohibit drug manufacturers from extending rebates to pharmacy benefit managers (PBMs) by taking away current AKS safe harbor protections allowing for the rebates and creating new safe harbor protections encouraging health plan sponsors, pharmacies, and PBMs to extend prescription discounts to patients at point-of-sale (i.e. pharmacy counter). The safe harbor changes are scheduled to take effect on January 1, 2022.

HHS scrapped a similar rule in July 2019 over concerns the proposal would increase Medicare beneficiary premiums. In a July 2020 Executive Order (EO), President Trump directed HHS to finalize the rule and confirm “that the action is not projected to increase Federal spending, Medicare beneficiary premiums, or patients’ total out-of-pocket costs.” Secretary Alex Azar issued a personal confirmation that the rule would not violate the EO on November 20, 2020.

Physician Self-Referral Regulations (Stark Law) Final Rules

On November 20, 2020, the Centers for Medicare and Medicaid Services (CMS) and the HHS Office of Inspector General (OIG) released a pair of final rules updating physician self-referral regulations (Stark Law) and the Anti-Kickback Statute (AKS) / Civil Monetary Penalty (CMP) rules. These changes aim to remove regulatory barriers preventing healthcare stakeholders from entering into value-based payment and delivery systems. The CMS final rule creates new, permanent exceptions to the Stark Law for value-based arrangements compliant with new guidance, such as ensuring fair market value for any compensation provided to a physician by another provider. The complementary HHS OIG rule aligns the Stark Law changes by updating AKS safe harbors and CMP rules regarding beneficiary inducements. Both final rules will publish in the Federal Register on December 2, 2020.

In January 2017, CMS Administrator Seema Verma launched the “Patients Over Paperwork” initiative in response to an Executive Order (EO) directing federal agencies to cut overly-burdensome and unnecessary regulations. Subsequently, the agency issued a Request for Information (RFI) in June 2018 seeking input from stakeholders on how to address Stark Law barriers to value-based healthcare payment and delivery systems. Largely unchanged since 1989, CMS published a proposed rule modernizing the regulations in October 2019.

Importation of Prescription Drugs Final Rule

On September 24, 2020, the FDA released the Importation of Prescription Drugs final rule and industry guidance as part of its Safe Importation Action Plan. The final rule implements a provision of federal law that allows states and tribal governments to import certain prescription drugs from Canada. Importation program proposals must be approved by the FDA, which is charged with ensuring program safety and cost savings. On the same day, HHS issued two Requests for Proposal (RFP) regarding individual drug importation programs and insulin reimportation programs. The RFPs aim to carry out a July 24, 2020 Executive Order (EO), which in part, directed FDA to authorize a “personal importation pathway” whereby individuals could seek to import prescription drugs “provided such importation poses no additional risk to public safety and results in lower costs to American patients.”

The July 2020 EO was one of several healthcare-related orders signed by President Trump in an effort to reduce prescription drug costs. The drug importation rule was first proposed in December 2019 alongside the release of the Safe Importation Action Plan.

Interoperability and Patient Access Proposed Rule

On December 10, 2020, CMS issued a proposed rule aimed at improving the electronic exchange of health care data among payers, providers, and patients with a heavy emphasis prior authorization (PA) reform. The rule would require Medicaid, CHIP, and Qualified Health Plans offered on federally-facilitated exchanges to build application programming interfaces (APIs) to support data exchange and electronic PA. More specifically, payers would be required to build and implement APIs that would allow providers to know what documentation is needed by the plan to approve PA. Payers would also be required to make PA decisions within 72 hours for urgent requests and 7 days for standard requests. CMS proposes implementing these changes on January 1, 2023.

The proposed rule includes 5 sets of proposals and 5 requests for information (RFI). The RFIs request stakeholder input on methods for enabling patients and providers to control sharing of health information, reducing burden and improving electronic information exchange of documentation and prior authorization, and accelerating the adoption of standards related to social risk data, among others. The comment period on this proposed rule closes January 4, 2020.

Medicaid Value-Based Purchasing Final Rule

On December 21, 2020, the Centers for Medicare and Medicaid Services (CMS) released a final rule on value-based purchasing (VBP) for drugs covered by the Medicaid program. According to CMS, the final rule supports state flexibility to enter into VBP arrangements with drug manufacturers. Among other changes, the final rule makes modifications to Medicaid’s “best price” policy, which requires drug makers to give Medicaid the lowest net price for drugs offered in the U.S. after factoring in all rebates and discounts. Stakeholders have argued Medicaid’s best price policy discourages manufacturers from negotiating VBP arrangements with payers because they would then have to extend the lowest price under such arrangements to Medicaid, which in some cases could be $0. CMS’ final rule allows drug makers to report multiple “best prices” to Medicaid — freeing them to engage in VBP arrangements with payers and report “bundled sales” prices that would still ensure Medicaid still gets the best price. These changes are effective January 1, 2022.

The final rule also includes a change that would require manufacturers to ensure that the full value of sponsored cost sharing assistance accrues to the patient before excluding such discounts from the best price and average manufacturer price (AMP) calculations. This policy is aimed at beneficiaries enrolled in copay accumulator programs established by pharmacy benefit managers (PBMs), under which some manufacturer cost sharing assistance accrues to the benefit of the plan. CMS noted it would delay the effective date of this requirement until January 1, 2023 “to allow manufacturers to develop mechanisms to obtain the information necessary to know whether the assistance has been in fact passed through to the patient.” The Network agreed with CMS that manufacturer cost sharing assistance should accrue solely to the patient rather than their plan, but also expressed concern that the proposal may unintentionally harm patients by jeopardizing access to cost sharing assistance.

Access to Affordable Life-Saving Medications Final Rule

On July 24, 2020, President Trump signed an Executive Order (EO) to specifically address the cost of insulin and injectable epinephrine for low-income Americans, defined as those at or below 350% of the Federal Poverty Guidelines. The EO requires Federally Qualified Health Centers (FQHCs) to make these drugs available to eligible patients at the discounted price paid under the 340B Drug Discount Program, plus a minimal administration fee. This price would not be available to beneficiaries covered by commercial plans or Federal programs like Medicare and Medicaid.

A final rule implementing the EO was published on December 22, 2020. According to the final rule summary participating 340B entities “must establish practices to provide access to insulin and injectable epinephrine to low-income health center patients at the price the health center purchased these two drug through the 340B Program.”

An America-First Healthcare Plan Executive Order

On September 24, 2020, President Trump signed an Executive Order (EO) broadly outlining his healthcare plan. It included a number of directives to federal agencies centered around three broad pillars: 1) more choice 2) lower costs, and 3) better care for patients. The White House claimed this is the first EO in history to declare it the policy of the federal government to protect individuals with preexisting conditions. The EO sets a 12/31/2020 deadline for Congress to pass surprise billing legislation; failure to do so would trigger an HHS directive to address the issue administratively. President Trump also announced new $200 Medicare prescription drug discount cards concurrently with the signing of this EO. This policy is not detailed in the EO, but the administration has stated it intends to use existing demonstration authority to carry out the program, which would be financed by savings from the most-favored-nation drug pricing policy (see Interim Final Rule mentioned above).

The Trump Administration has not promulgated any specific regulations associated with this EO, though it considers the drug importation and prescription drug policies consistent with the plan. Since the president lost the 2020 election, it is unlikely additional action will be taken to implement the provisions of this EO.

Improving Rural Health and Telehealth Access Executive Order

On August 3, 2020, President Trump signed an Executive Order (EO) that seized on the telehealth flexibilities extended from the COVID-19 public health emergency (PHE) and sought to permanently improve access to care, especially in rural areas. It directed HHS to establish a new Medicare payment model for rural health providers. It also tasked federal agencies with developing and implementing a strategy to improve rural health with physical and communications infrastructure, with particular focus on reducing regulatory burdens, preventing disease and mortality, reducing maternal mortality and morbidity, and improving mental health. Finally, the EO directed HHS to review the temporary telehealth measures enacted and within 60 days propose a regulation for their extension, as appropriate, after the PHE concludes.

The 2021 Physician Fee Schedule (PFS) proposed rule released on August 3 included a number of telehealth proposals pursuant to this EO (many of which were finalized, as discussed above). CMS also announced the Community Health Access and Rural Transformation (CHART) payment model on August 11. This model creates two tracks: the Community Transformation Track provides funding for rural communities to build systems of care and the Accountable Care Organizations (ACO) Transformation Track enables providers to “participate in value-based payment models where they are paid for quality and outcomes, instead of volume.” On October 14, CMS also announced 11 new services added to the Medicare telehealth list, along with supplemental telehealth policy considerations for state Medicaid and CHIP programs.

Ensuring Essential Medicines, Medicinal Countermeasures, and Critical Inputs are Made in the US

On August 6, 2020, President Trump signed an Executive Order (EO) referred to as “Buy American” that included a number of proposals related to securing American supply chains of essential medicines, medical countermeasures, and critical inputs. It included a broad directive to federal agencies to prioritize the procurement of essential medicines, medical countermeasures, and critical inputs produced in the United States, as defined by the FDA. Agencies can get around this new requirement when in the public interest, when commercial quantities or quality are only available abroad, or if procurement costs are projected to increase by more than 25%. The EO also requires HHS to issue a report on vulnerabilities in supply chains and the EPA to streamline regulatory requirements.

In response to this EO, the FDA published its list of essential medicines, countermeasures and critical inputs on October 30, 2020. A press release was issued and a docket was opened for public comment.

340B Administrative Dispute Resolution Final Rule

On December 10, 2020, the Health Resources and Services Administration (HRSA) released a final rule implementing an administrative dispute resolution process for the 340B Drug Pricing Program. The final rule establishes Administrative Dispute Resolution (ADR) Panels comprised of HHS officials which will make “precedential and binding final agency decisions” regarding claims filed by 340B covered entities and pharmaceutical manufacturers. The final rule notes the ADR Panel should be considered a last resort in the event that good-faith efforts to resolve disputes have failed.

Congress first directed HRSA to promulgate a 340B dispute resolution regulation over a decade ago in the Affordable Care Act (ACA). While a notice of proposed rulemaking (NPRM) was published in 2016, this is the first final rule associated with the ACA directive. The final rule is effective January 13, 2021.

2021 Physician Fee Schedule Final Rule

On December 1, 2020, CMS released the 2021 Medicare Physician Fee Schedule (PFS) and Quality Payment Program (QPP) final rule. The policies contained within this rule are scheduled to take effect on or after January 1, 2021. The final rule set the calendar year (CY) 2021 PFS conversion factor at $32.41, a decrease of $3.68 from the 2020 rate. The conversion factor reduction reflects the budget neutrality adjustment required by Medicare law. The bulk of the reduction is attributable to revalued E/M services. Providers billing high volumes of E/M services will largely benefit from this payment change, while providers heavily relying on procedure codes will likely see reimbursement reduction. While The Network encouraged CMS to waive the budget neutrality requirement for 2021, the agency claims it lacks the authority to do so. Thanks to stakeholder advocacy efforts expressing the negative harm to providers posed by these reimbursement cuts, Congress passed legislation on December 21, 2020 to mitigate the severity of the cuts. Rather than a -10.2% reduction to the conversion factor, the legislation passed by Congress will result in a conversion factor closer to -3%.

The PFS final rule adds more than 60 services to the Medicare telehealth list, including 7 service categories on a permanent basis. This includes 2 new E/M add-on codes for visit complexity and prolonged visits. CMS also finalized a new code establishing payment for an extended audio-only or virtual check-in service on an interim final basis. For 2021, providers may bill the newly created code G2252, describing 11-20 minutes of medical discussion to determine if an in-person visit is necessary.

CMS finalized a number of additional policies in the PFS/QPP final rule related to scope of practice, direct supervision, and a newly created Alternative Payment Model (APM) Performance Pathway (APP) reporting option for 2021 – which comes in lieu of a shift to MIPS Value Pathways (MVPs).

2021 Hospital Outpatient Prospective Payment System Final Rule

On December 2, 2020, CMS released the 2021 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgery Centers (ASC) final rule. Among other changes, the final rule will continue to reimburse 340B providers at ASP -22.5 percent for 340B acquired drugs. This decision follows an appellate court decision from July 2020 upholding the reimbursement reduction first implemented by CMS in 2018.

Related Links

Most Favored Nation

Rebate Rule

Physician Self-Referral Regulations

Drug Importation

Interoperability/Prior Authorization

Medicaid Value-Based Purchasing

Insulin/Life-Saving Medications

America-First Healthcare Plan

Rural Health and Telehealth

Buy American

340B Administrative Dispute Resolution

Physician Fee Schedule (PFS)

Hospital Outpatient Prospective Payment System (HOPPS)