HHS Releases Select Rules, Many 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.

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.

Access to Affordable Life-Saving Medications Proposed 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 proposed rule implementing the EO was published on September 24, 2020. A final rule was received by the Office of Management and Budget (OMB) for review on November 24, 2020. Once the pending OMB review is completed, the final rule will likely be published.

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.

2021 Physician Fee Schedule Final Rule

2021 Hospital Outpatient Prospective Payment System Final Rule