McDermottPlus Check-Up: December 11, 2020 - McDermott+Consulting

McDermottPlus Check-Up: December 11, 2020

This Week’s Dose

President-elect Biden announced key healthcare officials, and Congress passed a short-term measure to avert a government shutdown as negotiations continue on a comprehensive funding package. The Food and Drug Administration (FDA) is expected to issue an Emergency Use Authorization for the first coronavirus (COVID-19) vaccine within days.


President-Elect Biden Announced Healthcare Personnel. The President-elect nominated Xavier Becerra, the current Attorney General of California, for Secretary of the US Department of Health and Human Services (HHS). Becerra has been a vocal opponent of the Trump Administration’s healthcare policies, including leading Democratic states in defending the Affordable Care Act (ACA) before the Supreme Court. Becerra previously served 12 terms in the House of Representatives, including as a member of the House Ways and Means Committee. Dr. Vivek Murthy will return to his previous post as Surgeon General. The transition also announced Dr. Rochelle Walensky as Director of the Centers for Disease Control and Prevention (CDC), Dr. Marcella Nunez-Smith as the COVID-19 Equity Task Force Chair, Jeff Zients as Coordinator of the COVID-19 Response and Counselor to the President, and Natalie Quillian as Deputy Coordinator of the COVID-19 Response. Finally, Dr. Anthony Fauci will serve as Chief Medical Adviser on COVID-19 and continue his current role as Director of the National Institute of Allergy and Infectious Diseases. The roles of Administrator of the Centers for Medicare and Medicaid Services (CMS) and Commissioner of FDA have not yet been announced. Several key healthcare positions will require Senate confirmation, a process that may be complicated if Republicans win the runoff elections in Georgia to maintain their majority.


Congress Passed Short-Term Government Funding Measure. The measure pushes the deadline for government funding and expiration of the healthcare extenders to December 18 (originally December 11), giving lawmakers a little more time to reach a comprehensive spending deal. Notably, this one-week extension is paid for through a few offsets, including limiting the dispensing of certain controlled substances to a three-day supply and tapping into the Medicaid Improvement Fund. While work continues on a longer-term funding deal, Congress is still embroiled in negotiations over COVID-19 relief, telehealth, surprise billing, maternal healthcare policies, and Medicare payment policy. Over the weekend, House Speaker Nancy Pelosi (D-CA) suggested that Congress should include a surprise billing fix in the year-end package, but House Ways and Means Committee Chairman Richard Neal (D-MA), who introduced a surprise billing proposal last year, has said he wants to wait for the new Congress to deal with the policy. Negotiations continue on which additional healthcare policies may ultimately ride with the final spending agreement before the end of the year, including further COVID-19 relief.

COVID-19 Relief Prospects Still Uncertain. The bipartisan, bicameral group working on a COVID-19 relief package released an updated outline with additional details on their proposal, following a broad one-page framework that they released last week. The proposal includes $35 billion for the Provider Relief Fund (PRF), with targeted funding for rural providers ($7 billion) and Indian health ($1 billion), as well as the ability for health systems to allocate the targeted PRF distributions within their own systems. The proposal also extends telehealth flexibilities through December 31, 2021. Notably, the outline includes state and local aid and a placeholder for liability protections, which remain some of the major sticking points among Democratic and Republican leadership. Democratic leadership has voiced support for the bipartisan framework, though Senate Majority Leader Mitch McConnell (R-KY) has yet to get on board. Leader McConnell has suggested that lawmakers could speed up negotiations by setting aside the controversial provisions of liability protections and state and local aid, but Democratic leadership rejected the idea. President Trump has also weighed in on the talks, urging Congress to reach a deal that includes another round of direct payments to individuals.


HHS Released 340B ADR Rule. The long-awaited 340B Administrative Dispute Resolution (ADR) Rule, which was required by the ACA, allows 340B covered entities and drug manufacturers to bring claims before an HHS panel (“ADR Panel”) to resolve disputes involving 340B overcharges and duplicate discounts or diversion. Decisions of the ADR Panel will be “final agency decisions,” eligible for judicial appeal. The ADR Panel decisions will also be made public and considered precedential. In general, covered entities and drug manufacturers must bring claims for review by the ADR Panel within three years of the date of the conduct giving rise to the dispute. Consistent with the underlying statutory provisions, drug manufacturers must first conduct a formal audit of a covered entity before bringing a claim to the ADR Panel, while covered entities do not have such a requirement. Both covered entities and drug manufacturers are expected to engage in “good faith” efforts to resolve disputes before bringing them to the ADR Panel.

CMS Announced Acute Hospital Care at Home Waiver Portal. The new waivers build on the Hospitals Without Walls program to provide eligible hospitals with regulatory flexibilities to treat certain patients in their homes. Hospitals will be required to have appropriate screening protocols in place to ensure effective home care is possible, and patients will only be admitted from emergency departments and inpatient hospital beds following an in-person physician evaluation and will be visited regularly by a registered nurse. Hospitals and health systems wishing to participate can submit their information through an online portal. Participants will be required to regularly report quality and safety data to CMS.

FDA Advisory Panel Endorsed First COVID-19 Vaccine. The Vaccines and Related Biological Products Advisory Committee, an expert panel that advises the FDA, voted to approve Pfizer’s COVID-19 vaccine, which has already been approved in the United Kingdom and Canada. Though the Committee’s decisions are non-binding, FDA generally follows its recommendations. With the Committee’s endorsement, FDA is expected to issue an Emergency Use Authorization for the vaccine and begin distributing the first doses within days. Last week, an expert panel that advises the CDC recommended that front-line healthcare workers and residents of long-term care facilities should be prioritized for vaccination, but it remains unclear how doses will be allocated by states and in future allotments. Distribution will also present a challenge as states grapple with how to store and transmit the vaccine and track who has been vaccinated with little federal guidance so far.

Quick Hits

  • Senator Gary Peters (D-MI), Ranking Member of the Senate Homeland Security and Governmental Affairs Committee, sent a letter to HHS and the Department of Defense seeking information on the Administration’s readiness for vaccine distribution.
  • President Trump issued an executive order affirming that Americans will be the first to receive US-developed COVID-19 vaccines before doses are shared with other countries.
  • HHS issued a Notice of Proposed Rulemaking making changes to the Health Insurance Portability and Accountability Act Privacy Rule. The changes are largely aimed at strengthening individuals’ rights to access their own health information and improving the ability of providers and health plans to coordinate care for patients. Public comments will be due 60 days after publication in the Federal Register.
  • CMS issued a proposed rule aimed at streamlining the prior authorization process and improving data sharing. Public comments are due January 4, 2021.
  • The Fall 2020 HHS Rule List, which notes the regulatory actions the Department plans to issue in the near and long term, is available here. Of note, the Medicaid Fiscal Accountability Rule, which would have made significant changes to the way states finance their share of the Medicaid program and was opposed by many stakeholders, has been officially withdrawn.
  • The Supreme Court announced that it will hear a case regarding Medicaid work requirements, a policy that the Trump Administration embraced but which has faced repeated defeats in court. However, the Biden Administration is likely to reverse the policy once in office, potentially rendering the case moot.
  • The Medicaid and CHIP Payment and Access Commission held its December public meeting on December 10 and 11.

M+ Resources

  • Our consultants discuss the status of ongoing government funding and COVID-19 relief negotiations on this week’s episode of the Health Policy Breakroom.
  • On November 20, 2020, HHS announced an interim final rule with comment that will introduce sweeping changes to the way many drugs are reimbursed by Medicare Part B by adopting a system of external reference pricing (ERP) using a “most-favored nation” pricing approach. Here we review ERP proposals in the United States, drug pricing regimes in several other Organization for Economic Cooperation and Development countries, and the implications of implementation of an ERP regime in the United States for global pharmaceutical market entry.
  • During his time in office, President Trump issued several healthcare-related executive orders. We have identified those most likely to be overturned by the incoming Biden Administration here.

Next Week’s Diagnosis

Congress works to reach a deal on a year-end spending and COVID-19 relief package ahead of the December 18 deadline. With vaccine approval imminent, public health officials turn their attention to the logistical challenges of distribution.


For more information, contact Mara McDermottKristen O’BrienRachel StaufferEmma Zimmerman or Katie Waldo.

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