McDermottPlus Check-Up: December 4, 2020 - McDermott+Consulting

McDermottPlus Check-Up: December 4, 2020

This Week’s Dose

Congress is back in session with a week to reach a government funding deal as lawmakers also continue to push for further coronavirus (COVID-19) relief. The Trump Administration issued key payment rules for physicians, outpatient hospitals and ambulatory surgical centers.


Congress Returned with a Focus on Government Funding. Congress has just over a week to reach a deal to keep the government operating before the current short-term funding measure expires on December 11 along with a number of other time-limited healthcare policies (e.g., funding for community health centers, delaying the Medicaid Disproportionate Share Hospital reductions and funding for other public health programs). There are positive signs that an omnibus government spending package will move forward, though negotiations are fragile. There is little likelihood that lawmakers and the Administration fail to reach a deal and allow the government to shutter. Rather, the more relevant question is how big and how long. Will Congress and the President be able to advance only another short-term agreement, or might they agree to a bill that covers the entire fiscal year? In addition to the government spending package, there are other policies that Congress is actively considering, including COVID-19 relief (more on that below), telehealth, surprise billing, maternal healthcare policies, and Medicare payment policy. There is room for compromise in each of these areas. These policies do not have the same hard deadline, and therefore urgency, as government funding and so could slip to the following week (December 18), or altogether into 2021. Either way, it is a tight timeline for Congress to accomplish all these priorities.

Lawmakers Issued Multiple COVID-19 Relief Proposals. A group of bipartisan Senate and House members released a COVID-19 Emergency Relief Framework costing just over $900 billion, less than the House Democratic proposal of $1.9 trillion, but more than the $519 billion proposal that was being pushed by Senate Majority Leader Mitch McConnell (R-KY). The framework includes funding for testing and vaccine development, the Provider Relief Fund, aid for state, local and tribal governments, and a short-term liability moratorium on COVID-19-related litigation. House Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY) have urged Leader McConnell to use the bipartisan proposal as the starting point for negotiations. Instead, Leader McConnell released an updated targeted relief package, which includes broader liability protections and a short-term extension of unemployment benefits in addition to funding for testing and vaccines. While it is not clear that the bipartisan framework has the support of Republican leadership, it has reignited congressional efforts to get further COVID-19 relief over the finish line.


CMS Finalized Annual Medicare Payment Rules. The calendar year (CY) 2021 Medicare Physician Fee Schedule (PFS) and Quality Payment Program final rule includes a significant payment increase for certain office/outpatient Evaluation and Management services, typically delivered by primary care providers and certain specialties. To offset the increased spending, the rule finalizes an unusually large and controversial budget neutrality adjustment—resulting in a physician conversion factor of $32.4085 for CY 2021, a 10.20% decrease from 2020. This rule also includes changes that make permanent or extend COVID-19 flexibilities. With respect to telehealth, CMS declined to make sweeping permanent changes, but did respond to stakeholder concerns about an abrupt end to current flexibilities by temporarily extending coverage for more than 50 services beyond the end of the public health emergency. Our summary of the PFS rule is available here. Also this week, the Centers for Medicare and Medicaid Services (CMS) released the CY 2021 Medicare Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System final rule, which increases payment rates under the OPPS and the ASC payment systems by 2.4%. Hospitals and ASCs that fail to meet quality reporting program requirements are subject to a 2.0% reduction to the update factor. The rule also finalizes policies that seek to eliminate the site of service barriers for surgical procedures, and continues to address site neutrality reforms and payments under the 340B drug discount program. Our summary of the OPPS rule is available here.

Trump Administration Issued Series of Healthcare Regulations. Before Thanksgiving, the Trump Administration issued four long-awaited rules aimed at reducing drug pricing and reforming outdated fraud and abuse laws. The drug pricing rules — an interim final rule with comment that creates a mandatory, nationwide model that attempts to align payment for Medicare Part B drugs with international prices, and a final rule that excludes rebates on prescription drugs paid by manufacturers to pharmacy benefit managers and Part D plans from safe harbor protection under the Anti-Kickback Statute (AKS) — are significant policy changes and will face opposition from some stakeholders. Both are likely to face legal challenges and their ability to survive has already been called into question. The other two rules modify existing AKS safe harbors and make changes to the physician self-referral (commonly known as Stark) regulations designed to enable value-based care arrangements. For more on the AKS and Stark rules, join us for a virtual discussion at 2:00 PM ET on December 14, 2020.

CMS Proposed Rule Would Let States Privatize ACA Enrollment. The proposed rule would let states leave their Affordable Care Act (ACA) exchanges and allow private agents and brokers to conduct enrollment beginning in 2023. The rule would also codify 2018 guidance giving states wide leeway to tailor their individual marketplaces by relaxing the strict Obama Administration requirements for 1332 waivers. CMS recently approved Georgia’s 1332 waiver that would transition the state from the federal Marketplace and allow individuals to enroll in coverage through private web brokers or directly with insurance companies. Of note, the most recent COVID-19 interim final rule with comment includes provisions to waive the public comment period and notice requirements for 1332 waivers, meaning states wishing to adopt this policy could seek accelerated approval with less formal processes for stakeholder input. The Trump Administration is expected to finalize the rule before leaving office, though the policy is certain to face legal challenges and will likely be reversed by the Biden Administration.


Vaccines on the Way. Department of Health and Human Services (HHS) Secretary Alex Azar announced this week that about 40 million doses of a COVID-19 vaccine will be available in December, following news that Pfizer and Moderna have applied for Emergency Use Authorization for their vaccines from the Food and Drug Administration, and AstraZeneca will do so soon. An expert panel that advises the Centers for Disease Control and Prevention endorsed prioritizing front-line healthcare workers and residents of long-term care facilities for vaccination, and there is broad agreement on this approach, but policies are likely to differ by state, especially as more vaccine doses become available. HHS has said that the first vaccine doses will be provided to states based on population, and individual states will have final say in how they distribute them among their residents.

Quick Hits

  • Representative Cathy McMorris Rodgers (R-WA) was named Ranking Member of the House Energy and Commerce Committee for the 117th Congress, replacing retiring member Greg Walden (R-OR). Representative Frank Pallone (D-NJ) will maintain his position as Chairman of the powerful panel.
  • A bipartisan group of four dozen lawmakers sent a letter calling on congressional leadership to make permanent telehealth flexibilities established during the pandemic.
  • Democratic leadership of the House Ways and Means Committee sent a letter opposing a recent HHS proposal to require the agency to review older regulations or have them automatically expire.
  • CMS released a final rule revamping quality measures reported by Organ Procurement Organizations to boost organ transplant rates.
  • The Center for Medicare and Medicaid Innovation released information on the Geographic Direct Contracting Model, which will test whether a geographic-based approach to value-based care can improve quality of care and reduce costs for Medicare beneficiaries across an entire geographic region. The letter of intent is due December 21, 2020.
  • HHS released a request for information (RFI) soliciting comments on novel approaches and best practices that providers have developed during the pandemic. Comments are due through the Innovation Response Portal by December 24, 2020.
  • HHS issued an RFI seeking input on making COVID-19 regulatory flexibilities permanent or extended beyond the public health emergency. Comments are due in 30 days.
  • A federal appeals court upheld an injunction of the Trump Administration’s public charge rule in some states while multiple lawsuits challenging the policy continue to work their way through the courts.
  • The Medicare Payment Advisory Commission held its December public meeting on December 3 and 4.
  • A group of 501 Healthcare practices across the country sent a letter urging Congress to act to protect value-based care incentives.

M+ Resources

  • CMS finalized the annual Medicare PFS and OPPS rules this week. Our consultants discuss their key takeaways from the rules on the latest episode of the Health Policy Breakroom. Our summaries of the PFS rule and OPPS rule are also available.

Next Week’s Diagnosis

Congress continues to grapple with government funding, COVID-19 relief and other healthcare issues in the final weeks of the 2020 session.


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

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