McDermottPlus Check-Up: February 19, 2021 - McDermott+Consulting

McDermottPlus Check-Up: February 19, 2021

This Week’s Dose

The House Budget Committee meets today to combine provisions approved by other House committees last week into a final coronavirus (COVID-19) relief package for consideration by the full House of Representatives. The Centers for Medicare and Medicaid Services (CMS) took a first step toward reversing Medicaid work requirements. President Joe Biden is expected to name Chiquita Brooks-LaSure as his nominee for CMS Administrator, and named Elizabeth Fowler as his Director of the Center for Medicare and Medicaid Innovation (CMMI).


House Advances COVID-19 Relief Legislation. Last week, House committees approved pieces of the $1.9 trillion dollar COVID-19 relief package that congressional Democrats are preparing to pass through a budget reconciliation process. Although Republicans introduced numerous amendments throughout the committee consideration phase, the proposals advanced along party lines without any Republican-led changes. The House Budget Committee meets today (February 19) to compile each committee’s reconciliation pieces, and the full House of Representatives is expected to vote on the package the week of February 22, at which point the process will move to the Senate. Of note, there were no Medicare provisions in the legislative packaged approved by the House committees of jurisdiction, which means many provider priorities, like sequester and Advance and Accelerated Payment program relief are not included. Providers continue to pursue these and other Medicare changes; these and other policies could still make their way into the final package. The Senate rules require reconciliation bills to only include provisions that directly impact federal spending. Therefore, the Senate could significantly revise the House bill in the coming weeks in order to satisfy this requirement, and there is an opportunity for stakeholders to engage with Congress to push for changes.


Administration Delayed Pharmacy Benefit Manager Rebate Safe Harbor Rule. The final rule, advanced hastily and somewhat surprisingly in the waning days of the Trump Administration, was set to take effect January 1, 2022, but now will be pushed back until January 1, 2023. This delay of effective date is the result of negotiations between the parties stemming from litigation challenging the legality of the rule. The rule would exclude rebates on prescription drugs paid by manufacturers to pharmacy benefit managers (PBMs) and Part D plans from safe harbor protection under the federal Anti-Kickback Statute. The rule also creates a new safe harbor protecting discounts reflected at the point of sale and given to consumers, and creates new safe harbor protection for fixed-fee services arrangements between manufacturers and PBMs. PBM stakeholders expressed concern that this rule would limit their ability to negotiate lower drug prices and lead to increased premiums for Part D beneficiaries. With the additional time prior to implementation, it is likely the Biden Administration will revisit the policies established in the rule. In addition, because the rule was estimated to cost taxpayers $177 billion, repealing it would generate substantial savings to the federal government. Congress may repeal it and use those savings to offset increased spending for other priorities.

CMS Took Action Aimed at Rolling Back Medicaid Work Requirements. Last week, CMS sent letters to 10 states that have implemented, or sought to implement, Medicaid work requirements, saying the agency does not believe work requirements promote Medicaid objectives. The letters say that CMS is considering whether to withdraw the authorities allowing states to implement work requirements, and that CMS is giving states 30 days to submit information that would support leaving the programs in place. Medicaid work requirements have long been championed by conservative policymakers and were embraced by the Trump Administration; however, state plans to implement work requirements have been repeatedly blocked in court, and the Biden Administration is expected to overturn the policy.

CMS Rescinded Trump Administration Plan to Slow Repeal of Medicaid Waivers. Shortly before leaving office, former CMS Administrator Seema Verma sent letters to states asking them to sign on to a plan that would create a nine-month review and appeal process in those states if CMS sought to change or repeal state Medicaid waivers in the future. Many Republican-led states have sought waivers in recent years to implement controversial changes to their Medicaid programs, such as establishing work requirements, which the Biden Administration opposes. In a second letter to states last week, CMS said that the policy limits its ability to rapidly respond to the pandemic and conduct oversight of states’ demonstration programs, and that the agency will not accept plans from states agreeing to Verma’s proposal.

Three-Month Special Enrollment Period Opens. The Biden Administration launched the special enrollment period (SEP) for the federal Affordable Care Act (ACA) exchange from February 15, 2021, through May 15, 2021. Several state-run ACA exchanges had previously established SEPs to allow more flexibility for their citizens during the pandemic. In addition, President Biden announced a $50 million outreach campaign to encourage people to sign up for coverage. Biden made expanding the ACA a centerpiece of his campaign. In addition to the SEP, the COVID-19 relief package currently working its way through the House includes expanded ACA subsides, which would constitute the first major expansion of the law since its passage.

Biden Named Top CMS Posts. Chiquita Brooks-LaSure has been the reported frontrunner for the CMS Administrator post in recent weeks. She led the US Department of Health and Human Services (HHS) agency review team for the Biden transition, and has worked closely in the past with Xavier Becerra, President Biden’s nominee for HHS Secretary, as a health staffer on the House Ways and Means Committee. She also previously served as deputy director for policy at the Center for Consumer Information and Insurance Oversight at CMS, and as director of coverage policy at HHS. With this choice, the Biden Administration is making clear that they are prioritizing someone who has direct experience with HHS, and policymaking on Capitol Hill. In addition, Biden named Elizabeth Fowler as CMMI Director. Fowler previously served as a special assistant on healthcare and economic policy at the National Economic Council during the Obama Administration, as deputy director for policy at the CMS Consumer Information and Insurance Oversight office, and as chief health counsel to former Senate Finance Committee Chairman Max Baucus, where she led the drafting of the ACA. With these appointments, we expect additional development of the policy agenda at CMS and CMMI.

Quick Hits

  • A group of 23 Democratic senators sent a letter to Senate leadership urging them to include a 7.35% increase to Federal Medical Assistance Percentages for Home and Community Based Services in the COVID-19 relief package.
  • The Biden Administration announced a list of HHS staff appointments, including White House liaisons and press personnel.
  • A federal judge temporarily suspended proceedings in a case challenging a Trump Administration rule rolling back protections for transgender patients. The rule was blocked from taking effect by a federal district court in August 2020 while litigation continued. The Biden Administration is expected to reverse the policy.

M+ Resources

  • It was reported that Democrats are considering reviving earmarks in the appropriations process during this Congress. Our consultants discuss what this means and why it matters on the latest episode of the Health Policy Breakroom.

Next Week’s Diagnosis

The House is expected to vote on the COVID-19 relief package. The Senate Health, Education, Labor and Pensions and the Senate Finance committees will hold hearings to consider the nomination of Xavier Becerra to be Secretary of HHS.


For more information, contact Mara McDermottKristen O’BrienKatie Waldo or Emma Zimmerman.

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