McDermottPlus Check-Up: January 8, 2021 - McDermott+Consulting

McDermottPlus Check-Up: January 8, 2021

This Week’s Dose

The 116th Congress came to an end with passage of coronavirus (COVID-19) relief and government funding legislation, and the 117th Congress was sworn in. With victories in two Georgia runoff elections, Democrats will take control of the Senate, giving President-elect Joe Biden unified, albeit extremely narrow control of Congress. The House and Senate certified Biden’s Electoral College victory.


The 117th Congress Convened with Narrow Democratic Control of Both Chambers. Newly elected members were sworn in on January 3, kicking off the 117th Congress. Nancy Pelosi (D-CA) was reelected to her post as Speaker of the House of Representatives with the closest vote in recent history, underscoring the razor thin margin with which Democrats control the chamber. In Georgia, Democratic candidates for Senate Raphael Warnock and Jon Ossoff narrowly defeated Republican incumbents Kelly Loeffler and David Perdue, giving Democrats control of the Senate (a 50/50 split with Vice President-elect Kamala Harris available to break ties) for the first time since 2015. The Democratic victory and assumption of control of the Senate creates a path for President-elect Biden to pursue more ambitious healthcare policy than would otherwise have been possible, though the extremely narrow margin means that far-reaching ambitions will still be difficult. Recall that most legislation requires 60 votes to overcome the filibuster in the Senate, and Democrats may be unlikely to abolish the filibuster with such a narrow majority. Some policies can be passed using budget reconciliation (a process that requires only a simple majority), but reconciliation is available only for those policies with direct financial/budget implications. Expanding Affordable Care Act subsidies would fit; creating a public option might have more trouble advancing through reconciliation. Responding to the pandemic remains the number one priority for the President-elect and 117th Congress, and we expect further relief efforts to dominate the early days of the session.

The 116th Congress Ended with Passage of COVID-19 Relief and FY 2021 Funding. On December 21, 2020, after months of debate and discussion, Congress passed a $900 billion COVID-19 relief package that was attached to the $1.4 trillion Consolidated Appropriations Act of 2021 (H.R 133). H.R. 133 funds the government through the end of fiscal year 2021 (September 30, 2021); the COVID-19 provisions deliver additional aid to businesses, provide a $300 per week increase in unemployment insurance benefits, and direct $600 stimulus payments to certain Americans. The bill also provides targeted relief for healthcare providers and further funds vaccine and testing distribution. Additionally, the massive bill served as a vehicle for dozens of non-COVID-19-related healthcare provisions, including extension of Medicare, Medicaid and public health programs, and provisions barring surprise billing and establishing new transparency requirements. Our summary of the major federal healthcare program provisions in these packages is available here.


Hospital Price Transparency Rule Takes Effect. The final rule requiring hospitals to post certain pricing information online, including rates negotiated with insurers, took effect January 1, 2021. Hospitals had sued to block the policy, but a Federal Appeals Court ruled that it could go forward. In response, hospital groups have urged the incoming Biden Administration not to enforce the policy during the COVID-19 public health emergency, as the healthcare system remains overwhelmed with the pandemic. Hospitals that fail to disclose the required information face a relatively small penalty of $300 per day for noncompliance, which may explain why many hospitals have yet to comply. President-elect Biden is not expected to repeal the rule, but it is unclear how the new Administration will handle enforcement.


Federal District Courts Temporarily Blocked Most Favored Nation (MFN) Rule. A federal judge in California issued a preliminary injunction temporarily blocking the Trump Administration’s rule that would tie Medicare drug prices to lower international drug prices, following a decision by a federal district court in Maryland to issue a temporary restraining order against the rule. Drug manufactures sued the Administration for circumventing the rulemaking process in its development of the MFN regulation, and the courts’ decisions to halt the policy suggest that the manufactures may ultimately prevail. The rule is now indefinitely delayed as litigation continues, likely leaving it to the incoming Biden Administration to decide how to approach the policy. Though President-elect Biden has emphasized the need to lower drug costs, he has not endorsed the MFN approach.

Quick Hits

  • Democratic leadership of the House and Senate healthcare committee sent a letter to the Department of Health and Human Services (HHS) and the Treasury Department urging the Administration to withdraw a proposal that would allow states to turn their individual insurance markets over to private agents and brokers.
  • HHS Secretary Alex Azar extended the COVID-19 public health emergency on January 7 for an additional 90 days. The incoming Biden Administration is expected to continue renewing the order well into 2021.
  • The Centers for Medicare and Medicaid Services (CMS) announced a revised Medicare Physician Conversion Factor (CF) of $34.8931, a 3.3% reduction from the 2020 CF. CMS updated the CF as a result of a provision in the $1.4 trillion H.R. 133 directing Medicare to mitigate cuts to the CY 2021 physician payments.
  • The HHS Office of the General Counsel released an advisory opinion concluding that drug manufacturers are required to deliver 340B discounts for drugs provided through contract pharmacies, after several manufactures announced their plans to stop doing so.
  • The Center for Medicare and Medicaid Innovation extended the application deadline for the Community Transformation track of the Community Health Access and Rural Transformation Model. Application materials must be submitted by March 16, 2021.
  • The Federal Communications Commission (FCC) released a Request for Information seeking feedback on the distribution of the additional funding allocated for the FCC COVID-19 Telehealth Program. Comments are due January 19, 2021.
  • The Treasury Department and Small Business Administration released two new pieces of guidance on the Paycheck Protection Program, which received additional funding as part of H.R. 133. The first consolidates the rules for forgivable loans for first-time borrowers and outlines recent changes, and the second lays out the guidelines for new loans to businesses that previously received one.

M+ Resources

  • Our consultants discuss the disturbing chaos at the Capitol and what Democrats’ win in Georgia means for health policy in 2021 on this week’s episode of the Health Policy Breakroom.

Next Week’s Diagnosis

With the Georgia election settled, the work of the 117th Congress can begin in earnest.


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

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