McDermottPlus Check-Up: July 22, 2022 - McDermott+Consulting

McDermottPlus Check-Up: July 22, 2022

This Week’s Dose

A potential reconciliation package came into focus following last week’s announcement by Senator Joe Manchin (D-WV) that he would only accept a narrow deal that exclusively focused on Medicare prescription drug pricing negotiation and a two-year extension of the Marketplace advanced premium tax credits (APTC). Democratic leaders, including President Biden, have signaled support for a pared-down reconciliation package. However, a final agreement may not make it to the Senate floor until the first week of August, and details—including the length of the Affordable Care Act APTC extension and any additional health policy inclusions—are still in flux. Outside the healthcare space, the Senate voted to advance the CHIPS for America Act, a bill designed to boost US semiconductor competition with China through subsidies and tax credits, after the conference on the broader USICA/COMPETES Act legislation floundered. In addition, while COVID-19 has moved out of the spotlight, the virus continues to spread, with President Biden recently testing positive.


House Passes FY 2023 Minibus Appropriations Package. The House passed a six-bill funding package, approving more than $400 billion in government spending in advance of the August recess. The package passed 220–207 in a closely partisan vote and included bills for the US Departments of Housing and Urban Development, Transportation, Agriculture, Energy and Veterans Affairs, as well as the US Food and Drug Administration (FDA). The package did not include funding for the US Department of Health and Human Services (HHS), which will be addressed later. The bill provided FDA with $3.6 billion in discretionary funding for fiscal year (FY) 2023, an increase of $341 million over 2022 levels, along with an increase of $64 million for drug and device activities. This includes funds for FDA’s efforts to manage the opioid crisis, increase medical supply chain and drug safety surveillance and oversight, and strengthen in-person inspections of foreign drug manufacturers in India. It also includes a $77 million increase aimed at helping FDA address several food-related oversight issues.

Senate appropriators have yet to publicly release bill text for any of their 12 annual spending bills. It is rumored that Senate bipartisan negotiations have stalled and Senate Appropriations Committee Chair Patrick Leahy (D-VT) is planning to forgo markups and release the upper chamber’s 12 FY 2023 spending bills as soon as the end of July.

Given that the House is in session one more week before the August break, the Senate process is significantly behind schedule, and there are only 11 days when both the House and Senate are in session together prior to the September 30 FY deadline, it appears evident that a continuing resolution will take government into a lame duck session after the election.

House Passes Legislation to Federally Protect Access to Birth Control. On July 21, the House passed the Right to Contraception Act (H.R. 8373), which would federally guarantee access to various birth control measures and protect healthcare providers’ ability to provide them. The bill would protect access to any contraceptive device, including all contraceptive products approved by the FDA, such as intrauterine devices known as IUDs and emergency contraception such as Plan B. The legislation passed 228–195, with votes occurring largely along party lines. Eight Republicans joined all Democrats in supporting the measure, and two Republicans voted present. Several Republican women, including Representatives Mariannette Miller-Meeks (R-IA), Ashley Hinson (R-IA) and Nancy Mace (R-SC), introduced an alternative bill on July 20, which they say would improve access to over-the-counter birth-control pills that have been approved by the FDA without “requiring providers to administer contraceptives despite their moral or religious beliefs.” All three opposed H.R. 8373.


CMS Releases CY 2023 OPPS Proposed Rule. On July 15, CMS released the calendar year (CY) 2023 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Proposed Rule [CMS-1772-P], which includes proposals related to Medicare payment, quality reporting programs and the 340B drug discount program.

For CY 2023, CMS proposes to increase payment rates for the OPPS and ASC Payment System by 2.7%. CMS also proposes to expand the categories of services subject to prior authorization, outlined proposals to ensure continued access to mental health services via telehealth following the end of the COVID-19 public health emergency (PHE), and proposes numerous changes for hospital outpatient departments, including maintenance of the site neutrality process for exempt rural sole community hospitals and quality reporting policies for rural emergency hospitals. In the CY 2023 proposed rule, CMS proposes a payment rate of average sales price (ASP) minus 22.5% for drugs and biologicals acquired through the 340B program. However, CMS notes that it plans to apply a rate of ASP plus 6% to such drugs and biologicals in the final rule for CY 2023 and make a corresponding adjustment to the conversion factor to preserve budget neutrality, in light of the Supreme Court’s recent decision. CMS notes that it did not have time to adjust payment in the proposed rule. CMS also states that it is evaluating how to apply the Supreme Court’s recent decision to prior calendar years, including CY 2020–CY 2022, which were not subject to the Supreme Court decision. This means that CMS is determining whether additional dollars need to be provided back to hospitals that lost reimbursement due to the CY 2018 OPPS rule.

The proposed regulations will be published in the Federal Register on July 26. Comments are due September 13. The press release is available here, and the fact sheet is available here.

HHS Addresses Stakeholders on 988 Mental Health Hotline. On July 16, the new 988 national suicide and crisis hotline was launched, replacing the previous 10-digit national suicide prevention lifeline. The new three-digit number expands the previous hotline services to help callers experiencing a range of mental health emergencies.

On July 18, HHS held a live streaming meeting to share information about the 988 transition. The webinar featured HHS Secretary Xavier Becerra, members of the Substance Abuse and Mental Health Services Administration team and the CEO of Crisis Connections, which operates more than 200 call centers and is based in Seattle. The speakers shared information about the purpose of the 988 hotline, the commitment that has been made by the Biden Administration and the future vision for the hotline. As the 988 hotline continues to operate, HHS will provide more updates on its utilization and any challenges that emerge. As Secretary Becerra and others at HHS have mentioned, implementation is an iterative process, with additional features being considered for the future.

Quick Hits

  • On July 15, the Biden Administration announced the renewal of the COVID-19 PHE for another 90 days. The PHE has been in place nationwide since January 27, 2020. The Biden Administration continues to commit to a 60-day notice before the emergency is declared to end.
  • Through an internal memo, the Biden Administration is elevating the Office of the Assistant Secretary for Preparedness and Response into an independent HHS division named the Administration for Strategic Preparedness and Response that is intended to help the office better coordinate preparedness. This move is seen as responding to frustrations with the Centers for Disease Control and Prevention.
  • The US Department of Homeland Security (DHS) established an Office of Health Security, which will serve as the principal medical, workforce health and safety, and public health authority for DHS. Led by DHS’s chief medical officer, the Office of Health Security will unify DHS’s medical, workforce health and safety, and public health functions under one organization.
  • The CMS Office of Minority Health announced a grant funding opportunity for minority-serving institutions (MSIs) that are investigating or addressing healthcare disparities affecting racial and ethnic minority populations. The funding opportunity provides up to $333,000 to researchers at three eligible MSIs.
  • 181 members of the House sent a letter to the Biden Administration urging penalties for drug manufacturers that restrict drug discounts offered through the 340B program. Currently, 18 drug manufacturers limit 340B discounts dispensed through pharmacies that contract with 340B providers.
  • On July 19, the Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce held a hearing entitled “Roe Reversal: The Impacts of Taking Away the Constitutional Right to an Abortion.” Like previous congressional hearings, lawmakers examined the impact of the Supreme Court’s recent decision overturning the right to abortion and the implications for healthcare access.

Next Week’s Diagnosis

Reconciliation negotiations will continue next week, with more clarity around the contents of the package expected to emerge. The Senate is expected to consider the CHIPS legislation, sending it to the House for swift action before the House leaves after July 29 for its August recess. The House will consider a telehealth extender bill (an amended version of H.R. 4040) on the House floor. Additional work will continue on FY 2023 appropriations and negotiations around the FDA user-fee agreement legislation, which is likely to slip to September. We also anticipate publication of the final surprise medical billing rules, which have garnered significant attention due to ongoing litigation.


For more information, contact Debra Curtis, Madeline Hodge, Kristen O’Brien or Erica Stocker.

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