McDermottPlus Check-Up: July 31, 2020 - McDermott+Consulting

McDermottPlus Check-Up: July 31, 2020

This Week’s Dose

Senate Republicans released draft text of a coronavirus (COVID-19) relief and stimulus package, and the White House took action aimed at lowering drug prices.


Senate Republicans Released Proposal for Next COVID-19 Relief Bill. The nearly $1 trillion Health; Economic Assistance; Liability Protection; and Schools (HEALS) Act would provide additional funding to boost state COVID-19 testing and prevention efforts, add $25 billion to the Provider Relief Fund, adjust the repayment terms for the Accelerated and Advanced Payment Program, and expand small business loans. The proposal, which was released as multiple bills from various committees (S.4320, S.4318, S.4321, and S.4322 contain health provisions), would also create COVID-19 liability protections for healthcare entities, except in certain cases of gross negligence or willful misconduct. Notably, a few healthcare-related provisions were not included. For example, there is no additional Medicaid funding, such as an increase in the Federal Medical Assistance Percentage, which was included in the House-passed Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act. The HEALS Act is not supported by Democrats and has kicked off negotiations between Republicans, Democrats and the White House as they race to approve a final bill.


White House Issued Executive Orders on Drug Pricing. Late last Friday, President Trump unveiled three executive orders aimed at reducing the cost of prescription drugs. These orders include policies that allow drug importation, require federally qualified health centers to pass on drug discounts for insulin to diabetes patients, and eliminate rebates for health plan sponsors and pharmacy benefit managers if it can be done in a way that does increase federal spending. It is difficult to see how the Administration could achieve this given the Office of the Actuary’s findings that the policy would substantially increase federal spending. The White House also announced, but has yet to publish, an executive order tying the price of prescription drugs to international benchmarks. The Administration indicated this policy would go into effect on August 25, 2020, unless pharmaceutical manufacturers could strike a deal with the White House. A meeting between industry leaders and the Administration initially scheduled for Tuesday of this week was cancelled. As has been the case with numerous Trump Administration actions, it is probable that stakeholders will challenge efforts to implement these orders. Expect the Administration to use these actions as messaging tools ahead of the presidential election.

HHS Released Report on Telehealth Utilization. The issue brief from the Department of Health and Human Services (HHS) examined recent telehealth utilization trends in fee-for-service (FFS) Medicare. The report analyzes claims data from primary care providers and specialists from January 2020, through early June. It found that Medicare FFS in-person visits for primary care fell drastically in mid-March and that in April, nearly half (43.5%) of Medicare primary care visits were telehealth visits. In addition, more than 10.1 million Medicare beneficiaries received a telehealth service between mid-March and early-July, and one-third of telehealth visits relied on the traditional telephone. The issue brief does not speak to which policies to make permanent or extend beyond the end of the COVID-19 public health emergency, but does note several areas where more research would be helpful to further assess the impact and trends related to increased utilization of telehealth. This report may be used by lawmakers as they push for more permanent easing of restrictions around telehealth, an effort that has broad bipartisan support. The Centers for Medicare and Medicaid Services (CMS) will use the report as the agency continues to evaluate which policies to maintain beyond the public health emergency through regulatory action. Numerous bills have been introduced in recent weeks to address the longevity of telehealth flexibilities, and we expect additional changes in the forthcoming Physician Fee Schedule proposed rule.

HHS Released Report on Surprise Billing. The HHS Office of the Assistant Secretary for Planning and Evaluation released a Report on Addressing Surprise Billing, which provides an overview of the issue and its prevalence, key drivers, federal and state oversight, and recent congressional proposals to address the problem. It notes that surprise billing most often involves a facility’s “ancillary” providers, such as emergency medicine personnel and specialists, and that out of network billing increases when private staffing firms enter the market. The report encourages Congress to enact legislation to protect patients from surprise medical bills but does not specify the approach Congress should take. In response, Senators Michael Bennet (D-CO), Bill Cassidy (R-LA) and Maggie Hassan (D-NH) released a statement saying they are committed to including a surprise billing fix in the next COVID-19 package. There has been significant controversy over the various approaches proposed to settle payment disputes between insurers and providers (e.g., provider payments based on Medicare rates, average network rates, or through arbitration), and action has so far stalled in Congress despite broad bipartisan support for protecting patients from surprise bills. 


Federal Judge Temporarily Blocked Public Charge Rule. A federal district court agreed to temporarily halt a Trump Administration policy, allowing immigration authorities to deny visas or green cards based on a person’s use of Medicaid or other public benefits, for the duration of the COVID-19 public health emergency. The public charge rule has been hotly contested even before the pandemic began. Several federal district courts issued nationwide injunctions against the rule in 2019 before the US Supreme Court ruled in January 2020 to let the policy take effect while litigation continued. In the ruling this week, the judge agreed with the argument of immigrant rights groups that the policy deters immigrants from seeking healthcare, despite clarification from US Citizenship and Immigration Services that immigrants who receive testing or treatment for COVID-19 will not be penalized. In his opinion, US District Judge George Daniels notes the disproportionate effect of COVID-19 on minority communities and that “any policy that deters residents from seeking testing and treatment for COVID-19 increases the risk of infection for such residents and the public.” The Administration is expected to appeal the decision.

Quick Hit

  • The Senate Finance Committee held a two-part hearing on the reliability of the US medical supply chain. The House Select Subcommittee on the Coronavirus Crisis held a hearing on the need for a national plan to contain the pandemic, and the House Energy and Commerce Committee held a legislative hearing on bills to reauthorize various public health programs.
  • Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander (R-TN) introduced the Telehealth Modernization Act to make permanent several of the telehealth services Congress extended during the pandemic, including in-home visits and rural telehealth access.
  • A group of more than 50 congressional Democrats sent a letter urging HHS to allocate a portion of the Provider Relief Fund to community health centers.
  • Representatives Jim Clyburn (D-SC), Mark Green (R-TN) and Bill Foster (D-IL) called on the Government Accountability Office to audit Operation Warp Speed, the Administration’s COVID-19 development effort.
  • CMS released updated data on the impact of COVID-19 on different demographic groups. The new data confirm that Black Medicare beneficiaries have the highest rate of hospitalization for COVID-19, followed by American Indian/Alaskan Native beneficiaries.
  • HHS announced a new initiative, the National COVID-19 Implementation Forum, to provide an opportunity for public/private partnerships to accelerate innovation in COVID-19 testing and to evaluate current testing supply chain issues.
  • Hospital groups will seek a rehearing before a federal appeals court in a case challenging CMS’ decision to cut reimbursement rates for certain off-campus provider-based hospital departments. The appeals court sided with the Administration last week, but the hospitals argue the court failed to properly apply the statutory restrictions that bind the agency.

M+ Resources

  • Our consultants discuss Senate Republicans’ opening bid for the next COVID-19 package on this week’s episode of the Health Policy Breakroom.
  • During the COVID-19 pandemic, litigation impacting a wide range of healthcare issues continues to move through the judicial process. This month’s updates to the McDermottPlus Health Litigation Tracker include significant rulings affecting key components of the Affordable Care Act, as well as the Administration’s public charge rule. Get the Tracker along with all McDermottPlus analysis related to COVID-19 from our COVID-19 Resource Center.

Next Week’s Diagnosis

Negotiations on the next COVID-19 relief package continue. Lawmakers are up against a tight timeline as several relief provisions, including the $600 per week federal unemployment benefit, are set to expire.