McDermottPlus Check-Up: July 7, 2023 - McDermott+Consulting

McDermottPlus Check-Up: July 7, 2023


The House and Senate are in recess and will return next week to resume healthcare activity. The Senate Health, Education, Labor and Pensions (HELP) Committee is seeking feedback on a staff-level bipartisan discussion draft to reauthorize the Pandemic and All-Hazards Preparedness Act (PAHPA). On the regulatory front, the final information blocking penalty rule for developers and information exchanges and networks was published. The Centers for Medicare & Medicaid Services (CMS) also released proposed rules on short-term limited-duration insurance (STLDI) plans, the Home Health Prospective Payment System (PPS) and the End-Stage Renal Disease (ESRD) PPS. Additional proposed rules are expected imminently on the Medicare Physician Fee Schedule, 340B remedies, and the Hospital Outpatient PPS.


House and Senate Ramp Up PAHPA Reauthorization Efforts. On July 3, the Senate HELP Committee released, and is seeking feedback on, a bipartisan discussion draft to reauthorize PAHPA. PAHPA’s current authorization is set to expire on September 30 without congressional action, and reauthorization efforts are underway in both the HELP Committee and the House Energy and Commerce Committee.

Outside of the bipartisan HELP Committee agreement, Chairman Sanders’s (I-VT) staff is requesting feedback on a proposed policy to require that all products supported by the Biomedical Advanced Research and Development Authority and the Centers for Disease Control and Prevention be sold to the federal government or in the US commercial market at the lowest price among G7 countries (Canada, France, Germany, Italy, Japan and the United Kingdom). Additionally, Ranking Member Cassidy’s (R-LA) staff is requesting feedback on a proposed policy to incentivize the development of more medical countermeasures by extending the Priority Review Voucher program through the duration of PAHPA; providing a new, non-transferrable priority review voucher to companies that develop new medical countermeasures on top of the transferrable voucher they currently receive; and including threats to the US Armed Forces as items eligible for funding.

To be considered, comments must be submitted to by July 10 at 10:00 am EDT.

While the HELP Committee continues consideration of its draft bill, the House Energy and Commerce Health Subcommittee is planning to mark up its PAHPA reauthorization legislation on July 13. The Republican majority is moving forward as they continue to resist committee Democrats’ push for the inclusion of drug shortage provisions.


Administration Releases Proposed Rules on STLDI Plans. On July 7, CMS, along with the Departments of Treasury and Labor, released a notice of proposed rulemaking (NPRM) on STLDI and fixed indemnity insurance. The NPRM would change the definition of STLDI and update conditions for certain fixed indemnity insurance to be considered an excepted benefit.

On STLDI plans, the proposed rule would limit the length of the initial contract period to no more than three months and the maximum coverage period to no more than four months, reversing a 2018 rule in which the coverage period was extended to no longer than 12 months and maximum duration of 36 months. Additionally, the NPRM prohibits the practice of “stacking” where the same issuer issues multiple STLDI policies to the same policyholder within a 12-month period. And, the rule updates the consumer notice requirements on plan documents and marketing materials.  The NPRM reinforces that STLDI plans are generally not considered group coverage or employer-sponsored coverage that must comply with the federal consumer protections and requirements for comprehensive coverage in the group market.

The NPRM on fixed indemnity excepted benefits prohibits fixed indemnity excepted benefits coverage in the individual market from paying benefits on a per-service basis, in order to limit the practice among certain issuers of designing complex, fee-for-service-style fixed indemnity plans that resemble comprehensive coverage. The NPRM also creates additional payment standards for fixed indemnity excepted benefits coverage in both the individual and group market by requiring hospital indemnity or other fixed indemnity insurance to pay benefits without regard to services or items received, actual or estimated amount of expenses incurred, the severity of the illness or injury, or other characteristics particular to a course of treatment and not on any other basis (such as a per-item or per-service basis).  It also treats the benefits from fixed indemnity products as taxable income.

Also included in the NPRM are requests for comments on specified disease excepted benefits coverage and level-funded plan arrangements. Additional details are included in a CMS fact sheet. Comments are due September 11.

Administration Releases New Set of FAQs on NSA. On July 7, the Departments of Labor, Treasury, and Health and Human Services (HHS) released a set of frequently asked questions (FAQs) related to surprise billing under the No Surprises Act (NSA). The new FAQs are fairly technical in nature and try to address issues with facility fees and potentially conflicting requirements under the NSA and previous limitations on cost-sharing under the Affordable Care Act (ACA section 1302(c)(1) (sometimes called the maximum out-of-pocket limit or MOOP limit). The Departments state they are monitoring the potential implications of facility fees and that facility fees must be included as part of the good faith estimate to uninsured/self-pay individuals as well as the price comparisons required by the Transparency in Coverage (TiC) Final Rules that require plans and issuers to make information available to participants, beneficiaries, and enrollees. The new FAQs also clarify that, in general, there should be consistency in how cost-sharing is applied to consumers. Cost-sharing by non-participating providers under the NSA is also considered cost-sharing for purposes of the MOOP limit and in-network status should also be treated the same.

Relatedly, HHS, through the Assistant Secretary for Planning and Evaluation (ASPE), issued the first in a series of reports to Congress on the impact of the No Surprises Act. The report creates a framework to review the law’s impact on surprise billing, health care costs, and consolidation that will be used in future reports evaluating the impact of the law.

HHS OIG Releases Long-Awaited Information Blocking Penalty Final Rule. On June 27, the HHS Office of Inspector General (OIG) posted its final rule implementing information blocking penalties. Per the statutory penalties created by the 21st Century Cures Act, if OIG determines that an individual or entity has committed information blocking, that individual or entity may be subject to a penalty of up to $1 million per violation.

To prioritize allegations and allot resources, OIG will consider cases for investigation that have the following characteristics:

  • Resulted in, are causing, or had the potential to cause patient harm
  • Significantly impacted a provider’s ability to deliver patient care
  • Were of long duration
  • Caused financial loss to federal healthcare programs or other government or private entities
  • Were performed with actual knowledge.

The OIG press release can be found here. The rule applies to health IT developers of certified health IT, entities offering certified health IT, health information exchanges and health information networks. Stakeholders are still awaiting a proposed rule outlining “disincentives” for providers that engage in information blocking.

CMS Releases ESRD PPS Proposed Rule. On June 26, CMS released the Calendar Year (CY) 2024 ESRD PPS proposed rule. CMS proposed an ESRD PPS base payment rate of $269.99 (an increase of $4.42 from the final CY 2023 base payment rate of $265.57). The proposed rule also includes a proposed payment adjustment that would increase payment for certain new renal dialysis drugs and biological products after the Transitional Drug Add-on Payment Adjustment period ends.

The proposed rule also would require reporting of “time on machine” data (the amount of time that a beneficiary spends receiving an in-center hemodialysis treatment) and reporting of discarded and unused amounts of certain renal dialysis drugs and biological products from single-dose containers and single-use packages on ESRD PPS claims. The rule proposes a transitional add-on pediatric ESRD dialysis payment adjustment for CYs 2024, 2025 and 2026, intended to promote equitable and accurate payments. Finally, the proposed rule includes requests for information to inform potential future rulemaking regarding updates to the Low-Volume Payment Adjustment methodology and the possible creation of a new payment adjustment that would increase payment to geographically isolated ESRD facilities.

Comments on the proposed rule must be submitted by August 25. The CMS fact sheet can be found here.

CMS Issues Revised Medicare Drug Price Negotiation Guidance. On June 30, CMS released updated guidance on the implementation of the Medicare Drug Pricing Negotiation Program, as required under the Inflation Reduction Act. Key changes include clarification of how CMS will identify selected drugs, revision and clarification of the process applicable for participating drug companies, clarification of how CMS will consider the negotiation factors, clarification of how CMS will engage in compliance and oversight activities, clarification regarding Part D formulary inclusion for selected drugs, and inclusion of additional opportunities for drug companies and members of the public to engage with CMS during the negotiation process on the selected drugs.

CMS notes in its fact sheet that the agency made changes to the confidentiality process after it received substantial comments, including concerns that the initial guidance might violate the first amendment. After the initial guidance was published in March, drug manufacturers asked to be able to publicly disclose some aspects of the negotiations. Under this revised guidance, CMS clarifies exactly what information will be made public and which entity will be responsible for doing so. The guidance states that CMS will include a narrative explanation as part of the public explanation of the maximum fair prices published starting in March 2025.

CMS will also share additional nonproprietary information that was part of the negotiation process, including information submitted by other interested parties. A drug company may choose to publicly discuss the negotiation process prior to the publication of the explanation of the maximum fair price. However, in those cases, CMS may decide to make early disclosures about the negotiation process as well.

The CMS press release can be found here, the fact sheet can be found here, and the program website can be found here.

CMS Issues CY 2024 Home Health PPS Update Proposed Rule. On June 30, CMS released the CY 2024 Home Health PPS Rate Update proposed rule, which would update Medicare payment policies and rates for home health agencies. This rule proposes routine, statutorily required updates to the home health payment rates for CY 2024. The proposed home health payment update percentage is a 2.7% increase (approximately $460 million). CMS estimates that Medicare payments to home health agencies in CY 2024 would decrease in the aggregate by 2.2%, or $375 million compared to CY 2023, based on the proposed policies. The CMS press release can be found here.


  • The Consumer Financial Protection Bureau, the Treasury Department and HHS issued a request for information (RFI) related to medical credit cards, loans, and other financial products used to pay for healthcare. The agencies would like to understand the prevalence, nature, and impact of these products, including disparities across different demographic groups. The agencies also seek comment on policy options to address practices by healthcare providers, health insurance issuers, employer-sponsored health plans, and financial companies that result in consumers paying excess costs. Comments are due 60 days from when the RFI is published in the Federal Register.
  • HHS released a new report projecting that nearly 18.7 million seniors will save approximately $400 per year on prescription drug costs when the $2,000 out-of-pocket prescription drug spending cap from the Inflation Reduction Act goes into effect in 2025. Among this population, the report finds nearly 1.9 million enrollees are projected to save at least $1,000 in 2025. Once all of the provisions modeled in this report are in effect in 2025, they collectively will result in about a $7.4 billion reduction in annual out-of-pocket spending.
  • The US Food and Drug Administration (FDA) converted Leqembi, indicated to treat adult patients with Alzheimer’s Disease, to traditional approval following a determination that a confirmatory trial verified clinical benefit. Leqembi is the first amyloid beta-directed antibody to be converted from an accelerated approval to a traditional approval for the treatment of Alzheimer’s disease.
  • HHS announced that South Dakota expanded Medicaid, bringing health coverage to more than 52,000 state residents, including many members of South Dakota Tribes. As of July 1, thousands of South Dakotans who applied for coverage in June began to receive full Medicaid benefits, including access to primary, preventive and emergency care, as well as substance abuse treatment and prescription drug benefits. In implementing its Medicaid expansion, South Dakota is able to offer all adults aged 19 to 64 with incomes under 138% of the federal poverty level ($20,120) comprehensive health coverage through Medicaid.


The House and Senate are both scheduled to be in session next week. Healthcare activity is planned at the committee level, including an expected House Energy and Commerce Health Subcommittee markup of PAHPA legislation. Key payment rules impacting physician and hospital outpatient departments are also expected imminently.

For more information, contact Debra CurtisKristen O’Brien, Priya Rathakrishnan or Erica Stocker.

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