McDermottPlus Check-Up: May 3, 2024 - McDermott+Consulting

McDermottPlus Check-Up: May 3, 2024


  • House Energy & Commerce Health Subcommittee Holds Legislative Hearing on Improving Medicaid Access. Daniel Tsai, deputy administrator and director of the Center for Medicaid and CHIP Services (CMCS), testified. Members discussed 19 legislative proposals to improve Medicaid spending accountability and focused on recent related regulatory activity.
  • UnitedHealth Group CEO Testifies About Change Cyberattack. The Senate Finance Committee and House Energy & Commerce Oversight and Investigations Subcommittee held hearings on the Change Healthcare cyberattack with UnitedHealth Group CEO Andrew Witty.
  • Senate Health, Education, Labor & Pensions Committee Holds Hearing on Minority Healthcare Workforce Shortage, Maternal Health Crisis. Members and experts discussed investments in education and the importance of community health centers.
  • FDA Releases Laboratory Developed Test Final Rule. The US Food and Drug Administration (FDA) issued the final rule and two draft guidances.
  • DOL Issues AHP Final Rule. The final rule from the US Department of Labor (DOL) rescinds the 2018 Association Health Plan (AHP) final rule.
  • HHS Issues Final Rules to Prevent Discrimination. The rules secure protections for LGBTQ+ individuals and people with disabilities.
  • CMS Expands Healthcare Access for DACA Recipients. The Centers for Medicare & Medicaid Services (CMS) finalized a rule allowing Deferred Action for Childhood Arrivals (DACA) recipients to be eligible to enroll in a Qualified Health Plan (QHP) or Basic Health Program (BHP).


House Energy & Commerce Health Subcommittee Holds Legislative Hearing on Improving Medicaid Access and program Integrity. The hearing discussed 19 legislative proposals to ensure Medicaid’s spending is accountable to the neediest beneficiaries, including those that rely on long-term services and supports. Deputy Administrator and CMCS Director Daniel Tsai emphasized the need for CMS to ensure fiscal responsibility while maintaining access and quality care for Medicaid beneficiaries. Democrats generally supported the recently released nursing staffing ratio rule for long-term care facilities and the Medicaid Access rule’s requirement that states ensure that home- and community-based services providers spend at least 80% percent of Medicaid payments they receive for personal care, homemaker and home health aide services on compensation. In contrast, Republicans voiced support for H.R. 7513 and H.R. 8114 (no bill text yet), which would prohibit implementation of both recent rules. Bipartisan support was expressed for the following bills:

  • H.R. 8106, which aims to improve transparency and remove the requirement that an individual must need an institutional level of care to qualify for home- and community-based services under a Medicaid waiver.
  • H.R. 8111, which would provide for a process to regularly obtain address information for individuals enrolled in a Medicaid plan from reliable data sources and would require managed care entities to provide the state with address information on enrollees in their plan.
  • H.R. 8109, which would make permanent the Money Follows the Person demonstration that supports states’ strategies to rebalance their long-term care services and supports systems from institutional to community-based care.

For more information about all of the legislative proposals discussed, read the hearing memo here.

UnitedHealth Group CEO Testifies About Change Cyberattack. UnitedHealth Group CEO Andrew Witty appeared at hearings on both sides of the Capitol on May 1 as Congress sought continued insight into the Change cyberattack, which broadly impacted the health sector.

At the Senate Finance Committee hearing, there was bipartisan concern about several issues:

  • The size of UnitedHealth Group and the broader impact of consolidation in the health sector.
  • How UnitedHealth Group failed “cyber security 101,” since the breach occurred because of a failure to enforce two-factor authentication.
  • The impact of protected health information data breaches on national security.
  • UnitedHealth Group’s delay in notifying affected patients.
  • The financial strain on providers and how UnitedHealth Group is working with them to make them whole after this incident.

Senators called for minimum healthcare cybersecurity standards and discussed implementation of best practices.

Witty then appeared at a House Energy & Commerce Oversight and Investigations Subcommittee hearing, where members highlighted their concerns with the cyberattack’s impact on small provider practices, pharmacies and patient access to care. Much of the hearing focused on the negative impacts of UnitedHealth Group’s vertical integration, which members asserted leads to increased costs, reduced quality of care and single points of failure. Members also spoke about a national cybersecurity standard and called on private companies to implement best practices in this arena.

Senate Health, Education, Labor & Pensions Committee Holds Hearing on Minority Healthcare Workforce Shortage and Maternal Health Crisis. In the hearing, senators explored solutions to improve the pipeline of minority healthcare workers, including investing in K-12 education, community college, medical schools, and historically black colleges and universities. There was bipartisan support for removing financial barriers for students of color and investing in science, technology, engineering and mathematics education. Senators and witnesses also spoke about the important role of community health centers in improving maternal health outcomes.


FDA Releases Laboratory Developed Test Final Rule. The final rule amends FDA regulations to make explicit that in vitro diagnostic (IVD) products are devices under the Federal Food, Drug, and Cosmetic Act, including when the manufacturer of the IVD is a laboratory. This is significant because the FDA has historically exercised enforcement discretion with respect to most of these tests and has not required the laboratories offering these tests to comply with FDA regulatory requirements for medical devices. The final rule makes clear that FDA will phase out its current general enforcement discretion approach for laboratory developed tests over the course of four years. In a change from the proposed rule, the agency substantially expanded its list of tests that will be eligible for some form of “grandfathering” (i.e., continued enforcement discretion).

In addition to the final rule, FDA issued two draft guidances. The first provides the agency’s perspective on an enforcement discretion policy for certain laboratories offering certain unauthorized IVDs for immediate response to an emergent situation, such as an outbreak of an infectious disease, in the absence of a public health emergency declaration applicable to IVDs. The second provides the FDA’s perspective on the factors it intends to consider when developing a policy regarding enforcement discretion for certain IVDs during a public health emergency.

The FDA will host a webinar on the final rule on May 14, 2024, and a press release can be found here. Read more details in our +Insight.

DOL Issues AHP Final Rule. The AHP final rule officially rescinds the 2018 AHP rule, which broadened the types of employer groups and associations that could sponsor a single group health plan under the Employee Retirement Income Security Act. Because of court rulings, the 2018 rule was never fully implemented. The DOL now believes that the 2018 rule provisions could result in higher out-of-pocket costs and decreased access to care since an AHP in the large group market is not mandated to offer essential health benefits. DOL does not believe any entities rely upon the 2018 rule, so this rescission will maintain the status quo. The new AHP rule will be effective on June 29, 2024.

HHS Issues Final Rules to Prevent Discrimination. Through the Office for Civil Rights and the Assistant Secretary for Financial Resources, the US Department of Health and Human Services (HHS) released two final rules to affirm nondiscrimination in HHS-funded programs and services. The first protects LGBTQ+ individuals by clarifying the prohibition on discrimination on the basis of sex to include sexual orientation and gender identity. The second strengthens protections for people with disabilities in programs or activities receiving federal financial assistance by addressing medical discrimination, adding enforceable standards for accessible medical diagnostics and ensuring accessible web content. A fact sheet for the second rule can be found here.

CMS Expands Healthcare Access for DACA Recipients. CMS released a final rule that ensures DACA recipients’ eligibility to enroll in a QHP through the Affordable Care Act Health Insurance Marketplace, or for coverage through a BHP. According to CMS’ estimates, the rule could lead to 100,000 previously uninsured DACA recipients enrolling in health coverage through Marketplaces or BHP. Read the press release here.


  • CMS Holds National Stakeholder Call. Leaders discussed prescription drug affordability, nursing home staffing requirements, Medicaid and Medicaid managed care eligibility and enrollment policies, and new alternative payment models – the Accountable Care Organization Primary Care Flex Model and the Transforming Episode Accountability Model. A review of the call will be posted here soon.
  • FTC Challenges Validity of Pharmaceutical Patent Listings. The Federal Trade Commission (FTC) sent warning letters to 10 drugmakers, alleging more than 300 improperly listed patents that have been used to delay generic competition. The letters targeted medications used to treat diabetes, weight loss, asthma and chronic obstructive pulmonary disease.
  • CMS Announces New IDR Resubmission Process. CMS intends to streamline the new No Surprises Act independent dispute resolution (IDR) process for resubmitting disputes that were originally determined to be improperly batched or bundled. The new web form user guide can be found here.
  • HRSA Invests $105 M to Improve Maternal and Infant Health. The Health Resources and Services Administration (HRSA) funding will support more than 100 community-based organizations to support healthcare and social needs for moms and babies in high-need communities. HRSA is part of HHS. The press release can be found here.
  • HHS Announces Plan for Promoting Responsible Use of AI. The plan provides recommendations for use of artificial intelligence (AI) in state, local, tribal and territorial governments.
  • GAO Announces MACPAC Appointments. The US Government Accountability Office (GAO) appointed two new members and reappointed four current members to the Medicaid and CHIP Payment and Access Commission (MACPAC). In its announcement, GAO also designated MACPAC’s Chair.
  • CMS Releases Draft Guidance for Drug Price Negotiation Program. The draft guidance establishes the parameters for the second round of negotiations under the Medicare Drug Price Negotiation Program established by the Inflation Reduction Act. Read the fact sheet here.


Congress is scheduled to be in session next week, with healthcare activity likely at the committee level.

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

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