McDermottPlus Check-Up: September 25, 2020 - McDermott+Consulting

McDermottPlus Check-Up: September 25, 2020

This Week’s Dose

The House of Representatives advanced a government funding measure, and President Trump issued an executive order outlining his healthcare agenda.


House Passed Continuing Resolution (CR) to Fund the Government. The CR, which passed the House with broad bipartisan support, contains funding for all federal agencies through December 11, 2020, some relief for providers who received Accelerated and Advanced Payment (AAP) loans and funding for several Medicare, Medicaid and public healthcare programs (known as “healthcare extenders”). It lengthens the recoupment period for AAP loans to one year (which is currently four months after initial payment) and reduces the offset amount to 25% for the first 11 months, 50% for the next six months, with 29 months to repay the balance in full. It also reduces the interest rate on unpaid balances from nearly 10% to 4%. The CR also funds the healthcare extenders through December 11, including community health centers, teaching health centers, special diabetes programs, money follows the person, the community mental health services demonstration program and the disproportionate share hospital payment reduction delay that were previously set to sunset on November 30, 2020. The Senate is expected to pass the measure by early next week, averting a government shutdown and punting further funding decisions until after the election. This sets up the next funding deal needed by December 11 as possibly the only legislative vehicle for any remaining policy priorities for the 116th Congress.


President Trump Issued Executive Order (EO) on Healthcare. The EO on An America-First Healthcare Plan is largely an overview of past healthcare-related actions the Administration has taken. These include zeroing out the individual mandate, expanding short-term limited duration insurance plans and association health plans, expanding telehealth services due to the COVID-19 pandemic, and other EOs focused on prescription drug pricing, such as drug importation, pharmacy benefit manager rebates and most favored nation pricing. One new policy announcement included in the EO instructs the Secretary of Health and Human Services (HHS) to work with Congress to find a legislative solution to surprise billing by December 30, 2020. If a solution cannot be reached, the Secretary should take administrative action to end surprise billing. Given that Congress has not been able to reach an agreement despite several attempts over the last year-and-a-half, and that it remains unclear what administrative action HHS can take, the impact of this EO on ending surprise billing is likely minimal. It also requires the Secretary within 180 days to update the Hospital Compare website to inform beneficiaries of hospital compliance with the Hospital Price Transparency Final Rule, whether the hospital provides patients with a receipt that includes a list of itemized services received at the hospital and if the hospital pursues legal action against patients.

Administration Announced $200 Prescription Drug Discount Cards. Separate from the EO, the President also announced that the Administration would be sending 33 million Medicare beneficiaries $200 discount cards to support the purchase of prescription drugs. Actual text on this action is not yet available. It has been reported that the Administration would be pursuing this action through section 402 Medicare demonstration authority, which allows the Secretary to waive Medicare statutes and rules to demonstrate new approaches to provider reimbursement, including tests of alternative payment methodologies. Although it had been reported that these coupons would be paid through savings from the Administration’s EO on implementing a most favored nation pricing policy, which has yet to be officially proposed, the Administration clarified on a call with stakeholders that they are still working out the details of the funding mechanism. We expect that, over the coming weeks, there will be a conflict between the Administration trying to get the $200 discount cards out the door prior to the election and the opposition attempting to use litigation stop their distribution.

Administration Finalized Rules on Drug Importation and 340B Prices for Insulin. The Importation of Prescription Drugs final rule would allow the importation of certain prescription drugs from Canada. Under this final rule, States and Indian Tribes, and in certain future circumstances pharmacists and wholesalers, may submit importation program proposals to the Food and Drug Administration for review and authorization. Private individuals will not be allowed to import drugs on their own. The Implementation of Executive Order 13937, Executive Order on Access to Affordable Lifesaving Medications final rule requires health centers funded under section 330(e) of the Public Health Service Act to provide access to insulin and injectable epinephrine to low-income patients at the price the health center purchased these two drugs through the 340B Drug Pricing Program. The President has touted both rules as part of his effort to lower drug costs.

CMS Issued Announcements on MA and Part D. The Centers for Medicare and Medicaid Services (CMS) released information on Medicare Advantage (MA) and Part D 2021 plan premiums, including a decrease in average premiums for MA and an increase in MA plan choices. CMS also highlighted that seniors who use insulin will be able to choose a plan in their area that offers insulin savings through the Part D Senior Savings Model and notes that coverage is provided for a broad set of insulins, each for no more than $35 per month. Beneficiaries will be able to find prescription drug plans that are participating in the Part D Senior Savings Model in the 2021 plan year through the Medicare Plan Finder. CMS will also add a new “Insulin Savings” filter to easily display plans that will offer capped out-of-pocket costs for insulin. Seventy-six Part D sponsors will be participating in this model and are estimated to cover 13.2 million enrollees. The Administration will release a request for application for manufacturers and Part D sponsors to participate in the model for 2022.

CMS Announced Updates to MA VBID Model. CMS released the calendar year (CY) 2021 participation in the MA Value-Based Insurance Design (VBID) Model and information about the CY 2022 application process for eligible MA organizations. According to CMS, the Model is designed to test the impact of coverage and payment flexibilities on care quality and coordination. For CY 2021, the VBID Model has 19 participating MA organizations, up from 10 in 2019 and 14 in 2020. In CY 2021, nine MA organizations will participate in the Hospice Benefit Component of the VBID Model. CMS will release a request for applications for CY 2022 along with a separate CY 2022 request for applications for the Hospice Benefit Component this fall.

HHS Updated PRF Reporting Requirements. HHS posted long-anticipated additional information about the reporting requirements for Provider Relief Fund (PRF) recipients who received aggregated payments of more than $10,000. The newly released information details specifics on the documentation requirements and the agency’s approach to account for lost revenues and expenses. Given the additional detail and changes to the expense and lost revenue categories, providers and their practice finance teams should carefully review and assess the implications of this new guidance. HHS recently updated the Reporting and Auditing guidelines stating that the reporting system will become available on January 15, 2021, and recipients are required to report on their expenditures by February 15, 2021. Recipients who have expended funds in full prior to December 31, 2020, may submit a single final report by the February 15 deadline, and recipients with unexpended funds after December 31, 2020, must submit a second and final report by July 31, 2021. We note that the dates related to the PRF are fluid and should be monitored. More information on the most recent reporting guidance is available here, and for more on the PRF, see our Toolkit.


Justice Ginsburg’s Passing Raises Stakes for the ACA. The nation lost a giant of the Supreme Court last week with the passing of Justice Ruth Bader Ginsburg. Her death raises significant political questions, both in terms of her absence on the Court and with who her successor may be. President Trump plans to nominate her replacement on September 26, leaving the Republican-controlled Senate just 37 days to confirm his nominee if they wish to do so before the election. Importantly, the person President Trump nominates could be the deciding vote on whether to uphold the Affordable Care Act (ACA). The Court is scheduled to hear oral arguments on November 10 in a case challenging whether the ACA can stand without the individual mandate in effect. A lower court ruled that without the mandate, the entire law must be overturned. There are numerous possible scenarios and outcomes for the ACA’s future, depending on who is confirmed and when. Regardless of when her replacement is confirmed, Justice Ginsburg’s death significantly heightens the importance of the Supreme Court and the fate of the ACA as political issues leading up the election.

Quick Hits

  • The House Energy and Commerce Health Subcommittee held a hearing on the ACA and the pandemic.
  • Democratic leadership of House and Senate healthcare committees sent a letter to HHS and CMS expressing concern with the agencies’ expansion of the AAP program and requesting a briefing on the program by October 2, 2020.
  • A bipartisan group of 160 House members sent a letter urging HHS and CMS to stop payment cuts for certain specialty providers that were included in the proposed 2021 Medicare Physician Fee Schedule.
  • CMS finalized two new mandatory payment models for radiation oncology and end-stage renal disease (ESRD),  which provide bundled payments for 90-day episodes of radiotherapy and give ESRD facilities payment adjustments to incentivize home-based dialysis treatment and higher rates of kidney transplants, respectively.
  • HHS sent a letter to a leading drug manufacturer raising concerns with the company’s actions to restrict the 340B program, saying the agency is reviewing the legality of the move.
  • CMS released a request for information seeking feedback on a draft national data set for Medicaid-funded home and community-based services. The deadline to submit comments is October 19, 2020.
  • CMS posted additional resources for stakeholders to assess the Direct Contracting model, including the Direct Contracting rate book, risk adjustment methodology and financial operating guide. CMS also posted slides from a webinar on the financial methodology and a recording of an office hours question and answer session.
  • The Government Accountability Office issued a report on the federal response to COVID-19, noting that the nation continues to face shortages of personal protective equipment.
  • The Medicaid and CHIP Payment and Access Commission held its September public meeting. Of note, during one session, the Commission noted that only $2.2 billion of the $15 billion allotted to Medicaid and Children’s Health Insurance Program (CHIP) providers through the PRF had been taken up by providers as of September 11, 2020.

M+ Resources

  • Our consultants offer their analysis of the CR and what’s next in Congress on this week’s episode of the Health Policy Breakroom.
  • As the 2020 presidential campaign heads into the final weeks, it presents an opportunity to ask a question: what happens if President Trump wins reelection? We offer some key considerations here.
  • The 2020 election is around the corner and the results will significantly shape the health policy landscape in 2021 and beyond. Follow our Special Election Coverage page for all our analysis related to the election and its health policy implications.

Next Week’s Diagnosis

The Senate is expected to pass the CR to fund the government and turn its attention to the Supreme Court vacancy. The House is keeping busy with hearings on drug pricing, with CEOs of several drug companies testifying, and vaccine safety. HHS Secretary Alex Azar will also testify on the Department’s response to the pandemic.


For more information, contact Mara McDermott, Rachel Stauffer, Emma Zimmerman or Katie Waldo.

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