While the COVID-19 pandemic remains the center of everyone’s attention and COVID-19-related policy developments continue (for more on this topic, see this month’s COVID-19 Update), there has been a recent uptick in federal health policy developments unrelated to the pandemic. Below, we provide a brief overview of several recent health policy developments unrelated to the COVID-19 pandemic, along with links to more information.
Final Section 1557 Nondiscrimination Rule
The Office for Civil Rights in the federal Department of Health and Human Services (HHS) finalized proposed changes to the Section 1557 Nondiscrimination Rule over a year after publishing the proposed rule, and after receiving nearly 200,000 comments. The changes remove protection for gender identity (which is also the subject of a pending Supreme Court case related to the Civil Rights Act with implications for the Section 1557 Rule) and pregnancy status, as well as abolish requirements that regulated entities:
- Provide taglines in languages other than English on notices, and post information about the Nondiscrimination Rule online, in-person, and in notices; and
- Have a compliance coordinator on staff and a written grievance process in place.
The changes also remove certain enforcement provisions, include a broad religious exemption, and narrow the scope of covered entities.
Additionally, through conforming amendments, the final rule eliminates protections for LGBT people in other unrelated HHS regulations.
The new rule is set to get into effect on August 18th. However, several lawsuits  have already been brought seeking to prevent HHS from implementing the rule. The lawsuits challenge the validity of the rule on various grounds and argue that it should be vacated.
Payment for Direct Primary Care Arrangements and Healthcare Sharing Ministries via Health Reimbursement Accounts
On June 8th, the Internal Revenue Service (IRS) issued a proposed rule that would allow employees to pay fees for direct primary care arrangements, as well as monthly shares to healthcare sharing ministries, through health reimbursement arrangements (HRAs). The proposed rule defines these fees and shares as payments for medical care or medical insurance, making them tax deductible as qualified medical expenses. This is despite the fact that healthcare sharing ministries in particular do not guarantee reimbursement for medical expenses and are not subject to state or federal insurance standards. Many states also exempt direct primary care arrangements from state insurance regulation and these arrangements typically cover a limited set of services. Comments on the proposal are due on August 10, 2020.
Use of Telehealth for Medicare Home Health
The Centers for Medicare and Medicaid Services (CMS) issued a proposed rule on June 25th that, in part, makes permanent certain telehealth policy changes originally implemented as a temporary response to the pandemic. Specifically, beginning January 1, 2021, the rule would permit home health agencies (HHAs) to provide services via telehealth under a Medicare home health benefit.
To be allowable under the proposed rule, use of telehealth must be outlined in a patient’s plan of care and tied to a specific goal indicating how use of telehealth will facilitate treatment outcomes. Further, telehealth could not be used for an in-person home visit that is ordered on the plan of care, or for visits related to patient eligibility. Under the proposed rule, HHAs could report the costs of telehealth technology as allowable administrative costs on the HHA cost report; however, could not be used to claim payment. CMS is accepting comments on the proposed rule until August 31, 2020.
Group Market Grandfathered Plans
Earlier this month, the Departments of HHS, Labor and Treasury issued a proposed rule providing additional flexibility to plans seeking to continue to qualify as grandfathered plans in the group markets, a follow-up to the 2019 Request for Information. By allowing an alternative method of measuring permitted cost-sharing changes, the rule would allow group plans to impose higher cost-sharing without losing their grandfathered status. The proposed rule would also permit group high-deductible health plans (HDHPs) to increase fixed-amount cost-sharing requirements (such as deductibles) to the extent necessary to maintain HDHP status without losing their grandfathered status. Comments on the rule are due on August 14, 2020.
Prescription Drug Executive Orders
The federal administration issued several executive orders aimed at prescription drug pricing on July 24th, which are summarized below.
The Executive Order on Access to Affordable Life-Saving Medications addresses the rising price of insulin and the high cost of injectable epinephrine that creates access issues. The order directs HHS to ensure funding for Federally-Qualified Health Centers is conditioned on FQHCs having “established practices” to make insulin and injectable epinephrine available at their discounted 340B Prescription Drug Program prices to low-income individuals who are uninsured or have high cost-sharing requirements.
The Executive Order on Increasing Drug Importation to Lower Prices for American Patients directs HHS to expand access to imported prescription drugs as permissible under existing law. This can be achieved by:
- providing individual waivers of the prohibition on importation;
- authorizing the re-importation of insulin as required for emergency medical care; and
- finalizing the proposed rule to allow importation of drugs from Canada.
Finally, the Executive Order on Lowering Prices for Patients by Eliminating Kickbacks to Middlemen addresses the fact that health plan sponsors and pharmacy benefit managers (PBMs) often fail to pass along the rebates they receive from drug manufacturers to Medicare enrollees. The order calls on HHS to complete the existing rulemaking process to:
- eliminate the current safe harbor for rebates that currently excludes them from being considered prohibited kickbacks; and
- establish new safe harbors to allow those entities to pass rebates on to consumers.
Recent reports indicate that the President has signed an additional executive order aimed at prescription drug pricing, though it has not yet released. That order is expected to direct HHS to release a plan for implementing a most-favored-nations rule linking Medicare payments for certain drugs to the lower costs paid for the same drug in other countries.
CMS Rule Change regarding Value-Based Purchasing Agreements and Drug Pricing
Also related to prescription drug pricing, in June, CMS proposed a rule designed to address perceived barriers to value-based purchasing arrangements related to prescription drugs. The rule would change the requirement that manufacturers offer their best price to state Medicaid programs, instead allowing manufacturers to either:
- report best price under VBP arrangements as a bundled sale; or
- report multiple best price calculations, including under both VBP and non-VBP arrangements.
The proposed rule’s goal is to prevent the best price rule from disincentivizing manufacturers’ participation in VBP arrangements based on the concern that participation could result in very low drug prices for Medicaid programs. On the other hand, if enacted, the rule creates the possibility of manufacturers gaming the best price, thus increasing costs for Medicaid programs. Comments on the rule were due earlier this month.
Alternative Insurance Plan-Related Litigation Updates
On July 17th, a three-judge panel of the Court of Appeals for the District of Columbia upheld the 2018 Short-Term, Limited-Duration Insurance (STLDI) rule. The 2018 rule greatly expanded the duration of STLDI, allowing these plans—which are not required to comply with Affordable Care Act regulations—to be issued for up to 12 months and renewed for up to three years if allowed under state law. The case charged that the expansion of STLDI was contrary to Congressional intent and an unreasonable interpretation. The plaintiffs can seek a review of the panel’s decision by the full Court of Appeals. At the same time, a decision is pending in the same court regarding the 2018 Association Health Plan (AHP) rule. Health Policy News will continue to follow these cases and provide major updates to readers as they occur.
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