As summer came to a close, health policy developments continued at the federal level. Below, we provide brief overviews of updates both related and unrelated to the COVID-19 pandemic, along with links to more detailed information about each.
As efforts to address the impact of the COVID-19 pandemic continue at the federal and state level, Health Policy News continues our work of the last six months of bringing you the latest updates. This month, the latest updates from the federal pandemic response include those relative to commercial insurance, Medicare and Medicaid guidance, guidance relative to telehealth, state waivers, and new funding distributions for providers.
With information and policy evolving regularly, we encourage readers to stay on top of the latest updates on these topics and others, including clinical guidance, at https://www.hhs.gov/about/news/coronavirus/index.html.
Commercial Insurance Premiums and Risk Adjustment
As we shared on our blog last month, the Centers for Medicare and Medicaid Services (CMS) provided long-awaited guidance on what are commonly referred to as “premium holidays” by commercial health insurers. In light of declines in utilization during the pandemic, CMS released guidance on August 4th allowing commercial insurers in the individual and small group markets to provide temporary premium reductions during the 2020 coverage year. (This guidance is outlined in more detail in our post from August 11th, 2020). Such reductions would typically violate the federal prohibition on mid-year premium changes, but are temporarily permitted as long as they are consistent with state law and comply with enumerated guidance. Premium holidays impact Exchanges, user fees, premium tax credits, affordability determinations, Medical Loss Ratios (MLR) and Risk Adjustment—our August 11th post outlines how each will be handled. Following our post, CMS released an expected interim final rule and technical fact sheet further clarifying the requirements related to Risk Adjustment and MLR reporting.
More recently, CMS clarified in a FAQ that any service provided through telehealth that is reimbursable under state law and meets applicable Risk Adjustment standards may be submitted for the federal Risk Adjustment program. CMS is also allowing certain telephone-only services to be submitted.
Medicaid and Medicare
In a new interim final rule released at the end of August, CMS put hospitals on notice that it will revoke their Medicaid and Medicare funding if they do not report COVID-19 data and test results to the federal Department of Health and Human Services (HHS). In doing so, the rule made reporting this data mandatory.
The President issued an Executive Order at the beginning of August directing the Department of Agriculture to enhance the telehealth infrastructure in rural communities and HHS to propose regulations making Medicare coverage of certain telehealth services (including office visits, emergency room visits, nurse consultations, speech therapy and occupational therapy) permanent for individuals living in rural communities. The order also directs HHS to develop a new payment model that promotes predictable funding streams for rural hospitals that meet quality measures.
Relatedly, CMS updated its Frequently Asked Questions (FAQ) to include information about Medicare coverage for telehealth. CMS also released a FAQ that addresses issues related to Medicare Cost Reports during the pandemic.
CMS released a Center for Medicaid & CHIP Services Informational Bulletin last month outlining flexibility available to states to enhance Medicaid payments to nursing facilities during the COVID-19 public health emergency. The goal of these flexibilities is to account for potentially increased resident acuity levels and support actions to mitigate the spread of COVID-19. Payment enhancements can include base rate increases, new payment methodologies, modifying rate-setting methodologies and penalties, creating options for specialized payment adjustments, creating targeted supplemental payments, and modifying state bed hold policies, among others. They can be made via State Plan Amendments (SPAs) or Medicaid Disaster Relief SPAs. States with managed care delivery systems can direct payments through managed care plans or pay for services through non-risk payment arrangements. The bulletin gives examples of how some states have approached doing so.
Finally, CMS approved a number of new COVID-related waivers over the last two months, including 14 new 1135 Waivers. While many of these waivers granted authority that had previously been approved in other states, nine states received approval for a new flexibility: waiver of a regulatory requirement for outpatient clinics. This new flexibility allows clinic practitioners’ locations to be designated as part of a clinic facility so that clinic services can be provided via telehealth when neither the practitioner or patient is onsite. In addition, CMS approved 27 new Appendix K Section 1915(c) Waiver Amendments during this two-month time period.
The administration announced new distributions of Provider Relief Funding for:
- Free-standing children’s hospitals ($1.4 billion);
- Nursing homes and long-term care facilities (approximately $5 billion) as well as performance-based incentive payments for nursing homes ($2 billion); and
- Assisted Living Facilities.
The Center for Disease Control and Prevention announced $200 million from the Coronavirus Aid, Relief and Economic Security (CARES) Act is being provided to 64 jurisdictions through an existing cooperative agreement to prepare for distributing the COVID-19 vaccine.
Section 1557 Nondiscrimination Rule
As we reported over the summer, HHS’s final Section 1557 Nondiscrimination Rule was the source of immediate challenge. In August, Judge Frederic Block from the Eastern District of New York issued a preliminary injunction blocking the implementation of changes to the definition of “on the basis of sex,” “gender identity,” and “sex stereotyping,” provisions that were set to go into effect the following day. As a result, the prior definitions will remain in effect nationwide. In September, in response to another lawsuit, Judge James Boasberg from the district court for D.C. also granted a preliminary injunction preventing the elimination of protections based on sex stereotyping and enforcement of the new religious exemption. A third case was decided against the plaintiff (the Washington attorney general) on the basis of standing (a procedural finding based on the determination that the AG was not harmed by the Rule). Each of these injunctions applies nationwide, though other provisions of the new rule did go into effect. Two other lawsuits remain in progress.
Prescription Drug Developments
Over the summer, we shared information about three Executive Orders related to prescription drugs. At the time, we were awaiting a fourth Executive Order that was not released with the others. That Executive Order was released earlier this month, and orders HHS to take immediate steps to test a payment model under which Medicare does not pay more for prescription drugs or biologicals than the “most-favored-nation” price.
Also this month, HHS issued a final rule allowing States to seek approval of the Food and Drug Administration (FDA) for drug importation programs, allowing them to import certain prescription drugs from Canada. The state must demonstrate the program will not increase the risk to public safety and will result in a cost savings. The rule does not allow the importation of biologics, such as insulin.
Another Health-Related Executive Order
Last week, the Administration released the Executive Order on an America-First Healthcare Plan. The Order largely restates recent health policy changes, in addition to calling on:
- HHS and the FDA to accelerate the approvals of new generic and biosimilar drugs and facilitate the safe importation of prescription drugs;
- the Treasury Department, Department of Labor and HHS to work with Congress to address surprise medical bills by the end of the year or, if that does not happen, protect patients against surprise medical bills;
- HHS to increase cost transparency for Medicare patients; and
- HHS and the Veterans Affairs Department to improve care for veterans.
Finally, the Order states a commitment to protecting access to care for individuals with pre-existing conditions while restating the administration’s desire to invalidate the Affordable Care Act.
As with all Executive Orders, this Order requires further action for any policy changes to go into effect.
 The lowest price paid in a member country of the Organisation for Economic Co-operation and Development (OECD) that has a comparable per-capita gross domestic product.