Health Care Week in Review: CMS Released CY 2023 Payment Policies Under PFS Proposed Rule

Below is Alston & Bird's Health Care Week in Review, which provides a synopsis of the latest news in health care regulations, notices, and guidance; federal legislation and congressional committee action; reports, studies, and analyses; and other health policy news.

Week in Review Highlight of the Week:

This week, CMS released the CY 2023 Payment Policies under PFS Proposed Rule and HRSA distributed over $142 million in Phase 4 PRF payments to over 150 providers. Read more about these actions and other news below.

I. Regulations, Notices & Guidance

• On July 5, 2022, the Food and Drug Administration (FDA) issued draft guidance entitled, Drug Supply Chain Security Act Standards for the Interoperable Exchange of Information for Tracing of Certain Human, Finished, Prescription Drugs. This draft guidance identifies the standards necessary to facilitate adoption of secure, interoperable, electronic data exchange among the pharmaceutical distribution supply chain, and clarifies the trading partners, products, and transactions subject to such standards.
• On July 5, 2022, FDA issued revised draft guidance entitled, Identifying Trading Partners Under the Drug Supply Chain Security Act. FDA is issuing this guidance to assist industry and state and local governments in understanding how to categorize the entities in the drug supply chain in accordance with the Drug Supply Chain Security Act (DSCSA). The revised draft guidance explains how to determine when certain statutory requirements will apply to entities that are considered trading partners in the drug supply chain. It also discusses the activities of private label distributors, salvagers, and returns processors and reverse logistics providers. Additionally, the revised draft guidance discusses the distribution of drugs for emergency medical reasons, office use, non-human research purposes, and research purposes in humans under an investigational new drug application.
• On July 5, 2022, FDA issued a notice entitled, Request for Nominations on Public Advisory Panels of the Medical Devices Advisory Committee. FDA is requesting that any industry organizations interested in participating in the selection of nonvoting industry representatives to serve on certain panels of the Medical Devices Advisory Committee (MDAC) in the Center for Devices and Radiological Health (CDRH) notify FDA in writing. FDA is also requesting nominations for nonvoting industry representatives to serve on certain device panels of the MDAC in the CDRH. A nominee may either be self-nominated or nominated by an organization to serve as a nonvoting industry representative. Nominations will be accepted for current and upcoming vacancies effective with this notice until 30 days after the request’s publication in the Federal Register on July 6, 2022.
• On July 6, 2022, FDA issued draft guidance entitled, DSCSA Standards for the Interoperable Exchange of Information for Tracing of Certain Human, Finished, Prescription Drugs. This guidance identifies the standards necessary to facilitate adoption of secure, interoperable, electronic data exchange among the pharmaceutical distribution supply chain, and clarifies the trading partners, products, and transactions subject to such standards. The revisions described in this guidance update the November 2014 policy to reflect the enhanced drug distribution security requirements that will go into effect on November 27, 2023, including that paper-based methods of product tracing will no longer be permitted and verification of product at the package level will be required, unless a waiver, exception, or exemption applies.
• On July 6, 2022, the Environmental Protection Agency (EPA) issued notice entitled, Request for Nominations to the Children’s Health Protection Advisory Committee (CHPAC). CHPAC was established in 1997 to provide independent advice to the EPA Administrator on a broad range of environmental issues affecting children’s health. CHPAC is looking for representatives from industry; government; school systems; academia; health care providers; and nongovernmental organizations. The types of experience necessary includes children’s environmental health and development; epidemiology and toxicology; role of environmental chemicals in childhood diseases; prenatal environmental exposures and adverse health outcomes; specific environmental exposures; tribal children’s environmental health; children’s environmental health disparities; and more. Nominations are due by August 15, 2022.
• On July 7, 2022, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule entitled, Medicare and Medicaid Programs: Calendar Year 2023 Payment Policies under the Physician Fee Schedule and Other Changes to Part B Payment Policies, Medicare Shared Savings Program Requirements, etc. The 2,066-page annual proposed rule includes numerous policy updates and proposals. The rule includes proposals to implement provisions of the Protecting Medicare and American Farmers from Sequester Cuts Act, the Infrastructure Investment and Jobs Act, the Consolidated Appropriations Act, 2021, the Bipartisan Budget Act of 2018, and the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act related to Medicare Part B payment. The Biden Administration issued three separate fact sheets that focused on several aspects of the proposed rule, including the PFS, the Medicare Shared Savings Program (MSSP), and the Quality Payment Program (QPP).
• On July 7, 2022, CMS issued a final rule entitled, Clinical Laboratory Improvement Amendments Proficiency Testing Regulations Related to Analytes and Acceptable Performance. This final rule updates proficiency testing (PT) regulations under the Clinical Laboratory Improvement Amendments of 1988 (CLIA) to address current analytes (that is, substances or constituents for which the laboratory conducts testing) and newer technologies. This final rule also makes technical changes to PT referral regulations to better align them with the CLIA statute.
• On July 8, 2022, the Centers for Disease Control and Prevention (CDC) issued a notice entitled, National Health and Nutrition Examination Survey Stored DNA Specimens: Proposed Cost Schedule and Guidelines for Proposal to Use DNA Specimens. The notice announced the availability of stored DNA specimens obtained from participants in the National Health and Nutrition Examination Survey (NHANES) and the proposal parameters and fee schedule for use. NHANES is one of a series of health-related surveys conducted by CDC's National Center for Health Statistics (NCHS). NHANES III DNA specimens are in limited supply and thus investigators are required to submit proposals to NHANES. This notice details proposal submission requirements and processes and provides an updated cost schedule for obtaining the samples upon approval of the proposal.
• On July 8, 2022, CDC issued a notice entitled, Requests for Nominations to the Board of Scientific Counselors, National Center for Injury Prevention and Control (BSC, NCIPC). The BSC, NCIPC consists of 18 experts in fields associated with surveillance; basic epidemiologic research; intervention research; and implementation, dissemination, and evaluation of promising and evidence-based strategies for the prevention of injury, violence, and drug abuse. Members may be invited to serve for up to four-year terms. Selection of members is based on candidates’ qualifications to contribute to the accomplishment of BSC, NCIPC objectives. Nominations are due by September 1, 2022.

Event Notices

• July 27, 2022: CDC announced the opening of a docket and public meeting to obtain comments on the Draft Supplemental Environmental Impact Statement (SEIS) for CDC’s Roybal Campus in Atlanta, Georgia.
• August 4, 2022: The Department of Health and Human Services (HHS) announced a public meeting of the National Advisory Committee on Seniors and Disasters (NACSD) and the National Advisory Committee on Individuals with Disabilities and Disasters (NACIDD). The agenda will consist of discussions and a vote on possible recommendations for national public health and medical preparedness, response, and recovery, specific to the needs of older adults and people with disabilities in disasters.
• August 8, 2022: The Substance Abuse and Mental Health Services Administration (SAMHSA) announced a public meeting of the Center for Substance Abuse Prevention National Advisory Council (CSAP NAC). The agenda will consist of discussions of substance use prevention priorities and updates on CSAP program developments.
• August 8, 2022: The National Institutes of Health (NIH) announced a public meeting of The Eunice Kennedy Shriver National Institute of Child Health and Human Development (NICHD) to enable public discussion of the Institute’s proposal to reorganize its Division of Extramural Research. NICHD’s proposal would simplify the organizational structure of the NICHD, create new organizational components to reduce “siloing”, increase administrative efficiencies, facilitate transdisciplinary research and idea exchange, and benefit the institute’s internal and external communities. The proposal seeks to capitalize on emerging scientific opportunities, while reducing barriers to scientific and interdisciplinary collaboration.
• August 16, 2022: The NIH National Heart, Lung, and Blood Institute (NHLBI) announced a public meeting of the National Asthma Education Prevention Program Coordinating Committee (NAEPPCC). The agenda will include programmatic and scientific updates.
• August 23, 2022: CDC announced a virtual public meeting for the Advisory Committee on Breast Cancer in Young Women (ACBCYW). The agenda will include discussions on current topics related to breast cancer in young women. These will include Mental/Behavioral Health, Sexual Health, Genetics and Genomics, and Provider Engagement. Agenda items are subject to change as priorities dictate.
• September 13, 2022: NIH announced a virtual public meeting of the Board of Regents of the National Library of Medicine (NLM). The agenda will include a program discussion.

II. Reports, Studies & Analyses

• On July 5, 2022, the Kaiser Family Foundation (KFF) published a report entitled, Claims Denials and Appeals in ACA Marketplace Plans in 2020. KFF analyzed transparency data released by CMS on claims denials and appeals for non-group qualified health plans (QHPs) offered on HealthCare.gov. The report found that, across HealthCare.gov insurers for the 2020 plan year with complete data, about 18 percent of in-network claims were denied in 2020 (with almost one-in-five insurers reporting they denied more than 30 percent of in-network claims). Insurer denial rates varied widely around this average, ranging from less than 1 percent to more than 80 percent. HealthCare.gov consumers appealed just over one-tenth of 1 percent of denied in-network claims, and insurers upheld most (63 percent) of denials on appeal. KFF called for more transparent data on all features of health plans beyond just premiums, deductibles, copays, and lists of covered services so that HealthCare.gov is more useful for consumers and regulators.
• On July 6, 2022, the RAND Corporation published an article entitled, Diversity, Equality and Inclusion in Healthcare Innovation: Considerations for Future Research, Policy and Practice. The authors noted that although innovations that aim to improve prevention, diagnosis, and treatment of illness have broad societal benefits, they may perpetuate disparities in social determinants of health. For example, the pulse oximeter, a device that measures blood oxygen saturation by passing light through the skin, may overestimate saturation in individuals with darker skin tones. Additionally, innovative approaches to healthcare service delivery, such as algorithms used to diagnose disease, such as using BMI to calculate risk of type 2 diabetes. The authors identified four recommendations for healthcare innovation decision-makers: (1) prioritize underrepresented groups for innovation investment, (2) consider potential biases in innovation design, (3) identify potential biases and inequities in evaluation and testing of innovations, and (4) improve access and use among underrepresented groups.
• On July 6, 2022, HHS Office of the Inspector General (OIG) published a report entitled, The Reduced Outlier Threshold Applied to Transfer Claims Did Not Significantly Increase Medicare Payments to Hospitals. The Medicare program supplements the DRG rate payment by making outlier payments to protect hospitals from losses due to high-cost cases. To avoid giving hospitals an incentive to transfer patients to another health care setting, Congress established the transfer policy. Under the transfer policy, CMS (1) uses a graduated per diem rate payment, which is less than the full diagnosis-related group (DRG) rate payment, to pay a hospital that transfers an inpatient to another health care setting, or (2) decreases the outlier threshold applied to determine the eligibility and amount of outlier payments for transfer claims. OIG’s objective was to assess the financial impact that Medicare’s transfer policy and reduced outlier threshold have on Medicare total payments for transfer claims compared with what hospitals would have been paid if the beneficiary had been discharged instead of transferred. OIG found that Medicare’s reduced outlier threshold for transfer claims did not have a significant impact on the total Medicare payments. Specifically, under the transfer policy, Medicare decreased DRG rate payments by $10.8 million but, because of the reduced outlier threshold, Medicare increased outlier payments by $13.7 million, resulting in a net increase of $2.9 million in total Medicare payments compared to what hospitals would have been paid if they had discharged the beneficiaries.
• On July 7, 2022, the Congressional Budget Office (CBO) released a report entitled, Answers to Questions for the Record Following a Hearing on a Single-Payer Health Care System That Is Based on Medicare’s Fee-for-Service Program. On May 12, 2022, the Senate Committee on the Budget convened a hearing at which Phillip L. Swagel, the Congressional Budget Office’s Director, testified about the agency’s analyses of illustrative single-payer health care systems. After the hearing, Senator Van Hollen (D-MD) submitted questions for the record. The two questions asked were: (1) if medical providers, under the proposed Medicare for All system in the Medicare for All Act of 2019 (S. 1129), would be compensated equal to the level received under current system; and (2) estimates on the savings prescription drug price negotiation would generate under the Medicare for All system. This report provides CBO’s answers.
• On July 8, 2022, KFF issued an analysis entitled, Child and Teen Firearm Mortality in the U.S. and Peer Countries. The report examined how gun violence and other types of firearm deaths among children and teens in the U.S. compares to rates in similarly large and wealthy countries. The report finds that the U.S. has, by far, the highest overall firearm death rate among children, but also has the highest rates of each type of child firearm deaths — suicides, assaults, and accident or undetermined intent — among similarly large and wealthy countries. The U.S. had 5.6 deaths per 100,000 children in 2020, compared to an average among 11 peer countries of about 0.3 deaths per 100,000 children in 2019.

III. Other Health Policy News

• On July 6, 2022, HHS announced a suite of resources to improve CMS and state oversight of Medicaid and Children’s Health Insurance Program (CHIP) managed care programs. This new information includes tools, templates, and updates on tactics to improve states reporting on their managed care programs, which promotes access to care for millions of people enrolled in Medicaid and CHIP. Examples of the resources include a new web-based portal for state reporting on managed care programs to CMS; specific practices and strategies to aid states and managed care plans to provide for Alaska Native and American Indian communities; standardized methods for states to report managed care medical loss ratios and network adequacy to CMS; and a toolkit to support program monitoring for Medicaid enrollees in Managed Long-Term Services and Supports (MLTSS). More information can be found here.
• On July 7, 2022, HHS announced that it will make an additional 144,000 doses of the JYNNEOS vaccine available to states and jurisdictions, as part of the Biden Administration’s comprehensive strategy to combat monkeypox and protect Americans most at risk from monkeypox. These doses of JYNNEOS vaccine will begin shipping from the Strategic National Stockpile (SNS) on July 11, 2022. To date, the HHS Office of the Assistant Secretary for Preparedness and Response (ASPR), in partnership with CDC, has delivered more than 41,000 doses of JYNNEOS from the SNS to states and jurisdictions nationwide. HHS has also recently ordered an additional 2.5 million doses of JYNNEOS, bringing the total to approximately 1.9 million doses of JYNNEOS available in 2022, with an additional 2.2 million available during the first half of 2023.
• On July 7, 2022, HHS through the Health Resources and Services Administration (HRSA), announced over $142 million in Provider Relief Fund (PRF) Phase 4 General Distribution payments to 151 providers across the country. Providers will receive an email notification if their application was among those processed in this latest batch. Nearly $14.5 out of $17 billion in PRF Phase 4 funding has now been distributed. This is in addition to HRSA’s distribution of American Rescue Plan Rural payments totaling over $8 billion. More information can be found here.
• On July 8, 2022, President Biden issued an Executive Order on Protecting Access to Reproductive Healthcare Services. The executive order responds to the Supreme Court Decision Dobbs v. Jackson Women’s Health Organization that overturned two former cases, Roe v. Wade and Planned Parenthood of Southeastern Pennsylvania v. Casey, which granted access to abortion services. The order states that eliminating the right recognized in Roehas devastating implications for women’s health, access to reproductive services, and public health more broadly. The order specifically requires many government agencies and authorities to identify potential actions to protect and expand access to reproductive health services, such as by ensuring women have access to emergency care, encouraging legal representation support for women seeking services, educating consumers on how to best protect their health privacy, assisting states with legal protections regarding care provided to out-of-state patients, establishing an interagency task force, and more. More information can be found http:here.

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