August 06, 2020

Health Care Amid and After COVID-19: Public Policy Outlook

With the COVID-19 pandemic response and civil discourse on race and health disparities raising new questions about the future of U.S. health care policy, the winners of the 2020 federal elections will face a multitude of challenges ؅— and an opportunity to reshape the health care policy landscape. While there are many plausible election outcomes, by understanding ongoing health care regulatory rulemaking processes, policy wish-lists for Republican and Democratic legislators in both the House and the Senate, and the different health care priorities that would likely be pursued under a Trump administration and Biden administration, we can make measured predictions about what 2021 has in store for U.S. health care policy.

The Regulatory Process

Washington is in its regulatory season, and there are two major categories of health care regulations — annual payment regulations and other high-profile regulations — that are in various stages of the rulemaking process.

Annual Payment Regulations

  • The Inpatient Prospective Payment System (IPPS) Rule. Providers will have less time to prepare for implementation of the IPPS final rule, as the Centers for Medicare and Medicaid Services (CMS) has waived its effective date. The IPPS final rule is likely to make changes to cost estimates to account for the coronavirus pandemic’s impact on the U.S. health care system. The final rule will also build upon the requirement of providers to list their median payer-specific negotiated rates for inpatient services; include a minimum reporting requirement for electronic health records; and amend the IPPS bad debt regulation.
  • The Outpatient Prospective Payment System (OPPS) Rule. CMS is pushing forward with its site-neutral payment policy and 340B Drug Discount Program cuts for hospitals in its new OPPS rule. Bolstered by favorable recent court decisions, CMS is also exploring ways to move forward with its rate cuts in its 340B program for hospitals serving lower income patients. CMS is also increasing OPPS rates eliminating the inpatient only list over the course of three years.
  • The Physician Fee Schedule Rule. CMS recently released the proposed rule. The rule builds upon President Trump’s Executive Order on “Protecting and Improving Medicare for Our Nation’s Seniors” to expand telehealth by making some telehealth flexibilities permanent and extending others through the end of the year in which the Public Health Emergency ends. Notably, CMS does not intend to make permanent audio-only telehealth visits. CMS also looks to make payment-rate adjustments that will reallocate Medicare payments in a way that benefits general practitioners but is detrimental to some specialists. The agency plans to delay the start of the MIPS Value Pathways until at least 2022.

Other High-Profile Regulatory Changes

  • The International Pricing Index Drug Pricing Rule. CMS is unlikely to issue a proposed rule before the 2020 presidential election.
  • The Price Transparency Rule. A federal judge recently held that the U.S. Department of Health and Human Services can force hospitals to release the prices they negotiate with insurers. Since the American Hospital Association (AHA) intends to appeal the decision, the AHA will likely ask the court for a delay in the rule’s implementation.
  • Interoperability. In June, CMS created the Office of Burden Reduction and Health Informatics, which will focus on reducing federal regulatory burdens as well as improving interoperability and flexibility for health care providers.

The U.S. House of Representatives

The House Democrats will focus on its health care agenda priorities as well as policies that serve as messaging tools in preparation for the upcoming 2020 presidential election.

The House’s “Must-Do” Health Care Agenda

  • Fast-paced appropriations. The House Appropriations Committee worked quickly to mark up the Fiscal Year 2021 appropriations bills, and the House has considered 10 of the 12 funding bills. Congress will likely pass a continuing resolution to fund the government past the fiscal year deadline of September 30 until sometime after the elections and then make decisions about how to proceed.
  • Surprise billing. Surprise billing will likely move forward in the future, but Congress is still in disagreement on some of the details. How the government decides to address surprise billing — whether in an end-of-the-year package, a COVID-19 package or in balance billing related to COVID-19 treatment bills — remains to be seen.
  • Drug pricing. The U.S. Congress will likely focus on making COVID-19 vaccines and drug treatments more affordable for everyone.
  • Drug supply chain. There may be modest movements in drug supply chain packages in the future, such as incentives to onshore manufacturing. Packages related to requirements that limit drug manufacturing exclusively in the United States are unlikely in Congress.
  • Health care reauthorizations. By November 2020, the House needs to complete health care reauthorizations related to community health centers and other providers. The House has attempted to include surprise billing and drug pricing provisions within health care authorization requirements in the past, but it is unclear if the House will push again to include these issues in the package later this year.

The House Democrats’ “Message” Pieces

  • The ACA Enhancement Bill. The Patient Protection and Affordable Care Act (ACA) enhancement bill would provide more subsidies to the ACA marketplaces, eliminate some Trump administration policies to limit the ACA in the marketplaces, include H.R. 3 drug pricing provisions, and add provisions on Medicaid and the Children’s Health Insurance Program. There is no Medicare For All provision included in this bill, and House Democrats are not likely to include it as part of their health care reform agenda.
  • Investigations and oversight of the Trump administration. House Democrats are likely to continue their efforts to investigate the Trump administration, focusing on how the administration responded to COVID-19.

Prognostication and the 2020 Election

With Election Day drawing near, now is the time to consider and prepare for how the outcome of the presidential election could impact the future of U.S. health policy.

Priorities Based on Election Outcome

  • If Democrats have control of both chambers of Congress and the executive branch, the government may focus on restoring and expanding the ACA. These efforts could include: the creation of a public option (though likely not Medicare For All); limitations on private plans and state flexibility; reductions in consumer pricing; negotiations on drug pricing; increases in drug importation; restrictions on out-of-pocket expenses and surprise billing; expansion of Medicare; and protection of Medicaid.
  • If the Trump administration remains for a second term, but Democrats have control of Congress, the government is more likely to focus on surprise billing in health care, some drug pricing issues, and likely not much movement on ACA enhancement efforts.

The Election’s Impact on Other Potential Health Care Developments

  • Consolidation. Regardless of the election’s outcome, the financial and administrative burdens of the pandemic may create another wave of consolidation. If the Trump administration remains for a second term, the government would likely continue to encourage companies not traditionally in the health care space to enter it. With a Biden administration, much of the changes that could drive consolidation would likely come from reductions in the age for Medicare eligibility. Either administration could issue regulations on increasing patient stability and rights to share in efficiencies from consolidation.
  • Value-based care. The Trump administration has embraced value-based care models, and it would likely continue to do in a second term with an emphasis on driving competition between providers and incentivizing beneficiaries to choose higher value providers. A Biden administration would likely focus on building upon Obama-era innovation and value-based care models, as well as efforts to restore Medicare Part B and Part D drug models to reduce Medicare spending. Under either administration, the government could redo Medicare Advantage Star Ratings and risk adjustment to transition away from ACC coding. Overall, paying for volume is likely to be a thing of the past.
  • Medicaid. A second Trump term would likely continue to implement block grants for states and provide them with more independence in structuring their Medicaid programs. In contrast, a Biden administration would focus its Medicaid efforts on expanding Medicaid and stopping policies such as block grants to states and Medicaid work requirements.

The Congressional Review Act

The Congressional Review Act (CRA), which enables Congress to vacate regulations in their entirety via joint resolutions of disapproval, is also a key consideration as Election Day approaches.

  • It is important to note that this discussion is largely only relevant if the Democrats hold the presidency and majorities in both chambers of Congress come 2021, as the Republicans did in 2017.
  • The CRA allows Congress to pass joint resolutions of disapproval that vacate a regulation in its entirety. Since these resolutions are still subject to a presidential veto, however, their passage is historically uncommon since a sitting president is not exactly keen to eliminate his own administration’s actions.
  • The CRA contains a “lookback” provision that essentially dictates that any rule published within 60 session days of a Congress adjourning sine die then gets rolled over to the following Congress for possible CRA consideration. Because of COVID-19 and Congress not being in session for so long it is estimated that we hit the start of the lookback period already — on about May 13 of this year.
  • Another important aspect of the CRA is the process that it establishes in the Senate. Starting on the 15th session day of the newly convened Senate and going out 60 session days from then, a CRA resolution bypasses the normal cloture process that requires a 60-vote threshold and can pass by a simple majority. Therefore, even the slimmest of Democratic majorities could vote through such resolutions. For instance, the efforts to overturn the tranche of Obama-era rules in 2017 included Senate votes that involved Vice President Pence breaking a 50-50 tie.
  • The Trump administration has prioritized certain rules to avoid the CRA lookback period. Although the administration hopes that the rules it has released after May 13 will survive following the election, some of these rules could instead function as message pieces for the administration leading up to the election.

Special thanks to Faegre Drinker summer law clerk Larissa Morgan, who assisted in drafting this alert.

Faegre Drinker’s Coronavirus Resource Center is available to help you understand and assess the legal, regulatory and commercial implications of COVID-19.

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