Law360 (November 30, 2020, 5:18 PM EST) --
|Ilisa Halpern Paul|
A narrowly divided Washington, D.C. — notably a Senate that will be either controlled by Republicans with at-most two votes to spare or be tied 50-50 with Vice President-elect Kamala Harris breaking ties — will have a significant impact on this agenda over the coming two years.
Closely divided government generally means limited to no movement on more sweeping and partisan health care legislation. This category would include legislation to establish a public option health insurance plan, allow people under age 65 to enroll in Medicare and provide higher subsidies for people to purchase care in the individual marketplace established by the Affordable Care Act.
It would also include proposals to allow Medicare to negotiate directly with drug companies on prices, an approach many Democrats say would result in lower overall costs, and more aggressive proposals to limit drug prices.
And while not sweeping in size or cost, smaller fixes to the ACA also are unlikely to advance under divided government, unless the U.S. Supreme Court issues a ruling in California v. Texas that proves so disruptive that Congress must act in response.
Given this climate, the incoming Biden administration will most likely look to use executive actions to pursue priority Democratic health care policy goals. And just as we have seen with the Trump administration, most of those executive actions alone will have limited reach.
The Congressional Health Care Agenda
The COVID-19 pandemic, surging once again, will continue to dominate the congressional agenda. This will likely include continued debate on potential relief packages and what those packages should include. In the core health care space, this will include topics such as:
- Potential future rounds of provider relief funding and accountability associated with previous and future allocations;
- Possible expansion of the federal Medicaid match;
- Funding to support the response, such as money for personal protective equipment, testing, contact tracing and other measures;
- Funding to develop and distribute FDA-approved COVID-19 vaccines , including resources to monitor for any adverse events;
- Policies to address costs of COVID-19-related care; and
- Potential funding to support medical research focused on understanding, preventing, treating and managing the longer-term health effects of COVID-19 as well as to offset costs associated with pandemic-related disruptions to research.
If the Senate remains under narrow Republican control, the partisan divide on funding levels and some policies likely will continue. But major changes — such as a worsening of the pandemic or, conversely, more progress toward safe and effective vaccinations — need to be watched closely given their potential to impact negotiations.
Beyond the COVID-19 pandemic, Congress will have to address many other health care issues in 2021. These include:
- The reauthorization of the U.S. Food and Drug Administration Prescription Drug User Fee Act and related user fee authorizations that typically result in an omnibus FDA policy bill;
- Annual appropriations or spending bills that shape department and agency actions and priorities;
- Legislation to curb balance or surprise health care billing;
- Initiatives to address costs of prescription drugs; and
- Legislation to sustain expanded access to telehealth.
User Fee Legislation
The user fee bill will have to be enacted by September 2022 when the current authorization expires, and much of the foundational work will occur this coming year. User fee bills have typically been targeted as legislative vehicles for an array of FDA policy proposals, and PDUFA VII will be viewed in this manner.
While the ultimate scope of the legislation is to be determined, it is safe to expect interest in policies that build upon the most recent reauthorization from 2017 as well as the 21st Century Cures Act. This would include policies advancing use of patient experience and other data to inform reviews of therapies and to support development of novel products such as cell-based and gene therapies.
Related to the Cures Act is the interest among many stakeholders and some legislators — notably Reps. Fred Upton, R-Mich., and Diana DeGette, D-Colo. — to write a Cures Act 2.0 bill.
The lawmakers released a legislative framework for a Cures Act 2.0 this spring and engaged in a robust process to gain feedback from stakeholders.
The draft framework included policies to modernize and better coordinate the FDA regulatory structure for reviewing digital health tools, foster greater levels of FDA and Centers for Medicare & Medicaid Services collaboration regarding novel therapies, increase diversity of clinical trials participants and continue driving the use of real-world evidence. Ultimately, this work may inform or be folded into a larger user fee bill.
Drug Pricing and Balance Billing
On the topic of drug pricing, the divided Congress means limited to no chance for more ambitious measures like the House Democrats' H.R. 3 package, passed in 2019, that would enable direct negotiation by Medicare and require manufacturers to pay rebates if their annual prices exceed a certain level.
A bill led by outgoing Senate Finance Committee Chairman Charles Grassley, R-Iowa, included the inflationary cap but Republican support has been modest overall.
With Grassley term-limited from remaining chairman of the Finance Committee and Sen. Mike Crapo, R-Idaho, set to take over in the new Congress if Republicans hold the majority, a question will be if some of the more modest proposals such as prohibiting policies that delay marketing of generic medications, banning the use of spread pricing by pharmacy benefit managers and encouraging prescribing of biosimilars may have a path forward.
Within Medicare Part D, there is bipartisan support for provisions to cap and smooth out-of-pocket spending for seniors; however, it is not likely these provisions will move without being attached to a larger drug pricing or health care bill.
Legislation that would limit or restrict balance or surprise billing remains politically popular at the overarching level. However, differences in approach — notably arbitration or establishing a benchmark rate — have prevented resolution.
This issue has not fallen along partisan lines, with all three major proposals from this Congress enjoying strong bipartisan support. Lines have instead formed around the various industry stakeholders supporting the different proposals and, to some extent, committee membership and jurisdiction.
Expansion of Medicare coverage of care delivered by telehealth is one additional issue to keep on the radar screen. Congress acted on this topic as part of the COVID-19 response legislation enacted this winter and spring and retaining access to telehealth care remains a popular issue particularly among health care providers and patients.
Expanding access more permanently would require further legislative action and will likely require Congress to address rates for care delivered via telehealth compared to in-person and other nuances.
The Affordable Care Act
A major legislative wild card is the outcome of California v. Texas. Depending on the scope and nature of the decision, Congress may be forced to take up legislation to address disruption that could result the court's decision.
For example, if the court were to scuttle the individual mandate along with guaranteed issue and community rating but leave the rest of the law in place, Congress may need to pass legislation to substantively protect people with preexisting conditions. However, if only the individual mandate is struck and severed from the rest of the law, legislation may be unnecessary.
If the Democrats take both Georgia Senate seats, budget reconciliation would be an available tool. Reconciliation is what Democrats employed to enact the ACA in 2010 and Republicans used in their attempt to repeal the law in 2017.
Reconciliation legislation can be passed by a simple majority vote but is a complex tool that must be used strategically and will likely require unanimity of the entire caucus to result in a tie-break vote by Vice President Kamala Harris.
Provisions included in budget reconciliation must be ruled permissible by the Senate parliamentarian. Whether legislation lowering the age for Medicare eligibility pass this hurdle is an example of a reconciliation question Democrats may ask were the Senate to be tied.
The Anticipated Biden Regulatory Agenda
As noted earlier, the high likelihood of divided government means the Biden administration will need to rely on regulatory powers to advance much of its agenda to the extent possible. In the health care space, this will include undoing or reversing a litany of Trump administration policies pertaining to the ACA, Medicaid work requirements, cuts to 340B hospitals, protections from discrimination, reproductive health care and beyond.
Some of this work will begin on day one when the administration can issue a freeze on any pending regulations. From there, the administration will determine what it will reregulate, what it will seek to reverse and what it will modify to make it its own image.
Regarding the ACA, the Biden administration would be anticipated to more actively support the individual marketplace including promoting open enrollment advertising and helping consumers navigate their insurance options. Near-term, it is anticipated that the administration will launch a special enrollment period targeted to those who have lost their employer-based insurance during the pandemic.
For many issues, policies and programs, notably those already memorialized via finalized regulations, the administration will need to go through the lengthy rulemaking process — including public comment periods — which take many months to effectuate change.
If the Democrats gain the Georgia Senate seats, this would open potential use of the Congressional Review Act, or CRA, to disapprove of more recently finalized regulations, but even if the CRA tool is available, its use would be limited.
Examples of long-finalized regulations that would need to be rewritten include those that significantly expand the reach of short-term limited duration insurance products and health reimbursement arrangements. The Biden administration may issue proposed rules to undo these changes, as Democrats generally prefer to more expansive coverage offered by plans in the federal and state exchanges.
The Biden administration is anticipated to reject state Medicaid 1115 waivers with work requirements or other limits to program benefits while looking more favorably on waivers proposing to expand access and eligibility.
And it would be anticipated to review all current and pending models promulgated via the Center for Medicare and Medicaid Innovation and aim future models at improving care for dually-eligible individuals, as well as addressing health disparities.
The incoming Biden administration likely will seek to incentivize the 12 states that have not expanded Medicaid under the ACA to do so. As Medicaid enrollment is generally countercyclical, Medicaid enrollment is up in both expansion and non-expansion states. This is occurring at the same time many states are or may be looking at cuts to their Medicaid programs given reduced tax revenue.
The Biden administration likely will seek to boost resources for states so they can maintain access to care under Medicaid, but how much can be done absent congressional action is one big question.
Other Regulatory Actions
The incoming administration will also be able to exert its influence in the myriad annual health care rules — such as the notice of benefits and payment parameters, the Medicare Advantage call letter and the annual rules that set Medicare payment and other policies for hospitals, outpatient facilities, physician offices, long-term care facilities, home health, hospice and more.
A number of Trump administration policies promulgated through the annual payment regulations — such as requiring disclosure of rates hospitals negotiate with insurers — are under legal challenge. Some of these contentious issues could be reversed by the Biden administration, such as cuts to 340B hospitals. However, in making changes to existing final rules, the administration could invite new lawsuits.
Looking ahead to 2021, health care policy will continue to cast a long shadow upon the overall agenda. A divided government will likely result in an aggressive use of regulatory tools by the incoming Biden administration to pursue policies unable to clear a Republican Senate.
Congress will have to address several health care issues, big and small, and wild cards including a raging pandemic and a pending U.S. Supreme Court case may shift the agenda at any time.
Nick Manetto is a principal and Ilisa Halpern Paul is president of the district policy group at Faegre Drinker Biddle & Reath LLP.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
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