Weekly Health Care Policy Update – April 3, 2023

April 10, 2023

In this update: 

  • Administration Updates
    • Biden to Sign Measure Ending Section 201 Covid National Emergency
  • Federal Agencies
    • CMS Finalizes 2024 Medicare Advantage and Part D Rate Announcement, Phasing in New Risk Adjustment Model
    • CMS Proposes FY 2024 Hospice Payment Update
    • Narcan Nasal Spray Approved for Nonprescription Use
  • Other Updates
    • Medicare Board of Trustees Releases Annual Report
    • Texas Judge Strikes Down ACA Preventive Services Provision
    • CMS Approves New Jersey 1115 Waiver Amendment
    • HHS/CARIN Alliance Release Report on Digital Health Identity
    • UnitedHealthcare Announces Changes to Preauthorization Requirements
  • New York State Updates
    • NYS Budget Deadline Extended to April 10th
    • NYRx Medicaid Pharmacy Carveout Takes Effect
    • CMS Approves New York SPA Adding an Assessment Fee to the Health Home Program
    • CMS Approves New York SPA Continuing 25 Percent Rate Enhancement for CFTSS
    • SED Proposes Amendments for Mental Health Practitioner Diagnostic Privileges
    • OPWDD Adopts Regulations for Residential and Care Management Service Providers
    • Governor Hochul Signs Health Care Bills into Law
  • Funding Opportunities
    • SAMHSA Releases NOFO for SUD Peer Recovery Support Services
    • OASAS Releases RFA for Comprehensive Connections to Care Programs
    • SAMHSA Issues NOFOs for 2023 CCBHC New and Advancement Grants

Administration Update

Biden to Sign Measure Ending Section 201 Covid National Emergency
On March 29th, the White House announced that President Biden would sign a Joint Congressional Resolution (H.J.Res. 7). Upon signing, the resolution will immediately terminate the Section 201 national emergency declaration for Covid-19, which was issued by President Trump in March 2020. The resolution passed the House with bipartisan support in February and the Senate voted in favor 68-23 on March 29th.
 
Note that the Section 201 declaration is not the same as the Covid-19 Public Health Emergency (PHE), which is still scheduled to end on May 11th. In January, President Biden had opposed a previous resolution that would have ended both the Section 201 declaration and the Covid-19 PHE simultaneously. The end of the Section 201 emergency will result in: 

  • Expiration of the authority for Section 1135 waivers related to Covid-19, which offer emergency flexibilities for Medicare, Medicaid, and CHIP programs. Note that many Section 1135 waivers were approved with specified expiration dates on or after the end of the PHE, including the waiver applying to New York’s Office for People with Developmental Disabilities (OPWDD) programs.
  • Expiration of certain flexibilities related to the Health Insurance Portability and Accountability Act (HIPAA), and in particular, the extension of election and notice deadlines for COBRA continuation coverage.

Many of these waivers have become irrelevant as Covid precautions have become relaxed and as health care stakeholders prepare for the previously announced end of the national emergency and PHE on May 11th.
 
The text of the Joint Resolution is available here. The expiration was also discussed at the March 30th White House press conference (transcript available here).

Federal Agencies

CMS Finalizes 2024 Medicare Advantage and Part D Rate Announcement, Phasing in New Risk Adjustment Model
On March 31st, the Centers for Medicare and Medicaid Services (CMS) released the Calendar Year (CY) 2024 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies. Overall, MA plan payments are expected to increase 3.32% relative to 2023. This is more than two percentage points higher than the 1.03% increase proposed in the Advance Notice. The increase is the net result of: 

  • A 2.28% increase in the effective growth rate (up from 2.09% in the Advance Notice);
  • A 1.24% decrease due to changes in Star Ratings (unchanged);
  • A 2.16% decrease due to risk model revision and normalization (up from a 3.12% decrease); and
  • A 4.44% increase in risk score trend (up from 3.30%).

CMS will implement the new 2024 Hierarchical Condition Categories (HCC) model (HCC v28) that was proposed in the Advance Notice, but it will be phased in over three years. Specifically: 

  • For CY 2024, CMS will calculate MA risk scores as a blend of 67% of the risk scores under the current 2020 risk adjustment model (HCC v24) and 33% of the risk scores under the new model.
  • For CY 2025, CMS intends to use a blend of 33% of HCC v24 and 67% of HCC v28.
  • For CY 2026, CMS intends to convert fully to HCC v28.

As proposed, the revised model will also include restructured condition categories using ICD-10, updated underlying fee-for-service data years (from 2014 diagnoses/2015 expenditures to 2018 diagnoses/2019 expenditures), and revisions to certain specific conditions. In particular, CMS did not make changes to its proposals to: 

  • Remove all codes related to protein-calorie malnutrition (HCC 21) and angina pectoris (HCC 88), and 30 codes related to vascular disease (HCC 108), from payment HCCs;
  • Constrain coefficients for all diabetes HCCs to the same level; and
  • Constrain coefficients for four congestive heart failure (CHF) HCCs to the same level.

The final risk score trend for 2024 is 3.30% under HCC v28 and 5.00% under HCC v24. As described above, CMS has blended these two amounts to yield the 4.44% overall trend. CMS noted the large number of comments on the proposed changes to the risk adjustment model and provided significantly more detail on the predictive accuracy of the model in the announcement.
 
Other notable policies finalized in the announcement include: 

  • Growth Rates: This year’s Effective Growth Rate includes a technical adjustment to the per capita cost calculations related to indirect and direct medical education costs. The adjustment will be phased in over three years, with 33% applied to CY 2024.
  • Inflation Reduction Act (IRA) Updates: The IRA made changes to the standard Part D drug benefit. For CY 2024, these updates include:  
    • Cost-sharing for Part D drugs will be eliminated for beneficiaries in the catastrophic phase of coverage;
    • The Low-Income Subsidy (LIS) program will be expanded to beneficiaries who earn 135-150% FPL and meet resource limit requirements;
    • Part D plans must not apply the deductible to any Part D covered insulin product and must charge no more than $35 per month’s supply of a covered insulin product in the initial coverage phase and the coverage gap phase;
    • Part D plans must not apply the deductible to an adult vaccine recommended by the Advisory Committee on Immunization Practices and must charge no cost-sharing at any point in the benefit for such vaccines; and
    • The annual growth in the Base Beneficiary Premium will be capped at 6%: the lesser of a 6% annual increase, or the amount that would otherwise apply under the prior methodology had the IRA not been enacted.
  • Part C and D Star Ratings: CMS provided the list of eligible disasters for the extreme and uncontrollable circumstances adjustment, updated several measure specifications, and published a list of measures included in Part C and D Improvement Measures and Categorical Adjustment Index for the 2024 Star Ratings to be issued later this year.

The full Rate Announcement is available here. A Fact Sheet, including an FAQ document, is available here.
 
CMS Proposes FY 2024 Hospice Payment Update
On March 31st, CMS released a proposed rule updating Medicare hospice payment rates for fiscal year (FY) 2024. The FY 2024 payment update percentage is 2.8% above the FY2023 payment rate. This represents an increase of approximately $720 million in hospice payments and is the result of a 3.0% market basket increase reduced by a 0.2 percentage point productivity adjustment. In a press release accompanying the proposed rule, CMS states it is “looking closely at the hospice industry, as we have increasing concerns about fraud, waste and abuse in this space.” CMS stresses that the rule is “part of a larger effort by CMS to address hospice fraud, waste and abuse that will continue this year.”
 
Additional highlights of the proposed rule include: 

  • Utilization Trend Data: The proposed rule includes analysis of historic hospice utilization data and seeks comment on issues such as increasing access to higher levels of hospice care, non-hospice spending during a hospice election, ownership transparency, and ways to examine health equity under the hospice benefit.
  • Hospice Quality Reporting Program (HQRP): The rule: 
    • Proposes to codify the HQRP data submission threshold policy adopted in the FY 2016 final rule;
    • Proposes to create the Hospice Outcomes and Patient Evaluation (HOPE) tool to provide quality data for the HQRP through standardized data collection and to provide additional clinical data to inform future payment refinements;
    • Provides an update on quality measure development and health equity efforts; and
    • Provides an update on the Consumer Assessment of Healthcare Providers and Systems (CAHPS) Hospice Survey mode experiment.
  • Program Survey and Enforcement: HHS is statutorily required to create a Special Focus Program (SFP) for poor-performing hospice programs. In this proposed rule, CMS notes that it is continuing to develop the SFP and expects to include a proposal implementing the SFP in the CY 2024 Home Health Prospective Payment System Payment Update Rule.
  • Physician Enrollment: The rule proposes that physicians who order or certify hospice services for Medicare beneficiaries be enrolled in or validly opted-out of Medicare and a payment prerequisite.

The proposed rule is scheduled for publication in the April 4th Federal Register. Comments will be accepted until May 30th. An unpublished version of the rule is available here and a press release is available here.
 
Narcan Nasal Spray Approved for Nonprescription Use
On March 29th, the Food and Drug Administration (FDA) approved naloxone hydrochloride (“Narcan”) nasal spray for over-the-counter (OTC) nonprescription use in a 4 milligram dosage. Narcan rapidly reverses, and is the standard treatment for, opioid overdose. Narcan nasal spray was first approved by the FDA in 2015 as a prescription drug. In order to change the status of the drug, Narcan’s manufacturer provided data demonstrating that the drug is safe and effective for use as directed in its proposed labeling, and that consumers can understand how to use the drug safely and effectively without the supervision of a health care professional. The approval follows the unanimous recommendation of the FDA’s advisory committee in February 2023. The approval will allow the drug to be available in locations such as drug stores, convenience stores, grocery stores, gas stations, and online. It is expected to be available OTC by late summer 2023.
 
More information is available here.

Other Updates

Medicare Board of Trustees Releases Annual Report
On March 31st, the Medicare Board of Trustees released their 2023 Annual Report for Medicare’s two trust funds, the Hospital Insurance (HI) Trust Fund and the Supplementary Medical Insurance (SMI) Trust Fund. According to the report, the HI Trust Fund will be able to pay 100% of scheduled benefits until 2031, three years later than projected last year, due to lower-than-projected spending trends. The report notes that “actual fee-for-service per capita spending has been consistently below the pre-pandemic projections throughout the PHE, even into 2022,” and credits several factors, including “lower average morbidity among the surviving population from COVID-related deaths”, more dual eligibles enrolling in MA, and the shift of joint replacement procedures from inpatient to outpatient settings.
 
The Supplementary SMI Trust Fund remains adequately financed indefinitely, since its main financing sources (premiums and federal contributions from the Treasury) are adjusted each year to cover costs. SMI Trust Fund expenditures for Medicare Part B as a share of GDP are also projected to be lower than previously estimated, also based on lower than projected health care spending.
 
The report notes that lawmakers “have many options for changes that would reduce or eliminate the long-term financing shortfalls” and urge Congress “to consider such options for both Medicare and Social Security.” They specifically encourage lawmakers to consider proposals for Medicare in the President’s FY 2024 Budget.
 
The full report is available here.
 
Texas Judge Strikes Down ACA Preventive Services Provision
On March 30th, U.S. District Court Judge Reed O’Connor of the Northern District of Texas issued an opinion invalidating portions of the Affordable Care Act (ACA) that require coverage of preventive services recommended by the United States Preventive Services Task Force (USPSTF) at no cost to the patient. The ruling specifically applies to insurers and employers offering plans that cover HIV-prevention measures such as PrEP (which can cost up to $20,000 per year), but the ruling’s entire scope is unclear. The plaintiff, Dr. Steven Hotze, claims that offering the drugs to his employees facilitates “behaviors such as homosexual sodomy, prostitution, and intravenous drug use,” conflicting with his religious beliefs. The ruling applies to recommendations issued by the USPSTF after March 23, 2010, the day after the ACA was signed into law, though many recommendations that pre-date the ACA have been updated since then.
 
The Association for Community Affiliated Plans, the American Medical Association, the American College of Obstetricians and Gynecologists, and the Human Rights Campaign have all publicly opposed the decision. The Biden Administration is expected to appeal the ruling and request a stay as the case continues.
 
CMS Approves New Jersey 1115 Waiver Amendment
On March 30th, CMS approved New Jersey’s request for an amendment to its 1115 Medicaid waiver, the FamilyCare Comprehensive Demonstration. Along with eligibility changes and new service carve-ins, the waiver includes various new initiatives, including: 

  • $30 million for a new incentive-based payment program, the Behavioral Health Promoting Interoperability Program (BH PIP), to support connectivity of behavioral health providers to the state’s Health Information Exchange (HIE);
  • $79 million in infrastructure funding as well as approval for federal matching funds for additional health-related social needs (HRSN) services, including nutritional services and transitional housing supports; and
  • $25 million for community health worker (CHW) pilots to be administered by managed care organizations (MCOs).

The Biden Administration has encouraged states to propose such waivers, focused on expanding coverage, reducing health disparities, and advancing “whole-person care” including addressing HRSNs.
 
New Jersey issued a press release on the waiver, which is available here. The full text of the waiver approval is available here.

HHS/CARIN Alliance Release Report on Digital Health Identity
On March 22nd, the CARIN Alliance and the Department of Health and Human Services (HHS) released a report to lay a foundation “for how individuals can voluntarily digital identity proof themselves once and use that same digital credential with multiple data holders of their health information,” or access all their medical records from a single query. In developing the report, the CARIN Alliance partnered with the HHS NextGen External User Management System (XMS) team, the Office of the National Coordinator for Health Information Technology (ONC), and the Centers for Medicare and Medicaid Services (CMS), the HL7® FAST Digital Identity Tiger Team, and 25 other public/private sector stakeholders. Together, the organizations developed a health care digital identify federal “Proof of Concept” which would eliminate the need for separate portal accounts for data holders. The report offers “lessons learned and recommendations” related to testing the Proof of Concept, helping to “define how the health care system can move toward a more interoperable, equitable, privacy-centric, resilient, and secure federated digital identity ecosystem.”

The full report is available here.
 
UnitedHealthcare Announces Changes to Preauthorization Requirements
On March 29th, UnitedHealthcare announced significant changes to its prior authorization processes, in advance of federal regulations expected to be finalized shortly that would require plans to automate prior authorization. UnitedHealthcare says that it will “eliminate nearly 20% of current prior authorizations,” beginning in the third quarter of this year for most commercial, Medicare, and Medicaid plans. The company also announced that in early 2024, it will launch a national Gold Card Program which will eliminate prior authorization requirements for most procedures for provider care groups that qualify. Gold Card providers will only be required to notify UnitedHealthcare about care, rather than request authorization.
 
A press release announcing these changes is available here.

New York State Updates

NYS Budget Deadline Extended to April 10th
Today (April 3rd), Governor Hochul issued a statement on the ongoing negotiations for New York’s FY 2023-24 budget. The Governor said that “it is clear there is more work to be done before we reach an agreement.” As a result, she submitted a bill (S.6200) providing for ongoing government funding through April 10th, which the Assembly and Senate took up and passed, and which the Governor signed. Further extensions may be made through the same process until the budget is finalized.
 
The statement is available here.
 
NYRx Medicaid Pharmacy Carveout Takes Effect
On April 1st, Governor Hochul announced that the carve-out of Medicaid pharmacy benefits was taking effect as scheduled under current legislation. All Medicaid enrollees will now access their pharmacy benefits through NYRx, the state’s fee-for-service pharmacy benefit program. The announcement noted that under NYRx, New York will have greater negotiating power, a single statewide pharmacy network, and a single comprehensive list of all covered drugs. The carveout has been a significant issue during the budget process and may remain a topic of negotiation even though the implementation has now begun.  
 
The press release is available here.
 
CMS Approves New York SPA Adding an Assessment Fee to the Health Home Program
On March 27th, CMS approved New York’s State Plan Amendment (SPA) to add an annual assessment fee to the Children’s Health Home program to pay Health Homes for conducting a Home and Community-Based Services (HCBS) eligibility determination. This proposal is being implemented as part of the State’s Enhanced Federal Medical Assistance Percentage (FMAP) spending plan, and will fund the assessment fee from April 1, 2021 through March 31, 2024. After this period, the regular FMAP will be used for the continuation of the fee.
 
The assessment fee will compensate the Health Home for: 

  • Evaluation and/or re-evaluation of HCBS Level of Care;
  • Assessment and/or re-assessment of the need for HCBS; and
  • Inclusion of all aspects of an HCBS Plan of Care in the Health Home’s Comprehensive Care Plan.

The fee, which was proposed in the State’s spending plan at a rate of $200, will be paid in addition to the Health Home’s per member per month payment.
 
The SPA is available here. The CMS approval letter is available here.
 
CMS Approves New York SPA Continuing 25 Percent Rate Enhancement for CFTSS
On March 27th, CMS approved New York’s SPA to permanently extend the 25% rate increase for Children and Family Treatment and Support Services (CFTSS) that was temporarily implemented as part of the State’s Enhanced FMAP spending plan. This change is effective October 1, 2022.
 
The SPA is available here. The CMS approval letter is available here.
 
SED Proposes Amendments for Mental Health Practitioner Diagnostic Privileges
On March 30th, the New York State Education Department (SED) issued proposed amendments to regulations that allow licensed mental health counselors (LMHCs), licensed marriage and family therapists (LMFTs), and licensed psychoanalysts (LPs) to earn a “diagnostic privilege” by meeting specified requirements. These professions did not previously have the authority to diagnosis but were permitted to do so since 2002 under the “social worker exemption” that expired on June 24, 2022. The State enacted legislation to address the expiration of the exemption, allowing such professionals to continue to diagnose and develop treatment plans without additional requirements through June 24, 2025. During this period, they must apply to receive limited permits and gain experience for the diagnostic privilege. On November 30, 2022, SED finalized initial regulations allowing such professionals to continue to diagnose and develop treatment plans (see SPG summary here).
 
The proposed amendments implement sections 2 and 3 of Chapter 230 of the Education Law to: 

  • Clarify acceptable clinical content in education for applicants for the diagnostic privilege;
  • Define acceptable experience in diagnosis, psychotherapy, and assessment-based treatment plans;
  • Set forth application and registration requirements; and
  • Establish that the diagnostic privilege should be valid for the life of the holder unless otherwise revoked, annulled, or suspended.

The proposed amendments are available in the State Register here. Comments may be submitted to REGCOMMENTS@nysed.gov through June 21st.
 
OPWDD Adopts Regulations for Residential and Care Management Service Providers
On March 30th, OPWDD adopted regulations to add Subpart 636-3 to Title 13 of the New York Codes, Rules, and Regulations (NYCRR) to define processes for the provision of residential and care management services to individuals with intellectual and/or developmental disabilities (I/DD). The regulations formally codify the responsibilities of residential provider agencies and care management providers, the process for determining levels of need for certified residential services, the residential referral process, and internal moves requirements. The regulations are effective June 14th.
 
The notice of adoption is available in the State Register here.
 
Governor Hochul Signs Package of Health Care-Related Bills
Governor Hochul has recently signed into law the following health care-related legislation:  

  • S1331/A04015 allows pharmacists to synchronize the dispensing of multiple prescriptions for Medicaid recipients by reimbursing for partial fills.
  • S1349/A4016 requires the State to apply for federal matching funds to support the provision of hospice services for residents of assisted living programs.
  • S01324/A4131 repeals certain provisions relating to claims for qualifying health care costs under the NYS Medical Indemnity Fund.
  • S1350/A3693 requires health plans and pharmacy benefit managers to count manufacturers’ discounts towards an individual’s cost-sharing maximum calculation only for certain brand-name drugs and all generic drugs.
  • S823/A2890 requires applications submitted by individuals with I/DD for eligibility determinations and service authorizations to be processed in a timely manner and eliminates a quarterly reporting requirement concerning eligibility determinations and service authorizations.
  • S837/A4132 clarifies regulations that protect the confidentiality of vaccine information related to the sharing of vaccine registry information.

Funding Opportunities

SAMHSA Releases NOFO for SUD Peer Recovery Support Services
On March 28th, the Substance Abuse and Mental Health Services Administration (SAMHSA) released a Notice of Funding Opportunity (NOFO) seeking applicants to provide peer recovery support services to individuals with substance use disorders (SUD) or co-occurring substance use and mental disorders (COD). Funding will support the delivery of recovery services and Peer Recovery Support Services training for individuals with SUD and COD, including those in recovery from these disorders.
 
Through this opportunity, SAMHSA will award $1.2 million in total annual funding to four applicants (up to $300,000 annually per awardee) over a five-year program period. Eligible applicants include health facilities or other public and private non-profit entities.
 
The NOFO is available here. Applications are due on May 30th. Questions may be submitted to Timothy Jean at RCSP@samhsa.hhs.gov.
 
OASAS Releases RFA for Comprehensive Connections to Care Programs
On March 30th, the Office of Addiction Services and Supports (OASAS) released a Request for Applications (RFA) for the development of a comprehensive Connections to Care Program that will support long-term substance use disorder (SUD) recovery for underserved, vulnerable target populations. Services include direct in-person and telehealth contacts, coordination of transportation, direct linkage, and assistance solving access barriers, including harm reduction and recovery services. Services may be provided by certified peer advocates, care managers, and/or clinical staff. Funding may only be used for new services or to enhance existing services.
 
Through this opportunity, OASAS will award $2.2 million in total annual funding to eleven applicants (up to $200,000 annually per awardee) over a three-year program period. Eligible applicants must be at least one of the following: 

  • OASAS-certified and/or funded by OASAS State Aid;
  • Office of Mental Health (OMH) Integrated Outpatient Services (IOS) provider;
  • Behavioral health Independent Practice Association (IPA);
  • Entity applying as a lead agency for a SOR-funded regional network; and/or
  • Graduate of the OMH clinic initiative to support provision of medication assisted treatment.

The RFA is available here. Applications are due on May 10th. Questions may be submitted to Grants@oasas.ny.gov with the subject line “RFA SETT-23008” through April 7th. There will be a virtual applicant conference on April 5th at 3pm.
 
SAMHSA Issues NOFOs for 2023 CCBHC New and Advancement Grants
On March 18th, SAMHSA released the following two NOFOs for Certified Community Behavioral Health Clinics (CCBHCs): 

  • Planning, Development, and Implementation Grants (to establish new CCBHCs); and 
  • Improvement and Advancement Grants (to enhance and support existing CCBHCs) .

CCBHCs provide comprehensive person- and family-centered services that aim to increase access to community-based care, stabilize individuals in crisis, and provide the necessary treatment and recovery support services for individuals with complex mental and substance use disorders. Through these opportunities, over 120 organizations will be awarded up to $1 million in annual funding during the four-year grant period. 
 
The Planning, Development, and Implementation NOFO is available here and the Improvement and Advancement NOFO is available here. SPG’s summaries of each opportunity are available here and here, respectively. Applications are due on May 22nd.