Weekly Health Care Policy Update – June 28, 2024

In this update:

• Legislative Updates
  • Legislators Send Letter to CMS on Use of AI in Medicare Advantage
• Federal Agencies
  • HHS Finalizes Rule on Information Blocking Penalties for Providers
  • CMS Issues CY 2025 Home Health Proposed Rule
  • FDA Issues Draft Guidance on Diversity Action Plans in Clinical Trials for Comment
• Other Updates
  • Supreme Court Overrules Chevron Doctrine
  • Fifth Circuit Court Issues Mixed Decision on Preventive Services Mandate
  • CBO, JCT Estimate Extension of ARP Enhanced Tax Credits Would Cost $335 Billion over Ten Years
  • AHA Sends Letters to House and Senate on Nurse Staffing Mandates
• New York State Updates
  • DOH Issues Public Notice Regarding New Rate Methodology for Medically Fragile Pediatric Facilities
  • DOH Issues Proposed Regulations to Clarify Provider Enrollment and Access to Medicaid Data in the SHIN-NY
  • DOH to Add Medicaid Coverage of Critical Time Intervention (CTI) Services 
  • CMS Approves New York SPA Updating Health Home Serving Children Rates and Adding Rates for High Fidelity Wraparound

Legislative Update

Legislators Send Letter to CMS on Use of AI in Medicare Advantage
On June 25^th, a bipartisan group of legislators from both the House and Senate sent a letter urging the Centers for Medicare and Medicaid (CMS) to increase oversight of artificial intelligence (AI) and other algorithmic software tools in Medicare Advantage (MA) coverage determinations. Reports have found that several MA insurers are using these technologies to assist in prior authorization and coverage terminations, with recent suits against UnitedHealth and Cigna. Earlier this year, CMS finalized rules and issued guidance clarifying that MA plans cannot solely rely on these technologies during coverage determinations, but the legislators point out that there are no enforcement mechanisms in place. The legislators set forth a number of interim recommendations until CMS can conduct a systematic evaluation of these technologies to determine future use.
 
The announcement is available here.

Federal Agencies

HHS Finalizes Rule on Information Blocking Penalties for Providers
On June 24^th, the Department of Health and Human Services (HHS) finalized a rule that establishes disincentives for health care providers that engage in information blocking practices. Information blocking is defined as knowingly interfering with access to electronic health information. Since April 2021, HHS has received over 1,000 claims of possible information blocking. The HHS Office of Inspector General (OIG) is responsible for determining whether information blocking has occurred. In this rule, HHS outlined three disincentives: 

• Meaningful EHR User for Hospitals: If a Medicare Promoting Interoperability Program-eligible hospital or critical access hospital (CAH) commits information blocking, it cannot be a meaningful EHR user during the calendar year of the EHR reporting period in question. There are differential payment reductions based on hospital type.
• Meaningful EHR User for Clinicians: If a Merit-based Incentive Payment System-eligible clinician or group practice commits information blocking, it cannot be a meaningful EHR user during the calendar year of the performance period in question.
• ACO Participation: If a Medicare Shared Savings Program Accountable Care Organization (ACO) commits information blocking, it may be ineligible to participate in the program for at least one year. CMS staff has indicated that other considerations may be weighed before barring participation. This disincentive will not go into effect until 2025.

Stakeholders, including the American Hospital Association (AHA), have expressed concern over this rule’s impact on economically fragile hospitals. Since this rule only targets providers enrolled in federal quality programs, further regulations are expected. HHS will not investigate conduct prior to the final rule’s enactment 30 days after publication in the Federal Register.

The announcement is available here.

CMS Issues CY 2025 Home Health Proposed Rule 
On June 26^th, CMS issued the Calendar Year (CY) 2025 Home Health Prospective Payment System proposed rule. Overall, CMS estimates that the proposed rule will decrease Medicare payments to home health agencies (HHAs) by 1.7%, or $280 million total, compared to CY 2024. The decrease is the result of a 2.5% home health payment update, a 3.6% decrease from the permanent behavior adjustment (due to continuing implementation of the Patient-Driven Groupings Model), and a 0.6% decrease that reflects a proposed fixed dollar loss for outlier payments.

Additional key provisions of the proposed rule include: 

• LUPA: CMS is proposing to establish a definitive occupational therapy (OT) specific low utilization payment adjustment (LUPA) add-on factor and discontinue the temporary use of the physical therapy (PT) LUPA add-on factor as a proxy.
• PDGM Case-Mix Weights: CMS is proposing to recalibrate the case-mix weights — including the functional levels and comorbidity adjustment subgroups — and LUPA thresholds using CY 2023 data, to more accurately pay for the types of patients HHAs are serving.
• Wage Index: CMS is proposing to update the home health wage index and adopt the new labor market delineations based on data collected from the 2020 Decennial Census.
• Quality Reporting Program (QRP): CMS is proposing to collect four new items as standardized patient assessment data elements in the social determinants of health (SDOH) category – one living situation item, two food items, and one utilities item – beginning with the CY 2027 HH QRP.
• Conditions of Payment: CMS is proposing to require HHAs to develop, implement, and maintain a patient acceptance to service policy that is applied consistently to each prospective patient referred for home health care.

The proposed rule also includes three Requests for Information (RFIs). They seek input on (1) potential future measure concepts that could fill measurement gaps in the expanded Home Health Value-Based Purchasing (HHVBP) Model; (2) the feasibility of rehabilitative therapists conducting the comprehensive assessment for cases that have both therapy and nursing services ordered as part of the plan of care; and (3) the HHA scope of services and how these services interact with HHA operations.

The proposed rule will be open for comment through August 26^th. The rule, including a fact sheet, is available here.

FDA Issues Draft Guidance on Diversity Action Plans in Clinical Trials for Comment
On June 26^th, the Food and Drug Administration (FDA) issued draft guidance on the use of Diversity Action Plans (DAPs) in clinical trials. Under the Food and Drug Omnibus Reform Act of 2022, clinical trial sponsors are required to submit a DAP to ensure that they have considered the need to enroll trial participants from underrepresented populations. If finalized, the guidance would go into effect 180 days afterwards.

The guidance is available here.

Other Updates

Supreme Court Overrules Chevron Doctrine
On June 28^th, the Supreme Court issued a ruling overturning the 1984 decision in Chevron v. Natural Resources Defense Council, a landmark case that established that courts should defer to federal agencies’ interpretation of ambiguous statutory language. Although the Court ruled that Chevron doctrine should no longer be applied by courts moving forward, it also explicitly noted that the ruling in this case does not in itself overturn past rulings reliant on Chevron which determined that rules were acceptable.
 
As a result of this case, regulatory actions by CMS and other HHS agencies will likely be subject to more legal actions and will face more scrutiny from courts in such actions. In recent years, many CMS policies, such as Medicare reimbursement changes, Medicare drug negotiation policies, and the No Surprises Act, have already been the subject of lawsuits that in some cases have been elevated to the Supreme Court. However, lower courts are now much more likely to apply their own interpretation to check agency actions.
 
Fifth Circuit Court Issues Mixed Decision on Preventive Services Mandate
On June 21^st, the Fifth Circuit Court of Appeals issued a mixed ruling on the Affordable Care Act (ACA) requirement that health plans cover preventive care items and services without cost-sharing. The Court affirmed the lower court ruling that members of the U.S. Preventive Services Task Force (USPSTF) should be nominated by the president and confirmed by the Senate, given the power that its recommendations wield in setting coverage requirements. The Court also affirmed the lower court ruling that, given the improper appointments of Task Force members, the plaintiffs in this case cannot be compelled to cover preventive items and services recommended by the Task Force since the ACA became law.
 
Critically, the Court reversed a lower court ruling extending this relief from preventive care coverage requirements to all insurers. Nationwide enforcement of the lower court ruling was on hold during the appeals process. Additionally, the Court sent several questions back to the district court, including whether the Department of Health and Human Services (HHS) can require insurer coverage of immunizations recommended by the Advisory Committee on Immunization Practices (ACIP) and preventive care and screenings included in guidelines support by the Health Resources and Services Administration (HRSA).
 
These ACIP and HRSA questions will be remanded to Judge Reed O’Connor who has issued several rulings against the ACA in the past. In the meantime, legal observers note other employers may file lawsuits seeking similar remedies to those provided to Braidwood Management in this case. This could set up conflicting rulings and ripen the issue for consideration by the Supreme Court.
 
CBO, JCT Estimate Extension of ARP Enhanced Tax Credits Would Cost $335 Billion over Ten Years
On June 24^th, the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) jointly issued an estimate of the cost of making permanent the enhanced premium tax credits first created in the American Rescue Plan Act (ARPA). These enhanced credits are currently set to expire at the end of calendar year 2025. CBO and JCT estimate that making these credits permanent would add $335 billion to the federal deficit over the ten-year budget window. The change would also increase the number of Americans with health insurance by 3.4 million people, the net effect of a 6.9 million-enrollee increase in Marketplace coverage and a 3.5 million-person decrease in employer-sponsored insurance.
 
The estimates were requested by two House Republican Committee chairs, Jodey Arrington (TX) of the Budget Committee and Jason Smith (MO) of the Ways & Means Committee, as Congress begins to prepare for debate on the future of the tax credits.
 
The estimate is available here.
 
AHA Sends Letters to House and Senate on Nurse Staffing Mandates
On June 24^th, the American Hospital Association (AHA) sent letters to the U.S. Senate and House of Representatives in support of resolutions expressing disapproval of minimum nurse staffing mandates. Earlier this year, CMS finalized a rule that establishes minimum staffing requirements for long-term care (LTC)  facilities. The AHA principally objects to the rule on the grounds of its inflexibility and “one-size-fits-all” approach to safe staffing, which involves consideration of various, dynamic factors. According to AHA, numeric staffing requirements are incompatible with more innovative care delivery models that leverage interprofessional teams. Lastly, the AHA points to the potential closure of nursing homes and existing shortages of nurses and other direct care professionals as further evidence against the rule.
 
The Congressional Review Act (CRA) allows Congress to overturn rules issued by the Executive Branch. S.J.Res. 91, introduced by Senator Lankford (R-OK), and H.J.Res. 139, introduced by Representative Fischbach (R-MN), are joint resolutions for congressional disapproval. Aside from Senator Manchin (D-WV) and Senator Tester (D-MT), there are only Republican cosponsors of the resolutions. If either resolution receives a simple majority in both chambers and is signed by the President (or Congress overrides a presidential veto) the rule would not go into effect.
 
The announcement is available here.

New York State Updates

DOH Issues Public Notice Regarding New Rate Methodology for Medically Fragile Pediatric Facilities
On June 26^th, the New York State (NYS) Department of Health (DOH) issued a public notice indicating that, effective on or after July 1^st, qualified pediatric Article 28 Diagnostic and Treatment Centers (D&TCs) will be eligible for a new Medicaid rate that reflects the costs associated with providing care to children with medical fragility. This change, which was included as part of the 2024-25 Enacted NYS Budget, will apply to pediatric D&TCs participating in a demonstration program for children with medical fragility for which at least 80% of total Medicaid fee-for-service reimbursements derive from the provision of services to children under age 21 with medical fragility. The pediatric D&TC must also be affiliated with a pediatric residential health care facility (either freestanding or a discrete unit within a facility) that is authorized to provide nursing, medical, psychological, and counseling support services to children under age 21.

The public notice is available in the State Register here. Public comment may be submitted to spa_inquiries@health.ny.gov.

DOH Issues Proposed Regulations to Clarify Provider Enrollment and Access to Medicaid Data in the SHIN-NY
On June 26^th, DOH issued proposed regulations to amend section 504.9 of Title 18 of the New York Codes, Rules, and Regulations (NYCRR) to clarify provider access to Medicaid Confidential Data (MCD) in the Statewide Healthcare Information Network for New York (SHIN-NY). The proposed regulations would: 

• Clarify that patient consent is obtained at the provider level, removing any question as to whether Qualified Entities (QEs) must obtain a separate consent at the entity level in order for their participants to access data pertaining to Medicaid beneficiaries;
• Clarify that QEs are not required to enroll as Medicaid providers in order to facilitate the exchange of clinical and other data pursuant to patient consent;
• Clarify that the QEs may permissibly disclose MCD where the patient has provided consent and the disclosure is made for a purpose connected to the administration of the Medicaid program.

The proposed amendment would resolve the current inconsistency between 18 NYCRR section 504.9 and SHIN-NY regulations, SHIN-NY policy, and current practice among QE participants.

The proposed regulations are available here. Public comment may be submitted to regsqna@health.ny.gov through August 26^th.

DOH to Add Medicaid Coverage of Critical Time Intervention (CTI) Services
On June 26^th, DOH issued a public notice announcing that, effective on or after July 1, 2024, it intends to amend the State Plan to establish Medicaid coverage and payment rates for Critical Time Intervention (CTI) services. CTI services are time-limited interventions to assist individuals during the transition from inpatient psychiatric hospital, emergency, and crisis services or other institutional or incarceration settings. CTI providers will be licensed by the NYS Office of Mental Health (OMH).

This past March, OMH issued a funding opportunity for the development of 26 adult CTI teams statewide (details here). Once this State Plan Amendment (SPA) is approved, funding for these teams will change from full state aid coverage to a mix of state aid and Medicaid reimbursement.

The public notice is available in the State Register here. Public comment may be submitted to spa_inquiries@health.ny.gov.

CMS Approves New York SPA Updating Health Home Serving Children Rates and Adding Rates for High Fidelity Wraparound
On June 27^th, CMS approved New York’s SPA to update the fees for the Health Home Serving Children (HHSC) program and add an additional tiered fee for HHSC programs that are designated to provide High Fidelity Wraparound (HFW) services. The updated rates, which are effective retroactive to January 1, 2024, are available here.

The SPA is available here. The CMS approval letter is available here.