On Aug. 31, 2021, the Department of Health and Human Services’ Health Resources and Services Administration (HRSA) issued a notice announcing the reorganization of several parts of the agency. This is not the first effort in recent years to reorganize HRSA. On June 3, 2020, the Trump administration issued a notice to make changes to HRSA’s organization.

The most recent notice announced the creation of the Provider Relief Bureau, which will replace the HRSA Office of Provider Support created by the Trump administration. The new bureau will be responsible for managing the $175 billion Provider Relief Fund created by the CARES Act to compensate for expenses and lost revenue related to the COVID-19 pandemic. This comes at a time when providers are pushing for the release of $44 billion remaining from the CARES Act provision.

In addition, the notice details the objective and responsibilities of the Office for the Advancement of Telehealth, which was established in HRSA’s Office of the Administrator in Jan. 2021 as part of the Trump administration reorganization. The Office for the Advancement of Telehealth includes the Telehealth Innovation and Services Division, which supports grant programs and technical assistance.

The notice also clarifies that the organ donation and transplantation programs will remain with HRSA’s Health Systems Bureau (formerly known as the Healthcare Systems Bureau). The Trump administration reorganization had moved the transplant programs out of the agency to the Office of the Assistant Secretary for Public Health.

Read more on healthcare policy on McGuireWoods Consulting’s website.

This week in Washington: House passes budget resolution with compromise, setting up a September deadline for infrastructure bill vote.

House Passes Budget Resolution
On Aug. 24, the House voted 220-212 to pass a $3.5 trillion budget resolution and also advanced a $1 trillion bipartisan infrastructure bill. The vote allows Democrats to write and approve the spending package without Republican support. This vote came after House leadership compromised with centrist Democrats by agreeing to a Sept. 27 deadline for the infrastructure bill vote. The reconciliation instructions make way for health care measures such as extending the Affordable Care Act (ACA) tax credits, expanding Medicare benefits and closing the Medicaid coverage gap. The resolution assumes these measures will be paid for by drug pricing reforms.

Reps. Kuster and McKinley Request a New Formulary Tier for Generics and Biosimilars
On Aug. 25, Reps. Annie Kuster (D-NH) and David McKinley (R-WV) wrote to the Centers for Medicare and Medicaid Services (CMS) requesting the creation of a preferred formulary tier just for generics and biosimilars. In addition, the representatives asked CMS to set a lower coinsurance for the specialty generic and biosimilar tier, and that brand drugs be prohibited from the specialty tier. The letter can be found here.

Read more on healthcare policy in McGuireWoods Consulting’s Washington Healthcare Update.

This week in Washington: Senate passes infrastructure bill; Senate passes budget resolution with reconciliation instructions; Congress enters recess with House members to return Aug. 23.

Senate Passes Infrastructure Bill

On Aug. 10, the Senate voted 69-30 to pass the bipartisan infrastructure bill, with 19 Republicans voting in favor. The path forward for the bill is not straightforward, as House Speaker Nancy Pelosi has repeatedly stated that the House will not take up the infrastructure bill until the Senate passes the reconciliation package.

The infrastructure bill includes two offsets related to drugs: it would delay the Trump-era Part D drug rebate rule and require drug companies to refund Medicare for leftover medicine when vials contain more than patients need. The rebate rule was intended to eliminate Part D rebates unless they are shared upfront at the point of sale, and its delay will offset $49 billion. The measure, which requires drug companies to pay back Medicare Part B for unused portions of drugs packaged in vials, would save $3 billion over a decade.

Budget Resolution Passes Senate with Instructions Setting Up Healthcare Debate in the Fall

In the early morning, the Senate adopted a budget resolution with reconciliation instructions after 14 hours of continuous amendment votes. This will allow the Senate to deliver legislation to address the Biden administration’s “human infrastructure” legislation without Republican votes. The budget resolution calls for a $3.5 trillion framework of climate and social initiatives, including subsidized childcare, expanded Medicare and paid family and medical leave benefits. The House will return early from their district work period to consider the resolution. The budget measure instructs committees to begin drafting the pieces of President Joe Biden’s plan, with a flexible deadline of Sept. 15.

Some of the health issues the resolution makes way for include: adding dental, vision and hearing benefits to Medicare; lowering the age of Medicare eligibility; permitting Medicare to negotiate drug prices; and addressing the “Medicaid Gap” created by some states not having expanded their Medicaid programs. In addition, it is expected that the reconciliation package may also include other drug pricing reforms. Two Democratic senators who already voted for the resolution are expressing discomfort with the top line $3.5 trillion number.

Read more on healthcare policy in McGuireWoods Consulting’s Washington Healthcare Update.

The clock is ticking for Congress to reach a deal to raise the federal borrowing limit — the debt ceiling. On July 23, 2021, Secretary of the Treasury Janet Yellen notified Congress that, as of Aug. 1, the outstanding debt of the United States will be at the statutory limit and the Treasury would use extraordinary measures, including suspending the sale of nonmarketable debt, to prolong the period before Congress needs to act.

Under normal circumstances, the Treasury has sufficient financial resources to pay all obligations arising from discretionary and mandatory spending, including interest payments on the debt partly due to its ability to borrow funds. Once the country hits the debt ceiling, the Treasury cannot borrow more unless Congress votes to raise the ceiling. The Congressional Budget Office (CBO) and other third-party analysts predict that the extraordinary measures probably will allow the Treasury to make it to early fall or October or November before congressional action would be needed, either to raise the debt limit or suspend it. The CBO also notes that the government’s obligations are about twice as much as the revenue it expects to collect.

When Senate Democrats released their budget resolution, it did not contain a provision to raise the debt limit. On the same day, Senate Minority Leader Mitch McConnell (R-Ky.) doubled down, saying Republicans would not be a part of raising the debt limit for Democrats to spend. He in essence dared the Democrats to push through an increase in the debt limit using only Democratic votes, just as they plan to do for budget reconciliation. On Aug. 11, Senate Majority Leader Chuck Schumer (D-N.Y.) pointed out that this usually has been a bipartisan issue and that the White House and the Treasury wanted this to be resolved outside of budget reconciliation, so it would be a bipartisan response and because rules related to reconciliation would limit solutions.

Read more on the debt ceiling on McGuireWoods Consulting’s website.

On Aug. 10, 2021, the Senate passed the infrastructure bill, called the Infrastructure Investment and Jobs Act (IIJA) in a 69-30 vote. The bill will now wait for consideration in the House of Representatives. The total cost of the bill is $1.2 trillion with $548 billion in new spending. The bill reauthorizes the traditional surface transportation programs for five years, and provides additional funding for energy, water and broadband.

The IIJA includes the committee-passed surface transportation reauthorization bills from the Commerce and Environment and Public Works Committees, the Drinking Water and Wastewater Infrastructure Act passed by the Senate, and the Energy Infrastructure Act approved by the Energy and Natural Resources Committee.

Read more on McGuireWoods Consulting’s website for a breakdown on new spending included in the bill, as well as details on topline provisions included in the legislation.

The courts continue to play an important role in health policy. 2020 saw several notable lawsuits related to the Affordable Care Act (ACA). Several other Trump administration policies were challenged, including Medicare payment policies, price transparency, how the Medicaid program can change and whether Medicaid beneficiaries can sue over curtailed benefits, and immigration changes affecting access to programs like Medicaid. By June 2021, the Supreme Court had ruled in the risk corridors case and the case of Texas v. United States.

The courts will play an important role going forward, and the Supreme Court has agreed to take up several cases related to healthcare in the next term.

2022 Cases

340B Reimbursement. On July 2, 2021, the Supreme Court stated that it would hear American Hospital Association v. Becerra, a lawsuit by hospitals over cuts to Medicare reimbursement for 340B drugs and will also hear arguments on whether a review is precluded by statute.

The Centers for Medicare and Medicaid Services (CMS) cut Medicare pay for 340B drugs by approximately 30 percent in 2018, and the district court ruled that CMS did not have the authority to make this change. CMS appealed the decision, and an appeals court upheld the pay cuts.

Medicare Disproportionate Share Payments. On July 2, 2021, the U.S. Supreme Court accepted the Department of Health and Human Services’ (HHS) request to review HHS Secretary Xavier Becerra v. Empire Health Foundation since the courts’ decisions are split. The case involves the question of whether or not the Centers for Medicare and Medicaid Services (CMS) must include patients who have exhausted their Medicare Part A benefits when calculating disproportionate share hospital (DSH) payments.

The issue stems from a 2005 rule in which HHS stated that although patients are entitled to benefits under Medicare if they have used all of their Part A benefits, Medicare will no longer pay providers for their care. As a result, hospitals sued HHS, accusing the Department of incorrectly equating the statutory language of “entitled” to with “eligible” for benefits. Two circuit courts sided with HHS, finding the law was ambiguous and the secretary’s interpretation of the law was reasonable. However, the 9th Circuit Court ruled earlier this year in favor of the hospitals, stating that “entitled” and “eligible” cannot be considered interchangeable if the statute includes both words.

States’ Ability to Recover Medicaid Beneficiaries’ Settlement Costs. On July 2, 2021, the Supreme Court agreed to hear Gallardo v. Marstiller, a case on whether state Medicaid agencies can recover costs for Medicaid beneficiaries’ past medical expenses from settlements that are aimed at compensating them for their future medical costs.

The case revolves around a Florida woman, Gianinna Gallardo, who was hit by a truck while getting off a school bus at 13 years of age in 2008, and has been in a vegetative state since. She received an $800,000 settlement for her medical expenses and other damages, but the amount only covered a fraction of the expenses. The Florida Agency for Health Care Administration wanted to recover $300,000 from the settlement after its state Medicaid program paid over $860,000 for Gallardo’s care, but only $35,000 of Gallardo’s settlement was earmarked for past medical expenses. Florida statute allows Medicaid to recoup costs from payments earmarked for future expenses. Lawyers argued that Florida’s law violates federal Medicaid statute. The District Court for the Northern District of Florida agreed that the Medicaid statute preempted Florida’s statute. However, the 11th Circuit Court reversed the decision three years later.

States laws vary on whether costs can be recouped from settlements designated for future medical costs, and state supreme court decisions have been similarly varied.

Read more on healthcare policy on McGuireWoods Consulting’s website.

On Monday, Aug. 9, 2021, the Senate Budget Committee released its budget resolution for fiscal year 2022. The bill will serve as the foundation for the broad, sweeping spending bill that Democrats and President Biden hope to pass this fall. The bill aims to fulfill many of the promises made by the administration related to climate, healthcare, education, childcare, and additional infrastructure funding.

The Senate will start debating and vote on the topline numbers and policy this week. The budget resolution and the subsequent legislation drafted according to the resolution only needs a majority of the members in the House and Senate to pass. This will be the second time in 2021 Democrats use the budget reconciliation to process significant legislation.

Read more on McGuireWoods Consulting’s website for a list of the topline priorities published by Senate Democrats that they want included in the 2022 budget reconciliation bill, including funding for families, climate, infrastructure, jobs and healthcare.

This week in Washington: House in recess, Senate continues to debate bipartisan infrastructure bill, Senate to pass a budget resolution with reconciliation instructions before they leave for recess.


Bicameral Legislation to Update Food Labeling Introduced
On Aug. 4, Reps. Frank Pallone (D-NJ) and Rosa DeLauro (D-CT) and Sens. Richard Blumenthal (D-CT), Sheldon Whitehouse (D-RI) and Ed Markey (D-MA) reintroduced the Food Labeling Modernization Act in both the House and Senate. The bills would update front-of-package food labeling requirements, update ingredient lists on packaged foods and apply consumer-friendly labeling requirements. The bill was previously introduced in 2018 but was not taken up by the Energy and Commerce Committee. The bill text can be found here.


Senate Appropriations Committee Passes Funding Bill on to the Senate Floor
On Aug. 4, the Senate Appropriations Committee voted 25-5 to send the fiscal year (FY) 2022 funding bill to the Senate floor. The bill would give the Food and Drug Administration (FDA) $3.41 billion in discretionary funding, an increase of $200 million from FY 2021 levels.

Bill to Expand Substance Use Treatment in Jails and Prisons Passes Senate
On Aug. 3, the Senate passed the bipartisan Residential Substance Use Disorder Treatment Act of 2021. The bill was introduced by Sens. Sheldon Whitehouse (D-RI) and John Cornyn (R-TX) and would expand access to substance use treatment in jails and prisons. The bill was cosponsored by Sens. Thom Tillis (R-NC), Amy Klobuchar (D-MN), Dianne Feinstein (D-CA), Bill Cassidy, M.D. (R-LA), Maggie Hassan (D-NH), James Lankford (R-OK) and Tim Scott (R-SC). The bill text can be found here.

Senators Encourage Leadership to Include Provisions from the Medicaid Saves Lives Act in Reconciliation Package
On Aug. 3, a group of 30 senators led by Sens. Tammy Baldwin (D-WI), Raphael Warnock (D-GA) and Jon Ossoff (D-GA) wrote to congressional leadership to emphasize the need to include the federally funded program detailed in the Medicaid Saves Lives Act (H.R. 4595 and S. 2315) in the upcoming reconciliation package. The Medicare Saves Lives Act was introduced earlier in July and would create a Medicaid-like program to provide health care to the more than 4 million Americans currently denied health insurance through Medicaid due to where they live. The letter can be found here.

Sens. Wyden and Crapo Request Input on Mental Healthcare
On Aug. 5, chairman of the Senate Finance Committee Ron Wyden (D-OR) and Finance Committee ranking member Mike Crapo (R-ID) wrote a letter to their fellow committee members requesting input on matters related to mental healthcare. In the letter, Sens. Wyden and Crapo welcome input on how to improve the behavioral health workforce, support care integration, achieve parity and improve telehealth, and ask that proposals be submitted prior to Aug. 31. The letter states that a separate request for public- and private-sector input will be announced later this month. The letter can be found here.

Read more on healthcare policy in McGuireWoods Consulting’s Washington Healthcare Update.

This week in Washington: Senate agrees on infrastructure compromise, budget resolution with reconciliation instructions to be voted on.


76 Members of Congress Request CMS Guidance for States to Extend Postpartum Medicaid Coverage
On July 26, a group of 14 Senate and 62 House members wrote to Centers for Medicare and Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure requesting that CMS take immediate steps to implement the State plan option authority authorized by the American Rescue Plan to provide 12 months’ postpartum Medicaid coverage. The letter encourages CMS to issue guidance in the form of a State Medicaid Director Letter with an accompanying toolkit for states to facilitate implementation of the State plan no later than April 1, 2022. The letter can be found here.

Rep. Trone’s Bill to Safely Dispose of Opioids Heads to President Biden’s Desk
On July 28, Rep. David Trone (D-MD) announced that his bill, the Dispose Unused Medications and Prescription (DUMP) Opioids Act, passed the House floor and will now head to President Biden’s desk to be signed. The House bill was cosponsored by Rep. Mariannette Miller-Meeks (R-IA). The identical Senate version of the bill was introduced by Sens. John Kennedy (R-LA) and Jon Tester (D-MT) and passed the Senate earlier this year with unanimous consent. The DUMP Opioids Act would expand the Johnny Isakson and David P. Roe, M.D. Veterans Health Care and Benefits Improvement Act of 2020 to allow anyone to dispose of controlled substance medications at VA center drop boxes. The bill text can be found here.


Infrastructure Bill Compromise Includes Two Drug-Related Offsets
On July 28, the Senate voted 67-32 to take up a $1 trillion bipartisan infrastructure bill after a compromise was reached. The bill still needs to be turned into legislative text and pass both the Senate and the House. The infrastructure deal includes two offsets related to drugs: it would delay the Trump-era Part D Drug Rebate Rule and require drug companies to refund Medicare for leftover medicine when vials contain more than patients need. The rebate rule was intended to eliminate Part D rebates unless they are shared upfront at the point of sale, and its delay will offset $49 billion. The measure, which requires drug companies to pay back Medicare Part B for unused portions of drugs packaged in vials, would save $3 billion over a decade.

Sens. Cassidy and Schatz Introduce Public Health Emergency Response and Accountability Act
On June 27, Sens. Bill Cassidy (R-LA) and Brian Schatz (D-HI) introduced the Public Health Emergency Response and Accountability Act. The bill would provide automatic funding for a new Public Health Emergency Fund based on a formula similar to the budget authority provided to FEMA, with the goal of facilitating a quick response to future public health emergencies.
The bill text can be found here.

Senators Ask HHS to Support Policies that Would Allow Americans to Personally Import Certain Prescription Drugs from Canada
On July 27, Sens. Amy Klobuchar (D-MN), Chuck Grassley (R-IA), Angus King (I-ME) and Susan Collins (R-ME) sent a letter to the Department of Health and Human Services (HHS) requesting that the agency support policies to allow Americans to personally import certain prescription drugs from Canada. The letter states that the Biden administration’s recent Executive Order on Promoting Competition in the American Economy recognized that importing safe drugs from Canada could lower U.S. prescription drug prices. Sens. Klobuchar, Grassley, King and Collins recently introduced the Safe and Affordable Drugs from Canada Act, which would allow for the importation of certain prescription drugs from approved Canadian pharmacies.
The letter can be found here.

Senate to Hold Executive Session on Nominations and Bills
On Aug. 3, the Senate Health, Education, Labor and Pensions (HELP) Committee will hold an executive session to consider several nominations and bills. The executive session agenda items can be found below:

  • Nomination of David Weil to be the administrator of the Wage and Hour Division of the Department of Labor
  • Nomination of Catherine Lhamon to be assistant secretary for Civil Rights at the Department of Education
  • Nomination of Javier Ramirez to be the director of the Federal Mediation and Conciliation Service
  • S. 1486, The Pregnant Workers Fairness Act
  • S. 1543, The Suicide Training and Awareness Nationally Delivered for Universal Prevention (STANDUP) Act
  • S. 2425, The Suicide Prevention Lifeline Improvement Act
  • S. 2401, The 21st Century Assistive Technology Act
  • Any additional business for consideration

The meeting will not be broadcast to the public. For more information, click here.

Read more on healthcare policy in McGuireWoods Consulting’s Washington Healthcare Update.

On Wednesday, July 28, a bipartisan group of Senators, along with the White House, announced an infrastructure agreement. That evening, the Senate then voted to invoke cloture on the motion to proceed with consideration of the agreement by a vote of 67-32.

Every Senate Democrat voted in favor of the motion, in addition to 17 Republicans. The Republicans voting yes were:

Sens. Roy Blunt (MO), Richard Burr (NC), Shelley Moore Capito (WV), Bill Cassidy (LA), Susan Collins (ME), Kevin Cramer (ND), Mike Crapo (ID), Lindsey Graham (SC), Chuck Grassley (IA), John Hoeven (ND), Mitch McConnell (KY), Lisa Murkowski (AK), Rob Portman (OH), Jim Risch (ID), Mitt Romney (UT), Thom Tillis (NC) and Todd Young (IN).

As of July 29, Senators have not yet released legislative text of the infrastructure deal. However, lawmakers and the White House began circulating top-level outlines Wednesday evening.

Read more on the Senate outline of the legislation, how the $550 billion in new spending will be allocated, funding sources for new spending and what comes next on the McGuireWoods Consulting website.