What’s Ahead for Federal Health Policy in 2022

Health Highlights

The authors would like to thank Joel Ario, Blair Cantfil, Alexander Dworkowitz, Adam Finkelstein, Michael Kolber, Cindy Mann and Julian Polaris for their contributions.

As the Biden administration begins its second year in office, the administration remains focused on its core health policy agenda—advancing coverage, access and equity. If the Build Back Better Act (BBB) is enacted, implementation will be a focus of the administration’s activities in 2022. If not, the Department of Health & Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) still have regulatory and subregulatory tools at their disposal to advance the administration’s health policy agenda, including CMS’ strategic goals to advance health equity, expand access and drive innovation.1

This newsletter provides a look ahead at potential federal activity for 2022.

COVID-19. Addressing the COVID-19 pandemic remains a top priority for the Biden administration, from continuing to ramp up testing capacity to promoting the development of new therapeutic interventions to implementing vaccine mandates. Yet even amidst a COVID-19 surge, the administration is preparing for the end of the public health emergency (PHE), considering which flexibilities to retain and working with stakeholders to phase out others. Other COVID-related policy concerns include:

  • Unwinding the Medicaid Continuous Coverage Requirement. A key focus for CMS will be working with states to retain coverage gains made during the PHE, in large part due to the Medicaid continuous coverage requirement instituted by the Families First Coronavirus Response Act, which prohibits states from disenrolling most Medicaid beneficiaries for the duration of the PHE in exchange for a 6.2 percentage point increase in the Medicaid matching rate during this period. In light of the potential for massive coverage disruptions as the continuous coverage requirements end, CMS has already issued guidance and strategies to help states “unwind” the continuous coverage requirements and plan for redeterminations—whenever they may begin. To help prevent unnecessary coverage losses, CMS is likely to continue working over the next year to help ensure that states undertake redeterminations consistent with Medicaid regulations. While many individuals subject to Medicaid redeterminations will remain eligible for Medicaid, others will have income that exceeds the Medicaid income threshold and instead may be eligible for Marketplace financial assistance. Thus, another CMS priority is likely to be easing transitions between Medicaid and Marketplace coverage. Indeed, 2022 will likely include a renewed focus on interactions between the federally facilitated Marketplace and Medicaid to help ensure a more seamless coverage experience, and states with state-based Marketplaces may follow suit as well.
  • Telehealth. In light of the substantial growth in telehealth services during the pandemic and in acknowledgment of the critical role telehealth plays in improving health care access—spurred in part by the statutory and regulatory flexibilities put in place during the PHE—CMS will continue to evaluate telehealth services after the PHE ends. As such, CMS has already extended and expanded certain telehealth services in the final rule for the calendar year 2022 Medicare Physician Fee Schedule (MPFS). While the MPFS includes an expansion of certain Medicare telehealth services, with a focus on tele-behavioral health services, the final rule also continues to illustrate the limitations that CMS has in broadly expanding telehealth coverage and reimbursement, given statutory restrictions. Without further congressional action, statutory restrictions on geographic sites, originating sites and eligible providers will come back into effect at the end of the COVID-19 PHE. Assuming there is interest in extending these PHE-related flexibilities on a more permanent basis, the end of the PHE may force legislative action on telehealth, and there are several bills pending in Congress to do so.

Marketplace and Individual Market Coverage. In late December 2021, HHS proposed its 2023 Notice of Benefit and Payment Parameters (NBPP), which sets out proposed Marketplace policies for 2023, including a requirement that qualified health plan issuers in federally facilitated Marketplaces offer standardized plans, increased oversight over network adequacy, and new standards for agents and brokers. HHS also recently released the draft 2023 Letter to Issuers providing additional details on network adequacy oversight starting in 2023, which will need to be finalized this year. We may also see new rulemaking to ensure that short-term, limited-duration plans do not undermine the Affordable Care Act (ACA) Marketplaces by siphoning off healthy risk and driving up premiums for consumers remaining in the Marketplaces. Look for CMS to take these and other steps to bolster the individual health insurance market, which may be especially necessary if the American Rescue Plan enhanced subsidies sunset at the end of the year.

Medicaid. To ensure that individuals enrolled in Medicaid can access the care they need, CMS has signaled its plans to update Medicaid access standards; a Request for Information (RFI) is expected this month, to be followed by rulemaking later this year to develop a comprehensive access strategy to address fee-for-service payment as well as access in managed care and HCBS. CMS is also likely to focus on how to use its executive authority to work with states to advance health equity, including by supporting state strategies to address social drivers (or determinants) of health (SDOH), continuing progress to close the gap on infant and maternal mortality, and focusing on improving whole-person care for people with behavioral health and substance use disorder (SUD) needs. CMS is likely to publish new guidance on strategies to address SDOH, coverage for justice-involved populations and value-based care in Medicaid.

With more than 38.3 million children nationwide covered by Medicaid and CHIP, the federal government is also likely to continue working with states to make improving access to and quality of care for kids a priority. This work includes continued efforts to address gaps in vaccination for the youngest children as well as efforts to ensure that children retain access to other vaccinations and preventive care that may have been disrupted during the pandemic. Supporting children’s physical and mental health, as well as untangling and addressing the effect that pandemic-driven disruptions to school have had on children’s health and well-being, is likely to be a cross-cutting HHS priority.

Medicare. CMS leaders recently released a strategic vision for Medicare, focusing on the program’s role in advancing health equity, expanding access to affordable coverage, driving high-quality care, and promoting affordability and the sustainability of the Medicare trust funds. Outside of potential activities on prescription drug pricing in Medicare, Medicare Advantage (MA) is a vehicle through which the administration will likely seek to put its stamp on Medicare policy in 2022. More than four in ten Medicare beneficiaries are now enrolled in an MA plan, and the program is continuing to grow, yet the administration so far has made few changes to the program.

Innovation in Medicare and Medicaid. Across both Medicare and Medicaid, the Biden administration is likely to use CMMI to advance the administration’s policy agenda. The Biden administration released a white paper in October 2021 outlining CMMI’s strategic outlook and objectives for the next decade to drive toward its central vision: “A health system that achieves equitable outcomes through high-quality, affordable, person-centered care.” In 2022, CMMI may engage in additional activities to meet these goals, which include increasing the number of patients in a care relationship with accountability for quality and total cost of care, working toward alignment across CMS and HHS to improve quality, and increasing the number of beneficiaries from underserved communities who receive care through value-based payment models. CMMI is now conducting a listening tour, after which the Innovation Center seems poised to begin transforming its current slate of models to meet these goals, most likely by slimming down its current portfolio of models into a smaller number of more targeted tests focused on these key criteria.

Prescription Drug Prices. The House-passed BBB includes considerable drug pricing changes, but with the fate of that legislation unclear, the administration may instead seek to deliver on its policy priority to lower consumer spending on drugs by utilizing regulatory tools. The Fall 2021 Unified Agenda and Regulatory Plan included several planned activities regarding prescription drugs, including a proposed rule to establish requirements for drug products that could be marketed as nonprescription drug products to increase consumer access, a rule on new requirements and procedures for the 340B Program’s administrative dispute resolution process, and updates to the FDA’s existing biologics regulations to account for the existence of biosimilar and interchangeable biological products.

Outside the regulatory process, CMS may take other drug pricing measures through Medicaid demonstration approvals. Oregon has proposed a closed formulary for its Medicaid program, following a similar model that was approved in Tennessee early in 2021 but which has yet to be implemented. If CMS approves Oregon’s demonstration proposal, it could open the door to more states seeking to limit coverage of drugs, potentially reducing state spending on such drugs but also curtailing Medicaid enrollees’ access to certain treatments. CMMI also may explore Medicare and Medicaid demonstrations intended to curb drug spending if the BBB is not enacted. For example, CMMI may follow the lead of past administrations and seek to develop a demonstration aimed at Part B drug spending.

Surprise Medical Billing. The No Surprises Act, which Congress enacted in 2020, prohibits out-of-network health care providers from balance billing insured patients in many cases and is being implemented this year. On the central issue of how health plans are to reimburse health care providers for unscheduled out-of-network services, state and federal regulators still need to provide significant guidance on whether state or federal law will apply to particular claims. When federal law does apply, there remains a question of what reimbursement standard is to be used: Several hospital and provider organizations have sued HHS over its determination that independent arbitrators should give substantial deference to the health plan’s median negotiated rates with in-network providers. Decisions in those cases will determine whether the arbitrations track in-network rates or become more unpredictable in their outcomes.

Providers are struggling to implement a requirement to provide good-faith estimates of charges for scheduled services, and HHS has delayed, pending further regulation, a parallel requirement to provide estimates to insured patients, including for health plans to provide an advance estimate of their cost sharing. More federal regulations are expected on various aspects of the law, including requirements for health plans to verify their network provider directory data every 90 days, although this requirement is being enforced even without implementing regulations.

For information on the No Surprises Act, please see Manatt’s recently released No Surprises Act Toolkit.

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1 Over the course of the past year, CMS has issued a series of strategic vision statements for Medicare, Medicaid and the Children’s Health Insurance Program (CHIP), the Center for Medicare & Medicaid Innovation (CMMI), and CMS overall. Additionally, on January 18, CMS held a national stakeholder call with the CMS Administrator, providing an update on the CMS strategic vision and key 2021 accomplishments.

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