McDermottPlus is pleased to bring you Regs & Eggs, a weekly Regulatory Affairs blog by Jeffrey Davis. 

As 2023 comes to a close, I can’t help but reflect on all the regulations and policies we reviewed this year (and those that we’ll continue to handle next week before the year actually ends). There were some tasty eggs with regs, and some not so tasty ones that we asked the kitchen to redo or throw away completely. And then there were those that, as my dad likes to say, were “perfectly adequate”—they tasted fine and got the job done. So, in my last Regs & Eggs of the year, I’m calling out five major regulatory issues that captured our attention (and stomachs) in 2023.

End of COVID-19 Public Health Emergency Regs and Policies

While it may seem like the COVID-19 public health emergency (PHE) ended a long time ago, in fact it ended earlier this year on May 11. The conclusion of the PHE impacted a plethora of policies, which Regs & Eggs previewed before the PHE actually ended. Beyond the Medicaid unwinding process discussed in last week’s blog post (and a more detailed post earlier in the year), policymakers had to address whether and how to continue the telehealth flexibilities that were present during the PHE.

While use of telehealth expanded exponentially over the course of the PHE, it has slowed a bit since its peak in 2020. Still, providers and patients alike appreciate having telehealth available as a service delivery option. The Consolidated Appropriations Act, 2023, passed at the end of 2022, extended many PHE telehealth flexibilities through the end of 2024. Congress essentially kicked the can down the road—Congress will have to enact additional legislation if it wants to extend these flexibilities past 2024 or make any of them permanent.

On the regulatory side, the Centers for Medicare & Medicaid Services (CMS) did the same thing, as described in this blog post. In the Calendar Year (CY) 2024 Physician Fee Schedule (PFS) final reg, CMS delayed making major decisions related to the future of telehealth in order to see how Congress acts on the topic. For a summary of the telehealth policies included in that reg, click here.

Also, here is a handy chart that lays out the status of all the telehealth flexibilities:

*Certain codes were temporarily added to the Medicare Telehealth List during the PHE. After the PHE, CMS kept these codes on the Medicare Telehealth List on a “provisional” basis. There is no specified timeframe to remove “provisional” codes from the list, so they will remain on the list through at least the end of CY 2024.

Physician Fee Schedule Payments

At the start of 2023, I opined in Regs & Eggs on whether this would finally be the year that Congress enacted meaningful physician payment reform. The answer to that question is sadly no. While Congress introduced legislation (discussed in this Regs & Eggs post) that would help address some underlying issues in the Medicare PFS, that legislation will not be enacted this year. Congress also will not take up the Medicare Payment Advisory Commission recommendation for 2024 (and repeated for 2025) to increase payments by half of the Medicare Economic Index (MEI), nor will Congress take up separate legislation introduced by Representative Raul Ruiz (D-CA) that would update payments by the full MEI.

Instead, we are ending the year with some uncertainty. CMS finalized a 3.4% cut to payments in the CY 2024 PFS final reg (as described here), and Congress still has not intervened (as it has done in previous years) to offset part or all of the cut. We will have to wait until early 2024 to see if Congress decides to act and, if so, what the outlook for Medicare payments will be for 2024 and beyond.

No Surprises Act Implementation

We have truly come full circle with respect to implementation of the No Surprises Act, particularly the independent dispute resolution (IDR) process. We ended 2022 with the announcement of a significant increase in the IDR administrative fee, from $50 to $350, and we ended this year with the release of a final reg that—you guessed it—increases the IDR fees.

On December 18, 2023, the US Departments of Health and Human Services, Labor and the Treasury released the IDR fees final reg. The Departments finalized an administrative fee of $115, a $65 increase over the current fee of $50 (as discussed below, a federal court invalidated the $350 fee that was previously established). The finalized $115 fee is lower than the proposed fee of $150. The Departments lowered the proposed fee after adopting some of the recommendations they received from the public. The effective date of the fee increase will be 30 days from when this rule is posted in the Federal Register (which should occur in the next few days), not January 1, 2024, as proposed. The new fees will likely be in effect by around January 20, 2024.

With respect to the certified IDR entity fee, for disputes initiated on or after the effective date of the reg (again, around January 20, 2024), the Departments will allow certified IDR entities to charge a fixed fee for single determinations within the range of $200 to $840. This range represents a 20% increase to the upper limit compared to the 2023 single determination fee range. For batched claims, the Departments finalized their proposal to allow certified IDR entities to charge a fixed fee within the range of $268 to $1,173. This fee range represents a 25% increase to the upper limit compared to the 2023 batched determination fee range. This range will only apply to batches of up to 25 claims (line items). For batched disputes with more than 25 line items, the certified IDR entity will be able to increase the base amount for every additional 25 line items by a fixed value between $75 and $250, as determined by the certified IDR entity.

Beyond these increases in the IDR fees, there were lots of other changes throughout the year. Let’s take a quick trip down memory lane:

• On February 5, the US District Court for the Eastern District of Texas issued the Texas Medical Association (TMA) II ruling, which struck down regulatory provisions related to how certified IDR entities treat the qualifying payment amount (QPA) during the IDR process. For more on the court decision, read this Regs & Eggs post. The Departments released new guidance for certified IDR entities in March to take into account the court’s ruling. The IDR portal was suspended on February 10, partially reopened on February 24 and fully reopened on March 17.
• In August, the same district court ruled in two additional TMA cases, TMA IV (issued August 3) and TMA III (August 24). The TMA IV decision invalidated the $350 administrative fee as well as some batching regulations, while the TMA III decision invalidated major portions of the methodology the Departments established for calculating the QPA. More information about these decisions can be found in this Regs & Eggs post as well as this special report.
• The Departments closed the IDR portal on August 4, the day after the court’s decision in TMA IV. On August 8, certified IDR entities resumed processing batched disputes that they determined to be eligible and for which administrative fees had been paid (or the deadline for collecting fees had expired) before August 3. On August 11, the Departments directed certified IDR entities to resume processing all single and bundled disputes initiated on or before August 3.
• On August 25, after the TMA III decision, the Departments closed the portal for all claims. On September 5, the Departments directed certified IDR entities to proceed with eligibility determinations for single and bundled disputes submitted on or before August 3.
• On September 20, the Departments released a reg that proposed increases to the IDR fees. This occurred the day after the US House of Representatives Ways & Means Committee held a four-hour hearing highlighting various ways that stakeholders believe the Biden Administration has failed to properly implement the No Surprises Act.
• On October 6, the Departments reopened the federal IDR portal for the initiation of certain new single and bundled disputes. That same day, the Departments also released guidance about how health plans should calculate the QPA in light of the TMA III ruling, as explained in this Regs & Eggs post.
• On October 27, the Departments issued the IDR operations proposed reg. This McDermottPlus +Insight highlights the major proposals in the reg.
• On November 22 and 28, the Departments granted certain extensions to the IDR process. On November 28, the Departments released new rules and timeline extensions that will apply to batched disputes once the portal is reopened for those disputes. Read this Regs & Eggs post for more.
• On December 12, the US Government Accountability Office issued a report highlighting issues with the rollout of the IDR process.
• On December 15, the Departments reopened the federal IDR portal to process all dispute types, including previously initiated batched disputes and new batched disputes. Parties have until January 16, 2024, to initiate any disputes that were eligible for the IDR process between August 3, 2023, and December 15, 2023, and that become eligible for the IDR process between December 16, 2023, and January 15, 2024.
• On December 18, the Departments released the IDR fee final reg described above.

That was just a taste of what happened in 2023. The “fun” will continue in 2024!

Drug Payment Reform 

CMS issued many guidance documents throughout the year implementing the Inflation Reduction Act (IRA). As described in this Regs & Eggs post, in August, CMS released draft guidance for implementing the new Medicare Prescription Payment Plan that was part of the IRA. This program will start with plan year 2025 and gives Medicare beneficiaries with Part D (prescription drug coverage) the option to pay out-of-pocket costs in monthly installments over the course of the year. CMS also made a big announcement regarding implementation of the Medicare Drug Pricing Negotiation Program. CMS named the first 10 Part D drugs for which Medicare will negotiate prices with manufacturers starting in 2026. The Office of the Assistant Secretary for Planning and Evaluation also released a report on Medicare beneficiary out-of-pocket expenses for these drugs. Per the IRA, 10 drugs or vaccines will be selected for 2026, an additional 15 in 2027 and 2028 each, and an additional 20 in 2029 and subsequent years. (Part B drugs are included beginning in 2028.)

Just last week, on December 14, CMS also released revised guidance related to the Medicare Prescription Drug Inflation Rebate Program, one of the key programs put into place by the IRA. This program requires manufacturers of certain drugs covered under Medicare Part B and Part D to pay rebates to the Medicare Trust Fund if they raise prices at a rate that exceeds the rate of inflation. The revised guidance includes more details about requirements and procedures for calculating rebates and invoicing drug companies that owe rebates. The guidance also includes guardrails to minimize incentives for drug companies to remain on a shortage list, delay resolving a severe supply chain disruption, or maintain a situation in which a generic drug would be at risk of shortage in order to avoid paying an inflation rebate. At the same time, CMS released a list of 48 prescription drugs for which Part B beneficiary coinsurances may be lower between January 1, 2024, and March 31, 2024. According to CMS, some people with Medicare who take these drugs may save between $1 and $2,786 per average dose starting January 1, 2024, depending on their individual coverage.

Medicare Advantage and Private Insurance Reforms

As described in a recent Regs & Eggs blog post, CMS has certain priorities for reforming health insurance plan policies. These priorities are demonstrated in two recent proposed regs: one impacting Medicare Advantage (MA) health plans and plans that offer prescription drug coverage under Medicare Part D, and the other impacting health plans that operate in the federal and state “Marketplaces.”

These priorities are not new; they include protecting enrollees from misleading marketing practices, increasing access to care, simplifying enrollment options and lowering prescription drug out-of-pocket costs. For example, earlier this year, CMS finalized a reg that made sweeping changes to MA prior authorization policies. CMS prohibited MA plans from making up their own coverage rules and denying coverage for services covered by traditional Medicare. Under the rule, prior authorization can only be a means of ensuring that services meet Medicare coverage rules and that care is medically necessary. CMS required that prior authorization approvals remain valid for the entire episode of care for patients as long as the care is medically necessary. CMS also required denials of coverage based on medical necessity to be reviewed by healthcare professionals with relevant expertise before a denial can be issued.

In this same final reg, CMS instituted policies to crack down on fraudulent marketing practices that some MA plans may currently utilize. CMS prohibited advertisements (which we often see on TV) that do not mention a specific plan name or that use the Medicare name, CMS logo, and products or information issued by the federal government, including the Medicare card, in a misleading way.

Interestingly, one reg that we did not see in 2023 was a final reg implementing broader changes to prior authorization processes that health plans use. In December 2022, CMS released a proposed regulation that would change how health plans can operate prior authorization protocols. CMS proposed to require health insurers to implement an electronic prior authorization process. CMS also proposed to shorten the timeframes for payors to respond to prior authorization requests, and to establish policies to make the prior authorization process more efficient and transparent. Health plans would be required to build and maintain a FHIR API (a platform or application) that would “automate the process for providers to determine whether a prior authorization is required, identify prior authorization information and documentation requirements, as well as facilitate the exchange of prior authorization requests and decisions from their electronic health records (EHRs) or practice management system.” CMS also proposed to require impacted payors to include a specific reason when they deny a prior authorization request and to send prior authorization decisions within 72 hours for expedited (i.e., urgent) requests and seven calendar days for standard (i.e., non-urgent) requests. CMS sought comment on alternative timeframes with shorter turnaround times, such as 48 hours for expedited requests and five calendar days for standard requests.

While CMS has yet to finalize this reg, the final reg is currently at the Office of Management and Budget for review.

Well, that’s a wrap for the year (and what a regulatory year it was)! Enjoy the holidays, and watch for the return of Regs & Eggs on January 4, 2024!

Until next year, this is Jeffrey saying, enjoy reading regs with your eggs.

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