Health Care Week in Review: CMS and HHS Announce Residency Slots and Dates for Medicare Drug Negotiation

Below is Alston & Bird’s Health Care Week in Review, which provides a synopsis of the latest news in health care regulations, notices, and guidance; federal legislation and congressional committee action; reports, studies, and analyses; and other health policy news.

Week in Review Highlight of the Week:

This week, CMS announced the implementation of 200 Medicare physician residency slots in underserved communities and HHS released key dates for the Medicare Drug Price Negotiation Program. Read more about these actions and other news below.

I. Regulations, Notices & Guidance

• On January 10, 2023, the Food and Drug Administration (FDA) issued final guidance entitled, Foreign Supplier Verification Programs for Importers of Food for Humans and Animals: Guidance for Industry. This guidance document provides the agency’s thinking on how importers of food for humans and animals can comply with the regulation on foreign supplier verification programs (FSVPs) issued on November 27, 2015. The guidance announced in this notice finalizes the draft guidance of the same title dated January 24, 2018.
• On January 10, 2023, FDA issued a notice entitled, Prescription Drug User Fee Act VII Meetings Program for Model-Informed Drug Development Approaches. The seventh iteration of the Prescription Drug User Fee Act (PDUFA VII), incorporated as part of the FDA User Fee Reauthorization Act of 2022, highlights the goal of advancing model-informed drug development (MIDD). FDA is announcing the continuation of the MIDD Paired Meeting Program that affords sponsors who are selected for participation the opportunity to meet with Agency staff to discuss MIDD approaches in medical product development. Meetings under the program will be conducted by FDA’s Center for Drug Evaluation and Research (CDER) and Center for Biologics Evaluation and Research (CBER) during fiscal years (FYs) 2023-2027. This program is being conducted to fulfill FDA’s performance commitment under PDUFA VII. For this program, MIDD is defined as the application of exposure-based, biological, and/or statistical models derived from non-clinical and clinical data sources to address drug development and/or regulatory issues. For each approved proposal, the program consists of two meetings between sponsors or applicants and the relevant center that provide an opportunity for drug developers and FDA to discuss the application of MIDD approaches to the development and regulatory evaluation of medical products in development.
• On January 10, 2023, the Department of Health and Human Services (HHS) issued a notice entitled, Invitation to Become a National Youth Sports Strategy Champion. The Office of Disease Prevention and Health Promotion (ODPHP) invites public and private sector organizations that support the National Youth Sports Strategy (NYSS) to become a National Youth Sports Strategy Champion (NYSS Champion). NYSS Champions will receive recognition from ODPHP and the President's Council on Sports, Fitness, and Nutrition (PCSFN) on Health.gov, a digital NYSS Champion badge to highlight their support of the NYSS, and tools to disseminate the NYSS and promote physical activity. Applications will be accepted starting on January 11, 2023 and reviewed on a rolling basis.
• On January 11, 2023, FDA issued draft guidance entitled, Photobiomodulation (PBM) Devices--Premarket Notification [510(k)] Submissions. This draft guidance provides recommendations on premarket submissions for photobiomodulation devices, which are used in applications such as aesthetics, dermatology, and other general indications. This draft guidance is not final nor is it for implementation at this time.
• On January 12, 2023, FDA issued a rule entitled, Medical Devices: Neurological Devices; Classification of the Digital Therapy Device to Reduce Sleep Disturbance for Psychiatric Conditions. FDA is classifying the digital therapy device to reduce sleep disturbance for psychiatric conditions into class II (special controls). The special controls that apply to the device type are identified in this order and will be part of the codified language for the digital therapy device to reduce sleep disturbance for psychiatric conditions’ classification. FDA is taking this action because it has determined that classifying the device into class II (special controls) will provide a reasonable assurance of safety and effectiveness of the device. FDA believes this action will also enhance patients’ access to beneficial innovative devices.
• On January 12, 2022, FDA issued draft guidance entitled, Dosage and Administration Section of Labeling for Human Prescription Drug and Biological Products--Content and Format. This guidance is intended to assist applicants in developing the DOSAGE AND ADMINISTRATION section of labeling. The purpose of this guidance is to assist applicants in ensuring that the DOSAGE AND ADMINISTRATION section contains the dosage- and administration-related information needed for safe and effective use of a drug and that the information is clear, concise, and presented in a manner that is pertinent and understandable to health care practitioners. FDA is withdrawing the guidance for industry entitled “Dosage and Administration Section of Labeling for Human Prescription Drug and Biological Products—Content and Format” issued on March 29, 2010 and issuing this draft guidance.
• On January 12, 2023, HHS issued a proposed rule entitled, Partnerships with Faith-Based and Neighborhood Organizations. HHS agencies propose to amend their regulations to clarify protections for beneficiaries and potential beneficiaries receiving federally funded social services and the rights and obligations of organizations providing such services. In accordance with the Executive order of February 14, 2021 (Establishment of the White House Office of Faith-Based and Neighborhood Partnerships), this clarification should promote maximum participation by beneficiaries and providers in the Agencies’ covered programs and activities and ensure consistency in the implementation of those programs and activities.
• On January 12, 2023, FDA issued final guidance entitled, Policy for Coronavirus Disease-2019 Tests (Revised): Guidance for Developers and Food and Drug Administration Staff. FDA is issuing this guidance to provide FDA’s review priorities and enforcement policies regarding novel coronavirus (COVID-19) tests. Rapid detection of COVID-19 cases in the United States requires wide availability of testing to control the spread of this highly contagious infection. The policies in this guidance are intended to remain in effect only for the duration of the declaration under section 564 of the Federal Food, Drug, and Cosmetic Act (FD&C Act) by the Secretary of HHS on February 4, 2020, declaring that circumstances exist justifying the authorization of emergency use of in vitro diagnostics for detection and/or diagnosis of the novel coronavirus (2019-nCoV). FDA continues to assess the evolving situation and intends to update this guidance as appropriate.
• On January 12, 2023, FDA issued final guidance entitled, Policy for Evaluating Impact of Viral Mutations on COVID-19 Tests (Revised): Guidance for Test Developers and Food and Drug Administration Staff. FDA is issuing this guidance to provide a policy and recommendations on evaluating the potential impact of emerging and future viral mutations of SARS-CoV-2 on COVID-19 tests. This guidance describes a policy for test developers to consider the impact of emerging and future variants on their COVID-19 tests during development and post-authorization. Throughout this guidance, references to COVID-19 tests are referring to molecular and antigen tests that detect the SARSCoV-2 virus and serology tests that detect antibodies to the SARS-CoV-2 virus. This policy is also intended to remain in effect only for the duration of the declaration under section 564 of the FD&C Act by the Secretary of HHS.
• On January 13, 2023, the Centers for Medicare & Medicaid Services (CMS) issued a rule entitled, Medicare Program; Updates to Face-to-Face Encounter and Written Order Prior to Delivery List. This document announces updates to the Healthcare Common Procedure Coding System (HCPCS) codes on the Required Face-to-Face Encounter and Written Order Prior to Delivery List.
• On January 13, 2023, FDA issued a rule entitled, Medical Devices; Clinical Chemistry and Clinical Toxicology Devices; Classification of the Prognostic Test for Assessment of Liver Related Disease Progression. FDA is classifying the prognostic test for assessment of liver related disease progression into class II (special controls). The special controls that apply to the device type are identified in this order and will be part of the codified language for the prognostic test for assessment of liver related disease progression’s classification. FDA is taking this action because the agency has determined that classifying the device into class II (special controls) will provide a reasonable assurance of safety and effectiveness of the device. FDA believes this action will also enhance patients’ access to beneficial innovative devices.

Event Notices

• January 27, 2023: The National Institutes of Health (NIH) announced a meeting of the National Science Advisory Board for Biosecurity (NSABB). The agenda will include presentation, discussion, and possible finalization of the draft recommendations and findings from the NSABB Working Groups to Review and Evaluate Potential Pandemic Pathogen Care and Oversight (PC3O) Policy and U.S. Government Policies for the Oversight of Dual Use Research of Concern (DURC).
• January 30-31, 2023: HHS announced a meeting of the Advisory Council on Alzheimer’s Research, Care, and Services (Advisory Council). During the meeting, the Advisory Council will hear presentations on issues related to clinical practice and plans for advanced care planning. The second day presentations will review the impact of new drug approvals and focus on risk reduction and social determinants of health. The National Institute of Neurological Disorders and Stroke (NINDS) will present research milestones from the 2022 ADRD summit and other Federal agencies will also provide updates.
• February 2, 2023: NIH announced a meeting of the Advisory Committee to the Deputy Director for Intramural Research (DDIR). The meeting will include a discussion of recruitment and retention of trainees and barriers thereto.
• February 7, 2023: The Centers for Disease Control and Prevention (CDC) announced a meeting for the Advisory Committee to the Director (ACD). The agenda will include discussions on CDC’s current work and priorities as they relate to health equity and data and surveillance recommendations to the HHS and CDC Director. The agenda also includes a laboratory workgroup update with recommended action steps to the full ACD Committee, along with an update on the public health infrastructure grant.
• February 15, 2023: CDC announced a meeting of the Board of Scientific Counselors, National Center for Health Statistics (BSC, NCHS). The meeting agenda will include a Center update from the NCHS Director; an update on CDC’s Data Modernization Initiative; program updates from NCHS Division Directors; and time for Board discussion regarding current issues and topics.
• February 21-22, 2023: NIH announced a partially open meeting of the National Advisory Environmental Health Sciences Council (NAEHSC). The open agenda will include discussion of program policies and issues/NAEHSC discussion. The closed agenda will be for review and evaluation of grant applications.

II. Reports, Studies & Analyses

• On January 9, 2023, the Kaiser Family Foundation (KFF) published an issue brief entitled, Analysis of Recent National Trends in Medicaid and CHIP Enrollment. Assessing national and state Medicaid and Children's Health Insurance Program (CHIP) data, KFF found that enrollment continued to grow to 90.0 million individuals, an increase of 19.8 million or about 28 percent since February 2020, when enrollment steadily increased because of the COVID-19 pandemic. KFF found that enrollment was higher in states who expanded their Medicaid programs. The growth in enrollment was almost exclusively concentrated in Medicaid; many states have much slower rates of enrollment growth, or even declines in enrollment, in CHIP. The issue brief cautions that many Medicaid and CHIP beneficiaries may lose coverage as states resume disenrollment once the continuous enrollment provision implemented during the pandemic expires in April 2023.
• On January 10, 2023, KFF published a report entitled, Telehealth Delivery of Behavioral Health Care in Medicaid: Findings from a Survey of State Medicaid Programs. Over the COVID-19 pandemic, the utilization of telehealth services, particularly for behavioral health needs, rose significantly. This was in part due to state expansion of Medicaid telehealth policies during the pandemic. Because of the ongoing provider workforce challenge, KFF notes that Medicaid telehealth policy will continue to be of great importance to patients seeking behavioral health care. As such, KFF surveyed state Medicaid officials about policies and trends related to telehealth delivery of behavioral health services. It found that nearly every state surveyed took at least one Medicaid policy action to expand access to telehealth care for behavioral health, such as allowing for audio-only coverage, and that most intend to keep pandemic expansions of telehealth flexibilities for behavioral health. States also reported that they will monitor utilization of behavioral health care delivered via telehealth and trends among different Medicaid populations. States shared that key issues that may influence their Medicaid policy decisions include analysis of utilization and other data as well as federal guidance.
• On January 10, 2023, KFF published a report entitled, A Look at Strategies to Address Behavioral Health Workforce Shortages: Findings from a Survey of State Medicaid Programs. KFF surveyed state Medicaid officials about their state’s strategies for addressing behavioral health workforce shortages in FY 2022 or 2023. Recognizing the mental health crisis in the U.S., exacerbated by the COVID-19 pandemic, KFF sought to understand how to better support the behavioral health workforce to ensure beneficiaries’ access to care. KFF found that states’ strategies to address the behavioral health workforce shortage could be categorized into four area: (1) increasing reimbursement rates; (2) reducing administrative burden, such as by reducing prior authorization complexities and simplifying the credentialing process; (3) extending workforce through various means, such as by expanding provider types who can bill for mental health services rendered, using inter-professional consultation codes, and providing telehealth services; and (4) incentivizing participation, such as through prompt payment policies or student loan repayment programs.
• On January 10, 2023, Avalere Health (Avalere) published a report entitled, Comparing Detection, Treatment, Outcomes, and Spending for Patients with Type 2 Diabetes Between Medicare Advantage and Fee-For-Service Medicare. Avalere studied the difference in type 2 diabetes detection, treatment, outcomes, and spending between patients in Medicare Advantage (MA) and fee-for-service (FFS) Medicare. To do so, Avalere matched cohorts MA and FFS patients across three disease stages (prediabetes, incident diabetes, chronic diabetes). They found that among patients with prediabetes, MA patients received earlier diagnoses and had lower diabetes severity scores than FFS patients. Among patients with incident diabetes, MA patients were more likely to fill diabetes medication prescriptions than FFS patients. Among patients with chronic diabetes, MA and FFS patients visited primary care providers at about the same rate, but MA patients were more likely to receive preventative care and were less likely to require dialysis than FFS patients. Among dual eligible patients with diabetes, MA patients were more likely to visit a primary care provider, fill prescriptions, and result in lower total medical spending than FFS patients.
• On January 11, 2023, the Government Accountability Office (GAO) issued a report entitled, Abuse and Neglect: CMS Should Strengthen Reporting Requirements to Better Protect Individuals Receiving Hospice Care. GAO reviewed CMS’ requirements for reporting and responding to abuse and neglect for Medicare- and Medicaid-certified hospice care providers. GAO found that hospice providers have gaps in such requirements compared to hospital and nursing home providers who deliver similar extended care. For example, hospices are only required to report allegations to state survey agencies if: (1) the alleged perpetrator is affiliated with the hospice and (2) the hospice has conducted an internal investigation to verify the incident as abuse or neglect. Conversely, nursing homes and hospitals are required to report all abuse and neglect allegations regardless of those two criteria being met. As such, GAO expressed concern that hospice providers’ reporting of abuse and neglect is less complete and timely. GAO recommended that CMS require hospice care providers to report all allegations of abuse and neglect immediately to survey agencies to protect vulnerable individuals.
• On January 12, 2023, the Congressional Research Service (CRS) published a report entitled, Congressionally Directed Medical Research Programs Funding for FY 2023. CRS summarizes enacted levels of funding for medical research programs under the Congressionally Directed Medical Research Programs (CDMRP) as part of the annual defense appropriation legislation. The CDMRP is a Department of Defense (DOD) program that receives congressional appropriations for congressionally identified health matters and biomedical research. The Consolidated Appropriations Act, 2023 allocated over $1.5 billion into the DOD’s annual appropriations for the CDMRP program. Members of Congress may request funding for medical research during the annual defense appropriations process, and the medical research programs funded under the CDMRP are not static. Additionally, the program with the highest annual funding level under the CDMRP is the Peer Reviewed Medical Research Program (PRMRP). CRS details the 50 conditions and treatments eligible for PRMRP funding in FY 2023, including: bone marrow failure disease; chronic pain management; breast, kidney, lung, ovarian, pancreatic, prostate, and rare cancers; spinal cord injury; tick-borne disease, vision, and more.
• On January 12, 2023, the Congressional Budget Office released a cost report entitled, CBO Estimate for Divisions O Through MM of H.R. 2617, the Consolidated Appropriations Act, 2023, Enacted as Public Law 117-328 on December 29, 2022. CBO estimates Divisions O through MM, which authorize various programs and activities, will decrease the deficit by $3.9 billion over the 2023-2032 period.

III. Other Health Policy News

• On January 9, 2023, HHS announced nearly $245 million in Bipartisan Safer Communities Act funding to support youth mental health, to help bolster and support the mental health care workforce, and to fund other mental health initiatives. Examples of efforts the Substance Abuse and Mental Health Services Administration (SAMHSA) funded include (1) the Project Advancing Wellness and Resiliency in Education (Project AWARE) to help develop and support school-based mental health; (2) mental health training grants for emergency responders and law enforcement; and (3) Resiliency in Communities after Stress and Trauma grants to support communities that have recently faced trauma. Additionally, grants through the Health Resources and Services Administration (HRSA)) funded supported efforts to integrate mental health training into training for primary care clinicians. More information on this announcement can be found here.
• On January 9, 2023, CMS announced implementing the first 200 of 1,000 total Medicare-funded physician residency slots to enhance the health care workforce in underserved communities. The FY 2022 Inpatient Prospective Payment System (IPPS) final rule established policies to implement 1,000 new Medicare-funded physician residency slots to qualifying hospitals phased in by 200 slots per year over five years. This first round of residency positions was awarded to 100 teaching hospitals across 30 states and D.C. and are effective July 1, 2023. All 1,000 positions will target geographic areas and communities with the highest need for providers, such as those with high rates of provider shortages. Additionally, about 75 percent of all residency positions will be reserved for providers in primary care and mental health specialties. More on this announcement can be found here.
• On January 11, 2023, CMS announced that about 15.9 million people have selected an Affordable Care Act (ACA) Marketplace health plan since the start of the 2023 Marketplace Open Enrollment Period (OEP) on November 1, 2022. This is a 13 percent increase in the number of people who signed up for Marketplace coverage from this time last year. About 3.1 million of the individuals who selected plans for 2023 are new to the Marketplaces, whereas about 12.8 million of them are returning customers with active coverage in 2022 who re-enrolled for 2023. The Marketplaces offer affordable and competitive plans. For example, four out of five enrollees on HealthCare.gov will be able to find a plan for $10 or less after tax credits and 92 percent of HealthCare.gov enrollees will have access to options from three or more insurance companies when they shop for plans. The 2023 OEP will close on January 15, 2023, and beneficiaries’ coverage will start on February 1, 2023. More information on this announcement can be found here.
• On January 11, 2023, HHS announced key dates for the first year of the Medicare Drug Price Negotiation Program under the Inflation Reduction Act. By September 1, 2023, CMS will have the authority to select 10 Part D high expenditure, single source drugs for which they will negotiate maximum fair prices. The maximum fair prices will be announced by September 1, 2024 and be effective by January 1, 2026. In future years, CMS will be able to negotiate 15 more Part D drugs for 2027, 15 more Part B or Part D drugs for 2028, and 20 more-Part B or Part D drugs for each subsequent year. CMS also intends to hold public comment periods throughout the process for continual feedback. More information on this announcement can be found here.
• On January 12, 2023, the HHS, Agriculture, Education (ED), Homeland Security (DHS), Housing and Urban Development (HUD), Justice (DOJ), Labor (DOL), and Veterans Affairs and the United States Agency for International Development (USAID) announced a new proposed rule to restore religious liberty protections for beneficiaries of federally funded social services (e.g., academic opportunities, job training, and housing services). Specifically, this proposed rule will protect beneficiaries by requiring social service programs to notify them of their right to be free from discrimination on the basis of religion and encouraging government funders of social service programs to help beneficiaries find services compatible with their beliefs. The proposed rule will also ensure faith-based providers are equally eligible to compete for federal grants. The agencies encourage the public to submit comments to this proposed rule. More information on this announcement can be found here.

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