Health Care Week in Review: CMS Issues Rules on FY 2025 Payment Rates; Medicaid Enrollment; and Short-Term, Limited Duration Insurance

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 issued proposed FY 2025 payment rules for inpatient psychiatric facilities (IPF), skilled nursing facilities (SNF), and hospice providers, and finalized rules streamlining Medicaid enrollment and limiting short-term, limited duration insurance (STLDI).

I. Regulations, Notices & Guidance

• On March 25, 2024, the Food and Drug Administration (FDA) released a notice entitled, AstraZeneca Pharmaceuticals LP; Withdrawal of Approval of New Drug Application for LYNPARZA (Olaparib) Capsules. FDA is withdrawing approval of new drug application (NDA) for LYNPARZA (olaparib) Capsules, 50 milligrams (mg) held by AstraZeneca Pharmaceuticals LP (AstraZeneca), 1800 Concord Pike, Wilmington, DE 19803. AstraZeneca has voluntarily requested that FDA withdraw approval of this application and has waived its opportunity for a hearing.
• On March 25, 2024, FDA released a notice entitled, Determination That ISUPREL (Isoproterenol Hydrochloride) Injection, 0.2 Milligrams Per Milliliter, Was Not Withdrawn From Sale for Reasons of Safety or Effectiveness. FDA has determined that ISUPREL (isoproterenol hydrochloride) injection, 0.2 milligrams (mg)/milliliter (mL), was not withdrawn from sale for reasons of safety or effectiveness. This determination will allow FDA to approve abbreviated new drug applications (ANDAs) for ISUPREL (isoproterenol hydrochloride) injection, 0.2 mg/mL, if all other legal and regulatory requirements are met.
• On March 25, 2024, FDA released a proposed rule entitled, Banned Devices; Proposal to Ban Electrical Stimulation Devices for Self-Injurious or Aggressive Behavior. FDA is proposing to ban electrical stimulation devices (ESDs) intended for self-injurious behavior (SIB) or aggressive behavior (AB). FDA has determined these devices present an unreasonable and substantial risk of illness or injury that cannot be corrected or eliminated by labeling. This proposal follows a court decision vacating a prior ban and amendment to the Federal Food, Drug, and Cosmetic Act (FD&C Act) clarifying FDA’s authority to ban a device for one or more intended uses. This proposed rule, if finalized, will mean ESDs for SIB and AB are adulterated and not legally marketed.
• On March 26, 2024, FDA released a notice entitled, Handling and Retention of Bioavailability and Bioequivalence Testing Samples; Guidance for Industry (Part Draft, Part Final); Availability. This guidance is intended to provide recommendations for applicants of new drug applications (NDAs) and ANDAs, including supplemental applications, and contract research organizations (CROs), regarding the procedures for handling reserve samples from relevant bioavailability (BA) and bioequivalence (BE) studies, and recommendations regarding responsibilities of each party involved in the study pertaining to reserve samples. Additionally, this guidance describes the conditions under which FDA generally does not intend to take enforcement action against an applicant or CRO that retains less than the quantity of reserve samples specified in the regulation.
• On March 27, 2024, the Centers for Medicare & Medicaid Services (CMS) released a final rule entitled, Medicaid Program; Streamlining the Medicaid, Children’s Health Insurance Program, and Basic Health Program Application, Eligibility Determination, Enrollment, and Renewal Processes. This is the second part of a two-part final rule that simplifies the eligibility and enrollment processes for Medicaid, the Children’s Health Insurance Program (CHIP), and the Basic Health Program (BHP). This final rule aligns enrollment and renewal requirements for most individuals in Medicaid; establishes beneficiary protections related to returned mail; creates timeliness requirements for redeterminations of eligibility; makes transitions between programs easier; eliminates access barriers for children enrolled in CHIP by prohibiting premium lock-out periods, benefit limitations, and waiting periods; and modernizes recordkeeping requirements to ensure proper documentation of eligibility determination.
• On March 27, 2024, CMS issued a proposed rule entitled Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2025 and Updates to the IRF Quality Reporting Program. CMS proposes updates to the prospective payment rates for inpatient rehabilitation facilities (IRFs) for federal fiscal year (FY) 2025. As required by statute, this proposed rule includes the classification and weighting factors for the IRF prospective payment system’s case-mix groups and a description of the methodologies and data used in computing the prospective payment rates for FY 2025. CMS proposes updates to the Office of Management and Budget (OMB) market area delineations for the IRF prospective payment system (PPS) wage index and proposes to apply a 3-year phase-out of the rural adjustment. The agency also proposes a number of policies related to the IRF Quality Reporting Program (QRP).
• On March 28, 2024, the Department of Health and Human Services (HHS) issued a final rule entitled, Short-Term, Limited-Duration Insurance and Independent, Noncoordinated Excepted Benefits Coverage. The final rule amends the definition of short-term, limited-duration insurance, which is excluded from the definition of individual health insurance coverage under the Public Health Service Act. The final rule  also amends the regulations regarding the requirements for hospital indemnity or other fixed indemnity insurance to be considered an excepted benefit in the group and individual health insurance markets.
• On March 28, 2024, the Centers for Disease Control and Prevention (CDC) released a notice entitled, Solicitation for Nominations for Appointment to the Mine Safety and Health Research Advisory Committee. In accordance with the Federal Advisory Committee Act, CDC is seeking nominations for membership on the Mine Safety and Health Research Advisory Committee (MSHRAC). MSHRAC consists of 10 experts in fields associated with mine safety and health research.
• On March 28, 2024, FDA released a notice entitled, Animal Studies for Dental Bone Grafting Material Devices-Premarket Notification (510(k)) Submissions; Draft Guidance for Industry and Food and Drug Administration Staff; Availability. This draft guidance document provides animal study design recommendations and animal study information to include to support a 510(k) submission for dental bone grafting material devices. This draft guidance may help manufacturers comply with some special controls for dental bone grafting material devices. The recommendations reflect current review practices and are intended to promote consistency and facilitate efficient review of these submissions.
• On March 28, 2024, FDA released a notice entitled, Over-the-Counter Monograph Drug User Fee Program-Facility Fee Rates for Fiscal Year 2024. FDA is announcing the over-the-counter (OTC) monograph drug facility (MDF) fee rates under the OTC monograph drug user fee program (OMUFA) for FY 2024. The FD&C Act authorizes FDA to assess and collect user fees from qualifying manufacturers of OTC monograph drugs and submitters of OTC monograph order requests (OMORs). This notice publishes the OMUFA facility fee rates for FY 2024. These facility fees are effective on October 1, 2023, and will remain in effect through September 30, 2024.
• On March 29, 2024, CMS issued a proposed rule entitled, Medicare Program; FY 2025 Hospice Wage Index and Payment Rate Update, Hospice Conditions of Participation Updates, and Hospice Quality Reporting Program Requirements. CMS proposes to update the hospice wage index, payment rates, and aggregate cap amount for FY 2025. CMS also proposes changes to the Hospice Quality Reporting Program. Further, the agency proposes to adopt the most recent OMB statistical area delineations, which would change the hospice wage index. CMS proposes to clarify current policy related to the “election statement” and the “notice of election”, as well as to add clarifying language regarding hospice certification. Finally, the agency solicits comments regarding potential implementation of a separate payment mechanism to account for high intensity palliative care services.
• On March 29, 2024, CMS issued a proposed rule entitled, Medicare Program; FY 2025 Inpatient Psychiatric Facilities Prospective Payment System – Rate Update. CMS proposes updating the prospective payment rates, the outlier threshold, and the wage index for Medicare inpatient hospital services provided by inpatient psychiatric facilities (IPFs), which include psychiatric hospitals and exclude psychiatric units of an acute care hospital (ACH) or critical access hospital (CAH). The agency also proposes to revise the patient-level adjustment factors, the Emergency Department (ED) adjustment, and the payment amount for electroconvulsive therapy. These proposed changes would be effective for IPF discharges occurring during the fiscal year beginning October 1, 2024 through September 30, 2025 (FY 2025). In addition, CMS proposes to adopt a new quality measure and modify reporting requirements under the IPF Quality Reporting Program beginning with the FY 2027 payment determination. Furthermore, the agency solicits comments through Requests for Information (RFIs) regarding potential future revisions to the IPF PPS facility-level adjustments and regarding the development of a standardized IPF Patient Assessment Instrument.
• On March 29, 2024, CMS issued a proposed rule entitled, Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities; Updates to the Quality Reporting Program and Value-Based Purchasing Program for Federal Fiscal Year 2025. CMS proposes changes and updates to the policies and payment rates used under skilled nursing facilities (SNFs) Prospective Payment System (PPS) for FY 2025. First, CMS is proposing to rebase and revise the SNF market basket to reflect a 2022 base year. Next, CMS will update the wage index used under the SNF PPS to reflect data collected during the most recent decennial census. Additionally, CMS is proposing several technical revisions to the code mappings used to classify patients under the Patient Driven Payment Model (PDPM) to improve payment and coding accuracy. Finally, this proposed rule includes a RFI on potential updates to the Non-Therapy Ancillary (NTA) component of PDPM. The agency also proposes to update the requirements for the SNF Quality Reporting Program and the SNF Value-Based Purchasing Program. CMS is also proposing to expand its enforcement authority for imposing civil money penalties (CMPs). Finally, this proposed rule includes proposals to strengthen nursing home enforcement requirements.
• On March 29, 2024, CMS released a notice entitled, Medicare, Medicaid, and CLIA Programs; Clinical Laboratory Improvement Amendments of 1988 Exemption of Laboratories Licensed by the State of Washington. This notice announces that laboratories located in and licensed by the State of Washington that possess a valid license under the Medical Test Site law, chapter 70.42 of the Revised Code of Washington, are exempt from the requirements of the Clinical Laboratory Improvement Amendments of 1988 (CLIA) for a period of 4 years.
• On March 29, 2024, FDA released a notice entitled, Providing Regulatory Submissions in Electronic Format: Investigational New Drug Application Safety Reports; Guidance for Industry; Availability. This guidance finalizes the draft guidance of the same name published on October 30, 2019, and describes the electronic format sponsors will be required to use when they electronically submit investigational new drug application (IND) safety reports to the Center for Drug Evaluation and Research (CDER) or the Center for Biologics Evaluation and Research (CBER) for serious and unexpected suspected adverse reactions, as required by FDA regulations. FDA is establishing the electronic format requirements described in this guidance under the FD&C Act. The requirements in the guidance will be effective 24 months after the date of publication (April 1, 2026). Certain sponsors will be required to submit the specified IND safety reports electronically to FDA using the FDA Adverse Event Reporting System (FAERS) as structured data elements, which will provide sponsors with a reporting format that is consistent with the International Council for Harmonisation (ICH) E2B format guidelines and reporting requirements to other regulatory agencies.

Event Notices

April 2-4, 2024: The Health Resources and Services Administration (HRSA) announced a meeting of the Advisory Committee on Infant and Maternal Health. This is a hybrid meeting open to the public.

April 4-5, 2024: The National Institutes of Health (NIH) announced a meeting of the Sleep Disorders Research Advisory Board. This is a hybrid meeting open to the public.

April 5, 2024: HHS announced a meeting of the Office of Global Affairs on Public Health Emergencies Preparedness and Response Negotiations. This is a virtual meeting open to the public.

April 9, 2024: NIH announced a meeting of the Advisory Committee on Research on Women’s Health. This is a hybrid meeting open to the public.

April 10, 2024: CDC announced a meeting of the Clinical Laboratory Improvement Advisory Committee (CLIAC). This is a virtual meeting open to the public.

April 9-11, 2024: HRSA announced a meeting of the National Advisory Committee on Rural Health and Human Services. This is a hybrid meeting open to the public.

April 17, 2024: NIH announced a meeting of the Interagency Autism Coordinating Committee. This is a hybrid meeting open to the public.

April 17, 2024: CDC announced a meeting of the Advisory Board on Radiation and Worker Health, National Institute for Occupational Safety and Health. This is a hybrid meeting open to the public.

April 17, 2024: CDC announced a meeting of the Community Preventative Services Task Force. This is a virtual meeting open to the public.

April 30, 2024: HHS announced a meeting of the Advisory Committee on Minority Health. This is a virtual meeting open to the public.

May 6, 2024: CDC announced a meeting of the National Advisory Board on Medical Rehabilitation Research. This is a virtual meeting open to the public.

May 9, 2024: FDA announced a meeting of the Blood Products Advisory Committee. This is a virtual meeting open to the public.

May 9-10, 2024: HRSA announced a meeting of the Advisory Committee on Heritable Disorders in Newborns and Children. This is a hybrid meeting open to the public.

May 21, 2024: CMS announced a meeting of the Medicare Evidence Development & Coverage Advisory Committee (MEDCAC). This is a virtual meeting open to the public.

May 21-22, 2024: HHS announced a meeting of the Presidential Advisory Council on Combating Antibiotic-Resistant Bacteria. This is a hybrid meeting open to the public.

June 3, 2024: FDA announced a meeting of the AIDS Research Advisory Committee. This is a hybrid meeting open to the public.

II. Reports, Studies, & Analyses

• On March 25, 2024, the Government Accountability Office (GAO) released a report entitled, Clinical Research: FDA Should Evaluate Its Efforts to Recruit and Retain Its Inspection Workforce. The report explained that due to low compensation and heavy travel, FDA struggles with recruiting and retaining investigators to inspect hospitals, laboratories, and other health care settings that conduct clinical trials and other research with human subjects. As such, the report states that FDA is left with a less experienced workforce conducting fewer inspections, potentially compromising the quality and integrity of clinical research. GAO noted that in attempts to address this, FDA now offers a study loan repayment program and an increased salary; however, attrition remains and problem and training for new staff can last up to a year. GAO recommended that FDA evaluate its currently used recruitment and retention efforts, such as student loan repayments and increased compensation, to determine their effectiveness. FDA should incorporate the results into their workforce strategy.
• On March 27, 2024, GAO released a report entitled, Maternal and Infant Health: HHS Should Strengthen Processes for Measuring Program Performance. GAO conducted an evaluation of the Healthy Start program and provided recommendations for strengthening the program’s performance measurements. The Healthy Start program aims to address the high rates of maternal and infant mortality in the U.S., particularly focusing on reducing racial and ethnic disparities. HHS utilizes performance data to track progress towards program goals, however, GAO identified shortcomings in the clarity and reliability of performance measures, attributing these issues to the lack of a documented review process by HHS. According to the report, the coordination of performance measures across Healthy Start and related programs lack a structured approach, hindering the alignment of metrics to ensure optimal effectiveness. GAO recommended HHS implement documented processes to review and coordinate performance measures, emphasizing the need for clarity, reliability, and alignment to improve program outcomes.
• On March 28, 2024, the Office of the Inspector General (OIG) released a report entitled, CMS Did Not Ensure That Selected States Complied With Medicaid Managed Care Mental Health and Substance Use Disorder Parity Requirements. OIG conducted an audit to assess whether CMS ensured that selected states complied with Medicaid Managed Care Mental Health and Substance Use Disorder (MH/SUD) parity requirements. Given the significant prevalence of mental illness and substance use disorder in the U.S., federal regulations were established to facilitate access to treatment for these conditions by prohibiting coverage limitations that were more restrictive for MH/SUD benefits compared to medical/surgical benefits. OIG selected eight states with Medicaid managed care contracts to review, focusing on whether the states and their managed care organizations (MCOs) adhered to parity requirements. The findings revealed deficiencies in compliance across all eight states, including the absence of required parity provisions in state contracts with MCOs, failure to conduct mandated parity analyses, and a lack of publicly available documentation demonstrating compliance by the specified deadline. Additionally, the report found indications that some MCOs applied more restrictive financial and treatment limitations for MH/SUD services compared to medical/surgical services. OIG recommended that CMS enhance its oversight of states’ compliance with MH/SUD parity requirements and ensure that States improve monitoring of MCOs’ ongoing adherence to these standards. In response, CMS acknowledged the recommendations and outlined plans to strengthen monitoring procedures, verify state compliance with parity analyses, and issue guidance to states to uphold ongoing compliance by MCOs.

III. Other Health Policy News

• On March 27, 2024, the Office of the National Coordinator for Health Information Technology (ONC), released the draft 2024–2030 Federal Health IT Strategic Plan for public feedback. This strategic plan aims to enhance access to health data, promote a more equitable healthcare experience, and modernize the nation’s public health data infrastructure. The plan supports recent initiatives, such as the recently finalized entitled, Health Data, Technology, and Interoperability: Certification Program Updates, Algorithm Transparency, and Information Sharing (89 FR 1192/2024). The rule aims to improve the exchange of electronic health information and foster transparent and equitable care. Additionally, the plan underscores the significance of common standards such as United States Core Data for Interoperability (USCDI) and Fast Healthcare Interoperability Resources (FHIR) in enhancing data accessibility and usefulness. The draft plan also addresses the need to modernize public health data infrastructure and ensure equitable access to health IT benefits for all communities, including the use of technologies like artificial intelligence (AI) in healthcare. The public comment period for the draft plan runs until May 28, 2024. A press release with more information is available here. The strategic plan is available here.
• On March 29, 2024, the Federal Trade Commission (FTC) and HHS announced an extension of the public comment period for a joint RFI aimed at understanding the potential contributions of group purchasing organizations (GPOs) and drug wholesalers to generic drug shortages. The new deadline for submitting comments is May 30, 2024. The RFI seeks input from the public on various aspects, including market concentration among major GPOs and wholesalers, as well as their contracting practices, with the goal of assessing their impact on the generic pharmaceutical market, including pricing and drug availability. Originally scheduled to conclude on April 15, 2024, this extension provides stakeholders with additional time to offer insights and perspectives on these crucial issues affecting competition and healthcare access. A press release with more information is available here.

This week, CMS released a number of proposed and final rules:

• On March 27, 2024, CMS released a final rule entitled, Streamlining Medicaid, Children’s Health Insurance Program, and Basic Health Program Application, Eligibility Determination, Enrollment, and Renewal Processes. The final rule simplifies eligibility and enrollment mechanisms in Medicaid to ease administrative burdens and promote continuous coverage.
• On March 28, 2024, along with DOL, CMS released a final rule entitled, Short-Term, Limited-Duration Insurance and Independent, Noncoordinated Excepted Benefits Coverage. The final rule limits short-term, limited duration insurance (STLDI) plans’ initial coverage period to three months, and limits the maximum coverage period to four months when including extensions and renewals. A fact sheet on the final rule is available here.
• On March 28, 2024, CMS issued a proposed rule entitled, Medicare Program; FY 2025 Hospice Wage Index and Payment Rate Update, Hospice Conditions of Participation Updates, and Hospice Quality Reporting Program Requirements. The proposed rule proposes increasing hospice reimbursement by 2.6 percent in FY 2025 for providers that submit the required quality data. The proposed rule would decrease reimbursement by 1.4 percent for providers who do not submit the quality data. The proposed rule also proposes an aggregate hospice cap per patient of $34,364.85, an increase of 2.6 percent from 2024. A fact sheet on the proposed rule is available here.
• On March 28, 2024, CMS issued a proposed rule entitled, Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities; Updates to the Quality Reporting Program and Value-Based Purchasing Program for Federal Fiscal Year 2025. The proposed rule proposes increasing SNF reimbursement by 4.1 percent increase in FY 2025. The proposed rule also proposes stronger enforcement mechanisms for nursing homes that violate CMS health or safety requirements. A fact sheet on the proposed rule is available here.
• On March 28, 2024, CMS issued a proposed rule entitled, Medicare Program; FY 2025 Inpatient Psychiatric Facilities Prospective Payment System – Rate Update. The proposed rule proposes increasing IPF reimbursement by 2.6 percent in FY 2025. A fact sheet on the proposed rule is available here.

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