Word from Washington: December 2022

person holding folder in front of Capitol

On December 23rd, Congress passed a $1.7 trillion year-end spending package that averts a government shutdown and funds the government through September 2023. The 4,000+ page omnibus bill contains numerous important health provisions affecting Medicaid, telehealth, the accelerated approval pathway for new drugs, and more.

The legislation sets a date (April 1, 2023) for the end of pandemic-related Medicaid continuous coverage requirements and thus allows states to resume Medicaid eligibility redeterminations and disenrollments. As previously reported, states for almost three years have been barred from terminating coverage for existing Medicaid enrollees, pursuant to the 2020 Families First Coronavirus Relief Act. The FFCRA gave states extra federal matching funds (FMAP) for their Medicaid programs, requiring, in exchange, that the states pause all Medicaid disenrollments. Both the funding bump and the disenrollment freeze continue so long as the COVID-19 public health emergency remains in effect. Since early 2020, the U.S. Department of Health and Human Services has continuously renewed the PHE declaration in 90-day increments – and during that period, thanks in large part to the continuous coverage requirements, the number of Americans enrolled in Medicaid has increased by 30%.

State and federal officials recognize that the end of the PHE and the “unwinding” of the Medicaid continuous coverage requirements will threaten coverage for millions of Americans and will challenge the capacity of state agencies. In recent months, state Medicaid directors have urged Congress to provide more certainty around when the PHE might end, allowing them to plan for the resumption of eligibility redeterminations and disenrollments.

The omnibus legislation provides that certainty. It delinks the Medicaid continuous coverage requirement from the PHE declaration and authorizes states to begin their Medicaid “unwinding” on April 1, 2023. The omnibus legislation also phases out the extra federal funding for Medicaid over the course of 2023, rather than ending it all at once (as originally contemplated by the FFCRA). This gradual approach lessens financial incentives for states to rush through the unwinding process – thereby providing some protection against the risk of erroneous procedural coverage terminations. Congress also built in additional safeguards in the form of data transparency and reporting requirements around state unwinding efforts; states that don’t comply with these requirements will be penalized with reductions in federal Medicaid funding.

The legislation includes other important policy changes affecting Medicaid and CHIP (Children’s Health Insurance Program) as well. Effective January 1, 2024, the law requires all states to cover children continuously for 12 months in Medicaid and CHIP, thus preventing states from conducting more frequent eligibility redeterminations. The law extends CHIP funding through 2029, and makes permanent the state option to extend 12-month Medicaid postpartum coverage (currently in place in 34 states). Finally, the law stabilizes Medicaid funding for Puerto Rico and the other territories: it extends the current 76% FMAP for Puerto Rico for five years, and permanently extends the current 83% FMAP for the other territories.   

The omnibus legislation also extends key pandemic-era telehealth flexibilities and waivers for two years. It continues waivers that have eased access to telehealth for Medicare beneficiaries, as well as a rule that allows high-deductible health plans to cover certain telehealth appointments even before subscribers have met their deductibles. These extensions give telehealth stakeholders additional time to fight for permanent virtual health policies that would continue to expand access to care and ensure the economic boom in the telehealth and health technology industry.

Lastly, the omnibus law reforms the FDA’s accelerated approval pathway for drugs, giving the agency clear authority to require post-approval clinical trials to confirm a product’s benefit.

Quick Hits

  • On December 6, 2022, the U.S. Centers for Medicare and Medicaid Services (CMS) published a proposed rule to improve and streamline prior authorization processes used by Medicare Advantage organizations, state Medicaid and CHIP programs (fee-for-service and managed care), and health insurers that sell plans on healthcare.gov. The draft rule aims to alleviate burdens and improve the patient experience by requiring payers to automate their prior authorization processes; give specific reasons when they deny any prior authorization request; respond to prior authorization requests within set deadlines; and publicly report their prior authorization metrics on an annual basis.
  • One week later, CMS published a separate proposed rule addressing prior authorization practices used by Medicare Advantage and Medicare Part D prescription drug plans. The rule seeks to reduce disruptions in care for Medicare Advantage enrollees by requiring that a granted prior authorization approval remain valid for an enrollee’s full course of treatment; requiring Medicare Advantage plans to annually review their utilization management policies; and requiring coverage determinations to be reviewed by professionals with relevant expertise. CMS says its rule seeks to counteract prior authorization abuses detailed in an HHS Office of Inspector General Report earlier this year. The proposed rule also seeks to protect Medicare shoppers against confusing and potentially misleading advertisements that promote enrollment in Medicare Advantage plans.
  • On December 12, 2022, CMS published its proposed Marketplace Rule (“Notice of Benefit and Payment Parameters”) for ACA-compliant 2024 health plans. In an effort to reduce complexity and confusion and make plan selection easier, CMS is proposing to limit the number of non-standardized plans that carriers can sell in any one Marketplace. (Per CMS, “the average number of plans available to consumers on the Marketplace has increased from 25.9 in PY2019 to 113.6 in PY2023. Such plan choice overload limits consumers’ ability to make a meaningful selection when comparing plan offerings.”) The rule also calls on health plans to make their drug formularies more understandable and easy to compare by standardizing drug tiering practices. Disappointingly, CMS once again declined to rein in health insurer use of copay accumulator adjusters in its proposed Marketplace Rule for 2024.
  • The open enrollment period (OEP) for 2023 health insurance continues in healthcare.gov and for all state-based Marketplaces through at least January 15 (except for Idaho, where the OEP ended December 15). If you need insurance but didn’t sign up before December 15, use this extended opportunity to get coverage for 2023. And, if you find yourself re-enrolled in a plan that is more expensive than you expected, you may be able to use the extra time in this OEP to change your coverage and avoid higher costs for at least 11 months (February-December) of 2023.