Health care was one of the most active issue areas in 2023 and
this trend is expected to continue when Congress returns in the New
Year for the second session of the 118th Congress. The activity by
the health committees of jurisdiction in both the House and the
Senate has been fueled in part by efforts to reauthorize various
expiring provisions. This Congress continues to be defined by a
juxtaposition between an extraordinarily high level of activity by
the committees, but with relatively few health bills having passed
the full Congress, including reauthorization of bipartisan
legislation. With these dynamics in mind, stakeholders will be
closely watching to see how Congress looks to address its
unfinished legislative health care business. This client alert
highlights 10 health policy issues to watch as Congress rings in
the New Year.
- Fiscal Year (FY) 2024 Appropriations –
As noted in our prior alert, health
stakeholders most closely watch two annual appropriations bills:
the Labor, Health and Human Services, Education, and Related
Agencies (Labor-HHS) appropriations bill and the Agriculture, Rural
Development, and Food and Drug Administration, and Related Agencies
(Ag-FDA) appropriations bill. The Senate Appropriations Committee
advanced all 12 annual appropriations bills out of Committee with
overwhelming bipartisan support—seven of the 12 bills passed
out of Committee unanimously. The Senate's bipartisan work
continued when the upper Chamber passed a "minibus" on
November 1 with three of the appropriations bills, including the
Ag-FDA bill, by a vote of 82-15. To the frustration of Senate
Republicans, including Appropriations Committee Vice Chair Susan
Collins (R-ME), who has repeatedly called for the Senate to
continue putting the appropriations bills on the floor, it is not
likely that the full Senate will consider the nine remaining bills,
which includes the Labor-HHS bill. On the other side of the
Capitol, the House Appropriations Committee approved 10 of the
bills, but the Committee never held full committee markups for the
Labor-HHS bill or the Commerce-Justice-Science bill. To date, the
full House has passed seven of the 12 appropriations bills, but
unlike the bipartisan approach in the Senate, the House's work
has played out almost entirely along party lines. With such a small
majority and virtually no Democratic support, the House has
struggled to pass the remaining five appropriations bills. In fact,
after initially pulling the Ag-FDA bill, which had been scheduled
to be on the House floor before the August recess, on September 28,
27 Republicans joined all Democrats in voting against the bill, and
it failed by a vote of 191-237. The House has continued to struggle
to even bring the remaining bills to the floor, and after leaving
early for Thanksgiving following a failed vote on a rule to
consider the Commerce-Justice-Science bill, the House has not
attempted to resume consideration of any appropriations bill. The
FY 24 appropriations process will come to a head in Q1 2024 after
Congress passed a Continuing Resolution (CR) that funds four
appropriations bills, including Ag-FDA, through January 19, and
eight appropriations bills, including Labor-HHS, through February
2. Despite recent acknowledgement from outgoing House Freedom
Caucus Chair Scott Perry (R-PA) that FY 24 appropriations are
likely to end up at the spending levels agreed to as part of the
Fiscal Responsibility Act, the House and Senate have yet to agree
on the top-line number to allow appropriators to reconcile the 12
bills ahead of the January 19 and February 2 deadlines. With the
Senate scheduled to return on Monday, January 8 and the House
returning a day later, there is limited time to reach an agreement,
suggesting the possibility of at least a partial government
shutdown as the path forward on resolving the FY 24 appropriations
remains unclear.
- Health Care Extenders – A number of
expiring health care programs and policies remain on the agenda for
the 118th Congress as the New Year begins. The most recent CR
provided short-term extensions for many such policies only through
January 19, 2024, including: funding for the Community Health
Center Fund and the National Health Service Corps; funding for the
Special Diabetes Program; delay of Medicaid disproportionate share
hospital (DSH) allotment reductions; and extension of the work
geographic index floor under the Medicaid physician fee schedule.
The CR also delayed clinical laboratory payment reductions until
2025. Also under consideration are proposals to reverse or mitigate
pending Medicare physician payment cuts. A 3.4% cut to the Medicare
physician fee schedule conversion factor went into effect January
1, 2024, which may add urgency to legislation on this issue and
other so-called health care extenders in the coming weeks.
- SUPPORT Act Reauthorization – The
SUPPORT for Patients and Communities (SUPPORT) Act (P.L. 115-271)
was a defining law in the effort to combat the opioid epidemic and
was enacted with overwhelming bipartisan support over five years
ago. The Energy and Commerce Committee advanced legislation (H.R.
4531) by a vote of 49‑0 in July to reauthorize expiring
provisions in the 2018 law and add new provisions to account for
the evolving nature of the fentanyl and opioid crisis, including
provisions to schedule xylazine. The full House passed the Support
for Patients and Communities Reauthorization Act on December 12 by
a vote of 386-37. After months of uncertainty, the Senate Health,
Education, Labor and Pensions (HELP) Committee advanced its own
SUPPORT Act reauthorization bill by a vote of 19-1. There are
differences between these House and Senate bills which will need to
be reconciled as part of moving forward with a final
reauthorization when Congress reconvenes.
- Pandemic and All-Hazards Preparedness Act (PAHPA)
Reauthorization – Congress has extended some of
PAHPA's programs as part of the recent continuing resolutions;
however, resolution of a final bill between the House and Senate
thus far has proven elusive this Congress. Despite this stopgap
action, noticeably absent from the CR extensions has been an
extension of the Food and Drug Administration's (FDA) Material
Threat Medical Countermeasure Priority Review Voucher Program,
which expired at the end of the last fiscal year (September 30,
2023). In July, the Senate HELP Committee approved S. 2333, the
Pandemic and All-Hazards Preparedness and Response Act, with
bipartisan support, but the full Senate has still not taken up this
bill. Similarly, also in July, the House Energy and Commerce
Committee advanced two bills related to reauthorization along party
lines (H.R. 4421, the Preparing for All Hazards and Pathogens
Reauthorization Act, and H.R. 4420, Preparedness and Response
Reauthorization Act). Informal conversations between these
Committees have been playing out for the past few months, but has
yet to result in a final, reconciled reauthorization. Disagreement
over the path forward on drug shortages has been a consistent
sticking point throughout consideration of this reauthorization in
the House. Thus, it still remains unclear how the House and Senate
will reconcile the differences between their respective
reauthorization bills. Most recently, on December 18, Senate HELP
Committee Ranking Member Bill Cassidy (R-LA) issued a statement on
PAHPA reauthorization noting that 115 organizations have called on
Congress to reauthorize PAHPA, and stating that Congress
"needs to finish the job and pass it into law."
- Drug Shortages – In July, the Senate
HELP Committee advanced a PAHPA reauthorization bill that included
several drug shortage-related provisions. The inclusion of FDA
medical product shortage related provisions has been a partisan
sticking point in the House, however. Democratic members of the
Energy and Commerce Committee sought to include such provisions in
the PAHPA reauthorization bills at both the Health Subcommittee and
full Committee markups. Instead of including such provisions in the
House PAHPA reauthorization bills, in June, Chair Cathy McMorris
Rodgers (R-WA) teamed up with Senate Finance Committee Ranking
Member Mike Crapo (R-ID) to release a bicameral Request for
Information (RFI) on drug shortages. In late July, Chair McMorris
Rodgers released a legislative discussion draft focused on drug
shortages and asked for stakeholder comments by August 25. Since
these developments, the Energy and Commerce Health Subcommittee
held a hearing on the discussion draft and several Democratic
proposals in September, though none were included in subsequent
Subcommittee and Full Committee markups. While it is unclear if
Congress will find bipartisan, bicameral agreement on these issues,
given the impact drug shortages have on patients and public health,
the congressional focus on these issues is expected to continue in
the months ahead.
- Drug Pricing – Drug pricing issues
continue to take center stage in this Congress and remain a key
area of focus by the Biden administration. The Biden administration
is pressing forward with implementation of the Inflation Reduction
Act (IRA) as part of their drug pricing policy agenda. However,
their work on drug pricing has gone beyond the IRA's sweeping
reforms. In December, the National Institute of Standards and
Technology (NIST) unveiled a draft guidance document explicitly
proposing for the first time that a drug's high price could be
considered as a factor that would be expressly considered in
determining whether a "march-in" should be exercised.
While comments are not due on the NIST proposal until February 6,
Members of Congress on both sides of the aisle immediately issued
strong statements in response to this policy development further
highlighting the partisan and philosophical policy fault lines on
various drug pricing fronts. Relatedly, congressional oversight
continues to drive the drug pricing dialogue within the Beltway. In
particular, the congressional attention on pharmacy benefit
managers (PBMs) over the past year has been unprecedented and
prolific with multiple Committees in the House and Senate holding
hearings and marking up various pieces of PBM legislation. While it still
remains to be seen when and how the House and Senate will come
together on PBM legislative reforms, it is clear that there is
growing momentum for moving bipartisan legislation on this issue
even if the specific legislative path for such action remains
uncertain.
- Provider Price Transparency – Ahead of
the end-of-year recess, the House passed the Lower Costs, More
Transparency Act, as amended (H.R. 5378), by a significant
bipartisan vote of 320-71 with one member voting present. The
multijurisdictional bill, parts of which were approved by the House
Energy and Commerce, Ways and Means, and Education and the
Workforce Committees, was unexpectedly pulled from the House floor
this fall leading up to the House Speaker turmoil yet remained a
priority for Energy and Commerce Committee Chair Cathy McMorris
Rodgers (R-WA). Hospitals remain firmly opposed to the bill's
inclusion of site-neutral payment policies for certain off-campus
hospital outpatient departments (HOPDs), as well as the additional
regulatory requirements placed on hospitals and health systems from
provisions that codify the Hospital Price Transparency Rule and
establish unique identifiers for HOPDs. The amended bill gained the
support of the Education and Workforce Ranking Member Bobby Scott
(D-VA) after changes were made to ensure that reporting
requirements for PBMs also applied to the direct and indirect
compensation earned by health plans. The bill includes several PBM
transparency policies that target questionable PBM activity that
lawmakers have concluded are leading to higher prescription drug
costs.
The focus on transparency in health care has also been a priority for Senate Finance Committee Chair Ron Wyden (D-OR). In November, the Committee marked up and unanimously approved the Better Mental Health Care, Lower-Cost Drugs, and Extenders Act (S. 3430), which aims to decrease costs for certain covered Part D drugs by removing PBM payment from drug prices and developing a new designation for "essential retail pharmacies" to expand pharmacy options for beneficiaries in underserved areas unaffiliated with PBMs. During the mark-up, Sen. Maggie Hassan (D-NH) withdrew consideration of an amendment that would require parity for certain services provided in off-campus HOPDs by ending various exemptions, as well as require a unique provider identifier for each off-campus HOPD. Chairman Wyden did, however, express an interest in site-neutral payment policies. On December 14, Senate HELP Committee members, Chair Bernie Sanders (I-VT) and Sens. Mike Braun (R-IN), Tina Smith (D-MN) and John Hickenlooper (D-CO) introduced the Health Care PRICE Transparency Act 2.0 (S. 3548), which, like the House-passed bill, includes insurer and provider transparency policies. Despite bipartisan momentum behind various price transparency policies, there remains uncertainty as to whether a health care focused package would ride on an appropriations bill in early 2024.
- Diagnostics Reform – Diagnostics reform
has been a long-standing area of focus for Congress even though
enactment of bipartisan legislation (the VALID Act) has thus far
proven elusive. The latest chapter in diagnostics reform was penned
when the FDA promulgated a much-anticipated proposed rule on
laboratory-developed tests (LDTs) in early October 2023. Despite
having received requests to extend the comment period for this
rule, FDA updated their website to make clear that the agency would
not be extending the 60-day comment period, which ended on December
4, 2023. Stakeholders will be closely watching for a final FDA LDT
rule in the coming months, and Congress may use the developments
around this rulemaking to re-engage on the diagnostics reform
discussion and potential related legislative considerations.
- HHS Oversight – In addition to the
legislative activity, 2023 was also a year of Congressional
oversight over the Department of Health and Human Services (HHS)
across a range of policy issues, and Congress may continue to lean
into oversight efforts in the New Year. From IRA implementation to
the Biden administration's work on drug shortages, Congress may
use oversight letters and related press to highlight their work in
an election year and with Congressional dynamics that have
demonstrated an increasingly difficult environment in which to move
stand-alone health care bills. One area in particular to watch will
be FDA's proposed reorganization
given that the products the agency regulates account for almost 20
cents of every dollar spent by U.S. consumers and FDA regulates
about 80% of the U.S. food supply.
- Artificial Intelligence (AI) - In recent months, Congress has noticeably increased its attention on AI, leading key congressional committees to explore AI implications for health care and life sciences. Of note, the House Energy and Commerce Committee convened a series of subcommittee hearings, including one at the Health Subcommittee, and subsequently held a Full Committee hearing featuring testimony from an HHS witness. This focus has been mirrored in the Senate, where in recent months the "Group of Four" concluded a series of AI Insight Forums, the HELP Committee held a hearing to examine AI in health care and the Senate Finance Committee pressed HHS on its use of AI. As Congress continues to examine potential legislative reforms, the Biden Administration has forged ahead on AI, most notably with President Biden's long-awaited AI Executive Order (EO). Outside of the EO, in recent weeks the White House announced that it had subsequently secured voluntary commitments from 28 provider and payer organizations, while HHS finalized its health IT interoperability and algorithm transparency rule and unveiled its multiyear data strategy highlighting the need to responsibly leverage AI. Looking to specific agencies, the Agency for Health Care Research and Quality (AHRQ) released principles to guide AI developers and health care organizations in reducing potential bias in AI, while the FDA is working to stand up a Digital Health Advisory Committee, which will provide guidance on the development, regulation, and implementation of digital health technologies (DHTs) like AI. Looking ahead to 2024, HHS will continue to press forward with implementing the directives outlined in the AI EO, including the charge to create an AI Task Force by the end of January and work through the Task Force to develop a plan for responsible deployment of AI and AI-enabled technologies.
Outlook
In the New Year, Congress will return to a long list of unfinished business on a number of health care fronts and election year politics will only make the current legislative environment more complex. Stakeholders will be closely watching for policy developments from Capitol Hill and the Biden Administration as both seek to advance their priority issues and use the policy tools at their disposal. While there is uncertainty about how exactly these various health care bills and policy areas will play out, it is certain that stakeholders will be closely watching for further developments in the weeks and months ahead.
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