Sellers Dorsey Digest

SELLERS DORSEY DIGEST

Issue 18 | January 21, 2021 NAVIGATION Summary of Key Updates On January 14, CMS Administrator Seema Verma submitted her resignation Federal Updates effective January 20, 2021. Verma reviewed administrative highlights On January 15, CMS finalized a rule including lowering premiums in the Medicare Advantage and Exchange on prior authorization and marketplaces, empowering patients by mandating price transparency, and increasing competition among providers. Liz Richter, who has worked at CMS information sharing which it first for 30 years, will serve as Acting Administrator (Twitter, January 14; Modern proposed on December 10, 2020. Healthcare, January 20). On January 12, HHS Secretary Alex Azar submitted his resignation effective at noon on January 20, 2021. Azar commented on the achievements over the course of the administration including those of Operation Warp Speed, the State Updates focus on facilitating patient-centered health care markets, protecting life and Democratic lawmakers in lives, and promoting independence over dependence in our safety-net Connecticut are proposing a tax on programs. He also condemned the recent attacks on the Capitol. Azar will be replaced by California Attorney General Xavier Becerra (Alex Azar, January carriers to help support and fund 12). the health insurance exchange and reduce costs for customers. Three drug makers filed separate federal lawsuits against HHS in an attempt to invalidate a recent HHS Office of General Counsel opinion that 340B discounts are applicable to contract pharmacies (Fierce Healthcare, January 13; Inside Health Policy, January 13). Private Sector Updates On January 15, CMS finalized a rule on prior authorization and information Accolade will acquire 2nd.MD, a sharing, which it first proposed on December 10, 2020. The final rule is largely telehealth start-up for $460 million. unchanged from the proposed version (CMS, January 15; CMS, January 15; Fierce Healthcare, January 15; Modern Healthcare, January 15). 2nd.MD, which went public last year, helps patients get expert medical From January 12 through January 19, CMS approved one Section 1135 waiver, one 1115 waiver, nine Section 1915(c) Appendix K waivers, and nine SPAs, opinions virtually. three of which are time-limited, COVID-19 disaster relief SPAs.

Sellers Dorsey Updates Sellers Dorsey is proud to be a Major Sponsor of the upcoming Texas State of Reform Virtual Health Policy Conference, held on February 4.

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Federal Updates News • On January 15, CMS released two tools intended to assist states’ operational planning efforts for returning state Medicaid programs to standard operations following the expiration of the public health emergency (PHE). These tools build on the State Health Official Letter CMS released on December 22, 2020. One tool is specific to eligibility actions, while the other covers more general program considerations. As noted in a December 22 letter, states are not required to submit these documents to CMS for approval but must make them available upon request (CMS, January 15). Federal Regulations • On January 15, CMS finalized a rule on prior authorization and information sharing, which it first proposed on December 10, 2020. The public comment period for the rule was just 22 days, which MACPAC and industry groups argued was insufficient given the scope of the changes. With the exception of some specific application program interface (API) requirements, the final rule is largely unchanged from the proposed version. Medicare Advantage plans are not subject to these new regulations. Key provisions include:

o Requirement for impacted payers to include information about a patient’s claims, encounters, and pending and active prior authorization decisions in the Patient Access API.

o Requirement for impacted payers to build a Provider Access API for payer-to-payer and payer-to- provider data sharing.

o Requirement to facilitate a more efficient and transparent prior authorization process that will allow providers to: . Look up prior authorization requirements within a payer’s API. . Submit and receive electronic prior authorization requests. . Receive denial reasons on prior authorization requests. . Send prior authorization decisions within 72 hours for urgent requests and 7 calendar days for standard requests (not including Qualified Health Plans).

o Requirement for payers to publicly report prior authorization metrics (CMS, January 15; CMS, January 15; Fierce Healthcare, January 15; Modern Healthcare, January 15). • On January 8, HHS finalized a regulation first proposed on November 4, 2020, overhauling the agency’s requirements for reviewing its own existing regulations, dubbed the “Securing Updated and Necessary Statutory Evaluations Timely (SUNSET)” rule. Under this rule, any HHS regulation will cease to be effective after 10 years unless HHS “performs a plenary assessment of the regulation and a more detailed review of those regulations that have a significant economic impact upon a substantial number of small entities.” In a change from the proposed rule, the final rule gives HHS five years to complete its review of existing regulations that are more than 10 years old. Some rules, like Medicare payment rules, are exempt. Industry groups argue this review process could lead to considerable provider confusion (HHS, January 8; HHS, January 8; Fierce Healthcare, January 8). Federal Legislation • The Consolidated Appropriations Act 2021 contains several provisions focused on government spending. However, Congress also included requirements to strengthen mental health parity in a managed care environment, particularly non-quantitative treatment limitations (NQTLs) through the Strengthening Behavioral Health Parity Act (HR 7539). NQTLs include a range of managed care practices, including medical necessity criteria and clinical coverage guideline development, utilization management, provider network recruitment, reimbursement rate methodologies, and other practices that constitute "a limit on

the scope or duration of services." The provisions will largely impact health plans that are now subject to additional oversight requirements by the Departments of Labor and HHS. Of note, Medicaid managed care organizations do not have to follow the new compliance requirements if the plans comply with parity requirements in CMS Medicaid regulations and the Mental Health Parity Act (American Health Law Association, January 15).

o In the January 7 issue of Sellers Dorsey Digest, we highlighted the spending provisions under the Consolidated Appropriations Act. The Biden-Harris Administration • On January 15, President Joe Biden and Vice President Kamala Harris announced eight additional appointees for the White House COVID-19 Response Team. All appointees will join the team during the Biden-Harris transition, with no member having previously worked for the Trump administration. This team will implement a cohesive COVID-19 response strategy that includes vaccinating Americans efficiently, increasing testing across the country, and changing the trajectory of the pandemic. Appointees for the team are as follows:

o Amy Chang, Policy Advisor o Abbe Gluck, Special Counsel o David Kessler, Chief Science Officer of COVID-19 Response o Rosa Po, COVID-19 Response Team Deputy Chief of Staff o Andy Slavitt, Senior Advisor to the COVID-19 Response Coordinator o Vidur Sharma, Policy Advisor for Testing o Ben Wakana, Deputy Director of Strategic Communications and Engagement o B. Cameron Webb, Senior Policy Advisor for COVID-19 Equity (Build Back Better, January 15). • On January 14, President Biden proposed the American Relief Plan, a $1.9 trillion relief package that includes $400 billion to fight the COVID-19 pandemic, including the following COVID-19 specific aid for:

o National vaccine program ($20 billion) – to offer free shots for all US residents and establish community vaccination centers nationwide and mobile units in rural communities. Biden will also work with Congress to expand the federal matching rate to 100% for vaccination of all Medicaid enrollees.

o COVID-19 testing ($50 billion) – to fund purchase of rapid tests, expand lab capacity, and assist local governments in creating testing plans.

o Personal protective equipment ($30 billion) – to purchase supplies such as ventilators and personal protective equipment.

o Public health jobs (100,000 jobs) – to fund jobs like vaccine outreach and contact tracing. o Federal wage increase ($15/hour) – to increase the federal minimum wage to $15 per hour. This is more than double the current $7.25 rate.

o Local aid ($350 billion) – to allocate funds for state and local governments to bridge budget shortfalls.

o Stimulus checks ($1,400/ person) – make direct payments to Americans. o Emergency paid leave – extend emergency paid leave to 106 million Americans. o Small business loans ($15 billion) – extend directly to small businesses plus $35 billion of government funds into low-interest loans to help small businesses (Becker’s Hospital Review, January 15; Fierce Healthcare, January 15).

Letters • In a January 19 letter to CMS, Representative Pallone and Senator Wyden expressed strong disappointment in CMS Administrator Seema Verma’s decision to send “letters of agreement” to states operating Section 1115 demonstration waivers to implement new procedures for CMS to withdraw approval for such waivers. The letter argues CMS’ letters of agreement do not have the force of law and must be considered impermissible sub-regulatory guidance. The letter contends existing regulations stipulate the terms and conditions of each 1115 waiver and establishes procedures for waiver withdrawal (House Committee on Energy and Commerce, January 19). Waivers • Section 1115 o On January 15, CMS approved Texas’ request to extend its existing Section 1115 demonstration waiver, the Texas Healthcare Transformation and Quality Improvement Program, through September 30, 2030. The waiver extension maintains the state’s existing managed care delivery system, but makes the following funding changes: . New Public Health Providers Charity Care Pool (PHP-CCP) with up to $500 million in each of the first two years of the demonstration, which is subject to resizing in subsequent years. Payments will be available to publicly owned and operated community mental health clinics (CMHCs), local behavioral health authorities (LBHAs), or local mental health authorities (LMHAs), local health departments (LHDs), and Public Health Districts (PHD). . Resizing the existing Uncompensated Care Pool in 2022, using FY 2019 data, and again in 2027. . Rebasing budget neutrality effective FY 2023, using FY 2022 data to establish a new without waiver cost. CMS will also allow a one-time adjustment to budget neutrality to account for COVID-19 impacts on enrollment and spending.

o In last week’s Digest, we announced CMS approved Tennessee's Section 1115 Demonstration Waiver, TennCare III. Sellers Dorsey Senior Strategic Advisor Gabe Roberts, former CEO and Director of TennCare, released an analysis on the Modified Block Grant amendment. Click here to read the analysis.

o On December 31, 2020, Utah submitted a request to CMS to amend its existing Section 1115 waiver, Primary Care Network, to add coverage for in-vitro fertilization and genetic testing for beneficiaries diagnosed with any of the following conditions: Cystic Fibrosis, Spinal Muscular Atrophy, Morquio Syndrome or Myotonic Dystrophy. CMS will accept public comments through February 13.

o On December 22, 2020, Washington submitted an application to CMS to extend its existing Section 1115 waiver, Medicaid Transformation Project, through December 31, 2022. The state is not requesting programmatic or funding changes as part of the extension request. CMS will accept public comments through February 20. • Section 1135 o Minnesota . Suspends Pre-Admission Screening and Annual Resident Review Level I and Level II Assessments for 30 days. • Section 1915(c) Appendix K o Maryland . Extends waiver expiration date to six months after end of the PHE.

o New Hampshire . Extends waiver expiration date to six months after end of the PHE. o Colorado . Extends waiver expiration date to six months after end of the PHE. o Louisiana . Makes additional retainer payments to day habilitation, pre-vocational, supported employment, and adult day health care center providers. . Waives HCBS settings rule requirements. . Adds electronic delivery for case management, personal care services, in-home habilitation, and monthly monitoring. . Adds home-delivered meals; medical supplies, equipment, and appliances; and assistive technology. . Allows spouses and family members to deliver personal care services. . Extends assessment due dates, allows virtual assessments and electronic signatures, and adjusts prior authorization requirements.

o Oklahoma . Extends waiver expiration date to six months after end of the PHE. o Maine . Extends waiver expiration date to six months after end of the PHE. . Temporarily exceeds service limitations for community supports. . Temporarily adds financial management services, skills training for self-directed participants, and self-directed attendant services. . Temporarily allows family members to deliver attendant care services. . Temporarily allows physician assistants, nurse practitioners, and clinical nurse specialists to recertify plans of care for home health services. . Temporarily expands self-direction for adults with brain injuries or other related conditions.

o Ohio . Extends waiver expiration date to six months after end of the PHE. o South Carolina . Extends waiver expiration date to six months after end of the PHE. . Temporarily allows the person-centered planning processes to be completed by telephone. . Allows offsite desk reviews for provider audit activities. . Waives HCBS settings rule requirements. . Adds electronic delivery for case management, monthly monitoring, and high fidelity wraparound services. . Allows virtual assessments and electronic signatures. o Wyoming . Extends waiver expiration date to six months after end of the PHE. SPAs • Traditional SPAs o Alaska (AK-20-0008): Makes revision of coverage for Inpatient Hospital Services (organ transplants) and Laboratory & Radiology Services. This SPA has an effective date of October 1, 2020.

o Kansas (KS-20-0019): Updates the fee schedule to increase reimbursement for cardiac catheterization to 80% of the annual non-rural Medicare rate in outpatient settings only and includes provisions to update these rates yearly on January 1 based on non-rural Medicare rate changes. This SPA has an effective date of January 1, 2021.

o Kansas (KS-20-0021): Updates the fee schedule to add two Early and Periodic Screening, Diagnostic and Treatment (EPSDT) counseling codes. This SPA has an effective date of January 1, 2021.

o Louisiana (LA-20-0013): Amends the provisions governing hospice services currently provided with life-prolonging treatments to individuals under 21 years of age. This SPA has an effective date of November 20, 2020.

o Minnesota (MN-20-0017): Authorizes ongoing interim payments from the Department to hospitals eligible to receive the inpatient hospital supplemental payment. This SPA has an effective date of October 1, 2020.

o Oklahoma (OK-20-0036): Authorizes mandatory benefit coverage and reimbursement of medication-assisted treatment (MAT) in opioid treatment programs (OTPs) and office- based opioid treatment (OBOT) settings in compliance the SUPPORT Act, HR 6, Section 1006(b), and Section 1905(a)(29) of the Social Security Act. This SPA has an effective date of October 1, 2020. • COVID-19 Disaster Relief SPAs o Massachusetts (MA-20-0025): Implements a one-time supplemental payment to chronic disease and rehabilitation inpatient hospitals. This time-limited COVID-19 response SPA has an effective date of August 1, 2020, and an expiration date upon termination of the PHE.

o North Dakota (ND-20-0031): Allows the state to increase payment for a reserved day of therapeutic leave of absences for a resident of an intermediate care facility to 60 days. This time- limited COVID-19 response SPA has an effective date of March 1, 2020, and an expiration date upon termination of the PHE.

o Oregon (OR-20-0019): Continues the stability payment rate method for Tribal 638 and Urban Indian Health programs into 2021 using the 2019 month actuals in years 2020 and 2021. This amendment is submitted as a technical addition stemming from the COVID-19 SPA, OR-20-0010. This time-limited COVID-19 response SPA has an effective date of January 1, 2021, and an expiration date upon termination of the PHE. State Updates Click here to view Sellers Dorsey’s state budget tracking summaries. • Democratic lawmakers in Connecticut are proposing a tax on carriers to help support and fund the health insurance exchange and reduce costs for customers. The Health Insurance Providers Fee was originally created under the Affordable Care Act, which was repealed by Congress in 2019. The tax could bring in millions of dollars for the State and help fund other health care initiatives, such as Medicaid expansion; however, those who oppose the tax argue it would increase premiums for those who are fully insured (Health Payer Specialist, January 15). • New Mexico lawmakers are proposing a bill known as the Health Care Affordability Fund that would impose a 2.75% surtax on health insurers, which would generate an estimated $110 million for the state. Proceeds from the tax would go into a state fund aimed to increase enrollment on the health exchange. New Mexico, among many other states, is taking this action to make up for the loss in federal funding

when Congress in 2019 repealed the federal tax on insurers, an action originally created under the Affordable Care Act (Health Payer Specialist, January 20). Private Sector Updates • Accolade will acquire 2nd.MD, a telehealth start-up for $460 million. 2nd.MD, which went public last year, helps patients get expert medical opinions virtually and helps employers address employees’ urgent medical needs. The deal is expected to close by the end of February and is estimated to expand Accolade’s market by about $22 billion (Fierce Healthcare, January 15). • UnitedHealthcare, Anthem, Aetna, Health Care Service Corp., Cigna, and Florida Blue were all told to share their patient-level commercial claims data for inpatient, outpatient, and physician services in 15 states from 2015 to 2020, according to the FTC. The insurers must file before April 20, 2021. This data will be used to evaluate the impact of clinical practices by hospitals and other physician groups. This order is part of FTC’s expansion of its merger retrospective program (Health Payer Specialist, January 19). • The Modern Medicaid Alliance has seen a dramatic rise in enrollment in Medicaid and CHIP between December 2019 and June 2020, largely due to COVID-19. Modern Medicaid Alliance estimates at least five million more enrollees by 2022. The organization found growth is uneven across the country, with Idaho leading with a 28.1% increase. Maine, Montana, and Arkansas saw their enrollments drop at 8.6%, 4.1%, and 2.5% respectively (Health Payer Specialist, January 13). • Pharmaceutical Care Management Association (PCMA), the top lobbying group for pharmacy benefit managers (PBMs), sued the Trump administration to block the finalized rebate rule. PCMA claims the rule will result in higher premiums in Medicare Part D and increase costs for taxpayers. PCMA President and CEO JC Scott expressed, “the haphazard process to finalize a rule that had already been withdrawn circumvented the proper rulemaking process and imposes an effective date that utterly fails to take account of the CMS timeline for issuing implementing guidance, creating chaos for the upcoming plan year… The agency failed to consider the significant impacts on beneficiaries and government costs that were articulated in thousands of public comments opposing the rule when it was originally proposed. The rebate rule cannot be implemented and should be invalidated” (Health Payer Specialist, January 13; Fierce Healthcare, January 12). Sellers Dorsey Updates • Sellers Dorsey is proud to be a Major Sponsor of the upcoming Texas State of Reform Virtual Health Policy Conference, held on February 4. Managing Director Gary Jessee will be on a panel during the conference discussing “Innovative Strategies from the Pandemic that Should Remain Post-COVID.” To learn about other events the Sellers Dorsey team will be attending, click here. • Gabe Roberts is a Senior Strategic Advisor to Sellers Dorsey and a former Director and CEO of TennCare, Tennessee’s Medicaid Program. In addition to providing timely knowledge and analyses such as this piece on TennCare’s Modified Block Grant, Gabe offers a wealth of knowledge in Medicaid, payment delivery systems, and health care policy and provides high-level strategic guidance to team members and clients on Medicaid financing initiatives. During his tenure as Director, Gabe designed this modified block grant funding model proposal, championed innovative policies for members with intellectual and developmental disabilities, and drove the further adoption of TennCare’s value-based purchasing model. Learn more about Gabe and get in touch with him here.

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