Jeffrey J. Kimbell, Eric P. Juhl, JD and David C. Rudloff, Jeffrey J. Kimbell & Associates Inc.10.01.20
The summer has come to a close in Washington, D.C., as both the House and Senate took the August recess to return home to their districts. While passing legislation to provide additional relief during the COVID-19 pandemic remains a priority, much attention has now turned to the highly competitive elections on Nov. 3. There are also a number of recent regulatory changes of importance to manufacturers of medical products.
2020 Presidential Race Update
The 2020 presidential election is heating up as both parties held their national conventions in late August. National conventions offer an opportunity to garner substantial media attention. Typically, due to the increased attention, national conventions are accompanied by a slight bump in the polls. However, in this current polarized political climate, it appears polling has not been significantly impacted. Former Vice President Joe Biden still leads President Trump by 7.2 percent in national polls, according to RealClearPolitics polling averages. There is some evidence Trump has narrowed Biden’s lead in swing state polls, but not to the point where he is shown to be ahead. Perhaps one silver lining for the Trump campaign is his odds of winning the election have improved slightly from pre-convention numbers, as Biden held a 72 percent chance of victory as of Aug. 17, according to FiveThirtyEight’s statisticians, and now holds a 69 percent chance of victory. The 2020 presidential election is still no sure bet for either campaign, as much could transpire over the course of the next few weeks.
Democratic National Convention
On Aug. 17-20, the Democratic Party held its National Convention, where Biden formally accepted the party’s nomination in the 2020 presidential election. The virtual convention featured a lineup of prominent speakers, including former Presidents Barack Obama and Bill Clinton, as well as Hillary Clinton, Michelle Obama, U.S. Senator Elizabeth Warren (D-MA), and House Speaker Nancy Pelosi (D-CA), among others. In her speech, Vice Presidential candidate Senator Kamala Harris (D-CA) criticized President Trump’s leadership and highlighted her diversity, calling to alleviate structural racism and injustice in healthcare.
Biden spoke about the need to bring people across the country together and criticized the Trump administration’s response to the COVID-19 pandemic. He emphasized the need to protect people with pre-existing conditions and expand coverage under the Affordable Care Act, a plan Biden claimed would lower premiums, deductibles, and drug prices. Biden ended his remarks with a national call for unity and return to normalcy.
Biden’s healthcare platform calls for creating a public option to give all Americans the ability to buy into Medicare, allowing premium-free access to the public options for individuals in states that have not expanded Medicaid, and lowering the Medicare age to 60. With regard to drug pricing, Biden would allow direct negotiation of drug prices in Medicare and establish an independent review board within the U.S. Department of Health and Human Services (HHS) to recommend a reasonable price that Medicare and the public option would pay for new specialty drugs without competition. He would also limit price increases for all brand, biotech, and “abusively priced” generic drugs to inflation and allow consumers to buy and import drugs from other nations.
Republican National Convention
On Aug. 24-27, the Republican Party held its National Convention in Charlotte, N.C., with most events taking place virtually. Notable speakers included South Carolina Gov. Nikki Haley, Senator Tim Scott (R-SC), Secretary of State Mike Pompeo, House Minority Leader Kevin McCarthy (R-CA), and Senate Majority Leader Mitch McConnell (R-KY), among others. The fourth night of the convention culminated with the re-nomination of President Donald Trump and Vice President Mike Pence.
In his speech, President Trump laid out the case for his re-election, citing his administration’s response to the pandemic and economic recovery. Trump assured the nation of the development of a COVID-19 vaccine by the end of the year and stated the use of convalescent plasma would be helpful in treating the virus. Trump also stated he would further reduce the cost of prescription drugs and health insurance premiums as well as end surprise medical billing and highlighted his recent Executive Orders on drug pricing. Trump closed his speech by criticizing Biden and calling for law and order.
During the convention, the Trump campaign released a bullet-point agenda for his potential next term. The agenda called attention to several healthcare issues including lowering the price of prescription drugs, putting patients and doctors back in charge of the healthcare system, lowering premiums, ending surprise medical billing, covering all pre-existing conditions, protecting Social Security and Medicare, and providing veterans with world-class healthcare and services.
Recent Regulatory Changes
After devoting much of its focus during the first half of 2020 on a response to the COVID-19 Public Health Emergency (PHE), the HHS and Centers for Medicare and Medicaid Services (CMS) turned their attention to issuing a number of proposed rules that update the Medicare program.
In late August, CMS released a proposed rule that would provide faster access to new, innovative medical devices that have been designated as “breakthrough” by the U.S. Food and Drug Administration (FDA) and have also received market authorization. The Medicare Coverage of Innovative Technology (MCIT) proposed rule would begin national Medicare coverage for eligible devices on the date of FDA market authorization. The national coverage determination would continue for four years. In the proposed rule, CMS states the “coverage pathway delivers on the Administration’s commitment to give Medicare beneficiaries access to the newest innovations on the market…”
CMS acknowledged the concerns it has heard from a variety of stakeholders about the variation in coverage between Medicare jurisdictions and the length of time it takes from FDA approval to a Medicare coverage determination. Under the current structure, coverage determinations can take, on average, nine to 12 months, which CMS states leads to coverage uncertainty between the period of FDA market authorization and any Medicare coverage determination. Such uncertainty hampers beneficiary access to innovative medical devices and could delay treatment.
As CMS notes in the proposed rule, so far, 16 breakthrough devices have received market authorization, so the immediate impact of the proposed rule may be limited. However, the number of designated breakthrough devices under the FDA pathway has grown to almost 300 devices. As more of these devices gain market authorization, the impact of the proposed rule grows. Since it is hard to predict how many devices might gain FDA market authorization, and therefore would be covered under the MCIT pathway, CMS estimates the program could cost anywhere between $66 million and $2 billion over the next four years. Interested stakeholders wishing to comment on the proposed rule have until Nov. 2 to make their submissions on regulations.gov.
In addition to the MCIT proposed rule, CMS also released several proposed rules that update payment rates and policies in the Medicare program. In late July, CMS issued both the CY 2021 Hospital Outpatient Prospective Payment System (OPPS) Proposed Rule and CY 2021 Medicare Physician Fee Schedule (MPFS) and Quality Payment Program (QPP) Proposed Rules.
The OPPS Proposed Rule provides updated payment rates and policy changes for the OPPS and Ambulatory Surgical Center Payment System. CMS is proposing to update the OPPS rates by 2.6 percent for 2021 and estimates overall payments to OPPS providers would be $83.9 billion, approximately $7.5 billion higher than estimated CY 2020 OPPS payments.
CMS is estimating total pass-through payment for medical devices will be $309.8 million in CY 2021. When combined with drugs and biologicals receiving pass-through, total pass-through payments will be approximately $783.2 million, or about 2 percent of total projected OPPS CY 2021 spending. CMS is also proposing a clarification; for a device to be eligible to apply for pass-through payment through an alternative pathway, the device must receive marketing authorization for the indication covered by the Breakthrough Devices Program. This clarification aligns with the coverage determination requirements proposed in the MCIT rule.
In the MPFS and QPP rules, CMS is proposing a 10 percent reduction in the payment calculation that is used to establish rates for many specialty services included in the physician fee schedule. The impact of the proposed payment cuts varies between provider types, with some experiencing double-digit cuts and others seeing an increase. The impact even varies within a specialty category based on the types of services provided. For example, CMS estimates the proposed change would result in a 6 percent overall estimated reduction for ophthalmology providers. However, ophthalmologists who focus their practice on cataract surgeries are likely to see something closer to a 10 percent cut in payments for CY 2021. Several specialty societies have already voiced strong opposition to the proposed cuts, and it can be expected the opposition will grow louder as the comment period comes to a close in early October. CMS is also contemplating the creation of a temporary new category for telehealth services to reflect additions made to the list of allowable telehealth services during the PHE. Under this proposal, Category Three telehealth services would be temporarily allowed through the calendar year in which the PHE ends.
Jeffrey J. Kimbell, president and founder of Jeffrey J. Kimbell & Associates Inc., represents 45 clients in the life sciences community seeking legislative and policy remedies in Washington. Founded in 1998, the firm provides strategic solutions to hand-selected clients seeking creation, modification, or proper implementation of public law.
Eric P. Juhl is a senior director of health policy and reimbursement strategy at Jeffrey J. Kimbell & Associates Inc.
David C. Rudloff is a senior manager of government affairs at Jeffrey J. Kimbell & Associates Inc.
2020 Presidential Race Update
The 2020 presidential election is heating up as both parties held their national conventions in late August. National conventions offer an opportunity to garner substantial media attention. Typically, due to the increased attention, national conventions are accompanied by a slight bump in the polls. However, in this current polarized political climate, it appears polling has not been significantly impacted. Former Vice President Joe Biden still leads President Trump by 7.2 percent in national polls, according to RealClearPolitics polling averages. There is some evidence Trump has narrowed Biden’s lead in swing state polls, but not to the point where he is shown to be ahead. Perhaps one silver lining for the Trump campaign is his odds of winning the election have improved slightly from pre-convention numbers, as Biden held a 72 percent chance of victory as of Aug. 17, according to FiveThirtyEight’s statisticians, and now holds a 69 percent chance of victory. The 2020 presidential election is still no sure bet for either campaign, as much could transpire over the course of the next few weeks.
Democratic National Convention
On Aug. 17-20, the Democratic Party held its National Convention, where Biden formally accepted the party’s nomination in the 2020 presidential election. The virtual convention featured a lineup of prominent speakers, including former Presidents Barack Obama and Bill Clinton, as well as Hillary Clinton, Michelle Obama, U.S. Senator Elizabeth Warren (D-MA), and House Speaker Nancy Pelosi (D-CA), among others. In her speech, Vice Presidential candidate Senator Kamala Harris (D-CA) criticized President Trump’s leadership and highlighted her diversity, calling to alleviate structural racism and injustice in healthcare.
Biden spoke about the need to bring people across the country together and criticized the Trump administration’s response to the COVID-19 pandemic. He emphasized the need to protect people with pre-existing conditions and expand coverage under the Affordable Care Act, a plan Biden claimed would lower premiums, deductibles, and drug prices. Biden ended his remarks with a national call for unity and return to normalcy.
Biden’s healthcare platform calls for creating a public option to give all Americans the ability to buy into Medicare, allowing premium-free access to the public options for individuals in states that have not expanded Medicaid, and lowering the Medicare age to 60. With regard to drug pricing, Biden would allow direct negotiation of drug prices in Medicare and establish an independent review board within the U.S. Department of Health and Human Services (HHS) to recommend a reasonable price that Medicare and the public option would pay for new specialty drugs without competition. He would also limit price increases for all brand, biotech, and “abusively priced” generic drugs to inflation and allow consumers to buy and import drugs from other nations.
Republican National Convention
On Aug. 24-27, the Republican Party held its National Convention in Charlotte, N.C., with most events taking place virtually. Notable speakers included South Carolina Gov. Nikki Haley, Senator Tim Scott (R-SC), Secretary of State Mike Pompeo, House Minority Leader Kevin McCarthy (R-CA), and Senate Majority Leader Mitch McConnell (R-KY), among others. The fourth night of the convention culminated with the re-nomination of President Donald Trump and Vice President Mike Pence.
In his speech, President Trump laid out the case for his re-election, citing his administration’s response to the pandemic and economic recovery. Trump assured the nation of the development of a COVID-19 vaccine by the end of the year and stated the use of convalescent plasma would be helpful in treating the virus. Trump also stated he would further reduce the cost of prescription drugs and health insurance premiums as well as end surprise medical billing and highlighted his recent Executive Orders on drug pricing. Trump closed his speech by criticizing Biden and calling for law and order.
During the convention, the Trump campaign released a bullet-point agenda for his potential next term. The agenda called attention to several healthcare issues including lowering the price of prescription drugs, putting patients and doctors back in charge of the healthcare system, lowering premiums, ending surprise medical billing, covering all pre-existing conditions, protecting Social Security and Medicare, and providing veterans with world-class healthcare and services.
Recent Regulatory Changes
After devoting much of its focus during the first half of 2020 on a response to the COVID-19 Public Health Emergency (PHE), the HHS and Centers for Medicare and Medicaid Services (CMS) turned their attention to issuing a number of proposed rules that update the Medicare program.
In late August, CMS released a proposed rule that would provide faster access to new, innovative medical devices that have been designated as “breakthrough” by the U.S. Food and Drug Administration (FDA) and have also received market authorization. The Medicare Coverage of Innovative Technology (MCIT) proposed rule would begin national Medicare coverage for eligible devices on the date of FDA market authorization. The national coverage determination would continue for four years. In the proposed rule, CMS states the “coverage pathway delivers on the Administration’s commitment to give Medicare beneficiaries access to the newest innovations on the market…”
CMS acknowledged the concerns it has heard from a variety of stakeholders about the variation in coverage between Medicare jurisdictions and the length of time it takes from FDA approval to a Medicare coverage determination. Under the current structure, coverage determinations can take, on average, nine to 12 months, which CMS states leads to coverage uncertainty between the period of FDA market authorization and any Medicare coverage determination. Such uncertainty hampers beneficiary access to innovative medical devices and could delay treatment.
As CMS notes in the proposed rule, so far, 16 breakthrough devices have received market authorization, so the immediate impact of the proposed rule may be limited. However, the number of designated breakthrough devices under the FDA pathway has grown to almost 300 devices. As more of these devices gain market authorization, the impact of the proposed rule grows. Since it is hard to predict how many devices might gain FDA market authorization, and therefore would be covered under the MCIT pathway, CMS estimates the program could cost anywhere between $66 million and $2 billion over the next four years. Interested stakeholders wishing to comment on the proposed rule have until Nov. 2 to make their submissions on regulations.gov.
In addition to the MCIT proposed rule, CMS also released several proposed rules that update payment rates and policies in the Medicare program. In late July, CMS issued both the CY 2021 Hospital Outpatient Prospective Payment System (OPPS) Proposed Rule and CY 2021 Medicare Physician Fee Schedule (MPFS) and Quality Payment Program (QPP) Proposed Rules.
The OPPS Proposed Rule provides updated payment rates and policy changes for the OPPS and Ambulatory Surgical Center Payment System. CMS is proposing to update the OPPS rates by 2.6 percent for 2021 and estimates overall payments to OPPS providers would be $83.9 billion, approximately $7.5 billion higher than estimated CY 2020 OPPS payments.
CMS is estimating total pass-through payment for medical devices will be $309.8 million in CY 2021. When combined with drugs and biologicals receiving pass-through, total pass-through payments will be approximately $783.2 million, or about 2 percent of total projected OPPS CY 2021 spending. CMS is also proposing a clarification; for a device to be eligible to apply for pass-through payment through an alternative pathway, the device must receive marketing authorization for the indication covered by the Breakthrough Devices Program. This clarification aligns with the coverage determination requirements proposed in the MCIT rule.
In the MPFS and QPP rules, CMS is proposing a 10 percent reduction in the payment calculation that is used to establish rates for many specialty services included in the physician fee schedule. The impact of the proposed payment cuts varies between provider types, with some experiencing double-digit cuts and others seeing an increase. The impact even varies within a specialty category based on the types of services provided. For example, CMS estimates the proposed change would result in a 6 percent overall estimated reduction for ophthalmology providers. However, ophthalmologists who focus their practice on cataract surgeries are likely to see something closer to a 10 percent cut in payments for CY 2021. Several specialty societies have already voiced strong opposition to the proposed cuts, and it can be expected the opposition will grow louder as the comment period comes to a close in early October. CMS is also contemplating the creation of a temporary new category for telehealth services to reflect additions made to the list of allowable telehealth services during the PHE. Under this proposal, Category Three telehealth services would be temporarily allowed through the calendar year in which the PHE ends.
Jeffrey J. Kimbell, president and founder of Jeffrey J. Kimbell & Associates Inc., represents 45 clients in the life sciences community seeking legislative and policy remedies in Washington. Founded in 1998, the firm provides strategic solutions to hand-selected clients seeking creation, modification, or proper implementation of public law.
Eric P. Juhl is a senior director of health policy and reimbursement strategy at Jeffrey J. Kimbell & Associates Inc.
David C. Rudloff is a senior manager of government affairs at Jeffrey J. Kimbell & Associates Inc.
