Introduction
The upcoming election, and the approaching end of the
President’s four-year term, introduce additional dynamics into
the agencies’ rulemaking process and even the guidance process.
From now through the November election, the Biden administration
will be increasingly focused on pushing forward policies that
fulfill campaign promises and achieve important policy priorities,
while potentially being more circumspect about whether, and when,
to issue policies that may be controversial. During an election
year, the White House, through the Office of Management and Budget
(OMB) and the Office of Information and Regulatory Affairs (OIRA),
typically takes a stronger hand in determining how to balance
agencies’ priorities, and how to manage the limited resources
and timeline for issuing final rules (as well as proposed rules
and, in some cases, certain guidances). Moreover, the Congressional
Review Act (CRA) and the potential for a new administration to
impose a regulatory freeze further collapses what an incumbent
administration considers the optimal window and timing for issuing
regulations and guidance.
These factors will directly affect which health care-related
policies are issued and when. This alert summarizes these dynamics,
some of the key health care-related policies that are anticipated
for this year and the likely timing for action on these policies.
Overall, we expect the next several weeks to be a critical time for
the release of important priorities for the Department of Health
and Human Services (HHS) and its component agencies. After that
point, regulations will still be issued, but at a slower pace and
at greater risk for the policies not to survive a change in
administration, if one were to occur, or subsequent CRA action.
Key Takeaways
- Various rules and guidances affecting the health care and life
sciences industries are currently pending, including proposals from
FDA, CMS, and HRSA. - The next few weeks, through mid-May, will be a critical period
for the release of policies, particularly policies that are more
controversial and lack broad, bipartisan support. - After mid-May, certain policies will still be issued (such as
those that essentially must be issued), but discretionary rules and
guidances will be less common.
The Regulatory Agenda
Notice and comment rulemaking is a cumbersome process. It is
difficult for any administration’s regulatory priorities to be
fully implemented during a term of office, and as a result, an
election year typically requires further prioritization among
competing priorities of departments and agencies. In short, with
certain exceptions, rulemaking must begin with a proposed rule,
followed by a comment period. The issuing agency must then review
the comments received, consider any revisions to the proposed rule
and draft a final rule, along with a preamble addressing the
comments received. That final rule is itself a proposal, which then
must go through a formal clearance process through OMB/OIRA. When a
final rule is submitted to OMB for final clearance, it will be
listed on the dashboard. It could be days, weeks or months before
OMB completes review, and the order in which rules move through OMB
review is necessarily influenced by presidential priorities. In an
election year, the White House, through OMB, will typically ensure
that its key policies receive prioritized OMB attention, including
being prioritized in chronology to help insulate those rules from
being reversed or subject to a subsequent regulatory freeze, and
also to be able to tout those priorities from the “bully
pulpit” or on the campaign trail.
The Congressional Review Act
The CRA provides Congress with a method of conducting oversight
of agency rulemaking by delaying the implementation of so-called
“major rules” for 60 days following the rule’s
submission to Congress or publication in the Federal
Register. After a rule is reported to Congress, members have
60 days starting on the 15th day of the first legislative session
to introduce a joint resolution of disapproval. Disapproval
resolutions can pass with a simple majority—meaning they are
not subject to Senate filibuster. They can, however, be vetoed by
the President, with a two-thirds vote needed to override it. As a
result, the CRA typically becomes most relevant when a president is
no longer in office, and the president’s party controls neither
chamber of Congress (otherwise, the president would presumably veto
a disapproval resolution, and a president’s party would
generally not support a disapproval resolution either). In 2017,
for example, Republicans had complete control of Congress and the
White House and used the CRA to repeal several federal rules
promulgated during the Obama administration. Similarly, following
the 2020 elections, the Biden administration signed three CRA
resolutions into law passed by the Democratic-controlled Congress,
overturning Trump administration policies.
If the resolution is passed, the rule at issue is invalid, and
the agency is barred from issuing a substantially similar rule. The
resolution operates as a binary tool; it must be brought against
the entire rule and cannot be used to invalidate portions of the
rule. This dynamic effectively immunizes policies that are
incorporated into “mandatory” rules like Medicare’s
annual payment rules.
Because congressional calendars are subject to change, it is
challenging to determine the precise date on which a CRA lookback
would begin. However, based on the current congressional schedule,
rules submitted to Congress after mid-May 2024 would trigger the
lookback mechanism, opening them to review in 2025. The pressure on
the Biden administration to issue priority health policy rules
ahead of this lookback period is apparent. Just in the past few
weeks, the Biden administration has finalized several priority
health policy rules including streamlining the processes for
eligible individuals to enroll and retain their Medicaid,
Children’s Health Insurance Program (CHIP) and Basic Health
Program (BHP) coverage, and updating the administrative dispute
resolution process for drug makers and health providers
participating in the federal 340B drug discount program. Just this
week, the administration issued a new rule to support reproductive
health privacy under the Health Insurance Portability and
Accountability Act of 1996 and Health Information Technology for
Economic and Clinical Health (HITECH) Act of 2009 (together,
HIPAA).
Health Care Regulations to Watch
1. FDA LDT Rule
The Food and Drug Administration (FDA) has several pending rules
at OMB, such as a proposed rule to establish and require
standardized testing methods for detecting and identifying asbestos
in talc-containing cosmetic products as required by the
Modernization of Cosmetics Regulation Act of 2022. Notably, OMB
recently concluded review of the widely anticipated final rule to
regulate laboratory-developed tests (LDTs) as medical devices. As
previously noted in our analysis of the proposed LDT rule, this
action is the latest chapter in FDA’s efforts to end its
posture of generally exercising enforcement discretion with regard
to LDTs, which the agency describes as in vitro diagnostic products
(IVDs) “intended for clinical use and that [are] designed,
manufactured, and used within a single laboratory that is certified
under the Clinical Laboratory Improvement Amendments of 1988 (CLIA)
and meets the regulatory requirements under CLIA to perform high
complexity testing.” The agency is proposing to amend
“FDA’s regulations to reflect that the device definition
in the Federal Food, Drug, and Cosmetic Act (FD&C Act) does not
differentiate between entities manufacturing the device.” In
conjunction with this amendment, “FDA is also advancing a
policy under which FDA intends to phase out its general enforcement
discretion approach for LDTs, so that IVDs manufactured by a
laboratory would generally fall under the same enforcement approach
as other IVDs.” The OMB concluded its review of the proposed
rule on April 22, suggesting that it is on track for Federal
Register publication in early- to mid-May.
2. Medicare Payment Rules
Although Medicare payment rules are “must pass”
regulations and therefore not generally at risk of being undone by
the CRA, they do take up resources in OMB. Currently pending
promulgation are final rules related to the fiscal year 2025
Medicare hospital inpatient prospective payment system (IPPS) and
long-term care hospital prospective payment system (LTCH PPS).
3. March-In Rights for Drugs
On December 8, 2023, the National Institute of Science and
Technology (NIST), part of the Department of Commerce, which has
overall responsibility for Bayh-Dole administration, issued a
“Request for Information Regarding the Draft Interagency
Guidance Framework for Considering the Exercise of March-In
Rights” 88 Fed. Reg. 85593 (the Draft Guidance). The
NIST Draft Guidance for the first time (and contrary to
all prior NIH pronouncements) explicitly authorizes
“march-in” on the basis of a drug’s price, but
without much guidance on how to assess when a price should trigger
“march-in.” A group of Republican senators recently
requested that the U.S. Government Accountability Office (GAO)
determine whether the NIST proposal meets the definition of a rule
under the CRA, thus making the proposal subject to
repeal.1
4. Insurance Market Reforms
There are two proposed rules from the Centers for Medicare and
Medicaid Services (CMS) reforming various aspects of health
insurance coverage:
- Provider Nondiscrimination Requirements: The proposed
rule would implement section 108 of the No Surprises Act, which
directs the HHS to health plans from discriminating against
qualified licensed health care professionals, solely on the basis
of their licensure. - Coverage of Certain Preventative Services: The
proposed rule amends the final rules regarding religious and moral
exemptions and accommodations regarding coverage of certain
preventative services under title I of the Patient Protection and
Affordable Care Act.
5. Medicaid
CMS also has the Medicaid Access rule, which contains a number
of policies, including the “80/20” provision that would
require 80% of all Medicaid payments to be spent on direct care
workers and direct service professionals’ compensation for
personal services. That rule has now been placed on display on the
Office of Federal Register website, although it has not yet been
formally published. Within a day of the text of the final rule
being displayed, the Energy and Commerce Committee Subcommittee on
Health scheduled a legislative hearing on a range of Medicaid
proposals, including legislation related to the policy under the
final Access Rule—signaling that Congress is not done
engaging on these issues. Additionally, the agency proposed
requirements related to manufacturers’ misclassification of
covered outpatient drug products under the Medicaid Drug Rebate
Program (MDRP).
6. New Payment Models
CMS issued proposed rules related to two new payment models
including the Transforming Episode Accountability Model (TEAM) and
the Increasing Organ Transplant Access (IOTA) Model, both focused
on accountability for quality, cost and health equity.
7. Nursing Home Staffing Minimums
In his 2022 State of the Union address, President Biden
announced his Nursing Home Reform initiative to ensure safe and
quality care in nursing homes. CMS subsequently issued a proposed
rule establishing minimum staffing standards for long-term
facilities. On March 6, 2024, the House Ways and Means Committee
advanced the Protecting American Seniors’ Access to Care Act of
2023, which would bar CMS from finalizing the regulation, on a
26-17 vote. Given the current opposition in Congress, the proposed
minimum staffing rule appears to be a potential candidate for CRA
repeal. On April 22, 2024, the proposed rule went on display on the
Office of Federal Register website as part of Vice President
Harris’ announcement in conjunction with the Medicaid Access
Rule roll out and is scheduled to be published on May 10, 2024.
8. Health Care Fraud and Abuse
The Office of Inspector General (OIG) of the HHS issued two
proposed rules that would establish new safe harbors under the
Federal Anti-Kickback Statute (AKS) and revise OIG’s Medicare
and Medicaid Program exclusion authorities.
9. Health Privacy and Data Protection
On June 9, 2023, the Federal Trade Commission (FTC) published a
proposed rule to amend its
2009 Health Breach Notification Rule (HBNR) adopted under the
HITECH Act. As discussed in our analysis of the Commission’s
first HBNR enforcement action, the
HBNR focuses on personal health records (PHRs)—electronic
records containing individually identifiable health information
that are managed, shared and controlled by or primarily for an
individual—and requires vendors of PHRs and PHR-related
entities to notify affected individuals, the FTC and potentially
the media in the event PHR identifiable health information is
acquired by an unauthorized person as a result of a breach of
security. In response to the increasing proliferation of apps and
other direct-to-consumer health technologies (e.g., fitness
trackers, wearable blood pressure monitors, etc.), the agency seeks
to clarify that the HBNR also applies to these types of
applications and similar technologies.
Agency Guidance to Watch
In addition to these rules, OMB also reviews certain agency
guidances that are considered significant (despite not having
binding effect). For example, the widely anticipated FDA clinical
trial diversity guidance, mandated by the Food and Drug Omnibus
Reform Act of 2022 (FDORA), is still pending at OMB, well past the
congressional deadline.
Footnote
1. Letter from Sen. B. Cassidy dated March 4, 2024,
available at https://www.help.senate.gov/imo/media/doc/march_in_gao_finalpdf.pdf.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
#Regulatory #Race #Biden #Administration #Sprints #Issue #Key #Health #Policies #Healthcare
