Infrastructure bill impacts health policy and spending

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On August 10, 2021, the Senate passed HR 3684, an approximately $ 1 trillion infrastructure bill (the “Bill on infrastructure“) which authorizes funds for federal aid highways, public transportation, broadband access and other infrastructure purposes. Notably, the infrastructure bill is funded in part by changes to several health policies, including deferring a Medicare Part D reimbursement rule for an additional three years and reducing the amounts of Medicare payments to providers. infrastructure to health policies have a mixed impact on stakeholders in the health care industry, with both expected benefits and burdens for providers, payers and drugmakers.

Restart Medicare Payment Reductions

The Infrastructure Bill reinstates a 2% reduction in all Medicare payments to providers to help fund infrastructure spending. This cut was initially installed in 2013 in receivership, but Congress suspended it at the start of the pandemic in 2020 to help financially distressed suppliers. Congress then extended the moratorium until 2021. Under the Infrastructure Bill, the reduction in Medicare payments to providers will restart in 2022 and continue until 2031. “), Medicare cuts would result in savings of approximately $ 21 billion over a ten-year period (2022 to 2031).

Leading provider advocacy groups have expressed concern that this reduction in the Medicare program will not be sustainable for providers, especially given the resurgence of COVID-19 cases due to the Delta variant. The American Hospital Association and the American Medical Association, among other groups, wrote a letter to congressional leaders on July 15, 2021, ahead of the Senate vote, warning that “[e]The extension of sequestration imposes a destabilizing element on access to health care in the face of years of experience with cost increases that are not properly reflected in Medicare payments.[1]

Delay the reimbursement of Part D

The infrastructure bill also delays a controversial Medicare Part D reimbursement rule (the “Part D refund rule“) until 2026. These Trump-era regulations, originally slated to come into effect in 2022, eliminate the safe harbor for Part D remittances and replace it with a much narrower safe harbor for remissions at the point of sale that are designed to directly benefit patients with high out-of-pocket expenses. The rebate rule in Part D also changes the way pharmacy benefit managers (“PBM“) are compensated. However, in January 2021, the Biden administration successfully attempted to delay the entry into force of the Part D refund rule until 2023 via a court order. infrastructure will now delay it for another three years.As noted by the CBO and reported in the CBO report, the delay would result in savings of $ 52 billion over the three-year period.

The delay of the Part D reimbursement rule infrastructure bill is being celebrated as a victory for PBMs and insurers, while the delay is contested by the pharmaceutical industry. Former Department of Health and Human Services secretary Alex Azar previously said the Part D rebate rule would benefit drugmakers by eliminating a ‘bribe’ drugmakers owe pay to register for Part D form for PBMs and insurers. However, PBMs and insurers have previously argued that the Part D refund rule would increase Part D premiums for seniors.[2]

Regulate PPE purchases

In addition, the Infrastructure Bill requires the federal government to purchase personal protective equipment (“EAR”) Exclusively from domestic manufacturers, with contracts of at least two years. The legislation aims to support domestic production of PPE to ensure more stable access given the accelerated demand and overloaded overseas supply chain. The two-year requirement is also intended to recognize the economic uncertainty that domestic producers face.[3]

Require drug manufacturers to reimburse Medicare for discarded drugs

Finally, the Infrastructure Bill requires drugmakers to reimburse Medicare for any single-dose or single-use drugs issued under Part B of Medicare (which reimburses medical services, including drugs administered by doctor). Starting in 2023, these refunds must be made quarterly. This requirement is intended to deter drug manufacturers from overpacking single-use containers and hopes to reduce drug waste. This could force some large pharmaceutical companies to reimburse the federal government about $ 100 million per year based on the current rate and volume at which drugs are thrown away by doctors due to overpack. This reimbursement would in turn help finance the projects of the infrastructure bill. According to the CBO report, the reimbursement provision would result in savings of approximately $ 3.2 billion in the Medicare program.

The rest of the story: the infrastructure bill in the House of Representatives

Although the Senate infrastructure bill enjoys broad bipartisan support, politics in the House of Representatives have somewhat blocked its final passage. At the heart of the controversy is a $ 3.5 trillion Senate reconciliation package, backed by President Pelosi and the Biden administration, which is expected to include top healthcare priorities such as the extension from hearing, dental and visual benefits to Medicare; and giving the program the power to negotiate lower prices for drugs. A small but critical number of moderate Democrats in the House are pushing for a vote on the infrastructure bill as drafted before pushing forward the $ 3.5 trillion reconciliation package, while President Pelosi and the Biden administration advocate a vote on the reconciliation package first.

Emma Arroyo, legal assistant in the firm’s Orange County office, contributed to this article.

FOOTNOTES

[1] Robert King, The Senate adopts a bill on infrastructure that revives the cuts under sequestration and delays the rule of reimbursements, FIERCE HEALTHCARE (August 10, 2021); Robert King, 3 key health policies in the Senate’s $ 1T infrastructure program, FIERCE HEALTHCARE (August 2, 2021).

[2] Analysts from CBO, the Centers for Medicare and Medicaid Services (CMS) and Avalere Health have found that the rule will increase Part D premiums from 25 to 40 percent. (Center For Medicare & Medicaid Services Office Of The Actuary, Memo On Proposed Safe Harbor Regulation; Congressional Budget Office, Incorporing The Effects Of The Proposed Rule On Safe Harbors For Pharmaceutical Rebates In CBO’s Budget Projections; Avalere Health, costs to taxpayers could soar under Proposed Discount Rule)

[3] Username.

Copyright © 2021, Sheppard Mullin Richter & Hampton LLP.Revue nationale de droit, volume XI, number 236

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