Happy new year! The 118th Congress convened on January 3. In the Senate, where Democrats retain the majority, the convening and swearing-in activities ran smoothly, and the Senate is now in recess until January 23. It was another story across the Capitol in the House, where the new Republican majority was immediately thrown into disarray during its first order of business: electing a Speaker of the House. The US Department of Health and Human Services (HHS) released several regulatory updates and guidance documents, including an updated CY 2023 physician conversion factor (CF).
Chaos in House Portends Difficulties Ahead in Legislating. The new Republican majority is attempting to elect Rep. Kevin McCarthy (R-CA) as Speaker of the House but cannot, as of this writing, attain the majority of votes needed to do so, given the party’s narrow 222–212 majority (with one vacancy) and the continued resistance from 20 holdout Republicans. Over the course of the week, the House has so far held 11 failed votes to elect a Speaker. There is news of movement as this writing goes to press, but we await votes starting again after the House convenes at Noon on January 6 to learn more.
The House is essentially paralyzed until it elects a Speaker. Members-elect are not formally sworn in until after a Speaker is elected, committee assignments are not made, legislative business cannot occur, and no rules are enacted for the House. The House chaos is an early indication of the difficulty the new Republican majority may have in conducting regular legislative business during the 118th Congress, as some Republicans have already demonstrated their willingness to buck party leaders.
Based on the events of this week, the House may have difficulty advancing even the traditional “must pass” items such as the annual spending bills for FY 2024, not to mention the pending need to raise the federal debt limit this summer. All eyes are looking toward the Senate to be able to lead legislative efforts this year. Expect the early focus in the Senate to be on nominations, however, which don’t require House consideration. In short, legislating is going to be difficult.
On the healthcare front, Congress will need to address funding for community health centers, avoiding scheduled cuts in Medicaid disproportionate share funding to hospitals that care for the most vulnerable, and extending the Special Diabetes Program later this year, as all are set to expire on October 1. To what extent Congress can successfully address these and other health policy priorities will also depend on the composition of the key healthcare committees. Committee assignments and agendas have yet to be finalized. As these decisions are made, we will continue to provide updates and analyses regarding potential implications for health policy.
Biden Administration Issues Updates Related to Abortion Drugs. Two announcements were made this week related to the availability of the abortion drugs mifepristone and misoprostol. First, the US Department of Justice released a legal opinion for the general counsel of the US Postal Service (USPS) regarding the mailing of prescription drugs that can be used for abortions, clearing the USPS to mail such drugs in states that have enacted strict limits on abortions following last year’s Supreme Court decision overturning Roe v. Wade.
The US Food and Drug Administration (FDA) also updated its information page on mifepristone, including modifications to the mifepristone risk evaluation and mitigation strategy. Under those changes, the drug may now be dispensed by certified pharmacies, in addition to certified prescribers. To become certified to dispense mifepristone, pharmacies must complete a pharmacy agreement form. The FDA update also removed the requirement that patients see a provider in person before being prescribed mifepristone (a requirement that was temporarily waived during the COVID-19 public health emergency).
Following the FDA announcement, major retail pharmacies Walgreens and CVS both announced that they plan to dispense the drug in states where abortion is legal.
CMS Updates CY 2023 Physician Conversion Factor. On January 5, the Centers for Medicare & Medicaid Services (CMS) announced an updated CY 2023 physician CF of $33.8872.
This change reflects a 2.5% positive adjustment from the initial CY 2023 physician CF of $33.0607 announced in the CY 2023 Medicare Physician Fee Schedule Final Rule. That initial CF represented a 4.47% cut from the CY 2022 CF of $34.6062, while the updated CF represents a 2.08% cut.
CMS implemented this change in response to the Consolidated Appropriations Act (CAA), 2023 (Public Law 117-328), signed into law on December 29, 2022. In addition to mitigating the cut to the Medicare CF, this bipartisan legislation staved off other Medicare cuts, including the Pay-As-You-Go Act of 2010 (PAYGO) cuts that impact all Medicare payments. Without legislative action, providers could have faced a 4% across-the-board PAYGO reduction and the aforementioned cuts to the physician CF.
In addition to the 2.5% positive adjustment to the CF for January 1, 2023, through December 31, 2023, the law implements a 1.25% positive adjustment to the CF for January 1, 2024, through December 31, 2024.
OIG Releases Report on CMS Oversight of Average Sales Price Data. On January 3, the HHS Office of Inspector General (OIG) released a report regarding gaps in CMS’s oversight of manufacturer-reported average sales price (ASP) data. OIG found that these gaps may limit the agency’s ability to ensure the accuracy of ASP data and result in inaccurate Part B drug payment amounts.
The report found that CMS’s quality assurance procedures lack checks to ensure the accuracy of manual processes it employs to analyze the data used to calculate Part B payment amounts. It also found that CMS does not leverage its ASP data collection system to produce analytical reports that would monitor ASP data quality and maximize CMS’s oversight capabilities. The report found that 24% of drug codes were missing ASP data for one or more specific drugs within that code for at least one quarter between 2016 and 2020.
The OIG recommended that CMS build a strategy to strengthen its internal controls for ensuring the accuracy of Part B drug payments and bolster its oversight of manufacturer-reported ASP data. CMS concurred with the recommendation, which is a strong indication of regulatory actions that the agency may take this year.
The House is scheduled to be in session next week, and the Senate is in recess until January 23. We will continue to report on organizational matters as the new Congress gets situated, including committee assignments and implications for health policy.
For more information, contact Debra Curtis, Kristen O’Brien or Erica Stocker.
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