Summary
Happy July 4th! The House and Senate are both on recess this week for the holiday. We hope you all have a wonderful Independence Day celebration!
Prior to recessing, the House had a busy week last week passing three of the fiscal year (FY) 2025 appropriations bills by mostly partly line votes on the floor, and moving the last five bills through Subcommittee, including the Labor-HHS-Education bill. The overall funding level for the Labor-HHS bill is $24.6 billion (11%) less than last year, which resulted in some drastic cuts. HHS received $109.5 billion, a decrease of $7.5 billion, or 6.4 percent, below the FY 2024 level and $9.7 billion below the 2025 Administration request. CDC, HRSA, and the Administration on Children and Families all received cuts, while programs such as the Agency for Healthcare Research and Quality and Title X Family Planning, the Healthy Start Program, and the Ending the HIV Epidemic programs were eliminated. The Democratic summary of the bill can be found here, and the Republican summary is here. The bill is scheduled to go to the full Committee on July 10. The Senate has not yet begun marking up FY 25 bills, but it is safe to assume that the elimination of programs and controversial riders that have been included in the House bills will not survive in the Senate.
Supreme Court Chevron Ruling
On Friday, in a 6-3 decision the Supreme Court reversed a 1984 decision known as the “Chevron deference” that allowed federal agencies, not the courts, leeway to implement laws that were ambiguous or lacked specificity. The 1984 decision was based on the idea that experts employed by federal agencies have more knowledge and expertise than federal judges when it came to complex regulations. With this ruling, however, the power is returned to the courts thereby substantially weakening federal agencies. This ruling could have a major impact on complex technical health care regulations including FDA drug and medical device approvals, Medicare reimbursement, and drug pricing.
Healthcare stakeholder organizations such as the American Academy of Pediatrics, American Cancer Society, American Public Health Association and others submitted an amicus brief prior to the decision warning of chaos for health programs if Chevron was overturned.
The decision is not retroactive, so previous court rulings that used the Chevron deference will not be overturned, but going forward we can expect that courts will increasingly take up cases involving an agency’s interpretation of ambiguous laws. In fact, there has been some speculation that this ruling could open the door to legal challenges for some of the more controversial federal rules recently put out by HHS, such drug price negotiation, the nursing home staffing rule and the LDT rule.
Regulatory Update
The Office of Management and Budget (OMB) is currently reviewing the following rules:
Medicare
- Calendar Year (CY) Payment Updates – The CY 2025 proposed rule for Medicare Physician Fee Schedule and hospital outpatient departments and ambulatory surgical centers (June 2024).
- Fiscal Year (FY) Payment Updates – The FY 2025 final rules for hospitals and long-term care hospitals, and skilled nursing facilities (August 2024).
Medicaid
- Drug Rebate Program – The final rule would establishes requirements related to manufacturers’ misclassification of covered outpatient drug products under the Medicaid Drug Rebate Program (MDRP). In addition, it finalizes beneficiary protections, as well as MDRP program integrity and administration changes (June 2024).
Other Topics
- Healthcare System Resiliency and Modernization – The proposed rule would revise and update national emergency preparedness requirements for Medicare- and Medicaid-participating providers and suppliers (was set for December 2023).
- Tobacco Products – The final rule would prohibit the sale of tobacco products to persons younger than 21 years of age (was set for April 2024).
- Retail Pharmacy Standards – The final rule would require pharmacies and vendors to modify the currently adopted National Council for Prescription Drug Programs (NCPDP) standards to the Telecommunications Standard Implementation Guide Version F6 (F6); Batch Standard Implementation Guide version 15; and Batch Standard Subrogation Implementation Guide version 10 (was set for February 2024).