Human Resources

The Washington Report

March 24, 2021

Note to subscribers: Due to the current environment, information is changing at a rapid rate. While we do our best to provide timely updates, it is possible that the information shared in the newsletter may change or be revised after our publication deadline. Stay healthy and safe! ~The Washington Report team



House Approves Bill Exempting Medicare From Budgetary Reductions
On March 19, 2021, the House passed with a 246–175 vote H.R. 1868, which would make several budgetary and technical changes to provisions under Medicare, Medicaid, and the American Rescue Plan Act of 2021 (ARPA). The ARPA provided additional relief to address the ongoing impact of COVID-19. The bill would exempt the budgetary effects of the ARPA and this bill from the statutory Pay-As-You-Go Act of 2010 (PAYGO) and would exempt this bill from the Senate PAYGO rule. The bill would also continue to exempt Medicare from sequestration until December 31, 2021. (Sequestration is “a process of automatic, usually across-the-board spending reductions under which budgetary resources are permanently cancelled to enforce specific budget policy goals.”) Senate passage is uncertain.

The full text of H.R. 1868 is available here.



OIG, HHS Delay Drug Rebate Rule to January 1, 2023, Due to Court Order
On March 22, 2021, the Office of Inspector General (OIG) and the Department of Health and Human Services (HHS) published a final rule providing a notice of the delay of the effective date of certain amendments to the safe harbors to the federal anti-kickback statute that were put into effect in a final rule published in the Federal Register on November 30, 2020 (Fraud and Abuse; Removal of Safe Harbor Protection for Rebates Involving Prescription Pharmaceuticals and Creation of New Safe Harbor Protection for Certain Point-of-Sale Reductions in Price on Prescription Pharmaceuticals and Certain Pharmacy Benefit Manager Service Fees). The new effective date for these certain amendments is now January 1, 2023.

On November 30, 2020, HHS issued a final rule establishing four changes to the regulatory safe harbors to the federal anti-kickback statute (Social Security Act Section 1128B(b)). Specifically, the final rule:

  1. Amended 42 CFR 1001.952(h)(5) to remove safe harbor protection for reductions in price for prescription pharmaceutical products provided to plan sponsors under Part D;
  2. Created a new safe harbor at Section 1001.952(cc) for certain point-of-sale reductions in price offered by manufacturers on prescription pharmaceutical products that are payable under Medicare Part D or by Medicaid managed care organizations that meet certain criteria;
  3. Created a new safe harbor at Section 1001.952(dd) for fixed fees that manufacturers pay to pharmacy benefit managers for services rendered to the manufacturers that meet specified criteria; and
  4. Added new paragraphs (h)(6) through (9) to 42 CFR 1001.952, defining certain terms.

The final rule was published with an effective date of January 29, 2021, except for the amendments to 42 CFR 1001.952(h)(5), which were to be effective on January 1, 2022. On January 12, 2021, a lawsuit challenging the final rule was filed in the U.S. District Court for the District of Columbia. On January 30, 2021, the Court issued an order postponing until January 1, 2023, the effective date of the provisions of the final rule that were scheduled to take effect on January 1, 2022. Consistent with that order, HHS notified the public that the effective date of the amendments to 42 CFR 1001.952(h)(5) in the final rule is now January 1, 2023.

The final rule delaying the drug rebate rule effective date is available here.

The November 30, 2020, final rule is available here.

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