Unfinished Health Care Business: 10 Issues to Watch as Congress Rings in the New Year

Health care was one of the most active issue areas in 2023 and this trend is expected to continue when Congress returns in the New Year for the second session of the 118th Congress. The activity by the health committees of jurisdiction in both the House and the Senate has been fueled in part by efforts to reauthorize various expiring provisions. This Congress continues to be defined by a juxtaposition between an extraordinarily high level of activity by the committees, but with relatively few health bills having passed the full Congress, including reauthorization of bipartisan legislation. With these dynamics in mind, stakeholders will be closely watching to see how Congress looks to address its unfinished legislative health care business. This client alert highlights 10 health policy issues to watch as Congress rings in the New Year.

1. Fiscal Year (FY) 2024 Appropriations – As noted in our prior alert, health stakeholders most closely watch two annual appropriations bills: the Labor, Health and Human Services, Education, and Related Agencies (Labor-HHS) appropriations bill and the Agriculture, Rural Development, and Food and Drug Administration, and Related Agencies (Ag-FDA) appropriations bill. The Senate Appropriations Committee advanced all 12 annual appropriations bills out of Committee with overwhelming bipartisan support—seven of the 12 bills passed out of Committee unanimously. The Senate’s bipartisan work continued when the upper Chamber passed a “minibus” on November 1 with three of the appropriations bills, including the Ag-FDA bill, by a vote of 82-15. To the frustration of Senate Republicans, including Appropriations Committee Vice Chair Susan Collins (R-ME), who has repeatedly called for the Senate to continue putting the appropriations bills on the floor, it is not likely that the full Senate will consider the nine remaining bills, which includes the Labor-HHS bill. On the other side of the Capitol, the House Appropriations Committee approved 10 of the bills, but the Committee never held full committee markups for the Labor-HHS bill or the Commerce-Justice-Science bill. To date, the full House has passed seven of the 12 appropriations bills, but unlike the bipartisan approach in the Senate, the House’s work has played out almost entirely along party lines. With such a small majority and virtually no Democratic support, the House has struggled to pass the remaining five appropriations bills. In fact, after initially pulling the Ag-FDA bill, which had been scheduled to be on the House floor before the August recess, on September 28, 27 Republicans joined all Democrats in voting against the bill, and it failed by a vote of 191-237. The House has continued to struggle to even bring the remaining bills to the floor, and after leaving early for Thanksgiving following a failed vote on a rule to consider the Commerce-Justice-Science bill, the House has not attempted to resume consideration of any appropriations bill. The FY 24 appropriations process will come to a head in Q1 2024 after Congress passed a Continuing Resolution (CR) that funds four appropriations bills, including Ag-FDA, through January 19, and eight appropriations bills, including Labor-HHS, through February 2. Despite recent acknowledgement from outgoing House Freedom Caucus Chair Scott Perry (R-PA) that FY 24 appropriations are likely to end up at the spending levels agreed to as part of the Fiscal Responsibility Act, the House and Senate have yet to agree on the top-line number to allow appropriators to reconcile the 12 bills ahead of the January 19 and February 2 deadlines. With the Senate scheduled to return on Monday, January 8 and the House returning a day later, there is limited time to reach an agreement, suggesting the possibility of at least a partial government shutdown as the path forward on resolving the FY 24 appropriations remains unclear.
   
   
2. Health Care Extenders – A number of expiring health care programs and policies remain on the agenda for the 118th Congress as the New Year begins. The most recent CR provided short-term extensions for many such policies only through January 19, 2024, including: funding for the Community Health Center Fund and the National Health Service Corps; funding for the Special Diabetes Program; delay of Medicaid disproportionate share hospital (DSH) allotment reductions; and extension of the work geographic index floor under the Medicaid physician fee schedule. The CR also delayed clinical laboratory payment reductions until 2025. Also under consideration are proposals to reverse or mitigate pending Medicare physician payment cuts. A 3.4% cut to the Medicare physician fee schedule conversion factor went into effect January 1, 2024, which may add urgency to legislation on this issue and other so-called health care extenders in the coming weeks.
   
   
3. SUPPORT Act Reauthorization – The SUPPORT for Patients and Communities (SUPPORT) Act (P.L. 115-271) was a defining law in the effort to combat the opioid epidemic and was enacted with overwhelming bipartisan support over five years ago. The Energy and Commerce Committee advanced legislation (H.R. 4531) by a vote of 49‑0 in July to reauthorize expiring provisions in the 2018 law and add new provisions to account for the evolving nature of the fentanyl and opioid crisis, including provisions to schedule xylazine. The full House passed the Support for Patients and Communities Reauthorization Act on December 12 by a vote of 386-37. After months of uncertainty, the Senate Health, Education, Labor and Pensions (HELP) Committee advanced its own SUPPORT Act reauthorization bill by a vote of 19-1. There are differences between these House and Senate bills which will need to be reconciled as part of moving forward with a final reauthorization when Congress reconvenes.
   
   
4. Pandemic and All-Hazards Preparedness Act (PAHPA) Reauthorization – Congress has extended some of PAHPA’s programs as part of the recent continuing resolutions; however, resolution of a final bill between the House and Senate thus far has proven elusive this Congress. Despite this stopgap action, noticeably absent from the CR extensions has been an extension of the Food and Drug Administration’s (FDA) Material Threat Medical Countermeasure Priority Review Voucher Program, which expired at the end of the last fiscal year (September 30, 2023). In July, the Senate HELP Committee approved S. 2333, the Pandemic and All-Hazards Preparedness and Response Act, with bipartisan support, but the full Senate has still not taken up this bill. Similarly, also in July, the House Energy and Commerce Committee advanced two bills related to reauthorization along party lines (H.R. 4421, the Preparing for All Hazards and Pathogens Reauthorization Act, and H.R. 4420, Preparedness and Response Reauthorization Act). Informal conversations between these Committees have been playing out for the past few months, but has yet to result in a final, reconciled reauthorization. Disagreement over the path forward on drug shortages has been a consistent sticking point throughout consideration of this reauthorization in the House. Thus, it still remains unclear how the House and Senate will reconcile the differences between their respective reauthorization bills. Most recently, on December 18, Senate HELP Committee Ranking Member Bill Cassidy (R-LA) issued a statement on PAHPA reauthorization noting that 115 organizations have called on Congress to reauthorize PAHPA, and stating that Congress “needs to finish the job and pass it into law.”
   
   
5. Drug Shortages – In July, the Senate HELP Committee advanced a PAHPA reauthorization bill that included several drug shortage-related provisions. The inclusion of FDA medical product shortage related provisions has been a partisan sticking point in the House, however. Democratic members of the Energy and Commerce Committee sought to include such provisions in the PAHPA reauthorization bills at both the Health Subcommittee and full Committee markups. Instead of including such provisions in the House PAHPA reauthorization bills, in June, Chair Cathy McMorris Rodgers (R-WA) teamed up with Senate Finance Committee Ranking Member Mike Crapo (R-ID) to release a bicameral Request for Information (RFI) on drug shortages. In late July, Chair McMorris Rodgers released a legislative discussion draft focused on drug shortages and asked for stakeholder comments by August 25. Since these developments, the Energy and Commerce Health Subcommittee held a hearing on the discussion draft and several Democratic proposals in September, though none were included in subsequent Subcommittee and Full Committee markups. While it is unclear if Congress will find bipartisan, bicameral agreement on these issues, given the impact drug shortages have on patients and public health, the congressional focus on these issues is expected to continue in the months ahead.
   
   
6. Drug Pricing – Drug pricing issues continue to take center stage in this Congress and remain a key area of focus by the Biden administration. The Biden administration is pressing forward with implementation of the Inflation Reduction Act (IRA) as part of their drug pricing policy agenda. However, their work on drug pricing has gone beyond the IRA’s sweeping reforms. In December, the National Institute of Standards and Technology (NIST) unveiled a draft guidance document explicitly proposing for the first time that a drug’s high price could be considered as a factor that would be expressly considered in determining whether a “march-in” should be exercised. While comments are not due on the NIST proposal until February 6, Members of Congress on both sides of the aisle immediately issued strong statements in response to this policy development further highlighting the partisan and philosophical policy fault lines on various drug pricing fronts. Relatedly, congressional oversight continues to drive the drug pricing dialogue within the Beltway. In particular, the congressional attention on pharmacy benefit managers (PBMs) over the past year has been unprecedented and prolific with multiple Committees in the House and Senate holding hearings and marking up various pieces of PBM legislation. While it still remains to be seen when and how the House and Senate will come together on PBM legislative reforms, it is clear that there is growing momentum for moving bipartisan legislation on this issue even if the specific legislative path for such action remains uncertain.
   
   
7. Provider Price Transparency – Ahead of the end-of-year recess, the House passed the Lower Costs, More Transparency Act, as amended (H.R. 5378), by a significant bipartisan vote of 320-71 with one member voting present. The multijurisdictional bill, parts of which were approved by the House Energy and Commerce, Ways and Means, and Education and the Workforce Committees, was unexpectedly pulled from the House floor this fall leading up to the House Speaker turmoil yet remained a priority for Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-WA). Hospitals remain firmly opposed to the bill’s inclusion of site-neutral payment policies for certain off-campus hospital outpatient departments (HOPDs), as well as the additional regulatory requirements placed on hospitals and health systems from provisions that codify the Hospital Price Transparency Rule and establish unique identifiers for HOPDs. The amended bill gained the support of the Education and Workforce Ranking Member Bobby Scott (D-VA) after changes were made to ensure that reporting requirements for PBMs also applied to the direct and indirect compensation earned by health plans. The bill includes several PBM transparency policies that target questionable PBM activity that lawmakers have concluded are leading to higher prescription drug costs.
   
   The focus on transparency in health care has also been a priority for Senate Finance Committee Chair Ron Wyden (D-OR). In November, the Committee marked up and unanimously approved the Better Mental Health Care, Lower-Cost Drugs, and Extenders Act (S. 3430), which aims to decrease costs for certain covered Part D drugs by removing PBM payment from drug prices and developing a new designation for “essential retail pharmacies” to expand pharmacy options for beneficiaries in underserved areas unaffiliated with PBMs. During the mark-up, Sen. Maggie Hassan (D-NH) withdrew consideration of an amendment that would require parity for certain services provided in off-campus HOPDs by ending various exemptions, as well as require a unique provider identifier for each off-campus HOPD. Chairman Wyden did, however, express an interest in site-neutral payment policies. On December 14, Senate HELP Committee members, Chair Bernie Sanders (I-VT) and Sens. Mike Braun (R-IN), Tina Smith (D-MN) and John Hickenlooper (D-CO) introduced the Health Care PRICE Transparency Act 2.0 (S. 3548), which, like the House-passed bill, includes insurer and provider transparency policies. Despite bipartisan momentum behind various price transparency policies, there remains uncertainty as to whether a health care focused package would ride on an appropriations bill in early 2024.
   
   
8. Diagnostics Reform – Diagnostics reform has been a long-standing area of focus for Congress even though enactment of bipartisan legislation (the VALID Act) has thus far proven elusive. The latest chapter in diagnostics reform was penned when the FDA promulgated a much-anticipated proposed rule on laboratory-developed tests (LDTs) in early October 2023. Despite having received requests to extend the comment period for this rule, FDA updated their website to make clear that the agency would not be extending the 60-day comment period, which ended on December 4, 2023. Stakeholders will be closely watching for a final FDA LDT rule in the coming months, and Congress may use the developments around this rulemaking to re-engage on the diagnostics reform discussion and potential related legislative considerations.
   
   
9. HHS Oversight – In addition to the legislative activity, 2023 was also a year of Congressional oversight over the Department of Health and Human Services (HHS) across a range of policy issues, and Congress may continue to lean into oversight efforts in the New Year. From IRA implementation to the Biden administration’s work on drug shortages, Congress may use oversight letters and related press to highlight their work in an election year and with Congressional dynamics that have demonstrated an increasingly difficult environment in which to move stand-alone health care bills. One area in particular to watch will be FDA’s proposed reorganization given that the products the agency regulates account for almost 20 cents of every dollar spent by U.S. consumers and FDA regulates about 80% of the U.S. food supply.
   
   
10. Artificial Intelligence (AI) - In recent months, Congress has noticeably increased its attention on AI, leading key congressional committees to explore AI implications for health care and life sciences. Of note, the House Energy and Commerce Committee convened a series of subcommittee hearings, including one at the Health Subcommittee, and subsequently held a Full Committee hearing featuring testimony from an HHS witness. This focus has been mirrored in the Senate, where in recent months the “Group of Four” concluded a series of AI Insight Forums, the HELP Committee held a hearing to examine AI in health care and the Senate Finance Committee pressed HHS on its use of AI. As Congress continues to examine potential legislative reforms, the Biden Administration has forged ahead on AI, most notably with President Biden’s long-awaited AI Executive Order (EO). Outside of the EO, in recent weeks the White House announced that it had subsequently secured voluntary commitments from 28 provider and payer organizations, while HHS finalized its health IT interoperability and algorithm transparency rule and unveiled its multiyear data strategy highlighting the need to responsibly leverage AI. Looking to specific agencies, the Agency for Health Care Research and Quality (AHRQ) released principles to guide AI developers and health care organizations in reducing potential bias in AI, while the FDA is working to stand up a Digital Health Advisory Committee, which will provide guidance on the development, regulation, and implementation of digital health technologies (DHTs) like AI. Looking ahead to 2024, HHS will continue to press forward with implementing the directives outlined in the AI EO, including the charge to create an AI Task Force by the end of January and work through the Task Force to develop a plan for responsible deployment of AI and AI-enabled technologies.

Outlook

In the New Year, Congress will return to a long list of unfinished business on a number of health care fronts and election year politics will only make the current legislative environment more complex. Stakeholders will be closely watching for policy developments from Capitol Hill and the Biden Administration as both seek to advance their priority issues and use the policy tools at their disposal. While there is uncertainty about how exactly these various health care bills and policy areas will play out, it is certain that stakeholders will be closely watching for further developments in the weeks and months ahead.