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Preparing for the End of Stark Law Blanket Waivers: Insights and Strategies for Healthcare ProvidersHall Render attorneys Alyssa James, Erin Drummy and Joe Wolfe discuss the upcoming end of the declared federal public health emergency (PHE) on May 11, 2023, and its impact on Stark Law blanket waivers and physician arrangements. The blanket waivers were initially issued in March 2020 to help hospitals and health systems with physician contracting and compensation models, staffing issues, and scaling up response to the public health emergency. The blanket waivers provided flexibility to health care providers in ensuring compliance with the Stark Law while addressing the needs of patients for COVID-19 related purposes. The waivers were used to stabilize physician compensation, secure necessary space and equipment, and provide additional items or services to referring physicians. The podcast discusses ways hospitals and health care systems, physician groups, and other providers used the waivers over the past three years, and provides recommendations and considerations to ensure Stark compliance post-PHE.
Podcast ParticipantsAlyssa JamesAttorney, Hall Render
ajames@hallrender.com
Erin DrummyAttorney, Hall Render
edrummy@hallrender.com
Joe WolfeAttorney, Hall Render
jwolfe@hallrender.com
Episode TranscriptAlyssa James: Hello and welcome to Hall Render’s Practical Solutions Podcast in Healthcare regulatory update. I’m your host Alyssa James, and I’m a shareholder with Hall Render, the largest healthcare focused law firm in the country. Today, we’re here to discuss the upcoming end of the declared federal Public Health Emergency or PHE that ends on May 11th, 2023, and the impact that it will have on the Stark Law blanket waivers and physician arrangements that have relied on those waivers. So let’s dive right in. Joe, can you briefly tell us about what the end of the PHE and blanket waivers means for healthcare organizations and providers?
Joe Wolfe: Thanks, Alyssa. It’s nice to be able to talk through this now that the public health emergency is coming to an end. The waivers were initially issued back in March of 2020. They were always set to expire at the end of the public health emergency, and they were really helpful for hospitals and health systems and other providers back then. If you recall, there were lots of challenging times around physician contracting, around physician compensation models and staffing issues back then, there was a lot of scaling up in response to the public health emergency. So the waivers were issued again back in March of 2020. They were set up so they could be relied upon for financial arrangements that relate to a COVID-19 purpose and things that we were analyzing, our arrangements we were analyzing under the waivers were physician services arrangements where we were pulling together emergency coverage and maybe you weren’t able to get in line the documentation to support fair market value.
So one of the waivers included payments to physicians above or below fair market value for personally performed services. For example, there were some waiver concepts around space and equipment rentals and rental charges for equipment or office space above and below FMV at that time, there was some waiver of the medical staff and incidental benefits occurrence cap around non-monetary compensation, some discussion of loans. If you recall, the waiver document back then gave a number of examples. I think there were around 20 of them of specific arrangements that could fall within the scope of these waivers. So it gave healthcare providers some flexibility to look to the waivers, rely upon them if they needed to, and then they needed to document their use of those safeguards contemporaneously. As we even thought about it back then, it was always a novel concept. We didn’t know how long they were going to stay in place, but they also had remained untested.
So we encouraged our clients if they’re going to rely on those waivers to get something in the record. Then definitely before the public health emergency came to an end. So fast-forward to now, the waivers, it was recently announced that they’re going to end on May 11th, so coming up very soon. So that’s a little background in the waivers. I saw clients mostly relying on them for the stabilization of physician compensation plans, saw them use them in some coverage situations where maybe there was a hospital-based coverage arrangement where the financial model didn’t work as anticipated. Also saw it in the lease context, especially where physicians were leasing space from a healthcare entity and needed to build in some flexibility in that area. So that’s a little bit of background on the waivers.
Alyssa James: Awesome. Thanks, Joe. Now that we have that background and lay of the land. Erin, can you share some ways that you’ve seen clients use the waivers and worked with clients to utilize the waivers over the past three years that they’ve been available?
Erin Drummy: Sure. So at the time that the pandemic was beginning and certainly at the height of the pandemic with the lockdowns and the restrictions on elective procedures, I was actually serving as general counsel for a large national physician group. We, like many other healthcare providers, were experiencing revenue challenges associated with the restraints on elective procedures. Even thereafter, patients were not particularly excited about leaving their home and coming to the doctor’s office for routine elective or preventative services. So one of the early uses of the waivers that I personally was involved with and am aware of other providers as well, is seeking rental abatements from landlords and hospital health system landlords were Stark was implicated, and I think there were a number of providers that were seeking these types of abatements or rental relief, rental reduction to ensure that they could continue to operate even in light of these revenue challenges.
We also saw a desire by hospitals and health systems to provide telehealth equipment to physicians and physician practices at no charge or to reduced charge. Again, looking to secure services for patients who are reluctant or unable to leave their home to seek medical services. Many hospital and health system clients reached out to ask for advice related to providing items of additional medical staff, incidental benefits and other non-monetary items to their referring physicians. Sometimes these were items or services directly related to the pandemic protective equipment, things of that nature. Other times it was comfort. Additional meals or having some additional amenities for providers who were spending many, many hours in the hospitals taking care of patients.
One of the other waiver uses that we’re aware of pertains to the physician owned hospitals. As you likely know, the Stark Law places restrictions on the number of beds that a physician owned hospital can have, and it can’t expand beyond that number of beds without some exception granted by CMS. But during the public health emergency, there was a blanket waiver that permitted a temporary expansion of beds to meet inpatient hospital needs. Then finally, I would note that in the physician group side on the in-office ancillary services exception, there was a waiver that permitted some additional flexibility around the location requirements for that exception. So we’re aware of clients who were looking to provide items or services via mail or in other locations that may or may not have met the location requirements for same building or centralized building under the in-office exception.
Alyssa James: Yeah. Thanks, Erin. I know a lot of clients that I worked with, particularly early on in the pandemic, but even still it seemed to center around either decreases in services due to surgery cancellations and elective surgery terminations and things like that, but wanting to make physicians full from an RBU standpoint or from a compensation standpoint as well as instances where depending on the specialty, you also had physicians doing a lot of extra work and extra hours that depending on their compensation model in their original arrangement, they may or may not have gotten kind adequate credit for, if you will.
So wanting to increase their compensation for that work and having the waivers to rely on for situations where maybe that additional compensation could have exceeded fair market value, or even just having the comfort of the waiver without having to go out and seek a new opinion at times when things were moving so quickly. I know a lot of clients were really appreciative of that flexibility and having those opportunities. So along those lines, Joe, can you tell us a little bit more about what you think providers and healthcare organizations that have utilized any of these blanket waivers in the past, what they should be doing now to prepare for the termination of the Public Health Emergency and how they can pivot or evaluate any changes they need to make to their arrangements?
Joe Wolfe: Yeah, sure, Alyssa. I think first of all, it’s important to think, and Erin, and you, Alyssa, you already described some situations where you went through the regulatory analysis back then, and if we all go back in time, I don’t think it was a free for all back then. There were situations that healthcare organizations were encountering and they were doing the analysis, they were deciding whether they needed to rely on the waiver. So I think it’s important to know that this isn’t starting. Right now, getting a sense of what occurred is, isn’t it maybe as heavy a lift as we might think because there already is going to be a record back there in time when you made that decision. So a lot of strong analysis was developed back as the pandemic unfolded. So as healthcare organizations think about winding down and reassessing again, understanding that what occurred in the past is important to go back and start to think about and review that internal documentation to analyze the timing, what actions were taken, how the disbursements of compensation were handled.
It’s likely you relied on an existing exception or safe harbor. Maybe you didn’t even need to look to the waivers. Maybe you were able to get comfortable looking to Stark or kick back. Maybe that’s already reflected in the record. If you go back, you also may have the luxury now of saying, “Look, it also fit in line with the waivers as well.” If you did rely on a waiver, I think it’s important to have in the record how that aligned with the COVID-19 purpose. There were six of them identified in the guidance. Ideally, you’d want your arrangement and what actions you took to fit within one of the defined waivers or one of the actual examples that the government gave. Of course, many won’t, but I think to the extent your documentation and what actions you took were framed and aligned with those waiver concepts, the better off you’re going to be.
Then you want to make sure you’ve developed some separate documentation that described the COVID-19 purpose and the scope of the arrangement. There wasn’t one way to do it back then. Like I said, maybe you have something in the record that you can point to. Maybe you developed an amendment and that amendment captures this. Maybe there’s a log. I’ve heard of organizations that developed a COVID log that just identifies in sequence, the actions they took. But outlining what actions you took over time, I think is important. Now that the public health emergency is coming to an end, you still have time to develop that documentation.
You should be thinking about what to do with existing arrangements where you’re still relying on the waiver. Does it make sense to wind that down? Does it make sense to pivot into some other rationale or regulatory analysis to support staying in that arrangement? You just want to be clear with everyone on the team, your legal team and your compliance team, just where is your defensibility sitting with where you were and if you’re going to stay in that arrangement going forward, what defensibility are you going to rely on? Those are just some thoughts, Alyssa.
Alyssa James: Great. Thanks, Joe. Erin, what have you seen or thought through with respect to … I know there were blanket waivers that applied specifically to physician owned hospitals and their ability to temporarily expand their number of beds or their footprint in response to the pandemic. What are folks doing in that space to make sure they get back in compliance with the moratorium on expansion, absent the waivers?
Erin Drummy: Sure. So I think this one, this is an important one because the risk is significant. As I noted, the exception for ownership in a physician hospital requires that the hospital not have expanded its number of beds beyond a certain threshold. So if during the pandemic, the hospital was relying on the waivers to do so, to convert beds from observations to inpatient or otherwise. It will be very important to have those beds switched back and taken off your license if that’s required. It will vary a bit state-to-state in terms of what the process is, but certainly want to make sure that that’s done prior to the end of the PHE so that there’s no violation, which could potentially implicate all of the referrals by your physician owners. So I think this is an important one, and given that it may take some interaction with the state to adjust the license, I think this is one that we would recommend folks get moving on.
There are, in addition to the unwind provisions that Joe mentioned, there are some individual waiver abilities or flexibilities. CMS has provided a process by which providers can request a waiver under an ongoing waiver post PHE. So that may be something for providers to consider if there is something that’s not a easily able to be unwound or if there’s some other justification for something that might satisfy CMSs requirements to permit an ongoing waiver. That may be something else that parties want to consider. There is a specific to physician owned hospitals, there is an exception process that CMS has for those entities. Again, that may be an avenue to consider, but given the timing, I think it’s important to start thinking about, can we convert these beds back to OB status or are there other things that we can do to get ourselves back to pre-pandemic bed counts in order not to violate Stark?
Alyssa James: Absolutely. Yeah. That approval process from CMS for possible expansion of physician owned hospitals can be lengthy. So certainly not something that’s probably going to be in place before the end of the PHE, but something that folks could look to pursue on a parallel track while temporarily, or at least for the time being, reducing those numbers back down. So Erin and Joe, what can providers do now if they’re not ready to revert certain arrangements back to their pre waiver status? I know we’ve touched on this a little bit already, but are there any new or creative options available that provide some flexibility for certain types of arrangements and instances where maybe providers have modified or entered into new arrangements with physicians that they don’t want to end just because the PHE is terminating?
Erin Drummy: Well, one potential option there, Alyssa, relates to a new exception. Hall Render worked with Congress to get a new exception to Stark past for physician wellness programs. It’s a fairly broad exception that’s available to entities with the formal medical staff, and they’re able to offer certain mental health or behavioral health improvements or maintenance programs to physicians in a geographic area that are designed to improve or maintain or prevent mental health issues, including suicide prevention, substance abuse disorders, and other things of that nature. I think during the course of the pandemic, we’ve heard a lot about burnout by healthcare providers, and I think these mental health concerns can be ongoing. Just because the public health emergency is ending, these concerns are not. So this is one area where CMS has established a process for a provider to establish via policy, a bonafide program to help prevent and avoid and treat these issues that are being encountered by their medical staff.
This has to be substantive. There’s got to be evidence-based evidence basis for the program. It’s got to be administered by a qualified healthcare professional. The board needs to approve this. So there are some structural and procedural requirements in order to put one of these programs in place, but that may be an area where providers could consider codifying or formalizing some of the things that they’ve been doing during the pandemic with under the protection of the other blanket waivers with this new exception. The new exception is available for programs that went into effect beginning at the end of December of 2022. So again, it’s a fairly new program.
Joe Wolfe: Yeah. I would add that, and I think that’s a great example Erin just gave. Also, there’s some other new opportunities under some recent rule changes under the Stark overhaul, the government gave us a new exception for limited remuneration arrangements. So arrangements when it was rolled out, arrangements at $5,000 or below $5,000 would not be a Stark violation if you have a services’ arrangement, even if it’s not documented as long as that services arrangement met the big three. So does not exceed fair market value, is commercially reasonable and doesn’t take into account referrals. So this is a really helpful exception if we do have situations like we had during the pandemic where you need to ramp up coverage very quickly for emergency situation, and as long as that doesn’t exceed $5,700 under inflation now, that’s going to be a protected arrangement. So that’s an area where I think healthcare organizations could put in place some type of a policy or an expectation that if they do get in an emergency situation, they could look to this limited remuneration exception to help protect that.
As I mentioned earlier, just an offshoot of that. I mentioned earlier some of the exceptions or the waivers that were issued got into arrangements being above or below fair market value for professional services. I think the government was trying to say, “Look, you could have an emergency situation here where you have to get coverage in place quickly, and maybe that’s going to push the limits of fair market value.” The government also came out in the most recent rule making and said, “With respect to fair market value, that extenuating circumstances are relevant for determining fair market value.”
So I do think that some of that commentary that the government came out with around the rule change would play right into the pandemic. If you have an emergency coverage situation, you do have to pay higher rates to get that coverage in place. I think you’re have some protection potentially under the fair market value standard as well. So those are just the limited remuneration exception and the greater flexibility around fair market value are two areas that I think will be helpful if they have to revert to arrangements to pre waiver status, Alyssa.
Alyssa James: Oh, I think those are both really good call-outs of some new flexibilities that came about while we were in the midst of the pandemic. So things that didn’t necessarily exist, or options that didn’t exist pre-pandemic that hopefully continue some of that flexibility that providers have had during the PHE. Another framework that I think could be useful for some providers is the establishment or expansion of value-based enterprises, value-based arrangements where they can partner with physicians and other organizations to effectuate some of those value-based purposes. But I think a lot of the COVID related arrangements or expansions of arrangements for COVID purposes are things that could very easily dovetail into that value-based framework on a go forward basis. Those exceptions under Stark and Safe Harbor’s under AKS give providers a lot of flexibility I think that they may not have with some of the other Stark Law exceptions.
So there’s a lot of resources on the Hall Render website about value-based arrangements that for anyone who’s interested in those can look to set those up with without a lot of downside financial risk to the physicians. There are some monitoring and things like that that are required that may take a little bit to get in place and to effectuate, but I think all of those options discuss the wellness exception, limited remuneration and value-based exceptions hopefully will give providers continued flexibility even after the waivers are no longer available. Joe, Erin, any final thoughts for our audience today with respect to the end of the PHE and its impact on these blanket waivers?
Joe Wolfe: I just think doing the analysis sooner rather than later is going to be important. So conduct an audit, it’s likely your compliance team may be made up of people that weren’t even part of the team at the beginning of the pandemic. So do that audit. Contemporaneous documentation is the best situation to be in. But I think even having documentation now before the public health emergency is over is critical because you’re not going to want to be developing a record down the road when you have some an enforcement type action. So doing it now, it’s the right time to unpack this while you still have the opportunity. But we wish all … We know that everyone had the best of intentions during the public health emergency and they had to move quickly and now as an opportunity in the next few weeks to get these audits in place and to get the documentation solidified.
Erin Drummy: I would echo Joe’s comment around the timing. These things always take longer than you might think they would in terms of getting updated fair market value in place and getting documentation signed if there’s an arrangement that’s not documented in compliance with a Stark Law that needs to be post pandemic. So I think thinking about identifying those arrangements and getting all of the I’s dotted and T’s crossed in terms of the supporting documentation amendments agreements in place so that you’re well suited to have an arrangement that fully complies with the law as of May 11th.
Alyssa James: I think those are all really good takeaways for the audience. Thank you all for joining us today. If you’d like to learn more about the Stark Law Blanket Waiver termination or other fraud and abuse and compliance issues more generally, please visit our website at hallrender.com or feel free to reach out to Erin Drummy, Joe Wolfe, or myself, Alyssa James or your regular Hall Render attorney. Please remember that the views expressed in this podcast are those of the participants only and do not constitute legal advice. Thanks.
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Inside Baseball: 2023 Political Draft PicksOn this episode, John and Andrew discuss the latest legislative and regulatory news from Washington and conduct a “political draft” of events they believe will take place in 2023.
Podcast ParticipantsJohn WilliamsHall Render
jwilliams@hallrender.com
Andrew CoatsHall Render
acoats@hallrender.com
Episode TranscriptJohn Williams: Hello again, everybody. Welcome to another episode of Inside Baseball, a look at healthcare, politics, and policy in Washington, part of Hall Render’s Practical Solutions podcast series. I am John Williams, managing partner of Hall Render’s Washington, D.C., office. As always, I am joined by my colleague and D.C. cohort, Andrew Coats. Andrew, how are you?
Andrew Coats: Doing good. How we doing?
John Williams: We’re doing all right. We’re doing all right. Not sure what I can say about Congress in that regard. I mean, they’re continuing to do what I can only refer to as a slow roll into the first session of the 118th.
Andrew Coats: One of the slower starts to a Congress that I can remember.
John Williams: Yeah, it has been. It has been really slow. And speaking of slow, I’m going to touch base on some of that stuff real quick, but we have something rather exciting in store for the podcast later. You want to tell everybody about it?
Andrew Coats: So everyone… Not everyone, but a lot of people do fantasy sports, and you draft players that you think will have a good year in whatever league. We’re going to do a fantasy draft for D.C., and by this I mean there’s going to be a healthcare focus, but also just we’re going to draft items that we think you’re going to be reading about or hearing about in 2023. How we score this, I don’t know. There’s no first-based way, but I think it’s a fun way to kind of hit on some of the big issues that we’re going to be hearing about this year. And we’ll look back at the end of the year and see who had the better team.
John Williams: Or at least a way to fill up this podcast since there’s not too much to talk about, at least as far as Capitol Hill is concerned. And I’ll sort of do some housekeeping on that side real quick before we dive into the draft. When I say it’s slow, I mean slow as in the Senate has passed one bill that makes technical corrections to the Controlled Substances Act and nothing else. They’re really moving slowly over there. I mean, they’re doing confirmations for judges and executive-branch positions, but nothing really on the legislative front. The House has passed 28 bills. Only three of them are even related to healthcare. And those three deal with either ending the vaccine mandate or the public health emergency, so not much legislative productivity.
The Senate HELP committee did hold a hearing on workforce shortages. It was the first HELP hearing for the new chairman, Bernie Sanders, and ranking member, Bill Cassidy. That may result in some legislation down the road, but really nothing for now. On the administrative executive-branch side of things, I do want to note for everybody that the DEA released a long-awaited proposed rule on prescribing controlled substances via telehealth. That does not seem to have made anyone very happy. They did it after 6:00 PM via a press release, which is essentially an agency’s way of hoping nobody’s going to notice for a few days. Normally, that stuff goes to the Office of Information and Regulatory Affairs, which then publishes it in the Federal Register. Everybody gets notice that it’s at OIRA. We got nothing but a press release. It has reached the Federal Register and been published.
So the gist there is that they’re not adopting what has been in place during the pandemic as far as the prescription of controlled substances via telemedicine. During the pandemic, DEA-registered practitioners could issue prescriptions for controlled substances without conducting an in-person medical evaluation if they met certain conditions. Under these new rules, there is some flexibility, in that telemedicine prescriptions would be authorized when a qualifying telemedicine referral has been made by another practitioner. So there is that flexibility that didn’t exist before. But under the new rule, when you don’t have a prior in-person exam or a qualified referral that I just mentioned, prescriptions are limited to 30 days, a 30-day supply. You have to search the state Prescription Drug Monitoring Program. The prescriber must be licensed in the originating and the distant site location. So wherever the doc is, he’s got to be licensed. And whatever state the patient’s in, the doc has to be licensed.
No Schedule II drugs or opioids can be prescribed except subject to the 30-day supply limit up above, unless you’re talking about buprenorphine, which is for opioid-use disorder. And they’re giving everybody a six-month grace period to comply. So there’s more on that on Hall Render’s website under our resources tab if you would like more information on that proposed rule.
Andrew Coats: Real quick on just the workforce shortages HELP hearing, I tracked that. I thought it was interesting. I wanted to see kind of how Bernie and Cassidy would get along in their first meeting. But it was, I think, just worth noting, Bernie talked about kind of legislation that was needed regarding workforce shortages this year from the Senate. And he mentioned expanding the GME program, which actually I think that’s finance committee. He mentioned that as a must-do and expanding the Teaching Health Center Program as well as nursing shortages and emergency medical services.
John Williams: That’ll be interesting because there were 200 new GME slots in the omnibus last December. A hundred of those went to psychiatry. So it’ll just be interesting because some people will argue, well, we already did that in December, but-
Andrew Coats: Right.
John Williams: It’s certainly something that… I agree with you. It’s certainly something that needs to be addressed. I had a chance to talk to Bill Cassidy a couple of weekends ago, and we touched on this, and he also noted that that’s something he’s looking forward to working with Chairman Sanders on.
Andrew Coats: Right. And Cassidy did mention the government doesn’t have to do everything, and he talked about how they need to address physician burnout, which he thinks is partly due to overregulation by the government. So there’s certainly differences there between the two of them, but also some areas that they can work on.
John Williams: Exactly. Okay. So with those housekeeping items out of the way, we thought we’d have a little fun in the prognostication department. Andrew, do you want to tee this up?
Andrew Coats: Yeah, absolutely. We put together about eight different items, and between the two of us, we’re going to draft those items, which we think will be newsworthy this year. John, I think we did a coin flip beforehand, and you won the toss. So you get the first pick of our 2023 Fantasy D.C. things draft.
John Williams: Very good. Well, I will go first and not defer, and my first selection is Ron DeSantis is running for President. I know, surprising. But he will not announce until after Memorial Day. So I’m walking out on a really big limb with that one. I know. He’s got a book that’s come out this week, apparently doing very well, at least as far as Amazon’s concerned. He’s been making visits to other states. He’s doing all the things that you’re supposed to do when you’re preparing to run for President. So, DeSantis running for President, but not announcing until after Memorial Day.
Andrew Coats: Why do you think after Memorial Day? Any reasoning behind that?
John Williams: Well, because he’s really in no rush. It doesn’t, at least, seem like it. The legislative session in Tallahassee is, I think, getting close to finishing up. And I know that he’s going to want to… Or at least he plans to highlight a lot of the legislative accomplishments he will have had in that session of the general assembly down there. So I think he’s waiting until that’s wrapped up. And frankly, I don’t know if there’s anything in it for him to announce sooner rather than later, unless Trump-
Andrew Coats: I agree. When you have a national kind of name and platform that he does… I mean, I guess you could say the local politics of Iowa and New Hampshire, you want to get up there and start locking down votes and donors. But he has such a big platform. It’s not like Nikki Haley to John Sununu, someone who’s not known that needs to get out in front and get people to recognize them.
John Williams: Well, and somebody else had an article, I think it was maybe The Washington Post, talked about this weekend summit he had down in Miami a couple of weekends ago, where he had all these big-dollar donors in the Republican Party fly down there and spend the weekend meeting with him and his political team, and a lot of people down there at that event who have previously supported Trump. So he’s courting the donors. He’s releasing the book. He’s making the visits. I found it interesting that he’s… Instead of going to Iowa or New Hampshire, he’s been to New York and Illinois. So a little bit out-of-the-box strategy there early, where most people running for President, their first trips are usually to Iowa or New Hampshire or some early primary state. So yeah, so running for President, not announcing until after Memorial Day.
Andrew Coats: Little history note. You know who announced really early, and this has always been kind of the case study of why you announce early, was Jimmy Carter announced a month after the ’74 midterms. His famous kind of stump speech on that was he told his mom he’s running for President, and she always said, “President of what?” But that’s always been regarded as why you get in. But of course, Carter wasn’t really known then, right? So he had to get out there and get up and get to those states early on.
John Williams: Did not know that. Did not know that.
Andrew Coats: A little Jimmy Carter history for you.
John Williams: There you go. All right, your turn.
Andrew Coats: All right. So I’m looking across the board here, and with my first pick, I’m going to take Kevin McCarthy’s 2023 playbook. I think be prepared to read a lot of, if you’re a Politico or Bloomberg reader, a lot of headlines mentioning McCarthy’s playbook. And of course, this is true with all Speakers of the House, right? We’re all eyes on Kevin McCarthy. But it raises a good point. What are McCarthy’s top goals for this year? And I think we’re starting to see that slowly trickle out. But like any Speaker of the House, probably your number-one job is maintaining the majority, right? That’s how you’re ultimately going to be measured, is if your party stays in power after the next election. So his main job, it’s a little bit under the radar, but it’s flying around the country with his most vulnerable members, a lot of the freshman members who are… That’s the easiest time to beat an incumbent, is their first term before their name gets known. So to get out there and travel and raise money with them.
Oversight is going to be huge in this Congress. I mean, this Congress is shaping up to be a massive oversight Congress, and I don’t just mean from your former committee, government reform, but it seems like all the committees are dipping their toe in the oversight water. And the plan just seems to be investigate everything right now and tie up the White House with having to respond to these investigations and hearings and subpoenas and kind of control the message, as opposed to the White House getting to dictate what the messages are.
So, we’re already seeing the big ones that are all over cable news, the handling of COVID, the Twitter censoring, the train derailment in Ohio. Those are the big ones that the administration wants to avoid, but then you have the more kind of in-the-weeds investigations going on. So waste, fraud, and abuse of authority in federal agencies, federal regulations and the burdens they create on Americans, everything down to even like hospital CEO compensation is going to be a big item this year for a number of the different House committees. So we’re starting to see that play out already.
John Williams: Yeah, you mentioned my former committee, Oversight. Well, it used to be called Government Reform and Oversight, and now I think it’s just called Oversight and Reform. Its chairman, Jamie Comer of Kentucky, I know earlier this year mentioned that how hospitals spent their provider relief fund monies is something that they were going to look at. So I think that fits… I think you’re right. That fits within that more niche area of oversight so that they’re not just looking at Hunter Biden’s laptop. They’re actually going to look at what they view as more substantive policy-related oversight and how those agencies… The same thing with PPP. They’re going to look at the PPP loan stuff. So yeah, I think you’re right.
And McCarthy overall with what, a four-vote, a five-vote majority, yeah, that playbook’s going to come in handy because it just takes one person getting sick. I mean, you see it in the Senate right now with Senator Fetterman of Pennsylvania having had a stroke and now unfortunately suffering from depression and being admitted to the hospital. The reality is it puts the Democrats in the Senate down a vote, and nobody’s sure when he’s going to be coming back. So that significantly changes the voting dynamics there. And McCarthy’s got the same problem really in the House with his narrow majority.
Andrew Coats: I certainly hope the best for Senator Fetterman.
John Williams: Yep.
Andrew Coats: Never like to see that, but it’s going to bring Kamala Harris back up to the Hill quite a bit to break ties in the Senate with the closer margin. And to your point on McCarthy kind of holding his party in line, he has to maintain the fringe element of the House, these members who grab a lot of headlines. I think we saw a certain member from Georgia calling for a national divorce last week. And let’s be honest. Every Congress has these members, and this goes back to the days when we were on the Hill, right?
John Williams: Right.
Andrew Coats: But the problem is or McCarthy’s problem is he really called in a favor to get the gavel with this group.
John Williams: Made a lot of promises. Yep.
Andrew Coats: Yep. I liken it to… One of my favorite movies is Goodfellas, and that scene when the restaurant owner goes to Paulie and asks to partner with him in running his restaurant, and there’s that moment when Paulie looks at him and says, “Yeah, that’s not even a fair deal.” It’s kind of similar to the Speaker vote, where I think one of the House members, maybe it was Chip Roy, I’m not sure which one, said they finally agreed to McCarthy, to vote for McCarthy as Speaker when they couldn’t think of anything else to ask for. So…
John Williams: That’s true.
Andrew Coats: How will the far right treat this Congress? Will it be similar to the restaurant in Goodfellas, which essentially burned down, right? I think that’s going to be interesting and see how McCarthy deals with that. And then he also has the debt-ceiling fight coming, whether that gets raised or lifted. I think that comes to a head as early as July and September at the latest. So you’re going to have this stare-down between the White House and McCarthy. Republicans never win on these.
John Williams: No. Well, you’re going to have a stare-down between McCarthy and the people in the caucus that you’re talking about.
Andrew Coats: Right.
John Williams: You’re going to have that stare-down first before he even gets to negotiate with Schumer or the White House.
Andrew Coats: Exactly. So be prepared to read a lot about extraordinary measures and the federal government on the brink between now and then. In the past, it’s always worked its way out. It’s worked itself out somehow, but that’s certainly going to be in the news. That’s kind of an overview of his playbook, so I shift back to you with your second pick.
John Williams: Well, my second pick in our draft is the highly entertaining DSH cuts fix.
Andrew Coats: Ooh.
John Williams: Yeah. Disproportionate share hospitals. If everyone will recall, there’s about $8 billion in ACA-related DSH cuts that have been postponed ever since the ACA passed. Folks will remember that part of the structure of the ACA is that because everyone was going to do Medicaid expansion in the states, that states didn’t need as much Medicaid funding. So there’s $8 billion in Medicaid cuts that can be made. Well, we all know how that worked out in states that chose not to expand Medicaid. So in order to prevent these cuts from taking place, Congress has passed legislation sort of kicking that can down the road for so many years at a time, and the last postponement expires at the end of this fiscal year, so September 30th. And the cuts will then start again on October 1st if Congress doesn’t do anything.
It is my pick that Congress will pass legislation to postpone the DSH cuts again. That will be obviously a healthcare bill, which means that, given the political dynamics and the makeup on the Hill and divided government, it might be the only healthcare-related bill that passes this year. And if that’s the case, then we may see more items in that bill than just the DSH cuts fix. But that is my second pick for our draft, is the DSH cuts fix.
Andrew Coats: Yeah. I like that pick because, as you mentioned, there’s not a lot of healthcare vehicles moving this year, and that’s going to be the one that everyone kind of tries to get a hook into. So we’ll see if Congress keeps that clean or what it does with it. But there certainly will be a lot of news items, and that will be mentioned in no shortage of meetings up on the Hill this coming year. With my second pick, and I really like this pick. I feel like I’m getting a good value pick here. I’m going to go with Biden getting challenged in a primary. And we haven’t seen… It’s been a long time. We haven’t seen a sitting president get challenged since the pre-internet days. But if President Biden does get challenged, and I’m talking about a major candidate, not-
John Williams: So not Marianne Williamson, because she’s already announced that she’s challenging him. So you’re saying that Marianne Williamson is not a serious candidate?
Andrew Coats: I guess I am.
John Williams: Not that I disagree with you, but…
Andrew Coats: But if a bigger name… Think back when Eugene McCarthy challenged Johnson, someone of that ilk.
John Williams: Oh, yeah. Well, you mentioned Carter, right? I mean Ted Kennedy, right?
Andrew Coats: Oh, in 1980.
John Williams: Yeah.
Andrew Coats: He challenged Carter, and that really weakened him. And I think Kennedy, he was clearly… He wasn’t going to win that primary, but he wouldn’t pull out of the race.
John Williams: No. He went all the way to the convention and gave that famous speech. Yeah.
Andrew Coats: Exactly. And the final moment… Back when this was just you had the major networks showing the convention. The final moment of that convention was Carter’s acceptance speech and Kennedy up on the stage, and they didn’t join… They didn’t do the political kind of hands of unity.
John Williams: Right, right.
Andrew Coats: So that’s another example. Ford got challenged by Reagan in ’76.
John Williams: Indeed. Sure did. Does the challenge against Biden come from the progressive Bernie Sanders/AOC wing, or does it come from, I guess, the more moderate wing?
Andrew Coats: You’re right. You’d think it would be the progressive wing. But at the same time, President Biden has been a fairly progressive president in the policies he’s pushing and the White House are pushing. And I would think… If I’m in the White House advising President Biden and he wants to run again, I’d be saying, “You may want to start shifting to the center here sooner than later and start running on some issues that can grab more moderate voters.” So I don’t know where that challenger would come from, but I do know if you’re the White House, you certainly want to do what you can to sort of weaken potential challengers that would be a threat.
John Williams: Well, and I think they’ve done that systematically by the way that they’ve changed up the primary system so that they’re not going to Iowa. They’re not going to do that. They’re going to go to the states where Biden is strongest, right? South Carolina. Right out of the gate, they’re going to go to states where they know he’s not at risk of losing.
Andrew Coats: Yeah, no, I completely agree with that. And I think you look back at when there were a lot of challenges to sitting presidents, and that was what? The late ’60s, ’70s, Watergate, Vietnam, just a general sense of government overreach. And we’re in a very similar… There’s different reasons, but there’s a lot of anti-Washington sentiment right now. So I think this is something we could see. And if it were to happen, I think it’s bad news obviously for President Biden and national Democrats in 2024.
John Williams: Very good. Well, I guess we’re what, to my third pick?
Andrew Coats: Third pick.
John Williams: All right. Well, and my third pick in our fantasy, I guess, draft or whatever we’re calling this, I am going to tee up the ever… Oh, I don’t even know what the right word for it is. It’s certainly not entertaining, but it is interesting, I think, is a workplace violence regulation. The administration… And every administration does this. They put out a regulatory agenda at least twice a year, and it lists all of the regulations that are either in the process of being finished or mid-draft or whatever. But it also lists the regulations that are in the pre-writing phase. So this agenda is what we look to to get a sense of what might be coming up on the regulatory front coming out of HHS. And this one actually is not an HHS rule. It is a Department of Labor rule called the Prevention of Workplace Violence in Healthcare and Social Assistance.
It’s in the pre-rule stage. It’s being handled by OSHA. So it is a DOL, again, a DOL rule. OSHA published a request for information way back in 2016, where they solicited information mostly from healthcare employers, workers, other healthcare subject-matter experts on the impact of violence and prevention strategies and anything else along those lines that would be useful to the agency, to OSHA. There was a broad coalition of labor unions, the nurses’ unions, that petitioned OSHA to do something, to set some sort of standard along those lines. OSHA recognized the need to do that. Of course, 2016, 2017, we’re talking about when we had a change of administration, right? So that went on the back burner during the Trump years, and now it looks like it’s come back.
The House of Representatives during the last Congress when Democrats were in the majority, they did pass a workplace violence rule that was never taken up by the Senate. That rule would’ve given OSHA a significant amount of regulatory authority in this area. For that reason, it was strongly opposed by the American Hospital Association, the Chamber of Commerce, other business groups, I guess, if you will, and a lot of healthcare or hospital-related groups opposed it too. So this may be the administration’s attempt to jumpstart that again. So sometime this year, I think we are going to see a proposed rule on workplace violence come out of OSHA.
Andrew Coats: Yeah, it’s interesting the timing with Marty Walsh just leaving DOL as secretary and taking another position. So we’ll see what the new labor secretary that they… if they can get the nominee in confirmed, if it has to wait for them to kind of go through the confirmation process, which could be controversial from the sounds of it. So that’s definitely going to be in the news and something to watch. It’s a good third-round pick.
John Williams: Thank you.
Andrew Coats: With my third pick, I’m going to go with a subject you hear a bit about, and it’s really kind of ratcheted back up in the news of late, and that’s congressional earmarks. Now, recall in what, two years ago, the Democrats ended a 10-year moratorium on federal earmarks. And earmarks are, they’re basically small grants to projects in congressional districts or states. And by small, I mean in the $100,000 to $4 million range. The thinking is you attach these projects to annual spending bills to ensure bipartisan buy-in, so bills are passing with not just party-line votes.
John Williams: Yeah, let’s call it greasing the wheel, right? That’s greasing the legislative process. Let’s just call it what it is.
Andrew Coats: Yeah. The optics have never been good really for either party here, but particularly for Republicans. The bridge to nowhere, right? Google earmarks, and you come up… One of the first hits is the Heritage Report that calls into question… This is recent. This is 2022. 1.6 million for the equitable growth of the shellfish industry in Rhode Island, or 4.2 million for sheep experiment station infrastructure improvements in Idaho, and 3 million for the Mahatma Gandhi Museum in Houston.
So we’re starting to see these get brought back up again and bandied about in the news. But at the same time, the members that bring these up know that if it’s Congress not giving out the grants, then it’s going to be unelected bureaucrats and the agencies doing it. So it’s an interesting kind of dichotomy here. I think one of the wow moments, and we often will send each other texts or headlines, was late last year, and I forget if you sent it to me or I sent it to you. But it was House Republicans voting to keep earmarks in place for this Congress and by a big margin. It was over a hundred votes. So I’m playing a little bit of a long game here, but I’m predicting by fall, you’re going to continue to see earmark bashing in the Congress, especially in the House.
John Williams: Well, yeah, yeah, earmark bashing in the House. And we just learned in the last 24 hours that there are certain types of earmarks that House Republicans are just not going to do. And the House Appropriations Committee has announced that there are certain accounts, they refer to them… you can think of them as agencies, in general, that they’re not going to do earmarks for this year. And one of those is the Labor HHS appropriations bill. They’re not going to do earmarks. So whether it’s… Take a pick of an agency under HHS, whether it’s SAMHSA or-
Andrew Coats: HRSA.
John Williams: … CMS or HRSA or whoever it, HRSA and SAMHSA being good examples of agencies that have been responsible for distributing earmarks that were approved by Congress in the past. Well, House Republicans said last night that “We’re not doing them. We’re not going to do Labor HHS earmarks.” So hospitals, health systems, a lot of folks in the healthcare space that were hoping to get the House of Representatives to… or their congressperson to put in an earmark request for them are going to be out of luck this year. So yeah, you’re right. The bashing is going to continue.
Andrew Coats: What’s interesting is under that Heritage Report, the next link was a Brookings Report. Now, Heritage being the conservative think tank, Brookings being the more liberal. They talked about that while Democrats sought more earmarks in 2021, 2022, the Republicans actually asked for more money. So I think they eliminated the defense account. They eliminated, as you mentioned, the HHS account. By doing that, that may be a way of controlling the spending that comes out.
John Williams: Yep, yep. I think you’re right.
Andrew Coats: All right. Last pick.
John Williams: Okay. For my last pick in our political draft, I’m actually going to go with the relationship between Bernie Sanders and Bill Cassidy will be more amicable than folks might have anticipated. The interesting thing about that committee is that if Republicans would’ve gone by seniority, then Rand Paul would’ve been next in line to be the highest-ranking Republican instead of Bill Cassidy. And the idea of Rand Paul and Bernie Sanders being responsible for running a committee together would’ve been just the height of political theater. That would’ve been must-watch TV as far as political geeks like me are concerned. But there would’ve been areas too where they would’ve worked together, I think. They would’ve both enjoyed bashing drug companies together.
But I do think that Cassidy and Sanders are going to work better together than people think. And I have a little bit of insight on this, in that I was able to talk to Dr. Bill Cassidy about this a couple weekends ago and asked him about his relationship with Sanders, and he said that he gets along with Sanders pretty well. There’s not a lot of animosity there. There are going to be certainly things that they don’t agree upon. Dr. Bill, being a doctor, certainly wants to decrease the regulatory burden on physicians so they can spend more time practicing instead of doing paperwork and complying with regulations. I’m not sure there’s a regulation Bernie ever saw that he didn’t like.
But there is other areas where I think there is room to work together. We talked about workforce shortage being one of those earlier, but also in behavioral health. Behavioral health is a huge issue for Bill Cassidy for personal family reasons, and I know that’s also been one that’s been a big issue for Bernie Sanders as well. And Cassidy is a member of what’s known in the Senate as the Gang of Eight. It’s these eight Republicans that have a history of working across the aisle on bipartisan legislation to get bipartisan legislation through the Senate. So I think you’re going to see a better working relationship between Cassidy and Sanders than I think a lot of people had anticipated.
Andrew Coats: Yeah, I agree. And both these members are not afraid to jump in the water on any healthcare-related issue. So there’s going to be no shortage of headlines and news coming out of that committee and action coming out of the HELP committee on healthcare.
John Williams: Indeed.
Andrew Coats: All right.
John Williams: All right. Last one.
Andrew Coats: The last one. And with every fantasy draft, you need a good sleeper, and I think there’s no better sleeper than what I’m going to take in the fourth and final pick: nonpartisan advisory commissions and panels. And by this I’m talking about MedPAC and MACPAC. Now, who is MedPAC? MedPAC is the Medicare Payment Advisory Commission, which was created by Congress in 1997. It advises Congress on issues impacting Medicare, particularly Medicare reimbursement. For over a decade now, John, you and I, we’ve written newsletters and D.C. updates, and for the large part, this decade has been filled with a lot of healthcare news, whether it’s passage of the ACA, the attempts to repeal the ACA, COVID, all the massive spending to deal with COVID. There’s been no shortage of news. But one constant is always, in the healthcare world, there’s always reports coming out of MedPAC and MACPAC. MACPAC is kind of the sister to MedPAC in that it deals with Medicaid.
These are important, these reports that come out, and they come out… They meet monthly or bimonthly, and they have annual and semi-annual reports. They’re important, and it’s really how healthcare policy is made. John, you and I have both been congressional staffers, and you don’t just learn things by sitting inside of Longworth and Rayburn and Cannon. You have to read these reports and find out what nonpartisan experts are advising Congress on in regards to Medicare payment. And I think in the first year without major healthcare policy news coming out of D.C., get ready to hear a lot more about these MedPAC reports. They’re highly technical. They’re in the weeds. Hence, the sleeper nature of my pick. But it’s a very much underrated facet of healthcare policy.
John Williams: You’re right. It is certainly in the weeds over there. They’ve got some pretty deep policy expertise. People that get appointed at MACPAC or MedPAC, they’re typically from outside of Washington. These commission members are hospital CEOs or physicians or people who work in their day jobs in healthcare, and they’re certainly subject-matter experts. And then you’ve got the staff at these commissions who are also really good subject-matter experts on this stuff. So yeah, I think you’re right. I think they’re going to get a lot more attention just because there’s not going to be a ton happening on the Hill, so people are going to be focused… At least folks in the D.C. healthcare media who need stuff to write about are going to be looking to these commissions a lot more.
The interesting part I’ve always found is that… Take MedPAC, for example. They make all these recommendations to Congress on what Congress should do on Medicare policy, and that’s what they’re charged with doing. That’s what Congress asked them to do. That’s why they exist. Yet, you see all these recommendations that they make to Congress all the time that Congress doesn’t pay attention to. I mean, they pay attention to some of them, but a lot of them they don’t, but…
Andrew Coats: Yeah.
John Williams: I think we’ll just have to wait and see what they come up with that’s new, but I think they’re definitely going to get some more attention. You’re right. Well-
Andrew Coats: So that does it.
John Williams: Yeah, I guess we’ll have to see how it all plays out, as always. And however it all plays out, we’ll be there to tell you about it here on Inside Baseball. So thank you for joining us on this edition. As always, if you’d like to receive more information about what Andrew and I do or how we provide federal advocacy services to our clients, please visit our website at hallrender.com or reach out to me at jwilliams@hallrender.com or Andrew at acoats@hallrender.com. And one last disclaimer: Please remember, the views expressed in this podcast are those of me and Andrew only and do not constitute legal advice. So long, everybody.
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Inside Baseball: A Look at the 118th CongressOn this episode, John and Andrew preview what to expect on the health care front as lawmakers begin the 118th Congress.
Podcast ParticipantsJohn WilliamsHall Render
jwilliams@hallrender.com
Andrew CoatsHall Render
acoats@hallrender.com
Episode TranscriptJohn Williams: Hello again, everybody, and welcome to another episode of Inside Baseball, a look at healthcare politics and policy in Washington, part of Hall Render’s Practical Solutions podcast series. I’m John Williams, managing partner of Hall Render’s Washington, DC office. As always, I’m joined by my colleague and DC cohort, partner in crime, whatever you want to call him, Andrew Coats. Andrew, how are you?
Andrew Coats: Good. Happy new Congress.
John Williams: Happy new Congress. Happy New Year.
Andrew Coats: First recess week of the year.
John Williams: Right? Yeah, absolutely. It is a brand-new day, if you will, on Capitol Hill, with a whole lot of new things to look forward to. This is our first podcast of the new year and end of the 118th Congress, which is already off to a very interesting start. If you’re watching the news at all, then you know the speaker’s election was quite the high drama. I thought that C-SPAN’s coverage was absolutely amazing, for all of you listening to this that are political geeks like Andrew and I. And actually spent the time watching C-SPAN instead of the national news shows.
It was fascinating because normally the party that’s in control of the House controls the C-SPAN feed and controls the C-SPAN cameras, but because of a technicality, neither party was actually in control of the House for that period. The clerk of the House was in control, and so C-SPAN got to control their own cameras and because of that, I think America got a really amazing view of how the House floor works. And I, for one, wish they would do an awful lot more of that. But I think for obvious reasons and optics they don’t, and I know Republicans are already in control of those cameras again.
Andrew Coats: Thank you, John. And more people watched C-SPAN and that drama over the speaker vote than probably any other House proceeding short of maybe an impeachment vote.
John Williams: Exactly. I was going to say, probably not since the last Trump impeachment has anybody watched that much C-SPAN. No question. No question. Well, for this episode, I think we’re going to look at the political power dynamics of the 118th Congress and then talk a little bit about what you might expect on the healthcare front. Andrew’s going to walk you through the new power dynamics in the Senate, which aren’t really that new, I guess. Talk a little bit about the healthcare committees of jurisdiction over there, and then I’m going to do the same thing over in the House with the House Republican majority, the new House Republican majority, and what we might be able to expect from them since they are in the majority. Andrew, you ready?
Andrew Coats: Let’s do it.
John Williams: Take it away, my man.
Andrew Coats: All right. Yeah, so let’s talk about the Senate and what has changed and what hasn’t. There’s not a lot of drama compared to what’s going on with the House. The Senate is still going to be the Senate. They’re swearing in new members and basically are out now, but you’re still going to need 60 votes unless there’s a reconciliation vote, and there’s not going to be in this Congress. What we do see that’s different is that a lot of the Republican deal makers who had big roles on the A committees as far as healthcare goes are now gone. Senator Blunt, key appropriator, Labor, HHS Committee, ranking member, he’s gone, he retired. Senator Burr, ranking member on the Health Committee, from North Carolina, retired. Senator Portman, key member on Senate Finance from Ohio, retired. Senator Toomey, another Finance member, Pennsylvania, retired.
These are all members that McConnell kind of leaned on and they did a lot of the deal making and worked closely with Democrats. They’re gone now. And because of that, you have a much different Republican Senate caucus than you did last Congress. And we’ve already seen McConnell face a leadership election challenge from Senator Rick Scott in Florida. It’s the first time there’s really been a group that’s publicly opposed to McConnell, who has for the bulk of his time in leadership, really enjoyed unified support from within the caucus. So he’s going to face a little bit of headwinds this year from within, and that will be something new to watch. Now, Senate is out this week. They come back the week of January 23rd.
You’re going to see the committee appointments and the committees get filled out, so new members get appointed to committees. And then the Senate will be off and running from there. The two big sort of Senate A committees that we keep an eye on, one is the Health Committee, the other is the Senate Finance Committee. The Health Committee is where we see the big change. Gone are Senator Burr, which I’ve mentioned. He retired. Senator Murray is no longer going to be chairwoman. You’re going to have Bernie Sanders in charge of the Health Committee and you’re going to have Dr. Cassidy from the Republican side as ranking member.
John Williams: Yeah, you’ve got Mr. Medicare for all on the one side and then you’ve got a former physician on the other. That will be interesting.
Andrew Coats: Two members that they’ll never shy away from healthcare issues. Say what you will, both take a very much interest in healthcare, diametrically opposed guys. So not as much in last Congress, but in recent years the Health Committee has always worked well together. And when you meet with their committee staff, you’re usually joined by Republican and Democrat staffers who would sit in on that meeting. We’ll see if they go back to this format under Sanders. I don’t know, and this is such an unknown to so many people of how this will play out that it’s going to be interesting to see how well these two work together and how well the committee works together in the [inaudible 00:06:36]
John Williams: That’s really a good point. Cassidy is… I don’t know the gang of whatever number it is now, but you do have this group of Republicans that have worked across the aisle to pass legislation to get to the 60 votes, and Cassidy has traditionally been one of those. Todd Young from Indiana has been part of that from time to time. Mitt Romney from Utah has been part of that. You’ve had this group that has been willing to work across the aisle to get stuff done, and Cassidy’s been a part of that.
Now, how far he’s going to go to what Bernie Sanders’ traditional views of healthcare are, who really knows? Cassidy’s got a real soft spot on behavioral health, which could be an area where they work together. Although there was a lot of money for behavioral health in the omnibus that passed last month. I do think it’s going to be fascinating to watch, but I think it’s possible that there could be some areas where they actually work together. But I think to your point as well, seeing how the staff works together is going to be fascinating too, and that’s something that people like us will keep an eye out for.
Andrew Coats: And then the other big A committee in the Senate is the Senate Finance Committee. And here you have basically the same roster intact, Senator Wyden from Oregon as chairman and Crapo from Idaho as ranking member. Again, if you only listen or watch MSNBC or Fox News, you’d probably be surprised to learn that the Finance Committee, like most committees in the Senate, attempts to work in a bipartisan manner. And if we’re up there with a client or you have a proposed bill that a client wants to have introduced, you’re going to need to have buy-in from both Republicans and Democrats on that committee to make it really a serious legislative effort. So again, I think we’re going to see that bipartisanship on the Senate Finance Committee.
John Williams: Hate to interrupt you, I’m sorry, but there’s a fascinating development. And maybe you were going to get to this and I apologize if you were, but is this retirement of Debbie Stabenow from Michigan. You talk about somebody that’s worked across the aisle over the years, on healthcare issues especially. And not only that, but somebody that was in line to be the next chairperson of that committee, and then just up and decided not to run for reelection in ’24. So some changing dynamics there too.
Andrew Coats: One of the interesting nuggets that Senate Democrats now have is subpoena power. Last year, with a 50/50 split, they did not have the subpoena power that the Senate normally enjoys. So I would expect a number of industry leaders being hauled up before the Senate. And then in the House you’re going to see this back and forth, because the House can kind of respond in kind. So if you see the House do something on document leak from President Biden, you see the Senate respond with something regarding Trump.
Or the Senate does something on climate change, why are you killing the environment? You may see the House respond with something on tech, and why is the company so woke? So you’re going to see this kind of ping pong match going back and forth. But I think it puts a lot of the Fortune 500 CEOs and big industry leaders and trade associations on their toes and be ready to be hauled up before Capitol Hill at a moment’s notice.
John Williams: Yeah, and I think you’re absolutely right. I think what we’ve always seen in the past is that when you have divided government like that and you’ve got one party controlling one body, one party controlling the other one, the chances of getting legislation passed is really remote. And so what does everybody spend their time doing? They spend their time on oversight, and to your point, having subpoena power to do oversight. So yeah, I think you’re absolutely right. I think you’re going to see a ton of oversight from both parties, but coming from different angles, depending on whether or not it’s the Senate you’re talking about or the House.
Andrew Coats: But end of the day, Senate is still going to be fairly status quo from what we saw over the past two years. Where the big change, and where I think a lot of the interest has been, at least in this opening couple weeks, has been the House.
John Williams: Yeah, you think?
Andrew Coats: You want to talk about the power struggle on what the speaker vote and all the implications of that mean for this Congress?
John Williams: Yeah. I mean, as I said, it was high drama for political geeks like us. And in case you weren’t watching the speaker’s vote because you had a lot better things to do, it took 15 votes, or 15 ballots, for Kevin McCarthy to finally win. The 14th ballot was especially intense because everybody went into that vote believing that Kevin had finally gotten enough votes to get across the finish line and win the speakership. But it turns out that he didn’t because a handful of Republicans changed their minds at the very last minute. Literally, as the vote was starting, they changed their minds. And there was this really intense 25-minute standoff on the House floor that was caught on television, not just C-SPAN, but CNN, Fox, everybody was showing it. And they eventually proceeded to a 15th ballot where Kevin, again, finally secured enough votes to become the speaker.
And there’s really two schools of thought regarding how all this played out and what it means. I tend to agree with those who say that this episode is really a display of how the process should work. Although it was truly a close view of how the sausage gets made in Washington, the legislative process, which includes picking leadership can be very, very messy. And in this case it was on display for the whole world to see. But there are many Republicans that really wanted to move away from this top-down leadership-driven approach to legislating that has become the norm for both parties over the last 20 to 30 years. And this was their opportunity to try to do that. The other school of thought, which I also agree with, is that this episode is merely an example of the dysfunction that we’re all in store for on the Republican side this year.
When you look at the vote itself, there was really two factions at work here. First you had this Chip Roy, Byron Donalds camp, if you will, of about 20 Republicans who wanted rules changes and greater representation of conservatives on committees. They basically wanted to go back to the Schoolhouse Rock, I’m just a bill method of doing things, where bills went through committee and they get marked up and they go to the floor and they can be amended on the floor and all of that. So those are legitimate political and policy concerns and I think that that is the right arena in which to have that debate, as messy as it was and as public as it was. The other faction was just for Republicans, really, led by Matt Gaetz of Florida. And I’m not really sure what their endgame was other than to draw attention to themselves in order to raise money off of social media, which I know some of them were doing the entire time this process was going on.
What their legitimate policy concerns were, I’m not really sure to this point. But in the end, Kevin got the votes he needed to become speaker. What does that mean for the future? Republicans have a very small majority here. And that means that the smallest group of Republicans can bring everything to a complete standstill. So it’s going to be really hard for Republicans to pass any meaningful legislation through the Congress. They got the votes to get it through the House, but getting 60 votes in the Senate, which means getting Democrats to go along, is going to be incredibly difficult, if not impossible. So despite their promises to stop the IRS from hiring these 87,000 new employees and their promises to use the power of the purse to lower government spending, there’s no bill to do those kinds of things that can get 60 votes in the Senate, much less get Biden to sign it.
So Republicans seem to be sticking with this time-tested tradition that they have of overpromising and under-delivering. And look, both sides do it. I’m not just picking on Republicans here. But just think of the ACA repeal debacle if you want to see what I’m talking about. And if you really want to see what we’re in for, I think, over the next two years, all you really have to do is think back to that period of 2010 to 2016 when Obama was president and John Boehner was speaker, and we just went from fiscal cliff to fiscal cliff from continuing resolution to continuing resolution and government shut-down threats and whatnot.
And I think hopefully, and I say this, hopefully, Republicans learned their lesson on government shutdowns. But I’m not really sure because you still have a significant number of Republicans in the House who weren’t around the last time Republicans shut the government down. So they don’t really understand what the political cost is for doing that. But hopefully McCarthy can keep everybody on board and they don’t run the train off the rails.
Andrew Coats: We knew that this was going to be a tough slate for McCarthy. We knew this would be a tough Congress. We talked about it in our post-election recap. I think anyone who follows politics closely knew he had a tough schedule ahead.
John Williams: You know what? [inaudible 00:16:31] but I think you’re absolutely right. We knew that after the election. But before the election, all the predictions, ours included, was like, oh, Republicans are going to get anywhere from 12 to 40 seats in the House. And ended up being four or five. And so I think that’s part of what McCarthy had to deal with, was that he went in to the midterm election thinking that he wasn’t going to need Chip Roy, he wasn’t going to need Byron Donalds or Matt Gaetz or Lauren Boebert. And that call-
Andrew Coats: The speaker vote was so dramatic and so many people watched it. Now it’s not just the kind of inside baseball, shameless plug, folks that know this, but your Uber driver knows it’s going to be tough for McCarthy. Your kid’s basketball coach knows it’s going to be tough for McCarthy. Everyone knows how tough it’s going to be this year for McCarthy. And in a way, that may help lower the expectations for Republicans and for leadership. Because [inaudible 00:17:32], as you mentioned, when a new party takes over the House, there’s always that January, February period where just the sky is the limit. And we’re going to impose term limits, we’re going to repeal the ACA, we’re pass climate change. Of course, he’s coming at this from the opposite end here. So any sort of movement he gets is going to be seen as a positive, and kind of unexpected.
John Williams: Right. I mean, so tough to the point that nobody else wanted the job, all right? For the people that were watching it, you kept see them nominating Republicans, nominating Jim Jordan to be speaker, even though he didn’t want the job and he was backing McCarthy. That’s how hard it was to become speaker, third in line for the presidency of the United States, that nobody else in the Republican Party wanted the job and the Republican House guys wanted the job other than Kevin McCarthy. So yeah, I mean…
Andrew Coats: For the Democrats, can you ever remember a change in power in the House where the minority party comes in with more momentum than House Democrats right now?
John Williams: No.
Andrew Coats: Usually the party that lost has this month of recrimination, and you’re reading these 10,000 word think pieces about who’s to blame for losing the House. But that really hasn’t been the case. Partly, they have new leadership for the first time in a long time. They’re kind of enjoying that honeymoon period.
John Williams: Well, and the enthusiasm that goes with it, right? I mean, they’re excited about having this new young crop of leaders on the Democratic side. And they’ve got some good ones. I mean, Pete Aguilar has got a great record and Hakeem Jeffries does too. I mean, they’re qualified to do the job. But yeah, they certainly… You talk about over-promising and underdelivering. I mean, they outperformed their expectations, which always gives you momentum when you’re going into a new job. But speaking of new jobs in the House, we’re going to have new leadership of committees. And in the House there’s two committees that have jurisdiction over healthcare, Ways and Means, and Energy and Commerce. And if a person wants to be a chairman of a committee in the House, they literally have to run a campaign for it. And this is some serious inside baseball stuff.
The steering committee inside the Republican caucus… And don’t ask me how many people serve on it because I can’t remember, they are really who determines who becomes chairman of these committees. And so you have to run these campaigns in front of the steering committee to win enough votes to become a chairman. And different people on the committee, which includes Kevin McCarthy and Steve Scalise, they have a different number of votes. I think the last time I checked, the speaker has seven votes on the steering committee, so the greatest amount of influence. So these folks literally have to run these campaigns for these chairmanships. And that includes raising a significant amount of money for your colleagues, and in this case doing that for the National Republican Campaign Committee.
So if you look at Ways and Means, of the two healthcare committees, it was really the only one that had a race for its chairmanship, and that was between Vern Buchanan of Florida and Jason Smith of Missouri. And Vern has more seniority on that committee, a committee where seniority is fairly important. On the Democratic side of things in the House, seniority is still the most important thing. It hasn’t been the most important thing for Republicans since about 1994 when Newt Gingrich picked Bob Livingston over John Myers from Indiana for the House Appropriations Committee chairmanship, but it still plays some factor. And Vern, you talk about money, Vern raised more money for the NRCC than Jason did, although not by much. I think Vern raised like 4.1 million and Jason raised 3.8 or something like that. So he raised slightly less money, but Jason is much closer personally to Kevin McCarthy even though Vern and Kevin came into Congress in the same class together.
I think ultimately it came down to the fact that Jason is viewed as more conservative than Vern, and more importantly for that, making Jason chair of the Ways and Means Committee was another bargaining chip that Kevin could use in his negotiations with conservatives to win the vote for speaker. It was a bargaining chip, and he could say to them, “Okay, I know you like Jason better than you like Vern because he’s more conservative, so I promise I’ll make Jason chairman of Ways and Means instead of Vern if you’ll vote for me.” There’s been reports that there was a very heated conversation between Vern and Kevin on the floor after that, where Vern told him that “You screwed me,” which is not exactly the word he used.
So high drama there. Ways and Means does have a health subcommittee and I think Vern’s consolation prize is that he gets the Health Subcommittee gavel. He was already the highest ranking Republican on that subcommittee, and so he’ll now become the chairman of that subcommittee. He made a lot of noise during the whole process that if he didn’t get the gavel for Ways and Means, the full committee gavel, that he was going to retire from Congress, and now that looks like it’s probably not going to happen. So he’s going to stay and serve in that role.
On the Democratic side, Lloyd Doggett from Texas has been serving as the chairman of that subcommittee, and he’ll just assume the highest ranking Democratic spot on that subcommittee. As we sit here today, we know that Republicans will have 25 seats on the full Ways and Means Committee and Democrats will have 18, which is fewer than they have now. That’s the way the process works. Whichever party controls the Chamber gets more seats on the committee than the other one does. No word yet on which Democrats are going to lose their seats on that committee. But we do know that there’s going to be about 10 new Republicans on that committee because of other vacancies and whatnot.
The other committee in the House that has jurisdiction over healthcare, Energy and Commerce, nowhere near the type of changes that we’re seeing in Ways and Means, in fact barely any changes at all, quite frankly. At the full committee level, Cathy McMorris Rodgers is moving from the ranking Republican spot to the chair. Frank Pallone of New Jersey is moving from the chair to the highest ranking Democrat spot on that full committee. At the Health Subcommittee level, Brett Guthrie’s taking the gavel as chairman and Anna Eshoo is moving from the chair to the highest ranking Democrat on that committee.
Andrew Coats: I think on E&C, that’s a committee you could look at and say you could see legislation moving out of that committee. Last year with Pallone and CMR, you saw that they moved a privacy bill, they moved the FDA user-fee bills and worked in, from what we could tell, a bipartisan fashion. I pinpoint that committee as one where I’d looked at, predicted to see legislation getting moved.
John Williams: Yeah, absolutely. And it will be interesting because 29 Republicans on that committee, 23 Democrats. No word yet on who’s going to get that seat and who’s going to lose it on the Democratic side. But to your point, there are issues that have been bipartisan that come out of this committee. And one of those issues could be the issue of healthcare monopolies and antitrust. And that leads us into what we might expect, as far as a healthcare agenda is concerned, from House Republicans. And obviously focusing on House Republicans because Democrats control the Senate. And they really haven’t put out necessarily a blueprint yet, which House Republicans did last year when they created this Healthy Future Task Force that outlined their priorities if they were given control of the chamber.
And they divided issues into taskforce subcommittees that had titles like the Affordability Subcommittee and the Modernization Subcommittee, Security Subcommittee or the Doctor-Patient Relationship Subcommittee. And each of these subcommittees put out white papers, and then the items in those white papers read like a greatest hits compilation of past Republican proposals like encouraging more portable health coverage or making health savings accounts more accessible and promoting association health plans. However, there were some things in there that I won’t say are necessarily new, especially for people who deal with healthcare at the state level and state houses, but are fairly new in Washington and could be pretty concerning, especially for hospitals and health systems.
And these include things like reforming the inpatient only list or pursuing site-neutral payment reform, repealing the moratorium opposition on hospitals. Those were all things that were included as recommendations from the Healthy Future Task Force. From what we have been told by the leadership staff, Republicans are considering using a collection of bills that were introduced in the last Congress as a blueprint of sorts for their agenda, a comprehensive healthcare package, if you will. And those bills had titles like the Addressing Anti-Competitive Contracting Clauses Act or the Consumer Choice of Care Act or the Transparency of Hospital Billing Act.
So you can look at the titles of those and get an idea of where Republicans might be going with their healthcare agenda in the House. Another area that we think is going to be a significant focus for the House, and this goes back to the point we were making earlier about oversight and subpoena power, is that House Republicans are going to spend some time focused on exactly how it is that hospitals and other healthcare entities used the monies that they received from the Provider Relief Fund. Many of you listening to this podcast probably read the Wall Street Journal article that ran last month, or I think it was even a series that they’ve been running on this stuff. But at least one article from last month that claimed that billions of dollars in Provider Relief Fund monies went to hospitals that didn’t need it, and/or who used it to either improve their bottom line or bonus up their executives or used it for some purpose that Congress did not intend Provider Relief Fund monies to go to.
We’re even getting word that Representative James Comer of Kentucky, who’s the incoming chairman of the House Oversight Committee, which I guess, ironically for me, is the committee that I worked on when I was on the Hill in the nineties, is going to hold hearings that not only focus on how hospitals spent their Provider Relief Fund dollars, but is also going to hold hearings on how hospitals spend their 340B dollars, hold hearings on hospital not-for-profit status and how the FTC, Federal Trade Commission, conducts oversight of their consolidation activities, the merger and acquisition activities in the healthcare space. And it’s that issue of competition and antitrust enforcement that I think might have the best chance of legislative success. And you talk about the things that Republicans and Democrats can work together on, and you look at Energy and Commerce, and it’s got jurisdiction over this issue.
On the one hand, you’ve got this new strain of populism that’s running through the Republican Party that isn’t necessarily as pro-business as it has been in previous years. And on the other hand, you’ve got Democrats in the Senate, like Elizabeth Warren or Bernie Sanders, who might be willing to go along with Republican legislation that cracks down on what they view as monopoly forces in the healthcare marketplace. So trying to read these tea leaves here, I think antitrust and monopoly, or what are viewed as monopoly issues in healthcare, is areas that we might see folks on the Hill working together on. But it’s early and we’ll just have to see how it all plays out.
Andrew Coats: Stepping back from a 10,000-foot view, you have 117th Congress, you have a new presidential administration, you have big ideas, and you had big bills coming out. American Rescue Plan, Build Back Better. These are hundreds of billions of dollars that were poured into these bills. Those days are gone. 118th Congress is going to look a lot different. It’s going to be much more micro-driven, less coming from the White House, more coming out of the congressional office buildings and the policy staff on these committees. And at end of the day, if the bills they’re going to move, they’re going to need to be broad bipartisan support, and fairly not controversial because of that. And then I think you have to pay for it too. I think that’s going to come back into focus as well. And we got away from that a little bit, and I think that’s going to be back in vogue again.
John Williams: Yeah. Looking in the healthcare space and looking down the road, there isn’t a lot of must-pass legislation that needs to get done this year, except for the $8 billion in ACA-related dish cuts, Medicaid dish cuts that are set to kick in on October 1st, right at the end of this fiscal year. Those have been postponed over the years and they’re going to kick back in unless Congress does something about it. And from everything that we’ve heard on the Hill, they are going to do something about that, probably postpone it again. I doubt they’ll eliminate it. They’re probably postpone it again, but that provides a vehicle then to do other things in healthcare. And to your point, if they postpone it, they’re going to have to figure out how to pay for it.
And if they have to figure out how to pay for it, one of the areas that has always been talked about is this site neutral payment reform for hospital outpatient departments that are receiving on-campus hospital rates instead of physician office rates. And those were banned, then there was a exception for mid-builds. But there was a large group that were grandfathered in. And so in order to pay for this dish cut legislation, they could very well go back and use the monies from site neutral payment reform to help cover the cost of that legislation. So that’s something that was on Republican agenda to do, and I’m sure Democrats would go along with something like that in return for postponing these dish cuts. But I guess we’ll just have to wait and see how it all plays out.
Andrew Coats: It’s hard to see a big healthcare vehicle moving as a standalone. You have to think it’s going to be attached to some sort of either raising the debt ceiling, supplemental funding, year-end appropriations type bill. Maybe I’m wrong, but you kind of see it moving through those type of bigger vehicles.
John Williams: No, no, I agree with you. Well, however it all plays out, we’ll be here to tell you about it on Inside Baseball. So thank you for joining us for this edition. As always, if you would like more information about what Andrew and I do or how we provide federal advocacy services to our clients, please visit our website at hallrender.com or reach out to me at jwilliams@hallrender.com or Andrew at jcoats@hallrender.com. And one last disclaimer because we are lawyers, please remember that the news expressed on this podcast are those of the participants only and do not constitute legal advice. So long, everybody. Thanks for joining us.
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