December 2024

From the President's Desk:

Building on Our Commitment to Improving Lives

Jim Scott,

President and CEO

When I founded Applied Policy nearly fifteen years ago, my goal was not only to assemble a team capable of delivering exceptional value to our clients but also to address a more profound concern. Having worked at the Centers for Medicare & Medicaid Services (CMS), in a major pharmaceutical company, and on Capitol Hill, I had seen firsthand how various forces often hinder the American public's access to high-quality, affordable care. This experience shaped my most important mission in founding and growing Applied Policy: to improve the lives of patients who put their trust in those who deliver their care.

This newsletter highlights some of the most significant victories we have achieved on behalf of our clients this year. These accomplishments will ultimately help Americans access medications at better prices, prevent essential drug shortages, and provide safer non-opioid pain relief options to reduce the risk of addiction. Through our efforts, patients receiving end-stage renal disease treatment in hospital-based facilities will benefit from simplified payment structures. We also supported our clients in complying with state-mandated reporting requirements for the cost of caring for undocumented immigrants, ensuring they could continue meeting the needs of these often vulnerable patients. Additionally, we assisted nursing homes in meeting compliance and third-party ownership regulations, helping to ensure that elderly residents can continue to live in safe and secure environments. Achieving these goals—and others like them—has made 2024 a successful year and serves as our inspiration as we look ahead to 2025.

To all who are reading this, to those who helped us achieve these victories and those who benefited from them, we wish you a joyous holiday season and a healthy New Year! 

The Year in Review: Successes for Clients and Patients

Looking Ahead to 2025: Prepared for Change

• DOGE Poised to Leverage Loper Bright

As Applied Policy reported in the July edition of Insight, the U.S. Supreme Court concluded its 2023-2024 term with several rulings that had significant implications for the healthcare sector. Foremost among these was the Court’s decision in its joint review of Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce, in which the justices considered whether to overrule or clarify Chevron deference.

The longstanding doctrine of Chevron deference had allowed courts to defer to federal agencies’ interpretations of ambiguous statutes. While supporters viewed Chevron as a mechanism for ensuring agency expertise guided policymaking, critics argued it gave agencies excessive interpretative authority. In overruling its 1984 decision in Chevron v. Natural Resources Defense Council in a 6-3 decision, the Court significantly curtailed the authority of executive agencies and shifted interpretive power to the judiciary.



The implications of this judicial shift may be magnified under the incoming administration. Notably, Elon Musk and Vivek Ramaswamy, appointed to lead the newly established Department of Government Efficiency, have cited the Loper Bright decision as a foundational element in their strategy to streamline federal operations. In a Wall Street Journal op-ed, they argue that the ruling provides a judicial mandate to curtail bureaucratic overreach, thereby facilitating a more efficient and accountable government. 

Highlights from NVHPF's November Webinar

Technology and the Future of Diabetes Care

CMS Finalizes Mandatory Kidney Transplant Payment Model to Enhance Access to Transplants for ESRD Patients

By Caitlyn Bernard

On November 26, CMS released the Alternative Payment Model Updates and the Increasing Organ Transplant Access (IOTA) Model final rule. The rule finalizes a new mandatory payment model, the IOTA Model, which will subject participating kidney transplant hospitals to upside and downside risk based on the number of transplants they perform, the efficiency of their matching process, post-transplant success rates, and certain quality measures.

This final rule also includes standard provisions that will apply to the Radiation Oncology (RO) Model, the End-Stage Renal Disease (ESRD) Treatment Choices (ETC) model, and all mandatory Innovation Center models with first performance periods starting on or after January 1, 2025. These provisions cover beneficiary protections, cooperation in model evaluation and monitoring, audits and record retention, data and intellectual property rights, monitoring and compliance, remedial actions, CMS's authority to terminate models, limitations on review, and various provisions regarding bankruptcy and other notifications, as well as the reconsideration review process.

The IOTA Model will begin on July 1, 2025, and end on July 30, 2031.

CMS Proposes Coverage of AOMs in Release of Policy and Technical Changes

By Caitlyn Bernard

On November 26, CMS released its Contract Year 2026 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly proposed rule, which contains proposed policies for Medicare Advantage (MA) and Medicare Part D plans in contract year (CY) 2026. In this rule, CMS proposes to:

• Reinterpret existing policies to allow Medicare Part D coverage of Anti-Obesity Medications (AOMs) for beneficiaries diagnosed with obesity. (This reinterpretation would also extend to Medicaid coverage.)
• Codify Part D provisions in the IRA eliminating cost-sharing for adult vaccines and restricting cost-sharing for a one-month supply of insulin
• Implement regulatory changes to codify agency guidance implementing the Medicare Prescription Payment Plan
• Establish new Part D policies to promote pharmacy transparency and minimize disruptions in care
• Modify regulations governing internal coverage criteria to improve patient access to care under MA
• Implement guardrails for use of artificial intelligence to prevent inequitable care and/or bias in MA
• Update MA plans’ health equity analyses of utilization management policies in alignment with feedback received in response to the CY 2025 proposed rule
• Modify behavioral health cost-sharing standards for MA and Cost Plans to ensure equitable access to behavioral health benefits
• Change MA and Part D medical loss ratio (MLR) requirements to align with commercial and Medicaid MLR requirements
• Implement policies aimed at integrating care for dually-eligible individuals, and
• Establish requirements for the proper administration of supplemental benefits coverage

On November 7 and 8, the Medicare Payment Advisory Commission held a virtual public meeting, which included the following sessions:

• Reforming physician fee schedule updates and improving the accuracy of payments
• Considering the participation bonus for clinicians in advanced alternative payment models
• Structural differences between the PDP and MA–PD markets
• Workplan: Assessing Medicare Advantage provider networks
• Medicare’s coverage limits on stays in freestanding inpatient psychiatric facilities

On the Docket/Under Review

Applied Policy is following these rules under review at the Office of Management and Budget:

• Occupational Exposure to COVID-19 in Healthcare Settings 
• Healthcare System Resiliency and Modernization
• Telemedicine Prescribing of Controlled Substances When the Practitioner and the Patient Have not had a Prior In-Person Medical Evaluation
• Administrative Simplification: Modifications to NCPDP Retail Pharmacy Standards
• Amendments to Rules Governing Organ Procurement Organizations
• Health Data, Technology, and Interoperability: Patient Engagement, Information Sharing, and Public Health Interoperability
• HHS Notice of Benefit and Payment Parameters for 2026
• Advance Notice of Methodological Changes for CY 2026 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies + Draft CY 2026 Part D Redesign Program Instructions

See all rules under OMB review here.

December 12

FDA Vaccines and Related Biological Products Advisory Committee

December 12-13

MACPAC Public Meeting

December 12-13

MedPAC Public Meeting

December 24-26

Applied Policy office closed

How can Santa's reindeer jump higher than a house?

Frequentist statistical methods continue to be considered the standard for testing and evaluating new drugs and medical devices. Yet, with advances in computing power, many within the scientific community have shown an interest in the potential of Bayesian statistics in medical research and regulatory review. Proponents point to the value of Bayesian principles—which use prior information and new trial data to update inferences—in adaptive designs and when dealing with limited sample sizes.

While some fault Bayesian methods for being overly subjective, the FDA has offered Guidance for the Use of Bayesian Statistics in Medical Device Clinical Trials since 2010. Its Center for Drug Evaluation and Research observes that "Bayesian approaches may be well-suited for some complex innovative designs because they can provide flexibility in the design and analysis of a trial" and reports a recent increase in the use of Bayesian statistical methods in pediatric drug development.

The debate over Bayesian statistics is often heated. But whether one embraces or rejects its principles, understanding the Bayesian approach could become important in evaluating certain study results and making informed policy decisions.

Tom Chivers' Everything Is Predictable, How Bayesian Statistics Explain Our World offers an engaging and accessible introduction to Bayesian principles. It also includes a refresher on frequentist statistics and the chance to revisit and reconsider the p-values of one's college statistics course. The book explains how Bayesian approaches can help refine probabilities, optimize decision-making, and address real-world complexities in clinical trials and regulatory review.

While by no means a "light read," Everything Is Predictable demystifies Bayesian theory. In bridging the gap between theoretical concepts and their real-world implications, Chivers provides a valuable resource for anyone seeking a deeper understanding of this increasingly recognized approach to testing and evaluation.