Insights

A few weeks ago, we chronicled the challenge that the rise in mid-term resignations is posing for legislating in this Congress. While the recent spate of resignations has certainly posed a problem for the, still relatively new, speakership of Rep. Mike Johnson (R-LA), another challenge is looming for the House Republican Conference: the departure of some of its most respected health care voices.

In addition to the departure of House Energy & Commerce Chairwoman Cathy McMorris Rodgers, significant institutional and real-world health policy expertise will be heading for the exits as Rep. Larry Bucshon, MD (R-IN), Michael Burgess, MD (R-TX), Rep. Drew Ferguson, DMD (R-GA), and Rep. Brad Wenstrup, DPM (R-OH) have all decided to not seek reelection. Their four retirements mean the influential House GOP Doctors Caucus will not only be losing almost a quarter of its 19 members, but it also means that the Caucus will be losing 4 voices on the House’s two key committees for health policy—the House Ways and Means Committee and the House Energy and Commerce Committee.

It is hard to overstate the influence of these members as Burgess, Bucshon, and Wenstrup and the Caucus played an instrumental role in passing the Medicare Access and CHIP Reauthorization Act (MACRA) in 2015, which finally repealed the sustainable growth rate formula and brought an end to the annual threat of drastic cuts in Medicare payments to physicians. While MACRA was no small feat, the victory has proven to be fleeting as physicians once again find themselves in an annual exercise of the threat of Medicare cuts. Each of the past four years, doctors have faced the threat of Medicare cuts, but only for 2021 did Congress provide full relief and now doctors are in the third straight year of Medicare payment cuts. While Congress did provide some relief in 2022, 2023, and 2024, the reality is that as costs are going up Medicare payments to physician have been declining.

There is general agreement something must be done. Last year, Congress finally held hearings to look at the Medicare payment challenges facing physicians once again. Yet, while it took Congress almost a decade before holding its first MACRA oversight hearing, some have been trying to make up for lost time as the House Energy & Commerce Health Subcommittee heard testimony regarding the Provider Reimbursement Stability Act (H.R. 6371), which was introduced by fellow doctor, Rep. Greg Murphy, MD (R-NC), and would enact the first sizable payment reforms since MACRA, and then approved the legislation in November of last year.

Among its reforms, the legislation would help address the threat of annual Medicare payment cuts by updating the “budget neutrality” threshold that can trigger potential cuts when certain services see a change in valuation or when new codes are introduced to the Medicare physician fee schedule.

While the outlook for significant health legislation before the election seems grim, the legislation has bipartisan backing and the support of the House GOP Doctors Caucus behind it, and one must wonder if H.R. 6371 might be these scions’ legislative swan song. For four members who have contributed so much to health policy over the last decade, it would only be fitting if they left one last indelible mark on Medicare before heading for the exits.

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Washington generally moves in one of two ways; either Congress legislates, or the Administration regulates. However, these two paths converge often as our system runs on checks and balances. Federal agencies produce regulations, and Congress conducts oversight of those agencies. The Food and Drug Administration’s (FDA) proposed rule to regulate lab developed tests (LDTs) as medical devices came about in response to a perceived failure to legislate, and Congress is responding by exercising its oversight authority. This blog provides a history of the development of this rule and where things stand in its implementation. 

How We Got Here 

Efforts to address concerns about certain LDTs came to a head with the publication of the FDA’s 2014 draft guidance outlining a risk-based approach to regulating moderate and high-risk LDTs as medical devices. Early discussion drafts of what ultimately became the Verifying Accurate Leading-edge IVCT Development (VALID) Act started making the rounds among representatives in 2015 in response to the draft guidance.  The House Energy and Commerce Health Subcommittee responded with a hearing in November of that year on the subject of diagnostic testing and laboratory operations. Prior to the hearing, the Energy and Commerce Committee circulated draft legislation that removed LDTs from FDA’s medical device authority,  relocated them under a new center within the agency, and prioritized avoidance of duplicative regulation with CMS, among other provisions. However, a lack of stakeholder consensus around the Energy and Commerce approach formed. Other legislative proposals, including from former Senate Health, Education, Labor and Pensions Chair Lamar Alexander (R-TN), continued to be floated by stakeholders but none ever gained traction. Ultimately, the Trump Administration’s FDA announced in January of 2017 that they would not finalize the draft guidance – one of several Obama-era regulations to fall to the new Administration’s unprecedented use of the Congressional Review Act (CRA). 

Bipartisan congressional interest in enhanced oversight of LDTs continued despite the rollback of the guidance. Moreover, FDA leadership publicly affirmed that a legislative solution would be the preferred mechanism for future regulation of in vitro diagnostics (IVDs). Reps. Larry Bucshon (R-IN) and Diana DeGette (D-CO) released the discussion draft Diagnostic Accuracy and Innovation Act (DAIA) in March of 2017. This legislation had the elements of the framework developed by the Diagnostic Test Working Group (DTWG) – an independent group consisting of representatives from diagnostic manufacturers and clinical laboratories – with further input from additional stakeholders. Reps. Bucshon (R-IN) and DeGette (D-CO) intended to evoke responses from the FDA and public and professional stakeholders by publishing this document. Significant backlash ensued, given its higher regulatory burden and likely inhibiting effect on innovation.  Reps. DeGette (D-CO) and Bucshon (R-IN) released A new version of the DAIA draft, entitled VALID, in 2018 It also gained the support of former Senator Orrin Hatch (R-UT) and Senator Michael Bennet (D-CO).  However, many stakeholders, including the American Clinical Laboratory Association (ACLA), remained opposed to the early version of VALID because it took a more device-centric model toward regulating IVDs.  

Still stakeholders continued to work to improve the bill. Stakeholders identified creation of a diagnostic regulatory framework, risk classification, and grandfathering of existing tests as top priorities. By the Spring of 2022, VALID legislation included all of these priorities and others.  Despite this, key stakeholders, including ACLA, College of American Pathologists (CAP), and the Association for Molecular Pathology (AMP), refused to endorse it.  

Efforts to pass VALID continued to fail given the lack of stakeholder support despite bipartisan, bicameral support. A push to include it as part of the FDA User Fee Reauthorization Act failed.  Senator Richard Burr (R-NC), who replaced Sen. Hatch  as the lead Republican VALID sponsor, pushed hard for inclusion of the bill in the end of year spending bill, the Consolidated Appropriations Act of 2023. However, this effort failed as well, despite it being a top priority for the retiring Burr because of opposition from academic medical centers (AMCs) interested in a regulatory carveout for their reference lab businesses. 

Where We Are 

Many believe that Burr’s failure to get VALID included in the end of year package in 2022 served as the catalyst for the FDA deciding to publish its proposed rule to regulate LDTs as medical devices in October of 2023. The rule proposes to phase out its default posture of enforcement discretion for IVDs in five stages over 4 years. The proposed rule is as bad, from a test developer standpoint, as it can be. It layers medical device regulation over the practice of laboratory medicine including pre-market review requirements; there is no risk classification and all IVDs default to high risk; there is no grandfathering of existing tests; and test modifications require premarket submission.  FDA received over 6500 comments on the rule, the vast majority of which are negative. The agency plans to finalize the rule in April according to their unified agenda. FDA is unlikely to make significant changes before finalizing the rule and will face litigation challenging their authority to issue it as soon as they finalize.   

Stakeholders concerned with the rule immediately started reaching back out to policymakers urging Congress to pass a legislative alternative. The House Energy and Commerce Health Subcommittee held a hearing on the rule, its impact on patient access and the appropriate role for FDA on regulating them.  They heard from five stakeholders, all of which expressed a preference for legislation and either endorsed VALID or spoke positively about VALID. ACLA, CAP, AdvaMedDx, Friends of Cancer Research, and a pathologist from the University of Colorado (CO), who is also a cancer survivor, testified. All, except ACLA and the CO pathologist, fully endorsed VALID and ACLA acknowledged that they worked hard on developing VALID and would far prefer that to a finalized FDA rule. Moreover, all Republican Subcommittee members and several Democrats, including Health Subcommittee Ranking Member Anna Eshoo (D-CA) – a cosponsor of VALID — expressed concerns with FDA’s medical device approach and a preference for VALID or a similar legislative alternative.  

Where We Are Going  

The hearing provided a great first step toward passage of VALID or another version of it (maybe even with a different name?).  The Energy and Commerce Committee demands that any legislation over which it has jurisdiction must submit to regular order before being considered by the full House. The sponsors of VALID can now argue that their bill has undergone a legislative hearing., However, the legislation faces challenges. VALID still has bipartisan congressional support in the House but, with Sen. Burr’s retirement, it no longer enjoys such support in the Senate. Stakeholders, and most notably AMCs, can no longer be fragmented in their support if, as we suspect, they prefer legislation to FDA medical device regulation. Once the FDA proposed rule to regulate LDTs as medical devices goes final, we believe even those who are still pursuing Clinical Laboratory Improvement Amendments (CLIA) modernization as the only alternative – a non-starter with policymakers – may come around to VALID.  

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