Oversight and Investigations Informer – February 26, 2021

What We Are Watching:

HAALAND’S LAST MINUTE SHIFT: Interior secretary nominee Deb Haaland softened her stance on fossil fuels during her confirmation hearing this week in a bid to win support from Republicans and Senate Energy and Natural Resources Committee chairman Sen. Joe Manchin (D-WV), who are wary of her progressive energy views and support for the Green New Deal. “The role of a congresswoman in one district in the country is much different than the role of a secretary who is fighting and working for every single American and all of our public lands across the country,” Haaland said. Following two days of hearings, Manchin announced he would vote to confirm her, paving the way for Senate confirmation of the first Native American Cabinet secretary.

HOUSE OVERSIGHT TO INVESTIGATE ‘FAILURES OF FOSSIL FUELS’: The investigations of Texas’ power crisis continued to pile up after we highlighted the issue last week. U.S. Rep. Ro Khanna (D-CA) said the House Oversight Committee’s Environment Subcommittee would investigate “why so many fossil fuel sources failed, why ERCOT wasn’t better prepared, & who participated in the conspiracy to falsely blame renewables,” adding, “Americans deserve to know the truth about the failures of fossil fuels.” But, as always, the reality is much more complex, as reporting by Climatewire this week found that utilities further north “have long fortified themselves against extreme cold, preventing the widespread outages seen in Texas last week…Yet these power systems remain highly reliant on fossil fuels to keep the lights on and the heat humming during cold snaps.”

Week Ahead:

• The Senate Committee on Banking, Housing, and Urban Affairs will host the confirmation hearing for Gary Gensler, President Joe Biden’s nominee to lead the Securities and Exchange Commission, at 10 a.m. on Tuesday, March 2, 2021.

Key Insights:

SEC REVIEWING CLIMATE DISCLOSURES: Speaking of the SEC, the oversight agency announced this week that it will be applying additional scrutiny to corporate climate disclosures, which will likely result in new rules or at the very least an update to the Commission’s 2010 guidance. That 2010 guidance was more of a suggestion than a requirement, and the materiality of information currently disclosed by companies – if they disclose at all – is hit or miss. The announcement this week signals a move towards more standardized reporting requirements that would allow investors to easily compare companies across specific metrics, meaning it’s more important than ever for companies to develop a strategic framework that integrates ESG with business strategy for the long-term benefit of shareholders and stakeholders.

What We Are Watching:

CHAIRMAN NEAL URGES CMS TO PROTECT MEDICARE NURSING HOME RESIDENTS: On Thursday, House Ways and Means Committee Chairman Richard E. Neal (D-MA) sent a letter to Acting Centers for Medicare & Medicaid Services (CMS) Administrator, Elizabeth Richter, urging she reinstate “mechanisms of nursing home oversight and enforcement” to better protect residents during COVID-19. Chairman Neal suggested that such oversight had been insufficient under the Trump Administration, recounting that he’d “sent a number of letters to the Trump Administration with specific requests about regulatory actions the former administrator could have taken to better protect nursing home residents and their families during the pandemic. Many of those requests went unanswered and unheeded.”

HHS OIG REPORT SAYS HOSPITALS MEDICARE STAYS VULNERABLE TO UPCODING: On Wednesday, the Department of Health and Human Services’ (HHS’) Office of Inspector General (OIG) released a report with key findings that state that from FY2014-FY2019 hospitals increasingly billing Medicare inpatient stays at the most severe (i.e. most expensive) level. The report claims that such inpatient stays are more vulnerable to upcoding and are a subject of concern. As a result, OIG recommends that “CMS conduct targeted reviews of MS-DRGs and stays that are vulnerable to upcoding, as well as the hospitals that frequently bill for them.” Medicare Severity Diagnosis Related Groups (MS-DRG) are categories used to classify Medicare beneficiaries diagnoses and procedures for hospital stays; they are also by Medicare used to determine payment amounts.

Week Ahead:

• On Tuesday, March 2, at 10:30am,  the House Energy and Commerce Health Subcommittee will hold a hearing on telehealth policy in the United States.  The hearing is entitled, “The Future of Telehealth: How COVID-19 is Changing the Delivery of Virtual Care.” Information for this hearing, including the Committee Memorandum, witness list, testimony and a live webcast will be posted here as they become available.
• On Tuesday, March 2, at 9:45am, Senate and House Committee Leaders from the House Committee on Oversight and Reform and the Senate Homeland Security and Governmental Affairs Committee will hold a press call with U.S. Comptroller General Gene Dodaro, head of the Government Accountability Office (GAO) to release the GAO’s 2021 High-Risk Report. This report, released biannually at the start of each new Congress, “focus[es] on government operations vulnerable to fraud, waste, abuse and mismanagement, or in need of transformation to meet the nation’s biggest challenges.” The 2019 report included sections on: Managing Risks and Improving VA Health Care, Medicare Program & Improper Payments, Protecting Public Health through Enhanced Oversight of Medical Products, and Strengthening Medicaid Program Integrity. Should similar risks be outlined in 2021, health care industry stakeholders engaged with government programs should be prepared for congressional scrutiny over their business operations and ensure they are ready to justify business operations as necessary and cost-effective.
• After the press conference, the Committee on Oversight and Reform will hold a full committee hearing about the report at 10:30am.  The Senate Homeland Security and Governmental Affairs Committee’s hearing will follow beginning at 2:30pm

Key Insights:

On Wednesday, President Biden signed an Executive Order (EO) requiring a 100-day review of U.S. supply chains as a part of the Administration’s efforts to bolster domestic production of critical products during the COVID-19 pandemic. The EO calls for a review of four major U.S. supply chains including pharmaceuticals, rare earth minerals, semiconductor chips and large-capacity batteries.  This review could lead to congressional scrutiny and oversight should the Biden Administration uncover any concerning vulnerabilities or mistakes made by industry or the previous administration.

What We Are Watching:

REGULATORS CRACKING DOWN ON AIRLINES: Last weekend United Flight 328 was forced to conduct an emergency landing after experiencing a total engine failure. The failed engine of the Boeing 777, manufactured by Pratt & Whitney, was later discovered to have metal fatigue on one of the engine fan blades. The National Transportation Safety Board (NTSB) is conducting a full investigation into the engine failure and emergency landing, including a complete review of the inspection history of the aircraft. In addition, earlier this week the U.S. Department of Transportation Inspector General issued a report on the 737 MAX that called for a major overhaul of the Federal Aviation Administration’s (FAA) aircraft certification process.

INFRASTRUCTURE OFF TO A HAPPY START: The Senate Committee on Environment and Public Works (EPW) held its first hearing of the 117th Congress on infrastructure earlier this week. The legislative process for a new infrastructure package is expected to draw attention to a variety of issues surrounding surface transportation infrastructure, the federal environmental review process, electronic vehicles, and clean energy. Companies that stand to benefit from investments included in the infrastructure package will receive scrutiny for their alignment with policy priorities of both political parties.

DOD REVIEWS MAJOR PROGRAMS: The U.S. Department of Defense (DOD) ordered a review of major programs throughout the department including the controversial F-35 fighter jet program. DOD is facing downward pressure on its annual budget as a result of significant deficit spending approved by Congress to fund COVID-19 relief legislation throughout 2020. The review, highlighted in a memo from Deputy Defense Secretary Kathleen Hicks, reflects an internal effort to cut costs where possible from some of the most expensive items in the annual budget.

Week Ahead:

• WHAT WE’LL BE WATCHING: Two hearings are scheduled next week that will include oversight of critical industrials sectors. The House Transportation & Infrastructure Committee will hold a hearing on March 2 on the impact of the COVID-19 pandemic on the U.S. aviation industry and the House Appropriations Subcommittee on Labor-HHS-Education will hold a hearing on worker safety in the meatpacking and food processing industry during the pandemic.

Key Insights:

FTI THOUGHT LEADERSHIP: Katherine Tai and Game-changing Labor Mechanism Take Center Stage

COMPANIES REFUSE TO PAY OSHA: Companies are refusing to pay fines levied by the Occupational Safety and Health Administration (OSHA) during the pandemic, arguing the regulator did not provide clear guidelines related to working safety. OSHA indicated it will review the fines but a prolonged standoff could draw increased scrutiny of the treatment of workers in the meatpacking and food processing industry.