Weekly Washington Healthcare Update

April 22, 2013

Pardon Our Dust

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This Week:

1. Congress

House of Representatives


2. Administration

Centers for Medicare and Medicaid Services (CMS)

Food and Drug Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

Department of Health and Human Services Office of the Inspector General (HHS-OIG)


Bipartisan Policy Center

1. Congress

House of Representatives

Energy and Commerce Hearing on Drug Compounding Regulation

On Tuesday, the Energy and Commerce Committee held a hearing in which Food and Drug Administration Commissioner Margaret Hamburg testified as to her agency’s role in overseeing the activities of the New England Compounding Center (NECC) in the years leading up to the deadly fungal meningitis outbreak last fall. Members on both sides of the aisle criticized the FDA’s lack of activity in preventing the spread of contaminated drugs, which has led to the deaths of more than 50 people; however, some Democrats noted that the FDA’s authority over compounding clinics in some areas is unclear, due to a patchwork of state and federal laws and conflicting court decisions. Republicans took the opportunity tounveil a report criticizing the FDA’s decision to suspend inspections of the NECC facility, instead choosing to clarify its policy on compounder regulation. The Senate HELP Committee is expected to release on Friday a draft of legislation aimed at bolstering oversight of compounding pharmacies.

McDermott Asks CMS to Close Fraud Loophole

Last week, Rep. McDermottwrote a letter asking CMS to address concerns he has with current regulations related to Medicare’s ability to combat fraud. Specifically, McDermott points to several court cases in which Medicare providers have been found to be in violation of portions of the Code of Federal Regulations (CFR) related to “conditions of enrollment,” though no sanctions are imposed under the False Claims Act (FCA) because only violations of “conditions of payment” can trigger such sanctions. “I am concerned that the Medicare trust fund has lost hundreds of millions of dollars when several False Claims Act (‘FCA’) decisions won by federal prosecutors have been overturned on this basis,” McDermott wrote.

Dual-Eligible Drug Rebate Legislation Introduced

Legislation has been introduced in both the House and Senate that would require pharmaceutical companies to provide rebates for drugs for people who qualify for both Medicare and Medicaid, known as “dual-eligibles.” Under the bill, drug manufacturers would pay a rebate based on the lowest current rebate they pay to Medicare Part D plans and their current Medicaid average manufacturer price (AMP) percentage. Sen. Rockefeller (D-WV) is the lead sponsor in the Senate, while House Energy and Commerce Committee Ranking Member Waxman (D-CA) introduced the House companion. Drug makers, who oppose the bill, claim the proposal would raise premiums and copays and would lead to restricted access to medicines for low-income seniors and other vulnerable populations.

Sebelius Testifies in Health Subcommittee on FY2014 Budget Request

On Thursday, the House Energy and Commerce Committee held a hearing titled “A Financial Review of the Department of Health and Human Services and Its FY 2014 Budget,” in which HHS Secretary Sebelius appeared to testify. The hearing focused on President Obama’s proposed FY2014 budget request for HHS, as well as the department’s activities related to implementation of the 2010 health reform law.

The Honorable Kathleen Sebelius
U.S. Department of Health and Human Services

For more information, or to view the hearing, please visit:energycommerce.house.gov

Committee Passes High-Risk Pool Bill; House Vote Scheduled

Last week, the Energy and Commerce Committee approved legislation that would authorize funding for a program created by the Affordable Care Act (ACA), which would be responsible for assisting individuals with pre-existing conditions to acquire health insurance. The bill, H.R. 1549, would transfer funds from the ACA’s Prevention and Public Health Fund, which has been derided by Republicans as a slush fund for the Administration, in order to fund the Pre-Existing Condition Insurance Plan (PCIP). In addition, the bill would remove an existing requirement that individuals be uninsured for six months in order to qualify for PCIP. While the committee approved the bill along party lines, Democrats offered an amendment that would have changed the bill’s funding source, indicating that the use of Prevention and Public Health Fund dollars was a chief source of concern. The bill is expected to receive full House consideration this week.


Meaningful Use and Health Information Technology Questions

Several Republican senators havereleased a paper highlighting flaws they see in the 2009 stimulus bill’s health information technology (HIT) initiatives, claiming increased health care costs and concerns over patient privacy as a result of the policies. The paper, entitled “Reboot!: Re-examining the Strategies Needed to Successfully Adopt Health IT,” authored by Sens. Thune (R-ND), Alexander (R-TN), Roberts (R-KS), Burr (R-NC), Coburn (R-OK) and Enzi (R-WY), outlines perceived problems related to the implementation of the Health Information Technology for Economic and Clinical Health (HITECH) Act, including concerns over the ability of providers to achieve “meaningful use” of HIT, as required by the law. In addition, the groupwrote a letter to HHS Secretary Sebelius asking that she answer a list of questions related to the concerns outlined by their white paper.

2. Administration


Tavenner Response to Finance Confirmation Written Questions

Following her notably smooth confirmation hearing, in which no member of the Senate Finance Committee voiced opposition to her nomination, CMS Acting Administrator Tavenner last weekresponded in writing to Questions for the Record (QFRs) by committee members. Questions covered topics including the agency’s plan to engage the public to provide information related to health insurance exchanges, demonstrations and pilots being conducted by the Center for Medicare and Medicaid Innovation (CMMI), and the overall cost of operating federally facilitated exchanges (FFEs). Tavenner also confirmed that President Obama was intent on advancing the nomination process for members of the Independent Payment Advisory Board (IPAB).

Timeline for Basic Health Plan (BHP) Released

Sen. Maria Cantwell has posted asimple chart on her website offering a timeline for implementation of the Basic Health Plan (BHP), provided for by the ACA. BHP is an optional coverage program under the ACA that allows states to use federal tax subsidy dollars to offer subsidized coverage for certain low-income individuals. The timeline begins with currently ongoing discussions among HHS and stakeholders, with the program becoming operational Jan. 1, 2015. Cantwell had previously expressed concern about supporting the confirmation of CMS Acting Administrator Tavenner unless HHS focused on implementing BHP.

Food and Drug Administration (FDA)

Generic OxyContin Application Denied

On Tuesday, theFDA announced it would not approve a generic version of the opioid painkiller OxyContin because of the increased potential for abuse that accompanies doses of the compound absent crush-resistant formulas. Specifically, the FDA has determined that the benefits of original OxyContin no longer outweigh its risks and that original OxyContin was withdrawn from sale for reasons of safety or effectiveness. Accordingly, the agency will not accept or approve any abbreviated new drug applications (generics) that rely upon the approval of original OxyContin. The FDA, together with other public health agencies, continues to encourage the development of abuse-deterrent formulations of opioids and believes that such products will help reduce prescription drug abuse.

3. State Activities

Arkansas Medicaid Waiver Passes State Legislature

Last week, Arkansas successfully advanced a plan championed by Gov. Beebe that would allow for an expansion of the state’s Medicaid program, pursuant to the ACA, using federal dollars to purchase private insurance for the newly eligible population. However, the plan would require approval from HHS Secretary Sebelius in order to be operational. Though Sebelius has publicly acknowledged she’s open to reviewing the proposal, approval could inspire other states to examine similar ways to leverage generous federal contributions without being accused of embracing the controversial health reform law.

Rhode Island Posts 2014 Health Insurance Premium Rates

Rhode Island has become one of the first states topublicly release rates for health insurance premiums for 2014. The list includes submissions from plans including Blue Cross Blue Shield of Rhode Island and United Healthcare, which will be reviewed by Rhode Island Health Insurance Commissioner Christopher Koller, who is expected to approve, modify or reject the requested rates by June 2013.

4. Regulations Open for Comment

CMS Releases Health Exchange Navigator Rule

CMS issued aproposed rule that would create conflict-of-interest, training and certification, and meaningful access standards applicable to Navigators and non-Navigator assistance personnel in federally facilitated exchanges, including state partnership exchanges, and to non-Navigator assistance personnel in state-based exchanges that are funded through federal exchange establishment grants. These proposed standards would help ensure that Navigators and non-Navigator assistance personnel will be fair and impartial, will be appropriately trained, and will provide services and information in a manner that is accessible.

The proposed regulations would also make two amendments to the existing regulation for Navigators that would apply to all Navigators in all Affordable Insurance Exchanges (Exchanges), including State-based Exchanges, clarifying that any Navigator licensing, certification or other standards prescribed by the state or Exchange must not prevent the application of the provisions of Title I of the Affordable Care Act; and adding to the list of entities ineligible to become Navigators those entities with relationships to issuers of stop-loss insurance, including those who are compensated directly or indirectly by issuers of stop-loss insurance in connection with enrollment in Qualified Health Plans or non-Qualified Health Plans. The proposed regulations would also clarify that the same ineligibility criteria that apply to Navigators would also apply to non-Navigator assistance personnel providing services in any Federally facilitated Exchanges, including in State Consumer Partnership Exchanges, and to federally funded non-Navigator assistance personnel in State-based Exchanges. Comments on the proposed rule are due by May 6.

Charitable Hospital Rule

CMS has announced aproposed rule providing guidance to charitable hospital organizations on the community health needs assessment (CHNA) requirements, and related excise tax and reporting obligations enacted as part of the Patient Protection and Affordable Care Act of 2010. The proposed regulation also clarifies the consequences for failing to meet these and other requirements for charitable hospital organizations. These regulations will affect charitable hospital organizations.

Comments and requests for a public hearing must be received by July 1.

CMS Proposed Rule Would Increase Oversight of Accrediting Organizations

CMS has issued aproposed rule that would revise the survey, certification and enforcement procedures related to CMS oversight of national accreditation organizations (AOs). These revisions would implement certain provisions under the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). The proposed revisions would also clarify oversight of AOs that apply for, and are granted, recognition and approval of an accreditation program in accordance with the Social Security Act. According to the proposed rule, health care facilities, with the exception of kidney transplant centers, end-stage renal dialysis facilities and providers of medical equipment and supplies, can demonstrate their compliance with Medicare conditions of participation, conditions of certification or conditions of coverage by being accredited by a CMS-approved organization. The proposed rule would implement, among other things, provisions requiring prospective or existing accreditation organizations seeking CMS approval of their programs to submit documentation proving they are a national accreditation organization, defined as an organization that accredits health care facilities under a specific program and whose accredited health care facilities under each program are widely located geographically across the United States. Comments on the proposed rule are due June 4.

IRS, HHS, DOL Issue Proposed Health Coverage Waiting Periods Rules

Under proposed rules issued jointly by the Internal Revenue Service, the Department of Labor’s Employee Benefits Security Administration and the Department of Health and Human Services, no group health plan or group health insurance issuer could impose a waiting period that exceeds 90 days after employment. The rules also would amend regulations to conform to ACA provisions already in effect, as well as those that will become effective beginning in 2014, barring discrimination against people with pre-existing medical conditions. Comments are due by May 20.

FDA Proposed Rule on Defibrillator Premarket Approval Applications

The FDA filed notice of of a proposed rule to require the filing of a premarket approval application (PMA) or a notice of completion of a product development protocol (PDP) for the following class III preamendment devices: automated external defibrillators systems (AEDs), which include the AED device and its accessories (i.e., pad electrodes, batteries and adapters). The Agency is also summarizing its proposed findings regarding the degree of risk of illness or injury designed to be eliminated or reduced by requiring this device to meet the statute’s premarket approval requirements and the benefits to the public from the use of the device. In addition, FDA is announcing the opportunity for interested persons to request that the Agency change the classification of the AED based on new information. This action implements certain statutory requirements. Comments will be accepted until June 20.

Proposed Rule for Part A Payment Appeals

On March 13, CMS issued a proposed rule that would allow CMS to pay for additional hospital inpatient services under Medicare Part B after it was denied under Part A because the beneficiary should have been treated as an outpatient. According to CMS, the rule would result in a $4.8 billion decrease in Medicare program expenditures over five years. The proposed rule will be published in the March 18 Federal Register, and comments are due May 17. Additionally, CMS Administrator Marilyn Tavenner issued an Administrator’s Ruling to address the number of appeals of Part A hospital inpatient reasonable and necessary denials. The ruling sets a standard process for pending appeals and billing for the additional Part B inpatient services while the proposed rule is vetted.

CMS Request for Information (RFI) on Health Information Technology

CMS and the Office of the National Coordinator for Health Information Technology released a request for information last week on a number of options to further push the exchange of health information. Suggested options include requiring or encouraging Medicare ACOs to include health information exchange components, requiring health information exchange components in care models for dual eligibles and promoting the use of “Blue Button,” which is a way for consumers to securely access their health information.

FDA Draft of Risk-Benefit Plan Published

The FDA filed a draft of its five-year plan for developing and implementing a benefit-risk framework that will guide its review of drugs. The notice was provided for in last year’s prescription drug user fee agreement. Drug companies and some patient advocates have argued that FDA is overly concerned with risks that the market is willing to bear. FDA agreed to go through a public process of developing a framework that would factor those concerns into its review process.

HHS Interim Final Rule — 2014 Notice of Benefit and Payment Parameters

HHS has issued aninterim final rule with comment that builds upon standards set forth in the HHS Notice of Benefit and Payment Parameters for 2014. The interim final rule will adjust risk corridors calculations that would align the calculations with the single risk pool provision, and set standards permitting issuers of qualified health plans the option of using an alternate methodology for calculating the value of cost-sharing reductions provided for the purpose of reconciliation of advance payments of cost-sharing reductions. Comments are due by April 30, which is also when the rule becomes effective.

ACA’s “Whistleblower” Protection Rule Proposed

DOL published an interim final rule that would implement the employee protection (whistleblower) provision of Section 1558 of the Affordable Care Act, to provide protections to employees of health insurance issuers or other employers who may have been subject to retaliation for reporting potential violations of the law’s consumer protections (e.g., the prohibition on denials of insurance due to pre-existing conditions) or affordability assistance provisions (e.g., access to health insurance premium tax credits). The interim rule also establishes procedures and time frames for the handling of retaliation complaints, including procedures and time frames for employee complaints to the Occupational Safety and Health Administration (OSHA), investigations by OSHA, appeals of OSHA determinations to an administrative law judge (ALJ) for a hearing de novo, hearings by ALJs, review of ALJ decisions by the Administrative Review Board (ARB) (acting on behalf of the Secretary of Labor) and judicial review of the Secretary’s final decision. Comments will be received until April 29, 2013.

DOL’s press release

View the rule

Food and Drug Administration (FDA) Proposes New Food Safety Rules

The FDA has proposed new rules on food safety, including regulations on good manufacturing practices standards for growing, handling and packaging produce. Specifically, to minimize the risk of serious adverse health consequences or death from consumption of contaminated produce, the FDA is proposing to establish science-based minimum standards for the safe growing, harvesting, packing and holding of produce, meaning fruits and vegetables grown for human consumption. FDA is proposing these standards as part of its implementation of the FDA Food Safety Modernization Act (FSMA). These standards would not apply to produce that is rarely consumed raw, produce for personal or on-farm consumption, or produce that is not a raw agricultural commodity. The proposed rule would also set forth procedures, processes and practices that minimize the risk of serious adverse health consequences or death, including those reasonably necessary to prevent the introduction of known or reasonably foreseeable biological hazards into or onto produce and to provide reasonable assurances that the produce is not adulterated on account of such hazards.

Another proposed rule would amend FDA’s current regulation for Current Good Manufacturing Practice In Manufacturing, Packing, or Holding Human Food (CGMPs), which requires domestic and foreign facilities that are required to register under the Federal Food, Drug, and Cosmetic Act (FD&C Act) to establish and implement hazard analysis and risk-based preventive controls for human food. FDA also is proposing to revise certain definitions in FDA’s current regulation for Registration of Food Facilities to clarify the scope of the exemption from registration requirements provided by the FD&C Act for “farms.”

Comments on both proposed rules are due by May 16, 2013.

5. Reports


Medicare Part D Prepayment Delay Could Have Earned Program $111 Million

According to areport issued April 16 by the HHS Office of the Inspector General (HHS-OIG), the Medicare Part D trust fund could have earned $111 million in calendar year 2009 if it had delayed prepayments to Part D plans by 20 days. The report, “Impact on Medicare Program for Investment Income That Medicare Part D Plans Earned and Retained From Medicare Funds in 2009,” bases its conclusions on the potential interest income that could be achieved by a 20-day delay in plan prepayments, assuming that the federal government would have invested the prepayment money in interest-bearing financial instruments with annual interest rates of 4.4 percent, equal to what the Medicare Part D trust fund earned in 2009. The report recommends that CMS seek legislative action to delay prepayments to Part D plans, or implement regulations that require Part D plans to include expected interest income in their bid proposals. CMS disagreed with the OIG recommendations and said “the implementation of either option would cause most Part D plans to increase their bid proposals to recoup the investment income that they would lose.”


New Simpson-Bowles Proposal Includes Chained CPI, Medicare Buy-In

The bipartisan duo of Alan Simpson and Erskine Bowles has released an updated set of deficit reduction proposals, focusing on major reforms to our nation’s entitlement programs, including Social Security and Medicare. Overall, the plan calls for roughly $2.4 trillion in deficit reduction over 10 years, including $600 billion in additional revenues and $600 billion in health care savings, as well as an overhaul of the U.S. tax system. Specifically, Simpson and Bowles would achieve $585 billion in savings through health-related reforms including changes to Medicare’s cost-sharing structure and increasing eligibility age for the program. In addition, the plan would reduce the deficit by $280 billion over the next 10 years by implementing a “chained” Consumer Price Index (CPI), which reflects a slower growth in inflation than the conventional CPI.

Bipartisan Policy Center

Proposal Claims $560 Billion in Health Care Savings

Last week, the Bipartisan Policy Centerreleased its plan to reduce health care spending through a combination of reforms the authors claim will avoid politically toxic issues, such as having a premium support system for Medicare or raising the age of eligibility for Medicare. Led by former Sens. Daschle, Frist and Domenici, as well as budget expert Alice Rivlin, the proposal would achieve about $300 billion in Medicare savings over 10 years, and an additional $260 billion through adjustments to the tax code. Of note, the plan would prohibit first-dollar Medigap policies and increase Medicare means-testing for higher-income beneficiaries. It would also combine the Medicare Part A and B deductibles.

If you have any questions, please contact Stephanie Kennan, Senior Vice President, or Brian Looser, Assistant Vice President, at McGuireWoods Consulting.

Founded in 1998, McGuireWoods Consulting LLC (MWC) is a full-service public affairs firm offering state and federal government relations, national/multistate strategies, infrastructure and economic development, strategic communications and grassroots issue management services. McGuireWoods Consulting is a subsidiary of the McGuireWoods LLP law firm and in 2010 was ranked in the Top 20 of The National Law Journal‘s “The Influence 50,” an annual report of the top public affairs firms in Washington, D.C.

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