Washington Healthcare Update

January 12, 2015

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This Week: Veteran Exclusion for ACA Mandate, 40-Hour Work Week BillsPass House…FDA Advisory Panel Recommends Approval of First Biosimilar in U.S….TennesseeGovernor Reveals More Details for Medicaid Expansion Plan

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


Veteran Exclusion for ACA Mandate, 40-Hour Work Week Bills Pass House

As its first order of business in the 114th Congress, the House passed two bills aimed at paring back specific aspects of the ACA. The Hire More Heroes Act, which stipulates that employees with health coverage underTRICARE or the Veterans Administration would not be taken into account when determining whether an employer must offer health coverage to its employees,passed unanimously. A second bill, which would change the ACA’s definition of afull-time work week from 30 hours to 40 hours,passed by a vote of 252-172 with the support of 12 Democrats and a unified Republican caucus. The passage of these two bills marks the beginning of whatRepublicans have vowed will be a targeted stripping of the most controversial policies enacted as part of the ACA. President Obama has threatened to vetothe work week bill if it reaches his desk.

Legislation to Repeal Medical Device Tax Introduced

On Jan. 6, Rep. Paulsen (R-MN) introduced legislation, the Protect Medical Innovation Act, which would repeal the controversial 2.3percent Medical Device Excise Tax established under the ACA. In addition, the bill would allow device companies to seek refunds for taxes already paidunder the law. While the legislation has already received significant support in the form of 254 bipartisan cosponsors, and nearly identical bills havepreviously passed the House, agreement has yet to be reached on how to replace the roughly $30 billion the tax is expected to generate. While SenateFinance Committee Chairman Hatch (R-UT) indicated last week that his committee could advance the legislation without an offset, President Obamahas threatened to veto the bill, and absent an offset, that threat becomesmore of a certainty. Rep. Kind (D-WI) coauthored the bill, one of nearly twodozen original Democratic cosponsors.


Ranking Member Mikulski Announces Democratic Appropriations Subcommittee Leadership Positions

In a release Jan. 9, Ranking Member Barbara Mikulski (MD), the most senior Democrat on the Senate Appropriations Committee, announced the subcommitteeranking member positions for the 114th Congress. Sen. Patty Murray (WA) was awarded the ranking Democrat for the Labor-HHS Appropriations Subcommittee, andSen. Jeff Merkley (OR) was given the top Democratic position for the FDA and Agriculture Subcommittee. Sen. Thad Cochran (R-MS), who officially took overas chairman of the Senate Appropriations Committee on Jan. 8, is currently working on designating subcommittee chairmen from among the Republican membersof the committee. A full list of the subcommittee ranking member positions for all Appropriations subcommittees can be foundhere.

GOP Senator Introduces Legislation to Exempt Long-Term Underemployed from Employer Mandate

On Jan. 7, Sen. John Thune (R-SD) introduced a bill that he thinks will provide an incentive for employers to hire long-term unemployed Americans (thosewho haven’t been employed for 27 or more weeks). S. 38, the Helping Individuals Regain Employment Act (HIRE Act) would permanently exempt employees whohave been long-term unemployed from being counted toward the employer mandate, as defined within the Affordable Care Act (ACA). “The HIRE Act is a win-winfor employers and long-term unemployed Americans who continue to feel the pain from Obamacare and six years of President Obama’s failed economic policies,”said Sen. Thune in apress release.“Congress should be doing all it can to enact policies that help unemployed Americans find good-paying jobs, and Obamacare shouldn’t stand in the way.” TheACA requires any business with 100 or more full-time employees to provide government-approved insurance or pay a penalty in 2015; beginning in 2016, anybusiness with 50 or more full-time employees must comply with the mandate. Currently, there are 9.1 million unemployed Americans of which about 2.8 millionhave been out of work for 27 weeks or more. The bill would exempt those hires from the mandate on a permanent basis.

2. Administration

Director of Medicaid and CHIP Exiting Administration

Centers for Medicare & Medicaid Services (CMS) Administrator Marilyn Tavenner announced via email Dec. 19 that Cindy Mann, Deputy Administrator andDirector of the Center for Medicaid and Children’s Health Insurance Program Services (CMCS), will be leaving the Obama Administration. Deputy AdministratorMann has held the position since 2009 and is credited with putting policies in place that were used as the mandated criterion for Medicaid expansion, withenrollment in both Medicaid and CHIP growing by 9.7 million since September 2013. “[Mann] has been an open and trustworthy partner to state leaders on thefront lines of administering these programs,” Administrator Tavenner said in the email. “She has also been a passionate advocate for beneficiaries, astalwart steward of taxpayer funds, and an inspiring and tireless leader for staff in CMCS and throughout the agency.” Vikki Wachino, deputy director ofCMCS will become the acting director while the CMS looks for a replacement. A specific exit date for Mann has not been released.

FDA Advisory Panel Recommends Approval of First Biosimilar in U.S.

On Jan. 7, the U.S. Food and Drug Administration (FDA) Oncologic Drugs Advisory Committee (ODAC)recommended approval of the investigational biosimilarfilgrastim for use in the United States. Specifically, ODAC concluded that a comparison of the analytical properties of the clinical product lots of thebiosimilar application and U.S.-licensed Neupogen showed the two products were highly similar, notwithstanding minor differences in clinically inactivecomponents. In addition, ODAC found that the totality of evidence shows that the investigational biosimilar product has no clinically meaningfuldifferences from U.S.-licensed Neupogen, suggesting that the biosimilar should receive licensure for each of the five indications for which Neupogen iscurrently licensed. “We are pleased with the ODAC’s recommendation to approve our biosimilar filgrastim and we look forward to continuing to work with FDAas it completes its review of our filing,” said Mark McCamish, M.D., Ph.D., Head of Global Biopharmaceutical & Oncology Injectables Development atSandoz.

OMB Receives Proposed Rule on Stage 3 Meaningful Use

On Dec. 31, the Office of Management and Budget received aproposed Centers for Medicare and Medicaid Services (CMS) rule to establish policies related toStage 3 of meaningful use for the Medicare and Medicaid EHR Incentive Programs. This rule implements the provisions of the American Recovery andReinvestment Act (ARRA) that provide incentive payments to eligible professionals (EPs), eligible hospitals and critical access hospitals (CAHs)participating in Medicare and Medicaid programs that adopt and meaningfully use certified EHR technology. The rule specifies applicable criteria fordemonstrating Stage 3 of meaningful use, which stakeholders have criticized as being too rigid and punitive. However, in its description of the proposedrule, CMS seems to indicate additional flexibility and a clearer framework will be provided to stakeholders to ensure future sustainability of the EHRprogram and to reduce confusion stemming from multiple stage requirements.

3. State Activities

Tennessee Governor Reveals More Details for Medicaid Expansion Plan

On Jan. 9, GOP Governor Bill Haslam requested a special session of the state legislature to be held Feb. 2 in order to incite discussions on hisalternative Medicaid expansion plan. “Insure Tennessee,” a two-year pilot program. would provide health care to more than 200,000 Tennesseans who lackdirect access to coverage. Specifically, the program contains two components and would be offered to eligible adults aged 21 to 64, who earn less than 138percent of the federal poverty line. “There are few challenges facing us today as great as those presented by our broken health care system. The InsureTennessee plan is a conservative approach that introduces market principles to Medicaid, provides health care coverage to more Tennesseans at no additionalcost to taxpayers, and leverages a payment reform initiative that is working to control health care costs and improve the quality of care,” Gov. Haslamsaid in a press release. Specifically, the “Volunteer Plan” would provide a delineated contribution to assistpeople in purchasing employer-sponsored coverage while the “Healthy Incentives Plan” would provide Medicaid coverage, with people above the poverty levelpaying premiums of about $20 per month and copayments. Moreover, Insure Tennessee would also include health savings accounts and wellness incentives. Apublic comment period has been opened for the proposal for the next 30 days.

GOP Governors of UT and NC Meet with POTUS to Discuss Alternative Medicaid Expansion Plans

At a meeting held Jan. 6, President Barack Obama and Govs. Pat McCrory (R-NC) and Gary Herbert (R-UT) discussed possible compromises concerning their alternative Medicaid expansion plans currently awaiting afinal decision by the Department of Health and Human Services (HHS). In a news conference with reporters, Gov. Herbert said President Obama pledged torevisit the issue, while Gov. McCrory said he expected “immediate dialogue” with Health and Human Services (HHS) Secretary Sylvia Mathews Burwell. Startingin 2014, states that have opted to participate in Medicaid expansion are required to increase program eligibility levels for citizens in their state, up to138 percent of the Federal Poverty Level. However, as part of their Medicaid expansion programs, states can ask the Centers for Medicare and Medicaid Services (CMS) relief from certain Medicaidrequirements through Section 1115 demonstration waivers. The NC Medicaid expansion waiver would impose a work or job training requirement as a condition ofexpanded Medicaid eligibility in its state, while Utah’s waiver would use 258 million federal dollars per year to subsidize private insurance for those whoqualify for expanded program eligibility. Currently, five states will be implementing expansion through a demonstration waiver and four other states,including North Carolina and Utah, are in active discussions with federal officials that may lead to a waiver-based Medicaid expansion in 2015. The ObamaAdministration has called Medicaid expansion a crucial step toward reducing the uninsured rate, and 28 states have opted to expand Medicaid.

4. Regulations Open for Comment

Medicare and Medicaid Program; Revisions to Certain Patient’s RightsConditions of Participation and Conditions for Coverage Overview

On Dec. 11, the Centers for Medicare & Medicaid Services (CMS) issued aproposed rule to revise selected conditions of participation (CoPs) forproviders, conditions for coverage (CfCs) for suppliers, and requirementsfor long-term care facilities, by proposing to clarify that where state lawor facility policy provides or allows certain rights or privileges to apatient’s opposite-sex spouse under certain provisions, a patient’s same-sexspouse must be afforded equal treatment if the marriage is valid in thejurisdiction in which it was celebrated. The proposal was made in responseto a Supreme Court decision, United States v. Windsor, which held thatSection 3 of the Defense of Marriage Act (DOMA) is unconstitutional becauseit violates the Fifth Amendment. Section 3 of DOMA provided that indetermining the meaning of any Act of the Congress, or of any ruling,regulation or interpretation of the various administrative bureaus andagencies of the United States, the word “marriage” meant only a legal unionbetween one man and one woman as husband and wife, and the word “spouse”could refer only to a person of the opposite sex who was a husband or awife. To be assured consideration, comments must be received no later than 5p.m. on Feb. 10, 2015.

CMS Releases Proposed Rule Aimed to Strengthen ACOs

In aDec. 1 press release, theCenters for Medicare & Medicaid Services (CMS) announced a newproposed rule looking to improve the Shared SavingsProgram (SSP) for Accountable Care Organizations (ACOs) through a greater emphasis on primary care services and promoting transitions to performance-basedrisk arrangements. Through the Affordable Care Act (ACA), ACOs encourage doctors, hospitals and other health care providers to work together to bettercoordinate care when people are sick and keep people healthy, which helps to reduce growth in health care costs and improve outcomes. CMS AdministratorMarilyn Tavenner said, “This proposed rule is part of our continued commitment to rewarding value and care coordination– rather than volume and careduplication. We look forward to partnering with providers and stakeholders to continuously refine and improve the Medicare Shared Savings program.” Othergoals of the rule include providing more flexibility for ACOs seeking to renew their participation in the program, encouraging ACOs to take on greaterperformance-based risk and reward, creating alternative methodologies for benchmarks, and streamlining data sharing and reducing administrative burden. TheSSSP now includes more than 330 ACOs in 47 states, providing care to more than 4.9 million beneficiaries in Medicare fee for service. Recently, CMSannounced first-year SSP results, finding that 58 SSP ACOs held spending below their benchmarks by a total of $705 million and earned shared savingspayments of more than $315 million, and that another 60 ACOs had expenditures below their benchmark, but not by a sufficient amount to earn shared savings.Comments on the proposed rule are due by Feb. 6. A fact sheet accompanying the proposed rule can be found here.

5. Reports

HHS: Exchange Enrollment Reaches Nearly6.6 Million

In anannouncement Jan. 7, the Department of Health and Human Services (HHS)announced that 6,593,388 people had chosen health plans or re-enrolled duringthe seventh week of the healthcare.gov sign-up window, which ended Jan. 2. About103,000 people enrolled in the seventh week alone, creeping up from 96,000 theweek before. “As we turn to the New Year, our focus is on helping everyindividual who is interested in quality, affordable health insurance tounderstand their options and to get covered,” HHS Secretary Sylvia MathewsBurwell said in a statement. The Administration has set a goal to enroll roughly9 million people on the federal exchange by Feb. 15.

If you have any questions, contact the following individuals atMcGuireWoods Consulting:

StephanieKennan, Senior Vice President
Charlyn Iovino, VicePresident
BrianLooser, Assistant Vice President
Amanda Anderson,Research Assistant

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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