Washington Healthcare Update

February 9, 2015

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This Week: President’s FY2016 Budget Request… FDA Commissioner Hamburgto step down… Tennessee Medicaid expansion plan rejected by legislature

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


House Ways and Means Committee Hosts Hearing with Treasury Secretary to Discuss POTUS FY 2016 Budget

On Feb. 3, House Committee on Ways and Means Chairman Paul Ryan (R-WI) held a hearing on President Obama’s budget proposals for fiscal year 2016. Theproposed budget for the fiscal year starting Oct. 1 includes $2.1 trillion in new revenue over the next 10 years, some of that from a 19 percent minimumtax on U.S. companies’ foreign earnings. During his testimony, Treasury Secretary Jacob Lew emphasized the need for an overhaul of business taxes.Secretary Lew also said eliminating federal health insurance subsidies would be a serious disruption to health care markets. When asked about a backup planif Healthcare.gov subsidies and, in effect, the individual mandate is gutted, Lew did not directly answer the question but said, “We obviously will look atwhat proposals are made (by Congress and the administration) but I’m not going to prejudge what the court does.”

Witness List

The Honorable Jacob J. Lew
Secretary of the Treasury
United States Department of Treasury

For more information or to watch the hearing, please visitwaysandmeans.house.gov.

Energy and Commerce Health Subcommittee Clears Four Public Health Bills

On Feb. 4, the Energy and Commerce Subcommittee on Health, chaired by Rep. Joe Pitts (R-PA), approved four bills aimed to help patients and localcommunities. These bills attempt to improve transparency, reduce regulatory burdens, provide clarity and reduce costs for patients and families.Specifically, the four bills were:

H.R. 639, Improving Regulatory Transparency for New Medical Therapies Act

The Improving Regulatory Transparency for New Medical Therapies Act (to be introduced by Chairman Pitts and Ranking Members Rep. Pallone and Rep. Green)would amend the Controlled Substances Act (CSA) to require the Drug Enforcement Agency (DEA) to act on a recommendation from the Food and DrugAdministration (FDA) to add a drug or substance that has never been marketed in the United States to a schedule of controlled substances within a specifiedperiod. Currently, new drug and substances that previously have not been marketed in the United States and that have abuse potential must be scheduledunder the CSA by the DEA prior to being marketed.

The CSA currently provides no deadline for the DEA to act after receiving a recommendation. The amount of time the DEA has taken before acting on FDArecommendations has increased significantly in recent years, delaying the availability of these drugs and substances to patients. The legislation is basedon H.R. 4299, which passed the Committee during the 113th Congress.

H.R. 471, Ensuring Patient Access and Effective Drug Enforcement Act

H.R. 471 (introduced by Rep. Marino, Rep. Blackburn, Rep. Welch and Rep. Chu) would amend the CSA to help prevent prescription drug abuse, establish clearand consistent enforcement standards and ensure that patients have access to medications by promoting collaboration among governmentagencies, patients and industry stakeholders. The bill is based on H.R. 4709, which passed the House in the 113th Congress.

H.R. ___, Trauma Systems and Regionalization of Emergency Care Reauthorization Act

The Trauma Systems and Regionalization of Emergency Care Reauthorization Act (to be introduced by Rep. Burgess and Rep. Green) would amend the PublicHealth Service Act to reauthorize Trauma Care Systems Planning Grants, which support State and rural development of trauma systems. It also wouldreauthorize pilot projects to implement and assess regionalized emergency care models. The legislation is based on H.R. 4080, which passed the House duringthe 113th Congress.

H.R. ___, Access to Life-Saving Trauma Care for All Americans Act

The Access to Life-Saving Trauma Care for All Americans Act (to be introduced by Reps. Burgess and Green) would amend the Public Health Service Act toreauthorize Trauma Center Care Grants. These grants aid hospitals in handling their substantial uncompensated care costs from traumatic injuries.

For more information, please visitenergycommerce.house.gov.


Senate Finance Committee Hosts Treasury/HHS Secretaries for Hearing on POTUS FY 2016 Budget

On Feb. 4 and 5, the Senate Finance Committee heard testimony from HHS Secretary Burwell and Treasury Secretary Jacob Lew, respectively, on the goals ofPresident Obama’s Fiscal Year 2016 Budget. The hearings gave members the opportunity to ask the Administration about possible contingency plans in place inthe event the Supreme Court invalidates the current structure of the Affordable Care Act tax subsidies later this year. As expected, debt-conscious SenateRepublicans did not receive the President’s budget very well. Chairman Orrin Hatch (R-UT) said in his opening statement, “Simply put, there are too manyshortcomings in the President’s budget to adequately address in my opening statement, but they include: higher taxes that would stifle job creation,economic growth, savings, and investment; new wealth taxes; muddled thinking about distributional issues; a lack of significant reforms to ourunsustainable entitlements; ongoing deficits and outsized, risky federal debt; and a repackaged bank tax that nods to the ineffectiveness of the Dodd-Franklaw.”

Witness List

(Feb. 4) The Honorable Sylvia Mathews Burwell
Secretary of Health and Human Services
United States Department of Health and Human Services

(Feb. 5) The Honorable Jacob J. Lew
Secretary of the Treasury
United States Department of the Treasury

For more information or to watch on the hearing, please visitfinance.senate.gov.

Bipartisan Legislation Introduced in Senate to Make Low-Volume and Medicare-Dependent Hospital Extenders Permanent

On Feb. 2 Senators Charles Grassley (R-IA) and Chuck Schumer (D-NY) introduced bipartisan legislation that aims to make permanent the low volume andMedicare-dependent hospital extenders that are habitually carried by legislative patches to the Sustainable Growth Rate (SGR) formula that sets physicianreimbursement rates. The Rural Hospital Access Act (S. 332) would continue the two programs that have been close to the chopping block in previous years asCongress looked to cut costs. “Strong rural hospitals are essential to quality care, and they are the lifeblood of rural communities,” said Sen. Schumer inapress release. “These hospitals serve a vital public need, employ several thousands of people, and they deserve our support in their continuous efforts to provide thehighest level of care to residents…. Rural hospitals need certainty that this critical funding stream will be available year after year, and this bill willdo just that.” The Medicare Dependent Hospital designation helps rural hospitals that otherwise would struggle to maintain financial stability underMedicare’s fee schedule because of their small size and the large share of Medicare beneficiaries who make up their patient base. There are currently morethan 200 Medicare Dependent Hospitals in 32 states, six of which are in Iowa and eight in New York. Congress enacted payment modifications to help keepthese hospitals open as a critical health care source for rural Medicare beneficiaries. The Low-Volume Hospital designation similarly offers hospitals thattreat a low number of beneficiaries a payment formula that recognizes the fixed costs of treating these patients relative to the prospective payment systemthat favors high beneficiary volume. This funding is critical to the survival of these programs because they are frequently under financial stress due totheir low volume in comparison to their urban counterparts. Without an extension, these two programs will expire April 1, 2015. Medicare DependentHospitals and Low-Volume Hospitals are the safety-net providers for rural Americans and are extremely important to the economy of rural areas.

2. Administration

President’s FY 2016 Budget Request: Key Health Provisions

The President’s fiscal year (FY) 2016 Budget for HHS includes investments needed to support the health and well-being of the nation, and legislativeproposals that taken together would save on net an estimated $249.9 billion over 10 years. An additional $38.4 billion in savings over 10 years toMarketplace subsidies will be realized in the Department of Treasury programs and accounts. The Budget proposes $83.8 billion in discretionary budgetauthority, an increase of $4.8 billion from FY 2015. Notable provisions include:

Ambulatory Care: The budget proposes to lower payments for services provided in off-campus hospital outpatient departments under the Outpatient PPS to either the MedicarePhysician fee schedule-based rate or the rate for surgical procedures covered under the Ambulatory Surgical Center Payment system.

Bundled Payment for Post-Acute Care: Beginning in 2020, this proposal would bundle payments for post-acute care providers, including long-term care hospitals, inpatient rehabilitationfacilities, skilled nursing facilities and home health. Payments would be bundled for at least half of the total payments for post-acute providers. Ratesbased on patient characteristics and other factors would be set so as to produce a permanent and total cumulative adjustment of -2.85 percent.


  • Allow the Secretary to base beneficiary assignment in the Medicare Shared Savings Program on a broader set of primary care providers. Beneficiaries would be able to be assigned to an ACO on the basis of services delivered by nurse practitioners, physician assistants and clinical nurse specialists.
  • Allow ACOs to pay beneficiaries for primary care visits up to the applicable Medicare cost-sharing amount.

Hospital Quality:

  • Revise the Hospital Readmissions Reduction Program to allow the Secretary to use a comprehensive Hospital-Wide Readmission Measure that encompasses broad categories of conditions rather than discrete applicable conditions. (budget-neutral implementation)
  • Extend Accountability for Hospital-Acquired Conditions to require hospitals to code conditions as “present on arrival” at a hospital instead of “present on admission” (no budget impact).

Medicare Appeals Process:

  • Expand the Secretary’s authority to retain a portion of recovery audit contractor (RAC) recoveries for the purpose of administering the recovering audit program.
  • Institute a refundable per-claim filing fee for providers, suppliers and State Medicaid agencies so HHS can invest in the appeals system to improve responsiveness and efficiency.
  • Allow Office of Medicare Hearings and Appeals to use attorney adjudicators for appealed claims below the federal district court amount in controversy ($1,460 in CY 2015), reserving Administrative Law Judges for more complex and higher amounts in controversy appeals.

For more information, please visitwww.hhs.gov.

CMS Finalizes Medicare Lung Cancer Coverage Screening Determination

On Feb. 5 the Centers for Medicare and Medicaid Services (CMS) released adecision memo that provides Medicare coverage forannual lung cancer screening for certain high-risk beneficiaries, including people who’ve smoked, on average, a pack a day for 30 years and people ages 55to 77 who have quit smoking within the last 15 years. Coverage will include preventative screenings utilizing low-dose computed tomography technology.Senate Majority Leader Mitch McConnell praised the decision, “Today’s announcement is welcome news and I applaud CMS for its decision to allow Medicare tocover lung cancer screenings for patients at high-risk for developing the disease. In one way or another, cancer has touched the lives of almost everyAmerican, and ensuring seniors have access to innovative diagnostic tools and treatment options should always be a top priority.” Lung cancer is the thirdmost common cancer and the leading cause of cancer deaths in the United States. It is an important issue for the Medicare population due to the age atdiagnosis and at death. In 2013, the National Cancer Institute (NCI) estimated that the number of new cases is over 220,000, with a median age at diagnosisof 70 years.

FDA Commissioner Hamburg to Resign in March

On Feb. 5, Margaret Hamburg, Commissioner of the U.S. Food and Drug Administration (FDA) announced that she will be stepping down at the end of March,after almost six years in the position overseeing public health initiatives (such as tobacco control and food safety), personalized medicine advances and avast array of drug approvals. In a note to staff, Commissioner Hamburg said it was “with very mixed emotions” that she planned to step down next month andthat her tenure as FDA chief “has been the most rewarding of my career.” Dr. Stephen Ostroff, the FDA’s chief scientist, will fill Hamburg’s position untila new commissioner is confirmed. The Department of Health and Human Services secretary, Sylvia Burwell, said in a statement that Commissioner Hamburg“leaves a legacy of incredible, historic accomplishment at FDA.” Also worth noting, Commissioner Hamburg’s resignation comes as the agency prepares forwhat could be a significant transformation, spurred by initiatives in Congress to speed new drug development, and by food safety advocates, backed by thepresident, who in his budget called for the creation of a separate agency combining the food safety functions of the FDA and the U.S. Department ofAgriculture.

Office of National Coordinator Announces Funding for Advance Interoperable Health Information Technology Services

The National Coordinator for Health Information Technology (ONC) has announced a funding opportunity, the “Advance Interoperable Health InformationTechnology Services to Support Health Information Exchange,” intended to leverage the investments and lessons learned from the original State HIE Programand accelerate the widespread adoption and use of health information exchange infrastructure, including transport mechanisms such as direct securemessaging, query-based exchange and consumer medicated exchange. The awards will fund efforts to provide training, education and technical assistance tosupport clinical and non-clinical caregivers with incorporating health information exchange into their existing workflows to improve care coordination,population management and measurement reporting. Grantees will use interstate and intrastate partnerships to enable clinical and non-clinical caregivers tosend, receive, find and use a common clinical data set across unaffiliated organizations, with the goal of improving care coordination and promoting alearning environment.

Application Deadlines and Key Dates

  • Letters of Intent Due: March 2, 2015, 11:59 p.m. EST
  • Application Deadline: April 6, 2015, 11:59 p.m. EST
  • Informational Webinars: Tuesday, Feb. 24, 2015, 3-4 p.m. EST

For more information, please visithealthit.gov.

Open Enrollment Week 11: Jan. 24, 2015 – Jan. 30, 2015

Since Open Enrollment began on Nov. 15, nearly 7.5 million consumers selected a plan or were automatically re-enrolled through the HealthCare.gov platform,which includes the Federally Facilitated Marketplace (FFM), State Partnership Marketplaces and supported State-Based Marketplaces. This week’s snapshotincludes weekly and cumulative data for the FFM, cumulative data for states and for the first time, cumulative data for certain local areas. “There arejust eleven days before the February 15 deadline and the end of this year’s Open Enrollment,” HHS Secretary Sylvia Burwell said. “Time is running out.Consumers should shop atHealthCare.gov for an affordable plan that fits their budget and health needs and jointhe millions of Americans who have signed up to date. Eighty-seven percent of those who have signed up for coverage through HealthCare.govqualify for financial assistance to help lower the cost of their premiums.”For more information, please visitwww.hhs.gov.

3. State Activities

Arkansas Legislature Passes Private Option Extension

On Feb. 5, the Arkansas House of Representatives voted 82-16 to reauthorize funding through June 2016 for the “private option” plan, which was crafted twoyears ago as an alternative to expanding Medicaid in the state under the Affordable Care Act. Arkansas was the first state to gain federal approval fromthe Department of Health and Human Services (HHS) for such an approach, praised by many as a compromise for Republican-leaning states. Thebill, H.B. 1147, extends the private option until June 30, 2016, so aseparate short-term appropriations bill will be needed next year to cover the six-month gap. The reauthorization now heads to Republican Gov. AsaHutchinson, who had called on lawmakers to continue the program while a proposed task force looks at alternatives for covering the more than 213,000 peoplecurrently in the program. The House approved a separate proposal setting up the task force, sending the bill to the Senate for a final vote. Thus far, 28states and the District of Columbia have agreed to expand Medicaid under the health care law since the U.S. Supreme Court ruled in 2012 that the decisionwas up to states and not mandatory.

Tennessee Rejects Private-Option Medicaid Expansion

On Feb. 4, lawmakers in Tennessee voted down Gov. Bill Haslam’s alternative plan to expand Medicaid to an additional 250,000 residents under the ACA.Tennessee was widely seen as the next Republican state that could expand Medicaid under Obamacare, with Haslam negotiating with federal officials formonths on an approach that included conservative policy elements. The lawmakers, members of the state Senate Health and Welfare Committee, voted 7-4against the plan, which included setting up health reimbursement accounts to help individuals cover their out-of-pocket costs while requiring premiums andcopays, and had the support of the Tennessee Hospital Association, the Tennessee Business Roundtable and the Tennessee Medical Association. Currently, 10states with Republican governors have expanded Medicaid.

Hawaii Legislature Considering Bills to Fortify Health Exchange

In response to a decision by the Hawaii Medical Services Association (HMSA), the state’s largest insurer, to abandon participation on Hawaii HealthConnector, leaving Kaiser Permanente as the only participating insurer, Hawaii Rep. Della Au Bellati introduced a bill to require insurers with at least a20 percent share of the market to submit plans to be sold through the Connector. HMSA opposes the bill; however its proponents believe it will enhancecompetition. Another bill, HB 727, would require that all plans sold on the exchange meet the standards of ACA’s gold-level plans, a move some hope willhelp the state if the federal government ultimately runs Hawaii’s exchange. For more information, please visitwww.thestate.com.

4. Regulations Open for Comment

FDA Releases Draft to Streamline Experimental Drug Applications

On Feb. 4, the Food and Drug Administration (FDA) releaseddraft guidance, entitled IndividualPatient Expanded Access Applications: Form 3926, for a new, shorter application for patient access to experimental drugs. The draft comes in response toconcerns that the existing process for “compassionate use” for experimental drug applications was too arduous. In the guidance, FDA says the newly proposedform would take doctors 45 minutes to complete whereas the existing form is estimated to take 100 minutes. Under the old system, FDA required that a “coversheet” be included with any IND submission, known as Form 1571. However, that form was originally intended to be used by companies involved in drugdevelopment, not physicians, who submit the vast majority of expanded access requests. FDA said it was “concerned” that some physicians might notunderstand how to complete that cover sheet “and associated documents because it is not tailored to requests for individual patient expanded access.” PeterLaurie, FDA’s associate commissioner for public health strategy and analysis, said the changes would greatly simplify the compassionate use process. Theold form “called for 26 separate types of information and seven attachments,” he noted. “The new form calls for a small fraction of that. The new draftform, when finalized, will require only eight elements of information and a single attachment.” The changes announced by the agency are expected to affecta significant number of patients each year; in 2014, FDA processed 1,758 single patient investigational new drug applications and emergency investigationalnew drug applications—97 percent of all expanded access requests.

Comments and suggestions for the draft document should be submitted within 60 days of publication to the Federal Register towww.regulations.gov.

FDA Reopens Comment Period for Certain Provisions within Generic Drug User Fee Amendments

On Feb. 6, the Food and Drug Administration (FDA) posted aFederal Register notice reopening the public docket to solicit commentson certain topics related to Generic Drug User Fee Amendments of 2012 (GDUFA) implementation and the GDUFA Commitment Letter that accompanies thelegislation. FDA will reopen the comment period to the public docket associated with the Sept. 17, 2014, GDUFA Public Hearing on Policy Development for anadditional 30 days. Specifically, the agency has requested public input on the five draft guidance documents that were issued to facilitate implementationof GDUFA and on future policy priorities including recommendations for additional guidance topics to facilitate GDUFA implementation. FDA also requestedfeedback on issues that may arise in consideration of 180-day exclusivity provided for by paragraph IV patent certifications. Finally, FDA requestedfeedback on the specific criteria FDA should apply to identify an abbreviated new drug application (ANDA) as a first generic eligible for expedited ANDAreview. FDA will take the information presented at the public hearing and in comments to the docket into account when developing the fiscal year 2015 GDUFApriorities.

Interested persons may submit either electronic comments regarding this document towww.regulations.gov or written comments to the Division of Dockets Management by close of businessMarch 9.

5. Reports

International Classification of Diseases: CMS’s Efforts to Prepare for the New Version of the Disease and Procedure Codes

According a recent report by GAO, has CMS has undertaken a number of efforts to prepare for the Oct. 1, 2015, transition to the 10th revision of theInternational Classification of Diseases (ICD-10) codes, which are used for documenting patient medical diagnoses and inpatient medical procedures. CMS hasdeveloped educational materials, such as checklists and timelines, for entities covered by the Health Insurance Portability and Accountability Act of 1996(HIPAA)—that is, health care providers, clearinghouses and health plans, which GAO refers to as “payers”—and their support vendors. In addition, CMS hasconducted outreach to prepare covered entities for the transition by, for example, holding in-person training for small physician practices in some states.CMS officials have also monitored covered entity and vendor readiness through stakeholder collaboration meetings, focus group testing and review of surveysconducted by the health care industry. CMS also reported modifying its Medicare systems and policies. For example, CMS documentation states that the agencycompleted all ICD-10-related changes to its Medicare fee-for-service (FFS)claims processing systems, which reflect the results of internal testing. Atthis time, it is not known what, if any, changes might be necessary basedupon the agency’s ongoing external testing activities. CMS has also providedtechnical assistance to Medicaid agencies and monitored their readiness forthe transition. For example, all Medicaid agencies reported that they wouldbe able to perform by the transition deadline all the activities that CMShas identified as critical; however, as of November 2014, not all agencieshave started to test their systems’ abilities to accept and adjudicateclaims containing ICD-10 codes.

Mental Health: HHS Leadership Needed to Coordinate Federal Efforts Related to Serious Mental Illness

According a GAO report released Feb. 6, interagency coordination for programs supporting individuals with serious mental illness is lacking. HHS is chargedwith leading the federal government’s public health efforts related to mental health, and the Substance Abuse and Mental Health Services Administration isrequired to promote coordination of programs relating to mental illness throughout the federal government. In the past, HHS led the Federal ExecutiveSteering Committee for Mental Health, with members from across the federal government. However, the steering committee has not met since 2009. HHSofficials told us that the Behavioral Health Coordinating Council (BHCC) performs some functions previously carried out by the steering committee. TheBHCC, however, is limited to HHS and is not an interagency committee. Otherinteragency committees were broad in scope and did not target individualswith serious mental illness. Staff for the majority of the programstargeting serious mental illness reported taking steps to coordinate withstaff in other agencies. While coordination at the program level isimportant, it does not take the place of, or achieve the level of,leadership that GAO has previously found to be key to successfulcoordination and that is essential to identifying whethe