Washington Healthcare Update

March 2, 2015

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This Week: Ways and Means Advances Four Health-Related Measures… SenateCommerce Committee Clears Legislation on E-Cigarette Packaging… CMS Pushes BackDeadline on Meaningful Use for Physicians

1. Congress

House of Representatives

Senate

2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress

House

Health Subcommittee Explores FY 2016 HHS Budget Request

On Feb. 26, the Energy and Commerce Health Subcommittee held a hearing entitled “Examining the FY2016 HHS Budget,” in which members of the subcommitteeheard testimony from HHS Secretary Burwell. The President’s fiscal year (FY) 2016 budget proposal was submitted to Congress on Feb. 2, 2015. With respectto Department of Health and Human Services (HHS), the President’s budget requests an $80 billion increase in outlays relative to FY 2015 (a 0.9 percentincrease in department spending). However, in addition to questions related to the budget, Sec. Burwell was repeatedly questioned by committee Republicansabout the Administration’s activity relative to a pending Supreme Court case, King vs. Burwell, which has called into question the availability ofthe ACA’s health insurance tax subsidies for individuals who purchase coverage through federally facilitated marketplaces.

Witnesses:

The Honorable Sylvia Mathews Burwell
Secretary
Department of Health and Human Services

For more information, or to view the hearing, please visitenergycommerce.house.gov.

Ways and Means Advances Four Health-Related Measures

On Feb. 26, the House Ways and Means Health Subcommittee held a markup to consider four pieces of legislation aimed at improving the Medicare programthrough provisions related to fraud, competitive bidding, electronic health records and patient observation status.

  • H.R. 1021, “Protecting the Integrity of Medicare Act of 2015”: ordered favorably reported to the House of Representatives as amended by voice vote
  • H.R. 284, “Medicare DEMPOS Competitive Bidding Improvement Act of 2015”: ordered favorably reported to the House of Representatives as amended by voice vote
  • H.R. 876, “NOTICE Act”: ordered favorably reported to the House of Representatives as amended by voice vote
  • H.R. 887, “Electronic Health Fairness Act of 2015”: ordered favorably reported to the House of Representatives as amended by voice vote

For more information, please visitwaysandmeans.house.gov.

House Lawmakers Re-introduce Legislation to Exempt FDA User Fees from Sequestration

On Feb. 25, Reps. Leonard Lance (R-NJ) and Anna Eshoo (D-CA) reintroduced the FDA Safety Over Sequestration Act, or FDA SOS Act, H.R.1078, which exemptsFood and Drug Administration (FDA) user fees from sequestration. FDA user fees are 100 percent industry-financed and are used specifically for the approvalof safe and effective drugs and devices. In the event of another sequester like the budget sequestration of 2013, the FDA could lose tens of millions ofdollars, preventing it from meeting its Congressionally mandated responsibilities and leaving patients without lifesaving therapies. “The FDA’s user feesare 100 percent private sector dollars,” said Rep Eshoo in apress statement. “If theintent of sequestration is to limit public spending, withholding private monies is counterintuitive. Whether one agrees or disagrees with sequestration,private dollars should not be held hostage by the policy. It discourages investment in medical innovation and denies patients access to timely andpotentially lifesaving therapies.” The user fees are industry-financed and account for roughly 35 percent of the FDA’s budget. Under sequestration, the FDAis prohibited from collecting approximately more than $1 billion over a five-year period, according to the non-partisan Congressional Budget Office (CBO).Congress has recently increased FDA user fees in addition to strengthening and improving the review process.

House Appropriations Committee Examines FY2016 HHS Budget Request

On Feb. 25, the House Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies held a hearing to explore specificfunding requests found within the President’s FY 2016 budget for the Department of Health and Human Services (HHS). The two-hour hearing gave members theopportunity to ask HHS Secretary Sylvia Burwell questions on a broad range of topics, including abortion funding within plans offered on the exchanges, HHStravel budgets, Ebola response and future preparedness, the expansion in funding for childcare for working-class families and changes in payments/rules forcritical access hospitals. Republican members were largely supportive of some of the new initiatives within the budget, including HHS leaders’ call forexpanded use of medications to combat opioid overdose epidemic and monitoring system and increased NIH funding for disease research.

Witness List

The Honorable Sylvia Burwell
Secretary
Department of Health and Human Services

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

Upcoming: Energy and Commerce Subcommittee Hearing on 340B Drug Program

The Energy and Commerce Subcommittee on Health, chaired by Rep. Joe Pitts(R-PA), has scheduled a hearing for Thursday, March 5, 2015, at 10:00 a.m.in Room 2123 of the Rayburn House Office Building. The hearing is entitled “Examiningthe 340B Drug Pricing Program.” Subcommittee members will hear testimonyfrom witnesses from the Health Resources and Services Administration, theGovernment Accountability Office and the Department of Health and HumanServices Office of the Inspector General about the 340B program, a federaldrug discount program. Subcommittee members will review the functionality ofthe program to ensure it is meeting its goal of improving access toprescription drugs for needy patients at facilities serving thesepopulations.

Upcoming: House Appropriations Subcommittee to Hold Hearing on NIH Budget

The House Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies will hold a hearing on March 3, 2015, at 8:30a.m. in 2358-C Rayburn House Office Building to explore specific funding requests found within the President’s FY 2016 budget for the National Institutesof Health (NIH).

Witness List

Francis S. Collins, M.D., Ph.D.
Director
National Institute of Health

Accompanied by:

Anthony S. Fauci, M.D.
Director
National Institute of Allergy and Infectious Diseases

Thomas R. Insel, M.D.
Director
National Institute of Mental Health

Jon R. Lorsch, Ph.D.
Director
National Institute of General Medical Sciences

Nora D. Volkow, M.D.
Director
National Institute on Drug Abuse

Gary H. Gibbons, M.D.
Director
National Heart, Lung, and Blood Institute

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

Senate

Senate Commerce Committee Clears Legislation on E-Cigarette Packaging

On Feb. 26, the Senate Commerce Committee approved bipartisan legislation,S.142, authored by Sen. Bill Nelson(D-FL) and Kelly Ayotte (R-NH) that would require child-resistant packaging on any liquid nicotine (as used in e-cigarettes) available for purchase. “It’ssimply common sense to make this potentially lethal product as difficult as possible for small children to get into,” Sen. Nelson said in apress release. E-cigarette-related calls to poison control centers spiked in recent years, going from just one call per month in September 2010 to 215 per month inFebruary 2014, according to the Centers for Disease Control and Prevention (CDC); more than half of those calls involved children five years old oryounger. The same bill passed the committee in 2014 but never reached the Senate floor for a vote.

Senate HELP Committee Holds Hearing on Pandemics and Future Threat Preparedness

On Thursday, Feb. 26, the Senate Committee on Health, Labor, and Pensions (HELP) held a hearing entitled “Medical and Public Health Preparedness andResponse: Are We Ready for Future Threats?” to investigate whether the U.S. health care system is adequately prepared for a medical or public healthemergency. The hearing gave members the opportunity to ask Health and Human Services (HHS) and Centers for Disease Control and Prevention (CDC)officials about looming threats including Ebola, measles and other diseases. In his prepared opening statement, Committee Chairman Richard Burr (NC-R)said, “Our healthcare system was not fully stressed in those response efforts. We cannot put off taking the steps we must take today to be betterprepared tomorrow.” Ranking Member Bob Casey (D-PA) made the case for sustained investment to public health preparedness. “We cannot hope to beadequately prepared for a medical or public health emergency if we lurch from crisis to crisis,” he said.

Witness List

Nicole Lurie
Assistant Secretary for Preparedness and Response
U.S. Department of Health and Human Services

Robin Robinson
Director
Biomedical Advanced Research and Development Authority
Deputy Assistant Secretary for Preparedness and Response

Stephen Redd
Director
Office of Public Health Preparedness and Response
Centers for Disease Control and Prevention

Luciana Borio
Assistant Commissioner for Counterterrorism Policy
Director of the Office of Counterterrorism and Emerging Threats
Deputy Chief Scientist (Acting), U.S. Food and Drug Administration

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

Congressional Republicans Name New CBO Director

Last week, Republicans in Congress named Keith Hall, who was chief economist on Bush’s Council of Economic Advisers, to replace Doug Elmendorf as Directorof the Congressional Budget Office (CBO). “Keith Hall will bring an impressive level of economic expertise and experience to the Congressional BudgetOffice,” said House Budget Committee Chairman Tom Price, in a statement. “His vast understanding of economic and labor market policy will be invaluable tothe work of CBO and the important role it will continue to play as Congress seeks to enact policies that support a healthy and growing economy.” CBOdirectors are chosen jointly by the heads of the House and Senate BudgetCommittees, with the Speaker and Senate’s president pro tempore—its longestserving member of the majority party, who is Sen. Orrin Hatch—formallymaking the appointment. No vote is required. Hall’s term will begin April 1,Price said, with Elmendorf continuing to serve until then. For moreinformation, please visitbudget.house.gov.

2. Administration

CMS Pushes Back Deadline on Meaningful Use for Physicians

In a Feb. 25 announcement, the Centers for Medicare & Medicaid Services (CMS) revealed that the agency is giving physicians an extra three weeks (until11:59 p.m. ET on March 20, 2015) to attest meaningful use for the Medicare Electronic Health Record (EHR) Incentive Program 2014 reporting year.Additionally, the EHR reporting option for PQRS has been extended until March 20, 2015. Previously, in August 2014, CMS released a final rule that grantsflexibility to providers who are unable to fully implement 2014 Edition CEHRT for an EHR reporting period in 2014 due to delays in 2014 CEHRT availability.CMS said in a press release, “CMS extended the deadline to allow providers extra time to submit their meaningful use data. CMS continues to urge providersto begin attesting for 2014 as soon as they can.” The original deadline for attestation was Feb. 28. The agency previously allowed for hospitals andphysicians to use either older certified EHR technology, updated technology or a combination in order to meet meaningful use for 2014. In an email tostakeholders, CMS says the Medicare meaningful use extension does not affect deadlines for the Medicaid EHR program. Medicare-eligible professionals mustattest to meaningful use every year to receive an incentive and avoid a payment adjustment. To receive an EHR incentive payment, providers have to showthat they are meaningfully using their EHRs by meeting thresholds for a number of objectives. The EHR Incentive Programs are phased in three stages withincreasing requirements.

HHS: 8.84 Million Enrolled in the Federal Exchange

In aweekly enrollment report released Feb. 25, theDepartment of Health and Human Services (HHS) announced that more than 8.84 million Americans in 37 states signed up for health coverage through thefederal marketplace during the 2015 open enrollment period, including nearly 41,000 who came in under the wire during a deadline extension that expiredFeb. 22. The final count also subtracted around 90,000 customers who bought coverage in 2014 but whose plans were canceled because they failed to provideproper citizenship or immigration paperwork. Slightly over half of the 8.84 million Americans who signed up for health insurance coverage on HealthCare.govwere new customers who were uninsured in 2014 and approximately 4.17 million of the federal website customers renewed plans. Moreover, 1.2 million chose adifferent plan than they had in 2014.The figuresare the first such breakdown from CMS. HHS has not yet specified how many enrollees have paid their first month’s premium to start their coverage. TheAffordable Care Act’s (ACA) second enrollment period ended on Feb. 15; however, consumers who waited in line at the call center or who experiencedtechnical issues were able to sign up for health insurance coverage until Feb. 22 through a special enrollment period.

CMS Announces Results of Value-Based Physician Payment Modifier

On Feb. 27, CMS posted results from the implementation of the first year of theValue-based Payment Modifier (Value Modifier). Established by the ACA,the Value Modifier rewards physicians and groups of physicians who providehigh-quality and cost-effective care, while encouraging improvement forthose who do not report quality measures or who don’t meet the mark. Basedon their 2013 performance on quality and cost measures, nearly 7,000physicians in 14 group practices across the country are receiving anincrease in their Medicare payments in 2015. While groups that exceeded theprogram’s benchmarks in quality and cost efficiency receive an increase inphysician payments under the Medicare Physician Fee Schedule, those who donot perform well or failed to meet quality reporting requirements are seeinga decrease to their Medicare payments in 2015. Most physician groupsnationwide met the quality reporting requirements and their Medicarepayments remain unchanged. Physician groups getting an upward 2015 ValueModifier adjustment had, on average, lower (better) hospital readmissionsrates—14.3 per 100 admissions—than the corresponding benchmark of 16.4 per100 admissions. These groups also had on average lower hospital admissionsrates for acute and chronic ambulatory care sensitive conditions. 

CMS Highlights End-to-End ICD-10 Testing Results

According to a Feb. 25 blog post by CMS Administrator Tavenner, Medicare Fee-For-Service (FFS) health care providers, clearinghouses and billing agenciesparticipated in the first successful ICD-10 end-to-end testing week with all Medicare Administrative Contractors (MACs) and the Durable Medical Equipment(DME) MAC Common Electronic Data Interchange (CEDI) contractor from Jan. 26 through Feb. 3, 2015, with approximately 660 providers and billing companiessubmitting nearly 15,000 test claims. Health care professionals use codes from the International Classification of Diseases—or ICD—torecord their patients’ health conditions and document inpatient hospitalprocedures. While most countries already use the 10th revision of thesecodes (or ICD-10), the United States has yet to adopt this convention. TheU.S. is the last major industrialized nation to make the switch to ICD-10.The structure of ICD-9, which is more than 35 years old, limits the numberof new codes that can be created, and many ICD-9 categories are full. ICD-10provides room for code expansion, so providers can use codes more specificto patient diagnoses. And since ICD-10 codes are more specific than ICD-9,doctors can capture much more information, meaning they can betterunderstand important details about the patient’s health than with ICD-9-CM.

PCORI Awards $64.1 Million to Support Five Pragmatic Clinical Studies

The Patient-Centered Outcomes Research Institute (PCORI) Board of Governorsapproved awards totaling more than $64 million to fund five largepatient-centered comparative effectiveness research (CER) studies that will answer critical clinical questions about care for cancer, back pain and stroke.The awards are the first to be made through PCORI’s Pragmatic Clinical Studies Initiative, an effort to produce results that are broadly applicable to agreater variety of patients and care situations and can be more quickly taken up in routine clinical practice. Ranging from $7.75 million to $14.5 millioneach, the five awards will fund studies involving thousands to tens of thousands of patients in efforts to fill critical evidence gaps.

3. State Activities

Utah Medicaid Expansion Plan Hits Impasse Following Senate Approval

Republican Gov. Gary Herbert’s plan for expanding Medicaid—Healthy Utah—survived its first hearing in the state Senate only to be declared dead on arrivalin the state’s House of Representatives. On Feb. 25 senators voted 17-11 in favor of the plan. The plan would move to the state House, however Speaker GregHughes, R-Draper, saysSB-164 doesn’t have the support to pass. Rep. Hughes said there’s nopoint in bringing Healthy Utah to a vote just to kill it. “We’re done with the proposal of Healthy Utah,” he said, keeping the door open for “a wayforward” if someone can come up with an idea that finds support in the House. Republican House members control the chamber by a 63-12 margin. Gov.Herbert’s Medicaid plan would set up a two-year pilot program to expand Medicaid, a concept initially designed as a concession to convince hesitant statelawmakers to support the program.

Illinois Governor’s Proposed FY 2016 Budget Would Cut Medicaid Spending by $1.5 Billion

In his proposedFY2016 Budget,Illinois Gov. Bruce Rauner (R) proposed to cut Medicaid spending by approximately $1.5 billion, part of his larger plan to reduce state spending by $6.6billion, mostly by moving workers to less-generous pension plans, lowering Medicaid payments for hospitals and doctors, and reducing state funding forlocal governments and universities. His budget plan would move certain Illinois residents off of Medicaid and onto the exchange to get coverage (estimatedto save roughly $41 million) and reinstate an “aggressive review” of beneficiaries enrolled in the program to make sure that ineligible people are notreceiving benefits. The governor’s plan also proposes cuts to hospital reimbursements, while aiming to have 60 percent of the Medicaid population enrolledin managed care by the end of the year. Worth noting, it’s likely that several cost-saving measures Gov. Rauner put into his budget proposal will facesignificant challenges getting passed by a Democratic-controlled legislature.

4. Regulations Open for Comment

FDA Reopens Comment Period for Generic Drug Labeling Rule

In anannouncement Feb. 17, the Food andDrug Administration (FDA) revealed that it has formally re-opened the comment period for a controversial generic drug labeling proposed rule and will holda public meeting next month to address concerns with the rule and possible alternatives. The rule, which FDA proposed in 2013, would allow generic drugmakers to unilaterally update safety information and would require generic drugmakers to modify their labels independently of their brand-namecounterparts, something that only brand-name drugmakers can currently do before receiving agency permission. The FDA proposed the rule in response to a2011 U.S. Supreme Court decision that federal law does not permit generic drugmakers to make such changes independently and, therefore, they should not beheld accountable for a failure to warn against a risk. Stakeholders will have until April 27 to comment on the proposed rule; the agency’s public hearingto receive more input from stakeholders will be held on March 27 from 8 a.m. to 5 p.m. at FDA’s White Oak campus.

FDA Releases Five Draft Guidance Documents on Drug Compounding

On Feb. 13, U.S. Food and Drug Administration (FDA) issued fivedraft guidance documents related to drug compounding and repackagingthat will help entities comply with important public health provisions; guidance will be applicable to pharmacies, federal facilities, outsourcingfacilities and physicians and comes as an outcrop of the Drug Quality and Security Act (DQSA), enacted by Congress in November 2013, in response to adeadly fungal meningitis outbreak that was linked to contaminated sterile compounded drug products. Specifically, the documents include potential directionon outsourcing facility registration, outsourcing facility adverse event reporting, drug repackaging, mixing, diluting and repackaging biological products,and a draft Memorandum of Understanding (MOU) with the states. The draft guidance documents are available for public comment until May 14, while draftcomment for the draft MOU is open until June 13.

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 by April 13, 2015.

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 ne