Washington Healthcare Update

March 16, 2015

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This Week: Senate HELP Committee Hosts Hearing on MedicalInnovation… HHS Announces Next Generation Accountable Care Organization (ACO)Model… CBO Releases New Long-range Cost Estimates for ACA

1. Congress

House of Representatives

  • District Work Period – No Legislative Activity


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


District Work Period – No Legislative Activity


Senate HELP Committee Hosts Hearing on Medical Innovation

On March 10, the Senate Committee on Health, Employment, Labor, and Pensions (HELP) held a hearing on advancing medical innovation, with top officialstestifying from the National Institutes of Health (NIH) and the Food and Drug Administration (FDA). Members were given the opportunity to ask questionson national efforts toward lifesaving research, the importance of funding government agencies on the forefront of future medical discoveries and policysolutions that allow for a better streamlined path from the discovery of leading drugs, devices and treatments to their finished, available product. Inhis opening statement Chairman Lamar Alexander noted, “This work will affect every single American — from a very ill patient who has run out oftreatment options and is counting on the most cutting-edge drug, to an active child with asthma who’s hoping to run faster and farther with the aid ofa new drug.”

Witness List

Francis Collins, M.D., Ph.D.
Director, National Institutes of Health

Margaret Hamburg, M.D.
Commissioner, Food and Drug Administration

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

Upcoming: Senate HELP Committee to Hold Hearing on Health IT and Electronic Health Records

On Tuesday, March 17, Senate Committee on Health, Employment, Labor, and Pensions (HELP) Chairman Lamar Alexander (R-TN) will hold a hearing onnational improvements to health information technology infrastructure and the implications of electronic health records on coordinating care forpatients. The hearing, entitled “America’s Health IT Transformation: Translating the Promise of Electronic Health Records into Better Care,” will beheld at 10:00 a.m. in 430 Dirksen Senate Office Building.

Witness List

Julia Adler-Milstein, Ph.D.,
Assistant Professor of Information, School of Information
Assistant Professor of Health Management and Policy, School of Public Health
University of Michigan

Robert L. Wergin, M.D
President, American Academy of Family Physicians (AAFP)

Peter DeVault
Director of Interoperability, Epic Systems Corporation

Angela Kennedy, Ed.D., M.B.A., R.H.I.A
Head of Department/Professor, Department of Health Informatics and Information Management
College of Applied and Natural Sciences, Louisiana Tech University

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

2. Administration

HHS Announces Next Generation Accountable Care Organization (ACO)Model

On March 10, the Department of Health and Human Services (HHS) announced a new initiative from the Centers for Medicare & Medicaid Services’Innovation Center (CMS Innovation Center): The Next Generation Accountable Care Organization (ACO) Model of payment and care delivery. “The NextGeneration ACO Model is one of many innovative payment and care delivery models created under the Affordable Care Act, and is an important step towardsadvancing models of care that reward value over volume in care delivery,” said HHS Secretary Sylvia M. Burwell. “This model is part of our largereffort to set clear, measurable goals and a timeline to move the Medicare program — and the health care system at large — toward paying providers basedon the quality, rather than the quantity, of care they give patients.” The big difference between the existing two models and the new ACOs is that thelatter will take on much more risk. CMS will accept ACOs into the Next Generation ACO Model through two rounds of applications in 2015 and 2016, withparticipation expected to last up to five years. Organizations interested in applying in 2015 must submit a Letter of Intent by May 1, 2015, and anapplication by June 1, 2015.The agency expects between 15 and 20 ACOs to participate, with each containing a minimum of 10,000 beneficiaries.

FDA Amends Final Rule on Electronic Medical Device Reporting to Include Unique Device Identifiers

According to anotice printed in the Federal Register, the Food andDrug Administration (FDA) has made amendments to a final rule released February 2014 that required device manufacturers to submit device reportselectronically, fixing an error that inadvertently excluded unique device identifiers (UDIs) from reporting requirements. Specifically, the originallyprinted rule accidentally excluded UDIs completely by taking the field out of the original form. The UDI rule, finalized in September 2013, requiredUDIs to be in medical device event reporting (MDR). FDA announced in the notice that it would not be accepting public comments or input because “FDAhas determined that good cause exists to dispense with prior notice and public because the provisions addressed in this document have already undergonenotice and public comment. The electronic medical device reporting rule will become effective on Aug. 14, 2015.

Administrator of HRSA Wakefield Named as New Deputy Secretary for HHS

In a March 12 letter to staff from Department of Health and Human Services (HHS) Secretary Sylvia Burwell, the agency announced that Health Resourcesand Services Administration (HRSA) Administrator Mary Wakefield will permanently replace Bill Corr, acting Deputy Secretary of HHS. “Mary will bringher strong managerial and leadership skills, as well as her commitment to the mission of the Department to her new role. I am looking forward to theaddition of her insight and her energy to our senior leadership team, and know that she will continue to be a great colleague to all of us as she makesthis transition,” said Secretary Burwell. During her six years at HRSA, Administrator Wakefield oversaw the growth of its community health centers. Thecenters now serve 22 million patients a year, about 5 million more than when she took the helm. She has also helped grow programs like the NationalHealth Service Corps, which has more than doubled its number of clinicians to 9,200. A trained nurse, Wakefield also previously worked on Capitol Hillas chief of staff to Sen. Kent Conrad (D-ND).

HHS: Exchange Enrollment Reaches Almost 11.7 Million

Nationwide, nearly 11.7 million consumers selected or were automatically re-enrolled in health insurance coverage through the Health InsuranceMarketplace as of Feb. 22, according to a report released March 10 by theDepartment of Health and Human Services (HHS). Of those, 8.84 million (76 percent) were in states using the HealthCare.gov platform and 2.85 million(24 percent) were in the 13 states and the District of Columbia using their own Marketplace platforms. More than half (53 percent or more than 4.6million) of plan selections in HealthCare.gov states are new consumers who did not have Marketplace coverage as of November 2014, and 47 percent(nearly 4.2 million) are consumers who re-enrolled in Marketplace coverage. “The figures released today tell a story of health coverage consumers relyon for financial and health security — and of coverage they don’t want to lose,” said HHS Secretary Sylvia Burwell. “Millions of Marketplace consumersin HealthCare.gov states qualified for tax credits to make their coverage affordable and accessible.” Open Enrollment in the Marketplace ended on Feb.15.

3. State Activities

CA Governor Brown Appoints Two New Exchange Board Members

In a press announcement March 5, California Gov. Jerry Brown (D) appointed two new members to thestate’s health benefit exchange, Covered California. Senior adviser Marty Morgenstern and Latino health activist Genoveva Islas will replace two offormer Gov. Arnold Schwarzenegger (R) appointees, Kim Belshe and Susan Kennedy, whose terms expired Dec. 31. Ms. Islas was previously employed asprogram director at the Public Health Institute’s Cultiva La Salud; Mr. Morgenstern served as a senior adviser in the Office of the Governor since 2013and as secretary of the California Labor and Workforce Development Agency from 2011 to 2013. The appointments require confirmation by the state Senate.There’s still one vacancy on the board following the December departure of Bob Ross. The five-member board is composed of two members selected by theGovernor, two selected by the Legislature, and the Secretary of the California Department of Health and Human Services. Covered California is thehealth insurance marketplace in California, the state’s implementation of the American Health Benefit Exchange provisions of the Patient Protection andAffordable Care Act (ACA). For 2015, Covered California ended the second open enrollment with 1.4 million consumers, including 495,073 people who newlysigned up for 2015 coverage.

Arkansas Moves to Block State Exchange Pending SCOTUS Ruling

The Arkansas House voted 74-11 toapprove a bill that would halt the state’s current activities related to establishment of a state-run health insuranceexchange, pending a ruling expected this June by the Supreme Court on King v. Burwell,which could prevent individuals in states operating a federally facilitatedmarketplace from accessing tax subsidies to assist with the cost of healthinsurance. The bill states that if the Supreme Court decides that subsidiesare not allowed in the 34 states without state-run exchanges — whichincludes Arkansas — “implementation of an appropriate health insuranceexchange … shall be determined by a future act of the General Assembly.”Gov. Hutchinson publicly stated his support for the bill.

4. Regulations Open for Comment

Use of an Electronic Informed Consent in Clinical Investigations: Questions and Answers; Draft Guidance for Industry, Clinical Investigators andInstitutional Review Boards

The Food and Drug Administration (FDA or the Agency) is announcing the availability ofdraft guidance for industry, clinical investigators andinstitutional review boards, entitled “Use of Electronic Informed Consent in Clinical Investigations: Questions and Answers.” The guidance providesrecommendations for clinical investigators, sponsors and institutional review boards (IRBs)on the use of electronic media and processes to obtain informed consent forFDA-regulated clinical investigations of medical products, including humandrug and biological products, medical devices and combinations thereof.Although public comments will be accepted any time, to ensure that theAgency considers your comment on this draft guidance before it begins workon the final version of the guidance, submit either electronic or writtencomments on the draft guidance by May 8, 2015.

FDA: Reprocessing Medical Devices in Health Care Settings: Validation Methods and Labeling

On March 12, FDA announced new actions to enhance the safety of reusable medical devices and address the possible spread of infectious agents between uses.The new recommendations are outlined in a final industry guidance aimed at helping device manufacturers develop safer reusable devices, especially thosedevices that pose a greater risk of infection. Medical devices intended for repeated use are commonplace in health care settings. They are typically madeof durable substances that can withstand reprocessing, a multi-step process designed to remove soil and contaminants by cleaning and to inactivatemicroorganisms by disinfection or sterilization. While the majority of reusable devices are successfully reprocessed in health care settings, the complexdesign of some devices makes it harder to remove contaminants. FDA’s guidance document, titled “Reprocessing Medical Devices in Health Care Settings: Validation Methods and Labeling,” includes recommendations medical device manufacturers should follow pre-market and post-market for the safe and effective use of reprocessed devices. Adevice manufacturer’s reprocessing instructions are critical to protect patients against the spread of infections. As part of its regulatory review forreusable medical devices, the FDA reviews the manufacturer’s reprocessing instructions to determine whether they are appropriate and able to be understoodand followed by end users. The guidance lists six criteria that should be addressed in the instructions for use with every reusable device to ensure usersunderstand and correctly follow the reprocessing instructions.

Compounding of Human Drug Products Under the Federal Food, Drug, and Cosmetic Act; Establishment of a Public Docket

On March 9, FDA announced it is establishing a public docket to receive information, recommendations and comments on matters related to the Agency’sregulation of compounding of human drug products under sections 503A and 503B of the Federal Food, Drug, and Cosmetic Act (FD&C Act). Section 503A ofthe FD&C Act describes the conditions that must be satisfied for human drug products compounded by a licensed pharmacist or licensed physician to beexempt from certain sections of the FD&C Act. Previously, the conditions of section 503A of the FD&C Act also included restrictions on theadvertising or promotion of the compounding of any particular drug, class of drug or type of drug and the solicitation of prescriptions for compoundeddrugs. These provisions were challenged in court and held unconstitutional by the U.S. Supreme Court in 2002.

On Nov. 27, 2013, President Obama signed the Drug Quality and Security Act (DQSA), which contains important provisions relating to the oversight of humandrug compounding. This new law removes from section 503A of the FD&C Act the provisions that had been held unconstitutional by the U.S. Supreme Courtin 2002. By removing these provisions, the new law clarifies that section 503A of the FD&C Act applies nationwide. In addition, the DQSA adds a newsection, 503B, to the FD&C Act that creates a new category of “outsourcing facilities.” Outsourcing facilities, as defined in section 503B of theFD&C Act, are facilities that meet certain conditions described in section 503B, including registration with FDA as an outsourcing facility. Thisdocket is intended for general comments related to human drug compounding that are not specific to documents or issues that are the subject of otherdockets. Comments may be submitted to this docket at any time.

FDA Solicits Comments on New Methodologies for Generic Drug Clinical Studies

In anotice released March 5 by the Federal Register, the Food and DrugAdministration (FDA) is seeking feedback from stakeholders on possible new methodologies for generic drug clinical studies and ways to demonstratebioequivalence as part of its regulatory science priorities for 2016 under Generic Drug User Fee Amendments (GDUFA). FDA noted it will take feedback fromstakeholders into account when creating next year’s regulatory science plan for generic drugs. A public hearing has been scheduled for June 5, where FDAplans to hear from stakeholders on six specific areas including scientific or technical advancements that would help that currently limit generics’availability, innovative approaches to preapproval development of generic drugs, advancements in scientific approaches to evaluate therapeutic equivalenceof generic drugs through later stages of their lifecycle. The agency’s efforts come as House and Senate lawmakers are also looking at ways to revampclinical trial design, though up to now they haven’t focused on generic drug-specific issues, and identification of high-impact public health issuesinvolving generic drugs, among others. The notice comes as the House of Representatives 21st Century Cures discussion legislative draft also seeks torevamp clinical trials by allowing trial sponsors to propose incorporating adaptive trial designs for alternative statistical methods into proposedclinical trials and streamlining the institutional review board.

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.

5. Reports

GAO Releases Report on Comparative Effectiveness of the Patient-Centered Outcomes Research Institute (PCORI)

On March 9, the Government Accountability Office (GAO) released a report on the progress of thePatient-Centered Outcomes Research Institute (PCORI), a federally funded, nonprofit corporation created under the Affordable Care Act (ACA) to improve thequality and relevance of comparative clinical effectiveness research — a type of research that evaluates and compares health outcomes and the clinicaleffectiveness, risks and benefits of two or more medical treatments, services or items such as health care interventions. ACA mandated that GAO reviewPCORI’s activities by 2015 and 2018. In its report, GAO examined (1) the extent to which PCORI established priorities and processes for funding anddisseminating comparative clinical effectiveness research; (2) the status of PCORI’s efforts to fund comparative clinical effectiveness research; and (3)PCORI’s plans, if any, to evaluate the effectiveness of its work. In its report, GAO found that since its inception in 2012, PCORI has established fivebroad research priorities and awarded 360 contracts to fund research projects (totaling $670.8 million) through October 2014. Moreover, with regard to itsinternal evaluation mechanisms, GAO found PCORI has been using early and intermediate process and output measures — such as the number of people accessingor referencing PCORI information — as a way to monitor its progress toward its strategic goals, and that PCORI anticipates having some early resultsrelated to its primary outcome measures starting in 2017 after the first CER studies are completed and their findings released; full evaluation of theresults of these outcome measures will not be possible until around 2020. PCORI is funded through the Patient-Centered Outcomes Research Trust Fund, withan estimated $3.5 billion in federal funding from fiscal years 2010 through 2019.

CBO Releases New Long-range Cost Estimates for ACA

On March 9, the Congressional Budget Office (CBO) updated its budget projections, finding that the Affordable Care Act will cost $142 billion, or 11percent less, over the next 10 years, when compared to what the agency had projected in January. New CBO estimates forecast a cost of $1.207 trillionover 10 years (2016–2025). The CBO has been estimating that cost of the law has been falling for several years, and now analysts are beginning toassess the evidence of the law’s impact from its first full year of implementation. Also worth noting, the agency found that private health insuranceper enrollee would grow by an average of 5.6 percent annually, a decrease of 5 percent in 2016, compared with earlier estimates. The number of peoplewho rely on Medicaid is smaller than CBO had originally anticipated, one of the sources of savings, the report noted. A copy of CBO’s latestprojections can be foundhere.

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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