Washington Healthcare Update

April 6, 2015

Pardon Our Dust

We recently launched this new site and are still in the process of updating some of our archived content. Some details of this article may be incomplete, links may be broken, and other elements may not display properly yet. We appreciate your patience and understanding.

This Week: CMS Releases Three Documents on Biosimilar Reimbursement…SCOTUS: Agencies, Not State Courts, in Charge of Medicaid Rate Setting… HHSOIG and Treasury IG Release Report on ACA’s Advanced Premium Tax Credits

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

The House was not in session this week. Congress will return from a two-week recess on April 13. The House of Representatives calendar for 2015 can befound here.


State Work Period – No Legislative Activity

The Senate was not in session this week. Congress will return from a two-week recess on April 13. The Senate calendar for 2015 can be found here.

Bipartisan Letter to Preserve Community Health Center Funding

On March 30, Senators Debbie Stabenow (D-MI) and Roger Wicker (R-MS), along with 58 other senators,sent a letter to Senate Appropriations Subcommittee on Labor, Health and Human Services,Education, and Related Agencies Chairman Roy Blunt (R-MO) and Ranking Member Patty Murray (D-WA), urging them to continue national financial support forcommunity health centers. In the letter, the bipartisan senators requested continued funding from the appropriators, explaining that the potentialmandatory cuts at the end of this fiscal year could result in site closures and prevent millions of people in high-need communities from accessingcost-effective, primary care services. “As Congress works to improve access to care and reduce health-care expenditures, we urge the Subcommittee tosupport Health Centers, allowing them to continue to provide cost-effective primary care,” the letter said. The discretionary account for community healthcenter funding amounts to $1.5 million this year; this fund is separate from the $7 billion in mandatory two-year funding for community health centers thatis included in the SGR bill the Senate is expected to pass later this month. As it stands, community health centers could have their funding cut by nearly70 percent at the end of the fiscal year in September. Health Centers are the health-care home for more than 23 million patients, including nearly sevenmillion children and more than 268,000 veterans. These centers employ more than 156,000 Americans, and generate an economic impact and overall cost savingsof over $24 billion.

2. Administration

DOL, HHS and Treasury Delay Implementation of New Summary of Benefits and Coverage Templates Until 2017

The Department of Health and Human Services (HHS), the Treasury Department and the Department of Labor (DOL) released afrequently asked questions document (FAQ) March 30 noting of their intention to delayimplementation of a revised summary of benefits and coverage (SBC) templates until the beginning of the 2017 plan year; the revised SBC templates wouldinclude details on plans sold in open enrollment periods in the fall of that coverage year. As is currently proposed, the revised template requires grouphealth plans and health insurers to provide summaries of benefits and coverage that “accurately [describe] the benefits and coverage under the applicableplan or coverage” during open enrollment periods. A notice of proposed rule-making issued in December would have required new summary regulations,templates and associated documents to begin being used as of Sept. 1, 2015. Moreover, the FAQ document says the agencies expect plan summary templates tobe finalized by the agencies as early as January 2016. “The Departments are fully committed to updating the template and associated documents (includingthe uniform glossary) to better meet consumers’ needs as quickly as possible,” the FAQ says. Moreover, the FAQ notes that agencies plan to use consumertesting and give members of the public an opportunity to provide additional input before finalizing the template.

CMS Seeks Comments on QHP Requirements for Provider Networks and Prescription Drug Formularies

The Centers for Medicare and Medicaid Service (CMS) released acollections noticeseeking comments on the requirement that qualified health plans (QHPs) publish machine-readable data on provider networks and prescription drugformularies, a function that aids consumers in comparing qualified health plans in the federal marketplace. In a notice published in January, CMS commandedinsurers who sell plans through the federal exchange that beginning in the 2016 plan year, QHPs must publish information regarding their formulary druglists and provider directories on their websites in a format and at times to be announced by the Department of Health and Human Services (HHS). Moreover,the published notice also solicits feedback on guidelines for exchange navigator grant programs, specifically feedback on the progress reports required ofexchange navigator programs. A program developed under the Affordable Care Act (ACA), CMS awards navigator grants to individuals and groups that assistcustomers in selecting plans in the state and federal exchanges.

CMS Releases Bulletin on Retirement of Transitional Medical Assistance (TMA) and Qualifying Individuals (QI) Programs

The Centers for Medicare and Medicaid Services (CMS) released aninformational bulletin April 1 to provide information to stateMedicaid agencies on the impact of the sunset of Transitional Medical Assistance (TMA) and the Qualifying Individuals (QI) programs, which became effectiveon April 1, 2015. The six- to 12-month TMA program is covered under Section 1925 and Section 1902(e)(1)(B) of the Social Security Act and requires statesto provide certain families with continued Medicaid coverage for a designated six- to 12-month period after the family becomes income ineligible.Originally authorized under the Family Support Act of TMA and extended numerous times, the six- to 12-month program expired on April 1. The bulletinclarifies that the sunset does not disrupt coverage for families already receiving support under Section 1925 TMA and does discontinue future eligibilityfor Section 1925 TMA if in the future the sunset is lifted by subsequent legislation. The four-month extension under Section 1902(e)(1)(A) remainsavailable and does not have a sunset date. Like the TMA program, the Qualifying Individuals program (QI) has been extended numerous times. In the absenceof an extension, states will not be required to discontinue their payment of Part B premiums for QI beneficiaries; however these payments will no longer beeligible for federal reimbursement from CMS unless and until the program is reauthorized.

FDA Releases Long-awaited Final Abuse Deterrent Opioid Guidance

The Food and Drug Administration (FDA) released itsfinal guidance April 1 on evaluation andlabeling of abuse-deterrent opioids, ahead of a June 1 deadline set by Congress. While drugs with abuse-deterrent properties are not “abuse-proof,” FDAsees this guidance as an important step toward balancing appropriate access to opioids for patients with pain with the importance of reducing opioid misuseand abuse. The document, entitled “Guidance for Industry: Abuse-Deterrent Opioids — Evaluation and Labeling,” lays out three premarket studies that shouldgenerally be performed to demonstrate the abuse deterrence properties of a new opioid drug and the general characteristics of post-market studies to showwhether a product actually leads to meaningful reductions in abuse and misuse of the medication. The guidance described what is required for labelinglanguage that allows manufacturers to claim the opioid is indeed abuse-deterrent. The final guidance does not address generic versions of abuse-deterrentopioids, but the agency plans to release draft guidance for generic products later this year. Abuse-deterrent opioids are designed to make it harder tomanipulate the drugs — such as being crushed and swallowed, crushed and smoked, crushed and snorted or dissolved and injected — to make abuse of themedications more difficult, or “make abuse of the manipulated product less attractive or rewarding.” FDA is also clear in the guidance that these productsmake the drugs more difficult to abuse only in specific ways, thereby meaningfully deterring abuse, rather than preventing abuse all together.

NIH Team Announced for POTUS’s Precision Medicine Initiative

On March 30, the National Institutes of Health (NIH) announced the formation of a Working Group of the Advisory Committee to the NIH Director (ACD) thatwill deliver a preliminary report in September 2015 to develop the President’s Precision Medicine Initiative. The Precision Medicine Initiative is aresearch consortium that will create a cohort of 1 million people who would share information about their lifestyles and health to help researchersunderstand how to individualize prevention and treatment. The Working Group will help define what can be learned from a study of this scale and scope, whatissues will need to be addressed and considered as part of the study design, and what success would look like five and 10 years out. In addition to a teamof research experts, the Working Group will include ex-officio members from the U.S. Department of Defense, U.S. Department of Veteran Affairs, U.S. Foodand Drug Administration, Health and Human Services Office of the National Coordinator for Health Information Technology, and White House Office of Scienceand Technology Policy. As it stands, the ACD advises the NIH Director on policy matters important to the NIH mission of conducting and supportingbiomedical and behavioral research, research training and translating research results for the public. More information and a list of Working Group memberscan be found atnih.gov.

CMS Releases Three Documents on Biosimilar Reimbursement

Three documents released March 30 outline how the Centers for Medicare and Medicaid Services (CMS) will pay for biosimilars in Part B, Part D andMedicaid. The Food and Drug Administration (FDA) on March 6 approved the first biosimilar. The documents suggest that CMS plans to place biosimilarsand their reference biopharmaceuticals in separate Part B billing codes, and in Part D, plans would have to get CMS approval before replacingbiopharmaceuticals with biosimilar versions. While documents provided some detail on the future of reimbursements, CMS did not address some aspects ofpayment, including that Medicare will pay for biosimilars administered in hospital outpatient departments under Part B. CMS says it has yet todetermine whether it will place multiple biosimilars based on the same reference product in the same billing codes. Further, one of the documents alsoincluded suggestions for how states can save money with biosimilars in their Medicaid programs. The Affordable Care Act (ACA) included a measure toavoid discouraging physicians from using biosimilars without grouping biosimilars and reference biologics in the same billing codes and directsMedicare to pay doctors 6 percent of the higher reference biologic prices for administering biosimilars.

Links to the documents can be found below:

CMS Enrollment Report Shows 36,000 Signed Up for Coverage During Special Enrollment Period

In anApril 1 press release, theDepartment of Health and Human Services (HHS) announced that as of March 29, only 36,000 people have signed up for coverage so far during the specialenrollment period the agency created for people to get health insurance on HealthCare.gov to avoid tax penalties, a consequence of the individual mandatewithin the Affordable Care Act (ACA). To qualify for special enrollment, consumers must self-attest that they paid a penalty for not having coverage in2014, are not enrolled in a plan on HealthCare.gov for 2015 and found out about their penalty only when they filed returns. As many as 6 million Americansare expected to pay a penalty for not having coverage in 2014, according to Obama administration projections. The special enrollment window was launchedMarch 15 and concludes April 30 in the 37 states that rely on the federal exchange, and several states running their own exchanges have also announcedspecial enrollment periods.

NIH National Cancer Institute Names New Acting Director

On April 1 in anofficial announcement, the National Cancer Institute named Doug Lowry,M.D., as the new Acting Director of the National Cancer Institute (NCI). Dr. Lowy has served as NCI’s deputy director since July 2010. Dr. Lowy, a cancerresearcher for more than 40 years, received the National Medal of Technology and Innovation from President Obama in 2014 for his research that led to thedevelopment of the human papillomavirus (HPV) vaccine. Dr. Lowy received his medical degree from New York University School of Medicine, trained ininternal medicine at Stanford University and studied dermatology at Yale University. “We are fortunate to have a scientist of such stature stepping intothe role of Acting Director of the NCI,” said National Institutes of Health (NIH) Director Francis Collins. “Dr. Lowy possesses not only a sharp intellect,deep knowledge of science, and proven leadership experience, but he takes a warm and humane approach to all things. He is superbly positioned to lead theNCI at a time of exceptional progress in cancer research.” NCI is one of the 27 Institutes and Centers that compose NIH. NIC leads the National CancerProgram and the NIH’s efforts to dramatically reduce the prevalence of cancer and improve the lives of cancer patients and their families, through researchinto prevention and cancer biology, the development of new interventions and the training and mentoring of new researchers.

3. State Activities

SCOTUS: Agencies, Not State Courts, in Charge of Medicaid Rate Setting

On March 31, the Supreme Court ruled in a 5-4 vote that providers cannot sue states over Medicaid rates, arguing that the Department of Health and HumanServices (HHS) handles rate setting, and the law on rate setting is too broad for federal courts to take up. The 9th U.S. Circuit Court of Appeals hadpreviously ruled in 2013 that the providers could sue. In the case, Armstrong v. Exceptional Child Center, five Idaho Medicaid providers sued theIdaho Department of Health and Welfare after the state failed to increase payment rates, despite studies by the department showing providers’ costs weregreater than the Medicaid rates. In the late 2000s, state officials recommended increases in reimbursement rates, but they were never implemented becausethe Idaho legislature declined to appropriate funds. The providers sued the state in 2009, accusing it of maintaining reimbursement rates that were too lowand did not keep up with their rising costs for delivering medical care. Specifically, the providers claimed that the state violated Medicaid’sequal-access provision — the §30(A) provision — which requires states to pay providers at rates that “are sufficient to enlist enough providers so thatcare and services are available under the plan at least to the extent that such care and services are available to the general population in the geographicarea.” In a dissenting opinion, Justice Sonia Sotomayor said the ruling would have “real consequences” because previously when a state set rates too low,it could be held accountable by the providers directly affected. The medical providers had noted that similar litigation in other states, includingIllinois and Oklahoma, has been allowed ever since Medicaid was introduced in 1965. The high court split along non-ideological lines. Liberal JusticeStephen Breyer joined four conservatives in the majority, and conservative Anthony Kennedy joined the other liberals in dissent.

New Mexico Opts for Federal Exchange Platform Due to High Costs of Exchange Technology

In a decision March 31 by New Mexico’s Health Insurance Exchange (NMHIX) Board of Directors, the state has opted to forgo building its own exchangetechnology and instead will lease the HealthCare.gov platform from the Centers for Medicare and Medicaid Services (CMS). The long-awaited decision comesafter months of evaluation and a recent denial for federal funding by the Department of Health and Human Services (HHS) for funding for the technologydevelopment. The state estimated that constructing its own enrollment platform would cost approximately $118 million between 2015 and 2019, whereasutilizing HealthCare.gov through a lease with CMS would cost only $79 million. Exchange CEO Amy Dowd said that CMS has verbally committed to thearrangement and has assured New Mexico it will still be considered a state-based exchange (and not at risk in a King v. Burwell decision).

Tennessee Legislature Committee Ends Revival of Medicaid Expansion Efforts in State

GOP Gov. Bill Haslam’s proposed alternative Medicaid expansion plan, Insure Tennessee, was rejected for a second time March 31 by the state’s SenateCommerce and Labor Committee after six Republican committee members voted no and only two — including the committee’s lone Democrat — voted yes on theresurrected and retooled plan (SB 72) to use federal Medicaid dollars under theAffordable Care Act (ACA); the ninth senator, physician Mark Green (R), abstained. The resolution failed last month in the Republican-dominated SenateHealth Committee on the third day of a special legislative session called by Haslam to discuss the Medicaid expansion plan. Among the changes to theretooled proposal were a lockout provision for six months if beneficiaries did not pay insurance premiums and holding off implementation until the SupremeCourt ruled in King v. Burwell. Overall, it’s the fourth time a Senate committee has voted on the bill; there have been no votes in any Housecommittee. The House version(HB 61) of the plan is still palpable, although thelikelihood of Insure Tennessee’s becoming law this year is very low; as it stands, the plan sought to extend health insurance coverage to an estimated280,000 Tennesseans.

Hawaii House Legislative Committees Pull $28 Million Debt Plan from Health Connector Bill

Hawaii’s House of Representatives Committees on Health and Commerce and Consumer Protection approved a bill March 25 that allows continued operations ofthe state’s health insurance exchange, Hawaii Health Connector, but removed part of the proposal that would allow the exchange to issue $28 million in debtfinancing. The Committee’s decision came after concerns were raised about the plan, including the idea that the state would back the debt using its reservefund. Hawaii Health Connector CEO Jeff Kissel says that if the debt-financing plan isn’t approved, customers won’t lose their coverage; however theprovision would effectively stop the exchange from enrolling new customers. The Hawaii Health Connector needs approximately $28 million to maintain itsoperations through 2022, according to the latest sustainability plan; at that point, it’s expected to break even and begin paying off through its revenuesthe loan interest estimated at $4 million. Worth noting, the Committee moved the debt financing language to its committee report, so that it would beavailable for the Finance committee to consider. As part of the Affordable Care Act (ACA), Hawaii is one of 16 states and the District of Columbia thathave their own state-based exchange.

HHS Audit of Maryland Insurance Exchange Finds $28.4 Million in Improper Billing

A Department of Health of Human Services Office of the Inspector General (OIG)audit ofMaryland’s health insurance exchange, Maryland Health Connection, found that the state improperly billed the federal government $28.4 million as a resultof its exchange technology failure during the state’s first open enrollment period. The Centers for Medicare and Medicaid Services (CMS) reimbursed statesbased on the number of people they enrolled in the coverage expansion; the report found that the Maryland exchange substantially overestimated the numberof beneficiaries who would enroll in coverage through the exchange, and while the state did adjust the numbers down after its website crashed, it stillinvoiced HHS for the original amount. The Office of the Inspector General (OIG) report recommends that the state repay the money, although it found noevidence of fraud. The agency also recommended that the state amend its Cost Allocation Plan and the Advance Planning Document for the period for the lasthalf of 2014 so that allocated costs correspond to the relative benefits received, develop a written policy that explains how to calculate costallocations, and oversee operations to ensure the identification and correction of enrollment projection errors.

4. Regulations Open for Comment

FDA Assessing the Center of Drug Evaluation and Research’s Safety-RelatedRegulatory Science Needs and Identifying Priorities

On March 19, the Food and Drug Administration (FDA) announced theavailability of a report entitled “AssessingCDER’s Drug Safety-Related Regulatory Science Needs and IdentifyingPriorities.” This report identifies drug safety-related regulatoryscience needs and priorities related to the mission of FDA’s Center for DrugEvaluation and Research (CDER) that would benefit from externalcollaborations and resources. FDA hopes to foster collaborations withexternal partners and stakeholders to help address these needs andpriorities. This notice asks stakeholders conducting research related tothese needs to describe that research and indicate their interest incollaborating with FDA to address safety-related research priorities. Sincepublication of the 2011 “Identifying CDER’s Science and Research Needs”report, FDA has been engaged in efforts to further assess and prioritize theneeds articulated therein. As part of these efforts, CDER’s Safety ResearchInterest Group (SRIG), a subcommittee of the Science Prioritization andReview Committee, assessed CDER’s overall drug safety-related regulatoryscience needs in view of FDA’s ongoing research efforts and highlightedareas that would benefit from additional resources and collaboration. Publiccomments will be accepted at any time. However, the public is encouraged tosubmit comments by May 18, 2015, to ensure FDA consideration.

National Coverage Determinations Proposed for Removal

On Aug. 7, 2013, the Centers for Medicare & Medicaid Services (CMS) published a Federal Register notice (78 FR 48164-69), updating the process used foropening, deciding or reconsidering national coverage determinations (NCDs) under the Social Security Act (the Act). The notice replaced the Sept. 26, 2003,Federal Register notice (68 FR 55634) and further outlined an expedited administrative process, using specific criteria, to remove certain NCDs older than10 years since their most recent review. On March 18, CMS announced its list of NCDs proposed for removal, along with the relevant portion of the FederalRegister notice containing the CMS criteria. CMS is soliciting public comment through April 17 on whether any or all of these NCDs should be removed orretained. CMS expects to publish a finalized list by fall 2015. Local Medicare Administrative Contractors (MACs) will be able to determine coverage foritems and services that were previously determined by removed NCDs. View theproposed rule:www.cms.gov.

HHS Releases Proposed Rules on EHR Incentive Programs and Health IT Certification Criteria

The U.S. Department of Health and Human Services (HHS), Centers for Medicare & Medicaid Services (CMS) and Office of the National Coordinator forHealth Information Technology (ONC)announced March 20 the release of the Stage 3notice of proposed rulemaking for the Medicare and Medicaid Electronic Health Records (EHRs) Incentive Programs and 2015 Edition Health IT CertificationCriteria to improve the way electronic health information is shared and ultimately improve the way care is delivered and experienced. The proposed rulesaim to give providers additional flexibility, make the program simpler, drive interoperability among electronic health records and increase the focus onpatient outcomes to improve care.

Specifically, the Meaningful Use Stage 3 proposed rule issued by CMS specifies new criteria that eligible professionals, eligible hospita