Washington Healthcare Update

May 18, 2015

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This Week: Health Subcommittee Advances 21st Century Cures, Full Committee Action Scheduled…Senate Finance Committee Hearing: Chair Hatch to Launch New Initiative on Improving Chronic Care for Medicare Patients…Hawaii’s Exchange Submits Corrective Action Plan to CMS, State May Have to Abandon State Exchange Due to Funding and IT Issues

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


Health Subcommittee Advances 21st Century Cures, Full Committee Action Scheduled

Energy and Commerce Committee Chairman Upton (R-MI) has announced his Committee will convene Tuesday, May 19, 2015, 5 p.m. in order to consider the 21stCentury Cures initiative, a nonpartisan legislative proposal that aims to accelerate the pace of cures and medical breakthroughs in the United States. Overthe course of the last year, the 21st Century Cures initiative involved a nationwide conversation with patients, providers, innovators, regulators andresearchers. During the conversation, the Committee received countless ideas in response to the Committee white papers, held eight hearings convened by theSubcommittee on Health, and held over a dozen roundtables hosted both at the Committee and by members in their districts all across the country. InJanuary, the Committee launched the legislative phase of the 21st Century Cures initiative by circulating a discussion document, which included a number ofideas proposed by both Republicans and Democrats. The Subcommittee on Health held a hearing on the discussion document on April 30, 2015, and on May 14,2015, the Subcommittee met in open markup session to consider the discussion draft and forwarded the bill, as amended, to the full Committee by a voicevote. For more information, or to view the markup, please visit:http://energycommerce.house.gov/markup/full-committee-vote-21st-century-cures-act

Eighteen House Democrats Send Letter to Leadership to Push for Medical Device Tax Repeal

A group of 18 Democratic congressmen, led by Rep. Scott Peters (CA), sent aletter to House Speaker JohnBoehner, Minority Leader Nancy Pelosi, Ways and Means Committee Chairman Paul Ryan and Ways and Means Committee Ranking Member Sander Levin calling for therepeal of the medical device excise tax prior to the Memorial Day recess. In the letter, the lawmakers note that the Protect Medical Innovation Act, whichwas introduced by Rep. Erik Paulsen (R-MI) in January, has broad bipartisan support from 277 House members. The medical device excise tax is estimated togenerate up to $30 billion over the next decade to help provide health insurance to all Americans, however industry estimates it could cost as many as43,000 jobs nationwide and billions of dollars if the tax stays in place.

Upcoming: Energy and Commerce Oversight Subcommittee to Host Hearing on State Actions to Prevent Opioid Abuse

The House Energy & Commerce Subcommittee on Oversight and Investigations, chaired by Rep. Tim Murphy (R-PA), will hold a hearing entitled “What are theState Governments Doing to Combat the Opioid Abuse Epidemic?” on Thursday, May 21, 2015, at 10:15 a.m. in 2322 Rayburn House Office Building. Thesubcommittee will continue its hearing series to review how states are combating the opioid abuse epidemic and explore how state and federal policies canmost effectively incentivize the development and broadened use of evidence-based practices and treatments in their communities. In the hearing,subcommittee members will hear testimony from several state health leaders about their experiences in coordinating efforts with the federal government;witnesses from Colorado, Indiana, Massachusetts and Missouri will testify.

A witness list was not available at the time of print. For more information or to rel=”noopener noreferrer” view the hearing, visitenergycommerce.house.gov.

Upcoming Ways and Means Hearing Will Examine Competition in Medicare

Ways and Means Health Subcommittee Chairman Kevin Brady (R-TX) has announced that the subcommittee will hold a hearing titled “Improving Competition inMedicare: Removing Moratoria and Expanding Access.” The hearing will take place on Tuesday, May 19, at 10 a.m. Oral testimony at this hearing will be fromthe invited witnesses only. However, any individual or organization may submit a written statement for consideration by the Committee and for inclusion inthe printed record of the hearing. For more rel=”noopener noreferrer” information, or to view the hearing, please visit:http://waysandmeans.house.gov/calendar/eventsingle.aspx?EventID=398604


Senate Finance Committee Hearing: Chair Hatch to Launch New Initiative on Improving Chronic Care for Medicare Patients

On May 14, the Senate Finance Committee held a hearing entitled “A Pathway to Improving Care for Medicare Patients with Chronic Conditions” where CommitteeChairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) announced a new plan for the committee to address rising Medicare spending on treatingmultiple chronic illnesses while simultaneously improving how Medicare beneficiaries with chronic illnesses are treated. “Chronically ill patients accountfor a large percentage of Medicare spending, and if left rel=”noopener noreferrer” unresolved, this situation will only get worse,” Chair Hatch said in astatement. “We have to find ways to providehigh quality care at greater value and lower cost, and I look forward to working with Ranking Member Wyden and all of our committee colleagues towards thisgoal.” Worth noting, Ranking Member Ron Wyden (D-OR) said the committee intends to release chronic-care legislation in the coming months, with intendedfull chamber passage by the end of the year. A working group to develop policy ideas for the committee to consider will be co-chaired by Sens. JohnnyIsakson (R-GA) and Mark Warner (D-VA). The Committee will solicit public comments on the initiative in the coming weeks. According to Centers for Medicare& Medicaid Services (CMS) data, more than 90 percent of Medicare spending is on beneficiaries with two or more chronic conditions. At the hearing, bothwitnesses offered their ideas on how Congress can begin addressing chronic illness in Medicare.

Witness List

Dr. Patrick Conway
Acting Principal Deputy Administrator
Deputy Administrator for Innovation and Quality, and Chief Medical Officer
Centers for Medicare & Medicaid Services
Department of Health and Human Services

Mark E. Miller, Ph.D.
Executive Director
Medicare rel=”noopener noreferrer” Payment Advisory Commission

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

Veterans Affairs Committee Hearing Examines Status of Veterans Choice Program

On May 12, the Senate Committee on Veterans Affairs held a hearing entitled, “Exploring the Implementation and Future of the Veterans Choice Program.” Thehearing gave members of the committee an opportunity to hear from the U.S. Department of Veterans Affairs (VA), in addition to other experts, on theimplementation of the Veterans Access, Choice, and Accountability Act. According to Ranking Member Murray’s opening statement, despite $5 billion beingallocated to improve health services for veterans, delays and confusion in getting care through the program remain.


Panel I

The Honorable Sloan D. Gibson
Deputy Secretary
U.S. Department of Veterans Affairs
(Accompanied by Dr. James Tuchschmidt, Acting Principal Deputy Under Secretary for Health)

Mr. David J. McIntyre
President and Chief Executive Officer
TriWest Healthcare Alliance

Ms. Donna Hoffmeier
Vice President, VA Services and PCCC Program Manager
HealthNet Federal Services

Panel II

Mr. Roscoe Butler
Deputy Director for Health Care
The American Legion

Mr. Darin Selnick
Senior Veterans Affairs Advisor
Concerned Veterans for America

Mr. Joseph Violante
National Legislative Director
Disabled American Veterans

Mr. Bill Rausch
Political Director
Iraq and Afghanistan Veterans of America

Mr. Carlos Fuentes
Senior Legislative Associate
Veterans of Foreign Wars

For more information, or to view the hearing, please visit:http://www.veterans.senate.gov/hearings/exploring-the-implementation-and-future-of-the-veterans-choice-program051215

Sens. Reed, Murkowski Introduce Youth Suicide Prevention Bill

On May 12, Sens. Murkowski (R-AK) and Reed (D-RI) introduced the Garrett Lee Smith Reauthorization Act in order to improve mental health services for youngpeople and, in turn, help prevent youth suicide. Specifically, the bill is designed to improve access to counseling for at-risk teens and promote thedevelopment of statewide suicide early intervention and prevention strategies. It will also increase federal funding for competitive grants to help states,colleges, universities and tribes improve mental and behavioral health counseling services. A recent study found that “suicide rates for young people arealmost twice as high in rural areas” than cities, lending urgency to this bill’s aims. For more information, please visit:http://www.murkowski.senate.gov/public/index.cfm/pressreleases?ID=cb5c6743-7f1e-4278-9fc6-8031fe42f083

2. Administration

HHS: 137 Million Individuals with Private Insurers Have Health Insurance rel=”noopener noreferrer” with Free Preventative Services

On May 14, the Department of Health and rel=”noopener noreferrer” Human Services (HHS) in a newASPE Data Point factsheetannounced that 137 million individuals, including 55 million women and 28 millionchildren, have private health insurance that covers recommended preventive services without cost sharing. Under the Affordable Care Act (ACA), most healthplans are required to provide coverage for recommended preventive health care services without copays. These services include but are not limited to: Bloodpressure screening, well-baby and well-child visits, obesity screening and counseling, flu vaccination and other immunizations, well-woman visits, tobaccocessation interventions, domestic violence screening and counseling, vision screening for children, breastfeeding support and supplies, HIV screening,FDA-approved contraceptive methods and depression screening, among others. “Thanks to the Affordable Care Act, millions more Americans have access topreventive services, including vaccinations, well-baby visits, and diabetes and blood pressure screenings,” said Secretary Sylvia M. Burwell in a pressrelease. “These services can substantially improve the health of families, and in some cases even save lives. We urge all individuals with health carecoverage to take advantage of these services. This can make a tremendous difference in the health of Americans.” The released data is broken down by state,age, gender, and race and ethnicity. HHS previously estimated that approximately 76 million Americans — and 30 million women — received expanded coverageof one or more preventive services because of the Affordable Care Act.

FDA: Biosimilars – Additional Questions and Answers Regarding Implementation of the Biologics Price Competition and Innovation Act of 2009

This guidance provides answers to common questions from sponsors interested in developing proposed biosimilar products, biologics license application (BLA)holders and other interested parties regarding FDA’s interpretation of the Biologics Price Competition and Innovation Act of 2009 (BPCI Act). This guidancerevises the 2012 draft guidance on Biosimilars: Questions and Answers Regarding Implementation of the Biologics Price Competition and Innovation Act of2009 to provide new and revised questions and answers. It also includes certain original questions and answers that have not yet been finalized. Theguidance is one in a series of guidances that FDA is developing to implement the BPCI Act. The guidances address a broad range of issues, including:

  • Quality Considerations in Demonstrating Biosimilarity of a Therapeutic Protein 44 Product to a Reference Product
  • Scientific Considerations in Demonstrating Biosimilarity to a Reference Product
  • Biosimilars: Questions and Answers Regarding Implementation of the Biologics Price Competition and Innovation Act of 2009
  • Formal Meetings Between the FDA and Biosimilar Biological Product Sponsors or Applicants

Enacted as part of the ACA on March 23, 2010, the BPCI Act creates an abbreviated licensure pathway for biological products shown to be biosimilar to, orinterchangeable with, an FDA-licensed biological reference product. View the guidance:http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM273001.pdf

3. State Activities

California Becomes First State to Rule in “Pay-For-Delay” Decision in Pharmaceutical Space

On May 7, California became the first state to rule on how the Supreme Court’s 2013 decision in the landmark “pay-for-delay” case, FTC v. Actavis,applies to pharmaceutical patent settlements brought under its own antitrust act. In this scenario, a larger pharmaceutical company first sues a genericmaker, and then “settles” by agreeing to pay a sum of money to the generic maker to, among other things, remain out of the market for longer than theyotherwise would have needed to. Not surprisingly, the rise of such pay for delay, or “reverse payment,” deals came as a result of the Hatch-Waxman Act from1984, which was supposed to encourage generic drugs to enter the market. In its decision, California’s Supreme Court reversed the prior decisions of boththe rel=”noopener noreferrer” Superior Court and the Court of Appeals and restored the class action claims of indirect purchasers of the brand-named drug Cipro (Re Cipro I &II). The Justices’ruling states that while compensation from abranded drug company to a generic drug company as part of a patent settlement dictating when generic competition can begin is not in itself illegal, notall of these types of settlements will always meet the litmus test. As part of the decision, the California Justices laid out a legal precedent for howsuch antitrust suits will be decided, stating that the anti-competitive effects of a settlement must be measured against the expected life of the patent,not the actual life.

California rel=”noopener noreferrer” Exchange Releases Budget with Proposed Cuts Expected at $58 Million for FY 2016

On May 13, California’s state insurance exchange, Covered California, unveiled itsproposed budget for fiscal year 2015-2016, with anticipated cutsof $58 million for FY 2016 due to a decrease in federal funding for the year. As it stands, the proposed budget of $332.9 million is also comprised ofapproximately $100 million in federal establishment funds. In fiscal year 2015-2016, Covered California will transition to relying solely on the fees itcollects from health insurance companies and the extensive reserves it has saved while using federal funds. “In the last two years, we established a solidfoundation, and we are confident as we transition now from startup mode to ongoing operations,” said Covered California Executive Director Peter V. Lee.“Covered California is changing lives and giving consumers affordable access to the best doctors and hospitals in our state. As we move ahead, we are gladto have the resources we need, and we will continue to work to bring affordable health coverage within the reach of all Californians.” With approximately1.4 million consumers currently enrolled on the state exchange, the proposed budget will be reviewed and revised before being finalized by the CoveredCalifornia Board of Directors in June.

Hawaii’s Exchange Submits Corrective Action Plan to CMS, State May Have to Abandon State Exchange Due to Funding and IT Issues

Due to the significant funding shortfall and IT issues plaguing Hawaii’s health insurance exchange, Hawaii Health Connector, Gov. Ige (D) on May 11submitted a corrective action plan to the Centers for Medicare & Medicaid Services (CMS) concerning remedial action for his state’s exchange operationsin 2016. While state lawmakers did approve $2 million in operations funding for the exchange on May 5, the sum was less than half of what the exchangeneeded to continue its operations ($5.4 million). Moreover, in the same week another legislative proposal to issue up to $28 million in state-backed debtfor exchange funding also failed. In its corrective action plan, the state asked CMS to release additional grant funds so that it can make the exchangecompliant with the law before open enrollment begins Nov. 1. If Hawaii’s plan is not acceptable to CMS, Hawaii risks losing $1 billion in matching federalMedicaid funds, and continuity of coverage for the 37,000 to 40,000 Hawaii residents who are receiving health insurance coverage through the state’sexchange. A report sent to the exchange board of directors May 15 said, “Now that it is clear that the state will not provide sufficient support for theHawaii Health Connector’s operations through fiscal year 2016 (ending June 30, 2016), the Connector can no longer operate in a manner that would cause itto incur additional debts or other obligations for which it is unable to pay.” The report also notes that the Connector will cease new enrollments May 15,discontinue outreach services May 31 and transfer its technology to the state by Sept. 30. Starting next year, residents would have to re-enroll inhealthcare.gov to ensure coverage next year. To sustain its operations, the Connector needs to enroll 70,000; the program is funded by a 2 percent fee oneach policy, which is set to increase to 3.5 percent July 1.

Tennessee, Georgia Pass Biologic Substitution Laws

With follow-on biologic, or biosimilar, drugs entering the market in the wake of FDA’s approval of the first biosimilar product on March 6, 2015, manystates are evaluating their existing substitution laws, which govern the ability of pharmacists to dispense biosimilar drugs in place of name-brandbiologics. Earlier this month, both Tennessee and Georgia enacted laws to establish processes through which dispensing pharmacists may request authority tosubstitute a biosimilar drug with an interchangeable biological product of a prescribed biological product, unless the prescriber determines the medicalnecessity of a prescribed reference biological product. Brand-name drug manufacturers have advocated for such state laws on the basis that existingsubstitution laws designed for generic small molecule drugs are insufficient to ensure patient safety when applied to substantially more complex, andpotentially clinically meaningful, differences between biologic and biosimilar therapies. Opponents contend that the laws are simply intended to add redtape to the biosimilar dispensing process, creating unnecessary barriers to the use of biosimilar drugs, which in many cases, may be more affordable.

Minnesota Enacts Right-to-Try Legislation

Earlier this month, Minnesota Gov. Mark Dayton signed into law legislation intended to help specific patients access medical treatments that have not yetbeen approved by the FDA. Specifically, the measure allows doctors to prescribe certain experimental medicines to terminally ill patients. The medicationsmust first clear basic safety testing and be part of ongoing clinical trials to qualify, while the patients must have already exhausted all conventionaltreatment options and be unable to enroll in clinical trials.

The Food and Drug Administration has a process in place that allows individual patients to request permission to obtain investigational medicines, butproponents of the Right to Try Act say fewer than 1,000 people a year receive help using that avenue. Critics of “right-to-try” laws suggest thatright-to-try laws undermine the FDA approval process, and patients could be putting themselves in harm’s way. The intention of drug review procedures is tomake sure a drug can be distributed to a wider population, by assessing in part whether the benefits outweigh any known risks. Minnesota is the 16th stateto enact such a law.

4. Regulations Open for Comment

CMS Updates Wage Indexand Payment Rates for the Medicare Hospice Benefit

On April 30, 2015, CMS issued a proposed rule (CMS-1629-P) that would update fiscal year (FY) 2016 Medicare payment rates and the wage index for hospicesserving Medicare beneficiaries. The proposed hospice payment rule reflects the ongoing efforts of CMS to support beneficiary access to hospice care. Asproposed, hospices would see an estimated 1.3 percent ($200 million) increase in their payments for FY 2016. The $200 million increase in estimatedpayments for FY 2016 reflects the distributional effects of the 1.8 percent proposed FY 2016 hospice payment update percentage ($290 million increase); theuse of updated wage index data and the phaseout of the wage index budget neutrality adjustment factor (-0.7 percent/$120 million decrease); and theproposed implementation of the new Office of Management and Budget (OMB) Core Based Statistical Areas (CBSA) delineations for the FY 2016 hospice wageindex with a one-year transition (0.2 percent/$30 million increase). The elimination of the wage index budget neutrality adjustment factor (BNAF) was partof a seven-year phaseout that was finalized in the “Medicare Program; Hospice Wage Index for Fiscal Year 2010” final rule (74 FR 39384, Aug. 6, 2009) andis not a policy change. For more information, please visit:http://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-04-30-2.html

Proposed FY 2016 MedicarePayment and Policy Changes for Inpatient Psychiatric Facilities

On April 24, 2015, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule outlining proposed fiscal year (FY) 2016 Medicare paymentpolicies and rates for the Inpatient Psychiatric Facilities Prospective Payment System (IPF PPS). The proposed rule also updates the Inpatient PsychiatricFacility Quality Reporting (IPFQR) Program, which requires participating facilities to report on quality measures or incur a reduction in their annualpayment update. This proposed rule would expand the measure sets in future fiscal years and change certain data reporting requirements for these measures.CMS is proposing to update the estimated payments to IPFs in FY 2016 relative to estimated payments in FY 2015 by 1.6 percent (or $80 million). This amountreflects 2.7 percent IPF-specific market basket estimate less the productivity adjustment of 0.6 percentage point and less the 0.2 percentage pointreduction required by law, for a net update of 1.9 percent. Estimated payments to IPFs are reduced by 0.3 percent due to updating the outlier fixed-dollarloss threshold amount. CMS will accept comments on the proposed rule until June 23, 2015. View the proposed rule:https://federalregister.gov/a/2015-09880

CMS Releases Proposed Rule on FY2016 Medicare Payments for Inpatient Rehab Facilities

On April 23, 2015, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule outlining proposed FY 2016 Medicare payment policiesand rates for the Inpatient Rehabilitation Facility (IRF) Prospective Payment System and the IRF Quality Reporting Program. Specifically, CMS isproposing to increase payments to inpatient rehabilitation hospitals in 2016 by approximately $130 million, or 1.7 percent when compared to 2015. Thisagency also proposes new quality reporting requirements to adopt measures that satisfy three of the quality domains required by the IMPACT Act in FY2016: skin integrity and changes in skin integrity; functional status, cognitive function and changes in function and cognitive function; and incidenceof major falls; IRFs that fail to submit the required quality data to CMS will be subject to a 2 percentage point reduction to their applicable FYannual increase factor, and the expected cost of the implementation of these new quality reporting requirements is approximately $24 million tohospitals. Worth noting, the payment increase is significantly smaller than the 2.4 percent raise they received in fiscal 2015. The agency proposes tobegin