Washington Healthcare Update

May 27, 2015

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This Week: House E&C 21st Century Cures Bill Passes Unanimously Out ofCommittee… House Votes to Codify Permanent R&D Tax Credit… CMS ReleasedProposed Rule Concerning Medicaid and CHIP Plans

1. Congress

House of Representatives

District Work Period – No Legislative Activity


State 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

House E&C 21st Century Cures Bill Passes Unanimously Out of Committee

On May 21, the House Energy and Commerce Committee held amarkup to finalize the draft of its comprehensive healthcare legislation,21st Century Cures Act, H.R. 6. Thelegislation was authored by full committee Chairman Fred Upton (R-MI), Oversight and Investigations Subcommittee Ranking Member DeGette, full committeeRanking Member Frank Pallone, Jr. (D-NJ), Health Subcommittee Chairman Joe Pitts (R-PA) and Health Subcommittee Ranking Member Gene Green (D-TX). Thelatest version of the bill, which passed unanimously out of committee 51-0, includes $13.2 billion in new offsets to cover the cost of the bill’s increasedfunding for the National Institutes of Health (NIH) and the Food and Drug Administration (FDA). The new offsets include selling off some the country’sstrategic petroleum reserves, altering the timetable for pre-payments on Medicare Part D, lowering federal reimbursement rate for durable medical equipmentin Medicaid to coincide with Medicare rates, and advancing the modernization of X-ray imaging from cassette-based imaging to digital imaging. Moreover, theapproved bill includes $550 million toward a Cures Innovation Fund ($110 million a year for fiscal years 2016 through 2020 for various FDA and NIHexpenditures), and protects FDA user fees funding from sequestration cuts. Seemingly controversial proposals scrapped in the final version of the billinclude a proposal to save $1.8 billion by calculating the Federal Upper Limit reimbursement using generic drug prices and eliminating a previous proposalto increase premium costs of Medicare for multi-millionaire beneficiaries. “I’m proud of the final bill that was voted out of Committee, which will improvethe innovation ecosystem for the development of life-saving medical breakthroughs, foster the development and the interoperability of health informationtechnology, and better leverage critical resources to facilitate the discovery of new cures. After one year of deliberation, research, and stakeholderinput we’re one step closer to delivering new cures and therapies, and hope to patients,” said Rep. Green. Chair Upton said at an event after the markupthat he anticipates having the legislation up for a full House vote by the third week of June and hopes the legislation will come up for a vote on theSenate floor by August. Worth noting, Senate Health, Education, Labor, and Pensions Committee Chair Lamar Alexander (R-TN) and Ranking Member Patty Murray(D-WA) are working on a parallel effort to a comprehensive health care bill, but Chair Alexander has said he doesn’t anticipate having the measure finisheduntil early next year.

The agreed-to manager’s amendment to the bill can be foundhere.

A section-by-section outline of the bill can be foundhere.

House Votes to Codify Permanent R&D Tax Credit

The House voted 274-145 on May 20 to simplify the research and development tax credit and make it permanent, giving businesses more incentive to invest ininnovation. Specifically,H.R. 880, the American Research and Competitiveness Act of 2015, introducedearlier this year by Rep. Kevin Brady (R-TX), makes permanent the 2014 Research and Development (R&D) tax credit, thereby ending the series ofyear-to-year extensions seen in recent history. “America’s future depends on innovation occurring here in the U.S. Without the right permanent research anddevelopment incentive, we will continue to fall behind our global competitors and watch good paying research jobs go overseas. A permanently strong economyrequires a permanent research and development tax credit,” said Rep. Brady in apress release. The measure allows companies to claim 20 percent oftheir basic or otherwise qualified research expenses once those costs go above 50 percent of their average research costs for the previous three years;moreover, the credit covers a flat 10 percent of research expenditures if a company does not have any qualified research expenses for any or all of theprevious three years and 20 percent for any energy research expenses paid to an “energy research consortium,” with no minimum threshold. The White House,however, has threatened to veto the bill, as the House has not offered any funding measure to offset the $180 billion in lost tax revenue over the next 10years. Although not opposed to the measure itself, the White House noted that “H.R. 880 violates the very standard that House and Senate Republicansapproved less than a month ago in their concurrent budget resolution, which requires offsetting the cost of any tax extenders that are made permanent withother revenue measures.” Also worth noting, on the same day lawmakers passedH.R. 1806, the America Competes Reauthorization Act, in a 217-205 vote. TheAmerica Competes Reauthorization Act would provide about $33 billion in funding for federal scientific research and research grants between fiscal years2016 and 2020, to be divided among the National Science Foundation, the Office of Science and Technology Policy, the National Institute of Standards andTechnology and certain offices at the U.S. Department of Energy.

House E&C Commerce Oversight Subcommittee Holds Hearing on Assisting State Governments Fight Opioid Abuse

On Thursday, May 21, 2015, the House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing entitled “What are the StateGovernments Doing to Combat the Opioid Abuse Epidemic?” Members on the committee heard from several state health officials (from Missouri, Indiana,Massachusetts and Colorado) regarding their ongoing efforts to combat the opioid abuse epidemic and explore how State and Federal policies can mosteffectively incentivize the development and broadened use of evidence-based practices and treatments in their communities. “The size of this problem andthe need for a new paradigm of treatment can’t be understated. And the process of developing legislative solutions has already started.… We received honestinput and ideas about where there are problems and successes with any federal policies,” said Subcommittee Chair Tim Murphy (R-PA) in his openingstatement. “We know that more than 70% of those who abuse prescription drugs obtain them from the unused supplies of friends or family, highlighting theimportance of supporting robust medication collection and disposal resources throughout the state,” explained Colorado Department of Public Health andEnvironment Executive Director and Chief Medical Officer Larry Wolk, M.D., MSPH. In his testimony, Dr. Wolk, like the other witnesses, stressed howimportant education and collaborative work are to fighting this crisis.

Witness List

Jerome Adams, M.D., M.P.H.
Health Commissioner
Indiana State Department of Health

Monica Bharel, M.D., M.P.H.
Massachusetts Department of Public Health

Mark Stringer, M.A., L.P.C., N.C.C.
Director, Division of Behavioral Health
Missouri Department of Mental Health

Larry Wolk, M.D., MSPH
Executive Director and Chief Medical Officer
Colorado Department of Public Health and Environment

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

W&M Oversight Subcommittee Holds Hearing on Administration’s Use of Agency Action in ACA Implementation

On May 20, Chair of the Ways and Means Subcommittee on Oversight Peter Roskam (R-IL) held a hearing to investigate the role of Administrative actions inthe years-long implementation and roll out of the Affordable Care Act. In a largely political hearing, members used their questioning to specificallytarget premium tax credits, the ACA transition policy that let insurers continue to offer some plans past 2014, and the delay in the employer mandate,among other issues. “Today we’re going to look at ‘administrative actions’—that is—unilateral actions by the President and the Executive Branch as theyimplement and administer the President’s healthcare law.… The question before us is not whether the Administration is implementing the healthcare law. It’swhether the Administration is undermining the rule of law. And the answer is yes,” said Chair Roskam in his opening statement. Democrats, on the otherhand, argued that the Administration acted as both party predecessors before them to implement a law in a manner that considers and reflects the importanceof the affordable health care mission.

Witness List

Elizabeth Papez
Winston & Strawn LLP

Jonathan Adler
Professor of Law
Case-Western Reserve University School of Law

Grace-Marie Turner
The Galen Institute

Robert Weiner
Arnold and Porter LLC

For more information or to view the hearing visitwaysandmeans.house.gov.

House Bill Introduced to Establish ACA Inspector General

On May 19, Ways and Means Oversight Subcommittee Chair Peter Roskam (R-IL) and 16 other Republican cosponsors reintroducedH.R. 2400, the Special Inspector General for Monitoring the Affordable Care (SIGMA) Act, which would establish an oversight body to investigate the overall effectiveness and spending mechanisms within programs established under the AffordableCare Act (ACA). “We need assurance that—until Obamacare is repealed and replaced—there is rigorous oversight in place to prevent more taxpayer dollars frombeing squandered on this law,” Rep. Roskam said in a statement, addingthat this inspector general “alone would have needed authority to oversee all federal agencies involved in implementing and administering Obamacare andprotect the American people from its harmful effects.” As written, H.R. 2400 would require the Special Inspector General for Monitoring the Affordable CareAct to provide a report to Congress within 120 days after appointment, followed by quarterly reports and audits that would span every aspect of the healthcare law, from the impact on out-of-pocket costs, to shrinking provider networks, contracting, the role of the Independent Payment Advisory Board incutting Medicare benefits and much more. SIGMA would also be equipped with the same investigative and law enforcement authority as standing InspectorsGeneral, including subpoena and audit powers to compel responses from the Administration. The legislation was originally introduced last Congress in March2014, and the bill already has support from Sens. Pat Roberts (R-PA) and Rob Portman (R-OH), who will introduce a Senate companion bill.

W&M Health Subcommittee Holds Hearing on Way to Improve Competition in Medicare

On May 19, House Ways and Means Health Subcommittee Chair Kevin Brady (R-TX) held a hearing entitled “Improving Competition in Medicare: Removing Moratoriaand Expanding Access” in order to explore how to improve the complicated Medicare payment system for hospitals and other health care providers. At thehearing, witnesses spoke to a measure by Rep. Sam Johnson (R-TX) that repeals the ban expanding physician-owned hospitals. “What are the impacts—pro andcon—of this discrimination against one model of acute care, and is the current ban based on quality of service or a desire to restrain competition?” Rep.Kevin Brady asked during a hearing Tuesday. Another topic discussed included a bill by Rep. Tom Price (R-GA) that repeals and reforms the Medicare biddingprocess for supplying durable medical equipment.

Witness List

Joe Antos
Wilson H. Taylor Scholar in Health Care and Retirement Policy
American Enterprise Institute

Joe Minissale
Methodist McKinney Hospital

Robert Steedley
Barnes Healthcare Services
On behalf of the American Association for Homecare

Rich Umbdenstock
President and CEO
American Hospital Association

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

Members of House W&M and E&C Committees Introduce Legislation Targeted at Medicare Advantage Reform

Members on both sides of the aisle of the House Ways and Means Committee and the House Energy and Commerce Committee on May 21 introduced four bills thatattempt to modify the Medicare Advantage (MA) program for seniors. The four bipartisan bills are:

  • H.R. 2506, the Seniors’ Health Care Plan Protection Act of 2015, introduced by Ways and Means members Rep. Vern Buchanan (R-FL) and Rep. Charles Rangel (D-NY) and Energy and Commerce member Rep. Marsha Blackburn (R-TN). The legislation would delay the authority to terminate MA contracts for plans failing to achieve minimum quality ratings under the Medicare Advantage STARS rating system.
  • H.R. 2505, the Medicare Advantage Coverage Transparency Act of 2015, introduced by Ways and Means members Rep. Mike Kelly (R-PA) and Rep. Ron Kind (D-WI) and Energy and Commerce member Rep. Gus Bilirakis (R-FL). The bill would require annual reporting of enrollment data in MA plans.
  • H.R. 2507, the Increasing Regulatory Fairness Act of 2015, introduced by Ways and Means members Rep. Kevin Brady (R-TX)—chairman of the Health Subcommittee—and Rep. Mike Thompson (D-CA) and Energy and Commerce member Rep. Joe Pitts (R-PA). The legislation looks to expand an annual regulatory schedule for MA payment rates.
  • H.R. 2488, the Medicare Beneficiary Preservation of Choice Act of 2015, introduced by Ways and Means member Rep. Brady, Rep. Keith Rothfus (R-PA) and Energy and Commerce members Rep. Susan Brooks (R-IN) and Rep. Kurt Schrader (D-OR). The bill aims to restore the second Medicare open enrollment period and disenrollment opportunities.


State Work Period – No Legislative Activity

Senate NIH Caucus Launched

On May 19, alongside National Institutes of Health (NIH) Director Francis Collins, Senators Lindsey Graham (R-SC) and Dick Durbin (D-IL) launched a newbipartisan caucus dedicated to strengthening the National Institutes of Health (NIH). The NIH Caucus, according to the senators, will offer “more thansymbolic support” for the agency and will work to boost stagnant research funds. “The purpose of this caucus is to shine a light on what you [the NIH] do,inform the American tax payer that this is a great return on investment—about 30 billion dollars a year,” said Sen. Graham. “I would tell the American taxpayer for the money that we spend, percentage wise of the budget—and it’s a very small percent of the budget, return on investment is enormous here.” Othermembers who have joined the caucus include: Sens. Tammy Baldwin (D-WI), Richard Blumenthal (D-CT), Bob Casey (D-PA), Ben Cardin (D-MD), Joe Donnelly(D-IN), Ed Markey (D-MA), Gary Peters (D-MI), Al Franken (D-MN), Tim Kaine (D-VA), Amy Klobuchar (D-MN), Roger Wicker (R-MS) and Jerry Moran (R-KS).Funding for the NIH is already a driving force behind a bipartisan House bill known as 21st Century Cures. That bill, which comes from the House Energy andCommerce Committee, includes $10 billion for the agency. Due to looming sequestration cuts, NIH’s budget will be an enormous challenge for Congress todevelop; while both Democrats and conservative Republicans have called for increased funding for the NIH, none have proposed how to pay for it. A dear colleague letter announcing the new caucus waspreviously circulated May 5.

Senate Passes Trade Promotion Authority Legislation Paving Way for TTPP Negotiations

On May 22, the Senate passed 62-38 itsbipartisan version of the Trade Promotion Authority (TPA) legislation, or Fast Track, which allows the president to expedite and negotiate the completionof international trade dealings. With fast track legislation in place, as it was from 1975-1994, the House and Senate are not given authority to vote onindividual elements of international trade deals, and instead members must simply vote yes or no on whether it should pass. In the end, Democrats MariaCantwell (WA) and Patty Murray (WA), Heidi Heitkamp (ND), Chris Coons (DE) and Claire McCaskill (MO), plus Republican Lindsey Graham (SC), all voted “aye”to bring the package past the 60 vote threshold; an extension to a program called Trade Adjustment Assistance that provides income support and training toworkers displaced by international trade and a deal on the Export-Import Bank brought the legislation its final votes. Pending passage in the House ofRepresentatives, the legislation tees up President Obama’s 12-country Trans Pacific Partnership (TPP) negotiations, which, at present, contains languagethat advocates for making permanent the 12-year patent exclusivity for biologics drugs. In the health care space, opponents of the trade agreement worry itwill limit competition and encourage higher prices for pharmaceuticals and other high-value products by spreading American standards for patent protectionsto other countries. Worth noting, this existing biologic proposal is contrary to the Administration’s FY 2016 budget, which calls for only seven years ofexclusivity. A vote on the House version of the bill is expected in the coming weeks, although potential hurdles to its passage remain.

Bipartisan NOTICE Act Introduced in Senate

On May 14, Sens. Ben Cardin (D-MD) and Michael Enzi (R-WY) introduced S. 1349, the Notice of Observation Treatment and Implication for Care Eligibility(NOTICE) Act, which mandates that hospitals notify beneficiaries put into observation rather than admitted to a hospital that Medicare may not pay fortheir nursing home care. The legislation is designed to save seniors under Medicare Part A the sticker shock that comes after they are discharged from thehospital; Medicare does not cover the cost of post-acute care in a skilled nursing facility because their overnight stays in a hospital is classified asoutpatient observation instead of inpatient admissions. “This bill is about helping seniors understand when their treatment after a hospital stay will becovered by Medicare and when it isn’t,” said Senator Enzi in apress release. “With this little bit of information we can help people feel a little bit more secure in their medical care.” The House companion bill NOTICE Act passed the House of Representatives in March,395-0, with 37 lawmakers not voting. An Office of Inspector General (OIG) report found that the average out-of-pocket cost for skilled nursing facilitiesservices not covered by Medicare was more than $10,000 per beneficiary.

2. Administration

HHS Awards $112 Million to Help 5,000 Primary Care Professionals Advance Heart Health

Department of Health and Human Services (HHS) Secretary Sylvia Burwellannounced May26 the awarding of $112 million to regional cooperatives to work with about 5,000 primary care professionals in 12 states to improve the heart health oftheir nearly 8 million patients. The EvidenceNOW initiative establishes seven regional cooperatives composed of multidisciplinary teams of experts who willeach provide quality improvement services to up to 300 small primary care practices. These services include on-site coaching, consultation from experts inhealth care delivery improvement, sharing best practices, and electronic health record support. This initiative will help small primary care practicesincorporate the most recent evidence on how best to deliver the ABCS of cardiovascular prevention into their patients’ care: Aspirin use by high-riskindividuals, Blood pressure control, Cholesterol management and Smoking cessation. “The goal of the EvidenceNOW initiative is to give primary carepractices the support they need to help patients live healthier and longer,” said Secretary Burwell. “By targeting smaller practices, we have a uniqueopportunity to reduce cardiovascular risk factors for hundreds of thousands of patients, and learn what kind of support results in better patientoutcomes.” Heart disease is the leading cause of death for men and women in the United States.

For more information about AHRQ’s EvidenceNOW initiative, including details on each of the grantees and cooperatives, visitwww.ahrq.gov/evidencenow.html.

3. State Activities

Tennessee “Right to Try” Law Takes Effect

Patients diagnosed with terminal illnesses in Tennessee will now have the right to access experimental medications that haven’t passed the Food and DrugAdministration’s final approval processes after Gov. Bill Haslam (R) signed the Phil Timp-Amanda Wilcox Right to Try Act into effect May 8. Thelegislation, sponsored by Rep. Jon Lundberg and Sen. Joey Hensley, both Republicans, unanimously passed both chambers of the General Assembly in April. Thelegislation,House Bill 143, will grant Volunteer State doctors the ability to prescribeto terminally ill patients drugs that haven’t yet been fully vetted by the FDA, as long as they’ve passed phase 1 testing for safety. Tennessee became the18th state to enact a law to give patients with advanced illness the ability to access an investigational drug or medical device.

New Jersey Biologic Substitution Bill Passes the General Assembly

On May 12, the New Jersey Assembly passed a bill,A.2477, which would permit theautomatic substitution of interchangeable biosimilars. The bill, which was first proposed in 2014, would mandate that, after dispensing an interchangeablebiosimilar, pharmacists notify prescribers within five business days, providing them with information including the specific product name and the name ofmanufacturer, and preferably in an electronic manner. New Jersey Assembly Deputy Republican Leader Nancy Muñoz said in a statement that the bill is neededto ensure that once the Food and Drug Administration (FDA) has approved a biosimilar as “interchangeable” with a biologic, a law is in place to handle theissue of substitution. Currently, eight states—Delaware, Florida, Indiana, Massachusetts, North Dakota, Oregon, Utah and Virginia—have enacted laws thatlimit biosimilar substitution to those drugs that the FDA has deemed interchangeable. Thus far, the FDA has only approved one biosimilar, Sandoz’s Zarxio,which it deemed as not interchangeable. The legislation now heads to the state senate for approval.

4. Regulations Open for Comment

CMS Released Proposed Rule Concerning Medicaid and CHIP Plans

On May 26, CMS posted a proposed rule to modernize the Medicaidand Children’s Health Insurance Program (CHIP) managed care regulations. The proposed rule is the first major update to Medicaid and CHIP managed careregulations in more than a decade. The proposal is sweeping in that it touches many areas, including network adequacy, quality measures, enrollment andbest practices, and aligns many policies to be similar to those for Medicare Advantage and the private market. The rule will be published in the FederalRegister on June 1, and the deadline to submit comments is July 27, 2015, at 5 p.m. EST.

More information on the rule can be found atfederal registar.gov.

FDA Releases Draft Guidance on Use Adaptive Trial Designs for Medical Devices