Washington Healthcare Update

July 14, 2015

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This Week: 21st Century Cures Legislation Passes House inBipartisan Vote… CMS Releases Proposed CY 2016 Home Health Prospective PayRule… CMS Releases Final CY 2016 Hospital Outpatient Prospective PaymentSystem (OPPS) and Ambulatory Surgical Center (ASC) Payment System Rule andChanges to the Two-Midnight Rule

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


21st Century Cures Legislation Passes House in Bipartisan Vote

The House passed the21st Century Cures Act by a 344-77 tally on Friday, July 10. The vote shows a strong bipartisan support for the multifacetedproposal to speed approval of devices and drugs. The legislation would increase National Institutes of Health funding by $8.75 million in mandatory fundingover the next five years. That amount is considered a major increase for the agency although less than was originally promised. The Food and DrugAdministration (FDA) will receive $550 million to help implement the law that includes changes on how the agency reviews some new drugs and devices soproducts get to market faster.

Since the bill was reported out of the House Energy and Commerce Committee in May, much of the discussion has been about how to pay for the proposal. Theinsurance industry opposed taking up to $7 billion from private Medicare Part D prescription drug plans, forcing policy-makers to look for alternatives.The drug industry successfully fought two proposed pay-fors, including a new policy on how Medicare would pay for biosimilars and a change to Medicare’slow-income subsidy.

Lawmakers instead kept the other offsets included in the committee-passed bill and increased the amount of oil they would sell off from the StrategicPetroleum Reserve. The bill now includes several pay-fors: trimming federal payments for generic drugs; a $300 million pay-for related to infused drugs;and several pay-fors related to durable medical equipment.

The legislation also includes an extension of the Centers for Medicare and Medicaid Services (CMS) wheelchair prior authorization demonstration, which hasreduced Medicare spending on power wheelchairs. The extension is likely to save more money. CMS previously authorized a demonstration for power mobilitywheelchairs in 2012, and announced an expansion in 2014. The demonstration was set to end in August 2015; however, the legislation extends it through Aug.31, 2018, and adds more states.

Five amendments were agreed to by voice vote when the bill was considered on the floor of the House:

  • A sense of Congress resolution that recording unique device identifiers at the point-of-care in electronic health record systems could significantly enhance the availability of medical device data for postmarket surveillance purposes.
  • An amendment directing CDC to conduct a study to determine how additional Medicare payments for antimicrobials are affecting the development of drug resistance.
  • An amendment to give NIH authority to incentivize health innovation by offering competitors the chance to win a prize for creating breakthrough research and technology.
  • An amendment aimed at ensuring underrepresented individuals, such as women and minorities, are included in the Supporting Young Emerging Scientists Report.
  • An amendment directing the HHS secretary to conduct outreach to Historically Black Colleges and Universities, Hispanic-serving Institutions, Native American colleges and rural colleges to ensure that health professionals from underrepresented populations are aware of research opportunities under the Cures bill.

The Administration outlined a number of concerns over the legislation, including that FDA’s responsibilities would exceed the resources provided, makingthe agency unable to implement the law. The Administration is also concerned about how the extensions on patent exclusivity will impact drug costs andwhether regulatory standards will be undermined in the rush to bring new products to market. However, the Administration did praise the inclusion of thePresident’s Precision Medicine Initiative, including patients’ voices into the FDA decision-making and reducing barriers to medical device trials.

OMB has outlined a host of Obama administration concerns over 21st Century Cures, including providing NIH with additional funding without addressing thebroader budget problems posed by sequestration. In a Statement of Administration Policy, OMB also says the FDA’s new responsibilities would “exceed theresources provided,” which would make the agency unable to fully implement the bill while “maintaining its current performance levels.” The administrationis also concerned about how the extensions on patent exclusivity will impact drug costs and whether policies to bring drugs to market faster will undermineregulatory standards. But the statement also contains praise, for the bill’s support of the president’s Precision Medicine Initiative and its steps toincorporate patients’ voices into FDA decision-making, further develop reliable biomarkers and reduce barriers to medical device trials.

The Senate has been working on its own version of the Cures bill. Its timing is unclear.

Energy and Commerce Health Subcommittee Holds Hearing on 50-Year Anniversary of Medicaid

The Energy and Commerce Subcommittee on Health, chaired by Rep. Joe Pitts (R-PA), held a hearing July 8 entitled “Medicaid at 50: Strengthening andSustaining the Program.” Witnesses from the Centers for Medicare and Medicaid Services (CMS), Government Accountability Office (GAO), and Medicaid and CHIPPayment and Access Commission (MACPAC) testified. At the hearing, claims of CMS favoritism and of inconsistent oversight of Section 1115 demonstrationswere a key theme. “It’s well known that some states get CMS approval for a specific proposal, while the CMS will deny another state for a very similarproposal,” said Rep. Joe Pitts (R-PA). Furthermore, in the hearing several Republican committee members relayed concerns surrounding the growing financialimpact of Medicaid on federal and state budgets, delivery system reforms and access to health care.

Witness List

Vikki Wachino
Deputy Administrator, Centers for Medicare & Medicaid Services (CMS)
Director, Center for Medicaid and CHIP Services, CMS

Carolyn Yocom
Director, Health Care
Government Accountability Office (GAO)
accompanied by Katherine Iritani, Director, Health Care, GAO

Anne Schwartz
Executive Director
Medicaid and CHIP Payment and Access Commission (MACPAC)

For more information or to view the hearing visit energycommerce.gov.

Upcoming: Energy and Commerce Subcommittee on Oversight and Investigations to Hold Hearing on Medicare Part D Program Integrity

The Subcommittee on Oversight and Investigations, chaired by Rep. Tim Murphy (R-PA), has scheduled a hearing entitled “Medicare Part D: Measures Needed toStrengthen Program Integrity,” for Tuesday, July 14, at 2 p.m. in Room 2322 of the Rayburn House Office Building. The Medicare prescription drug programwas established to provide an optional prescription drug benefit for Medicare beneficiaries. The Department of Health and Human Services Office ofInspector General recently released two reports, “Ensuring the Integrity of Medicare Part D” and “Questionable Billing and Geographic Hotspots Point to Potential Fraud and Abuse in Medicare Part D,” that highlight weaknesses that make Medicare Part D fraud and abuse possible. Subcommittee members will discuss ways to ensure that the program operatesmore effectively and has working fiscal oversight, and that critical drug cost benefits are upheld for seniors.

For more information or to view the hearing, visit energycommerce.gov.

Congress Expands Medicare Coverage for Acute Dialysis Services

On June 29, 2015, President Obama signed into law the Trade Preferences Extension Act (H.R. of 2015 (H.R. 1295), which provides for Medicare reimbursement for renal dialysisservices furnished to individuals with acute kidney injury. This measure, which takes effect on Jan. 1, 2017, has been long awaited by dialysis providers.CMS had taken the position that hospital outpatients may receive acute dialysis only in a hospital or in locations that qualify as provider-baseddepartments of the hospital if they want those services reimbursed by Medicare. Its July 2012 statement presented considerable confusion in the dialysiscommunity regarding whether CMS was also stating that Medicare-certified facilities could provide acute dialysis services. The legislation now ensures thatdialysis facilities will be reimbursed for acute dialysis treatments rendered to Medicare beneficiaries as of Jan. 1, 2017. Further, payment for furnishingacute dialysis services “shall be the base rate for renal dialysis services determined for such year.”

More information on the measure can be found here.

GOP Doctors’ Caucus Sends Letter to HHS on U.S. Preventive Services Task Force Mammogram Draft Guidelines

The Republican Doctors Caucus sent aletter to Department of Health and Human Services Secretary Sylvia Burwell urging the agency to forgo finalization ofthe U.S. Preventive Services Task Force’s (USPSTF) recent draft guidelines recommending the “C” grade assigned to screening mammograms for women betweenthe ages of 40 and 49. Signers of the letter believe the recommendation would have a “chilling effect” on insurance coverage of mammograms and “will limitaccess to this valuable diagnostic tool.” The issue has bipartisan support; Democrats on the House Appropriations Committee inserted language in theDepartment of Health and Human Services (HHS) appropriations bill that would delay the effects of the guidelines for one year.


Senate HELP Committee Holds Hearing on Small Business Health Care Challenges

In a partisan hearing, three small business owners testified to the Senate Health, Education, Labor, and Pensions’ Subcommittee on Primary Health andRetirement Security on July 7 that problems within the Affordable Care Act (ACA) are leading to more expensive insurance policies for employers, therebymaking it more difficult for companies to provide high-quality health care to their employees. Witness Kelly Conklin, a small business owner, said thatselecting a plan “can be a daunting experience,” especially for a small business owner who is uncertain of what coverage is most suitable for hisemployees. He told subcommittee members that coverage selection would be easier for small employers if there was more transparency, or if policies werewritten with less confusing language. The hearing also looked at what to do about the small group market overall.

Witness List

Thomas Harte
Landmark Benefits

James Scott
Applied Policy

Sabrina Corlette
Senior Research Fellow and Project Director
Georgetown University

Kelly Conklin
Foley Waite LLC

For more information or to view the hearing, visit help.senate.gov.

Upcoming: Senate Aging Committee to Hold Hearing on Finding Diabetes Cures

On July 15, 2015, Senate Special Committee on Aging Chairwoman Susan Collins will hold a hearing entitled “Diabetes Research: Improving Lives on the Pathto a Cure.” The hearing will be held at 2:15 p.m. in G-50 Dirksen Senate Building. A witness list was unavailable at the time of print.

For more information or to view the hearing, visit aging.senate.gov.

2. Administration

Biosimilar Interchangeability Guidance Document to Be Released by FDA Before 2016

According to a July 1 Federal Register notice, the Foodand Drug Administration (FDA) will, by year’s end, release draft guidance on how companies can demonstrate how their biosimilars are interchangeable withexisting reference biologics. Companies must receive an interchangeability designation from FDA for the cheaper drugs to be considered qualified forautomatic substitution for the costlier brand medicines. FDA estimates that the burden estimates for seeking licensure of a proposed biosimilar productthat meets the standards for interchangeability would be 860 hours. According to the notice, the agency anticipates receiving five biosimilar applicationseach year, significantly rel=”noopener noreferrer” fewer than the hundreds of generic drug applications it receives annually.

FDA Releases New Draft Guidance on Bioequivalence Recommendations for Specific Generics

In a June 29 guidance document, the Food and DrugAdministration (FDA) announced the availability of additional draft and revised draft product-specific bioequivalence (BE) recommendations for more thanthree dozen drug products, including several noteworthy branded pharmaceuticals that are not yet subject to generic competition. The document aims to makeit easier for generic drug manufacturers to eventually make copies of several popular drugs, including Sovaldi (sofosbuvir), Northera (droxidopa), Xtandi(enzalutamide) and Olysio (simeprevir). Bioequivalence recommendations are a critical part of the submission of an Abbreviated New Drug Application (ANDA)— the application generic pharmaceutical companies use to submit for each new generic drug. Public comments on the draft product-specific BErecommendations can be sent viawww.regulations.gov.

FDA Delays Enforcement of Drug Supply Chain Security Act Requirements for Pharmacies

A recent Food and Drug Administration (FDA) guidance document announced the agency’sdecision to give pharmacies four more months — until Nov. 1, 2015 — until enforcement will begin of the product-tracing information requirementsestablished within the Drug Supply Chain Security Act (DSCSA). The act requires that pharmacies accept shipments of pharmaceuticals only if they receivecertain tracking information from trading partners, and mandates that they store this data upon receipt. The DSCSA requires an electronic, interoperablesystem by Nov. 27, 2023, which will identify and trace certain prescription drugs as they are distributed within the United States. In addition, FDA plansto have a number of stakeholder calls to solicit public feedback in the coming weeks.

CMS Releases Open Payments Data for CY 2014

On June 30 the Centers for Medicare & Medicaid Services (CMS) published searchable 2014 Open Paymentsdata-relating payments, honoraria or research grants by drug and medical device makers to health care providers. Created by the Affordable Care Act, theprogram relies on voluntary participation by physicians and teaching hospitals to review the information submitted by these companies. In its press release CMS said registeredphysicians and teaching hospitals reviewed nearly 30 percent of the total value of the reported data. The data includes information about 11.4 millionfinancial transactions attributed to over 600,000 physicians and more than 1,100 teaching hospitals, totaling $6.49 billion. According to CMS, nearly halfof the transfers was for research payments such as clinical trials; the remaining $2.56 billion — about 40 percent — was for general payments, which caninclude food and drink; fees for consulting; travel or speaking; royalties; and even gifts. The median value of total payments made to registeredphysicians is $3,644, compared to $747 made to non-registered covered recipient physicians. This was the first time a full year’s worth of payment data wasmade available.

HHS Awards $840 Million in Public Health and Emergency Preparedness Grants to Local Health Departments

The U.S. Department of Health and Human Services (HHS) will award health departments across the country more than $840 million in cooperative agreementsfor the improvement and sustainability of emergency preparedness of state and local public health and health care systems. The cooperative agreement fundsare distributed through two federal preparedness programs: the Hospital Preparedness Program (HPP) and the Public Health Emergency Preparedness (PHEP)program. Nationwide, HHS awarded a total of $228.5 million for HPP and $611 million for PHEP in fiscal year 2015. The programs provide resources needed toensure that local communities can respond effectively to infectious disease outbreaks, natural disasters or chemical, biological or radiological nuclearevents. The aligned HPP and PHEP cooperative agreements encourage state and local public health departments to work collaboratively with federal health andpreparedness programs in their jurisdictions to maximize resources and prevent duplicative efforts. Such coordination of activities with emergencymanagement and homeland security programs supports “whole community” planning to improve national preparedness efforts.

HPP and PHEP 2015 grant awards to individual states can be found here.

An HHS press release on the grant awards can be found here.

CMS Will Again Waive 90-Day Requirement for Grandfathered Individual Plans in 2016

Inguidancereleased July 7, the Centers for Medicare & Medicaid Services (CMS) announced that it will again waive enforcement of the 90-day requirement fornon-grandfathered, non-transitional coverage for 2016. As it stands, insurers are required to provide a notice of discontinuance for these plans onlybefore the first day of open enrollment or prior to Nov. 1, 2015; moreover, insurers that anticipate terminating their transitional or grandfathered plansmust provide the agency 60 days’ notice. The 90-day discontinuance notice requirement will remain applicable to group plans, as they have continuous openenrollment status. Insurers that intend to completely withdraw from a market must continue to give 180 days’ notice (and may not return to the market forfive years). The CMS guidance further explains that insurers should continue to use standard notices for product discontinuances and renewals provided in previous guidance documents.

CMS Releases Data on Qualified Health Plan Selections by Advanced Premium Tax Credit, Age, Income and County

On July 8, the Centers for Medicare and Medicaid Services (CMS) released new information on Qualified Health Plan selections by county for the 37 statesthat use the HealthCare.gov platform (including the Federally-facilitated Marketplace, State Partnership Marketplaces and supported State-basedMarketplaces) for the Marketplace open enrollment period from Nov. 15, 2014, through Feb. 15, 2015, including additional special enrollment period (SEP)activity reported through Feb. 22, 2015. CMS released the following tables:

FDA Announces Prescription Drug User Fee Act Patient-Focused Drug Development Disease Areas for Meetings in FY 2016-2017

On July 2 the Food and Drug Administration (FDA) announced theselection of disease areas to be addressed during fiscal years (FYs) 2016-2017 of its Patient-Focused Drug Development Initiative. FDA has identified thefollowing diseases/ health issues to be the focus of meetings scheduled in FYs 2016-2017: alopecia areata; autism; hereditary angioedema; non-tuberculousmycobacterial infections; patients who have received an organ transplant; psoriasis; neuropathic pain associated with peripheral neuropathy; andsarcopenia. FDA selected these disea