Washington Healthcare Update

This Week: President Obama Nominates Food and Drug Administration (FDA)Deputy Commissioner Robert Califf to Head the Agency… Congressional BudgetOffice (CBO) Estimate Says Eliminating the Affordable Care Act’s (ACA)Individual Mandate Would Reduce Budget Deficit by $305 Billion by 2025…Montana Submits Formal Medicaid Expansion Waiver to Centers for Medicare andMedicaid Services (CMS)

1. Congress

House of Representatives

District Work Period: Sept. 21–Sept. 25

• House Ways and Means Committee Marks Up and Approves Seven Health, Tax-Related Bills; Approves Two Small Affordable Care Act (ACA) Adjustments
• House Energy and Commerce Health Subcommittee Holds Hearing on Medicaid Legislation
• Conservative Republican Study Committee Releases Their Desired Budget

Senate

• Bipartisan Cadillac Tax Repeal Legislation Introduced in the Senate
• Senate Judiciary Antitrust Subcommittee to Hold Hearing on Consumer Impact of Health Insurance Industry Consolidation
• Senate Health, Education, Labor and Pensions (HELP) Subcommittee Holds Hearing on the Food and Drug Administration’s (FDA) Progress on Biosimilars Implementation
• Senate Health, Education, Labor and Pensions (HELP) Committee Holds Hearing on Electronic Health Records; Chair Calls for Delay of Stage 3 of Meaningful Use Rules Until 2017
• Democratic, Bicameral Legislation Proposed to Allow the Government to Negotiate Prescription Drug Prices

2. Administration

• Federal Judge Issues Injunction Against Centers for Medicare and Medicaid Services’ Fixed Indemnity Rule
• Food and Drug Administration (FDA) Releases Final Rule on Drug Destruction Authority at the U.S. Border
• The Food and Drug Administration (FDA) Declines Request for Special Flexibility for Orphan Drug Applications
• President Obama Nominates Food and Drug Administration (FDA) Deputy Commissioner Robert Califf to Head the Agency
• Federal Exchange CEO Sends Letter to Insurers to Reaffirm Centers for Medicare and Medicaid Services’s (CMS) Dedication to Its Out-of-Pocket Caps Calculation
• Bureau of Labor Statistics (BLS) Releases Data Hinting at Potential for Higher Medicare Part B Premiums in 2016 for Some Beneficiaries

3. State Activities

• Montana Submits Formal Medicaid Expansion Waiver to Centers for Medicare and Medicaid Services (CMS)
• Virginia Hospitals Launches Campaign Against Falling Medicare and Medicaid Reimbursements
• California State Legislature Passes Legislation to Cap Copays for Medically Necessary Prescription Drugs

4. Regulations Open for Comment

• The Centers for Medicare and Medicaid Services (CMS) Offers Long-term Care Reform Proposed Rule
• Department of Health and Human Services (HHS) Proposes Updates to “the Common Rule”
• Department of Health and Human Services (HHS) Releases Proposed Rule on Health Equity
• Internal Revenue Service (IRS) Proposed Rule Mandates Employer Health Plans Offer Hospital and Physician Services
• Centers for Medicare and Medicaid Services (CMS) Issues FY 2016 Final Inpatient and Long-Term Care Hospital Policy and Payment Changes
• Food and Drug Administration (FDA) Issues Final Rule to Phase Out Trans Fats

5. Reports

• Government Accountability Office (GAO) Releases Report on CMS Oversight of State Health Insurance Exchange Technology Projects
• The Center for American Progress (CAP) Unveils New Proposals for Addressing High Prescription Drug Costs
• The Congressional Budget Office (CBO) Releases Estimate on Employer Small Group Market Delay
• Congressional Budget Office (CBO) Estimate Says Eliminating the Affordable Care Act’s (ACA) Individual Mandate Reduces Budget Deficit by $305 Billion by 2025
• Harvard Study Finds Medicare’s 30-Day Readmission Policy Penalizes Hospitals with Sickest, Poorest Patient Populations
• Department of Health and Human Services (HHS) Office of the Inspector General (OIG) Report Details Centers for Medicare and Medicaid Services Mismanagement of Healthcare.gov Private Contractors

6. Other

• Hospital Trade Association Comments Urge the Centers for Medicare and Medicaid Services (CMS) to Waive Penalties for Proposed Joint Replacement Pay Bundle Till Year Three of the Demonstration

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1. Congress

House

District Work Period: Sept. 21–Sept. 25

House Ways and Means Committee Marks Up and Approves Seven Health, Tax-Related Bills; Approves Two Small Affordable Care Act (ACA) Adjustments

The House Ways and Means Committee held a hearing Sept. 17 to mark up seven bills, two of which are related to health care. The two bills, approved andreported out of the committee, were:

• H.R. 2061, Equitable Access to Care and Health “EACH Act” : Sponsored by Rep. Rodney Davis (R-IL), the bipartisan bill would expand the religious liberty exemption to the individual mandate in the ACA. Sen. Kelly Ayotte (R-NH) has introduced an identical Senate version with 30 cosponsors.
• H.R. 1270, “Restoring Access to Medication Act of 2015” : Sponsored by Rep. Lynn Jenkins (R-KS), the bill would allow people to use their health savings accounts (HSAs), flexible spending accounts (FSAs) and other similar accounts to buy over-the-counter medications. Sen. Pat Roberts (R-KS) introduced a Senate version of the bill, also with bipartisan cosponsors.

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

House Energy and Commerce Health Subcommittee Holds Hearing on Medicaid Legislation

The House Energy and Commerce Subcommittee on Health held a hearing Sept. 18 entitled “Improving the Medicaid Program for Beneficiaries” to hear testimonyfrom disease groups and researchers on four legislative proposals to update programs within Medicaid. The subcommittee last week discussed six additionalMedicaid bills in its ongoing effort to strengthen Medicaid.

The bills discussed at the hearing include:

• H.R. 209, the Ensuring Access to Clinical Trials Act of 2015 : Sponsored by Rep. Lloyd Doggett (R-TX), the bill would allow individuals to participate in clinical trials for rare diseases and conditions without counting the income earned from these trials against their eligibility for Medicaid and Supplemental Security Income.
• H.R. 670, the Special Needs Trust Fairness Act of 2015 : Sponsored by Rep. Glenn Thompson (R-PA) and Committee Ranking Member Frank Pallone (D-NJ), the bill would extend the special needs trust exception to allow nonelderly individuals with disabilities to establish a special needs trust on their own behalf.
• H.R. 3243, to amend title XI of the Social Security Act to clarify waiver authority regarding programs of all-inclusive care for the elderly (PACE programs) : Sponsored by Rep. Chris Smith (R-NJ), the bill would allow CMS to expand the PACE demonstration model to new populations such as younger people with disabilities, individuals at-risk for needing nursing home care and others.
• The Medicaid DOC Act : Sponsored by Rep. Chris Collins (R-NY), the bill would require state Medicaid programs that operate fee-for-service and/or primary care case management programs to include a directory of physicians who served Medicaid patients in the prior six months on the Medicaid program’s website.

Witness List

Michael Boyle, M.D.
Vice President of Therapeutics Development
The Cystic Fibrosis Foundation

Tim Clontz
Senior Vice President for Health Services
Cone Health

Richard Courtney
President
Special Needs Alliance

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

Conservative Republican Study Committee Releases Their Desired Budget

On Sept. 15, Chair of the Republican Study Committee Bill Flores (R-TX) offered his caucus’s government funding proposal,the Responsible Spending and Accountability Act (RSAA) of 2015, which is similar to the budget passed by the House and Senate. The RSAA would adopt the FY 2016 appropriations package, including the six appropriationbills passed by the House earlier this year. It would also include several conservative policy priorities, including measures to defund all abortionproviders, ban the sale of fetal tissues, defund the Affordable Care Act (ACA) and limit executive authority over immigration amnesty and the Iran nuclearagreements.

In addition to 12 appropriations bills, the RSAA includes more than 180 amendments adopted on the House floor from 107 Members of Congress, which includebolstering funding for national security, decreasing bureaucratic authority at the Internal Revenue Service (IRS) and the Environmental Protection Agency(EPA), and reduce taxes and restrictions on businesses and investors. The plan intends to pressure on Republican leadership, who is trying to prevent agovernment shutdown over Planned Parenthood funding.

Senate

Bipartisan Cadillac Tax Repeal Legislation Introduced in the Senate

On Sept. 18 Sens. Dean Heller (R-NV) and Martin Heinrich (D-NM) introduced a billto repeal the Affordable Care Act’s (ACA) Cadillac tax. The Cadillac tax is a 40 percent excise tax on high-cost health insurance plans that begins in2018. The tax was designed to put downward pressure on health costs and payroll taxation. The tax applies to family health care coverage exceeding $27,500and individual coverage exceeding $10,200, with low inflation adjustments intended to capture more taxpayers over time. The biggest obstacle to the bill,aside from President Obama’s veto, is the cost of repealing the tax. The Congressional Budget Office (CBO) projects the tax will generate $87 billion forthe government over the next decade. The bill is a Senate companion to U.S. Congressman Joe Courtney’s (D-CT) House legislation. There are two bills in theHouse of Representatives on this issue, which combined have 288 cosponsors.

A joint press release on the legislation can be found here.

Senate Judiciary Antitrust Subcommittee to Hold Hearing on Consumer Impact of Health Insurance Industry Consolidation

The Senate Committee on Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights has scheduled a hearing entitled “ExaminingConsolidation in the Health Insurance Industry and its Impact on Consumers” on Tuesday, Sept. 22, 2015, at 10 a.m., in Room 226 of the Dirksen SenateOffice Building. Members will question witnesses on the consumer impacts of the proposed insurance industry mergers of Anthem and Cigna and of United andHumana that were announced earlier this year. The impending mergers involving these four major providers have raised concerns about antitrust issues aswell as patient choice.

Witness List

Mr. Mark T. Bertolini
Chairman and Chief Executive Officer
Aetna, Inc.

Mr. Joseph R. Swedish
President and Chief Executive Officer
Anthem, Inc.

Dr. Paul Ginsburg
Norman Topping Chair in Medicine and Public Policy
University of Southern California

Dr. Leemore S. Dafny
Professor
Kellogg School of Management, Northwestern University

Mr. Richard J. Pollack
President and Chief Executive Officer
American Hospitals Association

Mr. George Slover
Senior Policy Counsel
Consumer Union

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

Senate Health, Education, Labor and Pensions (HELP) Subcommittee Holds Hearing on the Food and Drug Administration’s (FDA) Progress on BiosimilarsImplementation

The Senate HELP Subcommittee on Primary Health and Retirement Security held a hearing Sept. 17 in which FDA’s Director of the Center for Drug Evaluationand Research, Jane Woodcock, testified that should the Centers for Medicare and Medicaid Services (CMS) proceed with its proposal to put biosimilars thatreference the same brand biologic into single billing codes, the FDA would collaborate with CMS to develop a method to use some codes, or “codingmodifiers,” to track which patients received which medications.

The hearing gave committee members an opportunity to receive a status report on the progress FDA has made on implementing legislation that created apathway for biosimilars to be approved. Director Woodcock asked legislators for additional financial resources for educational campaigns for targetstakeholder groups around biosimilars. At the hearing, Sen. Christopher Murphy (D-CT) questioned Director Woodcock on how CMS’s biosimilar billing proposalwould affect her agency’s use of the codes for safety purposes, and Sens. Tim Scott (R-SC) and Elizabeth Warren (D-MA) probed Director Woodcock about theagency’s delay in releasing guidance documents on biosimilar labeling and interchangeability. The FDA intends to release that guidance later this year. InAugust the FDA released a naming guidance document that proposed adding non-meaningful, four-letter suffixes to the nonproprietary names of biologics andbiosimilars.

Witness List

Janet Woodcock, M.D.
Director
Center for Drug Evaluation and Research, Food and Drug Administration

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

Senate Health, Education, Labor and Pensions (HELP) Committee Holds Hearing on Electronic Health Records; Chair Calls for Delay of Stage 3 ofMeaningful Use Rules Until 2017

Senate HELP Committee Chair Lamar Alexander (R-TN) held a hearing Sept. 16 to discuss ways to improve care through increasing patients’ accessibility totheir own health records. At the hearing, Chair Alexander called on the Department of Health and Human Services (HHS) to delay the agency’s final rule forthe third stage of meaningful use of the electronic health records program until 2017 and to phase-in the last stage of the program’s requirements based onhow successfully it is implemented. Provider groups have voiced similar concerns and have asked the agency to hold off on the changes to Stage 2 and delayfinalizing the third stage of the meaningful use program. The White House Office of Management and Budget is reviewing both the modifications to the secondstage of the program and the foundational plans for the third stage of the program. Witnesses at the hearing testified about the need to involve patientsin their own care and the challenges surrounding that task. Chair Alexander indicated that he and committee staffs are crafting a handful of legislativechanges to improve the meaningful use program.

Witness List

Raj Ratwani, Ph.D.
Scientific Director, National Center for Human Factors in Healthcare, MedStar Health
Assistant Professor of Emergency Medicine, Georgetown University School of Medicine

Kathy Giusti, MBA
Founder and Executive Chairman
Multiple Myeloma Research Foundation

Eric Dishman
Intel Fellow, General Manager for Health and Life Sciences
Intel Corporation

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

Democratic, Bicameral Legislation Proposed to Allow the Government to Negotiate Prescription Drug Prices

Sen. Bernie Sanders (I-VT) and House Oversight and Government Reform Committee Ranking Member Elijah Cummings (D-MD) recently introduced legislation toaddress rising prescription drug prices. The Prescription Drug Affordability Act of 2015 (S.2023 and H.R.3513)authorizes the Secretary of the Department Health and Human Services (HHS) to negotiate drug prices with pharmaceutical companies for the Medicare program.The bill also includes tougher penalties for drug companies that commit fraud, and bans the practice of brand-name drugmakers’ paying competitors to keeplower-priced generic substitutes off the market. The bill also lowers barriers to the importation of lower-cost drugs from Canada. The legislation iscosponsored by Democrats including Sen. Al Franken (MN) and Reps. Keith Ellison (MN), Eleanor Holmes Norton (D-DC) and John Sarbanes (MD). Data from theCenters for Medicare and Medicaid Services show that drug prices rose more than 12 percent last year, a gain that is more than double the rise in overallmedical costs. The Congressional Budget Office historically has said that government negotiations for drugs in the Medicare program would not save theprogram money.

A fact sheet on the bill can be found here.

A press release on the legislation can be foundhere.

2. Administration

Federal Judge Issues Injunction Against Centers for Medicare and Medicaid Services’ Fixed Indemnity Rule

On Sept. 11, Federal Judge Royce Lambert issued a permanent injunction in Central United Life v. Burwell that bars the Obama Administration fromenforcing a 2014 rule to restrict the sale of stand-alone “fixed indemnity” insurance plans unless they include coverage that meets the Affordable CareAct’s (ACA) individual mandate requirements. These plans are sometimes called “skimpy plans.” In the rule, CMS allows for the continued marketing ofper-service indemnity policies, but only if certain requirements are met.

Central United Life Insurance Company, which offers fixed indemnity plans, brought the lawsuit against the Department of Health and Human Services (HHS) ongrounds that the rule violated previous federal law allowing fixed indemnity plans. Pre-ACA regulations had provided that fixed indemnity coverage had topay benefits on a per-period basis, for example, $100 per day of hospitalization. In the new regulation, an insurer could pay either a service-basedbenefit or a time-based benefit, but, once an insured had a triggering event, such as a diagnosis of cancer, the carrier would have to pay a set benefitand not an “excepted benefit.” CMS’s rule applies to individual hospital indemnity insurance, individual critical illness insurance and other individualsupplemental health insurance products. Companies that violated that rule would be subject to fines of up to $100 per day per customer.

Food and Drug Administration (FDA) Releases Final Rule on Drug Destruction Authority at the U.S. Border

FDA finalized without changes a final rule that implements Section 708 of theFood and Drug Administration Safety and Innovation Act (FDASIA), which allows the agency to destroy personally imported drugs valued at or below $2,500that have been refused at the U.S. border. The rule is designed to prevent successive attempts at importation. The rule also requires FDA to providewritten notice to owners or consignees of the drugs of the agency’s plan to destroy the drugs and gives the owner of the drugs the option to presenttestimony prior to the destruction of the drugs. A group of bipartisan senators sent a letter to FDA inJune 2014 concerning the proposed regulation, arguing that it “constitutes a potential health threat to hundreds of thousands of Americans who receivetheir affordable drugs from safe, licensed and legal pharmacies in Canada.” In the letter, they requested “the final regulation contain a requirement thatpatients be notified that their drugs could be destroyed at least six months in advance of their medication being denied to them.” The rule becomeseffective Oct. 15, 2015.

The Food and Drug Administration (FDA) Declines Request for Special Flexibility for Orphan Drug Applications

On Sept. 17, the Food and Drug Administration declined a request from the National Organization for Rare Disorders (NORD) to officially provide “specialflexibility” as the agency undergoes its review process for applications for orphan drugs. In the decision, FDA rationalized that such a policy could imply an abdication ofsafety and effectiveness standards. FDA noted that orphan drugs have been aided by a number of actions, including having official consent to perform onlyone trial and having smaller clinical trial populations (sometimes with fewer than 20 participants). FDA’s action came in response to a 2011 citizen petition submitted by NORD to formalize the leniency thatregulators have historically given to orphan drugs. Studies are more difficult to conduct because, by definition, the diseases are rare and the number ofindividuals available for clinical trials is smaller. The citizen petition also sought a formal acknowledgement from FDA that orphan drug clinical trialsand application reviews are “qualitatively and quantitatively different” from those encompassing standard prescription drugs.

President Obama Nominates Food and Drug Administration (FDA) Deputy Commissioner Robert Califf to Head the Agency

On Sept. 15, President Obama announced the nomination ofFDA Deputy Commissioner Robert Califf, a cardiologist and a former Duke professor, to serve as Administrator to the Food and Drug Administration. SinceFebruary 2015, Dr. Califf has been serving as deputy commissioner for medical products and tobacco and managing FDA’s Office of Special Medical Programs.Dr. Califf additionally served on the Institute of Medicine committees that recommended Medicare coverage of clinical trials and the removal of ephedrafrom the market. In his current role, he directs FDA efforts covering precision medicine, combination products, orphan drugs, pediatric therapeutics andthe advisory committee system.

Federal Exchange CEO Sends Letter to Insurers to Reaffirm Centers for Medicare and Medicaid Services’s (CMS) Dedication to Its Out-of-Pocket CapsCalculation

The Obama Administration sent aletter to a trade association representing larger employer employee benefit and compensation insurers, the ERISA IndustryCommittee, reaffirming the Administration’s controversial change to the method for calculating 2016 out-of-pocket caps. On Nov. 26, 2014, the Department ofHealth and Human Services (HHS) published a notice of proposed rulemaking to clarify that “the annual limitation on cost sharing for self-only coverage beapplied to all individuals regardless of whether the individual is covered by a self-only plan or is covered by a plan that is other than self-only.”

In the letter from Healthcare.gov CEO Kevin Counihan, he stated, “We believe that applying the individual $6,850 maximum annual limitation on cost sharingto individuals covered by a plan that is other than self-only helps remedy the difficulty a consumer could face in paying up to $13,700 out-of-pocket forcertain covered medical care under the plan because he or she purchased family coverage instead of self-only coverage.” The new policy is meant to protectconsumers enrolled in family coverage from running up medical bills of more than $6,850 per year and the policy applies to all non-grandfathered small andlarge group health plans including self-insured plans.

Bureau of Labor Statistics (BLS) Releases Data Hinting at Potential for Higher Medicare Part B Premiums in 2016 for Some Beneficiaries

BLS released data Sept. 16 that means it is likely that Social Security recipients will not receive a cost of living adjustment (COLA). Medicarebeneficiaries who pay the lowest Part B premium directly to Social Security — about 70 percent of all beneficiaries — can’t be required to pay any premiumincreases at all next year. Medicare Trustees reported in July that they anticipated Medicare part B premiums to rise because of Medicare policies thathave been successful in pushing more care to the outpatient setting. By law Medicare Part B premiums from beneficiaries are to cover 25 percent of Part B’soverall cost. Because 70 percent of Medicare beneficiaries are held harmless in instances in which there is no COLA and premiums increase, Medicare has tocollect more from a smaller pool of beneficiaries.

On Oct. 15, the Bureau of Labor Statistics will release the final data needed to officially calculate the cost-of-living adjustment; at that time, SSA willannounce a cost-of-living adjustment for 2016.

3. State Activities

Montana Submits Formal Medicaid Expansion Waiver to Centers for Medicare and Medicaid Services (CMS)

On Sept. 16, Montana submitted aMedicaid expansion waiverto CMS, which would require income-eligible Montanans to pay monthly premiums equal to 2 percent of household income as well as the maximum copaypermitted. The state has asked CMS to approve the waiver by Nov. 1, so coverage can start in January with health insurance exchange open enrollment. Underthe Affordable Care Act, the federal government will fund 100 percent of the expansion through 2016, which will gradually decline to 90 percent by 2020.

Montana will be the first state in the nation to use a private company to administer Medicaid expansion under the Affordable Care Act (ACA), if CMSapproves the waiver. The state legislature approved the expansion this spring, making Montana the 29th state to expand Medicaid under the ACA. Theexpansion is expected to provide additional coverage to an estimated 70,000 Montanan residents who make between 100 and 138 percent of the federal povertyline. CMS has expressed some concern over the waiver, due to its cost-sharing provisions on low-income residents. CMS will be taking public comment on thestate’s proposal through Oct. 15.

Virginia Hospitals Launches Campaign Against Falling Medicare and Medicaid Reimbursements

The Virginia Hospital and Healthcare Association has initiated a grassroots movement called “Hospitals:Our Lifeline” to raise state