Washington Healthcare Update

December 21, 2015

Pardon Our Dust

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This Week:Congress raced to exit for the holidays and passed a $1.5 trillion omnibus spending bill and $680 billion tax-extenders package on Friday. The omnibusfunds the government through September 2016. President Obama signed the Legislation on Friday. In that package, the medical device tax was suspended fortwo years, as was the health insurance tax. The Cadillac tax implementation was also delayed. Both bodies went on to pass legislation concerning meaningfuluse and other Medicare changes.

Healthcare.gov signed up 6 million people for coverage beginning Jan.1.

The House convenes on Jan. 5. Majority Leader Kevin McCarthy (R-Calif.) said the House will vote next month on a reconciliation measure that would repealkey portions of the Affordable Care Act.

The State of the Union is scheduled for Jan. 12.

Because of the congressional recess and holidays, the next update will be Monday, January 11, unless there is breaking healthcare news.

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

1. Congress


Energy and Commerce Committee Members Ask GAO to Assess FDA’s Review of NBCDs

House Energy and Commerce Committee members wrote aletter asking the GovernmentAccountability Office (GAO) to conduct a study to assess the Food and Drug Administration’s (FDA) regulatory pathway for reviewing generic non-biologiccomplex drugs (NBCDs). The lawmakers note that non-biologic complex drugs are being approved through the same regulatory pathway as small molecule genericdrugs. They ask GAO to evaluate whether generic NBCDs that are not fully characterized present unique challenges in meeting generic-drug approval standardsthat are different from those presented by small-molecule generic drugs.

For the purposes of the study, the lawmakers stated that an NBCD is not fully characterized NBCD if: 1) the active ingredient has molecular diversity; 2)scientific analytic methodologies are unable to fully identify the molecular structures and physiochemical properties of the active ingredient; and 3) thenature of the active ingredient is not understood sufficiently to identify all the molecular components that produce the therapeutic effect of the drug andthe mechanisms of action that produce such effect. They also note that the study they are requesting rel=”noopener noreferrer” is based on the Generic Complex Drugs Safety and Effectiveness Act, a bill introduced by Rep.Michael Burgess (R-TX), and that it includes additional questions that should also be addressed.

Oversight Republicans Investigating Generic Backlog

House rel=”noopener noreferrer” Oversight Committee Republicans wrote a letter to the U.S. Foodand Drug Administration (FDA) asking for documents about its review of Abbreviated New Drug Applications (ANDA). The letter said there are questions aboutthe competence of FDA’s review process of generic drug applications due to recent price increases of off-patent drugs with no competitors. FDA oversight ofpriority review vouchers is also in question. According to the letter, the vouchers have increased in resale value from $67.5 million to $375 million inthe past year.

Turing Pharmaceuticals CEO Martin Shkreli has recently come under allegations that he bought a $3 million majority stake in KaloBios, which makes a drugthat has yet to be approved in the U.S., to get a priority review voucher and sell it. The members want to know how safeguards work in the priority reviewvoucher program because some scenarios raise questions about companies that apply for vouchers only to capitalize on the resale market.

House Lawmakers Ask CMS to Change Clinical Diagnostic Laboratory Payment Proposed Rule

On Dec. 17, House lawmakers joined a group a senators in asking the Centers for Medicare and Medicaid Services (CMS) to make changes to the MedicareClinical Diagnostic Laboratory Tests Payment System Proposed Rule. The lawmakers expressed their concern that laboratories will not be able to comply withthe proposed rule’s implementation timeline, and asked that it be delayed.

A number of laboratories are prohibited from participating in the reporting process, which the members of Congress believe will skew the market data andresult in Medicare rates that are not reflective of true market prices. They suggest that CMS use a more inclusive method of determining which laboratoriesshould report data and allow any laboratory to voluntarily report. They also ask that CMS delay implementation of the reporting timeline, because it giveslittle time to prepare, certify and submit data points.

Also, the Protecting Access to Medicare Act of 2014 (PAMA) creates a new category of tests, Advanced Diagnostic Laboratory Tests (ADLTs) — these are teststhat must analyze multiple biomarkers of DNA, RNA or proteins. However, CMS excludes proteins from the criteria in the proposed rule. The members alsoasked that CMS change the ADLT definition to reflect the statute.

To read the letter, clickhere.


Senate and House Pass Medicare Changes at Last Minute

A bipartisan group of members was successful in expediting passage of S. 2425 sponsored by Senators Rob Portman (R-OH) and Bob Casey (D-PA). Thislegislation includes a blanket hardship exemption from 2015 meaningful use penalties to all providers who apply for it. Doctors would have until March 15to apply for the exemptions and Hospitals until April 1. The legislation also provides for a one-year delay in applying Medicare competitive bid pricing tocomplex rehab accessories.

An attempt was made to pass legislation to grandfather Hospital Outpatient Departments in the development stage so they would not be subject to siteneutral payment requirements just enacted. However, that effort did not get enough momentum to be considered before both chambers adjourned.

Senators Ask CMS to Stop Rising Drug Prices

On Dec. 17, a group of Democratic senators wrote to the Centers for Medicare and Medicaid Services (CMS) asking what it can do to stop rising drug prices.Despite rising interest from lawmakers, there is little indication that Congress has a consensus proposal to prevent higher drug prices. Therefore,lawmakers are looking to CMS for help. They also asked CMS a number of additional questions: 1) can CMS give the public comparisons of drugs based on priceand effectiveness; 2) how does CMS plan to ensure that exchange plans offer sufficient drug coverage; 3) how does CMS plan to use its authority to examinethe potential of alternative payment mechanisms; 4) how can CMS use comparative effectiveness research to improve beneficiary outcomes and lower programspending; and 5) how is CMS dealing with Medicaid managed care plans? The lawmakers also want CMS to advertise its website for comparing drug coverage andcost sharing in individual plans.

Sen. Ben Sasse Lifts Hold on HHS Nominees After Receiving Information from HHS

Sen. Ben Sasse (R-NE) recently lifted his hold on the pending nominees in the U.S. Department of Health and Human Services (HHS). This list includes AndySlavitt for Director of the Centers for Medicare and Medicaid Services (CMS) and Robert Califf for commissioner of the U.S. Food and Drug Administration(FDA). Sasse lifted the hold after HHS gave his office the information he requested regarding the Affordable Care Act’s (ACA) CO-OP program. There has beendiscussion of holding a vote on Califf’s nomination early next year.

2. Administration

Discharge Planning Proposed Rule Focuses on Patient Preferences

On rel=”noopener noreferrer” Dec. 14, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule to revise the discharge planning requirementsthat hospitals, including long-term care hospitals and inpatient rehabilitation facilities, critical access hospitals and home health agencies, must meetin order to participate in the Medicare and Medicaid programs. The proposed changes would tweak the discharge planning requirements by: bringing them intocloser alignment with current practice; trying to improve patient quality of care and outcomes; and reducing avoidable complications, adverse events andreadmissions.

The proposed rule would also implement the discharge planning requirements of the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACTAct), which aims to improve consumer transparency and beneficiary experience during the discharge planning process. The IMPACT Act requires hospitals,critical access hospitals and certain post-acute care providers to use data on both quality and resource use measures to assist patients during thedischarge planning process, while taking into account the patient’s goals of care and treatment preferences.

Under the proposed rule, hospitals and critical access hospitals would be required to develop a discharge plan within 24 hours of admission or registrationand complete a discharge plan before the patient is discharged home or transferred to another facility. This would apply to all inpatients and certaintypes of outpatients, including patients receiving observation services, patients who are undergoing surgery or other same-day procedures where anesthesiaor moderate sedation is used and emergency department patients who have been identified by a practitioner as needing a discharge plan.

Also, hospitals, critical access hospitals and home health agencies would be required to:

  • Provide discharge instructions to patients who are discharged home (proposed for hospitals and critical access hospitals only);
  • Have a medication reconciliation process with the goal of improving patient safety by enhancing medication management (proposed for hospitals and critical access hospitals only);
  • For patients who are transferred to another facility, send specific medical information to the receiving facility; and
  • Establish a post-discharge follow-up process (proposed for hospitals and critical access hospitals only).

Comments on the proposed rel=”noopener noreferrer” rule must be received no later than 5 p.m. on Jan. 4, 2016.

For more information, clickhere.

Center for Health Care Strategies Says Additional Measures Needed to Test Duals Demos

The Centers for Medicare and Medicaid Services (CMS) is currently developing a star-rating system for Medicare-Medicaid plans participating in the dualsdemonstrations. However, the non-profit Center for Health Care Strategies (CHCS) says that more quality measures on care coordination and care managementare necessary to measure the performance of both the demos and the integrated special needs plans. CHCS says that Medicare-Medicaid enrollees are beginningto benefit from integrated care, but that current measures may not fully capture how the programs are improving individual lives.

CMS says that the star-ratings system will include measures to allow the comparison of the duals demonstrations’ performance to other such plans, MedicareAdvantage-Prescription Drug plans and fee-for-service Medicare. The rating system will address 1) community integration and long-term services and support;2) the management of chronic conditions and health outcomes; 3) prevention; 4) member experience with plans and providers; and 5) plan performance onadministrative duties. Comments are due for the Medicare-Medicaid plans’ star-ratings system by Dec. 21.

IRS Publishes Guidance Restating Employer Reporting Penalty Relief

On Dec. 17, the Internal Revenue Service (IRS)published guidance saying that it will not punish employers who do not file correct formsreporting on health benefits to employees — so long as they make a good faith effort to collect that information. The guidance is intended to give moretime to develop appropriate procedures for collecting data and compliance with new reporting requirements. When penalties are enforced, employers would befined up to $250 per form or a maximum of $3 million for having false or missing data. The guidance clarifies previous IRS proposals, including one thatemployers with 50 or more workers have to provide coverage that meets certain benefits, or pay a fine. The new fine for 2016 is $2,160 per employee for nocoverage offered, and $3,240 if coverage is offered that doesn’t meet minimum requirements. IRS seeks comments on this and other provisions by Feb. 18,2016.

3. State Activities

Michigan: CMS Announces Approval of Michigan 1115 Waiver

On Dec. 17, the Centers for Medicare and Medicaid Services (CMS)announced its approval of awaiver Michiganneeds to extend its Medicaid demonstration — without the wavier, the demonstration would have ended in April 2016. The waiver incorporates someconservative concepts, including a requirement that Medicaid enrollees earning above the poverty line must choose after four years of coverage to eitherenroll on healthcare.gov or stay in Medicaid and pay up to 7 percent of household income toward health care costs. This is higher than the 5 percentceiling that CMS gives to other states.

A list of special terms and conditions can be foundhere.

Iowa: Transition to Medicaid Managed Care Cannot Start Yet

The Centers for Medicare and Medicaid Services (CMS) told Iowa on Dec. 18, that the state cannot begin implementing a transition to Medicaid managed careat the start of 2016. Iowa has been pushing for that start date. Instead, CMS believes the state will be ready March 1.

CMS has told Iowa that there are gaps in the state’s readiness to implement a statewide managed care program, including CMS’s belief that the managed careplans’ provider networks were not fully developed.

4. Regulations Open for Comment

Department of Health and Human rel=”noopener noreferrer” Services (HHS) Proposes Updates to “the Common Rule”

HHS and 15 other agencies released a notice of proposed rulemaking Sept. 2 for the Common Rule, theexisting regulatory framework to transparency and oversight for scientific research involving human subjects. The proposed changes are to address thesubstantial changes that have occurred within scientific research. Current regulations have been in place since 1991 and are followed by 18 federalagencies. Proposed updates to the rule include:

  • Strengthened informed consent provisions
  • Requirements for administrative or IRB review that would align better with the risks of the proposed research
  • New data security and information protection standards
  • Requirements for written consent for use of an individual’s biological samples, for example, blood or urine, for research with the option to consent to their future use for unspecified studies
  • Requirement, in most cases, to use a single institutional review board for multisite research studies
  • Application of rule to clinical trials, regardless of funding source, if they are conducted in a US institution that receives funding from a Common Rule agency for research involving human participants.

In July 2011, HHS issued an Advance Notice of Proposed Rulemaking to seek the public’s input on updating the Common Rule. The proposed rule issued reflectsinput and requests comments for HHS to consider as it drafts rel=”noopener noreferrer” the final rule. HHS will take public comment on the proposed rule until Jan 6, 2016.

For a press release detailing changes to the rule visit hhs.gov.

Food and Drug Administration (FDA) Issues Final Rule to Phase Out Trans Fats

FDA issued a final rule June 16that gives the food manufacturers three years to phase out partially hydrogenated oils (PHOs), which are still used in a wide variety of food products frommicrowave popcorn to cake frosting. The decision finalizes an agency determination that PHOs, the primary dietary source of artificial trans fat inprocessed foods, are not “generally recognized as safe” or GRAS for use in human food. Since 2006, manufacturers have been required to include trans fatcontent information on the Nutrition Facts label of foods. Between 2003 and 2012, the FDA estimates that consumer trans fat consumption decreased about 78percent and that the labeling rule and industry reformulation of foods were key factors in informing rel=”noopener noreferrer” healthier consumer choices and reducing trans fat infoods. Comments on the final rule are due by June 18, 2018.

More information on FDA’s decision can be found in the agency’s press release.

CMS Releases Proposed Rule with New Discharge Planning Requirements

The Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would require all hospitals develop awritten discharge plan for all inpatient and many outpatients in an attempt to reduce readmissions. The proposed rule, “Medicare and Medicaid Programs;Revisions to Requirements for Discharge Planning for Hospitals, Critical Access Hospitals, and Home Health Agencies,” would require hospitals to develop adischarge plan based on the needs of each applicable patient within 24 hours of admission. The plan would include a medication reconciliation process.Hospitals would be required to establish a process for patients who are transferred to a different facility or who went home.

CMS noted that the requirements could help reduce readmissions by a third. Until now, hospitals have had the ability to decide which patients need awritten rel=”noopener noreferrer” discharge plan, and have increasingly used the plans to reduce readmission and avoid the Affordable Care Act’s (ACA) financial penalties. Commentswill be accepted until no later than 5 p.m. on Jan. 4, 2016.

A press release can be found here.

CMS Issues Final Rule to Ensure Medicaid Services for Beneficiaries and Issues Request for Information on the Rule

On Oct. 29, the Centers for Medicare and Medicaid Services (CMS) issued a final rule that ensures Medicaid beneficiaries have sufficientaccess to covered Medicaid services. CMS said that the rule, entitled “Methods for Assuring Access to Covered Medicaid Services,” will allow states and CMSto make more informed decisions when considering whether proposed changes to Medicaid fee-for-service payment rates are sufficient to ensure thebeneficiaries’ access to those services. States will have to create access review plans that rel=”noopener noreferrer” outline how states will ensure access to health care servicesand to examine how cuts to provider payments will affect the care received.

The rule strengthens CMS’s oversight of Medicaid reimbursement and beneficiary access to providers. It will go into effect in January and CMS issued a Request for Information (RFI) to get feedback on how to makesure rel=”noopener noreferrer” access requirements are being met. Comments will be accepted until no later than 5 p.m. on Jan. 4, 2016.

EEOC Issues Proposed Rule Amending the Genetic Information Nondiscrimination Act (GINA)

On Oct. 30, the U.S. Equal Employment Opportunity Commission (EEOC) issued a proposed rule clarifyingwhen, under the Genetic Information Nondiscrimination Act (GINA), employers who offer wellness programs as part of group health plans can provideincentives to an employee’s spouse to provide information about his or her current or past health status. (This is different from the April EEOCproposed rulerelated rel=”noopener noreferrer” to the Americans with Disabilities Act.) The proposed rule clarifies that an employer can offer limited incentives in exchange for the employee’sspouse providing information about his or her current or past health status. EEOC will accept comments on the new proposed rule through Dec. 29, 2015.

A press release on the proposed rule can be found here.

CMS Soliciting Comments on Episode Groups as Required by MACRA

The rel=”noopener noreferrer” Centers for Medicare and Medicaid Services (CMS) is solicitingcommentson episode groups and on specific clinical criteria and patient characteristics to classify patients into care episode and patient condition groups asrequired by Section 101(f) of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), enacted April16, 2015. The purpose of this commentary is to provide background and context to solicit stakeholder input on the episode groups that CMS has developedpursuant to Section 3003 of the Affordable Care Act (ACA). CMS is also seeking stakeholder input on the future role of episode groups in resource usemeasurement.

Comments should be sent to episodegroups@cms.hhs.gov by 11:59 p.m. EST on Feb. 15, 2016.

FDA Seeks Comments rel=”noopener noreferrer” on Whether It Should Define “Natural” and If So, How?

Because of a series of competing citizen petitions, GMO labeling issues and congressional concern, the US Food and Drug Administration (FDA) is seekingpublic input on whether it should define the term “natural” for use on food product labels, and, if so, how to do so.

On Nov. 12, FDA published a request for feedback. FDA policy to date hasnot restricted the use of the word “natural” on food labeling unless the product has added color, synthetic substances or flavoring.

FDA has received four citizen petitions over the past two years asking the agency to issue regulations on the use of the term, and in July the House ofRepresentatives passed a proposal on GMOs that would require FDA to define the term “natural” for product labeling.

FDA seeks feedback on the following questions:

  • What types of foods should be able to use the term?
  • Should only raw agriculture products be able to use the term?
  • Should only single-ingredient foods, such as bottled water or bagged spinach, be able to use the term?
  • If multi-ingredient foods can use the term, what types of ingredients would disqualify a product from using it?
  • What data or other information shows how consumers associate, confuse or compare the terms “natural” with “organic”?
  • What data or other information shows how consumers associate, confuse or rel=”noopener noreferrer” compare the term “natural” with the term “healthy”?

The comment period is open until Feb. 10, 2016.

HHS Releases Notice of Benefit and Payment Parameters Proposed Rule for Health Insurance Marketplaces for 2017

On Nov. 20, the U.S. Department of Health and Human Services (HHS) released the proposed rule providing the payment parameters that would applyto the 2017 benefit year and new standards relating to consumers’ experience in the Marketplaces.

The policies included in the proposed rule include payment parameters, Market rules, eligibility, enrollment and benefits.

Highlights of the proposed rule are:

  • Another recalibration of risk adjustment factors for the 2017 year — the department is proposing to incorporate preventive services into their simulation of plan liability as part of the recalibration. They are seeking comments on other improvements that could be made to the risk adjustment methodology;
  • A separate, lower default risk adjustment charge for smaller issuers, defined as issuers with 500 or fewer billable member months in a state’s individual and small group markets combined in a benefit year. HHS believes this proposal would have a minimal impact on risk transfers;
  • A raise in the default risk adjustment charge from the 75th percentile to the 90th percentile of absolute transfers nationwide as a percent of state average premium. This adjustment would be designed to prevent the charge from being a low-cost option for issuers;
  • A federally facilitated Marketplace (FFM) user fee rate of 3.5 percent for 2017 and a fee of 3 percent for those state-based Marketplaces using the federal platform;
  • A maximum annual limitation on cost sharing for 2017 of $7,15