Washington Healthcare Update

March 7, 2016

Pardon Our Dust

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This Week:The President took a victory lap in Wisconsin, announcing that 20 million people have gained health insurance through the Affordable Care Act…That figure includes people newly covered through insurance exchanges,Medicaid expansion and the provision allowing young adults to stay on theirparents’ health plans until they turn 26 years old… HHS estimated that about 6.1 million young adults have gained coverage since 2010… CMS released the final rule concerningpayment and parameters for health policies and exchanges.

1. Congress

House of Representatives


2. Administration

3. The Courts

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress

House of Representatives

House Looks at Legislation Ensuring Removal of Terminated Providers from Medicaid and CHIP

On March 3, the House passedH.R. 3716, “The Ensuring Removal of TerminatedProviders from Medicaid and CHIP Act,” authored by Rep. Larry Bucshon. This legislation would prevent doctors banned from Medicaid and CHIP in one statefrom participating in those programs in other states. It would accomplish this in part by requiring states to set up provider databases. The legislationcame after an HHS Office of Inspector General (OIG) report in August found that Medicaidprograms were still paying millions of dollars to terminated providers who continued participation in other states.

Specifically, OIG found that 12 percent of providers terminated for cause in 2011 were still participating in other states’ Medicaid programs in January2014. These Medicaid programs paid $7.4 million to 94 providers for services performed after each provider’s termination for cause by the initial state.These physicians often found a way to work in another state through a managed care provider.

The legislation included provisions of H.R. 3821, the Medicaid Directory of Caregivers Act (Medicaid DOC Act), legislation Reps. Collins (R-NY) and Tonko(D-NY) introduced to improve access to doctors for Medicaid beneficiaries. This legislation requires states that operate a Medicaid fee-for-service orprimary care case management program to include on the Medicaid program’s website a directory of physicians who served Medicaid patients in the prior year.The listing on the state’s Medicaid website will include the physician’s name, address, telephone number and specialty. This will help Medicaidbeneficiaries easily identify doctors who can serve them.

Energy and Commerce Health Subcommittee Examines Financing and Delivery of Long-Term Care in U.S.

On March 1, the House Energy and Commerce Health Subcommittee held a hearing examining thefinancing and delivery of long-term care in the United States. In 2014, $340 billion was spent on long-term care, amounting to more than 13 percent of thealmost $2.6 trillion spent on personal health expenditures. Subcommittee members and witnesses highlighted the fact that Americans are living longer. Also,with 10,000 baby boomers turning 65 every day, the demand for long-term care is expected to significantly increase. “While long-term care largely differsfrom health coverage or medical care, I know every member of this Committee wants to ensure that frail elderly seniors or disabled individuals across thecountry receive high-quality care,” stated Chairman Pitts.


Alice Rivlin, Ph.D.
Co-Chair, Long-Term Care Initiative, Bipartisan Policy Center

William J. Scanlon, Ph.D.
Consultant, West Health Institute and National Health Policy Forum

Ms. Anne Tumlinson
CEO, Anne Tumlinson Innovations

To see a related press release, click here.

House Energy and Commerce Oversight Subcommittee Holds Hearing on Zika Virus

On March 2, the House Energy and Commerce oversight subcommittee held a hearing examining the U.S. public health response to the Zika virus. Nine witnessesprovided testimony, including Dr. Thomas Frieden, Director of the Centers for Disease Control and Prevention (CDC); Dr. Nicole Lurie, Assistant Secretaryfor Preparedness and Response at the Department of Health and Human Services; and Dr. Anthony Fauci, Director of the National Institute of Allergy andInfectious Diseases (NIAID) at the National Institutes of Health (NIH). Members raised concerns about education on and treatment of the virus. A key topicduring the hearing was the administration’s emergency supplemental appropriation request to respond to Zika both domestically and internationally.

For more information and a full list of witnesses, click here.

To see a related press release, click here.

House Budget Chairman Price Releases Budget Proposal

On March 3, House Budget Chairman Tom Price (R-GA) formally laid out his budget proposal at a House GOP conference meeting. Price and Speaker Paul Ryanface an uphill battle to win over hard-right lawmakers. Passing a budget is a top priority for House GOP leaders this year, but they have been strugglingto unify behind a plan.

At the meeting, Price told lawmakers that his committee would try to pass a budget that funds the government at $1.070 trillion, but includes $30 billionin mandatory savings — this would likely come from cuts to programs like Social Security, Medicare, Medicaid and food stamps. However, many said they donot see much to support in the proposal. If GOP leaders fail to get support from conservatives, it could prevent Ryan’s hope to approve 12 appropriationbills.


Senate Starts Debate on Bill Addressing Opioid Addiction

On March 1, the Senate voted to start debate on the Comprehensive Addiction and Recovery Act (CARA), but there is little agreement on how to handleamendments. Republicans argue that enough money was included in the year-end budget deal for opioid programs, and many anti-addiction groups want the billto move forward with or without the new money.

The bill would not do much to address the epidemic unless it includes funding to support the effort, the White House said in a statement of administration policy on March 1.The administration’s proposed 2017 budget calls for $1 billion in new mandatory funding for opioids and $90 million in discretionary money to expand accessto treatment — including medication-assisted treatment — and to make the overdose antidote naloxone more available. The Senate bill is similar, but differsin that it redirects already appropriated money rather than providing for new funding.

Additionally, the White House said that CARA could interfere with the Centers for Disease Control and Prevention’s (CDC) effort to finalize an opioidprescribing guideline. A CBO score released Feb. 26 estimatesCARA would increase spending by $2 million through 2021. It has been endorsed by more than 130 anti-addiction groups.

On March 2, the Senate passed an amendment to CARA that would let Part D plans lock Medicare beneficiaries at risk of drug abuse into a single physician orpharmacy. Sen. Pat Toomey (R-PA) offered the Stopping Medication Abuse and Protecting Seniors Act (S. 1913) and said that the intention of the bill is tostop beneficiaries from getting multiple opioid prescriptions. The Government Accountability Office (GAO) found that 170,000 Medicare enrolleesparticipated in “doctor shopping” in a single year. The measure meets opposition from the National Community Pharmacists Association but is widely used instate Medicaid programs and the private sector. CMS supports it.

Sen. Jeanne Shaheen’s amendment, which would have provided $600 million in emergency funds for first responders and treatment providers, failed.

Senate Finance Committee Postpones Vote on Wakefield Nomination

The U.S. Senate Finance Committee postposed its vote on Mary Wakefield’s nomination to be deputy secretary of the U.S. Department of Health and HumanServices (HHS). There was no reason given for the postponement, and Chairman Hatch hopes to reschedule in the near future, according to a committeespokesperson.

Sen. Chuck Grassley is opposed to Wakefield’s nomination because he says HHS has not answered questions about fetal-tissue practices at Planned Parenthood.Several investigations have found no wrongdoing at the organization. Wakefield has been the acting deputy secretary since last year.

Sens. Warren and Murray Push for Cures Funding

As part of the Senate HELP committee’s counterpart to the House 21st Century Cures Act, Sens. Elizabeth Warren and Patty Murray are set to introduce a billthat would give NIH and FDA $5 billion in additional funding each year for 10 years. The National Biomedical Research Act would direct money toward certainprograms — including the cancer moon shot, the Precision Medicine initiative and the BRAIN initiative.

All Democrats on the HELP committee have signed on but there is still noword on whether the bill will be considered at the committee’s Cures markupMarch 9. To view the bill, clickhere.

Senators Ask FDA for Efficient Ways to Deliver Cancer Drugs

Sens. Amy Klobuchar and Jeanne Shaheen want the U.S. Food and Drug Administration (FDA) to change the way that drugs are packaged and distributed. Thisrequest comes after a BMJ study concluded that Medicare and private insurers waste almost $3 billionper year on leftover medication from cancer vials — which must be disposed of. “Because the drugs used to treat cancer are expensive, even small amounts ofleftover medication can be extremely costly for patients and the health system,” they write to Robert Califf at FDA.

Sen. Grassley Introduces Medicaid Directory of Caregivers Bill

On March 2, Sen. Chuck Grassley (R-IA) introduced the Medicaid Directory of Caregivers bill (S. 2618) to ensure Medicaid programs give beneficiaries an updated list ofparticipating doctors. The bill would require the publication of a provider directory in the case of states giving medical assistance on a fee-for-servicebasis or through a primary care case management system. The listing, on a state’s Medicaid website, would include the physician’s name, business address,telephone number and specialty. Grassley said Iowa already provides an updated directory through its fee-for-service Medicaid program and can serve as anexample for other states. Provisions from the companion bill were passed by the House this week.

2. Administration

CMS Issues Final Rule for 2017 Notice of Benefit and Payment Parameters

On March 1, the Centers for Medicare and Medicaid Services (CMS) issued thefinal 2017 HHS Notice of Benefit and Payment Parameters for the 2017 coverage year, along with related guidance documents.

The rule finalizes provisions to: help consumers with surprise out-of-network costs at in-network facilities; provide consumers with notifications when aprovider network changes; give insurance companies the option to offer plans with standardized cost-sharing structures; provide a rating on HealthCare.govof each QHP’s relative network breadth (for example, “basic,” “standard” and “broad”) to support more-informed consumer decision-making; and improve therisk adjustment formula.

CMS also finalized the open enrollment period for future years. For coverage in 2017 and 2018, open enrollment will begin on Nov. 1 of the previous yearand run through Jan. 31 of the coverage year. For coverage in 2019 and beyond, open enrollment will begin on Nov. 1 and end on Dec. 15 of the precedingyear (for example, Nov. 1, 2018, through Dec. 15, 2018, for 2019 coverage).

The fact sheet with details on these key provisions and others can be found here.

In addition to the final Notice of Benefit and Payment Parameters for 2017, CMS released its final Annual Letter to Issuers. This provides issuersinterested in offering coverage in states with a Federally-facilitated Marketplace information on key dates for the Qualified Health Plan (QHP)certification process; standards that will be used to evaluate QHPs for certification; and oversight procedures, consumer support policies and programs.The letter is available here.

Additionally, CMS released a bulletin on the Rate Filing Justifications for the 2016 Filing Year for Single Risk Pool Compliant Coverage. This bulletinprovides guidance on the timing for state Departments of Insurance and health insurance insurers to submit Rate Filing Justifications for proposed rateincreases in the individual and small group markets. The guidance, which offers states greater flexibility than the proposed bulletin, is available here.

Key dates for the 2016 calendar year can be found here.

CMS released a set of Frequently Asked Questions (FAQs) related to the Moratorium on the Health Insurance Provider Fee (enacted in the ConsolidatedAppropriations Act of 2016, P.L. 114-113), which suspends collection of this fee for the 2017 plan year. This guidance urges issuers to lower theiradministrative costs and premiums appropriately to account for the moratorium. The FAQs are available here.

Lastly, CMS released guidance addressing the transitional policy for plans that have been continuously renewed since 2014. To allow for a smooth wind-downof transition relief, states and issuers will have the option to renew nongrandfathered individual and small group health policies, but these policies mustend no later than Dec. 31, 2017. This approach offers flexibility to states and issuers to align the end of these policies with open enrollment and thestart of the calendar year, facilitating smooth transitions to Affordable Care Act-compliant policies. The guidance is available here.

CMS Updates Guidance on HITECH

On March 1, the Centers for Medicare and Medicaid Services (CMS) announced the availability of HITECH administrative matching funds to help professionalsand hospitals eligible for Medicaid EHR incentive payments connect to other Medicaid providers. CMS issued a letter to states updating prior guidance onwhen state costs related to promoting Health Information Exchange (HIE) can be matched at the 90 percent HITECH — Health Information Technology forEconomic and Clinical Health Act — administrative rate to support the coordination of care and transitions of care requirements in Meaningful Use modifiedStage 2 and Stage 3.

The letter can be found here.

CMS Releases Next Steps Toolkit for Providers on ICD-10 Progress

On March 1, the Centers for Medicare and Medicaid Services (CMS) released the Next Steps Toolkit to help providers track and improveICD-10 progress. The toolkit includes information and resources on how to:

  • Assess ICD-10 progress using key performance indicators to identify potential productivity or cash flow issues
  • Address opportunities for improvement
  • Maintain progress and keep up to date on ICD-10

In the coming weeks, CMS will also release a companion infographic with simple steps from the Next Steps Toolkit.

For more information, click here.

HHS Met Goal for Alternative Payment Ahead of Schedule

The Obama administration met its goal of tying 30 percent of Medicare payments to alternative payment models almost a full year ahead of schedule,according to federal officials. In 2016, Medicare is projected to pay more than $117 billion to accountable care organizations, bundled payment programsand other alternatives to fee-for-service medicine. The shift to value-based care has apparently been aided by Obamacare’s delivery system reformprovisions.

CMS wants to tie 50 percent of Medicare payments to alternative payment models by 2018. When the goal was first outlined in January 2015, around 20 percentof Medicare payments — $72.4 billion — in provider payments went through alternative models. Before the passage of the Affordable Care Act (ACA), Medicarepaid almost nothing through alternative payment arrangements.

Food and Drug Administration Misses Deadline on Biosimilars

The U.S. Food and Drug Administration (FDA) missed the deadline to give lawmakers an estimated timeline of when FDA will finalize several biosimilarguidance documents. The timeline was required by the 2016 omnibus spending bill. Stakeholders have been waiting for FDA guidance on the interchangeabilityof biosimilars with their reference products, labeling of biosimilar product and the statistical approaches to evaluating analytical similarity data tosupport a demonstration of biosimilarity. Newly confirmed FDA Commissioner Robert Califf declined to provide details on the timing of the guidance at anappropriations hearing on March 2.

OMB Reviewing Proposed Rule to Increase Medicare Appeals Efficiency

The White House Office of Management and Budget (OMB) is reviewing a proposed rule to make Medicare appeals more efficient and curb the increase inappeals. The rule would change the appeals process in fee-for-service, managed care and the drug benefit programs — it does not, however, give details. TheOffice of Medicare Hearings and Appeals (OMHA) has struggled with a backlog, and the proposed rule would alleviate this issue. In its 2017 budgetjustification, OMHA stated that the number of appeals increased 1,222 percent between 2009 and 2014 and this has had a detrimental impact on the agency’sperformance. OMB started reviewing the proposed rule on March 1 and typically has 90 days for review.

Department of Justice Announces That Olympus Admits to Charges of Bribery in Medical Device Business

On March 1, the Justice Department announced thatthe medical equipment company Olympus, which produced endoscopes linked to hospital infections, will pay $646 million for making illegal payments todoctors and hospitals in the United States and Latin America. Olympus admitted to criminal charges that it won new business and rewarded sales by givingdoctors and hospitals consulting payments, foreign travel, meals and millions of dollars in grants and free endoscopes. It also faced civil charges — underthe False Claims Act — that its kickbacks caused false claims to be submitted to federal health care programs.

Olympus is entering into a three-year deferred prosecution agreement that will allow it to avoid conviction if it complies with certain requirements. Itsubmitted to a corporate integrity agreement with HHS as well. The company will pay $623.2 million to resolve these criminal charges.

Olympus will also pay $22.8 million to resolve separate criminal charges related to the Foreign Corrupt Practices Act (FCPA) in Latin America. It paidnearly $3 million in bribes to practitioners in Central and South America from 2006 to 2011. There will be a separate deferred prosecution agreement toresolve those charges.

The company is under scrutiny from the U.S. Food and Drug Administration (FDA) because its endoscopes were linked to infections at two California hospitalsin 2015.

3. The Courts

SCOTUS Declines Origination Case

On Feb. 29, the Supreme Court refused to hear Hotze v. Burwell — a case challenging the Affordable Care Act (ACA), brought by an anti-gay Houstonphysician who warned that same-sex marriage would lead to sodomy among kindergarteners. The court rejected the case in a single-line order. The lawsuitalleged that the legislation started in the Senate and not the House, as the Constitution requires for bills that raise revenue. The denial was expectedbecause the case has been dismissed by the lower courts.

Pay-For-Delay Court Rulings

The 1st Circuit became the second U.S. appeals court to rule thatsettlement deals in pharma patent cases involving noncash payment from a brand drug company to a generic drugmaker could constitute antitrust violations.This decision was based on the Supreme Court’s 2013 ruling in FTC v. Actavis. It reviewed a case involving Warner Chilcott’s oral contraceptiveLoestrin 24 wherein Warner settled patent litigation with the generic company Watson Pharmaceuticals by entering into promotional deals with the genericcompany and promising not to introduce its own generic version of the drug. Watson then delayed selling its generic version. After that, Warner settledpatent litigation with Lupin Pharmaceuticals over the birth control pill. Lupin agreed to postpone its generic entry in exchange for attorneys’ fees andWarner’s agreement to enter into favorable side deals.

Last June, the 3rd Circuit found that settlements involving a noncash payment — such as a brandcompany’s agreeing to not compete against the generic — can constitute a reverse payment under Actavis. GlaxoSmithKline and Teva petitioned theSupreme Court to take the 3rd Circuit case this week, arguing that it expanded Actavis beyond its intended bounds. If the ruling stands, it willdestabilize patent rights and the ability to settle patent disputes in the pharma industry and beyond, the companies claim.

4. State Activities

Florida: Senate Passes Needle Exchange Program

The Florida Senate approved a bill that allows the University of Miami to create a needle exchange to curb the spread of HIV. Needle exchanges are illegalunder the state’s drug paraphernalia laws and this bill would make an exception. No taxpayer money could be used for the program. House lawmakers arepreparing to vote on a companion measure. Similar bills have not passed before, but new language requires the program to direct people to drug treatmentoptions and to make educational materials available.

Illinois: Chicago Opening 24-Hour Triage Center

Chicago is opening a 24-hour triage center to which police officers can take people experiencing mental health and substance abuse emergencies. This ispart of an effort to reduce overcrowding at the Cook County Jail, which has been housing more behavioral health patients since some of the city’s mentalhealth facilities have closed down. Advocates argue the triage center will be helpful if it is staffed with trained police officers who are able to respondto people experiencing behavioral health crises.

Kentucky: Kentucky’s Medicaid Shortfall and the Transition Away From Kynect