Washington Healthcare Update

March 14, 2016

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This Week:Drug pricing remains a focus as CMS rolls out a demonstration project for Part B drugs… The Senate passes The Comprehensive Addiction and Recovery Act(CARA) and Senate Cureslegislation moves forward… Senate looks at co-ops… House was in recess.

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress

House of Representatives

NIH Refuses House Democrats’ Request to Issue Guidance on March-In Rights

The National Institutes of Health (NIH) refused a request from over 50 House Democrats that the agency put the drug industry on notice that it is preparedto use its “march-in rights” to stop pharmaceutical price gouging, arguing that the issue is better suited for lawmakers to address. March-in rights giveNIH the authority to require patent holders of federally funded intellectual property to license their patents to third parties to ensure the products areavailable to the public.

Rep. Lloyd Doggett (D-TX) led the lawmakers’ letter to NIH and the Department of Health and Human Services (HHS) that said some experts estimate aboutone-fourth of priority reviewed drugs could be impacted by NIH’s fully exercising its march-in rights. The letter added that even an announcement ofreasonable guidelines in response to price gouging could positively influence pricing across the industry.

HHS responded that NIH considered using its march-in rights to address drug pricing concerns for Norvir and Xalatan in 2004, and also again in 2013,related to Norvir again. Each time, NIH determined that the drug did not meet the statutory requirements to justify use of the authority.

In its 2013 review of Norvir, NIH found, “As stated in previous march-in considerations, the general issue of drug pricing is appropriately addressedthrough legislative and other remedies, not through the use of the NIH’s march-in authorities. The exercise of the Government’s use license to the SubjectPatents is not appropriate in this case.”

The lawmakers said, “The failure to act in the past has undoubtedly sent an unfortunate signal that prices for federally-funded inventions can be set ashigh as a sick or dying consumer will pay.”

HHS said that NIH considers application of the march-in statute on a case-by-case basis and is prepared to use its authority when the statutory criteriaare met. Neither HHS nor NIH think additional guidance is needed.

HHS has taken other actions however. The agency sent a notice to all 50 state Medicaid directors and letters to the CEOs of many drug manufacturers aboutproviding access to drugs for Hepatitis C patients; it held a forum with stakeholders to speak about opportunities to improve patient access to affordableprescription drugs; it is incorporating value-based and outcomes-based models into purchasing programs in the public and private sectors and is publishingthe Medicare Drug Spending Dashboard to provide information on the highest-priced drugs in Medicare Parts B and D.

House Energy and Commerce Committee’s Subcommittee on Health to Review MACRA

The House Energy and Commerce Committee’s Subcommittee on Health scheduled a March 17 hearing to review the payment reforms in the Medicare Access and CHIPReauthorization Act (MACRA), which passed in April 2015. For more information or to watch the hearing, clickhere.


GOP Split Widens on the Budget

The divide between House and Senate Republicans on how to handle the budget is widening. On March 7, Senate Budget Committee Chairman Mike Enzi saidlawmakers will delay consideration of a fiscal blueprint until at least April. The announcement comes as the House Budget Committee is preparing to vote ona budget resolution this week. Also, the Senate GOP is preparing to move appropriations bills that stand by last year’s bipartisan deal, whereasRepublicans in the House are still resistant.

Senate Majority Leader Mitch McConnell said the Senate will stick to the bipartisan spending deal that set discretionary spending at $1.07 trillion forfiscal year 2017. He said that specific allocations will come later and ensured the spending bills will get a lot of time on the floor in the comingmonths. McConnell did not commit this time to moving a budget through the Senate and said Sen. Mike Enzi and the Budget Committee are figuring out how todeal with that. He also ignored a question about what would happen in the case that the House adopted a budget with lower spending.

Senate HELP Committee to Mark Up Mental Health and Opioid Abuse Bills

On March 7, the Senate Committee on Health, Education, Labor and Pensions (HELP) released a draft of itsbipartisan mental health bill. The bill requires SAMHSA to hire a chief medical officer and report to Congress every two years on its activities and HHS to establish a committee towork on serious mental illnesses. The draft also includes measures to address the provider workforce shortage and care access issues. According to acommitteepress release, the Mental Health Reform Act of 2016 will: 1) ensure that mental health programs are effectively serving those with mental illness; 2) help states meetthe needs of those suffering from mental illness; 3) promote the use of evidence-based approaches, promising best practices in mental health care; and 4)increase access to mental health care.

The HELP committee will also consider legislation to help tackle the opioid epidemic by addressing treatment, prevention and other efforts to combat opioidaddiction and abuse. That bill will be marked up alongside the mental health bill on March 16 — both measures are expected to be packaged with mentalhealth reform bills, which await markups in the Senate Judiciary and Finance committees.

Senate HELP Committee Approves Seven Cures Bills

On March 9, the Senate HELP Committee approved seven biomedical innovation bills as part of an innovation companion to the House-passed 21st Century CuresAct (H.R. 6). The approved bills are as follows:

  • The Advancing Hope Act of 2015 (S. 1878) : a bill to permanently reauthorize the Food and Drug Administration’s (FDA) rare pediatric disease priority review voucher program. Sens. Warren and Sanders voted against the bill.
  • The Advancing Breakthrough Medical Devices for Patients Act of 2015 (S. 1077) : a bill to establish a breakthrough pathway for medical devices so they will move more efficiently through the FDA review process.
  • The Medical Electronic Data Technology Enhancement for Consumer’s Health (MEDTECH) Act (S. 1101) : a bill exempting some medical software from FDA oversight.
  • The Medical Countermeasures Innovation Act of 2015 (S. 2055) : a bill to address medical countermeasures. This would increase the likelihood that there will be a drug to help save someone’s life if they are a victim in a bioterror attack.
  • The Combination Products Innovation Act of 2015 (S. 1767) : a bill that will help prevent combination products from being caught in regulatory red tape between various departments at FDA.
  • Patient Focused Impact Assessment Act of 2015 (S. 1597) : a bill that requires FDA to document patient engagement in a drug’s development.
  • Adding Zika to the Priority Review Voucher Program Act (S. 2512) : legislation adding Zika to the FDA rare disease priority review voucher program, which aims at a faster treatment, cure or vaccine for the virus.

Democrats proposed and withdrew two amendments: 1) one from Sen. Elizabeth Warren providing $5 billion in new mandatory funding to the National Institutesof Health (NIH) and FDA every year for 10 years and 2) a second from ranking member Patty Murray establishing a new FDA safety program for medical devices.These issues must be addressed before legislation goes to the Senate floor, according to Democrats. The committee earlier approved seven biomedical reformbills in February and will hold its third and final markup on April 6.

Sen. Carper Writes to HHS Regarding Nursing Home Violations

Sen. Tom Carper (D-DE) asked the Health and Human Services (HHS) Office forCivil Rights what efforts it is making to address possible violations of theHealth Insurance Portability and Accountability Act in nursing homes relatedto the use of social media. In hisletter, Carperpoints to the investigation by ProPublica that revealed nursing home staff posting inappropriate photos and videos of residents — some of whom were notfully clothed or had dementia. The posts have appeared on networks like Snapchat and Facebook. Under the federal patient privacy law, the Office for CivilRights is responsible for investigating complaints such as these and taking corrective action when violations occur. However, according to ProPublica’sinvestigation, the office had not taken any such action as of December 2015.

Sens. Capito and Stabenow Ask CMS to Implement Alzheimer’s Caregiver Support Program

Sens. Shelley Moore Capito (R-WV) and Debbie Stabenow (D-MI) asked the Centers for Medicare and Medicaid Services (CMS) to implement a program that aims tosupport over 15 million Americans who are caring for a family member living with Alzheimer’s. These Americans provide roughly 18 billion hours of unpaidcare annually. “Mounting evidence suggests that targeted support services directed to these informal family caregivers may help the caregiver prevent ormitigate these challenges and help keep an Alzheimer’s patient in the home setting for longer periods of time,” the senators wrote. Last year, Capito andStabenow introduced the “HOPE Act” to provide Alzheimer’s patients and theirfamilies with necessary information about the disease and possible treatment options.

To read a press release and the letter, click here.

Senate Approves Opioids Bill

On March 10, the Senate easily approved a bill to address the opioid epidemic after Democrats gave up their effort to put funding in the legislation.Democrats had threatened to block the bill last month if Republicans didn’t add $600 million to fund its programs. They gave in after realizing there wasno GOP support for the funds and advocacy groups backed the bill regardless.

The Comprehensive Addiction and Recovery Act(CARA) (S. 524) was approved 91-1, with Sen. Ben Sasse (R-NE) voting against the legislation. The bill redirects funding to drug abuse treatment andprevention programs. Democrats had put up a procedural vote on the funding amendment — sponsored by Sen. Jeanne Shaheen (D-NH) — and it fell 48-47 alongparty lines. Democrats believed this helped show that Republicans will not actually put money behind their legislation.

Republican lawmakers, however, point to $400 million in appropriations for opioid programs in the year-end budget deal and said any more funding should beconsidered through the appropriations process.

The House has not scheduled a hearing on companion legislation.

Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations Holds Hearing on ACA’s Co-ops Failure

CMS Acting Administrator Andy Slavitt and Marketplace CEO Kevin Counihan testified March 10 before the Senate Homeland Security and Governmental AffairsCommittee Investigations Subcommittee at a hearing on the ACA’s troubled co-op program. Twenty-three co-ops were launched in 2013 with funding from theAffordable Care Act (ACA). Twelve have closed and eight are on enhanced oversight.

The subcommittee released a report at the hearing that said HHS ignored evidence that many of the nonprofit co-ops lacked sound business plans, had beenoversubscribed and were underpriced. Chairman Rob Portman (R-OH) and Sen. Ben Sasse (R-NE) did most of the questioning. Portman focused on what informationwas available to CMS and what tools they were using. Sasse focused on the failure of CoOportunity Health, which was operating in Iowa and Nebraska. ActingAdministrator Slavitt said that he did not think the Nebraska co-op should have been allowed to move forward for open enrollment in 2015 based on 2014information.

Slavitt and Counihan both stressed the high-risk nature of starting up co-ops and that the co-ops did not have information to base price on experienceuntil 2015.

Members of the subcommittee raised concerns about the amount of unpaid medical claims and the impact the co-ops’ underpricing of premiums might have had onthe overall market.

For Slavitt and Counihan’s testimony or to view the hearing, click here.

For the subcommittee report, clickhere.

2. Administration

CMS Releases 2016 Value Modifier Results and Upward Payment Adjustment Factor

The Centers for Medicare and Medicaid Services (CMS) made resultsavailable from the implementation of the 2016 Value Modifier and theadjustment factorthat will be applied to physician groups that are subject to upward payment adjustments under the Value Modifier in 2016. The upward payment adjustmentfactor in 2016 is +15.92 percent. The Value Modifier adjustment factor is determined after the close of the performance period and is based on theestimated aggregate amount of downward payment adjustments.

There are 13,813 physician group practices with 10 or more eligible professionals that are subject to the 2016 Value Modifier based on performance in 2014.Physicians in 128 groups exceeded the program’s benchmarks in quality and cost efficiency and will receive an increase in their payments under the MedicarePhysician Fee Schedule. In contrast, physicians in 59 groups will see a decrease in their Medicare payments in 2016 based on their performance. Also,physicians in 5,418 groups that failed to meet minimum reporting requirements will see a decrease in their Medicare payments in 2016. Medicare payments formost physician groups nationwide (8,208 groups) that met the minimum reporting requirements will remain unchanged in 2016 because of their performance onquality and cost-efficiency measures or because there was insufficient data to calculate the groups’ Value Modifier.

CMS Announces Second Round of Applications for Next Generation ACO Model

On March 8, the Centers for Medicare and Medicaid Services’ (CMS) Innovation Center announced the second and final round of applications for the NextGeneration Accountable Care Organization (ACO) Model. The model will start its second performance year on Jan. 1, 2017. Details on model parameters areincluded in the Request for Applications, which is available on the Next Generation ACO Model web page.

The Next Generation ACO Model is a health care delivery and payment model created by the CMS Innovation Center. Building upon experience from the PioneerACO Model and the Medicare Shared Savings Program, this model sets predictable financial targets, enables providers and beneficiaries greater opportunitiesto coordinate care, and aims to attain the highest-quality standards of care.

The ACOs in the Next Generation ACO Model take on greater performance risk than ACOs in current models, while also potentially sharing in a greater portionof savings. To support increased risk, ACOs have a stable, predictable benchmark and flexible payment options that support ACO investments in careimprovement infrastructure that provides high-quality care to patients. Currently there are a total of 21 Next Generation ACOs all over the nation —including ones in Los Angeles, California, Boston and Massachusetts.

Organizations interested in applying to the model must submit a Letter of Intent (LOI) before completing an application. The LOI is available on the NextGeneration web page. The Innovation Center will also hold open door forums (ODFs) to help applicants in the process and give more information on the model.The first ODF was on March 8 and the second will be on March 22. CMS has posted dial-in information for the ODFs on the Next Generation ACO model web page.

CMS Releases Skilled Nursing Facility Utilization and Payment Data

On March 9, the Centers for Medicare and Medicaid Services (CMS) released a public data set that provides information on services provided to Medicarebeneficiaries by skilled nursing facilities (SNFs). The Skilled Nursing Facility Utilization and Payment Public Use File (SNF PUF) contains information onutilization, payments and submitted charges organized by provider, state and resource utilization group (RUG). The data includes information on 15,055skilled nursing facilities, over 2.5 million stays and almost $27 billion in Medicare payments for 2013. The data set does not contain any individuallyidentifiable information about Medicare beneficiaries.

In addition to information on payments and charges, the SNF PUF contains information on two categories of RUGs for patients who receive a significantamount of therapy: Ultra-High (RU) and Very High (RV) Rehabilitation RUGs. Consistent with prior CMS findings, the SNF PUF shows that for these two RUGs,the amount of therapy provided is often very close to the minimum amount of minutes needed to qualify a patient for these categories. Medicare SNF per diempayment amounts for rehabilitation RUGs are primarily based on therapy minutes, and payment amounts for these two RUGs can exceed payments for comparableRUGs with fewer therapy minutes by more than 25 percent.

The SNF PUF was created from CMS administrative claims data for Medicare beneficiaries enrolled in the fee-for-service program available from the CMSChronic Condition Data Warehouse (www.ccwdata.org). The data covers calendar year 2013 and is based on SNF Part A institutional claims.

To view a fact sheet on the Skilled Nursing Facility data set, click here.

FDA, Amarin Settlement Allows Continued Promotion of Off-Label Drug Uses

Amarin, a biopharmaceutical company, will be able to promote its prescription fish oil pill for off-label uses under the terms of a settlement agreement reachedwith the Food and Drug Administration (FDA) on March 8. The agreement could have big consequences for the future of drug marketing. Amarin is now allowedto market Vascepa for off-label uses not approved by the FDA without fear of prosecution as long as its claims are truthful and nonmisleading.

Amarin had sued the FDA in federal court New York after failing to get expanded FDA approval for the drug. It claimed government prosecution formisbranding violated its free speech rights. The preliminary court ruling cited a 2012 case — U.S. v. Caronia — in which the 2nd Circuit Court ofAppeals ruled that under the First Amendment the government could not prohibit and criminalize truthful off-label promotion. The settlement now bindsAmarin and FDA to the ruling. Also, Amarin can submit to FDA up to two proposed communications per year and was offered a process for arbitration on anyconcerns FDA has.

FDA’s agreement to accept Amarin’s position in this case could mean that drugmakers will have more promotional freedom in the future.

3. State Activities

Alaska: Judge Dismisses State Legislature’s Lawsuit over Medicaid Expansion

On March 1, a Superior Court judge dismissed the Alaska Legislature’s lawsuit to stop Gov. Bill Walker’s Medicaid expansion plan. The legislature contendedthe Walker administration overstepped its bounds by expanding Medicaid unilaterally. The court concluded that the state’s expansion was within the boundsof the law. “Because the Social Security Act requires expansion, state law makes the expansion group eligible for Medicaid services. Because existing lawrequired the Governor to provide Medicaid to the expansion group, the Governor did not violate the Alaska Constitution by doing so,” Judge Frank Pfiffnerwrote in his decision.

California: Gov. Brown Signs Bill Taxing Health Plans

California Gov. Jerry Brown signed into law a tax on health plans to replace the state’s old Medicaid managed care organization tax. Federal officials saidthe latter tax was no longer permissible because it targeted only Medicaid plans. Without the new tax on managed care plans, there would have been a 41billion hole in the state budget. The tax was part of a bigger package of bills that includes a $300 million increase in state funding for people withdevelopmental disabilities and $400 million in debt relief by prefunding retiree health benefits and repaying transportation loans. The Centers forMedicare and Medicaid Services (CMS) still has the final word on the tax and whether California’s new structure makes it eligible for federal matchingfunds.

Michigan: SCOTUS Asks for Review of Case Against Gov. Snyder

The U.S. Supreme Court (SCOTUS) has asked a federal appeals court to reconsider a case against Michigan Gov. Rick Snyder in light of its recent decision in Gobeille v. Liberty Mutual Insurance Co. That decision limited states’ abilities to interfere with self-funded insurance plans that are governed bythe Employee Retirement Income Security Act (ERISA). A group representing self-funded insurance plans in Michigan sued Snyder over the 2011 Michigan lawimposing a 1 percent tax on paid health care claims for self-insured and other employers, and required plans — including self-insured plans — to filecertain records with the state. Both the district and appeals courts rejected the case, and SCOTUS is asking them to revisit it. SCOTUS highlighted thatits Gobeille decision will have impact beyond the claims databases at the center of that case. Read the request here.

Missouri: House Lawmakers Approve Prescription Drug Monitoring Program

House members approved legislation to create a prescription drug monitoring program in response to the opioid epidemic across the country, which would makeMichigan the final state to adopt such a program. The bill — HB 1892 — would require pharmacies to report to the state health department details aboutmedications dispensed to people. The bill will now go to the Senate, where similar proposals have stalled in the past. Sen. Robert Schaaf has been the mainopponent to creating such a database, citing patient privacy concerns.

New Hampshire: State House Continues Medicaid Expansion Through 2018

On March 9, the New Hampshire House voted to continue Medicaid expansion through 2018, signaling a key victory for Democratic Gov. Maggie Hassan. Hassan —who is in a Senate race with incumbent Republican Sen. Kelly Ayotte — made reauthorization a top priority and contends the programs must continue to helpNew Hampshire combat its opioid abuse epidemic. Republican legislators added multiple conservation elements to expansion as a condition of a two-yearextension. The state would also need to get another waiver approved by the Obama administration.

The model would create a work requirement — one that CMS has not agreed to — as well as copays for enroll