Washington Healthcare Update

March 21, 2016

Pardon Our Dust

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This Week:Medicaid program takes financial hits as the House looks for “savers” and acts on a budget… while the Senate sees no reason to do a budget… The Senatefocuses on ACA oversight and mental health and opioid abuse while the CDC and HHS release new guidelines on the use of opioids and a strategy to managepain that does not rely solely on prescription medication…  The Senate leaves for recess while the House stays.

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress

House of Representatives

Energy and Commerce Committee Approves $30 Billion in Cuts to Health Programs

At amarkup on March 15,the House Energy and Commerce Committee approved $30 billion in cuts to health programs, despite claims from Democrats that the GOP proposal was anotherattempt to undermine the Affordable Care Act (ACA) and move costs to states.

The Common Sense Savings Act of 2016 ( H.R. 4725) — approved 28-19 — reducesfederal funding for the Children’s Health Insurance Program (CHIP), limits a state’s ability to tax Medicaid providers from the current 6 percent to 5.5percent, cuts Medicaid funding for prison inmates, ensures that jackpot winners are not eligible for Medicaid and repeals the Affordable Care Act’s (ACA)Prevention and Public Health Fund.

Democrats offered several amendments, but all were rejected. Among these were amendments to ensure that lead poisoning screening and prevention programswould not be hurt by the cuts, one repealing language to lower the Medicaid provider tax threshold to 5.5 percent and one to keep the prevention fundunless all state and local health officials are prepared for the Zika virus.

House Budget Committee Passes Budget Resolution for FY 2017

House Republicans unveiled a sweeping budget on March 15 that would eliminate federal deficits within 10 years and cut spending by $6.5 trillion.

Democrats immediately attacked it because it would slash social safety net programs and hardline conservative Republicans said the budget did not cutenough. Despite that, the Budget Committee voted along party lines to send the budget for consideration by the House on March 16.

Conservative opposition is based on the budget’s $1.07 trillion in discretionary spending for fiscal 2017, which most Republicans opposed. However, thebudget resembles past Republican budgets in many respects: It increases defense spending and doesn’t raise taxes. It converts Medicaid into a block grantprogram, repeals the Affordable Care Act and reduces Medicare spending. It also eliminates part of the Dodd-Frank financial regulation law.

The budget also makes deep cuts to nondefense discretionary programs. The proposal would reduce federal noninterest spending — that is, federal spending oneverything other than interest on the debt — to less than 17 percent of GDP by 2024, according to an analysis by theCongressional Budget Office. Under current law, noninterest federal spending is projected to be 19.5 percent of GDP in 2024.

The budget includes reconciliation instructions that could be used if the Senate also adopts a budget. Outside of reconciliation, the budget also calls for$30 billion in mandatory savings over the next two years and at least $140 billion in savings over 10 years, and it requests that the following committeesfind those savings: Agriculture, Energy and Commerce, Financial Services, Judiciary and Ways and Means.

A quick look at some of the main proposals:


  • The budget provides $551 billion in base defense funding for fiscal 2017, as agreed to in the bipartisan budget deal. It also provides $74 billion in so-called Overseas Contingency Operations funding.
  • While President Barack Obama’s budget request increased defense spending over sequester levels by $178 billion over the next decade, the House budget goes further, increasing defense spending by $267 billion over sequester caps over the next decade.
  • The budget calls for maintaining the prison at Guantánamo Bay, Cuba.


  • The budget would create a new private Medicare program to compete with Medicare starting in 2024; the traditional Medicare program would remain an option.
  • The budget would increase means-testing for Medicare recipients with high incomes.
  • Medicaid would be transitioned into a block grant, or “State Flexibility Fund,” that gives states more freedom to operate the program.
  • The budget would include a work requirement for able-bodied adults who are enrolled in Medicaid.
  • The budget would repeal all of Obamacare.
  • On Social Security, the budget would alter a current-law trigger that requires the president to submit a plan for restoring balance to the Social Security trust fund. Congressional leaders would also be required to propose solutions for Social Security.


  • The budget calls for “lowering of rates and a consolidation of tax brackets,” but does not go into specifics.
  • The alternative minimum tax would be repealed.
  • The budget calls for a transition away from a worldwide tax system as a way to “make U.S. companies more competitive in the global marketplace.”


  • EPA funding would be reduced and “unobligated balances from stimulus green energy programs” would be rescinded.


  • The responsibility for infrastructure spending would be largely shifted to the states.
  • Operating subsidies for Amtrak would be eliminated, which would likely shutter all Amtrak lines other than the Northeast Corridor.
  • The TIGER grant program would also be eliminated, as would “New Starts transit grants,” which the budget proposal says fund projects “that are largely of local, not national, benefit” and bias “local transportation investment decisions toward building costly new rail projects.”

Financial services

  • Provisions of the Dodd-Frank financial regulations would be repealed, including the FDIC’s authority to assist “systemically significant” institutions.
  • The Consumer Financial Protection Bureau would be abolished.
  • Fannie Mae and Freddie Mac would be privatized.


  • The budget would slow the growth of the Pell Grant program for college students.

Welfare and nutrition

  • Administration TANF waivers would be rescinded.
  • The food stamp program would be converted into a “State Flexibility Fund,” or block grant.
  • The Economic Development Administration would be eliminated.

Budget reform

  • The House will consider an amendment to the Constitution requiring a balanced federal budget.
  • The budget calls for a complete overhaul of the Congressional Budget Act of 1974 to “reinforce a healthy balance of power between the different branches of government, so Congress restores its power of the purse and improves its oversight of the Executive Branch’s activities.”
  • The budget calls for adopting “fair-value accounting practices” to more accurately reflect the costs and benefits of the government’s federal direct loans and loan guarantee programs for mortgages, student loans, agriculture and more.
  • The budget recommends rules relating to unauthorized appropriations should be reviewed and reformed.

Senate Republicans have said they see no need for a budget resolution this year since the agreement passed last year was a two-year agreement.

For more information, click here.

Ways and Means Committee Passes “Savers” Package

On March 16, the House Ways and Means Committee voted to pass three pieces of legislation to cut spending, part of a move by GOP leaders to demonstrate toconservatives that they are serious about deficit reduction and in the hopes that the conservatives would fall into line and support the leadership budgetthat was rolled out this week. The legislation passed by Ways and Means would save $16.5 billion over two years and a total of $98 billion over 10 years.The “savers” package passed out of the committee includes:

  • H.R. 4722 – Rep. Sam Johnson (R-TX) – a bill that prevents abuse in the refundable Child Tax Credit by requiring a Social Security number.
  • H.R. 4723 – Rep. Lynn Jenkins (R-KS) – a bill that recovers Obamacare subsidy overpayments.
  • H.R. 4724 – Rep. Kevin Brady (R-TX) – a bill that would end the duplicative Social

Services Block Grant (SSBG).

To view the markup, click here.

For a related press release, click here.

Education and Workforce Committee Grills Burwell on Reinsurance Program

On March 15, the House Education and Workforce Committee held a hearingentitled “Examining the Policies and Priorities of the U.S. Department of Health and Human Services.” Republicans on the committee grilled U.S. Health andHuman Services Department (HHS) Secretary Sylvia Mathews Burwell on the Affordable Care Act’s (ACA) reinsurance program. The program was designed to helpinsurers offset the costs of covering sicker enrollees in the first three years. However, it has come under scrutiny by Republicans who believe theadministration is illegally diverting money from the U.S. Treasury to insurers.

Funding for the program comes from fees placed on all insurers, including self-funded employer plans, and CMS is required to give $5 billion to theTreasury. However, CMS said in a rule that if collections fell short, the agency would prioritize funding for the insurers over the Treasury. Rep. BradleyByrne (R-AL) argued that putting out a rule and giving stakeholders a chance to comment does not mean CMS did not violate the law. He quoted a CRS reportthat said HHS’s interpretation of the law was “in conflict with the plain wording of Section 1341(b)(4).” Burwell responded, “We have articulated why webelieve our reading of the law is correct.”

Energy and Commerce Committee Holds Hearing on MACRA and SGR Repeal

On March 17, the Energy and Commerce Committee held a hearing examiningthe implementation of Medicare payment reforms. Lawmakers asked CMS Deputy Administrator for Innovation and Quality Patrick Conway questions about theagency’s upcoming proposed rule on the Medicare Access and Chip Reauthorization Act of 2015 (MACRA). The hearing focused on the repeal of the SustainableGrowth Rate (SGR) formula — a payment system for doctors that required Congress to implement temporary fixes for over a decade. Committee members had theopportunity to check in with CMS about how the process is going.

Members asked Conway for more information on how CMS will define the amount of risk a doctor must take to be counted under the eligible APM track thatqualifies them for a payment increase. There were also questions raised about when the performance period for new payments will begin — Conway implied thatthe period will begin as soon as 2017. He also said that CNS will simplify some reporting programs currently required of providers.

Appropriations Committee Will Not Cut NIH Funding

On March 16, Rep. Tom Cole (R-OK) said the House Appropriations Committee will not cut $1 billion in discretionary spending from the National Institutes ofHealth (NIH). This cut was requested in the White House budget proposal.

Cole said the White House proposal to make the cut in discretionary funding and offset it with $1.8 billion in new mandatory spending is discouragingbecause NIH resources should be increased through the annual discretionary appropriations process.

House Appropriations Chairman Hal Rogers (R-KY) supports increased NIH funding, while agreeing that it should not come from mandatory funding. Rankingmember Nita Lowey (D-NY) said Democrats want to double the NIH budget in coming years.

NIH Director Francis Collins welcomed the support of the committee, and stressed that a $1 billion cut would have severe consequences on initiatives oncancer, diabetes and Alzheimer’s.

The Appropriations Committee will start the appropriations process next week, with the Military Construction-Veterans Affairs Appropriations Subcommitteescheduling its markup for March 23.

Upcoming House Hearings

Oversight Committee will hold a hearing on heroin and opioidabuse on March 22.

House Appropriations subcommittee will hold a hearing on the CDCbudget on March 23.


Senate Finance Committee Holds Hearing on ACA and HealthCare.gov

On March 17, the Senate Finance Committee held a hearing entitled “HealthCare.gov: A Review of Operations and Enrollment.” At the hearing, senatorsquestioned officials from the U.S. Department of Health and Human Services (HHS) and the Government Accountability Office (GAO), asking how HealthCare.govand the Affordable Care Act (ACA) in general can improve.

Members of the committee used new data from a new GAO report to raise concerns about remaining ACAco-ops. The report found that more than 500,000 Americans received coverage through co-ops that have since shut down. Also, four of the 11 co-ops still inoperation had not hit enrollment of at least 25,000 members. Most of the co-ops are still in financial turmoil. In commenting on the report, HHS stated itscommitment to co-op beneficiaries and taxpayers and provided technical comments.

Senate Committee on Aging Holds Hearing on Drug Price Increases

On March 17, the Senate Special Committee on Aging held a hearing on drug price hikes. Members of the committee grilled Turing interim CEO Ronald Tillesand Turing co-founder Michael Smith about that company’s infamous drug price hike last year. Former CEO Martin Shkreli, who came under federal indictmentin December, was not there. Senators focused on the toxoplasmosis drug Daraprim — the hearing featured testimony from a couple who struggled last year toget access to Daraprim for their infant. Tilles said the company is investing in better treatments for the disease and had cut the price in half to somehospitals after its initial 5,000 percent increase. He would not commit to lowering the price further, however.

300 Groups Write Letter to House and Senate Leadership on CMS Part B Drug Model

Over 300 drug companies and doctor and consumer groups wrote aletter to leaders in the House and Senate to express concern withthe Centers for Medicare and Medicaid Services’ (CMS) proposed rule to implement a new “Medicare Part B Payment Model.” The groups asked that the House andSenate permanently withdraw the Innovation Center experiment to overhaul payments for Part B drugs. “There is no evidence indicating that the paymentchanges contemplated by the model will improve quality of care, and may adversely impact those patients that lose access to their most appropriatetreatments,” according to the letter sent on March 17. The groups argued the initiative will affect patients with conditions such as cancer, maculardegeneration, hypertension, rheumatoid arthritis, Crohn’s disease and ulcerative colitis, and primary immunodeficiency diseases. The letter was signed by316 groups including PhRMA, BIO, cancer providers, disease groups and others.

Read the CMS proposed rule here.

The FDA and NIH Workforce Authorities Modernization Act Introduced

On March 17, Senators Lamar Alexander (R-TN) and Senator Patty Murray (D-WA), leaders of the Senate Health Education Labor and Pensions Committee,introduced legislation to help the Food and Drug Administration (FDA) and the National Institutes of Health (NIH) “attract top talent during this excitingtime in science.” The FDA and NIH Workforce Authorities Modernization Act will also authorize the agencies to streamline coordination and cut red tape.

The committee plans to debate and vote on the legislation during the committee’s markup on April 6.

A summary of the legislation can be foundhere.

HELP Committee Approves Mental Health and Opioid Abuse Legislation

On March 16, the Senate Health, Education, Labor and Pension Committee approved a package of bipartisan mental health and opioid abuse bills that addressaccess to care, early intervention and the behavioral workforce shortage, but leave out earlier proposed changes to Medicaid reimbursements.

The committee unanimously approved the measures, including a manager’s amendment to the Mental Health Reform Act of 2016 sponsored by Chairman LamarAlexander, ranking member Sen. Patty Murray and Sens. Chris Murphy and Bill Cassidy. The committee also adopted an amendment sponsored by Sen. ElizabethWarren that strengthens enforcement of the mental health parity law.

Alexander said the full Senate would likely consider mental health in April. However, several contentious issues will be raised on the floor of the Senate,including funding and a gun-related amendment, and could complicate the bipartisan effort in the Senate.

The HELP legislation includes a measure to increase the number of substance abuse patients that doctors can treat with buprenorphine — itself an opioidthat is used to treat addiction — from 30 to 100, and even more under certain circumstances. It encourages broader use of the overdose remedy naloxone, andbetter state enforcement of the “plan of safe care” for children who are born dependent on opioids.

Before the legislation goes to the floor, the Finance and Judiciary Committees may offer amendments that deal with issues outside HELP’s jurisdiction. Onewould likely repeal the IMD exclusion — a decades-old law that prohibits Medicaid reimbursements for mental health patients at hospitals with more than 16psychiatric beds. Alexander said it has bipartisan support, but it could face opposition as it is estimated to cost in the tens of billions of dollars. Itis also unclear what funding will be used to pay for the proposal.

2. Administration

Executive Director for Cancer Moon Shot Task Force Announced

Vice President Joe Biden appointed Greg Simon, a former pharma executive, Clinton administration official and Hill staffer, as executive director of thecancer moon shot task force today. A recent cancer patient, Simon was most recently CEO of Poliwogg, a financial services company focused on life scienceinvestment. He was a vice president for patient engagement at Pfizer from 2009 to 2012.

HHS Announces Membership of the Health Care Industry Cybersecurity Task Force

On March 16, the U.S. Department of Health and Human Services (HHS) named a slate of health care professionals from topproviders and tech firms to its Health Care Industry Cybersecurity Task Force. The nomination period, which lasted nine days, ended on March 10 as mandatedby Section 405 of the Cybersecurity Act of 2015. This aggressive timeline came in response to the rapid increase in cyberattacks and intrusions targetinginsurers, hospitals, devices and many other parts of the health industry.

The task force will schedule four in-person meetings and also work through teleconferences until March 2017, when it is expected to report its findings andrecommendations.

Members are from different parts of the industry, and include executives from Philips, Symantec, Anthem, Sutter Health and more.

HHS Cyber Grant Project Will Provide Initial Results This Month

Harris County Hospital District could produce results on the effort to increase sharing of cyber-threat data in the health care and public health sector bythe end of March, according to HHS. Last fall, HHS awarded a one-year, $150,000 planning grant to the district — located in Houston, Texas — with the aimof identifying the cybersecurity information needs and gaps of hospitals and other health care organizations across the country.

The grant notice called for the recipient to submit a cybersecurity threat information gap analysis to HHS by Jan. 29 and an initial strategy withrecommendations by March 31. The first deadline was subsequently delayed until the end of March. Consistent with President Obama’s February 2015cybersecurity information-sharing executive order, the notice said the project would support the creation of an information-sharing and analysisorganization (ISAO) for the sector.

Harris County Hospital District rebranded itself Harris Health System in 2012 but still uses its original name in contracts.

CMCS Releases Community First Choice Report

On March 16, the Center for Medicaid and CHIP Services (CMCS)releasedthe Community First Choice: Final Report to Congress. The report describes findings in four states (California, Montana, Maryland and Oregon) that hadimplemented the Community First Choice (CFC) benefit as of December 2014, and summarizes the status of the CFC benefit in those states as of March 15,2015. The “Community First Choice Option” allows states to provide home- and community-based attendant services and supports to eligible Medicaid enrolleesunder their State Plan.

CMS Releases Interactive Mapping Medicare Disparities Tool

On March 17, the Centers for Medicare and Medicaid Services Office of Minority Health (CMS OMH) released a new interactive map to increase understanding ofgeographic disparities in chronic disease among Medicare beneficiaries. TheMapping Medicare Disparities (MMD) Toolidentifies disparities in health outcomes, utilization and spending by race, ethnicity and geographic location. Understanding geographic differences indisparities is important to informing policy decisions and efficiently targeting populations and geographies for interventions.

Racial and ethnic minorities experience disproportionately high rates of chronic diseases and are more likely than other individuals to experiencedifficulty accessing a high quality of care. The identification of areas