Washington Healthcare Update

April 4, 2016

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This Week:The House of Representatives and the Senate were on recess…but it was not quiet on the health care front!

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress

House of Representatives

House, Senate Democrats Want NIH to Bring Down Prostate Cancer Drug Cost

A group of House and Senate Democrats is calling on the National Institutes of Health (NIH) and the U.S. Department of Health and Human Services (HHS) tobring down the price of the cancer drug Xtandi. In a March 28 letter, lawmakers — including Sen. Bernie Sanders (I-VT) and Rep. Elijah Cummings (D-MD) —asked the NIH and HHS to hold a public hearing that would determine whether they should use “march-in rights” to lower the price of the drug.

NIH has never used its march-in rights to set new prices since their inception in 1980 under the Bayh-Dole Act. The letter states that Astellas, thecompany that sells Xtandi, is charging Americans $129,000 for the drug, which sells in Japan and Sweden for $39,000 and in Canada for $30,000. The groupbelieves that a public hearing on the drug would allow the public to engage in dialogue with NIH and HHS in order to better understand their position onthe use of march-in rights to “address excessive prices.”

This letter comes after a petition was submitted by the Knowledge Ecology International and the Union for Affordable Cancer Treatment to HHS, NIH and theDepartment of Defense asking them to exercise march-in rights to address the high price of Xtandi.

Rep. Carter Asks HHS Secretary Sylvia Burwell About “Office-Use” Compounding

On March 22, Rep. Buddy Carter (R-GA)wrote a letter to HHS Secretary Sylvia Burwell asking her to specify when the U.S. Food and Drug Administration (FDA)will issue guidance as requested by appropriators to clarify that traditional compounding pharmacies, which are regulated by the State Boards of Pharmacy,are exempt from federal oversight when participating in “office-use” compounding. The letter followed a hearing held by the House Education and theWorkforce Committee on March 15.

At the hearing, Burwell testified that there is nothing preventing a 503A pharmacy from compounding for office-use purposes. This seemed to contradictFDA’s stance that traditional compounders must obtain patient-specific prescriptions, Carter said. He also pointed out that Burwell left out the fact that503A pharmacies are currently being regulated under Good Manufacturing Practices (cGMPs) standards rather than U.S. Pharmacopeia (USP) Conventionstandards.

Carter asked Burwell the following questions:

  1. When can we expect FDA to release guidance to clarify that 503A pharmacies will be exempt from the Drug Quality and Security Act (DQSA) requirements when participating in office-use compounding?
  2. What prompted FDA to begin inspecting 503A pharmacies under cGMPs as opposed to USP standards?
  3. What authority does FDA have to inspect 503A pharmacies with cGMPs when federal oversight of the pharmacies was never the intent of Congress?

To see the letter, click here (buddy carter letter.pdf).

House Republican Committee Leaders Subpoena HHS Secretary Burwell Over Basic Health Program

On March 29, House Republican leaderssubpoenaedHHS Secretary Sylvia Mathews Burwell to explain how the administration spent over $1 billion on the Affordable Care Act’s (ACA) Basic Health Program (BHP),which Republicans argue lacks a congressional appropriation. In a letter to the Secretary, House Ways and Means Committee Chairman Kevin Brady (R-TX) andHouse Energy and Commerce Committee Chairman Fred Upton (R-MI) detailed HHS’s obstruction in their investigation and said they would issue the subpoena ifthe Department did not produce the requested documents.

Republicans accuse the administration of illegally funding BHP, which gives states flexibility to extend coverage to low-income people who do not qualifyfor Medicaid or CHIP. HHS argues that the program is fully funded through the ACA. The subpoena requests documents from HHS by April 12.

Ways and Means ranking member Sander Levin (D-MI) and Energy and Commerce ranking member Frank Pallone (D-NJ) condemned the subpoena as “yet another futileattempt to weaken the ACA,” according to apress release.


Senate HELP Committee to Hold Markup April 6

The Senate Health, Education, Labor and Pensions (HELP) Committee will hold a markup on April 6 that will be the last markup of its Innovation forHealthier Americans Initiative. The bills to be considered include legislation to improve FDA’s hiring capabilities, establish a program to approveantibiotics for limited populations and support the President’s Precision Medicine Initiative. It is possible the markup will also include legislationrelated to the NIH and promoting biomedical research. The hope is to have the Senate bills married up to the House-passed “Cures legislation” and have afinal bill passed before the July 4 recess. The Senate legislation however has a hurdle to get through — and that is that there has been no consensus onhow to pay for the bill.

2. Administration

Organizations Urge CMS to Modify Proposed ACO Benchmarking Methodology

Twenty organizations — including the American Medical Association, the National Association of ACOs and Premier — are calling on the Centers for Medicareand Medicaid Services (CMS) to make significant changes to the methodology used for its ACO benchmarking.

Specifically, the organizations recommend that CMS:

  1. Finalize, with modifications, the proposal to blend ACO historical and regional cost data into ACO benchmarks
  2. Provide ACOs with choices related to transitioning to new benchmarks that incorporate regional cost data
  3. Exclude ACO-assigned beneficiaries (for all ACOs in the region) from the regional beneficiary population
  4. Finalize the use of assignable beneficiaries (as opposed to all beneficiaries) for nationally based updates, regionally based updates and regional cost calculations
  5. Base the counties used to define an ACO’s regional service area on those in which at least 1 percent of the ACO’s assigned beneficiaries reside
  6. Consider a different approach to ensure a statistically valid population for calculating regional end stage renal disease (ESRD) costs rather than using state averages, at least until CMS releases data to properly evaluate basing regional ESRD costs on state-level averages
  7. Finalize the proposal to adjust for an ACO’s risk relative to its region for the purposes of determining the regional adjustment to the ACO’s reset historical benchmark
  8. Replace the national trend factor with a regional trend factor for ACOs in second and subsequent agreement periods
  9. Honor the current policy that accounts for savings in rebased benchmarks

10. Provide stakeholders with data to model the impact of adjusting benchmarks to account for ACO Participant Taxpayer Identification Numbers (TIN) changes

11. Finalize the optional fourth year in Track 1 for ACOs moving to Track 2 or 3 and allow ACOs to transition to a higher-risk track at the start of anycalendar year rather than solely at the end of their agreement periods

12. Modify and enhance the proposal to reopen ACO determinations by allowing providers to request a redetermination, considering the impact to a specificACO in determining materiality and shortening the timeframe from four to two years

To see the letter, click here.

Obama Administration Announces Additional Opioid Efforts

On March 29, the White House announced newinitiatives to combat the opioid epidemic and build on President Obama’s proposal for $1.1 billion in new opioid spending. At the National Rx Drug Abuse& Heroin Conference that same day, Obama urged the public to pressure Congress to support the White House request for $1.1 billion in new opioidspending, mostly to expand medication-assisted treatment.

The administration will release a proposed rule to increase the patient limit for doctors who provide medication-assisted treatment for opioid addictionfrom 100 to 200. The U.S. Department of Health and Human Services (HHS) is also finalizing a separate rule that requires Medicaid programs to provide coverage of substance abuse andother mental health services on par with medical and surgical coverage. That builds on earlier efforts to require “mental health parity” in employer-basedcoverage and Obamacare plans in the individual and small group markets. About 23 million Medicaid enrollees will be affected by the new final rule,according to CMS.

The final rule was the last piece of guidance coming from the Mental Health Parity and Addiction Equity Act of 2008. An interagency task force will makerecommendations on how to enforce the parity provisions.

The Substance Abuse and Mental Health Services Administration (SAMHSA) is also releasing an $11 million grant for states to expand theirmedication-assisted treatment and $11 million to make naloxone — the opioid overdose reversal drug — more available to first responders. Earlier thismonth, HHS released $94 million to expand medication-assisted treatment in community health centers.

Officials said that 75 percent of federal prescribers have been trained already on appropriate prescribing guidelines for opioids. In response to a requestfrom the administration, more than 60 medical schools have agreed to begin mandatory training of students in opioid prescribing this fall. The trainingwill be in accordance with the new CDC guidelines finalized in early March.

For more information on the final rule, click here.

Knee and Hip Bundled Payment Program Began April 1

The program to overhaul how Medicare pays for hip and knee surgeries began on April 1. The Comprehensive Care for Joint Replacement (CJR) model tests bundled payment and quality measurementfor an episode of care associated with hip and knee replacements to encourage hospitals, physicians and post-acute care providers to work together toimprove the quality and coordination of care from the initial hospitalization through recovery.

Medicare will pay hospitals a set price for the hip or knee replacementsurgery and up to 90 days of rehabilitation and recovery to encourage themto better coordinate and streamline the patient’s experience. According to arecent survey of 100+ orthopedic practices, mostpractices say they are “somewhat prepared” or “almost fully prepared” and hospital representatives say the same. Very few providers say they are fullyready for the program, which is mandatory for around 800 hospitals in 67 different regions.

This program will be the first time Medicare has forced participation in one of its alternative payment models. Up until now, efforts to transition awayfrom fee-for-service have been voluntary.

The Centers for Medicare and Medicaid Services (CMS) chose to test the payment system on hip and knee replacements because they are the most commoninpatient surgeries for Medicare and yet the quality and costs of care for the surgeries still vary greatly among providers. The penalties will be phasedin over time — for the rest of this year, hospitals will not be penalized if they spend more than the Medicare target amounts. Hospitals are still waitingfor more data from CMS about the quality and cost of care from post-acute care providers in their area, which will be available once the program begins.

House Budget Committee Chairman Tom Price (R-GA) introduced a bill that would delay the model’s April 1 implementation date — under H.R. 4848, CJR would not begin until Jan. 1, 2018.

CMS Adding Functions to HealthCare.gov Aimed at Keeping Consumers Covered

The Centers for Medicare and Medicaid Services (CMS) recently added new functions to HealthCare.gov aimed at helping eligible consumers stay covered. Thechanges — outlined in a blog post by HealthCare.gov CEO Kevin Counihan — include those to improve the consumer payment experience and to help consumersavoid data-matching issues during the enrollment process.

In terms of the consumer payment experience, CMS is making improvements to its marketplace outreach, sending consumers earlier and additional remindersabout payments, and working closely with insurance companies to reinstate consumers who had trouble during the payment process.

Consumers can also lose their coverage when CMS cannot match information on an application with reliable data in the federal system. Counihan said having adata-matching issue does not mean that an applicant is ineligible for coverage, but only that the information could not be electronically verified.Consumers with personal data-related issues can still enroll in coverage for 90 or 95 days, but must provide CMS with necessary information in order toavoid termination or adjustments.

To help consumers avoid data-matching issues, CMS made improvements to the online application that make it clearer when an issue is created. The agency isencouraging people to provide key information, if they failed to do so in the beginning, such as providing a Social Security number. CMS also added afunction to help ensure consumers do not generate a new data-matching issue if they have previously resolved that same problem in the past. Lastly, thefinal 2017 Notice of Benefit Payment and Parameters allows CMS to establish more appropriate income verification thresholds for consumers. In 2015,coverage was terminated or adjusted due to data-matching issues for around 1.7 million consumers.

To read the blog post, click here.

CMS Finalizes the ACA Federal Upper Limits (FUL)

On March 29, the Centers for Medicare and Medicaid Services (CMS) released the finalized Affordable Care Act (ACA)Federal Upper Limits (FUL)calculated in accordance with the Medicaid Covered Outpatient Drug final rule. States will have up to 30 days from the April 1 effective date to implementthe FULs. After that, the FULs will be updated monthly, and will be effective on the first date of the month following the publication of the update.States will have up to 30 days after the effective date to implement the FULs.

For more information on the FUL program, click here.

Medicare Sends MACRA Rule to White House for Review

The Centers for Medicare and Medicaid Services (CMS) sent its proposed rule on a new payment system for physicians to the White House for review. The rulewill outline the Merit-Based Incentive Payment System (MIPS) and a separate payment track for doctors partaking in alternative payment models — both wereinstituted under SGR repeal last year. CMS officials say they hope to release the proposed rule next month.

MIPS folds meaningful use, the value-based modifier and the physician quality-reporting system into one program. Providers will face cuts of up to 9percent of their Medicare payments by 2022 depending on how well they meet requirements. The Medicare Access and CHIP Reauthorization Act (MACRA) statesfinal rules around it must be published by Nov. 1.

FDA Wants Biosimilar Labels to Specify Copycat Status

On March 31, the U.S. Food and Drug Administration (FDA) released draft guidance for the labeling ofbiosimilar products. The guidance recommends that biosimilar labels include a statement that the product is a near copy of a branded biologic medicine.

FDA recommends that the biosimilar labels specifically name the branded biologic the biosimilar is based on. The statement should be tied to a footnotethat states that a biosimilar is a biological product approved based on data showing that it is highly similar to an FDA-approved biological product, knownas a reference product, and that there are no clinically meaningful differences between the biosimilar product and the reference product.

The drug lobbies PhRMA and BIO urged FDA to require this kind of labeling after it approved the first biosimilar product in 2015 with labeling that doesnot include its biosimilar status. The lobbies argue the information is essential for health care providers when making prescribing decisions. Others areconcerned the labeling could cause doctors to be more hesitant in prescribing the cheaper biosimilars.

FDA did not agree with PhRMA and BIO’s request that labeling include the data that supported the biosimilar’s finding of biosimilarity. The agency arguedthe studies are most likely irrelevant to a health care provider’s consideration regarding the safety and use of the drug and could cause confusion.

The guidance does not address interchangeable biosimilars, which could be automatically substituted for the reference product at pharmacies. FDA is stillworking on the data needed to prove a biosimilar is interchangeable with the reference product.

3. State Activities

Kentucky: June Deadline Set for State Exchange Transition

The Obama administration and Kentucky set June 1 as the deadline to determine whether the state has made enough progress to switch over to HealthCare.govfor 2017. The deadline was outlined in aletter on March 25 from the Centers for Medicare and Medicaid Services’ (CMS) Kevin Counihan, who oversees HealthCare.gov, to Kentucky health secretary Vickie Yates Brown Glisson. CMS said that until this decision date is reached, Kentuckymust concurrently implement a contingency plan that ensures that current customers can re-enroll and new customers can enroll into coverage withoutdisruption.

U.S. Health and Human Services (HHS) Secretary Sylvia Mathews Burwell sent amessage alongside the letter on the HealthCare.govtransition. Kentucky plans to use HealthCare.gov for eligibility and enrollment functionality while maintaining responsibility for other aspects of itsexchange.

Kentucky Gov. Matt Bevin says that decommissioning Kynect — set up under his Democratic predecessor Steve Beshear — will cost the state only $236,000.Other estimates are higher.

New Hampshire: Senate Passes Medicaid Expansion Bill

On March 31, New Hampshire’s Republican-controlled Senate approved a bill to continue the state’s Medicaid expansion for another two years, keeping nearly50,000 residents on subsidized health insurance plans. The bill now goes to Democratic Gov. Maggie Hassan’s desk for approval. The state Senate FinanceCommittee had endorsed the bill to continue expansion, before it moved the bill to the Senate chamber.

Under the program, people making up to 138 percent of the federal poverty level can use federal dollars to buy private health insurance plans. The billmakes changes to the program, including adding a requirement that any able-bodied adults must work, volunteer or participate in job training programs for30 hours a week. However, the bill includes language saying the state’s plan can continue even if this requirement is rejected.

Oklahoma: State Medicaid Agency Proposes 25 Percent Rate Cut

On March 29, the Oklahoma Health Care Authority announced SoonerCare — the state Medicaid agency — will cut provider reimbursement rates by 25 percentacross the board. This announcement comes as the state tries to patch a $1.3 billion budget hole for 2017. A 25 percent rate cut would put SoonerCareprovider rates at 64.9 percent of the Medicare rate. The state also says that additional cuts will be required if the Medicaid agency’s fiscal year 2017budget appropriation is reduced more.

SoonerCare currently contracts with over 46,000 providers, and the cuts would affect all provider types including hospitals, physicians, pharmacies,durable medical equipment suppliers and nursing home facilities. The proposed cut rate needs to be approved by the Centers for Medicare and MedicaidServices (CMS). Oklahoma wants the cut to take effect June 1.

4. Regulations Open for Comment

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 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.

HHS Posts Guidance for State Innovation Waivers

On Dec. 11, the Department of Health and Human Services (HHS) posted guidance for states interested in seeking a State Innovation Waiver under Section 1332of the Affordable Care Act (ACA). State Innovation Waivers allow states to receive federal funding to implement alternative models of health care coveragethat provide affordable coverage to their residents. The notice clarifies that the minimum length of public notice and comment periods for waiverapplications is 30 days.

To see the guidance, click here.

CMS Releases Proposed Rule for Provider Enrollment Process

On Feb. 25, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule to implement additional provider enrollment provisions of theAffordable Care Act (ACA) to help make sure that entities and individuals who pose risks to the Medicare program are kept out of it or removed for extendedperiods. This rule is part of CMS’s effort to prevent questionable providers and suppliers from entering the Medicare program.

If finalized, the regulations would allow CMS to remove or prevent enrollment of those who try to circumvent enrollment requirements through name andidentity changes or through inter-provider relationships. It will also address vulnerabilities such as when providers and suppliers avoid paying theirMedicare debts by reenrolling as a different entity.

Major provisions of the proposed rule include:

  • Disclosure of Affiliations: Would require health care providers and suppliers to report affiliations with entities and individuals that: (1) currently have uncollected debt to Medicare, Medicaid or CHIP; (2) have been or are subject to a payment suspension under a federal health care program or subject to an Office of Inspector General (OIG) exclusion; or (3) have had their Medicare, Medicaid or CHIP enrollment denied or revoked. CMS could deny or revoke the provider’s or supplier’s Medicare, Medicaid or CHIP enrollment if CMS determines that the affiliation poses an undue risk of fraud, waste or abuse.
  • Different Name, Numerical Identifier or Business Identity: CMS could deny or revoke a provider’s or supplier’s Medicare enrollment if CMS determines that the provider or supplier is currently revoked under a different name, numerical identifier or business identity.
  • Abusive Ordering/Certifying: Would allow CMS to revoke a physician’s or eligible professional’s Medicare enrollment if he or she has a pattern or practice of ordering, certifying, referring or prescribing Medicare Part A or B services, items or drugs that is abusive, represents a threat to the health and safety of Medicare beneficiaries or otherwise fails to meet Medicare requirements.
  • Increasing Medicare Program Re-enrollment Bars: Would improve protection of the Medicare Trust Funds and program beneficiaries by: 1) raising the existing maximum re-enrollment bar from three years to 10 years; 2) allowing CMS to add three more years to the provider’s or supplier’s re-enrollment bar if the provider attempts to re-enroll in Medicare under a different name, numerical identifier or busi