Washington Healthcare Update

April 11, 2016

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This Week:MedPAC votes on changes in Part D… Senate HELP Committee reports five “Cures” bills… One report shows uninsured number decreasing… Another says, but we stillneed the safety net.

1. Congress

House of Representatives– District Work Period


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress

House of Representatives– District Work Period


Senate HELP Committee Reports Final Five “Cures” Bills

On April 6, the Senate Health, Education, Labor and Pensions (HELP) Committee passed five bills in the final markup of its biomedical innovation work, with a few amendments added along the way. The bills are as follows:

  • S. 2700, the FDA and NIH Workforce Authorities Modernization Act
  • S. 185, the Promise for Antibiotics and Therapeutics for Health Act
  • S. 2713, the Advancing Precision Medicine Act of 2016
  • S. 2745, the Advancing NIH Strategic Planning and Representation in Medical Research Act
  • S. 2742, the Promoting Biomedical Research and Public Health for Patients Act

Sen. Pat Roberts (R-KS) added a change that would force the FDA to explain why it is issuing guidance for industry rather than a formal rule; Sen.Richard Burr (R-VA) added an amendment that would give HHS more power to waive the Paperwork Reduction Act.

An amendment from Sen. Elizabeth Warren (D-MA) and Sen. Mike Enzi(R-WY)—theGenetic Research Privacy Protection Act—exempts genetic data collected for research from the Freedom of Information Act (FOIA) and protects the identities of researchparticipants through NIH’s certificate of confidentiality (CoC) process.

Warren proposed and then withdrew an amendment to increase NIH funding. Chairman Lamar Alexander (R-TN) said the committee is still working on anagreement on that topic. Many Democrats—Warren, Sheldon Whitehouse and Al Franken—have all said they will not support a bill without a fundingagreement before it hits the floor.

2. Administration

NIH Announces Cancer Moonshot Blue Ribbon Panel Members

On April 4, the National Institutes of Health (NIH) announced the formation of a Blue Ribbon Panel of experts that will provide advice on the vision,proposed scientific goals and implementation of the National Cancer Moonshot Initiative. Potential funding opportunities the panel will consider in fiscalyear 2017 include the development of single-cell genomic profiling of cancer cells, cancer vaccines and pediatric cancer research. To gather input from thecancer research community, the panel may call upon special consultants, create ad hoc work groups, hold workshops and provide opportunities for publicinput.

For the list of panel members and for more information, click here.

CMS Finalizes 2017 Payment and Policy Updates for Medicare Advantage and Part D Prescription Drug Program

On April 4, the Centers for Medicare and Medicaid Services (CMS) released the final Medicare Advantage and Part D Prescription Drug Program changes for2017 that seek to provide stable payments to plans and make improvements to the program for plans that provide high-quality care to the most vulnerableenrollees. CMS will phase in the cuts to Medicare Advantage plans over two years in order to ease the pain for insurers.

The final policies are similar to those proposed in February but incorporate several changes in response to feedback received during the public commentperiod. On average, CMS estimates there will be a 0.85 percent increase in payments without accounting for the expected growth in coding acuity that hastypically added another 2.2 percent. The final revenue increase is down from the 1.35 percent increase estimated in the February Advance Notice.

CMS is also changing its proposal to increase the use of medical claims data in determining payment rates. Instead of increasing the percentage of theformula based on medical claims data next year from 10 percent to 50 percent, it will instead raise the threshold to 25 percent.

New policies aim to improve the accuracy of payments to Medicare Advantage plans that serve vulnerable populations, such as dually eligible or low-incomebeneficiaries. Specifically, a revised methodology used to risk-adjust payments to plans will more accurately reflect the cost of care for dually eligiblebeneficiaries. CMS will also implement an interim adjustment to the Star Ratings system that is designed to more accurately compensate plans that attractdisproportionately sick, expensive customers. Additionally, CMS’s finalized policies will provide stability to the Medicare Advantage program in PuertoRico.

Insurers waged a lobbying campaign to roll back some of the changes, most notably the cuts to employer-based plans. The financial stakes are huge, withhealth plans receiving roughly $170 billion in federal funds each year to cover seniors.

CMS is also finalizing policies that will further combat opioid overutilization by encouraging safeguards before an opioid prescription is dispensed at thepharmacy and maintaining access to needed medications. Insurers will be required to put systems in place by 2018 that will reject claims for opioidprescriptions at the pharmacy for patients who have reached a threshold for the total amount of painkiller prescriptions they have filled. CMS said it willnot approve plan formularies that hinder access to medication-assisted treatment for substance abuse disorder.

For a general fact sheet on the 2017 Rate Announcement and Call Letter, click here.

For more information on Medicare Employer Retiree Plans (Employer Group Waiver Plans) and the 2017 Rate Announcement and Call Letter, click here.

CMS Planning to Exclude Oncology Care Model Physicians From Part B Demonstration

The Centers for Medicare and Medicaid Services (CMS) is planning to exclude from the Part B drug demonstration physician practices participating in theOncology Care Model. The exclusion of those oncologists would not only improve the integrity of results from the Part B demo, but also serve to ease thenerves of Democratic lawmakers caught between provider lobbyists trying to kill the demonstration and the administration supporting it.

At issue is the proposed rule to test new models to improve how Medicare Part B pays for prescription drugs and supports physicians and other clinicians indelivering higher-quality care. Oncologists oppose the proposed Part B demonstration because Part B drugs account for nearly 80 percent of oncologists’Medicare fee-for-service revenue. They were among the 300 drug companies and doctor and consumer groups that wrote to Congress in opposition of theproposal.

CMS’s proposal acknowledges the overlap between the Part B demonstration and the Oncology Care Model. However, including the Oncology Care Model makes itmore difficult for CMS to avoid messing up test results. CMS must ensure that the demonstration does not hurt patient access to clinically appropriatetherapies.

Federal Appeals Panel Unconvinced of Obamacare Lawsuit

A federal appeals panel on Tuesday appeared skeptical of the latest Obamacare lawsuit, which challenges an Obama administration policy allowing healthplans not meeting the law’s coverage requirements to remain in place.

On April 5, a three-judge panel of the D.C. Circuit Court of Appeals focused on whether the American Freedom Law Center (AFLC)—a nonprofit legal advocacygroup—can show its health insurer hiked premiums because of the Obama administration’s decision to extend expiring health plans. If AFLC cannot show this,it will not have standing to bring the lawsuit and the court will not even consider the claims raised in the case.

AFLC lost on the standing issue during the first visit to a lower federal court. A case brought by the state of West Virginia also failed on the standingissue at the district court level. The case is up for appeal before the D.C. Circuit on April 15. In response to backlash when Americans received noticestheir health plans were being cancelled, the administration announced it would allow plans that do not meet the ACA’s coverage requirements to stay inplace through 2017—if states choose to allow it.

The plaintiffs in this case argue the move was an unconstitutional use of executive authority.

FDA Approves Inflectra Biosimilar to Remicade

On April 5, the U.S. Food and Drug Administration (FDA) approved thesecond biosimilar that can enter the U.S market. Celltrion’s and Hospira’s infliximab product Inflectra is approved for all the indications treated by thereference product: Crohn’s disease, ulcerative colitis, rheumatoid arthritis, ankylosing spondylitis, psoriatic arthritis and plaque psoriasis.

However, the drug is at the focus of litigation. Janssen Pharmaceutica filed suit against the biosimilar sponsors, alleging the companies refused toparticipate in required statutory procedures. In a brief filed in support of Amgen’s argument against Apotex, Janssen said that Celltrion and Hospiraagreed to refrain from entering the market until after June 29, even though their product could be approved before that time

Allergan and Pfizer Call Off $160 Billion Merger

On April 6, drugmakers Allergan and Pfizer called off their $160 billion merger less than 48 hours after the Treasury Department announced harsh rules tostop corporate inversions. This has also been an issue in the presidential campaign: Hillary Clinton, Bernie Sanders and Donald Trump have all spoken outagainst Pfizer’s inversion.

White House to Transfer Ebola Funds to Fight Zika Virus

The Obama administration announced it will transfer $600 million in leftover money from the fight against Ebola to fight the growing threat of the Zikavirus. Most of the funds will go to the Centers for Disease Control and Prevention (CDC), which is researching anti-Zika vaccines, treating those infectedwith it and addressing mosquitos that spread it.

The Ebola funds have been a point of contention between Congress and the White House, with GOP leaders repeatedly rejecting President Obama’s $1.9 billionemergency Zika funding request and urging him to use the Ebola funds instead. The White House has maintained that those funds were already intended to helpcontain and fight outbreaks abroad.

On April 5, a group of major public health and physician organizations wrote a letter to members of Congress requesting immediateemergency funding to guard against the threat from the Zika virus, arguing there is only a brief window of opportunity to “avert a wave of preventablebirth defects.”

HHS, DOL, Department of Treasury Finalize New Version of the Summary of Benefits and Coverage

On April 6, the U.S. Department of Health and Human Services (HHS), the Department of Labor (DOL) and the Department of the Treasury announced keyenhancements to the Summary of Benefits and Coverage (SBC) template and Uniform Glossary. The improvements include an additional coverage example andlanguage and terms to improve consumers’ understanding of their health coverage.

Under the Affordable Care Act (ACA), issuers and health plans are required to provide a brief summary of what the plan covers and the cost-sharingresponsibility of the consumer, in order to help individuals make more informed choices among health plan options and better understand their coverage.Plans and issuers are also required to provide a comprehensive uniform glossary of commonly used health coverage and medical terms.

The SBC includes coverage examples that demonstrate the cost-sharing amounts an individual might be responsible for in three common medical situations. Inaddition to the current coverage examples that address diabetes care and childbirth, the updated template has a new coverage example that addressescoverage for a foot fracture so that a consumer understands what a plan covers in an emergency scenario.

Changes have also been made to the SBC to improve readability for consumers. The new templates include more information about cost sharing, such asenhanced language to explain deductibles and a requirement that plans address individual and overall out-of-pocket limits in the SBC. These improvementsreflect input from consumer groups, the National Association of Insurance Commissioners and other stakeholders. Health plans and issuers will use thisfinal SBC template beginning on the first day of the first open enrollment period that begins on or after April 1, 2017.

The SBC is available for every Marketplace plan and most non-Marketplace plans.

For more information regarding the SBC and supporting materials, clickhere.

3. State Activities

Arkansas: Governor’s Medicaid Plan Approved by Arkansas House and Senate

The state legislature held its special session on Medicaid last week, where lawmakers considered extending coverage for the Medicaid expansion population,among other reforms. Gov. Asa Hutchinson’s managed care proposal was not considered after lawmakers urged him to drop the plan. House and Senate leaderssaid there was no consensus on managed care, so they only considered Arkansas Works.

Both chambers passed Arkansas Works on April 7, and funding for the program will be voted on during the fiscal session starting April 13 — appropriationrequires a 75 percent majority.

California: State Exchange Analysis Reveals Challenges for Undocumented Waiver

On April 7, California exchange board members cleared the way for an Affordable Care Act waiver (Section 1332) that would let undocumented immigrantspurchase plans at full cost. The board’s recommendations sent the issue to the California Legislature, which must pass a bill authorizing the state tosubmit the waiver request to the federal government.

A Section 1332 waiver allowing undocumented immigrants in California to purchase Affordable Care Act (ACA)plans at full cost would likely take until 2018 to implement even if thefederal government accepted it, according to ananalysis by Covered California.

The state may consider other waiver ideas in later years, including a fix of the ACA’s so-called family glitch, which prevents some individuals fromobtaining subsidized coverage on the exchanges if a family member receives affordable job-based coverage.

The health care law explicitly prohibited undocumented immigrants from enrolling in ACA coverage, so federal approval of the undocumented coverage waiveris uncertain. Gov. Jerry Brown’s stance is also unclear, although last year he expanded Medicaid coverage to undocumented children.

Covered California—the state’s exchange—prepared the analysis of several Section 1332 waiver options before an April 7th exchange board meeting wheremembers voted on initial recommendations. Implementation would require changes to Covered California’s marketing campaign and the state’s eligibility andenrollment system. The analysis also points out that California is quickly running out of time to get a waiver submission prepared for this year.

For 2016, 1.6 million people signed up through the state exchange, a number that includes nearly 440,000 new enrollees;90 percent of enrollees qualifiedfor subsidies.

For more information, clickhere.

Florida: Legislature Passes Prescribing Bill

The Florida state legislature passed a bill that grants nurse practitioners and physician assistants prescribing authority for controlled substances.Florida is the only state in the country that does not give that authority to nurse practitioners, and both Florida and Kentucky still do not givephysician assistants the authority. Gov. Rick Scott has until April 14 to sign or veto the legislation.

In other news, Florida has reached a settlement in aclass-action lawsuit over access to providers for children enrolled in Medicaid.In the lawsuit, lasting over 10 years, the state admitted to no wrongdoing but agreed to pay $12 million in attorneys’ fees for the plaintiffs. Thisincludes the Florida Pediatric Society and the American Academy of Pediatrics. Florida’s Agency for Health Care Administration (AHCA) will make attempts toreach specific thresholds for provider participation in the Medicaid program within 30 months of the settlement’s implementation. Florida will have tocreate a corrective action plan with the plaintiffs if it fails to meet this goal. The AHCA will seek increases in payments to Florida’s Medicaid managedcare plans if it does not meet provider participation goals. Florida also agreed to improve outreach efforts to enroll additional children in Medicaid.

Additionally, there are requirements related to children’s access to dental services—within 30 days of the settlement’s implementation, AHCA agreed tostart a study of network adequacy for dental plans to determine what changes should be made in Medicaid contracts for 2016.

Minnesota: Increased Losses for Health Insurers in Individual Market

Minnesota health plans say their financial losses for the individual market grew last year. Nonprofit health insurers lost $351.8 million in the individualmarket on revenues of around $1.1 billion. However, they expect losses to be closer to $133 million after taking into account ACA programs that areshielding insurers from financial risk. The Minnesota Council of Health Plans released these figures. They reflected financialperformances of seven health insurers in Minnesota: Blue Cross and Blue Shield of Minnesota, HealthPartners, Metropolitan Health Plan, Medica,PreferredOne, UCare and Sanford Health Plan of Minnesota.

New York: Budget Agreement Allows Federal Waiver for Medicaid Inmate Exclusion

The budget agreement announced by Gov.Andrew Cuomo and legislative leaders authorizes New York to seek a federal waiver for Medicaid’s inmate exclusion. Federal Medicaid law prohibits thepayment of federal Medicaid matching funds for the medical costs of inmates, unless the inmate is in an inpatient hospital setting or other medicalinstitution. The New York budget allows the state to seek a federal waiver in order to provide transitional services to high-needs inmates 30 days beforebeing released. Services could include medical care, prescription drugs and care coordination services.

Ohio: Gov. Kasich to Release Medicaid Waiver Proposal

Republican Gov. John Kasich’s administration is going to release a Medicaid expansion waiver proposal that would require certain Medicaid enrollees to payinto a health savings account (HSA) regardless of their income. House Republicans added the plan to the state budget last year. If approved by the federalgovernment, more than 1 million low-income people would be required to pay the new monthly cost beginning in 2018. A draft of the waiver proposal will bemade available for public comment on April 15.

Oklahoma: Medicaid Agency Proposing to Adopt Medicaid Expansion

Oklahoma’s Medicaid agency—Oklahoma Health Care Authority—is proposing to adopt Obamacare’s Medicaid expansion. Titled “the Medicaid Rebalancing Act of2020,” the proposal relies on the enhanced federal Medicaid funding to cover 175,000 uninsured Oklahomans earning up to 133 percent of the federal povertylevel. Enrollees would have a choice of commercial insurance plans and premiums based on their income on a sliding scale. The plan would also move 175,000pregnant women and children into private insurance plans, which the agency estimates would save Oklahoma $60 million.

The expansion would be an option under the state’s existingInsure Oklahoma Medicaid 1115 waiver, which covered over 19,000low-income adults as of March 2016.

This plan comes after the Medicaid agency notified providers that it wants to cut reimbursement rates by 25 percent, as the state tries to plug a $1.3billion budget hole. A fact sheet detailing the plan notes that it would restoreprovider rates back to the current 86.5 percent of Medicare as soon as possible.

Tennessee: Departure of TennCare Director Darin Gordon

Tennessee Gov. Bill Haslam announced TennCare Director Darin Gordon will leave his post at the end of June and enterthe private sector. Gordon spent 10 years leading the state’s Medicaid program and is the longest-serving Medicaid director in the country.

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 Ins