Washington Healthcare Update

April 25, 2016

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This Week:Speaker Ryan says he cannot get the votes for a budget…House appropriators begin markups…UnitedHealth says it will exit the exchanges but other insurerssay they will stay in.

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress

House of Representatives

House Appropriations Committee Approves FDA Funding Bill

On April 19, the House Appropriations Committee approved a $21.3 billion FDA-agricultural bill. Democrats unsuccessfully sought to include the WhiteHouse’s request for $1.9 billion in new Zika funding and to remove FDA-focused policy riders. The bill includes $2.7 billion in discretionary funding forFDA, $33 million higher than the 2016 enacted level. Most of that money is directed to food safety. There also is $10 million included in new FDA money forZika and Ebola.

The committee passed an amendment 31-19 to exempt e-cigarettes and other vapor products on the market from FDA’s tobacco deeming rule. The amendment wouldexempt the products from the review process, but also mandates advertising and labeling aimed at keeping them out of the hands of children.

Appropriators also voted 34-14 against an attempt by Democrat Rosa DeLauro (CT) to remove a policy rider that forces FDA to exempt premium cigars from thefinal rule. The final rule is expected soon.

The bill includes riders that would enact pieces of the 21st Century Cures Act, prevent FDA from finalizing a drug labeling rule unless it agrees toCongressional mandates reflecting industry demands and prevent FDA from approving gene editing research that modifies inheritable traits in human embryos.

Ranking member Nita Lowey (D-NY) unsuccessfully sought an amendment that would have required FDA to use $3 million of its funding for work on drugs andmedical devices for children.

House Appropriators Move to Delay FDA Salt Reduction Efforts

During a seven-hour agriculture spending bill markup on April 18, House appropriators approved a provision to block the U.S. Food and Drug Administration(FDA) from taking action on salt reduction until the Institute of Medicine (IOM) and the Centers for Disease Control and Prevention (CDC) update theDietary Reference Intake (DRI) for sodium. The DRI is a measure of the nutrient needs of health populations. The IOM’s process for updating the DRI forsodium is expected to take at least 18 months.

House Energy and Commerce Committee Approves Opioid Package

On April 20, the House Energy and Commerce Committee held a markup on12 separate bills intended to be the counterpart to the Senate’s Comprehensive Addition and Recovery Act (CARA) legislation. The subcommittee on healthapproved all 12 bills aimed at addressing the opioid and drug abuse crisis in the country.

The bills include measures to expand patient access to medication-assisted treatment and to allow partial fillings of opioid prescriptions. Other bills aredesigned to increase access to the overdose reversal drug naloxone and expand services for pregnant women or mothers with young children dealing withsubstance abuse.

Other bills would require FDA to consult outside advisers before changing labels on opioids, the development of education programs for opioid prescribersand the creation of an interagency task force to update best practices for pain medication prescribing.

The markup was largely bipartisan, though lawmakers quarreled over caps on the number of patients doctors can treat with medication-assisted treatments.Rep. Frank Pallone (D-NJ) proposed raising the cap to 300 patients, but the committee approved only 250.

For more information,click here.

Bipartisan Bill Introduced to Guarantee Medicare Coverage of Breakthrough Medical Devices

Representatives Charles Boustany (R-LA), Gus Bilirakis (R-FL), Richard Neal (D-MA) and Tony Cardenas (D-CA) introduced a bill on April 21 to guaranteeimmediate Medicare coverage of breakthrough medical devices and diagnostics following FDA approval. The initial Medicare coverage would run three years.During those three years, CMS could specify additional data it wants to justify further coverage. The bill also changes the CMS New Technology Add-onPayment program.


House and Senate Lawmakers Introduce Meaningful Use Bill

On April 20, a bipartisan group of House and Senate lawmakers introduced a bill to shorten the 2016 reporting period for the electronic health record (EHR)Meaningful Use program to 90 days, as opposed to a full year. Providers are also pushing the Centers for Medicare and Medicaid Services (CMS) to shortenthe 2016 reporting period.

Rep. Renee Ellmers (R-NC) introduced H.R. 5001 along with Reps. Tom Price(R-GA), Marsha Blackburn (R-TN), Ron Kind (D-WI), Bobby Rush (D-IL) and Doris Matsui (D-CA). In the Senate, Sen. Rob Portman (R-OH) and Michael Bennet(D-CO) introduced the bill. Providers argue the reporting period should be shortened because CMS is reworking the Meaningful Use program to fit it into thephysician pay system.

Senate Finance Committee to Hold Hearing on Mental Health

The Senate Finance Committee will hold a hearing on mental health issues on April 28. The Senate Health Education, Labor and Pensions Committee recentlypassed the Mental Health Reform Act of 2016, but deferred key provisions such as the Institutions for Mental Diseases (IMD) exclusion. That policyprohibits Medicaid from reimbursing psychiatric institutions or IMDs for services provided to Medicaid enrollees who are 21 to 64.

For more information about the hearing, click here.

2. Administration

White House Gets Specific on Zika Funding

On April 18, the Obama administration updated its Zika funding request—overall, it is requesting the same amount of emergency funding from Congress, buthas ramped up its request in two key areas while reducing spending in others. The administration nearly doubled the request for the Biomedical AdvancedResearch and Development Authority from $100 million to $188 million to help get ready for Phase II vaccine testing. In terms of cuts, the administrationreduced contingency funding by $150 million and facility funding by $85 million.

Over 800 Americans in 40 states, three U.S. territories and D.C. have contracted the virus, according to a letter from Senate Democrats to GOP leaders.This total includes 89 pregnant women. To see the letter, click here.

The Biosimilar User Fee Negotiations Begin

The U.S. Food and Drug Administration (FDA) is asking industry trade groups to agree on negotiation ground rules and a proposed timeline for the BiosimilarUser Fee Act (BsUFA) reauthorization process. Brand-drug company lobbying groups BIO and PhRMA, along with GPhA Biosimilars Council and the BiosimilarForum are all taking part in the private reauthorization negotiations. According to FDA’s notes from the first set of meetings, sustainable financing ofthe user fee program is a priority for all parties involved. FDA has told lawmakers in the past that it needs additional funding for biosimilars.

To see FDA’s meeting notes, click here.

FDA Proposes Rules for Seamless Clinical Trial Design

Agency cancer leaders support companies’ using a new clinical trial process known as “seamless expansion cohort” trials for developing oncology drugs. Thetrials are designed to bring treatments to market more efficiently, but the U.S. Food and Drug Administration (FDA) is concerned some companies areneglecting some safety precautions. Given this drug development program’s efficiency and success with regard to several indications, many drug companieshave forgone the traditional three stages of drug development and opted for a seamless approach of adding cohorts to a first-in-human trial to investigatedoses and activity in a variety of cancers. Many companies are using this approach, but these trials often lack elements important for FDA approval. Forexample, it can be difficult to evaluate drug safety if there is no control group.

In a New England Journal of Medicine (NEJM) op-ed, FDA’s cancer drug director Richard Pazdur, FDA’s Marc Theoret and Johns Hopkins’ Tatiana Prowellpropose that companies that want to conduct seamless trials go through FDA’s breakthrough therapy program. This would allow for additional interaction withFDA and prevent many concerns the agency has with the trials. FDA plans to release formal guidance on the issue.

To see the op-ed, click here.

FDA Releases Guidance on Drug Compounding

On April 15, the U.S. Food and Drug Administration (FDA) put out three guidance papers on drug compounding under the 2013 Drug Quality and Security Act,which passed after the 2012 outbreak of fungal meningitis from contaminated compounded medications. The guidance helps clarify when FDA considerscompounding to be exempt from agency oversight and when FDA manufacturing requirements will apply. For instance, FDA says that some compounding can happenbefore receiving a valid patient prescription and stay outside of its oversight if the compounder holds no more than a 30-day supply of the drug,determined based on past prescriptions. It also allows hospital pharmacies to distribute compounded drugs within a one-mile radius to facilities owned andcontrolled by the same entity.

For the first guidance, click here.

For the second, click here.

For the third, click here.

FDA Revokes Approval for Abbvie Cholesterol Drugs

On April 15, the U.S. Food and Drug Administration (FDA)revoked approvals for drugs that had made billions in sales beforestudies found they were ineffective. AbbVie’s Niaspan was approved in 1997, and Trilipix was approved in 2008. Studies found neither drug reducescardiovascular problems or mortality in patients treated with statins. FDA also withdrew approval of AbbVie’s Advicor and Simcor, two drugs that combineniacin—the active ingredient in Niaspan—with different statins. None of these drugs worked any better than statins alone, according to FDA.

CMS Releases Medicare Advantage Quality Data for Racial and Ethnic Minorities

On April 19, the Centers for Medicare and Medicaid Services (CMS) Office of Minority Health released data detailing by racial or ethnic group the qualityof care received by people with Medicare Advantage.

The data is based on an analysis of two sources of information: The first is part of the Healthcare Effectiveness Data and Information Set (HEDIS). HEDIScollects information from medical records and administrative data on how well the needs of Medicare beneficiaries are met for a variety of medical issues,including diabetes, cardiovascular disease and chronic lung disease. The second part is the Medicare Consumer Assessment of Healthcare Providers andSystems (CAHPS) Survey, which is conducted annually by CMS. CAHPS focuses on the health care experiences of Medicare beneficiaries across the nation.

The database presents HEDIS and CAHPS scores for different racial and ethnic groups at the level of individual Medicare contracts and is intended to beused to improve quality and accountability. The information provided by this database is not used to evaluate care through the Medicare Advantage and PartD Star Ratings program nor is it used for payment purposes.

A report summarizing the data accompanied the release. Analysis of the quality of care delivered to beneficiaries showed that Asians and Pacific Islanderstypically received care that is similar to or better than the care received by whites, whereas African Americans and Hispanics typically received care thatis similar to or worse than the care received by whites. African Americans and Hispanics also reported their health care experiences as being similar to orworse than the experiences reported by whites.

To view the data and summary report, click here.

For the CMS press release, click here.

Providers Push Back on Labor Department’s Overtime Rule

Health care providers who primarily rely on Medicaid funding are unhappy with the Labor Department’s proposed overtime rule. These health care groupsprovide services to people with disabilities. They say that doubling the salary threshold for overtime pay to $50,440 from $23,660—under which almost allworkers qualify—is impractical for an industry that cannot increase prices to cover additional costs. The providers are asking that the rule be modifiedbefore it is finalized, which will likely happen in the coming weeks. It would take effect 60 days after that.

The providers argue that since their funding comes mostly from the government, the Obama administration should at least phase in the new threshold to givethem time to negotiate with states to increase Medicaid reimbursements. In a recentletter to House colleagues, Rep. Collin Peterson(D-MN) said the overtime rule could disproportionately hurt local human services nonprofits that receive their reimbursements from Medicaid. He asked thatHouse colleagues sign a separate letter requesting the Labor Department consider the rule’s effect on disability services providers.

Proponents of the rule, however, are questioning the fairness of treating disability service providers any differently than those in other industries.

The American Network of Community Options and Resources (ANCOR) is pushing Congress to increase federal Medicaid funding to cover these new overtime costs.The likelihood of getting that increase is slim given the election year and a Republican-controlled Congress against both entitlement spending and the ruleitself.

Avalere Health conducted a study for ANCOR,which estimates that 139,000 employees providing disability services will need to be paid overtime because of the new industry threshold. If thoseemployees work five hours of overtime per week, the overtime rule will cost the providers over $1 billion within the first year, according to Avalere.

NIST Seeking Health Care Participants for Federated Identity Pilot Grant

The National Institute of Standards and Technology (NIST) is seeking applicants for a grant to pilot the use of online “identity solution” for patients andhealth care providers. The National Strategy for Trusted Identities in Cyberspace(NSTIC) initiative is offering grant funding of up to $2 million to health care providers who can pilot a “federated credential solution in which at leasttwo hospitals or regional healthcare systems accept a federated, verified identity that leverages multi-factor authentication and an effective identityproofing process,” according to NIST.

NIST held a webinar on April 18 for those interested in participating. Applications are due on June 1, 2016, and NIST expects to notify successfulapplications in September 2016.

CMS Extends Participation in the Bundled Payments for Care Improvement Initiative

On April 18, the Centers for Medicare and Medicaid Services (CMS) said that providers involved in three models of the Innovation Center’s Bundled Payments for Care Improvement (BPCI) initiative can extend theirparticipation by two years through Sept. 30, 2018. The continuation applies to Models 2, 3 and 4 of the initiative. As of April 1, models 2, 3 and 4 had649, 862 and 10 participants, respectively. Model 1 of the initiative has only one provider left—an acute care hospital in Wichita, Kansas. That hospital’sparticipation will conclude at the end of this year.

For more information, click here.

CMS Delays Star Ratings Until July

On April 20, the Centers for Medicare and Medicaid Services (CMS) notified Congress it would not implement plans to release the hospital star ratings —designed to identify hospitals with high patient quality and experience — on April 21.The star ratings will instead be published in July. Over half ofCongress petitioned CMS to delay the star ratings, with lawmakers expressing concern that the ratings would penalize hospitals that treat patients withpoor, unhealthy populations.

CMS also announced two other delays: new inpatient psychiatric and ambulatory surgery measures will now be released May 4, and the preview period for July2016 Hospital Compare data—when hospitals will be able to review their ratings on CMS’s website before it goes public—is delayed from April 22 to May 6.

HRSA Reopens Comment Period on Proposed “Penny Pricing Policy”

The Health Resources and Services Administration (HRSA) has reopened the comment period on a proposed 340B rule that deals with setting prices under thedrug discount program and assessing penalties for not providing drugs at the right price, signaling it potentially could change course on using theso-called “penny pricing” policy and has not resolved how it will estimate the ceiling price of new drugs and determine when a manufacturer “knowingly andintentionally” charged 340B providers more than the ceiling price.

The penny pricing policy would charge a penny for drugs where the ceiling price comes out below $0.01 per unit. HRSA said the agency received a number ofcomments both supporting and opposing the penny pricing proposal—hospitals and other 340B providers were pleased with the proposed policy, while otherssuggested alternatives—including the federal ceiling price, the most recent positive ceiling price from previous quarters and nominal sales price.

“Given these comments, HHS is considering whether any of these alternatives or other alternatives not raised by the commenters, alone or in combination,would be more appropriate than the penny pricing proposal and whether to revise the proposed regulatory text,” HRSA says.

The penny pricing policy in the proposed rule is consistent with past HRSA guidance, but PhRMA and the Biotechnology Industry Organization (BIO) said incomments on the proposed rule that the policy is punitive and could lead to providers’ hoarding drugs when they cost only a penny.

HRSA says comments may be submitted on any aspect of the proposed rule, not just those on which it has sought more input due to stakeholders’ previouscomments. The agency also asked stakeholders not to re-submit comments given to the agency during the first comment period.

3. State Activities

NASHP Announces Creation of Working Group to Address High Drug Costs

On April 19, the National Academy for State Health Policy (NASHP) announced the creation of a working group in which state officials will identify newpolicies and strategies to reel in drug costs. According to NASHP Executive Director Trish Riley, the group’s members will be announced this week. It willbe a yearlong project that could delve into potential laws or measures that state agencies can implement administratively. In addition to thisannouncement, NASHP released a brief on measures states have already tried toaddress high drug costs.

California: State Lawmakers Approve Price Transparency Bill

California’s Senate Health Committee approved a bill requiring drug companies to notify insurers if they plan to increase a drug’s price by 10 percent ormore in any 12-month time frame. The bill—introduced by Democratic state Senator Ed Hernandez—would also require companies to give justifications 30 daysahead of time for price increases of drugs with list prices over $10,000.

To see the text of the bill, click here.

Georgia: Document Details Negative Impacts of Megamergers in Georgia

A state insurance department document suggests that two pending insurance megamergers would tighten an already concentrated market in Georgia. The proposedAetna-Humana merger would have a bigger impact than the Anthem-Cigna merger. The document states that a health insurance market is highly concentrated if75 percent of business is controlled by four or less insurers—the Georgia markets selling to individuals, small and large businesses, and Medicarebeneficiaries already fit that category. The Aetna-Humana merger would give the combined company 58 percent of the individual market in the state, andAnthem-Cigna would have 29 percent.

Illinois: State Employee Claims Insurance Denied Due to Lack of State Budget

A state employee filed a class-action lawsuit against Illinois Gov. Bruce Rauner and other state officials, alleging the state’s budget impasse left somestate employees without health insurance. The employee says the state stopped giving nonunion employees’ health insurance withholdings to insurancecompanies, so the companies stopped covering medical expenses. Illinois has been operating without a state budget for over a year.

Kentucky: Gov. Bevin Signs Biosimilar Substitution Bill

Kentucky Gov. Matt Bevin signed legislation that requires pharmacists to notify physicians and patients if they substitute an interchangeable biosimilarfor a biologic medicine. Senate Bill 134 seeks to preserve patient access to accurateprescription information, maintain incentives for innovation and promote a competitive market for biologic therapies. Major drug industry groups arepushing the measure in state legislatures around the country—the Biotechnology Innovation Organization (BIO) and Kentucky Life Science Council (KLSC)commended the governor for signing the legislation.

Louisiana: Gov. Edwards Reworking Medicaid Expansion Hiring Plan

Democratic Gov. John Bel Edwards is reworking a plan to hire the staff needed to handle his Medicaid expansion effort. The changes were announced afterRepublican lawmakers objected to adding employees while the state is dealing with budget problems. Now, Louisiana’s health agency will boost an outsidecontracting deal with the University of New Orleans, which will have as many as 200 short-term employees who will conduct the eligibility reviews forexpansion.

Maine: Gov. LePage Signs Legislation Limiting Opioid Prescriptions

Maine Gov. Paul LePage has signed legislation that limits opioid prescriptions and requires prescribers to check the state’s prescription drug monitoringprogram at a certain frequency. This law comes soon after Massachusetts became the first state to limit how many opioids could be prescribed. In the state,starting in 2017, providers will not be allowed to prescribe more than a seven-day supply within a seven-day period for acute pain or a 30-day supplywithin a 30-day period for chronic pain—though there are exceptions for cancer and palliative care.

To see the legislation, click here.

New York: Mayor Announces Three-Year, $21 Million Zika Plan

New York Mayor Bill de Blasio announced a three-year, $21 million plan to address the threat of Zika virus in New York City. The city has seen 40 cases ofZika virus so far, all of which were contracted outside the country. Of the 40 cases, six were pregnant women. The mayor’s response plan includes threemajor components: 1) mosquito reduction through targeted citywide prevention efforts; 2) disease detection and testing, which will include doubling thenumber of mosquito traps currently employed in the city; and 3) public information efforts through the “Fight Back NYC” education campaign.

New York: State Opens Insurance Enrollment to Domestic Violence Victims, AG Suing Insurer for Delaying Hepatitis C Coverage

New York is requiring insurers providing ind