Washington Healthcare Update

May 16, 2016

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This Week:House still talks about doing a budget…Courts rule against the administration on cost-sharing subsidies, but it’s a long legal battle to the end…Part B Demo continues to draw anger…Nondiscrimination rule released…Opioid bills by the dozen pass the House.

1. Courts

2. Congress

House of Representatives


3. Administration

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Courts

Federal Court Finds Obama Administration Improperly Funding Cost-Sharing Subsidies

On May 12, a federal court ruled that the Obama administration has been improperly funding Obamacare’s cost-sharing subsidies. The ruling is stayed pendingappeal, so there will be no immediate fallout for health plans. At stake is $175 billion over 10 years that insurers would receive to subsidize theirObamacare customers, according to a Congressional Budget Office report. Cost-sharing subsidies are available to enrollees with incomes below 250 percent of the federal poverty level who enroll in silver plans. They aredesigned to reduce out-of-pocket costs when those individuals access medical care.

The administration has said that it will appeal the decision. If ultimately the courts strike the subsidies, the health plans would likely sufferfinancially because those payments go directly to insurers to make up for lower payments from their poorest customers.


House of Representatives

House Energy and Commerce Committee to Hold Hearing on Medicare Part B Demo

The House Energy and Commerce health subcommittee plans to hold a May 17hearingon the Obama administration’s Medicare Part B demonstration project on drug prices. More specifically, the hearing will address a legislativeproposal—introduced by Rep. Larry Bucshon (R-IN)—that would end the demonstration project.

This hearing comes as CMS faces competing pressure from lawmakers and stakeholders who support the demo and those who strongly oppose it. Comments weredue to CMS on May 9.

A group of House Democrats—led by Reps. Jan Schakowsky (D-IL), Peter Welch (D-VT), Lloyd Doggett (D-TX) and John Conyers (D-MI)—sent a letter to CMS expressing their support for the demonstration project and urging that it still move forward.

The lawmakers argue that the demonstration project is a necessary attempt to investigate whether higher reimbursement rates are having an impact onwhich drugs doctors prescribe.Click hereto see the letter.

Medicaid Task Force Working to Lay Foundation forMedicaid Reform

Rep. Brett Guthrie (R-KY), head of the House Energy and CommerceCommittee’s Medicaid task force, said Republican lawmakers hope to lay thefoundation for Medicaid reform next year, suggesting some reforms could movealong with efforts to renew Medicare extenders that end in 2017.

Reps. Marsha Blackburn (R-TN), Susan Brooks (R-IN), Larry Bucshon (R-IN), Michael Burgess (R-TX), Chris Collins (R-NY), Bill Flores (R-TX) andMarkwayne Mullin (R-OK) also serve on the task force. Democrats argued the creation of the task force was a partisan attempt to dismantle Medicaid.

CMS Shows Support for UDIs in House Ways and Means Hearing

At a House Ways and Means health subcommittee hearing onMay 11, CMS Acting Administrator Andy Slavitt said the agency would like to see the incorporation of unique device identifiers (UDIs) in electronic recordsand medical billing claims. This is an unexpected change of CMS’s position. Slavitt explained CMS supports UDIs, but faces issues in funding theirincorporation and educating doctors to use them.

“Our history is that physicians don’t automatically put the information they need to down on a form unless it’s critical to them getting paid,” he said.But Slavitt pledged to work with Congress on UDIs and said he was already working with the American Medical Association (AMA) on the issue.

UDIs are seen as a way to detect dangerous or ineffective devices so they can be quickly removed from the market. The X12 committee, which oversees changesin the forms, currently is developing the next version, to be released in 2021.

At the hearing, Rep. Bill Pascrell (D-NJ) said he has been frustrated with CMS’s resistance to UDIs, which FDA last year required as part of devices.Former CMS Administrator Marilyn Tavenner last year pushed back against requiring them on claims forms, saying it would be complicated and expensive.

Additionally, in aMarch 9 letter, Sens. Elizabeth Warren (D-MA) and Chuck Grassley (R-IA) called on CMS to quickly endorse UDI incorporation in claims forms.

House Passes 12 Opioid Bills

On May 12, the House finished passing 12 bills aimed at curbing the opioid abuse epidemic, but HHS Secretary Sylvia Burwell complained the measureslack funding and urged movement on the administration’s $1.1 billion plan to expand access to medication-assisted treatment and fund state-leveloverdose prevention efforts.

The House passed two opioid bills earlier in the week, one on Tuesday and one on Wednesday; then on Thursday the chamber passed the other ten bills.

The Opioid Program Evaluation Act, H.R. 5052, which passed Tuesday and is the sole piece of legislation that did not originate from Energy andCommerce, calls for evaluating the effectiveness of grant programs that are targeted to address opioid abuse issues. H.R. 4641, which passed Wednesday,would create an interagency task force charged with updating best practices for pain management and prescribing pain medication.

The remaining bills that passed Thursday are as follows:

  • The Nurturing and Supporting Healthy Babies Act (H.R. 4978), which would require the Government Accountability Office to write a report on neonatal abstinence syndrome—a medical disorder caused by exposure to opiate drugs.
  • The Co-Prescribing to Reduce Overdoses Act of 2016 (H.R. 3680), which would create a grant program for co-prescribing opioid reversal drugs alongside opioid prescriptions for patients who are at a high risk of overdosing. It also calls for guidelines on opioid overdose reversal co-prescribing.
  • The Improving Treatment for Pregnant and Postpartum Women Act of 2016 (H.R. 3691), which would reauthorize residential treatment programs for pregnant and postpartum women and create a pilot grant program for state substance abuse agencies.
  • Veteran Emergency Medical Technician Support Act of 2016 (H.R. 1818).
  • The John Thomas Decker Act of 2016 (H.R. 4969), which would require the Centers for Disease Control and Prevention to identify what resources are available to young athletes and their families about the dangers of opioid abuse and non-opioid treatment options.
  • Lali’s Law (H.R. 4586), which would authorize grants to states to create standing orders for naloxone prescriptions and would educate health care professionals about dispensing the opioid overdose reversal medication without individual prescriptions.
  • The Reducing Unused Medications Act of 2016 (H.R. 4599), which would clarify when a prescription for a drug listed on Schedule II of the Controlled Substances Act may be partially filled.
  • The Opioid Review Modernization Act of 2016 (H.R. 4976), which would require that the FDA work with expert advisory committees before making product approval and labeling decisions and encourage the development and approval of opioids with abuse-deterrent properties.
  • The Examining Opioid Treatment Infrastructure Act of 2016 (H.R. 4982), which would require that GAO report on substance abuse treatment availability and infrastructure needs throughout the country.
  • The Opioid Use Disorder Treatment Expansion and Modernization Act (H.R. 4981), which aims to improve access to opioid use disorder treatment.


Senate Finance Committee Report Finds PODs Need More Oversight

According to a new Senate Finance Committee report, surgeons who participate in physician-owned distributorships (PODs) might be motived by profit toperform more surgeries. PODs serve as intermediaries between device-makers and providers, and owners receive commissions on additional sales.

For example, the report notes that PODs have been most prevalent in the field of spinal surgery. Surgeons in PODs performed almost twice as manyspinal-fusion surgeries as non-POD surgeons. Experts have raised questions about whether the procedure is medically necessary—especially for seniors, whoseage makes them less capable of withstanding the risks of invasive spinal surgeries.

Overall, the report found that:

  1. POD surgeons saw significantly more patients—24 percent more—than non-POD surgeons.
  2. In absolute numbers, POD surgeons performed fusion surgery on nearly twice as many patients—91 percent more—as non-POD surgeons.
  3. As a percentage of patients seen, POD surgeons performed surgery at a much higher rate—44 percent higher—than non-POD surgeons.
  4. In absolute numbers, POD surgeons performed nearly twice as many fusion surgeries—94 percent more—as non-POD surgeons.

The report states that the POD model presents an inherent conflict of interest that places financial incentives at odds with the interest of the patient.The report also offers several recommendations to increase transparency and scrutiny of PODs, and calls on CMS, the HHS Inspector General and GAO to reviewthe model further.

To see the report,click here.

Sen. Johnson Introduces Right to Try Legislation

On May 10, Sen. Ron Johnson (R-WI) announced the introduction of his bill to expand the ability of terminally ill patients to gain access toexperimental medicines. The “Right to Try” legislation, which joins acompanion billthat was introduced in the House last year, would bar the government from restricting the production, distribution, prescribing or use of experimentaldrugs authorized by state law to treat a terminally ill patient. Johnson’s bill goes one step further by shielding drugmakers and prescribers fromliability. Twenty-eight states have passed Right to Try laws letting terminally ill patients gain access to experimental drugs that have passed Phase 1of the FDA approval process.

These laws reflect mounting frustration with a U.S. Food and Drug Administration (FDA) program called expanded access, in which people who areseriously ill can obtain a drug under development, even if they are not enrolled in a clinical trial.

Johnson announced the introduction of his bill at a congressional briefing, where one of the panelists was Laura McLinn, whose son Jordan has Duchennemuscular dystrophy. McLinn said she had asked the senator to draft Right to Try legislation and to hold FDA accountable for not expediting the approvalof drugs that show promise.

The House bill currently has 21 Republican cosponsors, and was introduced a day before the House passed 21st Century Cures legislation that takes adifferent path by improving FDA’s current expanded access program.

3. Administration

HHS Releases ACA Nondiscrimination Final Rule

HHS released the final rule on the Affordable Care Act’s nondiscrimination policies on May 13. The rule prohibits discrimination in health care on thebasis of race, color, national origin, age, disability and sex, including pregnancy and gender stereotyping. It also “enhances” language help for thosewith minimal English proficiency.

The rule does not say whether discrimination on the basis of sexual orientation is a form of discrimination, but the rule says that complaints on the issuewill be evaluated.

To see the rule, click here.

340B Hospitals Urging CMS to Exempt Them From Proposed Part B Drug Demonstration

340B hospitals are urging the Centers for Medicare and Medicaid Services (CMS) to exempt them from the proposed Part B drug cost-cutting demonstration.Many drugmakers, providers, patients and lawmakers oppose CMS’s proposed demonstration, which in its first phase would change the Part B pay formula foradministering drugs. Medicare Part B currently pays a drug’s average sales price, plus a 6 percent add-on fee. CMS proposes changing that to 102.5 percentof the average sales price, plus a flat fee of $16.80 per drug, per day. This change would cut reimbursement for drugs with prices greater than $480 andbenefit doctors who prescribe cheaper drugs.

CMS says it is looking to remove the financial incentive for providers to use more expensive drugs. 340B providers argue that reducing payments could makeit more difficult to treat the vulnerable patients 340B is meant to help, particularly those in Medicare. Drug manufacturers also say the demonstrationwould likely increase the number of patients who are treated at hospitals rather than doctors’ offices.

The American Hospital Association (AHA) argues hospitals should be excluded from the first phase of the Part B demonstration. AHA also suggests that CMScap drug price increases and either discontinue Part D reinsurance or increase the reinsurance threshold. AHA says its advice is consistent with theMedicare Payment Advisory Commission’s (MedPAC) recent recommendations for Part D. MedPAC passed a package of Part D recommendations estimated to save $10billion over five years that includes lowering Medicare’s individual reinsurance subsidy benefit from 80 percent to 20 percent while maintaining Medicare’soverall 74.5 percent subsidy of basic benefits. AHA also suggested that CMS consider putting downward pressure on drug prices through an average salesprice inflation cap in both Part B and Part D.

AHA, which is a member of the Campaign for Sustainable Rx Pricing, also said that drugmakers should be required to provide evidence to support drug prices,and criticized brand drugmaker policies that the hospitals say amount to abuse of market exclusivity protections, like evergreening, pay-for-delay, abusingRisk Evaluation and Mitigation Strategies to withhold information from generic manufacturers, and manufacturers’ seeking orphan drug status for drugs thatthey intend to sell for multiple indications. AHA also says providers need more information on the effectiveness of certain treatments

CMS Holds Forum for Insurers to Share Thoughts on Exchange Success

On June 9, the Centers for Medicare and Medicaid Services (CMS) will hold a forum where health insurance companies will share thoughts about how bestto serve exchange customers, HealthCare.gov CEO Kevin Counihan announced in a blog post. The forum aims to give insurers that are still adapting to theexchange a chance to hear from companies that have had more success. Counihan noted that Aetna, Blue Cross Blue Shield of Florida, Blue Cross BlueShield of Massachusetts, CareSource, Horizon Blue Cross Blue Shield, SelectHealth, UPMC and the Society of Actuaries will be among those attending.

CMS announced the forum as it tries to downplay news that UnitedHealth Group is pulling out of the exchange market in most states where it doesbusiness, saying that not all issuers are adapting well to the new insurance landscape by properly pricing their products.

Anyone interested in attending is asked to sign up by May 25.

To see the blog post,click here.

CMS Releases 2014 PQRS Experience Report

On May 12, the Centers for Medicare and Medicaid Services (CMS) released the 2014 Reporting Experience Including Trends (2007-2015), referred to as the2014 PQRS Experience Report.

The PQRS Experience Report is released by CMS annually and provides data and trends on participation, incentive eligibility, incentive payments and paymentadjustments as applicable since the beginning of PQRS, including measure performance and program participation broken down by specialty and geographiclocation. The full report can be found on thePQRS Analysis and Payment webpage.

The 2014 report found an increase in participation from eligible professionals (EPs) across most reporting mechanisms. The report also indicates progressin CMS’s efforts to improve participation by redesigning the submission process to be user-centered and responsive, and lowering the reporting burden forEPs by aligning reporting requirements across CMS quality programs.

Report highlights include:

  • 1.32 million professionals were eligible to participate in PQRS in 2014. In 2013, there were 1.25 million professionals eligible to participate in PQRS.
  • Participation increased by 11 percent in 2014 from 2013. In 2014, a total of 822,810 (63 percent) EPs successfully participated through at least one reporting mechanism compared to 642,114 (51 percent) EPs who successfully participated in 2013.
  • Participation via Electronic Health Record (EHR) more than doubled in number since 2013. EHR reporting by EPs demonstrated strong growth in 2014, with over 50,000 participant reports received.
  • 558,885 EPs are currently subject to the 2016 PQRS negative payment adjustment. Based on 2014 PQRS reporting, 558,885 EPs are subject to a reduction of 2.0 percent of their 2016 Part B Medicare Physician Fee Schedule allowed charges. Of those professionals subject to the adjustment, 466,351 were non-participants (those EPs who did not attempt to participate) and 92,534 were participants who were unsuccessful in meeting the reporting requirements to avoid being subject to the PQRS negative payment adjustment in individual or group practices. This number accounts for less than half of all 2014 professionals who were eligible to participate.
  • Participation in PQRS GPRO had a large increase in 2014 compared to 2013. Nearly 3,000 group practices (1,545 Small GPRO, 855 Medium GPRO and 585 Large GPRO) self-nominated or registered to participate via the PQRS GPRO in 2014. This was a large increase compared to 677 total practices that self-nominated for participation in PQRS GPRO in 2013.
  • The 2014 PQRS incentive payments paid equaled $224,088,411. Program year 2014 was the last year EPs could earn a PQRS incentive. The average incentive was $383 per EP and $4,950 per group practice, with 585,037 EPs and 45,273 group practices receiving incentive payments (excluding Maintenance of Certification Program). A total of $1,627,613,994 was paid over the eight years (2007-2014) that CMS provided PQRS incentive payments.

PQRS is a quality reporting program that requires individual EPs and group practices to report quality measure information to CMS. The PQRS negativepayment adjustment will end in 2019 and aspects of the program will be consolidated into the Merit-Based Incentive Payment System (MIPS), which wasestablished by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

For more information about PQRS, including information on how to avoid the negative payment adjustment, click here.

NIH Seeking New Leadership Following Negative Independent Review

The National Institutes of Health (NIH) is looking for new senior leadership for its hospital after an independent review of thefacility found major problems, including cases in which research needs took precedent over patient safety.

NIH, which plans to model the leadership structure on non-government hospitals, will open a search for a new CEO, chief operating officer and chief medicalofficer of the NIH Clinical Center. Director Francis Collins wants all three leadership positions to be filled by physicians by the end of the year.

The new CEO will report to a newly formed hospital board, which Collins announced in late April when the independent review of the facility was published.John Gallin, who has headed the NIH hospital for over 20 years, will stay on during the transition.

The review of the hospital was triggered when a complaint led to an FDA inspection that found manufacturing deficiencies and quality problems in thefacility that makes drugs for the hospital’s clinical trials. NIH asked for a review of the entire clinical center after an internal task force foundproblems were more widespread.

NIH has already reviewed all of its sterile production laboratories and is currently reviewing its standard operating procedures and training under a newlyestablished Office of Research Support and Compliance.

FDA announced in aFederal Register noticethat it will hold a public meeting on June 10 to explore setting up a user fee program to help fund reviews of over-the-counter (OTC) drug monographs,saying the agency’s OTC program is severely under-resourced.

FDA Finalizes Medical Foods Guidance  

On May 12, the U.S. Food and Drug Administration (FDA) finalized guidance that answers questions about medical foods regarding confusion about how they canbe labeled and sold in the market.

The guidance updates a May 2007 version and is intended to explain FDA’s thinking on the growing medical foods sector, which is advertising a wide array ofproducts targeting the nutritional needs of people with various medical conditions. FDA said medical food should not be labeled and marketed for diabetes,pregnancy or nutrient deficiency diseases like scurvy. But medical foods can be sold to address metabolic problems that prohibit the body from properlyturning food into energy.

OMB Completes Review of EEOC Regulations on Workplace Wellness Programs

The White House Office of Management and Budget (OMB) on May 12 completed its review of the EEOC’s regulations clarifying the application of federalanti-discrimination laws to workplace wellness programs.

The regulations are intended to better streamline the Americans with Disabilities Act and the Genetics Information Nondiscrimination Act with theAffordable Care Act (ACA). Under the ACA, the incentive (or penalty) for participating (or not participating) in a wellness program typically may notexceed 30 percent of a group health plan.

The EEOC proposed the regulations after it came under fire from the business community in 2014 for suing three companies, alleging their wellness programsviolated the ADA because financial incentives were too high and forced employees to provide medical information. Under federal law, companies may not askemployees for their medical information, unless that information is job-related and consistent with business necessity. However, there is an exception forvoluntary wellness programs. In response to the lawsuits, the business community asked the EEOC to clarify when a wellness program is considered“voluntary.”

In April 2015, the EEOC proposed arule that said a wellness program is ADA-compliant as long as companies do not offer incentives thatexceed 30 percent of the cost of employee-only coverage. In October 2015, the EEOC proposed anotherrule that said a wellness program isGINA-compliant if financial incentives for an employee and his or her spouse to participate do not exceed “30 percent of the total annual cost of coveragefor the plan.”

4. State Activities

Alabama: FTC Says Proposed Alabama Bill Could Encourage Anticompetitive Behavior

The Federal Trade Commission (FTC) is opposing a proposed bill that would permit public universities with medical schools to form a new type of corporationthat would be exempt from antitrust laws. According to FTC comments, the Alabama bill would permit any public university that operates a school of medicineto form a new type of corporation in the state, to be known as an “authority,” in collaboration with all types of health care providers. The FTC, however,warns that the legislation would encourage an array of anticompetitive behavior—including anticompetitive mergers, price fixing and boycotts—and raisehealth care costs. To see FTC’s letter,click here.

Florida: Gov. Scott Asks for More Zika Funding

Florida Gov. Rick Scott visited the Hill on May 9 to make th