Washington Healthcare Update

September 12, 2016

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This Week: House and Senate return to work…Ways and Means Committee marks up co-op bill…Mylan’s EpiPen continues to raise issues…CMS provides more options to complywith MACRA, but will it be enough? Government funding issues loom large—discussions going on about how long to fund the government…Zika funding continuesto be debated.

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress

House of Representatives

House Ways and Means Committee Marks Up Co-op Bill

On Sept. 8, the House Ways and Means Committee voted out a bill (H.R. 954) toexempt Americans from paying the individual mandate penalty if they lose coverage due to a consumer-operated and -oriented plan collapse. The bill wouldmake this exemption effective retroactively to after 2013, and exemptions would be offered for the month in which someone loses coverage and would runthrough the end of the calendar year.

Lawmakers on both sides of the aisle largely agreed the bill would not harm anyone, but some argued it did not address the underlying problems of the ACAand how co-ops have been treated in legislation and regulation.

Ranking Member Sandy Levin (D-MI) indicated that the plight of former co-op members could become an area of bipartisan progress. He wrote to TreasurySecretary Jack Lew and HHS Secretary Sylvia Burwell on Sept. 6 to ask where co-ops have closed midyear and how the administration has helped those people,as well as how many of those members reenrolled in coverage and whether they would qualify for a hardship exemption.

Acting CMS Administrator Andy Slavitt responded to Levin in a letter on Sept. 7 stating that the agency works closely with state insurance departments totell consumers about special enrollment periods.

“Each member of a closing CO-OP who purchased a Marketplace plan is contacted at least 20 times in a variety of formats, including emails, calls, and papermailers to encourage the selection of a new policy during the SEP,” Slavitt said. “It should also be noted that in states that have guarantee fundsavailable, members who do not make a new plan selection during an open SEP window continue to be covered and do not experience a gap in coverage.”

Slavitt added that people can claim an exemption from the individual mandate’s tax penalty if they are uninsured for fewer than three consecutive months orif the remaining coverage options are deemed unaffordable based on their income.

Almost 750,000 individuals have been affected by co-op closures so far, Joint Committee on Taxation (JCT) Chief of Staff Thomas Barthold told thecommittee. He noted that he has not been able to get data on what those people did after losing coverage.

JCT estimated that $4 million in revenue would be lost by 2016 as a net effect of fewer tax penalties paid minus fewer plan subsidies going to thoseconsumers if they do not reenroll in exchange coverage.

Lawmakers Ask CMS to Be Flexible as MACRA Start Date Approaches

Leaders from two House committees have asked CMS to consider easing into the January 2017 start date of Medicare’s new payment scheme for physicians. Thelawmakers asked CMS to consider flexibilities for all practitioners, including small practices, to ensure a smooth transition into the new payment system.The letter was sentby Energy and Commerce leaders Fred Upton and Frank Pallone, Ways and Means leaders Kevin Brady and Sandy Levin, and the leaders of their committee’shealth panels.

The lawmakers call on CMS to provide the following:

  • Simplified, streamlined, coordinated requirements;
  • Clear pathways to succeed in MIPS or the APM tracks;
  • Opportunities to move to APM track and flexibilities to be rewarded for meaningful delivery system reform activities in MIPS and in the APMs; and
  • Reporting in January 2017 with appropriate systems ready and in place.

House to Vote on Bill to Expand Tax Deduction for Medical Expenses

The House will vote this month on a bill to expand a tax deduction for medical expenses. The proposal, which aims to reverse restrictions on the breakimposed by Obamacare, is the only tax measure mentioned in an Aug. 31 memo distributed by Majority Leader Kevin McCarthy on the chamber’s Septemberlegislative agenda. Other items in his memo included legislation to fund the federal government into the next fiscal year and funding to fight the Zikavirus.

Current law mandates that taxpayers can claim a deduction for medical expenses to the extent they exceed 10 percent of their adjusted gross incomes. H.R. 3590 would reduce that to 7.5 percent—this was the threshold before theAffordable Care Act (ACA) was enacted. The bill would cost almost $33 billion, according to the Joint Committee on Taxation. It is unlikely to go anywherein the Senate.

CBO’s Estimate for Cost of Part B Drug Demo Repeal to Be Released Soon

In the next several weeks, the Congressional Budget Office (CBO) will release what it thinks it will cost to repeal Medicare’s Part B drug payment model.At a House Budget Committee hearing on the CMS Innovation Center, CBO’s Mark Hadley said that they are looking very carefully to figure out what thebudgetary effects would be from legislation to block its moving forward.


Senators Warren and Sanders, and Others, Ask Aetna Questions About Exiting Exchanges

Sens. Elizabeth Warren, Bernie Sanders and several other Senate Democrats are calling for answers from Aetna about its decision to pull out of mostObamacare exchanges for 2017. In a letter to Aetna CEO Mark Bertolini, the senators said, “We are particularly troubled that Aetna’s decision to leave theACA exchanges appears to have been motivated by the Justice Department’s decision to challenge Aetna’s proposed $37 billion merger with Humana.” Thesenators also criticize a July 5 letter to lawmakers in which Bertolini warned that Aetna’s participation in the exchanges was contingent on approval ofthe Humana merger. DOJ filed lawsuits seeking to block the Aetna-Humana merger and the Cigna-Anthem merger—the antitrust trials are scheduled to begin inNovember. Aetna announced two weeks after DOJ’s suit that it will leave 11 of 15 state exchanges for 2017.

To see the letter,click here.

Sen. McCain Leads GOP Bill to Suspend Individual Mandate Penalty in Some Areas

A group of Senate Republicans recently introduced abill to suspend the individual mandate penalty for people living in areas withless than two exchange insurers. Sen. John McCain is a lead sponsor of the bill and said it will help areas where no insurers are planning to sell 2017exchange plans.

Senators Portman and Ayotte Introduce New Opioid Bill

On Sept. 7, Sens. Rob Portman, Ron Johnson and Kelly Ayotte introduced a bill to combat the opioid epidemic after Congress approved their earlier opioidlegislation this summer. The new bill aims to curtail the trafficking of synthetic drugs like fentanyl and carfentanil by requiring postal services inChina, India and other countries to provide advance electronic data on all mail shipments.

For more information on the Synthetics Trafficking & Overdose Prevention Act (STOP), click here.

Zika Funding Bill Fails Once Again

On Sept. 6, Senate Democrats blocked the GOP’s $1.1 billion funding bill for the nation’s Zika response. As expected, the Zika bill failed 52-46 afterhaving failed under similar margins in June and July. The lack of funding is already having serious negative effects on the efforts to battle the Zikavirus—according to an Obama administration health official, progress on multiple vaccines will have to stop if new funding does not come in at the end ofSeptember.

The next opportunity to attach Zika funding to must-pass legislation, perhaps the only chance in the near future, will be the legislative package to fundgovernment beyond Sept. 30.

Democrats blamed their rejection of the Zika bill on GOP riders. Senate Minority Leader Harry Reid accused Republicans of attacking PlannedParenthood in the bill, which would not have provided funding for contraception.

There are now 2,722 reported cases of Zika in the United States and 624 of them are pregnant women. The virus is wreaking havoc on Puerto Rico and the U.S.territories, where there are more than 14,000 cases, including nearly 1,000 pregnant women.

After the virus was detected in several parts of Florida, both Republicans and Democrats in the state—as well as Texas, where the virus is expected totravel—stepped up their calls for congressional action.

The legislation would have provided $1.1 billion to develop a Zika vaccine and to try to control the mosquito population. It is partially funded by cuts toAffordable Care Act (ACA) programs.

Senate Democrats Warn of Government Shutdown

Senate Democrats are warning of a government shutdown in October if Republicans do not submit to their demands for a stopgap bill that runs only throughthis year. Senate Minority Leader Harry Reid (D-NV), along with Sens. Chuck Schumer (D-NY) and Debbie Stabenow (D-MI), said Democrats will not accept ashort-term funding bill that goes into 2017, which several House Republicans proposed before August recess.

Several House conservatives and even some top Senate Republicans, including Majority Whip John Cornyn (R-TX), have said they prefer a stopgap that kicksfunding into early next year, preferring to turn to an omnibus package when a new president can dictate spending priorities.

As of Sept. 6, lawmakers have four weeks to move a bill that keeps the government open beyond Sept. 30 and has enough support to pass both chambers.

Sens. Grassley, Warren Ask Standard-Setting Committee About Incorporating Medical Device Identifiers on Insurance Claim Forms

On Aug. 29, Sens. Chuck Grassley (R-IA) and Elizabeth Warren (D-MA) sent a letter asking the Accredited Standards Committee X12 (ASCX12) about steps it is taking to include medical devices’ unique device identifier (UDI) on health insurance claim forms.

“In order for our offices to better understand the process that ASC X12 is following in developing these standards, and the status of the discussion ofincluding [device identifier] information for implantable devices, we request that you provide our staff with a briefing on the steps the Committee willtake to finalize its recommendations,” wrote Grassley and Warren to ASC X12 Chair Garry Beatty. The lawmakers requested that the briefing take place nolater than Sept. 9.

The senators would like to discuss the following:

  1. The Committee’s process for developing recommended changes to claims forms.
  2. The timeline associated with each stage of the process.
  3. The process for incorporating feedback from members into final consensus recommendations of the Committee.
  4. The status of discussions related to inclusion of DI information in claims for implantable devices.
  5. The status of discussion related to inclusion of DI information into claims for reimbursable supplies.

For more information, click here.

2. Administration

CMS Issues Final Rule on Emergency Preparedness Requirements for Providers and Suppliers

On Sept. 8, CMS issued a final rule requiring health providers participating in Medicare and Medicaid to create an emergency plan to follow in the event ofnatural disasters like floods or hurricanes. The new rule requires providers and suppliers to have a coordinated response with federal, state, trial andlocal entities to ensure that facilities are adequately prepared to care for patients during emergencies.

To see the final rule, click here.

CMS Gives More Options to Comply with MACRA

On Sept. 8, CMS announced it will allow doctors participating in Medicare’s new payment system four options to comply with the first year of the law andavoid penalties, which are set to hit in 2019. Acting CMS Administrator Andy Slavitt laid out the different options in a blog post:

  • Option 1: Test the Quality Payment Program
  • Option 2: Participate for part of the calendar year
  • Option 3: Participate for the full calendar year
  • Option 4: Participate in an Advanced Alternative Payment Model in 2017

CMS Announces Recipients of 2016 Navigator Grants

CMS recently announced it will fund $63 million in navigator grants to provide assistance to people who need help shopping and signing up for exchangecoverage when the 2017 enrollment season starts. The grants went to 96 returning organizations and two new ones in Hawaii.

For more information, click here.

CMS Announces Pre-Enrollment Verification Pilot Program for SEPs

On Sept. 6, CMS announced it will pilot a program requiring consumers who want to use a special enrollment period (SEP) to complete an eligibilitydetermination before signing up for coverage. The insurance industry and hospitals support the policy, while consumer advocates oppose it.

The agency hopes to evaluate how pre-enrollment verification of SEP eligibility affects members’ compliance, enrollment, continuity of coverage, the riskpool and other outcomes. The scope of the pilot is still being determined.

Insurers believe that lax verification of eligibility for these SEPs allows people to game the system by waiting until they are sick to enroll, oftenracking up large claims before dropping coverage. CMS responded by narrowing the reasons people can enroll in an SEP and creating a post-enrollmentverification process.

The agency plans to consult with stakeholders on a range of pilot design questions, including the following:

  • Should the pilot be geographically targeted, or should it involve a sample of consumers throughout the Federally-Facilitated Marketplaces? If it is geographically targeted, what states or sub-state regions should be included?
  • Should the pilot focus on a subset of special enrollment periods that may be most prone to abuse? If so, which would those be?
  • How should we conduct the pilot in a manner that minimizes burdens on consumers and disruptions in coverage?
  • How should we measure the impact of the pilot on compliance, enrollment, continuity of coverage and the health of the risk pool, and do so in a timely way so as to inform potential policy changes for 2018?

CMS Announces 2017 Hospital Payment Adjustments for EHR Incentive Program

On Sept. 2, CMS posted a fact sheet outlining its updated reductions for eligible hospitals that fail to successfully demonstrate meaningful use for anElectronic Health Record (EHR) reporting period. Those eligible hospitals participating in the Medicare and Medicaid EHR Incentive Programs will be subjectto the payment adjustments as of Oct. 1.

The change is applied as a reduction to the applicable percentage increase to the Inpatient Prospective Payment System (IPPS) rate, according to CMS. Thepercentage decrease was 25 percent in 2015 for the 2013 reporting period and 50 percent in 2016 for the 2014 reporting period, and will be 75 percent in2017 for the 2015 reporting period.

However, 98 percent of eligible hospitals and critical access hospitals in the country have already successfully demonstrated either Stage 1 or Stage 2meaningful use. CMS does offer hardship exceptions for hospitals not demonstrating meaningful use on a case-by-case basis.

For more information, click here.

CMS Looking at Medicare Loophole That Allowed Mylan’s EpiPen to Pay Generic Drug Rebates to Medicaid, While Having Brand-Drug Protections

Mylan—the owner of the anti-allergy injection drug EpiPen—could be facing more issues as it continues to come under public scrutiny for raising EpiPen’sprice by nearly 500 percent since it acquired the treatment in 2007. On Sept. 1, the list price of an EpiPen two-pack rose from about $100 to $600.

A loophole in how CMS defined an “innovator” drug allowed Mylan to make more profit in its sale of the EpiPen. Under Medicaid, the injection drug wasconsidered a generic or “non-innovator” medicine, meaning the company paid lower rebates to the government. But at the same time, Mylan had all the marketmonopoly and patent protection of an FDA-approved brand-name drug. Its one-time competitor, Sanofi’s Auvi-Q, was deemed an innovator drug and did notreceive the same perks. Sanofi no longer makes that product.

A number of lawmakers in both the House and Senate are investigating. Three of them—Sens. Chuck Grassley (R-IA), Amy Klobuchar (D-MN) and RichardBlumenthal (D-CT)—wrote to CMS on Aug. 31 inquiring about the price hike’s impact on taxpayer-funded health programs, like Medicaid, and asking why EpiPensare treated like a generic under the Medicaid Drug Rebate Program.

According to a1997 letter from CMS to Dey Laboratories, FDA listed EpiPen as a new drug application because it is a new deliverysystem—the syringe that people can carry with them and can be injected easily. However, the drug inside the injector—epinephrine—is made by genericcompanies. Therefore, the designation of the EpiPen as a non-innovator and its subjection to the lowest rebate is “entirely fitting and proper,” accordingto CMS.

Mylan said it complied with all laws and regulations surrounding Medicaid’s rebate classifications. It noted that EpiPen’s “non-innovator” classificationdated back to before Mylan acquired it.

Additionally a 2016 rule from Medicaid established a new process fordrugmakers to follow if the FDA approves a product as a new drug but the company believes CMS should keep treating it as a non-innovator. Mylan plans tosubmit such an application for continued non-innovator status by the April 1, 2017, due date.

Medicare Trustees Warn of Provider Shortages in Medicare Due to MACRA Pay Cuts

In their2016 Annual Report, Medicare Trustees warn that future MACRA pay cuts and ACA productivity adjustments could lead to future provider shortages in Medicare unless lawmakersstep in. Payment updates under the SGR-replacement law likely will not keep pace with physician cost increases, leading to rates that will be lower thanthey would have been under the SGR formula by 2048, the trustees say.

“The specified rate updates could be an issue in years when levels of inflation are high and would be problematic when the cumulative gap between the priceupdates and physician costs becomes large,” the report says. “Absent a change in the delivery system or level of update by subsequent legislation, theTrustees expect access to Medicare-participating physicians to become a significant issue in the long term under current law.”

The trustees note an additional $500 million for doctors that participate in the Merit-Based Incentive Payment System and the 5 percent annual bonuses fordoctors participating in alternative payments are set to expire in 2025. The sunset of those two provisions will result in a significant one-time pay cutfor most doctors, the trustees say.

Federal Government Launches $20 Million Fund to FightAntibiotic Resistanc

On Sept. 8, the federal government officially launched afederal prize competitionwherein contestants will vie for $20 million in prizes to develop new laboratory diagnostic tools that detect and distinguish antibiotic-resistantbacteria. Rapid diagnostics are urgently needed so physicians can test whether infections are bacterial or viral, and thus whether they will respond toantibiotics. Overuse of these drugs has spurred the spread of deadly superbugs resistant to the medicines. Doctors often feel pressure from patients toprescribe antibiotics even when it is unclear if they are necessary. Applications will be accepted through Jan. 9.

National Cancer Institute Accepts Panel Recommendations on Cancer Moon Shot Initiative

On Sept. 7, the National Cancer Institute acceptednew recommendationsfrom a blue ribbon panel on the most promising research opportunities for the cancer moon shot. The recommendations represent the first of three majorreports that will influence the cancer moon shot, which looks to make 10 years’ worth of progress against cancer in half the time.

The ability to quickly launch moon shot programs will depend on whether Congress provides additional funds. At a meeting of the National Cancer AdvisoryBoard, officials said they are developing work plans based on different budget scenarios.

The blue ribbon report did not include specific funding requests but instead charted 10 areas of focus to lay the groundwork for the moon shot’s scientificbasis. These areas range from building a national patient network for tumor profiling that can also collect data on what treatments work—regardless ofwhere patients receive their care—to expanding immunotherapy clinical trials and encouraging the broad adoption of cancer prevention strategies.

In October, the White House Cancer Task Force will release policy proposals, and Vice President Joe Biden, who is leading the initiative, will release aseparate report. The White House has asked for $1 billion in moon shot funding. Congress is widely expected to pass a short-term continuing resolution forthe government this month. That is unlikely to include moon shot resources, so advocates are pressing for startup funds in an omnibus budget deal later inthe year.

CDC Estimates Show Uninsured Rate Falls Below 9 Percent for the First Time

According tonew CDC estimates released Sept. 7, the U.S. uninsured rate fell to 8.6 percent in the first quarter of2016—the first time that the uninsured rate has dropped below 9 percent. Altogether, 27.3 million people were uninsured between January and March of thisyear, down from 28.6 million in 2015 and 48.6 million in 2010. The data comes from the National Health Interview Survey, which is considered the gold standard of national insurance surveys byresearchers and updated several times throughout the year. Overall, the national uninsured rate has been nearly halved since the Affordable Care Act waspassed in 2010, when 16 percent of Americans said they were uninsured. The most dramatic declines began in 2014, after key coverage provisions took effect.Among adults aged 18 to 64, the uninsured rate fell from 22.3 percent in 2010 to 20.4 percent in 2013 and 11.9 this year.

CDC Announces $2.4 Million in Zika Funding for Five Major Metropolitan Areas

On Sept. 2, CDC announced a funding amount of $2.4 million to five major metropolitan areas to help combat the Zika virus as Congress remains at an impasseover an emergency funding deal.

The funding will go to Chicago, Houston, Los Angeles County, New York City and Philadelphia— all of which face higher risks from travel-related Zikainfections. CDC’s funds will be used to establish systems to detect microcephaly and other effects caused by the virus. CDC a