Washington Healthcare Update

October 24, 2016

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This Week: Generic medicines saved $227 billion in 2015…Medicare advocates worry about the impact of the COLA on Medicare premiums…Nursing homes sue to blockregulations on mandatory arbitration…Congress continues to be on recess…The presidential debates are over—and the election is almost here!

1. Congress


2. Administration

3. Other

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


Sen. Sanders, Rep. Cummings Request Answers Regarding Leukemia Drug Price Hike

Sen. Bernie Sanders (D-VT) and Rep. Elijah Cummings (D-MD) are requesting answers from ARIAD Pharmaceuticals over repeated price increases for the drugIclusig (ponatinib). Four price increases this year alone have added more than $80,000 to the drug’s already-high annual price tag, according to themembers of Congress in anOct. 20 letter.

The members of Congress expressed concern that the drug company raised the price of the drug Iclusig despite new evidence showing it posed far greatersafety risks to patients. They also accuse ARIAD of insulating company profits by discontinuing sales of a two-monthly supply of its 15 mg dose and thenselling a one-month supply at the same price. Furthermore, ARIAD stopped selling 30 mg tablets of the drug, a common dose, to push patients to the morecostly 15 mg tablets.

Iclusig was priced at $115,000 per year when it was first approved by FDA in December 2012, but it was pulled from the market less than a year later due tosevere side effects. FDA let the company reintroduce the drug in December 2013 for a smaller subset of chronic myeloid leukemia patients, after which ARIADstarted increasing the drug’s price. It now sells for $199,000.

The members of Congress asked the company to provide sales and profit figures by Nov. 4 as well as expenses related to development and sales broken down byspending on clinical trials, manufacturing and advertising. They also asked about the drug’s price in other countries and for information on patient couponprograms, including any tax deduction the company has taken for patient assistance.

2. Administration

CMS Will Reduce RAC Audits for Doctors in a Pilot

CMS says doctors participating in pay models that include penalties will be low priorities for reviews by Recovery Auditors and other contractors in apilot scheduled to start in January. The pilot is part of a long-term initiative to reduce medical record reviews and to review regulations andpolicies to minimize administrative tasks.

CMS says the first aspect of the initiative will be an 18-month pilot that aims to reduce medical reviews by directing some contractors to considerphysicians a low priority for audits if they are participating in certain advanced alternative payment models (APMs), including Next Generation ACOs,track 2 and 3 ACOs in the Medicare Shared Savings Program, and the two-sided track of the Oncology Care Model. Ashby Wolfe, the Region IX chief medicalofficer for CMS, said this is a first step for the initiative.

The pilot will start in January with post-pay reviews by Recovery Auditors, Supplemental Medical Review Contractors and Medicare AdministrativeContractors (MACs).

In April, the MACs will consider physicians participating in these advanced APMs as low-priority for pre-payment reviews as well.

CMS says these advanced APMs are a first opportunity for this pilot because the providers share financial risk with Medicare, which discouragesproviding unneeded services.

HHS Predicts 13.8 Million Obamacare Enrollees in 2017

The Obama administration predicts 13.8 million people will enroll in the Obamacare exchanges during the upcoming open enrollment period. This is about 1million more than this year’s 12.7 million sign-up total. HHS Secretary Sylvia Mathews Burwell announced the enrollment target less than two weeks beforethe start of the law’s fourth sign-up window, which is expected to be the most challenging yet. Premiums are rising much faster, several national insurersare pulling back from the exchanges and the pool of uninsured customers has shrunk to historic lows.

Enrollment is expected to dip throughout 2017 because some will not pay their initial premium and others may drop coverage for a variety of reasons. HHSsaid it expects 11.4 million paying exchange customers on average throughout 2017, up slightly from the 10.5 million average enrollment in 2016.

HHS this year issued estimates based on average paid enrollment throughout the year, rather than an end-of-year enrollment goal as it previously has.Officials said they believed this is a more meaningful metric.

Anindependent analysisfrom S&P Global Ratings earlier this month also projected weak enrollment growth in 2017. The firm predicted enrollment could possibly drop by as muchas 8 percent next year or grow by up to just 4 percent.

The fourth open enrollment period begins Nov. 1 and ends Jan. 31, less than two weeks after the next presidential administration takes office.

COLA Could Mean Large Medicare Premium Increases for Some

On Oct. 18, the Social Security Administration announced a 0.3 percent Cost of Living Adjustment (COLA) increase in2017, which could mean large premium increases for many Medicare beneficiaries. It is not yet clear how much Part B premiums will go up, but Medicaretrustees projected this summer that a third of beneficiaries could see premium increases of 22 percent. The premium hikes for those beneficiaries aredetermined by a complex interaction between Social Security and Medicare rules.

Medicare has not announced the final 2017 premium increases yet. Last year, Congress reduced a huge spike in Part B premiums, affecting about a third ofMedicare enrollees when there was no COLA adjustment for Social Security benefits. However, that was a short-term patch. Those affected include high-incomebeneficiaries, seniors new to the program and enrollees whose premiums are paid by Medicaid. However, the majority of Medicare beneficiaries will likelysee much smaller premium increases.

Senator Ron Wyden (D-OR), the ranking Democrat on the Senate Finance Committee has already said that he will be working to make premiums affordable.

Medicare’s Investment in Primary Care Shows Progress

On Oct. 17, CMS announced the Comprehensive Primary Care (CPC) initiative’s second round ofshared savings results, with nearly all practices (95 percent) meeting quality of care requirements and four out of seven regions sharing in savings withCMS. These results reflect the work of 481 practices that served over 376,000 Medicare beneficiaries and more than 2.7 million patients overall in 2015.

As the largest test of advanced primary care in U.S. history, CPC demonstrates the potential of primary care clinicians’ redesigning their practices todeliver better care to their patients, and provides clinicians support to innovate and deliver care in ways that better meet their patients’ needs andpreferences.

During 2015, its second shared savings performance year, CPC generated a total of $57.7 million gross savings in Part A and Part B expenditures. Thesesavings are essentially equivalent to the $58 million paid in care management fees to the practices. Four of the seven regions participating in CPC—thestates of Arkansas, Colorado and Oregon, and the Greater Tulsa region in Oklahoma—realized net savings (after accounting for the care management fees paid)and will share in those savings with CMS. Although three of the CPC regions had net losses, the savings generated in the other four regions covered thoselosses, so that care management fees across CPC were offset by reduced spending on Medicare Part A and Part B services. Further, more than half ofparticipating CPC practices will receive a share of over $13 million in earned shared savings.

In addition to the gross Medicare savings, CPC practices showed positive quality, with lower-than-expected hospital admission and readmission rates, andfavorable performance on patient experience measures. CPC practices’ performance on electronic Clinical Quality Measures (eCQMs) also exceeded nationalbenchmarks, particularly on preventive health measures.

This is the first year CMS has included eCQM performance in Medicare shared savings determinations for CPC. eCQM reporting covering the entire practicepopulation at the practice site level is critical to using health information technology as a tool to support care delivery transformation. eCQM data arerecorded in the electronic health record in the routine course of clinical care, allowing practices to engage in real-time quality improvement efforts thatdrive population health. As we move to a health care system that rewards value over volume, CPC practices are at the forefront of using eCQMs for qualityimprovement, measurement and reporting.

Quality highlights from the 2015 shared savings performance year include:

  • 97 percent of CPC practices successfully reported 9 eCQMs. For 10 out of the 11 eCQMs in the CPC measure set, the majority of CPC practices who reported surpassed the median national performance.
  • Nearly all (99 percent) practices reported higher levels of colorectal cancer screening and influenza immunization compared to national benchmarks. Additionally, 100 percent of practices who reported on screening for clinical depression surpassed national benchmarks.
  • Compared to 2014, most regions maintained or improved their scores on hospital readmissions and admissions for chronic obstructive pulmonary disorder and congestive heart failure.
  • Patients rated the care they receive from their CPC practitioners highly, particularly on how well practitioners supported them in taking care of their own health and the attention they paid to care from other providers.

White House Rolls Out New Initiatives, Report for Cancer Moonshot

On Oct. 17, the White House announced new public and private sector initiatives to advance the goals laid out by the Cancer Moonshot. The new efforts werereleased with the Cancer Moonshot Task Force report thataims to drive policy to accelerate progress against the disease.

The National Cancer Institute, Amazon Web Services and Microsoft will form a partnership to build a sustainable model for maintaining cancer genomic datain the cloud and to make it available to cancer researchers through the NCI’s data-sharing programs.

The Department of Defense (DoD) is establishing a new study to “transform our understanding of the biological basis of cancer.” Lyft and Uber are expandingtheir support of transportation for cancer patients in coming years. These are just a few examples of more than 70 commitments made this year as a resultof the Cancer Moonshot, the White House said.

A new Blood Profiling Atlas pilot project will get drug anddiagnostic companies, government and academia to create an open database of liquid biopsies, with the goal of developing better technologies for detectingcancers from blood samples.

Bristol-Myers Squibb is committing $25 million over two years to target disparities in cancer care and announced five new partnerships to launch theeffort. The Leukemia & Lymphoma Society committed $50 million to target acute myeloid leukemia and announced a new clinical trial, called Beat AML.

The White House fact sheet on new Moonshot initiatives is available here.

3. Other

Pennsylvania Asks to Join Highmark Risk Corridor Lawsuit

The Pennsylvania Insurance Department said it has asked the U.S. Court of Federal Claims for permission to join Highmark Blue Cross Blue Shield’s lawsuitover ACA risk-corridor payments. Highmark sued the federal government in May to recover nearly $200 million it is owed from the program, which was designedto protect insurers from big exchange losses.

State regulators announced the decision to join the Highmark lawsuit as it approved a 32.5 percent average rate increase for individual plans inPennsylvania next year. “These rate increases make it clear that Washington needs to move swiftly to address consumer needs under the Affordable Care Act,”said insurance commissioner Teresa Miller.

For more information on 2017 rates in Pennsylvania,click here.

Nursing Home Groups Sue HHS Over New Rule Prohibiting Mandatory Arbitration

The top lobbying group for nursing homes issuing HHS over a new rule that blocks mandatory arbitration in facilities receivingfederal funds. The American Health Care Association and four other plaintiffs filed the lawsuit in a Mississippi federal court on Oct. 17, arguing that HHSoverstepped its legal authority. The new rule, going into effect Nov. 28, will make it easier for nursing home residents and their families to sue whenthey think they have been mistreated. Consumer advocates have argued that facilities use mandatory arbitration to hide misconduct.

The other plaintiffs are the Community Care Center of Vicksburg, Great Oaks Rehabilitation and Healthcare Center, Mansfield Long Term Care and MississippiHealth Care Association.

4. State Activities

Arizona: State Regulators Detail Rate Hikes for 2017

On Oct. 14, Arizona regulators released information detailing steep insurance rate hikes for 2017. Significantly, the only two insurers in theexchange—Blue Cross Blue Shield and Health Net—will increase average rates by 51 percent and 75 percent, respectively. Eight other companies will sellindividual plans only outside the exchange.

See the increaseshere, as well assample prices.

Hawaii: State Regulators Approve Individual Market Premium Increases

Hawaii regulators have approved individual market premium increases ranging from 26 percent to 30 percent on average for next year. The rate increases inthe state are roughly in line with national trends. The rates are expected to affect 41,000 people who purchase individual ACA coverage, according to theHawaii Department of Commerce and Consumer Affairs.

Maine: Medicaid Expansion Supporters Launch Effort to Get Initiative on 2018 Ballot

Medicaid expansion supporters in Maine have launched a citizen initiative campaign to get an initiative on the 2018 ballot. The Maine Legislature haspreviously approved Medicaid expansion but Gov. Paul LePage has vetoed several bills in past years. Organizers would need to collect more than 61,000signatures. Expansion would cover about 70,000 people in the state.

Minnesota: House Dems Propose One-Time Premium Rebates to Those Not Eligible for ACA Subsidies

Minnesota House Democrats are proposing to provide one-time premium rebates to people not eligible for ACA subsidies in an effort to insulate individualmarket customers from large rate hikes for next year. The rebate amount would be the difference between the annual premium for a region’ssecond-lowest-cost silver plan and 10 percent of the individual’s household income. The legislation, if enacted, would pay for the rebates by eliminating aproposed $31 million tax cut for tobacco companies and using surplus funding from Minnesota’s previous high-risk pool.

South Dakota: State Legislators Recommend More Participation in Prescription Drug Monitoring Program

The state legislature’s study committee on substance abuse prevention is recommending requiring more participation in South Dakota’s prescription drugmonitoring program. All providers prescribing controlled substances would be required to participate in the program. The committee also recommended thatpharmacists be required to submit prescription information within 24 hours, up from the current weekly reporting requirement.

Virginia: JLARC Releases 2016 State Spending Update

The Joint Legislative Audit and Review Commission (JLARC) recently submitted its 2016 spending update to the Virginia legislature. The report shows Medicaid spending hasincreased by $2 billion over the past 10 years—a 96 percent increase. The report comes as Gov. Terry McAuliffe is calling on the state legislature toreconsider Medicaid expansion. However, state Republicans used the report’s findings to argue expansion would be too costly.

5. Regulations Open for Comment

IRS, Treasury Release Proposed Rule on QHP Benchmarks

The IRS and Treasury Department, in a proposed rule released July 6, proposed toalter how qualified health plan (QHP) benchmarks are determined so that theyaccount for the costs of pediatric dental benefits. If finalized, the rule wouldgo into effect for the 2019 plan year.

Although pediatric dental care is one of the 10 “essential health benefits” thatplans are required to cover under the Affordable Care Act (ACA), several plansdo not include such coverage, and consumers instead buy stand-alone dentalproducts. Meanwhile, the marketplace determines the amount of tax credits afamily can receive to cover the cost of coverage based on the second-cheapestsilver-level plan.

However, as the proposed rule said, “because qualified health plans that do notoffer pediatric dental benefits tend to be cheaper than qualified health plansthat cover all ten essential health benefits, the second lowest-cost silver plan(and therefore the premium tax credit) for taxpayers purchasing coverage througha Marketplace in which stand-alone dental plans are offered is likely to notaccount for the cost of obtaining pediatric dental coverage.”

Treasury and IRS added that the existing rules “frustrate” the goal of makingall essential health benefits affordable to those receiving premium tax credits,so the administration wants to update its interpretation to ensure all 10services are addressed.

“Consistent with this interpretation, the proposed regulations provide that fortaxable years beginning after December 31, 2018, if an Exchange offers one ormore silver-level qualified health plans that do not cover pediatric dentalbenefits, the applicable benchmark plan is determined by ranking (1) thepremiums for the silver-level qualified health plans that include pediatricdental benefits offered by the Exchange and (2) the aggregate of the premiumsfor the silver-level qualified health plans offered by the Exchange that do notinclude pediatric dental benefits plus the portion of the premium allocable topediatric dental benefits for stand-alone dental plans offered by the Exchange,”the proposal said.

The rule aims to create the ranking by adding the premium for the lowest-costsilver plan that does not include a pediatric dental benefit to the premium forthe cheapest stand-alone dental plan, and the premium for the second-cheapestsilver plan without pediatric dental benefits to that of the second-loweststand-alone dental plan. The second-cheapest amount from this combined rankingwould be the taxpayer’s applicable benchmark plan premium, the rule said.

HHS Proposes Updates to Title X Rules

On Sept. 2, HHSproposed to preclude Title X grant recipients from using criteria intheir selection of family planning providers that are unrelated to theability to deliver services effectively.

Since 2011, 13 states have attempted to restrict participation by familyplanning providers in Title X based on factors unrelated to their ability toprovide services. The Title X program provides funding for certain familyplanning services, including STD screening and treatment, but funding is notused to pay for abortions. Although Planned Parenthood is not mentioned byname in the proposed rule, it has often been the subject of defundingactions by states and Congress.

In the proposed rule, HHS said the effects already felt by the restrictionsin many states justify the department’s rulemaking. HHS said grantrecipients that do not provide services directly would also be required tofollow the updated standards when choosing subrecipients.

HHS also proposed that a tiered structure governing how funds aredistributed would not be allowed unless it can be proven that aprovider in a top tier delivers Title X services more effectively than alower-tier provider. According to the Guttmacher Institute, a researchorganization that supports reproductive rights, four states have a prioritysystem for distributing family planning funds, which often disadvantagesfamily planning centers.

6. Reports

GAO Report Looks at HHS Breast Cancer Education Initiatives for Young Women

In a new report, GAO looked at HHS’s efforts to provide or support breast cancer education for young women and whether these efforts duplicate otherfederal breast cancer education efforts. While most breast cancer is detected in older women, it also affects young women—defined as women under 45 yearsold. Young women account for 11 percent of all new cases of breast cancer in the U.S., tend to have worse outcomes than older women and face unique issuesin managing the disease.

GAO determined that HHS’s targeted breast cancer education campaign for young women leverages existing resources, but does not duplicate other federalbreast cancer education efforts, which are more general in nature. Additionally, a breast cancer expert noted that breast cancer education for young womenis new and evolving, thus, further limiting the possibility that recent efforts are duplicative.

Among its activities, HHS used social media to launch the following campaigns targeted to young women:

  • Know: BRCA – an interactive tool that helps women assess their risk of developing cancer, and
  • Bring Your Brave – an online resource that includes testimonials from young breast cancer survivors.

To see the full report, click here.

GAO: Report on Durable Medical Equipment in Competitive Bidding Programs

GAO recently released a report looking at the effects of Medicare changes to payments for durable medical equipment items on beneficiaries’ access to anduse of those items.

Medicare is changing how it determines how much to pay for certain durable medical equipment (DME) items, such as oxygen, wheelchairs and walkers. Thesechanges help Medicare and its beneficiaries pay less for these items – saving Medicare about $3.6 billion between mid-2013 and 2015. Under the competitivebidding program (CBP), only competitively selected contract suppliers can furnish certain DME items at competitively determined prices to beneficiaries indesignated competitive bidding areas.

In its report, GAO examined the extent to which phase 2 of the CBP has affected utilization of CBP-covered DME items, and beneficiaries’ access to DMEitems. GAO found that after implementation of the two CBP phases in 2013, the number of beneficiaries receiving DME items generally decreased. From theyear before (2012) to the year after (2014) implementation, the number of beneficiaries receiving covered items in phase 2 areas decreased 17 percent.

To see the report, click here.

Report Finds Generic Drug Savings Reached $227 Billion in 2015

In 2015, generic drug savings reached $227 billion, up from $207 billion in 2014 and just $53 billion 10 years ago, according to a new Quintile IMS Healthreport produced for the generic drug lobby, GPhA. The increased savings is largely due to an increase in the number of drugs that have generic options.Medicare saved $67.6 billion, or just over $1,700 per enrollee. Medicaid saved $32.7 billion, about $450 per enrollee. Overall, generics made up 89 percentof prescriptions dispensed last year, up one percent from the year prior, but generics accounted for only 27 percent of the U.S. medication spending.

To see the full report, click here.

Kaiser Family Foundation Gives First Look into 2017 Medicare Part D Drug Plans

According to a joint Kaiser Family Foundation-Georgetown University analysis, seniors enrolled in standalonePart D plans would face an average 9 percent increase in premiums unless they switch to a different plan for 2017. For enrollees who stay in the same planfor next year, average monthly premiums are projected to go from $38.57 to $42.17. The lowest premiums are in New Mexico, with New Jersey having thehighest premiums.

If you have any questions, contact the following individuals atMcGuireWoods Consulting:

StephanieKennan, Senior Vice President
Charlie Iovino, VicePresident
Caroline Perrin, Research Assistant

Founded in 1998, McGuireWoods Consulting LLC(MWC) is a full-service public affairs firm offering infrastructure andeconomic development, strategic communications & grassroots, and governmentrelations services. McGuireWoods Consulting is a subsidiary of the McGuireWoods LLPlaw firm and has been named in The National Law Journal’s special annualreport, “The Influence 50,” for the past several years. In the most recentreport, McGuireWoods Consulting was ranked 15th of the 1,900 governmentrelations firms in Washington, D.C.

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