Washington Healthcare Update

November 21, 2016

Pardon Our Dust

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*There will be no newsletter released on November 28th due to the Thanksgiving holiday. The newsletter will resume on December 5th.*

This week was focused on leadership elections and getting rules out.

1. Congress



2. Administration

3. Courts

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


House Passes Midnight Rules Relief Act

On Nov. 17, the House of Representatives passed a bill that would make it easier to kill so-called midnight rules issued during a president’s final year inoffice. H.R. 5982—the Midnight Rules Relief Act—permits lawmakers to grouptogether any number of regulations for a Congressional Review Act (CRA) challenge, rather than considering them one at a time. The bill’s Republicansupporters argued that Congress could find itself backed up passing individual CRA resolutions. The 240-179 vote broke down largely along party lines.

The White House, in aStatement of Administration Policy, criticizedthe bill as “intended to solve a problem that does not exist,” and noted Congress is free to pass CRA resolutions on a case-by-case basis. It alsocomplained that the bill “would expand the scope of rules subject to the CRA such that by the time a vote on a resolution occurs, some of the rules mayhave been in effect for over a year,” thus creating “tremendous regulatory uncertainty.”

House Republicans Urge Agencies to Halt Rulemaking Until Trump Takes Office

On Nov. 15, House Republican leaders sent letters to every government agency requesting they halt all rulemaking until President-elect Donald Trump takesoffice. The letter, sent by the House Republican committee chairmen and Majority Leader Kevin McCarthy (R-CA), warns federal agencies against finalizingpending rules that may have unintended consequences for consumers and businesses.

Referring to planned rules, the GOP letter states: “As you are aware, such action often involves the exercise of substantial policymaking discretion andcould have far-reaching impacts on the American people and economy. Considering these potential consequences, we write to caution you against finalizingpending rules or regulations in the Administration’s last days.”

The Office of Management and Budget started reviewing a rule finalizing changes to the Medicare, Medicaid and CHIP provider enrollment processes just a daybefore the letter. There are three final CMS rules including the provider enrollment processes rule, and two proposed rules under review at OMB.

If FDA honors the request, regulations on postmarket safety reporting and compounding will be halted, among others. FDA was to publish a number ofregulations on compounding before the end of the year, including two lists of bulk drug substances that may be used to compound drugs under 503A of theFood, Drug and Cosmetic Act, and a proposed rule on good manufacturing practices for outsourcing facilities involved in compounding. A proposed rule on“Human Drug Compounding Under Sections 503A and 503B of the Federal Food, Drug, and Cosmetic Act” is also listed on FDA’s 2016 regulations agenda, althoughit is listed as a long-term action.

House GOP Unanimously Nominates Ryan for Speaker

On Nov. 15, House Republicans unanimously nominated Paul Ryan for a second term as Speaker. The GOP conference gave the Wisconsin Republican voice-voteapproval, forgoing a secret ballot tally that would have shown how many Republicans oppose Ryan’s leading the chamber.

This vote sends a signal of GOP unity under President-elect Donald Trump and puts to rest speculation that Ryan’s speakership was in jeopardy. Ryan muststill win a floor vote in January to officially retain his position. That will require him to garner the support of a majority of the House, typically 218Republicans, giving him little wiggle room.


Senate Republicans and Democrats Elect Their Respective Leaders

Republicans re-elected Mitch McConnell (R-KY) as Senate Majority Leader, Sen. John Cornyn (R-TX) as Majority Whip and Sen. John Barrasso (R-WY) as policychair. Sen. Orrin Hatch (R-UT) remains Chair of the Senate Finance Committee and Rep. Lamar Alexander (R-TN) remains Chair of the Senate Health, Education,Labor and Pensions (HELP) Committee.

Senate Democrats elected Sen. Chuck Schumer (D-NY) Minority Leader to replace Sen. Harry Reid (D-NV), who is retiring. In addition to Schumer, theleadership team for the Democrats includes:

Sen. Richard J. Durbin (D-IL) will serve as party whip and Schumer’s chief deputy, maintaining a role he held under outgoing Minority Leader Harry Reid.

Sen. Patty Murray (D-WA) will serve as the third-ranking Democrat, assuming the new title of assistant Democratic leader. Murray was rumored to beconsidering a challenge to Senator Durbin, but the creation of this position negates the need for the Democrats to have a leadership fight.

Sen. Debbie Stabenow (D-MI) was named chair of the Democratic Policy and Communications Committee.

The Democratic leadership team will be expanded to 10 members, with Sens. Bernie Sanders (I-VT), Joe Manchin III (D-WV) and Tammy Baldwin (D-WI) adding tothe team’s ideological, geographic and gender balance. Manchin will help with messaging, and Sanders will handle outreach to key party constituencies,while Baldwin plays an organizational role.

Following Democratic leadership elections, Sen. Patty Murray will remain the ranking Democrat on the Health committee, Sen. Patrick Leahy (D-VT) shifts toranking Democrat on Appropriations, Sen. Bernie Sanders (I-VT) retains the ranking spot on Budget and Sen. Dianne Feinstein (D-CA) takes the rankingposition on the Judiciary committee.

Murray has been heavily involved in FDA reform issues as part of work on 21st Century Cures legislation and now remains in a position to influence drug anddevice user fee bills in the next Congress. Sen. Debbie Stabenow (D-MI) was named chair of the Democratic Policy and Communications Committee.

Leahy, who leaves his position as ranking Democrat on Judiciary, said addressing the opioid crisis and supporting research on cancer and infectiousdiseases are continued health-related priorities he will address on Appropriations in the 115th Congress.

Sen. Ron Wyden (D-OR) remains ranking Democrat on the Senate Finance Committee.

2. Administration

CMS Issues New Guidance to Manufacturers  

On Nov. 18, CMS released guidance to manufacturers through Manufacturer Release #102 to clarify how CMS intends to verify if a drug is an abuse-deterrentformulation, and should thus be excluded from the definition of line extension for purposes of the Medicaid Drug Rebate (MDR) program.

The Manufacturer Release is available for download here.

CMS Launches New Tool for Clinicians in Quality Payment Program

On Nov. 17, CMS released a tool—an Application Program Interface (API)—to share automatically electronic data for the Medicare Quality Payment Program.

In October, CMS released the Quality Payment Program website, an interactive site to help clinicians understand theprogram and successfully participate. The new tool, commonly referred to as an Application Program Interface (API), builds on that site by making it easierfor other organizations to retrieve and maintain the Quality Payment Program’s measures and enable them to build applications for clinicians and theirpractices.

The API will allow developers to write software using the information described on the Explore Measures section of QPP.cms.gov. Based on interviews withclinicians, CMS created the Explore Measures tool, which enables clinicians and practice managers to select measures that likely fit their practice,assemble them into a group, and print or save them for reference.

Several groups have applauded the release of this information, including the American Academy of Ophthalmology, Network for Regional Healthcare Improvement(NHRI), American College of Radiology (ACR), American College of Physicians (ACP), National Rural Accountable Care Consortium, Great Lakes PTN, PacificBusiness Group on Health, Compass PTN, TMF QIN-QIO and Mountain Pacific Quality Health Foundation.

To see the API Swagger documentation, click here.

Co-op Losses Occurring at a Slower Rate

According to new quarterly financial findings, most of the six remaining Obamacare co-ops continue to lose money, but at a slower rate than in prior years.The five startup insurers for which reports were available lost roughly $55 million combined through the first nine months of this year. That was roughlyhalf the losses for the five nonprofits at this point in 2015.

Wisconsin’s Common Ground Healthcare Cooperative, which has a $25.7 million deficit for the year, has experienced the most losses. Minuteman Health, whichsells plans in Massachusetts and New Hampshire, turned a small profit of $270,000. The financial report for Maryland’s Evergreen Health Cooperative was notyet available.

Just six of the 23 nonprofit startups seeded with $2.4 billion in federal loans remain in business. The co-ops were designed to spur increased competitionin the Obamacare exchanges, but they hemorrhaged cash in their first two years of operations.

The biggest obstacle facing the remaining co-ops is most likely the risk adjustment program, which is designed to spread financial risk among all insurerscompeting in the exchanges. But many insurers have complained that the program is too unpredictable and volatile, creating instability in the marketplaces.

The uncertainty about Obamacare’s future after the election is another challenge for the co-ops and other insurers.

SAMHSA Expands Ability to Prescribe Opioid Treatment

On Nov. 16, federal officials launched a 24-hour training course that will allow physician assistants and nurse practitioners to prescribe buprenorphinefor opioid abuse, as required by the Comprehensive Addiction and Recovery Act. This privilege had previously been restricted to doctors.

HHS also announced that it will write a new rule raising the cap on the number of patients NPs and PAs can treat with the opioid replacement therapy from30 to 100 after they had prescribed the treatment for a year. In July, HHS boosted the cap on the number of patients doctors can treat with buprenorphinefrom 100 to 275.

The moves are meant to close the gap between the 2.3 million people who were estimated to abuse or be dependent on opioids in 2012, according to a recent study, and the 1.4 million who hadaccess to that treatment.

One Million People Sign Up for Obamacare Plans in First Two Weeks

About 1 million people signed up for Obamacare plans on HealthCare.gov during the first two weeks of open enrollment, the Obama administration said Nov.16. The vast majority of customers renewed coverage—approximately 246,000 were new enrollees and nearly 762,000 were renewals. The CMS enrollment figures cover the period fromNov. 1 to Nov. 12 and include the 39 states using HealthCare.gov this year.

The Obama administration and ACA supporters are trying to boost enrollment amid the GOP’s efforts to dismantle the law when President-elect Donald Trumptakes office.

HHS has estimated that 13.8 million people will sign up for coverage during the 2017 open enrollment window, about 1 million more than last year. Thethree-month enrollment season ends Jan. 31, less than two weeks after Trump takes office.

FDA Responds to Questions Concerning Mylan EpiPen

In its response to a letter from Senate Judiciary Chairman Chuck Grassley (R-IA) and other senators asking what the Food and Drug Administration could doto address the high price of Mylan’s EpiPen, the FDA said it is willing to meet with companies to discuss what might be needed for an epinephrineauto-injector to be switched from prescription to over the counter. However the FDA would not say whether it has been approached due to the sensitivitiesof the approval process.

In order to make a switch, a sponsor would have to provide data showing consumers can self-diagnose and use a drug safely and effectively on their ownwithout supervision from a health care professional, according to FDA. In addition, for an OTC switch to be approved, a sponsor must develop a drug labelthat explains to consumers how to use the drug in question safely. However, in response to a question on whether FDA had specifically looked into makingEpiPen an OTC drug, the agency declined to answer.

CMS Releases Data on Medicaid and Medicare Drug Costs

On Nov. 14, CMSreleased dataon Medicaid and Medicare costs. The Medicaid prices do not reflect the rebates drugmakers pay. Overall, Medicaid spending on the 20 drugs with the highestyearly increases more than tripled from $146 million in 2014 to $486 million in 2015. The program’s total drug spending for its more than 73 millionbeneficiaries in 2015 was $57 billion.

Twenty drugs saw their unit costs more than double for Medicaid in 2015 and one drug—Valeant’s Ativan—rose more than 1,200 percent in a single year.Ativan, cost Medicare more than $700 per prescription or $5.3 million in 2015.

Drugs with high year-over-year price increases included both brands and generics. Nine of the 20 drugs with the highest per unit costs were generic drugsincluding the antimalarial treatment hydroxychloroquine sulfate, which rose by 489 percent. It is also used to treat autoimmune diseases like rheumatoidarthritis.

The drugs in the dashboard represent just 70 of the more than 6,500 products in the Medicaid drug program but accounted for about 41 percent of Medicaidoutpatient drug spending in 2015. The dashboard numbers are based on prices paid to pharmacies, without the rebates.

The drugs with the highest burden to Medicaid in terms of total spending were the Hepatitis C drug Harvoni, which accounted for about $2.2 billion,followed not far behind by the antipsychotic Abilify at $2 billion. Sanofi’s insulins, Lantus and Lantus SoloSTAR, accounted for more than $1.4 billion—theonly other drug that topped $1 billion in Medicaid spend in 2015.

CMS also provided data on Medicaid spend from 2011 through 2015 for these drugs. Over those five years, Abilify was by far and away the most costly drugfor Medicaid with more than $10 billion in total spend, followed by Lantus at more than $4 billion and the HIV medicine Truvada at $2.9 billion.

Harvoni tops the list of the most expensive drugs on a per prescription basis in Medicaid coming in at number three. The new Hepatitis C drug is used byfar more patients than most other drugs that come in at such a high price per prescription, pointing to why the drug’s high price has been so burdensome tostates.

The drugs with the most prescriptions filled on the list include two asthma drugs, Ventolin HFA and ProAir HFA, with around 7 million prescriptions each,followed by the insulin Lantus with around 3.7 million prescriptions.

Other commonly prescribed drugs in Medicaid include the opioid addiction treatment Suboxone, which was the eighth most prescribed in 2015 with more than 2million prescriptions. Attention deficit hyperactivity disorder drugs are also commonly prescribed.

3. Courts

Former Valeant Executive Charged in Fraud Scheme

A former Valeant executive and the former head of the specialty pharmacy Philidor Rx Services were indicted on federal fraud and conspiracy charges forengaging in a multimillion-dollar kickback scheme, federal prosecutors announced Nov. 17.

The complaint accuses former Valeant executive Gary Tanner and formerPhilidor CEO Andrew Davenport of conspiracy to create Philidor to benefit them financially. Davenport allegedly paid Tanner approximately $10million in kickbacks to facilitate Philidor’s interests, which enabled Davenport to receive over $40 million and potentially tens of millions of additionaldollars from Valeant. Tanner also allegedly encouraged Valeant to purchase Philidor, enabling him to receive additional kickbacks from Davenport.

Tanner is also accused of using the pharmacy to promote and direct business to Valeant’s costly dermatological drugs, despite the availability of cheapergenerics. Philidor had been altering doctors’ orders to request Valeant’s brand-name medicines.

At least 90 percent of the drugs dispensed by Philidor were for Valeant-branded drugs, according to the complaint. Valeant acknowledged the criminalcomplaint in a statement and said it was cooperating with authorities. Congresshas scrutinized the company in recent years for dramatically raising the prices of many old medicines.

Federal Claims Judge Rejects Illinois Co-op Efforts to Collect Money From Federal Government

A U.S. Court of Federal Claims judge has rejected Illinois insurance co-op Land of Lincoln Health’s efforts to collect on nearly $73 million in payments itclaims it is owed by the federal government, a decision the insurer said it plans to appeal.

Land of Lincoln Mutual Health Insurance Co., which closed earlier this year in the face of a $32 million payment it owed the government under theAffordable Care Act, can’t use the act to immediately collect on money the government doles out in a separate program to mitigate insurers’ risk, FederalClaims Judge Charles F. Lettow said in an opinion published Nov. 17.

The company, currently in liquidation, will appeal the decision and ask for an expedited review. In its suit filed earlier this year before the companyannounced its closure, Lincoln argued the U.S. Department of Health and Human Services owed the company at least $72,859,053 for 2014 and 2015 under theACA’s risk corridor program, which the company said required the government to pay its full obligation annually. The suit also claimed HHS breached itscontracts with Lincoln and violated the Fifth Amendment’s Takings Clause by failing to make the payments.

Judge Lettow agreed with the government, finding the statute doesn’t dictate the payments be made in full and annually. The agency’s interpretation of therule, which allows it to make payments as it collects money from other insurers, is supported by Congress’ deliberations while it considered the bills thateventually became the Affordable Care Act, the judge said.

4. State Activities

Alabama: GOP Lawmakers Optimistic About Trump Administration

Alabama Gov. Robert Bentley and Republican lawmakers expressed initial optimism about how a Donald Trump administration could be a potential solution tothe state’s Medicaid problems. Some of the Republican lawmakers said they were encouraged by Trump’s support for block grants for Medicaid, which Gov.Bentley called for in 2014. They said block grants would give them more options when trying to solve their budget shortfall, which has been mostly drivenby Medicaid. Alabama cut physician rates to save money earlier this year, but those have since been restored.

Florida: Florida Seeking Extension of Medicaid Managed Care Program

Florida is asking CMS to extend its Medicaid managed care program for three additional years. Public comment onthe proposalended Nov. 10. If CMS approves the extension, the state will continue outsourcing its Medicaid program for more than 3.6 million residents to privatecontractors. The program will expire next June if it is not extended.

Iowa: State Supreme Court Upholds Governor’s Closing of Mental Health Facilities

Iowa’s Supreme Court upheld Gov. TerryBranstad’s decision last year to close two state-run mental health care facilities. Branstad had vetoed funding for them in June 2015, prompting a lawsuitby the largest state employee union and 20 state legislators who said state law requires Iowa to have four mental health institutions. The suit alsoclaimed the governor did not have authority to close the facilities. Nonetheless, the court sided with Branstad.

Minnesota: Task Force on Mental Health Releases Draft Report

A task force assembled by Minnesota Gov. Mark Dayton released a draft report detailing serious problems in the state’s mental healthsystem including severe workforce shortages and significant barriers to care. The report revealed a significant shortage of psychiatric beds and said thatinsurers commonly deny coverage for mental health treatment. They recommended enforcing parity laws, increasing the behavioral workforce and creating acontinuum of mental health care that provides follow-up services instead of allowing people to file in and out of the emergency rooms. They alsorecommended creating additional affordable housing for people in need of mental health treatment.

South Dakota: Gov. Daugaard Will No Longer Pursue Medicaid Expansion

On Nov. 15, South Dakota Gov. Dennis Daugaard said he will give up efforts to expand Medicaid, citing Donald Trump’s victory in the presidential election.

Daugaard had been one of a few Republican governors who supported Medicaid expansion but was admonished by a GOP-controlled legislature. He even personallylobbied HHS to take on additional expenses through the Indian Health Service, which would have freed up state money to cover expansion costs.

Daugaard ultimately decided early this year that he would not urge the state legislature to pursue expansion during its 2016 session, but he left open thepossibility it would be on the table for 2017. Nineteen states have yet to join Obamacare’s Medicaid expansion.

Wisconsin: Emergency Rule Requires Doctors to Learn About Opioid Prescriptions

Wisconsin’s Department of Safety and Professional Services approved an emergency rule that requires doctors to get biennial training on how to prescribeopioids. The new rule means that two of the required 30 hours of training for doctors must cover opioid-prescribing guidelines, which advise againstprescribing opioids as the first option to treat pain.

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 allo