Washington Healthcare Update

December 5, 2016

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This Week: More leadership changes in Congress…Cures legislation passes House, finally…the administration announces enrollment numbers.

1. Congress



2. Administration

3. Courts

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


Walden Elected Chairman of House Energy and Commerce Committee

On Dec. 1, Republicans elected Rep. Greg Walden (R-OR) to be the next chairman of the House Energy and Commerce Committee. Walden beat Reps. John Shimkus(R-IL) and Joe Barton (R-TX) for the chairman post. He succeeds Rep. Fred Upton, who is stepping down as chairman due to Republican term limits.

Walden currently serves as head of the panel’s communications and technology subcommittee.

Rep. Nancy Pelosi Wins Another Term as Democratic Caucus Leader

House Minority Leader Nancy Pelosi (D-CA) swept aside a challenge from Rep. Tim Ryan (D-OH) on Nov. 30 to win another term atop the Democratic caucus,ensuring continuity for Democrats despite their poor performance on Election Day.

Pelosi beat Ryan in a 134-63 vote, securing the two-thirds support within the caucus she had claimed earlier this month before Ryan officially jumped inthe race. Pelosi had vocal support from multiple lawmakers leading up to the election, who said her long-time tenure would be an asset heading into anunprecedented period in Washington. They also blamed the party’s poor election performance on the top of the ticket.

Ryan argued that the party had failed to deliver a compelling message to blue-collar voters like those in his Ohio district, which he won easily even asHillary Clinton lost the area by a wide margin. He also earned the support of younger members frustrated at being frozen out of leadership.

Republicans will hold a 241-194 lead in House seats.

Levin Stepping Down as Top Ways and Means Democrat; Neal to be Ranking Member

Longtime Ways and Means Ranking Member Sandy Levin (D-MI) announced he is stepping down as the panel’s top Democrat. Levin said in aletter to colleagues that Donald Trump’s recent election convinced him to step aside, both to allow younger House Democrats a chance to progress and to allowhimself to focus on policy issues. Levin, who is 85, had faced questions in recent years over whether it was time for Democrats to install a younger memberin his position.

Rep. Richard Neal (D-MA) was chosen to replace him as Ways and Means top Democrat on Dec. 1. Rep. John Lewis (D-GA), who was the next most senior Democraton the committee, was also nominated. However, he withdrew and threw his support to Neal. Neal pitched himself to colleagues as having the policy expertisefor the position, but also the ability to reach the white working-class voters and middle-class voters who defected from Democrats earlier this month.

Rep. Xavier Becerra (D-CA) had also announced his intention to run for the slot even though Rep. Neal was more senior on the committee. However, on Nov.30, Gov. Jerry Brown (D-CA) announced that he was appointing Becerra as California’s attorney general.

21st Century Cures Legislation Finally Passes House, Senate Vote Next

The 21st Century Cures legislation, sponsored by Reps. Fred Uptonand Diana DeGette, finally passed the House on Dec. 2. The legislation now goes to the Senate where it is expected to pass without amendment early thisweek, despite some opposition. The nearly 1,000-page bill includes $1 billion over two years to address the opioid epidemic and $500 million to help theFDA implement changes called for in the legislation, though none of the funding is mandatory. It will have to be released to the Cures programs each yearby appropriators, which was a key post-election concession from Democrats. The mental health provisions in the bill have been watered down from a versionthat passed the House earlier this year, and no longer include funding. They do, however, authorize new and existing treatment and prevention programs,double-down on existing parity language and restructure the leadership at SAMHSA.

The legislation also includes several Medicare, electronic medical record and foster care reforms, as well as language from a bipartisan mental healthreform bill that was more than three years in the making.

In the Senate, Democratic senators Bernie Sanders, Elizabeth Warren and Jeff Merkley have said they will oppose the bill, citing concerns about weakenedFDA oversight and benefits to the drug industry. The White House, however, has said it “strongly supports” its passage.

Rep. Cole Says Appropriators Will Come Through With Cures Money

At the House Rules Committee hearing on Nov. 29, Rep. Tom Cole (R-OK) said House and Senate appropriators are committed to authorizing the new NIH fundingprovided by 21st Century Cures.

Cole, who chairs the House Labor-HHS appropriations subcommittee, said appropriators in the coming years will also provide NIH with additional fundingbeyond what is in the Cures bill.

The Cures bill provides $4.77 billion to NIH over 10 years.


Sen. Grassley Postpones Mylan EpiPen Hearing, Asks for SEC Investigation

The Senate Judiciary Committee postponed a previously scheduled Nov. 30 hearing on a potential settlement between Mylan and the Justice Department over theEpiPen after representatives from the government and Mylan declined to testify. Senate Judiciary Chairman Chuck Grassley (R-IA) said he is looking at otheravenues for oversight of the pending $465 million settlement. Representatives from the Justice Department, CMS and Mylan have all declined to attend,citing pending matters and investigations.

Mylan announced the settlement agreement in early October, which would resolve allegations that the company overcharged Medicaid for its lifesaving allergydrug. Grassley wants to know whether the EpiPen settlement was proportional to what Mylan overcharged taxpayers and how much of the money will be returnedto the states.

The hearing would have more broadly focused on CMS authority to prevent and address drug misclassification and whether these misclassifications violate theFalse Claims Act.

Sen. Grassley also wrote to the SEC asking for an investigation into whether Mylan misled investors about the settlement. Mylan said in a press releasethat it had agreed to the terms of the $465 million settlement, however the Justice Department has maintained that it is not final yet.

“This seems to contradict Mylan’s claim that all potential liability claims have been resolved. Mylan made no mention of the fact that they are under anSEC investigation in their press release,” Grassley said in the letter.Grassley asked for an SEC response by Nov. 29.

2. Administration

CMS Releases 2015 National Health Expenditures

In 2015, per capita health care spending grew by 5.0 percent and overall health spending grew by 5.8 percent, according to a study by the Office of theActuary at the Centers for Medicare & Medicaid Services (CMS) published Dec. 2 as a Web First by Health Affairs. Those annual rates continueto be below the rates of most years prior to passage of the Affordable Care Act. And, even as millions of people gained coverage, per-enrollee spendinggrowth in private health insurance and Medicare continues to be well below the average in the decade before passage of the Affordable Care Act.

The report concludes that 2015 expenditure growth was primarily the result of increased use and intensity of services as millions gained health coverage,as well as continued significant growth in spending for retail prescription drugs. Spending on prescription drugs increased 9.0 percent in 2015, lower thanthe 12.4 percent growth in 2014, yet significantly higher compared to 2.3 percent growth in 2013. On a per-enrollee basis, overall spending increased by4.5 percent for private health insurance, 1.7 percent for Medicare and 3.8 percent for Medicaid.

The report noted that over a two-year period, 20.0 million individuals either gained private health insurance coverage or enrolled in the Medicaid program,primarily as the result of the Affordable Care Act. The share of the population with health coverage increased from 86.0 percent in 2013 to 90.9 percent in2015.

Additional highlights from the report:

  • Total per-enrollee private health insurance spending increased by 4.5 percent in 2015, compared to average growth in per-enrollee spending of 7.4 percent during 2000-2009. Overall, private health insurance expenditures (33 percent of total health care spending) reached $1.1 trillion in 2015, and increased 7.2 percent in 2015. The faster rate of growth reflected increased enrollment in private health insurance associated with coverage expansions under the Affordable Care Act, and a notable increase in the enrollment in employer-sponsored plans.
  • Per-enrollee Medicare spending increased by 1.7 percent, about the same rate as in 2014 and below the average annual growth in per-enrollee spending during 2000-2009 of 7.0 percent (or 5.8 percent when Medicare Part D, which was implemented in 2006, is excluded). Medicare spending, which represented 20 percent of national total health care spending in 2015, grew 4.5 percent to $646.2 billion, slightly slower than the 4.8 percent growth in 2014 even as the leading edge of the baby boom generation joined Medicare. The 2015 rate of growth reflected mixed trends among services compared to 2014 as Medicare hospital spending growth slowed and nursing home and home health care spending grew faster. Medicare prescription drug spending continued to grow by double digits with an 11.0 percent increase in 2015 following a 14.5 increase in 2014.
  • Overall Medicaid spending and enrollment grew at a slower rate in 2015 than in 2014 with per-enrollee Medicaid spending increasing 3.8 percent. Medicaid spending, which totaled $545.1 billion, accounted for 17 percent of total spending on health care. Similarly, growth in Medicaid enrollment slowed to 5.7 percent in 2015, significantly lower than the 2014 increase of 11.1 percent.
  • Retail prescription drug spending continued to outpace overall health expenditure growth in 2015, increasing 9.0 percent to $324.6 billion after rising 12.4 percent in 2014. Growth in prescription drug spending was faster than that of any other service in 2015. Recent rapid growth was due to increased spending for new medicines (particularly for specialty drugs such as those used to treat hepatitis C), price growth in existing brand-name drugs, increased spending on generics and a decrease in the number of expensive blockbuster drugs whose patents expired.

The CMS Office of the Actuary’s report can be foundhere.

CMS Updates ACA Federal Upper Limits

CMS recently released updated Affordable Care Act federal upper limits (FUL). The FULs, CMS said, were calculated in accordance with the Medicaid CoveredOutpatient Drug final rule with comment and are now available. To see the new FULs, click here.

States will have up to 30 days from the Dec. 1, 2016, effective date to implement the updated FULs.

For further information on the FUL program, click here.

Obamacare Enrollment Through HealthCare.gov Exceeds 2.1 Million

According to data released by CMS onNov. 30, more than 2.1 million customers have picked a plan through HealthCare.gov since Obamacare open enrollment began, and nearly one-quarter are newcustomers.

Altogether, 1.6 million customers have renewed their coverage and roughly 520,000 shoppers have picked a new plan. Through the first four weeks ofenrollment, about 100,000 more people have signed up for coverage through HealthCare.gov compared to last year.

Thirty-nine states use HealthCare.gov, but nearly 1 million signups have been in just four states — Florida, Texas, North Carolina and Pennsylvania.

Enrollment may surge over the two next weeks, ahead of the Dec. 15 deadline to sign up for coverage starting Jan. 1. The administration expects that 13.8million people will sign up for plans during this enrollment season, which ends Jan. 31.

CMS Falls Short on Obamacare Risk Corridor Payments Again

According to a recent memo, CMSwill pay another fraction of the money that insurers requested under Obamacare’s risk corridors program.

Insurers will not receive any of the money they are owed for the 2015 benefit year. The new funds instead will be used to fill the program’s $2.6 billiondeficit from 2014.

Therefore, CMS must still pay out the billions of dollars insurers requested for 2015 before the risk corridors program expires next year. Several insurersare suing the Obama administration over the shortfall, arguing that it should allocate funds from outside CMS to help pay off the debt.

CMS Issues Medicaid and CHIP Eligibility and Appeals Final Rule

On Nov. 21, CMS issued a final rule that includes finalized Medicaid and the Children’s Health Insurance Program (CHIP) provisions associated with theeligibility changes under the Affordable Care Act of 2010 and previous legislation. The final rule supports modernization of notices and appeals processesand the coordination of eligibility notices and appeals across insurance affordability programs. Other provisions complement the simplification ofeligibility and enrollment and the shift to MAGI-based financial methodologies codified in the final rule published in March 2012, including coverage forformer foster care youth, optional eligibility pathways, financial methodologies for medically needy individuals and verification of citizenship andimmigration status. CMS also issued a Notice of Proposed Rulemaking (companion NPRM) relating to Medicaid and CHIP eligibility appeals processes thatcomplements the final rule.

To see the final rule,click here. For the proposed rule,click here.

Along with the two rules, CMCS issued an informational bulletin to inform states how they can pursue a Medicaid demonstration project under Section 1115 ofthe Social Security Act to continue to provide Medicaid coverage to former foster care youth who aged out of foster care under the responsibility ofanother state (and were enrolled in Medicaid while in foster care), and are now applying for Medicaid in the state in which they live.

The informational bulletin is available here.

3. Courts

House Asks Court to Halt Obamacare Lawsuit

On Nov. 21, theHouse asked the D.C. Court of Appeals to temporarily halt its lawsuit challenging the legality of an Obamacaresubsidy program, a move that could allow the incoming Trump administration to quickly unwind the health care law.

Delaying the lawsuit, House v. Burwell, would allow the Trump administration to decide whether it wants to continue the Obama administration’sdefense of Obamacare’s cost-sharing subsidies. If the Trump administration were to decide to stop defending Obamacare, the cost-sharing subsidy payments tohealth insurers may end.

If the subsidies stopped, health insurers could be allowed to almost immediately pull their insurance plans from the exchanges. That could force millionsoff their health insurance and destabilize the Obamacare exchange market early next year.

“In light of public statements by the President-Elect and his campaign, there is at least a significant possibility of a meaningful change in policy in thenew Administration that could either obviate the need for resolution of this appeal or affect the nature and scope of the issues presented for review,” theHouse lawyers wrote.

4. State Activities

Alaska: Alaska Posts Draft 1332 Waiver Proposal

Alaska has posted adraft waiver proposal that asks the federal government to cover a significant share of the cost of its ACAreinsurance program. Alaska appropriated $55 million for reinsurance in 2017 to shore up the state’s individual market, which had been at risk ofcollapsing because of rising costs and insurer exits.

In the Section 1332 waiver application, Alaska argues that its state fund is limiting premium increases, and therefore the state is saving the federalgovernment money because it will spend less on premium tax credits. As a result, Alaska argues the state should receive federal “pass-through” fundingbased on those savings to subsidize the cost of the program. State officials estimate that the reinsurance fund will save the federal government $51.6million in tax credits for 2018 and increase individual market enrollment by nearly 1,650 people. The 1332 waiver would be effective at the start of 2018for an initial period of five years. An actuarial analysis from Oliver Wyman isposted here and the public hearing dates are here.

California: Gov. Jerry Brown Appoints Xavier Becerra as California’s Next Attorney General

On Dec. 1, California Gov. Jerry Brown nominated Democratic Rep. Xavier Becerra to be the state’s next attorney general. Sitting Attorney General KamalaHarris was just elected to the U.S. Senate. Becerra was first elected to Congress from Los Angeles in 1992.

To see a related press release,click here.

Kentucky: ER Visits Covered by Medicaid Up 16.7 Percent

According to a new study from the Foundation for a HealthyKentucky, ER visits covered by Medicaid are up 16.7 percentage points since 2012 because of expansion under the ACA. In 2015, roughly 47 percent of ERvisits were paid for by Medicaid, whereas in 2012 it was just over 30 percent. Even though the source of payment is changing, the foundation noted that thenumber of ER visits overall has remained fairly steady even though more people are insured. In 2015, there were 2.2 million ER visits in the state, onlyslightly more than the 2.1 million ER visits reported for 2014.

Michigan: State Health Department to Release Proposal on Spending $2 Billion for Mental Health Programs

Michigan’s health department is expected to release a draft proposal of how it will spend more than $2 billion in Medicaid funding for its mental healthsystem. Earlier this year, Gov. Rick Snyder supported a plan to privatize Michigan’s mental health care by contracting with Medicaid HMOs. But the planfaced backlash from mental health advocates who said it could worsen patient care. The state legislature, instead, directed the health department todevelop a new proposal that is expected in December. A final report will be presented to the legislature in January.

Minnesota: OIG Finds State Misallocated Federal Funds in Setting Up ACA Exchange

Minnesota misallocated federal funds and claimed unallowable costs totaling nearly $1.3 million in setting up its ACA exchange, according to a new report from the HHS inspector general. The auditor found, for example, that theexchange misallocated more than $346,000 in costs to federal exchange grants rather than having its state-run public programs cover those expenses. It alsodid not appropriately authorize $930,000 for additional marketing work. The office recommended that Minnesota refund the misallocated funds to CMS but theexchange did not agree.

Texas: Texas Reinstates Medicaid Coverage of Mosquito Repellent

In response to the first case of locally transmitted Zika, Texas officials are reinstating Medicaid coverage of mosquito repellent through December. TexasMedicaid has a standing order for mosquito repellent prescriptions for pregnant women and women ages 10 to 45. Eligible women can obtain two repellent cansper month from pharmacies.

The patient who contracted Zika is not pregnant and reported no recent travel to countries with ongoing Zika virus transmission. The announcement makesTexas the second state to report local transmission of the virus.

The Texas announcement comes shortly after the World Health Organization declared that Zika was no longer considered an international public healthemergency but remains a “significant enduring public health challenge requiring intense action.”

Utah: Feds to Make Changes to Medicaid Expansion Plan

The federal government will likely make changes to Utah’s limited Medicaid expansion proposal, which is currently awaiting approval. As a result, the statewill not be able to begin enrollment on Jan. 1. The state projects that it would cover roughly 10,000 low-income adults who are chronically homeless, haveinteracted with the criminal justice system or are in need of mental health or substance abuse treatment. It would also broaden access to more parents withdependent children who couldn’t previously get Medicaid coverage.

Virginia: Legislature Setting Up Joint Subcommittee to Monitor Health Care

The Virginia legislature is setting up a new joint subcommittee tasked with monitoring health care changes that President-elect Donald Trump proposes,including repealing Obamacare and revisions to other laws. Lawmakers say the new group would allow the legislature’s budget committees to respond morequickly to changes under a Trump administration. Virginia has blocked Medicaid expansion under the ACA despite support from Democratic Gov. TerryMcAuliffe—this will likely not change given the Republican House and Trump administration.

5. Regulations Open for Comment

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.

CMS Releases Proposed Rule on Fire Safety Requirements for Dialysis Facilities

On Nov. 3, CMS announced a proposed rule to update Medicarefire protection guidelines for certain dialysis facilities to ensure that patients are protected from fire while receiving treatment in those facilities.

The new proposed guidelines apply to all dialysis facilities that do not provide one or more exits at grade level from the treatment area level. CMSpreviously updated the requirements to include dialysis facilities located adjacent to industrial high-hazard occupancies; however, as dialysis facilitiesare not permitted to be located in such areas, the requirement specific to such geographically located facilities will be removed.

The rule adopts, for certain dialysis facilities, updated provisions of the National Fire Protection Association’s (NFPA) 2012 edition of the Life SafetyCode (LSC), as well as provisions of the NFPA’s 2012 edition of the Health Care Facilities Code in order to bring CMS’s requirements more up to date withcurrent fire safety standards. The LSC is a compilation of fire safety requirements for new and existing buildings, and is updated every three years.

The proposed rule addresses construction, protection and operational features of dialysis facilities to provide safety for Medicare beneficiaries from fireand smoke. Some of the main requirements laid out in the rule include:

  • Doors to hazardous areas must be self-closing or must close automatically.
  • Alcohol-based hand rub dispensers now may be placed in corridors to allow for easier access.
  • A fire watch or building evacuation is required if the sprinkler system is out of service for more than 10 hours.

Currently, CMS is using the 2000 edition of the LSC to survey dialysis facilities for health and safety compliance. With this proposed rule, CMS isadopting provisions of the 2012 edition of the LSC and provisions