Washington Healthcare Update

December 12, 2016

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This Week: Congress leaves town…Government funded through April 28, 2017…21st Century Cures passes…and we get to start all over again next year!

1. Congress



2. Administration

3. Courts

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


HRAs Expanded for Small Businesses

The 21st Century Cures legislation passed by Congress this week contains a provision to expand the use of HRAs for small employers. The provision, which isset to apply to plan years beginning after Dec. 31, 2016, would let small employers use “qualified small employer health reimbursement arrangements” toreimburse workers for up to $4,950 per year for employee-only coverage and up to $10,000 for family coverage. The employees using the arrangement wouldhave to show they had health coverage. The reimbursement cap would be adjusted for inflation. An employer using the provision would have to fund the HRAitself. An employer could not use salary reduction mechanisms to fund the HRAs.

In the past, the Obama administration has argued that a stand-alone cash-for-coverage arrangement is really a major medical plan for purposes of AffordableCare Act compliance and had to meet all of the ACA requirements that apply to major medical plans, such as the ban on annual and lifetime benefits limits.The administration had also argued that small employers should be discouraged from using cash-for-coverage arrangements, because they could affect thelevel of health risk in the small-group market and potentially destabilize either the individual market or the traditional small-group major medicalmarket.

House Republican Leadership Asks for State Input on Health Reform

On Dec. 2, House Majority Leader Kevin McCarthy (R-CA), committee Chairmen Kevin Brady (R-TX), Fred Upton (R-MI), John Kline (R-MN) and Chairmen-elect GregWalden (R-OR) and Virginia Foxx (R-NC) sent a letter to governors and insurance commissioners asking for input on nine questions related to health reformthat range from insurance options to how to use Section 1332 waivers to Medicaid. States have until Jan. 6 to respond.

To see the letter,click here.


21st Century Cures Legislation Passes Senate

The long-awaited 21st Century Cures legislation passed the Senate on Dec. 7 by a 94-5 vote. It is expected to be signed into law by the President. Inaddition to sweeping reforms in relation to drugs and devices and increased funding for NIH and other research initiatives, the legislation containsprovisions related to opioid use, mental health HIPAA clarifications and issues involving Medicaid and Medicare.

To see the legislation,click here.

Continuing Resolution Passes House and Senate

Late Dec. 9, the Senate passed the continuing resolution to fund the government through April 28, 2017. Some members led by Senators Joe Manchin (D-WV) andSherrod Brown (D-OH) were concerned that the language added to the CR to address coal miner health plan funding was only temporary and they felt they hadbeen promised a more permanent fix so they held up the bill. However, after hours of discussion, it was clear they could not make changes. In addition, theHouse of Representatives had already left having voted for the CR.

Bipartisan Group of Senators Introduces CHRONIC Care Act

On Dec. 6, a bipartisan group of senators introduced the CHRONIC Care Act (S. 3504), which aims to improve Medicare handling ofpatients with chronic conditions. The final bill increasesMedicare’s coverage of telemedicine for stroke care and home kidney dialysis therapy and for Medicare Advantage and accountable care organizations. Otherparts of the bill expand Medicare’s Independence at Home demonstration and change how patients are assigned to ACOs.

Senate Finance Chairman Orrin Hatch (R-UT), ranking member Ron Wyden (D-OR) and Sens. Johnny Isakson (R-GA) and Mark Warner (D-VA) have been working sincelast year on chronic care legislation they hope to tee up for consideration in 2017. The four lawmakers formed a working group last year that published apolicy paper that has received 327 comments.

2. Administration

CMS Releases New Medicare Drug Spending Data Files

On Dec. 8, CMS released Medicare spending and utilization data for all Part B drugs (drugs administered in doctors’ offices and other outpatient settings)and Part D drugs (drugs patients generally administer themselves) for 2011 to 2015. These data files are the basis for the 2015 Medicare Drug SpendingDashboard that CMS released last month and are available in Microsoft Excel format.

To access the data,click here.

Novo Nordisk Commits to Limit Drug Price Increases

The world’s largest insulin maker—Novo Nordisk—has committed to finding sustainablesolutions for limiting price increases on its drugs. The solutions are based on three tenets: transforming the complex pricing system; creating morepricing predictability; and reducing the burden of out-of-pocket costs.

More specifically, Novo Nordisk will be limiting any future list price increases on its drugs to less than 10 percent annually, making it the second drugcompany to make this pledge in recent months. Company President Jakob Riis said the commitment to single-digit yearly price increases willhelp payers better anticipate and budget for price hikes. Novo also said it will focus on transforming and simplifying the drug pricing system, though itoffered few details.

Riis said many of the company’s large price hikes actually resulted in small earnings increases after the company negotiated rebates and other discountswith payers. For instance, since 2001 its list price for one type of insulin vial has increased by 353 percent, but the company said its net price increasewas only 36 percent.

The price of diabetes drugs came under congressional scrutiny last month when Sen. Bernie Sanders (I-VT) and Rep. Elijah Cummings (D-MD) called on theJustice Department to investigate potential collusion among drug companies regarding the escalating cost of insulin.

Novo’s announcement follows a similar pricing commitment by Allergan in September.

FDA’s Office of New Drugs Director to Retire

FDA’s Office of New Drugs Director John Jenkins will retire on Jan. 6. He will be leaving after 15 years of leading the office tasked with approvingprescription drugs. Jenkins is the FDA’s first high-profile departure since the election. Janet Woodcock, director of the FDA’s Center for Drug Evaluationand Research, will serve as acting director of the new drugs office while a national search is conducted to find Jenkins’s replacement.

Jenkins has been at FDA since 1992 and is credited with designing and overseeing the agency’s current drug review process, known as 21st Century Review. Healso championed the new biosimilar review program and implemented numerous FDA changes mandated through legislation or industry user fee agreements.

3. Courts

Solicitor General Recommends SCOTUS Weigh in on Biosimilar Case

The solicitor generalrecommended that the Supreme Court should weigh in on a drug industry fight that will affect how soon cheaperversions of expensive biologic medicines reach patients, and that it should overturn part of the appeals court’s decision.

The high court had asked the solicitor general for advice on whether to hear Sandoz v. Amgen. Acting Solicitor General Ian Gershengorn said itshould take the case because the issues at hand apply to every biosimilar applicant in the U.S. Also, he said, only one appeals court has jurisdiction overpatent cases, so no other appeals courts will weigh in on the law.

Sandoz’ version of Amgen’s Neupogen, which treats a common side effect of cancer chemotherapy, was the first copycat biologic approved under a law that’spart of Obamacare.

The solicitor general’s brief, filed Dec. 7, argues that the high court should overturn the Federal Circuit’s ruling that a biosimilar applicant must waitfor FDA approval before sending the company that makes the original biologic a 180-day notice of intent to market. Sandoz asked the high court to reverse this decision, which effectivelygives brand companies an additional six months of market exclusivity.

The solicitor general agreed, however, with the appeals court’s decision that biosimilar makers do not have to engage in a patent-sharing process with thebranded biologic maker they seek to copy. In a cross-petition, Amgen has asked the Supreme Court to reverse this decision if it takes up the case.

Court Issues Hold on Obamacare Lawsuit

The U.S. Court of Appeals for the District of Columbia has put the lawsuit against Obamacare’s cost-sharing subsidies on hold until after Donald Trump’sinauguration.

The court issued the order on Dec. 5 in House v. Burwell without an explanation, though it did refer to the House’s request for the delay and thereply from the Justice Department. The delay provides the Trump administration the opportunity to drop the defense of the cost-sharing payments, which theHouse argues have been being distributed illegally. If the Trump administration lets the lower court ruling stand, the subsidies could potentially behalted immediately, throwing the Obamacare markets into a downward spiral.

4. State Activities

California: Report May Have Underestimated Economic Impact of ACA in California

In 2012, the Economic Institute of the Bay Area Council projected the Affordable Care Act would bring 100,000 new jobs to California. However, they are nowsaying that may have been an underestimate, emphasizing the negative economic impact repealing the law could have on the state.

Micah Weinberg, president of the institute, suggested that the economic impact of the federal health law on states is not getting the attention it deservespost-election and that there was too much attention placed on manufacturing jobs.

Colorado: Connect for Health Colorado Enrollment Numbers Increase Compared to Last Year

According to new data released by Connect for Health Colorado, enrollment through the state marketplace is 23 percent higher than this time last year.Through November, almost 38,000 people signed up for medical and dental plans, compared to roughly 30,800 last year. Colorado exchange officials praisedthe figures as proof that people want health insurance even as Republicans talk about dismantling the ACA early next year. Exchange sign-ups are expectedto surge more in the days leading up to the Dec. 15 enrollment deadline for coverage that starts Jan 1, 2017.

Minnesota: 300,000 in State Must Find New Health Insurance Next Year

More than 300,000 Minnesotans that enrolled in Medicaid and the state’s ACA Basic Health Plan will have to find new health insurance next year. Medicaidhas announced it will not renew its HMO contract for most in the programs due to mounting financial losses. It projects it will lose more than $150 millionthis year and another $100 million in 2017 under the new rates proposed by the state’s Department of Health Services. DHS is now scrambling to find otherinsurers to close the gap. Health officials will notify enrollees of their options 60 days before May 1.

Oklahoma: Insure Oklahoma 1115 Waiver Extended for One Year

Oklahoma has received a one-year extension of its Insurance Oklahoma 1115 waiver, according to Gov. Mary Fallin—this puts the new end date at Dec. 31,2017. The waiver includes premium assistance for low-income individuals to purchase either employer-sponsored or individual coverage. Total enrollment inthe program was roughly 19,500 people as of October.

Tennessee: CMS Extends TennCare Waiver Through Dec. 15

CMS granted Tennessee a TennCare extension through Dec. 15 as officials continue to finalize terms of the 1115 waiver. The waiver will include changes tosupplemental hospital payments to offset their uncompensated care costs. According to a Tennessee budget presentation from November, $880 million was allotted under thestate’s current supplemental pool structure, which includes several sections of funding for specific types of hospitals and clinics. The future poolstructure will include just $627 million, and an unspecified amount of “directed payments” tied to performance and utilization rather than unreimbursedcosts will go to hospitals. The Obama administration has stated that it does not want to cover uncompensated care costs for hospitals that would be paid ifMedicaid were expanded under the ACA. CMS reiterated this point in aNov. 30 letter to Tennessee about the short two-week waiverextension.

Texas: Texas Moving Forward With Budget Cuts for Pediatric Therapy Services

Texas is moving forward with $350 million in cuts to Medicaid payments for pediatric therapy services on Dec. 15 after a yearlong legal battle with patientgroups. The Supreme Court of Texas temporarily blocked the cuts, which were scheduled to go into effect last year, after providers and patient advocacygroups criticized them as harmful to patients. In April, a state appeals court ruled that the groups had no jurisdiction to sue. The state supreme courtdeclined to review that ruling, clearing the path for Texas to carry out the cuts, which will apply to fee-for-service rates. Patient groups are calling onthe governor and state legislature to overturn the cuts during the next legislative session.

5. Regulations Open for Comment

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 of the 2012 edition of the Health Care Facilities Code, to bring CMS’s requirements moreup to date, and align dialysis facility fire safety requirements with the codes CMS uses to survey other healthcare facilities.

CMS Releases Proposed Notice With Changes to Medicaid National Drug Rebate Agreement

On Nov. 7, CMS issued a proposed notice announcing changes that would be made to the Medicaid National Drug Rebate Agreement (NDRA) for use by theSecretary of the Department of Health and Human Services and manufacturers under the Medicaid Drug Rebate Program. The NDRA is being updated to incorporatelegislative and regulatory changes that have occurred since the agreement was published in February 1991, as well as to make editorial and structuralrevisions, such as references to the updated Office of Management and Budget (OMB)-approved data collection forms and electronic data reporting. There is a90-day comment period for this proposed notice that will end on Feb. 7, 2017.

For more information, click here.

Comments Due on IMPACT Act Cross-Setting Quality Measure

On Nov. 4, CMS announced that public comments are due Nov. 17 on a cross-setting post-acute care measure under the Improving Medicare Post-Acute CareTransformation Act of 2014 (IMPACT Act) to further develop and refinethe percentage of residents or patients with pressure ulcers that are new or worsened and language modifications being explored with the term “PressureInjury.” CMS seeks feedback on potential updates to measure specifications and items used to calculate the quality measure. Visit the Public Comment webpagefor more information.

CMS Issues Interim Final Rule to Delay Inclusion of U.S. Territories in Definitions of States and United States

CMS published the Covered Outpatient Drug Final Rule with Comment Period in the Federal Register on Feb. 1, 2016. As part of thatfinal rule with comment, CMS amended the regulatory definitions of “States” and “United States” to include the U.S. territories (American Samoa, theNorthern Mariana Islands, Guam, the Commonwealth of Puerto Rico and the U.S. Virgin Islands) beginning April 1, 2017. However, the agency said thoseterritories could not be ready to implement the program by this date.

Therefore, CMS issued an Interim Final Rule with comment period that delays the inclusion of the territories in the definitions of “States” and “UnitedStates” from April 1, 2017, until April 1, 2020, which is effective on Nov. 15, 2016. There is a 60-day comment period that will end on Jan. 17, 2017.

For more information visit theCovered Outpatient Drugs Policy page on Medicaid.gov.

CMS Issues Proposed Rule for Medicaid Managed Care Plans

CMS has issued a new proposed rule detailing regulations for pass-through payments to providers from Medicaid managed care plans. The guidance builds onthe Medicaid managed care rule finalized by the Obama administration in May.

Read the proposed rulehere. It is scheduled to bepublishedin the Federal Register on Nov. 22.

6. Reports

Urban Institute Report Reveals Possible Implications of Partial ACA Repeal Through Reconciliation

According to Urban Institute, immediate partial repeal of the Affordable Care Act (ACA) through budget reconciliation would double the number of uninsuredby 2019. Since only components of the law with federal budget implications can be changed through reconciliation, this approach would permit elimination ofthe Medicaid expansion, tax credits and the individual and employer mandates. Urban Institute projects that the individual insurance market would collapse.The report also estimates that working-class white families would be the most heavily affected demographic.

To see the full report, click here.

Kaiser Family Foundation: 11 Million Medicaid Enrollees Newly Eligible Due to Expansion

According to Kaiser Family Foundation, an estimated 11 million Medicaid enrollees were newly eligible because of expansion in 2015. KFF’s analysis suggeststhat about 75 percent of Medicaid enrollees in 2015 who got covered since summer 2013 were newly eligible. The report also notes that loss of Medicaidcoverage could reverse the progress in reducing the uninsured. This is an implicit reproach to some conservatives who argue that the ACA’s effects areoverstated.

To see the full report, click here.

GAO Recommends Ways to Improve Nursing Home Compare

GAO recently recommended ways CMS can improve the Nursing Home Compare website. Nursing Home Compare is an online tool that allows people to research andcompare nursing homes using a rating system. GAO found that most people think the site is helpful, but it is not perfect. For example, it lacks some keyinformation, such as consumer satisfaction scores.

CMS runs the site, and GAO recommended four ways CMS can improve it and make it a better tool for consumers, including that CMS establish a process toevaluate and prioritize website improvements, add information to the Five-Star System that allows homes to be compared nationally, and evaluate thefeasibility of adding consumer satisfaction data. HHS agreed with three of GAO’s recommendations, but did not agree to add national comparison information.

To see the full report, click here.

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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