Washington Healthcare Update

December 19, 2016

Pardon Our Dust

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This Week: Congress has adjourned…The administration may release a few more regulations between now and the end of the year…Congressional staff have turned to lookingahead to next year and how the Affordable Care Act will be repealed, and what the replacement and transition might be.

*In lieu of a newsletter on Monday the 26th, we will be putting out an early issue this week that focuses on what is next in Congress. The newsletterwill resume normal scheduling on January 9th.*

1. Congress


The House has adjourned for the holidays.


The Senate has adjourned for the holidays.

2. Administration

3. Courts

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


The House has adjourned for the holidays.


The Senate has adjourned for the holidays.

Sen. Grassley Urges Trump to Increase Importation of Drugs

On Dec 13, Sen. Charles Grassley (R-IA) urged President-elect Donald Trump to use agency authority to increase the importation of drugs from othercountries to help bring down the cost of drugs in the United States. He also suggested the Centers for Medicare and Medicaid Services (CMS) and the Foodand Drug Administration (FDA) could do more to help control drug prices. Grassley also said the Federal Trade Commission (FTC) needs to step up itsscrutiny of the pharmaceutical market.

Grassley noted Trump’s recent discussion with Time, in which the president-elect said he was going to bring down drug prices. In his letter,Grassley said he shares those concerns, adding that a “lack of drug options in the marketplace, drug company anti-competitive behavior, regulatory backlogsat the Food and Drug Administration (FDA), inefficient and ineffective government bureaucracies, and poor corporate decisions have all contributed to thecurrent crisis.”

He cited Mylan’s EpiPen, Turing Pharmaceuticals’ AIDS drug Daraprim and Valeant Pharmaceuticals’ heart drug Isuprel as examples of extreme price spikes.EpiPen’s 400 percent increase, from $52 to $600 since 2007, drew widespread consumer frustration. Grassley, who chairs the Senate Judiciary Committee, islooking into Mylan’s classification of EpiPen as a generic, which cost Medicaid hundreds of millions of dollars in rebates.

Grassley asked the incoming administration to work with lawmakers on legislation to address anti-competitive behavior and reduce regulatory burdens.Grassley also asked Trump to cooperate more fully with congressional requests than has been the case with the Obama administration, and noted that CMS andthe Justice Department would not testify at a hearing on Mylan and EpiPens that Grassley had planned.

Finance Republicans Seek Input on Future of Medicaid in Letter to Republican Governors Association

In a Dec. 13 letter,Senate Finance Committee Republicans requested input from Republican governors on how to provide states with the flexibility to design and operateinnovative Medicaid programs in a fiscally responsible way. The letter, led by Chairman Orrin Hatch (R-UT), was sent to the Republican GovernorsAssociation, and announced the committee will convene a roundtable discussion in January 2017 with state governors on the future of the Medicaid program.

“Even before the most recent expansion resulting from the Affordable Care Act (ACA), the Medicaid program was plagued by quality issues, states werestymied in their attempts to utilize innovative solutions to improve patient care, and both federal and state Medicaid spending was growing atunprecedented, and unsustainable levels,” the senators wrote. “We now find ourselves uniquely positioned to repeal the ACA, which was rife with failuresand the broken promise of lowering health care costs for the American people, and advance alternatives to it. … In addition, we recognize that we have theopportunity to reflect on flexibilities that states have gained in recent years as well as the factors that inhibit states from pursuing innovations andresponding to the unique needs of their Medicaid beneficiaries. To that end, we will convene a small roundtable of Governors in January 17, to begin theimportant dialogue regarding the future of the Medicaid program.”

The letter was signed by Senate Finance Committee Chairman Orrin Hatch (UT) and Senators Chuck Grassley (IA), Mike Crapo (ID), Pat Roberts (KS), Mike Enzi(WY), John Cornyn (TX), John Thune (SD), Richard Burr (NC), Johnny Isakson (GA), Rob Portman (OH), Patrick Toomey (PA), Dan Coats (IN), Dean Heller (NV)and Tim Scott (SC).

2. Administration

CMS Finalizes 2018 Obamacare Rules

On Dec. 16, CMS released the final 2018 notice of benefit and payment parameters, a major regulation that sets policy for the health care law’s exchangesand other insurance programs.

The 465-page rule outlines changes to the ACA risk adjustmentmodel, standardized plan benefits and special enrollment periods among other topics.

For more information, click here.

CMS Drops Medicare Part B Proposal

The Obama administration has decided to drop its controversial test of new ways of paying for often costly drugs in Medicare Part B. The proposal, aimed atreducing drug spending, spurred a heavy lobbying campaign against it, and sharp criticism from Congress.

The Part B drugs are administered by physicians and include costly medications for cancer and other diseases.

CMS Unveils New Quality Sites for Rehab Facilities, Long-Term Care Hospitals

On Dec. 14, CMS unveiled new Compare websites for both Inpatient Rehabilitation Facilities (IRFs) and Long-Term Care Hospitals. The new websiteswill allow the public to compare metrics for more than 1,100 rehab facilities and 420 long-term care hospitals across the country. Measures that will bereported on the websites relate to patient pressure ulcers and unplanned readmissions within 30 days of discharge.

For more information, click here.

Signup Period for Health Insurance Extended Through Dec. 19

The deadline to sign up for Obamacare coverage starting Jan. 1 has been extended for four days, until Dec. 19, amid high volume on the HealthCare.govwebsite and the call center. Nearly 1 million people have left contact information to hold a place in the signup line, HealthCare.gov CEO Kevin Counihansaid.

HHS Finalizes Rule to Protect Abortion Providers From State Defunding

On Dec. 14, the Obama finalized a rule on the Title X program that is designed to shield abortion providers against state defunding efforts. The regulationwould ban grant recipients from prohibiting family-planning providers if the basis for those decisions is not related to their ability to administerservices. The Title X program provides funding for a broad array of family planning services, including STD screening and treatment, but funding is notused to pay for abortions.

According to HHS, 13 states since 2011 have taken actions to restrict participation by family planning providers in Title X because they provide abortions.Planned Parenthood has often been the subject of defunding actions at the state level and in Congress.

However, abortion rights supporters acknowledged the final rule may be short-lived. Republican sources have already said the incoming Trump administrationcan quickly undo this rule. Republican lawmakers next year are also expected to act quickly to cut off Planned Parenthood’s federal funding.

CMS Announces New Medicare-Medicaid ACO Model

On Dec. 15, the Centers for Medicare and Medicaid Services (CMS) announced the Medicare-Medicaid Accountable Care Organization (ACO) Model, a newinitiative designed to improve the quality of care and lower costs for beneficiaries who are dually eligible for Medicare and Medicaid. Through the model,CMS intends to partner with interested states to offer ACOs the opportunity to take on accountability for both Medicare and Medicaid costs and quality fortheir beneficiaries.

In current Medicare ACO initiatives, beneficiaries who are Medicare-Medicaid enrollees may be attributed to ACOs. However, Medicare ACOs often do not havefinancial accountability for the Medicaid expenditures for those beneficiaries. The Medicare-Medicaid ACO Model will allow Medicare Shared Savings ProgramACOs to take on accountability for the quality of care and both Medicare and Medicaid costs for Medicare-Medicaid enrollees.

CMS is accepting letters of intent from states that wish to work with CMS to design certain state-specific elements of the model. The model is open to allstates and the District of Columbia that have a sufficient number of Medicare-Medicaid enrollees in fee-for-service Medicare and Medicaid. CMS will enterinto participation agreements with up to six states with preference given to states with low Medicare ACO saturation. Once a state is approved toparticipate in the model, a request for application will be released to ACOs and health care providers in that state.

For more information on the Medicare-Medicaid ACO Model, including a fact sheet, click here.

OASIS-C2 Approved by OMB for Home Health Quality Reporting Program

On Dec. 9, CMS received approval for the OASIS-C2 form, developed to accommodate new data being collected for the Home Health Quality Reporting Program insupport of the Improving Medicare Post-Acute Care Transformation Act (IMPACT Act). Effective Jan. 1, 2017, HHA providers and vendors will begin using theOASIS-C2 in submitting assessments.

The guidance manual for OASIS-C2 is available here.

CMS Releases Its Person and Family Engagement Strategy

On Dec. 13, CMS released its Person and Family Engagement Strategy, one of the six goals outlined in theCMS Quality Strategy. The goal of the PFE Strategy is to create a new health care system that proactively engages people and caregivers in the definition, design and deliveryof their care.

The PFE Strategy will serve as a guide for the implementation of person and family engagement principles and strategies throughout CMS programs. Thisstrategy will expand the awareness and practice of person and family engagement by providing the following goals and objectives:

  • Goal 1 : Actively encourage person and family engagement along the continuum of care within the broader context of health and well-being in the communities in which people live.
  • Goal 2: Promote tools and strategies that reflect person and/or family values and preferences and enable them to actively engage in directing and self-managing their care.
  • Goal 3: Create an environment where persons and their families work in partnership with their health care providers to develop their health and wellness goals informed by sound evidence and aligned with their values and preferences.
  • Goal 4: Develop meaningful measures and tools aimed at improving the experience and outcomes of care for persons, caregivers and families. Also, identify person and family engagement best practices and techniques in the field that are ready for widespread scaling and national integration.

For more information,click here.

CMS Releases Interim Final Rule for Medicaid Dialysis Facilities

On Dec. 13, CMS released aninterim final rule requiring new disclosures for Medicare dialysis facilities that helppatients pay their premiums either directly or through a nonprofit charity or other third-party payer. CMS also announced it will pilot its pre-enrollmentverification system for special enrollment periods in all federally facilitated marketplace (FFM) states and counties starting in June 2017.

Fifty percent of new applicants will be randomly selected for the pilot, which will include all special enrollment categories. Applicants in thepilot—which was first announced in September—will still be able to apply and select a plan, but their enrollment will be pended until the consumer submitsdocumentation proving eligibility. Applicants will have 30 days to provide the information. Once the document has been provided, the FFM will send theapplication to the issuer, and coverage can begin once payment is received. CMS will train navigators and other enrollment assisters as well as agents andbrokers on how to help consumers, and will add instructions to HealthCare.gov.

CMS plans to evaluate the impact of pre-enrollment verification on the risk pool using data on 2017 claims that will become available in the spring of2018, and will also look at how the pilot affects enrollment and other metrics on an ongoing basis.

CMS Releases Final Medicare Outpatient Observation Notice

On Dec. 9, CMSposted the final Medicare OutpatientObservation Notice after withdrawing a notice the agency said was posted prematurely earlier in the week.

The final notice, required under the Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act, is a standard form that hospitalsand critical access hospitals must provide to beneficiaries who receive observation services to let them know they are receiving outpatient care and havenot been admitted to the hospital. The final notice also lays out the potential consequences for beneficiaries of receiving outpatient care.

Hospitals have 90 days to implement the new notice and must provide it to beneficiaries under observation starting March 8.

3. Courts

Former Pharma Executives Charged in Price-Fixing Case

The Justice Department has charged two former senior executives with Heritage Pharmaceuticals for their roles in alleged conspiracies to fix prices forcertain generic drugs. Former company CEO Jeffrey Glaze and Jason Malek, the company’s former president, were also accused of rigging bids and allocatingcustomers for an antibiotic and a diabetes drug. The company ran its antibiotic scheme from as early as April 2013 until at least December 2015 and fixedprices for the diabetes drug between April 2014 and December 2015, DOJ said.

Attorneys General to Sue Heritage for Collusion in Generic Market

Nearly two dozen state attorneys general have named New Jersey-based Heritage Pharmaceuticals and other companies in a lawsuit accusing them of conspiringto increase generic drug prices.

The officials, including New York Attorney General Eric Schneiderman, accuse the companies of committing significant harm to the nation’s health caresystem by artificially increasing the price for the antibiotic doxycycline hyclate and glyburide, an oral diabetes medication, according to a complaintfiled under seal in U.S. District Court in Connecticut.

The suit also accuses Aurobindo Pharma USA, Inc.; Citron Pharma, LLC; Mayne Pharma (USA), Inc.; Mylan Pharmaceuticals, Inc.; and Teva Pharmaceuticals USA,Inc., of colluding with their competitors at “industry dinners,” “girls’ nights out,” lunches and parties, and through numerous and frequent telephonecalls, emails and text messages.

Fearing that prosecutors might one day catch on, many of these communications were done in person or via text to avoid creating a record. Heritage isaccused of being the ringleader, according to the court filings.

The U.S Justice Department on Wednesday charged two Heritage executives with conspiring to fix prices on generic drugs. Jeffrey Glazer, a former chiefexecutive officer of Heritage, and Jason Malek, an ex-president, are preparing to plead guilty and cooperate with investigators.

The criminal charges and the civil suit stem from a sweeping two-year investigation into the pricing of generic drugs. The investigation began inConnecticut. Aside from Schneiderman, the attorneys general participating in the suit are from Connecticut, Delaware, Florida, Hawaii, Idaho, Iowa, Kansas,Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Nevada, North Dakota, Ohio, Pennsylvania, Virginia and Washington.

Read the complainthere.

Supreme Court Declines to Hear Apotex v. Amgen

On Dec. 12, the U.S. Supreme Court declined to hear a challenge to anappeals court ruling that effectively gave brand drugmakers an additional six months of marketing protection from inexpensive biosimilars.

Apotex had asked the high court to reverse the Federal Circuit’s July ruling that the company had to wait until it received FDA approval of its biosimilarto Amgen’s Neulasta before it could give Amgen the required 180 days’ notice of its intent to launch the copycat drug. Apotex had argued it could file that notice earlier so that it couldlaunch the drug immediately following FDA’s approval.

However, the Supreme Court could still weigh in on the issue, which will affect how quickly cheaper versions of some of the most expensive drugs couldreach patients. The Supreme Court must still decide whether to take up Sandoz v. Amgen. In that case, Sandoz asked the Supreme Court to overturn anidentical decision from the Federal Circuit.

Thesolicitor general weighed in and said the high court should take up Sandoz v. Amgen and overturn the FederalCircuit’s decision that the 180-day notice must come after FDA approves the biosimilar.

Amgen also asked the Supreme Court to reverse the appeals court’s decision that biosimilar makers do not have to engage in a patent-sharing process withbranded biologic makers. The solicitor general said that part of the Sandoz v. Amgen ruling should stand.

4. State Activities

Arkansas: CMS Approves Governor’s Proposed Medicaid Expansion Changes

On Dec. 7, Arkansas Gov. Asa Hutchinson said that the Obama administration has approved most of his proposed changes to the state’s Medicaid expansion program. Though CMS did not grant all of the governor’s more conservative requests for the program, it will allow the state to charge premiums andrequire certain recipients to look for a job. CMS did not approve Hutchinson’s proposal to provide assistance to all businesses that provide healthinsurance to their workers.

California: California Exchange Extends Enrollment Deadline

California’s Obamacare exchange is pushing back the deadline to enroll in coverage starting in the new year, citing an increase in demand. The new signupdeadline for Jan. 1 coverage is midnight on Dec. 17, two days later than the original Dec. 15 deadline. State exchange officials said more than 25,000 newenrollees chose plans on Monday and Tuesday, nearly double the 13,000 people who selected plans during the same dates last year.

More than 153,000 new customers have selected Obamacare plans in California since enrollment began six weeks ago. Those figures are not included in CMSenrollment updates for HealthCare.gov states. In the 39 states using the federal enrollment website, more than 4 million people selected plans between Nov.1 and Dec. 10. Most states set Dec. 15 as the deadline to enroll in coverage starting Jan. 1, although some did not. For instance, the deadline inMassachusetts is Dec. 23.

In other news, California alone accounts for nearly a third of the adults who could lose Medicaid coverage if the ACA is repealed. The Kaiser FamilyFoundation (KFF) analysis,which relies on Medicaid enrollment by state in 2015, shows nearly 3.5 million California adults have become newly insured through the expansion effort.That is a significant portion of the statewide Medi-Cal population of more than 13 million, and far more than any other state.

California: Sen. Hernandez Reintroduces Drug Pricing Legislation

California Sen. Ed Hernandez, who chairs the Senate Committee on Health, recharged his fight against rising drug prices by reintroducing legislation forthe 2017-18 session that would require pharmaceutical companies to provide advance notification of their price increases. The Democrat pulled his previouseffort, S.B. 1010, from consideration in August afteramendments had watered down the legislation too much.

The details of the new version, S.B. 17, have not been hammered out, but the previous version would have required drugmakers to warn health insurers andstate programs in writing if they planned to raise drug prices by 10 percent or more, or if a drug was going to cost more than $10,000 for an annual courseof treatment.

Louisiana: State Prisons to Enroll Ex-Inmates in Medicaid Beginning Jan. 1

In January, as part of the state’s Medicaid expansion program, seven state-owned prisons will begin automatically enrolling prisoners in Medicaid on theday they are released. Implementation of the enrollment program will start roughly six months after expansion took effect under Democratic Gov. John BelEdwards. Louisiana is among a handful of states—including Ohio and Massachusetts—that have inmate Medicaid enrollment programs in place. The LouisianaDepartment of Health said it will also identify high-need inmates and assign them case managers to make sure they receive sufficient medical orbehavioral care.

Oregon: Gov. Brown Trying to Secure Medicaid Waiver Before Trump Takes Office

Oregon Gov. Kate Brown is attempting to get CMS’s approval for a Medicaid waiver that would extend the state’s coordinated care organizations programbefore Trump takes office. The waiver would extend Oregon’s system for coordinated care organizations, which is scheduled to sunset next year.

Vermont: Vermont Receives Start-up Funding for All-Payer Waiver

On Dec. 15, CMS issued a notice officially outlining the amount of start-up Medicare funding Vermont will receive for its all-payer waiver, which wasapproved in October and will begin in January. The state will get $9.5 million to help achieve the health outcomes and financial goals under the model. Thewaiver aims to contain health care cost growth across Medicare, Medicaid and private insurance. Vermont will seek to limit annual cost growth to 3.5percent per capita.

To read the CMS notice, click here.

Washington: Letter Urges Republican Lawmakers Against Dismantling Obamacare

Washington state Gov. Jay Inslee and insurance commissioner Mike Kreidler are urging Republican lawmakers not to pursue efforts to dismantle Obamacare ormake cuts to Medicaid and Medicare. In a letter sent toHouse Majority Leader Kevin McCarthy, Inslee and Kreidler say that “it would be a moral outrage to repeal the health care policies that are so beneficialto millions of Washingtonians without providing an alternative system to make sure all our families continue to have access to affordable care.” McCarthyrecently requested feedback from state officials on Congress’s Obamacare repeal efforts.

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 eas