Washington Healthcare Update

March 13, 2017

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This Week: House Ways and Means Committee and Energy and Commerce Committee markup “repeal and replace” bill…Meanwhile while all eyes were on the other two committees, House Education and Workforce Committee marked up other health-related bills…Trump talks drug negotiation.

Heath Reform Takeaways

  • Medicaid provisions in the replacement bill raise concerns with enough Republican senators to be problematic
  • House Freedom Caucus met with the president and wants changes in the bill
  • Congressional Budget Office score expected early in the week, but already others are estimating how many will lose coverage

1. Congress



2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


President Trump Supports Drug Price Negotiation and Drug Importation Bills

In a March 8 meeting with Democratic lawmakers, President Donald Trumpexpressed his continued support for government negotiation of drug pricesin Medicare Part D. The hour-long meeting included Trump, Rep. ElijahCummings (D-MD), Rep. Peter Welch (D-VT), Health and Human Services (HHS)Secretary Tom Price and the president of Johns Hopkins Hospital, Redonda G.Miller.

Rep. Cummings also said Trump would go further with drug negotiations thanRep. Cumming’s legislation does. Trump said he wants to negotiate for anydrug the government purchases, not just those covered by the Medicare PartD program.

Cummings’ legislation would allow the HHS secretary to negotiate drugprices in Medicare Part D and to establish a formulary. The CongressionalBudget Office (CBO) has found that government drug price negotiations alonewould have a limited effect on Medicare spending, but that permittingnegotiations in conjunction with a formulary could give HHS “the ability toobtain significant discounts in negotiations with drug manufacturers,”asummary provided by Cummings’ office says.

The bill would also give Part D plans additional tools to secure steeperdiscounts on drugs and would establish a fallback process if negotiationsare unsuccessful. Additionally, the bill would require the inclusion of atleast one drug to treat each clinical condition and preserve the appealsprocesses for drugs not covered by the formulary. It would also preserveprotections in Part D that mandate certain types of drugs be covered.Currently, all Part D plans must cover all medicines used to treat certainconditions, such as cancer and depression.

Finally, the bill would shift dual eligibles to the Medicaid drug benefit.Because drug companies are required to provide mandatory discounts to theMedicaid program, but not to Part D, this would save taxpayers $145 billionover 10 years, CBO estimates. Dual eligibles were switched to Medicare PartD’s drug benefit when the program was first created in 2006.

Cummings described the meeting at the White House as productive, addingthat Trump committed to reviewing the proposal and seemed enthusiasticabout the idea.

Trump also volunteered his support for adrug importation bill introduced by Cummings and Sen. BernieSanders (I-VT).

House Ways and Means Marks Up Repeal Bill

As markups began on the American Health Care Act—the House Republicanlegislation to repeal and replace the Affordable Care Act—Democrats forcedmeaningless votes on the House floor and in two House committees,and even required committee clerks to read the entire text of the bill outloud at one point—all in an effort to stop Republicans from fulfillingtheir campaign pledge to repeal the Affordable Care Act.

The House Ways and Means Committee’s March 8 markup focused on taxprovisions in the American Health Care Act. In the markup Democrats soughtto paint the legislation as a subtle attack on Medicare, pointing to a taxprovision that they warned would drain money from the program’s trust fund.

The repeal legislation—which eliminates a slew of taxes imposed byObamacare—would roll back a 0.9 percent Medicare tax on high earners.Eliminating that tax would take away $170 billion in anticipated revenuesfrom the Medicare trust fund, Rep. John Larson (D-CT) said, shortening itssolvency by three years. Rep. Terri Sewell (D-AL) added that the provisionviolates President Donald Trump’s pledge not to touch Medicare.

Democrats on the panel hammered the House bill throughout the day as agiveaway for the rich, who would profit at the expense of the poor andelderly. But committee Chairman Kevin Brady (R-TX) objected to linkingMedicare to the repeal effort, arguing that House Republicans are simplytrying to halt the rising premiums seniors have to pay under Obamacare.

Ultimately, the bill was reported out early in the morning on March 9 witha party line vote.

House Energy and Commerce Committee Marks Up for 27 Hours

The House Energy and Commerce Committee reported out its portion of theObamacare repeal legislation in a party line 31-23 vote. The committee metfor 27 straight hours with recesses only for votes on the floor. Democratshad filed more than 100 amendments. The committee has jurisdiction overinsurance portions of the bill as well as Medicaid.

Republicans on the panel knocked down more than a dozen Democraticamendments to the bill.

Rep. Joe Barton (R-TX) introduced—and later withdrew—two amendments tospeed up the repeal of the Medicaid expansion and put an end date on theenhanced federal match. These two amendments are supported by the HouseFreedom Caucus and the Republican Study Committee—conservative Housecaucuses that oppose the bill in its present form. They are expected to bepart of the debate as the measures move toward consideration by the House.

House Education and Workforce Marks Up Association Health Plans and Wellness Program Legislation

On March 8, the House Committee on Education and the Workforce, chaired byRep. Virginia Foxx (R-NC), approved three legislative proposals relating toassociation health plans, and issues related to employer-sponsored healthinsurance, including employee wellness plans. The three bills approved bythe committee are:

  • The Small Business Health Fairness Act (H.R. 1101), introduced by Reps. Sam Johnson (R-TX) and Walberg, which would permit small businesses to band together through association health plans. The proposal passed the committee by a vote of 22 to 17.
  • The Self-Insurance Protection Act (H.R. 1304), introduced by Rep. Phil Roe (R-TN), would reaffirm that stop-loss insurance is not health insurance and clarify that regulators cannot redefine “stop-loss.” It passed the committee by voice vote.
  • The Preserving Employee Wellness Programs Act (H.R. 1313), introduced by Chairwoman Foxx, would provide employers the legal certainty they need to offer employee wellness plans. The bill passed the committee by a vote of 22 to 17.

For more information on Medicaid and other changes please see: “GOP Healthcare Reform Proposal: Significant Changes for Employers” and “Washington Update: Congress Proposes Overhauling Medicaid.”

AMA Criticizes GOP Obamacare Repeal Bill

The American Medical Association—the nation’s largest physicianorganization—opposes the House Republicans’ repeal bill, criticizingprovisions it says will take away coverage from low-income Americans andmake it harder to access care.

The AMA listed a series of concerns with the legislation in a letter to House lawmakers March 8. It highlighted thedisproportionate impact that capping funding for states’ Medicaid programscould have on those most in need of care.

In its letter, the AMA also criticized the bill for defunding PlannedParenthood, arguing that cutting off money to the organization wouldrestrict patients’ choice of providers.

AHIP Concerned GOP Repeal Bill Could Disrupt Marketplace

America’s Health Insurance Plans (AHIP) is raising concerns that the HouseGOP’s Obamacare repeal bill could further destabilize the individual marketand disrupt vital coverage for Medicaid enrollees.

In a March 8 letter to the chairs of the Ways andMeans and Energy and Commerce committees, the lobbying group is calling forchanges to the structure of the bill’s tax credits. Specifically, AHIPwants credits to be based on both age and income, instead of only on age asRepublicans proposed. The group believes additional assistance should beavailable for individuals with incomes below 400 percent of the povertythreshold, as is the case under Obamacare.

AHIP is also raising concerns about the adequacy of Medicaid funding undera new system that would begin in 2020. Instead of the current open-endedentitlement, states would get capped payments based on the number ofMedicaid enrollees.

The new Medicaid funding system “could result in unnecessary disruptions inthe coverage and care beneficiaries depend on,” the letter states.

The letter does admit that the proposed legislation includes a number ofpositive steps “to help stabilize the market and create a bridge to areformed market during the 2018 and 2019 transition period. These stepsinclude continuing premium tax credits through the transition; funding forstates to help stabilize risk pools; more flexibility for states and healthplans to offer consumers more choices; and permanently eliminating manytaxes that drive up consumer costs, including the health insurance tax.”

Hospital Groups Do Not Support GOP Obamacare Repeal Bill

The nation’s largest hospital groups state they cannot support the ACArepeal-and-replace bill—the American Health Care Act—and warn that it couldcreate “tremendous instability” for Americans seeking insurance coverage.

The groups also criticized Republicans’ push to restructure Medicaid bycapping its federal funding, a shift that they said would make it moredifficult to care for the newly uninsured.

“Absent Congressional Budget Office analysis, our assessment of thislegislation as currently drafted is that it is likely to result in asubstantial reduction in the number of Americans able to buy affordablehealth insurance or maintain coverage under the Medicaid program,” thelettersays.

The American Hospital Association, America’s Essential Hospitals,Association of American Medical Colleges, Catholic Health Association ofthe United States, Children’s Hospital Association, Federation of AmericanHospitals and National Association of Psychiatric Health Systems signedonto the letter.


Four GOP Senators Express Concerns Over House Health Care Draft

Four Republican senators from states that expanded Medicaid under Obamacaresay they cannot support a draft House repeal bill because it will notprotect people enrolled in the health entitlement—a move that could hurtthe legislation’s prospects of passing.

“We are concerned that any poorly implemented or poorly timed change in thecurrent funding structure in Medicaid could result in a reduction in accessto life-saving health care services,” Sens. Lisa Murkowski of Alaska, CoryGardner of Colorado, Rob Portman of Ohio and Shelley Moore Capito of WestVirginiawrote in a letterto Majority Leader Mitch McConnell. “The February 10th draft proposal fromthe House does not meet the test of stability for individuals currentlyenrolled in the program and we will not support a plan that does notinclude stability for Medicaid expansion populations or flexibility forstates.”

Medicaid expansion has emerged as a key issue in the debate over the healthlaw. Several Republicans say they are worried that Americans who obtainedcoverage under the program would suddenly lose their health insurance andbe left without options if the program is rolled back.

The House bill would freeze the Medicaid expansion in 2020 and phase it outover time. Nationwide, more than 11 million people got Medicaid through theexpansion under Obamacare. In Ohio alone, some 700,000 residents obtainedinsurance because of the state’s expansion.

Senate Republicans can absorb no more than two votes against the bill ifthey hope to pass it under an expedited procedure that requires a simplemajority vote, with Vice President Mike Pence serving as the potentialtiebreaker.

2. Administration

FDA to Hold Public Meeting on Patient-Focused Drug Development for Autism

FDA will hold a patient-focused drug development meeting on autism as partof its Patient-Focused Drug Development Initiative, which aims to getpatient perspectives on specific disease areas. The agency is seekingcomments from patients and patient representatives—children with autism andtheir parents—on the symptoms of autism that matter most to them and oncurrent approaches to treating autism.

In its Federal Registernotice of the meeting, which will be held May 4, FDA asks nine main questions addressing autismsymptoms and the daily impact that matters most to patients, and patients’perspectives on current treatment options.

The meeting will be held at FDA’s White Oak Campus in Silver Spring, MD.Registration ends April 24, and the deadline for stakeholders to provideinput and answers to the discussion questions in the Federal Registercloses on July 5.

Autism is one of four diseases areas for which FDA has planned to holdmeetings in 2017, and the second one that will be held this year. The firstmeeting of the year is scheduled for April 6 and will discuss sarcopenia.Since 2013, FDA has held 20 meetings on various diseases.

3. State Activities

California: GOP Repeal Bill Could Impact Women’s Reproductive Health

The GOP repeal bill, which defunds Planned Parenthood, could have a hugeimpact on women’s reproductive health. Planned Parenthood affiliates inCalifornia receive $253 million in federal funds, amounting to 80 percentof their operating budgets. The House bill’s tax credit scheme also couldbe problematic because of a 1981 state constitutional ruling requiringhealth insurers that cover maternal care to also cover abortion services.The bill would make virtually all California health plans ineligible fortax credits, said Beth Parker, chief legal counsel for Planned ParenthoodAffiliates of California.

Florida: Hospitals Could Lose $308 Million in Medicaid Funds

Florida hospitals could lose $308 million in Medicaid funds under proposedreductions outlined by the Senate Health and Human Services AppropriationsSubcommittee on March 8. The majority of the proposed cuts come from a $100million general revenue reduction to hospital rate enhancements which, whencombined with the loss of matching federal dollars, equals a $257 millionhit. The cut would affect about 70 hospitals, which all provide largeamounts of charity care.

New Jersey: Gov. Christie Waiting to See How GOP Repeal Process Pans Out

New Jersey Gov. Chris Christie said he is taking a wait-and-see approach tothe GOP repeal bill, which could cost the state billions of dollars infederal funding. More than 500,000 residents gained coverage throughChristie’s decision to expand Medicaid. The governor said he was “heartenedby the idea” that the federal funding match wouldn’t change for four yearsand “would give folks a chance to adjust to whatever it would beafterwards.”

New York: GOP Repeal Bill Could Cost New York Billions of Dollars Per Year

The Obamacare repeal bill, the American Health Care Act, could cost NewYork $240 million this year and $2.4 billion per year beginning in 2021,the state Department of Health estimates. The analysis shows the largestimpact would come from the cap on federal Medicaid spending and theMedicaid expansion phase-out beginning in 2020. Lt. Gov. Kathy Hochul wasin Washington last week to lobby the state’s Republican delegation.

4. Regulations Open for Comment

CMS Proposes Rule for Prosthetics and Orthotics Suppliers

On Jan. 11, CMS issued a proposed rule that would implement statutoryrequirements and specify: the qualifications needed for practitioners tofurnish and fabricate prosthetics and custom-fabricated orthotics, and forqualified suppliers to fabricate prosthetics and custom-fabricatedorthotics; accreditation requirements that qualified suppliers must meet inorder to bill for prosthetics and custom‑fabricated orthotics; requirementsthat an organization must meet in order to accredit qualified suppliers tobill for prosthetics and custom-fabricated orthotics; and a timeframe bywhich qualified practitioners and qualified suppliers must meet theapplicable licensure, certification and accreditation requirements. Thisrule would also remove the exemption from quality standards andaccreditation that is currently in place in accordance with Section1834(a)(20) of the Act for certain practitioners and suppliers who furnishor fabricate prosthetics and custom‑fabricated orthotics. In addition, thisrule also includes authority for the Centers for Medicare & MedicaidServices (CMS) to revoke the Medicare enrollment of Durable MedicalEquipment, Prosthetics, Orthotics and Supplies (DMEPOS) suppliers that submit claims for items that donot meet the requirements of the statute and this proposed rule.

Only qualified practitioners who furnish or fabricate prosthetics andcustom‑fabricated orthotics and qualified suppliers that fabricate or billfor prosthetics and custom‑fabricated orthotics would be subject to theserequirements.

CMS will accept comments on the proposed rule until March 13, 2017, andwill respond to comments in a final rule.

To see the proposed rule,click here.

FDA Releases Draft Guidance for Interchangeable Biosimilars

On Jan. 17, FDA outlined the criteria companies must meet to get a copycatbiologic deemed interchangeable with its branded counterpart, acertification that paves the way for the cheaper products to beautomatically substituted at the pharmacy level under state laws.

To get this designation, a biosimilar sponsor must show that its productcan be expected to produce the same clinical result as the branded biologicin any given patient, for all of the drug’s approved uses, and that thereare no risks if a patient is switched back and forth between theinterchangeable biosimilar and the branded biologic,per draft guidancereleased by FDA.

Interchangeable biosimilars are expected to offer greater savings to thehealth system than biosimilars that lack this designation. Without theinterchangeability designation a doctor must proactively write aprescription for the biosimilar.

The guidance outlines the types of studies and scientific data thatcompanies will need to submit to FDA to get an interchangeable designation.When companies seek that designation, FDA recommends they seek approval forall of the branded biologic approved uses.

FDA is requesting comments on the draft guidance as well as a number ofquestions outlined in aFederal Register notice. FDA wants to know how it should regulate manufacturing changes ofinterchangeable products that occur after approval. The agency also wantsto know how it should handle interchangeable designations if a brandedbiologic gets another use approved for the drug, after the interchangeablebiosimilar is cleared by FDA.

FDA Releases Draft Guidance on Off-Label Drug Communication

On Jan. 17, FDAissued draft guidancethat gives drug and device companies more flexibility to communicateoff-label information about their products and avoid charges ofmisbranding. The new policy allows companies to promote a drug or devicewith information not on the agency-approved label as long as thatinformation is truthful and non-misleading and is consistent withFDA-approved labeling.

Companies have asked FDA for clarity on marketing policies after a 2012U.S. Court of Appeals decision ruled that under the First Amendment thegovernment could not prohibit and criminalize the truthful off-labelpromotion of FDA-approved drugs.

The guidance outlines how FDA will determine whether a company’scommunication is consistent with FDA’s required labeling. For example,companies will not be permitted to communicate information about the drugor device related to a use that has not yet been approved by FDA. They alsocan’t promote a patient population for the drug or device that has not beencleared by the agency.

The agency offers some examples of information companies could communicatethat could be consistent with its FDA-required labels. For example, FDAsaid companies can promote testimony of patients who used the drug for itsFDA-approved uses, such as the product’s effect on patients’ dailyactivities. Companies could also communicate long-term safety and efficacyinformation about products that were approved for chronic use based on asix-month trial, if the company now has data on the drug lasting a coupleof years, FDA added.

The guidance also outlines the type of scientific data companies need tosupport their off-label claims. Comments on the draft are due in 60 days.

CMS Proposes Average 0.25 Percent Hike for Medicare Advantage Plans

On Feb. 1, the Trump administration issued guidance that proposes updatesto the methodologies used to pay Medicare Advantage plans and Part Dsponsors. The guidance calls for raising Medicare Advantage payments anaverage of 0.25 percent.

Health plans take in roughly $200 billion a year from the government toprovide care for seniors enrolled in private Medicare plans. There arecurrently more than 18 million people enrolled in Medicare Advantage,accounting for roughly a third of all of the program’s beneficiaries. Morethan 1 million seniors have been added to private Medicare plans in thepast year, continuing a trend of robust growth that goes back a decade.

“These proposals will continue to keep Medicare Advantage strong and stableand provide high quality, affordable care to seniors and people living withdisabilities,” said Patrick Conway, acting administrator of the Centers forMedicare and Medicaid Services.

Obamacare included major cuts to Medicare Advantage—America’s HealthInsurance Plans puts the total figure at $200 billion—that were designed tobring payments more in line with traditional government-run Medicare. Lastyear, the federal government paid private plans an average of 102 percentof traditional fee-for-service costs per member.

UnitedHealth Group and Humana are the biggest national players, accountingfor roughly 40 percent of the Medicare Advantage market in 2015.

CMS will accept comments until March 3 and the final notice will be postedon April 3.

To read a fact sheet on the rate proposal,click here.

CMS Announces RFI for Input on Improving Pediatric Care

CMS announced Feb. 27 a Request for Information (RFI) seeking input onapproaches to improve pediatric care, specifically to improve the qualityand reduce the cost of care for children and youth enrolled in Medicaid andthe Children’s Health Insurance Program (CHIP). CMS is also exploringconcepts that encourage pediatric providers to collaborate withhealth-related social service providers at the state, tribal and locallevels and share accountability for health outcomes for children and youthenrolled in Medicaid and CHIP.

CMS is asking stakeholders to submit comments via email toHealthyChildrenandYouth@cms.hhs.govby 11:59 p.m. on March 28, 2017.

For more information about the RFI, visit theCMS Innovation Center website.

5. Reports

Brookings Analysis Finds CBO Will Predict 15 Million to Lose Coverage Under GOP Reform Bill

A new Brookings analysis predicts that Republicans’ health proposal woulderase about two-thirds of the coverage gains of the Affordable Care Actahead of the Congressional Budget Office score to be released this week.

“We conclude that CBO’s analysis will likely estimate that at least 15million people will lose coverage under the American Health Care Act by theend of the 10-year scoring window,” Loren Adler and Matthew Fiedler write.CBO previously estimated about 24 million Americans would gain coveragethrough Obamacare within the same time frame.

According to Brookings, which extrapolates from previous CBO scores, thebudget office will conclude that Republican plans to repeal the individualmandate would reduce coverage by 15 million and their proposed changes tothe Medicaid program would lead to “significant” coverage losses, likelyseveral million.

The net effect of the bill’s other provisions to change the insurancemarkets is unclear, but unlikely to mitigate those coverage losses,Brookings concludes.

Other analyses have projected the Republican bill would lead to significantdeclines in coverage, although they measured different time horizons andreported different figures. Standard & Poor’s this week estimated theprivate exchange market would shrink by 4 million by 2019 and Medicaidenrollment would fall by as much as 6 million by 2024.

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 communicat