Washington Healthcare Update

March 20, 2017

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This Week: Health reform advances haltingly…The president sends a budget toCongress…Secretary Price suggests states look at Section 1332 waivers.

Heath Reform Takeaways

  • CBO score arrived and raised concerns from some members about Medicaid cuts.
  • House conservatives attempt to use their leverage to force changes.
  • Changes being discussed are moving up the Medicaid expansion termination date, work requirements for Medicaid and more robust tax credits for the “54-64” group.
  • More Republican senators make clear they have concerns with the House bill.

1. Congress



2. Administration

3. State Activities

4. Regulations Open for Comment

5. Other

6. Reports

1. Congress


House Budget Committee Sends AHCA Forward, Vote Expected Thursday

By a narrow 19-17 vote, the House Budget Committee sent the bill to repealand replace the Affordable Care Act (ACA) through the committee March 16,keeping the legislation on track for a floor vote Thursday.

Strong opposition from House conservatives threatened to halt the bill.Ultimately three conservative members of the House Freedom Caucus—Reps.Dave Brat (R-VA), Mark Sanford (R-SC) and Gary Palmer (R-AL)—all votedagainst the measure for not going far enough to dismantle the AffordableCare Act.

Brat on Wednesday announced his opposition to the bill, while Palmer andSanford had not previously said how they would vote. Sanford, whooriginally voted to advance the bill, switched his vote to no whenit was clear the bill had enough support to pass.

Conservatives want a quicker phase-out of Medicaid expansion and theimposition of a work requirement for the program’s low-incomebeneficiaries.

The White House has hinted at compromises that could bring conservativesonboard ahead of a full House vote, including moving up the Medicaidexpansion phase out from 2020 to 2019.

Veterans’ Affairs Committee to Hold Hearing on Recruiting, Retaining Quality Providers

On March 22, the House Committee on Veterans’ Affairs will hold a hearingtitled “Healthy hiring: Enabling the VA to recruit and retain qualityproviders.”

To view the hearing,click here.

Appropriations Committee Holds Hearing on Early Childhood Education Programs at HHS

On March 16, the House Committee on Appropriations Subcommittee on Labor,Health and Human Services, Education and Related Agencies held a hearingtitled “Investing in the Future- Early Childhood Education Programs at theDepartment of Health and Human Services.”

The witnesses were as follows:

  • Jeanne Brooks-Gunn, Professor of Child Development and Education, Columbia University
  • Steven Dow, Executive Director, CAP Tulsa
  • Jennifer Garner, Trustee, Save the Children
  • Don Millican, Spokesman, George Kaiser Family Foundation

To view the hearing and read witness testimonies,click here.

Ways and Means Committee Holds Hearing on Maternal, Infant and Early Childhood Home Visiting Program

On March 15, the House Committee on Ways and Means Subcommittee on HumanResources held a hearing titled “Reauthorization of the Maternal, Infant,and Early Childhood Home Visiting (MIECHV) Program.”

The witnesses were as follows:

  • Beth Russell, Nurse Home Visitor, Penn Medicine Lancaster General
  • Rosa Valentin, Client, Penn Medicine Lancaster General
  • Eric Bellamy, Home Visiting Manager, Children’s Trust of South Carolina
  • Diana Rauner, President, The Ounce of Prevention Fund

To view the hearing and read witness testimonies,click here.

House GOP Announces Additional Health Care Reform Legislation

House Majority Leader Kevin McCarthy (R-CA) said the House will considerthe following legislation this week to reform America’s health care system:

  • The Competitive Health Insurance Reform Act (H.R. 372): this bill amends the McCarran-Ferguson Act to declare that nothing in that act modifies, impairs or supersedes the operation of antitrust laws with respect to the business of health insurance, including the business of dental insurance. Prohibitions against unfair methods of competition apply to the business of health insurance without regard to whether the business is for profit.
  • The Small Business Health Fairness Act (H.R. 1101): this bill would create an exemption from state regulations so association health plans could work across state lines.
  • The Protecting Access to Care Act (H.R. 1215): this bill would establish provisions governing health care lawsuits where coverage for the care was provided or subsidized by the federal government, including through a subsidy or tax benefit.
  • The Self-Insurance Protection Act (H.R. 1304): this bill amends the Public Health Service Act, the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code to exclude from the definition of “health insurance coverage” a stop-loss policy obtained by a self-insured health plan or a sponsor of a self-insured group health plan to reimburse the plan or sponsor for losses incurred in providing health benefits to plan participants in excess of a level set forth in the stop-loss policy.

The move toward association health plans has been supported by the NationalFederation of Independent Business, Chamber of Commerce and National RetailFederation (NRF). However, issuers and regulators have raised concernsabout association health plans. In a February policy brief, America’sHealth Insurance Plans (AHIP) expressed concern that exempting associationhealth plans from state regulation would lead to market instability andhigher premiums, eliminate consumer and patient protections and increasethe potential for fraud and abuse.

The National Governors Association also previously opposed the idea ofassociation health plans, saying they would raise premiums and threatenconsumers. The group currently has no formal position.

Energy and Commerce to Hold Hearing on PDUFA

This Wednesday, the House Energy & Commerce Committee will holda hearingon reauthorization of the Prescription Drug User Fee Act (PDUFA).

The hearing “on PDUFA will examine how this important user fee program hasbeen implemented since it was reauthorized in 2012 as part of the Food andDrug Administration Safety and Innovation Act (FDASIA),” said E&CChairman Michael Burgess. “I am encouraged to see that the proposedagreement between FDA and industry builds upon several key provisions inthe 21st Century Cures Act, and will further streamline the development andreview of innovative new drugs for patients.”

The PDUFA supports the review and regulation of innovative drug productsand helps ensure patients receive timely access to safe and effective newtherapies. The E&C Health Subcommittee recentlyheld a hearingexamining the Generic Drug User Fee Amendments (GDUFA) and the BiosimilarUser Fee Act (BsUFA), both of which also expire in September 2017.

For more information,click here.

Senate, House Democrats Raise Concerns About Flu Preparedness

On March 13, a number of House and Senate Democrats wrote a letter to HHSSecretary Tom Price and CDC Acting Director Anne Schuchat regarding areport about a surge in human infections of deadly bird flu in China. Thecongressmen say several Trump administration actions might harm thecountry’s preparedness for handling a flu outbreak, including the absenceof a nominee for CDC director and other HHS appointees who would handlepublic health issues.

The letter also raises concerns about President Trump’s questioning ofvaccine safety and congressional GOP plans to cut the ACA’s Prevention andPublic Health Fund. Congressmen want a series of questions answered byPrice and Schuchat by March 27.

To see the letter,click here.


Senate HELP Committee to Hold Hearing on FDA User Fee Agreements

On March 21, the Senate HELP Committee will hold a hearing on FDA user feeagreements with witnesses from the agency’s drug, biologics and devicecenters. Witnesses will talk about how the user fee agreements benefitpatients and how the FDA can continue to improve its performance.

The witnesses are as follows:

  • Janet Woodcock, MD, Director, Center for Drug Evaluation and Research, Food and Drug Administration
  • Peter Marks, PhD, Director, Center for Biologics Evaluation and Research, Food and Drug Administration
  • Jeffrey Shuren, MD, JD, Director, Center for Devices and Radiological Health, Food and Drug Administration

To view the hearing and read witness testimonies,click here.

Special Committee on Aging to Hold Hearing on Raising Grandchildren inthe Opioid Crisis

On March 21, the Senate Special Committee on Aging will hold a hearingtitled “Raising Grandchildren in the Opioid Crisis and Beyond.”

To view the hearing,click here.

Veterans’ Affairs Committee Holds Hearing on GAO’s High Risk List andthe VHA

On March 15, the Senate Committee on Veterans’ Affairs held a hearingtitled “GAO’s High Risk List and the Veterans Health Administration.”

The witnesses were as follows:

  • Debra Draper, PhD, Director of Health Care Team, the Government Accountability Office
  • Michael Missal, Inspector General, Department of Veterans Affairs
  • John Daigh, Jr., MD, CPA, Assistant Inspector General for Healthcare Inspections, Office of Inspector General
  • Carolyn Clancy, MD, Deputy Under Secretary for Health for Organizational Excellence, Department of Veterans Affairs
  • Jennifer Lee, MD, Deputy Under Secretary for Health for Policy and Services, Department of Veterans Affairs
  • Amy Parker, Executive Director of Operations, Office of Management, Department of Veterans Affairs

To view the hearing and read witness testimonies,click here.

Top Democrats Criticize HHS Plan to Fast-Track New Medicaid Waivers

Sen. Ron Wyden (D-OR) and Rep. Frank Pallone, Jr. (D-NJ)—ranking members ofthe Senate Finance Committee and House Energy and Commerce Committee,respectively—wrote a letter to HHS Secretary Tom Price criticizing the HHSplan to fast-track approvals of waivers looking to test different ways ofdelivering Medicaid funds.

In the letter, the ranking members said HHS must not approve “waivers basedon ideological and misguided policies that are not in line with Congress’longstanding intent for the Medicaid program.” Work requirements andcost-sharing, among other ideological proposals, are counterproductive inthe long term and hurt Medicaid families, who generally live on a budget ofless than $15,000 per year, the Democrats said.

Instead, waiver proposals must be judged on the Centers for Medicare andMedicaid Services’ stated principles: to strengthen coverage, expand accessto providers, improve health outcomes and increase the efficiency andquality of care for individuals, Wyden and Pallone said.

The Democrats wrote the letter after Price and CMS Administrator SeemaVerma sent theirown letterto state governors, describing the implementation and interpretation offederal rules governing Medicaid as “rigid and outdated” and described someof their plans to change how the federal program works.

Price and Verma said that the states are in the best position to assess theneeds of their Medicaid-eligible residents and that the current Medicaidframework often fails to properly account for demographic and geographicconsiderations, as well as health system variables that differ from stateto state.

Sen. Wyden Introduces Drug-Price Transparency Bill

On March 15, Sen. Ron Wyden (D-OR) introduced adrug-price transparency billthat would require pharmacy benefit managers (PBMs) in Medicaid to disclosetheir aggregate rebates provided by drug manufacturers, as well as theamount of those rebates that are passed on to health plans, thereforelowering prices for people who need prescription drugs.

The bill—the Creating Transparency to Have Drug Rebates Unlocked (C-THRU)Act—would direct CMS to post on its website the aggregate amount of rebatesthat pharmacy benefit managers receive from drug makers and the proportionof those rebates that go to Medicare Part D beneficiaries. After two yearsof public reporting, PBMs would have to pass a minimum percentage ofrebates and discounts to health plans, which would lower premiums or otherbeneficiary cost-sharing in Part D.

Under current law, beneficiary cost-sharing is based on drug list prices,which CMS says speeds them into catastrophic coverage, at which pointtaxpayers pick up 80 percent of the tab. The bill would change that bybasing cost-sharing on discounted drug prices.

PBM executives dispute the assertion that plans and PBMs favor high-priceddrugs.

Senate Confirms Seema Verma as CMS Administrator

On March 13, the Senate confirmed Seema Verma by a 55-43 vote to lead CMS.As an Indiana-based health consultant, Verma gained national recognition byworking with GOP states to add conservative elements to their ObamacareMedicaid expansion programs. Verma worked for then-Gov. Mike Pence when heaccepted that major piece of Obamacare with a conservative twist.

Apart from overseeing changes to Obamacare, Verma will be tasked withrunning Medicare and Medicaid, two health entitlement programs thatcollectively cover nearly 130 million people. With Verma at the helm, CMSis expected to be much more willing to grant conservative reforms to redstates that want to revamp their Medicaid programs. The House ACA repealbill, if it becomes law, would change Medicaid from an entitlement to acapped federal payment system.

She will also oversee major changes to Medicare payment policy under MACRA,a 2015 law that was passed with strong bipartisan support.

Verma is the first CMS administrator to gain Senate confirmation sinceMarilyn Tavenner in May 2013. She served about two years and was replacedby Andy Slavitt, who held the position on an acting basis until the end ofthe Obama administration.

GOP Senate Critics of Obamacare Repeal Bill Visit White House

A group of Senate conservatives visited the White House on March 13 todiscuss the Obamacare repeal bill. Members of the Republican SteeringCommittee, which is chaired by Sen. Mike Lee (UT), discussed Obamacarestrategy along with Sens. Rand Paul (KY), James Lankford (OK) and Ted Cruz(TX). Several of them say the bill as written cannot pass the Senate due toconcerns over the bill’s tax credits and how quickly the GOP is trying topush the bill through Congress this month.

Congressmen Question FDA’s Approval of Drug to Treat Duchenne MuscularDystrophy

In aletter to the FDA, Sen. Bernie Sanders (I-VT) and Rep. Elijah Cummings (D-MD)—the HouseOversight ranking member—requested details about FDA’s approval of abrand-name version of the more than 20-year-old drug deflazacort. The brandname version—Emflaza—is used to treat patients with Duchenne musculardystrophy (DMD), a rare genetic disorder that causes progressive muscledeterioration and weakness.

FDA fast-tracked the drug’s approval and gave it orphan drug status. Thecongressmen asked the agency to explain the unusual circumstances used toapprove Emflaza. The manufacturer Marathon Pharmaceuticals announced itwill sell the drug for the high price of $89,000 a year.

“The high price was especially troubling in light of the incrediblylucrative benefits FDA has granted to Marathon, and the limited amount ofinnovative research the company appears to have conducted to developEmflaza,” Sanders and Cummings wrote to FDA Acting Commissioner StephenOstroff.

Marathon delayed the launch in response to outrage from patients andlawmakers over the price. The benefits to Marathon include grantingMarathon a monopoly for seven years as an orphan drug. It also received apediatric priority review voucher that is potentially worth millions ofdollars to use or sell to another pharmaceutical company.

For more information,click here.

2. Administration

President Trump Releases First Budget Blueprint

On March 16, President Donald Trump released hisfirst budget blueprint, “America First: A budget blueprint to make America great again.” The plansets HHS’s budget at $69 billion—a decline of roughly $15 billion from2017—and proposes cuts across various agencies, including a $6 billion cutto the NIH and a $403 million cut in health workforce training programs.Overall, the blueprint proposes to cut HHS spending by 18 percent forfiscal year 2018.

The budget was panned by most in Congress.

Trump also wants to double the FDA user fees paid by medical industry from$1 billion to $2 billion. To offset that, the budget “includes a package ofadministrative actions designed to achieve regulatory efficiency and speedthe development of safe and effective medical products,” according to thedocument.

The president’s proposed fiscal 2018 budget calls for eliminating programsthat are duplicative or have a limited impact on public health andwell-being across HHS, while allowing the agency to continue supportingpriority activities. The budget document says this reflects “a new andsustainable approach to long-term fiscal stability across the FederalGovernment.”

The budget document places Medicare and Medicaid program integrity as ahigh priority, adding that curbing waste, fraud and abuse in those programsis an urgent public health issue, along with stemming prescription drugoverdoses.

Trump’s budget proposes $751 million in discretionary funding in fiscal2018 for the Health Care Fraud and Abuse Control program—a $70 millionincrease compared to 2017 funding. The program also receives mandatoryfunding, but it is not clear from the budget how that would be affected.The budget touts the fraud-control program for helping shift CMS’s programintegrity activities away from “pay and chase” toward preventing fraudulentor improper payments. It also highlights the program’s return oninvestment, stating that $5 has been returned for every $1 spent between2014 and 2016.

The HHS Office of Inspector General’s annual reviews of the program showthe average return on investment decreasing for the last few years,however. The rolling three-year average from 2011-2013 was $8.10 returnedfor every dollar spent, from 2012-2014 the average return was $7.70 forevery dollar spent, and from 2013-2015, the average return was $6.10 forevery dollar spent.

In addition, the budget would invest in mental health activities “awardedto high-performing entities” and focus on priority areas such as suicideprevention, serious mental illness and children’s mental health.

Health profession and nurse training programs lose $403 million. Thebudget says these programs “lack evidence that they significantly improvethe Nation’s health workforce.” However, the budget would continue to fundscholarships and loan repayment programs in exchange for work in a healthshortage area.

The budget cuts $5.8 billion from the National Institutes of Health. Theproposed budget does not address changes to mandatory spending, which theTrump administration plans to include in a more detailed budget plan inMay.

President Trump Announces FDA Commissioner Nominee Scott Gottlieb

On March 10, President Donald Trump nominated Scott Gottlieb for FDAcommissioner. Trump’s pick did not prompt the strong partisan reactionsthat was the case with many of his other nominees.

Senate HELP Chairman Lamar Alexander said Gottlieb “has impressivequalifications as both a physician and in his previous roles at FDA,” andthat he looks forward to hearing more about Gottlieb’s plans for theagency.

The committee’s ranking member, Patty Murray, said she has some initialconcerns about how Gottlieb’s views could impact FDA approval—she hasfought to ensure that “medical expertise—not ideology—governs FDA’sdecision-making on critical products.” Murray said she will closely reviewGottlieb’s relationships with drug companies and investment firms to seewhether conflicts of interest could impact his decisions as head of theFDA.

Some players who may be more likely to give Gottlieb a hard time during hisconfirmation process have not yet weighed in, including Sens. BernieSanders and Elizabeth Warren, so it may take a few days before it is clearjust how smoothly his confirmation will proceed.

If confirmed, Gottlieb will play a major role in the Trump administration’sefforts to speed up regulatory approval of drugs.

CMS, FDA Ordered to Craft Plans to Improve Efficiency

The White House ordered federal agencies to send reorganization planswithin 180 days to the Office of Management and Budget (OMB), which willuse them to craft a master plan to reorganize the federal government andscrap unnecessary agencies and functions. The president’s executive order,issued March 13, also comes as FDA and the U.S. Department of Agricultureface renewed pressure from the Government Accountability Office toeliminate duplicative food safety functions.

The executive order also directs the OMB chief to gather public comment forfurther suggestions. The director is ordered to give the president a plan180 days after OMB receives agency plans.

Newly confirmed CMS Administrator Seema Verma and FDA Commissioner-nomineeScott Gottlieb, if confirmed, face immediate orders from the White House tocraft plans to reorganize their agencies to improve efficiency, shiftfunctions to the state or local governments, and merge or shut down anyfunctions for which costs are not justified by public benefits or areredundant with work of other agencies.

CMS Releases Report on 2017 Enrollment Activity

On March 15, CMS released a report summarizing enrollment activity in theindividual marketplaces during the 2017 Open Enrollment Period (2017 OEP)for all 50 states and the District of Columbia. Approximately 12.2 millionconsumers selected or were automatically re-enrolled in marketplace plansduring the 2017 OEP. An accompan