Washington Healthcare Update

March 27, 2017

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  • This Week: Health Reform gets to the floor of the House for consideration, but crashes.

1. Congress



2. Administration

3. Courts

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


American Health Care Act Withdrawn Before Vote

After seven years of Republicans’ running against the Affordable Care Act,the American Health Care Act was pulled just before it was to be voted onin the House of Representatives. Pulling the bill on Friday, March 24, cameafter postponing a vote scheduled the day before. Within the RepublicanParty, a tug of war among the conservatives and moderates made itimpossible to create a bill that would have the necessary votes to pass.The most recent Congressional Budget Office (CBO) forecast 24 millionpeople would be uninsured within a decade. Polls showed that only 17percent of Americans supported the bill.

Even if it was passed by the House, the Senate did not have the votes topass the House bill.

Medicaid was a large stumbling block. However, changes made to appeal tothe Freedom Caucus also lost the bill support among moderates.

It is unclear when the House will return to working on health reform. Ithas been suggested that Health and Human Services Secretary Price can makechanges through the regulatory process.

House Energy & Commerce Committee Examines FDA’s Prescription Drug User Fee Program

At aHouse Energy & Commerce hearingon March 22, members of Congress, FDA officials and industry stakeholdersall praised the success of FDA’s breakthrough designation in lowering drugdevelopment times, and stressed that the pending Prescription Drug User FeeAgreement (PDUFA) will bring important resources to the effort.

However, FDA drug center director Janet Woodcock also cautioned the programcan be expanded only so far.

FDA’s breakthrough designation was created by the Food and DrugAdministration Safety and Innovation Act (FDASIA) and allows for expediteddevelopment and review of drugs intended to treat a serious orlife-threatening disease, and which preliminary clinical research indicatesmay demonstrate substantial improvement over existing therapies on one ormore clinically significant endpoints.

Lawmakers were quick to praise the commitment to supporting thebreakthrough designation included in the pending drug user fee agreement.“I am pleased that PDUFA VI will continue to build upon the success of thebreakthrough therapy program,” E&C health subcommittee Chairman MichaelBurgess (R-TX) said in his opening statement.


Senate Democrats Deliver Guarantee to Block Repeal of Essential Benefits

Senate Democrats say they have enough votes to block any Republican attemptto repeal Obamacare’s essential benefits and consumer protections throughregular order.

Forty-two Democrats signaled the warning to House Republicans that theyshould not expect Democrats to cave on future repeal bills the GOP mayinclude in its “third phase” of repeal.

Ina letterto House Speaker Paul Ryan, they warn: “Any assurances to your colleaguesthat future legislation to further scale back insurance coverage will passthrough regular order if the AHCA is enacted are based on the flawedassumption that the Senate Democratic Caucus will vote to further erode thehealth care system and strip our constituents of coverage.”

Republicans are trying to strip out essential benefits in the repeallegislation in an attempt to win over the House Freedom Caucus. But it isunclear whether that move would pass muster under Senate rules.

In the letter, led by Sen. Jeanne Shaheen (D-NH), Democrats promised toblock legislation to repeal the essential benefits, as well as preventivecare provisions. The letter targets what Republicans have called phasethree of their repeal plan: passing legislation through regular order thatwould need to pick up eight Democratic votes in the Senate. It came justhours before the House’s scheduled vote on repealing major parts of thehealth law.

“Given your plans to pass subsequent legislation through regular order inCongress, we want to correct any misimpression you may have that we willsupport proposals you have cited as key to your effort,” the letter says.

Senate Minority Leader Chuck Schumer, who did not sign the letter, haspushed back strongly against repealing any major part of Obamacare andwould surely join Democrats in opposition.

Three of the Senate’s most moderate Democrats did not sign on: Sens. HeidiHeitkamp of North Dakota, Joe Donnelly of Indiana and Joe Manchin of WestVirginia.

Senators Reintroduce Legislation to Make More Hearing Aids Available Over the Counter

On March 21, Sens. Chuck Grassley (R-IA), Elizabeth Warren (D-MA), MaggieHassan (D-NH) and Johnny Isakson (R-GA)reintroduced legislationto make certain hearing aids available over the counter (OTC), followingcalls from the Obama White House and the National Academics of Sciences,Engineering and Medicine. FDA has also indicated it is considering the ideaof an OTC hearing aid, and recently loosened restrictions on dispensinghearing aids.

The bill would make certain air-conduction hearing aids available over thecounter for patients 18 years and older to treat mild to moderate hearingimpairment. The bill would also direct HHS to circulate regulations withinthree years to establish such a category and codify requirements to“provide reasonable assurances of safety and efficacy.” It would also taskHHS with determining whether over-the-counter hearing aids would require510(k) submissions.

FDA issued guidance on Dec. 7 waiving the recordkeeping and medicalevaluation requirements for the dispensing of class I and II air-conductionhearing aids for patients older than 18. FDA also said it would considermaking hearing aids available over the counter.

Acompanion billwas introduced in the House by Reps. Joe Kennedy III (D-MA) and MarshaBlackburn (R-TN).

Sen. Wyden Asks HHS to Ensure CMS Administrator Verma Complies With Ethics Agreement

Senate Finance ranking Democrat Ron Wyden (OR) isrequesting informationabout how HHS will make sure that CMS Administrator Seema Verma is incompliance with her ethics agreements not to directly work on mattersrelating to seven states with which she has previously done consultingrelated to Medicaid.

HHS Secretary Tom Price and Vermawrote to governorsMarch 14 that Medicaid expansion is “a clear departure from the core,historical mission” of the program, and began overtures to states to reworkMedicaid. They said tax dollars should go to the most vulnerable; urgedstates to shift to private insurance models and use 1115 waivers toincentivize employment for Medicaid-eligible, poor adults; and said HHSwill review all managed care regulations and put off enforcing the 2014home- and community-based services rule.

“In light of her announced intentions to begin discussions with statesregarding changes to the Medicaid programs they carry out, I am writingtoday to obtain a description of the procedures and safeguards that theDepartment intends to put in place to ensure that her prior associationswith a number of states are properly reviewed and in full compliance withher ethics agreement and the Department’s and Federal ethics rules,” Wydensays.

Wyden asked the HHS acting general counsel how Verma’s Medicaid work withstates will comply with her ethics obligations, as she worked with severalstates through her consulting firm SVC, Inc. Wyden notes that Verma’sethics agreement says she “will seek a written authorization to participatesubstantially in particular matters involving specific parties in which Iknow the States of Arkansas, Indiana, Iowa, Kentucky, Ohio, South Carolinaand Virginia are a party or represents a party.”

2. Administration

OMB Memo Instructs Executive Branch Officials to Limit Testimony on Budget Blueprint

Two high-profile appropriations hearings were canceled March 20 following aWhite House memo warning federal officials to limit congressional testimonyon the Trump administration’s FY 2018 budget blueprint.

The Office of Management and Budget (OMB) releasedthe memo stating that it is the administration’s “strongpreference that only heads of executive departments and agencies or theacting head of the department or agency” should testify on the budgetblueprint.

“Until OMB releases the full FY 2018 Budget, all public comments of anysort should be limited to the information contained in the Budget Blueprintchapter for your agency,” states the memo, which was sent to all agencies.

Both canceled hearings were to be hosted by the House Appropriationssubcommittee on Labor, Health and Human Services, and Education. The firstpanel, scheduled for March 21, would have included witnesses from theNational Institutes of Health, the National Cancer Institute and theNational Institute on Drug Abuse. The second cancelled hearing, which wasset for March 22, would have featured testimony from Education SecretaryBetsy DeVos.

HHS Updates Website to Explain ACA Regulatory Overhaul

HHS recently updated its website to explain the regulatory changes it ismaking to overhaul the Affordable Care Act (ACA) and stabilize themarketplace. The agency announced it is working through all of the ACA’sregulations and guidance to determine their success. HHS’s page “Providing Relief Right Now for Patients” lays out concerns with rising premiums and limited coverage choices.

“The Department of Health and Human Services (HHS) is committed to doingeverything in our power to provide relief immediately. Within what the lawallows, HHS is taking action to stabilize the individual and small groupinsurance markets (the markets most affected by the ACA) so that they workbetter for everyone,” the new page says.

HHS Delays CMMI’s Bundled Payment Programs Again

HHS is further delaying two Medicare bundled payment programs from the CMSInnovation Center, according to aFederal Register noticepublished March 20. The notice postpones an expansion of its bundledpayment program for knee and hip replacements and the start of a stroke andheart attack care program from March 21 until May 20.

The additional time allows new HHS leadership to review the two bundledpayments and seek comment about possibly delaying the start of the cardiaccare and expansion of the joint replacement bundles all the way until Jan.1.

The Trump administration had already delayed the start date for the twofrom Jan. 21 when it ordered a 60-day regulatory freeze after Trump tookoffice. While in Congress, now-HHS Secretary Tom Price was highly criticalof mandatory demonstration projects like CMMI’s bundled payments for hipand knee replacements.

MGMA Urges CMS to Release MIPS Eligibility Notifications

CMS is aiming to get doctors information on whether they meet the volumethresholds for participating in the Merit-based Incentive Payment System(MIPS) this spring, and the Medical Group Management Association says thelack of eligibility notifications is “generating considerable frustrationand confusion.” The American Medical Association has also talked with CMSabout the problem and was told the notifications would come out soonerrather than later.

“Transitioning to MIPS is a challenge involving upgrades to electronichealth record software, re-engineering clinical workflows to meet datacapture and reporting requirements, contracting with data registries, andtraining clinical and administrative staff,” MGMA says in aMarch 15 letter to CMS. “Without basic information about eligibility, physicians and medicalgroups are significantly disadvantaged from positioning themselves forsuccess in the program.”

The Medicare Access and CHIP Reauthorization Act set up MIPS as one of twotracks in the new Medicare physician payment system, and physicians whobill Medicare Part B more than $30,000 annually and provide care for morethan 100 Medicare patients a year participate in one of the two tracks.

The first performance period for MIPS opened Jan. 1, and physicians willsee their pay adjusted in 2019 based on their 2017 performance. Those whodo not report 2017 data get a 4 percent cut to their Medicare pay, thosewho submit a minimum amount of 2017 data—such as data on one qualifiedmeasure or one improvement activity—avoid a cut and those who submit atleast 90 days of data are eligible for a bonus.

CMS previously said it would provide notifications by December to those whoare exempt from MIPS because of the low-volume threshold exemption, but theagency has yet to do so. MGMA notes that CMS had estimated that 32.5percent of Medicare providers are exempt from MIPS in 2017 under thelow-volume threshold, and “as such, at least 32.5 percent of Medicareproviders are currently unsure whether they qualify for participation inMIPS.”

MGMA says CMS has yet to release a final list of approved 2017 clinicaldata registries or an approved list of registry vendors, as well, and thatis “further hindering group practices’ success in MIPS.” 

3. Courts

Supreme Court Sets Limits on Acting Officials

On March 21, the Supreme Court ruled 6-2 that certain acting officials injobs requiring Senate confirmation cannot continue to serve in that roleonce they have been nominated to the post, a decision that will preventPresident Donald Trump from temporarily filling such jobs with his firstpicks while nominations work their way through the Senate.

“Even if a first assistant is serving as an acting officer under thisstatutory mandate, he must cease that service if the President nominateshim to fill the vacant [Senate-confirmed] office,” the court concluded in acase involving the Federal Vacancies Reform Act of 1998.

The law includes a narrow exception for “first assistants” who had servedfor at least 90 days, although the changeover of political appointeesduring the transition means fewer of these such deputies are now serving inacting posts. The Supreme Court said that prohibition also extends to anynon-deputy officials specifically directed by the president to serve inacting capacities.

It appears unlikely the ruling will affect many actions taken by actingofficials under the Obama administration, since a lower court said any suchchallenges would have had to have raised the vacancy issue already. Still,the Obama administration previously had pointed to uncertainties aboutacting EPA deputy administrator Stan Meiburg and acting officials at otheragencies.

4. State Activities

California: Huge Cost-Shift Could Occur for Medi-Cal Under GOP Plan

The current GOP health proposal would have required California to come upwith nearly $6 billion to pay for Medi-Cal—the state’s Medicaidprogram—in 2020 and as much as $24.3 billion by 2027, according to apreliminary analysisreleased by state officials March 22.

Of that amount, California’s general fund, which covers about 70 percent ofMedi-Cal costs, was estimated to grow from $4.3 billion in 2020 to $18.6billion over the next decade, due in part to an increase in Californiaresidents covered under the program.

Reduced federal contributions and other administrative changes would costthe state $4.8 billion by 2020, and as much as $18.5 billion within thenext decade. California’s cost trends are also expected to exceed theexpenditures allowed under the Republicans’ per-capita spending limit,increasing state costs from $680 million in 2020 to $5.3 billion by 2027.

Medi-Cal is projected to cover 14.3 million Californians next year, or onein three residents. The analysis, which was conducted by the Department ofHealth Care Services with the Department of Finance, was sent to thestate’s congressional membership.

Florida: Gov. Scott Plans to Ask Federal Government for a Medicaid Block Grant

Florida Gov. Rick Scott announced plans to ask the federal government togive Florida a Medicaid block grant. The Agency for Health CareAdministration sent a letter to HHS Secretary Tom Price saying Floridaintends on amending a Medicaid 1115 waiver request that is pending approvalto include a request for a Medicaid block grant. The letter outlined thefive changes Florida would like to make to its Medicaid program under ablock grant, including eliminating a requirement that the stateretroactively cover health care costs for newly eligible beneficiaries andeliminating a requirement that the federal government review the rates thestate pays HMOs to make sure they are actuarially sound. Florida has a $26billion Medicaid program and requires most of its enrollees to enroll in amanaged care plan.

Kansas: Kansas State Senate Approves Bill for Obamacare Medicaid Expansion

On March 23, a committee in the Kansas State Senate cleared a bill thatwould expand the state’s Medicaid program under Obamacare, a rebuke toCongress as Republicans try to unwind the health law.

The Kansas Senate Public Health and Welfare Committee advanced legislationon a voice vote, sending it to the full GOP-controlled chamber forconsideration. Legislation cleared the Kansas House in February, asurprising endorsement of the Obamacare program from a deep red state.

Kansas is one of 19 states that have not accepted the Medicaid expansion.But it is unclear whether Republican Gov. Sam Brownback would sign the billgiven that he has been vehemently opposed to Obamacare for years.

The American Health Care Act seeks to phase out Obamacare’s Medicaidexpansion funding beginning in 2020. But one of the changes included in anamendment to the bill is designed to make sure additional states would notexpand their Medicaid program between now and then. The change only allowsstates to maintain the federal funding boost under Obamacare if they hadalready expanded by March.

5. Regulations Open for Comment

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.

FDA Considers Establishing New Office of Patient Affairs

The FDA is considering establishing a new Office of Patient Affairs thatwould centralize its work on patient involvement in the review and approvalof drugs and medical devices, according to aMarch 14 noticein the Federal Register.

Comments on the new office are due by June 12, 2017.

FDA Proposes 1,000 Medical Devices to Exempt From PremarketNotification

On March 14, FDA took one of its first actions to begin implementing the21st Century Cures Act, byproposingmore than 1,000 medical devices it will exempt or partially exempt from thepremarket review process. The devices on the list are sufficiently wellunderstood and do not present risks that require premarket notification toprovide a reasonable assurance of safety and effectiveness, FDA said. Theagency will finalize the list after a 60-day public comment period.Comments are due by May 15, 2017.

FDA Extends Comment Period on Biosimilar Interchangeability Guidance

FDA is extending the public comment period for itsdraft guidanceoutlining how biosimilar sponsors can demonstrate that their products areinterchangeable with other biologics, following extension requests from toptrade associations.

The agency laid out in a January 2017 draft guidance its first attempt atcodifying the requirements that sponsors must satisfy to demonstrateinterchangeability. The agency said it would make case-by-casedeterminations of interchangeability, but indicated it would requirestudies measuring the impact of switching on clinical pharmacokinetics andpharmacodynamics.

The Biotechnology Innovation Organization (BIO), Pharmaceutical Researchand Manufacturers of America and Covington & Burling all requestedcomment period extensions, according to documents posted onRegulations.gov.

The comment period, which was set to close on March 20, will be extended 60days until May 19.

6. Reports

GAO Testimony Shows VHA Struggles to Recruit and Retain Staff

On March 22, GAO released testimony regarding the Veterans HealthAdministration’s challenges with recruiting and retaining staff.Specifically, GAO found that the VHA is having difficulty recruiting andretaining both clinical and administrative staff. There is high attritionamong HR staff at the VHA, along with weak internal control processes,which are contributing to staffing issues. These challenges are making itmore difficult for VHA to meet the health care needs of the nation’sveterans, according to GAO.

GAO recommended that VHA improve oversight of nurse recruitment andretention initiatives, and strengthen its HR capacity.

To see the 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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