Washington Healthcare Update

April 24, 2017

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This Week: Repeal/replace sputters to life, maybe…Congress returns to fund the government…FDA nominee gets a vote.

1. Congress



2. Administration

3. Courts

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


GOP Renewing Efforts for Obamacare Repeal

House Republicans have outlined an amendment that could revive theirefforts to repeal Obamacare. The amendment aims at reuniting the GOP behindSpeaker Paul Ryan’s American Health Care Act, offering concessions meant towin over the party’s moderate and conservative members.

The deal—brokered by centrist Tuesday Group co-chair Tom MacArthur andhard-right Freedom Caucus head Mark Meadows—proposes giving states moreflexibility to opt out of major Obamacare provisions, while also preservingpopular protections like the law’s ban on discrimination against peoplewith pre-existing conditions.

It remains unclear whether the proposal can succeed in shifting any votes.While the Administration originally pushed for a vote this week, it beganto soft pedal the need for a vote this week. According to a draft of thetentative deal, the latest proposal would allow states to apply forso-called limited waivers to opt out of Obamacare’s standards settingminimum benefits that health plans must offer and a requirement—calledcommunity rating—forbidding insurers from charging different prices topeople who are the same age.

At the same time, the deal would maintain several Obamacare protectionssupported by centrist Republicans, including the prohibition on denyingpeople coverage based on pre-existing conditions. It would also forcestates that opt out of the community rating rules to set up separateinsurance pools, known as “high-risk pools,” where people priced out of theprivate market could go to purchase coverage.

NAIC Urges Congress to Appropriate Obamacare Subsidy Funds

In anApril 19 letter to House and Senate leaders, theNational Association of Insurance Commissioners (NAIC) urged Congress tofund Obamacare’s cost-sharing subsidies in the upcoming continuingresolution for 2017, as well as for 2018. NAIC is a trade associationrepresenting state insurance regulators.

NAIC wrote that appropriating the subsidy money is “critical to theviability and stability of the individual health insurance markets in asignificant number of states across the country.”

The subsidies reduce out-of-pocket costs for Obamacare customers withincomes of up to 250 percent of the federal poverty level. However, HouseRepublicans sued over funding for the program and scored a legal victory incourt last year that threatens to halt the subsidies.

The decision was appealed by the Obama administration, but the lawsuit hasbeen put on hold until May 22 while the Trump administration decides how toproceed. Officials have given several mixed signals about whether thefunding will continue. Should it cease, the NAIC warns that insurers willask for double-digit premium increases when they make 2018 pricing requeststo state regulators. Also, carriers could exit from the markets altogethernext year, a potential some insurers have already voiced.

“As long as the court case, House v. Price, remains unresolved andfederal funding is not assured, carriers will be forced to think twiceabout participating on the exchanges,” the group wrote. “Even if they dodecide to participate, state regulators have been informed that theuncertainty of this funding could add a 15 percent to 20 percent load tothe rates.”

Congress Releases Draft User Fee Bill

On April 14, Congress released a discussiondraft of a billto reauthorize the FDA’s various user fee programs, commonly referred to as“the UFAs.” The FDA Reauthorization Act (FDARA) would renew the agency’sauthority to collect user fees in fiscal years 2018 through 2022 and putinto effect the commitments negotiated by FDA and regulated industry.

Without such legislative action, the authority to collect user fees is setto expire on Sept. 30. If the user fee programs aren’t reauthorized beforeAugust, FDA will have to send layoff notices to more than 5,000 employeeswhose positions are supported through user fee funds—and if not enacted, itwould cripple the agency’s drug and device review functions. However, itappears both the Senate and House are interested in a timelyreauthorization, with Energy and Commerce Committee Chairman Greg Walden(R-OR) stating that the House is committed to a timely reauthorization ofthe agreements. Senate HELP Committee Chairman Lamar Alexander (R-TN) alsostated they would like the agreements to be reauthorized quickly.

Walden’s statement on the draft’s release hinted that additional policiescould still make it into the bill.


Senate HELP Committee to Vote on Scott Gottlieb Nomination to Run the FDA

The Senate HELP Committeewill votethis Wednesday on Scott Gottlieb’s nomination to run the FDA.

Gottlieb is widely expected to gain approval, despite concerns aboutwidespread ties to companies regulated by the agency. Gottlieb hasindicated that he will recuse himself for one year from any FDA decisionsinvolving about 20 health care companies he has worked with.

Republicans, including HELP Committee Chairman Lamar Alexander (R-TN), haveheaped praise on Gottlieb, who served as a deputy commissioner at theagency during the George W. Bush administration.

Senate HELP Committee to Consider Four Health Care Bills

The Senate HELP Committee recently announced that it will consider fourhealth care bills with bipartisan support at a hearing on April 26. Thebills include proposals to improve screening for hearing loss in kids andto bolster efforts to prepare for new public health threats like the Zikavirus. The bills to be considered are as follows:

  • S. 652, Early Hearing Detection and Intervention Act of 2017
  • H.R. 309, National Clinical Care Commission Act
  • S. ___, Protecting Patient Access to Emergency Medications Act of 2017
  • S. 849, SMASH Act
  • Nomination of Scott Gottlieb to serve as the commissioner of Food and Drugs

To view the hearing,click here.

Sen. Grassley Raising Concerns Over Insurer’s Brand Drug Penalties

Sen. Chuck Grassley (R-IA) is raising concerns about an insurance company’spractice of charging patients a penalty when they are prescribed a brandname drug and a cheaper generic product is available.

Grassley is concerned that patients in CareFirst BlueCross BlueShield plansare being charged a “brand penalty”—the difference between the price of thebrand drug and its generic—instead of the typical copay or coinsurance,even though a physician prescribed the brand version for medical reasons.In addition, according to Grassley’s office, the brand penalty does notcount toward a patient’s deductible.

Ina letterto the insurer sent April 17, Grassleyrequests more information on how CareFirst is applying the brand penaltyand whether this is a common industry payment tactic. Grassley’s officewants to look at the use of brand penalties across the industry.

Grassley questions whether this practice violates CareFirst’s policies, aswell as federal law. Grassley’s letter says the Public Health Service Actrequires plans to waive cost sharing for the brand drug when medicallynecessary, according to the Department of Labor Employee Benefits SecurityAdministration.

Grassley is also concerned that in some cases CareFirst is overchargingpharmacies when they give a patient a brand drug because a generic is nolonger available.

2. Administration

Trump Nominates Two for Top HHS Positions

On April 21, the Administration nominated Elinore McCance-Katz asHHS assistant secretary for mental health and substance use and BrettGiroir as HHS assistant secretary for health.

McCance-Katz, who was previously the chief medical officer at the SubstanceAbuse and Mental Health Services Administration, would oversee SAMHSA andcoordinate the nation’s mental health and substance abuse treatmentprograms at other agencies throughout the federal government. The positionwas created by last year’s 21st Century Cures Act. McCance-Katz blastedSAMHSA last year, saying that she left after two years because it was “timefor change.”

Giroir, a former CEO of the Texas A&M Health Science Center, was mostrecently president and CEO of ViraCyte, a biopharmaceutical company.

Surgeon General Terminated

U.S. Surgeon General Vivek Murthy, a holdover from the ObamaAdministration, was let go by the Administration on April 21. Trump hasrepeatedly vowed to turn over his agencies’ leadership, firing officialsfrom across different departments with ties to the previous administration.Murthy also had been visibly excluded from the White House’s public healthefforts. Days after the election, Murthy released the surgeon general’sfirst-ever report on addiction, which was months in the making. However, the Trump administration is planning its own months-long study, andMurthy was disinvited from the White House’s planned opioids commission.Rear Admiral Sylvia Trent-Adams, a nurse who’s been with the CommissionedCorps since 1992, replaced Murthy immediately as Acting Surgeon General.

President Trump Signs VA Choice Program Extension Bill

On April 19, President Donald Trump signed legislation extending theVeterans’ Choice Program, ahead of its anticipated expiration in August.

The legislation removes the program’s August sunset date and allows theVeterans Affairs Department to spend nearly $1 billion in remainingemergency funding to subsidize non-VA medical care for veterans who facelong wait times or distances to access VA medical facilities.

The bill easily passed the House and Senate earlier this month, overcriticisms from members of both parties that the emergency program has beenpoorly implemented and is in need of major reform.

The extension Trump signed allows more time for the VA to provide medicalcare through the program while lawmakers and the department hammer out along-term fix. VA Secretary David Shulkin has said he aims to roll out areplacement for the Choice program this fall.

HHS Keeps Hiring Ban, Leaving FDA With Nearly 1,000 Vacancies to Fill

The administration will continue on with a hiring freeze, despite a memosent by OMB that lifted the government-wide ban instituted at the beginningof the Trump administration. Instead, it directed the agencies to developplans for deep personnel cuts. HHS said it will leave the hiringrestrictions in place until it develops strategies to address the OMB memo.

FDA has nearly 1,000 vacancies to fill. According to the documents, FDA ispermitted to hire certain staff, including some positions paid for by userfees, which are funded by industry rather than taxpayer dollars. However,an agency staffer was still concerned about FDA’s ability to hire becausemany of the positions exempted from the freeze were lower on the governmentpayscale. This could make it difficult for the agency to hire the type ofsenior scientists Congress intended when it gave the agency new hiringpower in the Cures Act.

FDA Holding Public Workshop to Discuss Pain Management and Safe Use of Opioid Analgesics

The FDA recently announced it will hold a public workshop on May 9th and10th with experts from a variety of federal and state agencies to discussthe role of federal training on pain management and prescribing of opioids.The meeting comes in the wake of a May 2016 meeting of two FDA advisorycommittees where it was recommended that the training program for anopioid-related Risk Evaluation and Mitigation Strategy (REMS) be broadened,as well as a July 2016 request from HHS for information on the mostpromising approaches for educating prescribers on opioids.

The public workshop, “Training Health Care Providers on Pain Management and Safe Use ofOpioid Analgesics-Exploring the Path Forward,” will include speakers from FDA, CMS, the Drug Enforcement Administration(DEA) and the departments of Veterans Affairs and Defense, among otherfederal and state agencies.

The meeting will explore: the role of federal training in improving painmanagement; the merits and challenges of federal and state governments’, aswell as public-private partnerships’, providing education on painmanagement; and the aspects of the opioid epidemic that can be mostimpacted by training providers, and how to measure those improvements.

The meeting will also build on HHS’s request for information on the mostpromising approaches in opioid prescriber education and ways to leverageHHS programs to expand these promising programs.

Persons interested in attending the workshop must register online beforeMay 1, 2017.Click hereto register.

FDA Advisory Committee to Meet to Consider Biosimilar to Amgen’sEpogen/Procrit

FDAannouncedon April 17 that it will convene an advisory committee meeting on May 25 toconsider what could become the first FDA-approved biosimilar to Amgen’sEpogen/Procrit (epoetin alfa). Amgen’s Epogen/Procit biologic was firstlicensed in 1989, according to the Purple Book. FDA currently has nobiosimilar approved for the product, but the European Medicines Agency hashad a licensed biosimilar for epoetin alfa since 2007.

The agency’s Oncologic Drugs Advisory Committee will consider whether torecommend FDA approve the product for four indications related to anemia.

Hospira’s application for an epoetin alfa biosimilar lists the followingindications: “(1) For the treatment of anemia due to chronic kidneydisease, including patients on dialysis and not on dialysis, to decreasethe need for red blood cell (RBC) transfusion; (2) for the treatment ofanemia due to zidovudine administered at [less than or equal to] 4,200mg/week in HIV-infected patients with endogenous serum erythropoietinlevels of [less than or equal to] 500 m units/mL; (3) for the treatment ofanemia in patients with nonmyeloid malignancies where anemia is due to theeffect of concomitant myelosuppresive chemotherapy, and upon initiation,there is a minimum of 2 additional months of planned chemotherapy; and (4)to reduce the need for allogeneic RBC transfusions among patients withperioperative hemoglobin > 10 to [less than or equal to]13 g/dL who areat high risk for perioperative blood loss from elective, noncardiac, andnonvascular surgery.”

3. Courts

Supreme Court Refuses to Hear Obamacare Case

On April 17, the Supreme Court said it will not hear a lawsuit challengingan Obama administration policy allowing insurers to continue offeringhealth plans not compliant with the Affordable Care Act.

West Virginia sued the Obama administration three years ago over itsdecision to let states determine whether insurers could extend these healthplans. The Obama administration crafted the policy to tamp down the outcryover millions of health plan cancellations in fall 2013, just beforeObamacare’s major insurance rules took effect. West Virginia argued thatthe Obama administration didn’t have the authority to force states todecide whether to enforce the federal rules.

The Supreme Court’s refusal to hear the case, West Virginia v. HHS,was expected. The U.S. Court of Appeals for the District of Columbia lastsummerfoundWest Virginia lacked standing to bring the case.

The Obama administration extended the phase-out date for the “transitional”health plans several times. In February, the Trump administration againextended the policy through 2018.

4. State Activities

New York: Mayor de Blasio Proposes Raising the Price of Cigarettes

New York Mayor Bill de Blasio wants to raise the minimum price of a pack ofcigarettes to $13, up from $10.50. The move, if passed by the City Council,would once again make New York City the most expensive place in the countryto buy a pack of cigarettes. The goal is to reduce the smoking rate to 12percent by 2020, down from 14.3 percent. The bill is expected to receive ahearing on Thursday.

Oregon: Joint Legislative Committee Considering Ending Medicaid Expansion

A joint legislative committeeis consideringending Obamacare’s expansion of Medicaid to help plug a $1.6 billion budgetgap, along with several other potential options. The legislative committeeon Ways and Means, which is tasked with setting budget policy, estimatedthat eliminating Medicaid expansion would save $256 million between 2017and 2019. At the same time, Oregon would also lose roughly $5 billion infederal Medicaid funding. Oregon appears to be the first blue stateconsidering ending the program because of budgetary pressures. However, itremains to be seen whether winding down Medicaid expansion—which coversroughly 350,000 low-income adults—would garner support from theDemocratic-controlled legislature, as well as from Democratic Gov. KateBrown.

Texas: 10 Percent of Texans Rank Health Care as Most Important Issue

Even as congressional Republicans prioritize repealing the ACA, Texasvoters don’t seem to have health care on their minds. About 10 percent ofTexans ranked health care as the most important issue facing the country,according to the newly released figuresfrom the annual Texas Lyceum poll, an independent survey of 1,000 adults inearly April. More Texans surveyed thought immigration and education weremost important. Health care came in fourth place.

5. Regulations Open for Comment

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.

CMS Releases Proposed Hospital Pay Rule

In a new proposed2018 Medicare payment rule, CMSsays it will look to cut hospital industry regulations and streamlineoversight, and it’s asking hospitals themselves for help. The agency issoliciting ideas for changes to rules and procedures governing acute-careand long-term care hospitals. The initiative aims to “relieve regulatoryburdens for providers,” as well as promote flexibility and innovation, CMSsaid in a statement.

The new proposed rule would suspend for one year a provision penalizinglong-term care hospitals that receive more than 25 percent of patients froma single acute-care hospital. It would also reduce certain qualityreporting requirements for hospitals that have implemented electronichealth records.

CMS projects the rule would increase Medicare spending on inpatienthospital services by $3.1 billion in 2018, with operating payments tohospitals increasing 2.9 percent. Long-term care hospitals’ Medicarepayments are projected to decrease by $173 million, or 3.75 percent, overthe same period.

Comments on the rule must be submitted no later than 5 p.m. EDT on June 13,2017.

CMS Proposes 2018 Payment and Policy Updates for Medicare HospitalAdmissions

CMS is offering hospitals a 90-day meaningful use reporting period in 2018,according to aproposed payment rulereleased April 14.

The first major payment regulation released under HHS Secretary Tom Pricemarks a change from the back-and-forth over electronic health recordsmeaningful use requirements seen under the Obama White House. The previousadministration would typically propose a yearlong reporting period, thenscale it back at the last minute after intense lobbying pressure. As aRepublican congressman from Georgia, Price often pushed the Obamaadministration hard for 90-day meaningful use reporting periods.

In connection with the 21st Century Cures Act, CMS also isproposingto remove from meaningful use clinicians who see most of their patients atambulatory surgery centers.

Price and CMS are also changing previously finalized requirements fromelectronic clinical quality measures. Under the proposed rule, hospitalscan select six measures and report on them for the first three quarters of2018.

For more information,click here.

6. Reports

JAMA Study Finds CDC Guidelines Omit Major Cause of Opioid Use

A new study published in JAMA Surgery found that despite sharp focuson the opioid epidemic following the 2016 release of the CDC Guideline forPrescribing Opioids for Chronic Pain, the guidelines fail toaddress—and little attention has been paid overall to—prescribing practicesthat lead to the persistent use of opioids after elective, outpatientsurgery. However, more than two million people—about 6 percent of patientswho undergo both minor and major surgeries—continued using opioids forlonger than 90 days after their procedure, making new and persistent use ofopioids “one of the most common complications after elective, outpatientsurgery,” according to researchers with the University of Michigan MedicalSchool, Ann Arbor.

Researchers found no difference in opioid use among people who had bothmajor and minor surgical procedures, leading them to conclude that patientslikely continue using opioids for reasons other than intensity of surgicalpain. More must be done, they said, to understand and address the issue.

To see the study,click here.

IRS Releases Mid-Season Report for 2017 Filing Season

According to amid-season reportfrom the Treasury Inspector General for Tax Administration (TIGTA),one-third fewer Americans told the IRS that they had minimal essentialcoverage compared to the same time frame last year, but IRS has collected20 percent more in penalties.

The report comes amid concerns that the Trump administration will notproactively implement the ACA’s individual mandate, which could furtherundermine the insurance markets.

There were 47 million people who submitted a tax return to indicateessential coverage for all their family members in 2016, but only 44.1million reported such coverage in 2017, a 33.3 percent decrease. Sixmillion people reported an exemption from essential coverage in 2016 andthat dropped to 5.3 million in 2017. The amount of individuals reportingshared responsibility payments (SRPs) also decreased from 2.7 million in2016 to 1.8 million in 2017. But the amount of SRPs jumped 20 percent from$1 billion in 2016 to $1.2 billion in 2017.

The IRS says that it will be enforcing the mandate as it has in earlieryears.

GAO Examines CMS Oversight and Support of States’ Medicaid Program Integrity Efforts

In a new report, GAO examined CMS’s oversight and support of states’Medicaid program integrity efforts. GAO studied, among other issues: (1)how CMS tailors its reviews to states’ circumstances; (2) states’experiences with collaborative audits; and (3) CMS’s steps to sharepromising program integrity practices. GAO reviewed CMS documents,including state program integrity reports, and data on collaborativeaudits. GAO interviewed officials from CMS and eight states selected basedon expenditures, managed care use and number of collabora