Washington Healthcare Update

May 1, 2017

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This Week: Congress passes short-term spending bill to keep the federal governmentopen… Despite health care “deal,” House leadership is still looking forvotes to bring repeal/replace to the floor…FDA nominee gets a vote.

1. Congress



2. Administration

3. Courts

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


House Delays Obamacare Repeal Vote

On April 27, House Republican leaders decided to delay a vote on theirObamacare repeal bill until this week at the earliest. After a late-nightmeeting on Thursday, Speaker Paul Ryan determined that at least 15 HouseRepublicans are opposed and another 20 are leaning to no or areundecided. Republicans who backed earlier versions of the proposal,including Reps. Mike Coffman of Colorado and Adam Kinzinger of Illinois,said they were now undecided.

In order to pass the legislation Republicans cannot lose more than 22votes. Democrats remain unified in opposition.

Judiciary Committees Reintroduce Bipartisan Bill to Expand Generic Competition

Leaders of the Senate and House judiciary committeesreintroduced a billon April 27 meant to make it harder for brand drug companies to keepgeneric competitors off the market.

The CREATES Act of 2017 would help generic manufacturers obtain access todrug samples they need to bring cheaper versions to market. The bill wouldalso make it harder for drug companies to use FDA-mandated safety programsto keep generic competition off the market.

Sponsors of the Senate bill include Patrick Leahy (D-VT), Chuck Grassley(R-IA), Dianne Feinstein (D-CA), Amy Klobuchar (D-MN) and Mike Lee (R-UT).In the House, the bill is sponsored by Reps. Tom Marino (R-PA) and DavidCicilline (D-RI).

The Congressional Budget Office (CBO) has estimated the bill would decreasethe federal deficit by $3.3 billion. Savings to consumers and insurerswould likely be much greater, the bill sponsors say.

The legislation has been endorsed by the generic drug lobby, theAssociation for Accessible Medicines, America’s Health Insurance Plans, theAmerican Hospital Association, the American College of Physicians and anumber of consumer groups like AARP.

FDA commissioner nominee Scott Gottlieb indicated in written responses tothe Senate he could support the bill. “If manufacturers inappropriatelyrefuse to provide their product to prospective generic competitors, thiswould be a concern to FDA and become a matter for potential enforcementaction by the Federal Trade Commission,” he wrote.

The brand drug industry has previously lobbied hard against this bill. Itwas dropped as a pay-for in the 21st Century Cures Act last year because ofpharma opposition.

Appropriators Offer One-Week Stopgap Spending Bill

The House and Senate passed a short-term spending bill that would givelawmakers an extra week to strike a final deal on spending and avert agovernment shutdown.

In announcing thestopgap bill, top Republicanappropriators in both chambers said lawmakers are close to an agreementthat would fully fund the government through September, however they needmore time to hash out final details before the deadline for fiscal 2017funding.

Both spending committee chairmen—Rep. Rodney Frelinghuysen (R-NJ) and Sen.Thad Cochran (R-MS)—said lawmakers have made “substantial progress” towardan agreement. Democrats this week said they would refuse to back ashort-term continuing resolution until it became clear both parties wouldreach a deal on updated spending levels for the remainder of fiscal 2017.

Democrats Question CMS Decision to Fund Florida’s LIP Medicaid Payments

House Energy and Commerce ranking member Frank Pallone and Senate Financeranking member Ron Wyden sent a letter last week to CMS Administrator SeemaVerma asking for information on the agency’s decision to give Florida $1.5billion for its Low-Income Pool program.

“CMS has cited significant concerns with the structure and functioning ofthe Florida LIP in the past,” they wrote. “We are deeply concerned withCMS’s lack of transparency and documentation around the approval of theadditional funds and the absence of a clear plan moving forward to ensurethat the statutory objectives of the Medicaid program are met.”

To see the letter,click here.


Senate Finance Committee Plans CHIP Hearing May 9

The Senate Finance Committee is expected to hold a hearing May 9 about thefuture of the Children’s Health Insurance Program (CHIP).

Congress faces a Sept. 30 deadline to extend funding for the program.According toCMS data, CHIP covered roughly 5.6 million children as of February. Without anextension, states are set to run out of federal funds beginning in October,with the majority of states exhausting their money between January andMarch, according to the Medicaid and CHIP Payment and Access Commission.

Governors from both parties have urged Congress to quickly approve newfunds for the program, as states set their budgets for the next fiscalyear. The federal government provides the majority of funds for theprogram, with match rates ranging from 88 percent to 100 percent.

There has been no official announcement for the hearing as of yet.

Senate HELP Committee Votes to Advance FDA Nominee Gottlieb

On April 27, the Senate HELP Committee voted 14-9 to advance ScottGottlieb’s nomination for FDA commissioner, with two Senate Democratsbreaking with their party to support him.

The vote, originally scheduled for April 26, was delayed a day afterranking member Patty Murray said the committee needed more time to reviewnew information about Gottlieb’s financial ties, which have been an issuefor Democrats.

Democrats have contested the doctor’s ties to some of the largest playersin the health care industry. In an agreement with the Office of GovernmentEthics, Gottlieb said that he would recuse himself from more than 20companies for one year, though Democrats were pushing for longer.

Sens. Michael Bennet (D-CO) and Sheldon Whitehouse (D-RI) voted by proxy tosupport Gottlieb’s nomination.

Gottlieb was the FDA’s deputy commissioner for scientific affairs from 2005to 2007 and chief policy adviser to the CMS administrator in 2004 duringimplementation of Medicare’s prescription drug program. He has since servedon the board of various companies, including GlaxoSmithKline’s research anddevelopment board, and he advised numerous others through the venturecapital firm New Enterprise Associates.

Governors Ask Congress to Fund Obamacare Subsidies

In a new letter, the National Governors Association askedCongress to fully fund Obamacare’s cost-sharing subsidies through 2018,making a rare show of bipartisan support from governors for an Obamacareprogram.

The association is urging lawmakers to include funding for the subsidies inthe fiscal year 2017 spending bill that lawmakers are negotiating to keepthe government open, as well as full funding for 2018.

“Already, many states have seen significant reductions in insurerparticipation in their individual insurance markets in addition to largeincreases in unsubsidized premiums,” NGA executive director Scott Pattisonwrites. “Currently, insurers across the country are developing their ratesand deciding whether to participate in the individual marketplaces in2018.”

State insurance regulators, insurers and other health care groups areurging Congress to act, warning that the Obamacare markets could collapsenext year if uncertainty about the funding continues.

However, House Speaker Paul Ryan said Congress will not provide the fundingin the spending bill, while White House officials are telling lawmakers theadministration will continue making the payments.

If Congress refuses to fund the subsidies, the Trump administration mustdecide by next month whether to fight the House lawsuit that lawmakersfiled to block the payments.

The letter was written to House Speaker Paul Ryan (WI), House MinorityLeader Nancy Pelosi (CA), Senate Majority Leader Mitch McConnell (KY) andSenate Democratic Leader Charles Schumer (NY).

Molina Threatens Immediate Exchange Exit If CSRs Not Funded

Molina Healthcare CEO J. Mario Molina warned congressional leaders April 27that the issuer would have no choice but to immediately send a defaultnotice to the government and seek to withdraw from the exchange markets ifthe government fails to continue the ACA’s cost-sharing reduction payments.Also, a coalition of issuers, providers and business groups said thepayments must be funded for at least two years in order to provide neededclarity and stability.

Molina’s move comes after Anthem CEO Joseph Swedish said April 26 that thecompany will file preliminary rates under the assumption that the CSRs willbe funded. He added, however, if there is no certainty by early June,Anthem would need to consider adjustments, including reducing serviceareas, increasing rates, ending some products or exiting certain marketsaltogether.

Molina points out that the company entered into the contracts with CMS withthe expectation that payments would continue to be fully funded. “If theCSR is not funded, we will have no choice but to send a notice of defaultinforming the government that we are dropping our contracts for theirfailure to pay premiums and seek to withdraw from the Marketplaceimmediately,” Molina said. “That would result in about 650,000-700,000people losing insurance coverage in 2017, and we would not participate in2018.”

CMS included in the 2017 exchange contracts a clause that acknowledgestheir filings were based on assumptions that the CSRs would be in place,and thus their disappearance would be a cause for termination subject tostate law.

2. Administration

President Trump Names Charmaine Yoest to Top HHS Post

On April 28, President Donald Trump said he would name Charmaine Yoest tobe assistant secretary of public affairs at HHS.

Charmaine Yoest is a senior fellow at American Values and previously servedas president and CEO of Americans United for Life, a public interest lawfirm. She began her career serving in the White House under Ronald Reaganin the Office of Presidential Personnel.

The assistant secretary of public affairs shapes communications efforts forthe entire agency.

CMS Office of Minority Health Releases Medicare Advantage Reports on Disparities in Care

The CMS Office of Minority Health released new Medicare Advantage (MA) dataon racial and ethnic disparities in care. The data helps reveal theconnections between a person’s race, ethnicity and gender and the healthcare that they receive.

Two new reports focus on the treatment and patient care experiences for avariety of conditions. Thefirst report looks at racial and ethnic disparities by gender and examines differencesbetween black, Hispanic, Asian and Pacific Islander and white MAbeneficiaries in rates of colorectal cancer screening, treatment forchronic lung disease and other conditions as well as their ability toaccess needed care.

Thesecond reportlooks at racial and ethnic minorities; people with disabilities; members ofthe lesbian, gay, bisexual and transgender community; and rural populationsin quality of treatment for certain conditions among MA beneficiaries. Itshows that women receive better treatment for chronic lung disease andrheumatoid arthritis and are more likely than men to receive properfollow-up care after being hospitalized for a mental health disorder.

For more information,click here.

Anthem Continues Consideration of 2018 Obamacare Option

Anthem is still evaluating how aggressively to compete for Obamacarecustomers next year as Republicans struggle to repeal the health care law.

“We will continue to focus on participating in only those markets which areon a visible path toward sustainability,” Anthem CEO Joseph Swedish said onan April 26 call with investors to discuss first quarter earnings.

Anthem officials applauded a recent Trump administration regulation meantto stabilize the Obamacare marketplaces. But they expressed concerns aboutwhether Washington will continue funding cost-sharing subsidies and calledfor elimination of Obamacare’s health insurance tax.

Anthem had 1.1 million exchange customers at the end of March—or roughly 10percent of the total market. An additional 500,000 individual marketcustomers are in Obamacare plans purchased outside the marketplaces, and300,000 are in non-compliant plans.

Anthem is the largest Blue Cross Blue Shield plan in the country,dominating the Obamacare marketplaces in many of the 14 states where itprimarily does business.

Anthem officials continue to seek approval of the company’s proposed $54billion acquisition of Cigna, even though Cigna tried to terminate themerger after a federal judge blocked it. The merger case is on appeal.

3. Courts

FDA May Need to Weigh In to Solve Biosimilar Dispute, Supreme Court Justices Say

The U.S. Supreme Court heard arguments April 26 in a case that pittedbranded biologic maker Amgen against biosimilar maker Sandoz. Sandoz wasthe first company to get a biosimilar approved in the U.S.—a copycat ofAmgen’s Neupogen, which is used to prevent infections in cancer patients.The case will have broad consequences for how fast cheaper versions ofbiologic medicines—near copycats of some of the most expensive drugsavailable today—reach patients.

Sandoz is protesting a Federal Circuit decision that said a biosimilarmanufacturer must await FDA approval before providing the brand company alegally mandated 180-day notice of intent to market a competing product.Sandoz says this ruling gives brand biologics an additional six months ofmarketing exclusivity that was not intended by Congress. The U.S.government agreed with Sandoz and argued in its favor at the SupremeCourt.

Amgen, meanwhile, is protesting a Federal Circuit decision that arose fromthe same case—that biosimilar companies do not have to engage in apatent-sharing process with the branded biologic manufacturer. Amgen arguesthis ruling makes it difficult for companies to determine whether they wantto file patent infringement lawsuits before a biosimilar is sold. The U.S.government disagreed with Amgen and argued in favor of the FederalCircuit’s ruling.

Supreme Court justices suggested that the best way to resolve disputesbetween brand and biosimilar companies over a law that allows the FDA toapprove copycat biologics may be to have the agency issue regulationsbefore the disputes are interpreted by the high court.

Justice Stephen Breyer said there seems to be a lot of ambiguity in thebiosimilar pathway that was created by Obamacare, and that he felt FDA wasbest placed to help interpret the conflicts at hand through regulation. Hesaid there are “many things he did not understand,” and that FDA rulemakingas a first step would likely lead to a better outcome than if the justices,who are unfamiliar with the intricacies of the biosimilar process, try andmake sense of the law without the agency’s input.

Breyer said that if FDA weighs in on the law through rulemaking first, thenthe drug companies could go back to the courts if they felt the agency’sinterpretation didn’t align with Congress’s intent. He also was notpersuaded that the testimony of the assistant to the solicitor generalcould take the place of FDA’s interpretation of the process, asSandoz argued.

Breyer’s approach got the support of his much more conservative colleagueAnthony Kennedy, while fellow liberal Justice Ruth Bader Ginsburg askedwhether the U.S. Patent and Trademark Office would perhaps have a role inclarifying the law.

However, Sandoz’s attorney said she did not think FDA or the PTO would haveany ability to intervene.

But Breyer disagreed. He said FDA wouldn’t need “explicit regulatoryauthority,” noting there are many situations in which it would beappropriate to defer to an agency’s informal interpretation.

Anthony Yang, the assistant to the solicitor general, said FDA hadpreviously been petitioned to do rulemaking on some of these topics anddeclined.

Many of the justices did not ask questions; Samuel Alito and the almostalways quiet Clarence Thomas were completely silent, making it hard tointerpret how the court will ultimately rule.

Other justices, including Sotoymayor, seemed to agree with Sandoz’sposition—that the law did not mandate that patent information be shared,making the practice optional.

4. State Activities

California: California Regulator Asks Insurers to File Two Sets of Premiums

California insurance commissioner Dave Jonesis askinginsurers to file two sets of premium requests for 2018 to account foruncertainty about Obamacare’s future.

The California Department of Insurance wants insurers to file ratesassuming continued implementation of the Affordable Care Act, as well as aseparate set that anticipates the Trump administration halts enforcement ofthe individual mandate and gets rid of the law’s cost-sharing subsidies.

Without a congressional appropriation for the cost-sharing subsidies, stateregulators and insurers have warned of significant rate increases for nextyear that could destabilize the health law’s markets.

The Trump administration told lawmakers last week that it would continuefunding the cost-sharing subsidies.

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.

FDA Submits Interim Final Rule on Long-Delayed Menu Labeling Rule

On April 27, FDA submitted aninterim final ruleto the White House Office of Management and Budget concerning along-delayed menu labeling rule. By submitting an interim final rule to OMBthey are delaying its existing final rule, slated to take effect May 5. Theapparent change in course follows arecent petitionby the National Association of Convenience Stores and the National GrocersAssociation asking FDA to push back the final rule’s effective date.

The move to submit the interim final rule follows years of controversy anddebate about the menu labeling requirements, which stem from alittle-noticed provision in the Affordable Care Act that calls formandatory calorie disclosure on menus at chains that have 20 or morelocations.

The agency’s notice to OMB offers no detail about whether it is seekingother changes to the rule, but says FDA will be taking comments.

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.

CMS is Accepting Measure Submissions for the Advancing Care InformationPerformance Category until June 30

CMS is still accepting measures for the Advancing Care Informationperformance category of the Merit-based Incentive Payment System (MIPS).The Annual Call for Measures and Activities ends June 30, 2017.

CMS encourages providers to identify and submit measures for the MIPSAdvancing Care Information performance category. To be considered,proposals must include specific criteria including, but not limited to,measure description, measure type and numerator and denominatordescriptions.

CMS requests that stakeholders consider outcome-based measures, patientsafety measures and cross-cutting measures that use certified EHRtechnology to support the improvement activities and quality performancecategories of MIPS.

Use theAdvancing Care Information Submission Formto propose measures for inclusion, and send the form toCMSCallforMeasuresACI@ketchum.com.

To learn more about the process for submitting measures, please visit theCall for Measureswebpage, and review theCall for Measures and Activities fact sheet.

CMS Looks to Boost Medicare Payments to Rehab Hospitals, NursingFacilities and Hospices

CMS could boost Medicare payments to a swath of rehabilitation hospitals,nursing facilities and hospices under a trio of new proposed rules.

On April 27, the agency floated a$390 million bumpin federal payments to skilled nursing facilities in 2018—or roughly 1percent higher than this year. Hospices, meanwhile,would receivea 1 percent increase worth $180 million.