Washington Healthcare Update

June 12, 2017

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This Week: Senate Republicans continue to work on repeal and replace…FDA User Fee Reauthorization moves forward in the House…Drug pricing is a focus of committees

1. Congress



2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


House Energy and Commerce Committee Moves Forward FDA User Fee Bill

On June 7, the House Energy and Commerce Committee reported out a billreauthorizing FDA user fee programs for drugs and medical devices in aunanimous 54-0 vote. The user fees covered by the legislation account fornearly half of the FDA’s budget for regulating medical products. The SenateHELP Committee voted its reauthorization out of committee nearly one monthago.

Chairman Walden (R-OR) offered a bipartisan manager’samendmentincluding measures approved at a health subcommittee markup last month thatwas adopted by voice vote. The subcommittee last month approved fourbipartisan amendments, including one designed to increase generic drugcompetition to address price hikes of older drugs and another that wouldestablish a category of FDA-approved over-the-counter hearing aids.

The full committee also adopted four bipartisan amendments that would:clarifythe FDA review process for medical imaging devices intended to be used inconjunction with contrast agents;removethe FDA’s high-risk classification for low-risk medical devices;requirepilot projects to generate “reliable and timely” safety surveillance dataon approved medical devices; and require HHS to submit a report to Congressabout how FDA ensures the safety and continued effectiveness of medicaldevices that have been serviced.

The panel considered several controversial proposals dealing with marketingand importation. One from Rep. Morgan Griffith (R-VA) would haveeasedrestrictions on off-label promotion of medicines. An amendment from Rep.Peter Welch (D-VT) would haveallowedfor the reimportation of drugs from Canada.

Griffith’s proposal drew threats from Democrats, including ranking memberFrank Pallone (D-NJ) and Gene Green (D-TX), who vowed to sink the entireuser fee package if the language was adopted. Congressional leaders fromboth parties and houses have stressed the need to keep contentious languageout of the must-pass package in order to ensure passage before the Augustrecess. The amendment was withdrawn.

Another amendment by Welch and David McKinley (R-WV)targetedattempts by some brand-name drug companies to use FDA’s risk managementprograms to block potential generic competitors’ access to samples of thebranded products that are needed to bring a generic to market. Thatmeasure, opposed by the industry, was withdrawn. The RACE for Children Act,which would require drug companies to research cancer treatments in kids,was not brought up for a vote, either.

In addition to the FDA user fee reauthorization legislation, the committeealso advanced bills that wouldexpandresearch of congenital heart disease,reauthorizea sickle cell disease and prevention program andallowdoctors and other health care providers to carry controlled substancesbetween practices in different states.

House Health Leaders Look into 340B

House Energy and Commerce Chairman Greg Walden (R-OR)askedthe Health Resources and Services Administration to provide any audits ofhealth providers participating in the drug discount program for 2015 and2016. The letter cited earlier audits, which “commonly find that coveredentities bill for duplicate discounts on the same drug, and divert 340Bdrugs to ineligible patients.”

The letter, signed by Oversight Subcommittee Chairman Tim Murphy and HealthSubcommittee Chairman Michael Burgess, also says, “HRSA’s lack of follow-upaudits when it finds violations is troubling and combined with the highrate of noncompliance, indicates a need for additional oversight of thisprogram.”

340B Health, representing hospitals and health systems participating in theprogram, issued a statement citing “extensive additional oversight of 340Bhospitals and other providers in recent years,” with 644 covered entityaudits completed since 2012 and 400 more planned for 2017 and 2018.

Bipartisan Letter Urges Price to Overturn Third-Party Payer Ban

A group of 184 House Democrats and Republicans wrote aletter to HHS Secretary Tom Price asking him to issue a rule that wouldexplicitly require qualified health plans to accept premium payments fromthird-party payers, including charities and hospitals. The rule sought bythe lawmakers would reverse CMS’s controversial guidance from 2014, but, ifissued, also would address a December interim final rule that effectivelycurbed dialysis facilities from helping patients get assistance throughnonprofit charities.

Cramer has twice introduced bipartisan legislation to make sure nonprofitsand other groups can help people with their premiums.

In December, CMS issued an interim final rule that allowed health plans toreject coverage for end-stage renal disease patients who receive premiumhelp from other parties, which kidney care and ESRD stakeholders sayeffectively blocks coverage for people with expensive preexistingconditions.


Senate HELP Committee to Hold Hearing on Drug Pricing

The Senate Health, Education, Labor and Pensions (HELP) Committee will holda hearing on June 13 at 10 a.m. The hearing will focus on the “the processof moving prescription drugs from the manufacturer to patients and how thedrug delivery system affects what patients pay when picking up theirprescriptions.”

For more information,click here.

Senate Takes Steps to Move Health Care Bill

On June 7, Senate Majority Leader Mitch McConnell (R-KY) took theprocedural first steps to move the Republican health care bill closer to afloor vote. McConnell asked for a second reading of the bill and for it tobe placed on the calendar. To vote by June 30, Republicans would have tohave their bill to the CBO about two weeks prior. Unlike the House, theSenate needs to have the score before its members vote on the bill becausethey are required to come up with $133 billion in savings. Staff hasalready started early discussions with CBO on pieces of what could be inthe bill. That gives the Senate only about 10 more calendar days tofinalize its legislation.

If a repeal bill is approved by the Senate by June 30, Republicans wouldstill have one month before the August recess to merge the House and Senatebills, which are expected to have major differences.

Congressmen Push Funding for State Health Insurance Assistance Program

A group of Senate Democrats and two independents wrote a letter urging theSenate Appropriations HHS subcommittee to fund the State Health InsuranceAssistance Program (SHIP) at the fiscal 2016 level after the most recentfiscal 2017 spending agreement cut $5 million from the program andPresident Donald Trump seeks to eliminate discretionary funding for theeffort in fiscal 2018. The letter was led by Sen. Chris Murphey (D-CT).

The letter asks HHS subcommittee Chair Roy Blunt (R-MO) and rankingDemocrat Patty Murray (WA) to provide $52.1 million for SHIP in fiscal2018, saying that restoring the funding to fiscal 2016 levels is criticalas more individuals become eligible for Medicare.

The National Council on Aging, the National Association of Area Agencies onAging and others are engaged in pushing back against proposed cuts.

Mandatory funding for SHIP would also need to be reauthorized for fiscal2018 to be continued. The Medicare Access and CHIP Reauthorization Actincluded $13 million for SHIP in fiscal 2016 and 2017 as part of fundingfor low-income outreach and assistance, the Congressional Research Servicenoted in a February report, but funding for these programs has not beenenacted for fiscal 2018 and runs out in October.

Misclassification of EpiPen May Have Cost Taxpayers $1.27 Billion

In a letter to Senator Chuck Grassley (R-IA), the Office of the HHSInspector General says taxpayers may have spent $1.27 billion too much forMylan’s EpiPen because the product was misclassified for years as a genericinstead of a brand-name drug. The estimate covers Medicaid spending on theEpiPen from 2006 to 2016.

That amount is close to three times the $465 million agreement that theDepartment of Justice and the company had reportedly negotiated last year,although the settlement has still not been finalized and no deal has beenconfirmed by DOJ.

Grassley’s office said that CMS recently provided documents showing that itrepeatedly told Mylan that the treatment had been misclassified, althoughit is unclear when CMS first raised the issue and what the agency did toforce a change.

2. Administration

CMS Announces IMPACT Act Special Open Door Forum

CMS recently announced it will be holding a Special Open Door Forum (SODF),which will provide information and solicit feedback pertaining to theImproving Medicare Post-Acute Care Transformation Act of 2014 (commonlyreferred to as theIMPACT Act). This SODF will focus on the goals of the IMPACT Act, update attendees onthe RAND contract activities for item development, including the upcomingnational testing, and identify opportunities for providers, consumers,stakeholders, researchers and advocates to become involved over the nextyear.

The forum will take place on Tuesday, June 20, from 2:00-3:00 p.m.

Visit theIMPACT Act SODF Announcement- 6-20-17for more information.

CMS Seeks Input on Reducing Regulatory Burdens of the Patient Protection and Affordable Care Act

On June 8, CMS issued a request for information (RFI) seekingrecommendations and input from the public on how to create a more flexible,streamlined approach to the regulatory structure of the individual andsmall group markets. CMS’s goal is to identify and eliminate or changeregulations that are outdated, unnecessary or ineffective; impose coststhat exceed benefits; or create inconsistencies that otherwise interferewith regulatory reform initiatives and policies.

Consumers who have obtained coverage through the exchanges are facingsignificant premium increases. A recentreportissued by the Department of Health and Human Services states that theaverage premium in the 39 states using HealthCare.gov in 2017 increased from$232 in 2013 to $476 in 2017, which is a 105 percent increase. Consumersare also dealing with fewer plans to choose from and a continuous stream ofissuers exiting the exchanges.

The RFI follows steps CMS has already taken to help improve the health caresystem, including issuing the Market Stabilization Final Rule on April 18,2017. This new rule will place downward pressure on premiums, limit specialenrollment period abuses and help to improve choices, while also reducingregulatory burden. The RFI will be open for public comment for 30 days.

To view the request for information,click here.

HHS Secretary Price Endorses Budget Cuts for the Agency

HHS Secretary Tom Price officially endorsed deep cuts to the agency’sfunding as part of a proposed fiscal 2018 budget, telling senators that HHSbadly needs an overhaul—not more money. Price, during the first of his twocongressional hearings, defended slashing the budget for antipovertyprograms like Medicaid and Temporary Assistance for Needy Families, as wellas stripping billions of dollars from agencies such as NIH. The cuts arepart of a bid to make HHS more efficient and effective, he told the SenateFinance Committee, rather than continue to throw money at programs thatPrice believes are not working.

Site-Neutral Payment Reform Pushed for Upcoming Outpatient Pay Rule

The Alliance for Site-Neutral Payment Reform asks that CMS use the upcomingoutpatient pay rule to pay equal rates to hospital outpatient facilitiesand doctor offices, which is the opposite of hospitals’ request.

Medicare pays far more for services in hospital-owned doctor offices thanin independent doctor offices, the site-neutral group states, so expandingsite-neutral policies would significantly reduce Medicare spending andlower copays for beneficiaries, who are responsible for 20 percent of thecost of services.

In 2014, Congress passed the Improving Medicare Post-Acute CareTransformation Act to set up the post-acute care sectors for eventualpayment reforms, including site-neutral pay. The following year, Congresswrote a law that directs CMS to lower doctor’s office rates to physicianpractices that hospitals buy and turn into outpatient departments. Thepolicy applies to off-campus outpatient facilities that were not billingMedicare as of Nov. 2, 2015. Hospitals then convinced Congress a year laterto include a measure in 21st Century Cures that exempts hospital outpatientdepartments that were in development when the site-neutral law took effect.

The Alliance for Site-Neutral Payment Reform wants site-neutral pay ratesapplied to all off-campus outpatient facilities.

The Alliance for Site-Neutral Payment Reform assembled reports on the trendof hospitals’ buying doctor practices, which the group says is largely dueto the pay rate differences that encourage doctors to sell out and cash in.Cancer doctor practices are especially vulnerable to hospital buyouts. AMilliman study found the portion of chemotherapy infusions the Medicarebeneficiaries receive in hospital outpatient departments increased from 16percent in 2004 to 46 percent 2014.

CMS could make administrative changes that help equalize pay rates for likeservices, the site-neutral groups says, such as eliminating hospitaloutpatient department facility fees. The group also says CMS should requirethat outpatient departments attest their off-campus provider-basedfacilities meet requirements for receiving higher OPPS payments. The HHSinspector general reported last year that about three-quarters of the 50hospitals it reviewed had not voluntarily attested their off-campusprovider-based facilities meet at least one requirement for higheroutpatient reimbursement.

CMS also should alert consumers to the cost of receiving care athospital-owned facilities, the group said. CMS’s website lets beneficiariesscroll through a list of covered services to see the availability andpotential cost of services. However, Medicare.gov does not includeinformation on costs associated with different care settings.

Medicare Cards Will No Longer Have Social Security Numbers

On May 30, CMS announced that new Medicare cards will use a unique,randomly assigned number, called a Medicare Beneficiary Identifier (MBI),to replace the Social Security-based Health Insurance Claim Number (HICN)currently used on the Medicare card. CMS will begin mailing new cards inApril 2018 and will meet the congressional deadline for replacing allMedicare cards by April 2019.

Providers and beneficiaries will both be able to use secure look-up toolsthat will support quick access to MBIs when they need them. There will alsobe a 21-month transition period during which providers will be able to useeither the MBI or the HICN, further easing the transition.

CMS has a websitededicated to the Social Security Number Removal Initiative (SSNRI) whereproviders can find the latest information and sign up for newsletters. CMSis also planning regular calls as a way to share updates and answerprovider questions before and after new cards are mailed beginning in April2018.

HHS Makes Grants Available to Treat People for Opioid Use

On May 31, HHS announced it was making $70 million in grants available tohelp communities and health care providers prevent opioid overdose deathsand treat people with opioid use disorder. This amount includes $28 milliondedicated to medication-assisted treatment.

Other funds—$41.7 million over four years—will be available to about 30grant recipients to train and provide resources for first respondersadministering FDA-approved emergency treatments for opioid overdose. Up to$1 million over five years will be available to one grantee to expandavailability of overdose reversal medications in health care settings andto establish protocols to connect patients who have experienced an overdosewith treatment.

These grants are in addition to $485 million in grants HHS announced inApril 2017 provided by the 21st Century Cures Act to address opioid abuseprevention, treatment and recovery.

FDA Orders Painkiller Off the Market

On June 8, the FDA told Endo Pharmaceuticals to pull its painkiller OpanaER from the market—the first time the agency has taken such an actionbecause of an opioid’s potential for abuse.

An agency review of postmarket surveillance data found “a significantshift” in the way the reformulated drug was being abused—from snorting tocrushing and injecting it.

“We will continue to take regulatory steps when we see situations where anopioid product’s risks outweigh its benefits, not only for its intendedpatient population but also in regard to its potential for misuse andabuse,” FDA Commissioner Scott Gottlieb said inan announcementof the decision.

The decision follows an advisory board vote in March that the drug’sbenefits no longer outweigh its risks. In 2012, Endo introduced areformulated version of Opana ER—first approved in 2006 — that includedabuse-deterrent properties. But the new formulation has been linked toinfectious disease outbreaks, including a 2015 HIV outbreak in Indiana tiedto injections of the drug.

FDA Advisory Committee to Meet About Two Biosimilar Applications

On July 13, FDA’s oncology advisory committee will meet to recommendwhether FDA should approve two biosimilar applications: Amgen’s biosimilarapplication for Genentech/Roche’s Avastin and Mylan GmbH’s application forGenentech’s Herceptin. There are no FDA-approved biosimilars for eitherbiologic. The panel will consider approval of Amgen’s biosimilar for allcurrently approved indications for Avastin: Metastatic Colorectal Cancer;Non-Squamous Non-Small Cell Lung Cancer; Glioblastoma; Metastatic RenalCell Carcinoma; Persistent, Recurrent, or Metastatic Carcinoma of theCervix; and Recurrent Epithelial Ovarian, Fallopian Tube, or PrimaryPeritoneal Cancer.

The panel will also consider approval of Mylan’s biosimilar to treatAdjuvant Breast Cancer; Metastatic Breast Cancer; and Metastatic GastricCancer—all indications for which Genetech’s biologic is currentlyindicated.

FDA has approved five biosimilars to date. On May 26, the Oncology AdvisoryCommittee also recommended approval of Hospira’s epoetin alfa biosimilar,but FDA has not yet approved the application.

Veterans Affairs Scraps VistA Electronic Health Record System

Secretary of Veterans Affairs David Shulkin has decided to scrap the VistAelectronic health record system and go with Cerner instead. Shulkin said hesigned a special authorization enabling him to skip the normal competitivebidding process and move ahead with a direct solicitation to Cerner. The VAwill not adopt the identical EHR that the Department of Defense uses, butintends to be located on a similar Cerner platform, Shulkin said.

3. State Activities

Illinois: Federal Judge Rules Illinois is not Complying With Court Orders to Pay Health Care Bills

A federal judge ruled this week that Illinois is not complying with courtorders to pay health care bills for low-income people while the statecontinues for a third year without a budget. The judge, however, did notorder the state to pay the $2 billion in unpaid medical bills. Instead, sheinstructed state attorneys to negotiate an agreement with Medicaidrecipients, which reportedly could happen in the coming days. The judge’sruling said the state has not lived up to its agreements in a decades-oldcivil case that required the state to keep making Medicaid payments in theevent of a financial crisis.

Michigan: State Would Pay Big to Keep Medicaid Expansion if Repeal BillBecomes Law

Michigan would have to pay up to $800 million per year to keep ObamacareMedicaid expansion if the House’s repeal bill becomes law. More than650,000 people are enrolled in the expanded program in Michigan and stateofficials say it would be very difficult to maintain the program if thosefunding cuts are enacted. Even though the Senate is rewriting the Housebill, the Senate is still discussing phasing out the enhanced federalfunding for expansion over a longer period of time.

4. 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.

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 the