Washington Healthcare Update

June 26, 2017

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This Week: To vote for the Better Care Reconciliation Act of 2017 or to voteagainst—that is the question facing senators this week…Magic number forpassage is 51 senators or 50 senators and the vote of the vice president.

1. Congress



2. Administration

3. Courts

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


Rep. Cummings and Rep. Welch Slam Trump on Drug Prices

House Oversight Committee ranking member Elijah Cummings (D-MD) and Rep.Peter Welch (D-VT), who met with Trump on drug prices in March, sayrecently leaked details of an upcoming executive order on drug pricessuggest that Trump has “abandoned these promises in favor of the verypharmaceutical lobby you warned of.”

During the presidential campaign and early into his administration, Trumpexpressed a willingness to allow consumers to import drugs from Canada andto empower Medicare to negotiate with drug makers. However, a leaked draftof the White House’s executive order would include a number ofindustry-friendly provisions.

“Simply put, Mr. President, these measures utterly fail to make good onyour promise to the American people to take aggressive action to cut theskyrocketing price of prescription drugs,” Cummings and Welchwrote (repletter 6.23.pdf) to Trump. “Six months into your presidency, the pricingpower of the pharmaceutical industry continues—unabated and unchecked.”

Diabetes Caucus Writes PhRMA, AHIP, PCMA on RisingPrice of Insulin

Congressional Diabetes Caucus co-chairs Reps. Diana DeGette (D-CO) and TomReed (R-NY) sent letters to the heads of the drug, insurance and pharmacybenefits manager lobbies on June 22, requesting a meeting to discuss theincreasing cost of insulin and policy solutions to bring the price downbefore the end of July.

“Both the underlying cost of insulin and the direct cost burden on patientswith diabetes have risen in recent years,” the pair wrote. “People skipdoses, fail to pay rent or buy groceries and even resort to an insulin‘black market’ in order to afford their insulin. No one should be forced tomake these difficult choices,” they added.

To read the letter,click here.


GOP Senate Releases Discussion Draft of Legislation to Repeal and Replace the Affordable Care Act

Amid complaints that the legislation was being written in secret, SenateMajority Leader Mitch McConnell released the “Better Care ReconciliationAct of 2017,” legislation to repeal and replace the Affordable Care Act. Bythe afternoon, four conservative senators had come out against it: RonJohnson (R-WI), Ted Cruz (R-TX), Rand Paul (R-KY) and Mike Lee (R-UT).Moderate GOP senators concerned about Medicaid were studying the bill andwaiting for the Congressional Budget Office score. Two GOP governors,Kasich of Ohio and Sandoval of Nevada, in separate statements said theywere deeply concerned about the Medicaid portion of the bill. Sandoval madeclear he was in touch with Senator Dean Heller (R-NV), considered by someto be the most vulnerable Republican senator up for re-election becauseNevada went for Clinton in the presidential race and the state has expandedMedicaid.

The necessary number for passage under reconciliation rules is 51.McConnell can only afford to lose two from his caucus and the vicepresident would vote to break the tie. It is expected that the bill willhave some changes made before it hits the floor of the Senate to addressconcerns of some senators who are on the fence. However, key to some willbe the Congressional Budget Office score, which will likely be releasedMonday.

What does the bill do? Below is the legislation in a nutshell—but the billcould change.

  • Medicaid expansion will stay as is under the Affordable Care Act for three years, then a three-year phasedown of the enhanced funding will start.
  • States can choose their base years for per-capita caps based on eight consecutive quarters from first quarter of 2014 through second quarter of 2017. The annual inflator of the caps will remain at the House level until 2025, and then will be reduced to the urban consumer price index. Disabled kids will be carved out of the caps.
  • The House block grant option for states remains on the table, but children, the elderly and the disabled would not be included under the block grant.
  • States that “underspend” within their caps will receive bonus “quality payments.”
  • States that didn’t expand Medicaid don’t hit the per-person national average for disproportionate share hospital payments will get a funding bump so that they hit the national average.
  • The House state innovation fund for nonexpansion states will stay.
  • Medicaid provider taxes will be cut by 0.1 percent every year, ending in 2025.
  • The so-called “IMD exclusion” is amended to allow for opioid treatment for 30 days, but not to exceed 90 days within a calendar year.


  • Cost-sharing reduction payments to insurers on the state exchanges will be funded through 2019.

Stabilization Fund

  • Congress will fund short-term reinsurance pools for four years: $15 billion in 2018 and 2019; $10 billion in 2020 and 2021.
  • Long-term funding for states will be flexible, but a percentage must be used for reinsurance, and will be distributed from 2019 through 2026: $8 billion in 2019; $14 billion in 2020 and 2021; $6 billion in 2022 and 2023; $5 billion in 2024 and 2025; and $4 billion in 2026.
  • States will have to spend their money within three years, or their appropriation will be redistributed to other states that need it.

1332 Waivers

  • The Senate language will codify a $2 billion incentive for states to use 1332 waivers to redesign their insurance markets. This approach gets around the controversial MacArthur amendment from the House. States will be able to waive essential health benefits and subsidies off the exchanges, but by using 1332 waivers instead.

Tax Credits

  • ACA subsidies will remain in play for 2018 and 2019.
  • The GOP-proposed tax credits will be targeted toward low-income and the elderly.
  • Starting in 2020, people from 0-350 percent of poverty level will be eligible for an advanceable, refundable tax credit unless they are eligible for Medicaid.
  • No affordability test, so an employer offer will be counted as coverage.
  • The benchmark for the credits is 58 percent actuarial value of qualified health plans with essential health benefits.


  • A one-year defunding of Planned Parenthood
  • Wipes out the Prevention Fund

For more detail see thesection by sectionprepared by the Senate GOP staff.

2. Administration

HHS Pays CSRS for June

The Department of Health and Human Services (HHS) has paid insurers theACA’s cost-sharing reduction payments for June, but is still decidingwhether to make the payments going forward. Insurers were to file rates byJune 21 for next year.

Both Senator Lamar Alexander (R-TN), chairman of the Health Education,Labor and Pensions Committee, and Rep. Kevin Brady (R-TX), chairman of theWays and Means Committee, have called for the payments to be made. Inaddition, Sen. Ron Johnson (R-WI) has called for Congress to pass ashort-term market stabilization bill before moving forward with largerhealth reform legislation. Former House Speaker Newt Gingrich penned anop-ed calling for the same.

ONC Seeking Hospitals to Participate in Measure Development Feedback Opportunity

The Office of the National Coordinator for Health Information Technology(ONC) is currently looking for hospitals to help this summer with initialqualitative testing activities of their health information technologysafety measure.

The measure is focused on reducing potentially inappropriate duplicateorders for medications, laboratory tests, radiological exams andprocedures.

To assist with this activity, contact Emily Newton atENewton@mathematica-mpr.com.

FDA to Create a Plan at Lowering Costs and Improving Trial Designs

In testimony before the Senate Appropriations Committee on June 20, FDAAdministrator Scott Gottlieb announced that the agency will create a“Medical Innovation Development Plan” aimed at lowering health care costsby facilitating development of drugs to treat costly rare diseases throughimproved adaptive trial designs and statistical tools. The BiotechnologyInnovation Organization said Gottlieb’s commitment to streamline clinicaltrials would improve outcomes and lower costs, but Public Citizen said theplan would lower the evidentiary standard for drug approvals and pose newrisks to consumers.

Gottlieb also said FDA is working to clear a backlog of approximately 200pending orphan drug designation requests within 90 days, and committed toreviewing any new request within 90 days as part of the new plan.

Gottlieb told Senate appropriators that the upcoming innovation plan willreduce health care costs by incentivizing development of new drugs forcostly diseases. The plan will “include a broad range of steps we’ll taketo make sure that our own regulatory tools and policies are modern andrisk-based and designed to facilitate the development of potentiallybreakthrough new treatments.”

While the innovation plan appears more geared toward brand products, theFDA administrator told House appropriators last month that FDA would alsocreate a drug competition plan with a focus of getting more generic drugsto market.

FDA Issues Draft Guidance to Speed Some Generic Drug Applications

FDA issued draft guidance last week that sets up a new presubmissionprocess for certain generic drug applications. FDA Administrator ScottGottlieb says this process could cut two months off review times andincrease access to affordable drugs.

Under the draft guidance, applicants submitting a presubmission facilitycorrespondence (PFC) containing manufacturing and bioequivalence facilityinformation may be awarded priority review. The PFC will help FDA determinewhether facility inspections are necessary and potentially shorten thereview timeline.

“If ANDA applicant sends FDA Pre-Submission Facility Correspondence 2months prior to ANDA submission, then ANDA can obtain priority review,”Gottlieb tweeted. “Priority review means 8 month review goal. Standardreview is 10 months. Faster review of priority ANDAs expands access toaffordable drugs.”

3. Courts

Supreme Court Rules to Limit “Forum Shopping” by Patients

The U.S. Supreme Court ruled on June 19 for Bristol-Myers Squibb’s effortto limit where patients can sue to seek compensation for harm caused bydrugs. The justices ruled, 8-1, in a case that pitted Bristol-Meyers Squibbagainst the state of California. The questions in the case centered aroundwhether plaintiffs residing outside California who claim they were harmedby the company’s blood thinner Plavix could join in a lawsuit inCalifornia brought by California residents against the New York-basedcompany. The out-of-state residents didn’t buy the drug or take it inCalifornia, and the product wasn’t manufactured in the state. California isthought to be a particularly friendly state for injured plaintiffs.

“The mere fact that other plaintiffs were prescribed, obtained, andingested Plavix in California—and allegedly sustained the same injuries asdid the non-residents—does not allow the State to assert specificjurisdiction over the nonresidents’ claims,”wroteJustice Samuel Alito in the court’s opinion.

4. State Activities

California: Bill Allowing “Safe Space” for Injections to Be Heard in State Legislature

A bill designed to help reduce overdose deaths could make California thefirst state where intravenous drug users could have a “safe space” forinjections. Coming up for a key committee vote in the state Legislature,A.B. 186 would authorize eight California counties—Alameda, Fresno,Humboldt, Los Angeles, Mendocino, San Francisco, San Joaquin and SantaCruz—to pilot these so-called safe injection sites. Drug use supervised byhealth care professionals would be allowed on site. The bill is slated tobe heard in the state Senate health committee on July 5. A similar billdied in committee last year.

Ohio: Republican Senators Want a Freeze on Medicaid Expansion Enrollment

Republicans in the Ohio Senate want to freeze Medicaid expansion enrollmentstarting in July 2018. The provision made it into the state budget the OhioSenate approved earlier this week. Lawmakers must resolve the issue by June30, when Ohio’s current fiscal year ends and the Legislature has to pass anew budget. Kasich has not stated his position on the enrollment freeze butcontinues to advocate for preserving Medicaid expansion, which coversroughly 700,000 people in Ohio.

5. Regulations Open for Comment 

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.

CMSis planningto increase reimbursement to rehab hospitals by $80 million for 2018, inaddition to eliminating a penalty on facilities that don’t submit certaindata to the federal government on time.

Similar toproposed payment rules for otherproviders, CMS is asking the industries for input on regulations it shouldoverhaul or eliminate. CMS Administrator Seema Verma and HHS Secretary TomPrice have pledged to review all of the agency’s rules in a bid to cutunnecessary or burdensome regulations.

Comments on the trio of rules must be received no later than 5 p.m. on June26, 2017.

CMS Seeking Comments on Data Elements in IMPACT Act

CMS has contracted with the RAND Corporation to develop standardizedpatient/resident assessment data elements in alignment with the ImprovingMedicare Post-Acute Care Transformation Act of 2014 (IMPACT Act).

CMS seeks comments from stakeholders on data elements that meet the IMPACTAct domains of cognitive function and mental status; medical conditions andco-morbidities; impairments; medication reconciliation; and carepreferences. The public comment period opens on April 26, 2017, and closeson June 26, 2017.

For more information, view thepublic commentwebpage.

CMS Publishes Post-Acute Care Proposed Rules

On May 11, CMS published the following proposed rules:

CMS Issues Proposed Revision Requirements for Long-Term CareFacilities’ Arbitration Agreements

On June 5, CMS issued proposed revisions to arbitration agreementrequirements for long-term care facilities. The proposed revisions wouldhelp strengthen transparency in the arbitration process, reduce unnecessaryprovider burden and support residents’ rights to make informed decisionsabout important aspects of their health care.

The Reform of Requirements for Long-Term Care Facilities Final Rule,published on Oct. 4, 2016, listed the requirements facilities need tofollow if they choose to ask residents to sign agreements for bindingarbitration. The final rule also prohibited predispute agreements forbinding arbitration. The American Health Care Association and a group ofnursing homes sued for preliminary and permanent injunction to stop CMSfrom enforcing that requirement. The court granted a preliminary injunctionon Nov. 7, 2016. After that decision, CMS reviewed and reconsidered thearbitration requirements in the 2016 Final Rule.

The proposed rule focuses on the transparency surrounding the arbitrationprocess and includes the following proposals:

  • The prohibition on predispute binding arbitration agreements is removed.
  • All agreements for binding arbitration must be in plain language.
  • If signing the agreement for binding arbitration is a condition of admission into the facility, the language of the agreement must be in plain writing and in the admissions contract.
  • The agreement must be explained to the resident and his or her representative in a form and manner they understand, including that it must be in a language they understand.
  • The resident must acknowledge that he or she understands the agreement.
  • The agreement must not contain any language that prohibits or discourages the resident or anyone else from communicating with federal, state or local officials, including federal and state surveyors, other federal or state health department employees, or representatives of the State Long-Term Care Ombudsman.
  • If a facility resolves a dispute with a resident through arbitration, it must retain a copy of the signed agreement for binding arbitration and the arbitrator’s final decision so it can be inspected by CMS or its designee.
  • The facility must post a notice regarding its use of binding arbitration in an area that is visible to both residents and visitors.

This proposed rule is scheduled to be published in the Federal Register on June 8, 2017, and comments are due by Aug. 7,2017. For more information,click here.

CMS Proposes MACRA Rule

On June 19, CMS issued aproposed rulethat would make changes in the second year of the Quality Payment Programas required by the Medicare Access and CHIP Reauthorization Act of 2015(MACRA).

The 1,058-page rule continues the “pick-your-pace” option in year two ofthe program, letting doctors report a limited amount of quality data to beexempted from Medicare’s penalties.

CMS creates a “virtual group” reporting option, allowing doctors to poolthe information on how they care for patients and be subjected toMedicare’s quality payment scheme.

CMS is also increasing the minimum number of patients doctors can treatbefore being subject to the program’s Merit-based Incentive Payment System.It establishes more flexibility for doctors who see limited numbers ofpatients face to face or in a hospital. For 2017, roughly 800,000clinicians were exempt from the MIPS program.

CMS will not require doctors to use 2015 certified EHRs next year, as ithad ordered during the Obama administration. However, clinicians areoffered bonuses for using new versions of the software. Medicare also willdelay for another year judging doctors for how much they spend for treatingpatients.

Comments on the rule are due no later than 5 p.m. on Aug. 21, 2017. For afact sheet on the proposed rule,click here.

6. Reports

GAO: VA Needs Improved Management Processes for IT Systems That Support Health Care

In a new report, GAO found that the Department of Veterans Affairs (VA) hasestablished information technology (IT) management processes that arepartially consistent with leading practices.

VA has issued strategic plans that identify goals and objectives related tohealth IT; established investment review boards at the department level andwithin the Veterans Health Administration (VHA) that are responsible forselecting IT investments aligned to VHA priorities; and documented VHA’score business functions within an enterprise architecture. However, the ITstrategic plans do not include performance measures and targets for theirdefined objectives, VA’s department-level IT investment board has beeninactive and its investment selection guidance lacks criteria, and thedepartment has not fully identified metrics aligned to core businessfunctions to inform investment decisions. The VA risks having IT systemsthat may not fully support VHA’s mission until it can improve theseprocesses, GAO found.

To read the report,click here.

If you have any questions, contact the following individuals atMcGuireWoods Consulting:

StephanieKennan, Senior Vice President
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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