Washington Healthcare Update

July 3, 2017

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This Week: By Oct. 1, federal funding runs out, the Children’s HealthInsurance Program needs to be renewed and the FDA user fee legislation needs tobe reauthorized (or the FDA has to lay off staff). Were you looking for repealand replace legislation? So is the Senate.

Because Congress will be in recess for the Fourth of July, the nextnewsletter will be July 17. Happy Fourth of July!

1. Congress



2. Administration

3. Regulations Open for Comment

4. Reports

1. Congress


House Appropriations Subcommittee Moves FY 2018 Spending Bill

The House Appropriations Subcommittee for Agriculture, Rural Development,Food and Drug Administration (FDA), and Related Agencies released theirspending bill for the 2018 fiscal year. The bill increases spending forFDA, appropriating $5.1 billion, an increase from FY 2017. Included in thebill are riders that target the FDA’s regulation of tobacco products likeelectronic cigarettes and premium cigars. Riders would slow down the FDA’sregulation of these products. A markup has not been scheduled for thismeasure yet.

The bill can be foundhere.

House Passes Bill to Address Malpractice Awards

On June 28, the House passedH.R.1215, a bill that would cap at $250,000 the amount of damages of medicalmalpractice lawsuits that involve government-subsidized health care. Thebill narrowly passed through the chamber by a vote of 218 to 210, with manyconservatives and Democrats opposing it. Conservatives raised issues offederalism and preemption of states’ rights.

The bill’s language can be foundhere.

House to Vote on FDA User Fees in July

Following the July 4th recess, the House hopes to vote on the FDA user feepackage. The Senate Health, Education, Labor and Pensions Committee and theHouse Energy & Commerce Committee have been working together to marrythe bills in order to get a vote. Should reauthorization not happen beforethe end of July, the FDA will have to lay off employees.


Senate Postpones Repeal and Replace Vote

The Senate Republican Leadership faces a tough road to get a repeal andreplace bill launched. After much anticipation, the Congressional BudgetOffice released its score of theBetter Health Care Reconciliation Act. It rapidly became clear that conservatives and moderates both hadsignificant issues with the bill, and a number of them would not vote forthe motion to proceed, a procedural measure needed to begin debate on thefloor of the Senate. It was also clear that simply “tweaking” provisions ofthe bill would not be enough to bring 50 Republican senators along tosupport the legislation.

On June 27, Senate Majority Leader Mitch McConnell announced that he wasgoing to postpone the vote until after the Fourth of July recess. SenateRepublicans spent the rest of the week shuttling to and from the majorityleader’s office in the hopes of changes to the bill that would beacceptable.

The bill has roughly five areas that could be changed.

  1. Medicaid: The Senate health bill would gut Medicaid by rolling back the Affordable Care Act’s expanded coverage and reducing its funding by $772 billion over 10 years.
  2. Subsidies: The current bill scales back the Affordable Care Act’s subsidies and cuts off eligibility at 350 percent of the federal poverty line (compared with the ACA’s 400 percent threshold). The restructuring disproportionately benefits younger and healthier enrollees.
  3. Leaving too much of the ACA structure/rolling back regulations: Conservatives were concerned that the legislation did not do enough to repeal the Affordable Care Act’s structure or roll back regulations implementing it.
  4. Planned Parenthood: The legislation would “defund” Planned Parenthood for a year. Both Senators Murkowski and Collins were concerned that this would reduce access for women to health care services. Senators Murkowski and Collins had drafted an amendment related to this.
  5. Sweeteners: The Senate bill achieves more in savings toward deficit reduction than it needs to, therefore, funds can be added back in for such items as opioid treatment, or into tax credits to reduce the burden of particularly expensive insurance markets, or other requests of senators.

By the end of the week it was clear that as the majority leader moved toaddress the concerns of one group, it opened up other divides. For example,one proposal now being considered is to maintain the net investment tax anduse those funds toward making health care affordable for low-incomeindividuals. For some conservatives, not repealing this tax is a dealbreaker. That proposal along with two others were sent to the CongressionalBudget Office (CBO) to be scored. The other two provisions are a proposalto expand health savings accounts and to add $45 billion to the bill foropioid treatment.

CBO will use the week to score the proposal. When members return they willregroup. However, the Senate has only 13 legislative days before the Augustrecess. Congress has other pressing issues including funding the governmentfor the next fiscal year, CHIP renewal and FDA User Fee Reauthorization toaddress in September.

2. Administration

FDA Submits Nutrition Facts Label Rule to OMB

Following the announcement earlier this month to push back the compliancedeadline for regulations updating nutrition facts and serving sizes, theFDA formally filed an extension of compliance to the White House OMB. TheFDA did not give a timeline for when it would be officially in compliance.

The formal submission from the FDA can be found here.

The earlier announcement can be foundhere.

FDA Releases Orphan Drug Modernization Plan

The FDA has released the Orphan Drug Modernization Plan that looks toreview all orphan drug designations in the past 120 days and aims torespond to new requests in 90 days by establishing a special SWAT team.Following this addition, the FDA will additionally put an Orphan DrugsCouncil in place.

The press release for the plan can be foundhere.

The Orphan Drug Modernization Plan can be foundhere.

President Nominates Surgeon General

On June 29 President Trump nominated Jerome Adams to be the next surgeongeneral. Previously, Adams served as state health commissioner appointed bythen-Governor Mike Pence and was also on the board of the IndianaUniversity School of Medicine. Adams is a trained anesthesiologist.

The press release can be foundhere.

3. Regulations Open for Comment 

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.

CMS Proposes 2018 Policy and Payment Rate Changes for End-Stage RenalDisease Facilities

On June 29, the Centers for Medicare & Medicaid Services (CMS) issued aproposed rule that would update payment policies for the End-Stage RenalDisease (ESRD) Prospective Payment System (PPS). The rule covers paymentrates for renal dialysis services, including updates to acute kidney injury(AKI), furnished to beneficiaries on or after Jan. 1, 2018.

The ESRD Quality Incentive Program (QIP) proposed changes are for paymentyears 2019, 2020 and 2021, and a number of key dialysis data methodologiesand quality measures. The proposed rule also requests comment on how toinclude individuals with acute kidney injury in the ESRD QualityImprovement Program.

In addition to the proposed rule, CMS is releasing a request forinformation to welcome continued feedback on the Medicare program. CMS iscommitted to maintaining flexibility and efficiency throughout Medicare.Through transparency, flexibility, program simplification and innovation,CMS aims to transform the Medicare program and promote the availability ofhigh-value and efficiently provided care for its beneficiaries.

Comments are due no later than 5 p.m. on Aug. 28, 2017.

For a fact sheet on the proposed rule, please clickhere.

For the ESRD proposed rule (CMS 1674-P), please click here.

4. Reports

Generic Drug User Fees: Application Review Times Declined, But FDAShould Develop a Plan for Administering Its Unobligated User Fees

A new GAO report found that nearly 90 percent of the prescription drugsdispensed in the United States are generics. The FDA must approve thesedrugs before they are marketed.

In 2012, a law allowed FDA to collect fees from drug manufacturers tosupport the review process. FDA committed to improving its process andmeeting specific performance goals such as decreasing review times.

GAO found that FDA’s reliance on user fees increased and that it surpassedmany of its performance goals. However, GAO recommended that FDA make aplan for the fees it does not spend in the same year they are collected.

To read the report,click here.

Physician Workforce: Locations and Types of Graduate Training WereLargely Unchanged, and Federal Efforts May Not Be Sufficient to MeetNeeds

In a recently released GAO report, the GAO found that, from 2005-2015, thetypes and locations of residents generally remained unchanged, but therewas growth in certain areas. Residents were concentrated in the Northeastand in urban areas. And, while many trained in primary care, primary careresidents often subspecialize in other fields. Federal efforts to increasegraduate medical education (GME) in rural areas and primary care werelimited. In 2015, the GAO had recommended HHS develop a plan for its healthcare workforce programs—it has yet to do so.

The GAO also projects a deficit of over 20,000 primary care physicians by2025. Residents in GME affect the supply of physicians. Federal GMEspending is over $15 billion/year.

To read the report,click here.

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

StephanieKennan, Senior Vice President
Anne Starke, Research Associate

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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