Washington Healthcare Update

July 17, 2017

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This Week: Senate Releases Tweaks in Reform Bill…House Moves Forward on FDA User Fees…CMS Releases Annual Payment Rules

1. Congress



2. Administration

3. Courts

4. Regulations Open for Comment

5. Reports

1. Congress


Energy and Commerce Subcommittee Schedules 340B Hearing

Earlier this week, House Energy & Commerce Oversight Subcommitteeannounced a hearing date has been set to discuss the 340B drug discountprogram on July 18. Hearing witnesses include Captain Krista Pedley,director of the Office of Pharmacy Affairs at the Health Resources andServices Administration; Debbie Draper, director of health care at theGovernment Accountability Office; and Erin Bliss, assistant inspectorgeneral with the Office of Evaluation and Inspections at the HHS Office ofInspector General. The hearing follows E&C Chairman Greg Walden (R-OR)and health subcommittee Chairman Mike Burgess’s (R-TX) letter addressingconcern about program and lack of oversight.

Chairman Walden and Burgess’s letter can be found byclicking here.

For more information on the hearing,click here.

House Passes FDA User Fee Bill

On July 12, the FDA Reauthorization Act of 2017 passed the House floor byvoice vote. The bill, H.R. 2430, seeks to extend user fee programs thatfund the agency’s drug and medical device reviews for five years. The billnow heads to the Senate, and Senate HELP Chairman Lamar Alexander (R-TN)has said they plan to vote on the bill before the end of the month as itwas “pre conferenced.” If the bill does not pass, August 1 the FDA will berequired to notify employees of layoffs.

To view the FDA Reauthorization Act of 2017, pleaseclick here.

White House Raises Issues with House-Passed FDA User Fee Bill

The White House once again urged Congress to require drug and devicecompanies to pay for the full cost of their FDA reviews, in a statement onthe FDA Reauthorization Act,H.R. 2430, passed by the House Wednesday.

The administration has proposed that FDA receive more than $2 billion inmedical product industry fees in fiscal year 2018. This would allow thegovernment to cut FDA’s taxpayer financing, but still receive the sameamount of money overall. But lawmakers and the industries opted not tochange the fee amounts negotiated by the Obama administration, which wouldimpose an additional cost on the drug and device industries.

The White House also took issue with portions of the bill it said wouldprovide additional marketing exclusivity to manufacturers, saying that thiswould make exclusivity unpredictable and decrease competition. Theadministration also has a number of technical requests, including adjustingthe foreign drug facility inspection fee.

Thestatementput out by the White House the day after the House had passed the bill didnot threaten a veto. The Senate still needs to vote on the user fee packageand is expected to do so before the August recess.

NIH Gets Appropriations Increase

The House Appropriations Labor-HHS Subcommittee released a bill earlierthis week giving NIH a $1.1 billion raise for FY 2018. This would provideNIH with $35.2 billion next year and is $8.6 billion over whatadministration officials had requested. The bill also contains languagemandating NIH reimburse grantee research institutions for facilities andother costs. This also goes against White House requests to reduceuniversity funding for overhead expenses. Alzheimer’s research, the CancerMoonshot and regenerative medicine also received substantial funding.

To view the bill’s language,click here.

FDA Funding Approved in House Appropriations Subcommittee

On July 12, the House Appropriations Subcommittee for Agriculture, RuralDevelopment, Food and Drug Administration, and Related Agencies approved anincrease of almost $500 million in annual funding for the FDA. The billgives the FDA $5.1 billion for FY 2018 with $2.8 billion from taxpayerrevenue and the rest from industry user fees. The approval comes after atense hearing where Rep. Chris Stewart’s (R-UT) amendment to remove the FDAban on drug compounding in doctor’s offices, but not pharmacies, wasopposed by committee leaders who are looking for alternative avenues toaddress the issue.

To view the bill’s language,click here.

Home Infusion Legislation Introduced

House Ways & Means Health Subcommittee Chairman Pat Tiberi (R-OH) andRep. Bill Pascrell (D-NJ) introduced legislation to create a transitionalpay structure for home infusion services that would bridge a gap inreimbursement created by policies in the 21st Century Cures Act. TheNational Home Infusion Association says the bill’s introduction is animportant step in getting the gap resolved.

The 21st Century Cures Act includes provisions meant to fix what the HHSOffice of Inspector General said was a flawed benchmark for determiningpayment for those drugs. The Cures Act moved reimbursement from an averagewholesale prices-based formula to the average sales price-based formulaused for most other Part B drugs—ASP + 6 percent. That shift went intoeffect at the beginning of the year. However, a second provision in thebill, which provides reimbursement for the professional services associatedwith infusing the drugs, doesn’t go into effect until 2021. This created areimbursement payment gap. The Medicare Part B Home Infusion ServicesTemporary Transitional Payment Act (H.R. 3161) creates a new transitional payment structure for providers of homeinfusion services before the 21st Century Cures Act provision takes effectin 2021.

Ways and Means Committee Reports Two Bills on Medicare

On July 14, the Ways and Means Committee approved two bills focused onimproving Medicare.

Medicare Part B Improvement Act of 2017 (H.R. 3178), introduced by Ways and Means Committee Chairman Kevin Brady (R-TX) andRanking Member Richard Neal (D-MA), makes a series of targeted improvementsto Medicare Part B programs, including expanding access to in-hometreatments for patients. The legislation includes several bipartisan ideasfrom members of the committee, including policies reflected in thefollowing bills:

  • H.R. 3161, introduced by Health Subcommittee Chairman Pat Tiberi (R-OH) and Rep. Bill Pascrell (D-NJ), which creates a transition payment for home infusion therapies for Medicare beneficiaries to ensure there is no gap in care. To view the bill, click here.
  • H.R. 3172, introduced by Chairman Brady and Rep. Doris Matsui (D-CA), which extends a successful pilot program that allows Medicare beneficiaries with weakened immune systems to receive care in their homes. To view the bill, click here.
  • H.R. 3171, introduced by Reps. Mike Bishop (R-MI) and Mike Thompson (D-CA), which protects access to orthotics and prosthetics for Medicare beneficiaries who need them. To view the bill, click here.
  • H.R. 3166, introduced by Reps. Lynn Jenkins (R-KS) and John Lewis (D-GA), which improves the accreditation process for dialysis facilities so Medicare beneficiaries with chronic kidney disease living in rural communities can more easily access the treatments they need. To view the bill, click here.
  • H.R. 3164, introduced by Reps. Diane Black (R-TN), Suzan DelBene (D-WA), Mike Thompson and Pat Meehan (R-PA), which expands the use of telehealth technologies for Medicare beneficiaries receiving dialysis in their homes. To view the bill, click here.
  • H.R. 3173, introduced by Reps. Kenny Marchant (R-TX) and Ron Kind (D-WI), which puts into law existing regulations to modernize Medicare’s physician self-referral laws, known as “Stark laws.” To view the bill, click here.

Legislation to reauthorize Medicare Special Needs Plans (H.R. 3168), introduced by Health Subcommittee Chairman Tiberi and Ranking MemberSander Levin (D-MI),extends and strengthens Medicare Special Needs Plans (SNPs)to increase efficiency and improve access to high-quality health care forelderly patients living in poverty or with a chronic illness.

To view the markup,click here.


Senators Ask If the FDA Needs Additional Authority to Speed Up Recalls

On June 29, twelve senators sent a letter to FDA Commissioner ScottGottlieb requesting information on the recent recall of faulty detectiontests. The letter asked what additional authorization the agency needed andif the faulty tests were part of an expedited approval process. Thesenators asked why the FDA only acted in June when the issues had beenidentified three years ago and how the FDA coordinates with the Centers forDisease Control and Prevention; they also raised concerns that Magellanappeared to provide faulty information.

The letter comes after the FDA issued an alert in May on inaccurate leaddetection results from Magellan and issued a recall in June over concernsthat the test may not accurately represent lead levels in blood.

The letter can be found byclicking here.

Senate Releases New Bill to Repeal and Replace

On July 13, the Senate leadership released a revised version of the BetterCare Reconciliation Act, legislation to repeal and replace the AffordableCare Act. The plan is to move the motion to proceed—a parliamentary stepneeded before beginning debate on the bill this week. It is unclear howeverif there are enough votes to pass the motion to proceed.

Revisions include:

  1. Out-of-Pocket Costs: An additional $70 billion is dedicated to driving state-based reforms, which could include help with driving down premiums through cost-sharing, health savings accounts (HSA) and other innovative ideas to help pay for health care costs. This is in addition to the $112 billion in funding already in the original bill.
  2. Health Savings Accounts: A provision has been included in the bill that would, for the first time, allow people to use their HSAs to pay for their premiums. This is a policy that the Joint Committee on Taxation says will increase health care coverage.
  3. Funding to Combat the Opioid Epidemic: An additional $45 billion is provided for substance abuse treatment and recovery.
  4. Catastrophic Plans, Higher Deductible Plans and Tax Credits: Individuals who enroll in catastrophic plans would be eligible for the tax credit so long as they meet other tax credit eligibility requirements. The ACA prohibited individuals enrolled in catastrophic plans from receiving a tax credit. Anyone in the individual market would be allowed to purchase a lower-premium health insurance plan with their federal tax credit assistance. These plans are higher deductible plans that cover three primary care visits a year and have federal protections that limit an individual’s out-of-pocket costs.
  5. Tax Revisions: The new draft bill will not include any changes from current law to the net investment income tax, the additional Medicare Health Insurance (HI) tax or the remuneration tax on executive compensation for certain health insurance executives.
  6. Medicaid Revisions: (a) the new draft discussion changes the DSH calculation from per Medicaid enrollee to per uninsured; (b) states may apply for a waiver for the purpose of continuing and/or improving home and community-based services for aged, blind and disabled populations; (c) if a public health emergency is declared, state medical assistance expenditures in a particular part of the state will not be counted toward the per capita caps or block grant allocations for the declared period of the emergency; and (d) states can use block grant option to allow states to also add expand Medicaid.
  7. Higher-Risk Individuals: Creates a fund for the purpose of making payments to specified health insurance issuers for the associated costs of covering high-risk individuals enrolled in the qualified health plans on the Affordable Care Act’s individual exchange. In order to qualify for such funds, an issuer must offer sufficient minimum coverage on the exchange that remains subject to Title 1 mandates. Offering such coverage would enable the issuer to also provide coverage off the exchange that would be exempt from certain Title 1 mandates.

To view the bill’s updated language,click here.

2. Administration

New Regulatory Scheme for Regenerative Medicine to Be Unveiled in September

On July 7, FDA Commissioner Scott Gottlieb signaled that the FDA willreveal a framework on how the FDA will regulate regenerative medicinethrough a succession of guidance reports that will make agency policiesmore efficient. The reports are aimed at helping manufacturers demonstratesafety and effectiveness. Further, the FDA’s biologics center is executingthe new regenerative medicine advanced therapy (RMAT) designation to speedup development and the approval process for medical products and bring downcosts. Gottlieb also noted that the FDA has approved four RMAT designationrequests, which aims to speed certain cell therapies, engineering productsand combination products to market.

CMS and Treasury Approve Alaska’s 1332 State Innovation Waiver

On July 11, the Treasury Department and Centers for Medicare & MedicaidServices (CMS) approved Alaska’s 1332 State Innovation Waiver application,which seeks to implement the Alaska Reinsurance Program (ARP) in futureyears in order to stabilize the individual health care market. This waiverallows the state to implement the ARP for the next five plan years, untilDec. 31, 2022. The ARP is a state-operated program that covers claims inthe individual market for people with identified costly conditions, inorder to stabilize premiums. The state believes the ARP will bring premiumsdown by 20 percent in 2018.

For more information about the Alaska 1332 waiver,click here.

Medicare Hospital Trust Fund Does Not Trigger IPAB

Medicare’s hospital trust fund is expected to run out of money in 2029, ayear later than what trustees predicted in 2016, because national healthspending continues to grow at a slower rate, the program’s trustees said ina new report published July 13. Medicare’s trustees predict that theprogram’s costs will grow from 3.6 percent of GDP to 5.6 percent of GDP by2041, driven largely by enrollment. Projected spending rates are stilllower than Medicare’s target level, meaning the Independent PaymentAdvisory Board (IPAB) created by the Affordable Care Act will remaindormant. IPAB was created to provide Congress with Medicare cuts shouldMedicare spending hit certain levels.

The trustees last year had warned that IPAB would be triggered this yearfor the first time since Obamacare’s passage. However, the new reportstates they anticipate that the panel won’t be activated until 2021. Thatwould give lawmakers critical of the payment board significantly more timeto eliminate it before it takes effect.

DOJ Cracks Down on Fraudulent Opioid Treatment Programs

On July 13, Attorney General Jeff Session announced the Justice Departmentwould be enforcing sanctions against fraudulent opioid treatment programs.The action will charge 412 people, including 56 physicians, with defraudingthe federal government of $1.3 billion. This announcement follows thesettlement the Justice Department made with Mallinckrodt Pharmaceuticals,an opioid manufacturer. Mallinckrodt Pharmaceuticals has agreed to pay $35million to settle charges that it failed to notify the Drug EnforcementAgency (DEA) of suspicious drug orders from 2008 to 2011.

To view the Justice Department’s press release,click here.

3. Courts

House v. Price: Republicans and DOJ Ask to Reject Democratic AGs’ Move to Intervene

Earlier this week, House Republicans and the Department of Justice filedseparately to ask the D.C. Court of Appeals to reject a motion to intervenein the ACA cost-sharing reduction case, House v. Price. The motionwas submitted by Democratic attorneys-general. House Republicans haveargued that the attorneys-general lack standing. The Justice Departmentargues that the motion is speculative and that pending legislation in theSenate would fund CSRs and the case would be moot. In House v. Price, GOP Republicans charged the Obama administration for illegally providingcost-sharing payments without congressional appropriation. The GOP askedthe appeals court to put aside the case after President Trump’s election,to consider alternative paths.

Suit Alleges CA Medicaid Payment Rates Violate Civil Rights

The Mexican American Legal Defense and Educational Fund, the Civil RightsEducation and Enforcement Center and law firm Feinberg, Jackson, Worthman& Wasow have filed suit against the state of California for lowMedicaid payment rates that violate civil rights of the 14 million enrolledin the program. The suit filed on July 12 asserts that Medi-Cal patientsare not able to access care because of poor provider reimbursement ratesand that rates have declined as Latino enrollment has climbed. Just lastmonth, California lawmakers approved a budget deal that gives doctors anddentists who treat Medicaid patients a raise of $325 million and $180million, respectively.

To view the complaint,click here.

To view California’s budget bill,click here.

4. 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.

CMS Proposes 2018 Policy and Rate Changes for Hospital Outpatient,Ambulatory Surgical Center Payment Systems

The Centers for Medicare & Medicaid Services (CMS) on July 13, issued aproposed rule that updates payment rates and policy changes in the HospitalOutpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center(ASC) Payment System.

Among the provisions in this rule, CMS is proposing to change the paymentrate for certain Medicare Part B drugs purchased by hospitals through the340B program. The proposed rule also requests comment on how CMS can bestimplement the proposal to pass savings on to beneficiaries and providers,and to allow seniors to save money