Washington Healthcare Update

July 24, 2017

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This Week:Is health reform alive or dead? The answer depends on the day and time;meanwhile, House and Senate Appropriations move forward, House BudgetCommittee marks up budget resolution to set stage for tax reform.

1. Congress



2. Administration

3.Regulations Open for Comment

4. Reports

1. Congress


House Appropriators Gut ACA Funding

On July 19, the House Appropriations Committee held a markup on the FY 2018Labor-HHS-Education bill and effectively used the bill to prevent the useof federal dollars to implement Obamacare by defeating amendments relatedto HHS and functions under the ACA. During the markup, Rep. DebbieWasserman Schultz (D-FL) offered an amendment to restore Obamacareimplementation funding but it was defeated on a party line vote, 29-21.Similarly, an amendment from Rep. Barbara Lee (D-CA) to defeat GOP ridersto defund Planned Parenthood and the ACA also failed.

To view the Appropriations Committee markup,click here.

House Budget Committee Marks Up FY 2018 Budget

On July 19, the House Budget Committee held a markup for the FY 2018 budgetthat would cut Medicare and Social Security. President Trump campaigned onnot cutting either program. The budget resolution would cut spending upwardof $5 trillion from the budget in the coming decade. The budget plan iscrucial because its passage would pave the way to pass a tax overhaul thisfall without the fear of a filibuster by Senate Democrats.

In addition to cutting social safety net and other discretionary programs,it also would sharply boost military spending.

It is unclear, however, whether the budget proposal can be passed in theHouse. Conservatives had pushed for a larger package of spending cuts.Moderates are concerned cuts to programs such as food stamps are too deep.

The budget resolution is nonbinding, because it is not a law. However, itwould allow Republicans to use reconciliation instructions to pass tax cutswith only 50 votes in the Senate, similar to the strategy used for thefailed health care effort.

To view the markup,click here.

To view the FY 2018 budget, click here.

House Energy and Commerce Subcommittee to Hold Hearing on SNPs

The House Energy and Commerce Health Subcommittee will hold a hearing July26 on Medicare special needs plans (SNPs). SNPs are Medicare Advantageplans that exclusively enroll beneficiaries with special needs. There areSNPs for dual-eligible beneficiaries, institutionalized beneficiaries andbeneficiaries with certain chronic conditions.

The House Ways and Means Committee recently voted for a five-yearreauthorization of two types of SNPs and permanent reauthorization of thethird type. On July 20, thirteen patient and industry groups sent a letterto the Energy and Commerce Committee urging permanent reauthorization ofthose plans.


Senate Health Reform Runs Into Stronger Opposition

On Monday night, two more senators came out publically against the Senateproposal to repeal and replace the Affordable Care Act. This brought thenumber against the proposal to at least four, killing the chances of theproposal’s being passed. Immediately, Senator Mitch McConnell (R-KY), theSenate majority leader, announced that he would hold a vote on the motionto proceed to the House-passed bill and that the first amendment that wouldbe in order would be legislation similar to the repeal-only bill passed bythe House and Senate in 2015. That bill was vetoed by President Obama.However it was not clear that McConnell will have the votes for even theparliamentary procedure of the motion to proceed. On July 19, the SenateBudget Committee released the text of the repeal-only legislation.

To see the text of the repeal-only legislation,click here.

HHS Releases Cruz Amendment Analysis

Also on July 19, the Department of Health and Human Services (HHS) releasedits own analysis of the Cruz amendment.

The HHS analysis of the Cruz amendment, which would permit “skinny plans”that are not ACA compliant so long as the insurer had an ACA-compliant planon the exchange, showed that premiums for certain enrollees by 2020 wouldbe reduced, and would save even more for consumers who opt for cheaper,no-frills products. HHS also found the amendment would boost enrollment ashigh as 16.1 million people by 2024, more than the nearly 14 milliontopline projected under Obamacare. Republicans are touting the analysis asevidence that their reforms would help Americans and that the CBO has beentoo pessimistic about their legislation. Others, however, have pointed outproblems with the analysis, including that it was not scored in relation toother provisions of the legislation.

CBO Releases Two Scores

The Congressional Budget Office score of repeal-only legislationdemonstrates that the impact of not replacing the law immediately could besevere. Three-quarters of the country would live in areas with no insurersparticipating in the individual market by 2026. Premiums would double by2026 as well, compared to the current law. A second CBO score was releasedon July 20, which did not include the Cruz amendment, and concluded that 22million people would lose insurance coverage.

To view the score, click here.

The president met with members on July 19, and following that meeting about20 members met that night to see if there was a path forward. With no staffin attendance, members discussed the legislation and what concerned them.It is unclear that they moved closer.

The Senate is scheduled to vote early in the week on a motion to proceed.Following Senate rules this would mean they would proceed to theHouse-passed bill, and then offer an amendment that would gut that bill andinsert another proposal. It is unclear if the first amendment in order willnow be the repeal-only proposal or something else.

FDA Funding

On July 18, Senate Appropriations Agriculture Subcommittee advanced its FY2018 funding bill. The bill seeks to add $1 million in FDA discretionaryfunding above FY 2017, which is not included in the House version. TheSenate bill also includes $60 million in additional funding to execute the21st Century Cures Act. Appropriators did not fulfill the administration’srequest for FDA premarket reviews through increased user fees.

The markup can be viewed byclicking here.

2. Administration

Administration Cuts Off Teen Pregnancy Funding

The Trump administration has reached out to the researchers using grantsthat target preventing teenage pregnancy to announce they intend to cut offfunding. The 81 grants originally were set to run for five years and willnow be cut two years short, announced by a standard renewal notice thatwent out earlier this month. Many of the programs focus on areas with ahigh Native American population as well as other rural areas. ValerieHuber, chief of staff to the assistance secretary at HHS, and HHS SecretaryTom Price both are proponents of abstinence education.

FDA Rolls Out New Hiring Program

On July 17, the FDA released a plan to fill hundreds of open positions andattempt to give hiring authority to scientific leadership as opposed totraditional human resources. Initially, the pilot will focus on fillingpositions funded by prescription drug user fees, hopefully within a year.Major goals of the program are to onboard employees more quickly so as tonot lose them to the private sector and to retain current specialists.

These challenges at the FDA were originally presented in the 21st CenturyCures Act of 2016, which gave the FDA more authority to bring on employeeswithout bureaucratic blockades and make better salary offers for scientificand medical positions.

To view the commissioner’s statement,click here.

Extended Use of the Targeted Enrollment “SNAP Strategy” Under Section1902(e)(14)(A) of the Social Security Act

On July 19, the Centers for Medicare & Medicaid Services (CMS) issuedan informational bulletin that discusses the conditions under which CMS mayapprove waivers under Section 1902(e)(14)(A) of the Social Security Act toauthorize states to rely on findings from the Supplemental NutritionAssistance Program (SNAP) to support Medicaid eligibility determinations atapplication and renewal for certain populations.

To view the bulletin,click here.

IMPACT Act: Drug Regimen Review Measure Overview for the Home HealthQuality Reporting Program Call

On Aug. 17, the Medicare Learning Network (MLN) will be holding a call toaddress the drug regimen review measure overview for home health quality.The description of the call provided by MLN focuses on the ImprovingMedicare Post-Acute Care Transformation Act of 2014 (IMPACT Act). MLNstates that during the call CMS and measure developers will present thedrug regimen review (DRR) quality measure and that the call will focus onthe home health measure. Question-and-answer will follow.

The agenda provided by MLN:

  • Review the goals of the DRR measure
  • Review guidance and walk through scenarios for coding the Outcome and Assessment Information Set (OASIS) items used to calculate the measure

For materials and more information about the call,click here.

Physician Fee Schedule Proposes Cuts to Off-Campus Sites

CMS has proposed reductions in payments to off-campus hospital departmentsin the proposed Physician Fee Schedule rule. These reductions are a resultof the Bipartisan Budget Act of 2015, mandating CMS to pay lowerdoctor-office rates to practices that are bought by hospitals and turnedinto outpatient departments. The proposed cuts affect off-campus outpatientfacilities that were not billing Medicare by Nov. 2, 2015. The 21st CenturyCures Act exempted hospital outpatient departments that were indevelopmental stages when the law was put into place. CMS will pay half ofhospital rates for off-campus outpatient facilities that were not in thebuilding process and proposes to pay only a quarter of hospital rates nextyear.

For more information,click here.

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 pre-dispute 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 pre-dispute 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 on their drug costs. The 340B DrugPricing Program allows certain hospitals and other health care providers topurchase drugs and biologicals (other than vaccines) that are administeredin a hospital outpatient department from drug manufacturers at discountedprices.

The proposed rule also includes a provision to address rural hospitalsrecruiting physicians by placing a two-year moratorium on the directsupervision requirement currently in place at rural hospitals and criticalaccess hospitals.

In addition, CMS is releasing within the proposed rule a request forinformation to welcome continued feedback on flexibilities and efficienciesin the Medicare program.

Comments are due 5 p.m. Sept. 11, 2017.

To view a fact sheet on the proposed rule,click here.

To view the proposed rule, click here.

CMS Proposes 2018 Payment and Policy Updates for the Physician FeeSchedule

The Centers for Medicare & Medicaid Services (CMS) on July 13 issued aproposed rule that would update Medicare payment and policies for doctorsand other clinicians who treat Medicare patients in calendar year (CY)2018. This proposed rule seeks public comment on reducing administrativeburdens for providing patient care, including visits, care management andtelehealth services. The rule takes steps to better align incentives andprovide clinicians with a smoother transition to the new Merit-basedIncentive Payment System under the Quality Payment Program (QPP). The rulealso attempts to encourage fairer competition between hospitals andphysician practices by promoting greater payment alignment, and it wouldimprove the payment for office-based behavioral health services that areoften the therapy and counseling services used to treat opioid addictionand other substance use disorders. In addition, the proposed rule makesadditional proposals to implement the Center for Medicare & MedicaidInnovation’s Medicare Diabetes Prevention Program expanded model startingin 2018.

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. This willinform the discussion on future regulatory action related to the PhysicianFee Schedule. Comments are due by 5 p.m. on Sept. 11, 2017.

For a fact sheet on the proposed rule,click here.

To view the proposed rule,click here.

6. Reports

PhRMA Posts New Innovation Report

The biopharmaceutical pipeline contains thousands of significant andinnovative new treatments with the potential to address unmet medicalneeds, save lives and improve patients’ health. A new report by theAnalysis Group, “The Biopharmaceutical Pipeline: Innovative Therapies inClinical Development,” examines the state of the drug development pipelineand provides insights into new approaches researchers are pursuing.

Key findings:

  • 74 percent of medicines in clinical development are potentially first-in-class medicines, meaning they represent a possible new pharmacological class for treating a medical condition
  • 822 projects—defined as unique molecule-indication combinations—are designated by the U.S. Food and Drug Administration (FDA) as orphan drugs, which is critically important given only 5 percent of rare diseases have an approved medicine
  • A range of novel scientific approaches are being pursued, including cell and gene therapies, DNA and RNA therapeutics and conjugated monoclonal antibodies

To view the report,click here.

Medicare Advantage Program Integrity: CMS’s Efforts to Ensure ProperPayments and Identify and Recover Improper Payments

The Centers for Medicare & Medicaid Services estimates that about $16billion or nearly 10 percent of its payments to Medicare Advantageorganizations were improper.

In this testimony, GAO reviewed several problems found with CMS’s effortsto ensure proper payments in this program, which serves about a third ofMedicare beneficiaries.

For example, certain CMS audits do not target Medicare Advantage contractsat highest risk for improper payments—payments made in error or due topotential fraud. CMS has also not fully validated the data—known as“encounter data”—it uses to ensure proper Medicare Advantage payments.

To view 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 theMcGuireWoods 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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