Washington Healthcare Update

September 11, 2017

Pardon Our Dust

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This Week: Congress returns to face debt ceiling, funding the government and fundingdisaster assistance for Hurricane Harvey, and the Senate holds hearings onmarketplace stabilization and CHIP.

1. Congress


2. Administration

3. Regulations Open for Comment

4. Reports

1. Congress


Senate Appropriators Approve HHS Spending Bill

On Sept. 7, the Senate Appropriations Committee approved the FY 2018 $79.4billion spending bill for HHS, a $1.7 billion increase over enacted levels.The Labor-HHS-Education spending package goes against the president’swishes and adds an additional $2 billion in additional funding for NIH. CDCfunding dropped, bringing their budget to $7.18 billion. The language alsoprovides funding for CMS to continue to oversee the ACA and fund thenavigator program, as well as providing Title X family planning fundinglevel of $287 million.

For more information and details on the bill,click here.

Reconciliation Instructions Expire Sept. 30

On Sept. 1, the Senate parliamentarian released a ruling regarding theexpiration of the effort to repeal and replace the Affordable Care Act. Theopportunity for the Senate to pass this legislation with a majority willexpire on Sept. 30. Congress has several other major items to tackle thisfall including facing a debt ceiling vote by the end of the month.

Ahead of Senate HELP Hearings, Governors Pen Bipartisan Plan

On Aug. 30, eight governors—Gov. John Kasich of Ohio, Gov. JohnHickenlooper of Colorado, Gov. Brian Sandoval of Nevada, Gov. Tom Wolf ofPennsylvania, Gov. Bill Walker of Alaska, Gov. Terry McAuliffe of Virginia,Gov. John Bel Edwards of Louisiana and Gov. Steve Bullock of Montana—signeda plan in an effort to stabilize the ACA. The plan comes just the weekprior to Senate HELP’s hearings on shoring up the Obamacare markets.

The governors stated, “We strongly encourage that Congress and theAdministration take immediate action to stabilize the individual healthinsurance marketplace. If there is a clear signal to consumers and carriersthat the individual market is viable, then additional state-based reformswill be more manageable and we can succeed in preserving recent coveragegains and controlling costs.”

Recommendations include, but are not limited to:

  • Funding cost-sharing reduction payments through 2019;
  • Creating a temporary stability fund for reinsurance programs;
  • Offering choices in underserved counties;
  • Keeping the individual mandate for now;
  • Maximizing market participation;
  • Promoting appropriate enrollment;
  • Stabilizing the risk pools; and
  • Reducing cost through coverage redesign by asking HHS Secretary Price to allow states more flexibility.

To view the letter,click here.

HELP Committee Holds Hearing on Stabilization and Schedules MoreHearings

On Sept. 6, the Senate HELP Committee held a hearing on congressional fundsfor the ACA’s cost-sharing reduction payments. The witnesses—Oklahoma’sJohn Doak, Washington’s Mike Kreidler, Tennessee’s Julie Mix McPeak,Pennsylvania’s Teresa Miller and Alaska’s Lori Wing-Heier—were stateinsurance commissioners asking for payments for over two years, controlover state insurance markets and simplification to the 1332 waiverprovision. Chairman Lamar Alexander (R-TN) said during the hearing,“There’s a great deal of what we’re doing that’s in Finance’s jurisdiction,I think we’re moving at such a rapid pace we’ll make our recommendation tofull Senate and hopefully come up with something.”

Before the hearing, in a show of interest in stabilization, 31 senators metwith the chairman and ranking member Patty Murray (D-WA). The attendeesincluded two senators not on the committee, Sens. Angus King (I-ME) and TomCarper (D-DE), who attended the hearing as observers.

Insurance commissioners asked questions regarding the administration’sdecision to cut the marketing budget for open enrollment and navigatorprogram. However, not all commissioners agreed on whether every state couldafford reinsurance waivers or a replacement penalty for the individualmandate.

Chairman Alexander asked the witnesses if they would provide two policychanges that could represent bipartisan agreement. One idea that all fivecommissioners agreed upon was that CSRs need to be funded and that thecommissioners preferred a multiyear appropriation. The chairman stated thatCongress needs to act to appropriate CSRs to guarantee certainty. Further,several witnesses cited the budget neutrality requirement in the statute isa great hurdle. Tennessee’s Julie Mix McPeak stated this requirement wouldprevent some states from setting up reinsurance provisions and asked toshorten the six-month approval period for the waiver. Other emerging policyideas covered in the hearing were reinsurance, marketing and navigators,increased competition, individual mandate and building a healthier pool,and sales across state lines.

To view the hearing,click here.

The Senate HELP Committee has added two more hearings to the calendar in aneffort to stabilize the insurance markets. On Sept. 12, the committee willhear from health care experts on increasing flexibility in the individualhealth care market. The witnesses are: Mike Leavitt, a former HHS secretaryand governor of Utah; Allison Leigh O’Toole, the CEO of Minnesota healthexchange MNsure; Tarren Bragdon, who heads the free-market Foundation forGovernment Accountability; Kaiser Permanente CEO Bernard Tyson; and actuaryTammy Tomczyk. The second hearing will be on Sept. 14 and will includetestimony from representatives from the industry. The announced witnessesare: Tennessee physician Manny Sethi; Marshfield Clinic Health System CEOSusan Turney; Anthem vice president Robert Ruiz-Moss; Young Invincibles’Christina Postolowski; and South Carolina insurance director RaymondFarmer.

Senate Appropriations Subcommittee Keeps Opioid Funding Flat

The Senate Appropriations HHS subcommittee advanced an FY 2018 spendingbill to keep funding for the opioid crisis flat. This bill splits $816million between the CDC, the Substance Abuse and Mental Health ServicesAdministration and the Health Resources and Services Administration forprograms combating opioid abuse. This is only a $15 million increase from2017 levels; however, the 2017 omnibus raised spending levels to $801million, an increase of $650 million.

Senator McCaskill Releases Report on Opioids

On Sept. 7, Sen. Claire McCaskill (D-MO) released a report by the SenateHomeland Security and Governmental Affairs Committee Democrats that statesInsys Therapeutics, a drug maker, used aggressive tactics to increaseprescriptions for the opioid Subsys that undermined substance abuse. Thereport also indicated that Insys created a business unit to go betweenpharmacy benefit managers and gain reimbursements in the years 2013-2016.Express Scripts and UnitedHealth Group excluded Subsys from their list ofcovered drugs in 2015 and 2016 respectfully. In December last year, federalprosecutors indicted six Insys executives on racketeering charges. Theresponse from Insys has been that they have “completely transformed itsemployee base over the last several years and actively taken theappropriate steps to place ethical standards of conduct and patientinterests at the heart of [its] business decisions.”

To view the report,click here.

2. Administration

Flexibility Because of Hurricane Harvey

When HHS Secretary Tom Price declared public health emergencies in Texasand Louisiana, he triggered a series of 1135 waivers that allow providersto disregard certain Medicaid and CHIP requirements, out-of-state licensingrules, self-referral sanctions and obligations under the rules of bothHIPAA and the Emergency Medical Treatment and Labor Act, the federal lawrequiring emergency departments to stabilize and treat anyone, regardlessof their insurance status or ability to pay. It is expected that the samedeclarations will be made for the areas impacted by Hurricane Irma.

“Due to the emergency declaration and other actions taken by HHS, CMS isable to waive certain documentation requirements to help ensure facilitiescan deliver care,” Price said in a statement. “These actions andflexibilities will become effective at 12:00 P.M. Eastern Standard Time onAugust 28, 2017, but will have retroactive effect to August 25, 2017.”

The agency can offer waivers during emergencies, but it cannot pay forservices that aren’t covered. The Centers for Medicare & MedicaidServices (CMS) is granting exceptions under certain Medicare qualityreporting and value-based purchasing programs to acute care hospitals,PPS-exempt cancer hospitals, inpatient psychiatric facilities, skillednursing facilities, home health agencies, hospices, inpatientrehabilitation facilities, outpatient dialysis facilities, long-term carehospitals and ambulatory surgical centers located in areas affected byHurricane Harvey due to the devastating impact of the storm. Theseproviders will be granted exceptions without having to submit anextraordinary circumstances exception request if they are located in one ofthe Texas counties or Louisiana parishes, all of which have been designatedby the Federal Emergency Management Agency (FEMA) as a major disastercounty.

The scope and duration of the exception under each Medicare qualityreporting program is described in the memo posted on Aug. 31; however, allof the exceptions are being granted to assist these providers while theydirect their resources toward caring for their patients and repairingstructural damages to facilities.

To view the memo,click here.

If FEMA expands the current disaster declaration for Hurricane Harvey toinclude additional counties or parishes, CMS will update this memo toexpand the list of providers eligible to receive an exception withoutsubmitting a request to include the hospitals, PPS-exempt cancer hospitals,inpatient psychiatric facilities, skilled nursing facilities, home healthagencies, hospices, inpatient rehabilitation facilities, long-term carehospitals and ambulatory surgical centers located in the additionalcounties and parishes.

In addition, CMS will continue to monitor the situation and adjust exemptedreporting periods and submission deadlines accordingly.

To view additional details and materials,click here.

Insurers are also waiving out-of-network penalties, extending claim-filingdeadlines and pre-authorizing payments for prescriptions and other medicalsupplies. Cigna and Blue Shield of Texas said in emails that for customersliving in areas affected by Harvey, they are waiving prior authorizationrequirements for acute medical and behavioral health care, coveringout-of-network services at in-network rates, lifting prescription refillrestrictions and forgiving premium late payments.

However, negotiations for flexibility on other rules, such as who coversthe cost of care and drugs during the crisis, could drag on for weeks andmonths.

After Hurricane Katrina, more than 86,000 people on Louisiana Medicaid wereevacuated to other states where HHS had to approve temporary coverage sothey could continue receiving benefits, according to a 2006 Health Affairsstudy.

To view the study,click here.

FDA has provided commissioned corps officers as part of the overall HHSdeployment of medical equipment and resources to help address public healthneeds and assess critical health infrastructure needs in the wake ofHurricane Harvey. FDA also has posted hurricane safety recommendations toguide consumers on safe use of drugs, medical devices, biologics, food andwater.

The Federal Emergency Management Agency announced Monday, Aug. 28, thatunder the public health emergency declared by HHS Secretary Tom Price onSaturday, Aug. 26, more than 500 HHS personnel have been deployed inaffected areas in Texas and Louisiana and more are on alert.

To view the FDA hurricane recommendations,click here.

HHS IG Warns CMS That It Is Not Protecting Nursing Home Patients Enough

On Aug. 24, HHS released an “early alert” that shows the preliminaryresults pointing to more than 100 cases of neglect and potential abuse innursing homes. The inspector general of the HHS warned CMS concerning itslack of attention in protecting patients.

These incidents are likely not reported to authorities, even in cases ofsexual assault, physical abuse or lack of medical care. The “early alert”is an effort to notify CMS of “inadequate procedures,” so they can beginremedying the current situation before the report is finalized.

To view the report,click here.

FDA Outlines Actions on Gene Therapy and Stem Cell Treatments

On Aug. 28, FDA Commissioner Scott Gottlieb released a statement oncreating a 21st Century Cures expedited pathway for regenerative productsand announced that certain gene therapy products would be eligible. The FDAhas yet to approve a gene therapy, but Novartis’s CTL019 could be thefirst, following unanimous approval in July.

Further, Gottlieb stated he intends to develop a framework for regenerativemedicine before the fall. He informed the industry that the FDA will beincreasing enforcement against unapproved regenerative medicine treatmentsand is forming a working group. In an effort to strengthen its enforcementposition, FDA sent a public warning letter to the U.S. Stem Cell Clinicafter the agency found the company was using components of fat tissue as atreatment for Parkinson’s and ALS.

To view the statement,click here.

To view the letter to U.S. Stem Cell Clinic,click here.

Second Biosimilar Gets a Modifier

On Aug. 25, CMS added a second modifier in order to differentiate betweentwo biosimilars in a common billing code. This is the first time CMS hasissued a policy in response to drug industry concerns regarding safetyafter the biosimilar had been placed on the market. The modifier is similarto the biosimilar Renflexis, which is the second biosimilar of Remicade.The transmittal document to Medicare Administrative Contractors states: “Inorder to allow the identification of the manufacturer of the specificbiosimilar biological product that was administered to a patient, eitherexisting HCPCS modifier ZB, or new modifier ZC is required when HCPCS codeQ5102 is billed on a claim that is submitted after October 1, 2017.”

Renflexis and Inflectra were the first two biosimilars to reference thesame brand biologic. On Aug. 25, the FDA also approved the secondbiosimilar for AbbVie’s Humira. The Healthcare Common Procedure CodingSystem is updated on a quarterly basis so the second modifier for Humira isnot currently available.

To view the transmittal,click here.

3. Regulations Open for Comment

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.

CMS Proposes 2018 and 2019 Payment Changes for Medicare Home HealthAgencies

The Centers for Medicare & Medicaid Services (CMS) on July 25 issued aproposed rule that would update payment rates and the wage index for homehealth agencies (HHAs) serving Medicare beneficiaries in 2018; it alsoproposes a redesign of the payment system in 2019. Comments are due Sept.25, 2017.

CMS is planning a slight pay cut for home health agencies in 2018, byreducing Medicare payments to the agencies by 0.4 percent next year, savingthe federal government an estimated $80 million. That change is driven inpart by CMS’s planned phase out of a provision boosting pay rates forcertain home health services delivered to rural patients. The agency isalso floating a series of changes to the payment methodology beginning in2019, which could result in a pay cut of up to 4.3 percent. That wouldtranslate to as much as $950 million in reduced Medicare payments to homehealth agencies.

Under the proposed rule, the home health payment update percentage for HHAsthat submit the required quality data for the Home Health Quality ReportingProgram would be 1 percent in 2018. The proposed rule also includesproposals to refine the HH PPS case-mix adjustment methodology, including achange in the unit of payment from 60-day episodes of care to 30-dayperiods of care, to be implemented for periods of care beginning on orafter Jan. 1, 2019. Additionally, the proposed rule includes proposals forthe Home Health Value-Based Purchasing Model and the Home Health QualityReporting Program.

To view the proposed rule,click here.

For more information on the Home Health Prospective Payment System,click here.

4. Reports

Affordable Care Act: IRS Should Mitigate Limitations of Data to Be Usedfor the Age and Gender Adjustment for the Tax on High-cost Health Plans

Starting in 2020, the Affordable Care Act is scheduled to impose a 40percent tax on high-cost health plans when an employee’s annual cost ofcoverage exceeds a certain dollar limit. The limit may be adjusted if anemployer’s workforce—based on age and gender—is likely to havehigher-than-average health costs.

The adjustment is to be made based on the costs of the federal employeeBlueCross BlueShield Standard plan, but we found that an adjustment basedon this plan’s costs alone may not be effective due to the relatively highcosts incurred by its young members.

GAO recommended that IRS take steps to ensure an effective age and genderadjustment.

To view the report,click here.

Public Health Information Technology: HHS Has Made Little ProgressToward Implementing Enhanced Situational Awareness Network Capabilities

GAO is recommending that HHS complete a plan that includes all actions forestablishing the network, develop a project management plan that identifiesmeasurable steps for completing the actions and conduct IT managementprocesses according to CIO guidance. HHS had no comments on the report orrecommendations.

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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