Washington Healthcare Update

October 16, 2017

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This Week: Administration hits the ACA….CHIP floor vote delayed….Drug prices back in focus.

1. Congress



2. Administration

3. Reports

1. Congress


House Republicans Delay CHIP Floor Vote to Negotiate Offsets

House Republicans have briefly delayed the floor vote on CHIP legislation to negotiate offsets with Democrats. The House Energy and Commerce Committee markup of the bill focused on hours of debate over how to pay for funding the program for five years. If they cannot reach a deal, it is likely House leadership will take the legislation as is to the floor for a vote when the House returns from its recess.  

Democrats approve of the legislation’s policy, which mirrors the Senate’s bipartisan deal on CHIP legislation, but they would not support the offsets. Republicans said the programs they are proposing to cut wouldn’t be needed if Congress funds CHIP and community health centers. Meanwhile, Democrats said Republicans are trying to undermine Obamacare; Democrats believe they are being asked to help some people at the expense of others.

However, if House Republicans negotiate bipartisan offsets, the Senate would be pressured to adopt the House bill. If they don’t, House Republicans will likely have to swallow what the Senate sends over, which might not pay the full cost of the bill. If the two parties can’t agree on offsets, the effort to negotiate still helps House Republicans to show they tried, a separate analyst said.

House Members Ask for Larger Part D Rebates and Discounts

A bipartisan group of 54 House members on Oct. 3 asked CMS to force plans and pharmacy benefit managers to give Part D beneficiaries a larger share of rebates, discounts and pharmacy price concessions.

Rep. Buddy Carter (R-GA) spearheaded the letter that says CMS isn’t using its power to police the opaque system of rebates, discounts and price concessions. The law gives CMS the “authority to negotiate the terms and conditions of the proposed bid submitted and other terms and conditions of a proposed plan.”

“The Act also requires plan sponsors to ‘provide enrollees with access to negotiated prices’ that ‘take into account … discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations, for covered Part D drugs, and include dispensing fees for such drugs,’ ” the letter states.

The letter largely focuses on direct and indirect remuneration fees that pharmacy benefit managers use to reduce ingredient and dispensing costs for Part D plans, sources said. Those fees have tripled since 2010. If CMS were to clamp down on direct and indirect remuneration, pharmacy benefit managers could increase other fees, such as quality or performance fees. They could also charge claims processing fees when claims are submitted and often insist on contracts that let them change the pay rate for drugs daily.

The letter to HHS and CMS says the agency could accomplish that goal without violating a central tenet of the Part D program that bans CMS from interfering in negotiations over drug rebates and discounts. Three years ago, members of both parties attacked CMS for a proposal that called for opening preferred pharmacy networks to all pharmacies that accept the terms of those networks. That failed proposal differs from what lawmakers are now urging CMS to do, but Merritt said a key similarity is that both approaches would have CMS interfere in negotiations among stakeholders where the law prohibits the agency from interfering.

Energy and Commerce Hearing Examines 340B

Republicans pressed hospital executives about whether the 340B Drug Discount Program is driving them to snap up more off-site cancer clinics, suggesting that the acquisitions are primarily a way to wring more money from the 340B program. Reps. Buddy Carter and Chris Collins both floated the possibility during a House hearing on the drug program, with Collins arguing that the hospitals are using the clinics to prescribe more 340B drugs and boost their profits.

“The minute the [disproportionate share] hospital acquires that practice, all of the sudden these 25 to 50 percent discounts float to the bottom line,” Rep. Carter said. “It’s legal, but I call that a loophole.”

Hospital executives defended the expansion of cancer services as a result of growing demand among patients.

To view the hearing, click here.

Calls for Congress to Eliminate IMD Exclusion

Republican Rep. Tom MacArthur (NJ), cochair of the Bipartisan Task Force to Combat the Heroin Epidemic, urged Congress to eliminate Medicaid payment restrictions on certain inpatient facilities for substance abuse treatment in response to the opioid crisis. During an Energy and Commerce health subcommittee hearing on the drug epidemic, MacArthur described the so-called IMD exclusion a “primary barrier preventing access to substance abuse treatment,” and touted a bill sponsored by Rep. Brian Fitzpatrick (R-PA), the vice chair of the task force, that lifts the IMD exclusion for addiction treatment. CBO scored an earlier bill that rolled back the IMD exclusion for mental health and substance abuse treatment and found it would cost $40 to $60 billion. The legislation is similar to a recommendation by the President’s opioid commission, led by New Jersey Gov. Chris Christie, that urges the Trump administration to quickly approve state waivers to lift the IMD exclusion for substance use treatment. CMS on Tuesday approved West Virginia’s waiver. At least five states are still waiting for approval.


Senator Collins Will Not Run for Governor

Republican Sen. Susan Collins announced Oct. 13, that she would not run for governor of Maine. Collins’ decision preserves her role as a key moderate and swing vote in the Senate. She was a key vote against recent proposals to repeal and replace the Affordable Care Act, largely because of the cuts the proposals would have made to Medicaid. She had considered running for governor for months and faced pressure from fellow Republicans and moderates to stay in the Senate. Collins said her decision was based on where she could do the most good.

2. Administration

Trump Hits ACA With Two Decisions

On Oct. 12, the President signed an executive order that loosens insurance rules to offer more plans and then announced the Administration would no longer make the cost-share reduction payments.

The executive order on health care:

  • Directs the Secretary of Labor to broaden the agency’s interpretation of the Employee Retirement Income Security Act (ERISA) to allow employers to collectively partner to offer group insurance plans, or association health plans (AHPs).
  • Directs the Departments of Treasury, Labor, and Health and Human Services to:
    • Explore increasing the amount of time an individual may take advantage of short-term limited duration insurance (STLDI).
    • Modify Health Reimbursement Arrangements (HRAs) to further limit taxation on employers or employees paying into these plans.

AHPs provide a framework for small businesses to extend coverage to employees through health plans established by associations and business groups. Employers within an AHP have the benefit of buying large group insurance for their employees. In the past, AHPs have been exempt from select consumer protections and from select rating and underwriting standards of the individual or small-employer market.

According to the National Conference of State Legislatures, six states—Rhode Island, Wyoming, Georgia, Kentucky, Maine and Oklahoma—have passed and signed into law various versions of “cross-border” health insurance bills to encourage greater use of AHPs. However, no states have yet had to implement the laws or related compacts.

It is believed that forthcoming changes to ERISA will facilitate cross-state AHPs and could lead to an override of some state regulations. This could mean when exempt, association health plan coverage is not regulated by the state where the small business or consumer is located; instead, it is regulated under the standards of the state where the master contract is issued to the association. Generally, this is where the association is headquartered or, if the policy is held in a trust, the location of the trust, typically in a state with few requirements for association health insurance.

To read the Executive Order, click here.  

In a separate move, the Administration signaled that it would announce plans to cut subsidy payments to insurers. The subsidies, which are worth an estimated $7 billion this year and are paid out in monthly installments, may stop almost immediately since Congress hasn’t appropriated funding for the program. Ending the payments is likely to provide another jolt to the already fragile insurance markets. Insurers rely on the subsidies to reduce out-of-pocket costs for low-income Obamacare customers. They’re still on the hook to provide the discounted rates to their members under the law, despite no longer receiving the federal funding.

Trump has threatened for months to cut off the payments, deriding them as a “bailout” for insurers. While Republican lawmakers complained the subsidies were never properly appropriated by Congress, many were wary of ending them suddenly. The Trump administration will also likely drop an appeal of a lawsuit contesting the legality of the payments, known as cost-sharing reductions. However, a group of Democratic state attorneys general will continue fighting in court to preserve the payments.

Some insurers are also likely to sue the Trump administration over the failure to make payments that they believe they’re entitled to under the Affordable Care Act.

FDA Allows Four Drugs to be Imported

FDA has authorized the importation of four drugs from Europe in response to shortages caused by Hurricane Maria. The FDA said the hurricane had left 40 high-priority drugs at risk of shortage, and as of Oct. 10, three of the products will now be imported because there appears to be a shortage. However, one product now being imported does not appear to be on FDA’s shortage list.

FDA Commissioner Scott Gottlieb on Sept. 25 announced the creation of a hurricane shortages task force, which is charged with creating solutions to avoid medical product shortages using a broadened mandate for FDA’s emergency operations team.

The FDA has authorized importation of the following IV drugs: Sodium-Chloride 0.9% w/v Intravenous Infusion, BP, MINI-BAG Plus in VIAFLEX plastic container; Sodium-Chloride 0.9% w/v Intravenous Infusion, BP, in VIAFLO container; Glucose 5% w/v Intravenous Infusion BP in VIAFLO container; and Metronidazole Injection 500mg Isotonic Saline in VIAFLO container.

While the sodium-chloride IV solutions and the glucose infusion are on FDA’s shortage list, the Metronidazole injection is not.

3. Reports

Kaiser Survey Finds Groups Cutting Back on Navigators

A new Kaiser Family Foundation survey found that Obamacare enrollment groups say they are likely to lay off staff, cut back outreach and limit their geographic footprint after the Trump administration sharply curtailed their federal funding. Nearly 90 percent of navigators said they expect to lay off staff, the survey found. More than 80 percent said they would cut back their enrollment efforts and events, and 57 percent said they would limit the number of people who are devoted to more complicated enrollment cases.

HHS awarded roughly $37 million to nearly 100 navigator organizations across the country this year, a sharp decline from the roughly $60 million they received annually from the federal government in prior enrollment seasons.

The Kaiser survey also raises questions about the Trump Administration’s explanation for the funding cuts. CMS said the funding would be tied to how well the groups performed on previous enrollment targets—for instance, a group that previously hit 70 percent of its enrollment goal would now receive 70 percent of its funding, HHS said.

But the Kaiser survey found funding adjustments did not correlate with enrollment performance for about 78 percent of navigator groups. Roughly half the organizations surveyed also said the federal government did not provide a rationale for their funding decreases, and another 40 percent said the reasoning was unclear.

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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