Washington Healthcare Update

October 30, 2017

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This Week: Fourth week of CHIP’s not being renewed…Administration proclaimsa National Public Health Emergency on opioids…Senate budget passes theHouse…Hatch and Brady offer their own market stabilization plan…While CBOsays Alexander-Murray saves.

1. Congress

House

Senate

2. Administration

3. Courts

4. Reports

1. Congress

House

Rep. Cummings and Sen. Sanders Introduce Legislation to Let GovernmentNegotiate Drug Prices

Rep. Elijah Cummings (D-MD) and Sen. Bernie Sanders (I-VT) introducedlegislation on Oct. 25 to let the government negotiate drug prices inMedicare Part D. The legislation also would let CMS use drug formulariesand fallback prices, which are policies the Congressional Budget Officesaid are needed to obtain discounts in price negotiation, and it wouldoffer drug rebates for low-income beneficiaries.

Cummings is the ranking Democrat on the House Oversight and GovernmentReform Committee. The House bill’s cosponsors include Reps. Peter Welch(D-VT), a member of the Energy & Commerce Committee, and Lloyd Doggett(D-TX), who is on Ways & Means. The Senate version is cosponsored byDemocratic Sens. Jack Reed (RI), Kirsten Gillibrand (NY), Kamala Harris(CA) and Al Franken (MN).

Cummings and Welch on Tuesday sent their third letter to Trump sincemeeting with him March 8. Cummings said the president supported the thrustof what was then draft legislation, but he hasn’t responded to theirrequests to support the legislation in the seven months since.

Framework for Repeal of Therapy Caps Unveiled

The House Ways and Means and Energy and Commerce Committees and the SenateFinance Committee unveiled a bipartisan framework to repeal Medicaretherapy caps, which is based off the targeted manual medical reviewprocess. The policy would repeal the Part B outpatient therapy caps. Thecaps currently are $1,980 for speech and physical therapy and $1,980 foroccupational therapy, with an exceptions process that will expire at theend of the year. Renewing the exceptions process has been an annualexercise for Congress as part of the Medicare extenders.

Currently, claims above the cap are marked with a modifier and theframework released on Oct. 26 would still require a modifier on medicallynecessary claims over the current exceptions threshold. The new policywould require current practice to continue of targeted manual medicalreviews for claims over a threshold although the framework may change thethreshold. There is no Congressional Budget Office estimate yet.

Hatch-Brady Proposal on Market Stabilization

On Oct. 24, the Senate Finance Chairman Orrin Hatch and House Ways andMeans Chairman Kevin Brady combined forces to unveil a proposal that wouldfund ACA insurance subsidies in exchange for temporarily eliminating thehealth law’s individual mandate.

The Republican-only plan represents direct competition to the bipartisanACA stabilization bill (Alexander-Murray)—and could appeal to undecidedRepublicans looking for a more conservative approach.

The proposal from Hatch and Brady would fund the ACA’s cost-sharing programthrough 2019, similar to the bipartisan stabilization bill drafted by Sens.Lamar Alexander and Patty Murray.

However, it would also include a number of new provisions designed toappeal to conservatives, including eliminating the individual mandatethrough 2021 and expanding the use of health savings accounts.

The Hatch-Brady bill will also exempt businesses from the employer mandatefor 2015 through 2017 and apply certain “pro-life protections” to thecost-sharing funding.

Some of the provisions in the proposal—like the expansion of HSAs andemployer mandate exemption are changes the White House also requested bemade to the Alexander-Murray bill.

House Passes Budget Paving the Way for Tax Reform

On Oct. 26, the House of Representatives narrowly passed the budgetresolution the Senate had passed last week. The resolution passed 216-212.

The budget the House passed is different from the version the chamber firstapproved earlier this month and is unlikely to have garnered sufficientsupport without the tax debate looming over Congress.

The House’s initial plan, favored by fiscal hawks, would have requiredlawmakers to offset the costs of new tax cuts and find $203 billion inextra savings from some welfare programs. But those requirements would notfly in the more moderate Senate, which passed its budget last week.

Under immense pressure to pass a tax reform bill by year’s end, Republicanleaders struck a time-saving deal to forgo a formal conference committee toresolve differences between the House and Senate plans.

The Senate budget envisions tax cuts that could add $1.5 trillion to thedeficit over a decade.

Senate

Congressional Budget Office Says Alexander-Murray Would Reduce FederalDeficit

The bipartisan bill to stabilize ACA individual markets drafted by Sens.Lamar Alexander and Patty Murray would reduce the federal deficit by $3.8billion. However, it would not do much to change health insurance premiumsfor 2018, but could keep rates steady in 2019, according to a new analysisby the Congressional Budget Office on Oct. 25. The legislation also wouldnot substantially change the number of people who are covered.

CBO said the savings would stem in part from letting states offer so-calledcopper plans—or lower-cost policies that appeal to healthier enrollees inthe Obamacare markets.

The federal government would also save money by funding cost-sharingsubsidies for two years, preventing it from having to pay insurers more tocover separate subsidies tied to rising premiums. Those subsidies—thecenter of a court battle and ongoing partisan conflict—help cover medicalbills for lower-income enrollees. The administration recently stopped thosepayments, but Congress could resume them, either through legislation likethe Alexander-Murray bill or through a year-end spending bill.

The CBO found there is no additional cost to Congress’s appropriating moneyfor that cost-sharing program because the spending has been done in thepast.

To read the estimate, visitwww.cbo.gov

HELP Committee to Hold Hearing on Health IT

On Oct. 31 at 2:30 p.m. the Senate HELP Committee will hold its firsthearing on health IT since last year’s passage of the 21st Century CuresAct.

Witnesses are to include ONC’s Jon White, the office’s deputy head; KateGoodrich, CMS head of clinical standards; and James Cannatti of the HHSInspector General Office.

The Cures bill penalized information blocking and asked HHS to define thepractice, while creating a new federal health IT advisory committee anddirecting ONC to develop a shared set of terms and conditions forinformation exchange. ONC must outline a strategy for reducing theadministrative burden of health IT, update its electronic health recordscertification program to include new requirements for the usability andcontract with an outside agency to test how vendors can meet thosecertification requirements.

To view the hearing, visitwww.help.senate.gov

20 Senators Ask Administration to Allow Negotiated Prices for Naloxone

Sen. Debbie Stabenow (D-MI) and 18 other Democratic senators on Oct. 25called on President Donald Trump to allow the government to negotiate lowerprices for naloxone, an opioid overdose reversal drug.

The price of naloxone has risen during the course of the opioid crisis.Narcan, which administers naloxone as a nasal spray, costs $150 for atwo-pack and Evzio, a naloxone auto-injector, has increased from $690 in2014 to $4,500 currently for a two-pack. In their interim report, theCommission on Combating Drug Addiction and the Opioid Crisis recommendedthat the federal government and states increase distribution andutilization of the opioid overdose-reversing drug, naloxone.

In addition to Stabenow, the letter was signed by U.S. Senators MichaelBennet (D-CO), Maggie Hassan (D-NH), Amy Klobuchar (D-MN), Patrick Leahy(D-VT), Jeanne Shaheen (D-NH), Tammy Baldwin (D-WI), Sheldon Whitehouse(D-RI), Angus King (I-ME), Gary Peters (D-MI), Jack Reed (D-RI), BernieSanders (I-VT), Cory Booker (D-NJ), Kamala Harris (D-CA), Al Franken(D-MN), Chris Murphy (D-CT), Richard Blumenthal (D-CT), Sherrod Brown(D-OH) and Joe Donnelly (D-IN).

To read the letter, visitwww.stabenow.senate.gov

2. Administration

Trump Declares Opioid Epidemic a Public Health Emergency

President Donald Trump’s public health emergency declaration on the opioidepidemic does not contain any new funding to combat the problem,disappointing state officials and others on the front lines.

A public health emergency declaration allows public health agencies toswiftly move existing health resources to the crisis. It also reduces“delays” in hiring personnel and expands access to telemedicine, includingremote prescribing of medication commonly used for substance abuse or othermental health treatment.

However the declaration does not add more money. HHS’s public health fundonly has about $57,000, and the declaration won’t provide additional newfunding to address opioid abuse. Congress could appropriate more money atthe end of the year and is likely to face pressure to do so from states andothers.

In addition, the president said his administration will “announce a newpolicy to overcome a restrictive 1970s-era rule that prevents states fromproviding care at certain treatment facilities with more than 16 beds forthose suffering from drug addiction.” This refers to the “IMD-exclusion,”which prevents Medicaid from paying for patients at inpatient treatmentfacilities with more than 16 beds. This rule is from the 1960s. However,states can already seek Medicaid waivers that exempt the individual state’sMedicaid program from these restrictions. In 2015, states were informedthey could use the 115 waiver to gain an exception for substance abusetreatment. Five states have already received waivers: California, Maryland,Massachusetts, Virginia and West Virginia. Four other states are waitingfor approval. It is unclear if the president plans to change the currentregulatory process or propose a repeal of the IMD rule, which would requirecongressional action.

Iowa Drops 1332 Waiver Request

Iowa was seeking a Section 1332 waiver in order to overhaul the state’stroubled Affordable Care Act insurance market with just a week left beforethe start of open enrollment. The director of the Iowa Insurance Divisionsaid that the waiver was ultimately proven to be unworkable. The IowaInsurance Division estimates that 25 percent of the entire individualmarket will drop coverage due to premium increases.

That means Medica will be the only insurer offering plans on the state’sexchange market, with its rates expected to rise an average of more than 50percent.

Iowa’s waiver would have created an entirely new subsidy structure and areinsurance program to protect health plans from the most expensivecustomers. That retooled individual insurance market would have included astandard benefit plan that every participating insurer would have beenrequired to offer for 2018. Wellmark Blue Cross and Blue Shield, thestate’s dominant carrier, had agreed to sell that product statewide if thewaiver had been approved.

The Iowa Insurance Division estimates that skyrocketing premiums for nextyear will result in 18,000 to 22,000 individuals—about 25 percent of theentire individual market—dropping coverage.

Massachusetts Denied Waiver

The Trump administration on Oct. 23 told Massachusetts that it can’t get awaiver from Affordable Care Act rules because there isn’t enough timebefore the next open enrollment window begins.

The decision—outlined in a letter from CMS to state officials today—comesjust a week before signups on the law’s exchanges begin on Nov. 1, andafter Iowa announced earlier in the day that it would withdraw its waiverplan to overhaul its individual market.

Massachusetts was told that its proposed waiver application was incompleteand there was too little time to implement the plan for 2018. The state onSept. 8 requested a waiver to establish a premium stabilization fund inlieu of ACA cost-sharing reductions for next year.

HHS IG Reports Cancelling ACA Ads and Outreach Cost $1.5 Million

The cancellation in January of ads and outreach tied to the ACA’s openenrollment cost the Trump administration at least $1.5 million—and promptedmass confusion within HHS, according to a report published by the U.S.Department of Health and Human Services’ Inspector General.

The investigation found that Trump transition officials ordered federalhealth staff to cut off outreach within days of officially taking over thegovernment, despite warnings that ending the activity could cost millionsand depress enrollment during the last week of Obamacare signups.

Staffers quickly started pulling back all the ads and outreach connected toopen enrollment, spreading the word throughout HHS and CMS, and sendingnotices to a pair of contractors.

Later that same day, the Trump administration clarified its instructions,telling the agency that it should only cancel select activities. Staffersscrambled to reinstate parts of the outreach plan.

The cancellation and resumption of some functions led to about $1.5 millionin unrecoverable costs to the government and another $5.2 million inexpenses seen as recoverable. That recoverable money has not yet beenreturned to the Treasury.

A preliminary analysis that HHS gave Trump officials ahead of thecancellation decision had estimated that pulling the outreach and ads wouldcost at least $5 million.

To read the report, visitwww.oig.hhs.gov

FDA Unable to Contact 40 Percent of Drug and Device Makers in PuertoRico

The FDA has been able to reach only 60 percent of the approximately 5,000pharmaceutical and medical device companies in the aftermath of HurricaneMaria. It has been in contact with all the firms that make devices theagency deems critical.

So far, the agency has not found any firm running above 70 percent ofnormal capacity, and many are operating around 20 percent, according toprepared testimony FDA Commissioner Scott Gottlieb delivered to the HouseEnergy and Commerce Oversight Subcommittee.

To head off prospective supply shortages, FDA will import necessarysupplies from other manufacturing sites and markets, Gottlieb said. FDAsaid it already prevented a significant shortfall of Baxter’s sodiumchloride injection bags, due to lost manufacturing days at the company’sPuerto Rico facility, by facilitating the importation of the products fromcompany facilities in Ireland and Australia.

To view the hearing, visitenergycommerce.house.gov

FDA Seeks to Advance Medical Device Innovation

On Oct. 25, the FDA announced three new guidance documents and drafts. Oneis a draft guidance on the “Breakthrough Devices Program” created under21st Century Cures. The other two are final guidance that will helpinnovators know when they must submit a new 510(k) before changing a devicesubject to premarket notification (510(k)) requirements.

3. Courts

Federal Judge Denies AGs Request to Force CSR Payments to Continue

A federal judge denied a request to immediately force the Trumpadministration to continue making the ACA insurance subsidy payments thatit cut off earlier this month.

U.S. District Court Judge Vince Chhabria ruled Oct. 25 against an emergencyorder to require that the payments continue to be made while a lawsuitfiled by 18 states and the District of Columbia over the cost-sharingreduction payments works its way through the courts.

4. Reports

Some States Still Restrict Hepatitis C Drugs

According to a Harvard Law School and National Viral Hepatitis Roundtablereport card, more than half of all Medicaid programs received a “D” or “F”for having discriminatory restrictions on hepatitis C drugs. The “HepatitisC: State of Medicaid Access” report graded each state according to itsoverall access to treatments for hepatitis C and offered suggestions tostreamline treatment access requirements. The states that got the bestgrades took steps to ensure extensive access to hepatitis C treatments.

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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