Washington Healthcare Update

January 29, 2018

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This Week: Funding the government drama? Azar nomination moves forward…Ways and Means asks CMS what it is doing to prevent opioid abuse by Medicare beneficiaries…Interim Final Common Rule released…CMS not processing therapy claims, to avoid hitting caps…

1. Congress



2. Administration

3. Reports

1. Congress


Concern Over RFI Use in Rulemaking

Republican leaders of the Senate Finance, House Energy & Commerce and House Ways & Means committees sent a letter to the Centers for Medicare and Medicaid Services (CMS) asking CMS not to include feedback from a recent request for information on making pharmacy benefit managers share rebates and other pharmacy fees with beneficiaries in a final Medicare Advantage and Part D rule. They say any changes must go through notice and comment rulemaking.

As part of the Medicare Advantage and Part D rule CMS proposed in November, CMS asked for feedback on “how we might most effectively design a policy requiring Part D sponsors to pass through at the point of sale a share of manufacturer rebates they receive, in order to mitigate the effects of the [Direct and Indirect Remuneration] construct on costs to both beneficiaries and Medicare, competition, and efficiency under Part D.” The agency said that when Part D was created, CMS had expected plans would pass on those savings at the point of sale, but few have done so.

House Ways & Means Chair Kevin Brady (R-TX), House Energy & Commerce Chair Greg Walden (R-OR) and Senate Finance Chair Orrin Hatch (R-UT) say they understand the administration is looking to make sure Part D delivers maximum value to beneficiaries and providers, but the administration should make sure any changes it makes as a result of the feedback it receives on the RFI go through notice and comment rulemaking.

“A full and transparent process is paramount for potential changes of this magnitude. Thus, policy changes as a result of the RFI should not be included in the final Contract 2019 rule as to allow for robust input from the public and full examination by Congress,” the committee chairs stated.


Azar Confirmed

The Senate confirmed Alex Azar as secretary of Health and Human Services in a 55-43 vote, with six Senate Democrats and Independent Angus King joining nearly all Republicans to support his confirmation. Democratic Sens. Tom Carper and Chris Coons (DE), Joe Donnelly (IN), Doug Jones (AL), Heidi Heitkamp (ND) and Joe Manchin (WV) supported his confirmation. Sen. Rand Paul (R-KY), who has disagreed with Azar over the merits of drug reimportation, was the only Republican present to oppose Azar.

Azar has pledged to prioritize reining in drug prices. He has also been a critic of the Affordable Care Act.

340B Legislation

On Jan. 17, Sen. Bill Cassidy (R-LA) introduced legislation, the 340B PAUSE Act, to halt certain types of hospitals from entering the 340B program until the Health Resources and Services Administration (HRSA) writes regulations for the drug discount program with additional transparency measures and other program requirements.

The bill would create a moratorium on new Disproportionate Share Hospitals and hospital “child-sites” from entering the program for at least two years, or until the Health Resources and Services Administration writes certain 340B regulations. The bill would require hospitals to use CMS’ new 340B claims modifier on drugs bought through the program and it would create for hospitals a number of reporting requirements, including those on 340B revenue and information on patients’ insurance.

Passing on Drug Discounts

Twenty-one senators led by Sens. Shelley Moore Capito (R-WV) and Jon Tester (D-MT) sent a letter to the Centers for Medicare or Medicaid Services (CMS) endorsing a CMS proposal to require drug price discounts be passed on to consumers. The CMS proposal would require pharmacy discounts on drugs be passed on to Medicare beneficiaries, not insurers or pharmacy benefits managers. CMS has estimated this move would save beneficiaries $10.4 billion over 10 years. CMS sought feedback on the proposal in a November rule for 2019 Medicare outpatient prescription drug benefits.

This “will help increase the transparency and accuracy of prescription drugs costs in Medicare Part D, and help significantly lower American seniors’ out of pocket drug costs,” the senators wrote. “Seniors should not have to bear the burden of artificially inflated drug prices when they go to the pharmacy counter,” they added.

A group of 80 bipartisan House members sent a similar letter to CMS earlier in January.

2. Administration

OMB Begins Review of Inpatient Hospital Rule

The White House Office of Management and Budget on Jan. 18 began reviewing the proposed hospital inpatient payment rule for FY 2019. The rule is expected to be released in April.

Medicaid Head to Leave CMS

Brian Neale, a senior CMS official overseeing Medicaid and a former aide to then-Indiana Gov. Mike Pence, will depart the agency next month.

Neale is one of CMS Administrator Seema Verma’s top deputies, heading the Center for Medicaid and CHIP Services. His exit follows a string of recent departures by other senior HHS officials, including Jane Norton, Nina Schaefer and Teresa Manning.

Azar Chief of Staff Named

Newly confirmed Secretary of Health and Human Services Alex Azar has named Peter Urbanowicz as his chief of staff. Like Azar, Urbanowicz was in the George W. Bush administration at HHS. He served as deputy general counsel at HHS from 2001 to 2003, working under Azar in the general counsel’s office. He also was part of the team that drafted the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which created the Medicare Part D drug benefit.

FDA Updates Biologics Inspection Policy

On Jan. 25, the FDA issued a new rule to update regulations on biologic inspections. Previously, the FDA required drug and biologic facilities to be inspected every other year, but the 2012 FDA Safety and Innovation Act instead required FDA to establish a risk-based schedule for inspections.

To read the rule, click here.

3. Reports

Urban Institute: Implications of a Medicaid Buy-In

A new report by the Urban Institute released on Jan. 22 on allowing anyone to “buy into” Medicaid says it would have uneven impact. It could be helpful in states that have expanded Medicaid under Obamacare and are grappling with high individual market premiums, such as Alaska, Arizona and Maryland. However, it wouldn’t make much of a difference in states like New York, Ohio, Massachusetts, California and Michigan, which already have competitive insurance markets and where Medicaid plans offer products on their states’ exchanges. The Medicaid buy-in idea was pushed into the spotlight last year after Nevada nearly became the first state in the country to enact it.

To read the report, click here.

Government Accountability Office: Federal Health-Insurance Marketplace: Analysis of Plan Year 2015 Application, Enrollment and Eligibility-Verification Process

The GAO found that a small percentage—about 1 percent—of plan year (PY) 2015 enrollments were potentially improper or fraudulent. These applicants had unresolved inconsistencies related to citizenship, status as a national, lawful presence or Social Security number (SSN), or received coverage while reportedly deceased, according to GAO’s analysis of federally facilitated marketplace (FFM) eligibility and enrollment data. To verify applicant information, such as citizenship, status as a national or lawful presence, and SSNs, the FFM uses data from the Department of Homeland Security (DHS) and Social Security Administration (SSA), among other sources. When an applicant’s information does not match the available data sources, the FFM generates an inconsistency, and the FFM should take steps, such as requesting applicant documentation, to resolve it. Having an SSN is not a condition of eligibility; however, unresolved inconsistencies could indicate that an enrollment is potentially improper or fraudulent. The FFM did not actively resolve SSN inconsistencies for PY 2015, but the Centers for Medicare & Medicaid Services (CMS) has since completed system upgrades and established procedures for verifying SSNs with applicant-provided documentation, according to CMS officials.

To read the report, click here.

If you have any questions, contact the following individuals atMcGuireWoods Consulting:

StephanieKennan, Senior Vice President
Anne Starke, Research Associate

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