Washington Healthcare Update

March 12, 2018

Pardon Our Dust

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This Week: President’s budget released and hearings begin … health care spending expected to rise … and the FDA releases guidance for neurological drug development.

1. Congress



2. Administration

3. Reports

1. Congress


Omnibus Status

House Majority Leader Kevin McCarthy said that the vote on the $1.3 trillion omnibus spending bill may come next week in the House to give the Senate adequate time to deliberate and pass legislation before the March 23 deadline. 

House GOP leaders have pushed each of the 12 appropriations subcommittees to finish their work by March 14 or risk a short-term funding patch for their bill. The leaders of nearly all spending panels have voiced confidence they’ll meet the deadline, with the exception of Labor-HHS-Education—the largest domestic spending bill.

Supporters of stabilizing the health marketplaces are attempting to find a way to put a stabilization package on the omnibus. However last-minute demands concerning abortion language and defunding Planned Parenthood have made reaching an agreement even more difficult.


Cochran to Resign

On March 6, Sen. Thad Cochran (R-MS) announced that he would resign after appropriations were completed for the year because of health reasons. The chairman of the Appropriations Committee has had health issues for some time. After decades of waiting, Sen. Richard Shelby (R-AL) is expected to be his replacement as chairman. 

Grassley Introduces 340B Legislation

Sen. Charles Grassley (R-IA) on Feb. 27 introduced legislation to require hospitals to report on savings they get from the 340B program. The Ensuring the Value of the 340B Program Act would make hospitals disclose acquisition costs for 340B drugs and reimbursement for those drugs from all payers, including Medicare, Medicaid, the Children’s Health Insurance Program, private health insurance and the uninsured. That information would be included in a CMS cost report. Because the legislation is drafted to include the CMS cost reports, the legislation will fall into the Senate Finance Committee jurisdiction rather than the Senate Health, Education, Labor and Pensions Committee, which has generally had jurisdiction over the 340B program.

340B hospitals say the bill would take savings out of context.

Finance Chair Orrin Hatch (R-UT) in late January asked HHS Secretary Alex Azar whether the Health Resources and Services Administration has enough resources to run the 340B program, and whether CMS should run it instead. Moving 340B to CMS would give the Senate Finance Committee jurisdiction.

After Grassley introduced his bill, the American Hospital Association on Thursday reported that 340B tax-exempt hospitals provided more than $50 billion in total benefits to their communities in 2015. AHA says the analysis shows hospitals are meeting the goals of the 340B program.

2. Congress

Administration Tells Idaho Not So Fast

The Trump administration on March 8 wrote in a letter that Idaho’s plan to let health insurers offer plans that do not meet the Affordable Care Act’s coverage requirements wouldn’t be substantially enforcing the law’s key requirements.

Under the ACA, states are the primary enforcers of the law’s private insurance rules, but the federal government is required to step in if a state chooses to not do so.

“CMS is committed to working with states to give them as much flexibility as permissible under the law to provide their citizens the best possible access to healthcare. However, the Affordable Care Act remains the law,” CMS said in a statement.

CMS also told Idaho that its so-called state-based plans with certain changes could be legally offered as short-term, limited-duration plans, which HHS has moved to expand through regulations.

HHS Secretary Azar Praises United’s Rebate Announcement

On March 6, UnitedHealth Group, the country’s largest insurer, says it will begin passing on rebates it gets from pharmaceutical companies to some customers when they buy prescription drugs. The change will take effect next year and apply to 7 million customers enrolled in fully insured plans offered by their employers. UnitedHealthcare said, beginning in January, customers who are enrolled in fully insured group health benefit plans will get discounts that will be applied to their drugs at the point of sale. The new rebate policy will affect about 7.5 million people and their savings will range from a few dollars to thousands of dollars. Plans say rebates reduce premiums for everyone, and the new policy will target benefits at people in need of treatments. One of the main complaints about the current rebate system is that it reverses the way insurance should work because sick people subsidize coverage for healthy customers.

In response, HHS Secretary Alex Azar and brand drug companies praised UnitedHealthcare for sharing rebates with its customers. PHARMA said it believes Medicare Part D should adopt the health insurance company’s policy.

Separately, the health insurance company this year stopped counting drug copay coupons toward deductibles. Some believe that the new rebate policy is offset by the copay coupon policy. 

On March 6, Azar described the current rebate system as a web of negotiated discounts that makes it impossible to reward value, and he said the system “too often generates profits for middlemen rather than savings for patients.” He said if providers, insurers, drug makers and pharmacies are not more honest and open about the prices for drugs and health care services, the government will force them to be transparent.

“Change is possible, change is necessary and change is coming,” Azar told attendees at the Federation of American Hospitals annual policy conference.

Azar Underwhelmed by ACOs

HHS Secretary Alex Azar told hospital officials that Accountable Care Organizations have produced underwhelming results, but he promised that the Trump administration will be more successful than its predecessors in achieving value-based care.

The HHS Secretary said that a web of negotiated discounts currently makes it impossible to reward value and the system “too often generates profits for middlemen rather than savings for patients.” He called on providers, insurers, drug makers and pharmacies to be more transparent on their pricing of services and products. If they aren’t, Azar said, the government has plenty of levers to pull to help drive change.

Azar said HHS is looking at using Medicare and Medicaid to transform the broader health care arena, particularly as commercial payers often mimic Medicare fee-for-service pay, and only Medicare and Medicaid have the heft and concentration to drive a change in the system.

He pointed to a range of tools available to transform the two programs, including levers provided by the Medicare Access and CHIP Reauthorization Act legislation and CMS’s innovation center. Azar said these tools give the administration tremendous power.

Azar said the Trump administration is mindful that aggressive models haven’t always worked in the past, and said appropriate guardrails will always be essential.

He said HHS also will look at how new models might drive consolidation. However, as a matter of principle, HHS wants to get to a point where it is agnostic about ownership structures.

Azar said HHS found the results coming in from ACOs underwhelming and lackluster. But he also said such results weren’t surprising, as providers weren’t given new space to experiment with arrangements necessary to take on the risk of a patient’s outcomes. At the same time, ACOs were allowed to share in savings without taking responsibility for cost overruns.

Azar also said that quality measures and reporting need to be as easy as possible, echoing concerns voiced by CMS Administrator Seema Verma when she kicked off the Patients Over Paperwork initiative. That initiative is meant to help reduce provider burden.

CMS Announces MyHealthEData Initiative

On March 6, CMS Administrator Seema Verma announced a new Trump administration initiative—MyHealthEData—to empower patients by giving them control of their health care data. MyHealthEData aims to break down the barriers that prevent patients from having electronic access and true control of their own health records. Patients will be able to choose the provider that best meets their needs and then give that provider secure access to their data, leading to greater competition and reducing costs.

In an address at the Healthcare Information and Management Systems Society (HIMSS) annual conference in Las Vegas, Administrator Verma also announced the launch of Medicare’s Blue Button 2.0—a new and secure way for Medicare beneficiaries to access and share their personal health data in a universal digital format. This enables patients who participate in the traditional Medicare program to connect their claims data to the secure applications, providers, services and research programs they trust.

Additionally, CMS intends to overhaul the Electronic Health Record Incentive Programs to refocus the programs on interoperability and reduce the time and cost required of providers to comply with the programs’ requirements.

The administrator also highlighted other CMS plans including:

  • Require providers to update their systems to ensure data sharing
  • Require that a patient’s data follow them after they are discharged from the hospital
  • Streamline documentation and billing requirements for providers to allow doctors to spend more time with their patients
  • Reduce the incidence of unnecessary and duplicative testing which occurs as a result of providers’ not sharing data

The initiative is led by the White House Office of American Innovation with the participation of HHS, including ONC and CMS. As part of that, CMS will examine its expectations for Medicare Advantage and qualified health plans and ask insurers to release their data. CMS is to review quality measures in the star ratings program to shift the focus to patient access to data. Verma said the agency will work with states on making claims data available to Medicaid beneficiaries as well.

For more information:

See the full text of this excerpted CMS Press Release (issued March 6).

CMS Approves Arkansas Waiver with Work Requirements

Arkansas became the third state to obtain federal permission to add work requirements to its Medicaid program on March 5, but CMS postponed a decision on Arkansas’s proposed rollback of its Medicaid expansion.

Under Arkansas’s work requirement program approved Monday, able-bodied adults between the ages of 19 and 49 will be required to work at least 80 hours a month in order to retain their Medicaid coverage. Beneficiaries who fail to meet the work requirement for any three months during a year will be locked out of coverage for the rest of the year. People who care for children, are in substance abuse treatment or are in full-time school or job training are exempt from the work requirement.

Kentucky and Indiana have received CMS’s approval of their waivers to permit those states to condition Medicaid benefits for able-bodied adults on having a job, going to school or receiving job training. More than a dozen other states either have pending requests with CMS to adopt similar work requirements in their Medicaid programs or are seriously considering submitting such requests.

Arkansas officials said they expect the work requirement program to be fully operational by early June. The Indiana and Kentucky work requirements have not yet taken effect, and Kentucky’s program is the subject of a lawsuit.

Arkansas now seeks to become the first state to enact so-called “partial expansion” by lowering the eligibility threshold while still receiving the enhanced federal matching rate for funds tied to expansion. If approved, the rollback would affect about 60,000 Arkansas Medicaid beneficiaries. Those beneficiaries would then be eligible for ACA marketplace subsidies paid entirely by federal funds.

Medicare Advantage and Part D Rule at OMB for Review

The White House Office of Management and Budget started reviewing the final Medicare Advantage and Part D rule on March 5. The unified agenda indicates the administration hopes to get the rule done in time for the policies in the rule to be in place for the 2019 contract year.

The proposed rule was released in November, and targeted pharmacy benefit managers by asking for feedback on making the middleman share rebates with beneficiaries. However, Republican leaders of the Senate Finance, House Energy & Commerce and House Ways & Means committees in January asked CMS not to include feedback from the request for information in a final Medicare Advantage and Part D rule, as they said any changes the administration wants to make must first go through notice and comment rulemaking.

On Medicare Advantage, CMS proposed to place limits on seamless conversions that would only allow Medicare Advantage plans to automatically enroll new dually eligible beneficiaries into duals special needs plans if they were previously in affiliated Medicaid-managed care plans. The proposed rule also would allow passive enrollment of duals from a D-SNP that is ending to another, comparable plan. It would change medical loss ratio calculations, eliminate certain MA “meaningful difference” requirements, allow plans more flexibility on uniformity requirements and reduce the oversight on certain marketing materials CMS says don’t affect beneficiaries’ enrollment decisions.

FDA Approves DTC Genetic Tests for Breast and Ovarian Cancer

On March 6, FDA granted marketing authorization—with special controls—for the first time for a direct-to-consumer (DTC) genetic health report detecting whether users are at risk of developing breast and ovarian cancer. The test reports on three specific BRCA1/BRCA2 breast cancer gene mutations that are most common in people of Ashkenazi Jewish descent.

FDA has granted marketing authorization to 23andMe for its BRCA1/BRCA2 Genetic Health Risk Report, which was reviewed through the agency’s de novo premarket review pathway for novel low-to-moderate-risk devices. With the authorization come special controls, which allow FDA to set out its expectations for the test’s accuracy, reproducibility, clinical performance and labeling.

“These special controls, when met along with general controls, provide reasonable assurance of safety and effectiveness for this test,” FDA said in a press statement.

23andMe submitted data to FDA that showed test users were able to comprehend test instructions and reports, and that the test is accurate and can provide reproducible results.

The agency emphasized that while the three mutations are most common in those of Ashkenazi Jewish descent, they are not the most common mutations in the general population. In fact, there are more than 1,000 known BRCA mutations, according to FDA, meaning that a negative result on the 23andMe test does not rule out the possibility of carrying another BRCA mutation.

FDA Commissioner Scott Gottlieb Addresses ACLA Annual Meeting

In a speech to the American Clinical Laboratory Association’s annual meeting, FDA Commissioner Gottlieb said he wants to find ways to speed the market entry of next-generation sequencing tests and other lab-developed tests. Noting that his agency last year approved two next-generation sequencing tests, which used genetic tests to tailor drug treatments to patients’ tumors, Gottlieb suggested FDA would have more approvals this year. In the current fiscal year, he said, more than a dozen developers had pre-submitted their lab-developed tests.

FDA has been deliberating how to regulate diagnostics developed and sold at a single laboratory. Last year, the agency rolled out a pair of new policies. The first, a pilot, attempts to pre-certify labs, as opposed to individual tests. The second policy uses third-party reviewers to clear tests.

For genetic tests, the agency is examining how to use reference databases, such at the National Institutes of Health’s ClinVar repository, to establish their clinical validity. Gottlieb also said the agency is looking at more advanced technologies, like machine learning and artificial intelligence, to assess a test’s clinical performance.

FDA Regulations on Nicotine Cleared by OMB

Three preliminary regulations crafted to help FDA set its approach toward reducing nicotine levels in cigarettes and regulating premium cigars and flavored tobacco cleared the White House Office of Management and Budget on Tuesday, March 6. However, all three regulations are expected to pose questions on how FDA should proceed, rather than determine policy, and some stakeholders are skeptical that FDA will ever get the actual regulations across the finish line.

In July FDA Commissioner Scott Gottlieb announced that the FDA would develop “comprehensive nicotine regulatory plan premised on the need to confront and alter cigarette addiction,” which he said would be accomplished largely by reducing the nicotine level in cigarettes to non-addictive levels. As part of that plan, Gottlieb said the agency would issue an advance notice of proposed rulemaking “to identify the issues FDA would need to address to use our clear authority under the product standard provisions in the Tobacco Control Act to regulate nicotine in combustible cigarettes and render them minimally or non-addictive.”

That ANPRM, “Tobacco Product Standard for Nicotine Level of Certain Tobacco Products; Request for Information,” was submitted to OMB on Dec. 4, 2017, and cleared the White House budget office Tuesday.

Gottlieb also pledged in July to issue an ANPRM on how to regulate “kid-appealing flavors in e-cigarettes and cigars.” An agency press release from July revealed that the ANPRM will:1) seek public comment on the role that flavors (including menthol) in tobacco products play in attracting youth and may play in helping some smokers switch to potentially less harmful forms of nicotine delivery; and 2) solicit additional comments and scientific data related to the patterns of use and resulting public health impacts from premium cigars, which were included in the FDA’s 2016 rule.” FDA’s request for information on regulation of premium cigars also cleared OMB Tuesday. The agency’s decision to put out requests for information on tobacco, rather than promulgating actual policies, has led some to question whether FDA will actually move on the ambitious plans laid out by Gottlieb.

While Gottlieb had said FDA would begin holding meetings with stakeholders once the ANPRMs were promulgated, the commissioner has already met with a number of tobacco groups. “[W]hen we do promulgate our Advance Notice of Proposed Rulemaking, we will start to take meetings with stakeholders and hear from them. They’ll be listening sessions and so that will be my first opportunity to hear directly from some of the companies,” Gottlieb said during the National Press Club luncheon.

Gottlieb, along with eight other FDA staffers including tobacco office head Mitch Zeller, met with the J.C. Newman Cigar Company on Feb. 12, according to official records. Gottlieb and a number of the same staffers also met with Advancing Convenience and Fuel Retailing and National Association of Tobacco Outlets, Inc., on Feb. 14; Philip Morris International on Feb. 5; and Altria Group, Philip Morris’s parent company, on Jan. 16.

FDA also met with anti-tobacco groups on the plan, including the Truth Initiative on Jan. 9 and the Campaign for Tobacco-Free Kids on Jan. 10.

OMB also met with a number of groups on the regulations. FDA and OMB met with Altria on Feb. 16; RAI Services Inc, which appears to be connected to R.J. Reynolds’ parent company, Reynolds American, on Feb. 8; the Cigar Association of America on Jan. 24; and a number of public health groups, including the American Lung Association, Truth Initiative and Campaign for Tobacco-Free Kids, on Jan. 4.

NIST to Request Industry Participation for Improved Security of Patient Imaging

In the next few weeks, the National Institute of Standards and Technology will request industry participation in a proposed project for improved security of patient imaging, archiving and communications systems, as part of a broader NIST effort to assist health care providers and device manufacturers address the growing threat of cyberattacks. The PAC project will be the second by NIST’s National Cybersecurity Center of Excellence on improving the cybersecurity of medical services and devices.

3. Administration

CDC Releases New Report on Opioids

In a new report the Centers for Disease Control and Prevention found hospitalizations for opioid overdoses jumped by 30 percent in 45 states between July 2016 and September 2017.

The Midwest saw the largest increase (70 percent) in hospitalizations for opioid overdoses, with rates in Wisconsin jumping 109 percent. Illinois was up 66 percent, and Indiana had a 35 percent increase.

The data represents the latest glimpse at the growing opioid crisis. The CDC also tracks the epidemic through overdose death rates, but the latest available figures are from 2016.

For more information please read https://www.cdc.gov/vitalsigns/index.html.

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

StephanieKennan, Senior Vice President
Anne Starke, Research Associate

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