Washington Healthcare Update

August 6, 2018

Pardon Our Dust

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This Week: CMS releases final rules for SNF, IRF and others; House in recess; Senatein recess, but will be back this month.

1. Congress



2. Administration

1. Congress


House Energy and Commerce Committee Looks at 340B Pharmacies

The leadership of the House Energy and Commerce Committeeleaders have queried nine contract pharmacies participating in the 340Bdrug discount program. The letters to the pharmacies follow a June GAreport that emphasized issues in HHS oversight and revealed that somecontracting practices may create incentives to use higher-cost drugs.

The letters ask for details on how much money pharmacies recoup from each340B prescription. The committee also wants to know whether the agreementswith 340B hospitals require the companies to offer discounts to uninsuredand low-income patients on 340B drugs. In addition the letters ask abouthow the pharmacies prevent diversion of 340B medicine


Animal Drug User Fee Passes Senate

On July 31, the Senate passed by voice vote the Animal Drug User Fee andAnimal Generic Drug User Fee Amendments (ADUFA/AGDUFA), which reauthorizethe FDA’s animal drug and generic drug user fee programs. Despite consensusfrom both sides that the bill had to be passed, Sen. Patty Murray (D-WA)raised concern with a provision that expands FDA’s conditional approvalpathway for animal drugs, but both she and Sen. Lamar Alexander (R-TN) saidFDA Commissioner Scott Gottlieb has committed to providing guidance on thepathway and understands it is not intended for antibiotics.

The vote took place the same day Gottlieb announced a five-year plan meantto slow the development of antimicrobial-resistant bacteria by reducing theoveruse and misuse of antimicrobial drugs in veterinary settings. The plan,Gottlieb said, aims to align antimicrobial drug product use with theprinciples of antimicrobial stewardship; support efforts to foster betterstewardship of antimicrobials in veterinary settings; and enhance themonitoring of antimicrobial resistance and antimicrobial drug use inanimals. The announcement was well-received by Sens. Elizabeth Warren(D-MA) and Murray.

During the Senate floor vote Tuesday, Sen. Murray, the Senate HELPcommittee’s ranking Democrat, criticized the House Energy and CommerceCommittee for taking “our bipartisan bill that we workedon together” and adding the “controversial” conditional approval provision.She said the pathway as it currently stands—where FDA can for a limitedamount of time conditionally approve an animal drug for a minor species oran uncommon disease in a major species while the sponsor collects data onthe safety and efficacy—does not have a good track record of success.

“This pathway was supposed to spur innovation, but only four drugs haveever been conditionally approved in the pathway’s 14-year history. And onlyone of those four was actually effective and gained full approval. That’snot a very good track record,” Murray said. “Nonetheless, the House billexpands that pathway to any difficult-to-develop animal drug that couldaddress an unmet need and doesn’t even define what qualifies as‘difficult.’ ”

The senator said she is concerned with the “undefined scope of thispathway” and believes it does not uphold FDA’s gold standard for drugapprovals.

Sen. Alexander (R-TN), chair of the Senate HELP Committee, said he andMurray agree there needs to be more clarification around what it means fora drug to be difficult to study, adding he has spoken with Gottlieb aboutthe issue and the agency chief has committed to issue guidance quickly anddevelop regulations to provide such clarity.

2. Administration

Medicare Part D Premiums Continue to Decline in 2019

On July 31, the Centers for Medicare & Medicaid Services (CMS)announced that, for the second year in a row, the average basic premium fora Medicare Part D prescription drug plan in 2019 is projected to decline.Basic Part D premiums are expected to fall from $33.59 this year to $32.50next year.

Earlier this year, CMS announced changes in the Part D program aimed atstrengthening the program. Those changes included:

  • Reducing the maximum amount that low-income beneficiaries pay for certain innovative medicines known as “biosimilars.”
  • Allowing for certain generic drugs to be substituted onto plan formularies more quickly during the year, so beneficiaries immediately benefit and have lower cost sharing.
  • Increasing competition among plans by removing the requirement that certain Part D plans have to “meaningfully differ” from each other, making more plan options available.
  • Increasing competition among pharmacies by clarifying the “any willing provider” requirement, to increase the number of pharmacy options that beneficiaries have.

CMS anticipates releasing the premiums and costs for Medicare health anddrug plans for the 2019 calendar year in mid-to-late September.

CMS Finalizes Rules for SNFs, IRFs and Inpatient Psychiatric Hospitals

On July 31, the Centers for Medicare and Medicaid Services finalized three2019 Medicare payment rules for the Skilled Nursing Facility PPS, InpatientRehabilitation Facility PPS and Inpatient Psychiatric Facility PPS. Thefinal rules approved $975 million in additional funding for post-acute careproviders, including skilled-nursing, inpatient psychiatric and inpatientrehab facilities.

The Skilled Nursing Facilities (SNF) PPS final rule incorporates theagency’s Patients Over Paperwork initiative through avenues that reduceunnecessary burden on providers by easing documentation requirements andoffering more flexibility. As part of the agency’s actions to modernizeMedicare, the SNF PPS rule establishes an innovative new classificationsystem, the Patient Driven Payment Model (PDPM), which ties skilled nursingfacility payments to patients’ conditions and care needs rather than volumeof services provided. The move to this model is expected to also saveproviders an estimated $2 billion over the next decade.

Of note in these rules is the continued work on the agency’s MeaningfulMeasures initiative. The goal of this initiative is a prudent measure setthat focuses on the most critical quality issues and patient safety withthe least burden for clinicians and providers. The Inpatient RehabilitationFacility (IRF) PPS and Inpatient Psychiatric Facility (IPF) PPS final rulesfinalize policies that ensure the measures those providers must report arepatient-centered and outcome-driven rather than process-oriented. Whereapplicable, these changes will allow providers to work with a smaller setof more meaningful health care measures and spend more time on patientcare.

The IRF PPS final rule reduces both administrative and documentation burdenfor IRF providers by well over 300,000 hours. By reducing regulatorydocumentation burden on IRF physicians, provisions in this final rule willallow more time to be spent on direct patient care. Additionally, thisfinal rule adopts advances in telecommunications technology by removingobstacles that may prevent rehabilitation physicians from conductinginterdisciplinary team meetings without being physically in the room.


For a fact sheet on the FY 2019 SNF PPS final rule please visit:


For a fact sheet on the FY 2019 Inpatient Rehabilitation Facility PPS finalrule please visit:


For a fact sheet on the FY 2019 Inpatient Psychiatric Facility (IPF) PPSfinal rule please visit:

CMS Continues Moratoria on New Non-Emergency Ground Ambulance Suppliersand Home Health

On July 30, CMS announced it would continue for another six monthsmoratoria on Medicare, Medicaid and CHIP participation for newnon-emergency ground ambulance suppliers in New Jersey and Pennsylvania andhome health agencies in Florida, Illinois, Michigan and Texas.

CMS says the moratoria aren’t expected to negatively affect access to carefor Medicare, Medicaid or CHIP beneficiaries.

“CMS consulted with the HHS-OIG regarding the extension of the moratoria onnew HHAs and Part B non-emergency ground ambulance providers and suppliersin all of the moratoria states, and HHS-OIG agrees that a significantpotential for fraud, waste, and abuse continues to exist regarding thoseprovider and supplier types in these geographic areas. The circumstanceswarranting the imposition of the moratoria have not yet abated, and CMS hasdetermined that the moratoria are still needed as we monitor the indicatorsand continue with administrative actions to combat fraud and abuse, such aspayment suspensions and revocations of provider/supplier numbers,” CMSsaid.

Note: The next issue will be Monday, Sept 17.

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

StephanieKennan, Senior Vice President

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