Washington Healthcare Update

September 17, 2018

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This Week: Labor-HHS Appropriations conference comes to agreement; hospitals sue over 340B implementation delay; Senate delays votes on opioids and gag clause because of hurricane; Maryland files suit to declare ACA constitutional









House Rules Committee to Vote on Legislation for Delay of Affordable Care Act’s Cadillac Tax

On Sept. 12 the House Rules Committee agreed to H.R. 3798, the Save American Workers Act, by voice vote. The bill contains five health-related bills, including a delay of the Affordable Care Act’s Cadillac tax for one year, and provides four years of relief from the employer mandate. The bill would also eliminate the employer mandate’s 30-hour threshold classification for full-time employees, replacing it with a 40-hour threshold.

Local Coverage Decision Transparency Bill Passes House

On Sept. 12, the House passed H.R. 3635, the Local Coverage Determination Clarification Act of 2017 (LCD) bill, by voice vote. In order to move the legislation in the House, a provision was removed requiring Medicare contractors (MAC) to individually investigate the evidentiary results of other MAC investigations before these comparative results could be brought to each MAC’s region. The College of American Pathologists supports that provision and will push to have it included in the Senate.

House Passes Health-related Legislation

On Sept. 12, the House also passed legislation for the Department of Health and Human Services (HHS) to continue regulatory updates of the Programs of All-Inclusive Care for the Elderly. HHS is also being asked to conduct a pilot program on Medicare “smart cards” over a span of three years, as well as to create a rule allowing Medicare Cost Plan beneficiaries more time to change coverage when not under Medicare Advantage.

House and Senate Conference Agree to FY 2019 Labor, Health and Human Services, Education and Related Agencies Spending Bill

The House and Senate conference considering the Labor-HHS appropriations bill for the 2019 fiscal year agreed on a package Sept. 13; The agreement would spend $2.3 billion more than in FY 2018. The proposal removed a House-approved proposal to block the Centers for Medicare and Medicaid Services (CMS) from administering the Affordable Care Act.

The package allocates $90.3 billion in discretionary program funds for the Department of Health and Human Services, and investments in more medical research than in the president’s request. This included $3.8 billion to be spent on treatment of opioid abuse and mental health concerns, including funding for Teen Pregnancy Prevention Program and Title X funding that was taken out of the House version of the package. Other provisions include:

  • NIH to receive $2 billion more, including additional funding for cancer and Alzheimer’s research
  • States would get $1.5 billion in grants for opioid response
  • SAMHSA would receive an additional $584 million
  • The Agency for Healthcare Research and Quality (AHRQ) would receive a $4 million increase

The final legislation also includes the long-standing bans on federally funded gun violence research and municipal needle exchange programs.


Health Groups Urging Congress to Act on Over-the-Counter Drug Reform

Seven public health and consumer advocacy groups have called on Congress for action on over-the-counter drug reform. The letter sent by the groups addresses H.R. 5333 (115), passed by the House last month. The Senate has not yet passed the proposal. These new regulations would allow the FDA greater authority in pulling products from the market, as well as giving $134 million for a five-year user fee program. If made into law, the bill would be the first major reform to the industry in almost 40 years.

The groups signing the letter are: American Academy of Pediatrics, American Public Health Association, the Consumer Healthcare Products Association, March of Dimes, National Association of County and City Health Officials, Pew Charitable Trusts and Society for Maternal-Fetal Medicine.

Senate Vote Delayed on Bipartisan Bill to Lower Drug Prices for Private Health Plans and ACA

A vote on the Patient Right to Know Drug Prices Act (S. 2554) was anticipated in the Senate but was delayed because Congress recessed to allow members in hurricane-effected states to return home. The act prohibits “gag clauses,” that prevent pharmacists from informing patients on whether they could save money on drugs with an out-of-pocket cost over using insurance.

The House Energy and Commerce Committee has its own gag clause bill, related to Medicare and private health insurance, and was reported to the House by the committee on Sept. 13.

Senate Will Vote on Opioid Legislation Package on Monday, Sept. 17

Because the Senate adjourned unexpectedly early, the scheduled vote on the Senate’s opioid package was delayed. The Senate will begin debate on its opioid legislation package on Sept. 17. Debate should begin late Monday.


The Centers for Medicare and Medicaid Services (CMS) Details Additional Processes for Providing Relief for Consumers From Individual Mandate

On Sept. 12, the Centers for Medicare and Medicaid Services (CMS) announced a new option to claim hardship exemption through the federal tax filing process, responding to President Trump’s executive order directing agencies to minimize unwarranted economic and regulatory burdens. The Patient Protection and Affordable Care Act (PPACA) requires that all Americans receive health coverage that qualifies as minimum essential coverage (MEC) or pay a penalty, known as the “individual mandate.” This CMS hardship exemption, on the tax penalties imposed for not maintaining health coverage for 2018 on federal income tax returns, is meant to simplify how taxpayers claim exemptions. The president’s executive order will direct agencies to grant exemptions from PPACA requirements that would impose financial burden on individuals and families.


American Hospital Association Leads Lawsuit Against the Department of Health and Human Services

The hospital industry filed a lawsuit against the Department of Health and Human Services (HHS) over the delay on implementing the 340B drug discount program. The administration has delayed implementation until July 1, 2019. The regulation would address maximum prices for pharmaceutical companies to charge hospitals. The discount has now been delayed five times, under both the Obama and Trump administrations. HHS Secretary Alex Azar attributes the latest delay to the Trump administration’s attempt at new drug pricing policy. However, the hospital groups, led by the American Hospital Association, are pushing for transparency from drug makers and a fast resolution following a court ruling. The hospital groups ask the court to declare HHS’s latest delay as “arbitrary and capricious” and to make the rule effective in 30 days.

Federal Judge Struck the 2014 CMS Rule on Medicare Advantage Overpayments and Liability Standard

A federal judge has struck a 2014 CMS rule that sought to define Medicare Advantage (MA) overpayments and the liability standard of reporting to CMS. Legal experts have noted that the ruling could make it difficult for CMS to address fraud related to MA plans in the future. UnitedHealth took issue with the entire 2014 CMS rule, calling the overpayment standards far harsher than those used in traditional Medicare plans. Judge Rosemary Collyer agreed with UnitedHealth, citing that this variation in treatment of standards violates a statutory requirement that requires CMS to pay for MA plans to be equivalent to traditional Medicare payments.

Maryland Sues Trump Administration to Affirm ACA’s Constitutionality

On Sept. 13, the state of Maryland filed a lawsuit against the Trump administration, seeking a declaratory judgment that the Affordable Care Act is constitutional and a court order barring the United States from taking any action is inconsistent with that conclusion. The suit comes one week after oral arguments in a case led by 20 Republican-led states trying to declare the law unconstitutional because Congress zeroed out the individual mandate penalty that played the crucial role in the U.S. Supreme Court case declaring the law constitutional. The Maryland suit argues the law is constitutional even without the individual mandate penalty. The case is State of Maryland v. United States, U.S. District Court, District of Maryland (Greenbelt).


National Association of Medicaid Directors (NAMD): Medicaid Operations Survey Report

A report published by the National Association of Medicaid Directors on Sept. 6 provides the common priorities of 2018 of state Medicaid directors around the country. The priorities include delivery system and payment reform, information technology improvement and behavioral health reform. Medicaid directors note that delivery and payment reforms should include an alternative payment model, such as bundled payments. NAMD also concluded in the report that the median length of time Medicaid directors have to be in their positions is only 26 months, an increase from the median of 19 months back in 2016. NAMD is concerned these number are low, as upcoming gubernatorial elections in November will lead to further turnover.

GAO Report: Benefits and Challenges of Payment Adjustments Based on Beneficiaries’ Ability to Perform Daily Tasks

The 21st Century Cures Act contains a provision for the Government Accountability Office (GAO) to report on issues related to incorporating functional status into MA risk adjustment. The GAO estimated that about 4 in 10 beneficiaries had functional limitations in 2016. These findings suggest that risk adjustment accuracy could be improved by accounting for functional status, which could in turn reduce financial disadvantages plans may experience by enrolling beneficiaries with functional limitations. The Centers for Medicare & Medicaid Services’s (CMS) risk adjustment model estimates health care spending based on beneficiary demographic characteristics and clinical diagnoses. The CMS model does not account for functional status—the ability to perform routine daily activities. The GAO found that for the beneficiaries analyzed, the MA risk adjustment model underestimated spending for those with functional limitations and overestimated spending for those without such limitations.

Read the report.

GAO Report: Clear Definition of the Interagency Program Office’s Role in the Department of Veteran Affairs’ (VA) New Modernization Effort

The National Defense Authorization Act for Fiscal Year 2008 included provisions that the Department of Veterans Affairs (VA) and Department of Defense (DOD) jointly develop and implement electronic health record systems or capabilities and accelerate the exchange of health care information. According to a report by the Government Accountability Office (GAO), the Interagency Program Office of these two departments has not been effectively positioned to function as the single point of accountability for the departments’ electronic health record system interoperability efforts. The GAO recommends that the VA clearly define the role and responsibilities of the Interagency Program Office in the governance plans for acquisition of the department’s new electronic health record system.

Read the report.

The National Association of ACOs and the Centers for Medicare & Medicaid Services (CMS) Provide Conflicting Conclusions on Medicare ACO Performance

A report released by the National Association of ACOs diverges from a similar study from the Centers for Medicare & Medicaid Services (CMS), where CMS claimed that Medicare ACOs underperformed in the first few years of observation. The CMS report noted that ACOs increased Medicare spending by about $344 million between 2013 and 2015. In that same span of time, ACOs show that more than $1.8 billion was actually saved by the program. Some experts have noted CMS’s numbers do not account for what provider spending would be without ACOs.

Read the report.

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

Stephanie Kennan, Senior Vice President

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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