Washington Healthcare Update

June 17, 2019

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This week in Washington: The Senate continues to hold hearings on the cost of health care, the House will hold hearings on the federal approach to opioid treatment and strengthening health care in the U.S. territories.

Upcoming Hearings/Markups






Final Rules/Guidance

Proposed Regulations



Upcoming Hearings/Markups

Tuesday, June 18, 2019

Senate Committee on Health, Education, Labor and Pensions (HELP): “Lower Health Care Costs Act”

The Senate Committee on Health, Education, Labor and Pensions (HELP) will hold a hearing on the Lower Health Care Costs Act, a bipartisan discussion draft largely concerning drug pricing.  The committee requested comment on the draft that addresses surprise medical billing, reforms to prevent anticompetitive behavior in health care markets and a proposal to create a nationwide health care cost transparency organization. The comment period closed on June 5. Find an analysis of the discussion draft by MWC Research Associate, Mariam Eatedali, here. Find witness testimonies and hearing updates as they become available here.

Wednesday, June 19, 2019

Senate Special Committee on Aging: “The Complex Web of Prescription Drug Prices, Part III: Examining Agency Efforts to Further Competition and Increase Affordability”

The Senate Aging Committee will hold the third hearing in its series on prescription drug prices, with witnesses testifying from the Centers for Medicare and Medicaid Services (CMS), the Food and Drug Administration (FDA) and the Department of Health and Human Services (HHS), Office of the Inspector General. Find witness testimonies and hearing updates as they become available here.

House Committee on Oversight and Reform: “Medical Experts: Inadequate Federal Approach to Opioid Treatment and the Need to Expand Care”

The House Committee on Oversight and Reform will hold a hearing on solutions that address the opioid crisis and action that can be taken at the federal level. Witnesses will include a panel of medical experts. Find witness testimonies and hearing updates as they become available here.

Thursday, June 20, 2019

House Committee on Energy and Commerce: “Strengthening Health Care in the U.S. Territories for Today and Into the Future”

The House Committee on Energy and Commerce’s Health subcommittee will hold a hearing on long-term health care concerns in U.S. territories. Find witness testimonies and hearing updates as they become available here.

Tuesday, July 23, 2019

Senate Committee on the Judiciary: “Oversight of the Enforcement of the Antitrust Laws”

The Senate Committee on the Judiciary’s Subcommittee on Antitrust, Competition Policy, and Consumer Rights will hold another hearing related to antitrust laws, seeking suggestions on oversight and enforcement at the federal level.



Senate Committee on the Judiciary: “The State of Patent Eligibility in America: Part III”

Tuesday, June 11, 2019: The Senate Judiciary’s Subcommittee on Intellectual Property held a hearing continuing its work on patent eligibility, with a large panel of witnesses, most of whom are arguing in favor of statutory reform that would tighten up the law of eligibility. Find the draft bill here. Find witness testimonies and hearing updates as they become available here

Why this is important: Chairman Thom Tillis (R-NC) The hearing was the final gathering before the subcommittee alters the draft bill that would undo U.S. Supreme Court decisions and expand patent eligibility.

Senate Committee on the Judiciary: “Your Doctor/Pharmacist/Insurer Will See You Now: Competitive Implications of Vertical Consolidation in the Healthcare Industry”

Wednesday, June 12, 2019: The Senate Judiciary’s Subcommittee on Antitrust, Competition Policy, and Consumer Rights held a hearing on how vertical consolidation practices in the health care industry could threaten competition. Find witness testimonies and hearing updates as they become available here.

Why this is important: While the witness panel saw benefits to vertical mergers done properly, there was warning that efficiencies in vertical mergers can be over-hyped, as the benefits are not, statistically speaking, likely to be achieved. Witnesses encouraged more transparency to attorneys during mergers, which could address legality concerns. The panel ultimately warned that while most vertical mergers do not impair competition, it should not be assumed that all are benign, and that significant efficiencies will always be realized, or that cost savings will be passed along to consumers. A broad agreement for more oversight and regulatory measures was called for.  

House Ways and Means Committee: “Pathways to Universal Health Coverage”

Wednesday, June 12, 2019: The House Ways and Means Committee held a hearing on the single-payer issue, marking the first time in decades that one of the two main health care committees of jurisdiction will hold a hearing on the topic. The hearing will also discuss other ways to achieve universal coverage. Find witness testimonies and hearing updates here.

Why this is important: Democratic members stayed unified on the need for universal coverage.  Republicans spent their time speaking against Medicare for All, which was not the sole subject of the hearing. Some Democratic members asked about Medicare and Medicaid buy-ins and opportunities for states to expand health coverage, and rebutted Republicans’ statements about how single-payer health care approaches would cause irreparable harm to patients and to the economy.

House Energy and Commerce: “No More Surprises: Protecting Patients from Surprise Medical Bills”

Wednesday, June 12, 2019: The House Energy and Commerce Health Subcommittee will hold a hearing on surprise medical billing with a goal to protect patients by developing a solution that takes patients out of the middle of pricing issues without increasing health care costs. An unannounced group of stakeholders will testify as the committee considers legislative proposals to address the surprise billing concerns.

Why this is important: While all the panelists agreed that patients should not be caught in the middle of surprise billing issues, stakeholders repeated their warnings related to federal involvement. There was agreement on the panel against balanced billing as a solution, and more support for methods of arbitration. Yet, members of the subcommittee were split, with Rep. Raul Ruiz (D-CA) advocating for his own arbitration proposal not yet introduced. Supporters of the Ruiz proposal include Rep. Larry Bucshon (R-IN), who argued during the hearing that providers need more negotiating power with insurers for higher rates. Rep. Ruiz’ proposal is backed by physician groups and would set up an arbitration model similar to the one hospitals and doctors use in New York and Texas. Members also pressured witnesses about transparency on prices and overall costs.


House Begins Consideration of First Appropriations Minibus

On June 12, the first minibus of fiscal year 2020 appropriation bills began consideration on the House floor. H.R. 2740 includes the FY 2020 Labor-Health and Human Services-Education, Defense, State-Foreign Operations, and Energy and Water Development spending bills. As of June 14, consideration of the minibus is ongoing. A division-by-division summary is available here. Find and track the full bill, H.R. 2740, here.


House and Senate Democrats Propose Requiring Insurance to Cover OTC Birth Control

On June 13, Rep. Ayanna Pressley (D-MA) and Sen. Patty Murray (D-WA) proposed a measure that requires insurance companies to cover over-the-counter (OTC) birth control at no cost to patients. The proposal ensures insurance companies cover birth control that is available without a prescription. The bill does not make birth control available over the counter, which can only be authorized by the Food and Drug Administration (FDA) The bill simply requires that insurance companies pay for over-the-counter birth control if it is ever approved by the FDA. Find Sen. Murray’s bill, the Affordability is Access Act (AAA), here. Find Rep. Pressley’s identical bill in the House here.


FDA: Proposal for Stricter 10-Month E-Cigarette Deadline

On June 12, the Food and Drug Administration (FDA) submitted a proposal that gives e-cigarette makers an accelerated 10-month deadline to submit applications for U.S. government clearance to keep their products on the market. The proposal was submitted to U.S. District Judge Paul Grimm in Maryland after he ruled last month that the FDA had illegally allowed e-cigarettes to stay on the market until 2022 without a safety and public health review.

FDA: IBM, Walmart, Merck Join Blockchain Collaboration

The Food and Drug Administration (FDA) launched a pilot program experimenting with blockchain technology to strengthen the security of the supply and distribution chains of prescription drugs. On June 13, IBM Global Services U.S., Merck & Co. Inc. and Walmart Inc. were selected for the FDA program and will work a joint blockchain network that tracks the movement of pharmaceutical products in real time.

The project was authorized under the Drug Supply Chain Security Act (DSCSA) that was set up to increase regulatory oversight of counterfeit, stolen, contaminated or otherwise harmful drugs. The pilot program is meant to reduce the time needed to track and trace prescription drugs, while improving the distribution process.

CMS Approves Washington Request for Subscription Model to Pay for Hepatitis C Drugs

On June 12, the Centers for Medicare and Medicaid Services (CMS) approved a request from Washington state to negotiate value-based drug rebate agreements with pharmaceutical manufacturers in its Medicaid program. The approval makes Washington the fourth state to test such an arrangement; similar policies have already been given approval in Oklahoma, Michigan and Colorado. In this model, Medicaid would pay a fixed annual sum to a drug company for the hepatitis C medication, purchasing an unrestricted supply of the drug. Find the CMS press release here.

CMS Asks for Feedback to Reduce Regulatory Burdens

On June 6, the Centers for Medicare and Medicaid Services (CMS) announced a request for information (RFI) asking for another round of feedback on ways to cut administrative and regulatory burden through its Patients over Paperwork campaign, an initiative to lower health care costs. The RFI specifically looks for ways to cut down on the burden posed by prior authorization procedures, beneficiary enrollment and beneficiary eligibility determinations, as well as burdens on rural providers and duals.

Comments must be submitted by Aug. 12, 2019. Find the RFI here.

Final Rules/Guidance

Trump Administration Finalizes Health Reimbursement Arrangement Rule

On June 13, the Trump administration finalized a rule allowing employers to offer health reimbursement arrangements (HRA) for employees to enroll in the individual market or in short-term plans beginning in 2020. The final rule creates individual coverage HRAs that reimburse premiums for individual health insurance chosen by the employee, as well as excepted benefit HRAs that allow employers to finance additional medical care or plans, such as short-term health plans. This rule was released by the Department of Labor, Department of Health and Human Services and the Treasury.

Find the final rule here.

FDA: Final Guidance Premarket Tobacco Product Applications for Electronic Nicotine Delivery Systems (ENDS)

On June 11, the Food and Drug Administration (FDA) finalized its guidance for manufacturers submitting new tobacco product applications through the premarket tobacco product application (PMTA) pathway for electronic nicotine delivery systems (ENDS), such as e-cigarettes or “vapes,” and the liquid nicotine and nicotine-containing e-liquids used with such products. The final guidance is meant to improve the efficiency of application submission and review.

Find the final guidance here.

Proposed Regulations

CMS: Fiscal Year (FY) 2020 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Acute Care Hospital (LTACH) Prospective Payment System

On April 23, 2019, the Centers for Medicare and Medicaid Services (CMS) proposed to update Medicare payment policies for hospitals under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) for fiscal year 2020. The proposals include a raise in pay for low-wage hospitals by cutting pay for high-wage hospitals, as part of the reforms to the hospital wage index, as well as raising the add-on pay for new technology and providing a path for breakthrough devices approved by the Food and Drug Administration (FDA) to access add-on payments. CMS also proposed policy changes to increase significantly Medicare pay to hospitals for administering expensive chimeric antigen receptor T-cell (CAR-T) cancer drugs and make it easier for hospitals to get the maximum possible reimbursement for administering the CAR-T cell therapies.

The bundled proposals will be published on May 3, 2019 here.

Find the unpublished proposed rule here.

CMS Proposes Fiscal 2020 Pay Rates for Inpatient Psychiatric Facilities

On April 17, 2019, the Centers for Medicare and Medicaid Services (CMS) proposed to modify the market basket used to calculate inpatient psychiatric facility payments. The rule would use 2016 instead of 2012 as a base year and add a new claims-based measure to the Inpatient Psychiatric Facility Quality Reporting Program starting in FY 2020.

The proposal increases Medicare payments to inpatient psychiatric facilities by 1.7 percent in fiscal year 2020 while adding a new quality measure intended to assess whether patients with certain diagnoses are filling their prescriptions after being discharged from such facilities.

Comment period ends on June 17, 2019.

Find the proposed rule here.

CMS Proposes Boosting Payments to Inpatient Rehabilitation Facilities

On April 17, 2019, the Centers for Medicare and Medicaid Services (CMS) proposed a rule to update Medicare payment policies for facilities under the Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) and the Inpatient Rehabilitation Quality Reporting Program (IRF QRP) for fiscal year (FY) 2020.

CMS is proposing to raise the estimated payments per discharge for inpatient rehabilitation facilities in federal fiscal 2020 by 2.3 percent, or $195 million, compared to 2019. The proposal could boost payments in urban areas by 2.2 percent and rural areas by 4.3 percent compared to the year before.

Comment period ends on June 27, 2019.

Find the proposed rule here.


Drug Manufacturers and Advertisers Sue HHS over List Price Rule

On June 14, Merck, Eli Lilly, Amgen and the Association of National advertisers filed suit over a rule requiring that list prices be included in direct-to-consumer drug advertising. The companies argue that the rule violates their freedom of speech and could discourage patients from taking needed medicines. The rule is to take effect in July of this year. Consumers usually pay lower prices than the list price because of negotiations by insurers, rebates and other factors. The rule was supported by Senator Chuck Grassley (R-IA) Chairman of the Senate Finance Committee, who had attempted to include the idea in an amendment to the opioid legislation passed last year. The case was filed in the Federal District Court of the District of Columbia.


MedPAC Releases Recommendations on Medicare and the Healthcare Delivery System

On June 14, the Medicare Payment Advisory Commission (MedPAC) released the June 2019 Report to the Congress: Medicare and the Health Care Delivery System.  The report includes a congressionally mandated reports on clinician payment in Medicare and changes in post acute and hospice care after implementation of the long-term hospital dual payment rate structure.

The wide ranging report includes a discussion related to skilled nursing facilities and the differences in individual residents’ functional assessments as they passed through the continuum, concluding that the patterns MedPAC found indicated attempt to artificially increase payments.

In relation to Accountable Care Organizations (ACO), those patients who switched ACOs in 2016 or dropped out entirely saw spending growth nearly 14 percentage points higher than the market average.  More research is needed, but one theory is that beneficiaries who switched ACOs often do so because of catastrophic health events.       

Other issues in the report, include restructuring Medicare Part D to account better for specialty drugs, redesigning the Medicare Advantage quality bonus program  and  improving price competition for Medicare Part B drugs. 

Find the full report to Congress here.

MACPAC Releases Recommendations on Medicaid Drug Policy, Hospital Payment, Program Integrity, and Foster Care Services

On June 14, the Medicaid and CHIP Payment and Access Commission (MACPAC) recommended to Congress and the Department of Health and Human Services (HHS) should make changes to improve Medicaid policy affecting prescription drug and hospital payment, program integrity and therapeutic foster care services for children and youth. The recommendations are part of MACPAC’s June 2019 Report to Congress on Medicaid and CHIP, one of two such reports that MACPAC is required by statute to publish annually. The June report to Congress also contains a congressionally requested analysis on Medicaid in Puerto Rico, swhich faces a funding shortfall early next year.

GAO: DOD Healthcare – Improvements Needed for Tracking Coordination of Specialty Care Referrals for TRICARE Prime Beneficiaries

On June 12, the Government Accountability Office (GAO) released a report examining care coordination within and between the direct and purchased care systems of TRICARE Prime. The GAO found that the Department of Defense’s (DOD) Defense Health Agency (DHA) has limited information about the extent to which the referral management process facilitates the coordination of primary and specialty care for beneficiaries enrolled in TRICARE Prime—a managed care option—because information about their specialty care referrals is not always complete or accurate.

The GAO recommends that:

  • The Secretary of Defense direct DHA to ensure that military treatment facilities’ (MTF) referral management center staff are trained to process and accurately document information in the Military Health System (MHS) Genesis about specialty care referrals, including the receipt of CLRs, the submission of referral results and the closure of referrals.
  • The Secretary of Defense direct DHA to ensure that MHS Genesis is configured to produce reports that accurately reflect the use and outcomes of specialty care referrals.

Find the full report here.

GAO: VA Healthcare – Estimating Resources Needed to Provide Community Care

On June 12, the Government Accountability Office (GAO) released a report reviewing the Department of Veterans Affairs’ (VA) use of community care and efforts to develop budget estimates for the Veterans Community Care Program, a consolidation of the Veterans Choice Program and several other community care programs in fiscal year 2019. The GAO found that the VA obligated $14.9 billion for community care in fiscal year 2018, an increase of $6.7 billion (about 82 percent) since fiscal year 2014. The number of veterans authorized to use community care increased from 1.3 million to 1.8 million during this period. By fiscal year 2021, VA estimated obligations to increase to $17.8 billion, and officials estimate at least 1.8 million veterans will continue to use this care.

The VA’s actual obligations for community care for fiscal years 2017 and 2018 were $1.2 billion and $2.2 billion higher, respectively, than originally estimated. According to VA officials, this occurred for several reasons, including policy changes and increased costs for the Veterans Choice Program. To support higher obligations, VA requested and received additional funding for the Veterans Choice Program outside the annual appropriations process and used other funding sources, such as unobligated amounts from prior fiscal years.

Find the full report here.

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

Stephanie Kennan, Senior Vice President
Mariam Eatedali, 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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