Washington Healthcare Update

September 23, 2019

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This week in Washington: Hearings on the public health impact of e-cigarettes, making prescription drugs more affordable and promoting healthy aging. 

Upcoming Hearings/Markups





Proposed Regulations/Guidance

Final Rules/Guidance




Upcoming Hearings/Markups

Wednesday, Sept. 25, 2019

Senate Special Committee on Aging: “Promoting Healthy Aging – Living Your Best Life Long into Your Golden Years”

The Senate Special Committee on Aging will hold a hearing for seniors seeking to maintain a healthy lifestyle as they age. Find more information for this hearing here.

House Energy and Commerce Committee, Subcommittee on Health: “Making Prescription Drugs More Affordable: Legislation to Negotiate a Better Deal for Americans”

The Subcommittee on Health of the Committee on Energy and Commerce will hold a legislative hearing to discuss Speaker Nancy Pelosi’s (D-CA) new drug pricing bill, which gives the Department of Health and Human Services (HHS) negotiation power over drug prices that apply to all payers, including the commercial market. Find more information for this hearing here.

House Energy and Commerce Committee, Subcommittee on Oversight and Investigations: “Sounding the Alarm: The Public Health Threats of E-Cigarettes”

Energy and Commerce Chairman Frank Pallone, Jr. (D-NJ) and Oversight and Investigations Subcommittee Chair Diana DeGette (D-CO) announced that the Oversight and Investigations Subcommittee will hold a hearing on Wednesday, Sept. 25, on the public health impacts and regulatory authorities related to e-cigarette manufacturing, sales and use. Testimony will be provided by the Centers for Disease Control and Prevention (CDC), the Food and Drug Administration (FDA) and state health officials. Find more information for this hearing here.



House Committee on Rules: Meeting on continuing appropriations for fiscal year 2020

The House Committee on Rules held a meeting to discuss H.R. 4378, Continuing Appropriations Act 2020 and Health Extenders Act of 2019. They agreed upon a rule for consideration of the Continuing Resolution. The CR passed the House on Sept. 18 by a vote of 301-123.  Find more information on the meeting here.

House Energy and Commerce Subcommittee on Consumer Protection and Commerce: “Profits over Consumers: Exposing How Pharmaceutical Companies Game the System” 

The House Energy and Commerce Consumer Protection and Commerce Subcommittee held a hearing on product hopping in the pharmaceutical market. Find information for this hearing here.

Why this is important: Members used the hearing to highlight concerns over product hopping, also known as line extension and sometimes referred to as evergreening, referring to the reformulation of a pharmaceutical drug product by a brand drug manufacturer for the purpose of delaying competition. Chairman Frank Pallone (D-NJ) emphasized that profit made from drug sales is concentrated around only a few drugs with no competition; in 2017, only 10 percent of drugs were responsible for 72 percent of consumer spending on drugs.


House Passes Continuing Resolution to Fund Government Through Nov. 21, Include Health Extenders

On Sept. 18, the House passed a short-term continuing resolution (CR), H.R. 4378, to fund the government through Nov. 21, with a 301-123 vote. The Senate is expected to take up the CR this week. A package of health extenders was added to the CR. The CR funds community health centers and Medicaid in Puerto Rico and other territories at current levels.

The CR delays a $4 billion reduction in Medicaid disproportionate share hospital (DSH) payments through Nov. 21.

The CR includes a provision that was recommended from the Medicaid and CHIP Payment and Access Commission. That provision would exclude a manufacturer’s authorized generic drug price from the average manufacturer price of its brand product. The bill also would remove manufacturers from the definition of wholesaler in the Medicaid drug rebate program. The CR includes a short-term delay of the Medicaid DSH cuts.

Follow more on H.R. 4378 here.

Education & Labor Committee Surprise Billing Markup Delayed by Payment Disputes, ERISA

On Sept. 18, the House Education & Labor Committee Chairman Bobby Scott (D-VA) said that his committee is sorting out technical issues to ensure its surprise billing fix applies to the Employee Retirement Income Security Act of 1974 (ERISA), as well as all other forms of health coverage, and that the committee is still debating on whether to use a benchmark payment rate or arbitration as the policy fix. Rep. Scott expects to introduce and mark up surprise billing legislation either immediately before or after the October recess.

Speaker Pelosi Introduces Drug Pricing Bill

On Sept. 19, House Speaker Nancy Pelosi (D-CA) released a drug-pricing bill that gives the Department of Health and Human Services (HHS) negotiation power over drug prices that apply to all payers, including the commercial market. The released bill directs HHS to negotiate prices on drugs without generic or biosimilar competition, while the earlier draft had price negotiation on drugs with less than two competing generics or biosimilars. The plan applies to drugs that meet two conditions—they are among the 250 most costly drugs to Medicare and the U.S. health system, and they face no competition. HHS would have to negotiate a minimum of 25 drugs annually.

The maximum negotiated price would be set with an international price index, called the “Average International Market” price. The index would set a maximum price at 120 percent of the average of prices in six countries: Australia, Canada, France, Germany, Japan and the United Kingdom. If companies do not participate in the negotiation process or bargaining fails, drug makers would have to pay a fee of 65 percent of gross sales of the drug, which would increase by 10 percent with each quarter of noncompliance, to a maximum of 95 percent.

The House Energy & Commerce Health subcommittee plans to hold a hearing on the drug pricing legislation on Sept. 25.


Appropriations Committee Favorably Reports $80 Million Increase for FDA to Senate Floor

On Sept. 19, the Senate Appropriations Committee favorably reported a bill to the Senate floor that gives the Food and Drug Administration (FDA) an $80 million funding boost in fiscal 2020, with investments in the FDA’s medical countermeasures initiatives, pathogen reduction efforts, compounding oversight, food safety and outbreak prevention, cannabidiol activities and infrastructure maintenance.

Proposed Regulations/Guidance

SAMHSA: Proposed Rule to Loosen 42 CFR Part 2

On Aug. 22, the Substance Abuse and Mental Health Services Administration (SAMHSA) proposed a rule that would loosen substance use record privacy restrictions. The proposed rule is part of the Department of Health and Human Services’ (HHS) “Regulatory Sprint to Coordinated Care,” championed by HHS Deputy Secretary Eric Hargan. The rule is one of four expected as part of the sprint, including changes to the Health Insurance Portability and Accountability Act (HIPAA), Stark Law and the anti-kickback statute. HHS Secretary Alex Azar commented that HHS does not have the authority to fully align 42 CFR Part 2 with HIPAA but expressed support for legislation to do so in Congress.

Find the proposed rule here. Public comments are due by Oct. 25, 2019.

CMS: CY 2020 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Proposed Rule

On July 29, the Centers for Medicare and Medicaid Services (CMS) proposed policies that follow directives in President Trump’s executive order entitled “Improving Price and Quality Transparency in American Healthcare to Put Patients First.” The proposed rule requires hospitals to not only publish their gross charges, or list prices, but also the negotiated price by specific payer and plan for a set of “shoppable” services. Those services could include anything that can be scheduled by a patient in advance, such as an MRI or hip replacement.

The rule also encourages site-neutral payment between certain Medicare sites of services, and proposes updates and policy changes under the Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System. The proposal includes the continuation of policy reducing reimbursement by nearly 30 percent for Part B drugs that hospitals buy through 340B. The policy is budget-neutral, so payment cuts are redistributed equally among hospitals.

Find the proposed rule here. The rule will be published on Aug. 8, 2019, and public comments are due on Sept. 27, 2019.

CMS: Proposed Radiation Oncology (RO) Model

On July 10, the Centers for Medicare and Medicaid Services (CMS) proposed a Radiation Oncology (RO) Model as a payment model that tests if site-neutral payments, in which providers are paid the same rate no matter the care setting, for a 90-day episode of care, can improve the quality of treatment and save Medicare money. The experiment targets radiation treatment for 17 different types of cancer. Payment will be based on proposed national base rates and trend factors and will be adjusted for geography and the mix of patients the provider treats.

Participants in the model could earn back a share of dollars that are withheld based on the quality of care and patient experience. The model is scheduled to begin next year and end in December 2024.

Find the proposed rule here.

FDA: New Required Health Warnings with Color Images for Cigarette Packages and Advertisements to Promote Greater Public Understanding of Negative Health Consequences of Smoking

On Aug. 15, the Food and Drug Administration (FDA) proposed a rule to require new health warnings on cigarette packages and in advertisements to promote greater public understanding of the negative health consequences of smoking. The proposed warnings feature photo-realistic color images depicting the health risks of cigarette smoking. When finalized, this rule would fulfill a requirement in the Family Smoking Prevention and Tobacco Control Act.

The new warnings would appear prominently on cigarette packages and in advertisements, occupying the top 50% of the area of the front and rear panels of cigarette packages and at least 20% of the area at the top of cigarette advertisements. The warnings would be required to appear on packages and in advertisements 15 months after a final rule is issued.

Find the proposed rule here.

Public comments must be submitted by Oct. 15, 2019.

FDA: General Clinical Pharmacology Considerations for Neonatal Studies for Drugs and Biological Products

On July 31, the Food and Drug Administration (FDA) released a draft guidance regarding clinical trial design for newborns. The neonatal period is defined as the day of birth plus 27 days for full-term infants and as the day of birth through the expected date of delivery plus 27 days for preterm infants. The draft guidance provides the FDA’s current thinking on clinical pharmacology considerations for neonatal studies for drugs and biological products. It discusses neonatal subgroup classification, dose selection and study design and analysis considerations for the conduct of neonatal clinical pharmacology studies.

The guidance encourages the design of studies using input from a multidisciplinary team involved in neonatal care, including parents. The guidance also recommends that sponsors should use “innovative quantitative approaches” to study data gathered from adult, preclinical, animal, in vitro or other pediatric studies to predict the doses and clinical trial designs best suited for newborns.

Find the draft guidance here.

Public comments must be submitted by Sept. 30, 2019.

Final Rules/Guidance

FDA: Citizen Petitions and Petitions for Stay of Action Subject to Section 505(q) of the Federal Food, Drug, and Cosmetic Act

On Sept. 18, the Food and Drug Administration (FDA) released a final guidance that rejects citizen petitions submitted primarily to delay generic and biosimilar competition. The FDA will refer offenders to the Federal Trade Commission (FTC). The FDA also will report to Congress annually on citizen petitions aimed at delaying competition, and will only allow citizen petitions to delay approval of generics or biosimilars when necessary to protect public health. The FDA will take final action on petitions no later than 150 days after they are submitted, and the guidance emphasizes that the 150-day deadline will not be extended for any reason.

Find the final guidance here.


Provider Groups Criticize CMS for Nearly 2-Year Delay in Payout of Medicare Performance Bonuses

On Sept. 18, nine organizations that represent health care providers wrote to the Center for Medicare and Medicaid Services (CMS) urging CMS to “expeditiously pay” the 5 percent bonuses to health care providers for participation in advanced alternative payment models. CMS has yet to send the total payment for participation in 2017, the first year the incentive was available. In contrast, clinicians participating in MACRA’s Merit-based Incentive Payment System began receiving payment adjustments in January for their 2017 performance.

Congress created the bonus in the landmark 2015 law, the Medicare Access and CHIP Reauthorization Act (MACRA), as a reward for participation in risk-bearing payment models, like certain accountable care organizations (ACOs), designed to lower health care spending.

Organizations that submitted the joint letter:

  • American Academy of Family Physicians
  • American College of Physicians
  • American Medical Association
  • American Medical Group Association
  • America’s Physician Groups
  • Health Care Transformation Task Force
  • Medical Group Management Association
  • National Association of ACOs
  • Premier

Find the letter here.


Federal Judge Rules Site-Neutral Cuts Are Outside CMS’s Authority

On Sept. 17, Federal D.C. District Court Judge Rosemary Collyer ruled that the Center for Medicare and Medicaid Services (CMS) lacked authority to impose deep reimbursement cuts for clinic visits at certain off-campus facilities. Judge Collyer vacated the cuts in the 2019 hospital outpatient pay rule, and said CMS can implement the ruling without complication because CMS’s site-neutral pay reductions were not put in place in a budget-neutral way.

The lawsuit included the American Hospital Association and Association of American Medical Colleges, suing CMS after the final 2019 hospital outpatient rule established a new payment rate for off-campus hospital outpatient clinic visits that was equivalent to what those visits would be paid under Medicare’s physician fee schedule. The affected providers had been exempted from the Bipartisan Budget Act of 2015’s site-neutral provisions for off-campus hospital facilities. CMS planned to phase in the pay reductions over a two-year period, and said it intended to continue down that path in its proposed 2020 hospital outpatient pay rule.


GAO: Health Care Quality – CMS Could More Effectively Ensure Its Quality Measurement Activities Promote Its Objectives

On Sept. 19, the Government Accountability Office (GAO) released a report of recommendations on ways to ensure Medicare’s priorities drive its quality measurement activities. The Center for Medicare and Medicaid Services (CMS) officials also told GAO that the information it maintains does not identify all of the funding the CMS has obligated for quality measurement activities. Further, it does not identify the extent to which this funding has supported CMS’s quality measurement strategic objectives, such as reducing the reporting burden placed on providers by CMS’s quality measures.

The GAO recommends:

  • The administrator of CMS should, to the extent feasible, maintain more complete information on both the total amount of funding allocated for quality measurement activities and the extent to which this funding supports each of its quality measurement strategic objectives.
  • The administrator of CMS should develop and implement procedures to systematically assess the measures it is considering developing, using or removing in terms of their impact on achieving CMS’s strategic objectives and document its compliance with those procedures.
  • The administrator of CMS should develop and use a set of performance indicators to evaluate CMS’s progress toward achieving its quality measurement strategic objectives.

Find the full report here.

GAO: Elder Abuse – Federal Requirements for Oversight in Nursing Homes and Assisted Living Facilities Differ

On Sept. 18, the Government Accountability Office (GAO) released a report comparing federal requirements for reporting and investigating elder abuse in nursing homes and assisted living facilities. The GAO found that while the federal government sets specific requirements for nursing homes, it requires states to establish their own requirements for reporting and investigating elder abuse in assisted living facilities.

For example, state survey agencies must prioritize reports of elder abuse in nursing homes based on the Center for Medicare and Medicaid’s (CMS) specified criteria and investigate within specific time frames. In contrast, there are no similar federal requirements for assisted living facilities, which are licensed and regulated by states. Instead, CMS requires state Medicaid agencies to develop policies to ensure the reporting and investigation of elder abuse in assisted living facilities. Officials from the three selected states in GAO’s review (Connecticut, Oklahoma and South Dakota) said they apply certain federal nursing home requirements and investigation time frames for assisted living facilities when overseeing elder abuse.

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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