Washington Healthcare Update

May 31, 2016

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This Week:Ways and Means voice votes bipartisan hospital legislation…Bipartisan Pediatric Trauma Caucus launched…CDC warns that without funds, the Zika fight will belost…Mental health bills to be marked up in June…HHS regulatory agenda lists final action on the proposed Part B drug demonstration three years into thenext administration but CMS says the rule is still on track.

1. Courts

2. Congress

House of Representatives

Senate

3. Administration

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Courts

SUPC Ruling Could Hold Board Members Liable for Antitrust Violations

At least five antitrust lawsuits have been filed against state health licensing boards since the Supreme Court ruling that could hold individual medicalboard members liable for antitrust violations. The North Carolina Dental Board v. Federal Trade Commission decisionheld that licensing boards, like those that regulate physicians, nurses and pharmacists, are open to antitrust suits if they try to block competitors liketelemedicine companies or pain clinics.

The high court ruling left open the question of whether individual board members could be sued, and in some cases they have been.

In the battle between Teladoc and the Texas Medical Board, plaintiffs sued not only the state board but also 14 members of the board, which is trying toprevent the Dallas-based telemedicine company from operating in the state. Medical groups argue these actions bring about a risk of liability that willundercut state medical authorities by creating fear of repercussions.

Individual board members have been sued in states other than Texas. Board members are listed individually in a hearing aid supplier’s suit, against theTennessee Department of Health, over the process required to become licensed to sell hearing aids in the state. Members are also listed in a case broughtagainst the Nevada pharmacy board by veterinarians who want to sell animal drugs directly to individuals. A case against the Mississippi medical board overownership of pain clinics does not list individual board members.

State policies on how to protect individual members vary. Some insure members and offer to cover any legal damages. The American Medical Association (AMA)and Federation of State Medical Boards are trying to get other states to extend that same coverage.

The Federation of State Medical Boards passed a resolution this month to develop policies and guidance in response to the Supreme Court decision. It wantsCongress to clarify that health licensing boards enjoy immunity.

The AMA wants states to give their medical board members legal protections from antitrust suits. Alabama passed a bill saying it was their intent to protect medical board members from such actions.

The Federal Trade Commission (FTC) published guidance on ways statelicensing boards can avoid antitrust action. It didn’t address the threats of individual liability.

Former Drug Executive Goes to Trial Over Kickback Allegations

The former president of Warner-Chilcott’s pharmaceutical division began trial last week in Massachusetts in one of a handful of cases in which federalauthorities are seeking to hold individuals criminally responsible for pharmaceutical company abuses. W. Carl Reichelwas indictedlast fall for allegedly orchestrating a campaign to give doctors money, free meals and fake speaking fees in exchange for prescribing his company’smedications. He faces up to five years in prison and a $250,000 fine. At the time Reichel was indicted, Allergen, which owns Warner-Chilcott, agreed toplead guilty to health care fraud and pay $125 million to settle false marketing charges related to several drugs.

Lawsuit Plaintiffs Commission Fitbit Study

In January, plaintiff’s firm Lieff Cabraser filed a class-action lawsuit against Fitbit, charging the wearable tech company with shipping inaccurate heartrate monitors. The plaintiffs received scientific validation on May 21 with the unveiling of a study commissioned by themthat purports to show major inaccuracies with the heart rate tracking of Fitbit’s Charge and Surge devices, when compared with an electrocardiogram.

During exercise, the study claims, the Charge’s heart rate differed from the electrocardiogram by a mean of 15.5 beats per minute, while the Surge differedby 22.8 beats.

Researchers and users have long faulted fitness trackers for their inaccuracy; for example, some Iowa State professors dinged the industry for their poorcalorie-tracking, while bloggers have often noted the devices’ shortcomings.

2.Congress

House of Representatives

Ways and Means Passes Hospital Bill by Voice Vote

The House Ways & Means Committee on May 24 unanimously passed, by voice vote, legislation to clarify and make it easier for hospitals to get exemptionsfrom site-neutral pay cuts. Last year, Congress reduced Medicare reimbursement for services provided at new off-campus outpatient departments tophysician-office rates. The law took effect Nov. 2, but pay cuts do not occur until next year. Facing questions about hospital outpatient departments indevelopment that were not grandfathered by last year’s legislation, the House Ways & Means Committee added a narrow exemption for hospital outpatientdepartments that were under development when Congress passed the site-neutral law.

The bill as originally introduced, before the committee’s markup, called for requiring both attestation and certification by July 1. Attestation requireshospital executives to attest to meeting outpatient department criteria and certification requires executives to certify that they have a binding writtenagreement to construct a facility. The manager’s amendment pushes the attestation deadline back to Dec. 31, and certification would be required within 60days of the law’s enactment, which would be later than July 1.

Hospital-based cancer centers also would be exempted from the site-neutral pay cuts, but they’d have to pay their way with other pay cuts to their sector.

The package also includes several other items, including the House speaker’s bill to pay similar rates for inpatient and outpatient services for certainsurgical procedures, the Medicare Advantage Coverage Transparency Act, and a hospital readmissions bill by Rep. James Renacci (R-OH).

The hospital legislation included only measures with bipartisan support that could be easily offset and pass the committee.

For more information:http://waysandmeans.house.gov/ways-means-advances-bipartisan-medicare-reforms-improve-hospitals-better-serve-patients/

House Votes on Zika Funding

On May 26, the House of Representatives voted 233-180 to go to conference with the Senate on a military spending bill that includes Zika funding. TheSenate has approved $1.1 billion in Zika funding and the House has approved only about half of that amount. The final figure is expected to come closer tothe Senate’s total but far below the White House’s $1.9 billion request.

Bipartisan Letter Asks HHS to Quash Prior Authorization for Home Health

On May 25, more than 100 representatives sent a letter asking HHS Secretary Burwell and Acting Administrator Andy Slavitt to “refrain from moving forwardwith the proposed demonstration project” that would require home health agencies to receive prior authorization before treating Medicare beneficiaries.

“This demonstration project imposes costs on patients, providers and taxpayers,” the lawmakers wrote to HHS Secretary Sylvia Mathews Burwell and CMS ActingAdministrator Andy Slavitt. “Delaying patient care while waiting for CMS to approve home health services may put patient health in jeopardy and causepatients to stay in the hospital longer than necessary.”

See the letter: http://bit.ly/1NQPO9x

House Democrats Say NFL Attempted to Interfere With Government Study on Brain Injuries

House Democrats are accusing the National Football League (NFL) of attempting to use donations to influence a major government-backed study on the linksbetween football injuries and brain disease.

A 91-page report, published by the House Energy and Commerce Democrats on May 23, claims that NFL officials tried to persuade the National Institutes ofHealth (NIH) to pull a $16 million research grant for Dr. Robert Stern—a prominent Boston University (BU) researcher who has spoken out against the leagueand its approach to the dangers of concussions.

The money was part of an “unrestricted” $30 million gift the NFL donated to NIH in 2012 for research on “serious medical conditions prominent in athletes.”The report finds that officials from the league were trying to get that money redirected to members of the NFL’s own committee on brain injury research.

“In this instance, our investigation has shown that while the NFL had been publicly proclaiming its role as funder and accelerator of important research,it was privately attempting to influence that research,” said lawmakers in the report.

When the NIH refused to take away Stern’s grant, the NFL backed off on its deal to pay for the study, leaving taxpayers to pick up the tab. Thecongressional investigation was prompted by an ESPN article in December that first alleged the NFL had backed out of its donation because it objected tothe NIH’s selection of Stern.

To see the full report,click here.

Energy and Commerce Committee Members Launch Pediatric Trauma Caucus

The bipartisan caucus led by Reps. Richard Hudson (R-NC) and Rep. G.K. Butterfield (D-NC) began with a briefing on May 24 featuring Richard Childress, aNASCAR team owner and co-founder of the Childress Institute for Pediatric Trauma. A National Institutes of Health expert was also attending.

The announcement of the caucus comes as members of the committee have also taken steps to investigate concussions, including the rise of concussions inyouth sports.

House Oversight and Government Reform Committee Republicans Release Report on Oregon Exchange—Democrats Release Their Own Report

House Oversight and Government Reform Committee Republicans released a report on May 25 detailing Oregon’s troubled state Obamacare exchange. They accuseformer Gov. John Kitzhaber of illegally interfering with the decision to scrap the website and switch to HealthCare.gov. In addition, they have askedAttorney General Loretta Lynch and state Attorney General Ellen Rosenblum for a criminal probe. Committee Democrats released a separate report blamingOracle, the company that built Cover Oregon’s failed website.

For the Republican report:https://oversight.house.gov/wp-content/uploads/2016/05/OGR-Cover-Oregon-Report-UPDATE.pdf

For the Democratic report:http://democrats.oversight.house.gov/news/press-releases/new-report-finds-oracle-corp-primarily-and-directly-responsible-for-failed

Medicare and Medicaid Program Integrity

On May 24, at a House Energy and Commerce Committee Oversight hearing, lawmakers pressed CMS about how the agency will strengthen program integrity to dealwith persistently high payment errors in Medicaid and Medicare. This comes after the HHS Office of Inspector General told CMS it has 30 days to sendCongress proposals to lower improper payments in Medicare fee-for-service and bring the program back into compliance.

CMS’s program integrity chief stressed the Medicare errors stem mainly from documentation problems and warned lawmakers that lowering error rates wouldn’tnecessarily cut spending.

Medicare has had an improper payment rate of more than 10 percent for three fiscal years—10.1 percent in fiscal 2013, 12.7 percent in fiscal 2014 and 12.1percent in fiscal 2015, according to the government’s payment accuracy website—and the HHS OIG notes in a recent report on HHS’s improper pay rates thatbecause of this, the program is noncompliant with the Improper Payments Elimination and Recovery Act. OIG says the head of CMS has 30 days to submit toCongress either reauthorization proposals for Medicare fee-for-service or proposed statutory changes necessary to bring the program into compliance.

Medicaid improper pay rates were 9.8 percent for 2015, according to the government’s website on payment accuracy, and the target error rate for the programwas 6.7 percent. The 12.1 percent improper payment rate for Medicare fee-for-service in fiscal 2015 was down slightly from an error rate of 12.7 percent infiscal 2014 as reported on the government’s payment accuracy website. This was under the agency’s reported error rate target of 12.5 percent.

For more information about the hearing:https://energycommerce.house.gov/hearings-and-votes/hearings/medicare-and-medicaid-program-integrity-combatting-improper-payments-and

Senate

HELP Committee Chair Says Mental Health to be Marked Up in June

Sen. Lamar Alexander (R-TN), Chairman of the Senate Health, Education, Labor and Pensions Committee and the co-author of the Senate’s primary mental healthreform bill, said he expects the Senate to vote on the measure in June. Speaking on the Senate floor, Alexander said Senate Majority Leader Mitch McConnellhas signaled the bill will get floor time and he may even “interrupt the appropriations process if they can act quickly and not take a lot of floor time.”

However, several obstacles remain. Among the obstacles are how to pay for the legislation and Sen. John Cornyn wants to offer a controversialamendment containing NRA-backed language on gun background checks. That provision is a non-starter for Democrats who want to keep mental health reformseparate from gun control.

House Energy and Commerce Committee lawmakers are planning to mark up a version of Rep. Tim Murphy’s mental health reform bill in June.

Congressional Budget Office and Medicare Payment Advisory Commission Pushed on Savings for Telemedicine

More than 20 health care researchers and institutions are urging the Congressional Budget Office and the Medicare Payment Advisory Commission (MedPAC) toconsider the savings that telemedicine has generated in Medicaid and the commercial market when estimating savings that telemedicine could generate inMedicare.

Robert Groves, chief medical officer of the Banner Health Network; Jack Lewin, of the Cardiovascular Research Foundation; Ascension Health; Stanford HealthCare; and the University of Pittsburgh Medical Center (UPMC) Telehealth Program are among those who signed the letter.

MedPAC did not find definitive evidence that telehealth works when commissioners reviewed studies based on Medicare and patients 60 years or older andsickly. At a meeting in November, commission researchers presented a mixed bag of research. However, the researchers who sent the letter to CBO and MedPACsaid Medicare’s restrictions on telemedicine make Medicare data a poor source for research on telehealth.

“[S]ince federal law prevents many providers from being paid when they use telemedicine to serve Medicare beneficiaries, obviously, little data isavailable. We have been encouraged by the Centers for Medicare & Medicaid Services’ increasing—but limited—allowance of telemedicine as part of newdemonstration projects, but we are concerned that it will be too difficult to isolate telemedicine’s impact, as it is one of many variables measured,” theresearchers said.

The Alliance for Connected Care said the letter expands on support for the CONNECT for Health Act (S. 2484), introduced by Sen. Brian Schatz (D-HI) inFebruary 2016. The legislation removes geographic restrictions, provides resources for remote patient monitoring technology for patients with chronicconditions and addresses specific challenges related to stroke and dialysis, according to the Alliance for Connected Care.

The CONNECT for Health Act has not been scored by CBO, and supporters worry that CBO willunderestimate the potential for savings. Schatz touted the bill shortly after it was introduced, saying it would save $1.8 billion over 10 years based onan analysis by consultant Avalere Health. Some of the proposals included in Schatz’s bill made it into the president’s budget request, which estimated $160million in savings over 10 years from telemedicine measures.

3. Administration

HHS Secretary Warns House Package to Fight Zika Uses MACRA Funds

The House’s $622 million package to fight the Zika virus is offset with about $352 million of leftover Ebola funding and $270 million of HHS funds, most ofwhich would come from the nonrecurring expenses fund.

In a letter to the House Appropriations Committee, HHS Secretary Sylvia Mathews Burwell says HHS had planned to use $108 million in the nonrecurringexpense fund to implement Medicare’s new physician payment law. The nonrecurring expenses fund is often used by HHS to support capital investments andother infrastructure items. If the House package stands, it would be the first time that Congress has dipped into the nonrecurring expenses fund to offsetother initiatives.

CMS Expands Hospital Quality Effort

On May 25, in a blog post by the Centers for Medicare and Medicaid Services (CMS), Patrick Conway said CMS is expanding hospital quality efforts with newprograms to reduce patient harm and keep bringing down the hospital readmission rate.

CMS is releasing a request for proposal for hospital improvement and innovation networks, which will work with existing quality improvement organizationsand related hospital safety and engagement programs. These networks will “engage and support the nation’s hospitals, patients, and their caregivers in workto implement and spread well-tested, evidence-based best practices,” he wrote.

The goal is to have the networks through 2019 pursue “bold new national aims” that include a 20 percent decrease in overall patient harm and a 12 percentreduction in 30-day hospital readmissions from the 2014 baseline.

FDA Approves Probuphine, First Implantable Version of Medication to Treat Opioid Addiction

The FDA has approved the first implantable version of a medication to treat opioid addiction. Braeburn Pharmaceuticals’ Probuphine is designed to deliver amoderate dose of buprenorphine for six months through rods inserted under the skin of a patient’s arm, removing the need to take the treatment daily.

Before today’s approval, which follows the recommendation of an agency advisory committee in January, buprenorphine was available only in the form of adaily pill or a film that dissolved in patients’ mouths.

Braeburn has not yet said what it will charge for the drug, although it is expected to be significantly more expensive than the current forms ofbuprenorphine.

FDA Delays Decision on Duchenne Muscular Dystrophy Drug

The FDA will take more time to make a decision on whether to approve a new Duchenne muscular dystrophy drug that has been pushed by lawmakers and patientgroups but found wanting by some experts.

The FDA told the drugmaker Sarepta Therapeutics that it will not meet its Thursday deadline to finish its review of the drug eteplirsen. Last month, an FDAadvisory group recommended against the drug’s approval, finding there was not enough evidence to prove its effectiveness. Lawmakers have continued amonths-long campaign to pressure FDA, taking to the floor and op-ed pages to call for speeding the approval.

Recent FDA appropriations bills passed by House and Senate committees included report language reminding the agency it has “the tools, authorities, andlatitude necessary” to approve rare disease treatments like drugs for Duchenne as fast as possible.

4. State Activities

Ohio: Co-op Becomes the 13th to Fail

The Ohio Insurance Department is taking over control of the co-op InHealth Mutual, making it the 13th Obamacare startup to collapse. Roughly 22,000customers will need to find new coverage in the next 60 days.

“Our examination of the company’s financials made it clear that the company’s losses would prevent it from paying future claims should its operationscontinue,” said Ohio Lt. Gov. Mary Taylor, who also serves as the state’s director of insurance.

InHealth Mutual lost roughly $80 million last year. Only Land of Lincoln Illinois had more red ink among the remaining co-ops.

Ohio has a guaranty fund that will pay provider claims if InHealth Mutual runs out of money.

Of the 23 startup nonprofit plans begun with Affordable Care Act funds, just 10 remain in business. Four plans showed modest profits during the firstquarter of 2016, according to financial filings.

Colorado: Hickenlooper Signs Health Insurance Study Bill

Colorado Gov. John Hickenlooper signed a bill directing the state to study the possible effects of reducing Colorado’s geographic insurance rating areasfrom nine down to one. Insurance industry officials say reducing the ratings area to one would lower premiums in Colorado’s high-cost regions—which rankamong the most expensive in the country—but increase premiums in cities like Denver and Boulder.

Kansas: Kansas Governor Makes Major Medicaid Cuts

Kansas Gov. Sam Brownback approved $97 billion in cuts to the state budget, more than half of which will come out of its Medicaid program. Combined withthe loss of federal matching funds, Kansas’s Medicaid program is losing $120 million. Brownback cut Medicaid reimbursements by 4 percent, but certaininstitutions are exempt, including home-based services for disabled enrollees and 95 critical access hospitals. These moves are expected to leave the statewith $87.5 million in its general fund by the end of June 2017.

North Carolina: Mental Health Task Force Releases Reform Recommendations

The mental health task force created by North Carolina Gov. Pat McCrory recently released its reform recommendations, including how to address accessissues and combat the opioid abuse epidemic. The group suggested increasing the number of inpatient facilities for mental health patients by securing fundsfor private startups. The task force also recommended studying how to limit initial opioid prescriptions to a maximum of seven days to help curb addiction.

To see the full list of recommendations, click here.

Oklahoma: Republicans Fail to Pass Cigarette Tax, Democrats Hold Out for Medicaid Expansion .

On May 18, Republicans failed to get House Bill 3210 passed—a $1.50 per packcigarette tax increase they say is needed to keep the state’s Medicaid program solvent. Democrats would not support the bill unless Republicans advancedlegislation to expand Medicaid under the Affordable Care Act (ACA). The additional tax revenue is aimed at avoiding cuts to provider reimbursements thatcould go as high as 25 percent. However, leading Oklahoma lawmakers say they have found a way to close the state’s $1.3 billion budget hole without relyingon tax increases.

Virginia: Gov. McAuliffe Vetoes Concierge Care Bill

Virginia Gov. Terry McAuliffe vetoed a bill that would have exempted direct primary care agreements—also called concierge care—from health insurance lawsand regulations. The governor said he vetoed the bill because more work is necessary on how to best implement the change and protect consumers. He proposedan amendment to the bill adding a clause to allow further study. McAuliffe argued that direct primary care agreements could deter people from purchasinginsurance and the agreements would not cover catastrophic care or chronic conditions requiring a specialist.

Missouri: Strikes Blow to Aetna-Humana Merger

The Missouri Department of Insurance issued an order prohibiting the merged Aetna-Humana company from competing in numerous markets in the state if thedeal goes forward.

A new department orderprohibits the merged company from selling plans in the individual, small group and group Medicare Advantage markets. It also prevents the insurer fromselling individual Medicare Advantage plans in numerous counties where it would be deemed to unfairly limit competition.

The department found that Aetna and Humana currently control more than 70 percent of the private Medicare market in 33 counties in the state.

Missouri is the first state to take steps to limit the merged company from competing in the insurance market.

The order by Missouri Insurance Commissioner John Huff will not be finalized for 30 days, during which time Aetna and Humana will have the opportunity tooffer a plan to “remedy the anticompetitive impact of the acquisition.”

5. Regulations Open for Comment

HHS Posts Guidance for State Innovation Waivers

On Dec. 11, the Department of Health and Human Service