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This Week: More skirmishes over repeal and replace… MedPAC makesrecommendations on Part B drug payment… Congress goes home for two weeks.
1. Congress
House
- House Rules Committee Approves Risk Stabilization Amendment to AHCA
- House Approves VA Choice Extension, Sends to President Trump
Senate
- Senators Urge AG to Continue Appeal of ACA Cost-Sharing Reduction Lawsuit
- Senate HELP Committee Holds Hearing on FDA User Fees
- Medicare Advisers Recommend Drug Payment Reforms
2. Administration
- CMS Announces Participants for the Assistance and Alignment Tracks of the Accountable Health Communities Model
- CMS Releases Interim Report on Risk Adjustment
- CMS Announces Medicare Advantage Payment Boost for 2018
- FDA Approves Direct-to-Consumer Marketing for 23andMe
3. State Activities
- Florida: New Bill Imposes Conservative Changes to Medicaid Program
- Indiana: Gov. Holcomb to Sign Needle-Exchange Program Bill
- Kansas: Kansas House Fails to Override Veto of Medicaid Expansion
- New Mexico: New Mexico Requiring Police to Carry Overdose Reversal Drugs
- New York: Rep. Faso Introduces Property Tax Reduction Act
- Oklahoma: Oklahoma Considering 1332 Waivers
- Virginia: Virginia House Rejects Medicaid Expansion
4. Regulations Open for Comment
- FDA Considers Establishing New Office of Patient Affairs
- FDA Proposes 1,000 Medical Devices to Exempt From Premarket Notification
- FDA Extends Comment Period on Biosimilar Interchangeability Guidance
5. Reports
1. Congress
House
House Rules Committee Approves Risk Stabilization Amendment to AHCA
On April 6, House Republicans attached anamendment to the American Health Care Act that would allocate $15 billion from thePatient and State Stability Fund between 2018 and 2026 to create a federal“invisible risk sharing program.” The House Rules Committee approved theamendment 9-2 along party lines.
The amendment was drafted by House Freedom Caucus members Rep. Gary Palmer(R-AL) and Rep. David Schweikert (R-AZ). Under the program, applicants fillout a health history and those with certain conditions found to drive healthclaims would be automatically placed in the pool. The program also allowsissuers to voluntarily put consumers likely to have high claims into thepool.
In the GOP amendment, HHS would establish the fund after consultation withhealth care consumers, issuers, commissioners and other stakeholders andafter taking into consideration high-cost health conditions. HHS would runit through 2020, after which the states would take over. HHS would defineparameters including eligible individuals, health status statements,automatic qualities, voluntary qualities, the percent of insurance premiumsthat would be applied to the pool, and the attachment point and payoutproportion.
Rep. Schweikert said it would not resolve everyone’s concerns, but it doesaddress one of the main ones from the Freedom Caucus—that the AHCA didnothing to lower premiums. He said there are still questions over whatflexibility in Medicaid expansion means and how states could be morecreative without HHS interference.
House Majority Leader Kevin McCarthy (R-CA) wrote amemo in support of the amendment wherein he stressed the importanceof repealing and replacing Obamacare.
Members were told that there would be more discussions during the two-weekbreak, and should progress be made, they may be called back early toconsider legislation.
House Approves VA Choice Extension, Sends to President Trump
On April 5, the House approved and sent to President Donald Trumplegislation that would extend the Veterans’ Choice Program past its expectedAugust expiration. The bill was passed by a voice vote, followingsimilar approval in the Senate.
If signed by the president, as expected, the legislation would eliminate theAugust sunset date for the program and allow the VA to spend the nearly $1billion left from an initial $10 billion in emergency funding dedicated tothe Choice Program.
The program, created to subsidize non-VA care for veterans who face longwait times for medical appointments or live long distances from a VA medicalfacility, is set to expire three years after its creation or when it runsout of money, whichever comes first.
The Choice Program was created as a temporary program to cut waits formedical appointments at the height of the VA’s 2014 wait times scandal.However, lawmakers from both parties and VA officials have since argued theprogram’s rollout was deeply flawed and requires reform.
House Veterans’ Affairs Chairman Phil Roe (R-TN) said on the House floorthat his goal is to secure passage of a broader rewrite of the ChoiceProgram later this year, but the legislation considered now would givelawmakers time to negotiate a broader deal.
The legislation is sponsored by 20 senators from both parties, includingSenate Veterans’ Affairs Chairman Johnny Isakson (R-GA) and the committee’sranking Democrat, Sen. Jon Tester of Montana, as well as Senate ArmedServices Chairman John McCain (R-AZ). On the Senate floor, the bill’sbackers characterized the legislation as a first step in improving theprogram.
Senate
Senators Urge AG to Continue Appeal of ACA Cost-Sharing ReductionLawsuit
On April 4, nine senators urged Attorney General Jeff Sessions to continuethe prior administration’s appeal of a lower court decision in the House GOPlawsuit over the ACA’s cost-sharing reductions. The letter was signed byDemocrats Mark Warner (VA), Michael Bennet (CO), Tom Carper (DE), ChrisCoons (DE), Maggie Hassan (NH), Tim Kaine (VA), Bill Nelson (FL) and JeanneShaheen (D-NH), along with Independent Angus King (ME).
In their letter to Sessions, the senators argue that “the immediate threatposed by the mixed messages coming from the Administration,” in addition touncertainty created by a wide range of actions from the administration andthe GOP-led Congress, could lead to fewer choices, less access and higherpremiums. “Until those who initiated the lawsuit, the House RepublicanConference, develop a practical resolution to prevent millions of Americansfrom experiencing higher out of pocket costs, we urge you to providepredictability for the American people by continuing to appeal the decisionand reimbursing insurers to cost-sharing payments,” the letter says.
Earlier this week, Speaker Paul Ryan (R-WI) stated the House does not intendto drop the suit because of the separation of powers issues involved. Anadministration official said April 3 that HHS would follow precedent byallowing the CSRs to be paid out as long as the case is in litigation, butdid not say whether the administration intended to defend the case, House v. Price.
House Republicans won in a lower court last year and the decision is now onappeal. President Donald Trump’s statement that the White House would bewilling to watch the exchanges “explode” following the collapse of the GOP’shealth reform effort has led to confusion over whether the administrationwill continue the appeal.
Senate HELP Committee Holds Hearing on FDA User Fees
On April 4, the Senate Health, Education, Labor and Pensions (HELP)Committee held a hearing on FDA user fee agreements. During the hearing,Committee Chairman Lamar Alexander (R-TN) said he hopes to move quickly toreauthorize the user fee agreements negotiated by FDA and industry so thatthe agency will not be forced to send layoff notices to employees at the endof July. “After reviewing the recommendations from industry and the FDA, Ibelieve these are good agreements for patients,” Alexander said, signalinghe will not accept President Donald Trump’s request in his “skinny” fiscal2018 budget to double the fees and lower appropriations.
Committee ranking Democrat Patty Murray (WA) called Trump’s request thatindustry pay double in exchange for regulatory reforms a dangerous proposal.Sen. Elizabeth Warren (D-MA) also said that Trump’s proposal to shiftfunding to increased reliance on user fees would keep the agency fromcompleting activities that do not receive funding from user fees,endangering public health.
Kay Holcombe, senior vice president of science policy at the BiotechnologyInnovation Organization, noted the president’s hiring freeze has a directimpact on user fees. “If FDA is unable to make these hires, user fees cannotbe spent. This is a situation that is not good for fee payers, for FDA, orfor patients who are waiting for approved therapies,” Holcombe said.
For more information on the hearing,click here.
Medicare Advisers Recommend Drug Payment Reforms
On April 6, a congressional Medicare advisory panel unanimously supportedrecommendations that would fundamentally restructure how the program paysfor physician-administered drugs, ending more than two years of discussionon the topic.
Medicare Part B now reimburses doctors for these drugs based on aformula—average sales price plus 6 percent—that critics say incentivizesdoctors to prescribe high-cost treatments when cheaper alternatives wouldsuffice. The advisory panel, MedPAC, agreed that drug companies should pay arebate when the average sales price of their products increases faster thanan inflation benchmark.
MedPAC also supported a new “drug value program,” which would create anegotiation system for physician-administered drugs, similar to what is usedin Medicare Part D for pharmacy prescriptions. Under this system, a limitednumber of vendors would negotiate drug prices, and participating providerswould buy those medicines at prices that would not be made public.
The group suggested creating a voluntary program that would be phased in by2022 at the earliest. To encourage participation, however, they suggestgradually reducing the ASP add-on percentage.
PhRMA and some doctors groups, like the Community Oncology Alliance, opposethese changes. These groups were instrumental in killing an Obamaadministration proposal to test new ways of paying for Part B drugs.
But some MedPAC recommendations might find a receptive audience in the newWhite House, given President Donald Trump’s support for negotiating drugprices. MedPAC also said HHS should use the same billing code for areference biologic and biosimilar, which would incentivize doctors to usethe cheaper copycats of branded biologics.
The panel estimated its package of recommendations would save between $1billion and $5 billion over five years.
2. Administration
CMS Announces Participants for the Assistance and Alignment Tracks ofthe Accountable Health Communities Model
On April 6, CMS announced the participants for the Assistance and AlignmentTracks of the Accountable Health Communities (AHC) Model. By addressingcritical drivers of poor health and high health care costs, the model aimsto reduce avoidable health care utilization, impact the cost of health careand improve health and quality of care for Medicare and Medicaidbeneficiaries. The organizations in the Accountable Health Communities ModelAssistance Track will provide person-centered community service navigationservices to assist high-risk beneficiaries with accessing needed services.The organizations will also provide community service navigation services,as well as encourage community-level partner alignment to ensure that neededservices and supports are available and responsive to the needs ofbeneficiaries.
The Assistance and Alignment Tracks of the Accountable Health CommunitiesModel will begin on May 1, 2017, with a five-year performance period.
To view a list of the Assistance and Alignment Tracks bridge organizations,visit the Accountable Health Communities Model web page.
CMS Releases Interim Report on Risk Adjustment
On March 31, CMS released aninterim reporton 2016 risk adjustment calculations for all but two states, and stressedthat the figures are only preliminary and liable to change once the finalnumbers are out in June.
The ACA’s risk adjustment program is designed to protect issuers fromadverse selection by requiring plans with healthier risk pools to pay into afund so that payments can be transferred to issuers that ended up with asicker population. While CMS has determined the program works as intended,issuers have consistently argued the program design is problematic andshould be overhauled.
Issuers also asked CMS to provide interim calculations after issuers largeand small were caught off-guard by the results of the 2014 RA program. CMSagreed, and began doing so last year. As in 2015, the agency only providesthe numbers for states in which each credible issuer (meaning an issuer withat least 0.5 percent of market share) submitted at least 90 percent ofenrollment data and claims for the first three-quarters of the benefit yearsand there were no data outliers.
Only 21 states met that criteria in 2015, but in 2016 all states in whichthe federal government runs risk adjustment were included except for Hawaii,which had two plans unable to pass the thresholds. Massachusettsadministered its own RA program for 2016 and so it is also excluded. The newfigures published on March 31 also include a brief analysis of how thenumbers changed from interim to final status in 2016.
The agency reports that the risk adjustment transfers reversed for 10.5percent of issuers in individual markets, and 15.3 percent of issuers in thesmall group market.
For the 190 individual market plans that received the estimates, about 5.8percent of those who had been expected to see a charge ended up getting apayment, and 4.7 percent changed from an interim payment to a charge. Forthe small group market, 10 percent went from a charge to a final payment and5.2 percent went from a payment to a charge.
CMS Announces Medicare Advantage Payment Boost for 2018
Medicare Advantage plans will receive a 0.45 percent increase in funding for2018, CMSannounced April 3. That is slightly more than the 0.25 percent bump the Trumpadministration proposed in February.
Insurers also received news on how CMS will evaluate “encounter data.” TheTrump administration will base 15 percent of the Medicare Advantage fundingformula on encounter data, down from 25 percent as it initially proposed.Insurers have complained that the data—essentially their paid claims—is notreliable and should be scrapped entirely.
Otherwise, the final rate notice is largely unchanged from what the Trumpadministration proposed in February. This is not surprising given that theTrump administration has yet to appoint many key officials within theagency.
The stakes are huge for health plans: Medicare Advantage is a roughly $200billion per year business and covers about a third of all Medicarebeneficiaries.
Insurers had been lobbying for the Trump administration to fix what they seeas a glitch in the funding formula that prevents some plans from gettingtheir full quality bonus payments. However the administration did not alterthe policy.
CMS also decided not to move forward with changes to the funding model foremployer-based plans that the Obama administration had proposed. Insurersbelieve the change would have resulted in lower payments. Instead theadministration will stick with the same formula as 2017.
CMS also issued a request for information about ways to improve the privateMedicare program. The agency asks for ideas on regulatory, sub-regulatory,policy, practice and procedural changes to improve the programs, andsuggests that ideas could include recommendations on benefit design,operational or network flexibility, “supporting the doctor-patientrelationship in care delivery” and ways to promote individual preferences.
For example, CMS suggests stakeholders could come up with recommendations onchanges to the way plans are paid, monitored and measured as well as changesto the star rating quality program. The agency also suggests thatstakeholders could provide feedback on “when and how CMS issues regulationsand policies and how CMS can simplify rules and policies for beneficiaries,providers and plans.”
Comments are due April 24.
For more information,click here.
FDA Approves Direct-to-Consumer Marketing for 23andMe
On April 6, FDA announced that it will allow23andMe to do direct-to-consumer marketing of tests that indicate inheritedpredispositions for 10 diseases including Parkinson’s and late-onsetAlzheimer’s, in a major victory for the startup and the emerging consumergenomics market.
Positive reactions were swift in the patient advocacy world. “The decisiontoday can help inform patients’ behaviors and medical decisions,” saidEdward Abrahams, president of the Personalized Medicine Coalition.
The agency used a so-called “de novo pathway,” which allows relatively quickapproval of moderate-risk medical devices. An agency spokeswoman said futureapprovals would be premised on the regulated companies’ accepting “specialcontrols” and submitting to a streamlined 510(k) pathway.
Further details on the special controls, which can include things likeperformance standards, postmarket surveillance, patient registries andlabeling requirements, will be available when the agency releases itssummary of the approval decision in a few weeks, she said.
The Mountain View startup ran into trouble with the FDA in 2013, when theagency ordered 23andMe to withdraw from the market genome tests thatincluded broad claims about the patient’s disease risks.
Since then FDA has approved various narrower pre-diagnostics, such as a 2015approval for a test of genetic links for diseases like Bloom’s Syndrome.
While the latest approval did not cover 23andMe’s original tests, itsignaled FDA’s comfort with direct-to-consumer tests that point topredispositions for certain disease conditions that can be modified bylifestyle changes such as additional exercise or healthier eating.
3. State Activities
Florida: New Bill Imposes Conservative Changes to Medicaid Program
On April 6, the Florida House Health and Human Services Committee approved abill that would impose several conservative changes to the Medicaid program.It would implement cost-sharing and work requirements and ban enrollees forup to one year for failing to pay premiums. Premiums would be set at $10 permonth for people earning as little as 50 percent of the federal povertylevel, while enrollees earning above the poverty line would pay $15 permonth. The bill establishes a 60-day grace period for any missed premiumpayment.
Indiana: Gov. Holcomb to Sign Needle-Exchange Program Bill
Indiana Gov. Eric Holcomb is expected to sign a bill allowing counties andmunicipalities to set up their own needle-exchange programs to help curtailthe spread of HIV. Former Indiana Gov. Mike Pence in 2015 lifted the state’sban on needle exchanges as a response to a deadly HIV outbreak in ScottCounty. Under the bill, counties would no longer need state approval to setup a program.
Kansas: Kansas House Fails to Override Veto of Medicaid Expansion
On April 3, the Kansas House came short of overriding Gov. Sam Brownback’sveto of Medicaid expansion, ending the deep-red state’s surprising push tojoin the Obamacare program.
The House voted 81-44, needing three more votes to override Brownback’sveto. In his veto message, Brownback said the expansion would burden thestate’s budget with “unrestrainable entitlement costs.” He argued thatKansas should not expand its program when the Republican-controlled Congressis working to repeal Obamacare and overhaul Medicaid.
The expansion bill was originally approved by the House and Senate withmajor bipartisan support, though it lacked veto-proof majorities in bothchambers. Kansas remains one of 19 states that have not expanded Medicaid.
New Mexico: New Mexico Requiring Police to Carry Overdose Reversal Drugs
New Mexico Gov. Susana Martinez signed legislation last week making NewMexico the first state to require all local and state police to carryoverdose reversal drugs to combat opioid and heroin overdoses. The money forthe naloxone kits will come from a state fund for officers that goes towardtraining, equipment and supplies.
The new law also requires federally certified addiction treatment centers togive patients two doses of naloxone and a prescription for the reversaldrug, as well as education on how to use it. Prisons and jails will berequired to give at-risk inmates naloxone when they are released if suppliesis available.
New York: Rep. Faso Introduces Property Tax Reduction Act
New York Rep. John Faso recently introduced theProperty Tax Reduction Act, which would effectively prohibit the state from having local governmentscontribute toward Medicaid. The 57 counties outside of New York Citycontribute $2.3 billion toward the state’s Medicaid program—money that wouldhave to be made up from elsewhere in the state budget. The legislation isidentical to an amendment that was attached to the stalled GOP Obamacarerepeal bill last month, sparking a debate between Gov. Andrew Cuomo andseveral congressional Republicans.
Oklahoma: Oklahoma Considering 1332 Waivers
Oklahoma, a state that did not expand Medicaid and reports low participationin the insurance exchanges, is proposing 1332 waivers to restructureAffordable Care Act coverage for people earning up to 300 percent ofpoverty, according to a paper from the state’s Department of Health andHuman Services.
The analysis asks for greater state authority over the exchanges that wouldinclude control of cost-sharing reductions, advanced premium tax credits,calculating subsidy amounts for eligible people, and setting the essentialhealth benefits for plans.
The state wants to redesign financing and eligibility for the exchanges totry to close the coverage gap—the so-called “Medicaid gap”—caused byOklahoma’s refusal to expand Medicaid after Congress passed the ACA.Thirty-nine percent of Oklahoma’s uninsured fall below the federal povertylevel, so they cannot receive federal subsidies to purchase coverage on theexchanges. The state can only offer subsidies to people between 100 percentand 400 percent of poverty under current law.
Oklahoma’s proposal would shape an exchange market similar to what Arkansasengineered through Medicaid expansion and Medicaid 1115 waivers. Thatprogram lets childless adults who earn up to 138 percent of poverty buy intothe exchanges with additional benefits traditionally included under Medicaidprovided as wraparound coverage.
Oklahoma’s HHS task force says that with new policies in place Medicaidmanaged care providers may be able to assume coverage for some traditionalMedicaid beneficiaries—including the aged, blind and disabled—while bringingother Medicaid beneficiaries into the exchanges.
Virginia: Virginia House Rejects Medicaid Expansion
On April 5, Virginia’s Republican-controlled House rejected a proposal toexpand the state’s Medicaid program, citing budgetary concerns.
Delegates rejected an amendment to the budget that would have allowedDemocratic Gov. Terry McAuliffe to grow the health entitlement underObamacare. McAuliffe made the latest in a series of attempts to expand theprogram last month, after congressional Republicans dropped their Obamacarerepeal bill. Republicans in Virginia’s legislature have rejected expansionfor the past four years.
A total of 19 states have not expanded their Medicaid programs.
4. Regulations Open for Comment
FDA Considers Establishing New Office of Patient Affairs
The FDA is considering establishing a new Office of Patient Affairs thatwould centralize its work on patient involvement in the review and approvalof drugs and medical devices, according to aMarch 14 noticein the Federal Register.
Comments on the new office are due by June 12, 2017.
FDA Proposes 1,000 Medical Devices to Exempt From PremarketNotification
On March 14, FDA took one of its first actions to begin implementing the21st Century Cures Act, byproposingmore than 1,000 medical devices it will exempt or partially exempt from thepremarket review process. The devices on the list are sufficiently wellunderstood and do not present risks that require premarket notification toprovide a reasonable assurance of safety and effectiveness, FDA said. Theagency will finalize the list after a 60-day public comment period.Comments are due by May 15, 2017.
FDA Extends Comment Period on Biosimilar Interchangeability Guidance
FDA is extending the public comment period for itsdraft guidanceoutlining how biosimilar sponsors can demonstrate that their products areinterchangeable with other biologics, following extension requests from toptrade associations.
The agency laid out in a January 2017 draft guidance its first attempt atcodifying the requirements that sponsors must satisfy to demonstrateinterchangeability. The agency said it would make case-by-casedeterminations of interchangeability, but indicated it would requirestudies measuring the impact of switching on clinical pharmacokinetics andpharmacodynamics.
The Biotechnology Innovation Organization (BIO), Pharmaceutical Researchand Manufacturers of America and Covington & Burling all requestedcomment period extensions, according to documents posted onRegulations.gov.
The comment period, which was set to close on March 20, will be extended 60days until May 19.
5. Reports
CDC Report Evaluates U.S. Infants Exposed to Zika
According to anew CDC report, roughly one in 10 U.S. women with a confirmed Zika infection during apregnancy last year had a baby with a virus-related brain defect.
The chances of birth defects were even higher among babies whose motherswere infected with Zika during the first trimester of their pregnancies.Among this group, about 15 percent reported birth defects.
The CDC also found roughly 5 percent of the 972 women who had possibleevidence of Zika—but not confirmed cases—had fetuses or babies withvirus-related defects. Of these 51 women, 45 had live births and six hadpregnancy losses.
Although attention to Zika has decreased since last year’s outbreak, the CDCis warning that the threat of Zika will remain high as the weather getswarmer and mosquito season approaches.
Acting CDC Director Anne Schuchat said the agency is still seeing new casesof the mosquito-borne virus in the United States every month, mostly relatedto travel. There are currently more than 5,000 Zika cases nationwide and1,600 potential cases of Zika in pregnant women.
Schuchat also said the number of pregnant women with Zika in the countrycould be even higher because only 25 percent of infants included in thestudy had undergone brain scans to detect the virus. She encouragedclinicians to use brain imaging in any potential cases of Zika.
If you have any questions, contact the following individuals atMcGuireWoods Consulting:
StephanieKennan, Senior Vice President
Charlie Iovino, VicePresident