Washington Healthcare Update

February 17, 2020

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This week in Washington: The House and Senate will be in recess the week of Feb. 17 in observation of Presidents Day.

Congress

Hearings/Markups

Senate

Administration

Proposed Regulations/Guidance

Courts 

Reports

Hearings/Markups

House Education and Labor Committee: “Markup: H.R. 5800, Ban Surprise Billing Act”

Tuesday, February 11, 2020: The House Education and Labor Committee held a markup for:

Why this is important: The committee approved H.R. 5800, 32-13, to end surprise medical billing. The plan uses a federal benchmark payment to settle differences while allowing providers and payers to appeal to an independent arbiter in disputes over bills above $750. The Congressional Budget Office (CBO) estimates the bill would save the federal government about $24 billion over a decade.

Find more details on the hearing here.

House Ways and Means Committee: “Markup of Health Legislation”

Wednesday, February 12, 2020: The House Ways and Means Committee held a markup for the follow three bills:

  • H.R. 5821, the “HOSPICE” Act
  • H.R. 5825, The “Transparency in Health Care Investments Act of 2020” 
  • H.R. 5826, the “Consumer Protections Against Surprise Medical Bills Act”

Why this is important: The bill, H.R. 5826, passed by voice vote and addresses surprise medical billing by requiring negotiations between health plans and providers who could submit disputes to an independent mediator if there is an impasse. The Congressional Budget Office (CBO) estimated that the bill would save the federal government $17.77 billion over a decade. The committee also passed H.R. 5821 by voice vote.

Find more details on the markup here.

House Committee on Energy and Commerce, Subcommittee on Health: “Protecting Women’s Access to Reproductive Health Care”

Wednesday, February 12, 2020: The Subcommittee on Health of the Committee on Energy and Commerce held a legislative hearing to discuss H.R. 2975, the Women’s Health Protection Act of 2019.

Find more details on the hearing here.

Senate Committee on Aging: “There’s No Place Like Home: Home Health Care in Rural America”

Wednesday, February 12, 2020: The Senate Committee on Aging held a hearing on rural health care concerns, featuring a panel of witnesses to discuss home care and hospice care.

Find more details on the hearing here.

Senate

HHS Secretary Azar Testifies to Senate Finance on President Trump’s 2021 Budget

On Feb. 13, the Department of Health and Human Services (HHS) Secretary, Alex Azar, testified to the Senate Finance Committee during a hearing on President Trump’s fiscal 2021 budget proposal. Senate Finance Democrats asked Azar to describe the administration’s Affordable Care Act (ACA) replacement plan, but Azar said the high-profile litigation over the constitutionality of the health law is a long way from being finished and at this point, an ACA replacement is a hypothetical situation.

Bipartisan Senate Bill Introduced to Close Orphan Drug Act Cost Recovery “Loophole”

On Feb. 11, Senate Health, Education, Labor and Pension (HELP) members Bill Cassidy (R-LA) and Tammy Baldwin (D-WI) along with Sen. Jeanne Shaheen (D-NH) introduced the Fairness in Orphan Drug Exclusivity Act, a companion to the House’s bipartisan bill of the same name. The bill aims to close an Orphan Drug Act loophole that is believed to allow drug manufacturers to obtain orphan drug designation, and the corresponding seven years of exclusivity, if they claim they are unable to recover development costs on the drug.

Administration

HHS Secretary Azar Announces New Coronavirus Tracking Effort

On Feb. 13, the Department of Health and Human Services (HHS) Secretary, Alex Azar, announced that the Centers for Disease Control and Prevention (CDC) would heighten efforts to track coronavirus, including the use of the national flu surveillance tracking system with health departments in five cities to test patients with flu-like symptoms for coronavirus.

FDA Announces New Controlled Substances Program

On Feb. 12, the Food and Drug Administration (FDA) announced the launch of a program that will strengthen the FDA’s ability to pursue policies tackling drug misuse while ensuring access for patients with medical needs. The new program will facilitate work on controlled substances within and outside the FDA, acting as an “FDA liaison” to other government organizations. Its staff will provide expertise on drug applications and drug scheduling decisions.

Next month, the program will launch an opioid data warehouse integrating internal and external data sources. It will also work to address rising rates of stimulant drug overdose deaths and will hold a March 10 meeting to get patient input on treatments for stimulant use disorder.

President Trump’s Budget Includes HHS Funding Cut, Medicaid Overhaul

On Feb. 10, President Trump released his proposed budget for fiscal year 2021, which included a 9 percent cut to the Department of Health and Human Services (HHS) funding, a $96.4 billion HHS budget, down from the $105.8 billion enacted for fiscal 2020. The budget also calls for an overhaul of Medicare and Medicaid spending, projecting that initiatives cracking down on fraud, abuse and wasted spending in Medicare could generate $478.5 billion in savings over the next decade.

The Centers for Disease Control and Prevention (CDC), which is central to efforts to contain the Wuhan coronavirus, would also be in line for an 18.6 percent decrease in its discretionary budget. However, funding for immunization and respiratory diseases would get a 5 percent boost, and the prevention and public health fund would see a 4.5 percent increase under the blueprint.

The Senate Finance Committee held two days of hearings (Feb. 12 and 13) to discuss the budget proposal. Chairman of the Senate Committee on the Budget Mike Enzi (R-WY), who also serves on the Senate Finance Committee, chose not to hold a hearing on the president’s proposed budget.

Find the full budget proposal here.

FDA, FTC Collaborate to End Biosimilars Misinformation and Increase Competition

On Feb. 3, the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) announced a collaboration to advance biosimilars adoption, discourage false or misleading communications about biosimilars and deter anticompetitive behaviors.

To begin, a public meeting will be held on March 9, 2020, for input on how to increase competition for biological products.

Find the statement here.

Proposed Regulations/Guidance

CMS: Basic Health Program Funding Methodology Proposed Payment Notice for Program Year 2021

On Feb. 10, the Centers for Medicare and Medicaid Services (CMS) published the Basic Health Program proposed federal funding methodology for program year 2021. This document provides the methodology and data sources necessary to determine federal payment amounts for program year 2021 to states that elect to establish a Basic Health Program to offer health benefits coverage to low-income individuals otherwise eligible to purchase coverage through Affordable Insurance Exchanges.

Find the proposed rule here. Public comments are due by March 11, 2020.

CMS: 2021 Medicare Advantage and Part D Advance Notice Part II

On Feb. 5, the Centers for Medicare and Medicaid Services (CMS) released Part II of the Calendar Year (CY) 2021 Advance Notice of Methodological Changes for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (the Advance Notice). CMS released Part I of the Advance Notice on Jan. 6, 2020. The notice is seeking comment on whether it should develop measures of generic and biosimilar utilization that could be used to calculate a plan’s star rating, so CMS could reward plans that encourage adoption of lower-cost products.

Find the notice here.

CMS will accept comments on all proposals in the Advance Notice through March 6, 2020, before publishing the final Rate Announcement by April 6, 2020.

CMS: Contract Year 2021 and 2022 Medicare Advantage and Part D

On Feb. 5, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule that updates Medicare Advantage (MA or Part C) and the Medicare prescription drug benefit (Part D) program. Medicare Part D plans will be allowed to offer two specialty tiers on their drug formularies starting in 2021. The proposed rule requires that one of the two specialty tiers be a “preferred” tier that offers lower cost sharing for beneficiaries. The maximum allowed cost sharing for the specialty tiers would be between 25 percent and 33 percent, depending on whether the plan includes a deductible.

Drugs that cost $670 a month or more must currently be placed on one specialty tier. Allowing two tier options should give health plans leverage to work with drug manufacturers to get prices lower if the manufacturer wants to price their product at a more accessible cost to patients compared with their competitors. The proposed rule also requires Part D plans to implement by Jan. 1, 2022, a tool that will provide beneficiaries with real-time details on the cost of drugs based on their plan coverage and alternatives.

Find the proposed rule here. The rule will be published in the Federal Register on Feb. 18, 2020.

CMS: 2021 Medicare Advantage Advance Notice Part I – Risk Adjustment

On Jan. 6, the Centers for Medicare and Medicaid Services (CMS) released Part I of the 2021 Advance Notice of Methodological Changes for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies (the Advance Notice), which contains key information about proposed updates to the Part C CMS-Hierarchical Condition Categories (HCC) risk adjustment model and the use of encounter data.

Part 1 of the 2021 Advance Notice of Methodological Changes for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies proposes changes to the Part C risk adjustment model and the use of encounter data. Under the proposal, CMS proposes to calculate risk scores for 2021 by using the sum of 75 percent of the risk score calculated with the 2020 CMS-Hierarchical Condition Categories model and 25 percent of the risk score calculated with the 2017 version of the model. For 2020, CMS calculated risk scores using the sum of 50 percent of each model.

CMS also proposed changes to how it uses encounter data, or diagnostic information, in the risk adjustment calculation process. For 2021, CMS wants to calculate risk scores for Medicare Advantage plans by summing 75 percent of the encounter data-based risk score with 25 percent of the Risk Adjustment Processing System-based risk score. For 2020, CMS calculated risk scores using the sum of 50 percent of each type of data.

Find the proposed rule here. Public comments are due by March 6, 2020.

CMS: Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2021

On Jan. 31, the Centers for Medicare and Medicaid Services (CMS) released the proposed annual Notice of Benefit and Payment Parameters Rule for 2021, also known as the proposed 2021 Payment Notice. This is the second year in a row that the proposed rule has been late. 

CMS proposes to maintain the Federally Facilitated Exchange (FFE) user fee rate of 3.0 percent of premium, and the State-based Exchange on the Federal Platform (SBE-FP) user fee rate of 2.5 percent of premium based on the portion of FFE user fee-eligible costs allocated to SBE-FP activities. Alternatively, CMS is considering and seeking comment on reducing the FFE and SBE-FP user fee rate below the 2020 plan year level to reflect estimates of premium increases and enrollment decreases for the 2021 plan year, as well as potential savings resulting from cost-saving measures implemented over the last several years in hopes of reducing the user fee burden on consumers and creating downward pressure on premiums.

CMS is proposing changes to the policy regarding how drug manufacturer coupons accrue towards the annual limitation on cost sharing in response to stakeholder feedback indicating Treatment of Drug Manufacturer Coupons. CMS is proposing to amend current Medical Loss Ratio (MLR) regulations to require issuers to deduct from incurred claims the prescription drug rebates and other price concessions attributable to the issuer’s enrollees and received and retained by an entity providing pharmacy benefit management services to the issuer. CMS also proposes to clarify more generally that issuers must report expenses for services outsourced to or provided by other entities in the same manner as issuers’ expenses for non-outsourced services. These changes would help lower premiums by helping ensure that consumers’ premiums reflect the full benefit of prescription drug rebates and are not artificially inflated by outsourcing expenses.

Find the proposed rule here.

CMS: Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2020

On Jan. 17, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule for plans sold on the Health Insurance Marketplaces for the 2020 benefit year. The proposed rule sets forth payment parameters and provisions related to the risk adjustment and risk adjustment data validation programs, cost-sharing parameters and user fees for Federally Facilitated Exchanges (FFEs) and State-based Exchanges on the Federal Platform (SBE-FPs). It proposes changes that would allow greater flexibility related to the duties and training requirements for the Navigator program and proposes changes that would provide greater flexibility for direct enrollment entities, while strengthening program integrity oversight over those entities. It proposes policies that are intended to reduce the costs of prescription drugs. It includes proposed changes to Exchange standards related to eligibility and enrollment, exemptions and other related topics.

Find the proposed rule here.

Public comments are due by Feb. 19, 2020.

CMS and HRSA: Two Proposed Rules for Organ Procurement Organizations (OPOs)

On Dec. 17, two rules were proposed related to organ procurement organizations (OPOs), specifically on performance standards and the promotion of donations from living donors.

The first rule, by the Centers for Medicare and Medicaid Services (CMS), holds OPOs accountable for meeting specific performance metrics. The rule uses federal death records, which show the entire pool of potential organ donors, to calculate an OPO’s donation and transplantation rates. In addition, the proposed rule would require all OPOs to meet the donation and transplantation rates of the current top 25 percent of OPOs. CMS will be able to rank the OPOs based on their performance and make that data public, assessing them annually through a re-certification cycle.

Find the CMS rule here.

Public comments are due by Feb. 21, 2020.

The second rule, by the Health Resources and Services Administration (HRSA), attempts to eliminate financial burden on living donors. The proposed rule would allow insurers to reimburse living donors for lost wages, as well as any child care or elder care expenses they incurred during their hospitalizations for or recoveries from the donation.

Find the HRSA rule here.

Public comments are due by Feb. 18, 2020.

FDA and HHS: Proposed Rule on Canadian Drug Importation Plan

On Dec. 18, the Food and Drug Administration (FDA) and the Department of Health and Human Services (HHS) released a draft guidance on the importation of certain prescription drug imports from Canada, leaving out many specialty medications and other therapies for chronic diseases that cost patients the most. The FDA seeks request for comment on two importation pathways. One would allow states to submit proposals to the FDA to allow the importation of small molecule brand-name medicines sold at retail pharmacies, typically ones that have rebates attached to them. The draft guidance for industry lets manufacturers import the same versions of FDA-approved drugs they now sell in foreign countries. Under this second pathway, drug manufacturers would use a new National Drug Code (NDC) and sell these drugs in the U.S. at a cheaper price.

Find the proposed rule here.

Find the guidance for industry here—comments are due by March 5, 2020.

Final Regulations/Guidance

FDA: Nutrition Labeling Compliance Guide for Small Businesses

On Feb. 3, the Food and Drug Administration (FDA) issued a compliance guidance for small businesses on following the 2018 nutrition and supplement facts labeling rule issued by the FDA. The guidance explains how businesses generating less than $10 million can adhere to the new recordkeeping and formatting requirements that were established by the rule, how the nutrient values have been updated and why complying with the new rule is mandatory.

Find the compliance guidance here.

Courts

Find a comprehensive look at “Courts and Healthcare Policy in 2020” here.

SCOTUS Will Decide Feb. 21 Whether to Review ACA Case

The Supreme Court will decide whether it will hear Texas v. United States, the case claiming that the Affordable Care Act’s (ACA) individual mandate is unconstitutional and therefore the entire law may be unconstitutional, on Feb. 21. The Supreme Court already denied a request from defendants of the law to fast-track the case.

Reports

GAO: Medicaid Eligibility – Accuracy of Determinations and Efforts to Recoup Federal Funds Due to Errors

On Feb. 12, the Government Accountability Office (GAO) released a report that reviews the accuracy of states determining eligibility for Medicaid, and how this affects federal and state spending, a process overseen by the Centers for Medicare and Medicaid Services (CMS).

GAO found that federal and state audits showed several accuracy issues, some of which resulted in errors, and for decades, CMS has not recouped federal funds from states with eligibility error rates exceeding 3 percent, but plans to start in FY 2022. CMS updated its national estimate of inaccurate payments due to eligibility errors in November 2019, the first update since the Affordable Care Act (ACA) required changes to states’ processes.

Find the full report here.

GAO: Defense Health Care – Plans Needed to Ensure Implementation of Required Elements for TRICARE’s Managed Care Support Contracts

On Feb. 7, the Government Accountability Office (GAO) published a report on the Defense Department’s (DOD) TRICARE program that pays for health care services for more than 9 million beneficiaries. Congress in 2016 required DOD, among other things, to come up with a strategy to improve TRICARE that addressed 13 specific elements related to health care delivery, including provider networks, telehealth services and referrals, among others.

GAO reports that the DOD has partially implemented six of these elements. DOD leadership explained that they decided to implement each of the 13 elements separately rather than by developing a single strategy that addressed all of the elements. DOD officials explained that some of the 13 elements will be implemented through modifications to the T-2017 contracts, while others will be addressed in the fifth generation of managed care support contracts (T-5), which are expected to be awarded in 2021. While DOD has taken steps to begin implementing some of the required elements, GAO found that DOD lacks plans with specific timeframes and actions needed to fully implement all of the elements.

GAO recommends:

  • The director of the Defense Health Agency (DHA) develop and implement plans with timeframes and specific actions needed for all 13 required elements to be reflected in the TRICARE contracts.

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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