CONSISTENTLY DELIVERS

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Oct 6, 2014

Washington Healthcare Update

1. Congress

House of Representatives

  • District Work Period -- No Legislative Activity
  • House E&C Oversight Subcommittee to Hold Upcoming Hearing on Ebola Containment

Senate

  • State Work Period -- No Legislative Activity

2. Administration

  • Continuing Resolution Allows FDA to Collect Drug Compounding Fees
  • CMS Open Payments Data Shows U.S. Physicians Paid $3.5 Billion by Drug and Device Companies in 2013
  • CMS Releases FY 2013 Medicare RAC Report; RACs Collect $3.65 Billion in Overpayments
  • FDA Awards $19 Million in Grants for Rare Disease Treatments

3. State Activities

  • Indiana Governor Sends Letter to President Asking to Discuss Alternative Medicaid Expansion Proposal, HIP 2.0
  • Montana Legislator Introduces Plan to Expand Medicaid Eligibility without Federal Funding

4. Regulations Open for Comment

  • CMS Seeks Stakeholder Input on Innovative Health Plan Designs
  • OIG Proposed Rule Would Expand Medicare Anti-Kickback Statute Safe Harbors

5. Reports

  • GAO Issues Legal Brief Affirming Congress to Include Insurer User Fees in FY 2015 HHS Budget
  • GAO: Largest Issuers of Health Coverage Participated in Most Exchanges, and Number of Plans Available Varied
  • GAO Report: Integration of Benefits for Disabled Dual Beneficiaries May Not Produce Medicare Savings
  • Compounded Drugs: TRICARE's Payment Practices Should Be More Consistent with Regulations

1. Congress

House

House E&C Oversight Subcommittee to Hold Upcoming Hearing on Ebola Containment

The House Energy and Commerce Subcommittee on Oversight and Investigations, chaired by Rep. Tim Murphy (R-PA), has scheduled an upcoming hearing to investigate the Ebola outbreak and the U.S. government's preparedness and response efforts. The hearing, titled "Examining the U.S. Public Health Response to the Ebola Outbreak," will be held on Thursday, Oct. 16, 2014, at noon in Room 2123 of the Rayburn House Office Building. "As the Ebola outbreak becomes a growing public health concern here in the U.S., the Energy and Commerce Committee is reviewing all aspects of the federal response. From the decisions of the Centers for Disease Control and Prevention to airline passenger screening procedures by Customs and Border Patrol, our goal is to ensure every step necessary is being taken to contain and prevent the spread of this disease and protect public health," said Chairman Murphy. "We look forward to hearing directly from CDC Director Frieden about current efforts and whether those are sufficient to stop the spread of this deadly disease and ensure health and safety of all Americans."

Witness List

Dr. Tom Frieden
Director, Centers for Disease Control and Prevention

Dr. Anthony Fauci
Director of the National Institute of Allergy and Infectious Disease at the National Institutes of Health

Additional witnesses will be announced.

More information on the hearing can be found at energycommerce.house.gov.

Senate

State Work Period -- No Legislative Activity

2. Administration

Continuing Resolution Allows FDA to Collect Drug Compounding Fees

On Sept. 19, President Obama signed a continuing resolution (CR), Continuing Appropriations Act, 2015 (H.J.Res. 124), funding the Department of Health and Human Services (HHS), including National Institutes of Health, at 99.9 percent of its FY2014 levels until Dec. 11, 2014. Beyond funding the agency, the CR added a funding provision that allows FDA to collect new drug compounding user fees imposed by the Drug Quality and Security Act (DQSA). DQSA created a new category of outsourcing facilities that are subject to federal requirements, including fees, the first of which are due starting Oct. 1. The CR, which also includes $58 million in funding to HHS to advance the development of a countermeasure and produce advanced research for combating the Ebola outbreak and $30 million to support the Centers for Disease Control and Prevention's (CDC) response to the Ebola virus in Africa, grants a request on the White House Office of Management and Budget's (OMB) list of proposed spending and authorization changes. "Under the DQSA, the Food and Drug Administration is not authorized to collect user fees from outsourcing facilities ... until those fees are appropriated," OMB says in its justification for the budget anomaly. "Without the anomaly to collect the fee, firms that select to register as outsourcing facilities would not be able to do so because payment of the annual establishment fee is a condition of registration." The fiscal 2015 rates for DQSA user fees are $5,103 for small businesses, $16,442 for non-small businesses and $15,308 for facility re-inspections.

CMS Open Payments Data Shows U.S. Physicians Paid $3.5 Billion by Drug and Device Companies in 2013

On Sept. 30, the Centers for Medicare and Medicaid Services (CMS) released interactive data detailing 4.4 million payments from drug and device companies to about 550,000 physicians and 1,360 teaching hospitals from August to December 2013. The payments to physicians, totaling about $3.5 billion, were posted for public viewing on CMS's new open payment website. Section 6002 of the Affordable Care Act (ACA) (also known as the Sunshine Act) requires manufacturers of covered drugs, devices, biologicals and medical supplies to report to CMS any payments or gifts (valued at $10 or more) they make to teaching hospitals or physicians. Group-purchasing organizations must also disclose doctors' ownership and investment interests in their companies. Although this is the first time that payment data has been required by all drug and device makers, the payment disclosures released have been widely criticized for several shortcomings, including the short five-month time window for payments, the lack of an identifiable payment receiver in 40 percent of the data and the absence of historical data for comparison. Also worth noting, CMS revealed that about 190,000 research payments during the August-to-December 2013 period have not yet been made public, as companies were permitted to delay the release of information about research payments for products that haven't been approved, or for new uses of existing products. CMS contends the program aims to provide increased transparency as disclosures can be an important tool to help limit drug and device makers' influence on doctors.

CMS Releases FY 2013 Medicare RAC Report; RACs Collect $3.65 Billion in Overpayments

On Sept. 29 the Centers for Medicare and Medicaid Services (CMS) released its annual report to Congress detailing improper payments resolved by its four Recovery Audit Contractors (RAC) programs in FY 2013. The report discloses that of the 1.4 million claims filed, RACs identified $3.65 billion in overpayments in FY 2013 as well as $102.4 million in underpayments to be returned to providers. After accounting for RAC shares of the recouped funds, which can range from 9 percent to 12.5 percent, as well as underpayments and appeals costs, CMS recouped $3 billion for Medicare's trust fund. Also worth noting, the report found that RACs blocked $22 million in improper payments from being made in the prepayment review demonstration program operational in 11 states. The report, which is required under Section 1893(h) of the Social Security Act, showed that RACs received high accuracy scores (92 percent) from the Recovery Audit Validation Contractor (RVC), an independent contractor tasked with reviewing random samples of claims denied by RACs. Current contracts in the Medicare Fee-For-Service RAC program were set to expire in February, however a January CMS announcement noted that they will be extended several months.

FDA Awards $19 Million in Grants for Rare Disease Treatments

On Sept. 30, the U.S. Food and Drug Administration (FDA) announced it has awarded 15 grants totaling more than $19 million to boost the development of medical device, drug and biological products for patients with rare diseases, with at least a quarter of the funding going to studies focused solely on pediatrics. The FDA awards grants for clinical studies on safety and/or effectiveness of products that could either result in, or substantially contribute to, approval of the products. The program is administered through the FDA's Orphan Products Grants Program. This program was created by the Orphan Drug Act, passed in 1983, to promote the development of products for rare diseases. Since its inception, the program has given more than $330 million to fund more than 530 new clinical studies on developing treatments for rare diseases and has been used to bring more than 50 products to marketing approval. For more information, please visit  www.fda.gov.

3. State Activities

Indiana Governor Sends Letter to President Asking to Discuss Alternative Medicaid Expansion Proposal, HIP 2.0

While the comment period for Indiana's Medicaid Expansion proposal ended on Sept. 21, the state's Republican Gov. Michael Pence requested to discuss his "alternative" Medicaid plan, Health Indiana Plan (HIP 2.0), with President Obama during his visit the governor's state on Friday. In an open letter released on Oct. 2, Gov. Pence told the president that negotiations with federal officials to extend Medicaid to an additional 350,000 lower-income Hoosiers have stalled over a key provision: The state's desire to require the low-income participants in the federal-state insurance program to pay premiums toward the cost of their coverage. "The proposal we have before HHS is not based on an untested idea, but a program that has already achieved results for on average 45,000-50,000 individuals annually since 2008. Your administration has approved the continuation of the Healthy Indiana Plan on two occasions already and is very familiar with the program. We are now simply asking to expand coverage for more uninsured in our state the Indiana way. Since its inception, the Healthy Indiana Plan has empowered its members to take greater personal ownership over their health care decisions and become more cost-conscious consumers of health care services," the letter says. Under the governor's current Medicaid proposal, new beneficiaries in the program who earn slightly under the federal poverty level would be required to pay $15 a month in premiums, or forfeit benefits such as dental and vision care. Participants who are a little above the federal poverty line, or around $11,700 for a single person, must pay $25 a month, and they could be locked out from coverage for six months if they fall behind in their payments. In response to the letter, President Obama briefly met with Gov. Pence, during his short trip to Evansville, Indiana. The two discussed the President's willingness to work with state officials in Indiana to expand Medicaid; a lengthier conversation is likely to happen on Oct. 6 when Gov. Pence meets with HHS Secretary Sylvia Mathews Burwell in Washington.

Montana Legislator Introduces Plan to Expand Medicaid Eligibility without Federal Funding

On Sept. 23, Senate Majority Leader Art Wittich (R-Bozeman) of the Montana State Senate released a proposal to revamp and expand Medicaid coverage for low-income residents in the state, without requiring federal dollars offered to the states through the Affordable Care Act (ACA). Under the plan, childless, able-bodied adults earning below 100 percent of the federal poverty level, while still ineligible for Medicaid coverage, would get access to subsidized, private health insurance policies if they had employment. The 125,000 low-income people covered by Medicaid would get free primary care at federally funded health clinics or through contracted physicians, who would be paid a set fee for each patient in the system. Furthermore, uninsured residents who earn between 100 percent and 400 percent of the poverty line could also get subsidies. Majority Leader Wittich is offering his plan as a potential compromise to Democratic calls to accept federal dollars to expand Medicaid coverage to everyone in Montana earning less than 138 percent of the federal poverty level ($16,100 a year for a single person). Majority Leader Wittich said his plan can help "bridge the gap" for coverage for low-income Montanans, and that insisting on a full Medicaid expansion could yield no plan at all. Previously, the GOP-controlled 2013 legislature rejected Medicaid expansion; Republicans are expected to retain control of the 2015 legislature as well. More information on the plan can be found in the Billings Gazette.

4. Regulations Open for Comment

CMS Seeks Stakeholder Input on Innovative Health Plan Designs

On Oct. 2, the Centers for Medicare and Medicaid Services issued a request for information (RFI) for input from health plans and other stakeholders to explore innovative ways to improve Medicare. The CMS specifically would like information about stand-alone Medicare prescription drug plans (PDPs), Medigap and retiree supplemental health plans, Medicare Advantage and Medicare Advantage prescription drug plans, and Medicaid managed care plans. The request is intended to help CMS improve Medicare plan design, care delivery, beneficiary and provided engagement, and network design. CMS would like to receive the information by Nov. 3.

OIG Proposed Rule Would Expand Medicare Anti-Kickback Statute Safe Harbors

The Department of Health and Human Services Office of the Inspector General (OIG) released a proposed rule (RIN 0936-AA06) on Oct. 2 that would add new safe harbors to the anti-kickback statute covering some Medicare Part D activities and expand the list of conduct exempted from civil monetary penalties (CMPs). The proposed rule would cover a variety of behaviors, including: pharmacy cost-sharing waivers for impoverished Medicare Part D beneficiaries; cost-sharing waivers for emergency ambulance services offered by state or municipal-owned organizations; manufacturer discounts for drugs provided through the Medicare Coverage Gap Discount Program; and certain interactions between Medicare Advantage plans and federally qualified health centers (FQHCs). Lewis Morris, former chief counsel to the OIG, said the rule illustrates that the "inspector general is really working hard to find ways to promote quality of care in an integrated delivery system while still protecting the integrity of the program and its beneficiaries." Comments on the proposed rule are due Dec. 2.

5. Reports

GAO Issues Legal Brief Affirming Congress to Include Insurer User Fees in FY 2015 HHS Budget

The Government Accountability Office (GAO) issued a legal opinion Sept. 30 asserting that Congress must include language in its FY 2015 appropriations to allow the Department of Health and Human Services (HHS) to expend insurer user fees to cover health insurance company losses in 2015 under the Affordable Care Act's (ACA) risk corridor program. Section 1342 of the ACA directs HHS to establish and administer a temporary risk corridors program to limit the losses and gains of qualified health plans participating in the exchanges in calendar years 2014, 2015 and 2016. HHS has FY 2015 funding until Dec. 11, 2014, through a Continuing Appropriations Act, 2015 ( H.J.Res. 124), signed into law by President Obama on Sept. 19. As it stands, the risk corridor program was initially anticipated to be budget-neutral, but many believe that insurers may incur greater losses for 2014 than expected because more Americans with significant health problems disproportionately enrolled in the health insurance exchanges. House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Senate Budget Committee Ranking Member Jeff Sessions (R-AL) requested the brief from GAO.

GAO: Largest Issuers of Health Coverage Participated in Most Exchanges, and Number of Plans Available Varied

According to a report from GAO released Sept. 29, most of the largest issuers of health coverage from 2012 participated in the exchanges that the Patient Protection and Affordable Care Act (PPACA) required be established in all states in 2014. Previously, in 2012, while a large number of issuers participated in state individual and small-group markets, a small number of these participating issuers held a majority of the market share in terms of enrollment. In 2014, for both those exchanges serving the individual market and those serving the small-group market, in more than two-thirds of the states, the issuer with the largest share of the 2012 market participated in the 2014 exchange. In addition, in most states, other larger issuers with a 5 percent or more share of the 2012 market participated in the 2014 exchanges. Most smaller issuers with less than 5 percent of the 2012 market did not participate in the 2014 exchanges, although in many states more than one of these smaller issuers did participate. In addition, some issuers that participated in a 2014 individual or small-business exchange had not offered coverage in the respective 2012 market, although they may have offered coverage in other markets within the same state. In most states, for 2014, the issuers participating in the exchanges represented a mix of larger issuers, smaller issuers and issuers new to that market.

GAO Report: Integration of Benefits for Disabled Dual Beneficiaries May Not Produce Medicare Savings

On Sept. 29, the Government Accountability Office (GAO) released a report revealing that integrated care for disabled dual-eligible beneficiaries (patients eligible for both Medicare and Medicaid) may not lower the use of costly Medicare services. Although using special needs managed care plans and integrating benefits might improve care outcomes, the GAO report noted that it wouldn't necessarily reduce dual-eligible beneficiaries' Medicare spending when compared to Medicare spending in settings without integrated benefits. The report, titled "Disabled Dual-Eligible Beneficiaries: Integration of Medicare and Medicaid Benefits May Not Lead to Expected Medicare Savings," said that dual-eligible special needs Medicare Advantages plans designed to target the needs of dual-eligible beneficiaries often met criteria for high quality but had limited experience serving disabled dual-eligible beneficiaries or demonstrating Medicare savings. "These results suggest that CMS's expectations regarding the extent to which integration of benefits will produce savings through lower use of costly Medicare services may be optimistic," the report said. "Whether CMS and participating states will be able to improve quality without increasing overall program spending for disabled dual-eligible beneficiaries is uncertain." Moreover, GAO found that because Medicare and Medicaid are each responsible for covering certain services for dual-eligibles, there may be little incentive for one program to help control costs in the other program. CMS integrated a financial alignment demonstration for dual-eligible beneficiaries in 2011, and currently 12 states have been approved to participate in the demonstration, and four states have active proposals pending. In 2009, about 4 million dual-eligibles were younger than 65 and qualified for Medicare, costing Medicare and Medicaid about $103 billion for providing care.

Compounded Drugs: TRICARE's Payment Practices Should Be More Consistent with Regulations

The Department of Defense's (DOD) TRICARE program paid for about 465,000 compounded drug prescriptions through its pharmacy benefit in fiscal year 2013; these prescriptions represented 0.3 percent of all prescription drugs paid for through TRICARE's pharmacy benefit in that year. However, according to a GAO report released Oct. 2, TRICARE could not identify compounded drug prescriptions paid for through its medical benefit, which pays for drugs administered to patients in outpatient or inpatient settings, because claim forms for outpatient and inpatient drugs lack specific billing codes. In addition, TRICARE's payment practices for certain compounded drugs under its pharmacy and medical benefit are inconsistent with TRICARE regulations and are typically more generous than those of Medicare and the Department of Veterans Affairs (VA). GAO recommends that DOD align TRICARE's payment practices for compounded drugs with applicable regulations governing the TRICARE program. DOD concurred with GAO's recommendation and VA generally agreed with GAO's conclusions. HHS and VA provided technical comments that GAO incorporated as appropriate. 


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

Stephanie Kennan, Senior Vice President
Charlyn Iovino, Vice President
Brian Looser, Assistant Vice President
Amanda Anderson, Research Assistant

Founded in 1998, McGuireWoods Consulting LLC (MWC) is a full-service public affairs firm offering state and federal government relations, national/multistate strategies, infrastructure and economic development, strategic communications and grassroots issue management services. McGuireWoods Consulting is a subsidiary of the McGuireWoods LLP law firm and in 2010 was ranked in the Top 20 of The National Law Journal's "The Influence 50," an annual report of the top public affairs firms in Washington, D.C.

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