plant with roots
Feb 9, 2015

Washington Healthcare Update

This Week: President’s FY2016 Budget Request... FDA Commissioner Hamburg to step down... Tennessee Medicaid expansion plan rejected by legislature

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


House Ways and Means Committee Hosts Hearing with Treasury Secretary to Discuss POTUS FY 2016 Budget

On Feb. 3, House Committee on Ways and Means Chairman Paul Ryan (R-WI) held a hearing on President Obama’s budget proposals for fiscal year 2016. The proposed budget for the fiscal year starting Oct. 1 includes $2.1 trillion in new revenue over the next 10 years, some of that from a 19 percent minimum tax on U.S. companies’ foreign earnings. During his testimony, Treasury Secretary Jacob Lew emphasized the need for an overhaul of business taxes. Secretary Lew also said eliminating federal health insurance subsidies would be a serious disruption to health care markets. When asked about a backup plan if subsidies and, in effect, the individual mandate is gutted, Lew did not directly answer the question but said, “We obviously will look at what proposals are made (by Congress and the administration) but I’m not going to prejudge what the court does.”

Witness List

The Honorable Jacob J. Lew
Secretary of the Treasury
United States Department of Treasury

For more information or to watch the hearing, please visit

Energy and Commerce Health Subcommittee Clears Four Public Health Bills

On Feb. 4, the Energy and Commerce Subcommittee on Health, chaired by Rep. Joe Pitts (R-PA), approved four bills aimed to help patients and local communities. These bills attempt to improve transparency, reduce regulatory burdens, provide clarity and reduce costs for patients and families. Specifically, the four bills were:

H.R. 639, Improving Regulatory Transparency for New Medical Therapies Act

The Improving Regulatory Transparency for New Medical Therapies Act (to be introduced by Chairman Pitts and Ranking Members Rep. Pallone and Rep. Green) would amend the Controlled Substances Act (CSA) to require the Drug Enforcement Agency (DEA) to act on a recommendation from the Food and Drug Administration (FDA) to add a drug or substance that has never been marketed in the United States to a schedule of controlled substances within a specified period. Currently, new drug and substances that previously have not been marketed in the United States and that have abuse potential must be scheduled under the CSA by the DEA prior to being marketed.

The CSA currently provides no deadline for the DEA to act after receiving a recommendation. The amount of time the DEA has taken before acting on FDA recommendations has increased significantly in recent years, delaying the availability of these drugs and substances to patients. The legislation is based on H.R. 4299, which passed the Committee during the 113th Congress.

H.R. 471, Ensuring Patient Access and Effective Drug Enforcement Act

H.R. 471 (introduced by Rep. Marino, Rep. Blackburn, Rep. Welch and Rep. Chu) would amend the CSA to help prevent prescription drug abuse, establish clear and consistent enforcement standards and ensure that patients have access to medications by promoting collaboration among government agencies, patients and industry stakeholders. The bill is based on H.R. 4709, which passed the House in the 113th Congress.

H.R. ___, Trauma Systems and Regionalization of Emergency Care Reauthorization Act

The Trauma Systems and Regionalization of Emergency Care Reauthorization Act (to be introduced by Rep. Burgess and Rep. Green) would amend the Public Health Service Act to reauthorize Trauma Care Systems Planning Grants, which support State and rural development of trauma systems. It also would reauthorize pilot projects to implement and assess regionalized emergency care models. The legislation is based on H.R. 4080, which passed the House during the 113th Congress.

H.R. ___, Access to Life-Saving Trauma Care for All Americans Act

The Access to Life-Saving Trauma Care for All Americans Act (to be introduced by Reps. Burgess and Green) would amend the Public Health Service Act to reauthorize Trauma Center Care Grants. These grants aid hospitals in handling their substantial uncompensated care costs from traumatic injuries.

For more information, please visit


Senate Finance Committee Hosts Treasury/HHS Secretaries for Hearing on POTUS FY 2016 Budget

On Feb. 4 and 5, the Senate Finance Committee heard testimony from HHS Secretary Burwell and Treasury Secretary Jacob Lew, respectively, on the goals of President Obama’s Fiscal Year 2016 Budget. The hearings gave members the opportunity to ask the Administration about possible contingency plans in place in the event the Supreme Court invalidates the current structure of the Affordable Care Act tax subsidies later this year. As expected, debt-conscious Senate Republicans did not receive the President’s budget very well. Chairman Orrin Hatch (R-UT) said in his opening statement, “Simply put, there are too many shortcomings in the President’s budget to adequately address in my opening statement, but they include: higher taxes that would stifle job creation, economic growth, savings, and investment; new wealth taxes; muddled thinking about distributional issues; a lack of significant reforms to our unsustainable entitlements; ongoing deficits and outsized, risky federal debt; and a repackaged bank tax that nods to the ineffectiveness of the Dodd-Frank law.”

Witness List

(Feb. 4) The Honorable Sylvia Mathews Burwell
Secretary of Health and Human Services
United States Department of Health and Human Services

(Feb. 5) The Honorable Jacob J. Lew
Secretary of the Treasury
United States Department of the Treasury

For more information or to watch on the hearing, please visit

Bipartisan Legislation Introduced in Senate to Make Low-Volume and Medicare-Dependent Hospital Extenders Permanent

On Feb. 2 Senators Charles Grassley (R-IA) and Chuck Schumer (D-NY) introduced bipartisan legislation that aims to make permanent the low volume and Medicare-dependent hospital extenders that are habitually carried by legislative patches to the Sustainable Growth Rate (SGR) formula that sets physician reimbursement rates. The Rural Hospital Access Act (S. 332) would continue the two programs that have been close to the chopping block in previous years as Congress looked to cut costs. “Strong rural hospitals are essential to quality care, and they are the lifeblood of rural communities,” said Sen. Schumer in a press release. “These hospitals serve a vital public need, employ several thousands of people, and they deserve our support in their continuous efforts to provide the highest level of care to residents…. Rural hospitals need certainty that this critical funding stream will be available year after year, and this bill will do just that.” The Medicare Dependent Hospital designation helps rural hospitals that otherwise would struggle to maintain financial stability under Medicare’s fee schedule because of their small size and the large share of Medicare beneficiaries who make up their patient base. There are currently more than 200 Medicare Dependent Hospitals in 32 states, six of which are in Iowa and eight in New York. Congress enacted payment modifications to help keep these hospitals open as a critical health care source for rural Medicare beneficiaries. The Low-Volume Hospital designation similarly offers hospitals that treat a low number of beneficiaries a payment formula that recognizes the fixed costs of treating these patients relative to the prospective payment system that favors high beneficiary volume. This funding is critical to the survival of these programs because they are frequently under financial stress due to their low volume in comparison to their urban counterparts. Without an extension, these two programs will expire April 1, 2015. Medicare Dependent Hospitals and Low-Volume Hospitals are the safety-net providers for rural Americans and are extremely important to the economy of rural areas.

2. Administration

President’s FY 2016 Budget Request: Key Health Provisions

The President’s fiscal year (FY) 2016 Budget for HHS includes investments needed to support the health and well-being of the nation, and legislative proposals that taken together would save on net an estimated $249.9 billion over 10 years. An additional $38.4 billion in savings over 10 years to Marketplace subsidies will be realized in the Department of Treasury programs and accounts. The Budget proposes $83.8 billion in discretionary budget authority, an increase of $4.8 billion from FY 2015. Notable provisions include:

Ambulatory Care : The budget proposes to lower payments for services provided in off-campus hospital outpatient departments under the Outpatient PPS to either the Medicare Physician fee schedule-based rate or the rate for surgical procedures covered under the Ambulatory Surgical Center Payment system.

Bundled Payment for Post-Acute Care : Beginning in 2020, this proposal would bundle payments for post-acute care providers, including long-term care hospitals, inpatient rehabilitation facilities, skilled nursing facilities and home health. Payments would be bundled for at least half of the total payments for post-acute providers. Rates based on patient characteristics and other factors would be set so as to produce a permanent and total cumulative adjustment of -2.85 percent.


  • Allow the Secretary to base beneficiary assignment in the Medicare Shared Savings Program on a broader set of primary care providers. Beneficiaries would be able to be assigned to an ACO on the basis of services delivered by nurse practitioners, physician assistants and clinical nurse specialists.
  • Allow ACOs to pay beneficiaries for primary care visits up to the applicable Medicare cost-sharing amount.

Hospital Quality :

  • Revise the Hospital Readmissions Reduction Program to allow the Secretary to use a comprehensive Hospital-Wide Readmission Measure that encompasses broad categories of conditions rather than discrete applicable conditions. (budget-neutral implementation)
  • Extend Accountability for Hospital-Acquired Conditions to require hospitals to code conditions as “present on arrival” at a hospital instead of “present on admission” (no budget impact).

Medicare Appeals Process:

  • Expand the Secretary’s authority to retain a portion of recovery audit contractor (RAC) recoveries for the purpose of administering the recovering audit program.
  • Institute a refundable per-claim filing fee for providers, suppliers and State Medicaid agencies so HHS can invest in the appeals system to improve responsiveness and efficiency.
  • Allow Office of Medicare Hearings and Appeals to use attorney adjudicators for appealed claims below the federal district court amount in controversy ($1,460 in CY 2015), reserving Administrative Law Judges for more complex and higher amounts in controversy appeals.

For more information, please visit

CMS Finalizes Medicare Lung Cancer Coverage Screening Determination

On Feb. 5 the Centers for Medicare and Medicaid Services (CMS) released a decision memo that provides Medicare coverage for annual lung cancer screening for certain high-risk beneficiaries, including people who’ve smoked, on average, a pack a day for 30 years and people ages 55 to 77 who have quit smoking within the last 15 years. Coverage will include preventative screenings utilizing low-dose computed tomography technology. Senate Majority Leader Mitch McConnell praised the decision, “Today’s announcement is welcome news and I applaud CMS for its decision to allow Medicare to cover lung cancer screenings for patients at high-risk for developing the disease. In one way or another, cancer has touched the lives of almost every American, and ensuring seniors have access to innovative diagnostic tools and treatment options should always be a top priority.” Lung cancer is the third most common cancer and the leading cause of cancer deaths in the United States. It is an important issue for the Medicare population due to the age at diagnosis and at death. In 2013, the National Cancer Institute (NCI) estimated that the number of new cases is over 220,000, with a median age at diagnosis of 70 years.

FDA Commissioner Hamburg to Resign in March

On Feb. 5, Margaret Hamburg, Commissioner of the U.S. Food and Drug Administration (FDA) announced that she will be stepping down at the end of March, after almost six years in the position overseeing public health initiatives (such as tobacco control and food safety), personalized medicine advances and a vast array of drug approvals. In a note to staff, Commissioner Hamburg said it was “with very mixed emotions” that she planned to step down next month and that her tenure as FDA chief “has been the most rewarding of my career.” Dr. Stephen Ostroff, the FDA’s chief scientist, will fill Hamburg’s position until a new commissioner is confirmed. The Department of Health and Human Services secretary, Sylvia Burwell, said in a statement that Commissioner Hamburg “leaves a legacy of incredible, historic accomplishment at FDA.” Also worth noting, Commissioner Hamburg’s resignation comes as the agency prepares for what could be a significant transformation, spurred by initiatives in Congress to speed new drug development, and by food safety advocates, backed by the president, who in his budget called for the creation of a separate agency combining the food safety functions of the FDA and the U.S. Department of Agriculture.

Office of National Coordinator Announces Funding for Advance Interoperable Health Information Technology Services

The National Coordinator for Health Information Technology (ONC) has announced a funding opportunity, the “Advance Interoperable Health Information Technology Services to Support Health Information Exchange,” intended to leverage the investments and lessons learned from the original State HIE Program and accelerate the widespread adoption and use of health information exchange infrastructure, including transport mechanisms such as direct secure messaging, query-based exchange and consumer medicated exchange. The awards will fund efforts to provide training, education and technical assistance to support clinical and non-clinical caregivers with incorporating health information exchange into their existing workflows to improve care coordination, population management and measurement reporting. Grantees will use interstate and intrastate partnerships to enable clinical and non-clinical caregivers to send, receive, find and use a common clinical data set across unaffiliated organizations, with the goal of improving care coordination and promoting a learning environment.

Application Deadlines and Key Dates

  • Letters of Intent Due: March 2, 2015, 11:59 p.m. EST
  • Application Deadline: April 6, 2015, 11:59 p.m. EST
  • Informational Webinars: Tuesday, Feb. 24, 2015, 3-4 p.m. EST

For more information, please visit

Open Enrollment Week 11: Jan. 24, 2015 – Jan. 30, 2015

Since Open Enrollment began on Nov. 15, nearly 7.5 million consumers selected a plan or were automatically re-enrolled through the platform, which includes the Federally Facilitated Marketplace (FFM), State Partnership Marketplaces and supported State-Based Marketplaces. This week’s snapshot includes weekly and cumulative data for the FFM, cumulative data for states and for the first time, cumulative data for certain local areas. “There are just eleven days before the February 15 deadline and the end of this year’s Open Enrollment,” HHS Secretary Sylvia Burwell said. “Time is running out. Consumers should shop at for an affordable plan that fits their budget and health needs and join the millions of Americans who have signed up to date. Eighty-seven percent of those who have signed up for coverage through qualify for financial assistance to help lower the cost of their premiums.” For more information, please visit

3. State Activities

Arkansas Legislature Passes Private Option Extension

On Feb. 5, the Arkansas House of Representatives voted 82-16 to reauthorize funding through June 2016 for the “private option” plan, which was crafted two years ago as an alternative to expanding Medicaid in the state under the Affordable Care Act. Arkansas was the first state to gain federal approval from the Department of Health and Human Services (HHS) for such an approach, praised by many as a compromise for Republican-leaning states. The bill, H.B. 1147, extends the private option until June 30, 2016, so a separate short-term appropriations bill will be needed next year to cover the six-month gap. The reauthorization now heads to Republican Gov. Asa Hutchinson, who had called on lawmakers to continue the program while a proposed task force looks at alternatives for covering the more than 213,000 people currently in the program. The House approved a separate proposal setting up the task force, sending the bill to the Senate for a final vote. Thus far, 28 states and the District of Columbia have agreed to expand Medicaid under the health care law since the U.S. Supreme Court ruled in 2012 that the decision was up to states and not mandatory.

Tennessee Rejects Private-Option Medicaid Expansion

On Feb. 4, lawmakers in Tennessee voted down Gov. Bill Haslam’s alternative plan to expand Medicaid to an additional 250,000 residents under the ACA. Tennessee was widely seen as the next Republican state that could expand Medicaid under Obamacare, with Haslam negotiating with federal officials for months on an approach that included conservative policy elements. The lawmakers, members of the state Senate Health and Welfare Committee, voted 7-4 against the plan, which included setting up health reimbursement accounts to help individuals cover their out-of-pocket costs while requiring premiums and copays, and had the support of the Tennessee Hospital Association, the Tennessee Business Roundtable and the Tennessee Medical Association. Currently, 10 states with Republican governors have expanded Medicaid.

Hawaii Legislature Considering Bills to Fortify Health Exchange

In response to a decision by the Hawaii Medical Services Association (HMSA), the state’s largest insurer, to abandon participation on Hawaii Health Connector, leaving Kaiser Permanente as the only participating insurer, Hawaii Rep. Della Au Bellati introduced a bill to require insurers with at least a 20 percent share of the market to submit plans to be sold through the Connector. HMSA opposes the bill; however its proponents believe it will enhance competition. Another bill, HB 727, would require that all plans sold on the exchange meet the standards of ACA’s gold-level plans, a move some hope will help the state if the federal government ultimately runs Hawaii’s exchange. For more information, please visit

4. Regulations Open for Comment

FDA Releases Draft to Streamline Experimental Drug Applications

On Feb. 4, the Food and Drug Administration (FDA) released draft guidance, entitled Individual Patient Expanded Access Applications: Form 3926, for a new, shorter application for patient access to experimental drugs. The draft comes in response to concerns that the existing process for “compassionate use” for experimental drug applications was too arduous. In the guidance, FDA says the newly proposed form would take doctors 45 minutes to complete whereas the existing form is estimated to take 100 minutes. Under the old system, FDA required that a “cover sheet” be included with any IND submission, known as Form 1571. However, that form was originally intended to be used by companies involved in drug development, not physicians, who submit the vast majority of expanded access requests. FDA said it was “concerned” that some physicians might not understand how to complete that cover sheet “and associated documents because it is not tailored to requests for individual patient expanded access.” Peter Laurie, FDA’s associate commissioner for public health strategy and analysis, said the changes would greatly simplify the compassionate use process. The old form “called for 26 separate types of information and seven attachments,” he noted. “The new form calls for a small fraction of that. The new draft form, when finalized, will require only eight elements of information and a single attachment.” The changes announced by the agency are expected to affect a significant number of patients each year; in 2014, FDA processed 1,758 single patient investigational new drug applications and emergency investigational new drug applications—97 percent of all expanded access requests.

Comments and suggestions for the draft document should be submitted within 60 days of publication to the Federal Register to

FDA Reopens Comment Period for Certain Provisions within Generic Drug User Fee Amendments

On Feb. 6, the Food and Drug Administration (FDA) posted a Federal Register notice reopening the public docket to solicit comments on certain topics related to Generic Drug User Fee Amendments of 2012 (GDUFA) implementation and the GDUFA Commitment Letter that accompanies the legislation. FDA will reopen the comment period to the public docket associated with the Sept. 17, 2014, GDUFA Public Hearing on Policy Development for an additional 30 days. Specifically, the agency has requested public input on the five draft guidance documents that were issued to facilitate implementation of GDUFA and on future policy priorities including recommendations for additional guidance topics to facilitate GDUFA implementation. FDA also requested feedback on issues that may arise in consideration of 180-day exclusivity provided for by paragraph IV patent certifications. Finally, FDA requested feedback on the specific criteria FDA should apply to identify an abbreviated new drug application (ANDA) as a first generic eligible for expedited ANDA review. FDA will take the information presented at the public hearing and in comments to the docket into account when developing the fiscal year 2015 GDUFA priorities.

Interested persons may submit either electronic comments regarding this document to or written comments to the Division of Dockets Management by close of business March 9.

5. Reports

International Classification of Diseases: CMS’s Efforts to Prepare for the New Version of the Disease and Procedure Codes

According a recent report by GAO, has CMS has undertaken a number of efforts to prepare for the Oct. 1, 2015, transition to the 10th revision of the International Classification of Diseases (ICD-10) codes, which are used for documenting patient medical diagnoses and inpatient medical procedures. CMS has developed educational materials, such as checklists and timelines, for entities covered by the Health Insurance Portability and Accountability Act of 1996 (HIPAA)—that is, health care providers, clearinghouses and health plans, which GAO refers to as “payers”—and their support vendors. In addition, CMS has conducted outreach to prepare covered entities for the transition by, for example, holding in-person training for small physician practices in some states. CMS officials have also monitored covered entity and vendor readiness through stakeholder collaboration meetings, focus group testing and review of surveys conducted by the health care industry. CMS also reported modifying its Medicare systems and policies. For example, CMS documentation states that the agency completed all ICD-10-related changes to its Medicare fee-for-service (FFS) claims processing systems, which reflect the results of internal testing. At this time, it is not known what, if any, changes might be necessary based upon the agency’s ongoing external testing activities. CMS has also provided technical assistance to Medicaid agencies and monitored their readiness for the transition. For example, all Medicaid agencies reported that they would be able to perform by the transition deadline all the activities that CMS has identified as critical; however, as of November 2014, not all agencies have started to test their systems’ abilities to accept and adjudicate claims containing ICD-10 codes.

Mental Health: HHS Leadership Needed to Coordinate Federal Efforts Related to Serious Mental Illness

According a GAO report released Feb. 6, interagency coordination for programs supporting individuals with serious mental illness is lacking. HHS is charged with leading the federal government’s public health efforts related to mental health, and the Substance Abuse and Mental Health Services Administration is required to promote coordination of programs relating to mental illness throughout the federal government. In the past, HHS led the Federal Executive Steering Committee for Mental Health, with members from across the federal government. However, the steering committee has not met since 2009. HHS officials told us that the Behavioral Health Coordinating Council (BHCC) performs some functions previously carried out by the steering committee. The BHCC, however, is limited to HHS and is not an interagency committee. Other interagency committees were broad in scope and did not target individuals with serious mental illness. Staff for the majority of the programs targeting serious mental illness reported taking steps to coordinate with staff in other agencies. While coordination at the program level is important, it does not take the place of, or achieve the level of, leadership that GAO has previously found to be key to successful coordination and that is essential to identifying whether there are gaps in services and if agencies have the necessary information to assess the reach and effectiveness of their programs.

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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