Washington Healthcare Update

February 27, 2017

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This Week: The House and Senate were in recess for President’s Day.

1. Congress

House

Senate

2. Administration

3. Courts

4. State Activities

5. Regulations Open for Comment

1. Congress

House

House Draft ACA Replacement Bill Leaked

On Friday, Feb. 24, adraft House Republican repeal bill was leaked. The bill would remove the foundations of theACA, the individual mandate, subsidies based on people’s income, and all ofthe law’s taxes. It would significantly roll back Medicaid spending andgive states money to create high risk pools for some people withpre-existing conditions. Some elements would be effective right away,others not until 2020.

The replacement would be paid for by limiting tax breaks on generous healthplans people get at work—an idea that is similar to the Obamacare “Cadillactax” that Republicans have fought to repeal.

In place of the Obamacare subsidies, the House bill starting in 2020 wouldgive tax credits based on age instead of income. For a person under age 30,the credit would be $2,000. That amount would double for beneficiaries overthe age of 60, according to the proposal. A related document notes that HHSSecretary Tom Price wants the subsidies to be slightly less generous formost age groups.

The Republican plan would also eliminate Obamacare’s Medicaid expansion in2020. States could still cover those people if they chose but they’d get alot less federal money to do so. And instead of the current open-endedfederal entitlement, states would get capped payments based on the numberof Medicaid enrollees.

The proposal includes $100 billion in “state innovation grants” to helpsubsidize extremely expensive enrollees. That aims to address at least aportion of the “pre-existing condition” population, though without the samebroad protections as in the Affordable Care Act.

According to the document, there’s only one single revenue generator to payfor the new tax credits and grants. Republicans are proposing to cap thetax exemption for employer sponsored insurance at the 90th percentile ofcurrent premiums. That means benefits above that level would be taxed.

The proposal also includes penalties for individuals who fail to maintaincoverage continuously. If their coverage lapses and they decide tore-enroll, they would have to pay a 30 percent boost in premiums for ayear. Like the unpopular individual mandate, that penalty is designed todiscourage individuals from waiting until they get sick to get coverage.

The exact details of any legislation will also be shaped by findings fromthe CBO about how much it will cost and what it will do to the federaldeficit.

House Panel to Markup Medical Malpractice Legislation

The House Judiciary Committee is set to take uplegislationon Feb. 28 imposing broad limits on medical malpractice lawsuits.

The bill, which is scheduled forfull committee markupon Feb. 28, proposes tightening the statute of limitations for malpracticesuits, capping certain damage awards and restricting attorneys’ fees. Thelegislation also shields providers from prescription drug lawsuitsinvolving FDA-approved drugs.

Health care companies have long urged for a sweeping overhaul of themedical malpractice system, arguing that it now encourages attorneys to suein hopes of big paydays. But trial attorney groups counter that tighteningthe rules around malpractice suits would prevent injured patients frombeing adequately compensated for a provider’s negligence.

The bill in front of the Judiciary Committee would require patients to filesuit within three years of an injury and cap noneconomic damages such aspain and suffering awards at $250,000. Attorneys would only be able tocollect up to a fixed percentage of a plaintiff’s total award.

House Begins User Fee Hearings This Week

The House Energy and Commerce health subcommittee will hold its firsthearing on reauthorization of the FDA user fee programs this week.

TheMarch 2 hearingwill focus on the generic drug and biosimilar user fees programs. Abouthalf of the FDA’s annual budget is funded by fees paid by drug and devicemakers, and those industry agreements must be reauthorized by Sept. 30.

At the hearing, the committee will also consider a drug pricing bill,H.R. 749, meant to encourage drug companies to develop generic medicines amidshortages or absence of competition. The bill is targeted at high-pricedolder drugs that have lost patent protection.

The committee earlier this month postponed a markup on the bill becauseDemocrats wanted it thoroughly vetted in subcommittee instead of fasttracked for a vote.

Republicans Postpone Obamacare Subsidies Lawsuit

The Trump administration and House Republicans have put a pause on thelegal dispute over the constitutionality of billions of dollars inObamacare subsidies to consider what to do now with the court case startedby House Republicans against the Obama administration.

The two sides said they need another three months to come to a resolution,according to a Feb. 21 appellate court filing. The subsidies were subjectto a court battle between House Republicans and the Obama administration.The House argued that the payments to insurers were illegal becauseCongress never appropriated the money. The payments reduce the deductiblesand copays for more than half of enrollees on the Obamacare exchanges.

A district court judge last year ruled in favor of the House, finding thesubsidies were illegal and must stop. However, she stayed her decision, andthe Obama administration filed an appeal.

Now that the White House has changed hands, House GOP lawmakers are in theuncomfortable situation of suing Health Secretary Tom Price, who took overafter Burwell and is one of their own.

The agreement delays any further proceedings until at least May 22, withthe requirement that HHS and House Republicans file status reports every 90days on whether to continue the pause.

Congressional Republicans have recently indicated they are leaning towardtemporarily funding the subsidies if the White House decides against alegal challenge, for fear of destabilizing the health care system beforethey can repeal and replace Obamacare.

Senate

Sens. Booker and Casey Seek to Revive Drug Importation Bill

Democratic Sens. Cory Booker (NJ) and Bob Casey (PA) are circulating adrugimportation draft bil authored by Sen. BernieSanders (I-VT) in a search for more cosponsors before they introduce themeasure on Feb. 28. The senators had previously been reluctant to supportdrug importation as a way to address the high cost of prescriptionmedicines but are now joining with Sanders in a bid to revive the idea.

Booker and Casey’s involvement could be critical in advancing thelegislation. Both lawmakers voted against a drug importation amendment thatSanders and Sen. Amy Klobuchar (D-MN) offered during the Senate budgetdebate in January. They were among 13 Democrats who opposed the measurewhile 12 Republicans voted yes—the amendment failed 46-52. President DonaldTrump has also endorsed importing drugs from countries where they oftensell for less than in the United States.

Booker and Casey’s latest proposal more thoroughly addresses safetyconcerns surrounding importation, an issue that kept them from supportingthe previous Sanders amendment.

For more information on the bill, clickhere.

Senator Murkowski Won’t Vote To Repeal Medicaid Expansion

Alaska Sen. Lisa Murkowski (R-Alaska)—a key swing vote on repealingObamacare—says she won’t vote to strike the law’s expansion of Medicaid orsupport legislation to pull funding for Planned Parenthood as part ofefforts to repeal the law. Speaking about Medicaid to the AlaskaLegislature on Feb. 22, Murkowski said, “So as long as this Legislaturewants to keep the expansion, Alaska should have that option, so I will notvote to repeal it.” Medicaid expansion in Alaska, which was adopted by Gov.Bill Walker in 2015 via executive order, covers nearly 30,000 people in thevery rural, high-cost state.

On Planned Parenthood, Murkowski said she does not believe the organizationshould be part of Congress’ deliberations on the Affordable Care Act. “Iwill not vote to deny Alaskans access to the health services that PlannedParenthood provides,” she said.

Senate Republicans can handle only a few defections on repeal, and agrowing group of Republican senators whose states took up the ObamacareMedicaid expansion are expressing concern about its elimination.

2. Administration

President Trump Orders Agencies to Identify Rules for Elimination

On Feb. 24, President Donald Trump ordered federal agencies to beginidentifying rules for elimination—a move he presented as part of his largerassault on regulations he said damage the economy. The executive order hesigned in the Oval Office directs each federal agency to set up a“regulatory reform task force” to review an agency’s existing regulationsand search for rules to repeal or modify. The task forces in particularwill be directed to “focus on eliminating costly and unnecessaryregulations,” according to a White House official.

The orders come on top of one of the Trump administration’s first acts uponhis inauguration issuing a blanket freeze on regulatory actions across thegovernment, similar to the stoppage imposed when Barack Obama first tookoffice.

White House Releasing Budget Outline in Mid-March

The Trump administration plans to release its fiscal 2018 budget outline bythe second week of March, offering the first detailed look at prioritiesfor the president’s first year. White House spokesman Sean Spicer confirmedFeb. 22 that the administration aims to release its budget around March 13.Congressional budget writers were also told to expect President DonaldTrump’s outline in that timeframe.

The plan—the “skinny budget”—is the first draft of Trump’s full budgetproposal, which is expected later this spring. In broad strokes, it willlikely lay out where Trump plans to increase spending, and which programshe will roll back.

CMS Extends Deadline for 2016 Physician Quality Reporting System (PQRS) Electronic Health Record (EHR) Submission

CMS is extending the submission deadline for 2016 Quality ReportingDocument Architecture (QRDA) data submission for the EHR reportingmechanism of the Physician Quality Reporting System (PQRS) program.Individual eligible professionals (EPs), PQRS group practices, qualifiedclinical data registries (QCDRs) and qualified EHR data submission vendors(DSVs) now have until Friday, March 31, 2017, to submit 2016 EHR data viaQRDA. The deadline is extended to March 31, 2017, for EPs to electronicallyreport electronic Clinical Quality Measures (eCQMs) for the Medicare EHRIncentive Program.

For more information,click here.

CMS to Hold Q&A Session on March 8

On Wednesday, March 8, 2017, from 1:00 p.m. to 2:00 p.m. (EST), CMS will behosting a live question and answer (Q&A) session. The session will openwith a brief presentation, then the Open Payments team will be available torespond to questions.

To be able to ask a question or view the presentation, participants must goonline and register at least 15 minutes prior to when the webinar begins.Participants will still have the ability to call in and listen only.

To register for the session,click here. After registration, participants will receive an email with instructionson how to join the call and ask a question.

To listen only, call 1-844-396-8222 and enter the meeting number (903 123962) when prompted.

3. Courts

Judge Blocks Texas From Cutting Planned Parenthood Medicaid Funding

On Feb. 21, a federal judge issued an injunction blocking Texas fromcutting Medicaid funding for Planned Parenthood. The state tried to cutfunding last month but U.S. District Judge Sam Sparks delayed the cutsuntil he issued a decision. In his ruling, Sparks said the state “likelyacted to disenroll qualified health care providers from Medicaid withoutcause.” He added, “such action would deprive Medicaid patients of theirstatutory right to obtain health care from their chosen qualifiedprovider.”

Texas, along with a handful of other Republican-controlled states, hastried to cut Planned Parenthood’s funding since anti-abortion activistsreleased undercover videos in 2015 allegedly showing officials from theorganization negotiating prices for fetal tissue. Investigations into thevideos concluded with no criminal charges.

To see the ruling,click here.

4. State Activities

Florida: “Eyeball Wars” Restart After Optometry Bill Filed

Florida’s “eyeball wars” have flared up again after a state senator filed abill that would expand the scope of practice for Florida optometrists,giving them the go-ahead to cut, inject, freeze, suture, vaporize or photodisrupt eye tissue. Filed by Senate Appropriations Chairman state Sen. JackLatvala, SB 1168 wouldalso give optometrists the ability to work on eyelids, eyebrows, the liningof the eyelids and the lacrimal apparatus, or the organs responsible forthe production and drainage of tears. The Florida Optometric Associationhas hired a team of well-connected lobbyists, including Michael Corcoranand Bill Rubin. Former Senate President Don Gaetz coined the phrase eyeballwars to describe the multi-year effort by the optometrists to expand theirscope of practice to include administering and prescribing controlledsubstances for the treatment of glaucoma. Ophthalmologists opposed themove.

Kansas: Kansas House Endorses Medicaid Expansion

On Feb. 22, the Kansas House of Representatives overwhelmingly endorsedObamacare’s Medicaid expansion, providing an unexpectedly strong sign ofsupport for the program in the deep red state.

State lawmakers in the lower chamber voted 85-40 on anamendmentthat would expand coverage to low-income adults earning up to 133 percentof the federal poverty level. The vote was to add the Medicaid expansionamendment to a separate piece of legislation, which has not yet beenapproved by the Senate.

The Kansas House approved the amendment just days after a separate billexpanding Medicaid was tabled in committee, leading observers to believe itwould not pass during the current legislative session. It is unclearwhether the underlying bill will make it through the Kansas state Senate,which also has a GOP majority. Gov. Sam Brownback strongly opposes Medicaidexpansion.

Oregon: Oregon Medicaid Enrollment Down

Oregon’s Medicaid population has dropped, and it is unclear why. Data fromthe Oregon Health Authority shows January enrollment at 956,790, an 11percent drop from 10 months earlier, when enrollment in March stood at1,076,833. Enrollment in Oregon’s state-run coordinated care organizations,or CCOs, dropped by 133,322 in that same period. An improved economy,operational challenges and public apathy may be culprits.

To see the data,click here.

Texas: Lawmaker Pushing Legislation for Gun Ban in Psychiatric Hospitals

A Texas lawmaker is pushing legislation that would reinstate a ban on gunsin state-run psychiatric hospitals. Firearms were previously prohibited inthe state-run institutions until a law passed in 2015 lifted the ban. Thelaw created penalties for local government facilities that posted “no gun”signs on public buildings without authorization to do so, forcing thestate-run hospitals to lift their restrictions. Republican state Rep.Andrew Murr is the sponsor of the bill to reinstate the ban, House Bill 14.

5. Regulations Open for Comment

CMS Proposes Rule for Prosthetics and Orthotics Suppliers

On Jan. 11, CMS issued a proposed rule that would implement statutoryrequirements and specify: the qualifications needed for practitioners tofurnish and fabricate prosthetics and custom-fabricated orthotics, and forqualified suppliers to fabricate prosthetics and custom-fabricatedorthotics; accreditation requirements that qualified suppliers must meet inorder to bill for prosthetics and custom‑fabricated orthotics; requirementsthat an organization must meet in order to accredit qualified suppliers tobill for prosthetics and custom-fabricated orthotics; and a timeframe bywhich qualified practitioners and qualified suppliers must meet theapplicable licensure, certification and accreditation requirements. Thisrule would also remove the exemption from quality standards andaccreditation that is currently in place in accordance with Section1834(a)(20) of the Act for certain practitioners and suppliers who furnishor fabricate prosthetics and custom‑fabricated orthotics. In addition, thisrule also includes authority for the Centers for Medicare & MedicaidServices (CMS) to revoke the Medicare enrollment of Durable MedicalEquipment, Prosthetics, Orthotics and Supplies (DMEPOS) suppliers that submit claims for items that donot meet the requirements of the statute and this proposed rule.

Only qualified practitioners who furnish or fabricate prosthetics andcustom‑fabricated orthotics and qualified suppliers that fabricate or billfor prosthetics and custom‑fabricated orthotics would be subject to theserequirements.

CMS will accept comments on the proposed rule until March 13, 2017, andwill respond to comments in a final rule.

To see the proposed rule,click here.

FDA Releases Draft Guidance for Interchangeable Biosimilars

On Jan. 17, FDA outlined the criteria companies must meet to get a copycatbiologic deemed interchangeable with its branded counterpart, acertification that paves the way for the cheaper products to beautomatically substituted at the pharmacy level under state laws.

To get this designation, a biosimilar sponsor must show that its productcan be expected to produce the same clinical result as the branded biologicin any given patient, for all of the drug’s approved uses, and that thereare no risks if a patient is switched back and forth between theinterchangeable biosimilar and the branded biologic,per draft guidancereleased by FDA.

Interchangeable biosimilars are expected to offer greater savings to thehealth system than biosimilars that lack this designation. Without theinterchangeability designation a doctor must proactively write aprescription for the biosimilar.

The guidance outlines the types of studies and scientific data thatcompanies will need to submit to FDA to get an interchangeable designation.When companies seek that designation, FDA recommends they seek approval forall of the branded biologic approved uses.

FDA is requesting comments on the draft guidance as well as a number ofquestions outlined in aFederal Register notice. FDA wants to know how it should regulate manufacturing changes ofinterchangeable products that occur after approval. The agency also wantsto know how it should handle interchangeable designations if a brandedbiologic gets another use approved for the drug, after the interchangeablebiosimilar is cleared by FDA.

FDA Releases Draft Guidance on Off-Label Drug Communication

On Jan. 17, FDAissued draft guidancethat gives drug and device companies more flexibility to communicateoff-label information about their products and avoid charges ofmisbranding. The new policy allows companies to promote a drug or devicewith information not on the agency-approved label as long as thatinformation is truthful and non-misleading and is consistent withFDA-approved labeling.

Companies have asked FDA for clarity on marketing policies after a 2012U.S. Court of Appeals decision ruled that under the First Amendment thegovernment could not prohibit and criminalize the truthful off-labelpromotion of FDA-approved drugs.

The guidance outlines how FDA will determine whether a company’scommunication is consistent with FDA’s required labeling. For example,companies will not be permitted to communicate information about the drugor device related to a use that has not yet been approved by FDA. They alsocan’t promote a patient population for the drug or device that has not beencleared by the agency.

The agency offers some examples of information companies could communicatethat could be consistent with its FDA-required labels. For example, FDAsaid companies can promote testimony of patients who used the drug for itsFDA-approved uses, such as the product’s effect on patients’ dailyactivities. Companies could also communicate long-term safety and efficacyinformation about products that were approved for chronic use based on asix-month trial, if the company now has data on the drug lasting a coupleof years, FDA added.

The guidance also outlines the type of scientific data companies need tosupport their off-label claims. Comments on the draft are due in 60 days.

CMS Proposes Average 0.25 Percent Hike for Medicare Advantage Plans

On Feb. 1, the Trump administration issued guidance that proposes updatesto the methodologies used to pay Medicare Advantage plans and Part Dsponsors. The guidance calls for raising Medicare Advantage payments anaverage of 0.25 percent.

Health plans take in roughly $200 billion a year from the government toprovide care for seniors enrolled in private Medicare plans. There arecurrently more than 18 million people enrolled in Medicare Advantage,accounting for roughly a third of all of the program’s beneficiaries. Morethan 1 million seniors have been added to private Medicare plans in thepast year, continuing a trend of robust growth that goes back a decade.

“These proposals will continue to keep Medicare Advantage strong and stableand provide high quality, affordable care to seniors and people living withdisabilities,” said Patrick Conway, acting administrator of the Centers forMedicare and Medicaid Services.

Obamacare included major cuts to Medicare Advantage—America’s HealthInsurance Plans puts the total figure at $200 billion—that were designed tobring payments more in line with traditional government-run Medicare. Lastyear, the federal government paid private plans an average of 102 percentof traditional fee-for-service costs per member.

UnitedHealth Group and Humana are the biggest national players, accountingfor roughly 40 percent of the Medicare Advantage market in 2015.

CMS will accept comments until March 3 and the final notice will be postedon April 3.

To read a fact sheet on the rate proposal,click here.

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

StephanieKennan, Senior Vice President
Charlie Iovino, VicePresident
Caroline Perrin, Research Assistant

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 the McGuireWoods 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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