CONSISTENTLY DELIVERS

Sep 15, 2014

Washington Healthcare Update

1. Congress

House of Representatives

  • House Committee Leaders Demand Answers on How ACA Funds Were Used in Failed State Exchanges
  • House Passes Legislation to Postpone 2014 Enforcement of Medicare Supervision Requirement for Outpatient Therapeutic Services
  • House E&C Oversight Subcommittee to Host Hearing on Mental Health
  • House E&C Health Subcommittee Hearing to Examine New Drug Development to Fight Antibiotic Resistance
  • Ways and Means Hearing on ACA Implementation

Senate

  • Bipartisan Legislation Would Establish Value-Based Medicare Advantage Pilot

2. Administration

  • HHS Awards $295 Million to Promote Primary Care
  • HHS: $60 Million in Grants Awarded for Navigators in Federal and State Partnership Exchanges
  • CMS: Unresolved Immigration-related Inconsistencies Deadline "Expanded"
  • DEA: Final Rule Issued for Return of Unused Prescription Drugs
  • CMS Says It Will Not Cut Low-Quality Medicare Advantage Part D Plans for 2015
  • Delayed Implementation of Dialysis Facility Compare Star Rating System

3. State Activities

  • Alaska State Insurance Department Announces Substantial ACA Premiums Increase
  • Tennessee's TennCare Program Wait Times Trigger Class Action

4. Regulations Open for Comment

  • Guidance for Industry on Registration of Human Drug Compounding Outsourcing Facilities Under Section 503B of the Federal Food, Drug, and Cosmetic Act

5. Reports

  • Medicaid Demonstrations: HHS's Approval Process for Arkansas's Medicaid Expansion Waiver Raises Cost Concerns

1. Congress

House

House Committee Leaders Demand Answers on How ACA Funds Were Used in Failed State Exchanges

On Sept. 8, Republican leaders of the House Energy and Commerce Committee sent a letter to Health and Human Services (HHS) Secretary Sylvia Burwell requesting all documentation detailing information on the more than $1.3 billion spent on "[Affordable Care Act] state based exchanges that have failed or are so flawed that they require substantial modification." This letter follows an already failed June 18deadline set in a previous June 3 letter and several other extended production deadlines established through interagency discussions. The letter, signed by full Committee Chairman Fred Upton (R-MI), Oversight and Investigations Subcommittee Chairman Tim Murphy (R-PA), full committee Vice Chairman Marsha Blackburn (R-TN), Chairman Emeritus Joe Barton (R-TX) and Vice Chairman of the Health and Oversight and Investigations Subcommittees Michael C. Burgess, M.D. (R-TX), hopes to shed light on how federal money was spent on establishing and repairing state exchanges in Massachusetts, Maryland, Oregon, Nevada, Hawaii, Minnesota and Vermont. The letter sets forth a new document delivery deadline of Sept. 19, 2014.

House Passes Legislation to Postpone 2014 Enforcement of Medicare Supervision Requirement for Outpatient Therapeutic Services

On Sept. 9, the House of Representatives passed legislation (H.R. 4067) by voice vote to postpone enforcement of a Centers for Medicare and Medicaid Services (CMS) supervision requirement for outpatient therapeutic services in critical access and small and rural hospitals. The regulation, which went into effect on Jan. 1, 2014, affected only critical access and small rural hospitals with fewer than 100 beds and mandated direct physician supervision of even routine procedures such as drawing blood. A press release by the bill's sponsor, Rep. Lynn Jenkins (R-AL), said, "There are over 1,300 critical access hospitals that serve rural Americans in nearly every state, and these facilities simply lack the resources to fulfill this burdensome mandate. Physicians at rural hospitals have not been required to directly supervise these types of outpatient therapy in the past, and asking them to do so now provides no benefits to patients and at the same time jeopardizes access to care." An identical Senate version of the bill (S.1954), introduced by Senator Jerry Moran (R-KS), passed by unanimous consent in the Senate in February 2014.

House E&C Oversight Subcommittee to Host Hearing on Mental Health

The House Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing to examine the connection between serious mental illness and suicidal behavior. The hearing, entitled "Suicide Prevention and Treatment: Helping Loved Ones in Mental Health Crisis," is scheduled for Thursday, Sept. 18 at 11:30 a.m. in Room 2123 of the Rayburn House Office Building. The hearing follows the full committee's yearlong investigation of federal programs addressing severe mental illness. Members will seek to identify evidence-based treatments and effective strategies for suicide prevention. A witness list for the hearing is still forthcoming.

House E&C Health Subcommittee Hearing to Examine New Drug Development to Fight Antibiotic Resistance

In continuing with its 21st Century Cures hearing series, on Friday, Sept. 19, the House Energy and Commerce Subcommittee on Health will host a hearing titled "Examining Ways to Combat Antibiotic Resistance and Foster New Drug Development." As the 21st Century Cures initiative continues, subcommittee members will review the growing threat of antibiotic resistance and explore efforts to counteract this global health threat through new drug development. The witness list is forthcoming.

Ways and Means Hearing on ACA Implementation

On Sept. 3, 2014, Ways and Means Health Subcommittee Chairman Kevin Brady (R-TX) held a hearing on the status of the Obama Administration's implementation and oversight of the Affordable Care Act (ACA). Witnesses were present representing both CMS and the IRS, as the CMS is the federal agency that oversees the operation of the Exchanges through the Center for Consumer Information and Insurance Oversight (CCIIO) and the IRS oversees the distribution and verification of the subsidies in the ACA. During a question posed by Chairman Brady regarding whether the IRS would be collecting overpayments of subsidies for health coverage under the ACA, Internal Revenue Service Commissioner John Koskinen answered, "Where we can, we follow the law," to which Chairman Brady responded, "I encourage you to follow the law in all instances." House Republicans are currently pursuing litigation against the Administration for failure to adhere to the statutory language of the ACA.

Witnesses:

Andy Slavitt
Deputy Principal Administrator
Centers for Medicare & Medicaid Services (CMS)
U.S. Department of Health and Human Services (HHS)

John Koskinen
Commissioner
Internal Revenue Service

More information on the hearing can be found here.

Senate

Bipartisan Legislation Would Establish Value-Based Medicare Advantage Pilot

On Sept. 10, Sens. Thune (R-SD) and Stabenow (D-MI) introduced legislation that would provide for a demonstration project to evaluate how value-based insurance design (V-BID) could reduce Medicare Advantage (MA) enrollees' copayments and coinsurance for some beneficiaries with specific chronic conditions for certain high-value medications and services and result in better health outcomes and reduced overall health spending. Specifically, the bill would allow participating MA plans the option to use V-BID benefits to lower copayments and coinsurance to encourage the use of specific, evidence-based medications or clinical services and/or specific high-performing providers. To protect seniors it also explicitly prohibits plans from increasing copayments or coinsurance to discourage use of services. Representatives Diane Black (R-Tennesse-06) and Earl Blumenauer (D-Oregon-03) have introduced companion legislation in the House of Representatives.

2. Administration

HHS Awards $295 Million to Promote Primary Care

Health and Human Services Secretary Sylvia M. Burwell announced $295 million in Affordable Care Act funding to 1,195 health centers in every U.S. state, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and the Pacific Basin to expand primary care services. The funds are designed to increase access to comprehensive primary health care services by hiring an estimated 4,750 new staff including new health care providers, staying open for longer hours and expanding the care they provide to include new services such as oral health, behavioral health, pharmacy and vision care. These investments will help health centers reach an estimated 1.5 million new patients nationwide, including more than 137,000 oral health patients and more than 38,000 mental and substance abuse patients.

HHS: $60 Million in Grants Awarded for Navigators in Federal and State Partnership Exchanges

On Sept. 8, the Department of Health and Human Services (HHS) Secretary Sylvia Burwell announced $60 million in Navigator grants to 90 organizations in states with federally facilitated and state partnership Marketplaces. These awards support preparation and outreach activities for 2015 exchange enrollment, and utilize lessons learned from the previous year's enrollment. "In-person assisters have an impact on the lives of so many Americans, helping individuals and families across the country access quality, affordable health coverage," said Secretary Burwell. "We are committed to helping Americans get covered and stay covered with in-person assistance in their own communities." Navigators help consumers compare their health coverage options, including helping them determine whether they are eligible for public programs such as Medicaid and CHIP, and guide consumers -- many of whom have never had insurance before -- on accessing and using their new coverage, among other important functions.

CMS: Unresolved Immigration-related Inconsistencies Deadline "Expanded"

The Department of Health and Human Services (HHS) announced Sept. 8 that it had received more than 100,000 pieces of documentation following a big push for enrollees to resolve immigration-related inconsistencies to avoid losing coverage through the federally run health exchanges by the Sept. 5 deadline. Moreover, according to CMS guidance sent to issuers on Aug. 13, the agency has created two 60-day special enrollment periods for consumers unable to provide valid documentation by the deadline; one special enrollment window would affect consumers who can confirm that they attempted to submit their documents prior to deadline and for whom eligibility can be determined. Consumers in this category have up to 60 days to choose a plan, and coverage would be implemented retroactively after their plan was terminated. The second window is available for consumers who cannot verify that they tried to submit documents by Sept. 5, but who do provide the needed information within the 60-day window. In those cases, coverage would go into effect the first day of the month following plan selection. Worth noting, the guidance provides clarification on scenarios in which the terminated individual is a member of a family plan, but the remaining members of the plan are eligible. HHS has yet to comment on when termination notices will be sent or what message the notices will contain.

DEA: Final Rule Issued for Return of Unused Prescription Drugs

On Sept. 8, the Department of Justice Drug Enforcement Administration (DEA) issued a final rule announcing that hospitals, clinics, pharmacies and other authorized agencies may now serve as official drop-off locations for unused prescription medications. The final rule, which goes into effect on Oct. 9, 2014, is an enforcement outcrop of the Secure and Responsible Drug Disposal Act of 2010 and helps to condense and reorganize existing regulations for prescription disposal. As it stands, the rule expands the list of authorized drug take-back facilities to include authorized manufacturers, reverse distributors, distributors, narcotic treatment facilities and hospitals/clinics (with on-site pharmacies); retail pharmacies will be permitted to voluntarily house collection receptacles and manage mail-back programs. Moreover, the final rule also expands the authority of hospitals/clinics and retail pharmacies to maintain collection vessels at long-term care facilities. The rule coordinates well with a recent expansion of take-back programs administered by DEA; from 2010--2014, DEA and other partnering organizations have collected more than 4.1 million pounds in returned, unused prescription medications. The final rule was published in the Federal Register on Sept. 9.

CMS Says It Will Not Cut Low-Quality Medicare Advantage Part D Plans for 2015

In a memo released Sept. 8 to Medicare Advantage and Part D drug plans, the Centers for Medicare and Medicaid Services (CMS) announced that it will not terminate its contracts for low-performing Medicare Advantage (MA) plans for 2015, even though it has the authority to do so for plans that fail to receive at least three out of five quality starts for three consecutive years. The delayed action will allow lower-rated plans another year to bolster their star ratings, and the memo said that plans "must focus on the overall health care needs of their individual enrollees, including improving enrollee experience and ensuring that their enrollees receive needed medical care." CMS said it did, however, see improvement in low-performing plans in 2014, and that CMS 2015 star ratings are expected shortly. In a separate development, a request for information and corresponding memo were posted concerning the ability of plans that enroll a disproportionate percentage of beneficiaries eligible for both Medicare and Medicaid to achieve high plan performance ratings. Research is being solicited on whether a high number of dual beneficiaries cause ratings to be low or whether high-quality performance can be achieved regardless of the level of low-income elderly. The deadline for research is set for Nov. 3. Worth noting, CMS said it expects to terminate contracts at the end of 2015 if plans do not achieve at least a three-star rating for 2016.

Delayed Implementation of Dialysis Facility Compare Star Rating System

According to a memo released by CMS, the agency has decided to delay until January implementation of the Star Rating System for dialysis facilities in January 2015 to allow more time for consumer education about appropriate use of the ratings for making decisions about treatment. The memo goes on to note that implementing the Star Rating System for dialysis facilities in January will also give dialysis facilities extra time to review their ratings and fine-tune verification and correction processes for data submission to DFC. The Star Rating System for dialysis facilities would introduce star ratings on the Medicare Dialysis Facility Compare (DFC) website as part of CMS's plan to feature star ratings on all its Compare websites to make it easier for consumers to compare and select dialysis facilities.

3. State Activities

Alaska State Insurance Department Announces Substantial ACA Premiums Increase

On Sept. 4, Alaska's state insurance department sent out a critical press release announcing a premium increase of as much as 37 percent in the individual market, a direct result, the Insurance Commissioner says, of changes with the Affordable Care Act (ACA). "Governor Parnell has expressed concern from the beginning that Obamacare's one-size-fits-all approach to health care for Alaskans is not going to work in our state, and that heavy-handed federal mandates, taxes, and penalties will only add to Alaska's health care costs," said Susan Bell, commissioner of the Department of Commerce, Community and Economic Development. "His concerns are, unfortunately, proving to be true." Sen. Mark Begich, in a tough re-election fight, pointed out that the department singled out only the largest increase to mention in its announcement, and criticized the state's refusal to expand Medicaid.

Tennessee's TennCare Program Wait Times Trigger Class Action

As a result of extended delays in determining whether low-income applicants will qualify for Tennessee's Medicaid program, known as TennCare, U.S. District Judge Todd Campbell ruled the state must hold hearings for Tennesseans who have waited months to learn whether they qualify for Medicaid coverage because of delays in processing applications. In addition, Campbell granted class-action status to the lawsuit, which could result in potentially thousands of Tennesseans' becoming plaintiffs in the case. "It is clear that irreparable harm has occurred and will continue to occur without the issuance of injunctive relief," Campbell said in the order. "The plaintiff class members are economically impoverished and, without TennCare benefits, have forgone or are forgoing vital medical treatments, services and prescriptions. These injuries cannot be made whole by a retroactive award of money after the litigation process is complete." For more information, please visit www.tennessean.com.

4. Regulations Open for Comment

Guidance for Industry on Registration of Human Drug Compounding Outsourcing Facilities Under Section 503B of the Federal Food, Drug, and Cosmetic Act

The Food and Drug Administration (FDA) has announced that a proposed collection of information has been submitted to the Office of Management and Budget (OMB) for review and clearance under the Paperwork Reduction Act of 1995 (the PRA). FDA is working to implement provisions added to the Federal Food, Drug, and Cosmetic Act (the FD Act) by the Drug Quality and Security Act (DQSA), which created a statutory category of "outsourcing facilities" that compound human drugs. Section 503B of the FD Act allows compounders to register with FDA as outsourcing facilities. Drug products compounded in an outsourcing facility can qualify for exemptions from the FDA approval requirements in Section 505 of the FD Act and the requirement to label products with adequate directions for use under Section 502(f)(1) of the FD Act if the requirements in Section 503B are met. The guidance discusses the process for registration of outsourcing facilities.

Under the guidance, facilities that elect to register must submit the following registration information to FDA for each facility:

  • name of the facility;
  • place of business;
  • unique facility identifier;
  • point of contact email address and phone number;
  • whether the facility intends to compound drugs that appear on FDA's drug shortage list in effect under Section 506E of the FD Act; and
  • an indication of whether the facility compounds from bulk drug substances, and if so, whether it compounds sterile or nonsterile drugs from bulk drug substances.

After initial registration, outsourcing facilities that wish to remain an outsourcing facility must re-register annually between Oct. 1 and Dec. 31 of each year. Registration information should be submitted to FDA electronically using the Structured Product Labeling (SPL) format and in accordance with Section IV of the FDA guidance entitled "Providing Regulatory Submissions in Electronic Format--Drug Establishment Registration and Drug Listing." In the draft guidance issued on Dec. 4, 2013, FDA described an alternative interim registration mechanism for use after initial passage of the DQSA and until Sept. 30, 2014. The final guidance specifies the use of the SPL format for all registrations. Under the final guidance, outsourcing facilities may request a waiver from the SPL electronic submission process by submitting a written request to FDA explaining why the use of electronic means is not reasonable for the person requesting the waiver.

Comments are due Sept. 26, 2014.

5. Reports

Medicaid Demonstrations: HHS's Approval Process for Arkansas's Medicaid Expansion Waiver Raises Cost Concerns

According to a GAO report issued Sept. 8, when HHS approved Arkansas's Medicaid Section 1115 demonstration waiver, the agency gave the state the authority to test whether providing premium assistance to purchase private coverage offered on the health insurance exchange will improve access to care for individuals newly eligible for Medicaid as a result of the ACA. However, HHS did not ensure that the demonstration would be budget-neutral -- that is, that the federal government would spend no more under the state's demonstration than it would have spent without the demonstration. Specifically, HHS approved a spending limit for the demonstration that was based, in part, on hypothetical costs -- significantly higher payment amounts the state assumed it would have to make to providers if it expanded coverage under the traditional Medicaid program -- without requesting any data from the state to support the state's assumptions. GAO estimated that, by including these costs, the three-year, nearly $4.0 billion spending limit that HHS approved for the state's demonstration was approximately $778 million more than what the spending limit would have been if it was based on the state's actual payment rates for services under the traditional Medicaid program.


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.

To sign up for the Weekly Washington Healthcare Update, use our online subscription form.

McGuireWoods Consulting LLC
2001 K Street
Suite 400
Washington, DC 20006-1040
202.857.1700