Mar 2, 2015

Washington Healthcare Update

This Week: Ways and Means Advances Four Health-Related Measures... Senate Commerce Committee Clears Legislation on E-Cigarette Packaging... CMS Pushes Back Deadline on Meaningful Use for Physicians

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


Health Subcommittee Explores FY 2016 HHS Budget Request

On Feb. 26, the Energy and Commerce Health Subcommittee held a hearing entitled “Examining the FY2016 HHS Budget,” in which members of the subcommittee heard testimony from HHS Secretary Burwell. The President’s fiscal year (FY) 2016 budget proposal was submitted to Congress on Feb. 2, 2015. With respect to Department of Health and Human Services (HHS), the President’s budget requests an $80 billion increase in outlays relative to FY 2015 (a 0.9 percent increase in department spending). However, in addition to questions related to the budget, Sec. Burwell was repeatedly questioned by committee Republicans about the Administration’s activity relative to a pending Supreme Court case, King vs. Burwell, which has called into question the availability of the ACA’s health insurance tax subsidies for individuals who purchase coverage through federally facilitated marketplaces.


The Honorable Sylvia Mathews Burwell
Department of Health and Human Services

For more information, or to view the hearing, please visit

Ways and Means Advances Four Health-Related Measures

On Feb. 26, the House Ways and Means Health Subcommittee held a markup to consider four pieces of legislation aimed at improving the Medicare program through provisions related to fraud, competitive bidding, electronic health records and patient observation status.

  • H.R. 1021, “Protecting the Integrity of Medicare Act of 2015”: ordered favorably reported to the House of Representatives as amended by voice vote
  • H.R. 284, “Medicare DEMPOS Competitive Bidding Improvement Act of 2015”: ordered favorably reported to the House of Representatives as amended by voice vote
  • H.R. 876, “NOTICE Act”: ordered favorably reported to the House of Representatives as amended by voice vote
  • H.R. 887, “Electronic Health Fairness Act of 2015”: ordered favorably reported to the House of Representatives as amended by voice vote

For more information, please visit

House Lawmakers Re-introduce Legislation to Exempt FDA User Fees from Sequestration

On Feb. 25, Reps. Leonard Lance (R-NJ) and Anna Eshoo (D-CA) reintroduced the FDA Safety Over Sequestration Act, or FDA SOS Act, H.R.1078, which exempts Food and Drug Administration (FDA) user fees from sequestration. FDA user fees are 100 percent industry-financed and are used specifically for the approval of safe and effective drugs and devices. In the event of another sequester like the budget sequestration of 2013, the FDA could lose tens of millions of dollars, preventing it from meeting its Congressionally mandated responsibilities and leaving patients without lifesaving therapies. “The FDA’s user fees are 100 percent private sector dollars,” said Rep Eshoo in a press statement. “If the intent of sequestration is to limit public spending, withholding private monies is counterintuitive. Whether one agrees or disagrees with sequestration, private dollars should not be held hostage by the policy. It discourages investment in medical innovation and denies patients access to timely and potentially lifesaving therapies.” The user fees are industry-financed and account for roughly 35 percent of the FDA’s budget. Under sequestration, the FDA is prohibited from collecting approximately more than $1 billion over a five-year period, according to the non-partisan Congressional Budget Office (CBO). Congress has recently increased FDA user fees in addition to strengthening and improving the review process.

House Appropriations Committee Examines FY2016 HHS Budget Request

On Feb. 25, the House Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies held a hearing to explore specific funding requests found within the President’s FY 2016 budget for the Department of Health and Human Services (HHS). The two-hour hearing gave members the opportunity to ask HHS Secretary Sylvia Burwell questions on a broad range of topics, including abortion funding within plans offered on the exchanges, HHS travel budgets, Ebola response and future preparedness, the expansion in funding for childcare for working-class families and changes in payments/rules for critical access hospitals. Republican members were largely supportive of some of the new initiatives within the budget, including HHS leaders’ call for expanded use of medications to combat opioid overdose epidemic and monitoring system and increased NIH funding for disease research.

Witness List

The Honorable Sylvia Burwell
Department of Health and Human Services

For more information or to watch the hearing, please visit

Upcoming: Energy and Commerce Subcommittee Hearing on 340B Drug Program

The Energy and Commerce Subcommittee on Health, chaired by Rep. Joe Pitts (R-PA), has scheduled a hearing for Thursday, March 5, 2015, at 10:00 a.m. in Room 2123 of the Rayburn House Office Building. The hearing is entitled “Examining the 340B Drug Pricing Program.” Subcommittee members will hear testimony from witnesses from the Health Resources and Services Administration, the Government Accountability Office and the Department of Health and Human Services Office of the Inspector General about the 340B program, a federal drug discount program. Subcommittee members will review the functionality of the program to ensure it is meeting its goal of improving access to prescription drugs for needy patients at facilities serving these populations.

Upcoming: House Appropriations Subcommittee to Hold Hearing on NIH Budget

The House Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies will hold a hearing on March 3, 2015, at 8:30 a.m. in 2358-C Rayburn House Office Building to explore specific funding requests found within the President’s FY 2016 budget for the National Institutes of Health (NIH).

Witness List

Francis S. Collins, M.D., Ph.D.
National Institute of Health

Accompanied by:

Anthony S. Fauci, M.D.
National Institute of Allergy and Infectious Diseases

Thomas R. Insel, M.D.
National Institute of Mental Health

Jon R. Lorsch, Ph.D.
National Institute of General Medical Sciences

Nora D. Volkow, M.D.
National Institute on Drug Abuse

Gary H. Gibbons, M.D.
National Heart, Lung, and Blood Institute

For more information or to watch the hearing please visit


Senate Commerce Committee Clears Legislation on E-Cigarette Packaging

On Feb. 26, the Senate Commerce Committee approved bipartisan legislation, S.142, authored by Sen. Bill Nelson (D-FL) and Kelly Ayotte (R-NH) that would require child-resistant packaging on any liquid nicotine (as used in e-cigarettes) available for purchase. “It’s simply common sense to make this potentially lethal product as difficult as possible for small children to get into,” Sen. Nelson said in a press release . E-cigarette-related calls to poison control centers spiked in recent years, going from just one call per month in September 2010 to 215 per month in February 2014, according to the Centers for Disease Control and Prevention (CDC); more than half of those calls involved children five years old or younger. The same bill passed the committee in 2014 but never reached the Senate floor for a vote.

Senate HELP Committee Holds Hearing on Pandemics and Future Threat Preparedness

On Thursday, Feb. 26, the Senate Committee on Health, Labor, and Pensions (HELP) held a hearing entitled “Medical and Public Health Preparedness and Response: Are We Ready for Future Threats?” to investigate whether the U.S. health care system is adequately prepared for a medical or public health emergency. The hearing gave members the opportunity to ask Health and Human Services (HHS) and Centers for Disease Control and Prevention (CDC) officials about looming threats including Ebola, measles and other diseases. In his prepared opening statement, Committee Chairman Richard Burr (NC-R) said, “Our healthcare system was not fully stressed in those response efforts. We cannot put off taking the steps we must take today to be better prepared tomorrow.” Ranking Member Bob Casey (D-PA) made the case for sustained investment to public health preparedness. “We cannot hope to be adequately prepared for a medical or public health emergency if we lurch from crisis to crisis,” he said.

Witness List

Nicole Lurie
Assistant Secretary for Preparedness and Response
U.S. Department of Health and Human Services

Robin Robinson
Biomedical Advanced Research and Development Authority
Deputy Assistant Secretary for Preparedness and Response

Stephen Redd
Office of Public Health Preparedness and Response
Centers for Disease Control and Prevention

Luciana Borio
Assistant Commissioner for Counterterrorism Policy
Director of the Office of Counterterrorism and Emerging Threats
Deputy Chief Scientist (Acting), U.S. Food and Drug Administration

For more information or to watch the hearing, please visit

Congressional Republicans Name New CBO Director

Last week, Republicans in Congress named Keith Hall, who was chief economist on Bush’s Council of Economic Advisers, to replace Doug Elmendorf as Director of the Congressional Budget Office (CBO). “Keith Hall will bring an impressive level of economic expertise and experience to the Congressional Budget Office,” said House Budget Committee Chairman Tom Price, in a statement. “His vast understanding of economic and labor market policy will be invaluable to the work of CBO and the important role it will continue to play as Congress seeks to enact policies that support a healthy and growing economy.” CBO directors are chosen jointly by the heads of the House and Senate Budget Committees, with the Speaker and Senate’s president pro tempore—its longest serving member of the majority party, who is Sen. Orrin Hatch—formally making the appointment. No vote is required. Hall’s term will begin April 1, Price said, with Elmendorf continuing to serve until then. For more information, please visit

2. Administration

CMS Pushes Back Deadline on Meaningful Use for Physicians

In a Feb. 25 announcement, the Centers for Medicare & Medicaid Services (CMS) revealed that the agency is giving physicians an extra three weeks (until 11:59 p.m. ET on March 20, 2015) to attest meaningful use for the Medicare Electronic Health Record (EHR) Incentive Program 2014 reporting year. Additionally, the EHR reporting option for PQRS has been extended until March 20, 2015. Previously, in August 2014, CMS released a final rule that grants flexibility to providers who are unable to fully implement 2014 Edition CEHRT for an EHR reporting period in 2014 due to delays in 2014 CEHRT availability. CMS said in a press release, “CMS extended the deadline to allow providers extra time to submit their meaningful use data. CMS continues to urge providers to begin attesting for 2014 as soon as they can.” The original deadline for attestation was Feb. 28. The agency previously allowed for hospitals and physicians to use either older certified EHR technology, updated technology or a combination in order to meet meaningful use for 2014. In an email to stakeholders, CMS says the Medicare meaningful use extension does not affect deadlines for the Medicaid EHR program. Medicare-eligible professionals must attest to meaningful use every year to receive an incentive and avoid a payment adjustment. To receive an EHR incentive payment, providers have to show that they are meaningfully using their EHRs by meeting thresholds for a number of objectives. The EHR Incentive Programs are phased in three stages with increasing requirements.

HHS: 8.84 Million Enrolled in the Federal Exchange

In a weekly enrollment report released Feb. 25, the Department of Health and Human Services (HHS) announced that more than 8.84 million Americans in 37 states signed up for health coverage through the federal marketplace during the 2015 open enrollment period, including nearly 41,000 who came in under the wire during a deadline extension that expired Feb. 22. The final count also subtracted around 90,000 customers who bought coverage in 2014 but whose plans were canceled because they failed to provide proper citizenship or immigration paperwork. Slightly over half of the 8.84 million Americans who signed up for health insurance coverage on were new customers who were uninsured in 2014 and approximately 4.17 million of the federal website customers renewed plans. Moreover, 1.2 million chose a different plan than they had in 2014. The figures are the first such breakdown from CMS. HHS has not yet specified how many enrollees have paid their first month’s premium to start their coverage. The Affordable Care Act’s (ACA) second enrollment period ended on Feb. 15; however, consumers who waited in line at the call center or who experienced technical issues were able to sign up for health insurance coverage until Feb. 22 through a special enrollment period.

CMS Announces Results of Value-Based Physician Payment Modifier

On Feb. 27, CMS posted results from the implementation of the first year of the Value-based Payment Modifier (Value Modifier). Established by the ACA, the Value Modifier rewards physicians and groups of physicians who provide high-quality and cost-effective care, while encouraging improvement for those who do not report quality measures or who don’t meet the mark. Based on their 2013 performance on quality and cost measures, nearly 7,000 physicians in 14 group practices across the country are receiving an increase in their Medicare payments in 2015. While groups that exceeded the program’s benchmarks in quality and cost efficiency receive an increase in physician payments under the Medicare Physician Fee Schedule, those who do not perform well or failed to meet quality reporting requirements are seeing a decrease to their Medicare payments in 2015. Most physician groups nationwide met the quality reporting requirements and their Medicare payments remain unchanged. Physician groups getting an upward 2015 Value Modifier adjustment had, on average, lower (better) hospital readmissions rates—14.3 per 100 admissions—than the corresponding benchmark of 16.4 per 100 admissions. These groups also had on average lower hospital admissions rates for acute and chronic ambulatory care sensitive conditions.  

CMS Highlights End-to-End ICD-10 Testing Results

According to a Feb. 25 blog post by CMS Administrator Tavenner, Medicare Fee-For-Service (FFS) health care providers, clearinghouses and billing agencies participated in the first successful ICD-10 end-to-end testing week with all Medicare Administrative Contractors (MACs) and the Durable Medical Equipment (DME) MAC Common Electronic Data Interchange (CEDI) contractor from Jan. 26 through Feb. 3, 2015, with approximately 660 providers and billing companies submitting nearly 15,000 test claims. Health care professionals use codes from the International Classification of Diseases—or ICD—to record their patients’ health conditions and document inpatient hospital procedures. While most countries already use the 10th revision of these codes (or ICD-10), the United States has yet to adopt this convention. The U.S. is the last major industrialized nation to make the switch to ICD-10. The structure of ICD-9, which is more than 35 years old, limits the number of new codes that can be created, and many ICD-9 categories are full. ICD-10 provides room for code expansion, so providers can use codes more specific to patient diagnoses. And since ICD-10 codes are more specific than ICD-9, doctors can capture much more information, meaning they can better understand important details about the patient’s health than with ICD-9-CM.

PCORI Awards $64.1 Million to Support Five Pragmatic Clinical Studies

The Patient-Centered Outcomes Research Institute (PCORI) Board of Governors approved awards totaling more than $64 million to fund five large patient-centered comparative effectiveness research (CER) studies that will answer critical clinical questions about care for cancer, back pain and stroke. The awards are the first to be made through PCORI’s Pragmatic Clinical Studies Initiative, an effort to produce results that are broadly applicable to a greater variety of patients and care situations and can be more quickly taken up in routine clinical practice. Ranging from $7.75 million to $14.5 million each, the five awards will fund studies involving thousands to tens of thousands of patients in efforts to fill critical evidence gaps.

3. State Activities

Utah Medicaid Expansion Plan Hits Impasse Following Senate Approval

Republican Gov. Gary Herbert’s plan for expanding Medicaid—Healthy Utah—survived its first hearing in the state Senate only to be declared dead on arrival in the state’s House of Representatives. On Feb. 25 senators voted 17-11 in favor of the plan. The plan would move to the state House, however Speaker Greg Hughes, R-Draper, says SB-164 doesn’t have the support to pass. Rep. Hughes said there’s no point in bringing Healthy Utah to a vote just to kill it. “We’re done with the proposal of Healthy Utah,” he said, keeping the door open for “a way forward” if someone can come up with an idea that finds support in the House. Republican House members control the chamber by a 63-12 margin. Gov. Herbert’s Medicaid plan would set up a two-year pilot program to expand Medicaid, a concept initially designed as a concession to convince hesitant state lawmakers to support the program.

Illinois Governor’s Proposed FY 2016 Budget Would Cut Medicaid Spending by $1.5 Billion

In his proposed FY2016 Budget, Illinois Gov. Bruce Rauner (R) proposed to cut Medicaid spending by approximately $1.5 billion, part of his larger plan to reduce state spending by $6.6 billion, mostly by moving workers to less-generous pension plans, lowering Medicaid payments for hospitals and doctors, and reducing state funding for local governments and universities. His budget plan would move certain Illinois residents off of Medicaid and onto the exchange to get coverage (estimated to save roughly $41 million) and reinstate an “aggressive review” of beneficiaries enrolled in the program to make sure that ineligible people are not receiving benefits. The governor’s plan also proposes cuts to hospital reimbursements, while aiming to have 60 percent of the Medicaid population enrolled in managed care by the end of the year. Worth noting, it’s likely that several cost-saving measures Gov. Rauner put into his budget proposal will face significant challenges getting passed by a Democratic-controlled legislature.

4. Regulations Open for Comment

FDA Reopens Comment Period for Generic Drug Labeling Rule

In an announcement Feb. 17, the Food and Drug Administration (FDA) revealed that it has formally re-opened the comment period for a controversial generic drug labeling proposed rule and will hold a public meeting next month to address concerns with the rule and possible alternatives. The rule, which FDA proposed in 2013, would allow generic drugmakers to unilaterally update safety information and would require generic drugmakers to modify their labels independently of their brand-name counterparts, something that only brand-name drugmakers can currently do before receiving agency permission. The FDA proposed the rule in response to a 2011 U.S. Supreme Court decision that federal law does not permit generic drugmakers to make such changes independently and, therefore, they should not be held accountable for a failure to warn against a risk. Stakeholders will have until April 27 to comment on the proposed rule; the agency’s public hearing to receive more input from stakeholders will be held on March 27 from 8 a.m. to 5 p.m. at FDA’s White Oak campus.

FDA Releases Five Draft Guidance Documents on Drug Compounding

On Feb. 13, U.S. Food and Drug Administration (FDA) issued five draft guidance documents related to drug compounding and repackaging that will help entities comply with important public health provisions; guidance will be applicable to pharmacies, federal facilities, outsourcing facilities and physicians and comes as an outcrop of the Drug Quality and Security Act (DQSA), enacted by Congress in November 2013, in response to a deadly fungal meningitis outbreak that was linked to contaminated sterile compounded drug products. Specifically, the documents include potential direction on outsourcing facility registration, outsourcing facility adverse event reporting, drug repackaging, mixing, diluting and repackaging biological products, and a draft Memorandum of Understanding (MOU) with the states. The draft guidance documents are available for public comment until May 14, while draft comment for the draft MOU is open until June 13.

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 by April 13, 2015.

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

CDC, FDA and USDA Release Joint Report on Foodborne Illness

In a report released this week by the Interagency Food Safety Analytics Collaboration (IFSAC), which includes contributions from the Centers for Disease Control and Prevention (CDC), the U.S. Food and Drug Administration (FDA) and the U.S. Department of Agriculture’s Food Safety and Inspection Service (USDA/FSIS), IFSAC looked at foodborne illness source attribution, which is the process of estimating the most common food sources responsible for specific foodborne illnesses. The report, which analyzed data from nearly 1,000 outbreaks that occurred from 1998 to 2012, briefly summarizes IFSAC’s methods and results, including estimated attribution percentages for the four pathogens, including e. coli O157, salmonella, listeria and campylobacter. Some IFSAC findings of the report include that more than 80 percent of E. coli O157 illnesses were attributed to beef and vegetable row crops, that salmonella illnesses were broadly attributed across food commodities, that nearly 75 percent of campylobacter illnesses were attributed to dairy (66 percent) and chicken (8 percent), and that more than 80 percent of listeria illnesses were attributed to fruit (50 percent) and dairy (31 percent). CDC estimates that, together, these four pathogens cause 1.9 million cases of foodborne illness in the United States each year.

CDC: Nearly Half a Million Americans Suffered from Clostridium Difficile Infections in a Single Year

According to a report by the CDC released Feb. 25, approximately 29,000 patients died within 30 days of the initial diagnosis of C. difficile. Of those, about 15,000 deaths were estimated to be directly attributable to C. difficile infections, making C. difficile a very important cause of infectious disease death in the United States. More than 80 percent of the deaths associated with C. difficile occurred among Americans aged 65 years or older. C. difficile causes an inflammation of the colon and deadly diarrhea. Previous studies indicate that C. difficile has become the most common microbial cause of health care-associated infections in U.S. hospitals and costs up to $4.8 billion each year in excess health care costs for acute care facilities alone. The new study found that one out of every five patients with a health care-associated C. difficile infection experienced a recurrence of the infection and one out of every nine patients aged 65 or older with a health care-associated C. difficile infection died within 30 days of diagnosis.

OIG: Comparing Average Sales Price and Average Manufacturer Prices for Medicare Part B Drugs

According to a report issued by the Department of Health and Human Services Office of the Inspector General, under CMS’s price substitution policy, 15 drug codes were subject to reimbursement reductions on the basis of data from 2013, saving Medicare and its beneficiaries an estimated $13 million from the fourth quarter of 2013 through the third quarter of 2014. OIG estimates that if CMS had expanded its price substitution criteria to include drug codes with complete AMP data in a single quarter or certain codes with partial AMP data, the agency could have generated almost $6 million in additional savings. When Congress established average sales prices (ASPs) as the primary basis for Medicare Part B drug reimbursement, it also mandated that the Office of Inspector General (OIG) compare SPs with average manufacturer prices (AMPs) and directed the Centers for Medicare & Medicaid Services (CMS) to substitute payment amounts for drugs with ASPs that exceed AMPs by a threshold of 5 percent. To comply with its statutory mandate, OIG has completed over 30 quarterly pricing comparisons. In April 2013, CMS began substituting payment amounts in accordance with its published price substitution policy, which currently applies to only certain drug codes with complete AMP data that exceed the 5 percent threshold in two consecutive quarters or three of the previous four quarters. OIG recommends that CMS consider pursuing rulemaking to expand the price substitution policy to include at least some additional drug codes. CMS responded that more experience with the policy is needed before it is expanded.

U.S. Department of Health and Human Services, Office of Inspector General, Fiscal Year 2015 Health Reform Oversight Plan

This fiscal year (FY) 2015 Health Reform Oversight Plan (the Plan) describes the Office of Inspector General’s (OIG’s) current and planned efforts to oversee the implementation and management of the Department of Health and Human Services’s (HHS’s) programs under the Affordable Care Act (ACA). The Plan outlines OIG’s (1) key tactical considerations; (2) key focus areas, both in the health insurance Marketplaces and in their ACA-related HHS programs; and (3) target timeframes for issuing reports on reviews elated to the Marketplaces. This plan focuses primarily on OIG oversight through audits and evaluations. OIG is also prepared for and engaged in law enforcement operations elated to ACA programs, as appropriate. In planning and executing the health reform portfolio, OIG adheres to four key strategic goals: fighting fraud, waste and abuse; promoting value, safety and quality; securing the future; and advancing excellence and innovation.

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

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