Mar 30, 2015

Washington Healthcare Update

This Week: House Approves FY 2016 Budget Proposal... House Passes Permanent SGR Reform and Two-Year CHIP Reauthorization... Senate Passes FY 2016 Budget Plan... HHS Report: ACA Led to $7.4 Billion Decline in Uncompensated Hospital Care Costs... New Hampshire Legislature Moves to End Medicaid Expansion in 2016

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


House Approves FY 2016 Budget Proposal

On March 25, the House passed its FY 2016 budget resolution, a blueprint Chairman Price (R-GA) calls “A Balanced Budget for a Stronger America,” by a party line vote of 228-199, with all Democrats and 17 Republicans opposing the measure. The budget resolution is a blueprint for Congress on spending priorities. It is not signed by the president and therefore is not a law. However, at times the budget resolution can include reconciliation instructions, which are directed to authorizing committees usually to reduce spending in specific programmatic areas like Medicare and Medicaid. The budget proposal impacts the health sector in a number of areas:

  • Uses reconciliation to overturn the Affordable Care Act (ACA): The House Budget would use the reconciliation process to repeal the ACA “in its entirety” and would shift some savings to Medicare’s solvency.
  • Reverses the $700 billion taken from Medicare as part of the enactment of the ACA. The budget would put these savings toward Medicare solvency.
  • Repeals the Independent Payment Advisory Board (IPAB), which was to advise Congress on Medicare cuts but never has been staffed.
  • Repeals the ACA’s funding for expansion of Medicaid. Instead, the resolution provides for new State Flexibility Funds that we believe will operate much like block grants.
  • Reforms Medicare by changing the program to a premium support model, starting for beneficiaries in 2024, and combining Parts A and B so there would be a single premium for seniors. The budget also appears to call for some risk adjustment of premiums. It also provides a catastrophic cap on annual out-of-pocket expenses for Medicare beneficiaries.
  • Unifies Medicaid and the State Children’s Health Insurance Program (SCHIP) into a single program, while providing funds to extend SCHIP.
  • Provides for medical liability reform.

For more information, please visit

House Passes Permanent SGR Reform and Two-Year CHIP Reauthorization

On March 26, the House of Representatives passed H.R. 2, the Medicare Access and CHIP Reauthorization Act of 2015; the legislation creates a permanent fix to the Sustained Growth Rate (SGR) formula, the payment rate at which providers are reimbursed through Medicare, and includes a number of other important health-related policies, including funding for the Children’s Health Insurance Program (CHIP), provisions known as “extenders,” the Protecting the Integrity of Medicare Act and an extension of the Secure Rural Schools and Community Self-Determination Act of 2000. In a historic display of bipartisanship, the legislation passed by a vote of 392-37, with 212 Republicans and 180 Democrats supporting the proposal. The Balanced Budget Act of 1997 established the SGR formula to control Medicare spending for physicians’ services; the formula set an overall target of how much that spending should be and measured spending on both annual and cumulative bases. Since 2002, the formula triggered reductions in physician payment and only the continued intervention of the U.S. Congress has prevented these cuts from being implemented. To avert these cuts, Congress has “patched” the problem, as determining how to pay for a permanent fix was a stumbling block. H.R. 2 only partially pays for the cost of the package, relying in part on the upcoming Congressional budget resolution to accommodate funding. However, part of the funding in the legislation comes from beneficiaries themselves. The Senate did not act on the House-passed SGR deal before it adjourned for a two-week recess, but Senate Majority Leader Mitch McConnell (R-KY) did promise the chamber would take up the measure “very quickly” when it returned; he and Senate Minority Leader Harry Reid will work together to schedule the vote on the bill. One potential point of contention: Senate Democrats have been very vocal on pushing for four years of funding for CHIP reauthorization; funding for the program runs out at the end of September 2015. The current SGR patch expires March 31, thereby mandating that the Centers for Medicare and Medicaid Services (CMS) hold claims until Congress does act, as the agency has done in the past.

The Congressional Research Service (CRS), which provides exclusive policy and legal analysis to committees and Members of both the House and Senate, released a March 26 report that provides a brief summary of each provision of H.R. 2, the Medicare Access and CHIP Reauthorization Act of 2015 as well as a brief description of how each provision impacts the current law.

Click here for a more detailed summary of the legislation.

Ways and Means Hearing Examines the Use of Data to Stop Medicare Fraud

On March 24, House Committee on Ways and Means Subcommittee on Oversight held a hearing on the federal government’s use of data analysis—particularly the Centers for Medicare and Medicaid Services’ Fraud Prevention System (FPS)—to identify emerging trends and stop Medicare fraud. This hearing allowed the Committee to hear testimony from both government and non-governmental witnesses on the progress that the FPS has made and what continued efforts are under way to use data analysis in identifying and stopping fraud and waste within Medicare.

Witness List

Dr. Shantanu Agrawal
Deputy Administrator and Director, Center for Program Integrity, Centers for Medicare & Medicaid Services

Mr. Gary Cantrell
Deputy Inspector General for Investigations, Office of Inspector General, U.S. Department of Health and Human Services

Ms. Charlene Frizzera
President and CEO, CF Health Advisors

Mr. Kirk Ogrosky
Partner, Arnold & Porter LLP

Mr. Mark Nelsen
Senior VP for Risk Products and Business Intelligence, Visa Inc.

Mr. Louis Saccoccio
Executive Director, National Health Care Anti-Fraud Association

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

Bicameral Legislation Introduced to Eliminate Restrictions on HSAs and FSAs

On March 23, Republican Rep. Erik Paulsen (MN-03) and U.S. Senator John Barrasso (WY-R) introduced twin legislation in the House and Senate respectively repealing certain Affordable Care Act (ACA) restrictions on health savings accounts (HSAs) and flexible spending accounts (FSAs). The Family Health Care Flexibility Act, H.R. 1547 repeals Section 9005 of the ACA that sets a $2,500 FSA contribution cap and prohibits HSA and FSA participants from using their own account dollars to purchase over-the-counter medicines without a prescription. “Health savings and flexible spending accounts put power in the hands of patients by letting them make their own decisions when it comes to their care,” said Congressman Paulsen in a press release. “It makes no sense that the President’s health care law prohibits a parent from using these accounts to purchase over-the-counter allergy treatment or cold medicine for their child without a doctor’s prescription. As health care costs continue to rise, Washington should allow more choices in health care, not fewer options.” Previously, individuals could receive reimbursement for all medications through these accounts, including over-the-counter drugs that were not prescribed by a medical provider; FSAs had no contribution limit and could be used to pay for routine medical expenses including vision and dental care. Sens. Kelly Ayotte (R-NH), Richard Burr (R-NC), Mike Crapo (R-ID), Johnny Isakson (R-GA), Jim Risch (R-ID), Pat Roberts (R-KS) and Roger Wicker (R-MS) also co-sponsored the bill.


Senate Passes FY 2016 Budget Plan

On March 27, the Senate approved the Republican-led budget resolution that established the budget outline for fiscal year 2016. In a 52-46 vote, with Republicans Ted Cruz (R-TX) and Rand Paul (R-KY) opposing and Democrats Dianne Feinstein (D-CA) and Barbara Mikulski (D-MD) abstaining, the budget proposal was passed along party lines. With the plan, Senate Republicans anticipate saving $2.1 trillion by eliminating the coverage provisions of the Affordable Care Act (ACA), including repealing the law’s expansion of Medicaid eligibility to households with incomes up to 138 percent of the federal poverty level and eliminating the subsidies available to low- and middle-income households to buy private plans through state and federal exchanges. The approved Senate budget also includes an additional $400 billion in reductions to Medicaid spending over a decade and $430 billion in savings from changes to Medicare benefits. The average annual growth in spending on Medicare slows from 6.4 percent under current law to 5.5 percent under the GOP proposal, with those increases largely driven by an aging population; the Republican budget also drops average yearly increases in Medicaid spending from 5.6 percent to 4.2. Worth noting, the Senate proposal differs from the House’s approved version in that it stops short of moving Medicare to a premium support model, and vows to extend the solvency of the Medicare trust fund by five years (leaving the details for achieving that goal up to legislative committees). The budget also promises to “modernize Medicaid based on the successful model of the Children’s Health Insurance Program,” while simultaneously pledging more flexibility for states. The chamber also voted 56-44 to approve an amendment offered by Sen. Tim Scott (R-SC) to create a deficit-neutral fund that would increase awareness of all ACA-related taxes included in monthly health insurance premiums. Altogether, the Senate budget would cut $4.3 trillion in mandatory spending over the next 10 years and $97 billion from discretionary programs. In its next steps, both the House and Senate now have to form a conference committee to resolve their budget differences after the Easter recess.

Senators Send Bipartisan Letter to CMS Asking Agency to Reverse Its Decision on MA Risk Adjustment Rate

Fourteen bipartisan senators, led by Johnny Isakson (R-GA), Michael Bennet (D-CO), sent a letter to CMS March 23 imploring the agency to cease moving forward on a Medicare Advantage risk-adjustment model, CY 2016 45 Day Notice for Medicare Advantage, that it announced in its latest call letter. They believe the CMS-proposed rule will create further disruptions to MA beneficiaries in 2016 due to proposed payment cuts in the rule. In lieu of this payment model change, they ask the agency to use the risk adjustment scheme it released in 2013, saying it would give plans “greater certainty and less volatility.” The letter says that fully implementing the revised health-status risk-adjustment model will decrease payments by 1.7 percent next year. The Medicare Payment Advisory Commission (MedPAC) reported in 2014 that the model tends to overpay for low-cost enrollees and underpay for very high-cost enrollees.

Senate Aging Committee Hearing and Bicameral Legislation Highlight Need for Increased Alzheimer’s Research Funding

The Senate Aging Committee held a hearing March 25 in order to investigate whether the U.S. is properly funding Alzheimer’s research in order to find a cure for the disease by 2025. The hearing focused on the financial, economic and emotional challenges facing those with Alzheimer’s disease and the individuals and families who care for them. Approximately $600 million, or less than three-tenths of 1 percent of the $226 billion spent to care for Americans suffering with the disease, is spent on researching a cure for the disease. “Alzheimer’s receives funding that is clearly disproportionately low compared to its human and economic toll,” said Chair Susan Collins (R-ME) in her opening statement. Moreover, Ranking Member Claire McCaskill (D-MO) discussed the critical importance of both investing in medical research to combat Alzheimer’s and the importance of funding and expanding Medicaid programs for long-term care. As the most expensive disease in the nation, Alzheimer’s will cost $226 billion in 2015 with projections to reach $1.1 trillion by 2050. Also introduced this week in both chambers, the bipartisan HOPE for Alzheimer's Act (H.R. 1559/S. 857) aims to ensure that newly diagnosed Medicare beneficiaries and their caregivers receive comprehensive care planning services and mandates their diagnosis to be documented in their medical record; it will also help inform health care providers about what steps should be taken following a diagnosis, which will enhance assistance for people with Alzheimer’s and their caregivers.

Witness List

B Smith
and her husband, Dan Gasby
Former model, Restaurateur, Retailer, Author and Actor who has been diagnosed with early-onset Alzheimer’s disease

Richard J. Hodes, M.D.
Director, National Institute on Aging at the National Institutes of Health

Ronald Petersen, Ph.D., M.D.
Professor of Neurology, Director and Chair, Cora Kanow Professor of Alzheimer’s Disease Research, Mayo Clinic Alzheimer’s Disease Research Center and Advisory Council on Alzheimer’s Research, Care, and Services

Kimberly Stemley
Caregiver and Chief Financial Officer, Rx Outreach

Heidi R. Weirman, M.D.
Division Director of Geriatrics and Medical Director, Maine Medical Center and Elder Care Services, MaineHealth

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

2. Administration

HHS Announces Health Care Payment Learning and Action Network

On March 25, HHS Secretary Burwell announced new engagement with public and private health care payers, purchasers, providers, consumers and states designed to develop successful payment models that improve health care quality. According to Burwell, the new initiative, known as The Health Care Payment Learning and Action Network, is being established to provide a forum for public-private partnerships to help the U.S. health care payment system meet or exceed recently established Medicare goals for value-based payments and alternative payment models. These goals are to move 30 percent of Medicare payments into alternative payment models by the end of 2016 and 50 percent into alternative payment models by the end of 2018. Alternative payment models include models such as Accountable Care Organizations (ACOs), bundled payments and advanced primary care medical homes. The Network will serve as a forum where payers, providers, employers, purchasers, states, consumer groups, individual consumers and others can discuss, track and share best practices on how to transition towards alternative payment models that emphasize value. The Network will be supported by an independent contractor that will act as a convener and facilitator.

FDA: An Interactive Discussion on the Clinical Considerations of Risk in the Postmarket Environment

On March 19, the FDA is announcing a public workshop entitled “Clinical Considerations of Risk in the Postmarket Environment.” The purpose of this workshop is to provide a forum for an interactive discussion on assessing changes in medical device risk as quality and safety situations arise in the postmarket setting when a patient, operator or member of the public uses the device. FDA is interested in obtaining input from stakeholders about assessing risk postmarket when new hazards develop in the postmarket setting that were not present or not known at the time of approval, or hazards were anticipated, but harm occurs at an unexpected rate or in unexpected populations or use environments. Comments and suggestions generated through this workshop will facilitate the assessment of risk in postmarket quality and safety situations. The public workshop will be held on April 21, 2015, from 8:30 a.m. to 5 p.m. This public workshop will be webcast. Persons interested in viewing the webcast must register online by 4 p.m., April 13, 2015. In addition, the workshop will include a public comment session and topic-focused sessions.

HHS Report: ACA Led to $7.4 Billion Decline in Uncompensated Hospital Care Costs

The Department of Health and Human Services (HHS) released a report March 23 finding that hospitals spent approximately $7.4 billion less in uncompensated care in 2014 than they would have, had coverage remained at its 2013 level — at $27.3 billion versus $34.7 billion. The figures represent a 21 percent reduction in uncompensated care spending. Uncompensated care is the unreimbursed cost of the care provided by hospitals to people who are uninsured or underinsured. In order to develop its findings, HHS’s Assistant Secretary for Planning and Evaluation (ASPE) analyzed hospital financial reporting and found that member surveys from hospital associations indicate that through 2014 the payor mix shifted in ways that will likely reduce hospital uncompensated care costs in the future. Also worth noting, the agency concluded that $5.0 billion of this uncompensated cost reduction comes from the 28 Medicaid expansion states plus Washington, D.C., representing a 26 percent reduction in uncompensated care spending and 68 percent of total savings. The remaining $2.4 billion comes from the 22 Medicaid non-expansion states, representing a 16 percent reduction in uncompensated care spending and 32 percent of total savings. Alluding to possible further savings, HHS said if non-expansion states had proportionately as large increases in Medicaid coverage as did expansion states, their uncompensated care costs would have declined by an additional $1.4 billion. In 2013, hospitals provided over $50 billion in uncompensated care in the United States.

3. State Activities

New Hampshire Legislature Moves to End Medicaid Expansion in 2016

During a budget review session on March 15, Republican members of the New Hampshire House Finance Committee, Division III, approved by 6-3 party line vote to eliminate a provision in the budget that would have provided for the state’s expanded Medicaid program to continue beyond its current sunset date of Dec. 31, 2016. According to the National Association of State Budget Officers’ annual report, in New Hampshire Medicaid grew from 24 percent of the overall state budget in 2012 to 27 percent in 2014, with roughly 34,000 residents having signed up for the state’s expansion program, which provides coverage for individuals with incomes that fall within 138 percent of the federal poverty level. The budget must pass the full House and Senate before being sent to Gov. Hassan for her signature. While Hassan opposes the committee’s decision to end the expansion, and has included an extension into 2017 of the existing expansion, she has not indicated whether the absence of an extension would compel her to veto the budget. For more information, please visit

Right to Try Laws Signed in Three States

This week, three more governors signed into law “Right to Try” legislation, which would nullify in practice some Food and Drug Administration (FDA) rules that prevent still experimental drugs and treatments from being used by terminally ill patients. On March 26 Gov. Terry McAuliffe (D-VA) signed HB1750, the Virginia Right to Try Act, and on March 24 Gov. Gary Herbert (UT-R) and Gov. Mike Pence (R-IN) signed into law HB94, the Utah Right to Try Act, and HB1065, the Right to Try Act, respectively. Under current federal regulations, a patient with a serious or life-threatening condition has two options for accessing drugs and therapies not already approved and in the marketplace. The easiest way to do so is by enrolling in a clinical trial for the drug. Unfortunately, there are a number of factors that may prohibit a patient’s participating in a clinical trial, such as a preexisting medical condition, age and geographic location. As it stands, patients can also attempt to gain access to an experimental therapy by applying directly to the FDA through their “compassionate use” program. In the last four years, the FDA has received close to 6,000 applications from patients hoping to gain access to unapproved but potentially lifesaving therapies; FDA says it has denied only 33 requests in that time period. Thus far eight other states have enacted “Right to Try” laws, and similar legislation is on the desks of Mississippi’s and Montana’s governors and in various phases of consideration in 20 other states.

4. Regulations Open for Comment

FDA Assessing the Center of Drug Evaluation and Research’s Safety-Related Regulatory Science Needs and Identifying Priorities

On March 19, the Food and Drug Administration (FDA) announced the availability of a report entitled "Assessing CDER’s Drug Safety-Related Regulatory Science Needs and Identifying Priorities." This report identifies drug safety-related regulatory science needs and priorities related to the mission of FDA’s Center for Drug Evaluation and Research (CDER) that would benefit from external collaborations and resources. FDA hopes to foster collaborations with external partners and stakeholders to help address these needs and priorities. This notice asks stakeholders conducting research related to these needs to describe that research and indicate their interest in collaborating with FDA to address safety-related research priorities. Since publication of the 2011 ‘‘Identifying CDER’s Science and Research Needs’’ report, FDA has been engaged in efforts to further assess and prioritize the needs articulated therein. As part of these efforts, CDER’s Safety Research Interest Group (SRIG), a subcommittee of the Science Prioritization and Review Committee, assessed CDER’s overall drug safety-related regulatory science needs in view of FDA’s ongoing research efforts and highlighted areas that would benefit from additional resources and collaboration. Public comments will be accepted at any time. However, the public is encouraged to submit comments by May 18, 2015, to ensure FDA consideration.

National Coverage Determinations Proposed for Removal

On Aug. 7, 2013, the Centers for Medicare & Medicaid Services (CMS) published a Federal Register notice (78 FR 48164-69), updating the process used for opening, deciding or reconsidering national coverage determinations (NCDs) under the Social Security Act (the Act). The notice replaced the Sept. 26, 2003, Federal Register notice (68 FR 55634) and further outlined an expedited administrative process, using specific criteria, to remove certain NCDs older than 10 years since their most recent review. On March 18, CMS announced its list of NCDs proposed for removal, along with the relevant portion of the Federal Register notice containing the CMS criteria. CMS is soliciting public comment through April 17 on whether any or all of these NCDs should be removed or retained. CMS expects to publish a finalized list by fall 2015. Local Medicare Administrative Contractors (MACs) will be able to determine coverage for items and services that were previously determined by removed NCDs. View the proposed rule:

HHS Releases Proposed Rules on EHR Incentive Programs and Health IT Certification Criteria

The U.S. Department of Health and Human Services (HHS), Centers for Medicare & Medicaid Services (CMS) and Office of the National Coordinator for Health Information Technology (ONC) announced March 20 the release of the Stage 3 notice of proposed rulemaking for the Medicare and Medicaid Electronic Health Records (EHRs) Incentive Programs and 2015 Edition Health IT Certification Criteria to improve the way electronic health information is shared and ultimately improve the way care is delivered and experienced. The proposed rules aim to give providers additional flexibility, make the program simpler, drive interoperability among electronic health records and increase the focus on patient outcomes to improve care.

Specifically, the Meaningful Use Stage 3 proposed rule issued by CMS specifies new criteria that eligible professionals, eligible hospitals and critical access hospitals must meet to qualify for Medicaid EHR incentive payments; the rule also proposes criteria that providers must meet to avoid Medicare payment adjustments (Medicaid has no payment adjustments) based on program performance beginning in payment year 2018. Moreover, the 2015 Edition Health IT Certification Criteria proposed rule aligns with the path toward interoperability — the secure, efficient and effective sharing and use of health information — identified in ONC’s draft shared Nationwide Interoperability Roadmap. The proposed rule also builds on past editions of adopted health IT certification criteria, and includes new and updated IT functionality and provisions that support the EHR Incentive Programs’ care improvement, cost reduction and patient safety across the health system.

Under the Health Information Technology for Economic and Clinical Health Act, doctors, health care professionals and hospitals, including critical access hospitals, can qualify for Medicare and Medicaid incentive payments when they adopt and meaningfully use health IT technology certified by ONC. The Stage 3 proposed rule may be viewed here, and the comment period ends on May 29, 2015. The 2015 Edition proposed rule may be viewed here and the comment period ends on May 29, 2015. The Draft 2015 Edition Certification Test Procedures may be viewed at, and the comment period ends on June 30, 2015.

Use of an Electronic Informed Consent in Clinical Investigations: Questions and Answers; Draft Guidance for Industry, Clinical Investigators and Institutional Review Boards

The Food and Drug Administration (FDA or the Agency) is announcing the availability of draft guidance for industry, clinical investigators and institutional review boards, entitled “Use of Electronic Informed Consent in Clinical Investigations: Questions and Answers.” The guidance provides recommendations for clinical investigators, sponsors and institutional review boards (IRBs) on the use of electronic media and processes to obtain informed consent for FDA-regulated clinical investigations of medical products, including human drug and biological products, medical devices and combinations thereof. Although public comments will be accepted any time, to ensure that the Agency considers your comment on this draft guidance before it begins work on the final version of the guidance, submit either electronic or written comments on the draft guidance by May 8, 2015.

FDA: Reprocessing Medical Devices in Health Care Settings: Validation Methods and Labeling

On March 12, FDA announced new actions to enhance the safety of reusable medical devices and address the possible spread of infectious agents between uses. The new recommendations are outlined in a final industry guidance aimed at helping device manufacturers develop safer reusable devices, especially those devices that pose a greater risk of infection. Medical devices intended for repeated use are commonplace in health care settings. They are typically made of durable substances that can withstand reprocessing, a multi-step process designed to remove soil and contaminants by cleaning and to inactivate microorganisms by disinfection or sterilization. While the majority of reusable devices are successfully reprocessed in health care settings, the complex design of some devices makes it harder to remove contaminants. FDA’s guidance document, titled “ Reprocessing Medical Devices in Health Care Settings: Validation Methods and Labeling ,” includes recommendations medical device manufacturers should follow pre-market and post-market for the safe and effective use of reprocessed devices. A device manufacturer’s reprocessing instructions are critical to protect patients against the spread of infections. As part of its regulatory review for reusable medical devices, the FDA reviews the manufacturer’s reprocessing instructions to determine whether they are appropriate and able to be understood and followed by end users. The guidance lists six criteria that should be addressed in the instructions for use with every reusable device to ensure users understand and correctly follow the reprocessing instructions.

Compounding of Human Drug Products Under the Federal Food, Drug, and Cosmetic Act; Establishment of a Public Docket

On March 9, FDA announced it is establishing a public docket to receive information, recommendations and comments on matters related to the Agency’s regulation of compounding of human drug products under sections 503A and 503B of the Federal Food, Drug, and Cosmetic Act (FD&C Act). Section 503A of the FD&C Act describes the conditions that must be satisfied for human drug products compounded by a licensed pharmacist or licensed physician to be exempt from certain sections of the FD&C Act. Previously, the conditions of section 503A of the FD&C Act also included restrictions on the advertising or promotion of the compounding of any particular drug, class of drug or type of drug and the solicitation of prescriptions for compounded drugs. These provisions were challenged in court and held unconstitutional by the U.S. Supreme Court in 2002.

On Nov. 27, 2013, President Obama signed the Drug Quality and Security Act (DQSA), which contains important provisions relating to the oversight of human drug compounding. This new law removes from section 503A of the FD&C Act the provisions that had been held unconstitutional by the U.S. Supreme Court in 2002. By removing these provisions, the new law clarifies that section 503A of the FD&C Act applies nationwide. In addition, the DQSA adds a new section, 503B, to the FD&C Act that creates a new category of “outsourcing facilities.” Outsourcing facilities, as defined in section 503B of the FD&C Act, are facilities that meet certain conditions described in section 503B, including registration with FDA as an outsourcing facility. This docket is intended for general comments related to human drug compounding that are not specific to documents or issues that are the subject of other dockets. Comments may be submitted to this docket at any time.

FDA Solicits Comments on New Methodologies for Generic Drug Clinical Studies

In a notice released March 5 by the Federal Register, the Food and Drug Administration (FDA) is seeking feedback from stakeholders on possible new methodologies for generic drug clinical studies and ways to demonstrate bioequivalence as part of its regulatory science priorities for 2016 under Generic Drug User Fee Amendments (GDUFA). FDA noted it will take feedback from stakeholders into account when creating next year’s regulatory science plan for generic drugs. A public hearing has been scheduled for June 5, where FDA plans to hear from stakeholders on six specific areas including scientific or technical advancements that would help that currently limit generics’ availability, innovative approaches to preapproval development of generic drugs, advancements in scientific approaches to evaluate therapeutic equivalence of generic drugs through later stages of their lifecycle. The agency’s efforts come as House and Senate lawmakers are also looking at ways to revamp clinical trial design, though up to now they haven’t focused on generic drug-specific issues, and identification of high-impact public health issues involving generic drugs, among others. The notice comes as the House of Representatives 21st Century Cures discussion legislative draft also seeks to revamp clinical trials by allowing trial sponsors to propose incorporating adaptive trial designs for alternative statistical methods into proposed clinical trials and streamlining the institutional review board.

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.

5. Reports

GAO: Coverage of Services and Costs to Consumers in Selected CHIP and Private Health Plans in Five States

According a recent report, in five selected states, GAO determined that coverage of services in the selected State Children’s Health Insurance Program (CHIP) plans was generally comparable to that of the selected private qualified health plans (QHP), with some differences. In particular, the plans were generally comparable in that most covered the services GAO reviewed, with the notable exceptions of pediatric dental and certain enabling services such as translation and transportation services, which were covered more frequently by the CHIP plans. For example, only the selected QHP in New York covered pediatric dental services; the QHPs in the other four states did not include pediatric dental services, although some officials indicated this would change for 2015 offerings. In those four states, stand-alone dental plans (SADP) could be purchased separately. Selected CHIP plans and QHPs were also similar in terms of the services on which they imposed day, visit or dollar limits, although the five selected CHIP plans generally imposed fewer limits than the selected QHPs. For services where coverage limits were sometimes imposed on QHPs and CHIP plans, GAO’s review found that the limits on CHIP plans were at times less restrictive. For example, the selected QHP in Utah limited home- and community-based health care services to 60 visits per year while the selected CHIP plan did not impose any limits. In addition, for pediatric dental services, coverage limits in the selected SADPs were generally similar to those in the selected CHIP plan; however, when there were differences, CHIP was generally more generous.

MACPAC Issues March 2015 Report to Congress

The Medicaid and CHIP Payment and Access Commission (MACPAC) has released its March 2015 Report to Congress. The report examines the affordability of exchange coverage for children currently covered by CHIP; additional chapters on CHIP focus on provider networks and comparing CHIP benefits to Medicaid, exchange plans and employer-sponsored insurance. MACPAC is a non-partisan legislative branch agency that provides policy and data analysis and makes recommendations to Congress, the Secretary of the U.S. Department of Health and Human Services, and the states on a wide array of issues affecting Medicaid and the State Children’s Health Insurance Program (CHIP). The U.S. Comptroller General appoints MACPAC’s 17 commissioners, who come from diverse regions across the United States and bring broad expertise and a wide range of perspectives on Medicaid and CHIP. MACPAC’s authorizing statute also requires the Commission to submit reports to Congress by March 15 and June 15 of each year.

GAO Report Finds ACA Tax Credits Expanded Insurance Coverage

In a report released March 23, the Government Accountability Office (GAO) provides an early look at the effect of the advance premium tax credit (APTC) and the affordability of health insurance under the Affordable Care Act (ACA) The study found that early evidence suggests that the APTC likely contributed to an expansion of health insurance coverage in 2014 because it significantly reduced the cost of exchange plans’ premiums for those eligible. Although GAO says there are limitations to measuring the effects of the APTC using currently available data, surveys that GAO identified estimated that the uninsured rate declined significantly among households with incomes eligible for the APTC. For example, one survey found that the rate of uninsured among individuals with household incomes that make them financially eligible for the APTC fell 5.2 percentage points between September 2013 and September 2014.This expansion in health insurance coverage is likely partially a result of the APTC’s having reduced the cost of health insurance premiums for those eligible. Among those eligible for the APTC who the Department of Health and Human Services (HHS) initially reported had selected a plan through a federally facilitated exchange or one of two state-based exchanges, the APTC reduced premiums by 76 percent, on average. Also worth noting, GAO indicated that non-elderly adults “may face challenges maintaining coverage,” and those without it could have a hard time affording it. About 16 percent of these individuals remained uninsured, including some with household income below 100 percent of the federal poverty level but who live in one of the 23 states that didn’t expand Medicaid or those without work-offered insurance who were not eligible for a tax credit. To make health insurance more affordable and expand access, the ACA created the APTC to subsidize the cost of exchange plans’ premiums for those eligible, creating two standards for defining affordability of health insurance: 8 percent of household income for the purposes of minimum essential coverage and 9.5 percent for APTC eligibility for individuals offered employer-sponsored plans.

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

Stephanie Kennan, Senior Vice President
Charlyn Iovino, Vice President
Brian Looser, 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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