Feb 1, 2016

Washington Healthcare Update

This Week: Because of the Blizzard of 2016—also known as “Snowzilla”—in Washington, D.C., and other parts of the East Coast, this is a combined issue... The House of Representatives opted not to come back to town until next week because of the snow... The federal government was closed for two days... The Senate delayed returning by a day... But it was still a busy time for health policy.

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress

House of Representatives

Reps. Upton and Brady Subpoena Treasury Regarding ACA Cost-sharing Reduction Program

House Energy and Commerce Committee Chairman Fred Upton (R-MI) and House Ways and Means Committee Chairman Kevin Brady (R-TX) both issued a subpoena to Secretary of the Treasury Jack Lew for documents regarding the cost-sharing reduction (CSR) program—part of the Affordable Care Act (ACA)—which gives subsidies to some low-income people covered by Obamacare to help them pay for medical care. The committee chairmen say that the administration has refused repeated requests for information and documents on the program. They have also requested documents from Health and Human Services (HHS) Secretary Sylvia Burwell. Burwell agreed to provide a briefing on the issue, putting a subpoena threat on hold to give HHS another chance to provide the requested information.

The committee leaders are concerned that the administration is paying subsidies to insurance companies under the health care law without approval from Congress; the expenditures have totaled more than $5 billion to date and are estimated by the Congressional Budget Office (CBO) to amount to $170 billion over the next 10 years. The committees first requested documents on Feb. 3, 2015, then on July 7, 2015, and once more in December 2015. In the most recent letter, the chairmen are requiring Treasury to comply with their requests by Feb. 3, 2016.

Click here to see a press release and complete timeline of events.

To read all the letters, click here.

Former Turing CEO Shkreli to Appear Before Oversight Committee Feb. 4

The House Oversight Committee subpoenaed former Turing Pharmaceuticals CEO Martin Shkreli to appear at a hearing on recent drug price increases on Jan. 26, 2016. Because of snow, the hearing has been postponed to Feb. 4. However, Shkreli’s lawyers asked the committee to excuse him from the hearing because of a federal court order from another case that prohibits his traveling outside New York City. He must receive permission from the court to travel, but neither Shkreli nor his representatives have attempted to get that permission. Shkreli’s lawyers have suggested that he will plead the Fifth. However, Oversight staff said the subpoena still requires him to show up at the hearing, even if he does so plead.

Nancy Retzlaff, chief commercial officer at Turing, and Howard Schiller, interim CEO at Valeant, are both scheduled to testify at the hearing. Valeant is another company that has been on the burner for dramatically raising prices of off-patent drugs.

Here is the full list of witnesses:

Dr. Janet Woodcock
Director, Center for Drug Evaluation and Research
U.S. Food and Drug Administration (FDA)

Mr. Howard B. Schiller
Interim Chief Executive Officer
Valeant Pharmaceuticals International, Inc.

Mr. Martin Shkreli
Former Chief Executive Officer
Turing Pharmaceuticals LLC

Ms. Nancy Retzlaff
Chief Commercial Officer
Turing Pharmaceuticals LLC

Mr. Mark Merritt
President and Chief Executive Officer
Pharmaceutical Care Management Association

For more information, click here.


Senate Committee on Homeland Security Looking into Co-Ops

The chairman of the Senate Committee on Homeland Security and Governmental Affairs, Wisconsin Sen. Ron Johnson, is asking the Centers for Medicare and Medicaid Services (CMS) to provide information about the Affordable Care Act (ACA) co-ops—including copies of loan agreements, a list of plans that have been put under “enhanced oversight” and details on plans to recover funding from failed insurers. Johnson requested the information two days before the Senate Finance Committee held its own hearing on the co-ops. To read his letter, click here.

Senate Finance Committee Holds Hearing on Obamacare Co-Ops

On Jan. 21, the Senate Finance Committee held a hearing entitled “Healthcare Co-Ops: A Review of the Financial and Oversight Controls.” Acting Administrator for the Centers for Medicare and Medicaid Services (CMS) Andy Slavitt was the sole witness in the hearing, which addressed the program’s failures. Twelve of the 23 co-ops started with $2.4 billion in Obamacare loans have failed, forcing 600,000 exchange customers to find new plans. Most of the remaining startups continue to suffer, with a combined $200 million in losses through the first nine months of 2015.

Committee Chair Orrin Hatch (R-UT) blamed the program’s problems on CMS, which he said encouraged the co-ops to use “creative accounting” to cook their books. Other members defended the Obama administration, arguing that Congress gave the program no financial flexibility.

Slavitt said his focus was on creating better oversight practices for the program. He also said he would like to loosen the capital rules for co-ops and help them attract greater investment, or find partners to merge with. These issues will all be addressed in guidance for the co-ops that Slavitt said would be released soon. CMS is also working with the Department of Justice (DoJ) to see how much of the $1.2 billion of federal dollars funded into the co-ops can be recovered. Slavitt declined to say which co-ops may face legal action. Read his testimony here.

Senators Wyden, Grassley Request Information on Sovaldi Report

Senate Finance Committee Ranking Member Ron Wyden (D-OR) and senior committee member Chuck Grassley (R-IA) sent a letter to the health care and patient community requesting feedback on policy questions raised in their report, “The Price of Sovaldi and Its Impact on the U.S. Health Care System,” from Dec. 1, 2015. This report examined how Gilead Sciences, Inc., developed, priced, marketed and sold the hepatitis C drug Sovaldi (and later Harvoni). The senators ask for information “about how to address the financial impact of high prices of breakthrough drugs, ensuring patient access, and improving marketplace transparency.”

Congress, Democratic presidential candidates and the administration have kept rising drug prices in the spotlight, but none have taken concrete action on the matter. Grassley and Wyden argue that the price of hepatitis C medications is to blame for patients’ not receiving the drug.

Senate HELP Committee Will Piece Together Medical Innovations Bill, Work Toward Mental Health Bill Markup

On Jan. 19, the Senate Health, Education, Labor and Pensions (HELP) Committee announced they will not immediately put forth a companion to the House’s 21st Century Cures Bill and will instead consider several smaller bills that have bipartisan support. There will be three executive markup sessions on numerous bipartisan bills. So far, Committee Democrats have committed to only the first markup on Feb. 9. Partisan disagreement on major subject areas such as drug pricing and funding has led Senate HELP Committee Chairman Lamar Alexander (R-TN) to take a fragmented approach. Alexander said he hopes to pass enough smaller bills to match the House Cures bill that passed the lower chamber this summer. Click here to see the press release and list of bills to be considered at each markup session.

The HELP Committee also held its first hearing on mental health this year, questioning experts and hinting at legislation they want included in a bill. Committee members and witnesses discussed increasing access to mental health care in rural areas, reducing the stigma around mental health and addressing the shortage of providers, among other issues. Sens. Bill Cassidy (R-LA) and Chris Murphy (D-CT) are working on a bill with Alexander and Ranking Member Sen. Patty Murray (D-WA), S. 1945, which will most likely pair with a reauthorization of the Substance Abuse and Mental Health Services Administration.

Holds Placed on Califf’s FDA Nomination and Sen. Manchin Threatens Filibuster

Sen. Bernie Sanders (D-VT) has placed a hold on Robert Califf’s nomination to lead the U.S. Food and Drug Administration (FDA), citing his ties to the drug industry. Sanders said in a statement that the next FDA commissioner should work to lower drug prices, “implement rules to safely import brand-name drugs from Canada and hold companies accountable who defraud our government.” Sanders voiced his support for Sen. Edward Markey (D-MA), who issued a hold on Califf’s nomination until FDA changes its approval process for opioid painkillers. Califf’s nomination also faces a hold from Sen. Lisa Murkowski (R-AK), who is asking FDA to require labeling of genetically modified salmon.

Sen. Joe Manchin (D-WV) announced that should the nomination come to the Senate floor for consideration, he would filibuster. Manchin doesn’t think Califf would be steadfast enough in preventing the abuse of opioid painkillers. “The FDA and Commissioner’s number one priority should be public health and it is inappropriate for the FDA Commissioner to have had such close financial ties with the pharmaceutical industry,” Manchin said.

Sen. Shaheen Asks for a Federal Response to the Zika Outbreak

In a letter on Jan. 27, Sen. Jeanne Shaheen (D-NH) called on Cabinet officials to coordinate a federal response to the Zika outbreak with the same urgency as when the Ebola outbreak began in West Africa. The letter—sent to HHS Secretary Sylvia Burwell and the heads of the Homeland Security and State Departments—asks that the officials detail any additional resources or authorities they might need from Congress.

2. Administration

Insurance Mega-Mergers Will Get Review by States

Antitrust experts and consumer advocates are asking state regulators to examine the blockbuster insurance mergers that would reduce the number of national health plans from five to three. They argue that these mergers threaten to leave consumers with fewer choices and higher prices. There has been increased attention on whether the Justice Department will block Aetna’s $37 billion acquisition of Humana and Anthem’s $54 million takeover of Cigna on antitrust grounds. However, health plans are usually regulated by the states, which have a broader mandate to assess issues raised by the deals.

David Balto, an antitrust lawyer and former federal regulator, asked the National Association of Insurance Commissioners to create a working group that would help state regulators conduct reviews. He is also working with consumer groups concerned about the mega-mergers. Regulators are looking into more than just antitrust concerns—consumer protection issues such as bolstering benefits and limiting premium increases may be addressed. Individual states and regulators can demand concessions if they feel that their consumers would be better served as a result, according to antitrust expert Leemore Dafny.

Consumer advocates pointed out that Aetna and Humana combined would control two-thirds of the Medicare Advantage market in the state of Virginia, according to a letter written to the Virginia Bureau of Insurance. The groups wrote, “If the market becomes so concentrated that dominant insurers are able to eliminate or unduly restrict broader-network options that would be harmful for consumers who are willing to pay more and want a broader network.”

Public hearings have been held on the mergers and more are planned in numerous states, including California, Wisconsin and Connecticut.

FDA Incentivizes More Information Sharing on Medical Device Cybersecurity Vulnerabilities

On the first day of the U.S. Food and Drug Administration’s (FDA) two-day meeting on medical device security, attendees focused largely on the steps that could be taken to better address vulnerabilities in devices, with information-sharing organizations discussed as a key route for encouraging more collaboration from manufacturers. FDA, in its recent draft guidance on postmarket management of cybersecurity for medical devices, suggested waiving reporting requirements for vulnerabilities that do not result in serious injuries, so long as the manufacturer is a member of an Information Sharing and Analysis Organization (ISAO). At the meeting, attendees worried that participation in such organizations would be a major change for companies that have traditionally kept vulnerability information secret.

According to panelists at the meeting, the difficulty in establishing ISAOs is creating the appropriate environment for information sharing. It is not known what would constitute an ISAO and what kind of information would need to be shared to qualify under FDA’s guidance. FDA hopes to bring the security community together to a degree that researchers, regulators and manufacturers can have transparent conversations about vulnerabilities. Several ISAOs exist that have the necessary government structure for non-disclosure agreements to allow for a collaborative environment. FDA is attempting to determine what incentives would bring stakeholders together.

FDA previously issued guidance on cybersecurity in the premarket phase—this focused on addressing vulnerabilities in the design and approval phases. An analysis by FDA of 85 510(k) submissions from October 2014 to October 2015, however, shows that 69 percent should have included cybersecurity information and only 47 percent did (28 out of the 59 submissions).

CMS Schedules Webinars on Covered Outpatient Drugs Final Rule

CMS will host the following webinars to provide an overview of the Covered Outpatient Drugs final rule with comment that was displayed in the Federal Register on Jan. 21, 2016.

Wednesday, Feb. 10, 2016, 12:30 – 2:00 p.m. ET: This webinar will be geared toward drug manufacturers and those with responsibilities or involvement in government pricing/programs. CMS will provide a broad overview of the final rule with comment, the focus of this webinar will be manufacturer reporting requirements and rebate requirements, including topics related to Average Manufacturer Price (AMP), best price, 5i drugs, authorized generics, covered outpatient drug definition, innovator multiple source drug and single-source drug definitions, drugs approved exclusively for pediatric indications, and line extension drugs.

Thursday, Feb. 11, 2016, 12:30 – 2:00 p.m. ET: CMS states that this webinar will be geared toward the pharmacy industry including retail community pharmacies and pharmacy trade organizations. CMS will provide a broad overview of the final rule with comment, the focus of this webinar will primarily be within the area of pharmacy reimbursement, including the federal upper limits (FULs), Actual Acquisition Cost, Professional Dispensing Fee, and Reimbursement for Federal Discount Programs (340B) and Federal Supply Schedule (FSS).

Please visit the Covered Outpatient Drugs Policy page for more details on the final rule with comment.

CMS Defends Legality of 1115 Waivers

Beneficiary advocates are expressing concerns over the legality of certain Medicaid demonstration waivers (1115 waivers) approved by the Centers for Medicare and Medicaid Services (CMS), including those requiring premiums, cost-sharing, lock-outs and nonemergency visits and transportation. Advocates such as Leonardo Cuello of the National Health Law Program have legal concerns about many waivers granted to states—including ones to Iowa, Michigan, Indiana and Montana—that let those states charge beneficiaries premiums. Medicaid does not permit states to charge premiums to beneficiaries with incomes less than 150 percent of the federal poverty level, so states must get 1115 demonstration waivers to charge premiums. Indiana goes further and locks beneficiaries out of Medicaid for six months if they don’t pay their premiums (even if they offer to pay back what they owe). Advocates argue that this policy shouldn’t be allowed.

CMS points to its ongoing evaluations of the waivers to quell concerns, and stresses it will continue working with states to create individual programs while also ensuring consumer protections are maintained. CMS also notes that Indiana is the only state with a lock-out period, which is being evaluated with the creation of a control group, in compliance with federal law. Advocates argue, however, that CMS is not complying with the minimum requirements of 1115, which include promoting Medicaid objectives. Overall, advocates agree that it is important to test whether certain waiver requirements, including premiums, copays and health behaviors, are good for the program in the long run.

CMS Releases Final Medicaid Outpatient Drug Rule

On Jan. 21, the Centers for Medicare and Medicaid Services (CMS) published a final rule on Medicaid coverage of outpatient drugs. The rule includes reforms to the rebate and reimbursement systems for Medicaid prescription drugs, which will save federal and state governments an estimated $2.7 billion over five years. The “Covered Outpatient Drugs” rule implements changes made to Medicaid drug coverage under Obamacare by providing further detail on how reimbursements and rebates are calculated. This is part of CMS’s efforts to help ensure affordability and accessibility of prescription drugs, while also supporting pharmaceutical innovation. CMS says the rule will close loopholes, incentivize pharmacies to utilize generic drugs by ensuring proper reimbursements for their cost and give territories additional tools to manage Medicaid drug costs.

Registration Now Open for CMS Risk Adjustment Forum

The Centers for Medicare and Medicaid Services (CMS) announced that registration is open for its all-day risk adjustment forum scheduled to take place on Mar. 31 in Baltimore, MD. Stakeholders are invited to the public session to review plan experience over the past two years and to talk about potential changes to the risk adjustment methodology for plan years starting in 2018. Registration for the event will end Mar. 23.

CMS Outlines Six Priorities to Reduce Disparities in Medicare

On Jan. 26, the Centers for Medicare and Medicaid Services (CMS) laid out six priorities in “The CMS Equity Plan for Improving Quality in Medicare.” The priorities are as follows:

  1. Expand the collection, reporting and analysis of standardized data
  2. Evaluate disparities impacts and integrate equity solutions across CMS programs
  3. Develop and disseminate promising approaches to reduce health disparities
  4. Increase the ability of the health care workforce to meet the needs of vulnerable populations
  5. Improve communication and language access for individuals with limited English proficiency and persons with disabilities
  6. Increase physical accessibility of health care facilities

CMS also said it will work to understand how Medicare programs have affected disparities, and is performing a separate evaluation and report to be released later this year. CMS also released a new guide for reducing readmissions for racially diverse patients as part of its plan to reduce health disparities.

CMS Announces Draft Medicaid Federal Upper Limits (FULs)

The Centers for Medicare and Medicaid Services (CMS) announced that the final Medicaid Average Manufacturer Price-based Federal Upper Limits (FULs) will be released in late March and made effective on April 1. The FULs were laid out in a recently released rule on Medicaid outpatient drugs, which also defines Average Manufacturer Price (AMP)—a key metric for determining pharmacy reimbursement for specific generics subject to the FULs. The Affordable Care Act (ACA) requires CMS to recalculate the FUL amounts, because they sometimes exceeded the market prices for multiple-source drugs.

CMS gave states a one-year transition period for the new FULs, so they can file new state plan amendments to adopt new pricing; the states will essentially need to plug the new FULs into their systems while working on plan amendments. CMS’s final rule also includes an exception to the FUL calculation, which allows for a higher multiplier to calculate the FUL based on the acquisition costs for specific multiple source drugs. States will have up to 30 days to implement the FULs after they become effective.

CMS Issues Final Rule With Face-to-Face Requirements for Home Health Services

On Jan. 27, the Centers for Medicare and Medicaid Services (CMS) released a final rule issuing requirements that physicians must document a face-to-face encounter with Medicaid patients before ordering home health services or certain related medical equipment. This rule also explains definitions related to the home health benefit and expands the home health benefit to include coverage of more medical supplies and equipment.

CMS Releases First Home Health Patient Experience of Care Star Ratings

On Jan. 28, the Centers for Medicare and Medicaid Services (CMS) introduced the first patient experience of care star ratings on Home Health Compare. Known as Home Health Care Consumer Assessment of Healthcare Providers and Systems (HHCAHPS) Survey star ratings, the measures evaluate patients’ experiences with home health agencies. Home Health Compare provides information on how well Medicare-certified agencies provide care to their patients. The star ratings report patients’ experiences of care ranging from one star to five stars using data from patients who have been treated by the agency. A five-star rating reflects the best patient experience. Out of the 11,000 agencies with data on Home Health Compare, over 6,000 of them now have patient care experience star ratings.

An individual is now able to view the following five HHCAHPS Survey star ratings for each home health agency listed on the site:

  1. Care of patients
  2. Communication between providers and patients
  3. Specific care issues
  4. Overall rating of care provided by the home health agency
  5. Survey summary star rating

This announcement is part of CMS’s initiative to increase transparency and help patients make informed health care decisions by simplifying the quality of care information across all CMS Compare websites. It also supports the larger effort across the Department of Health and Human Services (HHS) to deliver better care, spend health care dollars more wisely and make people healthier.

  • Nursing Home Compare features an overall star rating for each nursing home.
  • Physician Compare uses star ratings to display ratings for several meaningful measures for group practices.
  • Dialysis Compare uses star ratings to help make data on dialysis centers easier to understand and use.
  • Hospital Compare uses star ratings to help consumers compare and choose among hospitals.

For more information, click here.

CMS Releases Proposed Changes to Medicare Shared Savings Program ACOs

On Jan. 28, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule to update the way it measures the performance of Accountable Care Organizations (ACOs) in the Medicare Shared Savings Program. The proposal aims at creating long-term sustainability by improving the long-term incentives for ACOs that provide efficient, high-quality health care to Medicare beneficiaries.

Under the proposed rule, CMS would modify the process for resetting the benchmarks, which are used to determine ACO performance for ACOs renewing their participation agreements for a subsequent agreement period. The proposed practice would incorporate factors based on regional fee-for-service expenditures into establishing and updating the ACO’s rebased historical benchmark, including an adjustment to the benchmark based on regional spending that is phased-in over numerous agreement periods.

Other proposals include:

  • Recognizing that health cost trends vary in communities across the country by using regional, rather than national, spending growth trends when establishing and updating an ACO’s rebased benchmark
  • Adjusting an ACO’s rebased benchmark when it enters a second or subsequent agreement period by a percentage (increased over time) of the difference between fee-for-service spending in the ACO’s regional service area and the ACO’s historical spending, which aims to provide a greater incentive for continued ACO participation and improvement
  • Using a phased-in approach to implementation to give ACOs time to prepare for benchmarks that incorporate regional expenditures

Other proposals include adding a renewal option to allow eligible ACOs to extend their agreements an extra year, adjusting an ACO’s benchmark when its composition changes and clarifying the timeline for reopening determinations of ACO shared savings and shared losses for good cause or fraud or similar fault.

Click here to see a fact sheet with more information. CMS will accept public comment on the proposed rule until March 28, 2016.

3. State Activities

Alabama: State’s Medicaid Agency Asks for $157 Million Increase in Funds

Alabama’s state Medicaid agency is asking for a $157 million increase to maintain its current services. Although the federal government covers 70 percent of the cost, Medicaid is still the single-largest expenditure of the $6 billion state budget. There are still no expectations that Alabama will expand Medicaid under the Affordable Care Act (ACA).

Arizona: Lawmakers File Appeal on How Medicaid Expansion is Being Funded

Arizona lawmakers filed an appeal to the state’s Court of Appeals in protest of how Medicaid expansion is being funded. The lawmakers argue that Arizona’s provider assessment funding the state expansion was illegally passed by a simple majority of lawmakers instead of by the two-thirds majority required for tax increases. A lower court previously decided the assessment is constitutional. The lawmakers in this case are represented by the Goldwater Institute.

Colorado: Community Forum Held on ColoradoCare Ballot Measure

A community forum was held on Jan. 26 on ColoradoCare, a single-payer plan that will be on the November ballot. Backers of the measure had almost $26,000 at the end of 2015, according to campaign finance disclosures. The ColoradoCareYes committee received $424,000 and spent $398,000 last year. At least two committees have registered to fight the ballot initiative, known as Amendment 69. If voters pass the ColoradoCare initiative in November, Colorado will become the first state to provide universal health care to all of its residents. At the forum, the costs involved in the plan were a central focus over which people at opposite ends clashed. If passed, the single-payer plan would need $25 billion in new tax deductions.

Massachusetts: State Attorney General Threatens Legal Action Against Gilead Over Drug Prices

In a letter to Gilead, Massachusetts Attorney General Maura Healey threatened to pursue legal action against the drugmaker if it does not lower the price of two hepatitis C medications—Sovaldi and Harvoni. Healey said that Gilead’s high price of the drugs “may constitute an unfair trade practice in violation of Massachusetts law.” She also said her office is considering bringing an unfair commercial conduct complaint against Gilead. The letter calls for decreased prices, expansion of access and assistance in the goal of eradicating hepatitis C in the U.S. within our lifetime.

Michigan: HMOs Asking for Mental Health Contracts

HMOs are moving to further privatize Michigan’s public nonprofit mental health system by getting state mental health contracts—totaling $2.4 billion in state funding. The Michigan Association of Health Plans is trying to get state approval next year to bid for the contracts that are currently only in the public health sector. The health plans told Gov. Rick Snyder that allowing them to integrate medical and behavioral health could potentially cut costs by $200 million from 2017 to 2019. The Michigan Association of Community Mental Health Boards is pushing back on this, warning that the health plans are underestimating the intricacies of caring for the state’s population.

Minnesota: State Task Force Recommends Changes to Affordable Care Act (ACA)

On Jan. 15, the Minnesota Health Care Financing Task Force recommended a list of more than 30 changes to build on the Affordable Care Act (ACA). The list includes proposals to keep the state-based exchange as opposed to switching to, maintain a tax collected by health care providers and expand the Basic Health Program to 275 percent of the federal poverty level. Click here to view the entire list of recommendations.

Additionally, MNsure is increasing its call center staff for the final weeks of open enrollment. This is due to the extensive delays that occurred leading up to the Dec. 28 deadline for obtaining coverage on the exchange starting Jan. 1.

Missouri: Missouri Issues Timeline to Offer Managed Care Statewide in 2017

Missouri issued a timeline for the implementation of statewide Medicaid managed care by the summer of 2017. The state plans to issue a Request for Proposal (RFP) by April 29 and to have contracts awarded by Oct. 1; the state says these contracts will include a clause allowing for Medicaid expansion should the legislature authorize it. Medicaid managed care is present in almost half of Missouri’s 114 counties already. However, the new plan would not cover all populations; aged, blind or disabled people will continue to receive services through the traditional Medicaid program.

South Dakota: Federal Official Meet with Gov. Daugaard to Discuss Medicaid Expansion

Federal officials visited South Dakota Gov. Dennis Daugaard the week of Jan. 18 to discuss his Medicaid expansion plan. The officials will soon send a letter to the governor about policy changes that could satisfy Daugaard’s concerns about expansion. His plan aims at freeing up South Dakota’s budget by having the federal government provide additional funding for services provided to Native Americans eligible for the Indian Health Service. The final guidance is expected to be completed by the end of February.

Vermont: Vermont Gov. Shumlin Releases Draft Policy for All-Payer Waiver

On Jan. 25, Vermont Gov. Peter Shumlin released a proposed policy framework for the “all-payer waiver” the state is discussing with the Centers for Medicare and Medicaid Services (CMS) Innovation Center. According to the framework, Vermont would control the rates paid to hospitals and doctors under certain health care programs and caps would limit health care cost growth over a five-year period. Medicare, Medicaid and private insurance regulated by the state’s Green Mountain Care Board are all subject to the waiver.

The agreement sets out an annual 4.3 percent per capita spending growth cap over five years, with the aim of keeping spending at 3.5 percent growth per capita per year. This spending cap is 1 percent higher than Vermont’s economic growth. The demonstration would be from 2017 through 2021.

Wisconsin: Sen. Baldwin Asks Gov. Walker to Track Number of People Dropped from BadgerCare; State Senate Cuts Planned Parenthood Funding

Sen. Tammy Baldwin (D-WI) wrote a letter to Wisconsin Gov. Scott Walker asking him to update the number of people who were dropped from Medicaid coverage two years ago that have not signed up for a plan through the federal exchange. Figures released in July 2014 estimated that 27,000 out of 63,000 people removed from BadgerCare had not signed up for a private plan on the exchange. Baldwin thinks those numbers should be updated; “it has been over a year since Wisconsin taxpayers were updated on your plan to transition former BadgerCare recipients to coverage in the federal Marketplace,” Baldwin said.

On another note, Wisconsin’s state Senate cleared legislation stripping $7.5 billion in federal funding from Planned Parenthood. The funding cuts arise from two bills: 1) one that limits how much reimbursement Planned Parenthood receives on prescription drugs acquired through a Medicaid program, and 2) one that prevents Planned Parenthood from receiving Title X family planning grants. The lower chamber already approved the bill that cuts Title X funds. Gov. Walker is expected to sign both measures if they reach his desk.

Wyoming: Lawmakers Vote Against Proposal for Medicaid Expansion

Wyoming lawmakers rejected Republican Gov. Matt Mead’s proposal that would have expanded the state’s Medicaid program to about 20,000 low-income people. The Joint Appropriations Committee voted against the recommendation, and the decision leaves little possibility for the legislature to consider expansion in 2016.

4. Regulations Open for Comment

Food and Drug Administration (FDA) Issues Final Rule to Phase Out Trans Fats

FDA issued a final rule June 16 that gives the food manufacturers three years to phase out partially hydrogenated oils (PHOs), which are still used in a wide variety of food products from microwave popcorn to cake frosting. The decision finalizes an agency determination that PHOs, the primary dietary source of artificial trans fat in processed foods, are not “generally recognized as safe” or GRAS for use in human food. Since 2006, manufacturers have been required to include trans fat content information on the Nutrition Facts label of foods. Between 2003 and 2012, the FDA estimates that consumer trans fat consumption decreased about 78 percent and that the labeling rule and industry reformulation of foods were key factors in informing healthier consumer choices and reducing trans fat in foods. Comments on the final rule are due by June 18, 2018.

More information on FDA’s decision can be found in the agency’s press release.

CMS Soliciting Comments on Episode Groups as Required by MACRA

The Centers for Medicare and Medicaid Services (CMS) is soliciting comments on episode groups and on specific clinical criteria and patient characteristics to classify patients into care episode and patient condition groups as required by Section 101(f) of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), enacted April 16, 2015. The purpose of this commentary is to provide background and context to solicit stakeholder input on the episode groups that CMS has developed pursuant to Section 3003 of the Affordable Care Act (ACA). CMS is also seeking stakeholder input on the future role of episode groups in resource use measurement.

Comments should be sent to by 11:59 p.m. EST on Feb. 15, 2016.

FDA Seeks Comments on Whether It Should Define “Natural” and If So, How?

Because of a series of competing citizen petitions, GMO labeling issues and congressional concern, the U.S. Food and Drug Administration (FDA) is seeking public input on whether it should define the term “natural” for use on food product labels, and, if so, how to do so.

On Nov. 12, FDA published a request for feedback. FDA policy to date has not restricted the use of the word “natural” on food labeling unless the product has added color, synthetic substances or flavoring.

FDA has received four citizen petitions over the past two years asking the agency to issue regulations on the use of the term, and in July the House of Representatives passed a proposal on GMOs that would require FDA to define the term “natural” for product labeling.

FDA seeks feedback on the following questions:

  • What types of foods should be able to use the term?
  • Should only raw agriculture products be able to use the term?
  • Should only single-ingredient foods, such as bottled water or bagged spinach, be able to use the term?
  • If multi-ingredient foods can use the term, what types of ingredients would disqualify a product from using it?
  • What data or other information shows how consumers associate, confuse or compare the terms “natural” with “organic”?
  • What data or other information shows how consumers associate, confuse or compare the term “natural” with the term “healthy”?

The comment period is open until Feb. 10, 2016.

HHS Posts Guidance for State Innovation Waivers

On Dec. 11, the Department of Health and Human Services (HHS) posted guidance for states interested in seeking a State Innovation Waiver under Section 1332 of the Affordable Care Act (ACA). State Innovation Waivers allow states to receive federal funding to implement alternative models of health care coverage that provide affordable coverage to their residents. The notice clarifies that the minimum length of public notice and comment periods for waiver applications is 30 days.

To see the guidance, click here.

5. Reports

CBO Releases Budget and Economic Outlook Report

On Jan. 25, the Congressional Budget Office (CBO) released its new budget and economic outlook. The report shows the economy growing faster in 2016 than in 2015, but with the deficit rising at a higher rate than previously estimated. CBO lowered projections for 2016 exchange enrollment from 15 million to 13 million people; of those that utilize the exchange, about 11 million will be subsidized. Nonetheless, the cost of subsidies is predicted to increase by $18 billion and reach $56 billion for 2016. The cost is expected to grow to $109 billion in 2026. Expenditures for the major health care programs—Medicare, Medicaid, the Children’s Health Insurance Program and subsidies offered through health insurance exchanges and related spending—are estimated to total around 5 percent of GDP in 2016 and to grow rapidly, reaching 6.6 percent of GDP in 2026.

In total, CBO estimates spending for the major health care programs will increase by $80 billion (8.6 percent) in 2016, compared to roughly $105 billion last year. Medicaid spending will increase by around $31 billion, with a total enrollment growth of 2 percent in 2016, compared to 6 percent in 2015. Medicare spending is estimated to increase by $28.8 billion (5.2 percent).

To read a summary of the report, click here.

GAO Releases Report on the Information Quality Act

On Jan. 20, the Government Accountability Office (GAO) released a report on the extent to which agencies made information available according to the Information Quality Act of 2001. The report is entitled “Information Quality Act: Actions Needed to Improve Transparency and Reporting of Correction Requests.”

The Information Quality Act (IQA) required the Office of Management and Budget (OMB) to issue guidelines to ensure the quality of information distributed by federal agencies. OMB’s guidance required agencies to develop and post IQA guidelines and information on their respective websites. GAO was asked to conduct an updated study on IQA. This report identifies the number of correction requests received for fiscal years 2010 through 2014 and assesses the extent to which agencies that received correction requests made IQA information publicly available. Following its analysis, GAO made three recommendations to the OMB: that it 1) consolidate and centralize a summary of IQA correction requests on its website; 2) work with the Department of Defense (DOD) and the Federal Housing Finance Agency (FHFA) to ensure they post required IQA administrative devices and guidance online; and 3) provide more guidance to help improve the transparency and usability of IQA websites to ensure the public can easily access online information.

Kaiser Family Foundation Report Shows States Having Problems Sending Medicaid Data to Federal Exchange

According to a Kaiser Family Foundation survey, 20 states participating in are still having problems sending data about applications between their Medicaid agencies and the federal exchange. Under the Affordable Care Act (ACA), anyone should be able to apply for coverage at a single portal and the exchanges would coordinate with state Medicaid systems to complete the enrollment process. However, states experienced problems with account transfers when started having issues. This led to extensive delays in enrolling people into Medicaid. There have been improvements since 2013 when the marketplaces opened—all 38 states depending on can now receive account transfers from the site. However, there are still 20 states experiencing difficulties of some sort.

States have been trying to upgrade their enrollment systems to keep up with new ACA eligibility rules and the federal government provided 90 percent of funding for states to update technology. Rules finalized in December made those Medicaid funding levels permanent; otherwise the money would have run out at the end of 2015. Thirty-seven states can now process Medicaid eligibility determinations for low-income children, pregnant women and non-disabled adults in less than 24 hours. Forty-seven states are up to date in processing Medicaid renewals.

Kaiser also notes that five states that have expanded Medicaid using alternative models charge premiums for enrollees with incomes above the federal poverty line: Arkansas, Indiana, Iowa, Michigan and Montana.

Obama Administration Release Final Report for 2015 Conference on Aging

On Dec. 29, 2015, the Obama administration released its final report for the 2015 White House Conference on Aging. At the conference, the administration announced multiple new public actions and initiatives being taken to help those preparing for retirement. The main announcements included:

  1. Facilitating state efforts to provide workplace-based retirement saving opportunities
  2. Launching
  3. Modernizing federal rules that affect long-term care, health aging and elder justice
  4. Utilizing technology to support older Americans

To see additional announcements and for more information, click here.

U.S. Preventative Services Task Force Advises All Adults Be Screened for Depression

According to recommendations published in JAMA, the U.S. Preventative Services Task Force (USPSTF) is advising all adults—including pregnant and postpartum women—to get screened for depression. The task force classified this as a grade B recommendation, which means that insurers are required to cover screenings without cost-sharing under the Affordable Care Act’s (ACA) list of preventive services. USPSTF found that the harms of screening for depression are small to none, and therefore do not cancel out the benefits. It is still undetermined whether people should be screened more than once but suggests that people showing high risks of depression might require additional screening. This guidance updates the task force’s 2009 recommendation that adults be screened if doctors have the right staff in place.

New Study Finds Obamacare Hospital Penalties Are Unfair

A new study from the Association of American Medical Colleges concludes that Obamacare hospital penalties are unfair: the value-based payment, readmission and hospital-acquired condition penalties disproportionately hurt hospitals that treat poorer populations. The report argues that this raises questions about whether “patient population characteristics are sufficiently adjusted for in quality measuring.”

UnitedHealth Group Faces Higher Losses Than Expected

The nation’s largest insurer, UnitedHealth, lost $720 million on its individual-market health plans in 2015—a much larger loss than expected. The company expects to lose $1 billion on exchange plans in 2015 and 2016. This announcement comes as UnitedHealth is deliberating whether to enter exchanges once again in 2017. Despite the so-far-failed exchange experiment, the company still remains profitable overall: fourth-quarter revenue increased 30 percent to $43.6 billion and full-year revenue for 2015 jumped 20 percent to $157.1 billion.

HHS Report Finds Generic Drugs Are Not an Important Part of Drug Cost Problem

On Jan. 27, the U.S. Department of Health and Human Services (HHS) released a report detailing that generic drugs are not an important part of the drug cost problem in the U.S., despite recent price spikes of the generics. According to the Assistant Secretary for Planning and Evaluation, the generic drug market continues to provide downward pressure on drug prices. The report found that overall, the generics market is fairly competitive; two-thirds of generic drugs experienced price declines in 2014.

Some parts of the generic drug market experienced big price increases, but this didn’t affect overall spending, according to the report. The spikes do disadvantage certain patient groups but they are also limited enough so that they exert no large influence on overall drug spending. HHS says factors causing the high generic drug prices include drug shortages, mergers and acquisitions leading to fewer companies’ making a generic, complex distribution systems, and instances in which a small market exists for a generic product. HHS concluded that these factors will be studied further and addressed to make the generic market more competitive.

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

Stephanie Kennan, Senior Vice President
Charlie Iovino, Vice President
Caroline Perrin, Research Assistant

Founded in 1998, McGuireWoods Consulting LLC (MWC) is a full-service public affairs firm offering infrastructure and economic development, strategic communications & grassroots, and government relations services. McGuireWoods Consulting is a subsidiary of the McGuireWoods LLP law firm and has been named in The National Law Journal's special annual report, "The Influence 50," for the past several years. In the most recent report, McGuireWoods Consulting was ranked 15th of the 1,900 government relations firms in Washington, D.C.

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