computer and phone
Oct 23, 2017

Washington Healthcare Update

This Week: Chip funding negotiations fail in the House and continue in the Senate ... Deal for market stabilization has no clear path forward … Drug rebates questioned and HHS asked to cut waste

1. Congress



2. Administration

3. Reports

1. Congress


Bipartisan CHIP Funding Talks Fail to Reach Agreement

House Republicans and Democrats have failed to agree on how to pay for a five-year funding extension of the Children’s Health Insurance Program (CHIP). Some believe this means the House will likely have to accept the package negotiated by Senate Republicans and Democrats.

The Energy and Commerce markup was contentious because Democrats did not support the Republican plan for paying for the five-year CHIP legislation. Republicans delayed a floor vote last week to try to negotiate a bipartisan compromise on CHIP offsets. However, both sides say they haven’t reached an agreement. Energy and Commerce Committee Chair Greg Walden (R-OR) said previously that, if the two parties couldn’t agree by Oct. 13, Republicans would drop the efforts and vote on the CHIP funding bill when they return next week.

Senators are keeping CHIP-offset negotiations private and it is not clear how close they are to a deal or what policies they’re considering to pay the $8.2 billion price of funding CHIP another five years.

States are increasing the pressure on Congress to renew the CHIP program because it expired on Sept. 30. While CMS is redistributing unspent funds to states, states are concerned about running out of money by the end of the year.

Energy and Commerce Committee to Hold Hearing on Opioid Epidemic Oct. 25

The Committee on Energy and Commerce will hold a hearing on Wednesday, Oct. 25, 2017, at 10 a.m. in 2123 Rayburn House Office Building. The hearing is entitled “Federal Efforts to Combat the Opioid Crisis: A Status Update on CARA and Other Initiatives.” Witnesses will be announced and are by invitation only. The hearing webcast will be available at

Witnesses will include Nora Volkow, director of the National Institute on Drug Abuse; Elinore McCance-Katz, assistant secretary for Mental Health and Substance Abuse at the Substance Abuse and Mental Health Services Administration; Anne Schuchat, principal deputy director of the Centers for Disease Control and Prevention; Neil Doherty, deputy assistant administrator of the Office of Diversion Control at the Drug Enforcement Administration; and Scott Gottlieb, FDA commissioner.

For more information click here

Energy and Commerce Chair Wants HHS to Cut Waste

House Energy & Commerce Chair Greg Walden (R-OR) in an Oct. 18 letter asked HHS Acting Secretary Eric Hargan to look at how the Environmental Protection Agency and the departments of Commerce and Energy are working to cut down on administrative waste. HHS had told the committee back in July that it would cut back on administrative waste by “reimagining” the department and working with the Office of Inspector General and Government Accountability Office to end improper use of taxpayer dollars.

HHS’s draft strategic plan for fiscal 2018-2022, which was released last month, says that as part of the department’s goal to promote effective and efficient management and stewardship, the agency seeks to preserve the Medicare Trust Fund through prevention and detection of waste, fraud and abuse, as well as improper payments, through program integrity tools.

HHS had also asked Energy and Commerce staff to discuss ways the department and Congress could work together to “root out waste within HHS.”


Bipartisan Deal on Market Stabilization Issues Has Rough Road to Passage

Sens. Lamar Alexander (R-TN) and Patty Murray (D-WA) reached a deal to stabilize health insurance markets for two years; however its road to passage is unclear. Their market stabilization bill, which funds the cost-sharing reduction payments for two years, would amend the 1332 statute to fast-track the waiver process, broaden the budget neutrality requirements and set up the pass-through funding structure Alaska recently used for its reinsurance waiver.

In addition to the CSR funding, the agreement reallocates some of the money recently cut by HHS from open enrollment outreach and marketing through exchange user-fee funds; allows expansion of catastrophic or “copper” plan sales to anyone; and gives explicit instruction to HHS to write guidance for 1333 waivers—that allow interstate compacts for the sale of insurance across state lines—in consultation with the National Association of Insurance Commissioners.

Alexander and Murray added language that clarifies states can use pass-through funding for Basic Health Programs—a nod to Minnesota, which runs a substantial Basic Health Program and in its 1332 reinsurance waiver application wanted a full pass-through of BHP funding for MinnesotaCare. CMS approved the waiver and pass-through funding for the state’s exchanges, but not for the Basic Health Plan.

The bill also tweaks the budget neutrality provisions by letting states estimate financial impacts over the full life of the waiver, instead of on an annual basis.

In the Senate, the chairman of the Finance Committee, Orin Hatch, said he opposed the deal. The president has sent mixed signals, raising concerns about the CRS payments going to insurers. In the House, Speaker Ryan has announced his opposition; the bipartisan Problem Solvers Caucus backs the deal; and the powerful, conservative House Freedom Caucus thinks more work needs to be done.

The deal as of this writing has 22 cosponsors, including 12 Senate Republicans but faces steep challenges in the Senate, House and White House.

Sen. Johnson Calls for Alternative on Market Stabilization

Sen. Ron Johnson (R-WI), a supporter of the Graham-Cassidy reform proposal, is working on an alternative fix to the Affordable Care Act. Johnson calls for reform that focuses on five principles:

Improved price transparency. Specifically, he wants to require CMS to publicize pricing and cost information received by providers in a way that is “appropriate and useful” to consumers.

Expanded insurance options. The bill would allow all people—not just those under 30—to purchase catastrophic coverage and would roll back the 90-day limit on short-term plans while also deeming they satisfy the individual mandate under Obamacare.

Strengthened consumer-directed plans. The bill would support the use of consumer-directed accounts, such as health savings arrangements and flexible spending accounts, to purchase expanded insurance options, and would expand tax-free contributions.

Reduced mandates. The bill would delay enforcement of the employer mandate through 2019 to “prevent 90,000 businesses from being assessed $5 billion in fines due to Obamacare’s mandates on employers.”

Lower premiums. The proposal would do this by requiring issuers to roll back any premium increases that were justified by the CSR payments.

HELP Committee Holds Hearing on Drug Prices

Senate Health, Education, Labor and Pensions Committee Chair Lamar Alexander (R-TN) questioned the merit of drug rebates at a hearing Oct. 17 on drug prices. The hearing also included questions to other sectors of the drug supply chain, including the distributors that previously were all but absent in the debate over prices.

Alexander asked representatives of each sector to say whether they think rebates should be eliminated. Pharmacy benefit managers and drug distributors both were the focus of the hearing, in part because of a recent Washington Post article on that sector’s role in weakening the Drug Enforcement Agency’s ability to stop shipments of opioids that DEA suspects are destined to be abused as street drugs.

PhRMA also received several questions about drug prices, including a line of inquiry about insulin prices from Sen. Bill Cassidy (R-LA).

To watch the hearing: .

Murray Objects to FDA Delay in Updated Nutrition Fact Rule

The ranking Democrat on the Senate Health, Education, Labor and Pensions Committee on Oct. 16 objected to FDA Commissioner Scott Gottlieb’s proposal to delay implementation of the updated Nutrition Facts rule, saying the move is detrimental to public health and creates uncertainty for industry and consumers.

The FDA proposed Sept. 29 to extend the compliance dates for its Nutrition Facts and Supplement Facts label final rule from July 26, 2018, to Jan. 1, 2020, for manufacturers with $10 million or more in annual food sales, and until Jan. 1, 2021, for manufacturers with less than $10 million in annual food sales.

Sen. Patty Murray (D-WA) wrote Gottlieb to urge him to speed the issuance of key guidances that industry has argued are necessary to comply with the final rule, and implement the Nutrition Facts Panel regulations on a quicker timeline. Senator Murray says the delay hurts public health and suggested that the FDA can issue guidance and implement the final rule on a faster timeline.

Sen. Schumer Asks FDA to Enforce Tobacco Deeming Rule

Sen. Chuck Schumer (D-NY) called on FDA Commissioner Scott Gottlieb to reverse the agency’s decision to delay enforcement of the tobacco deeming rule, which would set in motion the agency’s regulation of e-cigarettes. Schumer criticized the FDA’s move to delay regulation of products that are popular among teens, pointing specifically to the JUUL e-cigarette.

The FDA announced in May that it was delaying by three months enforcement of the deeming rule, which extends FDA’s regulatory authority to electronic nicotine delivery systems (ENDS), hookah, pipe tobacco and cigars. Then, in July, the commissioner announced the agency would further extend compliance deadlines.

2. Administration

Democratic Attorneys General Sue Over CSR Payments

A coalition of Democratic attorneys general is seeking a temporary restraining order that would force the administration to continue paying out the cost-sharing reduction payments. The coalition filed in a federal court in Northern California after the administration said it would end the payments.

The attorneys general argue that the injunction would actually save the federal government money, since the Congressional Budget Office estimated that pulling CSR funding would cost the federal government $194 billion over 10 years.

IRS to Reject Tax Returns Without Health Insurance Confirmation

On Oct. 18, the IRS announced that it will reject 2017 electronic tax returns filed without confirmation of whether the filers had health insurance. Paper filings that don’t include coverage status may also be suspended and refunds delayed.

“The 2018 filing season will be the first time the IRS will not accept tax returns that omit this information,” the IRS statement said. “After a review of our process and discussions with the National Taxpayer Advocate, the IRS has determined that ‎it is more burdensome for taxpayers to allow them to file an incomplete tax return and then have to manage follow-up letters and potentially amend their return. Identifying omissions and requiring taxpayers to provide health coverage information at the point of filing makes it easier for the taxpayer to successfully file a tax return and minimizes related refund delays.”

Under the Obama administration, the IRS intended to start this policy in the 2017 filing year for 2016 returns. However, after President Donald Trump took office, he issued an executive order that instructed all the agencies to relieve people of “burdens” imposed by the ACA. The IRS reverted to the previous year’s policies of accepting tax returns regardless of whether the coverage status was included.

ACOs Saved Medicare Over $70 Million in 2016

The Centers for Medicare and Medicaid Services (CMS) posted performance results for ACOs in the three ACO demonstrations: the Next Generation model, Comprehensive ESRD Care model and the Pioneer model.

Following are the results of gross and net savings from the demos and the shared savings program:

  • Next Generation demo: $48 million (gross) / $63 million (net)—The net is higher than the gross due to how CMS accounts for saving accrued through the discount. The $48 million figure reflects savings generated by the ACOs, minus losses. The $63 million figure includes recuperated losses and adds savings through the discount.
  • Pioneer demo: $61 million (gross) / $23 million (net).
  • Comprehensive ESRD Care demo: $75 million (gross) / $23.9 million (net).
  • Shared Savings Program: $652 million (gross) / -$39.3 million (net)—The net figure is negative because CMS spent more on bonuses than the ACOs collectively reduced Medicare spending. This also happened in the second year of the results, when Medicare spent $683 million in ACO bonuses for $466 million savings.

Collectively according to CMS, ACOs in the Medicare Shared Savings Program and the three demonstrations saved Medicare $70.6 million in 2016 after taking into account ACO bonus payments.

Although CMS disclosed the overall amount that ACOs saved Medicare across the different initiatives, results for individual ACOs in the shared savings program will be posted later this month. ACOs in the shared savings program had until Oct. 13 to provide their results.

FDA Announces Expedited Reviews of Alternatives Due to Hurricane

FDA announced Oct. 13 that it is expediting reviews and approvals of alternative dosage forms and generic versions of multiple critical drugs facing shortages following the hurricane in Puerto Rico.

Expedited review may be granted to “submissions that could help mitigate or resolve a drug shortage and prevent future shortages, including submissions related to products that are listed on FDA’s Current Drug Shortages Index at the time of the submission,” according to FDA’s June “Prioritization of the Review of Original ANDAs, Amendments, and Supplements” Manual of Policies and Procedures.

3. Reports

The Government Accountability Office (GAO): Veterans Health Administration: Better Data and Evaluation Could Help Improve Physician Staffing, Recruitment and Retention Strategies GAO-18-124

The GAO found the Veterans Health Administration (VHA), within the U.S. Department of Veterans Affairs (VA), has opportunities to improve staffing, recruitment and retention strategies for physicians that it identified as a priority for staffing, or mission-critical. Specifically, GAO identified the following issues:

  1. Incomplete information on number of physicians. VHA is unable to accurately count the total number of physicians who provide care in its VA medical centers (VAMC). VHA has data on the number of mission-critical physicians it employs (more than 11,000) and that provide services on a fee-basis (about 2,800). However, VHA lacks data on the number of contract physicians and physician trainees. Five of the six VAMCs in GAO’s review used contract physicians or physician trainees to meet their staffing needs, but VHA has no information on the extent to which VAMCs nationwide use these arrangements.
  2. VAMCs’ Use of contract physicians, fee-basis physicians and physician trainees for mission-critical physician occupations at the Six VAMCs reviewed, as of March 31, 2017 had inconsistent productivity data. VHA measures productivity for some mission-critical physician occupations; however, mental health departments receive conflicting sets of productivity metrics from two VHA offices—the Office of Productivity, Efficiency, and Staffing and the Office of Mental Health Operations. VHA officials told the GAO the two offices use differing data to serve different purposes, and acknowledged that while information on how to interpret the two sets of productivity data is available, VAMC officials may find the data confusing.
  3. Lack of a comprehensive evaluation of its recruitment and retention strategies. VHA has not evaluated the effectiveness of its physician recruitment and retention strategies. One such strategy—hiring physician trainees—is weakened by ineffectual hiring practices, such as delaying employment offers until graduation. VHA’s strategies could be strengthened by comprehensively evaluating the causes of recruitment and retention.

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

Stephanie Kennan, Senior Vice President
Anne Starke, Research Associate

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.

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

McGuireWoods Consulting LLC
2001 K Street
Suite 400
Washington, DC 20006-1040
+1 202 857 1700