Oct 23, 2017
Washington Healthcare Update
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
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
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
Energy and Commerce Committee to Hold Hearing on Opioid Epidemic Oct.
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
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
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
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
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
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
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
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
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.
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:
- 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.
- 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.
- Lack of a comprehensive evaluation of its recruitment and retention
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
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
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
McGuireWoods Consulting LLC
2001 K Street
Washington, DC 20006-1040
+1 202 857 1700