CONSISTENTLY DELIVERS

Oct 30, 2017

Washington Healthcare Update

This Week: Fourth week of CHIP’s not being renewed…Administration proclaims a National Public Health Emergency on opioids…Senate budget passes the House…Hatch and Brady offer their own market stabilization plan…While CBO says Alexander-Murray saves.

1. Congress

House

Senate

2. Administration

3. Courts

4. Reports


1. Congress

House

Rep. Cummings and Sen. Sanders Introduce Legislation to Let Government Negotiate Drug Prices

Rep. Elijah Cummings (D-MD) and Sen. Bernie Sanders (I-VT) introduced legislation on Oct. 25 to let the government negotiate drug prices in Medicare Part D. The legislation also would let CMS use drug formularies and fallback prices, which are policies the Congressional Budget Office said are needed to obtain discounts in price negotiation, and it would offer drug rebates for low-income beneficiaries.

Cummings is the ranking Democrat on the House Oversight and Government Reform Committee. The House bill’s cosponsors include Reps. Peter Welch (D-VT), a member of the Energy & Commerce Committee, and Lloyd Doggett (D-TX), who is on Ways & Means. The Senate version is cosponsored by Democratic Sens. Jack Reed (RI), Kirsten Gillibrand (NY), Kamala Harris (CA) and Al Franken (MN).

Cummings and Welch on Tuesday sent their third letter to Trump since meeting with him March 8. Cummings said the president supported the thrust of what was then draft legislation, but he hasn’t responded to their requests to support the legislation in the seven months since.

Framework for Repeal of Therapy Caps Unveiled

The House Ways and Means and Energy and Commerce Committees and the Senate Finance Committee unveiled a bipartisan framework to repeal Medicare therapy caps, which is based off the targeted manual medical review process. The policy would repeal the Part B outpatient therapy caps. The caps currently are $1,980 for speech and physical therapy and $1,980 for occupational therapy, with an exceptions process that will expire at the end of the year. Renewing the exceptions process has been an annual exercise for Congress as part of the Medicare extenders.

Currently, claims above the cap are marked with a modifier and the framework released on Oct. 26 would still require a modifier on medically necessary claims over the current exceptions threshold. The new policy would require current practice to continue of targeted manual medical reviews for claims over a threshold although the framework may change the threshold. There is no Congressional Budget Office estimate yet.

Hatch-Brady Proposal on Market Stabilization

On Oct. 24, the Senate Finance Chairman Orrin Hatch and House Ways and Means Chairman Kevin Brady combined forces to unveil a proposal that would fund ACA insurance subsidies in exchange for temporarily eliminating the health law’s individual mandate.

The Republican-only plan represents direct competition to the bipartisan ACA stabilization bill (Alexander-Murray)—and could appeal to undecided Republicans looking for a more conservative approach.

The proposal from Hatch and Brady would fund the ACA’s cost-sharing program through 2019, similar to the bipartisan stabilization bill drafted by Sens. Lamar Alexander and Patty Murray.

However, it would also include a number of new provisions designed to appeal to conservatives, including eliminating the individual mandate through 2021 and expanding the use of health savings accounts.

The Hatch-Brady bill will also exempt businesses from the employer mandate for 2015 through 2017 and apply certain “pro-life protections” to the cost-sharing funding.

Some of the provisions in the proposal—like the expansion of HSAs and employer mandate exemption are changes the White House also requested be made to the Alexander-Murray bill.

House Passes Budget Paving the Way for Tax Reform

On Oct. 26, the House of Representatives narrowly passed the budget resolution the Senate had passed last week. The resolution passed 216-212.

The budget the House passed is different from the version the chamber first approved earlier this month and is unlikely to have garnered sufficient support without the tax debate looming over Congress.

The House’s initial plan, favored by fiscal hawks, would have required lawmakers to offset the costs of new tax cuts and find $203 billion in extra savings from some welfare programs. But those requirements would not fly in the more moderate Senate, which passed its budget last week.

Under immense pressure to pass a tax reform bill by year’s end, Republican leaders struck a time-saving deal to forgo a formal conference committee to resolve differences between the House and Senate plans.

The Senate budget envisions tax cuts that could add $1.5 trillion to the deficit over a decade.

Senate

Congressional Budget Office Says Alexander-Murray Would Reduce Federal Deficit

The bipartisan bill to stabilize ACA individual markets drafted by Sens. Lamar Alexander and Patty Murray would reduce the federal deficit by $3.8 billion. However, it would not do much to change health insurance premiums for 2018, but could keep rates steady in 2019, according to a new analysis by the Congressional Budget Office on Oct. 25. The legislation also would not substantially change the number of people who are covered.

CBO said the savings would stem in part from letting states offer so-called copper plans—or lower-cost policies that appeal to healthier enrollees in the Obamacare markets.

The federal government would also save money by funding cost-sharing subsidies for two years, preventing it from having to pay insurers more to cover separate subsidies tied to rising premiums. Those subsidies—the center of a court battle and ongoing partisan conflict—help cover medical bills for lower-income enrollees. The administration recently stopped those payments, but Congress could resume them, either through legislation like the Alexander-Murray bill or through a year-end spending bill.

The CBO found there is no additional cost to Congress’s appropriating money for that cost-sharing program because the spending has been done in the past.

To read the estimate, visit www.cbo.gov

HELP Committee to Hold Hearing on Health IT

On Oct. 31 at 2:30 p.m. the Senate HELP Committee will hold its first hearing on health IT since last year’s passage of the 21st Century Cures Act.

Witnesses are to include ONC’s Jon White, the office’s deputy head; Kate Goodrich, CMS head of clinical standards; and James Cannatti of the HHS Inspector General Office.

The Cures bill penalized information blocking and asked HHS to define the practice, while creating a new federal health IT advisory committee and directing ONC to develop a shared set of terms and conditions for information exchange. ONC must outline a strategy for reducing the administrative burden of health IT, update its electronic health records certification program to include new requirements for the usability and contract with an outside agency to test how vendors can meet those certification requirements.

To view the hearing, visit www.help.senate.gov

20 Senators Ask Administration to Allow Negotiated Prices for Naloxone

Sen. Debbie Stabenow (D-MI) and 18 other Democratic senators on Oct. 25 called on President Donald Trump to allow the government to negotiate lower prices for naloxone, an opioid overdose reversal drug.

The price of naloxone has risen during the course of the opioid crisis. Narcan, which administers naloxone as a nasal spray, costs $150 for a two-pack and Evzio, a naloxone auto-injector, has increased from $690 in 2014 to $4,500 currently for a two-pack. In their interim report, the Commission on Combating Drug Addiction and the Opioid Crisis recommended that the federal government and states increase distribution and utilization of the opioid overdose-reversing drug, naloxone.

In addition to Stabenow, the letter was signed by U.S. Senators Michael Bennet (D-CO), Maggie Hassan (D-NH), Amy Klobuchar (D-MN), Patrick Leahy (D-VT), Jeanne Shaheen (D-NH), Tammy Baldwin (D-WI), Sheldon Whitehouse (D-RI), Angus King (I-ME), Gary Peters (D-MI), Jack Reed (D-RI), Bernie Sanders (I-VT), Cory Booker (D-NJ), Kamala Harris (D-CA), Al Franken (D-MN), Chris Murphy (D-CT), Richard Blumenthal (D-CT), Sherrod Brown (D-OH) and Joe Donnelly (D-IN).

To read the letter, visit www.stabenow.senate.gov

2. Administration

Trump Declares Opioid Epidemic a Public Health Emergency

President Donald Trump’s public health emergency declaration on the opioid epidemic does not contain any new funding to combat the problem, disappointing state officials and others on the front lines.

A public health emergency declaration allows public health agencies to swiftly move existing health resources to the crisis. It also reduces “delays” in hiring personnel and expands access to telemedicine, including remote prescribing of medication commonly used for substance abuse or other mental health treatment.

However the declaration does not add more money. HHS’s public health fund only has about $57,000, and the declaration won’t provide additional new funding to address opioid abuse. Congress could appropriate more money at the end of the year and is likely to face pressure to do so from states and others.

In addition, the president said his administration will “announce a new policy to overcome a restrictive 1970s-era rule that prevents states from providing care at certain treatment facilities with more than 16 beds for those suffering from drug addiction.” This refers to the “IMD-exclusion,” which prevents Medicaid from paying for patients at inpatient treatment facilities with more than 16 beds. This rule is from the 1960s. However, states can already seek Medicaid waivers that exempt the individual state’s Medicaid program from these restrictions. In 2015, states were informed they could use the 115 waiver to gain an exception for substance abuse treatment. Five states have already received waivers: California, Maryland, Massachusetts, Virginia and West Virginia. Four other states are waiting for approval. It is unclear if the president plans to change the current regulatory process or propose a repeal of the IMD rule, which would require congressional action.

Iowa Drops 1332 Waiver Request

Iowa was seeking a Section 1332 waiver in order to overhaul the state’s troubled Affordable Care Act insurance market with just a week left before the start of open enrollment. The director of the Iowa Insurance Division said that the waiver was ultimately proven to be unworkable. The Iowa Insurance Division estimates that 25 percent of the entire individual market will drop coverage due to premium increases.

That means Medica will be the only insurer offering plans on the state’s exchange market, with its rates expected to rise an average of more than 50 percent.

Iowa’s waiver would have created an entirely new subsidy structure and a reinsurance program to protect health plans from the most expensive customers. That retooled individual insurance market would have included a standard benefit plan that every participating insurer would have been required to offer for 2018. Wellmark Blue Cross and Blue Shield, the state’s dominant carrier, had agreed to sell that product statewide if the waiver had been approved.

The Iowa Insurance Division estimates that skyrocketing premiums for next year will result in 18,000 to 22,000 individuals—about 25 percent of the entire individual market—dropping coverage.

Massachusetts Denied Waiver

The Trump administration on Oct. 23 told Massachusetts that it can’t get a waiver from Affordable Care Act rules because there isn’t enough time before the next open enrollment window begins.

The decision—outlined in a letter from CMS to state officials today—comes just a week before signups on the law’s exchanges begin on Nov. 1, and after Iowa announced earlier in the day that it would withdraw its waiver plan to overhaul its individual market.

Massachusetts was told that its proposed waiver application was incomplete and there was too little time to implement the plan for 2018. The state on Sept. 8 requested a waiver to establish a premium stabilization fund in lieu of ACA cost-sharing reductions for next year.

HHS IG Reports Cancelling ACA Ads and Outreach Cost $1.5 Million

The cancellation in January of ads and outreach tied to the ACA’s open enrollment cost the Trump administration at least $1.5 million—and prompted mass confusion within HHS, according to a report published by the U.S. Department of Health and Human Services’ Inspector General.

The investigation found that Trump transition officials ordered federal health staff to cut off outreach within days of officially taking over the government, despite warnings that ending the activity could cost millions and depress enrollment during the last week of Obamacare signups.

Staffers quickly started pulling back all the ads and outreach connected to open enrollment, spreading the word throughout HHS and CMS, and sending notices to a pair of contractors.

Later that same day, the Trump administration clarified its instructions, telling the agency that it should only cancel select activities. Staffers scrambled to reinstate parts of the outreach plan.

The cancellation and resumption of some functions led to about $1.5 million in unrecoverable costs to the government and another $5.2 million in expenses seen as recoverable. That recoverable money has not yet been returned to the Treasury.

A preliminary analysis that HHS gave Trump officials ahead of the cancellation decision had estimated that pulling the outreach and ads would cost at least $5 million.

To read the report, visit www.oig.hhs.gov

FDA Unable to Contact 40 Percent of Drug and Device Makers in Puerto Rico

The FDA has been able to reach only 60 percent of the approximately 5,000 pharmaceutical and medical device companies in the aftermath of Hurricane Maria. It has been in contact with all the firms that make devices the agency deems critical.

So far, the agency has not found any firm running above 70 percent of normal capacity, and many are operating around 20 percent, according to prepared testimony FDA Commissioner Scott Gottlieb delivered to the House Energy and Commerce Oversight Subcommittee.

To head off prospective supply shortages, FDA will import necessary supplies from other manufacturing sites and markets, Gottlieb said. FDA said it already prevented a significant shortfall of Baxter’s sodium chloride injection bags, due to lost manufacturing days at the company’s Puerto Rico facility, by facilitating the importation of the products from company facilities in Ireland and Australia.

To view the hearing, visit energycommerce.house.gov

FDA Seeks to Advance Medical Device Innovation

On Oct. 25, the FDA announced three new guidance documents and drafts. One is a draft guidance on the “Breakthrough Devices Program” created under 21st Century Cures. The other two are final guidance that will help innovators know when they must submit a new 510(k) before changing a device subject to premarket notification (510(k)) requirements.

3. Courts

Federal Judge Denies AGs Request to Force CSR Payments to Continue

A federal judge denied a request to immediately force the Trump administration to continue making the ACA insurance subsidy payments that it cut off earlier this month.

U.S. District Court Judge Vince Chhabria ruled Oct. 25 against an emergency order to require that the payments continue to be made while a lawsuit filed by 18 states and the District of Columbia over the cost-sharing reduction payments works its way through the courts.

4. Reports

Some States Still Restrict Hepatitis C Drugs

According to a Harvard Law School and National Viral Hepatitis Roundtable report card, more than half of all Medicaid programs received a “D” or “F” for having discriminatory restrictions on hepatitis C drugs. The “Hepatitis C: State of Medicaid Access” report graded each state according to its overall access to treatments for hepatitis C and offered suggestions to streamline treatment access requirements. The states that got the best grades took steps to ensure extensive access to hepatitis C treatments.


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.

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