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.
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
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.
Congressional Budget Office Says Alexander-Murray Would Reduce Federal
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
To read the estimate, visit
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
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
To view the hearing, visit
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
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
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
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
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
FDA Unable to Contact 40 Percent of Drug and Device Makers in Puerto
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
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.
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.
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
Kennan, Senior Vice President
Anne Starke, Research Associate
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