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Feb 27, 2017

Washington Healthcare Update

This Week: The House and Senate were in recess for President’s Day.

1. Congress



2. Administration

3. Courts

4. State Activities

5. Regulations Open for Comment

1. Congress


House Draft ACA Replacement Bill Leaked

On Friday, Feb. 24, a draft House Republican repeal bill was leaked. The bill would remove the foundations of the ACA, the individual mandate, subsidies based on people’s income, and all of the law’s taxes. It would significantly roll back Medicaid spending and give states money to create high risk pools for some people with pre-existing conditions. Some elements would be effective right away, others not until 2020.

The replacement would be paid for by limiting tax breaks on generous health plans people get at work—an idea that is similar to the Obamacare “Cadillac tax” that Republicans have fought to repeal.

In place of the Obamacare subsidies, the House bill starting in 2020 would give tax credits based on age instead of income. For a person under age 30, the credit would be $2,000. That amount would double for beneficiaries over the age of 60, according to the proposal. A related document notes that HHS Secretary Tom Price wants the subsidies to be slightly less generous for most age groups.

The Republican plan would also eliminate Obamacare’s Medicaid expansion in 2020. States could still cover those people if they chose but they’d get a lot less federal money to do so. And instead of the current open-ended federal entitlement, states would get capped payments based on the number of Medicaid enrollees.

The proposal includes $100 billion in “state innovation grants” to help subsidize extremely expensive enrollees. That aims to address at least a portion of the “pre-existing condition” population, though without the same broad protections as in the Affordable Care Act.

According to the document, there’s only one single revenue generator to pay for the new tax credits and grants. Republicans are proposing to cap the tax exemption for employer sponsored insurance at the 90th percentile of current premiums. That means benefits above that level would be taxed.

The proposal also includes penalties for individuals who fail to maintain coverage continuously. If their coverage lapses and they decide to re-enroll, they would have to pay a 30 percent boost in premiums for a year. Like the unpopular individual mandate, that penalty is designed to discourage individuals from waiting until they get sick to get coverage.

The exact details of any legislation will also be shaped by findings from the CBO about how much it will cost and what it will do to the federal deficit.

House Panel to Markup Medical Malpractice Legislation

The House Judiciary Committee is set to take up legislation on Feb. 28 imposing broad limits on medical malpractice lawsuits.

The bill, which is scheduled for full committee markup on Feb. 28, proposes tightening the statute of limitations for malpractice suits, capping certain damage awards and restricting attorneys’ fees. The legislation also shields providers from prescription drug lawsuits involving FDA-approved drugs.

Health care companies have long urged for a sweeping overhaul of the medical malpractice system, arguing that it now encourages attorneys to sue in hopes of big paydays. But trial attorney groups counter that tightening the rules around malpractice suits would prevent injured patients from being adequately compensated for a provider’s negligence.

The bill in front of the Judiciary Committee would require patients to file suit within three years of an injury and cap noneconomic damages such as pain and suffering awards at $250,000. Attorneys would only be able to collect up to a fixed percentage of a plaintiff’s total award.

House Begins User Fee Hearings This Week

The House Energy and Commerce health subcommittee will hold its first hearing on reauthorization of the FDA user fee programs this week.

The March 2 hearing will focus on the generic drug and biosimilar user fees programs. About half of the FDA’s annual budget is funded by fees paid by drug and device makers, and those industry agreements must be reauthorized by Sept. 30.

At the hearing, the committee will also consider a drug pricing bill, H.R. 749, meant to encourage drug companies to develop generic medicines amid shortages or absence of competition. The bill is targeted at high-priced older drugs that have lost patent protection.

The committee earlier this month postponed a markup on the bill because Democrats wanted it thoroughly vetted in subcommittee instead of fast tracked for a vote.

Republicans Postpone Obamacare Subsidies Lawsuit

The Trump administration and House Republicans have put a pause on the legal dispute over the constitutionality of billions of dollars in Obamacare subsidies to consider what to do now with the court case started by House Republicans against the Obama administration.

The two sides said they need another three months to come to a resolution, according to a Feb. 21 appellate court filing. The subsidies were subject to a court battle between House Republicans and the Obama administration. The House argued that the payments to insurers were illegal because Congress never appropriated the money. The payments reduce the deductibles and copays for more than half of enrollees on the Obamacare exchanges.

A district court judge last year ruled in favor of the House, finding the subsidies were illegal and must stop. However, she stayed her decision, and the Obama administration filed an appeal.

Now that the White House has changed hands, House GOP lawmakers are in the uncomfortable situation of suing Health Secretary Tom Price, who took over after Burwell and is one of their own.

The agreement delays any further proceedings until at least May 22, with the requirement that HHS and House Republicans file status reports every 90 days on whether to continue the pause.

Congressional Republicans have recently indicated they are leaning toward temporarily funding the subsidies if the White House decides against a legal challenge, for fear of destabilizing the health care system before they can repeal and replace Obamacare.


Sens. Booker and Casey Seek to Revive Drug Importation Bill

Democratic Sens. Cory Booker (NJ) and Bob Casey (PA) are circulating a drug importation draft bil authored by Sen. Bernie Sanders (I-VT) in a search for more cosponsors before they introduce the measure on Feb. 28. The senators had previously been reluctant to support drug importation as a way to address the high cost of prescription medicines but are now joining with Sanders in a bid to revive the idea.

Booker and Casey’s involvement could be critical in advancing the legislation. Both lawmakers voted against a drug importation amendment that Sanders and Sen. Amy Klobuchar (D-MN) offered during the Senate budget debate in January. They were among 13 Democrats who opposed the measure while 12 Republicans voted yes—the amendment failed 46-52. President Donald Trump has also endorsed importing drugs from countries where they often sell for less than in the United States.

Booker and Casey’s latest proposal more thoroughly addresses safety concerns surrounding importation, an issue that kept them from supporting the previous Sanders amendment.

For more information on the bill, click here.

Senator Murkowski Won’t Vote To Repeal Medicaid Expansion

Alaska Sen. Lisa Murkowski (R-Alaska)—a key swing vote on repealing Obamacare—says she won’t vote to strike the law’s expansion of Medicaid or support legislation to pull funding for Planned Parenthood as part of efforts to repeal the law. Speaking about Medicaid to the Alaska Legislature on Feb. 22, Murkowski said, “So as long as this Legislature wants to keep the expansion, Alaska should have that option, so I will not vote to repeal it.” Medicaid expansion in Alaska, which was adopted by Gov. Bill Walker in 2015 via executive order, covers nearly 30,000 people in the very rural, high-cost state.

On Planned Parenthood, Murkowski said she does not believe the organization should be part of Congress’ deliberations on the Affordable Care Act. “I will not vote to deny Alaskans access to the health services that Planned Parenthood provides,” she said.

Senate Republicans can handle only a few defections on repeal, and a growing group of Republican senators whose states took up the Obamacare Medicaid expansion are expressing concern about its elimination.

2. Administration

President Trump Orders Agencies to Identify Rules for Elimination

On Feb. 24, President Donald Trump ordered federal agencies to begin identifying rules for elimination—a move he presented as part of his larger assault on regulations he said damage the economy. The executive order he signed in the Oval Office directs each federal agency to set up a “regulatory reform task force” to review an agency’s existing regulations and search for rules to repeal or modify. The task forces in particular will be directed to “focus on eliminating costly and unnecessary regulations,” according to a White House official.

The orders come on top of one of the Trump administration’s first acts upon his inauguration issuing a blanket freeze on regulatory actions across the government, similar to the stoppage imposed when Barack Obama first took office.

White House Releasing Budget Outline in Mid-March

The Trump administration plans to release its fiscal 2018 budget outline by the second week of March, offering the first detailed look at priorities for the president’s first year. White House spokesman Sean Spicer confirmed Feb. 22 that the administration aims to release its budget around March 13. Congressional budget writers were also told to expect President Donald Trump’s outline in that timeframe.

The plan—the “skinny budget”—is the first draft of Trump’s full budget proposal, which is expected later this spring. In broad strokes, it will likely lay out where Trump plans to increase spending, and which programs he will roll back.

CMS Extends Deadline for 2016 Physician Quality Reporting System (PQRS) Electronic Health Record (EHR) Submission

CMS is extending the submission deadline for 2016 Quality Reporting Document Architecture (QRDA) data submission for the EHR reporting mechanism of the Physician Quality Reporting System (PQRS) program. Individual eligible professionals (EPs), PQRS group practices, qualified clinical data registries (QCDRs) and qualified EHR data submission vendors (DSVs) now have until Friday, March 31, 2017, to submit 2016 EHR data via QRDA. The deadline is extended to March 31, 2017, for EPs to electronically report electronic Clinical Quality Measures (eCQMs) for the Medicare EHR Incentive Program.

For more information, click here.

CMS to Hold Q&A Session on March 8

On Wednesday, March 8, 2017, from 1:00 p.m. to 2:00 p.m. (EST), CMS will be hosting a live question and answer (Q&A) session. The session will open with a brief presentation, then the Open Payments team will be available to respond to questions.

To be able to ask a question or view the presentation, participants must go online and register at least 15 minutes prior to when the webinar begins. Participants will still have the ability to call in and listen only.

To register for the session, click here. After registration, participants will receive an email with instructions on how to join the call and ask a question.

To listen only, call 1-844-396-8222 and enter the meeting number (903 123 962) when prompted.

3. Courts

Judge Blocks Texas From Cutting Planned Parenthood Medicaid Funding

On Feb. 21, a federal judge issued an injunction blocking Texas from cutting Medicaid funding for Planned Parenthood. The state tried to cut funding last month but U.S. District Judge Sam Sparks delayed the cuts until he issued a decision. In his ruling, Sparks said the state “likely acted to disenroll qualified health care providers from Medicaid without cause.” He added, “such action would deprive Medicaid patients of their statutory right to obtain health care from their chosen qualified provider.”

Texas, along with a handful of other Republican-controlled states, has tried to cut Planned Parenthood’s funding since anti-abortion activists released undercover videos in 2015 allegedly showing officials from the organization negotiating prices for fetal tissue. Investigations into the videos concluded with no criminal charges.

To see the ruling, click here.

4. State Activities

Florida: “Eyeball Wars” Restart After Optometry Bill Filed

Florida’s “eyeball wars” have flared up again after a state senator filed a bill that would expand the scope of practice for Florida optometrists, giving them the go-ahead to cut, inject, freeze, suture, vaporize or photo disrupt eye tissue. Filed by Senate Appropriations Chairman state Sen. Jack Latvala, SB 1168 would also give optometrists the ability to work on eyelids, eyebrows, the lining of the eyelids and the lacrimal apparatus, or the organs responsible for the production and drainage of tears. The Florida Optometric Association has hired a team of well-connected lobbyists, including Michael Corcoran and Bill Rubin. Former Senate President Don Gaetz coined the phrase eyeball wars to describe the multi-year effort by the optometrists to expand their scope of practice to include administering and prescribing controlled substances for the treatment of glaucoma. Ophthalmologists opposed the move.

Kansas: Kansas House Endorses Medicaid Expansion

On Feb. 22, the Kansas House of Representatives overwhelmingly endorsed Obamacare’s Medicaid expansion, providing an unexpectedly strong sign of support for the program in the deep red state.

State lawmakers in the lower chamber voted 85-40 on an amendment that would expand coverage to low-income adults earning up to 133 percent of the federal poverty level. The vote was to add the Medicaid expansion amendment to a separate piece of legislation, which has not yet been approved by the Senate.

The Kansas House approved the amendment just days after a separate bill expanding Medicaid was tabled in committee, leading observers to believe it would not pass during the current legislative session. It is unclear whether the underlying bill will make it through the Kansas state Senate, which also has a GOP majority. Gov. Sam Brownback strongly opposes Medicaid expansion.

Oregon: Oregon Medicaid Enrollment Down

Oregon’s Medicaid population has dropped, and it is unclear why. Data from the Oregon Health Authority shows January enrollment at 956,790, an 11 percent drop from 10 months earlier, when enrollment in March stood at 1,076,833. Enrollment in Oregon’s state-run coordinated care organizations, or CCOs, dropped by 133,322 in that same period. An improved economy, operational challenges and public apathy may be culprits.

To see the data, click here.

Texas: Lawmaker Pushing Legislation for Gun Ban in Psychiatric Hospitals

A Texas lawmaker is pushing legislation that would reinstate a ban on guns in state-run psychiatric hospitals. Firearms were previously prohibited in the state-run institutions until a law passed in 2015 lifted the ban. The law created penalties for local government facilities that posted “no gun” signs on public buildings without authorization to do so, forcing the state-run hospitals to lift their restrictions. Republican state Rep. Andrew Murr is the sponsor of the bill to reinstate the ban, House Bill 14.

5. Regulations Open for Comment

CMS Proposes Rule for Prosthetics and Orthotics Suppliers

On Jan. 11, CMS issued a proposed rule that would implement statutory requirements and specify: the qualifications needed for practitioners to furnish and fabricate prosthetics and custom-fabricated orthotics, and for qualified suppliers to fabricate prosthetics and custom-fabricated orthotics; accreditation requirements that qualified suppliers must meet in order to bill for prosthetics and custom‑fabricated orthotics; requirements that an organization must meet in order to accredit qualified suppliers to bill for prosthetics and custom-fabricated orthotics; and a timeframe by which qualified practitioners and qualified suppliers must meet the applicable licensure, certification and accreditation requirements. This rule would also remove the exemption from quality standards and accreditation that is currently in place in accordance with Section 1834(a)(20) of the Act for certain practitioners and suppliers who furnish or fabricate prosthetics and custom‑fabricated orthotics. In addition, this rule also includes authority for the Centers for Medicare & Medicaid Services (CMS) to revoke the Medicare enrollment of Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) suppliers that submit claims for items that do not meet the requirements of the statute and this proposed rule.

Only qualified practitioners who furnish or fabricate prosthetics and custom‑fabricated orthotics and qualified suppliers that fabricate or bill for prosthetics and custom‑fabricated orthotics would be subject to these requirements.

CMS will accept comments on the proposed rule until March 13, 2017, and will respond to comments in a final rule.

To see the proposed rule, click here.

FDA Releases Draft Guidance for Interchangeable Biosimilars

On Jan. 17, FDA outlined the criteria companies must meet to get a copycat biologic deemed interchangeable with its branded counterpart, a certification that paves the way for the cheaper products to be automatically substituted at the pharmacy level under state laws.

To get this designation, a biosimilar sponsor must show that its product can be expected to produce the same clinical result as the branded biologic in any given patient, for all of the drug’s approved uses, and that there are no risks if a patient is switched back and forth between the interchangeable biosimilar and the branded biologic, per draft guidance released by FDA.

Interchangeable biosimilars are expected to offer greater savings to the health system than biosimilars that lack this designation. Without the interchangeability designation a doctor must proactively write a prescription for the biosimilar.

The guidance outlines the types of studies and scientific data that companies will need to submit to FDA to get an interchangeable designation. When companies seek that designation, FDA recommends they seek approval for all of the branded biologic approved uses.

FDA is requesting comments on the draft guidance as well as a number of questions outlined in a Federal Register notice. FDA wants to know how it should regulate manufacturing changes of interchangeable products that occur after approval. The agency also wants to know how it should handle interchangeable designations if a branded biologic gets another use approved for the drug, after the interchangeable biosimilar is cleared by FDA.

FDA Releases Draft Guidance on Off-Label Drug Communication

On Jan. 17, FDA issued draft guidance that gives drug and device companies more flexibility to communicate off-label information about their products and avoid charges of misbranding. The new policy allows companies to promote a drug or device with information not on the agency-approved label as long as that information is truthful and non-misleading and is consistent with FDA-approved labeling.

Companies have asked FDA for clarity on marketing policies after a 2012 U.S. Court of Appeals decision ruled that under the First Amendment the government could not prohibit and criminalize the truthful off-label promotion of FDA-approved drugs.

The guidance outlines how FDA will determine whether a company's communication is consistent with FDA's required labeling. For example, companies will not be permitted to communicate information about the drug or device related to a use that has not yet been approved by FDA. They also can't promote a patient population for the drug or device that has not been cleared by the agency.

The agency offers some examples of information companies could communicate that could be consistent with its FDA-required labels. For example, FDA said companies can promote testimony of patients who used the drug for its FDA-approved uses, such as the product's effect on patients' daily activities. Companies could also communicate long-term safety and efficacy information about products that were approved for chronic use based on a six-month trial, if the company now has data on the drug lasting a couple of years, FDA added.

The guidance also outlines the type of scientific data companies need to support their off-label claims. Comments on the draft are due in 60 days.

CMS Proposes Average 0.25 Percent Hike for Medicare Advantage Plans

On Feb. 1, the Trump administration issued guidance that proposes updates to the methodologies used to pay Medicare Advantage plans and Part D sponsors. The guidance calls for raising Medicare Advantage payments an average of 0.25 percent.

Health plans take in roughly $200 billion a year from the government to provide care for seniors enrolled in private Medicare plans. There are currently more than 18 million people enrolled in Medicare Advantage, accounting for roughly a third of all of the program's beneficiaries. More than 1 million seniors have been added to private Medicare plans in the past year, continuing a trend of robust growth that goes back a decade.

"These proposals will continue to keep Medicare Advantage strong and stable and provide high quality, affordable care to seniors and people living with disabilities," said Patrick Conway, acting administrator of the Centers for Medicare and Medicaid Services.

Obamacare included major cuts to Medicare Advantage—America's Health Insurance Plans puts the total figure at $200 billion—that were designed to bring payments more in line with traditional government-run Medicare. Last year, the federal government paid private plans an average of 102 percent of traditional fee-for-service costs per member.

UnitedHealth Group and Humana are the biggest national players, accounting for roughly 40 percent of the Medicare Advantage market in 2015.

CMS will accept comments until March 3 and the final notice will be posted on April 3.

To read a fact sheet on the rate proposal, click here.

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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