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Mar 13, 2017

Washington Healthcare Update

This Week: House Ways and Means Committee and Energy and Commerce Committee markup “repeal and replace” bill…Meanwhile while all eyes were on the other two committees, House Education and Workforce Committee marked up other health-related bills…Trump talks drug negotiation.

Heath Reform Takeaways

  • Medicaid provisions in the replacement bill raise concerns with enough Republican senators to be problematic
  • House Freedom Caucus met with the president and wants changes in the bill
  • Congressional Budget Office score expected early in the week, but already others are estimating how many will lose coverage

1. Congress



2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


President Trump Supports Drug Price Negotiation and Drug Importation Bills

In a March 8 meeting with Democratic lawmakers, President Donald Trump expressed his continued support for government negotiation of drug prices in Medicare Part D. The hour-long meeting included Trump, Rep. Elijah Cummings (D-MD), Rep. Peter Welch (D-VT), Health and Human Services (HHS) Secretary Tom Price and the president of Johns Hopkins Hospital, Redonda G. Miller.

Rep. Cummings also said Trump would go further with drug negotiations than Rep. Cumming’s legislation does. Trump said he wants to negotiate for any drug the government purchases, not just those covered by the Medicare Part D program.

Cummings’ legislation would allow the HHS secretary to negotiate drug prices in Medicare Part D and to establish a formulary. The Congressional Budget Office (CBO) has found that government drug price negotiations alone would have a limited effect on Medicare spending, but that permitting negotiations in conjunction with a formulary could give HHS “the ability to obtain significant discounts in negotiations with drug manufacturers,” a summary provided by Cummings’ office says.

The bill would also give Part D plans additional tools to secure steeper discounts on drugs and would establish a fallback process if negotiations are unsuccessful. Additionally, the bill would require the inclusion of at least one drug to treat each clinical condition and preserve the appeals processes for drugs not covered by the formulary. It would also preserve protections in Part D that mandate certain types of drugs be covered. Currently, all Part D plans must cover all medicines used to treat certain conditions, such as cancer and depression.

Finally, the bill would shift dual eligibles to the Medicaid drug benefit. Because drug companies are required to provide mandatory discounts to the Medicaid program, but not to Part D, this would save taxpayers $145 billion over 10 years, CBO estimates. Dual eligibles were switched to Medicare Part D’s drug benefit when the program was first created in 2006.

Cummings described the meeting at the White House as productive, adding that Trump committed to reviewing the proposal and seemed enthusiastic about the idea.

Trump also volunteered his support for a drug importation bill introduced by Cummings and Sen. Bernie Sanders (I-VT).

House Ways and Means Marks Up Repeal Bill

As markups began on the American Health Care Act—the House Republican legislation to repeal and replace the Affordable Care Act—Democrats forced meaningless votes on the House floor and in two House committees, and even required committee clerks to read the entire text of the bill out loud at one point—all in an effort to stop Republicans from fulfilling their campaign pledge to repeal the Affordable Care Act.

The House Ways and Means Committee’s March 8 markup focused on tax provisions in the American Health Care Act. In the markup Democrats sought to paint the legislation as a subtle attack on Medicare, pointing to a tax provision that they warned would drain money from the program’s trust fund.

The repeal legislation—which eliminates a slew of taxes imposed by Obamacare—would roll back a 0.9 percent Medicare tax on high earners. Eliminating that tax would take away $170 billion in anticipated revenues from the Medicare trust fund, Rep. John Larson (D-CT) said, shortening its solvency by three years. Rep. Terri Sewell (D-AL) added that the provision violates President Donald Trump’s pledge not to touch Medicare.

Democrats on the panel hammered the House bill throughout the day as a giveaway for the rich, who would profit at the expense of the poor and elderly. But committee Chairman Kevin Brady (R-TX) objected to linking Medicare to the repeal effort, arguing that House Republicans are simply trying to halt the rising premiums seniors have to pay under Obamacare.

Ultimately, the bill was reported out early in the morning on March 9 with a party line vote.

House Energy and Commerce Committee Marks Up for 27 Hours

The House Energy and Commerce Committee reported out its portion of the Obamacare repeal legislation in a party line 31-23 vote. The committee met for 27 straight hours with recesses only for votes on the floor. Democrats had filed more than 100 amendments. The committee has jurisdiction over insurance portions of the bill as well as Medicaid.

Republicans on the panel knocked down more than a dozen Democratic amendments to the bill.

Rep. Joe Barton (R-TX) introduced—and later withdrew—two amendments to speed up the repeal of the Medicaid expansion and put an end date on the enhanced federal match. These two amendments are supported by the House Freedom Caucus and the Republican Study Committee—conservative House caucuses that oppose the bill in its present form. They are expected to be part of the debate as the measures move toward consideration by the House.

House Education and Workforce Marks Up Association Health Plans and Wellness Program Legislation

On March 8, the House Committee on Education and the Workforce, chaired by Rep. Virginia Foxx (R-NC), approved three legislative proposals relating to association health plans, and issues related to employer-sponsored health insurance, including employee wellness plans. The three bills approved by the committee are:

  • The Small Business Health Fairness Act (H.R. 1101), introduced by Reps. Sam Johnson (R-TX) and Walberg, which would permit small businesses to band together through association health plans. The proposal passed the committee by a vote of 22 to 17.
  • The Self-Insurance Protection Act (H.R. 1304), introduced by Rep. Phil Roe (R-TN), would reaffirm that stop-loss insurance is not health insurance and clarify that regulators cannot redefine “stop-loss.” It passed the committee by voice vote.
  • The Preserving Employee Wellness Programs Act (H.R. 1313), introduced by Chairwoman Foxx, would provide employers the legal certainty they need to offer employee wellness plans. The bill passed the committee by a vote of 22 to 17.

For more information on Medicaid and other changes please see: “GOP Healthcare Reform Proposal: Significant Changes for Employers” and “Washington Update: Congress Proposes Overhauling Medicaid.”

AMA Criticizes GOP Obamacare Repeal Bill

The American Medical Association—the nation’s largest physician organization—opposes the House Republicans’ repeal bill, criticizing provisions it says will take away coverage from low-income Americans and make it harder to access care.

The AMA listed a series of concerns with the legislation in a letter to House lawmakers March 8. It highlighted the disproportionate impact that capping funding for states’ Medicaid programs could have on those most in need of care.

In its letter, the AMA also criticized the bill for defunding Planned Parenthood, arguing that cutting off money to the organization would restrict patients’ choice of providers.

AHIP Concerned GOP Repeal Bill Could Disrupt Marketplace

America’s Health Insurance Plans (AHIP) is raising concerns that the House GOP’s Obamacare repeal bill could further destabilize the individual market and disrupt vital coverage for Medicaid enrollees.

In a March 8 letter to the chairs of the Ways and Means and Energy and Commerce committees, the lobbying group is calling for changes to the structure of the bill’s tax credits. Specifically, AHIP wants credits to be based on both age and income, instead of only on age as Republicans proposed. The group believes additional assistance should be available for individuals with incomes below 400 percent of the poverty threshold, as is the case under Obamacare.

AHIP is also raising concerns about the adequacy of Medicaid funding under a new system that would begin in 2020. Instead of the current open-ended entitlement, states would get capped payments based on the number of Medicaid enrollees.

The new Medicaid funding system “could result in unnecessary disruptions in the coverage and care beneficiaries depend on,” the letter states.

The letter does admit that the proposed legislation includes a number of positive steps “to help stabilize the market and create a bridge to a reformed market during the 2018 and 2019 transition period. These steps include continuing premium tax credits through the transition; funding for states to help stabilize risk pools; more flexibility for states and health plans to offer consumers more choices; and permanently eliminating many taxes that drive up consumer costs, including the health insurance tax.”

Hospital Groups Do Not Support GOP Obamacare Repeal Bill

The nation’s largest hospital groups state they cannot support the ACA repeal-and-replace bill—the American Health Care Act—and warn that it could create “tremendous instability” for Americans seeking insurance coverage.

The groups also criticized Republicans’ push to restructure Medicaid by capping its federal funding, a shift that they said would make it more difficult to care for the newly uninsured.

“Absent Congressional Budget Office analysis, our assessment of this legislation as currently drafted is that it is likely to result in a substantial reduction in the number of Americans able to buy affordable health insurance or maintain coverage under the Medicaid program,” the letter says.

The American Hospital Association, America’s Essential Hospitals, Association of American Medical Colleges, Catholic Health Association of the United States, Children’s Hospital Association, Federation of American Hospitals and National Association of Psychiatric Health Systems signed onto the letter.


Four GOP Senators Express Concerns Over House Health Care Draft

Four Republican senators from states that expanded Medicaid under Obamacare say they cannot support a draft House repeal bill because it will not protect people enrolled in the health entitlement—a move that could hurt the legislation’s prospects of passing.

“We are concerned that any poorly implemented or poorly timed change in the current funding structure in Medicaid could result in a reduction in access to life-saving health care services,” Sens. Lisa Murkowski of Alaska, Cory Gardner of Colorado, Rob Portman of Ohio and Shelley Moore Capito of West Virginia wrote in a letter to Majority Leader Mitch McConnell. “The February 10th draft proposal from the House does not meet the test of stability for individuals currently enrolled in the program and we will not support a plan that does not include stability for Medicaid expansion populations or flexibility for states.”

Medicaid expansion has emerged as a key issue in the debate over the health law. Several Republicans say they are worried that Americans who obtained coverage under the program would suddenly lose their health insurance and be left without options if the program is rolled back.

The House bill would freeze the Medicaid expansion in 2020 and phase it out over time. Nationwide, more than 11 million people got Medicaid through the expansion under Obamacare. In Ohio alone, some 700,000 residents obtained insurance because of the state’s expansion.

Senate Republicans can absorb no more than two votes against the bill if they hope to pass it under an expedited procedure that requires a simple majority vote, with Vice President Mike Pence serving as the potential tiebreaker.

2. Administration

FDA to Hold Public Meeting on Patient-Focused Drug Development for Autism

FDA will hold a patient-focused drug development meeting on autism as part of its Patient-Focused Drug Development Initiative, which aims to get patient perspectives on specific disease areas. The agency is seeking comments from patients and patient representatives—children with autism and their parents—on the symptoms of autism that matter most to them and on current approaches to treating autism.

In its Federal Register notice of the meeting, which will be held May 4, FDA asks nine main questions addressing autism symptoms and the daily impact that matters most to patients, and patients’ perspectives on current treatment options.

The meeting will be held at FDA’s White Oak Campus in Silver Spring, MD. Registration ends April 24, and the deadline for stakeholders to provide input and answers to the discussion questions in the Federal Register closes on July 5.

Autism is one of four diseases areas for which FDA has planned to hold meetings in 2017, and the second one that will be held this year. The first meeting of the year is scheduled for April 6 and will discuss sarcopenia. Since 2013, FDA has held 20 meetings on various diseases.

3. State Activities

California: GOP Repeal Bill Could Impact Women’s Reproductive Health

The GOP repeal bill, which defunds Planned Parenthood, could have a huge impact on women’s reproductive health. Planned Parenthood affiliates in California receive $253 million in federal funds, amounting to 80 percent of their operating budgets. The House bill’s tax credit scheme also could be problematic because of a 1981 state constitutional ruling requiring health insurers that cover maternal care to also cover abortion services. The bill would make virtually all California health plans ineligible for tax credits, said Beth Parker, chief legal counsel for Planned Parenthood Affiliates of California.

Florida: Hospitals Could Lose $308 Million in Medicaid Funds

Florida hospitals could lose $308 million in Medicaid funds under proposed reductions outlined by the Senate Health and Human Services Appropriations Subcommittee on March 8. The majority of the proposed cuts come from a $100 million general revenue reduction to hospital rate enhancements which, when combined with the loss of matching federal dollars, equals a $257 million hit. The cut would affect about 70 hospitals, which all provide large amounts of charity care.

New Jersey: Gov. Christie Waiting to See How GOP Repeal Process Pans Out

New Jersey Gov. Chris Christie said he is taking a wait-and-see approach to the GOP repeal bill, which could cost the state billions of dollars in federal funding. More than 500,000 residents gained coverage through Christie’s decision to expand Medicaid. The governor said he was “heartened by the idea” that the federal funding match wouldn’t change for four years and “would give folks a chance to adjust to whatever it would be afterwards.”

New York: GOP Repeal Bill Could Cost New York Billions of Dollars Per Year

The Obamacare repeal bill, the American Health Care Act, could cost New York $240 million this year and $2.4 billion per year beginning in 2021, the state Department of Health estimates. The analysis shows the largest impact would come from the cap on federal Medicaid spending and the Medicaid expansion phase-out beginning in 2020. Lt. Gov. Kathy Hochul was in Washington last week to lobby the state’s Republican delegation.

4. 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.

CMS Announces RFI for Input on Improving Pediatric Care

CMS announced Feb. 27 a Request for Information (RFI) seeking input on approaches to improve pediatric care, specifically to improve the quality and reduce the cost of care for children and youth enrolled in Medicaid and the Children’s Health Insurance Program (CHIP). CMS is also exploring concepts that encourage pediatric providers to collaborate with health-related social service providers at the state, tribal and local levels and share accountability for health outcomes for children and youth enrolled in Medicaid and CHIP.

CMS is asking stakeholders to submit comments via email to by 11:59 p.m. on March 28, 2017.

For more information about the RFI, visit the CMS Innovation Center website.

5. Reports

Brookings Analysis Finds CBO Will Predict 15 Million to Lose Coverage Under GOP Reform Bill

A new Brookings analysis predicts that Republicans’ health proposal would erase about two-thirds of the coverage gains of the Affordable Care Act ahead of the Congressional Budget Office score to be released this week.

“We conclude that CBO’s analysis will likely estimate that at least 15 million people will lose coverage under the American Health Care Act by the end of the 10-year scoring window,” Loren Adler and Matthew Fiedler write. CBO previously estimated about 24 million Americans would gain coverage through Obamacare within the same time frame.

According to Brookings, which extrapolates from previous CBO scores, the budget office will conclude that Republican plans to repeal the individual mandate would reduce coverage by 15 million and their proposed changes to the Medicaid program would lead to “significant” coverage losses, likely several million.

The net effect of the bill’s other provisions to change the insurance markets is unclear, but unlikely to mitigate those coverage losses, Brookings concludes.

Other analyses have projected the Republican bill would lead to significant declines in coverage, although they measured different time horizons and reported different figures. Standard & Poor’s this week estimated the private exchange market would shrink by 4 million by 2019 and Medicaid enrollment would fall by as much as 6 million by 2024.

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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