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
3. State Activities
4. Regulations Open for Comment
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.
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
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,”
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
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
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
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
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
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
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
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
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,
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
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,
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.
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
The net effect of the bill’s other provisions to change the insurance
markets is unclear, but unlikely to mitigate those coverage losses,
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
Kennan, Senior Vice President
Charlie Iovino, Vice
Caroline Perrin, Research Assistant
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