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Mar 27, 2017

Washington Healthcare Update

  • This Week: Health Reform gets to the floor of the House for consideration, but crashes.

1. Congress



2. Administration

3. Courts

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


American Health Care Act Withdrawn Before Vote

After seven years of Republicans’ running against the Affordable Care Act, the American Health Care Act was pulled just before it was to be voted on in the House of Representatives. Pulling the bill on Friday, March 24, came after postponing a vote scheduled the day before. Within the Republican Party, a tug of war among the conservatives and moderates made it impossible to create a bill that would have the necessary votes to pass. The most recent Congressional Budget Office (CBO) forecast 24 million people would be uninsured within a decade. Polls showed that only 17 percent of Americans supported the bill.

Even if it was passed by the House, the Senate did not have the votes to pass the House bill.

Medicaid was a large stumbling block. However, changes made to appeal to the Freedom Caucus also lost the bill support among moderates.

It is unclear when the House will return to working on health reform. It has been suggested that Health and Human Services Secretary Price can make changes through the regulatory process.

House Energy & Commerce Committee Examines FDA’s Prescription Drug User Fee Program

At a House Energy & Commerce hearing on March 22, members of Congress, FDA officials and industry stakeholders all praised the success of FDA’s breakthrough designation in lowering drug development times, and stressed that the pending Prescription Drug User Fee Agreement (PDUFA) will bring important resources to the effort.

However, FDA drug center director Janet Woodcock also cautioned the program can be expanded only so far.

FDA’s breakthrough designation was created by the Food and Drug Administration Safety and Innovation Act (FDASIA) and allows for expedited development and review of drugs intended to treat a serious or life-threatening disease, and which preliminary clinical research indicates may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints.

Lawmakers were quick to praise the commitment to supporting the breakthrough designation included in the pending drug user fee agreement. “I am pleased that PDUFA VI will continue to build upon the success of the breakthrough therapy program,” E&C health subcommittee Chairman Michael Burgess (R-TX) said in his opening statement.


Senate Democrats Deliver Guarantee to Block Repeal of Essential Benefits

Senate Democrats say they have enough votes to block any Republican attempt to repeal Obamacare’s essential benefits and consumer protections through regular order.

Forty-two Democrats signaled the warning to House Republicans that they should not expect Democrats to cave on future repeal bills the GOP may include in its “third phase” of repeal.

In a letter to House Speaker Paul Ryan, they warn: “Any assurances to your colleagues that future legislation to further scale back insurance coverage will pass through regular order if the AHCA is enacted are based on the flawed assumption that the Senate Democratic Caucus will vote to further erode the health care system and strip our constituents of coverage.”

Republicans are trying to strip out essential benefits in the repeal legislation in an attempt to win over the House Freedom Caucus. But it is unclear whether that move would pass muster under Senate rules.

In the letter, led by Sen. Jeanne Shaheen (D-NH), Democrats promised to block legislation to repeal the essential benefits, as well as preventive care provisions. The letter targets what Republicans have called phase three of their repeal plan: passing legislation through regular order that would need to pick up eight Democratic votes in the Senate. It came just hours before the House’s scheduled vote on repealing major parts of the health law.

“Given your plans to pass subsequent legislation through regular order in Congress, we want to correct any misimpression you may have that we will support proposals you have cited as key to your effort,” the letter says.

Senate Minority Leader Chuck Schumer, who did not sign the letter, has pushed back strongly against repealing any major part of Obamacare and would surely join Democrats in opposition.

Three of the Senate’s most moderate Democrats did not sign on: Sens. Heidi Heitkamp of North Dakota, Joe Donnelly of Indiana and Joe Manchin of West Virginia.

Senators Reintroduce Legislation to Make More Hearing Aids Available Over the Counter

On March 21, Sens. Chuck Grassley (R-IA), Elizabeth Warren (D-MA), Maggie Hassan (D-NH) and Johnny Isakson (R-GA) reintroduced legislation to make certain hearing aids available over the counter (OTC), following calls from the Obama White House and the National Academics of Sciences, Engineering and Medicine. FDA has also indicated it is considering the idea of an OTC hearing aid, and recently loosened restrictions on dispensing hearing aids.

The bill would make certain air-conduction hearing aids available over the counter for patients 18 years and older to treat mild to moderate hearing impairment. The bill would also direct HHS to circulate regulations within three years to establish such a category and codify requirements to “provide reasonable assurances of safety and efficacy.” It would also task HHS with determining whether over-the-counter hearing aids would require 510(k) submissions.

FDA issued guidance on Dec. 7 waiving the recordkeeping and medical evaluation requirements for the dispensing of class I and II air-conduction hearing aids for patients older than 18. FDA also said it would consider making hearing aids available over the counter.

A companion bill was introduced in the House by Reps. Joe Kennedy III (D-MA) and Marsha Blackburn (R-TN).

Sen. Wyden Asks HHS to Ensure CMS Administrator Verma Complies With Ethics Agreement

Senate Finance ranking Democrat Ron Wyden (OR) is requesting information about how HHS will make sure that CMS Administrator Seema Verma is in compliance with her ethics agreements not to directly work on matters relating to seven states with which she has previously done consulting related to Medicaid.

HHS Secretary Tom Price and Verma wrote to governors March 14 that Medicaid expansion is “a clear departure from the core, historical mission” of the program, and began overtures to states to rework Medicaid. They said tax dollars should go to the most vulnerable; urged states to shift to private insurance models and use 1115 waivers to incentivize employment for Medicaid-eligible, poor adults; and said HHS will review all managed care regulations and put off enforcing the 2014 home- and community-based services rule.

“In light of her announced intentions to begin discussions with states regarding changes to the Medicaid programs they carry out, I am writing today to obtain a description of the procedures and safeguards that the Department intends to put in place to ensure that her prior associations with a number of states are properly reviewed and in full compliance with her ethics agreement and the Department’s and Federal ethics rules,” Wyden says.

Wyden asked the HHS acting general counsel how Verma’s Medicaid work with states will comply with her ethics obligations, as she worked with several states through her consulting firm SVC, Inc. Wyden notes that Verma’s ethics agreement says she “will seek a written authorization to participate substantially in particular matters involving specific parties in which I know the States of Arkansas, Indiana, Iowa, Kentucky, Ohio, South Carolina and Virginia are a party or represents a party.”

2. Administration

OMB Memo Instructs Executive Branch Officials to Limit Testimony on Budget Blueprint

Two high-profile appropriations hearings were canceled March 20 following a White House memo warning federal officials to limit congressional testimony on the Trump administration’s FY 2018 budget blueprint.

The Office of Management and Budget (OMB) released the memo stating that it is the administration’s “strong preference that only heads of executive departments and agencies or the acting head of the department or agency” should testify on the budget blueprint.

“Until OMB releases the full FY 2018 Budget, all public comments of any sort should be limited to the information contained in the Budget Blueprint chapter for your agency,” states the memo, which was sent to all agencies.

Both canceled hearings were to be hosted by the House Appropriations subcommittee on Labor, Health and Human Services, and Education. The first panel, scheduled for March 21, would have included witnesses from the National Institutes of Health, the National Cancer Institute and the National Institute on Drug Abuse. The second cancelled hearing, which was set for March 22, would have featured testimony from Education Secretary Betsy DeVos.

HHS Updates Website to Explain ACA Regulatory Overhaul

HHS recently updated its website to explain the regulatory changes it is making to overhaul the Affordable Care Act (ACA) and stabilize the marketplace. The agency announced it is working through all of the ACA’s regulations and guidance to determine their success. HHS’s page “Providing Relief Right Now for Patients” lays out concerns with rising premiums and limited coverage choices.

“The Department of Health and Human Services (HHS) is committed to doing everything in our power to provide relief immediately. Within what the law allows, HHS is taking action to stabilize the individual and small group insurance markets (the markets most affected by the ACA) so that they work better for everyone,” the new page says.

HHS Delays CMMI’s Bundled Payment Programs Again

HHS is further delaying two Medicare bundled payment programs from the CMS Innovation Center, according to a Federal Register notice published March 20. The notice postpones an expansion of its bundled payment program for knee and hip replacements and the start of a stroke and heart attack care program from March 21 until May 20.

The additional time allows new HHS leadership to review the two bundled payments and seek comment about possibly delaying the start of the cardiac care and expansion of the joint replacement bundles all the way until Jan. 1.

The Trump administration had already delayed the start date for the two from Jan. 21 when it ordered a 60-day regulatory freeze after Trump took office. While in Congress, now-HHS Secretary Tom Price was highly critical of mandatory demonstration projects like CMMI’s bundled payments for hip and knee replacements.

MGMA Urges CMS to Release MIPS Eligibility Notifications

CMS is aiming to get doctors information on whether they meet the volume thresholds for participating in the Merit-based Incentive Payment System (MIPS) this spring, and the Medical Group Management Association says the lack of eligibility notifications is “generating considerable frustration and confusion.” The American Medical Association has also talked with CMS about the problem and was told the notifications would come out sooner rather than later.

“Transitioning to MIPS is a challenge involving upgrades to electronic health record software, re-engineering clinical workflows to meet data capture and reporting requirements, contracting with data registries, and training clinical and administrative staff,” MGMA says in a March 15 letter to CMS. “Without basic information about eligibility, physicians and medical groups are significantly disadvantaged from positioning themselves for success in the program.”

The Medicare Access and CHIP Reauthorization Act set up MIPS as one of two tracks in the new Medicare physician payment system, and physicians who bill Medicare Part B more than $30,000 annually and provide care for more than 100 Medicare patients a year participate in one of the two tracks.

The first performance period for MIPS opened Jan. 1, and physicians will see their pay adjusted in 2019 based on their 2017 performance. Those who do not report 2017 data get a 4 percent cut to their Medicare pay, those who submit a minimum amount of 2017 data—such as data on one qualified measure or one improvement activity—avoid a cut and those who submit at least 90 days of data are eligible for a bonus.

CMS previously said it would provide notifications by December to those who are exempt from MIPS because of the low-volume threshold exemption, but the agency has yet to do so. MGMA notes that CMS had estimated that 32.5 percent of Medicare providers are exempt from MIPS in 2017 under the low-volume threshold, and “as such, at least 32.5 percent of Medicare providers are currently unsure whether they qualify for participation in MIPS.”

MGMA says CMS has yet to release a final list of approved 2017 clinical data registries or an approved list of registry vendors, as well, and that is “further hindering group practices’ success in MIPS.”  

3. Courts

Supreme Court Sets Limits on Acting Officials

On March 21, the Supreme Court ruled 6-2 that certain acting officials in jobs requiring Senate confirmation cannot continue to serve in that role once they have been nominated to the post, a decision that will prevent President Donald Trump from temporarily filling such jobs with his first picks while nominations work their way through the Senate.

“Even if a first assistant is serving as an acting officer under this statutory mandate, he must cease that service if the President nominates him to fill the vacant [Senate-confirmed] office,” the court concluded in a case involving the Federal Vacancies Reform Act of 1998.

The law includes a narrow exception for “first assistants” who had served for at least 90 days, although the changeover of political appointees during the transition means fewer of these such deputies are now serving in acting posts. The Supreme Court said that prohibition also extends to any non-deputy officials specifically directed by the president to serve in acting capacities.

It appears unlikely the ruling will affect many actions taken by acting officials under the Obama administration, since a lower court said any such challenges would have had to have raised the vacancy issue already. Still, the Obama administration previously had pointed to uncertainties about acting EPA deputy administrator Stan Meiburg and acting officials at other agencies.

4. State Activities

California: Huge Cost-Shift Could Occur for Medi-Cal Under GOP Plan

The current GOP health proposal would have required California to come up with nearly $6 billion to pay for Medi-Cal—the state’s Medicaid program—in 2020 and as much as $24.3 billion by 2027, according to a preliminary analysis released by state officials March 22.

Of that amount, California’s general fund, which covers about 70 percent of Medi-Cal costs, was estimated to grow from $4.3 billion in 2020 to $18.6 billion over the next decade, due in part to an increase in California residents covered under the program.

Reduced federal contributions and other administrative changes would cost the state $4.8 billion by 2020, and as much as $18.5 billion within the next decade. California’s cost trends are also expected to exceed the expenditures allowed under the Republicans’ per-capita spending limit, increasing state costs from $680 million in 2020 to $5.3 billion by 2027.

Medi-Cal is projected to cover 14.3 million Californians next year, or one in three residents. The analysis, which was conducted by the Department of Health Care Services with the Department of Finance, was sent to the state’s congressional membership.

Florida: Gov. Scott Plans to Ask Federal Government for a Medicaid Block Grant

Florida Gov. Rick Scott announced plans to ask the federal government to give Florida a Medicaid block grant. The Agency for Health Care Administration sent a letter to HHS Secretary Tom Price saying Florida intends on amending a Medicaid 1115 waiver request that is pending approval to include a request for a Medicaid block grant. The letter outlined the five changes Florida would like to make to its Medicaid program under a block grant, including eliminating a requirement that the state retroactively cover health care costs for newly eligible beneficiaries and eliminating a requirement that the federal government review the rates the state pays HMOs to make sure they are actuarially sound. Florida has a $26 billion Medicaid program and requires most of its enrollees to enroll in a managed care plan.

Kansas: Kansas State Senate Approves Bill for Obamacare Medicaid Expansion

On March 23, a committee in the Kansas State Senate cleared a bill that would expand the state’s Medicaid program under Obamacare, a rebuke to Congress as Republicans try to unwind the health law.

The Kansas Senate Public Health and Welfare Committee advanced legislation on a voice vote, sending it to the full GOP-controlled chamber for consideration. Legislation cleared the Kansas House in February, a surprising endorsement of the Obamacare program from a deep red state.

Kansas is one of 19 states that have not accepted the Medicaid expansion. But it is unclear whether Republican Gov. Sam Brownback would sign the bill given that he has been vehemently opposed to Obamacare for years.

The American Health Care Act seeks to phase out Obamacare’s Medicaid expansion funding beginning in 2020. But one of the changes included in an amendment to the bill is designed to make sure additional states would not expand their Medicaid program between now and then. The change only allows states to maintain the federal funding boost under Obamacare if they had already expanded by March.

5. Regulations Open for Comment

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.

FDA Considers Establishing New Office of Patient Affairs

The FDA is considering establishing a new Office of Patient Affairs that would centralize its work on patient involvement in the review and approval of drugs and medical devices, according to a March 14 notice in the Federal Register.

Comments on the new office are due by June 12, 2017.

FDA Proposes 1,000 Medical Devices to Exempt From Premarket Notification

On March 14, FDA took one of its first actions to begin implementing the 21st Century Cures Act, by proposing more than 1,000 medical devices it will exempt or partially exempt from the premarket review process. The devices on the list are sufficiently well understood and do not present risks that require premarket notification to provide a reasonable assurance of safety and effectiveness, FDA said. The agency will finalize the list after a 60-day public comment period. Comments are due by May 15, 2017.

FDA Extends Comment Period on Biosimilar Interchangeability Guidance

FDA is extending the public comment period for its draft guidance outlining how biosimilar sponsors can demonstrate that their products are interchangeable with other biologics, following extension requests from top trade associations.

The agency laid out in a January 2017 draft guidance its first attempt at codifying the requirements that sponsors must satisfy to demonstrate interchangeability. The agency said it would make case-by-case determinations of interchangeability, but indicated it would require studies measuring the impact of switching on clinical pharmacokinetics and pharmacodynamics.

The Biotechnology Innovation Organization (BIO), Pharmaceutical Research and Manufacturers of America and Covington & Burling all requested comment period extensions, according to documents posted on

The comment period, which was set to close on March 20, will be extended 60 days until May 19.

6. Reports

GAO Testimony Shows VHA Struggles to Recruit and Retain Staff

On March 22, GAO released testimony regarding the Veterans Health Administration’s challenges with recruiting and retaining staff. Specifically, GAO found that the VHA is having difficulty recruiting and retaining both clinical and administrative staff. There is high attrition among HR staff at the VHA, along with weak internal control processes, which are contributing to staffing issues. These challenges are making it more difficult for VHA to meet the health care needs of the nation’s veterans, according to GAO.

GAO recommended that VHA improve oversight of nurse recruitment and retention initiatives, and strengthen its HR capacity.

To see the report, 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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