Apr 10, 2017
Washington Healthcare Update
This Week: More skirmishes over repeal and replace… MedPAC makes
recommendations on Part B drug payment… Congress goes home for two weeks.
3. State Activities
4. Regulations Open for Comment
House Rules Committee Approves Risk Stabilization Amendment to AHCA
On April 6, House Republicans attached an
amendment to the American Health Care Act that would allocate $15 billion from the
Patient and State Stability Fund between 2018 and 2026 to create a federal
“invisible risk sharing program.” The House Rules Committee approved the
amendment 9-2 along party lines.
The amendment was drafted by House Freedom Caucus members Rep. Gary Palmer
(R-AL) and Rep. David Schweikert (R-AZ). Under the program, applicants fill
out a health history and those with certain conditions found to drive health
claims would be automatically placed in the pool. The program also allows
issuers to voluntarily put consumers likely to have high claims into the
In the GOP amendment, HHS would establish the fund after consultation with
health care consumers, issuers, commissioners and other stakeholders and
after taking into consideration high-cost health conditions. HHS would run
it through 2020, after which the states would take over. HHS would define
parameters including eligible individuals, health status statements,
automatic qualities, voluntary qualities, the percent of insurance premiums
that would be applied to the pool, and the attachment point and payout
Rep. Schweikert said it would not resolve everyone’s concerns, but it does
address one of the main ones from the Freedom Caucus—that the AHCA did
nothing to lower premiums. He said there are still questions over what
flexibility in Medicaid expansion means and how states could be more
creative without HHS interference.
House Majority Leader Kevin McCarthy (R-CA) wrote a
memo in support of the amendment wherein he stressed the importance
of repealing and replacing Obamacare.
Members were told that there would be more discussions during the two-week
break, and should progress be made, they may be called back early to
House Approves VA Choice Extension, Sends to President Trump
On April 5, the House approved and sent to President Donald Trump
legislation that would extend the Veterans’ Choice Program past its expected
August expiration. The bill was passed by a voice vote, following
similar approval in the Senate.
If signed by the president, as expected, the legislation would eliminate the
August sunset date for the program and allow the VA to spend the nearly $1
billion left from an initial $10 billion in emergency funding dedicated to
the Choice Program.
The program, created to subsidize non-VA care for veterans who face long
wait times for medical appointments or live long distances from a VA medical
facility, is set to expire three years after its creation or when it runs
out of money, whichever comes first.
The Choice Program was created as a temporary program to cut waits for
medical appointments at the height of the VA’s 2014 wait times scandal.
However, lawmakers from both parties and VA officials have since argued the
program’s rollout was deeply flawed and requires reform.
House Veterans’ Affairs Chairman Phil Roe (R-TN) said on the House floor
that his goal is to secure passage of a broader rewrite of the Choice
Program later this year, but the legislation considered now would give
lawmakers time to negotiate a broader deal.
The legislation is sponsored by 20 senators from both parties, including
Senate Veterans’ Affairs Chairman Johnny Isakson (R-GA) and the committee’s
ranking Democrat, Sen. Jon Tester of Montana, as well as Senate Armed
Services Chairman John McCain (R-AZ). On the Senate floor, the bill’s
backers characterized the legislation as a first step in improving the
Senators Urge AG to Continue Appeal of ACA Cost-Sharing Reduction
On April 4, nine senators urged Attorney General Jeff Sessions to continue
the prior administration’s appeal of a lower court decision in the House GOP
lawsuit over the ACA’s cost-sharing reductions. The letter was signed by
Democrats Mark Warner (VA), Michael Bennet (CO), Tom Carper (DE), Chris
Coons (DE), Maggie Hassan (NH), Tim Kaine (VA), Bill Nelson (FL) and Jeanne
Shaheen (D-NH), along with Independent Angus King (ME).
In their letter to Sessions, the senators argue that “the immediate threat
posed by the mixed messages coming from the Administration,” in addition to
uncertainty created by a wide range of actions from the administration and
the GOP-led Congress, could lead to fewer choices, less access and higher
premiums. “Until those who initiated the lawsuit, the House Republican
Conference, develop a practical resolution to prevent millions of Americans
from experiencing higher out of pocket costs, we urge you to provide
predictability for the American people by continuing to appeal the decision
and reimbursing insurers to cost-sharing payments,” the letter says.
Earlier this week, Speaker Paul Ryan (R-WI) stated the House does not intend
to drop the suit because of the separation of powers issues involved. An
administration official said April 3 that HHS would follow precedent by
allowing the CSRs to be paid out as long as the case is in litigation, but
did not say whether the administration intended to defend the case,
House v. Price.
House Republicans won in a lower court last year and the decision is now on
appeal. President Donald Trump’s statement that the White House would be
willing to watch the exchanges “explode” following the collapse of the GOP’s
health reform effort has led to confusion over whether the administration
will continue the appeal.
Senate HELP Committee Holds Hearing on FDA User Fees
On April 4, the Senate Health, Education, Labor and Pensions (HELP)
Committee held a hearing on FDA user fee agreements. During the hearing,
Committee Chairman Lamar Alexander (R-TN) said he hopes to move quickly to
reauthorize the user fee agreements negotiated by FDA and industry so that
the agency will not be forced to send layoff notices to employees at the end
of July. “After reviewing the recommendations from industry and the FDA, I
believe these are good agreements for patients,” Alexander said, signaling
he will not accept President Donald Trump’s request in his “skinny” fiscal
2018 budget to double the fees and lower appropriations.
Committee ranking Democrat Patty Murray (WA) called Trump’s request that
industry pay double in exchange for regulatory reforms a dangerous proposal.
Sen. Elizabeth Warren (D-MA) also said that Trump’s proposal to shift
funding to increased reliance on user fees would keep the agency from
completing activities that do not receive funding from user fees,
endangering public health.
Kay Holcombe, senior vice president of science policy at the Biotechnology
Innovation Organization, noted the president’s hiring freeze has a direct
impact on user fees. “If FDA is unable to make these hires, user fees cannot
be spent. This is a situation that is not good for fee payers, for FDA, or
for patients who are waiting for approved therapies,” Holcombe said.
For more information on the hearing,
Medicare Advisers Recommend Drug Payment Reforms
On April 6, a congressional Medicare advisory panel unanimously supported
recommendations that would fundamentally restructure how the program pays
for physician-administered drugs, ending more than two years of discussion
on the topic.
Medicare Part B now reimburses doctors for these drugs based on a
formula—average sales price plus 6 percent—that critics say incentivizes
doctors to prescribe high-cost treatments when cheaper alternatives would
suffice. The advisory panel, MedPAC, agreed that drug companies should pay a
rebate when the average sales price of their products increases faster than
an inflation benchmark.
MedPAC also supported a new “drug value program,” which would create a
negotiation system for physician-administered drugs, similar to what is used
in Medicare Part D for pharmacy prescriptions. Under this system, a limited
number of vendors would negotiate drug prices, and participating providers
would buy those medicines at prices that would not be made public.
The group suggested creating a voluntary program that would be phased in by
2022 at the earliest. To encourage participation, however, they suggest
gradually reducing the ASP add-on percentage.
PhRMA and some doctors groups, like the Community Oncology Alliance, oppose
these changes. These groups were instrumental in killing an Obama
administration proposal to test new ways of paying for Part B drugs.
But some MedPAC recommendations might find a receptive audience in the new
White House, given President Donald Trump’s support for negotiating drug
prices. MedPAC also said HHS should use the same billing code for a
reference biologic and biosimilar, which would incentivize doctors to use
the cheaper copycats of branded biologics.
The panel estimated its package of recommendations would save between $1
billion and $5 billion over five years.
CMS Announces Participants for the Assistance and Alignment Tracks of
the Accountable Health Communities Model
On April 6, CMS announced the participants for the Assistance and Alignment
Tracks of the Accountable Health Communities (AHC) Model. By addressing
critical drivers of poor health and high health care costs, the model aims
to reduce avoidable health care utilization, impact the cost of health care
and improve health and quality of care for Medicare and Medicaid
beneficiaries. The organizations in the Accountable Health Communities Model
Assistance Track will provide person-centered community service navigation
services to assist high-risk beneficiaries with accessing needed services.
The organizations will also provide community service navigation services,
as well as encourage community-level partner alignment to ensure that needed
services and supports are available and responsive to the needs of
The Assistance and Alignment Tracks of the Accountable Health Communities
Model will begin on May 1, 2017, with a five-year performance period.
To view a list of the Assistance and Alignment Tracks bridge organizations,
visit the Accountable Health Communities Model
CMS Releases Interim Report on Risk Adjustment
On March 31, CMS released an
on 2016 risk adjustment calculations for all but two states, and stressed
that the figures are only preliminary and liable to change once the final
numbers are out in June.
The ACA’s risk adjustment program is designed to protect issuers from
adverse selection by requiring plans with healthier risk pools to pay into a
fund so that payments can be transferred to issuers that ended up with a
sicker population. While CMS has determined the program works as intended,
issuers have consistently argued the program design is problematic and
should be overhauled.
Issuers also asked CMS to provide interim calculations after issuers large
and small were caught off-guard by the results of the 2014 RA program. CMS
agreed, and began doing so last year. As in 2015, the agency only provides
the numbers for states in which each credible issuer (meaning an issuer with
at least 0.5 percent of market share) submitted at least 90 percent of
enrollment data and claims for the first three-quarters of the benefit years
and there were no data outliers.
Only 21 states met that criteria in 2015, but in 2016 all states in which
the federal government runs risk adjustment were included except for Hawaii,
which had two plans unable to pass the thresholds. Massachusetts
administered its own RA program for 2016 and so it is also excluded. The new
figures published on March 31 also include a brief analysis of how the
numbers changed from interim to final status in 2016.
The agency reports that the risk adjustment transfers reversed for 10.5
percent of issuers in individual markets, and 15.3 percent of issuers in the
small group market.
For the 190 individual market plans that received the estimates, about 5.8
percent of those who had been expected to see a charge ended up getting a
payment, and 4.7 percent changed from an interim payment to a charge. For
the small group market, 10 percent went from a charge to a final payment and
5.2 percent went from a payment to a charge.
CMS Announces Medicare Advantage Payment Boost for 2018
Medicare Advantage plans will receive a 0.45 percent increase in funding for
announced April 3. That is slightly more than the 0.25 percent bump the Trump
administration proposed in February.
Insurers also received news on how CMS will evaluate “encounter data.” The
Trump administration will base 15 percent of the Medicare Advantage funding
formula on encounter data, down from 25 percent as it initially proposed.
Insurers have complained that the data—essentially their paid claims—is not
reliable and should be scrapped entirely.
Otherwise, the final rate notice is largely unchanged from what the Trump
administration proposed in February. This is not surprising given that the
Trump administration has yet to appoint many key officials within the
The stakes are huge for health plans: Medicare Advantage is a roughly $200
billion per year business and covers about a third of all Medicare
Insurers had been lobbying for the Trump administration to fix what they see
as a glitch in the funding formula that prevents some plans from getting
their full quality bonus payments. However the administration did not alter
CMS also decided not to move forward with changes to the funding model for
employer-based plans that the Obama administration had proposed. Insurers
believe the change would have resulted in lower payments. Instead the
administration will stick with the same formula as 2017.
CMS also issued a request for information about ways to improve the private
Medicare program. The agency asks for ideas on regulatory, sub-regulatory,
policy, practice and procedural changes to improve the programs, and
suggests that ideas could include recommendations on benefit design,
operational or network flexibility, “supporting the doctor-patient
relationship in care delivery” and ways to promote individual preferences.
For example, CMS suggests stakeholders could come up with recommendations on
changes to the way plans are paid, monitored and measured as well as changes
to the star rating quality program. The agency also suggests that
stakeholders could provide feedback on “when and how CMS issues regulations
and policies and how CMS can simplify rules and policies for beneficiaries,
providers and plans.”
Comments are due April 24.
For more information,
FDA Approves Direct-to-Consumer Marketing for 23andMe
On April 6, FDA announced that it will allow
23andMe to do direct-to-consumer marketing of tests that indicate inherited
predispositions for 10 diseases including Parkinson’s and late-onset
Alzheimer’s, in a major victory for the startup and the emerging consumer
Positive reactions were swift in the patient advocacy world. “The decision
today can help inform patients’ behaviors and medical decisions,” said
Edward Abrahams, president of the Personalized Medicine Coalition.
The agency used a so-called “de novo pathway,” which allows relatively quick
approval of moderate-risk medical devices. An agency spokeswoman said future
approvals would be premised on the regulated companies’ accepting “special
controls” and submitting to a streamlined 510(k) pathway.
Further details on the special controls, which can include things like
performance standards, postmarket surveillance, patient registries and
labeling requirements, will be available when the agency releases its
summary of the approval decision in a few weeks, she said.
The Mountain View startup ran into trouble with the FDA in 2013, when the
agency ordered 23andMe to withdraw from the market genome tests that
included broad claims about the patient’s disease risks.
Since then FDA has approved various narrower pre-diagnostics, such as a 2015
approval for a test of genetic links for diseases like Bloom’s Syndrome.
While the latest approval did not cover 23andMe’s original tests, it
signaled FDA’s comfort with direct-to-consumer tests that point to
predispositions for certain disease conditions that can be modified by
lifestyle changes such as additional exercise or healthier eating.
3. State Activities
Florida: New Bill Imposes Conservative Changes to Medicaid Program
On April 6, the Florida House Health and Human Services Committee approved a
bill that would impose several conservative changes to the Medicaid program.
It would implement cost-sharing and work requirements and ban enrollees for
up to one year for failing to pay premiums. Premiums would be set at $10 per
month for people earning as little as 50 percent of the federal poverty
level, while enrollees earning above the poverty line would pay $15 per
month. The bill establishes a 60-day grace period for any missed premium
Indiana: Gov. Holcomb to Sign Needle-Exchange Program Bill
Indiana Gov. Eric Holcomb is expected to sign a bill allowing counties and
municipalities to set up their own needle-exchange programs to help curtail
the spread of HIV. Former Indiana Gov. Mike Pence in 2015 lifted the state’s
ban on needle exchanges as a response to a deadly HIV outbreak in Scott
County. Under the bill, counties would no longer need state approval to set
up a program.
Kansas: Kansas House Fails to Override Veto of Medicaid Expansion
On April 3, the Kansas House came short of overriding Gov. Sam Brownback’s
veto of Medicaid expansion, ending the deep-red state’s surprising push to
join the Obamacare program.
The House voted 81-44, needing three more votes to override Brownback’s
veto. In his veto message, Brownback said the expansion would burden the
state’s budget with “unrestrainable entitlement costs.” He argued that
Kansas should not expand its program when the Republican-controlled Congress
is working to repeal Obamacare and overhaul Medicaid.
The expansion bill was originally approved by the House and Senate with
major bipartisan support, though it lacked veto-proof majorities in both
chambers. Kansas remains one of 19 states that have not expanded Medicaid.
New Mexico: New Mexico Requiring Police to Carry Overdose Reversal Drugs
New Mexico Gov. Susana Martinez signed legislation last week making New
Mexico the first state to require all local and state police to carry
overdose reversal drugs to combat opioid and heroin overdoses. The money for
the naloxone kits will come from a state fund for officers that goes toward
training, equipment and supplies.
The new law also requires federally certified addiction treatment centers to
give patients two doses of naloxone and a prescription for the reversal
drug, as well as education on how to use it. Prisons and jails will be
required to give at-risk inmates naloxone when they are released if supplies
New York: Rep. Faso Introduces Property Tax Reduction Act
New York Rep. John Faso recently introduced the
Property Tax Reduction Act, which would effectively prohibit the state from having local governments
contribute toward Medicaid. The 57 counties outside of New York City
contribute $2.3 billion toward the state’s Medicaid program—money that would
have to be made up from elsewhere in the state budget. The legislation is
identical to an amendment that was attached to the stalled GOP Obamacare
repeal bill last month, sparking a debate between Gov. Andrew Cuomo and
several congressional Republicans.
Oklahoma: Oklahoma Considering 1332 Waivers
Oklahoma, a state that did not expand Medicaid and reports low participation
in the insurance exchanges, is proposing 1332 waivers to restructure
Affordable Care Act coverage for people earning up to 300 percent of
poverty, according to a paper from the state’s Department of Health and
The analysis asks for greater state authority over the exchanges that would
include control of cost-sharing reductions, advanced premium tax credits,
calculating subsidy amounts for eligible people, and setting the essential
health benefits for plans.
The state wants to redesign financing and eligibility for the exchanges to
try to close the coverage gap—the so-called “Medicaid gap”—caused by
Oklahoma’s refusal to expand Medicaid after Congress passed the ACA.
Thirty-nine percent of Oklahoma’s uninsured fall below the federal poverty
level, so they cannot receive federal subsidies to purchase coverage on the
exchanges. The state can only offer subsidies to people between 100 percent
and 400 percent of poverty under current law.
Oklahoma’s proposal would shape an exchange market similar to what Arkansas
engineered through Medicaid expansion and Medicaid 1115 waivers. That
program lets childless adults who earn up to 138 percent of poverty buy into
the exchanges with additional benefits traditionally included under Medicaid
provided as wraparound coverage.
Oklahoma’s HHS task force says that with new policies in place Medicaid
managed care providers may be able to assume coverage for some traditional
Medicaid beneficiaries—including the aged, blind and disabled—while bringing
other Medicaid beneficiaries into the exchanges.
Virginia: Virginia House Rejects Medicaid Expansion
On April 5, Virginia’s Republican-controlled House rejected a proposal to
expand the state’s Medicaid program, citing budgetary concerns.
Delegates rejected an amendment to the budget that would have allowed
Democratic Gov. Terry McAuliffe to grow the health entitlement under
Obamacare. McAuliffe made the latest in a series of attempts to expand the
program last month, after congressional Republicans dropped their Obamacare
repeal bill. Republicans in Virginia’s legislature have rejected expansion
for the past four years.
A total of 19 states have not expanded their Medicaid programs.
4. Regulations Open for Comment
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
On March 14, FDA took one of its first actions to begin implementing the
21st Century Cures Act, by
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
outlining how biosimilar sponsors can demonstrate that their products are
interchangeable with other biologics, following extension requests from top
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
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.
CDC Report Evaluates U.S. Infants Exposed to Zika
According to a
new CDC report, roughly one in 10 U.S. women with a confirmed Zika infection during a
pregnancy last year had a baby with a virus-related brain defect.
The chances of birth defects were even higher among babies whose mothers
were infected with Zika during the first trimester of their pregnancies.
Among this group, about 15 percent reported birth defects.
The CDC also found roughly 5 percent of the 972 women who had possible
evidence of Zika—but not confirmed cases—had fetuses or babies with
virus-related defects. Of these 51 women, 45 had live births and six had
Although attention to Zika has decreased since last year’s outbreak, the CDC
is warning that the threat of Zika will remain high as the weather gets
warmer and mosquito season approaches.
Acting CDC Director Anne Schuchat said the agency is still seeing new cases
of the mosquito-borne virus in the United States every month, mostly related
to travel. There are currently more than 5,000 Zika cases nationwide and
1,600 potential cases of Zika in pregnant women.
Schuchat also said the number of pregnant women with Zika in the country
could be even higher because only 25 percent of infants included in the
study had undergone brain scans to detect the virus. She encouraged
clinicians to use brain imaging in any potential cases of Zika.
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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