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Apr 24, 2017

Washington Healthcare Update

This Week: Repeal/replace sputters to life, maybe…Congress returns to fund the government…FDA nominee gets a vote.

1. Congress



2. Administration

3. Courts

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


GOP Renewing Efforts for Obamacare Repeal

House Republicans have outlined an amendment that could revive their efforts to repeal Obamacare. The amendment aims at reuniting the GOP behind Speaker Paul Ryan’s American Health Care Act, offering concessions meant to win over the party’s moderate and conservative members.

The deal—brokered by centrist Tuesday Group co-chair Tom MacArthur and hard-right Freedom Caucus head Mark Meadows—proposes giving states more flexibility to opt out of major Obamacare provisions, while also preserving popular protections like the law’s ban on discrimination against people with pre-existing conditions.

It remains unclear whether the proposal can succeed in shifting any votes. While the Administration originally pushed for a vote this week, it began to soft pedal the need for a vote this week. According to a draft of the tentative deal, the latest proposal would allow states to apply for so-called limited waivers to opt out of Obamacare’s standards setting minimum benefits that health plans must offer and a requirement—called community rating—forbidding insurers from charging different prices to people who are the same age.

At the same time, the deal would maintain several Obamacare protections supported by centrist Republicans, including the prohibition on denying people coverage based on pre-existing conditions. It would also force states that opt out of the community rating rules to set up separate insurance pools, known as “high-risk pools,” where people priced out of the private market could go to purchase coverage.

NAIC Urges Congress to Appropriate Obamacare Subsidy Funds

In an April 19 letter to House and Senate leaders, the National Association of Insurance Commissioners (NAIC) urged Congress to fund Obamacare’s cost-sharing subsidies in the upcoming continuing resolution for 2017, as well as for 2018. NAIC is a trade association representing state insurance regulators.

NAIC wrote that appropriating the subsidy money is “critical to the viability and stability of the individual health insurance markets in a significant number of states across the country.”

The subsidies reduce out-of-pocket costs for Obamacare customers with incomes of up to 250 percent of the federal poverty level. However, House Republicans sued over funding for the program and scored a legal victory in court last year that threatens to halt the subsidies.

The decision was appealed by the Obama administration, but the lawsuit has been put on hold until May 22 while the Trump administration decides how to proceed. Officials have given several mixed signals about whether the funding will continue. Should it cease, the NAIC warns that insurers will ask for double-digit premium increases when they make 2018 pricing requests to state regulators. Also, carriers could exit from the markets altogether next year, a potential some insurers have already voiced.

“As long as the court case, House v. Price, remains unresolved and federal funding is not assured, carriers will be forced to think twice about participating on the exchanges,” the group wrote. “Even if they do decide to participate, state regulators have been informed that the uncertainty of this funding could add a 15 percent to 20 percent load to the rates.”

Congress Releases Draft User Fee Bill

On April 14, Congress released a discussion draft of a bill to reauthorize the FDA’s various user fee programs, commonly referred to as “the UFAs.” The FDA Reauthorization Act (FDARA) would renew the agency’s authority to collect user fees in fiscal years 2018 through 2022 and put into effect the commitments negotiated by FDA and regulated industry.

Without such legislative action, the authority to collect user fees is set to expire on Sept. 30. If the user fee programs aren’t reauthorized before August, FDA will have to send layoff notices to more than 5,000 employees whose positions are supported through user fee funds—and if not enacted, it would cripple the agency’s drug and device review functions. However, it appears both the Senate and House are interested in a timely reauthorization, with Energy and Commerce Committee Chairman Greg Walden (R-OR) stating that the House is committed to a timely reauthorization of the agreements. Senate HELP Committee Chairman Lamar Alexander (R-TN) also stated they would like the agreements to be reauthorized quickly.

Walden’s statement on the draft’s release hinted that additional policies could still make it into the bill.


Senate HELP Committee to Vote on Scott Gottlieb Nomination to Run the FDA

The Senate HELP Committee will vote this Wednesday on Scott Gottlieb’s nomination to run the FDA.

Gottlieb is widely expected to gain approval, despite concerns about widespread ties to companies regulated by the agency. Gottlieb has indicated that he will recuse himself for one year from any FDA decisions involving about 20 health care companies he has worked with.

Republicans, including HELP Committee Chairman Lamar Alexander (R-TN), have heaped praise on Gottlieb, who served as a deputy commissioner at the agency during the George W. Bush administration.

Senate HELP Committee to Consider Four Health Care Bills

The Senate HELP Committee recently announced that it will consider four health care bills with bipartisan support at a hearing on April 26. The bills include proposals to improve screening for hearing loss in kids and to bolster efforts to prepare for new public health threats like the Zika virus. The bills to be considered are as follows:

  • S. 652, Early Hearing Detection and Intervention Act of 2017
  • H.R. 309, National Clinical Care Commission Act
  • S. ___, Protecting Patient Access to Emergency Medications Act of 2017
  • S. 849, SMASH Act
  • Nomination of Scott Gottlieb to serve as the commissioner of Food and Drugs

To view the hearing, click here.

Sen. Grassley Raising Concerns Over Insurer’s Brand Drug Penalties

Sen. Chuck Grassley (R-IA) is raising concerns about an insurance company’s practice of charging patients a penalty when they are prescribed a brand name drug and a cheaper generic product is available.

Grassley is concerned that patients in CareFirst BlueCross BlueShield plans are being charged a “brand penalty”—the difference between the price of the brand drug and its generic—instead of the typical copay or coinsurance, even though a physician prescribed the brand version for medical reasons. In addition, according to Grassley’s office, the brand penalty does not count toward a patient’s deductible.

In a letter to the insurer sent April 17, Grassley requests more information on how CareFirst is applying the brand penalty and whether this is a common industry payment tactic. Grassley’s office wants to look at the use of brand penalties across the industry.

Grassley questions whether this practice violates CareFirst’s policies, as well as federal law. Grassley’s letter says the Public Health Service Act requires plans to waive cost sharing for the brand drug when medically necessary, according to the Department of Labor Employee Benefits Security Administration.

Grassley is also concerned that in some cases CareFirst is overcharging pharmacies when they give a patient a brand drug because a generic is no longer available.

2. Administration

Trump Nominates Two for Top HHS Positions

On April 21, the Administration nominated Elinore McCance-Katz as HHS assistant secretary for mental health and substance use and Brett Giroir as HHS assistant secretary for health.

McCance-Katz, who was previously the chief medical officer at the Substance Abuse and Mental Health Services Administration, would oversee SAMHSA and coordinate the nation’s mental health and substance abuse treatment programs at other agencies throughout the federal government. The position was created by last year’s 21st Century Cures Act. McCance-Katz blasted SAMHSA last year, saying that she left after two years because it was “time for change.”

Giroir, a former CEO of the Texas A&M Health Science Center, was most recently president and CEO of ViraCyte, a biopharmaceutical company.

Surgeon General Terminated

U.S. Surgeon General Vivek Murthy, a holdover from the Obama Administration, was let go by the Administration on April 21. Trump has repeatedly vowed to turn over his agencies’ leadership, firing officials from across different departments with ties to the previous administration. Murthy also had been visibly excluded from the White House’s public health efforts. Days after the election, Murthy released the surgeon general’s first-ever report on addiction, which was months in the making. However, the Trump administration is planning its own months-long study, and Murthy was disinvited from the White House’s planned opioids commission. Rear Admiral Sylvia Trent-Adams, a nurse who’s been with the Commissioned Corps since 1992, replaced Murthy immediately as Acting Surgeon General.

President Trump Signs VA Choice Program Extension Bill

On April 19, President Donald Trump signed legislation extending the Veterans’ Choice Program, ahead of its anticipated expiration in August.

The legislation removes the program’s August sunset date and allows the Veterans Affairs Department to spend nearly $1 billion in remaining emergency funding to subsidize non-VA medical care for veterans who face long wait times or distances to access VA medical facilities.

The bill easily passed the House and Senate earlier this month, over criticisms from members of both parties that the emergency program has been poorly implemented and is in need of major reform.

The extension Trump signed allows more time for the VA to provide medical care through the program while lawmakers and the department hammer out a long-term fix. VA Secretary David Shulkin has said he aims to roll out a replacement for the Choice program this fall.

HHS Keeps Hiring Ban, Leaving FDA With Nearly 1,000 Vacancies to Fill

The administration will continue on with a hiring freeze, despite a memo sent by OMB that lifted the government-wide ban instituted at the beginning of the Trump administration. Instead, it directed the agencies to develop plans for deep personnel cuts. HHS said it will leave the hiring restrictions in place until it develops strategies to address the OMB memo.

FDA has nearly 1,000 vacancies to fill. According to the documents, FDA is permitted to hire certain staff, including some positions paid for by user fees, which are funded by industry rather than taxpayer dollars. However, an agency staffer was still concerned about FDA’s ability to hire because many of the positions exempted from the freeze were lower on the government payscale. This could make it difficult for the agency to hire the type of senior scientists Congress intended when it gave the agency new hiring power in the Cures Act.

FDA Holding Public Workshop to Discuss Pain Management and Safe Use of Opioid Analgesics

The FDA recently announced it will hold a public workshop on May 9th and 10th with experts from a variety of federal and state agencies to discuss the role of federal training on pain management and prescribing of opioids. The meeting comes in the wake of a May 2016 meeting of two FDA advisory committees where it was recommended that the training program for an opioid-related Risk Evaluation and Mitigation Strategy (REMS) be broadened, as well as a July 2016 request from HHS for information on the most promising approaches for educating prescribers on opioids.

The public workshop, “Training Health Care Providers on Pain Management and Safe Use of Opioid Analgesics-Exploring the Path Forward,” will include speakers from FDA, CMS, the Drug Enforcement Administration (DEA) and the departments of Veterans Affairs and Defense, among other federal and state agencies.

The meeting will explore: the role of federal training in improving pain management; the merits and challenges of federal and state governments’, as well as public-private partnerships’, providing education on pain management; and the aspects of the opioid epidemic that can be most impacted by training providers, and how to measure those improvements.

The meeting will also build on HHS’s request for information on the most promising approaches in opioid prescriber education and ways to leverage HHS programs to expand these promising programs.

Persons interested in attending the workshop must register online before May 1, 2017. Click here to register.

FDA Advisory Committee to Meet to Consider Biosimilar to Amgen’s Epogen/Procrit

FDA announced on April 17 that it will convene an advisory committee meeting on May 25 to consider what could become the first FDA-approved biosimilar to Amgen’s Epogen/Procrit (epoetin alfa). Amgen’s Epogen/Procit biologic was first licensed in 1989, according to the Purple Book. FDA currently has no biosimilar approved for the product, but the European Medicines Agency has had a licensed biosimilar for epoetin alfa since 2007.

The agency’s Oncologic Drugs Advisory Committee will consider whether to recommend FDA approve the product for four indications related to anemia.

Hospira’s application for an epoetin alfa biosimilar lists the following indications: “(1) For the treatment of anemia due to chronic kidney disease, including patients on dialysis and not on dialysis, to decrease the need for red blood cell (RBC) transfusion; (2) for the treatment of anemia due to zidovudine administered at [less than or equal to] 4,200 mg/week in HIV-infected patients with endogenous serum erythropoietin levels of [less than or equal to] 500 m units/mL; (3) for the treatment of anemia in patients with nonmyeloid malignancies where anemia is due to the effect of concomitant myelosuppresive chemotherapy, and upon initiation, there is a minimum of 2 additional months of planned chemotherapy; and (4) to reduce the need for allogeneic RBC transfusions among patients with perioperative hemoglobin > 10 to [less than or equal to]13 g/dL who are at high risk for perioperative blood loss from elective, noncardiac, and nonvascular surgery.”

3. Courts

Supreme Court Refuses to Hear Obamacare Case

On April 17, the Supreme Court said it will not hear a lawsuit challenging an Obama administration policy allowing insurers to continue offering health plans not compliant with the Affordable Care Act.

West Virginia sued the Obama administration three years ago over its decision to let states determine whether insurers could extend these health plans. The Obama administration crafted the policy to tamp down the outcry over millions of health plan cancellations in fall 2013, just before Obamacare’s major insurance rules took effect. West Virginia argued that the Obama administration didn’t have the authority to force states to decide whether to enforce the federal rules.

The Supreme Court’s refusal to hear the case, West Virginia v. HHS, was expected. The U.S. Court of Appeals for the District of Columbia last summer found West Virginia lacked standing to bring the case.

The Obama administration extended the phase-out date for the “transitional” health plans several times. In February, the Trump administration again extended the policy through 2018.

4. State Activities

New York: Mayor de Blasio Proposes Raising the Price of Cigarettes

New York Mayor Bill de Blasio wants to raise the minimum price of a pack of cigarettes to $13, up from $10.50. The move, if passed by the City Council, would once again make New York City the most expensive place in the country to buy a pack of cigarettes. The goal is to reduce the smoking rate to 12 percent by 2020, down from 14.3 percent. The bill is expected to receive a hearing on Thursday.

Oregon: Joint Legislative Committee Considering Ending Medicaid Expansion

A joint legislative committee is considering ending Obamacare’s expansion of Medicaid to help plug a $1.6 billion budget gap, along with several other potential options. The legislative committee on Ways and Means, which is tasked with setting budget policy, estimated that eliminating Medicaid expansion would save $256 million between 2017 and 2019. At the same time, Oregon would also lose roughly $5 billion in federal Medicaid funding. Oregon appears to be the first blue state considering ending the program because of budgetary pressures. However, it remains to be seen whether winding down Medicaid expansion—which covers roughly 350,000 low-income adults—would garner support from the Democratic-controlled legislature, as well as from Democratic Gov. Kate Brown.

Texas: 10 Percent of Texans Rank Health Care as Most Important Issue

Even as congressional Republicans prioritize repealing the ACA, Texas voters don’t seem to have health care on their minds. About 10 percent of Texans ranked health care as the most important issue facing the country, according to the newly released figures from the annual Texas Lyceum poll, an independent survey of 1,000 adults in early April. More Texans surveyed thought immigration and education were most important. Health care came in fourth place.

5. 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 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.

CMS Releases Proposed Hospital Pay Rule

In a new proposed 2018 Medicare payment rule, CMS says it will look to cut hospital industry regulations and streamline oversight, and it’s asking hospitals themselves for help. The agency is soliciting ideas for changes to rules and procedures governing acute-care and long-term care hospitals. The initiative aims to “relieve regulatory burdens for providers,” as well as promote flexibility and innovation, CMS said in a statement.

The new proposed rule would suspend for one year a provision penalizing long-term care hospitals that receive more than 25 percent of patients from a single acute-care hospital. It would also reduce certain quality reporting requirements for hospitals that have implemented electronic health records.

CMS projects the rule would increase Medicare spending on inpatient hospital services by $3.1 billion in 2018, with operating payments to hospitals increasing 2.9 percent. Long-term care hospitals’ Medicare payments are projected to decrease by $173 million, or 3.75 percent, over the same period.

Comments on the rule must be submitted no later than 5 p.m. EDT on June 13, 2017.

CMS Proposes 2018 Payment and Policy Updates for Medicare Hospital Admissions

CMS is offering hospitals a 90-day meaningful use reporting period in 2018, according to a proposed payment rule released April 14.

The first major payment regulation released under HHS Secretary Tom Price marks a change from the back-and-forth over electronic health records meaningful use requirements seen under the Obama White House. The previous administration would typically propose a yearlong reporting period, then scale it back at the last minute after intense lobbying pressure. As a Republican congressman from Georgia, Price often pushed the Obama administration hard for 90-day meaningful use reporting periods.

In connection with the 21st Century Cures Act, CMS also is proposing to remove from meaningful use clinicians who see most of their patients at ambulatory surgery centers.

Price and CMS are also changing previously finalized requirements from electronic clinical quality measures. Under the proposed rule, hospitals can select six measures and report on them for the first three quarters of 2018.

For more information, click here.

6. Reports

JAMA Study Finds CDC Guidelines Omit Major Cause of Opioid Use

A new study published in JAMA Surgery found that despite sharp focus on the opioid epidemic following the 2016 release of the CDC Guideline for Prescribing Opioids for Chronic Pain, the guidelines fail to address—and little attention has been paid overall to—prescribing practices that lead to the persistent use of opioids after elective, outpatient surgery. However, more than two million people—about 6 percent of patients who undergo both minor and major surgeries—continued using opioids for longer than 90 days after their procedure, making new and persistent use of opioids “one of the most common complications after elective, outpatient surgery,” according to researchers with the University of Michigan Medical School, Ann Arbor.

Researchers found no difference in opioid use among people who had both major and minor surgical procedures, leading them to conclude that patients likely continue using opioids for reasons other than intensity of surgical pain. More must be done, they said, to understand and address the issue.

To see the study, click here.

IRS Releases Mid-Season Report for 2017 Filing Season

According to a mid-season report from the Treasury Inspector General for Tax Administration (TIGTA), one-third fewer Americans told the IRS that they had minimal essential coverage compared to the same time frame last year, but IRS has collected 20 percent more in penalties.

The report comes amid concerns that the Trump administration will not proactively implement the ACA’s individual mandate, which could further undermine the insurance markets.

There were 47 million people who submitted a tax return to indicate essential coverage for all their family members in 2016, but only 44.1 million reported such coverage in 2017, a 33.3 percent decrease. Six million people reported an exemption from essential coverage in 2016 and that dropped to 5.3 million in 2017. The amount of individuals reporting shared responsibility payments (SRPs) also decreased from 2.7 million in 2016 to 1.8 million in 2017. But the amount of SRPs jumped 20 percent from $1 billion in 2016 to $1.2 billion in 2017.

The IRS says that it will be enforcing the mandate as it has in earlier years.

GAO Examines CMS Oversight and Support of States’ Medicaid Program Integrity Efforts

In a new report, GAO examined CMS’s oversight and support of states’ Medicaid program integrity efforts. GAO studied, among other issues: (1) how CMS tailors its reviews to states’ circumstances; (2) states’ experiences with collaborative audits; and (3) CMS’s steps to share promising program integrity practices. GAO reviewed CMS documents, including state program integrity reports, and data on collaborative audits. GAO interviewed officials from CMS and eight states selected based on expenditures, managed care use and number of collaborative audits, among other factors.

CMS reviews states’ efforts to reduce improper Medicaid payments, and encourages them to use collaborative audits—where CMS contractors and states work together to review the accuracy of payments made. However, some states have reported barriers (such as staff burden) to participating in collaborative audits.

GAO found that CMS lacks a systematic approach to collecting and communicating information about state practices to reduce Medicaid improper payments and recommended that the agency collect and share these practices, and work to increase states’ participation in collaborative audits.

To read 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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