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May 1, 2017

Washington Healthcare Update

This Week: Congress passes short-term spending bill to keep the federal government open… Despite health care “deal,” House leadership is still looking for votes to bring repeal/replace to the floor…FDA nominee gets a vote.

1. Congress



2. Administration

3. Courts

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


House Delays Obamacare Repeal Vote

On April 27, House Republican leaders decided to delay a vote on their Obamacare repeal bill until this week at the earliest. After a late-night meeting on Thursday, Speaker Paul Ryan determined that at least 15 House Republicans are opposed and another 20 are leaning to no or are undecided. Republicans who backed earlier versions of the proposal, including Reps. Mike Coffman of Colorado and Adam Kinzinger of Illinois, said they were now undecided.

In order to pass the legislation Republicans cannot lose more than 22 votes. Democrats remain unified in opposition.

Judiciary Committees Reintroduce Bipartisan Bill to Expand Generic Competition

Leaders of the Senate and House judiciary committees reintroduced a bill on April 27 meant to make it harder for brand drug companies to keep generic competitors off the market.

The CREATES Act of 2017 would help generic manufacturers obtain access to drug samples they need to bring cheaper versions to market. The bill would also make it harder for drug companies to use FDA-mandated safety programs to keep generic competition off the market.

Sponsors of the Senate bill include Patrick Leahy (D-VT), Chuck Grassley (R-IA), Dianne Feinstein (D-CA), Amy Klobuchar (D-MN) and Mike Lee (R-UT). In the House, the bill is sponsored by Reps. Tom Marino (R-PA) and David Cicilline (D-RI).

The Congressional Budget Office (CBO) has estimated the bill would decrease the federal deficit by $3.3 billion. Savings to consumers and insurers would likely be much greater, the bill sponsors say.

The legislation has been endorsed by the generic drug lobby, the Association for Accessible Medicines, America’s Health Insurance Plans, the American Hospital Association, the American College of Physicians and a number of consumer groups like AARP.

FDA commissioner nominee Scott Gottlieb indicated in written responses to the Senate he could support the bill. “If manufacturers inappropriately refuse to provide their product to prospective generic competitors, this would be a concern to FDA and become a matter for potential enforcement action by the Federal Trade Commission,” he wrote.

The brand drug industry has previously lobbied hard against this bill. It was dropped as a pay-for in the 21st Century Cures Act last year because of pharma opposition.

Appropriators Offer One-Week Stopgap Spending Bill

The House and Senate passed a short-term spending bill that would give lawmakers an extra week to strike a final deal on spending and avert a government shutdown.

In announcing the stopgap bill, top Republican appropriators in both chambers said lawmakers are close to an agreement that would fully fund the government through September, however they need more time to hash out final details before the deadline for fiscal 2017 funding.

Both spending committee chairmen—Rep. Rodney Frelinghuysen (R-NJ) and Sen. Thad Cochran (R-MS)—said lawmakers have made “substantial progress” toward an agreement. Democrats this week said they would refuse to back a short-term continuing resolution until it became clear both parties would reach a deal on updated spending levels for the remainder of fiscal 2017.

Democrats Question CMS Decision to Fund Florida’s LIP Medicaid Payments

House Energy and Commerce ranking member Frank Pallone and Senate Finance ranking member Ron Wyden sent a letter last week to CMS Administrator Seema Verma asking for information on the agency’s decision to give Florida $1.5 billion for its Low-Income Pool program.

“CMS has cited significant concerns with the structure and functioning of the Florida LIP in the past,” they wrote. “We are deeply concerned with CMS’s lack of transparency and documentation around the approval of the additional funds and the absence of a clear plan moving forward to ensure that the statutory objectives of the Medicaid program are met.”

To see the letter, click here.


Senate Finance Committee Plans CHIP Hearing May 9

The Senate Finance Committee is expected to hold a hearing May 9 about the future of the Children’s Health Insurance Program (CHIP).

Congress faces a Sept. 30 deadline to extend funding for the program. According to CMS data, CHIP covered roughly 5.6 million children as of February. Without an extension, states are set to run out of federal funds beginning in October, with the majority of states exhausting their money between January and March, according to the Medicaid and CHIP Payment and Access Commission.

Governors from both parties have urged Congress to quickly approve new funds for the program, as states set their budgets for the next fiscal year. The federal government provides the majority of funds for the program, with match rates ranging from 88 percent to 100 percent.

There has been no official announcement for the hearing as of yet.

Senate HELP Committee Votes to Advance FDA Nominee Gottlieb

On April 27, the Senate HELP Committee voted 14-9 to advance Scott Gottlieb’s nomination for FDA commissioner, with two Senate Democrats breaking with their party to support him.

The vote, originally scheduled for April 26, was delayed a day after ranking member Patty Murray said the committee needed more time to review new information about Gottlieb’s financial ties, which have been an issue for Democrats.

Democrats have contested the doctor’s ties to some of the largest players in the health care industry. In an agreement with the Office of Government Ethics, Gottlieb said that he would recuse himself from more than 20 companies for one year, though Democrats were pushing for longer.

Sens. Michael Bennet (D-CO) and Sheldon Whitehouse (D-RI) voted by proxy to support Gottlieb’s nomination.

Gottlieb was the FDA’s deputy commissioner for scientific affairs from 2005 to 2007 and chief policy adviser to the CMS administrator in 2004 during implementation of Medicare’s prescription drug program. He has since served on the board of various companies, including GlaxoSmithKline’s research and development board, and he advised numerous others through the venture capital firm New Enterprise Associates.

Governors Ask Congress to Fund Obamacare Subsidies

In a new letter, the National Governors Association asked Congress to fully fund Obamacare’s cost-sharing subsidies through 2018, making a rare show of bipartisan support from governors for an Obamacare program.

The association is urging lawmakers to include funding for the subsidies in the fiscal year 2017 spending bill that lawmakers are negotiating to keep the government open, as well as full funding for 2018.

“Already, many states have seen significant reductions in insurer participation in their individual insurance markets in addition to large increases in unsubsidized premiums,” NGA executive director Scott Pattison writes. “Currently, insurers across the country are developing their rates and deciding whether to participate in the individual marketplaces in 2018.”

State insurance regulators, insurers and other health care groups are urging Congress to act, warning that the Obamacare markets could collapse next year if uncertainty about the funding continues.

However, House Speaker Paul Ryan said Congress will not provide the funding in the spending bill, while White House officials are telling lawmakers the administration will continue making the payments.

If Congress refuses to fund the subsidies, the Trump administration must decide by next month whether to fight the House lawsuit that lawmakers filed to block the payments.

The letter was written to House Speaker Paul Ryan (WI), House Minority Leader Nancy Pelosi (CA), Senate Majority Leader Mitch McConnell (KY) and Senate Democratic Leader Charles Schumer (NY).

Molina Threatens Immediate Exchange Exit If CSRs Not Funded

Molina Healthcare CEO J. Mario Molina warned congressional leaders April 27 that the issuer would have no choice but to immediately send a default notice to the government and seek to withdraw from the exchange markets if the government fails to continue the ACA’s cost-sharing reduction payments. Also, a coalition of issuers, providers and business groups said the payments must be funded for at least two years in order to provide needed clarity and stability.

Molina’s move comes after Anthem CEO Joseph Swedish said April 26 that the company will file preliminary rates under the assumption that the CSRs will be funded. He added, however, if there is no certainty by early June, Anthem would need to consider adjustments, including reducing service areas, increasing rates, ending some products or exiting certain markets altogether.

Molina points out that the company entered into the contracts with CMS with the expectation that payments would continue to be fully funded. “If the CSR is not funded, we will have no choice but to send a notice of default informing the government that we are dropping our contracts for their failure to pay premiums and seek to withdraw from the Marketplace immediately,” Molina said. “That would result in about 650,000-700,000 people losing insurance coverage in 2017, and we would not participate in 2018.”

CMS included in the 2017 exchange contracts a clause that acknowledges their filings were based on assumptions that the CSRs would be in place, and thus their disappearance would be a cause for termination subject to state law.

2. Administration

President Trump Names Charmaine Yoest to Top HHS Post

On April 28, President Donald Trump said he would name Charmaine Yoest to be assistant secretary of public affairs at HHS.

Charmaine Yoest is a senior fellow at American Values and previously served as president and CEO of Americans United for Life, a public interest law firm. She began her career serving in the White House under Ronald Reagan in the Office of Presidential Personnel.

The assistant secretary of public affairs shapes communications efforts for the entire agency.

CMS Office of Minority Health Releases Medicare Advantage Reports on Disparities in Care

The CMS Office of Minority Health released new Medicare Advantage (MA) data on racial and ethnic disparities in care. The data helps reveal the connections between a person’s race, ethnicity and gender and the health care that they receive.

Two new reports focus on the treatment and patient care experiences for a variety of conditions. The first report looks at racial and ethnic disparities by gender and examines differences between black, Hispanic, Asian and Pacific Islander and white MA beneficiaries in rates of colorectal cancer screening, treatment for chronic lung disease and other conditions as well as their ability to access needed care.

The second report looks at racial and ethnic minorities; people with disabilities; members of the lesbian, gay, bisexual and transgender community; and rural populations in quality of treatment for certain conditions among MA beneficiaries. It shows that women receive better treatment for chronic lung disease and rheumatoid arthritis and are more likely than men to receive proper follow-up care after being hospitalized for a mental health disorder.

For more information, click here.

Anthem Continues Consideration of 2018 Obamacare Option

Anthem is still evaluating how aggressively to compete for Obamacare customers next year as Republicans struggle to repeal the health care law.

“We will continue to focus on participating in only those markets which are on a visible path toward sustainability,” Anthem CEO Joseph Swedish said on an April 26 call with investors to discuss first quarter earnings.

Anthem officials applauded a recent Trump administration regulation meant to stabilize the Obamacare marketplaces. But they expressed concerns about whether Washington will continue funding cost-sharing subsidies and called for elimination of Obamacare’s health insurance tax.

Anthem had 1.1 million exchange customers at the end of March—or roughly 10 percent of the total market. An additional 500,000 individual market customers are in Obamacare plans purchased outside the marketplaces, and 300,000 are in non-compliant plans.

Anthem is the largest Blue Cross Blue Shield plan in the country, dominating the Obamacare marketplaces in many of the 14 states where it primarily does business.

Anthem officials continue to seek approval of the company’s proposed $54 billion acquisition of Cigna, even though Cigna tried to terminate the merger after a federal judge blocked it. The merger case is on appeal.

3. Courts

FDA May Need to Weigh In to Solve Biosimilar Dispute, Supreme Court Justices Say

The U.S. Supreme Court heard arguments April 26 in a case that pitted branded biologic maker Amgen against biosimilar maker Sandoz. Sandoz was the first company to get a biosimilar approved in the U.S.—a copycat of Amgen’s Neupogen, which is used to prevent infections in cancer patients. The case will have broad consequences for how fast cheaper versions of biologic medicines—near copycats of some of the most expensive drugs available today—reach patients.

Sandoz is protesting a Federal Circuit decision that said a biosimilar manufacturer must await FDA approval before providing the brand company a legally mandated 180-day notice of intent to market a competing product. Sandoz says this ruling gives brand biologics an additional six months of marketing exclusivity that was not intended by Congress. The U.S. government agreed with Sandoz and argued in its favor at the Supreme Court.

Amgen, meanwhile, is protesting a Federal Circuit decision that arose from the same case—that biosimilar companies do not have to engage in a patent-sharing process with the branded biologic manufacturer. Amgen argues this ruling makes it difficult for companies to determine whether they want to file patent infringement lawsuits before a biosimilar is sold. The U.S. government disagreed with Amgen and argued in favor of the Federal Circuit’s ruling.

Supreme Court justices suggested that the best way to resolve disputes between brand and biosimilar companies over a law that allows the FDA to approve copycat biologics may be to have the agency issue regulations before the disputes are interpreted by the high court.

Justice Stephen Breyer said there seems to be a lot of ambiguity in the biosimilar pathway that was created by Obamacare, and that he felt FDA was best placed to help interpret the conflicts at hand through regulation. He said there are “many things he did not understand,” and that FDA rulemaking as a first step would likely lead to a better outcome than if the justices, who are unfamiliar with the intricacies of the biosimilar process, try and make sense of the law without the agency’s input.

Breyer said that if FDA weighs in on the law through rulemaking first, then the drug companies could go back to the courts if they felt the agency’s interpretation didn’t align with Congress’s intent. He also was not persuaded that the testimony of the assistant to the solicitor general could take the place of FDA’s interpretation of the process, as Sandoz argued.

Breyer’s approach got the support of his much more conservative colleague Anthony Kennedy, while fellow liberal Justice Ruth Bader Ginsburg asked whether the U.S. Patent and Trademark Office would perhaps have a role in clarifying the law.

However, Sandoz’s attorney said she did not think FDA or the PTO would have any ability to intervene.

But Breyer disagreed. He said FDA wouldn’t need “explicit regulatory authority,” noting there are many situations in which it would be appropriate to defer to an agency’s informal interpretation.

Anthony Yang, the assistant to the solicitor general, said FDA had previously been petitioned to do rulemaking on some of these topics and declined.

Many of the justices did not ask questions; Samuel Alito and the almost always quiet Clarence Thomas were completely silent, making it hard to interpret how the court will ultimately rule.

Other justices, including Sotoymayor, seemed to agree with Sandoz’s position—that the law did not mandate that patent information be shared, making the practice optional.

4. State Activities

California: California Regulator Asks Insurers to File Two Sets of Premiums

California insurance commissioner Dave Jones is asking insurers to file two sets of premium requests for 2018 to account for uncertainty about Obamacare’s future.

The California Department of Insurance wants insurers to file rates assuming continued implementation of the Affordable Care Act, as well as a separate set that anticipates the Trump administration halts enforcement of the individual mandate and gets rid of the law’s cost-sharing subsidies.

Without a congressional appropriation for the cost-sharing subsidies, state regulators and insurers have warned of significant rate increases for next year that could destabilize the health law’s markets.

The Trump administration told lawmakers last week that it would continue funding the cost-sharing subsidies.

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.

FDA Submits Interim Final Rule on Long-Delayed Menu Labeling Rule

On April 27, FDA submitted an interim final rule to the White House Office of Management and Budget concerning a long-delayed menu labeling rule. By submitting an interim final rule to OMB they are delaying its existing final rule, slated to take effect May 5. The apparent change in course follows a recent petition by the National Association of Convenience Stores and the National Grocers Association asking FDA to push back the final rule’s effective date.

The move to submit the interim final rule follows years of controversy and debate about the menu labeling requirements, which stem from a little-noticed provision in the Affordable Care Act that calls for mandatory calorie disclosure on menus at chains that have 20 or more locations.

The agency’s notice to OMB offers no detail about whether it is seeking other changes to the rule, but says FDA will be taking comments.

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.

CMS is Accepting Measure Submissions for the Advancing Care Information Performance Category until June 30

CMS is still accepting measures for the Advancing Care Information performance category of the Merit-based Incentive Payment System (MIPS). The Annual Call for Measures and Activities ends June 30, 2017.

CMS encourages providers to identify and submit measures for the MIPS Advancing Care Information performance category. To be considered, proposals must include specific criteria including, but not limited to, measure description, measure type and numerator and denominator descriptions.

CMS requests that stakeholders consider outcome-based measures, patient safety measures and cross-cutting measures that use certified EHR technology to support the improvement activities and quality performance categories of MIPS.

Use the Advancing Care Information Submission Form to propose measures for inclusion, and send the form to

To learn more about the process for submitting measures, please visit the Call for Measures webpage, and review the Call for Measures and Activities fact sheet.

CMS Looks to Boost Medicare Payments to Rehab Hospitals, Nursing Facilities and Hospices

CMS could boost Medicare payments to a swath of rehabilitation hospitals, nursing facilities and hospices under a trio of new proposed rules.

On April 27, the agency floated a $390 million bump in federal payments to skilled nursing facilities in 2018—or roughly 1 percent higher than this year. Hospices, meanwhile, would receive a 1 percent increase worth $180 million.

CMS is planning to increase reimbursement to rehab hospitals by $80 million for 2018, in addition to eliminating a penalty on facilities that don’t submit certain data to the federal government on time.

Similar to proposed payment rules for other providers, CMS is asking the industries for input on regulations it should overhaul or eliminate. CMS Administrator Seema Verma and HHS Secretary Tom Price have pledged to review all of the agency’s rules in a bid to cut unnecessary or burdensome regulations.

Comments on the trio of rules must be received no later than 5 p.m. on June 26, 2017.

CMS Seeking Comments on Data Elements in IMPACT Act

CMS has contracted with the RAND Corporation to develop standardized patient/resident assessment data elements in alignment with the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act).

CMS seeks comments from stakeholders on data elements that meet the IMPACT Act domains of cognitive function and mental status; medical conditions and co-morbidities; impairments; medication reconciliation; and care preferences. The public comment period opens on April 26, 2017, and closes on June 26, 2017.

For more information, view the public comment webpage.

CMS Issues 2018 IPPS Proposed Rule

CMS issued the FY 2018 Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) rule on April 14, which proposes a number of changes to the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs.

The proposals include:

  • For CY 2018, modifying the EHR reporting period from the full calendar year to a minimum of any continuous 90-day period for new and returning participants in the Medicare and Medicaid EHR Incentive programs.
  • Adding a new exception from the Medicare payment adjustments for Eligible Professionals (EPs), Eligible Hospitals and Critical Access Hospitals (CAHs) that demonstrate through an application process that complying with the requirement for being a meaningful EHR user is not possible because their certified EHR technology has been decertified under ONC’s Health IT Certification Program.
  • Implementing a policy in which no payment adjustments will be made for EPs who furnish “substantially all” of their covered professional services in an ambulatory surgical center (ASC); applicable for the 2017 and 2018 Medicare payment adjustments.
  • Using Place of Service (POS) code 24 to identify services furnished in an ASC as well as requesting public comment on whether other POS codes or mechanisms should be used to identify sites of service in addition to or in lieu of POS code 24.

Comments must be submitted by 5 p.m. on June 13, 2017.

To learn more, review the proposed rule or click here.

6. Reports

GAO Report Examines Availability, Outcomes of Pediatric Trauma Centers

In a new report, GAO examined what is known about the availability of trauma centers for children, the outcomes for children treated at different types of facilities and how federal agencies are involved in supporting pediatric trauma care.

GAO found that 57 percent of the nation’s 74 million children lived within 30 miles of a pediatric trauma center that can treat pediatric injuries, regardless of severity.

More children die of injury each year than from all other causes combined. Although most traumatic injuries are treated in hospital emergency departments, hospitals may not have the resources needed to treat injured children. For example, they may lack specially sized medical equipment. Pediatric trauma centers, however, have these resources.

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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