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May 8, 2017

Washington Healthcare Update

This Week: House passes Repeal/Replace bill…Senate says it will do its own bill…Congress passes spending bill to fund the rest of the fiscal year.

1. Congress



2. Administration

3. Other

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


House, Senate Pass $1 Trillion Spending Bill to Avoid Government Shutdown

Last week, the House and Senate passed a $1 trillion omnibus spending bill that would keep the government running until September. The bill passed the House in a 309-118 vote, with four members abstaining and passed the Senate with a vote of 79-18. It will now head to President Trump’s desk. Congress was supposed to have finished its spending work for the fiscal year seven months ago.

Lawmakers on both sides of the aisle are celebrating the deal, which would achieve a more sweeping update of federal funding levels than they had previously anticipated possible. The compromise struck over the weekend provides $2 billion in new spending for the National Institutes of Health and permanently extends expiring health insurance benefits to retired coal miners.

A majority of Republicans ultimately agreed to support the bill and look ahead to the fiscal 2018 appropriations process, which the White House has said would be more GOP-driven.

What ACA Provisions Are Inside Congress’ $1 Trillion Spending Bill

The fiscal 2017 spending deal contains several provisions related to the Affordable Care Act. First, it continues to block Congress from using CMS’s program money to fund the Affordable Care Act’s risk corridor program. Several insurers have sued over the situation, and plans that are still owed money from HHS have until May 12 to join Health Republic’s class action against the government.

The funding agreement also does not provide money for the ACA’s cost-sharing reductions (CSRs) despite urging from wide-ranging stakeholders. The White House has said the administration will continue making the CSR payments on a monthly basis, indefinitely.

The spending bill also includes several other oversight demands related to the ACA. For example the bill requires CMS notify Congress two business days before it releases grants opportunities; requires the administration detail all ACA-related spending; and requires publication of the number of employees and contractors related to administering the ACA.

Lawmakers released explanatory language weighing in on several CMS issues, including calling for a full audit of air emergency transport, mitigation of the reduced rates for critical access hospitals and a loosening of agency policy on hospitals that did not get their fair share of incentive payments through the Medicare Electronic Health Records Incentive Program.

The following concerns were highlighted over CMS policies:

GAO audit of air ambulance systems: The bill mandates detailed analysis by the GAO on all emergency air transport services and costs and payment systems. Lawmakers say the audit should cover reimbursements and reimbursement rates for private insurers, Medicare, Medicaid and other government-sponsored programs. GAO, which is already working on a report on air ambulance services and payments, should merge both reports and work with the appropriations committees in House and Senate to decide on the methods and scope of the required analysis, appropriators say.

Mitigate new payment reductions to critical access hospitals: Congressional appropriators address industry worries about the proposed revocation of “critical access hospital” classification from any hospital located less than 10 miles from another hospital and the reduced reimbursement rate for CAHs from 101 percent to 100 percent. Lawmakers instruct CMS to mitigate losses from the proposed rate cut.

Meaningful use and Medicare incentive payments: CMS should reconsider letting hospitals appeal federal decisions not to pay Medicare incentive payments if these hospitals were eligible for the incentive payments. The legislation notes that CMS blocked or adjusted the payments due to eligible hospitals—after the hospitals proved they had met CMS requirements—through administrative errors and said hospitals should be allowed to appeal the decisions.

Build out telehealth options for diabetic Medicare beneficiaries: CMS should expand the Medicare Diabetes Prevention Program beginning in January 2018, and needs to encourage use of telehealth services for the program in future rules.

Severe wounds: CMS needs to backdate the implementation of the “severe wounds” provision of the Consolidated Appropriations Act of 2016 to an effective date of Dec. 18, 2015.

340B drug program: The Health Resources and Services Administration must update its website for the 340B drug program and notify the House and Senate appropriations committees on its status within 90 days.

New grants for rural health: The spending deal would appropriate $65.6 million in grants for the Rural Health Outreach Program, and $2 million for HRSA to develop a pilot program with the Delta Regional Authority to support small rural hospitals. HRSA also would get $2 million to disburse in grants to critical access hospitals in rural communities with high poverty, unemployment and drug abuse.

Telehealth: Lawmakers earmark $1.5 million for telehealth, and instruct HHS to set up a test site for telehealth—preferably a public medical university that is successful, provides a high volume of telehealth services every year and reaches out through telehealth to medically underserved areas with high rates of chronic illness and poverty. HHS should make sure the medical center chosen has a financially self-sustaining telehealth system as well. The bill also sets up “not less than” $7.3 million for the Telehealth Network Grant Program, with HRSA instructed to give preference to small hospitals in poor communities with high rates of unemployment and drug use.

For more information, click here.

Omnibus Spending Bill Guarantees Medicare Cuts Left to Administration If IPAB Triggered

The fiscal 2017 spending bill guarantees the Trump administration would be in control of Medicare cuts if the Independent Payment Advisory Board (IPAB) is triggered this year, because it defunds IPAB. Drugmakers and drug plans would be especially exposed to IPAB-driven pay cuts, but lobbyists and analysts say they do not know what the administration would do if given the power to make major changes to Medicare drug reimbursement policy.

As in past spending legislation, the 2017 omnibus spending bill eliminates funding for IPAB. The difference this year is that there is a chance the board will be triggered in 2017. The CMS actuary was supposed to determine by April 30 whether IPAB is triggered, but that determination is not expected until this summer. The actuaries’ determination coincides with the Medicare Trustees’ annual report on the state of the program, which has been released over the summer for the past three years.

Under the law, IPAB recommendations, which would be unusually difficult for Congress to block, may not ration care, raise premiums, increase cost sharing for beneficiaries or restrict benefits or eligibility. Also, hospitals and hospices are exempted from cost-cutting proposals until 2020. That leaves a big target on Medicare Advantage and Part D, and the law even singles out those programs.


Senate Finance Committee Delays CHIP Hearing

The Senate Finance Committee is going to delay this week’s scheduled hearing on reauthorizing the Children’s Health Insurance Program (CHIP) in light of the chamber’s work on Obamacare repeal. The hearing was set for Tuesday morning.

The Finance Committee will also push back its work on legislation changing the way Medicare handles chronic disease (S. 870).

Sens. Grassley, Casey Introduce Bill to Expand Off-Label Coverage of Part D Drugs

On May 3, Sens. Charles Grassley (R-IA) and Bob Casey (D-PA) introduced legislation to expand off-label coverage of drugs in Medicare Part D.

Off-label is an FDA term that Medicare law does not use. Instead, Medicare covers “medically accepted indications” according to Medicare Rights Center Senior Counsel for Education & Federal Policy Casey Schwarz.

Medicare defines medically accepted indications more narrowly in Part D than in Part B. Medicare considers FDA-approved indications to be medically accepted across all its programs. In addition to the FDA label, Part D relies on three compendia for determining which drugs the federal government will cover and reimburse. In contrast, the federal government uses more than three compendia for off-label drug indications for Part B. However, their bill does not deal with peer-reviewed medical literature. Part B lets beneficiaries cite medical journals as evidence of medically accepted indications for all drugs, while journals are available for evidence in Part D only for chemotherapies.

“The body of knowledge available to prescribers currently is limited by law,” Grassley said. “Our bill updates the available information for the benefit of doctors and patients who should have access to the most complete medical literature available.”

Although the senators do not mention broader coverage, the goal of the bill seems to be to make it easier for patients to get insurance companies to cover drugs taken for conditions for which they have not been approved.

For more information, click here.

Senate HELP Committee to Mark Up FDA User Fee Bill

The Senate HELP committee plans to mark up the FDA user fee reauthorization on May 10. The date is tentative because an official markup has not been noticed.

Congress must reauthorize FDA’s user fee programs for brand and generic drugs, biosimilars and medical devices by the end of September. FDA gets nearly half of its annual funding from these programs, which help it review and approve drugs and medical devices faster.

2. Administration

HHS Task Force Finds FDA Cybersecurity Oversight Is Limited

Health care providers complain that device manufacturers treat cybersecurity as an “afterthought,” according to a draft report sent to Capitol Hill on May 3. The report also says that FDA’s device cybersecurity oversight continues to be limited to patient safety and does not extend to privacy and security issues.

The HHS Health Care Industry Cybersecurity Task Force report lays out how federal agencies, including FDA, and device manufacturers can monitor and make improvements to device cybersecurity risk management. The report pushes for more transparency between manufacturers and device users, recommends manufacturers consider cyber risks throughout a product’s lifecycle and proposes establishing a device-specific Medical Computer Emergency Readiness Team (MedCERT).

The report—a result of discussions between industry and government representatives—cites research company KLAS’s February survey in which health care providers reported that “many device manufacturers treat security as either an afterthought or that the attention is woefully inadequate.”

The task force said while FDA took steps to address device cybersecurity by publishing a December 2016 final guidance on postmarket management of medical device cybersecurity, the agency’s oversight remains limited to patient safety.

One solution to varying regulations and oversight would be harmonization of cybersecurity frameworks, which the task force says would help industry with compliance.

The task force calls for manufacturers and developers to create what it calls a bill of materials, which would describe a device’s equipment, software, open source and materials along with known risks associated with those components. It also insists industry actively participate in information-sharing programs, and adopt and engage in coordinated vulnerability disclosure that is consistent with recognized standards.

The challenge of ensuring the security of medical devices and health care data will only grow as the health care industry’s reliance on the Internet of Things (IoT)—which includes nonregulated devices such as wearables—as well as precision medicine increases, the report states.

HHS Secretary Price Meets With Groups on Drug Pricing

On May 1, HHS Secretary Tom Price met with patient and disease advocacy groups in the first of a series of meetings on drug prices.

Price is expected to meet with additional groups focused on drug prices. He is soon expected to hold a meeting with PhRMA on patient assistance programs that help consumers afford medicines not fully covered by their insurer.

Groups attending the meeting included the National Health Council, whose CEO, Marc Boutin, presented the group’s recently released proposals on how to reduce health care costs. Other groups in attendance included Friends of Cancer Research, the Multiple Sclerosis Coalition, the National Alliance on Mental Illness, the Cystic Fibrosis Foundation, JDRF, the American Diabetes Association and the Alzheimer’s Association.

OMB Reviews Proposed Rule for Long-Term Care Facilities

The White House Office of Management and Budget is reviewing a CMS proposed rule to revise a highly contentious provision on arbitration contracts that was included in updated requirements for long-term care facilities—mainly nursing homes—to participate in Medicare. It is unclear how CMS’s proposal, sent to OMB for review on April 26, would revamp the requirements, which banned predispute arbitration contracts.

The ban on predispute arbitration contracts, finalized in late September, was backed by consumers but opposed by nursing homes. The final rule on the updated requirements for long-term care facilities stated that, as of Nov. 28, 2016, long-term care facilities could not require residents to sign predispute arbitration agreements as a condition of admission to the facility. CMS officials at the time said the change was important to strengthen the rights of residents and their families. But the nursing home lobby said CMS stepped beyond its authority.

The American Health Care Association sued CMS over the provision last October, and asked for an injunction to keep the agency from enforcing the ban when the rule went into effect on Nov. 28. The court granted that request. The case was put on hold earlier this year.

3. Other

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

Aetna shed more than 70 percent of its individual market customers in the first quarter of this year after largely abandoning Obamacare exchanges, but the company still expects to lose money on the remaining members.

The insurer had 255,000 individual market customers at the end of the first quarter, down from nearly 1 million at the close of last year. However, Aetna officials said the remaining members are more expensive than anticipated, and the company is setting aside $110 million to guard against anticipated losses on that business this year.

Aetna pulled out of all but four state exchanges this year. The insurer already said it will pull out of Iowa for 2018, but has yet to announce plans for other markets. Aetna CEO Mark Bertolini said the decision to cut back has been ratified by market developments.

While Aetna has turned on the Obamacare markets, its other lines of government business continue to boom. The first quarter of this year marked the first time that government premiums—primarily Medicare and Medicaid—exceeded commercial revenues. The government share of premiums is up from 38 percent prior to full enactment of the Affordable Care Act in 2014.

Eli Lilly Investigated by State Attorneys General Over Insulin Pricing

Attorneys general in Washington state and New Mexico are investigating Eli Lilly over the pricing of its insulin products, the company disclosed in an SEC filing May 1.

The Washington state investigation is also focused on the company’s relationships with pharmacy benefits managers.

The disclosure follows news in January of a class-action lawsuit that accuses Lilly, along with Sanofi and Novo Nordisk, of conspiring to drive up the cost of insulin. The suit said the companies raised the list prices of their products by more than 150 percent in lockstep in order to offer larger rebates to PBMs as a quid pro quo for patient business. As a result neither drugmakers nor PBMs have to lower the net cost of the product.

Three additional class action lawsuits have since been filed against the drug companies and PBMs making similar accusations. Lilly said it believes the lawsuits and claims are without merit and will defend them vigorously.

4. State Activities

Arkansas: Arkansas Legislature Signs Off on Medicaid Expansion Changes

The Arkansas legislature has approved a bill paving the way for the state to institute several changes to its Medicaid expansion, including adding a work requirement.

Lawmakers in the state House and Senate took final votes May 3 to pass the legislation, which also seeks to cap expansion eligibility at the federal poverty line instead of 138 percent FPL, and change how the state determines whether someone is eligible for the program.

The revisions are expected to move roughly 60,000 people off expanded Medicaid rolls. More than 300,000 state residents were covered through the program as of March.

Gov. Asa Hutchinson’s administration still needs to receive permission from CMS to make the revisions. Several other states are seeking to impose work requirements, including Arizona, Kentucky and Wisconsin.

Indiana: Indiana Medicaid Expansion Blocks Out Thousands

Tens of thousands of low-income adults in Indiana who tried to sign up for the state’s Medicaid expansion program were never enrolled or were kicked off benefits for failing to make a monthly payment, according to a new independent study commissioned by state officials.

Between February 2015 and November 2016, more than 46,000 applicants earning above the poverty line were never enrolled because they did not make their first payment. Another 13,000 Indiana beneficiaries were disenrolled from the Indiana program after failing to pay.

The report from the Lewin Group specifically examines the HSA-like accounts that are a central component of the expansion program Vice President Mike Pence implemented as Indiana governor that could become a national model.

The Indiana program sets different rules for people above and below the poverty line. People earning above that threshold are refused coverage or disenrolled from the program for failing to contribute toward their HSA accounts each month. People below the poverty line who fail to pay premiums are moved into a less generous benefits package.

Monthly payment amounts range from $1 to $100 per person depending on income and household size. Once enrolled, benefits could be cut off for failing to pay after a 60-day grace period.

The HSA idea has been eyed by other Republican governors who are trying to incorporate more conservative elements into their Medicaid expansion programs. But Democrats have criticized the model as unnecessarily complicated for low-income people that ultimately makes it harder to access medical care.

The Indiana report found 22 percent of individuals who never enrolled in expansion because they did not make the first month’s payment cited affordability concerns, and 22 percent said they were confused about the payment process. Of those beneficiaries who were disenrolled after failing to make a monthly payment, 44 percent said they could not afford it.

More than 590,000 expansion enrollees were eligible to make monthly payments during the two-year study period. Of those, 55 percent did not make a contribution at some point during their enrollment.

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

KFF Poll Shows Drug Pricing Is Top Priority, Regardless of Party

A new Kaiser Family Foundation poll shows drug pricing is a top priority regardless of political party, with Medicare negotiation being the most popular drug pricing proposal.

Drug prices were a higher priority for both Republicans and Democrats than solving the opioid epidemic, and were nearly on par for Republicans with repealing the Affordable Care Act.

Sixty-four percent of Democrats, 60 percent of Republicans and 58 percent of Independents said in the poll conducted April 17-23 that “lowering the cost of prescription drugs” should be a top priority for the administration.

Medicare price negotiation was the most popular drug pricing proposal, regardless of party line. Ninety-six percent of Democrats, and 92 percent of both Republicans and Independents surveyed said they favor “allowing the federal government to negotiate with drug companies to get a lower price on medications for people on Medicare.”

Rep. Elijah Cummings (D-MD), who has been working alongside Sen. Bernie Sanders (I-VT) on a proposal to let Medicare negotiate drug prices, recently said President Donald Trump pledged to work with lawmakers to move that proposal along. Trump has repeatedly called for such negotiation.

The second most popular pricing proposal was “[m]aking it easier for generic drugs to come to market in order to increase competition and reduce costs,” which more Republicans and Independents (91 percent each) supported than Democrats (84 percent in support).

Requiring transparency of how drug companies set their prices was also supported by over 80 percent of respondents regardless of party. While federal transparency legislation has been introduced this session, numerous state legislatures have also pursued the issue—with Vermont enacting in 2016 the nation’s first drug price transparency law.

Even the idea of price controls for certain drugs was supported by nearly 80 percent of respondents, regardless of party. Seventy-eight percent of Democrats and 79 percent of both Republicans and Independents said they support “limiting the amount drug companies can charge for high-cost drugs for illnesses like hepatitis or cancer.”

To see the polling results, click here.

JAMA Study Shows Types, Distribution of Payments From Industry to Physicians

Limiting drug sales representatives’ access to doctors can lead to a modest but significant reduction in certain prescriptions. That finding, according to a first-of-its-kind study, is a key message of a special issue of the Journal of the American Medical Association that focuses on financial conflicts of interest which health experts say can wreak havoc on patients’ pocketbooks and skew the sector’s economics.

A review of prescribing patterns from over 2,000 physicians at academic medical centers between 2006 and 2012 found that doctors prescribed less of certain types of drugs when their hospitals clamped down on pharmaceutical sales reps’ visits, or detailing. The study also found a slight uptick in nonpromoted medicines when sales reps’ access to doctors was curtailed.

Lead author Ian Larkin, assistant professor of strategy at UCLA Anderson School of Management, partnered with 10 other researchers, including experts from Carnegie Mellon, NYU and Cornell, along with experts from the NIH and CVS. Their findings were drawn from over 16 million prescriptions written in California, Illinois, Massachusetts and New York.

The authors looked at eight prescribing categories and found reductions in six of them when sales reps’ access to physicians was limited: cholesterol, acid reflux, hypertension, difficulty sleeping, attention-deficit/hyperactivity disorder and antidepressants. They did not find significant evidence for change in prescribing patterns for diabetes or antipsychotic drugs. Those eight classes were chosen because they contained a mix of drugs promoted by at least 2,000 salespeople. Each class also contained at least one widely prescribed medication not advocated for by sales representatives. Those were mostly generics.

The authors write that by looking at hospitals in a variety of states, they were able to observe a number of policy changes for managing potential conflicts of interest. At 19 medical centers where they particularly focused, policies included limits or bans on industry salespeople’s providing meals, branded items and educational gifts. Some went further than PhRMA’s code of conduct. Eleven had penalties for salespeople, doctors or both for noncompliance.

The researchers cautioned that the reduction of prescriptions in promoted drugs was not found at every hospital they reviewed—and that other factors may have played a role.

GAO Finds Action Needed to Improve Oversight of Spending in Medicaid Demos

GAO recently found that, over the last decade, Medicaid has spent increasing amounts on demonstrations. There are also inconsistencies on how CMS monitors those funds.

Many states conduct Medicaid demonstrations, which allow them to test new approaches for delivering Medicaid services. CMS monitors spending under these demonstrations to ensure that the federal government does not pay more for them than it would have paid for the state’s traditional Medicaid program.

GAO recommended that CMS develop standard operating procedures to ensure that Medicaid’s demonstration funds are consistently monitored.

To see the report, click here.

GAO Recommends Harmonized Program Requirements, Better Data for Medicaid Personal Care Services

In new testimony, GAO stated that federal and state rules for protecting Medicaid beneficiaries have varied across personal care service programs, and that Medicaid needs better data to oversee these programs.

A growing number of people rely on Medicaid personal care services for help with daily tasks like bathing and eating. However, these types of services are at high risk for fraud and abuse—e.g., services that were paid for but never provided.

In its reports on the topic, GAO recommended that the program rules be harmonized and that better guidance be issued to states for reporting the required data.

To see the testimony, click here.

GAO Reviews Compensation of Medicaid Directors and MCO Executives for 2015

On May 1, GAO released a report on compensation of Medicaid directors and managed care organization (MCO) executives in selected states for 2015.

Medicaid is estimated to cover 74 million people in 2017 at a cost of $596 billion. State Medicaid directors have broad responsibilities for managing their programs. Responsibilities of top paid executives at MCOs that contract with Medicaid can be similar, but generally are not as broad.

In 2015, state Medicaid directors earned less than most top paid executives at MCOs that were reviewed. Medicaid directors’ salaries in 10 states averaged $152,439, while the total compensation for top paid executives in 15 MCOs averaged $314,278.

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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