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Jun 19, 2017

Washington Healthcare Update

This Week: We continue to wait on a Senate repeal/replace bill…CSR payments continue to be a concern.

1. Congress



2. Administration

3. Courts

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


Reps. Welch, Harper Introduce Bill to Expand 340B Drug Discounts

Reps. Peter Welch (D-VT) and Gregg Harper (R-MS) introduced a bill designed to close a loophole in the 340B drug program that the congressmen say unfairly allows drug companies to deny legally mandated discounts on orphan drugs to safety-net hospitals and other clinics serving a disproportionate share of low-income patients.

The bill would permit an exclusion on orphan drugs only in instances in which they are being used to treat a rare disease—if hospitals are purchasing the drug to treat a more common disease, drug makers would need to provide the 340B discounts.

To read the bill, click here.

House Approves “Third Bucket” Obamacare Bills

On June 13, the House passed the first in a series of bills that make up the so-called third bucket of the GOP’s repeal and replace strategy.

The Verify First Act, H.R. 2581, passed 238-184 along mostly party lines and would require individuals to verify their income eligibility and citizenship or legal immigration status with the Social Security Administration before accessing premium tax credits to buy health coverage.

Republicans said it is designed to close a loophole that protects taxpayer dollars from going to people who are not eligible for subsidies. Democrats maintained the Treasury Department already has protections in place and charged the effort is designed to target undocumented immigrants.

Other third-bucket bills that passed last week include a measure, H.R. 2372, which would allow veterans to access Obamacare subsidies if they are not enrolled in health coverage at the Veterans Administration and a bill, H.R. 2579, that would address how subsidies interact with COBRA coverage.

A vote on a fourth bill dealing with medical malpractice legislation (H.R. 1215) was postponed because some conservatives are worried about imposing federal standards on states.


Senate Appropriator Urges Against President Trump’s Proposed Cuts to NIH, CDC

On June 15, senior Senate appropriator Roy Blunt (R-MO) panned the Trump administration’s fiscal 2018 budget proposal, vowing not to sign off on any spending bill that would slash funding to key public health programs.

Blunt, chairman of the Labor-HHS-Education appropriations subcommittee, singled out proposed funding cuts to the NIH and CDC as particularly unacceptable.

Sen. Patty Murray, the panel’s ranking Democrat, also criticized the budget proposal for including devastating cuts to HHS’s funding.

The blueprint proposed reducing NIH’s funding by nearly 20 percent and cutting CDC funding by $1.3 billion.

Sen. Alexander Urges White House to Fund Obamacare Subsidies

On June 15, Sen. Lamar Alexander urged the White House to continue funding key Obamacare cost-sharing subsidies for the next two years.

Alexander, during a Senate hearing, said he believes the Trump administration should make the payments to insurers “at least through 2018, and should probably go ahead and do it through 2019.”

The Senate HELP chairman is the second high-profile Republican lawmaker in the last few weeks to call for funding the subsidies. The other was House Ways and Means Chairman Kevin Brady, who said that Congress should temporarily appropriate money for the insurer payments.

The future of the subsidies, worth about $7 billion this year, has been in doubt since House Republicans won a lawsuit challenging the Obama administration’s implementation of the payments. That lawsuit is still under appeal, but President Donald Trump has repeatedly threatened to cut off the funding. Insurers have warned that without the funding, they would be forced to dramatically hike premiums or leave the Obamacare markets altogether.

HHS Secretary Tom Price would not commit to maintaining the funding, telling Alexander that he cannot comment because he is a defendant in the lawsuit. Price noted that the White House’s proposed fiscal 2018 budget includes funding for the cost-sharing subsidies.

Appropriators Starting the Next Continuing Resolution

Senate Majority Leader Mitch McConnell said on June 13 that he has instructed appropriators to temporarily rely on spending limits from fiscal 2017 as they write new bills.

McConnell’s comments appear to be laying the groundwork for a continuing resolution that would extend the fiscal 2017 package, as many Republicans already anticipate. He also said he hoped to reach a deal with Democrats to set new spending levels sooner rather than later.

Any Senate budget deal for fiscal 2018 would need to address the looming spending cuts under sequestration, which are set to take effect in September. Without congressional action, this fall’s budget caps would force Congress to cut about $3 billion from domestic spending and $2 billion from defense spending, according to GOP appropriators. Domestic spending would be capped at $516 billion and defense spending would be capped at $549 billion—levels both parties have protested.

2. Administration

CMS Releases 1991-2014 Health Care Spending by State

On June 14, CMS’s Office of the Actuary (OACT) released state-level health care spending data for the period 1991-2014. The data shows that while most states experienced faster growth in 2014 due to Medicaid expansion and enrollment in exchange plans, per capita health spending in Medicaid expansion and non-expansion states grew at similar rates. The report also found that the most recent economic recession, which ended in 2009, and modest recovery since then, had a sustained impact on health spending and health insurance coverage. Every state experienced slower growth in per capita personal health care spending from 2010-2013 than experienced during the period 2004-2009.

David Lassman, the lead author of the report noted that “ ‘recent economic and health sector factors have had clear impacts by state, both by payer and in the rates of overall per capita personal health care expenditure growth; however, during the 2009 to 2014 period, the variation in spending between the lowest and highest states was virtually unchanged.’ ”

The report, published as a web first in Health Affairs, offers context for understanding how health spending varies across states. The analysis updates previous estimates published in 2011 and examines personal health care spending (or the health care goods and services consumed) through a resident-based view. These estimates are also presented both by type of goods and services (such as hospital services and retail prescription drugs) and by major payer (including Medicare, Medicaid, and private health insurance) for the individuals who reside in a state.

For more information, click here.

CMS Actuary Releases the Estimated Financial Effect of the AHCA

The House-passed Obamacare repeal bill would leave 13 million more Americans uninsured over the next decade and reduce federal spending by $328 billion, according to an analysis released June 13 by CMS’s Office of the Actuary.

The overage estimate is well below the 23 million more uninsured that the CBO has projected under the American Health Care Act. The congressional scorekeeper additionally estimated that the American Health Care Act would reduce spending by only $119 billion over a decade.

The disparity is a result of differing assumptions about whether cost-saving measures in the House bill will work. The CMS actuary and CBO have disagreed in the past on the budgetary effects of legislation, including surrounding the enactment of Obamacare.

Most of the coverage losses stem from the anticipated rollback of Obamacare’s Medicaid expansion. CMS estimates that 6 million fewer individuals would be shut out because of the House bill’s tighter eligibility criteria, and that an additional 2 million will cycle out of the program because of new requirements. Medicaid spending will be cut by $105 billion by 2026, chief actuary Paul Spitalnic estimated—amounting to an 11 percent reduction.

The CMS report has mixed news about what the House GOP bill will do to insurance premiums. It projects that average premiums will be 13 percent lower in 2026 under the AHCA. But once subsidies are taken into account, premiums would be 5 percent higher for enrollees—and out-of-pocket costs would be 61 percent higher than under Obamacare.

The latest analysis comes as the Senate seeks to build consensus around its own repeal package. The chamber is hoping to vote on a bill before breaking for the July 4 recess.

New Jersey Gov. Christie Says Opioid Commission May Propose Changing HIPAA Rules

The presidential opioid commission may propose changing patient privacy regulations so there are clear exemptions for overdose cases, Gov. Chris Christie, the commission chairman, said June 12.

Christie said the commission could recommend a retooling of the Health Insurance Portability and Accountability Act of 1996, or HIPAA, so physicians can notify close relatives when a patient’s overdose is reversed with the drug Narcan.

Christie told reporters he had a good meeting with HHS Secretary Tom Price in which they discussed the issue. He also said he is in talks with lawyers at the Justice Department to make sure the commission comes up with a proposal that is implementable.

HIPAA created national guidelines for how to protect a patient’s medical records and other health information.

3. Courts

Supreme Court Rules in Sandoz vs. Amgen

Under a unanimous Supreme Court decision issued June 12, cheaper versions of expensive biologic medicines will be able to reach the market sooner.

In Sandoz v. Amgen, the high court reversed a lower-court ruling that said biosimilar companies could not give branded biologic makers the legally required 180 days notices of their intent to sell a copycat until after it receives FDA approval. Sandoz, which was seeking to market a biosimilar version of Amgen’s biologic Neupogen, argued this effectively gave the brand company six additional months of marketing exclusivity.

The justices agreed with Sandoz’s argument, that the Biologics Price Competition and Innovation Act allows the 180-day notice of marketing to come either before or after the biosimilar receives FDA approval.

The Supreme Court also vacated the Federal Circuit’s ruling in a second issue at hand in the case—whether biosimilar makers must engage in a patent-sharing process with the biologic company prior to approval. The Federal Circuit had said this was not mandatory but Amgen disagreed.

The Supreme Court ruled that the patent-sharing outlined in the biosimilar law is not enforceable by injunction under federal law.

The Supreme Court said the Federal Circuit should reexamine this issue and determine whether a state-law injunction is available if a biosimilar company doesn’t share its patent information with the biologic maker.

4. State Activities

California: Covered California Adopts $314 Million Budget

Covered California’s board adopted a $314 million 2017-18 budget, with roughly one-third earmarked for sales, marketing and outreach. “We recognize there is a significant amount of uncertainty in the broad environment, but what is certain is our fiscal stability and solid financial planning,” exchange director Peter Lee said Thursday.

The board also confirmed changes in contract language that provides for insurers to submit two versions of rate filings: proposed rates with cost-sharing reduction payments, and rates without the subsidies. Covered California will opt for the higher rates by mid-August if the federal government fails to confirm whether it will fund the subsidies through the end of 2018. Covered California is still figuring out what to do if the subsidies are continued after its self-imposed August deadline.

Texas: Gov. Abbott Signed Bill Allowing Mothers to Get Postpartum Depression Screenings

Texas Gov. Greg Abbott signed a bill that would allow new low-income mothers to get postpartum depression screenings and counseling through Medicaid or the Children’s Health Insurance Program next year. Meanwhile, Abbott vetoed a bill that would extend the life of Women’s Health Advisory Committee, a state group that provides recommendations on women’s health issues, because he believes the panel’s mission has been fulfilled. The governor included maternal mortality on a list of items that he wants the Legislature to address later this summer during a special session.

5. Regulations Open for Comment 

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 Publishes Post-Acute Care Proposed Rules

On May 11, CMS published the following proposed rules:

CMS Issues Proposed Revision Requirements for Long-Term Care Facilities’ Arbitration Agreements

On June 5, CMS issued proposed revisions to arbitration agreement requirements for long-term care facilities. The proposed revisions would help strengthen transparency in the arbitration process, reduce unnecessary provider burden and support residents’ rights to make informed decisions about important aspects of their health care.

The Reform of Requirements for Long-Term Care Facilities Final Rule, published on Oct. 4, 2016, listed the requirements facilities need to follow if they choose to ask residents to sign agreements for binding arbitration. The final rule also prohibited predispute agreements for binding arbitration. The American Health Care Association and a group of nursing homes sued for preliminary and permanent injunction to stop CMS from enforcing that requirement. The court granted a preliminary injunction on Nov. 7, 2016. After that decision, CMS reviewed and reconsidered the arbitration requirements in the 2016 Final Rule.

The proposed rule focuses on the transparency surrounding the arbitration process and includes the following proposals:

  • The prohibition on predispute binding arbitration agreements is removed.
  • All agreements for binding arbitration must be in plain language.
  • If signing the agreement for binding arbitration is a condition of admission into the facility, the language of the agreement must be in plain writing and in the admissions contract.
  • The agreement must be explained to the resident and his or her representative in a form and manner they understand, including that it must be in a language they understand.
  • The resident must acknowledge that he or she understands the agreement.
  • The agreement must not contain any language that prohibits or discourages the resident or anyone else from communicating with federal, state or local officials, including federal and state surveyors, other federal or state health department employees, or representatives of the State Long-Term Care Ombudsman.
  • If a facility resolves a dispute with a resident through arbitration, it must retain a copy of the signed agreement for binding arbitration and the arbitrator’s final decision so it can be inspected by CMS or its designee.
  • The facility must post a notice regarding its use of binding arbitration in an area that is visible to both residents and visitors.

This proposed rule is scheduled to be published in the Federal Register on June 8, 2017, and comments are due by Aug. 7, 2017. For more information, click here.

6. Reports

MedPAC June Report Focuses on MACRA

The Medicare Payment Advisory Commission (MedPAC) released its June report to Congress on June 15. In it the advisory body says Medicare needs to pay doctors based on outcomes like preventable hospitalizations, but technology does not currently allow the agency to automatically extract from EHRs and data registries the information that is needed for such a payment system.

MACRA’s Merit-based Incentive Payment System is a “process-oriented” method of judging physician quality, and the data it uses is not comparable from one medical specialty to the next, the MedPAC wrote in its report. Until EHRs and data registries can easily provide statistics like emergency department visits and patient mobility postsurgery, the MIPS program should allow doctors to be judged against the performance of other physicians in their geographic area, the report said. MIPS takes effect this year and penalizes doctors with cuts of up to 4 percent of their Medicare payments.

The MedPAC report also suggests tinkering with MACRA’s alternative payment program, which has been criticized for not being inclusive enough to allow doctors to have their payments allotted under that scenario.

The 5 percent bonus that doctors receive for qualifying as an alternative payment model should be proportional to the amount of revenue generated under that different pay model, the report says. Currently, doctors only gain the bonus if they have a certain percentage of Medicare payments tied to an alternative payment model. The bar was 50 percent in 2021 and 2022, too high for some doctors and potentially leading many to avoid Medicare alternative payment models altogether.

The report also discusses a new, two-sided risk model for ACOs that would offer higher rewards for saving money. Under the model, doctors would be penalized for failing to cut spending proportional to the bill for his or her services alone, and not the total medical bill. Since only about 15 percent of Medicare spending goes to doctors, clinicians have limited influence on ACO spending, which has made many hesitant to join the organizations.

GAO: VA Pharmacy System Needs Additional Capabilities

In a new report, GAO examined the VA’s acquisition and use of a pharmacy system. GAO found that the VA’s pharmacy system capabilities align with three of six identified health care industry practices. Specifically, the pharmacy system (1) provides the ability to order medications electronically, (2) enables prescription checks for drug-to-drug and drug-allergy interactions and (3) tracks the dispensing of controlled prescription drugs. However, the pharmacy system lacks capabilities that align with three other practices that could enhance its usefulness.

GAO made six recommendations including that VA update its pharmacy system to view and receive complete medication data, assess the impact of interoperability and implement additional industry practices. VA generally concurred with GAO’s six recommendations.

For more information, click here.

CMS Reports: High Costs, Lack of Affordability Most Common Factors That Lead Consumers to Cancel Health Insurance Coverage

On June 12, CMS published two reports, the Effectuated Enrollment report and The Health Insurance Exchanges Trends report. These reports show that after selecting a plan on the exchanges during the open season that ended Jan. 31, 2017, less than two months later nearly 2 million people had not paid their insurance premium to effectuate and maintain their health coverage. This number will be adjusted for individuals who effectuate their coverage in March 2017. Exit survey data also contained in the reports indicate that cost is the top reason cited for ending their coverage. Taken together, these reports provide a better understanding of why consumers are leaving the exchanges.

The Effectuated Enrollment Report shows that 12.2 million individuals selected a plan at the end of open enrollment, but only 10.3 million followed through to pay the premiums necessary to maintain coverage as of March 15, 2017. This means 1.9 million people had not paid or did not continue paying for the insurance coverage they selected on the exchange. Additional individuals may effectuate coverage for March of 2017.

The Health Insurance Exchanges Trends Report shows exit survey data from consumers who canceled or terminated their 2017 health plans selected on the exchange during the open enrollment. Specifically, the report indicates that cost and affordability impact consumer decisions to pay for health coverage.

To read the Effectuated Enrollment report, click here.

To read the Health Insurance Exchanges Trends report, click here.

If you have any questions, contact the following individuals at McGuireWoods Consulting:

Stephanie Kennan, Senior 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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