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Jun 26, 2017

Washington Healthcare Update

This Week: To vote for the Better Care Reconciliation Act of 2017 or to vote against—that is the question facing senators this week…Magic number for passage is 51 senators or 50 senators and the vote of the vice president.

1. Congress



2. Administration

3. Courts

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


Rep. Cummings and Rep. Welch Slam Trump on Drug Prices

House Oversight Committee ranking member Elijah Cummings (D-MD) and Rep. Peter Welch (D-VT), who met with Trump on drug prices in March, say recently leaked details of an upcoming executive order on drug prices suggest that Trump has “abandoned these promises in favor of the very pharmaceutical lobby you warned of.”

During the presidential campaign and early into his administration, Trump expressed a willingness to allow consumers to import drugs from Canada and to empower Medicare to negotiate with drug makers. However, a leaked draft of the White House’s executive order would include a number of industry-friendly provisions.

“Simply put, Mr. President, these measures utterly fail to make good on your promise to the American people to take aggressive action to cut the skyrocketing price of prescription drugs,” Cummings and Welch wrote (rep letter 6.23.pdf) to Trump. “Six months into your presidency, the pricing power of the pharmaceutical industry continues—unabated and unchecked.”

Diabetes Caucus Writes PhRMA, AHIP, PCMA on Rising Price of Insulin

Congressional Diabetes Caucus co-chairs Reps. Diana DeGette (D-CO) and Tom Reed (R-NY) sent letters to the heads of the drug, insurance and pharmacy benefits manager lobbies on June 22, requesting a meeting to discuss the increasing cost of insulin and policy solutions to bring the price down before the end of July.

“Both the underlying cost of insulin and the direct cost burden on patients with diabetes have risen in recent years,” the pair wrote. “People skip doses, fail to pay rent or buy groceries and even resort to an insulin ‘black market’ in order to afford their insulin. No one should be forced to make these difficult choices,” they added.

To read the letter, click here.


GOP Senate Releases Discussion Draft of Legislation to Repeal and Replace the Affordable Care Act

Amid complaints that the legislation was being written in secret, Senate Majority Leader Mitch McConnell released the “Better Care Reconciliation Act of 2017,” legislation to repeal and replace the Affordable Care Act. By the afternoon, four conservative senators had come out against it: Ron Johnson (R-WI), Ted Cruz (R-TX), Rand Paul (R-KY) and Mike Lee (R-UT). Moderate GOP senators concerned about Medicaid were studying the bill and waiting for the Congressional Budget Office score. Two GOP governors, Kasich of Ohio and Sandoval of Nevada, in separate statements said they were deeply concerned about the Medicaid portion of the bill. Sandoval made clear he was in touch with Senator Dean Heller (R-NV), considered by some to be the most vulnerable Republican senator up for re-election because Nevada went for Clinton in the presidential race and the state has expanded Medicaid.

The necessary number for passage under reconciliation rules is 51. McConnell can only afford to lose two from his caucus and the vice president would vote to break the tie. It is expected that the bill will have some changes made before it hits the floor of the Senate to address concerns of some senators who are on the fence. However, key to some will be the Congressional Budget Office score, which will likely be released Monday.

What does the bill do? Below is the legislation in a nutshell—but the bill could change.

  • Medicaid expansion will stay as is under the Affordable Care Act for three years, then a three-year phasedown of the enhanced funding will start.
  • States can choose their base years for per-capita caps based on eight consecutive quarters from first quarter of 2014 through second quarter of 2017. The annual inflator of the caps will remain at the House level until 2025, and then will be reduced to the urban consumer price index. Disabled kids will be carved out of the caps.
  • The House block grant option for states remains on the table, but children, the elderly and the disabled would not be included under the block grant.
  • States that “underspend” within their caps will receive bonus “quality payments.”
  • States that didn’t expand Medicaid don’t hit the per-person national average for disproportionate share hospital payments will get a funding bump so that they hit the national average.
  • The House state innovation fund for nonexpansion states will stay.
  • Medicaid provider taxes will be cut by 0.1 percent every year, ending in 2025.
  • The so-called “IMD exclusion” is amended to allow for opioid treatment for 30 days, but not to exceed 90 days within a calendar year.


  • Cost-sharing reduction payments to insurers on the state exchanges will be funded through 2019.

Stabilization Fund

  • Congress will fund short-term reinsurance pools for four years: $15 billion in 2018 and 2019; $10 billion in 2020 and 2021.
  • Long-term funding for states will be flexible, but a percentage must be used for reinsurance, and will be distributed from 2019 through 2026: $8 billion in 2019; $14 billion in 2020 and 2021; $6 billion in 2022 and 2023; $5 billion in 2024 and 2025; and $4 billion in 2026.
  • States will have to spend their money within three years, or their appropriation will be redistributed to other states that need it.

1332 Waivers

  • The Senate language will codify a $2 billion incentive for states to use 1332 waivers to redesign their insurance markets. This approach gets around the controversial MacArthur amendment from the House. States will be able to waive essential health benefits and subsidies off the exchanges, but by using 1332 waivers instead.

Tax Credits

  • ACA subsidies will remain in play for 2018 and 2019.
  • The GOP-proposed tax credits will be targeted toward low-income and the elderly.
  • Starting in 2020, people from 0-350 percent of poverty level will be eligible for an advanceable, refundable tax credit unless they are eligible for Medicaid.
  • No affordability test, so an employer offer will be counted as coverage.
  • The benchmark for the credits is 58 percent actuarial value of qualified health plans with essential health benefits.


  • A one-year defunding of Planned Parenthood
  • Wipes out the Prevention Fund

For more detail see the section by section prepared by the Senate GOP staff.

2. Administration

HHS Pays CSRS for June

The Department of Health and Human Services (HHS) has paid insurers the ACA’s cost-sharing reduction payments for June, but is still deciding whether to make the payments going forward. Insurers were to file rates by June 21 for next year.

Both Senator Lamar Alexander (R-TN), chairman of the Health Education, Labor and Pensions Committee, and Rep. Kevin Brady (R-TX), chairman of the Ways and Means Committee, have called for the payments to be made. In addition, Sen. Ron Johnson (R-WI) has called for Congress to pass a short-term market stabilization bill before moving forward with larger health reform legislation. Former House Speaker Newt Gingrich penned an op-ed calling for the same.

ONC Seeking Hospitals to Participate in Measure Development Feedback Opportunity

The Office of the National Coordinator for Health Information Technology (ONC) is currently looking for hospitals to help this summer with initial qualitative testing activities of their health information technology safety measure.

The measure is focused on reducing potentially inappropriate duplicate orders for medications, laboratory tests, radiological exams and procedures.

To assist with this activity, contact Emily Newton at

FDA to Create a Plan at Lowering Costs and Improving Trial Designs

In testimony before the Senate Appropriations Committee on June 20, FDA Administrator Scott Gottlieb announced that the agency will create a “Medical Innovation Development Plan” aimed at lowering health care costs by facilitating development of drugs to treat costly rare diseases through improved adaptive trial designs and statistical tools. The Biotechnology Innovation Organization said Gottlieb’s commitment to streamline clinical trials would improve outcomes and lower costs, but Public Citizen said the plan would lower the evidentiary standard for drug approvals and pose new risks to consumers.

Gottlieb also said FDA is working to clear a backlog of approximately 200 pending orphan drug designation requests within 90 days, and committed to reviewing any new request within 90 days as part of the new plan.

Gottlieb told Senate appropriators that the upcoming innovation plan will reduce health care costs by incentivizing development of new drugs for costly diseases. The plan will “include a broad range of steps we’ll take to make sure that our own regulatory tools and policies are modern and risk-based and designed to facilitate the development of potentially breakthrough new treatments.”

While the innovation plan appears more geared toward brand products, the FDA administrator told House appropriators last month that FDA would also create a drug competition plan with a focus of getting more generic drugs to market.

FDA Issues Draft Guidance to Speed Some Generic Drug Applications

FDA issued draft guidance last week that sets up a new presubmission process for certain generic drug applications. FDA Administrator Scott Gottlieb says this process could cut two months off review times and increase access to affordable drugs.

Under the draft guidance, applicants submitting a presubmission facility correspondence (PFC) containing manufacturing and bioequivalence facility information may be awarded priority review. The PFC will help FDA determine whether facility inspections are necessary and potentially shorten the review timeline.

“If ANDA applicant sends FDA Pre-Submission Facility Correspondence 2 months prior to ANDA submission, then ANDA can obtain priority review,” Gottlieb tweeted. “Priority review means 8 month review goal. Standard review is 10 months. Faster review of priority ANDAs expands access to affordable drugs.”

3. Courts

Supreme Court Rules to Limit “Forum Shopping” by Patients

The U.S. Supreme Court ruled on June 19 for Bristol-Myers Squibb’s effort to limit where patients can sue to seek compensation for harm caused by drugs. The justices ruled, 8-1, in a case that pitted Bristol-Meyers Squibb against the state of California. The questions in the case centered around whether plaintiffs residing outside California who claim they were harmed by the company’s blood thinner Plavix could join in a lawsuit in California brought by California residents against the New York-based company. The out-of-state residents didn’t buy the drug or take it in California, and the product wasn’t manufactured in the state. California is thought to be a particularly friendly state for injured plaintiffs.

“The mere fact that other plaintiffs were prescribed, obtained, and ingested Plavix in California—and allegedly sustained the same injuries as did the non-residents—does not allow the State to assert specific jurisdiction over the nonresidents’ claims,” wrote Justice Samuel Alito in the court’s opinion.

4. State Activities

California: Bill Allowing “Safe Space” for Injections to Be Heard in State Legislature

A bill designed to help reduce overdose deaths could make California the first state where intravenous drug users could have a “safe space” for injections. Coming up for a key committee vote in the state Legislature, A.B. 186 would authorize eight California counties—Alameda, Fresno, Humboldt, Los Angeles, Mendocino, San Francisco, San Joaquin and Santa Cruz—to pilot these so-called safe injection sites. Drug use supervised by health care professionals would be allowed on site. The bill is slated to be heard in the state Senate health committee on July 5. A similar bill died in committee last year.

Ohio: Republican Senators Want a Freeze on Medicaid Expansion Enrollment

Republicans in the Ohio Senate want to freeze Medicaid expansion enrollment starting in July 2018. The provision made it into the state budget the Ohio Senate approved earlier this week. Lawmakers must resolve the issue by June 30, when Ohio’s current fiscal year ends and the Legislature has to pass a new budget. Kasich has not stated his position on the enrollment freeze but continues to advocate for preserving Medicaid expansion, which covers roughly 700,000 people in Ohio.

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.

CMS Proposes MACRA Rule

On June 19, CMS issued a proposed rule that would make changes in the second year of the Quality Payment Program as required by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

The 1,058-page rule continues the “pick-your-pace” option in year two of the program, letting doctors report a limited amount of quality data to be exempted from Medicare’s penalties.

CMS creates a “virtual group” reporting option, allowing doctors to pool the information on how they care for patients and be subjected to Medicare’s quality payment scheme.

CMS is also increasing the minimum number of patients doctors can treat before being subject to the program’s Merit-based Incentive Payment System. It establishes more flexibility for doctors who see limited numbers of patients face to face or in a hospital. For 2017, roughly 800,000 clinicians were exempt from the MIPS program.

CMS will not require doctors to use 2015 certified EHRs next year, as it had ordered during the Obama administration. However, clinicians are offered bonuses for using new versions of the software. Medicare also will delay for another year judging doctors for how much they spend for treating patients.

Comments on the rule are due no later than 5 p.m. on Aug. 21, 2017. For a fact sheet on the proposed rule, click here.

6. Reports

GAO: VA Needs Improved Management Processes for IT Systems That Support Health Care

In a new report, GAO found that the Department of Veterans Affairs (VA) has established information technology (IT) management processes that are partially consistent with leading practices.

VA has issued strategic plans that identify goals and objectives related to health IT; established investment review boards at the department level and within the Veterans Health Administration (VHA) that are responsible for selecting IT investments aligned to VHA priorities; and documented VHA’s core business functions within an enterprise architecture. However, the IT strategic plans do not include performance measures and targets for their defined objectives, VA’s department-level IT investment board has been inactive and its investment selection guidance lacks criteria, and the department has not fully identified metrics aligned to core business functions to inform investment decisions. The VA risks having IT systems that may not fully support VHA’s mission until it can improve these processes, GAO found.

To read the 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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