Washington Healthcare Update

February 3, 2020

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This week in Washington: The House of Representatives passes legislation on fentanyl analogues; Senate continues impeachment trial.

Upcoming Hearings/Markups

Congress

Hearings/Markups

House

Senate

The Senate continues the impeachment trial.

Administration

Proposed Regulations/Guidance

Final Regulations/Guidance

Courts

Reports

Upcoming Hearings/Markups

Wednesday, February 5, 2020

House Committee on Energy and Commerce, Subcommittee on Oversight and Investigation: “Vaping in America: E-Cigarette Manufacturers’ Impact on Public Health”

The Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce will hold another hearing focused on the spread of vaping, focusing on the roles of e-cigarette manufacturers.

Find more details on the hearing as they become available here.

House Committee on Energy and Commerce, Subcommittee on Oversight and Investigations: Untitled Hearing on E-Cigarettes

The Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce will hold a hearing with executives from five e-cigarette manufacturers serving as witnesses. The executives of Juul, Fontem, Japan Tobacco International, NJOY and Reynolds American are expected to testify about their marketing strategies and the public health effects of vaping.

Hearings/Markups

House Committee on the Judiciary, Subcommittee on Crime, Terrorism, and Homeland Security: “Fentanyl Analogues: Perspectives on Classwide Scheduling”

Tuesday, January 28, 2020: The Subcommittee on Crime, Terrorism, and Homeland Security on Judiciary held a hearing on the fentanyl crisis, and the wider discussion of prescription drug scheduling practices.

Why this is important: Following the hearing, on Jan. 29, House passed a bill that would temporarily extend the Drug Enforcement Administration’s (DEA) classwide ban on all variants of fentanyl.

Find more details on the hearing here.

House Education and Labor Committee, Subcommittee on Health, Employment, Labor and Pensions, and the Subcommittee on Workforce Protections: “Expecting More: Addressing America’s Maternal and Infant Health Crisis”

Tuesday, January 28, 2020: The Subcommittee on Health, Employment, Labor and Pensions, and the Workforce Protections subcommittee of the House Education and Labor Committee held a hearing on the current maternal and infant mortality crisis.

Why this is important: The United States has the worst maternal mortality rate among developed countries. Each year, 700 women die from pregnancy and 50,000 women suffer from pregnancy complications. Outcomes in the U.S. are moving in the opposite direction. The 2016 mortality rate was nearly 17 per 100,000 live births, more than the rate in 1987.

Find more details on the hearing here.

House Committee on Energy and Commerce, Subcommittee on Health: “Improving Safety and Transparency in America’s Food and Drugs”

Wednesday, January 29, 2020: The Subcommittee on Health of the Committee on Energy and Commerce held a legislative hearing to discuss health and safety concerns in food and drug consumption.

Find more details on the hearing here.

Why this is important: In comments during the hearing, there was general bipartisan support for the Fairness in Orphan Drug Exclusivity Act, H.R. 4712, which would close a loophole in the 1983 Orphan Drug Act that provides companies with financial incentives and a seven-year exclusivity period for drugs by convincing FDA they will not recoup their development costs. The committee also supported bills that would allow the FDA to enforce updated generic drug labels and crack down on counterfeit device imports, H.R. 5663, and one that would provide $80 million to fund research on manufacturing processes that could improve and speed drug production, H.R. 4866.

The panel also heard from Jeff Allen, president and CEO of Friends of Cancer Research, who argued for H.R. 5668, the Modern Labeling Act, which would enable FDA to order label changes for generic drugs whose brand-name versions had been withdrawn.

Senate Special Committee on Aging: “That’s Not the Government Calling: Protecting Seniors from the Social Security Impersonation Scam”

Wednesday, January 29, 2020: The Senate Special Committee on Aging held a hearing on government impersonation scams aimed at American seniors. Witnesses include victims and the commissioner, and other representatives, of the Social Security Administration (SSA).

Find more details on the hearing here.

House

Ways and Means Plans Mid-February Markup for Surprise Billing Plan

On Jan. 29, House Ways and Means Chairman Richard Neal (D-MA) announced that the committee is likely to have a markup of the committee’s approach to “surprise” medical billing on Feb. 12, with the expectation that language will be released this week.

In addition, the House Education and Labor Committee Chairman, Rep. Bobby Scott (D-VA) announced his committee is also considering surprise billing legislation and will likely hold a markup in two weeks.

Energy and Commerce Plans Coronavirus Hearing

On Jan. 30, the House Energy and Commerce Health Subcommittee chairwoman, Anna Eshoo (D-CA), announced that the subcommittee will hold the first congressional hearing on the Wuhan coronavirus outbreak next week, in a bid to make facts about the virus “simple and clear” to the public.

Administration

HHS Secretary Azar Declares Coronavirus a Public Health Emergency

On Jan. 31, the Department of Health and Human Services (HHS) Secretary, Alex Azar, declared the Wuhan coronavirus a public health emergency and ordered any U.S. citizens returning from the center of the outbreak in China to be quarantined for two weeks.

Trump Administration to Launch Means Test to Enforce Public Charge Rule for Immigrants on Feb. 24

As of Jan. 30, the Trump administration is set to implement a new means test for immigrants on Feb. 24, enforcing the public charge regulation in every state but Illinois, where a federal appeals court has upheld a statewide injunction. The rules expand the government’s ability to refuse green cards or visas for legal immigrants using or likely to use Medicaid, food stamps and other safety net programs. Officials can also refuse entry or deport people whose age, education and health status, among other factors, could make them likely to need government assistance.

USMCA Signed into Law by President Trump

On Jan. 29, President Trump signed the United States–Mexico–Canada Agreement (USMCA) into law. The final version of the deal excluded the 10-year protection for biologic drugs, drugs produced by live organisms, from generic drugs entering the same market.

Proposed Regulations/Guidance

CMS: Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2021

On Jan. 31, the Centers for Medicare and Medicaid Services (CMS) released the proposed annual Notice of Benefit and Payment Parameters Rule for 2021, also known as the proposed 2021 Payment Notice. This is the second year in a row that the proposed rule has been late. 

CMS proposes to maintain the Federally Facilitated Exchange (FFE) user fee rate of 3.0 percent of premium, and the State-based Exchange on the Federal Platform (SBE-FP) user fee rate of 2.5 percent of premium based on the portion of FFE user fee-eligible costs allocated to SBE-FP activities. Alternatively, CMS is considering and seeking comment on reducing the FFE and SBE-FP user fee rate below the 2020 plan year level to reflect estimates of premium increases and enrollment decreases for the 2021 plan year, as well as potential savings resulting from cost-saving measures implemented over the last several years in hopes of reducing the user fee burden on consumers and creating downward pressure on premiums.

CMS is proposing changes to the policy regarding how drug manufacturer coupons accrue towards the annual limitation on cost sharing in response to stakeholder feedback indicating Treatment of Drug Manufacturer Coupons. CMS proposes changing the policy regarding how drug manufacturer coupons accrue towards the annual limitation on cost sharing.

CMS is proposing to amend current Medical Loss Ratio (MLR) regulations to require issuers to deduct from incurred claims the prescription drug rebates and other price concessions attributable to the issuer’s enrollees and received and retained by an entity providing pharmacy benefit management services to the issuer. CMS also proposes to clarify more generally that issuers must report expenses for services outsourced to or provided by other entities in the same manner as issuers’ expenses for non-outsourced services. These changes would help lower premiums by helping ensure that consumers’ premiums reflect the full benefit of prescription drug rebates and are not artificially inflated by outsourcing expenses.

Find the proposed rule here, which will be published in the Federal Register on Feb. 6, 2020.

CMS: Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2020

On Jan. 17, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule for plans sold on the Health Insurance Marketplaces for the 2020 benefit year. The proposed rule sets forth payment parameters and provisions related to the risk adjustment and risk adjustment data validation programs, cost-sharing parameters, and user fees for Federally Facilitated Exchanges (FFEs) and State-based Exchanges on the Federal Platform (SBE-FPs). It proposes changes that would allow greater flexibility related to the duties and training requirements for the Navigator program and proposes changes that would provide greater flexibility for direct enrollment entities, while strengthening program integrity oversight over those entities. It proposes policies that are intended to reduce the costs of prescription drugs. It includes proposed changes to Exchange standards related to eligibility and enrollment, exemptions and other related topics.

Find the proposed rule here.

Public comments are due by Feb. 19, 2020.

CMS: 2021 Medicare Advantage Advance Notice Part I – Risk Adjustment

On Jan. 6, the Centers for Medicare and Medicaid Services (CMS) released Part I of the 2021 Advance Notice of Methodological Changes for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies (the Advance Notice), which contains key information about proposed updates to the Part C CMS-Hierarchical Condition Categories (HCC) risk adjustment model and the use of encounter data.

Part 1 of the 2021 Advance Notice of Methodological Changes for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies proposes changes to the Part C risk adjustment model and the use of encounter data. Under the proposal, CMS proposes to calculate risk scores for 2021 by using the sum of 75 percent of the risk score calculated with the 2020 CMS-Hierarchical Condition Categories model and 25 percent of the risk score calculated with the 2017 version of the model. For 2020, CMS calculated risk scores using the sum of 50 percent of each model.

CMS also proposed changes to how it uses encounter data, or diagnostic information, in the risk adjustment calculation process. For 2021, CMS wants to calculate risk scores for Medicare Advantage plans by summing 75 percent of the encounter data-based risk score with 25 percent of the Risk Adjustment Processing System-based risk score. For 2020, CMS calculated risk scores using the sum of 50 percent of each type of data.

Find the proposed rule here. Public comments are due by March 6, 2020.

CMS and HRSA: Two Proposed Rules for Organ Procurement Organizations (OPOs)

On Dec. 17, two rules were proposed related to organ procurement organizations (OPOs), specifically on performance standards and the promotion of donations from living donors.

The first rule, by the Centers for Medicare and Medicaid Services (CMS), holds OPOs accountable for meeting specific performance metrics. The rule uses federal death records, which show the entire pool of potential organ donors, to calculate an OPO’s donation and transplantation rates. In addition, the proposed rule would require all OPOs to meet the donation and transplantation rates of the current top 25 percent of OPOs. CMS will be able to rank the OPOs based on their performance and make that data public, assessing them annually through a re-certification cycle.

Find the CMS rule here.

Public comments are due by Feb. 21, 2020.

The second rule, by the Health Resources and Services Administration (HRSA), attempts to eliminate financial burden on living donors. The proposed rule would allow insurers to reimburse living donors for lost wages, as well as any child care or elder care expenses they incurred during their hospitalizations for or recoveries from the donation.

Find the HRSA rule here.

Public comments are due by Feb. 18, 2020.

FDA and HHS: Proposed Rule on Canadian Drug Importation Plan

On Dec. 18, the Food and Drug Administration (FDA) and the Department of Health and Human Services (HHS) released a draft guidance on the importation of certain prescription drug imports from Canada, leaving out many specialty medications and other therapies for chronic disease that cost patients the most. The FDA seeks request for comment on two importation pathways. One would allow states to submit proposals to the FDA to allow the importation of small molecule brand-name medicines sold at retail pharmacies, typically ones that have rebates attached to them. The draft guidance for industry lets manufacturers import the same versions of FDA-approved drugs they now sell in foreign countries. Under this second pathway, drug manufacturers would use a new National Drug Code (NDC) and sell these drugs in the U.S. at a cheaper price.

Find the proposed rule here.

Find the guidance for industry here—comments are due by March 5, 2020.

Final Regulations/Guidance

CMS: Medicaid Block Grant Guidance

On Jan. 30, the Centers for Medicare and Medicaid Services (CMS) released guidance on how Medicaid directors can convert their open-ended Medicaid funding into block grants, a move officials contend will give states more flexibility to change their programs. The letter stipulates that states can apply for lump-sum Medicaid payments for adult populations covered under Medicaid expansion or other Medicaid coverage programs. People enrolled in Medicaid for a disability or long-term care services will not be eligible, as well as traditional populations like children and pregnant patients. The option would let states get approval for broader negotiating power to control drug costs. The plan includes the option to waive requirements, such as retroactive coverage periods, and let states include “nominal” premiums and cost sharing.

Find the guidance here.

Courts

Find a comprehensive look at “Courts and Healthcare Policy in 2020” here.

Fifth Circuit Rejects Full Appeals Court to Rehear Texas v. United States

On Jan. 29, the 5th Circuit Court of Appeals rejected a petition from one of its judges for the full court to rehear the challenge to the constitutionality to the Affordable Care Act (ACA) in an 8-6 decision. The court did not reveal which justice requested the case be reheard “en banc,” but any of the full-time judges or any member of a panel that heard the initial case may petition the court under the circuit’s rule.

Reports

GAO: Medicaid – States’ Changes to Payment Rates for Substance Use Disorder Services

On Jan. 30, the Government Accountability Office (GAO) published a report on state Medicaid programs’ changes to what the states paid for substance use disorder (SUD) treatment services from 2014-2019. Most state Medicaid programs increased payment rates for at least one addiction treatment service (e.g., counseling) and rate decreases were less common in this period of time. The report states that higher rate increases can encourage more addiction treatment service providers to accept Medicaid patients. However, other factors also affect service availability. For example, some providers do not accept Medicaid patients because of the paperwork and audit requirements.

Specifically, over 80 percent of all states increased rates for at least one SUD service from 2014 to 2019. About two-thirds of states’ rate increases were targeted specifically to SUD or SUD and other behavioral health services, while the remainder were part of changes to rates for a broader set of Medicaid services. Decreases to SUD rates were less common and tended to be part of broader rate changes. State officials and SUD providers in the selected states with larger rate changes reported greater effects on SUD service availability compared to those in states with smaller changes. For example, state officials said that larger rate increases helped increase the number of SUD providers participating in Medicaid, but did not generally note SUD service availability effects for smaller rate increases.

Find the full report here.

GAO: 340B Drug Discount Program – Oversight of the Intersection with the Medicaid Drug Rebate Program Needs Improvement

On Jan. 27, the Government Accountability Office (GAO) published a report on the oversight of the 340B and Medicaid Drug Rebate programs to prevent duplicate discounts for hospitals and clinics. The report covers how the 340B program allows certain hospitals and clinics to buy discounted drugs. The rebate program allows state Medicaid programs to request manufacturer rebates on certain drugs dispensed to their beneficiaries. However, drugs that hospitals and clinics buy through 340B cannot also qualify for Medicaid rebates, and duplicate discounts occur as a result.

The GAO recommends:

  • The administrator of CMS ensure that state Medicaid programs have written policies and procedures that specify the extent to which covered entities can use 340B drugs for Medicaid beneficiaries, are designed to effectively identify if 340B drugs were used and, if so, how they should be excluded from Medicaid rebate requests. The policies and procedures should be made publicly available and cover FFS, managed care and all of the dispensing methods for outpatient drugs.
  • The administrator of HRSA incorporate assessments of covered entities’ compliance with state Medicaid programs’ policies and procedures regarding the use and identification of 340B drugs into its audit process, working with CMS as needed to obtain states’ policies and procedures.
  • The administrator of HRSA require covered entities to work with affected drug manufacturers regarding repayment of identified duplicate discounts in Medicaid managed care.

Find the full report here.

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

Stephanie Kennan, Senior Vice President
Mariam Eatedali, Research Associate

Founded in 1998,McGuireWoods Consulting LLC(MWC) is a full-service public affairs firm offering infrastructure andeconomic development, strategic communications & grassroots, and governmentrelations services. McGuireWoods Consulting is a subsidiary of theMcGuireWoods LLPlaw firm and has been named in The National Law Journal’s special annualreport, “The Influence 50,” for the past several years. In the most recentreport, McGuireWoods Consulting was ranked 15th of the 1,900 governmentrelations firms in Washington, D.C.

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