1. What the Trump Administration Means for Health Care

What the Election Means for Health-Related Committees in Congress

Even though Republicans remain in control of the House and Senate there could be some changes in leadership on health-related committees:

Senate Health, Education, Labor and Pensions Committee. Chairman Lamar Alexander (R-TN) is expected to continue in that position, overseeing FDA user fee reauthorization bills next year that must be passed before the agreements expire in late 2017.

Sen. Patty Murray (D-WA) is considering a run for the position of Democratic Whip but could also move to be the ranking member of the Senate Appropriations Committee, or she could remain as the ranking member of the HELP committee. If Murray moves to the Whip position or becomes the top Democrat on Appropriations, there are rumors that Sen. Bernie Sanders (I-VT) is interested in the top Democratic position on the HELP committee. If Murray becomes the Democratic Whip and Sanders remains ranking member on the Budget Committee, Sens. Bob Casey (D-PA) and Al Franken (D-MN) are next in seniority for the health committee.

Senate Appropriations Committee. Sen. Thad Cochran (R-MS) is expected to stay on as chairman of the Appropriations Committee.

The Democratic leadership of the committee is less clear, because current ranking Democrat Barbara Mikulski (MD) is retiring. A number of senior Democrats could take the ranking position on the committee, including Sens. Patrick Leahy (VT), Diane Feinstein (CA), Dick Durbin (IL) and Patty Murray (WA).

Sen. Patrick Leahy of Vermont has the seniority. However, it is assumed that he would prefer to retain his position as the top Democrat on the Senate Judiciary Committee.

Senate Finance Committee. All Finance Committee Republicans who were up for re-election won their races, though committee member Sen. Dan Coats (R-IN) is retiring. Sen. Orrin Hatch (R-UT) is expected to stay chairman of the committee. Sen. Ron Wyden (D-OR) is expected to remain as the ranking Democrat on the committee.

House Energy & Commerce Committee. Current Chairman Fred Upton (R-MI) is term limited, opening the position to other members. Two members who have expressed interest in being chairman are Reps. John Shimkus (R-IL) and Greg Walden (R-OR). Shimkus has seniority and has a long history of voting with GOP leadership. Walden was chair of the National Republican Congressional Committee.

House Ways & Means Committee. Chairman Kevin Brady (R-TX) just started his term this year and will stay on. Sander Levin (D-MI) is expected to remain as the ranking Democrat on the committee.

Repealing the Affordable Care Act

President-elect Donald Trump promised to repeal the Affordable Care Act (ACA). His public statements and campaign website left little detail other than that he would replace the ACA with

  1. expanding health savings accounts;
  2. allowing people to deduct the cost of premiums; and
  3. allowing policies to be sold across state lines.

His transition website added the following:

To maximize choice and create a dynamic market for health insurance, across state lines. The Administration will work with both Congress and the States to re-establish high-risk pools – a proven approach to ensuring access to health insurance coverage for individuals who have significant medical expenses and who have not maintained continuous coverage.

He has not suggested doing away with the more popular parts of the ACA like the protections against being denied coverage because of pre-existing conditions, or allowing children to stay on the parents’ plan until the children are 26. Nor has Trump discussed dismantling the exchanges, but he has not proposed a mechanism for individuals to know what plans are available.

The House Republican Plan: “A Better Way”

Because Trump has not provided detail, some have suggested that he might rely on Paul Ryan’s plan, which outlines the same principles but in more detail.

That plan would:

  • Allow health care to be portable—meaning you could take it from job to job
  • Expand the use of health savings accounts
  • Cap open-ended tax break on employer-based premiums—to replace the Cadillac tax
  • Allow policy sales across state lines
  • Allow small businesses and individuals to band together to create new pooling mechanisms
  • Remove the individual and employer mandates
  • Reform medical liability

In addition, expanding the availability of catastrophic health policies is being considered.

In 2015, a reconciliation bill was passed—but vetoed by Obama—that included language to repeal the individual mandate, ax the ACA’s premium subsidies, strip the HHS secretary of the authority to run a federal health insurance marketplace starting in 2018, end the three risk mitigation programs, stop Medicaid expansion and scrap the law’s major taxes. It is highly likely this could serve as the basis of legislation to repeal the ACA.

The question remains of whether the Trump administration would seek to work with any Democrats on this. Democrats have wanted to make changes in the ACA but have not wanted to provide opportunities for a full repeal. For example, many Democrats want to repeal the Cadillac tax and the device tax repeal effort also had bipartisan support.

However, the regulatory process could be used to loosen some requirements, for example to exempt more people from the individual mandate.

Medicaid

In addition, Trump has supported block granting Medicaid, a proposal Republicans have supported for years. State budgets could get much tighter if a Trump administration follows through on converting Medicaid into a block-grant program. Federal Medicaid funds accounted for roughly 15 percent of total state expenditures in 2014, the National Association of State Budget Officers calculates.

The best way to accomplish repeal would be through the budget reconciliation process because reconciliation needs only a simple majority, not the usual 60 votes in the Senate.

2. Congress

Senate

Inspector General Asked to Provide Records, Testify Over EpiPen Misclassification

According to a Nov. 8 letter by Sen. Chuck Grassley (R-IA) to HHS Inspector General Daniel Levinson, CMS knew in 2009 that Mylan’s EpiPen was misclassified as a generic drug. However, it is still unclear whether CMS did anything to address the issue before the EpiPen pricing controversy became public this year.

In a July 2009 report, the HHS Inspector General informed CMS that eight drugs were misclassified for the purposes of setting rebates in Medicaid, which are larger for brand-name drugs. “With respect to those eight, your staff has stated that the EpiPen was one of those drugs and that your office reported the misclassification to CMS in 2009,” Sen. Grassley wrote in his letter.

Sen. Grassley asked why no one has done anything about the misclassification when CMS knew of the problem for years. In October, Mylan announced a $465 million settlement with the Justice Department to settle claims over the issue, but DOJ has not confirmed the settlement.

The Senate Judiciary Committee will hold a hearing Nov. 30 on the reported settlement. Grassley’s letter directed Inspector General Levinson to provide all records of OIG’s notifications to CMS about the misclassification of EpiPen.

Sens. Chuck Grassley (R-IA), Amy Klobuchar (D-MN) and Richard Blumenthal (D-CT) asked Mylan to explain its plans to reimburse the Defense Department for EpiPens due to the drug’s misclassification as a generic drug.

“If Mylan’s intention is to ‘move forward and bring resolution to all EpiPen Auto-Injector related matters,’ it is imperative that you quickly resolve this additional discrepancy and take steps to refund our military for past overpayments,” the lawmakers wrote in a Nov. 7 letter to the company. They asked for a response by Nov. 18.

Sen. Grassley, the chairman of the Senate Judiciary Committee, and Ranking Member Patrick Leahy (D-VT) also called on the Federal Trade Commission to review Mylan’s EpiPen contracts with schools for possible antitrust behavior. Mylan reportedly was offering free or low-cost EpiPens to many schools in return for the schools’ agreement not to purchase competitors’ products. Click here to see that letter.

3. Administration

CMS Announces $66.1 Million to Support Zika Prevention & Treatment Services

On Nov. 9, CMS announced a funding opportunity providing up to $66.1 million available to support prevention activities and treatment services for health conditions related to the Zika virus. Congress authorized this funding in the Continuing Appropriations and Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2017, and Zika Response and Preparedness Act.

In accordance with the Zika Response and Preparedness Act, entities eligible to apply for this funding opportunity include states, territories, tribes or tribal organizations with active or local transmission of the Zika virus, as confirmed by the Centers for Disease Control and Prevention (CDC). The CDC has designated American Samoa, Puerto Rico, the U.S. Virgin Islands and Florida as areas with laboratory-confirmed active or local Zika virus transmission. As such, this emergency funding opportunity is currently available to the territorial and state health departments in these areas.

Through this funding opportunity, up to $66.1 million is available, with $60.6 million directed to Puerto Rico, which has a high incidence of local Zika cases. Allocations are based on the percentage of active and local Zika cases reported by the CDC and the size of the populations in these areas. Funding in Puerto Rico will significantly increase the resources and capacity needed to prevent transmission of the virus and provide critical diagnostic, screening and treatment for pregnant women, newborns and others.

In order to receive funding, applicants must demonstrate their ability to quickly and efficiently expand existing Zika response efforts and further determine the most effective use and dissemination of funds in their respective jurisdictions. Funds will be available for health care services related to family planning, diagnostic testing, screening and counseling, medical care, case management and treatment, and improving provider capacity and capability.

CMS is hosting a MLN Connects® Call on Nov. 15 at 1:30 p.m. ET on the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) final rule.

CMS will provide an overview of the Merit-based Incentive Payment System (MIPS) and Advanced Alternative Payment Model (APM) incentive payment provisions under MACRA, collectively referred to as the Quality Payment Program. Anyone can join the call, and participants may include Medicare Part B Fee-For-Service clinicians, office managers and administrators, state and national associations that represent health care providers, and other stakeholders.

To register for the call, click here. Registration will close at 12 p.m. ET on the day of the call or when available space has been filled.

Follow CMCS at https://twitter.com/MedicaidGov. CMCS also created a blog.

President Obama Signs Executive Order Advancing the Global Health Security Agenda

On Nov. 4, President Barack Obama signed an executive order building upon the Global Health Security Agenda (GHSA) that focuses on combating infectious disease threats like Zika and Ebola.

The president is directing executive departments and agencies to coordinate with other governments, financial institutions and nongovernmental stakeholders to implement international health regulations and meet the goals of the GHSA, which was launched in 2014.

“Already, we’ve seen historic success: Working with partners in Guinea, Liberia, Sierra Leone, and from around the world, we led the way in ending the Ebola epidemic in West Africa — and we are leading the way on the Zika response here at home,” National Security Advisor Susan Rice said in a statement. “The executive order signed today builds on this progress by establishing long-term policy objectives and memorializing a comprehensive framework for the United States to continue, strengthen, and institutionalize our achievements and use common targets to measure progress.”

The executive order requires the National Security Council to convene an interagency review council to provide guidance to participating agencies, facilitate and provide a forum to resolve interagency disagreements, and review progress on the work of the GHSA.

4. Courts

Judge Rules House Cannot Participate in Risk-Corridor Lawsuit

On Nov. 7, a federal judge denied the House of Representative’s requests to weigh in on one of the lawsuits over Obamacare’s risk-corridor program. The House had asked the judge to allow it to argue on behalf of the Obama administration, which is trying to throw out a case brought by Health Republic over missing risk-corridor payments. The House wanted to tell the court that Congress intentionally limited the payments.

But Judge Margaret M. Sweeney denied the request, saying that the rules of the U.S. Court of Federal Claims do not allow outside parties to weigh in. While she could have waived the rule, she was swayed by the insurance company’s argument that the court should not allow any new arguments.

On Nov. 7, a U.S. district court halted implementation of the new policy cracking down on nursing homes’ use of mandatory arbitration agreements. In his ruling, Judge Michael Mills questioned CMS’s authority to place the sweeping restriction on facilities that receive federal funds, saying it raises “serious legal questions” about the power that federal agencies hold. He granted a preliminary injunction preventing the arbitration ban from taking effect until a broader lawsuit against the rule is resolved.

CMS had originally planned to implement the rule on Nov. 28. The American Health Care Association, Community Care of Vicksburg, Great Oaks Rehabilitation, the Mississippi Health Care Association and Mansfield Long Term Care are suing CMS over the rule. They had requested the injunction, arguing that the prohibition is unlawful and exceeds the agency’s authority.

The judge did express sympathy for CMS’s intentions, writing that the arbitration ban appears to be good public policy. Yet he remained unconvinced that CMS had the authority to write the rule in the first place.

On Nov. 7, the Supreme Court said it will not review an appeals court decision that took a broader view of what may qualify as an anti-competitive “pay-for-delay” agreement between brand and generic drug companies.

The court’s refusal to hear the case leaves in place a 3rd Circuit Court of Appeals ruling from June 2015 finding that drug patent settlements involving a non-cash transfer of value are subject to antitrust scrutiny.

Pay-for-delay agreements typically involve brand drug makers’ paying generic companies to delay introduction of a cheaper generic. However, in this case, SmithKline Beecham Corp. v. King Drug Co. of Florence, the brand drug maker relinquished its right to produce its own “authorized generic” during the 180-day marketing exclusivity period typically awarded to the first generic company to challenge the brand drug’s patent. In return, the generic company delayed entry of its product. The lawsuit was brought by drug purchasers who argued they were paying higher prices because of the settlement.

The decision is a win for the FTC, which has been trying to clamp down on non-cash forms of pharma patent settlements it considers anti-competitive. It is a loss for both brand and generic drug companies, which argue these deals provide leverage to avoid costly and lengthy patent fights.

The appellate court’s decision was based on the Supreme Court’s 2012 decision in FTC v. Actavis. In that landmark case, the Supreme Court ruled that unexplained large payments from a brand drug maker to a generic company to settle litigation can sometimes violate antitrust laws.

The Solicitor General said the Supreme Court should let the lower court ruling stand, arguing that the court’s decision in Actavis was not limited to cash payments.

5. State Activities

California: Women Still Struggle to Obtain Birth Control Directly From Pharmacists

In California, women are still struggling to find pharmacists that will dispense birth control without a doctor’s prescription even though legislation was passed three years ago permitting it. There is no comprehensive list outlining how many of California’s 6,500 pharmacies are participating in the program. However, some pharmacists say they are reluctant to do so in part because it could take up to an hour to complete the process of filling a prescription for one patient. This is due to required blood work and having to administer a questionnaire about health issues. California is one of three states where pharmacists can prescribe birth control.

California’s Proposition 61 was defeated by a 54-46 margin on the November ballot. Proposition 61 sought to lower prescription drug prices by requiring that state agencies pay no more for medicines than the federal Department of Veterans Affairs. Drug companies led the campaign opposing the proposition, raising $109 million to defeat the measure.

Opponents of the proposition included drug makers, the California Medical Association and veterans’ groups. They argued the initiative could lead to higher drug prices for veterans and seniors if the pharmaceutical industry refused to sell the state medicines at lower prices.

Colorado: Measure to Create Universal Health Care System Fails

On Nov. 8, Coloradans voted against creating a universal health care system for the state by a large margin, with about 80 percent voting against the measure despite support for it from Sen. Bernie Sanders (I-VT) who advocated for a single-payer system during the presidential campaign.

The measure would have covered all residents in Colorado. Those in Medicaid or the Children’s Health Insurance Program would have received benefits required by federal law as well as ColoradoCare standard benefits. Beneficiaries would not have had any deductibles, and preventive and primary care services would not have had copayments. The provision would have been funded by a 10 percent payroll tax funded two-thirds by employers and a third by employees. There would also have been a 10 percent tax of all non-payroll income.

Colorado Democratic Sen. Michael Bennet came out against the proposal, as did Gov. John Hickenlooper (D). Bennet raised concerns with putting an overhaul of the state’s health care system and a tax increase into the state’s constitution.

ColoradoCare Yes, which had pushed for the bill, spent more than $850,000, but the group was outspent by Coloradans for Coloradans, which spent almost $4 million to defeat the proposition. Anthem spent about a million to defeat the bill, UnitedHealth spent $450,000 and Centura Health spend $250,000.

Connecticut: Hospitals Allege the State Is Illegally Administering Medicaid Program

Connecticut hospitals have filed a petition to CMS alleging that the state is “illegally administering” its Medicaid program by paying inadequate rates for treatment and imposing a $556 million tax on providers. “Connecticut’s Medicaid payment system has degraded to a point where provider payments are no longer sufficient to assure efficiency, economy, quality of care, and adequate access to care for Medicaid beneficiaries,” the petition says. The state’s hospital association and 20 hospitals also appealed a state court’s ruling on the tax to a state Superior Court. The group’s claim against the tax was denied by two state agencies last month.

Several months after a statewide managed care program began, Iowa is increasing the amount of money it pays three private insurers administering Medicaid. The Iowa Department of Human Services will pay an extra $33.2 million to the health plan, and the federal government will pay an additional $94.5 million for the increased rates. Gov. Terry Branstad, who has vocally defended the move to statewide managed care as necessary to save taxpayer funds and eliminate fraud, insists Iowa is still expected to save more than $100 million this year. The savings, he asserts, will result from fewer people enrolled in higher-cost programs. The state launched the new Medicaid delivery system in April. It pays the insurers per member each month.

Louisiana: Medicaid Expansion Projected to Cost $376 Million More Than Budgeted

In Louisiana, Medicaid expansion is projected to cost $376 million more than expected this year, based on new spending figures from the state’s health agency. The total estimated cost of expansion is $2.3 billion this fiscal year as a result of the increase in spending. But all of it will be picked up by the federal government, officials said, because of the ACA’s enhanced match rate for states. There are two main drivers of the higher cost: Louisiana now projects to enroll 402,000 people in the first year of expansion, up from an earlier estimate of 375,000. And the individuals signing up are older than expected. As of Oct. 20, 326,000 people had enrolled in expanded coverage that began on July 1.

On Nov. 4, Massachusetts received CMS approval for a new, five-year 1115 waiver that will restructure Medicaid payment and delivery systems for nearly 2 million enrollees. The $52.4 billion waiver, which goes into effect in July 2017, will transition the state’s mostly fee-for-service model to one of provider-led ACOs and managed care. CMS wrote to Massachusetts that the waiver authorizes $1.8 billion in new Delivery System Reform Incentive payments over five years, as well as $4.8 billion in supplemental safety net payments to hospitals and other providers. CMS also granted MassHealth approval to launch an ACO pilot program in December.

Vermont: Medicaid Dollars Being Transferred to Primary Care

Vermont has begun reallocating $4 million Medicaid dollars from academic medical centers to primary care doctors under a larger spending bill approved earlier this year. The state reduced the University of Vermont Medical Center payments by $2.9 million and the Dartmouth-Hitchcock Medical Center by $1 million, as well as $100,000 for out-of-state academic medical centers. With the shift in payments, primary care providers will get $48.9 million—an 8.9 percent increase.

6. Regulations Open for Comment

The IRS and Treasury Department, in a proposed rule released July 6, proposed to alter how qualified health plan (QHP) benchmarks are determined so that they account for the costs of pediatric dental benefits. If finalized, the rule would go into effect for the 2019 plan year.

Although pediatric dental care is one of the 10 “essential health benefits” that plans are required to cover under the Affordable Care Act (ACA), several plans do not include such coverage, and consumers instead buy stand-alone dental products. Meanwhile, the marketplace determines the amount of tax credits a family can receive to cover the cost of coverage based on the second-cheapest silver-level plan.

However, as the proposed rule said, “because qualified health plans that do not offer pediatric dental benefits tend to be cheaper than qualified health plans that cover all ten essential health benefits, the second lowest-cost silver plan (and therefore the premium tax credit) for taxpayers purchasing coverage through a Marketplace in which stand-alone dental plans are offered is likely to not account for the cost of obtaining pediatric dental coverage.”

Treasury and IRS added that the existing rules “frustrate” the goal of making all essential health benefits affordable to those receiving premium tax credits, so the administration wants to update its interpretation to ensure all 10 services are addressed.

“Consistent with this interpretation, the proposed regulations provide that for taxable years beginning after December 31, 2018, if an Exchange offers one or more silver-level qualified health plans that do not cover pediatric dental benefits, the applicable benchmark plan is determined by ranking (1) the premiums for the silver-level qualified health plans that include pediatric dental benefits offered by the Exchange and (2) the aggregate of the premiums for the silver-level qualified health plans offered by the Exchange that do not include pediatric dental benefits plus the portion of the premium allocable to pediatric dental benefits for stand-alone dental plans offered by the Exchange,” the proposal said.

The rule aims to create the ranking by adding the premium for the lowest-cost silver plan that does not include a pediatric dental benefit to the premium for the cheapest stand-alone dental plan, and the premium for the second-cheapest silver plan without pediatric dental benefits to that of the second-lowest stand-alone dental plan. The second-cheapest amount from this combined ranking would be the taxpayer’s applicable benchmark plan premium, the rule said.

On Sept. 2, HHS proposed to preclude Title X grant recipients from using criteria in their selection of family planning providers that are unrelated to the ability to deliver services effectively.

Since 2011, 13 states have attempted to restrict participation by family planning providers in Title X based on factors unrelated to their ability to provide services. The Title X program provides funding for certain family planning services, including STD screening and treatment, but funding is not used to pay for abortions. Although Planned Parenthood is not mentioned by name in the proposed rule, it has often been the subject of defunding actions by states and Congress.

In the proposed rule, HHS said the effects already felt by the restrictions in many states justify the department’s rulemaking. HHS said grant recipients that do not provide services directly would also be required to follow the updated standards when choosing subrecipients.

HHS also proposed that a tiered structure governing how funds are distributedwould not be allowed unless it can be proven that a provider in a top tier delivers Title X services more effectively than a lower-tier provider. According to the Guttmacher Institute, a research organization that supports reproductive rights, four states have a priority system for distributing family planning funds, which often disadvantages family planning centers.

On Nov. 3, CMS announced a proposed rule to update Medicare fire protection guidelines for certain dialysis facilities to ensure that patients are protected from fire while receiving treatment in those facilities.

The new proposed guidelines apply to all dialysis facilities that do not provide one or more exits at grade level from the treatment area level. CMS previously updated the requirements to include dialysis facilities located adjacent to industrial high-hazard occupancies; however, as dialysis facilities are not permitted to be located in such areas, the requirement specific to such geographically located facilities will be removed.

The rule adopts, for certain dialysis facilities, updated provisions of the National Fire Protection Association’s (NFPA) 2012 edition of the Life Safety Code (LSC), as well as provisions of the NFPA’s 2012 edition of the Health Care Facilities Code in order to bring CMS’s requirements more up to date with current fire safety standards. The LSC is a compilation of fire safety requirements for new and existing buildings, and is updated every three years.

The proposed rule addresses construction, protection and operational features of dialysis facilities to provide safety for Medicare beneficiaries from fire and smoke. Some of the main requirements laid out in the rule include:

  • Doors to hazardous areas must be self-closing or must close automatically.
  • Alcohol-based hand rub dispensers now may be placed in corridors to allow for easier access.
  • A fire watch or building evacuation is required if the sprinkler system is out of service for more than 10 hours.

Currently, CMS is using the 2000 edition of the LSC to survey dialysis facilities for health and safety compliance. With this proposed rule, CMS is adopting provisions of the 2012 edition of the LSC and provisions of the 2012 edition of the Health Care Facilities Code, to bring CMS’s requirements more up to date, and align dialysis facility fire safety requirements with the codes CMS uses to survey other healthcare facilities.

On Nov. 7, CMS issued a proposed notice announcing changes that would be made to the Medicaid National Drug Rebate Agreement (NDRA) for use by the Secretary of the Department of Health and Human Services and manufacturers under the Medicaid Drug Rebate Program. The NDRA is being updated to incorporate legislative and regulatory changes that have occurred since the agreement was published in February 1991, as well as to make editorial and structural revisions, such as references to the updated Office of Management and Budget (OMB)-approved data collection forms and electronic data reporting. There is a 90-day comment period for this proposed notice that will end on Feb. 7, 2017.

For more information, click here.

On Nov. 4, CMS announced that public comments are due Nov. 17 on a cross-setting post-acute care measure under the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) to further develop and refine the percentage of residents or patients with pressure ulcers that are new or worsened and language modifications being explored with the term “Pressure Injury.” CMS seeks feedback on potential updates to measure specifications and items used to calculate the quality measure. Visit the Public Comment webpage for more information.

7. Reports

Two researchers at the University of Oxford launched a website that shows major drug companies and institutions sponsoring clinical trials—and their failure rate for reporting results. Sanofi and Novartis top the list followed by the National Cancer Institute.

To see the site, 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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