A&B Healthcare Week in Review, August 1, 2014

I. REGULATIONS, NOTICES, & GUIDANCE

• On July 28, 2014, the Centers for Medicare and Medicaid Services (CMS) issued a notice entitled “Medicare Program; Evaluation Criteria and Standards for Beneficiary and Family Centered Care Quality Improvement Organization Contract.”. This notice with comment period describes the general criteria CMS intends to use to evaluate the effectiveness and efficiency of Beneficiary and Family Centered Care (BFCC) Quality Improvement Organizations (QIOs) that will enter into contracts with CMS under the 11th Statement of Work (SOW). This contract allows for a transition period from the incumbent QIOs to the successor QIOs. The activities for the BFCC-QIO SOW begin August 1, 2014. The evaluation of a BFCC-QIO's performance related to the SOW will be based on evaluation criteria specified for the tasks set forth in Attachment J-10 of the BFCC-QIOs' SOW contract. Comments are due August 27, 2014.
• On July 28, 2014, the Food and Drug Administration (FDA) released a guidance document entitled “The 510(k) Program: Evaluating Substantial Equivalence in Premarket Notifications [510(k)]”. This guidance document describes FDA's current review practices for premarket notification (510(k)) submissions by describing in greater detail the regulatory framework, policies, and practices underlying FDA's review of traditional 510(k) submissions. This guidance document does not address the special and abbreviated 510(k) programs. FDA intends to finalize those sections separately. More information may be found here.
• On July 28, 2014, FDA issued a notice establishing a public docket entitled “Exploring the Possibility of Proprietary Name Reservation for Drug Products” to discuss issues related to reserving proprietary names for drug products. During the negotiations for the 2007 reauthorization of the Prescription Drug User Fee Amendments Act (PDUFA IV), FDA agreed to several performance goals related to the review of drug and biological product proprietary names to reduce medication error. Among those goals, FDA and industry expressed an interest in exploring the possibility of “reserving” proprietary names for companies once the names have been tentatively accepted by the Agency. Accordingly, FDA is initiating a public process to discuss issues around reserving proprietary names. Comments are due October 27, 2014.
• On July 29, 2014, the Agency for Healthcare Research and Quality (AHRQ) announced its intention to request that OMB approve the proposed information collection project: “Phase II of a Longitudinal Program Evaluation of Health and Human Services (HHS) Healthcare Associated Infections (HAI) National Action Plan (NAP).” This evaluation of HHS' Healthcare Associated Infections National Action Plan will assess the efficacy, efficiency and coordination of federal efforts to mitigate and prevent Healthcare Associated Infections (HAIs). Comments are due August 28, 2014. More information may be found here.
• On July 29, 2014, CMS announced the expansion of the Medicare Prior Authorization for Power Mobility Devices (PMDs) Demonstration to 12 additional states. The expanded demonstration begins on October 1, 2014. On September 1, 2012, CMS implemented the Medicare Prior Authorization for Power Mobility Devices (PMDs) Demonstration that would operate for a period of 3 years (September 1, 2012 through August 31, 2015). The demonstration was initially implemented in California, Florida, Illinois, Michigan, New York, North Carolina, and Texas. These states were selected for the demonstrations based upon their history of having high levels of improper payments and incidents of fraud related to PMDs. The objective of the demonstration is to develop improved methods for the investigation and prosecution of fraud in order to protect the Medicare Trust Fund from fraudulent actions and any resulting improper payments. Because of the initial success of the demonstration in reducing spending on PMDs, CMS is expanding the demonstration to 12 additional states (Pennsylvania, Ohio, Louisiana, Missouri, Washington, New Jersey, Maryland, Indiana, Kentucky, Georgia, Tennessee, and Arizona) which have high expenditures and improper payments for PMDs based on 2012 billing data. The remaining states and territories would be the control group for the demonstration. More information may be found here.
• On July 30, 2014, FDA announced the fee rates and payment procedures for medical device user fees for fiscal year (FY) 2015. The Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended by the Medical Device User Fee Amendments of 2012 (MDUFA III), authorizes FDA to collect user fees for certain medical device submissions and annual fees both for certain periodic reports and for establishments subject to registration. This notice establishes the fee rates for FY 2015, which apply from October 1, 2014, through September 30, 2015. This document provides information on how the fees for FY 2015 were determined, the payment procedures that should be followed, and how to qualify for the reduced small business fee. More information may be found here.
• On July 30, 2014, FDA announced the availability of a guidance document entitled “Center for Devices and Radiological Health (CDRH) Appeals Processes: Questions and Answers About 517A”. This document provides CDRH's interpretation of key provisions of section 517A of the Federal Food, Drug, and Cosmetic Act (FD&C Act), which were added by the FDA Safety and Innovation Act (FDASIA), as these provisions pertain to requests for documentation of rationales for significant decisions and requests for supervisory review of regulatory decisions and actions taken by CDRH. More information may be found here.
• On July 30, 2014, CMS requested emergency review of an information collection entitled “Initial Plan Data Collection To Support Qualified Health Plan (QHP) Certification and Other Financial Management and Exchange Operations”. Under the Affordable Care Act (ACA), each Exchange must assume responsibilities related to the certification and offering of Qualified Health Plans (QHPs). In addition to data collection for the certification of QHPs, the reinsurance and risk adjustment programs outlined by the ACA have general information reporting requirements that apply to issuers, group health plans, third party administrators, and plan offerings outside of the Exchanges. Subsequent regulations for these programs including the final HHS Notice of Benefit and Payment Parameters for 2014 and the Program Integrity: Exchange, Premium Stabilization Programs, and Market Standards; Amendments to the HHS Notice of Benefit and Payment Parameters for 2014, and the final HHS Notice of Benefit and Payment Parameters for 2015 provide further reporting requirements. Comments are due August 27, 2014.
• On July 30, 2014, AHRQ issued a request for Office of Management and Budget (OMB) approval for the following information collection project: “Care Coordination Quality Measure for Patients in the Primary Care Setting.” The project will develop a patient survey of the quality of care coordination for adults in primary care settings, i.e., the Care Coordination Quality Measure for Primary Care (CCQM-PC). The project will update the Care Coordination Measures Atlas, available here. In combination with primary research, the project will use the Atlas and prior work that identified gaps in the measurement of care coordination to develop and pilot test a rigorous and psychometrically sound patient assessment (from the perspective of patient and family) of the quality of care coordination for adults within primary care settings. Comments are due September 29, 2014.
• On July 31, 2014, FDA unveiled a preliminary risk-based plan for regulating laboratory-developed tests (LDTs). The Food and Drug Administration Safety and Innovation Act (FDASIA) requires that FDA notify Congress of its intent to issue the draft guidance, entitled “Framework/or Regulatory Oversight of Laboratory Developed Tests (LDTs)” and an accompanying draft guidance document entitled “FDA Notification and Medical Device Reporting for Laborato1y Developed Tests (LDTs)”. The draft Framework Guidance proposes a risk-based, phased-in framework for oversight of LDTs in a manner that is consistent with FDA's current regulation of in vitro diagnostic devices. The accompanying draft guidance describes the manner in which laboratories may provide notification and comply with medical device adverse event reporting. Specifically, this document describes FDA’s priorities for enforcing premarket and postmarket requirements for LDTs as well as the process by which FDA intends to phase in enforcement of FDA regulatory requirements for LDTs over time.
• On July 31, 2014, the Department of Health and Human Services (HHS) issued a rule entitled “Administrative Simplification: Change to the Compliance Date for the International Classification of Diseases, 10th Revision (ICD–10–CM and ICD-10-PCS) Medical Data Code Sets”. The rule finalizes Oct. 1, 2015 as the new compliance date for health care providers, health plans, and health care clearinghouses to transition to ICD-10, the tenth revision of the International Classification of Diseases. According to a CMS press release, the deadline “…allows providers, insurance companies and others in the health care industry time to ramp up their operations to ensure their systems and business processes are ready to go on Oct. 1, 2015.” The rule was filed July 31, 2014, and is scheduled to be published in the Federal Register on August 4, 2014.
• On July 31, 2014, CMS released a final rule entitled “Medicare Program; Inpatient Psychiatric Facilities Prospective Payment System - Update for Fiscal Year Beginning October 1, 2014 (FY 2015)”. This final rule will update the prospective payment rates for Medicare inpatient hospital services provided by inpatient psychiatric facilities (IPFs). These changes will be applicable to IPF discharges occurring during the fiscal year (FY) beginning October 1, 2014 through September 30, 2015. This final rule will also address implementation of ICD-10-CM and ICD-10-PCS codes; finalize a new methodology for updating the cost of living adjustment (COLA), and finalize new quality measures and reporting requirements under the IPF quality reporting program. Under the final rule, payments to IPFs are estimated to increase by 2.5 percent compared to FY 2014. The rule was filed July 31, 2014, and is scheduled to be published in the Federal Register on August 6, 2014. A CMS fact sheet on the rule may be found here.
• On July 31, 2014, CMS released a final rule entitled “Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2015”. This final rule updates the prospective payment rates for inpatient rehabilitation facilities (IRFs) for federal fiscal year (FY) 2015 as required by the statute. This final rule finalizes a policy to collect data on the amount and mode (that is, Individual, Concurrent, Group, and Co-Treatment) of therapy provided in the IRF setting according to therapy discipline, revises the list of diagnosis and impairment group codes that presumptively meet the “60 percent rule” compliance criteria, provides a way for IRFs to indicate on the Inpatient Rehabilitation Facility-Patient Assessment Instrument (IRF-PAI) form whether the prior treatment and severity requirements have been met for arthritis cases to presumptively meet the “60 percent rule” compliance criteria, and revises and updates quality measures and reporting requirements under the IRF quality reporting program (QRP). This rule also delays the effective date for the revisions to the list of diagnosis codes that are used to determine presumptive compliance under the “60 percent rule” that were finalized in FY 2014 IRF PPS final rule and adopts the revisions to the list of diagnosis codes that are used to determine presumptive compliance under the “60 percent rule” that are finalized in this rule. This final rule also addresses the implementation of the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM), for the IRF prospective payment system (PPS), which will be effective when ICD-10-CM becomes the required medical data code set for use on Medicare claims and IRF-PAI submissions. CMS estimates that aggregate payments to IRFs will increase in FY 2015 by $180 million, or 2.4 percent, relative to payments in FY 2014. This estimated increase is attributed to a 2.2 percent payment update, which includes a 2.9 percent market basket increase factor, reduced by a 0.5 percentage point multi-factor productivity adjustment and an additional 0.2 percentage point reduction as required by law. In addition, CMS will update the outlier threshold, increasing IRF PPS payments by an estimated 0.2 percent. The rule was filed July 31, 2014, and is scheduled to be published in the Federal Register on August 6, 2014. A CMS fact sheet on the rule may be found here.
• On July 31, 2014, CMS released a final rule entitled “Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2015”. This final rule updates the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs) for fiscal year (FY) 2015. In addition, it adopts the most recent OMB statistical area delineations to identify a facility’s urban or rural status for the purpose of determining which set of rate tables will apply to the facility, and to determine the SNF PPS wage index including a 1-year transition with a blended wage index for all providers for FY 2015. This final rule also contains a revision to policies related to the Change of Therapy (COT) Other Medicare Required Assessment (OMRA). This final rule includes a discussion of a provision related to the Affordable Care Act involving Civil Money Penalties. Finally, this final rule discusses the SNF therapy payment research currently underway within CMS, observed trends related to therapy utilization among SNF providers, and the agency’s commitment to accelerating health information exchange in SNFs. Based on changes contained within this final rule, CMS estimates that aggregate payments to SNFs will increase by $750 million, or 2.0 percent, from payments in FY 2014, which represents a higher update factor than the 1.3 percent update finalized for SNFs last year. This estimated increase is attributable to a 2.5 percent market basket increase, reduced by the 0.5 percentage point multifactor productivity adjustment required by law. The rule was filed July 31, 2014, and is scheduled to be published in the Federal Register on August 5, 2014. A CMS fact sheet on the rule may be found here.
• On August 1, 2014, CMS announced the extension of temporary moratoria on the enrollment of new ambulance suppliers and home health agencies (HHAs) in specific locations within designated metropolitan areas in Florida, Illinois, Michigan, Texas, Pennsylvania, and New Jersey to prevent and combat fraud, waste, and abuse. More information may be found here.
• On August 1, 2014, CMS issued a request to extend a currently approved collection entitled “Independent Rural Health Clinic/Freestanding Federally Qualified Health Center Cost Report”. The Form CMS-222-92 cost report is needed to determine the provider's reasonable costs incurred in furnishing medical services to Medicare beneficiaries and reimbursement due to or due from the provider. Comments are due September 2, 2014.
• On August 1, 2014, CMS issued a request to extend a currently approved collection entitled “State Medicaid HIT Plan, Planning Advance Planning Document, and Implementation Advance Planning Document for Section 4201 of the Recovery Act”. CMS is also requesting to reinstate without change a previously approved collection entitled “Letter Requesting Waiver of Medicare/Medicaid Enrollment Application Fee; Submission of Fingerprints; Submission of Medicaid Identifying Information; Medicaid Site Visit and Rescreening”. Comments are due September 30, 2014. More information may be found here.
• On August 1, 2014, FDA announced he rates for abbreviated new drug applications (ANDAs), prior approval supplements to an approved ANDA (PASs), drug master files (DMFs), generic drug active pharmaceutical ingredient (API) facilities, and finished dosage form (FDF) facilities user fees related to the Generic Drug User Fee Program for fiscal year (FY) 2015. The Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended by the Generic Drug User Fee Amendments of 2012 (GDUFA), authorizes FDA to assess and collect user fees for certain applications and supplements for human generic drug products, on applications in the backlog as of October 1, 2012 (only applicable to FY 2013), on FDF and API facilities, and on type II active pharmaceutical ingredient DMFs to be made available for reference. This document establishes the fee rates for FY 2015. More information may be found here.
• On August 1, 2014, FDA issued a proposed information collection entitled “Guidance for Industry: Fast Track Drug Development Programs: Designation, Development, and Application Review”. This notice solicits comments on the proposed collection of information concerning requests by sponsors of investigational new drugs and applicants for new drug or biologics licenses for fast track designation as provided in the Guidance for Industry on Fast Track Drug Development Programs: Designation, Development, and Application Review. Comments are due September 30, 2014.
• On August 1, 2014, FDA issued a proposed information collection entitled “Medical Device Labeling Regulations”. Section 502 of the Federal Food, Drug, and Cosmetic Act (the FD Act) (21 U.S.C. 352), among other things, establishes requirements for the label or labeling of a medical device so that it is not misbranded and subject to a regulatory action. Certain provisions under section 502 require manufacturers, importers, and distributors of medical devices to disclose information about themselves or the devices, on the labels or labeling for the devices. Section 502(b) of the FD&C Act requires that for packaged devices, the label must bear the name and place of business of the manufacturer, packer, or distributor as well as an accurate statement of the quantity of the contents. Section 502(f) of the FD&C Act requires that the labeling for a device must contain adequate directions for use. FDA regulations under parts 800, 801, and 809 (21 CFR parts 800, 801, and 809) require disclosure of specific information by manufacturers, importers, and distributors of medical devices about themselves or the devices, on the label or labeling for the devices to health professionals and consumers. Comments are due September 30, 2014.
• On August 1, 2014, FDA announced the rates for biosimilar user fees for fiscal year (FY) 2015. The Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended by the Biosimilar User Fee Act of 2012 (BsUFA), authorizes FDA to assess and collect user fees for certain activities in connection with biosimilar biological product development, certain applications and supplements for approval of biosimilar biological products, establishments where approved biosimilar biological product products are made, and biosimilar biological products after approval. BsUFA directs FDA to establish, before the beginning of each fiscal year, the initial and annual biosimilar biological product development (BPD) fees, the reactivation fee, and the biosimilar biological product application, establishment, and product fees. These fees are effective on October 1, 2014, and will remain in effect through September 30, 2015. More information may be found here.
• On August 1, 2014, FDA announced rates for fiscal year (FY) 2015 for the establishment and reinspection fees related to human drug compounding outsourcing facilities (outsourcing facilities) that elect to register under the Federal Food, Drug, and Cosmetic Act (the FD&C Act). The FD&C Act authorizes FDA to assess and collect an annual establishment fee from outsourcing facilities that have elected to register, as well as a reinspection fee for each reinspection of an outsourcing facility. This document establishes the FY 2015 rates for the small business establishment fee ($5,103), the non-small business establishment fee ($16,442) and the reinspection fee ($15,308) for outsourcing facilities, provides information on how the fees for FY 2015 were determined, and describes the payment procedures outsourcing facilities should follow. More information may be found here.
• On August 1, 2014, FDA announced the rates for prescription drug user fees for fiscal year (FY) 2015. The Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended by the Prescription Drug User Fee Amendments of 2012 (PDUFA V), authorizes FDA to collect user fees for certain applications for the review of human drug and biological products, on establishments where the products are made, and on such products. This notice establishes the fee rates for FY 2015. More information may be found here.
• On August 1, 2014, FDA announced the availability of the draft guidance entitled “Intent to Exempt Certain Class II and Class I Reserved Medical Devices from Premarket Notification Requirements.” This draft guidance describes FDA's intent to exempt certain Class II medical devices and certain Class I medical devices, subject to the reserved criteria, from premarket notification requirements. FDA believes devices identified in this guidance document are sufficiently well understood and do not present risks that require premarket notification review to assure their safety and effectiveness. Comments must be received by September 30, 2014, before the Agency begins work on final guidance. More information may be found here.
• On August 1, 2014, CMS solicited public comment on the agency’s intent to revise the charter for the Medicare Evidence Development & Coverage Advisory Committee (MEDCAC). The most substantial change the agency is proposing to the current Charter is the ability for CMS to broaden the use of the Representative role on MEDCAC. Under the proposed Charter, at-large members to MEDCAC (those not in special roles like the Chairs, industry representatives and patient advocates) will be able to elect to serve as either an Special Government Employee (SGE) or a Representative. The Representative is allowed to be informed by his/her supporting constituency prior to the meeting, in comparison to the SGE who represents only himself or herself. More information may be found here.

Event Notices

• September 4-5, 2014: FDA will host a meeting of the Nonprescription Drugs Advisory Committee on September 4th and 5th. The meeting will take place at FDA’s White Oak Campus in Silver Spring, Maryland. The committee will discuss the scope of safety testing that should be required for sunscreen active ingredients to be marketed in U.S. over-the-counter (OTC) sunscreen products. This discussion will take into consideration that sunscreens are typically used chronically in individuals over the age of 6 months to help prevent skin cancer and skin aging. The need for various types of safety data, including clinical data and nonclinical data, will be discussed. More information may be found here.
• September 18, 2014: FDA will host a meeting of the Cellular, Tissue and Gene Therapies Advisory Committee on September 18th from 1:00 PM to 4:00 PM in FDA’s White Oak Campus in Silver Spring, Maryland. In open session, the committee will hear updates of research programs in the Laboratory of Biochemistry, Division of Therapeutic Proteins, the Laboratory of Molecular Oncology and the Laboratory of Molecular and Developmental Immunology, Division of Monoclonal Antibodies, Office of Biotechnology Products, Office of Pharmaceutical Sciences, Center for Drug Evaluation and Research, FDA. Interested persons may present data, information, or views, orally or in writing, on issues pending before the committee. Written submissions may be made to the contact person on or before September 11, 2014. More information may be found here.

II. LEGISLATION & COMMITTEE ACTION

U.S. Senate

• On July 30, 2014, the Senate Special Aging Committee held a hearing entitled “Admitted or Not? The Impact of Medicare Observation Status on Seniors”. Witnesses for the hearing included Ann Sheehy, MD, Chief, Division Of Hospital Medicine, University of Wisconsin; Bob Armstrong, Vice President, Elder Care Services, St. Mary's Health System; Marna Parke Borgstrom, President And CEO, Yale New Haven Health System; and Sylvia Engler, Medicare Beneficiary. Toby Edelman of the Center for Medicare Advocacy accompanied Mrs. Engler. During the hearing Members and witnesses discussed the “two midnight” rule proposed by CMS. Under the controversial rule, Medicare will not reimburse providers under the Inpatient Prospective Payment System (IPPS) unless the physician ordering the inpatient admission certifies that the patient is expected to have a length-of-stay (LOS) that crosses two midnights at the time of admission. For IPPS claims where the LOS spanned less than two midnights and there is not sufficient evidence to support a physician’s expectation of a two midnight LOS, the hospital is required to re-bill the claim as outpatient services payable at Outpatient Prospective Payment System (OPPS) reimbursement levels. Hearing participants also discussed the CMS “three day rule” under which Medicare fee-for-service (FFS) beneficiaries are required to spend three nights in a hospital before being eligible for post-acute care services under Medicare Part A. More information may be found here.
• On July 31, 2014, the Senate completed action on HR 3230, the Veterans' Access to Care through Choice, Accountability, and Transparency Act of 2014, following House passage of the bill the day before. The measure would appropriate $15 billion to increase veterans’ access to health care by expanding the use of care provided by entities other than the Department of Veterans Affairs (VA); to improve the department's infrastructure; to hire medical staff; and to extend the Health Professionals Educational Assistance Program. The Act would also authorize VA to enter into a number of leases for medical facilities and would modify a number of veterans’ benefits programs. The Congressional Budget Office (CBO) cost estimate may be accessed here. On Tuesday, the Senate confirmed former Procter & Gamble CEO Robert McDonald as VA Secretary, to replace former Secretary Eric Shinseki following a series of allegations that VA patient records had been falsified, leading to shortfalls in care.

House of Representatives

• On July 28, 2014, the House passed the Sunscreen Innovation Act (HR 4250) by a voice vote. The bill sets up a system under which sunscreens that have been marketed continuously for at least five years in the United States or elsewhere, and that meet certain other conditions, would be eligible for review by an FDA advisory committee. After the advisory committee issued its recommendation, FDA would have 45 days to affirm or deny the recommendation. If FDA did not deny an approval recommendation within 45 days, the sunscreen would automatically be approved as generally recognized as safe and effective. The bill also provides an appeals process for situations in which the company disagreed with the FDA determination. The House bill is sponsored by Reps. Ed Whitfield (R-KY) and John Dingell (D-MI). Senators Jack Reed (D-RI) and Johnny Isakson (R-GA) sponsored the Senate version.
• On July 28, 2014, the House Energy and Commerce Health Subcommittee held a hearing entitled “Protecting Americans from Illegal Bailouts and Plan Cancellations Under the President’s Health Care Law”. Witnesses for the hearing included Edmund Haislmaier, Senior Research Fellow, Heritage Foundation; Stan Veuger Resident Scholar, American Enterprise Institute; and John Hoadley Research Professor, Georgetown University. During the hearing the following pieces of legislation were considered: H.R. 4406, Taxpayer Bailout Protection Act: The bill amends the Affordable Care Act (ACA) risk corridor program to require the Department of Health and Human Services (HHS) to ensure that the amount of payments to plans for a plan year beginning during calendar years 2014 through 2016 does not exceed the amount of payments to the Secretary for such plan year; H.R. 5175, Stop Illegal Payments to Health Insurers Act: The bill amends the ACA to repeal the risk corridor program; and H.R. 3522, Employee Health Care Protection Act: The bill would allow health insurance issuers to continue to offer group coverage that was in effect during 2013. More information may be found here.
• On July 28, 2014, the House Energy and Commerce Health Subcommittee held a markup to consider patient care bills: HR 4067 — A bill to provide for the extension of the enforcement instruction on supervision requirements for outpatient therapeutic services in critical access and small rural hospitals through 2014; and Draft Bill — a bill to require the Secretary of Health and Human Services to provide for recommendations for the development and use of clinical data registries for the improvement of patient care. More information may be found here.
• On July 29, 2014, the House Oversight and Government Reform Subcommittee on Energy Policy, Health Care and Entitlements held a hearing entitled “Examining the Federal Government’s Failure to Curb Wasteful State Medicaid Financing Schemes”. Witnesses for the hearing included Ms. Katherine M. Irtani, Director, Health Care, Government Accountability Office (GAO); Mr. John Haag, Director of Medicaid Audits, U.S. Department of Health and Human Services (HHS); and Ms. Cindy Mann, Deputy Administrator and Director, CMS. During the hearing Irtani highlighted results from a report issued on Tuesday (GAO-14-627) which found that states’ reliance on funds from health care providers and local governments to finance Medicaid has increased in recent years, with implications for federal costs. More information may be found here.
• On July 29, 2014, the House Energy and Commerce Subcommittee on Commerce, Manufacturing, and Trade held a hearing entitled “Nanotechnology: Understanding How Small Solutions Drive Big Innovation”. Witnesses for the hearing included James M. Tour, Ph.D., T.T. and W.F. Chao Professor of Chemistry, Professor of Computer Science, Materials Science and Nanoengineering, Smalley Institute for Nanoscale Science and Technology, Rice University; Christian Binek, Ph. D., Associate Professor, Physics and Astronomy, University of Nebraska – Lincoln; Milan Mrksich, Ph. D., Henry Wade Rogers Professor of Biomedical Engineering, Chemistry and Cell and Molecular Biology, Northwestern University; Jim Phillips, Chairman and CEO, NanoMech, Incorporated. More information may be found here.
• On Tuesday July 29 and Wednesday July 30, 2014, the House Energy and Commerce Committee held a markup to consider pending legislation: HR 3522 — Employee Health Care Protection Act of 2013; HR 4701 — Vector-Borne Disease Research Accountability and Transparency Act; HR 4067 — A bill to provide for the extension of the enforcement instruction on supervision requirements for outpatient therapeutic services in critical access and small rural hospitals through 2014; Draft Bill — a bill to require the Secretary of Health and Human Services to provide for recommendations for the development and use of clinical data registries for the improvement of patient care; HR 3670 — Anti-Spoofing Act of 2013; HR 5161 — Enhance Labeling, Accessing, and Branding of Electronic Licenses Act; and HR 1575 — Kelsey Smith Act. More information may be found here.
• On July 30, 2014, the House passed two bipartisan bills by voice vote: the Ensuring Patient Access and Effective Drug Enforcement Act of 2014 (HR 4709), and the Paul D. Wellstone Muscular Dystrophy Community Assistance, Research and Education Amendments of 2014 (HR 594).
• On July 31, 2014, the House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing entitled “PPACA Implementation: Updates from CMS and GAO”. Witnesses for the hearing included Andy Slavitt, Principal Deputy Administrator at CMS; and William Woods, Director of Acquisition and Sourcing Management at GAO. During the hearing Woods testified that GAO is conducting a body of work to investigate the development, launch and “other issues” associated with the FFE, including a report released yesterday that focuses on CMS acquisition planning activities; CMS oversight of cost, schedule, and system capability changes; and actions taken by CMS to identify and address contractor performance issues. He explained that GAO selected two task orders and one contract to review. He said GAO’s investigation found that CMS undertook the development of HealthCare.gov and its related systems without effective planning or oversight practices despite facing a number of challenges that increased both the level of risk and the need for effective oversight. More information may be found here.
• On July 31, 2014, the House Committee on Small Business Subcommittee on Health and Technology held a hearing entitled “Telemedicine: A Prescription for Small Medical Practices?” Witnesses for the hearing included Dr. Karen Rheuban, Senior Associate Dean for CME and External Affairs Director, University of Virginia Center for Telehealth, University of Virginia; Dr. Megan McHugh, Research Assistant Professor, Director, Program in Healthcare Policy and Implementation, Center for Healthcare Studies, Institute for Public Health and Medicine and Department of Emergency Medicine, Northwestern University; Ms. Maggie Basgall, Community Development Specialist, Nex-Tech, testifying on behalf of the Rural Broadband Association; and Dr. Brenda Dintiman, FAAD, Fair Oaks Skin Care Center, testifying on behalf of the American Academy of Dermatology. More information may be found here.
• On July 31, 2014, House Energy and Commerce Ranking Member Henry Waxman (D-CA) and Health Subcommittee Ranking Member Frank Pallone (D-NJ) introduced a bill to extend funding for the federal-state Children’s Health Insurance Program (CHIP). The bill would extend federal CHIP funding for four years. Unless Congress acts first, CHIP funding will end on October 1, 2015. In a press release, Energy and Commerce minority staff point to a study released Tuesday (available here) which shows that CHIP offers more coverage of child-specific care than Marketplace plans, with lower out-of-pocket costs.

III. REPORTS, STUDIES, & ANALYSES

• On Monday July 28, 2014, Medicare Trustees projected that the trust fund that finances Medicare’s hospital insurance coverage will remain solvent until 2030, four years beyond what was projected in last year’s report. A number of factors have contributed to the improved outlook, including lower-than-expected spending in 2013, and lower projected utilization in the types of health care needed by Medicare patients. During the past four years, per capita Medicare spending growth has averaged 0.8 percent annually, much more slowly than the average 3.1 percent annual increase in per capita GDP and national health expenditures over the same period. “The Medicare Hospital Insurance trust fund is projected to be solvent for longer, which is good news for beneficiaries and taxpayers,” said Marilyn Tavenner, CMS Administrator. “Thanks to the Affordable Care Act, we are taking important steps to improve the quality of care for Medicare beneficiaries, while improving Medicare’s long-term solvency. Specifically, we have made major progress in improving patient safety, decreasing hospital readmissions, and establishing new payment models such as accountable care organizations aimed at reducing costs and improving quality. These reforms slow the rise in health care spending while improving the quality of care for beneficiaries.”
• On July 29, 2014, the Institute of Medicine (IOM) released a report entitled “Graduate Medical Education That Meets the Nation’s Health Needs: Recommendations, Goals, and Next Steps”. IOM recommendations issued in the report include: 1) maintain Medicare graduate medical education (GME) support at the current aggregate amount while taking steps to modernize GME payment methods; 2) build a GME policy and financing infrastructure; 3) create one Medicare GME fund with two subsidiary funds; 4) modernize GME payment methodology; and 5) allow GME funding to remain at the state’s discretion.
• On July 30, 2014, the Healthcare Leadership Council released the results of a nationwide survey of adults age 65 and older which finds that nearly nine of ten seniors are satisfied with their Medicare Part D prescription drug coverage. Seventy-five percent of respondents said it is important to them to have a variety of plans from which to choose, and 74 percent said they would be concerned about any moves to limit those choices. Other key findings in the survey include: 86 percent of seniors say their Part D co-pays are affordable, with 85 percent saying the same of their monthly premiums; two in three seniors (67 percent) say without Part D they would be unable to fill all of the prescriptions their doctors prescribe; 68 percent say they are better off today than they were before they had Part D coverage and 71 percent have greater peace of mind because of their drug coverage; 27 percent are aware of Medicare’s current ratings system for assessing plan quality; and only 38 percent are aware there are Medicare counselors in their state they can contact for assistance.
• On July 30, 2014, the Congressional Budget Office (CBO) released a report entitled “Competition and the Cost of Medicare’s Prescription Drug Program”. Using the first few years of data from the Medicare Part D program, CBO found that spending was lower in years when, and in areas of the country where, more plan sponsors competed for beneficiaries. CBO's analysis suggests that competition between plan sponsors in Part D could be strengthened further, and costs lowered further, through certain changes in the rules of the program, although such changes could have disadvantages as well. CBO also found that Medicaid pays lower prices than Medicare, on average, for the mix of prescription drugs purchased by Medicare enrollees, primarily because the rebates that the law requires on brand-name drugs under Medicaid are larger than the ones that plan sponsors negotiate with manufacturers under Part D. If policymakers implemented Medicaid's statutory rebates for Part D beneficiaries with low income, but otherwise left Part D unchanged, CBO finds that federal costs would be reduced substantially in the short term. However, firms would respond by charging higher prices before rebates for new drugs (thereby probably offsetting a substantial portion of the savings for the federal government over the longer term) and by curtailing drug innovation.

IV. OTHER HEALTH POLICY NEWS

• On July 29, 2014, the Patient-Centered Outcomes Research Institute (PCORI) announced that it had awarded $54.8 million to support 33 new comparative clinical effectiveness studies based at institutions and organizations in 18 states. More information on the awards may be found here.
• On July 31, 2014, Covered California Executive Director Peter Lee announced that most consumers in California’s state-based Exchange will see low increases in their insurance premiums in the coming year. The statewide weighted average came in at 4.2 percent, with some plans offering weighted average rates that are 8.5 percent lower than current pricing. “This is good news for Californians and an example of how Covered California and the Affordable Care Act are working to make health insurance affordable,” said Lee. “As we move into our second open enrollment and first renewal for many Californians, we are glad to see consumers have a real choice, with affordable options in all regions.” Lee also announced that a total of ten health plans will participate in the state’s Exchange in 2015, all of which participated last year.
• On July 31, 2014, CMS projected that the average premium for a basic Medicare Part D prescription drug plan in 2015 will increase by about $1, to an estimated $32 per month, continuing its historically low growth rate. For the last four years – for plan years 2011, 2012, 2013, and 2014 – the average premium for a Medicare Part D basic plan has been $30 or $31. Yesterday’s projection for the average premium for 2015 is based on bids submitted by drug and health plans for basic drug coverage for the 2015 benefit year, and calculated by the Centers for Medicare & Medicaid Services Office of the Actuary. The Part D Base Beneficiary Premium, the Part D National Average Monthly Bid Amount, the Part D Regional Low-Income Premium Subsidy Amounts, the De Minimis Amount, and the Medicare Advantage Regional Benchmarks may be found here.
• On August 1, 2014, the Obama Administration filed a petition for en banc in the US Court of Appeals for the DC Circuit, hoping to overturn the three-judge panel’s decision in Halbig v. Burwell. Last week the court found that the that the Internal Revenue Service (IRS) Rule implementing the ACA tax credit provision is invalid. The Court held that IRS interpretation of statute—which made tax credits available to individuals purchasing health plans on both state and federally established Health Insurance Exchanges—was contrary to the language in 26 U.S.C. § 36B(b)(2), which requires the IRS to calculate tax credits for premiums for qualified health plans (QHPs) “which were enrolled in through an Exchange established by the State”. Several hours after the D.C. Circuit issued Halbig, the U.S. Court of Appeals for the Fourth Circuit reached the exact opposite result in King v. Burwell. The Fourth Circuit upheld the IRS Rule by finding that § 36B(b)(2) is ambiguous and then deferring to the IRS’s reading of the statutory language as a permissible exercise of agency discretion. On Thursday, the King plaintiffs petitioned the US Supreme Court to review the case.

This advisory is published by Alston & Bird LLP’s Health Care practice area to provide a summary of significant developments to our clients and friends. It is intended to be informational and does not constitute legal advice regarding any specific situation. This material may also be considered attorney advertising under court rules of certain jurisdictions.