A&B Healthcare Week in Review, September 20, 2014

I. REGULATIONS, NOTICES, & GUIDANCE

• On September 17, 2014, the Food and Drug Administration (FDA) announced the availability of a draft guidance for industry entitled “ANDA Submissions—Refuse to Receive for Lack of Proper Justification of Impurity Limits.” This draft guidance is intended to assist applicants preparing to submit to FDA abbreviated new drug applications (ANDAs) and related submissions (i.e., prior approval supplements) for which the applicant is seeking approval of a new strength of the drug product. The draft guidance highlights deficiencies about impurity information that may cause FDA to refuse to receive an ANDA. Comments on the draft guidance must be received by November 17, 2014. More information may be found here.
• On September 17, 2014, FDA announced the availability of a guidance for industry entitled “ANDA Submissions—Refuse-to-Receive Standards.” This document finalizes the draft guidance with the same name that published on October 1, 2013. This guidance is intended to assist applicants preparing to submit to FDA abbreviated new drug applications (ANDAs) and related submissions (i.e., prior approval supplements for new strengths). The guidance represents the FDA's current thinking regarding the types of serious deficiencies that may cause FDA to refuse-to-receive the submission. More information may be found here.
• On September 17, 2014, FDA announced that a proposed information collection entitled “Application for Food and Drug Administration Approval To Market a New Drug” had been submitted to OMB for review and clearance. Comments on the proposed collection are due October 17, 2014.
• On September 18, 2014, the Internal Revenue Service (IRS) released final regulations entitled “The $500,000 Deduction Limitation for Remuneration Provided by Certain Health Insurance Providers”. This document contains final regulations on the application of the $500,000 deduction limitation for remuneration provided by certain health insurance providers under section 162(m)(6) of the Internal Revenue Code. These regulations affect certain health insurance providers providing remuneration that exceeds the deduction limitation.
• On September 19, 2014, the Centers for Medicare and Medicaid Services (CMS) announced an opportunity for the public to comment on several information collection requests that have been submitted to OMB for review. They are entitled: 1) Solicitation for Applications for Medicare Prescription Drug Plan 2015 Contracts; 2) Medicare Part C and Part D Data Validation; 3) Medicare Ombudsman Customer Service Feedback Survey; and 4) State Plan Preprint for Medicaid Recovery Audit Contractors (RACs). Comments are due October 20, 2014. More information may be found here.

Event Notices

• December 10th & 11th, 2014: The FDA Center for Tobacco Products will hold a public workshop to obtain information on electronic cigarettes and the public health. The workshop will include presentations and panel discussions about the current state of the science, and will focus on product science, packaging, constituent labeling, and environmental impacts. FDA intends to follow this workshop with two additional electronic cigarette workshops, with one on individual health effects and one on population health effects. The public workshop will be held on December 10, 2014, from 8 a.m. to 5 p.m. and on December 11, 2014, from 8:30 a.m. to 3:30 p.m. Individuals who wish to attend the public workshop must register by November 25, 2014. More information may be found here.

II. LEGISLATION & COMMITTEE ACTION

U.S. Senate

• On September 16, 2014, the Senate Special Aging Committee held a roundtable discussion entitled “Harnessing the Power of Telehealth: Promises and Challenges?" Participants included Steve R. Ommen, Director, Cardiomyopathy Clinic, Mayo Clinic, And Professor, Mayo Clinic College of Medicine; Neal Neuberger, Executive Director, Institute for e-Health Policy; Craig Silliman, Senior Vice President, Public Policy And Government Affairs, Verizon Communications; Ralph Sacco, MD, Chairman, Department Of Neurology, University Of Miami Miller School Of Medicine, And Former President, American Heart Association; Katheren Koehn, MA, RN, Member, American Nurses Association, And Executive Director, Minnesota Organization of Registered Nurses; Gail Gibson Hunt, President And CEO, National Alliance for Caregiving; Alice Borrelli, Director Of Global Healthcare Policy, Intel Corporation; Jack Resneck, Jr., MD, Member, American Medical Association Board Of Trustees, And Vice Chair, Department Of Dermatology, University of California, San Francisco; Andrew I. Gavil, Director, Office Of Policy Planning, Federal Trade Commission; Matthew Quinn, MBA, Director Of Healthcare Initiatives, Federal Communications Commission; and Marc Hartstein, Director, Hospital And Ambulatory Policy Group, CMS. More information on the roundtable may be found here.
• On September 16, 2014, the Senate Finance Subcommittee on Health held a hearing entitled “The Children's Health Insurance Program [CHIP]: Protecting America's Children and Families”. Witnesses included: Bruce D. Lesley, president, First Focus; James M. Perrin, president, American Academy of Pediatrics, Elk Grove Village, Ill.; Cathy Caldwell, director, Bureau of Children's Health Insurance, Alabama Department of Public Health, Montgomery, Ala.; and Douglas Holtz-Eakin, president, American Action Forum. More information may be found here.
• On September 17, 2014, the Senate advanced the Sunscreen Innovation Act, which would streamline FDA’s sunscreen ingredient review process. The measure passed the House in July, and now heads to the White House for President Obama’s consideration.

House of Representatives

• On September 15, 2014, House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Senate Finance Committee Ranking Member Orrin Hatch (R-UT), sent CMS Administrator Marilyn Tavenner a letter asking for clarification regarding CMS’ issuance of a Medicaid expansion waiver to Arkansas. The lawmakers cite a recent Government Accountability Office (GAO) report which suggests that the expansion was not budget neutral and raises potential cost concerns. In approving Arkansas’s Medicaid Section 1115 demonstration, the Department of Health and Human Services (HHS) allowed Arkansas to test whether using premium assistance to purchase coverage offered on the Exchange will, among other things, improve access to care for individuals newly eligible under the ACA. Specifically, under the demonstration, HHS approved Arkansas to receive federal Medicaid funds to purchase private coverage offered on the Exchange for individuals newly eligible for Medicaid and required the state to pay directly for any services covered under its traditional Medicaid program that are not covered by Exchange plans. GAO reports that in approving the demonstration, HHS did not ensure budget neutrality. HHS approved a spending limit for the demonstration that was based, in part, on hypothetical costs—significantly higher payment amounts the state assumed it would have to make to providers if it expanded coverage under the traditional Medicaid program—without requesting any data to support the state’s assumptions. In their letter, the lawmakers write, “While we are supportive of states’ ability to use premium assistance programs to create innovative benefit designs for individuals to use premium assistance programs to create innovative benefit designs for individuals in their state, we also have a responsibility to ensure that federal dollars are accounted for in a transparent and accurate manner.”
• On September 17, 2014, the House passed a series of bills under suspension of the rules, including:
  • HR 4994, the Improving Medicare Post-Acute Care Transformation (IMPACT) Act, which would, among other provisions, require post-acute care (PAC) providers to report interoperable, standardized patient assessment data, data on quality measures, and data on resource use. The IMPACT Act also strengthens Medicare’s oversight of hospice care. The measure cleared the Senate on Wednesday. The legislation that now goes to the White House is largely a product of a discussion draft in March that was shaped by input the lawmakers received from the post-acute care community.
  • S. 2154, the Emergency Medical Services for Children Reauthorization Act of 2014, which reauthorizes the Emergency Medical Services for Children Program through FY2019. The bill, passed by the Senate last week, was signed into law by President Obama on September 18th.
• On September 17, 2014, the House Ways and Means Subcommittee on Select Revenue Measures held a hearing on private employer defined benefit pension plans. The hearing focused on some of the challenges facing employers, employees, and retirees who rely on defined benefit pension plans to help provide retirement security. It examined the funding rules governing multiemployer plans, as well as selected issues that affect single employer plans. Witnesses included Deborah Tully, Director of Compensation and Benefits Finance and Accounting Analysis, Raytheon; R. Dale Hall, Managing Director of Research, Society of Actuaries; Scott Henderson, Vice President of Pension Investment and Strategy, The Kroger Co.; Jeremy Gold, FSA, MAAA, Jeremy Gold Pensions; Diane Oakley, Executive Director, National Institute on Retirement Security. More information may be found here.
• On September 18, 2014, the House Oversight and Government Reform Committee convened a hearing entitled “Examining ObamaCare’s Failures in Security, Accountability, and Transparency”. Witnesses for the hearing included Marilyn Tavenner, Administrator, CMS; Ann Barron-DiCamillo, Director, US Computer Emergency Readiness Team (CERT), US Department of Homeland Security (DHS); and Mr. Greg Wilshusen, Director, Information Security Issues, GAO. In early September, the Obama Administration announced that a portion of HealthCare.gov—the health plan compare and enrollment website associated with the Federally-Facilitated Health Insurance Exchanges (FFEs) established under the Affordable Care Act (ACA)—had been breached. Administration officials insisted that no data was stolen and no personal information was compromised during the breach. During Thursday’s hearing witnesses and Members discussed the breach, as well as a GAO report released this week entitled “Actions Needed to Address Weaknesses in Information Security and Privacy Controls”. More information on the hearing may be found here. Also of note, the previous day a bicameral group of Republican lawmakers issued a letter to Administrator Tavenner seeking further details on HealthCare.gov security in light of the GAO report.
• On September 19, 2014, the House Energy and Commerce Subcommittee on Health convened a 21st Century Cures hearing entitled “Examining Ways to Combat Antibiotic Resistance and Foster New Drug Development”. The sole witness for Panel I was Dr. Janet Woodcock, Director of the Center for Drug Evaluation and Research (CDER) at the Food and Drug Administration (FDA). Witnesses for Panel II included Dr. Kenneth J. Hillan, Chief Executive Officer, Achaogen, Inc.; Dr. Barbara E. Murray, President, Infectious Diseases Society of America (IDSA); Mr. Kevin Outterson, Professor of Law, Boston University School of Law; Dr. Adrian Thomas Vice President, Global Market Access and Public Health, Janssen Global Services, LLC; Mr. Allan Coukell, Director, Medical Programs, Pew Health Group, The Pew Charitable Trusts; and Dr. John H. Powers, Assistant Clinical Professor of Medicine, George Washington University School of Medicine. More information may be found here. Also this week, the White House released a Presidential Executive Order regarding efforts to combat antibiotic-resistant bacteria. One component of the order calls on FDA, in coordination with the Department of Agriculture, to continue taking steps to eliminate the use of medically important classes of antibiotics for growth promotion in animals. The order coincided with the release of a President’s Council of Advisors on Science and Technology (PCAST) report to the President entitled “Combating Antibiotic Resistance”, as well as a National Strategy on Combating Antibiotic Resistant Bacteria.

III. REPORTS, STUDIES, & ANALYSES

• On September 16, 2014, the Office of Inspector General (OIG) released a report entitled “Medicare Part B Prescription Drug Dispensing and Supplying Fee Payment Rates are Considerably Higher Than the Rates Paid by Other Government Programs”. The Inspector General calculated quarterly average dispensing fee payment amounts for Part D and State Medicaid programs and compared them with Part B dispensing and supplying fees. OIG determined that Part B would have saved millions of dollars in 2011 if dispensing and supplying fees had been aligned with the rates that Part D and State Medicaid programs paid.
• On September 17, 2014, the Institute of Medicine (IOM) released a report entitled “Dying in America: Improving Quality and Honoring Individual Preferences Near the End of Life”. The report finds that improving the quality and availability of medical and social services for patients and their families could not only enhance quality of life through the end of life, but may also contribute to a more sustainable care system. The document provides a comprehensive assessment of the knowledge gaps, structural problems, and financial disincentives that hamper delivery of optimal care, and makes cross-sectoral recommendations.
• On September 18, 2014, Avalere Health released the results of an initial analysis on the current Medicare landscape. The report highlights the continued impact of payment reforms imposed by the ACA on MA plans, as well as the growing use of low-cost PDPs with preferred pharmacy networks. More information may be found here.
• On September 19, 2014, HHS released the Department’s Rate Review Annual Report. This is the third Rate Review Annual Report issued by HHS. It is based on data for calendar year (CY) 2013 submitted by states receiving rate review grants, supplemented by data that are available on these states’ websites, and state website data for several non-grantee states. This report uses an analysis of data from 40 states in the individual market and 37 states in the small group market to estimate the impact of the Rate Review Program and the Rate Review Grant Program on premiums in the individual and small group markets. HHS’ findings suggest that rate review reduced total premiums by an estimated $290 million in the individual market for all states, and reduced total premiums by an estimated $703 million in the small group market for all states.
• On September 19, 2014, OIG released a report entitled “Manufacturer Safeguards May Not Prevent Copayment Coupon Use for Part D Drugs”. OIG analysts surveyed 30 manufacturers of the top 100 Part D brand-name drugs with coupons and with the highest Medicare expenditures in order to identify the safeguards pharmaceutical manufacturers employ to prevent their copayment coupons from being used for drugs paid for by Part D, and to identify vulnerabilities in those safeguards. The report finds that pharmaceutical manufacturers’ current safeguards may not prevent all copayment coupons from being used for drugs paid for by Part D. OIG reports that all surveyed manufacturers provide notices directed to beneficiaries and pharmacists that coupons may not be used in Federal health care programs. Most surveyed manufacturers use pharmacy claims edits to prevent coupons from being processed for drugs covered by Part D. Most of these edits may not prevent all coupons from being processed for Part D-covered drugs. Finally, Part D plans and other entities cannot identify coupons within pharmacy claims. OIG recommended that CMS should cooperate with industry stakeholder efforts to improve the reliability of pharmacy claims edits and make coupons transparent. OIG also released an accompanying Special Advisory Bulletin this week providing more information for stakeholders.

IV. OTHER HEALTH POLICY NEWS

• On September 18th and 19th, the Medicaid and CHIP Payment and Access Commission (MACPAC) convened a series of meetings in Washington, DC. The agenda included sessions on Medicaid expansions via premium assistance; an update on Medicaid and CHIP enrollment in 2014; and the future of CHIP. More information may be found here.
• Last month CMS announced that the Federal Health Insurance Marketplace had issued notices to approximately 310,000 consumers with citizenship or immigration data matching issues who had not responded to previous notices via mail, email, or phone. The agency noted that if these consumers did not submit supporting documentation to establish their citizenship status by September 5, 2014, their Marketplace coverage would be terminated within the month. On Monday, CMS released an update indicating that the agency has received “hundreds of thousands of documents” in response to the September 5th deadline, resulting in a reduction in the number of individuals with citizenship or immigration data matching issues to 115,000. The announcement indicates that if these remaining individuals submit information confirming their eligibility after the deadline, they may still be eligible for a Special Enrollment Period. CMS also provided an update regarding the agency’s efforts to address income-related data-matching issues. The agency announced that of the 1.2 million households with income-related matching issues identified on May 30, 2014, approximately 467,000 household income data-matching issues have been closed and an additional 430,000 are currently in the process of being resolved. There are still about 279,000 households with unresolved income-related data-matching issues that haven’t sent in supporting information, representing 363,000 individuals. If these consumers do not submit supporting documents by September 30th, CMS explains, they “may see their costs change”.
• On September 16, 2014, CMS issued updated quality and financial performance results on Medicare Accountable Care Organizations (ACOs). CMS’ data shows that during the second performance year, Pioneer ACOs generated estimated total model savings of over $96 million and at the same time qualified for shared savings payments of $68 million, and saved the Medicare Trust Fund approximately $41 million. The mean quality score among Pioneer ACOs increased by 19 percent, from 71.8 percent in 2012 to 85.2 percent in 2013. Of the 220 ACOs in the Medicare Shared Savings Program, 53 earned bonuses and another 52 reduced Medicare costs but not by enough to share in savings. Since passage of the ACA, more than 360 Medicare ACOs have been established in 47 states, serving over 5.6 million Medicare beneficiaries. More information on the results may be found here.
• On September 18, 2014, CMS released data demonstrating that Medicare Advantage (MA) enrollment is at an all-time high. The figures show that the average MA premium submitted by health plans for 2015 would increase by $2.94 next year, to $33.90 per month. However, CMS estimates the actual 2015 MA average premium will increase by only $1.30, as more beneficiaries elect to enroll in lower cost plans. The vast majority of MA enrollees will face little or no premium increase for next year with 61 percent of beneficiaries not seeing any premium increase at all. The agency reports that approximately 40 percent of MA contracts will receive four or more stars for 2015, an increase of around 6 percent from 2014. About 60 percent of MA enrollees are currently enrolled in plans with four or more stars for 2015, an increase of approximately 31 percent compared to the percentage in four or five star plans based on 2012 ratings.

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.