A&B Healthcare Week in Review, November 8, 2014

I. REGULATIONS, NOTICES, & GUIDANCE

• On November 4, 2014, the Internal Revenue Service (IRS) released guidance entitled “Notice 2014-69:Group Health Plans that Fail to Cover In-Patient Hospitalization Services”. The Department of Health and Human Services (HHS) and the Department of the Treasury (including the Internal Revenue Service) have become aware that certain group health plan benefit designs that do not provide coverage for in-patient hospitalization services are being promoted to employers. The guidance states that HHS intends to promptly propose amending 45 CFR 156.145 to provide that a plan will not provide minimum value (MV) if it excludes substantial coverage for in-patient hospitalization services or physician services (or both). Treasury and the IRS intend to issue proposed regulations that apply these proposed HHS regulations. Accordingly, under the HHS and Treasury regulations, an employer will not be permitted to use the MV Calculator (or any actuarial certification or valuation) to demonstrate that a Non-Hospital/Non-Physician Services Plan provides minimum value. It is anticipated that the proposed changes to regulations will be finalized in 2015 and will apply to plans other than Pre-November 4, 2014 Non-Hospital/Non-Physician Services Plans on the date they become final, rather than being delayed to the end of 2015 or the end of the 2015 plan year.
• On November 5, 2014, the HHS Office of Medicare Hearings and Appeals (OMHA) released a request for information entitled “Administrative Law Judge Hearing Program for Medicare Claim Appeals”. This request for information solicits suggestions for addressing the substantial growth in the number of requests for hearing being filed with OMHA, and backlog of pending cases. In recent years, OMHA has experienced a significant and sustained increase in appeals workload that has compromised its ability to meet its 90-day adjudication time frame. In addition to the expanding Medicare beneficiary population and utilization of services across that population, the increase in appeals workload has resulted from a number of changes in the Medicare claim review and appeals processes in recent years. OMHA is seeking input from the public on the current initiatives being undertaken at the Administrative Law Judge level, as well as suggestions for additional initiatives which could be undertaken at OMHA to address the Medicare claim and entitlement appeals workload and backlog at the Administrative Law Judge level. Responses must be received by 5:00 PM on December 5, 2014.
• On November 6, 2014, the Department of Labor released “Technical Guidance on State Regulation of Stop-Loss Insurance”. Employers and other sponsors of self-insured group health plans, especially small employers, may face large fluctuations in claims, and they frequently seek to reduce this risk by purchasing stop-loss insurance. Unless prohibited by state insurance law, a stop-loss insurer might offer insurance policies with attachment points set so low that the insurer assumes nearly all the employer's claims risk. Use of stop-loss insurance with such low attachment points effectively gives nearly all the risk protection of a conventional health insurance policy without the consumer protections required for such policies. This has prompted some states to consider measures for protecting the viability of their health insurance markets. In the guidance, the Department of Labor, which is the agency primarily tasked with administration of Title I of the Employee Retirement Income Security Act of 1974 (ERISA), takes the view that states may regulate insurance policies issued to plans or plan sponsors, including stop-loss insurance policies, if the law regulates the insurance company and the business of insurance. The guidance states: “Insurance regulation of group health insurance clearly limits insurance policy choices available to third parties, including employee benefit plans. Insurance regulation of stop-loss insurance can have a similar consequence without ERISA preempting the insurance regulation. Thus, a State law that prohibits insurers from issuing stop-loss contracts with attachment points below specified levels would not, in the Department's view, be preempted by ERISA.”
• On November 4, 2014, the Centers for Medicare and Medicaid Services (CMS) released a notice entitled “CMS–10527 Annual Eligibility Redetermination, Product Discontinuation and Renewal Notices”. In this notice, CMS estimates the burden associated with annual eligibility redetermination, product discontinuation, and renewal notice activities required by the Affordable Care Act (ACA), as promulgated in the final rule ‘‘Patient Protection and Affordable Care Act; Annual Eligibility Redeterminations for Exchange Participation and Insurance Affordability Programs; Health Insurance Issuer Standards Under the Affordable Care Act, Including Standards Related to Exchanges’’ (79 FR 52994). Comments must be received by January 5, 2015.
• On November 4, 2014, CMS announced that an information collection request entitled “Executive Summary Form for Research Identifiable Data” had been submitted to the Office of Management and Budget (OMB) for review and clearance. Comments on the proposal must be received by the OMB desk officer by December 4, 2014.
• On November 4, 2014, the Food and Drug Administration (FDA) announced that a guidance document entitled “Guidance for Industry on Updating Labeling for Susceptibility Test Information in Systemic Antibacterial Drug Products and Antimicrobial Susceptibility Testing Devices” had been submitted to OMB for review. To address concerns about antibacterial drug product labeling with out-of-date information on susceptibility test interpretive criteria, quality control parameters, and susceptibility test methods, the guidance describes procedures for FDA, applications holders, and antimicrobial susceptibility testing device manufacturers to ensure that updated susceptibility test information is available to health care providers. Comments are due December 4, 2014.
• On November 4, 2014, FDA announced the establishment of a docket for comments on FDA activities performed under the Food and Drug Administration Safety and Innovation Act (FDASIA), Patient Participation in Medical Product Discussions. This notice announces FDA’s intent to gather input from stakeholders on strategies to obtain the views of patients during the medical product development process and ways to consider patients’ perspectives during regulatory discussions. This notice provides background on ongoing patient engagement activities, so that stakeholders can consider both current and new activities that involve patient participation and perspectives during medical product regulatory discussions. Although FDA welcomes comments at any time, to help FDA address issues related to Patient Participation in Medical Products Discussions in a timely fashion, comments should be submitted by December 4, 2014. More information may be found here.
• On November 4, 2014, the Department of Veterans Affairs (VA) released a notice entitled “Cost Based and Inter-Agency Billing Rates for Medical Care or Services Provided by the Department of Veterans Affairs”. This document updates the Cost-Based and Inter-Agency billing rates for medical care or services provided by VA. The rates set forth in this notice are effective November 4, 2014 and until further notice.
• On November 5, 2014, FDA announced that the Agency is requesting OMB approval for the reporting and recordkeeping requirements contained in FDA regulations entitled "Investigational New Drug Application" in 21 CFR part 312 (part 312). Comments are due January 5, 2015.
• On November 6, 2014, FDA announced the availability of a guidance for industry entitled ‘‘Specification of the Unique Facility Identifier (UFI) System for Drug Establishment Registration.’’ This guidance specifies the UFI system for registration of domestic and foreign drug establishments. The guidance addresses provisions set forth in the Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended by the Food and Drug Administration Safety and Innovation Act (FDASIA). This guidance finalizes the draft guidance issued on September 6, 2013. More information may be found here.
• On November 7, 2014, CMS released a proposed rule entitled “Clinical Laboratory Improvement Amendments (CLIA); Fecal Occult Blood (FOB) Testing” This proposed rule would amend the Clinical Laboratory Improvement Amendments (CLIA) regulations to clarify that the waived test categorization applies only to non-automated fecal occult blood tests. In addition, the proposed rule would remove the hemoglobin by copper sulfate method from the list of waived tests if commenters confirm that the method is no longer used. Comments on the proposed rule are due January 6, 2014.
• On November 7, 2014, CMS released an emergency clearance to OMB entitled “CMS-10371 Cooperative Agreement to Support Establishment of State-Operated Health Insurance Exchanges”. Section 1311 of the ACA provides for grants to States for the planning and establishment of Marketplaces. These grants are funded through the Health Insurance Marketplaces Cooperative Agreement to Support Establishment of the Affordable Care Act’s Health Insurance Exchanges (Funding Opportunity Number: IE– HBE–12–001). A critical part of this guidance and assistance is the collection of precise information to measure the performance of the individual exchanges. The revised data collection instrument has been developed in coordination with the states, based on an understanding of their current data collection efforts and capabilities. Comments on the revised data collection instrument are due November 14, 2014.

Event Notices

• December 4-5, 2014: The Centers for Disease Control and Prevention (CDC) will convene a meeting of the Advisory Committee on Breast Cancer in Young Women (ACBCYW). The agenda will include discussions on the current and emerging topics related to breast cancer in young women. These may include public health communication, breast cancer in young women digital and social media campaigns, and CDC updates. Topics will address efforts increase awareness around breast cancer risk, breast health, symptoms, diagnosis, and treatment of breast cancer in young women. The meeting will take place December 4th and 5th at CDC headquarters in Atlanta, Georgia. The meeting is also accessible by teleconference and web address; more information may be found here.
• December 11, 2014: The FDA will host a meeting of the Oncologic Drugs Advisory Committee on December 11th from 8:00 AM to 3:30 PM at FDA’s White Oak Campus in Silver Spring, Maryland. Information will be presented to gauge investigator interest in exploring potential pediatric development plans for three products in various stages of development for adult cancer indications. The subcommittee will consider and discuss issues concerning diseases to be studied, patient populations to be included, and possible study designs in the development of these products for pediatric use. The discussion will also provide information to the Agency pertinent to the formulation of written requests for pediatric studies, if appropriate. The products under consideration are: (1) GANETESPIB, application submitted by Synta Pharmaceuticals Corp. (2) Etirinotecan, application submitted by Nektar Therapeutics, and (3) RO5503781, application submitted by Hoffmann-La Roche, Inc. More information may be found here.

II. LEGISLATION & COMMITTEE ACTION

U.S. Senate

• The Senate is not in session. More information about the Senate calendar may be found here. Both chambers of Congress are expected to return to session on November 12th.

House of Representatives

• The House is not in session. More information about the House calendar may be found here. Both chambers of Congress are expected to return to session on November 12th.
• On November 5, 2014, The White House asked Congress to consider an emergency appropriations request for fiscal year (FY) 2015 that includes $6.8 billion to implement a comprehensive strategy to address the Ebola outbreak in Africa; enhance domestic preparedness; speed procurement and testing of vaccines and therapeutics; and accelerate global capacity to prevent the spread of the disease. The request includes $4.64 billion for immediate needs and $1.54 billion in contingency funding.

III. REPORTS, STUDIES, & ANALYSES

• A study published in the New England Journal of Medicine (NEJM) last week compares patient experiences in a group of fee-for-service (FFS) beneficiaries attributed to accountable care organizations (ACOs) with a control group attributed to other providers before and after the start of ACO contracts. The results show that after ACO contracts began, patients' reports of timely access to care and their primary physicians' being informed about specialty care differentially improved in the ACO group, as compared with the control group, whereas patients' ratings of physicians, interactions with physicians, and overall care did not differentially change. Among patients with multiple chronic conditions and high predicted Medicare spending, overall ratings of care differentially improved in the ACO group as compared with the control group. Differential improvements in timely access to care and overall ratings were equivalent to moving from average performance among ACOs to the 86th to 98th percentile (timely access to care) and to the 82nd to 96th percentile (overall ratings) and were robust to adjustment for group differences in trends during the pre-intervention period.
• The Urban Institute recently published a report entitled “Narrow Networks, Access to Hospitals and Premiums: An Analysis of Marketplace Products in Six Cities”. Researchers at Urban studied ACA Health Insurance Marketplace plans in six cities—Denver, Colorado; Portland, Oregon; New York City (Manhattan), New York; Providence, Rhode Island; Baltimore, Maryland; and Richmond, Virginia—by counting the number of hospitals included in each plan offered by each insurer for each of their silver-tiered Health Insurance Marketplace plans. The analysis concludes that almost all insurers offer access to highly ranked hospitals in their networks, and every hospital in the cities studied includes in at least one Marketplace plan network. They found that the size of a plan’s network is not necessarily tied to the cost of its premiums, and generally, narrow networks led to more-competitive, lower-cost premiums. Of note, the authors found that it is “difficult for the average consumer to accurately compare the size and quality of hospital networks across insurance plans. Consumers who know what hospital they want included in their network may be able to select an appropriate plan, but it would be difficult to otherwise compare plans by the breadth of hospital networks”.
• A study published this week in Health Affairs examines outpatient prescription dispensing patterns through contract pharmacies in the 340B drug discount program. Section 340B of the Public Health Service Act provides qualified organizations serving vulnerable populations with deep discounts for some outpatient medications. A 2010 regulatory change widely expanded the 340B program’s reach, allowing these organizations to contract with retail pharmacies to dispense medications for eligible patients. Little is known about which medications are dispensed by contract pharmacies under the expanded program. This study provides a comparison of 340B prescriptions and all prescriptions dispensed in contract pharmacies using 2012 data from Walgreens, the national leader in 340B contract pharmacies. The results suggest that 340B contract pharmacies dispense medications used to treat Americans’ chronic disease burden and disproportionately dispense medications used by key vulnerable populations targeted by the program.
• On November 3, 2014, the RAND Corporation released an analysis entitled “The Cost Savings Potential of Biosimilar Drugs in the United States”. The analysis predicts that biosimilars will lead to a $44.2 billion reduction in direct spending on biologic drugs from 2014 to 2024, or about 4 percent of total biologic spending over the same period, with a range of $13 billion to $66 billion.

IV. OTHER HEALTH POLICY NEWS

• On November 7, 2014, the Supreme Court granted the petition for a writ of certiorari in a challenge (King v Burwell) to the IRS Rule (26 CFR § 1.36B-2(a)(1)) providing that qualified persons may receive a premium subsidy if the individual is enrolled in a qualified health plan through an “Exchange”, regardless of whether the Exchange was established and operated by states or the federal government. Plaintiffs argue that subsidies should be made available only to individuals in state-established Exchanges, per section 36B(b)(2) of the Internal Revenue Code (“§ 36B(b)(2)”), as added by the ACA, which provides that the IRS is to calculate tax credits for premiums for qualified health plans “which were enrolled through an Exchange established by the State”. The Court’s acceptance of King v. Burwell follows a unanimous decision by a panel of the U.S. Court of Appeals for the 4th Circuit that sided with HHS. The decision to hear the case will be decided by the end of the Court’s term in June.
• On November 6th and 7th, the Medicare Payment Advisory Commission (MedPAC) convened a series of meetings on Medicare payment policy. MedPAC is an independent congressional agency established by the Balanced Budget Act of 1997 (P.L. 105-33) to advise the U.S. Congress on issues affecting the Medicare program. Topics discussed during this week’s sessions included: site neutral payments between inpatient rehabilitation facilities and skilled nursing facilities; the 340B Drug Pricing Program; issues in Medicare Advantage; and hospital short stay policy issues. More information, including MedPAC staff presentations and transcripts as they become available, may be found here.

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.