A&B Healthcare Week in Review, July 2, 2015

I. REGULATIONS, NOTICES, & GUIDANCE

• On July 1, 2015, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule entitled “Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Short Inpatient Hospital Stays; Transition for Certain Medicare-Dependent, Small Rural Hospitals under the Hospital Inpatient Prospective Payment System”. This proposed rule would revise the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for CY 2016 to implement applicable statutory requirements and changes arising from CMS’ continuing experience with these systems. In this proposed rule, the agency describes the proposed changes to the amounts and factors used to determine the payment rates for Medicare services paid under the OPPS and those paid under the ASC payment system. In addition, this proposed rule would update and refine the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program. Further, this proposed rule includes certain proposals relating to the hospital inpatient prospective payment system: proposed changes to the 2-midnight rule under the short inpatient hospital stay policy, as well as a discussion of the related -0.2 percent payment adjustment; and a proposed transition for Medicare-dependent, small rural hospitals located in all-urban States. Comments on the proposed rule are due August 31, 2015. CMS released a Fact Sheet on the proposed rule, which may be accessed here; a separate Fact Sheet regarding proposed updates to the 2-midnight rule regarding when inpatient admissions are appropriate for payment under Medicare Part A is available here.
• On June 29, 2015, the CMS Center for Medicaid and CHIP released an informational bulletin “Coverage of Housing-Related Activities and Services for Individuals with Disabilities”. This Informational Bulletin is intended to assist states in designing Medicaid benefits, and to clarify the circumstances under which Medicaid reimburses for certain housing-related activities, with the goal of promoting community integration for individuals with disabilities, older adults needing long term services and supports (LTSS), and those experiencing chronic homelessness. Consistent with statute, CMS does not provide Federal Financial Participation (FFP) for room and board in home and community based services but can assist states with coverage of certain housing-related activities and services.
• On June 29, 2015, the Health Resources and Services Administration (HRSA) released a notice of publication of the Revised Guidebook for the National Practitioner Data Bank (NPDB). The NPDB is a confidential information clearinghouse created by Congress and intended to facilitate a comprehensive review of the professional credentials of health care practitioners, entities, and suppliers. The Guidebook is the primary policy document explaining the statutes and regulations behind and operation of the NPDB. It serves as an essential reference for NPDB users, offering reporting and querying examples, explanations, definitions, and frequently asked questions. The new Guidebook incorporates legislative and regulatory changes adopted since its last edition, including the NPDB’s merger with the Healthcare Integrity and Protection Data Bank.
• On June 29, 2015, the Food and Drug Administration (FDA) announced the availability of a draft guidance for industry entitled ‘‘Assessment of Radiofrequency-Induced Heating in the Magnetic Resonance (MR) Environment for Multi-Configuration Passive Medical Devices.’’ The purpose of this guidance is to provide an assessment paradigm for radiofrequency (RF)-induced heating on, or near, multi-component, or multi-configuration, passive medical devices in the magnetic resonance environment. Comments on the draft guidance must be submitted by August 28, 2015.
• On June 29, 2015, FDA released a notice and request for public comment entitled “Use of Ozone-Depleting Substances; Request for Comment Concerning Essential-Use Designations”. FDA is seeking public comment on whether the uses of ozone-depleting substances (ODSs), including chlorofluorocarbons (CFCs), in certain FDA-regulated products currently designated essential are no longer essential under the Clean Air Act due to the availability of alternatives that do not use CFCs or because the products are no longer being marketed. Essential-use products are exempt from FDA’s ban on the use of CFC propellants in FDA-regulated products and the Environmental Protection Agency’s (EPA’s) ban on the use of CFCs in pressurized dispensers. FDA is seeking public comment because it is responsible for determining which FDA-regulated products that release CFCs or other ODSs are essential uses under the Clean Air Act. FDA is soliciting comments to assist the Agency in striking an appropriate balance that will best protect the public health, both by ensuring the availability of an adequate number of alternatives and by curtailing the release of ODSs. Comments are due August 28, 2015.
• On June 30, 2015, the Office of Personnel Management (OPM) released a final rule entitled “Federal Employees Health Benefits Program: FEHB Plan Performance Assessment System”. OPM is issuing a final rule to amend the system for assessing the annual performance of health plans contracted under the Federal Employees Health Benefits (FEHB) Program. The purpose of this rule is to measure and assess FEHB plan performance (both experience-rated and community-rated plans) through the use of a common, objective, and quantifiable performance assessment.
• On June 30, 2015, FDA announced the availability of a draft guidance entitled ‘‘Premarket Notification Requirements Concerning Gowns Intended for Use in Health Care Settings.’’ FDA is issuing this draft guidance to describe the Agency’s premarket regulatory requirements and the performance testing needed to support liquid barrier claims for gowns intended for use in health care settings. This draft guidance is being issued in light of the public health importance of personal protective equipment in health care settings and the recognition that terminology used to describe gowns has evolved, including by industry, the standards community, and health care professionals. Comments are due August 31, 2015.
• On June 30, 2015, FDA announced the availability of additional draft and revised draft product-specific bioequivalence (BE) recommendations. The recommendations provide product-specific guidance on the design of BE studies to support abbreviated new drug applications (ANDAs). In the Federal Register of June 11, 2010, FDA announced the availability of a guidance for industry entitled ‘‘Bioequivalence Recommendations for Specific Products’’ that explained the process that would be used to make product-specific BE recommendations available to the public on FDA’s Web site. The BE recommendations identified in this notice were developed using the process described in that guidance. Comments should be submitted by August 31, 2015. More information may be found here.
• On June 30, 2015, FDA released a guidance document entitled “DSCSA Implementation: Product Tracing Requirements for Dispensers — Compliance Policy”. This guidance addresses the readiness of dispensers in the pharmaceutical distribution supply chain to comply with the provisions in section 582 of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 360eee-1(d)(1)) related to the exchange of transaction information, transaction history, and transaction statements (product tracing information). For dispensers, requirements for the tracing of products through the pharmaceutical distribution supply chain under section 582(d)(1) of the FD&C Act go into effect on July 1, 2015. This guidance announces the FDA’s intention with regard to enforcement of the product tracing information requirements under section 582(d)(1) of the FD&C Act. As described in further detail in the guidance, FDA does not intend to take action against dispensers who, prior to November 1, 2015, (1) accept ownership of product without receiving product tracing information, prior to or at the time of a transaction, as required by section 582(d)(1)(A)(i) of the FD&C Act, or (2) do not capture and maintain the product tracing information, as required by section 582(d)(1)(A)(iii) of the FD&C Act. Section IV of this guidance provides further detail about the scope of this compliance policy and FDA’s expectations for dispensers and trading partners involved in transactions with dispensers.
• On June 30, 2015, the Internal Revenue Service (IRS) released interim guidance entitled “Expatriate Health Coverage Clarification Act of 2014”. This notice provides interim guidance on the application of certain provisions of the Affordable Care Act (ACA) to expatriate health insurance issuers, expatriate health plans, and employers in their capacity as plan sponsors of expatriate health plans, as defined in the Expatriate Health Coverage Clarification Act of 2014 (EHCCA). This notice does not apply to the health insurance providers fee imposed by § 9010 of the Affordable Care Act (§ 9010 fee). For purposes of the § 9010 fee, Notice 2015-29, 2015-15 IRB 873, applies to the 2014 and 2015 fee years, and future guidance will address the 2016 and later fee years. Public comments on the interim guidance should be submitted no later than October 19, 2015.
• On July 1, 2015, FDA announced that a proposed information collection activity entitled “General Licensing Provisions; Section 351(k) Biosimilar Applications” had been submitted to OMB for review. Public comments on this item are due July 31, 2015.
• On July 1, 2015, FDA announced that a proposed information collection activity entitled “Registration of Producers of Drugs and Listing of Drugs in Commercial Distribution” had been submitted to OMB for review. Public comments on this item are due July 31, 2015.
• On July 1, 2015, FDA announced the issuance of an Emergency Use Authorization (EUA) for an in vitro diagnostic device for detection of Enterovirus D68 (EV–D68) strains detected in North America in 2014. FDA issued this Authorization under the Federal Food, Drug, and Cosmetic Act (the FD&C Act), as requested by the Centers for Disease Control and Prevention (CDC). The Authorization contains, among other things, conditions on the emergency use of the authorized in vitro diagnostic device. The Authorization follows the February 6, 2015, determination by the Department of Health and Human Services (HHS) Secretary that there is a significant potential for a public health emergency that has a significant potential to affect national security or the health and security of U.S. citizens living abroad and that involves EV–D68. On the basis of such determination, the Secretary of HHS also declared on February 6, 2015, that circumstances exist justifying the authorization of emergency use of in vitro diagnostic devices for detection of EV–D68 subject to the terms of any authorization issued under the FD&C Act. The Authorization, which includes an explanation of the reasons for issuance, is reprinted in this document. The Authorization is effective as of May 12, 2015.
• On July 1, 2015, FDA announced the availability of the guidance entitled ‘‘Intent to Exempt Certain Unclassified, Class II, and Class I Reserved Medical Devices from Premarket Notification Requirements.’’ This guidance describes FDA’s intent to exempt certain unclassified medical devices (that FDA intends to classify into class I or II), certain class II medical devices, and certain class I medical devices from premarket notification requirements. FDA believes the devices identified in this guidance document are sufficiently well understood and do not require premarket notification to assure their safety and effectiveness.
• On July 1, 2015, HRSA published a notice entitled “Lists of Designated Primary Medical Care, Mental Health, and Dental Health Professional Shortage Areas”. This notice advises the public of the published lists of all geographic areas, population groups, and facilities designated as primary medical care, mental health, and dental health professional shortage areas (HPSAs) as of May 29, 2015, available on the Health Resources and Services Administration (HRSA) Web site at http:// www.hrsa.gov/shortage/. HPSAs are designated or withdrawn by the Secretary of HHS under the authority of section 332 of the Public Health Service (PHS) Act and 42 CFR part 5.
• On July 2, 2015, CMS released a notice announcing that an information collection activity entitled “Medicare and Medicaid Programs: Conditions of Participation for Home Health Agencies (HHA)” had been submitted to OMB for review. Comments on this item are due August 3, 2015.
• On July 2, 2015, FDA released a final rule entitled “Revocation of General Safety Test Regulations That Are Duplicative of Requirements in Biologics License Applications”. FDA is amending the biologics regulations by removing the general safety test (GST) requirements for biological products. FDA is finalizing this action because the existing codified GST regulations are duplicative of requirements that are also specified in biologics license applications (BLAs), or are no longer necessary or appropriate to help ensure the safety, purity, and potency of licensed biological products. FDA is taking this action as part of its retrospective review of its regulations to promote improvement and innovation, in response to the Executive order. This rule is effective August 3, 2015.
• On July 2, 2015, FDA released a proposed rule entitled “Removal of Review and Reclassification Procedures for Biological Products Licensed Prior to July 1, 1972”. In the proposed rule FDA proposes to remove two regulations that prescribe procedures for FDA’s review and classification of biological products licensed before July 1, 1972. FDA is taking this action because the two regulations are obsolete and no longer necessary in light of other statutory and regulatory authorities established since 1972, which allow FDA to evaluate and monitor the safety and effectiveness of all biological products. In addition, other statutory and regulatory authorities authorize FDA to revoke a license for products because they are not safe and effective, or are misbranded. FDA is taking this action as part of its retrospective review of its regulations to promote improvement and innovation. Submit either written or electronic comments on the proposed rule by September 30, 2015.
• On July 2, 2015, FDA announced that a proposed information collection activity entitled “Guidance for Industry on Controlled Correspondence Related to Generic Drug Development” had been submitted to OMB for review and clearance. Comments on this item are due August 3, 2015.
• On July 2, 2015, FDA announced the selection of disease areas to be addressed during fiscal years (FYs) 2016–2017of its Patient-Focused Drug Development Initiative. This initiative is being conducted to fulfill FDA’s performance commitments under the fifth authorization of the Prescription Drug User Fee Act (PDUFA V). This effort provides a more systematic approach under PDUFA V for obtaining the patients’ perspective on disease severity and currently available treatments for a set of disease areas. FDA selected these disease areas based on a careful consideration of the public comments received after publication of a preliminary list of disease areas in the Federal Register on October 8, 2014. More information may be found here.
• On July 2, 2015, FDA released a notice entitled “Unapproved and Misbranded Otic Prescription Drug Products; Enforcement Action Dates”. FDA is announcing its intention to take enforcement action against unapproved and misbranded otic drug products labeled for prescription use and containing benzocaine; benzocaine and antipyrine; benzocaine, antipyrine, and zinc acetate; benzocaine, chloroxylenol, and hydrocortisone; chloroxylenol and pramoxine; or chloroxylenol, pramoxine, and hydrocortisone; and against persons who manufacture or cause the manufacture or distribution of such products in interstate commerce. These unapproved and misbranded prescription drug products are marketed without evidence of safety and effectiveness; may present safety concerns; and pose a direct challenge to the new drug approval system and, in some cases, the over-the-counter (OTC) drug monograph system. This notice is effective July 2, 2015.

Event Notices

• August 6, 2015: On July 1, 2015, CMS issued a Notice of Hearing entitled “Reconsideration of Disapproval Texas Medicaid State Plan Amendment (SPA) 14–25”. This notice announces an administrative hearing to be held on August 6, 2015, at the Department of Health and Human Services, Centers for Medicare and Medicaid Services, Division of Medicaid & Children’s Health, Dallas Regional Office, 1301 Young Street, Room 714, Dallas, TX 75202, to reconsider CMS’ decision to disapprove Texas’ Medicaid SPA 14–25. Requests to participate in the hearing as a party must be received by the presiding officer by July 15, 2015.

II. CONGRESSIONAL LEGISLATION & COMMITTEE ACTION

U.S. Senate

• The Senate was out of session this week. Both Chambers of Congress will return for regular legislative business on July 7th.

House of Representatives

• The House was out of session this week. Both Chambers of Congress will return for regular legislative business on July 7th.

III. REPORTS, STUDIES, & ANALYSES

• On June 29, 2015, the Urban Institute published a study entitled “Marketplace Price Competition in 2014 and 2015: Does Insurer Type Matter in Early Performance?”. In the study researchers examined a wide array of plan data comparing the premium prices of the lowest cost silver plan—the most popular of marketplace options—by insurer across 30 states for 2014 and 2015. Key findings include:
  • National insurers, including Aetna/Coventry, United, Assurant, Cigna, and Humana and their subsidiaries were reluctant to participate in the marketplaces in the first year, but they entered many more markets in the second year. With the exception of Humana, they typically have higher than average premiums, continuing to reflect a significant aversion to risk.
  • Regional insurers are also participating in a significant number of marketplaces, but many appear to be struggling to remain price competitive, although there are some prominent exceptions.
  • Blue Cross insurers offer plans that rank among those with the lowest premiums in many markets, although this was more frequently the case in 2014 than in 2015. Depending upon the nature of the market, Blues insurers take very different pricing strategies. Some Blue Cross insurers are monopolies or near monopolies and, as a result, their offerings are among the lowest premium plans in those areas. In areas where the Blues have many competitors, they sometimes priced very aggressively, while in other markets they did not. In still others, Blues insurers developed lower priced subsidiaries with limited provider networks which usually allowed them to be strong competitors.
  • Previously Medicaid-only insurers, which can either be local insurers or large national chains, are new entrants to these commercial markets in the last two years. They are generally very price competitive and seem to be becoming increasingly so over time.
  • Insurers sponsored by or affiliated with large provider systems have entered the non-group insurance market in a number of areas, and are also very price competitive in many of the markets in which they operate.
  • Co-ops, defined technically as member owned insurers (the owners of the co-op are insured by the co-op), are spreading to more markets and are generally very price competitive, although some face significant financial difficulties.
• On June 29, 2015, the Government Accountability Office (GAO) released a report entitled “Medicaid: Service Utilization Patterns for Beneficiaries in Managed Care”. GAO calculated service utilization rates for adult and child beneficiaries enrolled in comprehensive managed care plans by state, service category, and length of enrollment in 19 states. Based on GAO’s analysis, the number of professional services utilized by adult beneficiaries ranged from about 13 to 55. For children, the number of professional services utilized per beneficiary was lower, ranging from about 6 to 16 among the 19 states. Professional services included four categories of services: (1) evaluation and management (E/M) services, such as office visits and emergency room and critical care services; (2) procedural services, such as surgery and ophthalmology; (3) ancillary services, such as pathology and lab services; and (4) other professional services, such as oxygen therapy. States varied considerably in how service utilization was distributed within service categories. For example, of total services:
  • Adult per beneficiary utilization of ancillary services ranged from 37 percent in Rhode Island to 65 percent in Washington and Illinois; and
  • Child per beneficiary utilization of E/M services ranged from 29 percent in Minnesota to 45 percent in Georgia and Rhode Island.

Service utilization for both adult and child beneficiaries also varied by the length of enrollment. When compared with beneficiaries enrolled for a full year, total service utilization for adults was 2 to 78 percent higher for partial-year beneficiaries—those enrolled in a comprehensive managed care plan for less than the full year—in slightly more than half of selected states. For children in all but one selected state, service utilization was 4 to 44 percent higher for partial-year beneficiaries compared with full-year beneficiaries.

• On June 30, 2015, the CMS Center for Consumer Information and Insurance Oversight (CCIIO) released a “Summary Report on Transitional Reinsurance Payments and Permanent Risk Adjustment Transfers for the 2014 Benefit Year”. The report details the total estimated reinsurance payments by issuer and also provides summary level information on the program. The report includes issuers’ risk adjustment charge or payment information. In addition, the report includes an early assessment of the risk adjustment program that, according to a CMS Fact Sheet on the report, “…shows the program is working as intended by compensating issuers who enrolled higher risk individuals, helping protect against adverse selection within a market.” Issuers will use the reinsurance and risk adjustment amounts to calculate their risk corridor payments and medical loss ratio rebates, if any.
• On June 30, 2015, a study entitled “Restrictions for Medicaid Reimbursement of Sofosbuvir for the Treatment of Hepatitis C Virus Infection in the United States” was published in the Annals of Internal Medicine. The aim of this study was to systematically evaluate state Medicaid policies for the treatment of hepatitis C virus (HCV) infection with sofosbuvir (Sovaldi) in the United States. Medicaid reimbursement criteria for sofosbuvir were evaluated in all 50 states and the District of Columbia. Data extracted were whether sofosbuvir was covered and criteria for coverage based on the following categories: liver disease stage, HIV co-infection, prescriber type, and drug or alcohol use. Of the 42 states with known Medicaid reimbursement criteria for sofosbuvir, 74% limit sofosbuvir access to persons with advanced fibrosis or cirrhosis. One quarter of states require persons co-infected with HCV and HIV to be receiving antiretroviral therapy or to have suppressed HIV RNA levels. Two thirds of states have restrictions based on prescriber type, and 88% include drug or alcohol use in their sofosbuvir eligibility criteria, with 50% requiring a period of abstinence and 64% requiring urine drug screening. Heterogeneity is present in Medicaid reimbursement criteria for sofosbuvir with respect to liver disease staging, HIV co-infection, prescriber type, and drug or alcohol use across the United States. The authors conclude that restrictions do not seem to conform with recommendations from professional organizations, such as the Infectious Diseases Society of America and the American Association for the Study of Liver Diseases. “Current restrictions seem to violate federal Medicaid law,” they write, “which requires states to cover drugs consistent with their U.S. Food and Drug Administration labels.”

IV. OTHER HEALTH POLICY NEWS

• On June 30, 2015, CMS published 2014 Open Payments data about transfers of value by drug and medical device makers to health care providers. The data includes information about 11.4 million financial transactions attributed to over 600,000 physicians and more than 1,100 teaching hospitals, totaling $6.49 billion. The Open Payments program, created by the Affordable Care Act, requires drug and device manufacturers to report transfers of value (i.e., payments, honoraria or research grants) to health care providers, as well as other industry-related investments providers may have. The program relies on voluntary participation by physicians and teaching hospitals to review the information submitted by these companies. Acting CMS Administrator Andy Slavitt said in a press release, “Consumer access to information is a key component of delivery system reform and making the health care system perform better. In year 2, Open Payments is now a highly searchable resource to provide transparency to over 1 1/2 years’ worth of financial transactions between drug and device companies and physicians and teaching hospitals. This is part of our larger effort to open up the health care system to consumers by providing more information to help in their decision making.”
• On July 1, 2015, HHS launched the HHS Education and Training Resources on Multiple Chronic Conditions (MCC) for the Healthcare Workforce materials. Through these resources, HHS explains in a press release, “HHS seeks to bolster inter-professional education and training materials for health professions students, faculty, practitioners, direct care workers, and patients and their families that address the care of persons with multiple chronic conditions.” The resources are available online and include:
  • The “Multiple Chronic Conditions Education and Training Repository” - a searchable database of existing educational resources that specifically address the care of persons living with MCC;
  • The “Multiple Chronic Conditions: A Framework for Education and Training” – a conceptual model that outlines the core domains and competencies for the interprofessional health care team and;
  • The “Education and Training Curriculum on Multiple Chronic Conditions” - a web-based course consisting of six modules.