A&B Healthcare Week in Review, December 9, 2016

I. Regulations, Notices, & Guidance

• On December 5, 2016, the Food and Drug Administration (FDA) issued a final order entitled, Medical Devices; Neurological Devices; Classification of the Computerized Cognitive Assessment Aid for Concussion. The final order classifies the Computerized Cognitive Assessment Aid for Concussion into class II (special controls). The special controls that will apply to the device are identified in this final order and will be part of the codified language for the computerized cognitive assessment aid for concussion’s classification. According to the FDA, they are classifying the device into class II (special controls) in order to provide a reasonable assurance of safety and effectiveness of the device. The order is effective December 6, 2016.
• On December 5, 2016, the Internal Revenue Service (IRS) issued a guidance entitled, Section 45R – 2016 Guidance with Respect to the Tax Credit for Employee Health Insurance Expenses of Certain Small Employers. The IRS is providing guidance on section 45R of the Internal Revenue Code (Code) for certain small employers that cannot offer a qualified health plan (QHP) through the Small Business Health Options Program (SHOP) Exchange because the employer’s principal business address is in a county in Wisconsin in which a QHP through a SHOP Exchange will not be available for all or part of 2016 calendar year.
• On December 6, 2016, the Department of Veterans Affairs (VA) issued an interim final rule entitled, Extension of Pharmacy Copayments for Medications. The interim final rule amends the VA’s medical regulations concerning the copayment required for certain medications. This interim final rule freezes copayments at the current rate for veterans in priority group groups 2 through 8 through February 26, 2017. The rule is effective on December 7, 2016 and comments are due by February 6, 2017.
• On December 6, 2016, the FDA issued a notice entitled, Posting Adverse Event Report Data Associated with Conventional Foods, Dietary Supplements, and Cosmetics on the Internet. The notice announces the availability of data extracted from adverse event reports from January 2004 to the present involving food (including food additives, color additives, and dietary supplements) and cosmetics regulated by the FDA’s Center for Food Safety and Applied Nutrition (CFSAN).
• On December 6, 2016, the FDA issued a guidance entitled, Third-Party Certification Body Accreditation for Food Safety Audits: Model Accreditation Standards. The guidance contains the FDA’s recommendations on third-party certification body qualifications for accreditation to conduct food safety audits and to issue food and/or facility certifications under an FDA program required by the FDA Food Safety Modernization Act (FSMA). According to the FDA, the guidance is intended to describe the standards for accreditation of third-party certification bodies as required under the final rule entitled "Accreditation of Third-Party Certification Bodies to Conduct Food Safety Audits and to Issue Certifications." In addition, the guidance discusses specific clauses of ISO/IEC 17021: 2015 and industry practice that are currently being used by third-party certification bodies and that the FDA recommends accreditation bodies consider as a model when making accreditation decisions. Comments may be submitted at any time.
• On December 6, 2016, the Office of Inspector General (OIG) issued a final rule entitled, Medicare and State Health Care Programs: Fraud and Abuse; Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements. The final rule amends the safe harbors to the anti-kickback statute by adding new safe harbors that protect certain payment practices and business arrangements from sanctions under the anti-kickback statute. The final rule also amends the civil monetary penalty (CMP) rules by codifying revisions to the definition of “remuneration.” The final rule also updates the existing safe harbor regulations and enhances flexibility for providers and others to engage in 2 health care business arrangements to improve efficiency and access to quality care while protecting programs and patients from fraud and abuse. The final rule is effective on January 6, 2017.
• On December 6, 2016, the OIG issued a final rule entitled, Medicare and State Health Care Programs: Fraud and Abuse; Revisions to the Office of Inspector General’s Civil Monetary Penalty Rules. The final rule amends the CMP rules of the OIG to incorporate new CMP authorities, clarify existing authorities, and reorganize regulations on civil money penalties, assessments, and exclusions to improve readability and clarity. The final rule is effective on January 6, 2017.
• On December 6, 2016, the Federal Trade Commission (FTC) issued a notice of proposed rulemaking entitled, Contact Lens Rule. The FTC proposes to amend the Contact Lens Rule to require that prescribers obtain a signed acknowledgment after releasing a contact lens prescription to a patient, and maintain each such acknowledgment for a period of not less than three years. Comments are due by January 30, 2017.
• On December 8, 2016, the Department of Health and Human Services (HHS) issued a notice of charter renewal. HHS is giving notice that the Council on Graduate Medical Education (COGME) has been renewed.
• On December 8, 2016, the FDA issued a draft guidance entitled, Preparation of Food Contact Notifications for Food Contact Substances in Contact With Infant Formula and/or Human Milk. The draft guidance, when finalized, will provide guidance on the FDA’s current thinking on how to prepare a food contact notification (FCN) submission for FDA review and evaluation of the safety of food contact substances (FCSs) used in contact with infant formula and/or human milk. Comments are due by February 7, 2017.
• On December 8, 2016, the FDA issued a guidance entitled, Drug Supply Chain Security Act Implementation: Identification of Suspect Product and Notification. The guidance addresses provisions in the Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended by the Drug Supply Chain Security Act (DSCSA). The guidance is intended to aid certain trading partners (manufacturers, repackagers, wholesale distributors, and dispensers) in identifying a suspect product and specific scenarios that could significantly increase the risk of a suspect product entering the pharmaceutical distribution supply chain. The guidance also describes how trading partners should notify the FDA of illegitimate products and sets forth a process for terminating notifications of illegitimate products in consultation with the FDA. The guidance also includes a draft section, for comment purposes only, that describes when manufacturers should notify the FDA of a high risk that a product is illegitimate. Aside from the draft section, the guidance is a final guidance subsequent to the draft guidance that was issued on June 11, 2014. Comments on the draft section are due by February 7, 2017.
• On December 8, 2016, the IRS issued a notice of proposed rulemaking entitled, Health Insurance Providers Fee. The IRS proposes to modify the current definition of “net premiums written” for purposes of the fee imposed by section 9010 of the Patient Protection and Affordable Care Act (ACA), as amended. The proposed regulations will affect persons engaged in the business of providing health insurance for United States health risks. Comments are due by March 9, 2017.
• On December 8, 2016, the IRS issued a notice of proposed rulemaking entitled, Electronic Filing of the Report of Health Insurance Provider Information. The IRS proposes to amend the Health Insurance Providers Fee regulations to require certain entities engaged in the business of providing health insurance for United States health risks to electronically file Form 8963, “Report of Health Insurance Provider Information.” Comments are due by March 9, 2017.
• On December 8, 2016, the Centers for Medicare & Medicaid Services (CMS) issued a notice entitled, Zika Health Care Services Program. CMS is announcing a funding opportunity providing up to $66.1 million available to support prevention activities and treatment services for health conditions related to the Zika virus. Entities eligible to apply for this funding opportunity are states, territories, tribes or tribal organizations, with active or local transmission of the Zika virus, as confirmed by the Centers for Disease Control and Prevention (CDC). As of October 12, 2016, the CDC designated American Samoa, Puerto Rico, the U.S. Virgin Islands, and Florida as areas with laboratory-confirmed active or local Zika virus transmission. As such, the emergency funding opportunity is currently available to the territorial and state health departments in those areas.
• On December 9, 2016, the FDA issued a guidance entitled, Immediately in Effect Guidance Document: Conditions for Sale for Air-Conduction Hearing Aids. According to the FDA, the purpose of the guidance is to communicate to consumers, hearing aid dispensers, hearing aid manufacturers, and hearing health professionals that the FDA does not intend to enforce certain conditions for sale of hearing aid devices that are required per FDA regulation. Specifically, the FDA does not intend to enforce the medical evaluation or recordkeeping requirements prior to the dispensing of certain hearing aid devices to individuals 18 years of age and older. Comments may be submitted at any time.
• On December 9, 2016, the FDA issued a notice entitled, Determination That SODIUM CHLORIDE 23.4% IN PLASTIC CONTAINER (Sodium Chloride), Injectable, 234 Milligrams/Milliliter, Was Not Withdrawn From Sale for Reasons of Safety or Effectiveness. The FDA has determined that SODIUM CHLORIDE 23.4% IN PLASTIC CONTAINER (sodium chloride), injectable, 234 milligrams (mg)/milliliter (mL), was not withdrawn from sale for reasons of safety or effectiveness. According to the FDA, this determination will allow the FDA to approve abbreviated new drug applications (ANDAs) for sodium chloride, injectable, 234 mg/mL, if all other legal and regulatory requirements are met.

Event Notices

• December 19-20, 2016: HHS announced a meeting of The Technical Advisory Panel on Medicare Trustee Reports.  The Panel will likely hear presentations from two outside experts; one on prescription drug spending and a second on spillover effects. Additional presentations regarding long range growth, sustainability of provider payments under Affordable Care Act (ACA) and Medicare Access and Chip Reauthorization Act (MACRA), methods for transitioning from short term (10 year) to long term (75 year) projections and methods and the presentation of uncertainty in the report may follow.
• March 27, 2017: FDA announced a public meeting to discuss the final assessment of the Program for Enhanced Review Transparency and Communication for New Molecular Entity (NME) New Drug Applications (NDAs) and Original Biologics License Applications (BLAs). Participants must register by March 20, 2017.

II. Congressional Legislation & Committee Action

U.S. Senate

• There were no healthcare related hearings this week.
• On December 7, 2016 the Senate passed R. 34, the 21^st Century Cures Act by a vote of 94-5. 

House of Representatives

• There were no healthcare related hearings this week.

III. Reports, Studies, & Analyses  

• On December 5, 2016, the Government Accountability Office (GAO) released a report entitled, VA Health Care: Improved Monitoring Needed for Effective Oversight of Care for Women Veterans. The report found that six (6) VA medical centers that were visited had not been reported or recorded in the Veterans Health Administration (VHA) database, and compliance rates ranged from 65 percent to 81 percent. For example, the GAO found a lack of auditory privacy at check-in clerk stations and a lack of privacy curtains in examination rooms, as required by VHA policy. The GAO also found weaknesses in the VHA’s oversight of the environment of care for women, including a lack of thorough inspections and limited verification of facility-reported data which results in inaccurate and incomplete data.
• On December 5, 2016, the Congressional Budget Office (CBO) issued a cost estimate of S. 2511, Improving Health Information Technology Act. The CBO found that S. 2511 would require HHS to strengthen federal efforts related to the adoption and certification of health information technology (HIT), the exchange of electronic health data between different HIT systems, and the transmission of electronic health data to patients and to registries that collect data about individuals with specific medical conditions. The CBO estimates that implementing S. 2511 would cost $122 million over the 2017-2021 period, assuming appropriation of the necessary funds. Moreover, enacting S. 2511 would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2027. 
• On December 5, 2016, the OIG released a report entitled, Visiting Nurse Service of New York Budgeted Costs That Were Not Appropriate and Claimed Some Unallowable Hurricane Sandy Disaster Relief Act Funds. The report found that the Administration for Children and Families (ACF) awarded approximately $4.8 million in Disaster Relief Act funds to Visiting Nurse Service of New York (VNSNY), a not-for-profit home health care agency that operated Head Start and Early Head Start programs in New York, New York. The funds were for program expenses directly related to Hurricane Sandy. Of the $760,000 in Disaster Relief Act costs that the OIG reviewed, $375,000 complied with applicable Federal requirements. However, VNSNY claimed some Disaster Relief Act costs that did not comply with applicable Federal requirements. Specifically, VNSNY improperly claimed costs totaling $385,000 that were not directly related to Hurricane Sandy. VNSNY used Disaster Relief Act funds for Head Start program normal operating costs (i.e., rent and rent-related costs, renovation and supplies costs) that were not directly related to Hurricane Sandy. In addition, VNSNY budgeted Disaster Relief Act costs totaling $2.5 million that were not appropriate, including fireproofing and Head Start program costs that were not directly related to Hurricane Sandy and construction costs that were not appropriate once VNSNY abandoned its plan to repair and renovate one of its locations.
• On December 5, 2016, the OIG released a report entitled, Hospitals Did Not Always Comply With Medicare Requirements for Reporting Cochlear Devices Replaced Without Cost. The report found that hospitals nationwide did not always comply with Medicare requirements for reporting cochlear devices replaced without cost to the hospital or beneficiary. Specifically, for 116 of the 149 claims the OIG reviewed, hospitals did not report the appropriate modifiers and charges (for claims with dates of service in calendar years (CY) 2012 and 2013) or a combination of the appropriate value code and condition codes (for claims with dates of service in CY 2014) to alert the Medicare contractors of the need for payment adjustments. For the remaining 33 claims, the OIG confirmed that the hospital had paid for the device, or the medical records showed that the procedure performed was not a device replacement. For the 116 incorrectly billed claims the OIG identified, hospitals received $2.7 million in Medicare overpayments. 
• On December 5, 2016, the OIG released a report entitled, Review of Massachusetts Medicaid Managed Care Program Potential Savings with Minimum Medical Loss Ratio. The report found that the Massachusetts Medicaid program could have saved $4.7 million (approximately $3.5 million Federal share) in CY 2014 if the Massachusetts Executive Office of Health and Human Services: (1) required its Medicaid managed care plans to meet the minimum medical loss ratio (MLR) standard similar to the Federal standards for certain private health insurers and Medicare Advantage plans and (2) required remittances when Medicaid managed care plans did not meet the MLR standard. Specifically, of the 10 managed care plans that the OIG reviewed, they calculated MLRs for 2 plans that were less than 85 percent (the minimum MLR standard for large private insurers) during CY 2014.
• On December 5, 2016, the OIG issued Advisory Opinion No. 16-12. The advisory opinion is in response to a laboratory’s proposal to provide services consisting of the labeling of test tubes and specimen collection containers at no cost to dialysis facilities (the Proposed Arrangement). The OIG concluded that the Proposed Arrangement could potentially generate prohibited remuneration under the anti-kickback statute and that the OIG could potentially impose administrative sanctions. 
• On December 6, 2016, the OIG released a report entitled, Medicare Market Shares of Mail Order Diabetes Test Strips From April to June 2016. The report found that from April to June 2016, sampled suppliers provided 30 types of diabetes test strips via mail order. Of these strips, two types accounted for about half of the mail order market. Therefore, a supplier's bid would meet the Medicare Improvements for Patients and Providers Act (MIPPA) 50-percent rule if the bid declared that the supplier intended to provide either (1) both of these 2 types of strips or (2) at least 1 of these 2 types of strips and a combination of certain subsets of the other 28 types of strips sufficient to reach 50-percent. Further, the OIG found that five types of diabetes test strips accounted for 81 percent of the Medicare mail order market share, and ten types accounted for 93 percent.
• On December 6, 2016, the GAO released a report entitled, Nursing Homes: Consumers Could Benefit from Improvements to the Nursing Home Compare Website and Five-Star Quality Rating System. The report found that CMS collects information on the use of the Nursing Home Compare website. CMS uses three standard mechanisms for collecting website information: (1) website analytics; (2) website user surveys; and (3) website usability tests. These mechanisms have helped identify potential improvements to the website, such as adding information explaining how to use the website. However, the GAO found that CMS does not have a systematic process for prioritizing and implementing these potential improvements. Rather, CMS officials described a fragmented approach to reviewing and implementing recommended website changes. Federal internal control standards require management to evaluate appropriate actions for improvement. Without having an established process to evaluate and prioritize implementation of improvements, CMS cannot ensure that it is fully meeting its goals for the website. The GAO also found that several factors inhibit the ability of CMS's Five-Star Quality Rating System (Five-Star System) to help consumers understand nursing home quality and choose between high- and low-performing homes. 
• On December 7, 2016, the CBO released the Monthly Budget Review for November 2016. The federal budget deficit was $179 billion for the first two months of fiscal year 2017, the CBO estimates, and $22 billion less than the one recorded during the same period last year. Revenues were higher than those in the same period last year, by 1 percent, and outlays decreased by 3 percent. But this year’s outlays were reduced by the shift of certain payments from October 2016 to September 2016 because October 1 fell on a weekend. Otherwise, outlays so far this year would have been $25 billion (or about 4 percent) larger than those in October and November last year, and the deficit would have risen by about $20 billion.
• On December 9, 2016, the GAO released a report entitled, Medicare Value-Based Payment Models: Participation Challenges and Available Assistance for Small and Rural Practices. The report discusses challenges faced by small and rural physician practices when participating in Medicare’s new value-based payment models. 
• On December 9, 2016, the GAO released a report entitled, Prescription Drug Labels: Actions Needed to Increase Awareness of Best Practices for Accessible Labels for Individuals Who are Blind or Visually Impaired. The report found that some pharmacies can provide accessible labels in audible, braille, and large print formats, but dispensed very few prescriptions with these labels. The GAO also found that the National Council on Disability has conducted limited activities to inform pharmacies and the public about best practices for accessible prescription drug labeling.

IV. Other Health Policy News 

• On December 5, 2016, CMS issued an informational bulletin entitled, 2017 SSI and Spousal Impoverishment Standards. The bulletin provides an update on the 2017 Supplemental Security Income (SSI) and Spousal Impoverishment Standards.
• On December 5, 2016, CMS issued an informational bulletin entitled, 2017 Updates to the Child and Adult Core Health Care Quality Measurement Sets. The informational bulletin describes the 2017 updates to the core set of children’s health care quality measures for Medicaid and the Children’s Health Insurance Program (CHIP) (the Child Core Set) and the core set of health care quality measures for adults enrolled in Medicaid (the Adult Core Set).
• On December 6, 2016, the OIG issued a policy statement regarding gifts of nominal value to Medicare and Medicaid beneficiaries. The OIG is interpreting “nominal value” as having a retail value of no more than $15 per item or $75 in the aggregate per patient on an annual basis. As with the OIG’s previous interpretation, the items may not be cash or cash equivalents.
• On December 7, 2016, CMS released Medicare spending and utilization data for all Part B and D drugs for 2011 to 2015. The data files are the basis for the 2015 Medicare Drug Spending Dashboard that CMS released last month.
• On December 8, 2016, CMS announced two new models from the CMS Innovation Center. These two Beneficiary Engagement and Incentives (BEI) Models are the Shared Decision Making Model (SDM Model) and the Direct Decision Support Model (DDS Model). According to CMS, the BEI models will test different approaches to shared decision making, acknowledging that beneficiaries make decisions regarding treatment options in a variety of ways, and that facilitating a better understanding of their health and health care decisions is key towards improved beneficiary engagement.
• On December 9, 2016, CMS released the finalized Office of Management and Budget (OMB)-approved Medicare Outpatient Observation Notice (MOON). The MOON is a standardized notice to inform beneficiaries (including Medicare health plan enrollees) that they are an outpatient receiving observation services and are not an inpatient of the hospital or (CAH). Hospitals and CAHs must begin using the MOON no later than March 8, 2017.