House Passes 21st Century Cures Act

On November 30, 2016, the House of Representatives passed the 21st Century Cures Act, a bill intended to modernize health care delivery and speed up and improve medical research and innovations by removing bureaucratic obstacles.  If enacted, the bill would provide (i) the National Institute of Health (NIH) with over $4.8 billion in funding over the next ten years to fund cancer research and other health innovation projects, (ii) the FDA with $500 million in funding over ten years to help move drugs and medical devices to patients more quickly while maintaining safety and effectiveness standards, and (iii) $1 billion over two years for grants to states to supplement opioid prevention and treatment activities, including improving prescription drug monitoring programs, implementing prevention activities, training health care providers, and expanding access to opioid treatment programs. The bill is expected to pass the Senate later this week.  

The bill contains sweeping legislation with provisions on FDA and NIH research prioritization, medication review, medication and medical device development, and mental health reforms, among numerous others.  As to the FDA provisions, the bill would:

• Make several changes to the FDA’s drug and device approval and regulation process, intended to bring treatments to market more quickly, particularly where they can take on unmet medical needs;
• Open up the possibility for additional market exclusivity on certain drugs, such as existing drugs that can be repurposed to safely and effectively treat rare diseases;
• Require the FDA to clarify some of its regulatory efforts, such as how its various divisions oversee drug-device combination products (such as a drug-coated stent);
• Require the FDA to identify low-risk medical devices that no longer require safety and efficacy reporting under the 510(k) process; and
• Direct the FDA to develop guidance on off-label marketing within 18 months of final passage of the bill, facilitating “responsible communication” of truthful and nonmisleading scientific developments regarding the use of drugs that are not reflected in product labels.

With respect to electronic technology and mental health, the bill includes a number of proposed provisions that:

• Are aimed at the HHS Secretary, through notice and comment rulemaking, improving the use of electronic technology, such as electronic health records, with a sizable section of the legislation dedicated to improving interoperability between various electronic health record systems, including a prohibition on configurations that enable so-called information blocking; and
• Focus on evidence-based mental health treatments and increase cooperation between federal agencies on mental health policy. 

The legislation has also become a vehicle for other healthcare priorities, including the following:

• The Burgess-DeFazio Physician ‘Sunshine Act’ Education Clarification
  • This clarification would exempt continuing medical education seminars, as well as the distribution of medical textbooks and peer-reviewed journal articles, from the Physician Sunshine Act reporting requirements.  Sponsored by Congressmen Michael C. Burgess, M.D. (R-TX), a physician, and Peter DeFazio (D-OR), this bipartisan measure supports physicians that seek to remain educated on innovative clinical care techniques by removing burdensome reporting requirements, fitting with the intended goals of the Sunshine Act to encourage transparency while ensuring that medical practices and patient care would not be harmed.
• Regulatory Relief for Long-Term Care Hospitals (LTCH)
  • Section 15004 would allow those LTCHs that qualify for a “mid-build” to be excepted from the current CMS moratorium on bed expansion.
  • Similar to the provision that allows for expansion of provider-based outpatient departments that were “mid-build” in November 2015, this new language would enable LTCHs that had previously made plans to expand its certified beds to do so before the sunset of the statutory moratorium in September 30, 2017.
  • This section is offset by a reduction to LTCHs outlier payments, requiring a higher threshold for LTCHs discharges to qualify for outlier payments.
• Establishment of a Medicare Pharmaceutical & Technology Ombudsman to Increase Pricing Transparency on the Hospital Outpatient Side
  • Section 4011 would create a new authority within CMS to review complaints regarding drug and medical technology coverage and pricing.
  • The Ombudsman, who must be appointed by the Secretary of HHS within twelve months of enactment, will work to resolve complaints from current and potential Medicare suppliers with respect to their products’ coverage status and payment parameters.
  • Similar to the Medicare Beneficiary Ombudsman, the Pharmaceutical & Technology Ombudsman will also be required to provide periodic reports to the Secretary and Congress regarding its findings.
• Requiring Information on the Provision of Telemedicine to the Medicare/Medicaid population(s) from Both CMS and MedPAC
  • Section 4013 would require CMS and MedPAC to study and evaluate the role of telemedicine techniques in improving access to Medicare and Medicaid beneficiaries.
  • Specifically, this provision would require CMS to submit a report to Congress within twelve months of enactment highlighting the specific populations of patients that would benefit from telehealth supports, high-volume treatments that are amenable to being provided in a telehealth setting, activities sponsored under the CMS Innovation Center to identify new models of service delivery using telemedicine, and barriers to encouraging more expansive use of telemedicine that currently exist.
  • The provision also requires MedPAC to produce an evaluation of the telehealth services that are currently paid for in Medicare, Medicaid, and private insurance comparatively as well as recommendations for additional services that should be considered for future coverage and payment.
• Extension of the Prohibition on the LTCH 25 Percent Rule
  • Under the LTCH 25 percent rule, no more than 25 percent of a LTCH’s admissions can come from the same inpatient acute hospital.  The Bipartisan Budget Act of 2012 prohibited the Secretary of HHS from enforcing the LTCH 25 percent rule through June 30, 2016.  If enacted, Section 15006 of the 21st Century Cures Act would amend the prohibition by extending the prohibition on the LTCH 25 percent rule for an additional 12 months from October 1, 2016 through discharges occurring before October 1, 2017.
• Adjustments to Risk Adjustment Methodology
  • Section 15002 of the legislation would require HHS to implement a transitional risk adjustment methodology to serve as a proxy for socio-economic status for the Hospital Readmissions Reduction Program and clarify that the proxy should only apply to a hospital’s Medicare population.

• Limited Exception for Mid-Build Outpatient Departments
  • Section 16001 of the legislation would provide a limited exception to the hospital outpatient department (HOPD) payment reductions in Section 603 of the Bipartisan Budget Act of 2015 for HOPDs that were defined as “mid-build” prior to November 2, 2015.
    • Under the exception, an outpatient department qualifies as “mid-build” if the hospital had “before November 2, 2015 … a binding written agreement with an outside unrelated party for the actual construction” of the department.  If a department meets that definition of “mid-build,” then it can qualify for excepted status in 2018 if the hospital sends to CMS within 60 days of the provision becoming law both (i) a letter from its chief executive officer or chief operating officer stating that the department meets the definition of mid-build and (ii) a full provider-based attestation for that department.  If CMS approves the attestation, the department will receive the full OPPS payment rate beginning January 1, 2018.  (Even mid-build departments will still receive 50 percent of the OPPS payment rate in 2017 using the “PN” claims modifier.) 
    • As a result, an outpatient department(s) will need to be operational now or very soon since the deadline to submit these documents will be just a bit more than two months from now. 
• End-Stage Renal Disease Medicare Advantage Enrollment
  • Section 17006 of the legislation would allow Medicare beneficiaries with end-stage renal disease to enroll in a Medicare Advantage plan as part of their standard benefit package for plan years beginning on or after January 1, 2021.

The full bill text is available here.