This week in Washington: Senate to consider state of patent eligibility in America, House Ways and Means Committee will hold a hearing on the single-payer issue and both the House and Senate continue to hold hearings on the cost of healthcare.

Upcoming Hearings/Markups

Congress

Hearings/Markups

• House Energy & Commerce, Subcommittee on Health: "Investing in America’s Healthcare"

House

• Bipartisan Bill Unveiled to Repeal Ban on Physician-Owned Hospitals
• House Passes Pandemic Preparedness Bill
• House Appropriations Sends Agriculture-FDA Spending Bill to Floor

Senate

• Senate Finance Adds Health Insurance Tax to List of Fees Needing Permanent Fix
• Coons Says Patent Draft Bill Would Not Allow Gene Patenting
• Draft CBO Score of Surprise Billing Options: Benchmark Rates Save Most

Administration

• CMS Asks for Feedback to Reduce Regulatory Burdens
• CMS to Begin Publicizing Updated List of Troubled Nursing Homes
• HHS Ends Fetal Tissue Contract, Announces New Restrictions
• OMB Reviewing Trump Administration Medicaid Block Grant Plan
• FDA Announces Call Center to Simplify Expanded Access for Cancer Drugs
• FTC Finds Pay-For-Delay Deals at Lowest Level in 15 Years

Courts

• CMS Wins Lawsuit Challenging Portion of DSH Payment Formula
• U.S. Supreme Court Restricts CMS’s Ability to Skirt Notice-And-Comment

Proposed Regulations

• CMS: Fiscal Year (FY) 2020 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Acute Care Hospital (LTACH) Prospective Payment System
• CMS Proposes Fiscal 2020 Pay Rates for Inpatient Psychiatric Facilities
• CMS Proposes Boosting Payments to Inpatient Rehabilitation Facilities

Reports

• GAO: Elder Justice — Goals and Outcome Measures Would Provide DOJ with Clear Direction and a Means to Assess Its Efforts
• GAO: Insurance Markets — Benefits and Challenges Presented by Innovative Uses of Technology
• GAO: FEMA Action Needed to Better Support Individuals Who Are Older or Have Disabilities

Upcoming Hearings/Markups

Tuesday, June 11, 2019

Senate Committee on the Judiciary: “The State of Patent Eligibility in America: Part III”

The Senate Judiciary’s Subcommittee on Intellectual Property will hold a hearing continuing its work on patent eligibility, with a large panel of witnesses, most of whom are arguing in favor of statutory reform that would tighten up the law of eligibility. Find witness testimonies and hearing updates as they become available.

Wednesday, June 12, 2019

Senate Committee on the Judiciary: “Your Doctor/Pharmacist/Insurer Will See You Now: Competitive Implications of Vertical Consolidation in the Healthcare Industry”

The Senate Judiciary’s Subcommittee on Antitrust, Competition Policy, and Consumer Rights will hold a hearing on how vertical consolidation practices in the health care industry could threaten competition. Find witness testimonies and hearing updates as they become available.

House Ways and Means Committee: “Pathways to Universal Health Coverage”

The House Ways and Means Committee will hold a hearing on the single-payer issue, marking the first time in decades that one of the two main health care committees of jurisdiction will hold a hearing on the topic. The hearing will also discuss other ways to achieve universal coverage. Find witness testimonies and hearing updates as they become available.

House Energy and Commerce: “No More Surprises: Protecting Patients from Surprise Medical Bills”

The House Energy and Commerce Health Subcommittee will hold a hearing on surprise medical billing with a goal to protect patients by developing a solution that takes patients out of the middle of pricing issues without increasing health care costs. An unannounced group of stakeholders will testify as the committee considers legislative proposals to address the surprise billing concerns. Find witness testimonies and hearing updates as they become available.

Wednesday, June 19, 2019

Senate Special Committee on Aging: “The Complex Web of Prescription Drug Prices, Part III: Examining Agency Efforts to Further Competition and Increase Affordability”

The Senate Aging Committee will hold the third hearing in its series on prescription drug prices, with witnesses testifying from the Centers for Medicare and Medicaid Services (CMS), the Food and Drug Administration (FDA) and the Department of Health and Human Services (HHS), Office of the Inspector General. Find witness testimonies and hearing updates as they become available.

Congress

Hearings/Markups

House Energy & Commerce, Subcommittee on Health: "Investing in America’s Healthcare"

The Health Subcommittee of the Committee on Energy and Commerce held a hearing on health care extenders, discussing the following legislation:

• H.R. 1767, the “Excellence in Mental Health and Addiction Treatment Expansion Act”
• H.R. 1943, the “Community Health Center and Primary Care Workforce Expansion Act of 2019”
• H.R. 2328, the “Community Health Investment, Modernization, and Excellence Act of 2019”
• H.R. 2668, the “Special Diabetes Program Reauthorization Act of 2019”
• H.R. 2680, the “Special Diabetes Programs for Indians Reauthorization Act of 2019”
• H.R. 2815, the “Training the Next Generation of Primary Care Doctors Act of 2019”
• H.R. 2822, the “Family-to-Family Reauthorization Act of 2019”
• H.R. 3022, the “Patient Access Protection Act”
• H.R. 3029, the “Improving Low Income Access to Prescription Drugs Act of 2019”
• H.R. 3030, the “Patient-Centered Outcomes Research Extension Act of 2019”
• H.R. 3031, a bill to amend Title XVIII of the Social Security Act to extend funding for quality measure endorsement, input and selection under the Medicare program
• H.R. 3039, a bill to provide for a five-year extension of funding outreach and assistance for low-income programs

Why this is important: The majority of the House has asked House leadership to move legislation delaying cuts in DSH payments scheduled for Oct. 1. The majority of members supports delaying the cuts by an additional two years.

At the hearing, most members agreed that extending funding for community health centers, the National Health Services Corps and the Teaching Health Center Graduate Medical Education program for more than two years is a priority, but some House Republicans held concern about increasing funding with no offsets.

Read witness testimonies and the full hearing.

House

Bipartisan Bill Unveiled to Repeal Ban on Physician-Owned Hospitals

On June 5, House Energy & Commerce health subcommittee ranking Republican Michael Burgess (TX) and Rep. Vicente Gonzalez (D-TX) announced a bipartisan bill to repeal the Affordable Care Act’s (ACA) ban on new physician-owned hospitals. H.R. 3062, the Patient Access to Higher Quality Health Care Act of 2019 would eliminate the restrictions that put a moratorium on physician-owned hospitals and limited the expansion of most grandfathered physician-owned hospitals.

Read the bill.

House Passes Pandemic Preparedness Bill

On June 4, the House passed by voice vote the Senate’s Pandemic and All-Hazards Preparedness and Advancing Innovation Act (PAHPAI). The legislation reauthorizes HHS efforts to respond to disasters, emerging infectious diseases and chemical/biologicals threats. The bill authorizes funds to encourage new antibiotics and stockpile critical medicines and authorizes a range of state and local disaster responses.

It was delayed in passing the Senate because of issues related to over-the-counter drug reform which had been included in the House version.

The final version of the pandemic legislation does not include the reform of the Food and Drug Administration’s (FDA) over-the-counter (OTC) drug regulatory framework that was part of the House’s original pandemic bill. Because it was left out of the final bill, the OTC reform legislation will now have to pass through Congress on its own or be attached to a different vehicle, although it is not clear whether it is a priority at the moment.

House Appropriations Sends Agriculture-FDA Spending Bill to Floor

On June 4, the House Appropriations Committee approved its Agriculture-FDA spending bill 29-21. The bill includes a total of $24.3 billion in discretionary funding for the Department of Agriculture (USDA) and the Food and Drug Administration (FDA), which is $5.1 billion more than the Trump administration requested in its budget plan.

The committee adopted by voice vote an amendment that blocks the use of funds for reviewing research into genetically modifying human embryos. The bill would also boost the FDA’s taxpayer funding by $185 million and includes language urging the FDA to expedite pre-market review of e-cigarettes, establish a track-and-trace system for tobacco products and expand the “Real Cost” anti-tobacco ad campaign that targets teens.

An amendment introduced by Rep. Aderholt to raise the tobacco purchasing age to 21 and to limit online e-cigarette sales failed in a 23-27 recorded vote.

Senate

Senate Finance Adds Health Insurance Tax to List of Fees Needing Permanent Fix

On June 6, a Senate Finance Committee task force added the Affordable Care Act’s (ACA) health insurance tax to the list of health fees for which it is seeking a permanent fix. The fee applies to nearly all health issuers, including Medicaid managed care and Medicare Advantage plans, and is apportioned based on market share. The tax was to bring in $8 billion in 2014 and $14.3 billion in 2018, and it was indexed to premium growth post-2018. However, Congress paused the tax in 2017 and then again for 2019.

Coons Says Patent Draft Bill Would Not Allow Gene Patenting

On June 4, Sen. Chris Coons (D-DE) said a draft bill aiming to broadly reform how patents are granted would not allow for the patenting of individual, isolated genes. The draft eliminates a restriction on patenting broad categories of intellectual property such as “abstract ideas,” “laws of nature” or “natural phenomena.” It would establish a new benchmark involving “specific and practical utility in any field of technology through human intervention.” The draft bill text to reform Section 101 of the Patent Act was released on May 22 by Sens. Thom Tillis (R-NC) and Coons. Reps. Doug Collins (R-GA), Steve Stivers (R-OH) and Hank Johnson (D-GA) introduced a companion to the Coons-Tillis bill in the House.

Read the draft bill.

Draft CBO Score of Surprise Billing Options: Benchmark Rates Save Most

On June 4, the Congressional Budget Office sent a preliminary budget estimate to Congress on the Senate HELP committee’s options to curb surprise medical bills. The CBO found the committee’s proposal, which sets a benchmark payment rate, would save the most money at $25 billion in health savings to the federal government over 10 years. The arbitration model in the Senate discussion draft would save $20 billion over 10 years and the committee’s network matching proposal would save the least, $9 billion over 10 years.

Administration

CMS Asks for Feedback to Reduce Regulatory Burdens

On June 6, the Centers for Medicare and Medicaid Services (CMS) announced a request for information (RFI) asking for another round of feedback on ways to cut administrative and regulatory burden through its Patients over Paperwork campaign, an initiative to lower health care costs. The RFI specifically looks for ways to cut down on the burden posed by prior authorization procedures, beneficiary enrollment and beneficiary eligibility determinations, as well as burdens on rural providers and duals.

The RFI will be published on June 11, 2019. Comments must be submitted by Aug. 12, 2019.

Read the RFI.

CMS to Begin Publicizing Updated List of Troubled Nursing Homes

On June 5, the Centers for Medicare and Medicaid Services (CMS) announced it will begin posting a list of roughly 400 nursing homes with poor performance records. Sens. Bob Casey (D-PA) and Pat Toomey (R-PA) released the previously undisclosed list on June 3.

The list, which CMS says it will update monthly, consists of candidates for CMS’s Special Focus Facility program, which increases federal oversight for nursing homes with higher instances of poor care that can include documented cases of neglect and abuse. CMS chooses 88 nursing homes out of a list of about 400 candidates to participate in the 21-year-old program. The list of the 88 nursing homes chosen for the program is publicized, but the candidates previously had not been released.

HHS Ends Fetal Tissue Contract, Announces New Restrictions

On June 5, the Department of Health and Human Services (HHS) announced that it is stopping government scientists from acquiring new fetal tissue from elective abortions to use in medical research. Research using fetal tissue that is government funded but conducted by scientists who are not employed by the government will be allowed to continue. The Trump administration had conducted a six-month audit of more than $100 million in federally funded research that used fetal tissue.

According to the statement, “promoting the dignity of human life from conception to natural death is one of the very top priorities of President Trump’s administration,” and the audit led the to the administration’s decision to let the contract with the University of California, San Francisco expire, as well as the new restrictions.

Read the press release.

OMB Reviewing Trump Administration Medicaid Block Grant Plan

On June 5, the Trump administration’s plan to let states reform their Medicaid programs by instituting block grants was listed as a pending review at the Office of Management and Budget (OMB). The “State Medicaid Director Letter: Medicaid Value and Accountability Demonstration Opportunity” will go under review before the full plan is made public.

FDA Announces Call Center to Simplify Expanded Access for Cancer Drugs

On June 3, the Food and Drug Administration (FDA) announced a pilot program call center to serve as an information hub for physicians treating patients with cancer who seek access to unapproved therapies. The goal of the call center, Project Facilitate, is to make the Expanded Access request process easier for physicians, provide patients with new therapies and provide data that could help sponsors open clinical trials for more existing drugs. Before the announcement of Project Facilitate, Expanded Access requests for patients with cancer would come in through multiple places at the FDA.

Read the press release.

FTC Finds Pay-For-Delay Deals at Lowest Level in 15 Years

On May 23, the Federal Trade Commission reported that while brand and generic drug makers settled patent disputes more often in fiscal year 2016 than prior years, only one of the agreements met the Supreme Court’s criteria of potentially being anticompetitive. The FTC noted that such legal settlements could impede price competition for drugs when branded manufacturers agree to keep “authorized” generics off the market during the first six months of a generic launch, keeping prices artificially high.

The report summarizes data on the 232 final patent settlements filed with the FTC and the Department of Justice (DOJ) during FY 2016 pursuant to requirements imposed by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

Read the full report.

Courts

CMS Wins Lawsuit Challenging Portion of DSH Payment Formula

On June 4, the U.S. Court of Appeals for the D.C. Circuit ruled that hospitals cannot bring a legal challenge to the Centers for Medicare and Medicaid’s (CMS) method of estimating uncompensated care costs for the purpose of calculating Medicare disproportionate share hospital payments (DSH). The court dismissed a lawsuit from an Alabama hospital that argued CMS underestimated the hospital’s costs of uncompensated care and shortchanged the hospital’s DSH allotment.

U.S. Supreme Court Restricts CMS’s Ability to Skirt Notice-And-Comment

In a 7 to 1 decision, the U.S. Supreme Court on June 3, 2019, held that “[b]ecause the Department of Health and Human Services neglected its statutory notice-and-comment obligations when it revealed a new policy that dramatically—and retroactively—reduced Medicare payments to hospitals serving low-income patients, its policy must be vacated.”

The majority opinion in Azar v. Allina Health Services rejected the U.S. Department of Health and Human Services’s argument that it had broad authority to issue its own legal interpretations of the Medicare statute, including interpretations that affect payments to providers, without going through the rulemaking process.

Read the court’s opinion.

Read a detailed analysis of the decision, by McGuireWoods Consulting senior vice president, Stephanie Kennan.

Proposed Regulations

CMS: Fiscal Year (FY) 2020 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Acute Care Hospital (LTACH) Prospective Payment System

On April 23, 2019, the Centers for Medicare and Medicaid Services (CMS) proposed to update Medicare payment policies for hospitals under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) for fiscal year 2020. The proposals include a raise in pay for low-wage hospitals by cutting pay for high-wage hospitals, as part of the reforms to the hospital wage index, as well as raising the add-on pay for new technology and providing a path for breakthrough devices approved by the Food and Drug Administration (FDA) to access add-on payments. CMS also proposed policy changes to increase significantly Medicare pay to hospitals for administering expensive chimeric antigen receptor T-cell (CAR-T) cancer drugs and make it easier for hospitals to get the maximum possible reimbursement for administering the CAR-T cell therapies.

The bundled proposals will be published on May 3, 2019 here.

Find the unpublished proposed rule here.

CMS Proposes Fiscal 2020 Pay Rates for Inpatient Psychiatric Facilities

On April 17, 2019, the Centers for Medicare and Medicaid Services (CMS) proposed to modify the market basket used to calculate inpatient psychiatric facility payments. The rule would use 2016 instead of 2012 as a base year and add a new claims-based measure to the Inpatient Psychiatric Facility Quality Reporting Program starting in FY 2020.

The proposal increases Medicare payments to inpatient psychiatric facilities by 1.7 percent in fiscal year 2020 while adding a new quality measure intended to assess whether patients with certain diagnoses are filling their prescriptions after being discharged from such facilities.

Comment period ends on June 17, 2019.

Find the proposed rule here.

CMS Proposes Boosting Payments to Inpatient Rehabilitation Facilities

On April 17, 2019, the Centers for Medicare and Medicaid Services (CMS) proposed a rule to update Medicare payment policies for facilities under the Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) and the Inpatient Rehabilitation Quality Reporting Program (IRF QRP) for fiscal year (FY) 2020.

CMS is proposing to raise the estimated payments per discharge for inpatient rehabilitation facilities in federal fiscal 2020 by 2.3 percent, or $195 million, compared to 2019. The proposal could boost payments in urban areas by 2.2 percent and rural areas by 4.3 percent compared to the year before.

Comment period ends on June 27, 2019.

Find the proposed rule here.

Reports

GAO: Elder Justice — Goals and Outcome Measures Would Provide DOJ with Clear Direction and a Means to Assess Its Efforts

On June 7, the Government Accountability Office (GAO) released a report adhering to a provision within the Elder Abuse Prevention and Prosecution Act (EAPPA) to review elder justice efforts in the federal criminal justice system. The GAO found that the Department of Justice (DOJ) investigated and prosecuted cases of elder abuse, provided training and grants, and had taken other action for elder justice. However, the DOJ has not developed goals that could help guide these efforts. For example, the DOJ has no means to measure if its coordination practices have been useful and relevant over time to state and local officials.

The GAO recommends:

1. The Attorney General develop and document goals that explain the common outcomes DOJ seeks to achieve through its elder justice efforts.
2. The Attorney General develop and document outcome measures to track the progress the DOJ is making toward achieving its elder justice goals.

Read the full report.

GAO: Insurance Markets — Benefits and Challenges Presented by Innovative Uses of Technology

On June 7, the Government Accountability Office (GAO) released a report on insurtech activities in property/casualty and life insurance sectors, determining the technologies by these companies can create potential challenges for insurers and risks for consumers. Because many of these regulatory initiatives are still in development, or recently developed, the effect on innovation and consumer protection is unknown.

The challenges and risks include:

• The use of AI to create underwriting models for determining premium rates can make it challenging for insurers to ensure that factors prohibited by regulation, such as race, are not used in models. Such models are often developed by data scientists who, unlike actuaries, may not fully understand insurance-specific requirements.
• Insurer collection and use of consumer data not provided by the consumer raise questions about data accuracy, privacy and ownership.
• Some insurtech companies sell coverage through nonadmitted insurers. As the GAO previously reported, nonadmitted insurers, unlike traditional insurers, are not required to be licensed in each state in which they sell insurance, and receive less regulatory oversight of their policies and rates. Also, if nonadmitted insurers became insolvent, state guaranty funds would not be available to help pay policyholder claims.

The GAO did not make any recommendations in this report.

Read the full report.

GAO: FEMA Action Needed to Better Support Individuals Who Are Older or Have Disabilities

On June 5, the Government Accountability Office (GAO) released a report after reviewing disaster assistance for individuals who are older or have disabilities and were affected by three sequential hurricanes: Harvey, Irma and Maria. The GAO found that aspects of the process to apply for assistance from the Federal Emergency Management Agency (FEMA) after the 2017 hurricanes were challenging for older individuals and those with disabilities. FEMA’s application for assistance contained disability questions that were easily misinterpreted. This may have led to fewer people reporting their disabilities, making it more difficult to help those in need.

The GAO made seven recommendations for FEMA’s new approach to helping people with disabilities.

Read the full report.