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November 30, 2015

Washington Health Policy Week in Review Archive 55195139-fa16-407d-a0f4-6e1724845458

Newsletter Article


In Alabama, Report Provides Hope for Medicaid Expansion

By Marissa Evans, CQ Roll Call

November 23, 2015 -- Alabama lawmakers are mulling the idea of expanding Medicaid coverage to 290,000 low-income residents, a potential political U-turn for a state that has long opposed participation in the federal health care law. 

The idea was endorsed by the Alabama Health Care Improvement Task Force, a group that includes health care providers and Republican lawmakers, in a three-page report released on Nov. 18.

"Across the country, in every region and in some very conservative political environments, states are finding that local reform to Medicaid helps working families, local economies and state budgets," the task force members wrote. "We have an opportunity to design a plan that reflects Alabama's values and meets Alabama's needs. What would closing the gap mean for our state?" 

Republican Gov. Robert Bentley has not officially embraced the report, but he hasn't dismissed it, either. And he has indicated previously that he sees the state's high rate of uninsured residents as a hurdle to economic progress.

"I am concerned about the plight of the working poor," he said in a Nov. 12 speech, according to the Associated Press. "If doctors are not paid for seeing those patients, doctors will not go to rural Alabama because you can't expect a doctor to go to rural Alabama and lose money."

Twelve Republican-controlled states have expanded their Medicaid programs under the 2010 health care overhaul, which allows state to extend the state and federal insurance plan to people with incomes up to 138 percent of the federal poverty line. The cost is 100 percent covered by the federal government until 2017, when states that expanded will have to start chipping in. By 2020, states will have to cover 10 percent of the cost. Thirty states and the District of Columbia are participating in the expansion already.

Republican state lawmakers around the country have raised doubts that the federal government will keep its financial promise to cover most of the cost. 

The three-page health task force report outlined positive impacts from expansion, including less use of emergency rooms and health clinics for primary care and hospitals being financially stable enough to keep their doors open.

'A Win for the State Budget'

The task force also noted how Medicaid expansion is "a win for the state budget" as Alabama would see savings on mental, behavioral and public health services for low-income adults and providing care for inmates.

The program would generate an additional $1.2 billion into the state's economy, according to the report. 

Republican lawmakers' concerns about continued federal funding also were addressed in the report: "For 50 years the federal government has kept its Medicaid promise to states" and that Alabama can opt-out of the program anytime. 

The report has given providers a long awaited glimmer of hope and at a critical juncture for the state's hospitals, according to Rosemary Blackmon, executive vice president for the Alabama Hospital Association. 

Serving a large population of uninsured patients has cost Alabama hospitals millions of dollars, she said. Since 2011, five rural Alabama hospitals have closed and among the ones still open, 45 percent are operating in the red, according to the report. Blackmon said many hospitals are cutting services, reducing staff or being more efficient with their supplies to save money and stay open.

"They're dipping in reserves or utilizing other sources of income that are not specifically hospital related," Blackmon said. "In the end you can't continue to operate in the red and survive."

But while three of the state's Republican legislators—Reps. Jim Carnes and April Weaver, and Sen. Gerald Dial—served on the committee, selling the idea of expansion to other Republicans won't be easy.

Republican state Sen. Del Marsh said that he and many of his party's colleagues are concerned that Alabama could underestimate the number of residents eligible for Medicaid expansion, leading to unexpected costs. Marsh also said after the state's grueling two special sessions to get a budget passed, it will be tough to get Republicans on board with more taxes.  

"We've only got so much money to spend and every time we make further commitments to Medicaid without raising revenue then that money has to come from someone else," Marsh said. 

Among expansion states enrollment is projected to increase on average of 4.5 percent in fiscal 2016, according to a Kaiser Family Foundation report released last month. During fiscal 2015, beneficiary enrollment rose on average by 18 percent and Medicaid spending increased on average by 17.7 percent for the then 28 states and District of Columbia that had expanded.

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HHS Airs Concerns About Rising Drug Prices

By Melanie Zanona, CQ Roll Call

November 20, 2015 -- Health and Human Services (HHS) officials signaled Friday they want to help curb soaring prescription drug prices but didn't say what steps the administration might take or lay out a timetable. 

With presidential candidates and lawmakers from across the political spectrum questioning drug pricing, HHS held a forum Friday to discuss the challenges and solutions to ensuring patients have access to affordable, innovative medicines.

"We're here today to listen and learn," Secretary Sylvia Mathews Burwell said. "Though this problem is complex, we know that action will be needed from all of us here today."

The debate over drug pricing has intensified over the past year, driven by instances in which companies such as Turing Pharmaceuticals and Valeant Pharmaceuticals hiked the cost of decades-old drugs. Such moves have stoked public perceptions that drug costs are ballooning: 72 percent of respondents to an August Kaiser Family Foundation poll believed drug costs were unreasonable.

Friday's forum was intended to air the views of insurers, drug companies, patient advocates and others in the debate. There was a general consensus that the pressing issue could be addressed through regulation or legislation.

Some solutions floated included allowing the government to negotiate directly with pharmaceutical companies on behalf of Medicare instead of relying on insurers, requiring greater transparency about how drugmakers set their prices and shifting towards more value-based health plans that reward efficiency.

"People deserve the right to know how a drug is priced and how much was paid by taxpayers in the form of research to develop that drug," said Debra Whitman, chief public policy officer at the seniors lobby AARP. "Right now, prices are set arbitrarily. Consumers don't have all the information they need."

Democratic presidential candidate Sen. Bernard Sanders, I-Vt., has helped elevate the topic on the campaign trail. He introduced legislation (S 2023) in September that would require greater transparency; allow drugs to be imported from licensed Canadian pharmacies, where they are often sold for less; and terminate patent exclusivity periods for manufacturers that commit fraud, among other things.

Andy Slavitt, acting administrator for the Centers for Medicare and Medicaid Services, said his agency spent $140 billion on prescription drugs and that spending on medicines increased 13 percent in 2014 while overall health spending grew 5 percent.

But Slavitt was also careful to emphasize the importance of balancing affordability with innovation, a leading concern among drugmakers.

"I hope that today's public dialogue kicks off a commitment to listening and working together to advance ideas that improve access, affordability and innovation so all Americans have access to the breakthroughs ahead," Slavitt said. "We look forward to working with you in the weeks and months ahead."

The Pharmaceutical Research and Manufacturers of America said there is a need "to look at spending across the health care system to find solutions that ensure access to high quality, patient-centered care and continue to encourage development of innovative, life-changing medicines."

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Senators Press FDA Nominee on High Drug Prices

By Andrew Siddons, CQ Roll Call

November 17, 2015 -- President Barack Obama's nominee to lead the Food and Drug Administration (FDA) faced pointed questions about rising prescription drug prices and the pace of product reviews during a confirmation hearing that touched on the FDA's role in regulating products from medical devices to tobacco and genetically modified fish. 

Duke University cardiologist Robert Califf, currently an FDA deputy commissioner, told the Senate Health, Education, Labor, and Pensions (HELP) Committee that the agency doesn't police the price of medicines but can influence cost by ensuring that products are safe and effective. 

Califf faced sharp questioning from Bernard Sanders of Vermont, who is running for the Democratic presidential nomination and sponsoring several bills that would address drug prices through changes including allowing the importation of lower-priced drugs from Canada.

"We can import lettuce, tomatoes, vegetables from all over the world, but we cannot import from Canada prescription drugs," Sanders said. "Why do we pay the highest prices in the world, by far, for prescription drugs?" 

Califf replied that he wasn't an expert on drug pricing.

"I'm certainly sensitive to the fact that in a field like cardiovascular medicine, my specialty, we need to have drugs available," Califf said.

Califf, echoing past concerns from FDA officials, said the agency would be stretched in trying to ensure that drugs imported from nations where they are sold for less were safe and effective. "We have major concerns about reimportation," Califf replied, saying that a system to monitor the imports would need to be developed and funded properly.

Sanders has previously said he would not support Califf's nomination and reiterated his position.

"I believe we need a commissioner who is going to stand up the pharmaceutical industry, and protect the American consumer, and I have to say to you, with regret, that I think you are not that person," Sanders said.

In opposing Califf, Sanders appears to be in the minority of senators on the HELP panel. The committee's top Democrat, Patty Murray of Washington, expressed support for his nomination, as did Richard Burr, R-N.C., and Barbara Mikulski, D-Md.

HELP Committee Chairman Lamar Alexander, R-Tenn., suggested through his questions that it is not the FDA's job to worry about the price of drugs.

"Do you believe in terms of drugs, it's accurate to say the FDA's statutory mission is to promptly and efficiently make sure that drugs are safe and effective?" Alexander asked.

"That is our primary mission, but we also can have an impact on the cost of drugs by performing that function effectively," Califf responded.

Califf's ties to pharmaceutical companies were raised by some Democrats. Califf previously ran Duke's Clinical Trial Research Institute. Some believe that the work he did with pharmaceutical companies could bias his decisions as a regulator of those same firms.

Murray and Sen. Elizabeth Warren, D-Mass., asked Califf if these relationships should be a concern. Califf told Murray that while at Duke, if a study was funded by industry, the company would sign "an ironclad contract" guaranteeing the independence of the researchers.

Warren asked Califf if he agreed with the pharmaceutical industry that the FDA is "too tough," and that standards should be lowered.

"I've never been a proponent of lowering standards. If anything, I've argued for raising standards for better studies that show the full gamut of risk and benefit," Califf replied. "That doesn't mean we couldn't potentially be quicker."

Alexander said in his opening statement that Califf had accepted "several recusals" for unspecified issues recommended by the Office of Government Ethics. That office and committee staff had found no remaining conflicts. 

Alexander pressed Califf on the FDA's logjam of generic drug applications, and why, despite a $1 billion in funding from a generic drug user fee authorized in 2012, the review time for generics had slipped from 30 months to 48 months.

Califf explained that the accumulation developed before the new funding, and it takes time to clear through that. "As that backlog is cleared, the new applications will be going through very quickly," he said.

The panel has not said when it will vote on Califf's nomination. Ben Sasse, R-Neb., has separately put a hold on all of Obama's health nominees until he receives answers about the failure of nonprofit health co-ops created under the health care overhaul.

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Bipartisan Anger Over Pharmacy Benefit Manager Power at Hearing

By Jad Chamseddine, CQ Roll Call

November 18, 2015 -- Republicans and Democrats showed rare unity in a hearing over competition among pharmacy benefit managers (PBMs), combining their attacks against companies for contributing to soaring drug prices and trampling independent pharmacies.

The House Judiciary Regulatory Reform, Commercial and Antitrust Law Subcommittee, which has maintained a focus on a rapidly consolidating health care industry, turned its attention on Tuesday to these specialized companies that typically negotiate discounts and rebates with drug manufacturers for their clients.

The subcommittee's members singled out the three major players—Express Scripts Holding Co., CVS Health Corp, and UnitedHealth Group Inc.'s OptumRx division — for wielding too much power.

Regulatory Reform, Commercial and Antitrust Law Subcommittee Chairman Tom Marino, R-Pa., said due to their central position in the administration of drug benefits PBMs have the ability to "place downward pressure on the prices of drugs." But their critics, largely smaller local pharmacies, have questioned whether they are passing any savings on to consumers.

Most of the hearing revolved around the interaction of PBMs with smaller, local pharmacies, which often take a loss on the pricing of specialty pharmaceuticals. Brad Arthur, the president of the National Community Pharmacists Association, an association of independent pharmacists, told the panel the largest PBMs have "disproportionate market power."

He said small independent pharmacies have no power to negotiate contracts often forcing them to enter into "take it or leave it contracts" to stack their shelves with the necessary prescriptions.

Lawmakers took up the plight of local pharmacies in repeated questioning of PBM executives.

Georgia Republican Doug Collins launched a stinging attack against representatives of CVS and Express Scripts at the hearing, questioning claims that the PBM market was competitive. "Three companies, Express Scripts, CVS Health, and Optum RX control about 80 percent of the PBM market," Collins said. "Not a great deal of competitiveness there."

Collins called for congressional action to tackle the rate of reimbursements received by local pharmacies, which are often well below the price of skyrocketing generic drugs.

Local pharmacies have called for greater transparency from PBMs on discounts they were able to achieve from generic drug manufacturers. Also known as Maximum Allowable Cost lists, they are often clouded in secrecy to the detriment of small pharmacies.

Earlier this year, Collins introduced a measure (HR 224) to shed more light on these lists and compel federal health care programs to disclose unfair practices. The bill is supported by five Democrats and 25 Republicans. PBMs have often been accused of not passing on savings from rebates and their negotiations with drug manufacturers on to consumers.

While Collins has previously toed the party line during health care hearings in the House Judiciary Committee, this time he was joined by House Judiciary Chairman Robert W. Goodlatte, R-Va., and Marino, in his call to better regulate the pharmaceutical market.

"During my tenure in Congress, I have seen many community pharmacies in my district shutter their doors," Goodlatte said. "While we should allow the free market to operate, we should ensure that there is a level playing field for both large and small pharmacies."

Local pharmacies are also pushing for legislation exempting them from antitrust laws allowing them to band together to negotiate better contract terms from the PBMs and health insurers. The Federal Trade Commission has not been receptive to these efforts, but subcommittee ranking member Hank Johnson of Georgia said the Federal Trade Commission (FTC) has not properly examined competition in the PBM space since 2005.

Since then, Express Scripts completed a $30 billion acquisition of Medco, CVS acquired PBM company Caremark Rx and UnitedHealth Group bought Catamaran. And Walgreens Alliance Boots Inc. said this month it would acquire Rite Aid Corp. to become the country's largest retail pharmacy.

Johnson said significant consolidation in the PBM market and questionable rebate schemes have led to higher cost to consumers.

Judiciary ranking member John Conyers Jr., D-Mich., said the issue of exempting local pharmacies from antitrust laws have previously been discussed and questioned whether changes to antirust laws alone would level the playing field, calling for "more direct regulatory measures" to be implemented. 

Marino has previously sponsored bills alongside Democrats to exempt small town pharmacies from antitrust laws. The FTC said such bills would have a "dire impact on seniors" and increase cost to employers.

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UnitedHealth Report Stirs Alarm About Obamacare Exchanges

By Rebecca Adams, CQ Roll Call

November 19, 2015 -- Health policy analysts and lobbyists were split on Thursday over whether the announcement by the nation's largest insurer that it may withdraw from health law insurance marketplaces in 2017 signals broader problems with the viability of the exchanges.

UnitedHealth Group lowered its expectations for earnings on Thursday, blaming higher-than-expected medical claims from the approximately 550,000 people it covers through the marketplaces created by the 2010 overhaul. Some patients enroll to receive medical care and drop coverage later, company officials said.

"In recent weeks, growth expectations for individual exchange participation have tempered industrywide, co-operatives have failed, and market data has signaled higher risks and more difficulties while our own claims experience has deteriorated," said Stephen J. Hemsley, chief executive officer of UnitedHealth Group, in a statement.

While United is not a dominant insurer in the marketplaces, lobbyists warned that other health plans face similar risks. Insurance companies are eyeing 2017 as a pivotal year because two financial protections that have limited insurers' losses will be expiring.

Administration officials already announced last month that one of those programs, the so-called risk corridors system, would not operate as intended. The program limits profits and losses for insurers offering coverage in the marketplaces. Lawmakers designed it to shift money from insurers with gains above a certain threshold to those with deficits beyond a certain cap.

Congressional Republicans had passed legislation in the fiscal 2015 spending package (PL 113-235) that blocked the Obama administration from tapping other federal funds to fund the program. In October, the Centers for Medicare and Medicaid Services (CMS) announced a $2.5 billion shortfall in the program and a subsequent 87 percent reduction in expected payments to insurers with losses.

As a result, many nonprofit co-op plans have failed and some other insurers are struggling. America's Health Insurance Plans spokeswoman Clare Krusing said the shortfall is causing some other plans to re-evaluate whether they will be able to keep offering coverage.

"We've been very clear with the Administration about the serious challenges facing consumers and health plans in this Exchange market," said AHIP president and CEO Marilyn Tavenner in a statement. "When health plans cannot rely on the government to meet its obligations, individuals and families are harmed as a result.

Tavenner, who until February was the administrator of CMS, said that "nearly 800,000 Americans have faced coverage disruptions as a result of the significant and unexpected shortfall." That includes people who are losing coverage because they were enrolled in either a co-op plan or other type of insurance plan that will not be continued.

Health and Human Services Secretary Sylvia Mathews Burwell has said she expects that about 10 million people will have enrolled and paid their premiums in the state and federal exchanges by the end of 2016, about half of previous Congressional Budget Office estimates and less than one million more people than in late 2015.

Tough Environment

The administration insisted that the marketplace remains stable.

"The Health Insurance Marketplace is entering its third year and continues to grow, giving millions of Americans access to quality affordable insurance," said CMS spokesman Aaron Albright. "Tens of thousands more Americans turn to the Health Insurance Marketplace for health coverage and even more return to the Marketplace for another year. In fact, about 9 out of 10 returning consumers will be able to choose from 3 or more insurers for 2016 coverage."

However, insurers are operating in an environment in which health care costs are rising at a faster clip than a couple of years ago and enrollment in the marketplaces has not been as robust as some plans predicted.

"The market dynamics mean that the administration is going to have to figure out what they can do to create more stability," said Dan Mendelson, the president of the Avalere consulting firm and a former Clinton administration health budget official.

The threat to withdraw by United, which is already reducing publicity about its marketplace plans, adds pressure on the administration.

CMS officials potentially could tweak other protections for insurers, such as a permanent program that bases insurance payments in part based on the health of the people enrolled. The administration also may be able to give insurers more discretion in the design of their benefits.

The best way to ensure the sustainability of the marketplaces would be for Congress to assist the administration in revising the law, much as lawmakers did for several years after Medicare cuts in the 1997 Balanced Budget Act (PL 105-33) struck home health agencies and other providers too deeply. "But when half of Congress is gunning for the law, that's just not going to happen," said Mendelson in an interview.

"One company doesn't tank the program but if they don't do something to stabilize the market, it's going to shrink and become more of a subsidized, specialized low-income program and that was not the intent of the law," he said. "The goal was to have a robust private insurance market for individuals in the U.S."

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Reconciliation Bill to Widen Health Law Repeal on Senate Floor

By Paul M. Krawzak, CQ Roll Call

Senate GOP leaders plan to take up a reconciliation bill to repeal much of the 2010 health care law next week, assuming it is clear after a conference meeting Nov. 30 that they have the 51 votes needed to pass the legislation.

People with knowledge of the process said final language in a Senate substitute amendment to the House-passed reconciliation bill (HR 3762) will be run by Senate Parliamentarian Elizabeth MacDonough on Dec. 1 to make sure modifications to the House bill do not violate the Senate’s Byrd rule.

The Senate on Dec. 2 then would begin consideration of the substitute, which has been crafted to protect against violations of the rule. The Byrd rule bars what is called "extraneous matter" from reconciliation bills, including provisions that do not have a budgetary impact.

People who have heard about the plan said Senate Republicans envision expanding the partial repeal of the law contained in the House bill by doing away with or scaling back the exchange subsidies, the Medicaid expansion and most of the taxes created by the law.

The first step is to make sure there is enough GOP support for the legislation, since several senators are opposed to the partial repeal approach in the House bill because they think it doesn't go far enough.

A few others are concerned about a provision that would suspend for a year federal Medicaid reimbursement to Planned Parenthood or other health care providers that perform abortions.

Republican senators received notice on Tuesday of the conference meeting, set for 6 p.m. Nov. 30, to discuss "Obamacare repeal."

By putting the reconciliation measure on the Senate agenda prior to consideration of any omnibus spending bill, it's possible Republicans could defuse at least some of the fights that could affect the appropriations measure, including Planned Parenthood defunding.

Attack on the Health Care Law

The House-passed bill sought a partial undoing of the health care law (PL 111-148, PL 111-152), including the repeal of the individual and employer mandates, taxes on high-cost health care plans and medical devices and a public health prevention fund, along with the Planned Parenthood defunding.

The partial repeal proved unacceptable to some GOP senators including presidential hopefuls Ted Cruz of Texas and Marco Rubio of Florida, as well as Mike Lee of Utah. They are pushing for total repeal or at least as much repeal as can be accomplished under Senate rules.

With a 54-seat majority, the GOP can only afford to lose three Republicans and still pass reconciliation with 51 votes, since all Democrats and the two independents in the Senate are expected to oppose the bill. President Barack Obama has said he would veto any repeal of the health care law.

Still, House and Senate Republicans view the reconciliation exercise as a dry run for what they might be able to accomplish if a Republican is elected president next year. The measure also serves as a powerful messaging tool communicating the party's intentions when it comes to the law, a signature of the Obama presidency.

By expanding the breadth of the repeal, Senate GOP leaders may be able to persuade most, if not all, of the Republican dissidents to vote for the legislation. However, that approach also runs the risk of alienating some other Republican senators, who may be hesitant to support a repeal of health insurance subsidies or the Medicaid expansion unless there is a credible replacement for the health coverage.

Planned Parenthood

The reconciliation bill also could lose support from some Republican senators who oppose defunding Planned Parenthood. That issue, however, could be resolved in the amendment process.

Susan Collins, R-Maine, who opposes defunding Planned Parenthood, expects an amendment to be offered to remove that provision. Even if the defunding provision is preserved in the bill, the opportunity to vote against it could provide cover for Planned Parenthood supporters.

The Senate substitute is needed to modify language in the House bill that MacDonough has said violates the Byrd rule, including repeals of the individual and employer mandates. MacDonough told leaders the budgetary impact of the repeals is "merely incidental" to the broader impact of ending the mandates and that it therefore violates the Byrd rule. GOP leaders said the language repealing the mandates could be modified in such a way as to achieve the same purpose without running afoul of the Byrd rule.

The repeals of the so-called Cadillac and medical device taxes in the House bill also create Byrd rule problems, since the revenue loss would add to the deficit in the "out years" after the budget window closes in 2025.

The GOP may be able to solve that problem by coupling additional deficit reduction–such as through repealing the exchange subsidies and Medicaid expansion–with the tax repeals.

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