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The Medliminal Washington Report 3.12.18

March 12, 2018

Statue of David G. Farragut at night, at Farragut Square, in Washington, DC.

This week, Congress returns to Washington with 11 days to finalize a government spending bill. Standing in the way are a number of contentious health care issues, most notably insurance market stabilization. Meanwhile, the administration weighed in on Idaho’s plan to skirt some of ACA requirements, and announced plans to overhaul electronic health record incentives. Also on our radar screen is the ongoing health insurance industry consolidation and new pharmacy rebates. We cover this and more in our weekly health care review.


White House Issues Demands on ACA Stabilization Bills

The White House has indicated that it would support a bipartisan push to restore cost-sharing reductions (CSRs) to stabilize the exchanges, but only if any legislation includes conservative policies that are almost universally opposed by Democrats. In a memo provided to reporters, the White House called for the stabilization measures (Alexander-Murray and Collins-Nelson bills) to include provisions that codify into law a recent Trump administration action to expand short-term health plans, and increase age rating bands from 3:1 to 5:1.

“Although congressional efforts to provide taxpayer money to prop up the exchanges is understandable, any such efforts must also provide relief to middle-class families harmed by the law and protect life,” the memo states. “In order to support such efforts, the administration believes these three policies to provide greater choice and control for middle-class families must be included.”

Stabilization bills, aimed at bringing down premiums, could be included in an omnibus budget bill that must be passed by March 23 to prevent a third government shutdown. However, House and Senate Republicans are divided on the issue and continue negotiating.

A recently published report by the actuarial consulting firm Oliver Wyman found that passing the stabilization bills would lower monthly premiums by 20 to 40 percent and prompt an additional 3.2 million people to get covered.

House to Vote on ‘Right to Try’ Bill for Terminally Ill Patients

On March 13, the House will vote on a bill that would give terminally ill patients the right to seek drugs in clinical trials, but not approved by the Food and Drug Administration (FDA). The Senate passed a similar bill by unanimous consent in 2017, though it differs enough from the bill under consideration that the House and Senate would have to reconcile the two bills if the House passes its bill.

Both bills would allow terminally patients to access drugs that have completed a Phase 1 clinical trial, and remove FDA from the process of signing off on certain patients accessing experimental treatments and instead allow institutional review boards to essentially make such decisions. However, neither bill would mandate or encourage companies to provide such treatments to those with terminal illnesses, which is usually the rate-limiting step as FDA typically signs off on 99 percent of all expanded access requests.

The president brought renewed attention to the effort in January when he mentioned the proposal in his State of the Union address, saying “patients with terminal conditions should have access to experimental treatments that could potentially save their lives.” These so-called “right to try” laws already exist in 38 states, and advocates argue that a federal law is needed to ensure greater continuity across state lines.

While the 2017 Senate bill passed without objection, it faces stronger opposition in the House. Energy and Commerce Committee ranking member, Rep. Frank Pallone (D-NJ), blasted the bill as needless legislation that undermines the FDA’s approval process and gives patients false hope, since it doesn’t require manufactures to actually provide the drugs to the patient. Critics also fear the legislation could carry broader implications and lead to a slippery slope of bypassing FDA regulations for less urgent cases, such as those with chronic illnesses.

The Administration

CMS Rejects Idaho Plan to Allow Sale of ACA Noncompliant Plans

The Trump administration rejected Idaho’s plan to allow the sale of limited benefit, low-cost health plans that do not comply with the Affordable Care Act (ACA). Centers for Medicare and Medicaid Services Administrator Seema Verma, in a March 8 letter to Idaho Gov. C. L. “Butch” Otter and Insurance Commissioner Dean Cameron, said the federal government has a duty to enforce the law, even though the administration opposes the ACA.

Although the letter commended Idaho’s effort to “address the damage” caused by the ACA, it said the proposed state-based plans would violate at least eight of its provisions, including bans on setting annual or lifetime caps, charging sick people more than those considered healthy or excluding coverage for preexisting conditions. The letter also noted that if such plans were sold in Idaho, insurance carriers might face significant financial penalties.

The letter outlines for Idaho options “within the law to meaningfully implement many of the policy proposals contained in the Bulletin.” The letter essentially says that Gov. Otter’s ACA-violating policies “with certain modifications” could be implemented as long as they were offered as part of short-term plans (the ACA does not impose essential health benefit requirements on short-term insurance plans). Last month, the Trump Administration issued proposed rules expanding short-term plans to year-long, renewable plans. The result would be that Idaho health insurers could still sell the limited benefit plans envisioned as long as they label the plans “short-term.”

Earlier this year, Governor Otter signed an executive order that allowed some Idaho health insurance plans to drop certain ACA requirements. For example, plans would not need to cover maternity care, mental illness, or other essential health benefits; insurers could charge higher premiums to those with preexisting conditions; and insurers could deny people coverage if they had failed to maintain continuous coverage. Blue Cross of Idaho was the first insurer in the state to announce it would offer such plans, filing five new individual market plans that skirt the ACA’s essential health benefits.

In response, the governor and insurance commissioner said in a joint statement that CMS’ ruling was “not a rejection” of the state’s plans. “Her letter made it clear that Idaho’s efforts to pursue innovative alternatives hold great promise, and we believe that Idaho’s plan aligns with the state’s responsibility for ‘substantially enforcing’ Obamacare. In fact, we consider the letter an invitation from CMS to continue discussing the specifics of what can and cannot be included in state-based plans.”

“We will consider all possible options and then continue discussions with CMS and HHS on how best to achieve our shared goals of reducing the costs of coverage and stabilizing our health insurance market,” they added.

CMS Announces Plans to Overhaul Electronic Health Record Incentive Programs

CMS Administrator Seema Verma announced on March 6 that the agency is planning to overhaul the meaningful use requirements of the electronic health record (EHR) incentive programs. Verma did not offer specific changes, but said the goals of the overhaul are to refocus the EHR programs on interoperability and to reduce the time and compliance cost required for providers to comply with meaningful use requirements.

The announcement follows the passage of legislation in February that no longer requires the Department of Health & Human Services (HHS) to create increasingly stringent EHR incentive program reporting requirements. The Meaningful Use program was created with passage of the HITECH Act in 2009, and offers financial incentives to providers to adopt EHR systems. Despite the wide adoption in the wake of the program, many providers have been flustered over systems’ usability and administrative burden.

In addition to the overhaul of the EHR incentive programs, CMS announced two new initiatives designed to improve patient access to health records. The first initiative, MyHealthEData, focuses on breaking down barriers that prevent patients from having electronic access to their health records on an application or device of their choice. The initiative will seek to ensure that patients have access to their entire health record, so patients can actively seek out health care service providers that meet their health needs.

The second initiative, Medicare Blue Button 2.0, is a new tool that will allow patients to access and share their health care information in a secure and universal digital format. The tool will enable Medicare patients to connect their claims data to secure applications and providers they trust and will allow patients to access and share their information with new health care providers. CMS hopes that the new tool will lead to less duplication in testing and will promote increased competition among technology innovators who serve the Medicare population.

According to a CMS press statement, more than 100 organizations, including some of the most notable names in technological innovation, have signed on to use Medicare’s Blue Button 2.0 to develop applications that will provide innovative new tools to help these patients manage their health.

“CMS serves more than 130 million beneficiaries through our programs, which means we are uniquely positioned to transform how important healthcare data is shared between patients and their doctors,” said Administrator Verma. “Today, we are calling on private health plans to join us in sharing their data with patients because enabling patients to control their Medicare data so that they can quickly obtain and share it is critical to creating more patient empowerment.”

IRS Reduces Family HSA Contribution Limit For 2018

On March 5, the IRS released Revenue Bulletin No. 2018-10, in which it reduced the maximum amount an individual with family coverage may contribute to a Health Savings Account (HSA) for the 2018 calendar year – from $6,900 to $6,850. The $50 reduction is effective immediately. The annual tax-deductible contribution limit for tax year 2018 will stay at $3,450 for HSA account holders with self-only coverage through a high-deductible health plan (HDHPs).

The IRS had previously announced that the maximum HSA contribution limits for the 2018 calendar year were $3,450 for individuals with self-only coverage and $6,900 for individuals with family coverage. However, the IRS recalculated its previously released limits to take into account a new inflation measure as required by the tax legislation enacted in December 22.

Industry News

UnitedHealthcare to Pass Drug Rebates to Some Employee Customers

UnitedHealthcare announced on Tuesday, March 6, that starting January 1, 2019, it will pass along drug rebates to customers when they fill prescriptions through retail pharmacies or home delivery.

The move will apply to over 7 million people enrolled in UnitedHealthcare fully insured commercial group benefit plans, lowering out-of-pocket costs by directly providing consumers with savings from pharmacy manufacturer rebates at the time of purchase. Discounts can range from a few dollars to more than $1,000, depending on the medication. Rebates are currently used to keep premiums lower for the benefit of all members and customers, rather than distributed to individual consumers.

“People use their pharmacy benefit more frequently than any other type of benefit, which means pharmacy provides the greatest opportunity for us to understand and meet their needs,” said Dan Schumacher, president and chief operating officer of UnitedHealthcare in a statement. “We believe our efforts to enhance value for our customers will not only benefit our members, but the health care system as a whole.”

The decision was applauded by Health and Human Services Secretary Alex Azar, who in a press statement, said “today’s announcement by is a prime example of the type of movement toward transparency and lower drug prices for millions of patients that the Trump Administration is championing. Empowering patients and providers with the information and control to put them in the driver’s seat is a key part of our strategy at the Department of Health and Human Services to bring down the price of drugs and make healthcare more affordable. We are already seeing clear momentum toward the type of innovation in the private sector that will be an important part of the value-based transformation that is coming to America’s healthcare system.”

Cigna to Acquire Express Scripts in $67 Billion

On March 8, Cigna revealed plans to acquire Express Scripts, the nation’s largest pharmacy benefit manager (PBM) in a $67 billion deal in a deal aimed at “making healthcare simpler” for its members, and at creating “an expanded portfolio of health services with greater choice.” The deal, which is expected to close later this year pending shareholder approval, continues a pattern of consolidation in the pharmacy and insurance industries.

Last fall, the health insurer Anthem announced plans to launch its own in-house PBM in partnership with CVS Health, and in December, CVS announced plans to acquire Aetna for $69 billion. The deal also comes on the heels of speculation that Amazon could buy an existing PBM, or launch its own service to administer drug plans.

In a speech last week, FDA Commissioner Scott Gottlieb expressed some concerns with the current drug reimbursement model, saying “too often, we see situations where consolidated firms—the PBMs, the distributors, and the drug stores—team up with payors. They use their individual market power to effectively split some of the monopoly rents with large manufacturers and other intermediaries rather than passing on the saving garnered from competition to patients and employers.”

The deal faces a drawn-out merger review by the Justice Department, which is examining the proposed CVS-Aetna deal, and blocked the Anthem-Cigna deal last year.

The Week Ahead

The U.S. House of Representatives and Senate will be in session the week of March 5-9.

Congressional Hearings:

March 15: HHS Secretary Alex Azar testifies before the House Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies.

March 15: The Senate Health, Education, Labor and Pensions Committee holds a hearing on the 340B Drug Discount Program