FEDERAL UPDATE

21^st Century Cures

After more than a year of work, the House of Representatives passed H.R. 6, the 21st Century Cures Act on July 10 with strong bipartisan support. The legislation is intended to modernize the country’s health care innovation infrastructure. Most notably, the House version of bill would grant the Food and Drug Administration (FDA) the ability to accelerate the approval process for innovative drugs, devices and treatments. Drug makers seeking to treat life-threatening diseases could request an accelerated development plan. The bill includes a number of significant changes to the approval and post-approval review process and mandates that the FDA review the possibility of including clinical and patient experience data. For antibiotics and antifungals, the FDA would be required to create a system to monitor and track for changes in resistance. The FDA and NIH would be required to create a pilot clinical trial data system that would make data from qualified clinical trials available for future research.

Another major provision in the bill is the creation of an innovation fund, to which $1.75 billion would be allocated annually with the overall intent to support NIH sponsored biomedical research. $500 million of this would go towards matching grants under the newly created “Accelerating Advancement Program.” The NIH would be required under this bill to create a five year strategic plan for biomedical research, prioritizing pediatric and uncommon diseases. Overall, 21st Century Cures would increase funding for the National Institutes of Health (NIH) to $31.8 billion in 2016, $33.3 billion in 2017, and $34.9 billion in 2018.

Finally, the Energy and Commerce Health Subcommittee included a provision in the bill that encourages the interoperability of electronic health record (EHR) systems. Specifically, certified EHR vendors would be required to make their data interoperable with competing vendors. Starting in 2018, interoperability requirements would be included in the requirements for participation in the meaningful use program. However, providers would be able to seek an exemption of up to five years complying with the requirements would result in financial hardship, or us they used an EHR vendor that was decertified.

In order to offset the overall cost of the bill, a number of revenue tools are proposed including the sale of crude oil from the Strategic Petroleum Reserve, the expansion of HHS’ ability to penalize contractors and grant recipients who violate the terms of their agreement, the modification of payment rates for infusion drugs that are used with durable medical equipment, a reduction in payments for the reimbursement of film x-ray as a means to encourage the adoption of digital x-ray, and changes to the way Medicare drug rebates from manufacturers to state and federal governments are calculated (by excluding authorized generic drugs from the calculation).

The bill is currently in the Senate Committee on Health, Education, Labor and Pensions where a draft Senate version is expected imminently. The full Senate is planning on taking up the bill by the end of the year. However, other priorities such as passing a FY 2016 budget, and long-term surface transportation alter this timeframe.  HELP Committee Chairman, Lamar Alexander, has stated that their bill many no make it to the floor until early next year. The Senate’s version of this bill is likely to be called the Healthier Americans Act. The HELP Committee is expected to hold a hearing with outgoing ONC head Karen DeSalvo on September 16 and in October focused primarily on health IT and interoperability. The House’s medical-innovation bill may face an uphill battle in the Senate, partly because of its use of the Strategic Petroleum Reserve to offset the costs of the bill. In addition to that, groups have outlined privacy concerns with some of the changes the bill makes to HIPAA.

Repeal of ACA Taxes

Republican Leadership in the House is planning to introduce a bill that repeals a number of ACA taxes this Fall. The Chairman of the Ways and Means Committee, Kevin Brady has indicated that he would release draft legislation in September although it may be later. While legislators involved have not yet publicly disclosed which ACA taxes will be included, it is expected that a repeal of the Cadillac tax will be a central component of the legislation. The White House has consistently opposed attempts to repeal the Affordable Care Act’s revenue sources. However there is a notable amount of bipartisan support in Congress for the repeal of the Cadillac Tax, Medical Device Tax, and a number of other ACA taxes.

Chairman Brady’s announcement came at the same time as the publication of a report completed by the Kaiser Family Foundation on the Cadillac Tax. It estimated that 26% of employer sponsored healthcare plans will face the Cadillac tax once the law is implemented. It also estimates that employers affected by this tax could grow to 30% in 2023, and 42% by 2028 if plans do not change and the costs of healthcare increase at expected rates. The IRS has yet to release its final rule on the tax. However, aspects use to calculation of the total cost of coverage are known. Most notably is the inclusion of contributions from employees to flexible spending accounts or FSAs (the max amount allowed is just over $2,500 annually).

Continuing Resolution and Planned Parenthood Defunding Efforts

With the Appropriations process stalled, Congress intends to use a Continuing Resolution to avoid a government shutdown. However, a growing number of Republicans in the House and a few Senators are pushing to include a measure in the CR that would defund Planned Parenthood. House and Senate leadership is trying to separate Planned Parenthood funding and more broad bills that limit abortions from a Continuing Resolution.

At the time of writing, Republican leadership has not ruled out attaching the defund measure to a continuing resolution. Senate Majority Leader Mitch McConnell has publicly opposed shutting down the government over this issue stating that it should not be pursued until a Republican is in the White House. A Planned Parenthood defund bill introduced in the Senate last month failed to overcome a Democratic filibuster. House Speaker Boehner had initially stated that defund efforts should only be considered once a Congressional investigation into charges that Planned Parenthood sold aborted fetuses for profits was concluded. However, he has publicly supported current defund proposals which are being been pushed by Majority Leader Kevin McCarthy. Representative McCarthy has scheduled floor votes on a measure that would cut off federal funds to Planned Parenthood for one year along with other organizations that perform abortions, and another that would punish doctors criminally if they did not provide medical attention to live babies during the abortion process. While defunding efforts are expected to pass the House, it is likely to face the same fate as the Senate’s bill did last month. The President would veto any defund efforts that reach his desk.

Five states have found no wrongdoing on the part of Planned Parenthood concerning the sale of fetal tissue for medical research at a profit. These states include Georgia, Indiana, Massachusetts, Pennsylvania and South Dakota.

PENNSYLVANIA UPDATE

Pennsylvania Medicaid Expansion Transition Complete

September 1 marked the Wolf administration’s official transition from former Governor Corbett’s Healthy PA program to an expanded, traditional Medicaid program, known as HealthChoices in Pennsylvania.  The first transition phase was completed in April, with the second and final phase of the transition beginning in late July.

Pennsylvania Secretary of the Department of Human Services Ted Dallas says the transition to Medicaid brings a savings of state funds and an infusion of federal dollars, and that the Commonwealth has been able to handle the influx of new patients added through the Medicaid expansion.   On September 2, Secretary Dallas hosted a conference call to provide an update on the Governor’s expansion plan.  Nearly 440,000 Pennsylvanians are enrolled in the Medicaid expansion plan, and more than 216,000 newly eligible Pennsylvanians have enrolled in HealthChoices since April 27th. Remaining individuals who were enrolled in the private coverage option under Healthy PA have officially transferred to HealthChoices.   He added with the full transition now complete, Pennsylvania will realize a savings of $626 million from people moving off of state-funded care to fully federally funded Medicaid expansion, and that will grow.

NEW JERSEY UPDATE

 OHIO UPDATE

Health Care Premiums Slated to Rise as Ohio's Health Insurance Industry Competition Declines

According to a new study released on September 8 by the American Medical Association (AMA), Ohio’s health insurance industry experienced one of the nation's largest declines in competition between 2010 and 2013, ranking the state 10th nationally.

In its report, the AMA warned that premiums could rise sharply in communities across Ohio and the U.S. due to consolidation by insurers, which negatively affects consumers and providers of care.  Additionally, they propose that authorities should “vigorously examine the competitive effects of proposed mergers between health insurers."

A leading trade group for the insurance industry disagreed with the findings, stating that the data is “fatally flawed,” does not accurately reflect today’s market, and that the consolidation of hospitals and other providers is to blame for escalating health care costs.

The study is based on insurance coverage information, including market share of companies on an overall basis and by insurance product, compiled through January 2013.  The report also uses a U.S. Department of Justice index that slates market power increases when a merger is likely to encourage one or more firms to raise price, reduce output, diminish innovation or otherwise harm consumers.

The AMA study found that Ohio stands to be seriously affected by the mergers of Anthem-Cigna and Aetna-Humana. Both mergers are subject to review by the Federal Trade Commission and the Department of Justice. State regulators are also scrutinizing the potential impacts on insurance costs.