On The Hill

Health Update (December 7)

Dec 10, 2018 | SHARE  
Remembering 41

This week, Washington, D.C. took time to honor the life of former President George H.W. Bush, who died last Friday night at the age of 94. From Monday until Wednesday morning, the former president laid in state in the U.S. Capitol Rotunda, and thousands of Americans came to pay their respects. On Wednesday morning, a motorcade took President Bush’s body to the National Cathedral, where former colleagues, family, and friends held a memorial service which included a eulogy from his son, former President George W. Bush. On Wednesday evening, President George H.W. Bush’s casket was flown to Texas, and a funeral service was held in Houston, Texas before a train took his remains to its final resting place at the Bush Presidential Library in College Station.


Government Funding Negotiations

Due to unexpected schedule changes surrounding the week of mourning for President George H.W. Bush, Congress avoided a last-minute fight and potential partial government shutdown ahead of the December 7th funding deadline. Both chambers approved the short-term spending bill to give lawmakers more time to reach an agreement on the remaining 7 government appropriations bills, setting a new deadline of December 21st. At issue in the fight between the parties is funding for President Trump’s border wall. Democrats have agreed to $1.6 billion in additional border funding–far short of the $5 billion request from the Trump administration. Senate Minority Leader Chuck Schumer (D-NY) said that none of the $1.6 billion could be used for construction of the 30 foot border wall, and could only be used for “fencing, using technology currently deployed at the border, and only where the experts say fencing is appropriate and makes sense.”[1]


Drug Pricing

This week, Department of Health and Human Services (HHS) Secretary Alex Azar announced the new Senior Advisor to the Secretary for Drug Pricing Reform, a position made vacant by the unexpected death of senior advisor Dan Best. Secretary Azar announced John O’Brien as the new senior advisor. Mr. O’Brien previously served as Advisor to the Secretary for health reform and drug pricing, as well as Deputy Assistant Secretary for Health Policy.[2]


In a potential preview of bipartisan drug pricing legislation to come in the 116th Congress, Senators Chuck Grassley (R-IA) and Ron Wyden (D-OR) introduced S. 3702 this week. Known as the “Right Rebate Act of 2018,” the legislation would prevent the misclassification of drugs in the Medicaid drug rebate program and create civil penalties for deliberate misclassification of a covered drug.[3] To read the full bill, please click here.


The pharmaceutical company Actelion will pay $360 million to resolve an alleged violation of the False Claims Act. The Justice Department announced on Thursday that Actelion Pharmaceuticals illegally used a foundation as a conduit to pay copays for thousands of Medicare patients. Pharmaceutical companies are prohibited by the federal Anti-Kickback Statute from paying to require Medicare patients to purchase that company’s drugs.[4] For more on this settlement, see the press release from the Department of Justice by clicking here.


Health Care Choice and Competition Report

The Department of Health and Human Services, in conjunction with the Departments of Treasury and Labor, released a report this week entitled “Reforming America’s Healthcare System Through Choice and Competition.” The report “describes the influence of state and federal laws, regulations, guidance, and policies on choice and competition in health care markets and identifies actions that states or the Federal Government could take to develop a better functioning health care market.” The report highlights the impact of several administration initiatives, such as the final rule on Association Health Plans, the Tax Cuts and Jobs Act (TCJA), and the “American Patients First” drug blueprint. While the report is favorable to those initiatives, it also discusses recommendations for improvement in the following four areas: health care workforce and labor markets, health care provider markets, health care insurance markets, and consumer-driven healthcare.[5] To read the full report, click here.


Affordable Care Act

This week, the Centers for Medicare & Medicaid Services (CMS) issued a final rule on adoption of the methodology for the 2018 risk adjustment program. The effective date is Friday, February 8th, 2019. The final rule was issued in light of the ongoing litigation in the U.S. District Court of New Mexico, which vacated the use of statewide average premium for the risk adjustment methodology for 2014-2018. The litigation is still pending, but CMS Administrator Seema Verma said the decision to issue a final rule was made “to preserve the consistent, ongoing operation of the Risk Adjustment program for the 2018 benefit year.”[6] To view the final rule, click here.


The Minnesota reinsurance program will receive $84.7 million in federal funding for 2019, down from roughly $130.7 million in 2018. A letter from CMS detailed the Section 1332 state-based reinsurance program funding changes, and justifies the reduced funding because of the success of Minnesota’s reinsurance program. Because premiums have been lower, the federal government has less funding to “pass through” to states.[7] The final amount of $84,757,861 for 2019 is “subject to a final administrative determination by the Department of the Treasury,” according to the letter.[8]


In the fifth week of Affordable Care Act open enrollment, figures continue to run at a slower pace than 2017. At this point last year, there were 3,604,440 new plan selections, with 271,207 sign-ups in the fifth week alone. This year, 224,132 new consumers signed up for plans, for a cumulative total of 3,198,163 plan selections.[9] Most states only have another week of open enrollment, as the period runs until December 15th. Some states, such as California, have extended open enrollment an additional month. State by state enrollment figures for week five can be seen here.


Proposed Medical Device Rule

 The Food and Drug Administration (FDA) is proposing a new rule to establish requirements for De Novo classification requests. The proposed rule would implement a medical device De Novo classification which “provides a pathway for certain new types of devices to obtain marketing authorization as class I or class II devices, rather than remaining automatically designated as a class III devices which would require premarket approval.”[10] Such a pathway would allow for manufacturers to market similar medical devices that have already been classified as class I or class II without having to submit another De Novo request–those manufacturers could pursue a 510(k) pathway to market their devices instead. The proposed FDA regulation amendment would create a new subpart of the medical device classification procedures regulations. To read the full proposed rule, click here. A public comment period is open until March 7, 2019.



[1] Amanda Becker. “Congress approves short-term spending bill to avert government shutdown.” Reuters, 6 Dec 2018. https://www.reuters.com/article/us-usa-congress-budget/house-approves-short-term-spending-bill-to-avert-government-shutdown-idUSKBN1O522G

[2] “Secretary Azar Announces Senior Advisor for Drug Pricing Reform.” Department of Health and Human Services, 6 Dec 2018. https://www.hhs.gov/about/news/2018/12/06/secretary-azar-announces-senior-advisor-for-drug-pricing-reform.html

[3] “The Right Rebate Act of 2018.” Senators Chuck Grassley and Ron Wyden. U.S. Senate, 4 Dec 2018. https://www.finance.senate.gov/imo/media/doc/120418%20Right%20Rebate%20Act%20leg%20text.pdf

[4] “Drug Maker Actelion Agrees to Pay $360 Million to Resolve False Claims Act Liability for Paying Kickbacks.” Depart of Justice Office of Public Affairs, 6 Dec 2018. https://www.justice.gov/opa/pr/drug-maker-actelion-agrees-pay-360-million-resolve-false-claims-act-liability-paying

[5] “Reforming America’s Healthcare System Through Choice and Competition.” Department of Health and Human Services Press Office, 3 Dec 2018. https://www.hhs.gov/about/news/2018/12/03/reforming-americas-healthcare-system-through-choice-and-competition.html

[6] “CMS finalizes rule on the risk adjustment program for the 2018 benefit year.” Center for Medicare & Medicaid Services, 7 Dec 2018. https://www.cms.gov/newsroom/press-releases/cms-finalizes-rule-risk-adjustment-program-2018-benefit-year

[7] Katie Keith. “Unpacking Lower Federal Funding For Minnesota’s Reinsurance Program.” Health Affairs Blog, 6 Dec 2018. https://www.healthaffairs.org/do/10.1377/hblog20181206.657929/full/

[8] Charles Gelt-ba. “Tweet reply to @jburcum.” Twitter, 5 Dec 2018. https://twitter.com/jburcum/status/1070406757153947648

[9] “Weekly Enrollment Snapshot: Week 5.” Center for Medicare & Medicaid Services, 6 Dec 2018. https://www.cms.gov/newsroom/fact-sheets/weekly-enrollment-snapshot-week-5

[10] “Medical Device De Novo Classification Process.” Food and Drug Administration, 7 Dec 2018. https://s3.amazonaws.com/public-inspection.federalregister.gov/2018-26378.pdf?utm_campaign=pi%20subscription%20mailing%20list&utm_source=federalregister.gov&utm_medium=email


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