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Negotiators File Compromise HHS Spending Bill

September 14, 2018—House and Senate negotiators Sept. 13 adopted a compromise agreement on the fiscal year (FY) 2019 Labor-HHS-Education and Defense spending bills (H.R. 6157) that next will go to each chamber for final approval before being sent to the president. The measure also includes a continuing resolution through Dec. 7 for any of the 12 annual spending bills that have not been finalized by the start of the new fiscal year Oct. 1.

The conference agreement, which spends $178 billion on the Labor-HHS-Education portion of the bill in Division B, adopts the Senate-passed $39.1 billion funding level for the National Institutes of Health (NIH) [see Washington Highlights, Aug. 24], representing a $2 billion (5.4%) increase including funding provided through the 21st Century Cures Act.

Within the NIH total, conferees provide $361.6 million for the Institutional Development Awards (IDeA), an $11.0 million (3.1%) increase over FY 2018, and $559.7 million for the Clinical and Translational Science Awards, a $17.0 million (3.1%) increase. The package also boosts funding for Alzheimer’s disease research, the Brain Research through Advancing Innovative Neurotechnologies Initiative, the Cancer Moonshot initiative, and research on a universal flu vaccine, among other items.

Like both the House committee and Senate bills, the conference agreement maintains the salary cap at Executive Level II of the federal pay scale and continues a prohibition on changes to NIH support for facilities and administrative expenses. The conferees did not adopt a provision in the House committee-passed bill [see Washington Highlights, July 13] that effectively would have prohibited fetal tissue research.

Negotiators also include in the package a provision from the Senate-passed bill transferring $5 million from the NIH Office of the Director (OD) to the Department of Health and Human Services Office of the Inspector General (OIG), “to examine NIH’s oversight of its grantees’ compliance with NIH policies, including NIH efforts to ensure the integrity of its grant application and selection processes.” The package’s joint explanatory statement directs OIG to “examine the effectiveness of NIH’s and grantee institutions’ efforts to protect intellectual property derived from NIH-supported research.”

Separately, the package also carries over language in the Senate spending bill allocating $50 million within the NIH OD for grants or contracts to public and nonprofit private entities for modernization and construction of biomedical and behavioral research facilities.

Among other highlights, the package provides $338 million for the Agency for Healthcare Research and Quality, $4 million (1.2%) more than FY 2018 and both the House committee- and Senate-passed FY 2019 bills.

The agreement includes $25 million for a new Health Resources and Services Administration primary care Graduate Medical Education (GME) program, originally proposed at $200 million by the House earlier this year [see Washington Highlights, June 29].

As proposed in both the House committee and Senate, the final package includes $325 million for Children’s Hospital GME, a $10 million (3%) increase over FY 2018; as well as $105 million for the National Health Service Corps, matching the FY 2018 omnibus and bringing total funding for the program to $415 million for FY 2019. The agreement also includes $10 million for the HRSA Rural Residency program established in the FY 2018 omnibus, a $5 million (33.3%) decrease below the original level.

Rejecting significant cuts proposed by the president and the House committee, the HRSA Title VII and Title VIII workforce development and diversity pipeline programs — including the Health Careers Opportunity Program — are flat-funded, with the exception of $39.3 million for Area Health Education Centers, a $1 million (0.3%) increase over FY 2018.

Conferees also establish a new $50 million “Infectious Diseases Rapid Response Reserve Fund” within the Centers for Disease Control and Prevention (CDC) to be available indefinitely for the CDC Director to use to prevent or respond to a major infectious disease emergency declared by the Health and Human Services Secretary.

The agreement excludes, reportedly at the request of House Republicans, a provision championed in the Senate spending bill by Senators Dick Durbin (D-Ill.) and Chuck Grassley (R-Iowa) that would provide up to $1 million within HHS to require direct-to-consumer drug advertisements to disclose pricing information.

The Senate is expected to vote on the package the week of Sept. 17, with a House vote the following week, before sending to the president. If it is enacted before Oct. 1, it will be the first time since 1996 that the Labor-HHS bill has been completed before the start of the new fiscal year.


Tannaz Rasouli
Sr. Director, Public Policy & Strategic Outreach
Telephone: 202-828-0525

Matthew Shick, JD
Director, Gov't Relations & Regulatory Affairs
Telephone: 202-828-0525

Christa Wagner
Legislative Analyst
Telephone: 202-828-0595


AAMC Submits Comments to CMS on CY 2019 Medicare Physician Fee Schedule and Quality Payment Program Proposed Rule

September 14, 2018—The AAMC Sept. 10 submitted comments to the Centers for Medicare and Medicaid Services (CMS), responding to the agency’s proposed rule changes in the Medicare Physician Fee Schedule and Quality Payment Program to take effect in calendar year (CY) 2019. CMS proposed major changes to payment and documentation for outpatient evaluation and management (E/M) services. It also proposed that Medicare cover newly-established interprofessional internet consultation codes and recommended changes and updates to the quality payment program (QPP). 

CMS proposes to pay a single payment rate ($135) for E/M levels two through five visits for new patients (99201-99205) and a separate single payment rate ($93) for levels two through five visits for established patients (99212-99215). CMS also has proposed three add-on codes to recognize additional relative resources for certain kinds of visits. To fund the add-on payments, CMS proposes a multiple procedure payment reduction (MPPR) that would reduce payment by 50% for the least expensive procedure or visit when a procedure is performed on the same day as an office visit.  

The AAMC opposes the proposal to establish single payment rates for outpatient/office visits (99202-99205 and 99212-99215), the proposed MPPR, and the proposed add-on codes for primary care, inherent complexity, and prolonged services, because the changes would hurt physicians who treat more complex patients and result in numerous unintended consequences. The letter recommends that CMS work with stakeholders on implementation of a new approach.

To reduce the administrative burden physicians experience in billing for treatment of Medicare patients, CMS proposed substantial changes to E/M documentation by allowing physicians to choose one of the following documentation methods: 1) current framework of evaluation guidelines from 1995 or 1997, 2) medical decision making, or 3) time. In addition, CMS proposes to reduce redundancy of documentation by eliminating the requirement that physicians re-document information already in the patient’s record, as well as by requiring documentation of only the interval history since a patient’s last visit. The AAMC supports these documentation proposals and recommends that CMS finalize them.

Additional comments include:

  • The AAMC supports the CMS proposal that would allow medical records to show that a teaching physician was present at the time of service, with documentation made by the physician, resident, or a nurse.
  • The AAMC supports CMS’ efforts to modernize Medicare physician payment by recognizing communication technology-based services and is particularly supportive of CMS’ development of new internet interprofessional consultation codes (994X0 and 994X6). The AAMC requests that CMS use the RVS Update Committee-recommended values of these codes (0.50 and 0.70) instead of valuing them both at 0.50.

  • The AAMC supports CMS exploring options for a subgroup to report separately on QPP measures and activities that are more applicable to the subgroup and be assessed based on performance of that subgroup. This would be of interest to many teaching hospitals that participate in large, multispecialty group practices.

  • The AAMC disagrees with CMS’ proposal to weight the cost performance category at 15% instead of the current use of 10% and recommends continued use of the 10% weight.

  • The AAMC requests that cost measures be adjusted appropriately to account for sociodemographic status risk factors.

  • The AAMC is concerned with the most recent cost category feedback reports, noting that missing from the reports is detailed information that helps providers determine how they are performing or how their performance compares to other providers. The absence of such data inhibits providers’ ability to make improvements.

  • The AAMC suggests aligning interoperability programs as much as possible.

  • The AAMC supports CMS’ decision that the generally applicable revenue-based nominal amount standard should remain at 8%.

  • The AAMC notes that eligible clinicians are taking on additional risk in advanced alternative payment models (APMs) as the thresholds to be a qualified participant will increase to 75% of Medicare payments and 50% of Medicare patients over the next several years. The AAMC recommends that CMS review information about physician participation in advanced APMs before deciding whether to change the amount of required financial risk, since a downside risk that is set too high will create a barrier to physician participation.

In response to these concerns, which the AAMC and numerous provider groups representing diverse specialties raised, Reps. Brad Wenstrup (R-Ohio), Earl Blumenauer (D-Ore.), Marsha Blackburn (R-Tenn.), and Doris Matsui (D-Calf.), along with 86 House colleagues, sent a letterto CMS Administrator Seema Verma, urging the agency “to take additional time to work closely with physicians and other stakeholders to identify alternative approaches that would accomplish CMS’ goals while ensuring that physicians are reimbursed appropriately according to the level of care required by each individual patient’s condition.”

Sens. Bill Cassidy (R-La.) and Sherrod Brown (D-Ohio) are circulating a Senate version of the House letter, which they expect to send to CMS soon.


Gayle Lee
Director, Physician Payment & Quality
Telephone: 202-741-6429

Kate Ogden
Physician Payment & Quality Specialist
Telephone: 202-540-5413


AAMC Files 340B Lawsuit that Challenges the Delay in the Ceiling Price Rule

September 14, 2018—The AAMC, American Hospital Association, America’s Essential Hospitals, and 340B Health filed a lawsuit Sept. 11 in U.S. District Court that challenges the years-long delay by Department of Health and Human Services (HHS) to issue the ceiling price and civil monetary penalties (CMP) final rule [see Washington Highlights, June 8].

The rule requires HHS to develop a system to verify that drug manufacturers disclose the ceiling price that can be charged to providers for outpatient drugs under the 340B Drug Pricing Program. Such verification is the only way that 340B covered entities can know if drug manufacturers are providing the correct prices, as required by law. The suit further challenges the delay to give the government the ability to levy CMPs against drug companies that knowingly and intentionally overcharge 340B providers.

In a joint press release from the hospital associations, AAMC President and CEO Darrell G. Kirch stated, “The final regulation provides important transparency for this vital program. Delaying implementation of that rule ultimately harms vulnerable patients and the teaching hospitals they rely on for care.”

The associations are joined in the suit by three hospital plaintiffs: Rutland Regional Medical Center, Genesis HealthCare System, and Kearny County Hospital.


Ivy Baer, J.D., M.P.H.
Senior Director and Regulatory Counsel
Telephone: 202-828-0499


Congress Passes First Minibus of FY 2019 Spending Bills

September 14, 2018—Both the House and Senate the week of Sept. 10 passed the first spending bills for fiscal year (FY) 2019 as a three-bill minibus containing the Energy and Water, Military Construction, Veterans Affairs, and Related Agencies (MilCon-VA), and Legislative Branch bills. The minibus was the result of a conference committee agreement to H.R. 5895 reached between the House and Senate [see Washington Highlights, Sept. 7].

Of note, the FY 2019 MilCon-VA bill includes:

  • An additional $750 million for the Medical Services account, totaling $49.9 billion for FY 2019, a 6.5% increase over FY 2018 as well as $51.4 billion in advance appropriations for FY 2020;
  • An additional $1 billion for the Medical Community Care account, totaling $9.4 billion for FY 2019, a decrease of 4.5% from FY 2018 and $10.8 billion in advance appropriations for FY 2020; and
  • $779 million for the VA Medical and Prosthetic Research Program, a $57 million (7.9%) increase over FY 2018, including $27 million over five years for a collaboration with Department of Energy to enhance computing and biomedical imaging.

The Senate Sept. 13 voted 92-5 and the House Sept. 14 voted 377-20 to pass the jointly agreed-upon spending package. In statements following passage, Senate Appropriations Committee Chair Richard Shelby (R-Ala.) thanked his colleagues for their bipartisan efforts, adding, “If we continue to work together in a bipartisan manner we can successfully fund nearly 90% of the federal government on time through regular order – something Congress has not been able to do in many years.”

Senate Committee Vice Chair Patrick Leahy (D-Vt.) noted that the MilCon-VA bill “includes significant new investments in mental health and opioid abuse treatment, including $1 billion in new funding over fiscal year 2017 levels for mental health care programs and suicide prevention.”

The three spending bills now await the President’s signature. Congress has until Sept. 30 to pass the remaining nine funding bills before the start of the new fiscal year (see related story).


Matthew Shick, JD
Director, Gov't Relations & Regulatory Affairs
Telephone: 202-828-0525

Christa Wagner
Legislative Analyst
Telephone: 202-828-0595


AAMC Submits Comments on FDA’s Draft Patient-Focused Drug Development Guidance

September 14, 2018—The AAMC submitted a Sept. 11 letter to the Food and Drug Administration (FDA) in response to a request for comments on the draft guidance, Patient-Focused Drug Development: Collecting Comprehensive and Representative Input.

The AAMC supported the FDA’s collection and use of “patient experience data” to inform the agency’s regulatory decisions and commended the FDA in its solicitation of feedback on the tools and methods related to the collection and use of these data. To help the agency further these efforts, the AAMC emphasized the importance of the FDA ensuring that patients, caregivers, and families are engaged meaningfully throughout development and implementation phases of the research process. The association strongly recommended that “the FDA work with patients and other key stakeholders to develop a framework for using patient engagement data during the study design phase to help define the research objectives and questions.”

The AAMC underscored the importance of ensuring the final guidance will be useful for all stakeholders interested in collecting and submitting patient data to the FDA, including lay patients or individuals who may be unfamiliar with the research methodologies and processes included in the guidance.

The AAMC also encouraged the FDA to develop strategies to ensure the engagement of a diverse representation of patient and advocate populations. The association said that the recently established FDA Office of Patient Affairs should “play a key role in the internal coordination of the data submitted to the Agency in addition to serving as a central point for industry, patients, and other stakeholders.”

In its June 2017 response to the FDA’s proposal for the future of patient engagement, the AAMC expressed strong support for the agency’s current and proposed patient engagement efforts, which included the establishment of an Office of Patient Affairs [see Washington Highlights, June 16, 2017].


Philip M. Alberti, PhD
Senior Director, Health Equity Research and Policy
Telephone: 202-828-0522


PCORI Adopts Policy for Data Management and Data Sharing

September 14, 2018—The Patient-Centered Outcomes Research Institute (PCORI) Board of Governors Sept. 7 approved the new PCORI Policy for Data Management and Data Sharing. The policy supports PCORI’s commitment to advancing open science and requires certain PCORI-funded researcher teams to share their study data and documentation for secondary use and analysis.

In 2016, the AAMC submitted a comment letter when PCORI sought stakeholder input on the draft policy for data access and data sharing [see Washington Highlights, Jan. 6, 2017]. The association commended PCORI for its “commitment to maximizing the utility and usability of data collected in research projects that PCORI funds,” and, among other observations, recommended that the policy should include requirements for third-parties requesting use of data and prohibit the data from being used to re-identify research participants. Both recommendations were incorporated into the final version of the policy.

While developing the policy, PCORI also received feedback through convening an expert advisory group and conducting a pilot project. Additionally, since 2015, PCORI has included language in its funding announcements and research contracts that specified awardees were required to develop a data management and data sharing plan.

Moving forward under the new policy, the institute will provide funding for awardees to prepare and deposit data and protocols into a designated data repository. PCORI will implement the new policy in stages and plans to host a Town Hall for current awardees in early October.


Anne Berry, MPP
Lead Specialist, Implementation Research & Policy
Telephone: 202-739-2987


MACPAC Discusses Hospital Payment Policies, Changes to DSH Payments, and Drug Coverage

September 14, 2018—The Medicaid and CHIP Payment and Access Commission (MACPAC) met Sept. 13-14 to discuss several issues, including new and developing hospital payment policies, disproportionate share hospital (DSH) payment changes, the impact of new engagement requirements on beneficiaries, coverage of new, high-cost drugs, and upper payment level (UPL) payments.

MACPAC staff presented on a recent study it conducted to look at trends in hospital payment policies. Staff interviewed state, hospital, and managed care representatives in five states to collect information about payment methods, payment amounts, and outcomes related to payments. The questions focused on which factors affect the structure and mix of base and supplemental payments and why and how states determine certain hospitals to target payments to, among other issues.

Results revealed states’ use of base and supplemental payments is affected by the availability of financing for the non-federal share of Medicaid payments, managed care has not substantially affected Medicaid payments to hospitals, and prospective and value-based payment (VBP) models are slow to be adopted. In its discussion, commissioners focused on the VBP issues, arguing whether it makes sense in the Medicaid sphere due to the already-low physician payment rates. 

Additionally, MACPAC staff presented on DSH policy changes. Medicaid DSH allotment reductions are set to occur in fiscal year (FY) 2020 ($4 billion reduction) and FYs 2021-2025 ($8 billion reduction each year). The Centers for Medicare and Medicaid Services (CMS) will need to finalize a methodology for distributing the reductions before implementation. Staff discussed several options for this situation, including distributing the reductions over a longer timeframe to more gradually phase in reductions or consider tying DSH funding to “objective measures of need.”

The commission discussed two options of changing the allotment reduction formula: modifying the targeting factors or basing reductions solely on the uninsured percentage factor. The commissioners also voiced opinions on possibly altering the DSH definition of uncompensated care in an effort to change the amount of DSH funds for eligible hospitals. Additionally, there was a robust discussion of the new “Medicaid shortfall” definition, which changed in March 2018 as a result of federal district court decisions in Missouri and Washington, DC. The courts ruled that payments from third-party payers are no longer included as part of the definition.  Commissioners discussed the fallout from this change, expecting Medicaid shortfall to at least double in the national aggregate and maximum DSH payments to increase because of the new definition.

MACPAC staff presented a brief status report on states’ implementation of new work and community engagement requirements. CMS granted Section 1115 demonstration waivers to four states to adopt Medicaid work and community engagement requirements. Staff reported that in Arkansas, more than 4,000 Medicaid beneficiaries have been disenrolled for non-compliance with the new reporting requirements since the waiver was implemented in June 2018.  Commissioners voiced concern about the negative impact on beneficiaries and questioned whether states were doing enough to ensure beneficiaries understand these new reporting requirements. Based on additional findings presented at the next MACPAC meeting, commissioners will determine whether to reach out to CMS to discuss their concerns.

Commission staff also presented on Medicaid coverage of new and high-cost drugs. Prescription drugs account for a growing share of Medicaid expenditures. In 2017, gross spending on drugs costing more than $1,000 accounted for 43.7% of total Medicaid spending.  State Medicaid programs must cover all outpatient drugs upon approval by the Food and Drug Administration (FDA).

By contrast, Medicare has 180 days from the date of FDA approval before it is required to cover most new drugs. Some new drugs are approved under an accelerated review process that requires less testing to ensure safety and efficacy prior to FDA approval.  It was noted that post-market safety events are more common for accelerated drugs.  MACPAC staff presented policy options to allow more time for state Medicaid programs to review the safety and efficacy of new drugs before providing coverage.  Commissioners agreed that allowing Medicaid programs a “grace period,” similar to the 180-day period in Medicare would not jeopardize beneficiary access to new drugs. 

Additionally, staff provided analysis on the oversight of UPL payments and proposed three potential policy options the commission could present to CMS: monitor actual UPL supplemental payment spending relative to the UPL gap calculated by states, review compliance with UPL requirements retrospectively using actual payment data rather than state projections, and require states to calculate the UPL based on current Medicare payment methods.


Mary Mullaney
Director, Hospital Payment Policies
Telephone: 202-909-2084

Andrew Amari
Hospital Policy and Regulatory Specialist
Telephone: 202-828-0554


On the Hill

September 14, 2018—Rep. Ron DeSantis (R-Fla.) Sept. 10 announced his immediate resignation from Congress. Citing his campaign for Governor of Florida, DeSantis noted that “it is clear to me that I will likely miss the vast majority of our remaining session days for this Congress [and] in order to honor my principles and protect the taxpayer, I officially resign from the House of Representatives effective immediately.” No special election is expected to fill DeSantis’ seat. 

On the Agenda

Sept. 17-18: HRSA National Advisory Council to NHSC
The National Advisory Council to the National Health Service Corps will hold a public meeting. An agenda will be posted in advance of the meeting.

Sept. 18: Senate HELP Hearing on Reducing Health Care Costs
10 a.m.; 430 Dirksen Senate Office Building, Washington, D.C.
The Senate Health, Education, Labor, and Pensions (HELP) Committee will hold a hearing titled “Reducing Health Care Costs: Examining How Transparency Can Lower Spending and Empower Patients.”


The House will be in a state work period during the week of Sept. 17.


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Jason Kleinman
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Telephone: 202-903-0806