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Second Opinion

Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

AAMC Sends Letter Opposing Bill that Makes Changes to 340B Program

January 12, 2018—The AAMC sent a Jan. 9 letter to Representatives Larry Bucshon, MD (R-Ind.) and Scott Peters (D-Calif.) highlighting concerns about, and opposing, a bill that would make changes to the 340B Drug Pricing Program. The 340B Protecting Access for the Underserved and Safety-Net Entities Act (340B PAUSE Act, H.R. 4710) would impose a two-year moratorium and create new reporting requirements for certain hospitals that participate in the program. 

In the letter, AAMC Chief Public Policy Officer Karen Fisher, JD, notes that the changes outlined in H.R. 4710 “would provide no additional benefits for patients who rely on services that hospitals provide from the program’s savings.” In particular, the association raises concerns that the bill creates new burdensome reporting requirements on hospitals while not addressing any issues that arise with drug manufacturers that fail to comply with program requirements. 

The AAMC also highlights problems with the bill’s proposed moratorium that prevents additional safety net hospitals and child sites from joining the 340B program. The letter states, “Safety net hospitals that participate in the 340B program provide a disproportionate share of care to Medicaid and low-income patients, while also providing a high level of uncompensated care. A moratorium would prevent these hospitals from expanding services and prohibit other hospitals that provide a high level of care to underserved populations from benefitting from the program.” 

Additionally, the letter addresses unsubstantiated concerns about growth in the 340B program. “Due to the success of the program for so many patients and communities, Congress expanded the 340B program in 2010 to allow additional hospitals and other entities to participate in the program. This resulted in increased access to care and services to needy patients. Even with the addition of these new covered entities, 340B sales grew by less than 1 percent between 2012-2016 compared to total drug sales. In other words, while the program has grown and served more patients, it is not responsible for increased drug costs."


Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806


HHS Secretary Nominee Highlights Top Priorities During Senate Hearing

January 12, 2018—Alex Azar, President Trump’s nominee for Health and Human Services (HHS) Secretary, outlined his top priorities for the department during a Jan. 9 hearing in front of the Senate Finance Committee.

As he did during a Nov. 29, 2017, hearing with the Senate Health, Labor, Education, and Pensions (HELP) Committee, Azar used his opening statement to address what his top priorities would be if confirmed [see Washington Highlights, Dec. 1, 2017). Those include:

  • Address high drug prices;
  • Make health care more affordable, more available, and more tailored to what individuals want and need in their care;
  • Harness the power of Medicare to shift the focus in our health care system from paying for procedures and sickness to paying for health and outcomes; and
  • Tackle the scourge of the opioid epidemic.

Committee Chair Orrin Hatch (R-Utah) praised Azar for his previous experience at HHS and responded to criticism that Azar has received for his most recent role as a top executive at Eli Lilly & Company. Hatch stated, “Experience in the private sector and dealing with the policies and regulations that come from government agencies is, in my view, a mark in favor of a nominee’s qualifications. Mr Azar’s work in the pharmaceutical industry will give him important insights regarding the impact of policies designed and implemented by HHS. And, when you add that knowledge and background to the years he spent as a senior official at HHS, you have an exemplary resume for an HHS Secretary.”

Ranking Member Ron Wyden (D-Ore.) referred to Azar as “a drug company executive with a documented history of raising prescription drug prices” during his opening statement and highlighted several examples of drug prices that drastically increased while Azar worked at Eli Lilly. Wyden also expressed concern about the future of the Medicaid program and noted that “endangering the health care of low-income Americans is the absolute wrong way to go.”

During the hearing, Sen. Dean Heller (R-Nev.) asked Azar what he would do in response to the AAMC’s projected shortage of 100,000 physicians by 2020. Azar referred to the doctor shortage as a “vexing problem” and noted current HHS programs to address the issue, including graduate medical education, reimbursement programs, and health professions programs. Heller highlighted the Resident Physician Shortage Reduction Act of 2017 (S. 1301), which he introduced with Sens. Chuck Schumer (D-N.Y.) and Bill Nelson (D-Fla.). The bill would alleviate the impending doctor shortage by providing 15,000 federally supported residency positions over a five year period [see Washington Highlights, June 9, 2017].

The Senate Finance Committee is expected to vote on Azar’s confirmation by the end of the month.


Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806


CBO Says Ten-Year Extension of CHIP is a Saver

January 12, 2018The Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) Jan. 11 released a preliminary estimate that found extending the Children’s Health Insurance Program (CHIP) for ten years would save $6 billion. The score is in marked contrast to a Jan. 5 CBO estimate that found a five-year extension of CHIP would cost $800 million, and an Oct. 20 score that found the program would cost $8 billion over five-years. 

The CBO found that the program saves the federal government money “because the federal costs of the alternatives to providing coverage through CHIP (primarily Medicaid, subsidized coverage in the marketplaces, and employment-based insurance) are larger than the costs of providing coverage through CHIP during that period.” Additionally, CHIP premiums will be less expensive than coverage obtained under the Affordable Care Act (ACA), as premiums under the ACA are expected to rise due to the repeal of the individual mandate.

The updated score is welcome news to advocates of the CHIP program. Federal funding for the program expired at the end of September. The Dec. 21, 2017, continuing resolution (CR) included $2.8 billion stopgap funding for CHIP, meant to expire at the end of March (see Washington Highlights, Dec. 22, 2017). Reports have indicated that states are quickly exhausting the stopgap funding, prompting advocates to continue to push for a long-term reauthorization of CHIP. The AAMC sent a Dec. 19, 2017, letter to House and Senate leadership urging lawmakers to immediately reauthorize and fully fund CHIP for five years.  


Catie Spivey, JD
Sr. Legislative Analyst, Gov't Relations
Telephone: 202-862-6042


AAMC submits comments on NQF Measure Application Partnership Draft Report

January 12, 2018—The AAMC Jan. 11 submitted comments to the National Quality Forum (NQF) regarding the Measure Application Partnership (MAP)’s draft reports to the Centers for Medicare and Medicaid Services (CMS) on 2018 Considerations for Implementing Measures based upon CMS’ 2017 Measures under Consideration (MUC) List for 2018 pre-rulemaking.

The MAP’s draft report is the last step for public input before the MAP provides program-specific recommendations to CMS as part of the pre-rulemaking process for the selection of quality and efficiency measures for use in the Medicare program (as required by Section 3014 of the Affordable Care Act).

The AAMC is committed to working with the MAP and other stakeholders to evaluate CMS’ proposed measures, and appreciates the MAP Workgroups’ thoughtful review and discussion of the 2017 MUC list for 2018 pre-rulemaking. The AAMC shared concerns with some of the proposed measures, as summarized below:

  • Clinician Measures: Providers should not be held accountable for activities outside their control. Episode-level cost measures must be appropriately risk adjusted, including for social risk factors, and the attribution methodology for episodes should clearly and accurately determine the relationship between patient and clinician before such episode-level cost measures are incorporated into the Quality Payment Program.
  •  Hospital Measures: The AAMC strongly believes that certain accountability measures must be adjusted for sociodemographic status (SDS) before being included in the Medicare quality reporting programs and should be NQF-endorsed prior to MAP review.

  • Overall: MAP Workgroups should review measures in the Medicare programs holistically in order to ensure that new measures add value, are useful for consumers, and promote alignment, while also considering the burden to reporting these measures for providers.


Phoebe Ramsey, J.D.
Sr. Regulatory Analyst - Quality and Payment Polic
Telephone: 202-448-6636


Federal Court Grants Provisional Relief for Current DACA Awardees

January 12, 2018—In a case brought by the Regents of the University of California against the Department of Homeland Security challenging the Trump Administration’s decision to end the Deferred Action for Childhood Arrivals (DACA) program, the Northern District of California Jan. 9 granted Plaintiffs’ motion for provisional relief, ordering the federal government to maintain DACA on a nationwide basis as it operated on Sept. 5, 2017 (the date of its rescission), with several exceptions.

The court ruled that the Sept. 5 rescission was arbitrary because it relied on an erroneous opinion of Attorney General Jeff Sessions regarding the underlying legality of the DACA program [see Washington Highlights, Sept. 8, 2017]. The court also rejected the government’s alternative justification for the rescission — that it was trying to manage an orderly wind-down of the program to avoid the prospect of a successful legal challenge to the DACA program.

The court recognized the “reliance interest” among DACA recipients, their employers, their colleges, and their communities, and criticized the government for not documenting its consideration of these interests in its decision-making process. AAMC Sr. Director for Student Affairs and Programs Geoffrey Young, PhD, submitted an Oct. 26 declaration in the case describing the reliance interests among medical students and AAMC member institutions.

Specifically, the court ordered the government to allow individuals with DACA status to renew their enrollments. However, the court’s order does not require the government to process new applications for DACA status and it expressly permits the government to deny individuals with DACA status permission to travel overseas and then return to the U.S. (“advance parole”). It also allows the government to exercise “fair discretion” in deciding individual applications for renewal of DACA status.

The order directs the government to post “reasonable public notice” about the process for renewal applications. As of press time, the U.S. Citizenship and Immigration Services (USCIS) website still indicated “DACA is ending,” but noted, “This page contains information that is no longer current but remains on our site for reference purposes.” There is no information yet about reinstating a process for renewal applications.

The California case is one of several challenges to the Government’s decision to rescind the DACA program. Other courts could issue rulings in the near future.

As graduating medical students with DACA status and teaching hospitals head into the final steps of the 2018 Match, the AAMC Dec. 13 led 60 health professions organizations in urging Congress to pass a permanent legislative remedy “as soon as possible” [see Washington Highlights, Dec. 15, 2017].


Frank Trinity, J.D.
Chief Legal Officer
Telephone: 202-828-0540


CMS Announces Work Requirement Guidance Under Medicaid 1115 Waivers

January 12, 2018—Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma Jan. 11 announced, “CMS will support state efforts to test incentives that make participation in work or other community engagement a requirement for continued Medicaid eligibility or coverage for certain adult Medicaid beneficiaries”  under 1115 waivers.

Ten states already have submitted proposals that include employment and community engagement initiatives: Arizona, Arkansas, Indiana, Kansas, Kentucky, Maine, New Hampshire, North Carolina, Utah and Wisconsin.

CMS recognizes that non-disabled adults who are eligible for Medicaid will be subject to the work/community engagement requirements. CMS acknowledges that states may want to exempt certain populations; provide and support individuals with disabilities and others who may be unable to meet requirements; and provide a wide range of allowable activities, such as caregiving, community service, and attending school. 

States also must make exemptions for those who are medically frail or who have acute medical conditions “validated by a medical professional” that would prevent them from meeting the requirements. States must comply with the Americans with Disabilities Act, which would require reasonable accommodations for certain individuals.

CMS also discusses the application of this guidance to individuals with opioid addiction or other substance abuse disorders, which may require modification such as counting time spent in medical treatment toward the work requirement. There will be no Federal Medicaid Match for strategies that states use to help beneficiaries meet work/community engagement requirements.


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


Energy and Commerce Releases Report on 340B Program

January 12, 2018—The House Energy and Commerce Committee Jan. 10 released a report on the 340B Drug Pricing Program. The report is the culmination of the Oversight and Investigations Subcommittee’s examination into the program, which has included several hearings and a request for information from 19 hospitals that participate in the program [see Washington Highlights, Oct. 13, 2017 and  July 21, 2017].

The report, Review of the 340B Drug Pricing Program, notes that the “340B program is an important program that enjoys strong bipartisan support in Congress.” It includes a variety of findings and a list of recommendations to address these concerns.

Some of the report’s findings include:

  • The Health Resources and Services Administration (HRSA) lacks sufficient authority to adequately oversee the program and its audit process still needs
  • Since covered entities do not have access to ceiling prices, they do not know if they are getting an accurate price from drug manufacturers;
  • Congress did not clearly identify the program’s intent or establish any mechanisms to calculate program savings; and
  • The 340B statute does not require covered entities to report the level of charity care provided and the current eligibility metric does not reflect the level of charity care provided.

The report provides a list of 12 recommendations to address these findings. Some of the recommendations include:

  • HRSA should finalize and enforce regulations in the areas that it currently has regulatory authority, including the 340B Alternative Dispute Resolution process, the imposition of civil monetary penalties against manufacturers that knowingly and intentionally overcharge a covered entity for a 340B drug, and the calculation of ceiling prices;
  • Congress should give HRSA sufficient regulatory authority to adequately administer and oversee the program;
  • Congress should equip HRSA with more resources and staff to conduct more rigorous oversight and more effective management of the program;
  • HRSA should work toward ensuring that it audits covered entities and manufacturers at the same rate
  • Congress should clarify the intent of the program;
  • Congress should promote transparency in the 340B program for both covered entities and manufacturers;
  • Congress should establish a mechanism to monitor the level of charity care provided by covered entities; and
  • Congress should reassess whether DSH is an appropriate measure for program eligibility.


Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806


CMS Announces New Medicare Voluntary Bundled Payment Model

January 12, 2018—The Centers for Medicare and Medicaid Services (CMS) Jan. 9 announced a new voluntary Medicare bundled payment model titled Bundled Payments for Care Improvement Advanced (BPCI Advanced), which will qualify as an Advanced Alternative Payment Model (APM). 

BPCI Advanced is designed to incentivize providers to deliver higher quality care at a lower cost. The model encompasses 32 different Clinical Episodes, including three outpatient procedures, and will examine the cost of care for each episode from the initiation of treatment and the ensuing 90 days. The program will allow both hospital and physician group practices (PGP) participants. BPCI Advanced is scheduled to launch on Oct. 1 and end Dec. 31, 2023. The deadline to submit applications is March 12, 2018; although an additional application period will open on Jan. 1, 2020. 

The clinical episode list and the seven quality measures (six of which are endorsed by the National Quality Forum) that will be tracked are outlined on the BPCI Advanced website. Under BPCI Advanced, participant financial performance will be retrospectively compared to target prices, which will be based on historical benchmarks minus a three percent CMS discount. 

Additionally, payment will be linked to quality using a pay-for-performance methodology that includes a quality score derived from the aforementioned measures. Initially, CMS will cap the amount by which the quality score can adjust payment at ten percent, although CMS may modify this in future model years. Importantly, participants are required to accept downside risk at the beginning of the program, and payment reconciliation will occur semi-annually. Losses and gains will be capped at 20 percent of the target.

As this model encompasses a wide variety of procedures and conditions including almost every organ system, it is the most ambitious bundled payment plan to date and once tested may provide a template for future CMS coverage.


Lauren Kuenstner
Healthcare Payment Reform Specialist
Telephone: 202-741-5516


On the Agenda

Jan. 16: Senate HELP Committee Markup on Nominations
Time TBD; Location TBD
The Senate Health, Education, Labor and Pensions Committee will hold a markup of outstanding nominations, including considering the nomination of Brett Giroir, MD, to be Assistant Secretary for Health at the Department of Health and Human Services.

Jan. 17: House and Means Committee hearing on opioids
10 a.m.; 1100 Longworth House Office Building, Washington, D.C.
The House Committee on Ways and Means will hold a hearing entitled, “The Opioid Crisis: the Current Landscape and CMS Actions to Prevent Opioid Misuse.”

Jan. 17: Senate Homeland Security and Governmental Affairs Committee hearing on Medicaid and opioids
10 a.m.; 342 Dirksen Senate Office Building, Washington, D.C.
The Senate Committee on Homeland Security and Government Affairs will hold a hearing entitled “Unintended Consequences: Medicaid and the Opioid Epidemic.” 

Jan. 17: Senate HELP Committee hearing on public health threats
10 a.m.; 430 Dirksen Senate Office Building, Washington, D.C.
The Senate HELP Committee will hold a hearing entitled, “Facing 21st Century Public Health Threats: Our Nation’s Preparedness and Response Capabilities, Part I.” 

Jan. 17: Senate VA Committee hearing on VA reform legislation
2 p.m.; 418 Russell Senate Office Building, Washington, D.C.
The Senate Veterans’ Affairs Committee will hold a hearing entitled, “The State of the VA: A Progress Report on Implementing 2017 VA Reform Legislation.”

Jan. 18: Senate HELP Committee hearing on financial aid simplification
10 a.m.; 430 Dirksen Senate Office Building, Washington D.C.
The Senate HELP Committee will hold a hearing entitled, “Reauthorizing the Higher Education Act: Financial Aid Simplification and Transparency.”

Jan. 18: House Rules Committee Meeting on Article I: Effective Oversight and the Power of the Purse
10:30 a.m.; H-313, the Capitol, Washington, D.C.
The House Rules Committee will hold a hearing on “Article I: Effective Oversight and the Power of the Purse.”


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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806