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AAMC Wins Lawsuit Challenging Medicare Cuts to Certain Outpatient Departments

September 20, 2019—Judge Rosemary Collyer of the US District Court for the District of Columbia issued a ruling Sept. 17 that the Centers for Medicare and Medicaid Services (CMS) exceeded its statutory authority when it finalized the calendar year (CY) 2019 Outpatient Prospective Payment (OPPS) rule that cut payments for evaluation and management (E&M) services provided at off-campus provider-based departments, and ordered CMS to vacate the rule. No remedy was ordered. The decision was in a response to a lawsuit filed by the AAMC, the American Hospital Association (AHA), and others [see Washington Highlights, Dec. 7, 2018]. In response to the ruling, AAMC and AHA issued a joint statement.

The AAMC and numerous other stakeholders objected to the proposed cuts in a comment letter submitted in response to the CY19 OPPS proposed rule [see Washington Highlights, Sept. 28, 2018]. Nonetheless, in the final rule, CMS cut payments to outpatient provider-based departments that had been grandfathered into the OPPS payment system [see Washington Highlights, Nov. 9, 2018]. In taking this action, CMS did not make the cuts budget neutral which resulted in overall cuts to OPPS. CMS claimed authority for these cuts due to “unnecessary increases in the volume of outpatient services.” The agency also claimed that the reason for the growth of E&M services in these off-campus provider-based departments was because they received a higher payment rate.

The court rejected CMS’s arguments. First, the court concluded that if CMS were to make such cuts, it would have to use a methodology that was established by Congress and therefore would have to be budget neutral. The court found that “Congress has developed a multi-factored, complicated annual process whereby CMS is to pre-set relative payments for OPD [outpatient department] services. This annual process would be totally ignored and circumvented if CMS could unilaterally set OPD service-specific rates without regard to their relative position or budget neutrality.”

The court vacated the portion of the rule related to the cuts and sent it back to CMS, noting the “Final Rule is less than one year old and did not apply budget neutrality principles. These burdens should lessen the burden [on CMS] on reconsideration.” The court ordered both parties provide a joint status report by Oct. 1 to determine if additional briefing on the remedy is appropriate.

Contact:

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

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House Passes CR to Fund Government Through Nov. 21

September 20, 2019—The House of Representatives Sept. 19 passed the Continuing Appropriations Act, 2020, and Health Extenders Act of 2019 (H.R. 4378), a continuing resolution (CR) which temporarily extends the fiscal year (FY) 2019 funding levels for discretionary spending and some mandatory health programs through Nov. 21.

If enacted, the legislation would avert a government shutdown when the new fiscal year begins Oct. 1 because none of the twelve FY 2020 spending bills have been signed into law. The CR passed the House of Representatives by a vote of 301-123.

The CR also contains provisions to extend several health programs that are set to expire on Sept. 30, 2019. The package would delay reductions in Medicaid Disproportionate Share Hospital (DSH) allotments; prorate the funding for the Community Health Centers, Teaching Health Centers, and the National Health Service Corps (NHSC) at current levels; and extend the authorization for Patient-Centered Outcomes Research Institute (PCORI) to receive funding from its associated trust fund, through Nov. 21.

The Senate is expected to consider the legislation the week of Sept. 23. If passed by the Senate, the bill would also require the president’s signature before Oct. 1.

Contact:

Tannaz Rasouli
Sr. Director, Public Policy & Strategic Outreach
Telephone: 202-828-0525
Email: trasouli@aamc.org

Len Marquez
Senior Director, Government Relations
Telephone: 202-862-6281
Email: lmarquez@aamc.org

Matthew Shick, JD
Sr. Director, Gov't Relations & Regulatory Affairs
Telephone: 202-828-0525
Email: mshick@aamc.org

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Senate Appropriators Release FY 2020 Labor-HHS Bill, Fail to Begin Floor Consideration

September 20, 2019—The Senate Sept. 18 failed to move forward on consideration of H.R. 2740, the House-passed fiscal year (FY) 2020 “minibus” package of four spending bills, including funding for the Departments of Labor, Health and Human Services, and Education (Labor-HHS) [see Washington Highlights, June 21]. A 60 vote threshold was needed and the motion failed 51-44, in a party line vote with the exception of Sens. Mitch McConnell (R-Ky.) and Rand Paul (R-Ky.), who voted against the measure.

The Senate had planned to replace the language of the House-passed package with Senate versions of the four bills, including a Labor-HHS spending bill with report language that was released Sept. 18 after the Senate Appropriations Committee postponed consideration of the bill the week of Sept. 9 [see Washington Highlights, Sept. 13]. Press reports indicated that, in an effort to reach consensus on the Labor-HHS bill, Senate Republicans sent a proposal to Democratic colleagues recommending appropriators tap into unobligated funding in Pell Grants as a way to increase the allocations for some programs in the original legislation.

The committee also released an accompanying press statement and summary from Subcommittee Chair Roy Blunt (R-Mo.), which noted that the spending bill combines $178.3 billion in base allocation with $9.4 billion in changes in mandatory programs (CHIMPs), a total of $2.2 billion (1%) more in discretionary spending compared to the enacted FY 2019 bill.

The draft bill provides a total of $42.1 billion for National Institutes of Health (NIH) in FY 2020, including the full $492 million provided in FY 2020 through the Innovation Account established in the 21st Century Cures Act for specific initiatives (P.L. 114–255). This total funding level would represent a $3 billion or 7.7% increase over the comparable FY 2019 funding level, adding to a $12 billion, or 40% increase, since FY 2016. This compares to the House-passed $41.1 billion (a $2 billion or 5.1% increase over FY 2019).  Specifically, the proposal includes $380 million for the Institutions Development Award (IDeA) program, an increase of $19.2 million over FY 2019, as well as $589.4 million for Clinical and Translation Science Awards (CTSA), an increase of $29.7 million. The bill also maintains the HHS salary cap at Executive Level II of the federal pay scale and adds, “none of the funds appropriated in this title shall be used to prevent the NIH from paying up to 100 percent of the salary of an individual at this rate.”

The Ad Hoc Group for Medical Research, convened by the AAMC, issued a press statement commending the investment in NIH while encouraging “lawmakers in both chambers to work swiftly toward enactment of a bipartisan spending bill that avoids unnecessary delays in scientific progress.” Additionally, the bill provides $256 million for the Agency for Healthcare Research and Quality (AHRQ), an $82 million (24%) cut. The bill rejects the president’s proposal to fund AHRQ as an institute within the NIH.

The legislation provides the Centers for Disease Control and Prevention (CDC) with a program level of $7.52 billion for FY 2020, a $180 million (2.4%) increase over FY 2019 enacted levels. This compares to the House-passed funding level of $8.3 billion (a $938 million or 12.8% increase over FY 2019). However, the bill does not include the $25 million included in the House spending bill for the CDC to conduct gun violence research.

The funding allocations proposed in the legislation includes $633.5 million for the Health Resources and Services Administration (HRSA) Title VII health professions and Title VIII nursing workforce development programs, an $8.2 million (1.3%) decrease from FY 2019 enacted levels. This amount reflects the elimination of the Health Careers Opportunity Program, and flat funding for most other programs. The bill also provides an additional $5 million in new Title VII funding for Mental and Substance Use Disorders Workforce Training Demonstration program, which was authorized under the 21st Century Cures Act (P.L. 114–255).

Earlier this summer, the House of Representatives passed Labor-HHS funding legislation that would provide $680 million for Title VII and Title VIII, a $38 million (6%) increase over FY 2019 enacted levels [See Washington Highlights, May 10]. The AAMC-led Health Professions and Nursing Education Coalition (HPNEC) released a statement expressing disappointment with the Senate allocations and urging Senators and Representatives to work on a bipartisan resolution that adequately funds Titles VII and VIII for FY 2020. 

The Labor-HHS legislation included funding for additional programs administered by HRSA. The Committee allocated $340 million for Children’s Hospital Graduate Medical Education, a $15 million (4.6%) increase over FY 2019 enacted levels, and $10 million less than what the House legislation provided, and flat funded the Medical Student Education Program at $25 million, $15 million less than the House bill. Finally, the legislation provided $105 million for the National Health Service Corps, which is additional funding provided to the program on top of its mandatory appropriation.

The draft legislation also provides funding for the Department of Education programs. According to the committee report, the Federal Work Study program received $1.13 billion in FY 2020 (flat-funded from FY 2019). The House-passed legislation includes $1.4 billion for FWS, a $304 million (2.8%) increase over FY 2019 enacted levels. The draft bill also includes $100 million for the Temporary Extended Public Service Loan Forgiveness program, signaling Senate support for retaining the Public Service Loan Forgiveness program.

With one week left in FY 2019, the Senate the week of Sept. 23 is expected to vote on the House-passed continuing resolution to avoid a government shutdown when the new fiscal year begins Oct. 1.

Contact:

Brett Roude
Legislative Analyst
Telephone: 202-753-5726
Email: broude@aamc.org

Christa Wagner, PhD
Senior Legislative Analyst
Telephone: 202-828-0595
Email: chwagner@aamc.org

Matthew Shick, JD
Sr. Director, Gov't Relations & Regulatory Affairs
Telephone: 202-828-0525
Email: mshick@aamc.org

Tannaz Rasouli
Sr. Director, Public Policy & Strategic Outreach
Telephone: 202-828-0525
Email: trasouli@aamc.org

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House Democratic Leaders Introduce Legislation to Reduce Prescription Drug Costs

September 20, 2019—House Speaker Nancy Pelosi (D-Calif.), Majority Leader Steny Hoyer (D-Md.), Energy and Commerce Committee Chair Frank Pallone (D-N.J.), and Ways and Means Committee Chair Richie Neal (D-Mass.) held a press conference Sept. 19 unveiling the Lower Prescription Drug Costs Now Act (H.R. 3), the Speaker’s prescription drug legislation aimed at lowering prices the government and patients pay for prescription drugs.

At the press conference, Speaker Pelosi stressed challenge for families facing high drug prices and that Congress needs to act, saying, “For years, seniors and families across America have struggled under the skyrocketing cost of prescription drugs. Drugs they need to stay healthy, but also the cost of drugs threatening their financial health and well‑being as well … The burden of out‑of‑control prescription costs is an issue that touches every family in America. That was self‑evident in the election of 2018. It's still a big issue as we go forward. We don't want a political issue at the polls. We want a solution in the Congress, and we want it now.”

The legislation, officially introduced by Pallone, Neal, and Education and Labor Committee Chair Bobby Scott (D-Va.), would grant the Department of Health and Human Services (HHS) broad powers to negotiate prescription drug prices in an effort to drive down their high costs.

Other major provisions included in H.R. 3 would:

  • Require the HHS Secretary to negotiate the prices on up to 250 of the most costly drugs to Medicare and the entire U.S. health system that do not have competition from at least one generic or biosimilar on the market. 

  • Establish the Average International Market price, a maximum price for any negotiated drug based on an international price index from six countries. 

  • Create significant penalties for drug manufacturers who refuse to participate in the drug pricing negotiation process or fail to reach agreement with HHS.

  • Limit price increases for Medicare Part B and Part D drugs to the rate of inflation and create a Medicare Part B and D inflation rebate.

  • Mandate an annual $2,000 cap on the Medicare beneficiaries’ out-of-pocket prescription drug expenses.

  • Require that savings from drug price negotiations be reinvested in the National Institutes of Health.

In response to the legislation, House Republican Leader Kevin McCarthy (R-Calif.), Minority Whip Steve Scalise (R-La.), and Conference Chair Liz Cheney (R-Wyo.) issued a statement expressing serious concerns with the H.R. 3, saying, “The Pelosi plan is a step toward nationalizing the drug industry and opening the door to a one-size-fits all, government-controlled rationing of prescription drugs. This exacerbates the existing government policies that got us here in the first place while damaging the free market that has created these life changing medications and cures … Caught in the aftermath of this socialist economic disaster are those devoting their lives to healing others and those they are trying to heal. Congress can find a bipartisan solution to lower drug prices without taking away choice, access, and control from patients and doctors. We have to.”

Prior to the release of H.R. 3, Energy and Commerce Committee Chair Pallone and Health Subcommittee Chair Anna Eshoo (D-Calif.) announced a Sept. 25 hearing on prescription drug pricing entitled, “Making Prescription Drugs More Affordable: Legislation to Negotiate a Better Deal for Americans.” In a press release, Pallone and Eshoo echoed the Speaker’s comments, saying, “Across the nation, millions of Americans struggle to keep up with the soaring cost of prescription drugs without any relief in sight … The status quo is unacceptable and unsustainable. It’s time for Congress to act on behalf of consumers by passing legislation that lowers prescription drug prices and negotiates a better deal for them.”

In addition to H.R. 3, the subcommittee will discuss other prescription drug legislation including the Medicare Prescription Drug Price Negotiation Act of 2019 (H.R.275), the Medicare Drug Price Negotiation Act (H.R.448), and the Medicare Negotiation and Competitive Licensing Act of 2019 (H.R. 1046) [see Washington Highlights, March 8].

The House is expected to hold several hearings on prescription drug prices this fall in an attempt to finalize legislation by the end of the year.

Contact:

Len Marquez
Senior Director, Government Relations
Telephone: 202-862-6281
Email: lmarquez@aamc.org

Christa Wagner, PhD
Senior Legislative Analyst
Telephone: 202-828-0595
Email: chwagner@aamc.org

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On the Agenda

Sept. 24: Senate Appropriations Subcommittee Markup of FY 2020 CJS Spending Bill
10:00 a.m., 192 Dirksen Senate Office Building, Washington, D.C.
The Senate Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies will hold a markup of its FY 2020 spending bill.

Sept. 25: House Appropriations Subcommittee Hearing on NIH
10:00 a.m., 2358-C Rayburn House Office Building, Washington, D.C.
The House Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies will hold a hearing titled, “Investments in Medical Research at Five Institutes and Centers of the National Institutes of Health.” Witnesses include NIH Director Francis Collins, MD, PhD, and the directors of the National Center for Advancing Translational Sciences, National Library of Medicine, National Center for Complementary and Integrative Health, National Institute on Minority Health and Health Disparities, and National Institutes of Biomedical Imaging and Bioengineering.

Sept. 25: House Veterans Affairs Committee Hearing on the Community Care Network
10:00 a.m., 210 U.S. Capitol, Washington, D.C.
The House Veterans Affairs Subcommittee on Health will hold a hearing titled, “MISSION Critical: Care in the Community Update.”

Sept. 25: House Energy and Commerce Hearing on Prescription Drug Prices
10:30 a.m., 2322 Rayburn House Office Building, Washington, D.C.
The House Energy and Commerce Subcommittee on Health will hold a hearing titled, “Making Prescription Drugs More Affordable: Legislation to Negotiate a Better Deal for Americans.”

Sept. 25: Senate Aging Committee Hearing on Health Aging
2:30 p.m., 562 Dirksen Senate Office Building, Washington, D.C.
The Senate Committee on Aging will hold a hearing titled, “Promoting Healthy Aging: Living Your Best Life Long Into Your Golden Years.”

Sept. 26: House Education and Labor Hearing on Drug Prices
2:00 p.m., 2175 Rayburn House Office Building, Washington, D.C.
The House Education and Labor Subcommittee on Health, Employment, Labor, and Pensions will hold a hearing titled, “Making Health Care More Affordable: Lowering Drug Prices and Increasing Transparency.”

Sept. 26-27: MACPAC Public Meeting
Time: TBD, Ronald Reagan Building, 1300 Pennsylvania Ave. NW, Washington, D.C.
The Medicaid and CHIP Payment and Access Commission will hold a public meeting.

 


On the Hill

Rep. Paul Cook (R-Calif.) announced Sept. 17 that he will retire from Congress at the end of this Congress to run for a seat on the San Bernardino County Board of Supervisors.

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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.


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For More Information

Jason Kleinman
Senior Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org