Alston & Bird Health Care Week in Review, August 2, 2019

Below is Alston & Bird’s Health Care Week in Review, which provides a synopsis of the latest news in healthcare regulations, notices, and guidance; federal legislation and congressional committee action; reports, studies, and analyses; and other health policy news.

1. Regulations, Notices, & Guidance

• On July 29, 2019, the Food and Drug Administration (FDA) issued guidance entitled, Rare Pediatric Disease Pediatric Priority Review Vouchers. This draft guidance provides information on the rare pediatric disease priority review voucher program under the Federal Food, Drug, and Cosmetic Act (FD&C Act), under which FDA will award priority review vouchers to sponsors of certain rare pediatric disease product applications that meet the relevant statutory criteria. These priority review vouchers can be used when submitting future human drug marketing applications that would not otherwise qualify for priority review. Because there exists a need for products for rare pediatric diseases, this program is intended to encourage development of new drug and biological products for prevention and treatment of certain rare pediatric diseases.
• On July 29, 2019, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule entitled, Medicare Program: CY 2020 Revisions to Payment Policies under the Physician Fee Schedule and Other Changes to Part B Payment Policies; Medicare Shared Savings Program Requirements; etc. This major proposed rule addresses changes to the physician fee schedule (PFS); other changes to Medicare Part B payment policies to ensure that payment systems are updated to reflect changes in medical practice, relative value of services, and changes in the statute; Medicare Shared Savings Program quality reporting requirements; Medicaid Promoting Interoperability Program requirements for eligible professionals; the establishment of an ambulance data collection system; updates to the Quality Payment Program; Medicare enrollment of Opioid Treatment Programs and enhancements to provider enrollment regulations concerning improper prescribing and patient harm; and amendments to Physician Self-Referral Law advisory opinion regulations.
• On July 29, 2019, CMS issued a proposed rule entitled, End-Stage Renal Disease Prospective Payment System, Payment for Renal Dialysis Services Furnished to Individuals with Acute Kidney Injury, End-Stage Renal Disease Quality Incentive Program, Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Fee Schedule Amounts, DMEPOS Competitive Bidding (CBP) Proposed Amendments, Standard Elements for a DMEPOS Order, and Master List of DMEPOS Items Potentially Subject to a Face-to-Face Encounter and Written Order Prior to Delivery and/or Prior Authorization Requirements. This proposed rule would update and revise the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for calendar year (CY) 2020. This rule also proposes to update the payment rate for renal dialysis services furnished by an ESRD facility to individuals with acute kidney injury (AKI). This proposed rule also proposes to update requirements for the ESRD Quality Incentive Program (QIP). In addition, this rule proposes a methodology for calculating fee schedule payment amounts for new Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) items and services and adjustments to the fee schedule amounts established using supplier or commercial prices if such prices decrease within five years of establishing the initial fee schedule amounts. This rule also proposes to revise existing regulations related to the competitive bidding program for DMEPOS, streamline the requirements for ordering DMEPOS items, and develop a new list of DMEPOS items potentially subject to a face-to-face encounter, written orders prior to delivery and/or prior authorization requirements. Finally, this proposed rule includes requests for information on data collection resulting from the ESRD PPS technical expert panel, changing the basis for the ESRD PPS wage index, and new requirements for the competitive bidding of diabetic testing strips.
• On July 29, 2019, CMS issued a proposed rule entitled, Proposed Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Price Transparency of Hospital Standard Charges; etc. This rule proposes revisions to the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for CY 2020. CMS proposes changes to the amounts and factors used to determine the payment rates for Medicare services paid under the OPPS and those paid under the ASC payment system. In addition, this proposed rule would update and refine the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program. In addition, in this proposed rule, CMS proposes to establish requirements for all hospitals in the United States for making hospital standard charges available to the public; establish a process and requirements for prior authorization for certain covered outpatient department services; revise the conditions for coverage of organ procurement organizations; and revise the regulations to allow grandfathered children’s hospitals-within-hospitals to increase the number of beds without resulting in the loss of grandfathered status.
• On July 30, 2019, FDA issued a notice entitled, Medical Device User Fee Rates for Fiscal Year 2020. The FD&C Act, as amended by the Medical Device User Fee Amendments of 2017 (MDUFA IV), authorizes FDA to collect user fees for certain medical device submissions and annual fees both for certain periodic reports and for establishments subject to registration. This notice establishes the fee rates for FY 2020, which apply from October 1, 2019, through September 30, 2020.
• On July 30, 2019, FDA issued a notice entitled, Outsourcing Facility Fee Rates for Fiscal Year 2020. The FD&C Act authorizes FDA to assess and collect an annual establishment fee from outsourcing facilities, as well as a re-inspection fee for each re-inspection of an outsourcing facility. This document establishes the FY 2020 rates for the small business establishment fee ($5,599), the non-small business establishment fee ($18,288), and the reinspection fee ($16,798) for outsourcing facilities; provides information on how the fees for FY 2020 were determined; and describes the payment procedures outsourcing facilities should follow. These fee rates are effective October 1, 2019, and will remain in effect through September 30, 2020.
• On July 30, 2019, CMS issued a rule entitled, FY 2020 Inpatient Psychiatric Facilities Prospective Payment System and Quality Reporting Updates for Fiscal Year Beginning October 1, 2019. This final rule updates the prospective payment rates, the outlier threshold, and the wage index for Medicare inpatient hospital services provided by Inpatient Psychiatric Facilities (IPFs), which include psychiatric hospitals and excluded psychiatric units of an inpatient prospective payment system hospital or critical access hospital. Additionally, this final rule revises and rebases the IPF market basket to reflect a 2016 base year and removes the IPF PPS 1-year lag of the wage index data. Finally, this final rule implements updates to the IPF Quality Reporting Program. These changes will be effective for IPF discharges during fiscal year (FY) 2020.
• On July 30, 2019, CMS issued a rule entitled, Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities: Updates to the Quality Reporting Program and Value-Based Purchasing Program for Federal Fiscal Year 2020. This final rule updates the payment rates used under the PPS for skilled nursing facilities (SNFs) for FY 2020. CMS is also making minor revisions to the regulation text to reflect the revised assessment schedule under the Patient Driven Payment Model (PDPM). Additionally, CMS is revising the definition of group therapy under the SNF PPS, and implementing a subregulatory process for updating the code lists used under PDPM. In addition, the final rule updates requirements for the SNF Quality Reporting Program (QRP) and the SNF Value-Based Purchasing (VBP) Program.
• On July 31, 2019, CMS issued a rule entitled, Inpatient Rehabilitation Facility (IRF) Prospective Payment System for Federal Fiscal Year 2020 and Updates to the IRF Quality Reporting Program. This final rule updates the prospective payment rates for IRFs for FY 2020. As required by the statute, this final rule includes the classification and weighting factors for the IRF PPS case-mix groups (CMGs) and a description of the methodologies and data used in computing the prospective payment rates for FY 2020. This final rule rebases and revises the IRF market basket to reflect a 2016 base year rather than the current 2012 base year. Additionally, this final rule revises the CMGs and updates the CMG relative weights and average length of stay (LOS) values beginning with FY 2020, based on analysis of 2 years of data (FYs 2017 and 2018). CMS is also finalizing the use of an unweighted motor score to assign patients to CMGs beginning with FY 2020. Additionally, CMS is finalizing the removal of one item from the motor score. CMS is updating the IRF wage index to use the concurrent fiscal year inpatient prospective payment system (IPPS) wage index beginning with FY 2020. For the IRF Quality Reporting Program (QRP), CMS is adopting two new measures, modifying an existing measure, and adopting new standardized patient assessment data elements.
• On July 31, 2019, CMS issued a rule entitled, FY 2020 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Requirements. This final rule updates the hospice wage index, payment rates, and cap amount for FY 2020. This rule also rebases the continuous home care, general inpatient care, and the inpatient respite care per diem payment rates in a budget-neutral manner to more accurately align Medicare payments with the costs of providing care. In addition, this rule modifies the election statement by requiring an addendum that includes information aimed at increasing coverage transparency for patient under a hospice election. Finally, this rule includes changes to the Hospice Quality Reporting Program.
• On July 31, 2019, FDA issued guidance entitled, E8(R1) General Considerations for Clinical Studies. This draft guidance describes internationally accepted principles and practices for the design and conduct of clinical studies of drug and biologic products. In addition, the draft guidance provides an overview of the types of clinical studies that may be performed and data sources during the product’s life cycle. The draft guidance is intended to promote the quality of the studies submitted to regulatory authorities, while allowing for flexibility.
• On July 31, 2019, FDA issued guidance entitled, General Clinical Pharmacology Considerations for Neonatal Studies for Drugs and Biological Products. This draft guidance is intended to assist sponsors of new drug applications (NDAs), biologics license applications (BLAs) for therapeutic biologics, and supplements who are planning to conduct clinical studies in neonatal populations. The issuance of this draft guidance on clinical pharmacology considerations for neonatal studies for drugs and biological products is stipulated under the FDA Reauthorization Act of 2017 (FDARA).
• On August 1, 2019, FDA issued a notice entitled, Biosimilar User Fee Rates for Fiscal Year 2020. The FD&C Act, as amended by the Biosimilar User Fee Amendments of 2017 (BsUFA II), directs FDA to establish, before the beginning of each fiscal year, the amount of initial and annual biosimilar biological product development (BPD) fees, the reactivation fee, and the biosimilar biological product application and program fees for such year. These fees apply to the period from October 1, 2019, through September 30, 2020.
• On August 1, 2019, FDA issued a notice entitled, Prescription Drug User Fee Rates for Fiscal Year 2020. The FD&C Act, as amended by the Prescription Drug User Fee Amendments of 2017 (PDUFA VI), authorizes FDA to collect application fees for certain applications for the review of human drug and biological products, and prescription drug program fees for certain approved products. This notice establishes the fee rates for FY 2020.
• On August 1, 2019, FDA issued guidance entitled, Oncology Therapeutic Radiopharmaceuticals: Nonclinical Studies and Labeling Recommendations. The purpose of this guidance is to assist sponsors in designing appropriate nonclinical studies before initiation of first-in-human (FIH) trials and through product approval. In addition, this guidance provides recommendations for product labeling, such as duration of contraception to minimize potential risk to a developing embryo or fetus, and recommendations for lactating women to minimize potential risk to a nursing child. This guidance is intended to provide recommendations for nonclinical programs in a unique and challenging area of product development, provide a more consistent approach in nonclinical studies and product labeling, and reduce the conduct of nonclinical studies that are not informative for product use.
• On August 2, 2019, FDA issued guidance entitled, Testing and Labeling Medical Devices for Safety in the Magnetic Resonance Environment. This guidance is intended to provide FDA's recommendations on the testing needed for assessing the safety and compatibility of medical devices in the Magnetic Resonance (MR) Environment and the recommended format for Magnetic Resonance Imaging (MRI) Safety Information in medical device labeling. This draft guidance document is anticipated to aid in consistency of reviews, testing, and MRI safety labeling across a variety of medical devices.
• On August 2, 2019, CMS issued a rule entitled, Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2020 Rates; Quality Reporting Requirements for Specific Providers; Medicare and Medicaid Promoting Interoperability Programs Requirements for Eligible Hospitals and Critical Access Hospitals. This rule will update Medicare payment policies for hospitals under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) for FY 2020. The policies in the rule represent historic changes to the way many low-wage index hospitals, which tend to be rural, are paid, and support the agency’s priority of “Rethinking Rural Health.” These changes are intended to improve the accuracy of Medicare payments to these low-wage hospitals so they will be able to increase what they pay their workers, which will help ensure that patients, including those living in rural areas, continue to have access to high-quality, affordable healthcare. In addition, the new technology policies in this rule are intended to ensure that Medicare beneficiaries continue to have access to potentially life-saving diagnostics and therapies by unleashing innovation and removing barriers to competition.

• August 6 and August 7, 2019: The Department of Health and Human Services (HHS) announced a public meeting entitled, National Committee on Vital and Health Statistics. The goal of this expert roundtable meeting is to identify research questions to inform evaluation of the benefit and cost of transition from International Classification of Diseases-10 (ICD-10) to ICD-11 for mortality and morbidity. Specific meeting objectives include: developing a shared understanding of lessons from the ICD-10 planning process/transition and the differences between ICD-10 and ICD-11; reaching consensus on the research questions to be answered to inform evaluation of cost and benefit of transition from ICD-10 to ICD-11 for mortality and morbidity—and to identify impacts of not moving to ICD-11 for morbidity; and identifying key topics and messages to communicate to the industry to foster early stakeholder engagement and preparation for the transition to ICD-11.
• August 21, 2019: HHS Substance Abuse and Mental Health Services Administration (SAMHSA) announced a public meeting entitled, Center for Substance Abuse Prevention. The meeting will include discussion of the substance use prevention workforce, as well as marijuana and HIV. The meeting will also include updates on Center for Substance Abuse Prevention (CSAP) program developments.

II. Congressional Legislation & Committee Action

• On August 2, President Trump signed the Bipartisan Budget Act of 2019. The budget agreement will suspend the debt limit through July 31, 2021, and avoid the risk of a default on payments by the federal government. The budget agreement will increase statutory spending limits by $323 billion combined for fiscal years 2020 and 2021 to boost discretionary spending to avoid steep cuts, which are scheduled to occur under current law. The current budget caps were set under a 2011 budget agreement with the intent of restraining federal spending. This budget agreement also calls for the extension of the sequestration of mandatory spending, which includes the two percent reduction of Medicare provider payments, through 2029. The House passed the budget agreement late last week and the Senate passed the agreement on August 1.

• On July 29, 2019, the Government Accountability Office (GAO) released a report entitled, Medicaid: States' Use and Distribution of Supplemental Payments to Hospitals. Medicaid disproportionate share hospital (DSH) payments are supplemental payments designed to help offset hospitals' uncompensated care costs for serving Medicaid beneficiaries and uninsured patients. Under the Medicaid DSH program, uncompensated care costs include two components: (1) costs related to care for the uninsured; and (2) the Medicaid shortfall—the gap between a state's Medicaid payment rates and hospitals' costs for serving Medicaid beneficiaries. GAO's analysis of hospitals receiving DSH payments showed that in 2014, costs related to care for the uninsured comprised 68 percent of total uncompensated care costs, and the remaining 32 percent was the Medicaid shortfall. Across states, GAO found that total DSH payments varied significantly in 2014. DSH payment levels are generally tied to state DSH spending in 1992 and since 1993 states have been subject to a limit on the amount of federal funding that may be used for DSH payments.
• On July 30, 2019, GAO released a report entitled, Medicare Plan Finder: Usability Problems and Incomplete Information Create Challenges for Beneficiaries Comparing Coverage Options. The Medicare Plan Finder (MPF) website—a primary resource for comparing Medicare coverage options—is difficult for beneficiaries to use and provides incomplete information, according to stakeholders and research studies. These sources and directors of State Health Insurance Assistance Programs (SHIP) GAO surveyed reported that beneficiaries struggle with using MPF. In response to GAO's survey, 73 percent of SHIP directors reported that beneficiaries experience difficulty finding information in MPF, while 18 percent reported that SHIP counselors experience difficulty.
• On July 31, 2019, GAO released a report entitled, Medicare Physician Services: Spending On and Use of Billing Codes for Comprehensive Care Planning Services. In this report, GAO found that overall Medicare spending on longitudinal comprehensive care planning (LCCP)-type services that were billed to the 58 codes increased from $26 billion in 2013 to almost $29 billion in 2017. While narrowly-defined services accounted for a small share of this total spending ($467 million in 2017), spending on these narrowly-defined services such as chronic care management increased rapidly. Moreover, spending growth on narrowly-defined services was driven by increased use of these services rather than increases in reimbursement rates.
• On July 31, 2019, RAND Corporation released a study entitled, Claims-Based Reporting of Post-Operative Visits for Procedures with 10- or 90-Day Global Periods. CMS currently bundles payment for postoperative care within ten or 90 days after many surgical procedures. Historically, CMS has not collected data on whether post-operative visits are actually performed. Congress mandated that CMS collect data on the number and level of post-operative visits to enable CMS to assess the accuracy of global surgical package valuation. Beginning July 1, 2017, CMS required select practitioners to report when they perform post-operative visits after procedures with 10- or 90- day global periods. This report summarizes patterns of post-operative visits in the first year of reporting.
• On August 1, 2019, CMS released a report entitled, Summary Report of 2017 Benefit Year Risk Adjustment Data Validation Adjustments to Risk Adjustment Transfers. The Patient Protection and Affordable Care Act (PPACA) established a permanent risk adjustment program to provide payments to health insurance issuers that attract higher-risk enrollees, such as those with chronic conditions, to reduce the incentives for issuers to avoid those enrollees, and to lessen the potential influence of risk selection on the premiums that issuers charge. The risk adjustment program is designed to support issuers offering a wide range of benefit designs that are available to consumers at an affordable premium. This is the first annual report on issuers’ risk adjustment data validation (HHS-RADV) adjustments to risk adjustment transfer results.

IV. Other Health Policy News

• On July 31, 2019, HHS and FDA announced the Safe Importation Action Plan, which is intended to allow the safe importation of certain drugs originally intended for foreign markets. The Safe Importation Action Plan describes two pathways to provide safe, lower cost drugs to consumers:

1. Under Pathway 1, a Notice of Proposed Rulemaking (“NPRM”) would rely on the authority in the FD&C Act section 804 to authorize demonstration projects to allow importation of drugs from Canada. The NPRM would include conditions to ensure the importation poses no additional risk to the public’s health and safety and that it will achieve significant cost savings to the American consumer.

2. Under Pathway 2, manufacturers could import versions of FDA-approved drug products that they sell in foreign countries that are the same as the U.S. versions. To use this pathway, the manufacturer or person authorized by the manufacturer would need to establish with FDA that the foreign version is the same as the U.S. version (such as through manufacturing records).