Health Policy Report (10/15)

The Week Ahead

Congress returns to action today as lawmakers gear up for a three-week legislative work session. Over the course of these next three weeks, House and Senate appropriators are expected to continue negotiations on subcommittee allocations for each of the 12 fiscal year (FY) 2020 spending measures. If they reach an agreement, they could begin “pre conferencing” the 12 fiscal year (FY) 2020 spending bills ahead of the Senate’s votes on the floor. However, disagreements over the Trump administration’s border security and family planning policies — as well as the recent developments on impeachment — could complicate matters for FY 2020 government funding bills.

On the floor this week, the House is expected to consider a pair of Securities and Exchange Committee-related measures. Lawmakers will take up a bill that would require the disclosure of the total number of domestic and foreign employees of certain public companies, as well as legislation that would mandate the SEC to conduct investor testing and surveys when developing regulations about disclosures for retail investors. Meanwhile, Senators are expected to resume consideration of pending presidential nominations.

President Trump Signs Executive Order Limiting Agency Guidance

Last Wednesday, President Donald Trump signed an executive order designed to limit the effect of guidance issued outside the rulemaking process. The order makes all current and future guidance nonbinding, “both in law and in practice,” unless agreed to in contract or authorized by law. This will almost certainly create some large gaps in agency policy, as federal agencies have frequently used guidance to supplement rulemaking. One such example of potentially impacted guidance is the use of State Medicaid Directors Letters, through which the Centers for Medicare and Medicaid Services issues guidance to Medicaid programs that often includes new policy. Going forward, all agency policy actions designed to have an effect on the behavior of its subjects will need to go through the rulemaking process.

In terms of process, the executive order is likely to have two primary effects: (1) it will slow down agency actions designed to change behavior, specifically those that were previously determined to not need to go through the rulemaking process, and (2) it will centralize regulatory authority with the Office of Management and Budget (OMB), as all actions will require OMB review and approval, reducing the ability of agencies to work outside the direct priorities of the administration. Additionally, agencies will be required to promulgate new procedures or amend existing procedures for issuing guidance in compliance with the executive order. In a further sign of centralization of the process, recently OMB budget staff has been directing all external stakeholder meeting requests to the more prescriptive process managed by the Office of Information and Regulatory Affairs (OIRA), rather than interested parties directly contacting OMB staff. This could have the effect of limiting the traditional types of staff interaction and engagement with external stakeholders.

Notably, the Trump Administration has released a pair of significant health care-related guidance documents that this executive order may affect. The first is a guidance loosening restrictions on 1332 State Innovation Waivers, permitting the use of subsidies for non-Affordable Care Act (ACA) compliant plans, redefining coverage standards, and lowering the guardrails on waivable ACA provisions. The second is the Food and Drug Administration’s (FDA) plan for two pathways for importing prescription drugs from abroad. While one of the pathways outlined by FDA’s notice requires a rulemaking process, the other, which involves manufacturers relabeling their own drugs intended for use overseas, was not determined to require a rulemaking process and it is not immediately clear how this executive order will affect it.

HHS Issues Proposed Modernization and Reforms for Stark Law, Anti-Kickback Statute

The administration released a pair of long-awaited rules last Wednesday aimed at modernizing and clarifying the Stark Law and Anti-Kickback Statute (AKS). The Department of Health and Human Services (HHS) said that the notice of proposed rulemaking (NPRM) addressing the Stark Law from the Centers for Medicare and Medicaid Services (CMS) and the NPRM addressing the AKS from the Office of the Inspector General (OIG) would provide greater certainty for health care providers participating in value-based arrangements and providing coordinated care for patients. Additionally, the proposals are aimed at easing the compliance burden for health care providers across the industry, while maintaining “a carefully woven fabric of safeguards” to protect patients and programs from fraud and abuse. HHS Secretary Alex Azar said the proposed rules would provide “an unprecedented opportunity for providers to work together to deliver the kind of high-value, coordinated care that patients deserve.”

The proposed rule on the Stark Law opens additional avenues for physicians and other healthcare providers to coordinate the care of the patients they serve and will allow providers across different health care settings to work together to promote quality care. According to CMS, the Stark Law’s new value-based exceptions acknowledge that incentives are different in a health care system that pays for value, rather than the volume, of services provided. The agency also ensured that the proposed new pathways include proper safeguards to ensure meaningful protection against overutilization and other harms. The changes are based on feedback CMS received during last summer’s RFI on the issue, during which stakeholders informed CMS that the regulations have not kept up with the evolution of a health care landscape that is focused more on value than volume. Stakeholders also asked for additional guidance on fundamental requirements and other changes to help ease burden and make compliance more straightforward. CMS Administrator Seema Verma noted that the proposed modernization for the Stark Law was an “important next step in President Trump’s health care agenda for Americans.”

The proposal on the AKS and civil monetary penalties (CMP) regarding beneficiary inducements would create a number of safe harbor protections similar to CMS’s rule on the Stark Law. The new safe harbors would create a range of flexibilities for providers engaged in value-based arrangements, ranging from flexibility on in-kind remuneration for coordinated care to permitting monetary remuneration for providers with full financial risk in a value-based care arrangement. It would also create an exception to CMP for inducing the use of telehealth technologies for patients undergoing in-home dialysis. Given the benefits of sharing cybersecurity and electronic health record (EHR) technology, the rule would create a safe harbor for transfers of cybersecurity and EHR goods and services between entities.

Pharmaceutical manufacturers were notably excluded from the bulk of the new and modified safe harbors. OIG says in the NPRM that its decision to exclude pharmaceutical manufacturers stems from concerns that value-based arrangements involving them could encourage the use of a certain product. Manufacturers would still be eligible for limited safe harbors, such as those concerning cybersecurity and CMS-sponsored models. The agency is seeking comment on whether to exclude pharmacy benefit managers (PBMs), distributors, and wholesalers for similar reasons, but does not preclude their inclusion. It also seeks comment on whether to exclude health technology companies and to create an exclusion list based on factors such as product type and company structure as opposed to broad categories of firms. However, Secretary Azar said that these rules focus on providers, and regarding manufacturers and other such entities, HHS continues “to work on that and hopes to get changes and pathways out as soon as possible.”

HHS Releases New Guidance on Tapering Opioid Use for Chronic Pain Management

Last Thursday, the Department of Health and Human Services (HHS) released new guidance for health care providers on the appropriate tapering or discontinuation of long-term opioid use. The guidance is intended to assist physicians contemplating or initiating a change in opioid dosage, and encourages thorough, deliberative case review and discussion with the patient so that they may not risk harm from abrupt changes in their treatment regimen. The Assistant Secretary of Health, Adm. Brett P. Giroir, M.D., noted that care must be a patient-centered experience with care for a patient’s specific circumstances and unique needs, and said that the guide would provide more resources “for clinicians to best help patients achieve the dual goals of effective pain management and reduction in the risk for addiction.” He explained that the goals were “not mutually exclusive.”

The recommendations are a shift in direction amid concerns that physicians are increasingly pulling back chronic pain patients’ dosages or abandoning their care completely. Much of the debate has centered around the Centers of Disease Control and Prevention's (CDC’s) 2016 opioid prescribing recommendations, which administration officials and experts have acknowledged have been misapplied and resulted in inappropriate limitations on patient access to opioids for chronic pain management. Some experts and advocates have also warned that overly aggressive reductions or forced cutbacks have led some patients who are dependent on the drugs to seek out illicit sources of opioids or consider suicide. The new guidance is part of the administration’s effort to strike a better balance between reducing the amount of opioids prescribed and ensuring patients still have appropriate access to opioid therapies, and is compiled from published guidelines and practices endorsed in peer-reviewed literature.

HHS stressed that the decision to taper should be individualized, and reached jointly by patients and providers. The guidance also recommends that physicians pursue tapering off opioids at a rate "slow enough to minimize opioid withdrawal symptoms and signs.” The new guidance outlines issues physicians should consider prior to transitioning chronic pain patients off of opioids, including: shared decision-making with the patient; issues to consider when initiating the change; and issues to consider as a patient’s dosage is being tapered, including the need to treat symptoms of opioid withdrawal and provide behavioral health support. HHS reported that successful tapers to lower dosages could lead to improvements in overall daily function without resurgences in pain, but Dr. Deborah Dowell from the Centers for Disease Control and Prevention clarified there are no specific dose reduction targets for physicians to hit. Administration officials also published a piece in the Journal of American Medical Association (JAMA) stressing that “clinicians have a responsibility to provide care for or arrange for management of patients’ pain and should not abandon patients.” They noted that not all patients may be able to or willing to taper or discontinue their opioid use for chronic pain management, and that physicians should continue to closely monitor and mitigate their opioid overdose risk.

Researchers Find Up to $935 Billion In Annual Health System Waste

A team of researchers headed by William Shrank, M.D., who serves as Humana’s Chief Medical Officer, recently found that between $760 billion and $935 billion is wasted in the U.S. health system annually. They reported that waste comes from a wide range of areas, including care delivery failure, care coordination failure, administrative complexity, and “pricing failure.” Fraud and abuse accounted for one of the smallest segments studied, amounting to between $44.4 billion and $93.3 billion, and administrative complexity was the greatest contributor, at $265.6 billion. Meanwhile, currently existing interventions targeting health care system waste save between $191 billion and $282 billion. The researchers came to their estimates through an analysis of academic publications, government reports, and other reports of waste, totaling 54 unique publications.

The researchers note that the U.S. spends more on health care than any other country. U.S. health care expenditures have been estimated to total $3.82 trillion in 2019, making their estimates of wastage count for between 19.9 percent and 24.5 percent of what Americans spend on health care annually. This is lower than previous estimates, which have found that as much as 35 percent of health spending is waste. Even these lower estimates suggest considerable room for policymakers to devise ways to save the health system money, however. Some work is in progress in addition to the existing programs that were found to save hundreds of billions. For instance, the authors note that recent proposals from the Department of Health and Human Services (HHS) to improve data interoperability and sharing should help administrative processes to become increasingly automated, reducing what the system spends on administration.