Congress has completed action on federal fiscal year (FY) 2020 spending, and President Trump has signed the two domestic and national security funding packages into law.  The major health care policy provisions included in the domestic spending package, HR 1865, the “‘Further Consolidated Appropriations Act, 2020” (the “Act”), are summarized below.

Repeal of ACA Device, Insurance Taxes

The Act permanently repeals the Affordable Care Act’s (ACA) 2.3% excise tax on the sale of certain medical devices, which has been a top priority of the medical technology industry.  It also permanently repeals the excise tax on certain high-cost employer-sponsored health coverage (the so-called “Cadillac tax”) and the annual excise tax imposed on health insurer providers.

Medicare Part B Policies

The Act incorporates provisions of the Laboratory Access for Beneficiaries (LAB) Act, which delays the next round of clinical laboratory private payer data reporting for one year.  The Act also directs the Medicare Payment Advisory Commission (MedPAC) to study how to improve this data collection.

In addition, the Act excludes certain complex rehabilitative manual wheelchairs (e.g., HCPCS codes E1235, E1236, E1237, E1238, and K0008) from the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program.  The Act also bars CMS from using competitive bidding rate information to adjust payment for certain wheelchair accessories and cushions furnished with complex rehabilitative manual wheelchairs.

The Act reimburses acute care hospitals on a reasonable cost basis for furnishing allogeneic hematopoietic stem cell transplants.  It also extends outpatient hospital pass-through status for a number of diagnostic radiopharmaceuticals.

Medicare, Medicaid, and Public Health Extenders

The Act extends through May 22, 2020 a number of Medicare, Medicaid, and public health programs and policies, including the following:
Continue Reading FY 2020 Government Funding Bill Repeals ACA Health-Related Taxes, Extends Expiring Health Provisions, Makes Other Health Policy Updates

In addition to keeping the federal government operating through February 8, 2018, the newly-enacted Continuing Appropriations Act provides temporary relief from three health-related taxes imposed by the Affordable Care Act (ACA) and funds the Children’s Health Insurance Program (CHIP) through fiscal year 2023. With regard to the ACA taxes, the Continuing Appropriations Act:

  • Imposes a

The House of Representatives is moving ahead on the Republican plan -– the American Health Care Act (AHCA) – that would repeal and replace major provisions of the Affordable Care Act (ACA). On March 16, 2017, the House Budget Committee approved sending the bill to the full House as part of fiscal year 2017 budget reconciliation bill, and a vote is expected later this week. The fate of the bill is uncertain in the face of united Democratic opposition to the plan and the objections of various ideological and regional factions within the Republican party. The political challenge has been complicated by a Congressional Budget Office (CBO)/Joint Committee on Taxation (JCT) estimate that the AHCA would result in 14 million more uninsured individuals in 2018, rising to 24 million by 2026. The CBO and JCT project that more of half of the coverage loss would be a result of the steep –$880 billion – proposed cut in federal Medicaid outlays, which would result in 14 million fewer Medicaid enrollees by 2026. And yet one of the fundamental disputes among Republican lawmakers is whether the ACA’s Medicaid expansion should be phased out sooner than the legislation now contemplates (2020), or whether additional protections should be provided in Medicaid expansion states.

Due to complex budget reconciliation rules, the AHCA concentrates on tax and Medicaid spending provisions. The AHCA would repeal the tax penalties enforcing the ACA mandates that most individuals obtain health insurance coverage and that certain employers offer employees coverage meeting minimum essential coverage standards, retroactive to those impacted by the penalty in 2016. Instead, to encourage healthier people to purchase insurance, the AHCA would require insurers to impose a 30% premium penalty for individuals who have not maintained continuous insurance coverage. Insurers also generally would be permitted to charge older individuals five times more than younger individuals (instead of the current 3 to 1 cap), beginning in 2018. Furthermore, the AHCA also would replace ACA insurance premium subsidies with refundable tax credits beginning in 2020 and establish a Patient and State Stability Fund intended to lower patient costs and stabilize state markets. The CBO/JCT estimate that, by 2026, the average subsidy under the AHCA would be about half of the average subsidy under current law. As noted, the AHCA also includes significant Medicaid cuts in the form of reduced enhanced federal matching and limits on growth in per-enrollee payments starting in 2020. In light of the expected decrease in the number of individuals with Medicaid coverage, the AHCA would eliminate cuts in disproportionate share hospital spending imposed under the ACA, and thus increase outlays by $31 billion. The AHCA also would repeal various ACA taxes, including the medical device tax, the prescription drug manufacturers’ tax, the health insurance provider fee, and the surtax on high-income taxpayer’s net investment income. Overall, CBO/JCT estimate that the AHCA would decrease federal spending by $1.2 trillion and reduce federal revenues by $883 billion, resulting in a $337 billion reduction to federal deficits, over the 2017-2026 period.
Continue Reading House GOP Moving Ahead on Controversial ACA Repeal & Replace Bill; First of Three Planned Phases of Health Reform

Observers are digesting what the Trump Administration will mean for the health care and life sciences industry.  Forecasting is more challenging for this incoming Administration than most given the relatively sparse policy details released during the campaign and the lack of a government service record to examine for clues.  Today President-elect Trump’s transition team released a one-page statement on health care policy, but many questions remain.  Nevertheless, we offer below our initial observations and issues to watch in the months to come.

  • Potential Sea Change. Uncertainty is, as some like to say, the “obvious comment” that characterizes the whole prospective Trump Administration.  Other than an intended “repeal and replacement” of the Affordable Care Act (ACA), President-elect Trump has provided relatively few details on a proposed health care agenda.  Until these policies are fleshed-out, expect an environment where some business decisions and investments may be delayed, with a resulting impact on merger and acquisition activity. That said, other transactions may become more likely, as the threat of new restrictions under a Clinton administration are removed, along with the prospect of potential regulatory relief under a Republican-controlled federal government.
  • Affordable Care Act Repeal and Replacement.  Trump has repeatedly indicated his desire to repeal and replace the ACA, including a vow to summon Congress into a special session for this task.  If the law is repealed, however, what would take its place, and how would Congress address the roughly 20 million Americans currently covered in some way under the ACA (and the potential rise in uncompensated care costs that also would result)?  Despite the call for repeal, certain parts of the law are popular. For instance, President-elect Trump noted on the campaign trail that he was in support of the ACA’s prohibition against the use of pre-existing health conditions to deny coverage (or as a basis for premium-setting).  Other proposals offered by Trump as candidate include allowing for the sale of health insurance across state lines as long as plans comply with state requirements, various tax benefits, and more transparency in health care pricing.  In today’s policy statement, President-elect Trump added support for high-risk pools, which he characterizes as “a proven approach to ensuring access to health insurance coverage for individuals who have significant medical expenses and who have not maintained continuous coverage.”  Congressional Republicans have offered a number of alternatives that are likely to be a springboard for reform, most notably the “Better Way” plan proposed by House Speaker Paul Ryan.  In fact, according to the Speaker’s office, “in the 114th Congress alone, House Republicans have introduced more than 400 individual bills that would improve our nation’s health care system” – demonstrating that Congress is not reticent about legislating on health care issues.  The new Senate’s Republican majority will not have the 60 votes required to override a potential Democratic filibuster of legislation to fully repeal the law. While Congress could use budget reconciliation authority (which requires only 50 votes in the Senate) to make significant changes, the drawn-out pace of the budget process may not satisfy those who want quick action in this area.  Regardless of the legislative vehicle, after years of calling for Obamacare repeal while President Obama was in office, the Republican Congress will be under tremendous pressure to act quickly – even if it is a “down-payment” on reform — now that Republicans will control the presidency and the Congress.

Continue Reading Looking Ahead to a Trump Administration: Health Care and Life Sciences Industry Perspectives

On December 15, 2015, Congressional leaders released sweeping spending and tax proposals, including a number of provisions impacting Medicare and the Affordable Care Act (ACA). The legislation is being considered on a fast track; the House approved the tax component of the package today, and it is scheduled to vote on the appropriations bill tomorrow, with Senate action expected shortly thereafter. Medicare/Medicaid provisions of the Consolidated Appropriations Act of 2016, which are intended to offset the costs of reauthorizing the World Trade Center Health Program, include the following:
Continue Reading Congressional Leaders Announce Spending/Tax Deal with Medicare and ACA Provisions; House Approves Tax Package

Today the House of Representatives approved H.R. 3762, budget “reconciliation” legislation that would repeal four provisions of the Affordable Care Act (ACA).  Specifically, the legislation would repeal the ACA employer and individual insurance mandates, the medical device excise tax, and the so-called “Cadillac tax” on high-cost health plans (an earlier House Ways and Means Committee

On September 29, 2015, the House Ways and Means Committee approved budget “reconciliation” legislation that calls for repeal of five provisions of the Affordable Care Act (ACA). Specifically, the legislation would repeal the employer and individual insurance mandates, the medical device excise tax, the so-called “Cadillac tax on high-cost health plans, and the Independent Payment

The House of Representatives has taken action on a number of bills to modify certain Affordable Care Act (ACA) provisions, revise Medicare Advantage policies, and make other health policy changes.

On June 23, 2015, the House voted to approve H.R. 1190, a bill to repeal the Independent Payment Advisory Board (IPAB), by a vote of 244 to 154. The IPAB was established by the ACA to submit Medicare spending plans to Congress if projected spending growth exceeds specified targets. Under the ACA, future IPAB’s proposals would go into effect automatically unless Congress enacts alternative legislation achieving required savings levels. IPAB members have not been appointed, and the spending trigger for IPAB recommendations has not yet been reached. The Administration has expressed its opposition to the bill, noting that while the IPAB “is not projected to be needed now or for a number of years given recent exceptionally slow growth in health care costs, it could serve a valuable role should rapid growth in health costs return.”

This action follows House approval last week of H.R. 160, a bill to repeal the ACA medical device tax, applicable to sales in calendar quarters beginning after the date of enactment. The Administration also opposes enactment of this legislation on grounds that it would increase the deficit. In other action, the House also approved the following health policy bills last week:Continue Reading House Passes Bills to Repeal ACA Medical Device Tax and IPAB, Revise Medicare Advantage Policy

On June 2, 2015, the House Ways and Means Committee approved ten health policy bills, including legislation to repeal the ACA’s medical device tax and the Independent Payment Advisory Board (IPAB). Other measures would make a series of changes to Medicare Advantage (MA) requirements and Medicare long-term care hospital (LTCH) policy. Specifically, the Committee approved the following bills:
Continue Reading Ways and Means Committee Approves Health Policy Bills, Including Repeal of ACA Medical Device Tax & IPAB, and Medicare Advantage/LTCH Policy Changes

As reported on our sister blog, http://www.lifescienceslegalupdate.com/, Reliance Medical Systems, LLC, filed a complaint in the U.S. District Court for the Central District of California this week that seeks a declaration that an Office of Inspector General (OIG) Special Fraud Alert on physician-owned distributors (PODs) unfairly and unconstitutionally burdens First Amendment rights of free

This post was also written by Ruth N. Holzman and Angelo Ciavarella.

On December 7, 2012, the IRS published final regulations that provide guidance on the 2.3% excise tax imposed on any sale occurring after December 31, 2012, of any “taxable medical device” by the manufacturer, producer or importer of such device (such tax enacted as part of the Affordable Care Act (ACA)). A “taxable medical device” is any device (as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act (FFDCA)) that is intended for humans, excluding eyeglasses, contact lenses, hearing aids, and any other medical device of a type that is generally purchased by the general public at retail for individual use. The final regulations set forth the IRS’s interpretation of key elements of the excise tax, including the retail exemption, as discussed after the jump.Continue Reading IRS Issues Regulations to Implement ACA Medical Device Tax

This post was also written by Ruth N. Holzman, Angelo Ciavarella and Jennifer A. Goldstein.

On February 7, 2012, the Internal Revenue Service (IRS) published proposed regulations to implement the Affordable Care Act’s (ACA) 2.3% excise tax on the sale price of medical devices sold by the manufacturer, producer, or importer of the device after December 31, 2012. The ACA defines a taxable medical device as any device (as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act) that is intended for humans and is listed as a medical device with FDA (or should have been listed) by a registered medical device establishment excluding eyeglasses, contact lenses, hearing aids, and any other medical device of a type that is generally purchased by the general public at retail for individual use. The proposed regulations set forth the IRS’s interpretation of key elements of the excise tax, including the retail exemption.

Additional details are available after the jump.Continue Reading IRS Proposes Regulations to Implement ACA Medical Device Tax

The Internal Revenue Service (IRS) has issued documents related to the annual fee for manufacturers and importers of brand name pharmaceuticals under section 9008 of the ACA, which is payable beginning in 2011. Specifically, IRS Notice 2010-71 describes a proposed methodology for calculating the fee (including a discussion of covered entities, sales taken into

In April 2010, Reed Smith provided an extensive analysis of the recently-enacted health reform legislation, H.R. 3590, the Patient Protection and Affordable Care Act (PPACA), as amended by H.R. 4872, the Health Care and Education Reconciliation Act of 2010 (Reconciliation Act). Together, these sweeping measures expand access to health insurance (including subsidies, mandates, and market reforms); reduce health care spending (particularly in the Medicare program); expand federal fraud and abuse authorities and transparency requirements; impose new taxes and fees on health industry sectors; and institute a variety of other health policy reforms.

In this analysis, we concentrate on those provisions in the new law that will affect life sciences entities: pharmaceutical, device, and biologics manufacturers. These include significant revisions to the Medicaid drug rebate program and the Medicare Part D prescription drug program; an expansion of the Public Health Service Section 340B drug discount program; the imposition of substantial new industry fees and excise taxes; creation of an abbreviated approval pathway for follow-on biologics; and sweeping new reporting and disclosure requirements affecting all manufacturers regarding their relationships with physicians and teaching hospitals, among other changes.

Many of the new provisions require the Secretary of the Department of Health and Human Services (HHS) to issue implementing regulations. We have referenced notices that have been published already, and we will be reporting on additional developments in the coming months.
Continue Reading Reed Smith Health Care Reform Review: The Affordable Care Act – Analysis and Implications for Drug, Device and Biotech Manufacturers