Capital Thinking: Health Care



On Monday, July 28, the House Committee on Energy and Commerce, Subcommittee on Health will hold a markup to consider two bills: H.R. ____, a bill to require the Secretary of Health and Human Services to provide for recommendations for the development and use of clinical data registries for the improvement of patient care and H.R. 4067, a bill to provide for the extension of the enforcement instruction on supervision requirements for outpatient therapeutic services in critical access and small rural hospitals through 2014. The full committee will meet on Tuesday, July 29 and Wednesday, July 30 to mark up the two bills reported from Monday’s markup, as well as H.R. 4701, Lyme and Tick-borne Diseases Act of 2014 and H.R. 3522, Employee Health Care Protection Act.

Speaker of the House John Boehner (R-OH) continues to pursue a lawsuit against President Barack Obama. The lawsuit is to focus on implementation of health care reform and the White House’s decision to delay the employer mandate provision. On Tuesday, July 29, the House Committee on Rules will meet to consider H. Res. 676, providing for authority to initiate litigation for actions by the President or other executive branch officials inconsistent with their duties under the Constitution of the United States. A House floor vote is likely to occur before the House adjourns for the August recess. The floor vote is expected to be cast along party lines.

Last week, the Senate Committee on Appropriations revealed a draft FY 2015 Labor-Health and Human Services-Education bill and report. However, due to the upcoming elections and controversial nature of the policies involved in the spending bill, lawmakers are instead expected to negotiate an omnibus or short-term continuing resolution. The House has not released a similar FY 2015 draft.

This Week’s Hearings:

  • Monday, July 28: The House Committee on Energy and Commerce, Subcommittee on Health will hold a hearing titled “Protecting Americans from Illegal Bailouts and Plan Cancellations Under the President’s Health Care Law.”
  • Wednesday, July 30: The Senate Committee on the Judiciary, Subcommittee on Antitrust, Competition Policy and Consumer Rights will hold a hearing titled “Pricing Policies and Competition in the Contact Lens Industry: Is What You See What You Get?” The Senate Special Committee on Aging will hold a hearing titled “Admitted or Not? The Impact of Medicare Observation Status on Seniors.”
  • Thursday, July 31: The House Committee on Energy and Commerce, Subcommittee on Oversight and Investigations will hold a hearing titled “PPACA Implementation: Updates from CMS and GAO.” The Committee on Small Business, Subcommittee on Health and Technology will hold a hearing tilted “Telemedicine: A Prescription for Small Medical Practices?”


IRS Posts Draft Employer Mandate Forms

This week, the Internal Revenue Service (IRS) posted draft forms that employers will utilize to report and comply with health reform’s employer mandate to provide health insurance to workers. These postings were widely seen as a signal to stakeholders that the administration will continue to pursue the mandate, despite two delays and the potential lawsuit against the President being considered in the House. The forms and instructions are to be finalized later this year.

Orphan Drug Interpretive Rule

The Health Resources and Services Administration (HRSA) of the Department of Health and Human Services (HHS) announced the availability of an interpretive rule regarding section 340B(e) of the Public Health Service Act (PHSA), effective July 21, 2014. The interpretive rule, “Implementation of the Exclusion of Orphan Drugs for Certain Covered Entities Under the 340B Program,” requires pharmaceutical manufacturers to discount orphan drugs when hospitals utilize them for conditions other than their specified condition. The interpretive rule specifically states that HHS interprets 340B(e) of the PHSA as excluding from the drug pricing program “drugs that are transferred, prescribed, sold, or otherwise used for the rare condition or disease for which the drug was designated” under the Federal Food, Drug, and Cosmetic Act (FFDCA). The interpretive rule also states that the PHSA does not exclude from the program “drugs that are transferred, prescribed, sold, or otherwise used for conditions or diseases other than for which the drug was designated” under the FFDCA. Previously, in May, the U.S. District Court for the District of Columbia invalidated an HHS regulation of the same nature.


Conflicting Rulings on Obamacare Subsidies

This past week, two U.S. appeals courts issued conflicting rulings regarding the availability of subsidies for those who purchase health insurance through an exchange. The health reform law provides that certain consumers are eligible for subsidies, administered through a tax credit, when purchasing coverage through an exchange “established by the State.” The law also delegates responsibility for establishing exchanges to states, but provides for the federal government to establish an exchange within a state if the state refuses or is unable to do so. The IRS has interpreted the law to allow all eligible purchasers to receive subsidies, whether they purchase coverage through an exchange run by a state or by the federal government.

The U.S. Court of Appeals for the District of Columbia Circuit ruled 2-1 that the subsidies are available to those eligible consumers who purchase coverage through exchanges operated by states. Those who purchase coverage through an exchange run by the federal government may not receive subsidies (Halbig v. Burwell, D.C. Cir., No. 14-5018, July 22, 2014). The U.S. Court of Appeals for the Fourth Circuit, based in Richmond, Virginia, ruled 3-0 that subsidies are available to eligible consumers of all states, not just those purchasing from a state-run exchange (King v. Burwell, 4th Cir., No. 14-1158, July 22, 2014).

A Department of Justice spokesman said, “We believe that this decision [Halbig v. Burwell] is incorrect, inconsistent with Congressional intent, different from previous rulings, and at odds with the goal of the law: to make health care affordable no matter where people live.” The government will seek an en banc review from the U.S. Court of Appeals for the District of Columbia.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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