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Key Legislative and Regulatory Developments

Washington Prepares for Federal Budget Battles Following August Recess Congress left town for its August recess this year with quite a few major issues simmering in the pot. Some issues enjoy bipartisan support, such as legislation to replace the Sustainable Growth Rate (SGR) formula with a system that creates quality incentive payments for physicians providing services to Medicare beneficiaries. However, only the House Energy & Commerce Committee has so far drafted an SGR proposal, and it does not include a way to pay for its $140 billion price tag. This leaves the proposal susceptible to larger political forces in play involving impending deadlines to fund the government and raise the debt ceiling. Congress first deadline will be funding the federal government before it shuts down on October 1. This date coincides with the beginning of open enrollment for health exchanges created by the Affordable Care Act (ACA), which has given conservatives an easy opportunity to threaten shutting down the government if any continuing resolution (CR) to fund the government also funds the ACA. Furthermore, while House Ways and Means Committee Chairman Dave Camp (RMI) and Senate Finance Committee Chairman Max Baucus (D-MT) have worked continuously on broad tax reform this year, the parties have long fought over the past few years about whether tax reform should raise revenues or be revenue neutral. Camp and Baucus have yet to reveal if they have made any decision about the nature of their tax reform framework, but the discussion over tax revenues is likely to become a part of the battle to fund the federal government. As past budget battles have made clear, Republicans are reluctant to yield on increased tax revenues unless Democrats are willing to cut entitlement spending through various structural changes, such as raising the age to become eligible for Medicare or adjusting beneficiary copays. Another key issue on Congresss agenda this fall is raising the debt ceiling. While Congress suspended the debt limit earlier this year, it is expected the Treasury will breach the current federal borrowing limit sometime in mid-October. As in 2011, House Republicans are expected to argue for spending cuts before agreeing to raise the debt ceiling. This creates a prime opportunity for Congress to align its deadlines with a short-term (weeks or months long) CR that funds the federal government just long enough for Congress to work out a longer term deal that includes some level of government funding and an increase to the governments borrowing limit. Additionally, sequestration is still in effect and remains unpopular. If Congress does nothing to eliminate it in this years battle, it is possible another round of blunt spending cuts will occur, albeit smaller cuts than the ones occurring earlier this year. It is possible this chaos will create a perfect storm yielding an opportunity for a Grand Bargain which would include tax and entitlement reform (including an SGR proposal). Several Republican 1008 Upper Gulph Road Wayne, PA 19087

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Senators have been repeatedly meeting with President Obama to discuss such a deal. However, similar talks have occurred in the past to no avail. Given the politically perilous consequences of a government shutdown or breaching the debt limit, some sort of agreement is likely, but recent history tells us Congress may only address the issues for a short period and kick the can for another year.

Sunshine Act Reporting Begins On August 1, the first reporting period under the Physician Payment Sunshine Act, or Sunshine Act, went into effect. Enacted as part of the Affordable Care Act (ACA), the Sunshine Act will regulate annual reporting of payments or other transfers of value from manufacturers of FDAapproved drugs, devices, and other medical supplies to doctors and hospitals. During this first reporting period, manufacturers of applicable products reimbursable by Medicare, Medicaid, and the Childrens Health Insurance Program (CHIP) are required to collect data regarding financial transfers made between August 1, 2013 and December 31, 2013, with a deadline of reporting this information to the Centers for Medicare and Medicaid Services (CMS) by March 31, 2014. The data will be publicly released by September 30, 2014. The Agency has created a web portal of tools and resources for applicable stakeholders entitled Open Payments, which is accessible HERE.

Bipartisan & Bicameral Bills to Exempt FDA User Fees from Sequestration Introduced On August 1, a group of five Senators led by Senate Agriculture, Rural Development, Food and Drug Administration (FDA), and Related Agencies (Ag-FDA) Appropriations Subcommittee Chairman Mark Pryor (D-AR) introduced a bill (S.1413) to exempt FDA user fees from sequestration. The other sponsors were Ag-FDA Subcommittee Ranking Member Roy Blunt (RMO) and Senators Dan Coats (R-IN), Al Franken (D-MN), and Jerry Moran (R-KS). A similar bill, H.R. 2725, was introduced in the House by Congressmen Leonard Lance (R-NJ) and Anna Eshoo (D-CA) on July 18. Sequestration prohibited FDA from accessing around $85 million in user fees in 2013. If Congress passes a continuing appropriations bill that funds the federal government above the discretionary spending caps set by the sequester and the Budget Control Act (BCA), FDA user fees would again be eligible for sequestration in 2014.

CMS Solicits Stakeholder Feedback on Disclosing Medicare Physician Payment Data In May, a Florida federal district court lifted a permanent injunction prohibiting CMS from disclosing Medicare payments made to individual physicians or in a manner that could identify 1008 Upper Gulph Road Wayne, PA 19087

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individual physicians. In light of this ruling, CMS has released a request for public comment on how to properly disclose individual physician payment data. Specifically, CMS is seeking feedback on whether the public interest in disclosure outweighs a physicians privacy interests; how to disclose the data in such a way as to increase care quality, transparency, and program integrity; and the form in which CMS should release this information. The full request for comment can be found HERE. Comments are due by September 5.

ACA Implementation Update With health insurance exchange open enrollment less than two months away, the federal government and stakeholders are under intense pressure to complete a number of actions to ensure readiness for implementation of exchanges as well as several other ACA market reforms in 2014. Although many questions remain unanswered, the following developments at the federal level are likely to influence exchange rollout. Earlier this month, the Administration clarified a policy proposed in February that delayed enforcement of the ACAs limit on out-of-pocket maximum spending for 2014 for certain group health plans. The ACA called for an out-of-pocket spending cap for all individuals enrolled in large group health plans, but the Administration is allowing a safe harbor for plans which use multiple providers to administer benefits (i.e. separate benefit administrators for medical vs. drug benefits). Thus, enrollees could face separate out-of-pocket caps for benefits administered by multiple entities rather than a single, coordinated limit. The availability of federal subsidies for the purchase of insurance in state-based exchanges has been widely criticized by Republicans, who argue that the legislative language of ACA only specifies that these subsidies would be available to those purchasing in federally-facilitated exchanges. On August 12, this argument was given more momentum as a U.S District Judge in Oklahoma agreed to hear a case challenging the ability of the Internal Revenue Service (IRS) to provide premium tax subsidies for insurance plans provided in a federal exchange. Additionally, on August 2 the House passed H.R. 2009, the Keep the IRS Off Your Health Care Act of 2013, which would keep the IRS from implementing any aspects of ACA which fall under its jurisdiction. Concerns have also arisen regarding HHS ability to complete the security authorization package for the Federal Data Services Hub, which is a vital component of making exchanges operate effectively, as it will verify individuals income and benefit eligibility information from several federal agencies. On August 20, CMS released a guidance which stated that states must report any suspected or confirmed breaches of personally identifiable information (PII) associated with the Hub to their designated representative of the Centers for Consumer Information and Insurance Oversight (CCIIO) within one hour of discovering the incident. An authorization for

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final security checks for the Hub has been delayed to September 30 just one day before open enrollment. This week, the Internal Revenue Service (IRS) released a final rule regarding ACAs individual mandate, which said that individuals will be considered as complying with the ACAs coverage mandate for a given month as long as the individual is covered for one day during that month.

Ophthalmic Interest Group Activity Medicare Payment Advisory Commission (MedPAC) MedPAC will hold public meetings. Date and time: Thursday, Sept. 12 Friday, Sept. 13 Location: Ronald Reagan Building; The International Trade Center, 1300 Pennsylvania Avenue, N.W., Washington, DC More information is available HERE. An agenda will provided there when available, usually about one week before the meeting. Food and Drug Administration (FDA) The Ophthalmic Devices Panel of the Medical Devices Advisory Committee will hold a meeting to discuss, make recommendations, and vote on information regarding the premarket approval application for the ReSure Sealant sponsored by Ocular Therapeutix, Inc. Date and time: Thursday, Sept. 19 Location: Hilton Washington DC North/Gaithersburg; 620 Perry Pkwy., Gaithersburg, MD More information is available HERE. American Medical Association The American Medical Associations (AMA) Relative Value Scale Update Committee (RUC) will hold a meeting to discuss recommendations for valuation of physician services. Annual updates to the physician work relative values are based on recommendations from a committee involving the AMA and national medical specialty societies. These meetings are not open to the public. Date and time: Thursday, Oct. 3 Saturday, Oct. 5 Location: Marriott Downtown Magnificent Mile Chicago, IL AMAs Current Procedural Terminology (CPT) Editorial Panel will hold a public meeting to discuss proposed update, additions, and revisions to the CPT code set. Date and time: Thursday, Oct. 10 Saturday, Oct.12 Location: The JW Marriott, Los Angeles, California More information and registration details are available HERE.

1008 Upper Gulph Road Wayne, PA 19087