Oct 12, 2015
Washington Healthcare Update
This Week: While the House of Representatives searched for who
will be the next Speaker of the House, efforts to repeal key provisions of
the Affordable Care Act continued.
House of Representatives
4. State Activities
5. Regulations Open for Comment
House Leadership Race
On Oct. 8, the House Republican caucus did not select a candidate for Speaker of the House and selection has been delayed. The current Speaker, John
Boehner (R-OH), had announced that he would step down and retire from Congress at the end of October, but will now stay until a Speaker is selected. The
delay reflects the lack of a clear successor for Boehner. It also means that Boehner likely will remain a key player as Congress heads into debate over the
House Reconciliation Package
The House of Representatives is expected to vote on its reconciliation package the week of Oct. 19. This package would repeal provisions of the Affordable
Care Act including the individual and employer mandate, the Cadillac tax (a tax on insurance plans), the medical device tax, the auto-enrollment
requirement for large companies, the Prevention and Public Health Fund and IPAB, the independent advisory body that has never been staffed. In addition,
the reconciliation package denies funding to Planned Parenthood for one year. It remains unclear if the Senate is going to take up this legislation. If
such a package makes it to the President’s desk, it is unlikely to be signed into law.
Bicameral Letter Asks About Late CHIP Report
Senate Finance Committee Chair Orrin Hatch (R-UT), House Energy and Commerce Committee Chairman Fred Upton (R-MI) and that committee’s health subcommittee
chair Joe Pitts (R-PA) have released their letter to Secretary of Health and Human Services Burwell blasting HHS for failing to deliver an Affordable Care
Act mandated report on children’s health insurance, which was originally due at the start of April. The report is to analyze how CHIP plans stack up
against exchange plans. The letter points out that information is now more important to know since states were allowed to start enrolling CHIP kids in
exchange plans as of Sept. 30. The legislators say they want an update on the status of the report in two weeks.
House and Senate Democrats are urging Republicans to stop a 52 percent increase in Part B premiums and a significant deductible increase for about 30
percent of Medicare beneficiaries. Ranking Senate Finance Committee Democrat Senator Ron Wyden (D-OR) introduced a bill to stop the increase and House
Democrats held a press conference after negotiations with Republicans fell through.
Wyden’s bill would make the federal government pay for the increase on behalf of beneficiaries. According to some reports, it could cost up to $7.5 billion
to avoid the premium increase.
Most seniors choose to have Part B premiums automatically deducted from their Social Security checks. To protect seniors against Social Security pay cuts,
when Medicare Part B premium increases are greater than the annual cost of living adjustments in Social Security checks, seniors do not pay the increase.
The Bureau of Labor Statistics will release final data needed to calculate the cost of living adjustment on Oct. 15. Seniors who could be affected by a
premium increase include new Medicare enrollees, those not collecting Social Security and those paying higher, income-related premiums for Part B. Those
individuals who are dually eligible for Medicare and Medicaid also face premium increases; however, state Medicaid programs will pay those costs.
View bill text and more information.
NIH Warns Against a Yearlong Continuing Resolution
On Oct. 7, in testimony before the Senate Appropriations subcommittee that oversees funding to the Department of Health and Human Services, Director
Collins said that if Congress were to fund the government through a continuing resolution at current levels, several NIH efforts would likely be put on
hold. President Barack Obama’s precision medicine initiative, which NIH is hoping to launch in the fiscal year that started Oct. 1, “would have to go into
the freezer or on mothballs,” Collins said. He said NIH’s BRAIN initiative, which is working on understanding and treating neurological disease, would also
be halted. The project’s work is at a “critical point where more investment is needed.”
In addition, a yearlong CR would hinder NIH’s ability to develop vaccines that would work against all influenza strains and place other vaccine work in
jeopardy. The most recent CR, which was approved last week, funds the government through Dec. 11.
For more information on the hearing and testimony
please click here.
Trans-Pacific Partnership (TPP) Agreement and Biologics
As part of the Trans-Pacific Partnership Agreement, the United States agreed to a deal this past weekend that would require only five years of data
protection for biologics and then provide two options for potentially adding extra years. Australia, Chile and others were demanding five years’ protection
for intellectual property in the negotiations, but the U.S. was asking for 12 years. The agreement would permit additional time for that exclusivity period
in accordance with the U.S. system or with Australia’s system, which says the time period is often extended as a result of the country’s regulatory
approval process. This is a win for generic drug manufacturers. However, U.S. drugmakers and Senator Hatch, Chairman of the Senate Finance Committee, have
expressed concern over the lack of a mandatory 12 years of protection.
Congress must approve the trade agreement and that vote is likely months away.
Sandoz Submits Second Biosimilar Application
On Oct. 2, the Food and Drug Administration accepted for review Sandoz’s second
biosimilar application, a biosimilar of Amgen’s drug Enbrel, a tumor necrosis factor alpha inhibitor. Novartis is Sandoz’s parent company.
Draft Labeling for Abbreviated New Drug Applications (ANDAs) Guidance Released
On Oct. 5, the FDA announced that it will accept draft labeling in order to approve abbreviated new drug applications (ANDAs) rather than require generic
drug manufacturers to submit final printed labeling for their products. Despite the fact the guidance was issued in final form, the FDA
says it will accept public comments submitted to www.regulations.gov.
In its guidance, FDA said the draft labeling must comply with applicable labeling requirements other than “editorial or similar minor deficiencies.” FDA
states that its thinking on the use of draft labeling has evolved especially as manufacturers are able to submit electronic versions of labels.
Generic drug sponsors must show that the proposed labeling for the generic drug is the same as the labeling for the reference product, and ANDA applicants
must submit in electronic format the content of the labeling including prescribing information and FDA-approved patient labeling. The draft labeling must
include the full content of the labeling concerning prescribing information and patient labeling as well as the planned order of the content.
FDA Orders Postmarket Surveillance Studies From Duodenoscope Companies
On Oct. 5, the FDA ordered the three manufacturers of duodenoscopes marketed in the U.S. to conduct postmarket surveillance studies in health care
facilities, to better understand how the devices are reprocessed in real-world settings. The FDA has identified evidence that duodenoscopes have
contributed to the transmission of infections, including antibiotic-resistant infections, to patients. Duodenoscopes can be reused after a complex
disinfection procedure called reprocessing is completed between patients. The design of the devices makes it difficult to remove contaminants compared to
other types of endoscopes. The FDA’s analysis also shows that manufacturers’ reprocessing instructions are not always being followed correctly, because
these instructions are labor intensive and prone to human error.
The three manufacturers — Olympus America, Inc.; Fujifilm Medical Systems, U.S.A., Inc.; and Hoya Corp. (Pentax Life Care Division) — will have 30 days to
submit detailed postmarket surveillance plans to the FDA.
View the announcement.
Centers for Medicare and Medicaid Services (CMS) Announces Results of Comprehensive Primary Care (CPC) Initiative
On Oct. 7, the Centers for Medicare & Medicaid Services (CMS) announced results of the first shared savings performance year for the Comprehensive
Primary Care (CPC) initiative.
Authorized by the Affordable Care Act, the CPC initiative is a multipayor partnership between Medicare, Medicaid, commercial payors and primary care
practices in seven regions. Participating practices identify patients who are sick or at risk and provide targeted care management to improve outcomes and
prevent potential adverse events. Patients at CPC practices have 24/7 access to a provider, and receive enhanced self-management and decision-making
support. The CPC initiative supports these efforts by paying an additional fee for non-face-to-face care, such as tracking hospital discharges to provide
follow-up support to patients.
During this first shared savings performance year, the initiative decreased Medicare Part A and Part B spending compared to spending targets while
achieving high-quality outcomes. The CPC initiative generated a total of $24 million in gross savings overall (excluding the CPC care management fees).
These results reflect the work of 483 practices that served approximately 377,000 people with Medicare and more than 2.7 million patients overall. Four of
the CPC initiative’s seven regions (Arkansas, Colorado, Cincinnati-Dayton region of Ohio and Oregon) generated gross savings. The Greater Tulsa region
decreased costs in excess of the CPC care management fees, generating net savings of $10.8 million and earning more than $500,000 in shared savings
For more information on the quality see
CMS Staff Changes
Centers for Medicare and Medicaid Services (CMS) Acting Administrator Andy Slavitt and Deputy Administrator Patrick Conway announced several staff changes
Oct. 9. CMS chief of staff Mandy Cohen will also become the CMS’ chief operating officer on Nov. 1. Cohen replaces Deb Taylor, who will be retiring at the
end of the month. Other staff changes include Karen Jackson, the current deputy director of the CMS Innovation Center, who will become acting deputy chief
operating officer and Tim Gronniger will be promoted to deputy chief of staff. Lisa Watkins will also be promoted to senior adviser.
CMS Announces Dialysis Accountable Care Organizations
On Oct. 7, the Centers for Medicare and Medicaid Services (CMS) announced participants in the
dialysis accountable care organizations demonstration called the Comprehensive ESRD Care Model. CMS delayed the application deadline three times because
large dialysis providers showed little interest in the initiative. The ACOs are accountable for clinical quality outcomes and financial outcomes measured
by Medicare Part A and B spending, including spending on dialysis services for their beneficiaries. Medicare pays large and small ACOs differently, but
only one of the 13 ACOs in the demonstration is considered small. ACOs with at least 200 dialysis facilities are at risk of penalties and have higher
overall levels of risk than the smaller ACO. The small ACO is not responsible for penalties.
CMS Expands Medicare Appeals Settlement Pilot
The Centers for Medicare and Medicaid Services’ (CMS) Office of Medicare Hearings and Appeals (OMHA) announced that it will expand its settlement
conference facilitation pilot to include more appeals and will extend the program beyond Part B claims to also include Part A claims next year.
The pilot program launched in 2014 as a step to alleviate the backlog of appeals and has since June 2014 settled 2,000 claims. The CMS hospital settlement
process eliminated close to 300,000 claims. As of Oct. 1, OMHA expanded the pilot to include more pending appeals. To be eligible for the pilot an appeal
must not yet have been scheduled for an Administrative Law Judge hearing and the request for a hearing must have been submitted by Sept. 30, 2015.
Previously the pilot only included appeals filed in 2013. OMHA plans to hold a teleconference on Oct. 15 to answer questions.
CMS and ONC Release Final Rule With Comment Period on Meaningful Use
On Oct. 6, the Centers for Medicare and Medicaid Services and the Office of the National Health Information IT Coordinator (ONC) released a final rule
concerning the third and final stage of meaningful use. In its press release the Department of Health and Human Services stated that it had reduced the
number of objectives from 20 to less than 10 and provided flexibility so providers may choose measures that are most relevant to them. In addition the
rules provide more time for providers and states to comply with program requirements. CMS announced a 60-day public comment period to gather additional
feedback about the EHR Incentive Programs going forward, in particular with the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which
established the Merit-based Incentive Payment System and consolidates certain aspects of a number of quality measurement and federal incentive programs
into one more efficient framework. CMS will use this feedback to inform future policy developments for the EHR Incentive Programs, as well as consider it
during rulemaking to implement MACRA, which we expect to release in the spring of 2016.
In addition to the final rule for the EHR Incentive Programs, ONC is also announcing the final rule for the 2015 Edition Health IT Certification Criteria.
This rule focuses on increasing interoperability — a secure but seamless flow of electronic health information — and improving transparency and competition
in the health IT marketplace.
For more information click here
On Monday, Oct. 5, the U.S. Supreme Court said it will not hear a challenge to the delays of the Affordable Care Act’s employer mandate. The challenger,
Kawa Orthodontics, had asked the justices to review the decision by a lower court, which threw out the suit on procedural grounds.
Minimum Wage and Overtime Protection for Home Health Workers Goes Forward
The Supreme Court on Oct. 6 declined to enjoin from implementing the U.S. Labor Department’s home health rule. That rule moves forward a DOL rule that
extends minimum wage and overtime protection to home health workers. Home health care companies had sued to block the rule. Under Tuesday’s ruling the
Supreme Court may still choose to take up the case sometime in the future.
4. State Activities
Utah Medicaid Expansion Still Being Debated
Medicaid expansion continues to be discussed. However, House Speaker Greg Hughes decided that the 38 votes needed to pass the newest plan all have to come
from House Republicans. Ten Republicans supported the previous Medicaid expansion plan. This coming week, a legislative task force will weigh the latest
proposal, and House Republicans will meet in a closed meeting on Oct. 13 to take a straw vote.
Florida Governor Seeks Transparency From Hospitals
Gov. Rick Scott is pushing a broad 2016 legislative agenda to create more transparency in prices. Scott’s proposal would require hospitals to post
information on their websites, including prices and average payments for products and services provided as well as quality data. Tax-exempt hospitals would
be required to post their annual financial reports to the IRS online, which would also include information on executive compensation and lobbying spending.
Scott also wants patients to have the ability to have third-party review of their charges. This comes at a time when hospitals and the governor have
divergent views concerning Medicaid expansion.
California Keeps New Vaccination Law
The referendum to overturn the state’s new vaccination law did not receive enough signatures to get it on the ballot. An unofficial count from referendum
organizers found that they had roughly 200,000 signatures, but they needed 365,880 to temporarily halt implementation and put it on the ballot next year.
The tighter vaccine law was passed after a measles outbreak that began in Disneyland.
California Governor Signs Physician Aid in Dying Law
California Gov. Jerry Brown signed into law a measure permitting terminally ill patients to end their lives with a doctor’s help. California becomes the
fifth state to permit physician aid in dying for terminally ill patients. The legislation has broad support among California residents, according to recent
polling from the Institute of Governmental Studies at the University of California, Berkeley. Brown explained his decision by saying, “In the end, I was
left to reflect on what I would want in the face of my own death.”
5. Regulations Open for Comment
The Centers for Medicare and Medicaid Services (CMS) Offers Request for Information (RFI) to Solicit Answers to Physician Pay Formula Questions
On Sept. 28, CMS released an RFI to seek public comment related to new
provisions in the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA): Merit-based Incentive Payment System (MIPS), Alternative Payment Models
(APMs) and a physician-focused payment model (PFPMs). Rather than offering much insight on how it plans to implement the physician pay formula (SGR), the
“request for information” asks about 150 questions. In April 2015, Congress voted to repeal and substitute the SGR with a reimbursement system that aims to
pay providers contingent on the value of care they provide.
The SGR legislation creates a payment system that encourages physicians to participate in alternative value-based pay models. Beginning in 2026, the
physician reimbursement rate will rise 0.75 percent annually for providers who utilize alternative pay models. Alternatively, physicians who do not enroll
in alternative pay models will see only a 0.25 percent pay raise each year. For providers who receive a substantial part of their revenue from alternative
pay models, they will get an additional 5 percent bonus from 2019 to 2024, in combination with the shared savings bonuses or fees they might collect for
participating in those models. Worth noting, providers do not have to participate in alternative pay models to get value-based care bonuses. The Doc Fix
law also consolidates Medicare’s three existing quality programs into the MIPS, which begins in 2019. Sans this overarching payment structure, the Doc Fix
law leaves much of this new pay system to CMS’s discretion; CMS now requests provider feedback on the most efficient way to accomplish the savings and
enhanced care goals of the new law. Public comments for the RFI are due on Nov. 2, 2015.
Centers for Medicare and Medicaid Services (CMS) Issues Proposed Rule to Begin Data Collection for New Fee Schedule for Medicare Clinical Diagnostic
CMS released a proposed rule Sept. 25 that initiates the agency’s next step in
implementing the Protecting Access to Medicare Act of 2014 (PAMA), a bill that requires clinical laboratories to report on private insurance payment
amounts and volumes for lab tests. Under the proposed rule, certain laboratories would be required to report private payor rate and volume data if they
receive at least $50,000 in Medicare revenues from laboratory services and more than 50 percent of their Medicare revenues from laboratory and physician
services. Laboratories would collect private payor data from July 1, 2015, through Dec. 31, 2015, and report it to CMS by March 31, 2016. CMS will post the
new Medicare rates by Nov. 1, 2016; these rates will be effective on Jan. 1, 2017. Tests that meet the criteria for being considered new advanced
diagnostic laboratory tests (ADLTs) will be paid at actual list charge for a minimum of three quarters. ADLTs are tests offered under Medicare Part B and
are furnished by only one laboratory and that either include a unique algorithm and are at a minimum an analysis of RNA or DNA, or are cleared or approved
by the U.S. Food and Drug Administration (FDA). Under PAMA, the Medicare payment amount for any test cannot be reduced by more than 10 percent compared to
the prior year’s amount during the first three years of implementation (2017-2019) and cannot be reduced by more than 15 percent in the following three
Medicare’s current fee schedule for lab tests was first adopted in 1984 and has remained relatively unchanged except to establish payments for new tests or
implement across-the-board statutory payment updates. Medicare pays approximately $8 billion a year for clinical diagnostic laboratory tests. The new
system will be updated every three years for clinical diagnostic laboratory tests (CDLTs) and every year for ADLTs to reflect market rates paid by private
payors. One hot-button issue in the proposed rule is the definition of “applicable laboratory.” PAMA defined an applicable laboratory as one that receives
a majority of its Medicare revenues under the MCLFS or the Medicare Physician Fee Schedule (MPFS). In a
fact sheet summarizing the proposed rule
, CMS said it does not expect any hospital laboratory to meet the definition of “applicable laboratory” and that more than 50 percent of independent
laboratories and more than 90 percent of physician offices would likely be excluded based on the $50,000 threshold. The proposed rule was published in the Federal Register on Oct. 2. CMS will solicit comments until Nov. 24, 2015.
The Centers for Medicare and Medicaid Services (CMS) Offers Long-term Care Reform Proposed Rule
In conjunction with the White House Conference on Aging, the Centers for Medicare and Medicaid Services released a long-term care reform proposed rule July 16. The rule concerns reducing unnecessary hospital
readmissions and infections, and strengthening safety measures for the nearly 1.5 million residents in the more than 15,000 long-term care facilities or
nursing homes that participate in the Medicare and Medicaid programs. The proposed changes include:
Ensuring nursing home staff is properly trained on caring for residents with dementia and in preventing elder abuse.
Ensuring that staff members have the right skill sets and competencies to provide person-centered care to residents.
Improving care planning, including discharge planning for all residents with involvement of the facility’s interdisciplinary team and consideration of
the caregiver’s capacity, giving residents information they need for follow-up, and ensuring that instructions are transmitted to any receiving
facilities or services.
Allowing dietitians and therapy providers the authority to write orders in their areas of expertise when a physician delegates the responsibility and
state licensing laws allow.
Updating the nursing home’s infection prevention and control program, including requiring an infection prevention and control officer and an antibiotic
Many of the proposals in the draft rule build on improvements that nursing homes have already made since 1991, the last time these conditions of
participation were comprehensively updated. The recommended reforms were published in a proposed rule in the July 16, 2015, Federal Register. The comment period for the proposed rule ended on Sept. 14, 2015, and was
reopened until Oct. 15, 2015.
Department of Health and Human Services (HHS) Proposes Updates to “the Common Rule”
HHS and 15 other agencies released a notice of proposed rulemaking Sept. 2 for the Common Rule, the
existing regulatory framework to transparency and oversight for scientific research involving human subjects. The proposed changes are to address the
substantial changes that have occurred within scientific research. Current regulations have been in place since 1991 and are followed by 18 federal
agencies. Proposed updates to the rule include:
Strengthened informed consent provisions
Requirements for administrative or IRB review that would align better with the risks of the proposed research
New data security and information protection standards
Requirements for written consent for use of an individual’s biological samples, for example, blood or urine, for research with the option to consent to
their future use for unspecified studies
Requirement, in most cases, to use a single institutional review board for multisite research studies
Application of rule to clinical trials, regardless of funding source, if they are conducted in a U.S. institution that receives funding from a Common
Rule agency for research involving human participants.
In July 2011, HHS issued an Advance Notice of Proposed Rulemaking to seek the public’s input on updating the Common Rule. The proposed rule issued reflects
input and requests comments for HHS to consider as it drafts the final rule. HHS will take public comment on the proposed rule until Dec. 7.
For a press release detailing changes to the rule visit hhs.gov.
Department of Health and Human Services (HHS) Releases Proposed Rule on Health Equity
On Sept. 3, HHS issued a proposed rule, Nondiscrimination in
Health Programs and Activities, to advance health equity and reduce disparities in health care. The proposed rule establishes that the prohibition on sex
discrimination includes discrimination based on gender identity. It also includes requirements for effective communication for individuals with
disabilities and enhanced language assistance for people with limited English proficiency. The proposed rule applies to Health Insurance Marketplaces, any
health program that HHS itself administers, and any health program or activity any part of which receives funding from HHS, such as hospitals that accept
Medicare patients or doctors who treat Medicaid patients. Finally, the proposed rule extends these nondiscrimination protections to individuals enrolled in
plans offered by issuers participating in the Health Insurance Marketplaces and explicitly bars any marketing practices or benefit designs that
discriminate on the basis of race, color, national origin, sex, age or disability. Section 1557 of the Affordable Care Act (ACA) extended civil rights
protections banning sex discrimination to health programs and activities. Previously, civil rights laws enforced by HHS’s Office for Civil Rights (OCR)
barred discrimination based only on race, color, national origin, disability or age. The rule will be published in the Federal Register on Sept. 8,
and is open for public comment through Nov. 6, 2015.
For more information, including a fact sheet and Frequently Asked Questions, visit hhs.gov.
Internal Revenue Service (IRS) Proposed Rule Mandates Employer Health Plans Offer Hospital and Physician Services
The IRS released a proposed rule Aug. 31 that would require employer health
plans to offer substantial coverage for inpatient hospital services and physician services. The Affordable Care Act requires employer health plans to be at
least 60 percent of the minimum value standard. News reports uncovered the fact that employer plans could do so without providing hospital or physician
The preamble of the proposal points out that while large group plans are not required to cover the ACA’s Essential Health Benefit, a plan that does not
cover hospital and physician services “does not meet a universally accepted minimum standards of value expected from and inherent in any arrangement that
can reasonably be called a health plan and that is intended to provide the primary health coverage for employees.”
Under the proposed rule, an employer group health plan must, to meet the minimum value standard (MSV) and avoid a penalty, meet or exceed an actuarial
value standard of at least 60 percent coverage including substantial coverage for doctor and hospital services. The proposed rule provides a transition
period for employers that have previously offered non-compliant coverage prior to Nov. 4, 2014. The proposal aligns IRS and Department of Health and Human
Services (HHS) policies. The ACA compels employers who do not meet the affordability and MSV thresholds to pay a penalty of $3,000 for each worker that
receives a tax credit. The IRS proposed rule, published in the Federal Register Sept. 1, also says that any employee offered a non-compliant plan
would not be prevented from receiving premium tax credits. IRS is taking comments on the proposed rule until Nov. 2, 2015.
Food and Drug Administration (FDA) Issues Final Rule to Phase Out Trans Fats
FDA issued a final rule June 16
that gives the food manufacturers three years to phase out partially hydrogenated oils (PHOs), which are still used in a wide variety of food products from
microwave popcorn to cake frosting. The decision finalizes an agency determination that PHOs, the primary dietary source of artificial trans fat in
processed foods, are not “generally recognized as safe” or GRAS for use in human food. Since 2006, manufacturers have been required to include trans fat
content information on the Nutrition Facts label of foods. Between 2003 and 2012, the FDA estimates that consumer trans fat consumption decreased about 78
percent and that the labeling rule and industry reformulation of foods were key factors in informing healthier consumer choices and reducing trans fat in
foods. Comments on the final rule are due by June 18, 2018.
More information on FDA’s decision can be found in the agency’s press release.
Health Affairs Report Describes Who is Likely to Leave Medicare
Patients who used high-cost services were more likely to leave their
plans in favor of traditional Medicare, according to a new study in Health
Affairs. Patients who used nursing home care or home health care were more
likely to switch away from Medicare Advantage. This effect was magnified
among the dual-eligible population, the researchers from Brown and
Vanderbilt Universities found.
If you have any questions, contact the following individuals at
Kennan, Senior Vice President
Charlyn Iovino, Vice
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