Dec 17, 2015
Washington Healthcare Update: Health Provisions in the Omnibus Appropriations and Tax Extenders Legislation
The omnibus appropriations and tax extenders package released last night
contain many healthcare provisions.
The tax extenders package provides for a two-year moratorium for the medical
device tax for 2016 and 2017.
The omnibus appropriations legislation contains a variety of health-related
provisions. These provisions include rescinding funding for the Independent
Payment Advisory Board (IPAB), deficit-neutral language related to risk corridor
payments and cybersecurity.
Excise Tax on High-Cost Employer-Sponsored Coverage: The legislation
delays the excise tax on high-cost employer-sponsored coverage for two years. In
addition, the legislation requires a study of the premium cost of the Blue
Cross/Blue Shield standard benefit option under the Federal Employees Health
Benefits Plan as a benchmark for the age and gender adjustment of the applicable
dollar limit with respect to the excise tax on high-cost employer-sponsored
health coverage. In addition, the study should make recommendations regarding
any more suitable benchmarks for age and gender adjustments.
Health Insurance Tax: The legislation provides for a one-year
moratorium of the Health Insurance Tax.
Risk Corridor Payments: The appropriations bill, for the second year
in a row, requires budget neutrality for the risk corridor payments to insurers.
Although insurers will save because of the one-year moratorium of the Health
Insurance Tax, it is not likely to be the equivalent of the funds insurers will
not receive from the risk corridor program.
Medicare and Medicaid
Independent Payment Advisory Board: Funding was rescinded. This board
was created by the Affordable Care Act and never funded or staffed.
Medicare Improvement Fund: The amount provided to the Medicare
Improvement Fund is reduced. This fund was established in the IMPACT Act of 2014
and was to provide funds to make improvements in the original Medicare
fee-for-service program under Parts A and B. This fund has been used as offset
before. Most recently, its funding was reduced to pay for the physician payment
Imaging Issues − Medicare Payment Incentive for the Transition from
Traditional X-Ray Imaging to Digital Radiography and Other Medicare Imaging
- Limitation on payment for film X-ray imaging
services. In the case of an imaging service that is an X-ray taken using
film during 2017 or later, the technical component payment will be reduced
by 20 percent.
- Phased-in limitation for computed radiography
imaging services. In the case of imaging services, an X-ray taken using
computed radiography technology, the technical component payment will be
reduced by 7 percent for the years 2018 through 2022. For 2023 or after, the
payment for the technical component will be reduced by 10 percent.
- Computed radiography technology is defined as a
cassette-based imaging that utilizes an imaging plate to create the image
- The Secretary may adopt a mechanism including
modifiers to implement this provision.
- Reduced expenditures attributable to incentives
to transition to digital radiography will take effect beginning with the
2017 fee schedule.
- Reduction of discount in payment for the
professional component of multiple imaging services. In the case of the
professional component of imaging services furnished on or after 2017,
instead of the 25 percent reduction for multiple procedures that was
published as part of a regulation on November 29, 2011, the reduction will
be 5 percent.
- Payment incentive for transition under hospital
outpatient PPS from traditional X-ray imaging to digital radiography. In the
case of an imaging service that is an X-ray provided during 2017 or after,
the payment for the service shall be reduced 20 percent. For 2018-2022, the
reduction will be 7 percent, and for 2023 or after, the reduction is 10
Limiting Federal Medicaid Reimbursement to States for Durable Medical
Equipment to Medicare Payment Rates: This provision was in the 21st Century
Cures legislation to pay for the spending portions of that bill. Since that bill
has not yet been enacted, it is being used to pay for portions of the tax
extenders. The provision in essence requires states to pay for durable medical
equipment using Medicare rates. Nothing in the provision would prohibit a state
Medicaid program from providing medical assistance for DME for which payment is
denied or not available under Medicare. The provision requires that there be an
evaluation of the impact of applying Medicare payment rates to DME under the
Medicaid program, but there is no timeline for the evaluation.
Treatment of Disposable Devices: The Secretary shall make a payment
for a disposable device to a home health agency in an amount equal to the
payment that would have been made for covered outpatient department services for
the Level 1 HCPCS code for which the description for the professional service
including the furnishing of such device is included.
"Disposable device" is defined as a disposable, negative-pressure
wound-therapy device that is an integrated system comprised of a non-manual
vacuum pump, a receptacle for collecting exudate, and dressings for the purposes
of wound therapy, and a substitute for a negative-pressure wound-therapy DME
item that is an integrated system of a negative-pressure vacuum pump, a separate
collection canister and dressings that would be covered for individuals for
A GAO study and report is required to address the types of disposable devices
that could potentially qualify as substitutes; the views and information from
manufactures, providers and suppliers on the incentives and disincentives under
current Medicare coverage and payment policies; implications of expanding
Medicare coverage to include additional disposable devices that are substitutes
for DME and payment methodologies. The report is due 18 months after the
A second GAO study is required to look at the impact on utilization, the type
of Medicare beneficiaries under the home health benefit who use the disposable
devices compared to the substitute DME, and payment rates of other payers
including Medicaid. The second report is due in four years.
Cybersecurity in the Healthcare Industry
Within a title dealing with cybersecurity issues, including within the
federal government, section 405 requires the Department of Health and Human
Services to provide the Senate HELP Committee and the House Energy and Commerce
Committee with a report within one year. That report is to provide a clear
statement concerning who is responsible for leading and coordinating efforts at
HHS regarding cybersecurity threats in the healthcare industry and provide a
plan from each relevant operating division and subdivision. The legislation also
creates a healthcare industry cybersecurity task force that shall include
healthcare industry stakeholders as well as cybersecurity experts, and any
federal agencies or entities the Secretary determines appropriate to:
- analyze how industries other than healthcare
have implemented strategies and safeguards for addressing cybersecurity
- analyze challenges and barriers private entities
in the healthcare sector face in securing themselves against cyberattacks;
- review challenges that covered entities and
business associates face in security networked medical devices and other
software or systems that connect to an electronic health record;
- provide the secretary with information to
disseminate to healthcare industry stakeholders of all sizes for purposes of
improving their preparedness for and response to cybersecurity threats;
- establish a plan for implementing so the federal
government and healthcare industry stakeholders may in real time share
actionable cyber threat indicators and defensive measures; and
- report findings and recommendations to the
appropriate congressional committees.
The task force is terminated one year after the date on which it is
In addition, the Secretary shall establish a common set of voluntary
consensus-based and industry-led guidelines, best practices and methodologies
- serve as a resource for cost-effectively
reducing cybersecurity risks for a range of healthcare organizations;
- support voluntary adoption and implementation
efforts to improve safeguards to address threats; and
- are consistent with the standards and guidelines
developed by the National Institute of Standards and Technology Act, the
regulations promulgated under section 264(c) of the Health Insurance
Portability and Accountability Act of 1996 (HIPAA), and the provisions of
the Health Information Technology for Economic and Clinical Health Act.
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