CONSISTENTLY DELIVERS

May 18, 2015

Washington Healthcare Update

This Week: Health Subcommittee Advances 21st Century Cures, Full Committee Action Scheduled…Senate Finance Committee Hearing: Chair Hatch to Launch New Initiative on Improving Chronic Care for Medicare Patients…Hawaii’s Exchange Submits Corrective Action Plan to CMS, State May Have to Abandon State Exchange Due to Funding and IT Issues

1. Congress

House of Representatives

Senate

2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports


1. Congress

House

Health Subcommittee Advances 21st Century Cures, Full Committee Action Scheduled

Energy and Commerce Committee Chairman Upton (R-MI) has announced his Committee will convene Tuesday, May 19, 2015, 5 p.m. in order to consider the 21st Century Cures initiative, a nonpartisan legislative proposal that aims to accelerate the pace of cures and medical breakthroughs in the United States. Over the course of the last year, the 21st Century Cures initiative involved a nationwide conversation with patients, providers, innovators, regulators and researchers. During the conversation, the Committee received countless ideas in response to the Committee white papers, held eight hearings convened by the Subcommittee on Health, and held over a dozen roundtables hosted both at the Committee and by members in their districts all across the country. In January, the Committee launched the legislative phase of the 21st Century Cures initiative by circulating a discussion document, which included a number of ideas proposed by both Republicans and Democrats. The Subcommittee on Health held a hearing on the discussion document on April 30, 2015, and on May 14, 2015, the Subcommittee met in open markup session to consider the discussion draft and forwarded the bill, as amended, to the full Committee by a voice vote. For more information, or to view the markup, please visit: http://energycommerce.house.gov/markup/full-committee-vote-21st-century-cures-act

Eighteen House Democrats Send Letter to Leadership to Push for Medical Device Tax Repeal

A group of 18 Democratic congressmen, led by Rep. Scott Peters (CA), sent a letter to House Speaker John Boehner, Minority Leader Nancy Pelosi, Ways and Means Committee Chairman Paul Ryan and Ways and Means Committee Ranking Member Sander Levin calling for the repeal of the medical device excise tax prior to the Memorial Day recess. In the letter, the lawmakers note that the Protect Medical Innovation Act, which was introduced by Rep. Erik Paulsen (R-MI) in January, has broad bipartisan support from 277 House members. The medical device excise tax is estimated to generate up to $30 billion over the next decade to help provide health insurance to all Americans, however industry estimates it could cost as many as 43,000 jobs nationwide and billions of dollars if the tax stays in place.

Upcoming: Energy and Commerce Oversight Subcommittee to Host Hearing on State Actions to Prevent Opioid Abuse

The House Energy & Commerce Subcommittee on Oversight and Investigations, chaired by Rep. Tim Murphy (R-PA), will hold a hearing entitled “What are the State Governments Doing to Combat the Opioid Abuse Epidemic?” on Thursday, May 21, 2015, at 10:15 a.m. in 2322 Rayburn House Office Building. The subcommittee will continue its hearing series to review how states are combatting the opioid abuse epidemic and explore how state and federal policies can most effectively incentivize the development and broadened use of evidence-based practices and treatments in their communities. In the hearing, subcommittee members will hear testimony from several state health leaders about their experiences in coordinating efforts with the federal government; witnesses from Colorado, Indiana, Massachusetts and Missouri will testify.

A witness list was not available at the time of print. For more information or to view the hearing, visit energycommerce.house.gov.

Upcoming Ways and Means Hearing Will Examine Competition in Medicare

Ways and Means Health Subcommittee Chairman Kevin Brady (R-TX) has announced that the subcommittee will hold a hearing titled “Improving Competition in Medicare: Removing Moratoria and Expanding Access.” The hearing will take place on Tuesday, May 19, at 10 a.m. Oral testimony at this hearing will be from the invited witnesses only. However, any individual or organization may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing. For more information, or to view the hearing, please visit: http://waysandmeans.house.gov/calendar/eventsingle.aspx?EventID=398604

Senate

Senate Finance Committee Hearing: Chair Hatch to Launch New Initiative on Improving Chronic Care for Medicare Patients

On May 14, the Senate Finance Committee held a hearing entitled “A Pathway to Improving Care for Medicare Patients with Chronic Conditions” where Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) announced a new plan for the committee to address rising Medicare spending on treating multiple chronic illnesses while simultaneously improving how Medicare beneficiaries with chronic illnesses are treated. “Chronically ill patients account for a large percentage of Medicare spending, and if left unresolved, this situation will only get worse,” Chair Hatch said in a statement. “We have to find ways to provide high quality care at greater value and lower cost, and I look forward to working with Ranking Member Wyden and all of our committee colleagues towards this goal.” Worth noting, Ranking Member Ron Wyden (D-OR) said the committee intends to release chronic-care legislation in the coming months, with intended full chamber passage by the end of the year. A working group to develop policy ideas for the committee to consider will be co-chaired by Sens. Johnny Isakson (R-GA) and Mark Warner (D-VA). The Committee will solicit public comments on the initiative in the coming weeks. According to Centers for Medicare & Medicaid Services (CMS) data, more than 90 percent of Medicare spending is on beneficiaries with two or more chronic conditions. At the hearing, both witnesses offered their ideas on how Congress can begin addressing chronic illness in Medicare.

Witness List

Dr. Patrick Conway
Acting Principal Deputy Administrator
Deputy Administrator for Innovation and Quality, and Chief Medical Officer
Centers for Medicare & Medicaid Services
Department of Health and Human Services

Mark E. Miller, Ph.D.
Executive Director
Medicare Payment Advisory Commission

For more information or to watch the hearing, please visit finance.senate.gov.

Veterans Affairs Committee Hearing Examines Status of Veterans Choice Program

On May 12, the Senate Committee on Veterans Affairs held a hearing entitled, “Exploring the Implementation and Future of the Veterans Choice Program.” The hearing gave members of the committee an opportunity to hear from the U.S. Department of Veterans Affairs (VA), in addition to other experts, on the implementation of the Veterans Access, Choice, and Accountability Act. According to Ranking Member Murray’s opening statement, despite $5 billion being allocated to improve health services for veterans, delays and confusion in getting care through the program remain.

Witnesses:

Panel I

The Honorable Sloan D. Gibson
Deputy Secretary
U.S. Department of Veterans Affairs
(Accompanied by Dr. James Tuchschmidt, Acting Principal Deputy Under Secretary for Health)

Mr. David J. McIntyre
President and Chief Executive Officer
TriWest Healthcare Alliance

Ms. Donna Hoffmeier
Vice President, VA Services and PCCC Program Manager
HealthNet Federal Services

Panel II

Mr. Roscoe Butler
Deputy Director for Health Care
The American Legion

Mr. Darin Selnick
Senior Veterans Affairs Advisor
Concerned Veterans for America

Mr. Joseph Violante
National Legislative Director
Disabled American Veterans

Mr. Bill Rausch
Political Director
Iraq and Afghanistan Veterans of America

Mr. Carlos Fuentes
Senior Legislative Associate
Veterans of Foreign Wars

For more information, or to view the hearing, please visit: http://www.veterans.senate.gov/hearings/exploring-the-implementation-and-future-of-the-veterans-choice-program051215

Sens. Reed, Murkowski Introduce Youth Suicide Prevention Bill

On May 12, Sens. Murkowski (R-AK) and Reed (D-RI) introduced the Garrett Lee Smith Reauthorization Act in order to improve mental health services for young people and, in turn, help prevent youth suicide. Specifically, the bill is designed to improve access to counseling for at-risk teens and promote the development of statewide suicide early intervention and prevention strategies. It will also increase federal funding for competitive grants to help states, colleges, universities and tribes improve mental and behavioral health counseling services. A recent study found that “suicide rates for young people are almost twice as high in rural areas” than cities, lending urgency to this bill’s aims. For more information, please visit: http://www.murkowski.senate.gov/public/index.cfm/pressreleases?ID=cb5c6743-7f1e-4278-9fc6-8031fe42f083

2. Administration

HHS: 137 Million Individuals with Private Insurers Have Health Insurance with Free Preventative Services

On May 14, the Department of Health and Human Services (HHS) in a new ASPE Data Point factsheet announced that 137 million individuals, including 55 million women and 28 million children, have private health insurance that covers recommended preventive services without cost sharing. Under the Affordable Care Act (ACA), most health plans are required to provide coverage for recommended preventive health care services without copays. These services include but are not limited to: Blood pressure screening, well-baby and well-child visits, obesity screening and counseling, flu vaccination and other immunizations, well-woman visits, tobacco cessation interventions, domestic violence screening and counseling, vision screening for children, breastfeeding support and supplies, HIV screening, FDA-approved contraceptive methods and depression screening, among others. “Thanks to the Affordable Care Act, millions more Americans have access to preventive services, including vaccinations, well-baby visits, and diabetes and blood pressure screenings,” said Secretary Sylvia M. Burwell in a press release. “These services can substantially improve the health of families, and in some cases even save lives. We urge all individuals with health care coverage to take advantage of these services. This can make a tremendous difference in the health of Americans.” The released data is broken down by state, age, gender, and race and ethnicity. HHS previously estimated that approximately 76 million Americans — and 30 million women — received expanded coverage of one or more preventive services because of the Affordable Care Act.

FDA: Biosimilars – Additional Questions and Answers Regarding Implementation of the Biologics Price Competition and Innovation Act of 2009

This guidance provides answers to common questions from sponsors interested in developing proposed biosimilar products, biologics license application (BLA) holders and other interested parties regarding FDA’s interpretation of the Biologics Price Competition and Innovation Act of 2009 (BPCI Act). This guidance revises the 2012 draft guidance on Biosimilars: Questions and Answers Regarding Implementation of the Biologics Price Competition and Innovation Act of 2009 to provide new and revised questions and answers. It also includes certain original questions and answers that have not yet been finalized. The guidance is one in a series of guidances that FDA is developing to implement the BPCI Act. The guidances address a broad range of issues, including:

  • Quality Considerations in Demonstrating Biosimilarity of a Therapeutic Protein 44 Product to a Reference Product
  • Scientific Considerations in Demonstrating Biosimilarity to a Reference Product
  • Biosimilars: Questions and Answers Regarding Implementation of the Biologics Price Competition and Innovation Act of 2009
  • Formal Meetings Between the FDA and Biosimilar Biological Product Sponsors or Applicants

Enacted as part of the ACA on March 23, 2010, the BPCI Act creates an abbreviated licensure pathway for biological products shown to be biosimilar to, or interchangeable with, an FDA-licensed biological reference product. View the guidance: http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM273001.pdf

3. State Activities

California Becomes First State to Rule in “Pay-For-Delay” Decision in Pharmaceutical Space

On May 7, California became the first state to rule on how the Supreme Court’s 2013 decision in the landmark “pay-for-delay” case, FTC v. Actavis, applies to pharmaceutical patent settlements brought under its own antitrust act. In this scenario, a larger pharmaceutical company first sues a generic maker, and then “settles” by agreeing to pay a sum of money to the generic maker to, among other things, remain out of the market for longer than they otherwise would have needed to. Not surprisingly, the rise of such pay for delay, or “reverse payment,” deals came as a result of the Hatch-Waxman Act from 1984, which was supposed to encourage generic drugs to enter the market. In its decision, California’s Supreme Court reversed the prior decisions of both the Superior Court and the Court of Appeals and restored the class action claims of indirect purchasers of the brand-named drug Cipro (Re Cipro I & II). The Justices’ ruling states that while compensation from a branded drug company to a generic drug company as part of a patent settlement dictating when generic competition can begin is not in itself illegal, not all of these types of settlements will always meet the litmus test. As part of the decision, the California Justices laid out a legal precedent for how such antitrust suits will be decided, stating that the anti-competitive effects of a settlement must be measured against the expected life of the patent, not the actual life.

California Exchange Releases Budget with Proposed Cuts Expected at $58 Million for FY 2016

On May 13, California’s state insurance exchange, Covered California, unveiled its proposed budget for fiscal year 2015-2016, with anticipated cuts of $58 million for FY 2016 due to a decrease in federal funding for the year. As it stands, the proposed budget of $332.9 million is also comprised of approximately $100 million in federal establishment funds. In fiscal year 2015-2016, Covered California will transition to relying solely on the fees it collects from health insurance companies and the extensive reserves it has saved while using federal funds. “In the last two years, we established a solid foundation, and we are confident as we transition now from startup mode to ongoing operations,” said Covered California Executive Director Peter V. Lee. “Covered California is changing lives and giving consumers affordable access to the best doctors and hospitals in our state. As we move ahead, we are glad to have the resources we need, and we will continue to work to bring affordable health coverage within the reach of all Californians.” With approximately 1.4 million consumers currently enrolled on the state exchange, the proposed budget will be reviewed and revised before being finalized by the Covered California Board of Directors in June.

Hawaii’s Exchange Submits Corrective Action Plan to CMS, State May Have to Abandon State Exchange Due to Funding and IT Issues

Due to the significant funding shortfall and IT issues plaguing Hawaii’s health insurance exchange, Hawaii Health Connector, Gov. Ige (D) on May 11 submitted a corrective action plan to the Centers for Medicare & Medicaid Services (CMS) concerning remedial action for his state’s exchange operations in 2016. While state lawmakers did approve $2 million in operations funding for the exchange on May 5, the sum was less than half of what the exchange needed to continue its operations ($5.4 million). Moreover, in the same week another legislative proposal to issue up to $28 million in state-backed debt for exchange funding also failed. In its corrective action plan, the state asked CMS to release additional grant funds so that it can make the exchange compliant with the law before open enrollment begins Nov. 1. If Hawaii’s plan is not acceptable to CMS, Hawaii risks losing $1 billion in matching federal Medicaid funds, and continuity of coverage for the 37,000 to 40,000 Hawaii residents who are receiving health insurance coverage through the state’s exchange. A report sent to the exchange board of directors May 15 said, “Now that it is clear that the state will not provide sufficient support for the Hawaii Health Connector’s operations through fiscal year 2016 (ending June 30, 2016), the Connector can no longer operate in a manner that would cause it to incur additional debts or other obligations for which it is unable to pay.” The report also notes that the Connector will cease new enrollments May 15, discontinue outreach services May 31 and transfer its technology to the state by Sept. 30. Starting next year, residents would have to re-enroll in healthcare.gov to ensure coverage next year. To sustain its operations, the Connector needs to enroll 70,000; the program is funded by a 2 percent fee on each policy, which is set to increase to 3.5 percent July 1.

Tennessee, Georgia Pass Biologic Substitution Laws

With follow-on biologic, or biosimilar, drugs entering the market in the wake of FDA’s approval of the first biosimilar product on March 6, 2015, many states are evaluating their existing substitution laws, which govern the ability of pharmacists to dispense biosimilar drugs in place of name-brand biologics. Earlier this month, both Tennessee and Georgia enacted laws to establish processes through which dispensing pharmacists may request authority to substitute a biosimilar drug with an interchangeable biological product of a prescribed biological product, unless the prescriber determines the medical necessity of a prescribed reference biological product. Brand-name drug manufacturers have advocated for such state laws on the basis that existing substitution laws designed for generic small molecule drugs are insufficient to ensure patient safety when applied to substantially more complex, and potentially clinically meaningful, differences between biologic and biosimilar therapies. Opponents contend that the laws are simply intended to add red tape to the biosimilar dispensing process, creating unnecessary barriers to the use of biosimilar drugs, which in many cases, may be more affordable.

Minnesota Enacts Right-to-Try Legislation

Earlier this month, Minnesota Gov. Mark Dayton signed into law legislation intended to help specific patients access medical treatments that have not yet been approved by the FDA. Specifically, the measure allows doctors to prescribe certain experimental medicines to terminally ill patients. The medications must first clear basic safety testing and be part of ongoing clinical trials to qualify, while the patients must have already exhausted all conventional treatment options and be unable to enroll in clinical trials.

The Food and Drug Administration has a process in place that allows individual patients to request permission to obtain investigational medicines, but proponents of the Right to Try Act say fewer than 1,000 people a year receive help using that avenue. Critics of “right-to-try” laws suggest that right-to-try laws undermine the FDA approval process, and patients could be putting themselves in harm’s way. The intention of drug review procedures is to make sure a drug can be distributed to a wider population, by assessing in part whether the benefits outweigh any known risks. Minnesota is the 16th state to enact such a law.

4. Regulations Open for Comment

CMS Updates Wage Index and Payment Rates for the Medicare Hospice Benefit

On April 30, 2015, CMS issued a proposed rule (CMS-1629-P) that would update fiscal year (FY) 2016 Medicare payment rates and the wage index for hospices serving Medicare beneficiaries. The proposed hospice payment rule reflects the ongoing efforts of CMS to support beneficiary access to hospice care. As proposed, hospices would see an estimated 1.3 percent ($200 million) increase in their payments for FY 2016. The $200 million increase in estimated payments for FY 2016 reflects the distributional effects of the 1.8 percent proposed FY 2016 hospice payment update percentage ($290 million increase); the use of updated wage index data and the phaseout of the wage index budget neutrality adjustment factor (-0.7 percent/$120 million decrease); and the proposed implementation of the new Office of Management and Budget (OMB) Core Based Statistical Areas (CBSA) delineations for the FY 2016 hospice wage index with a one-year transition (0.2 percent/$30 million increase). The elimination of the wage index budget neutrality adjustment factor (BNAF) was part of a seven-year phaseout that was finalized in the “Medicare Program; Hospice Wage Index for Fiscal Year 2010” final rule (74 FR 39384, Aug. 6, 2009) and is not a policy change. For more information, please visit: http://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-04-30-2.html

Proposed FY 2016 Medicare Payment and Policy Changes for Inpatient Psychiatric Facilities

On April 24, 2015, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule outlining proposed fiscal year (FY) 2016 Medicare payment policies and rates for the Inpatient Psychiatric Facilities Prospective Payment System (IPF PPS). The proposed rule also updates the Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program, which requires participating facilities to report on quality measures or incur a reduction in their annual payment update. This proposed rule would expand the measure sets in future fiscal years and change certain data reporting requirements for these measures. CMS is proposing to update the estimated payments to IPFs in FY 2016 relative to estimated payments in FY 2015 by 1.6 percent (or $80 million). This amount reflects 2.7 percent IPF-specific market basket estimate less the productivity adjustment of 0.6 percentage point and less the 0.2 percentage point reduction required by law, for a net update of 1.9 percent. Estimated payments to IPFs are reduced by 0.3 percent due to updating the outlier fixed-dollar loss threshold amount. CMS will accept comments on the proposed rule until June 23, 2015. View the proposed rule: https://federalregister.gov/a/2015-09880

CMS Releases Proposed Rule on FY 2016 Medicare Payments for Inpatient Rehab Facilities

On April 23, 2015, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule outlining proposed FY 2016 Medicare payment policies and rates for the Inpatient Rehabilitation Facility (IRF) Prospective Payment System and the IRF Quality Reporting Program. Specifically, CMS is proposing to increase payments to inpatient rehabilitation hospitals in 2016 by approximately $130 million, or 1.7 percent when compared to 2015. This agency also proposes new quality reporting requirements to adopt measures that satisfy three of the quality domains required by the IMPACT Act in FY 2016: skin integrity and changes in skin integrity; functional status, cognitive function and changes in function and cognitive function; and incidence of major falls; IRFs that fail to submit the required quality data to CMS will be subject to a 2 percentage point reduction to their applicable FY annual increase factor, and the expected cost of the implementation of these new quality reporting requirements is approximately $24 million to hospitals. Worth noting, the payment increase is significantly smaller than the 2.4 percent raise they received in fiscal 2015. The agency proposes to begin collecting IRF quality reporting data by fall 2016. The proposed rule will be published in the Federal Register on April 27, and the agency will accept comments from stakeholders until June 22, 2015.

USPSTF Upholds Recommendations on Mammography for Women Under 50

In a draft recommendation released April 20, the U.S. Preventive Services Task Force (USPSTF) upheld its 2009 recommendation that women under 50 wait to start getting mammograms. In a letter to the Department of Health and Human Services opposing the decision, Sen. Barbara Mikulski said, “Should the draft recommendation be finalized, I will actively and aggressively pursue all legislative options available to ensure that women aged 40 and older are able to continue receiving free annual mammogram.” The task force reports that women aged 60-69 are most likely to avoid a breast cancer death due to a mammography. “Screening mammography in women ages 40 to 49 years may reduce the risk of dying of breast cancer, but the number of deaths averted is much smaller than in older women and the number of false-positive tests and unnecessary biopsies are larger. All women undergoing regular screening mammography are at risk for the diagnosis and treatment of noninvasive and invasive breast cancer that would otherwise not have become a threat to her health, or even apparent, during her lifetime. Public comment on the draft recommendations must be submitted by May 18, 2015, at 8:00 PM EST.

Fiscal Year 2016 Proposed Inpatient and Long-term Care Hospital Policy and Payment Changes

On April 17, 2015, CMS issued a proposed rule to update fiscal year (FY) 2016 Medicare payment policies and rates under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS). The proposed rule, which would apply to approximately 3,400 acute care hospitals and approximately 435 LTCHs, would affect discharges occurring on or after Oct. 1, 2015. The IPPS pays hospitals for services provided to Medicare beneficiaries using a national base payment rate, adjusted for a number of factors that affect hospitals’ costs, including the patient’s condition and market conditions in the hospital’s geographic area.

The rule proposes policies that continue a commitment to increasingly shift Medicare payments from volume to value. CMS pays acute care hospitals (with a few exceptions specified in the law) for inpatient stays under the IPPS and long-term care hospitals under the LTCH PPS. Under these two payment systems, CMS generally sets payment rates prospectively for inpatient stays based on the patient’s diagnosis and severity of illness. A hospital receives a single payment for the case based on the payment classification—MS-DRGs under the IPPS and MS-LTC-DRGs under the LTCH PPS—assigned at discharge.

By law, CMS is required to update payment rates for IPPS hospitals annually, and to account for changes in the costs of goods and services used by these hospitals in treating Medicare patients, as well as for other factors. This is known as the hospital “market basket.” LTCHs are paid according to a separate market basket based on LTCH-specific goods and services. CMS will accept comments on the proposed rule until June 16, 2015. View the proposed rule: https://www.federalregister.gov/articles/2015/04/30/2015-09245/medicare-program-hospital-inpatient-prospective-payment-systems-for-acute-care-hospitals-and-the

Proposed FY 2016 Payment and Policy Changes for Medicare Skilled Nursing Facilities (SNF)

On April 15, 2015, CMS issued a proposed rule [CMS-1622-P] outlining proposed Fiscal Year (FY) 2016 Medicare payment rates for skilled nursing facilities (SNFs). This proposed rule would update the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs) for fiscal year (FY) 2016. In addition, it includes a proposal to specify a SNF all-cause all-condition hospital readmission measure, as well as a proposal to adopt that measure for a new SNF Value-Based Purchasing (VBP) Program and a discussion of SNF VBP Program policies being considered for future rulemaking to promote higher quality and more efficient health care for Medicare beneficiaries. Additionally, this proposed rule would implement a new quality reporting program for SNFs as specified in the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act). It also would amend the requirements that a long-term care (LTC) facility must meet to qualify to participate as a skilled nursing facility (SNF) in the Medicare program, or a nursing facility (NF) in the Medicaid program. These requirements implement the provision in the Affordable Care Act regarding the submission of staffing information based on payroll data. To be assured consideration, comments must be received no later than 5 p.m. on June 19, 2015. View the proposed rule: https://www.federalregister.gov/articles/2015/04/20/2015-08944/medicare-program-prospective-payment-system-and-consolidated-billing-for-skilled-nursing-facilities

CMS Proposes Mental Health Parity for Medicaid and CHIP in New Rule

The Centers for Medicare & Medicaid Services (CMS) announced April 6 a new proposed rule to align mental health and substance use disorder benefits for low-income Americans with benefits required of private health plans and insurance. Specifically, the proposal applies certain provisions of the Mental Health Parity and Addiction Equity Act of 2008 to Medicaid and the Children’s Health Insurance Program (CHIP) by mandating that mental health and substance use disorder benefits are no more restrictive than medical and surgical services. As it is currently written, the proposed rule ensures that all beneficiaries who receive services through managed care organizations or under alternative benefit plans have access to mental health and substance use disorder benefits regardless of whether services are provided through the managed care organization or another service delivery system, and the full scope of the proposed rule applies to CHIP, regardless of whether care is provided through fee-for-service or managed care. Currently, states have flexibility to provide services through a managed care delivery mechanism using entities other than Medicaid managed care organizations, such as prepaid inpatient health plans or prepaid ambulatory health plans; in the new rule, states will be required to include contract provisions requiring compliance with parity requirements in all applicable contracts for these Medicaid managed care arrangements. The proposed rule was published in the Federal Register on April 10 with comments due to the agency by June 9, 2015.

FDA Assessing the Center of Drug Evaluation and Research’s Safety-Related Regulatory Science Needs and Identifying Priorities

On March 19, the Food and Drug Administration (FDA) announced the availability of a report entitled “Assessing CDER’s Drug Safety-Related Regulatory Science Needs and Identifying Priorities.” This report identifies drug safety-related regulatory science needs and priorities related to the mission of FDA’s Center for Drug Evaluation and Research (CDER) that would benefit from external collaborations and resources. FDA hopes to foster collaborations with external partners and stakeholders to help address these needs and priorities. This notice asks stakeholders conducting research related to these needs to describe that research and indicate their interest in collaborating with FDA to address safety-related research priorities. Since publication of the 2011 “Identifying CDER’s Science and Research Needs” report, FDA has been engaged in efforts to further assess and prioritize the needs articulated therein. As part of these efforts, CDER’s Safety Research Interest Group (SRIG), a subcommittee of the Science Prioritization and Review Committee, assessed CDER’s overall drug safety-related regulatory science needs in view of FDA’s ongoing research efforts and highlighted areas that would benefit from additional resources and collaboration. Public comments will be accepted at any time. However, the public is encouraged to submit comments by May 18, 2015, to ensure FDA consideration. View the report: http://www.gpo.gov/fdsys/pkg/FR-2015-03-19/pdf/2015-06288.pdf

HHS Releases Proposed Rules on EHR Incentive Programs and Health IT Certification Criteria

The U.S. Department of Health and Human Services (HHS), Centers for Medicare & Medicaid Services (CMS) and Office of the National Coordinator for Health Information Technology (ONC) announced March 20 the release of the Stage 3 notice of proposed rulemaking for the Medicare and Medicaid Electronic Health Records (EHRs) Incentive Programs and 2015 Edition Health IT Certification Criteria to improve the way electronic health information is shared and ultimately improve the way care is delivered and experienced. The proposed rules aim to give providers additional flexibility, make the program simpler, drive interoperability among electronic health records and increase the focus on patient outcomes to improve care.

Specifically, the Meaningful Use Stage 3 proposed rule issued by CMS specifies new criteria that eligible professionals, eligible hospitals and critical access hospitals must meet to qualify for Medicaid EHR incentive payments; the rule also proposes criteria that providers must meet to avoid Medicare payment adjustments (Medicaid has no payment adjustments) based on program performance beginning in payment year 2018. Moreover, the 2015 Edition Health IT Certification Criteria proposed rule aligns with the path toward interoperability—the secure, efficient and effective sharing and use of health information—identified in ONC’s draft shared Nationwide Interoperability Roadmap. The proposed rule also builds on past editions of adopted health IT certification criteria, and includes new and updated IT functionality and provisions that support the EHR Incentive Programs’ care improvement, cost reduction and patient safety across the health system.

Under the Health Information Technology for Economic and Clinical Health Act, doctors, health care professionals and hospitals, including critical access hospitals, can qualify for Medicare and Medicaid incentive payments when they adopt and meaningfully use health IT technology certified by ONC. The Stage 3 proposed rule may be viewed here, and the comment period ends on May 29, 2015. The 2015 Edition proposed rule may be viewed here and the comment period ends on May 29, 2015. The Draft 2015 Edition Certification Test Procedures may be viewed at HealthIT.gov, and the comment period ends on June 30, 2015.

5. Reports

TIGTA Report: IRS Lacks Methods to Verify Individual Mandate Compliance Given Delay of Employer and Insurer Reporting

The Treasury Inspector General for Tax Administration (TIGTA) released a report May 7 that presents the results of the oversight body’s effort to evaluate the status of the Internal Revenue Service’s (IRS) preparations for determining whether taxpayers maintained Minimum Essential Coverage or met exemption requirements and assess results with statistics on the Shared Responsibility Payment (SRP) during the 2015 Filing Season. In its analysis, the agency found that the Administration’s decision to delay employer and insurer reporting requirements has rendered the IRS unable to determine whether workers are actually covered by the minimum insurance necessary to comply with the Affordable Care Act (ACA). Specifically, forms used by insurers and employers with 50 or more employees do not need to be filed until March 31, 2016, at the latest, which, given the delay, sparked a business decision by IRS management not to scramble to develop processes and procedures to ensure compliance. Also worth noting, the report mentions that IRS officials said they plan to look into the feasibility and cost of providing an online tool that would let taxpayers calculate how much they owe the IRS when paying the penalty for lacking sufficient insurance. The agency has already developed such a calculator to help tax examiners and found that it correctly computes that shared responsibility payment. Officials told TIGTA that they will use data from the 2015 filing season to put in place processes to enforce compliance with the individual mandate in the event someone has falsified his tax filing documents. In the future, “the IRS plans to match the exemption certificate numbers that taxpayers report on their tax returns to the exemption certificate numbers received from the Exchanges,” the report said. “This will help the IRS determine the degree of variance between Exchange exemption reporting and actual filed tax returns. … The IRS must audit the tax return if the exemption information provided by the taxpayer does not match the Exchange exemption data.” Employers and insurers can still voluntarily file the reporting forms in 2015, though they are not required to until next year, the IRS said. According to the Centers for Medicare & Medicaid Services (CMS), nearly 352,000 people earned an exemption from the minimum coverage requirement through Healthcare.gov as of Jan. 2.

GAO Report Recommends Increased Transparency in Medicaid 1115 Demonstration Waivers

On May 13, the Government Accountability Office (GAO) released a report calling for the Department of Health and Human Services (HHS) to increase transparency in its processes for assessing whether Medicaid 1115 waivers are likely to promote the objectives of the Medicaid program. Under Medicaid Section 1115 demonstrations, the Department of Health and Human Services (HHS) authorized expenditures not otherwise allowed under Medicaid for a range of coverage-related purposes. In the study, GAO reviewed approval documents for new, extended or amended Section 1115 demonstrations approved by HHS in all 25 states with approvals between June 2012 and October 2013. The report found that HHS approved expenditure authorities to expand coverage to previously uncovered populations in most of the 25 states’ demonstrations; however, it also modified existing expenditure authorities to end or limit coverage under states’ demonstrations as new coverage became available in 2014 under Affordable Care Act (ACA). For example, HHS’s approvals in three states authorizing the use of federal Medicaid funds for more than half of the state programs GAO reviewed lacked clear information on how the programs would promote Medicaid objectives, such as how they would benefit low-income populations. In addition, HHS’s approvals authorizing funding pools for incentive payments did not always provide clear explanations of how payments to hospitals would promote Medicaid objectives, nor take enough steps to ensure 1115 waiver approvals contain assurances that states will avoid duplicative spending by offsetting as appropriate all other federal revenue received when claiming federal Medicaid matching funds. Given its findings, GAO recommends that HHS formalize its criteria in written guidance for assessing whether Medicaid 1115 waivers are likely to promote the objectives of the Medicaid program as well as document the use of those criteria in its sweeping Medicaid 1115 waiver approvals. The report was requested by House Energy and Commerce Committee Chairman Fred Upton and Senate Finance Committee Chairman Orrin Hatch.

Medicaid: CMS Oversight of Provider Payments is Hampered by Limited Data and Unclear Policy

Recently, GAO was asked to review state Medicaid payments to government providers compared to private, that is, for-profit and non-profit providers. However, GAO’s assessment of Medicaid payments to government and private hospitals in three selected states was hampered by inaccurate and incomplete data on payments. States must capture but are not required to report all payments they make to individual institutional providers, nor are states required to report ownership information. For example, large supplemental payments states often make to hospitals are not reported by hospitals. GAO assessed data for hospitals in two of three selected states, Illinois and New York; the third state, California, did not have accurate or complete payment data that would allow an assessment of total payments made to individual hospitals. In the two states, GAO’s estimates of average daily payments — total payments adjusted for differences in patient health, divided by patient days — made to government and private hospitals showed inconclusive trends, but also identified that a small number of government hospitals were receiving high payments that warrant oversight.

GAO recommends that CMS take steps to ensure states report provider-specific payment data, establish criteria for assessing payments to individual providers, develop a process to identify and review payments to individual providers, and expedite its review of the appropriateness of New York’s hospital payments. HHS concurred with the recommendations. For more information, please visit: http://www.gao.gov/assets/670/669560.pdf


If you have any questions, contact the following individuals at McGuireWoods Consulting:

Stephanie Kennan, Senior Vice President
Charlyn Iovino, Vice President
Brian Looser, Vice President
Amanda Anderson, Research Assistant

Founded in 1998, McGuireWoods Consulting LLC (MWC) is a full-service public affairs firm offering state and federal government relations, national/multistate strategies, infrastructure and economic development, strategic communications and grassroots issue management services. McGuireWoods Consulting is a subsidiary of the McGuireWoods LLP law firm and in 2010 was ranked in the Top 20 of The National Law Journal's "The Influence 50," an annual report of the top public affairs firms in Washington, D.C.

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