Jan 11, 2016
Washington Healthcare Update
The Senate and House pass legislation to repeal the Affordable Care Act but without enough votes to override a potential veto... However, this is the first
time repeal legislation makes it to the President’s desk... White House to veto it... By some counts this is the 62nd time the House of Representatives has
passed some form of repeal... Meanwhile, nearly 11.3 million had signed up for health plans nationwide as of Dec. 26, and 68 percent chose silver level
plans... Open enrollment ends Jan. 31.
House of Representatives
3. State Activities
4. Regulations Open for Comment
House of Representatives
GOP Doctors Caucus Creating Obamacare
The GOP Doctors Caucus is working on its own Affordable Care Act replacement bill, according to caucus co-chair John Fleming. The bill is going to be a
combination of Rep. Tom Price’s (R-GA)
Empowering Patients First Act of 2015 and
Rep. David Roe’s (R-TN)
American Health Care Reform Act of 2015.
Senate HELP Committee Schedules Vote on FDA Nominee Robert Califf
On Jan. 12, the Senate HELP Committee will vote on Robert Califf’s nomination to serve as Commissioner of the U.S. Food and Drug Administration (FDA).
Califf had the support of most committee members, including both Chairman Lamar Alexander (R-TN) and ranking member Patty Murray (D-WA), during his confirmation hearing on Nov. 17.
Senate Finance Committee Asks CMS to Change Clinical Lab Payment Plan
On Jan. 6, Senate Finance Committee Chairman Orrin Hatch (R-UT) and ranking
member Ron Wyden (D-OR)
wrote a letter asking the Centers for
Medicare and Medicaid Services (CMS) to make changes to the proposed rule establishing a new Medicare payment system for clinical laboratory services. The
senators ask for a more expansive methodology for identifying labs that must report private payment rates and a more reasonable timeline for the labs
required to report data. They argue that since the final rule has yet to be published in the Federal Registrar, a deadline of March 31, 2016, is
To see the proposed rule, click
Surgeon General to Issue First-Ever Report on Substance Abuse
A Dec. 31 notice from the U.S. Department of Health and Human Services (HHS)
announced the commission of the Surgeon General’s first-ever report on substance abuse, addiction and health. According to the notice, “[t]he report will
examine the health effects of drug and alcohol misuse from the perspectives of prevention, treatment, recovery, neurobiology, and delivery of care.” Data
from the 2014 National Survey on Drug Use and Health (NSDUH) showed that an estimated 27 million citizens age 12 and older were illicit drug users and 16.3
million were heavy drinkers. Also, 6.5 million people age 12 and older used psychotherapeutics non-medically.
CMS Issues Final Rule Establishing Prior Authorization Process for DMEPOS Items
On Dec. 29, the Centers for Medicare and Medicaid Services (CMS) issued a
that establishes a prior authorization process for certain durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) items that are
frequently subject to unnecessary utilization. This process aims to ensure that certain DMEPOS items are provided consistent with Medicare coverage, coding
and payment rules. The rule defines unnecessary utilization and attempts to prevent it, while safeguarding beneficiaries’ access to necessary medical care.
The Department of Health and Human Services’ Office of the Inspector General and the U.S. Government Accountability Office have published multiple reports
raising questions about billing practices by suppliers, inappropriate Medicare payments and questionable utilization of DMEPOS items.
The Master List is the set of 135 DMEPOS items identified as being frequently subject to unnecessary utilization. Items that meet the following criteria
are included on the Master List and thus potentially subject to prior authorization: items on the DMEPOS Fee Schedule with an average purchase fee of
$1,000 or greater, or an average rental fee schedule of $100 or greater, and the subject of:
HHS Office of the Inspector General (OIG) or U.S. Government Accountability Office (GAO) reports that are national in scope and published since 2007,
Comprehensive Error Rate Testing Annual Medicare Fee-for-Service Improper Payment Report Durable Medical Equipment (DME and/or) Report’s DMEPOS Service
Items will remain on the list for 10 years, but can be removed sooner if the purchase amount drops below the payment threshold. After 10 years, items can
remain on the list or be added back to the list if a subsequent report identifies the item as frequently subject to unnecessary utilization.
Presence on the Master List does not automatically create a prior authorization requirement for that item. In order to balance minimizing provider and
supplier burden with protecting the Medicare Trust Funds and beneficiary access, CMS will initially implement prior authorization for a subset of items on
the Master List (referred to as “Required Prior Authorization List”). CMS will publish the Required Prior Authorization List in the Federal Register with
60-days’ notice before implementation of prior authorization for those items.
CMS will issue specific prior authorization guidance in sub-regulatory communications. Because prior authorization does not guarantee payment, the reaction
to the regulation has been mixed.
To see the press release, click here.
Final Rule Limiting HIPAA for Firearm Background Checks Released
On Jan. 4, the Obama administration released a final rule to
modify the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule. The rule allows health care providers to disclose certain
information to the National Instant Criminal Background Check System (NICS). Now, providers can disclose the identities of those who are subject to the
“mental health prohibitor” that bans them from owning a firearm. The prohibitor applies to individuals who have been involuntarily committed, found
incompetent to stand trial or otherwise determined by a court or other lawful authority to be a danger to themselves or others.
This executive action is one of 23 President Barack Obama announced in January 2013 aimed at curbing gun violence.
OMB Has Multiple CMS Rules Under Review
The White House Office of Management and Budget (OMB) currently has 10 rules from the Centers for Medicare and Medicaid Services (CMS) under its review:
The Medicaid home health face-to-face rule: this rule was proposed in 2011, and it will set up such requirements for Medicaid as well as align timeframes
for face-to-face encounters with Medicare requirements. Home health providers believe the requirements for Medicare are flawed, and CMS modified them
January 2015 to address concerns. The industry is hoping that the Medicaid rule will provide states flexibility to use the requirement differently than in
Medicare reporting and returning of overpayments: Last February, CMS extended the timeline to 2016 for publication of a
on the reporting and returning of Medicare overpayments. Providers had concerns about the provision’s setting up a 10-year look-back period in which
providers must check for overpayments that need to be returned. This is CMS’s third attempt to change regulations on overpayments.
Pre-Existing Condition Insurance Plan Program: OMB has been reviewing updates to the Pre-Existing Condition Insurance Plan program since February 2015, and
the interim final rule will finalize provisions published in 2010.
OMB is reviewing a proposed rule that would expand the uses of Medicare claims data by qualified entities, as required by the Medicare Access and CHIP
The OMB is also reviewing CMS’s mental health parity rule. Under the proposed rule, enrollees needing mental health and substance abuse treatment must be
given sufficient reasoning for the denial of reimbursement or payment of such services.
Additionally, OMB is looking at CMS final rules on emergency preparedness requirements for Medicare and Medicaid providers and suppliers and fire safety
requirements for some health facilities.
CMS Creates the Accountable Health Communities Model
The Centers for Medicare and Medicaid Services (CMS) is creating a five-year demonstration program, called the Accountable Health Communities Model, to test whether paying third parties to set beneficiaries
up with social services impacts health care costs and improves health and quality of care. CMS points out that unmet health-related social needs, such as
food insecurity and unstable housing, could increase the risk of chronic conditions, but that health care providers rarely connect patients to social
services. CMS is going to grant up to $157 million to “bridge organizations” that connect Medicare and Medicaid beneficiaries with social services when
necessary. Over the five-year period, CMS is testing a three-track model: 1) awareness – organizations will increase beneficiary awareness of available
services; 2) assistance – organizations will help beneficiaries navigate those services; and 3) alignment – organizations will ensure that services are
available and responsive to the beneficiaries that require them. CMS will announce the awards to bridge organizations in the fall, after which the program
CDC Asks Work Group to Review Opioid Guideline
The Centers for Disease Control and Prevention (CDC) has asked the National Center for Injury Prevention and Control’s Board of Scientific Counselors to
appoint a work group to review the draft guideline for prescribing opioids for chronic pain. This is one of several steps CDC is taking to increase
transparency for its guidelines, following complaints about the secretive nature of their development. Public comments are due on or before Jan. 13, and
the work group will review those as well.
To see the guidelines, click here.
3. State Activities
Maine: Gov. LePage Pledges to Veto Medicaid Expansion Bill
Maine Gov. Paul LePage announced on Maine Public Radio that he will veto any Medicaid expansion bill the state legislature approves. His comments came
after two moderate Republican senators said they are going to push expansion in 2016, citing the difficulties the uninsured have accessing drug treatment
Nebraska: Lawmakers Pushing Medicaid Expansion
Nebraska lawmakers are trying again to push Medicaid expansion this year. Sen. Kathy Campbell plans to propose a bill setting up a “private option” for
expansion. This would provide transitional health insurance, Campbell said, which people could continue if they no longer qualify for Medicaid. Sen. John
McCollister is a new supporter of expansion due to the $2.1 billion in federal dollars it would bring to Nebraska in five years and the 77,000 people it
would cover. Expansion still faces opposition from Gov. Pete Ricketts.
Kansas: Senator Proposes to Stop Medicaid for Hepatitis C Patients Who Don’t Follow Treatment Requirements
A state legislative panel in Kansas passed a motion to take away drug coverage for Medicaid patients with hepatitis C if they drink alcohol or go off their
medication. Republican Sen. Jim Denning made the proposal, and the seven-member committee passed the motion, with the two Democrats voting against it.
Hawaii: State Negotiating With Ike in the Absence of Hawaii Health Connector
The state of Hawaii is negotiating a contract with a local health care technology company, ike, to help in the absence of the failed state health insurance
exchange. The company would provide data processing and help in developing the 1095-A tax forms that enrollees need to fill out. The 1095 forms are
required for those in an Affordable Care Act (ACA) plan and are supposed to be issued by the end of the month.
4. Regulations Open for Comment
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.
CMS Soliciting Comments on Episode Groups as Required by MACRA
The Centers for Medicare and Medicaid Services (CMS) is soliciting
on episode groups and on specific clinical criteria and patient characteristics to classify patients into care episode and patient condition groups as
required by Section 101(f) of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), enacted April
16, 2015. The purpose of this commentary is to provide background and context to solicit stakeholder input on the episode groups that CMS has developed
pursuant to Section 3003 of the Affordable Care Act (ACA). CMS is also seeking stakeholder input on the future role of episode groups in resource use
Comments should be sent to by 11:59 p.m. EST on Feb. 15, 2016.
FDA Seeks Comments on Whether It Should Define “Natural” and If So, How?
Because of a series of competing citizen petitions, GMO labeling issues and congressional concern, the U.S. Food and Drug Administration (FDA) is seeking
public input on whether it should define the term “natural” for use on food product labels, and, if so, how to do so.
On Nov. 12, FDA published a request for feedback. FDA policy to date has
not restricted the use of the word “natural” on food labeling unless the product has added color, synthetic substances or flavoring.
FDA has received four citizen petitions over the past two years asking the agency to issue regulations on the use of the term, and in July the House of
Representatives passed a proposal on GMOs that would require FDA to define the term “natural” for product labeling.
FDA seeks feedback on the following questions:
What types of foods should be able to use the term?
Should only raw agriculture products be able to use the term?
Should only single-ingredient foods, such as bottled water or bagged spinach, be able to use the term?
If multi-ingredient foods can use the term, what types of ingredients would disqualify a product from using it?
What data or other information shows how consumers associate, confuse or compare the terms “natural” with “organic”?
What data or other information shows how consumers associate, confuse or compare the term “natural” with the term “healthy”?
The comment period is open until Feb. 10, 2016.
HHS Posts Guidance for State Innovation Waivers
On Dec. 11, the Department of Health and Human Services (HHS) posted guidance for states interested in seeking a State Innovation Waiver under Section 1332
of the Affordable Care Act (ACA). State Innovation Waivers allow states to receive federal funding to implement alternative models of health care coverage
that provide affordable coverage to their residents. The notice clarifies that the minimum length of public notice and comment periods for waiver
applications is 30 days.
To see the guidance, click here.
HHS OIG Releases Report on APTC Payments
On Dec. 31, the U.S. Department of Health and Human Services (HHS) Office of the Inspector General (OIG) released a report concluding that CMS could not ensure that advance premium tax credit (APTC)
payments were only for enrollees who had paid their premiums. The OIG found that CMS relied on each plan to verify that enrollees paid their premiums and
to attest that APTC payment information that the issuer reported to CMS was accurate. The report recommended that CMS establish policies to calculate APTC
payments without relying on the individual plans. CMS concurred with this recommendation.
PricewaterhouseCoopers Releases Report on the State of Medicaid Expansion, Managed Care
According to a
by PricewaterhouseCoopers on the state of Medicaid expansion, managed care benefitted from significant enrollment growth due to expansion in 2014. The
report said that 66 percent of beneficiaries received coverage from a private Medicaid health plan in 2014, and this trend continued in 2015 when 70
percent — or 51.3 million Americans — received the same coverage. An ongoing shift away from fee-for-service and towards managed care by large states and
the total growth in Medicaid population — enabled by Medicaid expansion — powered the growth in private Medicaid health plans. The report also found that
significant enrollment growth for Medicaid may end in the next few years, due to a shrinking Medicaid expansion gap.
Aetna Decides Not to Renew AHIP Membership for 2016, Merging with Humana
Aetna announced that it will leave America’s Health Insurance Plans (AHIP), becoming the second major insurer to leave in less than a year. United
Healthcare left the group in June. Aetna is now in the process of merging with Humana.
Pharmacists Ask SCOTUS to Take Case Over Pharmacy Regulations
Stormans, Inc., pharmacy and two pharmacists, Rhonda Mesler and Margo Thelen, asked the Supreme Court to take their case against Washington state
regulations on selling prescription drugs. They have religious objections to selling emergency contraceptives, but in 2007 Washington issued a rule banning
any “conscience-based referrals” — with no exceptions for religious objections.
The question presented by the plaintiffs is: “Whether a law prohibiting religiously motivated conduct violates the Free Exercise Clause when it exempts the
same conduct when done for a host of secular reasons, has been enforced only against religious conduct, and has a history showing an intent to target
The 9th Circuit Court of Appeals upheld the state rules in July and the Becket Fund for Religious Liberty is now representing the pharmacists.
To read the Supreme Court petition, click here.
Other Potential SCOTUS Cases
This month, the Supreme Court will consider whether to take up several health care-related cases — a far heavier health care case load than normal. The
cases include a challenge to the Affordable Care Act’s (ACA) individual mandate; a challenge to the ACA based on an argument that the legislation started
in the Senate, not the House; and several cases on state abortion bans.
If you have any questions, contact the following individuals at
Kennan, Senior Vice President
Charlie Iovino, Vice
Caroline Perrin, Research Assistant
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