May 2, 2016
Washington Healthcare Update
CMS drops Medicaid Managed Care Rule…CMS releases MACRA rule…CMS awards contracts for Competitive Bidding round 2…Congress is still working on opioid legislation…CMS pushes back deadline for states to switch from using direct SHOP enrollment to an online SHOP portal…Congress continues to focus on drug prices.
House of Representatives
3. State Activities
4. Regulations Open for Comment
House of Representatives
House Judiciary Committee Approves Opioid Legislation
On April 27, the House Judiciary Committee approved opioid legislation that will be rolled into a larger measure to be the chamber’s alternative to the
Senate-approved CARA. The Comprehensive Opioid Abuse Reduction Act of 2016—HR 5046—gives states more power to address opioids than the Senate version—(S.
524)—does. It allots $103 million in already appropriated funds for states to fight the epidemic. The bill establishes mental health courts as well as a
veterans court program for treatment. It would train law enforcement officers how to respond to mental health and substance abuse cases involving veterans.
The committee also approved the Opioid Program Evaluation (OPEN) act to ramp up oversight, and another measure that requires a federal study on Good
Samaritan laws. Both the Senate and House bills use pre-existing funding and do not authorize new money.
The Judiciary bill is a piece of a larger House opioids package coming out of a number of different House committees, including Energy and Commerce, which
also advanced nine bills to address the epidemic.
It is unknown how likely it will be for the two chambers to conference the bills, since their approaches are different.
To view the markup session,
Republican Lawmakers Demand Documents Related to Abortion Drug From FDA
On April 25, House and Senate Republicans demanded the U.S. Food and Drug Administration (FDA) turn over documents related to its recent decision to relax
the rules surrounding the abortion drug mifepristone. In a letter to FDA Commissioner Robert Califf, 75 Republican lawmakers wrote, “This powerful abortion
drug has been associated with serious adverse events including hemorrhaging, severe infections and even deaths of mothers who have taken it.” The lawmakers
asked for all of the correspondence within the administration and with outside groups about the drug, any filed applications from the drugmaker and all
safety and study information.
For the full letter,
House Energy and Commerce Democrats Held Forum on Achieving Health Equity
On April 29, House Energy and Commerce Committee Democrats in partnership with the Congressional Black Caucus (CBC), Congressional Hispanic Caucus (CHC)
and Congressional Asian Pacific American Caucus (CAPAC) held a
on achieving health equity. The forum focused on health disparities in the treatment and prevention of heart disease among racial and ethnic minorities, as
well as efforts to build a more diverse health care workforce and transform medical research to meet the needs of a diverse population. Stakeholders
representing different areas of expertise on these topics participated in the forum.
Energy and Commerce Approves Opioid Bills
On April 27, the House Energy and Commerce committee approved
nine bills addressing the opioid epidemic, though disagreements about funding the legislation remain. The bills, all approved by voice vote, include
measures to expand patient access to medication-assisted treatment and allow partial fillings of opioid prescriptions. The committee approved raising the
cap on the number of patients doctors can treat with medication-assisted treatment from 100 to 250 patients. Democrats failed to get amendments passed that
would have further increased that number. Democrats also failed to pass an amendment that would give $1 billion in new mandatory funding—mostly for states
to increase their capacity to treat and prevent substance abuse.
On April 28, the committee approved three additional measures to address the epidemic. Those bills include a measure (H.R. 4586) to create state grants to
develop guidelines for health care professions dispensing opioid overdose reversal medication; a measure (H.R. 3680) authorizing $5 million for a grant
program for co-prescribing opioid overdose reversal drugs; and a measure (H.R. 3691) reauthorizing residential treatment programs for pregnant women and
postpartum women and creating a pilot program to give grants to state substance abuse agencies.
These bills are expected to be packaged with legislation approved by the House Judiciary Committee and another bill approved by the House Education and
To see a related press release, click here.
House Speaker Ryan Wants to End Obamacare Protection for Sick Consumers
On April 27, House Speaker Paul Ryan called for an end to Obamacare’s financial protections for people with serious medical conditions, arguing that those
consumers should be placed in state high-risk pools; he says this is a less expensive alternative to cover America’s sickest patients.
Ryan said existing federal policy preventing insurers from charging sick people higher rates for health coverage has increased costs for health consumers
while undermining choice and competition. “Let’s fund risk pools at the state level to subsidize their coverage, so that they can get affordable coverage,”
Ryan said in a speech to students at Georgetown University. “You dramatically lower the price for everybody else. You make health insurance so much more
affordable, so much more competitive and open up competition.”
Senate Aging Committee Holds Hearing on Valeant Pharmaceuticals’ Business Model
On April 27, the Senate Aging Committee held a hearing on Valeant Pharmaceuticals’ business model. During the hearing, lawmakers accused the company of
gouging patients to reward investors. These accusations from Senate Republicans and Democrats came as hedge fund manager William Ackman defended the
company’s business model and Martin Shkreli, Valeant’s outgoing CEO, express regrets for its largest price hikes.
To see the full hearing,
To see a related press release,
Senate Finance Committee Holds Hearing on Mental Health Issues
On April 28, the Senate Finance Committee held a
mental health issues. The hearing focused on mental health issues in America and the roles the Medicaid and Medicare programs play in addressing the needs
of those with behavioral and mental health issues. Together, Medicare and Medicaid finance nearly 45 percent of mental health spending in the United
States, which amounted to more than $75 billion in 2014 alone.
Senate Judiciary Committee Holds Hearing on Counterfeits and Consumer Safety
On April 27, the Senate Judiciary Committee held a hearing on counterfeits and consumer safety. During the hearing, Bruce Foucart—U.S. Immigration and
Customs Enforcement’s (ICE) top intellectual property rights enforcer—told the committee that the illegal importation, distribution and sale of counterfeit
products pose a growing threat to health and safety. Committee leadership acknowledged that counterfeiting is a worldwide problem that impacts business,
presents health and safety hazards and funds criminal organizations. Members challenged the witness panel to come up with solutions to the growing problem.
To view the hearing,
Wyden Introduces Bill to Cap Out-of-Pocket Costs in Medicare Part D
On April 27, Senate Finance Committee ranking member Ron Wyden introduced
a bill aimed at protecting Medicare beneficiaries from high
out-of-pocket costs in Medicare’s outpatient drug program. This would bring Medicare more in line with commercial payers.
The bill—the Reducing Existing Costs Associated with Pharmaceuticals for Seniors Act of 2016 (RxCAP)—would eliminate all cost sharing above the Medicare
Part D annual out-of-pocket threshold, which is at $7,500. In 2013, 2.9 million people in Part D surpassed this limit and those with the highest drug costs
paid an average of $2,600 above that amount, according to Wyden. The patient caps imposed by the bill are in line with those imposed on many commercial
health plans under the Affordable Care Act, he said.
Co-sponsors of the bill include Democratic Sens. Ben Cardin (MD), Michael Bennet (CO) and Maria Cantwell (WA)
A Bipartisan Effort to Stop the Medicare Part B Demonstration
Both Republican and Democratic lawmakers are planning to ask the U.S. Department of Health and Human Services (HHS) to get rid of the proposed Medicare
Part B drug demonstration, which would reduce reimbursements for high-cost drugs given in physicians’ offices and hospital outpatient centers in some parts
of the U.S.
Lobbyists for providers and drugmakers are putting pressure on congressional Democrats to oppose the program as it is structured now. More than 300
physician and patient advocacy groups, such as the American Medical Association and Patients Rising, are also strongly opposed to the program.
But those lawmakers are also coming under pressure from the Obama administration as it attempts to respond to the public outcry over drug prices. The
Democrats are caught between patient groups who oppose the demonstration and the administration’s interest in making a change on drug pricing—a change that
many Democrats called on the administration to make.
The goal of the demonstration is to reduce reimbursements, thereby reducing financial incentives for physicians to choose higher-cost drugs even when less
expensive drugs may be just as or more effective. The drugs targeted would be intravenous medications—such as cancer treatments, injectable drugs,
antibiotics, certain eye treatments and more.
House and Senate Republicans are gathering signatures for letters asking HHS to cancel the program. The letters scold the Centers for Medicare and Medicaid
Services (CMS) for the policy and for the process that they say did not include the health industry, lawmakers or experts.
Both parties have concerns that these changes could disproportionately affect independent physician practices, leading them to shut down or be bought out
by hospitals, thus increasing consolidation of providers.
House Democratic Leader Nancy Pelosi is advising lawmakers to sign a letter by Rep. Richard Neal (D-MA) that asks for changes to the program but would not
end it completely. Neal’s letter specifies 11 policy areas that should be addressed and hints that Congress should be involved.
All 12 Democrats on the Senate Finance Committee signed their own
letter expressing concern with the program—including how it
would interact with other payment reform efforts and Medicare demonstration projects. The letter also says the program could exceed Medicare’s authority
for a demonstration project.
FTC Endorses Alaska Bill to Expand Telehealth Services
For the first time, the Federal Trade Commission (FTC) has endorsed a state bill to expand telehealth services—specifically backing an Alaskan bill that
commission staff says could incentivize competition and lower state Medicaid costs by eliminating an in-state physician requirement. “Statutory or
regulatory proposals of this type are of interest to the FTC because greater use of telehealth has the potential to expand the supply of practitioners,
promote competition, reduce transportation costs, and increase access to safe and cost-effective care,” Frank Dorman from FTC’s Public Affairs office said.
Under current Alaskan law, doctors licensed and located in the state can prescribe drugs without conducting a physical examination in certain cases, and
the Alaska State Medical Board cannot discipline a doctor for doing so. The bill under consideration, S.B. 74, would allow Alaskan licensed physicians
located outside the state to also provide telehealth services and would let certain Alaskan licensed behavioral health professionals provide services
remotely. The commission said Alaska has historically faced a provider shortage and telehealth services help to fix the problem. Also, health care costs in
the state are high partly because of insufficient competition.
The FTC also suggested the Alaska legislature add a provision saying a physician-patient relationship can be established using telehealth. Commission staff
also questioned the bill’s special requirements for behavioral telehealth. FTC’s decision to comment on the bill could mean it is becoming more involved in
Andrew Bindman to Direct AHRQ
Andrew Bindman, a primary care physician and health policy researcher at the University of California at San Fransisco, will become the new director of the
Agency for Healthcare Research and Quality (AHRQ) beginning May 2. He will succeed Richard Kronick, who announced his departure in February.
Bindman has experience in medicine, academia and federal policy. He was a doctor at San Francisco General Hospital and directed the UCSF California
Medicaid Research Institute and its Primary Care Research Fellowship. He was an RWJF fellow on the House Energy and Commerce Committee during the debate
that led to passage of the Affordable Care Act (ACA) and has been an adviser to both HHS and CMS.
CMS Pushes Back Deadline for States Switching to Online SHOP Portal
The Centers for Medicare and Medicaid Services (CMS) pushed back the deadline to 2019 for states to switch from using direct Small Business Health Options
Program (SHOP) enrollment to an online SHOP portal—the agency also clarified that states can keep their individual exchanges and still transition to the
federal SHOP platform or forgo the exchange using a state innovation waiver.
The guidance comes as SHOP exchanges nationwide continue to struggle with enrollment and finances. Right now there are four states—Hawaii, Idaho, Vermont
and Oregon—that do not have the portal and qualify for the extension. State health reform officials are concerned that setting up the online marketplace
after years of successful direct enrollment would waste money, confuse customers and pose a excess of new technological and educational hurdles.
States using direct enrollment must ensure that employers are deemed eligible for coverage through SHOP, that employees enroll in SHOP-qualified health
plans and that issuers follow all related rules and policies when enrolling new customers. States that are interested in the extension need to satisfy that
criteria as well. State officials would also need to tell CMS how they will run the exchange after the transition.
The guidance clarifies that under the final 2017 Notice of Benefit and Payment Parameters, states can use the federal SHOP platform even if they want to
keep their state-based individual marketplaces. CMS said that if a state chooses to do so, they should inform the agency nine months before the start of
open enrollment, submit a revised blueprint and enter into a federal platform agreement with CMS.
Hawaii is working on a 1332 waiver proposal that would eliminate SHOP because it conflicts with more comprehensive existing state law. Vermont also
finalized a proposal that would allow the state to continue using direct enrollment, as it has done since the state exchanges launched because Vermont
could not set up a functional SHOP exchange on time. Massachusetts’ 1332 proposal, which is expected to be finalized in the coming weeks, seeks to preserve
its merged market and single risk pool.
CMS Releases Medicaid Managed Care Overhaul
On April 25, CMS made public a 1,425-page final rule that is a sweeping update of Medicaid managed care requirements. This is the first time in more than a
decade that CMS has made changes in the requirements. Key issues include:
The rule addresses the decades-old so-called IMD exclusion, which prohibits Medicaid from reimbursing for patients at inpatient facilities with more than
16 psychiatric beds. The final rule allows states to cover the care of beneficiaries if they stay no more than 15 days in an inpatient facility that
provides behavioral health services. Several mental health reform measures in Congress have also attempted to chip away at the law but those efforts have
mostly stalled because a complete repeal would be expensive.
The rule finalized a national medical loss ratio (MLR) standard of at least 85 percent for Medicaid managed care plans. However, the agency’s standard does
not include payment penalties if plans spend less than 85 percent of premiums on care. That differs from the Affordable Care Act’s MLR requirement, which
requires plans to pay rebates to consumers if they fall below thresholds. CMS said “there is no statutory basis” to require Medicaid plans to pay a rebate.
However, agency officials said states would be expected to take excess payments into account when setting future payment rates.
For the first time, each state must create its own network adequacy standards for private Medicaid plans. Telemedicine can play a role.
CMS will add a quality rating system for private Medicaid and CHIP plans; the program is expected to be similar to one utilized for Medicare Advantage
plans. The agency plans to implement the rating system for Medicaid plans over five years and will seek feedback on its proposed methodology before moving
Prohibit supplemental payments to providers: CMS will prohibit states from making certain supplemental payments to hospitals and other providers that serve Medicaid managed care enrollees, a move
that hospitals said was disappointing. Instead, states and Medicaid plans must transition to systems where the payment structure is linked to delivered
services or quality, with CMS allowing a multi-year transition period.
The rule will be published May 6 in the Federal Register. To see the rule,
For fact sheets on the rule, click here.
To see the implementation timeline,
CMS Adds Six New Quality Measures to Nursing Home Compare
On April 27, the Centers for Medicare and Medicaid Services (CMS)
announced the addition of six new quality measures to
its consumer-based Nursing Home Compare website. This will be the first time CMS is including quality measures not based solely on data that is
self-reported by nursing homes. The new measures are based primarily on Medicare claims data submitted by hospitals and measure the rate of
rehospitalization, emergency room use and community discharge among nursing home residents. The six measures are as follows:
- Percentage of short-stay residents who were successfully discharged to the community (Medicare claims and MDS-based)
- Percentage of short-stay residents who have had an outpatient emergency department visit (Medicare claims and MDS-based)
- Percentage of short-stay residents who were rehospitalized after a nursing home admission (Medicare claims and MDS-based)
- Percentage of short-stay residents who made improvements in function (Minimum Data Set (MDS)-based)
- Percentage of long-stay residents whose ability to move independently worsened (MDS-based)
- Percentage of long-stay residents who received an antianxiety or hypnotic medication (MDS-based)
These added measures will be reported on the Nursing Home Compare website but will not be incorporated into the methodology to compute nursing home star
ratings until July 2016.
To see a fact sheet,
The agency says the quality measure update nearly doubles the number of short-stay measures on the public website. Nursing Home Compare has 24 quality
measures, including those CMS just added to the site.
CMS Issues Guidance to States on Inmate Policies
On April 28, the Centers for Medicaid and CHIP Services (CMCS) issued guidance to states on Medicaid inmate eligibility, enrollment and coverage policy.
The letter with attached Questions and Answers describes how states can better facilitate access to Medicaid services for individuals transitioning from
incarceration to their communities.
The letter is available
CMS Awards Contracts for the DMEPOS Competitive Bidding Program Round 2 Recompete and National Mail-Order Recompete
On April 28, the Centers for Medicare and Medicaid Services (CMS) announced the Round 2 Recompete and national mail-order recompete contract suppliers for
Medicare’s Durable Medical Equipment Prosthetics, Orthotics and Supplies (DMEPOS) Competitive Bidding program. The program has been in effect since 2011
and is used as a tool in helping Medicare set appropriate payment rates for DMEPOS items, saving money for beneficiaries and taxpayers and ensuring access
to quality items.
Prior to the DMEPOS Competitive Bidding Program, Medicare paid for these DMEPOS items using a fee schedule that is generally based on historic supplier
charges from the 1980s. Numerous studies from the Department of Health and Human Services’ Office of Inspector General (HHS OIG) and the Government
Accountability Office (GAO) have shown these fee schedule prices to be excessive, and taxpayers and Medicare beneficiaries bear the burden of these
Under the program, DMEPOS suppliers compete to become Medicare contract suppliers by submitting bids to furnish certain items in competitive bidding areas
(CBAs). After the first two years of Round 2 and the national mail-order programs (July 1, 2013 - June 30, 2015), Medicare has saved approximately $3.6
The Round 2 and national mail-order program contract periods expire on June 30, 2016. Round 2 Recompete and the national mail-order recompete contracts
will be effective from July 1, 2016, through Dec. 31, 2018. The national mail-order recompete for diabetes testing supplies will be implemented at the same
time as Round 2 Recompete and will include all parts of the United States, including the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin
Islands, Guam and American Samoa.
Competitive bidding contracts and pricing have been in place in Round 1 areas since Jan. 1, 2011, with the current Round 1 Recompete contracts and prices
being in place since Jan. 1, 2014. CMS is currently evaluating bids received as part of the Round 1 2017 competition, which is scheduled to be implemented
on Jan. 1, 2017.
For Round 2 Recompete, CMS has executed 586 DMEPOS competitive bidding program contracts (91 percent of contracts offered). The Round 2 Recompete contract
suppliers have 2,200 locations to serve Medicare beneficiaries in these CBAs. CMS has also awarded nine national mail-order recompete contracts (100
percent of contracts offered). Contract suppliers are required to meet CMS’s quality standards, meet applicable state licensure requirements and be
accredited by a CMS-approved independent accreditation organization.
A list of Round 2 Recompete and national mail-order recompete contract supplier names is available
Current contract supplier locations for each product category in a CBA can be found in the Supplier Directory
The Round 2 Recompete product categories are:
Enteral nutrients, equipment and supplies
General home equipment and related supplies and accessories
includes hospital beds and related accessories, group 1 and 2 support surfaces, commode chairs, patient lifts and seat lifts
Nebulizers and related supplies
Negative pressure wound therapy (NPWT) pumps and related supplies and accessories
Respiratory equipment and related supplies and accessories
includes oxygen, oxygen equipment and supplies; continuous positive airway pressure (CPAP) devices and respiratory assist devices (RADs) and
related supplies and accessories
Standard mobility equipment and related accessories
includes walkers, standard power and manual wheelchairs, scooters and related accessories
Transcutaneous electrical nerve stimulation (TENS) devices and supplies
For a list of specific items in each product category, or for a list of the areas included in Round 2 Recompete, visit the Competitive
Bidding Implementation Contractor website.
For additional information about the Medicare DMEPOS Competitive Bidding Program, click here.
3. State Activities
California: California Considering Letting Undocumented Immigrants Purchase Health Care
The California Legislature is considering legislation that would request that the federal government allow undocumented immigrants residing in the state to
purchase health insurance through the Covered California exchange. Lawmakers removed a provision from
S.B. 10 that would have permitted
undocumented adults to receive comprehensive Medicaid coverage—however, lawmakers in the California Assembly Health Committee on April 26 passed the second
piece of the bill, which would require the state to apply for an Obamacare 1332 waiver allowing undocumented individuals to buy exchange coverage at full
price. The bill would potentially allow up to 390,000 undocumented immigrants to purchase health care through the Affordable Care Act (ACA).
California: Drugmakers Push Back on California Drug Price Ballot Initiative
A California ballot initiative has been introduced that would require the state to pay no more for prescription drugs than the U.S. Department of Veterans
Affairs—one of the few federal agencies allowed to negotiate drug prices. The industry is going to fight back—drug companies are expected to pour $100
million into the effort to kill the referendum.
From industry perspective, California could set a dangerous precedent if the initiative goes through. Also, the fact that the presidential candidates are
pushing the federal government to negotiate drug prices for Medicare could mean the idea would take root.
The initiative’s sponsor—CEO of the Los Angeles-based AIDS Healthcare Foundation, Michael Weinstein—said his intention in introducing the initiative is to
start a “national prairie fire.” Weinstein pursued the ballot measure after involving himself in activism on AIDS and after watching the California state
legislature fail to do anything about drug prices—a big concern to people with HIV/AIDS who may be taking costly drugs for the rest of their lives.
Well-known companies like Johnson & Johnson, Bristol-Meyers, Bayer and Pfizer have already raised $67 million to assemble a California team to ensure
the proposal loses. The AIDS Healthcare Foundation has raised roughly 6 percent—$4.3 million—of what the drug companies have raised. The industry has also
recruited patient advocacy and civil rights groups as allies by raising concerns about the potential economic harm to consumers. Roughly 30 groups have
signed up to oppose the initiative, including veterans’ organizations, the California NAACP, the Bonnie J. Addario Lung Cancer Foundation, the Lupus
Foundation of Southern California and the California Chamber of Commerce. A number of these groups receive donations from the industry.
Supporters of the initiative say three to seven million residents enrolled in some state-supported health programs would get access to much lower-cost
drugs. Specifically, the measure says that state-funded programs such as the California Public Employees’ Retirement System, the Medicaid fee-for-service
outpatient drug program and California’s AIDS Drug Assistance Program must pay no more for prescription drugs than the Department of Veterans Affairs.
The VA can negotiate drug prices and gets at least the lowest price the drug companies are paid by any commercial client. In exchange for those discounts,
the agency puts the medication on the list of drugs VA doctors can prescribe. A 2005 Congressional Budget Office report found that the VA generally pays
less than other federal, state and private health programs.
If the initiative passes, drugmakers are expected to sue.
Minnesota: MNsure Debates Outsourcing Technology Issues
Minnesota’s state exchange—MNsure—is thinking about hiring a different company to handle its technology. The state exchange has been struggling with
technology problems for years. Tech firm hCentive—the firm that helped fix Massachusetts’ state exchange and has presence in several other states—recently
gave a sales pitch to the MNsure board. However, the earliest any transition would take place is most likely 2018.
New Jersey: State Co-op Reports Big Losses for 2015
New Jersey’s co-op—Health Republic Insurance of New Jersey—posted a net loss of $17.6 million for 2015. This is a huge reversal after the co-op recorded
profits during the first nine months of last year. The loss was mostly due to a $17.1 million payment the insurer had to make toward the Affordable Care
Act’s (ACA) risk adjustment program. The insurer is now seeking to increase its off-exchange enrollment. Health Republic anticipates having 50 percent of
its enrollment on the New Jersey exchange, 25 percent off-exchange for individuals and 25 percent from small groups. More than half of the 23 co-ops
established under the ACA have collapsed due to financial distress.
Oklahoma: Legislature Approves Bill to Revoke Licenses of Abortion Doctors
Oklahoma’s Republican-controlled state legislature approved a bill that could revoke the license of any doctor who performs an abortion. It exempts
providers who perform abortions to remove a miscarried fetus or in instances in which the mother’s life is in danger. The measure, which opponents argue is
unconstitutional, is headed to Gov. Mary Fallin’s desk. The governor has not yet indicated whether she will sign the legislation.
Texas: Officials Ask CMS to Grant Waiver Extension
Texas state officials have asked CMS to grant an initial 15-month extension beginning on Oct. 1 to maintain current levels of uncompensated care and
delivery system reform incentive payment funding—this request comes as the state is trying to secure a five-year renewal for a Medicaid 1115 waiver. Texas
originally submitted a five-year renewal application last fall—its existing waiver expires on Sept. 30. With that deadline fast approaching, state
officials want to ensure that billions of dollars for hospitals will not suddenly terminate at the end of September. For the initial 15-month extension,
the state asks that the uncompensated care pool and DSRIP program each get $3.1 billion in the first year, followed by a pro-rated amount for the other
three months. The request is less than what Texas asked for last fall. CMS has not yet responded to the request.
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.
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.
CMS Releases Proposed Rule for Provider Enrollment Process
On Feb. 25, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule to implement additional provider enrollment provisions of the
Affordable Care Act (ACA) to help make sure that entities and individuals who pose risks to the Medicare program are kept out of it or removed for extended
periods. This rule is part of CMS’s effort to prevent questionable providers and suppliers from entering the Medicare program.
If finalized, the regulations would allow CMS to remove or prevent enrollment of those who try to circumvent enrollment requirements through name and
identity changes or through inter-provider relationships. It will also address vulnerabilities such as when providers and suppliers avoid paying their
Medicare debts by reenrolling as a different entity.
Major provisions of the proposed rule include:
Disclosure of Affiliations:
Would require health care providers and suppliers to report affiliations with entities and individuals that: (1) currently have uncollected debt to
Medicare, Medicaid or CHIP; (2) have been or are subject to a payment suspension under a federal health care program or subject to an Office of
Inspector General (OIG) exclusion; or (3) have had their Medicare, Medicaid or CHIP enrollment denied or revoked. CMS could deny or revoke the
provider’s or supplier’s Medicare, Medicaid or CHIP enrollment if CMS determines that the affiliation poses an undue risk of fraud, waste or abuse.
Different Name, Numerical Identifier or Business Identity:
CMS could deny or revoke a provider’s or supplier’s Medicare enrollment if CMS determines that the provider or supplier is currently revoked under a
different name, numerical identifier or business identity.
Would allow CMS to revoke a physician’s or eligible professional’s Medicare enrollment if he or she has a pattern or practice of ordering, certifying,
referring or prescribing Medicare Part A or B services, items or drugs that is abusive, represents a threat to the health and safety of Medicare
beneficiaries or otherwise fails to meet Medicare requirements.
Increasing Medicare Program Re-enrollment Bars:
Would improve protection of the Medicare Trust Funds and program beneficiaries by: 1) raising the existing maximum re-enrollment bar from three years
to 10 years; 2) allowing CMS to add three more years to the provider’s or supplier’s re-enrollment bar if the provider attempts to re-enroll in
Medicare under a different name, numerical identifier or business identity; and 3) imposing a maximum 20-year re-enrollment bar if the provider or
supplier is being revoked from Medicare for the second time.
Other Public Program Termination:
Would permit CMS to deny or revoke a provider’s or supplier’s Medicare enrollment if: (1) the provider or supplier is currently terminated from
participation in a particular Medicaid program or any other federal health care program under any of its current or former names, numerical identifiers
or business identities; or (2) the provider’s or supplier’s license is revoked in a state other than that in which the provider or supplier is enrolled
Expansion of Ordering/Certifying Requirements:
Would permit CMS to require that physicians and eligible professionals who order, certify, refer or prescribe any Part A or B service, item or drug
must be enrolled in or validly opted out of Medicare.
Comments on the proposed rule must be submitted no later than 5 p.m. on April 25.
For more information, click here.
ONC Releases Proposed Rule Expanding Role in Health IT Certification Program
The Office of the National Coordinator for Health Information Technology (ONC) released a proposed rule that would enable the agency to conduct direct
reviews of certified health IT products. Such direct review would also include how certified health IT interacts with other systems. The rule increases
ONC’s oversight of health IT testing bodies to improve alignment and more successfully deal with issues, and seeks to increase transparency associated with
the surveillance—it plans to make results of surveillance of electronic health records (EHRs) publicly available. The reviews would focus on situations
posing health or safety risks. Depending on the findings, the office says it may require corrective action or suspend or terminate certification for an EHR
or health IT module.
ONC hopes this move will enhance public confidence in health IT testing and certification. The U.S. Department of Health and Human Services (HHS) said the
rule will empower consumers by improving availability of certification information. ONC is proposing a “strict process” for health IT recertification or
replacement versions, and a program ban for those that don’t fix problems pointed out by ONC. Comments on the rule will be accepted through May 2.
To see the proposed rule, click here.
CMS Proposes to Test New Medicare Part B Prescription Drug Models
On March 8, the Centers for Medicare and Medicaid Services (CMS) announced a proposed rule to test new models to improve how Medicare Part B pays for
prescription drugs and supports physicians and other clinicians in delivering higher-quality care. Medicare Part B covers prescription drugs that are
administered in a physician’s office or hospital outpatient department, such as cancer medications, injectables like antibiotics, or eye care treatments.
The proposed Medicare Part B Model would test new ways to support physicians and other clinicians as they choose the drug that is right for their patients.
The proposed rule is designed to test different physician and patient incentives to do two things: drive the prescribing of the most effective drugs and
test new payment approaches to reward positive patient outcomes. Among the approaches to be tested are the elimination of certain incentives that work
against the selection of high-performing drugs, as well as the creation of positive incentives for the selection of high-performing drugs, including
reducing or eliminating patient cost sharing to improve patients’ access and appropriate use of effective drugs.
Prescription drug spending in the U.S. was around $457 billion in 2015, or 16.7 percent of overall health spending. In 2015, Medicare Part B spent $20
billion on outpatient drugs administered by physicians and hospital outpatient departments. The proposed rule seeks comments on testing six different
alternative approaches for Part B drugs to improve outcomes and align incentives to improve quality of care and spend dollars wisely:
Improving incentives for best clinical care
Discounting or eliminating patient cost sharing
Feedback on prescribing patterns and online decision support tools
Risk-sharing agreements based on outcomes
CMS is accepting comment on the proposed rule through May 9, 2016.
To see the press release, click here.
For a fact sheet on the proposed rule, click here.
CMS Issues Proposed Rules for Hospice, Nursing Homes and Inpatient Rehab Facilities
On April 21, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would update Medicare fiscal year 2017 payment rules for
nursing homes and
inpatient rehab facilities. CMS is proposing a 2
percent increase in hospice payments for 2017, which would cost $330 million. This includes a 2.8 percent hike to reflect increased costs, but is balanced
out by a productivity adjustment of 0.5 percent and a 0.3 percent cut required by the Affordable Care Act (ACA).
CMS is also proposing two new hospice quality measures for 2017. One will assess staff visits during the last week of life, and the other will look at
whether patients received treatment consistent with federal guidelines in areas such as pain assessment.
CMS estimates that nursing homes will see a 2.1 percent pay increase next year, a boost of $800 million, according to a
fact sheet. To comply with the IMPACT Act, CMS proposed one new assessment-based quality measure and three claims-based measures to be included in the nursing homes’
quality reporting program.
The proposal for inpatient rehabilitation facilities would create a 1.6 percent increase compared to 2016 payments, an increase of $125 million.
CMS Proposes Inpatient Prospective Payment System and Long-Term Care Hospital Rule
On April 18, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule to update fiscal year (FY) 2017 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
would affect discharges occurring on or after Oct. 1, 2016.
Most notably, the proposed rule would permanently remove the two midnight rule and its effects for the current as well as the past two fiscal years
by adjusting the FY 2017 payment rates. CMS is proposing as an alternative that hospitals provide Medicare beneficiaries with a special notice if the
patient has been receiving observation services as an outpatient for more than 24 hours.
Proposed Changes to Payment Rates under IPPS
The proposed increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital
Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) users is 0.9 percent.
Hospitals that do not successfully participate in the Hospital IQR Program and do not submit the required quality data will be subject to a one-fourth
reduction of the market basket update. Also, the law requires that any hospital that is not a meaningful EHR user will be subject to a three-fourths
reduction of the market basket update in FY 2017.
CMS projects that the rate increase, together with other proposed changes to IPPS payment policies, will increase IPPS operating payments by approximately
0.7 percent and that changes in uncompensated care payments will decrease IPPS operating payments by an additional 0.3 percent. Other additional payment
adjustments will include continued penalties for excess readmissions, a continued 1 percent penalty for hospitals in the worst-performing quartile under
the Hospital Acquired Condition Reduction Program, and continued bonuses and penalties for hospital value-based purchasing. In sum, CMS projects that total
Medicare spending on inpatient hospital services, including capital, will increase by about $539 million in FY 2017.
This projected increase in spending includes an estimated $350,000 increase in FY 2017 payments to hospitals located in Puerto Rico under the proposal to
make IPPS payments for capital-related costs based solely on the national capital Federal rate (rather than the current blend of the national capital
Federal rate and Puerto Rico-specific capital rate), consistent with the recent statutory change in the payment methodology for operating IPPS payments to
To see the CMS fact sheet, click here.
CMS is issuing an Interim Final Rule with Comment for the section that establishes a temporary exception for certain wound care discharges from the site
neutral payment rate for LTCH discharges that do not meet the statutory patient level criteria for certain LTCHs.
CMS will accept comments on the proposed rule until June 16, 2016, and will respond to comments in a final rule to be issued by Aug. 1, 2016.
The proposed rule can be downloaded from the Federal Register.
CMS Releases MACRA Proposed Rule for New Physician Pay System
On April 27, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule to guide major changes in Medicare payment to physicians,
meaningful use policy, and quality and value measures. The focus of the rule is to introduce more flexibility for physicians, who say they are
over-regulated and over-measure, while also nudging them toward models designed to reimburse them for high-value care.
The proposed rule would implement changes through the Quality Payment Program, which includes two paths:
1. The Merit-based Incentive Payment System (MIPS):
Most Medicare clinicians will initially participate in the Quality Payment Program through MIPS. MIPS allows Medicare clinicians to be paid for providing
high-value care through success in four performance categories:
Quality (50 percent of total score in year 1)
Advancing Care Information (25 percent of total score in year 1)
Clinical Practice Improvement Activities (15 percent of total score in year 1)
Resource Use (10 percent of total score in year 1)
2. Advanced Alternative Payment Models (APMs):
Clinicians who take a further step toward care transformation would be exempt from MIPS reporting requirements and qualify for financial bonuses. These
Comprehensive ESRD Care Model (Large Dialysis Organization arrangement)
Comprehensive Primary Care Plus (CPC+)
Medicare Shared Savings Program – Track 2
Medicare Shared Savings Program – Track 3
Next Generation ACO Model
Oncology Care Model Two-Sided Risk Arrangement (available in 2018)
The nominal risk standard was included in the rule but how CMS would define it is still a question.
To see the proposed rule,
For a related press release,
Mercatus Center Study Finds Significant Insurer Losses on 2014 Individual Plans
George Mason University’s Mercatus Center recently released a study intended to provide a comprehensive analysis of the impact of the Affordable Care
Act (ACA) on the individual and small group insurance markets in 2014. The study finds that insurers lost more than $2.2 billion on individual
Obamacare plans in 2014, despite receiving reinsurance payments of $6.7 billion to subsidize sicker, more expensive customers. It also found that
premiums in 2014 would have had to be more than 25 percent higher to cover expenses in the first year of exchange operations. In contrast, insurers
with narrow provider networks appear to have done relatively well. There is not full financial data available yet for 2015, but the researchers suggest
a similar performance in the second year of full ACA implementation.
To see the full study,
World Health Organization Releases Report on Eliminating Malaria
On April 25, the World Health Organization (WHO) released a report identifying 21 countries that are in a position to eliminate malaria within the next
five years. The report comes one year after WHO endorsed a new Global Technical Strategy for Malaria. A key target of the strategy is eliminating malaria
in at least 10 countries by 2020 and at least 35 countries by 2030.
To see the full report,
CDC Releases Annual Report on the Nation’s Health
On April 27, the Centers for Disease Control and Prevention (CDC) released a comprehensive annual report—Health, United States—offering a lot of
national data on everything from coverage expansion and electronic health record (EHR) adoption to use of colorectal tests and the number of dentists by
state. The four major areas included in the report are: 1) health status and determinants; 2) utilization of health resources; 3) health care resources;
and 4) health care expenditures and payers. This edition also includes a special feature on racial and ethnic health disparities.
To see the full report,
RWJF Survey Finds Some States Behind in Preparedness for Emergencies
According to a new Robert Wood Johnson Foundation (RWJF) survey, the country is getting more prepared for emergencies, but some states are still behind.
The survey found a wide range in how states are prepared to handle health emergencies. Overall, the U.S. scored 6.7 in a 10-point preparedness index—this
is a 3.6 percent increase since the survey began in 2013. Preparedness matters more now with the threat of the Zika virus this summer—especially in
Southern states. Many of the states that could be affected by the virus lagged in the survey.
States that are the most prepared:
Maryland - 7.6
New York - 7.5
Minnesota - 7.4
States that are the least prepared:
Louisiana - 5.6
Montana - 5.7
Arizona, Mississippi - 5.8
To see the survey, click here.
Campaign for Sustainable Rx Pricing Releases Policy Proposals to Address Drug Pricing
On April 25, the Campaign for Sustainable Rx Pricing released
12 policy proposals aimed at reducing pharmaceutical prices.
The proposals include new limits on FDA marketing exclusivity and requiring HHS to report the top 50 drug price increases each year for brand and generic
The proposals address three categories—increasing transparency in the drug marketplace, increasing competition and innovation, and rewarding the most
The Campaign—headed up by AARP, Walmart and the American Hospital Association, among others—said companies should not get addition FDA marketing
exclusivity for making small changes to older drugs, such as extended-release formulations or combinations of two existing drugs into one pill.
The proposals also call for shortening the 12 years of marketing exclusivity currently given to biologics. The group wants FDA to ensure incentives
encouraging the development of rare disease medications are not abused. After receiving orphan drug designation, many companies seek additional approvals
for non-orphan indications and substantially expand use of the drug.
Drugmakers should be required to compare their drugs to existing treatments, and also to show whether their products are improvements. Additionally, the
Campaign proposes that government payers should move more quickly in adopting new payment methods that reward treatments that add new value for patients.
Transparency proposals called for disclosure of how much an outside party funded a drug’s development. The government should also assess how advertising
affects utilization of high-cost drugs.
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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