May 9, 2016
Washington Healthcare Update
House efforts to pass a budget fall on deaf ears…House starts appropriations after May 15…CMS releases final rule on fire safety requirements for health care facilities and FDA releases long-awaited rule on e-cigarettes.
House of Representatives
3. State Activities
4. Regulations Open for Comment
House of Representatives
Over 240 House Members Call on CMS to Withdraw Proposed Medicare Part B Demo
On May 2, a bipartisan group of House lawmakers
the Centers for Medicare and Medicaid Services (CMS) to withdraw its proposal to modify its reimbursement rate for Medicare Part B drugs. The
letter was orchestrated by House Budget Committee Chairman Tom Price (R-GA), John Shimkus (R-IL) and Charles Boustany (R-LA)—it
marks the first time any Democrats have publicly asked for the whole demonstration to be withdrawn.
Republican leadership signed the letter, including Ways and Means Committee Chairman Kevin Brady (R-TX), Majority Whip Steve Scalise (R-LA) and Energy and
Commerce Committee Chairman Fred Upton (R-MI). Although the group is mostly Republican, a handful of Democrats gave their support as well.
On April 27, Senate Finance Committee Republicans sent a
letter requesting that CMS withdraw the demo, while committee
Democrats asked for significant changes. House Democrats are working on their own
letter outlining proposed changes.
The demonstration will start by testing a lower reimbursement rate for high-cost drugs administered under Part B—CMS aims to start the project this summer.
AARP released its own
letter in support of the demonstration immediately after the House
letter went public. Some groups supporting AARP
include Aetna, Blue Shield of California and Kaiser Permanente.
House Republicans Question CMS’s Standardized Plans s
House Republicans questioned CMS’s decision to add standardized plans to the federal exchange—which was finalized in the 2017 Notice of Benefit and Payment
Parameters earlier this year—in a letter on April 29.
The new “Simple Choice” plans are standardized health plans with uniform deductibles, out-of-pocket limits and standard copayments that insurers have the
option of offering on the federal marketplace. Consumers can also choose to see only the simple choice plans to compare them. Insurance companies—including
the insurance lobby America’s Health Insurance Plans—argue that the standardized plans will inhibit insurers’ ability to promote more economical plans.
Thirty members of the House Ways and Means and Energy and Commerce committees signed the
letter to CMS Acting Administrator Andy Slavitt, including
Chairmen Reps. Kevin Brady (R-TX) and Fred Upton (R-MI).
The lawmakers asked CMS to describe the process of developing the standardized plan benchmarks and how CMS will certify QHPs that meet those requirements,
how CMS will show those plans on the exchange, whether CMS will consider making QHP certification contingent on meeting standardization requirements and
whether CMS worked with the U.S. Treasury Department to check whether standardized plans would conflict with requirements for high-deductible health plans
and other products. They request a response from CMS no later than May 20.
House Committees Subpoenaed HHS Over Cost-Sharing Program
The House Ways and Means and Energy and Commerce Committees subpoenaed the Department of Health and Human Services and the Office of Management and Budget
for documents relating to the development of the cost-sharing reduction program, the central piece of the House’s lawsuit against the Obama administration.
Congressional Republicans say that the Affordable Care Act did not authorize funding for the program and that the administration has been illegally paying
subsidies to insurance companies without an appropriation.
The administration counters that the program was funded by the health law.
House Republicans Efforts to Pass a Budget Stall
House Republicans will not bring a budget to the floor next week. Republican leaders were trying to convince conservative hard-liners to support a $1.07
trillion budget by promising to move a separate deficit reduction package.
After May 15, the House can begin to move appropriations bills without a new budget in place. It appears the House Appropriations Committee will be ready
or near ready to bring bills to the floor by then. The Appropriations Committee is writing spending measures that adhere to the $1.07 trillion
topline level, to the unhappiness of conservatives who have been successful in blocking a budget but will have a harder time blocking higher spending,
especially if Democrats ultimately provide the needed votes to pass appropriations bills.
Bipartisan legislation introduced by Reps. Billy Long (R-MO) and Doris Matsui (D-CA) would establish a chief information security officer at HHS. The bill
is based on the House Energy and Commerce Committee’s findings of data-security risks at the department, according to the bill’s sponsors. This bill is
intended to address data-security vulnerabilities that were identified following a breach at FDA in 2013.
Ways and Means Health Subcommittee to Hold Hearing on MACRA
Ways and Means Committee Health Subcommittee Chairman Pat Tiberi announced a hearing on the implementation of Medicare’s physician payment law for next
Wednesday, May 11.
Senate, House Legislators Supporting Legislation to Reduce Overprescription of Opioids
Senate and House legislators from both parties are supporting legislation to detach patient views on pain management from Medicare payments to hospitals.
The bills would reverse an Obamacare provision that links the results of patient satisfaction surveys to how much hospitals are paid, which has some
stakeholders worried that hospitals will have a perverse incentive to overprescribe opioids. Hospitals with high scores on the survey get a greater share
of nearly $500 million in Medicare reimbursements as a result.
Sen. Pat Toomey (R-PA) is one of the latest lawmakers to sign onto bipartisan legislation—sponsored by Sen. Ron Johnson (R-WI)—that would reverse the
Obamacare provision. Companion legislation in the House—introduced by Reps. Alex Mooney (R-WV) and Ann Kuster (D-NH)—would also detach the Hospital
Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey’s pain management questions from CMS’s hospital incentive payments.
Johnson’s bill—the Promoting Responsible Opioid Prescribing Act—would remove the results of the Affordable Care Act-mandated pain questions from Medicare
reimbursement in order to alleviate the pressure on physicians to overprescribe opioids.
The American Medical Association, American Hospital Association, American Osteopathic Association and Physicians for Responsible Opioid Prescribing are
among the groups endorsing the legislation.
On April 13, stakeholders asked CMS to remove questions on pain and pain management from the survey.
CMS Scales Back Quality Star Ratings Initiative to Five-State Pilot
On April 29, the Centers for Medicare and Medicaid Services (CMS) announced it will be scaling back the federal exchange market’s quality star rating
initiative from a full-fledged national program to a five-state pilot for the 2017 plan year. The pilot will include plans in Michigan, Ohio, Pennsylvania,
Virginia and Wisconsin; these states were chosen because of their large number of health plans participating.
“As with all quality ratings, they simplify a lot of information and in some cases, consumers would be wise to go beyond what they see here,” Kevin
Counihan and Patrick Conway said in a CMS blog post. “We’ll continue testing consumer use and experience and improve the display of quality rating
information. We also have provided the opportunity for state-based Marketplaces to choose to display quality rating information on their websites in the
2017 Open Enrollment period.”
To see the CMS blog post,
CMS Announces Requirements and Registration for MIPS Mobile Challenge
On May 2, the Centers for Medicare and Medicaid Services (CMS) announced a challenge to educate physicians and others about
the new Merit-Based Incentive Payment System (MIPS) program for Medicare payments. In a Federal Register notice, CMS wrote that physicians have expressed a
desire to have more real-time information and access to assistance in order to successfully report to MIPS’s reporting programs. CMS estimates there are
potentially 1.2 million MIPS-eligible clinicians.
The challenge will have two phases: The first is the creation of an initial mobile platform that will feature innovative ways of transmitting educational
materials or fostering collaboration amongst users to give meaningful education. Participants will codesign with users to understand their needs to
influence their submission. The second is the development and functional integration of any features from phase I and user experience testing. The deadline
for phase I is set at July 15 and the phase II deadline is Sept. 30, with a grand prize awarded on Oct. 15. CMS wants to use a mobile platform such as a
website or application to educate physicians.
CMS Releases Final Rule on Fire Safety Requirements for Certain Health Care Facilities
On May 3, the Centers for Medicare and Medicaid Services (CMS) announced a final rule to
update health care facilities’ fire protection guidelines to improve protections from fire for all Medicare beneficiaries in facilities.
The new guidelines apply to hospitals; long-term care (LTC) facilities; critical access hospitals (CAHs); inpatient hospice facilities; programs for
all-inclusive care for the elderly (PACE); religious nonmedical health care institutions (RNHCI); ambulatory surgical centers (ASCs); and intermediate care
facilities for individuals with intellectual disabilities (ICF-IID).
The rule adopts updated provisions of the National Fire Protection Association’s (NFPA) 2012 edition of the Life Safety Code (LSC) as well as provisions of
the NFPA’s 2012 edition of the Health Care Facilities Code.
The provisions in the final rule cover construction, protection and operational features designed to provide safety for Medicare beneficiaries from fire,
smoke and panic. Some of the main requirements laid out in the rule include:
Health care facilities located in buildings that are taller than 75 feet are required to install automatic sprinkler systems within 12 years after the
rule’s effective date.
Health care facilities are required to have a fire watch or building evacuation if their sprinkler systems are out of service for more than 10 hours.
The provisions offer LTC facilities greater flexibility in what they can place in corridors. Currently, they cannot include benches or other seating
areas because of fire code requirements limiting potential barriers to firefighters. Moving forward, LTC facilities will be able to include more
home-like items such as fixed seating in the corridor for resting and certain decorations in patient rooms (such as pictures and other items of home
Fireplaces will be permitted in smoke compartments without a one-hour firewall rating, which makes a facility more home-like for residents.
Cooking facilities now may have an opening to the hallway corridor. This will permit residents of inpatient facilities such as nursing homes to make
food for themselves or others if they choose to, and, if the patient does decide to make food, facility staff is able to provide supervision of the
For ASCs, all doors to hazardous areas must be self-closing or must close automatically. Additionally, alcohol-based hand rub dispensers now may be
placed in corridors to allow for easier access.
ICF-IIDs have expanded sprinkler requirements to include habitable areas, closets, roofed porches, balconies and decks in new facilities. All attics must
have a sprinkler system if they are used for living purposes, storage or housing of fuel-fired equipment. If they are not used for these purposes, attics
may have heat detection systems instead. Hazardous areas are to be separated from other parts of the building by smoke partitions. Existing ICF-IIDs must
include certain fire alarm features when they choose to update their fire alarm systems.
The LSC is a compilation of fire safety requirements for new and existing buildings and is updated every three years. Currently, CMS is using the 2000
edition of the LSC to survey for health and safety compliance. With this rule, CMS adopted provisions of the 2012 edition of the LSC and provisions of the
2012 edition of the Health Care Facilities Code to bring its requirements more up to date. In addition, the 2012 edition of the NFPA’s Health Care
Facilities Code gives more detailed provisions specific to different types of health care facilities.
Health care providers affected by this rule must comply with all regulations within 60 days of the publication date of the final rule, which was May 4,
GSA to Embed Obama Technology Unit Into Its Permanent Operations
The General Services Administration (GSA) is moving to embed President Barack Obama’s technology unit 18F into its
operations in order to ensure the long-term survival of the unit once Obama leaves office.
The Obama administration created 18F after the HealthCare.gov disaster, with the goal of inserting cutting-edge technology into the federal government. The
unit helps federal agencies build, buy and share efficient and easy-to-use digital services with a model that mimics the growing tech industry rather than
18F will eventually become GSA’s third major branch. Called the Technology Transformation Service, the unit will join GSA’s real estate and federal
acquisition wings. Increasing it to the level of a full GSA service will most likely give it additional staying power.
The Technology Transformation Service will also house the Presidential Innovation Fellows Program, launched in 2012 to attract private-sector technologists
to spend a year in public service. In August, Obama issued an executive order
making the program permanent.
18F currently has more than 180 coders, designers and other technologists on staff to help other federal agencies both build and buy better digital
FDA Releases Final Rule Regulating E-Cigarettes
The FDA will regulate e-cigarettes the same as cigarettes and other tobacco products under a final rule released May 5. The rule was first proposed two
The rule requires that all tobacco products brought to the market after Feb. 15, 2007—which includes all e-cigarettes—must submit applications to FDA and
show they don’t pose any new health risks beyond products that were on the market at that time.
The final tobacco “deeming” rule grandfathers the date in the Tobacco Control Act of 2009, which gave FDA its expanded authority over tobacco. The
e-cigarette lobby had been fighting for the date to be moved up so that the products on the market now would be exempt.
Companies that introduced tobacco products since then will have two years to submit an application to the agency demonstrating they pose no new risks.
Smaller players in the e-cigarette market say this requirement will put them out of business.
Lobbyists for premium cigars had lobbied hard for an exemption from the new policy, but they also were given no quarter in the final rule.
FDA Advisory Panel Recommends Mandating Education for Doctors Prescribing Opioids
The majority of the Food and Drug Administration’s pain and drug safety advisers on May 4 recommended mandating continuing education for doctors who
prescribe opioids. This action rejects the American Medical Association calls for such requirements to be voluntary.
The committee, which held no formal vote on the issue, also urged FDA to update its education materials by incorporating the new CDC guidelines on opioid
prescribing and other material on alternative pain treatments. The committee suggested education be required for doctors seeking DEA registration to
prescribe controlled substances.
The committee also urged the agency to update its risk evaluation and mitigation strategy to include shorter-acting opioids, amid criticism
from some members that opioid manufacturers have too much influence over the strategy.
The FDA can require manufacturers to follow the strategies to ensure the benefits of their drugs outweigh the risks.
Only about 20 percent of doctors who prescribe long-acting opioids have taken continuing education courses since the current risk evaluation and mitigation
strategy was implemented in 2012.
The committee voted 30-0 to urge FDA to make changes to its entire opioid drug safety program. Some of the advisers said there was little evidence the
current safety plan has had any effect, adding that it needed a greater emphasis on the drugs’ risks.
FDA Urged to Ensure Interoperability Standards Align With Cybersecurity Standards
The College of Healthcare Information Management Executives (CHIME) in an April 28
letter to FDA Commissioner Robert Califf calls on FDA to better align
standards for medical device interoperability with cybersecurity control standards for such devices.
CHIME also calls for greater alignment of FDA risk-management principles for cybersecurity and privacy with other federal government standards and
requirements, including Health Insurance Portability and Accountability Act and Health Information Technology for Economic and Clinical Health Act
requirements. CHIME argues that medical devices are currently being released without “basic security requirements” in place such as encryption, access
control mechanisms, and access restriction and password protections. FDA should mandate that medical device manufacturers conduct cybersecurity and privacy
risk assessments annually, CHIME stated.
This letter comes as FDA revises its draft guidance on medical device cybersecurity standards. The administration closed a public comment period on the new
guidance for medical device cybersecurity and is now reviewing comments before issuing a final guide.
3. State Activities
Colorado: Campaign Opposing Single-Payer Ballot Gains Supporters
According to financial filings with the Colorado Secretary of State, the industry-backed campaign to derail Colorado’s single-payer ballot initiative
raised roughly $1 million in the first four months of 2016—Anthem donated half of the funding. Coloradans for Coloradans—a campaign that is leading
opposition to the measure—received contributions between Jan. 1 and April 27. It spent almost $320,000, which left $684,000 at the end of the reporting
Ballot initiative supporters raised $153,700 through the ColoradoCareYES Committee. The committee had roughly $57,500 left after spending over $123,000.
Supporters maintain the proposal would insure people Obamacare has not yet covered, and that state residents would save $6 billion per year compared to the
The single-payer ballot—Amendment 69—would create a universal health care system called ColoradoCare and impose new taxes to raise $25 billion in the first year of
operations. ColoradoCare would have an annual budget of $38 billion. Its revenues would be higher than companies such as American Express, McDonald’s and
Nike, according to an analysis by the Colorado
To see the list of companies that signed on to block Amendment 69,
Hawaii: State Lawmakers Propose Legislation to Let Psychologists Prescribe Drugs
State lawmakers are aiming to make Hawaii one of a handful of states that lets psychologists prescribe medication in hopes of increasing access to mental
health services. The legislation would allow psychologists to prescribe drugs if they meet specific requirements, including 400 hours of training,
supervision of 100 patients and passing an exam. The Hawaii Medical Service Association and the Hawaii Association of Professional Nurses support the bill
but the state’s medical association and the American Psychiatric Association oppose it. Hawaii would join Illinois, Louisiana and New Mexico as states that
give this prescribing authority if Gov. David Ige signs the legislation.
Iowa: Iowa Sues Federal Government Over Failed Co-Op
On May 3, Iowa sued the federal government to get back millions of dollars it argues are owed to CoOportunity Health—the nonprofit insurance startup seeded
with Obamacare loan dollars that collapsed after incurring big losses. CoOportunity Health received $147 million in startup loans under the Affordable Care
Act (ACA). It shut down in December 2014 after losing $163 million that year.
The state’s insurance commissioner argues that the federal government still owes the co-op $130 million in risk corridor funds. The program initially paid
out only 12.6 percent of anticipated payments to insurers because Republicans imposed restrictions.
Overall, the lawsuit seeks to invalidate claims by the Obama administration that the federal government should have “super priority” status in recovering
funds it’s owed by CoOportunity Health.
Louisiana: State Hospitals Question Gov. Edwards’ Medicaid Expansion Savings Projections
Two hospitals are questioning Louisiana Gov. John Bel Edward’s projections about how much money Medicaid expansion will save the state. Officials at the
University Medical Center in New Orleans and Lafayette General Health said that if the savings are less than projected, it could cause a midyear shortfall
and funding cuts to the hospitals. A key component of the savings projection is how much Louisiana hospitals will reduce uncompensated care—Edwards’
administration originally included a 10.5 percent savings but officials later increased that to 25 percent. The Edwards administration increased its
savings projections from $104 million to $184 million in the first year of expansion.
Oregon: Oracle’s Effort to Kill Oregon Lawsuit Succeeds So Far
An effort by Oracle to kill a lawsuit from Oregon over the state’s failed exchange—Cover Oregon—has survived an initial court challenge. In January, Oracle
filed a lawsuit claiming that aides to Gov. Kate Brown agreed to settle the state’s racketeering and fraud case against the company for $25 million in
Oracle products and services. However, Oregon Attorney General Ellen Rosenblum argued that she had sole authority to settle the suit, not the governor.
Marion County Circuit Judge Sean Armstrong rejected Rosenblum’s argument that only the attorney general could settle the case. This ruling means that the
case will continue, which could signal bad news for Gov. Brown.
Pennsylvania: Department of Human Services Awards Contracts to Managed Care Organizations
The Department of Human Services (DHS) will negotiate contracts with eight managed care organizations (MCOs) for Pennsylvania’s Medicaid program. The
contracts will deliver physical health services to Pennsylvanians through HealthChoices, the state’s mandatory Medicaid managed care program since 1997.
The new three-year contracts with the insurers will begin in 2017 and 30 percent of provider payments will be tied to value or outcomes. This, according to
officials, will result in over $6 billion in funds for outcome- or value-based options that would have otherwise been spent on traditional fee-for-service
arrangements. Participating insurers include Aetna, Centene, Geisinger Health Plan, Health Partners, UPMC, UnitedHealth Care and Vista.
South Dakota: Tribe Sues Federal Government Over Emergency Room Closure
A Native American tribe—the Rosebud Sioux Tribe—in South Dakota has sued the federal government over the five-month closure of the only emergency room on
its reservation. The tribe wants to force federal officials to re-open the emergency room at the Indian Health Service (IHS) hospital. IHS shut down the ER
in December after federal inspectors found violations that they said put patients’ lives at risk. The tribe says IHS broke the law because it did not
comply with a piece of the Indian Health Care Improvement Act.
Texas: CMS Grants Texas a 15-Month Medicaid Funding Extension
The Centers for Medicare and Medicaid Services (CMS) granted Texas a preliminary extension of Medicaid uncompensated care and delivery system reform
incentive payment (DSRIP) funding—a decision that preserves billions in funding through December 2017. Texas requested the 15-month extension to give
certainty to hospitals as it negotiates a five-year renewal of its Section 1115 waiver. Texas’s funding was slated to expire at the end of September.
letter, CMS warned that if an alternative agreement is not reached by the end of the extension period, Texas should expect
major cuts. Specifically, the uncompensated care pool will be renewed at a reduced level consistent with CMS’s principles for uncompensated care.
Additionally, the DSRIP will phase down beginning at 25 percent in 2018, then by another 25 percent each year after that.
For the 15-month extension, CMS granted Texas’s request that the uncompensated care and DSRIP programs each receive $3.1 billion for the first year, and a
pro-rated amount for the additional three months. The uncompensated care funding level is much less than what Texas sought in its renewal application last
Last year, Florida’s uncompensated care pool was cut down significantly, and Tennessee currently faces a funding expiration this summer.
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,
CMS Report Shows Medicaid Enrollment Rises to 72.4 Million
On April 29, the Centers for Medicare and Medicaid Services (CMS) released its monthly report on state Medicaid and Children’s Health Insurance Program
(CHIP) data, which measures eligibility and enrollment activity for the entire Medicaid and CHIP programs in all states. According to the report, Medicaid
enrollment rose to 72.4 million in February 2016—that is an all-time high, and about 14 million people more than in October 2013, before the Affordable
Care Act’s (ACA) coverage expansion began to take effect.
Below is a breakdown of how Americans get covered:
Medicaid – 72.4 million
Medicare – 55.2 million
UnitedHealth – 47.7 million
Anthem – 39.6 million
To see the full report, click here.
Health Affairs Studies on Cancer Drug Treatments in the United States
A new Health Affairs study reveals increased competition might not help rein in
the rising costs of cancer drugs in the United States. This study was released alongside another Health Affairs study that shows the United States gets low health value per dollar
spent on cancer drugs. The U.S. consistently spent more than other countries on cancer drugs between 2004 and 2014, but had lower utilization and one of
the smallest improvements in cancer-related outcomes.
The first study, which looked at 24 orally administered cancer drugs approved by FDA between 2000 and 2012, calculated average patient payments for a
30-day supply of the drugs each quarter from 2007 to 2013. Overall, the prices increased 5 percent each year, despite competition from other products.
Prices rose an additional 10 percent with each supplemental indication approved by the FDA and declined 2 percent with FDA’s approval of a competitor drug.
Unlike in other disease areas where a patient may take just one company’s medicine to achieve a cure, cancer patients are usually treated with multiple
drug therapies, progressing from one medicine to the next as their cancer develops resistance to a drug. This lets medicines maintain “monopolies” that are
not effectively diminished by the presence of other similar drugs, the authors say.
Moreover, regulations prevent Medicare and many health plans from categorizing similar cancer drugs as interchangeable, which also limits competitive
pressure because insurers have to cover all the drug options.
The authors say that to combat rising drug prices, policies must be implemented that link reimbursement rates or coverage mandates to standardized metrics
of clinical value. They also recommend assigning different values to drugs based on the specific cancer they treat.
According to the second study, the U.S. accounted for nearly 56 percent of total 2014 cancer drug expenditure among the nine countries examined, but
received just 12.6 percent of the global total net economic return generated that year from oncology care. It got far less return from its spending than
other countries did. For instance, Japan obtained close to seven times as much return in health gain per dollar spent on cancer drugs as the United States.
BMJ Study Finds Medical Errors May Be Third-Leading Cause of Death in U.S.
According to a new BMJ study, medical errors may be the third-leading cause of death in the United
States. The study concludes that roughly 251,000 Americans die per year due to surgical errors, inaccurate diagnostic errors and communication breakdowns.
The researchers—led by Johns Hopkins surgeon Marty Makary—explained that it is difficult to quantify the exact number of medical errors that lead to death
because of how they are reported and recorded. A major limitation of the death certificate—according to the researchers—is that it relies on assigning an
International Classification of Disease (ICD) code to the cause of death. Therefore, causes of death such as human and system errors are not captured. In
open letter, they call on the Centers for Disease Control and
Prevention (CDC) to update how it tracks medical errors on death certificates.
Top causes of death in 2013, per the study:
Heart disease – 611,000
Cancer – 585,000
Medical error – 251,000
COPD – 149,000
IG Report Finds the IRS Is Accurately Verifying Premium Tax Credit Claims
According to an Inspector General
report released May 3, the Internal Revenue Service (IRS) is accurately verifying most claims for
the new Premium Tax Credit (PTC) under the Affordable Care Act (ACA). The IRS accurately determined the allowable PTC on 93 percent of returns during the
audit, which was requested by the House Appropriations Committee.
The report “verified that the IRS processes to identify potentially fraudulent PTC claims are operating as intended” and that the IRS has corrected
previously identified programming errors, according to a statement released with the report by the Treasury Inspector General for Tax Administration
The agency was hindered by information delays, according to the report. Under the law, exchanges have to provide the IRS with monthly data on individuals
enrolling in the exchange, known as the Exchange Periodic Data (EPD). However, the exchanges did not provide that data before the 2015 filing season, and
IRS system problems prevented the agency from being able to use the data received between Jan. 20, 2015, and March 29, 2015, according to the report.
TIGTA recommended the IRS review the 27,827 tax returns for which computer programming errors resulted in an incorrect computation of the allowed credit
during that period.
Association of American Medical Colleges Finds Increased Enrollment
First-year U.S. medical school enrollment has surged since 2002, as administrators introduced new recruiting initiatives and 20 new medical schools have
opened, according to a new report from the Association
of American Medical Colleges (AAMC).
The organization stated that there were 16,488 first-year medical school students enrolled in 2002-2003. AAMC now projects first-year enrollment of 21,434
students in 2017-2018. There’s also been a push for more diversity, including more students from rural areas.
The report praises medical schools for launching a series of initiatives to diversify their student bodies. About eight in 10 schools have committed to
programs that recruit and aid minority groups that are underrepresented in medicine. About half of schools have launched efforts to recruit and support
students from rural communities.
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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