Jun 20, 2016
Washington Healthcare Update
Zika funding flounders…Mental health legislation starts to move forward…CMS proposes changes in conditions of participation to improve quality of care
particularly related to antibiotics…Philadelphia puts a soda tax in place.
House of Representatives
3. State Activities
4. Regulations Open for Comment
House of Representatives
House Energy and Commerce Committee Approves Mental Health Reform Bill
On June 15, the House Energy and Commerce Committee unanimously approved a mental health
reform bill, first introduced as Congress’s response to gun violence following the 2012 Sandy Hook Elementary School shooting. The bill stalled over cost
disagreements and controversial provisions, but has been considerably rewritten.
The Helping Families in Mental Health Crisis Act, introduced by Rep. Tim Murphy (R-PA), is more modest and budget-neutral than when it was introduced. It creates a new leadership position to oversee
mental health and substance abuse programs and reauthorizes existing treatment and prevention programs. It also authorizes new programs, but does not
guarantee funding, including one to train clinicians how to better share information under HIPAA.
Several of the most controversial provisions were taken out, including one to allow Medicaid to pay for more care at mental health facilities. It also was
stripped of reforms to HIPAA because of disagreement from committee members.
Democrats noted that more funding is necessary to truly address the problem. Murphy said he is working with House appropriators to include more money for
mental health in the future.
House Speaker Paul Ryan has vowed to bring the bill to a vote by the full House before the August recess. The Senate has not yet acted on its version of
mental health legislation.
To watch the hearing,
Ways and Means Advances Seven Bills to Improve Access to Health Care, Provide Targeted Relief from Obamacare
On June 15, the House Ways and Means Committee passed seven bills aimed at increasing health care flexibility and choice for individuals.
Committee Chairman Kevin Brady (R-TX) said the measures would “provide Americans more access, better choices, and greater flexibility in health care.”
The first four health bills would expand access to consumer-driven health care options, such as Health Reimbursement Arrangements or Health Savings
Accounts (HSAs). The bills include:
The Small Business Health Care Relief Act (H.R. 5447), sponsored by Reps. Charles Boustany (R-LA)
and Mike Thompson (D-CA), which allows employers to provide employer payment arrangements;
The Veterans TRICARE Choice Act (H.R. 5458),
sponsored by Rep. Chris Stewart (R-UT), which provides more options for those eligible for TRICARE;
The Native Americans Health Savings Improvement Act (H.R. 5452), sponsored by Rep. John Moolenaar (R-MI),
which improves access to Health Savings Accounts for those who receive services at Indian Health Service facilities; and
The Health Care Security Act of 2016 (H.R. 5445), sponsored by Rep. Erik Paulsen (R-MN), which makes several reforms to expand access to HSAs, including increasing the annual contribution limits,
allowing for catch-up contributions to the same account and allowing for more flexibility between incurring expenses and actually setting up an
The other three pieces of legislation repeal specific Affordable Care Act (ACA) provisions that hold down job growth and increase taxes.
The bills include:
The Tribal Employment and Jobs Protection Act (H.R. 3080), sponsored by Rep. Kristi Noem (R-SD), which
eliminates the ACA’s employer mandate for tribally owned businesses;
The Student Worker Exemption Act of 2015 (H.R. 210), sponsored by Rep. Mark Meadows (R-NC), which
provides universities relief from the employer mandate for hours worked by student workers; and
The Halt Tax Increases on the Middle Class and Seniors Act (H.R. 3590), sponsored by Martha McSally (R-AZ), which
repeals a provision of the ACA that makes it harder to deduct high-cost medical expenses.
For more information about the markup, click here.
Senate Bill Targets Brand Drugmakers’ Efforts to Stall Generics
Senate Judiciary Chairman Chuck Grassley (R-IA) is pushing bipartisan legislation designed to stop brand drugmakers from using restrictive safety
designations, known as Risk Evaluation and Mitigation Strategies (REMS), to delay generic drug entry to market.
The Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act— S. 3056
—is sponsored by Sens. Grassley, Patrick Leahy (D-VT), Amy Klobuchar (D-MN) and Mike Lee (R-UT). Lee, who chairs the Senate Judiciary’s Antitrust
on the CREATES Act for June 21.
Under the CREATES Act, a generic manufacturer can take a brand manufacturer to court 31 days after it makes a request to buy samples from the brand
drugmaker or 120 days after the generic manufacturer initiated an attempt to negotiate a shared safety protocol in order to get relief. The generic
manufacturer can also receive a “monetary amount sufficient to deter” the brand manufacturer from engaging in stalling tactics.
The Generic Pharmaceutical Association (GPHA) applauded the bill in a June 14 statement, calling Leahy’s bill a “common sense solution that will prevent
such abuses, and further patient access to safe, effective, and affordable medications.” The American Hospital Association (AHA) also supports the bill.
A similar effort to stop REMS abuse is underway in the House. Last year Reps. Steve Stivers (R-OH) and Peter Welch (D-VT) reintroduced the Fair Access for Safe and Timely (FAST) Generics Act. That bill has been
referred to the House Energy and Commerce health subcommittee, but has seen no action beyond that.
Senate, House Discuss Emergency Zika Funding
Senate and House appropriators met on June 15 to discuss emergency Zika funding. The House is proposing a fully offset $622 million and the Senate has a
$1.1 billion proposal. However, the group adjourned in five minutes with no sign of closing the gap. House Appropriations Chairman Hal Rogers (R-KY) told
reporters afterwards that any deal must be fully offset “no matter what”.
Meanwhile, in a new letter, Texas Governor Greg Abbott formally invited
the Centers for Disease Control and Prevention (CDC) to visit Texas to review the state’s Zika response plan. He also clarified that he’s asking the agency
for $11 million to help fund three key areas:
$9.2 million to strengthen epidemiology and laboratory capacity and improve health information systems;
$1.5 million to support Zika preparedness and response efforts; and
$360,000 to support Zika-related birth outcomes surveillance.
Abbott’s letter followed his conference call with the White House, CDC director Tom Frieden and other governors last week, during which Frieden encouraged
state leaders to get specific about their funding requests.
White House Announces Actions to Reduce Organ Wait List
On June 13, the White House announced new public and
private actions to reduce the organ transplant waiting list. The new actions announced are:
- Facilitating breakthrough research and development with almost $200 million in investments.
- Closing the gap between 95 percent of Americans who support organ donation and the 50 percent who are actually registered organ donors. Facebook, Tinder
and Twitter are helping develop tools and create advocacy campaigns to make it easier for people to register as organ donors.
- Investing in clinical research and innovation that could potentially increase the number of transplants by almost 2,000 each year and improve outcomes
The transplant waiting list currently stands at 120,000 people.
The Department of Defense (DOD) will dedicate the bulk of the research funding—$160 million—toward a public-private investment in manufacturing techniques
that can be used to repair and replace cells and tissues that may one day lead to organ replacement. DOD is also giving $7 million to small businesses
working to advance the science and technology of organ and tissue preservation.
NIH will work with Johns Hopkins University to study organ donations among HIV-positive donors and recipients—this could lead to as many as 1,000 more
transplants every year.
Patients waiting for organ transplants place a substantial financial burden on the health care system—for example, Medicare pays more than $34 billion per
year to care for patients with end-stage kidney failure. The government could save $60,000 a year for each one of these patients who receives a kidney
transplant rather than continue to receive dialysis, according to a 2013 Economic Report of the President.
CMS Says Drugmakers Liable for Past Gap Discounts to EGWPs
A CMS memo to drugmakers states that, due to CMS miscalculations, drugmakers will most likely have to pay some employer-sponsored plans for past discounts
intended to help retired beneficiaries in the coverage gap. However, industry consultants say the retired beneficiaries covered by the plans usually do not
have coverage gaps in their drug coverage.
The issue here is Part D plans called Employee Group Waiver Plans (EGWPs), which are increasingly offered by employers exclusively to their retirees who
are eligible for Medicare. Drug lobbyists say that taxpayer liability could also increase due to the coverage shift.
An agency spokesperson said CMS oversight of the gap discount process does not need to be improved. “CMS has extensive processes in place to monitor the
reporting of coverage gap discount amounts in the invoicing process,” the spokesperson said by email.
The April 11 memo to Part D sponsors suggests CMS incorrectly rejected claims from EGWPs for gap discounts going back to Jan. 1, 2014. More specifically,
CMS rejected Prescription Drug Events, which contain drug cost and payment data on which CMS bases payments to plans. The memo notifies EGWPs that they may
resubmit those Prescription Drug Events to be reviewed again. If CMS finds that Medicare should have paid those gap discounts, drug companies will be
liable for those gap discounts back through 2014.
However, drug companies’ primary complaint is that CMS in recent years began making them pay discounts on drugs for beneficiaries who don’t need the
discounts because their employer insurance doesn’t include coverage gaps.
The Medicare Coverage Gap Discount Program, created by the Affordable Care Act (ACA), makes manufacturers offer discounts on Part D drugs for Medicare
beneficiaries who fall in the coverage gap. Part D plans cover the discounts upfront for beneficiaries and are reimbursed later by drugmakers.
Before EGWPs became popular, many retirees were covered by the Retiree Drug Subsidy, which gives employers a subsidy equal to 28 percent of covered
prescription drug costs employers paid for their retirees. Employers also could deduct their retiree health coverage costs without netting out Retiree Drug
Subsidies for income tax purposes. The law that created the Part D program included the subsidy to encourage employers to continue offering drug coverage
after Part D took effect.
However, given that EGWPs are Part D plans, the government is on the hook for 80 percent of catastrophic costs, which may end up costing taxpayers much
more than the straight subsidy of 28 percent that the Retiree Drug Subsidy pays.
CMS Announces $22 Million in ACA Funding for State Insurance Departments
On June 15, the Centers for Medicare and Medicaid Services (CMS) announced the availability of $22 million in funding to state insurance regulators to use
for issuer compliance with Affordable Care Act (ACA) key consumer protections. This award opportunity enables states to seek funding for activities related
to planning and implementing select federal market reforms and consumer protections including: essential health benefits, preventive services, parity in
mental health and substance use disorder benefits, appeals processes and bringing down the cost of health care coverage (also known as medical loss ratio
As state commissioners of insurance review proposed rates, they will have a number of important factors to consider. These include medical trends, the end
of the temporary reinsurance program, the one-time 2017 moratorium on the Health Insurance Provider Fee, and recent data and policy information that may be
accounted for through supplemental filings by issuers. The report on risk adjustment and reinsurance for 2015, which will be issued on June 30, may also
The Department of Health and Human Services (HHS) will make three announcements in June regarding ongoing efforts to: strengthen the risk pool, work with
issuers and state insurance regulators and step up Marketplace outreach, especially to young adults in advance of Open Enrollment 4. CMS also announced a
of actions to strengthen the risk pool, including curbing abuses of short-term insurance plans, improving the risk adjustment program and beginning the implementation of the special enrollment
confirmation process, among other announcements. And HHS hosted an Issuer Innovation Summit to highlight best practices of issuers in attracting and
retaining consumers and improving their health.
The funding is part of the $250 million in state rate review grants the ACA provided to improve the process for how states review proposed health insurance
rate increases and hold insurance companies accountable for unjustified hikes. The funds are unobligated rate review grant funding from prior years. In
2015, rate review led to an estimated $1.5 billion in savings for consumers. Rate review grant funds not obligated by the end of FY 2014 are available to
HHS to issue grants to states for planning and implementing the insurance market reforms and consumer protections.
Medicare Will Use Private Payor Prices to Set Payment Rates for Clinical Diagnostic Laboratory Tests Starting in 2018
On June 17, the Centers for Medicare and Medicaid Services (CMS) released a final rule implementing Section 216(a) of the Protecting Access to Medicare Act
of 2014 (PAMA), requiring laboratories performing clinical diagnostic laboratory tests to report the amounts paid by private insurers for laboratory tests.
Medicare will use these private insurer rates to calculate Medicare payment rates for laboratory tests paid under the Clinical Laboratory Fee Schedule
(CLFS) beginning Jan. 1, 2018. The final rule includes provisions to ease administrative burdens for physician office laboratories and smaller independent
In response to public comments, CMS moved implementation of the new payment system from Jan. 1, 2017, to Jan. 1, 2018, to allow laboratories sufficient
time to develop the information systems necessary to collect, review and verify data before reporting applicable information to CMS. This will also allow
time for CMS to perform independent validation and testing of the CMS system through which laboratories will report applicable information, and allow
laboratories to perform end-to-end testing of their systems with CMS’s system.
The final rule will generally require reporting entities to report private payor rates and test volumes for laboratory tests if an applicable laboratory
receives at least $12,500 in Medicare revenues from laboratory services paid under the CLFS and more than 50 percent of its Medicare revenues from
laboratory and/or physician services. This means that approximately 95 percent of all physician office laboratories and about half of independent
laboratories will not fall under these requirements, easing administrative burdens for physician office labs and smaller independent labs while still
capturing most of the CLFS spending on physician office and independent laboratories.
For the system’s first year, laboratories will collect private payor data from Jan. 1, 2016, through June 30, 2016, and report it to CMS between Jan. 1,
2017, and March 31, 2017. CMS will calculate and post the new Medicare rates (equal to the weighted median of private payor rates for each test) by early
November 2017. These rates will take effect on Jan. 1, 2018.
The final rule will be published on June 23 and can be found here.
For a link to a fact sheet on the final rule, click here.
HHS Releases Report on Minnesota Senior Health Options Program
On June 16, the Department of Health and Human Services (HHS) published a report about the Minnesota Senior Health Options (MSHO) program. CMS and the
State of Minnesota started MSHO as a pilot in 1997 to better serve dually eligible beneficiaries age 65 and older. MSHO plans coordinate all the Medicare
and Medicaid benefits their members receive, including Medicare coverage of acute medical care and Medicaid coverage of long-term services and supports.
The new report gives us insight into MSHO’s effectiveness. The HHS Assistant Secretary for Planning and Evaluation contracted with RTI International to
evaluate MSHO’s outcomes from 2010 to 2012. RTI compared the experiences of similar beneficiaries inside and outside of MSHO and found that MSHO enrollees
- 48 percent less likely to have a hospital stay, and those who were hospitalized had 26 percent fewer stays;
- 6 percent less likely to have an outpatient emergency department visit, and those who did visit an emergency department had 38 percent fewer visits; and
- 13 percent more likely to receive home and community-based long term care services.
In 2013, CMS made investments to further strengthen the existing MSHO program through increased alignment of Medicare and Medicaid program administration,
federal-state data sharing and beneficiary materials. CMS is also partnering with 12 other states to implement and evaluate new models of integrated care
similar to MSHO through the
Financial Alignment Initiative. From 2011 to 2015, the number of dually eligible beneficiaries served in integrated care programs across the country rose from approximately 162,000 to
more than 650,000.
To see the report, click here.
3. State Activities
California: Gov. Brown Signs Undocumented Immigrant Coverage Bill
On June 10, California Gov. Jerry Brown signed legislation that could make California the first state to allow undocumented immigrants to purchase
Obamacare coverage. The bill authorizes California to negotiate a waiver with the federal government to expand coverage to a population that was
intentionally excluded in Obamacare. If approved, the waiver would allow an undocumented immigrant to purchase exchange plans but not to receive the law’s
insurance subsidies. Advocates hope the state will submit the request this year, avoiding any uncertainty coming with a new president in 2017.
However, Obama administration officials have not stated their position on the proposal. Presumptive Democratic presidential nominee Hillary Clinton said
she supports it. But the idea could largely end up being null, because many individuals would struggle to afford Obamacare plans without the help of
subsidies. Anti-immigration groups have also taken notice and could reignite a fierce health reform controversy in the Obama administration’s last months.
California: Insurance Commissioner Calls for Rejection of Anthem-Cigna Megamerger
On June 16, the California Insurance Department recommended that the Justice Department block the proposed Anthem-Cigna megamerger. Insurance Commissioner
Dave Jones—who made the recommendation—argued the $52 billion deal would be anti-competitive because there is substantial consolidation already across
insurance markets in the state.
Consumer advocates have exerted pressure on California regulators to heavily scrutinize proposed insurance deals, including Aetna’s plan to acquire Humana
for $37 billion. Jones said his department would also be issuing recommendations on that proposed deal in the near future.
Connecticut: Insurance Department Licenses New Captive Insurer
On June 9, Connecticut Insurance Commissioner Katharine L. Wade announced that the state Insurance Department has licensed a non-profit captive insurance
cooperative comprising several Connecticut municipalities and school districts, which regulators say will give communities greater control of health
insurance costs. According to the National Association of Insurance Commissioners, captive insurers are a type of self-insured plan where the insurer is
fully owned by the insured. The new cooperative—CT Prime—will be managed by the Capitol Region Education Council (CREC) and is the 11th captive insurance
company licensed by the department during Democratic Gov. Dannel Malloy’s tenure.
Delaware: Delaware to Treat All Medicaid Patients With Hepatitis C
The state of Delaware is going to phase in a new policy to treat all hepatitis C patients in its Medicaid program. Phase-in will begin as early as next
month and all hepatitis C-infected Medicaid patients will be automatically eligible for treatment starting in 2018. Delaware currently requires evidence of
significant liver damage or cirrhosis before approving the treatments, but by July 1 the severe restrictions will be dropped along with a requirement that
patients not be abusing drugs. The state had been threatened with a class action lawsuit from Harvard Law School’s Center for Health Law & Policy
CMS also had issued guidance in November telling states that it suspects they are unreasonably restricting coverage of hepatitis C drugs and separately
asked the manufacturers of those drugs how to make their products more affordable.
Louisiana: 197,000 Enroll in Louisiana’s Medicaid Expansion
According to the Louisiana Department of Health, more than 197,000 people signed up for coverage through Louisiana’s Medicaid expansion program in the
first week that enrollment was open. Nearly 187,000 were automatically signed up because they already receive limited health services from the state. The
remaining individuals signed up on their own or were deemed eligible because they were food stamp recipients. Expansion benefits start July 1.
Michigan: Gov. Snyder Drops Mental Health Services Budget Provision
Michigan Gov. Rick Snyder recently tossed out a provision of his 2017 budget that mental health advocates argued would have privatized the state’s mental
health services. A new version of the
budget section addressing mental health calls on the Michigan health department to convene a workgroup to make recommendations regarding a finance model
and policies to improve the coordination of state behavioral and physical health services.
Missouri: Gov. Nixon Signs Law Increasing Asset Limit to Qualify for Medicaid
Missouri Gov. Jay Nixon signed a measure into law that allows Medicaid beneficiaries to keep more in savings and still qualify for their benefits. The new
law increases the asset limit to qualify for Medicaid coverage for the aged, blind and disabled. Advocates had argued that the current asset limit prevents
people from preparing for emergencies—Missouri’s current asset limit is $1,000 for individuals and $2,000 for married couples living together. The new
law—taking effect next July—will increase the limit to $2,000 for individuals and $4,000 for married couples. It would also increase every year until 2020,
and after that grow with cost-of-living adjustments.
Pennsylvania: Philadelphia City Council Approves Soda Tax
On June 16, the Philadelphia city council approved a soda tax by a 13-4 vote. This final vote makes Philadelphia the largest U.S. city to impose a sin tax
on soft drinks—a move that health advocates hope will motivate other cities to follow suit. The beverage industry argues that Philadelphia’s tax is the
result of local politics and unlikely to start a trend.
4. Regulations Open for Comment
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 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 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 Proposes Rule to Improve Quality of Care and Health Equity in Hospitals
On June 13, the Centers for Medicare and Medicaid Services (CMS) proposed new standards to
improve the quality of care and advance health equity in the nation’s hospitals. The proposal applies to the 6,228 hospitals and critical access hospitals
that participate in Medicare or Medicaid.
The rule proposes to reduce overuse of antibiotics and implement comprehensive requirements for infection prevention. CMS estimates that these new
requirements could save hospitals up to $284 million annually, while also improving care and potentially saving lives. The proposed rule builds on the
Department of Health and Human Services (HHS) quality initiatives, including the
National Quality Strategy, the Center for Disease Control’s
to combat antibiotic-resistance bacteria and the
Partnership for Patients.
The proposed rule also advances protections for traditionally underserved and excluded populations based on race, color, religion, national origin, sex
(including gender identity), age, disability or sexual orientation.
The proposed rule also requires critical access hospitals to implement and maintain a Quality Assessment and Performance Improvement (QAPI) program. This
program monitors and improves a hospital’s care by collecting data to identify opportunities for improvement and develop corrective plans. Other hospitals
participating in Medicare or Medicaid already maintain these types of programs.
CMS will accept comments until Aug. 15, 2016. Comments can be submitted here.
To see a fact sheet on the proposed rule, click here.
MedPAC Releases June Report to Congress
On June 15, the Medicare Payment Advisory Commission (MedPAC) recommended several changes to Medicare’s drug benefits, mostly aimed at the growing number
of patients who are exceeding their out-of-pocket thresholds by using expensive medicines.
In its June report to
Congress, MedPAC recommends lowering the government’s Part D reinsurance subsidy from 80 percent to 20 percent. Reinsurance spending in the program has
grown 20 percent annually in recent years.
MedPAC recommends several changes aimed at out-of-pocket spending. It says Congress should eliminate cost-sharing for beneficiaries who have exceeded their
cap—$4,950 in 2017—but slow how consumers reach the cap by no longer counting some brand drug discounts toward it. Such drugs currently account for 5
percent of costs above the cap.
MedPAC also proposes cutting generic drug copays for Medicare’s low-income subsidy population to encourage broader use of inexpensive drugs. The policy
proposals were approved by the committee in April but formally made to Congress in this report.
On June 14, Avalere released
projecting that the recommended MedPAC cost-sharing changes could increase costs for many beneficiaries—but the changes could mean lower costs for the
low-income population and those with very high prescription drug costs. Avalere previously estimated beneficiaries would pay $4.1 billion more in Part D
from 2017 to 2020 if the changes took effect.
The MedPAC report also examines CMS’s proposed Part B demonstration. MedPAC suggests that Medicare overpays for Part B drugs and could decrease the add-on
payments to doctors. CMS has proposed doing that for high-cost medicines in the experiment.
To see a related press release,
Click here for a
Families USA Recommends Standardized Health Insurance Plans
According to a new study from Families USA, health insurers should offer new standardized “silver plans” that cover a broader range of medical care before
people have to pay their deductibles. Offering these types of plans would improve access to outpatient care without increasing premiums, the study argues.
HHS is encouraging insurers to sell standardized plans on Obamacare exchanges beginning in 2017, but they are not required to. These plans would cover more
primary care, specialty care, urgent care, prescription drugs and mental health providers without coming out of a patient’s deductible.
Currently, most silver plans cover primary care visits and generic drugs before patients must start to pay the deductible, but less so brand-name drugs or
In 2016, the average deductible for a silver plan cost $3,000 for an individual and up to $1,000 for an individual who received cost-sharing subsidies.
Families USA argues that health insurers can make these coverage changes and only increase premiums by an average of 5 percent. The group also argues that
the federal government, in future years, should require insurers to offer federal standardized plans.
Health Affairs Study Contests End-of-Life Spending Assumptions
According to a new Health Affairs study, the assumption that health care spending skyrockets at the end of life might be wrongly influencing strategies to
rein in costs. The findings were drawn from a sample of almost 1,000 Medicare patients who died in 2012, and could lead to different ways to influence
end-of-life care and control costs, according to study authors.
Efforts aimed at reducing costly inpatient and intensive services just in the last few months of life may have less effect on overall costs than might have
been anticipated based on previous assumptions. Instead, strategies that focus on older adults with multiple chronic conditions earlier in life, rather
than those with poor immediate prognosis, could have the largest impact on national health spending.
The study also found that the number of conditions patients had was the most relevant to end-of-life spending.
The study divided the patients into four spending trajectories: high persistent, moderate persistent, progressive and late rise spending.
The study separated the patients into four spending categories: 48.7 percent of patients had high persistent spending, meaning they had high initial
spending at the beginning of their last year of life that continued throughout that year. These patients cost considerably more than the other three
groups—with a median spend of nearly $60,000 during the last year of life—and were more likely to have multiple conditions. Nearly two-thirds had four or
Of the remaining patients in the study, 29 percent had moderate persistent spending. Their spending started out moderate and then dipped before increasing
in the last four months of life.
The late rise spenders made up 12.1 percent, and their spending was low until the last four months before death when it increased exponentially. They were
the least expensive patients, with a median of about $11,000 during the last year of life. About 10 percent had progressive spending—their spending started
low but increased steeply throughout the year.
To see the full study, click here.
Avalere Projects MedPAC Proposals Could Increase Part D Cost Sharing
On June 14, Avalere released
projecting that the
recommended MedPAC cost-sharing changes
could increase costs for many beneficiaries—but the changes could mean lower costs for the low-income population and those with very high prescription drug
costs. Avalere previously estimated beneficiaries would pay $4.1 billion more in Part D from 2017 to 2020 if the changes took effect.
In April, MedPAC voted in favor of a package of recommendations that commissioners estimated would save $10 billion over five years. The proposals in the
June report—which commissioners said in April should be viewed as a comprehensive package—include asking Congress to change Part D to:
- Transition Medicare’s individual reinsurance subsidy from 80 percent to 20 percent while maintaining Medicare’s overall 74.5 percent subsidy of basic
- Exclude manufacturers’ discounts in the coverage gap from enrollees’ true out-of-pocket spending.
- Eliminate enrollee cost sharing above the out-of-pocket threshold.
MedPAC also recommends that Congress change Part D’s low-income subsidy to:
- Modify copayments for Medicare beneficiaries with incomes at or below 135 percent of poverty to encourage the use of generic drugs, preferred multisource
drugs or biosimilars when available in selected therapeutic classes.
- Direct the Secretary to reduce or eliminate cost sharing for generic drugs, preferred multisource drugs and biosimilars.
- Direct the Secretary to determine appropriate therapeutic classifications for the purposes of implementing this policy and to review the therapeutic
classes at least every three years.
The commission also recommends HHS:
- Remove antidepressants and immunosuppressants for transplant rejection from the classes of clinical concern.
- Streamline the process for formulary changes.
- Require prescribers to provide standardized supporting justifications with more clinical rigor when applying for exceptions.
- Permit plan sponsors to use selected tools to manage specialty drug benefits while maintaining appropriate access to needed medications.
“According to the experts at Avalere, of the more than 42 million Part D enrollees in 2016, nearly 12 million are low-income subsidy (LIS) beneficiaries
who could experience lower costs for generic drugs or biosimilars,” Avalere says in its analysis.
Avalere also notes that implementing an out-of-pocket maximum, as recommend by MedPAC, is not out of the ordinary—most other forms of insurance have such
caps on enrollee spending as a result of the Affordable Care Act. That proposal combined with changes to the true-out-of-pocket-cap that keep beneficiaries
from reaching catastrophic coverage under Part D means that beneficiaries might actually pay more, Avalere says.
GAO Says Comprehensive Strategic Planning Needed to Enhance FDA Coordination Between Medical Product Centers
On May 16, the Government Accountability Office (GAO) released a report finding that FDA’s strategic integrated management plan (SIMP) for its three
centers that oversee medical products does not incorporate leading practices for strategic planning or document a comprehensive strategy for the centers.
In 2012, Congress required FDA to develop a SIMP for the three centers overseeing biologics, drugs and medical devices. FDA officials say that
circumstances during SIMP’s development—including leadership gaps—limited FDA’s ability to structure the plan into “an effective strategic planning
GAO recommended that the Secretary of Health and Human Services direct FDA to engage in a strategic planning process to identify challenges that cut across
the medical product centers, and document how it will achieve goals and objectives in these areas.
To see the full report, click here.
GAO: FDA Needs More Strategic Planning for Scientific Initiatives
On May 16, the Government Accountability Office (GAO) found that FDA lacks measurable goals to assess its progress in advancing regulatory science—the
science supporting its effort to assess the products it regulates.
FDA has faced challenges regulating medical products, partly due to fast changes in science and technology. In 2010, FDA established a regulatory science
initiative that identified eight priority areas for medical products where new research was needed to advance its mission. Legislation enacted in 2012
required FDA to establish a plan for measuring its progress on its regulatory science efforts.
GAO examined FDA’s progress on its regulatory science efforts related to medical products. GAO reviewed FDA data on obligations targeted at regulatory
science projects for fiscal years 2010 through 2014 and reviewed the achievements FDA reported from a sample of 17 projects, chosen to ensure nine FDA
centers and offices and priority areas are represented.
To improve strategic planning for regulatory science efforts, GAO recommends: FDA should develop and document measurable goals, including targets and time
frames, and should systematically track funding across its regulatory science priority areas.
To see the full report, click here.
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Charlie Iovino, Vice
Caroline Perrin, Research Assistant
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