CONSISTENTLY DELIVERS

Jun 27, 2016

Washington Healthcare Update

This Week: Sit-in for 25 hours in the House forces early recess…Sit-in delays vote on DME cuts…Medicare Trust Fund will run out of money in 2028, two years faster than predicted in last year’s report…House passes Zika funding package, but it is unlikely to pass the Senate.

1. Courts

2. Congress

House of Representatives

Senate

3. Administration

4. State Activities

5. Regulations Open for Comment

6. Reports


1. Courts

Supreme Court Asks Solicitor General to Weigh in on Sandoz v. Amgen

On June 20, the Supreme Court asked the solicitor general to weigh in on Sandoz v. Amgen before it decides whether to take up the case. The case could affect how soon less-expensive versions of some biologic medicines reach patients. Sandoz’s version of Amgen’s Neupogen, which treats a side effect of cancer chemotherapy, was the first copycat biologic approved under a law that is part of the Affordable Care Act (ACA). The Federal Circuit’s decision in the case gave a win to both the biosimilar industry and the branded companies.

Sandoz petitioned the Supreme Court for a writ of certiorari regarding the Federal Circuit’s ruling that biosimilar companies must wait until they receive FDA approval before sending the company that makes the original biologic a 180-day notice of intent to market—this ruling gives brand companies an extra six months of market exclusivity.

In response, Amgen opposed Sandoz’s petition, arguing that the BPCIA explicitly allows notice of commercial marketing only after FDA approval. Amgen also filed a conditional cross petition arguing the court should reject the Federal Circuit’s ruling that biosimilar makers do not have to engage in a patent-sharing process with the branded biologic maker they want to copy.

Supreme Court Rules in Favor of USPTO in Patent Review Case

In Cuozzo Speed Technologies v. Lee, the Supreme Court recently ruled that decisions from the U.S. Patent and Trademark Office’s (USPTO) patent appeals board are made using the right standard and cannot be reviewed by courts.

The case raised the issue of whether the appeals board is correct to use the PTO’s own agency standard when determining whether an invention can be patented. Critics argued the board should adopt a lower standard used by federal courts, and they asked the Supreme Court to decide whether appeals board decisions can be reviewed by federal courts. The life sciences sector has argued that legitimate patents are too often invalidated by the board, which was established by the 2011 America Invents Act.

The Supreme Court sided with the USPTO on both questions. Justice Breyer’s majority opinion approved of the USPTO’s approach of applying the broadest reasonable interpretation (BRI) standard to interpret patent claims—finding it a “reasonable exercise of the rulemaking authority that Congress delegated to the Patent Office.”

The Court was unanimous as to the BRI standard—however, Justices Samuel Alito and Sonia Sotomayor dissented from the no-appeal ruling, arguing that the appeals board’s operation should not be exempt from judicial review.

2. Congress

House of Representatives

GOP Releases Alternative to Affordable Care Act

Republicans have released an alternative to the Affordable Care Act (ACA) in a June 22 white paper. The plan would make changes to Medicare and Medicaid and would allow association health plans (AHPs), buying across state lines and high-risk pools, among other changes. Many of the ideas have been brought up in the past in various contexts.

For more details on the GOP health reform plan, click here.

Small Business Healthcare Relief Act Passes House

A bipartisan bill—the Small Business Healthcare Relief Act (H.R. 5477)—passed the House of Representatives by voice vote on June 21. The legislation would restore small employers’ abilities to help their employees purchase health coverage using Health Reimbursement Arrangements (HRAs) so they can choose a quality, affordable health insurance plan that fits their individual budget and health care needs.

Reps. Charles Boustany (R-LA) and Mike Thompson (D-CA)’s version of the bill was approved by the House Ways and Means Committee on June 13. Sens. Chuck Grassley (R-IA) and Heidi Heitkamp (D-ND) introduced the Senate version of the bill (S. 3060), making it identical to the House text to ease chances of Senate passage.

HRAs were discouraged because they did not meet the Affordable Care Act’s (ACAs) requirements for employer-sponsored health plans. Employers who disobey guidance are charged $100 per day, per employee—totaling up to $36,500 per year effective July 2015.

Under the new legislation, small businesses and local governments with fewer than 50 workers would be able to put pre-tax dollars toward a defined contribution for an employee’s health costs. Workers could use HRA money to buy individual market plans and pay for certain out-of-pocket costs if they have insurance that meets ACA standards. Employers would not be fined for offering HRAs.

Democrats supporting the bill highlighted it as one that would build on existing health care reform without undermining the ACA.

House Approves Conference Report to Fight the Zika Virus

On June 23, the House approved a Zika funding package, the product of a House-Senate conference report that was crafted hours earlier. The House vote was rushed—lawmakers began voting at 2:55 a.m. and there was no debate on the measure. Democrats stressed they are not totally onboard.

The $1.1 billion package includes:

  • $476 million to the Centers for Disease Control and Prevention (CDC) for mosquito control;
  • $230 million to the National Institutes of Health (NIH) for vaccines;
  • $165 million to the State Department and USAID to respond to outbreaks overseas; and
  • $86 million for emergency response research through the Biomedical Advanced Research and Development Authority.

The package is partially funded by about $750 million from unallocated Ebola and ACA funds, as well as $100 million from HHS’s administrative fund. It will now go to a Senate vote, where Minority Leader Harry Reid (D-NV) has already declared the proposal dead.

Democrats are unhappy with the funding level. It is almost one billion dollars short of what the administration’s public health experts have said is necessary to successfully combat the Zika virus. In addition, the White House does not like the fact that it takes funds from other priorities.

Adding to their differences, Democrats are also angered by the reproductive language in the bill.

“A narrowly partisan proposal that cuts off women’s access to birth control, shortchanges veterans and rescinds Obamacare funds to cover the cost is not a serious response to the threat from the Zika virus,” Reid said in a statement. “In short, Republicans are trying to turn an attempt to protect women’s health into an attack on women’s health.”

This means that issue will not be resolved for some time. The House is on recess until July 5, which leaves the House and Senate few days to work before they are both scheduled to leave until Labor Day.

Senate

Senate Majority Leader McConnell Appoints Conferees on CARA Act

Senate Majority Leader Mitch McConnell (R-KY) appointed Republican Sens. Chuck Grassley (IA), Lamar Alexander (TN), Orrin Hatch (UT) and Pete Sessions (TX) and Democratic Sens. Patrick Leahy (VT), Patty Murray (WA) and Ron Wyden (OR) as conferees on S. 524—the Comprehensive Addiction and Recovery Act (CARA). The motion to start conference passed on the Senate floor June 16 by a vote of 95-1. Two days prior, Democratic Sen. Jeanne Shaheen (NH) said the delay in commencing a House-Senate conference to merge the chambers’ respective opioid bills was due to disagreements over how many Senate conferees—both Democrats and Republicans—should be appointed.

In a motion on the floor June 16, Shaheen called for funding for prevention, treatment and recovery for state and local efforts—the motion was agreed to 66-29.

Sen. Sheldon Whitehouse (D-RI) offered a motion to instruct Senate conferees to press for key Senate provisions in their negotiations. The provisions include: rejecting proposals that would replace the individual prevention, treatment, law enforcement and recovery programs authorized in CARA; authorizing grants to states to strengthen the use of and make improvements to prescription drug monitoring programs; and addressing the unique needs of rural communities. The motion was adopted 72-24.

The House appointed its conferees in May. House Speaker Paul Ryan (R-WI) chose Energy and Commerce Committee Chair Fred Upton (R-MI) to spearhead efforts by the House to merge its opioid legislative package with that passed by the Senate. He appointed 21 House Republicans in total. Democratic Leader Nancy Pelosi (CA) named 14 Democrats to serve on the conference committee.

Senate Democrats Oppose Insurance Megamergers

A group of Senate Democrats is calling on the Justice Department to block the Anthem-Cigna and Aetna-Humana mergers. Their letter cites concerns about jobs, higher premiums and health care costs for consumers and businesses. “Highly concentrated markets rarely benefit consumers, and we believe that merging four of the five largest national health insurers will likely increase premium prices and health care costs to consumers and businesses, diminish competition and choice, and decrease access to quality health care,” according to the letter. Democrats who signed the letter include: Richard Blumenthal (CT), Al Franken (MN), Elizabeth Warren (MA), Sherrod Brown (OH), Edward Markey (MA), Dianne Feinstein (CA) and Mazie Hirono (HI).

To see the full letter, click here.

Senate Passes Patient Access to Durable Medical Equipment Act

On June 21, the Senate passed the Patient Access to Durable Medical Equipment (PADME) Act (S. 2736), which delays durable medical equipment (DME) supplier payment cuts in rural and non-competitive bid areas for one year. The cuts are set to be implemented July 1. CMS was required to adjust Medicare fee schedule amounts for non-competitive bid areas by Jan. 1. The agency decided to phase in changes to the DME fee schedule rates during the first half of 2016 so that the rates in all areas would be based on a 50/50 blend of current rates and adjusted rates. Stakeholders have been pushing lawmakers to pass legislation to put off the cuts scheduled to go into effect July 1.

The Senate bill would delay the second payment cut for DME in non-bid areas for 12 months; lock in the bid ceiling for future rounds of bidding at the bid rates in effect on July 1; require CMS to solicit stakeholder input and take into account travel costs, volume, clearing price and information on the number of suppliers in a bid area as part of rate setting in January 2019 and after; and push up the date when Medicaid reimbursement will match Medicare competitive bid rates from January 2019 to October 2018.

The House intended to vote on a bill—H.R. 5210—to delay the DME cuts in non-competitive bid areas on June 22, but Democrats conducted a sit-in on the House floor before the vote could occur. Without passage of the bill in the House, CMS will go forward with the next phase of cuts July 1. It is unclear when the House will take action now.

3. Administration

FDA Approves Zika Vaccine Clinical Trial

On June 20, Inovio Pharmaceuticals and GeneOne Life Science announced that they have received FDA approval to initiate a phase I human trial of a Zika vaccine. The phase I trial will be used to determine the safety and tolerability of the vaccine, its proper dosing and whether it can produce a good immune response. If it is successful, later trials will be designed to show whether the vaccine can protect patients against the virus.

The trial will include 40 patients who will be injected in the next few weeks—interim results should come out later this year. The vaccine is being developed with academic collaborators in the U.S. and Canada.

FDA Holds Public Meeting on Over-the-Counter Monograph User Fees

FDA recently held a public meeting to gather stakeholder input on the potential development of a user fee program for over-the-counter (OTC) monograph drugs. Stakeholders across the board agreed in theory on the need for a user fee program to provide supplemental funding for congressional non user fee appropriations. Stakeholder opinions differed, however, on how user fees should be assessed. They also raised concerns that a Prescription Drug User Fee Act (PDUFA)-type model could lead to industry consolidation.

FDA has a staff of only 18 full-time employees regulating a market of more than 100,000 products. In addition, Congress appropriated only a little over $8 million for OTC products in fiscal year 2016 and current staff levels make it difficult to address public safety issues, finalize monographs that have been outstanding for decades and keep up with scientific advancements and innovation in the field.

Janet Woodcock, head of FDA’s drug center, said user fees have been used effectively in other arenas the center regulates, such as the Prescription Drug User Fee Act (PDUFA) and the Generic Drug User Fee Act (GDUFA). While they will need to be structured differently for OTC drugmakers, user fees for OTC products could be a “triple-win” for industry, the agency and consumers, she said.

The Consumer Healthcare Products Association (CHPA), a trade lobby for the OTC industry, said it is open to a user fee program but said it must be designed in a way that does not discourage innovation.

CHPA points out that programs like PDUFA and GDUFA were created to address specific problems like new drug application (NDA) and abbreviated new drug application (ANDA) backlogs, and a major component of these programs is an application fee. For OTC products however, most are marketed under the monograph system—which FDA points out is not product specific but ingredient specific—that does not require premarket approval.

Facility fees and product listing fees were proposed as ways to adapt the user fee model to OTC products, but many stakeholders worried that a facility fee would lead companies to consolidate their manufacturing facilities, which in turn could lead to shortages.

The National Consumers League (NCL) stressed that user fees should also be structured on a tiered or sliding scale so that small firms are not adversely affected. NCL also said performance goals could include the agency’s committing to finalizing a certain number of outstanding monographs a year and producing an annual report on how the user fees have improved the OTC program.

But some individual companies making OTC products said during the public comment period of the meeting that user fees should not be used to finalize outstanding monographs. This, they said, should be done at taxpayer expense through adequate appropriations from Congress.

NIH Advisory Panel Approves First CRISPR Human Trial

On June 21, an NIH advisory committee approved a proposal to allow the first clinical trial using the CRISPR gene editing tool. The committee’s approval is a crucial step forward for the gene editing field, which hopes to capitalize on CRISPR’s precision, speed and low costs to address a broad array of diseases. However, the study still needs FDA approval of an investigational new drug application to proceed.

The trial will be run by the University of Pennsylvania with funding from Facebook cofounder Sean Parker. It is small and designed to test whether CRISPR is safe for use in people. It proposes to edit two genes in patients’ own blood cells to help fight three types of cancer: myeloma, melanoma and sarcoma.

The committee made several suggestions: that the trial better account for certain financial conflicts of interest and better protect and serve trial participants; that UPenn, which has financial interest in the product, might need to be excluded from being a study site; that patients should be told this is an early-phase study and is very unlikely to benefit them personally; and that the study should provide better coverage for patients’ care as well as housing to ensure financial burden is not a limiting factor for participation.

With the exception of one abstention, every member of the advisory committee approved the study.

NIH Finalizes Single IRB Policy for Multi-Site Research

On June 21, NIH issued final policy on the use of a single institutional review board (IRB) for multi-site research—the policy seeks to eliminate duplicative IRB review in order to reduce “unnecessary administrative burdens and systemic inefficiencies without diminishing human subjects protections,” according to the policy document. This move comes as the House-passed 21st Century Cures legislation urges the use of centralized IRBs for device clinical trials. The policy takes effect May 25, 2017, and will not affect ongoing, noncompeting awards already in place until the grantee submits a competing renewal application.

In order to address stakeholders’ concerns, NIH plans to release guidance before the policy goes into effect, addressing, among other topics:

  • How costs associated with a single IRB (sIRB) may be charged direct versus indirect costs;
  • Considerations in selecting a single IRB;
  • The content of the sIRB plan that must be submitted with applications and proposals;
  • The process for submitting a request for an exception, and process for how NIH will review those requests;
  • The roles and responsibilities of the sIRB and participating sites;
  • A model authorization agreement that lays out the roles and responsibilities of each signatory;
  • Models for gathering and evaluating information from all the reliant sites about community attitudes and the acceptability of the proposed research; and
  • A model communication plan that identifies when and which documents are to be completed and shared with those involved so each can fulfill its responsibilities.

NIH anticipates that there will be challenges associated with implementation, but says they should be short lived.

Medicare Fraud Strike Force Charges Individuals for $900 Million in False Billing

The Medicare Fraud Strike Force has charged 301 individuals, including 61 doctors, nurses and other licensed medical professionals, for their participation in health care fraud schemes that involved over $900 million in false billings. The operation is the largest—in terms of dollars and geographic spread—conducted by the joint HHS-Justice strike force.

The charges include unnecessary drugs prescribing, money laundering, false claims submissions and bribery. Criminals are increasingly targeting Medicare Part D, Lynch said, with growing use of stolen identities for fraudulent prescriptions. The Justice Department and HHS have also seen an increase in the number of cases involving compounded medication; the high costs of these compounded drugs make them more attractive for criminals, Lynch said.

From 2013 through 2015, Justice and HHS investigators recovered $6.10 for every dollar they spent on fighting health care fraud, Burwell said. That does not account for fraud that was deterred by prosecutions. She credited the ACA with new tools and resources that have helped achieve this recovery.

Medicare Trust Fund to Run Out of Money in 2028

Medicare’s hospital trust fund is expected to run out of money in 2028, according to the new trustees’ report released June 22. In last year’s report, trustees predicted Medicare would no longer be able to fully pay for beneficiaries’ hospital bills in 2030.

The report also showed that Medicare’s total costs will grow from roughly 3.6 percent of GDP in 2015 to 5.6 percent in 2040. Recently, increases in Medicare spending have come from an influx of new people signing up for the federal program as well as from rising drug costs, the trustees said. However, Medicare has not grown fast enough to trigger Obamacare’s controversial Independent Payment Advisory Board (IPAB), which would be empowered to make cuts to the program. As the trustees predicted last year, they don’t expect the panel will be needed until 2017.

Key findings by the trustees include:

Medicare Solvency. The report says Medicare will be insolvent two years earlier than predicted in the last two Medicare trustees’ reports due to lower estimated payroll taxes and a slower decline in inpatient stays. The report still estimates the hospital trust fund will last longer than predicted by the Congressional Budget Office (CBO), which estimated the trust fund would run out in 2026.

Treasury Secretary Jack Lew said the report confirms that Medicare remains “secure in the medium-term” and said there is some time to address fiscal challenges to Medicare. However, Lew cautioned that Congress should not wait until the eleventh hour.

Medicare Spending Growth Rates. CMS touted the slow estimated per enrollee spending growth rate, as the estimated 4.3 percent estimated per enrollee spending growth rate over the next 10 years is expected to be lower than the growth in overall per capita national health expenditures. The report says that 2017 will be the first year the growth rate is expected to trigger IPAB. The Affordable Care Act (ACA) created the board to keep the growth of per person Medicare spending in check when other payment and health care delivery reforms are not adequate. Medicare trustees predicted last year that the board would be triggered in 2017, but rising health care costs, a good share of which have come from increased drug spending, had some worried that IPAB could be triggered this year.

Drug Costs. The trustees highlighted the growth in prescription drug costs. The estimated Part D average annual increase in spending for the next five years is 10.6 percent, the report says. Democratic presidential candidate Hillary Clinton has proposed a drug price containment plan, and Republican presidential candidate Donald Trump has backed Medicare drug price rebates.

Part B Premiums. The report indicates that Part B premiums could increase for about 30 percent of beneficiaries next year, as the so-called “hold-harmless” provision goes into effect. Last year, lawmakers used the Bipartisan Budget Act to avert Medicare Part B premium spikes for about 30 percent of beneficiaries who do not have their Part B premiums deducted from their Social Security benefit. Beneficiaries who have their premiums deducted from Social Security are protected so that when the Part B premium increases are greater than the annual cost-of-living adjustments (COLAs) in Social Security, those seniors do not have to pay the premium increases. The Bipartisan Budget Act would also protect beneficiaries in 2017 if the COLA for Social Security is 0 percent, the trustees’ report says, but the trustees estimate that the COLA would be 0.2 percent and the Bipartisan Budget Act protections would not apply.

To see a related press release, click here.

4. State Activities

Arizona: Health Officials Find State Vaccine Laws Being Avoided

Arizona health department officials say public schools are not following vaccine laws—about 30 percent of Arizona kindergartners who enrolled during the most recent school year without measles vaccines did not have exemption forms. Also, the Arizona Department of Health Services found hundreds of schools were not requiring parents to turn in signed waivers when they enrolled their unvaccinated children in 2015. Under state law, schools are required to suspend unvaccinated students without signed exemptions.

California: Board of Covered California Approves $320 Million Budget

The board of Covered California health exchange approved a $320 million budget for next year that includes a large increase for the website’s eligibility tools as well as additional funding for outreach to underserved communities. This new budget comes right after the state passed a law that will help undocumented immigrants enroll in health coverage on the exchange—without subsidies. The largest increase is $6.5 million to maintain the web-based system to determine eligibility. The budget provides $7.25 million for the navigator program to reach out to underserved groups (a $2.75 million cut from this year).

California: State Regulator Approves Aetna-Humana Merger

On June 20, the California Department of Managed Health Care (DMHC) approved Aetna’s $37 billion acquisition of Humana. The state regulator signed off on the deal after Aetna agreed to take steps to alleviate concerns about the merger’s effects on pricing and competition.

The only state to reject the merger deal so far is Missouri—the state cited concerns about lack of competition in the Medicare Advantage market as one of its reasons.

As a condition of approving the acquisition, Aetna agreed to make roughly $50 million in investments over the next three years to improve access to and quality of care. This includes $23 million to establish a service center in the “economically distressed” city of Fresno and $16.5 million to support accountable care organizations and pay for performance programs in the state.

The California agency has yet to weigh in on the other megamerger insurance deal—Anthem’s proposed $54 billion acquisition of Cigna.

There are two regulatory bodies in California that scrutinize the insurance market. Last week, California Insurance Commissioner Dave Jones urged federal regulators to block the Anthem-Cigna deal because of anti-competitive concerns. But his office has not yet offered a verdict on the Aetna-Humana deal.

Illinois Co-op Sues Federal Government Over Risk Corridor Payments

Land of Lincoln Health, one of the 23 co-ops seeded with Obamacare loans, is suing the federal government for almost $73 million in an effort to collect risk corridor payments. The nonprofit health plan is seeking to force the government to pay the money that it is owed for 2014, according to the complaint.

Land of Lincoln Health is the fifth insurer to file a lawsuit to recover risk corridor payments. The others include Blue Cross Blue Shield of North Carolina, Health Republic Insurance of Oregon, Highmark and Moda Health.

The Obama administration previously announced insurers initially would receive only 12.6 percent of anticipated payments for 2014—a $2.5 billion deficit. CMS has indicated that it intends to eventually come through on its obligations, but it is unclear where the money will come from.

More than half of the co-ops have collapsed because of financial losses. Many of them blamed their failure in part on the loss in risk corridors funding.

Land of Lincoln lost $90 million last year, according to financial filings. It raked up an additional $7 million in debt during the first three months of this year on its 50,000 customers.

New Hampshire: State Disbands Certificate of Need Board

On June 31, New Hampshire is disbanding its Certificate of Need (CON) board, which regulates when hospitals and other health facilities can open. Gov. Maggie Hassan signed a bill into law that would keep some restrictions on construction of new medical facilities but the state health department will make the decisions, not the CON board. Certificate of Needs laws are aimed at coordinating the construction of new facilities to control costs. Fourteen states have discontinued their CON programs, according to the National Conference of State Legislatures. Those states still have some laws in place intended to regulate costs and duplicative services.

North Carolina: Senators Debate Over End of Certificate of Need Law

The bill ending North Carolina’s Certificate of Need law, which regulates when new health care facilities can open, caused debate in a Senate Health Care Committee meeting. The meeting ended without a vote, and lawmakers may go back and make changes. The measure, which originated in the House, would eliminate a system of health regulations that limits when hospitals can buy large pieces of medical equipment or open new facilities.

South Dakota: Gov. Daugaard Rules Out Special Session on Medicaid Expansion

On June 22, South Dakota Gov. Dennis Daugaard said he will not convene a legislative special session to consider his plan for Medicaid expansion. The Republican governor said lawmakers wanted more time to study a plan and wait until after the presidential election to consider it. Daugaard’s expansion plan relies on shifting more costs to the federal government to free up the state budget. In February, the Obama administration adopted a policy wherein CMS picks up 100 percent of the cost of certain care for American Indians. Daugaard personally lobbied for this change, one which he said was necessary for getting expansion through in the state.

To see the governor’s press release, click here.

Texas: Texas Medicaid Program Denies Coverage for an Autism Therapy

The Texas Medicaid program is facing scrutiny for denying a 3-year-old beneficiary coverage for autism treatment. The child’s parent’s sought coverage for an expensive therapy called applied behavioral analysis (ABA), but Medicaid officials rejected their request. They appealed the decision around the same time the state said Medicaid would not cover behavioral therapy. Advocates are pointing to a 2014 CMS announcement advising states that they must cover medically necessary care for Medicaid-eligible children with autism up to age 21—they say this includes behavioral analysis. Other states have begun covering these treatments after court battles, but it is unclear whether Texas will do the same.

5. 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 hospice, 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 models include:

  • 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, click here.

For a related press release, click here.

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 strategy 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.

CMS Releases Proposed Changes to the Payment Error Rate Measurement and Medicaid Eligibility Quality Control Programs

On June 20, the Centers for Medicare and Medicaid Services (CMS) issued a notice of proposed rulemaking outlining proposed changes to the Payment Error Rate Measurement (PERM) and Medicaid Eligibility Quality Control (MEQC) programs to implement provisions in the Affordable Care Act’s (ACAs) changes to the way states adjudicate eligibility for Medicaid and the Children’s Health Insurance Program (CHIP). The proposed rule addresses the new eligibility provisions of the ACA and makes other general improvements to the PERM and MEQC programs. The proposed rule also includes policies that, if implemented, would reduce state burden and increase the focus on the continuous reduction of improper payment rates. Comments on this proposed rule are due by Aug. 22, 2016.

Proposed changes to the PERM program in the proposed rule include:

  • Review Period: The PERM program will review Medicaid and CHIP payments made by states July through June of a given year. Under the current rule, the PERM program reviews payments made in a federal FY (October through September).
  • Eligibility Review Responsibility: A federal contractor will conduct PERM eligibility reviews with support from each state. Under the current rule, states are required to conduct eligibility reviews and report the results to CMS.
  • Eligibility Universe: The PERM program will conduct eligibility reviews (in addition to medical and data processing reviews) on FFS and managed care payments sampled for the PERM program. The eligibility review will be conducted on the beneficiary associated with the sampled claim. Under the current rule, states create separate universes of eligible individuals that are sampled for eligibility review.
  • Federal Improper Payments: Improper payments will be cited if the federal share amount is incorrect (even if the total computable amount is correct). Under the current rule, improper payments are cited only on the total computable amount (i.e., federal share + state share).
  • Sample Sizes: A national sample size will be calculated to meet national Medicaid and CHIP improper payment rate precision requirements. The national sample size will then be distributed across states to maximize precision at the state level, and state-specific sample sizes would be based on factors such as each state’s expenditures and previous improper payment rate. Under the current rule, state-specific sample sizes are calculated based on the state’s previous improper payment rate and state level precision and combined to total the national sample size.
  • Corrective Action: States will continue to implement Corrective Action Plans (CAPs) for all errors and deficiencies; however, there will be more stringent requirements added for states that have consecutive PERM eligibility improper payment rates over the 3 percent national standard established under Section 1903(u) of the Social Security Act (the Act).
  • Payment Reductions/Disallowances: Potential payment reductions/disallowances under Section 1903(u) of the Act will be applicable for eligibility reviews conducted during PERM years in cases where a state’s eligibility improper payment rate exceeds 3 percent. CMS will pursue disallowances only if a state does not demonstrate a good faith effort to meet the national standard, which is defined as meeting PERM CAP and MEQC pilot requirements.

Changes to the MEQC program in the proposed rule include:

  • The MEQC program will be restructured into a pilot program that states must conduct during their off years from the PERM program to ensure continual oversight of both Medicaid and CHIP state eligibility determinations.
  • States will be required to review a number of items not fully reviewed through the PERM program (e.g., negative cases).
  • States will have flexibility in different areas to focus pilot reviews; however, should a state have consecutive PERM eligibility improper payment rates over the 3 percent national standard per Section 1903(u) of the Act, the state will lose this flexibility and CMS will provide direction for reviews.
  • States must submit corrective actions for identified errors.

To see the notice of proposed rulemaking, click here.

CMS Proposed Updates to Policies and Payment Rates for ESRD PPS, QIP, Coverage and Payment for Acute Kidney Injury, DMEPOS Competitive Bidding Program and Fee Schedule, and Comprehensive ESRD Care Model

On June 24, 2016, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule that would update payment policies and rates under the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for renal dialysis services furnished on or after January 1, 2017. This rule also proposes new quality measures to improve the quality of care by dialysis facilities treating patients with end-stage renal disease.

This rule also implements the Trade Preferences Extension Act of 2015 provisions regarding the coverage and payment of renal dialysis services furnished by ESRD facilities to individuals with acute kidney injury.

In addition, the ESRD PPS proposed rule proposes changes to the ESRD Quality Incentive Program (QIP), including for payment years (PYs) 2018, 2019, and 2020, under which payment incentives are made to dialysis facilities to improve the quality of care that they provide. Under the ESRD QIP, facilities that do not achieve a minimum Total Performance Score (TPS) with respect to quality measures receive a reduction in their payment rates under the ESRD PPS.

This rule also addresses issues related to the durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) Competitive Bidding Program (CBP).

CMS is proposing to require bidding entities to obtain and provide proof of a bid surety bond for each competitive bidding area (CBA) in which the entity submits its bid(s), in accordance with Section 1847(a)(1)(G) of the Social Security Act, as added by section 522(a) of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

The rule also proposes revisions to the existing state licensure requirement at §414.414(b)(3), and proposes to expand suppliers’ appeal rights in the event that CMS takes one or more of the breach of contract actions specified in §414.422(g)(2).

Finally, the proposed rule would change the methodologies for adjusting DMEPOS fee schedule amounts using information from the DMEPOS Competitive Bidding and for establishing single payment amounts under the Competitive Bidding Programs for certain groups of similar items (e.g., various types of walkers) with different features (e.g., walkers with wheels versus walkers without wheels). Changes are also proposed to the methodology for establishing bid limits for items under the DMEPOS Competitive Bidding Program.

In addition, CMS announced a request for Applications for the Comprehensive ESRD (CEC) Model.

The proposed rule will be issued in the June 24, 2016 Federal Register and can be seen here.

6. Reports

Gallup Poll: Health Care Insecurity Hits Record Low

A Gallup poll released June 20 finds that 15.5 percent of adults in the U.S. are unable to afford necessary health care or medicine—this is a record low since Gallup began tracking the metric in 2008.

The findings cover the first quarter of this year. Overall, the percentage of U.S. adults with health care insecurity has dropped 3.5 percentage points since the end of 2013—this period coincides with people’s signing up for Obamacare coverage through health insurance exchanges as well as expanded Medicaid.

Those without health insurance are at least three times more likely to report not having enough money for health care and medicine than those with health insurance. Gallup found that in the most recent quarter, almost 42 percent of the uninsured reported having health insecurity, compared with 12.3 percent of those with health insurance.

However, reductions were also seen in the percentage of uninsured individuals who said they were struggling to afford health care. Gallup said this could reflect the improvement of the U.S. economy because unemployment and underemployment rates have returned to levels before the recession.

JAMA Study Finds Association Between Industry-Sponsored Meals and Physician Prescribing Patterns

According to a new JAMA study of 279,669 physicians, those who received even a single, relatively inexpensive industry-sponsored meal had significantly higher rates of prescribing the brand-name drugs promoted at those meals. The physicians studied received more than 60,000 payments associated with four brand-name drugs. Over 95 percent of the payments were for meals that averaged less than $20 each.

The findings represent an association, not a cause-and-effect relationship, according to the authors of the study. For example, physicians are choosing to attend industry events about drugs they already prefer or events that provide new evidence on the drugs that help patients. The authors note, however, that it would be cause for concern if meals change physicians’ prescribing practices as a result of promotional influence—either by encouraging future use or rewarding an ongoing preference for the promoted drug.

In a corresponding editorial, JAMA Internal Medicine editor Robert Steinbrook argued that researchers do not need to prove a causal relationship to consider policy changes.

To see the study, click here.

Urban Institute Analysis Finds U.S. Could Spend Trillions Less on Health Care

According to a report from the Urban Institute, the U.S. should spend $2.6 trillion less on health care between 2014 and 2019 compared to initial projections made immediately after Obamacare passed in 2010. The Urban Institute says possible causes include the ramifications of the Supreme Court’s 2012 decision making the Affordable Care Act’s (ACA) Medicaid expansion optional, sequestration under the Budget Control Act, the recession and the country’s subsequent slow economic recovery.

To see the analysis, click here.

NIH Announces Zika in Infants and Pregnancy Study

On June 21, the National Institutes of Health (NIH) announced a study of 10,000 pregnant women in Puerto Rico, Brazil, Colombia and other Zika-afflicted areas to improve understanding of the health effects of Zika virus infection—the Zika in Infants and Pregnancy (ZIP) study.

Scientists will study the correlation of birth defects with the time of infection in the pregnancy and the intensity of symptoms, as well as socioeconomic and environmental factors, including past infection with viruses like dengue.

The Zika virus, currently affecting 60 countries or territories, causes microcephaly and has been linked to miscarriage, stillbirth, brain damage, vision and hearing deficits and impaired growth. Small studies to date have shown anywhere from 1 percent to 30 percent of infants born to women infected with Zika during pregnancy suffer microcephaly or other problems.

The study will enroll women in the first trimester of pregnancy and take place at 15 sites. It is expected to last a year or potentially longer.

To see a related press release, click here.

GAO Releases Report on Federal Autism Efforts

On June 20, the Government Accountability Office (GAO) released a report reviewing federal autism efforts. The report describes: 1) how federal agencies encourage early autism identifications and interventions and 2) the intervention services available through federal education and health care programs. It also examines the steps taken by HHS and federal agencies to improve research coordination.

GAO looked at education programs in five states that were chosen for size, activities and geographic location. GAO also analyzed fiscal year 2014 TRICARE data and fiscal year 2013 Medicaid and CHIP data from another five states. GAO continues to believe improved coordination is needed, but that HHS’s fulfillment of provisions in the Autism CARES Act could help the agency implement GAO’s 2013 recommendations.

To see the full report, click here.


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

Stephanie Kennan, Senior Vice President
Charlie Iovino, Vice President
Caroline Perrin, Research Assistant

Founded in 1998, McGuireWoods Consulting LLC (MWC) is a full-service public affairs firm offering infrastructure and economic development, strategic communications & grassroots, and government relations services. McGuireWoods Consulting is a subsidiary of the McGuireWoods LLP law firm and has been named in The National Law Journal's special annual report, "The Influence 50," for the past several years. In the most recent report, McGuireWoods Consulting was ranked 15th of the 1,900 government relations firms in Washington, D.C.

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