Aug 1, 2016
Washington Healthcare Update
This Week: Congress is in recess until after Labor Day.
5. State Activities
6. Regulations Open for Comment
Federal Judge Rules Federal Government Cannot Fine Lawmaker for Refusing Contraception Coverage
Federal Judge Jean C. Hamilton recently ruled that the federal government cannot fine a Missouri state senator for not having an insurance policy with
contraception coverage. State Sen. Paul Wieland objected to having any birth control coverage in the health plan he bought for his family through the
Missouri insurance plan for state employees.
“The only way [the Wielands] can comply with their religious conscience is by dropping their insurance altogether, which would result in them foregoing a
valuable job benefit; in the assessment of thousands of dollars per year in fines pursuant to the individual mandate; ... and in leaving their daughters
without health insurance,” Judge Hamilton wrote in her opinion.
The contraception mandate has been one of the most contentious pieces of the Affordable Care Act, sparking dozens of lawsuits from employers who do not
want to comply because of religious opposition to birth control. But this ruling marks one of the few cases in which an individual—as the recipient of
health insurance coverage—successfully sued the federal government over it. The Supreme Court ruled in 2014 that closely held for-profit businesses do not
have to comply with the coverage requirement. Earlier this year, the Supreme Court sent a case filed by religious nonprofits back to the lower courts in
search of a compromise that would allow employees to receive coverage without violating employers’ religious beliefs.
It is unclear whether the Obama administration will appeal the Missouri judge’s decision.
DOJ Files Lawsuits Against Anthem, Aetna
On July 21, the Justice Department filed lawsuits against Anthem and Aetna to stop their acquisitions of Cigna and Humana, respectively.
To see the complaint against Anthem,
For the complaint against Aetna,
Theranos Customer Files Lawsuit Claiming Medical Harm From Blood Test
On July 19, a Theranos customer filed a lawsuit against the startup and Walgreens in Arizona, alleging the company’s faulty blood tests caused him to have
a heart attack. The lawsuit filed in the U.S. District Court in Arizona is now one of nine civil suits against Theranos. The case appears to be the first
one alleging specific medical harm.
According to the lawsuit, the Arizona man—identified as R.C.—received lipid and A1C blood tests that used Theranos’ “tiny drop” finger prick method at a
Walgreens in the state. The results came back normal, leading R.C.’s doctor to recommend that he maintain his current medications. A month later, R.C.
suffered a heart attack and was hospitalized, at which point new tests suggested the Theranos test was inaccurate.
Walgreens formally ended its three-year partnership with Theranos in June after both the Centers for Medicare and Medicaid Services (CMS) and the Food and
Drug Administration (FDA) issued sanctions on the company and banned its founder, Elizabeth Holmes, from running any labs for two years. Theranos had
previously claimed its blood analysis could test for hundreds of diseases, but it later voided thousands of test results from 2014 and 2015 to comply with
R.C. is seeking class-action status for his case, along with costs, restitution and damages.
Cigar Trade Groups File Lawsuit Against FDA Over Final Deeming Rule
On July 15, Cigar Rights of America, the International Premium Cigar & Pipe Retailers Association and the Cigar Association of America sued the U.S.
Food and Drug Administration (FDA) over its plan to regulate premium cigars under the final “deeming” rule issued in May. This lawsuit is the most recent
challenge to the rule, which asserts FDA authority to regulate e-cigarettes, hookahs, cigars, pipe tobacco and other products under the Tobacco Control
Act. The premium cigar industry did not receive an exemption from pre-market review requirements in the rule. The lawsuit claims that the FDA rule
incorrectly subjects new products to stricter regulation than those that were on the market already and imposes a tax on cigars by charging user fees for
FDA review, among other things. The vaping industry has already sued.
Republican Senators Write Letter to Obama Administration on Reinsurance Program
The chairman of the Senate Homeland Security and Governmental Affairs Committee—Sen. Ron Johnson (R-WI)—says the Obama administration is violating the text
of Obamacare’s reinsurance program to pay health insurers at the expense of taxpayers. In a letter to HHS Secretary Sylvia Mathews Burwell, Chairman
Johnson and Sen. Ben Sasse (R-NE) said that “all told, the American taxpayers will receive only $500 million in payments under the transitional reinsurance
program for benefit years 2014 and 2015 instead of the combined $4 billion required by Congress in the ACA.”
In an investigation led by Sasse on the reinsurance program, Republicans argue that the ACA requires a certain amount of money collected for the
reinsurance program be sent back to the insurers and another amount sent to the Treasury—both are on a sliding scale over three years.
Republicans argue that HHS collected much less in contributions than the law required and shortchanged the Treasury.
They say the agency prioritized paying insurers but not taxpayers, which is “not consistent with the law.” The Republicans argue that the law says some
portion of the payments must go to taxpayers.
CMS Administrator Andy Slavitt testified in April that the agency followed the rulemaking process when implementing the program and after the first year’s
collections fell short, made adjustments for later years.
To see the letter,
FDA Finalizes Guidance on General Wellness Products
On July 28, FDA issued final guidance clarifying the varieties of “general wellness” products—low-risk products that promote a healthy lifestyle—that can
be marketed without FDA oversight. They include apps, recordings, video games and other items that make general health claims. Products that make specific
claims will escape FDA review as long as they are based on generally accepted medical information. Products that claim to treat or diagnose specific
diseases—such as an app claiming to treat autism—do not fall under “general wellness” and could be regulated. Developers must ensure their products are low
risk, to be exempted from FDA review.
To see the guidance,
FDA Releases Guidance on Use of Real-World Data for Development of Medical Devices
According to new FDA guidance, medical device companies could be able to use “real-world” data to receive FDA approval for a new use of a device. FDA said
in the guidance that real-world data from clinical practice may also be used to receive a new claim about the effectiveness of a product, as a control
group in a clinical study to support device approval, to fulfill post-marketing study requirements or for public health surveillance efforts, among other
Real-world data is collected during the care and treatment of patients, including information pulled from prospective observational or registry studies,
retrospective database studies, health care claims and electronic health records. FDA said its determination on whether it accepts data depends on what
regulatory use it is intended to support.
To see the guidance, click here.
FDA Releases PDUFA Agreement
The FDA recently outlined an agreement it reached with the pharmaceutical industry on the agency’s performance goals and industry user fees from 2018 to
2022. The agreement is commonly referred to as the “goals letter” or “commitment letter.” The Prescription Drug User Fee Act (PDUFA VI) letter
represents months of negotiations between FDA and regulated industry and public stakeholders. It is a major step toward the reauthorization of user fee
legislation that Congress needs to pass before October 2017.
The PDUFA letter only outlines FDA’s agreement with the branded drug industry—it still needs to finalize negotiations with biologic and generic drugmakers,
as well as device companies. The agreements provide certain standards FDA agrees to meet in its review of applications for drugs and medical devices in
exchange for industry user fees. It also lays out how long approvals will take and how FDA staff will interact with the companies.
The letter does not say what the drug industry has agreed to pay.
CMS Finalizes Hospice, Rehab and SNF Payment Rules for FY 2017
On July 29, CMS finalized fiscal year 2017 Medicare payments for hospice, inpatient rehabilitation facilities and nursing homes.
Hospices will see a $350 million increase in their payments for 2017, a 2.1 percent bump. CMS also said as early as next year, it will
begin publicly displaying quality measures and other data.
Rehab facilities will see a $145 million boost, or 1.9 percent.
skilled nursing facilities will rise by $920 million, or 2.4 percent.
CMS Extends Moratoria on New Medicare Part B Enrollment on Some Providers
On July 29, CMS announced it is extending for six months and expanding statewide the temporary provider enrollment moratoria on new Medicare Part B
non‑emergency ground ambulance suppliers in New Jersey, Pennsylvania, and Texas and home health agencies (HHAs) in Florida, Texas, Illinois, and Michigan.
Additionally, the statewide expansion also applies to Medicaid and CHIP. CMS also announced the Provider Enrollment Moratoria Access Waiver Demonstration (PEWD), which gives CMS the ability to allow for provider and supplier enrollment exceptions in the moratoria areas if access to care issues are
identified and for the development and improvement of methods of investigating and prosecuting fraud in Medicare, Medicaid, and CHIP.
For more information on the extension and statewide expansion of the temporary moratoria, the lifting of temporary moratoria on Part B, Medicaid, and CHIP
emergency ground ambulance suppliers, and the PEWD, click here.
Medicare Part D Premiums Remain Stable for 2017
On July 29, Medicare announced that the average basic premium for a Medicare Part D prescription drug plan in 2017 is projected to remain relatively stable
at an estimated $34 per month. This represents an increase of approximately $1.50 over the actual average premium of $32.56 in 2016.
To view the Part D Base Beneficiary Premium, the Part D National Average Monthly Bid Amount, the Part D Regional Low-Income Premium Subsidy Amounts, the De
Minimis Amount, the Part D Income-Related Monthly Adjustment Amounts, the 2017 Medicare Advantage Employer Group Waiver Plan Regional Payment Rates, and
the Medicare Advantage Regional Benchmarks, click here and select “2017.”
CMS Increases Medicare Payments for Inpatient Psychiatric Facilities
On July 28, CMS announced it will increase Medicare payments for inpatient psychiatric facilities by 2.2 percent (or by an estimated $100 million). The
increase includes freestanding psychiatric hospitals, psychiatric units at acute care hospitals or critical access hospitals for discharges. The payment
increase applies to FY 2017 beginning Oct. 1.
For more information, click here.
CMS Announces Participants in Initiatives to Prevent Heart Attacks and Strokes
On July 21, the Centers for Medicare and Medicaid Services (CMS) announced 516 awardees in 47 states, Puerto Rico and the District of Columbia to help
reduce the risks for heart attacks and strokes among millions of Medicare fee-for-service beneficiaries. The health care practitioners participating in the
Million Hearts® Cardiovascular Disease Risk Reduction Model will work to decrease cardiovascular disease risk by assessing an individual
patient’s risk for heart attack or stroke and applying prevention interventions.
Currently, health care practitioners are paid to screen for blood pressure, cholesterol or other risk factors individually. In testing a new approach,
practitioners participating in this model’s intervention group will use a data-driven, predictive modeling approach to generate personalized risk scores
and develop specific plans in partnership with patients to reduce the risk of having a heart attack or stroke.
Overall, nearly 20,000 health care practitioners and more than 3.3 million Medicare fee-for-service beneficiaries will participate in the five-year model.
Health care practitioners in the intervention group will work with beneficiaries individually to identify the best approach or approaches to reducing their
risk of having a heart attack or stroke—for example, smoking cessation interventions, blood pressure management or cholesterol-lowering drugs or
aspirin—and will explain the benefits of each approach. Each beneficiary will receive a personalized risk modification plan that will target their specific
risk factors. Organizations in the intervention group will be paid for reducing the absolute risk for heart disease or stroke among their high-risk
This model is part of Million Hearts, a broad national initiative co-led by CMS and CDC to prevent one million heart attacks and strokes by 2017. For more
information on the Million Hearts initiative, click here.
For additional information about the model, including a fact sheet and a list of participants, click here.
CMS Approves Arizona’s Plan Allowing New Enrollment in CHIP Program
On July 25, the Centers for Medicare and Medicaid Services (CMS) announced that it has approved Arizona’s plan to allow new enrollment in the Children’s
Health Insurance Program (CHIP) after enrollment was frozen for several years. Now all states provide CHIP coverage to eligible children.
Beginning on July 26, the state ended the existing enrollment freeze and began accepting new applications. Children ages birth through 18 with income above
133 percent up to and including 200 percent of the federal poverty level (FPL) are eligible to enroll in the state’s CHIP, known as KidsCare. Children will
be able to access services beginning Sept. 1, 2016.
CHIP covers a broad set of health benefits for children, including dental care, that are often out of reach for many families who cannot afford other
health coverage. This is especially true for children with special health care needs, as CHIP programs cover physical, occupational and speech and language
The state estimates that approximately 30,000 to 40,000 children will become eligible for coverage in KidsCare.
For more information, click here.
HHS Joins Partnership to Speed Up Development of New Antibiotics
HHS is joining U.S. and international groups to help speed up the development of new antibiotics as the threat of antibiotic-resistant infections grows.
The new public-private partnership hopes to make antibiotic development a more striking space for private investment. It will focus on pre-clinical
discovery and development of new antimicrobials, funding research, and development and technical assistance to companies.
The partnership’s goal is to push drug candidates through the early stages of development, so they will then gain more investment for advanced development
and approval by FDA and the United Kingdom’s drug regulator. HHS’s Biomedical Advanced Research and Development Authority is going to provide up to $250
million over five years for the project, called the Combating Antibiotic Resistant Bacteria Biopharmaceutical Accelerator. NIH’s National Institute of
Allergy and Infectious Diseases will also provide research and technical support.
The U.K.’s ARM Centre, a public-private group that works on antibiotics and diagnostics, will provide up to $100 million. The Wellcome Trust—a global
charitable foundation that works on medical challenges—will also provide funding. All four groups will share joint oversight of the project.
FTC Requiring Teva to Divest Almost 80 Generic Drugs
On July 27, the Federal Trade Commission (FTC) announced it is requiring Teva—the
country’s biggest generic drug company—to divest nearly 80 generic drugs to competitors as a condition of acquiring the generic pharmaceutical business
Allergan. This is the largest drug divestiture in a pharmaceutical merger case. If finalized, it would settle FTC claims that the proposed $40.5 billion
acquisition of Allergan’s generic drug business would be anticompetitive. Teva will divest to 11 companies antibiotics, oral contraceptives, cancer,
diabetes and Parkinson’s disease treatments, among other drugs.
Following the acquisition, FTC estimates Teva will have 22 percent of the generic market share in the U.S., up from 13 percent. Despite this acquisition’s
combining two large generic suppliers, FTC said the industry as a whole is relatively unconcentrated. More than 200 companies sell generics in the U.S and
the top five companies account for only about half of generic sales.
FTC Comments on Nurse Practice Authority Proposed Rule
The Federal Trade Commission’s staff submitted written comments in
support of a proposed rule that would allow the VA to grant “full practice authority” to four categories of advanced practice registered nurses, as long as
specific background requirements are met. This regulation would allow nurses employed by the VA to give certain services without clinical oversight from
IRS Denies Tax-Exempt Status for Commercial ACO
On June 10, the global law firm Dentons posted a memo to the National Association of ACOs saying “it is clear that the IRS will not grant tax exempt status
to an ACO engaged in primarily non-MSSP activities.” This memo follows the IRS’s decision to deny a commercial accountable care organization tax-exempt
status earlier this year, even though ACOs participating in the Medicare Shared Savings Program are eligible for tax-exempt charitable status. The law firm
says this decision raises questions about how different types of ACOs are treated as far as their tax status.
“This is the first public guidance from the IRS regarding a non-MSSP (or commercial) ACO and calls into question whether such ACOs can qualify for
tax-exempt status due to substantial non-charitable activities,” the Dentons memo says. But the memo also notes the case involves a single IRS denial
letter issued to a taxpayer and the IRS interprets and applies the tax laws to the taxpayer’s specific set of facts. “Therefore, the decision is not
precedential for other taxpayers and only the ACO that the PLR is issued to is bound by the IRS decision,” the memo adds.
The IRS position is unclear with respect to granting tax exemptions, especially when there is a mix of MSSP and non-MSSP activities performed by an ACO.
Insurance Industry Comments on CMS Interim Rule on Special Enrollment Periods
In May, the Centers for Medicare and Medicaid Services (CMS) issued an
interim final rule that stated that as of July 11 there would be
only six circumstances in which a person can buy coverage outside of open enrollment. The insurance industry, however, is concerned that CMS did not go far
enough in the rule to ensure that the circumstances won’t be abused by those seeking to game the system. Particularly, some health plan critics want CMS to
ensure people are actually eligible for a special enrollment period before allowing them to enroll in coverage.
According to comments from the Blue Cross Blue Shield Association (BCBSA), limiting the permanent move special enrollment period (SEP) to consumers who can
prove that they were previously insured is a good step, but “we recommend eligibility for all SEPs be verified before coverage is effective.” BCBSA also
suggests that CMS require a person to have had coverage within the past 30 days rather than 60 in order to help promote continuous coverage.
Cigna goes a step further, saying a person who will be moving and will need the SEP should be required to maintain their coverage at least until the date
of the move. For individuals who move to the U.S. from outside the country, Cigna says it wants to make sure they submit proof that they are indeed
currently living in the U.S.: “We believe such requirements could help deter incidents of medical tourism, where individuals move to the United States and
claim residency in state solely to obtain coverage to receive care,” David Schwartz, head of global policy at Cigna said in a comment.
Cigna also notes there is no guidance on how the exchange or issuers should validate SEP eligibility for transient people who do not have a fixed address.
CMS should identify criteria for this situation, as the lack of rules has created an incentive for “patient brokering” and other questionable practices
that could destabilize the risk pool, Cigna says.
America’s Health Insurance Plans (AHIP) says in comments that while it approves of the changes in the rule, it still believes pre-enrollment verification
is “critical to ensure appropriate use of SEPs and promote continuous coverage.”
Additionally, AHIP says CMS’s verification process for FFM states should not restrict off-exchange issuers from implementing their own processes as
permitted by the states. State-run exchanges “should continue to have the flexibility to implement their own verification processes, including
pre-enrollment verification, as determined by the SBM,” AHIP says.
AHIP’s verification recommendations include:
Develop HealthCare.gov messaging.
Simplify the eligibility determination notice.
Facilitate a successful document submission process.
Adopt a risk-based approach for eligibility verification.
Develop a robust and effective process to review documentation.
Further develop CMS program integrity tools related to fraudulent enrollments.
Conduct extensive outreach and education training.
Industry Lobbies and Non-Profits Comment Together on FDA Compounding Guidance
BIO, the Generic Pharmaceutical Association (GPhA), PhRMA, Pew Charitable Trusts, the American Public Health Association and the Trust for America’s Health
all came together to submit 10 pages of comments on three recently released FDA guidance papers. The guidance papers clarify rules put in place to
strengthen FDA oversight of compounding after a national meningitis outbreak linked to contaminated compounded drugs in 2012.
Following is some of what they’d like to see change:
- They argue FDA needs a stricter definition of “anticipatory compounding” to prevent pharmacies from conducting large-scale manufacturing activities when
they are supposed to be compounding only in limited quantities—under the current proposal, compounders could base their anticipatory compounding limits on
past volumes, but this could reward compounders who were operating improperly before the 2013 law that strengthened FDA regulation of the industry.
- They say FDA should require that any compounded drug held by a hospital or health system until a patient needs the drug should be obtained only from
compounders that are regulated as outsourcing facilities by FDA. Unlike traditional compounders, outsourcers are required to comply with good manufacturing
practices to protect patient safety.
White House Announces Federal Budget Deficit Will Increase $162 Billion
On July 15, the White House announced that the federal budget deficit is expected to be $600 billion this year, an increase of $162 billion from 2015. The
announcement was made in a mid-session review of the federal budget—this estimate is $16 billion lower than projected in February.
To see the mid-session review,
Largest Generic Drug Company Becomes Member of PhRMA
Teva—the world’s biggest generic drug company—has become the newest member of the brand-drug lobbying organization PhRMA. The PhRMA board’s approval of
Teva’s membership comes despite opposition from some other member companies that mostly make branded drugs.
While Teva is not the first PhRMA company to sell generic drugs, the size and scope of Teva’s generic business set it apart from the others. The
Israeli-based company is also currently involved in several lawsuits against other PhRMA members and the lobby and it holds a board seat on GPhA, the U.S.
generic drug lobby.
Other new PhRMA members include Alexion Pharmaceuticals and Jazz Pharmaceutical, and Horizon Pharma and AMAG Pharmaceuticals, who transitioned from
research associates to full members.
“The addition of these biopharmaceutical research companies will help guide us as we advocate for patient-centric policies to enhance the private market
and address costs holistically,” PhRMA CEO Stephen Ubl said in a statement.
UnitedHealth Group Reports Second Quarter Losses
According to UnitedHealth Group’s July 19 earnings report, the company lost $200 million more than projected on its ACA-compliant individual plans in the
second quarter of this year. The health insurer—the largest in the U.S.—had previously announced that it expects to lose $650 million on its Obamacare
business for the entire year. UnitedHealth is leaving most of the 34 exchanges where it sells plans. The individual insurance marketplace is a small
portion of UnitedHealth’s overall business. It had profits of $3.2 billion on revenues of $46.5 billion during the second quarter. To see the earnings
report, click here.
Five Foundations Partnering to Expand Care for Chronically Ill Patients
The Commonwealth Fund, the John A. Hartford Foundation, the Peterson Center on Healthcare, the SCAN Foundation and the Robert Wood Johnson Foundation are
working on a new project to reduce the cost of care for people with multiple chronic conditions. The groups announced their project on July 27 in the New England Journal of Medicine. The
project has three main goals: developing a better understanding of the population of chronically ill patients; identifying evidence-based programs to
deliver high-quality, integrated care at lower costs; and accelerating and expanding the adoption of these programs across the country.
5. State Activities
Alabama: Gov. Bentley Undecided About Special Session on Medicaid Funding
Alabama Gov. Robert Bentley said he has not made a decision about whether he will call a special session to sort out Medicaid funding for the state. The
state’s legislature passed a budget that appropriated $700 million to the Alabama Medicaid program—the governor wanted $785 million. Gov. Bentley argues
lawmakers have to appropriate an additional $15 million for the state to have adequate funding for the health program for the next year. He has suggested
using oil spill settlement funds to close the gap, as well as other options.
Alaska: Gov. Walker Signs Law to Prevent Collapse of Obamacare Insurer
On July 18, Alaska Gov. Bill Walker signed legislation to prevent the collapse of the state’s only Obamacare insurer. The bill creates a $55 million
fund—financed through an existing tax on all insurance companies—to cover high-cost enrollees’ medical bills, in the hopes of stabilizing premiums and
preventing thousands from losing coverage. State officials warned that the individual market could collapse without it, because premiums would not cover
the sickest people’s medical expenses.
Premera Blue Cross Blue Shield—the one company to offer plans on Alaska’s exchange in 2017—is set to increase rates by about 10 percent for next year,
compared to a 37 percent increase in 2015 and a 39 percent increase in 2016. The legislation also authorizes Alaska to apply for an Obamacare Section 1332
waiver that allows states to change pieces of the federal law beginning in 2017 as long as those changes meet specific requirements.
Alaska has had some of the highest health costs in the country, even before the ACA was enacted.
California: Health Insurers Propose Rate Increases of 13.2 Percent for Obamacare Plans
On July 19, California officials announced that insurers want to raise premiums for individual plans sold on the state’s Obamacare exchange by an average
of 13.2 percent next year. This is three times higher than the first two years of operations for Covered California. Exchange officials attribute the
increases to a few factors: The disappearance of the reinsurance program—which subsidizes companies that attract customers with large medical bills—is
expected to hike up rates by 4 to 7 percent; additionally, increases in medical costs and higher-than-expected claims from customers who sign up through
special enrollment periods will inflate rates.
Covered California customers have experienced stable premiums during the first two years of operations. The average weighted increase for 2015 was 4.2
percent; this year the rates went up by 4 percent.
According to Covered California Executive Director Peter Lee, the average proposed increase for silver plans—the most popular on the exchange—is 8.1
percent. The proposed rates are subject to review by state regulators. There will be 11 plans in California in 2017.
Minnesota: MNsure to Use All of Its Federal Grant Funding
MNsure’s newly approved budget for 2017 includes using an extra $4 million in federal grant money for IT improvements and business development. That means
the Minnesota health insurance exchange will use all of its remaining $189.3 million in federal grants for IT updates and administrative expenses. MNsure
has had issues with technical glitches and other problems while Republicans have called for it to be dismantled and switched to the federal exchange.
MNsure is funded by federal grants, premium taxes and state money.
Oregon: Insurers to Give Credit for Previous Payments for CO-OP Members
Oregon’s Health CO-OP members in the individual market can acquire a plan from a new insurer and receive credit for any money they have paid toward their
deductibles and out-of-pocket costs.
In a July 18 release, the Oregon Health Insurance Marketplace said that members who
get their insurance through the individual market “will not lose the money they already have paid into their CO-OP plan for yearly out-of-pocket maximums.
… [Their] new insurer will apply that money to … [their] new plan.” Group health plan members may have to start over on their deductibles and yearly
out-of-pocket maximums, depending on which carrier they choose, but their plans will be effective through Aug. 1, 2017.
The CO-OP has been placed in receivership and its plans end July 31. The affected individual market customers can now find new coverage through the nine
remaining insurers under a special enrollment period open until Sept. 29. Oregon’s exchange will call, email and mail information to current CO-OP
customers in the next two weeks, according to the release.
Oregon’s Health CO-OP is the 15th ACA CO-OP to close since the law was enacted. The company lost $18.4 million in 2015 and owes $900,000 to the federal
risk adjustment program for 2015, instead of receiving $5 million from the program as was expected.
The CO-OP’s closure affects about 22,000 residents, including 12,000 individual policyholders and 10,000 small and large group enrollees.
Vermont: Medical Groups File Suit Against State Over Physician-Assisted Suicide Law
Two medical groups have filed a lawsuit against Vermont over a 2013
physician-assisted suicide law that they claim violates the First Amendment and requires providers to help patients who wish to die. The Vermont Alliance
for Ethical Healthcare and Christian Medical & Dental Associations said they filed a lawsuit because, as they interpret it, the law requires providers
to tell terminally ill patients about the option of physician-assisted suicide, even if the providers object to the practice.
Washington: Providence Health Will Not Renew Contract With Premera
Providence Health, a major provider in Washington state, is not renewing its contract with Premera Blue Cross health insurance—this will impact around
500,000 consumers beginning in 2017. All of Providence’s providers will no longer be in-network for anyone covered by Premera Blue Cross in 2017. The
decision by Providence to separate from Premera was due to unsuccessful negotiations over rates.
6. Regulations Open for Comment
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.
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,
Proposed changes to the PERM program in the proposed rule include:
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.
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).
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.
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).
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,
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
CMS Releases Proposed Rule on the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System
On July 6, the Centers for Medicare and Medicaid Services (CMS) proposed updated payment rates and policy changes in the Hospital Outpatient Prospective
Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System. Several of the proposed policy changes would improve the quality of care
Medicare patients receive by better supporting their physicians and other health care providers. These changes are based on feedback from stakeholders,
including beneficiary and patient advocates, as well as health care providers, including hospitals, ambulatory surgical centers and the physician
In addition to the payment provisions and quality reporting program changes for the proposed rule, CMS is also proposing:
Several changes to the objectives and measures of the Medicare EHR Incentive Program. These changes are only applicable for eligible hospitals and
critical access hospitals (CAHs) attesting under the Medicare EHR Incentive Program and would not impact eligible hospitals and CAHs attesting under a
state’s Medicaid EHR Incentive Program.
To align the definition of “eligible death” and the aggregate donor yield metric in the Organ Procurement Organization (OPO) Conditions for Coverage
(CfC) with those of the Organ Procurement and Transplantation Network (OPTN) and Scientific Registry of Transplant Recipients (SRTR), as well as revise
the OPO CfC to reduce the amount of hard copy documentation that must be sent with the organ, as much of this information is now available to the
transplant center electronically.
CMS will accept comments on the proposed rule until Sept. 6, 2016.
To see the proposed rule,
For a fact sheet on the proposed rule, click here.
IRS, Treasury Release Proposed Rule on QHP Benchmarks
The IRS and Treasury Department, in a proposed rule released July 6, proposed to alter how qualified health plan (QHP) benchmarks are determined so that
they account for the costs of pediatric dental benefits. If finalized, the rule would go into effect for the 2019 plan year.
Although pediatric dental care is one of the 10 “essential health benefits” that plans are required to cover under the Affordable Care Act (ACA), several
plans do not include such coverage, and consumers instead buy stand-alone dental products. Meanwhile, the marketplace determines the amount of tax credits
a family can receive to cover the cost of coverage based on the second-cheapest silver-level plan.
However, as the proposed rule said, “because qualified health plans that do not offer pediatric dental benefits tend to be cheaper than qualified health
plans that cover all ten essential health benefits, the second lowest-cost silver plan (and therefore the premium tax credit) for taxpayers purchasing
coverage through a Marketplace in which stand-alone dental plans are offered is likely to not account for the cost of obtaining pediatric dental coverage.”
Treasury and IRS added that the existing rules “frustrate” the goal of making all essential health benefits affordable to those receiving premium tax
credits, so the administration wants to update its interpretation to ensure all 10 services are addressed.
“Consistent with this interpretation, the proposed regulations provide that for taxable years beginning after December 31, 2018, if an Exchange offers one
or more silver-level qualified health plans that do not cover pediatric dental benefits, the applicable benchmark plan is determined by ranking (1) the
premiums for the silver-level qualified health plans that include pediatric dental benefits offered by the Exchange and (2) the aggregate of the premiums
for the silver-level qualified health plans offered by the Exchange that do not include pediatric dental benefits plus the portion of the premium allocable
to pediatric dental benefits for stand-alone dental plans offered by the Exchange,” the proposal said.
The rule aims to create the ranking by adding the premium for the lowest-cost silver plan that does not include a pediatric dental benefit to the premium
for the cheapest stand-alone dental plan, and the premium for the second-cheapest silver plan without pediatric dental benefits to that of the
second-lowest stand-alone dental plan. The second-cheapest amount from this combined ranking would be the taxpayer’s applicable benchmark plan premium, the
CMS Announces Proposed Payment Changes for Medicare Home Health Agencies
On June 27, the Centers for Medicare and Medicaid Services (CMS) announced proposed changes to the Medicare home health prospective payment system (HH PPS)
for calendar year 2017 to foster greater efficiency, flexibility, payment accuracy and improved quality. Approximately 3.4 million beneficiaries received
home health services from approximately 11,400 home health agencies, costing Medicare approximately $17.8 billion in 2015.
In the rule, CMS projects that Medicare payments to home health agencies in CY 2017 would be reduced by 1.0 percent, or $180 million, based on the proposed
policies. The proposed decrease reflects the effects of the 2.3 percent home health payment update percentage ($420 million increase); the rebasing
adjustments to the national, standardized 60-day episode payment rate, the national per-visit payment rates and the non-routine medical supplies (NRS)
conversion factor ($420 million decrease); the effects of the -0.97 percent adjustment to the national, standardized 60-day episode payment rate to account
for nominal case-mix growth for an impact of -0.9 percent ($160 million decrease); and the effects of the proposed increase to the fixed-dollar loss (FDL)
ratio used in determining outlier payments from 0.45 to 0.56 for an estimated impact of -0.1 percent ($20 million decrease).
To be eligible for the home health benefit, beneficiaries must need intermittent skilled nursing or therapy services and must be homebound and under the
care of a physician. Covered home health services include skilled nursing, home health aide, physical therapy, speech-language pathology, occupational
therapy, medical social services and medical supplies. Home Health Agencies (HHAs) are paid a national, standardized 60-day episode payment for all covered
home health services, adjusted for case-mix and area wage differences.
The HH PPS proposed rule is one of several rules for calendar year 2017 that reflect a broader administration-wide strategy to create a health care system
that results in better care, smarter spending and healthier people.
For more information, click here.
to see the proposed rule.
CMS Extends Comment Deadline for RFI on Modular Solutions for Medicaid IT Enterprise and Pre-Certification of Solutions
CMS extended the deadline for information the agency is seeking on the availability of modular solutions and the ability and interest in producing and
offering solutions for Medicaid enterprise systems, specifically for clinical and administrative data warehouse and identity management solutions. CMS is
developing a process for vendors to voluntarily obtain pre-certification for their Medicaid Management Information Systems (MMIS) modules in order to
streamline the development and eventual certification of MMIS. CMS is now seeking suggestions for structuring such a pre-certification program. The
information gathered from this RFI will inform the CMS process for implementing voluntary vendor pre-certification.
The original due date was July 14, 2016. The comment period for this RFI has now been extended to Aug. 15, 2016.
To see the RFI, click here.
CMS Releases Proposed Mandatory Bundled Payment Program
The agency also announced a new initiative to encourage hospitals to increase cardiac rehabilitation, in hopes of improving patient outcomes and reducing
On July 25, CMS proposed new models to mandate bundled payments for cardiac care. This is the agency’s second program requiring providers to accept set
payments for an episode of care. CMS also proposed extending its existing mandatory bundled payment initiative for hip replacements to other hip surgeries.
CMS clarified that under the new Medicare physician payment system starting in 2018, both mandatory bundled payment models could qualify as Advanced
Alternative Payment Models, which would allow participating physicians to be excluded from a new proposed quality reporting program and instead receive a
lump-sum payment from Medicare.
The agency also announced a new initiative to encourage hospitals to increase cardiac rehabilitation, in hopes of improving patient outcomes and reducing
To see the proposed rule, click here.
CDC Releases Updated Guidance on Risk of Sexual Transmission of Zika Virus
The Centers for Disease Control and Prevention updated its guidance on prevention of sexual transmission of Zika to include pregnant women with female sex
partners. It also issued new recommendations to test all pregnant women with possible Zika virus exposure. Pregnant women with sex partners (male or
female) who live in or who have traveled to an area with active Zika virus transmission should consistently and correctly use barriers against infection
during sex or abstain from sex for the duration of the pregnancy, according to the guidance.
CDC reported the first case of a woman’s transmitting the Zika infection to a man through sexual intercourse earlier this month. There have been 15 cases
of Zika virus infection transmission through sex reported in the U.S. as of July 20, CDC said.
The CDC now calls for the assessment of all pregnant women in the United States and U.S. territories for possible Zika exposure at each prenatal care
The updated recommendations are due to new data indicating the virus can persist in serum of pregnant women longer than previously reported. Recent data
also indicate the Zika virus might be detected in the serum or urine of some pregnant women who have no symptoms of the virus.
CDC offers specific testing recommendations for symptomatic pregnant women, asymptomatic pregnant women and for all pregnant women who seek care more than
12 weeks after symptom onset or possible Zika exposure.
To see the guidance, click here.
Medicare Spending on Catastrophic Prescription Care Rises 85 Percent
According to a new report, Medicare spending on “catastrophic” prescription care rose 85 percent. The report found the program’s spending rose from $27.7
billion in 2013 to $51.3 billion in 2015. The main reason for this increase is expensive drugs. For example, spending on hepatitis C drugs Harvoni and
Sovaldi more than doubled to $7.5 billion in 2015. For the full report, click here.
JAMA Study Finds Medicare Enrollees Could Have Less Access to Opioid Addiction Treatment
According to a new JAMA Psychiatry analysis, less than 30 percent of Medicare
enrollees struggling with an opioid disorder are receiving medication that can help with addiction. More than 300,000 Medicare patients are estimated to
have an opioid use disorder, and more than 200,000 per year require hospitalization for overuse. About 81,000 of those were receiving
buprenorphine-naloxone—the only opioid addiction treatment covered in Part D.
The results of this study suggest Medicare patients could have less access to opioid addiction treatment than the broader population in the country.
A second study from the American Public Health
Association estimated that 2.3 million Americans abused or were dependent on opioids in 2012 and more than 50 percent (1.4 million) had access to
medication-assisted treatment. The Medicare population has the highest and most rapidly growing prevalence of opioid use disorders, according to study
authors Anna Lembke and Jonathan Chen of Stanford University. More than six out of every 1,000 Medicare patients are diagnosed with an opioid problem,
compared to just more than one out of every 1,000 privately insured patients.
Vermont, Maine, Massachusetts, Rhode Island, New Hampshire and Washington, D.C., all prescribed at 300 times the national average.
To help alleviate this gap, Congress approved legislation allowing nurse practitioners and physician assistants to prescribe medication-assisted treatment.
HHS also finalized a rule raising the cap on the number of patients whom doctors can treat with these drugs from 100 to 275.
JAMA Study Looks at Generic Drug Approvals Since 1984
According to a new JAMA analysis, more than one-third of drugs eligible for generic competition had three or less generic competitors, a gap in competition
that can alleviate pressure on branded drug companies to keep prices down. Even though FDA has proposed expediting the review of the first generic drug for
a branded product, the researchers said the agency may want to prioritize generic applications for drugs with three or less competitors. More recently the
prices for some generic drugs have increased 100 times or more, partly due to limited competition.
The study looked at drugs approved between September 1984 and January 2016—of the 210 drugs that were eligible for generic competition, 17 percent had no
generic competitor, 84 percent had at least one generic and 63 percent had four or more. Cancer drugs had the lowest rate of generic competition—only
two-thirds have at least one generic, and a little more than one-fourth have four or more generics. In contrast, all the neurology and psychiatry drugs
looked at had at least one generic.
To see the study, click here.
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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