Sep 12, 2016

Washington Healthcare Update

This Week: House and Senate return to work…Ways and Means Committee marks up co-op bill…Mylan’s EpiPen continues to raise issues…CMS provides more options to comply with MACRA, but will it be enough? Government funding issues loom large—discussions going on about how long to fund the government…Zika funding continues to be debated.

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress

House of Representatives

House Ways and Means Committee Marks Up Co-op Bill

On Sept. 8, the House Ways and Means Committee voted out a bill (H.R. 954) to exempt Americans from paying the individual mandate penalty if they lose coverage due to a consumer-operated and -oriented plan collapse. The bill would make this exemption effective retroactively to after 2013, and exemptions would be offered for the month in which someone loses coverage and would run through the end of the calendar year.

Lawmakers on both sides of the aisle largely agreed the bill would not harm anyone, but some argued it did not address the underlying problems of the ACA and how co-ops have been treated in legislation and regulation.

Ranking Member Sandy Levin (D-MI) indicated that the plight of former co-op members could become an area of bipartisan progress. He wrote to Treasury Secretary Jack Lew and HHS Secretary Sylvia Burwell on Sept. 6 to ask where co-ops have closed midyear and how the administration has helped those people, as well as how many of those members reenrolled in coverage and whether they would qualify for a hardship exemption.

Acting CMS Administrator Andy Slavitt responded to Levin in a letter on Sept. 7 stating that the agency works closely with state insurance departments to tell consumers about special enrollment periods.

“Each member of a closing CO-OP who purchased a Marketplace plan is contacted at least 20 times in a variety of formats, including emails, calls, and paper mailers to encourage the selection of a new policy during the SEP,” Slavitt said. “It should also be noted that in states that have guarantee funds available, members who do not make a new plan selection during an open SEP window continue to be covered and do not experience a gap in coverage.”

Slavitt added that people can claim an exemption from the individual mandate’s tax penalty if they are uninsured for fewer than three consecutive months or if the remaining coverage options are deemed unaffordable based on their income.

Almost 750,000 individuals have been affected by co-op closures so far, Joint Committee on Taxation (JCT) Chief of Staff Thomas Barthold told the committee. He noted that he has not been able to get data on what those people did after losing coverage.

JCT estimated that $4 million in revenue would be lost by 2016 as a net effect of fewer tax penalties paid minus fewer plan subsidies going to those consumers if they do not reenroll in exchange coverage.

Lawmakers Ask CMS to Be Flexible as MACRA Start Date Approaches

Leaders from two House committees have asked CMS to consider easing into the January 2017 start date of Medicare’s new payment scheme for physicians. The lawmakers asked CMS to consider flexibilities for all practitioners, including small practices, to ensure a smooth transition into the new payment system. The letter was sent by Energy and Commerce leaders Fred Upton and Frank Pallone, Ways and Means leaders Kevin Brady and Sandy Levin, and the leaders of their committee’s health panels.

The lawmakers call on CMS to provide the following:

  • Simplified, streamlined, coordinated requirements;
  • Clear pathways to succeed in MIPS or the APM tracks;
  • Opportunities to move to APM track and flexibilities to be rewarded for meaningful delivery system reform activities in MIPS and in the APMs; and
  • Reporting in January 2017 with appropriate systems ready and in place.

House to Vote on Bill to Expand Tax Deduction for Medical Expenses

The House will vote this month on a bill to expand a tax deduction for medical expenses. The proposal, which aims to reverse restrictions on the break imposed by Obamacare, is the only tax measure mentioned in an Aug. 31 memo distributed by Majority Leader Kevin McCarthy on the chamber’s September legislative agenda. Other items in his memo included legislation to fund the federal government into the next fiscal year and funding to fight the Zika virus.

Current law mandates that taxpayers can claim a deduction for medical expenses to the extent they exceed 10 percent of their adjusted gross incomes. H.R. 3590 would reduce that to 7.5 percent—this was the threshold before the Affordable Care Act (ACA) was enacted. The bill would cost almost $33 billion, according to the Joint Committee on Taxation. It is unlikely to go anywhere in the Senate.

CBO’s Estimate for Cost of Part B Drug Demo Repeal to Be Released Soon

In the next several weeks, the Congressional Budget Office (CBO) will release what it thinks it will cost to repeal Medicare’s Part B drug payment model. At a House Budget Committee hearing on the CMS Innovation Center, CBO’s Mark Hadley said that they are looking very carefully to figure out what the budgetary effects would be from legislation to block its moving forward.


Senators Warren and Sanders, and Others, Ask Aetna Questions About Exiting Exchanges

Sens. Elizabeth Warren, Bernie Sanders and several other Senate Democrats are calling for answers from Aetna about its decision to pull out of most Obamacare exchanges for 2017. In a letter to Aetna CEO Mark Bertolini, the senators said, “We are particularly troubled that Aetna’s decision to leave the ACA exchanges appears to have been motivated by the Justice Department’s decision to challenge Aetna’s proposed $37 billion merger with Humana.” The senators also criticize a July 5 letter to lawmakers in which Bertolini warned that Aetna’s participation in the exchanges was contingent on approval of the Humana merger. DOJ filed lawsuits seeking to block the Aetna-Humana merger and the Cigna-Anthem merger—the antitrust trials are scheduled to begin in November. Aetna announced two weeks after DOJ’s suit that it will leave 11 of 15 state exchanges for 2017.

To see the letter, click here.

Sen. McCain Leads GOP Bill to Suspend Individual Mandate Penalty in Some Areas

A group of Senate Republicans recently introduced a bill to suspend the individual mandate penalty for people living in areas with less than two exchange insurers. Sen. John McCain is a lead sponsor of the bill and said it will help areas where no insurers are planning to sell 2017 exchange plans.

Senators Portman and Ayotte Introduce New Opioid Bill

On Sept. 7, Sens. Rob Portman, Ron Johnson and Kelly Ayotte introduced a bill to combat the opioid epidemic after Congress approved their earlier opioid legislation this summer. The new bill aims to curtail the trafficking of synthetic drugs like fentanyl and carfentanil by requiring postal services in China, India and other countries to provide advance electronic data on all mail shipments.

For more information on the Synthetics Trafficking & Overdose Prevention Act (STOP), click here.

Zika Funding Bill Fails Once Again

On Sept. 6, Senate Democrats blocked the GOP’s $1.1 billion funding bill for the nation’s Zika response. As expected, the Zika bill failed 52-46 after having failed under similar margins in June and July. The lack of funding is already having serious negative effects on the efforts to battle the Zika virus—according to an Obama administration health official, progress on multiple vaccines will have to stop if new funding does not come in at the end of September.

The next opportunity to attach Zika funding to must-pass legislation, perhaps the only chance in the near future, will be the legislative package to fund government beyond Sept. 30.

Democrats blamed their rejection of the Zika bill on GOP riders. Senate Minority Leader Harry Reid accused Republicans of attacking Planned Parenthood in the bill, which would not have provided funding for contraception.

There are now 2,722 reported cases of Zika in the United States and 624 of them are pregnant women. The virus is wreaking havoc on Puerto Rico and the U.S. territories, where there are more than 14,000 cases, including nearly 1,000 pregnant women.

After the virus was detected in several parts of Florida, both Republicans and Democrats in the state—as well as Texas, where the virus is expected to travel—stepped up their calls for congressional action.

The legislation would have provided $1.1 billion to develop a Zika vaccine and to try to control the mosquito population. It is partially funded by cuts to Affordable Care Act (ACA) programs.

Senate Democrats Warn of Government Shutdown

Senate Democrats are warning of a government shutdown in October if Republicans do not submit to their demands for a stopgap bill that runs only through this year. Senate Minority Leader Harry Reid (D-NV), along with Sens. Chuck Schumer (D-NY) and Debbie Stabenow (D-MI), said Democrats will not accept a short-term funding bill that goes into 2017, which several House Republicans proposed before August recess.

Several House conservatives and even some top Senate Republicans, including Majority Whip John Cornyn (R-TX), have said they prefer a stopgap that kicks funding into early next year, preferring to turn to an omnibus package when a new president can dictate spending priorities.

As of Sept. 6, lawmakers have four weeks to move a bill that keeps the government open beyond Sept. 30 and has enough support to pass both chambers.

Sens. Grassley, Warren Ask Standard-Setting Committee About Incorporating Medical Device Identifiers on Insurance Claim Forms

On Aug. 29, Sens. Chuck Grassley (R-IA) and Elizabeth Warren (D-MA) sent a letter asking the Accredited Standards Committee X12 (ASC X12) about steps it is taking to include medical devices’ unique device identifier (UDI) on health insurance claim forms.

“In order for our offices to better understand the process that ASC X12 is following in developing these standards, and the status of the discussion of including [device identifier] information for implantable devices, we request that you provide our staff with a briefing on the steps the Committee will take to finalize its recommendations,” wrote Grassley and Warren to ASC X12 Chair Garry Beatty. The lawmakers requested that the briefing take place no later than Sept. 9.

The senators would like to discuss the following:

  1. The Committee’s process for developing recommended changes to claims forms.
  2. The timeline associated with each stage of the process.
  3. The process for incorporating feedback from members into final consensus recommendations of the Committee.
  4. The status of discussions related to inclusion of DI information in claims for implantable devices.
  5. The status of discussion related to inclusion of DI information into claims for reimbursable supplies.

For more information, click here.

2. Administration

CMS Issues Final Rule on Emergency Preparedness Requirements for Providers and Suppliers

On Sept. 8, CMS issued a final rule requiring health providers participating in Medicare and Medicaid to create an emergency plan to follow in the event of natural disasters like floods or hurricanes. The new rule requires providers and suppliers to have a coordinated response with federal, state, trial and local entities to ensure that facilities are adequately prepared to care for patients during emergencies.

To see the final rule, click here.

CMS Gives More Options to Comply with MACRA

On Sept. 8, CMS announced it will allow doctors participating in Medicare’s new payment system four options to comply with the first year of the law and avoid penalties, which are set to hit in 2019. Acting CMS Administrator Andy Slavitt laid out the different options in a blog post:

  • Option 1: Test the Quality Payment Program
  • Option 2: Participate for part of the calendar year
  • Option 3: Participate for the full calendar year
  • Option 4: Participate in an Advanced Alternative Payment Model in 2017

CMS Announces Recipients of 2016 Navigator Grants

CMS recently announced it will fund $63 million in navigator grants to provide assistance to people who need help shopping and signing up for exchange coverage when the 2017 enrollment season starts. The grants went to 96 returning organizations and two new ones in Hawaii.

For more information, click here.

CMS Announces Pre-Enrollment Verification Pilot Program for SEPs

On Sept. 6, CMS announced it will pilot a program requiring consumers who want to use a special enrollment period (SEP) to complete an eligibility determination before signing up for coverage. The insurance industry and hospitals support the policy, while consumer advocates oppose it.

The agency hopes to evaluate how pre-enrollment verification of SEP eligibility affects members’ compliance, enrollment, continuity of coverage, the risk pool and other outcomes. The scope of the pilot is still being determined.

Insurers believe that lax verification of eligibility for these SEPs allows people to game the system by waiting until they are sick to enroll, often racking up large claims before dropping coverage. CMS responded by narrowing the reasons people can enroll in an SEP and creating a post-enrollment verification process.

The agency plans to consult with stakeholders on a range of pilot design questions, including the following:

  • Should the pilot be geographically targeted, or should it involve a sample of consumers throughout the Federally-Facilitated Marketplaces? If it is geographically targeted, what states or sub-state regions should be included?
  • Should the pilot focus on a subset of special enrollment periods that may be most prone to abuse? If so, which would those be?
  • How should we conduct the pilot in a manner that minimizes burdens on consumers and disruptions in coverage?
  • How should we measure the impact of the pilot on compliance, enrollment, continuity of coverage and the health of the risk pool, and do so in a timely way so as to inform potential policy changes for 2018?

CMS Announces 2017 Hospital Payment Adjustments for EHR Incentive Program

On Sept. 2, CMS posted a fact sheet outlining its updated reductions for eligible hospitals that fail to successfully demonstrate meaningful use for an Electronic Health Record (EHR) reporting period. Those eligible hospitals participating in the Medicare and Medicaid EHR Incentive Programs will be subject to the payment adjustments as of Oct. 1.

The change is applied as a reduction to the applicable percentage increase to the Inpatient Prospective Payment System (IPPS) rate, according to CMS. The percentage decrease was 25 percent in 2015 for the 2013 reporting period and 50 percent in 2016 for the 2014 reporting period, and will be 75 percent in 2017 for the 2015 reporting period.

However, 98 percent of eligible hospitals and critical access hospitals in the country have already successfully demonstrated either Stage 1 or Stage 2 meaningful use. CMS does offer hardship exceptions for hospitals not demonstrating meaningful use on a case-by-case basis.

For more information, click here.

CMS Looking at Medicare Loophole That Allowed Mylan’s EpiPen to Pay Generic Drug Rebates to Medicaid, While Having Brand-Drug Protections

Mylan—the owner of the anti-allergy injection drug EpiPen—could be facing more issues as it continues to come under public scrutiny for raising EpiPen’s price by nearly 500 percent since it acquired the treatment in 2007. On Sept. 1, the list price of an EpiPen two-pack rose from about $100 to $600.

A loophole in how CMS defined an “innovator” drug allowed Mylan to make more profit in its sale of the EpiPen. Under Medicaid, the injection drug was considered a generic or “non-innovator” medicine, meaning the company paid lower rebates to the government. But at the same time, Mylan had all the market monopoly and patent protection of an FDA-approved brand-name drug. Its one-time competitor, Sanofi’s Auvi-Q, was deemed an innovator drug and did not receive the same perks. Sanofi no longer makes that product.

A number of lawmakers in both the House and Senate are investigating. Three of them—Sens. Chuck Grassley (R-IA), Amy Klobuchar (D-MN) and Richard Blumenthal (D-CT)—wrote to CMS on Aug. 31 inquiring about the price hike’s impact on taxpayer-funded health programs, like Medicaid, and asking why EpiPens are treated like a generic under the Medicaid Drug Rebate Program.

According to a 1997 letter from CMS to Dey Laboratories, FDA listed EpiPen as a new drug application because it is a new delivery system—the syringe that people can carry with them and can be injected easily. However, the drug inside the injector—epinephrine—is made by generic companies. Therefore, the designation of the EpiPen as a non-innovator and its subjection to the lowest rebate is “entirely fitting and proper,” according to CMS.

Mylan said it complied with all laws and regulations surrounding Medicaid’s rebate classifications. It noted that EpiPen’s “non-innovator” classification dated back to before Mylan acquired it.

Additionally a 2016 rule from Medicaid established a new process for drugmakers to follow if the FDA approves a product as a new drug but the company believes CMS should keep treating it as a non-innovator. Mylan plans to submit such an application for continued non-innovator status by the April 1, 2017, due date.

Medicare Trustees Warn of Provider Shortages in Medicare Due to MACRA Pay Cuts

In their 2016 Annual Report, Medicare Trustees warn that future MACRA pay cuts and ACA productivity adjustments could lead to future provider shortages in Medicare unless lawmakers step in. Payment updates under the SGR-replacement law likely will not keep pace with physician cost increases, leading to rates that will be lower than they would have been under the SGR formula by 2048, the trustees say.

“The specified rate updates could be an issue in years when levels of inflation are high and would be problematic when the cumulative gap between the price updates and physician costs becomes large,” the report says. “Absent a change in the delivery system or level of update by subsequent legislation, the Trustees expect access to Medicare-participating physicians to become a significant issue in the long term under current law.”

The trustees note an additional $500 million for doctors that participate in the Merit-Based Incentive Payment System and the 5 percent annual bonuses for doctors participating in alternative payments are set to expire in 2025. The sunset of those two provisions will result in a significant one-time pay cut for most doctors, the trustees say.

Federal Government Launches $20 Million Fund to Fight Antibiotic Resistanc

On Sept. 8, the federal government officially launched a federal prize competition wherein contestants will vie for $20 million in prizes to develop new laboratory diagnostic tools that detect and distinguish antibiotic-resistant bacteria. Rapid diagnostics are urgently needed so physicians can test whether infections are bacterial or viral, and thus whether they will respond to antibiotics. Overuse of these drugs has spurred the spread of deadly superbugs resistant to the medicines. Doctors often feel pressure from patients to prescribe antibiotics even when it is unclear if they are necessary. Applications will be accepted through Jan. 9.

National Cancer Institute Accepts Panel Recommendations on Cancer Moon Shot Initiative

On Sept. 7, the National Cancer Institute accepted new recommendations from a blue ribbon panel on the most promising research opportunities for the cancer moon shot. The recommendations represent the first of three major reports that will influence the cancer moon shot, which looks to make 10 years’ worth of progress against cancer in half the time.

The ability to quickly launch moon shot programs will depend on whether Congress provides additional funds. At a meeting of the National Cancer Advisory Board, officials said they are developing work plans based on different budget scenarios.

The blue ribbon report did not include specific funding requests but instead charted 10 areas of focus to lay the groundwork for the moon shot’s scientific basis. These areas range from building a national patient network for tumor profiling that can also collect data on what treatments work—regardless of where patients receive their care—to expanding immunotherapy clinical trials and encouraging the broad adoption of cancer prevention strategies.

In October, the White House Cancer Task Force will release policy proposals, and Vice President Joe Biden, who is leading the initiative, will release a separate report. The White House has asked for $1 billion in moon shot funding. Congress is widely expected to pass a short-term continuing resolution for the government this month. That is unlikely to include moon shot resources, so advocates are pressing for startup funds in an omnibus budget deal later in the year.

CDC Estimates Show Uninsured Rate Falls Below 9 Percent for the First Time

According to new CDC estimates released Sept. 7, the U.S. uninsured rate fell to 8.6 percent in the first quarter of 2016—the first time that the uninsured rate has dropped below 9 percent. Altogether, 27.3 million people were uninsured between January and March of this year, down from 28.6 million in 2015 and 48.6 million in 2010. The data comes from the National Health Interview Survey, which is considered the gold standard of national insurance surveys by researchers and updated several times throughout the year. Overall, the national uninsured rate has been nearly halved since the Affordable Care Act was passed in 2010, when 16 percent of Americans said they were uninsured. The most dramatic declines began in 2014, after key coverage provisions took effect. Among adults aged 18 to 64, the uninsured rate fell from 22.3 percent in 2010 to 20.4 percent in 2013 and 11.9 this year.

CDC Announces $2.4 Million in Zika Funding for Five Major Metropolitan Areas

On Sept. 2, CDC announced a funding amount of $2.4 million to five major metropolitan areas to help combat the Zika virus as Congress remains at an impasse over an emergency funding deal.

The funding will go to Chicago, Houston, Los Angeles County, New York City and Philadelphia— all of which face higher risks from travel-related Zika infections. CDC’s funds will be used to establish systems to detect microcephaly and other effects caused by the virus. CDC also gave $16.4 million for states to develop similar projects, but this additional money is intended to help the major cities coordinate with state efforts.

HHS has used $264 million of the $374 million in Ebola funds that were redirected for the domestic Zika response. CDC warned that funds will be exhausted by the end of September without additional aid from Congress.

FDA and Industry Reach User Fee Agreement

FDA and industry recently reached an agreement on the first reauthorization of the Generic Drug User Fee Act (GDUFA) program. The Generic Pharmaceutical Association said the new agreement will provide FDA with additional resources to review generic medicines. Additional GDUFA provisions will address the backlog of applications at FDA from before the first generic user fee program in 2012. Through the agreement, FDA must meet certain benchmarks in reviewing generic medicines in exchange for user fees from industry. It is unclear how much generic drugmakers will contribute over the five-year agreement. GDUFA also calls for increased communication and transparency with FDA and for special meetings between FDA and companies working on complex generic products. The full text of the agreement is not yet available.

FDA to Require Black Box Warnings on Opioid, Anxiety Drug Combinations

FDA recently announced it will be requiring almost 400 products to include its strongest “black box” warning about the dangers to taking opioids and a class of anti-anxiety drugs known as benzodiazepines together. Both types of drugs depress the central nervous system and using them at the same time carries risks of extreme sleepiness, respiratory depression, coma and death, according to FDA. This action was part of FDA’s Opioids Action Plan and comes after a review of the data that found overdose deaths involving both drugs tripled from 2004 to 2011.

The number of patients who were prescribed both drugs increased by 41 percent from 2002 to 2014. FDA estimates that means an additional 2.5 million opioid patients during that time received benzodiazepines, which include anti-anxiety drugs such as Xanax and Valium, as well as sleep aids such as Ativan.

FDA had already begun reviewing the data when it received a citizens’ petition from public health officials in February asking for a review of its warnings on the combined use of the drugs.

FDA Will Hold Meeting on Communications Regarding Unapproved Uses of Medical Products

On Aug. 31, FDA announced it will hold a November meeting to get feedback about how drug and device companies share information about the unapproved uses of their products.

FDA only lets companies promote their products by using information on the FDA-approved label, even though health care providers can legally treat patients with a drug or device for an “off-label” use. Companies want more freedom to communicate information about their drugs and devices after the 2nd U.S. Circuit Court of Appeals ruled four years ago in U.S. v. Caronia that the First Amendment prevents the government from banning truthful off-label promotion.

The agency is looking for feedback on multiple topics, including how increased industry communication about unapproved uses could affect public health, doctors’ decision-making and payers’ coverage decisions. FDA wants to know whether safeguards are needed to mitigate any potential risks to patients from off-label communication. In addition, FDA wants to know if increased off-label communication could affect drug and device companies’ research and development efforts.

FDA’s current regulations were developed in response to public health tragedies that occurred when companies could market drugs and devices without review of their effectiveness and safety.

The meeting is scheduled for Nov. 9-10.

3. State Activities

Alaska: Costs for Alaska’s Medicaid Expansion Exceed First-Year Estimates

Costs for Alaska’s expanded Medicaid program have exceeded the state’s first-year estimates by about $30 million so far. Gov. Bill Walker expanded the program through an executive order and enrollment began last September. As of July 31, nearly 20,400 people had signed up and medical claims totaled almost $175 million—the state health department had estimated first-year costs would be $145.4 million. Some in Alaska are concerned about the impact the program could have on the state budget after the federal government stops full coverage of expenses for expansion enrollees Jan. 1.

Arkansas: Former Head of Medicaid Named UAMS Visiting Professor, Medicaid Adviser in Arkansas

Dennis Smith, the head of Medicaid under President George W. Bush, will join the University of Arkansas for Medical Sciences as a visiting professor and adviser for Medicaid and health care reform for the state health department. Smith will start the positions on Sept. 15. He also ran Wisconsin’s health department under Gov. Scott Walker from 2011-2013.

California: State Legislature Passes Bill Preventing Surprise Medical Bills

The California legislature recently passed a bill that prevents consumers from receiving large medical bills when they unknowingly get care from an out-of-network provider at an in-network facility. This issue has gained prominence across the country as insurers downsize their provider networks. Under the bill, insurers are required to let individuals pay the same cost-sharing that they would pay for in-network care. An out-of-network provider would also be prohibited from reporting information to a credit reporting agency or initiating a lawsuit against a patient for 150 days after the initial billing, or using liens on a patient’s primary residence to collect unpaid bills. The bill applies to non-emergency care but not to self-insured plans governed by ERISA. The bill will take effect next July if it is signed by Gov. Jerry Brown.

Florida: State Regulators Approve 19 Percent Average Rate Hikes for Obamacare Plans

On Sept. 2, Florida state regulators announced that premiums for individual Obamacare plans in the state will rise by 19 percent on average in 2017. Florida exchange plans were approved for average rate changes anywhere from a 6 percent decrease to a 65 percent increase. In six out of seven instances, Florida regulators approved rate hikes that were higher than what the companies had requested. For example, Blue Cross Blue Shield was approved for an average rate increase of 19 percent after requesting 14.5 percent and Molina was given a 17.4 percent increase after asking for 10.6 percent. Humana was the only company to receive a lower rate increase than what the company had asked for—the insurer had requested an average increase of 43.6 percent and was granted a 36.8 percent increase. Seven companies are offering individual plans only off the Obamacare exchange, including Aetna and Cigna.

Georgia: Georgia Chamber of Commerce Releases Proposals for Medicaid Expansion

On Aug. 31, the Georgia Chamber of Commerce released proposals for expanding Medicaid under Obamacare, aiming to push the issue in the state legislature next year. The “Georgia Way” outlines three policy options for expanding coverage to low-income individuals. One plan would expand Medicaid to individuals up to 100 percent of the federal poverty level, while the other two would expand up to 138 percent FPL. All three plans depend on federal approval. The proposal would institute a work requirement and also require individuals to enroll in employer coverage where available. Enrollees would also pay premiums and co-pays.

The Obama administration has rejected work requirements as a condition for Medicaid eligibility and also has not allowed states to receive the ACA’s increased funding for expanding coverage just to the federal poverty level. Georgia Chamber officials are hopeful that Hillary Clinton or Donald Trump would grant more flexibility on Medicaid expansion.

Starting in 2017, the ACA requires that states cover 5 percent of the costs for Medicaid expansion and the amount steadily rises to 10 percent.

Maine: Maine Co-op Withdrawing From New Hampshire in 2017

Maine Community Health Options, one of the ACA’s co-op plans, is planning to withdraw from the New Hampshire insurance market next year. This means more than 11,400 people in New Hampshire will have to find new coverage for 2017. The co-op, which is still offering plans in Maine next year, expanded to New Hampshire last year but reported significant financial losses. The plan lost $3.3 million during the first six months of this year. The company also sued the federal government last month over payments it is owed under the ACA’s temporary risk corridor program. Regulators did say, however, that they are open to letting the co-op return to New Hampshire in 2018.

Mississippi: Magnolia Health Insurer to Expand Coverage to All 82 Mississippi Counties 

Mississippi health insurer Magnolia Health Care will offer insurance in all 82 of the state’s counties through the federal exchange starting Jan. 1. Magnolia, which is owned by Centene, is one of two insurers on the individual exchange in 2017, the other being Humana. This news comes as UnitedHealth Group is set to exit the exchange at the end of the year—the insurer had offered coverage in all 82 counties this year.

New Mexico: Interim CEO Announced for New Mexico’s Exchange

Linda Wedeen will take over as the new interim CEO for New Mexico’s exchange when current CEO Amy Dowd leaves at the end of September. Wedeen currently oversees the exchange’s marketing and outreach.

Oklahoma: Health Care Authority CEO to Retire

Oklahoma Health Care Authority CEO Nico Gomez announced his resignation for the end of September. Gomez plans to pursue opportunities in the private sector after spending 20 years in public service—including 16 years at the Oklahoma Medicaid agency.

Oregon: Oregon Asks for Additional Funding for Coordinated Care Demo

Oregon submitted a waiver proposal on Aug. 12 asking CMS for another $1.25 billion to continue its coordinated care demonstration program. The waiver, initially approved in 2012, gained national attention for creating coordinated care organizations such as ACOs to care for Oregon’s Medicaid population. The state was originally given $1.9 billion to set it up.

Pennsylvania: Health Department Awards Insurers Managed Care Contracts 

The Pennsylvania health department awarded a major Medicaid managed care contract to insurers AmeriHealth Caritas, Centene and UPMC. The contracts are for the new Community HealthChoices, a Medicaid program covering managed long-term services for around 420,000 people.

4. Regulations Open for Comment

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 rule said.

CMS Releases Proposed Mandatory Bundled Payment Program

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 readmissions.

To see the proposed rule, click here. CMS will accept comments on the proposed rule until 5 p.m. on Oct. 3.

IRS Publishes Draft Regulations on Reporting of Catastrophic Health Coverage

The Internal Revenue Service (IRS) published new draft health coverage reporting regulations in the Federal Register on Aug. 2. The new draft regulations call for the health insurers that sell catastrophic medical insurance to report any catastrophic coverage they have provided to the enrollees and the IRS on Form 1095-B. The rule would first apply to the coverage in effect in 2017—issuers would then send out the first catastrophic plan 1095-B forms in early 2018.

Catastrophic plans are higher-deductible, lower-value plans that insurers can sell to people under 30, and to people of any age who earn too much to qualify for ACA exchange plan premium subsidies. The new draft regulations also call for the government agencies that offer Basic Health Plans—which are similar to managed Medicaid programs for people who earn too much to qualify for Medicaid—to report Basic Health Plan coverage to the IRS.

A third piece of the draft regulations clarifies that an employer providing two or more types of coverage that come under the minimum essential coverage rules would just have to report the richest form of coverage.

Comments on the draft regulations are due by Oct. 3.

CMS Seeking Public Comment on Collection of Standardized Assessment-Based Data Items

CMS is seeking public comment on a collection of standardized assessment-based data items developed under the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) to meet the domains of: cognitive function and mental status; special services, treatments and interventions; medical conditions and co-morbidities; and impairments. Standardized assessment-based data items were developed for the Long-Term Care Hospital, the Inpatient Rehabilitation Facility, the Skilled Nursing Facility and the Home Health Agency settings. CMS is seeking public comment on whether the items have the potential for improving quality, the utility of the items for describing case mix, the feasibility of the items for use in post-acute care settings and the validity of the items. This call for public comment is now open from Aug. 12 through Sept. 12, 2016.

UNOS Proposes Changes to Liver Transplant Policies

The United Network for Organ Sharing (UNOS) is proposing changes to the geographic regions for liver transplants to better match organ supply with demand and make access more equitable. Currently, there exists a wide variation in a transplant candidate’s chance of receiving an organ in a timely way, based on where the patient lives and the location of the transplant hospital where they are listed. Some patients may not get organs until they are much sicker than are patients awaiting transplants in different regions.

HHS Proposes Updates to Title X Rules

On Sept. 2, HHS proposed to preclude Title X grant recipients from using criteria in their selection of family planning providers that are unrelated to the ability to deliver services effectively.

Since 2011, 13 states have attempted to restrict participation by family planning providers in Title X based on factors unrelated to their ability to provide services. The Title X program provides funding for certain family planning services, including STD screening and treatment, but funding is not used to pay for abortions. Although Planned Parenthood is not mentioned by name in the proposed rule, it has often been the subject of defunding actions by states and Congress.

In the proposed rule, HHS said the effects already felt by the restrictions in many states justify the department’s rulemaking. HHS said grant recipients that do not provide services directly would also be required to follow the updated standards when choosing subrecipients.

HHS also proposed that a tiered structure governing how funds are distributed would not be allowed unless it can be proven that a provider in a top tier delivers Title X services more effectively than a lower-tier provider. According to the Guttmacher Institute, a research organization that supports reproductive rights, four states have a priority system for distributing family planning funds, which often disadvantages family planning centers.

CMS Proposes Changes to Risk Adjustment in 2018 Marketplace Rules

On Aug. 29, CMS issued the proposed annual Notice of Benefit and Payment Parameters for 2018, which outlines additional steps to strengthen the Health Insurance Marketplace. CMS is issuing this rule earlier in the calendar year in order to provide more certainty to the Marketplace as it continues to mature.

Beginning in 2017, the proposed policies will take steps to strengthen the risk adjustment program. First, the rule proposes updates beginning in 2017 to better reflect the risk associated with enrollees who are not enrolled for a full 12 months. Second, beginning in 2018, the rule proposes to use prescription drug utilization data to improve the predictive ability of CMS’s risk adjustment models. Third, also beginning in 2018, the rule proposes to establish transfers that will help to better spread the risk of high-cost enrollees, a change that would improve the risk-sharing benefits of the program.

In addition to the improvements to risk adjustment, the proposed rule contains other provisions to improve the Marketplace consumer experience and strengthen the individual and small group markets as a whole. The proposed rule would give consumers additional tools for assessing the networks of competing plans; broaden availability of this year’s new standardized plan options by accommodating state cost-sharing rules; and create consumer protections for consumers enrolling through the direct enrollment channel. The proposed rule would also create multiple child age bands that address instances in which consumers could face large premium changes after turning age 21; amend the guaranteed renewability regulations to provide additional flexibility for issuers to remain in an insurance market in certain situations; and codify several special enrollment periods that are already available to consumers in order to ensure the rules are clear and to limit abuse. It also seeks information on a number of suggestions offered by issuers, consumers, providers and others on further improving the risk pool, such as additional changes to special enrollment period policies or outreach; clarifying coordination of benefit rules between Medicare, Medicaid and the Marketplace; and providing greater certainty on the amount of user fee revenue spent on education and outreach.

To see the proposed rule, click here.

5. Reports

GAO Report: Enrollees Concentrated Among Few Issuers in 2014  

On Sept. 6, GAO released a report finding that enrollment in private health insurance plans remained concentrated among a small number of issuers in most states in 2014—including in the newly established exchanges. In most states, the 3 largest issuers in each market had at least an 80 percent share of the market from 2011 to 2014, despite there being on average 11 or more issuers participating in the three types of markets—individual, small group and large group.

To see the full report, click here.

GAO Report: Medicare 2016 Payment Rates for Complex Wheelchair Accessories

On Aug. 31, GAO released a report on the 2016 payment rates for complex wheelchair accessories. Medicare was scheduled to begin paying lower rates for accessories used with certain complex power wheelchairs in 2016, but Congress delayed this for one year. To estimate the effect of the lower rates, GAO compared them to what Medicare was previously paying for each of the top 50 accessories. GAO found that the new rates were 3 to 50 percent lower and could save Medicare and beneficiaries up to $19 million per year.

To see the full report, click here.

GAO Report: Payment Methodologies for Physician-Administered Drugs 

On Aug. 1, GAO released a report on payment methodologies for physician-administered drugs. In this report, GAO provides information on the payment methodologies, drug utilization management strategies and cost-containment approaches for physician-administered drugs. GAO found that payment methodologies for physician-administered drugs varied across Medicare fee-for-service, Medicaid fee-for-service, the Department of Veterans Affairs (VA) health care system, the VA Choice program and the two large private payers that were reviewed. Compared to Medicare, other federal payers generally paid rates that were the same or lower. For example, for 10 high-expenditure drugs, VA paid rates that were no more than 68 percent of Medicare’s rate. In contrast, according to the two private payers GAO interviewed, their payment rates were often higher than Medicare’s rate.

To see the full report, click here.

WalletHub Lists States With the Best and Worst Health Care

WalletHub, a personal finance website, has listed the best and worst health care states based on 29 metrics including average premiums, coverage rates and physicians per capita. The top five are: Minnesota, Maryland, South Dakota, Iowa and Utah, respectively. The bottom five: Arkansas, Nevada, Mississippi, Louisiana and Alaska.

For more information, 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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