Nov 6, 2017
Washington Healthcare Update
CHIP hits the House floor; payment rules for 2018 finalized; administration
proposes loosening EHBs; opioid commission releases final report.
House Considers CHIP Legislation
On Nov. 3, the House passed legislation to renew the Children’s Hospital
Insurance Program, 242-174. Only 15 Democrats voted for the proposal. Of
concern to Democrats were the funding provisions that include substantially
cutting the Prevention and Public Health Fund as well as shortening the
Affordable Care Act’s grace period for missed premium payments before
enrollees lose their insurance. They also protested an offset to boost
costs for wealthier seniors on Medicare.
The legislation retained the ACA’s increase in the federal match rate for
CHIP for two years, before it begins to wind down in 2020. Republicans also
voted to delay cuts until 2020 to Medicaid disproportionate share hospital
payments included in Obamacare, and included roughly $1 billion in Medicaid
funds for Puerto Rico.
Although the Senate Finance Committee has marked up its CHIP proposal, the
Senate is still negotiating how they will pay for their proposal. This
means that although the CHIP program expired Sept. 30, Congress is not
likely to pass a proposal to renew it until the end of the year.
House Members Ask HHS Not to Finalize Medicare Home Health
Led by Reps. Ralph Abraham (R-LA) and Terri Sewell (D-AL), 174 members of
the House asked HHS Acting Secretary Eric Hargan and CMS Administrator
Seema Verma not to include 2019 cuts that rely on a new home health group
model in the final Medicare Home Health rule. Instead, the members have
asked the department and CMS to work with stakeholders to develop and
implement other pay reforms.
The proposed rule would cut almost $1 billion from Medicare reimbursement
for home health services in 2019 by changing the unit of payment for home
health episodes from 60 days of care to 30 days.
The members say that while the new model would make Medicare more
efficient, changes must be done in a manner that does not compromise access
to care. The proposed changes are not budget neutral and would reduce
reimbursements for home health programs by as much as $950 million—4.3
percent—in 2019 alone.
The letter follows a Sept. 26 letter from a group of 49 bipartisan senators
asking then-HHS Secretary Tom Price and Verma not to move forward with the
cuts until the impact of the proposed changes could be fully understood.
Senate Finance Committee Chair Orrin Hatch (R-UT) also sent a letter to CMS
in September asking that the proposed changes not be finalized.
Tax Bill Hits Medical Deduction
The GOP tax reform bill unveiled on Nov. 2 would not repeal any major part
of Affordable Care Act, but would eliminate the itemized deduction for
medical expenses, a hit to those with significant health care costs. It
would take effect next year.
The Tax Cuts and Jobs Act would also eliminate the deductibility of
contributions to Archer medical savings accounts, and would repeal the
credit drug makers can claim for clinical testing expenses for certain
drugs. Further, it would take away the orphan drug tax credit for
pharmaceutical companies. The credit allows companies to claim a credit
equal to 50 percent of their clinical testing expenses when researching
medicines for diseases that affect fewer than 200,000 Americans. The credit
was one element of the Hatch-Waxman legislation passed in 1983, which has
been credited with spurring development of rare disease treatments.
HELP Committee Hearing Focuses on Electronic Health Record Issues
At a hearing held by the Senate Health, Education, Labor and Pensions
Committee on Oct. 31, senators urged an HHS health IT official to set a
timeline for writing a rule on electronic health records that lays out what
activities are exempt from information blocking prohibitions laid out in
the 21st Century Cures Act. Committee Chair Lamar Alexander (R-TN) also
asked HHS officials to consider how much time doctors should spend on
documentation and to set an achievable goal for lowering the burden of EHR
Alexander said the hearing is the first in a series on the implementation
of the 21st Century Cures Act, which Congress passed a year ago. Hearings
in December will focus on the law’s treatment of research and development
of drugs and medical devices as well as mental health policy reforms.
Sen. Todd Young (R-IN) asked Deputy National Coordinator for Health IT Jon
White when ONC expects to publish a rule on information blocking.
That rule will guide the HHS Office of Inspector General’s enforcement and
investigation of information blocking. James Cannatti, senior counselor for
health information technology at the Office of Inspector General, said the
OIG doesn’t anticipate enforcing the information blocking provisions until
after the ONC publishes that rule.
To view the hearing,
President’s Opioid Commission Releases Final Report
The President’s Commission on Combating Drug Addiction and the Opioid
Crisis released its final report and recommendations on Nov. 1. The more
than 50 recommendations include requiring doctors and other prescribers of
opioids to show they have received training in the safe provision of those
drugs before they can renew their licenses to handle controlled substances.
The report places an emphasis on mandating that providers check
prescription drug monitoring databases and determine ways to make treatment
more accessible. Other recommendations include streamlining federal funding
so states can focus more on implementing programs and less on paperwork;
opening drug courts in all federal jurisdictions; stopping evaluating
physicians based on pain scores; allowing more emergency responders to
deploy naloxone; administering tougher prison sentences for fentanyl
trafficking; and launching a federally funded media campaign on addiction
stigma and the dangers of opioids
To read the report,
CMS Finalizes ESRD Rule
On Oct. 27, CMS finalized a 0.5 percent pay increase for dialysis
facilities in 2018 as part of the 2018 end-stage renal disease (ESRD) pay
rule. This amount is a slight decrease from what was proposed.
Hospital-based facilities are projected to receive slightly more, a 0.7
percent increase, while freestanding facilities are projected to see a 0.5
percent increase next year.
The 2018 base pay rate is $232.37, which is an increase of $0.82 from the
current base rate.
CMS also updated the outlier services fixed-dollar loss amounts for both
adults and pediatric patients, as well as the Medicare allowable payment
amounts for adult patients based on 2016 data.
CMS finalized updates to the extraordinary circumstances exception (ECE)
policy in the ESRD Quality Incentive Program to better align with the
extraordinary circumstances policies for other CMS Medicare quality
programs. The rule requires that facilities submit their ECE request forms
within 90 days of an extraordinary event, and CMS is expanding the reasons
for which an ECE can be requested.
The rule also finalizes the replacement of some existing ESRD Quality
Incentive Program measures with measures that the agency says have been
Medicare Payment Rules for OPPS and Home Health Finalized
On Nov. 1, the Centers for Medicare & Medicaid Services (CMS) finalized
two Medicare payment rules: the Hospital Outpatient Payment System (OPPS)
rule and the Home Health payment rule.
Home health agencies will face a 0.4 percent reduction in reimbursement for
2018. This is approximately $80 million overall. This cut incorporates the
phase-out of an add-on payment slated to expire at the end of the year
worth roughly $100 million in total for rural facilities.
CMS is not finalizing the Home Health Groupings Model and will take
additional time to further engage with stakeholders to move toward a system
that shifts the focus from volume of services to a more patient-centered
In the OPPS final rule, CMS is reallocating 340B program savings equally to
all hospitals paid under the OPPS. Children’s hospitals, certain cancer
hospitals and rural sole community hospitals will be accepted from these
drug payment reductions for 2018. Additionally, the OPPS final rule
includes a provision that would alleviate some of the burdens rural
hospitals experience by placing a two-year moratorium on the direct
physician supervision requirements for rural hospitals and critical access
The agency finalized a rate increase projected to increase provider
reimbursement by 1.4 percent in 2018. That’s slightly lower than the 2.0
percent overall impact on reimbursement CMS proposed in July, and should
translate to roughly $690 million in additional Medicare spending compared
with the prior year.
CMS is also permitting knee replacement surgeries to be done in outpatient
settings, finalizing a proposal that would remove the procedure from its
“inpatient only” list. In its final rule, CMS argued that it should be left
to physicians to decide where to perform each knee replacement surgery.
For a fact sheet on the OPPS final rule with comment period,
For a fact sheet on the Home Health final rule,
Medicare Reduction of 340B Reimbursements Remains Controversial
Because the final rule for the OPPS payment rule will dramatically cut what
it pays for certain physician-administered drugs at a rate that is 22.5
percent less than the average sales price, rather than the 6 percent
discount currently applied starting next year, hospitals are looking at
“We strongly urge CMS to abandon its misguided 340B rule, and instead take
direct action to halt the unchecked, unsustainable increases in the cost of
drugs,” American Hospital Association Executive Vice President Tom Nickels
said in response to the 2018 outpatient pay rule that CMS published
Wednesday (Nov. 1). “In the meantime, the AHA will work with Congress to
address this issue. In addition, the AHA will be joining the Association of
American Medical Colleges, America’s Essential Hospitals and our members to
pursue litigation to prevent these significant cuts to payments for 340B
drugs from moving forward.”
Separately, 340B Health President and CEO Ted Slafsky said his group is
examining its legal options. Slafsky said CMS doesn’t have the authority to
target 340B hospitals for reduced payments. However CMS says there is
nothing in Medicare law or the Public Health Service Act that prohibits the
CMS may revisit the policy in 2019. “[W]e remain interested in exploring
ways to better target the offsetting amount to those hospitals that serve
low-income and uninsured patients, as measured by uncompensated care,” the
Utah Gets Waiver for Medicaid Expansion
On Nov. 1, the Centers for Medicare and Medicaid Services approved Utah’s
request for a waiver for a limited Medicaid expansion that will provide
coverage to the neediest low-income adults without children. The state
estimates that as many as 6,000 adults with incomes up to 5 percent of the
federal poverty line who are chronically homeless or suffer from substance
use issues would gain coverage under Utah’s plan, according to state
State officials submitted the plan to the federal government after repeated
failed attempts to expand Medicaid under the Affordable Care Act, but the
state legislators did not support such efforts. Utah is one of several red
states that submitted Medicaid waiver requests to the Trump administration
in hopes that GOP officials would approve a spate of new restrictions that
were shunned by the Obama administration.
Utah was also granted the authority to receive federal funds to provide
short-term residential substance abuse treatment services to all Medicaid
Utah’s coverage expansion would be financed with the state’s regular
Medicaid match—the federal government covers roughly 70 percent of Utah’s
costs—rather than the enhanced funding that states receive for expanding
Medicaid up to 138 percent of the federal poverty line under Obamacare.
Earlier this year, CMS also gave Utah approval to expand Medicaid coverage
to about 4,000 parents with incomes up to 60 percent of the federal poverty
HHS Report Says Premiums Subsidies Will Rise Almost 50 Percent in
Exchanges Next Year
Premium subsidies for exchange customers will rise by nearly 50 percent
next year because of huge rate hikes, according to an analysis by the U.S.
Department of Health and Human Services of rate filings in the 39 states
that rely on HealthCare.gov for enrollments.
The average monthly federal subsidy will be $555 in 2018, compared to $382
this year. Premium subsidies are expected to be more than twice as high as
they were in 2016.
Premiums are increasing because of the administration’s decision to halt
cost-sharing-reduction (CSR) payments. Insurers use those payments to lower
the out-of-pocket costs for low-income exchange customers. The rate hikes
in most states are being loaded onto silver plans, which are the only ones
that qualify for cost-sharing-reduction payments, in order to blunt the
financial pain on Obamacare customers who don’t qualify for subsidies.
The monthly premium for the second-most-expensive silver plan—which is used
to determine subsidy levels—will increase by an average of 37 percent—from
$300 to $411—for a 27-year-old enrollee.
To read the report, click here.
Marketplace Proposed Rule Released
CMS on Oct. 27 took a major step toward administratively overhauling the
Affordable Care Act’s health insurance exchanges in line with key GOP
health reforms that have failed to pass Congress. The administration
proposed to give states new flexibility to set essential health benefits,
loosen requirements for small business exchanges, increase the threshold
for rate review and eliminate standardized plan options and the “meaningful
difference” standard, and more.
CMS will take comments through Nov. 27.
In the 365-page proposed rule, CMS would provide new flexibility for how
states select so-called benchmark plans that determine the scope of
essential health benefits. The ACA’s 10 categories of essential benefits
would still be required, but states would have more freedom to choose
benchmark plans with different standards for those benefits.
If finalized, states would have three options for revising the EHB
benchmarks. The rule would let states choose from 50 benchmark plans in any
state, replace one or more essential categories with one adopted by another
state, or otherwise select a set of benefits as long as they are equal to
those offered by a typical employer plan per the ACA requirements. The rule
would also give states a yearly opportunity to tweak the EHB package. CMS
seeks comments on the idea, and specifically asks whether the agency should
move forward with the change in 2019 or hold off until 2020.
CMS plans to continue ceding review authority to states in general,
including on accreditation, compliance and quality improvement strategy
reporting, and seeks comments on additional areas that would be
States using the FFE would still be required to pay a user fee equal to 3.5
percent of premiums, while the fee for SBE-FPs would increase from 2
percent to 3 percent of premiums.
The agency also proposes to eliminate the “meaningful difference” review
requirement for qualified health plans (QHPs). CMS originally implemented
the standard to avoid consumer confusion and the potential for competition
to be stifled by an issuer that takes up too much virtual shelf space by
offering a large number of similar plans. “However,” CMS says in the fact
sheet, “with fewer issuers participating in the Exchange, and fewer plans
for consumers to choose from, we propose to remove these standards, as we
no longer believe the requirement is necessary.”
CMS also seeks a new income “check” for consumers who attest to income
within the tax credit eligibility range, yet for whom data indicates they
earn below 100 percent of the federal poverty level, and thus are not
eligible for assistance.
Plus, the agency proposes several tweaks to the rate review program,
including exempting student health plans, allowing rolling deadlines and
hiking the default rate increases for which plans are subject to review
from 10 percent to 15 percent.
Other proposed changes include:
Eliminate the actuarial value standard for stand-alone dental plans.
Remove requirement that each exchange must have at least two navigator
entities, and that an entity must maintain a presence in the exchange
Align many of the exchange special enrollment periods with off-exchange
SEPs. Allow an SEP for pregnant women on CHIP who lose coverage
Friday’s rule solicited extensive feedback on the new definition of
“typical employer plan.” Among other things, it asked whether
state-specific factors should be taken into account in determining whether
a plan is really typical. The rule also asked if EHB changes should be
pushed back to 2020 instead of taking effect in 2019.
Notably, CMS also suggested that some new limits on state flexibility may
eventually be enacted. Specifically, the agency said it’s looking at
creating a national benchmark standard for prescription drugs to “provide a
consistent prescription drug default standard across states.”
CMS Releases New Policy for Demos to Increase Treatment for Opioid Use
On Nov. 1 the Centers for Medicare & Medicaid Services (CMS) announced
a new policy to allow states to design demonstration projects that increase
access to treatment for opioid use disorder (OUD) and other substance use
disorders (SUD). CMS’s new demonstration policy responds to the president’s
directive and provides states with greater flexibility to design programs
that improve access to high-quality, clinically appropriate treatment. In
addition, CMS is announcing the immediate approval of both New Jersey’s and
Utah’s demonstration waivers under the new policy.
Through this updated policy, states will be able to pay for a fuller
continuum of care to treat SUD, including critical treatment in residential
treatment facilities that Medicaid is unable to pay for without a waiver.
Previously, states had been required to build out their entire delivery
system for SUD treatment while also meeting rigid CMS standards before
Medicaid demonstration approvals could be granted. The new policy will
allow states to provide greater treatment options while improving their
continuum of care over time.
Under the new CMS demonstration policy, New Jersey will provide a
comprehensive and coordinated SUD benefit to adults and children while also
allowing for the continuum of SUD services provided to Medicaid
beneficiaries who reside in residential treatment facilities. The services
covered as part of the SUD benefit will include residential treatment,
withdrawal management, medication-assisted treatment, peer supports and
targeted case management.
Utah’s program is part of a broader delivery system reform effort to
address the needs of individuals with SUD, individuals who are chronically
homeless and individuals within the justice system. The demonstration will
also expand access to SUD treatment to a more complete continuum of
services, including previously excluded residential treatment sites.
The new policy also enhances the ability for CMS to evaluate how
effectively the demonstration programs are working through the collection
of information and data that can be used to inform CMS on best practices
and methods to specifically combat the opioid epidemic, increasing the
agency’s capacity to learn what treatment delivery methods are the most
effective in addressing our nation’s public health emergency.
To view a copy of the SMD # 17-003 letter to state Medicaid directors,
FDA Proposes Rule to Revoke Health Claim of Soy Protein
In a proposed rule published on Oct. 30, the Food and Drug Administration
(FDA) moved to revoke an FDA-authorized health claim rule linking
consumption of soy protein to lower risk of heart disease.
In an extensive review, the FDA found that current evidence does not meet
the robust level needed to maintain an authorized health claim. Should the
rule be finalized, the FDA will allow the use of a qualified health claim.
Manufacturers of soy protein products will be allowed to continue using the
authorized claim until at least the end of 2019.
A qualified health claim, which requires a lower scientific standard of
evidence than an authorized health claim, would allow industry to use
qualifying language that explains the limited evidence linking consumption
of soy protein with heart disease risk reduction.
FDA estimates that relabeling the estimated 200-300 products currently
bearing the authorized health claim would cost between $370,000 and
$860,000. FDA could not quantify the increased benefit to consumers.
FDA Will Recognize Drug Plant Inspections by Eight European Authorities
On Nov. 1, the FDA said it will recognize drug regulatory agencies in eight
EU countries as meeting its standards for inspecting manufacturing
facilities. The regulatory authorities are in Austria, Croatia, France,
Italy, Malta, Spain, Sweden and the United Kingdom. The agreement
officially launches on Wednesday.
The amended Pharmaceutical Annex to the 1998 U.S.-European Union Mutual
Recognition Agreement lets regulators from the U.S. and EU use each other’s
inspections. In June, the European Union determined the FDA was capable of
carrying out inspections that met EU standards. The FDA has a goal of
completing 28 capability assessments in the EU by July 2019.
GAO: Opioid Use Disorders: HHS Needs Measures to Assess the
Effectiveness of Efforts to Expand Access to Medication-Assisted
The GAO was asked to review HHS and other efforts related to
medication-assisted treatment (MAT) for opioid use disorders. The GAO
recommends that HHS take two actions: (1) establish performance measures
with targets related to expanding access to MAT and (2) establish
timeframes for its evaluation of its efforts to expand access to MAT. HHS
concurred with both recommendations.
To view the report,
To view highlights of the report,
Physician Workforce: Expansion of the Children’s Hospitals Graduate
Medical Education Payment Program
The majority of federal payments to support GME training are provided to
hospitals by the Medicare program. These payments are based, in part, on
the number of Medicare patients treated by a hospital. Because Medicare
primarily covers individuals aged 65 and older, children’s hospitals
generally treat very few Medicare patients and consequently receive few GME
payments from Medicare. Instead, many children’s hospitals receive payments
to support GME training through the CHGME program, which is administered by
the Health Resources and Services Administration (HRSA) within the
Department of Health and Human Services. Prior to 2014, eligibility for the
CHGME program was generally restricted to children’s hospitals that were
freestanding as of Dec. 31, 1996. Starting in 2014, CHGME program
eligibility was expanded to additional types of freestanding
hospitals—referred to as newly qualified hospitals.
The Protecting Access to Medicare Act of 2014 includes a provision for GAO
to examine payments to and characteristics of hospitals that participated
in the CHGME program under the expanded eligibility criteria.
The GAO looked at the four hospitals that became eligible and found that
they individually received about $320,000 to $1.6 million in 2016 from the
program. The hospitals use the program to address gaps in medical care,
including by training residents in medical specialties with physician
shortages, such as child and adolescent psychiatry.
To view the link,
If you have any questions, contact the following individuals at
Kennan, Senior Vice President
Anne Starke, Research Associate
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