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Nov 6, 2017

Washington Healthcare Update

This Week: CHIP hits the House floor; payment rules for 2018 finalized; administration proposes loosening EHBs; opioid commission releases final report.

1. Congress



2. Administration

3. Reports

1. Congress


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 Reimbursement Cuts

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 use.

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, click here.

2. Administration

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, click here.

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 improved.

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 model.

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 hospitals.

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, click here.

For a fact sheet on the Home Health final rule, click here.

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 legal options.

“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 pay cuts.

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 rule states.

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 estimates.

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 enrollees.

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 line.

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 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 appropriate.

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 service areas.
  • Align many of the exchange special enrollment periods with off-exchange SEPs. Allow an SEP for pregnant women on CHIP who lose coverage following childbirth.

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 Disorder

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, click here.

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.

3. Reports

GAO: Opioid Use Disorders: HHS Needs Measures to Assess the Effectiveness of Efforts to Expand Access to Medication-Assisted Treatment

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, click here.

To view highlights of the report, click here.

GAO 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, click here.

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

Stephanie Kennan, Senior Vice President
Anne Starke, Research Associate

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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