Jun 19, 2017
Washington Healthcare Update
This Week: We continue to wait on a Senate repeal/replace bill…CSR payments continue to be a concern.
4. State Activities
5. Regulations Open for Comment
Reps. Welch, Harper Introduce Bill to Expand 340B Drug Discounts
Reps. Peter Welch (D-VT) and Gregg Harper (R-MS) introduced a bill designed
to close a loophole in the 340B drug program that the congressmen say
unfairly allows drug companies to deny legally mandated discounts on orphan
drugs to safety-net hospitals and other clinics serving a disproportionate
share of low-income patients.
The bill would permit an exclusion on orphan drugs only in instances in
which they are being used to treat a rare disease—if hospitals are
purchasing the drug to treat a more common disease, drug makers would need
to provide the 340B discounts.
To read the bill,
House Approves “Third Bucket” Obamacare Bills
On June 13, the House passed the first in a series of bills that make up
the so-called third bucket of the GOP’s repeal and replace strategy.
The Verify First Act,
H.R. 2581, passed 238-184 along mostly party lines and would require individuals to
verify their income eligibility and citizenship or legal immigration status
with the Social Security Administration before accessing premium tax
credits to buy health coverage.
Republicans said it is designed to close a loophole that protects taxpayer
dollars from going to people who are not eligible for subsidies. Democrats
maintained the Treasury Department already has protections in place and
charged the effort is designed to target undocumented immigrants.
Other third-bucket bills that passed last week include a measure,
H.R. 2372, which would allow veterans to access Obamacare subsidies if they are not
enrolled in health coverage at the Veterans Administration and a bill,
H.R. 2579, that would address how subsidies interact with COBRA coverage.
A vote on a fourth bill dealing with medical malpractice legislation (H.R.
1215) was postponed because some conservatives are worried about imposing
federal standards on states.
Senate Appropriator Urges Against President Trump’s Proposed Cuts to NIH, CDC
On June 15, senior Senate appropriator Roy Blunt (R-MO) panned the Trump
administration’s fiscal 2018 budget proposal, vowing not to sign off on any
spending bill that would slash funding to key public health programs.
Blunt, chairman of the Labor-HHS-Education appropriations subcommittee,
singled out proposed funding cuts to the NIH and CDC as particularly
Sen. Patty Murray, the panel’s ranking Democrat, also criticized the budget
proposal for including devastating cuts to HHS’s funding.
The blueprint proposed reducing NIH’s funding by nearly 20 percent and
cutting CDC funding by $1.3 billion.
Sen. Alexander Urges White House to Fund Obamacare Subsidies
On June 15, Sen. Lamar Alexander urged the White House to continue funding
key Obamacare cost-sharing subsidies for the next two years.
Alexander, during a Senate hearing, said he believes the Trump
administration should make the payments to insurers “at least through 2018,
and should probably go ahead and do it through 2019.”
The Senate HELP chairman is the second high-profile Republican lawmaker in
the last few weeks to call for funding the subsidies. The other was House
Ways and Means Chairman Kevin Brady, who said that Congress should
temporarily appropriate money for the insurer payments.
The future of the subsidies, worth about $7 billion this year, has been in
doubt since House Republicans won a lawsuit challenging the Obama
administration’s implementation of the payments. That lawsuit is still
under appeal, but President Donald Trump has repeatedly threatened to cut
off the funding. Insurers have warned that without the funding, they would
be forced to dramatically hike premiums or leave the Obamacare markets
HHS Secretary Tom Price would not commit to maintaining the funding,
telling Alexander that he cannot comment because he is a defendant in the
lawsuit. Price noted that the White House’s proposed fiscal 2018 budget
includes funding for the cost-sharing subsidies.
Appropriators Starting the Next Continuing Resolution
Senate Majority Leader Mitch McConnell said on June 13 that he has
instructed appropriators to temporarily rely on spending limits from fiscal
2017 as they write new bills.
McConnell’s comments appear to be laying the groundwork for a continuing
resolution that would extend the fiscal 2017 package, as many Republicans
already anticipate. He also said he hoped to reach a deal with Democrats to
set new spending levels sooner rather than later.
Any Senate budget deal for fiscal 2018 would need to address the looming
spending cuts under sequestration, which are set to take effect in
September. Without congressional action, this fall’s budget caps would
force Congress to cut about $3 billion from domestic spending and $2
billion from defense spending, according to GOP appropriators. Domestic
spending would be capped at $516 billion and defense spending would be
capped at $549 billion—levels both parties have protested.
CMS Releases 1991-2014 Health Care Spending by State
On June 14, CMS’s Office of the Actuary (OACT) released state-level health
care spending data for the period 1991-2014. The data shows that while most
states experienced faster growth in 2014 due to Medicaid expansion and
enrollment in exchange plans, per capita health spending in Medicaid
expansion and non-expansion states grew at similar rates. The report also
found that the most recent economic recession, which ended in 2009, and
modest recovery since then, had a sustained impact on health spending and
health insurance coverage. Every state experienced slower growth in per
capita personal health care spending from 2010-2013 than experienced during
the period 2004-2009.
David Lassman, the lead author of the report noted that “ ‘recent economic
and health sector factors have had clear impacts by state, both by payer
and in the rates of overall per capita personal health care expenditure
growth; however, during the 2009 to 2014 period, the variation in spending
between the lowest and highest states was virtually unchanged.’ ”
The report, published as a web first in Health Affairs, offers context for
understanding how health spending varies across states. The analysis
updates previous estimates published in 2011 and examines personal health
care spending (or the health care goods and services consumed) through a
resident-based view. These estimates are also presented both by type of
goods and services (such as hospital services and retail prescription
drugs) and by major payer (including Medicare, Medicaid, and private health
insurance) for the individuals who reside in a state.
For more information,
CMS Actuary Releases the Estimated Financial Effect of the AHCA
The House-passed Obamacare repeal bill would leave 13 million more
Americans uninsured over the next decade and reduce federal spending by
according to an analysis
released June 13 by CMS’s Office of the Actuary.
The overage estimate is well below the 23 million more uninsured that the
CBO has projected under
the American Health Care Act. The congressional scorekeeper additionally
estimated that the American Health Care Act would reduce spending by only
$119 billion over a decade.
The disparity is a result of differing assumptions about whether
cost-saving measures in the House bill will work. The CMS actuary and CBO
have disagreed in the past on the budgetary effects of legislation,
including surrounding the enactment of Obamacare.
Most of the coverage losses stem from the anticipated rollback of
Obamacare’s Medicaid expansion. CMS estimates that 6 million fewer
individuals would be shut out because of the House bill’s tighter
eligibility criteria, and that an additional 2 million will cycle out of
the program because of new requirements. Medicaid spending will be cut by
$105 billion by 2026, chief actuary Paul Spitalnic estimated—amounting to
an 11 percent reduction.
The CMS report has mixed news about what the House GOP bill will do to
insurance premiums. It projects that average premiums will be 13 percent
lower in 2026 under the AHCA. But once subsidies are taken into account,
premiums would be 5 percent higher for enrollees—and out-of-pocket costs
would be 61 percent higher than under Obamacare.
The latest analysis comes as the Senate seeks to build consensus around its
own repeal package. The chamber is hoping to vote on a bill before breaking
for the July 4 recess.
New Jersey Gov. Christie Says Opioid Commission May Propose Changing
The presidential opioid commission may propose changing patient privacy
regulations so there are clear exemptions for overdose cases, Gov. Chris
Christie, the commission chairman, said June 12.
Christie said the commission could recommend a retooling of the Health
Insurance Portability and Accountability Act of 1996, or HIPAA, so
physicians can notify close relatives when a patient’s overdose is reversed
with the drug Narcan.
Christie told reporters he had a good meeting with HHS Secretary Tom Price
in which they discussed the issue. He also said he is in talks with lawyers
at the Justice Department to make sure the commission comes up with a
proposal that is implementable.
HIPAA created national guidelines for how to protect a patient’s medical
records and other health information.
Supreme Court Rules in Sandoz vs. Amgen
Under a unanimous
Supreme Court decision
issued June 12, cheaper versions of expensive biologic medicines will be
able to reach the market sooner.
In Sandoz v. Amgen, the high court reversed a lower-court ruling
that said biosimilar companies could not give branded biologic makers the
legally required 180 days notices of their intent to sell a copycat until
after it receives FDA approval. Sandoz, which was seeking to market a
biosimilar version of Amgen’s biologic Neupogen, argued this effectively
gave the brand company six additional months of marketing exclusivity.
The justices agreed with Sandoz’s argument, that the Biologics Price
Competition and Innovation Act allows the 180-day notice of marketing to
come either before or after the biosimilar receives FDA approval.
The Supreme Court also vacated the Federal Circuit’s ruling in a second
issue at hand in the case—whether biosimilar makers must engage in a
patent-sharing process with the biologic company prior to approval. The
Federal Circuit had said this was not mandatory but Amgen disagreed.
The Supreme Court ruled that the patent-sharing outlined in the biosimilar
law is not enforceable by injunction under federal law.
The Supreme Court said the Federal Circuit should reexamine this issue and
determine whether a state-law injunction is available if a biosimilar
company doesn’t share its patent information with the biologic maker.
4. State Activities
California: Covered California Adopts $314 Million Budget
Covered California’s board adopted a $314 million 2017-18 budget, with
roughly one-third earmarked for sales, marketing and outreach. “We
recognize there is a significant amount of uncertainty in the broad
environment, but what is certain is our fiscal stability and solid
financial planning,” exchange director Peter Lee said Thursday.
The board also confirmed changes in contract language that provides for
insurers to submit two versions of rate filings: proposed rates with
cost-sharing reduction payments, and rates without the subsidies. Covered
California will opt for the higher rates by mid-August if the federal
government fails to confirm whether it will fund the subsidies through the
end of 2018. Covered California is still figuring out what to do if the
subsidies are continued after its self-imposed August deadline.
Texas: Gov. Abbott Signed Bill Allowing Mothers to Get Postpartum Depression Screenings
Texas Gov. Greg Abbott signed a bill that would allow new low-income
mothers to get postpartum depression screenings and counseling through
Medicaid or the Children’s Health Insurance Program next year. Meanwhile,
Abbott vetoed a bill that would extend the life of Women’s Health Advisory
Committee, a state group that provides recommendations on women’s health
issues, because he believes the panel’s mission has been fulfilled. The
governor included maternal mortality on a list of items that he wants the
Legislature to address later this summer during a special session.
5. Regulations Open for Comment
CMS Proposes 2018 Payment and Policy Updates for Medicare Hospital
CMS is offering hospitals a 90-day meaningful use reporting period in 2018,
according to a
proposed payment rule
released April 14.
The first major payment regulation released under HHS Secretary Tom Price
marks a change from the back-and-forth over electronic health records
meaningful use requirements seen under the Obama White House. The previous
administration would typically propose a yearlong reporting period, then
scale it back at the last minute after intense lobbying pressure. As a
Republican congressman from Georgia, Price often pushed the Obama
administration hard for 90-day meaningful use reporting periods.
In connection with the 21st Century Cures Act, CMS also is
to remove from meaningful use clinicians who see most of their patients at
ambulatory surgery centers.
Price and CMS are also changing previously finalized requirements from
electronic clinical quality measures. Under the proposed rule, hospitals
can select six measures and report on them for the first three quarters of
For more information,
CMS is Accepting Measure Submissions for the Advancing Care Information
Performance Category until June 30
CMS is still accepting measures for the Advancing Care Information
performance category of the Merit-based Incentive Payment System (MIPS).
The Annual Call for Measures and Activities ends June 30, 2017.
CMS encourages providers to identify and submit measures for the MIPS
Advancing Care Information performance category. To be considered,
proposals must include specific criteria including, but not limited to,
measure description, measure type and numerator and denominator
CMS requests that stakeholders consider outcome-based measures, patient
safety measures and cross-cutting measures that use certified EHR
technology to support the improvement activities and quality performance
categories of MIPS.
Advancing Care Information Submission Form
to propose measures for inclusion, and send the form to
To learn more about the process for submitting measures, please visit the
Call for Measures
webpage, and review the
Call for Measures and Activities fact sheet.
CMS Looks to Boost Medicare Payments to Rehab Hospitals, Nursing
Facilities and Hospices
CMS could boost Medicare payments to a swath of rehabilitation hospitals,
nursing facilities and hospices under a trio of new proposed rules.
On April 27, the agency floated a
$390 million bump
in federal payments to skilled nursing facilities in 2018—or roughly 1
percent higher than this year. Hospices, meanwhile,
a 1 percent increase worth $180 million.
to increase reimbursement to rehab hospitals by $80 million for 2018, in
addition to eliminating a penalty on facilities that don’t submit certain
data to the federal government on time.
proposed payment rules for other
providers, CMS is asking the industries for input on regulations it should
overhaul or eliminate. CMS Administrator Seema Verma and HHS Secretary Tom
Price have pledged to review all of the agency’s rules in a bid to cut
unnecessary or burdensome regulations.
Comments on the trio of rules must be received no later than 5 p.m. on June
CMS Seeking Comments on Data Elements in IMPACT Act
CMS has contracted with the RAND Corporation to develop standardized
patient/resident assessment data elements in alignment with the Improving
Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act).
CMS seeks comments from stakeholders on data elements that meet the IMPACT
Act domains of cognitive function and mental status; medical conditions and
co-morbidities; impairments; medication reconciliation; and care
preferences. The public comment period opens on April 26, 2017, and closes
on June 26, 2017.
For more information, view the
CMS Publishes Post-Acute Care Proposed Rules
On May 11, CMS published the following proposed rules:
CMS Issues Proposed Revision Requirements for Long-Term Care
Facilities’ Arbitration Agreements
On June 5, CMS issued proposed revisions to arbitration agreement
requirements for long-term care facilities. The proposed revisions would
help strengthen transparency in the arbitration process, reduce unnecessary
provider burden and support residents’ rights to make informed decisions
about important aspects of their health care.
The Reform of Requirements for Long-Term Care Facilities Final Rule,
published on Oct. 4, 2016, listed the requirements facilities need to
follow if they choose to ask residents to sign agreements for binding
arbitration. The final rule also prohibited predispute agreements for
binding arbitration. The American Health Care Association and a group of
nursing homes sued for preliminary and permanent injunction to stop CMS
from enforcing that requirement. The court granted a preliminary injunction
on Nov. 7, 2016. After that decision, CMS reviewed and reconsidered the
arbitration requirements in the 2016 Final Rule.
The proposed rule focuses on the transparency surrounding the arbitration
process and includes the following proposals:
The prohibition on predispute binding arbitration agreements is
All agreements for binding arbitration must be in plain language.
If signing the agreement for binding arbitration is a condition of
admission into the facility, the language of the agreement must be in
plain writing and in the admissions contract.
The agreement must be explained to the resident and his or her
representative in a form and manner they understand, including that it
must be in a language they understand.
The resident must acknowledge that he or she understands the agreement.
The agreement must not contain any language that prohibits or
discourages the resident or anyone else from communicating with
federal, state or local officials, including federal and state
surveyors, other federal or state health department employees, or
representatives of the State Long-Term Care Ombudsman.
If a facility resolves a dispute with a resident through arbitration,
it must retain a copy of the signed agreement for binding arbitration
and the arbitrator’s final decision so it can be inspected by CMS or
The facility must post a notice regarding its use of binding
arbitration in an area that is visible to both residents and visitors.
This proposed rule is scheduled to be published in the Federal Register on June 8, 2017, and comments are due by Aug. 7,
2017. For more information,
MedPAC June Report Focuses on MACRA
The Medicare Payment Advisory Commission (MedPAC) released its
June report to Congress on June 15. In it the advisory body
says Medicare needs to pay doctors based on outcomes like preventable
hospitalizations, but technology does not currently allow the agency to
automatically extract from EHRs and data registries the information that is
needed for such a payment system.
MACRA’s Merit-based Incentive Payment System is a “process-oriented” method
of judging physician quality, and the data it uses is not comparable from
one medical specialty to the next, the MedPAC wrote in its report. Until
EHRs and data registries can easily provide statistics like emergency
department visits and patient mobility postsurgery, the MIPS program should
allow doctors to be judged against the performance of other physicians in
their geographic area, the report said. MIPS takes effect this year and
penalizes doctors with cuts of up to 4 percent of their Medicare payments.
The MedPAC report also suggests tinkering with MACRA’s alternative payment
program, which has been criticized for not being inclusive enough to allow
doctors to have their payments allotted under that scenario.
The 5 percent bonus that doctors receive for qualifying as an alternative
payment model should be proportional to the amount of revenue generated
under that different pay model, the report says. Currently, doctors only
gain the bonus if they have a certain percentage of Medicare payments tied
to an alternative payment model. The bar was 50 percent in 2021 and 2022,
too high for some doctors and potentially leading many to avoid Medicare
alternative payment models altogether.
The report also discusses a new, two-sided risk model for ACOs that would
offer higher rewards for saving money. Under the model, doctors would be
penalized for failing to cut spending proportional to the bill for his or
her services alone, and not the total medical bill. Since only about 15 percent of Medicare spending goes to doctors, clinicians have
limited influence on ACO spending, which has made many hesitant to join the
GAO: VA Pharmacy System Needs Additional Capabilities
In a new report, GAO examined the VA’s acquisition and use of a pharmacy
system. GAO found that the VA’s pharmacy system capabilities align with
three of six identified health care industry practices. Specifically, the
pharmacy system (1) provides the ability to order medications
electronically, (2) enables prescription checks for drug-to-drug and
drug-allergy interactions and (3) tracks the dispensing of controlled
prescription drugs. However, the pharmacy system lacks capabilities that
align with three other practices that could enhance its usefulness.
GAO made six recommendations including that VA update its pharmacy system
to view and receive complete medication data, assess the impact of
interoperability and implement additional industry practices. VA generally
concurred with GAO’s six recommendations.
For more information,
CMS Reports: High Costs, Lack of Affordability Most Common Factors That Lead Consumers to Cancel Health Insurance Coverage
On June 12, CMS published two reports, the Effectuated Enrollment report
and The Health Insurance Exchanges Trends report. These reports show that
after selecting a plan on the exchanges during the open season that ended
Jan. 31, 2017, less than two months later nearly 2 million people had not
paid their insurance premium to effectuate and maintain their health
coverage. This number will be adjusted for individuals who effectuate their
coverage in March 2017. Exit survey data also contained in the reports
indicate that cost is the top reason cited for ending their coverage. Taken
together, these reports provide a better understanding of why consumers are
leaving the exchanges.
The Effectuated Enrollment Report shows that 12.2 million individuals
selected a plan at the end of open enrollment, but only 10.3 million
followed through to pay the premiums necessary to maintain coverage as of
March 15, 2017. This means 1.9 million people had not paid or did not
continue paying for the insurance coverage they selected on the exchange.
Additional individuals may effectuate coverage for March of 2017.
The Health Insurance Exchanges Trends Report shows exit survey data from
consumers who canceled or terminated their 2017 health plans selected on
the exchange during the open enrollment. Specifically, the report indicates
that cost and affordability impact consumer decisions to pay for health
To read the Effectuated Enrollment report,
To read the Health Insurance Exchanges Trends report,
If you have any questions, contact the following individuals at
Kennan, Senior Vice President
Caroline Perrin, Research Assistant
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