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Sep 11, 2017

Washington Healthcare Update

This Week: Congress returns to face debt ceiling, funding the government and funding disaster assistance for Hurricane Harvey, and the Senate holds hearings on marketplace stabilization and CHIP.

1. Congress


2. Administration

3. Regulations Open for Comment

4. Reports

1. Congress


Senate Appropriators Approve HHS Spending Bill

On Sept. 7, the Senate Appropriations Committee approved the FY 2018 $79.4 billion spending bill for HHS, a $1.7 billion increase over enacted levels. The Labor-HHS-Education spending package goes against the president’s wishes and adds an additional $2 billion in additional funding for NIH. CDC funding dropped, bringing their budget to $7.18 billion. The language also provides funding for CMS to continue to oversee the ACA and fund the navigator program, as well as providing Title X family planning funding level of $287 million.

For more information and details on the bill, click here.

Reconciliation Instructions Expire Sept. 30

On Sept. 1, the Senate parliamentarian released a ruling regarding the expiration of the effort to repeal and replace the Affordable Care Act. The opportunity for the Senate to pass this legislation with a majority will expire on Sept. 30. Congress has several other major items to tackle this fall including facing a debt ceiling vote by the end of the month.

Ahead of Senate HELP Hearings, Governors Pen Bipartisan Plan

On Aug. 30, eight governors—Gov. John Kasich of Ohio, Gov. John Hickenlooper of Colorado, Gov. Brian Sandoval of Nevada, Gov. Tom Wolf of Pennsylvania, Gov. Bill Walker of Alaska, Gov. Terry McAuliffe of Virginia, Gov. John Bel Edwards of Louisiana and Gov. Steve Bullock of Montana—signed a plan in an effort to stabilize the ACA. The plan comes just the week prior to Senate HELP’s hearings on shoring up the Obamacare markets.

The governors stated, “We strongly encourage that Congress and the Administration take immediate action to stabilize the individual health insurance marketplace. If there is a clear signal to consumers and carriers that the individual market is viable, then additional state-based reforms will be more manageable and we can succeed in preserving recent coverage gains and controlling costs.”

Recommendations include, but are not limited to:

  • Funding cost-sharing reduction payments through 2019;
  • Creating a temporary stability fund for reinsurance programs;
  • Offering choices in underserved counties;
  • Keeping the individual mandate for now;
  • Maximizing market participation;
  • Promoting appropriate enrollment;
  • Stabilizing the risk pools; and
  • Reducing cost through coverage redesign by asking HHS Secretary Price to allow states more flexibility.

To view the letter, click here.

HELP Committee Holds Hearing on Stabilization and Schedules More Hearings

On Sept. 6, the Senate HELP Committee held a hearing on congressional funds for the ACA’s cost-sharing reduction payments. The witnesses—Oklahoma’s John Doak, Washington’s Mike Kreidler, Tennessee’s Julie Mix McPeak, Pennsylvania’s Teresa Miller and Alaska’s Lori Wing-Heier—were state insurance commissioners asking for payments for over two years, control over state insurance markets and simplification to the 1332 waiver provision. Chairman Lamar Alexander (R-TN) said during the hearing, “There’s a great deal of what we’re doing that’s in Finance’s jurisdiction, I think we’re moving at such a rapid pace we’ll make our recommendation to full Senate and hopefully come up with something.”

Before the hearing, in a show of interest in stabilization, 31 senators met with the chairman and ranking member Patty Murray (D-WA). The attendees included two senators not on the committee, Sens. Angus King (I-ME) and Tom Carper (D-DE), who attended the hearing as observers.

Insurance commissioners asked questions regarding the administration’s decision to cut the marketing budget for open enrollment and navigator program. However, not all commissioners agreed on whether every state could afford reinsurance waivers or a replacement penalty for the individual mandate.

Chairman Alexander asked the witnesses if they would provide two policy changes that could represent bipartisan agreement. One idea that all five commissioners agreed upon was that CSRs need to be funded and that the commissioners preferred a multiyear appropriation. The chairman stated that Congress needs to act to appropriate CSRs to guarantee certainty. Further, several witnesses cited the budget neutrality requirement in the statute is a great hurdle. Tennessee’s Julie Mix McPeak stated this requirement would prevent some states from setting up reinsurance provisions and asked to shorten the six-month approval period for the waiver. Other emerging policy ideas covered in the hearing were reinsurance, marketing and navigators, increased competition, individual mandate and building a healthier pool, and sales across state lines.

To view the hearing, click here.

The Senate HELP Committee has added two more hearings to the calendar in an effort to stabilize the insurance markets. On Sept. 12, the committee will hear from health care experts on increasing flexibility in the individual health care market. The witnesses are: Mike Leavitt, a former HHS secretary and governor of Utah; Allison Leigh O’Toole, the CEO of Minnesota health exchange MNsure; Tarren Bragdon, who heads the free-market Foundation for Government Accountability; Kaiser Permanente CEO Bernard Tyson; and actuary Tammy Tomczyk. The second hearing will be on Sept. 14 and will include testimony from representatives from the industry. The announced witnesses are: Tennessee physician Manny Sethi; Marshfield Clinic Health System CEO Susan Turney; Anthem vice president Robert Ruiz-Moss; Young Invincibles’ Christina Postolowski; and South Carolina insurance director Raymond Farmer.

Senate Appropriations Subcommittee Keeps Opioid Funding Flat

The Senate Appropriations HHS subcommittee advanced an FY 2018 spending bill to keep funding for the opioid crisis flat. This bill splits $816 million between the CDC, the Substance Abuse and Mental Health Services Administration and the Health Resources and Services Administration for programs combating opioid abuse. This is only a $15 million increase from 2017 levels; however, the 2017 omnibus raised spending levels to $801 million, an increase of $650 million.

Senator McCaskill Releases Report on Opioids

On Sept. 7, Sen. Claire McCaskill (D-MO) released a report by the Senate Homeland Security and Governmental Affairs Committee Democrats that states Insys Therapeutics, a drug maker, used aggressive tactics to increase prescriptions for the opioid Subsys that undermined substance abuse. The report also indicated that Insys created a business unit to go between pharmacy benefit managers and gain reimbursements in the years 2013-2016. Express Scripts and UnitedHealth Group excluded Subsys from their list of covered drugs in 2015 and 2016 respectfully. In December last year, federal prosecutors indicted six Insys executives on racketeering charges. The response from Insys has been that they have “completely transformed its employee base over the last several years and actively taken the appropriate steps to place ethical standards of conduct and patient interests at the heart of [its] business decisions.”

To view the report, click here.

2. Administration

Flexibility Because of Hurricane Harvey

When HHS Secretary Tom Price declared public health emergencies in Texas and Louisiana, he triggered a series of 1135 waivers that allow providers to disregard certain Medicaid and CHIP requirements, out-of-state licensing rules, self-referral sanctions and obligations under the rules of both HIPAA and the Emergency Medical Treatment and Labor Act, the federal law requiring emergency departments to stabilize and treat anyone, regardless of their insurance status or ability to pay. It is expected that the same declarations will be made for the areas impacted by Hurricane Irma.

“Due to the emergency declaration and other actions taken by HHS, CMS is able to waive certain documentation requirements to help ensure facilities can deliver care,” Price said in a statement. “These actions and flexibilities will become effective at 12:00 P.M. Eastern Standard Time on August 28, 2017, but will have retroactive effect to August 25, 2017.”

The agency can offer waivers during emergencies, but it cannot pay for services that aren’t covered. The Centers for Medicare & Medicaid Services (CMS) is granting exceptions under certain Medicare quality reporting and value-based purchasing programs to acute care hospitals, PPS-exempt cancer hospitals, inpatient psychiatric facilities, skilled nursing facilities, home health agencies, hospices, inpatient rehabilitation facilities, outpatient dialysis facilities, long-term care hospitals and ambulatory surgical centers located in areas affected by Hurricane Harvey due to the devastating impact of the storm. These providers will be granted exceptions without having to submit an extraordinary circumstances exception request if they are located in one of the Texas counties or Louisiana parishes, all of which have been designated by the Federal Emergency Management Agency (FEMA) as a major disaster county.

The scope and duration of the exception under each Medicare quality reporting program is described in the memo posted on Aug. 31; however, all of the exceptions are being granted to assist these providers while they direct their resources toward caring for their patients and repairing structural damages to facilities.

To view the memo, click here.

If FEMA expands the current disaster declaration for Hurricane Harvey to include additional counties or parishes, CMS will update this memo to expand the list of providers eligible to receive an exception without submitting a request to include the hospitals, PPS-exempt cancer hospitals, inpatient psychiatric facilities, skilled nursing facilities, home health agencies, hospices, inpatient rehabilitation facilities, long-term care hospitals and ambulatory surgical centers located in the additional counties and parishes.

In addition, CMS will continue to monitor the situation and adjust exempted reporting periods and submission deadlines accordingly.

To view additional details and materials, click here.

Insurers are also waiving out-of-network penalties, extending claim-filing deadlines and pre-authorizing payments for prescriptions and other medical supplies. Cigna and Blue Shield of Texas said in emails that for customers living in areas affected by Harvey, they are waiving prior authorization requirements for acute medical and behavioral health care, covering out-of-network services at in-network rates, lifting prescription refill restrictions and forgiving premium late payments.

However, negotiations for flexibility on other rules, such as who covers the cost of care and drugs during the crisis, could drag on for weeks and months.

After Hurricane Katrina, more than 86,000 people on Louisiana Medicaid were evacuated to other states where HHS had to approve temporary coverage so they could continue receiving benefits, according to a 2006 Health Affairs study.

To view the study, click here.

FDA has provided commissioned corps officers as part of the overall HHS deployment of medical equipment and resources to help address public health needs and assess critical health infrastructure needs in the wake of Hurricane Harvey. FDA also has posted hurricane safety recommendations to guide consumers on safe use of drugs, medical devices, biologics, food and water.

The Federal Emergency Management Agency announced Monday, Aug. 28, that under the public health emergency declared by HHS Secretary Tom Price on Saturday, Aug. 26, more than 500 HHS personnel have been deployed in affected areas in Texas and Louisiana and more are on alert.

To view the FDA hurricane recommendations, click here.

HHS IG Warns CMS That It Is Not Protecting Nursing Home Patients Enough

On Aug. 24, HHS released an “early alert” that shows the preliminary results pointing to more than 100 cases of neglect and potential abuse in nursing homes. The inspector general of the HHS warned CMS concerning its lack of attention in protecting patients.

These incidents are likely not reported to authorities, even in cases of sexual assault, physical abuse or lack of medical care. The “early alert” is an effort to notify CMS of “inadequate procedures,” so they can begin remedying the current situation before the report is finalized.

To view the report, click here.

FDA Outlines Actions on Gene Therapy and Stem Cell Treatments

On Aug. 28, FDA Commissioner Scott Gottlieb released a statement on creating a 21st Century Cures expedited pathway for regenerative products and announced that certain gene therapy products would be eligible. The FDA has yet to approve a gene therapy, but Novartis’s CTL019 could be the first, following unanimous approval in July.

Further, Gottlieb stated he intends to develop a framework for regenerative medicine before the fall. He informed the industry that the FDA will be increasing enforcement against unapproved regenerative medicine treatments and is forming a working group. In an effort to strengthen its enforcement position, FDA sent a public warning letter to the U.S. Stem Cell Clinic after the agency found the company was using components of fat tissue as a treatment for Parkinson’s and ALS.

To view the statement, click here.

To view the letter to U.S. Stem Cell Clinic, click here.

Second Biosimilar Gets a Modifier

On Aug. 25, CMS added a second modifier in order to differentiate between two biosimilars in a common billing code. This is the first time CMS has issued a policy in response to drug industry concerns regarding safety after the biosimilar had been placed on the market. The modifier is similar to the biosimilar Renflexis, which is the second biosimilar of Remicade. The transmittal document to Medicare Administrative Contractors states: “In order to allow the identification of the manufacturer of the specific biosimilar biological product that was administered to a patient, either existing HCPCS modifier ZB, or new modifier ZC is required when HCPCS code Q5102 is billed on a claim that is submitted after October 1, 2017.”

Renflexis and Inflectra were the first two biosimilars to reference the same brand biologic. On Aug. 25, the FDA also approved the second biosimilar for AbbVie’s Humira. The Healthcare Common Procedure Coding System is updated on a quarterly basis so the second modifier for Humira is not currently available.

To view the transmittal, click here.

3. Regulations Open for Comment

CMS Proposes 2018 Policy and Rate Changes for Hospital Outpatient, Ambulatory Surgical Center Payment Systems

The Centers for Medicare & Medicaid Services (CMS) on July 13, issued a proposed rule that updates payment rates and policy changes in the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System.

Among the provisions in this rule, CMS is proposing to change the payment rate for certain Medicare Part B drugs purchased by hospitals through the 340B program. The proposed rule also requests comment on how CMS can best implement the proposal to pass savings on to beneficiaries and providers, and to allow seniors to save money on their drug costs. The 340B Drug Pricing Program allows certain hospitals and other health care providers to purchase drugs and biologicals (other than vaccines) that are administered in a hospital outpatient department from drug manufacturers at discounted prices.

The proposed rule also includes a provision to address rural hospitals recruiting physicians by placing a two-year moratorium on the direct supervision requirement currently in place at rural hospitals and critical access hospitals.

In addition, CMS is releasing within the proposed rule a request for information to welcome continued feedback on flexibilities and efficiencies in the Medicare program.

Comments are due 5 p.m. Sept. 11, 2017.

To view a fact sheet on the proposed rule, click here.

To view the proposed rule, click here.

CMS Proposes 2018 Payment and Policy Updates for the Physician Fee Schedule

The Centers for Medicare & Medicaid Services (CMS) on July 13 issued a proposed rule that would update Medicare payment and policies for doctors and other clinicians who treat Medicare patients in calendar year (CY) 2018. This proposed rule seeks public comment on reducing administrative burdens for providing patient care, including visits, care management and telehealth services. The rule takes steps to better align incentives and provide clinicians with a smoother transition to the new Merit-based Incentive Payment System under the Quality Payment Program (QPP). The rule also attempts to encourage fairer competition between hospitals and physician practices by promoting greater payment alignment, and it would improve the payment for office-based behavioral health services that are often the therapy and counseling services used to treat opioid addiction and other substance use disorders. In addition, the proposed rule makes additional proposals to implement the Center for Medicare & Medicaid Innovation’s Medicare Diabetes Prevention Program expanded model starting in 2018.

In addition to the proposed rule, CMS is releasing a request for information to welcome continued feedback on the Medicare program. CMS is committed to maintaining flexibility and efficiency throughout Medicare. Through transparency, flexibility, program simplification and innovation, CMS aims to transform the Medicare program and promote the availability of high-value and efficiently provided care for its beneficiaries. This will inform the discussion on future regulatory action related to the Physician Fee Schedule.

Comments are due by 5 p.m. on Sept. 11, 2017.

For a fact sheet on the proposed rule, click here.

To view the proposed rule, click here.

CMS Proposes 2018 and 2019 Payment Changes for Medicare Home Health Agencies

The Centers for Medicare & Medicaid Services (CMS) on July 25 issued a proposed rule that would update payment rates and the wage index for home health agencies (HHAs) serving Medicare beneficiaries in 2018; it also proposes a redesign of the payment system in 2019. Comments are due Sept. 25, 2017.

CMS is planning a slight pay cut for home health agencies in 2018, by reducing Medicare payments to the agencies by 0.4 percent next year, saving the federal government an estimated $80 million. That change is driven in part by CMS’s planned phase out of a provision boosting pay rates for certain home health services delivered to rural patients. The agency is also floating a series of changes to the payment methodology beginning in 2019, which could result in a pay cut of up to 4.3 percent. That would translate to as much as $950 million in reduced Medicare payments to home health agencies.

Under the proposed rule, the home health payment update percentage for HHAs that submit the required quality data for the Home Health Quality Reporting Program would be 1 percent in 2018. The proposed rule also includes proposals to refine the HH PPS case-mix adjustment methodology, including a change in the unit of payment from 60-day episodes of care to 30-day periods of care, to be implemented for periods of care beginning on or after Jan. 1, 2019. Additionally, the proposed rule includes proposals for the Home Health Value-Based Purchasing Model and the Home Health Quality Reporting Program.

To view the proposed rule, click here.

For more information on the Home Health Prospective Payment System, click here.

4. Reports

Affordable Care Act: IRS Should Mitigate Limitations of Data to Be Used for the Age and Gender Adjustment for the Tax on High-cost Health Plans

Starting in 2020, the Affordable Care Act is scheduled to impose a 40 percent tax on high-cost health plans when an employee’s annual cost of coverage exceeds a certain dollar limit. The limit may be adjusted if an employer’s workforce—based on age and gender—is likely to have higher-than-average health costs.

The adjustment is to be made based on the costs of the federal employee BlueCross BlueShield Standard plan, but we found that an adjustment based on this plan’s costs alone may not be effective due to the relatively high costs incurred by its young members.

GAO recommended that IRS take steps to ensure an effective age and gender adjustment.

To view the report, click here.

Public Health Information Technology: HHS Has Made Little Progress Toward Implementing Enhanced Situational Awareness Network Capabilities

GAO is recommending that HHS complete a plan that includes all actions for establishing the network, develop a project management plan that identifies measurable steps for completing the actions and conduct IT management processes according to CIO guidance. HHS had no comments on the report or recommendations.

To view the report, 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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