Washington Healthcare Update

1. Congress

House of Representatives

• District Work Period — No Legislative Activity

Senate

• State Work Period — No Legislative Activity

2. Administration

• HHS: Report Says ACA Will Decrease Hospitals’ Uncompensated Care Costs by $5.7 Billion
• HHS Funds Research Grants to Prevent Chronic Disease
• HHS: Health Insurer Participation in the Exchange for 2015
• CMS Releases July Enrollment Data for Medicaid and CHIP
• HHS: $99 Million in Grants for Youth Mental Health Improvement
• CMS Coalition Aims to Reduce Use of Antipsychotic Meds in Nursing Homes

3. State Activities

• Utah Sees 5.7 Percent Increase in Insurance Premiums
• Vermont Exchange Could Be Offline for Weeks
• DC Health Insurance Exchange Announces Approved Plans for 2015

4. Regulations Open for Comment

• FDA: REMS Standardization Report Issued and Request for Comments

5. Reports

• OIG Releases Report on Copayment Coupons for Branded Drugs and its Effect on Medicare Part D Drug Costs
• OIG Exchange Security Reports Says Personal Information in Some Exchanges Still At Risk
• GAO – ACA: Procedures for Reporting Certain Financial Management Information Should Be Improved
• Three More ACOs Leave Pilot Study in Medicare Programs

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1. Congress

House

District Work Period — No Legislative Activity

Senate

State Work Period — No Legislative Activity

2. Administration

HHS: Report Says ACA Will Decrease Hospitals’ Uncompensated Care Costs by $5.7 Billion

According to a report released Sept. 24 by the Department of Health and Human Services (HHS), hospitals’ uncompensated care costs are expected to decrease by $5.7 billion in 2014. Moreover, in states that have expanded Medicaid, hospitals are projected to save up to $4.2 billion, or about three-quarters of the total uncompensated care savings; hospitals in states that have chosen not to expand Medicaid will potentially save up to $1.5 billion this year, or about 26 percent of the total national uncompensated care savings. “Hospitals have long been on the front lines of caring for the uninsured, who often cannot pay the full costs of their care,” HHS Secretary Sylvia Mathews Burwell said in a press release. “Today’s news is good for families, businesses, and taxpayers alike. It’s yet another example of how the Affordable Care Act is working in terms of affordability, access, and quality.” The Affordable Care Act (ACA) contained provisions that provided states with federal dollars to expand their respective Medicaid programs to better serve low-income individuals who may not be able to afford health insurance. Worth noting, as a result of statutes within the ACA, funding for the disproportionate share hospital program has decreased under the premise that hospitals would have fewer patients without insurance.

HHS Funds Research Grants to Prevent Chronic Disease

On Sept. 25, the Department of Health and Human Services (HHS) announced that the agency will fund nearly $212 million in research grants to support programs working to prevent chronic diseases. The 193 awards, which will go to all 50 states and the District of Columbia, will aim to combat common diseases and reduce rates of death and disability from ailments such as heart disease, diabetes, cancer and strokes. Funded in part by the Affordable Care Act, the awards will “strengthen state and local programs aimed at fighting these chronic diseases, which are the leading causes of death and disability in the U.S., and help lower health-care costs,” HHS said in its press release. Of note, FY2014 recipients of the awards, including states, large and small cities and counties, tribes and tribal organizations and national and community organizations, will focus efforts on populations hardest hit by chronic diseases. Other program goals include reducing rates of death and disability due to tobacco use and reducing prevalence of obesity. Chronic diseases are a contributor for approximately 70 percent of deaths in America each year and contribute 80 percent of the $2.7 trillion spent on medical care in the U.S. annually.

HHS: Health Insurer Participation in the Exchange for 2015

According to a report released Sept. 23 by the HHS, based on preliminary data available for 44 states, there will be 77 issuers offering Qualified Health Plans (QHPs) through the state-based and Federally facilitated Marketplaces (also known as Marketplace plans) for the first time in 2015, and 36 of the 44 states will have at least one new Marketplace entrant. In these 44 states, there will be 63 more issuers offering Marketplace plans in 2015 than there were in 2014. This represents a 25 percent increase in the total number of issuers offering Marketplace plans between 2014 and 2015.

CMS Releases July Enrollment Data for Medicaid and CHIP

On Sept. 26, the Centers for Medicare and Medicaid Services (CMS) released its report detailing CHIP and Medicaid enrollment numbers between June and July 2014. According to the report, 800,000 new beneficiaries enrolled in CHIP or Medicaid during that time period, bringing total enrollment in the program to 8 million since the beginning of open enrollment on Jan. 1, 2014. As of July 2014, twenty-six states and the District of Columbia had implemented the expansion of Medicaid coverage under the Affordable Care Act to adults under age 65 with incomes up to 133 percent of the federal poverty level in 2014. Based on the July 2014 data found within the report, children enrolled in the Medicaid program and CHIP make up approximately 55 percent of total Medicaid and CHIP program enrollment. Specific information on each state’s Medicaid and CHIP enrollment is available within the report.

HHS: $99 Million in Grants for Youth Mental Health Improvement

Last week, HHS announced it was awarding $99 million to train new mental health providers, help teachers and others recognize mental health issues in youth and connect them to help, and increase access to mental health services for young people. Of the total funds, more than $34 million is intended to train just over 4,000 new mental health providers, and $30.3 million to expand the mental health workforce through 100 new grants to training programs to train new mental health and substance abuse health professionals who treat children, adolescents and young adults with, or at risk for, a mental health or substance use disorder. In addition, $16.7 million will support 17 new Healthy Transitions grants, to improve access to treatment and support services for youth and young adults ages 16 to 25 that either have, or are at high risk of developing, a serious mental health condition.

CMS Coalition Aims to Reduce Use of Antipsychotic Meds in Nursing Homes

On Sept. 19, the National Partnership to Improve Dementia Care, a public-private coalition, established a new national goal of reducing the use of antipsychotic medications in long-stay nursing home residents by 25 percent by the end of 2015 and 30 percent by the end of 2016. The coalition includes the Centers for Medicare & Medicaid Services (CMS), consumers, advocacy organizations, providers and professional associations. The partnership has engaged the nursing home industry across the country around reducing use of antipsychotic medications with momentum and success in this area that is expected to continue. In 2011, Medicare Part D spending on antipsychotic drugs totaled $7.6 billion, which was the second-highest class of drugs, accounting for 8.4 percent of Part D spending. In addition to posting a measure of each nursing home’s use of antipsychotic medications on the CMS Nursing Home Compare website, in the coming months CMS plans to add the antipsychotic measure to the calculations that CMS makes for each nursing home’s rating on the agency’s Five-Star Quality Rating System.

3. State Activities

Utah Sees 5.7 Percent Increase in Insurance Premiums

In a presentation Sept. 18 before the state legislature’s health reform task force, Utah Insurance Commissioner Todd Kiser and other insurance officials revealed preliminary figures showing that average individual health insurance premiums will rise by about 5.7 percent on the federal insurance exchange in 2015. “Utahns living in rural areas will see steeper rate increases than those in urban areas, approximately 7 percent,” Tanji Northrup, Utah’s assistant insurance commissioner, told the lawmakers. Commissioner Kiser called the price hikes “minimal,” as they are more modest than the 10-percent-per-year increases that were typical before the Affordable Care Act (ACA). According to data from the presentation, 900 plans were submitted to the Insurance Department for 2015, more than double the number for 2014; as it stands, six companies will offer 108 plans to individual Utahns on the federal exchange in 2015, up from 96 in 2014. For small businesses, Avenue H, the state’s small business health exchange marketplace, will see smaller rate increases averaging 3.5 percent and will offer 75 plans from three companies in 2015. The Department of Health and Human Services and Avenue H have until Oct. 30 to make final decisions on the rates.

Vermont Exchange Could Be Offline for Weeks

On Sept. 23, Vermont Gov. Peter Shumlin announced that the state’s health insurance exchange, Vermont Health Connect, will temporarily shut down its website for repairs, which could take several weeks. “As all Vermonters know, we’ve had disappointment after disappointment with the Vermont Health Connect website,” Gov. Shumlin said. “I have been very frustrated that the website remains incomplete. Bringing down the site now to make improvements with our new partner Optum is the best choice to deliver a well-functioning, secure website for customers by the open enrollment period that begins Nov. 15.” The state’s exchange website has yet to be fully functional. Since its launch in October 2013, state officials and several contractors have struggled to identify problems and make fixes while continuing to operate the website. In the meantime, all Health Connect-related transactions will be handled by call center personnel and via mail.

DC Health Insurance Exchange Announces Approved Plans for 2015

The DC Department of Insurance, Securities and Banking announced Sept. 15 the approved health insurance plan rates for the District of Columbia’s health insurance marketplace, DC Health Link, for plan year 2015. Eight carriers through four major insurance companies — Aetna, CareFirst BlueCross BlueShield, Kaiser Permanente and UnitedHealthcare — will have plan offerings for individuals, families and small businesses on DC Health Link when enrollment opens Nov. 15, 2014. Premium rates in the exchange varied in cost from a 6.1 percent drop to a 7.6 percent increase.

4. Regulations Open for Comment

FDA: REMS Standardization Report Issued and Request for Comments

On Sept. 23, 2014, FDA announced in the Federal Register availability of FDA’s draft report entitled: “Standardizing and Evaluating Risk Evaluation and Mitigation Strategies .” The report summarizes FDA’s efforts to standardize risk evaluation and mitigation strategies (REMS) to help better integrate them into various health care settings. FDA committed to do this as part of the reauthorization of the Prescription Drug User Fee Act (PDFUA V), enacted on July 9, 2012, which was part of the Food and Drug Administration Safety and Innovation Act (FDASIA). The Food and Drug Administration Amendments Act of 2007 (FDAAA), enacted on Sept. 27, 2007, established FDA’s authority to implement REMS, replacing FDA’s prior risk management systems, when such strategies were required above and beyond the prescribing and consumer labeling to ensure that the benefits of a drug outweigh its risks. FDA has requested comments to its draft report by Nov. 24, 2014.

For more information, please visit www.fdalife.com.

5. Reports

OIG Releases Report on Copayment Coupons for Branded Drugs and its Effect on Medicare Part D Drug Costs

In a report released Sept. 18, the Department of Health and Human Services (HHS) Office of the Inspector General (OIG) found that the use of copayment coupons for brand name drugs by Medicare beneficiaries could impose significant costs on the Part D program, as many coupons encourage beneficiaries to choose more expensive brand name drugs over less expensive alternative drugs. In its study, OIG discovered that pharmaceutical manufacturers are currently offering copayment coupons to reduce or eliminate the cost of patients’ out-of-pocket copayments for specific brand name drugs; as it stands, an antikickback statute prohibits the knowing and willful offer or payment of reimbursement to a person to induce the purchase of any item or service for which payment may be made by a federal health care program. OIG’s survey results from 30 manufacturers of branded pharmaceuticals found that pharmaceutical manufacturers’ current safeguards may not prevent all copayment coupons from being used for drugs paid for by Part D. As it stands, most surveyed manufacturers use pharmacy claims edits to prevent copayment coupons from being processed for drugs paid for by Part D, which may not be enough of an adequate safeguard to prevent incorrect coupon use and subsequent reimbursement. Additional results found that other entities cannot identify coupons within pharmacy claims. Worth noting, the report said that “applying results to the population of 36 million Part D beneficiaries, the utilization of copayment coupons to obtain prescription drugs paid for by Part D could exceed 2 million beneficiaries.” Along with the study, OIG released an special advisory notice to pharmaceutical manufacturers, warning them that if they fail to take appropriate steps to ensure that coupons do not induce the purchase of Part D program items, that it may show evidence of intent to violate the antikickback statute.

OIG Exchange Security Reports Says Personal Information in Some Exchanges Still At Risk

A Sept. 23 report from the Department of Health and Human Services (HHS) Office of the Inspector General (OIG) found that the federal insurance exchange, as well as state exchanges for New Mexico and Kentucky remain vulnerable to cyber-attacks. The heavily anticipated report comes out of a Sept. 4 announcement of a cyber-attack on the federal insurance exchange site, HealthCare.gov, back in July 2014. In the report, titled “Health Insurance Marketplaces Generally Protected Personally Identifiable Information But Could Improve Certain Information Security Controls,” OIG examined whether information security protections were implemented in compliance with existing federal regulations and guidelines and whether weaknesses identified by previous assessments were fixed in a timely manner. The report noted that personally identifiable information (PII) in all three exchanges was safeguarded, but OIG found opportunities to improve database access and security controls to adhere more strictly to federal requirements. “Since the marketplaces handle consumers’ PII, security of the marketplaces’ data and systems is vital,” OIG said. Specifically, OIG found a “critical vulnerability” in the federal exchange operated through the HealthCare.gov website, which is also the gateway portal to the state exchanges. This weakness might allow an attacker to execute commands on the server, or retrieve and modify information on the server. OIG announced that the report is the first of others in a series on the data and system security for the exchanges.

GAO – ACA: Procedures for Reporting Certain Financial Management Information Should Be Improved

A recent GAO report examined the resources that the Center for Consumer Information and Insurance Oversight (CCIIO) used and expects to use in implementing the private health insurance provisions of the ACA. GAO’s objective was to identify resources that CCIIO received, used and expects to use from enactment of PPACA through fiscal year 2014, including certain categories of expenditures, the sources of funding and the total number of staff, along with the number of staff reassigned from other units. GAO identified several issues that contributed to CMS’s inability to provide complete information that is independently verifiable in a timely manner. First, CMS does not have an effective means of identifying CCIIO-related information. While CMS had policies and procedures for its standard financial operations, it did not have documented policies and procedures for responding to nonroutine information requests. Instead, CMS relied on ad hoc manual procedures that were labor intensive and time consuming. As a result, CMS required an extended period of time to provide most of the information GAO requested, in some cases taking several months. GAO recommends that CMS identify and evaluate options to facilitate reporting CCIIO-related financial management information that is independently verifiable in a timely manner, and develop and implement policies and procedures to document the preparation, review and approval of information produced for nonroutine requests. HHS did not concur with GAO’s recommendations.

Three More ACOs Leave Pilot Study in Medicare Programs

Three years after the CMS carefully selected 32 accountable care organizations (ACOs) deemed capable of handling the Pioneer program’s financial risks, three more insurers have left the program, bringing participation down to just 19 ACOs. According to a report from Modern Healthcare, Franciscan Alliance in Indianapolis, Indiana; Genesys PHO in Flint, Michigan; and Renaissance Health Network in Wayne, Pennsylvania, have left the pilot program. As it stands, nine participants dropped out in 2012, with seven switching to Medicare’s larger and less risky accountable care initiative, the Shared Savings Program. The Pioneer program was Medicare’s first test of accountable care organizations under the Affordable Care Act (ACA) and is designed and administered by the CMS Innovation Center. The premise of the program was that insurers would be willing to accept potential losses with the goal of earning bonuses tied to performance on quality measures and their ability to slow health spending. Insurers say that Medicare’s ACO programs so far have produced inconsistent results, some of which the policy experts and ACO executives have blamed on how Medicare calculates how much ACOs potentially saved the program. On Sept. 16 CMS announced that the initiatives saved Medicare $817 million through 2013. Dozens of participants shared $445 million of that savings in bonuses, but 75 percent of ACOs received nothing after performing insufficiently against CMS’s financial benchmarks.

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

Stephanie Kennan, Senior Vice President
Charlyn Iovino, Vice President
Brian Looser, Assistant Vice President
Amanda Anderson, Research Assistant

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