Washington Healthcare Update

March 23, 2015

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This Week: Bipartisan, Bicameral Permanent SGR Fix Introduced… HouseBudget Committee Advances FY2016 Budget Proposal… National CoverageDeterminations Proposed for Removal… HHS Releases Proposed Rules on EHRIncentive Programs and Health IT Certification Criteria… Departments ofJustice/Health and Human Services Announce Medicare Fraud Successes… IndianaAdds Hundreds of Providers and Networks to its Medicaid Program Since Expansion

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


House Members Introduce Bipartisan Post-Acute Care Coordination Bill

On March 19, Reps. David McKinley (WV-1), Jerry McNerney (D-CA) and Tom Price (R-GA) introduced bipartisan legislation, H.R. 1458, the Bundling and Coordinating Post-Acute Care (BACPAC) Act, which creates a new approach that coordinates care for seniors when they leave thehospital by bundling post-acute care Medicare payments. “For the past three years, we have been working on this legislation to help reduce the stressfor seniors dealing with Medicare after a hospital visit. This bipartisan reform addresses the complicated decisions Medicare patients face byproviding private-sector coordinators to guide patients through the process. BACPAC will strengthen Medicare for decades to come, help seniors receivethe most effective care, and save taxpayers tens of billions of dollars,” said Rep. McKinley in apress release. Under the model established by the Bundling and Coordinating Post-Acute Care Act, post-acute care providers would manage a patient’s care for up to90 days, using a bundled payment that is initiated on the day of discharge from the hospital. The bill attempts to reduce hospital readmissions byholding medical providers accountable for their costs, while simultaneously rewarding providers if the total cost of care is lower than the paymentamount.

Upcoming: E&C Oversight Subcommittee Hearing on Prescription Drug and Opioid Abuse

The House Energy and Commerce Subcommittee on Oversight and Investigations, chaired by Rep. Tim Murphy (R-PA), has scheduled for Thursday, March 26, ahearing entitled, “Examining the Growing Problems of Prescription Drug and Heroin Abuse: State and Local Perspectives.” The hearing will be held at 10:00a.m. in Room 2123 of the Rayburn House Office Building. At the event, the panel will continue its review of the growing prescription drug and opioid abusecrisis, and will follow up on last year’s subcommittee hearing that brought together several representatives from federal agencies to discuss the issue.Subcommittee members will hear from witnesses about what steps are being taken at a state and local level, what has worked and what hasn’t, and how toimprove federal efforts aimed at addressing this challenge. “The scourge of prescription drug and opioid abuse has blazed a destructive trail of tragedyand sorrow across the United States. Lives are lost, families are left in turmoil and communities feel helpless to respond. Compounding the problem is that40% of drug abusers have an underlying mental illness,” said Chairman Murphy. “The Subcommittee on Oversight and Investigations will continue examiningsolutions at next week’s hearing with experts from across the country who are confronting these challenges head on and can share their experiences on whatsteps we can take to restore communities and save lives.” The hearing comes as a bipartisan, bicameralbill was introduced March 19, the Protecting Our Infants Act, which directsthe Department of Health and Human Services (HHS) to make recommendations for diagnosis and treatment of infants born with neonatal abstinence syndrome, acondition linked to opioid abuse by pregnant mothers; the bill also directs HHS to coordinate and review federal research on the issue and to help statescollect relevant data. The legislation was introduced by Reps. Katherine Clark (D-MA) and Steve Stivers (R-OH) and Sens. Mitch McConnell (R-KY) and BobCasey (D-PA).

A witness list is forthcoming. For more information or to watch the hearing, please visitenergycommerce.house.gov.

Upcoming: House Appropriations Subcommittee Hearing on Neuroscience Research

On Thursday, March 26, at 10:30 a.m. in H-309 of the Capitol Building, the House Appropriations Subcommittee on Commerce, Justice, Science, and RelatedAgencies will hold an oversight hearing to investigate federal investments in Neuroscience and Neurotechnology. The hearing follows a September 2014announcement of a bold research collaboration, the BRAIN Initiative, that combines the manpower and funding of the National Institutes of Health (NIH),National Science Foundation (NSF), the Food and Drug Administration (FDA) and the Defense Advanced Research Projects Agency. The initiative aims torevolutionize the study of the human brain through accelerating development and application of innovative technologies that help treat, cure and preventbrain disorders.

Witness List

Dr. Jo Handelsman
Associate Director for Science, Office of Science and Technology Policy

Dr. James Olds
Assistant Director for Biological Sciences, National Science Foundation

Dr. Steven Hyman
Director, Stanley Center for Psychological Research Broad Institute of MIT and Harvard

For more information or to watch the hearing, please visitappropriations.house.gov.

Upcoming: E&C Health Subcommittee Hearing on 340B Drug Pricing Program

The House Energy and Commerce Subcommittee on Health scheduled a hearing for Tuesday, March 24, 2015, at 10:00 a.m. in 2322 Rayburn House Office Buildingentitled “Examining the 340B Drug Pricing Program.” The purpose of the hearing is to review the functionality of the 340B drug program in order tounderstand how it is impacting patients, providers, manufacturers and other stakeholders. Subcommittee members will hear testimony from witnesses from theHealth Resources and Services Administration, the Government Accountability Office and the Department of Health and Human Services Office of the InspectorGeneral about the 340B program, a federal drug discount program. Subcommittee members will review the functionality of the program to ensure it is meetingits goal of improving access to prescription drugs for needy patients at facilities serving these populations. The 340B drug discount program was createdby Congress in 1992. Under Section 340B of the Public Health Service Act (PHSA), in order to receive Medicaid reimbursement for their drugs, pharmaceuticaldrug manufacturers must enter into pharmaceutical pricing agreements that provide discounts on covered outpatient drugs purchased by certain public healthfacilities. As of May 31, 2013, 10,510 covered entities were participating in the 340B Program, including 1,103 community health centers and 1,039disproportionate share hospitals (DSH). More have become eligible to participate as Medicaid expands through the Affordable Care Act (ACA). Some 800pharmaceutical manufacturers also participate in the program.

Witness List

Diana Espinosa, MPP
Deputy Administrator, Health Resources and Services Administration
U.S. Department of Health and Human Services

Accompanied by Krista M. Pedley, PharmD, MS, CDR,
USPHS, Director
Office of Pharmacy Affairs Health Resources and Services Administration
U.S. Department of Health and Human Services

Debbie Draper
Director, Health Care
Government Accountability Office

Anne Maxwell
Assistant Inspector General for Evaluation and Inspections
Office of Inspector General
U.S. Department of Health and Human Services

For more information or to watch the hearing, please visitenergycommerce.gov.

House Passes Bipartisan Legislation on Hospital Observation Status and DME Binding Bids

On March 16, the House passed two bills requiring binding bids in Medicare auctions for durable medical equipment (DME) as well as a bill requiringMedicare beneficiaries be notified when they are placed in observation status instead of being admitted to the hospital. The Medicare DMEPOS CompetitiveBidding Improvement Act,H.R. 284, sponsored by Reps. Pat Tiberi (R-OH) andJohn Larson (D-CT), would require Medicare suppliers that bid under a DME prosthetics, orthotics and supplies (DMEPOS) competitive bidding program toobtain a $50,000-$100,000 bid surety bond for each competitive bidding area; if the bidder is offered a contract for any product category in thecompetitive bidding area, and the supplier’s bid for the product category was at or below the median bid rate, the bid bond would be forfeited if thesupplier does not accept the contract. The bill passed the House by voice vote. Moreover, the Notice of Observation Treatment and Implication for CareEligibility (NOTICE) Act,H.R. 876, passed the House 395-0, with 37 lawmakersnot voting. The legislation, sponsored by Lloyd Doggett (D-TX) and Todd Young (R-IN), would help beneficiaries avoid surprise hospital or nursing homecosts by requiring hospitals and critical access hospitals to provide written and oral notification to Medicare beneficiaries when they are kept underobservation rather than admitted to a hospital as an inpatient. The notice would also require an explanation of the implications of observation status forbeneficiary cost-sharing obligations and subsequent skilled nursing facility eligibility. H.R. 284 awaits movement on its Senate companion bill,S.148, sponsored by Sens. Rob Portman (R-OH) and Ben Cardin (D-MD), whereas aSenate version of H.R. 876 has yet to be introduced.

House Budget Committee Advances FY2016 Budget Proposal

On March 19, the House Budget Committee passed its FY2016 budget resolution, a blueprint Chairman Price (R-GA) calls “A Balanced Budget for a StrongerAmerica,” by a party line vote of 22-13. The budget resolution is a blueprint for Congress on spending priorities. It is not signed by the president andtherefore is not a law. However, at times the budget resolution can include reconciliation instructions, which are directed to authorizing committeesusually to reduce spending in specific programmatic areas like Medicare and Medicaid. The budget proposal impacts the health sector in a number of areas:

  • Uses reconciliation to overturn the Affordable Care Act: Both the House and Senate Budget Committees would use the reconciliation process to overturn the Affordable Care Act. House Republican use reconciliation to repeal the Affordable Care Act “in its entirety” and would shift some savings to Medicare’s solvency.
  • Reverses the $700 billion taken from Medicare as part of the enactment of the ACA. The budget would put these savings toward Medicare solvency.
  • Repeals the Independent Payment Advisory Board (IPAB), which was to advise Congress on Medicare cuts but never has been staffed.
  • Repeals the ACA’s funding for expansion of Medicaid. Instead, the resolution provides for new State Flexibility Funds that we believe will operate much like block grants.
  • Reforms Medicare by changing the program to a premium support model, starting for beneficiaries in 2024, and combining Parts A and B so there would be a single premium for seniors. The budget also appears to call for some risk adjustment of premiums. It also provides a catastrophic cap on annual out-of-pocket expenses for Medicare beneficiaries.
  • Unifies Medicaid and the State Children’s Health Insurance program (SCHIP) into a single program, while providing funds to extend SCHIP.
  • Provides for medical liability reform.

For more information, please visitbudget.house.gov.

House Approves Legislation to Improve Medical Therapy Approval

On March 16, the House passed, by voice vote, H.R. 639, the Improving Regulatory Transparency for New Medical Therapies Act, sponsored by Reps. Pitts(R-PA), Pallone (D-NJ) and Greene (D-TX). The legislation aims to improve the transparency and consistency of the Drug Enforcement Agency review ofpharmaceuticals. Under current rules, there is no deadline for the DEA to make a scheduling decision. Delays in DEA decisions have increased significantlyin recent years. In 1999, the average time between FDA approval and DEA’s final scheduling was 49.3 days. By the end of 2013, the average approval time hadrisen to 237.6 days. H.R. 639 would require DEA to schedule new drugs no later than 90 days after they are approved or when it receives the FDA’sscheduling recommendation, whichever comes later. After receiving FDA’s recommendation, DEA would continue to conduct its own analysis prior to schedulingthe drug, but would now be subject to a deadline for their process. Since 1996, the DEAhas not made any scheduling decision for a new drug that was contrary to theFDA recommendation. For more information, please visitenergycommerce.house.gov.


Senate Finance Committee Holds Hearing on ACA Five Years Later

The Senate Finance Committee held a hearing March 19 to explore what’s working and what isn’t when it comes to programs established under the AffordableCare Act (ACA). In his opening statement, Chairman Hatch (R-UT) stressed the difficulties associated with particular aspects of the ACA, including theproblems stemming from the rollout of HealthCare.Gov, while Ranking Member Wyden (D-OR) highlighted the benefits being experienced by many individuals whohave received health insurance as a result of the law, and the danger associated with attempts to repeal or dismantle it.


Dr. Douglas Holtz-Eakin
President, American Action Forum

Ms. Holly Wade
Director of Research and Policy Analysis, National Federation of Independent Business

Dr. David Blumenthal
President, The Commonwealth Fund,

For more information or to watch the hearing, please visitfinance.senate.gov.

Senate Budget Committee Advances FY2016 Budget Proposal

On March 19, the United States Senate Budget Committee, chaired by Senator Mike Enzi (R-WY),approved a plan that would balance the nation’s budget in 10years with no tax hikes, protect our most vulnerable citizens, strengthen the national defense and boost economic growth and opportunity for hardworkingfamilies. The full Senate will consider the committee’s balanced budget proposal next week. The Congressional Budget Act mandates a specific timetable forthe Congressional budget process, and by law the Senate Budget Committee must report its concurrent budget resolution by April 1. Congress must thencomplete and report the joint concurrent resolution by April 15.

“The committee’s approval of this balanced budget represents a significantfirst step in changing how we do business in order to safeguard the futurefor our kids and grandkids,” said Chairman Enzi. “The common sense ideas andsolutions that are part of this proposal can deliver real results and realprogress to hardworking American families. I look forward to considerationof our plan by the full Senate next week.”

Bipartisan, Bicameral Permanent SGR Fix Introduced

On March 19, leaders in the Senate and House introducedbipartisan, bicameral legislationto replace the broken Medicare Sustainable Growth Rate (SGR) formula with an improved payment system that rewards quality, efficiency and innovation. Thebipartisan, bicameral bill seeks to end the cycle of annual “Doc Fix” crises that have created uncertainty for millions of Medicare providers andbeneficiaries for over a decade and also create a system that promotes higher quality care for America’s seniors. Work continues toward an agreement to putthis plan into place as well as make reforms to strengthen Medicare and extend vital health provisions and the Children’s Health Insurance Program.

The legislation — nearly identical to bills introduced in the House and Senate last year — was introduced by Rep. Michael C. Burgess, M.D. (R-TX), SenateFinance Committee Chairman Orrin Hatch (R-UT), House Energy and Commerce Committee Chairman Fred Upton (R-MI), House Energy and Commerce Committee RankingMember Frank Pallone, Jr. (D-NJ), House Energy and Commerce Health Subcommittee Chairman Joe Pitts (R-PA), House Energy and Commerce Health SubcommitteeRanking Member Gene Green (D-TX), House Ways and Means Committee Chairman Paul Ryan (R-WI), House Ways and Means Committee Ranking Member Sander Levin(D-MI), House Ways and Means Health Subcommittee Chairman Kevin Brady (R-TX), House Ways and Means Health Subcommittee Ranking Member Jim McDermott (D-WA)and Rep. Charles Boustany, M.D. (R-LA). Senate Finance ranking Democrat Ron Wyden (OR) on Thursday, March 19, came out in opposition to the SGRpackage being negotiated by House Republican and Democratic leaders, and hisstance is making provider lobbyists nervous because many Senate Democratsare needed to pass the bill and negotiations might now get dragged out pastthe March 31 expiration of the current patch to the Sustainable Growth Rateformula. For more information, please visitwww.finance.senate.gov.

2. Administration

HHS Report Finds 16.4 Million Enrolled in Health Insurance Coverage Since Passage of ACA; States with Medicare Expansion See Lower Uninsured Rates

The Department of Health and Human Services (HHS) Office of Assistant Secretary for Planning and Evaluationreleased a report March 16 that found that a net 16.4 million uninsuredAmericans have gained health insurance coverage since provisions of the Affordable Care Act (ACA) first took effect in 2010; the report includes figuresfrom the 14.1 million adults who enrolled in on- and off-exchange coverage from October 2013 through March 4, and the 2.3 million young adults age 19 to 25who enrolled in their parents’ insurance before the insurance exchanges opened. Health insurance coverage gains were especially strong in Medicaidexpansion states and were concentrated among low and middle income population groups in all states, particularly among families in expansion states withincomes of 138 percent of poverty or less (previously 55 percent of that population were uninsured); that population experienced the largest gain incoverage after expansion, a 13 percentage point increase, nearly twice the percentage point increase that occurred in non-expansion states. Moreover, thereport found that states that expanded their Medicaid program saw a slightly larger drop in their uninsured rates, at an average decline of 7.4 percentagepoints compared to 6.9 percentage points in non-expansion states. On average, the uninsured rate in non-expansion states fell from 23.4 percent to 16.5percent, while that rate in states that did expand dropped slightly less, from 18.2 percent to 10.8 percent.

3. State Activities

Indiana Adds Hundreds of Providers and Networks to its Medicaid Program Since Expansion

In apress announcementMarch 17 by Governor Mike Pence’s (R-IN) office, the state’s executive branch revealed that the state has added 939 providers, including 335 physicians, tothe networks of the Healthy Indiana Plan and other Medicaid programs since CMS approved the state’s alternative Medicaid expansion plan in January.Approved through a Centers for Medicare and Medicaid Services waiver, the Healthy Indiana plan requires participants to contribute to health savingsaccounts and is the first plan to get CMS’ approval to charge income-based premiums; state residents who don’t pay their premiums are kicked out of theprogram for six months. “This rapid and meaningful increase in the number of doctors opening their practices to Healthy Indiana Plan members shows how thechanges we’ve made to our program here in Indiana are causing real reform to stick,” said Governor Pence. “We still have work to do to continue increasingour provider roles to meet the demand for HIP 2.0, but this immediate response is an indication that the program is popular with members and cliniciansalike.” Since the passage of the Affordable Care Act (ACA), the District of Columbia and 28 states have expanded Medicaid to adults making up to 138percent of the federal poverty line.

4. Regulations Open for Comment

National Coverage Determinations Proposed for Removal

On Aug. 7, 2013, the Centers for Medicare & Medicaid Services (CMS) published a Federal Register notice (78 FR 48164-69), updating the process used foropening, deciding or reconsidering national coverage determinations (NCDs) under the Social Security Act (the Act). The notice replaced the Sept. 26, 2003,Federal Register notice (68 FR 55634) and further outlined an expedited administrative process, using specific criteria, to remove certain NCDs older than10 years since their most recent review. On March 18, CMS announced its list of NCDs proposed for removal, along with the relevant portion of the FederalRegister notice containing the CMS criteria. CMS is soliciting public comment through April 17 on whether any or all of these NCDs should be removed orretained. CMS expects to publish a finalized list by fall 2015. Local Medicare Administrative Contractors (MACs) will be able to determine coverage foritems and services that were previously determined by removed NCDs. View theproposed rule:www.cms.gov.

HHS Releases Proposed Rules on EHR Incentive Programs and Health IT Certification Criteria

The U.S. Department of Health and Human Services (HHS), Centers for Medicare & Medicaid Services (CMS) and Office of the National Coordinator forHealth Information Technology (ONC)announced March 20 the release of the Stage 3notice of proposed rulemaking for the Medicare and Medicaid Electronic Health Records (EHRs) Incentive Programs and 2015 Edition Health IT CertificationCriteria to improve the way electronic health information is shared and ultimately improve the way care is delivered and experienced. The proposed rulesaim to give providers additional flexibility, make the program simpler, drive interoperability among electronic health records and increase the focus onpatient outcomes to improve care.

Specifically, the Meaningful Use Stage 3 proposed rule issued by CMS specifies new criteria that eligible professionals, eligible hospitals and criticalaccess hospitals must meet to qualify for Medicaid EHR incentive payments; the rule also proposes criteria that providers must meet to avoid Medicarepayment adjustments (Medicaid has no payment adjustments) based on program performance beginning in payment year 2018. Moreover, the 2015 Edition Health ITCertification Criteria proposed rule aligns with the path toward interoperability — the secure, efficient and effective sharing and use of healthinformation — identified in ONC’s draft shared Nationwide Interoperability Roadmap. The proposed rule also builds on past editions of adopted health ITcertification criteria, and includes new and updated IT functionality and provisions that support the EHR Incentive Programs’ care improvement, costreduction and patient safety across the health system.

Under the Health Information Technology for Economic and Clinical Health Act, doctors, health care professionals and hospitals, including critical accesshospitals, can qualify for Medicare and Medicaid incentive payments when they adopt and meaningfully use health IT technology certified by ONC. The Stage 3proposed rule may be viewedhere, and the comment period ends on May 29, 2015. The 2015 Edition proposed rule may be viewedhereand the comment period ends on May 29, 2015. The Draft 2015 Edition Certification Test Procedures may be viewed atHealthIT.gov, and the comment period ends on June 30, 2015.

Use of an Electronic Informed Consent in Clinical Investigations: Questions and Answers; Draft Guidance for Industry, Clinical Investigators andInstitutional Review Boards

The Food and Drug Administration (FDA or the Agency) is announcing the availability ofdraft guidance for industry, clinical investigators andinstitutional review boards, entitled “Use of Electronic Informed Consent in Clinical Investigations: Questions and Answers.” The guidance providesrecommendations for clinical investigators, sponsors and institutional review boards (IRBs)on the use of electronic media and processes to obtai