Washington Healthcare Update

April 13, 2015

Pardon Our Dust

We recently launched this new site and are still in the process of updating some of our archived content. Some details of this article may be incomplete, links may be broken, and other elements may not display properly yet. We appreciate your patience and understanding.

This Week: Montana Legislature Reverses Course, Endorses MedicaidExpansion… Final 2016 Medicare Advantage and Part D Rate Announcement and CallLetter… Upcoming: Energy and Commerce Subcommittee Hearing on Post-Acute Bundling

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


Upcoming: House W&M Committee to Hold Hearing on Individual Mandate

On April 14, the House Ways and Means Subcommittee on Health will hold a hearing on the individual and employer mandates and associated penalties in thePresident’s health care law. The hearing will take place immediately following a brief Subcommittee organizational meeting in Room B-318 of the RayburnHouse Office Building, beginning at 10:00 a.m. A witness list was not available at time of print. For more information or to watch the hearing, pleasevisitwaysandmeans.house.gov.

Upcoming: Energy and Commerce Subcommittee Hearing on Post-Acute Bundling

The Subcommittee on Health, chaired by Rep. Joe Pitts (R-PA), has scheduled a hearing for Thursday, April 16, 2015, at 10:15 a.m. in Room 2322 of theRayburn House Office Building. The hearing is entitled “Medicare Post Acute Care Delivery and Options to Improve It.” Subcommittee members will discuss thecurrent state of post-acute care for Medicare beneficiaries and ways to improve it, including H.R. 1458, the Bundling and Coordinating Post-Acute Care(BACPAC) Act, authored by Rep. David McKinley (R-WV), Rep. Jerry McNerney (D-CA) and House Budget Committee Chairman Tom Price (R-GA). The BACPAC Act wouldreform the delivery of Post-Acute Care Services under the Medicare program by providing for a system of bundled payments that seek to improve both qualityin the program and efficiencies in the delivery of services to seniors in need. The subcommittee will review recent improvements made inH.R. 2,the Medicare Access and CHIP Reauthorization Act, and discuss furtheropportunities to strengthen this important component of the Medicareprogram. For more information, or to view the hearing, please visitenergycommerce.house.gov.

Lawmakers Reintroduce Bill Closing Observation Status Loophole in House and Senate

Rep. Joe Courtney (D-CT) and a bipartisan group of senators, Sherrod Brown (D-OH), Susan Collins (R-ME), Bill Nelson (D-FL) and Shelley Moore-Capito(R-WV), reintroduced respective bills,H.R. 1571 andS.843, to count all time spent in a hospital toward Medicare’s required three-daynursing home eligibility requirement. “For seniors on Medicare, coverage of rehabilitative care after a stay in the hospital can be a financial lifesaver,”Rep. Courtney said in apress release. The Improving Access to Medicare Coverage Act of 2015 would count all time beneficiaries spend in the hospital toward the three-day inpatient requirementnecessary to receive Medicare coverage for post-hospital care. Currently, Medicare pays for post-hospital skilled nursing facility care only when patientsare formally classified as inpatients for three days. Medicare will not pay for such care when the increasingly common outpatient “observation status”classification is used, even when a patient remains under observation for three or more days. First introduced in 2010, the Improving Access to MedicareCoverage Act received broad bipartisan support in the 113th Congress.


Upcoming: Finance Committee Hearing Examines Medicare Claim Appeal System

On April 14, the Senate Finance Committee will hold a hearing entitled “Creating a More Efficient and Level Playing Field: Audit and Appeals Issues inMedicare,” in which members of the Committee will explore issues related to the process by which Medicare providers and beneficiaries contest reimbursementdecisions by Medicare contractors. Last year, Chief Administrative Law Judge Nancy Griswold announced that her agency, the Office of Medicare Hearings andAppeals, would be prioritizing beneficiary-generated appeals in an attempt to deal with a large and growing backlog of claims. Providers have criticizedMedicare contractors for their aggressive pursuit of improper payments, while Medicare officials have noted that some providers have abused the system byappealing virtually every denied claim.


The Honorable Nancy Griswold
Chief Administrative Law Judge, Office of Medicare Hearings and Appeals
United States Department of Health and Human Services

Ms. Sandy Coston
CEO and President
Diversified Service Options, Inc.

Mr. Thomas Naughton
Senior Vice President
MAXIMUS Federal Services, Inc.

For more information, or to view the hearing, please visitwww.finance.senate.gov.

Bipartisan Letter Seeks HHS Response on Use of Antipsychotic Drugs by Seniors

On April 3, Senators Tom Carper (D-DE), Ranking Member of the Homeland Security and Governmental Affairs Committee, and Susan Collins (R-ME), Chairman ofthe Special Committee on Aging,sent a letter seeking more information from HHSon its efforts to address the potentially improper prescribing ofantipsychotic medications to seniors with dementia, and the cost totaxpayers of paying for these prescriptions through Medicare Part D. Thebipartisan letter to Secretary Sylvia Mathews Burwell follows up on a recentGovernment Accountability Office (GAO) report that found among elderlyadults with dementia in 2012, nearly 30 percent living in nursing homes andnearly 14 percent living outside of nursing home care received potentiallyimproper anti-psychotic medications to treat their symptoms. Most of themedications prescribed have specific warnings that they not be given topatients with dementia due to an increased risk of falls or death, and theiruse in treating symptoms of dementia has not been approved by the FederalDrug Administration (FDA). According to GAO, Medicare Part D spent $363million on these antipsychotic prescriptions for elderly adults withdementia in 2012. 

2. Administration

Final 2016 Medicare Advantage and Part D Rate Announcement and Call Letter

On April 6, CMS released its final Medicare Advantage (MA) and Part D Prescription Drugprogram changes for 2016 that provide fair and accurate payments toplans, and encourage the delivery of high-quality care for all populations. The Rate Announcement finalizes changes in payments that will affect plansdifferently depending on the characteristics of those plans. On average, the expected revenue change is 1.25 percent without accounting for the expectedgrowth in coding acuity that has typically added another 2 percent. The final revenue increase is larger than the February advance notice largely becausethe Medicare actuaries recently updated Medicare per capita spending estimates for 2014 and 2015. Medicare per capita spending in 2014, 2015 and 2016 isstill expected to be below historical standards. In the 2016 Call Letter, CMS finalized a number of proposed improvements to the Medicare Advantage andPart D programs. CMS continues to signal an intention to begin working with plans participating in Medicare Advantage to better understand value-basedpayment models to compensate providers offering services to their enrollees. Based on stakeholder concerns, CMS decided not to finalize the proposed policyand will make no changes to the 2016 Star Ratings for dual-eligible or LISeffects.

Risk Evaluation and Mitigation Strategies: Modifications and Revisions Guidance for Industry

FDA hasreleased guidance on how the agency will define and process submissions from application holders for modifications and revisions to approved riskevaluation and mitigation strategies (REMS). Specifically, this guidance provides information on what types of changes to REMS will be consideredmodifications of the REMS, as described in Section 505-1(h) of the Federal Food, Drug, and Cosmetic Act (FD&C Act), and what types of changes will beconsidered revisions of the REMS. There are different procedures for submission of REMS modifications and revisions to the FDA, as well as different timeframes for FDA review and action on such changes. This guidance provides information on how REMS modifications and revisions should be submitted to theFDA, and the FDA’s process for reviewing and acting on these submissions. The definitions of REMS modifications and revisions set forth in this guidanceapply to all types of REMS. This guidance is issued pursuant to Sections 505 1(h)(2)(A)(ii), (iii) and (iv) of the FD&C Act. This guidance does notaddress additional procedures that may apply to application holders proposing changes to REMSthat are part of a single shared system. The FDA intends to address theseprocedures in future guidance.

CMS Expands Duration of Navigator Grant Awards to Three Years

On March 30, the Centers for Medicare & Medicaid Services (CMS) postedcooperative agreementsfor the next round of navigator grants, announcing that the agency will expand the duration of its navigator grant awards into three 12-month budgets,rather than funding grants for only one year at a time. “As the Navigator program enters its third year, the project period under the 2015 fundingopportunity will change from 12 months to 36 months, funded in 12-month increments known as budget periods,” CMS writes. The agency expects to awardfunding to 102 applicants in 2015. The official funding opportunity announcement is expected in late spring or early summer. As it stands, Section 1311(i)of the Affordable Care Act requires the exchanges to establish a navigator grant program under which it awards grants to eligible individuals and entitiesapplying to assist consumers in States with an FFM or State Partnership Marketplace; navigators aid consumers by providing education about and facilitatingselection of qualified health plans (QHPs) within the exchange, among other required duties. CMS previously provided $67 million in grants to 105navigators in FFM and partnership states in 2013, and another $60 million to 92 applicants in 2014.

CMS Call Letter Dictates 2016 Program Changes to Part D and Medicare Advantage

On April 6, the Centers for Medicare & Medicaid Services (CMS)announced final updates to theMedicare Advantage and Part D programs through the2016 Rate Announcement and Call Letter.The Rate Announcement finalizes changes in provider payments that will affect plans differently, depending on the characteristics of those plans. Onaverage, the expected revenue change is 1.25 percent without accounting for the expected growth in coding acuity that has typically added another 2percent. Moreover, the final revenue increase is larger than the Feb. 20 advance notice largely because the CMS Office of the Actuary recently updatedMedicare per-capita spending estimates for 2014 and 2015 to 1.9 percentage points of additional FFS spending for 2014 and 2015, 0.6 percent for 2016 and0.1 percent for the assumption that Congress will enact the pending legislation to permanently fix the SGR. The announcement includes importantimprovements to the star rating system, adds additional accuracy and transparency of provider networks and aims to promote improvements in quality of carefor beneficiaries. Updates to the Part D program include requirements that some insurance plans disclose in their marketing materials, including websites,that their networks offer limited access to preferred pharmacies with lower cost sharing.

CMS Announces Modifications to Meaningful Use for 2015 Through 2017

On April 10, 2015, CMS issued anew proposed rule for the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs to align Stage 1 andStage 2 objectives and measures with the long-term proposals for Stage 3, to build progress toward program milestones, to reduce complexity and to simplifyproviders’ reporting. These modifications would allow providers to focus more closely on the advanced use of certified EHR technology to support healthinformation exchange and quality improvement. The proposed rule would streamline reporting requirements. To accomplish these goals, the NPRM proposes:

  • Reducing the overall number of objectives to focus on advanced use of EHRs;
  • Removing measures that have become redundant, duplicative or have reached wide-spread adoption;
  • Realigning the reporting period beginning in 2015, so hospitals would participate on the calendar year instead of the fiscal year; and
  • Allowing a 90-day reporting period in 2015 to accommodate the implementation of these proposed changes in 2015.

As of March 1, 2015, more than 525,000 providers had registered to participate in the Medicare and Medicaid EHR Incentive Programs. In addition, more than438,000 eligible professionals, eligible hospitals and CAHs have received an EHR incentive payment. As of the end of 2014, 95 percent of eligible hospitalsand CAHs, and more than 62 percent of eligible professionals have successfully demonstrated meaningful use of certified EHRtechnology.

Griffis Named HHS Assistant Secretary for Public Affairs

On April 7, the White Houseannounced that Kevin Griffis would be named Assistant Secretary for Public Affairs within the Department of Health and HumanServices (HHS). Griffis currently serves as a Senior Advisor in the Office of the Assistant Secretary for Public Affairs at HHS, a position he has heldsince May 2014. Since December 2014, he has also served as the Acting Assistant Secretary for Public Affairs at HHS. Prior to this, Mr. Griffisserved as Communications Director for Senator Cory Booker from 2013 to 2014and as Senior Advisor and Communications Director for Cory Booker’s Senatecampaign in 2013.

3. State Activities

Colorado Names New Exchange CEO

In an April 1press release, the board forColorado’s state health insurance exchange, the Connect for Health Colorado, named Robert C. Malone, a veteran health care executive, as its finalcandidate for Chief Executive Officer. Under state law, the board posts the name of the finalist, takes public comment on the selection for 14 days andthen seeks approval from the Legislative Health Benefit Exchange Implementation Review Committee before formally offering the job. “This is a greatopportunity and challenge,” Mr. Malone said in a statement. “Colorado’s Marketplace has been a leader in the country among state-based exchanges, and it’sat a critical point in its growth. I’d be honored to work with all the stakeholders across the state who are so committed to its success. My job and ourmission will be that everyone in Colorado who wants health insurance has it.” Mr. Malone has 30 years of experience in insurance, brokerage, claims andcost-containment industries, and previously served as chief executive of the Assist Group. People who wish to submit comments on Malone’s candidacy canemail Connect for Health at: board@connectforhealthco.com.

Coverage for Low-Income Floridians in Limbo over Renewal of LIP Funding; Gov. Rejects Medicaid Expansion

Continuing funding for health care for Florida’s working poor who are underinsured and uninsured is in complicated limbo as negotiations with the Centersfor Medicare & Medicaid Services (CMS) over the Low Income Pool (LIP) funding have been delayed. LIP provides supplemental Medicaid dollars to thestate, which directs them to fund hospitals, federally qualified health centers, graduate medical education and health maintenance organizations (HMOs).Counties contribute the majority of dollars Florida uses to draw down federal funds, but there also is a bit of state money targeted to LIP. House SpeakerSteve Crisafulli (R) said in a statement that the federal government was using LIP funding to “bully” the state into expanding Medicaid to low-income,uninsured residents. Worth noting, the state’s Republican Senate insists that LIP funding must be connected to Medicaid expansion out of fear that CMS willbe unwilling to renew any LIP funding if the state doesn’t embrace expansion. To complicate things further, on April 6, GOP Gov. Rick Scott, in a reversalof his opinion two years ago, publicly opposed Medicaid expansion in the state. CMS told Florida last April that it would not extend the Low Income Poolprogram beyond June 2015; however, Gov. Rick Scott included the $2 billion of LIP funding in his proposed budget for 2015. As for the stateRepublican-controlled House, its budget proposal includes neither expansion nor funding under the low-income pool; the result is a $5 billion budget gapthat legislators must resolve before the state’s legislative session ends May 1. Nearly 800,000 low-income Floridians would be eligible for Medicaidcoverage if the state opts for expansion under provisions within the ACA.

Montana Legislature Reverses Course, Endorses Medicaid Expansion

On April 9, the Montana House of Representatives voted 54-46 in favor of a Medicaidexpansion plan developed by a Republican senator after the defeat ofDemocratic Gov. Steve Bullock’s proposal. Under the plan — which still needs to be reconciled with a similar version considered by the state’s Senatebefore it can be sent to the desk of Democratic Gov. Steve Bullock, after which it must be approved by HHS — would involve Medicaid enrollees’ payingmonthly premiums and copays. Many believed the bill was dead after being defeated in committee, but now Montana stands to be the 29th state to enactMedicaid expansion programs, as provided for under the ACA.

4. Regulations Open for Comment

CMS Proposes Mental Health Parity for Medicaid and CHIP in New Rule

The Centers for Medicare & Medicaid Services (CMS)announced April 6 a newproposed ruleto align mental health and substance use disorder benefits for low-income Americans with benefits required of private health plans and insurance.Specifically, the proposal applies certain provisions of the Mental Health Parity and Addiction Equity Act of 2008 to Medicaid and the Children’s HealthInsurance Program (CHIP) by mandating that mental health and substance use disorder benefits are no more restrictive than medical and surgical services. Asit is currently written, the proposed rule ensures that all beneficiaries who receive services through managed care organizations or under alternativebenefit plans have access to mental health and substance use disorder benefits regardless of whether services are provided through the managed careorganization or another service delivery system, and the full scope of the proposed rule applies to CHIP, regardless of whether care is provided throughfee-for-service or managed care. Currently, states have flexibility to provide services through a managed care delivery mechanism using entities other thanMedicaid managed care organizations, such as prepaid inpatient health plans or prepaid ambulatory health plans; in the new rule, states will be required toinclude contract provisions requiring compliance with parity requirements in all applicable contracts for these Medicaid managed care arrangements. Theproposed rule was published in the Federal Register on April 10 with comments due to the agency by June 9, 2015.

FDA Assessing the Center of Drug Evaluation and Research’s Safety-RelatedRegulatory Science Needs and Identifying Priorities

On March 19, the Food and Drug Administration (FDA) announced theavailability of a report entitled “AssessingCDER’s Drug Safety-Related Regulatory Science Needs and IdentifyingPriorities.” This report identifies drug safety-related regulatoryscience needs and priorities related to the mission of FDA’s Center for DrugEvaluation and Research (CDER) that would benefit from externalcollaborations and resources. FDA hopes to foster collaborations withexternal partners and stakeholders to help address these needs andpriorities. This notice asks stakeholders conducting research related tothese needs to describe that research and indicate their interest incollaborating with FDA to address safety-related research priorities. Sincepublication of the 2011 “Identifying CDER’s Science and Research Needs”report, FDA has been engaged in efforts to further assess and prioritize theneeds articulated therein. As part of these efforts, CDER’s Safety ResearchInterest Group (SRIG), a subcommittee of the Science Prioritization andReview Committee, assessed CDER’s overall drug safety-related regulatoryscience needs in view of FDA’s ongoing research efforts and highlightedareas that would benefit from additional resources and collaboration. Publiccomments will be accepted at any time. However, the public is encouraged tosubmit comments by May 18, 2015, to ensure FDA consideration.

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