Washington Healthcare Update

April 20, 2015

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This Week: Energy and Commerce Health Subcommittee Explores Post-AcuteBundling…CMS Releases First-ever Hospital Compare Star Ratings…Fiscal Year 2016Proposed Inpatient and Long-term Care Hospital Policy and Payment Changes

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


Energy and Commerce Health Subcommittee Explores Post-Acute Bundling

On April 16, the Energy and Commerce Health Subcommittee held a hearing entitled “Medicare Post-Acute Care Delivery and Options to Improve It.” The hearingwas intended to give members of the subcommittee an opportunity to explore the current state of Medicare’s post-acute care (PAC) system and discussopportunities to improve the delivery of, and access to, these services for our seniors. In addition, the hearing provided an opportunity for witnesses tooffer testimony regarding H.R. 1458, the “Bundling and Coordinating Post-Acute Care Act of 2015” (BACPAC), legislation introduced in March by Rep. DavidMcKinley (R-WV), Rep. Jerry McNerney (D-CA) and Rep. Tom Price (R-GA), to reform and improve the PAC system for our nation’s seniors. BACPAC would bundlePAC payments, while preserving the ability of patients, with the guidance of their physicians, to select their preferred providers of PAC services.


Panel 1

Mark E. Miller, Ph.D.
Executive Director
Medicare Payment Advisory Commission

Panel 2

Steven Landers, M.D., M.P.H.
President and CEO
Visiting Nurse Association Health Group

Samuel Hammerman, M.D., M.M.M., F.C.C.P.
Chief Medical Officer
LTACH Hospital Division
Select Medical Corporation

Melissa Morley, Ph.D.
Program Manager
Health Care Financing and Payment
RTI International

Leonard Russ
Principal Partner
Bayberry Health Care
Chairman of American Health Care Association

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

House W&M Health Subcommittee Holds Hearing on ACA Individual and Employer Mandates

On April 14, the House Ways and Means Subcommittee on Health held a hearing on the individual mandate and employer mandates and associated penalties in thePresident’s health care law. Members were given the opportunity to ask questions one year after the end of the Affordable Care Act’s (ACA) first openseason. The hearing took place immediately following a brief subcommittee organizational meeting in Room B-318 of the Rayburn House Office Building,beginning at 10:00 a.m.

Witness List

Douglas Holtz-Eakin
President, American Action Forum

Scott Womack
President, Womack Restaurants

Sabrina Corlette
Faculty, Georgetown University

For more information or to view the hearing, please visitwaysandmeans.house.gov.

Upcoming: Energy and Commerce Oversight Hearing on Opioid Abuse

The Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing on Thursday, April 23, 2015, at 10:15 a.m. in 2322 Rayburn HouseOffice Building. The hearing is entitled “Combatting the Opioid Abuse Epidemic: Professional and Academic Perspectives.” The hearing continues thesubcommittee’s review of the growing and complex threat of prescription drug and heroin abuse. Subcommittee members will hear testimony from academics andother experts about treatment options currently available and best practices for those suffering from addiction and abuse. The subcommittee began itsreview of this threatlast year, andlast month the subcommittee held a hearing to understand the challenges of this problem at thestate and local level.


Robert L. DuPont, M.D.
Institute For Behavior and Health

Marvin D. Seppala, M.D.
Chief Medical Officer
Hazelden Betty Ford Foundation

Laurence M. Westreich, M.D.
American Academy of Addiction Psychiatry

Anna Lembke, M.D.
Assistant Professor of Psychiatry and Behavioral Sciences
Stanford University Medical Center Psychiatry Department

Adam Bisaga, M.D.
Columbia University Medical Center
NYS Psychiatric Institute

Patrice Harris, M.D.
American Medical Association

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


Senate Approves, President Enacts Bipartisan Medicare Physician Payment Fix

On April 14, the Senate passed long-awaited legislation to permanently repeal the flawed sustainable growth rate (SGR) formula used to calculate Medicarephysician payments by a vote of 92-8. The repeal comes after 17 temporary patches were enacted over roughly a decade to avert the threat of steep paymentcuts. Six amendments were offered, but none were adopted. Some Republicans were concerned that the estimated $141 billion cost of the repeal package wasnot fully offset, while Democrats had pushed for a four-year extension of the Children’s Health Insurance Program (CHIP), though ultimately the need for apermanent “doc fix” allowed lawmakers to overcome disagreements and agree to the package that had previously passed the House by a vote of 392-37.President Obama signed the bill into law on April 16. Despite the broad bipartisan support, the CMS office of the Actuary has issued a report warning that,while the bill, H.R. 2, avoids the significant short-range physician payment issues resulting from the current SGR system approach, it nevertheless raisesimportant long-range concerns that would almost certainly need to be addressed by future legislation.

Upcoming: Senate Commerce Committee to Host Hearing on Expanding Progress on Telehealth

Sen. Roger Wicker (R-MS), chairman of the Commerce, Science, and Transportation Subcommittee on Communications, Technology, Innovation, and theInternet, will convene a hearing on Tuesday, April 21, 2015, at 10:00 a.m., titled “Advancing Telehealth Through Connectivity.” The hearing willexamine the progress made by the private sector and government entities to expand the benefits of telehealth nationwide, particularly in rural areas.The meeting will also explore the connectivity challenges facing many health care providers and patients attempting to take advantage of innovativetelehealth applications.

Witness List

Dr. Kristi Henderson
Chief Telehealth and Innovation Officer
University of Mississippi Medical Center

Mr. Jonathan D. Linkous
Chief Executive Officer
American Telemedicine Association

Dr. M. Chris Gibbons
Distinguished Scholar in Residence
Connect2HealthFCC Task Force
Federal Communications Commission

Mr. Todd Rytting
Chief Technology Officer
Panasonic Corporation of North America

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

Upcoming: Senate Finance Health Subcommittee to Hold Hearing on Impactsof Medical Device Tax

Chaired by Sen. Pat Toomey (R-PA), the Senate Finance Committee Subcommittee on Health will hold a hearing April 23 entitled “A Fresh Look at the Impact ofthe Medical Device Tax on Jobs, Innovation, and Patients.” Members will hear testimony on the economic and health outcome effects of the 2.3 percentmedical device excise tax, a key funding mechanism of the Affordable Care Act (ACA). As it stands, Full Committee Chairman Orrin Hatch’s (R-UT) proposal torepeal the medical device tax has 34 co-sponsors, five of whom are Democrats. A competing Democratic proposal in the Senate to repeal the tax and pay forit by closing tax loopholes has no GOP co-sponsors.

A witness list had not been posted at time of print. For more information or to view the hearing, please visitfinance.senate.gov.

HHS-OIG Accepts Request to Investigate Generic Drug Pricing

At the urging of Sen. Bernie Sanders (I-VT) and Rep. Elijah Cummings (D-MD), the Department of Health and Human Services inspector general has agreed toinvestigate how sudden price hikes by generic drugmakers are driving up the cost of taxpayer-supported health care. As part of their own congressionalinvestigation, Sanders and Cummings asked generic drugmakers to turn over records on prices. The companies refused to provide meaningful records. Federallaw, however, requires pharmaceutical firms to provide price data to HHS, so Sanders and Cummings formally requested the investigation by the department’sinspector general. According to HHS-OIG, the investigation will examine quarterly average manufacturer prices (AMP) reported under Medicaid drug rebateprogram from 2005 through 2014, and determine the extent to which the quarterly AMPs exceeded the specified inflation factor. More information can be foundatwww.sanders.senate.gov.

2. Administration

CMS to Award $201 Million over Three Years in Navigator Grants

The Centers for Medicare & Medicaid Services (CMS)announced April 15 the availability offunding to support navigators in Federally-facilitated Marketplaces (FFM), including State Partnership Marketplaces. Consumers shopping for and enrollingin coverage through the federal exchanges can get local help from Navigators, who aim to provide objective information about health coverage to helpconsumers choose a health plan in the Marketplaces or in public programs including Medicaid and the Children’s Health Insurance Program. Grantees will beselected for a three-year project period, and a total of up to $67 million is available for the first year of the award. “Navigators play a vital role inhelping Americans enroll in coverage through the Marketplaces and assessing if they qualify for any insurance affordability programs. Navigators have beenan important resource for the millions of Americans who enrolled in coverage over the past two years. This funding announcement ensures this important workwill continue over the next three years in states with a FFM, including during Marketplace open enrollment periods,” said CMS Acting Administrator AndySlavitt. The funding opportunity announcement is open to eligible individuals, as well as private and public entities, applying to serve as Navigators instates with an FFM. The multi-year grant award will be funded in 12-month increments with continued funding contingent on grantees’ continuing to meet allNavigator program requirements and on funding availability. HHS said organizations wanting to apply for the grants must submit a letter of intent by June 3and an application by June 15. The grants are slated to be awarded on Sept. 2.

HHS: $1 Million in New Grants Available to Help Improve Health IT Sharing

On April 16, National Coordinator for Health Information Technology Karen B. DeSalvoannounced the availability of $1 million in grant funds to support communityprojects for theCommunity Interoperability Health Information Exchange (HIE) Program. The Community Interoperability and HIE program will provide funds to up to 10 community organizations, state or local government agencies, or othercommunity groups. Final awardees will demonstrate the use of health IT to the wide range of health providers, including those that are not eligible underthe Medicare and Medicaid Electronic Health Record Incentive Programs. The awards aim to help unlock health information and better integrate communityresources advancing better care and healthier communities. “The new Community Interoperability and HIE program will fund local efforts that will leveragehealth IT in support of a more comprehensive digital data picture of health for people and their communities,” said Dr. DeSalvo in a statement. Thesubmission deadline for the applications is June 15, 2015, and the non-mandatory deadline to submit intent to apply notices is May 15.

The submission application is available atgrants.gov.

FDA Releases Guidance on Striking Median between Premarket and Postmarket Data Collection for Devices Subject to Premarket Approval

On April 13, the Food and Drug Administration (FDA) issuedfinal guidance that clarifies the agency’scurrent policy on balancing premarket and postmarket data collection during FDA review of premarket approval applications (PMAs). More specifically, theguidance outlines how FDA considers the role of postmarket information in determining the extent of data that should be collected in the premarket settingto support premarket approval while still meeting the statutory standard of reasonable assurance of safety and effectiveness. The guidance suggests theagency may be willing to rely more heavily on postmarket data in certain cases, such as when the device is part of a “mature technology” in which FDA has alot of experience with the benefits and when risks of a certain device type, or there is an urgent public health need. The guidance stresses that FDA muststrike the right balance between timely patient access to new technology and not undermining patient safety in decisions on whether to rely more heavily onpostmarket data. Section 513(a)(3)(C) of the Federal Food, Drug, and Cosmetic Act specifically requires FDA to consider the use of postmarket controls inlieu of collecting and reviewing all effectiveness data prior to PMA approval.

CMS Releases First-ever Hospital Compare Star Ratings

On April 16, CMS for the first time introduced star ratings on Hospital Compare, the agency’s public information website, to make it easier for consumersto choose a hospital and understand the quality of care each delivers. The announcement builds on a larger effort across HHS to build a health care systemthat delivers better care, spends health care dollars more wisely and results in healthier people. The Hospital Compare star ratings relate to patients’experience of care at almost 3,500 Medicare-certified acute care hospitals. The ratings are based on data from the Hospital Consumer Assessment ofHealthcare Providers and Systems Survey (HCAHPS) measures that are included in Hospital Compare. HCAHPS has been in use since 2006 to measure patients’perspectives of hospital care, and includes topics like:

  • How well nurses and doctors communicated with patients
  • How responsive hospital staff were to patient needs
  • How clean and quiet hospital environments were
  • How well patients were prepared for post-hospital settings

For more information, please visitwww.cms.gov.

Wachino Named as Permanent Chief Medicaid Official

On April 17, Vikki Wachino was tapped to be the top Medicaid official at CMS, Acting Administrator Andy Slavitt wrote in an email to staff. Wachino hasbeen acting director of CMS’ Center for Medicaid and CHIP Services since late December, following the announcement that Cindy Mann would depart the agencyin January. In prior and current roles at CMS, Wachino has overseen implementation of major pieces of the ACA and worked with states on Medicaid and CHIP.

3. State Activities

Florida Files Lawsuit Against CMS over Block on LIP Funding

On April 16, Florida Gov. Rick Scott (R)announcedthat his administration would file a lawsuit against the federal government if CMS continues to withhold more than $1.3 billion in Low Income Pool fundingshould the state not opt to expand Medicaid. “It is appalling that President Obama would cut off federal health care dollars to Florida in an effort toforce our state further into Obamacare,” Gov. Scott said, citing a 2012 Supreme Court ruling that said the federal government couldn’t put a “gun to thehead” of states to force them to expand Medicaid under the health care law. The decision follows a CMS letter sent to his Administration on April 15 thatset a clear impasse, with the agency specifically saying that LIP funding is connected to a state’s decision not to expand Medicaid. The surpriseannouncement by the Scott Administration trails weeks of escalating tensions between state and administration officials over Florida’s opposition toMedicaid expansion. LIP funds may be used for health care expenditures (medical care costs or premiums) that would be within the definition of medicalassistance. These health care expenditures may be incurred by the state, hospitals, clinics or other provider types for uncompensated costs of medicalservices for the uninsured. With LIP funds expected to run out by June 30, over 800,000 low-income Floridians may not have access to health care should thefederal funding cease.

4. Regulations Open for Comment

Fiscal Year 2016 Proposed Inpatient and Long-term Care Hospital Policy andPayment Changes

On April 17, 2015, CMSissued a proposed rule to update fiscal year (FY) 2016 Medicare paymentpolicies and rates under the Inpatient Prospective Payment System (IPPS) and theLong-Term Care Hospital (LTCH) Prospective Payment System (PPS). The proposedrule, which would apply to approximately 3,400 acute care hospitals andapproximately 435 LTCHs, would affect discharges occurring on or after Oct. 1,2015. The IPPS pays hospitals for services provided to Medicare beneficiariesusing a national base payment rate, adjusted for a number of factors that affecthospitals’ costs, including the patient’s condition and market conditions in thehospital’s geographic area.

The rule proposes policies that continue a commitment to increasingly shiftMedicare payments from volume to value. CMS pays acute care hospitals (with afew exceptions specified in the law) for inpatient stays under the IPPS andlong-term care hospitals under the LTCH PPS. Under these two payment systems,CMS generally sets payment rates prospectively for inpatient stays based on thepatient’s diagnosis and severity of illness. A hospital receives a singlepayment for the case based on the payment classification — MS-DRGs under theIPPS and MS-LTC-DRGs under the LTCH PPS — assigned at discharge.

By law, CMS is required to update payment rates for IPPS hospitals annually,and to account for changes in the costs of goods and services used by thesehospitals in treating Medicare patients, as well as for other factors. This isknown as the hospital “market basket.” LTCHs are paid according to a separatemarket basket based on LTCH-specific goods and services. CMS will acceptcomments on the proposed rule until June 16, 2015.

Proposed FY 2016 Payment and Policy Changes for Medicare Skilled NursingFacilities (SNF)

On April 15, 2015, CMSissued a proposed rule [CMS-1622-P] outlining proposed Fiscal Year (FY) 2016Medicare payment rates for skilled nursing facilities (SNFs). This proposed rulewould update the payment rates used under the prospective payment system (PPS)for skilled nursing facilities (SNFs) for fiscal year (FY) 2016. In addition, itincludes a proposal to specify a SNF all-cause all-condition hospitalreadmission measure, as well as a proposal to adopt that measure for a new SNFValue-Based Purchasing (VBP) Program and a discussion of SNF VBP Programpolicies being considered for future rulemaking to promote higher quality andmore efficient health care for Medicare beneficiaries. Additionally, thisproposed rule would implement a new quality reporting program for SNFs asspecified in the Improving Medicare Post-Acute Care Transformation Act of 2014(IMPACT Act). It also would amend the requirements that a long-term care (LTC)facility must meet to qualify to participate as a skilled nursing facility (SNF)in the Medicare program, or a nursing facility (NF) in the Medicaid program.These requirements implement the provision in the Affordable Care Act regardingthe submission of staffing information based on payroll data. To be assuredconsideration, comments must be received no later than 5 p.m. on June 19, 2015.

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 determina