Washington Healthcare Update

April 27, 2015

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This Week: CMS Releases Proposed Rule on FY 2016 Medicare Payments forInpatient Rehab Facilities… Commerce Subcommittee Hearing Finds MedicareReimbursement for Telehealth Needs Improvement… Upcoming: Energy and CommerceLegislative Hearing on 21st Century Cures

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


Energy and Commerce Hearing Examines Opioid Abuse Epidemic

On April 23, the Energy and Commerce Subcommittee on Oversight and Investigations held a hearing entitled “Combatting the Opioid Abuse Epidemic:Professional and Academic Perspectives.” The purpose of the hearing was to solicit insights and findings, drawn from clinical practice and research — aswell as constructive policy recommendations — from some of the nation’s foremost professional and academic experts on opioid abuse. Subcommittee membersheard testimony on treatment options currently available as well as new and emerging evidence-based practices supporting individuals living with opioidabuse and addiction.


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.

Upcoming: Energy and Commerce Legislative Hearing on 21st Century Cures

On April 30, the Energy and Commerce Health Subcommittee will hold a hearing entitled “Legislative Hearing on 21st Century Cures.” The committee has heldeight hearings and issued several white papers on the 21st Century Cures initiative since its launch last year, but this hearing will mark the firstcommittee activity focused on legislative language. Committee members, both in Washington, D.C., and across the country, have also hosted more than twodozen roundtables to generate ideas for this initiative. Staff continues to work together around the clock as they have for the past several months andlegislative text will be made available in the coming days.

Dr. Kathy Hudson, Deputy Director for Science, Outreach, and Policy at the National Institutes of Health; Dr. Janet Woodcock, Director of the Center forDrug Evaluation and Research at the Food and Drug Administration; and Dr. Jeff Shuren, Director of the Center for Devices and Radiological Health at theFDA will testify. The Majority Memorandum, legislative text and witness testimony will be availablehere as they are posted.


Commerce Subcommittee Hearing Finds Medicare Reimbursement for Telehealth Needs Improvement

The Senate Commerce Subcommittee on Communications, Technology, Innovation, and the Internet held a hearing April 21 entitled “Advancing TelehealthThrough Connectivity.” Subcommittee Chair Roger Wicker (R-MS) and other members of the subcommittee heard testimony from witnesses that Medicare’slimited reimbursement for telehealth services needs to be improved to better address a rapidly evolving electronic health care delivery infrastructure.The hearing also examined the progress made by the private sector and government entities to expand the benefits of telehealth nationwide, particularlyin rural areas, and ways to solve connectivity challenges facing many health care providers and patients attempting to take advantage of innovativetelehealth applications. Several federal entities have a jurisdictional role in supporting the deployment of telehealth technologies, including theFederal Communications Commission, the U.S. Department of Agriculture, the U.S. Department of Health and Human Services and the Federal TradeCommission. Also at the hearing, Chair Wicker announced that he and Sen. Thad Cochran intend to re-introduce the Telehealth Enhancement Act later thisyear.

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 watch the hearing, please visitcommerce.senate.gov.

Upcoming: Senate HELP Committee to Hold Hearing on Future MedicalInnovation

On April 28, the Senate Committee on Health, Education, Labor, and Pensions (HELP) will hold a hearing entitled “Continuing America’s Leadership: TheFuture of Medical Innovation for Patients.” Members will be given the opportunity to question witnesses about future technological breakthroughscurrently in the pipeline to enhance health care delivery for patients and the types of health research currently underway at the National Institutesof Health and the Food and Drug Administration. The hearing will be held at 10:00 a.m. in 430 Dirksen Senate Office Building.

Witness List

Roderic I. Pettigrew, Ph.D., M.D.
Director, National Institute of Biomedical Imaging and Bioengineering

National Institutes of Health, Bethesda, MD

Christopher P. Austin, M.D.
Director, National Center for Advancing Translational Sciences
National Institutes of Health

Janet Woodcock, M.D.
Director, Center for Drug Evaluation and Research
Food and Drug Administration

Jeffrey E. Shuren, M.D., J.D.
Director, Center for Devices and Radiological Health
Food and Drug Administration

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

GOP Senators Introduce Legislation to Sustain Subsidies Through August2017 Should SCOTUS Find IRS Tax Credits Inapplicable to Federal Exchange

On April 20, Sen. Ron Johnson and 29 other Republican cosponsors introducedS.B. 1016, The Preserving Access to Healthcare Act, legislation that allows beneficiaries enrolled on the federal exchange or states using the Healthcare.govplatform to maintain their subsidies through August 2017 should the U.S. Supreme Court (SCOTUS) decide in King v. Burwell that advanced premiumtax credits cannot run through the states. Moreover, the legislation allows consumers to keep their previous insurance plans regardless of its abilityto meet the Affordable Care Act’s (ACA) essential health benefit mandate and puts an end to both the employer and individual mandates. Justices of theU.S. Supreme Court heard oral arguments in King v. Burwell on March 4, and a final decision in the case is expected by the end of June 2015.

Senators Introduce Bipartisan Legislation to Strengthen Personal Care Product Oversight

On April 21, Dianne Feinstein (D-CA) and Susan Collins (R-ME) introduced the Personal Care Products Safety Act,S.1014, to protect consumersand streamline industry compliance by strengthening the Food and Drug Administration’s (FDA) authority to regulate the ingredients in personal careproducts. While the personal care products industry is projected to exceed $60 billion in U.S. revenue this year, federal regulations on these productshave not been updated in 75 years. As it stands, the legislation is the result of numerous discussions with stakeholders and extensive consultationwith FDA. The legislation, as written, requires FDA to evaluate five ingredients per year to determine their safety and appropriate use and mandatesthe agency provide streamlined federal standards so that the personal care products industry knows what to expect and companies can plan for the futurewith certainty; moreover, FDA would be required to consider whether consumer warnings are needed for chemical ingredients used in personal careproducts. The first chemicals slated for review under the bill include: diazolidinyl urea (used in several products including deodorant, shampoo andconditioner); lead acetate (used as a color additive in hair dyes); methylene glycol/formaldehyde (used in hair treatments); propylparaben (used as apreservative in shampoo, conditioner and lotion); and quaternium-15 (used as a preservative in a wide range of products including shampoo, shavingcream, skin creams and cleansers). Worth noting, to fund these new oversight activities, the bill would authorize the FDA to collect user-fees frompersonal care products manufacturers similar to what is done for medications and medical devices.

A press announcement on the legislation can be foundhere.

2. Administration

Guidance on 2016 Exchange Eligibility Redeterminations, Re-enrollments

On April 22, 2015, the Centers for Medicare and Medicaid Services (CMS) released aguidance document onprocedures for eligibility redetermination and re-enrollments for Marketplace Coverage for 2016 on the federally facilitated exchanges and any othermarketplace that opts to use it. Under CMS rules, marketplaces have three options for eligibility redeterminations. The document also containsclarifications from the agency that if a person did not file a tax return and reconcile his or her tax credits for 2014, the individual will not getadvanced premium tax credits or cost-sharing reductions when re-enrollment takes place for the 2016 plan year. Also worth noting, insurers will berequired to send separate notices to 2015 enrollees informing them whether the insurer will be offering a crosswalk option for 2016 similar to their2015 plan and inform them of the advanced premium tax credits that will be provided if the consumer is re-enrolled when the information becomesavailable.

CMS Reveals Plan for Federal Small Business Exchange

On April 21, 2015, Centers for Medicare and Medicaid (CMS) revealed on its REGTAP website the agency’s SHOP Development plan for 2016. According to aCMSwebinar, the development plan for 2016 involves threephases or “sprints.” In the first phase, the FF-SHOP will update maximum dependent age and aging off rules, and in the second phase, the FF-SHOP willupdate plan selection options to allow employees to choose dental or health coverage or both while also updating the employee user interface andcreating a series of new FF-SHOP notices. In the final phase FF-SHOP functionality will be updated to allow multiple plan years of data to be storedand to allow employers to renew FF-SHOP coverage. 2016 marks the first year employees will be allowed employee choice of plans in all FF-SHOPs. Issuertesting of the FF-SHOP will begin prior to Nov. 1 and is expected to last about three weeks.

FDA: Pilot Program for Center for Devices and Radiological Health Electronic Submission for Home Use Device Labeling

On April 20, the Food and Drug Administration (FDA) Center for Devices and Radiological Health (CDRH) announced the availability of a CDRH electronicsubmissions Pilot Program database to house labeling for home use devices. Participation in the pilot is open to applicants who label their device(s) forhome use. Participation in the pilot project is voluntary. Participants will be asked to navigate through the electronic submissions system and practicesubmitting labels and package inserts. The pilot project is intended to provide industry and CDRH staff the opportunity to evaluate the submissions processand system and to receive comments from industry participants. FDA will accept applications for participation in the voluntary electronic submissions CDRHHome Use Device Labeling Pilot Program from May 1, 2015, through May 31,2015. For more information, please visitwww.federalregister.gov.

FDA: Generic Drug User Fees; Public Meeting; Request for Comments

On April 21, FDA announced apublic meeting on the Generic Drug User Fee Amendments of 2012 (GDUFA). The legislative authority for GDUFA expires at the endof September 2017. At that time, new legislation will be required for FDA to continue to collect generic drug user fees for future fiscal years. Asrequired by the Federal Food, Drug, and Cosmetic Act (the FD&C Act), FDA has published a notice in the Federal Register requesting public input on thereauthorization; will hold a public meeting at which the public may present its views on the reauthorization, including specific suggestions for changes tothe goals referred to in the Generic Drug User Fee Act Program Performance Goals and Procedures (i.e., the Commitment Letter); will provide a period of 30days after the public meeting to obtain written comments from the public; and will publish the comments on FDA’s website. FDA invites public comment on theGDUFA program and suggestions regarding the features FDA should propose for the next GDUFAprogram. The public meeting will be held on June 15, 2015, from 9:00 a.m. to5:00 p.m. The public meeting may be extended or may end early depending onthe level of public participation.

3. State Activities

Puerto Rico Coalition Calls on Feds for Health System Reforms

Puerto Rico’s Gov. Alejandro Garcia Padilla and anew coalition of the territory’sphysicians, insurance companies and hospitals are demanding that the federal government take steps to prevent the collapse of the health care system onthe island. Rather than experiencing a 3 percent increase in its 2016 average Medicare Advantage (MA) benchmarks like the U.S. national average, PuertoRico’s MA reimbursement rates will decrease approximately 11 percent compared to 2015 funding levels, an action that was announced on the Centers forMedicare and Medicaid Services’ most recent call letter. Puerto Rico’s funding now stands as the lowest of any U.S. jurisdiction, 38 percent below theU.S. national average. “Puerto Rico can no longer bear the burden of inequality from unconscionable federal cuts to essential services,” saidCongresswoman Nydia Velazquez (D-NY). “Access to quality healthcare is not a privilege; it is a right for every American. Puerto Rico is simply askingto be treated with the fairness and dignity that all Americans deserve.” The Coalition intends to engage in a robust campaign to convince the federalgovernment to act, which will include lobbying, public relations, paid media and grass roots mobilizations. Without help from the government, the MAprogram is likely to begin to shut down on June 1, 2015. As it stands, 60 percent of Puerto Rico’s population, approximately 2 million patients,receives medical care through Medicare, Medicare Advantage (MA) or Medicaid.

4. Regulations Open for Comment

Proposed FY 2016 Medicare Payment and Policy Changes for Inpatient Psychiatric Facilities

On April 24, 2015, the Centers for Medicare & Medicaid Services (CMS) issued aproposed rule outlining proposed fiscal year (FY) 2016 Medicare paymentpolicies and rates for the Inpatient Psychiatric Facilities Prospective Payment System (IPF PPS). The proposed rule also updates the Inpatient PsychiatricFacility Quality Reporting (IPFQR) Program, which requires participating facilities to report on quality measures or incur a reduction in their annualpayment update. This proposed rule would expand the measure sets in future fiscal years and change certain data reporting requirements for these measures.CMS is proposing to update the estimated payments to IPFs in FY 2016 relative to estimated payments in FY 2015 by 1.6 percent (or $80 million). This amountreflects 2.7 percent IPF-specific market basket estimate less the productivity adjustment of 0.6 percentage point and less the 0.2 percentage pointreduction required by law, for a net update of 1.9 percent. Estimated payments to IPFsare reduced by 0.3 percent due to updating the outlier fixed-dollar lossthreshold amount. CMS will accept comments on the proposed rule until June23, 2015.

CMS Releases Proposed Rule on FY 2016 Medicare Payments for Inpatient Rehab Facilities

On April 23, 2015, the Centers for Medicare & Medicaid Services (CMS) issued aproposed rule outlining proposed FY 2016 Medicare payment policiesand rates for the Inpatient Rehabilitation Facility (IRF) Prospective Payment System and the IRF Quality Reporting Program. Specifically, CMS isproposing to increase payments to inpatient rehabilitation hospitals in 2016 by approximately $130 million, or 1.7 percent when compared to 2015. Thisagency also proposes new quality reporting requirements to adopt measures that satisfy three of the quality domains required by the IMPACT Act in FY2016: skin integrity and changes in skin integrity; functional status, cognitive function and changes in function and cognitive function; and incidenceof major falls; IRFs that fail to submit the required quality data to CMS will be subject to a 2 percentage point reduction to their applicable FYannual increase factor, and the expected cost of the implementation of these new quality reporting requirements is approximately $24 million tohospitals. Worth noting, the payment increase is significantly smaller than the 2.4 percent raise they received in fiscal 2015. The agency proposes tobegin collecting IRF quality reporting data by fall 2016. The proposed rule will be published in the Federal Register on April 27, and the agency willaccept comments from stakeholders until June 22, 2015.

USPSTF Upholds Recommendations on Mammography for Women Under 50

In a draft recommendationreleased April 20, the U.S. Preventive Services Task Force (USPSTF) upheld its 2009 recommendation that women under 50 wait to start gettingmammograms. Specifically, the task force downgraded mammography coverage for women ages 40-49 from “B” to “C” status, meaning insurers would no longerhave to cover screenings without a co-pay. The decision comes after more evidence has shown the negative effects associated with mammograms, includingfalse positives and overdiagnosis. In a letter to the Department of Health and Human Services opposed to the decision, Sen. Barbara Mikulski said,“Should the draft recommendation be finalized, I will actively and aggressively pursue all legislative options available to ensure that women aged 40and older are able to continue receiving free annual mammogram.” The task force reports that women aged 60-69 are most likely to avoid a breast cancerdeath due to a mammography. “Screening mammography in women ages 40 to 49 years may reduce the risk of dying of breast cancer, but the number of deathsaverted is much smaller than in older women and the number of false-positive tests and unnecessary biopsies are larger. All women undergoing regularscreening mammography are at risk for the diagnosis and treatment of noninvasive and invasive breast cancer that would otherwise not have become athreat to her health, or even apparent, during her lifetime. Public comment on the draft recommendations must be submitted by May 18, 2015, at 8:00 PMEST.

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)