Washington Healthcare Update

June 22, 2015

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This Week: Leading Up to the SCOTUS King v. Burwell Decision… HouseVotes to Repeal the Medical Device Tax…  CMS Announces It Will BolsterTransitional Reinsurance Payments…  MedPAC Releases June Report toCongress

1. U.S. Supreme Court – King v. Burwell

2. Congress

House of Representatives


3. Administration

4. State Activities

5. Regulations Open for Comment

6. Reports

1. U.S. Supreme Court – King v. Burwell

Leading Up to the SCOTUS Kingv. Burwell Decision

The U.S. Supreme Court is due to rule within days on whether the president’s health care law allows for low-income people using HealthCare.gov to getinsurance subsidies. If the court rules against the White House and strikes down the subsidies, there is growing concern about having a plan to address the6 million Americans who would lose their premium tax credits. The Supreme Court must rule by the end of June. This week saw much discussion about what acontingency plan might look like. President Obama continues to say he will veto any proposal that harms his largest domestic legacy.

A group convened by former HHS Secretary Mike Leavitt argues that governors and state officials should begin working together immediately to push for moreflexibility to establish state-based exchanges should the Court rule against the federal government in King v. Burwell. The group identifiedseveral areas in which they believe the Administration can make it easier for states to create an exchange and potentially rescue insurance subsidies.

Examples of state flexibility options include:

  1. HHS allowing states to leverage existing technology platforms from private exchanges and insurers;
  2. Temporarily freeing up more federal funds so states can afford to take on more exchange administrative functions;
  3. Allowing states to rely more on existing enrollment channels such as brokers instead of ACA navigators; and
  4. Permitting states to establish their own marketplaces without immediately requiring a governing board. Governors would still likely need approval from their legislatures.

Their findings can be found in aJune 15 Leavitt Partners white paper.

Congressional Republicans are also working to establish their own King v. Burwell contingency plans. Speaker John Boehner (R-OH) met with severalGOP senators June 16, including Orrin Hatch (UT), John Cornyn (TX) and John Thune (SD), to discuss the issue. The House Republicans held a special closedmeeting June 17 to discuss legislative plans if the Supreme Court strikes down the federal subsidies. Senate Republicans are coalescing around a plan toextend Obamacare subsidies for up to two years if the Supreme Court strikes them down this month. They have suggested extending subsidies for a period oftime—potentially through 2017—and also repealing some pieces of the Affordable Care Act (ACA) such as the individual and employer mandates.

Several Republicans in Congress, as well as GOP state leaders, are opposed to supporting any contingency plan that they feel would be viewed as supportingObamaCare, including but not limited to setting up state marketplaces or giving an extension for the subsidies.

The Congressional Budget Office (CBO) announced that repealing all of the ACA would increase the budget deficit by as much as $353 billion, which is largerthan previous forecasts. Repealing the law would generate savings by ending insurance subsidies to millions of Americans, but those savings would be morethan offset by reversing the law’s cuts to Medicare as well as its various tax increases, including a new levy on high-cost insurance plans, the agencysaid. CBO also stated that repeal would boost economic growth by an average 0.7 percent over the next decade, but the uninsured population would grow by 19million next year.

Authors’ note: Following the announcement of the upcoming SupremeCourt decision on King v. Burwell expected in the next couple weeks, aspecial edition of Weekly Washington Healthcare Update be circulated tooutline the impact of the decision.

2. Congress


House Subcommittee Reports Labor HHS Appropriations Bill

On June 16, House Republicans unveiled their $153 billion Labor-HHS appropriations bill, which provides the National Institutes of Health (NIH) with $31.2billion, a $1.1 billion increase and $100 million more than the President requested. The Centers for Disease Control (CDC) is slotted to receive $ 7billion for programs or approximately $344 million lower than current funding levels. Overall, the bill would cut about 9 percent from the Administration’sbudget request for health, labor and education for FY 2016. Worth noting, the bill would also defund the Affordable Care Act (ACA) and eliminate the entireAgency for Healthcare Research and Quality (AHRQ).

The bill was reported out of theLabor-HHS Subcommittee on June 17 without changes. During the markup, Democratic amendments proposed included increasing the bill’s funding for Title Xfamily planning programs, teen pregnancy prevention programs, the AHRQ, pandemic preparedness programs and mental health professionals in schools. Anotheramendment would have added even more money to the NIH budget. The amendments were determined to increase funding without corresponding offsets, which wouldhave violated the rules. The full committee is expected to vote on the bill on June 24 at 10:15 a.m. at 2359 Rayburn House Office Building.

More details on the draft appropriation bill can be found in an Appropriations Committee press release.

House E&C and W&M Committee Members Ask GAO to Examine CMS Fraud Prevention System

In a letter dated June 15 , a bipartisan group of House members wrote to the Government Accountability Office (GAO) asking that the oversight agency review the operations ofthe Centers for Medicare & Medicaid Services’ Fraud Prevention System (FPS). FPS analyzes all Medicare fee-for-service claims prior to payment toidentify aberrant and suspicious billing patterns for further investigation; the program was implemented in July 2011 in an effort to more proactivelyprevent fraud in the Medicare program, as opposed to the previously used “pay and chase” approach. In the letter, the leaders of both the House Energy andCommerce and Ways and Means committees and their respective health and oversight subcommittees asked GAO six specific questions including inquiring intoCMS’s plans for using FPS with regard to Medicaid and the Children’s Health Insurance Program (CHIP), how many administrative actions CMS has taken againstproviders since 2010 and if those actions were a direct result of FPS.

A press release on the letter can be found here.

Upcoming: House E&C Health Subcommittee to Hold Hearings on Bipartisan Children’s Health Bills

The House Energy and Commerce Subcommittee on Health, chaired by Rep. Joe Pitts (R-PA), has scheduled a hearing entitled “Examining Public HealthLegislation: H.R. 2820, H.R. 1344, and H.R. 1462” for Thursday, June 25, 2015, at 10:15 a.m. in Room 2322 of the Rayburn House Office Building.Subcommittee members will discuss three bipartisan bills including:

  • H.R. 2820, the Stem Cell Therapeutic and Research Reauthorization Act , introduced by Reps. Chris Smith (R-NJ) and Doris Matsui (D-CA), reauthorizes the Stem Cell Therapeutic and Research Act of 2005, which provides federal support for cord blood donation and research to increase patient access to transplants.
  • H.R. 1462, the Protecting Our Infants Act of 2015 , introduced by Reps. Katherine Clark (D-MA) and Steve Stivers (R-OH), will mandate that HHS: develop a study and subsequent recommendations for preventing and treating prenatal opioid abuse and neonatal abstinence syndrome; review existing programs and develop a more coordinated strategy; and provide additional technical assistance to states to improve the availability and quality of data collection and surveillance activities regarding neonatal abstinence syndrome.
  • H.R. 1344, the Early Hearing Detection and Intervention Act of 2015, authored by Health Subcommittee Vice Chairman Brett Guthrie (R-KY) and Rep. Lois Capps (D-CA), amends the public health service act to reauthorize a program for early detection, diagnosis and treatment of deaf and hard-of-hearing newborns, infants and young children.

The legislation and witness list will be availablehereas they are posted.

A press release on the hearing can be found here.

House Votes to Repeal the Medical Device Tax

On June 19, the House of Representatives voted 280 (including 46 Democrats) to 140 to repeal the 2.3 percent medical device excise tax, which was imposedby the enactment of the Affordable Care Act (ACA). The Protect Medical Innovation Act (H.R. 160), introduced by Rep. Erik Paulsen (R-MN), did not includeany provision for how to pay for the repeal. The White House had previously announced its opposition to the bill, saying the legislation “would increasethe deficit to finance a permanent and costly tax break for industry without improving the health system or helping middle-class Americans.” The Office ofManagement and Budget (OMB) has estimated the bill to cost $24.4 billion over 10 years. During the House’s last vote to repeal the tax in 2012, 37Democrats voted in favor of repeal. The measure must now be acted on by the Senate. The last Senate vote on this issue was in 2013, as part of anon-binding vote, which also called for the measure’s cost to be offset.

House E&C Committee Holds Hearing on Mental Health Bills

The House Energy and Commerce Health Subcommittee held a hearing June 16 focusing on the newly re-introduced Helping Families in Mental Health Crisis Act (H.R.2646), authoredby Rep. Tim Murphy (R- PA), and a more narrow billintroduced by Rep. Doris Matsui (D-CA). Rep. Murphy’s bill revises the Health Insurance Portability and Accountability Act (HIPAA) so caregivers can getaccess to certain information about patients who pose a danger to themselves or others. Likewise, Rep. Matsui’s bill proposes to codify guidelines from theDepartment of Health and Human Services’s (HHS) Office of Civil Rights and to educate providers on what’s permitted under HIPAA.

Witness List

Creigh Deeds
Senate of Virginia

Patrick J. Kennedy
Former U.S. Representative (RI)
Founder, Kennedy Forum

Jeffrey A. Lieberman, M.D.
Department of Psychiatry
Columbia University College of Physicians and Surgeons

Paul Gionfriddo
President and CEO
Mental Health America

Steve Coe
Chief Executive Officer
Community Access

Mary Jean Billingsley
National Disability Rights Network

Harvey Rosenthal
Executive Director
New York Association of Psychiatric Rehabilitation Services

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

House Passes Four Medicare Advantage Reform Bills

On June 17, the House of Representatives approved by voice vote four bills affecting the Centers for Medicare and Medicaid Services (CMS) MedicareAdvantage (MA) Program, a program that provides Medicare benefits to seniors through private health plans. Bills approved that will be moving to the Senatefor consideration include:

House Vote on 21st Century Cures Act Delayed

Although House Energy and Commerce Committee Chairman Fred Upton (R-MI) had been pushing his committee’s 21st Century Cures bill to be in a position to bevoted on before July, he announced that holdups over the bill’s provisions that pay for the spending in the proposal mean the vote on final passage isunlikely in June, before Congress recesses for the Fourth of July; however, he expects a vote shortly after Congress returns in July. A bipartisan group of44 House members has demanded that one offset be stripped from the bill. That provision would delay Part D reinsurance payments. Others are concerned aboutthe bill’s $10 billion funding increase for the National Institutes of Health (NIH). The NIH funding increase was put in the bill to gain the support ofDemocrats and some predict without it, the bill would not have their support.

Upcoming: House E&C Health Subcommittee to Hold Hearing on Medicaid Demonstration Projects

The House Energy and Commerce Subcommittee on Health, chaired by Rep. Joe Pitts (R-PA), has scheduled a hearing for Wednesday, June 24, entitled “Examiningthe Administration’s Approval of Medicaid Demonstration Projects.” Specifically, members of the committee will hear testimony from a representative of theGovernment Accountability Office (GAO) about a recent report that found transparency, accountability and consistency concerns in the Administration’sfunding of Medicaid demonstration programs. Medicaid demonstration projects constitute roughly one-third of Medicaid spending. A witness list was notavailable at the time of publication.

Witness List

Panel 1

Katherine Iritani
Health Care
Government Accountability Office

Panel 2

Haley Barbour
former Governor of Mississippi and Founding Partner
BGR Group

Matt Salo
Executive Director
National Association of Medicaid Directors

Joan Alker
Executive Director
Georgetown University Center for Children and Families

For more information or to view the hearing, visit energycommerce.gov.


Senate HELP Committee Holds Hearing on Improving User Experience in EHR

The Senate Health, Education, Labor, and Pensions (HELP) Committee held a hearing June 16 entitled “Achieving the Promise of Health Information Technology:What Can Providers and the U.S. Department of Health and Human Services Do To Improve the Electronic Health Record (EHR) User Experience?” to investigateopportunities for the federal government and physicians to bolster patients’ use of their own health data. The hearing, led by Sen. Bill Cassidy (R-LA) andSen. Sheldon Whitehouse (D-RI) is the second in a HELP Committee health IT hearing series and focused on the importance, and lack, of a set of standards inhealth care in relation to interoperability and the sharing of information. Witnesses testified their support to keep moving forward on the implementationof Meaningful Use Stage 3 and recommended reforms to improving patient accessibility and understanding of EHR including increasing transparency in the EHRmarketplace, empowering providers to choose the most suitable vendor and identifying the best practices to deploy electronic records as a care managementtool.

Witness List

Boyd Vindell Washington, M.D., MHCM
President, Franciscan Medical Group
Chief Medical Information Officer, Franciscan Missionaries of Our Lady Health System

Timothy A. Pletcher, DHA
Executive Director, Michigan Health Information Network Shared Services
Adjunct Faculty, Department of Learning Health Sciences, University of Michigan Medical School

Meryl Moss, MPA, EMHL
Chief Operating Officer
Coastal Medical

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

3. Administration

HHS: ACA Independence Home Model Saved $25 Million in First Year

On June 18, the Centers for Medicare & Medicaid Services (CMS) announced the results of the first performance year of the Independence at Home Demonstration, aprogram that provides chronically ill Medicare beneficiaries with primary care services in the home setting while attempting to lower beneficiary costs. Inthe first performance year, 17 participating practices served more than 8,400 Medicare beneficiaries. The CMS analysis found that Independence at Homeparticipants saved more than $25 million in the demonstration’s first performance year — an average of $3,070 per participating beneficiary — and all 17participating practices improved quality in at least three of the six quality measures for the demonstration, with four participating practices meeting allsix quality measures. CMS will award incentive payments of $11.7 million to nine participating practices that succeeded in reducing Medicare expendituresand met designated quality goals for the first year of the demonstration.

HHS Announces Coordinated Medicare Fraud Strike Force Action Involving $712 Million in False Billings

Department of Health and Human Services (HHS) Secretary Sylvia M. Burwell and Attorney General Loretta E. Lynch announced June 18 a nationwide sweep led by the Medicare Fraud Strike Force in 17districts, resulting in charges against 243 individuals, including 46 doctors, nurses and other licensed medical professionals, for their allegedparticipation in Medicare fraud schemes. “This Administration is committed to fighting fraud and protecting taxpayer dollars in Medicare and Medicaid,”said Secretary Burwell. “This takedown adds to the hundreds of millions we have saved through fraud prevention since the Affordable Care Act was passed.With increased resources that have allowed the Strike Force to expand and new tools, like enhanced screening and enrollment requirements, tough new rulesand sentences for criminals, and advanced predictive modeling technology, we have managed to better find and fight fraud as well as stop it before itstarts.” According to court documents, the defendants participated in alleged schemes to submit claims to Medicare and Medicaid for treatments that weremedically unnecessary and often never provided. In many cases, patient recruiters, Medicare beneficiaries and other co-conspirators allegedly were paidcash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare forservices that were medically unnecessary or never performed. Collectively, the doctors, nurses, licensed medical professionals, health care company ownersand others charged are accused of conspiring to submit a total of approximately $712 million in fraudulent billing.

CMS Announces It Will Bolster Transitional Reinsurance Payments

In a Centers for Medicare and Medicaid Services (CMS)memoreleased June 17, the agency announced that it will increase the transitional reinsurance reimbursement rate to 100 percent for the 2014 benefit year forinsurers providing ACA-compliant individual plans to 100 percent of enrollees’ costs between $45,000 and $250,000. Originally planning to cover only 80percent of cost, CMS says it boosted rates because “for the 2014 benefit year, reinsurance contributions exceeded the requests for reinsurance payments.”According to the memo, CMS has received approximately $8.7 billion in reinsurance contributions for 2014 and expects to collect $1 billion more by Nov. 15,2015. The Affordable Care Act (ACA) established the transitional reinsurance program to help keep premiums stable and low for consumers by providingpayments to health insurance issuers that cover higher-cost populations in the individual market.

FDA Issues Finalized Guidance on Early-Phase Clinical Trials Design for Cellular and Gene Therapy Products

The Food and Drug Administration (FDA) Center for Biologics Evaluation and Research (CBER)/Office of Cellular, Tissue, and Gene Therapies (OCTGT) releaseda finalized guidance document to assist sponsors and investigators in designingearly-phase clinical trials for cellular therapy (CT) and gene therapy (GT) products (referred to collectively as CGT products). The guidance documentprovides recommendations regarding clinical trials in which the primary objectives are the initial assessments of safety, tolerability or feasibility ofadministration of investigational products. The guidance released finalizes July 2013 draft guidance on the issues; stakeholders can submit eitherelectronic or written comments on the document at any time.

AHRQ Plans to Fund Studies on High-performing Health Care Systems for Comparative Effectiveness Research

In a press release, the Agency for Healthcare Research and Quality’s (AHRQ) Director Richard Kronick,Ph.D., provides further details on AHRQ’s intention to use patient-centered outcome grants to fund three Centers of Excellence. The Centers will identify,classify, track and compare how high-performing health care systems promote evidence-based practices in delivering care. Moreover, the centers willidentify the characteristics of health systems that successfully disseminate and apply evidence from patient-centered outcomes research and analyze theconnections between successful dissemination, patient health outcomes and effective use of resources. The three grants, which begin in September, willprovide approximately $52 million over five years to study how complex delivery systems disseminate evidence-based findings and provide lessons learned toinform the dissemination of findings in other settings. This year’s award recipients include: Dartmouth College, the National Bureau of Economic Researchand RAND Corporation, which will collaborate with other universities, think tanks and nonprofits to achieve program goals. The effort is part of theagency’s attempt to accelerate the dissemination and implementation of patient-centered outcomes research findings into practice. It is also tied to thewider HHS delivery system reform initiative to encourage “Better Care, Smarter