Washington Healthcare Update

June 29, 2015

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This Week: Federal Subsidies Upheld by SCOTUS in King v. Burwell…How to Pay for 21st Century Cures Bill Discussions Continue… SenateAppropriations Committee Approves HHS FY 2016 Budget… How to Pay for 21stCentury Cures Bill Discussions Continue… CMS Releases Proposed 2016 MedicareDialysis Pay Rule 

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

7. Other News

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

Federal Subsidies Upheld by SCOTUS in King v. Burwell

In a 6-3 decision, the Supreme Court upheld that the Affordable Care Act’s (ACA) premium tax credits are indeed available to individuals in states that areserviced by federal exchanges. In his opinion for the majority, Chief Justice Roberts wrote that the ACA adopted reforms that are closely intertwined:guarantee issue and community rating, requiring coverage or payment to the Internal Revenue Service, and affordability. The tax credits make insurance moreaffordable by giving refundable tax credits to individuals with household incomes between 100 percent and 400 percent of the federal poverty level. Thecourt found that pulling out the tax credit provision would create a “death spiral,” because if people did not have subsidies they would be exempt fromcoverage. As it stands, 16 states and the District of Columbia have created their own state-based exchanges, and 37 states rely to varying degrees on thefederal exchange via healthcare.gov. A more detailed summary of the decision and its implications can be found here.

2. Congress


How to Pay for 21st Century Cures Bill Discussions Continue

In a report released June 23, the Congressional BudgetOffice (CBO) estimated that implementing H.R. 6, 21st Century Cures Act, would cost $106.4 billion from 2016-2020 while simultaneously reducing directgovernment spending by $11.9 billion over the 2016-2025 period. CBO says the bill, which unanimously passed out of the House Energy and Commerce Committeeon May 21, includes specific department/agency costs of: $105.0 billion (National Institutes of Health), $872 million (Food and Drug Administration), $35million (Centers for Disease Control), $427 million (Department of Health and Human Services (HHS) programs and $21 million (for other Departments andagencies) for years 2016-2020.

While there will not be a vote until later this summer, House leadership has begun to have conversations with congressional offices about the bill andcirculate a list of potential policies that would pay for the proposal. On the list to pay for the proposal are the following policies:

  • Accelerating the modernization of X-ray imaging
  • Part D provider and patient assignment
  • Limit federal Medicaid matching funds for DME reimbursement to Medicare rates
  • Selling off excess capacity in the Strategic Petroleum Reserve

A policy considered controversial related to Medicare Part D reinsurance has been dropped because of concerns raised by Ways and Means Committee members.The House Energy and Commerce Committee chairman continues to seek pay-fors for the bill.

House E&C Health Subcommittee Holds Hearing on Medicaid Section 1115 Demonstration Projects

The Energy and Commerce Subcommittee on Health held a hearing on June 24, 2015, entitled “Examining the Administration’s Approval of Medicaid DemonstrationProjects.” Medicaid Section 1115 demonstrations projects have been used by some states to expand Medicaid up to 138 percent of the federal poverty limit,as outlined under the Patient Protection and Affordable Care Act (PPACA). The hearing centered on an April Government Accountability Office (GAO) report that determined that Centers for Medicare and MedicaidServices (CMS) Medicaid Section 1115 demonstration projects have duplicated other federal programs. The GAO also found that other demonstration projectshelped middle-income Americans rather than the low-income beneficiaries. At the hearing, members questioned the GAO whether CMS may be trying to pressurestates into expanding Medicaid when those states look for Medicaid 1115 waiver approval; others questioned witnesses about the transparency, predictabilityand budget neutrality of the waivers. The witness testimony of the second panel, however, asked lawmakers for added flexibility in the program itself.According to the GAO, in FY 2014, Section 1115 demonstrations accounted for close to one-third of total Medicaid expenditures. The agency recommended inMay that CMS issue criteria for whether 1115 expenditures are likely to promote Medicaid objectives and ensure that application of those criteria isdocumented in the Department of Health and Human Service’s approvals of 1115 waivers.

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.house.gov.

House E&C Health Subcommittee Holds Hearing on Public Health Bills

The House Energy and Commerce Subcommittee on Health held a hearing on June 25 entitled “Examining Public Health Legislation: H.R. 2820, H.R. 1344, andH.R. 1462.” Subcommittee members discussed the three bipartisan bills related to health care for newborns, infants and children.

Members discussed and sought witness testimony on the following bipartisan bills:

  • 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), would 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), to reauthorize a program for early detection, diagnosis and treatment of deaf and hard-of-hearing newborns, infants and young children in the Public Health Service Act.

Witness List

Joanne Kurtzberg, M.D.
Cord Blood Association

Jeff Chell, M.D.
Chief Executive Officer
National Marrow Donor Program

Patti Freemyer Martin, Ph.D.
Director of Audiology and Speech Language Pathology
Arkansas Children’s Hospital

Stephen W. Patrick, M.D., M.P.H., M.S.
Assistant Professor of Pediatrics and Health Policy
Department of Pediatrics
Vanderbilt University School of Medicine

Mishka Terplan, M.D., M.P.H., FACOG
Medical Director
Behavior Health System Baltimore

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

Bicameral Democratic Health Committee Leaders Send Letter to HHS Concerning Unfinished Final Medicaid Equal Access Rule

On June 22, Democratic committee leaders in both the House and Senate sent a letter to U.S.Department of Health and Human Services (HHS) Secretary Sylvia Burwell urging the agency to finalize a regulation proposed by the Centers for Medicare andMedicaid Services (CMS) in 2011 that would better enforce Medicaid’s equal access provision. Safety net hospitals earlier this year, however, expressedconcerns about how effective the proposed rule would be. The letter comes following a March 2015 Supreme Court decision in Armstrong v. Exceptional Child that providers cannot bring a claim against states for paying illegally low rates and must rely on HHS to takeadministrative action instead. The lawmakers urged, “CMS must provide firm and immediate oversight to ensure that states are setting and maintaining theirMedicaid rate structures as Congress intends in section 1902(a)(30)(A) of the Medicaid Act—consistent with efficiency, economy and quality of care and atlevels sufficient to ensure that care and services are available to Medicaid enrollees at least to the extent they are available to the general populationin the geographic area.” The letter was sent by House Energy and Commerce Committee Ranking Member Frank Pallone, Jr. (D-NJ), Senate Finance CommitteeRanking Member Ron Wyden (D-OR), Senate Finance Health Care Subcommittee Ranking Member Debbie Stabenow (D-MI), House Energy and Commerce HealthSubcommittee Ranking Member Gene Green (D-TX), House Ways and Means Committee Ranking Member rel=”noopener noreferrer” Sander Levin (D-MI) and House Ways and Means HealthSubcommittee Ranking Member Jim McDermott (D-WA).

A copy of the proposed rule can be found here.

House W&M Oversight Subcommittee Holds Hearing on Rising ACA Premiums

House Committee on Ways and Means Subcommittee on Oversight Chairman Peter Roskam (R-IL) held a hearing June 24 to discuss the effects of the AffordableCare Act (ACA) on health insurance premiums. He called the hearing after some states published high rate increase requests by several big health insurers,including increases of 51.6 percent in New Mexico, 36.3 percent in Tennessee and 30.4 percent in Maryland. At the hearing, which was largely partisan innature, Chair Roskam said, “Now, for the first time since the ACA became law, insurers are able to look at a full year’s worth of claims data to calculatepremium prices for the year ahead. The proposed premium hikes tell us a lot about how much health care cost last year and what insurers calculate healthcare will cost this next year. On June 1, CMS made public proposed premium hikes of 10 percent or more for the 2016 plan year, and many of the proposedincreases are eye-poppingly huge.” Minority witnesses responding to ACA attacks, stressing that premiums were rising in double digits prior to theenactment of the law and have slowed over the past several years.

Witness List

Seth Chandler
Insurance Law Professor at the University of Houston

Julie McPeak
Commissioner of the Tennessee Department of Commerce & Insurance

Al Redmer, Jr.
Commissioner of the Maryland Insurance Administration

Mike Kreidler
Washington State Insurance Commissioner

For more information or to watch the hearing,visit waysandmeans.gov.

Mental rel=”noopener noreferrer” Health Parity and Behavioral Health Clarification

Former Congressmen Patrick Kennedy (D-RI) and Jim Ramstad (R-MN)sent a letter to Reps. Ted Deutch (D-FL) and Ileana Ros-Lehtinen (R-FL) on June 22 thatclarifies the intent of their 2008 mental health parity legislation (Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, H.R. 6983) to mandate that health plans cover behavioral health just asthey are required to cover medical and surgical procedures. Specifically they say their bill was meant to also address the issue of eating disorders andresidential treatment for those diseases. In the 114th Congress, Reps. Deutch and Ros-Lehtinen have introduced legislation, H.R. 2515, to codify this clarification. Fourteen million Americans haveeating disorders, which have the highest mortality rate of any mental illness.

House Votes to Repeal ACA’s IPAB

On June 23, the House of Representatives voted 244-154 on H.R.1190, a bill thatwould repeal the Independent Payment Advisory Board (IPAB), with 11 Democrats voting support of the Republican measure. IPAB, intended as a Medicarespending control measure founded within the Affordable Care Act (ACA), consists of a panel of 15 appointed members who would make decisions on ways tocontrol the rate of Medicare growth and to help the program come up with savings, should projected Medicare spending exceed a certain target rate. Underthe ACA, future IPAB proposals would go into effect automatically unless Congress enacts alternative legislation achieving required savings levels. Thusfar, however, program spending has not risen fast enough to trigger the appointment and convening of IPAB. The Obama Administration has already threatenedto veto the legislation, and more Democrats likely would have voted in support of the legislation if the bill was not offset by cuts to the ACA Preventionand Public Health Fund.

Health IT Groups Send Letter to House E&C Committee in Support of Interoperability Provisions within 21st Century Cures Bill

On June 23, a coalition of 30 Healthcare Technology and IT groups sent a letter to the House Energy & Commerce Committee leadershipin support of the interoperability provisions proposed within the 21st Century Cures bill. These provisions, they say, allow health care information toflow more freely and become more accessible by stakeholders within the health care industry. Within H.R. 6, the groups applauded the introduction of anincreased focus on integrating already established high industry information standards, and more open application programming interfaces (APIs). Moreover,the coalition is calling for more attention and stauncher penalties for those health care groups that engage in “information blocking,” which is afrustrating practice in the current competitive business environment for many of these health care IT groups. The penalties proposed included both monetaryand certification consequences. Of note, there has been opposition to the interoperability provisions from some notable health IT groups, and also from theAmerican Hospital Association. Opposition groups claim the new language lacks specificity and may have unintended consequences on the certification processin the health care IT industry. Notable names within the 30 organizations that sent the letter include: Health IT Now, athenahealth, Intel, Oracle, Samsungand Verizon.

House Appropriations Committee Advances Labor-HHS-Ed Appropriations Bill

The House Appropriations Committee on June 24 approved theFY 2016 Labor, Health and Human Services (LHHS) funding billby a vote of 30-21. The legislation includes funding for programs within the Department of Labor, the Department of Health and Human Services, theDepartment of Education and other related agencies. The bill includes a total of $71.3 billion for the Department of Health and Human Services (HHS), anincrease of $298 million above last year’s level and $3.9 billion below the President’s budget request. However, the bill does not include additionalfunding to implement certain Affordable Care Act (ACA) programs, and prohibits funds for the new “Center for Consumer Information and Insurance Oversight”and “Navigators” programs. Unlike the Senate version, the funding bill would also eliminate the Agency for Healthcare and Research Quality (AHRQ). It alsocuts funding for the management of the Centers for Medicare and Medicaid Services (CMS) by $344 million ($3.3 billion for FY 2016) and $919 million belowthe President’s budget request.

It provides a total $31.2 billion for the National Institutes of Health (NIH), $1.1 billion above the fiscal year 2015 enacted level and $100 million abovethe President’s budget request. Unlike the Senate version, the funding bill would also eliminate the Agency for Healthcare and Research Quality (AHRQ). The21st Century Cures legislation drafted in the Energy and Commerce Committee would add another $10 billion of NIH funding over five years, but this issuehas not yet been reflected in either chamber’s current appropriations proposals. Office of Management and Budget (OMB) Director Shaun Donovan in responseto the appropriation bill’s passage out of subcommittee this week sent a letter to Appropriations CommitteeChairman Hal Rogers to express the Administration’s concerns about the deep cuts to the Affordable Care Act program. The Senate Appropriations Committeealso reported out its HHS-Labor funding bill on June 25; the two chambers will need to confer later this year to negotiate existing funding discrepancies.


Senate Appropriations Committee Approves HHS FY 2016 Budget

On June 25, the Senate Appropriations Committee reported out of committee its FY 2016 Labor, Health and Human Services, Education, and Related Agenciesappropriations bill by a 16-14 vote. As written, the measure would appropriate $70.4 billion to the Department of Health and Human Services (HHS), orapproximately $646 million less than in FY 2015. The bill makes several cuts to current health care programs, overall resulting in a $3.6 billion decreasefrom this year’s enacted level and $14.6 billion below the White House’s request. The National Institutes of Health (NIH) is slotted to receive $32billion, an increase of $2 billion above FY 2015, while the Centers for Disease Control (CDC) funding was cut by $251 million, or 4 percent from FY 2015levels. Only one amendment by Sen. Tom Udall (D-NM) was made from the subcommittee’s version, approved on June 23. That change would divert some publichealth funds to a preventive medicine residency program.

Several programs received an increase in funding, including rural health care efforts ($150.6 million, an increase of $3.1 million above FY 2015),Precision Medicine ($200 million) and combating opioid abuse ($67 million, an increase of $35 million). The bill also has significant implications forAffordable Care Act (ACA) funding: Republicans included language to prohibit spending on insurer risk corridor payments and to block funding forstate-based health exchanges, to eliminate funding for the Independent Physician Advisory Board (IPAB) and to cut operational funding for Centers forMedicare and Medicaid Services. In an effort to increase transparency, the bill requires the Obama Administration to publish ACA-related spending data, aswell as information on employees, contractors and other personnel who implement, administer or enforce ACA provisions.

Unlike the House, the Senate has not suggested cutting the Agency for Healthcare Research and Quality (AHRQ).

A more detailed breakdown of departmental, agency and program funding can be found here.

Senate Finance Committee Marks Up 12 Bipartisan Health Care Bills

The Senate Finance Committee held a markup June 24 on 12 bills affecting a variety of health care issues including Medicare and Medicaid antifraud, wasteand abuse, hospital observation status notification, rural health care access and other hospital-related bills. The following bills were voted out ofcommittee on a voice vote:

  • S. 607 – The Rural Community Hospital Demonstration Extension Act of 2015: Extends the period of the rural community hospital demonstration program from five to 10 years.
  • S. 1349 – The Notice of Observation, Treatment and Implication for Care Eligibility (NOTICE) Act of 2015: Requires hospitals to notify Medicare beneficiaries of their outpatient observation status within 36 hours after the time of their classification.
  • S. 1461 – A One Year Extension of the Enforcement Instructions on Supervision Requirements of Outpatient Therapeutic Services in Critical Access Hospitals (CAHs) and Small Rural Hospitals: Requires the Department of Health and Human Services to continue to instruct Medicare contractors not to enforce requirements for direct physician supervision of outpatient therapeutic services in critical access and small rural hospitals through 2015.
  • S. 313 – Prevent Interruptions in Physical Therapy Act of 2015: Requires physical therapists furnishing outpatient physical therapy services to use specified locum tenens arrangements for payment purposes in the same manner as such arrangements are used to apply to physicians’ furnishing substitute physician’s services for other physicians.
  • S. 1253 – Patient Access to Disposable Medical Technology Act of 2015: Requires Medicare to cover substitute disposable medical technology as durable medical equipment, subject it to a special payment rule and exempt it from competitive acquisition.
  • S. 1347 – Electronic Health Fairness Act of 2015: Prohibit any patient encounter of an eligible professional occurring at an ambulatory surgical center from being treated as such an encounter in determining whether an eligible professional qualifies as a meaningful electronic health record (EHR) user.
  • S. 704 – The Community Based Independence for Seniors Act: Directs the Department of Health and Human Services to establish a Community-Based Institutional Special Needs Plan demonstration program to target home- and community-based care to eligible Medicare beneficiaries.
  • S. 1362 – The PACE Innovation Act of 2015: Allows PACE to participate in demonstration programs under Section 1115 Research & Demonstration Projects and the Center for Medicare and Medicaid Innovation (CMMI). The bill allows the CMMI to test and improve the PACE program’s ability to reduce hospitalizations and emergency room use, manage chronic illness and improve functioning and quality of life; and also encourages the Centers for Medicare and Medicaid Services to increase operational flexibility and reduce administrative barriers that hinder PACE enrollment.
  • S. 861Preventing and Reducing Improper Medicare and Medicaid Expenditures Act of 2015: Directs the Secretary of Health and Human Services (HHS) to prohibit sponsors of prescription drug plans from paying claims for prescription drugs that do not include the valid National Provider Identifier for the drug’s prescriber; establishes stronger fraud and waste prevention strategies within Medicare and Medicaid to help phase out the practice of “pay and chase”; takes steps to help states identify and prevent Medicaid overpayments; and improves the sharing of fraud data across state and federal agencies and programs.
  • S. 349 – Special Needs Trust Fairness Act of 2015: Extends the supplemental needs trust exemption from treatment of a trust as resources available to the individual to supplemental needs trusts for Medicaid beneficiaries established by those beneficiaries.
  • S. 466 – Quality Care for Moms and Babies Act: Develops maternity care quality measures and supporting maternity care quality collaborative within Medicaid and CHIP programs.
  • S. 599 – Improving Access to Emergency Psychiatric Care Act of 2015: Extends the Medicaid Emergency Psychiatric Demonstration Project through FY 2016, with the possibility for a permanent extension (and potential nationwide expansion) through FY 2019 should HHS deem it appropriate.

The Chairman’s mark of each bill can be found here.

Not included in the markup were four bills that have bipartisan support but the Congressional Budget Office found would increase spending. The Committee isworking to find ways to lower their cost. The four bills not included in the markup are: