Washington Healthcare Update

July 27, 2015

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This Week: CMS Releases Guidance on Fast Track Process for 1115Waivers for Medicaid and CHIP… Healthcare.gov CEO Sends Letter to StateInsurance Commissioners Concerning 2016 Premium Decisions… Medicare Boardof Trustees Releases Annual Financial Report Finding Trust Fund Insolvencyby 2030; Predict Part B Premiums Up 52 Percent Due to Outpatient ServicesShift

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


The House Energy and Commerce (E&C) Subcommittee on Health held a markup July 23, 2015, to examine and vote out of subcommittee four bipartisan publichealth bills. The following bills were all approved by voice vote:

  • H.R. 1344, the Early Hearing Detection and Intervention Act : authored by Health Subcommittee Vice Chairman Brett Guthrie (R-KY) and Rep. Lois Capps (D-CA), the bill amends the Public Health Service Act to reauthorize a program for early detection, diagnosis and treatment regarding deaf and hard-of-hearing newborns, infants and young children.
  • H.R. 1462, the Protecting Our Infants Act: authored by Reps. Katherine Clark (D-MA) and Steve Stivers (R-OH), the bill requires the Agency for Healthcare Research and Quality to study and release a report on prenatal opioid abuse and neonatal abstinence syndrome ; mandates that the Department of Health and Human Services develop a strategy to address gaps in research and programs; and instructs the Centers for Disease Control and Prevention to provide technical assistance to states to improve neonatal abstinence syndrome surveillance.
  • H.R. 1725, the National All Schedules Prescription Electronic Reporting Reauthorization Act (NASPER) : authored by Rep. Ed Whitfield (R-KY) and Rep. Joseph Kennedy (D-MA), the bill would reauthorize the NASPER program to support state prescription drug monitoring programs.
  • H.R. 2820, the Stem Cell Therapeutic and Research Reauthorization Act : authored by Reps. Chris Smith (R-NJ) and Doris Matsui (D-CA), the bill would reauthorize the Stem Cell Therapeutic and Research Act. The bill provides federal support for cord blood donation, a national bone marrow registry and research essential to increasing patient access to transplants.

An electronic copy of the legislation, background memo, amendments and votes can be found at energycommerce.gov.

House Ways and Means Health Subcommittee Hosts MedPAC Director to Hear Testimony on Site-Neutral Payment Reforms and Rural Health

The House Ways and Means Health Subcommittee held a hearing on July 22 with Medicare Payment Advisory Commission Executive Director Mark Miller to discusshospital payment issues (including site-neutral payment reforms, DSH payments), rural health issues and beneficiary access. Dr. Miller testified thatsite-neutral payment reforms — particularly between inpatient and outpatient settings — are complex but possible (given clinical overview of the system anda public rulemaking process), and reaffirmed that low-volume rural hospitals that are not the sole providers in their communities should not be eligiblefor special payment adjustments from Medicare. Chairman Brady drew attention to the need for additional oversight and targeting on indirect medicaleducation payments and Disproportionate Share Hospital payments. He expressed concern that indirect medical education payments and DSH payments areconnected only to inpatient admissions, which means they can get caught up in a “financial numbers game” and aren’t protected. He noted that replacing theSustainable Growth Rate was a first step toward payment reform, but Congress’s next step should be to address needed changes in acute-care payment systems.

Witness List

Mark Miller
Executive Director
Medicare Payment Advisory Commission

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

Bipartisan House Cures Authors to Meet with Senate Health, Education, Labor & Pensions Committee Leadership on Drafting of Senate Counterpart

On July 21 at an Alzheimer’s Association event, House Energy and Commerce Committee Chair Fred Upton (R-MI) said that he and Rep. Diana DeGette (D-CO) willmeet with Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA) this week todiscuss the House’s recently passed 21st Century Cures legislation and encourage their committee to follow suit “so they don’t feel like we jammed themup.” His ask of the senators will be to craft their own legislation on policy areas applicable to the Cures provisions that can then be inserted into theirbill during conference committee (not all policy areas within the Cures bill, such as CMS provisions, and funding pay-fors, such as the Strategic PetroleumReserve, fall under the jurisdiction of the HELP Committee). Best estimates guess that a Senate version of the bill is still months away; however, ChairUpton hopes to get a finalized bill to the president’s desk by the end of 2015 to avoid potential political delays stemming from the 2016 presidentialelection.

Upcoming: House Education and Workforce Committee Holds Hearing on HHS Priorities

The House Education and Workforce Committee, chaired by Rep. John Kline (R-MN), will hold a hearing on July 28 entitled “Reviewing the Policies andPriorities of the U.S. Department of Health and Human Services” that will feature testimony from Secretary Sylvia Burwell on HHS programs within thecommittee’s jurisdiction. The hearing will be held at 10 a.m. in 2175 Rayburn House Office Building.

Witness List

The Honorable Sylvia Matthews Burwell
Department of Health and Human Services (HHS)

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


Senate Finance Committee Holds Tax Extenders Markup

On July 21, the Senate Finance Committee held a markup for its tax extenders bill, which passed by a 23-3 vote.The two-year package would extend more than 50 currently expired tax breaks for individuals and businesses for the 2015 and 2016 tax years. This includes atwo-year extension of the research and development credit, which totals at $22.1 billion. Though some of the amendments offered sought to make the R&D credit, as well as other provisions, permanent,Chairman Orrin Hatch (R-UT) announced at the beginning of the markup that any proposals relating to permanence would be deferred to a later time and wereconsidered non-germane. Therefore, the markup was very brief — most of the 105 amendments, including a repeal of the medical device tax,were discussed and then withdrawn in order to quickly pass the bill. It is unclear whether the full Senate will follow the House’s preferred method ofpermanently extending some of the provisions.

For more information on the markup, please visit finance.senate.gov.

Senate Health, Education, Labor & Pensions Committee Examines Information Blocking as an Obstacle to Interoperability

On July 21, the Senate Committee on Health, Education, Labor & Pensions (HELP) held a hearing entitled “Achieving the Promise of Health InformationTechnology: Information Blocking and Potential Solutions.” This is the HELP Committee’s fourth hearing on improving electronic health records (EHR), and itfocused on the intentional interruption or prevention of interoperability for patients perpetrated by both providers and vendors. Chairman Lamar Alexander(R-TN) expressed his frustrations with the adoption of EHR and suggested that the Administration slow down the implementation of Stage 3 Meaningful Use —some of the witnesses agreed. Dr. David Kendrick, chair of the Department of Medical Informatics at the University of Oklahoma and CEO of MyHealth AccessNetwork in Tulsa, blamed EHR vendors for information blocking, often through high prices charged by vendors to maintain interfaces. The other witnesseswere divided on the issue, with some pointing the finger at providers and inefficient business models. Paul Black, president and CEO of EHR vendorAllScripts, and Dr. David Kibbe, president and CEO of DirectTrust, emphasized the importance of the government in encouraging and incentivizinginteroperable health exchanges. The HELP Committee will be holding two additional hearings on health information technology, in September and in October,in hopes that they will be able to introduce medical innovation legislation by the end of the year.

Witness List

David C. Kendrick, M.D., M.P.H.
Chair, Department of Medical Informatics, University of Oklahoma
CEO, MyHealth Access Network

Michael J. Mirro, M.D., FACC, FAHA, FACP
Past Chair, Medical Informatics Committee, American College of Cardiology
Chief Academic / Research Officer, Parkview Mirro Center for Research and Innovation

David C. Kibbe, M.D., M.B.A.
President and CEO, DirectTrust
Senior Advisor, American Academy of Family Physicians

Paul M. Black, M.B.A.
President, Chief Executive Officer and Director

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

Senator Introduces Legislation to Allow Former Foster Children to Stay on Medicaid till Age 26

On July 23, Senator Bob Casey (D-PA) introduced legislation, the Health Insurance for Former Foster Youth Act, S.1852, which would fix an unintended glitchin the current health care system that could kick former foster youth off Medicaid if they move to a different state. Sen. Casey’s bill would extendMedicaid coverage to age 26 for all former foster youth who were in foster care on their 18th birthday and were already enrolled in Medicaid, no matterwhat state they live in. The Health Insurance for Former Foster Youth Act clarifies that the intent of the original provision in the Affordable Care Actwas to ensure that all former foster youth who were enrolled in Medicaid when they aged out can maintain that coverage until they turn 26. “A former fosteryouth’s ability to access healthcare coverage shouldn’t depend on their zip code,” Senator Casey said in apress release. “This is a commonsense fix so that former foster youth have the same ability to access health coverage as other young Americans.” Research indicates thatnearly 60 percent of children in foster care experience a chronic medical condition.

2. Administration

CMS Releases Guidance on Fast Track Process for 1115 Waivers for Medicaid and CHIP

In a July 24 guidance document, the Centers for Medicare& Medicaid Services (CMS) announced that the agency is establishing a new “fast track” process for reviewing proposals from states to extendestablished Medicaid and Children’s Health Insurance Program (CHIP) Section 1115 demonstrations that reauthorize longstanding policies with proven programoutcomes. CMS says the new process is intended to facilitate faster review of and federal decisions regarding state requests to extend established 1115demonstrations, reducing administrative burden on states and the federal government. This approach streamlines the extension process for those states withestablished demonstrations that are working successfully and who are not proposing to make major or complex policy changes to the demonstration. Timeframesfor these reviews will be comparable to those CMS uses to make decisions on Medicaid Section 1915 waivers or state plan amendments.

The fast track extension process is available for states that meet the following four criteria:

  1. Have established demonstration programs with at least one full extension cycle without substantial program changes;
  2. Have demonstrations in compliance with reporting deliverables and that have positive monitoring and evaluation results that indicate that the objectives of the demonstration and of the Medicaid/CHIP program have been achieved;
  3. Are not proposing major or complex changes; and
  4. Use the streamlined extension application templates.

CMS will offer states eligible for 1115 waiver fast track review a five-year extension period. Currently, a minority of demonstrations, such as those thatinclude dual eligible beneficiaries, are extended for more than three years at a time. CMS will reach out to states 18 months prior to the expiration oftheir current demonstration with a fast track extension packet to assist the state in considering use of the new fast track process.

CMS Releases New Hospice Care Delivery Model for Medicare and Dually Eligible Beneficiaries

On July 20, the Centers for Medicare and Medicaid Services (CMS) released a new hospice care model, the Medicare Care Choice Model, designed to evaluatewhether Medicare and dually eligible beneficiaries would elect to receive supportive care services typically provided by hospice if they could alsocontinue to receive curative services. The model also focuses on quality of care and patient and family satisfaction. Under the model, participatinghospices will provide services that are currently available under the Medicare hospice benefit for routine home care and respite levels of care, but cannotbe separately billed under Medicare Parts A, B and D. These services include nursing, social work, hospice aide, hospice homemaker, volunteer, chaplain,bereavement support, nutritional support and respite care. Services under this model will be available to Medicare beneficiaries who elect to participatein the model, around the clock, 365 calendar days per year, and CMS will pay a per beneficiary per month fee ranging from $200 to $400 to participatinghospices when delivering these services under the model. Providers and suppliers furnishing curative services will bill Medicare for the reasonable andnecessary services furnished to beneficiaries who elect to participate in the model. These services include physical or occupational therapy, speechlanguage pathology services, drugs for the management of pain or other symptoms from the terminal illness or related conditions, medical equipment andsupplies, any other service that is specified in the patient’s plan of care for which payment may otherwise be made under Medicare (for example, ambulancetransports), short-term inpatient care for pain or symptom management that cannot be managed in the home environment and physician services.

CMS originally anticipated selecting at least 30 Medicare-certified hospices to participate in the model and enrolling up to 30,000 beneficiariesthroughout a three-year period. Due to robust interest, CMS has invited over 140 Medicare-certified hospices to participate in the model and expanded theduration of the model to five years. This will enable up to 150,000 eligible Medicare and dually eligible beneficiaries to participate. Delivery ofservices under the model will be phased-in over two years. Approximately half of the participating hospices will begin providing services under the modelon Jan. 1, 2016. The remaining participant hospices will provide services under the model starting Jan. 1, 2018. This model is slated to end on Dec. 31,2020. Hospices participating in the model will be randomly assigned to Phase 1 or Phase 2.

For more information on the model, visitinnovation.cms.gov.

To read a fact sheet about the model, including a list of participants visitwww.cms.gov.

Preliminary IRS Data Shows $1.5 Billion in Fines Paid by 7.5 Billion Uninsured Americans

In a letter from Internal Revenue Service (IRS) Commissioner John Koskinento Congress, the agency relayed preliminary results from the 2015 tax filing season related to Affordable Care Act (ACA) individual shared responsibilityand premium tax credit provisions. The agency found that approximately 7.5 million taxpayers reported a total of $1.5 billion in individual sharedresponsibility payments. By contrast, about 12 million taxpayers claimed a health care coverage exemption. Payments were generally relatively small, withthe average payment around $200. About 40 percent of these payments were $100 or less and about 95 percent of these payments were $500 or less. The vastmajority — 85 percent — of taxpayers reporting a shared responsibility payment still reported a refund. Data from the letter also shows that IRS projectsthat about 4.8 million taxpayers need to file a return to claim premium tax credit or reconcile advanced premium tax credit. So far, approximately 3.2million taxpayers have filed Form 8962, Premium Tax Credit, 3 million of whom reported advanced premium tax credit. These taxpayers reported a total ofapproximately $10 billion in advanced premium tax credit of the approximately $15.5 billion the Marketplaces paid out in 2014. About 2.7 million taxpayersclaimed approximately $9 billion in premium tax credits, reporting an average credit of $3,400. About 40 percent claimed less than $2,000, 40 percentclaimed $2,000 to $5,000 and 20 percent claimed $5,000 or more. 2015 is the first year that taxpayers saw changes to their income tax returns related tothe individual shared responsibility provision and the premium tax credit provision of the Affordable Care Act (ACA).

CMS Releases Guidance on How State Health and Human Services Programs Can Pay for Medicaid Upgrades

The Centers for Medicare and Medicaid Services (CMS) issued a guidance letter July 20 to states that clarifies that their healthand human services agencies and programs (such as the Supplemental Nutrition Assistance Program or the Temporary Assistance for Needy Families) cancontinue through 2018 to benefit from investments in the design and development of state eligibility-determination systems for state-operated Marketplaces,Medicaid and the Children’s Health Insurance Program (CHIP), thereby clarifying that these programs do not need to split costs related to upgrading healthIT enrollment systems. This guidance letter provides a one-time extension of that timeline for an additional three years, and provides additional guidanceon how states may take advantage of the exception and the extended timeframe to leverage these investments to better serve consumers’ multiple programs andneeds. The document reiterated an October 2011 Administration decision that creates an exception to certain Office of Management and Budget (OMB)requirements, so that states can create new IT systems that mutually assist Medicaid and other human services programs. This fall CMS announced that theMedicaid cost-allocation waiver would be extended through 2018, and in April issued a proposed rule that would make permanent the 90-10 Medicaid matchingfunds rate for states looking to update their eligibility and enrollment systems. The Administration hopes that guidance will enable states experiencingunanticipated delays with the development of the Medicaid Modified Adjusted Gross Income (MAGI) functionality in their eligibility systems, procurementchallenges and other unforeseen barriers to complete that work and then effectively use the waiver extension to streamline their eligibility systems,improve access to health and human services programs and maximize efficiency.

CMS Releases New Guidance on State Innovation Waivers Allowing States to Opt Out of Portions of the ACA

The Centers for Medicare and Medicaid Services (CMS) releasednew guidanceJuly 22 on state innovation waivers, waivers affecting Section 1332 of the Affordable Care Act (ACA). States would apply for these waivers and startingJan. 1, 2017, waivers could be utilized to cancel out ACA-mandated provisions, including qualified health plan requirements such as essential healthbenefits and actuarial values; consumer choice and competition provisions within the exchanges; premium tax credits and cost-sharing reductions for federalexchange plans; and the individual and employer mandates. The guidance outlines that when crafting an application, states need to delineate the specificprovisions they want waived; relevant data, stated assumptions, goals, actuarial analyses of coverage; a 10-year budget projection; the effects of thewaiver on health insurance coverage; state legislation concerning the waiver; an implementation plan and timeline; and/or other information that justifytheir concepts. Within 45 days after submittal, the Department of Health and Human Services (HHS) and Treasury Department secretaries will make an initialdecision on whether the application is complete, and a final decision on the waiver itself will be made by six months after that. All submittedapplications will be publicly posted on the HHS website and require a federal public comment period. The guidance leaves several unanswered questions abouthow the Centers for Medicare and Medicaid Services (CMS) will calculate budget and enrollment neutrality for the changes states propose in their waiverapplications. Thus far, both Minnesota and New York have publicly expressed their intention to submit 1,332 waivers. Other states, such as Rhode Island,California, Hawaii, New Mexico and Arkansas, have authorized budgets, legislation or committees to investigate the implications of such a waiver for theirexchanges; Vermont and North Dakota are also considering the idea.

Healthcare.gov CEO Sends Letter to State Insurance Commissioners Concerning 2016 Premium Decisions

Chief Executive Officer, Health Insurance Marketplace, Kevin Counihan sent a letter to state insurance commissioners July 21,laying out several findings that the officials should weigh when making final 2016 rate decisions. He noted the availability of new Marketplace utilizationexperience data and the implementation of the reinsurance, risk adjustment and risk corridor premium stabilization programs as new information to helpinsurance commissions in reviewing insurer rate proposals in 2016. In urging insurance commissioners to use careful discretion and keep rates affordable,he noted in the letter that recent claims data show healthier consumers and less insurer service utilization, a continued moderate medical cost trend, andthe Centers for Medicare and Medicaid Services’ (CMS) commitment to utilize a 100 percent coinsurance rate for the 2014 reinsurance program. Lastly, theletter encourages as much public input as possible, such as public hearings, to help the public evaluate and scrutinize rate changes.

CMS Postpones Risk Adjustment Data Validation Program until 2016, Forgoing One Year of Preliminary Testing

In a July 16 announcement, the Centers for Medicareand Medicaid Services (CMS) revealed that the agency will not be performing validation tests on insurers’ 2014 risk adjustment data (as previouslyannounced in an HHS Notice of Benefit and Payment Parameters for 2014), and will instead run only one year of preliminary testing — in 2016, using 2015collected data. Issuers and auditors will have one preliminary testing year instead of two in which to implement and test the risk adjustment datavalidation (RADV) program and modify their audit procedures in response. Previously, CMS explained that issuers and auditors would have two preliminaryyears in which to implement the program. The agency said it still intends to commence the RADV program and adjust risk adjustment payments and charges in2018 based on data collected during the 2016 benefit year, keeping with the original program implementation schedule. While CMS previously announced inApril that it would put on hold its RADV program with further guidance to be released to clarify future program procedures, the bulletin does clarify thatHHS would not have the program up and running for 2014 data, so insurers can delay contracting with their auditor.

A revised timeline for risk adjustment data validation for 2015 benefit year data is included below:

  • Fall 2015 – RADV training to begin
  • Winter 2016 – Issuers select initial validation auditors
  • Spring 2016 – Issuers submit initial validation auditors to CMS for approval