Washington Healthcare Update

August 3, 2015

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This Week: CMS Issues FY 2016 Final Inpatient and Long-Term CareHospital Policy and Payment Changes…  CMS Releases Final FY 2016Medicare Payment Rule for Skilled Nursing Facilities… House Ways and MeansCommittee Members Introduce Three Medicare Hospital Bills; Committee EyesBills for Major Upcoming Health Care Legislation

AUTHOR’S NOTE: Due to the Congressional recess, the WeeklyWashington Healthcare Update will be distributed on a biweekly basis untilafter the Labor Day holiday. New editions will be released on Aug. 10, Aug.24 and Sept. 4, after which we will resume our regular weekly distributionschedule.

1. Congress

House of Representatives

District Work Period: August 4–September 7


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


House Energy and Commerce Committee Holds Markup on Health Care and Manufacturing Bills

The House Energy and Commerce Committee held amarkup July 29 to vote on six bills, includingfour public health bills, previously discussed in the health subcommittee, July 23.

The following health care bills were all approved by voice vote without amendment:

  • 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 reauthorizes 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 reauthorizes 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 reauthorizes the Stem Cell Therapeutic and Research Act, which provides federal support for cord blood donation, a national bone marrow registry and research to increase patient access to transplants.

A background memo and electronic copy of the legislation can be found on the Energy and Commerce Committee’s websitehere.

House and Senate Health Care Committee Members Renew Focus on Fixes for Stage 3 of Meaningful Use

Rep. Renee Ellmers (R-NC) introduced H.R. 3309, July 29, to delay rulemaking for Stage 3 of meaningful use until at least 2017, or either CMS releases itsMerit-Based Incentive Payment System final rule or at least 75 percent of doctors and hospitals are successful in meeting Stage 2 program requirements.“The Further Flexibility in HIT Reporting and Advancing Interoperability Act” (Flex-IT 2 Act) also would: 1) expand the provider hardship exemption; 2)eliminate CMS’s pass-fail approach to meaningful use by replacing it with a sliding scale to measure adoption performance; 3) harmonize reportingrequirements (MU, PQRS, IQR) to remove duplicative measurement and streamline requirements; and 4) institute a 90-day reporting period for each year,regardless of stage or program experience.

The legislation that comes after comments made by Senate Health, Education, Labor, and Pensions Committee Chair Lamar Alexander (R-TN) in a July 23 hearingthat his committee plans to introduce four or five suggestions to address issues within electronic health records meaningful use program by this fall andpossibly ask the Department of Health and Human Services (HHS) for an administrative delay for the mandate.

CMS earlier this year released a proposed rule setting up the third stage of the meaningful use program, and providers have urged the agency not tofinalize the rules at this time. Current implementation of Meaningful Use Stage 2 and Stage 3 were extended through 2016 and 2017, respectively, by CMS inDecember 2014. Only 19 percent of providers and 48 percent of hospitals have met Meaningful Use Stage 2.

House Ways and Means Health Subcommittee Members Introduce Bill to Create a Single Post-Acute Care Value-Based Purchasing System

House Ways and Means Health Subcommittee Chair Kevin Brady (R-TX) and Rep. Ron Kind (D-WI) introduced a bill on July 29, H.R. 3298, the Medicare Post-AcuteCare Value-Based Purchasing Act of 2015 (PAC VBP Act). The bill would create a single value-based purchasing system for post-acute care, including homehealth agencies, skilled-nursing facilities, inpatient-rehabilitation facilities and long-term-care hospitals. The model proposed by the legislation wouldcreate competition for bonus payments based on provider performance, and CMS would incentivize top individual provider performance. The sponsors believethis model would encourage providers to partner with other providers within the same region and decrease geographic variations.

In addition, Chairman Brady rel=”noopener noreferrer” and Rep. Kind also sent a letter to Secretary Burwell on the Centersfor Medicare and Medicaid Services’s recent home health proposal. The Centers for Medicare and Medicaid Services (CMS) released its final FY 2016 MedicareSkilled Nursing Facilities payment rule July 30.

A one-page rel=”noopener noreferrer” description of the PAC rel=”noopener noreferrer” VBP bill can be found here.

A rel=”noopener noreferrer” section-by-section rel=”noopener noreferrer” for the PAC VBP bill can be found here.

House Education and Workforce Committee Holds Hearing on HHS’s 2016 Policies and Priorities

The House Committee on Education and the Workforce held a partisan hearing July 28 entitled “Reviewing the Policies and Priorities of the U.S. Departmentof Health and Human Services.” Sylvia Burwell, Secretary of Health and Human Services (HHS), testified before the committee on 2016 health care priorities,including the Affordable Care Act (ACA) implementation, as well as federal children and family programs within HHS and, in particular, those programs’effect on working families. In the hearing, Committee Democrats highlighted the ACA’s role in increasing access, reducing health spending growth andimproving care, and applauded the President’s Budget for executing ACA implementation and advancing early learning and childcare programs. Republicans atthe hearing focused on the ACA’s negative effects on the economy, employment and quality of care delivered to patients. At the hearing, in a response to aquestion about a recent GAO report, Secretary Burwell reaffirmed that the department is not aware of any consumers intentionally falsifying information toget subsidies for insurance exchange coverage.

Witness List

The Honorable Sylvia Mathews Burwell
Department of rel=”noopener noreferrer” Health and Human Services

For rel=”noopener noreferrer” more information or to view the hearing, visit edworkforce.house.gov.

House Ways and Means Committee Members Introduce Three Medicare Hospital Bills; Committee Eyes Bills for Major Upcoming Health Care Legislation

On July 29, House Ways and Means Chairman Paul Ryan (R-WI), Health Subcommittee Chairman Kevin Brady (R-TX), Health Subcommittee member Kenny Marchant(R-TX) and Human Resources Subcommittee Chairman Charles Boustany (R-LA) introduced three bills to change Medicare reimbursement for hospital care. Thislegislation builds on the comments the committee received on Subcommittee Chairman Brady’sHospital Improvements for Paymentdiscussion draft, the recent regulatory notices from the Centers for Medicare and Medicaid Services (CMS), and work done by the Medicare Payment AdvisoryCommittee (MedPAC).

  • The Medicare Crosswalk Hospital Code Development Act of 2015 (H.R. 3291 ) : Introduced by Chairman Ryan, this bill follows up on a finding by the Medicare Payment Advisory Commission that Medicare is paying more for similar services depending on which payment system it uses — either outpatient or inpatient. MedPAC used a crosswalk to convert the principal diagnosis and procedure codes of outpatient claims into Medicare inpatient Diagnosis Related Groups. Because surgery is a clearly defined service, the legislation would create a crosswalk to serve as a guide to connect the inpatient and outpatient coding and payment systems for hospitals. The crosswalk could then be used for further payment reform. rel=”noopener noreferrer” A one-page description rel=”noopener noreferrer” of the Medicare Crosswalk Hospital Code Development Act of 2015 can be found here. rel=”noopener noreferrer”

A rel=”noopener noreferrer” section-by-section for the Medicare Crosswalk Hospital Code Development Act of 2015 can be found here.

  • The Medicare IME Pool Act of 2015 (H.R. 3292) : Introduced by Health Subcommittee Chairman Kevin Brady, the bill would direct the Department Health and Human Services (HHS) to give each teaching hospital a bimonthly lump-sum payment to reimburse IME costs, instead of paying the hospital an additional percentage based on each inpatient case. The stated goal of the legislation is to give more stability in Medicare’s ability to support medical education, while still maximizing rel=”noopener noreferrer” incentives to rel=”noopener noreferrer” deliver care at a lower cost and with improved quality. A one-page description of the Medicare IME Pool Act of 2015 can be found here.

A section-by-section for the Medicare IME Pool Act of 2015 can be found here.

  • The Strengthening DSH and Medicare through Subsidy Recapture and Payment Reform Act of 2015 (H.R. 3288) : Introduced by Health Subcommittee Member Kenny Marchant, the bill would change the Disproportionate Share Hospital (DSH) payment system by instructing the HHS Secretary to reimburse DSH through lump-sum payments, rather than as a per discharge add-on payment. Rather than redirecting DSH payments from expansion states to non-expansion states, the new spending called for under this bill is intended to be offset by recouping all overpayments made under rel=”noopener noreferrer” the Affordable Care Act (ACA) subsidy recapture rel=”noopener noreferrer” program.

A one-page description of the Strengthening DSH and Medicare Through Subsidy Recapture and Payment Reform Act of 2015 can be found here.

A section-by-section for the Strengthening DSH and Medicare Through Subsidy Recapture and Payment Reform Act of 2015 can be found here.

In addition, Health Subcommittee Chair Brady said he plans to introduce legislation this fall that restructures graduate medical education, addresses ruralcare disparities and applies similar pay-for-performance approaches implemented in the SGR-replacement law to other health care providers.

House rel=”noopener noreferrer” Energy and Commerce Committee Members Question rel=”noopener noreferrer” HHS’s 2016 Influenza Response Preparedness

On July 29, leadership from the House Energy & Commerce Committee and the Subcommittee on Oversight and Investigations sent a letter to Department ofHealth and Human Services (HHS) Secretary Sylvia Burwell regarding the Department’s preparedness for the upcoming flu season. This is part of a largereffort by the bipartisan group to examine the U.S. public health response to seasonal influenza; the letter specifically highlighted the need forimprovements from the 2014-2015 influenza season, which saw high death rates among the elderly and ineffective vaccinations. The letter, written by Energyand Commerce Chairman Fred Upton and Ranking Member Frank Pallone, and Oversight and Investigations Subcommittee Chairman Tim Murphy and Ranking MemberDiana DeGette, asks for documentation of the lessons that HHS learned from last year.


Bipartisan rel=”noopener noreferrer” Senate Bill Directs rel=”noopener noreferrer” FDA to Streamline Approval for Combination Drug, Device and Companion Diagnostic Products

Sens. Johnny Isakson (R-GA), Bob Casey (D-PA) and Pat Roberts (R-KS) introduced a bipartisan bill July 15, the Combination Product Regulatory Fairness Act of 2015 (S.1767), to streamline theregulatory process for combination drug, device and companion diagnostic products that currently do not fall under a single categorization for approval bythe Food and Drug Administration (FDA). The bill requires FDA to assign a leader center within the agency to address whether a product is to be examined asa drug, device or biologic, based upon the intended purpose of the product. The bill will allow application sponsors to submit and negotiate agreementswith the agency on an individualized Combination Product Review Plan (CPRP) that details a clear regulatory process for the combination product, addressingnecessary clinical studies, timelines and an evaluation of incremental risks posed by the combination product. The CPRP would establish requirements forthe safety and efficacy review, post-market modifications and good manufacturing practices for the product. The bill would also create a risk-basedframework to allow for prior findings of safety and efficacy for an approved constituent product to be used as scientific evidence in the premarket reviewprocess for combination products. The legislation may be incorporated into a larger Senate Health, Education, Labor and Pension Committee’s Innovation forHealthier Americans initiative.

Senate HELP Committee Leaders Introduce Mental Health Bill

On July 29, Senate Health, Education, Labor, and Pensions committee Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA) introduced theMental Health Awareness and Improvement Act, a bill to continue and improve programs that help states and local communities in suicide prevention, helpchildren recover from traumatic events, provide mental health awareness for teachers and other individuals, and assess barriers to integrating behavioralhealth and primary care. The bill requires:

  • A study of federal mandates that may get in the way of integrating mental health and substance use disorder treatment with primary care, as well as other barriers to care.
  • The Substance Abuse and Mental Health Services Administration (SAMHSA) to improve education and awareness among providers and patients of treatments for addiction to opioid painkillers.
  • A Government Accountability Office (GAO) study on mental health services for children, looking at both access rel=”noopener noreferrer” and availability.
  • The National Violent Death Reporting System to improve reporting data.
  • A study on the status of recommendations to the Department rel=”noopener noreferrer” of Health and Human Services in a 2007 report following the Virginia Tech tragedy.

A copy of the Senate rel=”noopener noreferrer” bill text can be found here. rel=”noopener noreferrer” A detailed summary of eachsection of the bill can be found here.

The bill has 16 cosponsors. Sen. Bill Cassidy (R-LA) will also be releasing amental health bill in the coming weeks that would create a new AssistantSecretary for Mental Health and Substance Use Disorders within the Department of Health and Human Services (HHS). The purpose of this Assistant Secretarywould be to coordinate HHS’s efforts, including encouraging medical professionals to specialize in mental health care and new rel=”noopener noreferrer” research.

In the House, the Energy and Commerce Committee recently announced its intentions to rel=”noopener noreferrer” study mental health issues after the August recess.

2. Administration

CMS Releases Final FY 2016 Medicare Payment Rule for Skilled Nursing Facilities

On July 30, 2015, the Centers for Medicare and Medicaid Services (CMS) issued a final rule outlining Fiscal Year (FY) 2016 Medicare paymentrates for skilled nursing facilities (SNFs). CMS will increase payment for SNF services 1.2 percent from FY 2015. This estimated increase is attributableto a 2.3 percent market basket increase, reduced by a 0.6 percentage point forecast error adjustment and further reduced by a 0.5 percentage point, inaccordance with the multifactor productivity adjustment required by law. In addition, beginning with FY 2018, SNFs that do not satisfactorily reportrequired quality data to CMS under the SNF Quality Reporting Program will have their market basket percentage updates reduced by 2 percentage points.

This rule is complicated because it implements major changes from multiple laws. The Protecting Access to Medicare Act requires a nursing home value-basedpurchasing rel=”noopener noreferrer” program to take effect FY 2019. Value-based incentive payments will be made to SNFs based on performance and the rule adopts a rel=”noopener noreferrer” measure thatestimates the risk standard rate for “all-cause, unplanned, hospital readmissions” for beneficiaries within 30 days of their previous short inpatient stay.

The final rule will be published in the Federal Register rel=”noopener noreferrer” Aug. 4. A CMS press release outlining the rule can be found here.

CMS Releases Final FY 2016 Inpatient Psychiatric Facilities Prospective Payment System Rule

On July 31, 2015, the Centers for Medicare and Medicaid Services (CMS) issued a final rule for fiscal year (FY) 2016 Medicare payment policiesand rates for the Inpatient Psychiatric Facilities Prospective Payment System (IPF PPS). The final rule will be published in the Federal Registeron Aug. 5, 2015, with an implementation date of Oct. 1, 2015.

Inpatient psychiatric facilities will receive an estimated 1.5 percent ($75 million) increase in Medicarepayments. The update is calculated from a 2.4 percent IPF market basket update minus the productivity adjustment of 0.5 and -0.2 percent for updating theoutlier fixed-dollar loss threshold amount.

CMS is adopting an IPF-specific market basket to replace the Rehabilitation, Psychiatric and Long-Term Care market basket. The final IPF market basket isbased on 2012 Medicare cost report data for both freestanding and hospital-based IPFs. The final 2012 IPF market basket was modified slightly based oncomments CMS received on the proposed rule.

The rule also reflects changes in the wage index because of CMS’s updating the Core Based Statistical Areas with the rel=”noopener noreferrer” Office of Management and Budget. As aresult of the change, 37 IPF providers will have their status changed from rural to urban.

The rel=”noopener noreferrer” final rule also updates quality measures including substance abuse intervention and measures related to tobacco cessation after the patient isdischarged. CMS removed two measures and added three transition record measures.

CMS also made changes to data-reporting requirements for the Inpatient rel=”noopener noreferrer” Facility Quality reporting program.

A fact sheet on the final ruleis available online.

CMS Issues Final FY 2016 Payment and Policy Changes Rule for Medicare Inpatient Rehabilitation Facilities

On July 31, 2015, the Centers for Medicare & Medicaid Services (CMS) issued a final rule outlining fiscal year (FY) 2016 Medicare paymentpolicies and rates for the Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) and the IRF Quality Reporting Program (IRF QRP). The IRFpayment rates reflect an estimated 1.7 percent increase factor rel=”noopener noreferrer” based on a new IRF-specific market basket. The market basket increase is 2.4 percent thenreduced by rel=”noopener noreferrer” a 0.5 percent productivity adjustment and a 0.2 percent reduction required by law. An additional 0.1 percent increase to aggregate payments dueto updates for the outlier threshold results in an overall update of 1.8 percent from FY 2015.

The rule contains a number of other policy changes including changes to the wage index and changes to the IRF Quality Reporting Program.

A fact sheet on the final rule can be found here. The final IRF PPS rule will bepublished in theFederal Registeron Aug. 6, 2015, and will be effective on Oct. 1, 2015.

CMS Releases Final FY 2016 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Requirements

The Centers for Medicare and Medicaid Services (CMS) released its finalFY 2016 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Requirementson July 31, 2015. The Medicare payment rate is estimated to increase 1.1 percent ($160 million) for FY 2016. CMS is finalizing two routine home care rates,in a