Washington Healthcare Update

September 14, 2015

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This Week: House Energy and Commerce Subcommittee Holds Hearing onLegislation to Strengthen Medicaid Program Integrity and Fraud Controls… Bipartisan Senate Bill Introduced to Stop Anti-Competitive “Pay-For-Delay”Practices by Pharmaceutical Companies…  The Government AccountabilityOffice (GAO) Releases Report on Private Health Insurance Premiums and PlanAvailability for Individuals

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


House Energy and Commerce Subcommittee Holds Hearing on Legislation to Strengthen Medicaid Program Integrity and Fraud Controls

On Sept. 11, 2015, the House Energy and Commerce Committee’s Health Subcommittee held a hearing, entitled “Strengthening Medicaid Program Integrity andClosing Loopholes,” to discuss six bills related to improving Medicaid program integrity and closing eligibility loopholes in the program.

Witness List

John Hagg
Director of Medicaid Audits
Office of Inspector General
U.S. Department of Health and Human Services

Nico Gomez
Chief Executive Officer
Oklahoma Health Care Authority

Trish Riley
Executive Director
National Academy for State Health Policy
Medicaid and CHIP Payment and Access Commission

The bills discussed included:

A background memo on the legislation can be found here.

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

House Judiciary Subcommittee Holds Hearing on ACA’s Effect on Competition in Health Care

The House Judiciary Committee’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law held a hearing Sept. 10 entitled “The State of Competitionin the Health Care Marketplace: The Patient Protection and Affordable Care Act’s (ACA) Impact on Competition.”

Congressional Republicans blame the ACA for mergers and consolidations by hospitals, pharmaceuticals and insurers. This consolidation in the marketplace,Republicans contend, is costing consumers money and choice. This hearing was spurred by the proposed Aetna-Humana and Anthem-Cigna insurance mergers. Thewitness from America’s Health Insurance Plans testified that the mergers will result in better health care quality and lower costs for consumers. AmericanHospital Association (AHA) President Richard Pollack and Barbara McAneny, a member of the American Medical Association’s (AMA) Board of Trustees, testifiedagainst the merger. Pollack, however, also stated that consolidation among providers is a necessary reaction to the ACA’s focus on population healthmanagement and the transition to value-based care. The hearing is the first in a series the committee plans to hold to examine competition within thehospital, insurance and physician marketplaces.

Witness List

Thomas L. Greaney
Professor of Law
St. Louis University School of Law

Mr. Richard (Rick) J. Pollack
President and CEO
American Hospital Association

Barbara L. McAneny, M.D.
Member of the Board of Trustees
American Medical Association

Scott Gottlieb, M.D.
Resident Fellow
American Enterprise Institute

Dan Durham
Executive Vice President
Strategic Initiatives, American Health Insurance Plans

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

Federal Judge Allows House Republicans’ Obamacare Lawsuit to Proceed

U.S. District Court Judge Rosemary M. Collyer ruled Sept. 9 that a lawsuit can move forward that challenges aspects of the “cost-sharing reductions” in theAffordable Care Act (ACA). The suit, bought by House Republicans, claims that healthcare reform’s subsidies that lower deductibles, copayments and otherout-of-pocket charges for marketplace enrollees with incomes below 250 percent of the poverty line cannot be paid to the insurers that deliver thesebenefits because Congress has not appropriated the money for those payments. The judge’s decision only rules on the question of standing, and the judge hasnot yet made any decisions on the merits of the case. The Obama Administration maintains that the spending is mandatory, much like Social Securitypayments, and does not require separate appropriations. The judge also ruled, however, that House Republicans cannot move forward with another significantcomponent of their lawsuit — challenging the changes the Department of Health and Human Services (HHS) made to the employer mandate and other provisions.

The White House issued a statement saying that the Justice Department intends to seek an appellate review of the judge’s “unprecedented” decision.

House Passes Prescription Drug Monitoring and Newborn Opioid Response Bills

On Sept. 9, the House of Representatives unanimously passed two bills to give state officials and medical practitioners nationwide more tools to addressthe opioid abuse epidemic.The National All Schedules Prescription Electronic Reporting Reauthorization Act of 2015(H.R.1725), authored by Rep. Ed Whitfield (R-KY), would reinstate federal funding to states to establish, implement and improve prescription drugmonitoring programs to help screen and treat those addicted or at risk of becoming addicted. The second bill, the Protecting Our Infants Act of 2015 (H.R. 1462) sponsored by Rep. KatherineClark, would direct the U.S. Department of Health and Human Services (HHS) to identify and make available best practices for the diagnosis and treatment ofneonatal abstinence syndrome (NAS), to evaluate and coordinate federal efforts to research and respond to NAS, and to assist state health agencies withtheir data collection efforts. If passed by the Senate, it would become the first law to address newborns exposed to opioid use. Both proposals havecompanion bills in the Senate, which have not yet been scheduled for consideration.

Push by Conservative House Republicans to Shut Down Federal Government over Planned Parenthood Funding Grows

Despite warnings from House and Senate leadership about the political consequences of shutting down the government, the House Freedom Caucus, whichincludes 40 Republican members, announced its opposition to any spending measure that continues funding for Planned Parenthood. The fiscal year ends onSept. 30, and Congress will need to provide a short-term spending bill to keep the federal government operating. Without such a bill, the government willshut down. Planned Parenthood receives $500 million annually in federal funding to provide women with health care services. A Senate effort to defundPlanned Parenthood failed earlier this summer.


Bipartisan Senate Bill Introduced to Stop Anti-Competitive “Pay-For-Delay” Practices by Pharmaceutical Companies

On Sept. 9, Senators Amy Klobuchar (D-MN) and Chuck Grassley (R-IA) reintroduced legislation, the Preserve Access to Affordable Generics Act. Thislegislation would make it illegal for brand-name drug manufacturers to use anticompetitive pay-off agreements (also known as “pay for delay”) to keepgeneric equivalents off the market. Sens. Klobuchar and Grassley introduced similar legislation last Congress following a resurgence of patent settlementagreements. “These agreements disrupt the current law that was put in place to speed generic drugs getting to the market. In addition, they force consumersto pay more for their medicines, and add an exorbitant burden to the deficit,” Grassley said in a press release. A report from the Federal TradeCommission (FTC) in December 2014 identified 29 potential pay-for-delay settlements involving 21 different branded pharmaceutical products, with combinedU.S. sales of approximately $4.3 billion.

2. Administration

Centers for Medicare and Medicaid Services (CMS) Announces Plan to Address Health Equity in Medicare

On Sept. 8, CMS’s Office of Minority Health (CMS OMH) unveiled a new plan to address health equity in Medicare. The CMS Equity Plan for Improving Qualityin Medicare (CMS Equity Plan for Medicare) is a plan that focuses on six priority areas and aims to reduce health disparities in four years. The EquityPlan focuses on Medicare populations that experience disproportionately high burdens of disease, lower quality of care and barriers to accessing care.These include racial and ethnic minorities, sexual and gender minorities, people with disabilities and those living in rural areas. The plan includes thefollowing priorities:

  • Priority 1: Expand the Collection, Reporting and Analysis of Standardized Data
  • Priority 2: Evaluate Disparities Impacts and Integrate Equity Solutions Across CMS Programs
  • Priority 3: Develop and Disseminate Promising Approaches to Reduce Health Disparities
  • Priority 4: Increase the Ability of the Health Care Workforce to Meet the Needs of Vulnerable Populations
  • Priority 5: Improve Communication and Language Access for Individuals with Limited English Proficiency and Persons with Disabilities
  • Priority 6: Increase Physical Accessibility of Health Care Facilities

A press release on the new plan can be found here. To learn more about the sixpriorities visit cms.gov.

Centers for Medicare and Medicaid Services (CMS) Quarterly Enrollment Snapshot: 9.9 Million Consumers Enrolled on the Exchanges

In a Sept. 8 press release, CMSannounced that as of June 30, about 9.9 million consumers had enrolled in coverage on health insurance marketplace exchanges, had paid their premiums andhad an active policy. These numbers are consistent with the Department of Health and Human Services’ (HHS) effectuated enrollment target of 9.1 million forthe end of 2015. There were 7.2 million consumers with effectuated enrollments at the end of June 2015 through the 37 Federally-Facilitated Marketplaces(including State Partnership Marketplaces) and supported State-based Marketplaces (collectively known as HealthCare.gov states) and 2.7 million through theremaining State-based Marketplaces. Of those with active Marketplace enrollments at the end of June, about 84 percent of, or more than 8.3 million,consumers were receiving an advanced premium tax credit (APTC). The average APTC for those enrollees who qualified for the financial assistance was $270per month.

The announcement noted that as of June 30, 2015, the Marketplace had ended 2015 coverage for approximately 423,000 consumers who failed to producesufficient documentation on their citizenship or immigration status and had adjusted APTC and/or CSRs for about 967,000 households.

Medicare Advisory Commission (MedPAC) Holds September Public Meeting; Commissioners Discuss Post-Acute Care Payment, Medicare Advantage Star Ratingsamong Other Items

MedPAC, an appointed commission that advises Congress on Medicare policy, held its monthly meeting Sept. 10-11 to discuss a number of items to be includedin its annual report to Congress. The commission discussed developing a unified payment system for post-acute care, reviewed a preliminary analysis ofMedicare Advantage and encounter data, and was briefed on factors affecting variation in Medicare Advantage plan star ratings. They also were briefed onMedicare drug spending issues and payments from drug and device manufacturers to physicians and teaching hospitals. Additionally they discussed trends inemergency medicine leading to the growth of free-standing emergency departments as well as off-campus hospital emergency departments.

For more information and a copy of MedPAC’s September meeting agenda visit medpac.gov.

3. State Activities

Michigan Sent the Centers for Medicare and Medicaid Services (CMS) a Controversial Proposal to Update Its Medicaid Expansion Model

On Sept. 1, Michigan sent to CMS proposed updates for the state’s Section 1115 waiver.The proposal would require Medicaid beneficiaries with incomes above the federal poverty level (FPL), and who have enrolled in the program for at least twoyears, to buy a private insurance plan through HealthCare.gov or start contributing up to 7 percent of their income to remain in the program. As theprogram currently operates, implemented through a 2013 state law that expanded the state’s Medicaid program (Healthy Michigan) under the Affordable CareAct (ACA), beneficiaries with incomes between 100 to 138 percent of the FPL pay between 3 to 5 percent of their income for premiums and cost-sharing. CMSmust respond to the state by December 2015. If the CMS rejects the waiver, the state must terminate its Medicaid expansion program by April 30, 2016.Healthy Michigan has approximately 600,000 state residents enrolled.

4. Regulations Open for Comment

Department of Health and Human Services (HHS) Proposes Updates to “the Common Rule”

HHS and 15 other agencies released a notice of proposed rulemaking Sept. 2 for the Common Rule, theexisting regulatory framework to transparency and oversight for scientific research involving human subjects. The proposed changes are to address thesubstantial changes that have occurred within scientific research. Current regulations have been in place since 1991 and are followed by 18 federalagencies. Proposed updates to the rule include:

  • Strengthened informed consent provisions
  • Requirements for administrative or IRB review that would align better with the risks of the proposed research
  • New data security and information protection standards
  • Requirements for written consent for use of an individual’s biological samples, for example, blood or urine, for research with the option to consent to their future use for unspecified studies
  • Requirement, in most cases, to use a single institutional review board for multisite research studies
  • Application of rule to clinical trials, regardless of funding source, if they are conducted in a U.S. institution that receives funding from a Common Rule agency for research involving human participants.

In July 2011, HHS issued an Advance Notice of Proposed Rulemaking to seek the public’s input on updating the Common Rule. The proposed rule issued reflectsinput and requests comments for HHS to consider as it drafts the final rule. HHS will take public comment on the proposed rule until Dec. 7.

For a press release detailing changes to the rule visit hhs.gov.

Department of Health and Human Services (HHS) Releases Proposed Rule on Health Equity

On Sept. 3, HHS issued a proposed rule, Nondiscrimination inHealth Programs and Activities, to advance health equity and reduce disparities in health care. The proposed rule establishes that the prohibition on sexdiscrimination includes discrimination based on gender identity. It also includes requirements for effective communication for individuals withdisabilities and enhanced language assistance for people with limited English proficiency. The proposed rule applies to Health Insurance Marketplaces, anyhealth program that HHS itself administers, and any health program or activity any part of which receives funding from HHS, such as hospitals that acceptMedicare patients or doctors who treat Medicaid patients. Finally, the proposed rule extends these nondiscrimination protections to individuals enrolled inplans offered by issuers participating in the Health Insurance Marketplaces and explicitly bars any marketing practices or benefit designs thatdiscriminate on the basis of race, color, national origin, sex, age or disability. Section 1557 of the Affordable Care Act (ACA) extended civil rightsprotections banning sex discrimination to health programs and activities. Previously, civil rights laws enforced by HHS’s Office for Civil Rights (OCR)barred discrimination based only on race, color, national origin, disability or age. The rule will be published in the Federal Register on Sept. 8,and is open for public comment through Nov. 6, 2015.

For more information, including a fact sheet and Frequently Asked Questions, visit hhs.gov.

Internal Revenue Service (IRS) Proposed Rule Mandates Employer Health Plans Offer Hospital and Physician Services

The IRS released a proposed rule Aug. 31 that would require employer healthplans to offer substantial coverage for inpatient hospital services and physician services. The Affordable Care Act requires employer health plans to be atleast 60 percent of the minimum value standard. News reports uncovered the fact that employer plans could do so without providing hospital or physiciancoverage.

The preamble of the proposal points out that while large group plans are not required to cover the ACA’s Essential Health Benefit, a plan that does notcover hospital and physician services “does not meet a universally accepted minimum standards of value expected from and inherent in any arrangement thatcan reasonably be called a health plan and that is intended to provide the primary health coverage for employees.”

Under the proposed rule, an employer group health plan must, to meet the minimum value standard (MSV) and avoid a penalty, meet or exceed an actuarialvalue standard of at least 60 percent coverage including substantial coverage for doctor and hospital services. The proposed rule provides a transitionperiod for employers that have previously offered non-compliant coverage prior to Nov. 4, 2014. The proposal aligns IRS and Department of Health and HumanServices (HHS) policies. The ACA compels employers who do not meet the affordability and MSV thresholds to pay a penalty of $3,000 for each worker thatreceives a tax credit. The IRS proposed rule, published in the Federal Register Sept. 1, also says that any employee offered a non-compliant planwould not be prevented from receiving premium tax credits. IRS is taking comments on the proposed rule until Nov. 2, 2015.

Centers for Medicare and Medicaid Services (CMS) Issues FY 2016 Final Inpatient and Long-Term Care Hospital Policy and Payment Changes

CMS issued a final rule on July 31, 2015, to update fiscal year(FY) 2016 Medicare payment policies and rates under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) ProspectivePayment System (PPS).

For hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and demonstrate meaningful use ofcertified electronic health record technology, the increase in rates is 0.9 percent. This is calculated from a hospital market basket update of 2.4 percentadjusted by -0.5 percent for multi-factor productivity and an additional adjustment of -0.2 percent in accordance with requirements of the Affordable CareAct and further adjusted by – 0.8 percent for a documentation coding recoupment adjustment required by the American Taxpayer Relief Act of 2012.

Hospitals that do not successfully participate in the Hospital IQR program and do not submit the required quality data will be subject to a one-fourthreduction of the market basket update. In addition the law required that the update for any hospital that is not a meaningful user of electronic healthrecords will be reduced by one-half of the market basket update in FY 2016. Other payment adjustments will include continued penalties for readmissions, acontinued -1 percent penalty for hospitals in the worst-performing quartile under the hospital acquired condition reduction program and continued bonusesand penalties for hospital valued-based purchasing.

Medicare Disproportionate Share Hospital (DSH) payments will also change. CMS is distributing an estimated $6.4 billion in uncompensated care payments inFY 2016, a decrease from FY 2015, which is attributable to the continued declines in the number of uninsured.

The rule contains a number of other policy changes. A fact sheet on the final rule can be found here. The final rule will be publishedin theFederal Registeron Aug. 17, 2015. Comments may be made on the final rule and are due to CMS by Sept. 29, 2015, and the rule is effective Oct. 1, 2015.

Food and Drug Administration (FDA) Issues Final Rule to Phase Out Trans Fats

FDA issued afinal rule June 16that gives the food manufacturers three years to phase out partially hydrogenated oils (PHOs), which are still used in a wide variety of food products frommicrowave popcorn to cake frosting. The decision finalizes an agency determination that PHOs, the primary dietary source of artificial trans fat inprocessed foods, are not “generally recognized as safe” or GRAS for use in human food. Since 2006, manufacturers have been required to include trans fatcontent information on the Nutrition Facts label of foods. Between 2003 and 2012, the FDA estimates that consumer trans fat consumpt