Washington Healthcare Update

September 28, 2015

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This Week: Senate Judiciary Committee Hearing Focuses on Health InsurersMerger… Arkansas to Delay Setting Up Its Own State Exchange…The Centers forMedicare and Medicaid Services (CMS) Announces Medicare Advantage PremiumRates and Costs for 2016

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

6. Other

1. Congress


House Energy and Commerce Oversight Subcommittee to Hold Hearing on State Exchange Marketplaces

The House Energy and Commerce Subcommittee on Oversight and Investigations, chaired by Rep. Tim Murphy (R-PA), will hold a hearing on Sept. 29 entitled“ACA Overdue Checkup: Examining the ACA’s State Insurance Marketplaces.” Subcommittee members will hear testimony from various state officials about theirexperiences working with the Administration to implement the Affordable Care Act (ACA). This hearing was postponed in July due to a scheduling change inthe House of Representatives. The hearing will be held at 10 a.m. in Room 2123 of the Rayburn House Office Building.

Witness List

Peter V. Lee
Executive Director
Covered California
State of California

Jim Wadleigh, Jr.
Chief Executive Officer
Access Health CT
State of Connecticut

Jeff M. Kissel
Executive Director
Hawaii Health Connector
State of Hawaii

Louis Gutierrez
Executive Director
Massachusetts Health Connector
State of Massachusetts

Allison O’Toole
Interim Chief Executive Officer
State of Minnesota

Patrick Allen
Department of Consumer and Business Services
State of Oregon

For more information or to view the hearing, visitenergycommerce.gov.

133 House Members Send Letter to the Centers for Medicare and Medicaid Services (CMS) on Proposed Rule on Value-Based Payment System for Home HealthAgencies

One hundred thirty-three House lawmakers sent a letter to CMS on Sept. 18concerning the proposed Medicare Home Health Prospective Payment System rule that is expected to take effect on Jan. 1, 2016, in Arizona, Florida, Iowa,Maryland, Massachusetts, Nebraska, North Carolina, Tennessee and Washington. Lawmakers are asking CMS to reconsider about the 1.72 percent home healthpayment cuts slated to occur in both 2016 and 2017, and in particular to reconsider the cuts’ impact on small and rural providers. Lawmakers argue that thecuts are based on case mix data that is out of date. They also claim that CMS’s home health value-based payment program (HHVBP) incentive/penalty paymentrange of 5 to 8 percent (over a five-year period) is too much too quickly. Lawmakers are asking CMS to consider a more reasonable implementation schedulefor the HHVBP, particularly given that there are 25 quality measures used to determine the penalty/incentive payments.

Bipartisan House Letter Applauds Centers for Medicare and Medicaid Services’ (CMS) “Appropriate Use” Criteria Decision on Advanced Imaging Services

Rep. Michael Burgess (R-TX) and a bipartisan group of 28 other House members sent a letter to CMS on Sept. 18 in support of theframework that CMS has proposed in the definition of “provider-led entities” for the purpose of implementation of appropriate use criteria (AUC)requirements for advanced imaging services, such as CT scans or MRIs.

Section 218 of the Protecting Access to Medicare Act of 2014 requires that ordering physicians must consult with applicable AUC requirements beforereferring a Medicare beneficiary for an advanced imaging service. In determining which clinical guidelines will qualify as applicable AUC, CMS is directedto identify evidence-based AUC that are developed or endorsed by national professional medical specialty societies or other provider-led entities, such asthe American College of Radiology or the American Academy of Family Physicians. They argue that it is more appropriate to have provider groups developingthe AUC qualifications than not-for-profit benefit managers, prior authorization managers or the federal government.

Bipartisan House Letter Critiques Centers for Medicare and Medicaid Services’ (CMS) Attempts at Modifying the Physician Self-Referral Law

Reps. Charles Boustany (R-LA) and Ron Kind (D-WI)sent a letter to the CMS on Sept. 21 that critiques CMS’s efforts to address issues in the Stark Law,which prevents doctors from referring Medicare or Medicaid beneficiaries to entities with which they have a financial interest or familial relationship.Hospitals have voiced concerns that the Stark Law could impose large penalties on providers for harmless and technical violations.

Representatives Boustany, Kind, Bucshon (R-IN) and Veasey (D-TX) introduced legislation in February that would limit the penalty a hospital can sufferunder the Stark Law governing physician self-referral for Medicare and Medicaid patients. This bill is designed to protect hospitals that have anunwritten, unsigned or lapsed agreement that is otherwise compliant with a federal fraud and abuse law, and would create an expedited process for thedisclosure and resolution of these technical violations by the Centers for Medicare and Medicaid Services (CMS).

The letter states that CMS’s modifications to its regulations to implement the Stark Law, which were proposed as part of the 2016 physician fee schedule,do not give enough certainty for providers when it comes to resolving their technical violations. The lawmakers say their legislation is more practicalthan what CMS has proposed in the rule, because it would let state contract law principles serve as guidance for what counts as a valid written arrangementunder the Stark Law.

House Letter Calls for Implementation Delay of Centers for Medicare and Medicaid Services’ (CMS) Proposed Comprehensive Care for Joint Replacement(CCJR) Model

Led by Rep. Tom Price (R-GA), 60 House members sent abipartisan letter to Acting CMS Administrator Andy Slavitt on Sept. 18 calling for at least aone-year delay of CMS’s proposed new bundled payments program for hip and knee surgeries.

Lawmakers are concerned about the effect of the model on, among other issues: hospital consolidation and vertical integration; access to care for patientsrequiring higher-cost complex surgeries; added administrative and oversight responsibilities for small and rural hospitals; the shrinking network ofpost-acute care providers available to hospitals associated with the mandated use of electronic health records (EHRs) by providers; and the limits on totalamount of gainsharing payments to providers, physician groups, etc. The CCJR proposed payment model would be a significant change for beneficiaries andproviders because it constitutes the first mandatory Medicare episode payment model promulgated under CMS’s Centers for Medicare and Medicaid Innovation(CMMI) authority. CMS announced a start date of the CCJR program is Jan. 1, 2016, but the proposal has not yet been finalized.

Possible Government Shutdown on Sept. 30

The Senate is poised to pass a clean continuing resolution on Monday, with no defunding of Planned Parenthood after the Senate failed to pass a CRdefunding Planned Parenthood on Thursday. The Senate CR would fund the government through Dec. 11. While the House’s next steps are still uncertain,Speaker Boehner’s announced retirement would seem to clear a pathway for him to attempt to make a deal with his far-right members, and should that fail,then make a deal with the House Democrats. The threat of a government shutdown seems less likely than it did earlier in the week, but time is running out.The fiscal year ends on Wednesday, Sept. 30.


Senate Judiciary Committee Hearing Focuses on Health Insurers Merger

The Senate Committee on the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights held a hearing Sept. 22 entitled “ExaminingConsolidation in the Health Insurance Industry and its Impact on Consumers.” At the hearing CEOs for Aetna and Anthem, two of the nation’s largest healthinsurers, testified to Subcommittee members that consumers would benefit if the federal government approved their plans to acquire two other big insurers,Humana and Cigna, respectively. Mark Bertolini, CEO of Aetna, told the senators that “robust choice and competition will remain in the Medicare market”even after Aetna buys the nation’s second-largest provider of Medicare Advantage plans. Joseph Swedish, CEO of Anthem, said consumers would benefit fromexpanded access to care in its combination with Cigna.

Other witnesses representing consumer advocate groups and provider groups testified that insurance industry consolidation decreases competition and leadsto higher premiums and out-of-pocket expenses for consumers. Subcommittee Chair Mike Lee (R-UT) noted that he was determined to find out why “the insuranceindustry is rapidly consolidating.” The Subcommittee’s Ranking Member, Amy Klobuchar (D-MN), said she wanted to know “whether the claims of consumerbenefits, corporate efficiency and lower costs are realistic.”

Witness List

Mr. Mark T. Bertolini
Chairman and Chief Executive Officer
Aetna, Inc.

Mr. Joseph R. Swedish
President and Chief Executive Officer
Anthem, Inc.

Dr. Paul Ginsburg
Norman Topping Chair in Medicine and Public Policy
University of Southern California

Dr. Leemore S. Dafny
Herman Smith Research Professor in Hospital and Health Services
Kellogg School of Management, Northwestern University

Mr. Richard J. Pollack
President and Chief Executive Officer
American Hospitals Association

Mr. George Slover
Senior Policy Counsel
Consumer Union

For more information or to view the hearing visitjudiciary.senate.gov.

Senate Democrats Introduce Another Affordable Care Act (ACA) Cadillac Tax Repeal Bill

On Sept. 24, Sen. Bernie Sanders (I-VT), Sen. Sherrod Brown (D-OH) and 10 other Democratic senators introduced legislation, S.2075, to repeal the Cadillactax on high-cost employer-sponsored health coverage. The Affordable Care Act (ACA) imposes a 40 percent “Cadillac” non-deductible excise tax on healthplans with values exceeding $10,200 in coverage for individuals and $27,500 for families. The tax, which takes effect in 2018, is indexed to inflation andwill rise automatically over time, with the potential to eventually affect all employer-sponsored plans. The tax was originally designed to put downwardpressure on healthcare costs and payroll taxation. Sens. Dean Heller (R-NV) and Martin Heinrich (D-NM) introduced their own bipartisan repeal proposal forthe Cadillac tax. A pay-for has not been offered for either proposal. There are two bills in the House of Representatives calling for repeal that have atotal of 288 cosponsors.

2. Administration

Precision Medicine Working Group Releases Implementation Report; Proposal Utilizes Health Care Provider Partnerships and Electronic Health Records forResearch Cohort Development

The Precision Medicine Initiative Working Group released its recommendations for a framework proposal on Sept. 19. The Group is charged withdeveloping a framework for creating and managing a large research cohort with data and specimens that can be accessed by all researchers, for studies tounderstand the variables that contribute to health and disease and ultimately to translate that knowledge into treatments tailored to individuals.

The recommendations are based on a set of high-value scientific opportunities that were identified by the Working Group following extensive stakeholderengagement. In the recommended model, Precision Medicine participants would volunteer to share core data, including their electronic health records, healthsurvey information and mobile health data, on lifestyle habits and environmental exposures. Patient data could also be collected through mobile cellulardevices, wireless health trackers and mHealth technology. In return, for enrollment in the initiative, patients will have access to their study results,along with aggregated results from all study participants, and will be provided with tools to make sense of the results.

In its report, the Working Group calls for the establishment of partnerships with health care providers and further integration of electronic healthrecords systems to recruit patient participants and compile individual health data for the million-patient research consortium; health care providerorganizations would act as, in essence, a participant’s point of contact for the cohort. The Working Group also recommends the establishment of adata-sharing privacy plan, in conjunction with the development of a single electronic medical record format, to allow for seamless health data transferbetween participating research groups. Other suggestions include the creation of a central biobank and operating system utilizing a central storage hub, asa means to lessen data transmission barriers among entities, and the appointment of an Initiative Director by the National Institutes of Health (NIH) tolead the effort.

The Centers for Medicare and Medicaid Services’ (CMS) Mandated Provider Use of ICD-10 to Go Live Oct. 1

Oct. 1, 2015, is the day when all providers must start using a ICD-10 coding system, which has almost 70,000 codes, to describe patient visits. CurrentlyU.S. health providers use a system called International Classification of Diseases, 9th Revision (ICD-9) with roughly 14,000 codes to designate adiagnosis.

The Centers for Medicare and Medicaid Services (CMS) previously delayed the original Oct. 1, 2014, implementation date twice. Even the threat of agovernment shutdown will not stop the Oct. 1 switch to ICD-10, the Centers for Medicare and Medicaid Services said. “In the event of a shutdown we willcontinue — and I want to be clear on this — to pay claims,” promised CMS Principal Deputy Administrator Patrick H. Conway, M.D. State Medicaid agencies inCalifornia, Louisiana, Maryland and Montana have received federal waivers to use a “crosswalk” coding translation system for provider claims for the Oct. 1transition to ICD-10 coding. Providers that cannot submit claims electronically through their own systems can download free billing software for theirMedicare Administrative Contractor (MAC) at any time.

Department of Health and Human Services (HHS) Releases Final Federal Health IT Strategic Plan for 2015-2020

HHS’s Office of the National Coordinator for Health Information Technology (ONC), in collaboration with over 35 federal partners, released the updated Federal Health IT Strategic Plan for 2015–2020.The plan establishes a blueprint for the federal partners to implement strategies that will support continued development of a responsive and secure healthIT and information use infrastructure. The final plan reflects the input from more than 400 public comments, collaboration between federal contributors andrecommendations from the Health IT Policy Committee.

The plan specifies four goals: 1) advance person-centered and self-managed health; 2) transform health care delivery and community health; 3) fosterresearch, scientific knowledge and innovation; and 4) enhance the nation’s health IT infrastructure. Over the next five years, the plan’s federal partnerswill assess their individual and collective progress on efforts to use health IT to achieve Plan goals, including progress on the HHS Delivery SystemReform initiative.

The National Coordinator for Health IT, Karen B. DeSalvo, M.D., M.P.H., M.Sc., said, “Implementing the Federal Health IT Strategic Plan over the next fiveyears drives toward a public-private partnership to achieve interoperability and will help the nation achieve important health outcomes, while remainingflexible to the evolving nature of health care and technology.”

The Centers for Medicare and Medicaid Services (CMS) Announces Medicare Advantage Premium Rates and Costs for 2016

On Sept. 21, CMS announced thatMedicare Advantage premiums will remain stable in 2016 and enrollment is expected to grow for the sixth straight year to a new high. Fifty-nine percent ofMedicare Advantage enrollees will not face a premium increase. CMS estimates that the average Medicare Advantage premium will decrease by $0.31 next year,from the 2015 average monthly premium of $32.91 to $32.60 in 2016.

CMS also reported that quality of care is increasing in plans. About 65 percent of Medicare Advantage enrollees are currently enrolled in plans with fouror more stars for 2016, a significant increase from an estimated 17 percent of enrollees in such plans in 2009. Additionally, CMS stated, the averagenumber of plan choices per beneficiary remains consistent in 2016 as compared to 2015 and access to supplemental benefits, such as dental and visionbenefits, is growing.

The Annual Election Period for Medicare health and drug plans begins on Oct. 15, 2015, and ends Dec. 7, 2015. Plan costs and covered benefits can changefrom year to year.

A fact sheet detailing 2016 Medicare Advantage rate information can be found here.

U.S. District Court Rules That the Department of Health and Human Services Must Reopen the Comment Period for Medicare’s Two-Midnight Rule

Federal district court Judge Randolph Moss ruled Sept. 21 that HHS has until Oct. 1 to negotiate with hospital groups a new timetable for the agency’sreissue of the 2014 Medicare two-midnights hospital inpatient admissions rule. In reissuing the rule, the agency must also provide better justification forthe 0.2 percent Medicare hospital payment reductions included in the rule. In hisopinion brief, Judge Moss said HHS left out important information abouthow the agency calculated that there would be 40,000 more inpatient stays under the two-midnight policy, which was HHS’s justification for a reduction inreimbursement. Although the rule has never been fully enforced, CMS announced in August that it would extend a partial enforcement delay on thetwo-midnight rule through the end of 2015.

In Shands Jacksonville Medical Center v. Burwell, the American Hospital Association (AHA) and its member hospitals brought the lawsuit against CMSover the 2014 cuts. AHA sued CMS again over further cuts in 2015. In its suit, AHA argued CMS cannot cut hospital payments in fiscal 2015 by incorporatingarbitrary cuts from the previous year. The hospitals also refuted HHS’s predictions about the two-midnight rule’s $220 million costs and argued therate cut is not needed. In the final decision, Judge Moss also determined that compelling HHS to pay back hospitals for the 2014 rate cuts would beextremely disorderly. “Although the deficiencies in the rule are serious, the Court is not convinced that they are so grave that the Secretary should beprecluded from taking corrective steps with respect to the 2014 inpatient prospective payment system,” the court opinion said. The judge hopes thatallowing more time for stakeholders to comment on the 2014 rule will provide clarity on the issue.

The Centers for Medicare and Medicaid Services (CMS) Awards $110 Million in Grants for Patient Safety Initiatives

On Sept. 25, CMS announced awarding $110 million in Affordable Care Act (ACA) funding to 17 national, regional or state hospital associations and healthsystem organizations to continue efforts in reducing preventable hospital-acquired conditions and readmissions. Through the Partnership for PatientsInitiative — a nationwide public-private collaboration that began in 2011 to reduce preventable hospital-acquired conditions and 30-day readmissions — thesecond round of the Hospital Engagement Networks will continue to work to improve patient care in the hospital setting. The Department of Health and HumanServices has estimated that 50,000 fewer patients died in hospitals and approximately $12 billion in health care costs were saved as a result of areduction in hospital-acquired conditions from 2010 to 2013.

For a fact sheet on round two of the Hospital Engagement Networks, pleasevisitcms.gov.

For more information on the Partnership for Patients Initiative, please visit:partnershipforpatients.cms.gov.

CMS Releases FAQ Guidance Documents on Hardship Exemptions for Physicians That Switch Electronic Health Records (EHR) Vendors and Decertified EHRs

In a new Frequently Asked Questions (FAQ) document released Sept. 24, CMS clarifiedthat health care providers who switch EHR vendors during the meaningful use program year can apply for a hardship exemption to avoid penalties. Thehardship exemption would be filed under “Extreme and/or Uncontrollable Circumstances hardship exception.” This is an existing hardship exception. Ifapproved, those providers will be exempt from the meaningful use cuts for the year they switch technology. The change in CMS policy is welcomed byhospitals that either must change their EHR technology platforms or would like to shift to a product that better fits their needs. The American HospitalAssociation (AHA) voiced support for this change in policy and has advocated for this exception since the meaningful use program began.

CMS also included an FAQ on decertified EHRs. CMS notes that if an EHR has beendecertified by the agency, the technology platform can still be utilized to demonstrate meaningful use of EHRs so long as the reporting period ended beforethe product decertification happens. However, CMS says providers can apply for a hardship exemption if the reporting period ends after a product isdecertified. The Office of the National Coordinator for Health IT (ONC) has recently decertified two versions of an EHR that 48 providers used to provecompliance with Meaningful Use Stage 1.

CMS Releases Resources for Employers with Employees Who Are Eligible for Health Coverage Under Medicare

CMS released new guidance for employerswho have Medicare-eligible employees. The guidance provides clarification on who gets Medicare automatically and who needs to specifically sign up for it,when eligible employees can enroll in Medicare Part B, eligibility for those under age 65, and other special enrollment rules for those who are stillworking and covered by an employ