Washington Healthcare Update

October 12, 2015

Pardon Our Dust

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This Week: While the House of Representatives searched for whowill be the next Speaker of the House, efforts to repeal key provisions ofthe Affordable Care Act continued.

1. Congress

House of Representatives

Senate

2. Administration

3. Other

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress

House

House Leadership Race

On Oct. 8, the House Republican caucus did not select a candidate for Speaker of the House and selection has been delayed. The current Speaker, JohnBoehner (R-OH), had announced that he would step down and retire from Congress at the end of October, but will now stay until a Speaker is selected. Thedelay reflects the lack of a clear successor for Boehner. It also means that Boehner likely will remain a key player as Congress heads into debate over thedebt ceiling.

House Reconciliation Package

The House of Representatives is expected to vote on its reconciliation package the week of Oct. 19. This package would repeal provisions of the AffordableCare Act including the individual and employer mandate, the Cadillac tax (a tax on insurance plans), the medical device tax, the auto-enrollmentrequirement for large companies, the Prevention and Public Health Fund and IPAB, the independent advisory body that has never been staffed. In addition,the reconciliation package denies funding to Planned Parenthood for one year. It remains unclear if the Senate is going to take up this legislation. Ifsuch a package makes it to the President’s desk, it is unlikely to be signed into law.

Senate

Bicameral Letter Asks About Late CHIP Report

Senate Finance Committee Chair Orrin Hatch (R-UT), House Energy and Commerce Committee Chairman Fred Upton (R-MI) and that committee’s health subcommitteechair Joe Pitts (R-PA) have released their letter to Secretary of Health and Human Services Burwell blasting HHS for failing to deliver an Affordable CareAct mandated report on children’s health insurance, which was originally due at the start of April. The report is to analyze how CHIP plans stack upagainst exchange plans. The letter points out that information is now more important to know since states were allowed to start enrolling CHIP kids inexchange plans as of Sept. 30. The legislators say they want an update on the status of the report in two weeks.

Medicare Premiums

House and Senate Democrats are urging Republicans to stop a 52 percent increase in Part B premiums and a significant deductible increase for about 30percent of Medicare beneficiaries. Ranking Senate Finance Committee Democrat Senator Ron Wyden (D-OR) introduced a bill to stop the increase and HouseDemocrats held a press conference after negotiations with Republicans fell through.

Wyden’s bill would make the federal government pay for the increase on behalf of beneficiaries. According to some reports, it could cost up to $7.5 billionto avoid the premium increase.

Most seniors choose to have Part B premiums automatically deducted from their Social Security checks. To protect seniors against Social Security pay cuts,when Medicare Part B premium increases are greater than the annual cost of living adjustments in Social Security checks, seniors do not pay the increase.The Bureau of Labor Statistics will release final data needed to calculate the cost of living adjustment on Oct. 15. Seniors who could be affected by apremium increase include new Medicare enrollees, those not collecting Social Security and those paying higher, income-related premiums for Part B. Thoseindividuals who are dually eligible for Medicare and Medicaid also face premium increases; however, state Medicaid programs will pay those costs.View bill text and more information.

NIH Warns Against a Yearlong Continuing Resolution

On Oct. 7, in testimony before the Senate Appropriations subcommittee that oversees funding to the Department of Health and Human Services, DirectorCollins said that if Congress were to fund the government through a continuing resolution at current levels, several NIH efforts would likely be put onhold. President Barack Obama’s precision medicine initiative, which NIH is hoping to launch in the fiscal year that started Oct. 1, “would have to go intothe freezer or on mothballs,” Collins said. He said NIH’s BRAIN initiative, which is working on understanding and treating neurological disease, would alsobe halted. The project’s work is at a “critical point where more investment is needed.”

In addition, a yearlong CR would hinder NIH’s ability to develop vaccines that would work against all influenza strains and place other vaccine work injeopardy. The most recent CR, which was approved last week, funds the government through Dec. 11.

For more information on the hearing and testimonyplease click here.

2. Administration

Trans-Pacific Partnership (TPP) Agreement and Biologics

As part of the Trans-Pacific Partnership Agreement, the United States agreed to a deal this past weekend that would require only five years of dataprotection for biologics and then provide two options for potentially adding extra years. Australia, Chile and others were demanding five years’ protectionfor intellectual property in the negotiations, but the U.S. was asking for 12 years. The agreement would permit additional time for that exclusivity periodin accordance with the U.S. system or with Australia’s system, which says the time period is often extended as a result of the country’s regulatoryapproval process. This is a win for generic drug manufacturers. However, U.S. drugmakers and Senator Hatch, Chairman of the Senate Finance Committee, haveexpressed concern over the lack of a mandatory 12 years of protection.

Congress must approve the trade agreement and that vote is likely months away.

Sandoz Submits Second Biosimilar Application

On Oct. 2, the Food and Drug Administration accepted for review Sandoz’s secondbiosimilar application, a biosimilar of Amgen’s drug Enbrel, a tumor necrosis factor alpha inhibitor. Novartis is Sandoz’s parent company.

Draft Labeling for Abbreviated New Drug Applications (ANDAs) Guidance Released

On Oct. 5, the FDA announced that it will accept draft labeling in order to approve abbreviated new drug applications (ANDAs) rather than require genericdrug manufacturers to submit final printed labeling for their products. Despite the fact the guidance was issued in final form, the FDAsays it will accept public comments submitted to www.regulations.gov.

In its guidance, FDA said the draft labeling must comply with applicable labeling requirements other than “editorial or similar minor deficiencies.” FDAstates that its thinking on the use of draft labeling has evolved especially as manufacturers are able to submit electronic versions of labels.

Generic drug sponsors must show that the proposed labeling for the generic drug is the same as the labeling for the reference product, and ANDA applicantsmust submit in electronic format the content of the labeling including prescribing information and FDA-approved patient labeling. The draft labeling mustinclude the full content of the labeling concerning prescribing information and patient labeling as well as the planned order of the content.

FDA Orders Postmarket Surveillance Studies From Duodenoscope Companies

On Oct. 5, the FDA ordered the three manufacturers of duodenoscopes marketed in the U.S. to conduct postmarket surveillance studies in health carefacilities, to better understand how the devices are reprocessed in real-world settings. The FDA has identified evidence that duodenoscopes havecontributed to the transmission of infections, including antibiotic-resistant infections, to patients. Duodenoscopes can be reused after a complexdisinfection procedure called reprocessing is completed between patients. The design of the devices makes it difficult to remove contaminants compared toother types of endoscopes. The FDA’s analysis also shows that manufacturers’ reprocessing instructions are not always being followed correctly, becausethese instructions are labor intensive and prone to human error.

The three manufacturers — Olympus America, Inc.; Fujifilm Medical Systems, U.S.A., Inc.; and Hoya Corp. (Pentax Life Care Division) — will have 30 days tosubmit detailed postmarket surveillance plans to the FDA.

View the announcement.

Centers for Medicare and Medicaid Services (CMS) Announces Results of Comprehensive Primary Care (CPC) Initiative

On Oct. 7, the Centers for Medicare & Medicaid Services (CMS) announced results of the first shared savings performance year for the ComprehensivePrimary Care (CPC) initiative.

Authorized by the Affordable Care Act, the CPC initiative is a multipayor partnership between Medicare, Medicaid, commercial payors and primary carepractices in seven regions. Participating practices identify patients who are sick or at risk and provide targeted care management to improve outcomes andprevent potential adverse events. Patients at CPC practices have 24/7 access to a provider, and receive enhanced self-management and decision-makingsupport. The CPC initiative supports these efforts by paying an additional fee for non-face-to-face care, such as tracking hospital discharges to providefollow-up support to patients.

During this first shared savings performance year, the initiative decreased Medicare Part A and Part B spending compared to spending targets whileachieving high-quality outcomes. The CPC initiative generated a total of $24 million in gross savings overall (excluding the CPC care management fees).These results reflect the work of 483 practices that served approximately 377,000 people with Medicare and more than 2.7 million patients overall. Four ofthe CPC initiative’s seven regions (Arkansas, Colorado, Cincinnati-Dayton region of Ohio and Oregon) generated gross savings. The Greater Tulsa regiondecreased costs in excess of the CPC care management fees, generating net savings of $10.8 million and earning more than $500,000 in shared savingspayments.

For more information on the quality seeblog.cms.gov.

CMS Staff Changes

Centers for Medicare and Medicaid Services (CMS) Acting Administrator Andy Slavitt and Deputy Administrator Patrick Conway announced several staff changesOct. 9. CMS chief of staff Mandy Cohen will also become the CMS’ chief operating officer on Nov. 1. Cohen replaces Deb Taylor, who will be retiring at theend of the month. Other staff changes include Karen Jackson, the current deputy director of the CMS Innovation Center, who will become acting deputy chiefoperating officer and Tim Gronniger will be promoted to deputy chief of staff. Lisa Watkins will also be promoted to senior adviser.

CMS Announces Dialysis Accountable Care Organizations

On Oct. 7, the Centers for Medicare and Medicaid Services (CMS) announced participants in thedialysis accountable care organizations demonstration called the Comprehensive ESRD Care Model. CMS delayed the application deadline three times becauselarge dialysis providers showed little interest in the initiative. The ACOs are accountable for clinical quality outcomes and financial outcomes measuredby Medicare Part A and B spending, including spending on dialysis services for their beneficiaries. Medicare pays large and small ACOs differently, butonly one of the 13 ACOs in the demonstration is considered small. ACOs with at least 200 dialysis facilities are at risk of penalties and have higheroverall levels of risk than the smaller ACO. The small ACO is not responsible for penalties.

CMS Expands Medicare Appeals Settlement Pilot

The Centers for Medicare and Medicaid Services’ (CMS) Office of Medicare Hearings and Appeals (OMHA) announced that it will expand its settlementconference facilitation pilot to include more appeals and will extend the program beyond Part B claims to also include Part A claims next year.

The pilot program launched in 2014 as a step to alleviate the backlog of appeals and has since June 2014 settled 2,000 claims. The CMS hospital settlementprocess eliminated close to 300,000 claims. As of Oct. 1, OMHA expanded the pilot to include more pending appeals. To be eligible for the pilot an appealmust not yet have been scheduled for an Administrative Law Judge hearing and the request for a hearing must have been submitted by Sept. 30, 2015.Previously the pilot only included appeals filed in 2013. OMHA plans to hold a teleconference on Oct. 15 to answer questions.

CMS and ONC Release Final Rule With Comment Period on Meaningful Use

On Oct. 6, the Centers for Medicare and Medicaid Services and the Office of the National Health Information IT Coordinator (ONC) released a final ruleconcerning the third and final stage of meaningful use. In its press release the Department of Health and Human Services stated that it had reduced thenumber of objectives from 20 to less than 10 and provided flexibility so providers may choose measures that are most relevant to them. In addition therules provide more time for providers and states to comply with program requirements. CMS announced a 60-day public comment period to gather additionalfeedback about the EHR Incentive Programs going forward, in particular with the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), whichestablished the Merit-based Incentive Payment System and consolidates certain aspects of a number of quality measurement and federal incentive programsinto one more efficient framework. CMS will use this feedback to inform future policy developments for the EHR Incentive Programs, as well as consider itduring rulemaking to implement MACRA, which we expect to release in the spring of 2016.

In addition to the final rule for the EHR Incentive Programs, ONC is also announcing the final rule for the 2015 Edition Health IT Certification Criteria.This rule focuses on increasing interoperability — a secure but seamless flow of electronic health information — and improving transparency and competitionin the health IT marketplace.

For more information click here

3. Other

Employer Mandate

On Monday, Oct. 5, the U.S. Supreme Court said it will not hear a challenge to the delays of the Affordable Care Act’s employer mandate. The challenger,Kawa Orthodontics, had asked the justices to review the decision by a lower court, which threw out the suit on procedural grounds.

Minimum Wage and Overtime Protection for Home Health Workers Goes Forward

The Supreme Court on Oct. 6 declined to enjoin from implementing the U.S. Labor Department’s home health rule. That rule moves forward a DOL rule thatextends minimum wage and overtime protection to home health workers. Home health care companies had sued to block the rule. Under Tuesday’s ruling theSupreme Court may still choose to take up the case sometime in the future.

4. State Activities

Utah Medicaid Expansion Still Being Debated

Medicaid expansion continues to be discussed. However, House Speaker Greg Hughes decided that the 38 votes needed to pass the newest plan all have to comefrom House Republicans. Ten Republicans supported the previous Medicaid expansion plan. This coming week, a legislative task force will weigh the latestproposal, and House Republicans will meet in a closed meeting on Oct. 13 to take a straw vote.

Florida Governor Seeks Transparency From Hospitals

Gov. Rick Scott is pushing a broad 2016 legislative agenda to create more transparency in prices. Scott’s proposal would require hospitals to postinformation on their websites, including prices and average payments for products and services provided as well as quality data. Tax-exempt hospitals wouldbe required to post their annual financial reports to the IRS online, which would also include information on executive compensation and lobbying spending.Scott also wants patients to have the ability to have third-party review of their charges. This comes at a time when hospitals and the governor havedivergent views concerning Medicaid expansion.

California Keeps New Vaccination Law

The referendum to overturn the state’s new vaccination law did not receive enough signatures to get it on the ballot. An unofficial count from referendumorganizers found that they had roughly 200,000 signatures, but they needed 365,880 to temporarily halt implementation and put it on the ballot next year.The tighter vaccine law was passed after a measles outbreak that began in Disneyland.

California Governor Signs Physician Aid in Dying Law

California Gov. Jerry Brown signed into law a measure permitting terminally ill patients to end their lives with a doctor’s help. California becomes thefifth state to permit physician aid in dying for terminally ill patients. The legislation has broad support among California residents, according to recentpolling from the Institute of Governmental Studies at the University of California, Berkeley. Brown explained his decision by saying, “In the end, I wasleft to reflect on what I would want in the face of my own death.”

5. Regulations Open for Comment

The Centers for Medicare and Medicaid Services (CMS) Offers Request for Information (RFI) to Solicit Answers to Physician Pay Formula Questions

On Sept. 28, CMS released an RFI to seek public comment related to newprovisions in the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA): Merit-based Incentive Payment System (MIPS), Alternative Payment Models(APMs) and a physician-focused payment model (PFPMs). Rather than offering much insight on how it plans to implement the physician pay formula (SGR), the“request for information” asks about 150 questions. In April 2015, Congress voted to repeal and substitute the SGR with a reimbursement system that aims topay providers contingent on the value of care they provide.

The SGR legislation creates a payment system that encourages physicians to participate in alternative value-based pay models. Beginning in 2026, thephysician reimbursement rate will rise 0.75 percent annually for providers who utilize alternative pay models. Alternatively, physicians who do not enrollin alternative pay models will see only a 0.25 percent pay raise each year. For providers who receive a substantial part of their revenue from alternativepay models, they will get an additional 5 percent bonus from 2019 to 2024, in combination with the shared savings bonuses or fees they might collect forparticipating in those models. Worth noting, providers do not have to participate in alternative pay models to get value-based care bonuses. The Doc Fixlaw also consolidates Medicare’s three existing quality programs into the MIPS, which begins in 2019. Sans this overarching payment structure, the Doc Fixlaw leaves much of this new pay system to CMS’s discretion; CMS now requests provider feedback on the most efficient way to accomplish the savings andenhanced care goals of the new law. Public comments for the RFI are due on Nov. 2, 2015.

Centers for Medicare and Medicaid Services (CMS) Issues Proposed Rule to Begin Data Collection for New Fee Schedule for Medicare Clinical DiagnosticLaboratory Tests

CMS released a proposed rule Sept. 25 that initiates the agency’s next step inimplementing the Protecting Access to Medicare Act of 2014 (PAMA), a bill that requires clinical laboratories to report on private insurance paymentamounts and volumes for lab tests. Under the proposed rule, certain laboratories would be required to report private payor rate and volume data if theyreceive at least $50,000 in Medicare revenues from laboratory services and more than 50 percent of their Medicare revenues from laboratory and physicianservices. Laboratories would collect private payor data from July 1, 2015, through Dec. 31, 2015, and report it to CMS by March 31, 2016. CMS will post thenew Medicare rates by Nov. 1, 2016; these rates will be effective on Jan. 1, 2017. Tests that meet the criteria for being considered new advanceddiagnostic laboratory tests (ADLTs) will be paid at actual list charge for a minimum of three quarters. ADLTs are tests offered under Medicare Part B andare furnished by only one laboratory and that either include a unique algorithm and are at a minimum an analysis of RNA or DNA, or are cleared or approvedby the U.S. Food and Drug Administration (FDA). Under PAMA, the Medicare payment amount for any test cannot be reduced by more than 10 percent compared tothe prior year’s amount during the first three years of implementation (2017-2019) and cannot be reduced by more than 15 percent in the following threeyears (2020-2022).

Medicare’s current fee schedule for lab tests was first adopted in 1984 and has remained relatively unchanged except to establish payments for new tests orimplement across-the-board statutory payment updates. Medicare pays approximately $8 billion a year for clinical diagnostic laboratory tests. The newsystem will be updated every three years for clinical diagnostic laboratory tests (CDLTs) and every year for ADLTs to reflect market rates paid by privatepayors. One hot-button issue in the proposed rule is the definition of “applicable laboratory.” PAMA defined an applicable laboratory as one that receivesa majority of its Medicare revenues under the MCLFS or the Medicare Physician Fee Schedule (MPFS). In afact sheet summarizing the proposed rule, CMS said it does not expect any hospital laboratory to meet the definition of “applicable laboratory” and that more than 50 percent of independentlaboratories and more than 90 percent of physician offices would likely be excluded based on the $50,000 threshold. The proposed rule was published in the Federal Register on Oct. 2. CMS will solicit comments until Nov. 24, 2015.

The Centers for Medicare and Medicaid Services (CMS) Offers Long-term Care Reform Proposed Rule

In conjunction with the White House Conference on Aging, the Centers for Medicare and Medicaid Services released a long-term care reform proposed rule July 16. The rule concerns reducing unnecessary hospitalreadmissions and infections, and strengthening safety measures for the nearly 1.5 million residents in the more than 15,000 long-term care facilities ornursing homes that participate in the Medicare and Medicaid programs. The proposed changes include:

  • Ensuring nursing home staff is properly trained on caring for residents with dementia and in preventing elder abuse.
  • Ensuring that staff members have the right skill sets and competencies to provide person-centered care to residents.
  • Improving care planning, including discharge planning for all residents with involvement of the facility’s interdisciplinary team and consideration of the caregiver’s capacity, giving residents information they need for follow-up, and ensuring that instructions are transmitted to any receiving facilities or services.
  • Allowing dietitians and therapy providers the authority to write orders in their areas of expertise when a physician delegates the responsibility and state licensing laws allow.
  • Updating the nursing home’s infection prevention and control program, including requiring an infection prevention and control officer and an antibiotic stewardship program.

Many of the proposals in the draft rule build on improvements that nursing homes have already made since 1991, the last time these conditions ofparticipation were comprehensively updated. The recommended reforms were published in a proposed rule in the July 16, 2015, Federal Register. The comment period for the proposed rule ended on Sept. 14, 2015, and wasreopened until Oct. 15, 2015.

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