Washington Healthcare Update

January 11, 2016

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This Week:The Senate and House pass legislation to repeal the Affordable Care Act but without enough votes to override a potential veto… However, this is the firsttime repeal legislation makes it to the President’s desk… White House to veto it… By some counts this is the 62nd time the House of Representatives haspassed some form of repeal… Meanwhile, nearly 11.3 million had signed up for health plans nationwide as of Dec. 26, and 68 percent chose silver levelplans… Open enrollment ends Jan. 31.

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

6. Other

1. Congress

House of Representatives

GOP Doctors Caucus Creating ObamacareReplacement Bill

The GOP Doctors Caucus is working on its own Affordable Care Act replacement bill, according to caucus co-chair John Fleming. The bill is going to be acombination of Rep. Tom Price’s (R-GA)Empowering Patients First Act of 2015 andRep. David Roe’s (R-TN)American Health Care Reform Act of 2015.


Senate HELP Committee Schedules Vote on FDA Nominee Robert Califf

On Jan. 12, the Senate HELP Committee will vote on Robert Califf’s nomination to serve as Commissioner of the U.S. Food and Drug Administration (FDA).Califf had the support of most committee members, including both Chairman Lamar Alexander (R-TN) and ranking member Patty Murray (D-WA), during his confirmation hearing on Nov. 17.

Senate Finance Committee Asks CMS to Change Clinical Lab Payment Plan

On Jan. 6, Senate Finance Committee Chairman Orrin Hatch (R-UT) and rankingmember Ron Wyden (D-OR)wrote a letter asking the Centers forMedicare and Medicaid Services (CMS) to make changes to the proposed rule establishing a new Medicare payment system for clinical laboratory services. Thesenators ask for a more expansive methodology for identifying labs that must report private payment rates and a more reasonable timeline for the labsrequired to report data. They argue that since the final rule has yet to be published in the Federal Registrar, a deadline of March 31, 2016, isunrealistic.

To see the proposed rule, clickhere.

2. Administration

Surgeon General to Issue First-Ever Report on Substance Abuse

A Dec. 31 notice from the U.S. Department of Health and Human Services (HHS)announced the commission of the Surgeon General’s first-ever report on substance abuse, addiction and health. According to the notice, “[t]he report willexamine the health effects of drug and alcohol misuse from the perspectives of prevention, treatment, recovery, neurobiology, and delivery of care.” Datafrom the 2014 National Survey on Drug Use and Health (NSDUH) showed that an estimated 27 million citizens age 12 and older were illicit drug users and 16.3million were heavy drinkers. Also, 6.5 million people age 12 and older used psychotherapeutics non-medically.

CMS Issues Final Rule Establishing Prior Authorization Process for DMEPOS Items

On Dec. 29, the Centers for Medicare and Medicaid Services (CMS) issued afinal rulethat establishes a prior authorization process for certain durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) items that arefrequently subject to unnecessary utilization. This process aims to ensure that certain DMEPOS items are provided consistent with Medicare coverage, codingand payment rules. The rule defines unnecessary utilization and attempts to prevent it, while safeguarding beneficiaries’ access to necessary medical care.

The Department of Health and Human Services’ Office of the Inspector General and the U.S. Government Accountability Office have published multiple reportsraising questions about billing practices by suppliers, inappropriate Medicare payments and questionable utilization of DMEPOS items.

The Master List is the set of 135 DMEPOS items identified as being frequently subject to unnecessary utilization. Items that meet the following criteriaare included on the Master List and thus potentially subject to prior authorization: items on the DMEPOS Fee Schedule with an average purchase fee of$1,000 or greater, or an average rental fee schedule of $100 or greater, and the subject of:

  • HHS Office of the Inspector General (OIG) or U.S. Government Accountability Office (GAO) reports that are national in scope and published since 2007, or
  • Comprehensive Error Rate Testing Annual Medicare Fee-for-Service Improper Payment Report Durable Medical Equipment (DME and/or) Report’s DMEPOS Service Specific Reports.

Items will remain on the list for 10 years, but can be removed sooner if the purchase amount drops below the payment threshold. After 10 years, items canremain on the list or be added back to the list if a subsequent report identifies the item as frequently subject to unnecessary utilization.

Presence on the Master List does not automatically create a prior authorization requirement for that item. In order to balance minimizing provider andsupplier burden with protecting the Medicare Trust Funds and beneficiary access, CMS will initially implement prior authorization for a subset of items onthe Master List (referred to as “Required Prior Authorization List”). CMS will publish the Required Prior Authorization List in the Federal Register with60-days’ notice before implementation of prior authorization for those items.

CMS will issue specific prior authorization guidance in sub-regulatory communications. Because prior authorization does not guarantee payment, the reactionto the regulation has been mixed.

To see the press release, click here.

Final Rule Limiting HIPAA for Firearm Background Checks Released

On Jan. 4, the Obama administration released a final rule tomodify the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule. The rule allows health care providers to disclose certaininformation to the National Instant Criminal Background Check System (NICS). Now, providers can disclose the identities of those who are subject to the“mental health prohibitor” that bans them from owning a firearm. The prohibitor applies to individuals who have been involuntarily committed, foundincompetent to stand trial or otherwise determined by a court or other lawful authority to be a danger to themselves or others.

This executive action is one of 23 President Barack Obama announced in January 2013 aimed at curbing gun violence.

OMB Has Multiple CMS Rules Under Review

The White House Office of Management and Budget (OMB) currently has 10 rules from the Centers for Medicare and Medicaid Services (CMS) under its review:

The Medicaid home health face-to-face rule: this rule was proposed in 2011, and it will set up such requirements for Medicaid as well as align timeframesfor face-to-face encounters with Medicare requirements. Home health providers believe the requirements for Medicare are flawed, and CMS modified themJanuary 2015 to address concerns. The industry is hoping that the Medicaid rule will provide states flexibility to use the requirement differently than inMedicare.

Medicare reporting and returning of overpayments: Last February, CMS extended the timeline to 2016 for publication of afinal ruleon the reporting and returning of Medicare overpayments. Providers had concerns about the provision’s setting up a 10-year look-back period in whichproviders must check for overpayments that need to be returned. This is CMS’s third attempt to change regulations on overpayments.

Pre-Existing Condition Insurance Plan Program: OMB has been reviewing updates to the Pre-Existing Condition Insurance Plan program since February 2015, andthe interim final rule will finalize provisions published in 2010.

OMB is reviewing a proposed rule that would expand the uses of Medicare claims data by qualified entities, as required by the Medicare Access and CHIPReauthorization Act.

The OMB is also reviewing CMS’s mental health parity rule. Under the proposed rule, enrollees needing mental health and substance abuse treatment must begiven sufficient reasoning for the denial of reimbursement or payment of such services.

Additionally, OMB is looking at CMS final rules on emergency preparedness requirements for Medicare and Medicaid providers and suppliers and fire safetyrequirements for some health facilities.

CMS Creates the Accountable Health Communities Model

The Centers for Medicare and Medicaid Services (CMS) is creating a five-year demonstration program, called the Accountable Health Communities Model, to test whether paying third parties to set beneficiariesup with social services impacts health care costs and improves health and quality of care. CMS points out that unmet health-related social needs, such asfood insecurity and unstable housing, could increase the risk of chronic conditions, but that health care providers rarely connect patients to socialservices. CMS is going to grant up to $157 million to “bridge organizations” that connect Medicare and Medicaid beneficiaries with social services whennecessary. Over the five-year period, CMS is testing a three-track model: 1) awareness – organizations will increase beneficiary awareness of availableservices; 2) assistance – organizations will help beneficiaries navigate those services; and 3) alignment – organizations will ensure that services areavailable and responsive to the beneficiaries that require them. CMS will announce the awards to bridge organizations in the fall, after which the programwill begin.

CDC Asks Work Group to Review Opioid Guideline

The Centers for Disease Control and Prevention (CDC) has asked the National Center for Injury Prevention and Control’s Board of Scientific Counselors toappoint a work group to review the draft guideline for prescribing opioids for chronic pain. This is one of several steps CDC is taking to increasetransparency for its guidelines, following complaints about the secretive nature of their development. Public comments are due on or before Jan. 13, andthe work group will review those as well.

To see the guidelines, click here.

3. State Activities

Maine: Gov. LePage Pledges to Veto Medicaid Expansion Bill

Maine Gov. Paul LePage announced on Maine Public Radio that he will veto any Medicaid expansion bill the state legislature approves. His comments cameafter two moderate Republican senators said they are going to push expansion in 2016, citing the difficulties the uninsured have accessing drug treatmentprograms.

Nebraska: Lawmakers Pushing Medicaid Expansion

Nebraska lawmakers are trying again to push Medicaid expansion this year. Sen. Kathy Campbell plans to propose a bill setting up a “private option” forexpansion. This would provide transitional health insurance, Campbell said, which people could continue if they no longer qualify for Medicaid. Sen. JohnMcCollister is a new supporter of expansion due to the $2.1 billion in federal dollars it would bring to Nebraska in five years and the 77,000 people itwould cover. Expansion still faces opposition from Gov. Pete Ricketts.

Kansas: Senator Proposes to Stop Medicaid for Hepatitis C Patients Who Don’t Follow Treatment Requirements

A state legislative panel in Kansas passed a motion to take away drug coverage for Medicaid patients with hepatitis C if they drink alcohol or go off theirmedication. Republican Sen. Jim Denning made the proposal, and the seven-member committee passed the motion, with the two Democrats voting against it.

Hawaii: State Negotiating With Ike in the Absence of Hawaii Health Connector

The state of Hawaii is negotiating a contract with a local health care technology company, ike, to help in the absence of the failed state health insuranceexchange. The company would provide data processing and help in developing the 1095-A tax forms that enrollees need to fill out. The 1095 forms arerequired for those in an Affordable Care Act (ACA) plan and are supposed to be issued by the end of the month.

4. Regulations Open for Comment

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

FDA issued a final 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 consumption decreased about 78percent and that the labeling rule and industry reformulation of foods were key factors in informing healthier consumer choices and reducing trans fat infoods. Comments on the final rule are due by June 18, 2018.

More information on FDA’s decision can be found in the agency’s press release.

CMS Soliciting Comments on Episode Groups as Required by MACRA

The Centers for Medicare and Medicaid Services (CMS) is solicitingcommentson episode groups and on specific clinical criteria and patient characteristics to classify patients into care episode and patient condition groups asrequired by Section 101(f) of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), enacted April16, 2015. The purpose of this commentary is to provide background and context to solicit stakeholder input on the episode groups that CMS has developedpursuant to Section 3003 of the Affordable Care Act (ACA). CMS is also seeking stakeholder input on the future role of episode groups in resource usemeasurement.

Comments should be sent to episodegroups@cms.hhs.gov by 11:59 p.m. EST on Feb. 15, 2016.

FDA Seeks Comments on Whether It Should Define “Natural” and If So, How?

Because of a series of competing citizen petitions, GMO labeling issues and congressional concern, the U.S. Food and Drug Administration (FDA) is seekingpublic input on whether it should define the term “natural” for use on food product labels, and, if so, how to do so.

On Nov. 12, FDA published a request for feedback. FDA policy to date hasnot restricted the use of the word “natural” on food labeling unless the product has added color, synthetic substances or flavoring.

FDA has received four citizen petitions over the past two years asking the agency to issue regulations on the use of the term, and in July the House ofRepresentatives passed a proposal on GMOs that would require FDA to define the term “natural” for product labeling.

FDA seeks feedback on the following questions:

  • What types of foods should be able to use the term?
  • Should only raw agriculture products be able to use the term?
  • Should only single-ingredient foods, such as bottled water or bagged spinach, be able to use the term?
  • If multi-ingredient foods can use the term, what types of ingredients would disqualify a product from using it?
  • What data or other information shows how consumers associate, confuse or compare the terms “natural” with “organic”?
  • What data or other information shows how consumers associate, confuse or compare the term “natural” with the term “healthy”?

The comment period is open until Feb. 10, 2016.

HHS Posts Guidance for State Innovation Waivers

On Dec. 11, the Department of Health and Human Services (HHS) posted guidance for states interested in seeking a State Innovation Waiver under Section 1332of the Affordable Care Act (ACA). State Innovation Waivers allow states to receive federal funding to implement alternative models of health care coveragethat provide affordable coverage to their residents. The notice clarifies that the minimum length of public notice and comment periods for waiverapplications is 30 days.

To see the guidance, click here.

5. Reports

HHS OIG Releases Report on APTC Payments

On Dec. 31, the U.S. Department of Health and Human Services (HHS) Office of the Inspector General (OIG) released a report concluding that CMS could not ensure that advance premium tax credit (APTC)payments were only for enrollees who had paid their premiums. The OIG found that CMS relied on each plan to verify that enrollees paid their premiums andto attest that APTC payment information that the issuer reported to CMS was accurate. The report recommended that CMS establish policies to calculate APTCpayments without relying on the individual plans. CMS concurred with this recommendation.

PricewaterhouseCoopers Releases Report on the State of Medicaid Expansion, Managed Care

According to areportby PricewaterhouseCoopers on the state of Medicaid expansion, managed care benefitted from significant enrollment growth due to expansion in 2014. Thereport said that 66 percent of beneficiaries received coverage from a private Medicaid health plan in 2014, and this trend continued in 2015 when 70percent — or 51.3 million Americans — received the same coverage. An ongoing shift away from fee-for-service and towards managed care by large states andthe total growth in Medicaid population — enabled by Medicaid expansion — powered the growth in private Medicaid health plans. The report also found thatsignificant enrollment growth for Medicaid may end in the next few years, due to a shrinking Medicaid expansion gap.

6. Other

Aetna Decides Not to Renew AHIP Membership for 2016, Merging with Humana

Aetna announced that it will leave America’s Health Insurance Plans (AHIP), becoming the second major insurer to leave in less than a year. UnitedHealthcare left the group in June. Aetna is now in the process of merging with Humana.

Pharmacists Ask SCOTUS to Take Case Over Pharmacy Regulations

Stormans, Inc., pharmacy and two pharmacists, Rhonda Mesler and Margo Thelen, asked the Supreme Court to take their case against Washington stateregulations on selling prescription drugs. They have religious objections to selling emergency contraceptives, but in 2007 Washington issued a rule banningany “conscience-based referrals” — with no exceptions for religious objections.

The question presented by the plaintiffs is: “Whether a law prohibiting religiously motivated conduct violates the Free Exercise Clause when it exempts thesame conduct when done for a host of secular reasons, has been enforced only against religious conduct, and has a history showing an intent to targetreligion.”

The 9th Circuit Court of Appeals upheld the state rules in July and the Becket Fund for Religious Liberty is now representing the pharmacists.

To read the Supreme Court petition, click here.

Other Potential SCOTUS Cases

This month, the Supreme Court will consider whether to take up several health care-related cases — a far heavier health care case load than normal. Thecases include a challenge to the Affordable Care Act’s (ACA) individual mandate; a challenge to the ACA based on an argument that the legislation startedin the Senate, not the House; and several cases on state abortion bans.

If you have any questions, contact the following individuals atMcGuireWoods Consulting:

StephanieKennan, Senior Vice President
Charlie Iovino, VicePresident
Caroline Perrin, Research Assistant

Founded in 1998, McGuireWoods Consulting LLC(MWC) is a full-service public affairs firm offering infrastructure andeconomic development, strategic communications & grassroots, and governmentrelations services. McGuireWoods Consulting is a subsidiary of the McGuireWoods LLPlaw firm and has been named in The National Law Journal’s special annualreport, “The Influence 50,” for the past several years. In the most recentreport, McGuireWoods Consulting was ranked 15th of the 1,900 governmentrelations firms in Washington, D.C.

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