Washington Healthcare Update

January 19, 2016

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This Week:The House is not in session this week… The Senate returns today… Committees in the Senate will hold hearings on co-ops and mental health… Vice President Bidenwill attend the World Economic Forum in Switzerland next week, where he will meet with international researchers about the state of cancer research.

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress

House of Representatives

House Democrats Urge NIH to Address High Drug Prices

House Democrats urged the National Institutes of Health (NIH) to use its march-in rights to respond to the high costs of certain pharmaceuticals. Aletter released Jan. 11 asks NIH to offer guidance for exercising march-in rights —specifically when the benefits of the patented products are not “available to the public on reasonable terms.” Rep. Lloyd Doggett said in a statement,“When drugs are developed with taxpayer funds, the government can and should act to bring relief from out-of-control drug pricing.” The authors of theletter believe that an announcement of reasonable guidelines in response to price gouging would have a positive influence on pricing in the pharmaceuticalindustry.

NIH has declined such requests in the past, citing that drug cost control is a legislative responsibility.


Senate HELP Committee Approves Califf’s Nomination to FDA

On Jan. 12, the Senate Health, Education, Labor and Pension (HELP) Committee approved Robert Califf’s nomination to serve as Commissioner of the U.S. Foodand Drug Administration (FDA). It is unclear when the full Senate will vote on his nomination. Alaska Sen. Lisa Murkowski (R-AK) has said she would put ahold on his nomination until issues related to FDA’s approval and labeling of genetically modified salmon are resolved. In addition, Sen. Bernie Sanders(D-VT) has said that he is considering placing a hold on the nomination because of his concerns with Califf’s ties to the pharmaceutical industry. Sanders,who is a member of the HELP Committee, had planned to vote “no” by proxy on the nomination in committee, but the panel’s leadership shifted to a voice votethat prevented him from registering his objection.

Senators Push for ACA Civil Rights Provision

Fifteen Democratic senators wrote to Health and Human Services (HHS) Secretary Burwell asking that the department implement a proposed rule on theAffordable Care Act’s (ACA) Section 1557, which protects against discrimination in access to health care. The Democrats urge that the regulation go furtherto ensure racial, religious, gender and disability protections.

Senate HELP Committee to Hold Hearing on Mental Health

The Senate Health, Education, Labor and Pensions Committee (HELP) will hold a hearing entitled “Improving the Federal Response to Challenges in MentalHealth Care in America”. This full committee hearing will be on Wednesday, January 20, 2016, at 10 am. The witnesses are:

  • Brian M. Hepburn, MD, Executive Director of the National Association of State Mental Health Program Directors
  • Penny Blake, RN, CCRN, CEN, Emergency Nurses Association
  • William W. Eaton, PhD, Johns Hopkins Bloomberg School of Public Health
  • Hakeem Rahim, EdM, MA, CEO of Live Breathe, LLC, National Alliance of Mental Health

For more information on the hearing, click here.

Senate Finance Committee to Hold Hearing on Co-op Failures

The Senate Finance Committee will hold a hearing at 9:30 am, Thursday, January 21, 2016 entitled “Health Care Co-ops: A Review of Financial and OversightControls.” The only witness will be Acting Administrator of the Centers for Medicare and Medicaid Services (CMS), Andy Slavitt.

For more information on the hearing, click here.

2. Administration

CMS Urges Individuals to Get Ready for Tax Season

The Centers for Medicare and Medicaid Services (CMS) is publicizing the need to gather information about health care coverage as part of the tax filingprocess. If you had coverage in 2015 — either through the Health Insurance Marketplace or another source like your employer, Medicare or Medicaid — you’llneed to indicate that when you file your tax return. If you could have afforded health insurance, but you chose not to enroll in coverage for 2015, you maybe required topay a feewhen you file your federal income tax return.

If you have questions about Marketplace tax forms, qualifying for exemptions, the fee or signing up for coverage through HealthCare.gov you should contactthe Marketplace Call Center. The call center is open all day, every day at 1-800-318-2596. Additional resources and information are also available at healthcare.gov or IRS.gov.

CMS to Narrow Special Enrollment Periods

The Centers for Medicare and Medicaid Services (CMS) is expected to provide guidance in the near future that will narrow and clarify special enrollmentperiods (SEP) that consumers can use for life-changing events like marriage, birth of a child or loss of other health coverage.

Insurers and state officials have been concerned by the proliferation of SEPs because they have argued that consumers are gaming the system.

Jan. 28 Deadline for Work Group to Present Findings on Opioid Guideline

A panel appointed on Jan. 7 has three weeks to review the Centers for Disease Control and Prevention’s (CDC) draft guideline for prescribing opioids forchronic pain — as well as all of the relevant public comments. It will present its findings to the National Center for Injury Prevention and Control’sBoard of Scientific Counselors on Jan. 28. CDC received nearly 2,000 comments before the Jan. 13 deadline, including input from patients and pain advocatesconcerned about limited access to painkillers. NIH hasn’t released a publications date, but the restricted timeline for the panel’s review suggests thatCDC will move quickly. CDC regards overprescribing as a major part of the epidemic.

Hospitals File Suit Over New Medicare Reimbursements

More than 50 hospitals have challenged the U.S. Department of Health and Human Services’ (HHS) changes to how hospital stays are reimbursed under Medicare.On Jan. 8, the hospitals filed a suit against HHS Secretary Sylvia Burwell in the U.S. District Court for the District of Columbia — the case is Asante Rouge Valley Medical Center et al. v. Sylvia Burwell.

The hospitals want a federal judge to remove the 0.2 percent cut in Medicare payments for inpatient care, stating that it was made without sufficientopportunity for public comment. Along with the cut, the Centers for Medicare and Medicaid Services (CMS) said it would require reimbursement at inpatientrates for patient hospital stays that last over “two midnights.” CMS estimated that this would create an increase of ~40,000 inpatient stays, which couldbe offset by the 0.2 percent cut. The hospitals argue that there are a variety of scenarios in which a patient is treated in the hospital and the ruledoesn’t explain how to handle all of them. The suit also says CMS assumes that hospitals will always bill stays that span two midnights as inpatient, butthis cannot occur unless a doctor expects their patient would need to stay that long. Without this proper documentation, hospitals will not want to billMedicare because of the likelihood of rejection.

There have been many attempts by hospitals across the country to block the rule’s implementation since its announcement. In response to a consolidatedaction filed by the Shands Jacksonville Medical Center, CMS explained its methodology for the 0.2 percent cut but admitted it was too conservative in itsestimation of the increase in hospital admissions. CMS will accept comments on the rule and expects a final notice by March 18.

CMS Announces New Participants in Medicare Accountable Care Organization (ACO) Initiatives

On Jan. 11, the Centers for Medicare and Medicaid Services (CMS) announced 121 new participants in Medicare Accountable Care Organization (ACO) initiativesdesigned to improve the care patients receive in the health care system and to lower costs. ACOs are now in 49 states and the District of Columbia.

ACOs were created to change the incentives for how medical care is paid for in the U.S., moving away from a system that rewards the quantity of services toone that rewards the quality of health outcomes. Doctors and hospitals coordinate to develop and execute a plan for patient care and share information toput the patient at the center of the health care delivery system. ACOs are paid by the success of the treatment administered, not by the quantity ofservices.

In 2014, ACOs had a combined total net program savings of $411 million for 333 Medicare Shared Savings Program (Shared Savings Program or SSP) ACOs and 20Pioneer ACOs. Based on 2014 quality and financial performance results for Shared Savings Program ACOs that started the program in 2012, 2013 and 2014,those that reported in both 2013 and 2014 improved on 27 of the 33 quality measures, including patients’ ratings of clinicians’ communication,beneficiaries’ rating of their doctors, screening for tobacco use and cessation, screening for high blood pressure, and Electronic Health Record use.Shared Savings Program ACOs also outperformed group practices, reporting quality on 18 out of 22 measures.

CMS also announced that providers and hospitals have signed up to join new types of ACOs, which in addition to being paid for positive patient outcomeswill also receive penalties for negative ones. With new participants in the Shared Savings Program (SSP), the Next Generation ACO Model, Pioneer ACO Modeland the Comprehensive ESRD Care Model, there will now be:

  • Nearly 8.9 million beneficiaries served;
  • A total of 477 ACOs across the various initiatives; and
  • 64 ACOs in a risk-bearing track, including SSP, Pioneer ACO Model, Next Generation ACO Model and Comprehensive ESRD Care Model.

Just 9 of 19 Pioneer ACOs renewed their participation in that program, and within the Shared Savings Program, 22 providers will participate in the moreaggressive Tracks 2 or 3. Another 39 SSP ACOs will participate in the new ACO investment model.

For more information on the Next Generation ACO Model, please visit theNext Generation ACO Model web page.

For the Shared Savings Program, visitthe Medicare Shared Savings Program web page.

For more information on the ACO Investment Model (AIM), please visit theACO Investment Model web page.

Additional ACO fact sheets are available at:

  1. Fact Sheet – NGACO
  2. Fact Sheet MSSP
  3. Fact Sheet AIM

Preventive Services Task Force Publishes Final Breast Cancer Screening Recommendations

On Jan. 11, the U.S. Preventive Services Task Force published its final breast cancer screening recommendations. This update is in line with earlier draft recommendations stating womenshould begin routine mammograms later and get them less frequently. The USPSTF recommendations will not affect insurance coverage of mammograms until 2018.

The final recommendations advise biennial mammogram screenings for women aged 50 to 74 and that women prior to age 50 should make individual decisions onwhether to start screening — they should weigh the benefits and harms of biennial screening. The panel notes that for women in their 40s, the likelihood ofbenefiting from screening mammography is less than for older women and the potential harms are greater.

The USPSTF gave a C recommendation for women under 50 — this means that insurers must provide the service depending on individual circumstances. Insurersmust pay for preventive care with an A or B recommendation under the health law. The task force said there is not sufficient evidence to make a coveragerecommendation for using 3-D mammography to screen for breast cancer. Because the task force did not make a recommendation on 3-D mammography, plans do nothave to cover that service.

Since the recommendations first came out in 2009, they have gained support from groups including the American Cancer Society.

CMS Launches Medicare Drug Spending Dashboard

The Centers for Medicare and Medicaid Services (CMS) released a new online dashboard with information on prescription drugs for Medicare Parts B and D withhigh spending on a per user basis, with high spending for the program overall and with high unit cost increases in recent years. CMS hopes that this datawill contribute to the sharing of information about drug spending and elevate the discussion around the rising costs of drugs. To access the Medicare DrugSpending Dashboards, click here.

Task Force to Examine Cybersecurity Challenges in Health Sector

As mandated by theCybersecurityAct of 2015, the U.S. Department of Health and Human Services (HHS) must create a task forcewithin 90 days of enactment to examine information-sharing and other cybersecurity challenges in the health sector. The task force is meant to complement,not to duplicate, ongoing efforts to apply the federal framework of cybersecurity standards to the health industry. HHS is also required to establish a“common set of voluntary, consensus-based, and industry-led guidelines, best practices, methodologies, procedures, and processes that” reduce cybersecurityrisks.

HHS must consult with the National Institute of Standards and Technology (NIST), which created the 2014 framework of cybersecurity standards for allcritical infrastructure sectors. The goal of the task force is to create collaboration between NIST, HHS and the private sector. This cybersecuritylanguage was drafted by Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Lamar Alexander (R-TN) and ranking member Patty Murray(D-WA). The task force has one year to complete its work under the new law.

Medicaid Stakeholders Make Recommendations Regarding CMS’s T-MSIS

Medicaid stakeholders made a series of recommendations to states regarding the Centers for Medicare and Medicaid Services’ (CMS) Transformed MedicaidStatistical Information System (T-MSIS). Under T-MSIS, CMS is attempting to establish a detailed national database of Medicaid and Children’s HealthInsurance Program information. The goal of T-MSIS is to improve the way states submit operational data about beneficiaries, providers and claims. However,CMS’s slow progress in improving this program made the Office of the Inspector General’s (OIG) list of top 25 unimplemented recommendations in March 2015.

In response to a request from the Senate Finance Committee for public input on improving Medicaid reporting requirements, the National Association ofMedicaid Directors (NAMD) recommended the establishment of a formal governance board that gives states more involvement in the program — this would helpincrease communication, create more realistic expectations for timelines and state resources, clarify the extent of state Medicaid data required forreporting and policymaking, and prioritize T-MSIS data uses. NAMD also suggested the streamlining of Medicaid’s reporting requirements and updating the CMSstate Medicaid manual, among other things.

The Medicaid and CHIP Payment and Access Commission (MACPAC) said that CMS expects T-MSIS to be ready by the end of the year — however, it has failed tomeet previous deadlines. MACPAC said T-MSIS will help with reliability by documenting source data from states and processes for each data element, and thatit will increase the number of data elements.

The American Health Care Association (AHCA) said issues with missing or inaccurate data make MSIS an inadequate resource for national Medicaid programintegrity analyses. The Affordable Care Act (ACA) created a provision to result in a transition from MSIS to T-MSIS, but AHCA has concerns that the programis lacking an updated strategy and a deadline for national implementation.

The White House Announces New Medicaid Expansion Proposal

On Jan. 14, the White House announced a new proposal to states that haven’t expanded Medicaid: those states can have three years of full federal funding ofnewly eligible beneficiaries whenever they join. President Obama is including the proposal in his 2017 budget. However, Congress would have to pass thisinitiative.

The White House’s announcement called upon the 19 states that have yet to expand Medicaid: Alabama, Florida, Georgia, Idaho, Kansas, Maine, Mississippi,Missouri, Nebraska, North Carolina, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Wisconsin and Wyoming. More than 5 millionuninsured people fall in this resulting coverage gap — 1.3 million in Texas alone — according to the Kaiser Family Foundation.

Consolidated Appropriations Act Modifies Inpatient Hospital Payment Rate

Section 601 of the recently passed Consolidated Appropriations Act of 2016 modifies the payment calculation for operating costs of inpatient hospitalservices of Puerto Rico hospitals for discharges on or after Jan. 1, 2016.

The Centers for Medicare and Medicaid Services (CMS) is revising the Inpatient Prospective Payment System (IPPS) FY 2016 Pricer software to reflect thisnew payment calculation requirement. The amount of the payment for the operating costs of inpatient hospital services on or after Jan. 1, 2016, will bebased on 0 percent of the applicable Puerto Rico percentage and 100 percent of the applicable federal percentage. Also, the IPPS Pricer will includeconforming changes to various FY 2016 IPPS operating rates and factors that result from the application of the new payment calculation requirement. CMSwill incorporate the revised IPPS rates into the Long-Term Care Hospital (LTCH) Pricer because they are used for certain LTCH claim payments.

CMS will implement the IPPS and LTCH Pricers on April 4, 2016, to allow time for development and testing. Medicare Administrative Contractors (MACs) willreprocess IPPS inpatient claims from Puerto Rico and other IPPS hospitals with a discharge date beginning Jan. 1, 2016. MACs will also reprocess LTCHclaims on or after this date due to the impact of the change. CMS expects to have claims reprocessed by June 30, 2016.

3. State Activities

California: Gov. Brown Releases 2017 State Budget

California Gov. Jerry Brown’s 2017 budget proposes the continued implementation of thestate’s Coordinated Care Initiative — a major piece of which is the federal demonstration to improve care for dual-eligibles. However, the state’s programfaces significant challenges — California’s share of Medicare and Medicaid savings is 25 to 30 percent rather than 50 percent; one of the eight counties isno longer participating; and more than 100,000 people were exempted.

Idaho: Gov. Otter Proposes Medicaid Expansion Alternative

On Jan. 7, Idaho Gov. Butch Otter said he wants to use money from cigarette and tobacco taxes to fund a new health care program separate from theAffordable Care Act’s (ACA) Medicaid expansion. The plan would cost $30 million a year and give 78,000 people access to clinics for routine visits. Theplan would not cover specialty care, hospitalization or certain prescriptions. This proposal comes as a task force to the governor recommended expandingMedicaid.

Kentucky: Gov. Bevin Announces Dismantling of Kynect Exchange

Kentucky Gov. Matt Bevin wrote a letter notifying the Centers for Medicare and Medicaid Services (CMS) that the state is dismantling the “Kynect” exchangeand planning to transition to the Federal Exchange. Federal rules require that a state notify officials at least 12 months before ceasing exchangeoperations.

This will be the first time a state ends a functional state-based marketplace in exchange for the Federal Exchange. As of Sept. 30, there were 87,000people enrolled in coverage through the exchange.

Louisiana: Newly Elected Gov. Edwards Issues Order to Expand Medicaid

On Jan. 11, Democrat John Bel Edwards was sworn in as Governor of Louisiana. On his second day in office, Edwards signed an executive order to expandMedicaid coverage under the Affordable Care Act (ACA) — he hopes to have expansion go into effect by July. The administration estimates this will extendcoverage to 193,000 people in the state.

Minnesota: Health Care Finance Task Force ACA Report to Come Soon

Minnesota’s Health Care Finance Task Force is expected to release its report on ways to build upon the Affordable Care Act (ACA) — by possibly pursuing aSection 1332 waiver or options under Medicaid 1115 waivers, among other things. The report could also shed some light on the future of Minnesota’sstate-based exchange, which has experienced technical and enrollment setbacks.

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