Washington Healthcare Update

February 29, 2016

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This Week:The House and Senate were out for Presidents’ Day recess… The Senate to vote on FDA Commissioner nominee Califf after 5:30 today… Medicare Advantagerates announced.

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress

House of Representatives

House Budget Committee Delays Budget Markup

In an effort to prevent birth defects in the Hispanic population, abipartisan group of 42 House lawmakers is asking the U.S. Food and DrugAdministration (FDA) to speed up its decision on whether to permit folicacid to be added to tortillas. “Preventable neural tube defects (NTDs)continue to occur in the United States, particularly among families in theHispanic community,” lawmakers said in a letter Feb. 23 to Stephen Ostroff, acting director of FDA. “Publichealth experts hypothesize that these higher rates are linked to the factthat corn masa flour, the staple grain in the diet of most individuals ofHispanic descent, is still not fortified with folic acid.”

A Citizens Petition filed in April 2012 called for corn masa fortificationand the lawmakers said they had been informed the FDA would respond lastmonth — FDA instead requested an additional three months to answer. FDA hasconcerns about whether folic acid would remain chemically stable in cornmasa flour during the manufacturing process, like it is in wheat flour.

House Lawmakers Call for FDA Approval of Corn Masa Fortification

In an effort to prevent birth defects in the Hispanic population, a bipartisan group of 42 House lawmakers is asking the U.S. Food and Drug Administration(FDA) to speed up its decision on whether to permit folic acid to be added to tortillas. “Preventable neural tube defects (NTDs) continue to occur in theUnited States, particularly among families in the Hispanic community,” lawmakers said in a letter Feb. 23 to Stephen Ostroff, acting director of FDA. “Public healthexperts hypothesize that these higher rates are linked to the fact that corn masa flour, the staple grain in the diet of most individuals of Hispanicdescent, is still not fortified with folic acid.”

A Citizens Petition filed in April 2012 called for corn masa fortification and the lawmakers said they had been informed the FDA would respond last month —FDA instead requested an additional three months to answer. FDA has concerns about whether folic acid would remain chemically stable in corn masa flourduring the manufacturing process, like it is in wheat flour.

Since the FDA authorized fortification of wheat and other types of flour in 1996, the rate of neural tube defects has been reduced by 27 percent, accordingto the Centers for Disease Control and Prevention (CDC). The lawmakers argue that it is critical for childbearing women in the Hispanic American communityto have the same access to this intervention for preventing birth defects in the United States.


Senate Finance Committee Focuses on Lock-In Bill Addressing Opioid Epidemic

On Feb. 23, the Senate Finance Committee held a hearing to examine the opioid abuseepidemic and its effect on Medicare and the child welfare system. Committee Chair Orrin Hatch (R-UT) said he wants to pass opioid-abuse deterrentlegislation, but community pharmacists oppose the bill’s central provision, and Democrats want additional emergency funding to deal with the opioid crisis.

The hearing focused on a bill, the Stopping Medication Abuse and Protecting Seniors Act (S. 1913), by Sen. Patrick Toomey (R-PA), that would lock at-riskMedicare beneficiaries into a single prescriber and a single pharmacy for opioid prescriptions. It would also encourage insurers, Part D plans andphysicians to help beneficiaries get substance-abuse treatment.

“Nearly all Medicaid programs and private payers have such a prescription drug review and restriction, or ‘lock-in,’ program. I look forward to hearingmore today about the success of these programs in Medicaid and how the Toomey-Portman bill would have a similar impact in Medicare,” Hatch said in hisopening statement.

The National Governors Association (NGA) and Pew Charitable Trusts have also said that the lock-in policy has worked well in Medicaid and commercial plansand should be taken up by Medicare. NGA recommended requiring prescribers to register with their state Prescription Drug Monitoring Program — this includesdatabases in each state that monitor prescribing and dispensing of controlled substances.

The National Community Pharmacists Association (NCPA) opposes the bill’s central provision. Pharmacists argue that the Centers for Medicare and MedicaidServices (CMS) should be the sole entity administering lock-in programs, not Part D sponsors. CMS oversight is better because a lot of drug plan sponsorscontract with retail pharmacy chains, which creates a conflict of interest. And, unlike Toomey’s bill, Medicaid lock-in programs allow beneficiaries tochoose in-network prescribers and pharmacies. The legislation would also allow plans to change prescribers or pharmacies if it is decided that eitherentity contributes to abuse or diversion.

In his opening statement, Hatch lauded the Comprehensive Addiction and Recovery Act (CARA), which he voted for in the Senate Judiciary Committee. The bill,by Sen. Sheldon Whitehouse (D-RI), would authorize the Attorney General to award grants to address the opioid abuse and heroin use crisis.

Australia Makes Effort to Quell U.S. Drug Companies’ Concerns Over TPP

Former and current Australian trade ministers Andrew Robb and Steven Ciobo sought to reassure U.S. pharmaceutical companies on Feb. 20 that a key provisionof the Trans-Pacific Partnership (TPP) trade agreement would provide at least eight years — and potentially as many as 12 to 17 years — of marketprotection in Australia for the new class of medicines known as biologics.

Rob and Ciobo were in the United States on a business development mission and met with U.S. Trade Representative Michael Froman and chief U.S. negotiatorfor the TPP Barbara Weisel. U.S. pharmaceutical companies wanted 12 years of data protection for biologics in the TPP agreement, arguing they need thattime to recoup the cost of developing the complex medicines. The monopoly on the data bars the U.S. Food and Drug Administration (FDA) from sharing thedata with other manufacturers for 12 years. However, the agreement settled upon last October allows TPP countries to give either eight years of dataprotection or five years of protection along with measures that give at least three more years of market safeguards for the medicines.

Senator Hatch (R-UT) is skeptical whether the “five-plus” option (which Australia and most other TPP countries are expected to choose) really gives morethan five years of protection. Froman is asking TPP countries to help explain to Congress how the two options both give strong levels of intellectualproperty protection. Australia’s track record in approving biosimilars shows the original manufacturer has a much longer monopoly, according to Robb.However, U.S. pharmaceutical companies are still concerned that the TPP agreement is not establishing a strong enough international standard for biologicsprotection, despite Robb and Ciobo’s comments.

2. Administration

CMS Updates Phone Instructions for Eligible Professionals in FAQ #2639

The Centers for Medicare and Medicaid Services (CMS) recently updated an FAQ that provides information on hospital-based eligible professionals’eligibility to receive incentive payments from the Medicare and Medicaid EHR Incentive Programs. FAQ #2639 includes new instructions for EPs — highlightedin bold text below — who would like to contact the EHR information center about their hospital-based status.

FAQ #2639:Are physicians who practice in hospital-based ambulatory clinics eligible to receive Medicare or Medicaid electronic health record (EHR) incentivepayments?

A hospital-based eligible professional (EP) is defined as an EP who furnishes 90 percent or more of his/her services in either the inpatient or emergencydepartment of a hospital. Hospital-based EPs do not qualify for Medicare or Medicaid EHR incentive payments.

If you are a new EP and need to determine your hospital-based status, contact the EHR information center at (888) 734-6433. Choose option 1 for the EHR Incentive Programs, then choose option 4 in the interactive voice response system (IVR). You will need your NationalProvider Identifier (NPI) and the last five digits of your Tax Identification Number (TIN). If you are an existing EP, review and resubmit yourregistration on the Registration and Attestation website to determine your hospital-basedstatus.

CMS Releases Medicare Fee-For-Service Provider and Supplier Lists

On Feb. 22, the Centers for Medicare and Medicaid Services (CMS) — as part of its efforts to improve care delivery, data sharing and transparency — released data sets regarding theavailability and use of services provided to Medicare beneficiaries by ground ambulance suppliers and home health agencies, as well as a list of Medicarefee-for-service (FFS) providers and suppliers currently approved to bill Medicare.

The Affordable Care Act (ACA) provided tools to improve CMS’s screening of providers and suppliers for potential fraud when they enroll. A GovernmentAccountability Office (GAO) report recently found areas where CMS could improve its Provider Enrollment Chain and Ownership System (PECOS), which verifiesprovider and supplier practice locations and physician licensure statuses.

The first data file CMS released is called the Public Provider Enrollment file and includes information on providers and suppliers, nationwide, who areapproved to bill Medicare. The data is taken directly from PECOS and is updated quarterly. The second is an extension of the Enrollment MoratoriaAuthority. CMS recently extended the temporary enrollment moratoria on new ground ambulance suppliers and home health agency sub-units and branch locationsin the Medicare, Medicaid and Children’s Health Insurance Programs (CHIP) for an additional six months in seven geographic locations. These provisions wereauthorized by the ACA to reduce fraud, waste and abuse while ensuring that patient access to care is not interrupted.

The Moratoria Provider Services and Utilization Data Tool was created using ground ambulance and home health agency paid claims data that resides in CMSsystems for Medicare fee-for-service beneficiaries. The data provides the number of Medicare providers and suppliers servicing a geographic region,identifies moratoria regions at the state and county levels and identifies the number of people with Medicare benefits who use a specific health service inthat region. The tool can help CMS to determine which geographic and health service areas might be considered for a moratorium on new provider and supplierenrollments.

The enrollment moratoria extension, along with these new provider and supplier data tools, shows that the potential for fraud, waste and abuse continues toexist in these areas, according to CMS.

The data can be found here.

Insurance Industry Asks CMS for “Good Faith” Compliance For Cost-Sharing Reduction Reconciliation

The insurance industry has asked the Centers for Medicare and Medicaid Services (CMS) to apply a “good faith” compliance standard to plans that are gettingready to reconcile two years’ worth of cost-sharing reduction (CSR) payments beginning April 1. Industry wants CMS to streamline the process and avoidrequiring plans to submit unnecessary data. The request was made in response to CMS’s draft manual for reconciliationof advance payment of CSR reductions that was published on Jan. 15.

Cost-sharing reductions must be available to enrollees who earn between 100 percent and 250 percent of the federal poverty level and who enroll in a silverplan through the marketplace, or to Native Americans who are enrolled in any metal level plan through the marketplace. The payments are used to lowerout-of-pocket costs, thus increasing the actuarial value of the plan. Qualified health plan (QHP) issuers must notify the Secretary of Health and HumanServices (HHS) of CSRs provided on behalf of eligible enrollees. Additionally, “periodic timely” payments equal to the value of those reductions arerequired to be sent to issuers. CSR payments can be made in advance and reconciled with actual claims.

The initial submission will include data for plan years 2014 and 2015, but the information for each year will be filed separately. The submission windowwill open April 1 and close April 30. CMS chose to delay the process in order to improve accuracy of the payments. It also said it would allow issuers toswitch from a simplified reconciliation methodology to the standard one at any time before sending in data.

In its comments on the draft manual, America’s Health Insurance Plans (AHIP) asked CMS to adopt a compliance standard for the reconciliation process sothat issuers who make a good faith effort to abide by the requirements do not get penalized. The group asked that CMS include the good faith standard inthe final manual and in the final Notice of Benefit and Payment Parameters for 2017.

Industry is also concerned about the short timeline and asks that CMS streamline the process so that only minimal data elements are required. It is likelythat CMS will not have a final draft ready until March 15.

CMS Administrator Slavitt Introduces 2016 Priorities

On Feb. 23, Acting CMS Administrator Andy Slavitt introduced the agency’s three main priorities for 2016: 1) continuing to build a market attractive toconsumers and health plans; 2) ensuring market rules are fair and promote rate stability; and 3) using the marketplace as a stepping stone to what he callsa “fully retail” health care system. Speaking at a National Association of Health Underwriters conference, Slavitt also announced that CMS will releasemore changes to special enrollment periods later in the week and stakeholders will have the opportunity to provide their input.

At the conference, Slavitt noted that CMS and insurers are on the same page. He said CMS thinks “it is critical … to enforce the integrity of the SpecialEnrollment eligibility process so that it serves those consumers who are eligible for them, not those who want to wait to buy insurance until they’resick.” He noted that Special Enrollment Periods (SEPs) are important for consumers who lose employer-sponsored coverage or have another qualifying event.CMS will reduce the number of SEPs available and overhaul the process to ensure that they meet their intended purpose.

Slavitt also reiterated CMS’s commitment to making sure risk adjustment continues to work as intended and improves based on recent data and accounts fornew trends that emerge (i.e., higher-cost drugs). In preparation for a public risk adjustment conference on March 31, CMS is going to release its newestrisk adjustment white paper, which will outline topics it is looking at. He added that the conference will bring together market participants, actuariesand stakeholders to review the methodology in order to build in changes based on the first years of experience. He also added that CMS will send out earlyestimates of health plan specific risk adjustment calculations to better inform care management approaches, network strategy and prices.

Finally, Slavitt pointed to the HHS announcement that it will pay up to $7.7 billion in reinsurance payments for 2015 — the reinsurance program paid out$7.9 billion for 2014.

To see Acting Administrator Slavitt’s full speech, click here.

To see specifics on the new special enrollment confirmation process, click here.

CMS Issues Federal Funding Methodology for Basic Health Program, Years 2017 and 2018

On Feb. 26, the Centers for Medicare and Medicaid Services (CMS) issued a final notice establishing the methodology for determining federal funding for theBasic Health Program (BHP) in years 2017 and 2018. The BHP gives states the option to establish a health benefits coverage program for low-incomeindividuals as an alternative to Health Insurance Marketplace coverage under the Affordable Care Act (ACA). This notice is substantially the same as thenotice for program year 2016.

Click hereto see the final notice.

3. State Activities

Iowa: CMS Approves State Medicaid Managed Care

On Feb. 23, the Centers for Medicare and Medicaid Services (CMS) approved an April 1, 2016, start date for Iowa’s transition to Medicaid managed care. IowaGov. Terry Branstad had asked that the waiver take effect Jan. 1, but CMS indicated that some key requirements had not yet been met by the state. Thelargest concerns were with adequate provider networks. CMS identified 16 action items and asked that Iowa demonstrate progress in those areas. Although thestate preferred a start date of March 1, CMS said an April 1 date gives additional time for Iowa to make progress toward a smooth transition, includingcompleting provider contracts and training case managers. The managed care proposal has garnered significant opposition in the state along with nationalattention.

Nevada: OIG Report Finds Nevada Misallocated Funds to Establishment Grants

A report from the Office of Inspector General (OIG) found Nevada’s health insuranceexchange illegally used $893,464 in establishment grant money for costs that should have gone to the Medicaid program over three years. Nevada redirectedthe funds back to the marketplace, but exchange officials and the OIG continue to be at odds over whether CMS guidance allowed the original allocation.

The Silver State Health Insurance Exchange’s executive director, in his response to the report, maintained the original funding decision was appropriateand the methodology was approved by CMS. However, OIG found that Nevada lacks the internal controls necessary to ensure costs are properly allocated.

The report provided four recommendations for the exchange: 1) refund $893,464 to CMS or work with CMS to resolve the amounts misallocated to theestablishment grants; 2) work with CMS on a new cost allocation methodology to ensure that costs claimed after the audit period are allocated correctly; 3)develop a written policy that explains how to perform cost allocations and emphasizes the necessity to use updated data when available; and 4) strengthenstaff oversight to ensure the application of updated data to properly allocate costs.

Although it did not concur with the first recommendation, the Nevada Exchange resolved the issue by transferring the requested funds to the exchange. TheExchange agreed with all other recommendations and will move toward implementing them. Acting CMS Administrator Andy Slavitt wrote in a November 2015letter that Nevada last updated its cost allocation procedure in April 2015 based on real data, therefore complying with federal guidance.

Several other states — including Arkansas, Oregon, Maryland, Massachusetts and Washington state — are being watched by CMS and OIG regarding their use ofestablishment grants.

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.

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.

CMS Issues Proposed Rule Expanding Access to Medicare Claims Data

The Centers for Medicare and Medicaid Services (CMS) issued aproposed rule entitled “Medicare Program: Expanding Uses of Medicare Data byQualified Entities.” The rule would expand access to Medicare information bypermitting certain organizations to buy and share claims data. Created underObamacare, Medicare’s qualified entity program allows providers, employers andothers access to Medicare data to analyze the performance of providers andsuppliers. The rule aims to help qualified entities make business decisions thatreduce costs and improve quality of care. These changes were mandated in theMedicare Access and CHIP Reauthorization Act and CMS thinks the expansion ofdata sharing will stir more interest in the program. If the proposal isfinalized, CMS estimates the number of qualified entities will go from 13 to 20.Comments will be accepted on the proposed rule until 5 p.m. on March 29, 2016.

CMS Releases Proposed Updates to Medicare Advantage and Part D Programs

On Feb. 19, the Centers for Medicare and Medicaid Services (CMS) released proposed updates to the Medicare Advantage (MA) and Part D programs for nextyear. The updates target high drug costs and the opioid abuse epidemic. CMS’s call letter encourages plans to notifypatients about drugs that are added to formularies in the middle of the year, such as generics or other newly approved drugs, which could provide bettervalue than existing options. It also aims to add a link from the Medicare Plan Finder website to theMedicare Drug Spending Dashboardby 2017. CMS is proposing for Part D plans to implement edits to prevent opioid overutilization at the point of sale, and says it will not approve benefitdesigns that hinder access to medication-assisted treatment through overly restrictive utilization management strategies or high cost-sharing. Aboutone-third of enrollees are in Part D plans with quality rankings of at least four stars, compared to 27 percent in 2009. Comments must be submitted byMarch 4 and the proposal will be finalized April 4.

CMS Releases Proposed Rule for Provider Enrollment Process

On Feb. 25, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule to implement additional provider enrollment provisions of theAffordable Care Act (ACA) to help make sure that entities and individuals who pose risks to the Medicare program are kept out of it or removed for extendedperiods. This rule is part of CMS’s effort to prevent questionable providers and suppliers from entering the Medicare program.

If finalized, the regulations would allow CMS to remove or prevent enrollment of those who try to circumvent enrollment requirements through name andidentity changes or through inter-provider relationships. It will also address vulnerabilities such as when providers and suppliers avoid paying theirMedicare debts by reenrolling as a different entity.

Major provisions of the proposed rule include:

  • Disclosure of Affiliations: Would require health care providers and suppliers to report affiliations with entities and individuals that: (1) currently have uncollected debt to Medicare, Medicaid or CHIP; (2) have been or are subject to a payment suspension under a federal health care program or subject to an Office of Inspector General (OIG) exclusion; or (3) have had their Medicare, Medicaid or CHIP enrollment denied or revoked. CMS could deny or revoke the provider’s or supplier’s Medicare, Medicaid or CHIP enrollment if CMS determines that the affiliation poses an undue risk of fraud, waste or abuse.
  • Different Name, Numerical Identifier or Business Identity: CMS could deny or revoke a provider’s or supplier’s Medicare enrollment if CMS determines that the provider or supplier is currently revoked under a different name, numerical identifier or business identity.
  • Abusive Ordering/Certifying: Would allow CMS to revoke a physician’s or eligible professional’s Medicare enrollment if he or she has a pattern or practice of ordering, certifying, referring or prescribing Medicare Part A or B services, items or drugs that is abusive, represents a threat to the health and safety of Medicare beneficiaries or otherwise fails to meet Medicare requirements.
  • Increasing Medicare Program Re-enrollment Bars: Would improve protection of the Medicare Trust Funds and