Washington Healthcare Update

May 2, 2016

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This Week:CMS drops Medicaid Managed Care Rule…CMS releases MACRA rule…CMS awards contracts for Competitive Bidding round 2…Congress is still working on opioid legislation…CMS pushes back deadline for states to switch from using direct SHOP enrollment to an online SHOP portal…Congress continues to focus on drug prices.

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress

House of Representatives

House Judiciary Committee Approves Opioid Legislation

On April 27, the House Judiciary Committee approved opioid legislation that will be rolled into a larger measure to be the chamber’s alternative to theSenate-approved CARA. The Comprehensive Opioid Abuse Reduction Act of 2016—HR 5046—gives states more power to address opioids than the Senate version—(S.524)—does. It allots $103 million in already appropriated funds for states to fight the epidemic. The bill establishes mental health courts as well as aveterans court program for treatment. It would train law enforcement officers how to respond to mental health and substance abuse cases involving veterans.

The committee also approved the Opioid Program Evaluation (OPEN) act to ramp up oversight, and another measure that requires a federal study on GoodSamaritan laws. Both the Senate and House bills use pre-existing funding and do not authorize new money.

The Judiciary bill is a piece of a larger House opioids package coming out of a number of different House committees, including Energy and Commerce, whichalso advanced nine bills to address the epidemic.

It is unknown how likely it will be for the two chambers to conference the bills, since their approaches are different.

To view the markup session,click here.

Republican Lawmakers Demand Documents Related to Abortion Drug From FDA

On April 25, House and Senate Republicans demanded the U.S. Food and Drug Administration (FDA) turn over documents related to its recent decision to relaxthe rules surrounding the abortion drug mifepristone. In a letter to FDA Commissioner Robert Califf, 75 Republican lawmakers wrote, “This powerful abortiondrug has been associated with serious adverse events including hemorrhaging, severe infections and even deaths of mothers who have taken it.” The lawmakersasked for all of the correspondence within the administration and with outside groups about the drug, any filed applications from the drugmaker and allsafety and study information.

For the full letter,click here.

House Energy and Commerce Democrats Held Forum on Achieving Health Equity

On April 29, House Energy and Commerce Committee Democrats in partnership with the Congressional Black Caucus (CBC), Congressional Hispanic Caucus (CHC)and Congressional Asian Pacific American Caucus (CAPAC) held aforumon achieving health equity. The forum focused on health disparities in the treatment and prevention of heart disease among racial and ethnic minorities, aswell as efforts to build a more diverse health care workforce and transform medical research to meet the needs of a diverse population. Stakeholdersrepresenting different areas of expertise on these topics participated in the forum.

Energy and Commerce Approves Opioid Bills

On April 27, the House Energy and Commerce committee approvednine bills addressing the opioid epidemic, though disagreements about funding the legislation remain. The bills, all approved by voice vote, includemeasures to expand patient access to medication-assisted treatment and allow partial fillings of opioid prescriptions. The committee approved raising thecap on the number of patients doctors can treat with medication-assisted treatment from 100 to 250 patients. Democrats failed to get amendments passed thatwould have further increased that number. Democrats also failed to pass an amendment that would give $1 billion in new mandatory funding—mostly for statesto increase their capacity to treat and prevent substance abuse.

On April 28, the committee approved three additional measures to address the epidemic. Those bills include a measure (H.R. 4586) to create state grants todevelop guidelines for health care professions dispensing opioid overdose reversal medication; a measure (H.R. 3680) authorizing $5 million for a grantprogram for co-prescribing opioid overdose reversal drugs; and a measure (H.R. 3691) reauthorizing residential treatment programs for pregnant women andpostpartum women and creating a pilot program to give grants to state substance abuse agencies.

These bills are expected to be packaged with legislation approved by the House Judiciary Committee and another bill approved by the House Education andWorkforce Committee.

To see a related press release, click here.

House Speaker Ryan Wants to End Obamacare Protection for Sick Consumers

On April 27, House Speaker Paul Ryan called for an end to Obamacare’s financial protections for people with serious medical conditions, arguing that thoseconsumers should be placed in state high-risk pools; he says this is a less expensive alternative to cover America’s sickest patients.

Ryan said existing federal policy preventing insurers from charging sick people higher rates for health coverage has increased costs for health consumerswhile undermining choice and competition. “Let’s fund risk pools at the state level to subsidize their coverage, so that they can get affordable coverage,”Ryan said in a speech to students at Georgetown University. “You dramatically lower the price for everybody else. You make health insurance so much moreaffordable, so much more competitive and open up competition.”


Senate Aging Committee Holds Hearing on Valeant Pharmaceuticals’ Business Model

On April 27, the Senate Aging Committee held a hearing on Valeant Pharmaceuticals’ business model. During the hearing, lawmakers accused the company ofgouging patients to reward investors. These accusations from Senate Republicans and Democrats came as hedge fund manager William Ackman defended thecompany’s business model and Martin Shkreli, Valeant’s outgoing CEO, express regrets for its largest price hikes.

To see the full hearing,click here.

To see a related press release,click here.

Senate Finance Committee Holds Hearing on Mental Health Issues

On April 28, the Senate Finance Committee held ahearing onmental health issues. The hearing focused on mental health issues in America and the roles the Medicaid and Medicare programs play in addressing the needsof those with behavioral and mental health issues. Together, Medicare and Medicaid finance nearly 45 percent of mental health spending in the UnitedStates, which amounted to more than $75 billion in 2014 alone.

Senate Judiciary Committee Holds Hearing on Counterfeits and Consumer Safety

On April 27, the Senate Judiciary Committee held a hearing on counterfeits and consumer safety. During the hearing, Bruce Foucart—U.S. Immigration andCustoms Enforcement’s (ICE) top intellectual property rights enforcer—told the committee that the illegal importation, distribution and sale of counterfeitproducts pose a growing threat to health and safety. Committee leadership acknowledged that counterfeiting is a worldwide problem that impacts business,presents health and safety hazards and funds criminal organizations. Members challenged the witness panel to come up with solutions to the growing problem.

To view the hearing,click here.

Wyden Introduces Bill to Cap Out-of-Pocket Costs in Medicare Part D

On April 27, Senate Finance Committee ranking member Ron Wyden introduceda bill aimed at protecting Medicare beneficiaries from highout-of-pocket costs in Medicare’s outpatient drug program. This would bring Medicare more in line with commercial payers.

The bill—the Reducing Existing Costs Associated with Pharmaceuticals for Seniors Act of 2016 (RxCAP)—would eliminate all cost sharing above the MedicarePart D annual out-of-pocket threshold, which is at $7,500. In 2013, 2.9 million people in Part D surpassed this limit and those with the highest drug costspaid an average of $2,600 above that amount, according to Wyden. The patient caps imposed by the bill are in line with those imposed on many commercialhealth plans under the Affordable Care Act, he said.

Co-sponsors of the bill include Democratic Sens. Ben Cardin (MD), Michael Bennet (CO) and Maria Cantwell (WA)

A Bipartisan Effort to Stop the Medicare Part B Demonstration

Both Republican and Democratic lawmakers are planning to ask the U.S. Department of Health and Human Services (HHS) to get rid of the proposed MedicarePart B drug demonstration, which would reduce reimbursements for high-cost drugs given in physicians’ offices and hospital outpatient centers in some partsof the U.S.

Lobbyists for providers and drugmakers are putting pressure on congressional Democrats to oppose the program as it is structured now. More than 300physician and patient advocacy groups, such as the American Medical Association and Patients Rising, are also strongly opposed to the program.

But those lawmakers are also coming under pressure from the Obama administration as it attempts to respond to the public outcry over drug prices. TheDemocrats are caught between patient groups who oppose the demonstration and the administration’s interest in making a change on drug pricing—a change thatmany Democrats called on the administration to make.

The goal of the demonstration is to reduce reimbursements, thereby reducing financial incentives for physicians to choose higher-cost drugs even when lessexpensive drugs may be just as or more effective. The drugs targeted would be intravenous medications—such as cancer treatments, injectable drugs,antibiotics, certain eye treatments and more.

House and Senate Republicans are gathering signatures for letters asking HHS to cancel the program. The letters scold the Centers for Medicare and MedicaidServices (CMS) for the policy and for the process that they say did not include the health industry, lawmakers or experts.

Both parties have concerns that these changes could disproportionately affect independent physician practices, leading them to shut down or be bought outby hospitals, thus increasing consolidation of providers.

House Democratic Leader Nancy Pelosi is advising lawmakers to sign a letter by Rep. Richard Neal (D-MA) that asks for changes to the program but would notend it completely. Neal’s letter specifies 11 policy areas that should be addressed and hints that Congress should be involved.

All 12 Democrats on the Senate Finance Committee signed their ownletter expressing concern with the program—including how itwould interact with other payment reform efforts and Medicare demonstration projects. The letter also says the program could exceed Medicare’s authorityfor a demonstration project.

2. Administration

FTC Endorses Alaska Bill to Expand Telehealth Services

For the first time, the Federal Trade Commission (FTC) has endorsed a state bill to expand telehealth services—specifically backing an Alaskan bill thatcommission staff says could incentivize competition and lower state Medicaid costs by eliminating an in-state physician requirement. “Statutory orregulatory proposals of this type are of interest to the FTC because greater use of telehealth has the potential to expand the supply of practitioners,promote competition, reduce transportation costs, and increase access to safe and cost-effective care,” Frank Dorman from FTC’s Public Affairs office said.

Under current Alaskan law, doctors licensed and located in the state can prescribe drugs without conducting a physical examination in certain cases, andthe Alaska State Medical Board cannot discipline a doctor for doing so. The bill under consideration, S.B. 74, would allow Alaskan licensed physicianslocated outside the state to also provide telehealth services and would let certain Alaskan licensed behavioral health professionals provide servicesremotely. The commission said Alaska has historically faced a provider shortage and telehealth services help to fix the problem. Also, health care costs inthe state are high partly because of insufficient competition.

The FTC also suggested the Alaska legislature add a provision saying a physician-patient relationship can be established using telehealth. Commission staffalso questioned the bill’s special requirements for behavioral telehealth. FTC’s decision to comment on the bill could mean it is becoming more involved intelehealth policy.

Andrew Bindman to Direct AHRQ

Andrew Bindman, a primary care physician and health policy researcher at the University of California at San Fransisco, will become the new director of theAgency for Healthcare Research and Quality (AHRQ) beginning May 2. He will succeed Richard Kronick, who announced his departure in February.

Bindman has experience in medicine, academia and federal policy. He was a doctor at San Francisco General Hospital and directed the UCSF CaliforniaMedicaid Research Institute and its Primary Care Research Fellowship. He was an RWJF fellow on the House Energy and Commerce Committee during the debatethat led to passage of the Affordable Care Act (ACA) and has been an adviser to both HHS and CMS.

CMS Pushes Back Deadline for States Switching to Online SHOP Portal

The Centers for Medicare and Medicaid Services (CMS) pushed back the deadline to 2019 for states to switch from using direct Small Business Health OptionsProgram (SHOP) enrollment to an online SHOP portal—the agency also clarified that states can keep their individual exchanges and still transition to thefederal SHOP platform or forgo the exchange using a state innovation waiver.

The guidance comes as SHOP exchanges nationwide continue to struggle with enrollment and finances. Right now there are four states—Hawaii, Idaho, Vermontand Oregon—that do not have the portal and qualify for the extension. State health reform officials are concerned that setting up the online marketplaceafter years of successful direct enrollment would waste money, confuse customers and pose a excess of new technological and educational hurdles.

States using direct enrollment must ensure that employers are deemed eligible for coverage through SHOP, that employees enroll in SHOP-qualified healthplans and that issuers follow all related rules and policies when enrolling new customers. States that are interested in the extension need to satisfy thatcriteria as well. State officials would also need to tell CMS how they will run the exchange after the transition.

The guidance clarifies that under the final 2017 Notice of Benefit and Payment Parameters, states can use the federal SHOP platform even if they want tokeep their state-based individual marketplaces. CMS said that if a state chooses to do so, they should inform the agency nine months before the start ofopen enrollment, submit a revised blueprint and enter into a federal platform agreement with CMS.

Hawaii is working on a 1332 waiver proposal that would eliminate SHOP because it conflicts with more comprehensive existing state law. Vermont alsofinalized a proposal that would allow the state to continue using direct enrollment, as it has done since the state exchanges launched because Vermontcould not set up a functional SHOP exchange on time. Massachusetts’ 1332 proposal, which is expected to be finalized in the coming weeks, seeks to preserveits merged market and single risk pool.

CMS Releases Medicaid Managed Care Overhaul

On April 25, CMS made public a 1,425-page final rule that is a sweeping update of Medicaid managed care requirements. This is the first time in more than adecade that CMS has made changes in the requirements. Key issues include:

IMD:The rule addresses the decades-old so-called IMD exclusion, which prohibits Medicaid from reimbursing for patients at inpatient facilities with more than16 psychiatric beds. The final rule allows states to cover the care of beneficiaries if they stay no more than 15 days in an inpatient facility thatprovides behavioral health services. Several mental health reform measures in Congress have also attempted to chip away at the law but those efforts havemostly stalled because a complete repeal would be expensive.

MLR:The rule finalized a national medical loss ratio (MLR) standard of at least 85 percent for Medicaid managed care plans. However, the agency’s standard doesnot include payment penalties if plans spend less than 85 percent of premiums on care. That differs from the Affordable Care Act’s MLR requirement, whichrequires plans to pay rebates to consumers if they fall below thresholds. CMS said “there is no statutory basis” to require Medicaid plans to pay a rebate.However, agency officials said states would be expected to take excess payments into account when setting future payment rates.

Networks:For the first time, each state must create its own network adequacy standards for private Medicaid plans. Telemedicine can play a role.

Quality rating:CMS will add a quality rating system for private Medicaid and CHIP plans; the program is expected to be similar to one utilized for Medicare Advantageplans. The agency plans to implement the rating system for Medicaid plans over five years and will seek feedback on its proposed methodology before movingahead.

Prohibit supplemental payments to providers: CMS will prohibit states from making certain supplemental payments to hospitals and other providers that serve Medicaid managed care enrollees, a movethat hospitals said was disappointing. Instead, states and Medicaid plans must transition to systems where the payment structure is linked to deliveredservices or quality, with CMS allowing a multi-year transition period.

The rule will be published May 6 in the Federal Register. To see the rule,click here.

For fact sheets on the rule, click here.

To see the implementation timeline,click here.

CMS Adds Six New Quality Measures to Nursing Home Compare

On April 27, the Centers for Medicare and Medicaid Services (CMS)announced the addition of six new quality measures toits consumer-based Nursing Home Compare website. This will be the first time CMS is including quality measures not based solely on data that isself-reported by nursing homes. The new measures are based primarily on Medicare claims data submitted by hospitals and measure the rate ofrehospitalization, emergency room use and community discharge among nursing home residents. The six measures are as follows:

  1. Percentage of short-stay residents who were successfully discharged to the community (Medicare claims and MDS-based)
  2. Percentage of short-stay residents who have had an outpatient emergency department visit (Medicare claims and MDS-based)
  3. Percentage of short-stay residents who were rehospitalized after a nursing home admission (Medicare claims and MDS-based)
  4. Percentage of short-stay residents who made improvements in function (Minimum Data Set (MDS)-based)
  5. Percentage of long-stay residents whose ability to move independently worsened (MDS-based)
  6. Percentage of long-stay residents who received an antianxiety or hypnotic medication (MDS-based)

These added measures will be reported on the Nursing Home Compare website but will not be incorporated into the methodology to compute nursing home starratings until July 2016.

To see a fact sheet,click here.

The agency says the quality measure update nearly doubles the number of short-stay measures on the public website. Nursing Home Compare has 24 qualitymeasures, including those CMS just added to the site.

CMS Issues Guidance to States on Inmate Policies

On April 28, the Centers for Medicaid and CHIP Services (CMCS) issued guidance to states on Medicaid inmate eligibility, enrollment and coverage policy.The letter with attached Questions and Answers describes how states can better facilitate access to Medicaid services for individuals transitioning fromincarceration to their communities.

The letter is availablehere.

CMS Awards Contracts for the DMEPOS Competitive Bidding Program Round 2 Recompete and National Mail-Order Recompete

On April 28, the Centers for Medicare and Medicaid Services (CMS) announced the Round 2 Recompete and national mail-order recompete contract suppliers forMedicare’s Durable Medical Equipment Prosthetics, Orthotics and Supplies (DMEPOS) Competitive Bidding program. The program has been in effect since 2011and is used as a tool in helping Medicare set appropriate payment rates for DMEPOS items, saving money for beneficiaries and taxpayers and ensuring accessto quality items.

Prior to the DMEPOS Competitive Bidding Program, Medicare paid for these DMEPOS items using a fee schedule that is generally based on historic suppliercharges from the 1980s. Numerous studies from the Department of Health and Human Services’ Office of Inspector General (HHS OIG) and the GovernmentAccountability Office (GAO) have shown these fee schedule prices to be excessive, and taxpayers and Medicare beneficiaries bear the burden of theseexcessive payments.

Under the program, DMEPOS suppliers compete to become Medicare contract suppliers by submitting bids to furnish certain items in competitive bidding areas(CBAs). After the first two years of Round 2 and the national mail-order programs (July 1, 2013 – June 30, 2015), Medicare has saved approximately $3.6billion.

The Round 2 and national mail-order program contract periods expire on June 30, 2016. Round 2 Recompete and the national mail-order recompete contractswill be effective from July 1, 2016, through Dec. 31, 2018. The national mail-order recompete for diabetes testing supplies will be implemented at the sametime as Round 2 Recompete and will include all parts of the United States, including the 50 states, the District of Columbia, Puerto Rico, the U.S. VirginIslands, Guam and American Samoa.

Competitive bidding contracts and pricing have been in place in Round 1 areas since Jan. 1, 2011, with the current Round 1 Recompete contracts and pricesbeing in place since Jan. 1, 2014. CMS is currently evaluating bids received as part of the Round 1 2017 competition, which is scheduled to be implementedon Jan. 1, 2017.

For Round 2 Recompete, CMS has executed 586 DMEPOS competitive bidding program contracts (91 percent of contracts offered). The Round 2 Recompete contractsuppliers have 2,200 locations to serve Medicare beneficiaries in these CBAs. CMS has also awarded nine national mail-order recompete contracts (100percent of contracts offered). Contract suppliers are required to meet CMS’s quality standards, meet applicable state licensure requirements and beaccredited by a CMS-approved independent accreditation organization.

A list of Round 2 Recompete and national mail-order recompete contract supplier names is availablehere.

Current contract supplier locations for each product category in a CBA can be found in the Supplier Directoryhere.

The Round 2 Recompete product categories are:

  • Enteral nutrients, equipment and supplies
  • General home equipment and related supplies and accessories
    • includes hospital beds and related accessories, group 1 and 2 support surfaces, commode chairs, patient lifts and seat lifts
  • Nebulizers and related supplies
  • Negative pressure wound therapy (NPWT) pumps and related supplies and accessories
  • Respiratory equipment and related supplies and accessories
    • includes oxygen, oxygen equipment and supplies; continuous positive airway pressure (CPAP) devices and respiratory assist devices (RADs) and related supplies and accessor