Washington Healthcare Update

May 9, 2016

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This Week:House efforts to pass a budget fall on deaf ears…House starts appropriations after May 15…CMS releases final rule on fire safety requirements for health care facilities and FDA releases long-awaited rule on e-cigarettes.

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress

House of Representatives

Over 240 House Members Call on CMS to Withdraw Proposed Medicare Part B Demo

On May 2, a bipartisan group of House lawmakerscalled onthe Centers for Medicare and Medicaid Services (CMS) to withdraw its proposal to modify its reimbursement rate for Medicare Part B drugs. Theletter was orchestrated by House Budget Committee Chairman Tom Price (R-GA), John Shimkus (R-IL) and Charles Boustany (R-LA)—itmarks the first time any Democrats have publicly asked for the whole demonstration to be withdrawn.

Republican leadership signed the letter, including Ways and Means Committee Chairman Kevin Brady (R-TX), Majority Whip Steve Scalise (R-LA) and Energy andCommerce Committee Chairman Fred Upton (R-MI). Although the group is mostly Republican, a handful of Democrats gave their support as well.

On April 27, Senate Finance Committee Republicans sent aletter requesting that CMS withdraw the demo, while committeeDemocrats asked for significant changes. House Democrats are working on their ownletter outlining proposed changes.

The demonstration will start by testing a lower reimbursement rate for high-cost drugs administered under Part B—CMS aims to start the project this summer.

AARP released its ownletter in support of the demonstration immediately after the Houseletter went public. Some groups supporting AARPinclude Aetna, Blue Shield of California and Kaiser Permanente.

House Republicans Question CMS’s Standardized Plans s

House Republicans questioned CMS’s decision to add standardized plans to the federal exchange—which was finalized in the 2017 Notice of Benefit and PaymentParameters earlier this year—in a letter on April 29.

The new “Simple Choice” plans are standardized health plans with uniform deductibles, out-of-pocket limits and standard copayments that insurers have theoption of offering on the federal marketplace. Consumers can also choose to see only the simple choice plans to compare them. Insurance companies—includingthe insurance lobby America’s Health Insurance Plans—argue that the standardized plans will inhibit insurers’ ability to promote more economical plans.

Thirty members of the House Ways and Means and Energy and Commerce committees signed theletter to CMS Acting Administrator Andy Slavitt, includingChairmen Reps. Kevin Brady (R-TX) and Fred Upton (R-MI).

The lawmakers asked CMS to describe the process of developing the standardized plan benchmarks and how CMS will certify QHPs that meet those requirements,how CMS will show those plans on the exchange, whether CMS will consider making QHP certification contingent on meeting standardization requirements andwhether CMS worked with the U.S. Treasury Department to check whether standardized plans would conflict with requirements for high-deductible health plansand other products. They request a response from CMS no later than May 20.

House Committees Subpoenaed HHS Over Cost-Sharing Program

The House Ways and Means and Energy and Commerce Committees subpoenaed the Department of Health and Human Services and the Office of Management and Budgetfor documents relating to the development of the cost-sharing reduction program, the central piece of the House’s lawsuit against the Obama administration.

Congressional Republicans say that the Affordable Care Act did not authorize funding for the program and that the administration has been illegally payingsubsidies to insurance companies without an appropriation.

The administration counters that the program was funded by the health law.

House Republicans Efforts to Pass a Budget Stall

House Republicans will not bring a budget to the floor next week. Republican leaders were trying to convince conservative hard-liners to support a $1.07trillion budget by promising to move a separate deficit reduction package.

After May 15, the House can begin to move appropriations bills without a new budget in place. It appears the House Appropriations Committee will be readyor near ready to bring bills to the floor by then. The Appropriations Committee is writing spending measures that adhere to the $1.07 trilliontopline level, to the unhappiness of conservatives who have been successful in blocking a budget but will have a harder time blocking higher spending,especially if Democrats ultimately provide the needed votes to pass appropriations bills.


Bipartisan legislation introduced by Reps. Billy Long (R-MO) and Doris Matsui (D-CA) would establish a chief information security officer at HHS. The billis based on the House Energy and Commerce Committee’s findings of data-security risks at the department, according to the bill’s sponsors. This bill isintended to address data-security vulnerabilities that were identified following a breach at FDA in 2013.

Ways and Means Health Subcommittee to Hold Hearing on MACRA

Ways and Means Committee Health Subcommittee Chairman Pat Tiberi announced a hearing on the implementation of Medicare’s physician payment law for nextWednesday, May 11.


Senate, House Legislators Supporting Legislation to Reduce Overprescription of Opioids

Senate and House legislators from both parties are supporting legislation to detach patient views on pain management from Medicare payments to hospitals.The bills would reverse an Obamacare provision that links the results of patient satisfaction surveys to how much hospitals are paid, which has somestakeholders worried that hospitals will have a perverse incentive to overprescribe opioids. Hospitals with high scores on the survey get a greater shareof nearly $500 million in Medicare reimbursements as a result.

Sen. Pat Toomey (R-PA) is one of the latest lawmakers to sign onto bipartisan legislation—sponsored by Sen. Ron Johnson (R-WI)—that would reverse theObamacare provision. Companion legislation in the House—introduced by Reps. Alex Mooney (R-WV) and Ann Kuster (D-NH)—would also detach the HospitalConsumer Assessment of Healthcare Providers and Systems (HCAHPS) survey’s pain management questions from CMS’s hospital incentive payments.

Johnson’s bill—the Promoting Responsible Opioid Prescribing Act—would remove the results of the Affordable Care Act-mandated pain questions from Medicarereimbursement in order to alleviate the pressure on physicians to overprescribe opioids.

The American Medical Association, American Hospital Association, American Osteopathic Association and Physicians for Responsible Opioid Prescribing areamong the groups endorsing the legislation.

On April 13, stakeholders asked CMS to remove questions on pain and pain management from the survey.

2. Administration

CMS Scales Back Quality Star Ratings Initiative to Five-State Pilot

On April 29, the Centers for Medicare and Medicaid Services (CMS) announced it will be scaling back the federal exchange market’s quality star ratinginitiative from a full-fledged national program to a five-state pilot for the 2017 plan year. The pilot will include plans in Michigan, Ohio, Pennsylvania,Virginia and Wisconsin; these states were chosen because of their large number of health plans participating.

“As with all quality ratings, they simplify a lot of information and in some cases, consumers would be wise to go beyond what they see here,” KevinCounihan and Patrick Conway said in a CMS blog post. “We’ll continue testing consumer use and experience and improve the display of quality ratinginformation. We also have provided the opportunity for state-based Marketplaces to choose to display quality rating information on their websites in the2017 Open Enrollment period.”

To see the CMS blog post,click here.

CMS Announces Requirements and Registration for MIPS Mobile Challenge

On May 2, the Centers for Medicare and Medicaid Services (CMS) announced a challenge to educate physicians and others aboutthe new Merit-Based Incentive Payment System (MIPS) program for Medicare payments. In a Federal Register notice, CMS wrote that physicians have expressed adesire to have more real-time information and access to assistance in order to successfully report to MIPS’s reporting programs. CMS estimates there arepotentially 1.2 million MIPS-eligible clinicians.

The challenge will have two phases: The first is the creation of an initial mobile platform that will feature innovative ways of transmitting educationalmaterials or fostering collaboration amongst users to give meaningful education. Participants will codesign with users to understand their needs toinfluence their submission. The second is the development and functional integration of any features from phase I and user experience testing. The deadlinefor phase I is set at July 15 and the phase II deadline is Sept. 30, with a grand prize awarded on Oct. 15. CMS wants to use a mobile platform such as awebsite or application to educate physicians.

CMS Releases Final Rule on Fire Safety Requirements for Certain Health Care Facilities

On May 3, the Centers for Medicare and Medicaid Services (CMS) announced a final rule toupdate health care facilities’ fire protection guidelines to improve protections from fire for all Medicare beneficiaries in facilities.

The new guidelines apply to hospitals; long-term care (LTC) facilities; critical access hospitals (CAHs); inpatient hospice facilities; programs forall-inclusive care for the elderly (PACE); religious nonmedical health care institutions (RNHCI); ambulatory surgical centers (ASCs); and intermediate carefacilities for individuals with intellectual disabilities (ICF-IID).

The rule adopts updated provisions of the National Fire Protection Association’s (NFPA) 2012 edition of the Life Safety Code (LSC) as well as provisions ofthe NFPA’s 2012 edition of the Health Care Facilities Code.

The provisions in the final rule cover construction, protection and operational features designed to provide safety for Medicare beneficiaries from fire,smoke and panic. Some of the main requirements laid out in the rule include:

  • Health care facilities located in buildings that are taller than 75 feet are required to install automatic sprinkler systems within 12 years after the rule’s effective date.
  • Health care facilities are required to have a fire watch or building evacuation if their sprinkler systems are out of service for more than 10 hours.
  • The provisions offer LTC facilities greater flexibility in what they can place in corridors. Currently, they cannot include benches or other seating areas because of fire code requirements limiting potential barriers to firefighters. Moving forward, LTC facilities will be able to include more home-like items such as fixed seating in the corridor for resting and certain decorations in patient rooms (such as pictures and other items of home décor).
  • Fireplaces will be permitted in smoke compartments without a one-hour firewall rating, which makes a facility more home-like for residents.
  • Cooking facilities now may have an opening to the hallway corridor. This will permit residents of inpatient facilities such as nursing homes to make food for themselves or others if they choose to, and, if the patient does decide to make food, facility staff is able to provide supervision of the patient.
  • For ASCs, all doors to hazardous areas must be self-closing or must close automatically. Additionally, alcohol-based hand rub dispensers now may be placed in corridors to allow for easier access.

ICF-IIDs have expanded sprinkler requirements to include habitable areas, closets, roofed porches, balconies and decks in new facilities. All attics musthave a sprinkler system if they are used for living purposes, storage or housing of fuel-fired equipment. If they are not used for these purposes, atticsmay have heat detection systems instead. Hazardous areas are to be separated from other parts of the building by smoke partitions. Existing ICF-IIDs mustinclude certain fire alarm features when they choose to update their fire alarm systems.

The LSC is a compilation of fire safety requirements for new and existing buildings and is updated every three years. Currently, CMS is using the 2000edition of the LSC to survey for health and safety compliance. With this rule, CMS adopted provisions of the 2012 edition of the LSC and provisions of the2012 edition of the Health Care Facilities Code to bring its requirements more up to date. In addition, the 2012 edition of the NFPA’s Health CareFacilities Code gives more detailed provisions specific to different types of health care facilities.

Health care providers affected by this rule must comply with all regulations within 60 days of the publication date of the final rule, which was May 4,2016.

GSA to Embed Obama Technology Unit Into Its Permanent Operations

The General Services Administration (GSA) is moving to embed President Barack Obama’s technology unit 18F into itsoperations in order to ensure the long-term survival of the unit once Obama leaves office.

The Obama administration created 18F after the HealthCare.gov disaster, with the goal of inserting cutting-edge technology into the federal government. Theunit helps federal agencies build, buy and share efficient and easy-to-use digital services with a model that mimics the growing tech industry rather thancontractor-dominated Washington.

18F will eventually become GSA’s third major branch. Called the Technology Transformation Service, the unit will join GSA’s real estate and federalacquisition wings. Increasing it to the level of a full GSA service will most likely give it additional staying power.

The Technology Transformation Service will also house the Presidential Innovation Fellows Program, launched in 2012 to attract private-sector technologiststo spend a year in public service. In August, Obama issued an executive ordermaking the program permanent.

18F currently has more than 180 coders, designers and other technologists on staff to help other federal agencies both build and buy better digitalproducts.

FDA Releases Final Rule Regulating E-Cigarettes

The FDA will regulate e-cigarettes the same as cigarettes and other tobacco products under a final rule released May 5. The rule was first proposed twoyears ago.

The rule requires that all tobacco products brought to the market after Feb. 15, 2007—which includes all e-cigarettes—must submit applications to FDA andshow they don’t pose any new health risks beyond products that were on the market at that time.

The final tobacco “deeming” rule grandfathers the date in the Tobacco Control Act of 2009, which gave FDA its expanded authority over tobacco. Thee-cigarette lobby had been fighting for the date to be moved up so that the products on the market now would be exempt.

Companies that introduced tobacco products since then will have two years to submit an application to the agency demonstrating they pose no new risks.Smaller players in the e-cigarette market say this requirement will put them out of business.

Lobbyists for premium cigars had lobbied hard for an exemption from the new policy, but they also were given no quarter in the final rule.


FDA Advisory Panel Recommends Mandating Education for Doctors Prescribing Opioids  

The majority of the Food and Drug Administration’s pain and drug safety advisers on May 4 recommended mandating continuing education for doctors whoprescribe opioids. This action rejects the American Medical Association calls for such requirements to be voluntary.

The committee, which held no formal vote on the issue, also urged FDA to update its education materials by incorporating the new CDC guidelines on opioidprescribing and other material on alternative pain treatments. The committee suggested education be required for doctors seeking DEA registration toprescribe controlled substances.

The committee also urged the agency to update its risk evaluation and mitigation strategy to include shorter-acting opioids, amid criticismfrom some members that opioid manufacturers have too much influence over the strategy.

The FDA can require manufacturers to follow the strategies to ensure the benefits of their drugs outweigh the risks.

Only about 20 percent of doctors who prescribe long-acting opioids have taken continuing education courses since the current risk evaluation and mitigationstrategy was implemented in 2012.

The committee voted 30-0 to urge FDA to make changes to its entire opioid drug safety program. Some of the advisers said there was little evidence thecurrent safety plan has had any effect, adding that it needed a greater emphasis on the drugs’ risks.

FDA Urged to Ensure Interoperability Standards Align With Cybersecurity Standards

The College of Healthcare Information Management Executives (CHIME) in an April 28letter to FDA Commissioner Robert Califf calls on FDA to better alignstandards for medical device interoperability with cybersecurity control standards for such devices.

CHIME also calls for greater alignment of FDA risk-management principles for cybersecurity and privacy with other federal government standards andrequirements, including Health Insurance Portability and Accountability Act and Health Information Technology for Economic and Clinical Health Actrequirements. CHIME argues that medical devices are currently being released without “basic security requirements” in place such as encryption, accesscontrol mechanisms, and access restriction and password protections. FDA should mandate that medical device manufacturers conduct cybersecurity and privacyrisk assessments annually, CHIME stated.

This letter comes as FDA revises its draft guidance on medical device cybersecurity standards. The administration closed a public comment period on the newguidance for medical device cybersecurity and is now reviewing comments before issuing a final guide.

3. State Activities

Colorado: Campaign Opposing Single-Payer Ballot Gains Supporters

According to financial filings with the Colorado Secretary of State, the industry-backed campaign to derail Colorado’s single-payer ballot initiativeraised roughly $1 million in the first four months of 2016—Anthem donated half of the funding. Coloradans for Coloradans—a campaign that is leadingopposition to the measure—received contributions between Jan. 1 and April 27. It spent almost $320,000, which left $684,000 at the end of the reportingperiod.

Ballot initiative supporters raised $153,700 through the ColoradoCareYES Committee. The committee had roughly $57,500 left after spending over $123,000.Supporters maintain the proposal would insure people Obamacare has not yet covered, and that state residents would save $6 billion per year compared to thecurrent system.

The single-payer ballot—Amendment 69—would create a universal health care system called ColoradoCare and impose new taxes to raise $25 billion in the first year ofoperations. ColoradoCare would have an annual budget of $38 billion. Its revenues would be higher than companies such as American Express, McDonald’s andNike, according to an analysis by the ColoradoHealth Institute.

To see the list of companies that signed on to block Amendment 69,click here.

Hawaii: State Lawmakers Propose Legislation to Let Psychologists Prescribe Drugs

State lawmakers are aiming to make Hawaii one of a handful of states that lets psychologists prescribe medication in hopes of increasing access to mentalhealth services. The legislation would allow psychologists to prescribe drugs if they meet specific requirements, including 400 hours of training,supervision of 100 patients and passing an exam. The Hawaii Medical Service Association and the Hawaii Association of Professional Nurses support the billbut the state’s medical association and the American Psychiatric Association oppose it. Hawaii would join Illinois, Louisiana and New Mexico as states thatgive this prescribing authority if Gov. David Ige signs the legislation.

Iowa: Iowa Sues Federal Government Over Failed Co-Op

On May 3, Iowa sued the federal government to get back millions of dollars it argues are owed to CoOportunity Health—the nonprofit insurance startup seededwith Obamacare loan dollars that collapsed after incurring big losses. CoOportunity Health received $147 million in startup loans under the Affordable CareAct (ACA). It shut down in December 2014 after losing $163 million that year.

The state’s insurance commissioner argues that the federal government still owes the co-op $130 million in risk corridor funds. The program initially paidout only 12.6 percent of anticipated payments to insurers because Republicans imposed restrictions.

Overall, the lawsuit seeks to invalidate claims by the Obama administration that the federal government should have “super priority” status in recoveringfunds it’s owed by CoOportunity Health.

Louisiana: State Hospitals Question Gov. Edwards’ Medicaid Expansion Savings Projections

Two hospitals are questioning Louisiana Gov. John Bel Edward’s projections about how much money Medicaid expansion will save the state. Officials at theUniversity Medical Center in New Orleans and Lafayette General Health said that if the savings are less than projected, it could cause a midyear shortfalland funding cuts to the hospitals. A key component of the savings projection is how much Louisiana hospitals will reduce uncompensated care—Edwards’administration originally included a 10.5 percent savings but officials later increased that to 25 percent. The Edwards administration increased itssavings projections from $104 million to $184 million in the first year of expansion.

Oregon: Oracle’s Effort to Kill Oregon Lawsuit Succeeds So Far

An effort by Oracle to kill a lawsuit from Oregon over the state’s failed exchange—Cover Oregon—has survived an initial court challenge. In January, Oraclefiled a lawsuit claiming that aides to Gov. Kate Brown agreed to settle the state’s racketeering and fraud case against the company for $25 million inOracle products and services. However, Oregon Attorney General Ellen Rosenblum argued that she had sole authority to settle the suit, not the governor.Marion County Circuit Judge Sean Armstrong rejected Rosenblum’s argument that only the attorney general could settle the case. This ruling means that thecase will continue, which could signal bad news for Gov. Brown.

Pennsylvania: Department of Human Services Awards Contracts to Managed Care Organizations

The Department of Human Services (DHS) will negotiate contracts with eight managed care organizations (MCOs) for Pennsylvania’s Medicaid program. Thecontracts will deliver physical health services to Pennsylvanians through HealthChoices, the state’s mandatory Medicaid managed care program since 1997.The new three-year contracts with the insurers will begin in 2017 and 30 percent of provider payments will be tied to value or outcomes. This, according toofficials, will result in over $6 billion in funds for outcome- or value-based options that would have otherwise been spent on traditional fee-for-servicearrangements. Participating insurers include Aetna, Centene, Geisinger Health Plan, Health Partners, UPMC, UnitedHealth Care and Vista.

South Dakota: Tribe Sues Federal Government Over Emergency Room Closure

A Native American tribe—the Rosebud Sioux Tribe—in South Dakota has sued the federal government over the five-month closure of the only emergency room onits reservation. The tribe wants to force federal officials to re-open the emergency room at the Indian Health Service (IHS) hospital. IHS shut down the ERin December after federal inspectors found violations that they said put patients’ lives at risk. The tribe says IHS broke the law because it did notcomply with a piece of the Indian Health Care Improvem