Washington Healthcare Update

May 23, 2016

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This Week:Zika funding debated…Labor Department releases final overtime rule…Part B demo still being discussed.

1. Courts

2. Congress

House of Representatives


3. Administration

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Courts

Supreme Court Sends Birth Control Case to Lower Courts

The Supreme Court told the Obama administration and religious nonprofits challenging the Obamacare birth control coverage requirement to find a solution inthe lower courts. In an unsigned opinion issued May 16, the court sent cases backto federal appeals courts with instructions for the parties to try harder to work things out. The opinion said the court expresses no view on the merits ofthe cases. At issue is the extent to which religiously affiliated employers need to participate in the requirement for most employer health plans toprovide no-cost contraception for women. The Supreme Court asked the lower courts to find a solution that allows religious institutions to avoid providingbirth control while maintaining Obamacare coverage protections.

The White House is pleased with the decision, according to press secretary Josh Earnest. He also said the White House is still concerned with Republicanopposition to confirming Supreme Court nominee Merrick Garland, but that an additional justice probably wouldn’t have caused a different result.

Lawsuit Against Obamacare’s Grandmothered Plans Rejected Again

A lawsuit challenging the Obama administration’s decision to allow plans that do not meet the Affordable Care Act’s (ACA) requirements to stay in place hasbeen rejected by the courts once again. The U.S. Court of Appeals for the District of Columbia Circuit upheld a lower court’s finding that the plaintiffcould not show it had been harmed by the administration’s policy on transitional health plans.

The American Freedom Law Center argued that the policy ignores federal law and was responsible for a 57 percent increase in its premiums at the end of2014. However, thecourt’s opinion notes that they have not demonstrated that they have standing because they failed to show thatthe increase in their premiums results from HHS’s transitional policy.

HHS initially allowed these so-called “grandmothered” plans to stay in place for one year, but ultimately extended the policy through 2017.

ACEP Suing HHS Over Out-of-Network Payments

The American College of Emergency Physicians (ACEP) is suing the U.S. Department of Health and Human Services (HHS), arguing that a provision of theAffordable Care Act (ACA) allows insurers to underpay for out-of-network emergency medical services. The suit — filed May 12 in the U.S District Courtfor the District of Columbia — comes after ACEP spent years urging HHS and the Labor and Treasury Departments to change the regulations.

The ACA established that in these cases, insurers must pay the greatest of three costs: the insurers’ in-network amount, the Medicare amount or theusual, customary and reasonable amount (UCR).

According to ACEP, the highest of the three amounts is almost always the UCR, but insurers have historically understated and prevented publicverification of these amounts.

ACEP said it met with CMS numerous times to establish a way to verify UCR amounts in the years following the proposed rule, but had no success. CMSfinalized the rule in November 2015. ACEP charges that the rule should be invalidated because the administration failed to follow the AdministrativeProcedures Act by not listening to the group.

The group argues that the final rule leaves ACEP’s members who are out-of-network emergency physicians with no minimum payment protection in statesthat prohibit balance billing.


House of Representatives

House Approves Zika Funding Bill, White House Threatens a Veto

On May 19, the House approved the $622 million Republican-backed Zika funding bill. The legislation offers less than one-third of the $1.9 billion requestin emergency funding that the administration has said is vital to respond to the virus. It does not include new money and instead draws on $352 million inunspent Ebola funds and another $270 million in HHS’s administrative budget. USAID would receive $119 million, BARDA would get $103 million, NIH would get$230 million and the CDC would receive $170 million for fiscal year 2016.

The measure next must be reconciled with a compromise Zika bill the Senate passed May 17, which would provide about $1.1 billion — roughly two-thirds whatthe Obama administration wants.

The White House had previously threatened to veto the bill if it gained approval in the House. The Office of Management and Budget says the bill is“woefully inadequate” to provide the support that public health experts say is necessary. OMB said advisers would urge President Obama to veto the bill.

To see the bill, click here.

CJS Subcommittee Approves House Bill Funding Opioid Programs

On May 18, the Appropriations subcommittee on Commerce, Justice, Science (CJS) and Related Agencies approved by voice vote the fiscal year 2017 CJSAppropriations bill. The legislation includes $103 million in grant programs to support opioid abuse reduction.

To see the bill, click here.

For a related press release, click here.

Energy and Commerce Committee Reiterates Request for Reinsurance Documents

In a letter to HHS Secretary Sylvia Mathews Burwell and CMS Acting Administrator Andy Slavitt, Republican House legislators expressed their frustration atthe administration’s delay in complying with document requests.

On March 23, the Energy and Commerce Committee requested all documents and communications relating to the administration’s decision “to prioritize paymentsto insurance companies under the Transitional Reinsurance Program.” At issue is whether CMS is improperly diverting $3.5 billion that should go to thefederal treasury to reinsurance payments for health plans competing in the Obamacare marketplaces. The committee threatened to subpoena the documents ifHHS and CMS fail to comply with the request by May 30.

To read the letter, click here.

House Energy and Commerce Committee Holds Hearing on Medicare Part B Demo

On May 17, the House Energy and Commerce Health Subcommittee held a hearing on the Medicare Part B demonstration. The hearing split along party lines, withRepublicans arguing that the initiative makes it harder for patients to access certain prescription drugs and Democrats supporting the initiative butsuggesting improvements. Patrick Conway, CMS’s chief medical officer, has said that CMS is open to making changes before the proposal is implemented.However, officials have also maintained that patients’ access to treatments covered by Part B would not be affected by the proposal.

To view the hearing, click here.

House Leadership Names CARA Conference Representatives

In a House and Senate conference committee on the Comprehensive Addiction and Recovery Act (CARA), 21 Republicans and 14 Democrats have been named torepresent the House. Majority Leader Kevin McCarthy will lead the Republicans and Energy and Commerce Committee Ranking Member Frank Pallone will lead theDemocrats. The Senate has not named conferees yet. A final bill on the legislation to address the opioid epidemic is expected to go to the president’s deskin July.

Reps. Tiberi, McDermott Introduce Bill to Help Hospitals and Improve Patient Care

On May 18, House Ways and Means health subcommittee chairman Pat Tiberi (R-OH) and ranking member Jim McDermott (D-WA) introduced the Helping HospitalsImprove Patient Care Act, bipartisan legislation to advance reforms for hospitals and other Medicare providers. The legislation is intended to supportcurrent efforts to develop outpatient facilities and allow hospitals to treat more low-income and cancer patients.

The bill would exempt hospitals that had a binding written agreement to construct an outpatient department on Nov. 2, 2015. To get the exemption, hospitalswould also have to attest to meeting outpatient department criteria. CMS does not require attestation for hospitals, but the HHS Inspector General isexpected to release a report that is critical of that voluntary policy. However, those “mid-build” facilities still would be paid the lower doctor-officerates next year, and then rates would revert to outpatient department levels in 2018.

The bill also includes an exemption for facilities that had attested to meeting outpatient department criteria by Dec. 2, 2015. Unlike mid-buildfacilities, those facilities would not have their rates temporarily cut by Medicare in 2017.

Hospital-based cancer centers also would be exempt from the site-neutral pay cuts, but they would have to pay their way with other pay cuts to theirsector.

The package also includes several other bills that the committee considered last year:

  • The Medicare Crosswalk Hospital Code Development Act (H.R. 3291), by House Speaker Paul Ryan (R-WI), which aims to improve understanding of how Medicare allocates resources for 10 surgical services that are provided in both inpatient and outpatient settings.
  • The Establishing Beneficiary Equity in the Hospital Readmission Program Act (H.R.1343), which accounts for the poor health of low-income beneficiaries for whom hospitals care when determining how many readmissions hospitals are allowed before Medicare penalizes them.
  • The Rural Community Hospital Demonstration Extension Act (S. 607), which would extend that demo from 5 years to 10 years.
  • LTCH Technical Correction Act (H.R. 2580).
  • Electronic Health Fairness Act of 2015 (H.R. 887), which calls for exempting ambulatory surgical centers from electronic health record meaningful use penalties.
  • Medicare Advantage Coverage Transparency Act (H.R. 2505), which would make CMS submit data on Medicare Part A, B, C and D enrollment by ZIP Code.
  • Seniors’ Health Care Plan Protection Act (H.R. 2506), which would require CMS to revise the Medicare Advantage risk adjustment system to account for beneficiaries’ chronic conditions. It also would require CMS to evaluate other potential changes to the risk adjustment system.

For more information, click here.


Moderate Senate Democrats Request Changes to Medicare Part B Demo

In a May 13 letter to CMS Acting Administrator Andy Slavitt, a group of moderate Senate Democrats asked that CMS change the size and scope of the MedicarePart B demonstration and make alterations to ensure that seniors’ care is protected. The Democrats also raised concerns about patient access and ruraldoctors. To see the full letter,click here.

Senate Approves Zika Funding

On May 17, the Senate approved a bipartisan deal to partially fund the Obama administration’s request for emergency funding to combat the Zika virus —signing off on $1.1 billion, which is not as much as Obama requested, but almost twice as much as the House is proposing. The Senate approved the funds ona procedural vote and turned down two related measures — one would fully fund the administration’s $1.9 billion request and another smaller package wouldhave been paid for by cutting Obamacare.

Sen. Marco Rubio (R-FL) — who cosponsored the bill to approve the full $1.9 billion — said he thinks the Senate will have to revisit the Zika funding issueat some point, especially if an outbreak occurs. Rubio’s home state of Florida already has over 100 of the 500 confirmed travel-related cases in the UnitedStates.

Sen. Shaheen Asks WHO to Evaluate Zika Threat to Olympics in Brazil

Sen. Jeanne Shaheen (D-NH) wrote a letter to WHO directorMargaret Chan expressing her concerns about the potential for the Olympics to greatly accelerate the global outbreak of the Zika virus. There will be anestimated 10,000 athletes from as many as 200 countries, and 500,000 spectators from around the world traveling to Brazil for the event. Shaheen said it is“imperative” that WHO commission a comprehensive evaluation of the public health risks associated with the Olympics being held in Brazil this August.

Senate Appropriations Subcommittee Gives Funding Increase to FDA

The Senate Appropriations Agriculture-FDA subcommitteeapproveda bill on May 17 that provides a small increase – $11.9 million – to the U.S. Food and Drug Administration’s (FDA) discretionary budget for medical productsafety activities. FDA received $2.759 billion total in discretionary funding. The full committee will markup the legislation on Thursday.

3. Administration

Valeant Announces Discounts for Price-Hiked Drugs

On May 16, Valeant Pharmaceuticals announceddiscounts for the price-spiked drugs Nitropress and Isuprel. Hospitals will be eligible for a minimum 10 percent rebate and up to 40 percent discountsbased on volume purchased of the two heart drugs. Valeant also said there will be no future price increases of the drugs or reductions in the discounts.Democratic Rep. Elijah Cummings was not pleased with Valeant’s move: “A year ago, Valeant increased prices on these same two drugs by 525 percent and 212percent, so slightly trimming their massive price increases now still forces our nation’s hospitals to pay millions of dollars more each year,” he said ina news release.

EEOC Lowers Wellness Program Financial Penalty for Employee Spouses

On May 16, the Equal Employment Opportunity Commission (EEOC) lowered the maximum financial penalty employers may use to pressure employee spouses intoparticipating in a workplace wellness program under the Genetic Information Nondiscrimination Act (GINA).

The final GINA rule, which applies only to employee spouses,limits the penalty to “30 percent of the total cost of self-only coverage under the group health plan.” This is different than the proposed rule, which limitedthe penalty to 30 percent of the cost of — more expensive — family coverage.

Under EEOC’s final ADA rule — the Americans with DisabilitiesAct — an employer can similarly impose a penalty of up to 30 percent of self-only coverage, which in this case is unchanged from theproposed rule.

According to an EEOC spokesperson, the penalties under both rules apply regardless of whether participation in a certain health plan is required toparticipate in a wellness program.

The ADA rule also clarifies that the law’s “safe harbor provision,” which allows insurers to use employee medical information to evaluate the cost ofinsurance, does not apply to workplace wellness programs.

Labor Department Releases Final Overtime Rule

On May 18, the White House finalized the Labor Department’s rule extending overtime protections to more than 4 millionworkers. The rule, which will take effect Dec. 1, will raise the salary threshold under which virtually all workers are guaranteed time-and-a-half pay to$47,476 — this is more than twice the current threshold of $23,660.

The threshold is tied to the 40th wage percentile for full-time salaried workers in the lowest income region and will be updated every three years.

The Labor Department said that the new salary threshold would apply to post-doctoral fellows who do not primarily teach.

The Labor Department also issued a non-enforcement policy forcertain health care providers that are primarily Medicaid-funded, which will last until March 2019.

To see the White House fact sheet, click here.

CMS Releases Final Rule on Medicare Secondary Payer Web Portal

On May 13, the Centers for Medicare and Medicaid Services (CMS) released itsfinal ruledetailing processes and a timeline for expansion of the Medicare Secondary Payer Web portal.

The agency published an interim final rule in September 2013 with a comment period meant to create a timeline to expand the functionalities of theMedicare Secondary Payer portal. It provided for the development of a multifactor authentication process to allow certain users other thanbeneficiaries to access CMS’s Medicare Secondary Payer conditional payment amounts and claims details through the agency’s web portal. It also saidthat CMS would allow users to notify the agency through the web portal that a case, like workers’ compensation, is approaching a settlement that couldaffect what Medicare would owe for health care as a secondary payer. The interim rule would also allow certain users to get conditional payment summarystatements and amounts before reaching a settlement, and make sure that disputes over what medical costs are related to a settlement are addressedwithin 11 business days of CMS’s receipt of dispute documentation.

Some stakeholders had complained that CMS used the interim final rule with a comment period to implement these provisions of the SMART Act, but theagency says in the final rule that the short time frame specified in the law — nine months — left the agency with little choice.

In the final rule, CMS removes the definition of Medicare Secondary Payer conditional payment information — it says doing so will prevent redundancyand confusion. CMS also clarifies that a claim may be disputed only once.

The rule also includes new language clarifying that information about a settlement must be submitted to CMS within 30 days of such a settlement’s beingreached for the agency to be bound to any final conditional payment amount provided through the web portal. CMS also clarifies that a final conditionalpayment amount may be requested at any time after a recovery case has been posted on the web portal.

CMS Releases Monitoring Data Showing Adequacy of New Payment Amounts for DMEPOS in Non-Competitively Bid Areas

On May 17, the Centers for Medicare and Medicaid Services (CMS) released monitoring data showing that suppliers in all areas where the adjusted DurableMedical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) fee schedule rates have been implemented have continued to accept these adjusted rates aspayment in full, suggesting that the adjusted fee schedule rates continue to be more than adequate in covering the costs of furnishing the DMEPOS items inall areas.

A good indicator of whether payment amounts are sufficient is the percentage of claims that suppliers submit as accepting assignment, meaning that thesuppliers accept the Medicare fee schedule amount as payment in full. Suppliers in non-competitive bidding areas are not required to accept assignment ofMedicare claims for DMEPOS items in accordance with the Medicare statute. This means that if an adjusted fee schedule amount is not sufficient to cover thecosts of furnishing the item to a particular beneficiary in the supplier’s service area because of where the beneficiary lives or for other reasons, thesupplier can decide not to accept assignment of the claim and can collect the extra money to cover their costs directly from the beneficiary. This paymentfrom the beneficiary would be in addition to the coinsurance and deductible required by all beneficiaries for DMEPOS items.

This monitoring data compares the rate of assignment of claims for DMEPOS items for the first four months of 2015 that were paid at the unadjusted feeschedule rates versus the rate of assignment of claims for the same items that were paid at the new partially adjusted rates for the first four months of2016.

The data are broken out for eight geographic regions of the contiguous United States, as well as non-contiguous areas (i.e., Alaska, Hawaii, Puerto Rico,Virgin Islands, etc., combined). The data are also broken out to compare the rate of assignment of claims for DMEPOS items furnished in rural areas versusnon-rural areas. The rate of assignment of claims in 2016 continues to be very high overall in both rural and non-rural areas. Finally, the data is brokenout for several different categories of DMEPOS items.

Overall, there was no change in the rate of assignment for the first four months in 2016 (99.88 percent) compared to the first four months in 2015 (99.87percent). There was also no change in the rate of assignment in rural areas in 2016 (99.90 percent) compared to 2015 (99.90 percent), while the rate ofassignment in non-contiguous areas changed only slightly in 2016 (99.81 percent) compared to 2015 (99.90 percent).

CMS said it will post additional data on assignment rates, access to items and services, and health outcomes in the near future.

To see the monitoring data, click here.

CMS Considering Overlapping Demonstrations  

CMS Deputy Administrator for Innovation and Quality Patrick Conway saidthe agency is considering how certain Center for Medicare and MedicaidInnovation models and demonstrations might work together.

The agency has historically set up demonstrations so that providers can participate in only one, and Conway said at a recent briefing that the agencyhas set it up that way so providers aren’t paid double for savings. CMS recently said that providers that participate in the Comprehensive Primary CarePlus (CPC+) demonstration cannot participate in both that and other Medicare shared savings programs or demonstrations “as the intent of the CPC+performance-based incentive payment and shared savings is the same.” This includes both Accountable Care Organizations and the Independence at Homedemonstration.

However, the agency also says in a Frequently Asked Questions document that providers participating in CPC+ can participate in certain otherdemonstrations like Model 2 and Model 3 of the bundled payments program, the oncology care model, the Million Hearts model and the Accountable HealthCommunities Model at the same time. Some analysts say this is one of the first times CMS has been explicit about allowing certain demonstrations tocross over.

Conway said the agency is getting feedback from stakeholders that would like to see the demonstrations cross over, and is actively thinking aboutallowing models to work together and how to adjust the parameters of certain demonstrations to incentivize players to work together.

Some analysts say it makes sense for CMS to allow providers to participate in complementary demonstrations as long as they aren’t paid twice for thesame actions, but others say that distortions created by overlapping models could be problematic.

4. State Activities

California: Covered California Moving Fast to Fix Unintentional Switches into Medi-Cal

Covered California is speeding up its response to a systemic problem that is transferring some pregnant women on private insurance plans into Medi-Calwithout notice or consent. Last month, at least 1,900 women in Covered California plans were automatically and wrongly transferred into Medi-Cal once theytold the agency they were pregnant. Some women reported losing their doctors or experiencing delays receiving care. Covered California said the issue wasdue to a computer glitch and that it will be resolved by September.

Minnesota: Minnesota DHS Hired Psychiatrists with Disciplinary Histories

The Minnesota Department of Human Services (DHS) has come under fire for knowingly hiring at least three psychiatrists with histories of allegedmalpractice and patient abuse. An investigation of psychiatrists hired by the state revealed that at least one had previously been sued by a patient forsexual harassment and another inappropriately prescribed psychiatric medication for patients. The Minnesota Board of Medical Practice declared onepsychiatrist’s treatment of several p