Washington Healthcare Update

August 15, 2016

Pardon Our Dust

We recently launched this new site and are still in the process of updating some of our archived content. Some details of this article may be incomplete, links may be broken, and other elements may not display properly yet. We appreciate your patience and understanding.

This Week: This issue includes a pocket guide to the presidential candidates’ health care policies.

AUTHOR’S NOTE: Due to the congressional recess, the Weekly Washington Healthcare Update is being distributed on a biweekly basis until after the Labor Day holiday. The next edition will be released on August 29, after which we will resume our regular weekly distribution schedule.

1. Congress

House of Representatives

District Work Period until after Labor Day.


District Work Period until after Labor Day.

2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

6. Other Developments

2. Administration

CMS Clarifies Medicaid Disproportionate Share Hospital Payments in Proposed Rule

The Centers for Medicare and Medicaid Services (CMS) issued a proposed rule on Aug. 12 that clarifies that Medicaid disproportionate share hospitalpayments are to be based only on uncompensated care costs for Medicaid-eligible patients who are not covered by another source. The proposal refers to anexisting rule that determines disproportionate share payments based on the total of uncompensated costs hospitals incur for treating patients who areMedicaid eligible and for whom hospitals have not received payments from Medicare or other third parties. That rule excludes payments hospitals receivefrom state or local governments for indigent patients.

For more information, click here.

CMS Proposes Changes to the ACA’s Risk Adjustment Program

On Aug.11, the Centers for Medicare and Medicaid Services (CMS) said it would propose changes to the ACA’s risk adjustment program to better adjust forhigh-cost enrollees. The agency will modify the program to absorb some of the cost for claims above a $2 million threshold, according to a blog post byKevin Counihan, the Health Insurance Marketplace CEO. The costs would be funded by insurer payments.

The permanent risk adjustment program has been criticized by smaller plans, especially nonprofit co-ops that have argued the program essentially forcesthem to subsidize larger, better-established competitors. Several co-ops have sued over the program. CMS argues that the risk adjustment program “worked asintended” in its first two years. However, the blog post acknowledges some states’ struggles with premium hikes—driven by high-cost customers—and the factthat the Affordable Care Act’s reinsurance program ends after this year.

Counihan suggests that states may want to follow in Alaska’s footsteps by establishing their own reinsurance funds to stabilize markets. Alaska set up a$55 million program to shore up its individual market, at risk of collapse because only one insurer will remain on the exchange next year. Without thefund, Alaska officials said, premiums couldn’t be raised enough to cover the sickest individuals’ medical claims.

To see the blog, click here.

CMS Updates Nursing Home Five-Star Quality Ratings

On Aug. 10, the Centers for Medicare and Medicaid Services (CMS) announced six new quality measures on the Nursing Home Compare website as part of aninitiative to broaden the amount of quality information available on that site. CMS is including five of those six new quality measures in the calculationsfor the Five-Star Quality Rating. The five measures include:

  1. Percentage of short-stay residents who were successfully discharged to the community (Medicare claims- and Minimum Data Set (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 (MDS-based)
  5. Percentage of long-stay residents whose ability to move independently worsened (MDS-based)

The sixth new quality measure, the antianxiety/hypnotic medication measure, is not incorporated into the Five-Star Quality Rating because it has beendifficult to determine appropriate nursing home benchmarks for the acceptable use of these medications.

The nursing home five-star ratings rely on health inspections, staffing and quality measures. The agency said the new measures will likely change existingnursing home ratings on the Nursing Home Compare tool.

For more information, click here.

Home-based Care Demo Saves $10 Million in Second Performance Year

The Independence at Home pilot, which provides primary care to chronically ill Medicare patients in their homes, saved over $10 million—an average of$1,010 per beneficiary—in its second performance year. Additionally, all 15 of the Independence at Home practices improved quality from the firstperformance year in at least two of the six quality measures. Four practices met the performance measures for all six quality measures.

For more information on the demonstration, click here.

CMS Announces Refinements to the Medicare Advantage Value-Based Insurance Design Model

On Aug. 10, the Centers for Medicare and Medicaid Services (CMS) Center for Medicare and Medicaid Innovation announced refinements to the design of thesecond year of the Medicare Advantage Value-Based Insurance Design (MA-VBID) model. The MA-VBID model is an opportunity for Medicare Advantage plans (MAplans), including Medicare Advantage plans offering Part D benefits (MA-PD plans), to offer clinically nuanced benefit packages aimed at improving qualityof care while also reducing costs.

In the second year of the model, beginning Jan. 1, 2018, CMS will: open the model test to new applicants; conduct the model test in three newstates—Alabama, Michigan and Texas; add rheumatoid arthritis and dementia to the clinical categories for which participants may offer benefits; makeadjustments to existing clinical categories; and change the minimum enrollment size for some MA and MA-PD plan participants.

As part of the “better care, smarter spending, healthier people” approach to improving health care delivery, CMS will test VBID in Medicare Advantage andmeasure whether structuring patient cost sharing and other health plan design elements encourages enrollees to use health care services in a way thatimproved their health and reduces costs.

The first year of the MA-VBID model will begin Jan. 1, 2017, and run for five years. CMS will announce the MA plans participating in the test’s first yearin September 2016. CMS expects to release a request for applications for the second year of the model test in the fall of 2016, and will accept proposalsfrom MA and MA-PD plans to offer VBID benefits in 2018.

In its first year, CMS will test the model in seven states: Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania and Tennessee. Beginning Jan. 1,2018, CMS will also test the model in Alabama, Michigan and Texas.

The MA-VBID model will provide flexibility for MA and MA-PD plans accepted into the model to develop clinically nuanced benefit designs for enrolleepopulations that fall within certain clinical categories.

The conditions are:

  • Diabetes
  • Chronic Obstructive Pulmonary Disease (COPD)
  • Congestive Heart Failure (CHF)
  • Patient with Past Stroke
  • Hypertension
  • Coronary Artery Disease
  • Mood Disorders
  • Rheumatoid Arthritis (starting in 2018)
  • Dementia (starting in 2018)

Eligible Applicants

The MA-VBID model test is open to all qualifying MA and MA-PD plans in the test states that submit acceptable programmatic proposals to CMS. Only certainMA and MA-PD plan types are eligible and certain restrictions apply to multi-state plans.

CMS will generally restrict the model test to plans with a minimum enrollment in the test states of 2,000 enrollees. However, beginning in 2018, an MAorganization participating in the model test with at least one plan with enrollment over 2,000 enrollees may have additional plan benefit packages (PBPs)participate with a minimum enrollee requirement of 500 enrollees; an additional plan benefit package using this lower enrollment requirement may be fromthat MA organization or other organizations with the same parent organization. CMS may also grant an exception upon request.

Additionally, plans must meet minimum quality thresholds, including: being rated by CMS at three stars or higher, not consistently low performing, not anoutlier in the CMS past performance analysis, not under sanction, and able to pass a program integrity screening.

The plan must have been offered in at least three annual coordinated election (open enrollment) periods prior to the open enrollment period for the yearfor which the plan is applying to participate. There is no cap on the total number of participating plans.

More Information and Application Process

More information about the MA-VBID model test can be found in the model’s announcements and other documents, available athttp://innovation.cms.gov/initiatives/VBID.

The announcement includes instructions for providing CMS with feedback on this model test’s design. A webinar on the MA-VBID model test will be held onAug. 25, 2016. Registration information is available on the same site.

CMS will accept applications for the second year of the MA-VBID model via a request for applications (RFA), to be released shortly. Once released,application materials will be available at:http://innovation.cms.gov/initiatives/VBID.

CMS Delays Medicare Requirement to Notify Patients of Loophole in Nursing Home Coverage

A new Medicare law that requires hospitals to notify patients when they are not formally admitted was to take effect on Aug. 6, but has been delayed. CMSdelayed the requirement at the request of the American Hospital Association (AHA). Patients can expect to start receiving these warnings in January.

Patients must be admitted for at least three days for Medicare to cover subsequent nursing home stays, but hospitals often place patients underobservation—which counts as outpatient care—rather than admitting them. Those patients then are surprised when they learn that Medicare will not pay fortheir nursing home stays, so Congress passed the NOTICE Act to require hospitals to notify patients of their status within 36 hours of being placed underobservation. Hospitals are also required to explain the implications of outpatient status on how much their treatment will cost and how it could affecteligibility for nursing home coverage. The notice must be signed by either the beneficiary, their representative or, if the beneficiary refuses to sign thenotice, hospital staff.

The final rule implementing this requirement says hospitals must notify only those patients receiving observation services as outpatients, not alloutpatients. The notice, while informing beneficiaries of their status, does not give them the right to appeal that outpatient status—however, the Centerfor Medicare Advocacy encourages beneficiaries to “take action” once they receive notice.

CMS Announces Participants in Frontier Community Health Integration Project Demo

On Aug. 4, the Centers for Medicare and Medicaid Services (CMS) announced the participants in the Frontier Community Health Integration Project (FCHIP)Demonstration, an effort to increase access to care for Medicare beneficiaries in areas of the country where access to health services can be limitedbecause of distance from providers. Ten critical access hospitals (CAHs) in Montana, Nevada and North Dakota will participate in the demonstration, whichbegins this August.

The FCHIP Demonstration, a statutory mandate launched by the CMS Innovation Center in collaboration with the Federal Office of Rural Health Policy, locatedin the Health Resources and Services Administration, will test new models of integrated, coordinated health care in the most sparsely populated ruralcounties in the nation over three years. This demonstration program will encourage the 10 CAHs to provide essential services that are often not financiallyviable in rural communities, with the goals of improving quality of care, increasing patient satisfaction in rural communities and spending health caredollars more wisely. The demonstration will provide financial incentives for care coordination activities for local CAHs to reduce unnecessary admissionsand readmissions across their networks of care.

Applications were received from CAHs in Montana, Nevada and North Dakota (although eligible, CAHs in Alaska or Wyoming did not apply).

Specifically, the demonstration aims to:

  • support the CAH and local delivery system in keeping patients within the community who might otherwise be transferred to distant providers;
  • test whether payments for certain services will enhance access to care for patients, increase the integration and coordination of care among providers, and reduce avoidable hospitalizations, admissions and transfers; and
  • test new CAH activities in three service categories: skilled nursing care, telehealth and ambulance services.

HRSA’s Federal Office of Rural Health Policy will monitor the work of the technical assistance provider, Montana Health and Research Education Foundation,and collect information on key policy challenges facing frontier providers, while CMS will test alternative payment and administrative strategies.

For more information, click here.

CMS Issues Final Hospital Inpatient IPPS and LTCH Policy and Payment Changes for FY 2017

On Aug. 2, the Centers for Medicare and Medicaid Services (CMS) issued a final rule to update fiscal year (FY) 2017 Medicare payment policies and ratesunder the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS). The final rule, which wouldapply to approximately 3,330 acute care hospitals and approximately 430 LTCHs, would affect discharges occurring on or after Oct. 1, 2016.

The IPPS pays hospitals for services provided to Medicare beneficiaries using a national base payment rate, adjusted for a number of factors that affecthospitals’ costs, including the patient’s condition and the cost of hospital labor in the hospital’s geographic area.

For a fact sheet on the rule, click here.

The final rule is available on theFederal Register.

CMS Opens Application Period for Comprehensive Primary Care Plus

On Aug. 1, the Centers for Medicare and Medicaid Services (CMS) opened the application period for practices to participate in the new nationwide primarycare model, Comprehensive Primary Care Plus (CPC+). CPC+ is a five-year primary care medical home model beginning January 2017 that will enable primarycare practices to care for their patients the way they think will deliver the best outcomes and to pay them for achieving results and improving care. CPC+is an opportunity for practices of diverse sizes, structures and ownership who are interested in qualifying for the incentive payment for AdvancedAlternative Payment Models through the proposed Quality Payment Program. CMS estimates that up to 5,000 primary care practices serving an estimated 3.5million beneficiaries could participate in the model.

CPC+ is a public-private partnership in 14 regions across the nation. CPC+ is a multi-payer model—Medicare, state Medicaid agencies and private insurancecompanies partner together to support primary care practices—so CMS selected the regions based on payer interest and coverage.

The following regions were selected for CPC+. Eligible practices in these 14 regions may apply between Aug. 1 and Sept. 15, 2016, to participate in CPC+:

  1. Arkansas: statewide
  2. Colorado: statewide
  3. Hawaii: statewide
  4. Kansas and Missouri: Greater Kansas City Region
  5. Michigan: statewide
  6. Montana: statewide
  7. New Jersey: statewide
  8. New York: North Hudson-Capital Region
  9. Ohio: statewide and Northern Kentucky Region
  10. Oklahoma: statewide
  11. Oregon: statewide
  12. Pennsylvania: Greater Philadelphia Region
  13. Rhode Island: statewide
  14. Tennessee: statewide

Practices may participate in one of two CPC+ tracks. In Track 1, CMS will pay practices a monthly fee in addition to regular Medicare fee-for-servicepayments. In Track 2, practices will receive the monthly fee, as well as a hybrid of reduced Medicare fee-for-service payments and up-front comprehensiveprimary care payments to allow greater flexibility in how practices deliver care. Practices in Track 2 will provide more comprehensive services forpatients with complex medical and behavioral health needs, including, as appropriate, a systematic assessment of their psychosocial needs and an inventoryof resources and supports to meet those needs. To promote high-quality and high-value care, practices in both tracks will also receive prospectiveperformance-based incentive payments that they will either keep or have to pay back to CMS based on their performance on quality and utilization metrics.In addition, practices that participate in CPC+ may qualify for the additional incentive payments available for the Advanced Alternative Payment Models inthe proposed Quality Payment Program beginning 2019.

For more information, click here.

HHS Shifts Funds to Zika

On Aug. 11, the Administration announced that it is moving an additional $81 million to fight the Zika virus. HHS Secretary Sylvia Mathews Burwell willtransfer $34 million within NIH and $47 million to BARDA in order to ensure that neither is forced to delay their Zika vaccine work as the fiscal yearcloses. The Administration told congressional leaders that the failure to pass a Zika emergency supplemental has forced the Administration to choosebetween delaying critical vaccine development work and raiding other worthy government programs to temporarily avoid these delays.

NIAID director Anthony Fauci said at the National Press Club that funding Zika this way is not the best way to pay for science. “All of that is extremelydamaging to the biomedical enterprise,” he said. “We’re taking money away from cancer, diabetes, all of those kinds of things.”

CDC Director Publishes Article on Zika Progress

CDC director Tom Frieden and colleagues published an article in JAMA Current about takeaways from this year’s fight against the Zika virus, including lessons on prevention, testing and mosquito cleanup. Forexample, researchers have developed new laboratory algorithms, including the need to test urine specimens for weeks after symptoms appear.

Overall, Frieden’s article is a clarification of what we still do not know. CDC is still not certain how the disease leads to some complications, includinga neurological condition called Guillain-Barre syndrome. The center is not even sure how much awareness of the virus exists in places like Puerto Rico, dueto widespread misinformation. It is also very difficult for providers to stay informed amidst rapidly changing guidance.

Frieden and his colleagues urge action in Puerto Rico, vigilance within southern parts of the U.S. and continued caution among pregnant women, theirpartners and health care professionals regarding travel and mosquito protection.

By Aug. 4, nearly 1,700 cases of travel-associated Zika infection, including 479 pregnant women, had been reported in the U.S, according to the article.

HRSA Proposes Rules for Dispute Resolution Process in 340B Program

The Health Resources and Services Administration (HRSA) issued a proposed rule on Aug. 11 that would establish a binding administrative dispute resolutionprocess when drug companies or health care organizations have disagreements regarding the 340B drug discount program.

The process would help resolve claims by health care facilities that they are being overcharged by drug companies, as well as claims by the companies thata health care facility is violating the prohibition on diversion of 340B drugs to patients who are not being served by covered health facilities orduplicate discounts. Drug companies have to conduct an audit before initiating a dispute.

The 340B drug program requires drug companies to offer steep discounts on outpatient medicines to federally qualified health centers, nonprofit safety-nethospitals, state AIDS Drug Assistance Programs and other qualified health entities that provide care for the uninsured and low-income patients. 340B healthcare faculties and drug companies are often at odds as to whether the program is truly serving the patients it was intended to assist.

HRSA said it has always encouraged both sides to voluntarily try to resolve disputes in good faith and this rule is not intended to replace those efforts,but instead should be considered a last resort.

HHS plans to establish a 340B ADR Panel that will review disputes, and it is not intended to be like a trial.

The rule proposes that disputes must be filed within three years of the sale of drug or payment at issue. Comments are due in 60 days.

For more information, click here.

3. State Activities

Alabama: Gov. Bentley Announces Special Session to Consider Additional Medicaid Funding

Alabama Gov. Robert Bentley has called a special legislative session starting Aug. 15 to consider a lottery proposal that would provide additional fundingfor the state’s Medicaid agency, among other things. The Alabama Legislature passed a budget that appropriates $700 million for Medicaid for the fiscalyear beginning Oct. 1, but Bentley says another $85 million is needed. In announcing the session, the governor said, “Iwill not, as your governor, and also as a physician, watch as our most vulnerable and most helpless, go without a doctor’s care.”

California: Residents Have Issues Finding Mental Health Treatment Covered by Insurance

Many California residents seeking mental health care are having trouble finding treatment covered by their insurance, despite federal and state insuranceparity laws. Insurers are reportedly routinely denying coverage for expensive inpatient treatment, often claiming it is “medically unnecessary.” Patientsthen have the option to appeal that decision to the state. According to the Department of Managed Health Care, California has received nearly 900 appealssince 2010 from patients who said their insurer unfairly denied coverage for inpatient mental health treatment. Almost 47 percent of those decisions havebeen overturned.

Colorado: Single-Payer Plan Not Fully Funded

According to an independent analysis released by the Colorado Health Institute, a single-payer health care proposal on Colorado’s ballot this fall wouldnot raise enough money to cover t