Washington Healthcare Update

September 19, 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: Hearings scheduled on EpiPen…House and Senate have hearings on ACA-related issues…Negotiations continue on Continuing Resolution and Zika funding.

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress

House of Representatives

House Energy and Commerce Committee Republican Leaders Send Letter to HHS OIG Concerning NIH Grant on Traumatic Brain Injury

On Sept. 15, Republican leaders of the House Energy and Commerce Committee sent a referral letter to HHS’sOffice of the Inspector General regarding an NIH grant awarded for research related to traumatic brain injury. The grant was to be funded through adonation by the National Football League (NFL) to the Foundation for the National Institutes for Health (FNIH) as part of the Sports and Health ResearchProgram (SHRP)—a public-private partnership with the National Institutes of Health (NIH). The SHRP was established for the purpose of supporting “researchon serious medical conditions prominent in athletes and relevant to the general population.”

Earlier this year, media outlets and a subsequent report by the committee’s Democratic staff alleged the NFL attempted to inappropriately influence NIHdecision-making related to this grant award. However, based on the information available to Republican committee staff, these reports failed to addresscritical questions related to the conduct of NIH that may have contributed to the controversy and delay in awarding this grant.

To ensure the integrity of NIH grant processes, prevent future breakdowns in NIH grant decision-making and advance the critical research related to headtrauma and sports-related injuries, the committee leaders pose five questions for potential examination by the independent HHS watchdog:

  1. Why didn’t the NIH require the NFL to pay pursuant to the terms of the agreement?
  2. If the actions of the NFL or its advisers were clearly inappropriate, as the Democratic staff report concludes, why did NIH and FNIH engage with representatives of the League and perpetuate the impression that the dialogue was appropriate? If confronted with inappropriate conduct by a donor, what are NIH’s responsibilities to flag and address such behavior?
  3. Did NIH adhere to the terms of the MOU regarding donor communications?
  4. What are NIH policies for the control of non-public information, including information related to Notice of Grant Awards, as well as non-funded grant proposals? Were they followed in this series of events?
  5. How does NIH evaluate conflicts of interest between applicants and donors in public-private partnership grant programs such as SHRP?

In the letter to the HHS OIG, the committee leaders concluded, “While this grant award has become an unfortunate distraction from the greater issue ofimproving the science of traumatic brain injury (TBI), given the significant public attention to these events, it is clear that a thorough and objectivereview by the HHS OIG is necessary. This review is important to the strength and integrity of the SHRP, as well as the independence of NIHdecision-making.”

The letter was signed by Energy and Commerce Committee Chairman Fred Upton (R-MI), Oversight and Investigations Subcommittee Chairman Tim Murphy (R-PA),Health Subcommittee Chairman Joseph Pitts (R-PA) and Commerce, Manufacturing, and Trade Subcommittee Chairman Michael C. Burgess, M.D. (R-TX).

House Energy and Commerce Committee Holds Hearing on ACA

Republicans on the House Energy and Commerce Committee issued two strident reports ahead of its Sept. 14 hearing on the Affordable Care Act.

One reportconcludes that state-based exchanges are mismanaged because CMS has not conducted “robust oversight” and has not collected funds that were misspent. Thereport also charges that the agency is wasting tax dollars by “encouraging” state-based exchanges to shutter and join the federal exchange; just 12 of the17 original state exchanges will be in operation next year.

Thesecond reportfocuses on the failure of co-ops, of which only 6 of the 23 created by the Affordable Care Act survive.

For more information on the hearing, click here.

House E&C Committee Chairman Upton Claims to be Close on Cures Deal

House Energy and Commerce Committee Chairman Fred Upton said he may have a 21st Century Cures deal early this week. The biggest issue has been howto pay for the package, particularly since some of the original pay-fors in last year’s House-approved legislation have since been used.

If there is at least two-thirds support from the House, it could be fast-tracked under a suspension of the rules before the chamber leaves town this month.Upton said whether to pass the bill under suspension would be a leadership decision.

House Oversight Committee to Hold Hearing on EpiPen’s Pricing

On Sept. 21, Mylan CEO Heather Bresch will testify at a House Committee on Oversight and Government Reform hearing on EpiPen price increases. SubcommitteeChairman Chaffetz and Ranking Member Cummings said they will also examine ways to encourage greater competition for EpiPen and to speed up FDA’s approvalof generic applications. Doug Throckmorton, FDA’s deputy director for the Center for Drug Evaluation and Research, will also testify. The Oversightcommittee will likely call more witnesses.

For more information, click here.

Moderate Democrats Write Concerns to CMS About Medicare Drug Demo

On Sept. 9, a group of moderate House Democrats wrote aletter to Acting CMS Administrator Andy Slavitt expressing concernswith the Obama administration’s controversial Medicare Part B prescription drug demonstration project. “We appreciate that [HHS and CMS] have listened tothe myriad concerns raised about this proposed demonstration. We ask that you fully address these concerns,” the Democrats wrote.

This letter comes as the administration is expected to release the final rule to authorize the demonstration. The group says they do not like the widescope of the demonstration, are frustrated that there was little input from stakeholders and warn that 60 days is not enough time to successfully educateMedicare beneficiaries.

The letter was signed by Democratic Reps. Ami Bera (CA), Brad Ashford (NE), Collin Peterson (MN), David Scott (GA), Grace Meng (NY), Joyce Beatty (OH),Kyrsten Sinema (AZ), Scott Peters (CA) and Suzan DelBene (WA).


Senate Homeland Security and Governmental Affairs Holds ACA Hearing to Look at Exchange Stability

On Sept.15, the Senate Homeland Security and Governmental Affairs Committee held a hearing concerning the stability of exchanges. Witnesses included: TheHonorable Mary Taylor, Lieutenant Governor and Director, Ohio Department of Insurance, State of Ohio; J.P. Wieske, Deputy Commissioner, Office of theCommissioner of Insurance, State of Wisconsin; Nick Gerhart, Commissioner, Iowa Insurance Division, State of Iowa; and The Honorable Mike Kreidler,Commissioner, Office of the Insurance Commissioner, State of Washington.

For more information on the hearing, click here.

Bipartisan Legislation Introduced in House and Senate to Require Transparency in Rx Drug Price Increases

U.S. Sens. Tammy Baldwin (D-WI) and John McCain (R-AZ) and U.S. Rep. Jan Schakowsky (D-IL) today introduced the FAIR Drug Pricing Act. The bipartisan andbicameral Fair Accountability and Innovative Research (FAIR) Drug Pricing Act is supported by AARP; the Campaign for Sustainable Rx Pricing; The MedicareRights Center; Consumers Union; Doctors for America: Drug Price, Value, and Affordability Campaign; Families USA and the Center for Medicare Advocacy,Inc.;and Public Citizen.

The FAIR Drug Pricing Act would require drug manufacturers to notify the U.S. Department of Health and Human Services (HHS) and submit a transparency andjustification report 30 days before they increase the price of certain drug products by more than 10 percent. The report will require manufacturers toprovide a justification for each price increase; manufacturing, research and development costs for the qualifying drug; net profits attributable to thequalifying drug; marketing and advertising spending on the qualifying drug; and other information as deemed appropriate. The bill will not prohibitmanufacturers from increasing prices but it will, for the first time, give taxpayers notice of price increases and bring basic transparency to the marketfor prescription drugs.

The legislation is in response to price increases of EpiPen, Gleevec and insulin, among others.

2. Administration

CMS Sends MACRA Rule to OMB

On Sept. 15, CMS sent its MACRA rule to the White House’s Office of Management andBudget (OMB) for review. CMS is required by statute to finish the rule, which will reshape its payment and bonus policies for doctors, by November. OnSept. 8, CMS announced flexibility in its quality reporting programsunder MACRA, which take effect Jan. 1.

CMS Blog Releases New Data From the Hospital Readmissions Reduction Program

In a Sept. 13 blog post, CMS released newdata to show the successes of the Hospital Readmissions Reduction Program. The program adjusts payments for hospitals with higher-than-expected 30-dayreadmission rates for targeted clinical conditions such as heart attacks, heart failure and pneumonia. According to the new data, since 2010:

  • All states but one have seen Medicare 30-day readmission rates fall.
  • In 43 states, readmission rates fell by more than 5 percent.
  • In 11 states, readmission rates fell by more than 10 percent.

Overall, readmission rates fell by 8 percent nationally between 2010 and 2015. Across states, Medicare beneficiaries avoided almost 104,000 readmissions in2015 alone, compared to if readmission rates had stayed constant at 2010 levels. That means Medicare beneficiaries collectively avoided 104,000 unnecessaryreturn trips to the hospital. Cumulatively since 2010, the HHS Assistant Secretary for Planning and Evaluation estimates that Medicare beneficiaries have avoided 565,000readmissions.

For more information, click here.

QIOs Restart Reviews of Short Inpatient Hospital Stays

On Sept. 12, the Quality Improvement Organizations (QIOs) restarted reviews of short inpatient hospital stays after CMS said the contractors completedre-training on the two-midnights hospital admissions policy. The audits had been on hold since early May.

CMS also said the Beneficiary and Family Centered Care QIOs finished a second review of all hospital short-stay claims that had been previously denied, andthe contractors reached out to providers affected by the temporary audit suspension prior to CMS’s lifting it.

The two-midnight hospital admissions policy says providers must expect that beneficiaries will remain hospitalized for at least two midnights for doctorsto admit them. Otherwise, the stay should be considered outpatient and paid at the lower outpatient rate. In early May, CMS temporarily paused the QIOs’initial patient-status reviews after hospitals told the agency there were procedural problems—such as not having enough time to implement education andimprovement activities between rounds of audits and delays in hospitals’ receiving review results.

In a notice posted on the QIO website, CMS said that the QIOs have also initiated provider education on the two-midnight policy in addition to finishingtheir own re-training on the policy. “CMS will continue its oversight efforts by re-reviewing a sample of BFCC-QIO completed claim reviews each month,monitoring provider education calls and responding to individual provider inquiries and concerns,” the agency said.

IRS Issues Report: $1.7 Billion Paid in Fines for Individual Mandate in 2014

Nearly $1.7 billion in individual mandate fines were paid through about 8.1 million tax returns in 2014, the first year the ACA’s penalty was enforced,according to an IRS report on 2014 individual income tax returns published Aug. 31. The average penalty paid was $210, the IRS said. In 2014, the fine forlacking minimum essential coverage equaled 1 percent of household income capped at the annual premium of the national average bronze-level exchange plan,or $95 per adult and $47.50 per child up to $285, whichever was higher.

More than 13.3 million Americans also claimed an exemption from the individual mandate. “The total premium tax credit was taken on 3.1 million returns onthe Form 8962, for a total of $11.2 billion,” the IRS said. “Also on Form 8962, 3.4 million returns had an APTC totaling $12.0 billion. When the PTC andAPTC were reconciled, 1.5 million returns received the net premium tax credit ($1.0 billion) and 1.8 million returns had to repay excess advance premiumtax credit ($1.4 billion).”

When broken down by adjusted gross income brackets, the IRS found that Americans who made between $15,000 and $20,000 noted the most premium tax credits ontheir returns, for $1.6 billion across nearly 470,000 returns. Those people also received the most APTCs, at $1.5 billion across nearly 460,000 returns.

Those taxpayers fell slightly higher than the 2014 federal poverty level for a single person, which was $11,670, and just below the poverty line for afamily of four at $23,850.

However, those with adjusted gross incomes of $50,000 or more—the income ceiling for subsidy eligibility started at $46,680 for a single person—had torepay the most in excess APTCs, at $691 million among more than 380,000 returns. While the $15,000 to $20,000 bracket filed the most returns withindividual mandate penalties, those in the $50,000 and higher bracket doled out the highest amount for the fee at $694 million.

3. State Activities

Alabama: State Lawmakers Provide Medicaid Another Short-Term Funding Fix

Alabama has temporarily solved its Medicaid budget shortfall. Gov. Robert Bentley signed a bill providing $120 million to Medicaid over the next two years.The money will come from a bond issue from BP’s $1 billion oil spill settlement with the state. Alabama’s Medicaid program, which requested $785 millionfor 2017, estimates that it needs about $865 million in 2018 and $895 million in 2019.

California: Report Finds California Officials Still Lack Oversight on Mental Health Spending

According to the Little Hoover Commission—a state watchdog—California officials still have not taken steps to better track how $2 billion a year invoter-approved funding for mental health programs is spent, despite a critical audit 19 months ago flagging issues. Proposition 63—known as theMillionaire’s Tax—is supposed to support mental health programs, but state officials are not sure the money is being used appropriately and effectively.The audit cites weak financial reporting and limited oversight of revenue as main issues. “Twelve years and $17 billion later the state still can’t handilyshow the impacts of this funding, how it is spent or who is helped,” the report said.

Connecticut: ConnectiCare Sues State Insurance Department, Threatens to Leave Obamacare Exchange

Health insurer ConnectiCare is suing the Connecticut insurance department and threatening to leave the Obamacare exchange because regulators declined toconsider its third revision to its rate increase averaging nearly 27 percent. The new request was made after the state insurance department had alreadyapproved an average rate increase of 17.4 percent for 2017. ConnectiCare covers about 48,000 individuals on the exchange, which has already seen thedeparture of UnitedHealth Group and the collapse of Connecticut’s co-op plan.

Massachusetts: Report Finds Health Care Costs in the State Grew More Than Expected

According to a new report, health care expenses totaled $57 billion in Massachusetts in 2015 and health care costs are growing faster than what stateofficials had hoped for. The Center for Health Information and Analysis said in its annual review of Massachusetts’s health care system that total costsrose by 3.9 percent over the previous year. This is higher than the 3.6 percent growth benchmark set by a commission established by the state’s 2012 costcontainment law. While costs exceeded state officials’ expectations, they grew more slowly in the state than the rest of the country in 2015.

Click hereto see the report.

Oregon: Oregon Health Authority Releases Quarterly Legislative Report

An Oregon Health Authority report to the state legislature findsthe state Medicaid program’s coordinated care organizations are cutting emergency department visits and preventable hospital visits. For example, avoidableER visits have declined by 50 percent since 2011. However, more improvement is necessary on measures related to substance abuse and smoking cessation. Thereport also finds the CCOs performed well enough to receive bonus payments based on a set of 17 quality measures. In 2015, all but one of 16 CCOs earnedall of the quality bonuses for which they were eligible. The remaining CCO received 60 percent of eligible funding. The bonuses totaled $168 million lastyear.

Vermont: Burwell, Gov. Shumlin Meet to Discuss Pending All-Payer Waiver

On Sept. 14, Vermont Gov. Peter Shumlin met with HHS Secretary Sylvia Burwell to discuss the state’s pending all-payer waiver, which would control ratespaid to hospitals and providers to limit health care cost growth. The demonstration would cover Medicare, Medicaid and private insurance regulated by thestate’s Green Mountain Care Board. Officials discussed the source of timing and funding during the meeting. Gov. Shumlin said he is “cautiously optimistic”that his administration will make the deal happen and he expects to have a decision in the next couple of weeks.

4. Regulations Open for Comment

IRS, Treasury Release Proposed Rule on QHP Benchmarks

The IRS and Treasury Department, in a proposed rule released July 6, proposed to alter how qualified health plan (QHP) benchmarks are determined so thatthey account for the costs of pediatric dental benefits. If finalized, the rule would go into effect for the 2019 plan year.

Although pediatric dental care is one of the 10 “essential health benefits” that plans are required to cover under the Affordable Care Act (ACA), severalplans do not include such coverage, and consumers instead buy stand-alone dental products. Meanwhile, the marketplace determines the amount of tax creditsa family can receive to cover the cost of coverage based on the second-cheapest silver-level plan.

However, as the proposed rule said, “because qualified health plans that do not offer pediatric dental benefits tend to be cheaper than qualified healthplans that cover all ten essential health benefits, the second lowest-cost silver plan (and therefore the premium tax credit) for taxpayers purchasingcoverage through a Marketplace in which stand-alone dental plans are offered is likely to not account for the cost of obtaining pediatric dental coverage.”

Treasury and IRS added that the existing rules “frustrate” the goal of making all essential health benefits affordable to those receiving premium taxcredits, so the administration wants to update its interpretation to ensure all 10 services are addressed.

“Consistent with this interpretation, the proposed regulations provide that for taxable years beginning after December 31, 2018, if an Exchange offers oneor more silver-level qualified health plans that do not cover pediatric dental benefits, the applicable benchmark plan is determined by ranking (1) thepremiums for the silver-level qualified health plans that include pediatric dental benefits offered by the Exchange and (2) the aggregate of the premiumsfor the silver-level qualified health plans offered by the Exchange that do not include pediatric dental benefits plus the portion of the premium allocableto pediatric dental benefits for stand-alone dental plans offered by the Exchange,” the proposal said.

The rule aims to create the ranking by adding the premium for the lowest-cost silver plan that does not include a pediatric dental benefit to the premiumfor the cheapest stand-alone dental plan, and the premium for the second-cheapest silver plan without pediatric dental benefits to that of thesecond-lowest stand-alone dental plan. The second-cheapest amount from this combined ranking would be the taxpayer’s applicable benchmark plan premium, therule said.

CMS Releases Proposed Mandatory Bundled Payment Program

On July 25, CMS proposed new models to mandate bundled payments for cardiac care. This is the agency’s second program requiring providers to accept setpayments for an episode of care. CMS also proposed extending its existing mandatory bundled payment initiative for hip replacements to other hip surgeries.

CMS clarified that under the new Medicare physician payment system starting in 2018, both mandatory bundled payment models could qualify as AdvancedAlternative Payment Models, which would allow participating physicians to be excluded from a new proposed quality reporting program and instead receive alump-sum payment from Medicare.

The agency also announced a new initiative to encourage hospitals to increase cardiac rehabilitation, in hopes of improving patient outcomes and reducingreadmissions.

To see the proposed rule,click here. CMS will accept comments on the proposed rule until 5 p.m. on Oct. 3.

IRS Publishes Draft Regulations on Reporting of Catastrophic Health Coverage

The Internal Revenue Service (IRS) published newdraft health coverage reporting regulationsin the Federal Register on Aug. 2. The new draft regulations call for the health insurers that sell catastrophic medical insurance to report anycatastrophic coverage they have provided to the enrollees and the IRS on Form 1095-B. The rule would first apply to the coverage in effect in 2017—issuerswould then send out the first catastrophic plan 1095-B forms in early 2018.

Catastrophic plans are higher-deductible, lower-value plans that insurers can sell to people under 30, and to people of any age who earn too much toqualify for ACA exchange plan premium subsidies. The new draft regulations also call for the government agencies that offer Basic Health Plans—which aresimilar to managed Medicaid programs for people who earn too much to qualify for Medicaid—to report Basic Health Plan coverage to the IRS.

A third piece of the draft regulations clarifies that an employer providing two or more types of coverage that come under the minimum essential coveragerules would just have to report the richest form of coverage.

Comments on the draft regulations are due by Oct. 3.

UNOS Proposes Changes to Liver Transplant Policies

The United Network for Organ Sharing (UNOS) is proposing changes to the geographic regions for liver transplants to better match organ supply with demandand make access more equitable. Currently, there exists a wide variation in a transplant candidate’s chance of receiving an organ in a timely way, based onwhere the patient lives and the location of the transplant hospital where they are listed. Some patients may not get organs until they are much sicker thanare patients awaiting transplants in different regions.

HHS Proposes Updates to Title X Rules

On Sept. 2, HHSproposed to preclude Title X grant recipients from using criteria in their selection of family planning providers thatare unrelated to the ability to deliver services effectively.

Since 2011, 13 states have attempted to restrict participation by family planning providers in Title X based on factors unrelated to their ability toprovide services. The Title X program provides funding for certain family planning services, including STD screening and treatment, but funding is not usedto pay for abortions. Although Planned Parenthood is not mentioned by name in the proposed rule, it has often been the subject of defunding actions bystates and Congress.

In the proposed rule, HHS said the effects already felt by the restrictions in many states justify the department’s rulemaking. HHS said grant recipientsthat do not provide services directly would also be required to follow the updated standards when choosing subrecipients.

HHS also proposed that a tiered structure governing how funds are distributed would not be allowed unless it can be proven that a provider in a toptier delivers Title X