Washington Healthcare Update

October 3, 2016

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This Week: Congress funds the government until Dec. 9.

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress

Continuing Resolution Passes: Funds Zika and Opioid Legislation

On Sept. 28, Congress passed a Continuing Resolution to fund the government through Dec. 9. The resolution includes $1.1 billion in funding for Zikavaccine development and mosquito control, as well as $37 million to fund the opioid legislation signed into law on July 22. The breakthrough came aftera deal was reached with House lawmakers to hold a vote on including funding for Flint, MI, in a separate water resources bill. Democrats blocked the CRa day earlier over objections that the funding bill did not include funding for Flint. The Senate passed the legislation 72-26 and the House passed thelegislation 342-48.

House of Representatives

Ways and Means Republicans Work on Home Health Appeals Settlement Relief

Representatives Tom Price (R-GA) and Greg Walden (R-OR) are working on a home health bill that could pave the way for a settlement to address theissues raised by the fact that providers cannot get a timely appeal when Medicare claims are denied. The Centers for Medicare and Medicaid Services(CMS) says it is exploring all options to reduce the appeals backlog, but has not ruled out settlements similar to the one it reached last year withhospitals, for other health care sectors.

To reduce the backlog, CMS executed settlements with hospitals over their appeals last year. As of last month CMS says the agency executed settlementswith over 2,000 hospitals over 346,000 claims. CMS has paid providers about $1.47 billion.

House Approves Mental Health First Aid Act

On Sept. 27, House lawmakers approved theMental Health First Aid Act undersuspension of the rules. The bipartisan measure, which had 36 Democrats and 11 Republicans as cosponsors, passed by voice vote. The bill authorizes $20million in grants to train people how to assist a person experiencing a mental health crisis. Critics say the bill takes resources away from addressing thebehavioral provider shortage. The training program is administered by the National Council for Behavioral Health. The Senate companion bill has abipartisan collection of 18 cosponsors. It has been referred to the Committee on Health, Education, Labor and Pensions in that chamber.

179 House Members Tell CMS to Cease All CMMI Initiatives

“CMS’s Innovation Center should cease all current and future mandatory initiatives,” 179 House members wrote in a Sept. 29 letter to CMS actingadministrator Andy Slavitt and Deputy Administrator Patrick Conway.

The letter, which was led by Reps. Tom Price (R-GA), Charles Boustany (R-LA) and Erik Paulson (R-MN), says the innovation center should impose the limitson its experimental models and only gradually expand them following dialogue with participants.

Medicare is forcing new models without consulting with the doctors, hospitals and patients who must participate in them, the lawmakers say. Medicare’sknee- and hip-replacement bundle model, Part B drug payment plan and forthcoming cardiac bundled-care model are all examples of forcing doctors toparticipate without consent.

“As a result, Medicare providers and their patients are blindly being forced into high-risk government-dictated reforms with unknown impacts,” the letterstates.

Republicans on Capitol Hill are already working on legislation to stop the rollout of Medicare’s Part B drug payment plan should the Obama administrationfinalize the rule later this year.


Right to Try Act Blocked in the Senate

On Sept. 28, Sen. Ron Johnson (R-WI) failed to get his right-to-try law through the Senate by unanimous consent. Minority Leader Harry Reid (D-NV) objectedto passing the bill without its going through the formal committee process.

The Trickett Wendler Right to Try Act of 2016 (S. 2912) would prevent thefederal government from interfering in state right-to-try laws. Approved in 32 states, the laws allow patients, health care providers and drugmanufacturers to give terminally ill patients experimental drugs and devices that have passed Phase I of the FDA approval process and remain in clinicaltrials but are not yet on pharmacy shelves.

The bill would also exempt drug companies, distributors, prescribers and those possessing the drug from any liability regarding the treatment. FDA wouldalso be prohibited from using the experience of patients using a product under right-to-try to adversely impact approval of the treatment.

Johnson’s bill has 42 cosponsors including two Democrats, Sens. Joe Manchin (D-WV) and Joe Donnelly (D-IN). In the 32 states that have passed right-to-trylaws, the issue has been very bipartisan with more than 97 percent of lawmakers supporting the measures.

The libertarian Goldwater Institute, which has pushed the laws, said at least 78 patients have been treated under the state laws. Bioethicists worry thelaws offer patients false hopes, as drug companies are not obligated to provide requested treatment and FDA and the pharmaceutical industry have not beensupportive of the state laws.

2. Administration

HHS Secretary Burwell Calls for Authority to Negotiate Drug Prices

On Sept. 29, HHS Secretary Sylvia Mathews Burwell called on Congress to give the department the power to negotiate drug prices when asked to comment onthe controversy around the skyrocketing cost of EpiPens.

The cost of an EpiPen two-pack has increased from $100 in 2007—when Mylan acquired the product—to over $600 this year, causing public discontent andprompting congressional investigations. Burwell did not address the EpiPen case specifically, but noted that FDA approved more generic drugs last yearthan any other year in its history.

Insurers Ask CMS for Interim Final Rule on Third-Party Steering of Patients

As a response to a request for information by CMS, the health insurance industry has called for the agency to immediately issue an interim final rule thatprohibits third-party entities from steering consumers out of Medicare or Medicaid and into private plans or otherwise attempting to glean higherreimbursements for certain providers by paying premiums for high-cost patients.

AHIP also asks CMS to collect information from stakeholders on the growing use of drug discount cards, copay cards and related programs.

Last month, CMS issued a request for information seeking advice on how premium assistance programs offered by nonprofits affect insurers. CMS raisedparticular concern that third parties might be inappropriately targeting high-cost patients eligible for Medicare or Medicaid and steering them intoprivate coverage. The same day it issued the RFI, CMS sent letters to all Medicare-approved dialysis facilities warning it was considering civil monetarypenalties or other actions, including allowing plans to limit payment on dialysis services, to rein in any bad actors.

AHIP says its members have seen a significant increase in steering over the past three years.While much of the activity has been around dialysis clinics, AHIP says it also extends to other providers and entities, including drug copay programs andrehabilitation facilities.

AHIP proposes that an interim rule should do the following:

  • Prohibit direct and indirect premium payments by providers to entities in which the provider has a financial interest by using CMS’s broad rulemaking authority under Medicare and Medicaid.
  • Confirm that certain third-party payments are prohibited under the Civil Monetary Penalties law.
  • Consider health care providers out of compliance with conditions of coverage if they fail to provide information to consumers on their full range of coverage options.
  • Interpret Medicare private contracting requirements in ways that discourage intentional steerage between markets.
  • Clarify plan authority to reject certain third-party payments and establish that federal rules supersede state guidance.
  • Revise guaranteed availability and renewability requirements for Medicare-eligible individuals to say that issuers are not required to sell policies to Medicare-eligible individuals.
  • Modify individual market rules to prevent inappropriate steering of Medicaid enrollees to marketplace coverage.
  • Increase transparency of third-party payments.
  • Utilize additional regulatory and operational tools to address third-party payments.

The Blue Cross Blue Shield Association made similar recommendations. Blue Shield of California proposed the criteria include:

  • “The assistance is provided on the basis of the insured’s financial need.
  • “The assistance is provided for the full plan year.
  • “The institution/organization is not a healthcare provider.
  • “The institution/organization is not financially interested.”

CMS Issues Final Rule for Long-Term Care Facilities

On Sept. 28, CMS finalized the first major policy changes in 25 years for long-term care facilities participating in Medicaid and Medicare. The final ruleis intended to reduce unnecessary hospital readmissions and infections, and improve quality and safety measures. The new requirements will affect theroughly 1.5 million residents at more than 15,000 long-term care facilities across the country.

The rule requires that facility staff members are properly trained to care for residents with dementia in order to prevent elder abuse and requiresfacilities to base staffing levels, in part, on the health of the residents. The rule also gives more responsibility to dietitians and therapy providerswhen state licensing laws allow, and it prohibits the use of pre-dispute binding arbitration agreements. The agency proposed the rule last year and itreceived nearly 10,000 public comments.

For more information, click here.

CMS, Vermont Negotiate All-Payer Waiver Model

On Sept. 28, Vermont released an all-payer waiver model agreement negotiated with federal officials specifying that the state will seek to limit healthcare cost growth to 3.5 percent per capita. The agreement seeks to improve care delivery and contain health care cost growth across Medicare, Medicaid andprivate insurance.

As part of the waiver, Vermont is set to launch a state-specific accountable care organization initiative at the start of 2019. Under the initial terms,state officials said Vermont would receive around $51 million in total Medicare funding between 2017 and 2022, including a $9.5 million one-time investmentin 2017 partly to build ACO infrastructure.

The waiver also sets a Medicare-specific cost growth target as 0.2 percent less than the national trend. It outlines several statewide measures forimproving health outcomes and quality, including reducing deaths related to drug overdoses and suicide, and ensuring the vast majority of adults have aprimary care provider. The agreement still has to be signed by CMS and Vermont officials before it is considered final. The state will have three publicforums on the waiver in the next few weeks.

HHS Secretary Burwell Announces New Campaign to Enroll Young Adults into Obamacare

On Sept. 27, HHS Secretary Sylvia Mathews Burwellannouncedthe Obama administration is launching new initiatives to reach young adults during the next open enrollment period and to encourage them to sign up forObamacare coverage.

CMS will conduct outreach utilizing Twitch, a social video platform and community for gamers. Twitch currently attracts close to 10 million daily userswho, on average, spend 106 minutes per person per day on the site. Twitch’s core demographic also has above average uninsured rates.

Burwell made the comments at a White House summit on boosting young adult enrollment in the exchanges. Getting younger, healthier Americans to sign upfor coverage is seen as crucial to stabilizing premiums on the exchanges. About 28 percent of Obamacare enrollees who signed up for coverage throughHealthCare.gov this year were between the ages of 18 and 34.

CMS will also work with Tumblr to reach out to young adults. Burwell added that the administration will announce more outreach strategies as well asconsumer tools, including new mobile technology to make it easier to shop for a plan on a cellphone or tablet.

Open enrollment begins Nov. 1.

CMS Save the Date for Rural Health Solutions Summitt

On Oct. 19, CMS will be holding its Rural Health Solutions Summit at CMS headquarters in Baltimore, MD, from 9 a.m.–4 p.m. CMS leadership, the CMSRural Health Council and stakeholders from all sectors of the health care industry will be engaging in in-depth discussions about ways to improveaccess to care in rural America and supporting innovation in care delivery.

3. State Activities

Alabama: Cut to Medicaid Primary Care Bump Will Be Restored

Alabama Gov. Robert Bentley recently announced that the Medicaid pay bump to primary care physicians will be restored because of new Medicaid funding. The$15 million pay increase will be reinstated on Oct. 1. Officials have also requested an eight-month extension for the state’s Medicaid waiver that sets upregional care organizations. The new effective date would be July 2017.

Arkansas: Arkansas Lawmakers Approved Mental Health Medicaid Cap

An Arkansas legislative committee has preliminarily approved a proposal to limit Medicaid coverage for mental health services, despite concern from someproviders that it could disrupt patient care. The plan would cap Medicaid coverage for group psychotherapy to an hour a day instead of 90 minutes and wouldlimit the number of hour-long sessions to 25 per year, per person. The state’s Medicaid inspector general proposed the cap and said Arkansas Medicaid wasbilled for group therapy significantly more than other states. Some providers argue the change could disrupt their practices so much that they would beforced to close.

Kansas: Kansas Has Spent Over $2 Million Fighting Medicaid Application Backlog

Kansas has spent $2.3 million fighting a Medicaid application backlog that was caused partly by the Department of Health’s electronic eligibility system,according to a state audit. The increase in spending was due to an increase in staffing to help cut the backlog from a high of 14,000 several months ago toabout 1,700 applications that have been lingering for more than 45 days.

Tennessee: Task Force Sent CMS Medicaid Expansion Plan Measurement

On Sept. 26, a legislative task force developing a phased-in Medicaid expansion plan sent CMS potential measurements to be used to go from the first phaseto a broader phase 2 expansion. The two-phase “3-Star Health Insurance Pilot” would initially target low-income individuals with behavioral health issues,as well as uninsured veterans. The second phase would make the program available to all qualifying Tennesseans up to 138 percent of the federal povertylevel. That is, if certain metrics were met. Task force Chairman Cameron Sexton said lawmakers will begin fleshing out details on the plan’s health savingsaccounts and cost-sharing levels.

Vermont: Report Finds Medicaid Pays for Almost 70 Percent of Buprenorphine Prescriptions

A new IMS reporton utilization trends of buprenorphine—a medication used to treat opioid addiction—finds that Medicaid funding pays for 68 percent of Vermont’s totalprescriptions, the highest in the country and much higher than the national average of 24 percent. The report also found that there are 34.3 buprenorphineprescriptions for every 100 opioid prescriptions in Vermont, more than six times the national average. Other states with the highest share of buprenorphineprescriptions funded by Medicaid include Connecticut, Kentucky, Massachusetts, Ohio, Rhode Island and West Virginia (all of which are Medicaid expansionstates).

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 toalter how qualified health plan (QHP) benchmarks are determined so that theyaccount for the costs of pediatric dental benefits. If finalized, the rule wouldgo into effect for the 2019 plan year.

Although pediatric dental care is one of the 10 “essential health benefits” thatplans are required to cover under the Affordable Care Act (ACA), several plansdo not include such coverage, and consumers instead buy stand-alone dentalproducts. Meanwhile, the marketplace determines the amount of tax credits afamily can receive to cover the cost of coverage based on the second-cheapestsilver-level plan.

However, as the proposed rule said, “because qualified health plans that do notoffer pediatric dental benefits tend to be cheaper than qualified health plansthat cover all ten essential health benefits, the second lowest-cost silver plan(and therefore the premium tax credit) for taxpayers purchasing coverage througha Marketplace in which stand-alone dental plans are offered is likely to notaccount for the cost of obtaining pediatric dental coverage.”

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

“Consistent with this interpretation, the proposed regulations provide that fortaxable years beginning after December 31, 2018, if an Exchange offers one ormore silver-level qualified health plans that do not cover pediatric dentalbenefits, the applicable benchmark plan is determined by ranking (1) thepremiums for the silver-level qualified health plans that include pediatricdental benefits offered by the Exchange and (2) the aggregate of the premiumsfor the silver-level qualified health plans offered by the Exchange that do notinclude pediatric dental benefits plus the portion of the premium allocable topediatric 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-costsilver plan that does not include a pediatric dental benefit to the premium forthe cheapest stand-alone dental plan, and the premium for the second-cheapestsilver plan without pediatric dental benefits to that of the second-loweststand-alone dental plan. The second-cheapest amount from this combined rankingwould be the taxpayer’s applicable benchmark plan premium, the rule said.

CMS Releases Proposed Mandatory Bundled Payment Program

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

CMS clarified that under the new Medicare physician payment system starting in2018, both mandatory bundled payment models could qualify as AdvancedAlternative Payment Models, which would allow participating physicians to beexcluded 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 increasecardiac 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. onOct. 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 healthinsurers that sell catastrophic medical insurance to report any catastrophiccoverage they have provided to the enrollees and the IRS on Form 1095-B. Therule would first apply to the coverage in effect in 2017—issuers would then sendout the first catastrophic plan 1095-B forms in early 2018.

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

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

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

HHS Proposes Updates to Title X Rules

On Sept. 2, HHSproposed to preclude Title X grant recipients from using criteria intheir selection of family planning providers that are unrelated to theability to deliver services effectively.

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

In the proposed rule, HHS said the effects already felt by the restrictionsin many states justify the department’s rulemaking. HHS said grantrecipients that do not provide services directly would also be required tofollow the updated standards when choosing subrecipients.

HHS also proposed that a tiered structure governing how funds aredistributed would not be allowed unless it can be proven that aprovider in a top tier delivers Title X services more effectively than alower-tier provider. According to the Guttmacher Institute, a researchorganization that supports reproductive rights, four states have a prioritysystem for distributing family planning funds, which often disadvantagesfamily planning centers.

CMS Proposes Changes to Risk Adjustment in 2018 Marketplace Rules

On Aug. 29, CMS issued the proposed annual Notice of Benefit and PaymentParameters for 2018, which outlines additional steps to strengthen theHealth Insurance Marketplace. CMS is issuing this rule earlier in thecalendar year in order to provide more certainty to the Marketplace as itcontinues to mature.

Beginning in 2017, the proposed policies will take steps to strengthen therisk adjustment program. First, the rule proposes updates beginning in 2017to better reflect the risk associated with enrollees who are not enrolledfor a full 12 months. Second, beginning in 2018, the rule proposes to useprescription drug utilization data to improve the predictive ability ofCMS’s risk adjustment models. Third, also beginning in 2018, the ruleproposes to establish transfers that will help to better spread the risk ofhigh-cost enrollees, a change that would improve the risk-sharing benefitsof the program.

In addition to the improvements to risk adjustment, the proposed rulecontains other provisions to improve the Marketplace consumer experience andstrengthen the individual and small group markets as a whole. The proposedrule would give consumers additional tools for assessing the networks ofcompeting plans; broaden availability of this year’s new standardized planoptions by accommodating state cost-sharing rules; and create consumerprotections for consumers enrolling through the direct enrollment channel.The proposed rule would also create multiple child age bands that addressinstances in which consumers could face large premium changes after turningage 21; amend the guaranteed renewability regulations to provide additionalflexibility for issuers to remain in an insurance market in certainsituations; and codify several special enrollment periods that are alreadyavailable to consumers in order to ensure the rules are clear and to limitabuse. It also seeks information on a number of suggestions offered byissuers, consumers, providers and others on further improving the risk pool,such as additional changes to special enrollment period policies oroutreach; clarifying coordination of benefit rules between Medicare,Medicaid and the Marketplace; and providing greater certainty on the amountof user fee revenue spent on education and outreach.

To see the proposed rule, click here.

5. Reports

GAO: State Resources Vary for Helping Beneficiaries in Medicaid Fee-for-Service

On Sept. 29, GAO released a report finding that stateresources vary widely for helping beneficiaries find providers in Medicaid fee-for-service. Millions of Medicaid beneficiaries are in fee-for-servicearrangements, in which states pay health care providers per service—if those providers participate in Medicaid. GAO looked at the resources available tohelp beneficiaries find participating health care providers. The 23 states reviewed had four common types of resources: searchable provider directories,provider lists, helplines and handbooks. These resources had different amounts of information and states differed in how they adapted resources to meetbeneficiary needs, according to the report.

GAO: HHS Misusing Obamacare Funds

According to a new GAO repo