Washington Healthcare Update

October 10, 2016

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This Week: Congress remains in recess, but members write letters on Mylan’s EpiPen…CBO says repealing Part B Demo would cost $395 million…CMS releases data on hospice utilization and finds spending and utilization vary in states…Only one more presidential debate to go!

1. Congress

House of Representatives


2. Administration

3. Other

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress

House of Representatives

House Lawmakers Question Mylan’s EpiPen Profit Claims

House Oversight Chairman Jason Chaffetz (R-CA) and ranking member Elijah Cummings (D-MD) recently asked Mylan to provide more information about how much itprofits from EpiPens, after news reports claimed the company’s profits are 60 percent higher than what it told lawmakers. Mylan CEO Heather Breschrepeatedly claimed during a hearing last month that Mylan makes $100 profit per EpiPen two-pack that it sells. However, The Wall Street Journal and Washington Post reported the profit is actually $160 before taxes. “Failing to disclose tax assumptions that formed the basis for the $100 profitper pack claim, despite opportunities to do so before and during the hearing, raises questions,” the lawmakers wrote in a Sept. 30 letter. Theyrequested information by no later than Oct. 7.

CBO Estimates Repealing Part B Demo Would Cost $395 Million

According to a new estimate from the CongressionalBudget Office (CBO), blocking a proposed demonstration project to reform how Medicare pays for physician-administered drugs would cost the government $395million over 10 years.

The CBO scored a House bill introduced earlier this year to stop a sweeping experiment proposed by CMS’s Innovation Center that seeks to lower payments fordrugs under Medicare Part B—projected to be about $18 billion in 2017.

CMS is refining its proposed rule after receiving pushback fromlawmakers on both sides of the aisle. It would first change the payment formula to incentivize the use of lower cost drugs, then introduce a variety ofvalue-based payment models. Republicans threatened to block the program as proposed, but the cost of doing so is potentially an obstacle. CMS is expectedto release a revised final rule later this year scaling down the experiment and exempting some physician practices.


Senators Seek DOJ Probe Into Mylan’s EpiPen

In an Oct. 5 letter, CMS says companies that incorrectly classify drugs in Medicaid are liable for False Claims Act penalties, and Senate Judiciary leaderswant to see if Mylan is liable for misclassifying EpiPen as generic. “Manufacturers that fail to accurately report product and pricing data to the rebateprogram and pay insufficient rebates may be subject to liability under the False Claims Act, a penalty of up to $100,000 per item of false informationunder the Rebate Agreement, or other government actions or claims,” CMS states.

Judiciary Committee Chairman Chuck Grassley (R-IA) and committee members Richard Blumenthal (D-CT) and Amy Klobuchar (D-MN) recently asked the JusticeDepartment to investigate whether Mylan violated the False Claims Act. They were among lawmakers who asked CMS to explain why EpiPen was classified as ageneric.

Additionally, Sen. Ron Wyden (D-OR), ranking member on the Senate Finance Committee, and Sen. Frank Pallone (D-NJ), ranking member on the House Energy& Commerce Committee, said they are reviewing whether CMS has enough power and resources to ensure drugs are properly classified.

2. Administration

HHS Awards Funding Grants to Help Protect Health Sector Against Cyber Threats

On Oct. 4, HHS awarded two grants totaling $350,000 to strengthen the ability of health care and public health sector partners to respond to cyber threats.The National Health Information Sharing and Analysis Center (NH-ISAC) received both grants to 1) provide cybersecurity information and education on cyberthreats to health care sector stakeholders and 2) help build the infrastructure necessary to disseminate cyber threat information securely to health carepartners.

Through a streamlined cyber threat information-sharing process, HHS will be able to send cyber threat information to a single entity, which then will sharethat information widely to support the full range of stakeholders. “This approach helps ensure that smaller health care providers have the information theyneed to take appropriate action,” according to HHS.

For more information, click here.

HHS Report Reveals People Buying Individual Market Coverage Could Be Eligible for Subsidies

On Oct. 4, HHS released a report demonstrating that two and a half million people who bought health insurance off the Obamacare exchanges may be eligiblefor subsidies if they shop in the marketplaces. That includes more than 100,000 people in each of six states—California, Florida, Illinois, North Carolina,Pennsylvania and Texas.

HHS said 6.9 million people now buy insurance in the individual market outside of the exchanges and 5 million of them would be qualified to buy coverage inthe Obamacare marketplaces. Fifty percent of those 5 million could get premium tax credits—available to those with incomes up to about $100,000 for afamily of four who shop on the exchanges. The subsidies are not available outside of the exchanges.

More than three quarters of the 26.9 million people eligible to buy Obamacare exchange plans, including those who are not currently insured, would qualifyfor the subsidies, HHS estimates.

Facing large premium increases in many states for Obamacare plans, HHS is ramping up its outreach efforts, especially to younger and healthier people,ahead of the open enrollment period that starts Nov. 1.

CMS Releases Hospice PUF and Update to the Market Saturation and Utilization Data Tool

On Oct. 6, CMS released a privacy-protected public data set, theHospice Utilization and Payment Public Use File (Hospice PUF), which provides information on services provided to Medicare beneficiaries by hospice providers. CMS also released an update to the Market Saturation and Utilization Data Tool, formerly called the Moratoria Provider Services andUtilization Data Tool. For the first time, this tool will include information on hospice services.

The Hospice PUF contains information on utilization, payments, submitted charges, diagnoses and hospice beneficiary demographics organized by provider andstate. The Hospice PUF covers calendar year 2014 and includes information on 4,025 hospice providers, over 1.3 million hospice beneficiaries and over $15billion in Medicare payments. With this data, CMS will analyze geographic variation in the delivery of hospice care, as well as variation across individualhospice providers. The Hospice PUF also includes a number of metrics on hospice beneficiary demographics and diagnoses to facilitate analyses ofdifferences in the patient population across providers.

The data shows that Medicare, in 2014, spent an average of $11,933 per hospice beneficiary for an average of 70 days of care. However there weresignificant regional variations in spending and utilization with states in the South spending more on hospice than other states. The state with highest perbeneficiary spending was South Carolina and the state with the lowest was Wyoming. The update to the Market Saturation and Utilization Data Tool includesinteractive maps and supporting data sets that show national-, state- and county-level provider services and utilization data for three reference periodsand the following health service areas: Home Health, Ambulance (Emergency, Non-Emergency, Emergency & Non-Emergency), Independent Diagnostic TestingFacilities (Part A and Part B), Skilled Nursing Facilities and Hospice.

The Market Saturation and Utilization Data Tool can be used by CMS to monitor market saturation as a means to prevent fraud, waste and abuse. There are anumber of research uses for these data, but one objective of making these data public is to assist health care providers in making informed decisions abouttheir service locations and the beneficiary populations they serve.

To view a fact sheet on the Hospice PUF, click here.

CMS Selects Quality Improvement Organization to Support Quality Improvement at Indian Health Service Hospitals

On Oct. 4, CMS awarded a new contract to help support best health care practices and other operational improvements for Indian Health Service (IHS) federalgovernment-operated hospitals that participate in the Medicare program. HealthInsight, a current Quality Innovation Network–Quality ImprovementOrganization (QIN-QIO), will partner with IHS hospitals to improve the quality of care for the Medicare patients they serve.

The goals for the QIN-QIO are to support, build and redesign if needed IHS hospital operating infrastructure in order to provide high-quality health careservices to Medicare beneficiaries. The contract will focus on leadership, staff development, data acquisition and analytics, clinical standards of careand quality of care related to the Medicare program. CMS expects that this work, while focused on Medicare beneficiaries, will result in systemic changethat improves all of the care provided at the facilities. Over the course of the contract (approximately three years), the QIN-QIO will:

  • Develop effective leaders through training and networking;
  • Build strong hospital systems through team-based care and clinical quality improvement;
  • Strengthen patient, family and tribal engagement at the project and local levels;
  • Promote and spread best practices in hospitals through Web-based Learning & Action Networks and direct technical assistance;
  • Ensure that clinical, operational and safety standards are met or exceeded;
  • Assist with the development of hospital improvement plans; and
  • Establish baseline data to ensure plans for improvement are successful and sustainable.

This action expands upon the May 2016 announcement of aCMS and IHS partnership to reduce hospital-acquired conditions and avoidable readmissions.

The IHS, an agency in the U.S. Department of Health and Human Services, provides a comprehensive health service delivery system for approximately 2.2million American Indians and Alaska Natives.

CMS Distributes Letters Regarding Physician Quality Reporting System Negative Payment Adjustment

CMS has begun distributing letters to Physician Quality Reporting System (PQRS) individual eligible professionals (EPs), EPs providing services at aCritical Access Hospital (CAH) billing under method II, and group practices regarding the 2017 PQRS negative payment adjustment.

The letter indicates that the recipient did not satisfactorily report 2015 PQRS quality measures or satisfactorily participate in a qualified clinical dataregistry in order to avoid the 2017 PQRS negative payment adjustment and, therefore, all of their 2017 Medicare Part B Physician Fee Schedule (PFS)payments will be subject to a 2.0 percent reduction.

The 2017 PQRS payment adjustment letter being sent to individual EPs includes a Tax Identification Number (TIN)/National Provider Identifier (NPI)combination; the adjustment applies only to the individual EP associated with the TIN/NPI noted within the letter and not the clinic or facility.

The 2017 PQRS payment adjustment letters being sent to PQRS group practices includes a TIN only and applies to all EPs who have reassigned their billingrights to the TIN.

For the 2015 reporting period, the majority of eligible clinicians successfully reported to PQRS and avoided the negative payment adjustment. CMS expectsthat trend to continue, under the new Quality Payment Program. The new program will replace PQRS and the Value Modifier program, as well as the separatepayment adjustments under the Medicare Electronic Health Record Incentive Program, with a streamlined program that has reduced quality reportingrequirements and a flexible design that allows eligible clinicians to pick their pace of participation in the first year.

To learn more about the new Quality Payment Program,click here.

CMS Finalizes Changes to Medicare Advantage Value-Based Insurance Design Modelt

CMS’s Center for Medicare and Medicaid Innovation recently announced refinements to the design of the second year of the Medicare Advantage Value-BasedInsurance Design (MA-VBID) model. The MA-VBID model is an opportunity for Medicare Advantage plans (MA plans), including Medicare Advantage plans offeringPart D benefits (MA-PD plans), to offer clinically nuanced benefit packages aimed at improving quality of 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.

Value-Based Insurance Design (VBID) generally refers to health insurers’ efforts to structure enrollee cost sharing and other health plan design elementsto encourage enrollees to use high-value clinical services—those that have the greatest potential to positively impact enrollee health.

The MA-VBID model will begin Jan. 1, 2017, and run for five years. CMS expects to release a Request for Applications for the second year of the model testin the fall of 2016 and will accept proposals from 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.

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 here.

CMS Selects Participants for Part D Enhanced Medication Therapy Management Model

On Oct. 3, CMS’s Center for Medicare and Medicaid Innovation (Innovation Center) announced the participants in the Part D Enhanced Medication TherapyManagement (MTM) model. The Enhanced MTM model offers an opportunity and financial incentives for basic stand-alone Part D Prescription Drug Plans (PDPs)in selected regions to offer innovative MTM programs in lieu of the standard CMS MTM model, aimed at improving the quality of care while also reducingcosts.

CMS will test changes to the Part D program that aim to achieve better alignment of PDP sponsor and government financial interests, while also creatingincentives for robust investment and innovation in MTM targeting and interventions. The objectives for the model are for stand-alone PDP sponsors toidentify and implement innovative strategies to optimize medication use, improve care coordination and strengthen system linkages.

The Enhanced MTM model test will begin Jan. 1, 2017, with a five-year performance period. CMS will test the model across five Part D regions: Region 7(Virginia), Region 11 (Florida), Region 21 (Louisiana), Region 25 (Iowa, Minnesota, Montana, Nebraska, North Dakota, South Dakota, Wyoming) and Region 28(Arizona). Regions were evaluated based on variation in market competition; the range of geographic, population and market characteristics; and the rangeof Parts A and B spending variance.

Six Part D sponsors that operate a total of 22 Plan Benefit Packages and provide benefits to an estimated 1.6 million beneficiaries in eligible Part DRegions will participate in the first year of the model. Upon approval from CMS, the selected basic stand-alone PDPs in these regions can vary theintensity and types of MTM interventions they provide based on beneficiary risk level and seek out a range of strategies to individualize beneficiary andprescriber outreach and engagement.

For more information, click here.

AHRQ, CMS Award $13 Million to Test and Implement New Children’s Quality Measures

On Oct. 3, the Agency for Healthcare Research and Quality (AHRQ) and CMS announced awardstotaling $13.4 million in funding over four years to six new Pediatric Quality Measures Program (PQMP) grantees focused on implementing new pediatricquality measures developed by the PQMP Centers of Excellence (COE).

Quality measures are used to evaluate or quantify specific health care processes, outcomes, patient perceptions or other factors related to health caredelivery. The pediatric quality measures are used by state Medicaid and Children’s Health Insurance Programs (CHIP) and other public and private programs,providers, plans, patients and their families to measure and improve the quality of children’s health care.

The initial phase of the PQMP funded seven COEs to develop new and innovative pediatric measures. This next phase of work will implement and test thesenewly developed pediatric measures in real-world settings to learn more about how they work when used in the front lines of care.

The new grantees will have two key goals focused on assessing the feasibility and usability of the new measures within the Medicaid and CHIP patientpopulations at the state, health plan and provider levels to support performance monitoring and quality improvement.

For more information,click here.

Anti-Tobacco Groups Sue FDA Over Rules for Graphic Warning Labels

Eight anti-tobacco groups aresuing the FDA to force the agency to issue rules requiring graphic warning labels on cigarettepackages. The suit filed in federal court in Boston comes more than four years after FDA’s first proposal for the labels was struck down by the U.S.District Court for the District of Columbia following a challenge from tobacco companies. FDA said afterward that it would issue new rules, but has yet todo so.

The agency was required to roll out the label requirements by the Tobacco Control Act of 2009. But after FDA issued a final rule in 2011, U.S. DistrictCourt Judge Richard Leon called the warnings “compelled commercial speech” that violated the First Amendment and appealed to emotion rather than focusingon factual information as other government-authorized warnings do.

The labels first proposed by FDA would have included graphic images of a cadaver, diseased lungs and rotted teeth displayed over half of the front and backof cigarette packs.

The American Cancer Society, the American Cancer Society Action Network, the American Lung Association, the American Academy of Pediatrics, the AmericanHeart Association, the Campaign for Tobacco-Free Kids, Truth Initiative and many individual pediatricians filed the lawsuit on Oct. 4.

NIH Releases Recommendations to Prevent Youth Suicide

On Oct. 4, NIH released a list of recommendations to help prevent youth suicide. Theserecommendations are a product of a workshop it convened on youth suicide prevention research in March. The list, published in the Annals of Internal Medicine, focuses on improving data systems to help identify people at risk for suicide, as well as improving research aroundrisk factors including knowledge around biomarkers and biological processes. The researchers say the list gives a roadmap to reach the ultimate goal ofeliminating suicide.

Mylan Settles With DOJ

Mylan has agreed to pay $465 million to resolve questions over whether it overcharged Medicaid for EpiPens by incorrectly classifying the drug as ageneric. Mylan is not admitting to any wrongdoing as part of the settlement with the Justice Department announced Oct. 7. The company maintains that theanaphylaxis treatment was classified with CMS as a non-innovator or generic drug long before the company acquired EpiPen in 2007, based on longstandingwritten guidance from the federal government.

CMS initially told the company that owned EpiPen in 1997 that it could be classified as a generic for Medicaid rebate purposes. It is unclear when CMS mayhave reconsidered this classification, but the issue was brought to its attention by lawmakers in 2014. CMS acting administrator Andy Slavitt in a recentletter to lawmakers said CMS had told Mylan the product is incorrectly classified, but he did not say when this was communicated to the company or why therebate process has not yet been changed.

The government spent $960 million on EpiPens over the past five years, CMS told lawmakers earlier this week.

3. Other

NAIC Asks Congress to Ensure Prioritization of Policyholder Claims in Event of Insurer Insolvency

The National Association of Insurance Commissioners (NAIC) is asking Congress to ensure that HHS lets states determine which creditors come first in theline for assets of insolvent co-ops.

As of Oct. 3, only six of the original 23 co-ops created with the ACA start-up loans are still up and running. One co-op, Evergreen Health in Maryland,plans to switch from a nonprofit co-op to a for-profit company by 2017. Congress has pressed HHS to recoup about $2.3 billion spent on the loans, but nowNAIC suggests HHS is pushing too hard by claiming a right to funds that should instead cover policyholders. CoOpportunity, which failed last year, has suedHHS over its attempts to recoup money for its debt.

Because the ACA does not preempt state liquidation laws, any “regulation that purported to alter the priority of claims in liquidation would be void,because it would exceed the agency’s regulatory authority and would violate the McCarran-Ferguson Act,” NAIC writes. “State liquidation laws expresslygovern the extent to which a creditor may or may not use netting as self-help in collecting its claims against an insolvent insurer, and the ACA did notgive HHS the authority to preempt those laws through rulemaking.”

NAIC also points out that HHS fails to account for all the money owed to insurers, especially the money owed via the risk corridors program.

To see the letter, click here.

4. State Activities

Alaska: Alaska and Xerox Reach Settlement Over Medicaid Payment System

The state of Alaska has reached a settlement with Xerox over its Medicaid payment system. Alaska will pay the vendor the $25.9 million it owes, as long asit provides $1.5 million in hardware system upgrades and other additional work. The state filed a complaint against Xerox in 2014 after the system’s launchthat was riddled with issues. Alaska has spent nearly $112 million on the system so far.

California: Specialty Drug Costs Jump 30 Percent for California Public Employees’ Retirement System

Specialty drug costs jumped 30 percent last year to $587 million for the California Public Employees’ Retirement System, one of the nation’s largest healthcare purchasers. Specialty drug prescriptions account for less than 1 percent of all prescriptions but more than 25 percent of the state agency’s $2.1billion in pharmacy costs. Hepatitis C drugs drove the majority of cost increases. Medications for rheumatoid arthritis, cancer and multiple sclerosis werealso among the top ten most prescribed specialty drugs.

Kentucky: CMS Authorizes Kentucky to Switch to HealthCare.gov

On Oct. 4, CMS officially authorized Kentucky to switch toHealthCare.gov for the start of 2017 open enrollment next month. Kentucky is the first state to ditch a functional Obamacare exchange for the federalenrollment website. Republican Gov. Matt Bevin campaigned on a promise to repeal the state-based system, known as Kynect, set up under his Democraticpredecessor, Steve Beshear.

While permitting the state to move ahead, CMS wrote that it remained concerned about the amount of disruption individuals could face whether they areenrolled in exchange coverage, Medicaid or CHIP. CMS said it will monitor how Kentucky reaches out to consumers about the new enrollment process.

Maryland: Co-op to Switch to For-Profit Insurer

Maryland’s co-op—Evergreen Health—will switch to a for-profit insurer in order to prevent the possibility of a shutdown. Evergreen’s governing boardapproved a deal on Oct. 3 in which private equity investors would take over the insurer from the federal government, and it arranged for a temporary loanto sustain operations until the conversion is complete. The switch still needs approval from state and federal regulators. If the deal goes through, onlyfive of the ACA’s nonprofit insurers will remain. Evergreen sued the federal government this summer over the ACA’s risk adjustment program.

Washington, D.C.: Aid-in-Dying Legislation

On Oct. 5, the D.C. Council’s Health and Human Services Committee held a markup on legislation that would allow terminally ill patients to end their liveswith a lethal prescription. The legislation outlines requirements for both verbal and written requests by a qualifying adult to an attending physician. Twowitnesses would also need to attest that the terminally ill pe