Washington Healthcare Update

October 31, 2016

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This Week: Possible risk corridor settlements still an issue… Chronic care draft bill in Senate… Future of 21st Century Cures up in the air… Medicare payment forrenal care services increasing…Alternative payment models expanding… Children’s health insurance rate at new high… Elections are next week!

1. Congress



2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


House E&C Leaders Ask for DOJ Involvement in Risk Corridor Lawsuits

House Energy and Commerce Committee leaders are asking the Justice Department to get involved with risk corridor questions. They are unhappy with CMSActing Administrator Andy Slavitt and HHS Secretary Sylvia Mathews Burwell for not answering their questions about the White House’s effort to settle riskcorridor-related lawsuits. In a recent letter, the leaders petition Attorney General Loretta Lynch for answers by Nov. 7.

To read the letter, click here.


Senate Finance Committee Leaders Release Chronic Care Draft Bill

Senate Finance Committee leaders pitched a series of Medicare reforms in a draft bill on Oct. 27, in a bid to improve care for beneficiaries suffering fromchronic conditions. Among the Chronic Care Act’s provisions is new permission for certain kidney disease patients to enroll in Medicare Advantage plansstarting in 2021. It would also widen the supplemental benefits that Medicare Advantage plans can offer the chronically ill.

The draft bill also looks to expand Medicare payment of telehealth services across Medicare Advantage, accountable care organizations and for stroke care.The proposal does not include any financial offsets for its policies.

For a summary of the bill’s provisions,click here.

For the lawmakers’ letter to the Obama administration,click here.

2. Administration

CMS Releases Final Rule Setting Pay Rates for Kidney Disease

CMS finalized a slight increase in 2017 Medicare payments for dialysisfacilities treating end-stage renal disease patients. The agency’s final rule published on Oct. 28 estimates that facilities will see a 0.73percent average increase in payments next year. Hospital-based dialysisfacilities should see the biggest increase, at 0.9 percent. Medicare expects topay about $9 billion total to 6,000 facilities treating the debilitating kidneydisease in 2017.

The new regulations also alter how Medicare pays for home and self-dialysistraining, changing the nurse training time used to calculate the paymentrate to 2.66 hours, from one-and-a-half hours. The change raises thetraining add-on payment adjustment to $95.60, from $50.16.

The final rule takes effect Jan. 1.

CMS Announces Updates to Dialysis Facility Compare: Patient Experience Ratings Now Available

On Oct. 28, CMS announced changes to the Dialysis Facility Compare (DFC) website onMedicare.gov, which provides information about thousands of Medicare-certified dialysis facilities across the country, including how well those centersdeliver care to patients.

The changes are in response to the feedback CMS received from dialysis patients and their caregivers about what is most important to them in selectingtheir dialysis facility. Since the initial release of the Dialysis Facility Compare website, patients have emphasized in their feedback to CMS thatunderstanding how others like them view a dialysis center—in particular the cleanliness of the facility and how well the staff cares for them—is valuableinformation when choosing a facility. As a result, visitors to the updated Dialysis Facility Compare website will now be able to see how patients ratetheir experiences with dialysis facilities.

CMS collects patient experience data though the In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems (ICH-CAHPS) Survey, whichmeasures patients’ perspectives on the care they received at dialysis facilities. A total of six ratings on patients’ experiences with care will bereported, including three that cover specific aspects of patient experience and three overall patient ratings of the kidney doctors, the facility staff andthe dialysis facilities. For each dialysis center on Dialysis Facility Compare, the site will include this patient experience information, the quality starrating and detailed clinical quality information.

CMS is also adding two quality measures to Dialysis Facility Compare:

  • The standardized infection ratio (SIR) is a ratio of the number of bloodstream infections that are observed at a facility versus the number of bloodstream infections that are predicted for that facility, based on national baseline data.
  • The pediatric peritoneal dialysis Kt/V measure equals the percent of eligible pediatric peritoneal dialysis patients at the facility who had enough waste removed from their blood during dialysis.

Other major changes to the site include modifications to the methodology for calculating dialysis facility star ratings based on recommendations from a2015 Technical Expert Panel. The updated methodology for calculating star ratings:

  • Establishes a baseline to show improvement by taking into account year-to-year changes in facility performance on the quality measures compared to performance standards set in a baseline year. Star ratings will reflect if a facility improves (or declines) in performance over time.
  • Limits the impact of a few very low scores by applying a statistical method called truncated z-scores to percentage measures. This ensures that star ratings are not determined by extreme outlier performance on a single measure.
  • Ensures accuracy of ratings by keeping the continuity of the measures.

A final change to the DFC website relates to ratio measures:

  • The Standardized Mortality Ratio, Standardized Hospitalization Ratio, Standardized Transfusion Ratio and Standardized Readmission Ratio will now be reflected as rates to display them more clearly.

For more information, click here.

White House Releases New Actions on Mental Health Parity Enforcement

On Oct. 27, the White House announced new actions to limit insurance coverage discrimination of mental health and substance abuse treatment amid thenation’s opioid abuse epidemic.

The White House’s Mental Health and Substance Use Disorder Parity Task Force, assembled last spring, awarded $9.3 million to helpstates enforce federal parity protections requiring equal coverage for mental health and behavioral health. So far, enforcement has been lagging in moststates.

The Labor Department will also be releasing annual data on closed federal parity investigations and listing any plans that have violated the law. The TaskForce also said that CMS will evaluate compliance with the parity law in its review of plans subject to the ACA’s essential benefit requirements, and itexpects states to do so as well. The report recommends Congress provide the Labor Department with the authority to assess civil monetary penalties forparity violations.

HHS and the Labor Department are also unveiling a new website to assist consumers with parity complaints, appeals and other actions.

CMS Announces 15 Target Markets for 2017 Open Enrollment

On Oct. 27, CMS announced 15 target markets for this year’s open enrollment that starts Nov. 1. The 15 major urban markets are Miami, Dallas, Atlanta,Houston, Tampa, Orlando, Northern New Jersey, Chicago, Philadelphia, Charlotte, Detroit, Salt Lake City, Phoenix, St. Louis and San Antonio.

There are 3 million individuals eligible for Obamacare coverage in the 15 markets that are not currently insured, according to CMS. The Miami marketcurrently has the highest number of exchange enrollees, with nearly 650,000.

The Obama administration will partner with local organizations to increase enrollment efforts. In Philadelphia, for example, the administration will workwith Philadelphia Gas Works to send out information about enrollment opportunities to the utility’s 500,000 customers.

The 15 targeted markets will also receive visits from administration officials and additional paid advertising.

Liberal Groups Want Cures Legislation Delayed

The Center for American Progress (CAP) is leading a new effort to delay the medical innovation bill. Among CAP’s co-signers: AFL-CIO, Consumers Union,Doctors for America, Public Citizen, SEIU and more.

“We write to urge you not to move forward with the 21st Century Cures Act during the lame duck session,” the groups write, asking lawmakers to instead waituntil the next administration—and until new drug price controls can be added.

The groups say that the Cures legislation makes unnecessary and potentially risky changes to how FDA evaluates new drugs. For instance, the legislationwould speed agency approval for some drugs—but “the FDA’s current extensive use of such pathways is already raising serious safety concerns,” they write.

Click here to read the letter.

On the other end of the spectrum, Research America is pushing Congress to pass the Cures legislation in the lame-duck session. The nonpartisan publichealth group urged action in a letter on Oct. 28 to House and Senate leaders.

CMS to Reopen Sign-Ups for Two Advanced APMs

On Oct. 25, CMS announced that it is giving health plans and providers another chance to participate in two advanced alternative payment models (APMs),saying it will reopen the application process for two advanced APMs. New enrollees will be able to join the models for the 2018 performance year.

The agency plans to allow new sign-ups for the Comprehensive Primary Care Plus Model and the Next Generation Accountable Care Organization Model, which areamong the seven advanced APMs that can earn participating clinicians a 2017 incentive payment under MACRA’s Quality Payment Program.

CMS is also making the Oncology Care Model with two-sided risk available in 2017, which will qualify the program as an advanced APM starting in the 2017performance year.

About 70,000 to 120,000 clinicians are expected to participate in advancedAPMs and qualify for a 5 percent incentive payment in 2017, the agency said. That number should grow to 125,000 clinicians by 2018.

Conway Wants to Update Medicare Advantage Star Rating Measures

CMS Deputy Administrator and Chief Medical Officer Patrick Conway recently said the Medicare Advantage star rating system needs new quality measures nowthat more than 70 percent of plans have achieved a rating of at least four out of five stars.

As with other performance measures, CMS wants star ratings to differentiate among performance to help consumers pick the best plans, and Conway said theagency seeks “iterative improvements” in plan performance. Medicare pays rebates to plans with four or more stars, which are passed to beneficiaries asincreased benefits or reduced cost sharing, and Medicare must restrict the percentage of plans that receive those rebates.

CMS has taken two approaches when it has had to adjust performance measure systems in the past: cut pay rates to make up for the extra bonuses, which iswhat happened to nursing homes, or add pay measures that are needed while removing those that are no longer needed.

Conway said he wants to change the performance metrics. He has heard about interest in adding outcome measures, adding measures that are meaningful toplans and aligning Medicare Advantage measures with other performance-rating systems throughout Medicare.

Obamacare Premiums to Jump 25 Percent Next Year

On Oct. 24, HHS released a report showingpremiums for a crucial category of Obamacare plans on Healthcare.gov will increase by an average of 25 percent next year—more than three times larger thanthis year’s price increases. By comparison, average prices for the second cheapest silver-level plan—which is used as the benchmark to determine premiumsubsidy levels—had increased by just 7.5 percent on average in 2016 and 2 percent in 2015.

Federal health officials also confirmed that roughly one in five people in the states that use Healthcare.gov must shop from only one insurer followingdecisions by several major national and regional insurers to pull back from the Obamacare marketplaces in 2017. On average, exchange customers will have 30plan options to choose from for 2017, down from 47 this year.

Premiums vary greatly across the country. Some states will see average monthly prices for benchmark silver plans increase at least 50 percent for27-year-olds. Those states include Alabama, Arizona, Nebraska, Oklahoma, Pennsylvania and Tennessee. The price increase for Arizona’s benchmark plan, at116 percent, is the highest of any state.

However, HHS is stressing that nearly three-quarters of federal marketplace consumers will have the option of paying a monthly premium of less than $75with federal financial assistance next year. The number of people who are eligible for federal tax credits will increase this year along with premiums. Thedepartment estimates 78 percent of people who are marketplace-eligible would qualify for financial assistance.

HHS has referred to 2017 as a “transition year” for the marketplace, attributing premium increases to insurers who underpriced their policies during theearly years of the marketplace making up for that now that they have more data, and to the end of the temporary reinsurance and risk corridor programs thatthe law included to help insurers adjust to the new marketplace.

HHS says 15 new insurers will enter the exchanges in 2017, while 83 insurers are dropping off the marketplaces. About 80 percent of customers will have atleast two companies to choose from; just more than half will have at least three. The Obama administration expects 13.8 million people nationwide to pick aplan during the upcoming open enrollment season, about 1 million more than signed up this year.

CMS Extends Safe Harbor for Student Health Plan Arrangements

On Oct. 21, CMS extended for the foreseeable future a safe harbor for student health plans that lets university employers continue to offer studentsreimbursement to offset the cost of their health coverage.

The administration determined via rulemaking in 2013 that certain health reimbursement arrangements that help workers purchase individual coverage were notacceptable under the ACA, and said employers would be penalized for such arrangements. In February, however, the administration offered a safe harbor forany student plan beginning prior to Jan. 1, 2017. The FAQ out Oct. 21 extends that safe harbor until further guidance is issued.

Many colleges and universities have “premium reduction arrangements” for graduate student health coverage that are sometimes intertwined with a large,complex admissions process, the FAQ says. Additionally, Congress in the ACA expressed its intent to preserve the student health plans.

Therefore, the FAQ concludes that CMS considers it “appropriate to further extend the enforcement relief provided in the February 5, 2016 guidance and willnot assert that a premium reduction arrangement offered by an institution of higher education fails to satisfy PHS Act section 2711 or 2713 if thearrangement is offered in connection with student health coverage (insured or self-insured).”

Employers are still banned from similar arrangements, and repealing that prohibition is a key lobbying priority for the U.S. Chamber of Commerce and othersmall business groups.

CMS, FDA Permanently Extend Medical Device Review Program

CMS and FDA are indefinitely extending a program that aims to reduce the time between FDA marketing approval and Medicare coverage decisions, to ensureprompt and efficient patient access to medical devices.

The Parallel Review program allows FDA and CMS to review the clinical evidence on a medical device at the same time rather than sequentially. The agenciessaid the program also helps companies design and conduct better clinical trials that answer both CMS and FDA questions—thus making it more likely thatmanufacturers need to conduct only a single study.

Companies apply to join the program, with priority given to devices expected to have the most impact on the Medicare population. However, CMS will acceptno more than five devices per year because of its existing resources.

FDA Announces Second Round of Generic Drug User Fee Agreement

On Oct. 21, FDA announced that the next round of the generic druguser fee program will tie industry fees to approved abbreviated new drug applications as opposed to requiring industry to pay fees when an application issubmitted regardless of whether it is approved. FDA also announced the fee will be charged in three tiers rather than a per-ANDA basis, in an effort toalign fee responsibility with costs and ability to pay.

Previously, FDA sometimes asked ANDA sponsors to submit a Prior Approval Supplement (PAS), which required a fee, and the number of submissions wasunpredictable, leading to industry’s and FDA’s agreement to eliminate the PAS fee.

Under the GDUFA II proposal, the three tiers in which the fee would be charged are as follows:

  • Small would pay one-tenth the large program fee (1-5 ANDAs).
  • Medium would pay four-tenths the large program fee (6-19 ANDAs).
  • Large would pay the full program fee (20+ ANDAs).

GDUFA I assumed the agency would receive only 750 ANDAs per year; however over the first four years of the agreement FDA received approximately 1,000 peryear. As a result, FDA hired additional staff to address the workload and is expecting to spend $430 million in the final year of GDUFA I.

Under the proposed changes recommended by FDA and industry, the total generic drug user fee collection will be increased to $493.6 million per year, inorder to maintain current staffing levels and implement GDUFA II improvements. The user fee will be annually adjusted for inflation.

Government sponsors or manufacturers of drugs that do not commercially distribute them will not be charged a user fee, according to FDA.

3. State Activities

California: Physicians Group Sues Over California “Surprise” Medical Bill Law

The conservative Association of American Physicians and Surgeons (AAPS) has filed a lawsuit against a new California law designed to protect consumers fromunexpected out-of-network medical bills. The law, which will go into effect in July, prevents individuals from getting hit with large medical bills whenthey unknowingly receive care from an out-of-network provider at an in-network facility. Insurers will be required to let individuals pay the samecost-sharing that they would pay for in-network care, and out-of-network providers will be required to accept reimbursement at 125 percent of Medicarerates or at the insurer’s average contracted rate—whichever is greater. AAPS argues that the California law violates both U.S. and state constitutions innumerous ways, including denying physicians just compensation for labor. However, Consumers Union—one of the law’s biggest proponents—says the lawsuit is“groundless.”

District of Columbia: Council Will Take Up Right-to-Die Legislation

The D.C. Council will take up “right-to-die” legislation on Nov. 1. The legislation would let physicians prescribe lethal medication to terminally illpatients. Council members are required to vote twice on the legislation before it is sent to the mayor. If it is approved by both the council and themayor, D.C. will join five states that have authorized right-to-die laws—California, Montana, Oregon, Vermont and Washington state.

Kentucky: CMS Extends Comment Period on Medicaid Expansion Proposal

In anOct. 19 letter, CMS agreed to continue accepting comments for Kentucky Gov. Matt Bevin’s waiver proposal, which would change the state’s Medicaid expansion. The federalcomment period on the proposed Kentucky HEALTH waiver was supposed to end Oct. 8, but consumer groups protesting Bevin’s requested changes asked for anextension. According to the Kentucky Center for Economic Policy, thecomments CMS has received thus far have mostly urged the Obama administration to reject the plan—approximately 90.1 percent of comments were unfavorabletoward the plan. The plan seeks to add a work requirement, impose new out-of-pocket costs for enrollees and boot them out of coverage if they do not adhereto certain criteria. CMS has received more than 1,700 comments on the proposal.

Minnesota: Gov. Dayton Proposes 25 Percent Rebate to Blunt Rate Hikes

Minnesota Gov. Mark Dayton is proposing that the state fund a 25 percent rebate to cushion rate hikes for Obamacare customers who do not qualify forfederal premium subsidies.

Roughly 123,000 Minnesotans who are expected to purchase individual market coverage next year would qualify for the state assistance, according to a newfact sheet outlining the governor’s proposal. The rebate program would reduce average rate increases in Minnesota from 55 percent to 16 percent.

Dayton has said the state should use a $313 million surplus to pay for the rebates. He wants a plan in place by Nov. 1, when the next open enrollmentperiod begins.

To read the fact sheet,click here.

Nevada: Mental Health America Ranks Nevada Last in Terms of Access to Mental Health Care

Nevada received the worst score in the country for access to mental health care this year in Mental Health America’s annual state rankings report.According to the study, 67.5 percent of Nevada residents in need of mental health treatment have not received care. The report also found that theuninsured rate among the state’s residents in need to health treatment is 28.2 percent. Massachusetts has the lowest rate at 2.7 percent.

New York: New York State Health Foundation Awards Grants to Increase Health Care Access

The New York State Health Foundation awarded $1.2 million in grants to five organizations that will work on projects to increase consumers’ access tohealth care information. The grantees and their projects are as follows:

  • MergerWatch will review the state’s Certificate of Need process.
  • IMPAQ will create a consumer tool for estimating out-of-pocket costs under different health plans for expensive but common medical conditions.
  • National Partnership for Women and Families will work with New York hospitals to make it easier for patients to access their medical records.
  • Cynosure Health will conduct an analysis of New York provider network adequacy.
  • Northeast Business Group on Health will use quality data to create a rating system for hospital maternity services in New York City and Long Island.

Ohio: Ohio Hospitals Claim Bad Debt Has Increased Post-ACA

According to a new report from the Ohio Hospital Association, hospitals in Ohio saw a decline in spending on charity care but boosted spending on “baddebt” in the first year after Ohio expanded Medicaid under Obamacare. Hospitals spent $1.03 billion in charity care in 2013 before expansion, and $809million in 2014 post-expansion. But bad debt expenses climbed from $1.04 billion to $1.23 billion, which the hospital association mostly blames on thegrowing prevalence of high-deductible plans.

To read the report, click here.

Vermont: Vermont Proposes Caps on Opioid Prescriptions

Vermont Gov. Peter Shumlin and Health Commissioner Harry Chen proposed capping all new opioid prescriptions to no more than a seven-day supply. Theproposed changes to the state’s opioid prescribing rule would cap prescriptions for relatively minor pain to between nine and twelve pills but provide someexemptions for treating severe pain due to complicated procedures or major trauma. The new rule would also require the co-prescription of the opioidoverdose drug Naloxone with opioid prescriptions above certain strength or when they are combined with benzodiazepines. The governor’s office said in arelease that the rule would be finalized in December.

Click hereto read the proposed rule.

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 obtaini