Washington Healthcare Update

January 17, 2017

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This Week: Congress wraps up the first step to the unraveling of the Affordable Care Act…HHS continues to release regulations that may or may not stay when the Trump administration takes over.

Health Care Reform Takeaway From the Week of January 3

  • The Senate and House finished consideration of the Budget Resolution. The Budget Resolution paves the way for the unraveling of the Affordable Care Act. In the Senate, Democrats offered a number of amendments—mostly “message amendments” designed to make Republicans take votes against popular parts of the Affordable Care Act.
  • Of significance was an amendment offered and then withdrawn by Sen. Bob Corker (R-TN) to extend the resolution’s timeline to March 3 from Jan. 27 for committees of jurisdiction to respond to the resolution’s instructions to repeal the ACA. This was part of the concern on part of some members that there needed to be a replacement bill ready after the ACA was repealed. Corker withdrew the amendment after being assured that Jan. 27 was “only a placeholder” date.
  • While there are many moving parts to repeal and replace, more members are becoming concerned about how long it might take to get a replacement bill together.
  • Next step will be “reconciliation”—legislation that will repeal parts of the Affordable Care Act. What is not known is if a replacement plan will be ready to go after repeal.

1. Congress



2. Courts

3. Administration

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


House Passes Budget Resolution

On Jan. 13, the House of Representatives passed the Budget Resolution 227to 198 paving the way for the next step—Budget Reconciliation. The Senatehad passed the resolution earlier in the week. The resolution containsinstructions to the four House and Senate health-related committees thatallow them to repeal the Affordable Care Act. While the instructionsinclude Jan. 27 as the date to report back to the House and Senate BudgetCommittees with legislation, that date is expected to slip.

House Members Introduce Bipartisan Bill on Health Insurance Tax

The insurance industry and business stakeholders praised the recentreintroduction of legislation that would fully repeal the ACA’s tax onhealth insurance plans. Reps. Kristi Noem (R-SD) and Kyrsten Sinema (D-AZ)introduced the insurance tax repeal bill (HR 246), which has 81 originalcosponsors. A full repeal of the tax was also included in last year’sreconciliation bill (HR 3762), which is seen as the baseline for lawmakers’upcoming ACA repeal package.

The fee on insurance plans, which is based on market share, went intoeffect in 2014, but is currently on hold until 2018 due to a provision inlast year’s omnibus spending bill.

The U.S. Chamber of Commerce recently launched a campaign urging Congressto end the HIT, as well as the ACA’s medical device tax and 40 percentexcise tax on high-cost health plans. The campaign kicked off with a focuson the HIT since members will be impacted as early as February whenbusinesses begin renewing health plans.


OMB Analysis Shows Senate Budget Resolution Increases Debt, Deficit

The Senate budget resolution paving the way for Obamacare repeal will driveup the public debt and national deficit over the next decade, the WhiteHouse budget office wrote in aJan. 9 letter.

The budget resolution would increase the public debt from $14.2 trillion in2016 to $23.7 trillion in 2026, according to the Office of Management andBudget analysis. The annual on-budget deficit would increase to more than$1 trillion by 2026, OMB also found.

2. Courts

Court Blocks North Carolina Medicaid Expansion

A federal court has temporarily blocked an effort by North Carolina Gov.Roy Cooper to expand Medicaid under Obamacare.

Thetemporary restraining order Jan. 15from U.S. District Court Judge Louise Wood Flanagan came soon afterRepublicans in the North Carolina Legislature sued to halt the newDemocratic governor’s plan, which aimed to make North Carolina the 32ndstate to expand under the ACA.

North Carolina GOP say Cooper’s plan to submit a Medicaid state planamendment to the Obama administration to expand runs afoul of a 2013 statelaw that blocks him from acting on his own. Cooper, a former state attorneygeneral, has argued that the state law does not apply to his plan.

The federal court order is in effect for two weeks and was issued beforeNorth Carolina officially submitted its plan to federal officials. Thestate was expected to do so early this week after a 10-day public commentperiod. Under the plan, expansion would take effect at the start of 2018.

Texas Judge Approves Delay of Final Rule for Dialysis Facilities

On Jan. 12, a Texas judge approved a request by dialysis companies to delaya new regulation, issued by the Department of Health and Human Services andexpected to take effect Jan. 13, that would have required them to discloseto health plans when premium assistance was being offered to patients whosign up for private health insurance. The suit claims the rule, issued inthe final weeks of the Obama administration, violates the AdministrativeProcedures Act.

Providers said if the rule was finalized as planned, insurers would usesuch information to refuse coverage to dialysis patients. HHS has saiddialysis companies and other health care providers have steered patientsaway from Medicare and Medicaid health plans and into these private plans,offered through the Affordable Care Act health exchange programs, to boostprofits.

U.S. District Judge Amos Mazzant granted the temporary restraining order,filed by dialysis providers Fresenius Medical Care, DaVita Inc. and U.S.Renal Care, along with Dialysis Patient Citizens, saying the group did showthat HHS “likely violated the procedures of the Administrative ProceduresAct” in pushing the final rule through without adequate time for feedbackand review. The judge also said the providers showed evidence that patientswould “suffer irreparable injury if the injunction is denied.” The rule, ifapproved, could force patients to shift to public insurance options,potentially disrupting insurance for themselves and members of their familynow covered under private plans. Mazzant said HHS “will suffer nocomparable harm if the Rule’s implementation is delayed while the Courtaddresses the merits of Plaintiffs’ challenges to the Rule.”

CMS issued the rule in December after requesting information fromstakeholders on the potential impact of Medicare- or Medicaid-eligiblepatients’ being steered into commercial plans. The agency sought inputafter issuers complained about skyrocketing costs for ESRD and otherservices that they attributed to third parties helping patients paypremiums for exchange plans, which have higher provider reimbursementrates.

Addressing third-party payments has consistently topped the list of policychanges that the health insurance industry says would help stabilize theexchange market.

3. Administration

President-elect Trump Picks VA Health Chief Shulkin for VA Secretary

On Jan. 11, President-elect Donald Trump named David Shulkin, the tophealth official in the Department of Veterans Affairs, to be VA secretary.A physician, Shulkin serves as VA’s undersecretary of health, a position hehas held in the Obama administration since 2015. Trump announced thesurprise pick during a long-awaited press conference at Trump Tower in NewYork.

Shulkin is also one of the few, if only, holdovers from the Obamaadministration so far tapped by the Republican president-elect. Trump’stransition team is also weighing keeping Bob Work as the Pentagon’s deputysecretary for several months in the new administration, while a search goeson for a permanent appointee.

As undersecretary of health, Shulkin oversees the largest integrated healthcare system in the country. Before joining VA, Shulkin was president of theMorristown Medical Center in New Jersey and, earlier, president and chiefexecutive of the Beth Israel Medical Center in New York City.

CMS Provides More Information on Calculations for Patient Action Objectives and Measures

CMS recently updated an FAQ to provide information about calculations forEHR Incentive Programs’ objectives and measures requiring patient action. More specifically, CMSprovides an answer to the question: In calculating the meaningful useobjectives requiring patient action, if a patient sends a message oraccesses his/her health information made available by their eligibleprofessional (EP), can the other EPs in the practice get credit for thepatient’s action in meeting the objectives?

To see the FAQ,click here.

CMS Finalizes New Medicare and Medicaid Home Health Care Rules and Beneficiary Protections

On Jan. 9, CMS finalized rules governing home health agencies that willimprove the quality of health care services for Medicare and Medicaidpatients and strengthen patients’ rights. The Medicare and MedicaidConditions of Participation are the minimum health and safety standards ahome health agency must meet in order to participate in the Medicare andMedicaid programs.

Home health care allows patients to receive needed health care serviceswithin their own homes. Patients receive coordinated services ranging fromskilled nursing to physical therapy to medical social services, all underthe direction of their physician. Currently, there are more than 5 millionMedicare and Medicaid beneficiaries receiving home health care from nearly12,600 Medicare- and Medicaid-participating home health agenciesnationwide.

The final rule includes:

  • A comprehensive patient rights condition of participation that clearly enumerates the rights of home health agency patients and the steps that must be taken to assure those rights.
  • An expanded comprehensive patient assessment requirement that focuses on all aspects of patient well-being.
  • A requirement that assures that patients and caregivers have written information about upcoming visits, medication instructions, treatments administered, instructions for care that the patient and caregivers perform, and the name and contact information of a home health agency clinical manager.
  • A requirement for an integrated communication system that ensures that patient needs are identified and addressed, care is coordinated among all disciplines, and there is active communication between the home health agency and the patient’s physician(s).
  • A requirement for a data-driven, agency-wide quality assessment and performance improvement (QAPI) program that continually evaluates and improves agency care for all patients at all times.
  • A new infection prevention and control requirement that focuses on the use of standard infection control practices, and patient/caregiver education and teaching.
  • A streamlined skilled professional services requirement that focuses on appropriate patient care activities and supervision across all disciplines.
  • An expanded patient care coordination requirement that makes a licensed clinician responsible for all patient care services, such as coordinating referrals and assuring that plans of care meet each patient’s needs at all times.
  • Revisions to simplify the organizational structure of home health agencies while continuing to allow parent agencies and their branches.
  • New personnel qualifications for home health agency administrators and clinical managers.

The final rule can be viewedhere.

SAMHSA Issues Rule on Sharing of Substance Abuse Treatment Records

The Substance Abuse and Mental Health Service Administration (SAMHSA) onJan. 13, issued afinal rulethat eases sharing of substance abuse treatment records among providers andrestores researchers’ access to CMS data on the disorders. The rule liftsan old restriction that prevented certain data on substance abuse inMedicare and Medicaid from being accessed for research purposes. The rulealso allows easier sharing of substance abuse treatment records amongproviders, while maintaining protections required under HIPAA for othermedical records.

Under current law, providers have to get approval from patients each timesubstance abuse-related information is shared. Under the final rule,patients sign one consent form that establishes which information they aredisclosing. Patients still have the right to know who sees that data.

Doctors have been pushing SAMHSA for years to change the restrictiveregulation to make it easier to share information with different providers,saying it is difficult to practice medicine holistically when vital mentalhealth information is lacking.

Privacy and patient advocates have been leery of changes that could putsensitive information in places where patients don’t want it seen.

SAMHSA alsoissueda supplemental notice of proposed rulemaking to make additional changes tothe final rule. These would deal with restrictions on use and disclosure ofPart 2-covered data for the purpose of payment and health care operationsfor contractors and subcontractors.

4. State Activities

California: Health Affairs Studies Find Consumers Missing out on Potential Benefits of Covered California

Consumers can find cheaper health plans in the California’s exchange ifthey shop around, but many are still missing out on the chance to getfinancial help to pay for their premiums, two studies released by thejournal Health Affairs found. Theaverage price that consumers actually paid for plans in Covered Californiawas less than the average premium increase, and that gap has widened overtime, the findings showed. Consumers paid 11.6 percent less on health planpremiums than the average offered price in 2014, 13.2 percent less in 2015and 15.2 percent less than last year. The study’s authors attributed thediscrepancy to enrollees switching to lower cost plans within the bronzeand silver tiers, and steering away from gold and platinum plans. Whileplan prices in Covered California increased by four percent on average inboth 2015 and 2016, this year’s increase averaged 13.2 percent, athree-fold spike but far lower than the average 22 percent rate hikereported nationwide. A separate Health Affairs studyestimated that 31 percent of individual market consumers in California whowere likely eligible for financial assistance missed out on potentialsavings, either because they purchased plans that were not silver tier, orthey purchased their insurance outside Covered California.

New Jersey: Gov. Christie Lays Out Health Care Plans in State of State Speech

New Jersey Gov. Chris Christie devoted the majority of his annual State ofthe State speech to laying out a comprehensive plan to fight drugaddiction. Christie, who has previously opposed insurance mandates, cameout in support of requiring health insurers to cover six months ofinpatient and outpatient rehab. Once drafted, the bill will most likelyface opposition from the insurance industry. Christie also irked thestate’s doctors by directing the state attorney general to use emergencyrulemaking to limit initiation opioid prescriptions for acute pain to afive-day supply. In the speech, he talked about how his decision to expandMedicaid has allowed for a change in the availability of drug treatment forlow-income New Jerseyans, but has yet to comment publicly on the ACA repealprocess and the future of the half a million residents who gained coverage.

Pennsylvania: State Closing Two Mental Health Facilities

Pennsylvania Gov. Tom Wolf’s administration announced it will be closing asmany as two residential mental health facilities and shifting patients intothe community as the state grapples with a $1.7 billion budget deficit.Pennsylvania has decreased its state hospital population by 70 percent overthe past 20 years. “The closures are part of the Wolf administration’scommitment to serve more people in the community, reduce reliance oninstitutional care, and improve access to home and community-based servicesfor Pennsylvanians,” Department of Human Services Secretary Ted Dallas saidin a statement. Once these centers close only four will remain, leavingsome patient advocacy groups concerned that it will further exasperate thestate’s psychiatric bed shortage.

Pennsylvania:CMS Announces Pennsylvania Rural Health Model

On Jan. 10, CMS and Pennsylvania announced the Pennsylvania Rural HealthModel, a new initiative of the CMS Center for Medicare and MedicaidInnovation (Innovation Center). The model is designed to improve health andhealth care in rural Pennsylvania under an agreement signed by Governor TomWolf and Pennsylvania Secretary of Health Karen Murphy.

Specifically, the model seeks to increase rural Pennsylvanians’ access tohigh-quality care and improve their health, while also reducing the growthof hospital expenditures across payers, including Medicare, and increasingthe financial viability of the state’s rural hospitals to ensure continuedaccess to care facilities. Pennsylvania, through its Department of Health,will be a key partner in jointly administering this model with CMS.

Under this model, participating rural hospitals will receive all-payerglobal budgets—or a fixed amount of money that is set in advance and fundedby all participating payers—to cover the inpatient and outpatient servicesthey provide. Rural hospitals will use this predictable funding todeliberately redesign the care they deliver to improve quality and meet thehealth needs of their local communities.

The model is open to critical access hospitals and acute care hospitals inrural Pennsylvania. In addition, other payers covering individuals in thecommonwealth, including Medicaid and commercial health plans, are eligibleto participate in the model by paying participating rural hospitals throughglobal budgets.

CMS intends to provide Pennsylvania with $25 million, which is a portion ofthe funding to begin implementing the Pennsylvania Rural Health Model.Pennsylvania will use this funding to operate the model, including dataanalytics, quality assurance and technical assistance to help ruralhospital participants create and implement plans to improve quality of careand address the most prevalent health needs in the communities they serve.

For more information,click here.

Utah: 1115 Waiver Proposal Will Fall to Trump Administration

A decision on the Utah’s 1115 waiver proposal to enact a limited Medicaidexpansion will fall to the Trump administration. The smaller scaleexpansion is expected to cover roughly 10,000 state residents who are inneed of substance abuse and mental health treatment, are chronicallyhomeless or involved in the criminal justice system. The plan was agreed toby Utah legislative leaders and Gov. Gary Herbert after ACA Medicaidexpansion repeatedly failed in the state Legislature.

5. Regulations Open for Comment

CMS Releases Proposed Notice With Changes to Medicaid National Drug Rebate Agreement

On Nov. 7, CMS issued a proposed notice announcing changes that would be made to the Medicaid National Drug Rebate Agreement (NDRA) for use by theSecretary of the Department of Health and Human Services and manufacturers under the Medicaid Drug Rebate Program. The NDRA is being updated to incorporatelegislative and regulatory changes that have occurred since the agreement was published in February 1991, as well as to make editorial and structuralrevisions, such as references to the updated Office of Management and Budget (OMB)-approved data collection forms and electronic data reporting. There is a90-day comment period for this proposed notice that will end on Feb. 7, 2017.

For more information, click here.

Comments Due on IMPACT Act Cross-Setting Quality Measure

On Nov. 4, CMS announced that public comments are due Nov. 17 on a cross-setting post-acute care measure under the Improving Medicare Post-Acute CareTransformation Act of 2014 (IMPACT Act) to further develop and refinethe percentage of residents or patients with pressure ulcers that are new or worsened and language modifications being explored with the term “PressureInjury.” CMS seeks feedback on potential updates to measure specifications and items used to calculate the quality measure. Visit the Public Comment webpagefor more information.

CMS Issues Interim Final Rule to Delay Inclusion of U.S. Territories inDefinitions of States and United States

CMS published the Covered Outpatient Drug Final Rule with Comment Period inthe Federal Register on Feb. 1, 2016. As part ofthat final rule with comment, CMS amended the regulatory definitions of“States” and “United States” to include the U.S. territories (AmericanSamoa, the Northern Mariana Islands, Guam, the Commonwealth of Puerto Ricoand the U.S. Virgin Islands) beginning April 1, 2017. However, the agencysaid those territories could not be ready to implement the program by thisdate.

Therefore, CMS issued an Interim Final Rule with comment period that delaysthe inclusion of the territories in the definitions of “States” and “UnitedStates” from April 1, 2017, until April 1, 2020, which is effective on Nov.15, 2016. There is a 60-day comment period that will end on Jan. 17, 2017.

For more information visit theCovered Outpatient Drugs Policypage onMedicaid.gov.

CMS Issues Proposed Rule for Medicaid Managed Care Plans

CMS has issued a new proposed rule detailing regulations for pass-throughpayments to providers from Medicaid managed care plans. The guidance buildson the Medicaid managed care rule finalized by the Obama administration inMay.

Read the proposed rulehere.

CMS Announces PACE Innovation Act Request for Information

On Jan. 4, CMS released aRequest for Information (RFI)seeking public input on potential adaptations of the model of care employedby the Program of All-Inclusive Care for the Elderly (PACE) for newpopulations, including individuals with physical disabilities, under theauthority provided by the PACE Innovation Act. The PACE Innovation Act of2015 (PIA) provides authority to test application of PACE-like models foradditional populations, including populations under the age of 55 and thosewho do not qualify for a nursing home level of care, under Section 1115A ofthe Social Security Act.

The RFI includes two parts:

  • In the first part, CMS seeks comment on potential elements of a five-year PACE-like model test for individuals dually eligible for Medicare and Medicaid, age 21 and older, with disabilities that impair their mobility and who are assessed as requiring a nursing home level of care, among other eligibility criteria. We have provisionally named this model “Person Centered Community Care” or P3C. This potential model is designed to meet the requirements of a model test under Section 1115A of the Social Security Act and to adapt the PACE model of care for one population of focus. In addition to feedback on the potential elements of the P3C model described in the RFI, CMS seeks comment on the types of technical assistance that potential P3C organizations and states would require to participate in the model test.
  • In the second part of the RFI, CMS seeks information on additional specific populations whose health outcomes could benefit from enrollment in PACE-like models, and how the PACE model of care could be adapted to better serve the needs of these populations and the currently eligible population.

CMS is accepting feedback on this RFI until 5 p.m. EST on Feb. 10, 2017.Comments should be submitted electronically in PDF form toMMCOcapsmodel@cms.hhs.govwith the organization or individual submitting comments on the title of thedocument.

CMS Proposes Rule for Prosthetics and Orthotics Suppliers

On Jan. 11, CMS issued a proposed rule that would implement statutoryrequirements and specify: the qualifications needed for practitioners tofurnish and fabricate prosthetics and custom-fabricated orthotics, and forqualified suppliers to fabricate prosthetics and custom-fabricatedorthotics; accreditation requirements that qualified suppliers must meet inorder to bill for prosthetics and custom‑fabricated orthotics; requirementsthat an organization must meet in order to accredit qualified suppliers tobill for prosthetics and custom-fabricated orthotics; and a timeframe bywhich qualified practitioners and qualified suppliers must meet theapplicable licensure, certification and accreditation requirements. Thisrule would also remove the exemption from quality standards andaccreditation that is currently in place