Washington Healthcare Update

January 23, 2017

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This Week: In this week of transition, the Senate held its first hearing on the HHS secretary nominee and the Obama administration released its last set of regulations.

Health Reform Takeaway

  • CBO releases a report on the blueprint of the Republicans’ repeal plan and Republicans call it incomplete. The HELP Committee holds a hearing on Rep. Tom Price nomination for HHS secretary. The Republican plan to repeal and replace starts to slow down.

1. Congress



2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


House Ways & Means Committee to Hold Hearing on Replacing Individual Mandate

On Jan. 24, the House Ways & Means Committee will hold a hearing onways to replace the ACA’s mandate to purchase health insurance. Repealingthe Affordable Care Act’s individual mandate is viewed as a key componentof congressional Republicans’ emerging plan to repeal and replace theAffordable Care Act, and replacing the mandate with alternative ways ofensuring continuous coverage is viewed as crucial to a stable insurancemarketplace.

For more information,click here.

Ohio Gov. Kasich Tells Republicans to Let States Keep Medicaid Expansion

Ohio Gov. John Kasich told congressional Republicans that states shouldhave the option of keeping Obamacare’s Medicaid expansion, and if Congressdecides to pare back the program, it should retain expansion funding forlow-income adults earning up to the federal poverty line.

In letters Kasich sent to theHouseandSenate, he said he is still supportive of Medicaid block grants.

An outspoken supporter of Medicaid expansion in Ohio, Kasich has said ithas benefited 700,000 residents, brought the state’s uninsured rate torecord lows and provided necessary treatment for those with substance abuseand mental health issues. Ohio is one of 16 states with Republicangovernors who have adopted that core piece of Obamacare.

Kasich also warned against repealing Obamacare without a replacement at thesame time, writing that approach would create uncertainty for millionscurrently covered and could destabilize insurance markets.


Finance Committee Schedules Price HHS Hearing

The Senate Finance Committee will hold a Jan. 24hearingon Rep. Tom Price’s (R-GA) nomination to lead HHS, the committeeannouncedJan. 17.

“Installing Dr. Price to lead HHS is a paramount step in repealing andreplacing Obamacare with patient-centered reforms that address costs andincrease choice,” Chairman Orrin Hatch said in a statement.

The announcement comes as Democrats have urged Republicans to slow down thenomination process to allow more time to scrutinize Price’s health careinvestments. Ron Wyden (OR), the top Democrat on the Finance Committee,criticized the decision to move forward with the hearing.

“Instead of confronting the serious issues raised about Congressman Price,Republicans are rushing to sneak his nomination through before alloutstanding questions have been answered,” Wyden said.

Price went before the Senate HELP Committee on Jan. 18. At thathearing, Republicans praised him while Democrats grilled him on everything fromhis stock picks and ethics to asking him to pledge not to cut Medicare andMedicaid. He will likely face the same kind of questioning at finance.

GOP Governors Meet With Senate Finance Committee Regarding Medicaid

Republican governors and lieutenant governors from 10 states — includingfour that expanded Medicaid under Obamacare — discussed the future ofMedicaid with Senate Finance Committee Republicans in Washington on Jan.19, according to a Senate aide.

Committee Republicans held the closed-door meeting to get input onpotential changes to the program, including what policies should beconsidered as part of an Obamacare replacement plan, how to keep Medicaidsustainable and whether states need more flexibility to enact reforms.

While the Republican governors oppose Obamacare and agree Medicaid needschanges, officials in states that expanded Medicaid are looking to protecthealth coverage for residents.

The following state officials will attend Thursday’s gathering: ArkansasGov. Asa Hutchinson; Florida Gov. Rick Scott; Idaho Gov. Butch Otter; IowaGov. Terry Branstad and Lt. Gov. Kim Reynolds; Kansas Lt. Gov. Jeff Colyer;Michigan Gov. Rick Snyder; Ohio Gov. John Kasich; South Dakota Gov. DennisDaugaard; Texas Gov. Greg Abbott; and Utah Gov. Gary Herbert.

2. Administration

President Trump Issues Executive Order on the ACA

On Jan. 20, as one of his first acts, President Donald Trump issued anexecutive order that asks HHS and other agencies to exercise all authorityunder the law to ease the costs of the Affordable Care Act on individualsand industry, provide states flexibility and promote interstate commerce asCongress and the administration work to repeal the law. It is unclear whatthe new administration can do under the new executive order, but GOPlawmakers have long said the HHS secretary has wide-ranging flexibilitywhen it comes to implementing the ACA.

“It is the policy of my Administration to seek the prompt repeal of thePatient Protection and Affordable Care Act,” Trump’s executive orderstates. “In the meantime, pending such repeal, it is imperative for theexecutive branch to ensure that the law is being efficiently implemented,take all actions consistent with law to minimize the unwarranted economicand regulatory burdens of the Act, and prepare to afford the States moreflexibility and control to create a more free and open healthcare market.”

The executive order continues: “To the maximum extent permitted by law, theSecretary of Health and Human Services (Secretary) and the heads of allother executive departments and agencies (agencies) with authorities andresponsibilities under the Act shall exercise all authority and discretionavailable to them to waive, defer, grant exemptions from, or delay theimplementation of any provision or requirement of the Act that would imposea fiscal burden on any State or a cost, fee, tax, penalty, or regulatoryburden on individuals, families, healthcare providers, health insurers,patients, recipients of healthcare services, purchasers of healthinsurance, or makers of medical devices, products, or medications.”

HHS Releases Final Revision of Common Rule

On Jan. 18, HHS issued a long-awaitedrevision of a ruleestablishing how to properly inform people enrolling in medical experimentsabout the risks and benefits of the research. The revision of the 1991Common Rule dropped an earlier proposal that scientists said would havemade much of their work impossible.

HHS and 15 other agencies issued a September 2015 proposed rewrite of theCommon Rule that drew 2,100 comments, many of them opposing a provisionrequiring researchers to get consent for using nonidentified biospecimenslike DNA samples. That part of the proposal was dropped in the new rule.

The final rule, most of which takes effect in 2018, calls for consent formsto include concise explanations of the purpose of a medical experiment, aswell as the risks and benefits and alternative treatments a subject mightwant to consider.

CMS Releases Corrected Year 2 Results for Independence at Home Demo

On Jan. 19, CMS released the corrected Year 2 results for the Independenceat Home Demonstration. The demonstration provides chronically ill patientswith a complete range of primary care services in the home setting. Medicalpractices led by physicians or nurse practitioners provide primary carehome visits tailored to the needs of beneficiaries with multiple chronicconditions and functional limitations. The demonstration also tests whetherhome-based care can reduce the need for hospitalization, improve patientand caregiver satisfaction, and lead to better health for beneficiaries andlower costs to Medicare.

In the second performance year of the demonstration, 10,484 beneficiarieswere enrolled in the 15 participating practices. All 15 of the Independenceat Home practices improved performance from the first performance year inat least two of the six quality measures for the demonstration. Fourpractices met the performance thresholds for all six quality measures.

In the original release of Performance Year 2 results in August 2016, CMSstated that the 15 participating practices saved $10,612,506 in aggregate,and that seven participating practices earned incentive payments of$5,719,526. After a corrected analysis, CMS stated that the practices saved$7,821,374 in aggregate, an average of $746 per beneficiary. Sevenparticipating practices earned incentive payments in the amount of$5,093,105.

For a fact sheet,click here.

CMS Releases Second Year of Skilled Nursing Facility Utilization and Payment Data

On Jan. 18, CMS posted the second annual release of theSkilled Nursing Facility Public Use File(Skilled Nursing Facility PUF) with data for 2014. The Skilled NursingFacility PUF presents summarized information on services provided toMedicare beneficiaries by skilled nursing facilities. It containsinformation on utilization, payment (Medicare payment and Medicarestandardized payment), submitted charges, and beneficiary demographic andchronic condition indicators organized by CMS Certification Number (6-digitprovider identification number), Resource Utilization Group (RUG) and stateof service.

The new 2014 PUF has information for 15,026 skilled nursing facilities,almost 2.5 million stays and more than $27 billion in Medicare payments for2014. New in the 2014 data is the demographic and chronic conditioninformation. CMS protects beneficiaries’ personal information in all publicdata releases.

CMS Updates Open Payments Data

On Jan. 17, CMS updated the Open Payments dataset to reflect changes to thedata that took place since the last publication on June 30, 2016. Theupdated dataset is now available for viewing here.

Every year, CMS updates the Open Payments data at least once to includeupdates from disputes and other data corrections made since the initialpublication of the data. The updates affect all types of payments ortransfers of value to physicians and teaching hospitals and physicianownership or investment interests.

The updated Open Payments dataset reflects:

  • Changes made to records
  • Changes to delays in publication flags
  • Changes to disputed records
  • Records that were deleted

The financial data was submitted by applicable manufacturers and grouppurchasing organizations (GPOs).

CMS Extends Meaningful Use Reporting Deadline

CMS has extended the deadline to March 13 for hospitals to submit data onmeaningful use and the Hospital Inpatient Quality Reporting program, anagency official wrote in ablog post. The previous deadline was Feb. 28.

Hospitals stand to receive a 4 percent penalty in their Medicare paymentsif they fail to achieve meaningful use standards in data they report for2016.

Kate Goodrich, CMS’s director of clinical standards and quality, said theagency also plans to address hospital concerns about switching EHR vendorsor upgrading current systems in the agency’s annual inpatient hospitalpayment rule later this spring. CMS also is considering changing the numberof required quality measures and shortening the reporting period.

CMS Releases Drug Utilization Review Annual State Reports and StateComparison/Summary Report

On Jan. 17, CMS posted the FFY 2015Drug Utilization Review (DUR) Annual State Reportsalong with theState Comparison/Summary Reportfor FFY 2015.

FDA Issues Guidance on Pharma-Payer Communications

On Jan. 18, FDAissued guidanceoutlining how drug companies can communicate with payers aboutcost-effectiveness and other economic information regarding their productswithout violating marketing regulations. The guidance also outlines howcompanies can discuss their products with insurers before agency approval.

The 1997 FDA Modernization Act gave companies some safe harbor protectionsto communicate economic information with payers, and the 21st Century CuresAct expanded these protections. But companies say they still fear talkingabout these issues because of a lack of clear FDA guardrails.

The new guidance describes what type of data qualify as health careeconomic information, how they can be presented and the appropriateaudience for this communication. The guidance does not apply tocommunications with physicians and other health care providers, the agencynotes.

The agencyput out a memoexpressing its views on the first amendment, public health andcommunicating about unapproved uses of drugs and medical devices. Companieshave pressed FDA for clarity on marketing policies after a 2012 U.S. Courtof Appeals decision ruled that under the First Amendment the governmentcould not prohibit or criminalize the truthful off-label promotion ofFDA-approved drugs.

Another guidanceput out by FDA on Jan. 17 describes how drug companies can communicate someoff-label information about their products and avoid charges ofmisbranding. Per this guidance companies can communicate only off-labelinformation about FDA-approved uses of their products.

3. State Activities

California: California Withdraws Request for Obamacare Undocumented Coverage

On Jan. 18, California asked to withdraw its request for undocumentedimmigrants to be allowed to purchase Obamacare plans entirely with theirown funds, according to the state lawmaker who spearheaded the plan.

Supporters of the proposal had hoped it would be approved by HHS before theend of the Obama administration. But CMS took only an incremental step inthe waiver process on Jan. 17, leaving the final decision to the incomingTrump administration, which is expected to be much more resistant to theplan.

California sought the Obamacare waiver under a part of the law that allowsstates to pursue their own health reform ideas beginning in 2017. But thegesture would have been mostly symbolic. State officials estimated thatonly 17,000 people would have enrolled in Obamacare plans if the proposalwas approved because undocumented individuals wouldn’t be eligible toreceive federal subsidies that lower premiums or out-of-pocket medicalcosts.

Democrats in California’s congressional delegation urged that the requestbe approved, but several Republican lawmakers said it should be rejected.

California: Exchange Mistake Causes Higher Premiums for Thousands

Almost 25,000 Covered California consumers will face higher-than-expectedhealth insurance bills because the exchange sent the wrong subsidyinformation to their health plans. Insurers are reportedly sending out newbills based on accurate tax credits for those consumers, and in most casesthat means higher premiums than consumers had anticipated. CoveredCalifornia officials couldn’t explain the glitch, but it followed a mistakediscovered last month that could have prevented as many as 24,000 consumersfrom receiving their 2017 subsidies, at least temporarily. About 1.4million residents are enrolled in the California exchange.

Florida: Hospitals Unable to Access Low Income Pool Funds

Florida hospitals have not been able to access $608 million in supplementalMedicaid funds known as the Low Income Pool because the state hasn’tsecured the local contributions necessary to fund the program. The statehas been unable to send supplemental payments to any Florida hospitalbecause the required local match has not been collected.

Jackson Memorial, Broward Health, Shands Healthcare and Tampa General,among others, notified the state that they would hold more than $200million in local dollars normally sent to Tallahassee to fund thesupplemental Medicaid programs until Florida persuades more hospitals tocontribute. Florida uses the local contributions to pull down federalmatching Medicaid dollars.

Minnesota: Minnesotans in Immigration Program Can Now Seek Health Coverage

Minnesota is now granting eligibility for subsidized health coverage toimmigrants granted deferred action under former President Barack Obama’scontroversial DACA program, which Trump has vowed to repeal. DeferredAction for Childhood Arrivals was created through an executive order byObama and it allows deportation stays to people brought into the UnitedStates illegally as children. Minnesota estimates it can enroll some 6,000recipients of DACA if they are income-eligible. Critics of the state’s moveto extend health benefits to DACA recipients say it encourages illegalimmigration. The idea was recommended by Gov. Mark Dayton’s health taskforce last year as a way to close health equity gaps.

New Jersey: State Attorney General Limits Opioid Prescriptions in Emergency Rule

Acting on a directive from Gov. Chris Christie, the state attorney generalwill use emergency rule-making powers to limit initial opioid prescriptionsfor acute pain to a five-day supply. Failure by providers to adhere to thenew rules may result in a disciplinary hearing and the suspension orlimitation of medical licenses, Attorney General Christopher Porrino wrotein a letter to the state’s board of medical examiners last week. He askedfor the board to agree to the new regulations by Feb. 16.

Oregon: RAND Assesses Options for Financing Health Care Delivery inOregon

A new RAND analysis of three proposals to cover Oregon’s remaininguninsured residents would be more expensive and difficult to implement ifpart or all of the ACA is rolled back. The study, requested by the OregonHealth Authority, found the two proposals that would provide universalcoverage — a single-payer plan, and one that would rely on private coverageto achieve the same goal — would face obstacles in getting the federalwaivers needed. A third proposal, a state-administered public option thatwould compete with private plans in Oregon’s ACA marketplace, would be theeasiest to do, but it wouldn’t cover everyone. About 5 percent of thestate’s residents remain uninsured. To see the study,click here.

In other news, Oregon lawmakers are trying to get ahead of expected federalrollbacks in care for reproductive health by pre-filing legislation — aheadof the Feb. 1 session start — that would require coverage for abortion,birth control, vasectomies and other health services. WithH.B. 2232, the Reproductive Health Equity Act, Oregon joins several other statesthat are trying to preserve such benefits as coverage for contraceptionwithout a copayment. The abortion protection may be controversial, but thebill allows employers to make religious exemptions.

Tennessee: Lawmakers Introduce Bill to Switch to Medicaid Block Grant

Republican state lawmakers haveintroduced a billthat prepares Tennessee to switch to a Medicaid block grant, in case Trumpand congressional Republicans make good on a plan to revamp the programfinancing. But the legislation would also pave the way for Tennessee toexpand eligibility up to 138 percent of the federal poverty level as theACA envisions. The block grant amount would take inflation into account aswell as population growth.

4. 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.

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 in accordance with Section1834(a)(20) of the Act for certain practitioners and suppliers who furnishor fabricate prosthetics and custom‑fabricated orthotics. In addition, thisrule also includes authority for the Centers for Medicare & MedicaidServices (CMS) to revoke the Medicare enrollment of Durable MedicalEquipment, Prosthetics, Orthotics and Supplies (DMEPOS) suppliers that submit claims for items that donot meet the