Washington Healthcare Update

April 17, 2017

Pardon Our Dust

We recently launched this new site and are still in the process of updating some of our archived content. Some details of this article may be incomplete, links may be broken, and other elements may not display properly yet. We appreciate your patience and understanding.

This Week: Congress is in recess…While there have been discussions about health care reform, the focus is turning to funding the government after April 28…CMS finalized the marketplace rule.

1. Congress



2. Administration

3. Other

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


Reps. Rodgers, Tsongas Garner Bipartisan Support for Teaching Health Center GME Program

Reps. Cathy McMorris Rodgers (R-WA) and Niki Tsongas (D-MA) are garneringsupport for reauthorizing at least three years of funding for theTeaching Health Center Graduate Medical Education (GME) program—a programthat helps teaching health centers train providers. More than 90 lawmakershave signed onto a dear-colleague letter to House Energy & CommerceCommittee leaders.

Osteopathic physicians say the program, while small compared to MedicareGME grants, could be a model for reforming Medicare GME because the programis transparent and has succeeded in training and retaining physicians inmedically underserved areas.

The program, which is run by the Health Resources and ServicesAdministration, expires after Sept. 30. It is on a long list of programsthat expire this year, and the American Osteopathic Association hopes tobring attention to the program to increase the chances that it will beincluded in expected legislation reauthorizing many of the expiringprograms at the end of the year.

HRSA’s teaching health center GME program is designed to train primary careproviders in areas of the country that need it most. The Medicare GMEprogram includes direct and indirect payments to hospitals, and lawmakershave criticized indirect Medicare GME because hospitals do not have to usethe money for training doctors.

John Sealey, an osteopathic surgeon and director of medical education atAuthority Health in Detroit, said the Teaching Health Center GME programrequires health centers to account for every dollar they spend. The programworks well because it lets health centers use the money to tailor thetraining of residents to the areas they serve. The health center programsmust meet the same criteria as traditional Medicare GME, Sealey said, butthe funding can also be used for additional training, such as thepopulation health certificate that Authority Health created. To becertified in population health, physicians must visit homeless shelters andfood banks to help them deal with the root causes of health problems forpatients in their area, such as hunger and poor diets.

Lawmakers Ask for Mental Health Program Funding

The co-authors of the bipartisan legislation Helping Families in MentalHealth Crisis Act are asking appropriators to fund the programs authorizedby the new law. Reps. Tim Murphy (R-PA) and Eddie Bernice Johnson (D-TX)sent a letter to House Appropriations Chairman Tom Cole and ranking memberRosa DeLauro asking that the committee consider funding the programs themental health reform legislation included in the 21st Century Cures Act.

“Treatment delayed is treatment denied—waiting to fund this law willcontribute to more crime, violence, homelessness, and the daily loss of 959Americans as a result of a mental illness,” the letter states.

To see the letter, clickhere.


Senate Bill Aims to Increase Number of Doctors in Rural Areas

A bipartisan group of senators unveiled a bill to increase the number ofdoctors in rural and other medically underserved areas. The legislation,which has been endorsed by major health organizations, would allowinternational doctors trained in the United States to remain in the countryif they practice in underserved areas.

The bill—sponsored by Sens. Amy Klobuchar (D-MN), Susan Collins (R-ME) andHeidi Heitkamp (D-ND)—extends the “Conrad 30” program that allows 30doctors per state to remain in the country without having to return home ifthey agree to practice in an underserved area for three years. The measureallows for the program to be expanded beyond 30 slots if certain thresholdsare met. The bill also allows the spouses of doctors to work and providesworker protections to prevent the doctors from being mistreated. Thelegislation has been endorsed by the American Medical Association,the American Hospital Association and the Association of American MedicalColleges.

For more information,click here.

MedPAC Finalizes Draft Recommendations to Curb Part B Drug Prices

On April 6, congressional Medicare advisers finalized recommendations forCongress aimed at reducing growth in Part B drug spending.

The vote was unanimous in favor of the recommendations, but a few MedicarePayment Advisory Commission (MedPAC) members said they dislike some of thepolicies, and the option to allow a third-party arbiter to determine pricesfor drugs that do not have competition caused the most debate.

The commission recommended modifying the reimbursement for Part B drugsthat are paid for based on wholesale acquisition cost (WAC)—amanufacturer’s undiscounted price to wholesalers or direct purchasers.Under the proposals, the payment rate for WAC-priced drugs would be reducedto WAC plus 3 percent, down from the current rate of WAC plus 6 percent.

MedPAC recommended requiring all Part B drug manufacturers to submit annualaverage sales price data. Currently, only Medicare Part B drugmanufacturers with Medicaid drug rebate agreements are required to submitannual average sales price data.

For drugs that are paid for based on average sales price, physicians andhospital outpatient departments are typically paid the ASP of a drug, plusa 6 percent add-on. The proposals would require manufacturers to payMedicare a rebate with the ASP for their product if it exceeds an inflationbenchmark such as the consumer price index.

The commission also recommended creating a voluntary Drug Value Programthat would be phased in by 2022. Under the program, private vendors wouldnegotiate lower Part B drug prices.

The Pharmaceutical Research and Manufacturers of America and the CommunityOncology Alliance oppose the recommendations, which they say threatenpatient access to therapies.

2. Administration

Trump Administration Finalizes Obamacare Stabilization Rule

On April 13, HHS released a final rule it says will help stabilizeObamacare’s insurance markets as the administration plans a broader repealstrategy. The rule implements a series of policies tightening enrollmentstandards.

The final rule makes several policy changes to improve the market andpromote stability, including:

  • 2018 Annual Open Enrollment Period: The final rule adjusts the annual open enrollment period for 2018 to more closely align with Medicare and the private market. The next open enrollment period will start on Nov. 1, 2017, and run through Dec. 15, 2017, encouraging individuals to enroll in coverage prior to the beginning of the year.
  • Reduce Fraud, Waste and Abuse: The final rule promotes program integrity by requiring individuals to submit supporting documentation for special enrollment periods and ensures that only those who are eligible are able to enroll. It will encourage individuals to stay enrolled in coverage all year, reducing gaps in coverage, resulting in fewer individual mandate penalties and helping to lower premiums.
  • Promote Continuous Coverage: The final rule promotes personal responsibility by allowing issuers to require individuals to pay back past due premiums before enrolling into a plan with the same issuer the following year. This is intended to address gaming and encourage individuals to maintain continuous coverage throughout the year, which will have a positive impact on the risk pool.
  • Ensure More Choices for Consumers: For the 2018 plan year and beyond, the final rule allows issuers additional actuarial value flexibility to develop more choices with lower premium options for consumers, and to continue offering existing plans.
  • Empower States & Reduce Duplication: The final rule reduces waste of taxpayer dollars by eliminating duplicative review of network adequacy by the federal government. The rule returns oversight of network adequacy to states that are best positioned to evaluate network adequacy.

To see the rule,click here.

CMS Announces Oncology Care Model Stakeholder Feedback Opportunity

TheOncology Care Model (OCM) teamwill be hosting the OCM Stakeholder Public Forum on Thursday, May 11, 2017, from 1-4 p.m. EDT. CMS invites allinterested OCM stakeholders to attend the public forum, with the goal ofhearing feedback about OCM.

The forum will include a brief introduction from the OCM team followed bydiscussion. An agenda will be sent to registrants two weeks prior to theforum and will include gathered topics that may be submitted via the textfield in the registration link below. Attendees may attend virtually orin-person at the Centers for Medicare & Medicaid Services CentralOffice located at 7500 Security Boulevard, Baltimore, Maryland 21244.

Space is limited, so if planning to attend in person, registration issuggested as soon as possible. Each organization is requested to limit itsin-person attendance to two individuals. In-person attendees are on afirst-come, first-serve basis. Registration will close one week in advanceof the forum. Persons who are not registered will not be permitted to enterthe CMS Central Office and thus will be unable to attend the forum.

Registration is available via this linkuntil 5 p.m. EDT, May 4, 2017.

For questions or additional event information, emailOCMSupport@cms.hhs.gov.

CMS Releases 2015 Data on Geographic Variation in the Medicare Program

On April 11, CMS posted the annual release of the Geographic VariationPublic Use File with data for 2015. The Geographic Variation Public UseFile is a series of downloadable tables and reports that containdemographic, spending, utilization and quality indicators for the Medicarefee-for-service population. It presents data at the state (including theDistrict of Columbia, Puerto Rico and the Virgin Islands), hospitalreferral region (HRR) and county levels.

This public use file can bedownloaded here.

VHA Introduces Scheduling Transparency Website

On April 12, the Veterans Health Administration (VHA) released a website that showshow long patients are waiting for appointments at VA hospitals and clinicsand provides quality information comparing VA centers with private-sectorhospitals.

The website, developed in-house, is the only one of its kind in thecountry. While it does not allow patients to schedule appointmentsthemselves, it eventually will be linked directly to a new VA schedulingsystem, said Poonam Alaigh, the department’s acting undersecretary forhealth.

The system lists average wait times for different specialties and is addingcomparative data on hospitals in cities and towns, as well as Yelp-stylereviews by veterans.

In a demo in Washington, VA officials showed that patients had averagewaits of 11 to 56 days at eight VA primary care clinics in Phoenix. Notingthat 56 days was a long wait, Alaigh said transparency could inspirecompetition and improvement in the system.

The site was to be officially released May 1. It showed that veteranscurrently have about 3,000 pending urgent referrals to specialists. Whenthe VA started attacking that problem in November 2015 by simplifying thedepartment’s byzantine scheduling system, there were more than 57,000 inthat category, Alaigh said.

White House Calls for Agencies to Shrink Their Workforces

On April 12, the White House directed federal agencies to make deeppersonnel cuts over the next year. Agency heads are to receive a 14-pagememorandum outlining changes. The memo, which replaces the federal hiringfreeze Trump enacted in January, outlines cuts based on Trump’s skinnybudget, released last month. The budget proposal called for deep cuts todomestic programs and an increase in military spending.

The memo tells agencies to submit a plan by June 30 that will save moneyand reduce their staffs. They must also come up with an agency reform planto shrink personnel to accommodate long-term budget reductions.

Office of Management and Budget Director Mick Mulvaney said some agenciessuch as the Defense Department and Veterans Affairs will add staff.

The memo says that agencies should eliminate programs that are duplicative,nonessential to the agency’s mission or are already carried out in someform by state and local government.

Mulvaney insisted the process could be bipartisan and include public input.

3. Other

Adapt Pharma Expands Free Nasal Spray Program to Colleges andUniversities

On April 10, Adapt Pharmaannouncedit is donating 20,000 cartons of the anti-opioid-overdose nasal sprayNarcan to colleges and universities.

The new effort was announced by the company and former President BillClinton in Little Rock, Arkansas, at the Clinton Health Matters ActivationSummit. It builds on an effort by the initiative and the company, focusedon K-12 schools, which has already led to the donation of 3,300 doses ofthe spray to high schools in 33 states.

The Centers for Disease Control and Prevention has said that heroinuse in the last decade has more than doubled among young adults aged 18 to25—a rise that has coincided with an increase in heroin deaths.

The spray can be used for the emergency treatment of known or suspectedopioid overdoses. Each carton contains two doses.

Colleges and universities can sign up to participate here.

4. State Activities

California: New Figures Show Higher Vaccination Rates in Children

California public health officials recently reported the highestkindergarten vaccination rates in more than 15 years.New figuresshow nearly 96 percent of kindergartners in the 2016-17 school year werevaccinated, a three-point jump from the previous school year.

A law passed last year nixed the state’s “personal-belief” provision thatallowed parents to refuse vaccinating their kids for virtually any reason,and all children without medical exemptions must now be vaccinated beforestarting school. Vaccination rates had dropped in recent years as moreparents opted out, but a measles outbreak at Disneyland in early 2015 drewnational attention to the issue.

Florida: Trump Administration Gives Florida Nearly $1 Billion in Supplemental Medicaid Payments

The Trump administration has increased by nearly $1 billion the amount ofsupplemental Medicaid payments Florida is set to receive in the upcomingyear.

Florida Gov. Rick Scott praised the administration, saying in a statementthat “it is great to have a partner in Washington who is willing to workwith us to help our state.”

The former Obama administration had pared back the amount of money Floridareceived for its Low Income Pool (LIP) from a high of $2 billion to $608million in 2015, and set an expiration date of June 30 after the staterefused to expand Medicaid. The administration maintained that supplementalMedicaid spending programs were not a good use of tax dollars and thatproviding people access to health care coverage was a better use of themoney.

Scott sued the Obama administration in federal court to force it tocontinue Florida’s supplemental Medicaid funding but eventually dropped it.

The governor has been working closely with the Trump administration tocontinue LIP funding. The approval comes as the Florida Legislature workson its budget for the upcoming fiscal year, which begins July 1.

Kentucky: Consultants Prepare Draft Documents for Kentucky Medicaid Expansion

Consultants that helped create Kentucky’s new Medicaid expansion model aredeveloping key operational details for the program. Newdraft documents were prepared by Deloitte Consulting forSVC—the Indiana-based consulting firm founded by now-CMS Administrator Seema Verma.

Kentucky initially opted for the traditional expansion under DemocraticGov. Steve Beshear that covered more than 400,000 people. Gov. Matt Bevinhas asked federal officials for several changes that could curtailenrollment. Among other things, Bevin’s plan would institute premiums forthe entire expansion population—ranging from $1 to $15 per month, dependingon income—a work requirement, penalties for using the ER inappropriately,HSA-style accounts, and a waiver of non-emergency medical transportationbenefits.

Massachusetts: Massachusetts Seeking Waiver to ACA’s Employer Mandate

Massachusetts is seeking a waiver to the ACA’s employer mandate, and toallow a state-based reinsurance and risk adjustment program to stabilizethe health insurance market. The state wants HHS Secretary Tom Price andCMS Administrator Seema Verma to relax reporting and tax requirementsimmediately to allow more state flexibility to build on its coveragesuccesses. The state is asking Verma to allow states to implement their ownemployer-sponsored coverage alternative, including swapping out the federalemployer mandate for a state-based approach. The state also wants morecontrol over its merged nongroup and small group markets and thestate-specific way of rating factors. Massachusetts wants more control overrisk adjustment, reinsurance, health insurance coverage standards andoperation of the state’s marketplace, as well.

Massachusetts would also like to waive small business taxes and allowstates to allocate them based on their own criteria.

Oklahoma: Oklahoma Weighs Heavy Cuts to Provider Pay, Medicaid Benefits

Oklahoma’s Medicaid agency is considering cutting provider reimbursementrates by 25 percent and eliminating several optional benefits amid ongoingbudget issues, officials said April 11.

This is the second straight year that Oklahoma is considering a 25 percentcut to provider rates. Oklahoma ultimately avoided painful cuts to providerrates and benefits last year, but a dire outlook for fiscal year 2018 isforcing the state to reconsider.

Oklahoma will consider eliminating or reducing benefits related topharmacy, behavioral health treatment, dialysis, adult organ transplants,hospice services and private duty nursing services, among others.

Cutting provider reimbursement rates by 25 percent would put physicianpayment levels at 65 percent of Medicare rates, officials said. Thereductions would affect all provider types, including hospitals, nursingfacilities and pharmacy.

Pennsylvania: CMS Announces $10 Million for Pennsylvania’s MedicareRural Health Model

On April 11, CMS announced that $10 million in startup funds is nowavailable for the Pennsylvania Department of Health to set up its newalternative payment model for Medicare in rural hospitals. The model willbe tested over seven years, four of which will be partially funded by CMS.HHS Secretary Tom Price is authorizing the initial $10 million for thePennsylvania Rural Health Model through CMS’s innovation center; after 12months, Pennsylvania can apply for an additional $15 million to continueimplementation.

The model was launched Jan. 12 and testing will run through the end of2023. The demonstration aims to forge a large-scale payer and ruralhospital network, according to the CMS model summary.

The new model would move away from Medicare fee-for-service and set aprospective budget for all Medicare payers for each participating ruralhospital. The budget is based on the total net revenues historically paidto these hospitals for inpatient and outpatient care. Under the model,payers will each pay their part of the global budget to the hospitals. Theoverall budget for each hospital must be approved by CMS.

The idea is to let hospitals better predict their costs so they can startinvesting in better care. The rural hospitals that join the effort willhave to bring their stakeholders and communities into long-term planningfor higher quality care and preventive care. The state will help thehospitals adapt their systems for the new payment model.

Six rural hospitals will take part in 2018, at least 18 in 2019 and atleast 30 in subsequent years. Pennsylvania agreed to have each ruralhospital’s global budget represent 75 percent of that hospital’s netrevenue by 2018 and at least 90 percent of their net revenue for the restof the testing period.

Pennsylvania will also try to bring Medicaid payers into the model,according to CMS. The state is aiming to save $25 million in Medicarehospital costs throughout the seven-year period, and the per-personMedicare yearly inflation rate must be budget neutral.

Texas: House Committee Considers Bill to Provide Information onVaccination Levels

The Texas House public health committee recently heard testimony on a bill thatwould require schools to provide more detailed information aboutvaccination levels amid growing rates of unvaccinated children. Billsupporters say that the data about school vaccination rates would providetransparency to parents worried about the spread of chidlhood diseases. Butparents who do not vaccinate their children said the bill would fosterbullying and discrimination against their children. Since 2003, when thestate made it easier for people to opt out of vaccines, the number ofunvaccinated children in Texas has climbed to nearly 45,000.

5. Regulations Open for Comment

FDA Considers Establishing New Office of Patient Affairs

The FDA is considering establishing a new Office of Patient Affairs thatwould centralize its work on patient involvement in the review and approvalof drugs and medical devices, according to aMarch 14 noticein the Federal Register.

Comments on the new office are due by June 12, 2017.

FDA Proposes 1,000 Medical Devices to Exempt From PremarketNotification

On March 14, FDA took one of its first actions to begin implementing the21st Century Cures Act, byproposingmore than 1,000 medical devices it will exempt or partially exempt from thepremarket review process. The devices on the list are sufficiently wellunderstood and do not present risks that require premarket notification toprovide a reasonable assurance of safety and effectiveness, FDA said. Theagency will finalize the list after a 60-day public comment period.Comments are due by May 15, 2017.

FDA Extends Comment Period on Biosimilar Interchangeability Guidance

FDA is extending the public comment period for itsdraft guidanceoutlining how biosimilar sponsors can demonstrate that their products areinterchangeable with other biologics, following extension requests from toptrade associations.

The agency laid out in a January 2017 draft guidance its first attempt atcodifying the requirements that sponsors must satisfy to demonstrateinterchangeability. The agency said it would make case-by-casedeterminations of interchangeability, but indicated it would requirestudies measuring the impact of switching on clinical pharmacokinetics andpharmacodynamics.

The Biotechnology Innovation Organization (BIO), Pharmaceutical Researchand Manufacturers of America and Covington & Burling all requestedcomment period extensions, according to documents posted onRegulations.gov.

The comment period, which was set to close on March 20, will be extended 60days until May 19.

CMS Releases Proposed Hospital Pay Rule

In a new proposed2018 Medicare payment rule, CMSsays it will look to cut hospital industry regulations and streamlineoversight, and it’s asking hospitals themselves for help. The agency issoliciting ideas for changes to rules and procedures governing acute-careand long-term care hospitals. The initiative aims to “relieve regulatoryburdens for providers,” as well as promote flexibility and innovation, CMSsaid in a statement.

The new proposed rule would suspend for one year a provision penalizinglong-term care hospitals that receive more than 25 percent of patients froma single acute-care hospital. It would also reduce certain qualityreporting requirements for hospitals that have implemented electronichealth records.

CMS projects the rule would increase Medicare spending on inpatienthospital services by $3.1 billion in 2018, with operating payments tohospitals increasing 2.9 percent. Long-term care hospitals’ Medicarepayments are projected to decrease by $173 million, or 3.75 percent, overthe same period.

Comments on the rule must be submitted no later than 5 p.m. EDT on June 13,2017.

6. Reports

MACPAC Weighs in on Capitated Rates and Medicaid

Analysts from the Medicaid and CHIP Payment and Access Commission (MACPAC)say that lawmakers who want to convert federal Medicaid funding intoper-person payments can look at how states negotiate capitated rates withmanaged care plans and the budget neutrality of waivers with CMS to forge asystem that would work well for states and the federal government.

Twenty-six states currently run their Medicaid programs through some kindof capitated system. However, the system works differently in each state,and it also works on different levels: There is the federal level, whereCMS negotiates budget-neutral 1115 waivers with states to allow them to runtheir programs through capitated managed care system