Washington Healthcare Update

June 19, 2017

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This Week: We continue to wait on a Senate repeal/replace bill…CSR payments continue to be a concern.

1. Congress



2. Administration

3. Courts

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


Reps. Welch, Harper Introduce Bill to Expand 340B Drug Discounts

Reps. Peter Welch (D-VT) and Gregg Harper (R-MS) introduced a bill designedto close a loophole in the 340B drug program that the congressmen sayunfairly allows drug companies to deny legally mandated discounts on orphandrugs to safety-net hospitals and other clinics serving a disproportionateshare of low-income patients.

The bill would permit an exclusion on orphan drugs only in instances inwhich they are being used to treat a rare disease—if hospitals arepurchasing the drug to treat a more common disease, drug makers would needto provide the 340B discounts.

To read the bill,click here.

House Approves “Third Bucket” Obamacare Bills

On June 13, the House passed the first in a series of bills that make upthe so-called third bucket of the GOP’s repeal and replace strategy.

The Verify First Act,H.R. 2581, passed 238-184 along mostly party lines and would require individuals toverify their income eligibility and citizenship or legal immigration statuswith the Social Security Administration before accessing premium taxcredits to buy health coverage.

Republicans said it is designed to close a loophole that protects taxpayerdollars from going to people who are not eligible for subsidies. Democratsmaintained the Treasury Department already has protections in place andcharged the effort is designed to target undocumented immigrants.

Other third-bucket bills that passed last week include a measure,H.R. 2372, which would allow veterans to access Obamacare subsidies if they are notenrolled in health coverage at the Veterans Administration and a bill,H.R. 2579, that would address how subsidies interact with COBRA coverage.

A vote on a fourth bill dealing with medical malpractice legislation (H.R.1215) was postponed because some conservatives are worried about imposingfederal standards on states.


Senate Appropriator Urges Against President Trump’s Proposed Cuts to NIH, CDC

On June 15, senior Senate appropriator Roy Blunt (R-MO) panned the Trumpadministration’s fiscal 2018 budget proposal, vowing not to sign off on anyspending bill that would slash funding to key public health programs.

Blunt, chairman of the Labor-HHS-Education appropriations subcommittee,singled out proposed funding cuts to the NIH and CDC as particularlyunacceptable.

Sen. Patty Murray, the panel’s ranking Democrat, also criticized the budgetproposal for including devastating cuts to HHS’s funding.

The blueprint proposed reducing NIH’s funding by nearly 20 percent andcutting CDC funding by $1.3 billion.

Sen. Alexander Urges White House to Fund Obamacare Subsidies

On June 15, Sen. Lamar Alexander urged the White House to continue fundingkey Obamacare cost-sharing subsidies for the next two years.

Alexander, during a Senate hearing, said he believes the Trumpadministration should make the payments to insurers “at least through 2018,and should probably go ahead and do it through 2019.”

The Senate HELP chairman is the second high-profile Republican lawmaker inthe last few weeks to call for funding the subsidies. The other was HouseWays and Means Chairman Kevin Brady, who said that Congress shouldtemporarily appropriate money for the insurer payments.

The future of the subsidies, worth about $7 billion this year, has been indoubt since House Republicans won a lawsuit challenging the Obamaadministration’s implementation of the payments. That lawsuit is stillunder appeal, but President Donald Trump has repeatedly threatened to cutoff the funding. Insurers have warned that without the funding, they wouldbe forced to dramatically hike premiums or leave the Obamacare marketsaltogether.

HHS Secretary Tom Price would not commit to maintaining the funding,telling Alexander that he cannot comment because he is a defendant in thelawsuit. Price noted that the White House’s proposed fiscal 2018 budgetincludes funding for the cost-sharing subsidies.

Appropriators Starting the Next Continuing Resolution

Senate Majority Leader Mitch McConnell said on June 13 that he hasinstructed appropriators to temporarily rely on spending limits from fiscal2017 as they write new bills.

McConnell’s comments appear to be laying the groundwork for a continuingresolution that would extend the fiscal 2017 package, as many Republicansalready anticipate. He also said he hoped to reach a deal with Democrats toset new spending levels sooner rather than later.

Any Senate budget deal for fiscal 2018 would need to address the loomingspending cuts under sequestration, which are set to take effect inSeptember. Without congressional action, this fall’s budget caps wouldforce Congress to cut about $3 billion from domestic spending and $2billion from defense spending, according to GOP appropriators. Domesticspending would be capped at $516 billion and defense spending would becapped at $549 billion—levels both parties have protested.

2. Administration

CMS Releases 1991-2014 Health Care Spending by State

On June 14, CMS’s Office of the Actuary (OACT) released state-level healthcare spending data for the period 1991-2014. The data shows that while moststates experienced faster growth in 2014 due to Medicaid expansion andenrollment in exchange plans, per capita health spending in Medicaidexpansion and non-expansion states grew at similar rates. The report alsofound that the most recent economic recession, which ended in 2009, andmodest recovery since then, had a sustained impact on health spending andhealth insurance coverage. Every state experienced slower growth in percapita personal health care spending from 2010-2013 than experienced duringthe period 2004-2009.

David Lassman, the lead author of the report noted that “ ‘recent economicand health sector factors have had clear impacts by state, both by payerand in the rates of overall per capita personal health care expendituregrowth; however, during the 2009 to 2014 period, the variation in spendingbetween the lowest and highest states was virtually unchanged.’ ”

The report, published as a web first in Health Affairs, offers context forunderstanding how health spending varies across states. The analysisupdates previous estimates published in 2011 and examines personal healthcare spending (or the health care goods and services consumed) through aresident-based view. These estimates are also presented both by type ofgoods and services (such as hospital services and retail prescriptiondrugs) and by major payer (including Medicare, Medicaid, and private healthinsurance) for the individuals who reside in a state.

For more information,click here.

CMS Actuary Releases the Estimated Financial Effect of the AHCA

The House-passed Obamacare repeal bill would leave 13 million moreAmericans uninsured over the next decade and reduce federal spending by$328 billion,according to an analysisreleased June 13 by CMS’s Office of the Actuary.

The overage estimate is well below the 23 million more uninsured that theCBO has projected underthe American Health Care Act. The congressional scorekeeper additionallyestimated that the American Health Care Act would reduce spending by only$119 billion over a decade.

The disparity is a result of differing assumptions about whethercost-saving measures in the House bill will work. The CMS actuary and CBOhave disagreed in the past on the budgetary effects of legislation,including surrounding the enactment of Obamacare.

Most of the coverage losses stem from the anticipated rollback ofObamacare’s Medicaid expansion. CMS estimates that 6 million fewerindividuals would be shut out because of the House bill’s tightereligibility criteria, and that an additional 2 million will cycle out ofthe program because of new requirements. Medicaid spending will be cut by$105 billion by 2026, chief actuary Paul Spitalnic estimated—amounting toan 11 percent reduction.

The CMS report has mixed news about what the House GOP bill will do toinsurance premiums. It projects that average premiums will be 13 percentlower in 2026 under the AHCA. But once subsidies are taken into account,premiums would be 5 percent higher for enrollees—and out-of-pocket costswould be 61 percent higher than under Obamacare.

The latest analysis comes as the Senate seeks to build consensus around itsown repeal package. The chamber is hoping to vote on a bill before breakingfor the July 4 recess.

New Jersey Gov. Christie Says Opioid Commission May Propose ChangingHIPAA Rules

The presidential opioid commission may propose changing patient privacyregulations so there are clear exemptions for overdose cases, Gov. ChrisChristie, the commission chairman, said June 12.

Christie said the commission could recommend a retooling of the HealthInsurance Portability and Accountability Act of 1996, or HIPAA, sophysicians can notify close relatives when a patient’s overdose is reversedwith the drug Narcan.

Christie told reporters he had a good meeting with HHS Secretary Tom Pricein which they discussed the issue. He also said he is in talks with lawyersat the Justice Department to make sure the commission comes up with aproposal that is implementable.

HIPAA created national guidelines for how to protect a patient’s medicalrecords and other health information.

3. Courts

Supreme Court Rules in Sandoz vs. Amgen

Under a unanimousSupreme Court decisionissued June 12, cheaper versions of expensive biologic medicines will beable to reach the market sooner.

In Sandoz v. Amgen, the high court reversed a lower-court rulingthat said biosimilar companies could not give branded biologic makers thelegally required 180 days notices of their intent to sell a copycat untilafter it receives FDA approval. Sandoz, which was seeking to market abiosimilar version of Amgen’s biologic Neupogen, argued this effectivelygave the brand company six additional months of marketing exclusivity.

The justices agreed with Sandoz’s argument, that the Biologics PriceCompetition and Innovation Act allows the 180-day notice of marketing tocome either before or after the biosimilar receives FDA approval.

The Supreme Court also vacated the Federal Circuit’s ruling in a secondissue at hand in the case—whether biosimilar makers must engage in apatent-sharing process with the biologic company prior to approval. TheFederal Circuit had said this was not mandatory but Amgen disagreed.

The Supreme Court ruled that the patent-sharing outlined in the biosimilarlaw is not enforceable by injunction under federal law.

The Supreme Court said the Federal Circuit should reexamine this issue anddetermine whether a state-law injunction is available if a biosimilarcompany doesn’t share its patent information with the biologic maker.

4. State Activities

California: Covered California Adopts $314 Million Budget

Covered California’s board adopted a $314 million 2017-18 budget, withroughly one-third earmarked for sales, marketing and outreach. “Werecognize there is a significant amount of uncertainty in the broadenvironment, but what is certain is our fiscal stability and solidfinancial planning,” exchange director Peter Lee said Thursday.

The board also confirmed changes in contract language that provides forinsurers to submit two versions of rate filings: proposed rates withcost-sharing reduction payments, and rates without the subsidies. CoveredCalifornia will opt for the higher rates by mid-August if the federalgovernment fails to confirm whether it will fund the subsidies through theend of 2018. Covered California is still figuring out what to do if thesubsidies are continued after its self-imposed August deadline.

Texas: Gov. Abbott Signed Bill Allowing Mothers to Get Postpartum Depression Screenings

Texas Gov. Greg Abbott signed a bill that would allow new low-incomemothers to get postpartum depression screenings and counseling throughMedicaid or the Children’s Health Insurance Program next year. Meanwhile,Abbott vetoed a bill that would extend the life of Women’s Health AdvisoryCommittee, a state group that provides recommendations on women’s healthissues, because he believes the panel’s mission has been fulfilled. Thegovernor included maternal mortality on a list of items that he wants theLegislature to address later this summer during a special session.

5. Regulations Open for Comment 

CMS Proposes 2018 Payment and Policy Updates for Medicare HospitalAdmissions

CMS is offering hospitals a 90-day meaningful use reporting period in 2018,according to aproposed payment rulereleased April 14.

The first major payment regulation released under HHS Secretary Tom Pricemarks a change from the back-and-forth over electronic health recordsmeaningful use requirements seen under the Obama White House. The previousadministration would typically propose a yearlong reporting period, thenscale it back at the last minute after intense lobbying pressure. As aRepublican congressman from Georgia, Price often pushed the Obamaadministration hard for 90-day meaningful use reporting periods.

In connection with the 21st Century Cures Act, CMS also isproposingto remove from meaningful use clinicians who see most of their patients atambulatory surgery centers.

Price and CMS are also changing previously finalized requirements fromelectronic clinical quality measures. Under the proposed rule, hospitalscan select six measures and report on them for the first three quarters of2018.

For more information,click here.

CMS is Accepting Measure Submissions for the Advancing Care InformationPerformance Category until June 30

CMS is still accepting measures for the Advancing Care Informationperformance category of the Merit-based Incentive Payment System (MIPS).The Annual Call for Measures and Activities ends June 30, 2017.

CMS encourages providers to identify and submit measures for the MIPSAdvancing Care Information performance category. To be considered,proposals must include specific criteria including, but not limited to,measure description, measure type and numerator and denominatordescriptions.

CMS requests that stakeholders consider outcome-based measures, patientsafety measures and cross-cutting measures that use certified EHRtechnology to support the improvement activities and quality performancecategories of MIPS.

Use theAdvancing Care Information Submission Formto propose measures for inclusion, and send the form toCMSCallforMeasuresACI@ketchum.com.

To learn more about the process for submitting measures, please visit theCall for Measureswebpage, and review theCall for Measures and Activities fact sheet.

CMS Looks to Boost Medicare Payments to Rehab Hospitals, NursingFacilities and Hospices

CMS could boost Medicare payments to a swath of rehabilitation hospitals,nursing facilities and hospices under a trio of new proposed rules.

On April 27, the agency floated a$390 million bumpin federal payments to skilled nursing facilities in 2018—or roughly 1percent higher than this year. Hospices, meanwhile,would receivea 1 percent increase worth $180 million.

CMSis planningto increase reimbursement to rehab hospitals by $80 million for 2018, inaddition to eliminating a penalty on facilities that don’t submit certaindata to the federal government on time.

Similar toproposed payment rules for otherproviders, CMS is asking the industries for input on regulations it shouldoverhaul or eliminate. CMS Administrator Seema Verma and HHS Secretary TomPrice have pledged to review all of the agency’s rules in a bid to cutunnecessary or burdensome regulations.

Comments on the trio of rules must be received no later than 5 p.m. on June26, 2017.

CMS Seeking Comments on Data Elements in IMPACT Act

CMS has contracted with the RAND Corporation to develop standardizedpatient/resident assessment data elements in alignment with the ImprovingMedicare Post-Acute Care Transformation Act of 2014 (IMPACT Act).

CMS seeks comments from stakeholders on data elements that meet the IMPACTAct domains of cognitive function and mental status; medical conditions andco-morbidities; impairments; medication reconciliation; and carepreferences. The public comment period opens on April 26, 2017, and closeson June 26, 2017.

For more information, view thepublic commentwebpage.

CMS Publishes Post-Acute Care Proposed Rules

On May 11, CMS published the following proposed rules:

CMS Issues Proposed Revision Requirements for Long-Term CareFacilities’ Arbitration Agreements

On June 5, CMS issued proposed revisions to arbitration agreementrequirements for long-term care facilities. The proposed revisions wouldhelp strengthen transparency in the arbitration process, reduce unnecessaryprovider burden and support residents’ rights to make informed decisionsabout important aspects of their health care.

The Reform of Requirements for Long-Term Care Facilities Final Rule,published on Oct. 4, 2016, listed the requirements facilities need tofollow if they choose to ask residents to sign agreements for bindingarbitration. The final rule also prohibited predispute agreements forbinding arbitration. The American Health Care Association and a group ofnursing homes sued for preliminary and permanent injunction to stop CMSfrom enforcing that requirement. The court granted a preliminary injunctionon Nov. 7, 2016. After that decision, CMS reviewed and reconsidered thearbitration requirements in the 2016 Final Rule.

The proposed rule focuses on the transparency surrounding the arbitrationprocess and includes the following proposals:

  • The prohibition on predispute binding arbitration agreements is removed.
  • All agreements for binding arbitration must be in plain language.
  • If signing the agreement for binding arbitration is a condition of admission into the facility, the language of the agreement must be in plain writing and in the admissions contract.
  • The agreement must be explained to the resident and his or her representative in a form and manner they understand, including that it must be in a language they understand.
  • The resident must acknowledge that he or she understands the agreement.
  • The agreement must not contain any language that prohibits or discourages the resident or anyone else from communicating with federal, state or local officials, including federal and state surveyors, other federal or state health department employees, or representatives of the State Long-Term Care Ombudsman.
  • If a facility resolves a dispute with a resident through arbitration, it must retain a copy of the signed agreement for binding arbitration and the arbitrator’s final decision so it can be inspected by CMS or its designee.
  • The facility must post a notice regarding its use of binding arbitration in an area that is visible to both residents and visitors.

This proposed rule is scheduled to be published in the Federal Register on June 8, 2017, and comments are due by Aug. 7,2017. For more information,click here.

6. Reports

MedPAC June Report Focuses on MACRA

The Medicare Payment Advisory Commission (MedPAC) released itsJune report to Congress on June 15. In it the advisory bodysays Medicare needs to pay doctors based on outcomes like preventablehospitalizations, but technology does not currently allow the agency toautomatically extract from EHRs and data registries the information that isneeded for such a payment system.

MACRA’s Merit-based Incentive Payment System is a “process-oriented” methodof judging physician quality, and the data it uses is not comparable fromone medical specialty to the next, the MedPAC wrote in its report. UntilEHRs and data registries can easily provide statistics like emergencydepartment visits and patient mobility postsurgery, the MIPS program shouldallow doctors to be judged against the performance of other physicians intheir geographic area, the report said. MIPS takes effect this year andpenalizes doctors with cuts of up to 4 percent of their Medicare payments.

The MedPAC report also suggests tinkering with MACRA’s alternative paymentprogram, which has been criticized for not being inclusive enough to allowdoctors to have their payments allotted under that scenario.

The 5 percent bonus that doctors receive for qualifying as an alternativepayment model should be proportional to the amount of revenue generatedunder that different pay model, the report says. Currently, doctors onlygain the bonus if they have a certain percentage of Medicare payments tiedto an alternative payment model. The bar was 50 percent in 2021 and 2022,too high for some doctors and potentially leading many to avoid Medicarealternative payment models altogether.

The report also discusses a new, two-sided risk model for ACOs that wouldoffer higher rewards for saving money. Under the model, doctors would bepenalized for failing to cut spending proportional to the bill for his orher services alone, and not the total medical bill. Since only about 15 percent of Medicare spending goes to doctors, clinicians havelimited influence on ACO spending, which has made many hesitant to join theorganizations.

GAO: VA Pharmacy System Needs Additional Capabilities

In a new report, GAO examined the VA’s acquisition and use of a pharmacysystem. GAO found that the VA’s pharmacy system capabilities align withthree of six identified health care industry practices. Specifically, thepharmacy system (1) provides the ability to order medicationselectronically, (2) enables prescription checks for drug-to-drug anddrug-allergy interactions and (3) tracks the dispensing of controlledprescription drugs. However, the pharmacy system lacks capabilities thatalign with three other practices that could enhance its usefulness.

GAO made six recommendations including that VA update its pharmacy systemto view and receive complete medication data, assess the impact ofinteroperability and implement additional industry practices. VA generallyconcurred with GAO’s six recommendations.

For more information,click here.

CMS Reports: High Costs, Lack of Affordability Most Common Factors That Lead Consumers to Cancel Health Insurance Coverage

On June 12, CMS published two reports, the Effectuated Enrollment reportand The Health Insurance Exchanges Trends report. These reports show thatafter selecting a plan on the exchanges during the open season that endedJan. 31, 2017, less than two months later nearly 2 million people had notpaid their insurance premium to effectuate and maintain their healthcoverage. This number will be adjusted for individuals who effectuate theircoverage in March 2017. Exit survey data also contained in the reportsindicate that cost is the top reason cited for ending their coverage. Takentogether, these reports provide a better understanding of why consumers areleaving the exchanges.

The Effectuated Enrollment Report shows that 12.2 million individualsselected a plan at the end of open enrollment, but only 10.3 millionfollowed through to pay the premiums necessary to maintain coverage as ofMarch 15, 2017. This means 1.9 million people had not paid or did notcontinue paying for the insurance coverage they selected on the exchange.Additional individuals may effectuate coverage for March of 2017.

The Health Insurance Exchanges Trends Report shows exit survey