Washington Healthcare Update

August 7, 2017

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This Week: Bipartisanship breaks out in the Senate and House as they look at health reform solutions; FDA User Fee legislation on the way to the President; more HHS nominees move out of committee and toward full Senate; CSR payments still in jeopardy; HHS finalizes payment rules.

1. Congress



2. Administration

3. Regulations Open for Comment

4. Reports

1. Congress


Bipartisan Health Reform Plan Emerges in the House

On July 31 the House Problem Solvers Caucus, a group comprising an evennumber of Democrats and Republicans, released a plan to fix the ACA. Theplan would fully fund cost-sharing reductions (CSRs) and create a fund thatstates could use to support their individual insurance markets to drivedown premiums. The proposal also eliminates the medical device tax andcurtails the employer mandate.

To view the proposal,click here.


Right to Try Legislation Passes Senate

On Aug. 3 the Senate approved by unanimous consent a bill that would allowseriously ill patients in all 50 states to request access to experimentalmedicines without FDA approval.

Sen. Ron Johnson’s (R-WI) Trickett Wendler, Frank Mongiello, Jordan McLinnand Matthew Bellina Right to Try Act of 2017 (S. 204) would authorize theuse of unapproved medicines by patients diagnosed with a life-threateningillness as long as the drugs in question have already been tested in thefirst phase of human clinical trials and are continuing on in furtherFDA-overseen research. Patients must have exhausted other treatment optionsand be unable to participate in ongoing clinical trials. The passage of thelegislation came after Senator Johnson threatened to hold up thereauthorization of the FDA user fee legislation if he did not get a vote onthe bill. A compromise reached by Senate leadership and the HELP Committeeleadership permitted Johnson to allow the FDA user fee legislation to moveforward and his revised right-to-try legislation to be voted on in theSenate. The compromise includes changes to satisfy the FDA and publichealth officials’ concerns. For example, the legislation now requires FDAto receive reports of safety events that occur in right-to-try situations.It also forbids patients from being charged more than the cost ofproduction for the medicines.

Similar right-to-try laws have passed in 37 states. Reps. Andy Biggs (R-PA)and Brian Fitzpatrick (R-AZ) have a similar bill pending in the House.

To view S. 204,click here.

To view H.R. 878,click here.

HELP Committee Moves Forward Five HHS Nominees

On Aug. 3 the Senate voted on nominees approved on Aug. 2 by the Senate’sHealth, Education, Labor and Pensions (HELP) Committee, which finished thenominee process for the assistant secretaries of Health and Human Services(HHS). The five nominations were:

  • Lance Allen Robertson, Assistant Secretary for Aging
  • Brett Giroir, Assistant Secretary for Health
  • Robert Kadlec, Assistant Secretary for Preparedness and Response
  • Elinore F. McCance-Katz, Assistant Secretary for Mental Health and Substance Use (a position created by the 21st Century Cures Act)
  • Jerome Adams, Surgeon General of the Public Health Service

To view the press release and read more on the nominees,click here.

Health, Education, Labor and Pensions Committee to Look for Short-TermSolutions to Stabilize Market

On Aug. 1, Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray(D-WA) of the Senate’s HELP committee announced there will be a series ofhearings in September to help stabilize the individual markets of theAffordable Care Act. The hearings are likely to be held in September. Thechairman also stated that he may push for a bill that would guaranteecost-sharing reduction payments for the following year to ensure marketsare stabilized.

To view the press release,click here.

FDA User Fee Bill Passes Senate

On Aug. 3, the Senate voted for a five-year reauthorization of FDA user feeprograms that fund drug and medical device reviews. The bill passed 94-1.Senator Bernie Sanders (D-VT) was the only senator to vote against thelegislation.

The FDA Reauthorization Act of 2017 now heads to the President havingalready passed the House. The administration put out a mixed statement onthe bill in July following House passage. The White House was critical ofthe bill’s not containing a Trump administration proposal to require drugand device companies to pay the full cost of their FDA reviews. However, itdidn’t threaten a veto. The administration acknowledged the importance ofthe law, pledged to work with lawmakers and supported the timelyreauthorization of the user fee programs. The new five-year agreement runsfrom fiscal 2018 to 2022 and enables FDA’s prescription drug program tocollect nearly $880 million in user fees from the industry next year. Inaddition, FDA would take in $494 million in generic drug fees, $183 millionin medical device fees and $45 million in biosimilar fees. The user feeprograms account for about half of FDA’s yearly budget. The current programexpires on Sept. 30.

The legislation also addresses FDA’s digital health work and expanded useof electronic health records for oversight of drugs and devices.

To view the legislation,click here.

2. Administration

CSR Payments in Jeopardy

The President threatened to cut off key payments known as cost-sharingreduction payments (CSRs) following the failed Senate vote concerningrepeal of the ACA.

However, a federal appellate court ruling on Aug. 1 could complicateTrump’s efforts to unilaterally cut off the payments. The court ruled thatmore than a dozen Democratic state attorneys general could intervene in alawsuit brought by House Republicans contesting the legality of thesubsidies. In essence, states can still continue to fight for the paymentsin court, even if the Trump administration refuses to defend them.

Members of the National Governors Association health care committee,meanwhile, urged the administration to commit to paying the subsidiesthrough 2018. “The uncertainty surrounding CSR payments is resulting insignificantly higher premiums for consumers in many parts of the countryand insurers exiting the marketplace altogether,” wrote Republican Gov.Charlie Baker of Massachusetts and Democratic Gov. Terry McAuliffe ofVirginia. The NGA previously called on Congress to fund the subsidies andstabilize markets.

In addition, Sen. Lamar Alexander, Chairman of the Health, Education, Laborand Pensions Committee (HELP), urged Trump to pay the subsidies throughSeptember so Congress has time to craft a bipartisan stabilization planthat would include one year of funding for the payments.

CMS Finalizes 2018 Payment and Policy Updates for Medicare HospitalAdmissions

On Aug. 2 CMS issued a rule updating the 2018 Medicare payment and policieswhen patients are discharged from the hospital: the FY 2018 MedicareInpatient Prospective Payment System and Long-Term Care HospitalProspective Payment System final rule. The rule states that hospitals willsee an increase in Medicare spending on inpatient hospital payments of $2.4billion based on payment rate increases and other policies. However,overall payments to long-term care hospitals will decrease by $110 milliondue to changes included in the final rule. CMS is also providing furtherclarification about discounts given to uninsured patients.

CMS also issued a notice on updating 2018 Medicare payment policies andrates for inpatient psychiatric facilities and predicts that Medicarepayments to those facilities will increase by $45 million in FY 2018.

To view a fact sheet on the fiscal year 2018 Medicare Inpatient ProspectivePayment System and Long-Term Care Hospital Prospective Payment System finalrule,click here.

To view a fact sheet on the fiscal year 2018 Medicare Inpatient PsychiatricProspective Payment System notice with comment period,click here.

CMS Announces Part D Prescription Drug Average Basic Premiums for 2018

On Aug. 2 CMS announced the average basic premium for Medicare Part D planwill drop to about $33.50/month in 2018. In 2017 the actual average premiumwas $34.70, marking a decrease of $1.20. The drop in the premium price isannounced despite spending for the Part D program increasing faster thanother parts of Medicare. The Medicare enrollment period begins on Oct. 15,2017, and closes on Dec. 7, 2017. Premiums and costs for Medicare healthand drug plans for 2018 are expected to be released in September.

To view the data analysis,click here.

FDA and Duke to Explore “Real-World Evidence”

In September the Duke-Margolis Center for Health Policy and the FDA willhold a meeting in order to discuss ideas on opportunities and challengesfor applying real-world evidence to support approval of a new indicationand satisfy post-approval study requirements. FDA is required to consultwith stakeholders to create the structure for using the real-worldexperience (RWE) as required by the 21st Century Cures Act. The group inSeptember is expected to discuss challenges related to collection, methodsfor development and pilot demonstrations.

This area has been highly criticized as HHS human research projects statethe FDA’s guidance is too vague to be useful.

To view the draft guidance,click here.

The workshop website can be accessed byclicking here.

Commission on Opioid Addiction Sends Interim Report

On July 31, the Commission on Combating Drug Addiction and the OpioidCrisis released an interim report calling the epidemic a national emergencyand increased federal funding to address the crisis, including forsubstance abuse treatment, expanding access to medication-assistedtreatment and helping states enhance their prescription monitoringprograms.

President Trump established the commission, which is housed within theOffice of National Drug Control Policy, by executive order on March 29.

The commission also recommended mandatory education for doctors and newgovernment partnerships with the pharmaceutical industry to developnon-opioid pain relievers in addition to new medication-assisted treatmentoptions. The commission’s report proposes waiving a long-standingprohibition on using Medicaid funds to pay for residential substance abusetreatment. That could cost the federal government between $40 billion and$60 billion over a decade, according to previous estimates from theCongressional Budget Office. Since the 1960s, the federal government hasbarred certain health care facilities with more than 16 beds—classified asInstitutions for Mental Disease—from receiving federal matching funds totreat Medicaid patients.

The ban was originally intended to force states to pay for the long-terminstitutionalization of psychiatric patients and limit Medicaid spending.

The report also recommends expanding access to medication-assistedtreatment, such as buprenorphine and methadone, for Medicaid and Medicarebeneficiaries, as well as for people who are incarcerated. The report alsocalls for increased training for doctors to combat “inappropriateoverprescribing.”

The final report is due in October.

The interim report can be found,here.

CMS Updates Medicare Payment Rates for SNFs and Inpatient Rehab

The 2018 Skilled Nursing Facility (SNF) Prospective Payment System FinalRule increases Medicare payment rates by 1 percent for FY 2018 and revisesthe SNF market basket index through updating the base year data from FY2010 to 2014. The rule also finalizes updates to the SNF Quality ReportingProgram and policies for the SNF Value-Based Purchasing Program from FY2019.

The rule revises and rebases the SNF market basket index by updating thebase year data from FY 2010 to 2014 and by adding a new cost category forInstallation, Maintenance and Repair Services. The rule also finalizesupdates to the SNF Quality Reporting Program, including replacing thepressure ulcer measure with an updated version, adopting new functionalstatus measures and publicly displaying new measures. In addition, itfinalizes policies for the SNF Value-Based Purchasing Program for FY 2019,the first year this program will impact Medicare payments and therequirements regarding the composition of professionals for the surveyteam.

The 2018 Inpatient Rehabilitation Facility (IRF) Prospective Payment SystemFinal Rule updates payment rates for FY 2018 to reflect a 1 percentincrease factor in accordance with 411(b) of the Medicare Access and CHIPReauthorization Act of 2015. An additional 0.1 percent decrease toaggregate payments due to updating the outlier threshold results in anoverall update for FY 2018 of 0.9 percent (or $75 million) relative topayments in FY 2017. CMS also finalized the removal of the 25 percentpayment penalty.

To view a fact sheet on the FY 2018 Skilled Nursing Facility ProspectivePayment System final rule,click here.

To view a fact sheet on the FY 2018 Inpatient Rehabilitation FacilityProspective Payment System Final Rule (CMS-1671-F),click here.

CMS Finalizes Updates to the Wage Index and Payment Rates for theMedicare Hospice Benefit

Hospices will generally see a 1 percent ($180 million aggregate) increasein their payments for FY 2018. The hospice payment system includes astatutory aggregate cap. The aggregate cap limits the overall payments madeto a hospice annually. As mandated by the Improving Medicare Post-AcuteCare Transformation Act of 2014 (Pub. L. 113-185) (IMPACT Act), the capamount for accounting years that end after Sept. 30, 2016, and before Oct.1, 2025, must be updated by the hospice payment update percentage, ratherthan the Consumer Price Index (CPI). Therefore, the cap amount for FY 2018will be $28,689.04 (2017 cap amount of $28,404.99 increased by 1 percent).

Hospice Quality Reporting Program

The rule finalizes eight measures from CAHPS Hospice Survey data alreadysubmitted by hospices and also finalizes the extension or exception forquality reporting purposes from 30 calendar days to 90 calendar days afterthe date that an extraordinary circumstance occurred. Additionally, thisrule outlines policies and procedures associated with the public reportingof the quality measures used in the hospice program.

For FY 2019 payment determination and subsequent years, CMS finalized thatit will extend the period of time a hospice may have to submit a requestfor an extension or exception for quality reporting purposes from 30calendar days to 90 calendar days after the date that an extraordinarycircumstance occurred. This change will align the HQRP with the otherpost-acute care quality reporting programs, as well as the HospitalInpatient Quality Reporting Program, and will give additional time forproviders to focus on operations related to patient care should a situationarise, such as an unforeseen environmental emergency.

CMS will begin public reporting Hospice Quality Reporting Program (HQRP)data via a Hospice Compare Site in August 2017 to help customers makeinformed choices. In this final rule, CMS has also finalized policies andprocedures associated with the public reporting of the quality measuresused in the Hospice Program, including release of the aggregate qualitydata file and the Provider Preview Reports.

CMS discussed enhancing the current Hospice Item Set data collectioninstrument to be more in line with other post-acute care settings. CMSreceived public feedback on considering this revised data collectioninstrument, HEART, which would be a patient assessment tool, rather thanthe current chart abstraction tool.

To view the finalized updates,click here.

3. Regulations Open for Comment 

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.

CMS Proposes MACRA Rule

On June 19, CMS issued aproposed rulethat would make changes in the second year of the Quality Payment Programas required by the Medicare Access and CHIP Reauthorization Act of 2015(MACRA).

The 1,058-page rule continues the “pick-your-pace” option in year two ofthe program, letting doctors report a limited amount of quality data to beexempted from Medicare’s penalties.

CMS creates a “virtual group” reporting option, allowing doctors to poolthe information on how they care for patients and be subjected toMedicare’s quality payment scheme.

CMS is also increasing the minimum number of patients doctors can treatbefore being subject to the program’s Merit-based Incentive Payment System.It establishes more flexibility for doctors who see limited numbers ofpatients face to face or in a hospital. For 2017, roughly 800,000clinicians were exempt from the MIPS program.

CMS will not require doctors to use 2015 certified EHRs next year, as ithad ordered during the Obama administration. However, clinicians areoffered bonuses for using new versions of the software. Medicare also willdelay for another year judging doctors for how much they spend for treatingpatients.

Comments on the rule are due no later than 5 p.m. on Aug. 21, 2017. For afact sheet on the proposed rule,click here.

CMS Proposes 2018 Policy and Payment Rate Changes for End-Stage RenalDisease Facilities

On June 29, the Centers for Medicare & Medicaid Services (CMS) issued aproposed rule that would update payment policies for the End-Stage RenalDisease (ESRD) Prospective Payment System (PPS). The rule covers paymentrates for renal dialysis services, including updates to acute kidney injury(AKI), furnished to beneficiaries on or after Jan. 1, 2018.

The ESRD Quality Incentive Program (QIP) proposed changes are for paymentyears 2019, 2020 and 2021, and a number of key dialysis data methodologiesand quality measures. The proposed rule also requests comment on how toinclude individuals with acute kidney injury in the ESRD QualityImprovement Program.

In addition to the proposed rule, CMS is releasing a request forinformation to welcome continued feedback on the Medicare program. CMS iscommitted to maintaining flexibility and efficiency throughout Medicare.Through transparency, flexibility, program simplification and innovation,CMS aims to transform the Medicare program and promote the availability ofhigh-value and efficiently provided care for its beneficiaries.

Comments are due no later than 5 p.m. on Aug. 28, 2017.

For a fact sheet on the proposed rule, please clickhere.

For the ESRD proposed rule (CMS 1674-P), please click here.

CMS Proposes 2018 Policy and Rate Changes for Hospital Outpatient,Ambulatory Surgical Center Payment Systems

The Centers for Medicare & Medicaid Services (CMS) on July 13, issued aproposed rule that updates payment rates and policy changes in the HospitalOutpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center(ASC) Payment System.

Among the provisions in this rule, CMS is proposing to change the paymentrate for certain Medicare Part B drugs purchased by hospitals through the340B program. The proposed rule also requests comment on how CMS can bestimplement the proposal to pass savings on to beneficiaries and providers,and to allow seniors to save money on their drug costs. The 340B DrugPricing Program allows certain hospitals and other health care providers topurchase drugs and biologicals (other than vaccines) that are administeredin a hospital outpatient department from drug manufacturers at discountedprices.

The proposed rule also includes a provision to address rural hospitalsrecruiting physicians by placing a two-year moratorium on the directsupervision requirement currently in place at rural hospitals and criticalaccess hospitals.

In addition, CMS is releasing within the proposed rule a request forinformation to welcome continued feedback on flexibilities and efficienciesin the Medicare program.

Comments are due 5 p.m. Sept. 11, 2017.

To view a fact sheet on the proposed rule,click here.

To view the proposed rule, click here.

CMS Proposes 2018 Payment and Policy Updates for the Physician FeeSchedule

The Centers for Medicare & Medicaid Services (CMS) on July 13 issued aproposed rule that would update Medicare payment and policies for doctorsand other clinicians who treat Medicare patients in calendar year (CY)2018. This proposed rule seeks public comment on reducing administrativeburdens for providing patient care, including visits, care management andtelehealth services. The rule takes steps to better align incentives andprovide clinicians with a smoother transition to the new Merit-basedIncentive Payment System under the Quality Payment Program (QPP). The rulealso attempts to encourage fairer competition between hospitals andphysician practices by promoting greater payment alignment, and it wouldimprove the payment for office-based behavioral health services that areoften the therapy and counseling services used to treat opioid addictionand other substance use disorders. In addition, the proposed rule makesadditional proposals to implement the Center for Medicare & MedicaidInnovation’s Medicare Diabetes Prevention Program expanded model startingin 2018.

In addition to the proposed rule, CMS is releasing a request forinformation to welcome continued feedback on the Medicare program. CMS iscommitted to maintaining flexibility and efficiency throughout Medicare.Through transparency, flexibility, program simplification and innovation,CMS aims to transform the Medicare program and promote the availability of