Washington Healthcare Update

July 16, 2018

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This Week: Ways and Means marks up HSA and other insurance-related legislation, CMS releases several payment rules … 340B discussed again … VA secretary nominee moves to the full Senate.

1. Congress



2. Administration

3. Reports

1. Congress


Ways and Means Marks Up HSA Legislation and Proposes Changes to Key ACA Taxes

In a two-day markup, the House Ways and Means Committee cleared a number of measures related to health savings accounts and a measure that would suspend or delay a pair of key Obamacare taxes.

The bill (H.R. 4616) to push back the “Cadillac tax” on expensive employer-provided health insurance to 2023 and to place a moratorium on the employer mandate passed on a party-line vote in what was another predictable partisan debate over both the Affordable Care Act and last year’s Tax Cuts and Jobs Act.

Democrats charged that the proposal was a politically motivated attempt to up support for Republicans ahead of November’s midterm elections, questioned why the measure would allow refunds for penalties already paid because of the employer mandate and complained that all the legislation the committee is considering would cost $92 billion over a decade without offsets.

Republicans cast the measure as just the latest GOP attempt to offer Americans relief from the Affordable Care Act. The Cadillac tax has already been delayed a couple times with bipartisan support. The committee has also passed several measures to expand tax-advantaged health savings accounts. Those bills are:

  • HSA expansion for non-prevention services: H.R. 6301 costs $3.8 billion over 10 years and alters the HSA rules to allow enrollees to use up to $250 to pay for non-prevention services prior to hitting the plan deductible. The bill passed 24-14, with two Democrats—Ron Kind (WI) and bill cosponsor Mike Thompson (CA)—joining the GOP.
  • HSAs and Direct Pay Primary Care: H.R. 6317 would allow people who use Direct Pay Primary Care services to enroll in an HSA and would also let them use the funding to pay the clinic’s monthly fee. The bill, which is estimated to cost $1.8 billion over 10 years, was approved by the committee 26-12.
  • HSAs and FSAs: H.R. 6305, which would allow HSAs to be used for both on-site and off-site work clinics (previous language allowed for only on-site clinics), lets individuals make HSA contributions regardless of whether a spouse has a Flexible Spending Account, and allows FSA funds to be distributed into an HSA. Democrats also joined GOP colleagues in approving the chairman’s substitute amendment of H.R. 6305. The bill would cost $4.3 billion over one year, and the bill passed 26-13.
  • HSAs and Medicare Part A: H.R. 6309 would allow seniors eligible for Medicare Part A to contribute to HSAs. Democrats said they are more concerned about seniors who have no savings, but the sponsor, Rep. Eric Paulsen (R-MN), argued the bill is aimed at working seniors and encourages them to stay in the labor pool. “This is a choice that will save Medicare money … it’s another option and another way to let consumer-driven health care lower costs,” he said. The JCT estimates the bill would cost $5.5 billion through 2028.

Energy and Commerce Health Subcommittee Discusses 340B Legislation

On July 11, the House Energy and Commerce Health Subcommittee discussed more than a dozen bills relating to the 340B program. Despite multiple hearings and increased attention to 340B this year, it is unlikely that legislation will pass in the near future.

Pallone Asks for Hearing on FDA Safety Systems and Generic Competition

House Energy & Commerce ranking Democrat Frank Pallone (NJ) on July 9 requested the committee hold a hearing examining how FDA safety systems are gamed to block generic competition and potential legislative fixes, including the pending Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act. “I would urge you to hold a hearing soon on the anti-competitive practices of pharmaceutical companies and the abuses of FDA’s regulatory programs to delay generic competition.”


VA Nominee Heads to Full Senate

The Senate Veterans’ Affairs Committee approved the nomination of Robert Wilkie for VA secretary. The full Senate is expected to hold a final vote soon, but it has yet to be scheduled. If confirmed, Wilkie would replace David Shulkin, who was fired in March. Sen. Bernie Sanders voted against Robert Wilkie. 

2. Administration

Navigator Funding Cut Again

The Centers for Medicare & Medicaid Services announced it is cutting money to the groups known as navigators from $36 million to $10 million for the upcoming 45-day enrollment period. This reduction comes a year after the Trump administration cut advertising and other outreach activities by 40 percent.

CMS Administrator Seema Verma said the navigators that operate in the 34 states that use the federal marketplace—including many health and religious organizations—were ineffective and had outlived their usefulness.

CMS Announces It Will Halt Risk Adjustment Payments

In a dispute over the risk adjustment payments’ legality, CMS on July 7 announced it would halt the payments, pending resolution. A federal court in New Mexico decided in February the payments were based on flawed rules, but another court in Massachusetts upheld the payments.

CMS will appeal the New Mexico ruling, stating, “CMS is seeking a quick resolution to the legal issues raised and will inform stakeholders of any update to the status of collections or payments at an appropriate future date.”

The risk adjustment payments are supposed to protect insurers from big losses. The health plans pay into a pool—this doesn’t involve tax dollars—and funds are transferred to insurers that ended up with many high-cost patients. For 2017, $10.4 billion was involved.

Insurers were caught flat-footed by CMS’s announcement and are seeking a regulation to “smooth” out legalities.    

CMS Ends Plan to Pay for Kymriah on Outcomes Basis

Earlier this year, CMS terminated a plan to pay for a breakthrough, half-million-dollar cancer treatment based on how well it worked. That strategy was one of the Trump administration’s first and most highly touted attempts to lower the cost of drugs.

CMS proposed paying full price if Kymriah, the first in a class known as CAR-T therapy to win FDA approval, produced results in patients after one month. Doctors said that time frame was an unrealistically short timeline for evaluating a complex cancer treatment.

The payment deal for Swiss drug giant Novartis’ Kymriah therapy drew internal HHS scrutiny and is the target of ongoing congressional investigations. Democrats want to know if the company got preferential treatment because Novartis paid President Donald Trump’s longtime lawyer Michael Cohen $1.2 million in early 2017 for health care consulting work—although there’s no indication that Cohen played a role in the Kymriah deal.

CMS last August promoted how the “pay-for-performance” arrangement would save lives and cut Medicare and Medicaid spending on the same day the FDA approved the company’s $475,000 gene therapy to treat kids and young adults with leukemia. Seven months later, CMS pulled out.

Competitive Bidding Proposed Rule Released

Medical equipment suppliers won’t have to bid for Medicare business next year as CMS hasn’t yet started the next round of bidding and existing contracts run out at the end of the year, according to a proposed rule CMS released July 11.

CMS says its proposed changes to the bidding process for durable medical equipment would more accurately set prices and protect beneficiary access.

CMS officials said the bidding process generally takes 18 to 24 months, but the agency will have a better sense of timing after the proposed DME and end stage renal disease pay rule is finished. An agency official said guidance will be released with more information.

The rule proposes adjustments to the DME fee schedule amounts for January 2019 through the end of 2020—when competitive bidding will likely be on hold—based on information from past bids. For areas that were formerly competitively bid, CMS proposes to take the pay amounts in place when competitive bid contracts ended and increase them by the urban Consumer Price Index. CMS proposes to increase those amounts each year for as long as it takes the agency to restart the bidding program.

CMS proposes to extend current payments through the end of 2020 in rural areas, as well as Alaska and Hawaii. The agency previously increased reimbursement for those areas in an interim final rule in May.

CMS also proposes changes to the bidding system. Currently, Medicare bases pay rates on median bids. A CMS official said that approach isn’t sustainable. CMS proposes to pay suppliers the maximum winning bid, and CMS proposes using so-called “lead item pricing” for certain items.

CMS proposes adding pay classes for portable liquid oxygen equipment, portable gaseous oxygen equipment and high-flow portable liquid oxygen. The proposed rule also includes a new way to make sure all pay classes for oxygen and oxygen equipment added since 2006 are budget neutral.

The agency includes a request for information in the rule, as well, as CMS says it is considering whether changes should be made to the gap-filling process that establishes pay for newly covered DME items paid for through the fee schedule. CMS asks for feedback on how the gap-filling process could be revised in a way that prevents excessive over- or underpayments for new technology.

The agency also proposes updates to the ESRD pay system that would increase the total pay to all ESRD facilities by 1.7 percent next year compared with 2018. Hospital-based facilities would get a 1.8 percent increase; CMS projects and freestanding facilities would get a 1.7 percent increase.

The rule proposes an expansion of the Transitional Drug Add-on Payment Adjustment to allow all new renal dialysis drugs and biologics to be eligible for the add-on payment, even if they fit into an existing functional category.

Fact sheet the CY 2019 proposed rule (CMS-1691-P).

View the proposed rule.

CMS Proposes Medicare Doc Payment Overhaul

In the proposed Physician Fee Schedule rule released July 12, CMS is proposing to overhaul how Medicare pays for office visits and how doctors document those visits. The rule would simplify coding and create a single payment amount for “evaluation and management” visits, or E/M visits, and some specialists could see payment reductions as a result. Public comments on the rule are due Sept. 10.

The proposed rule also seeks to establish new payment codes for two new virtual services: telephone “check-ins” between clinicians and beneficiaries and the remote evaluation of photos or videos that a patient submits to a clinician.

In addition, the proposed rule would enact provisions of the Bipartisan Budget Act of 2018 to expand telehealth services for beneficiaries with end-stage renal disease receiving home dialysis and beneficiaries with acute stroke.

The proposed rule also retains a so-called site-neutral policy under which certain off-campus hospital outpatient departments are paid 40 percent of what they would have received under the Hospital Outpatient Prospective Payment System. The American Hospital Association released a statement calling that portion of the proposed rule short-sighted.

The proposed rule includes a request for information on how CMS could make health care costs more transparent. In the 2019 Hospital Inpatient Prospective Payment System proposed rule, CMS said it would require hospitals to post their standard charges online, but the agency said Thursday that it thinks more can be done on price transparency and is seeking suggestions from the public on how it can better inform patients about out-of-pocket costs.

Other provisions in the proposed rule include:

  • Reducing the level of physician supervision required for services provided by radiologist assistants.
  • Allowing payment for communication technology-based services and remote evaluation services furnished by rural health clinics and federally qualified health centers.
  • Discontinuing functional status reporting requirements for outpatient therapy.
  • Implementing a statutory pay reduction for services provided by therapy assistants.
  • Seeking comments on how to combat opioid use disorder in Medicare.

The proposed rule’s conversion factor, a value used in CMS’s formula to calculate payment rates, is $36.05, up from the 2018 conversion factor of $35.99.

Fact sheet on the CY 2019 Physician Fee Schedule proposed rule. 

View the CY 2019 Physician Fee Schedule proposed rule. 

View the CY 2019 Quality Payment Program proposed rule.

Fact sheet on the Medicare Advantage Qualifying Payment Arrangement Incentive (MAQI) Demonstration.

CMS Releases Proposed Rule on Quality Payment Program

On July 12, as part of the Medicare Physician Fee schedule proposed rule, the Centers for Medicare & Medicaid Services (CMS) released its proposed policies for Year 3 (2019) of the Quality Payment Program via the Medicare Physician Fee Schedule (PFS). The provisions included in the notice are reflective of the feedback CMS received from many stakeholders, and continue to provide additional flexibilities to reduce burden and smooth the transition, where possible, so that doctors and other clinicians can spend more time with patients.

Key proposals for Year 3 of the Quality Payment Program include:

  • Expanding the definition of Merit-based Incentive Payment System (MIPS) eligible clinicians to include new clinician types (physical therapists, occupational therapists, clinical social workers and clinical psychologists).
  • Adding a third element (Number of Covered Professional Services) to the low-volume threshold determination and providing an opt-in policy that offers eligible clinicians who meet or exceed one or two, but not all, elements of the low-volume threshold the ability to participate in MIPS.
  • Providing the option to use facility-based scoring for facility-based clinicians that doesn’t require data submission.
  • Modifying the MIPS Promoting Interoperability (formerly Advancing Care Information) performance category to support greater electronic health record (EHR) interoperability and patient access while aligning with the proposed new Promoting Interoperability Program requirements for hospitals.
  • Moving clinicians to a smaller set of Objectives and Measures with scoring based on performance for the Promoting Interoperability performance category.
  • Continuing the small practice bonus, but including it in the Quality performance category score of clinicians in small practices instead of as a standalone bonus.
  • Streamlining the definition of a MIPS comparable measure in both the Advanced Alternative Payment Models (APMs) criteria and Other Payer Advanced APM criteria to reduce confusion and burden among payers and eligible clinicians submitting payment arrangement information to CMS.
  • Updating the MIPS APM measure sets that apply for purposes of the APM scoring standard.
  • Increasing flexibility for the All-Payer Combination Option and Other Payer Advanced APMs for non-Medicare payers to participate in the Quality Payment Program.
  • Updating the Advanced APM Certified EHR Technology (CEHRT) threshold so that an Advanced APM must require that at least 75 percent of eligible clinicians in each APM Entity use CEHRT.
  • Extending the 8 percent revenue-based nominal amount standard for Advanced APMs through performance year 2024.

Additionally, as a result of CMS’s Human-Centered Design research, new language was included that more accurately reflects how clinicians and vendors interact with MIPS. Comments should be submitted to CMS by Sept. 10.

3. Reports

HHS IG Examines Medicaid Health Plans, Detecting Fraud

The U.S. Health and Human Services’ inspector general’s office said a third of the Medicaid health plans it examined had referred fewer than 10 cases each of suspected fraud or abuse to state Medicaid officials in 2015 for further investigation. Two insurers in the program, which serves low-income Americans, didn’t identify a single case all year.

Some health plans terminated providers from their networks for fraud but didn’t inform the state. The inspectors said that could allow those doctors or providers to defraud other Medicaid insurers or other government programs in the same state.

In addition, some insurance companies failed to recover millions of dollars in overpayments made to doctors, home health agencies or other providers. The inspector general said insurers stood to benefit financially from this because higher costs can justify increased Medicaid rates in the future. (The report didn’t name specific insurers or states.)

Read the report.

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StephanieKennan, Senior Vice President

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