Washington Healthcare Update

This Week: Congress Agrees on Budget Framework… FDA Launches GlobalUnique Device Identification Database (GUDID)… POTUS Nominates DeSalvo toServe as Assistant Secretary for Health

1. Congress

House of Representatives

• District Work Period – No Legislative Activity
• Bipartisan IPAB Bill Has Enough Votes to Pass

Senate

• Congress Agrees on Budget Framework
• HELP Committee Examines Precision Medicine Initiatives
• Appropriations Subcommittee Explores Rural Health Programs

• Upcoming: Senate Finance Committee to Hold Panel on Medicare Beneficiaries with Chronic Conditions

2. Administration

• Final Rule: Organ Procurement and Transplantation: Implementation of the HIV Organ Policy Equity Act
• FDA Launches Global Unique Device Identification Database (GUDID)
• HHS to Provide $101 Million in ACA Funding to New Community Health Centers
• HHS Expands Pioneer ACO Model After Report Finds Substantial Savings
• POTUS Nominates DeSalvo to Serve as Assistant Secretary for Health

3. State Activities

• Lawmakers Concerned Over Funding for Medicare Advantage in Puerto Rico
• Minnesota Exchange CEO Resigns, Paving Way for Third Leadership Change in Two Years
• Florida: HHS Secretary Meets with Gov. Scott Over Non-renewed LIP Funding

4. Regulations Open for Comment

• CMS Updates Wage Index and Payment Rates for the Medicare Hospice Benefit
• Proposed FY 2016 Medicare Payment and Policy Changes for Inpatient Psychiatric Facilities
• CMS Releases Proposed Rule on FY 2016 Medicare Payments for Inpatient Rehab Facilities
• USPSTF Upholds Recommendations on Mammography for Women Under 50
• Fiscal Year 2016 Proposed Inpatient and Long-term Care Hospital Policy and Payment Changes
• Proposed FY 2016 Payment and Policy Changes for Medicare Skilled Nursing Facilities (SNF)
• CMS Proposes Mental Health Parity for Medicaid and CHIP in New Rule
• FDA Assessing the Center of Drug Evaluation and Research’s Safety-Related Regulatory Science Needs and Identifying Priorities
• HHS Releases Proposed Rules on EHR Incentive Programs and Health IT Certification Criteria

5. Reports

• Medicaid: A Small Share of Enrollees Consistently Accounted for a Large Share of Expenditures
• HHS OIG Report Finds FDA Is Improving on Generic Drug Oversight

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1. Congress

House

Bipartisan IPAB Bill Has Enough Votes to Pass

On May 5, Reps. Phil Roe, M.D. (R-TN), and Linda Sánchez (D-CA)announcedthat theirlegislation to repealthe Independent Payment Advisory Board (IPAB), introduced March 2, has surpassed 218 cosponsors, a critical milestone necessary to ensure House passageshould the legislation receive a floor vote. The 15-member Presidential-nominated panel, which was empowered by the Patient Protection and Affordable CareAct (ACA) but has not yet been appointed, is charged with cutting Medicare payments to providers if Medicare spending targets aren’t contained to certainthresholds. Under previous and current law, changes to Medicare payment rates and program rules are recommended by MedPAC but require an act of Congress totake effect. As it stands, the bill, H.R. 1190, the Protecting Seniors’ Access to Medicare Act of 2015, has 222 cosponsors, including nineteen Democrats.“I am proud of the support behind this bill, not just in this Congress but in previous years. The thought of entrusting a bureaucrat with sweeping powersover Medicare costs should be alarming to both Republicans and Democrats alike, and I am glad to lead this effort,” Rep. Roe said in a statement. The billwas originally introduced in the 113^th Congress in January 2013 by Reps. Roe and Allyson Schwartz (D-PA).

Senate

Congress Agrees on Budget Framework

On May 5, the budget framework developed by Republican leaders in Congress cleared a final hurdle when the Senate agreed by a 51-48 vote to approve itsfirst 10-year balanced budget since 2001. While the chances of the Republican-controlled Congress being able to adhere to the strict spending outlined inthe budget package are slim, passage of the budget resolution paves the way for Congress to pass controversial legislation, including ACArepeal using “reconciliation” — a maneuver that requires just a simplemajority to pass legislation without the threat of a filibuster in theSenate. The budget adheres to domestic spending caps included in the 2011Budget Control Act, also known as the sequester, and uses nearly $40 billionin off-budget funds to boost defense spending to over $563 billion. For moreinformation, please visitbudget.house.gov.

HELP Committee Examines Precision Medicine Initiatives

On May 5, the Senate HELP Committee held a hearing entitled “Continuing America’s Leadership: Realizing the Promise of Precision Medicine for Patients” inwhich the committee explored existing and potential approaches to medicine that take into account individual differences in patients, such as geneticmakeup, environment and lifestyles when evaluating patients and determining treatments. While the concept is not new, the development of powerful andaffordable methods for characterizing personal biological attributes (such as genomics and metabolomics), the widespread adoption of electronic healthrecords, the emergence of mobile health technologies and computational tools for analyzing large biomedical data sets have broadened the potentialapplications of precision medicine. In addition, in January of this year, the President announced a new Precision Medicine Initiative — a bold, newresearch effort to revolutionize how we diagnose and treat disease, including a $215 million investment in the President’s Fiscal Year (FY) 2016 Budget.

Witnesses:

Panel I
Francis Collins, M.D., Ph.D.
Director
National Institutes of Health

Karen DeSalvo, M.D., M.P.H., M.Sc.
National Coordinator for Health Information Technology

Jeff Shuren, M.D., J.D.
Director, Center for Devices and Radiological Health
Food and Drug Administration

For more information, or to view the hearing, please visitwww.help.senate.gov.

Appropriations Subcommittee Explores Rural Health Programs

On May 7, the Labor, Health and Human Services, and Education Appropriations Subcommittee held a hearing to explore issues related to rural health.Witnesses provided testimony and discussed not only the challenges and difficulties of rural health delivery but also the accomplishments of federalprograms designed to improve rural access to health services. HRSA is the primary Federal agency charged with improving access to health care services forpeople who are medically underserved because of their economic circumstances, geographic isolation or serious chronic disease. In addition, throughprograms like the Rural Health Open Door Forum, CMS engages with stakeholders to provide current information on CMS programs, answer questions and learnabout emerging rural health issues.

Witnesses:

Panel I

Mr. Sean Cavanaugh
Deputy Administrator and Director of the Center for Medicare
Centers for Medicare and Medicaid Services

Mr. Tom Morris
Associate Administrator
Federal Office of Rural Health Policy
Health Resources and Services Administration

Panel II

Mr. Tim Wolters
Director of Reimbursement
Citizens Memorial Hospital
Bolivar, Mo., and Reimbursement Specialist Lake Regional Health System

Dr. Kristi Henderson
Chief Telehealth & Innovation Officer
University of Mississippi Medical Center

Ms. Julie Petersen
Chief Executive Officer
PMH Medical Center

Mr. George Stover
Chief Executive Officer
Rice County Hospital District 1

For more information, or to view the hearing, please visitwww.appropriations.senate.gov.

Upcoming: Senate Finance Committee to Hold Panel on Medicare Beneficiaries with Chronic Conditions

The Senate Finance Committee will hold a hearing May 14 to hear from the Centers for Medicare and Medicaid Services and the Medicare Advisory Commission onsuggestions for effective ways the federal government can better coordinate care for chronically ill Medicare beneficiaries. The hearing, entitled “APathway to Improving Care for Medicare Patients with Chronic Conditions,” will be held at 10:00 a.m. EST in 215 Dirksen Senate Office Building.

Witness List

Dr. Patrick Conway
Acting Principal Deputy Administrator, Deputy Administrator for Innovation and Quality, and Chief Medical Officer
Centers for Medicare & Medicaid Services
Department of Health and Human Services

Mark E. Miller, Ph.D.
Executive Director
Medicare Payment Advisory Commission

For more information or to view the hearing, visitfinance.senate.gov.

2. Administration

Final Rule: Organ Procurement and Transplantation: Implementation of the HIV Organ Policy Equity Act

On May 8, HHS issued afinal rule to amend the regulations implementing the National Organ Transplant Act of 1984, as amended, (NOTA), pursuant tostatutory requirements of the HIV Organ Policy Equity Act (HOPE Act), enacted in 2013. In accordance with the mandates of the HOPE Act, this regulationremoves the current regulatory provision that requires the Organ Procurement Transplantation Network (OPTN)to adopt and use standards for preventing the acquisition of organs fromindividuals known to be infected with human immunodeficiency virus (HIV). Inits place, this regulation includes new requirements that organs fromindividuals infected with HIV may be transplanted only into individuals whoare infected with HIV before receiving such organs and who are participatingin clinical research approved by an institutional review board, as providedby regulation. The only exception to this requirement of participation insuch clinical research is if the Secretary publishes a determination in thefuture that participation in such clinical research, as a requirement fortransplants of organs from individuals infected with HIV, is no longerwarranted.

FDA Launches Global Unique Device Identification Database (GUDID)

On May 4, FDA, in partnership with the National Institutes of Health’s (NIH) National Library of Medicine (NLM), released a new open access data websiteknown as AccessGUDID. TheAccessGUDIDwebsite is designed to allow researchers, members of industry and the public to search and download information that labelers — typically manufacturers —have submitted about their medical devices to the FDA’s Global Unique Device Identification Database (GUDID). In 2013, the Food and Drug Administration(FDA) released a final rule establishing a unique device identification system designed to adequately identify devices through distribution and use.According to FDA, the unique device identification system offers a number of benefits that will be more fully realized with the adoption and integration ofUDIs into the health care delivery system. UDI implementation is intended to improve patient safety, modernize device postmarket surveillance andfacilitate medical device innovation. For more information, please visitwww.fda.gov.

HHS to Provide $101 Million in ACA Funding to New Community HealthCenters

On May 5, Department of Health and Human Services (HHS) Secretary Sylvia Burwellannounced the agencies will invest approximately $101 million in Affordable Care Act(ACA) grant funding to 164 new health center sites in 33 states and two U.S. Territories. HHS estimates that the new health centers will increase access tohealth care services for nearly 650,000 patients. “Health centers are keystones of the communities they serve. Today’s awards will enable more individualsand families to have access to the affordable, quality health care that health centers provide. That includes the preventive and primary care services thatwill keep them healthy,” said Secretary Burwell in a statement. The agency’s announcement will add to the more than 550 new health center sites that haveopened in the last four years as a result of the ACA. Nearly 1,300 health centers operate more than 9,000 service delivery sites that provide care tonearly 22 million patients — nearly 5 million more patients than at the beginning of 2009. The recently enacted bipartisan Medicare Access and CHIPReauthorization Act builds on this progress by extending mandatory funding for health centers in fiscal years 2016 and 2017.

The list of newly awarded grant recipients can be found athrsa.gov.

HHS Expands Pioneer ACO Model After Report Finds Substantial Savings

In aMay 4 announcement, the Department of Health and Human Services (HHS) releasedanevaluation reportshowing that the Pioneer Accountable Care Organization (ACO) Model, created as a pilot project by the Affordable Care Act (ACA), generated $384 million insavings ($279.7 million in 2012 and $104.5 million in 2013) to Medicare in just two years; this equates to an average savings of approximately $300 perparticipating beneficiary per year. Additionally, the independent Office of the Actuary in the Centers for Medicare & Medicaid Services (CMS) hascertified that this patient care model is the first to meet the stringent criteria for expansion to a larger population of Medicare beneficiaries. TheActuary’s certification that expansion of Pioneer ACOs would reduce net Medicare spending, coupled with HHS Secretary Burwell’s determination thatexpansion would maintain or improve patient care without limiting coverage or benefits, means that HHS will consider ways to scale the Pioneer ACO Modelinto other Medicare programs,” a CMS release states. The announcement combines two major ACA initiatives: demonstration authority and ACOs. As it stands,most ACOs currently participate in a separate ACO program called the Medicare Shared Savings program. To date, actuarial analyses show that ACOs in thePioneer ACO Model and the Medicare Shared Savings Program have generated over $417 million in total program savings for Medicare.

POTUS Nominates DeSalvo to Serve as Assistant Secretary for Health

President Obama on May 6nominated Karen DeSalvo,National Coordinator for Health Information Technology, to serve as assistant secretary for health. Dr. DeSalvo will serve as acting assistant secretaryfor health during her pending confirmation while simultaneously remaining as head of the Office of the National Coordinator for Health Technology (ONC)until she is confirmed by the Senate. Previously tapped by the Administration to serve as head of the Department of Health and Human Services’ (HHS) Ebolaresponse, Dr. DeSalvo joined ONC in January 2014 after serving as the Health Commissioner for the City of New Orleans and Senior Health Policy Advisor toMayor Mitch Landrieu.

3. State Activities

Lawmakers Concerned Over Funding for Medicare Advantage in Puerto Rico

A group of 10 Senators and Representatives have written to officials at the U.S. Department of Health and Human Services (HHS) to express their “acutedisappointment” in a Medicare Advantageformula announcement released on April 6that is poised to reduce funding to theU.S. territory by 11percent while the rest of the country receives a 3 percent increase. The letter, dated April 30, goes on to say that these cuts will not only threaten theability of Puerto Rico’s Medicare Advantage program to meet the needs of the 540,000 people it serves, but that there will also be further consequences. InMarch 2015, a similar group of Senators and Congressional Representatives wrote astrongly worded letterto HHS officials expressing “deep concern regarding the future of the Medicare Advantage program in Puerto Rico” and urging officials to take concreteaction in the April 6, 2015, Final Rate Announcement and Call Letter to preserve the stability of the Medicare Advantage program in Puerto Rico. For moreinformation, please visitwww.puertoricoreport.com.

Minnesota Exchange CEO Resigns, Paving Way for Third Leadership Change in Two Years

On May 4, Minnesota’s state exchange chief executive officer, Scott Leitz, announced his resignation after serving just 18 months, becoming the third CEOto resign in less than two years. His last day on May 22, Scott Leitz will step down to take a position as Chief Transformation Officer at Washington,D.C.-based think tank Health Care Cost Institute. Mr. Leitz was named permanent CEO of MNsure in April 2014 after serving as interim CEO of the exchangesince late 2013. He replaced its original executive director April Todd-Malmlov, who left amid the exchange’s rocky rollout during the first openenrollment period. Worth noting, the MNsure Board of Directorsannouncedon the same day the appointment of Allison O’Toole as Interim Chief Executive Officer of the exchange. Previously, Ms. O’Toole served as the deputydirector for external affairs and oversaw MNsure’s public-facing departments including Marketing and Communications, State and Federal Government Affairsand Navigator and Broker Relations, and was MNsure’s staff liaison to the Board of Directors. As of May 2014, 95 percent of Minnesotans have healthcoverage — the highest percentage in state history. The 2016 open enrollment period is scheduled to begin Nov. 1, 2015, and end on Jan. 31, 2016.

Florida: HHS Secretary Meets with Gov. Scott Over Non-renewed LIP Funding

Gov. Rick Scott (R-FL) met with Department of Health and Human Services (HHS) Secretary Sylvia Burwell on May 6 in Washington to attain an immediate answerfrom HHS on how much money, if any, the administration might provide with regard to the state’s LIP waiver, so that he and Florida’s legislature cancomplete their overdue budget deliberations. LIP provides supplemental Medicaid dollars for uncompensated care to states, which directs them to fundhospitals, federally qualified health centers, graduate medical education and health maintenance organizations (HMOs). Counties contribute the majority ofdollars. According to notes from the meeting, Secretary Burwell rebuked Gov. Scott’smost recent proposal for being ill-advised and solicitingtoo much money, approximately $2.2 billion annually through June 2017. “HHS heard the Governor’s request for a timely response to help the state meet itsbudget timeline,” HHS Secretary Burwell’s office said in the written remarks. “HHS believes completion of the public comment period, on-going discussionswith the state, and the state’s submission of its proposal to CMS are the next steps in the process.” But after meeting with Scott, Burwell insisted that“whether a state receives federal funding for an uncompensated care pool is not dependent on whether it expands Medicaid, and that the decision to expandMedicaid, or not, is a state decision.” That seemed to leave open the question of whether some funding might still be available for the program, albeit ata lower level, if a state does not expand. In the past, CMS has essentially said it does not want to pay separately for uncompensated care costs that wouldbe covered if the state expanded Medicaid. Worth noting, CMS told Florida last April that it would not extend the Low Income Pool program beyond June 2015.As for the state Republican-controlled House, its budget proposal includes neither expansion nor funding under the low-income pool; the result is a $5billion budget gap.

4. Regulations Open for Comment

CMS Updates Wage Index andPayment Rates for the Medicare Hospice Benefit

On April 30, 2015, CMS issued a proposed rule (CMS-1629-P)that would update fiscal year (FY) 2016 Medicare payment rates and the wageindex for hospices serving Medicare beneficiaries. The proposed hospice paymentrule reflects the ongoing efforts of CMS to support beneficiary access tohospice care. As proposed, hospices would see an estimated 1.3 percent ($200million) increase in their payments for FY 2016. The $200 million increase inestimated payments for FY 2016 reflects the distributional effects of the 1.8percent proposed FY 2016 hospice payment update percentage ($290 millionincrease); the use of updated wage index data and the phaseout of the wage indexbudget neutrality adjustment factor (-0.7 percent/$120 million decrease); andthe proposed implementation of the new Office of Management and Budget (OMB)Core Based Statistical Areas (CBSA) delineations for the FY 2016 hospice wageindex with a one-year transition (0.2 percent/$30 million increase). Theelimination of the wage index budget neutrality adjustment factor (BNAF) waspart of a seven-year phaseout that was finalized in the “Medicare Program;Hospice Wage Index for Fiscal Year 2010” final rule (74 FR 39384, Aug. 6, 2009)and is not a policy change.

Proposed FY 2016 Medicare Payment and Policy Changes for Inpatient Psychiatric Facilities

On April 24, 2015, the Centers for Medicare & Medicaid Services (CMS) issued aproposed rule outlining proposed fiscal year (FY) 2016 Medicare paymentpolicies and rates for the Inpatient Psychiatric Facilities Prospective Payment System (IPF PPS). The proposed rule also updates the Inpatient PsychiatricFacility Quality Reporting (IPFQR) Program, which requires participating facilities to report on quality measures or incur a reduction in their annualpayment update. This proposed rule would expand the measure sets in future fiscal years and change certain data reporting requirements for these measures.CMS is proposing to update the estimated payments to IPFs in FY 2016 relative to estimated payments in FY 2015 by 1.6 percent (or $80 million). This amountreflects 2.7 percent IPF-specific market basket estimate less the productivity adjustment of 0.6 percentage point and less the 0.2 percentage pointreduction required by law, for a net update of 1.9 percent. Estimated payments to IPFsare reduced by 0.3 percent due to updating the outlier fixed-dollar lossthreshold amount. CMS will accept comments on the proposed rule until June23, 2015.

CMS Releases Proposed Rule on FY 2016 Medicare Payments for Inpatient Rehab Facilities

On April 23, 2015, the Centers for Medicare & Medicaid Services (CMS) issued aproposed rule outlining proposed FY 2016 Medicare payment policiesand rates for the Inpatient Rehabilitation Facility (IRF) Prospective Payment System and the IRF Quality Reporting Program. Specifically, CMS isproposing to increase payments to inpatient rehabilitation hospitals in 2016 by approximately $130 million, or 1.7 percent when compared to 2015. Thisagency also proposes new quality reporting requirements to adopt measures that satisfy three of the quality domains required by the IMPACT Act in FY2016: skin integrity and changes in skin integrity; functional status, cognitive function and changes in function and cognitive function; and incidenceof major falls; IRFs that fail to submit the required quality data to CMS will be subject to a 2 percentage point reduction to their applicable FYannual increase factor, and the expected cost of the implementation of these new quality reporting requirements is approximately $24 million tohospitals. Worth noting, the payment increase is significantly smaller than the 2.4 percent raise they received in fiscal 2015. The agency proposes tobegin collecting IRF quality reporting data by fall 2016. The proposed rule will be published in the Federal Register on April 27, and the agency willaccept comments from stakeholders until June 22, 2015.

USPSTF Upholds Recommendations on Mammography for Women Under 50

In a draft recommendationreleased April 20, the U.S. Preventive Services Task Force (USPSTF) upheld its 2009 recommendation that women under 50 wait to start gettingmammograms. Specifically, the task force downgraded mammography coverage for women ages 40-49 from “B” to “C” status, meaning insurers would no longerhave to cover screenings without a co-pay. The decision comes after more evidence has shown the negative effects associated with mammograms, includingfalse positives and overdiagnosis. In a letter to the Department of Health and Human Services opposed to the decision, Sen. Barbara Mikulski said,“Should the draft recommendation be finalized, I will actively and aggressively pursue all legislative options available to ensure that women aged 40and older are able to continue receiving free annual mammogram.” The task force reports that women aged 60-69 are most likely to avoid a breast cancerdeath due to a mammography. “Screening mammography in women ages 40 to 49 years may reduce the risk of dying of breast cancer, but the number of deathsaverted is much smaller than in older women and the number of false-positive tests and unnecessary biopsies are larger. All women undergoing regularscreening mammography are at risk for the diagnosis and treatment of noninvasive and invasive breast cancer that would otherwise not have become athreat to her health, or even apparent, during her lifetime. Public comment on the draft recommendations must be submitted by May 18, 2015, at 8:00 PMEST.

Fiscal Year 2016 Proposed Inpatient and Long-term Care Hospital Policy andPayment Changes

On April 17, 2015, CMS