Medicare Proposes Shift in Payments

On Monday, January 26, HHS Secretary Sylvia Burwell announced a proposed shift in the way health care providers are paid by expanding the use of alternative payment models.  According to the announcement, HHS has set a goal of tying 30% of traditional fee-for-service Medicare payments to quality or value through the expanded use of Accountable Care Organizations and bundled payments by the end of 2016. The Department plans to tie 50% of payments to these models by the end of 2018.

However, CMS lacks the ability to bypass Congress and, on a broad scale, create any site-neutral payments between hospitals and physician offices or among post-acute providers, and it is unlikely that lawmakers will act on this proposal in the near term.  While it does not appear to give CMS any new regulatory authority to force providers into different payment systems, the announcement does mark the first time a definitive goal has been set with regard to payments associated with alternative payment methods.

CMS and Indiana Agree on Modified Medicaid Expansion

On Tuesday, January 27, CMS and the state of Indiana announced an agreement on the state’s Medicaid expansion proposal.  The proposal, known as the Healthy Indiana Plan 2.0, provides two levels of Medicaid coverage, one for residents living above 100% of the federal poverty line and one for those living below.  Those living under the poverty line will be able to get basic health coverage and have the option of paying between $3 and $15 per month for supplemental coverage.

Those living above the poverty line will have to pay a monthly contribution of up to $25.  Indiana will be the only state allowed to lock individuals above the 100% poverty line out of coverage if they don’t pay the monthly contributions.  The expansion will be paid for with 100% federal funds through 2016. Federal funding rates will gradually decline beginning in 2017 but will not fall below 90% of costs.

House Committee Releases Draft FDA Reform Legislation

On Monday, January 26, the House Energy and Commerce Committee released a 400-page discussion draft of the 21st Century Cures legislation.  The draft language includes ideas to foster faster access to treatments through reforming the FDA’s product review process.  It also includes new market exclusivities for the drug industry and language regarding the FDA’s mission statement that caused House Democrats to pull their support.

In the Senate, Health Committee Chairman Lamar Alexander (R-TN) announced that his committee will begin hearings in March on a measure that will parallel the House FDA reform efforts.

Bills Introduced This Week

Sen. Pat Roberts (R-KS) introduced a Senate bill (S. 258) that would remove the 96-hour physician certification requirement as a condition of payment for critical access hospitals (“CAHs”).  The legislation would not remove the requirement that CAHs maintain an average annual length of stay of 96 hours nor affect other certification requirements for hospitals.  Companion legislation (H.R. 169) was introduced in the House by Rep. Adrian Smith (R-NE) earlier this month.

Sen. Jerry Moran (R-KS) introduced a bill (S. 257) that would allow general supervision by a physician or non-physician practitioner for many outpatient therapeutic services.  The bill would mandate that CMS adopt a default setting of general supervision (not direct supervision) for outpatient therapeutic services.  The legislation would also create an advisory panel to establish an exceptions process for risky and complex outpatient services that require a higher, direct level of supervision.

Sen. Chuck Grassley (R-IA) introduced a bill (S. 314) that would amend Title XVIII of the Social Security Act to provide coverage under the Medicare program of pharmacist services.  The bill is intended to help rural seniors who might have easier access to pharmacists than doctors.  Companion legislation (H.R. 592) was introduced in the House.

Next Week in Congress

The Obama Administration is set to send its FY 2016 Budget request to Congress on Monday. HHS Secretary Burwell will testify on the Department’s portion of the proposed budget at a hearing before the Senate Finance Committee on Wednesday. On the House side of Capitol Hill, lawmakers will consider H.R. 596, a bill to repeal the Affordable Care Act.  The legislation also includes instructions for the House Ways and Means and Energy and Commerce committees to develop patient-centered health care reforms.