1. Congress

House of Representatives

House Ways and Means Committee Holds Hearing on the Tax Treatment of Health Care

The House Ways and Means Committee held a hearing on April 14 to examine the tax code and its effect on our existing health care system. Members and witnesses discussed the challenges with outdated, inefficient and unfair provisions in the tax code and explored opportunities to reform those provisions to increase access to the high-quality, affordable, portable health care options Americans deserve. Members and witnesses talked about the largest health tax expenditure, which affects more than 150 million Americans insured through employer-sponsored health plans. Known as the employer exclusion, this tax incentive subsidizes the cost of health insurance bought through a job.

Concluding the hearing, Chairman Kevin Brady (R-TX) said, “I cannot emphasize enough: the employer-sponsored health insurance market is a vital one. The question we must wrestle with is how we can sustain this option while advancing reforms that make the tax code fairer and health care more affordable for all Americans. This Committee will continue to protect and expand opportunities for Americans who want to take control of their health care dollars.”

To see a blog post about the hearing, click here.

House Education and Workforce Subcommittee Examined Solutions for a Healthy Workforce

On April 14, the House Education and the Workforce Committee Subcommittee on Health, Employment, Labor, and Pensions held a hearing to examine solutions for a healthy workforce. The hearing explored innovations employers are implementing to control costs and provide higher-quality coverage to their employees. Members examined and discussed the future of employer-sponsored wellness programs, private exchanges and other creative benefit strategies aimed at improving access to affordable care for America’s workers. The hearing was part of the ongoing work by the Task Force on Health Care Reform to develop reforms that will expand access to affordable coverage and lead to a more patient-centered health care system.

To see a related press release, click here.

House Energy and Commerce Committee Holds Hearing on Obamacare Reinsurance Payments

On April 15, the House Energy and Commerce Oversight Subcommittee held a hearing entitled “Unlawful Reinsurance Payments: CMS Diverting $3.5 Billion from Taxpayers to Pay Insurance Companies.” Despite the clear language of the statute, the Centers for Medicare and Medicaid Services (CMS) is continuing to divert funds intended for the U.S. Treasury to insurance companies as reinsurance payments. Over the last two benefit years, CMS has illegally paid out $3.5 billion in reinsurance payments. At the hearing, subcommittee members asked CMS Acting Administrator Andy Slavitt, the hearing’s sole witness, about the program.

To see a related press release, click here.

House Appropriation Bill Would Change FDA Drug Labeling Rule

FDA would be prohibited from finalizing a proposed rule that outlines how drugmakers can update their labeling unless it consents to provisions outlined by Congress, under the House’s FY 2017 appropriation bill released this afternoon.

Under the House’s FY 2017 appropriation bill released April 12, the U.S. Food and Drug Administration (FDA), unless it agrees to provisions outlined by Congress, would be prohibited from finalizing a proposed rule that outlines how drugmakers can update their labeling. The language reflects industry requests and says that FDA could finalized the proposal only if it is altered to put FDA in charge of approving safety updates to generic or biosimilar labels. FDA would also have to require the same changes to original and generic versions of the product.

Current FDA regulation prevents generic drugmakers from updating their products with new safety information unless the new labels are the same as those of the branded drug. This is a problem when generic companies notice safety issues before the original companies take action. The Supreme Court ruling in Mutual v. Bartlett says that patients cannot sue a generic company when they do not warn of a safety issue. After this ruling, FDA proposed to let generic drug companies update their safety labeling without agency approval—this could create periods where generic and branded products would have different labels.

Brand and generic lobbies submitted comments on the proposed rule urging FDA to adopt the alternative proposal known as the Expedited Agency Review (EAR), which would put the burden of updating safety information on FDA. They argued that the proposal would increase their legal costs, increase drug costs and cause confusion for consumers.

FDA says it plans to finalize the rule in July.

House Appropriations Committee Proposes $10 Million for Zika and Ebola

On April 12, the House Appropriations Committee unveiled a spending bill that includes $10 million in new FDA funding to combat Zika and Ebola. The funding will go toward ongoing response activities and the development of a vaccine to fight the viruses. This proposal is far from the White House’s $1.9 billion request, which administration officials argue is necessary to sufficiently respond to Zika and Ebola. The White House recently agreed to redirect almost $600 million in Ebola funds to fight the Zika virus, but officials say that money needs to be replenished in order to continue to fight Ebola in West Africa.

House Appropriations Committee Chairman Hal Rogers (R-KY) said his staff is working on a supplemental bill to get additional funding to fight Zika. The committee is waiting on the administration to give details about what exactly it needs to combat the virus.

Committee Democrats offered an amendment to fully fund the administration’s $1.9 billion request—Rogers offered a substitute amendment to that. His amendment would give the administration authority to use all unobligated Ebola money. He said the White House’s Zika request was basically a slush fund that did not include sufficient detail on where the money would go.

To see details about the spending bill, click here.

House Passes Zika Voucher Bill

On April 12, the House passed legislation to add the Zika virus to the list of tropical diseases under the FDA’s priority review voucher program, which expedites new drugs to market. A corresponding bill passed in the Senate in March. The bill now goes to the President. It is expected to be signed into law.

Cures Provisions Included in Appropriations Bill

The House Appropriations spending bill approved on April 12 would enact into law three sections of Title II of the 21st Century Cures Act, including one that would allow companies to get a new indication approved for a cancer drug or biologic based on data summaries, instead of the bigger amount of data usually required.

To see a detailed description of the bill, click here.


Bipartisan Group of Senators Asks CMS to Delay Hospital Compare Star Ratings

A bipartisan group of 60 senators is asking the Centers for Medicare and Medicaid Services (CMS) to delay publishing Hospital Compare Star Ratings that are expected to be out April 21—a similar letter from House lawmakers is in the works. Led by Sens. Rob Portman (R-OH) and Bob Casey (D-PA), the senators argue the star rating system could be misleading to consumers since it does not account for poor or complex patients. They also argue CMS has not given enough information to hospitals about how it came up with the ratings.

“We respectfully request that you delay release of the star ratings to provide the necessary time to more closely examine the star rating methodology, analyze its impact on different types of hospitals, and provide more transparent information regarding the calculation of the ratings to determine accuracy,” the lawmakers say in the April 11 letter.

The letter also says prominent hospitals with top quality ratings in other reports could receive one or two stars out of five in this system, which causes concern that the measures underpinning the rating system are flawed. Congress’s Medicare pay advisers and others have said the measures used for the hospital compare program are not appropriately adjusted for socioeconomic status nor do they account for beneficiaries with multiple chronic conditions.

The American Hospital Association (AHA) says that Reps. Jim Renacci (R-OH) and Bill Pascrell (D-NJ) collected signatures for a similar House letter through April 13.

  1. Administration

CMS Launches Initiative to Improve Primary Care Delivery

On April 11, the Centers for Medicare and Medicaid Services (CMS) announced its initiative to reform primary care delivery in its largest multipayer initiative yet. The Comprehensive Primary Care Plus (CPC+) model will be implemented in up to 20 regions and can accommodate up to 5,000 practices, which would encompass more than 20,000 doctors and clinicians and the 25 million people they serve. The initiative is designed to provide doctors the freedom to care for their patients the way they think will deliver the best outcomes and to pay them for achieving results and improving care. It is set to begin in January.

Final numbers, however, will depend on whether the agency has high levels of buy-in from commercial insurers and states, as well as physicians. Based on CMS’s request for applications, the 25 million figure could include the assumption that 3.5 million fee-for-service Medicare enrollees would be involved—no breakdown was given for Medicare Advantage, Medicaid and the commercially insured.

Building on the Comprehensive Primary Care initiative launched in late 2012, the five-year CPC+ model will benefit patients by helping primary care practices:

  • Support patients with serious or chronic diseases to achieve their health goals
  • Give patients 24-hour access to care and health information
  • Deliver preventive care
  • Engage patients and their families in their own care
  • Work together with hospitals and other clinicians, including specialists, to provide better coordinated care

CPC Plus contains two tracks that can each accommodate up to 2,500 practices. Both tracks will require practices to perform the functions and meet the criteria listed above, but practices in Track 2 will also provide more comprehensive services for patients with complex medical and behavioral health needs, including, as appropriate, a systematic assessment of their psychosocial needs and an inventory of resources and supports to meet those needs. The agency estimates that Track 1 will be budget-neutral, and Track 2 will save $2 billion over the five-year period. JAMA has a table comparing models here.

CMS will select regions for CPC+ where there is sufficient interest from multiple payers to support practices’ participation in the initiative. CMS will enter into a Memorandum of Understanding (MOU) with selected payer partners to document a shared commitment to align on payment, data sharing and quality metrics in CPC+.

CMS will accept payer proposals to partner in CPC+ from April 15 through June 1, 2016. CMS will accept practice applications in the determined regions from July 15 through Sept. 1, 2016.

For more information about the CPC+ model, including a fact sheet, click here.

CMS Releases New FAQs for Home and Community-Based Services

On April 12, the Centers for Medicare and Medicaid Services (CMS) released additional Frequently Asked Questions on implementation activities associated with the home and community-based services final regulation. Specifically, guidance is provided on how CMS will review requests to build new settings in categories that are presumed to be institutional in nature. The guidance also identifies the components of person-centered planning regulatory requirements that are in effect now and those that are part of the home and community-based settings transition period in effect through March 2019. The information is part of CMS’s effort to assist states in meeting regulatory requirements for residential and non-residential home and community-based settings.

The full Home and Community-Based Services toolkit, including the updated portions, is available here.

Officials Find Greater Risks Due to Zika Virus

During an April 11 White House briefing, top U.S. health officials said mosquitoes that can carry Zika have spread much faster in the country and the virus has bigger health impacts than originally thought. Officials now believe mosquitoes with the virus could be in 30 states—up from 12. They are also linking the virus to pregnancy complications beyond microcephaly, the neurological condition in which babies are born with abnormally small heads.

The Centers for Disease Control and Prevention (CDC) learned that Zika could be problematic throughout the entire pregnancy and that premature birth and eye problems in babies born to mothers infected with Zika may be due to the virus. Zika may also be associated with acute disseminated encephalomyelitis, the neurological condition that affects the brain in a way similar to multiple sclerosis.

Anthony Fauci, director of the NIH National Institute of Allergy and Infectious Diseases, said there is progress on getting a potential vaccine into a clinical trial—the agency hopes to begin this in September. NIH has also screened 62 drugs and identified 15 that could be useful for treating Zika.

Officials still stress the need for additional funding to combat the virus. They argued that the $600 million in Ebola funds would not be enough and that NIH will need to dip into other accounts when that money runs out. The White House has asked for $1.9 billion in new funding for Zika.   

Officials Say CMS Is Considering Excluding Oncology Care Model Practices From Part B Demo

On April 11, two officials from the Centers for Medicare and Medicaid Services (CMS) said they are considering excluding doctor practices that are part of the Oncology Care Model from the controversial Part B drug-price demonstration. The proposal to test changes to the physician pay formula in Medicare Part B has been the subject of many public meetings, including two on April 11.

Speaking at Pew Charitable Trusts, CMS Principal Deputy Administrator Patrick Conway stressed the possibility of excluding Oncology Care Model Practices. He also said including those practices would make it more difficult to determine whether the Part B demo is successful. At an event sponsored by the Pharmaceutical Care Management Association, CMS Deputy Administrator and Medicare Director Sean Cavanaugh also said CMS is considering excluding the aforementioned practices.

Part B currently pays doctors a drug’s average sales price (ASP) plus 6 percent. The first stage of the demonstration would cut that to 102.5 percent of the ASP, plus a flat fee of $16.80 per drug per day. The second stage of the demonstration would test approaches to paying for drugs based on their value. That phase is less defined and there are many options that CMS could explore. Oncologists and drugmakers generally support the idea of paying for value, but it is not clear that they will support whatever CMS ends up testing in the second phase.

An Avalere Health study found that the demonstration would reduce payments to hospitals and some specialists, while increasing payments to primary care providers. The study shows that seven of the 10 drugs that constitute the largest reduction in reimbursement are used to treat cancer.

Optometrists Files Claim With FDA Against Online Vision Test

On April 4, the American Optometric Association (AOA) filed a claim with FDA against an online vision test marketed by Opternative Inc. that allows patients to get prescriptions for glasses and contact lenses online. AOA claims the product has not received the premarket approval necessary for a new medical device and asks that the product be pulled from the market and undergo FDA review. The claim comes as FDA and lawmakers attempt to define the murky waters of what types of health care software requires agency oversight.

Opternative’s product offers patients an “online refractive exam that provides a prescription for glasses and contacts,” according to the company’s website. That includes diagnosing the level of a patient’s nearsightedness (myopia), farsightedness (hyperopia) and whether a patient has astigmatism and the degree of astigmatism. A patient takes the test online and then is sent a prescription from an ophthalmologist registered in the patient’s state that they can use to get glasses or contacts.

AOA’s claim alleges Opternative’s diagnosis has a significant potential for yielding an inaccurate prescription; is not adequate to yield a safe contact lens prescription; and carries a significant risk of missing diagnoses of serious eye and other conditions like glaucoma, diabetes, hypertension, cataracts and macular degeneration.

AOA says while it believes Opternative’s product meets the definition of a device, it finds no record of a cleared 510(k) premarket notification or an approved premarket approval application. AOA notes that Opternative is simply registered as a specification developer for a visual acuity chart, color vision tester and a medical device system, and devices covered by those classifications are exempt from the 510(k) requirements.

Last year, the agency issued final guidance stating that it would not regulate low-risk medical device data systems intended to transfer, store or display medical device data without controlling or altering the functions of any connected devices. FDA has said it will also not regulate low-risk personal devices like wearables that monitor things like a person’s heart rate and other vital signs. Instead, FDA said it would focus on higher-risk software and apps that actually make a diagnosis or recommend treatments, but has yet to publicly make clear how it will regulate these devices.

The House passed the 21st Century Cures Act that would remove low-risk software from FDA regulation. These provisions were scaled back from earlier language that aimed to more clearly define “medical” software subject to agency oversight.

CMS Plans Alternative Payment Models in Medicare Advantage

In its Call Letter for Medicare Advantage programs, CMS is laying the groundwork for alternative payment models in the Medicare Advantage program next year. CMS says that as a result of the high level of interest in the use of alternative payment models and the administration’s long-term goal of tying more Medicare fee-for-service payments to alternative payment models, CMS added questions to Medicare Advantage reporting requirements on how plans use these models. Specifically, CMS asks MA plans to report on the proportion of provider payments that are fee-for-service with no link to quality; fee-for-service with a link to quality; alternative models built on fee-for-service architecture; and population-based.

“CMS has designed the policies contained in this Call Letter to improve the overall management of the Medicare Advantage and Prescription Drug programs with four major outcomes in mind. These outcomes are: 1) improvement in quality of care for individuals, 2) promotion of alternative payment models, 3) program integrity and beneficiary/tax-payer value, and 4) improvement in beneficiary experience,” CMS said in the call letter.

CMS had also asked in the draft call letter for stakeholders to lay out the challenges and concerns associated with the use of APMs in MA. Lawmakers took CMS’s request that Medicare Advantage plans report on provider-pay models as implicit recognition that MA plans could qualify as alternative pay models, although the agency has yet to say which APMs will count toward physician bonuses under the new physician payment system.

CMS did not respond to lawmakers’ comments in the final rule, and now lawmakers are waiting to see what the final rule on the new physician payment system says before drawing conclusions. That proposed rule is under review by the White House Office of Management and Budget.

State-based Exchanges Look at Next Steps for Small Business Health Option Program (SHOP)

State-based exchanges are exploring next steps for Small Business Health Option Program (SHOP) marketplaces that are not delivering much return on investment as they enter their third year. If enrollment does not increase in the next few years, more states will look for alternatives. CMS has not released small group enrollment numbers since last July, when the first and only figure revealed only 85,000 or so workers covered through around 10,700 small employers nationwide as of May 2015. Under the final 2017 Notice of Benefit and Payment Parameters finalized last month, employers in FFM and “supported” exchange states can opt to offer all plans across all actuarial value levels from one issuer—known as “vertical choice”—for plan years beginning on or after Jan. 1, 2017. All SHOPs will still be required to let employers offer all qualified health plans at a single actuarial value level of coverage, CMS said.

Twenty-one states will do so starting in 2017, CMS said Friday, April 8. States that run their own exchanges make that decision themselves.

  1. State Activities

Alabama: Possible Cuts to Alabama’s Medicaid Agency

On April 6, Alabama Gov. Robert Bentley said the state’s Medicaid Agency would try program cuts before he considers calling a special session on the state budget. Bentley suggested that one option would be to eliminate Medicaid prescription drug coverage for adults, which would save an estimated $50 to $60 million in state dollars. This is one of several cuts the governor is considering after the state legislature did not provide the funding he requested—Bentley wanted a $100 million increase for the Medicaid program, but lawmakers approved only a $15 million boost.

Arkansas: Arkansas Senate Fails to Pass Medicaid Expansion Funding

On April 14, Arkansas Senate Republicans blocked funding for the state’s hybrid Medicaid expansion. Lawmakers had previously approved the framework of the governor’s Arkansas Works proposal to extend Medicaid expansion. However, the measure fell two votes short of the 27 majority—75 percent—needed to pass it, with the vote coming in at 25-10 in favor of it. Legislatures will reconvene in Little Rock on April 19 to once again take up the Arkansas Works proposal. Over 250,000 Arkansas residents depend on the private option for health insurance.

California: Senate Health Committee Approves Drug Transparency Bill

On April 13, the California Senate Health Committee approved a drug transparency bill, S.B. 1010, which would require drug manufacturers to notify California health care purchasers and other health insurers if they increase the price of a drug by more than 10 percent during any 12-month period. Within 30 days of such notice, the manufacturers would have to provide a written justification of the price hike. The bill also requires health plans to disclose the percentage of premiums they spend on prescription drugs. The bill is sponsored by California Senate Health Committee Chair Ed Hernandez (D-West Covina).

Connecticut: State Exchange to Release New Metrics to Prioritize Consumer Experience, Health System Use

Connecticut’s health insurance exchange—Access Health CT—is preparing to release new metrics for success that will prioritize consumer experience and health system use. On April 11, exchange CEO Jim Wadleigh said that state exchanges want to return to the conversation about quality that was happening before the Affordable Care Act (ACA) was enacted and national attention turned to enrollment.

Connecticut’s exchange team met with the Centers for Medicare and Medicaid Services (CMS) last week to discuss setting those quality standards. The shift will not mean a neglect of the state’s enrollment campaigns, but a focus on serving existing consumers in the best way possible. Access Health CT’s metrics are part of a three-year strategy to be released in the next month. One metric, for example, will look at how many exchange enrollees use wellness visits and preventive care.

Iowa: House Releases Medicaid Oversight Plan

Iowa House Republicans released an oversight plan to monitor Gov. Terry Brandstad’s shift of the state’s Medicaid program to Medicaid managed care. The plan includes requiring reports on the highest-risk Medicaid enrollees, providing call center performance information and making sure enough physicians are available. The proposal will be incorporated into a health spending bill that is being negotiated with the state Senate. The Senate already adopted legislation that creates an oversight plan, after Democrats brought up concerns that health insurers would try to profit by denying medical services to Medicaid enrollees.

Oklahoma: Tobacco Tax Increase Could Help Fund Medicaid Expansion Plan

The Oklahoma Health Care Authority is trying to get a tobacco tax increase to help fund a Medicaid expansion plan. Medicaid director Nico Gomez said a $1.50-per-pack cigarette tax would bring in $182 million per year. To pass, the proposal would require a two-thirds majority in the state legislature. The expansion would be an option under the state’s existing Insure Oklahoma Medicaid 1115 waiver, which covered over 19,000 low-income adults as of March 2016. The proposal came after the Medicaid agency notified providers that it wants to cut reimbursement rates by 25 percent, as the state tries to plug a $1.3 billion budget hole.

Tennessee: Health Care Task Force to Develop Proposal on Improving Access to Care

On April 12, Beth Harwell, the Tennessee House speaker, announced the creation of a legislative health care task force that will develop a proposal to improve access to care—however, she stopped short of endorsing Medicaid expansion. This announcement comes a year after Gov. Bill Haslam’s Medicaid expansion proposal—Insure Tennessee—was rejected by the Republican-controlled legislature. The task force will finish its work in time for Haslam and legislators’ meeting with the Centers for Medicare and Medicaid Services (CMS) in June.

  1. Regulations Open for Comment

Food and Drug Administration (FDA) Issues Final Rule to Phase Out Trans Fats

FDA issued a final rule June 16 that gives the food manufacturers three years to phase out partially hydrogenated oils (PHOs), which are still used in a wide variety of food products from microwave popcorn to cake frosting. The decision finalizes an agency determination that PHOs, the primary dietary source of artificial trans fat in processed foods, are not “generally recognized as safe” or GRAS for use in human food. Since 2006, manufacturers have been required to include trans fat content information on the Nutrition Facts label of foods. Between 2003 and 2012, the FDA estimates that consumer trans fat consumption decreased about 78 percent and that the labeling rule and industry reformulation of foods were key factors in informing healthier consumer choices and reducing trans fat in foods. Comments on the final rule are due by June 18, 2018.

More information on FDA’s decision can be found in the agency’s press release.

HHS Posts Guidance for State Innovation Waivers

On Dec. 11, the Department of Health and Human Services (HHS) posted guidance for states interested in seeking a State Innovation Waiver under Section 1332 of the Affordable Care Act (ACA). State Innovation Waivers allow states to receive federal funding to implement alternative models of health care coverage that provide affordable coverage to their residents. The notice clarifies that the minimum length of public notice and comment periods for waiver applications is 30 days.

To see the guidance, click here.

CMS Releases Proposed Rule for Provider Enrollment Process

On Feb. 25, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule to implement additional provider enrollment provisions of the Affordable Care Act (ACA) to help make sure that entities and individuals who pose risks to the Medicare program are kept out of it or removed for extended periods. This rule is part of CMS’s effort to prevent questionable providers and suppliers from entering the Medicare program.

If finalized, the regulations would allow CMS to remove or prevent enrollment of those who try to circumvent enrollment requirements through name and identity changes or through inter-provider relationships. It will also address vulnerabilities such as when providers and suppliers avoid paying their Medicare debts by reenrolling as a different entity.

Major provisions of the proposed rule include:

  • Disclosure of Affiliations: Would require health care providers and suppliers to report affiliations with entities and individuals that: (1) currently have uncollected debt to Medicare, Medicaid or CHIP; (2) have been or are subject to a payment suspension under a federal health care program or subject to an Office of Inspector General (OIG) exclusion; or (3) have had their Medicare, Medicaid or CHIP enrollment denied or revoked. CMS could deny or revoke the provider’s or supplier’s Medicare, Medicaid or CHIP enrollment if CMS determines that the affiliation poses an undue risk of fraud, waste or abuse.
  • Different Name, Numerical Identifier or Business Identity: CMS could deny or revoke a provider’s or supplier’s Medicare enrollment if CMS determines that the provider or supplier is currently revoked under a different name, numerical identifier or business identity.
  • Abusive Ordering/Certifying: Would allow CMS to revoke a physician’s or eligible professional’s Medicare enrollment if he or she has a pattern or practice of ordering, certifying, referring or prescribing Medicare Part A or B services, items or drugs that is abusive, represents a threat to the health and safety of Medicare beneficiaries or otherwise fails to meet Medicare requirements.
  • Increasing Medicare Program Re-enrollment Bars: Would improve protection of the Medicare Trust Funds and program beneficiaries by: 1) raising the existing maximum re-enrollment bar from three years to 10 years; 2) allowing CMS to add three more years to the provider’s or supplier’s re-enrollment bar if the provider attempts to re-enroll in Medicare under a different name, numerical identifier or business identity; and 3) imposing a maximum 20-year re-enrollment bar if the provider or supplier is being revoked from Medicare for the second time.
  • Other Public Program Termination: Would permit CMS to deny or revoke a provider’s or supplier’s Medicare enrollment if: (1) the provider or supplier is currently terminated from participation in a particular Medicaid program or any other federal health care program under any of its current or former names, numerical identifiers or business identities; or (2) the provider’s or supplier’s license is revoked in a state other than that in which the provider or supplier is enrolled or enrolling.
  • Expansion of Ordering/Certifying Requirements: Would permit CMS to require that physicians and eligible professionals who order, certify, refer or prescribe any Part A or B service, item or drug must be enrolled in or validly opted out of Medicare.

Comments on the proposed rule must be submitted no later than 5 p.m. on April 25.

For more information, click here.

ONC Releases Proposed Rule Expanding Role in Health IT Certification Program

The Office of the National Coordinator for Health Information Technology (ONC) released a proposed rule that would enable the agency to conduct direct reviews of certified health IT products. Such direct review would also include how certified health IT interacts with other systems. The rule increases ONC’s oversight of health IT testing bodies to improve alignment and more successfully deal with issues, and seeks to increase transparency associated with the surveillance—it plans to make results of surveillance of electronic health records (EHRs) publicly available. The reviews would focus on situations posing health or safety risks. Depending on the findings, the office says it may require corrective action or suspend or terminate certification for an EHR or health IT module.

ONC hopes this move will enhance public confidence in health IT testing and certification. The U.S. Department of Health and Human Services (HHS) said the rule will empower consumers by improving availability of certification information. ONC is proposing a “strict process” for health IT recertification or replacement versions, and a program ban for those that don’t fix problems pointed out by ONC. Comments on the rule will be accepted through May 2.

To see the proposed rule, click here.

CMS Proposes to Test New Medicare Part B Prescription Drug Models

On March 8, the Centers for Medicare and Medicaid Services (CMS) announced a proposed rule to test new models to improve how Medicare Part B pays for prescription drugs and supports physicians and other clinicians in delivering higher-quality care. Medicare Part B covers prescription drugs that are administered in a physician’s office or hospital outpatient department, such as cancer medications, injectables like antibiotics, or eye care treatments. The proposed Medicare Part B Model would test new ways to support physicians and other clinicians as they choose the drug that is right for their patients. The proposed rule is designed to test different physician and patient incentives to do two things: drive the prescribing of the most effective drugs and test new payment approaches to reward positive patient outcomes. Among the approaches to be tested are the elimination of certain incentives that work against the selection of high-performing drugs, as well as the creation of positive incentives for the selection of high-performing drugs, including reducing or eliminating patient cost sharing to improve patients’ access and appropriate use of effective drugs.

Prescription drug spending in the U.S. was around $457 billion in 2015, or 16.7 percent of overall health spending. In 2015, Medicare Part B spent $20 billion on outpatient drugs administered by physicians and hospital outpatient departments. The proposed rule seeks comments on testing six different alternative approaches for Part B drugs to improve outcomes and align incentives to improve quality of care and spend dollars wisely:

  1. Improving incentives for best clinical care
  2. Discounting or eliminating patient cost sharing
  3. Feedback on prescribing patterns and online decision support tools
  4. Indications-based pricing
  5. Reference pricing
  6. Risk-sharing agreements based on outcomes

CMS is accepting comment on the proposed rule through May 9, 2016.

To see the press release, click here.

For a fact sheet on the proposed rule, click here.

  1. Reports

JAMA Survey Shows Physicians Have Poor Knowledge About FDA Approval Standards

According to a new survey in JAMA, physicians tend to overestimate the quality of evidence FDA requires for a drug’s approval. This misconception could lead physicians to overprescribe newly approved drugs with designations like “breakthrough therapy” and insufficiently communicate to patients how well the treatment actually works.

Almost three-fourths (73 percent) of the 692 board-certified internists and specialists who responded to the survey incorrectly thought an FDA-approved drug must be as effective as other approved drugs. FDA can approve new drugs that are less effective than other products already out on the market.

Also, 70 percent incorrectly thought FDA requires new drugs to have both a statistically significant and clinically important effect for approval. Specialists were more likely to understand the approval process than internists.

More than half of the physicians thought evidence from randomized clinical trials is needed for a drug to earn the “breakthrough” designation. FDA has had authority since 2012 to assign a “breakthrough therapy” designation if preliminary clinical evidence suggests the drug may be an improvement over existing options. The term is often used in press releases and prescribing material for physicians.

When physicians were presented with two similar drugs to treat the same condition, almost all (94 percent) said they would try the drug described as an FDA-designated breakthrough drug first. Only 6 percent chose the other drug, which was described with language that meets the statutory criteria for a breakthrough drug without the “breakthrough” label.

American Academy of Actuaries Says Risk Adjustment Program Is Working

According to the American Academy of Actuaries, Obamacare’s risk adjustment program is working pretty much as it was designed to do. Plans that pay out a higher percentage of premiums for medical claims are benefitting from the program, while those with lower medical loss ratios are more likely to pay into the fund. This assessment, in a report released April 13, runs opposite to claims by small health plans that they are unfairly losing out to the more established, richer competitors.

There were some concerning aspects of the analysis—small plans have more variability in how much they received or paid into the risk adjustment program, potentially creating financial volatility.

To see the analysis, click here.

Avalere Study Finds Biosimilars Cost Medicare Beneficiaries More Than Biologics in Part D

A new Avalere Health report finds that seniors pay more for biosimilars than for the biologic reference product in Medicare Part D because, unlike for brand drugs, drugmakers do not have to discount biosimilars that beneficiaries buy while in the coverage gap. Avalere estimates that for a biologic costing $30,000 per year, costs for a biosimilar would be over $1,500 more per year (39 percent higher) than the reference product.

To fix this problem, Avalere suggests two options: 1) requiring manufacturer discounts to close the coverage gap for biosimilars and 2) creating a biosimilar tier that would reduce beneficiary costs for the biosimilar below that of the reference product. Avalere’s analysis found that both options could increase use of biosimilars and would decrease cost. The first would reduce federal spending by $800 million over 10 years, while increasing manufacturer costs. The second would increase federal spending by $300 million over 10 years as a result of higher costs to the Part D benefit.

To see the full report, click here.

Kaiser Family Foundation Finds Payments for Cost-Sharing Increasing Quickly Over Time

According to a new Kaiser Family Foundation analysis, out-of-pocket costs for workers with job-based health insurance have gone up much faster than costs covered by insurance companies.

Between 2004 and 2014, average patient cost-sharing rose by 77 percent—from $422 in 2004 to $747 in 2014. At the same time, health plans’ average payment per enrollee rose by 58 percent, reflecting a trend that people are receiving less-generous coverage. Payments by enrollees for deductibles in particular have increased significantly, rising 256 percent from $99 to $353—though average payments for copays decreased from $206 to $152.

Deductibles accounted for less than one-fourth of out-of-pocket costs in 2004, but rose to almost half in 2014. Costs for coinsurance also rose in that time frame.

Overall, the analysis found that individuals’ costs rose from an average of $422 in 2004 to $747 in 2014, while average payments from health insurance companies rose from $2,748 to $4,354.

Health Affairs Study Shows Support For Repealing Obamacare Dropped Since It Took Effect

According to a recent study published in Health Affairs, Americans’ views of Obamacare remain divided, but less people support repealing the law than when it first was enacted six years ago. Some of the gains in positive opinion are from people who received coverage themselves under the Affordable Care Act (ACA). The study analyzed public opinion of the health law from 2010 through 2014 and found many noticeable shifts, including a 9 percent decrease in support for repealing Obamacare. The study also found an increase of 19 percent of people who say the law has had some or great impact. Most of the people who changed their minds were among those that received coverage between 2010 and 2014, compared to people who supported repeal and already had coverage. However, 45.6 percent still view the law unfavorably compared to 36.2 who view it favorably.

GAO Finds Opportunities for CMS to Recover Overpayments to Providers With Criminal Backgrounds

On April 13, the Government Accountability Office (GAO) published a report entitled “Medicare: Opportunities Exist to Recover Potential Overpayments to Providers with Criminal Backgrounds.” The report finds that the Centers for Medicare and Medicaid Services (CMS) could recover about $1.3 million in potential overpayments to 16 out of 66 potentially ineligible providers with criminal backgrounds who were enrolled in Medicare before CMS implemented more extensive background-check processes in April 2014. These 16 providers had Medicare claims paid to them while they were possibly ineligible.

To see the full report, click here.

NEJM Study Finds Early Participants in MSSP Fared Better

According to a new study in the New England Journal of Medicine (NEJM), early participants in the Medicare Shared Savings Program (MSSP) fared much better. Compared to spending on participants in traditional Medicare, researchers found MSSP entrants had savings of $144 per beneficiary in 2012 but entrants in 2013 only had savings of $3 per beneficiary. According to the authors, the findings “suggest that progress toward net savings to Medicare or society may be slow.” They also add that independent primary care groups consistently achieved greater savings than hospital-integrated groups. Independent physicians may have stronger incentives to lower spending because they are not eating future hospital profits.

McKinsey Releases New Data on Provider-Led Health Plans

A new McKinsey report breaks down the market evolution of provider-led health plans, which were expected to surge in the wake of the Affordable Care Act (ACA) and the rise of population health. According to the report, there is a slow growth in participation, with 106 providers offering health plans in 2014, up from 94 providers in 2010. Total enrollment rose by about 3 million in three years—provider-led health plans covered 15.3 million people in 2014, up from 12.4 million in 2010. Nearly all the growth was in managed Medicaid, with 8.8 million covered people in 2014, up from 6.1 million in 2010. Also, more than 45 percent of provider-led health plans lost money.

To see the full report, click here.