1. Congress

House of Representatives

House Appropriations Committee Approves FDA Funding Bill

On April 19, the House Appropriations Committee approved a $21.3 billion FDA-agricultural bill. Democrats unsuccessfully sought to include the White House’s request for $1.9 billion in new Zika funding and to remove FDA-focused policy riders. The bill includes $2.7 billion in discretionary funding for FDA, $33 million higher than the 2016 enacted level. Most of that money is directed to food safety. There also is $10 million included in new FDA money for Zika and Ebola.

The committee passed an amendment 31-19 to exempt e-cigarettes and other vapor products on the market from FDA’s tobacco deeming rule. The amendment would exempt the products from the review process, but also mandates advertising and labeling aimed at keeping them out of the hands of children.

Appropriators also voted 34-14 against an attempt by Democrat Rosa DeLauro (CT) to remove a policy rider that forces FDA to exempt premium cigars from the final rule. The final rule is expected soon.

The bill includes riders that would enact pieces of the 21st Century Cures Act, prevent FDA from finalizing a drug labeling rule unless it agrees to Congressional mandates reflecting industry demands and prevent FDA from approving gene editing research that modifies inheritable traits in human embryos.

Ranking member Nita Lowey (D-NY) unsuccessfully sought an amendment that would have required FDA to use $3 million of its funding for work on drugs and medical devices for children.

House Appropriators Move to Delay FDA Salt Reduction Efforts

During a seven-hour agriculture spending bill markup on April 18, House appropriators approved a provision to block the U.S. Food and Drug Administration (FDA) from taking action on salt reduction until the Institute of Medicine (IOM) and the Centers for Disease Control and Prevention (CDC) update the Dietary Reference Intake (DRI) for sodium. The DRI is a measure of the nutrient needs of health populations. The IOM’s process for updating the DRI for sodium is expected to take at least 18 months.

House Energy and Commerce Committee Approves Opioid Package

On April 20, the House Energy and Commerce Committee held a markup on 12 separate bills intended to be the counterpart to the Senate’s Comprehensive Addition and Recovery Act (CARA) legislation. The subcommittee on health approved all 12 bills aimed at addressing the opioid and drug abuse crisis in the country.

The bills include measures to expand patient access to medication-assisted treatment and to allow partial fillings of opioid prescriptions. Other bills are designed to increase access to the overdose reversal drug naloxone and expand services for pregnant women or mothers with young children dealing with substance abuse.

Other bills would require FDA to consult outside advisers before changing labels on opioids, the development of education programs for opioid prescribers and the creation of an interagency task force to update best practices for pain medication prescribing.

The markup was largely bipartisan, though lawmakers quarreled over caps on the number of patients doctors can treat with medication-assisted treatments. Rep. Frank Pallone (D-NJ) proposed raising the cap to 300 patients, but the committee approved only 250.

For more information, click here.

Bipartisan Bill Introduced to Guarantee Medicare Coverage of Breakthrough Medical Devices

Representatives Charles Boustany (R-LA), Gus Bilirakis (R-FL), Richard Neal (D-MA) and Tony Cardenas (D-CA) introduced a bill on April 21 to guarantee immediate Medicare coverage of breakthrough medical devices and diagnostics following FDA approval. The initial Medicare coverage would run three years. During those three years, CMS could specify additional data it wants to justify further coverage. The bill also changes the CMS New Technology Add-on Payment program.


House and Senate Lawmakers Introduce Meaningful Use Bill

On April 20, a bipartisan group of House and Senate lawmakers introduced a bill to shorten the 2016 reporting period for the electronic health record (EHR) Meaningful Use program to 90 days, as opposed to a full year. Providers are also pushing the Centers for Medicare and Medicaid Services (CMS) to shorten the 2016 reporting period.

Rep. Renee Ellmers (R-NC) introduced H.R. 5001 along with Reps. Tom Price (R-GA), Marsha Blackburn (R-TN), Ron Kind (D-WI), Bobby Rush (D-IL) and Doris Matsui (D-CA). In the Senate, Sen. Rob Portman (R-OH) and Michael Bennet (D-CO) introduced the bill. Providers argue the reporting period should be shortened because CMS is reworking the Meaningful Use program to fit it into the physician pay system.

Senate Finance Committee to Hold Hearing on Mental Health

The Senate Finance Committee will hold a hearing on mental health issues on April 28. The Senate Health Education, Labor and Pensions Committee recently passed the Mental Health Reform Act of 2016, but deferred key provisions such as the Institutions for Mental Diseases (IMD) exclusion. That policy prohibits Medicaid from reimbursing psychiatric institutions or IMDs for services provided to Medicaid enrollees who are 21 to 64.

For more information about the hearing, click here.

2. Administration

White House Gets Specific on Zika Funding

On April 18, the Obama administration updated its Zika funding request—overall, it is requesting the same amount of emergency funding from Congress, but has ramped up its request in two key areas while reducing spending in others. The administration nearly doubled the request for the Biomedical Advanced Research and Development Authority from $100 million to $188 million to help get ready for Phase II vaccine testing. In terms of cuts, the administration reduced contingency funding by $150 million and facility funding by $85 million.

Over 800 Americans in 40 states, three U.S. territories and D.C. have contracted the virus, according to a letter from Senate Democrats to GOP leaders. This total includes 89 pregnant women. To see the letter, click here.

The Biosimilar User Fee Negotiations Begin

The U.S. Food and Drug Administration (FDA) is asking industry trade groups to agree on negotiation ground rules and a proposed timeline for the Biosimilar User Fee Act (BsUFA) reauthorization process. Brand-drug company lobbying groups BIO and PhRMA, along with GPhA Biosimilars Council and the Biosimilar Forum are all taking part in the private reauthorization negotiations. According to FDA’s notes from the first set of meetings, sustainable financing of the user fee program is a priority for all parties involved. FDA has told lawmakers in the past that it needs additional funding for biosimilars.

To see FDA’s meeting notes, click here.

FDA Proposes Rules for Seamless Clinical Trial Design

Agency cancer leaders support companies’ using a new clinical trial process known as “seamless expansion cohort” trials for developing oncology drugs. The trials are designed to bring treatments to market more efficiently, but the U.S. Food and Drug Administration (FDA) is concerned some companies are neglecting some safety precautions. Given this drug development program’s efficiency and success with regard to several indications, many drug companies have forgone the traditional three stages of drug development and opted for a seamless approach of adding cohorts to a first-in-human trial to investigate doses and activity in a variety of cancers. Many companies are using this approach, but these trials often lack elements important for FDA approval. For example, it can be difficult to evaluate drug safety if there is no control group.

In a New England Journal of Medicine (NEJM) op-ed, FDA’s cancer drug director Richard Pazdur, FDA’s Marc Theoret and Johns Hopkins’ Tatiana Prowell propose that companies that want to conduct seamless trials go through FDA’s breakthrough therapy program. This would allow for additional interaction with FDA and prevent many concerns the agency has with the trials. FDA plans to release formal guidance on the issue.

To see the op-ed, click here.

FDA Releases Guidance on Drug Compounding

On April 15, the U.S. Food and Drug Administration (FDA) put out three guidance papers on drug compounding under the 2013 Drug Quality and Security Act, which passed after the 2012 outbreak of fungal meningitis from contaminated compounded medications. The guidance helps clarify when FDA considers compounding to be exempt from agency oversight and when FDA manufacturing requirements will apply. For instance, FDA says that some compounding can happen before receiving a valid patient prescription and stay outside of its oversight if the compounder holds no more than a 30-day supply of the drug, determined based on past prescriptions. It also allows hospital pharmacies to distribute compounded drugs within a one-mile radius to facilities owned and controlled by the same entity.

For the first guidance, click here.

For the second, click here.

For the third, click here.

FDA Revokes Approval for Abbvie Cholesterol Drugs

On April 15, the U.S. Food and Drug Administration (FDA) revoked approvals for drugs that had made billions in sales before studies found they were ineffective. AbbVie’s Niaspan was approved in 1997, and Trilipix was approved in 2008. Studies found neither drug reduces cardiovascular problems or mortality in patients treated with statins. FDA also withdrew approval of AbbVie’s Advicor and Simcor, two drugs that combine niacin—the active ingredient in Niaspan—with different statins. None of these drugs worked any better than statins alone, according to FDA.

CMS Releases Medicare Advantage Quality Data for Racial and Ethnic Minorities

On April 19, the Centers for Medicare and Medicaid Services (CMS) Office of Minority Health released data detailing by racial or ethnic group the quality of care received by people with Medicare Advantage.

The data is based on an analysis of two sources of information: The first is part of the Healthcare Effectiveness Data and Information Set (HEDIS). HEDIS collects information from medical records and administrative data on how well the needs of Medicare beneficiaries are met for a variety of medical issues, including diabetes, cardiovascular disease and chronic lung disease. The second part is the Medicare Consumer Assessment of Healthcare Providers and Systems (CAHPS) Survey, which is conducted annually by CMS. CAHPS focuses on the health care experiences of Medicare beneficiaries across the nation.

The database presents HEDIS and CAHPS scores for different racial and ethnic groups at the level of individual Medicare contracts and is intended to be used to improve quality and accountability. The information provided by this database is not used to evaluate care through the Medicare Advantage and Part D Star Ratings program nor is it used for payment purposes.

A report summarizing the data accompanied the release. Analysis of the quality of care delivered to beneficiaries showed that Asians and Pacific Islanders typically received care that is similar to or better than the care received by whites, whereas African Americans and Hispanics typically received care that is similar to or worse than the care received by whites. African Americans and Hispanics also reported their health care experiences as being similar to or worse than the experiences reported by whites.

To view the data and summary report, click here.

For the CMS press release, click here.

Providers Push Back on Labor Department’s Overtime Rule

Health care providers who primarily rely on Medicaid funding are unhappy with the Labor Department’s proposed overtime rule. These health care groups provide services to people with disabilities. They say that doubling the salary threshold for overtime pay to $50,440 from $23,660—under which almost all workers qualify—is impractical for an industry that cannot increase prices to cover additional costs. The providers are asking that the rule be modified before it is finalized, which will likely happen in the coming weeks. It would take effect 60 days after that.

The providers argue that since their funding comes mostly from the government, the Obama administration should at least phase in the new threshold to give them time to negotiate with states to increase Medicaid reimbursements. In a recent letter to House colleagues, Rep. Collin Peterson (D-MN) said the overtime rule could disproportionately hurt local human services nonprofits that receive their reimbursements from Medicaid. He asked that House colleagues sign a separate letter requesting the Labor Department consider the rule’s effect on disability services providers.

Proponents of the rule, however, are questioning the fairness of treating disability service providers any differently than those in other industries.

The American Network of Community Options and Resources (ANCOR) is pushing Congress to increase federal Medicaid funding to cover these new overtime costs. The likelihood of getting that increase is slim given the election year and a Republican-controlled Congress against both entitlement spending and the rule itself.

Avalere Health conducted a study for ANCOR, which estimates that 139,000 employees providing disability services will need to be paid overtime because of the new industry threshold. If those employees work five hours of overtime per week, the overtime rule will cost the providers over $1 billion within the first year, according to Avalere.

NIST Seeking Health Care Participants for Federated Identity Pilot Grant

The National Institute of Standards and Technology (NIST) is seeking applicants for a grant to pilot the use of online “identity solution” for patients and health care providers. The National Strategy for Trusted Identities in Cyberspace (NSTIC) initiative is offering grant funding of up to $2 million to health care providers who can pilot a “federated credential solution in which at least two hospitals or regional healthcare systems accept a federated, verified identity that leverages multi-factor authentication and an effective identity proofing process,” according to NIST.

NIST held a webinar on April 18 for those interested in participating. Applications are due on June 1, 2016, and NIST expects to notify successful applications in September 2016.

CMS Extends Participation in the Bundled Payments for Care Improvement Initiative

On April 18, the Centers for Medicare and Medicaid Services (CMS) said that providers involved in three models of the Innovation Center’s Bundled Payments for Care Improvement (BPCI) initiative can extend their participation by two years through Sept. 30, 2018. The continuation applies to Models 2, 3 and 4 of the initiative. As of April 1, models 2, 3 and 4 had 649, 862 and 10 participants, respectively. Model 1 of the initiative has only one provider left—an acute care hospital in Wichita, Kansas. That hospital’s participation will conclude at the end of this year.

For more information, click here.

CMS Delays Star Ratings Until July

On April 20, the Centers for Medicare and Medicaid Services (CMS) notified Congress it would not implement plans to release the hospital star ratings — designed to identify hospitals with high patient quality and experience — on April 21.The star ratings will instead be published in July. Over half of Congress petitioned CMS to delay the star ratings, with lawmakers expressing concern that the ratings would penalize hospitals that treat patients with poor, unhealthy populations.

CMS also announced two other delays: new inpatient psychiatric and ambulatory surgery measures will now be released May 4, and the preview period for July 2016 Hospital Compare data—when hospitals will be able to review their ratings on CMS’s website before it goes public—is delayed from April 22 to May 6.

HRSA Reopens Comment Period on Proposed “Penny Pricing Policy”

The Health Resources and Services Administration (HRSA) has reopened the comment period on a proposed 340B rule that deals with setting prices under the drug discount program and assessing penalties for not providing drugs at the right price, signaling it potentially could change course on using the so-called “penny pricing” policy and has not resolved how it will estimate the ceiling price of new drugs and determine when a manufacturer “knowingly and intentionally” charged 340B providers more than the ceiling price.

The penny pricing policy would charge a penny for drugs where the ceiling price comes out below $0.01 per unit. HRSA said the agency received a number of comments both supporting and opposing the penny pricing proposal—hospitals and other 340B providers were pleased with the proposed policy, while others suggested alternatives—including the federal ceiling price, the most recent positive ceiling price from previous quarters and nominal sales price.

“Given these comments, HHS is considering whether any of these alternatives or other alternatives not raised by the commenters, alone or in combination, would be more appropriate than the penny pricing proposal and whether to revise the proposed regulatory text,” HRSA says.

The penny pricing policy in the proposed rule is consistent with past HRSA guidance, but PhRMA and the Biotechnology Industry Organization (BIO) said in comments on the proposed rule that the policy is punitive and could lead to providers’ hoarding drugs when they cost only a penny.

HRSA says comments may be submitted on any aspect of the proposed rule, not just those on which it has sought more input due to stakeholders’ previous comments. The agency also asked stakeholders not to re-submit comments given to the agency during the first comment period.

3. State Activities

NASHP Announces Creation of Working Group to Address High Drug Costs

On April 19, the National Academy for State Health Policy (NASHP) announced the creation of a working group in which state officials will identify new policies and strategies to reel in drug costs. According to NASHP Executive Director Trish Riley, the group’s members will be announced this week. It will be a yearlong project that could delve into potential laws or measures that state agencies can implement administratively. In addition to this announcement, NASHP released a brief on measures states have already tried to address high drug costs.

California: State Lawmakers Approve Price Transparency Bill

California’s Senate Health Committee approved a bill requiring drug companies to notify insurers if they plan to increase a drug’s price by 10 percent or more in any 12-month time frame. The bill—introduced by Democratic state Senator Ed Hernandez—would also require companies to give justifications 30 days ahead of time for price increases of drugs with list prices over $10,000.

To see the text of the bill, click here.

Georgia: Document Details Negative Impacts of Megamergers in Georgia

A state insurance department document suggests that two pending insurance megamergers would tighten an already concentrated market in Georgia. The proposed Aetna-Humana merger would have a bigger impact than the Anthem-Cigna merger. The document states that a health insurance market is highly concentrated if 75 percent of business is controlled by four or less insurers—the Georgia markets selling to individuals, small and large businesses, and Medicare beneficiaries already fit that category. The Aetna-Humana merger would give the combined company 58 percent of the individual market in the state, and Anthem-Cigna would have 29 percent.

Illinois: State Employee Claims Insurance Denied Due to Lack of State Budget

A state employee filed a class-action lawsuit against Illinois Gov. Bruce Rauner and other state officials, alleging the state’s budget impasse left some state employees without health insurance. The employee says the state stopped giving nonunion employees’ health insurance withholdings to insurance companies, so the companies stopped covering medical expenses. Illinois has been operating without a state budget for over a year.

Kentucky: Gov. Bevin Signs Biosimilar Substitution Bill

Kentucky Gov. Matt Bevin signed legislation that requires pharmacists to notify physicians and patients if they substitute an interchangeable biosimilar for a biologic medicine. Senate Bill 134 seeks to preserve patient access to accurate prescription information, maintain incentives for innovation and promote a competitive market for biologic therapies. Major drug industry groups are pushing the measure in state legislatures around the country—the Biotechnology Innovation Organization (BIO) and Kentucky Life Science Council (KLSC) commended the governor for signing the legislation.

Louisiana: Gov. Edwards Reworking Medicaid Expansion Hiring Plan

Democratic Gov. John Bel Edwards is reworking a plan to hire the staff needed to handle his Medicaid expansion effort. The changes were announced after Republican lawmakers objected to adding employees while the state is dealing with budget problems. Now, Louisiana’s health agency will boost an outside contracting deal with the University of New Orleans, which will have as many as 200 short-term employees who will conduct the eligibility reviews for expansion.

Maine: Gov. LePage Signs Legislation Limiting Opioid Prescriptions

Maine Gov. Paul LePage has signed legislation that limits opioid prescriptions and requires prescribers to check the state’s prescription drug monitoring program at a certain frequency. This law comes soon after Massachusetts became the first state to limit how many opioids could be prescribed. In the state, starting in 2017, providers will not be allowed to prescribe more than a seven-day supply within a seven-day period for acute pain or a 30-day supply within a 30-day period for chronic pain—though there are exceptions for cancer and palliative care.

To see the legislation, click here.

New York: Mayor Announces Three-Year, $21 Million Zika Plan

New York Mayor Bill de Blasio announced a three-year, $21 million plan to address the threat of Zika virus in New York City. The city has seen 40 cases of Zika virus so far, all of which were contracted outside the country. Of the 40 cases, six were pregnant women. The mayor’s response plan includes three major components: 1) mosquito reduction through targeted citywide prevention efforts; 2) disease detection and testing, which will include doubling the number of mosquito traps currently employed in the city; and 3) public information efforts through the “Fight Back NYC” education campaign.

New York: State Opens Insurance Enrollment to Domestic Violence Victims, AG Suing Insurer for Delaying Hepatitis C Coverage

New York is requiring insurers providing individual coverage through the state health insurance exchange to allow victims of domestic violence or abandonment to enroll at any time. The state Department of Financial Services created a special enrollment period beyond the standard enrollment period, which lasts from Nov. 1 to Jan. 31. In December New York approved a law to allow pregnant women to sign up for coverage outside of the regular enrollment period.

In other state news, the New York Attorney General is suing Albany-based insurer Capital District Physician’s Health Plan (CDPHP) for delaying coverage of hepatitis C treatments until patients are in the advance stages of the disease. Members diagnosed with early-stage chronic hepatitis C infection must monitor their disease and wait until they develop liver scarring or another advanced disease before their treatment will be covered by CDPHP. The lawsuit is part of an ongoing investigation into numerous health insurers for improperly restricting coverage of hepatitis C treatments and misleading members about the scope of their coverage.

To see a press release from the New York AG, click here.

West Virginia: Two Hospitals Settle Suit Accusing Them of Illegally Splitting Up Territories

St. Mary’s Medical Center and Charleston (W.Va.) Area Medical Center will settle an antitrust lawsuit accusing them of illegally coordinating marketing plans to restrict competition. The Justice Department alleged that the two hospitals agreed to split up geographic areas, so they did not run ads where the opposing hospitals are located. The settlement would prohibit the hospitals from entering into any agreement with a provider to limit marketing or allocate services, customers or geographic markets. It would also ban the hospitals from communicating with one another about marketing. St. Mary’s operates a general acute-care hospital with 393 beds, and Charleston Area Medical Center has 865 beds split up between four campuses.

4. 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.

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.

CMS Issues Proposed Rules for Hospice, Nursing Homes and Inpatient Rehab Facilities

On April 21, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would update Medicare fiscal year 2017 payment rules for hospicenursing homes and inpatient rehab facilities. CMS is proposing a 2 percent increase in hospice payments for 2017, which would cost $330 million. This includes a 2.8 percent hike to reflect increased costs, but is balanced out by a productivity adjustment of 0.5 percent and a 0.3 percent cut required by the Affordable Care Act (ACA).

CMS is also proposing two new hospice quality measures for 2017. One will assess staff visits during the last week of life, and the other will look at whether patients received treatment consistent with federal guidelines in areas such as pain assessment.

CMS estimates that nursing homes will see a 2.1 percent pay increase next year, a boost of $800 million, according to a fact sheet. To comply with the IMPACT Act, CMS proposed one new assessment-based quality measure and three claims-based measures to be included in the nursing homes’ quality reporting program.

The proposal for inpatient rehabilitation facilities would create a 1.6 percent increase compared to 2016 payments, an increase of $125 million.

CMS Proposes Inpatient Prospective Payment System and Long-Term Care Hospital Rule

On April 18, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule to update fiscal year (FY) 2017 Medicare payment policies and rates under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS). The proposed rule would affect discharges occurring on or after Oct. 1, 2016.

Most notably, the proposed rule would permanently remove the two midnight rule and its effects for the current as well as the past two fiscal years by adjusting the FY 2017 payment rates. CMS is proposing as an alternative that hospitals provide Medicare beneficiaries with a special notice if the patient has been receiving observation services as an outpatient for more than 24 hours.

Proposed Changes to Payment Rates under IPPS

The proposed increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) users is 0.9 percent.

Hospitals that do not successfully participate in the Hospital IQR Program and do not submit the required quality data will be subject to a one-fourth reduction of the market basket update. Also, the law requires that any hospital that is not a meaningful EHR user will be subject to a three-fourths reduction of the market basket update in FY 2017.

CMS projects that the rate increase, together with other proposed changes to IPPS payment policies, will increase IPPS operating payments by approximately 0.7 percent and that changes in uncompensated care payments will decrease IPPS operating payments by an additional 0.3 percent. Other additional payment adjustments will include continued penalties for excess readmissions, a continued 1 percent penalty for hospitals in the worst-performing quartile under the Hospital Acquired Condition Reduction Program, and continued bonuses and penalties for hospital value-based purchasing. In sum, CMS projects that total Medicare spending on inpatient hospital services, including capital, will increase by about $539 million in FY 2017.

This projected increase in spending includes an estimated $350,000 increase in FY 2017 payments to hospitals located in Puerto Rico under the proposal to make IPPS payments for capital-related costs based solely on the national capital Federal rate (rather than the current blend of the national capital Federal rate and Puerto Rico-specific capital rate), consistent with the recent statutory change in the payment methodology for operating IPPS payments to those hospitals.

To see the CMS fact sheet, click here.

CMS is issuing an Interim Final Rule with Comment for the section that establishes a temporary exception for certain wound care discharges from the site neutral payment rate for LTCH discharges that do not meet the statutory patient level criteria for certain LTCHs.

CMS will accept comments on the proposed rule until June 16, 2016, and will respond to comments in a final rule to be issued by Aug. 1, 2016.

The proposed rule can be downloaded from the Federal Register.

5. Reports

Kaiser Releases Analysis of UnitedHealth Group’s Effect on ACA Marketplaces

new analysis by the Kaiser Family Foundation found that in more than half the counties UnitedHealth Group currently sells Obamacare plans, exchange customers would be left with only one or two insurers to choose from if the company completely withdraws from the marketplaces. United currently participates in 1,855 counties—representing 60 percent of all counties nationwide. If it were to completely withdraw, 536 counties would be left with one choice, while 532 would have two remaining insurers. These predictions assume that no additional competitors would join or exit the exchanges.

United dropped out of the Arkansas and Michigan exchange markets for 2017, and will only compete in Georgia through its Harken Health subsidiary (which is limited to the Atlanta market).

According to the analysis, departure of United would likely have only a small effect on the price of the most popular Obamacare plans. The low-cost silver plan—used as the basis for subsidy calculation—would have been just 1 percent higher in 2016 if United had not participated.

This estimate does not account for price changes that insurers could make if there is one less insurer in the marketplace. It also is not known how many customers United has in most states because the Obama administration has not released that data.

A United exit from the exchanges would have a disproportionate effect on some states. For example, Kansas and Oklahoma would be left with one insurer on the exchanges if United left and was not replaced by a new entrant. In Alabama, Iowa and Nebraska, more than half of the counties would have had an increase in the benchmark silver plan of more than $25 this year if United had not participated.

UnitedHealth Group CEO Stephen Hemsley said the insurer is significantly cutting back its Obamacare business and will sell plans in only a handful of state exchanges in 2017. UnitedHealth had nearly 800,000 exchange customers at the close of the first quarter. The company expects that enrollment to fall to 650,000 by the end of the year.

National Bureau of Economic Research Finds Medicaid Expansion Improves Financial Well-Being

According to a working paper from the National Bureau of Economic Research, Medicaid expansion significantly reduced the number of unpaid non-medical bills and the amount of debt sent to collection agencies among those residing in areas with the highest share of low-income, uninsured individuals. The authors said the estimates suggest that debt collection balances were cut by $600 to $1,000 among those who gained Medicaid coverage due to the Affordable Care Act (ACA).

To see the full working paper, click here.

United Hospital Fund Report Examines Performance of New York ACOs

On April 18, the United Hospital Fund published a new report finding that Medicare Accountable Care Organizations (ACOs) in New York are stronger on quality measures compared to the national average, but less impressive in terms of cost savings. In Year 2 of the Medicare Shared Savings Program (MSSP), the report finds that only 19 percent of New York’s ACOs qualified to receive shared savings, compared to 26 percent nationally. But in terms of quality, the state’s ACOs achieved an average aggregate score of 86.31 out of 100, higher than the national average of 83.08. There are 21 ACOs in New York that have been in the program long enough to have generated results.

To see the full report, click here.

FDA Releases Report on Generic Drug Program

According to its most recent annual report, the U.S. Food and Drug Administration (FDA) approved 580 generic drugs and tentatively signed off on 148 generic drug approvals in 2015—the most ever. Tentative approvals are given to generic drugs that cannot go to market because relevant patents or exclusivities accorded to the reference listed drug remain. FDA denied approval of 1,300 applications, so companies had to fix deficiencies to get agency sign-off.

FDA has gotten rid of its backlog of over 1,000 applications and can tell companies within 40 days whether their application is sufficient for a full review. Additionally, FDA has taken a first action on 84 percent of the applications submitted before the start of the Generic Drug User Fee Act. The report also describes FDA’s research efforts to advance generic drugs.

To see the full report, click here.

GAO Found High-Containment Labs Need Up-to-Date Policies and Stronger Oversight

On April 20, the Government Accountability Office (GAO) released a report detailing shortfalls in policies and oversight mechanisms for high-containment laboratories. GAO found that most of the eight departments and fifteen agencies that it reviewed had policies that were not comprehensive, and some had policies that were not up to date. Policies at five departments and nine agencies were not comprehensive because they did not contain all six elements that GAO identified as key for managing biological agents in high-containment laboratories. The elements are incident reporting, roles and responsibilities, training, inventory control, inspections and required adherence to or reference to leading laboratory safety guidance. Three of the eight departments and five of the fifteen agencies did not have policies. GAO also found that as of December 2015, two departments and five agencies did not have up-to-date policies. Having comprehensive policies that contain all six key elements and that are reviewed and updated regularly would help departments reduce the risk of mismanaging hazardous biological agents and ensure that their policies convey consistent requirements for oversight, reflect current guidance and address emerging threats, according to the report.

To see the full report, click here.