This Week: The House is not in session this week... The Senate returns today... Committees in the Senate will hold hearings on co-ops and mental health... Vice President Biden will attend the World Economic Forum in Switzerland next week, where he will meet with international researchers about the state of cancer research.
House of Representatives
- Senate HELP Committee Approves Califf’s Nomination to FDA
- Senators Push for ACA Civil Rights Provision
- Senate HELP Committee to Hold Hearing on Mental Health
- Senate Finance Committee to Hold Hearing on Co-op Failures
- CMS Urges Individuals to Get Ready for Tax Season
- CMS to Narrow Special Enrollment Periods
- Jan. 28 Deadline for Work Group to Present Findings on Opioid Guideline
- Hospitals File Suit Over New Medicare Reimbursements
- CMS Announces New Participants in Medicare Accountable Care Organization (ACO) Initiatives
- Preventive Services Task Force Publishes Final Breast Cancer Screening Recommendations
- CMS Launches Medicare Drug Spending Dashboard
- Task Force to Examine Cybersecurity Challenges in Health Sector
- Medicaid Stakeholders Make Recommendations Regarding CMS’s T-MSIS
- The White House Announces New Medicaid Expansion Proposal
- Consolidated Appropriations Act Modifies Inpatient Hospital Payment Rate
3. State Activities
- California: Gov. Brown Releases 2017 State Budget
- Idaho: Gov. Otter Proposes Medicaid Expansion Alternative
- Kentucky: Gov. Bevin Announces Dismantling of Kynect Exchange
- Louisiana: Newly Elected Gov. Edwards Issues Order to Expand Medicaid
- Minnesota: Health Care Finance Task Force ACA Report to Come Soon
4. Regulations Open for Comment
- Food and Drug Administration (FDA) Issues Final Rule to Phase Out Trans Fats
- CMS Soliciting Comments on Episode Groups as Required by MACRA
- FDA Seeks Comments on Whether It Should Define “Natural” and If So, How?
- HHS Posts Guidance for State Innovation Waivers
- GAO Releases Report on Drug Compounding for Animals
- GAO Report Reviews HHS’s Workforce Efforts
- GAO Report Finds Issues with FDA Drug Safety Oversight
- MedPAC Makes Recommendations for its March Report to Congress
- Kaiser Family Foundation Report Shows Lower Cost for Medicaid Expansion Enrollees
- Study Shows High Costs of Converting to a Medical Home
- FTC Report Reveals Fewer Pay-For-Delay Settlements Following FTC v. Actavis Case
- Freedom Partners Release Obamacare Premium Increase Tracker
House of Representatives
House Democrats Urge NIH to Address High Drug Prices
House Democrats urged the National Institutes of Health (NIH) to use its march-in rights to respond to the high costs of certain pharmaceuticals. A letter released Jan. 11 asks NIH to offer guidance for exercising march-in rights — specifically when the benefits of the patented products are not “available to the public on reasonable terms.” Rep. Lloyd Doggett said in a statement, “When drugs are developed with taxpayer funds, the government can and should act to bring relief from out-of-control drug pricing.” The authors of the letter believe that an announcement of reasonable guidelines in response to price gouging would have a positive influence on pricing in the pharmaceutical industry.
NIH has declined such requests in the past, citing that drug cost control is a legislative responsibility.
Senate HELP Committee Approves Califf’s Nomination to FDA
On Jan. 12, the Senate Health, Education, Labor and Pension (HELP) Committee approved Robert Califf’s nomination to serve as Commissioner of the U.S. Food and Drug Administration (FDA). It is unclear when the full Senate will vote on his nomination. Alaska Sen. Lisa Murkowski (R-AK) has said she would put a hold on his nomination until issues related to FDA’s approval and labeling of genetically modified salmon are resolved. In addition, Sen. Bernie Sanders (D-VT) has said that he is considering placing a hold on the nomination because of his concerns with Califf’s ties to the pharmaceutical industry. Sanders, who is a member of the HELP Committee, had planned to vote “no” by proxy on the nomination in committee, but the panel’s leadership shifted to a voice vote that prevented him from registering his objection.
Senators Push for ACA Civil Rights Provision
Fifteen Democratic senators wrote to Health and Human Services (HHS) Secretary Burwell asking that the department implement a proposed rule on the Affordable Care Act’s (ACA) Section 1557, which protects against discrimination in access to health care. The Democrats urge that the regulation go further to ensure racial, religious, gender and disability protections.
Senate HELP Committee to Hold Hearing on Mental Health
The Senate Health, Education, Labor and Pensions Committee (HELP) will hold a hearing entitled “Improving the Federal Response to Challenges in Mental Health Care in America”. This full committee hearing will be on Wednesday, January 20, 2016, at 10 am. The witnesses are:
- Brian M. Hepburn, MD, Executive Director of the National Association of State Mental Health Program Directors
- Penny Blake, RN, CCRN, CEN, Emergency Nurses Association
- William W. Eaton, PhD, Johns Hopkins Bloomberg School of Public Health
- Hakeem Rahim, EdM, MA, CEO of Live Breathe, LLC, National Alliance of Mental Health
For more information on the hearing, click here.
Senate Finance Committee to Hold Hearing on Co-op Failures
The Senate Finance Committee will hold a hearing at 9:30 am, Thursday, January 21, 2016 entitled “Health Care Co-ops: A Review of Financial and Oversight Controls.” The only witness will be Acting Administrator of the Centers for Medicare and Medicaid Services (CMS), Andy Slavitt.
For more information on the hearing, click here.
CMS Urges Individuals to Get Ready for Tax Season
The Centers for Medicare and Medicaid Services (CMS) is publicizing the need to gather information about health care coverage as part of the tax filing process. If you had coverage in 2015 — either through the Health Insurance Marketplace or another source like your employer, Medicare or Medicaid — you’ll need to indicate that when you file your tax return. If you could have afforded health insurance, but you chose not to enroll in coverage for 2015, you may be required to pay a fee when you file your federal income tax return.
If you have questions about Marketplace tax forms, qualifying for exemptions, the fee or signing up for coverage through HealthCare.gov you should contact the Marketplace Call Center. The call center is open all day, every day at 1-800-318-2596. Additional resources and information are also available at healthcare.gov or IRS.gov.
CMS to Narrow Special Enrollment Periods
The Centers for Medicare and Medicaid Services (CMS) is expected to provide guidance in the near future that will narrow and clarify special enrollment periods (SEP) that consumers can use for life-changing events like marriage, birth of a child or loss of other health coverage.
Insurers and state officials have been concerned by the proliferation of SEPs because they have argued that consumers are gaming the system.
Jan. 28 Deadline for Work Group to Present Findings on Opioid Guideline
A panel appointed on Jan. 7 has three weeks to review the Centers for Disease Control and Prevention’s (CDC) draft guideline for prescribing opioids for chronic pain — as well as all of the relevant public comments. It will present its findings to the National Center for Injury Prevention and Control’s Board of Scientific Counselors on Jan. 28. CDC received nearly 2,000 comments before the Jan. 13 deadline, including input from patients and pain advocates concerned about limited access to painkillers. NIH hasn’t released a publications date, but the restricted timeline for the panel’s review suggests that CDC will move quickly. CDC regards overprescribing as a major part of the epidemic.
Hospitals File Suit Over New Medicare Reimbursements
More than 50 hospitals have challenged the U.S. Department of Health and Human Services’ (HHS) changes to how hospital stays are reimbursed under Medicare. On Jan. 8, the hospitals filed a suit against HHS Secretary Sylvia Burwell in the U.S. District Court for the District of Columbia — the case is Asante Rouge Valley Medical Center et al. v. Sylvia Burwell.
The hospitals want a federal judge to remove the 0.2 percent cut in Medicare payments for inpatient care, stating that it was made without sufficient opportunity for public comment. Along with the cut, the Centers for Medicare and Medicaid Services (CMS) said it would require reimbursement at inpatient rates for patient hospital stays that last over “two midnights.” CMS estimated that this would create an increase of ~40,000 inpatient stays, which could be offset by the 0.2 percent cut. The hospitals argue that there are a variety of scenarios in which a patient is treated in the hospital and the rule doesn’t explain how to handle all of them. The suit also says CMS assumes that hospitals will always bill stays that span two midnights as inpatient, but this cannot occur unless a doctor expects their patient would need to stay that long. Without this proper documentation, hospitals will not want to bill Medicare because of the likelihood of rejection. There have been many attempts by hospitals across the country to block the rule’s implementation since its announcement. In response to a consolidated action filed by the Shands Jacksonville Medical Center, CMS explained its methodology for the 0.2 percent cut but admitted it was too conservative in its estimation of the increase in hospital admissions. CMS will accept comments on the rule and expects a final notice by March 18.
CMS Announces New Participants in Medicare Accountable Care Organization (ACO) Initiatives
On Jan. 11, the Centers for Medicare and Medicaid Services (CMS) announced 121 new participants in Medicare Accountable Care Organization (ACO) initiatives designed to improve the care patients receive in the health care system and to lower costs. ACOs are now in 49 states and the District of Columbia.
ACOs were created to change the incentives for how medical care is paid for in the U.S., moving away from a system that rewards the quantity of services to one that rewards the quality of health outcomes. Doctors and hospitals coordinate to develop and execute a plan for patient care and share information to put the patient at the center of the health care delivery system. ACOs are paid by the success of the treatment administered, not by the quantity of services.
In 2014, ACOs had a combined total net program savings of $411 million for 333 Medicare Shared Savings Program (Shared Savings Program or SSP) ACOs and 20 Pioneer ACOs. Based on 2014 quality and financial performance results for Shared Savings Program ACOs that started the program in 2012, 2013 and 2014, those that reported in both 2013 and 2014 improved on 27 of the 33 quality measures, including patients’ ratings of clinicians’ communication, beneficiaries’ rating of their doctors, screening for tobacco use and cessation, screening for high blood pressure, and Electronic Health Record use. Shared Savings Program ACOs also outperformed group practices, reporting quality on 18 out of 22 measures.
CMS also announced that providers and hospitals have signed up to join new types of ACOs, which in addition to being paid for positive patient outcomes will also receive penalties for negative ones. With new participants in the Shared Savings Program (SSP), the Next Generation ACO Model, Pioneer ACO Model and the Comprehensive ESRD Care Model, there will now be:
- Nearly 8.9 million beneficiaries served;
- A total of 477 ACOs across the various initiatives; and
- 64 ACOs in a risk-bearing track, including SSP, Pioneer ACO Model, Next Generation ACO Model and Comprehensive ESRD Care Model.
Just 9 of 19 Pioneer ACOs renewed their participation in that program, and within the Shared Savings Program, 22 providers will participate in the more aggressive Tracks 2 or 3. Another 39 SSP ACOs will participate in the new ACO investment model.
For more information on the Next Generation ACO Model, please visit the Next Generation ACO Model web page.
For the Shared Savings Program, visit the Medicare Shared Savings Program web page.
For more information on the ACO Investment Model (AIM), please visit the ACO Investment Model web page.
Additional ACO fact sheets are available at:
Preventive Services Task Force Publishes Final Breast Cancer Screening Recommendations
On Jan. 11, the U.S. Preventive Services Task Force published its final breast cancer screening recommendations. This update is in line with earlier draft recommendations stating women should begin routine mammograms later and get them less frequently. The USPSTF recommendations will not affect insurance coverage of mammograms until 2018.
The final recommendations advise biennial mammogram screenings for women aged 50 to 74 and that women prior to age 50 should make individual decisions on whether to start screening — they should weigh the benefits and harms of biennial screening. The panel notes that for women in their 40s, the likelihood of benefiting from screening mammography is less than for older women and the potential harms are greater.
The USPSTF gave a C recommendation for women under 50 — this means that insurers must provide the service depending on individual circumstances. Insurers must pay for preventive care with an A or B recommendation under the health law. The task force said there is not sufficient evidence to make a coverage recommendation for using 3-D mammography to screen for breast cancer. Because the task force did not make a recommendation on 3-D mammography, plans do not have to cover that service.
Since the recommendations first came out in 2009, they have gained support from groups including the American Cancer Society.
CMS Launches Medicare Drug Spending Dashboard
The Centers for Medicare and Medicaid Services (CMS) released a new online dashboard with information on prescription drugs for Medicare Parts B and D with high spending on a per user basis, with high spending for the program overall and with high unit cost increases in recent years. CMS hopes that this data will contribute to the sharing of information about drug spending and elevate the discussion around the rising costs of drugs. To access the Medicare Drug Spending Dashboards, click here.
Task Force to Examine Cybersecurity Challenges in Health Sector
As mandated by the Cybersecurity Act of 2015, the U.S. Department of Health and Human Services (HHS) must create a task force within 90 days of enactment to examine information-sharing and other cybersecurity challenges in the health sector. The task force is meant to complement, not to duplicate, ongoing efforts to apply the federal framework of cybersecurity standards to the health industry. HHS is also required to establish a “common set of voluntary, consensus-based, and industry-led guidelines, best practices, methodologies, procedures, and processes that” reduce cybersecurity risks.
HHS must consult with the National Institute of Standards and Technology (NIST), which created the 2014 framework of cybersecurity standards for all critical infrastructure sectors. The goal of the task force is to create collaboration between NIST, HHS and the private sector. This cybersecurity language was drafted by Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Lamar Alexander (R-TN) and ranking member Patty Murray (D-WA). The task force has one year to complete its work under the new law.
Medicaid Stakeholders Make Recommendations Regarding CMS’s T-MSIS
Medicaid stakeholders made a series of recommendations to states regarding the Centers for Medicare and Medicaid Services’ (CMS) Transformed Medicaid Statistical Information System (T-MSIS). Under T-MSIS, CMS is attempting to establish a detailed national database of Medicaid and Children’s Health Insurance Program information. The goal of T-MSIS is to improve the way states submit operational data about beneficiaries, providers and claims. However, CMS’s slow progress in improving this program made the Office of the Inspector General’s (OIG) list of top 25 unimplemented recommendations in March 2015.
In response to a request from the Senate Finance Committee for public input on improving Medicaid reporting requirements, the National Association of Medicaid Directors (NAMD) recommended the establishment of a formal governance board that gives states more involvement in the program — this would help increase communication, create more realistic expectations for timelines and state resources, clarify the extent of state Medicaid data required for reporting and policymaking, and prioritize T-MSIS data uses. NAMD also suggested the streamlining of Medicaid’s reporting requirements and updating the CMS state Medicaid manual, among other things.
The Medicaid and CHIP Payment and Access Commission (MACPAC) said that CMS expects T-MSIS to be ready by the end of the year — however, it has failed to meet previous deadlines. MACPAC said T-MSIS will help with reliability by documenting source data from states and processes for each data element, and that it will increase the number of data elements.
The American Health Care Association (AHCA) said issues with missing or inaccurate data make MSIS an inadequate resource for national Medicaid program integrity analyses. The Affordable Care Act (ACA) created a provision to result in a transition from MSIS to T-MSIS, but AHCA has concerns that the program is lacking an updated strategy and a deadline for national implementation.
The White House Announces New Medicaid Expansion Proposal
On Jan. 14, the White House announced a new proposal to states that haven’t expanded Medicaid: those states can have three years of full federal funding of newly eligible beneficiaries whenever they join. President Obama is including the proposal in his 2017 budget. However, Congress would have to pass this initiative.
The White House’s announcement called upon the 19 states that have yet to expand Medicaid: Alabama, Florida, Georgia, Idaho, Kansas, Maine, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Wisconsin and Wyoming. More than 5 million uninsured people fall in this resulting coverage gap — 1.3 million in Texas alone — according to the Kaiser Family Foundation.
Consolidated Appropriations Act Modifies Inpatient Hospital Payment Rate
Section 601 of the recently passed Consolidated Appropriations Act of 2016 modifies the payment calculation for operating costs of inpatient hospital services of Puerto Rico hospitals for discharges on or after Jan. 1, 2016.
The Centers for Medicare and Medicaid Services (CMS) is revising the Inpatient Prospective Payment System (IPPS) FY 2016 Pricer software to reflect this new payment calculation requirement. The amount of the payment for the operating costs of inpatient hospital services on or after Jan. 1, 2016, will be based on 0 percent of the applicable Puerto Rico percentage and 100 percent of the applicable federal percentage. Also, the IPPS Pricer will include conforming changes to various FY 2016 IPPS operating rates and factors that result from the application of the new payment calculation requirement. CMS will incorporate the revised IPPS rates into the Long-Term Care Hospital (LTCH) Pricer because they are used for certain LTCH claim payments.
CMS will implement the IPPS and LTCH Pricers on April 4, 2016, to allow time for development and testing. Medicare Administrative Contractors (MACs) will reprocess IPPS inpatient claims from Puerto Rico and other IPPS hospitals with a discharge date beginning Jan. 1, 2016. MACs will also reprocess LTCH claims on or after this date due to the impact of the change. CMS expects to have claims reprocessed by June 30, 2016.
3. State Activities
California: Gov. Brown Releases 2017 State Budget
California Gov. Jerry Brown’s 2017 budget proposes the continued implementation of the state’s Coordinated Care Initiative — a major piece of which is the federal demonstration to improve care for dual-eligibles. However, the state’s program faces significant challenges — California’s share of Medicare and Medicaid savings is 25 to 30 percent rather than 50 percent; one of the eight counties is no longer participating; and more than 100,000 people were exempted.
Idaho: Gov. Otter Proposes Medicaid Expansion Alternative
On Jan. 7, Idaho Gov. Butch Otter said he wants to use money from cigarette and tobacco taxes to fund a new health care program separate from the Affordable Care Act’s (ACA) Medicaid expansion. The plan would cost $30 million a year and give 78,000 people access to clinics for routine visits. The plan would not cover specialty care, hospitalization or certain prescriptions. This proposal comes as a task force to the governor recommended expanding Medicaid.
Kentucky: Gov. Bevin Announces Dismantling of Kynect Exchange
Kentucky Gov. Matt Bevin wrote a letter notifying the Centers for Medicare and Medicaid Services (CMS) that the state is dismantling the “Kynect” exchange and planning to transition to the Federal Exchange. Federal rules require that a state notify officials at least 12 months before ceasing exchange operations.
This will be the first time a state ends a functional state-based marketplace in exchange for the Federal Exchange. As of Sept. 30, there were 87,000 people enrolled in coverage through the exchange.
Louisiana: Newly Elected Gov. Edwards Issues Order to Expand Medicaid
On Jan. 11, Democrat John Bel Edwards was sworn in as Governor of Louisiana. On his second day in office, Edwards signed an executive order to expand Medicaid coverage under the Affordable Care Act (ACA) — he hopes to have expansion go into effect by July. The administration estimates this will extend coverage to 193,000 people in the state.
Minnesota: Health Care Finance Task Force ACA Report to Come Soon
Minnesota’s Health Care Finance Task Force is expected to release its report on ways to build upon the Affordable Care Act (ACA) — by possibly pursuing a Section 1332 waiver or options under Medicaid 1115 waivers, among other things. The report could also shed some light on the future of Minnesota’s state-based exchange, which has experienced technical and enrollment setbacks.
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.
CMS Soliciting Comments on Episode Groups as Required by MACRA
The Centers for Medicare and Medicaid Services (CMS) is soliciting comments on episode groups and on specific clinical criteria and patient characteristics to classify patients into care episode and patient condition groups as required by Section 101(f) of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), enacted April 16, 2015. The purpose of this commentary is to provide background and context to solicit stakeholder input on the episode groups that CMS has developed pursuant to Section 3003 of the Affordable Care Act (ACA). CMS is also seeking stakeholder input on the future role of episode groups in resource use measurement.
Comments should be sent to firstname.lastname@example.org by 11:59 p.m. EST on Feb. 15, 2016.
FDA Seeks Comments on Whether It Should Define “Natural” and If So, How?
Because of a series of competing citizen petitions, GMO labeling issues and congressional concern, the U.S. Food and Drug Administration (FDA) is seeking public input on whether it should define the term “natural” for use on food product labels, and, if so, how to do so.
On Nov. 12, FDA published a request for feedback. FDA policy to date has not restricted the use of the word “natural” on food labeling unless the product has added color, synthetic substances or flavoring.
FDA has received four citizen petitions over the past two years asking the agency to issue regulations on the use of the term, and in July the House of Representatives passed a proposal on GMOs that would require FDA to define the term “natural” for product labeling.
FDA seeks feedback on the following questions:
- What types of foods should be able to use the term?
- Should only raw agriculture products be able to use the term?
- Should only single-ingredient foods, such as bottled water or bagged spinach, be able to use the term?
- If multi-ingredient foods can use the term, what types of ingredients would disqualify a product from using it?
- What data or other information shows how consumers associate, confuse or compare the terms “natural” with “organic”?
- What data or other information shows how consumers associate, confuse or compare the term “natural” with the term “healthy”?
The comment period is open until Feb. 10, 2016.
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.
GAO Releases Report on Drug Compounding for Animals
In a recent report, the Government Accountability Office (GAO) reviewed drug compounding for animals — this process involves combining, mixing or altering ingredients to create drugs that meet the medical needs of individual animals. The report examines (1) the benefits and risks of drug compounding for animals; (2) the extent of drug compounding for animals; and (3) how the U.S. Food and Drug Administration (FDA) regulates these drugs. To ensure the safety and effectiveness of drugs compounded for animals, GAO recommended that FDA modify its voluntary reporting form, develop guidance for staff that regulate compounding for animals, and consistently document the bases for its regulatory actions.
GAO Report Reviews HHS’s Workforce Efforts
The Government Accountability Office (GAO) released a report reviewing the U.S. Department of Health and Human Services’ (HHS) workforce efforts. HHS participates in some planning for the 72 health care workforce programs administered by its agencies, but lacks comprehensive planning and oversight to make sure these efforts meet national health care workforce needs, according to GAO.
The report examines (1) HHS’s efforts for ensuring a sufficient supply and distribution of the U.S. health care workforce and (2) the extent to which individual work force programs meet national needs. GAO recommended that HHS develop a planning approach that includes performance measures, points to any gaps between its workforce programs and national needs and identifies measures to close those gaps.
To see the highlights of the report, click here.
GAO Report Finds Issues with FDA Drug Safety Oversight
In a report commissioned by Rep. Rosa DeLauro, the Government Accountability Office (GAO) found that the U.S. Food and Drug Administration (FDA) lacks reliable data to conduct systematic drug safety oversight once medicines are out on the market. These findings are significant for drugs that are approved through various FDA-expedited programs. About a fourth of the drug applicants FDA approved from Oct. 1, 2006, through Dec. 31, 2014, used an expedited program.
GAO noted that reliable data to support additional oversight is essential given concern about the safety implications of streamlined drug development and review. GAO found that FDA evaluations used to track safety issues found problems with accuracy, timeliness and completeness. Overall, GAO recommended that FDA develop plans to connect problems with its postmarket safety data and ensure that these data can be easily used for oversight — the safety tracking data needs to be able to determine if drugs given expedited approval end up with more safety issues than those that underwent a standard review.
MedPAC Makes Recommendations for its March Report to Congress
The Medicare Payment Advisory Commission (MedPAC) voted on a number of recommendations for 2017 provider pay rates in preparation for its annual report to Congress, which will be released in March.
The following is a recap of the commission’s draft recommendations:
Medicare Advantage plans:
- Recommendation 1: Congress should eliminate the cap on benchmark amounts and the doubling of the quality increases in specified counties.
- Recommendation 2: Congress should direct CMS to develop a risk-adjustment model that uses two years of diagnostic data from both fee-for-service Medicare and Medicare Advantage but that does not include diagnoses from health risk assessments. Then CMS should apply a coding adjustment that accounts for the remaining differences in coding between fee-for-service Medicare and Medicare Advantage.
Hospitals: Congress should direct CMS to update inpatient and outpatient payments by the amount specified in current law and reduce Medicare pay rates by 10 percent of the Average Sales Price for 340B hospitals’ separately payable Part B drugs. Savings from cutting Part B drug pay rates should be put in the Medicare-funded uncompensated care pool, and CMS should use data from the Medicare cost reports’ worksheet S-10 to distribute those uncompensated-care payments. The use of S-10s should be phased in over three years.
Physician and other health professional services: Congress should increase pay rates by the amount specified by law.
Congress should eliminate the update to pay rates for ambulatory surgical centers and require ambulatory surgical centers to submit cost data.
Dialysis: Congress should increase the outpatient dialysis base pay rate by the update specified by law.
Nursing homes: Congress should eliminate the market basket update for 2017 and 2018 and direct CMS to revise the prospective payment system for nursing facilities. In 2019, CMS should report on the effects of the new pay system and adjustments payments as needed to align them with costs.
Home health: Congress should direct CMS to eliminate the pay update and rebase the pay system for two years, beginning in 2018. Congress should direct CMS to revise the pay system to eliminate the use of therapy visits as a factor in payment determinations, concurrent with rebasing.
Hospice: Congress should eliminate the pay update.
Long-term care hospitals: CMS should eliminate the pay update.
Inpatient rehabilitation facilities:
- Recommendation 1: Congress should eliminate the update to the Medicare payment rates.
- Recommendation 2: CMS should review medical records of rehabilitation facilities that have unusual patterns of case mix and coding.
- Recommendation 3: CMS should expand the outlier pool.
Kaiser Family Foundation Report Shows Lower Cost for Medicaid Expansion Enrollees
The Kaiser Family Foundation released a report entitled “Medicaid Expansion Spending and Enrollment in Context: An Early Look at CMS Claims Data for 2014.” The report finds that spending for Medicaid expansion enrollees is considerably lower than populations previously eligible for coverage. Compared to a cost of more than $7,500 for traditional enrollees, the cost for each expansion enrollee in 2014 was around $4,500 — this includes people with disabilities, pregnant women and certain parents. In 2014 spending for Medicaid expansion enrollees was $47.2 billion (that is, 16 percent of total Medicaid spending in those states).
Study Shows High Costs of Converting to a Medical Home
On Dec. 29, RAND published a study that estimates the costs of transformation incurred by primary care practices participating in a medical home pilot. The study found that the conversion into a medical home could cost hundreds of thousands of dollars for primary care practices — this could limit the ability of small practices to make that change successfully. Researchers noted that the median one-time costs of conversion to a medical home were $30,991 per practice — or $9,814 per clinician and $8 per patient. The median ongoing annual costs associated with this change were $147,573 per practice, or $64,768 per clinician and $30 per patient. The study looked at 12 practices that took part in the Pennsylvania Chronic Care Initiative (PACCI).
FTC Report Reveals Fewer Pay-For-Delay Settlements Following FTC v. Actavis Case
A new report by the Federal Trade Commission (FTC) reveals that drug companies entered into fewer potential pay-for-delay settlements in FY 2014 — this points to a possible change in industry behavior as a result of the Supreme Court’s 2013 ruling on the pharmaceutical patent settlements.
The Supreme Court, in FTC v. Actavis, held that a branded drug manufacturer’s payment to a generic drug company to settle patent litigation can violate U.S. antitrust laws. The number of potential pay-for-delays in FY 2014 was roughly half as many as in FY 2012, the last year before the Supreme Court ruling. Pay-for-delay deals happen when the brand-name company pays the generic manufacturer to restrict it from marketing its product for a period of time.
Twenty-one settlements involving pay-for-delay were filed in FY 2014 — compared to 29 in FY 2013 and 40 in FY 2012. These 21 settlements in 2014 involve 20 different branded products with combined annual U.S. sales of $6.2 billion. Ten out of those 21 involve compensation in the form of cash payment. The vast majority — 81 to 87 percent — of patent disputes in FY 2014 were resolved without compensation to the generic company.
Freedom Partners Release Obamacare Premium Increase Tracker
On Jan. 10, Freedom Partners, an Arlington, Virginia, nonprofit organization, released its “2016 Obamacare Premium Increase Tracker.” The tracker lists the average rate hike and health care premium increases on the exchanges for 2016. In most of the states, health insurance premiums are rising by double digits under Obamacare. View the tracker here.