1. Courts

Federal Court Finds Obama Administration Improperly Funding Cost-Sharing Subsidies

On May 12, a federal court ruled that the Obama administration has been improperly funding Obamacare’s cost-sharing subsidies. The ruling is stayed pending appeal, so there will be no immediate fallout for health plans. At stake is $175 billion over 10 years that insurers would receive to subsidize their Obamacare customers, according to a Congressional Budget Office report. Cost-sharing subsidies are available to enrollees with incomes below 250 percent of the federal poverty level who enroll in silver plans. They are designed to reduce out-of-pocket costs when those individuals access medical care.

The administration has said that it will appeal the decision. If ultimately the courts strike the subsidies, the health plans would likely suffer financially because those payments go directly to insurers to make up for lower payments from their poorest customers.


House of Representatives

House Energy and Commerce Committee to Hold Hearing on Medicare Part B Demo

The House Energy and Commerce health subcommittee plans to hold a May 17 hearing on the Obama administration’s Medicare Part B demonstration project on drug prices. More specifically, the hearing will address a legislative proposal—introduced by Rep. Larry Bucshon (R-IN)—that would end the demonstration project.

This hearing comes as CMS faces competing pressure from lawmakers and stakeholders who support the demo and those who strongly oppose it. Comments were due to CMS on May 9.

A group of House Democrats—led by Reps. Jan Schakowsky (D-IL), Peter Welch (D-VT), Lloyd Doggett (D-TX) and John Conyers (D-MI)— sent a letter to CMS expressing their support for the demonstration project and urging that it still move forward.

The lawmakers argue that the demonstration project is a necessary attempt to investigate whether higher reimbursement rates are having an impact on which drugs doctors prescribe. Click here to see the letter.

Medicaid Task Force Working to Lay Foundation for Medicaid Reform

Rep. Brett Guthrie (R-KY), head of the House Energy and Commerce Committee’s Medicaid task force, said Republican lawmakers hope to lay the foundation for Medicaid reform next year, suggesting some reforms could move along with efforts to renew Medicare extenders that end in 2017.

Reps. Marsha Blackburn (R-TN), Susan Brooks (R-IN), Larry Bucshon (R-IN), Michael Burgess (R-TX), Chris Collins (R-NY), Bill Flores (R-TX) and Markwayne Mullin (R-OK) also serve on the task force. Democrats argued the creation of the task force was a partisan attempt to dismantle Medicaid.

CMS Shows Support for UDIs in House Ways and Means Hearing

At a House Ways and Means health subcommittee hearing on May 11, CMS Acting Administrator Andy Slavitt said the agency would like to see the incorporation of unique device identifiers (UDIs) in electronic records and medical billing claims. This is an unexpected change of CMS’s position. Slavitt explained CMS supports UDIs, but faces issues in funding their incorporation and educating doctors to use them.

“Our history is that physicians don’t automatically put the information they need to down on a form unless it’s critical to them getting paid,” he said. But Slavitt pledged to work with Congress on UDIs and said he was already working with the American Medical Association (AMA) on the issue.

UDIs are seen as a way to detect dangerous or ineffective devices so they can be quickly removed from the market. The X12 committee, which oversees changes in the forms, currently is developing the next version, to be released in 2021.

At the hearing, Rep. Bill Pascrell (D-NJ) said he has been frustrated with CMS’s resistance to UDIs, which FDA last year required as part of devices. Former CMS Administrator Marilyn Tavenner last year pushed back against requiring them on claims forms, saying it would be complicated and expensive.

Additionally, in a March 9 letter, Sens. Elizabeth Warren (D-MA) and Chuck Grassley (R-IA) called on CMS to quickly endorse UDI incorporation in claims forms.

House Passes 12 Opioid Bills

On May 12, the House finished passing 12 bills aimed at curbing the opioid abuse epidemic, but HHS Secretary Sylvia Burwell complained the measures lack funding and urged movement on the administration’s $1.1 billion plan to expand access to medication-assisted treatment and fund state-level overdose prevention efforts.

The House passed two opioid bills earlier in the week, one on Tuesday and one on Wednesday; then on Thursday the chamber passed the other ten bills.

The Opioid Program Evaluation Act, H.R. 5052, which passed Tuesday and is the sole piece of legislation that did not originate from Energy and Commerce, calls for evaluating the effectiveness of grant programs that are targeted to address opioid abuse issues. H.R. 4641, which passed Wednesday, would create an interagency task force charged with updating best practices for pain management and prescribing pain medication.

The remaining bills that passed Thursday are as follows:

  • The Nurturing and Supporting Healthy Babies Act (H.R. 4978), which would require the Government Accountability Office to write a report on neonatal abstinence syndrome—a medical disorder caused by exposure to opiate drugs.
  • The Co-Prescribing to Reduce Overdoses Act of 2016 (H.R. 3680), which would create a grant program for co-prescribing opioid reversal drugs alongside opioid prescriptions for patients who are at a high risk of overdosing. It also calls for guidelines on opioid overdose reversal co-prescribing.
  • The Improving Treatment for Pregnant and Postpartum Women Act of 2016 (H.R. 3691), which would reauthorize residential treatment programs for pregnant and postpartum women and create a pilot grant program for state substance abuse agencies.
  • Veteran Emergency Medical Technician Support Act of 2016 (H.R. 1818).
  • The John Thomas Decker Act of 2016 (H.R. 4969), which would require the Centers for Disease Control and Prevention to identify what resources are available to young athletes and their families about the dangers of opioid abuse and non-opioid treatment options.
  • Lali’s Law (H.R. 4586), which would authorize grants to states to create standing orders for naloxone prescriptions and would educate health care professionals about dispensing the opioid overdose reversal medication without individual prescriptions.
  • The Reducing Unused Medications Act of 2016 (H.R. 4599), which would clarify when a prescription for a drug listed on Schedule II of the Controlled Substances Act may be partially filled.
  • The Opioid Review Modernization Act of 2016 (H.R. 4976), which would require that the FDA work with expert advisory committees before making product approval and labeling decisions and encourage the development and approval of opioids with abuse-deterrent properties.
  • The Examining Opioid Treatment Infrastructure Act of 2016 (H.R. 4982), which would require that GAO report on substance abuse treatment availability and infrastructure needs throughout the country.
  • The Opioid Use Disorder Treatment Expansion and Modernization Act (H.R. 4981), which aims to improve access to opioid use disorder treatment.


Senate Finance Committee Report Finds PODs Need More Oversight

According to a new Senate Finance Committee report, surgeons who participate in physician-owned distributorships (PODs) might be motived by profit to perform more surgeries. PODs serve as intermediaries between device-makers and providers, and owners receive commissions on additional sales.

For example, the report notes that PODs have been most prevalent in the field of spinal surgery. Surgeons in PODs performed almost twice as many spinal-fusion surgeries as non-POD surgeons. Experts have raised questions about whether the procedure is medically necessary—especially for seniors, whose age makes them less capable of withstanding the risks of invasive spinal surgeries.

Overall, the report found that:

  1. POD surgeons saw significantly more patients—24 percent more—than non-POD surgeons.
  2. In absolute numbers, POD surgeons performed fusion surgery on nearly twice as many patients—91 percent more—as non-POD surgeons.
  3. As a percentage of patients seen, POD surgeons performed surgery at a much higher rate—44 percent higher—than non-POD surgeons.
  4. In absolute numbers, POD surgeons performed nearly twice as many fusion surgeries—94 percent more—as non-POD surgeons.

The report states that the POD model presents an inherent conflict of interest that places financial incentives at odds with the interest of the patient. The report also offers several recommendations to increase transparency and scrutiny of PODs, and calls on CMS, the HHS Inspector General and GAO to review the model further.

To see the report, click here.

Sen. Johnson Introduces Right to Try Legislation

On May 10, Sen. Ron Johnson (R-WI) announced the introduction of his bill to expand the ability of terminally ill patients to gain access to experimental medicines. The “Right to Try” legislation, which joins a companion bill that was introduced in the House last year, would bar the government from restricting the production, distribution, prescribing or use of experimental drugs authorized by state law to treat a terminally ill patient. Johnson’s bill goes one step further by shielding drugmakers and prescribers from liability. Twenty-eight states have passed Right to Try laws letting terminally ill patients gain access to experimental drugs that have passed Phase 1 of the FDA approval process.

These laws reflect mounting frustration with a U.S. Food and Drug Administration (FDA) program called expanded access, in which people who are seriously ill can obtain a drug under development, even if they are not enrolled in a clinical trial.

Johnson announced the introduction of his bill at a congressional briefing, where one of the panelists was Laura McLinn, whose son Jordan has Duchenne muscular dystrophy. McLinn said she had asked the senator to draft Right to Try legislation and to hold FDA accountable for not expediting the approval of drugs that show promise.

The House bill currently has 21 Republican cosponsors, and was introduced a day before the House passed 21st Century Cures legislation that takes a different path by improving FDA’s current expanded access program.

3. Administration

HHS Releases ACA Nondiscrimination Final Rule

HHS released the final rule on the Affordable Care Act’s nondiscrimination policies on May 13. The rule prohibits discrimination in health care on the basis of race, color, national origin, age, disability and sex, including pregnancy and gender stereotyping. It also “enhances” language help for those with minimal English proficiency.

The rule does not say whether discrimination on the basis of sexual orientation is a form of discrimination, but the rule says that complaints on the issue will be evaluated.

To see the rule, click here.

340B Hospitals Urging CMS to Exempt Them From Proposed Part B Drug Demonstration

340B hospitals are urging the Centers for Medicare and Medicaid Services (CMS) to exempt them from the proposed Part B drug cost-cutting demonstration. Many drugmakers, providers, patients and lawmakers oppose CMS’s proposed demonstration, which in its first phase would change the Part B pay formula for administering drugs. Medicare Part B currently pays a drug’s average sales price, plus a 6 percent add-on fee. CMS proposes changing that to 102.5 percent of the average sales price, plus a flat fee of $16.80 per drug, per day. This change would cut reimbursement for drugs with prices greater than $480 and benefit doctors who prescribe cheaper drugs.

CMS says it is looking to remove the financial incentive for providers to use more expensive drugs. 340B providers argue that reducing payments could make it more difficult to treat the vulnerable patients 340B is meant to help, particularly those in Medicare. Drug manufacturers also say the demonstration would likely increase the number of patients who are treated at hospitals rather than doctors’ offices.

The American Hospital Association (AHA) argues hospitals should be excluded from the first phase of the Part B demonstration. AHA also suggests that CMS cap drug price increases and either discontinue Part D reinsurance or increase the reinsurance threshold. AHA says its advice is consistent with the Medicare Payment Advisory Commission’s (MedPAC) recent recommendations for Part D. MedPAC passed a package of Part D recommendations estimated to save $10 billion over five years that includes lowering Medicare’s individual reinsurance subsidy benefit from 80 percent to 20 percent while maintaining Medicare’s overall 74.5 percent subsidy of basic benefits. AHA also suggested that CMS consider putting downward pressure on drug prices through an average sales price inflation cap in both Part B and Part D.

AHA, which is a member of the Campaign for Sustainable Rx Pricing, also said that drugmakers should be required to provide evidence to support drug prices, and criticized brand drugmaker policies that the hospitals say amount to abuse of market exclusivity protections, like evergreening, pay-for-delay, abusing Risk Evaluation and Mitigation Strategies to withhold information from generic manufacturers, and manufacturers’ seeking orphan drug status for drugs that they intend to sell for multiple indications. AHA also says providers need more information on the effectiveness of certain treatments

CMS Holds Forum for Insurers to Share Thoughts on Exchange Success

On June 9, the Centers for Medicare and Medicaid Services (CMS) will hold a forum where health insurance companies will share thoughts about how best to serve exchange customers, HealthCare.gov CEO Kevin Counihan announced in a blog post. The forum aims to give insurers that are still adapting to the exchange a chance to hear from companies that have had more success. Counihan noted that Aetna, Blue Cross Blue Shield of Florida, Blue Cross Blue Shield of Massachusetts, CareSource, Horizon Blue Cross Blue Shield, SelectHealth, UPMC and the Society of Actuaries will be among those attending.

CMS announced the forum as it tries to downplay news that UnitedHealth Group is pulling out of the exchange market in most states where it does business, saying that not all issuers are adapting well to the new insurance landscape by properly pricing their products.

Anyone interested in attending is asked to sign up by May 25.

To see the blog post, click here.

CMS Releases 2014 PQRS Experience Report

On May 12, the Centers for Medicare and Medicaid Services (CMS) released the 2014 Reporting Experience Including Trends (2007-2015), referred to as the 2014 PQRS Experience Report.

The PQRS Experience Report is released by CMS annually and provides data and trends on participation, incentive eligibility, incentive payments and payment adjustments as applicable since the beginning of PQRS, including measure performance and program participation broken down by specialty and geographic location. The full report can be found on the PQRS Analysis and Payment webpage .

The 2014 report found an increase in participation from eligible professionals (EPs) across most reporting mechanisms. The report also indicates progress in CMS’s efforts to improve participation by redesigning the submission process to be user-centered and responsive, and lowering the reporting burden for EPs by aligning reporting requirements across CMS quality programs.

Report highlights include:

  • 1.32 million professionals were eligible to participate in PQRS in 2014. In 2013, there were 1.25 million professionals eligible to participate in PQRS.
  • Participation increased by 11 percent in 2014 from 2013. In 2014, a total of 822,810 (63 percent) EPs successfully participated through at least one reporting mechanism compared to 642,114 (51 percent) EPs who successfully participated in 2013.
  • Participation via Electronic Health Record (EHR) more than doubled in number since 2013. EHR reporting by EPs demonstrated strong growth in 2014, with over 50,000 participant reports received.
  • 558,885 EPs are currently subject to the 2016 PQRS negative payment adjustment. Based on 2014 PQRS reporting, 558,885 EPs are subject to a reduction of 2.0 percent of their 2016 Part B Medicare Physician Fee Schedule allowed charges. Of those professionals subject to the adjustment, 466,351 were non-participants (those EPs who did not attempt to participate) and 92,534 were participants who were unsuccessful in meeting the reporting requirements to avoid being subject to the PQRS negative payment adjustment in individual or group practices. This number accounts for less than half of all 2014 professionals who were eligible to participate.
  • Participation in PQRS GPRO had a large increase in 2014 compared to 2013. Nearly 3,000 group practices (1,545 Small GPRO, 855 Medium GPRO and 585 Large GPRO) self-nominated or registered to participate via the PQRS GPRO in 2014. This was a large increase compared to 677 total practices that self-nominated for participation in PQRS GPRO in 2013.
  • The 2014 PQRS incentive payments paid equaled $224,088,411. Program year 2014 was the last year EPs could earn a PQRS incentive. The average incentive was $383 per EP and $4,950 per group practice, with 585,037 EPs and 45,273 group practices receiving incentive payments (excluding Maintenance of Certification Program). A total of $1,627,613,994 was paid over the eight years (2007-2014) that CMS provided PQRS incentive payments.

PQRS is a quality reporting program that requires individual EPs and group practices to report quality measure information to CMS. The PQRS negative payment adjustment will end in 2019 and aspects of the program will be consolidated into the Merit-Based Incentive Payment System (MIPS), which was established by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

For more information about PQRS, including information on how to avoid the negative payment adjustment, click here.

NIH Seeking New Leadership Following Negative Independent Review

The National Institutes of Health (NIH) is looking for new senior leadership for its hospital after an independent review of the facility found major problems, including cases in which research needs took precedent over patient safety.

NIH, which plans to model the leadership structure on non-government hospitals, will open a search for a new CEO, chief operating officer and chief medical officer of the NIH Clinical Center. Director Francis Collins wants all three leadership positions to be filled by physicians by the end of the year.

The new CEO will report to a newly formed hospital board, which Collins announced in late April when the independent review of the facility was published. John Gallin, who has headed the NIH hospital for over 20 years, will stay on during the transition.

The review of the hospital was triggered when a complaint led to an FDA inspection that found manufacturing deficiencies and quality problems in the facility that makes drugs for the hospital’s clinical trials. NIH asked for a review of the entire clinical center after an internal task force found problems were more widespread.

NIH has already reviewed all of its sterile production laboratories and is currently reviewing its standard operating procedures and training under a newly established Office of Research Support and Compliance.

FDA announced in a Federal Register notice that it will hold a public meeting on June 10 to explore setting up a user fee program to help fund reviews of over-the-counter (OTC) drug monographs, saying the agency’s OTC program is severely under-resourced.

FDA Finalizes Medical Foods Guidance  

On May 12, the U.S. Food and Drug Administration (FDA) finalized guidance that answers questions about medical foods regarding confusion about how they can be labeled and sold in the market.

The guidance updates a May 2007 version and is intended to explain FDA’s thinking on the growing medical foods sector, which is advertising a wide array of products targeting the nutritional needs of people with various medical conditions. FDA said medical food should not be labeled and marketed for diabetes, pregnancy or nutrient deficiency diseases like scurvy. But medical foods can be sold to address metabolic problems that prohibit the body from properly turning food into energy.

OMB Completes Review of EEOC Regulations on Workplace Wellness Programs

The White House Office of Management and Budget (OMB) on May 12 completed its review of the EEOC’s regulations clarifying the application of federal anti-discrimination laws to workplace wellness programs.

The regulations are intended to better streamline the Americans with Disabilities Act and the Genetics Information Nondiscrimination Act with the Affordable Care Act (ACA). Under the ACA, the incentive (or penalty) for participating (or not participating) in a wellness program typically may not exceed 30 percent of a group health plan.

The EEOC proposed the regulations after it came under fire from the business community in 2014 for suing three companies, alleging their wellness programs violated the ADA because financial incentives were too high and forced employees to provide medical information. Under federal law, companies may not ask employees for their medical information, unless that information is job-related and consistent with business necessity. However, there is an exception for voluntary wellness programs. In response to the lawsuits, the business community asked the EEOC to clarify when a wellness program is considered “voluntary.”

In April 2015, the EEOC proposed a rule that said a wellness program is ADA-compliant as long as companies do not offer incentives that exceed 30 percent of the cost of employee-only coverage. In October 2015, the EEOC proposed another rule that said a wellness program is GINA-compliant if financial incentives for an employee and his or her spouse to participate do not exceed “30 percent of the total annual cost of coverage for the plan.”

4. State Activities

Alabama: FTC Says Proposed Alabama Bill Could Encourage Anticompetitive Behavior

The Federal Trade Commission (FTC) is opposing a proposed bill that would permit public universities with medical schools to form a new type of corporation that would be exempt from antitrust laws. According to FTC comments, the Alabama bill would permit any public university that operates a school of medicine to form a new type of corporation in the state, to be known as an “authority,” in collaboration with all types of health care providers. The FTC, however, warns that the legislation would encourage an array of anticompetitive behavior—including anticompetitive mergers, price fixing and boycotts—and raise health care costs. To see FTC’s letter, click here.

Florida: Gov. Scott Asks for More Zika Funding

Florida Gov. Rick Scott visited the Hill on May 9 to make the case for additional funding to fight the Zika virus. Florida has the most travel-related infections of any state in the country, and some Republicans in the state’s delegation—including Marco Rubio—have broken party lines to support the administration’s $1.9 billion emergency funding request. Gov. Scott has not yet endorsed a specific amount.

Hawaii: Hawaii Officials Call on Congress for Additional Zika Funding

Hawaii health officials are calling on Congress to approve emergency funding in response to the Zika virus outbreak. The state legislature already secured almost $1 million in funding to respond to the outbreak, but Gov. David Ige argues more money is needed. Hawaii has confirmed seven cases of travel-related Zika so far.

Kentucky: Foundation for a Healthy Kentucky Holds Closed-Door Meeting on Medicaid Expansion

The Foundation for a Health Kentucky held a closed-door meeting last week for various health care groups to provide input and shape the development of Medicaid expansion in the state. According to a foundation rep, no one from Gov. Matt Bevin’s office attended the May 12 meeting. This meeting followed one between Bevin and HHS Secretary Sylvia Mathews Burwell regarding Kentucky’s upcoming 11115 waiver submission. The expansion proposal is still under development, but Bevin is expected to alter the program to include more out-of-pocket costs for enrollees as well as other revisions modeled off of expansion waivers in other Republican-dominated states.

Maine: Insurers Seeking Double-digit Rate Hikes

The four insurers in Maine selling individual plans on Obamacare exchanges are requesting average rate hikes of at least 14 percent. For most customers in Maine, all or nearly all of the proposed hikes will be absorbed by government subsidies. The requested hikes, which are subject to state and federal review, are as follows: Community Health Options—22.8 percent; Harvard Pilgrim—18.7 percent; Aetna—14.2 percent; and Anthem Blue Cross Blue Shield—14.1 percent.

Minnesota: Lawmakers Debate Over MNsure Changes

The Minnesota state legislature is in a debate over what to do with its Obamacare health exchange—MNsure. Democrats are pushing fixes to the exchange, whereas Republicans are aiming to put Minnesota into a federally run marketplace by 2018. Republicans have passed measures to cut MNsure’s operating allowances, change its leadership structure and phase out the exchange completely. Lawmakers are working to negotiate a possible end-of-session deal, but both sides have dramatically different approaches to address the exchange problems.

Oregon: Oregon Health Authority Requests Extension for Oregon Contraceptive Care Demo

The Oregon Health Authority has asked the Centers for Medicare and Medicaid Services (CMS) for an extension of the Oregon Contraceptive Care demonstration using a fast-track process. The program—initially authorized in 1999—attempts to reduce unintended pregnancies by expanding access to contraceptives and other primary care and reproductive health services through Medicaid to residents with incomes up to 250 percent of the federal poverty line. The extension request is for five years beginning May 1 through April 30, 2021. The federal public comment period begins May 3 and ends June 2.

5. Regulations Open for Comment

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 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.

CMS Releases MACRA Proposed Rule for New Physician Pay System

On April 27, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule to guide major changes in Medicare payment to physicians, meaningful use policy, and quality and value measures. The focus of the rule is to introduce more flexibility for physicians, who say they are over-regulated and over-measure, while also nudging them toward models designed to reimburse them for high-value care.

The proposed rule would implement changes through the Quality Payment Program, which includes two paths:

  1. The Merit-based Incentive Payment System (MIPS): Most Medicare clinicians will initially participate in the Quality Payment Program through MIPS. MIPS allows Medicare clinicians to be paid for providing high-value care through success in four performance categories:
  • Quality (50 percent of total score in year 1)
  • Advancing Care Information (25 percent of total score in year 1)
  • Clinical Practice Improvement Activities (15 percent of total score in year 1)
  • Resource Use (10 percent of total score in year 1)
  1. Advanced Alternative Payment Models (APMs): Clinicians who take a further step toward care transformation would be exempt from MIPS reporting requirements and qualify for financial bonuses. These models include:
  • Comprehensive ESRD Care Model (Large Dialysis Organization arrangement)
  • Comprehensive Primary Care Plus (CPC+)
  • Medicare Shared Savings Program – Track 2
  • Medicare Shared Savings Program – Track 3
  • Next Generation ACO Model
  • Oncology Care Model Two-Sided Risk Arrangement (available in 2018)

The nominal risk standard was included in the rule but how CMS would define it is still a question.

To see the proposed rule, click here.

For a related press release, click here.

6. Reports

S&P Report Finds Health Care Costs Increased More Quickly in 2015

According to a new S&P report, national health care costs in the commercial market increased 6.5 percent in 2015—rising 50 percent more rapidly than in 2014. The increase in health care costs was driven by a 15.83 percent increase in drug costs and a 4.3 percent increase in medical services costs.

Brand-name drug costs increased faster than generic drug costs—19.17 percent versus 6.58 percent. In comparison, brand drug spending increased by 13.16 percent in 2014, while generic drug spending rose 10.99 percent that year.

Individual market plans, compared to employer plans, paid 8.14 percent more each month for members.

Costs increased by 23.04 percent in 2015 in the individual market, considerably more than the increase in the overall health care market, but down from its peak of 38 percent at the start of that year. Individual market plans experienced nearly a 50 percent increase in drug costs and an 18 percent increase in medical service costs.

The report tracks data from commercial health insurance plan payments to providers. To see the full report, click here.

Deloitte Publishes 2016 Survey of Health Care Consumers

According to a new survey conducted by Deloitte, more than half of exchange customers are satisfied with their health care coverage. This is basically identical to the portion of Americans with employer-based coverage who report being satisfied with their health insurance.

However, their satisfaction rate is lower than that of people with Medicare (74 percent) and Medicaid (71 percent). The survey also found that 34 percent of exchange customers feel prepared to handle future health care costs, compared to 16 percent in 2015.

To see the survey, click here.

Report Shows Exchange Websites Are Improving

According to a new report from the National Partnership for Women and Families, exchange websites are making it easier for consumers to compare health plans. For example, HealthCare.gov and about 50 percent of the state-run marketplace websites now have tools to let consumers project how much they will spend in a given year based on their expected health care utilization. However, there is still limited information on provider networks and health plan quality, according to the report.

To see the full report, click here.

GAO Report Finds Fundamental Improvements Needed in CMS Regulation of MA Plans

According to a new Government Accountability Office (GAO) report, Medicare Advantage overbilling is extensive and the Centers for Medicare and Medicaid Services (CMS) is not doing enough to address the issue. GAO says fundamental improvements are necessary to better regulate the private health plans that participate in the market.

According to GAO, the CMS audits intended to curb overbilling often went on for years without imposing significant financial penalties. CMS responded that the threat of audits has prompted health plans to voluntarily return hundreds of millions of dollars in overpayments.

GAO made five recommendations to CMS to improve its processes for selecting contracts to include in the audits, enhance the timeliness of the audits and incorporate RACs into the audits.

To see the full report, click here.

GAO Issues Report on Medicare Advantage Payments for Veterans, Nonveterans

The Government Accountability Office (GAO) released a report on how the Department of Veterans Affairs’ (VA) provision of Medicare-covered services to Medicare beneficiaries affects payments to Medicare Advantage (MA) plans. GAO estimated VA spending on Medicare-covered services and how VA spending affects payments to MA plans and evaluated whether CMS has the data it needs to adjust payments to MA plans.

GAO recommended that CMS (1) assess the feasibility of revising its methodology for determining if an adjustment to the benchmark is needed by obtaining diagnoses and utilization data from VA and (2) make any additional adjustments to MA plan payments as appropriate. HHS disagreed with the first recommendation, but agreed with the second.

To see the full report, click here.

GAO Releases Report on Veterans’ Health Care

The Government Accountability Office (GAO) released a report on the Veterans Health Administration’s (VHA) payment timeliness, comparing it to that of Medicare and TRICARE—the Department of Defense’s health care system. Due to recent increases in utilization of VA care in the community, VHA has had difficulty processing claims in a timely manner. To address this issue, GAO recommends that VA develop a written plan for modernizing its claims processing system that includes a detailed schedule, costs and performance measures. VA agreed with this recommendation. To see the full report, click here.