1. Courts

Supreme Court Asks Department of Justice to Weigh In on Pay-For-Delay Case

The Supreme Court asked the solicitor general to weigh in on King Drug Company v. SmithKline Beecham Corp., a sign that the Court is considering taking up a case that could broaden what kinds of brand-generic patient agreements count as pay-for-delay. In 2013, the Court ruled that if a branded drug company pays a generic drugmaker cash in order to delay the introduction of a cheaper rival product as part of patent settlement litigation, a court could strike the deal as anticompetitive. (FTC v. Actavis)

In King, the 3rd U.S. Circuit Court of Appeals ruled that an agreement by GlaxoSmithKline not to launch an authorized generic to compete with a forthcoming generic competitor made by Teva amounted to a “reverse payment”—or a pay for delay deal. That decision was appealed to the Supreme Court.


House of Representatives

House Energy and Commerce Committee Releases Draft Mental Health Reform Bill

On June 3, the House Energy and Commerce Committee circulated a draft mental health bill as a manager’s amendment to Rep. Tim Murphy’s (R-PA) reform legislation.

Murphy’s bill was approved by a subcommittee on mostly partisan lines. However, disagreements over funding and provisions related to patient privacy rights slowed progress.

The draft manager’s amendment does not include a provision that would have fully repealed the Institutes for Mental Disease (IMD) exclusion, a Medicaid rule that prohibits reimbursements to mental hospitals with more than 16 psychiatric beds. Advocates for repeal say the law is a barrier to care, but the cost of repealing it would make passage more difficult. Instead, the draft codifies a rule recently issued by CMS that alleviates restrictions on Medicaid reimbursements for mental health facilities.

The committee will hold a markup on the bill within the month and is accepting feedback from lawmakers and stakeholders in the meantime.

Energy and Commerce Hearing on Patient Solutions for Lower Costs, Better Care

On June 10, the House Energy and Commerce Committee Subcommittee on Health held a hearing entitled “Advancing Patient Solutions for Lower Costs and Better Care.” The hearing can be viewed along with the webcast of the hearing here. Witnesses were: Grace-Marie Turner, Founder, President and Trustee, Galen Institute, Inc.; Doug Holtz-Eakin, President, American Action Forum; and Sara Collins, Vice President of Health Coverage and Access, Commonwealth Fund.

The legislation discussed included:

  • Discussion Draft of H.R. ____, To amend title XXVII of the Public Health Service Act to change the permissible age variation in health insurance premium rates
  • Discussion Draft of HR____, To amend the Patient Protection and Affordable Care Act to better align the grace period required for non-payment of premiums before discontinuing coverage under qualified health plans with such grace periods provided for under State law
  • Discussion Draft of H.R. ____, To amend Title I of the Patient Protection and Affordable Care Act to require verification for eligibility for enrollment during special enrollment period in PPACA insurance plans, and for other purposes
  • H.R. 3463, Aligning Children’s Dental Coverage Act
  • H.R. 4262, Transparency and Accountability of Failed Exchanges Act

To see text of the legislation discussed, click here.

House Extends Grandfathered Status for Certain Outpatient Facilities Under Construction

On June 7, the House passed legislation by voice vote extending the timeline for hospitals to receive grandfathered status excluding them from new “site-neutral” payment rules.

Last year’s budget deal eliminated the Medicare policy that paid higher rates for services that could be provided in outpatient settings. Supporters of the legislation argued that the existing system created irrational financial incentives for hospitals to acquire physician groups in order to qualify for the higher payment. However, hospitals complained that the legislation unfairly punished those that had facilities under construction.

The House passed legislation allows facilities that were under construction on Nov. 2, 2015, to qualify for the higher reimbursements. Construction needs to be completed by the end of this year in order to qualify, however. The legislation also exempts PPS Exempt Hospitals from the site-neutral payments completely.

The bipartisan measure was sponsored by Reps. Pat Tiberi (R-OH) and Jim McDermott (D-WA).

According to an analysis by the Congressional Budget Office (CBO), if the bill becomes law, it will allow about 100 additional facilities to qualify for grandfathered status. It will cost $760 million over 10 years, but will be almost completely offset by other cuts in Medicare reimbursements that start in 2018. The analysis finds that the legislation would decrease spending by $14 million over 10 years.

The legislation contains other minor provisions. It extends the timeline to 2020 for when CMS can eliminate poorly performing Medicare Advantage plans. Under current law, starting next year CMS can eliminate plans that received under three stars on its quality rating system for three consecutive years.

The bill also extends the Rural Community Hospital Demonstration Program for an additional five years. The program aims to prevent hospital closures by providing higher reimbursement rates for qualifying facilities.

There is no companion bill in the Senate.

Reps. Upton, Pallone Introduce Bill to Promote Collaboration at FDA

On June 8, House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Ranking Member Frank Pallone (D-NJ) introduced legislation to encourage collaboration at the U.S. Food and Drug Administration (FDA). The bill—the FDA Cross-Center Collaboration Act of 2016—calls on FDA to establish disease-specific intercenter institutes to help streamline the review of drugs and devices for major disease areas across product centers.

The bill would require FDA to establish at least one intercenter institute focused on a major disease area and work across FDA’s Center for Drug Evaluation and Research (CDER), Center for Biologic Evaluation and Research (CBER) and Center for Devices and Radiological Health (CDRH).

FDA would have one year after enactment of the measure to establish at least one institute, and would be required to take public comments on the proposed institute before it is established. Also, FDA could shut down a disease-specific institute if it determines the institute no longer benefits the public health.

The bill mirrors provisions of an FDA and National Institutes of Health workforce bill passed by the Senate Health, Education, Labor, and Pensions (HELP) Committee as part of its parallel legislation to the House-passed 21st Century Cures Act.

On June 6, Friends of Cancer Research joined 27 other cancer patient advocacy groups in a letter calling for an Oncology Center of Excellence at FDA designed to bring together cancer experts from CDER, CBER and CDRH into their own center to regulate oncology products.

The Obama administration’s Cancer Moonshot Initiative led by Vice President Joe Biden calls for a Virtual Oncology Center of Excellence at FDA to work across its drug, biologic and device centers. The president’s 2017 budget request allocates $75 million to set up the virtual center.


Senate Dems Ask Defense, State Departments How They Are Preparing for Zika Virus

On June 7, Senate Democrats sent a letter to the Defense and State departments asking for more information on how they are preparing for the threat of the Zika virus. Both departments have developed policy guidance to potentially relocate pregnant service members and dependents from locations where the virus is being actively transmitted. The Pentagon recently reported that 11 active troops have been infected with Zika this year, in addition to four dependents and two retired members.

The letter was sent by Sen. Patty Murray and signed by 21 other Democrats. Murray has been the lead negotiator for the Democrats on the Senate’s $1.1 billion Zika funding package, which is awaiting conference with the House’s $622 million package. Democrats argue the House package is insufficient to combat the virus.

Senate Finance Committee Expected to Hold Medicare Part B Hearing

The Senate Finance Committee may hold a hearing on June 28 to address the Obama administration’s Medicare Part B drug proposal. The proposal has sparked criticism from congressional Republicans and some Democrats, who say it is too expensive. The Office of Management and Budget set 2019 as the time to take final action as part of OMB’s regulatory agenda. However, the Centers for Medicare and Medicaid Services says they have not yet delayed the demonstration.

Senate Finance Committee Approves Social Security and Medicare Trust Fund Nominees

On June 8, the Senate Finance Committee approved the re-nominations of Charles P. Blahous III and Robert D. Reischauer on 14-12 party-line votes to be public trustees of the Social Security and Medicare trust funds.

Democrats opposed Blahous—a researcher at the conservative Mercatus Center and Hoover Institution—saying he has undermined Social Security as a member of its board of trustees and as a George W. Bush administration official working to partially privatize the program.

Democrats also argued that no one should have a second term as a public trustee, in order to promote new thinking. The law requires that one trustee come from each party, and the nominations have typically not fueled major fights. However, the Democratic party has been increasingly fighting for a more progressive stance on the issue.

Senate Appropriations Committee Clears Labor-HHS Appropriations Bill for Senate Consideration

On June 9, the Senate Appropriations Committee cleared the Labor-HHS Appropriations bill for consideration by the Senate. The agreement funds the U.S. Department of Health and Human Services (HHS) at $76.9 billion, a $1.4 billion increase above FY 2016, including cap adjustments. The only amendment voted on was a Durbin–Feinstein amendment that would prevent federal authorities from interfering with a provider’s ability to prescribe medical marijuana where it is legal. The amendment was approved 18-11.

The breakdown of funding for health care:

National Institutes of Health (NIH) – $34 billion, an increase of $2 billion above FY 2016. The bill includes:

  • $300 million for the Precision Medicine Initiative, an increase of $100 million;
  • $1.39 billion for Alzheimer’s disease research, an increase of $400 million;
  • $250 million, an increase of $100 million, for the BRAIN Initiative to map the human brain;
  • $333.4 million, an increase of $12.5 million, for the Institutional Development Award;
  • $463 million, an increase of $50 million, to Combat Antibiotic Resistant Bacteria;
  • $12.6 million for the Gabriella Miller Kids First Research Act;
  • Increases to every institute and center to continue investments in innovative research that will advance fundamental knowledge and speed the development of new therapies, diagnostics and preventive measures to improve the health of all Americans.

Fighting Opioid Abuse – $261 million, an increase of $126 million or 93 percent, for Centers for Disease Control and Prevention (CDC), Substance Abuse and Mental Health Services Administration (SAMHSA) and Health Resources and Services Administration programs targeted to combat opioid abuse. According to CDC, sales from prescription opioids nearly quadrupled between 1999 and 2014. There has been a corresponding increase in deaths from prescription opioids, claiming more than 165,000 lives.

Specifically, the bill provides a $28 million increase for CDC Prescription Drug Overdose program; a $49 million increase to SAMHSA for treatment, prevention and overdose reversal; and $50 million for Community Health Center treatment and prevention. Further, the bill continues to provide $1.9 billion for the Substance Abuse Prevention and Treatment Block Grant, $94 million in mandatory funds to Community Health Centers and an additional $52.5 million to the National Institute on Drug Abuse at the NIH.

Community Health Centers (CHCs) – $1.49 billion, level with FY 2016. There are more than 9,000 health centers nationally, serving 22.9 million patients per year. Health centers advance the preventive and primary care model of coordinated and comprehensive care, coordinating a wide range of medical, dental, behavioral and social services in communities.

Obamacare – The bill does not provide new funding for the Affordable Care Act (ACA), or Obamacare. In addition, several oversight provisions are included in the agreement:

  • Risk Corridor – The bill continues to include a provision requiring the administration to operate the Risk Corridor program in a budget-neutral manner by prohibiting any funds from the Labor-HHS Appropriations Bill to be used as payments for the Risk Corridor program. Last year, insurers paid $362 million into the Risk Corridor program while submitting $2.87 billion in claims for Risk Corridor payments. Because of this provision in the FY 2016 bill, the subcommittee was able to save over $2.5 billion from potentially being transferred out of priority discretionary HHS programs in the Labor-HHS Appropriations Bill to bail out the Risk Corridor program established by the ACA.
  • ACA Congressional Notification – The agreement directs the Centers for Medicare & Medicaid Services to notify the appropriate congressional committees two business days before any ACA-related data or grant opportunities are released to the public.
  • Health Exchange Transparency – Bill language is included requiring the administration to publish ACA-related spending by category since its inception.
  • ACA Personnel – Bill language is included requiring the administration to publish information on the number of employees, contractors and activities involved in implementing, administering or enforcing provisions of the ACA.

Independent Payment Advisory Board (IPAB) – Funding for IPAB is eliminated. IPAB is a 15-member board of unelected bureaucrats created by the ACA to achieve a reduction in Medicare spending through the only means they have: rationing care.

Rural Health Care – $152.6 million, an increase of $3 million above FY 2016, for rural health programs. The obstacles faced by patients and providers in rural communities are unique and often significantly different than those in urban areas. Therefore, the bill focuses resources toward efforts and programs to help rural communities, such as telehealth.

Cancer Prevention and Control – $356.2 million, level with FY 2016. This includes funding for breast, cervical, colorectal and prostate cancer screening programs, which the administration proposed to cut by more than $54 million.

Immunization Program – $610.8 million, level with FY 2016. The administration proposed to cut this program by $50.3 million. Vaccines remain one of the most important and successful public health breakthroughs to prevent death and disability, and this program serves as a safety-net for the uninsured and underinsured populations.

Children’s Hospitals Graduate Medical Education (CHGME) – $300 million, an increase of $5 million above FY 2016. The CHGME program protects children’s access to high-quality medical care by providing freestanding children’s hospitals with funding to support the training of pediatric providers.

Preventive Health and Health Services Block Grant (Prevent Block Grant) – $160 million, level with FY 2016. The administration proposed to eliminate this program. The Prevent Block Grant provides flexible funding for states to implement prevention activities according to local health needs.

Medicare Appeals Process – $112.4 million, an increase of $5 million above FY 2016, for the Office of Medicare Hearings and Appeals (OMHA). The number of cases appealed to OMHA has increased 1,000 percent over the past six years. As of the end of 2015, OMHA takes nearly 700 days to close out an existing appeal. A significant portion of this backlog has been driven by appeals related to Recovery Audit Contractors.

Polio Eradication – $174 million, an increase of $5 million above FY 2016. Polio is currently endemic in only three countries: Nigeria, Afghanistan and Pakistan. Nigeria has not reported a case since August 2014 and will be declared polio-free if no cases are reported by August 2017.

Mental Health – $80 million increase above FY 2016. The bill provides $541.5 million, an increase of $30 million above FY 2016, for the Mental Health Block Grant and continues the set-aside for serious mental illness activities at 10 percent. The Block Grants represent the primary sources of mental health funding for state programs. The bill also provides $50 million within the funding for CHCs to provide mental health services at health centers across the country. 

Child Care and Development Block Grant (CCDBG) – $2.8 billion, an increase of $25 million above FY 2016. This funding builds on the consistent funding increases in recent years to help states implement key quality improvement reforms in the CCDBG Act of 2014. These reforms are intended to improve child care health and safety standards, and otherwise improve working families’ access to quality child care.

Head Start – $9.2 billion, an increase of $35 million above FY 2016, to help all Head Start programs keep up with costs, recruit and retain highly qualified staff, maintain enrollment and provide high-quality early childhood service for children and families.

Low Income Home Energy Assistance Program (LIHEAP) – $3.39 billion, level with FY 2016. LIHEAP provides home heating and cooling assistance for low-income households.

Public Health Preparedness and Response – The bill does not include the president’s cuts to critical preparedness and response activities and maintains FY 2016 levels for these activities:

  • Biomedical Advanced Research and Development Authority (BARDA) – $511.7 million. BARDA is responsible for advanced research and development of medical countermeasures for national preparedness efforts.
  • Project BioShield – $510 million, $160 million above the president’s request, to enhance national preparedness activities by procuring medical countermeasures against chemical, biological, radiological and nuclear threats.
  • Public Health Emergency Preparedness (PHEP) – $660 million. PHEP funds allow states to prepare, respond and recover from emerging threats such as natural disasters, disease outbreaks and chemical, biological, radiological and nuclear threats.
  • Strategic National Stockpile (SNS) – $575 million. CDC maintains and replenishes expiring medical countermeasures in the SNS for national preparedness efforts.

For more information, click here.

3. Administration

HHS Takes Action to Improve Marketplace Risk Pool

On June 8, the U.S. Health and Human Services Department (HHS) announced a series of actions to strengthen the Obamacare marketplace risk pool in hopes of boosting enrollment and reinforcing stability.

Starting June 17, HHS will require individuals signing up outside the standard enrollment period to provide documentation showing they are eligible. Insurers have complained that some Obamacare customers are exploiting loose rules and waiting until they get sick to sign up for coverage. HHS previously eliminated seven reasons that individuals could use to sign up outside the standard period.

HHS is also proposing changes to the risk adjustment program, which subsidizes insurers that attract a disproportionately sick, costly clientele. The changes aim to ensure that the program works as intended for issuers with higher-risk enrollees so they can sustainably serve all types of consumers.

Starting in 2017, the risk adjustment formula will be adjusted to account for partial-year enrollees. The next year, prescription drug data will be incorporated into the formula.

HHS is curbing abuses of short-term health insurance policies, which some insurers are marketing to consumers as cheaper alternatives to Obamacare plans. Those plans are not required to meet the Affordable Care Act’s (ACA) coverage requirements and insurers can turn away customers who are likely to be more expensive. HHS proposed to limit those plans to three months and not allow renewals. The administration also plans to require insurers to notify customers who purchase short-term plans that they do not satisfy Obamacare’s individual mandate and the customers may still face a penalty.

GAO Announces Appointment of New MedPAC Members

The Government Accountability Office (GAO) announced the appointment of five new members to the Medicare Payment Advisory Commission (MedPAC), as well as the reappointment of MedPAC’s vice chair. The new members are as follows:

  • Amy Bricker – Vice President of Supply Chain Strategy for Express Scripts
  • Brian DeBusk – Chief Executive Officer for DeRoyal Industries
  • Paul Ginsburg – Leonard Schaeffer chair in Health Policy Studies at the Brookings Institution
  • Bruce Pyenson – Principal and Consulting Actuary at Milliman
  • Pat Wang – Chief Executive Officer at Healthfirst

Their terms will end in April 2019. MedPAC Vice Chair Jon Christianson—professor of health policy and management at the University of Minnesota’s School of Public Health—will also serve until 2019.

CMS Releases Medicare Shared Savings Program Final Rule

On June 6, the Centers for Medicare and Medicaid Services (CMS) released a final rule to improve how Medicare pays Accountable Care Organizations (ACOs) in the Medicare Shared Savings Program (Shared Savings Program) for delivering better patient care.

Medicare bases ACOs’ payments on a variety of factors, including whether the ACO can deliver high-quality care at a reasonable cost. The final rule incorporates regional fee-for-service (FFS) expenditures into the methodology for establishing, adjusting and updating the benchmarks of ACOs that continue their participation in the Shared Savings Program after an initial three-year agreement period. It also adds a participation option to encourage ACOs to transition to performance-based risk arrangements and provides greater administrative finality around the program’s financial calculations. CMS is making these changes to strengthen incentives under the program after receiving comments on issues specified in the 2016 notice of proposed rulemaking.

The Shared Savings Program currently includes over 430 ACOs in 49 states and the District of Columbia, serving over 7.7 million Medicare beneficiaries. This final rule changes how Medicare pays ACOs by basing one of the payment factors on whether the ACO is able to deliver high-quality care at a lower cost compared to other providers in their region. In addition, the rule provides quicker transition to the more advanced tracks for certain ACOs by allowing an extra year under their first agreement before the organization takes on financial risk.

The early results of the Shared Savings Program and the Pioneer Accountable Care Organization Model show that in 2014, ACOs had a combined total net program savings of $411 million.

In March 2016, the administration estimated that it met its goal—11 months ahead of schedule—of tying 30 percent of Medicare payments to quality and value through alternative payment models by 2016. The administration’s next goal is tying 50 percent of Medicare payments to alternative payment models by 2018.

To see the final rule, click here.

To see a fact sheet with more information about the final rule, click here.

CMS: No Adverse Health Outcomes From New DME Fee Schedule

Earlier this year, CMS phased in the adjusted durable medical equipment (DME) fee schedule rates in non-competitive bidding areas. CMS says data shows suppliers continue to accept the new payments and the amount of supplies and services has remained steady—additionally CMS has seen no adverse health outcomes due to the new fee schedule.

CMS was required to adjust fee schedule amounts for non-competitive bid areas by Jan. 1. The agency decided to phase in changes to the DME fee schedule rates during the first half of 2016 so that the rates in all areas would be based on a 50/50 blend of current rates and adjusted rates. Another round of cuts is scheduled to go into effect July 1, but stakeholders are pushing lawmakers to pass the Patient Access to Durable Medical Equipment Act that would delay the cuts for 15 months.

Stakeholders have said that CMS is using payment information based on bidding that took place in one area to help set prices for other places where the costs of providing equipment could be different. Access—particularly to high-quality products—could be compromised at those adjusted prices.

CMS said it will continue to monitor all data leading up to and following the implementation of the phase-in set for July 1.

CMS Announces New Pre-Claim Review Demo of Home Health Services

On June 8, the Centers for Medicare and Medicaid Services (CMS) announced it is taking steps to provide timely and appropriate home health services to Medicare beneficiaries, while protecting the Medicare Trust Funds and taxpayer funds from fraud and improper payments. By implementing a new pre-claim review demonstration in five states—Illinois, Florida, Texas, Michigan and Massachusetts—CMS aims to ensure that home health services are medically necessary without delaying or disrupting patient care or access. The pre-claim review demonstration will begin in Illinois no earlier than Aug. 1, 2016, and the remaining states will phase in during 2016 and 2017.

Under this demonstration, physicians and clinicians participating in Medicare will continue to make health care decisions in coordination with their patients, including creating a care plan for the types of home health services a beneficiary needs. Once home health services are ordered by their Medicare physicians, the eligible beneficiary should be able to receive Medicare’s home health services immediately. The main change under this demonstration is that Home Health Agencies (HHAs) will submit the supporting documentation while beneficiaries are receiving care. This earlier submission of documentation will undergo the new “pre-claim review.” Pre-claim review does not change beneficiary eligibility standards or Medicare’s documentation requirements for home health care.

In most cases, the HHA providing the care will gather all the required documentation and submit it for pre-claim review. This is the same documentation they currently gather for payment, only HHAs will submit it earlier in the process. A beneficiary may also submit documentation for pre-claim review.

Medicare will review the documentation to determine if all coverage requirements for home health services are met and will issue a pre-claim review decision generally within 10 days. If the documentation submitted was not sufficient, then the HHA (or beneficiary) may submit additional documentation to support the claim. Once sufficient documentation is submitted, Medicare will make timely payment on the home health services claim following the standard process.

After the first three months of the demonstration in each participating state, if the claim is submitted without a pre-claim review and is determined to be payable, it will be paid with a 25 percent reduction of the full claim amount. This payment reduction is not subject to appeal and cannot be recouped from or otherwise charged to the beneficiary.

For more information, click here.

CMS will discuss the demonstration at an upcoming Special Open Door Forum call, which will be announced on the CMS website.

4. State Activities

Alaska: House, Senate Approve Reinsurance Bill

The Alaska House and Senate approved a bill creating a $55 million reinsurance fund to subsidize insurance premiums in the high-cost but low-population state. Alaska is set to have only one insurer operating on the individual exchange in 2017—state regulators warn that without this funding, the state’s individual market could collapse. The bill is currently awaiting transmittal to Gov. Bill Walker.

Connecticut: Consumer Group Argues Against Commissioner Wade’s Involvement in Cigna-Anthem Merger

A Connecticut consumer group—the Connecticut Citizen Action Group (CCAG)—says Insurance Commissioner Katharine Wade should not be the key state regulator to examine the proposed mega-merger between Cigna and Anthem because she used to work for Cigna and her husband still works for the company. State ethics offices, however, determined that there was not a conflict of interest. Merger opponents were also angered when Wade approved the separate proposed merger between Aetna and Humana on Jan. 22 without public notice or a public hearing. The U.S. health care insurance market would shrink from five major insurers to three as a result of these two mergers.

Oklahoma: Oklahoma Medicaid Agency Receives 2 Percent Funding Increase

Oklahoma Medicaid Director Nico Gomez said a recent 2 percent funding increase for the agency in the state’s fiscal 2017 budget could be enough to avoid any additional provider reimbursement cuts. Oklahoma’s Medicaid agency previously proposed that rates could be cut by as much as 25 percent across the board for providers and those reductions would have gone into effect on June 1.

Florida: Medicaid Agency Lifts Restrictions on Coverage of Hepatitis C Treatments

Florida’s Medicaid agency lifted some restrictions for the coverage of hepatitis C treatments, including direct-acting retrovirals. For the drug Viekira Pak—manufactured by AbbVie—the agency said it will discontinue the requirement for a clinical authorization and implement an automated prior authorization process to approve. Managed care plans need to implement this change by June 17, 2016.

Vermont: GOP Campaign Heats Up Over State Health Exchange .

Vermont Republican gubernatorial candidate Bruce Lisman has sent political mailings painting his opponent—Vermont’s lieutenant governor—as an ally to Democratic Gov. Peter Shumlin and supporter of the Vermont Health Connect online exchange. In one flyer, the text suggests Scott is a supporter of Shumlin and the health exchange, which has experienced severe technical glitches—“A picture is worth a thousand words,” the mailer reads. “Phil Scott won’t change Vermont’s direction.” Scott has called for abandoning Vermont Health Connect in the past.

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 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)
  2. 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

GAO Report Finds VA Made Efforts to Better Manage Budgets Following Projected Funding Gap in FY 2015

On June 3, 2016, the Government Accountability Office (GAO) released a report examining the activities that accounted for the Department of Veterans Affairs’ (VA) fiscal year 2015 projected funding gap and changes VA has made to prevent potential funding gaps in the future. GAO found that two areas accounted for VA’s funding gap of $2.75 billion:

  1. Higher-than-expected obligations for VA’s longstanding care in the community (CIC) programs—which allow veterans to obtain care from non-VA providers—accounted for $2.34 billion (85 percent) of VA’s funding gap, and
  2. Unanticipated obligations for hepatitis C drugs accounted for $408 million of the funding gap.

GAO found that VA has made efforts to prevent potential funding gaps in the future, including allocating funds for CIC and hepatitis C drugs and updating the projection it uses to inform budget estimates.

To see the full report, click here.

Health Affairs Study Finds Drug Monitoring Programs Reduce Some Opioid Prescribing

A new Health Affairs study found that state prescription drug monitoring programs are good tools to rein in prescription drug overdose. Doctors in states that adopted prescription drug monitoring programs to prevent doctor-shopping saw a 30 percent reduction in the rate of prescribing Schedule II opioids—the most powerful opioids.

However, the launch of these programs was not tied to a reduction in other commonly prescribed opioids such as Vicodin and Lortab. Also, effects on overall opioid prescribing and prescribing of non-opioid analgesics were limited.

The study looked at data on doctor visits by patients who complained of pain in 24 states that started such programs from 2001 to 2010. Doctors wrote prescriptions for Schedule II opioids—such as OxyContin—in 5.5 percent of visits before they had access to the data. Once the data became available, the likelihood of doctors’ prescribing these painkillers in such visits declined by almost one-third to 3.7 percent.

The databases may have considerably raised awareness and made doctors more careful when prescribing opioids, according to the researchers, led by Yuhua Bao, an associate professor of health care policy at Weill Cornell Medical College.

The adoption of the drug monitoring programs did not significantly reduce the prescription of Schedule III opioids through 2010, including combination hydrocodone products such as Vicodin. Those products were recently moved to the more restrictive Schedule II.

The Centers for Disease Control and Prevention (CDC) guidelines on opioid prescribing released this spring encourage doctors to use prescription drug monitoring programs before prescribing opioids. The American Medical Association (AMA) encourages this as well.

To see the full report, click here.

Studies Find Access to Treatment Improving for Mental Health, Not for Substance Use

According to a pair of new Health Affairs studies, access the mental health care has increased significantly since the Affordable Care Act (ACA) was enacted and insurers are more likely to cover the costs of care. However, the studies also found that access to treatment for substance abuse has hardly improved.

Mental health treatment rates increased significantly in 2014 compared to 2005, according to the first study. But only 7 percent of people needing substance abuse treatment received it—this rate remained consistent over the same time period.

second study found that the share of total mental health treatment being covered by private insurance, Medicare and Medicaid increased from 44 percent in 1906 to 68 percent in 2014. At the same time, the share of substance abuse treatment covered by insurance only increased from 45 percent in 1986 to 46 percent in 2014.

Study Finds Greater Subsidies Lead to Higher Enrollment Rates

According to a new study released by the Council for Affordable Health Coverage, only 17 percent of Americans with incomes between 300 and 400 percent of the poverty threshold who were eligible to enroll in exchange coverage actually did so this year. The individuals are eligible for subsidies, but the financial assistance is much less than what is offered to poorer households. From those with incomes below 150 percent of the poverty level, 80 percent signed up for coverage.

The study also found that 50 percent of Americans eligible to enroll in exchange coverage in 2016 were under the age of 34—but only 34 percent of those who actually signed up were in that age group. That group is seen as key to establishing a sustainable risk pool.

To see the full study, click here.

Study Finds One-Third of Americans Report Having Poor Dental Health

According to a survey by the American Dental Association Health Policy Institute and Families USA, over one-third of all adults in the U.S. say they have fair or poor dental health. The main reason is cost, and low-income people suffer the most from lack of treatment. One in four adults said they avoid smiling because of the state of their teeth and one in five experience anxiety.

This study looked at data from all 50 states and focused on income levels, finding severe health disparity in dental care. Low-income adults were 10 times as likely to have poor dental health than those in higher income brackets. They were also more likely to say that poor dental health and the appearance of their teeth hurt them during job interviews.

Nearly 60 percent of people from all income brackets who had not sought care in the last year cited price as the reason. Nearly one-third said life is “very often” less satisfying because of their dental health.

The researchers recommended extending dental benefits to all adult Medicaid beneficiaries and studying how private dental insurance benefits are structured to see if they could eventually reward health outcomes. They also recommended establishing new federal data-collection efforts that measure the contributions of oral health to a person’s physical, social and emotional well-being.