This Week: Rep. Brady (R-TX) Named Chairman of the House Ways and Means Committee... Co-op Closures Subject of Two Hearings and More Letters... Drug Prices Subject of Investigations in Senate, House Dems Launch Task Force on Issue... and HHS Announces Invitation-only Meeting to Talk About Drug Prices.

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


New Chairman at House Ways and Means Committee

Rep. Brady (R-TX) was named Chairman of the House Ways and Means Committee on Nov. 4, filling the vacancy that occurred when Rep. Paul Ryan became Speaker of the House. The 10-term congressman was chair of the committee’s Subcommittee on Health. Brady was challenged by Rep. Pat Tiberi (R-OH), who had less seniority. The committee has jurisdiction over taxes, health, trade and Social Security among other issues.

Energy and Commerce Committee Subcommittee on Health Approves Mental Health Legislation

The Energy and Commerce Committee Subcommittee on Health moved forward legislation on mental health introduced by Rep. Tim Murphy (R-PA). Democrats offered their own proposal and many amendments. However, the bill faces strong opposition from Democrats. The bill was voted out of the subcommittee on an 18-12 vote, with the support of every Republican. Rep. Kurt Schrader (D-OR) was the only Democrat to support it.

The bill dismantles SAMHSA to create a new office of the assistant secretary for mental health within the Department of Health and Human Services. This is opposed by most Democrats. It also expands exemptions to HIPAA privacy laws and clarifies when providers can share health information with caregivers and family members of patients with serious mental illness. Those who oppose the bill have said the proposal jeopardizes patient privacy, which in turn could deter patients from seeking care.

One of the most controversial provisions of the bill provides financial incentives to states with assisted outpatient treatment (AOT) laws. These laws, which are already law in some form in the vast majority of states, allow judges to order a patient with a serious mental illness to follow an intensive treatment plan. However, some patient advocates and Democrats argue that AOT violates patients’ civil liberties. Energy and Commerce Committee Chairman Fred Upton, who has been eager to move the bill forward, said there will be time to resolve disagreements over the legislation.

The bill also includes new funding toward early intervention, suicide prevention and expanding the mental health care workforce. It is unclear how the spending in the bill will be paid for.

Before the markup, Democrats released their own alternative, which would have overhauled the HIPAA provision, eliminated the AOT language and kept SAMHSA in place. It also added a section on substance abuse treatment and expanded meaningful use electronic health record payments to behavioral health providers. The Democratic alternative failed in a committee vote.

The next step is to be considered by the full committee, and it is unclear when that will take place.

House Democrats Form “Affordable Drug Pricing Task Force”

House Democrats announced the formation of the Affordable Drug Pricing Task Force on Wednesday, Nov. 4. The Biotechnology Industry Organization in a statement said, “We are disappointed, however, to learn that this task force seems likely to be narrowly focused on the cost of prescription drugs, rather than the enormous value they bring to patients, the healthcare system and society in general.”

Task force members held up potential legislative solutions to stem price increases. Rep. Lloyd Doggett (D-TX) pointed to the Medicare Prescription Drug Price Negotiation Act, which would amend the Medicare Part D program to permit the Department of Health and Human Services to negotiate prices with pharmaceutical manufacturers. The measure was initially introduced in 2007 and has been reintroduced every Congress.

Rep. Marcy Kaptur (D-OH) discussed her HHS study amendment that was included as part of the Labor/HHS appropriations bill in June. The amendment directs the HHS secretary to report to Congress within 120 days of the bill’s enactment with an analysis of prescription drug price increases and whether the government has achieved competitive cost reductions for drugs since 2001.

Also Wednesday, Elijah Cummings (D-MD), ranking Democrat of the House Committee on Oversight and Government Reform, led all 18 Democratic committee members in sending a letter to Chairman Jason Chaffetz (R-UT) requesting a Nov. 17 committee vote to subpoena J. Michael Pearson, CEO of Valeant Pharmaceuticals, and Martin Shkreli, CEO of Turing Pharmaceuticals, to produce documents on the issue of price increases.

House Energy and Commerce Committee Subcommittee on Health Holds Hearing on Medicare and Medicaid Legislation

On Nov. 3, the House Energy and Commerce Committee’s Subcommittee on Health held a hearing to discuss five bills to make changes in the Medicare and Medicaid programs:

1) H.R. 2878, a bill that would extend into calendar year 2015,the instruction to not enforce Medicare’s direct supervision requirements for outpatient therapeutic services in critical access and small rural hospitals through 2015. It was introduced by Reps. Lynn Jenkins (R-KS) and Dave Loebsack (D-IA). The Senate companion bill is S. 1461, which was reported out of the Senate Finance Committee in June.

2) An amendment to H.R. 1362 — the Medicaid REPORTS Act — an updated version of H.R. 1362 introduced by Rep. Brett Guthrie (R-KY), would implement a Government Accountability Office (GAO) recommendation requiring states to submit an annual report on theamount and sources of funds used to finance the nonfederal share of Medicaid.

3) H.R. 2151, entitled Improving Oversight and Accountability in Medicaid Non-DSH Supplemental Payments Act and introduced by Rep. Chris Collins (R-NY), would require states to conduct annual audits and report annually on non-disproportionate share hospital (DSH) supplemental payments. It also would require the Secretary of Health and Human Services (HHS) to issue guidance to states that identify approved methods for calculating non-DSH supplemental payments to providers.

4) An amendment to H.R. 1361, “the Medicaid HOME Improvement Act,” introduced by Rep. Brett Guthrie (R-KY). The committee discussed an updated version of H.R. 1361 that would establish a federal cap on the home equity allowance consistent with current Federal default levels of $552,000 that is indexed to growth with inflation. Under this policy, more than $552,000 in home equity would still be sheltered, including home equity of any amount if a spouse, child under age 21 or a child who is considered blind or disabled lives in the home. If it is enacted, individuals who have home equity levels above the allowed threshold could use the equity to help cover the cost of their care until they bring equity interest in their home below the federal standard, at which point they could obtain Medicaid long-term coverage if otherwise eligible. The equity interest in their home could be accessed through a variety of legal means, including a reverse mortgage, home equity loan or other financial vehicles.

5) H.R. ___ Quality Care for Moms and Babies Act, which will be introduced by Rep. Eliot Engel (D-NY) and Rep. Steve Stivers (R-OH), would develop maternity care quality measures and support maternity care quality collaboratives. The bill would authorize $15 million for the Department of Health and Human Services (HHS) to award grants.


Panel I

Lynn Jenkins

Panel II

Katharine Iritani

Anne Schwartz, Ph.D.

To view the bills and the hearing, click here.

Two Committees Hold Hearings on Co-op Closures

The House Ways and Means Subcommittee on Health held a hearing on Nov. 3 to examine the failure of co-ops created under the Affordable Care Act. The lone witness was Dr. Mandy Cohen, Chief Operating Officer and Chief of Staff for the Centers for Medicare and Medicaid Services.

To read testimony or to see the hearing, click here.

On Nov. 5, the House Energy and Commerce Committee Subcommittee on Oversight and Investigations asked a panel of two state insurance commissioners and two co-op officials the role of risk corridor payments and capitalization requirements as part of their hearing. Also at the hearing, the Health and Human Services (HHS) Office of Inspector’s deputy inspector general for audit services announced that the OIG will examine CMS’s decision to permit co-ops to reclassify certain loans as surplus. CMS guidance permitted this practice if the state regulator approved.

To read testimony or to see the hearing, click here.

House Energy and Commerce Committee Creates Medicaid Task Force

Energy and Commerce Committee Chairman Fred Upton (R-MI) is creating a new Medicaid task force to examine ways to strengthen and sustain the program. No Democrats are on the task force. Rep. Brett Guthrie (R-KY), now the health subcommittee vice chair, will lead the task force. Other members include: Marsha Blackburn (TN), Susan Brooks (IN), Larry Bucshon (IN), Michael Burgess (TX), Chris Collins (NY), Bill Flores (TX) and Markwayne Mullin (OK).


Republican Senators Write Letter Asking CMS Questions on Co-op Failures

In a letter to the Centers for Medicare and Medicaid Services (CMS), Republican Sens. Orrin Hatch (R-UT) and Lamar Alexander (R-TN) asked a series of questions regarding co-op plans and also asked what actions CMS is taking to ensure taxpayer funds are protected. The Senators asked whether CMS has recovered any loans from the failed co-ops and what steps are being taken to make sure 2016 plan options on are up to date. The letter comes after the failure of 11 co-ops, and just before two House committees hold hearings on the co-ops closures. Hatch and Alexander provided CMS with a list of seven requests and asked that the agency respond no later than Nov. 30.

Congressional Investigation into Prescription Drug Prices Announced

The Senate Special Committee on Aging announced a bipartisan Senate investigation into pharmaceutical drug pricing on Nov. 4. On Nov. 3, Democrats on the House Oversight Committee sent a letter to Chairman Jason Chaffetz (R-UT) repeating their request for a hearing into price increases.

The Senate Committee, led by Sens. Susan Collins (R-ME) and Clair McCaskill (D-MO), has requested documents and information from four pharmaceutical companies: Valeant Pharmaceuticals, Turing Pharmaceuticals, Rerophin Inc. and Rodelis Therapeutics. The Committee’s investigation will include an examination of 1) substantial price increases on recently acquired off-patent drugs, 2) mergers and acquisitions within the pharmaceutical industry that have sometimes led to dramatic increases in off-patent drug prices and 3) the Food and Drug Administration’s (FDA) role in the drug approval process for generic drugs, the agency’s distribution protocols and if necessary its off-label regulatory regime. A hearing has been scheduled by the Senate Special Committee on Aging tentatively for Dec. 9, 2015. However, the Committee expects to hold subsequent hearings.

Senate HELP Committee Holding Hearing for Califf’s FDA Nomination

On Nov. 17, the Senate Committee on Health, Education, Labor and Pensions (HELP) will hold a hearing to consider the nomination of Robert Califf as commissioner of the U.S. Food and Drug Administration (FDA). Califf would replace Acting Commissioner Stephen Ostroff who has been in the position since last spring. Some consumer advocates, along with Sen. Bernie Sanders, oppose his nomination due to his connection with the drug industry. The HELP committee will hold a vote on the nomination at a subsequent executive session. Sen. Ben Sasse (R-NE) is determined to put a hold on all Health and Human Services (HHS) nominations until it responds to questions regarding the co-ops funded by Obamacare – 12 of which have collapsed.

2. Administration

DOJ Reaches Settlements With Hospitals Over Improper Use of Cardiac Defibrillators

On Oct. 30, the Department of Justice (DOJ) announced that it reached 70 settlements with 457 hospitals in 43 states for more than $250 million over allegations that cardiac defibrillators were implanted in Medicare patients in violation of Medicare coverage requirements. DOJ alleged that from 2003 to 2010 each one of the settling hospitals used implantable cardioverter defibrillators (ICDs) during waiting periods prohibited by the National Coverage Determination (NCD). The case is one of the largest whistleblower lawsuits in the United States.

HHS to Hold Invitation-only Forum on Specialty Drug Costs

The U.S. Department of Health and Human Services (HHS) announced that it will hold a forum on Nov. 20 concerning “opportunities to improve patient access to affordable prescription drugs, develop innovative purchasing strategies and incorporate value-based and outcomes-based models into purchasing programs in both the public and private sectors.” According to HHS, specialty medications represent only 1 percent of all prescriptions, but resulted in over 31 percent of all drug spending in 2014. The forum will take place at the HHS building in Washington, D.C., and will be webcast. HHS invites those interested in attending to request an invitation.

To view the live webcast of the forum, click here.

CMS Releases New Interactive Medicare Part D Opioid Drug Mapping Tool

On Nov. 3, the Centers for Medicare and Medicaid Services (CMS) released an interactive online mapping tool that allows the public to search Medicare Part D opioid prescription claims data at the state, county and ZIP Code levels within the United States. With the new tool, the user can see both the number and percentage of opioid claims at the local level and better understand how the issue impacts communities. The tool gives providers, health officials and others the data about communities’ Medicare opioid prescription rate.

The data used in the mapping tool is privacy-protected and contains information from over one million providers who prescribed around $103 billion in prescription drugs and supplies under the Part D program. The tool includes interactive maps that allow users to mouse over an area and see its data. The data for each geographic region includes:

  • Percentage of opioid claims
  • State average
  • National average
  • Total providers
  • Total opioid claims
  • Total claims

This initiative focuses on three areas: 1) informing opioid prescribing practices, 2) increasing the use of naloxone (drug that reverses symptoms of a drug overdose) and 3) using medication-assisted treatment to treat opioid addiction. The U.S. Department of Health and Human Services (HHS) is working through the Centers for Disease Control and Prevention (CDC) to develop opioid prescribing guidelines and providing training for providers to make informed prescribing decisions.

For more information, read the Part D Overutilization Monitoring System Summary. Pilots New “Doctor Lookup” Feature and “Prescription Drug Check” Coming Soon

On Nov. 3, the U.S. Department of Health and Human Services (HHS) announced that the pilot version of its new “Doctor Lookup” feature is now live, allowing exchange consumers to search plans by their doctor or health facility. The goal is to provide consumers with more up-to-date information about a plan before enrolling.

The Centers for Medicare and Medicaid Services (CMS) said that the phased-in feature will reach out to one in four site visitors who are selected at random, “allowing us to examine the consumer experience with the feature and to analyze the quality of the data based on consumer feedback as we finalize the feature and determine how best to meet consumer needs.”

CMS acknowledges that in the early stages, some data may be missing or inaccurate, and consumers should still check with their doctor to confirm if they are in-network. has access to data from over 90 percent of insurance companies on the Marketplace. However, if a company has not provided validated data, the consumer will be alerted that no data is available when they search for a provider.

In the near future, CMS plans to pilot its “Prescription Drug Check” feature, which will provide data on covered drugs.

CMS Will Not Finalize Lower Limb Prostheses Local Coverage Determination Policy

On Nov. 4, the Centers for Medicare & Medicaid Services (CMS) announced that the Durable Medical Equipment Medicare Administrative Contractors will not finalize the draft Lower Limb Prostheses Local Coverage Determination (DL33787) at this time. Both CMS and its contractors have heard concerns about access to prostheses for Medicare beneficiaries. The draft policy raised alarms in the patient and provider communities because of concerns that patients would not be able to receive the appropriate lower limb prosthetics and about the scientific basis for the policy.

Instead of finalizing the policy, CMS is convening a multidisciplinary Lower Limb Prostheses Interagency Workgroup in 2016. The purpose of the Workgroup is to develop a consensus statement that informs Medicare policy by reviewing the available clinical evidence that defines best practices in the care of beneficiaries who require lower limb prostheses. The Workgroup will be composed of clinicians, researchers and policy specialists from different federal agencies. CMS will ensure there is opportunity for public comment and engagement on the Workgroup consensus statement and any related activities. It is expected that this workgroup will take over a year to complete its process.

AMA Asks Congress to Rework Meaningful Use Program

The American Medical Association (AMA) and state medical associations are asking Congress to rework the meaningful use program. The physicians are concerned by CMS’s decision to move ahead with Stage 3 of the program despite what they call the “widespread failure of Stage 2.”

The recently passed budget deal requires lawmakers to complete fiscal 2016 appropriations by Dec. 11. Senate Health Committee Chair Lamar Alexander (R-TN) — who also serves on the Appropriations Committee — has also raised issues with CMS’s decision to finalize the third stage of the program.

CMS has said that it expects the majority of all providers to be able to meet the modified 2015 reporting requirements for 90 days, but if a provider cannot do so because of the timing of the final rule — which was released with less than 90 days left in 2015 — they may apply for a hardship exception under the “extreme and uncontrollable circumstances” category. Hardship exceptions will be reviewed on a case-by-case basis.

CMS is accepting comments on the final rule through Dec. 15.

CMS and New York State Department of Health Testing New Demonstration for People With Intellectual and Developmental Disabilities

On Nov. 5, the Centers for Medicare and Medicaid Services (CMS) announced that CMS is partnering with the New York State Department of Health (NYSDOH) and the Office for People with Developmental Disabilities (OPWDD) to test a new model for providing Medicare-Medicaid enrollees with a more coordinated, person-centered care experience.

This partnership will create a program demonstration known as Fully Integrated Duals Advantage for Individuals with Intellectual and Developmental Disabilities (FIDA-IDD) to better serve individuals with intellectual and developmental disabilities who are eligible for both Medicare and Medicaid and will focus on these individuals’ long-term care needs. The FIDA-IDD Demonstration aims to help individuals to be more independently involved in their own care.

New York State and CMS are working with Partners Health Plan to offer this FIDA-IDD program in New York City, Long Island, and Rockland and Westchester Counties. Voluntary enrollment in the program will begin April 1, 2016.

This demonstration involves a different population and Medicare-Medicaid Plan than the Fully Integrated Duals Advantage (FIDA) Demonstration, which is already operating in New York. The new program also differs from the latter in that it doesn’t allow for passive enrollment of eligible individuals and includes a benefit package to support individuals with intellectual and developmental disabilities.

The New York FIDA-IDD Demonstration uses the Capitated Model, in which a state and CMS contract with health plans or other entities that receive a payment to provide enrollees with coordinated care. CMS predicts that 20,000 Medicare-Medicaid IDD enrollees in the New York downstate region will be able to receive more care as a result of the program. All participating plans must meet core Medicare and Medicaid requirements, state procurement standards and state insurance rules (as applicable). The plan must also pass a comprehensive readiness review operated by both CMS and the state, which is currently ongoing.

The demonstration also includes continuity of care requirements to ensure that enrollees can continue to see their current providers during their transitions into the FIDA-IDD Plan. New York State created an Ombudsman program called the Independent Consumer Advocacy Network (ICAN) to help enrollees with appeals and other issues with the FIDA-IDD program.

To develop this demonstration, New York:

  • Reached out to stakeholders, including individuals with developmental disabilities, parents and other family members, advocates, provider agency leaders and staff, and experts from outside the developmental disabilities service system
  • Held public information sessions with external stakeholders to inform demonstration development and policy
  • Posted its draft proposal for public comment and incorporated the feedback into its demonstration proposal before officially submitting it to CMS. The proposal was then posted by CMS for public comment.

The Memorandum of Understanding (MOU) between CMS and New York State that establishes the demonstration parameters is available here .

CMS Worried About Medicaid Limits on Hepatitis C Drugs

On Nov. 5, the Centers for Medicare and Medicaid (CMS) wrote a letter to all 50 states outlining concerns that Medicaid programs might be illegally restricting access to new hepatitis C treatments. A recent study by the American Association for the Study of Liver Diseases (AASLD) finds that Medicaid is denying almost half of hepatitis C drug requests — this denial is under 10 percent for commercial payers and under 5 percent for Medicare patients. CMS told the states that Medicaid programs are imposing coverage conditions that could wrongly restrict access to hepatitis C treatments. CMS also wrote letters to four drug companies — AbbvieJohnson & Johnson Gilead and Merck — questioning whether the companies are offering Medicaid the lowest price for the drugs, as required by law.

3. State Activities

New York: New York Health Exchange Improperly Enrolls Deceased Individuals

Between 2013 and 2014, New York’s health exchange improperly enrolled 354 deceased people in the state’s Medicaid program — resulting in a $325,000 cost to taxpayers in medical claims associated with the deceased. The state audit found that the overpayments occurred because there were not sufficient periodic verifications of enrollees’ life status to remove deceased people from active enrollment. However, state officials report that these numbers are a small fraction of total enrollment in Medicaid for New York. Around 2.1 million people have gone through the state exchange since July — 1.6 million enrolled in Medicaid and 415,000 obtained private insurance. The state Health Department said it has made improvements in the verification system since the program began in 2013, to prevent this issue in the future.

Colorado: Single-Payor Health Care System Proposed to Replace Obamacare in Colorado

Proponents of a statewide single-payor health care system to replace Obamacare have submitted more than the required number of signatures to get a measure on the November 2016 ballot. The program, called ColoradoCare, would cost $25 billion and would be funded by a 10 percent payroll tax increase. The plan would provide all Colorado residents with Medicare-style health care coverage. The proposal, called Initiative 20, requires that employers pay 6.67 percent of the tax and employees pay 3.33 percent. The program would be run by a nonprofit cooperative as opposed to a state agency and be led by a 21-member board. This proposal comes after the co-op Colorado HealthOp was dropped from the state exchange. The Colorado secretary of state’s office has yet to verify the signatures for the proposal.

Arkansas: Arkansas Governor Drops Two Proposed Changes From the State’s Medicaid Expansion Model

Arkansas Gov. Asa Hutchinson is dropping two proposals from his plan for reforming the state’s Medicaid expansion model. In a letter to a legislative task force detailing the changes, Hutchinson said he was dropping 1) the proposal to move some beneficiaries off the subsidized exchange coverage and onto traditional Medicaid and 2) the proposal to eliminate coverage of nonemergency medical transportation. He added that he wants to rename the hybrid expansion to “Arkansas Works” from the current name, the “private option.” Hutchinson’s changes come after the Stephen Group, a consultant to the Legislature, made recommendations to make changes to the “private option.”

New Mexico: A New Report Questions High Costs of New Mexico Health Insurance Exchange

The New Mexico Legislative Finance Committee (LGF) published a report on Oct. 28 that found that the state health exchange spent $78 million with limited benefits to taxpayers due to low enrollment. The report acknowledges that some of the exchange’s problems were due to policy changes and court mandates for the Affordable Care Act (ACA) and the release of the federal insurance portal, among other things. Only about 55,000 residents in New Mexico have enrolled — the exchange expected a number above 80,000. The report was critical of the high costs for marketing, advertising and technology — especially of the marketing and outreach contract awarded to Birdsall, Voss & Associates , a Wisconsin-based firm. Overall, the state exchange has spent $23 million on marketing and outreach.

Arizona: Arizona Co-op Becomes Eleventh to Shut Down

Arizona state co-op, Meritus, became the eleventh to shut down, on Oct. 30 — removing its plans from two days before open enrollment began. Nearly half of the co-ops established with Obamacare have closed or announced that they will close by the end of the year. Meritus officials declined to consent to the order to close, so the state regulators shut it down.

California: CMS and California Come to an Agreement on 1115 Medicaid Waiver

On Oct. 31, the Centers for Medicare and Medicaid Services (CMS) and California “agreed in principle” on the five-year extension on the state’s 1115 Medicaid waiver, entitled “California Bridge to Reform Demonstration.” The waiver includes uncompensated care funding for hospitals and a restructured Delivery System Reform Incentive Payment Program, among other things. As outlined in a letter from CMS to Mari Cantwell, the Chief Deputy Director of California’s Department of Health Care Services, some of the major details include:

  • A Global Payment Program including five years of disproportionate share hospital (DSH) funding
  • An initial one-year provision of $236 million in federal funding to cover hospital uncompensated care costs
  • $3.7 billion in federal funding for a hospital delivery system transformation program, called Programs in Medical Education (PRIME)
  • $750 million provided in federal dollars for a dental transformation incentive program

California must make an analysis of the hospital uncompensated care pool so CMS can decide whether it is promoting Medicaid objectives. This extension provides $6.2 billion in federal funding over the five-year period.

Montana: Montana’s Medicaid Expansion Waiver Approved by CMS

In a letter to Montana’s State Medicaid Director, the Centers for Medicare and Medicaid Services (CMS) approved Montana’s alternative model to expand Medicaid — making it the thirtieth state to adopt coverage expansion permitted under the Affordable Care Act (ACA). Gov. Steve Bullock signed the expansion into law in April, but the state needed federal approval to implement it.

The five-year Medicaid demonstration project entitled “Montana Health Economic Livelihood Partnership (HELP) Demonstration” will expand access to coverage to adults aged 19-64 in Montana who have incomes up to 133 percent of the federal poverty level (FPL). The expansion will be offered through a private insurance company, making Montana the only state in the country to have this model. Those adults with incomes between 50 and 133 percent of the FPL who are not medically frail or exempt under federal or state law, will be charged premiums up to 2 percent of household income. Nonpayment of premiums for individuals at or below 100 percent of the FPL will not result in disenrollment. For enrollees with incomes higher than 50 percent of the FPL, total cost sharing is capped at 5 percent of income. Montana estimated that 70,000 people can gain health coverage as a result of expansion. Coverage expansion will start Jan. 1.

4. Regulations Open for Comment

Centers for Medicare and Medicaid Services (CMS) Issues Proposed Rule to Begin Data Collection for New Fee Schedule for Medicare Clinical Diagnostic Laboratory Tests

CMS released a proposed rule Sept. 25 that initiates the agency’s next step in implementing the Protecting Access to Medicare Act of 2014 (PAMA), a bill that requires clinical laboratories to report on private insurance payment amounts and volumes for lab tests. Under the proposed rule, certain laboratories would be required to report private payor rate and volume data if they receive at least $50,000 in Medicare revenues from laboratory services and more than 50 percent of their Medicare revenues from laboratory and physician services. Laboratories would collect private payor data from July 1, 2015, through Dec. 31, 2015, and report it to CMS by March 31, 2016. CMS will post the new Medicare rates by Nov. 1, 2016; these rates will be effective on Jan. 1, 2017. Tests that meet the criteria for being considered new advanced diagnostic laboratory tests (ADLTs) will be paid at actual list charge for a minimum of three quarters. ADLTs are tests offered under Medicare Part B and are furnished by only one laboratory and that either include a unique algorithm and are at a minimum an analysis of RNA or DNA, or are cleared or approved by the U.S. Food and Drug Administration (FDA). Under PAMA, the Medicare payment amount for any test cannot be reduced by more than 10 percent compared to the prior year’s amount during the first three years of implementation (2017-2019) and cannot be reduced by more than 15 percent in the following three years (2020-2022).

Medicare’s current fee schedule for lab tests was first adopted in 1984 and has remained relatively unchanged except to establish payments for new tests or implement across-the-board statutory payment updates. Medicare pays approximately $8 billion a year for clinical diagnostic laboratory tests. The new system will be updated every three years for clinical diagnostic laboratory tests (CDLTs) and every year for ADLTs to reflect market rates paid by private payors. One hot-button issue in the proposed rule is the definition of “applicable laboratory.” PAMA defined an applicable laboratory as one that receives a majority of its Medicare revenues under the MCLFS or the Medicare Physician Fee Schedule (MPFS). In a fact sheet summarizing the proposed rule, CMS said it does not expect any hospital laboratory to meet the definition of “applicable laboratory” and that more than 50 percent of independent laboratories and more than 90 percent of physician offices would likely be excluded based on the $50,000 threshold. The proposed rule was published in the Federal Register on Oct. 2. CMS will solicit comments until Nov. 24, 2015.

Department of Health and Human Services (HHS) Proposes Updates to “the Common Rule”

HHS and 15 other agencies released a notice of proposed rulemaking Sept. 2 for the Common Rule, the existing regulatory framework to transparency and oversight for scientific research involving human subjects. The proposed changes are to address the substantial changes that have occurred within scientific research. Current regulations have been in place since 1991 and are followed by 18 federal agencies. Proposed updates to the rule include:

  • Strengthened informed consent provisions
  • Requirements for administrative or IRB review that would align better with the risks of the proposed research
  • New data security and information protection standards
  • Requirements for written consent for use of an individual’s biological samples, for example, blood or urine, for research with the option to consent to their future use for unspecified studies
  • Requirement, in most cases, to use a single institutional review board for multisite research studies
  • Application of rule to clinical trials, regardless of funding source, if they are conducted in a U.S. institution that receives funding from a Common Rule agency for research involving human participants.

In July 2011, HHS issued an Advance Notice of Proposed Rulemaking to seek the public’s input on updating the Common Rule. The proposed rule issued reflects input and requests comments for HHS to consider as it drafts the final rule. HHS will take public comment on the proposed rule until Dec. 7.

For a press release detailing changes to the rule visit

For more information, including a fact sheet and Frequently Asked Questions, visit

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 Releases Proposed Rule on Basic Health Program; Federal Funding Methodology for Programs Years 2017 and 2018

On Oct. 22, the Centers for Medicare and Medicaid Services (CMS) published a proposed rule related to federal funding methodology for the Basic Health Plan. The document provides the methodology and data sources necessary to determine federal payment amounts made in program years 2017 and 2018 to states that elect to establish a Basic Health Program under the Affordable Care Act to offer health benefits coverage to low-income individuals otherwise eligible to purchase coverage through Affordable Insurance Marketplaces. The Affordable Care Act provides states with an option to establish a Basic Health Program (BHP). Federal funding will be available for BHP based on the amount of PTC and cost-sharing reductions that BHP enrollees would have received had they been enrolled in qualified health plans (QHPs) through Marketplaces. These funds are paid to the states through trust funds dedicated to BHP, and the states then administer the payments to standard health plans within BHP. The proposed rule is open for comment. Comments must be received by 5 pm on November 23, 2015.

CMS Releases a Request for Comment (RFC) on Proposed Medicaid Services “Received Through” Indian Health Service/Tribal Facility

On Oct. 27, the Centers for Medicare and Medicaid Services (CMS) released a Request for Comment (RFC) on a proposed change being considered regarding the circumstances in which 100 percent federal funding would be available for services given to Medicaid-eligible American Indian and Alaska Native (AI/AN) individuals through facilities of the Indian Health Service (IHS) or Tribes. This policy change would apply to all states and is intended to improve access to care for AI/AN Medicaid beneficiaries. The RFC describes the policy options under consideration and asks for feedback from states, Tribes, and various stakeholders. The comment period will be open until Nov. 17, 2015.

Additional information on Indian Health and Medicaid can be found here.

CMS Releases Proposed Rule with New Discharge Planning Requirements

The Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would require all hospitals develop a written discharge plan for all inpatient and many outpatients in an attempt to reduce readmissions. The proposed rule, “Medicare and Medicaid Programs; Revisions to Requirements for Discharge Planning for Hospitals, Critical Access Hospitals, and Home Health Agencies,” would require hospitals to develop a discharge plan based on the needs of each applicable patient within 24 hours of admission. The plan would include a medication reconciliation process. Hospitals would be required to establish a process for patients who are transferred to a different facility or who went home.

CMS noted that the requirements could help reduce readmissions by a third. Until now, hospitals have had the ability to decide which patients need a written discharge plan, and have increasingly used the plans to reduce readmission and avoid the Affordable Care Act’s (ACA) financial penalties. There is a 60-day comment period for the proposed rule.

A press release can be found here.

CMS Issues Final Rule to Ensure Medicaid Services for Beneficiaries and Issues Request for Information on the Rule

On Oct. 29, the Centers for Medicare and Medicaid Services (CMS) issued a final rule that ensures Medicaid beneficiaries have sufficient access to covered Medicaid services. CMS said that the rule, entitled “Methods for Assuring Access to Covered Medicaid Services,” will allow states and CMS to make more informed decisions when considering whether proposed changes to Medicaid fee-for-service payment rates are sufficient to ensure the beneficiaries’ access to those services. States will have to create access review plans that outline how states will ensure access to health care services and to examine how cuts to provider payments will affect the care received.

The rule strengthens CMS’s oversight of Medicaid reimbursement and beneficiary access to providers. It will go into effect in January and CMS issued a Request for Information (RFI) to get feedback on how to make sure access requirements are being met. Comments will be accepted for 60 days.

EEOC Issues Proposed Rule Amending the Genetic Information Nondiscrimination Act (GINA)

On Oct. 30, the U.S. Equal Employment Opportunity Commission (EEOC) issued a proposed rule clarifying when, under the Genetic Information Nondiscrimination Act (GINA), employers who offer wellness programs as part of group health plans can provide incentives to an employee’s spouse to provide information about his or her current or past health status. (This is different from the April EEOC proposed rule related to the Americans with Disabilities Act.) The proposed rule clarifies that an employer can offer limited incentives in exchange for the employee’s spouse’s providing information about his or her current or past health status. EEOC will accept comments on the new proposed rule through Dec. 29, 2015.

A press release on the proposed rule can be found here.

5. Reports

JAMA Investigation Finds Off-Label Drug Use Leads to Increased Adverse Events

The Journal of the American Medical Association (JAMA) published an investigation identifying off-label use of prescription drugs as an important contributor to adverse drug events (ADEs) leading to a discontinuation of the drug. The JAMA Internal Medicine investigation, entitled “Association of Off-Label Drug Use and Adverse Drug Events in an Adult Population,” analyzed electronic health records (EHRs) of almost 50,000 adults in Quebec. JAMA found that off-label use that lacked strong scientific evidence had a higher risk of adverse drug events than on-label use. However, off-label use that was supported by strong-scientific evidence had the same risk of adverse drug events as on-label use. Overall, the study found that most off-label prescriptions lacked strong scientific evidence.

These findings come as drugmakers are advocating First Amendment rights to discuss unapproved use of their drugs. The U.S. Food and Drug Administration (FDA) doesn’t allow companies to market drugs for their unapproved uses, but is working on changing this guidance due to recent court cases that have favored the rights of these companies to share truthful but unapproved information about their drugs.

BMJ Study Shows Doctors Who Use More Resources Faced Fewer Malpractice Lawsuits

A new BMJ study looked at the question “Is a higher use of resources by physicians associated with a reduced risk of malpractice claims?” The answer was that in six of seven different specialties the study examined, it found doctors who spent more on care faced fewer malpractice lawsuits, even when accounting for patient and case mix. This may be significant as policymakers and others work to reduce costs in health care.