1. Congress


Senators Ask Questions About Mylan Pharmaceuticals EpiPen Price Hikes

A number of senators have written a variety of federal agencies as news of the EpiPen price hikes spreads. In addition, Representative Elijah Cummings (D-MD), ranking member of the House Oversight Committee, has called for his committee to schedule a hearing in September.

U.S. Senator Amy Klobuchar, the ranking member of the Antitrust Subcommittee of the Senate Judiciary Committee, has called for a Federal Trade Commission (FTC) investigation of Mylan Pharmaceuticals for possible antitrust violations in light of the dramatic price increase of EpiPen packs. Mylan has increased the price of its epinephrine injector EpiPen 400-fold over eight years—from $100 in 2007 to $500 today, with some reports of consumers paying $600 or more. This price increase occurred despite stable manufacturing costs.

Klobuchar has asked for an investigation into whether Mylan has engaged in activities, such as using incentives or exclusionary contracts with insurers, distributors or pharmacies, to deny an alternative product access to the market. The senator has also called for a hearing in the Senate Judiciary Committee on the increase in price of EpiPens.

The only competitor on the market, Adrenaclick, made by Impax Laboratories Inc.’s Amedra Pharmaceuticals, is cheaper, but is not covered by as many insurers as EpiPen.

Leaders of the Senate Special Aging Committee, Senators Susan Collins (R-ME) and Claire McCaskill (D-MO), also are asking Mylan to explain the price increases. “We are concerned that these drastic price increases could have a serious effect on the health and well-being of everyday Americans,” they wrote in an Aug. 24 letter. They asked Mylan CEO Heather Bresch to provide within two weeks any analysis used by Mylan related to the pricing or market share of EpiPen.

Another five senators, including Judiciary Committee Chairman Chuck Grassley (R-IA), sent a letter to FDA Commissioner Robert Califf expressing their concerns over the price hike. “[I]t is imperative to understand the FDA’s role with respect to EpiPens and its approval of generic equivalents that could help to increase competition and lower prices if introduced,” they wrote.

Sen. Joe Manchin (D-WV), whose daughter is the CEO of Mylan, also weighed in on the matter, saying, “I am aware of the questions my colleagues and many parents are asking and frankly I share their concerns about the skyrocketing prices of prescription drugs.”

  1. Administration

CMS Announces Medicare Accountable Care Organizations 2015 Performance Year Results

On Aug. 25, CMS released the 2015 quality and financial performance results for Medicare Accountable Care Organizations (ACOs) that show that ACOs continue to improve the quality of care for Medicare beneficiaries, while generating financial savings.

According to the results, over 400 Medicare ACOs generated more than $466 million in total program savings in 2015, accounting for all ACOs’ experiences. Of these, 125 qualified for shared savings payments by meeting quality performance standards and their savings threshold. The results show that more ACOs are sharing savings in 2015 compared to 2014 and that ACOs with more experience in the Pioneer ACO Model and the Medicare Shared Savings Program tend to perform better over time.

Additional details about the 2015 Medicare ACO performance and financial results can be found at the following resources:

CMS to Hold Special Open Door Forum on the IMPACT Act

On Sept. 15, CMS will hold a special open door forum for consumers on the Improving Medicare Post-Acute Care Transformation Act of 2014 (the IMPACT Act). The act aimed to set up the post-acute care sectors for payment reforms—including site-neutral pay, value-based pay and pay bundles—by enabling CMS to compare the cost and quality of care across the four settings. CMS hopes to gather feedback at the forum on ways the IMPACT Act could help improve care coordination, barriers to that improvement and providers’ role in implementing the law.

CMS also wants to know what information a provider needs for care transitions, when it would be helpful to have that information and what information is currently shared. CMS also seeks input on what types of information are needed by hospital staff, post-acute care staff, primary care physicians, a patient’s family and support systems and the patient.

To see the forum PowerPoint, click here.

Former CMS Officials Support Medicare Part B Enrollment and Simplification Changes

A bipartisan group of former top CMS officials is supporting legislative changes to enrollment policies for Medicare Part B. Three former CMS administrators and five former leaders of its predecessor agency, the Health Care Financing Administration, signed a letter backing the Beneficiary Enrollment Notification and Eligibility Simplification Act. The goal of the legislation is to make enrollment simpler and reduce premium penalties that many beneficiaries end up paying because they did not enroll right away. Roughly 750,000 Medicare beneficiaries are paying late enrollment penalties that can amount to a 30 percent increase in monthly premiums, according to the Medicare Rights Center. The former CMS officials argue the problem has been exacerbated by the increasing share of Americans who continue to work after they turn 65.

To see the letter, click here.

CMS Clarifies Approach to Reviewing Telemedicine State Plan Amendments

CMS recently clarified that states are not required to submit a separate state plan amendment (SPA) if they decide to reimburse for telemedicine services the same way or amount that they pay for face-to-face services.

When a state plans to make changes to its Medicaid program, that state sends an SPA to CMS for review and approval. A significant challenge to expanding Medicaid telehealth reimbursement has been the assumption that CMS first requires a state plan amendment to be approved before a reimbursement policy can be implemented. The Center for Connected Health Policy (CCHP) found that 21 states have submitted SPAs for telehealth reimbursement, while 25 states that currently reimburse for telehealth within their Medicaid program have not. “This prompted an inquiry from CCHP with the White House Rural Council earlier this year to clarify this issue, so that states wishing to modernize their telehealth reimbursement policies could do so without having to wait for CMS approval of a SPA. Subsequently, CMS has published on its website a specific section addressing telehealth and SPAs,” CCHP said.

CMS added a section to its telemedicine page to explain the policy. The agency says states have to submit a separate reimbursement state plan amendment if they want to provide reimbursement for telemedicine services or aspects of telemedicine that differs from the current reimbursement for face-to-face services.

For more information, click here.

CMS Limits Network Comparison Tool to Six States

In August 19 guidance, CMS said it will introduce a tool to let individuals compare the relative size of provider networks in Obamacare plans for 2017, but only in six HealthCare.gov states. Earlier this year, CMS suggested in guidance that, during the open enrollment period beginning Nov. 1, individuals in all HealthCare.gov states would be able to compare plans’ provider networks in the same county.

CMS did not specify which states will pilot the new tool.

CMS Requests Information on Reports of Steering Medicare, Medicaid Beneficiaries to Individual Market Plans

CMS is requesting information from the public regarding reports of inappropriate steering of individuals eligible for or receiving Medicaid and Medicare benefits to individual market plans in order to receive higher payment rates. In an official request for information issued Aug. 18, CMS asked for comments on the frequency of the practice, the impact it has on patients and options to limit or prevent it.

“This practice not only could raise overall health system costs, but could potentially be harmful to patient care and service coordination because of changes to provider networks and drug formularies, result in higher out-of-pocket costs for enrollees, and have a negative impact on the individual market single risk pool,” CMS said in the RFI.

Comments must be submitted no later than 5 p.m. on Sept. 22, 2016.

CMS Releases New Prescription Drug Cost Data

On Aug. 18, CMS released privacy-protected data on the prescription drugs that were paid for under the Medicare Part D Prescription Drug Program in 2014. This is the second release of the data on an annual basis, which shows which prescription drugs were prescribed to Medicare Part D enrollees by physicians and other health care professionals.

The 2014 data set contains information from over one million distinct health care providers who collectively prescribed approximately $121 billion in prescription drugs paid for under the Medicare Part D program. This represents a 17 percent increase compared to the 2013 data set. The March 2016 Department of Health and Human Services report provided a detailed analysis of prescription drug spending trends, and noted that overall prescription drug spending in the United States rose by 12.6 percent between 2013 and 2014.

The 2014 data set describes the specific medications prescribed for 38 million Medicare Part D enrollees, who represent about 70 percent of all Medicare beneficiaries. The data set was created using information submitted by Medicare Advantage Prescription drug plans and stand-alone Prescription Drug Plans. With two years of data, CMS can conduct analyses of trends from 2013 to 2014 as well as conduct a wide array of analyses that compare prescribing habits for specific providers, brand versus generic drug prescribing rates, and state- and local-level differences in drug utilization and costs. The 2014 data set includes new aggregated information on opioids, antibiotics, antipsychotics and high-risk medications among the elderly. In addition, a prescriber enrollment status field has been added to indicate whether the prescriber is enrolled, not enrolled or opted out of the Medicare program.

For a related fact sheet, click here.

To see the 2014 Medicare Part D prescriber data, click here.

FDA Expresses Concern Over Influx of Citizen Petitions on Generic Drugs

FDA is concerned about the influx of petitions to the agency that are intended primarily to delay the approval of a competing drug product and do not raise valid scientific issues. FDA said it is worried the resources required to respond within congressionally mandated timeframes are diverting its attention from other activities—like, for example, responding to other citizen petitions that do raise safety or public health concerns.

FDA is bound by law to respond within 150 days to citizen petitions relating to pending approvals of generic, biosimilar or 505(b)(2) drugs. In fiscal year 2015, FDA delayed the approval of one generic drug and one 505(b)(2) medication because of three citizen petitions. In comparison, it denied 16 petitions over that same time period. FDA gets around 22 of this type of petition per year. Overall, FDA has denied about 68 percent of the petitions related to generic, biosimilar or 505(b)(2) drugs since FY 2008. It partially denied another 25 percent, and granted 5 percent.

FDA’s last report to Congress reiterates frustrations the agency has expressed in years past. Although Congress made a few changes as part of the 2012 FDA Safety and Innovation Act to address the agency’s concerns, these updates have not done enough to change practices. FDA has also previously expressed concern that companies sent in multiple petitions about the same drug—requiring multiple responses from FDA.

FDA to Release Medical Device User Fee Agreement

On Aug. 22, the FDA announced the release of the Medical Device User Fee Agreement—an agreement between the FDA and representatives from the medical device industry on proposed recommendations for the fourth reauthorization of a medical device user fee program.

Under the draft agreement, the medical device industry would pay nearly $1 billion in user fees over five years starting in October 2017. The agreement is the result of months of negotiations and will form the backbone of reauthorizing legislation that Congress will need to pass before October 2017. It spells out certain benchmarks FDA agrees to meet in its review of medical devices in exchange for industry user fees, including how long approvals will take and how the agency staff will interact with companies.

“This draft agreement represents a substantial investment in the future of the agency’s medical device program and reflects the efforts the FDA has made to meet or exceed its performance goals and to help speed patient access to safe and effective medical devices,” FDA device center Director Jeffrey Shuren said in a statement.

For a related press release, click here.

Regeneron Acquires Funding From BARDA for MERS Vaccine

On Aug. 22, Regeneron Pharmaceuticals, Inc., announced an agreement with the Biomedical Advanced Research and Development Authority (BARDA) to manufacture and study two antibody therapies for the potential prevention and treatment of Middle East Respiratory Syndrome (MERS). BARDA will provide funding of up to $8.9 million to support packaging and labeling of the antibodies for human use, the preparation and submission of an Investigational New Drug application with the FDA, and a National Institutes of Health-conducted clinical trial in healthy volunteers. There are currently no medicines or vaccines to treat MERS, which first emerged in Saudi Arabia in 2012 and has been confirmed in other Middle Eastern countries, Africa, Europe and the U.S. According to the CDC, there is a very low risk of contracting the infection in this country.

USPTO Launches Cancer Moonshot Challenge

The U.S. Patent and Trademark Office (USPTO) recently launched a cancer “moonshot” initiative. The agency is challenging people to develop interactive visualizations and stories that can help reveal insights on new trends related to investments around cancer therapy research and treatment. The USPTO wants to leverage combine intellectual property data that the office has released with other economic and financial data—like SEC filings and FDA reports—so the federal government can make more precise decisions about cancer research. The challenge ends Sept. 12 and winners will be announced on Sept. 26.

For more information about the challenge, click here.

  1. Other

Consumer Advocates Propose Changes to Promote Access to Prescription Drugs

On Aug. 26, consumer representatives to the National Association of Insurance Commissioners released a list of recommendations for state and federal policymakers to consider for improving access to affordable prescription drugs. Among the changes suggested by the consumer advocates: limiting the number of drug tiers that insurers can use, prohibiting co-insurance for prescription drugs, outlawing mid-year formulary changes and soliciting feedback from external stakeholders.

For a related press release, click here.

Aetna Narrowing Individual Public Exchange Participation to Four States in 2017

Aetna is pulling out of all but four states where it currently sells plans on the Obamacare exchanges for 2017. The four states where it will participate next year are Delaware, Iowa, Nebraska and Virginia—Aetna competed for customers in 15 states this year. Similar decisions were made recently by UnitedHealth Group and Humana to roll back exchange participation.

Aetna cited unsustainable losses as the primary reason for decreasing its Obamacare participation. The number of counties where it sells exchange plans will drop from 778 to 242.

This decision comes at a time when Aetna’s $37 billion acquisition of Humana is being challenged by the DOJ. An antitrust lawsuit is scheduled to begin in December.

States, Providers File Lawsuit Against Obamacare Transgender Protections

Five Republican-led states and several provider groups are suing to block a new Obamacare rule intended to prevent health care providers and insurers from discriminating against transgender patients. The five states—Kansas, Kentucky, Nebraska, Texas and Wisconsin—and the provider groups contend that the nondiscrimination rule requires doctors to perform gender transition procedures even when they are against the doctor’s medical judgment.

The lawsuit challenges a section of the Affordable Care Act (ACA) that prohibits discrimination on the basis of race, color, national origin, sex, age or disability in health care programs. In May, HHS issued final regulations that prevent insurers from having blanket bans on coverage of gender reassignment services and forbids providers from refusing care to transgender patients.

“With a single stroke of the pen, HHS has created a massive new liability for thousands of healthcare professionals unless they cast aside their medical judgment and perform controversial and even harmful medical transition procedures,” the lawsuit states.

The suit was filed in the U.S. District Court for the Northern District of Texas. It comes one day after a federal judge sided with Texas to block the Obama administration’s guidance encouraging school districts to allow transgender students to use the bathroom of their choice.

FBI Says Minnesota, Montana Legislation Does Not Meet Requirements for Background Checks

The FBI said state legislation passed by Minnesota and Montana to allow them to participate in an interstate licensure compact—which would make it easier for physicians to provide telemedicine services across state lines—does not meet requirements that would allow the agency to share information with states for criminal background checks.

The Interstate Medical Licensure Compact offers an expedited pathway to licensure for qualified physicians who wish to practice in multiple states. Proponents of the compact say it will allow physicians to treat patients in participating states besides their own and provide remote communities access to care through telemedicine. According to a compact information website, 17 states have joined and nine states have introduced legislation to do so.

In a July 7 letter to Minnesota, Christopher Chaney, unit chief of the Criminal Justice Information Law Unit at the FBI, said the authority to circulate criminal history record information comes from specific federal statutes, and the FBI is not aware of a statute that allows criminal history information to be shared with the commission.

The Minnesota Board of Medical Practice has asked the FBI to reconsider. Rick Masters, special counsel at the National Center for Interstate Compacts, said the FBI’s letter is inaccurate and that the FBI does understand how the commission interacts with individual state licensing boards and the process for licensure.

  1. State Activities

California: Patients Face Hurdles Under New Aid-In-Dying Law

As California’s new aid-in-dying law takes effect, Modern Healthcare examined the hurdles terminally ill patients and health care providers are facing. A woman seeking to help her aunt described the difficulty she experienced in trying to find a physician who would begin the process. The prescription for the lethal medication was also not covered by the patient’s Medicare Advantage plan. The California law went into effect in June. States with similar measures in effect include Montana, Oregon, Vermont and Washington.

Colorado: State Board Recommends Expanded Coverage for Hepatitis C Treatment

Colorado’s Medicaid Drug Utilization Board recommended that access to hepatitis C medication should be expanded to more needy residents. But the Board stopped short of recommending that the treatments be extended to all Coloradans on Medicaid. As a result, the American Civil Liberties Union may file a lawsuit to force the state to provide treatment to everyone. Colorado’s Department of Health Care Policy will make a decision on the treatments next month.

Colorado: OIG Finds Colorado Received Millions in Unallowable CHIP Bonus Payments

According to the HHS Inspector General, Colorado received more than $38 million in unallowable bonus payments that were authorized under the 2009 law reauthorizing CHIP. The law appropriated $3.2 billion in performance bonuses to states to help offset the costs of increased enrollment of children eligible for Medicaid. However, the OIG’s review found that some of the bonus payments Colorado received between fiscal years 2010 and 2013 were not allowed, because the state overstated enrollment levels when it submitted bonus requests to CMS.

Overall, Colorado was granted almost $158 million in bonus payments for the years reviewed in the report. The OIG reported that $38.4 million of those payments were not allowed and should be repaid to the federal government. Colorado argued that it complied with federal definitions for qualifying children as well as additional guidance CMS issued in 2009 on bonus payments.

Delaware: Gov. Markell Signs Needle Exchange Expansion

Delaware Gov. Jack Markell recently signed legislation authorizing a statewide expansion of a needle exchange program. The program, which operates only in Wilmington, is meant to curtail the spread of injection-transmitted diseases such as HIV and hepatitis C. Delaware still needs to secure federal funding to pay for the expansion. Under the existing program, approximately 80,000 syringes are exchanged annually.

Florida: Molina, Humana Covering Prescriptions Filled Only at Large Pharmacy Chains Beginning Nov. 1

More than 650,000 Florida residents receiving Medicaid have been told they must fill their prescriptions at large pharmacy chains beginning Nov. 1. Molina and Humana, which manage many of the state’s Medicaid patients, decided to cover prescriptions filled only at large chains instead of small pharmacies. According to state law, managed plans can control their networks based on price, quality and credentials. Pharmacists are pushing back on the decision.

Hawaii: Hawaii Submits Revised 1332 Waiver Request to HHS

Hawaii submitted a revised Affordable Care Act 1332 waiver request to HHS, after the agency determined in July that the state’s initial application was incomplete. Hawaii is seeking to waive its SHOP exchange and other ACA requirements because they conflict with the state’s employer mandate law, enacted in the 1970s.

Hawaii submitted an initial waiver request in June. HHS asked for additional data to bolster the state’s claim that its proposal would comply with 1332 waiver requirements, including comprehensiveness of coverage, affordability and assurance that the plan would not add to the federal deficit.

In a letter sent with the revised waiver request, Gov. David Ige asked HHS to approve the application in a timely manner to prevent disruption to the upcoming 2017 open enrollment, which starts Nov. 1.

Illinois: Illinois Regulators Approve 45 Percent Rate Hikes

Under rates approved by state regulators, the average premium for the cheapest silver plan sold on Illinois’ exchange will increase by 45 percent in 2017. Illinois officials blame the rate hikes partly on the federal government’s failure to come through on risk corridor payments that plans are owed. “While these rate approvals result in a very difficult outcome for consumers, they were necessary to ensure that all Illinois consumers actually have an option for coverage when the 2017 Open Enrollment begins,” said Anne Melissa Dowling, acting director of the Illinois Department of Insurance.

Kansas: Gov. Brownback Seeks to Restore Medicaid Cuts by Increasing Hospital Tax

Kansas Gov. Sam Brownback will attempt to restore cuts to Medicaid reimbursement levels by increasing a tax on hospitals. Medicaid provider reimbursement rates were cut by 4 percent—about $56 million—to make up for a gap in the state’s fiscal 2017 budget. Brownback is now proposing to increase provider taxes on hospitals. The tax is currently at 1.83 percent of inpatient revenue, which is far below the 6 percent minimum allowed under federal law.

Kentucky: Gov. Bevin Submits Medicaid Expansion Proposal

Kentucky Gov. Matt Bevin submitted a proposal to CMS to alter the state’s Medicaid expansion program. The Republican governor has threatened to halt expansion—which has enrolled more than 430,000 people—if the Obama administration does not grant the changes he requested. Bevin wants to restructure Medicaid expansion as a high-deductible health plan paired with two health savings accounts, one to cover deductibles and the other to accrue savings that can be used to buy additional benefits (such as dental, vision and over-the-counter medications). Medicaid beneficiaries who are offered insurance through work eventually would be required to enroll in their job-based coverage. Bevin’s proposal also includes new premiums and copays, a work requirement and penalties to disenroll individuals for not making payments.

The state had originally planned to submit the proposal to CMS in early August, but officials said it was delayed by a high number of public comments on the waiver. Kentucky received nearly 1,350 written comments.

A 30-day comment period at the federal level will begin once CMS determines the waiver application is complete.

Maryland: Insurance Commissioner Holds Public Hearing on CareFirst’s Proposed Premium Increases

On Aug. 15, the Maryland insurance commissioner held a second public hearing on insurers’ proposed 2017 premiums, after CareFirst Blue Cross Blue Shield submitted a revised rate filing in which the insurer more than doubled its requested increases. CareFirst initially asked for 12 percent and 15.3 percent increases for its individual HMO and PPO plans, respectively. On July 26, however, the insurer sought increases of 27.8 percent and 36.6 percent. “We have re-filed rates out of necessity to stem unexpectedly large losses from our experience year to date, and attempt to ensure that premiums cover health care costs for these members,” CareFirst said in a statement.

Mississippi: Justice Department Files Suit Against State Over Failure to Provide Community-Based Mental Health Services

The Justice Department filed a lawsuit against Mississippi alleging it violated the Americans with Disabilities Act and Civil Rights of Institutionalized Persons Act by failing to provide community-based mental health services for mentally ill adults. As a result, people were forced to stay at the state’s mental institutions. Gov. Phil Bryant argued the lawsuit is without merit.

New Hampshire: New Hampshire Submits Most Recent Medicaid Expansion Waiver

New Hampshire sent CMS its latest Medicaid expansion waiver on Aug. 10. The waiver seeks to require new copays for adults who visit the emergency room for nonemergency purposes, a work requirement, new standards for verifying U.S. citizenship and changes to cost-sharing standards to allow different levels for enrollees with incomes above 100 percent of the federal poverty level. As of June, nearly 49,000 people were enrolled under expansion in New Hampshire. The state wants these changes to go into effect at the beginning of 2017.

Tennessee: Lawmakers, Health Care Officials Continue Discussion on Medicaid Expansion Plan

A group of Tennessee lawmakers and health care officials working on the state’s Medicaid expansion plan met on Aug. 17 to discuss more details of the proposal. The group continued discussion on the types of “circuit breakers” that would trigger a broader coverage expansion up to 138 percent of the federal poverty level. One of the ideas raised would be to cap enrollment if there were too many ER or hospital visits. The “3-Star Health Insurance Pilot” would first target uninsured veterans and low-income individuals with behavioral health issues. However, the broader coverage expansion for all qualifying residents up to 138 percent of the FPL would go into effect only if certain metrics were met.

South Dakota: State Licensing Board Proposes Opioid Tracking Guidelines

South Dakota’s licensing board proposed guidelines for how doctors keep track of the opioids they prescribe. The guidelines include a requirement to get approval from patients to allow information to be shared with other providers, in order to have better documentation of who has been prescribed what. A public hearing on the proposed rules will be held Sept. 8.

  1. Regulations Open for Comment

CMS Releases Proposed Changes to the Payment Error Rate Measurement and Medicaid Eligibility Quality Control Programs

On June 20, the Centers for Medicare and Medicaid Services (CMS) issued a notice of proposed rulemaking outlining proposed changes to the Payment Error Rate Measurement (PERM) and Medicaid Eligibility Quality Control (MEQC) programs to implement provisions in the Affordable Care Act’s (ACAs) changes to the way states adjudicate eligibility for Medicaid and the Children’s Health Insurance Program (CHIP). The proposed rule addresses the new eligibility provisions of the ACA and makes other general improvements to the PERM and MEQC programs. The proposed rule also includes policies that, if implemented, would reduce state burden and increase the focus on the continuous reduction of improper payment rates. Comments on this proposed rule are due by Aug. 22, 2016.

Proposed changes to the PERM program in the proposed rule include:

  • Review Period: The PERM program will review Medicaid and CHIP payments made by states July through June of a given year. Under the current rule, the PERM program reviews payments made in a federal FY (October through September).
  • Eligibility Review Responsibility: A federal contractor will conduct PERM eligibility reviews with support from each state. Under the current rule, states are required to conduct eligibility reviews and report the results to CMS.
  • Eligibility Universe: The PERM program will conduct eligibility reviews (in addition to medical and data processing reviews) on FFS and managed care payments sampled for the PERM program. The eligibility review will be conducted on the beneficiary associated with the sampled claim. Under the current rule, states create separate universes of eligible individuals that are sampled for eligibility review.
  • Federal Improper Payments: Improper payments will be cited if the federal share amount is incorrect (even if the total computable amount is correct). Under the current rule, improper payments are cited only on the total computable amount (i.e., federal share + state share).
  • Sample Sizes: A national sample size will be calculated to meet national Medicaid and CHIP improper payment rate precision requirements. The national sample size will then be distributed across states to maximize precision at the state level, and state-specific sample sizes would be based on factors such as each state’s expenditures and previous improper payment rate. Under the current rule, state-specific sample sizes are calculated based on the state’s previous improper payment rate and state level precision and combined to total the national sample size.
  • Corrective Action: States will continue to implement Corrective Action Plans (CAPs) for all errors and deficiencies; however, there will be more stringent requirements added for states that have consecutive PERM eligibility improper payment rates over the 3 percent national standard established under Section 1903(u) of the Social Security Act (the Act).
  • Payment Reductions/Disallowances: Potential payment reductions/disallowances under Section 1903(u) of the Act will be applicable for eligibility reviews conducted during PERM years in cases where a state’s eligibility improper payment rate exceeds 3 percent. CMS will pursue disallowances only if a state does not demonstrate a good faith effort to meet the national standard, which is defined as meeting PERM CAP and MEQC pilot requirements.

Changes to the MEQC program in the proposed rule include:

  • The MEQC program will be restructured into a pilot program that states must conduct during their off years from the PERM program to ensure continual oversight of both Medicaid and CHIP state eligibility determinations.
  • States will be required to review a number of items not fully reviewed through the PERM program (e.g., negative cases).
  • States will have flexibility in different areas to focus pilot reviews; however, should a state have consecutive PERM eligibility improper payment rates over the 3 percent national standard per Section 1903(u) of the Act, the state will lose this flexibility and CMS will provide direction for reviews.
  • States must submit corrective actions for identified errors.

To see the notice of proposed rulemaking, click here.

CMS Releases Proposed Rule on the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System

On July 6, the Centers for Medicare and Medicaid Services (CMS) proposed updated payment rates and policy changes in the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System. Several of the proposed policy changes would improve the quality of care Medicare patients receive by better supporting their physicians and other health care providers. These changes are based on feedback from stakeholders, including beneficiary and patient advocates, as well as health care providers, including hospitals, ambulatory surgical centers and the physician community.

In addition to the payment provisions and quality reporting program changes for the proposed rule, CMS is also proposing:

  • Several changes to the objectives and measures of the Medicare EHR Incentive Program. These changes are only applicable for eligible hospitals and critical access hospitals (CAHs) attesting under the Medicare EHR Incentive Program and would not impact eligible hospitals and CAHs attesting under a state’s Medicaid EHR Incentive Program.
  • To align the definition of “eligible death” and the aggregate donor yield metric in the Organ Procurement Organization (OPO) Conditions for Coverage (CfC) with those of the Organ Procurement and Transplantation Network (OPTN) and Scientific Registry of Transplant Recipients (SRTR), as well as revise the OPO CfC to reduce the amount of hard copy documentation that must be sent with the organ, as much of this information is now available to the transplant center electronically.

CMS will accept comments on the proposed rule until Sept. 6, 2016.

To see the proposed rule, click here.

For a fact sheet on the proposed rule, click here.

IRS, Treasury Release Proposed Rule on QHP Benchmarks

The IRS and Treasury Department, in a proposed rule released July 6, proposed to alter how qualified health plan (QHP) benchmarks are determined so that they account for the costs of pediatric dental benefits. If finalized, the rule would go into effect for the 2019 plan year.

Although pediatric dental care is one of the 10 “essential health benefits” that plans are required to cover under the Affordable Care Act (ACA), several plans do not include such coverage, and consumers instead buy stand-alone dental products. Meanwhile, the marketplace determines the amount of tax credits a family can receive to cover the cost of coverage based on the second-cheapest silver-level plan.

However, as the proposed rule said, “because qualified health plans that do not offer pediatric dental benefits tend to be cheaper than qualified health plans that cover all ten essential health benefits, the second lowest-cost silver plan (and therefore the premium tax credit) for taxpayers purchasing coverage through a Marketplace in which stand-alone dental plans are offered is likely to not account for the cost of obtaining pediatric dental coverage.”

Treasury and IRS added that the existing rules “frustrate” the goal of making all essential health benefits affordable to those receiving premium tax credits, so the administration wants to update its interpretation to ensure all 10 services are addressed.

“Consistent with this interpretation, the proposed regulations provide that for taxable years beginning after December 31, 2018, if an Exchange offers one or more silver-level qualified health plans that do not cover pediatric dental benefits, the applicable benchmark plan is determined by ranking (1) the premiums for the silver-level qualified health plans that include pediatric dental benefits offered by the Exchange and (2) the aggregate of the premiums for the silver-level qualified health plans offered by the Exchange that do not include pediatric dental benefits plus the portion of the premium allocable to pediatric dental benefits for stand-alone dental plans offered by the Exchange,” the proposal said.

The rule aims to create the ranking by adding the premium for the lowest-cost silver plan that does not include a pediatric dental benefit to the premium for the cheapest stand-alone dental plan, and the premium for the second-cheapest silver plan without pediatric dental benefits to that of the second-lowest stand-alone dental plan. The second-cheapest amount from this combined ranking would be the taxpayer’s applicable benchmark plan premium, the rule said.

CMS Releases Proposed Mandatory Bundled Payment Program

On July 25, CMS proposed new models to mandate bundled payments for cardiac care. This is the agency’s second program requiring providers to accept set payments for an episode of care. CMS also proposed extending its existing mandatory bundled payment initiative for hip replacements to other hip surgeries.

CMS clarified that under the new Medicare physician payment system starting in 2018, both mandatory bundled payment models could qualify as Advanced Alternative Payment Models, which would allow participating physicians to be excluded from a new proposed quality reporting program and instead receive a lump-sum payment from Medicare.

The agency also announced a new initiative to encourage hospitals to increase cardiac rehabilitation, in hopes of improving patient outcomes and reducing readmissions.

To see the proposed rule, click here. CMS will accept comments on the proposed rule until 5 p.m. on Oct. 3.

NIH Could Lift Ban on Human-Animal Chimera Research

The National Institutes of Health (NIH) is seeking feedback on a proposal to lift a moratorium on funding research in which animal embryos are used to grow human tissue and organs. In a blog post on Aug. 4, NIH associate director for science policy Carrie Wolinetz said, “Formation of these types of human-animal organism, referred to as ‘chimeras,’ holds tremendous potential for disease modeling, drug testing, and perhaps eventual organ transplant.”

This research, however, raises ethical concerns—including that it could blur the lines between human and animal species. Human stem cells could be introduced into animals’ brains, potentially altering their cognitive state. There is also concern about the ramifications of chimeras reproducing.

The Aug. 4 announcement is a reversal of the September 2015 decision to halt such research funding. NIH explained that at that time, it wanted to evaluate the state of science and ethical issues. NIH plans to outline new limitations on the stages at which human stem cells can be introduced into animal embryos. It will not fund research involving the breeding of animals where the introduction of any type of human cell could result in human egg or sperm developing.

Comments on the proposal are due by Sept. 4.

IRS Publishes Draft Regulations on Reporting of Catastrophic Health Coverage

The Internal Revenue Service (IRS) published new draft health coverage reporting regulations in the Federal Register on Aug. 2. The new draft regulations call for the health insurers that sell catastrophic medical insurance to report any catastrophic coverage they have provided to the enrollees and the IRS on Form 1095-B. The rule would first apply to the coverage in effect in 2017—issuers would then send out the first catastrophic plan 1095-B forms in early 2018.

Catastrophic plans are higher-deductible, lower-value plans that insurers can sell to people under 30, and to people of any age who earn too much to qualify for ACA exchange plan premium subsidies. The new draft regulations also call for the government agencies that offer Basic Health Plans—which are similar to managed Medicaid programs for people who earn too much to qualify for Medicaid—to report Basic Health Plan coverage to the IRS.

A third piece of the draft regulations clarifies that an employer providing two or more types of coverage that come under the minimum essential coverage rules would just have to report the richest form of coverage.

Comments on the draft regulations are due by Oct. 3.

CMS Seeking Public Comment on Collection of Standardized Assessment-Based Data Items

CMS is seeking public comment on a collection of standardized assessment-based data items developed under the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) to meet the domains of: cognitive function and mental status; special services, treatments and interventions; medical conditions and co-morbidities; and impairments. Standardized assessment-based data items were developed for the Long-Term Care Hospital, the Inpatient Rehabilitation Facility, the Skilled Nursing Facility and the Home Health Agency settings. CMS is seeking public comment on whether the items have the potential for improving quality, the utility of the items for describing case mix, the feasibility of the items for use in post-acute care settings and the validity of the items. This call for public comment is now open from Aug. 12 through Sept. 12, 2016.

UNOS Proposes Changes to Liver Transplant Policies

The United Network for Organ Sharing (UNOS) is proposing changes to the geographic regions for liver transplants to better match organ supply with demand and make access more equitable. Currently, there exists a wide variation in a transplant candidate’s chance of receiving an organ in a timely way, based on where the patient lives and the location of the transplant hospital where they are listed. Some patients may not get organs until they are much sicker than are patients awaiting transplants in different regions.

  1. Reports

HHS Study: Big Rate Hikes Won’t Hurt Access to Cheap Plans  

According to a new HHS analysis, most health exchange customers will not feel the effect of big rate hikes because they will be eligible for larger subsidies.

HHS researchers assumed a theoretical rate hike of 25 percent to examine how that would affect premiums for shoppers in the 38 states that use HealthCare.gov for enrollment. Their conclusion: 73 percent of shoppers could buy plans that cost $75 or less after subsidies. That’s actually higher than the 70 percent that could find plans that cheap in 2016.

The overwhelming majority of customers—87 percent—are eligible for subsidies that are linked to income. If the price of coverage goes up, the size of the subsidy increases accordingly, and more shoppers will qualify for financial assistance.

HHS also tested theoretical rate hikes of 10 percent and 50 percent for 2017. The department’s conclusion: The bigger the rate hikes, the more consumers will have access to cheap coverage. Under a 10 percent rate hike, 71 percent of customers would be able to buy coverage for less than $75. If rates skyrocket by 50 percent, then 76 percent of customers will be able to acquire coverage that cheap.

Many insurers are proposing double-digit rate hikes to make up for losses in prior years, increasing medical costs and the expiration of temporary programs designed to provide financial protections. Charles Gaba, who tracks enrollment data, found that the average proposed increase for 2017 plans is 23 percent.

JAMA Paper Finds Limiting Patents Could Curb High Drug Prices and Increase Innovation

JAMA recently published a paper that reviews more than a decade of health policy literature on U.S. pharmaceutical pricing. The findings: tightening standards for so-called secondary patents for pharmaceuticals could help reduce drug prices and spur more medical innovation. The paper says that the most important factors allowing companies to set high drug prices are market exclusivity protected by patents and monopoly rights awarded by FDA approval. The authors argue that the U.S. Patent and Trademark Office (PTO) should grant new patents to existing drugs only if improvements are made to the product’s safety or effectiveness.

PTO standards make it fairly easy to patent many non-therapeutic aspects of drugs to extend a brand drug’s dominance, the authors argue. For example, companies could create a new coating for a pill or a new method of administering the drug. Sometimes they discontinue old formations shortly before the arrival of generic competition to get patients switched to the new brand version, making it harder for a generic to take hold.

Hammering down on such patents could increase innovation because it could force companies to earn revenue from new clinical advancements rather than extending the patent life of old products.

To see the full paper, click here.

NBER Working Paper Finds Medicaid Expansion Has No Effect on “Employment Lock” 

According to a working paper from the National Bureau of Economic Research, there is no evidence that the ACA’s Medicaid expansion is reducing “employment lock”—in which people stay in their jobs just for health insurance—among low-income adults.

To read the paper, click here.

British Medical Journal Study Finds Drug Industry Payments Tied to Higher Regional Prescribing in Part D

According to a new study in the British Medical Journal, pharmaceutical company payments to physicians were associated with greater regional prescribing of brand diabetes drugs and oral clotting drugs in Medicare Part D.

One additional payment, at a median value of $13, was associated with 94 additional days of filled prescriptions for brand oral anticoagulants and 107 additional days of filled prescriptions for non-insulin diabetes drugs. The analysis looked at prescribing by 306 U.S. hospital regions, examining nearly 46 million prescriptions written by more than 600,000 physicians. Payments to specialists and speaking and consulting fees were associated with even larger increases in prescribing than payments to non-specialists or payments for food, beverages, gifts or educational materials.

The study confirms findings of smaller studies that have suggested industry payments to doctors influence prescribing practices, said lead study author William Fleischman, of Yale School of Medicine.

The authors examined nearly 980,000 payments to physicians totaling more than $61 million related to oral anticoagulants, and nearly 1.8 million payments totaling more than $108 million for diabetes medications.