House Passes Bill that Includes Provision to Revise HOPD Site-Neutral Payment Policy

On June 7, the House of Representatives passed the Helping Hospitals Improve Patient Care Act of 2016 (H.R. 5273) that would modify payment policies under Medicare for certain hospital outpatient departments and some hospital inpatient services. The bill would also change meaningful use standards for some providers practicing in ambulatory surgical centers and extend a demonstration project for rural community hospitals. Despite the bipartisan support in the House, Senate aides are skeptical of the bill’s fate in the Senate.

The Helping Hospital Improve Patient Care Act would amend Medicare hospital reimbursement rules under the Bipartisan Budget Act of 2015 (“BBA”) to exempt outpatient facilities from its site-neutral payment cuts if they were “mid-build” when the BBA was passed. A project is considered to be mid-build if the provider had a contract for construction with an unrelated party before November 2, 2015. H.R. 5273 would also exempt long-term care hospitals from an expansion moratorium if they were being built when the BBA took effect. According to a Congressional Budget Office (“CBO”) cost estimate, about 100 hospitals would have facilities that qualify for the mid-build exemption.

H.R. 5273 would extend the Rural Community Hospital Demonstration program for five years and allow more hospitals to participate. Under the demonstration, facilities are reimbursed based on the reasonable costs incurred, rather than the Inpatient Prospective Payment System, which uses diagnostic codes to determine payments. The CBO estimated that the demonstration extension would reduce mandatory Medicare spending by $21 million between 2017 and 2026.

While there is no specific companion bill to the Helping Hospital Improve Patient Care Act in the Senate, several measures included in H.R. 5273 have been introduced as stand-alone legislation, including S. 202, which would exempt long-term care facilities from the expansion moratorium, and S. 607, which would extend the rural hospital demonstration.

Senate Appropriations Committee Passes Labor-HHS Bill

On June 9, the Senate Appropriations Committee marked up the FY 2017 Labor-HHS-Education appropriations bill, adopting the bill for the first time in seven years with a vote of 29 to 1. Among other items, the 158-page bill:

  • Provides no new funding for the ACA;
  • Eliminates funding for the Independent Payment Advisory Board;
  • Increases funding by $5 million for Children’s Hospitals Graduate Medical Education;
  • Increases funding by $5 million for the Office of Medicare Hearings and Appeals;
  • Increases funding by $80 million for mental health block grants; and
  • Includes 18 federal program eliminations equating to over $1 billion in spending reductions.

CMS Releases Final Rule on ACO Targets and Incentives

On June 6, CMS issued a final rule changing the methodology for calculating financial targets for accountable care organizations (“ACOs”) in the Medicare Shared Savings Program. Under the new methodology, CMS will consider differences in regional health care fee-for-service expenditures rather than only accounting for an ACO’s historical financial performance when updating ACOs’ financial benchmarks. The agency will phase in the methodology over several performance periods to allow ACOs time to adjust.

The final rule also adds a new participation option to incentivize transitioning to performance-based risk arrangements. Currently, ACOs are able to enter a three-year agreement for a specific participation track, including the one-sided shared savings model (Track One) or the two-sided shared savings and shared losses model (Tracks Two or Three). In its rule, CMS included a third option for Track One ACOs, allowing groups renewing their participation to apply for a program that begins as a one-sided model but then transitions to a two-sided model in the same agreement period.

House GOP Plans Overhaul of Medicaid Program

House Republicans are expected to soon release a proposal to overhaul Medicaid and cap the program’s spending per enrollee. The plan would provide states with set funding per Medicaid beneficiary and would allow for spending adjustments based on beneficiaries’ health needs. Under their per capita cap proposal, House Republicans would give states financial flexibility to cover more people if they have high Medicaid enrollment or experience a surge in enrollment during an economic downturn.

The House’s Medicaid plan is being spearheaded by a health care task force led by Reps. Tom Price (R-GA), John Kline (R-MN), Kevin Brady (R-TX) and Fred Upton (R-MI). The group is also expected to endorse several other GOP proposals, including replacing ACA subsidies with tax credits, providing insurance protections for people with pre-existing conditions and eliminating the individual and employer mandates. The per capita cap proposal is expected to be released before the Republican National Convention in July.

Senate Passes Bill to Improve Access to Rural Health Care

On June 7, the Senate passed the Rural Health Care Connectivity Act (S. 1916), which was introduced by Sen. John Thune (R-SD) in August 2015. The legislation, which was included in a conference report on the Toxic Substances Control Act, would provide Federal Communications Commission funding to help health care providers in rural communities gain access to better broadband and telecommunication services.

The Rural Health Care Connectivity Act would amend the Communications Act to allow public and nonprofit skilled nursing facilities (“SNFs”) to apply for financial support from the Universal Service Fund’s Rural Health Care Program (“RHCP”), which funds technologies and communication services used to provide health care in rural settings. Under current law, SNFs are not eligible to receive RHCP support. Thune’s bill also would help organizations that assist rural patients connect remotely with physicians and help hospitals provide higher quality care in rural communities.

Health-Related Bills Introduced This Week

Sen. Jon Tester (D-MT) introduced legislation (S. 3030) to encourage more medical professionals to practice in rural communities and increase the number of providers training in rural settings. The bill would count resident time spent in a critical access hospital as time spent in a non-provider setting for the purposes of making Medicare direct and indirect graduate medical education payments.

Rep. Michael Burgess (R-TX) introduced a bill (H.R. 5395) that would increase patient access to specialty care through telehealth. The bill is intended to connect specialty physicians with primary care providers in rural areas. A companion bill was introduced in the Senate earlier this year by Sens. Orrin Hatch (R-UT) and Brian Schatz (D-HI).

Rep. Markwayne Mullin (R-OK) introduced the Preserving Access to Medicaid for Americans Act of 2016 (H.R. 5375) to eliminate disproportionate share hospital payment cuts for states not expanding Medicaid under the ACA. The bill would also remove the Children’s Health Insurance Program (“CHIP”) Maintenance of Effort requirement to give states more flexibility to adjust CHIP eligibility criteria.

Next Week in Washington

The House and Senate both return on Monday, June 13. On Wednesday, June 15, the House Energy and Commerce Committee will hold a long-awaited markup on the latest draft of Rep. Tim Murphy’s (R-PA) mental health reform bill (H.R. 2646). The draft bill, which was released to stakeholders on June 3, eliminates some of the more controversial provisions and should pass the Committee with bipartisan support. Momentum to pass a mental health reform bill in the Senate has stalled over the potential inclusion of gun-related language.