United States: Washington Healthcare Update - July 20, 2015

This Week: Senate Reauthorizes Older Americans Act; Bill Heads to the House... White House Holds 2015 Conference on Aging and Launches Several New Administration Healthy Aging Initiatives Enveloping Alzheimer’s, Dementia, Falls Prevention... HHS OIG Report Finds Fraud Prevention System (FPS) Saved $453.9 Million in 2014

1. Congress

House

Federal "Right to Try" Bill Introduced in the House

On July 9, Reps. Matt Salmon (R-AZ), Paul Gosar (R-AZ) and Marlin Stutzman (R-IN) introduced the Right to Try Act of 2015 (H.R.3012), to provide patients access to investigational drugs that have passed the Food and Drug Administration's (FDA) basic safety testing, but have not yet been fully approved. The bill parallels efforts in dozens of states, but goes even further by preventing the FDA from denying access for a terminally ill patient seeking an experimental therapy. While FDA's Compassionate Use program provides access to therapies still under evaluation, the application is seen by many patients and physicians as cumbersome and time consuming when a terminally ill patient often is diagnosed with months to live. Existing laws in some states reduce the often two- to four-month waiting period under the FDA's Compassionate Use down to two to four weeks, and eventually two to four days. During fiscal year 2015, the FDA approved 99.5 percent of the approximately 1,900 exception requests it received. The 21st Century Cures bill, which has passed the House, provides a different route by focusing efforts to improve FDA's existing expanded access program. The Cures provisions, authored by Reps. Michael McCaul (R-TX) and Michael Burgess (R-TX), would require drug companies to increase their transparency when making expanded access decisions.

House Energy and Commerce Hearing Highlights Fraud and Lack of Oversight in the Medicare Part D Program

On July 14, the House Energy and Commerce's Subcommittee on Oversight and Investigation held a hearing focused on Medicare Part D program integrity. This hearing was a result of the largest Medicare fraud takedown in history, which occurred last month when the Justice Department charged 243 individuals for participating in fraud schemes involving $172 billion in false Medicare billings. Also in June, the Department of Health and Human Services Inspector General (OIG) also issued a report highlighting fraud within the program, linking some of the fraud to the opioid abuse crisis. The Centers for Disease Control and Prevention issued a report about the growing use and abuse of prescribed painkillers as well. Several members noted that the Centers for Medicare and Medicaid (CMS) has failed to implement the nine recommendations from the OIG and has been too lenient in its oversight of the program. The members pressed Dr. Agrawal to give them a timeline for completion. Dr. Agrawal explained the technical challenges related to oversight, including that CMS cannot interfere with legitimate access to Part D services for beneficiaries. He stated that the CMS is moving as quickly as possible to implement the OIG suggestions and improve oversight of the Part D program. Ms. Maxwell of the OIG testified that CMS has made substantial improvements by closing the loopholes in prescriber screening standards. She noted that the plan sponsors also play a vital role in oversight of the program, but this does not negate the significance of CMS. Dr. Agrawal added that the CMS has been working with plan sponsors to identify Part D enrollees who have potential opioid overuse, but that there are still patients who genuinely need the drugs as part of their treatment.

For more information and to view the hearing, please visit energycommerce.house.gov.

GOP House Members Introduce Bill to Allow Provider Utilization of ICD-9 or ICD-10 Codes for Six-Month Transition Period

Republican Reps. Marsha Blackburn (TN) and Tom Price (GA) have introduced H.R. 3018, the Coding Flexibility in Healthcare Act, which would allow providers to use either ICD-9 or ICD-10 for a 180-day transition period, as providers make the permanent transition to the new health coding system. It would also allow Health and Human Services (HHS) Secretary Sylvia Burwell to extend the glide path for an additional six months if she determines that providers need more time, and requires HHS submit to Congress a report assessing the impact of such ICD-10 code sets on health care providers no later than 90 days after the final implementation date. "With industry surveys indicating that critical provider partners are behind schedule in deploying billing and electronic health record software, it is clear that some physicians will have no way to submit ICD-10 codes for payment," Rep. Blackburn said in a press release. "For this reason, it is critical to establish a transition period which allows the healthcare industry to ease into compliance instead of 'flipping a switch' on Oct. 1st. Our legislation will provide stability to providers during this difficult transition period by establishing a period of 180 days where providers would be permitted to code in either ICD-9 or ICD-10." ICD-10 is a coding system that doctors and hospitals must use starting Oct. 1, 2015. It requires new software and all that entails for implementation. While larger doctor groups and hospitals are mostly ready, smaller and rural doctor practices need additional time for software vendors to have them up and running.

Upcoming: House Energy and Commerce Oversight Subcommittee to Hold Hearing on ACA Exchanges

The House Energy and Commerce Subcommittee on Oversight and Investigations, chaired by Rep. Tim Murphy (R-PA), has scheduled a hearing for Friday, July 24, entitled "An Overdue Checkup: Examining the ACA's State Insurance Marketplaces." Subcommittee members will hear testimony from several states about their experiences implementing the Affordable Care Act (ACA). The hearing will be held at 9:15 a.m. in Room 2123 of the Rayburn House Office Building.

The Majority Memorandum, a witness list and witness testimony will be available at energycommerce.gov as they are posted. A press release announcing the hearing can be found here.

Senate

Senate Reauthorizes Older Americans Act; Bill Heads to the House

In a voice vote July 16, the Senate, without amendment, unanimously reauthorized the Older Americans Act, S. 192, a bill that funds programs such as Meals on Wheels, home care support and senior centers through 2018. Noteworthy changes to previous reauthorizations of the bill include the creation of a federal grant program for states to enhance elder abuse data collection; updates to the definitions of "adult protective services," "abuse," "exploitation and financial exploitation" and "elder justice"; and implementation of best practices in long-term care facility responses to elder abuse and neglect, including strengthening ombudsman programs that protect residents of nursing home and other long-term care facilities. The bill, which is sponsored by HELP Committee Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA), Sen. Richard Burr (R-NC) and Sen. Bernie Sanders (I-VT), streamlines federal-level administration of programs, promotes effective use of transportation services and improves coordination between programs at the federal, state and local levels. The reauthorization also adjusts the formula that allots state grants to account for geographic changes in the older population.

The Older Americans Act has been due for reauthorization since 2011 and has until this year been funded through continuing resolutions. The bill now moves for approval in the House of Representatives, where Reps. Bobby Scott (D-VA) and Suzanne Bonamici (D-OR) are sponsoring the House reauthorization bill.

Bill Funding FDA Passes Out of Senate Appropriations Committee

The Senate Committee on Appropriations approved the FY2016 Agriculture, Rural Development, Food and Drug Administration (FDA), and Related Agencies Appropriations bill on July 16 in a bipartisan 28-2 vote. The bill includes $148.3 billion for agricultural and rural development, food safety, public health and nutrition programs, and provides for FDA an additional $40 million over the previous fiscal year. The bill provides more than $2.6 billion in discretionary funding for the FDA, $40 million over the FY 2015 enacted level, and a $45 million increase was provided for food safety activities authorized in the Food Safety Modernization Act (FSMA), which is more than $60 million short of the President's Budget. The appropriators also provide a $3 million increase for antibiotic resistance research and programming, and an increase of $2 million for FDA's efforts under the Precision Medicine Initiative, which also fall short of the president's budget request. Overall, total FDA funding, including user fee revenues, is $4.6 billion, which is $116 million above FY 2015. Within this total, a $45 million increase is provided for food safety activities and a $5 million increase is included for medical product safety activities. Democrats worry the bill does not provide the requested funds for implementing the FDA Safety and Innovation Act, a bill that provides the oversight of drug compounding facilities and evaluates more sunscreens. A fact sheet containing a summary of the Senate's FY 2016 Agriculture, Rural Development, Food and Drug Administration (FDA), and Related Agencies Appropriations bill can be found here.

Senate Companion for 21st Century Cures Bill Not Expected for Months

The House's passage of the 21st Century Cures bill on July 10 has not jumpstarted the drafting of the Senate companion in the Help, Employment, Labor, and Pensions (HELP) Committee. As it stands, the HELP Committee has five working groups convening weekly on elements of the bill but HELP's legislation is still months from being finished. HELP Chairman Lamar Alexander (R-TN) said he doesn't expect a final bill to get a floor vote before early 2016, and it's likely that the Senate version will be significantly different than the House bill. Key components that make HELP's Cures counterpart bill crafting different include an absence of CMS provisions (as this jurisdiction rests with the Finance Committee) and a lack of access to the Strategic Petroleum Reserve, one of the main funding sources under the House version, which is at the discretion of the Commerce, Science, and Space Committee. The Committee could pass legislation with provisions for discretionary funding and then go to a bicameral conference, where more options exist for funding negotiations. In the meantime, the Committee opted to continue its focus on five more hearings centered on its "innovation initiatives," which include three that have touched on the implementation of the electronic health record requirements.

Senators Send Bipartisan Letter to GAO Asking Agency to Examine Quality of Care for Medicaid Beneficiaries in Assisted Living Facilities

Senators Elizabeth Warren (D-MA), Orrin Hatch (R-UT) and Aging Committee leadership Susan Collins (R-ME) and Claire McCaskill (D-MO) sent a letter to Gene L. Dodaro, Comptroller General of the General Accountability Office (GAO), requesting the agency develop a report on the oversight of and quality of care provided to Medicaid enrollees at assisted living facilities. "Given the growth in federal Medicaid spending for long-term care services and expected program growth caused by the aging and expansion of the population and program, information to understand federal and state spending and oversight of care provided in these settings is needed," the senators wrote. Currently, the federal government oversees and monitors care provided to Medicaid and Medicare recipients in nursing facilities. However, assisted living oversight is within the purview of the states, which have varying standards and definitions of what assisted living is. The senators' letter asks GAO to investigate the number of Medicaid enrollees in assisted living facilities and the level of federal spending for their care, and requests details on state Medicaid coverage for assisted living facilities. The letter also requests information about federal and state oversight of care provided to Medicaid enrollees in assisted living facilities, and how it may differ from the oversight of care provided in skilled nursing facilities.

A press release on the letter can be found here.

Senate Commerce Subcommittee Holds Hearing to Incentivize Cure Development Research

On July 14, the Senate Commerce, Science and Transportation Subcommittee on Space, Science and Technology held a hearing entitled "Unlocking the Cures for America's Most Deadly Diseases," to address the trend of lagging biomedical research and innovation in the United States. The hearing focused on how Congress can make the Food and Drug Administration (FDA) more inclined to catalyze medical innovation instead of instituting barriers to restrain it and how to find discernable ways to properly fund potential breakthroughs through public and private means. A witness at the hearing, physician and former Sen. Tom Coburn (R-OK), who has been critical of government spending in the past, urged Congress to be more supportive of the FDA. He said that the agency needs to be reformed, but cannot do so without proper funding and less criticism from his Republican colleagues. "[The FDA's] underlying motto is never do what's best, when you can do what's safe. And I don't blame them because the criticism is so severe," the former senator told the panel. Another witness, Dr. Keith Yamamoto of the University of California, said only federal agencies have the resources to back massive improvements in precision medicine—which targets diseases and tracks genes through direct manipulation of cells—and that private funding will follow the government's lead. The panel also discussed private sector solutions, like instituting a monetary prize system for innovation and bringing together interdisciplinary researchers from different fields to multilaterally address problems. In recent years, U.S. biomedical research and development expenditures in the private sector have declined by almost $13 billion. The hearing comes after the House passed the 21st Century Cures Act last week to boost funding for the National Institutes of Health (NIH) and implement reforms at the FDA.

For more information or to view the hearing, please visit commerce.senate.gov .

Senate Passes Bill to Permanently Allow Medicaid, SSI Beneficiaries to Participate and Receive Compensation in Clinical Trials

With a unanimous vote, the Senate passed the Ensuring Access to Clinical Trials Act of 2015, S.139, on July 16. The legislation makes permanent an existing provision that allowed those citizens who receive Supplemental Security Income (SSI) or Medicaid benefits to participate in clinical trials without jeopardizing their benefits. Moreover, the bill allows participants to discount up to $2,000 of income received from participating in these trials from SSI or Medicaid income calculations. Previously enacted legislation from 2010 expired in 2015 and required the effects of the bill be reviewed and studied. The Government Accountability Office (GAO) released a report last fall stating that they could not find any negative aspects to the 2010 law. Before the 2010 law, beneficiaries feared compensation would make them ineligible for benefits. Researchers applauded the bill as well, as they continue to recruit patients in niche patient populations. Seventy-six of the largest patient, industry, academic and medical organizations joined together to support the Ensuring Access to Clinical Trials Act. Sens. Wyden (D-OR), Hatch (R-UT), Brown (D-OH) and Markey (D-MA) led the legislative efforts in the Senate. Going forward, the bill now moves to the House of Representatives, where a companion bill was introduced in January by Rep. Lloyd Doggett (D-TX)

Former Bush Officials Send Letter Urging Senate to Confirm Slavitt as Permanent CMS Administrator

On July 15, all the former Administrators of the Centers for Medicare and Medicaid Services (CMS) under the George W. Bush Administration sent a letter to Senate and Finance Committee leadership in support of President Obama's nomination of Andy Slavitt as permanent CMS Administrator. The President chose Slavitt, who has been running the agency as acting administrator, to replace Marilyn Tavenner, who stepped down in February to lead America's Health and Insurance Plans (AHIP) as president and CEO. Senate Republicans Orrin Hatch (UT) and Chuck Grassley (IA), however, have expressed concerns over Acting Administrator Slavitt's potential conflicts of interest from when he was employed with Healthcare.gov IT contractor Optum. In addition, Senator Hatch expressed at a July 16 hearing on the recent GAO audit of healthcare.gov that CMS's unwillingness to comply with the Government of Accountability Office (GAO) recommendations will cast a shadow over his nomination. In a separate July 14 letter officials who led the HHS and CMS—including Tommy Thompson, Mike Leavitt, Tom Scully, Leslie Norwalk, Mark McClellan and Kerry Weems—wrote to Chairman Hatch that "Mr. Slavitt's previous professional roles provide the required understanding of health markets and mechanisms, which CMS desperately needs at this time." Acting Administrator Slavitt has received the support of provider and patient groups, and the former administrators indicated that his work in the private sector has prepared him to work with both ideological camps.

2. Administration

White House Holds 2015 Conference on Aging and Launches Several New Administration Healthy Aging Initiatives Enveloping Alzheimer's, Dementia, Falls Prevention...

The sixth annual White House Conference on Aging was held on July 13, 2015, with themes focusing on the 50th anniversary of Medicare, Medicaid and the Older Americans Act, as well as the 80th anniversary of Social Security. In the months leading up to the July event, the White House Conference on Aging has been collecting input and feedback from Americans about how to shape the aging policy landscape through a number of venues, including its website, social media, listening sessions with stakeholders and hosting regional forums across the country, such as in Tampa, Florida; Phoenix, Arizona; Seattle, Washington; Cleveland, Ohio; and Boston, Massachusetts. The U.S. Department of Health and Human Services (HHS) is engaged in the government-wide initiative to develop programs and provide funding and resources to help older adults live independent and fulfilling lives and to provide resources to their families, friends and other caregivers. At the event, the Department of Health and Human Services (HHS) announced several new agency programs, including:

• HHS's update of the National Plan to address Alzheimer's disease. The update includes priority actions that the government will take over the next year to address these conditions.
• Health Resources and Services Administration (HRSA) awards of $35 million to health professions training programs to expand geriatrics education to prepare the health care workforce to respond to the needs associated with advancing age.
• The National Prevention Council, chaired by the Surgeon General, will release in Spring 2016 a Healthy Aging Action Plan to advance the National Prevention Strategy, which will identify federal action steps to promote prevention and well-being among older Americans.
• The Health Resources and Services Administration (HRSA) will create an Alzheimer's Disease and Related Dementias training curriculum to build a health care workforce with the necessary skills to provide high-quality dementia care and ensure timely and accurate detection and diagnosis of dementia.
• The Administration on Community Living is launching a $4 million Brain Health Awareness Campaign to help older adults better understand changes that occur in the brain as people age and reduce the fear of discussing concerns with family members and clinicians.
• The Centers for Disease Control and Prevention (CDC) is launching a free online course offering to reduce the occurrence of preventable injuries such as falls, providing continuing education credits to physicians, nurses and other health professionals on making falls prevention a routine part of clinical care. The CDC's evidence-based falls prevention tool, known as STEADI (Stopping Elderly Accidents, Deaths & Injuries), will be implemented across the country.
• National Institutes of Health (NIH), which is teaming up with a diverse group of public and private partners, will promote healthy aging through its Go4Life exercise and physical activity campaign for older adults.

In conjunction with the conference, the Administration also launched a new website, Aging.gov, to provide information on resources and topics, such as healthy aging, elder justice and long-term care, and vital programs like Social Security and Medicare, designed to help older adults live independent and fulfilling lives. The White House has held a Conference on Aging each decade since the 1960s to identify and advance actions to improve the quality of life of older Americans.

More information on the event can be found in an HHS press release or by visiting the conference website.

FDA Releases Guidance on Procedures for Meeting with FDA's Office of Orphan Products Development

The Food and Drug Administration (FDA) released final guidance entitled "Meetings with the Office of Orphan Products Development" in order to provide recommendations to industry, researchers, patient groups and other stakeholders. The document addresses stakeholders interested in requesting a meeting with FDA's Office of Orphan Products Development (OOPD) on issues related to orphan drug designation requests, humanitarian use device (HUD) designation requests, rare pediatric disease designation requests, funding opportunities through the Orphan Products Grants Program and the Pediatric Device Consortia Grants Program, and orphan product patient-related topics of concern. Topics addressed in this guidance include: (1) clarification of what constitutes an "informal" or "formal" meeting; (2) program areas within OOPD that may be affected by this draft guidance; (3) procedures for requesting and scheduling meetings with OOPD; (4) a description of what constitutes a meeting package; and (5) procedures for the conduct and documentation of meetings with OOPD. This guidance finalizes the draft guidance of the same title dated April 2014. Submit electronic comments on the guidance to www.regulations.gov.

CMS Publishes First Star Ratings of Home Health Providers

On July 16, the Center for Medicaid and Medicare Services (CMS) released its first set of star ratings on Home Health Compare, CMS's public information website for Home Health Agencies. In addition to summarizing certain data about Home Health Agency performance for consumers, star ratings can also help the agencies identify areas for improvement. "Adding star ratings to Home Health Compare is another step forward in our continuing efforts to empower consumers by providing more information to help them make health care decisions, while also encouraging providers to strive for higher levels of quality," said Dr. Patrick Conway, Acting Principal Deputy Administrator for CMS and Deputy Administrator for Innovation and Quality. In the program, each Home Health Agency will receive a single summary Quality of Patient Care Star Rating encompassing that agency's relative performance on 9 of the 29 quality measures already posted on Home Health Compare, including how often home health teams did the following:

• Began their patients' care in a timely manner.
• Made sure that their patients have received a flu shot for the current flu season.
• Taught patients (or their family caregivers) about their prescribed drugs.

And how often home health patients:

• Got better at walking or moving around.
• Got better at getting in and out of bed.
• Had less pain when moving around.
• Got better at bathing.
• Had improved breathing.
• Had to be admitted to the hospital.

The five-star rating system was proposed by the agency in December to present consumers with more information and to better compare the different aspects of U.S. health care facilities. There are currently more than 12,000 home health care providers in the United States for seniors and the disabled. Approximately 9,300 had reported enough data to be rated, with an average rating of three stars out of five. Five-star ratings were received by 239 agencies, while 201 got either one or one-and-a-half stars. In the United States last year, 3.4 million Medicare beneficiaries received home health services, as Medicare spent approximately $18 billion on home health benefits.

3. State Activities

Tennessee: Federal Comment Period Opens for TennCare Managed Care Program, "Employment and Community First CHOICES"

The Centers for Medicare and Medicaid Services (CMS) released a new Medicaid waiver request, Amendment 27, to the TennCare Employment and Community First CHOICES, for public comment through Aug. 5. As written, the state recommends implementing within the state's existing managed care demonstration an integrated managed long-term services and supports (MLTSS) program that is specifically geared toward promoting and supporting integrated, competitive employment and independent, integrated community living as the first and preferred option for individuals with intellectual and developmental disabilities. Amendment 27 is the culmination of more than 18 months of intense planning and discussion with stakeholders and intends to help its beneficiaries achieve employment and independent community living to the maximum extent possible. The ECF CHOICES program will serve children under age 21 who live at home with their families, as well as adults with disabilities. The state also included in its waiver application that it desires the autonomy to establish yearly enrollment caps. Amendment 27 does not seek to change how intellectual and developmental disabilities services are delivered and will not change the existing 1915(c) waivers for people already enrolled in those waivers. Tennessee's current service delivery system for individuals with intellectual disabilities includes services in an Intermediate Care Facility for Individuals with Intellectual Disabilities as well as three Section 1915(c) HCBS waiver programs: the Arlington Waiver, the Statewide Waiver and the Self-Determination Waiver.

Montana Releases and Solicits Comments on its Medicaid Expansion Waiver Proposal

The Montana Department of Public Health & Human Services released its Section 1115 Demonstration waiver proposal to the U.S. Department of Health and Human Services (HHS) to extend health care coverage through Medicaid. In its proposal, Montana is soliciting third-party administration of its expansion program, and institutes monthly premiums equivalent to 2 percent of household income in addition to copays. Other notable provisions include disenrollment for non-poverty line level adults who don't make cost-sharing payments, with certain exceptions for beneficiaries who participate in wellness programs. While there is no official deadline for Centers for Medicare and Medicaid Services to approve the waiver, the state hopes to begin accepting applications for open enrollment Nov. 15 for coverage starting Jan. 1. Once approved by HHS, coverage would be expanded to eligible adults between the ages of 19–64 who earn incomes less than about $16,000 per year for an individual or $28,000 per year for a family of three. The department also implemented a 60-day public comment period that began on July 7, 2015, and will hold two public meetings in August on the waiver. In addition, the state has released a formal state request for proposals for a third-party administration contract, with proposals to be accepted through Aug. 18, 2015, 2 p.m. MST. More than 80,000 Montana residents could qualify for Medicaid under the expansion, and state officials anticipate more than 25,000 residents would enroll in the first year. Under the Affordable Care Act (ACA), the federal government would cover the costs of the expansion through 2016; however, the federal contribution phases down to 90 percent by 2020 and beyond.

Alaska's Governor Announces Medicaid Expansion Through Executive Action

On July 16, Alaska's Gov. Bill Walker (I) announced that his state will expand Medicaid through an executive action decision in order to circumvent the Republican-controlled legislature and implement the policy on his own. Prior to the announcement, Gov. Walker also sent a letter to the Legislative Budget and Audit Committee to afford legislators the mandatory 45-day notice of his intention to accept federal additional funding. While the governor did not call for lawmakers to reconvene, he noted that they could decide to do so in order to debate, and possibly attempt to block, his plan within the 45-day window. "This is the final option for me—I've tried everything else," Gov. Walker said. "Thousands of Alaskans and more than 150 organizations, including chambers of commerce, local hospitals, and local governments, have been waiting long enough for Medicaid expansion. It's time to expand Medicaid so thousands of our friends, coworkers, neighbors, and family members don't have to make the choice between health care or bankruptcy." The GOP-controlled legislature previously had tried to block Gov. Walker from expanding Medicaid on his own accord by putting language into the state's budget, but two legal opinions said it was illegal under the state's constitution. Gov. Walker has been pushing for Medicaid expansion for over a year, and unveiled a framework that would allow roughly 42,000 Alaskans to get coverage, with 20,000 signing up in the 2016 alone.

4. Regulations Open for Comment

CMS Releases CY 2016 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Rule and Changes to the Two-Midnight Rule

On July 1, the Centers for Medicare & Medicaid Services (CMS) announced the release of the Calendar Year 2016 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System policy changes, quality provisions and payment rates proposed rule . The CY 2016 OPPS/ASC proposed rule recommends updates to Medicare payment policies and rates for hospital outpatient departments (HOPDs), ASCs and partial hospitalization services provided by community mental health centers (CMHCs), and refinements to programs that encourage high-quality care in these outpatient settings. CMS suggested a decrease of 0.1% for outpatient payment rates. Moreover, it suggested an additional 2 percentage point adjustment to be included to account for inflation in OPPS payments to an increase in payments for laboratory tests. Approximately 3,800 hospitals and 60 CMHCs are paid under the OPPS, while approximately 5,300 ASCs are paid under the ASC payment system. The OPPS provides payment for most HOPD services, including partial hospitalization services furnished by HOPDs and CMHCs. OPPS payment amounts vary according to the Ambulatory Payment Classification (APC) group to which a service or procedure is assigned. This proposed rule also includes suggested changes to the Two Midnight Rule for CY 2016. The proposal was published in the July 8, 2015, Federal Register online. Comments on the proposed rule are due on Sept. 4, 2015.

A fact sheet on the proposed changes to the Two Midnight Rule for CY 2016 can be found here.

CMS Releases Proposed CY 2016 Home Health Prospective Pay Rule

On July 6, the Centers for Medicare & Medicaid Services (CMS) announced proposed changes to the Medicare home health prospective payment system (HH PPS) for calendar year (CY) 2016, including updating requirements for home health agencies under the Medicare program and moving forward to implement the third year of the four-year phase-in of the rebasing adjustments to the HH PPS. Finalized in the CY 14 final rule, the CY 16 downward adjustment is $80.95. Home health agencies (HHA) are paid a national standardized 60-day episode payment for all covered home health services, adjusted for case-mix and area wage differences. CMS proposes to decrease the national, standardized 60-day episode payment amount by 1.72 percent in each of CY 2016 and CY 2017. CMS will also be updating the HH PPS payment rates by the home health payment update percentage, 2.3 percent in CY 16. The Affordable Care Act (ACA) directs CMS to apply an adjustment to the national, standardized 60-day episode rate and other applicable amounts that reflect factors such as changes in the number of visits in an episode, the mix of services in an episode, the level of intensity of services in an episode, the average cost of providing care per episode and other relevant factors.

Also in the proposed rule, CMS included further implementation of provisions within the IMPACT Act, including one standardized cross-setting measure for CY 2016 under the skin integrity and changes to skin integrity domain. Measures for the other domains will be addressed through future rulemaking, although CMS is seeking feedback on four future, cross-setting measure constructs to potentially meet requirements of the IMPACT Act domains of:

• All-condition risk-adjusted potentially preventable hospital readmission rates;
• Resource use, including total estimated Medicare spending per beneficiary;
• Discharge to the community; and
• Medication reconciliation

CMS also announced the launch of a new initiative designed to support greater quality and efficiency of care among Medicare-certified HHAs across the nation. Authorized by the ACA and implemented by the Centers for Medicare & Medicaid Innovation, the HHVBP model draws upon the lessons learned from other value-based purchasing programs and demonstrations — including the Hospital Value-Based Purchasing Program and the Home Health Pay-for-Performance and Nursing Home Value-Based Purchasing Demonstrations — to shift to a model that promotes the delivery of higher-quality care to Medicare beneficiaries. CMS proposes to launch the HHVBP model among all HHAs in nine states representing each geographic area in the nation. HHAs in the nine states (Massachusetts, Maryland, North Carolina, Florida, Washington, Arizona, Iowa, Nebraska and Tennessee) would have their payments adjusted by 5 percent in each of the first two payment adjustment years, 6 percent in the third payment adjustment year and 8 percent in the final two payment adjustment years based on their performance across a series of quality metrics. CMS estimates approximately 3.5 million beneficiaries receive home health services from approximately 11,850 HHAs, costing Medicare approximately $17.9 billion.

Published in the Federal Register July 8, the proposed rule can be found here. CMS will solicit public comments on the proposed rule until Sept. 4, 2015.

CMS Releases Proposed Physician Payment Rule That Replaces SGR Formula

The Centers for Medicare and Medicaid Services (CMS) released a proposed update to the physician payment schedule since the repeal of the Sustainable Growth Rate (SGR) through the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The proposal includes a number of provisions focused on person-centered care, and continues the Administration's intention to transition the Medicare program to a system based on quality and healthy outcomes. In the proposed CY 2016 Physician Fee Schedule rule, CMS is also seeking comment from the public on implementation of certain provisions of the MACRA, including the new Merit-based Incentive Payment System (MIPS). The proposed rule includes updates to payment policies (increases physician pay by 0.5 percent); proposals to implement statutory adjustments to physician payments based on misvalued codes; updates to the Physician Quality Reporting System, which measures the quality performance of physicians participating in Medicare; and updates to the Physician Value-Based Payment Modifier, which ties a portion of physician payments to performance on measures of quality and cost.

Other issues addressed include changes to biosimilar reimbursement; expanded reporting of the Consumer Assessment of Healthcare Providers and Systems survey to group practices of 25 or more eligible professionals; and application of the value-based payment modifier to groups of only physician assistants and other non-physicians. In the proposed rule, CMS is additionally seeking comment on the potential expansion of the Comprehensive Primary Care Initiative, a CMS Innovation Center initiative designed to improve the coordination of care for Medicare beneficiaries. Other items included in the proposed rule include an initiative that supports patient- and family-centered care for seniors and other Medicare beneficiaries by enabling them to discuss advance care planning with their providers.

For a fact sheet on the proposed rule, please see here. For further information, please see the rule on display here. CMS is accepting public comments on the CY 2016 PFS proposed rule until Sept. 8, 2015. The proposed rule will be published in the Federal Register on July 15, 2015, and CMS will issue the final rule by Nov. 1.

CMS Releases Proposed 2016 Medicare Dialysis Pay Rule

The Centers for Medicare and Medicaid Services (CMS) released a proposed 2016 Medicare Dialysis pay rule June 26 which includes several technical changes including a new drug designation process, a new rural pay adjuster, and updates to the end-stage renal disease Quality Incentive Program- the base pay rate for services and the adjusters to that base rate. Specifically, CMS proposes reducing the base pay rate by $9.23, from $239.43 in 2015 to $230.20 in 2016. Other pay changes include updates to the low-volume payment adjustment and a new payment adjustment for rural ESRD facilities. Further, the proposed rule would revise the geographic proximity eligibility criterion for the low-volume payment adjustment from (25 road miles to 5 road miles) and would eliminate grandfathering from the criteria for the adjustment. CMS also suggests reducing the fixed-dollar loss amount for pediatric beneficiaries from $54.35 to $49.99 and the Medicare Allowable Payments for pediatric patients from $43.57 to $37.82. For adults, the fixed-dollar loss amount would decrease from $86.19 to $85.66 and the Medicare Allowable Payments amount would decrease from $51.29 to $48.15.

Other specific changes include:

• A process for understanding when an oral-only drug is no longer considered an oral-only drug
• A process for including new injectable and intravenous products into the ESRD bundled payment
• Changes to quality measures and implementation of payment reductions for low preforming facilities

CMS expects that combined these updates would increase the total payments to all dialysis facilities by 0.3 percent with Hospital-based facilities receiving an increase in total payments of 0.5 percent, and freestanding facilities receiving a 0.2 percent increase. The proposed rule will be published the Federal Register on July 1. Comments on the proposed rule are due August 25, 2015.

FDA Issues Final Rule to Phase Out Trans Fats

The Food and Drug Administration (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 Released Proposed Rule Concerning Medicaid and CHIP Plans

On May 26, CMS posted a proposed rule to modernize the Medicaid and Children's Health Insurance Program (CHIP) managed care regulations. The proposed rule is the first major update to Medicaid and CHIP managed care regulations in more than a decade. The proposal is sweeping in that it touches many areas, including network adequacy, quality measures, enrollment and best practices, and aligns many policies to be similar to those for Medicare Advantage and the private market. The rule will be published in the Federal Register on June 1, and the deadline to submit comments is July 27, 2015, at 5 p.m. EST.

More information on the rule can be found at federal registar.gov.

FDA Releases Draft Guidance on Use Adaptive Trial Designs for Medical Devices

On May 18, the Food and Drug Administration (FDA) released draft guidance in hopes of clarifying ways in which adaptive clinical trial designs can be used for medical devices. Specifically, the draft guidance lays out 11 types of adaptive trial designs the agency feels can be successfully used for devices: group sequential design; sample size adaptation; Bayesian sample size adaptation; group sequential designs with sample size reassessment; dropping a treatment arm; changing the randomization ratio; changing the hypothesis (claim); adaptive enrichment; planning to adapt based on the total information; adaptation of the device or endpoint; and seamless studies. The draft document also makes clear that the adaptive trial designs discussed apply to premarket approval applications, 510(k) submissions, de novo submissions, humanitarian device exemptions and investigational device exception, and do not apply to clinical studies of combination products or codevelopment of a pharmaceutical product with an unapproved diagnostic test. Worth noting, FDA says there are possible limitations to using adaptive trial designs, including requiring more effort at the design stage—leading to study designs that are overly complicated and cost more and to the introduction of bias into the study; implementing changes to the study due to an adaptation can "confound interpretation of the study results." FDA says in the guidance that to ensure that adaptive trial designs are scientifically valid, studies should be prospectively planned for in consultation with FDA prior to the initiation of any study, and the agency lays out two approaches that can help evaluate the operating characteristics of adaptive study designs—analytical methods and simulation studies.

FDA: Guidance Released on Investigational New Drug Applications

The Food and Drug Administration (FDA) released draft guidance to assist sponsor-investigators in preparing and submitting complete investigational new drug applications (INDs)—an application used by FDA to approve the start of a new trial—to the Center for Drug Evaluation and Research (CDER) and the Center for Biologics Evaluation and Research (CBER). The guidance is intended to act as a basic overview of the IND process, with an eye on individual researchers who are investigating new uses for either an approved or investigational drug. FDA's guidance goes on to explain the basics of 21 CFR 312—the federal regulation governing IND submissions—providing an overview of the essential elements of an IND submission, including information about the sponsor, a summary of the investigational drug product and its risks, the clinical trial protocol and a summary of previous clinical trial results involving the drug. Worth noting, the guidance, FDA notes, is not intended for use by sponsors or investigators "seeking to evaluate a drug for commercial purposes (i.e. seeking market approval or licensure) and thus does not focus on certain regulatory requirements that involve exchange of information or materials between a sponsor and investigator." The proposed guidance was published in the Federal Register May 15, and comments on the proposed draft guidance are due July 14, 2015.

5. Reports

HHS OIG Report Finds Fraud Prevention System (FPS) Saved $453.9 Million in 2014

The Department of Health and Human Services (HHS) Office of the Inspector General (OIG) released data on the third implementation year of the Fraud Prevention System (FPS), finding $133,200,896 of adjusted savings (return on investment of $2.84 for every dollar spent on the FPS) and $453,976,078 in unadjusted savings. This represents an increase from the prior year, but OIG found that updated procedures would improve reported savings. The Fraud Prevention System identified or prevented $820 million in inappropriate payments in the program's first three years by using predictive analytics to identify troublesome billing patterns and outlier claims for action, similar to systems used by credit card companies. To help identify and better report FPS savings, in its report OIG recommend that the Department provide its contractors with improved written instructions on how to attribute the FPS savings accurately and better document the contribution the FPS leads toward achieving administrative actions. CMS concurred with the recommendations and outlined steps for implementing GAO's recommendation. CMS stated that it "will continue to make decisions on expanding the FPS based primarily on the identified savings" because (1) "the concept of adjusted savings is important as it relates to this financial audit," (2) recovering money is contingent on numerous other processes and limitations and (3) there are other hard-to-quantify benefits of the FPS activity. The Department's Centers for Medicare & Medicaid Services (CMS), through its Center for Program Integrity, established the FPS on June 30, 2011, to identify and prevent fraud, waste and abuse in the Medicare Fee-for-Service program nationwide.

GAO Report Finds Variations in How Mock Applicants are Treated Throughout the Sign-up and Re-enrollment Processes on Healthcare.gov

The Government Accountability Office (GAO) released a report July 15 that found multiple inconsistencies in how healthcare.gov applications are handled throughout the sign-up and re-enrollment processes, with applicants often receiving conflicting answers from multiple official sources for an identical issue. To assess the enrollment controls of the federal Health Insurance Marketplace, GAO performed 18 undercover tests, 12 of which focused on phone or online applications. During these tests, the Marketplace approved subsidized coverage under the Patient Protection and Affordable Care Act (PPACA) for 11 of the 12 fictitious GAO applicants for 2014. The GAO applicants obtained a total of about $30,000 in annual advance premium tax credits, plus eligibility for lower costs due at time of service. For 7 of the 11 successful fictitious applicants, GAO intentionally did not submit all required verification documentation to the healthcare.gov, but the Marketplace did not cancel subsidized coverage for these applicants. Moreover, for an additional six applicants, GAO sought to test the extent to which, if any, in-person assisters would encourage applicants to misstate income in order to qualify for income-based subsidies during coverage year 2014. However, GAO was unable to obtain in-person assistance in five of the six undercover attempts. For example, an assister told GAO that it provided help only for those applying for Medicaid and not for health care insurance applications.

While these subsidies, including those granted to GAO's fictitious applicants, are paid to health care insurers and not directly to enrolled consumers, they nevertheless represent a benefit to consumers and a cost to the government. GAO's undercover testing, while illustrative, cannot be generalized to the population of all applicants or enrollees. GAO shared details of its observations with the Centers for Medicare & Medicaid Services (CMS) during the course of its testing, to seek agency responses to the issues raised.

OMB Report Shows Positive Fiscal Health; Administration Touts Falling Uninsured Rate in ACA as Partial Causality

The Office of Management and Budget (OMB) released the 2016 Mid-Session Review (MSR), which updates the Administration's estimates for outlays, receipts and the deficit in light of economic, legislative and other developments that occurred since the release of the President's 2016 Budget in February. The MSR projects a $455 billion deficit in 2015, which is 2.6 percent of GDP, nearly $30 billion less than last year's deficit and $128 billion lower than the projection of the 2015 deficit back in February. The Administration cited the falling rate of uninsured Americans as playing a pivotal role in the optimistic outlook of the country's fiscal state. In the MSR, OMB said, "[t]he uninsured rate [is at] the lowest level on record. Meanwhile, during the period since the Affordable Care Act became law, health care prices have grown at the slowest rate in nearly 50 years." Moreover, OMB said "to further strengthen America's long-term fiscal outlook and the economy and set the Nation on a sustainable fiscal path, the Budget proposes $1.75 trillion of deficit reduction over 10 years, primarily from health, tax, and immigration reforms. It includes about $370 billion of health savings that grow over time, extending the life of the Medicare Trust Fund and building on the Affordable Care Act with further incentives to improve quality and control health care cost growth."

An OMB blog post accompanying the MSR can be found here.

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