United States: Weekly Washington Healthcare Update - December 22, 2014

This Week: Retroactive Tax Extenders Package Receives Senate Approval... FDA Establishes Drug Compounding Advisory Committee... Tennessee Governor Unveils Medicaid Expansion Proposal

***Programming Note: Due to the Holidays, the Weekly Washington Health Care Update will not be issued until Jan. 12, 2015.***

1. CONGRESS

House

114th Congress Preview: Energy and Commerce Committee 21st Century Cures

The 21st Century Cures Initiative is a multi-year, collaborative project established by House Energy and Commerce Committee Chairman Fred Upton (R-MI) along with committee member Rep. Diana DeGette (D-CO). With the 113th Congress adjourned, when the 114th Congress convenes, stakeholders should expect further activity and that legislation will be developed through continued work by the initiative. The initiative's overall focus is how to assist the pace of cures and medical breakthroughs developed in the United States. Since the announcement of the initiative on April 30, 2014, the committee has sought to broadly collaborate with the National Institutes of Health (NIH), Food and Drug Administration (FDA) and other agencies, as well as patients and scientific pioneers in academia and industry to take a comprehensive look at the process of discovery, development and delivery of lifesaving medical technology. To date, the 21st Century Cures Initiative has been responsible for nearly a dozen hearings and roundtable discussions with experts from various government regulatory bodies, patient advocates, health professional associations and drug and device developers, among others. For more details, see our report: The House Energy and Commerce Committee and the 21 st Century Cures Initiative

Senate

One-Year Retroactive "Tax Extenders" Package Approved

On Dec. 17, the Senate voted 76-16 to pass the one-year tax "extenders" package before wrapping up for the year. The legislation will retroactively extend about 50 expired tax breaks for the 2014 tax year only -- a less-than-optimal default for lawmakers who wanted to broker a deal making some of the expired provisions permanent, while extending most of the others for a two-year period. After those negotiations failed, the House passed H.R. 5771 to prevent a tax hike for businesses and individuals come April. The $42 billion bill, which also includes a package of technical corrections and legislation (the ABLE Act) that allows states to set up tax-advantaged savings accounts for people with disabilities, now heads to the president's desk. Section-by-section summaries of both the extenders package and the ABLE Act are available here:

• Section-by-Section Summary of H.R. 5771, The "Tax Increase Prevention Act of 2014"
• Medicare Relative Value Unit Adjustments and End-Stage Renal Disease Offsets Under H.R. 647, the Achieving a Better Life Experience (ABLE) Act of 2014
• Summary of H.R. 647, the Achieving a Better Life Experience (ABLE) Act of 2014 (As Amended and Expected to Be Considered by the House)

Bipartisan Bill Introduced in Senate That Sets Up 15-Year Exclusivity for New Dormant Drug Class

Senators Orrin Hatch (R-UT) and Michael Bennet (D-CO) introduced legislation Dec. 11, the Dormant Therapies Act (S.3004), which would establish a new class of pharmaceuticals known as "dormant therapies," eligible for 15 years of data protection. To be eligible, a newly developed medication would have to be intended for one or more unmet medical needs, have a suitable clinical trial plan developed by the sponsor and at the time of request contain an active moiety that is not the same as, or highly similar to, an active moiety for another application with the Food and Drug Administration (FDA). The bill aims to assist pharmaceutical companies in removing the "ticking patent clock" conundrum that forces companies to prioritize research based on which compounds can be brought quickly to market. "It takes on average 14 years for a compound to make its way through the therapeutic pipeline from discovery, through clinical trials, to formal approval, and eventually to the patient," Sen. Hatch said in a press release. "Because patents last for only 20 years, much of this time is consumed during the lengthy research and development process. The result is companies are investing in research on compounds that can be brought to market quickly, rather than new treatments." Worth noting, the House of Representatives had a similar piece of bipartisan legislation, Modernizing Our Drug and Diagnostics Evaluation and Regulatory Network (MODDERN) Act (H.R. 2116), introduced by Rep. Leonard Lance (R-NJ) in September 2013.

Senate Confirms New Surgeon General, Vivek Murthy

On Dec. 15, the Senate narrowly approved President Obama's nominee for U.S. Surgeon General, Vivek Murthy, on a vote of 51-43. Dr. Murthy was formerly a physician at Boston's Brigham and Women's Hospital and instructor at Harvard Medical School. The vote, mostly along partisan lines, had only one Republican supporting the nominee, Illinois Sen. Mark Kirk; GOP opposition centered on the nominee's political background as a co-founder of Doctors for America, a group that has pushed for affordable health care and supports Obama's health care law, and his support of gun control. Three Democrats also voted against the nomination -- Sens. Heidi Heitkamp (ND), Joe Donnelly (IN) and Joe Manchin (WV) -- who reasoned that the nominee may not be able to separate his political beliefs from his public health views. Dr. Murthy's confirmation "makes us better positioned to save lives around the world and protect the American people here at home," President Obama said in a statement. "[Dr. Murthy] will also help us build on the progress we've made combating Ebola, both in our country and at its source" in West Africa. His nomination was endorsed by more than 100 health organizations, which included the American College of Physicians, the American Heart Association and the American Diabetes Association. As it stands, the U.S. has not had an officially confirmed surgeon general since July 2013. The surgeon general does not set policy but is an advocate for the people's health.

Final FY 2015 Funding Includes Increased FDA Funding, Drug Pricing Language

On Dec. 16, President Obama enacted the $1.1 trillion bipartisan FY 2015 omnibus appropriations agreement, which, among other measures, contained $2.59 billion in funding for the Food and Drug Administration (FDA), an increase in FDA's budget by more than $37 million above FY 2014. The funding includes $15 million for pharmacy compounding, $4.82 million for counterfeit drugs, $3 million for the National Antimicrobial Resistance Monitoring System and $2 million for foreign drug inspections. The budget agreement also incorporates proposed administrative savings in the amount of $15.689 million. Also worth noting, Congress appropriated an additional one-time $25 million funding pot for Ebola-related efforts, while simultaneously withholding $20 million from salaries and expenses until FDA's opioid guidance is finalized. The measure also includes two provisions related to prescription drug prices. In report language accompanying the legislation, lawmakers urge HHS to investigate whether the most vulnerable patients benefit from the 340B prescription drug discount program, and request that CMS study the prevalence of hepatitis and the cost of treating the sickest patients. In addition, the report language encourages CMS to "quantify and explain how the policy directing physicians to conduct face-to-face certifications for home health care has prevented fraud, increased access to health care, and impacted costs to the Medicare and Medicaid programs," saying CMS should include ways to simplify the provider documentation for face-to-face encounters as part of its fiscal 2016 budget request.

Senate Committee Report on Access, Use of Generic Drugs in Medicare Part D

On Dec. 15, the Senate Committee on Aging released a report that looked at ways to increase the use of generic drugs within the Medicare Part D program. In addition to the report, the committee is requesting that the Government Accountability Office (GAO) examine the reasoning behind recent price increases for certain generic drugs, like heart medication digoxin, which has been on the market for years. Specifically, the report outlines a series of policy recommendations including providing incentives to prescription drug plan sponsors to increase generics use; finding innovative ways to expand generic drug usage among low-income subsidy beneficiaries; increasing education of beneficiaries and health professionals on the safety, effectiveness and cost benefits of generic medications; and improving investigations of questionable pharmacy billing practices that thwart efforts to incentivize generics. A 2010 Congressional Budget Office (CBO) report estimated the use of generic drugs in the Part D program saved beneficiaries and taxpayers approximately $33 billion in one year alone. The committee's findings were part of a comprehensive two-year review that analyzed drug plan formularies, pharmacy billing, physician prescribing practices and plan sponsor programs to incentivize generics use. A press release accompanying the report can be found here.

HELP Committee Members Urge Continued Prescription Drug Abuse Work

On Dec. 17, Senate Health, Education, Labor, and Pensions (HELP) Committee Chairman Tom Harkin (D-IA) and Ranking Member Lamar Alexander (R-TN) led HELP Committee senators in sending letters to U.S. Department of Health and Human Services (HHS) Secretary Sylvia Burwell, National Governors Association (NGA) Chairman Governor John Hickenlooper (D-CO) and leaders of the American Medical Association (AMA), the Association of American Medical Colleges (AAMC), the Association for State and Territorial Health Officials (ASTHO) and the National Association of City and County Health Officials (NACCHO) highlighting key priorities of the committee in combating prescription drug abuse, thanking the addressees for participating in the committee's Prescription Drug Working Group and asking them to continue to keep the HELP Committee informed of their ongoing efforts to address the prescription drug abuse epidemic. In addition to Harkin and Alexander, the letters were signed by HELP Committee Members Barbara Mikulski (D-MD), Richard Burr (R-NC), Patty Murray (D-WA), Orrin Hatch (R-UT), Bernie Sanders (I-VT), Pat Roberts (R-KS), Bob Casey (D-PA), Mark Kirk (R-IL), Kay Hagan (D-NC), Al Franken (D-MN), Michael Bennet (D-CO), Sheldon Whitehouse (D-RI), Tammy Baldwin (D-WI), Chris Murphy (D-CT) and Elizabeth Warren (D-MA). The HELP Committee bipartisan staff working group was established to examine the characteristics and challenges of prescription drug abuse, and what the federal government, state governments, public health groups, health care providers, law enforcement and others are doing to address it; and to consider ways to further address the issue.

2. ADMINISTRATION

FDA Establishes Compounding Advisory Committee

In a press release, the Food and Drug Administration (FDA) announced Dec. 16 the membership of the agency's Pharmacy Compounding Advisory Committee. The committee is composed of 14 members -- 12 voting and two nonvoting -- who will provide advice on scientific, technical and medical issues concerning drug compounding under Sections 503A and 503B of the Federal Food, Drug, and Cosmetic Act. "Advisory committees are a very important source of knowledge and advice for drug regulation," said Janet Woodcock, M.D., director of the FDA's Center for Drug Evaluation and Research. "This is a key step toward implementing the compounding provisions of the Drug Quality and Security Act, and I expect we will benefit greatly from the advice and recommendations the members of the committee provide." The members are experts in pharmaceutical compounding and manufacturing, pharmacy, medicine and pharmaceutical regulation, and include representatives from the National Association of Boards of Pharmacy (NABP), the United States Pharmacopeia (USP), pharmacists with current experience and expertise in compounding, physicians with background and knowledge in compounding, and patient and public health advocacy organizations.

GAO Appoints Six New Members to MACPAC

On Dec. 19, Gene Dodaro, Comptroller General and head of the U.S. Government Accountability Office (GAO) announced the appointment of six new members to the Medicaid and CHIP Payment and Access Commission (MACPAC) for 2015 and designated the Commission's new Vice Chair, Marsha Gold, Sc.D. "The six men and women chosen to serve on the Commission offer important professional credentials and experiences, and their perspectives should greatly benefit MACPAC in advising Congress on Medicaid and CHIP," Comptroller General Dodaro said in a statement. The Children's Health Insurance Program Reauthorization Act of 2009 established MACPAC to review Medicaid and CHIP access and payment policies and to advise Congress on issues affecting Medicaid and CHIP. The Act also directs the Comptroller General to appoint MACPAC's members.

The newly appointed MACPAC members for 2015 include:

China Agrees to Streamline Approvals of U.S. Pharmaceutical and Medical Devices

In a fact sheet released Dec. 19, the Department of Commerce announced that bilateral agreements at the U.S.-China Joint Commission on Commerce and Trade (JCCT) on Dec. 16-18, 2014, resulted in Chinese officials' agreeing to streamline the approval of U.S. pharmaceutical and medical devices and promised fair treatment for American companies targeted for investigation under China's anti-monopoly law. "China's commitment below to devote more resources to and streamline China's regulatory processes for pharmaceuticals will speed patient access to new medicines in China and thereby lead to increased U.S. exports to what is now the second largest market for pharmaceuticals in the world .... China and the United States affirm that significantly reducing the time-to-market for innovative pharmaceutical products and medical devices will benefit patients by allowing them to receive better treatment earlier," the press release said. Moreover, China and the United States agreed that all draft pharmaceutical and medical device rules and regulations subject to WTO rules will ensure at least a 60-day comment period for manufacturers. Exports of U.S. pharmaceutical products to China exceeded $1.2 billion in 2013. Other issues discussed at the bilateral meeting included agricultural biotechnology, technology localization, intellectual property rights, competition law, government procurement regulations, fisheries and legal services among others.

CMS Releases Provider Data on HAC, HVBP and HAIs Via Compare Websites

In a Dec. 18 press release, the Centers for Medicare & Medicaid Services (CMS) announced data on the quality of care provided by physician group practices, Accountable Care Organizations (ACOs) and hospitals. Data was posted on Physician Compare, Hospital Compare and Data.Medicare.gov. Information posted included Hospital Value-Based Purchasing Program (HVBP) 2015 payment adjustments; updated performance results on diabetes and cardiovascular care by some physician group practices and ACOs; and hospital performance results on Hospital-Acquired Conditions (HACs) such as central line-associated bloodstream infections, catheter associated urinary tract infections, pressure ulcers and accidental punctures or lacerations. As part of transparency and quality improvement mechanisms within Patient Protection and Affordable Care Act (ACA), CMS makes provider information and performance publicly available to empower consumers with information to help with health care decisions, encourage providers to strive for higher levels of quality and drive overall health system improvement. Highlights within the posted data include that in 2015 more hospitals will experience a positive change in their payments (1,714) compared to the number of hospitals that will experience a negative change (1,375) -- a reversal from 2014. Moreover, Medicare reimbursement to about 724 hospitals will be reduced roughly 1 percent in fiscal 2015 for hospitals having high rates of hospital-acquired infections among patients.

CMS Releases Medicaid and CHIP Enrollment Figures

According to a report released by the Centers for Medicare & Medicaid Services (CMS) on Dec. 18, Medicaid and the Children's Health Insurance Program (CHIP) had grown by 9.7 million people as of October, a 17 percent increase compared with the average enrollment during July through September 2013 (the period before the Affordable Care Act insurance exchanges opened in October 2013). The report also noted that total CHIP and Medicaid enrollment data for the 50 states and the District of Columbia for October 2014 was for over 68.5 million beneficiaries. In a press release accompanying the report, Cindy Mann, Deputy Administrator of CMS and Director of the Centers for Medicaid and CHIP Services said, "In October 2014, twenty-six states and the District of Columbia were covering residents of their state through the Medicaid expansion under the Affordable Care Act (ACA). Coverage for newly eligible adult beneficiaries is fully federally paid for under the Affordable Care Act through 2016, and never less than 90 percent for the years following... Pennsylvania will become the 27th state when coverage starts on January 1, 2015. Several other states have recently indicated their plan to pursue expansion in 2015. This is encouraging because Medicaid and CHIP enrollment in states with expanded Medicaid programs rose by over 24 percent since before the initial open enrollment in Marketplace began, in comparison to nearly 7 percent in states that have not expanded Medicaid." Americans can sign up for Medicaid and CHIP through the Marketplace healthcare.gov between now and Feb. 15. Enrollment in Medicaid and CHIP happens year-round and states can expand their Medicaid programs to cover more people at any time.

HHS Awards $665 Million in State Innovation Model Initiative Grants

On Dec. 16, HHS announced that 28 states, three territories and the District of Columbia will receive over $665 million in ACA grants to design and test health care payment and service delivery models that will improve health care quality and lower costs as part of the State Innovation Model initiative. The initiative supports states in planning or implementing a customized, fully developed proposal capable of creating statewide health transformation to improve health care. Example initiatives include improving primary care through patient-centered medical homes, building upon current Accountable Care Organization models or integrating primary care and behavioral health services, as well as providing technical assistance and data to health care providers and payers that are working to advance models of integrated, team-based care, or transition to value-based payment models. Together with awards released in early 2013, over half of states (34 states and 3 territories and the District of Columbia), representing nearly two-thirds of the population, are participating in efforts to support comprehensive state-based innovation in health system transformation aimed at finding new and innovative ways to improve quality and lower costs. Awardees include both states that are designing plans and strategies for statewide innovation and states that are taking the next step from designing to testing and implementing comprehensive statewide health transformation plans. Over $622 million in State Innovation Model Test Awards will support 11 states -- Colorado, Connecticut, Delaware, Idaho, Iowa, Michigan, New York, Ohio, Rhode Island, Tennessee and Washington -- in implementing their State Health Care Innovation Plans.

3. STATE ACTIVITIES

Vermont Governor Decides to Forgo Single-Payer Health Care System

On Dec. 17, Vermont's Gov. Peter Shumlin (D) announced that he will drop his plan to enact a single-payer health care system in his state, a plan that was praised by liberals but never made it into the framework phases. The financial models unveiled by the governor in his Health Care Financing Report to Business and Consumer Advisory Councils would require both a double-digit payroll tax on Vermont businesses and an up to 9.5 percent public premium assessment on individual Vermonters' income to pay for Green Mountain Care, the statewide public health care system proposed in Act 48. "I have always made clear that I would ask the state to move forward with public financing only when we are ready and when we can be sure that it will promote prosperity for hard-working Vermonters and businesses, and create job growth," the Governor said in a statement. "Pushing for single payer health care when the time isn't right and it might hurt our economy would not be good for Vermont and it would not be good for true health care reform.... I am not going to undermine the hope of achieving critically important health care reforms for this state by pushing prematurely for single payer when it is not the right time for Vermont. In my judgment, now is not the right time to ask our legislature to take the step of passing a financing plan for Green Mountain Care." The governor's report will be presented to the state legislature in January.

Tennessee Governor Unveils Alternative Medicaid Expansion Proposal

Last week, Gov. Bill Haslam, a Republican, released a proposal to expand Medicaid coverage as provided for in the ACA. Insure Tennessee is an alternative approach that promotes personal responsibility, addresses cost and is a big step toward true health care reform in Tennessee. According to its authors, the program will provide health insurance coverage to more than 200,000 uninsured Tennesseans who earn less than 138 percent of the federal poverty level (FPL) without creating new taxes for Tennesseans. Haslam claims that unless his plan is implemented, Tennessee's hospitals will be forced to provide emergency care without reimbursement and must do so in the face of other ACA-related cuts. Meanwhile, Tennessee businesses will be subjected to ACA tax penalties if Tennessee fails to provide coverage for these individuals. In addition, businesses are currently paying a variety of new ACA-related federal taxes, but the state is not experiencing the full benefit of those dollars as they are not flowing back into the state to pay for the health care services delivered to these uninsured individuals. The plan would need to be approved by the Tennessee General Assembly and receive formal approval from federal officials at CMS before implementation.

4. REGULATIONS OPEN FOR COMMENT

Draft 2016 Letter to Issuers in the Federally-facilitated Marketplaces

On Dec. 19, CMS released a draft 2016 Letter to Issuers in the Federally-facilitated Marketplaces. The letter provides issuers seeking to offer qualified health plans (QHPs), including stand-alone dental plans (SADPs), in the Federally-facilitated Marketplaces (FFMs) or the Federally-facilitated Small Business Health Options Programs (FF-SHOPs), with operational and technical guidance to help them successfully participate in those Marketplaces in 2016. In the draft letter, CMS identifies the areas in which states performing plan management functions in the FFMs have flexibility to follow an approach different from that articulated in this guidance. CMS notes that the policies articulated in this Letter apply to the certification process for plan years beginning in 2016. CMS expects issuers to consult all applicable regulations, in conjunction with the final version of this draft letter, to ensure full compliance with the requirements of the ACA. In addition, throughout the plan year, QHPs may be required to correct deficiencies identified in CMS's. To the extent that this guidance summarizes policies proposed through other rulemaking processes that have not yet been finalized, such as the rulemaking process for the 2016 Payment Notice proposed rule, stakeholders should comment on those underlying policies through the ongoing rulemaking processes, and not through the comment process for this Letter. Please send comments on other aspects of this Letter to FFEcomments@cms.hhs.gov by Jan. 12, 2015.

Medicare and Medicaid Program; Revisions to Certain Patient's Rights Conditions of Participation and Conditions for Coverage Overview

On Dec. 11, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to revise selected conditions of participation (CoPs) for providers, conditions for coverage (CfCs) for suppliers, and requirements for long-term care facilities, by proposing to clarify that where state law or facility policy provides or allows certain rights or privileges to a patient's opposite-sex spouse under certain provisions, a patient's same-sex spouse must be afforded equal treatment if the marriage is valid in the jurisdiction in which it was celebrated. The proposal was made in response to a Supreme Court decision, United States v. Windsor, which held that Section 3 of the Defense of Marriage Act (DOMA) is unconstitutional because it violates the Fifth Amendment. Section 3 of DOMA provided that in determining the meaning of any Act of the Congress, or of any ruling, regulation or interpretation of the various administrative bureaus and agencies of the United States, the word "marriage" meant only a legal union between one man and one woman as husband and wife, and the word "spouse" could refer only to a person of the opposite sex who was a husband or a wife. To be assured consideration, comments must be received no later than 5 p.m. on Feb. 10, 2015.

CMS Releases Proposed Rule on ACA Benefit and Payment Parameters for 2016

In a Nov. 21 press release, the Centers for Medicare & Medicaid Services (CMS) announced the issuance of a proposed rule (CMS-9944-P) covering a wide range of Affordable Care Act policies for individual and small group health plans, both inside and outside the ACA marketplaces, including payment parameters and provisions related to the risk adjustment, reinsurance and risk corridors programs; cost-sharing parameters and cost-sharing reductions; and user fees for federally facilitated exchanges. The rule, entitled "HHS Notice of Benefit and Payment Parameters for 2016," would provide additional standards for the annual open enrollment period for the individual market for benefit years beginning on or after Jan. 1, 2016, and has provisions affecting essential health benefits, qualified health plans, network adequacy, quality improvement strategies, the Small Business Health Options Program, guaranteed availability, guaranteed renewability, minimum essential coverage, the rate review program and the medical loss ratio program. The rule was published in the Federal Register Nov. 26 and stakeholder comments are due Dec. 26.

CMS Releases Memo Seeking Comments on Changes to Ratings for Medicare Advantage, Drug Plans in 2016

In a memorandum released Nov. 21 by the Centers for Medicare & Medicaid Services (CMS), the agency is seeking comments on possible changes to its star rating system for Medicare Advantage (Part C) and prescription drug plans (Part D). The ratings, which grade plans on a scale of one to five and affect payments to Medicare Advantage plans, and other changes would be implemented for the 2016 contract year and will be further discussed in CMS' Call Letter in February 2015. Among the possible adjustments that CMS is investigating are the potential development of an integrated star rating system for Medicare-Medicaid Plans (MMPs) participating in the agency's capitated financial alignment demonstration for dually eligible beneficiaries. The memo said that a rating system for the managed care plans involved in some of the demos would acknowledge "the additional needs of Medicare-Medicaid enrollees and measure the performance of the MMPs in integrating the Medicare and Medicaid benefits." CMS also said it would be analyzing 67 responses received in September, when the agency posted a request for information (RFI) asking the public whether these plans have more problems than others with the quality ratings and further sought experiences or research into whether high-quality performance could be achieved, regardless of the enrollment level of low-income beneficiaries. Among the other possible changes outlined in the memo, the agency said for the 2016 ratings, it plans to remove its "pre-determined measure thresholds," which have been used since 2011 for certain measures partly to "set expectations for high performance." Furthermore, CMS said to help beneficiaries make more informed choices and to be as transparent as possible about the performance of all plans, it is moving toward including low-enrollment contracts in the star ratings beginning with the 2016 star ratings. Comments on the ratings alterations are due by Dec. 17.

CMS Releases Proposed Rule Aimed to Strengthen ACOs

In a Dec. 1 press release, the Centers for Medicare & Medicaid Services (CMS) announced a new proposed rule looking to improve the Shared Savings Program (SSP) for Accountable Care Organizations (ACOs) through a greater emphasis on primary care services and promoting transitions to performance-based risk arrangements. Through the Affordable Care Act (ACA), ACOs encourage doctors, hospitals and other health care providers to work together to better coordinate care when people are sick and keep people healthy, which helps to reduce growth in health care costs and improve outcomes. CMS Administrator Marilyn Tavenner said, "This proposed rule is part of our continued commitment to rewarding value and care coordination -- rather than volume and care duplication. We look forward to partnering with providers and stakeholders to continuously refine and improve the Medicare Shared Savings program." Other goals of the rule include providing more flexibility for ACOs seeking to renew their participation in the program, encouraging ACOs to take on greater performance-based risk and reward, creating alternative methodologies for benchmarks, and streamlining data sharing and reducing administrative burden. The SSSP now includes more than 330 ACOs in 47 states, providing care to more than 4.9 million beneficiaries in Medicare fee for service. Recently, CMS announced first-year SSP results, finding that 58 SSP ACOs held spending below their benchmarks by a total of $705 million and earned shared savings payments of more than $315 million, and that another 60 ACOs had expenditures below their benchmark, but not by a sufficient amount to earn shared savings. Comments on the proposed rule are due by Feb. 6. A fact sheet accompanying the proposed rule can be found here.

OPM Proposes New Multi-State Plan Rule

The U.S. Office of Personnel Management (OPM) is issuing a proposed rule to implement modifications to the Multi-State Plan (MSP) Program based on the experience of the Program to date. OPM established the MSP Program pursuant to Section 1334 of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, referred to collectively as the Affordable Care Act. This proposed rule clarifies the approach used to enforce the applicable requirements of the Affordable Care Act with respect to health insurance issuers that contract with OPM to offer MSP options. This proposed rule amends MSP standards related to coverage area, benefits and certain contracting provisions under Section 1334 of the Affordable Care Act. This document also makes non-substantive technical changes. Comments are due on or before Dec. 24, 2014.

CMS Releases Final Rule for Medicare Program: Physician Fee Schedule OPPS, ASC Payments, End-Stage Renal Disease

On Oct. 31, the Centers for Medicare and Medicaid Services (CMS) released its final rule for CY 2015 Medicare reimbursement payments to physicians and non-physician practitioners, hospital outpatient departments (OPPS), ambulatory surgical centers (ASCs), and home health agencies and dialysis facilities that treat patients with end-stage renal disease. Specifically, the CY 2015 OPPS/ASC final rule with comment period updates Medicare payment policies and rates for hospital outpatient department and ASC services and partial hospitalization services provided by community mental health centers (CMHCs), and refines programs that encourage high-quality care in these outpatient settings. In CY 2015, CMS is implementing a policy finalized last year regarding comprehensive Ambulatory Payment Classifications (C-APCs), with some refinements and updates.

OPPS

Overall OPPS payments are expected to increase by 2.3 percent for CY 2015. Also noteworthy in the rule, CMS has finalized a proposal to package prosthetic supplies as it does implantable prosthetic devices, and all other supplies in the OPPS when used in conjunction with a surgical or other procedure. Other significant OPPS payment modifications addressed in the statute include reimbursements for skin substitutes, off-campus provider-based departments, hospital outpatient outlier payments, community mental health center outlier payments, ancillary services and Part B drugs in the outpatient department.

ASC Payment Updates

For CY 2015, ASC payments will increase by 1.4 percent, accounting for the MFP-adjusted CPI-U update factor, which accounts for inflation.

Partial Hospitalization Program (PHP) Rates

CMS will update the two payment rates for CMHCs and the two payment rates for hospital-based PHPs. For community health centers the final CY 2015 APC geometric mean per diem cost will be $100.15 for Level I (three services) and $118.54 for Level II (four or more services). For hospital-based PHPs, the final CY 2015 APC geometric mean per diem cost will be $185.87 for Level I and $203.01 for Level II.

End-Stage Renal Disease

The finalized provisions in End-Stage Renal Disease (ESRD) Prospective Payment System rule introduce new quality and performance measures for outpatient dialysis facilities; moreover, the rule incorporates in 2017 a Standardized Readmission Ratio, which assesses the rate at which ESRD dialysis patients return to an acute care hospital within 30 days of discharge from an acute care hospital.

Other Policy Changes

CMS has finalized an internal process, to be used in limited circumstances, that will allow CMS to recover overpayments from erroneous payments made by Medicare Advantage (MA) organizations or Part D prescription drug plan sponsors; CMS has also finalized an appeals process for MA organizations and Part D sponsors to seek review of CMS' determination that the payment data are erroneous. The appeals process will have three levels of review that would include reconsideration, an informal hearing and an Administrator review.

CMS also finalized a proposal that requires the physician certification only for outlier cases and long-stay cases of 20 days or more. A hospital admission order will continue to be required for all inpatient admissions when a patient has been formally admitted as an inpatient of the hospital.

The final rule is slated to be published in the Federal Register on Nov. 6. The provisions in the rule will generally take effect on Jan. 1, 2015, and the public comment period will close on Dec. 30, 2014.

More information on the rule can be found in a CMS factsheet that accompanies the rule's release.

5. REPORTS

GAO Releases Report on How Federal Funding Transmits to Addressing Healthcare.gov Eligibility System Changes

On Dec. 12, the Government Accountability Office (GAO) released a report, entitled Federal Funds Aid Eligibility IT System Changes, but Implementation Challenges Persist, that evaluates how $1.8 billion in federal funding to all 50 states and the District of Columbia translated into improvements in eligibility information technology (IT) system for Medicaid. Medicaid eligibility IT systems play a key role in states' efforts to coordinate eligibility and enrollment processes for Medicaid, the Children's Health Insurance Program (CHIP) and health insurance exchanges, as required by the Patient Protection and Affordable Care Act (PPACA). However, many states' eligibility IT systems were outdated and lacked the technical capacity to support such efforts. CMS expanded the availability of a federal financial participation matching rate of 90 percent (90/10 funding) to states for costs associated with such IT system changes. With these funds, CMS required states to implement certain requirements -- known as critical success factors -- by Oct. 1, 2013. In this report, GAO specifically studied how states are using these Medicaid 90/10 funds and whether they are meeting the accompanying benchmark requirements. GAO analyzed state-reported expenditures of 90/10 funding from June 30, 2011, through Sept. 30, 2014, and interviewed state Medicaid officials from six states, which were selected from states reporting the most expenditures of 90/10 funding; The agency found that none of the 36 states with federal-run exchanges could transfer applications between the programs by Oct. 1, 2013 (the day the exchanges opened) and four still couldn't one year later; moreover GAO concluded that spending has grown steadily, with the most significant increases over the most recent quarters.

MedPAC December 2014 Meeting

Members of the Medicare Payment Advisory Commission (MedPAC) met for a public meeting on Dec. 18-19 to consider items and recommendations for the commission's March 2015 Report to Congress. In the report, the commission expects to repeat a package of recommendations from their March 2014 report to Congress, including an increase by 3.25 percent in payment rates for the hospital inpatient and outpatient prospective payment systems. Since the recommendation is the same as last year, there likely won't be a vote on the package. The comprehensive list of topics covered during the two-day meeting includes:

• Assessing payment adequacy and updating payments: hospital inpatient and outpatient services
• Assessing payment adequacy and updating payments: physician and other health professional services
• Assessing payment adequacy and updating payments: ambulatory surgical center services
• Assessing payment adequacy and updating payments: outpatient dialysis services
• Assessing payment adequacy and updating payments: hospice services
• Assessing payment adequacy and updating payments: skilled nursing facility services
• Assessing payment adequacy and updating payments: home health care services
• Assessing payment adequacy and updating payments: inpatient rehabilitation facility services; site-neutral payments for select conditions treated in inpatient rehabilitation facilities and skilled nursing facilities
• The Medicare Advantage program: status report
• Assessing payment adequacy and updating payments: long-term care hospital services

For more information, please visit www.medpac.gov.

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