United States: Weekly Washington Healthcare Update - July 2014

Last Updated: July 21 2014
Article by Stephanie A. Kennan and Brian J. Looser

This Week: House and Senate committees explore Medicare payments... CMS releases updated report on Medicaid and CHIP enrollment...Congressional Research Service report on ACA regulatory process

1. Congress

House

Oversight Subcommittee Hearing on Medicare Appeals Reform

On July 10, 2014, the House Oversight and Government Reform Subcommittee on Energy Policy, Health Care and Entitlements held a hearing entitled "Medicare Mismanagement Part II: Exploring Medicare Appeals Reform." The hearing focused on a large and growing backlog of Medicare claim appeals pending before the Administrative Law Judges (ALJs) within the Office of Medicare Hearings and Appeals. Currently, 800,000 claims await adjudication, with wait times averaging 387 days despite current law requiring that appeals be decided within 90 days. OMHA recently issued a policy change that prioritizes beneficiary-generated appeals over those initiated by providers.

Witness:

Ms. Nancy J. Griswold
Chief Administrative Law Judge, Office of Medicare Hearings and Appeals (OMHA)
U.S. Department of Health and Human Services (HHS)

For more information, or to view the hearing, please visit oversight.house.gov.

21st Century Cures: Modernizing Clinical Trials

On July 9, 2014, the House Energy and Commerce Health Subcommittee held a hearing entitled " 21st Century Cures: Modernizing Clinical Trials." The hearing focused on how to make clinical trials of new drugs and devices in the U.S. more efficient through science and technology. The panel of seven expert witnesses, including five physicians, focused on several key issues during the hearing, such as adaptive licensing between the U.S. and the E.U., as well as the conflict between pretrial data sharing and HIPAA privacy rights. Jay Siegel, head of scientific strategy and policy at Johnson & Johnson, said some ways to improve trials include standardization, interoperability, researching how best to compile and use data and reassessment of regulations to protect patients. Three other witnesses, including Sundeep Khosla, director of the Center for Clinical and Translational Science at Mayo Clinic, stressed the importance of data transparency.

21st Century Cures: Incorporating the Patient Perspective

On July 11, 2014, the House Energy and Commerce Subcommittee on Health held a hearing entitled "21st Century Cures: Incorporating the Patient Perspective." The hearing focused on how to incorporate the perspective of patients in the discovery, development and delivery of treatments and cures. Since the launch of the 21st Century Cures initiative, the committee has received substantial input on how to accelerate the discovery-development-delivery cycle of cures. This input includes the invaluable discussion at the two roundtables and two Health Subcommittee hearings as well as the comments submitted in response to the white papers.

Witnesses:

Janet Woodcock, M.D.
Director
Center for Drug Evaluation and Research, Food and Drug Administration

Richard F. Pops
Chairman and CEO
Alkermes

Robert J. Beall, Ph.D.
President and CEO
Cystic Fibrosis Foundation

Pat Furlong
Founding President and CEO
Parent Project Muscular Dystrophy

Leonard Lichtenfeld, M.D.
Deputy Chief Medical Office
American Cancer Society

Marshall Summar, M.D.
Director
Scientific Advisory Committee, National Organization for Rare Disorders

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

Senate

Aging Committee Roundtable Focuses on Strengthening Medicare

On July 9, 2014, the Senate Special Aging Committee held a hearing entitled "Improving Audits: How We Can Strengthen the Medicare Program for Future Generations." The hearing centered on a recent report developed by Aging Committee staff, which examined the CMS"s pre-payment and post-payment claim review programs, including the roles of its contractors, as well as the CMS and Departmental reports and documents, and Office of Inspector General (OIG), Government Accountability Office (GAO), Medicare Payment Advisory Commission (MedPAC) and private reports related to improper payments under the Medicare program.

Witnesses:

Moderator Alan Weil
Editor-in-Chief
Health Affairs

Steve Stang
National Partner-in-Charge, Health Care Assurance Services
Clifton Larson Allen, LLP

Walter Gorski
Principal
Gorski Healthcare Group, LLC

Jessica Meeske, DDS
Board Certified Pediatric Dentist
Pediatric Dental Specialists of Greater Nebraska and American Dental Association

Diana Haramboure
Senior Vice President and Chief Administrative Officer
First Coast Service Options

Margaret Hambleton
Vice President and Corporate Compliance Officer
Dignity Health

Kathleen King
Director, Healthcare
Government Accountability Office

Chad Janak
Vice President, Audit Operations
Connolly Healthcare

Mindy Hatton
Senior Vice President and General Counsel
American Hospital Association

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

2. Administration

May Medicaid & CHIP Eligibility and Enrollment Report

Last week, CMS released the May 2014 monthly report on state Medicaid and Children"s Health Insurance Program (CHIP) eligibility and enrollment data, reported as part of the Medicaid and CHIP Performance Indicator process. The data will continue to be released monthly. CMS will refine and improve the information as more comprehensive information becomes available.

HHS: $100 Million for New Community Health Centers

On July 8, HHS Secretary Sylvia Mathews Burwell announced the availability of $100 million from the Affordable Care Act to support an estimated 150 new health center sites across the country in 2015. New health center sites will increase access to comprehensive, affordable, high-quality primary health care services in the communities that need it most. The funds are expected to add to the more than 550 new health center sites that have opened in the last three years as a result of the Affordable Care Act. Currently, nearly 1,300 health centers operate more than 9,200 service delivery sites that provide care to more than 21 million patients in every state, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and the Pacific Basin.

HHS Awards $83.4 Million to Train New Primary Care Providers

Health and Human Services (HHS) Secretary Sylvia Mathews Burwell today announced $83.4 million in Affordable Care Act funding to support primary care residency programs in 60 Teaching Health Centers across the nation. During the 2014-2015 academic year the funding will help train more than 550 residents, 200 more than had been trained in the previous academic year, and will help increase access to health care in communities across the country. Created by the ACA, the Teaching Health Center Program expands residency training in community-based settings. Residents will be trained in family medicine, internal medicine, pediatrics, obstetrics and gynecology, psychiatry, geriatrics and general dentistry.

3. State Activities

Massachusetts Successfully Tests New Exchange Software

A possible new software system, hCentive, for the state"s health insurance exchange website, the Massachussetts Health Connector, passed a critical test July 7, making it one step closer to its possible usage for enrollment starting on Nov. 15. State officials demonstrated the software to CMS Administrator Marilyn Tavenner, utilizing a complex enrollment scenario and showing how the software can link to the federal data hub to provide essential income and identification verification using information from the Internal Revenue Service and Social Security Administration. The software, once officially approved, will also be able to share enrollment information with MassHealth, the state"s Medicaid Program, so that enrollees can dually apply for both programs and federal subsidies through a single-stream application process. After the state"s exchange website failed to function properly during open enrollment last fall, the state was forced to develop new software for its exchange site, while simultaneously preparing to join the federal exchange. The new software development project"s cost will likely be lower than the originally estimated $121 million. On July 10, the exchange board voted unanimously to approve a 2015 budget recommendation for the hCentive software project, hinting that a state exchange with hCentive software is what state officials are heavily anticipating.

4. Regulations Open for Comment

Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule, Clinical Laboratory Fee Schedule, Access to Identifiable Data for the Center for Medicare and Medicaid Innovation Models & Other Revisions to Part B for CY 2015

CMS released its proposal for the 2015 Medicare physician fee schedule on July 3 with suggested changes relating to Chronic Care Management (CCM) and Accountable Care Organizations (ACO). Medicare doctors who provide CCM services may be required starting in 2015 to use an electronic health record or other health information exchange platform to ensure their patients" care plans are electronically accessible to any provider caring for those patients. Medicare providers would also be required to use electronic health records certified under the Office of the National Coordinator for Health Information Technology"s certification program as having the capabilities to capture and report CCM data. ACOs were also addressed in the new fee schedule, as the proposed rule would increase the number of ACO quality measures with an increased focus on outcomes. Under the proposal, the total number of measures for quality reporting would increase from 33 to 37. Under the Medicare Shared Savings Program (MSSP), ACOs must meet certain quality targets to claim shared savings bonuses. Specifically, new measures would be added to focus on avoidable admissions for patients with multiple chronic conditions, heart failure and diabetes; depression remission; all-cause readmissions to a skilled nursing facility; and stewardship of patient resources, the agency said. The agency added that the existing composite measures for diabetes and coronary artery disease would also be updated. Comments must be received by Sept. 2, 2014.

Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Physician-Owned Hospitals: Data Sources for Expansion Exception; Physician Certification of Inpatient Hospital Services; Medicare Advantage Organizations and Part D Sponsors: Appeals Process for Overpayments Associated with Submitted Data

CMS has issued a proposed rule that would revise the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for CY 2015 to implement applicable statutory requirements and changes arising from continuing experience with these systems. The proposed rule describes the proposed changes to the amounts and factors used to determine the payment rates for Medicare services paid under the OPPS and those paid under the ASC payment system. In addition, this proposed rule would update and refine the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program.

CMS is also proposing changes to the data sources used for expansion requests for physician-owned hospitals under the physician self-referral regulations; changes to the underlying authority for the requirement of an admission order for all hospital inpatient admissions and changes to require physician certification for hospital inpatient admissions only for long-stay cases and outlier cases; and changes to establish a three-level appeals process for Medicare Advantage (MA) organizations and Part D sponsors that would be applicable to CMS-identified overpayments associated with data submitted by these organizations and sponsors. Comments must be received by Sept. 2, 2014.

Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies

This rule proposes to update and make revisions to the End-Stage Renal Disease (ESRD) prospective payment system (PPS) for calendar year (CY) 2015. This rule also proposes to set forth requirements for the ESRD quality incentive program (QIP), including payment years (PYs) 2017 and 2018. This rule also proposes to make a technical correction to remove outdated terms and definitions. In addition, this rule proposes to set forth the methodology for adjusting Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) fee schedule payment amounts using information from the Medicare DMEPOS Competitive Bidding Program (CBP); make alternative payment rules for DME and enteral nutrition under the Medicare DMEPOS CBP; clarify the statutory Medicare hearing aid coverage exclusion and specify devices not subject to the hearing aid exclusion; update the definition of minimal self-adjustment regarding what specialized training is needed by suppliers to provide custom fitting services if they are not certified orthotists; clarify the Change of Ownership (CHOW) and provides for an exception to the current requirements; revise the appeal provisions for termination of a contract and notification to beneficiaries under the Medicare DMEPOS CBP, and add a technical change related to submitting bids for infusion drugs under the Medicare DMEPOS CBP. Comments must be received by Sept. 2, 2014.

HHS Proposed Rule: Annual Eligibility Redeterminations for Exchange Participation and Insurance Affordability Programs

HHS has issued a proposed rule that would specify additional options for annual eligibility redeterminations and renewal and re-enrollment notice requirements for qualified health plans offered through the Exchange, beginning with annual redeterminations for coverage for plan year 2015. Specifically, in the notice of proposed rulemaking entitled "Patient Protection and Affordable Care Act; Annual Eligibility Redeterminations for Exchange Participation and Insurance Affordability Programs; Health Insurance Issuer Standards Under the Affordable Care Act, Including Standards Related to Exchanges," HHS proposes that a Marketplace must conduct annual redeterminations using either the procedures described in 45 CFR §155.335(b) through (m), alternative procedures specified by the Secretary for the applicable plan year, or alternative procedures approved by the Secretary based on a showing by the Exchange that such procedures meet specified criteria. This guidance specifies alternative procedures for plan year 2015 that, if a final rule is promulgated permitting a Marketplace to elect such process, will constitute the alternative procedures designated in proposed 45 CFR §155.335(a)(2)(ii). If permitted under such a final rule, the federally facilitated Marketplace (FFM) will adopt the alternative procedures specified in this guidance for plan year 2015, consistent with proposed 45 CFR §155.335(a)(2)(ii)2.

These alternative procedures are intended to preserve a feature of the annual redetermination process specified in 45 CFR §155.335(g), namely, that an enrollee may take no action and still have his or her coverage renewed for 2015, which is important in promoting continuity of coverage while limiting administrative burden for enrollees, issuers and Marketplaces.

Draft Guidance for Industry on Drug Supply Chain Security Act Implementation: Identification of Suspect Product and Notification; Availability

On June 11, 2014, FDA announced the availability of a draft guidance for industry entitled "Drug Supply Chain Security Act Implementation: Identification of Suspect Product and Notification." The draft guidance addresses new provisions in the Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended by the Drug Supply Chain Security Act (DSCSA). The draft guidance is intended to aid certain trading partners (manufacturers, repackagers, wholesale distributors and dispensers) in identifying a suspect product and terminating notifications regarding illegitimate product. This draft guidance identifies specific scenarios that could significantly increase the risk of a suspect product entering the pharmaceutical distribution supply chain; provides recommendations on how trading partners can identify the product and determine whether the product is a suspect product as soon as practicable; and for product that has been determined to be illegitimate, or (for manufacturers) has a high risk of illegitimacy, sets forth the process by which trading partners should notify FDA of illegitimate product and how they must terminate the notifications, in consultation with FDA. Public comments on the draft guidance will be accepted through Aug. 11, 2014.

CMS Proposed Rule: Medicare, Medicaid EHR Incentive Program

On May 23, 2014, CMS issued a proposed rule that would change the meaningful use stage timeline and the definition of certified electronic health record technology (CEHRT). It would also change the requirements for the reporting of clinical quality measures for 2014. Certified EHR technology is defined for the Medicare and Medicaid HER Incentive Programs at 42 CFR 495.4, which references the Office of the National Coordinator for Health Information Technology's (ONC) definition of CEHRT under 45 CFR 170.102. For Stages 1 and 2 of meaningful use, CMS and ONC worked closely to ensure that the definition of meaningful use of CEHRT and the standards and certification criteria for CEHRT were coordinated. The definition of CEHRT under 45 CFR 170.102 requires, beginning with federal fiscal year (FY) and calendar year (CY) 2014, EHR technology certified to the 2014 Edition EHR certification criteria. Therefore, all EPs, eligible hospitals and CAHs must use 2014 Edition CEHRT to meet meaningful use under the Medicare and Medicaid EHR Incentive Programs, beginning with FY 2014 and CY 2014. Beginning in 2015, all eligible hospitals and professionals would still be required to report using the 2014 Edition CEHRT. The proposed rule also includes a provision that would formalize CMS' and ONC's previously stated intention to extend Stage 2 through 2016 and begin Stage 3 in 2017.

To view the CMS press release on the proposed rule, visit cms.gov.

Medicare Program; Prior Authorization Process for Certain Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Items

On May 23, 2014, CMS issued a proposed rule that would establish a prior authorization process for certain durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) items that are frequently subject to unnecessary utilization and would add a contractor's decision regarding prior authorization of coverage of DMEPOS items to the list of actions that are not initial determinations and therefore not appealable.

The proposed rule is intended to replicate the Medicare Prior Authorization of Power Mobility Device Demonstration. Launched in 2012, the demonstration established a prior authorization process for certain power mobility devices. Based on September 2013 claims data, monthly expenditures for certain power mobility devices decreased from $12 million in September 2012 to $4 million in August 2013 across the seven demonstration states (California, Florida, Illinois, Michigan, New York, North Carolina and Texas) with no reduction in beneficiary access to medically necessary items. CMS seeks to leverage this success by extending the demonstration to an additional 12 states. These states include Arizona, Georgia, Indiana, Kentucky, Louisiana, Maryland, Missouri, New Jersey, Ohio, Pennsylvania, Tennessee and Washington. This will bring the total number of states participating in the demonstration to 19.

CMS also proposes to establish a prior authorization process for certain durable medical equipment, prosthetics, orthotics and supplies items that are frequently subject to unnecessary utilization. Through a proposed rule, CMS will solicit public comments on this prior authorization process, as well as criteria for establishing a list of durable medical items that are frequently subject to unnecessary utilization that may be subject to the new prior authorization process. CMS will launch two payment model demonstrations to test prior authorization for certain non-emergent services under Medicare. These services include hyperbaric oxygen therapy and repetitive scheduled non-emergent ambulance transport. Information from these models will inform future policy decisions on the use of prior authorization.

The deadline to submit comments is July 28, 2014.

FDA Proposed Rule on Deeming Tobacco Products To Be Subject to the Federal Food, Drug, and Cosmetic Act

FDA has issued a proposed rule that would deem products meeting the statutory definition of "tobacco product," except accessories of a proposed deemed tobacco product, to be subject to the Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended by the Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act). The Tobacco Control Act provides FDA authority to regulate cigarettes, cigarette tobacco, roll-your-own tobacco, smokeless tobacco and any other tobacco products that the Agency by regulation deems to be subject to the law. Option 1 of the proposed rule would extend the Agency's "tobacco product" authorities in the FD&C Act to all other categories of products, except accessories of a proposed deemed tobacco product, that meet the statutory definition of "tobacco product" in the FD&C Act. Option 2 of the proposed rule would extend the Agency's "tobacco product" authorities to all other categories of products, except premium cigars and the accessories of a proposed deemed tobacco product, that meet the statutory definition of "tobacco product" in the FD&C Act. FDA also is proposing to prohibit the sale of "covered tobacco products" to individuals under the age of 18 and to require the display of health warnings on cigarette tobacco, roll-your own tobacco and covered tobacco product packages and in advertisements. FDA is taking this action to address the public health concerns associated with the use of tobacco products. Comments are due July 9, 2014.

5. Reports

CRS: Updated Progress on Certain ACA Regulations

According to a June 30 Congressional Research Service (CRS) report, which was released July 7, CMS included three rules related to ACA, addressing its CY 2016 Notice of Benefit and Payment Parameters; Application of the Mental Health Parity and Addiction Equity Act to Medicaid Programs; and Reform of Requirements for Long-Term Care Facilities and Quality Assurance and Performance Improvement Program. These three rules are among 14 proposed and 17 final rules that the CRS said are expected to be issued in the 12 months after the ACA"s regulatory agenda was published May 23. Among the major final rules listed in the Unified Agenda was a rule on Eligibility Notices, Fair Hearing and Appeal Processes for Medicaid and Exchange Eligibility Appeals, and Other Eligibility and Enrollment Provisions, which the CMS expects to publish in November.

OIG: Questionable Billing for Medicare Part B Clinical Laboratory Services

According a recent OIG report, in 2010, over 1,000 labs exceeded the thresholds (i.e., had unusually high billing) for five or more measures of questionable billing for Medicare lab services. For example, a lab might have an unusually high percentage of claims with ineligible and/or invalid ordering-physician numbers, or an unusually high allowed amount per ordering physician. Almost half of the labs that exceeded the thresholds for five or more measures of questionable billing -- compared to 13 percent of all labs -- were located in California and Florida, areas known to be vulnerable to Medicare fraud. Some labs that exceeded the thresholds for fewer than five measures also exhibited billing that may warrant further review. Medicare allowed $1.7 billion across all labs for claims associated with questionable billing.

Early Effects of Medical Loss Ratio Requirements and Rebates on Insurers and Enrollees

On July 10, GAO issued a report finding that insurers that did not meet or exceed the PPACA MLR standards in 2011 and 2012 paid rebates in the amounts of $1.1 billion and $520 million (respectively) back to enrollees and policyholders who paid premiums in those years. These amounts would have decreased by about 75 percent had the commissions and fees insurers paid to agents and brokers been excluded from the MLRs. Agents and brokers sell insurance products and provide various services to consumers and groups related to their insurance needs, and the commissions and fees charged for these services are included in the MLRs. Insurers in the large group market paid the highest rebate amount ($405 million) across insurance markets in 2011 and insurers in the small group market paid the highest amount ($207 million) in 2012. Insurers in the individual market were more likely to pay rebates than insurers in the small and large group markets. GAO found that rebates would have fallen from $1.1 billion to $272 million in 2011 if the commissions and fees insurers paid to agents and brokers had been excluded from the MLRs, and rebates would have similarly fallen from $520 million to $135 million in 2012. GAO"s calculations assumed that insurers did not make other changes in their business practices in response to a different method for calculating MLRs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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