United States: Weekly Washington Healthcare Update: September 22, 2014

This Week: CMS outlines option for hospitals to settle backlogged Medicare claim appeals... Energy and Commerce examines antibiotic resistance measures... Senate Finance explores Children's Health Insurance Program (CHIP) reauthorization.

1. CONGRESS

House

Small Business Committee Hearing on SHOP Exchange Implementation

On Sept. 18, the House Small Business Subcommittee on Health and Technology held a hearing entitled "An Update on the Small Business Health Options Program: Is It Working for Small Businesses?" The purpose of the hearing was to examine the current state of the SHOPs and whether they are working for small businesses. The SHOP program has been the subject of significant delays in implementation, though CMS recently announced that small employers in five states -- Delaware, Illinois, New Jersey, Missouri and Ohio -- will have the opportunity to access the new online SHOP Marketplace on HealthCare.gov, in advance of the full SHOP Marketplace launch nationwide on November 15, under what is being called the "SHOP Early Access" program.

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

House W&M Subcommittee Chairman Sends Letter to HHS Concerning Backlog of Medicare Appeals

In a letter dated Sept. 15 to Department of Health and Human Services (HHS) Secretary Sylvia Burwell, House Ways and Means Health Subcommittee Chairman Kevin Brady (R-TX) inquired about the agency's unilateral action to clear the backlog of Medicare appeals through a "settlement" process and spoke to several other reservations. "Each discharge is unique and the circumstances that apply pertaining to medical necessity in one case do not necessarily transfer to all cases," Chairman Brady wrote, hinting that the Centers for Medicare and Medicaid Services (CMS) had prioritized how easy the process would be to implement over the due process rights of Medicare providers, which could set an "improper precedent." A press release from Rep. Brady's office said, "While the backlog of Medicare appeals is at an unacceptable high, settling all appeals without reviewing the merits of the appeals or coming up with any plan to address the backlog is just throwing money at a problem to make it go away. It hurts the integrity of Medicare and is a waste of taxpayer dollars." Chairman Brady requested that CMS make public its empirical analysis of the process for deriving the 68 percent settlement rate for the benefit of ensuring the solvency of the hospital insurance Trust Fund and to guarantee that hospitals are assured that the rate is indeed reflective of the current reimbursement standards in both CMS's inpatient and outpatient prospective payment systems.

House OGR Committee Holds Hearing on Healthcare.gov Security Breaches

The House Oversight and Government Reform Committee hosted several high-ranking Obama Administration officials at its 29th Healthcare.gov hearing on Sept. 18 at 11:00 a.m. in Rayburn House Office Building. The purpose of the hearing, titled "Examining Obamacare's Failures in Security, Accountability, and Transparency," was to examine whether the Administration has complied with the legal procedures for protecting Americans' personal information following the July 2014 healthcare.gov cyber-attack that the Department of Health and Human Services (HHS) said resulted in no serious data breaches. Committee members also requested that the Obama administration provide details on the security of HealthCare.gov after a recent report by the Government Accountability Office (GAO) found systemic security weaknesses in the website. Worth noting, in her opening statement CMS Administrator Marilyn Tavenner made a much anticipated announcment that as of Aug. 15, 7.3 million people had paid their Obamacare first month's premiums and were enrolled in health insurance plans sold through the federal and state health insurance exchanges.

More information on the hearing can be found here.

House E&C Health Subcommittee Holds Hearing on Antibiotic Resistance

The House Energy and Commerce Subcommittee on Health held a two-panel hearing on Friday, Sept. 19 at 9:00 a.m. in 2123 Rayburn House Office Building. The hearing, entitled "21st Century Cures: Examining Ways to Combat Antibiotic Resistance and Foster New Drug Development," examined ways to combat ongoing drug resistant health threats. The abundant use of antibiotics in humans has caused many bacteria to develop resistance to current antibiotic drugs and the Committee panel looked to witnesses for ideas on how best to spur development of new drugs. As it stands, Reps. Phil Gingrey (R-GA) and Gene Green (D-TX) have introduced a bill, the ADAPT Act (H.R.3742), which would seek to address problems related to the FDA approval process for new antibiotic drugs.

More information on the hearing can be found here.

Bipartisan Flexible EHR Meaningful Use Bill Introduced

On Sept. 16, Reps. Renee Ellmers (R-NC) and Jim Matheson (D-UT) introduced bipartisan legislation (H.R. 5481) giving physicians and hospitals more time to demonstrate the meaningful use of electronic health records in 2015. The bill as it stands would shorten the meaningful use program's reporting period in 2015 from a full year to three months. The bill, titled the Flexibility in Health IT Reporting (Flex-IT) Act of 2014, would eliminate the meaningful use program's "rigid mandates" for reporting, Rep. Ellmers said in a press release. "Dealing with these inflexible mandates is causing doctors, nurses, and their staff to focus more on avoiding financial penalties and less on their patients. The Flex-IT Act will provide the flexibility providers need while ensuring that the goal of upgrading their technologies is still being managed," the release said. The bill was referred to the House Energy and Commerce Committee for markup.

Senate

Post-Acute Care Bill Passes House and Senate

On Sept. 16, House passed a bill to standardize patient data collected across the four post-acute care settings, which include long-term care hospitals, inpatient rehabilitation facilities, home health agencies and skilled nursing facilities (SNF). The bipartisan bill, Improving Medicare Post-Acute Care Transformation (IMPACT) Act (H.R. 4994) , was sponsored by House Ways and Means Committee Chairman and Ranking Member Dave Camp (R-MI) and Sander M. Levin (D-MI), respectively. Moreover, a Senate companion bill (S. 2553), introduced by Senate Finance Committee Chairman Ron Wyden (D-OR) and Ranking Member Orrin Hatch (R-UT), passed the Senate on Sept. 18. "This bill is critical to driving fundamental reform of care for seniors after a hospitalization. Working together in an open, transparent way, the Ways and Means and Senate Finance Committees were able to produce a bill that will ensure our seniors get the highest quality and most cost effective care possible," Chairman Camp said in a statement. Besides mandating that providers submit standardized data by 2019, a measure that allows Medicare to more easily assess quality across different post-acute care settings, the bill dictates that collected data must be interoperable for facilitated data exchange among post-acute care and other providers as a means to better coordinate care and improve Medicare beneficiary outcomes. The legislation also directs Department of Health and Human Services (HHS) to lessen by 2 percent payments for SNFs that don't report the required data. Lawmakers have said the information would be utilized by the HHS Centers for Medicare and Medicaid Services (CMS) to alter the post-acute payment system using a new site-neutral or bundled payment system, or other changes. For more information, visit www.finance.senate.gov.

Finance Committee Hearing on Children's Health Insurance Program (CHIP)

On Sept. 16, the Senate Finance Subcommittee on Health held a hearing entitled " The Children's Health Insurance Program [CHIP]: Protecting America's Children and Families". In his opening statement, Chairman Rockefeller (D-WV) praised the bipartisan cooperation that led to the creation of CHIP in 1997, and the need for Congress to reauthorize the program by next fall. Ranking Member Enzi (R-WY) noted the high degree of state flexibility afforded by CHIP, and the need to focus the Committee's efforts "on identifying core mission of the program in a way that builds on the good work that many states are doing, and which serves the population that truly needs help."

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

Congressional Letter Calls for CMS Transparency on ACA's Medicaid Program Changes

Republican leaders of the health care-legislating House and Senate Committees sent a letter Sept. 18 to Centers for Medicare and Medicaid Services (CMS) Administrator Marilyn Tavenner related to issues that states are having while implementing Medicaid program changes as delegated by statutes found within the Affordable Care Act (ACA). House Energy and Commerce Committee Chairman Fred Upton (R-MI), Senate Finance Committee Ranking Member Orrin Hatch (R-UT) and Senate Health, Education, Labor, and Pensions Committee Ranking Member Lamar Alexander (R-TN) write, "The challenges states are experiencing with Medicaid applications are problems that CMS itself directly contributed to or created. ... CMS's focus on state challenges wrongly ignores the serious, systemic operational challenges created by the agency." Furthermore, Reps. Upton, Hatch and Alexander criticize the Administration for its lack of transparency with regard to providing information to Congress and write that "[w]e also find it troubling that in these letters, CMS demands a level of transparency and accountability to which it is not also willing to hold itself. ... Nearly nine months into the Medicaid expansion established by the Patient Protection and Affordable Care Act (PPACA), CMS has yet to publicly release the number of newly-eligible childless adults enrolled in Medicaid under PPACA -- despite repeated requests from our offices." As such, the lawmakers asked the agency for the same level of transparency demanded of the states in CMS's requests and seek answers within 10 days of receiving the letter to 10 specific questions regarding the health law's Medicaid expansion.

2. ADMINISTRATION

CMS Offering Administrative Option to Hospitals with Pending Medicare Appeals

To more quickly reduce the volume of patient status claim denials currently pending in the appeals process, CMS this month announced the availability of an administrative agreement to any acute care hospital or CAH willing to withdraw their pending appeals (or waive their right to request an appeal) in exchange for timely partial payment (68 percent of the net payable amount). The administrative agreement covers admissions prior to Oct. 1, 2013. Administrative agreement requests are due to CMS by Oct. 31, 2014. For details about the providers and claims eligible for administrative agreement, as well as the documents needed to request such an agreement, visit the Inpatient Hospital Reviews web page. In a letter to HHS Secretary Sylvia Burwell, Rep. Kevin Brady (R-TX), chairman of the House Ways and Means Subcommittee on Health questioned CMS's authority for making the settlement offer, noting that the statute cited by the agency refers to overpayments while the appeals in question pertain to medical necessity.

CMS: ACOs Initiatives Fact Sheet Outlines Program Savings

In a fact sheet released Sept. 16, the Centers for Medicare and Medicaid Services (CMS) announced that Accountable Care Organizations (ACOs) in the Pioneer ACO Model and Medicare Shared Savings Program (Shared Savings Program) generated more than $372 million in total program savings for Medicare ACOs while ACOs qualified for shared savings payments of $445 million. In an ACO, providers who enroll become eligible to share savings with Medicare when they provide care more efficiently. The data released includes year one performance for 220 ACOs enrolled in the Medicare Shared Savings Program and preliminary data on year two results for 23 Pioneer ACOs. Data shows that Pioneer ACOs had Medicare spending growth of 1.4 percent or 0.45 percent less than in traditional Medicare fee-for-service. Eleven Pioneer ACOs produced shared savings, while three had shared losses and three decided to wait until next year to tally their results. In its fact sheet, CMS said, "Beneficiaries seeing health care providers in ACOs always have the freedom to choose doctors inside or outside of the ACO. Medicare shares with ACOs any savings generated from lowering the growth in health care costs when they meet performance standards for high quality care." Since passage of the Affordable Care Act (ACA), more than 360 Medicare ACOs have been established, serving over 5.6 million Americans enrolled in Medicare.

The press release for the program can be found here.

HHS Secretary Announces Agency's Strategy to Improve Care Delivery

On Sept. 16, prior to the announcement on the agency's Accountable Care Organization (ACO) initiative savings, Secretary Sylvia Burwell of the Department of Health and Human Services (HHS) published an overarching strategy on how the agency will strive to improve health care delivery in the future. In her release, Secretary Burwell said, "At HHS, we understand that it's our role and responsibility to lead in the areas we can. Medicare and Medicaid are the two biggest health insurance plans in the world. In total, they cover roughly one in three Americans. And we believe there's a lot of opportunity there to deliver better care to beneficiaries, while spending taxpayer's dollars more wisely."

The agency's strategy is based on three principle incentives:

• Incentives -- Changing the way providers are paid for care through new alternative payment models; this process would include fostering demonstration projects to identify improvements to Medicare payments.
• Tools -- Providing technical assistance and grants for electronic health records (EHR), practice design and recruiting of world-class doctors.
• Information -- Making it easier for doctors and patients to have relevant information to guide their care, as with the release of the Medicare pay data, making EHRs more interoperable and publishing quality metrics for providers.

CMS Expects Higher Medicare Advantage Enrollment in 2015

In a press release dated Sept. 18, the Centers for Medicare and Medicaid Services (CMS) announced that the agency expects record numbers of seniors to enroll in private Medicare Advantage (MA) plans in 2015. Moreover, CMS estimates 2015 MA average premiums will increase by only $1.30, due to the fact that the agency believes more beneficiaries will opt to enroll in lower-cost plans. In the release, CMS says the vast majority of MA enrollees will see little or no premium increase for next year, with 61 percent of beneficiaries not experiencing any premium increase at all. CMS also noted improvements in MA plan quality, announcing that approximately 40 percent of MA contracts will receive four or more stars for 2015, an increase of around 6 percent from 2014. "Since the Affordable Care Act was enacted, enrollment in Medicare Advantage plans is now at an all-time high, and premiums have fallen," said CMS Administrator Marilyn Tavenner. "Seniors and people with disabilities are benefiting from a transparent and competitive marketplace for Medicare health and drug plans." The annual open enrollment period for Medicare health and drug plans begins on Oct. 15 and ends Dec. 7. By 2015, MA enrollment is expected to have grown 42 percent from 2010 and premiums to have declined 6 percent.

CDC: Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey, January-March 2014

According to a recent survey conducted by the Centers for Disease Control and Prevention (CDC), in the first three months of 2014, 41.0 million persons of all ages (13.1 percent) were uninsured at the time of interview, 55.5 million (17.8 percent) had been uninsured for at least part of the year prior to interview and 29.9 million (9.6 percent) had been uninsured for more than a year at the time of interview. In addition, among persons under age 65, 61.8 percent (165.6 million) were covered by private health insurance plans at the time of interview. This includes 1.4 percent (3.7 million) covered by private plans through the Health Insurance Marketplace or state-based exchanges at the time of interview between January and March 2014. For more information, please visit www.cdc.gov.

3. STATE ACTIVITIES

Major Minnesota Health Plan to Abandon Exchange

Consumers seeking health coverage in Minnesota through the state's insurance exchange could encounter higher costs as a result of a recent decision by PreferredOne, a plan that had set the lowest premium prices in the nation last year and signed up nearly six in ten consumers who shopped on the exchange, known as MNsure. According to a statement issued by PreferredOne CEO Marcus Mertz, "continuing to provide this coverage through MNsure is not sustainable." Current PreferredOne customers will be able to retain their existing coverage through the end of this year, and will still have the option to stay with PreferredOne next year, under state law; however such coverage purchased outside the exchange would not qualify for tax subsidies. For more information, please visit www.startribune.com.

South Carolina: Available ACA Insurance Plans Expected to Rise

According to a report released Sept. 10 by South Carolina's state insurance department, the number of health plans available to consumers enrolled in the state's federally run health insurance exchange is expected to more than double in 2015. In 2014, the state's federally run exchange offered 52 plans from four insurers while in 2015 it will offer 126 plans from five insurers. In a more detailed breakdown, the report notes that there will be six choices for the highest-cost platinum plans, 23 for gold plans, 50 for the most popular silver plans, 38 for bronze plans and nine for the least expensive catastrophic care plans. The Insurance Department has yet to include rates for new plans, which are expected to be released in October.

4. REGULATIONS OPEN FOR COMMENT

Guidance for Industry on Registration of Human Drug Compounding Outsourcing Facilities Under Section 503B of the Federal Food, Drug, and Cosmetic Act

The Food and Drug Administration (FDA) has announced that a proposed collection of information has been submitted to the Office of Management and Budget (OMB) for review and clearance under the Paperwork Reduction Act of 1995 (the PRA). FDA is working to implement provisions added to the Federal Food, Drug, and Cosmetic Act (the FD Act) by the Drug Quality and Security Act (DQSA), which created a statutory category of "outsourcing facilities" that compound human drugs. Section 503B of the FD Act allows compounders to register with FDA as outsourcing facilities. Drug products compounded in an outsourcing facility can qualify for exemptions from the FDA approval requirements in Section 505 of the FD Act and the requirement to label products with adequate directions for use under Section 502(f)(1) of the FD Act if the requirements in Section 503B are met. The guidance discusses the process for registration of outsourcing facilities.

Under the guidance, facilities that elect to register must submit the following registration information to FDA for each facility:

• name of the facility;
• place of business;
• unique facility identifier;
• point of contact email address and phone number;
• whether the facility intends to compound drugs that appear on FDA's drug shortage list in effect under Section 506E of the FD Act; and
• an indication of whether the facility compounds from bulk drug substances, and if so, whether it compounds sterile or nonsterile drugs from bulk drug substances.

After initial registration, outsourcing facilities that wish to remain an outsourcing facility must re-register annually between Oct. 1 and Dec. 31 of each year. Registration information should be submitted to FDA electronically using the Structured Product Labeling (SPL) format and in accordance with Section IV of the FDA guidance entitled "Providing Regulatory Submissions in Electronic Format--Drug Establishment Registration and Drug Listing." In the draft guidance issued on Dec. 4, 2013, FDA described an alternative interim registration mechanism for use after initial passage of the DQSA and until Sept. 30, 2014. The final guidance specifies the use of the SPL format for all registrations. Under the final guidance, outsourcing facilities may request a waiver from the SPL electronic submission process by submitting a written request to FDA explaining why the use of electronic means is not reasonable for the person requesting the waiver.

Comments are due Sept. 26, 2014.

5. REPORTS

Healthcare.gov: Information Security and Privacy Controls Should Be Enhanced to Address Weaknesses

According to a GAO report released Sept. 18, while CMS has security and privacy-related protections in place for Healthcare.gov and related systems, weaknesses exist that put these systems and the sensitive personal information they contain at risk. Specifically, CMS established security-related policies and procedures for Healthcare.gov, including interconnection security agreements with the federal agencies with which it exchanges information. It also instituted certain required privacy protections, such as notifying the public of the types of information that will be maintained in the system. However, weaknesses remained in the security and privacy protections applied to Healthcare.gov and its supporting systems. Enrollment through Healthcare.gov is supported by the exchange of information among many systems and entities. The Department of Health and Human Services's (HHS) Centers for Medicare & Medicaid Services (CMS) has overall responsibility for key information technology (IT) systems supporting Healthcare.gov.

MedPAC September 2014 Meeting Summary

The Medicare Payment Advisory Commission (MedPAC or Commission) is an independent Congressional agency established by the Balanced Budget Act of 1997 (P.L. 105-33) to advise the U.S. Congress on issues affecting the Medicare program. On Sept. 11-12, the Commission met to discuss select policy initiatives. The meeting was divided into seven sessions:

• Context for Medicare payment policy
• Developing payment policy to promote use of services based on clinical evidence
• Update on Medicare Accountable Care Organizations (ACOs)
• Medicare Advantage demographics and enrollment patterns
• Beneficiary and physician focus groups
• Hospital short-stay policy issues
• Mandated report: Impact of home health payment rebasing on beneficiary access to and quality of care

For more information, please visit medpac.gov.

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