United States: Washington Healthcare Update

Last Updated: October 13 2015
Article by Stephanie A. Kennan, Charlyn A. Iovino and Amanda Anderson

This Week: Congress Avoids a Government Shutdown... House and Senate Approves Measure to Expand the Affordable Care (ACA) Act Small Group Market to 100 Employees...Affordable Care Act (ACA) Health Insurers to Receive Only 12.6 Percent Reinsurance Rate of Under Risk Corridors Program

1. Congress


Congress Avoids a Government Shutdown

House and Senate Members avoided a government shutdown on Sept. 30, the day the 2015 fiscal year ended, by passing a short-term continuing resolution (CR)funding the government through Dec. 11. The House- passed CR without a controversial Tea-Party provision to defund Planned Parenthood, passed in a vote of 277-151, relying on Democrats to pass the bill. The Senate passed the CR in a 78-20 vote. A spending fight is expected to resume soon, as members try to hash out a long-term plan for the budget.

House and Senate Approves Measure to Expand the Affordable Care (ACA) Act Small Group Market to 100 Employees

The House of Representatives on Sept 28 passed by voice vote the Protecting Affordable Coverage for Employees Act (PACE) and the Senate did the same on October 1. The White House has not signaled whether they will sign the legislation. Under the ACA, the definition of small employer would increase from 1-50 employees to 1-100 employees. However, the legislation provides states the flexibility to expand the small group size. Both the House and Senate passed the legislation by voice vote.

Insurers and business groups were concerned that the change which would have gone into effect January 1, 2016, would force employers to seek new coverage and disrupt the marketplace.

House Committees Begins Reconciliation Discussions to Target the Affordable Care Act (ACA)

House committees began the process to move reconciliation legislation and included several provisions related to the ACA. In the budget resolution passed by both chambers of Congress earlier this year, three House committees were given instructions for " reconciliation" legislation that cuts a total of $3 billion from the budget. The Ways and Means Committee passed its reconciliation proposal on Sept. 29.. That package includes repeal of the ACA's individual and employer mandate repeal of the medical device and repeal of the "Cadillac" tax paid if the value of an insurance policy exceeds a threshold. In addition, the package repeals the Independent Payment Advisory Board (IPAB), a board created by the ACA to make cuts in health spending but has never been staffed.

The same day, the Energy and Commerce Committee passed t a reconciliation proposal , to defund Planned Parenthood under Medicaid ( about $390 million per year to be replaced with $235 million in funding for community health centers) and the ACA's Public Health Fund.

The Committee on Education and the Workforce used its reconciliation markup to target the "auto-enrollment mandate." This ACA function requires employers with 200 or more full-time employees to automatically enroll new full-time employees in job-based coverage if the worker does not pick another employer plan or decline coverage within 90 days of their hire.

The three committees' approved measures will be combined into one proposal and then will be sent to the House floor. President Obama is likely to veto the package. While the Senate is expected to also craft a reconciliation package, they have not yet begun to do so.

House Sends Clinical Trails Act to the President's Desk

On Sept. 28, the House of Representatives passed the Ensuring Access to Clinical Trials Act of 2015" (H.R.209). The bipartisan bill would allow people receiving Supplemental Security Income (SSI) and Medicaid benefits to participate in clinical trials without jeopardizing their eligibility for those income-eligible benefits. An identical Senate bill, sponsored by Senate Finance Ranking Member Ron Wyden (D-OR), Finance Chair Orrin Hatch (R-UT) and Sen. Edward Markey (D-MA), passed the Senate in July. The President is expected to sign the bill into law.

The legislation makes permanent a 2010 law which included a sunset provision ending the program after five years, so that its effects could be studied. The Government Accountability Office (GAO) released a report analyzing the program last year and determined there weren't any negative aspects.

House Passes Bill to Allow Individuals to Opt Out of Affordable Care Act (ACA) Individual Mandate for Religious Reasons

The House of Representatives approved H.R. 2061, the Equitable Access to Care and Health Act (EACH) on Sept. 28. This legislation extends the ACA's religious conscience exemption from the individual mandate to purchase health insurance to include individuals who rely solely on a religious method of healing and for whom the acceptance of medical health services would be inconsistent with their religious beliefs from the requirement to purchase and maintain minimum essential health care coverage. This language is most often used to describe Christian Scientists.

The ACA currently contains a religious conscience exemption, but it extends only to groups that refuse all insurance programs, including Medicare and Social Security, such as the Amish and some conservative Mennonite groups. Federal social legislation has traditionally made a special exemption provision for Christian Scientists. The legislation does not preempt state laws governing provision of medical services to children.

An identical Senate bill was introduced by Sen. Kelly Ayotte (R-NH). The Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) cost estimates show that, if signed into law by President Obama, the EACH Act would increase the federal deficit by $1.2 billion in the next decade.

House Ways and Means Committee Members Send Letter to Centers for Medicare and Medicaid Services (CMS) on Financial Solvency of the Affordable Care Act (ACA) Insurance Co-ops

On Sept. 30, House Ways and Means Oversight Subcommittee Chairman Peter Roskam (R-IL), Health Subcommittee Chairman Kevin Brady (R-TX), and Rep. Adrian Smith (R-NE) sent a letter to the Acting Administrator CMS, Andrew Slavitt expressing concern over the lack of oversight on ACA Consumer Operated and Oriented Plans (CO-OPS). Co-ops, are a type of non-profit health insurer created by the ACA which can s offer health plans both through the health insurance exchanges and outside the exchanges. The letter asked CMS to disclose which co-ops have been placed on "enhanced oversight". To date, four CO_OPS have announced that they will close. Members are concerned about the $542.9 billion spent on those four CO-Ops. The lawmakers wrote, "We look forward to working with you to improve oversight, accountability, and transparency of the CO-OPs, and most importantly, to protect taxpayers who stand to lose when they fail." 19 Insurance Co-ops currently operate under the Affordable Care Act (ACA).

Bicameral, Bipartisan Letters Urges the Centers for Medicare and Medicaid Services (CMS) to Prevent Proposed Reimbursement Cuts to Radiation Therapy

In three separate letters, members of the House and Senate wrote to CMS' Acting Administrator Andy Slavitt asking that a potential 6 percent cut to free standing radiation therapy centers be prevented. CMS proposed this reduction in its' 2016 Physician Fee schedule. Free standing radiation therapy centers serve nearly 40 percent of all cancer patients. Radiation therapy providers have seen a cumulative reduction in Medicare reimbursement of almost 20 percent over the past decade.

Members warned CMS that reimbursement rate cuts would be particularly onerous on patients diagnosed with breast and prostate cancer, cancers that have the highest annual growth rate (after skin cancer). The American Society for Radiation Oncology has voiced concerns that the proposed cuts will limit access to care. Sens. Richard Burr (R_NV) and Debbie Stabenow (D-MI), and Reps. Devin Nunes (R-CA), Paul Tonko (D-NY) and Robin Kelly (D-NY) led the letters.. Free standing radiation therapy centers serve nearly 40 percent of all cancer patients due to convenience and the ability to solicit personalized care. Radiation therapy provides have seen an almost cumulative 20 percent reimbursement drop in the past decade.

The House letters can be found here and here.

The Senate Letter can be found here.

House Energy and Commerce Health Subcommittee Holds Hearing on Three Medicare Bills

The House Energy and Commerce Subcommittee on Health held a hearing on Oct.1 to discuss three legislative proposals related to the Medicaid program

  • H.R. 1934, the Cancer Care Payment Reform Act of 2015 : Sponsored by Representative Cathy McMorris Rodgers (R-WA) and Steve Israel (D-NY), establishes a medical home demonstration for cancer care called the Oncology Medical Home Demonstration Project
  • H.R. 556, the Prevent Interruptions in Physical Therapy Act of 2015 : Introduced by Representative Gus M. Bilirakis(R-FL) and Representative Ben R. Lujan (D-NM). This legislation amends Medicare Part B to permit physical therapists the same latitude as other Medicare providers to to substitute another provider under their provider number in the absence of a provider for reasons such as illness, vacation, pregnancy or continuing medical education
  • H.R.___, To amend title XVIII of the Social Security Act : A discussion draft authored by Representative Greg Walden (R-OR), to make changes to the Medicare home health face-to-face encounter requirements:

Witness List

Dr. Bruce Gould MD
Community Oncology Alliance

Sarah Meyers CAE
Executive Director
Oregon Association of Health Care

Sandra Norby PT, AT
HomeTown Physical Therapy, LLC

A background memo detailing the bills can be found here

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

House Energy and Commerce Oversight Subcommittee to Hold Hearing on State Exchange Marketplaces

The House Energy and Commerce Subcommittee on Oversight and Investigations, chaired by Rep. Tim Murphy (R-PA), held a hearing on Sept. 29 entitled "ACA Overdue Checkup: Examining the ACA's State Insurance Marketplaces." Subcommittee members heard testimony from six states that have state based exchanges as part of the Affordable Care Act (ACA). Members were particularly interested in whether states intended to repay ACA funds used to construct troubled state information technology platforms for the state exchanges, particularly in states that abandoned the construction of their own exchanges in favor of using federal platform Healthcare.gov. and in the long term financial sustainability of the exchanges.

Witness List

Peter V. Lee
Executive Director
Covered California
State of California

Jim Wadleigh, Jr.
Chief Executive Officer
Access Health CT
State of Connecticut

Jeff M. Kissel
Executive Director
Hawaii Health Connector
State of Hawaii

Louis Gutierrez
Executive Director
Massachusetts Health Connector
State of Massachusetts

Allison O'Toole
Interim Chief Executive Officer
State of Minnesota

Patrick Allen
Department of Consumer and Business Services
State of Oregon

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


The Senate Health, Education, Labor, and Pensions (HELP) Committee Approves Mental Health Legislation

The Senate HELP Committee approved on a voice vote legislation, S. 1893 Mental Health Awareness and Improvement Act of 2015, that reauthorizes and makes targeted changes to programs related to awareness, prevention and early identification of mental health conditions and the promotion of linkages to appropriate services for children, and youth. The bill focuses on suicide prevention, helping children recover from traumatic events, mental health awareness for teachers and others and assessing barriers to integrating behavioral health and primary care. The bill also stresses efforts to assist states and local communities in addressing mental health needs.

Introduced by Chair Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA), the bill has 22 cosponsors. The committee is expected to take up a much more comprehensive mental health reform bill authored by Sens. Chris Murphy (D-CT) and Bill Cassidy (R-LA) in the coming months.

Letter to the Department of Health and Human Services (HHS) From Two Senate Committee Chairman: Adopt Stage Two of the Electronic Health Records Program and Finalize Stage Three No Sooner Than 2017

Senate Health, Education, Labor, and Pensions (HELP) Committee Chairman Lamar Alexander (R-TN) and Commerce, Science, and Transportation Committee Chairman John Thune (R-SD) sent a letter on Sept. 28 urging the Administration to immediately adopt stage two modifications for the federal government's program requiring doctors and hospitals to create electronic health records systems, and make the rules for stage three final not before Jan.1, 2017. "t... stage two requirements are so complex that only about 12 percent of eligible physicians and 40 percent of eligible hospitals have been able to comply. ... The modified stage two rule will enable more providers to comply with the government's requirements. It should be adopted immediately to give physicians and hospitals time to adapt to these huge changes," the letter said. They continued, "If the department does not delay making final the stage three rules and instead proceeds before it can measure the impact of the modified stage two rule, it will be a missed opportunity to build support among providers." The chairmen's letter comes as a bipartisan group of 96 Republicans and 20 Democrats in the House of Representatives in a separate letter to the Administration urged it to "pause" the process of making stage three rules final.

Senate Health, Education, Labor, and Pensions (HELP) Committee Holds Hearing on Health Information Technology

The Senate Health, Education, Labor, and Pensions Committee (HELP) held a hearing with Department of Health and Human Services (HHS) witnesses on Oct. 1 entitled "Achieving the Promise of Health Information Technology." At the hearing Chairman Lamar Alexander (R-TN) offered Administration officials five reasons to take more time before making final the stage 3 rule of the federal government's program to require doctors and hospitals to create electronic health records systems. "The whole purpose of this program is to benefit patients, so that they and their health care providers have quicker and better access to their health histories and their doctors and hospitals and pharmacists can provide them with better care." Chairman Alexander also used his time to point out that the Merit-Based Incentive Payment System (MIPS) pays out penalties and bonuses based partially on meeting meaningful use. Meaningful use will be 25 percent of a provider's MIPS score.

In response, CMS Principal Deputy Administrator Patrick Conway noted the MIPS program, which was part of the Sustainable Growth Rate (SGR) replacement law passed earlier Congress, affords CMS the ability to look beyond an all-or-nothing approach to meeting meaningful use. Doctors have been continually asking for more flexibility in the program so that a provider meeting the vast majority of requirements of the program will not be subject to tough penalties just for missing one requirement. At the hearing, Sen. Bill Cassidy (R-LA) also announced that he and Sen. Sheldon Whitehouse (D-RI) plan to co-introduce a bill on electronic health record interoperability the following week. The hearing was the committee's sixth on electronic health records.

Witness List

Karen DeSalvo, MD, MPH, MSc
National Coordinator for Health Information Technology Department of Health and Human Services
U.S. Department of Health and Human Services

Patrick Conway, MD, MSc
Acting Principal Deputy Administrator Deputy Administrator for Innovation and Quality, Centers for Medicare and Medicaid Services Chief Medical Officer
Centers for Medicare and Medicaid

Bicameral, Bipartisan Letter Urges Centers for Medicare and Medicaid Services (CMS) Not to Make Medicare Reimbursement Rate Cuts for Colorectal Cancer Screening

Separate House and Senate letters opposed CMS' proposed reduction in Medicare reimbursement for colorectal cancer screening. The House letter was signed by almost 100 members and the Senate letter was signed by 27 Senators. CMS proposed reducing reimbursement by ten to 200 percent in the proposed 2016 Medicare Physician Fee Schedule

The House letter can be found here.

The Senate letter can be found here.

2. Administration

Centers for Medicare and Medicaid Services (CMS) Announces Medicare Part D Enhanced Medication Therapy Management (Enhanced MTM) Model

On Sept. 28, CMS's Center for Medicare and Medicaid Innovation (CMMI) announced a model to test strategies to improve medication use among Medicare beneficiaries enrolled in Part D.. The Part D Enhanced Medication Therapy Management (Enhanced MTM) model will assess the feasibility of providing selected Medicare Prescription Drug Plans (PDPs) with additional incentives and flexibilities to design and implement innovative programs will better achieve the overall goals for MTM programs, including 1) improving compliance with medication protocols 2) reducing medication-related problems, such as duplicative or harmful prescription drugs, or suboptimal treatments; 3) increasing patients' knowledge of their own medications and 4) improving communication among prescribers, pharmacists, caregivers and patients.

The Enhanced MTM model test will begin January 1, 2017 with a five-year performance period in 5 Part D regions: Region 7 (Virginia), Region 11 (Florida), Region 21 (Louisiana), Region 25 (Iowa, Minnesota, Montana, Nebraska, North Dakota, South Dakota, Wyoming), and Region 28 (Arizona). Eligible stand-alone prescription drug plans in these regions can apply to vary the intensity and types of MTM interventions they offer based on beneficiary risk level and seek out a range of strategies to individualize beneficiary outreach and engagement.

More information about the Enhanced MTM model test can be found here.

The Department of Health and Human Services (HHS) Announces $685 Million in Federal Funding for Regional Healthcare Networks

On Sept. 29, HHS Secretary Sylvia Burwell announced $685 million in grant awards to 39 national and regional health care networks and supporting organizations in who will participate in the Transforming Clinical Practice Initiative. The initiative's purpose is to equip more than 140,000 clinicians with the tools and support needed to improve quality of care, increase patients' access to information, and reduce healthcare costs. The Transforming Clinical Practice Initiative is one of the largest federal investments designed to support doctors and other clinicians in all 50 states through collaborative and peer-based learning networks for primary and specialty physicians, nurse practitioners, physician assistants, clinical pharmacists, and their practices..

For a list of awardees and their project abstracts, visit cms.gov.

Affordable Care Act (ACA) Health Insurers to Receive Only 12.6 Percent Reinsurance Rate of Under Risk Corridors Program

On Oct. 1, HHS announced what payments will be made to insurers related to their risk corridors. Health insurers in the marketplaces created by the ACA will be reimbursed this year only 12.6 percent of the money they are owed under the law's Risk Corridors Program. Based on current data from qualified health plan issuers' risk corridors submissions, HHS said issuers will pay $362 million in risk corridors charges, and have submitted for $2.87 billion in risk corridors payments for 2014. HHS will begin collection of risk corridors charges in November, 2015, and will begin remitting risk corridors payments to issuers starting December, 2015. Reinsurance provides a safeguard against individuals with high medical costs – known as "high risk" – during the first three years of the ACA's insurance market reforms (2014-2016). All ACA-compliant, non-grandfathered plans on the individual market, both inside and outside the exchanges are eligible for reinsurance payments. A CMS regulatory impact analysis estimated that the reinsurance protection allowed insurers to price their premiums 10-15 percent lower in 2014 than what prices would have been otherwise.

The Centers for Medicare and Medicaid Services (CMS) Has Initiated New Data Matching Initiative to Capture Double Enrollment in Federally Subsidized Exchange Plans and Medicaid

CMS released a frequently asked questions document on Sept. 28 reporting that the agency has begun conducting Periodic Data Matching (PDM) in the Marketplace to help ensure consumers enrolled in Medicaid or CHIP coverage are not also accidentally enrolled in a an exchange plan with Advance Payments of the Premium Tax Credit (APTC) or Cost-Sharing Reductions (CSRs). The matching program alerts customers who are doubly enrolled and warns them that they need to end their exchange coverage and may have to reimburse the Internal Revenue Service for their ATCs. The agency has performed the validation process cross-referencing data from Medicaid and CHIP data and the exchanges.

Furthermore, CMS began sending notices to consumers in Sept. warning that they could be held accountable for some or all of their ATC should they fail to update their status with the federally facilitated marketplace. The CMS document clarified that consumers could end up being dually enrolled if he or she signed up for a qualified health plan with tax credits and subsequently was eligible for Medicaid/CHIP, but failed to report the change to the marketplace. Similarly, CMS mentioned that a consumer could enroll directly into Medicaid/CHIP via a state agency and fail to terminate marketplace coverage. The document is intended to reinforce in many places the need for consumers to report changes to the exchange and to end exchange coverage when enrolling in other minimum essential coverage programs.

In the first round of PDM, the Marketplace could not identify all consumers in all states who were dually-enrolled because not all states were able to fully participate. CMS further reveals that the federally facilitated marketplace could not identify all dually eligible consumers in the first PDM round because not all states were able to fully participate. Consumers in the following states will not receive notices in this round of PDM: AK, DE, GA, ME, MI, NJ, OR, SC, TN, and WY. CMS anticipates participation of these states in future rounds of PDM.

The Department of Health and Human Services (HHS) Funds Development of New Drug to Treat Influenza

HHS's Office of the Assistant Secretary for Preparedness and Response (ASPR) has entered into an agreement with drug developers to advance the development of a monoclonal antibody therapeutic drug to treat patients with influenza. This type of drug has never been approved by the Food and Drug Administration (FDA) to treat influenza. Visterra Inc. of Cambridge, Massachusetts is developing the drug, VIS410. According to researchers, the drug may be affective against flu strains that are resistant to current antiviral drugs because the target area evolves more slowly. ASPR's Biomedical Advanced Research and Development Authority (BARDA) has approved Visterra for a 40-month, $29.1 million clinical study on the safety and efficacy of VIS410. Under the agreement, Visterra can also manufacture materials for use in clinical studies and optimize the manufacturing process. The clinical study will also attempt to determine the drug's efficacy if it is administered more than 48 hours after the onset of symptoms as current treatment works best if administered before the 48 hour window. The contract between BARDA and Visterra could be extended for up to five years and $204.5 million.

3. State Activities

South Dakota Governor Release Announces Few Details on State's New Medicaid Expansion Plan

South Dakota Gov. Dennis Daugaard (R) will meet with Secretary of the Department of Health and Human Services (HHS) Sylvia Burwell on Oct. 6 to discuss his new Medicaid expansion plan. The proposal, which is in its preliminary stages, would provide Medicaid coverage to 48,500 South Dakotans newly eligible residents earning at or below 133 percent of the federal poverty line. Details of the proposal have not been made public, but the proposal pays for the South Dakota's portion of the expansion in part by expanding access to services that are fully funded by the federal government, such as programs in the Indian Health Service (IHS), with the goal of freeing up enough state funding to pay for the addition of more residents to the Medicaid program.

Gov. Daugaard's expansion is expected to cost South Dakota between $30 million and $33 million starting in 2020, after the federal matching rate for Medicaid expansion drops from 100 percent to 90 percent. HHS previously rejected a 2014 plan from the state to partially expand Medicaid to cover people earning up to 100 percent of the poverty line. Thus far, 30 states and the District of Columbia have opted to expand Medicaid under the Affordable Care Act (ACA).

Texas Implores the Centers for Medicare and Medicaid Services (CMS) to Renew Medicaid Demonstration Waiver for a $35 Billion Extension for Its Uncompensated Care Pool

On Sept. 30, Texas Gov. Greg Abbott's (R) Administration submitted an application for a five year extension of it Section 1115 demonstration waiver, asking CMS to provide the state with roughly $35 billion for hospitals to offset future uncompensated care costs for low income individuals. This amount is almost double the original $17.6 billion providers received under the current waiver. The additional funding, Texas says, is on par with the growing uncompensated care cost burden that providers, mostly hospitals, will be subject to in the coming years.

The state's Healthcare Transformation waiver was initially granted before the Supreme Court made Medicaid expansion optional under the Affordable Care Act (ACA) in 2012. The application will likely initiate a battle between CMS and the state for hospital funding, exacerbated by the fact that the state is adamantly against expanding Medicaid under the ACA..

Vermont Insurance Exchange To Head Offline to Undergo Technical Testing

Vermont Health Connect , the Vermont's online Affordable Care Act (ACA) health insurance marketplace will be taken offline from Oct. 1 to Oct 3 so software engineer contractor Optum can install key software upgrades to make certain the site functions properly for the start of annual enrollment on Nov. 1. The state's exchange website has experienced problems since its initial launch during the first open enrollment period in 2013. This spring Gov. Peter Shumlin said if the state's new vendor wasn't able to fix it by now he'd consider pulling the plug and moving to the federal exchange. This month, after some initial testing, Democratic Gov. Shumlin announced that he's "thrilled" with the progress since then -- including a June software upgrade that has helped weigh through a backlog of 10,000 online customer applications; during that time period, customers did not even have website functionality to make basic policy changes with the click of their mouse. The weekend upgrade is supposed to mean the exchange smoothly processes 2016 coverage requests and policy renewals.

Minnesota Health Insurance Premiums to Rise in 2016

On Oct. 1, the Minnesota Department of Commerce announced that in 2016, health insurance premium increases for individual plans will range from an average of 14.2 percent to 49 percent, with six of the eight plans increasing rates by more than 25 percent. The data includes plans sold both on and off the state's Obamacare exchange. The increases are due to a higher concentration of sicker, more expensive patients than insurance companies expected.

4. Regulations Open for Comment

Centers for Medicare and Medicaid Services (CMS) Issues Proposed Rule to Begin Data Collection for New Fee Schedule for Medicare Clinical Diagnostic Laboratory Tests

CMS released a proposed rule Sept. 25 that initiates the agency's next step in implementing the Protecting Access to Medicare Act of 2014 (PAMA), a bill that requires clinical laboratories to report on private insurance payment amounts and volumes for lab tests. Under the proposed rule, certain laboratories would be required to report private payer rate and volume data if they receive at least $50,000 in Medicare revenues from laboratory services and more than 50 percent of their Medicare revenues from laboratory and physician services. Laboratories would collect private payor data from July 1, 2015 through December 31, 2015 and report it to CMS by March 31, 2016. CMS will post the new Medicare rates by November 1, 2016; these rates will be effective on January 1, 2017. Tests that meet the criteria for being considered new advanced diagnostic laboratory tests (ADLTs) will be paid at actual list charge for a minimum of three quarters. ADLTs are tests offered under Medicare Part B and are furnished by only one laboratory and that either include a unique algorithm and are at a minimum an analysis of RNA or DNA, or are cleared or approved by the U.S. Food and Drug Administration (FDA). Under PAMA, the Medicare payment amount for any test cannot be reduced by more than 10% compared to the prior year's amount during the first three years of implementation (2017-2019) and cannot be reduced by more than 15% in the following three years (2020-2022).

Medicare's current fee schedule for lab tests was first adopted in 1984 and has remained relatively unchanged except to establish payments for new tests or implement across-the-board statutory payment updates. Medicare pays approximately $8 billion a year for clinical diagnostic laboratory tests. The new system will be updated every three years for clinical diagnostic laboratory tests (CDLTs) and every year for ADLTs to reflect market rates paid by private payers. One hot-button issue in the proposed rule is the definition of "applicable laboratory." PAMA defined an applicable laboratory as one that receives a majority of its Medicare revenues under the MCLFS or the Medicare Physician Fee Schedule (MPFS). In a fact sheet summarizing the proposed rule, CMS said it does any hospital laboratory to meet the definition of "applicable laboratory" and that more than 50% of independent laboratories and more than 90% of physician offices would likely be excluded based on the $50,000 threshold. The proposed rule was published in the Federal Register on Oct. 2. CMS will solicit comments until November 24, 2015.

The Centers for Medicare and Medicaid Services (CMS) Offers Request for Information (RFI) to Solicit Answers to Physician Pay Formula Questions

On Sept. 28, CMS released an RFI to seek public comment related to new provisions in the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA): Merit-based Incentive Payment System (MIPS), Alternative Payment Models (APMs) and a physician-focused payment model (PFPMs). Rather than offering much insight on how it plans to implement the physician pay formula (SGR), the "request for information" asks about 150 questions. In April 2015, Congress voted to repeal and substitute the SGR with a system that aims will pay providers contingent on the value of care they provide.

The SGR legislation creates a payment system that encourages physicians to participate in alternative value-based pay models. Beginning in 2026, the physician reimbursement rate will rise 0.75 percent annually for providers that utilize alternative pay models. Alternatively, physicians that do not enroll in alternative pay models will only see a 0.25 percent pay raise each year. For providers who receive a substantial part of their revenue from alternative pay models, they will get an additional 5 percent bonus from 2019 to 2024, in combination with the shared savings bonuses or fees they might collect for participating in those models. Worth noting, providers do not have to participate in alternative pay models to get value-based care bonuses. The Doc Fix law also consolidates Medicare's three existing quality programs into the MIPS, which begins in 2019. Sans this overarching payment structure, the Doc Fix law leaves much of this new pay system to CMS' discretion; CMS now requests provider feedback on the most efficient way to accomplish the savings and enhanced care goals of the new law.

The Centers for Medicare and Medicaid Services (CMS) Offers Long-term Care Reform Proposed Rule

In conjunction with the White House Conference on Aging, the Centers for Medicare and Medicaid Services released a long-term care reform proposed rule July 16. The rule concerns reducing unnecessary hospital readmissions and infections, and strengthening safety measures for the nearly 1.5 million residents in the more than 15,000 long-term care facilities or nursing homes that participate in the Medicare and Medicaid programs. The proposed changes include:

  • Ensuring nursing home staff is properly trained on caring for residents with dementia and in preventing elder abuse.
  • Ensuring that staff members have the right skill sets and competencies to provide person-centered care to residents.
  • Improving care planning, including discharge planning for all residents with involvement of the facility's interdisciplinary team and consideration of the caregiver's capacity, giving residents information they need for follow-up, and ensuring that instructions are transmitted to any receiving facilities or services.
  • Allowing dietitians and therapy providers the authority to write orders in their areas of expertise when a physician delegates the responsibility and state licensing laws allow.
  • Updating the nursing home's infection prevention and control program, including requiring an infection prevention and control officer and an antibiotic stewardship program.

Many of the proposals in the draft rule build on improvements that nursing homes have already made since 1991, the last time these conditions of participation were comprehensively updated. The recommended reforms were published in a proposed rule in the July 16, 2015, Federal Register. The comment period for the proposed rule ended on Sept. 14, 2015, and was reopened until Oct. 15, 2015.

Department of Health and Human Services (HHS) Proposes Updates to "the Common Rule"

HHS and 15 other agencies released a notice of proposed rulemaking Sept. 2 for the Common Rule, the existing regulatory framework to transparency and oversight for scientific research involving human subjects. The proposed changes are to address the substantial changes that have occurred within scientific research. Current regulations have been in place since 1991 and are followed by 18 federal agencies. Proposed updates to the rule include:

  • Strengthened informed consent provisions
  • Requirements for administrative or IRB review that would align better with the risks of the proposed research
  • New data security and information protection standards
  • Requirements for written consent for use of an individual's biological samples, for example, blood or urine, for research with the option to consent to their future use for unspecified studies
  • Requirement, in most cases, to use a single institutional review board for multisite research studies
  • Application of rule to clinical trials, regardless of funding source, if they are conducted in a U.S. institution that receives funding from a Common Rule agency for research involving human participants.

In July 2011, HHS issued an Advance Notice of Proposed Rulemaking to seek the public's input on updating the Common Rule. The proposed rule issued reflects input and requests comments for HHS to consider as it drafts the final rule. HHS will take public comment on the proposed rule until Dec. 7.

For a press release detailing changes to the rule visit hhs.gov.

Department of Health and Human Services (HHS) Releases Proposed Rule on Health Equity

On Sept. 3, HHS issued a proposed rule, Nondiscrimination in Health Programs and Activities, to advance health equity and reduce disparities in health care. The proposed rule establishes that the prohibition on sex discrimination includes discrimination based on gender identity. It also includes requirements for effective communication for individuals with disabilities and enhanced language assistance for people with limited English proficiency. The proposed rule applies to Health Insurance Marketplaces, any health program that HHS itself administers, and any health program or activity any part of which receives funding from HHS, such as hospitals that accept Medicare patients or doctors who treat Medicaid patients. Finally, the proposed rule extends these nondiscrimination protections to individuals enrolled in plans offered by issuers participating in the Health Insurance Marketplaces and explicitly bars any marketing practices or benefit designs that discriminate on the basis of race, color, national origin, sex, age or disability. Section 1557 of the Affordable Care Act (ACA) extended civil rights protections banning sex discrimination to health programs and activities. Previously, civil rights laws enforced by HHS's Office for Civil Rights (OCR) barred discrimination based only on race, color, national origin, disability or age. The rule will be published in the Federal Register on Sept. 8, and is open for public comment through Nov. 6, 2015.

For more information, including a fact sheet and Frequently Asked Questions, visit hhs.gov.

Internal Revenue Service (IRS) Proposed Rule Mandates Employer Health Plans Offer Hospital and Physician Services

The IRS released a proposed rule Aug. 31 that would require employer health plans to offer substantial coverage for inpatient hospital services and physician services. The Affordable Care Act requires employer health plans to be at least 60 percent of the minimum value standard. News reports uncovered the fact that employer plans could do so without providing hospital or physician coverage.

The preamble of the proposal points out that while large group plans are not required to cover the ACA's Essential Health Benefit, a plan that does not cover hospital and physician services "does not meet a universally accepted minimum standards of value expected from and inherent in any arrangement that can reasonably be called a health plan and that is intended to provide the primary health coverage for employees."

Under the proposed rule, an employer group health plan must, to meet the minimum value standard (MSV) and avoid a penalty, meet or exceed an actuarial value standard of at least 60 percent coverage including substantial coverage for doctor and hospital services. The proposed rule provides a transition period for employers that have previously offered non-compliant coverage prior to Nov. 4, 2014. The proposal aligns IRS and Department of Health and Human Services (HHS) policies. The ACA compels employers who do not meet the affordability and MSV thresholds to pay a penalty of $3,000 for each worker that receives a tax credit. The IRS proposed rule, published in the Federal Register Sept. 1, also says that any employee offered a non-compliant plan would not be prevented from receiving premium tax credits. IRS is taking comments on the proposed rule until Nov. 2, 2015.

Food and Drug Administration (FDA) Issues Final Rule to Phase Out Trans Fats

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.

5. Reports

Government Accountability Report (GAO) Evaluates Nonfederal Efforts to Accomplish Electronic Health Records (EHR) Interoperability Goals

The Government Accountability Office (GAO) released a report on Sept. 29 outlining five key factors—in addition to meaningful use program requirements—that are slowing down the progress of EHR interoperability. For the report, GAO was asked to review the status of efforts by entities other than the federal government to develop infrastructure that could lead to nationwide interoperability of health information. Five key challenges were described by stakeholders The challenges they described are (1) insufficiencies in health data standards, (2) variation in state privacy rules, (3) accurately matching patients' health records, (4) costs associated with interoperability, and (5) the need for governance and trust among entities, such as agreements to facilitate the sharing of information among all participants in an initiative. Representatives from the 18 initiatives GAO reviewed said they are working to address these key challenges using different approaches.

Government Accountability Office (GAO) Releases Report on Medicare Payment and Quality of Care Trends in Hospital Value Based Purchasing

A GAO report released Oct. 1 found that the bonuses and penalties received by most of the approximately 3,000 hospitals eligible for the Hospital Value-based Purchasing (HVBP) program amounted to less than 0.5 percent of applicable Medicare payments each year. GAO found that safety net hospitals, which provide a significant amount of care to the poor, consistently had lower median payment adjustments—that is, smaller bonuses or larger penalties—than hospitals overall in the program's first three years. However, this gap narrowed over time.

In contrast, small urban hospitals had higher median payment adjustments each year than hospitals overall, and small rural hospitals' median payment adjustments were similar to hospitals overall in the first two years and higher in the most recent year. GAO's analysis found no apparent shift in existing trends in hospitals' performance on the quality measures included in the HVBP program during the program's initial years. However, shifts in quality trends could emerge in the future as certain HVBP program measures are added and weighted differently. The HVBP program was enacted in 2010 as part of the Affordable Care Act (ACA). The first HVBP payment adjustments occurred in fiscal year 2013.

Government Accountability Office (GAO) Offers Considerations for Expansion of the Appropriate Use Criteria Program for Advanced Diagnostic Imaging Services

On September 30, 2015, the Government Accountability Office (GAO) issued a report that identified services for potential Appropriate Use Criteria (AUC) program expansion. Appropriate Use Criteria dictates provider prescriber requirements for advanced imaging services, such as CT scans or MRIs. Under the Protecting Access to Medicare Act of 2014 (PAMA), the Centers for Medicare and Medicaid Services (CMS) was required to establish a Medicare AUC program for advanced diagnostic imaging services. The legislation also required GAO to report on the extent to which AUC could be used for other Medicare Services, such as radiation therapy and clinical diagnostic laboratory services. To identify such services, GAO reviewed 36 non-imaging services deemed to be of questionable or low value as identified by the American Society for Radiation Oncology, the American Society for Clinical Pathology, and a 2014 study by researchers at Harvard Medical School. GAO found that provider-led entities have developed associated AUC for more than half of the 36 services that GAO focused on. Specifically, GAO found associated AUC across several service categories, including radiation therapy, clinical pathology, cardiovascular testing and procedures, cancer screenings, diagnostics and prevent testing, and preoperative testing.

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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