United States: Weekly Washington Healthcare Update - October 12, 2015

Last Updated: October 20 2015
Article by Stephanie A. Kennan, Charlyn A. Iovino and Amanda Anderson

This Week: While the House of Representatives searched for who will be the next Speaker of the House, efforts to repeal key provisions of the Affordable Care Act continued.



House Leadership Race

On Oct. 8, the House Republican caucus did not select a candidate for Speaker of the House and selection has been delayed. The current Speaker, John Boehner (R-OH), had announced that he would step down and retire from Congress at the end of October, but will now stay until a Speaker is selected. The delay reflects the lack of a clear successor for Boehner. It also means that Boehner likely will remain a key player as Congress heads into debate over the debt ceiling.

House Reconciliation Package

The House of Representatives is expected to vote on its reconciliation package the week of Oct. 19. This package would repeal provisions of the Affordable Care Act including the individual and employer mandate, the Cadillac tax (a tax on insurance plans), the medical device tax, the auto-enrollment requirement for large companies, the Prevention and Public Health Fund and IPAB, the independent advisory body that has never been staffed. In addition, the reconciliation package denies funding to Planned Parenthood for one year. It remains unclear if the Senate is going to take up this legislation. If such a package makes it to the President's desk, it is unlikely to be signed into law.


Bicameral Letter Asks About Late CHIP Report

Senate Finance Committee Chair Orrin Hatch (R-UT), House Energy and Commerce Committee Chairman Fred Upton (R-MI) and that committee's health subcommittee chair Joe Pitts (R-PA) have released their letter to Secretary of Health and Human Services Burwell blasting HHS for failing to deliver an Affordable Care Act mandated report on children's health insurance, which was originally due at the start of April. The report is to analyze how CHIP plans stack up against exchange plans. The letter points out that information is now more important to know since states were allowed to start enrolling CHIP kids in exchange plans as of Sept. 30. The legislators say they want an update on the status of the report in two weeks.

Medicare Premiums

House and Senate Democrats are urging Republicans to stop a 52 percent increase in Part B premiums and a significant deductible increase for about 30 percent of Medicare beneficiaries. Ranking Senate Finance Committee Democrat Senator Ron Wyden (D-OR) introduced a bill to stop the increase and House Democrats held a press conference after negotiations with Republicans fell through.

Wyden's bill would make the federal government pay for the increase on behalf of beneficiaries. According to some reports, it could cost up to $7.5 billion to avoid the premium increase.

Most seniors choose to have Part B premiums automatically deducted from their Social Security checks. To protect seniors against Social Security pay cuts, when Medicare Part B premium increases are greater than the annual cost of living adjustments in Social Security checks, seniors do not pay the increase. The Bureau of Labor Statistics will release final data needed to calculate the cost of living adjustment on Oct. 15. Seniors who could be affected by a premium increase include new Medicare enrollees, those not collecting Social Security and those paying higher, income-related premiums for Part B. Those individuals who are dually eligible for Medicare and Medicaid also face premium increases; however, state Medicaid programs will pay those costs. View bill text and more information.

NIH Warns Against a Yearlong Continuing Resolution

On Oct. 7, in testimony before the Senate Appropriations subcommittee that oversees funding to the Department of Health and Human Services, Director Collins said that if Congress were to fund the government through a continuing resolution at current levels, several NIH efforts would likely be put on hold. President Barack Obama's precision medicine initiative, which NIH is hoping to launch in the fiscal year that started Oct. 1, "would have to go into the freezer or on mothballs," Collins said. He said NIH's BRAIN initiative, which is working on understanding and treating neurological disease, would also be halted. The project's work is at a "critical point where more investment is needed."

In addition, a yearlong CR would hinder NIH's ability to develop vaccines that would work against all influenza strains and place other vaccine work in jeopardy. The most recent CR, which was approved last week, funds the government through Dec. 11.

For more information on the hearing and testimony please click here.


Trans-Pacific Partnership (TPP) Agreement and Biologics

As part of the Trans-Pacific Partnership Agreement, the United States agreed to a deal this past weekend that would require only five years of data protection for biologics and then provide two options for potentially adding extra years. Australia, Chile and others were demanding five years' protection for intellectual property in the negotiations, but the U.S. was asking for 12 years. The agreement would permit additional time for that exclusivity period in accordance with the U.S. system or with Australia's system, which says the time period is often extended as a result of the country's regulatory approval process. This is a win for generic drug manufacturers. However, U.S. drugmakers and Senator Hatch, Chairman of the Senate Finance Committee, have expressed concern over the lack of a mandatory 12 years of protection.

Congress must approve the trade agreement and that vote is likely months away.

Sandoz Submits Second Biosimilar Application

On Oct. 2, the Food and Drug Administration accepted for review Sandoz's second biosimilar application, a biosimilar of Amgen's drug Enbrel, a tumor necrosis factor alpha inhibitor. Novartis is Sandoz's parent company.

Draft Labeling for Abbreviated New Drug Applications (ANDAs) Guidance Released

On Oct. 5, the FDA announced that it will accept draft labeling in order to approve abbreviated new drug applications (ANDAs) rather than require generic drug manufacturers to submit final printed labeling for their products. Despite the fact the guidance was issued in final form, the FDA says it will accept public comments submitted to www.regulations.gov.

In its guidance, FDA said the draft labeling must comply with applicable labeling requirements other than "editorial or similar minor deficiencies." FDA states that its thinking on the use of draft labeling has evolved especially as manufacturers are able to submit electronic versions of labels.

Generic drug sponsors must show that the proposed labeling for the generic drug is the same as the labeling for the reference product, and ANDA applicants must submit in electronic format the content of the labeling including prescribing information and FDA-approved patient labeling. The draft labeling must include the full content of the labeling concerning prescribing information and patient labeling as well as the planned order of the content.

FDA Orders Postmarket Surveillance Studies From Duodenoscope Companies

On Oct. 5, the FDA ordered the three manufacturers of duodenoscopes marketed in the U.S. to conduct postmarket surveillance studies in health care facilities, to better understand how the devices are reprocessed in real-world settings. The FDA has identified evidence that duodenoscopes have contributed to the transmission of infections, including antibiotic-resistant infections, to patients. Duodenoscopes can be reused after a complex disinfection procedure called reprocessing is completed between patients. The design of the devices makes it difficult to remove contaminants compared to other types of endoscopes. The FDA's analysis also shows that manufacturers' reprocessing instructions are not always being followed correctly, because these instructions are labor intensive and prone to human error.

The three manufacturers — Olympus America, Inc.; Fujifilm Medical Systems, U.S.A., Inc.; and Hoya Corp. (Pentax Life Care Division) — will have 30 days to submit detailed postmarket surveillance plans to the FDA.

View the announcement.

Centers for Medicare and Medicaid Services (CMS) Announces Results of Comprehensive Primary Care (CPC) Initiative

On Oct. 7, the Centers for Medicare & Medicaid Services (CMS) announced results of the first shared savings performance year for the Comprehensive Primary Care (CPC) initiative.

Authorized by the Affordable Care Act, the CPC initiative is a multipayor partnership between Medicare, Medicaid, commercial payors and primary care practices in seven regions. Participating practices identify patients who are sick or at risk and provide targeted care management to improve outcomes and prevent potential adverse events. Patients at CPC practices have 24/7 access to a provider, and receive enhanced self-management and decision-making support. The CPC initiative supports these efforts by paying an additional fee for non-face-to-face care, such as tracking hospital discharges to provide follow-up support to patients.

During this first shared savings performance year, the initiative decreased Medicare Part A and Part B spending compared to spending targets while achieving high-quality outcomes. The CPC initiative generated a total of $24 million in gross savings overall (excluding the CPC care management fees). These results reflect the work of 483 practices that served approximately 377,000 people with Medicare and more than 2.7 million patients overall. Four of the CPC initiative's seven regions (Arkansas, Colorado, Cincinnati-Dayton region of Ohio and Oregon) generated gross savings. The Greater Tulsa region decreased costs in excess of the CPC care management fees, generating net savings of $10.8 million and earning more than $500,000 in shared savings payments.

For more information on the quality see blog.cms.gov.

CMS Staff Changes

Centers for Medicare and Medicaid Services (CMS) Acting Administrator Andy Slavitt and Deputy Administrator Patrick Conway announced several staff changes Oct. 9. CMS chief of staff Mandy Cohen will also become the CMS' chief operating officer on Nov. 1. Cohen replaces Deb Taylor, who will be retiring at the end of the month. Other staff changes include Karen Jackson, the current deputy director of the CMS Innovation Center, who will become acting deputy chief operating officer and Tim Gronniger will be promoted to deputy chief of staff. Lisa Watkins will also be promoted to senior adviser.

CMS Announces Dialysis Accountable Care Organizations

On Oct. 7, the Centers for Medicare and Medicaid Services (CMS) announced participants in the dialysis accountable care organizations demonstration called the Comprehensive ESRD Care Model. CMS delayed the application deadline three times because large dialysis providers showed little interest in the initiative. The ACOs are accountable for clinical quality outcomes and financial outcomes measured by Medicare Part A and B spending, including spending on dialysis services for their beneficiaries. Medicare pays large and small ACOs differently, but only one of the 13 ACOs in the demonstration is considered small. ACOs with at least 200 dialysis facilities are at risk of penalties and have higher overall levels of risk than the smaller ACO. The small ACO is not responsible for penalties.

CMS Expands Medicare Appeals Settlement Pilot

The Centers for Medicare and Medicaid Services' (CMS) Office of Medicare Hearings and Appeals (OMHA) announced that it will expand its settlement conference facilitation pilot to include more appeals and will extend the program beyond Part B claims to also include Part A claims next year.

The pilot program launched in 2014 as a step to alleviate the backlog of appeals and has since June 2014 settled 2,000 claims. The CMS hospital settlement process eliminated close to 300,000 claims. As of Oct. 1, OMHA expanded the pilot to include more pending appeals. To be eligible for the pilot an appeal must not yet have been scheduled for an Administrative Law Judge hearing and the request for a hearing must have been submitted by Sept. 30, 2015. Previously the pilot only included appeals filed in 2013. OMHA plans to hold a teleconference on Oct. 15 to answer questions.

CMS and ONC Release Final Rule With Comment Period on Meaningful Use

On Oct. 6, the Centers for Medicare and Medicaid Services and the Office of the National Health Information IT Coordinator (ONC) released a final rule concerning the third and final stage of meaningful use. In its press release the Department of Health and Human Services stated that it had reduced the number of objectives from 20 to less than 10 and provided flexibility so providers may choose measures that are most relevant to them. In addition the rules provide more time for providers and states to comply with program requirements. CMS announced a 60-day public comment period to gather additional feedback about the EHR Incentive Programs going forward, in particular with the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which established the Merit-based Incentive Payment System and consolidates certain aspects of a number of quality measurement and federal incentive programs into one more efficient framework. CMS will use this feedback to inform future policy developments for the EHR Incentive Programs, as well as consider it during rulemaking to implement MACRA, which we expect to release in the spring of 2016.

In addition to the final rule for the EHR Incentive Programs, ONC is also announcing the final rule for the 2015 Edition Health IT Certification Criteria. This rule focuses on increasing interoperability — a secure but seamless flow of electronic health information — and improving transparency and competition in the health IT marketplace.

For more information click here


Employer Mandate

On Monday, Oct. 5, the U.S. Supreme Court said it will not hear a challenge to the delays of the Affordable Care Act's employer mandate. The challenger, Kawa Orthodontics, had asked the justices to review the decision by a lower court, which threw out the suit on procedural grounds.

Minimum Wage and Overtime Protection for Home Health Workers Goes Forward

The Supreme Court on Oct. 6 declined to enjoin from implementing the U.S. Labor Department's home health rule. That rule moves forward a DOL rule that extends minimum wage and overtime protection to home health workers. Home health care companies had sued to block the rule. Under Tuesday's ruling the Supreme Court may still choose to take up the case sometime in the future.


Utah Medicaid Expansion Still Being Debated

Medicaid expansion continues to be discussed. However, House Speaker Greg Hughes decided that the 38 votes needed to pass the newest plan all have to come from House Republicans. Ten Republicans supported the previous Medicaid expansion plan. This coming week, a legislative task force will weigh the latest proposal, and House Republicans will meet in a closed meeting on Oct. 13 to take a straw vote.

Florida Governor Seeks Transparency From Hospitals

Gov. Rick Scott is pushing a broad 2016 legislative agenda to create more transparency in prices. Scott's proposal would require hospitals to post information on their websites, including prices and average payments for products and services provided as well as quality data. Tax-exempt hospitals would be required to post their annual financial reports to the IRS online, which would also include information on executive compensation and lobbying spending. Scott also wants patients to have the ability to have third-party review of their charges. This comes at a time when hospitals and the governor have divergent views concerning Medicaid expansion.

California Keeps New Vaccination Law

The referendum to overturn the state's new vaccination law did not receive enough signatures to get it on the ballot. An unofficial count from referendum organizers found that they had roughly 200,000 signatures, but they needed 365,880 to temporarily halt implementation and put it on the ballot next year. The tighter vaccine law was passed after a measles outbreak that began in Disneyland.

California Governor Signs Physician Aid in Dying Law

California Gov. Jerry Brown signed into law a measure permitting terminally ill patients to end their lives with a doctor's help. California becomes the fifth state to permit physician aid in dying for terminally ill patients. The legislation has broad support among California residents, according to recent polling from the Institute of Governmental Studies at the University of California, Berkeley. Brown explained his decision by saying, "In the end, I was left to reflect on what I would want in the face of my own death."


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 reimbursement system that aims to 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 who utilize alternative pay models. Alternatively, physicians who do not enroll in alternative pay models will see only 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's discretion; CMS now requests provider feedback on the most efficient way to accomplish the savings and enhanced care goals of the new law. Public comments for the RFI are due on Nov. 2, 2015.

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 payor 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 Dec. 31, 2015, and report it to CMS by March 31, 2016. CMS will post the new Medicare rates by Nov. 1, 2016; these rates will be effective on Jan. 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 percent compared to the prior year's amount during the first three years of implementation (2017-2019) and cannot be reduced by more than 15 percent 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 payors. 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 not expect any hospital laboratory to meet the definition of "applicable laboratory" and that more than 50 percent of independent laboratories and more than 90 percent 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 Nov. 24, 2015.

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.


Health Affairs Report Describes Who is Likely to Leave Medicare Advantage

Patients who used high-cost services were more likely to leave their Medicare Advantage plans in favor of traditional Medicare, according to a new study in Health Affairs. Patients who used nursing home care or home health care were more likely to switch away from Medicare Advantage. This effect was magnified among the dual-eligible population, the researchers from Brown and Vanderbilt Universities found.

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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Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.