United States: Washington Healthcare Update - June 22, 2015

This Week: Leading Up to the SCOTUS King v. Burwell Decision... House Votes to Repeal the Medical Device Tax... CMS Announces It Will Bolster Transitional Reinsurance Payments... MedPAC Releases June Report to Congress

1. U.S. Supreme Court – King v. Burwell

Leading Up to the SCOTUS King v. Burwell Decision

The U.S. Supreme Court is due to rule within days on whether the president's health care law allows for low-income people using HealthCare.gov to get insurance subsidies. If the court rules against the White House and strikes down the subsidies, there is growing concern about having a plan to address the 6 million Americans who would lose their premium tax credits. The Supreme Court must rule by the end of June. This week saw much discussion about what a contingency plan might look like. President Obama continues to say he will veto any proposal that harms his largest domestic legacy.

A group convened by former HHS Secretary Mike Leavitt argues that governors and state officials should begin working together immediately to push for more flexibility to establish state-based exchanges should the Court rule against the federal government in King v. Burwell. The group identified several areas in which they believe the Administration can make it easier for states to create an exchange and potentially rescue insurance subsidies.

Examples of state flexibility options include:

1. HHS allowing states to leverage existing technology platforms from private exchanges and insurers;
2. Temporarily freeing up more federal funds so states can afford to take on more exchange administrative functions;
3. Allowing states to rely more on existing enrollment channels such as brokers instead of ACA navigators; and
4. Permitting states to establish their own marketplaces without immediately requiring a governing board. Governors would still likely need approval from their legislatures.

Their findings can be found in a June 15 Leavitt Partners white paper.

Congressional Republicans are also working to establish their own King v. Burwell contingency plans. Speaker John Boehner (R-OH) met with several GOP senators June 16, including Orrin Hatch (UT), John Cornyn (TX) and John Thune (SD), to discuss the issue. The House Republicans held a special closed meeting June 17 to discuss legislative plans if the Supreme Court strikes down the federal subsidies. Senate Republicans are coalescing around a plan to extend Obamacare subsidies for up to two years if the Supreme Court strikes them down this month. They have suggested extending subsidies for a period of time—potentially through 2017—and also repealing some pieces of the Affordable Care Act (ACA) such as the individual and employer mandates.

Several Republicans in Congress, as well as GOP state leaders, are opposed to supporting any contingency plan that they feel would be viewed as supporting ObamaCare, including but not limited to setting up state marketplaces or giving an extension for the subsidies.

The Congressional Budget Office (CBO) announced that repealing all of the ACA would increase the budget deficit by as much as $353 billion, which is larger than previous forecasts. Repealing the law would generate savings by ending insurance subsidies to millions of Americans, but those savings would be more than offset by reversing the law's cuts to Medicare as well as its various tax increases, including a new levy on high-cost insurance plans, the agency said. CBO also stated that repeal would boost economic growth by an average 0.7 percent over the next decade, but the uninsured population would grow by 19 million next year.

2. Congress

House

House Subcommittee Reports Labor HHS Appropriations Bill

On June 16, House Republicans unveiled their $153 billion Labor-HHS appropriations bill, which provides the National Institutes of Health (NIH) with $31.2 billion, a $1.1 billion increase and $100 million more than the President requested. The Centers for Disease Control (CDC) is slotted to receive $ 7 billion for programs or approximately $344 million lower than current funding levels. Overall, the bill would cut about 9 percent from the Administration's budget request for health, labor and education for FY 2016. Worth noting, the bill would also defund the Affordable Care Act (ACA) and eliminate the entire Agency for Healthcare Research and Quality (AHRQ).

The bill was reported out of the Labor-HHS Subcommittee on June 17 without changes. During the markup, Democratic amendments proposed included increasing the bill's funding for Title X family planning programs, teen pregnancy prevention programs, the AHRQ, pandemic preparedness programs and mental health professionals in schools. Another amendment would have added even more money to the NIH budget. The amendments were determined to increase funding without corresponding offsets, which would have violated the rules. The full committee is expected to vote on the bill on June 24 at 10:15 a.m. at 2359 Rayburn House Office Building.

More details on the draft appropriation bill can be found in an Appropriations Committee press release.

House E&C and W&M Committee Members Ask GAO to Examine CMS Fraud Prevention System

In a letter dated June 15 , a bipartisan group of House members wrote to the Government Accountability Office (GAO) asking that the oversight agency review the operations of the Centers for Medicare & Medicaid Services' Fraud Prevention System (FPS). FPS analyzes all Medicare fee-for-service claims prior to payment to identify aberrant and suspicious billing patterns for further investigation; the program was implemented in July 2011 in an effort to more proactively prevent fraud in the Medicare program, as opposed to the previously used "pay and chase" approach. In the letter, the leaders of both the House Energy and Commerce and Ways and Means committees and their respective health and oversight subcommittees asked GAO six specific questions including inquiring into CMS's plans for using FPS with regard to Medicaid and the Children's Health Insurance Program (CHIP), how many administrative actions CMS has taken against providers since 2010 and if those actions were a direct result of FPS.

A press release on the letter can be found here.

Upcoming: House E&C Health Subcommittee to Hold Hearings on Bipartisan Children's Health Bills

The House Energy and Commerce Subcommittee on Health, chaired by Rep. Joe Pitts (R-PA), has scheduled a hearing entitled "Examining Public Health Legislation: H.R. 2820, H.R. 1344, and H.R. 1462" for Thursday, June 25, 2015, at 10:15 a.m. in Room 2322 of the Rayburn House Office Building. Subcommittee members will discuss three bipartisan bills including:

• H.R. 2820, the Stem Cell Therapeutic and Research Reauthorization Act , introduced by Reps. Chris Smith (R-NJ) and Doris Matsui (D-CA), reauthorizes the Stem Cell Therapeutic and Research Act of 2005, which provides federal support for cord blood donation and research to increase patient access to transplants.
• H.R. 1462, the Protecting Our Infants Act of 2015 , introduced by Reps. Katherine Clark (D-MA) and Steve Stivers (R-OH), will mandate that HHS: develop a study and subsequent recommendations for preventing and treating prenatal opioid abuse and neonatal abstinence syndrome; review existing programs and develop a more coordinated strategy; and provide additional technical assistance to states to improve the availability and quality of data collection and surveillance activities regarding neonatal abstinence syndrome.
• H.R. 1344, the Early Hearing Detection and Intervention Act of 2015, authored by Health Subcommittee Vice Chairman Brett Guthrie (R-KY) and Rep. Lois Capps (D-CA), amends the public health service act to reauthorize a program for early detection, diagnosis and treatment of deaf and hard-of-hearing newborns, infants and young children.

The legislation and witness list will be available here as they are posted.

A press release on the hearing can be found here.

House Votes to Repeal the Medical Device Tax

On June 19, the House of Representatives voted 280 (including 46 Democrats) to 140 to repeal the 2.3 percent medical device excise tax, which was imposed by the enactment of the Affordable Care Act (ACA). The Protect Medical Innovation Act (H.R. 160), introduced by Rep. Erik Paulsen (R-MN), did not include any provision for how to pay for the repeal. The White House had previously announced its opposition to the bill, saying the legislation "would increase the deficit to finance a permanent and costly tax break for industry without improving the health system or helping middle-class Americans." The Office of Management and Budget (OMB) has estimated the bill to cost $24.4 billion over 10 years. During the House's last vote to repeal the tax in 2012, 37 Democrats voted in favor of repeal. The measure must now be acted on by the Senate. The last Senate vote on this issue was in 2013, as part of a non-binding vote, which also called for the measure's cost to be offset.

House E&C Committee Holds Hearing on Mental Health Bills

The House Energy and Commerce Health Subcommittee held a hearing June 16 focusing on the newly re-introduced Helping Families in Mental Health Crisis Act (H.R.2646), authored by Rep. Tim Murphy (R- PA), and a more narrow bill introduced by Rep. Doris Matsui (D-CA). Rep. Murphy's bill revises the Health Insurance Portability and Accountability Act (HIPAA) so caregivers can get access to certain information about patients who pose a danger to themselves or others. Likewise, Rep. Matsui's bill proposes to codify guidelines from the Department of Health and Human Services's (HHS) Office of Civil Rights and to educate providers on what's permitted under HIPAA.

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

House Passes Four Medicare Advantage Reform Bills

On June 17, the House of Representatives approved by voice vote four bills affecting the Centers for Medicare and Medicaid Services (CMS) Medicare Advantage (MA) Program, a program that provides Medicare benefits to seniors through private health plans. Bills approved that will be moving to the Senate for consideration include:

• The Increasing Regulatory Fairness Act (H.R. 2507) gives insurers 60 days to respond to annual pay rules as opposed to the previously instituted 45 days.
• The Seniors' Health Care Plan Protection Act (H.R. 2582) would prevent the termination of Medicare contracts by CMS for plans with low star ratings until 2019 and formal revision to MA risk adjustment.
• The Strengthening Medicare Advantage through Innovation and Transparency for Seniors Act (H.R. 2570) creates a demonstration program using value-based insurance design to show that a reduction in beneficiaries' copayments or coinsurance for certain high-value services and prescriptions can increase their utilization, improve outcomes and reduce health care costs.
• The Medicare Advantage Coverage Transparency Act (H.R. 2505) would mandate that the Department of Health and Human Services (HHS) submit enrollment data on Medicare Parts A, B, C and D by congressional district, state and ZIP Code.

House Vote on 21st Century Cures Act Delayed

Although House Energy and Commerce Committee Chairman Fred Upton (R-MI) had been pushing his committee's 21st Century Cures bill to be in a position to be voted on before July, he announced that holdups over the bill's provisions that pay for the spending in the proposal mean the vote on final passage is unlikely in June, before Congress recesses for the Fourth of July; however, he expects a vote shortly after Congress returns in July. A bipartisan group of 44 House members has demanded that one offset be stripped from the bill. That provision would delay Part D reinsurance payments. Others are concerned about the bill's $10 billion funding increase for the National Institutes of Health (NIH). The NIH funding increase was put in the bill to gain the support of Democrats and some predict without it, the bill would not have their support.

Upcoming: House E&C Health Subcommittee to Hold Hearing on Medicaid Demonstration Projects

The House Energy and Commerce Subcommittee on Health, chaired by Rep. Joe Pitts (R-PA), has scheduled a hearing for Wednesday, June 24, entitled "Examining the Administration's Approval of Medicaid Demonstration Projects." Specifically, members of the committee will hear testimony from a representative of the Government Accountability Office (GAO) about a recent report that found transparency, accountability and consistency concerns in the Administration's funding of Medicaid demonstration programs. Medicaid demonstration projects constitute roughly one-third of Medicaid spending. A witness list was not available at the time of publication.

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

Senate

Senate HELP Committee Holds Hearing on Improving User Experience in EHR

The Senate Health, Education, Labor, and Pensions (HELP) Committee held a hearing June 16 entitled "Achieving the Promise of Health Information Technology: What Can Providers and the U.S. Department of Health and Human Services Do To Improve the Electronic Health Record (EHR) User Experience?" to investigate opportunities for the federal government and physicians to bolster patients' use of their own health data. The hearing, led by Sen. Bill Cassidy (R-LA) and Sen. Sheldon Whitehouse (D-RI) is the second in a HELP Committee health IT hearing series and focused on the importance, and lack, of a set of standards in health care in relation to interoperability and the sharing of information. Witnesses testified their support to keep moving forward on the implementation of Meaningful Use Stage 3 and recommended reforms to improving patient accessibility and understanding of EHR including increasing transparency in the EHR marketplace, empowering providers to choose the most suitable vendor and identifying the best practices to deploy electronic records as a care management tool.

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

3. Administration

HHS: ACA Independence Home Model Saved $25 Million in First Year

On June 18, the Centers for Medicare & Medicaid Services (CMS) announced the results of the first performance year of the Independence at Home Demonstration, a program that provides chronically ill Medicare beneficiaries with primary care services in the home setting while attempting to lower beneficiary costs. In the first performance year, 17 participating practices served more than 8,400 Medicare beneficiaries. The CMS analysis found that Independence at Home participants saved more than $25 million in the demonstration's first performance year — an average of $3,070 per participating beneficiary — and all 17 participating practices improved quality in at least three of the six quality measures for the demonstration, with four participating practices meeting all six quality measures. CMS will award incentive payments of $11.7 million to nine participating practices that succeeded in reducing Medicare expenditures and met designated quality goals for the first year of the demonstration.

HHS Announces Coordinated Medicare Fraud Strike Force Action Involving $712 Million in False Billings

Department of Health and Human Services (HHS) Secretary Sylvia M. Burwell and Attorney General Loretta E. Lynch announced June 18 a nationwide sweep led by the Medicare Fraud Strike Force in 17 districts, resulting in charges against 243 individuals, including 46 doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes. "This Administration is committed to fighting fraud and protecting taxpayer dollars in Medicare and Medicaid," said Secretary Burwell. "This takedown adds to the hundreds of millions we have saved through fraud prevention since the Affordable Care Act was passed. With increased resources that have allowed the Strike Force to expand and new tools, like enhanced screening and enrollment requirements, tough new rules and sentences for criminals, and advanced predictive modeling technology, we have managed to better find and fight fraud as well as stop it before it starts." According to court documents, the defendants participated in alleged schemes to submit claims to Medicare and Medicaid for treatments that were medically unnecessary and often never provided. In many cases, patient recruiters, Medicare beneficiaries and other co-conspirators allegedly were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare for services that were medically unnecessary or never performed. Collectively, the doctors, nurses, licensed medical professionals, health care company owners and others charged are accused of conspiring to submit a total of approximately $712 million in fraudulent billing.

CMS Announces It Will Bolster Transitional Reinsurance Payments

In a Centers for Medicare and Medicaid Services (CMS) memo released June 17, the agency announced that it will increase the transitional reinsurance reimbursement rate to 100 percent for the 2014 benefit year for insurers providing ACA-compliant individual plans to 100 percent of enrollees' costs between $45,000 and $250,000. Originally planning to cover only 80 percent of cost, CMS says it boosted rates because "for the 2014 benefit year, reinsurance contributions exceeded the requests for reinsurance payments." According to the memo, CMS has received approximately $8.7 billion in reinsurance contributions for 2014 and expects to collect $1 billion more by Nov. 15, 2015. The Affordable Care Act (ACA) established the transitional reinsurance program to help keep premiums stable and low for consumers by providing payments to health insurance issuers that cover higher-cost populations in the individual market.

FDA Issues Finalized Guidance on Early-Phase Clinical Trials Design for Cellular and Gene Therapy Products

The Food and Drug Administration (FDA) Center for Biologics Evaluation and Research (CBER)/Office of Cellular, Tissue, and Gene Therapies (OCTGT) released a finalized guidance document to assist sponsors and investigators in designing early-phase clinical trials for cellular therapy (CT) and gene therapy (GT) products (referred to collectively as CGT products). The guidance document provides recommendations regarding clinical trials in which the primary objectives are the initial assessments of safety, tolerability or feasibility of administration of investigational products. The guidance released finalizes July 2013 draft guidance on the issues; stakeholders can submit either electronic or written comments on the document at any time.

AHRQ Plans to Fund Studies on High-performing Health Care Systems for Comparative Effectiveness Research

In a press release, the Agency for Healthcare Research and Quality's (AHRQ) Director Richard Kronick, Ph.D., provides further details on AHRQ's intention to use patient-centered outcome grants to fund three Centers of Excellence. The Centers will identify, classify, track and compare how high-performing health care systems promote evidence-based practices in delivering care. Moreover, the centers will identify the characteristics of health systems that successfully disseminate and apply evidence from patient-centered outcomes research and analyze the connections between successful dissemination, patient health outcomes and effective use of resources. The three grants, which begin in September, will provide approximately $52 million over five years to study how complex delivery systems disseminate evidence-based findings and provide lessons learned to inform the dissemination of findings in other settings. This year's award recipients include: Dartmouth College, the National Bureau of Economic Research and RAND Corporation, which will collaborate with other universities, think tanks and nonprofits to achieve program goals. The effort is part of the agency's attempt to accelerate the dissemination and implementation of patient-centered outcomes research findings into practice. It is also tied to the wider HHS delivery system reform initiative to encourage "Better Care, Smarter Spending, and Healthier People."

4. State Activities

Pennsylvania, Delaware, Arkansas State Exchange Applications Conditionally Approved by HHS

On June 15, the Department of Health and Human Services (HHS) conditionally approved Pennsylvania's and Delaware's applications to operate their own respective state-run exchanges in 2016. Both Governors Tom Corbett (D-PA) and Jack Markell (D-DE) filed applications with the federal government earlier this month in order to protect their constituencies from the loss of Affordable Care Act (ACA) subsidies should the Supreme Court rule against the federal government in King v. Burwell.

Also, Arkansas, a state currently operating an exchange on the federal marketplace, was awarded HHS conditional approval for a state-run SHOP exchange in 2016 and a full state-based exchange in 2017. CMS mandates imposed a June 1 deadline for states to submit applications to run their own marketplace in 2016, and the agency was obliged to make decisions on state applications by June 15.

NC House Health Committee Backs Provider-led Entities' Plan to Reform State's Medicaid Program

On June 10, the North Carolina House of Representatives Health committee approved a new legislative proposal to redesign the state's Medicaid program. The Republican plan, HB372, led by Rep. Nelson Dollar and Rep. Donny Lambyth, would grant hospitals and doctors, in provider-led entities, the ability to directly manage the amount of money spent to care for each individual patient, as opposed to the state's existing fee-for-service model. As it stands, the plan, which would place more financial risk of rising costs on provider-led organizations, would coordinate care for at least 90 percent of Medicaid beneficiaries in all 100 counties within five years of enactment and would also contain an exclusion for dually eligible populations. The full NC House is slated to vote on the plan on June 23. Worth noting, as part of its biannual budget, the state Senate is expected to roll out its own Medicaid reform proposal later in the coming weeks; this plan is expected to contain language to develop managed care operations through state insurers. Consistently surpassing its projected costs, with approximately 1.8 million NC beneficiaries, Medicaid costs the state $3.5 billion, or roughly 20 percent of the state's budget.

RI House Committee Passes Budget Plan to Help Fund State's Insurance Exchange

On June 16, the Rhode Island General Assembly passed a $8.7 billion budget for FY 2016 (which starts July 1), which contains a new permanent funding stream for the state's insurance marketplace. The budget provision, which was originally proposed by Republican Governor Raimondo, tacks on fees to health insurance plans purchased both inside and outside the state-operated insurance marketplace in the amount of 2.86 and 0.59 percent for individual plans and small group plans respectively. These percentages are significantly lower than a previously suggested Democratic plan, and to make up for the difference in cost, the body approved the appropriation of $2.6 million in general fund dollars for exchange operations. Worth noting, since the HealthSource RI's inception, the state's exchange has almost been entirely funded by Department of Health and Human Services (HHS) grants, a mechanism that is no longer available in 2016 per solvency statutes enacted in the Affordable Care Act (ACA).

Florida Legislature Approves Budget, Which Includes Funds for LIP and Medicaid Providers Pay Boost

On June 19, Florida lawmakers in both Houses passed a $78.7 billion budget that includes $1 billion in Low Income Pool (LIP) funds (a funding mechanism used to provide compensation to health care providers that administer uncompensated care to Florida residents who are uninsured or underinsured), and $400 million in general revenue to boost providers' Medicaid reimbursement rates. The $400 million in state money, which will also be bolstered by another $600 million from the Department of Health and Human Services (HHS) as dictated by the state's existing Medicaid match rate, is intended to help to supplement the loss of substantial federally administered LIP money provided in previous years. The budget took several months to develop, as Senate Republicans wanted to use federal Medicaid expansion grants administered by HHS to expand health coverage to residents earning 133 percent of the federal poverty level; however, House Republicans have continually rejected the proposal.

5. Regulations Open for Comment

FDA Issues Final Rule to Phase Out Trans Fats

The Food and Drug Administration (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.

CMS Released Proposed Rule Concerning Medicaid and CHIP Plans

On May 26, CMS posted a proposed rule to modernize the Medicaid and Children's Health Insurance Program (CHIP) managed care regulations. The proposed rule is the first major update to Medicaid and CHIP managed care regulations in more than a decade. The proposal is sweeping in that it touches many areas, including network adequacy, quality measures, enrollment and best practices, and aligns many policies to be similar to those for Medicare Advantage and the private market. The rule will be published in the Federal Register on June 1, and the deadline to submit comments is July 27, 2015, at 5 p.m. EST.

More information on the rule can be found at federal registar.gov.

FDA Releases Draft Guidance on Use Adaptive Trial Designs for Medical Devices

On May 18, the Food and Drug Administration (FDA) released draft guidance in hopes of clarifying ways in which adaptive clinical trial designs can be used for medical devices. Specifically, the draft guidance lays out 11 types of adaptive trial designs the agency feels can be successfully used for devices: group sequential design; sample size adaptation; Bayesian sample size adaptation; group sequential designs with sample size reassessment; dropping a treatment arm; changing the randomization ratio; changing the hypothesis (claim); adaptive enrichment; planning to adapt based on the total information; adaptation of the device or endpoint; and seamless studies. The draft document also makes clear that the adaptive trial designs discussed apply to premarket approval applications, 510(k) submissions, de novo submissions, humanitarian device exemptions and investigational device exception, and do not apply to clinical studies of combination products or codevelopment of a pharmaceutical product with an unapproved diagnostic test. Worth noting, FDA says there are possible limitations to using adaptive trial designs, including requiring more effort at the design stage—leading to study designs that are overly complicated and cost more and to the introduction of bias into the study; implementing changes to the study due to an adaptation can "confound interpretation of the study results." FDA says in the guidance that to ensure that adaptive trial designs are scientifically valid, studies should be prospectively planned for in consultation with FDA prior to the initiation of any study, and the agency lays out two approaches that can help evaluate the operating characteristics of adaptive study designs—analytical methods and simulation studies.

FDA Releases Guidance on Standardizing Study Data for Drug Makers

In the Federal Register May 18, the Food and Drug Administration (FDA) announced the availability of draft recommendations for preparing a Study Data Standardization Plan. FDA's guidance recommends that, for both clinical and nonclinical studies, sponsors include a plan that describes the submission of standardized study data to FDA. The draft recommendations describe the information that should be included in the Standardization Plan, which includes but is not limited to, general sponsor information, product information, a list of completed studies and standards, and a list of planned studies and standards. The draft recommendations for creating a Standardization Plan are posted here. The agency is soliciting feedback on the plan, with comments due by July 2.

FDA: Guidance Released on Investigational New Drug Applications

The Food and Drug Administration (FDA) released draft guidance to assist sponsor-investigators in preparing and submitting complete investigational new drug applications (INDs)—an application used by FDA to approve the start of a new trial—to the Center for Drug Evaluation and Research (CDER) and the Center for Biologics Evaluation and Research (CBER). The guidance is intended to act as a basic overview of the IND process, with an eye on individual researchers who are investigating new uses for either an approved or investigational drug. FDA's guidance goes on to explain the basics of 21 CFR 312—the federal regulation governing IND submissions—providing an overview of the essential elements of an IND submission, including information about the sponsor, a summary of the investigational drug product and its risks, the clinical trial protocol and a summary of previous clinical trial results involving the drug. Worth noting, the guidance, FDA notes, is not intended for use by sponsors or investigators "seeking to evaluate a drug for commercial purposes (i.e. seeking market approval or licensure) and thus does not focus on certain regulatory requirements that involve exchange of information or materials between a sponsor and investigator." The proposed guidance was published in the Federal Register May 15, and comments on the proposed draft guidance are due July 14, 2015.

CMS Updates Wage Index and Payment Rates for the Medicare Hospice Benefit

On April 30, 2015, CMS issued a proposed rule (CMS-1629-P) that would update fiscal year (FY) 2016 Medicare payment rates and the wage index for hospices serving Medicare beneficiaries. The proposed hospice payment rule reflects the ongoing efforts of CMS to support beneficiary access to hospice care. As proposed, hospices would see an estimated 1.3 percent ($200 million) increase in their payments for FY 2016. The $200 million increase in estimated payments for FY 2016 reflects the distributional effects of the 1.8 percent proposed FY 2016 hospice payment update percentage ($290 million increase); the use of updated wage index data and the phaseout of the wage index budget neutrality adjustment factor (-0.7 percent/$120 million decrease); and the proposed implementation of the new Office of Management and Budget (OMB) Core Based Statistical Areas (CBSA) delineations for the FY 2016 hospice wage index with a one-year transition (0.2 percent/$30 million increase). The elimination of the wage index budget neutrality adjustment factor (BNAF) was part of a seven-year phaseout that was finalized in the "Medicare Program; Hospice Wage Index for Fiscal Year 2010" final rule (74 FR 39384, Aug. 6, 2009) and is not a policy change.

Proposed FY 2016 Medicare Payment and Policy Changes for Inpatient Psychiatric Facilities

On April 24, 2015, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule outlining proposed fiscal year (FY) 2016 Medicare payment policies and rates for the Inpatient Psychiatric Facilities Prospective Payment System (IPF PPS). The proposed rule also updates the Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program, which requires participating facilities to report on quality measures or incur a reduction in their annual payment update. This proposed rule would expand the measure sets in future fiscal years and change certain data reporting requirements for these measures. CMS is proposing to update the estimated payments to IPFs in FY 2016 relative to estimated payments in FY 2015 by 1.6 percent (or $80 million). This amount reflects 2.7 percent IPF-specific market basket estimate less the productivity adjustment of 0.6 percentage point and less the 0.2 percentage point reduction required by law, for a net update of 1.9 percent. Estimated payments to IPFs are reduced by 0.3 percent due to updating the outlier fixed-dollar loss threshold amount. CMS will accept comments on the proposed rule until June 23, 2015.

CMS Releases Proposed Rule on FY 2016 Medicare Payments for Inpatient Rehab Facilities

On April 23, 2015, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule outlining proposed FY 2016 Medicare payment policies and rates for the Inpatient Rehabilitation Facility (IRF) Prospective Payment System and the IRF Quality Reporting Program. Specifically, CMS is proposing to increase payments to inpatient rehabilitation hospitals in 2016 by approximately $130 million, or 1.7 percent when compared to 2015. This agency also proposes new quality reporting requirements to adopt measures that satisfy three of the quality domains required by the IMPACT Act in FY 2016: skin integrity and changes in skin integrity; functional status, cognitive function and changes in function and cognitive function; and incidence of major falls; IRFs that fail to submit the required quality data to CMS will be subject to a 2 percentage point reduction to their applicable FY annual increase factor, and the expected cost of the implementation of these new quality reporting requirements is approximately $24 million to hospitals. Worth noting, the payment increase is significantly smaller than the 2.4 percent raise they received in fiscal 2015. The agency proposes to begin collecting IRF quality reporting data by fall 2016. The proposed rule will be published in the Federal Register on April 27, and the agency will accept comments from stakeholders until June 22, 2015.

6. Reports

HHS OIG Report: CMS's Oversight Did Not Ensure the Accuracy of Aggregate Financial Assistance Payments Made to QHP Insurers under the ACA

In a report released June 16 by the Department of Health and Human Services Office of the Inspector General (OIG), the watchdog agency found that the Centers for Medicare and Medicaid Services's (CMS) internal controls did not effectively ensure the accuracy of nearly $2.8 billion in aggregate financial assistance payments made to insurance companies under the Affordable Care Act (ACA) during the first four months (January through April 2014) that these payments were made. Specifically, the agency determined that: CMS's reliance on issuer attestations did not ensure that advance cost-sharing reduction (CSR) payment rates identified as outliers were appropriate; CMS did not have systems in place to ensure that financial assistance payments were made on behalf of confirmed enrollees and in the correct amounts; CMS did not have systems in place for state marketplaces to submit enrollee eligibility data for financial assistance payments; and CMS did not always follow its guidance for calculating advance CSR payments and does not plan to perform a timely reconciliation of these payments. Furthermore, the agency said, these outlined internal control deficiencies limited CMS's ability to make accurate payments to qualified health plan (QHP) issuers. In response to these findings, OIG recommended that CMS correct these internal control deficiencies by requiring CMS's Office of the Actuary to review and validate QHP issuers' actuarial support for index rates that CMS identifies as outliers; they also suggested 1) implementing computerized systems to maintain confirmed enrollee and payment information so that CMS does not have to rely on QHP issuers' attestations in calculating payments; 2) implementing a computerized system so state marketplaces can submit enrollee eligibility data; 3) following its guidance for calculating estimated advance CSR payments; and 4) developing interim reconciliation procedures to address potentially inappropriate CSR payments. Sens. Orrin Hatch (R-UT) and Chuck Grassley (R-IA) sent Acting CMS Administrator Slavitt a letter June 17 inquiring into whether CMS has implemented the OIG report's recommendations, among other questions mentioned in CMS's response to the report.

MedPAC Releases June Report to Congress

On June 15, the Medicare Payment Advisory Commission (MedPAC), a nonpartisan congressional agency that provides policy and technical advice to the Congress, released its June 2015 report, "Report to the Congress: Medicare and the Health Care Delivery System," which examines a variety of Medicare payment issues. As part of its mandate from the Congress, each June MedPAC reports on issues affecting the Medicare program as well as broader changes in health care delivery and the market for health care services. In its annual report, MedPAC made specific recommendations concerning hospital short stay policies, payment policies for Part B drugs, value-based incentives for Part B drugs, risk sharing in Part D, polypharmacy and opoid use, synchronizing policy across Medicare's payment models, quality measure and the next generation of Medicare beneficiaries.

A summary of the report can be found in MedPAC's press release.

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.