This Week: The House and Senate were out for Presidents’ Day recess... The Senate to vote on FDA Commissioner nominee Califf after 5:30 today... Medicare Advantage rates announced.

1. Congress

House of Representatives

House Oversight and Government Reform Committee Announces Hearing on Co-ops Failure

The House Oversight Committee announced a hearing for Thursday, Feb. 25 at 2 p.m. The hearing is entitled “Review of Obamacare Consumer Operated and Oriented Plans (Co-ops).”

The witness list has not yet been posted. For details about the hearing, click here.

Senate

Finance Committee Announces Hearing on Opioid Epidemic

The Senate Finance Committee will hold a hearing on Feb. 23 at 10 a.m. The hearing is entitled “Examining the Opioid Epidemic: Challenges and Opportunities.”

The witnesses are:

Allan Coukell
Senior Director, Health Programs
Pew Charitable Trusts

Dr. Nancy K. Young
Director
Children and Family Futures

David Hart
Assistant Attorney-in-Charge, Civil Enforcement, Financial Fraud and Consumer Protection Section
Oregon Department of Justice

For details about the hearing, click here.

2. Administration

FDA Update Makes Blood Donation Recommendations for Zika

On Feb. 16, the U.S. Food and Drug Administration (FDA) issued new guidelines that recommend individuals at risk of Zika infection avoid donating blood for four weeks. People at risk of Zika include those who have had symptoms over the past four weeks, traveled to areas with active Zika transmission in the past four weeks or had sexual contact with someone who has traveled to or resided in an area with active Zika transmission during the past three months.

In U.S. areas with active Zika transmission, the FDA recommended blood banks get blood from areas without active virus transmission. Although there have been no reports of Zika virus entering the U.S. blood supply, FDA said the risk of its being transmitted via blood is likely, given the scientific evidence of how Zika and similar viruses spread and reports of transfusion-associated infection outside the United States. FDA is now prioritizing the development of blood screening and diagnostic tests that could help detect Zika virus.

Administration to Extend Medicaid Coverage to Flint Water Contamination Victims

On Feb. 12, Health and Human Services (HHS) Secretary Sylvia Mathews Burwell, Assistant Secretary Dr. Nicole Lurie and EPA Administrator Gina McCarthy told House Democrats they anticipate being able to extend Medicaid coverage to pregnant women and children affected by the Flint, Michigan, water crisis. The coverage would include lead-blood level monitoring, behavioral health and nutritional support. HHS is working with Michigan on an expedited basis.

Following a visit to the city on Feb. 18, Secretary Burwell announced that two area health centers will share in a $500,000 funding award to improve the screening and care for patients afflicted by the crisis.

Michigan Gov. Rick Snyder also announced on Feb. 18 $2 million in added funds to help Flint improve its water infrastructure. The state’s House lawmakers also unanimously approved a $30 million aid package, which the state Senate will take up on Feb. 23.

CMS and Insurers Release Quality Measures

On Feb. 16, the Centers for Medicare and Medicaid Services (CMS) and America’s Health Insurance Plans (AHIP), as part of a broad Core Quality Measures Collaborative of health care system participants, agreed on seven sets of clinical quality measures. The measures support multipayer alignment on core measures primarily for physician quality programs. This work is to assist CMS’s implementation of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) through its measure development plan and required rulemaking.

Measure requirements are often not aligned among payers, which has resulted in confusion and complexity for reporting providers. To address this problem, CMS, commercial plans, Medicare and Medicaid managed care plans, purchasers, physician and other care provider organizations, and consumers worked together through the Collaborative to identify core sets of quality measures that payers have committed to using for reporting as soon as feasible. This release is the first from the Collaborative, which plans to add more measure sets and update the current measure sets over time. CMS and the partner organizations believe that by reducing the complexity for providers and focusing quality improvement on key areas across payers, quality of care can be improved for patients more effectively and efficiently.

The core measures are in the following seven sets:

• Accountable Care Organizations (ACOs), Patient Centered Medical Homes (PCMHs) and Primary Care
• Cardiology
• Gastroenterology
• HIV and Hepatitis C
• Medical Oncology
• Obstetrics and Gynecology
• Orthopedics

Implementation of the measures will occur in several stages. The Collaborative will continue to convene to monitor progress, invite broader participation and add additional measures and measure sets.

To see a fact sheet, click here.

For a related press release, click here.

CMS Releases Updated FAQs

The Centers for Medicare and Medicaid Services (CMS) recently updated two FAQs that provide information on 1) hospital-based eligible professionals’ eligibility to receive incentive payments from the Medicare and Medicaid EHR Incentive Programs and 2) eligible hospitals’ requirements for meeting the specialized registry objective. The updated information is as follows:

FAQ #2639 : Are physicians who practice in hospital-based ambulatory clinics eligible to receive Medicare or Medicaid electronic health record (EHR) incentive payments?

A hospital-based eligible professional (EP) is defined as an EP who furnishes 90 percent or more of his/her services in either the inpatient or emergency department of a hospital. Hospital-based EPs do not qualify for Medicare or Medicaid EHR incentive payments.

FAQ #14117 : What steps do eligible hospitals need to take to meet the specialized registry objective? Is it different from EPs?

For an eligible hospital, the process is the same as for an EP. However, CMS notes that eligible hospitals do not need to explore every specialty society with which their hospital-based specialists may be affiliated. The hospital can simply check with the jurisdiction and any such organization with which it is an affiliate; if no such organization exists, and if their jurisdiction has no registry, they may simply exclude from the measure.

Visit the CMS website to review the full list of frequently asked questions.

CMS Releases Updated Manual Medical Review of Therapy Claims Process

On Feb. 9, the Centers for Medicare and Medicaid Services (CMS) released updated information on how it plans to proceed with therapy manual medical reviews as required by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). CMS plans to have Strategic Health Solutions, a Supplemental Medical Review Contractor (SMRC), take over manual medical review—on a post-payment basis—for services over the $3,700 therapy thresholds. The SMRC will be selecting claims for review based on:

• Providers with a high percentage of patients receiving therapy beyond the threshold as compared to their peers during the first year of MACRA.
• Therapy provided in skilled nursing facilities (SNFs), therapists in private practice and outpatient physical therapy or speech-language pathology providers (OPTs) or other rehabilitation providers.

CMS also says the evaluation of the number of units/hours of therapy provided in a day will be of particular interest in the medical review process. The law extended the exceptions process for therapy caps through the end of 2017, set for 2016 at $1,960 for physical therapy and speech therapy and $1,960 for occupational therapy, and directed CMS to target certain therapy claims over $3,700 for manual medical reviews rather than review every claim above that threshold.

The policy does not match what many were expecting and leaves questions unanswered. The American Health Care Association raised concerns that CMS’s new review process could target costly patients instead of risk providers, does not factor in a provider’s claims denial rate or historical data and lacks specifics on the review process.

The American Speech-Language-Hearing Association has pointed out that although the policy is in compliance with various parts of MACRA law, CMS has not laid out the best way to identify problematic situations. The association believes the process could have been more efficient if it had focused on claims data and targeted outliers who used more therapy than others in the same category of provider. There is also concern that CMS is looking at large pockets of providers instead of historical data to help target those outliers.

HHS Office of Civil Rights Seeks $1.36 Million Increase to Enforce ACA Non-Discrimination Provision

The U.S. Department of Health and Human Services’ (HHS) Office of Civil Rights (OCR) is asking for a $3.6 billion increase for fiscal 2017, $1.36 million of which it would use to enforce the Affordable Care Act’s (ACA) non-discrimination provision. The ACA provision extends prohibitions on sex discrimination to the health care programs for the first time, and HHS believes complex cases involving issues of law and complicated facts will significantly increase. OCR intends to increase its investigative staff in order to handle the current and forthcoming workload.

OCR estimates that new cases will result in a 25 percent workload increase for 2017, and the cases will be very complex—particularly with regard to complaints brought against private insurance companies. The office must evaluate whether health plans’ practices of setting specialty prices for drugs used to treat HIV/AIDS discriminate based on disability; determine what conditions should be treated as comparators in evaluating whether a plan’s exclusion of particular services for a medical condition is discriminatory; and determine whether the analysis of liability of insurers that act as third-party administrators differs from the analysis that would apply when insurers simply offer the insurance product.

The non-discrimination rule has been in effect since the enactment of the law—OCR did not propose rulemaking on it until September 2015.

CMS Fixing an Error in the EHR Incentive Programs Registration and Attestation System on Feb. 21

The Centers for Medicare and Medicaid Services (CMS) shut down the Medicare and Medicaid EHR Incentive Program Registration and Attestation System on Sunday, Feb. 21, between 6 a.m. and 10 a.m. EST, to fix an error that was preventing eligible professionals (EPs) from claiming an exclusion for Measure 1 of the Patient Electronic Access Objective (8A in the attestation system).

• Patient Electronic Access, Measure 1 Exclusion: Any EP who neither orders nor creates any of the information listed for inclusion as part of the measures except for ‘Patient Name’ and ‘Provider’s name and office contact information.’

EPs whose attestation was rejected as a result of not meeting objective 8 can modify and resubmit their attestation information after Feb. 21. EPs who successfully attested to the EHR Incentive Programs’ 2015 requirements do not need to take any action.

Batch attestation users who have not submitted their files will also need to wait to submit data until after Feb. 21. To upload a batch attestation, users must ensure the batch files include a ‘Y/N’ indicator for each provider record on the file. Users who have already submitted a batch attestation file for the 2015 program year do not need to resubmit.

For more information, click here.

CMS Announces Medicare Advantage Rates

On Feb. 19, the Centers for Medicare and Medicaid Services (CMS) issued guidance announcing 2017 Medicare Advantage rates will increase by 1.35 percent. The rates are derived from a formula that will ultimately determine how much health plans get paid for covering Medicare beneficiaries. The risk adjustment formula, star rating bonuses and geographic disparities all play a role in calculating payments. CMS also added a "coding trend" to account for discrepancies with the traditional fee-for-service program. CMS estimates that when that is factored in, the actual increase in payments to plans will be 3.55 percent.

Nearly one-third of all Medicare beneficiaries are now enrolled in Medicare Advantage plans.

CMS is proposing a new risk adjustment system for 2017 to more accurately compensate plans. The purpose of the new risk adjustment is to provide more precise payments to plans that attract beneficiaries who are disproportionately sick and expensive.

Insurers also stress that the rate hike is likely to change by the time it's finalized in April. Last year, for example, CMS announced a 1.7 percent increase in February, but the final bump came in at 4.2 percent.

America's Health Insurance Plans, the main industry group, is already conducting a seven-figure advocacy campaign to bolster support for the program, and more than 300 House members and 61 senators have signed on to letters opposing cuts.

The Association of Community Health Plans, which represents 57 nonprofit insurers, praised the department for making changes to the payment formula to better account for the costs of poor and disabled customers.

The Better Medicare Alliance, which counts providers and insurers among its members, raised concerns about a proposal that could reduce payments for Medicare Advantage customers enrolled in employer-based plans.

For more information, click here.

White House to Hold Meeting on Precision Medicine Initiative

On Feb. 25, the White House will host a stakeholder meeting on the Precision Medicine Initiative (PMI) to discuss next steps in the program. President Obama’s proposed fiscal 2017 budget includes $300 million for the National Institutes of Health (NIH) to continue its work on precision medicine. The funding would support various programs under the initiative, including recruitment of a cohort of 1 million Americans and modernization of the regulatory framework for advanced diagnostic tests.

The budget would also give $4.4 million to the U.S. Food and Drug Administration (FDA) for precision medicine activities, which the agency said it would use to establish a National Medical Device Evaluation System, among other things. The White House meeting is planned for the same day as an FDA public workshop on next-generation sequencing-based oncology panels. The scope of the public workshop will be limited to targeted NGS-based oncology panels and there will be no discussion of intended regulation for laboratory-developed tests (LDTs).

FDA requested in its 2017 budget $75 million in mandatory funding under the Moonshot initiative for evaluating precision medicine-based diagnostics and treatments and improving cancer diagnostics and treatments.

3. State Activities

Alabama: CMS Approves State’s Medicaid 1115 Waiver

The Centers for Medicare and Medicaid Services (CMS) approved Alabama’s Medicaid 1115 waiver that moves the state away from fee-for-service and toward a managed care structure. Under the waiver, Alabama’s Medicaid program will transition to regional care organizations (RCOs) that will provide services to most Medicaid beneficiaries at a set cost. The federal government will provide up to $328 million over three years to help the transition to RCOs. Alabama could also qualify for an additional $420 million in federal money over a five-year period to support the state’s Medicaid transformation process.

Arizona: House Health Committee Advances Bill to Restore KidsCare Health Insurance Program

The Arizona House Health Committee advanced a bill (House Bill 2309) that would resume enrollment in the KidsCare health insurance program for low-income families—this will expand health coverage for thousands of children. Arizona is the only state currently without a version of the federal Children’s Health Insurance Program (CHIP). The bill would restore coverage in the KidsCare program for children in families earning between 138 and 200 percent of the federal poverty level. Former Republican Gov. Jan Brewer halted the program in 2010 when around 1,000 children were actively enrolled. The committee unanimously approved the bill, which will now go to the House Appropriations Committee.

California: Lawmakers Reveal New Health Plan Tax Proposal

The California Legislature unveiled a bill imposing a new tax replacing the state’s Medicaid managed care organization tax, which is set to expire in June and would leave a $1.1 billion hole in the budget. The new tax would be imposed on health insurers broadly instead of solely on Medicaid managed plans, which CMS said was not permitted. Under the plan, insurers would get a decrease in other taxes to offset the cost of the new assessment.

Florida: Florida Approves Aetna-Humana Merger

The Florida Office of Insurance Regulation approved Aetna Inc.’s application to acquire Humana’s Florida companies—the merger is still awaiting federal approval, but Florida’s authorization is an important signal. Regulators are not asking Aetna or Humana to make any divestures. The state is, however, requiring Aetna to expand its involvement on the Affordable Care Act (ACA) insurance exchange.

In an unrelated decision, Florida’s insurance regulators announced that they have fined Humana $500,000 for failing to cooperate with investigators. In a Feb. 16 consent order, Humana agreed to maintain procedures ensuring that it does not treat people living with HIV/AIDS less favorably than individuals with any other condition.

Iowa: Senate Votes to Repeal Governor’s Medicaid Plan

Democratic state senators voted to repeal Republican Gov. Terry Branstad’s plan to privatize Medicaid. Senate File 2125—the “Health Care Protection Act”—is not likely to make it through Iowa’s Republican-controlled House, and is mostly a symbolic effort to kill Branstad’s plan. Opponents of the plan say it involves an unrealistic implementation timeline, disrupts patient-provider relationships and diminishes the quality of health care services.

Branstad’s plan would pay three private companies—United Healthcare, Amerigroup and Amerihealth—up to $504 million in the first year to manage Iowa’s $4.2 billion Medicaid program. Branstad says the plan will save as much as $51.3 million in the first six months. The Health Care Protection Act would immediately give termination notices to three private managed care companies, direct the Iowa Department of Human Services to continue to improve patient outcomes, increase access to care and make the management of Medicaid more efficient.

Washington: State Sued Over Denying Access to Hepatitis C Drugs

In a new class-action lawsuit Washington state has been accused of illegally denying Medicaid patients access to hepatitis C treatments based on the cost of the drugs. The state’s health care agency is limiting the use of drugs like Sovaldi and Harvoni to only the sickest patients. The lawsuit alleges that this policy violates federal law that requires Medicaid drug programs to give access to prescription drugs. The Centers for Medicare and Medicaid Services (CMS) has been concerned about Medicaid programs’ limiting access to the drugs and sent letters to all 50 states inquiring about restrictions.

Wisconsin: State Legislature Passes Bill to Cut Funding for Planned Parenthood

The Wisconsin Legislature passed a bill cutting how much Planned Parenthood can get reimbursed for prescription drugs through Medicaid. The bill requires family planning clinics to charge Medicaid only for the acquisition cost plus a dispensing fee for drugs obtained through Medicaid’s 340B discount program. This would include birth control and could result in cuts of up to $4.5 million in Medicaid funding for Planned Parenthood clinics each year. Republican Gov. Scott Walker will most likely sign the bill.

4. Regulations Open for Comment

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.

HHS Posts Guidance for State Innovation Waivers

On Dec. 11, the Department of Health and Human Services (HHS) posted guidance for states interested in seeking a State Innovation Waiver under Section 1332 of the Affordable Care Act (ACA). State Innovation Waivers allow states to receive federal funding to implement alternative models of health care coverage that provide affordable coverage to their residents. The notice clarifies that the minimum length of public notice and comment periods for waiver applications is 30 days.

To see the guidance, click here.

CMS Issues Proposed Rule Expanding Access to Medicare Claims Data

The Centers for Medicare and Medicaid Services (CMS) issued a proposed rule entitled “Medicare Program: Expanding Uses of Medicare Data by Qualified Entities.” The rule would expand access to Medicare information by permitting certain organizations to buy and share claims data. Created under Obamacare, Medicare’s qualified entity program allows providers, employers and others access to Medicare data to analyze the performance of providers and suppliers. The rule aims to help qualified entities make business decisions that reduce costs and improve quality of care. These changes were mandated in the Medicare Access and CHIP Reauthorization Act and CMS thinks the expansion of data sharing will stir more interest in the program. If the proposal is finalized, CMS estimates the number of qualified entities will go from 13 to 20. Comments will be accepted on the proposed rule until 5 p.m. on March 29, 2016.

5. Reports

Mercatus Study Finds Medicaid Provider Taxes Increase Health Costs

George Mason’s Mercatus Center released a new study finding that health care provider taxes—which 49 states use to partially fund Medicaid—are increasing health costs. Author Brian Blase argues that provider taxes shift costs from states to the federal government, but also raise overall spending by lowering the relative price of Medicaid expenditures to states. Blase concludes that transitioning Medicaid toward a fixed-payment system would move states’ incentives away from maximizing federal reimbursements and toward maximizing value (making provider taxes and similar schemes obsolete).

Health Care Industry Coalition Releases Health System Policy Recommendations

On Feb. 17, the Healthcare Leadership Council released a list of health system policy recommendations. The report—“Viable Solutions: Six Steps to Transform Healthcare Now”—calls for action in the following areas:

1. Comprehensive care planning
2. Medication therapy management
3. Health information interoperability
4. Changes to federal anti-kickback and physician self-referral (Stark) laws
5. Health information flow improvements focused on patient privacy laws and regulations
6. Food and Drug Administration (FDA) reforms

The group argues these six areas would increase innovation while also boosting quality and value.

While the Affordable Care Act (ACA) extended health coverage to tens of millions of Americans, a comparable effort is needed to address the system’s cost, quality and value challenges, according to the coalition.

Some proposals within the six areas include asking the Centers for Medicare and Medicaid Services (CMS) to allow collaboration between pharmaceutical companies and health plans on medication adherence. The coalition also calls for federal anti-kickback and Stark Law waivers for all accountable care organizations (ACOs) that meet certain conditions (even if they don’t participate in the Medicare Shared Savings Program).

The FDA proposed reforms include an expanded definition of valid scientific evidence to include evidence described in well-documented case histories, including registry data, studies published in peer-reviewed journals and data collected outside the U.S. This would provide FDA with more flexibility in reviewing new drugs and medical devices. The report also calls for allowing companies to make certain changes to medical devices without a premarket submission.

CBO Report Finds That a Senate Medicare Appeals Bill Could Increase Spending By $1.7 Billion

A Congressional Budget Office (CBO) report says that a bipartisan Senate Finance Committee plan to modify the Medicare appeals process would increase direct spending by about $1.7 billion between 2016 and 2026 and appropriated spending by another $35 million over that same period.

The Audit and Appeals Fairness, Integrity and Reforms in Medicare Act (AFIRM) would appropriate additional funding for the Office of Medicare Hearings and Appeals (OMHA) and the Departmental Appeals Board within the Department of Health and Human Services (HHS). The bill would also revamp the hearings and appeals process for Medicare beneficiaries and health care providers who challenge coverage and payment decisions in that program.

In its fiscal 2017 budget justification, OMHA says the office has seen an overall 1,222 percent increase in the number of appeals received annually between fiscal 2009 and 2014, which has caused a detrimental impact on the agency’s performance. CBO notes there is a delay of five months in entering new appeals cases into the Administrative Law Judge docket and the average processing time for an appeal in fiscal 2015 was 550 days.

A federal appeals court said that tracking the progress of the bill could show whether Congress and HHS are serious about addressing the appeals backlog. This could then inform a lower court’s decision about whether to step in and compel HHS to meet the 90-day timeline for making appeals decisions.

CBO says the bill would increase direct spending in three ways, by providing $1.3 billion for: hearing and appeal activities; hastening the resolution of appeals; and reducing recoveries to the Medicare program that result from certain audits—namely the RACs.

CBO says multiple provisions in the bill would change the timing of appeals, which could increase spending by around $460 million. These provisions include mandating the creation of Medicare magistrates; imposing monetary thresholds for appeals; requiring appeals to be returned to a prior level if new evidence was introduced by a party other than a beneficiary; mandating the development of an expedited appeals process; allowing the consolidation of multiple appeals cases; directing HHS to establish a process for OMHA and the fourth level of appeals to refer cases that could be fraud to law enforcement; looking at the feasibility of participation by CMS and others in hearings before ALJs; and instituting new annual training for ALJs and Medicare magistrates.

The bill would also allow HHS to shorten the RAC review period from four to three years, which could lead to fewer audits (and therefore fewer recoveries for the Medicare program).