This Week: Double Issue — Congress leaves for seven weeks, Congress sends opioid legislation to the President…More co-ops fail…The Supreme Court rules on Texas Abortion Case and Washington state Pharmacists and Religious Freedom Case…Hearings on MACRA, Stark, co-ops, cost-sharing and more.

1. Courts

Federal Circuit Court Rules in Favor of Biologic Companies

On July 5, the United States Court of Appeals for the Federal Circuit ruled that biosimilar manufacturers must wait six months after FDA approval before selling their product. This waiting period applies even if the biosimilar company and the branded biologic manufacturer had engaged in an optional patent exchange process, according to the court. The decision in Amgen v. Apotex will give branded biologics six months of additional marketing exclusivity—on top of the 12 years they already have—in some circumstances.

The appeals court, which has sole jurisdiction over patent case appeals, had previously ruled in the precedent-setting Amgen v. Sandoz that brand and biosimilar makers were not required to share patent information, a process known as the “patent dance.” The court had also ruled that biosimilar companies had to give biologic companies 180 days’ notice of intent to market after FDA approval.

Apotex, which plans to bring a version of Amgen’s cancer drug Neulasta to market, argued that it does not have to provide that 180-day notice because it had engaged in the patent process with Amgen.

However, the Federal Circuit ruled that the law requiring the notice is firm and does not change even if the biosimilar company engaged in the patent exchange process.

The Supreme Court could weigh in on the matter—in late June, it asked the solicitor general to consult on the Amgen-Sandoz case before deciding whether to take it.

Appellate Court Rules HHS Cannot Ban Fixed Indemnity Health Plans

In a ruling on July 1, the U.S. Court of Appeals for the D.C. Circuit confirmed that the Department of Health and Human Services (HHS) overstepped its authority by prohibiting “fixed indemnity” health insurance plans from being sold. Fixed indemnity plans—criticized by health care advocates for providing bare bones coverage—provide a set amount of benefits and do not meet Obamacare’s minimum coverage requirements.

HHS issued a 2014 rule that “effectively eliminated stand-alone fixed indemnity plans altogether,” the court stated in its ruling. The court determined that this contradicted the intent of Congress in passing the Public Service Health Act in 1996—the three-judge appellate panel granted a permanent injunction prohibiting HHS from enforcing the rule.

The case was brought by Central United Life Insurance Company.

Supreme Court Strikes Down Texas Abortion Restriction

On June 27, the Supreme Court struck down restrictions on Texas abortion clinics and possibly paved the way for a challenge to other similar state anti-abortion limits. The court’s 5-3 decision in Whole Woman’s Health v. Hellerstedt said Texas abortion clinics do not have to comply with standards of ambulatory surgical centers and their doctors are not required to have admitting privileges at local hospitals. The court found that such restrictions impose an “undue burden” on women’s constitutional right to abortion—this decision is expected to dissuade more states from passing similar restrictions, and to arm abortion rights activists in legal challenges to state laws already in place.

This ruling marked the first time in 15 years that the Supreme Court weighed in on state restrictions on abortion providers and facilities—a central strategy of the anti-abortion movement since 2010. The ruling’s scope will be tested almost immediately in lawsuits already filed over laws that have threatened to close clinics in Alabama, Florida, Louisiana, Mississippi, Oklahoma and Wisconsin.

In the Texas case, Justice Anthony Kennedy sided with the court’s liberal justices in the 5-3 decision that found the state had placed unconstitutional burdens on women seeking abortion. Texas argued that the ambulatory surgical and admitting privileges requirements were designed to make abortion safer, a claim that the court rejected.

“We conclude that neither of these provisions offers medical benefits sufficient to justify the burdens upon access,” Justice Stephen Breyer wrote for the court. “Each constitutes an undue burden on abortion access and each violates the Federal Constitution.”

Justice Samuel Alito, in a dissent quoting the late Scalia, chastised the decision as another in the “court’s troubling tendency to bend the rules when any effort to limit abortion, or even to speak in opposition to abortion, is at issue.”

The three dissenting justices—Alito, Clarence Thomas and Chief Justice John Roberts—wrote that the provision could have been sliced up.

Supreme Court Declines to Hear Pharmacists’ Religious Freedom Case

The Supreme Court declined to take up Stormans v. Wiesman, a case in which a group of pharmacists in Washington state maintain that the state does not have a conscious protection to safeguard them from having to stock and sell the morning-after pill. The group says their religious beliefs inform them that the pill is akin to abortion—the FDA says that the drug is a form of birth control and does not cause an abortion.

Three Supreme Court justices—Chief Justice John Roberts, Samuel Alito and Clarence Thomas—wanted to take the case. However, four justices must agree for the court to take a case.

Alito, in a dissent joined by Roberts and Thomas, called the case an “ominous sign” for religious freedom.

Washington state is one of the few states that does not allow pharmacists to opt out of selling the products.

In this case, one of the pharmacists says she was fired after the policy went into effect, and another was threatened with losing her job. The pharmacists say that before this policy went into effect, they had referred customers requesting the drugs to nearby pharmacies that sell them. None of the customers, the lawyers say, has ever been denied timely access.

In defense of the policy, Washington state says that no one has ever been held in violation of the regulation and that it only requires the pharmacy to sell the drugs—not an individual pharmacist.

2. Congress

House of Representatives

House Ways and Means Committee Approves Two Medicare Bills

At a full committee markup on July 13, the House Ways and Means Committee approved the Sustaining Healthcare Integrity and Fair Treatment (SHIFT) Act and the Expanding Seniors Receiving Dialysis (ESRD) Choice Act. The ESRD Choice Act— H.R. 5659—will remove a restriction that blocks patients with end-stage renal disease from enrolling in Medicare Advantage. The SHIFT Act— H.R. 5713—will “provide for the extension of certain long-term care hospital Medicare payment rules, clarify the length of stay to certain moratorium-excepted long-term care hospitals and for other purposes.” The committee said the bill will close a program integrity loophole.

To see the full markup, click here.

For a related press release, click here.

House Oversight Committee Predicts More Co-op Failures

On July 13, Kevin Counihan, CEO of the HealthCare.gov marketplace, faced a 90-minute grilling before the House Oversight Committee. Republican members of the committee noted that 16 of 23 co-ops have failed and most predicted the rest will fail as well.

In response, Counihan said he holds “a different perspective.” But he offered little in the way of confident assurances that the seven remaining co-ops—officially called consumer operated and oriented plans—will survive in the long run. Pressed to disclose whether any of the remaining co-ops are turning profits, Counihan demurred, saying that profitability is volatile and “can very much [change] on a month-by-month basis.”

At the hearing, ACA supporters did what they could to accentuate positive news and prevent co-op problems from tainting the entire law. Linda Blumberg, an Urban Institute senior fellow who testified alongside Counihan, credited the law with reining in national health expenditures and expanding coverage to 20 million Americans.

To watch the hearing, click here.

House Approves the CARA Act

On July 8, the House voted 407-5 to approve the conference report on the Comprehensive Addiction and Recovery Act (CARA). Democrats fought for months to include funding in the legislation and refused to sign a conference report on July 6 after Republicans voted down a $920 million funding proposal. However, they overwhelmingly voted in favor of that report with the blessing of Democratic leadership. The Senate passed the legislation 92-2 on July 13 despite similar complaints about a lack of funding.

The advocacy community applauded Congress for passing the opioid legislation—more than 110 groups had signed a letter to Congress praising the conference report and asking members to pass the legislation before leaving for summer recess.

Despite Democrats’ letter to Chairman Fred Upton (R-MI) saying they would not sign on unless the legislation included substantial new funding, the bill passed with overwhelming support.

House Ways and Means Committee Holds Hearing on Cost-Sharing Subsidies

On July 7, the House Ways and Means Oversight Subcommittee held a hearing on the Affordable Care Act’s Obamacare cost-sharing reduction program, the center of the House Republicans’ lawsuit against the Obama administration. Members debated over whether the administration’s $7 billion payments for cost-sharing subsidies to 6.4 million low-income Affordable Care Act (ACA) enrollees were illegal.

In a report issued jointly by the Republican staffs of the House Ways and Means Committee and the House Energy and Commerce Committee, Republicans detailed claims that the administration made the payments illegally without the required congressional appropriation. A federal district court also ruled that the payments were illegal and the administration is appealing the decision.

At the hearing, committee chairman Kevin Brady (R-TX) said the administration’s actions constituted “stealing from the American people.” Witnesses testified that payments were made legally as part of a permanent appropriation for premium tax credit subsidies.

House Ways and Means Committee Delays Direct Supervisions Rule for Rural Facilities

On July 7, the House Ways and Means Committee unanimously passed legislation to protect access to high-quality health care in rural communities by providing regulatory relief to Critical Access Hospitals (CAHs). The Continuing Access to Hospitals Act of 2016—H.R. 5613—delays through this year a requirement that doctors be present at facilities to supervise non-physician providers at small, rural facilities. Committee members amended the bill to require that the Medicare Payment Advisory Commission study whether the quality of care at rural facilities is hurt by the absence of the requirement. Rep. Xavier Becerra (D-CA) offered the amendment to require a MedPAC study to help Congress decide whether to get rid of the requirement for good.

To see a related press release, click here.

House Approves Mental Health Reform Bill

On July 6, the House passed bipartisan mental health reform legislation that was three years in the making. The bill passed 422-2, reflecting a decision to defer debates on some of its more controversial aspects. The bill would reorganize the Substance Abuse and Mental Health Services Administration, direct funding to fight serious mental illness as opposed to general mental health programs and change Medicaid reimbursements for treating patients with illnesses like schizophrenia. Costly and controversial provisions were stripped including some that would have expanded access to psychiatric hospital beds and made it easier for doctors to share information about mentally ill patients.

Although bill sponsor Rep. Tim Murphy (R-PA) acknowledged that he hoped for stronger legislation, he still called it an accomplishment that “lays the foundation for how we should handle prevention and treatment.”

One of the most significant reform proposals stripped from the bill would have cost between $40 billion and $60 billion over 10 years. The original bill would have struck a federal rule prohibiting Medicaid payments to psychiatric hospitals with more than 16 beds. Advocates say the rule is a serious barrier to care that has significantly reduced the number of psychiatric beds in the country.

Murphy said he hopes lawmakers can secure more funding for mental health through the appropriations process. He is hopeful that the Senate will quickly take up his bill, but a lack of time in the legislative calendar and partisan debates in that chamber could hold up the legislation.

A companion measure that was approved unanimously out of the Senate HELP Committee earlier this year has stalled over gun politics. Chairman Lamar Alexander says he is hopeful the Senate will take up that measure in September.

Democratic Committee Leaders Request Information From Theranos on Inaccurate Blood Test Results

On July 1, House Energy and Commerce Committee Democrats sent a letter to blood diagnostics startup Theranos requesting information on the company’s failure to comply with federal regulatory standards and its steps to address the inaccurate test results that were provided to customers. Because Democrats are in the minority, they cannot use subpoenas to make companies turn over documents. This investigation comes after FDA and CMS inspections found compliance violations.

“Given Theranos’ disregard for patient safety and its failure to immediately address concerns by federal regulators, we write to request more information about how company policies permitted systematic violations of federal law and how Theranos is working with regulators to address these failures,” states the letter to the company from E&C ranking member Frank Pallone (D-NJ), Health Subcommittee ranking member Gene Green (D-TX) and Oversight and Investigations Subcommittee ranking member Diana DeGette (D-CO).

Compliance issues uncovered by the FDA include the use of unapproved medical devices and the failure to keep records, conduct quality audits and validate processes to ensure devices are used as intended.

CMS also found the company violated five condition-level Clinical Laboratory Improvement Amendments (CLIA) requirements and other standard-level requirements. The agency said some of these compliance violations pose immediate jeopardy to patient health and safety.

CMS later imposed sanctions including barring Elizabeth Holmes, Theranos CEO, from owning or operating a lab for two years.

In the letter, the lawmakers ask Theranos to explain how it is working with regulators to come into compliance with federal law, how it changed internal policies to prevent future violations and whether it is investigating its policies and the actions of its employees to determine what caused the compliance failures. They also want to know what Theranos is doing to help medical professionals and patients who may have been harmed by inaccurate test results.

Click here for more information.

House Energy and Commerce Committee Subpoenas HHS Documents on Reinsurance Program

On June 29, the House Energy and Commerce Committee issued a subpoena to the U.S. Department of Health and Human Services (HHS) demanding all documents related to the Traditional Reinsurance Program, a program meant to help insurers endure the turbulent first few years of the Obamacare exchanges. A committee press release said that HHS acknowledged that “responsive documents” exist about its decision to divert billions in reinsurance dollars to health plans with high medical costs, but declined to turn them over earlier in June. HHS claims that providing these documents to Congress would “have a chilling effect on future deliberations.” The committee has also subpoenaed documents related to Obamacare’s cost-sharing subsidies and Basic Health Plan.

Senate

Senate Passes CARA Act

On July 13, the Senate passed the opioid conference report of the Comprehensive Addiction and Recovery (CARA) Act 92-2 despite Democrats’ complaints about a lack of funding. The bill expands education and prevention efforts, strengthens prescription drug monitoring programs and increases first responder access to naloxone—a overdose reversal drug—among other changes. It also includes a “lock-in” provision that lets plans limit at-risk beneficiaries’ access to “frequently abused drugs” by locking them into one or more prescribers and pharmacies.

The House on July 8 passed 407-5 the CARA conference report after Democrats dropped demands for more funding to fight the opioid epidemic and treat overdoses.

The bill now heads to President Obama’s desk for his signature.

On July 14, Sens. Patty Murray, Ron Wyden, Patrick Leahy and Jeanne Shaheen introduced a stand-alone bill to provide $920 million in new opioid resources over the next two years. The White House also pledged to keep fighting for money and circulated letters from law enforcement and addiction treatment advocacy groups calling for it. To see the bill, click here.

Senate Finance Committee Holds MACRA Hearing

On July 13, the Senate Finance Committee held a hearing on implementation of the new Medicare physician payment system—the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). At the hearing, CMS acting administrator Andy Slavitt indicated that the agency might delay the start date of the system. After committee members expressed concerns with the short period between when the final rule will be announced and the planned implementation date, Slavitt responded that CMS is open to alternatives that include postponing implementation and establishing shorter reporting periods. He acknowledged several times that the more time physicians have to spend reporting data, the less time they can devote to patient care.

To watch the full hearing, click here.

Senate Finance Subcommittee on Health Holds Hearing on Alzheimer’s

On July 13, the Senate Finance Subcommittee on Health held a hearing on Alzheimer’s and its impact on the health care system and family caregivers.

To watch the hearing or for the witness list and statements, click here.

Senate Finance Committee Holds Hearing on the Stark Law

On July 12, the Senate Finance Committee held a hearing to look at the anti-kickback law known as the “Stark Law,” which some argue could hinder value-based payment models. Dr. Ronald Paulus of Mission Health System said his system could not launch initiatives aimed at improving quality of care for patients because those moves could result in penalties under the Stark Law.

He and other witnesses asked Congress to repeal or revamp the physician self-referral law that prohibits doctors from referring Medicare patients to hospitals, labs and colleagues with whom they have financial relationships, unless they fall under certain exceptions. No intent of wrongdoing is required to prove liability, and offenses carry potential civil monetary penalties.

Another issue raised in relation to the Stark Law is that the law prevents hospitals from paying providers more when they meet certain quality measures, such as reducing hospital-acquired infections, while paying less to those who miss the goals.

Senate Finance Committee Chairman Orrin Hatch (R-UT) said the committee would take some sort of action before the end of the year, but he did not indicate if it would push for a full repeal or a modification of the Stark law.

CMS already made some changes to Stark last year within the Medicare physician fee schedule for 2016 that offered providers some flexibility when it came to technical violations of the law. However, those changes do not address Stark’s limitations within the context of the move to value-based care.

To watch the hearing or for the witness list and statements, click here.

Zika Funding Stalls in the Senate Twice

The House’s $1.1 billion funding package died in the Senate on June 28 as expected. A second attempt, on July 14, to move the funding bill failed to get the 60 votes necessary to move forward in the Senate. Democrats opposed the bill’s restrictions on contraception funding and lack of new funds. Republicans criticized Democrats for the bill’s failure to pass while Democrats criticized Republicans for leaving for the Fourth of July with the issue unresolved.

As of June 30, seven infants have been born with Zika-related birth defects in the U.S. and five pregnancies have ended due to Zika-related birth defects, according to new CDC data. The CDC defines pregnancy loss as a miscarriage, stillbirth or abortion.

The CDC began reporting pregnancy statistics two weeks prior to releasing this data.

Senate Finance Committee Holds Hearing on Proposed Medicare Part B Demo

On June 28, the Senate Finance Committee held a hearing on CMS’s proposed drug rule for Medicare Part B. During the hearing, senators on both sides of the aisle questioned the size of CMS’s proposed Part B drug pay demonstration. Many lawmakers also raised concerns over how the demo could affect small-practice providers and those in rural areas.

Senate Finance Chair Orrin Hatch (R-UT) called both phases of the demonstration “very troubling—and that’s putting it kindly.” Sen. Richard Burr (R-NC) asked the witness, Dr. Patrick Conway, twice if the agency is considering withdrawing the proposed rule, and Conway responded both times that the agency intends to take comments into account for the final rule.

Hatch said that with the backlash the program has created, if CMS moves forward with the demonstration, it will do so over the concerns and objections of many experts and stakeholders.

Sens. Rob Portman (R-OH), Debbie Stabenow (D-MI) and Tom Carper (D-DE) all questioned the size and scope of the demonstration. Portman called CMS’s proposal hardly a demonstration, and more of a wholesale change since it affects about 75 percent of Part B medications.

Ranking Democrat Ron Wyden (OR), Sen. Charles Grassley (R-IA) and other lawmakers raised concerns over what could happen to providers and beneficiaries in rural areas. Wyden worries that those beneficiaries could end up going to pricier hospitals for treatment.

Conway said CMS proposed to include rural providers and small practices in the demonstration, but knew there could be concerns. He said CMS will look closely at public comments to see if changes for rural and small practice providers are needed in the final rule, he said.

3. Administration

CMS Releases Guidance to States on Participation in Value-based Purchasing Arrangements

On July 14, the Centers for Medicare and Medicaid Services (CMS) released guidance to states and manufacturers regarding participation in value-based purchasing (VBP) arrangements. The guidance also encourages states to participate in such arrangements as a means to address, as well as offset, higher-cost drug treatments. This guidance has been released through State Release #176 and Manufacturer Release #99, which are available for download here.

CMS Data Brief: Median Marketplace Deductible $850

According to CMS data released July 12, the median individual deductible for HealthCare.gov Marketplace policies in 2016 is $850. That is down from $900 for Obamacare customers who bought a plan through the website in 2015. The figures include cost-sharing subsidies available to people earning up to 250 percent of the federal poverty level—about $29,000 per individual. About 60 percent of 2016 HealthCare.gov Marketplace consumers qualified for this assistance. For example, the median deductible this year for silver plan enrollees who do not qualify for reduced cost-sharing is $3,000. Twenty-nine percent of consumers are in plans with deductibles of $3,000 or above.

The report also notes that Obamacare customers are eligible for an average of seven types of medical treatment for which the deductible does not apply. These included preventive services such as cancer screenings and immunizations.

To see the full report, click here.

CMS Issues Final Rule Expanding Uses of Medicare Claims Data

On July 1, the Centers for Medicare and Medicaid Services (CMS) issued a final rule expanding the number of organizations allowed to access Medicare and private claims data before selling it to providers and employers.

The rule, required under the Medicare Access and CHIP Reauthorization Act (MACRA), allows qualified entities to share and sell data and analyses to providers in order to help them make better-informed decisions on care delivery and cost. It also requires anyone receiving that data to use security protections under HIPAA privacy and security rules.

The initiative is part of a broader effort by the Obama administration to use data to help create a health care system that delivers better care for patients, spends dollars more wisely and results in healthier people.

The final rule contains few changes from the proposed rule. Future rulemaking is anticipated to expand the data available to qualified entities to include standardized extracts of Medicaid data.

CMS Publishes Open Payments Data

On June 30, the Centers for Medicare and Medicaid Services (CMS) published 2015 Open Payments data, along with newly submitted and updated payment records for the 2013 and 2014 reporting periods. The Open Payments program (sometimes called the “Sunshine Act”) requires transfers of value by manufacturers of drugs, devices, biologicals and medical supplies that are paid to physicians and teaching hospitals to be published on a public website.

For Open Payments program year 2015, health care industry manufacturers reported $7.52 billion in payments and ownership and investment interests to physicians and teaching hospitals—an increase of about $30 million from the year before. This amount is composed of 11.90 million total records attributable to 618,931 physicians and 1,116 teaching hospitals.

Payments in the three major reporting categories are:

• $2.60 billion in general (i.e., non-research related) payments
• $3.89 billion in research payments
• $1.03 billion of ownership or investment interests held by physicians or their immediate family members

The modest increase comes from the boost in research payments—from $3.79 billion to $3.89 billion—while general payments to doctors, which include speaking fees and meals, as well as doctor ownership and investment interests, declined slightly.

The top spender was Novartis, which reported $539 million in financial interests with doctors in 2015, 40 percent higher than in 2014. Genetech came in second, with spending at $470 million, up 20 percent from the previous year.

The amount and distribution of payments and ownership and investment interest categories remained consistent between the 2014 and 2015 reporting periods.

For more information, click here.

CMS Announces Physician Groups Chosen for Oncology Care Model

On June 29, the Centers for Medicare and Medicaid Services (CMS) announced that it has selected nearly 200 physician group practices and 17 health insurance companies to participate in its Oncology Care Model, which is focused on incentivizing high-quality care using national treatment guidelines. The Medicare arm of the Oncology Care Model includes more than 3,200 oncologists and will cover approximately 155,000 Medicare beneficiaries nationwide. Participating practices cover urban, suburban and rural areas and range in size from solo oncologists to large practices with hundreds of providers. Other payers are commercial insurers that will align their oncology payment models with Medicare’s model and support OCM practices in their practice transformation efforts.

OCM is a five-year model that began on July 1, 2016, and runs through June 30, 2021. The names of those practices and payers participating in the Oncology Care Model, and more information about the model, can be found on the Oncology Care Model website.

FDA Panel Approves Humira Biosimilar

On July 12, an FDA advisory panel unanimously recommended approval of Amgen’s biosimilar version of AbbVie’s multibillion-dollar biologic Humira—at the same time, the panel cautioned the agency that it needs to address public concerns about the new generation of biologic copycat medicines.

Patient and doctor groups warned that payers would force patients using Humira for conditions such as rheumatoid arthritis and Crohn’s disease to switch to the biosimilar treatment because they are cheaper. This “non-medical switching” could have negative health effects on patients—FDA has not deemed any biosimilar interchangeable, which would allow for automatic substitution at the pharmacy level.

FDA staff members expressed their content with the biosimilar approval process, which was created by Obamacare in 2010. They explained that branded biologic companies often get adjustments to their biologics approved in a similar manner to the way FDA evaluates biosimilars.

FDA Issues Draft Guidance on Demographic Data in Medical Device Clinical Studies

On June 20, the Food and Drug Administration (FDA) issued draft guidance for the evaluation and reporting of age, race and ethnicity data in medical device clinical studies, which should reflect representative proportions of intended use populations. The move comes as FDA prepares to launch a campaign encouraging members of minority groups to take part in clinical trials. FDA also plans to work with stakeholder groups to develop multi-language resources and use social media in an effort to diversify clinical trials.

The draft guidance has three objectives:

1. Encourage the collection and consideration during the study design state of relevant age, race, ethnicity and associated covariates (e.g., body size, biomarkers, bone density, etc.), for devices for which safety, effectiveness (probable benefit, for HDEs) or benefit-risk profile are expected to vary across these groups;
2. Outline recommended analyses of study subgroup data, with a framework for considering demographic data when interpreting overall study outcomes; and
3. Specify FDA’s expectations for reporting age, race and ethnicity-specific information in summaries and labeling for approved or cleared medical devices.

The agency identifies several barriers to enrollment, including: lack of understanding about main obstacles to participation; inclusion and exclusion criteria that unintentionally exclude different groups; lack of understanding about differences in disease etiology and pathophysiology that may lead to under-diagnosis and under-referral of subgroups; patient concerns related to treatment group, randomization, possible side effects, privacy and historical mistrust of clinical trial ethics; and language, cultural and health literacy gaps.

FDA recommends that manufacturers identify and consider age, race and ethnicity-specific prevalence in the disease or condition the device is intended to treat; the diagnosis and treatment patterns of these groups; proportions of the subgroups included in past studies for the target indication; and any known clinically meaningful differences in outcomes related to either safety or effectiveness.

To read the draft guidance, click here.

FDA Officials Call for National Evaluation System for Health Technology

The FDA’s Sentinel Initiative would provide a backbone of the effort once it starts incorporating unique device identifiers, or UDIs. CMS has yet to require UDIs in claims data, but ONC’s 2015 certification criteria do require that EHRs be capable of standardized capture of UDIs for implantable devices.

In a new JAMA article, senior FDA officials called for a national evaluation system that would allow patients, providers and companies to detect safety problems in medical devices and produce insights to improve the products’ performance. The U.S. standards for marketing medical devices—reasonable assurance of safety and effectiveness (RASE)—is higher than those in other countries. This keeps dangerous or ineffective products off the market but also slows the availability of good ones, according to FDA chief Robert Califf and Jeff Shuren, director of the Center for Devices and Radiological Health.

They suggest that FDA could require less pre-market evaluation of risky but potentially valuable devices if it had more rigorous post-market evaluation that integrated clinical registries, electronic health records and claims data over the life of the device.

The national evaluation system could quickly identify problematic devices and share information about them. It could also speed up the availability of devices by giving quicker alerts should they prove dangerous.

To see the full article, click here.

AMA Wants CMS to Delay MACRA Reporting Requirements

The American Medical Association is requesting that the Obama administration push back reporting requirements under the new Medicare payment system by six months, until July 1, 2017. “After careful review, the AMA and many other physician organizations believe that the proposed start date is too early and will create significant problems for the launch of the MACRA programs,” the AMA comments to CMS in responding to a proposed rule for implementing the overhaul of Medicare payments.

The group also calls for more flexibility in reporting requirements under MACRA—specifically, they want physicians to have the option of using a reporting period that is less than a full year and they are asking CMS to alleviate reporting burdens.

The AMA has also asked the administration to wait to issue a final rule. Instead it would like an interim regulatory framework put in place at first.

President Obama Publishes U.S. Health Care Reform Editorial in JAMA

On July 11, the Journal of the American Medical Association (JAMA) published an editorial by President Barack Obama. The editorial reviewed the successes and challenges of the ACA and called for the following: (1) continued implementation of the Health Insurance Marketplaces and delivery system reform; (2) increased federal financial assistance for marketplace enrollees; (3) a public plan option, especially for the 12 percent of enrollees in areas with just one or two health insurers; and (4) actions to reduce prescription drug costs.

NIH Launches Largest Study of Breast Cancer Among Black Women

On July 6, the National Institutes of Health (NIH) launched the largest-ever study of breast cancer among black women. The NIH said the study will investigate how genetic and biological factors contribute to breast cancer risk in black women and “identify genetic factors that may underlie breast cancer disparities.” Investigators will share biospecimens, data and resources from 18 prior studies, resulting in a study population of 20,000 black women with breast cancer. Black women have lower breast cancer survival rates and are more likely to be diagnosed at later stages of the disease.

To see a related press release, click here.

National Academy of Medicine Drops Four From Opioid Panel After Wyden Letter

The National Academy of Medicine (NAM) took four members off a panel on opioids on July 6 after Senator Ron Wyden (D-OR) said in a letter that the panelists had not been appropriately vetted for conflicts of interest. NAM declined to comment on why it pulled the four members, two of whom were cited in Wyden’s letter to the academy president for their ties to the drug industry.

Wyden notes that both Dr. Gregory Terman and Dr. Mary Lynn McPherson hold or have held positions in professional societies with substantial ties to the pharmaceutical industry, specifically opioid manufacturers.

The other two members dropped are Gavin Bart from Hennepin County Medical Center and Howard Gutstein from University of Pittsburgh School of Medicine.

The panel—which met on July 6—will eventually offer recommendations to FDA.

Vice President Biden Announces New Cancer Moonshot Initiatives

On June 28, Vice President Joe Biden announced new initiatives to drive progress in the Cancer Moonshot. A few of the initiatives are as follows:

• The National Cancer Institute is launching a public-private partnership with more than 20 biopharmaceutical companies to accelerate researchers’ access to both approved drugs and those still being studied. The first agents will be available to investigators by the end of the year.
• CMS announced the enrollment of nearly 200 physician practices into its Oncology Care Model, which is focused on incentivizing high-quality care using national treatment guidelines. The practices include more than 3,200 oncologists and are expected to deliver roughly $6 billion in care for an estimated 155,000 beneficiaries over five years.
• FDA announced it has hired Dr. Richard Pazdur as acting director of its new Oncology Center of Excellence (OCE). The center, which cancer research advocates have lobbied for, will bring together oncology experts from throughout FDA in an effort to speed up development of new cancer treatments.

To see the full list of initiatives, click here.

Justice Department Files Motion to Dismiss Insurer’s Obamacare Lawsuit

On June 24, the U.S. Department of Justice responded to the lawsuit by the Oregon’s Health Republic Insurance Company over the ACA’s risk corridor funding gap. The department filed a motion to dismiss the case because it says it is premature—since the program is slated to last three years, and calculations and payments have been made for only 2014, the suit should be thrown out.

The ACA created the temporary risk corridors to help prevent inaccurate rate setting in the exchanges’ first three years. Under the program, if issuers earn more than a 3 percent margin, they must pay into the risk corridor fund, and those losing more than 3 percent receive payments.

HHS said the program would be budget-neutral but that the department would be willing to use other resources to pay for it if necessary. However, many Republican lawmakers saw the program as a federal bailout for issuers and blocked CMS from funding risk corridors in the 2014 omnibus bill. Thus, in 2014 payment requests far exceeded contributions—CMS distributed only 12.6 percent of the funding issuers expected. This led to the collapse of many of the co-ops and smaller plans that were relying on the promised funds.

In its suit, the Oregon co-op seeks immediate full payment for its 2014 request of $4.2 million, out of which it received just $530,000. The company also wants full funding for the 2015 payment. The case was filed in the U.S. Court of Federal Claims under the Tucker Act, which could give the issuers a way around Congress’ ban on risk corridors since there is a judgment fund for successful cases.

The administration argues that the co-op cannot claim the money because it is not presently due—final payments are not due until 2017 under the risk corridor program.

Several other insurers have also filed suit, including Illinois’ Land of Lincoln Health plan, the first operating co-op to make a formal complaint on risk corridors; Blue Cross and Blue Shield of North Carolina; Moda Health Plan of Oregon; and a number of Highmark affiliates in Pennsylvania.

4. State Activities

California: State House Republicans Ask Administration to Deny Undocumented Coverage Waiver

On June 24, nine Republicans in California’s congressional delegation called on the Obama administration to deny a pending state request to allow undocumented immigrants to enroll in health care coverage on the state’s exchange—Covered California. Gov. Jerry Brown recently signed legislation directing California to apply for an Obamacare waiver allowing the immigrants to purchase plans on the exchange at full cost.

In a letter to HHS and the Treasury Department, the Republican House members said this waiver “would exacerbate the negative effects of the president’s health care law and ignores congressional intent.” They argued that the law intentionally prohibited undocumented immigrants from obtaining coverage.

California has not yet submitted the 1332 waiver request. If it is approved, undocumented immigrants would be allowed to purchase exchange plans but could not receive insurance subsidies.

Connecticut: HealthyCT Co-op Collapses

Connecticut’s co-op—HealthyCT—is the latest Obamacare startup health care plan to collapse. The Connecticut Insurance Department announced on July 5 that it is placing the co-op under supervision and prohibiting it from selling any new policies. HealthyCT owes $13.4 million to the risk adjustment program. All but one of the remaining co-ops were net losers in the risk adjustment program, owing around $150 million.

HealthyCT had 40,000 customers at the end of the first quarter of this year. The co-op’s individual customers will need to shop for new plans when the next open enrollment period begins on Nov. 1. The nonprofit health plan’s small and large group members will have to shop for new coverage that begins Aug. 1.

Just nine of the original 23 startup plans remain in business.

Delaware: General Assembly Passes Health Care Pricing Transparency Legislation

The Delaware assembly approved legislation— Senate Bill 238 —to create a health care claims database within the Delaware Health Information Network intended to improve price transparency. The Health Care Claims Database will be administered by the health information network’s board of directors. The information network already has data from the state’s major hospitals and providers. The legislation will require that data to be encrypted and in compliance with federal and state health care privacy laws. The governor in an official statement called it “a critical step in Delaware’s health care innovation efforts.”

Kentucky: Gov. Bevin’s Plan to Overhaul Medicaid Comes Under Fire

Kentucky Gov. Matt Bevin’s proposal to overhaul the state’s Medicaid program is under fire from critics, who argue it will cut benefits and reduce health care for some of Kentucky’s poorest residents. Despite these concerns, officials in the governor’s administration say they are confident the federal government will approve the state’s proposed waiver. Kentucky is looking to enact several changes modeled after Medicaid expansion waivers in other conservative states, including monthly premiums, coverage lockouts for some enrollees who miss payments and cutting dental and vision benefits in the basic benefit package. Gov. Bevin hopes to have the plan approved by September.

Maryland: State Health Department Requests Funding for Inpatient Drug Treatment

In a new waiver, Maryland is asking the federal government for funding to cover inpatient drug treatment at small community facilities and private institutions. Under current law, Medicaid pays for inpatient treatment only at hospitals. Maryland also wants to be exempt from the IMD exclusion that prohibits Medicaid from reimbursing patients at psychiatric hospitals with over 16 beds. Additionally, the state wants to help eligible people being released from jail or prison to obtain Medicaid, and it wants to give more dental coverage for former foster children.

Massachusetts: MassHealth Announces Hepatitis C Drug Coverage for All Enrollees

On June 30, Massachusetts’ Medicaid agency announced it is lifting restrictions and covering hepatitis C drugs for all infected enrollees beginning Aug. 1. The agency—MassHealth—announced the decision after it negotiated new discounts from two drug manufacturers. Currently, one-third of MassHealth enrollees are eligible for hepatitis C drugs without restrictions, but the rest who get coverage through private insurers are denied unless they have severe liver damage. With the restrictions gone, more than 3,400 enrollees are expected to get treatment in the fiscal year. Additionally, expenditures on hepatitis C will not increase—staying at $200 million for the year—because of the lower prices they negotiated.

Oregon’s Remaining Co-op Put in Receivership

On July 11, the Oregon Department of Consumer and Business Services filed a petition to place Oregon’s remaining health co-op in receivership. The co-op has 20,600 policyholders of which 8,800 were in the small and large group markets and 11,800 in the individual market. The plans will end July 31.

Tennessee: 3-Star Health Task Force Proposes Coverage Expansion Plan

A Tennessee legislative task force charged with increasing health care access is proposing the implementation of a pilot program in 2017 before expanding coverage to all residents with income up to 138 percent of the federal poverty level.

The two-phase “3-Star Health Insurance Pilot” would initially target low-income individuals with behavioral health issues and uninsured veterans with enhanced accountability provisions. The second phase would make the pilot available to all qualifying residents earning up to 138 percent of the federal poverty level, the income threshold for Obamacare Medicaid expansion.

It is not clear, however, whether the state would join Obamacare’s Medicaid expansion.

Utah: If Its Plan is Not Approved, Utah Could Back Out of Medicaid Expansion

On July 1, Utah submitted its Medicaid expansion plan to the federal government and state officials said they could back out of their smaller-scale plan if it is not approved. Utah’s smaller expansion would cover around 10,000 people who are chronically homeless, involved in the criminal justice system or in need of behavioral health treatment. The state expects negotiations to begin in August.

5. Regulations Open for Comment

CMS Issues Proposed Rules for Hospice, Nursing Homes and Inpatient Rehab Facilities

On April 21, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would update Medicare fiscal year 2017 payment rules for hospice, nursing homes and inpatient rehab facilities. CMS is proposing a 2 percent increase in hospice payments for 2017, which would cost $330 million. This includes a 2.8 percent hike to reflect increased costs, but is balanced out by a productivity adjustment of 0.5 percent and a 0.3 percent cut required by the Affordable Care Act (ACA).

CMS is also proposing two new hospice quality measures for 2017. One will assess staff visits during the last week of life, and the other will look at whether patients received treatment consistent with federal guidelines in areas such as pain assessment.

CMS estimates that nursing homes will see a 2.1 percent pay increase next year, a boost of $800 million, according to a fact sheet. To comply with the IMPACT Act, CMS proposed one new assessment-based quality measure and three claims-based measures to be included in the nursing homes’ quality reporting program.

The proposal for inpatient rehabilitation facilities would create a 1.6 percent increase compared to 2016 payments, an increase of $125 million. 

CMS Proposes Rule to Improve Quality of Care and Health Equity in Hospitals

On June 13, the Centers for Medicare and Medicaid Services (CMS) proposed new standards to improve the quality of care and advance health equity in the nation’s hospitals. The proposal applies to the 6,228 hospitals and critical access hospitals that participate in Medicare or Medicaid.

The rule proposes to reduce overuse of antibiotics and implement comprehensive requirements for infection prevention. CMS estimates that these new requirements could save hospitals up to $284 million annually, while also improving care and potentially saving lives. The proposed rule builds on the Department of Health and Human Services (HHS) quality initiatives, including the National Quality Strategy, the Center for Disease Control’s strategy to combat antibiotic-resistance bacteria and the Partnership for Patients.

The proposed rule also advances protections for traditionally underserved and excluded populations based on race, color, religion, national origin, sex (including gender identity), age, disability or sexual orientation.

The proposed rule also requires critical access hospitals to implement and maintain a Quality Assessment and Performance Improvement (QAPI) program. This program monitors and improves a hospital’s care by collecting data to identify opportunities for improvement and develop corrective plans. Other hospitals participating in Medicare or Medicaid already maintain these types of programs.

CMS will accept comments until Aug. 15, 2016. Comments can be submitted here.

To see a fact sheet on the proposed rule, click here.

CMS Releases Proposed Changes to the Payment Error Rate Measurement and Medicaid Eligibility Quality Control Programs

On June 20, the Centers for Medicare and Medicaid Services (CMS) issued a notice of proposed rulemaking outlining proposed changes to the Payment Error Rate Measurement (PERM) and Medicaid Eligibility Quality Control (MEQC) programs to implement provisions in the Affordable Care Act’s (ACAs) changes to the way states adjudicate eligibility for Medicaid and the Children’s Health Insurance Program (CHIP). The proposed rule addresses the new eligibility provisions of the ACA and makes other general improvements to the PERM and MEQC programs. The proposed rule also includes policies that, if implemented, would reduce state burden and increase the focus on the continuous reduction of improper payment rates. Comments on this proposed rule are due by Aug. 22, 2016.

Proposed changes to the PERM program in the proposed rule include:

• Review Period: The PERM program will review Medicaid and CHIP payments made by states July through June of a given year. Under the current rule, the PERM program reviews payments made in a federal FY (October through September).
• Eligibility Review Responsibility: A federal contractor will conduct PERM eligibility reviews with support from each state. Under the current rule, states are required to conduct eligibility reviews and report the results to CMS.
• Eligibility Universe: The PERM program will conduct eligibility reviews (in addition to medical and data processing reviews) on FFS and managed care payments sampled for the PERM program. The eligibility review will be conducted on the beneficiary associated with the sampled claim. Under the current rule, states create separate universes of eligible individuals that are sampled for eligibility review.
• Federal Improper Payments: Improper payments will be cited if the federal share amount is incorrect (even if the total computable amount is correct). Under the current rule, improper payments are cited only on the total computable amount (i.e., federal share + state share).
• Sample Sizes: A national sample size will be calculated to meet national Medicaid and CHIP improper payment rate precision requirements. The national sample size will then be distributed across states to maximize precision at the state level, and state-specific sample sizes would be based on factors such as each state’s expenditures and previous improper payment rate. Under the current rule, state-specific sample sizes are calculated based on the state’s previous improper payment rate and state level precision and combined to total the national sample size.
• Corrective Action: States will continue to implement Corrective Action Plans (CAPs) for all errors and deficiencies; however, there will be more stringent requirements added for states that have consecutive PERM eligibility improper payment rates over the 3 percent national standard established under Section 1903(u) of the Social Security Act (the Act).
• Payment Reductions/Disallowances: Potential payment reductions/disallowances under Section 1903(u) of the Act will be applicable for eligibility reviews conducted during PERM years in cases where a state’s eligibility improper payment rate exceeds 3 percent. CMS will pursue disallowances only if a state does not demonstrate a good faith effort to meet the national standard, which is defined as meeting PERM CAP and MEQC pilot requirements.

Changes to the MEQC program in the proposed rule include:

• The MEQC program will be restructured into a pilot program that states must conduct during their off years from the PERM program to ensure continual oversight of both Medicaid and CHIP state eligibility determinations.
• States will be required to review a number of items not fully reviewed through the PERM program (e.g., negative cases).
• States will have flexibility in different areas to focus pilot reviews; however, should a state have consecutive PERM eligibility improper payment rates over the 3 percent national standard per Section 1903(u) of the Act, the state will lose this flexibility and CMS will provide direction for reviews.
• States must submit corrective actions for identified errors.

To see the notice of proposed rulemaking, click here.

CMS Proposed Updates to Policies and Payment Rates for ESRD PPS, QIP, Coverage and Payment for Acute Kidney Injury, DMEPOS Competitive Bidding Program and Fee Schedule, and Comprehensive ESRD Care Model

On June 24, 2016, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule that would update payment policies and rates under the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for renal dialysis services furnished on or after January 1, 2017. This rule also proposes new quality measures to improve the quality of care by dialysis facilities treating patients with end-stage renal disease.

This rule also implements the Trade Preferences Extension Act of 2015 provisions regarding the coverage and payment of renal dialysis services furnished by ESRD facilities to individuals with acute kidney injury.

In addition, the ESRD PPS proposed rule proposes changes to the ESRD Quality Incentive Program (QIP), including for payment years (PYs) 2018, 2019, and 2020, under which payment incentives are made to dialysis facilities to improve the quality of care that they provide. Under the ESRD QIP, facilities that do not achieve a minimum Total Performance Score (TPS) with respect to quality measures receive a reduction in their payment rates under the ESRD PPS.

This rule also addresses issues related to the durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) Competitive Bidding Program (CBP).

CMS is proposing to require bidding entities to obtain and provide proof of a bid surety bond for each competitive bidding area (CBA) in which the entity submits its bid(s), in accordance with Section 1847(a)(1)(G) of the Social Security Act, as added by section 522(a) of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

The rule also proposes revisions to the existing state licensure requirement at §414.414(b)(3), and proposes to expand suppliers’ appeal rights in the event that CMS takes one or more of the breach of contract actions specified in §414.422(g)(2).

Finally, the proposed rule would change the methodologies for adjusting DMEPOS fee schedule amounts using information from the DMEPOS Competitive Bidding and for establishing single payment amounts under the Competitive Bidding Programs for certain groups of similar items (e.g., various types of walkers) with different features (e.g., walkers with wheels versus walkers without wheels). Changes are also proposed to the methodology for establishing bid limits for items under the DMEPOS Competitive Bidding Program.

In addition, CMS announced a request for Applications for the Comprehensive ESRD (CEC) Model.

The proposed rule will be issued in the June 24, 2016 Federal Register and can be seen here.

CMS Releases Proposed Rule on the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System

On July 6, the Centers for Medicare and Medicaid Services (CMS) proposed updated payment rates and policy changes in the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System. Several of the proposed policy changes would improve the quality of care Medicare patients receive by better supporting their physicians and other health care providers. These changes are based on feedback from stakeholders, including beneficiary and patient advocates, as well as health care providers, including hospitals, ambulatory surgical centers and the physician community.

In addition to the payment provisions and quality reporting program changes for the proposed rule, CMS is also proposing:

• Several changes to the objectives and measures of the Medicare EHR Incentive Program. These changes are only applicable for eligible hospitals and critical access hospitals (CAHs) attesting under the Medicare EHR Incentive Program and would not impact eligible hospitals and CAHs attesting under a state’s Medicaid EHR Incentive Program.
• To align the definition of “eligible death” and the aggregate donor yield metric in the Organ Procurement Organization (OPO) Conditions for Coverage (CfC) with those of the Organ Procurement and Transplantation Network (OPTN) and Scientific Registry of Transplant Recipients (SRTR), as well as revise the OPO CfC to reduce the amount of hard copy documentation that must be sent with the organ, as much of this information is now available to the transplant center electronically.

CMS will accept comments on the proposed rule until Sept. 6, 2016.

To see the proposed rule, click here.

For a fact sheet on the proposed rule, click here.

IRS, Treasury Release Proposed Rule on QHP Benchmarks

The IRS and Treasury Department, in a proposed rule released July 6, proposed to alter how qualified health plan (QHP) benchmarks are determined so that they account for the costs of pediatric dental benefits. If finalized, the rule would go into effect for the 2019 plan year.

Although pediatric dental care is one of the 10 “essential health benefits” that plans are required to cover under the Affordable Care Act (ACA), several plans do not include such coverage, and consumers instead buy stand-alone dental products. Meanwhile, the marketplace determines the amount of tax credits a family can receive to cover the cost of coverage based on the second-cheapest silver-level plan.

However, as the proposed rule said, “because qualified health plans that do not offer pediatric dental benefits tend to be cheaper than qualified health plans that cover all ten essential health benefits, the second lowest-cost silver plan (and therefore the premium tax credit) for taxpayers purchasing coverage through a Marketplace in which stand-alone dental plans are offered is likely to not account for the cost of obtaining pediatric dental coverage.”

Treasury and IRS added that the existing rules “frustrate” the goal of making all essential health benefits affordable to those receiving premium tax credits, so the administration wants to update its interpretation to ensure all 10 services are addressed.

“Consistent with this interpretation, the proposed regulations provide that for taxable years beginning after December 31, 2018, if an Exchange offers one or more silver-level qualified health plans that do not cover pediatric dental benefits, the applicable benchmark plan is determined by ranking (1) the premiums for the silver-level qualified health plans that include pediatric dental benefits offered by the Exchange and (2) the aggregate of the premiums for the silver-level qualified health plans offered by the Exchange that do not include pediatric dental benefits plus the portion of the premium allocable to pediatric dental benefits for stand-alone dental plans offered by the Exchange,” the proposal said.

The rule aims to create the ranking by adding the premium for the lowest-cost silver plan that does not include a pediatric dental benefit to the premium for the cheapest stand-alone dental plan, and the premium for the second-cheapest silver plan without pediatric dental benefits to that of the second-lowest stand-alone dental plan. The second-cheapest amount from this combined ranking would be the taxpayer’s applicable benchmark plan premium, the rule said.

CMS Announces Proposed Payment Changes for Medicare Home Health Agencies

On June 27, the Centers for Medicare and Medicaid Services (CMS) announced proposed changes to the Medicare home health prospective payment system (HH PPS) for calendar year 2017 to foster greater efficiency, flexibility, payment accuracy and improved quality. Approximately 3.4 million beneficiaries received home health services from approximately 11,400 home health agencies, costing Medicare approximately $17.8 billion in 2015.

In the rule, CMS projects that Medicare payments to home health agencies in CY 2017 would be reduced by 1.0 percent, or $180 million, based on the proposed policies. The proposed decrease reflects the effects of the 2.3 percent home health payment update percentage ($420 million increase); the rebasing adjustments to the national, standardized 60-day episode payment rate, the national per-visit payment rates and the non-routine medical supplies (NRS) conversion factor ($420 million decrease); the effects of the -0.97 percent adjustment to the national, standardized 60-day episode payment rate to account for nominal case-mix growth for an impact of -0.9 percent ($160 million decrease); and the effects of the proposed increase to the fixed-dollar loss (FDL) ratio used in determining outlier payments from 0.45 to 0.56 for an estimated impact of -0.1 percent ($20 million decrease).

To be eligible for the home health benefit, beneficiaries must need intermittent skilled nursing or therapy services and must be homebound and under the care of a physician. Covered home health services include skilled nursing, home health aide, physical therapy, speech-language pathology, occupational therapy, medical social services and medical supplies. Home Health Agencies (HHAs) are paid a national, standardized 60-day episode payment for all covered home health services, adjusted for case-mix and area wage differences.

The HH PPS proposed rule is one of several rules for calendar year 2017 that reflect a broader administration-wide strategy to create a health care system that results in better care, smarter spending and healthier people.

For more information, click here.

Click here to see the proposed rule.

CMS Extends Comment Deadline for RFI on Modular Solutions for Medicaid IT Enterprise and Pre-Certification of Solutions

CMS extended the deadline for information the agency is seeking on the availability of modular solutions and the ability and interest in producing and offering solutions for Medicaid enterprise systems, specifically for clinical and administrative data warehouse and identity management solutions. CMS is developing a process for vendors to voluntarily obtain pre-certification for their Medicaid Management Information Systems (MMIS) modules in order to streamline the development and eventual certification of MMIS. CMS is now seeking suggestions for structuring such a pre-certification program. The information gathered from this RFI will inform the CMS process for implementing voluntary vendor pre-certification.

The original due date was July 14, 2016. The comment period for this RFI has now been extended to Aug. 15, 2016.

To see the RFI, click here.

6. Reports

National Academies Report Says Proposed Common Rule Should Be Dropped

According to a new report from the National Academies of Sciences, the federal government should withdraw its proposed update of a rule governing human research and appoint an independent commission to commence a reexamination of the ethical and practical questions involved. Last year’s proposed revisions to the Common Rule do “not adequately or effectively address the breadth, depth and import of unanswered questions,” concludes the report. “Rather, its inadequacies signal a pressing need for a comprehensive review of the nation’s ethical, legal, regulatory and institutional frameworks for protecting human research subjects.”

The report finds that the proposed rule failed to address a multitude of pressing questions regarding technological and other advancements in the practice of research. Those include research on large data sets, clinical trials that examine effects in groups of people and not just individuals, comparative effectiveness studies and research aimed at clinical innovation and quality improvement.

The report then concludes that a commission must be appointed to address these areas. The commission should also recommend where the regulatory authority for human research should lie within the federal government and whether the country should have a standing advisory committee on protecting human subjects.

The new report was the second of a two-part review of federal regulation of research. The first—released last fall—identified several areas in which federal regulations were hindering the research enterprise and recommended changes. The second report further details how those changes could be implemented.

The report was requested by the NIH and Department of Education.

GAO Report Finds Drug Shortages Associated With Patient Care

On July 7, the Government Accountability Office (GAO) released a study entitled “Drug Shortages: Certain Factors Are Strongly Associated with This Persistent Public Health Challenge.” The report found that when available supplies of prescription drugs are insufficient, patient care can be adversely affected.

To help address shortages, the Food and Drug Administration (FDA) prioritized the review of 383 drug applications and supplements during the time period GAO examined. Most were for generic sterile injectable drugs. FDA’s approval of some of these submissions occurred before the shortage was resolved. Although the timing of FDA’s approval does not establish a causal link, it could indicate that FDA’s action helped address some shortages.

GAO found that, as part of FDA’s oversight of drug safety and quality, it generally issued an increasing number of warning letters to sterile injectable drug establishments during the time period GAO reviewed for noncompliance with manufacturing standards outlined in federal regulations. However, the percentage of inspections resulting in warning letters remained relatively small as the number of inspections also increased. Moreover, seven establishments that were linked to widespread shortages and received warning letters all had previous indications of difficulty complying with manufacturing standards.

Shortages of sterile injectable anti-infective and cardiovascular drugs in 2012, 2013 and 2014 were strongly associated with certain factors GAO examined. Two factors—a decline in the number of suppliers and failure of at least one establishment making a drug to comply with manufacturing standards, resulting in a warning letter—suggest that shortages may be triggered by supply disruptions, according to the report. A third factor—drugs with sales of a generic version—suggests that due to relatively low profit margins for generic drugs, manufacturers are less likely to increase production, making the market vulnerable to shortages.

The Department of Health and Human Services (HHS) reviewed a draft of this report and reiterated its commitment to addressing drug shortages.

To see the full report, click here.

“Secret Shopper” Study Shows Insured Patients Have Difficult Time Scheduling Physician Appointments

According to a study published in Health Affairs on July 6, less than 30 percent of patients covered by California’s two biggest insurers were able to schedule an appointment with an initially selected physician. Researchers enlisted “secret shoppers” to schedule appointments with 743 primary care providers in five of California’s nineteen insurance marketplace pricing regions. The results were almost identical for patients covered by plans sold through Covered California and for those who enrolled outside the state’s exchange.

The study focused on plans sold by Anthem Blue Cross and Blue Shield of California, which together account for more than half of the individual market.

The shoppers also found widespread discrepancies in insurers’ provider directories. In 10 percent of cases, the listed physician was not part of the practice contacted. In addition, the wrong specialty was listed for 30 percent of doctors targeted. And nearly one in five physicians could not be contacted through the phone number listed.

The researchers point out that accurate provider directories are a key component to providing access to care, especially since narrow network plans are the most popular products on the Obamacare exchange markets.

They also point out that problems with provider directories are not a new phenomenon in California. A 2014 investigation by state officials highlighted widespread inaccuracies, and Blue Shield and Anthem were hit with fines last year for failing to maintain accurate directories.

FSAP Publishes First Annual Report on Oversight of Labs Working With Dangerous Agents

On June 30, the Federal Select Agent Program (FSAP) issued its first annual report on the oversight of labs that work with dangerous agents. The program, which tracks the handling of toxins and agents that could pose a threat to public health, reported 199 incidents last year of potential exposures in laboratories that led to the monitoring of more than 900 workers, although none of them became ill. Around 60 percent of the 290 entities registered with FSAP to handle toxins and agents were academic or non-federal government institutions. FSAP performed 216 inspections in 2015 and reported most were following regulations. Three entities, however, were suspended and six agreed to follow a corrective action plan. Sixteen were referred to the FBI—although no criminal intent was found—and four were referred to the HHS Office of Inspector General. FSAP approved 463 transfers of toxins or agents in 2015.

To see the report, click here.

Kaiser Family Foundation Releases Report on End of Life Medicare Spending

According to a new Kaiser Family Foundation report, for beneficiaries who died in 2014, Medicare spent $43,353 per capita on 73-year-old decedents, $33,381 on 85-year-olds and $27,779 on 90-year-olds. The analysis is based on data from a 5 percent sample of Medicare claims for services covered under Parts A, B and D for traditional Medicare beneficiaries.

To read the full report, click here.

CMS Data Shows Health Care Spending Grew in 2015

According to new CMS data, U.S. health spending is projected to have grown by an average of 5.8 percent in 2015, up from 5.3 percent a year prior. However, CMS is predicting that health spending growth will drop to 4.8 percent in 2016. CMS attributes the increased spending growth in 2015 to an aging population that needs more services, an increase in medical prices and expanded coverage under Obamacare.

Overall, health care spending remains lower than the average growth rate of nearly 8 percent in the two decades prior to the last recession.

Click here to view the data.

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