United States: Weekly Washington Healthcare Update - November 02, 2015

The Honorable LaVerne Council
Assistant Secretary for Information Technology and Chief Information Officer
U.S. Department of Veterans Affairs

Mr. Terry Halvorsen
Chief Information Officer
U.S. Department of Defense

Mr. Christopher Miller
Program Executive Officer for Defense Health Management Systems
Director of the Interagency Program Office
U.S. Department of Defense

Ms. Valerie Melvin
Director of Information Management
Government Accountability Office

2. ADMINISTRATION

National Governors Association Asks HHS for Information Sharing and Information on Section 1332 Waivers

The National Governors Association's Health and Human Services Committee wrote two separate letters to the U.S. Department of Health and Human Services (HHS) on Oct. 27. Massachusetts Gov. Charlie Baker and New Hampshire Gov. Maggie Hassan asked the Centers for Medicare and Medicaid Services (CMS) to provide states with increased flexibility to oversee marketplaces, and for more information sharing between the states and the federal government. In a second letter, they asked HHS and Treasury to provide states with the guidance and flexibility to pursue Section 1332, which provides for state innovation waivers, in order to opt out of major parts of Obamacare.

The letter on Health Insurance Marketplaces can be found here .

The letter on 1332 waivers can be found here.

E-Cigarette Trade Group Publishes FDA Draft Guidance

The Tobacco Vapor Electronic Cigarette Association leaked what appears to be draft guidance on e-cigarette approval from the U.S. Food and Drug Administration (FDA). The Office of Management and Budget (OMB) is reviewing FDA's final "deeming" rule, which would assert its authority to regulate e-cigs and other tobacco products under the 2009 Tobacco Control Act. The guidance details the process by which companies will file applications for premarket review of tobacco products (including e-cigarettes). The Tobacco Vapor Electronic Cigarette Association has expressed discontent with the draft guidance.

FDA Takes Action Against Tobacco Retailers Who Violated Restrictions

The U.S. Food and Drug Administration (FDA) announced that it filed complaints to start No-Tobacco-Sale Order actions against stores that repeatedly violated restrictions on the sale and distribution of tobacco. This is the first time FDA has used this authority that was granted in the 2009 Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act). FDA seeks to prohibit the sale of tobacco products for a period of 30 days at eight retail stores in five states. The enforcement actions will serve to send a message that there will be real consequences for breaking the law. For the locations please see the FDA's press release.

Hospitals in VBP Program to Experience Payment Increase

According to the Centers for Medicare and Medicaid Services (CMS), a bigger percentage of the hospitals participating in their Hospital Value-Based Purchasing program (VBP) will see payments rise. More than 1,800 of the 3,500 participating hospitals will experience an increase in their base operating payments, and 1,200 will see a decrease. Half of the hospitals will experience between a -0.4 percent and 0.4 percent change. The best-performing hospitals will see a 3 percent increase in payments and the worst a 1.75 percent decrease — which is the amount all the hospitals paid to initially fund the program. CMS will add new measures to the program in 2017, and remove six clinical process measures that are "topped out."

To see the CMS fact sheet, click here.

CMS Announces Final Rule for Payment Changes for Medicare Home Health Agencies for 2016

On Oct. 29, CMS announced that it projects Medicare payments to home health agencies (HHAs) in CY 2016 will be reduced by 1.4 percent. This decrease reflects the effects of the 1.9 percent home health payment update percentage; a 0.9 percent decrease in payments due to the 0.97 percent payment reduction to the national, standardized 60-day episode payment rate to account for nominal case-mix growth from 2012 through 2014; and a 2.4 percent decrease in payments due to the third year of the four-year phase-in of 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. Compared to the proposed rule, the maximum payment reduction in the first year of the value-based purchasing program would have been 5 percent but the final rule reduces that to 3 percent.

The final rule will be published in the Federal Register on Nov. 5. The final rule can be viewed here.

Highlights of the payment rule include:

Rebasing the HH PPS Payment Rates

The Affordable Care Act (ACA) directs CMS to apply an adjustment to the national, standardized 60-day episode payment rate and other applicable amounts to reflect factors such as changes in the number of visits in an episode, the mix of services in an episode, the level of intensity of services in an episode, the average cost of providing care per episode and other relevant factors. CMS is required to phase in any adjustment over a four-year period, in equal increments, not to exceed 3.5 percent of the amount (or amounts) as of the date of the enactment of the ACA (CY 2010), and be fully implemented by CY 2017.

In this CY 2016 final rule, CMS is moving forward with the third year of the four-year phase-in of the rebasing adjustments to the HH PPS payment rates. As finalized in the CY 2014 final rule, the adjustments include increases to the national per-visit payment rates, a 2.82 percent reduction to the NRS conversion factor and a reduction to the national, standardized 60-day episode payment rate of $80.95 for CY 2016.

Recalibration of the HH PPS Case-Mix Weights

CY 2016 will be the second year that CMS is annually recalibrating the HH PPS case-mix weights. The methodology used to recalibrate the case-mix weights for CY 2016 is identical to methodology used in CY 2015.

Reduction to the 60-day Episode Rate to Account for Nominal Case-Mix Growth

CMS is decreasing the national, standardized 60-day episode payment amount by 0.97 percent each year in CY 2016, CY 2017 and CY 2018 to account for nominal case-mix growth (i.e., case-mix growth unrelated to changes in patient acuity) from 2012 to 2014. CMS has adjusted home health payment in prior years to account for nominal case mix growth.

Other Updates

The Affordable Care Act requires that the market basket update for HHAs be adjusted by changes in economy-wide productivity. The CY 2016 home health market basket (2.3 percent) combined with the multifactor productivity adjustment (0.4 percentage points) results in a 1.9 percent home health payment update percentage.

CMS's Physician Payment Rule Contains Biosimilar Reimbursement Policy

The Centers for Medicare and Medicaid Services (CMS) included policy concerning paying for biosimilars in the finalized 2016 Physician Payment rule published Oct. 30. Biosimilars will be reimbursed under Medicare Part B in the same manner Medicare pays for generic drugs. Biosimilar manufacturers had argued the complexity of developing biologic drugs and biosimilars meant those products should be treated differently than traditional generics. In the final rule, CMS noted that any biosimilar that is approved under the Food and Drug Administration pathway would share a "high degree of similarity in the active component; have no clinically meaningful difference in safety, purity and potency." However, CMS also stated, "We would like to make clear that although our payment policy approach for biosimilars in analogous to our payment policy for multiple source drugs as described in this response, we take no position on whether a biosimilar is completely or partial analogous to its biologic reference product as a clinical matter.

CMS Finalizes Two-Midnight Rule Policy

In its final 2016 hospital outpatient payment rule released Oct. 30, the Centers for Medicare and Medicaid Services (CMS) finalized its proposal concerning the 2-midnight hospital admissions policy and recognized some hospital stays shorter than 2-midnights as legitimate inpatient stays. The 2-midnight policy dictates that doctors should expect beneficiaries to stay in the hospital for at least two-midnights for Medicare to reimburse hospitalizations as inpatient stays. Shorter stays would be considered outpatient stays and are paid at a lower rate. However, CMS acknowledged that some stakeholders' concerns were worth considering and proposed to relax the policy. "After consideration of the public comments we received, we are finalizing, without modification, our proposal to revise our previous 'rare and unusual' exceptions policy to allow for Medicare Part A payment on a case-by-case basis for inpatient admissions that do not satisfy the 2-midnight benchmark, if the documentation in the medical record supports the admitting physician's determination that the patient requires inpatient hospital care despite an expected length of stay that is less than 2 midnights," CMS says in the final rule. CMS is accepting comments on the rule. The American Hospital Association said it was pleased that CMS finalized its changes to the 2-midnight policy.

CMS Releases Rule to Ensure Medicaid Beneficiaries Have Access to Needed Services

The Centers for Medicare & Medicaid Services (CMS) on Oct. 29 released a final rule that improves CMS's ability to measure and ensure meaningful access to covered services for Medicaid beneficiaries. The rule also provides a higher level of safeguards for beneficiaries who may otherwise experience difficulty in receiving needed health care services. The intent of this final rule is to provide a framework for CMS to use to make better-informed, data-driven decisions that support more-effective service delivery systems, service rate structures and provider payment methodologies that reflect our unique and evolving Medicaid population. The proposed rule was released for comment in 2011.

The goals of the final rule are: (1) measuring and linking beneficiaries' needs and utilization of services with availability of care and providers, (2) increasing beneficiaries' involvement through multiple feedback mechanisms and (3) increasing stakeholder, provider and beneficiary engagement when considering proposed changes to Medicaid fee-for-service payment rates that could potentially impact beneficiaries' ability to obtain care.

To support these three goals, the final rule requires states to develop an access review plan that set out the data elements and other information to be used to ensure beneficiary access to mandatory and optional services; to establish new procedures to review the effects on beneficiary access of proposed rate reductions and payment restructuring; and to implement ongoing access monitoring reviews of key services, and additional services as warranted.

The final rule also strengthens CMS's ability to review and ensure Medicaid payment rates are consistent with efficiency, economy and quality and care. This aligns with the recent Supreme Court Armstrong v. Exceptional Child Center, Inc., 135 S. Ct. 1378 (2015) decision, which concluded that federal administrative agencies are better suited than federal courts to make these determinations. The court ruling placed greater importance on review and enforcement capability at the federal level, thus improving CMS's ability to monitor, measure, and ensure access to care within fee-for-service payment methodologies.

The final rule becomes effective on Jan. 4, 2016, at which time states must meet the requirements established through the provisions of the rule. During the 60-day period, CMS will accept comments from the public on the access review requirements. This will enable states to begin preparing their initial review plan analysis and to assess whether adjustments to this provision are warranted.

In conjunction with the final rule, CMS released a request for information to solicit comments on additional approaches the agency and states should consider ensuring better compliance with Medicaid access requirements. This includes comments on the potential development of standardized core set measures of access, access measures for long-term care and home- and community-based services, national access to care thresholds, and resolution processes that beneficiaries could use in facing challenges in accessing essential health care services. CMS will accept response to the request for information through Jan. 4, 2016.

The final rule with comment and the request for information are available on the Federal Register starting Oct. 29, 2015, and can be viewed at federalregister.gov starting Nov. 2, 2015.

3. STATE ACTIVITIES

Utah: Tenth Co-op Closes

Arches Health Plan will become the tenth co-op started with federal funds from the Affordable Care Act (ACA) to close. Like other co-ops, the reason for its collapse has been cited as the failure to receive full funding for risk corridors. Nearly 50,000 individuals were enrolled in plans sold by Arches. Customers will need to find new coverage during the open enrollment period that starts Nov. 1. In 20 of the 29 counties in the state, customers will now only have one choice when they shop for coverage. However, Utah Insurance Commissioner Todd Kiser said state regulators are discussing the possibility of adding other insurers with the Obama Administration and other health plans.

Connecticut Law Bans EHR-linked Information Blocking

In June, Connecticut became the first state to make it illegal to use electronic health records (EHRs) to block the flow of medical information. The issue of data blocking has become an issue in Congress recently. The Senate Health, Education, Labor and Pensions (HELP) Committee began drafting a bill to prohibit data blocking. The Connecticut law took effect Oct. 1 and was designed to slow the fast consolidation of health care networks. It came about as a result of independent medical groups' accusing big hospital networks of using their EHRs to coerce practices to join them — and punishing those who stay out of the network. The state attorney general is investigating Epic Systems and hospital networks throughout the state, and the U.S. Department of Health and Human Services' inspector general issued a warning about unfair EHR practices. Connecticut's law makes information blocking an unfair trade practice and puts severe penalties on it. Epic controls over half of the hospital EHR market in the state. The June law allows for the creation of a new statewide Health Information Exchange (HIE) to provide an alternative to the Epic exchange.

4. REGULATIONS OPEN FOR COMMENT

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

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

Medicare's current fee schedule for lab tests was first adopted in 1984 and has remained relatively unchanged except to establish payments for new tests or implement across-the-board statutory payment updates. Medicare pays approximately $8 billion a year for clinical diagnostic laboratory tests. The new system will be updated every three years for clinical diagnostic laboratory tests (CDLTs) and every year for ADLTs to reflect market rates paid by private payors. One hot-button issue in the proposed rule is the definition of "applicable laboratory." PAMA defined an applicable laboratory as one that receives a majority of its Medicare revenues under the MCLFS or the Medicare Physician Fee Schedule (MPFS). In a fact sheet summarizing the proposed rule, CMS said it does not expect any hospital laboratory to meet the definition of "applicable laboratory" and that more than 50 percent of independent laboratories and more than 90 percent of physician offices would likely be excluded based on the $50,000 threshold. The proposed rule was published in the Federal Register on Oct. 2. CMS will solicit comments until Nov. 24, 2015.

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

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

The SGR legislation creates a payment system that encourages physicians to participate in alternative value-based pay models. Beginning in 2026, the physician reimbursement rate will rise 0.75 percent annually for providers who utilize alternative pay models. Alternatively, physicians who do not enroll in alternative pay models will see only a 0.25 percent pay raise each year. For providers who receive a substantial part of their revenue from alternative pay models, they will get an additional 5 percent bonus from 2019 to 2024, in combination with the shared savings bonuses or fees they might collect for participating in those models. Worth noting, providers do not have to participate in alternative pay models to get value-based care bonuses. The Doc Fix law also consolidates Medicare's three existing quality programs into the MIPS, which begins in 2019. Sans this overarching payment structure, the Doc Fix law leaves much of this new pay system to CMS's discretion; CMS now requests provider feedback on the most efficient way to accomplish the savings and enhanced care goals of the new law. Public comments for the RFI are due on Nov. 2, 2015.

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

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

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

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

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

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

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

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

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

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

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

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

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

FDA issued a final rule June 16 that gives the food manufacturers three years to phase out partially hydrogenated oils (PHOs), which are still used in a wide variety of food products from microwave popcorn to cake frosting. The decision finalizes an agency determination that PHOs, the primary dietary source of artificial trans fat in processed foods, are not "generally recognized as safe" or GRAS for use in human food. Since 2006, manufacturers have been required to include trans fat content information on the Nutrition Facts label of foods. Between 2003 and 2012, the FDA estimates that consumer trans fat consumption decreased about 78 percent and that the labeling rule and industry reformulation of foods were key factors in informing healthier consumer choices and reducing trans fat in foods. Comments on the final rule are due by June 18, 2018.

More information on FDA's decision can be found in the agency's press release.

CMS Releases Proposed Rule on Basic Health Program; Federal Funding Methodology for Program Years 2017 and 2018

On Oct. 22, the Centers for Medicare and Medicaid Services (CMS) published a proposed rule related to federal funding methodology for the Basic Health Plan. The document provides the methodology and data sources necessary to determine federal payment amounts made in program years 2017 and 2018 to states that elect to establish a Basic Health Program under the Affordable Care Act to offer health benefits coverage to low-income individuals otherwise eligible to purchase coverage through Affordable Insurance Marketplaces. The Affordable Care Act provides states with an option to establish a Basic Health Program (BHP). Federal funding will be available for BHP based on the amount of premium tax credits (PTC) and cost-sharing reductions that BHP enrollees would have received had they been enrolled in qualified health plans (QHPs) through Marketplaces. These funds are paid to the states through trust funds dedicated to BHP, and the states then administer the payments to standard health plans within BHP. The proposed rule is open for comment. Comments must be received by 5 p.m. on Nov. 23, 2015.

CMS Releases a Request for Comment (RFC) on Proposed Medicaid Services "Received Through" Indian Health Service/Tribal Facility

On Oct. 27, the Centers for Medicare and Medicaid Services (CMS) released a Request for Comment (RFC) on a proposed change being considered regarding the circumstances in which 100 percent federal funding would be available for services given to Medicaid-eligible American Indian and Alaska Native (AI/AN) individuals through facilities of the Indian Health Service (IHS) or Tribes. This policy change would apply to all states and is intended to improve access to care for AI/AN Medicaid beneficiaries. The RFC describes the policy options under consideration and asks for feedback from states, Tribes and various stakeholders. The comment period will be open until Nov. 17, 2015.

Additional information on Indian Health and Medicaid can be found here.

CMS Releases Proposed Rule with New Discharge Planning Requirements

The Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would require all hospitals to develop a written discharge plan for all inpatients and many outpatients in an attempt to reduce readmissions. The proposed rule, "Medicare and Medicaid Programs; Revisions to Requirements for Discharge Planning for Hospitals, Critical Access Hospitals, and Home Health Agencies," would require hospitals to develop a discharge plan based on the needs of each applicable patient within 24 hours of admission. The plan would include a medication reconciliation process. Hospitals would be required to establish a process for patients who are transferred to a different facility or who went home.

CMS noted that the requirements could help reduce readmissions by a third. Until now, hospitals have had the ability to decide which patients need a written discharge plan, and have increasingly used the plans to reduce readmission and avoid the Affordable Care Act's (ACA) financial penalties. There is a 60-day comment period for the proposed rule.

A press release can be found here.

CMS Issues Final Rule to Ensure Medicaid Services for Beneficiaries and Issues Request for Information on the Rule

On Oct. 29, the Centers for Medicare and Medicaid Services (CMS) issued a final rule that ensures Medicaid beneficiaries have sufficient access to covered Medicaid services. CMS said that the rule, entitled "Methods for Assuring Access to Covered Medicaid Services," will allow states and CMS to make more-informed decisions when considering whether proposed changes to Medicaid fee-for-service payment rates are sufficient to ensure the beneficiaries access to those services. States will have to create access review plans that outline how states will ensure access to health care services and to examine how cuts to provider payments will affect the care received.

The rule strengthens CMS's oversight of Medicaid reimbursement and beneficiary access to providers. It will go into effect in January and CMS issued a Request for Information (RFI) to get feedback on how to make sure access requirements are being met. Comments will be accepted until 5 p.m. on Jan. 4, 2016.

5. REPORTS

GAO Report Concludes NIH Needs to Report More Detailed Data on Women

The Government Accountability Office (GAO) published a report on Oct. 22 entitled "National Institutes of Health: Better Oversight Needed to Help Ensure Continued Progress Including Women in Health Research." The report examines data from the National Institutes of Health (NIH) and concludes that NIH needs to examine and report more detailed data on women's enrollment in NIH-funded studies, and to report data on the extent to which these studies analyze potential differences between women and men. According to the GAO, more women than men were enrolled in NIH-funded clinical research from 2005-2014, but have been underrepresented in clinical research supported by NIH and others. As a result, differences in the manifestation of certain diseases and reactions to treatment in women compared to men weren't identified. Among other reporting objectives, the GAO examined 1) women's enrollment and NIH's efforts to monitor this enrollment in NIH-funded clinical research and 2) NIH's efforts to ensure that NIH-funded clinical trials are designed and conducted to analyze potential sex differences, when applicable.

NIH agreed with GAO's recommendations and intends to take action to implement them.

GAO Recommends CMS Increase Efforts to Ensure State Spending is Appropriately Matched with Federal Funds

The U.S. Government Accountability Office (GAO) was asked to examine Medicaid enrollment and expenditures and the Centers for Medicare and Medicaid Services' (CMS) oversight of the appropriateness of federal matching funds. GAO subsequently came out with a report entitled "MEDICAID: Additional Efforts Needed to Ensure that State Spending is Appropriately Matched with Federal Funds." In the past, Medicaid eligibility has been limited to specific categories of low-income people, but the Patient Protection and Affordable Care Act (PPACA) was enacted in 2010 and gave states the ability to expand coverage to almost all adults with income at or below 133 percent of the federal poverty level (beginning January 2014). States that do this are eligible for increased federal matching rates for these enrollees.

This report examines two things: 1) Medicaid enrollment and spending in 2014 by different eligibility groups and 2) how CMS ensures states are accurately determining eligibility and that expenditures are appropriately matched. To do this, GAO analyzed enrollment and expenditure data for enrollee eligibility groups submitted by states to CMS, examined relevant federal laws and regulations, internal control standards, CMS guidance and oversight tools, and interviewed CMS officials. GAO made two recommendations based on their findings: that CMS 1) review federal determinations of Medicaid eligibility for accuracy and 2) use the information obtained from the eligibility reviews to inform the expenditure review, and increase assurances that expenditures for the different eligibility groups are correctly reported and appropriately matched.

To see a testimony summarizing this report, click here.

GAO Finds That CMS Policies Do Not Minimize Potential for Gaps and Duplicate Coverage

In a new report, the Government Accountability Office (GAO) found that the Centers for Medicare and Medicaid Services' (CMS) policies and procedures do not sufficiently minimize the potential for coverage gaps and duplicate coverage in federal exchange states. GAO was asked to review information related to transitions between Medicaid and exchange coverage. While a certain amount of duplicate coverage is to be expected during the transition from exchange to Medicaid coverage, GAO found that duplicate coverage was occurring in other situations. Although CMS has implemented policies and procedures to minimize the potential of coverage gaps and duplicate coverage, GAO identified a few weaknesses in CMS's controls for federally facilitated exchange states (FFEs) based on federal internal control standards:

• CMS's controls don't provide assurance that accounts (that is, records) for people transitioning from Medicaid to exchange coverage in FFE states are transferred in near real time
• There are weaknesses in CMS's controls for preventing, detecting and resolving duplicate coverage in FFE states

GAO recommended that CMS take three actions: 1) to routinely monitor the timeliness of account transfers from states, 2) to establish a schedule for regular checks for duplicate coverage and 3) to develop a plan to monitor the effectiveness of the checks.

The U.S. Department of Health and Human Services agrees with GAO's recommendations.

To see a testimony summarizing this report, click here.

GAO Undercover Testing Results of the 2015 Federal Marketplace and Selected State Marketplaces for Coverage

In a new preliminary testimony, GAO examined application and enrollment controls for health-insurance marketplaces and Medicaid. The Patient Protection and Affordable Care Act (PPACA) establishes health insurance marketplaces where people can select private insurance plans or apply for Medicaid. Under the Act, the marketplaces are required to verify applicant information to determine eligibility for enrollment and to determine eligibility for income-based subsidies or Medicaid. This testimony provides preliminary results of undercover testing of the federal and selected state marketplaces during the 2015 open-enrollment period (for both private plans and Medicaid). GAO attempted to submit eighteen fake applications by phone and online, ten of which tested controls related to obtaining subsidized plan coverage through the federal marketplace (in New Jersey and North Dakota) and through state marketplaces (California and Kentucky). The other eight applications tested enrollment into Medicaid through the same federal marketplace and the two state marketplaces.

Of the ten fictitious applicants testing controls related to subsidized plan coverage, eight failed the initial identity-checking process, but all ten were subsequently approved by the federal Marketplace or the selected state marketplaces. Of the eight fictitious applicants testing enrollment into Medicaid, seven of them were able to obtain either Medicaid or alternative coverage.

GAO stated that these results, while illustrative, cannot be generalized to the full population of enrollees.

Bipartisan Bill Banning Reverse Payments Would Reduce Federal Spending and the Unified Budget Deficit

The Congressional Budget Office (CBO) reported that legislation designed to stop reverse payments or "pay for delay" — when brand-name drugmakers pay generic drug manufacturers to delay market entry of generic versions of their drugs — would accelerate the availability of lower-priced generic drugs and generate savings to public and private purchasers of said drugs. As a result, federal spending would be reduced by $2.4 billion and the deficit lowered by $2.9 billion over a 10-year period. Last month Sens. Amy Klobuchar (D-MN) and Chuck Grassley (R-IA) reintroduced S. 369, or the Preserve Access to Affordable Generics Act, which would ban companies from entering into these agreements.

Democratic presidential candidates Hillary Clinton and Sen. Bernie Sanders (I-VT) have both included bans on reverse payments as part of their platforms to reduce drug costs. Sanders introduced a drug price control bill last month that would ban reverse payments.

JAMA Study Shows Specialty Access is Limited in Some Insurance Networks

According to a study in the Journal of the American Medical Association (JAMA), physician networks in about 15 percent of insurance plans sold on HealthCare.gov in 2015 didn't provide patients with sufficient access to at least one specialty. The study analyzed 135 plans in the Affordable Care Act (ACA) across 34 states in 2015 and found that 14 percent of the plans didn't include at least one specialist within a 50-mile radius. They noted that this could be a violation of federal requirements for exchange plans to maintain adequate provider networks. Lead author Stephen Dorner explained, "A patient in one of these plans who has a condition that would need one of these specialists wouldn't be able to seek care within their network, which can translate into huge out-of-pocket costs for [the] patient."

Endocrinology, rheumatology and psychiatry were the most commonly excluded. They also found that there was no significant difference in access to specialists across insurance plan premium levels — meaning patients weren't paying less for fewer specialists. Nine of 34 states had at least one "specialist-deficient" plan. Patients enrolled in these specialist-deficient plans would face large bills for out-of-network care.

America's Health Insurance Plans (AHIP), the trade association for insurers, argued that this study's findings are misleading, because the authors do not account for state-specific network standards, local provider availability and other geographic limitations. They note that the Centers for Medicare and Medicaid Services (CMS) regulations do not have requirements for provider type and number. A CMS spokesperson said that insurers will need to provide more accessible up-to-date data on their networks in 2016.

JAMA's study comes as the National Association of Insurance Commissioners is working to address concerns about the adequacy of provider networks under the health care law.

HHS Report Shows Switching Plans Resulted in Savings for Consumers

On Oct. 28, the U.S. Department of Health and Human Services (HHS) released a report showing that people who switched plans in the 2015 enrollment period saved almost $400 per year on premiums after tax credits for the same level of coverage — this report comes as an effort to push Obamacare enrollees to shop during the 2016 open enrollment. A third of people who re-enrolled on HealthCare.gov in 2015 switched from previous plans — a higher rate of switching compared to other insurance programs like the Federal Employees Health Benefits Program and Medicare Part D drug plans. However, HHS reported that 51 percent of enrollees chose the same plan, with most of them being re-enrolled automatically.

HHS projected that if all enrollees switched from their current plan to the lowest-cost premium plan in the same metal level, they could save around $610 annually before tax credits (resulting in a total savings to consumers and taxpayers of $4 billion). Open enrollment starts on Nov. 1, 2015, and runs through Jan. 31, 2016.

GAO Report Reviews FDA Postmarket Studies of Medical Devices

On Oct. 29, the Government Accountability Office (GAO) released a report entitled "Medical Devices: FDA Ordered Postmarket Studies to Better Understand Safety Issues, and Many Studies Are Ongoing." The GAO was asked to report on the characteristics and status of postmarket studies. This report describes (1) the types of devices for which FDA has ordered a postapproval study and the status of these studies and (2) the types of devices for which FDA has ordered a postmarket surveillance study and the status of these studies. GAO analyzed FDA data — including data on medical specialty and study status as of February 2015 — for (1) postapproval studies ordered from Jan. 1, 2007, through Feb. 23, 2015, and (2) postmarket surveillance studies ordered from May 1, 2008, through Feb. 24, 2015. These represent the time periods for which FDA reported consistently tracking study data.

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