United States: Weekly Washington Healthcare Update: June 28, 2014

This Week: Ways and Means Committee examines ACA insurance subsidy fraud procedures... IRS releases draft employer mandate forms... Minnesota Medicaid ACO generates $10 million in savings.

1. CONGRESS

House

Energy and Commerce: Examining Barriers to Ongoing Evidence Development and Communication

On July 22, 2014, the House Energy and Commerce Health Subcommittee held a hearing entitled "21st Century Cures: Examining Barriers to Ongoing Evidence Development and Communication." The hearing will focus on issues surrounding continued evidence development and communication of information regarding treatments and cures in the real-world setting. Witnesses discussed efforts to limit off-label use among the provider community, limitations on communication found under HIPAA, and the Physician Sunshine Act as a few of the barriers to more effective development of treatments for disease.

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

Energy and Commerce: 21st Century Cures Roundtable on Personalized Medicine

On July 23, 2014, the House Energy and Commerce Health Subcommittee held a roundtable discussion on personalized medicine as part of the Committee's 21st Century Cures initiative. Chairman Fred Upton (R-MI) and Rep. Diana DeGette (D-CO) led the discussion on personalized medicine with participants from the U.S. Food and Drug Administration, the Ovarian Cancer Society, Leukemia and Lymphoma Society, MD Anderson, Duke University Health System, Genentech, Mayo Clinic, American College of Cardiology, Abbott Molecular, the Personalized Medicine Coalition and Apple Tree Partners. Participants discussed how advances in areas such as genomic sequencing and diagnostic testing can accelerate the pace of cures.

Ways and Means Examines ACA Premium Tax Credit Integrity

On July 23, 2014, the House Ways and Means Subcommittee on Oversight held a hearing on the integrity of the administration of the ACA premium tax credit. The ACA created tax credits and cost-sharing subsidies for certain individuals purchasing health insurance through insurance exchanges. To ensure that payments benefit only those eligible and are made in the correct amount, the federal government must verify a number of pieces of information, including identity of the applicant, date of birth, Social Security number, income, lawful presence in the country and other data. In an effort to examine various program integrity procedures, GAO went undercover and created 18 fictitious identities to apply for insurance subsidies online, over the phone and in person. The federal Marketplace approved coverage for 11 of 12 fictitious applicants who initially applied online or by telephone, and in all 11 cases, GAO obtained an advance premium tax credit, totaling around $2,500 per month.

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

Ways and Means Hearing on the Future of Medicare Advantage

On July 24, 2014, the House Ways and Means Subcommittee on Health held a hearing to examine the current status of the Medicare Advantage (MA) program, the effects of the ACA to the program and its impact on seniors enrolled in MA. According to Chairman Brady (R-TX), CMS has taken steps to mitigate the ACA's payment cuts through its MA Star Demonstration Program and by utilizing a new payment methodology regarding Medicare Sustainable Growth Rate. However, because of the ongoing transition to the new benchmarks established by the ACA, which will not be fully phased in until 2017, the independent and non-partisan Medicare Trustees have reported that enrollment in MA plans will begin to decline in 2015.

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

Senate

HELP Committee Advances Seven Health and Income Security Bills

On July 23, 2014, the Senate Health, Education, Labor and Pensions (HELP) Committee held a hearing on health and income security bills, including:

• S. 315, Paul D. Wellstone Muscular Dystrophy Community Assistance, Research and Education (MD-CARE) Amendments of 2013
• S. 2154, Emergency Medical Services for Children Reauthorization Act of 2014
• S. 531, Physical Activity Guidelines for Americans Act
• S. 2405, Trauma Systems and Regionalization of Emergency Care Reauthorization Act
• S. 2406, Improving Trauma Care Act of 2014
• S. 2539, Traumatic Brain Injury Reauthorization Act of 2014
• S. 2511, A bill to amend the Employee Retirement Income Security Act of 1974
• Any additional nominations cleared for action

"Today the HELP Committee passed seven more bipartisan bills, continuing our strong record of working across party lines to put Americans first," HELP Chairman Harkin (D-IA) said. "Six of the bills passed today underscore the Committee's focus on improving and supporting our country's public health--from addressing muscular dystrophy, to supporting emergency medical services for children, to improving care for traumatic injuries.

2. ADMINISTRATION

Employer Mandate Form Drafts Posted by IRS

On July 24, 2014, the Internal Revenue Service (IRS) released draft forms that employers will use to report on health coverage that they offer to their employees. The IRS said that it expects to post the draft instructions relating to the forms sometime in August. Three categories of information have been dropped. Employers can do a one-time check-off for people covered year-round, instead of filling out reports for everyone every month. And self-insured employers -- those that assume the whole cost of their coverage -- will fill out one form, not two. Although the IRS said that it was releasing the drafts to help stakeholders, including employers, tax professionals and software providers, prepare for these new reporting provisions and to invite comments from them, some are still unsatisfied with what has been provided. The Retail Industry Leaders Association, for one, said the information was still too tentative and too incomplete.

IRS Publishes Rules for Tax Credit Policy, Branded Prescription Drug Fee

On July 24, 2014, the Internal Revenue Service (IRS) published a rule to clarify its premium tax credit policy for complicated family and household situations, as well as a rule for implementing the Patient Protection and Affordable Care Act's branded prescription drug fee. A draft version of the Premium Tax Credit form includes sections for the annual and monthly contribution amounts, the Premium Tax Credit claim and a reconciliation that must be performed of any advance payment of the Premium Tax Credit, repayment of excess advance payment of the Premium Tax Credit, shared policy allocations and an alternative calculation for the year of marriage. These credits are complicated by the fact that they use household, not individual, income to determine the credits. The rule about the PPACA's branded prescription drug fee will apply starting Oct. 1, 2014, and gives guidelines for the time and manner of notifying entities of fee calculations. View the tax credit rule. View the branded drug fee rule.

HHS: 10.3 Million Newly Insured Through ACA

On July 23, 2014, HHS Secretary Burwell announced the release of a new study, published in the New England Journal of Medicine, estimating that 10.3 million uninsured adults gained health care coverage following the first open enrollment period in the Health Insurance Marketplace. The report examines trends in insurance before and after the open enrollment period and finds greater gains among those states that expanded their Medicaid programs under the Affordable Care Act. According to the report, the uninsured rate for adults ages 18 to 64 fell from 21 percent in September 2013 to 16.3 percent in April 2014. After taking into account economic factors and preexisting trends, this corresponded to a 5.2 percentage point change, or 10.3 million adults gaining coverage. The decline in the uninsured was significant for all age, race/ethnicity and gender groups, with the largest changes occurring among Latinos, blacks and adults ages 18-34 -- groups the Administration targeted for outreach during open enrollment.

HHS: Medical Loss Ratio Has Saved Consumers $9 Billion

On July 24, 2014, HHS Secretary Burwell announced that consumers have saved a total of $9 billion on their health insurance premiums since 2011 as a result of the ACA's 80/20 rule, also known as the Medical Loss Ratio (MLR) rule. The MLR requires insurers to spend at least 80 percent of premium dollars on patient care and quality improvement activities. If insurers spend an excessive amount on profits and red tape, they owe a refund back to consumers. HHS claims that last year alone, consumers nationwide saved $3.8 billion upfront on their premiums as insurance companies operated more efficiently. Additionally, consumers nationwide will save $330 million in refunds, with 6.8 million consumers due to receive an average refund benefit of $80 per family. This standard and other Affordable Care Act standards contributed to consumers' saving approximately $4.1 billion on premiums in 2013, for a total of $9 billion in savings since the MLR program's inception.

CDC to Form External Laboratory Safety Workgroup

CDC announced today the formation of an external laboratory safety workgroup of the Advisory Committee to the Director of CDC. This group will provide advice and guidance to the CDC Director and CDC's new Director of Laboratory Safety. The working group will review and provide input into corrective actions for CDC's laboratories. These include actions identified by the U.S. Department of Agriculture's Animal and Plant Health Inspection Services and CDC's Office of the Associate Director for Science following investigations conducted in response to the June 2014 transfer of potentially viable Bacillus anthracis from a CDC BSL-3 facility to CDC BSL-2 facilities; actions identified in follow-up to an inadvertent shipment of an H5N1 influenza-containing laboratory specimen to an external BSL-3 laboratory; and other necessary actions identified through ongoing procedural reviews.

3. STATE ACTIVITIES

Washington State Uninsured Rate Fell 40 Percent

According to the state Office of the Insurance Commissioner (OIC), the overall uninsured population in Washington has fallen from 970,000 to about 600,000, or roughly 38 percent. OIC noted that the individual market has grown to more than 327,000 -- which was about 81,000 more insured people than were in the individual market on Oct. 1, when the Washington Health Benefit Exchange opened for enrollment. The individual market included 156,155 people buying private insurance policies through the exchange and 171,286 who bought policies outside the exchange.

Minnesota Medicaid Shared Savings Program Generates $10 Million

As a result of its "Medicaid Accountable Care Organization," a program designed to promote coordination among providers caring for Medicaid patients, Minnesota claims to have generated $10.5 million in savings during the first year of operation. The new contracts let health care providers share in the savings when quality care is provided more efficiently. About $2.8 million is being split among three providers that are part of the new program -- Children's Hospitals and Clinics of Minnesota, North Memorial Health Care and Northwest Metro Alliance. The rest of the savings will be split between the state and federal governments.

4. REGULATIONS OPEN FOR COMMENT

Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule, Clinical Laboratory Fee Schedule, Access to Identifiable Data for the Center for Medicare and Medicaid Innovation Models & Other Revisions to Part B for CY 2015

CMS released its proposal for the 2015 Medicare physician fee schedule on July 3 with suggested changes relating to Chronic Care Management (CCM) and Accountable Care Organizations (ACO). Medicare doctors who provide CCM services may be required starting in 2015 to use an electronic health record or other health information exchange platform to ensure their patients" care plans are electronically accessible to any provider caring for those patients. Medicare providers would also be required to use electronic health records certified under the Office of the National Coordinator for Health Information Technology"s certification program as having the capabilities to capture and report CCM data. ACOs were also addressed in the new fee schedule, as the proposed rule would increase the number of ACO quality measures with an increased focus on outcomes. Under the proposal, the total number of measures for quality reporting would increase from 33 to 37. Under the Medicare Shared Savings Program (MSSP), ACOs must meet certain quality targets to claim shared savings bonuses. Specifically, new measures would be added to focus on avoidable admissions for patients with multiple chronic conditions, heart failure and diabetes; depression remission; all-cause readmissions to a skilled nursing facility; and stewardship of patient resources, the agency said. The agency added that the existing composite measures for diabetes and coronary artery disease would also be updated. Comments must be received by Sept. 2, 2014.

Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Physician-Owned Hospitals: Data Sources for Expansion Exception; Physician Certification of Inpatient Hospital Services; Medicare Advantage Organizations and Part D Sponsors: Appeals Process for Overpayments Associated with Submitted Data

CMS has issued a proposed rule that would revise the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for CY 2015 to implement applicable statutory requirements and changes arising from continuing experience with these systems. The proposed rule describes the proposed changes to the amounts and factors used to determine the payment rates for Medicare services paid under the OPPS and those paid under the ASC payment system. In addition, this proposed rule would update and refine the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program.

CMS is also proposing changes to the data sources used for expansion requests for physician-owned hospitals under the physician self-referral regulations; changes to the underlying authority for the requirement of an admission order for all hospital inpatient admissions and changes to require physician certification for hospital inpatient admissions only for long-stay cases and outlier cases; and changes to establish a three-level appeals process for Medicare Advantage (MA) organizations and Part D sponsors that would be applicable to CMS-identified overpayments associated with data submitted by these organizations and sponsors. Comments must be received by Sept. 2, 2014.

Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies

This rule proposes to update and make revisions to the End-Stage Renal Disease (ESRD) prospective payment system (PPS) for calendar year (CY) 2015. This rule also proposes to set forth requirements for the ESRD quality incentive program (QIP), including payment years (PYs) 2017 and 2018. This rule also proposes to make a technical correction to remove outdated terms and definitions. In addition, this rule proposes to set forth the methodology for adjusting Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) fee schedule payment amounts using information from the Medicare DMEPOS Competitive Bidding Program (CBP); make alternative payment rules for DME and enteral nutrition under the Medicare DMEPOS CBP; clarify the statutory Medicare hearing aid coverage exclusion and specify devices not subject to the hearing aid exclusion; update the definition of minimal self-adjustment regarding what specialized training is needed by suppliers to provide custom fitting services if they are not certified orthotists; clarify the Change of Ownership (CHOW) and provides for an exception to the current requirements; revise the appeal provisions for termination of a contract and notification to beneficiaries under the Medicare DMEPOS CBP, and add a technical change related to submitting bids for infusion drugs under the Medicare DMEPOS CBP. Comments must be received by Sept. 2, 2014.

HHS Proposed Rule: Annual Eligibility Redeterminations for Exchange Participation and Insurance Affordability Programs

HHS has issued a proposed rule that would specify additional options for annual eligibility redeterminations and renewal and re-enrollment notice requirements for qualified health plans offered through the Exchange, beginning with annual redeterminations for coverage for plan year 2015. Specifically, in the notice of proposed rulemaking entitled "Patient Protection and Affordable Care Act; Annual Eligibility Redeterminations for Exchange Participation and Insurance Affordability Programs; Health Insurance Issuer Standards Under the Affordable Care Act, Including Standards Related to Exchanges," HHS proposes that a Marketplace must conduct annual redeterminations using either the procedures described in 45 CFR §155.335(b) through (m), alternative procedures specified by the Secretary for the applicable plan year, or alternative procedures approved by the Secretary based on a showing by the Exchange that such procedures meet specified criteria. This guidance specifies alternative procedures for plan year 2015 that, if a final rule is promulgated permitting a Marketplace to elect such process, will constitute the alternative procedures designated in proposed 45 CFR §155.335(a)(2)(ii). If permitted under such a final rule, the federally facilitated Marketplace (FFM) will adopt the alternative procedures specified in this guidance for plan year 2015, consistent with proposed 45 CFR §155.335(a)(2)(ii)2.

These alternative procedures are intended to preserve a feature of the annual redetermination process specified in 45 CFR §155.335(g), namely, that an enrollee may take no action and still have his or her coverage renewed for 2015, which is important in promoting continuity of coverage while limiting administrative burden for enrollees, issuers and Marketplaces.

Draft Guidance for Industry on Drug Supply Chain Security Act Implementation: Identification of Suspect Product and Notification; Availability

On June 11, 2014, FDA announced the availability of a draft guidance for industry entitled "Drug Supply Chain Security Act Implementation: Identification of Suspect Product and Notification." The draft guidance addresses new provisions in the Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended by the Drug Supply Chain Security Act (DSCSA). The draft guidance is intended to aid certain trading partners (manufacturers, repackagers, wholesale distributors and dispensers) in identifying a suspect product and terminating notifications regarding illegitimate product. This draft guidance identifies specific scenarios that could significantly increase the risk of a suspect product entering the pharmaceutical distribution supply chain; provides recommendations on how trading partners can identify the product and determine whether the product is a suspect product as soon as practicable; and for product that has been determined to be illegitimate, or (for manufacturers) has a high risk of illegitimacy, sets forth the process by which trading partners should notify FDA of illegitimate product and how they must terminate the notifications, in consultation with FDA. Public comments on the draft guidance will be accepted through Aug. 11, 2014.

CMS Proposed Rule: Medicare, Medicaid EHR Incentive Program

On May 23, 2014, CMS issued a proposed rule that would change the meaningful use stage timeline and the definition of certified electronic health record technology (CEHRT). It would also change the requirements for the reporting of clinical quality measures for 2014. Certified EHR technology is defined for the Medicare and Medicaid HER Incentive Programs at 42 CFR 495.4, which references the Office of the National Coordinator for Health Information Technology's (ONC) definition of CEHRT under 45 CFR 170.102. For Stages 1 and 2 of meaningful use, CMS and ONC worked closely to ensure that the definition of meaningful use of CEHRT and the standards and certification criteria for CEHRT were coordinated. The definition of CEHRT under 45 CFR 170.102 requires, beginning with federal fiscal year (FY) and calendar year (CY) 2014, EHR technology certified to the 2014 Edition EHR certification criteria. Therefore, all EPs, eligible hospitals and CAHs must use 2014 Edition CEHRT to meet meaningful use under the Medicare and Medicaid EHR Incentive Programs, beginning with FY 2014 and CY 2014. Beginning in 2015, all eligible hospitals and professionals would still be required to report using the 2014 Edition CEHRT. The proposed rule also includes a provision that would formalize CMS' and ONC's previously stated intention to extend Stage 2 through 2016 and begin Stage 3 in 2017.

To view the CMS press release on the proposed rule, visit cms.gov.

Medicare Program; Prior Authorization Process for Certain Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Items

On May 23, 2014, CMS issued a proposed rule that would establish a prior authorization process for certain durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) items that are frequently subject to unnecessary utilization and would add a contractor's decision regarding prior authorization of coverage of DMEPOS items to the list of actions that are not initial determinations and therefore not appealable.

The proposed rule is intended to replicate the Medicare Prior Authorization of Power Mobility Device Demonstration. Launched in 2012, the demonstration established a prior authorization process for certain power mobility devices. Based on September 2013 claims data, monthly expenditures for certain power mobility devices decreased from $12 million in September 2012 to $4 million in August 2013 across the seven demonstration states (California, Florida, Illinois, Michigan, New York, North Carolina and Texas) with no reduction in beneficiary access to medically necessary items. CMS seeks to leverage this success by extending the demonstration to an additional 12 states. These states include Arizona, Georgia, Indiana, Kentucky, Louisiana, Maryland, Missouri, New Jersey, Ohio, Pennsylvania, Tennessee and Washington. This will bring the total number of states participating in the demonstration to 19.

CMS also proposes to establish a prior authorization process for certain durable medical equipment, prosthetics, orthotics and supplies items that are frequently subject to unnecessary utilization. Through a proposed rule, CMS will solicit public comments on this prior authorization process, as well as criteria for establishing a list of durable medical items that are frequently subject to unnecessary utilization that may be subject to the new prior authorization process. CMS will launch two payment model demonstrations to test prior authorization for certain non-emergent services under Medicare. These services include hyperbaric oxygen therapy and repetitive scheduled non-emergent ambulance transport. Information from these models will inform future policy decisions on the use of prior authorization.

The deadline to submit comments is July 28, 2014.

5. REPORTS

OIG: Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs

According to a report released on July 21, 2014, by the HHS Office of the Inspector General (HHS-OIG), at least one-third of the more than 200 manufacturers of Part B drugs did not submit ASPs for some of their products in the third quarter of 2012, despite being required to do so. An additional 45 manufacturers of Part B drugs were not required to report ASPs that quarter. Furthermore, for a small number of drugs, inaccuracies in CMS's ASP files may have affected Medicare payments. Finally, CMS has improved its ASP-related processes and procedures; however, challenges remain. OIG recommends that CMS (1) continue to assist OIG in identifying and penalizing manufacturers that do not meet ASP reporting requirements; (2) seek a legislative change to directly require all manufacturers of Part B drugs to submit ASPs; (3) ensure the accuracy of product information for NDCs listed in the background and crosswalk files; and (4) finalize the implementation of automated ASP-related procedures by using processes related to average manufacturer price as a model, and subsequently require all manufacturers to submit ASPs through the automated system. CMS concurred with the first, third and fourth recommendations, but did not concur with the recommendation to seek a legislative change.

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