Weekly E-bulletin

Hospital Funding Streams Under Assault on Many Fronts

From newly proposed CMS inpatient and outpatient rules to ACA repeal, replace legislation in the Senate and House to the Trump Administration’s proposed FY18 budget that would cut Medicaid by hundreds of billions of dollars over the next 10 years – hospital funding streams are under assault by the federal government.  Here’s a summary of the latest developments:


340B, HOPD Payments Are Targeted in New CMS Rules

CMS last week published two new payment proposals: Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System and Changes to the Medicare Physician Fee Schedule (PFS).

  • CMS proposes to reimburse hospitals for Part B drugs purchased at a discount through the 340B drug pricing program at a rate of average sales price minus 22.5 percent.
  • The rule also proposes to cut the PFS payment rates for non-excepted items and services from 50 percent of the OPPS payment rate to 25 percent of the OPPS rate for off-campus departments.
  • For the fact sheet for the OPPS rule, click here, and the PFS rule, click here. For the Strategic Health Care Top Issues memo of the two rules, click here.

340B Subject of Oversight Hearing Tuesday

The House Energy & Commerce Oversight Subcommittee will hold a hearing on the 340B drug discount program on Tuesday. This follows a letter from the Committee stating its concerns about the rapid growth and lack of oversight in the 340B drug discount program and requesting the Health Resources and Services Administration to do an audit of the program. A committee press release states that the GAO and OIG witnesses will speak to recommendations they have made to HRSA “as well as other potential areas for improvement.” Click here for the Committee information page on the hearing.

  • Public Citizen has published what it considers is a complete overview, with links, of the Trump Administration’s agenda on drug prices, including 340B.  Click here.

Senate Delays Vote on New Health Reform Bill; CBO Analysis Expected This Week

A vote on the Senate’s new health care reform legislation, released last week, has now been delayed until at least next week.  Majority Leader Mitch McConnell (R-KY) made the delay announcement Saturday after Senator John McCain (R-AZ) said he would be staying in Arizona this week for surgery.  Click here.  Opponents of the bill say they delay will help their cause.  Click here.  With Paul (R-KY) and Collins (R-ME) already publicly opposing the legislation, the bill will fail if only one more GOP senator votes against it.

Senate Republican leadership released the updated text (click here) of the Better Care Reconciliation Act last Thursday. View the section by section summaries here and here.   Click here for a NY Times report. The biggest changes:

  • Inclusion of a version of the Cruz (R-TX) which would allow insurers to sell non-ACA compliant plans as long as they offer at least one plan that meets marketplace requirements. This policy change has been blasted by actuaries, insurers, and providers – but has been made a must-pass priority for conservatives. Click here for details.
  • A Disproportionate Share Hospital (DSH) payment change that would base DSH payments on the number of uninsured people served rather than the number of Medicaid enrollees. This policy change is likely to benefit providers in non-expansion states while hurting those in states that expanded Medicaid. Click here for a WSJ report.
  • Inclusion of additional financial support to purchase health insurance and allow the use of health savings account (HSA) funds to pay insurance premiums.
  • A tweak to the block grant language that would allow states to count the Medicaid expansion population within the block grant.
  • An exemption of state costs of public health emergencies from Medicaid per-capita caps.
  • A change to Medicaid 1115 waivers to allow states to continue or improve home and community-based services for the aged, blind, and disabled.
  • Keeps some ACA taxes on the wealthy to help offset additional spending on premium assistance.

No Retroactive Eligibility for Medicaid in Senate Bill

A number of changes in the Senate GOP’s health care reform bill haven’t received much media attention, but there are several provisions that might surprise you.  Click here for a report in Health Affairs.


Governors of Both Parties Not Happy with Senate Health Care Bill

The National Governors Association meeting in Rhode Island is the setting for some significant push back against the Senate GOP health care legislation. Click here for the latest.


Another New GOP Reform Bill Complicates the Politics of ACA Repeal

Two Republican senators announced their own bill in an effort to find common ground. The plan from Sens. Lindsey Graham of South Carolina and Bill Cassidy of Louisiana would send revenue from Obamacare’s taxes for states to use to craft their own health plans. The alternative approach would keep a lot of Obamacare’s taxes but send that revenue to the states. The taxes that would be repealed are for medical device makers and the individual and employer mandates. It is not clear if there is much appetite for the proposal, which Graham has said he hopes will win bipartisan support. Click here for more.


Legislation Introduced To Boost Critical Access Hospitals The Critical Access and Rural Equity (CARE) Act (H.R. 3224), introduced by Representatives Harper (R-MS), Loebsack (D-IA), Kind (D-WI), Peterson (D-MN), Palazzo (R-MS), Kelly (R-MS), and Thompson (D-MS), would clarify the definition of CAH Medicare allowable costs to include patient- and physician-related expenses presently not covered. The CARE Act identifies frequently cited auditor discrepancies and removes barriers to care by ensuring coverage of the most common medical services and tests. To view the legislation and summary, click here.
Study Examines Why Primary Care Physicians Leave Rural Areas  A new study has found that younger primary care physicians in rural areas have a higher turnover rate than their older peers, and physicians in the two groups probably move on for different reasons.  The study from the Robert Graham Center for Policy Studies in Family Medicine and Primary Care explores the potential reasons why rural primary care physicians choose to stop practicing in rural areas. Using data from the AMA Physician Masterfile for clinically active physicians ages 65 and younger throughout the United States, the researchers looked at factors including age, the availability of nearby health facilities, population size, and physician supply, among other things. Click here to view the study.


Medicaid Participant Satisfaction Generally High: Study

Medicaid enrollees are largely satisfied with their care and few report having trouble seeing a doctor, according to a new Harvard study. Participants in a nationwide study gave their overall health care coverage an average rating of 7.9 on a 10-point scale, and more than four in five said they were able to get needed care in the prior six months. The findings, published in JAMA Internal Medicine, is based on CMS survey data collected between December 2014 and July 2015 across four types of patients: the disabled, those enrolled in both Medicare and Medicaid, non-disabled adults in Medicaid managed care, and non-disabled adults in fee-for-service Medicaid. The survey did not include those enrolled through the ACA’s Medicaid expansion. Click here for the study.


Fewer Insurers to Offer Plans on Exchanges in 2018, But Obamacare Markets Are Stabilizing

CMS said last week that far fewer health insurers have applied to sell plans on the federally run exchanges under the Affordable Care Act compared with last year. CMS counts 141 insurers, a 38 percent drop, across 39 states that have submitted applications to offer coverage in 2018, this significantly down from the 227 insurers at the initial filing deadline for 2017. Since companies have until September to make their final decisions, CMS does not know yet how many of the 141 insurers will end up selling plans in 2018. For more from CMS, click here.

  • A new analysis from the Kaiser Foundation says that despite all the turmoil, Obamacare markets are stabilizing. Click here.
  • Obamacare exchange insurers just had their most profitable quarter.  Click here.

House Passes FDA User-Fee Legislation, Senate Expected to Follow by August

The House last week passed by voice vote a key Food and Drug Administration authorization bill, with Senate leaders stating they hope to pass the bill before the August recess. The bill (HR 2430) would renew the FDA’s authority to collect fees from the prescription drug and medical device manufacturers which make up about $2 billion of the FDA’s nearly $5 billion budget. The bill would require FDA to prioritize the approval of certain generic drugs and set up a system for the regulation of hearing aids that don’t require a prescription. Click here for a summary from the Energy and Commerce Committee, and here for the bill language.


House Subcommittee Plans Hearing on Waste in Medicare Program

House Ways and Means Oversight Subcommittee announced a hearing scheduled for Wednesday entitled, “Efforts to Combat Waste, Fraud, and Abuse in the Medicare Program.” According to the Subcommittee, the hearing will focus on how CMS identifies and combats waste, fraud, and abuse, in both traditional Medicare and the Medicare Advantage programs. In their announcement, the Subcommittee also points to the FY 2016 Agency Financial Report in which HHS estimated $59.6 billion was spent on improper payments program-wide. To view more on the Ways and Means Committee website, click here.


House HHS Spending Bill Guts Exchange Funding, Increases Money for NIH 

The House Labor HHS Appropriations subcommittee passed its annual spending package, which includes $77.6 billion for HHS – $542 million below last year’s level, but $14.5 billion more than the president’s request. The bill would significantly decrease CMS’ funding for the health insurance exchanges under the ACA, prohibit funding for ACA “navigators,” and bar the agency from collecting user fees from qualified health plans that the agency uses to fund the federally-facilitated marketplace. The bill includes $1.1 billion more in NIH funding than this year, which is $8.6 billion more than the president’s request. However, the bill proposes $7 billion in funding for the CDC next year, a modest decrease from last year but $1 billion over the President’s proposal. Click here for full summary of the bill and here for the text.


Medicare to Run Out of Money in 2029

According to the latest Trustee Report released last week, Medicare’s hospital trust fund is expected to run out of money in 2029. This latest projection give one more year than what trustees had predicted in 2016, as national health spending continues growing slower than expected. Trustees are unsure whether the slowdown is driven by fundamental changes in the health care industry, or is a lingering after-effect of the financial crisis. Medicare’s trustees predict that the program’s costs will grow from 3.6 percent of GDP to 5.6 percent of GDP by 2041, driven largely by boosted enrollment. For the full report, click here.


FDA Panel OKs First Gene-Altering Leukemia Treatment

A Food and Drug Administration panel opened a new era in medicine last week, unanimously recommending that the agency approve the first-ever treatment that genetically alters a patient’s own cells to fight cancer, transforming them into what scientists call “a living drug” that powerfully bolsters the immune system to shut down the disease. Click here for the report

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