November 20, 2017

New Legislation Rolls Back CMS’ 340B Cuts; Lawsuit Also Filed

Hospitals across the country are being urged to contact their U.S. Representative to co-sponsor new legislation introduced last week to stop CMS’ new final rule that will dramatically cut savings for hospitals in the 340B drug discount program.

  • Three hospitals and their trade associations filed a lawsuit against the Trump Administration last week. The American Hospital Association, Association of American Medical Colleges and America’s Essential Hospitals argue in a D.C. federal court filing that Congress intended for hospitals and health clinics serving low-income patients to receive a discount on drugs through the 340B program. The three hospital associations are joined in the suit by Eastern Maine Healthcare Systems in Brewer, Maine, Henry Ford Health System in Detroit and Park Ridge Health in Hendersonville, N.C. Click here to view the suit.
  • Bi-partisan legislation to halt the regulation was also introduced last week. H.R. 4392 , led by Reps. David McKinley, Mike Thompsons, Bill Johnson, and David Kustoff, would reverse the rule that lead sponsor McKinley stated would jeopardize, “the ability of rural hospitals to provide vital services… (and) have a huge impact on hospitals’ ability to provide affordable care.” Click here for the bill.  There are already 17 cosponsors…click hereto see if your member of Congress is on it yet.

Earlier this month, CMS finalized a proposal to cut payments for physician-administered drugs by more than 28 percent, translating to $1.6 billion less for hospitals. Critical Access Hospitals, sole community hospitals and certain cancer and children’s hospitals will be exempt from the policy. The cuts would take effect Jan. 1, if a judge doesn’t issue an injunction or Congress doesn’t take action.  228 House members sent a letter (click here) to CMS last month urging the agency to drop the payment cuts.  57 senators signed a similar letter.

CAH Cuts Help Fund Medicare “Extenders” Deal

The House Ways and Means Committee struck a bipartisan deal last week to extend certain Medicare programs, an agreement likely to be included in a massive, end-of-the-year bill. The health extender package is expected to be part of legislation to fund the Children’s Health Insurance Program, which in turn is expected to be part of a year-end omnibus bill. There are differences between the House and Senate extenders legislation. Unlike the House bill, the Senate’s home health rural add-on is not a straight extension, and the low-volume Medicare hospital extender also differs slightly. To pay for extending these Medicare programs, the deal includes modifications to home health agency payments and payment reductions for critical access hospital swing beds. Click here for the outline of the deal in the House. The CAH Coalition is leading a letter to lawmakers urging that the legislation drop the cuts to CAHs.  Click here for more on the CAH Coalition.

House Passes Tax Bill; Senate Version Moves Forward; CBO Warns of Medicare Cuts Despite opposition to provisions that could negatively impact hospitals, the House passed its version of the tax reform last week. The final vote was 227-205, with no Democratic support and 13 Republicans in opposition. The House bill eliminates the orphan drug tax credit, the tax deduction for health care expenses, and tax-exempt bonds used by non-profits. The Senate Finance Committee also passed its version along party lines after a contentious debate. The Senate package includes a repeal of the individual mandate under the Affordable Care Act. The tax package is moving through the budget reconciliation process so that it cannot be filibustered and needs only 50 votes (plus a tie-breaker from the Vice President). Click here for a Ways and Means Committee section-by-section summary of the House-passed bill.  Click here for a summary of the Senate Finance Committee-passed version.

  • The Congressional Budget Office says that passing a bill in 2017 that would add $1.5 trillion in deficits over 10 years — which the House tax overhaul bill is estimated to do — would require the White House Office of Management and Budget to issue a sequestration order that would lead to a $25 billion cut to Medicare.  Click here for the CBO analysis.

Azar Is New HHS Secretary Nominee

Alex Azar, former pharmaceutical executive and Bush Administration official, would fill the role vacated a month ago by Tom Price, who resigned after he reportedly spent about a $1 million on private and government air travel. Azar’s first confirmation hearing is already set for the week after Thanksgiving. Azar worked at pharmaceutical giant Eli Lilly, eventually rising to become president of its U.S. operations. He is likely to face pointed questions from Senate Democrats skeptical of his pharmaceutical industry background and previous opposition to ideas aimed at reining in drug prices. For more on the nominee, click here. For another angle, click here for a Fox News report. For the hearing announcement, click here.

The Most Influential Health Care Policy Official?  Meet Joe Grogan

The White House’s Office of Management and Budget gives the ‘yes or no’ to regulations, guidance, and administrative policies before they are released. The man who makes the decisions on health care issues for OMB is Joe Grogan. “Perhaps more than any other member of Trump’s administration, (Grogan) holds the power to nix or give the nod to hundreds of regulations shaping how the federal government runs Medicare, Medicaid, the Affordable Care Act marketplaces, the FDA, the CDC and all the other sub-agencies contained within the sprawl of the Department of Health and Human Services,” according to recent news reports. This is the man who led the effort on CMS’ controversial 340B policy as well as easing reporting requirements for physicians. Recently he stated the 340B program is “incredibly flawed in how its operating.” Grogan formerly worked for big pharma.  For more on Grogan, click here.

New Bill Prioritizes Opioid Funds to Hard-Hit States  A bipartisan group of Senators from states hit hardest by the opioid crisis introduced a bill that instructs the Administration to prioritize funds for addiction treatment and prevention programs to high-need states. S. 2125, the Targeted Opioid Formula Act, sponsored by NH Senators Jeanne Shaheen and Maggie Hassan and WV Senators Joe Manchin and Shelley Moore Capito would require the distribution of the $1 billion left from last year’s 21st Century Cures legislation to fight the opioid crisis based on the per capita rate of overdose deaths and opioid use disorder. The Administration this year opted to distribute the first $500 million based on state size and the number of drug overdose deaths instead of a per-capita formula, which placed smaller states like New Hampshire and West Virginia at a disadvantage for receiving federal funding to fight the drug epidemic, despite having some of the highest overdose death rates in the country. Click here for the sponsor’s press release.

  • The U.S. Drug Enforcement Agency has developed a smart phone application that can be used to track drug overdose deaths in real time. Since its creation over a year ago, more than 250 law enforcement, first responders and public health agencies in 27 states have used the tool to record overdose incidents on the scene and transmit information to a central database tracking location and time. Click here for details.
  • The opioid abuse epidemic cost the U.S. economy $95 billion in 2016 in lost worker productivity, health care services and expenses in the criminal justice system, according to a new analysis, click here.
  • CMS proposed new regulations that could make it harder for recipients of Medicare’s drug benefits to abuse prescription opioids. The proposed rule is meant to implement provisions of a 2016 law designed to fight abuse of prescription painkillers, heroin and other drugs. Click here for CMS’ proposed rule.

2018 Medicare Premiums and Deductibles Mostly Unchanged 

CMS announced last week that the standard monthly premium for Medicare Part B, which covers doctor visits and outpatient hospital services, will be $134 next year, unchanged from 2017. However about one in four Part B beneficiaries will pay slightly less than the standard premium because of a “hold harmless” provision tied to Social Security benefits. In addition, individuals who earn more than $85,000 and couples with incomes above $170,000, or about 5 percent of beneficiaries, will pay higher Part B premiums, with a top rate of $429 per month in 2018. The annual deductible for Part B beneficiaries will be $183 next year, the same as for 2017. The annual deductible for Part A next year will be $1,340, an increase of $24 from 2017, there is no premium for Part A. Click here for the announcement from CMS.  Click here for the CMS fact sheet.

  • CMS is proposing to the loosen the rules around Medicare Advantage plans in order to expand the number of options available to beneficiaries. The agency is loosening rules around communicating with Medicare beneficiaries, allowing plans to send more materials electronically and allowing insurers to count fraud-detection activities in meeting medical-loss ratio requirements.  Click here for the CMS fact sheet.

If States Embraced Even Partial Expansion, Millions More Would be Medicaid Eligible  By allowing States to partially expand Medicaid, 6.9 million more people could be eligible for Medicaid, according to a new analysis. 19 states have not expanded Medicaid under the Affordable Care Act but many have expressed interest in partially expanding Medicaid to up to the federal poverty level and allowing people above the poverty level to get subsidized coverage. Current law requires states that expanded Medicaid to increase eligibility to people who earn 138 percent above the federal poverty level. However, people who earn between 100 and 138 percent can get subsidized coverage on the law’s exchanges. Partially expanding Medicaid in the holdout states would make 6.9 million more people eligible for Medicaid, but not all would enroll in the program. To read the report, click here.

  • As of Nov. 15th, almost 1.5 million people had enrolled in ACA marketplace exchanges, according to the the HHS “Snapshot.”  More than 1.1 million enrollees in 2018 plans were returning customers, 346,000 people bought plans for the first time, click here.
  • You’ll never guess the most expensive places to buy insurance on the exchanges…click here.

Provider Groups Warn House Committee of Looming Drug Shortages Associations representing hospitals, specialists, and pharmacists sent a letter to the House Energy and Commerce Oversight Subcommittee urging them to consider legislative fixes that would help the United States more systematically prepare for drug shortages. The letter asks lawmakers to consider whether manufacturers should be required to: disclose their manufacturing sites and the volume and percentage of products produced in those sites, and develop contingency plans for critical drugs in the event of a production interruption or shutdown. The groups state that the U.S. health care system is “on the brink of a significant public health crisis.” Click here for the letter.

Texas Senators Press for VA to Improve Care Quality Texas’ two Republican Senators, Ted Cruz and John Cornyn, sent a letter to VA Secretary David Shulkin urging critically needed improvements for Texas VA medical centers. The letter followed a recent VA study that found three Texas VA medical centers with the lowest possible rating. The three medical centers with one star ratings included West Texas VA Health Care System (Big Springs), the El Paso VA Health Care System, and the VA Health Care Center at Harlingen. Click here for the letter and here for the VA report.


Defense Department Rarely Uses Telemedicine: GAO Report Less than one percent of the military’s 1.2 million active duty service members participated in telemedicine last year, according to a GAO report released last week. The vast majority of these “visits” were real-time interactions, instead of sending images or data to be read by other clinicians. 97 percent of the telemedicine visit were performed by just seven of the Department’s military hospitals. About three-quarters of the military’s 59,000 telemedicine visits last year went to active duty service members. To read the full report, click here.

CMS Launches Drive To Clear Medicare Claims Backlog CMS has announced that it has launched two new initiatives aimed at clearing a backlog of Medicare claims appeals at the Administrative Law Judge level. CMS said the new process would apply to providers with fewer than 500 Medicare Part A or Part B claims appeals – totaling no more than $9,000 per claim – pending with the Office of Medicare Hearings and Appeals (OMHA) and the Medicare Appeals Council as of Nov. 3, with a total billed amount of $9,000 or less per appeal. CMS said it will settle eligible appeals at 62 percent of the net allowed amount. In addition, CMS said OMHA would expand its settlement conference facilitation process for certain providers that do not qualify for the low-volume appeals option. Click here for the announcement from CMS.

Interactive Medicare Payment Reform Tracker Launched The Kaiser Family Foundation has launched the Evidence Link, an interactive tracker of how Medicare’s accountable care organizations, medical home models and bundled payment programs are performing. The tracker is designed to offer information on each model, including maps of where they’re being deployed and how many beneficiaries are being covered. To view the new site, click here.


2016 ACA Risk Corridor Payments to Cover 2014 Debts All 2016 risk corridor payments will be used to pay down debts still owed to insurers from the 2014 enrollment cycle, according to CMS. The risk corridor program was designed to protect insurers from the risk of attracting expensive customers in the ACA marketplaces. However, since many consumers proved to be much sicker than anticipated – and because the program is required be budget neutral – CMS has only been able to pay a small amount of the money owed. In 2014, the Obama administration paid out just 12.6 percent of the $2.9 billion claimed by insurers, in 2015, all payments went toward making good on those unpaid 2014 claims. Many of Obamacare’s startup co-ops that collapsed blamed their demise in part on unpaid risk corridors claims. The risk corridors program expired after three years. More than a dozen insurers have sued the federal government seeking billions of dollars. Click here for the announcement. Click here for a good Health Affairs summary.


FDA Clears Telehealth-Enabled Cochlear Implant The FDA has approved the first telehealth-enabled cochlear implant, a device that hearing specialists can re-program while communicating with the patient at a distance. Cochlear implants, in use for decades, allow deaf or hearing-impaired patients to regain different degrees of hearing. Audiologists have to periodically adjust them to ensure that patients are picking up sounds with different frequencies. This newly approved device will allow the reprogramming process to be conducted through a video telehealth session instead of in-person. Click here for more from the FDA.


USDA Pumps $1 Billion into Rural Health Care in 2017

The US Department of Agriculture made more than $1 billion in investments in fiscal 2017 to fund health care projects and initiatives that enhanced services for some 2.5 million people in rural areas across 41 states, according to a release last week. The investments helped fund 97 rural health care projects through the Community Facilities Direct Loan Program which can be used to build or expand hospitals, medical clinics or other health care facilities, such as assisted-living facilities. The loans can also be used to purchase medical equipment. To qualify for the program, a public or nonprofit entity or federally recognized tribe must be located in a town with a population of no more than 20,000 people. For the USDA press release with more information on the program, click hereDoctor Groups Applaud Planned Medicare Demonstration Physician groups are cheering a move from the Trump administration to test the inclusion of certain contracts between doctors and insurance companies under a new Medicare payment system. The move will broaden the opportunities for doctors to participate in a system that rewards them more for the value of care over volume of services. Doctor groups have pushed CMS to incorporate Medicare Advantage arrangements as an Advanced APM, arguing that the nature of some contracts they have with insurance companies mirror the requirements of Advanced APMs. CMS indicated in an annual update that it plans to develop a pilot crediting doctors in MA under the new system next year. The demo would test how much MA would convince doctors to choose an Advanced APM over MIPS. Click here for a summary of the final rule impacting the Quality Payment Program.
Surgeon General Defends Controversial Health Policies

The Surgeon General, Jerome Adams, last week told lawmakers that he believes strongly in more money for public health, adding that the government should be working with the private sector to bring funding levels up. He also endorsed politically sensitive health policies such as needle exchanges, saying that “sometimes controversial interventions that are scientifically-based can and should be considered.” But Adams also vigorously defended some of the Trump administration’s controversial policies, resulting in one lawmaker accusing him of intellectual dishonesty. Click here for the Senate HELP Committee hearing featuring Surgeon General Adams, and here for Adams’s testimony.


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