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Vol. 18, No. 4 - January 29, 2015
CMS’ Value-Based Pay
Initiative Raises Stakes
For SGR Bill
The goals CMS set Monday (Jan.
26) for moving providers to alternative pay models and value-based
payments make it all the more
important for physicians that Congress
pass Medicare physician pay reform, a
provider lobbyists said, because
Congress can pay doctors extra for
simply participating in alternative pay
models and CMS cannot.
Last year’s bipartisan Sustainable
Growth Rate bill called for paying
bonuses to providers participating in
new pay models. Republicans and
Democrats could not agree on how to
pay for that bill. Last week, the House
Energy & Commerce Committee held
a two-day hearing that focused on
Medicare reforms that could pay for
the bill, but the two parties remain far
apart on offsets.
“This announcement is an
invitation to the dance for Congress,”
Avalere Health CEO Dan Mendelson
said.
CMS for the first time on Monday
(Jan. 26) set specific goals for moving
providers to alternative pay models
and value-based payments. HHS aims
to tie 30 percent of fee-for-service
Medicare payments to alternative
payment models, such as accountable
care organizations (ACOs) or
bundled-pay arrangements, by the end
of 2016, and it plans to tie half of
Medicare reimbursement to these
models by the end of 2018. HHS also
set a goal of tying 85 percent of
traditional Medicare payments to
continued on page 10
21st Century Cures Draft Includes Changes To
Medicare Coverage, Pay
The 21st Century Cures discussion draft released by House Energy &
Commerce Committee Chair Fred Upton (R-MI) Tuesday (Jan. 27) lays out
plans to address Medicare reimbursement and coverage in a variety of areas,
including changes to the coverage with evidence development policy to reform
of the Medicare Local Coverage Determination (LCD) process.
The draft, which is missing some sections, also indicates that the committee also plans to look a CMS’ coverage of breakthrough devices and
interoperability of health technology, but the language is still “to be supplied.”
A committee white paper released alongside the discussion draft says that “the
legislative language released today is neither perfect nor complete,” but it
continued on page 12
Indiana Medicaid-Expansion Alternative May
Pave Way For GOP Holdouts
CMS approved a non-traditional Medicaid expansion plan in Indiana that
requires participants to contribute to a health savings account. The agency
previously denied similarly designed plans, and sources say Indiana’s plan
may open the door for other states to follow suit.
Indiana Gov. Mike Pence is the ninth Republican governor to expand
Medicaid. CMS let other Republican-led states use federal funds, which
normally would have paid for Medicaid expansion, to instead subsidize
private insurance. However, Pence is the first to get permission to charge
premiums, which vary based on income, and to kick residents who don’t pay
their premiums out of the program for six months. Indiana caps participation
continued on page 14
21st Century Cures’ Interoperability Efforts Still A
Work In Progress
Rep. Michael Burgess (R-TX) says his office will continue working on the
interoperability section of the 21st Century Cures Initiative for the next several
months, even though the discussion draft was released by House Energy &
Commerce Chair Fred Upton (R-MI) Tuesday (Jan. 27). The legislative effort
comes as HHS crafts an interoperability roadmap, and Burgess signaled he
won’t necessarily follow the administration’s lead.
The White House Office of Management and Budget is currently reviewing CMS’ rule to set up the third stage of the meaningful use program, and the
agency has indicated it will propose changes to reporting periods and the
structure of the program as well. The Office of the National Coordinator for
continued on page 16
Private Sector Follows CMS’ Lead, Moves Providers To Value-Based Pay
Several of the nation’s largest health care systems, insurance plans and employers announced Wednesday (Jan. 28)
that they’ll put 75 percent of their business into value-based payment arrangements by 2020, which is part of an effort by
CMS and the private sector to align the public and private payer systems. The initiative coincides with a similar announcement by CMS officials Monday to speed providers’ move into alternative pay models and value-based payments in
Medicare.
When CMS officials announced goals for moving providers into value-based pay in Medicare, they emphasized that
they’re also trying to align those value-based pay models with the private sector. Providers don’t want to transform their
practices for Medicare alone so CMS set up the Learning and Action Network to align incentives between public and
private insurers.
The private-sector coalition is called the Health Care Transformation Task Force. Former CMS innovation center
head Richard Gilfillan, now CEO of Trinity Health, chairs the task force. Gilfillan said the task force’s work to develop
common metrics and incentives across Medicare, Medicaid and the private sector gives providers the confidence that the
nation will “stay the course to achieve this transformation,” according to a release.
Task force members include major insurance companies, a long list of health care systems that already formed
accountable care organizations, and the purchasers (employers) Pacific Business Group on Health and Caesar’s Entertainment. Gilfillan said the diverse make-up of the Health Care Transformation Task Force provides a critical mass of
business, operational and policy expertise to increase the momentum of delivery and payment system reforms.
The task force released recommendations for redesigning accountable care organizations in Medicare, Medicaid and
the commercial market. CMS recently proposed changes to the Medicare Shared Savings Program for the second round
of contracts, and the recommendations form the basis of the task force’s upcoming comment letter to CMS on those
proposed changes. — John Wilkerson
Hot Documents Now Available on InsideHealthPolicy.com
The following new documents are available on InsideHealthPolicy.com, our new online health news service.
Subscribers to InsideHealthPolicy.com also have access to hundreds of other health-related documents, daily news
updates, and a searchable archive of back issues.
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CMS Reports On Comprehensive Primary Care Initiative And Multi-Payer Advanced Primary Care Practice
Demonstration
Two GOP Lawmakers Introduce Bill To Make It Easier For LTCHs To Expand
Stakeholder Comments On Proposed Rule To Amend Excepted Benefits
Administration’s Jan. 21 Response In King V. Burwell
Senior Groups, Unions Call For Efforts To Lower Rx Prices In 21st Century Cures Draft Legislation
CMS Sets Goals, Timeline For Speeding Transition To Performance-Based Pay
Stakeholders React To Value-Based Pay Goals
CBO: Spending On Entitlements Outpaces Spending On Economy
Neurosurgeons Unveil 2015 Legislative Agenda
CMS Gives Indiana Nod For Innovative Medicaid Expansion
HHS: 9.5M Consumers Enrolled In Exchange Coverage
House Committee Unveils 21st Century Cures Discussion Draft
Reactions To Draft Cures Bill
Sen. Roberts Introduces Bipartisan Bill To Eliminate 96-Hour Rule
E&C White Paper Lays Out Areas For Further ‘Cures’ Discussion
Pallone, DeGette Withhold Support For Draft Cures Bill Pending Further Discussion
IRS Waives Additional Penalties For Those Who Owe Tax Credits
House E&C Asks HHS To Detail Contingency Planning For Possible Loss In King Case
Alexander, Murray Announce Health Committee Subcommittee Assignments
AdvaMed Survey Says Medical Device Tax Has Caused Job Loss, Cuts To R&D
HHS: Nearly 7.3M Enrolled Via Healthcare.gov As Of Jan. 23
Hatch Questions IRS On Penalty Waiver
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INSIDE CMS — www.InsideHealthPolicy.com — January 29, 2015
Site Neutral Coalition Formed As Congress Considers SGR Offsets
Health plans, cancer patients, nursing homes, and primary care doctors and internists formed the Alliance for SiteNeutral Payment Reform, and they’re lobbying Congress for pay policies that would reduce Medicare spending while
increasing pay for providers in the coalition. Lobbyists for providers across the four post-acute care sectors believe siteneutral pay is near the top of the list of offsets that Congress is considering to pay for temporarily overriding steep
Medicare physician pay cuts scheduled for April 1.
The alliance is lobbying Congress to pay the same rates for services regardless of where those services are provided.
The group wants site neutral pay between hospital outpatient departments and physician offices, which would benefit
family physicians and internists, and between nursing homes and inpatient rehabilitation facilities, which would benefit
nursing homes.
Health plans would benefit from site neutral policies because spending disparities in Medicare apply to the commercial market, too, the alliance says. Cancer patients want site-neutral pay because they pay more for care when treated by
oncologists who are employed by hospitals. Research by Milliman shows cancer care delivered in the hospital setting
costs Medicare beneficiaries $650 more in out-of-pocket copayments compared to community-based care.
“The Alliance for Site-Neutral Payment Reform and our member organizations feel that it is time to address payment
parity across site of service in order to decrease Medicare and commercial spending, ensure patients receive the right care
in the right setting, lower taxpayers and beneficiary costs and increase patient access,” states a Jan. 20 alliance letter to
congressional committees with jurisdiction over Medicare.
Congress is considering changes to Medicare to pay for either temporarily overriding pay cuts schedule by the Sustainable Growth Rate formula or replacing the SGR. Even if Congress fixes SGR, it will likely need to first patch it before the
end of March, several lobbyists say. They believe that site neutral pay policy between nursing homes and inpatient
rehabilitation facilities is a likely offset candidate, in part because the Congressional Budget Office already scored that
policy and because the president included the policy in his past budget.
“The 2015 President’s Budget estimates that site neutral payment for select rehabilitation services could reduce
Medicare costs by $2.4 billion over 10 years,” the alliance letter states.
Inpatient rehabilitation facilities say they do a better job of rehabilitating patients than nursing homes and are
covered by stricter regulations that drive up their costs compared to nursing homes. Hospitals complain that their profit
margins are razor thin and that cutting areas with higher profits will drive many of them out of business.
The alliance acknowledges the problems that hospitals face, and it says Congress should fix the payment system for
hospitals and stop overpaying for services in outpatient departments to offset pay that is too low in other areas.
“Some hospitals now depend on HOPD payments to cross-subsidize other necessary patient care services, therefore
alternative funding sources may be required to secure access to this care,” the letter by the Alliance for Site-Neutral
Payment Reform states. — John Wilkerson
House Bill Recognizes Pharmacists As Providers In Underserved Areas
Pharmacists are pleased Reps. Brett Guthrie (R-KY), G.K. Butterfield (D-NC), Todd Young (R-IN) and Ron Kind
(D-WI) reintroduced a bill Wednesday (Jan. 28) to recognize pharmacists as providers under Part B that can be reimbursed for certain services in medically underserved areas.
The bill would allow pharmacists in designated medically underserved areas to be paid under Part B for some
services like immunizations, diabetes screenings and self-management screenings, cardiovascular screenings, behavioral
therapy, cholesterol tests, and other preventive screenings consistent with state scope of practice laws. The National
Association of Chain Drug Stores notes that pharmacists are already providing these services to other patients. Identical
bipartisan legislation introduced in the House last session had 123 cosponsors.
“Allowing these qualified medical professionals to operate in underserved areas and receive payment for their
services is a practical way to address the basic health care needs of vulnerable communities and the shortage in the
delivery of care in those areas,” Butterfield said in a statement.
The American Pharmacists Association, National Community Pharmacists Association and NACDS support the bill.
All are part of the Patient Access to Pharmacists’ Care Coalition, a group of more than 20 organizations that focus on
pharmacists’ provider status and Medicare reimbursement. The coalition also supports the bill.
“NCPA and its pharmacy allies have for years advocated broadening the array of services these clinically-trained
medication experts can provide to patients,” NCPA CEO Douglass Hoey notes in a statement. “Momentum continues to
grow with the introduction of H.R. 592,” he adds.
Provider status for pharmacists has long been a goal for pharmacists groups. Carol Kelly, senior vice president for
government affairs and public policy at NACDS, said a continued focus on Medicare provider status legislation is a
priority for the pharmacists in 2015. NACDS last summer used a Senate Finance Committee push to improve chronic care
as a way to promote pharmacist provider status. Kelly said the group is also working on a state level to gain provider
INSIDE CMS — www.InsideHealthPolicy.com — January 29, 2015
3
recognition for pharmacists. NCPA and the Academy of Managed Care Pharmacy have also said provider status for
pharmacists remains on their 2015 agendas.
NACDS also notes in a statement that an internet poll of likely votes last summer found 79 percent of those who
responded favored the legislation, and support cut across party lines.
“The recognition by congressional leaders of pharmacists’ increasingly important role in the delivery of healthcare
services is growing, and important progress is being made for the ultimate benefit of patients,” NACDS President and
CEO Steven Anderson says in a statement. “We look forward to working with lawmakers as they pursue the enactment of
this legislation.” — Michelle M. Stein
MACPAC Weighs Medicaid’s Role In Mental Health Services
The Medicaid and CHIP Payment and Access Commission last week held extensive discussions about mental health
services available to the Medicaid population, particularly as the program has expanded to include more adults. Research
presented to the commission shows Medicaid includes a much higher number of adults with mental health issues compared to private insurance, with 31 percent of Medicaid adults having a mental illness compared with 17 percent of the
privately insured population. Research also shows that many mental health providers don’t accept Medicaid patients.
While that may seem high, commissioner Andrea Cohen said in many cases that mental illness is considered a
disability. “They are on Medicaid for that very issue,” she said.
Almost half of all Medicaid spending goes toward general behavioral health issues, totaling $170 billion in 2011.
Those services are particularly prevalent for the foster care population, of which 42 percent received behavioral health
therapy which accounted for 77 percent of all expenditures for foster children.
Peter Szilagyi said when it comes to Medicaid, he sees two types of children: foster kids, and everybody else. He
said this group tends to see an overuse of psychotropic medicine to deal with behavioral issues when he believes they
really need more trauma-focused therapy.
The commission will further examine what sort of access Medicaid patients have to mental health care,
particularly as more non-disabled adults join the rolls.
Commissioner Patricia Gabow said it is often hard to find mental health providers that take Medicaid patients. These
services are often paid separately or differently from other Medicaid services.
There is also the institution for mental diseases exception that bars Medicaid from reimbursing facilities with 16 or
more beds for treatment of adults 21 and older with mental illness. Commissioner Chuck Mulligan said the commission
needs to give this ban some serious thought when making its ultimate recommendations to Congress on mental health
issues.
“Should it be on a guide path to becoming more ingrained in Medicaid? Or is it unsuccessful?” he said.
The issue of how Medicaid should be focusing more on behavioral health interventions for foster children is
already gaining attention on Capitol Hill. On Wednesday (Jan. 28), Sen. Tom Carper (D-DE) told Senate Finance
Committee members that he think bipartisan agreement is possible on the issue. Carper has proposed that HHS be
required to issue guidance to states clarifying coverage of behavioral health care interventions for children in foster care
that are also Medicaid beneficiaries. Clarifying behavioral health interventions that could help resolve underlying issues
could also lead to cut backs on psychotropic drugs that the Government Accountability Office has found are often overprescribed for this population, he said. The guidance sought by Carper would encourage states to offer qualitative
treatments that have been shown to be effective in treating behavioral health issues.
“It is critical that we understand and treat these underlying problems affecting these children first, through qualitative
care, and not simply through medication,” Carper said.—Rebecca Beitsch
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INSIDE CMS — www.InsideHealthPolicy.com — January 29, 2015
MACPAC Monitors States Actions On Medicaid Primary Care Bump
Congressional Medicaid advisers still aren’t convinced that lawmakers should extend the ACA’s newly expired
Medicaid primary care pay bump, with some commissioners suggesting at a meeting late last week (Jan. 22) that it might
make sense to wait and see what transpires with the 14 states that have chosen to continue the pay increase on their own.
The Medicaid and CHIP Payment and Access Commission’s deliberations come as primary care physicians, increasingly
worried that Congress won’t revive the ACA measure, explore potential administrative options.
At their meeting last Thursday (Jan. 21), commissioners reviewed a chapter for an upcoming report to Congress that
concludes, based on research into seven states and the District of Columbia, that the ACA’s temporary measure putting
Medicaid primary care pay on par with higher Medicare rates had “at best, a modest effect” in terms of bringing more
doctors to Medicaid. In order to receive the higher rates, doctors had to complete additional paperwork confirming they
mainly provided primary care. The vast majority of these doctors were already part of the Medicaid program before.
Due to some complications involved in paying doctors the higher rates the effect of the pay bump could only be
analyzed over a relatively short period of time, the draft chapter says, while adding that those initial administrative issues
have now been resolved. But the report also notes there were a greater number of Medicaid appointments available to
enrollees after the bump as doctors were willing to increase their Medicaid patient load.
Fourteen states are choosing to continue the higher pay rate using the lower federal matching rates they received
before the Affordable Care Act. Commissioners did not immediately advocate to reinstall the pay increase, and several
commissioners said this divide among the states could make for an interesting natural experiment, allowing commissioners to analyze the long-term effectiveness of the pay hike.
“As a commission we should continue to track this. I wish the provider part was as simple as here’s a pay increase,”
said Commissioner Donna Checkett, adding that with fewer individual practices, the pay bump may not be that important
to many doctors.
New commissioner Peter Szilagyi said he’s not sure the question of effectiveness of the pay bump is being framed the
right way.
“What did you do with the money and what did patients get from it?” Szilagyi asked. “Maybe primary care got
substantially better, but it wasn’t measured in the number of patients.” —Rebecca Beitsch
Congressional CHIP Advisers Weigh Program Extension Alternatives
Congressional Medicaid and CHIP advisers late last week looked at a handful of potential alternatives to extending
the Children’s Health Insurance Program, which expires in 2016. The advisers discussed the following options without
formally weighing in on them: augmenting existing exchange subsidies, which currently help with the cost of premiums
for those earning up to 400 percent of the federal poverty level and help cover cost sharing for those earning up to 250
percent of the federal poverty level; providing wrap-around coverage for things that exchange and work plans may not
cover, like dental plans; and increasing Medicaid coverage.
The Medicaid and CHIP Payment and Access Commission met Thursday (Jan. 21) to discuss the potential end of the
CHIP program and how to address the needs of the 1.1 million children who would lose coverage, as children’s advocates
step up pressure on Congress to act by March to extend the program for four years.
The commission is looking both at what effects the expiration of CHIP would have on current enrollees as well as
possible ways to cover those children through other methods. A study by the Urban Institute showed families that lose
coverage may face significant financial barriers in securing coverage for their children.
Of the 1.1 million projected to become uninsured if CHIP expires, about 40 percent would be eligible for subsidized
exchange coverage. The other 60 percent could move to their parents’ employer plans, though this would likely cost over
$5,500 in out-of-pocket premiums, or 13.2 percent of their likely income, the Urban Institute study concludes.
Noting CHIP’s very low cost-sharing, several commissioners expressed concern over the new payments families
would be taking on if the program expires. Of the projected 1.1 million that would go uninsured, only 600,000 are
ineligible for exchange subsidies.
Families with parents already enrolled in the exchange would have little change in premium costs, but those not
already enrolled in the exchange would be faced with enrolling in plans that would be six to 11 times more expensive than
CHIP. And while premiums would not change much for those families that are already part of the exchange, the families’
out-of-pocket costs would be seven to 15 times greater, according to information presented to MACPAC.
Commissioner Mark Hoyt said there may be sticker shock, with many families unable or unwilling to spend more.
“That strikes me as a pretty significant hurdle to join one of those two pools,” he said of exchange and work coverage.
Commissioner Sharon Carte was also concerned about future cost-sharing for families currently enrolled in CHIP,
many whom have little disposable income or even tend to spend more on basics than they earn, according to a report
included in the chapter presented to MACPAC commissioners.
“Cost-sharing can be designed in a way that presents an access barrier,” she said. “You can have coverage, but if
INSIDE CMS — www.InsideHealthPolicy.com — January 29, 2015
5
there’s not access what’s it really worth?”
Several commissioners also said they were concerned about the idea of bringing all the CHIP kids into existing
insurance pools as that would increase insurers’ risk.
In addition to the risk issue, commissioners questioned the financial aspects of funding subsidies, the financial
burden states would take on if Medicaid was expanded to cover the CHIP population, and whether the costs of adding
kids to exchange or work plans would incentivize parents to cut hours at work in order to have children, especially
particularly sick ones, qualify for Medicaid.
The commission also discussed the recently expired primary care pay bump for Medicaid and the program’s coverage of mental health issues. — Rebecca Beitsch
CBO’s Estimated Cost Of Freezing Medicare Physician Pay Edges Up Again
The Congressional Budget Office’s estimated 10-year cost of freezing Medicare physician pay increased in the
office’s latest Budget and Economic Outlook, but some following the issue say a cost increase is unlikely to have much of
an affect on the current push to replace the flawed Sustainable Growth rate since lawmakers haven’t been able to agree on
how to pay for a replacement, regardless of the cost.
CBO pegged the cost of freezing physician pay for 10 years (2016-2025) at $131 billion, an increase from the $119
billion 10-year (2015-2024) cost estimate it released in November. To avoid Sustainable Growth Rate cuts for the rest of
2015, CBO estimated it would cost another $6 billion.
One lobbyist following the issue noted that CBO’s 10-year budget window shifted between the November estimate,
which looked at 2015-2024, and the January estimate, which looked at 2016-2025. Since the cost to freeze physician pay
for 2015 is estimated at about $6 billion, but the estimated cost for 2025 is about $17 billion, CBO’s new 10-year budget
window essentially drops a less costly year and adds on a more expensive one. The increase in the cost of the 10-year
estimate is really just a matter of timing and new budget windows, the lobbyist said.
The current SGR patch runs out at the end of March. The House Ways & Means and Energy & Commerce committees along with the Senate Finance Committee previously agreed on a policy to replace the SGR, and lawmakers have
said they are unlikely to tinker much with the policy. But the deal broke down last year when lawmakers couldn’t agree on
how to pay for an SGR replacement. Last week, House Energy & Commerce health subcommittee chair Joseph Pitts (RPA) said Medicare physician payment reform legislation should be offset, and also indicated the bill should be paid for in
such a way that the president will sign off on it.
But Ipsita Smolinski of Capitol Street said few are very optimistic that lawmakers can reach agreement on a 10-year
bill by March 31, adding that an SGR replacement is an uphill battle whether the price of freezing physician payments is
set at $119 billion or $131 billion. Julius Hobson, senior policy adviser with Polsinelli, agreed, and said that if lawmakers
can’t reach an agreement on how to pay for the bill, it doesn’t matter if the cost of freezing physician pay fluctuates.
Hobson also noted that CBO’s most recent estimate brings the cost of freezing physician pay closer to prior estimates
before the cost dropped to a little less than $119 billion. In April 2014, CBO estimated freezing physician pay for 10
years would cost $124 billion, and in February 2013, CBO lowered the cost of a pay freeze from $245 billion to $138
billion in what some viewed at the time as a potential game changer. In 2012, the estimated cost reached $316 billion.
CBO also notes that Medicare, Medicaid and subsidies offered through insurance exchanges — along with Social
Security — are expected to grow faster than the economy, and Senate Finance Chair Orrin Hatch (R-UT) says this points
to a need for entitlement reform.
“The CBO’s report is clear — entitlement spending, if not reformed, will drive our deficits and debt to
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INSIDE CMS — www.InsideHealthPolicy.com — January 29, 2015
unsustainable levels in the very near future, and unsustainable entitlement spending will continue to crowd out spending
in other areas,” Hatch said in a statement. “This means taking swift action to implement systematic and meaningful
reform” to strengthen these programs, he added. Hatch recently laid out an agenda that includes Medicare and other
entitlement reform. — Michelle M. Stein
Finance Democrats Bring Up CHIP Funding Amendment
Senate Finance Committee Democrats on Wednesday (Jan. 28) brought up an amendment to the Hire More Heroes
Act that would extend funding for the Children’s Health Insurance Program through 2019, but they stopped short of
actually offering the amendment and instead used the hearing to show they want to keep the program running.
CHIP offers low-cost health coverage for pregnant women and children of families that earn too much money to
qualify for Medicaid. The Affordable Care Act authorized the program until 2019, but only extended funding through
2015 because the health law was supposed to do away with the need for CHIP by expanding Medicaid and creating
exchanges with affordable commercial plans. However, those expansions didn’t turn out as planned, and it’s not clear that
the benefits and networks in exchange plans meet the needs of children covered by CHIP, so children advocates are
lobbying Congress to extend the program.
Lawmakers from both parties have said they plan to extend funding. Children’s advocates are asking congressional
members to act quickly because states are preparing budgets and must know whether federal funding will be
available. — John Wilkerson
Dialysis Facility Star Ratings Go Live Despite Pleas For A Delay
Despite pleas from patients and industry for a delay, CMS on Thursday (Jan. 22) added star ratings to the Dialysis
Facility Compare website. CMS said the ratings will help consumers choose high quality dialysis facilities by summarizing performance data, but patients and industry say the ratings program confuses patients and disadvantages facilities that
treat sicker, often poor, patients.
“Of particular concern is the statement that ‘The star ratings show whether your dialysis facility is providing
quality care,’” a Kidney Care Partners release states, referring to CMS’ press release on the program. “Yet, as KCP
has consistently noted, the calculation of the scores is based on a forced bell curve, which distorts the actual facility
performance.”
Likewise, Dialysis Patient Citizens said an initial review of the website reinforces the patient group’s concerns about
the star ratings program.
Dialysis patients are challenging CMS’ dialysis star ratings program, using a law called the Data Quality Act.
— John Wilkerson
Pharmacists Request Hearing On Aetna’s Inaccurate Part D Information
The National Community Pharmacists Association is calling for the House Ways & Means and Energy & Commerce
committees to hold a hearing to investigate how incorrect information about pharmacies participating in Aetna’s 2015
Medicare Part D plans was posted on Medicare Plan Finder.
“We are extremely concerned that a problem of this magnitude might be exacerbated next year unless immediate
action is taken to determine what led to these problems and proper controls are enacted to ensure this does not happen to
vulnerable Medicare beneficiaries again,” NCPA states in a Jan. 22 letter to the the committees.
NCPA says some beneficiaries have had to wait for medications and pay additional out-of-pocket costs because of
the situation. Aetna submitted incorrect pharmacy information to CMS for Aetna plans, and the incorrect information was
also posted on Aetna’s websites. The information was not corrected until after Medicare’s annual open enrollment period
closed.
NCPA called it a “bait-and-switch” on beneficiaries, and a source following the issue said beneficiary advocates told
CMS that the mediation plan the agency developed wasn’t strong enough. Originally, CMS’ mediation plan called for the
insurer to notify pharmacies of the situation, and a Special Enrollment Period to be offered on a case-by-case basis if
beneficiaries call 1-800-Medicare. Aetna said it would reimburse beneficiaries once during the first 90 days of the plan
year, and Aetna was set to reach out to about 50,000 beneficiaries.
The agency is now requiring more from Aetna, and a spokesperson tells Inside Health Policy that Aetna has temporarily expanded its pharmacy networks to make sure beneficiaries are not turned away at the pharmacy counter. The
network expansion will last until at least Feb. 28, CMS says.
CMS says Aetna is still in the process of rolling out the expanded access solution, but as of Jan. 20, all but 3,000 of
the 220,000 Aetna members whose pharmacy lost in-network status for 2015 are in plans with expanded access. Others
INSIDE CMS — www.InsideHealthPolicy.com — January 29, 2015
7
will receive expanded access sometime this month.
In the meantime, CMS says Aetna members whose claims are rejected for being out-of-network may ask their
pharmacist to call Aetna’s pharmacy technical help desk for instructions to process claims at network rates.
An NCPA spokesperson says CMS’ steps helped mitigate the problem, although it has not been fixed entirely. Still,
NCPA says its important for lawmakers to hold a hearing and investigate so it doesn’t happen again.
One beneficiary advocate says if lawmakers hold a hearing on problems with Part D, the hearing should have a
broader focus beyond the situation with Aetna. — Michelle M. Stein
MedPAC And Industry Ready To Change Payments To Nursing Homes
The Medicare Payment Advisory Commission released a report that recommends significant changes to the way
skilled nursing homes are paid and how they are reimbursed for expenses unrelated to therapy. The American Health Care
Association, which represents these facilities, is working on different approaches to restructuring reimbursements.
The MedPAC report, done in conjunction with the Urban Institute, says nursing homes are overpaid for therapy and
underpaid for other services they provide. The report says the current payment method incentivizes nursing homes to
provide too much therapy because therapy is reimbursed on an hourly basis.
The report recommends paying nursing homes a set daily fee for each patient based on a predictive model using such
data as the age and health of patients and conditions to be treated. The proposal is designed to be budget neutral by
shifting savings from therapy services to pay more for other services, such as administering drugs.
MedPAC has advocated for similar changes since 2008, pointing to data that shows the number of days used to treat
the most intensive therapy groups rose from 24 percent in 2000 to 76 percent in 2012. Congress has done little with the
recommendations, but that may change now that the industry is also looking to change how they are paid.
Nursing homes are the only sector reimbursed with daily fees per patient, and the American Health Care Association
is developing a proposal to change that system. AHCA spokesman Greg Crist said there are inherent limitations and
inefficiencies to the per-day payment model, and industry is looking to “better align ourselves with payments that already
exist in Medicare.”
“We’re looking at this as a sector. Those who are not as efficient will need to step up,” he said.
MedPAC says the proposed payment model would have a 93 percent accuracy rate for payments for nontherapy
ancillary services, compared with the current 8 percent accuracy rate. MedPAC also says nursing homes would not be
hurt by the decrease in therapy payments because they would be balanced out by the increase in pay for other services.
MedPAC estimates the proposal would lead to pay cuts pay at 5 percent of nursing homes, and payments at 80 percent of
those facilities would drop by more than 10 percent. However, those nursing homes have Medicare profit margins of at
least 10 percent.
Crist said the whole picture of payments is different because 66 percent of patients are on Medicaid. He said the
industry operates on a 2 percent profit margin overall because Medicaid reimbursement is lower than Medicare. MedPAC
says Medicare should not subsidize Medicaid reimbursement.—Rebecca Beitsch
Ways & Means Likely To Take Up SGR, Medicare Reform At Retreat
House Ways & Means committee members plan to discuss Medicare reforms many believe Congress could use to
pay for replacing the Sustainable Growth Rate formula during their upcoming retreat, Rep. Diane Black (R-TN) said
Thursday (Jan. 22).
Black, who spoke at a Bipartisan Policy Center event on alternative payment models, declined to name Medicare
reforms under consideration. She also said Ways & Means Chair Paul Ryan (R-WI) wants to replace SGR, and she
doesn’t expect lawmakers to make many changes to the bipartisan, bicameral SGR policy agreement from last year.
However, Black hopes to add measures on accountable care organizations from legislation she cosponsored with Rep.
Peter Welch (D-VT) last year, called the ACO Improvement Act.
Julius Hobson, senior policy adviser with Polsinelli, said the question is whether it’s possible to get congressional
Democrats and the president to go along with Medicare reforms by March 31. Lawmakers likely don’t have time to
complete these larger reforms before the current SGR patch runs out, he said. Most lobbyists assume Congress will patch
SGR in March, then deal with SGR legislation in the context of a budget resolution at the end of the year.
Black made the statement in the middle of a busy week for physician pay reform. The House Energy & Commerce
health subcommittee held a two-day hearing that focused on paying for the bill that the two parties agree to last year, and
Senate Finance Committee Chair Orrin Hatch (R-UT) included SGR reform on his list of priorities.
Energy & Commerce health subcommittee Chair Joseph Pitts (R-PA) said the committee aims to identify offsets that the
president will sign. President Barack Obama said during the State of the Union Tuesday that he would veto any bill
seeking to roll back the Affordable Care Act, and Energy & Commerce Republicans mostly discussed offsets that do not
undermine the president’s signature accomplishment.
Former Congressional Budget Office Director Alice Rivlin and former Senator Joe Lieberman (I-CT), who testified
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at the first day of the hearing, said Congress should use SGR repeal as an opportunity to reform Medicare. Rivlin said her
top offset priority would be speeding alternative provider pay models.
On day two, AARP told the Energy and Commerce health subcommittee it should find savings from drug makers by
extending Medicaid drug rebates to those dually eligible for Medicare and Medicaid. The seniors’ advocate also suggested expanding Medicare competitive bidding for equipment that beneficiaries use at home.
The American Hospital Association, on the other hand, said lawmakers should look to beneficiaries to find savings.
The AHA suggested lawmakers combine Medicare Parts A & B deductibles, create a uniform coinsurance rate of 20
percent for amounts above that deductible (including inpatient expenses), cap beneficiaries’ annual out-of-pocket spending, charge higher premiums from wealthier beneficiaries, reform medical malpractice, and restrict or ban first-dollar
coverage in Medigap plans.
Similarly, the AHA recently urged the president to turn to previously proposed changes to beneficiaries’ co-pays and
deductibles to find savings for his upcoming budget rather than include hospital cuts. Obama said he plans to address
health care in his upcoming budget.
Hobson noted that the policy options raised by those testifying have all been raised during previous discussions.
— Michelle M. Stein
AHA, AARP At Odds Over Who Should Pay For Doctor Pay Reforms
House Energy & Commerce health subcommittee members on Thursday (Jan. 22) heard advice from providers and
AARP on ways to pay for replacing Medicare’s Sustainable Growth Rate formula: the American Hospital Association
suggested beneficiaries pay, AARP suggested drug makers pay and the American Medical Association said it needed to
see parameters before recommending offsets. Committee leaders said they haven’t decided whether to allow offsets from
outside Medicare, but witnesses on the previous day of the two-day hearing said Congress should use SGR as an opportunity to reform Medicare, and Congress historically has paid for SGR patches with Medicare saving.
Last year Republicans and Democrats from three committees in both chambers agreed on a policy for replacing the
SGR but couldn’t agree on how to pay for it — the policy is estimated to cost between $140 billion and $150 billion. Offsets on
that scale are controversial and lawmakers and stakeholders usually steer clear of them unless they are forced to make recommendations. Rep. Joe Barton (R-TX), the chair emeritus, expressed surprise that witnesses at Thursday’s hearing offered offsets.
“Well good for you,” he said upon learning that AHA and AARP had named offset policies. Barton then turned to
Rep. Brett Guthrie (R-KY), who was sitting in for health subcommittee Chair Joseph Pitts (R-PA), to ask whether the
committee has decided whether offsets must come out of the health care system. Guthrie said it’s open for discussion.
AHA President and CEO Richard Umbdenstock said Medicare has cut pay to the hospital sector by $121 billion
since 2010, adding that AHA will not support fixing the physician payment problem if it’s at the expense of provider pay,
including hospitals’ payments.
Umbdenstock suggested Congress instead pay for fixing SGR by combining Medicare Part A and Part B
deductibles, creating a uniform coinsurance rate of 20 percent for amounts above that deductible (including inpatient
expenses), capping beneficiaries’ annual out-of-pocket spending, charging higher premiums from wealthier beneficiaries,
reforming medical malpractice, and restricting or banning first-dollar coverage in Medigap plans. Those reforms would
reduce spending by giving beneficiaries the incentives to choose health care services wisely and by charging the wealthier
more to avoid hurting the poor, he said.
However, AARP President-elect Eric Schneidewind said combining deductibles creates the wrong incentives.
Deductibles for Part A, which covers hospital services, are higher than deductibles for Part B, which covers doctor office
visits, so combining deductibles would raise Part B deductibles, he said. This, in turn, would discourage beneficiaries
from seeking primary care that keeps them out of the hospital. As for higher coinsurance, Schneidewind said beneficiaries
with incomes of $85,000 already must pay higher Part B premiums, so to go further would mean charging higher
deductibles to seniors with incomes of around $50,000, which he said is far from wealthy.
Schneidewind said Congress should focus on savings from drug makers, which drug lobbyists say is highly
unlikely, especially now that Republicans control Congress. Requiring brand drug makers to pay rebates for drugs
provided to Medicare Part D beneficiaries who are dually eligible for Medicare and Medicaid would reduce Medicare
spending by about $140 billion over a decade, he said, which is about what Congress needs to offset SGR legislation. He
also suggested letting Medicare negotiate drug prices, reducing the exclusivity period for biopharmaceuticals, banning
pay-for-delay deals between brands and generics, and stopping brands from using Risk Evaluation and Mitigation
Strategies (REMS) to block generic drug and biosimilar product development.
Schneidewind also called for speeding bidding programs for durable medical equipment; equalizing Medicare
payments for physician services between hospital outpatient and office settings; recouping overpayments to Medicare
Advantage plans; and increasing support for transitional care and chronic care management.
Both AHA and AARP made similar suggestions in the past. — John Wilkerson
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CMS Reports Mixed Results For First Year Of Primary Care Initiatives
CMS paid $20 per beneficiary to save $14 per beneficiary in the first year of the Comprehensive Primary Care
initiative, according to agency reports released Friday (Jan. 23), and the Multi-Payer Advanced Primary Care Practice
Demonstration reduced Medicare expenditures by $4.2 million in the first year but only reduced expenditures in two
states out of seven states in which it is running.
The two reports are the first results of CMS’ major tests of advanced primary care. The Affordable Care Act’s
Comprehensive Primary Care initiative lets Medicare pay doctors for care management without requiring patients to
make office visits and lets physicians receive a portion of what they save Medicare. It’s a multi-payer partnership between
Medicare, Medicaid private health care payers and primary care practices in four states (Arkansas, Colorado, New Jersey
and Oregon) and three regions (New York’s Capital District and Hudson Valley, Ohio and Kentucky’s Cincinnati-Dayton
region, and Oklahoma’s greater Tulsa region).
CMS Deputy Administrator for Innovation and Quality and Chief Medical Officer Patrick Conway said the initiative
“generated nearly enough savings in Medicare health care expenditures to offset care management fees paid by CMS.” He
then cautioned against interpreting the results as a failure, saying it will likely take a few years before the initiative breaks
even or saves money.
“Overall, CPC appears to have reduced total monthly Medicare Part A and Part B FFS expenditures per beneficiary
for all care compared to what they would have been absent the CPC intervention by $14,” according to the report that
Mathematica wrote for CMS on the initiative.
Those spending reductions primarily were due to reduced hospitalizations and emergency room visits. Medicare
spending was reduced most for the sickest patients.
In the Multi-payer Advanced Primary Care Practice Demonstration, Medicare participates with Medicaid and private
health care payers in eight states: Maine, Michigan, Minnesota, New York, North Carolina, Pennsylvania, Rhode Island,
and Vermont. Unlike the Comprehensive Primary Care initiative, states convene participants and run the demonstrations,
rather than CMS. Payers give practices and auxiliary providers, such as community health teams, monthly care management fees. Payers also support the practices in other ways, such as giving them feedback on the data they generate.
The demonstration reduced expenditures in Michigan and Vermont, but Medicare spent more on fees than
was saved in five states. Savings in Michigan equaled $27.8 million and savings totaled $9.8 million in Vermont. The
report excludes Minnesota from budget neutrality calculations due to lack of billing by physician practices, which would
have overstated savings.
“These first-year results illustrate the potential for steady improvements in the participating practices’ advanced
primary care capabilities,” Conway wrote in a blog post. “CMS anticipates continued improvements as the participating
practices deepen and refine their methods of delivering advanced primary care so that patients can continue to receive
improved quality and coordination of care.”
CMS in September extended the Multi-payer Advanced Primary Care Practice Demonstration for two more years
through 2016 in six of the eight participating states after pressure from both the states and some lawmakers. Minnesota
and Pennsylvania were not included in the extension. — John Wilkerson
CMS Announces Major Value Based Pay Initiative . . . begins on page one
quality or value by 2016 and 90 percent by 2018 through such programs as the Hospital Value Based Purchasing and the
Hospital Readmissions Reduction.
Provider lobbyists said those goals are ambitious, but several provider groups issued public statements in support of
CMS’ announcement.
CMS gets part way to its goals with existing initiatives. For example, all nursing homes will be included in
Medicare’s Value Based Purchasing program by fiscal 2019. The last SGR patch, the Protecting Access to Medicare Act
of 2014, put that requirement in place.
However, Mendelson said there is only so much CMS can do without help from Congress, which is why the
announcement raises the stakes for legislative intervention. Although agency officials might technically be able to run
demonstrations that increase Medicare spending — CMS once ran a star ratings demonstration that paid bonuses to more
Medicare Advantage plans than otherwise would have received them — the agency is under pressure to save money with
demonstrations. CMS officials can neither increase pay for providers that participate in alternative pay models nor can it
penalize providers to force them into ACOs or bundled pay arrangements. If providers want to remain in fee-for-service
Medicare and they have valid claims, there is nothing CMS can do, he said.
The SGR deal that both parties and chambers agreed to last year calls for paying annual 5 percent bonuses to
providers who receive a significant percentage of their income from alternative pay models, with penalties for missing
quality and cost targets. Those bonuses would be available between 2018 and 2023.
Piper Su, vice president of The Advisory Board Company’s health policy division, said CMS’ announcement shows
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that agency officials are willing to create a more progressive path for providers that want to be more accountable and take
on greater financial risk, while also creating less aggressive paths for hesitant providers. That might include, for example,
creating additional ACO models or bringing more practices into the Transforming Clinical Practice Initiative.
Su said another important aspect of the announcement is that CMS is trying to align its alternative pay
models with the commercial market. Providers don’t want to transform their practices for just one payer, even a payer
the size of Medicare. Providers want incentives to be the same for all their patients, regardless of who their insurance
company is. Similarly, Mendelson said he was impressed by the number of private plan representatives involved in the
announcement. The goals CMS set for alternative pay models and value-based payments do not include managed care.
“In some ways, managed care is the end game,” Mendelson said. — John Wilkerson
‘Cures’ Draft Bill Includes CME Exemption To Sunshine Law
Continuing medical education (CME) stakeholders are buoyed by inclusion of a bipartisan CME exemption from
reporting under the Open Payments Program (Sunshine Law) in the House 21st Century Cures draft legislation released
Tuesday (Jan. 27). Stakeholders have been confused as to whether payments from drug and device manufacturers to
support CME events now need to be reported following CMS’ move to ax the CME exclusion in its 2015 final Physician
Pay Rule. One CME stakeholder said his group appreciates the “Cures” draft provision put forward by Reps. Michael
Burgess (R-TX) and Peter DeFazio (D-OR) that would codify the CME exemption.
The Burgess/DeFazio provision in the draft Cures bill says peer-reviewed journals, journal reprints, journal supplements, and medical textbooks provided to attendees at a CME event as well as “[a] transfer of value to a covered recipient who is a physician if the thing of value is intended solely for the purposes of providing continuing medical education
to the physician” would be exempt from reporting under the Sunshine Law.
Andrew Rosenberg, senior adviser for the CME Coalition, told Inside Health Policy that stakeholders realize that the
“Cures” draft legislation is still very fluid and up for discussion but they are very supportive of the “bipartisan effort” to
protect CME from reporting requirements.
“CME is such a vital part and plays a vital role in bringing innovation to the patient’s bedside, and 21st Century
Cures recognizes that,” Rosenberg said.
Under the original CME exemption, funding for CME did not have to be reported if companies didn’t set the agenda,
choose speakers, or pay speakers directly, but CMS proposed over the summer to include indirect payments when it
issued the Proposed 2015 Physician Pay Rule in July.
In the proposed rule, CMS said the CME exclusion was redundant because of another provision that excludes
indirect payments or transfers to medical professionals providing CME lectures as long as manufacturers are “unaware”
of the lecturers’ identities for up to a year and a half after the indirect payment has been made.
Stakeholders like the CME Coalition rebelled, arguing that it is virtually impossible for manufacturers to remain in
the dark that long as to who speakers and presenters at a CME event were, which meant those indirect payments would
have to be reported on the Open Payments website.
Burgess even got into the act before CMS released the final rule, sending a letter along with Rep. Frank
Pallone (D-NJ) to CMS Administrator Marilyn Tavenner in September asking that the CME exemption remain intact.
Burgess and Pallone said in their letter that the importance of CME “in our healthcare system by improving patient
outcomes, facilitating medical innovations, and keeping our nation’s medical professionals up-to-date with the rapid pace
of scientific discovery” is why CMS excluded indirect payments from drug and device manufacturers to CME providers
from having to report under the Open Payments program.
Burgess followed up by filing bipartisan legislation with Rep. Allyson Schwartz (D-PA) similar to the CME provision
in the ‘Cures” draft bill that would protect the exemption. The legislation went nowhere as lawmakers had bigger fish to
fry in the lame-duck session following the midterm elections.
CMS’ final 2015 Physician Pay Rule scrapped the CME exemption, but the agency clarified that if manufacturers and
GPOs who give funding for CME events don’t have any say over the speakers and presenters or how the events use the
money then the payments don’t have to be reported because they fall outside the definition of an indirect payment.
“(I)f an applicable manufacturer or applicable GPO provides funding to support a continuing education event but
does not require, instruct, direct, or otherwise cause the continuing education event provider to provide the payment or
other transfer or value in whole or in part to a covered recipient, the applicable manufacturer or applicable GPO is not
required to report the payment or other transfer of value. The payment is not reportable regardless if the applicable
manufacturer or applicable GPO learns the identity of the covered recipient during the reporting year or by the end of the
second quarter of the following reporting year because the payment or other transfer of value did not meet the definition
of an indirect payment,” CMS said in the final rule.
Stakeholders have said CMS’ language on whether the exclusion now just exists in a separate form, and they are still
unsure exactly what is and isn’t reportable under the Sunshine Law.
Rosenberg said this is why stakeholders are very supportive of efforts to codify the exemption in law. — Todd Allen Wilson
INSIDE CMS — www.InsideHealthPolicy.com — January 29, 2015
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‘Cures’ Placeholders: LDTs, Precision Medicine, Device Coverage
The 21st Century Cures draft bill, which one industry attorney describes as including “More Proposals Than You Can
Shake a Stick At,” also includes placeholders for key sections that are still being worked out, including provisions
addressing CMS coverage of breakthrough devices, company communication about drugs and devices, precision medicine, regulation of laboratory developed tests, and health technology interoperability.
“The 21st Century Cures Act is chock-full of proposals, some of which are new and some of which are old (i.e.,
based on or inspired by previously introduced legislation), from various stakeholders,” notes Hyman, Phelps &
McNamara attorney Kurt Karst in a blog Wednesday (Jan. 28). But there are also blank sections of the 393-page bill that
lawmakers say will be filled in later.
It is unclear if the yet-to-be drafted language touches on issues that kept Democrats from endorsing the draft bill
unveiled by House Energy and Commerce chair Fred Upton (R-MI) Tuesday (Jan. 27).
One of the placeholder provisions is a section titled precision medicine, sharing the name of a recently unveiled
presidential initiative that focuses on patient-specific care. Consistent with the White House’s roll out of the initiative,
lawmakers also did not include hard details of what they envision in this area.
Language requiring transitional CMS coverage of breakthrough devices is also forthcoming, the draft indicates. Language lawmakers did supply under the subtitle “Priority Review For Breakthrough Devices” would establish a
process at FDA for the designation and expedited review of devices that represent breakthrough technologies with the
potential to address unmet medical needs.
“If FDA designates a medical device as such under Section 1161 and approves/clears it, Section 1162 would translate
into Medicare and Medicaid transitional coverage benefits,” states a summary document released with the draft. “As this
policy is still under development, Section 1162 currently contains a placeholder.”
The draft also includes a placeholder section on modernizing diagnostics regulations. The committee recently
released a white paper asking for feedback surrounding regulation of diagnostic tests, and lawmakers describe the need to
address this in a white paper accompanying the draft legislation.
“Following FDA’s proposed guidance altering the regulatory landscape for the review and oversight of laboratory
developed tests, a broader conversation about the need to modernize the regulation of diagnostics has reached a fever
pitch,” says the white paper released Tuesday. “The committee is encouraged by stakeholder efforts to build consensus
around what a modern framework should look like and is working toward the inclusion of such a proposal.”
Lawmakers also left a space in the bill for a provision on responsible communication of scientific and medical
developments. The summary document of the draft bill says the committee is working on a proposal that would “clarify
and rationalize” rules around what drug and device developers may say about their products, so that scientific and
medical developments can be shared with physicians, insurers and researchers.
“FDA’s current rules and policies governing what drug and device developers may say about their own products were
designed decades ago,” states the summary. “Since then, the way that medicine is practiced and delivered and the way
that information is communicated have fundamentally changed.”
Avalere Health pegged this as a potentially big development, saying the provision could be drafted to allow for
greater communication of scientific evidence to medical providers and health plans. “If enacted, this could create new
opportunities for product value discussions across the health care system,” says the group.
Another forthcoming section will address the interoperability of health technology, which Rep. Michael Burgess
(R-TX) says his office will continue to work on in the next several months. The lawmaker told Inside Health Policy that
legislation surrounding interoperability is a “substantial legislative undertaking.”
Another yet-to-be-drafted section of the bill will address FDA hiring, travel and training. — Erin Durkin
Draft E&C Bill Includes Medicare Reforms . . . begins on page one
would help “support continued innovation at our federal public health agencies,” and the discussion is ongoing.
Rep. Diana DeGette (D-CO) had been spearheading the 21st Century Cures Initiative, alongside Upton, but on
Tuesday said she did not endorse the discussion draft. The committee’s ranking Democrat, Frank Pallone (NJ), said he
was “disappointed that the discussion document released today by Chairman Upton does not reflect true bipartisan
collaboration.” Neither lawmaker identified specific provisions of concerns.
While the discussion draft had been anticipated to lay out FDA product approval reforms, the draft also lays out a
wide range of reforms to CMS’ reimbursement and coverage decisions.
One provision would look at CMS’ coverage with evidence development process. Coverage with evidence
development was created as a way to get new, promising products and procedures to Medicare beneficiaries earlier even
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when CMS wants more evidence before agreeing to cover them indefinitely. When using CED, CMS can continue to
researching services and products to decide if the agency will continue covering them. Stakeholders in 2012 asked CMS
for a faster, simpler process for when to include CED in a national coverage decision and also said there appeared to be
little cooperation between CMS and FDA around post-market studies.
A fact sheet on the draft says the bill will “address the long and sometimes costly process that new technology
developers must go through to secure CMS coverage, while reducing seniors’ medical costs by allowing for Medicare
beneficiaries to secure coverage from the program for products that are the subject of the clinical trial in which they
participate.”
CMS in November signaled in final guidance that the agency plans to increasingly rely on coverage with evidence
development, though there was an earlier expectation that the agency would use the policy infrequently with new technologies.
The draft also looks to expand telehealth services under Medicare Parts A and B. The discussion draft says that
for certain services providers would be paid the same for treating patients through telehealth as they would for seeing the
patient in person, though there are limits on how much Medicare overall could spend.
The 21st Century Cures draft bill also asks whether there are ways the National Coverage Determination and
Local Coverage Determination process can work better for both the administration and Medicare beneficiaries, and
asks for input. The provision also requires that Medicare Administrative Contractors have a timely process for developing
LCDs that includes opportunities for public comment and sharing decisions with the public. Any final LCD would also
have to include the contractor’s response to comments on the proposed LCD and the evidence and rationale used by the
contractor to make their final determination.
Upton’s discussion draft would also create “safe pharmacy networks,” which would lock certain beneficiaries
who use Part D coverage for certain frequently abused drugs into certain pharmacies for these prescriptions. House Ways
& Means health subcommittee Chair Kevin Brady (R-TX) also included a proposal to lock beneficiaries suspected of
abusing certain drugs into a pharmacy or pharmacies or to one or more providers in his Medicare program integrity bill,
which was introduced late last year.
The 21st Century Cures discussion draft also allows Medicare to suspend Part D payments to pharmacies
facing credible allegations of fraud, improve activities of Medicare Drug Integrity Contractors and require e-prescribing for coverage of covered Part D drugs.
Another provision would lay out the maximum out-of-pocket cost, including deductible and cost sharing, a
Part B Medicare beneficiary could expect to pay at different places where they could receive care. The fact sheet says
this will allow seniors to better identify the costs they could face for different treatments and to “pick the service that is
right for them and their budget.”
The draft also looks to reform Medicare coverage requirements for certain disposable medical equipment that
acts as a substitute for durable medical equipment. It would also create an ombudsman where medical device and
pharmaceutical companies could appeal decisions and where they could get the reasoning behind Medicare’s coverage
decisions.
The draft also includes provisions to:
• Add more transparency to the Inpatient Prospective Payment System’s new technology add-on payment.
• Require CMS to analyze and seek public input on how proposed Medicare pay policies would affect provider and
payer consolidation.
• Clarify the Continuing Medical Education Sunshine Act exemption.
• Establish a Medicaid and Children’s Health Insurance Program care coordination program for children with
medically complex conditions.
—Michelle M. Stein
INSIDE CMS — www.InsideHealthPolicy.com — January 29, 2015
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Gov. Pence Breaks New ground On Medicaid . . . begins on page one
in Medicaid to 60,000 residents, and the Healthy Indiana Plan 2.0, which begins Feb. 1, eliminates that cap. The state
expects to cover about 350,000 people.
Indiana’s plan, based on the state’s existing Medicaid plan, would cover those earning up to 138 percent of the
federal poverty level (FPL). Enrollees will be funneled into two programs: Healthy Indiana Plan Plus, a broader plan for
those willing to contribute up to 2 percent of their income to a health savings account used to cover initial bills, and
Healthy Indiana Plan Basic, which meets the minimum Medicaid coverage rules and still requires beneficiaries pay costsharing up to 5 percent of their income.
Individuals who fail to contribute to the health savings account after starting the program face different consequences
based on their income and health. Those with incomes above the poverty level are disenrolled after 60 days, then blocked
from coverage for six months. Those under the poverty line are moved from the Plus plan to the Basic plan. Exceptions
are made for the medically frail.
The plan charges $8 co-pays for non-emergency use of the emergency room on the first visit and $25 for the second
visit. The demonstration requires a control group to assess whether the cost-sharing reduces unnecessary use of the ER.
Indiana will raise their Medicaid reimbursement rates by 25 percent, paying doctors on par Medicare.
Primary care physicians are looking for ways to increase Medicaid pay now that the Affordable Care Act’s Medicare pay
parity measure has expired, and the Indiana plan offers a new route to that goal.
Matt Salo, executive director for the National Association of State Medicaid Directors, said approval of the plan
could have a big impact on both existing state Medicaid plans and on the 22 states that have yet to expand the program.
He said the decision comes as a surprise because the administration didn’t support it when Indiana proposed it a year
and a half ago. He said the federal government may be more flexible as the president’s term winds down and many states
continue resisting Medicaid expansion. But that flexibility and the approval of Indiana’s plan may put pressure on the
holdout states and Republican leadership.
“It gets harder and harder for other Republicans to say, ‘Oh, that’s just a bunch of soft Republicans that expanded
Medicaid.’ Gov. Pence is legit conservative. This says it’s OK for conservatives to go ahead and expand Medicaid,” Salo said.
Salo said states that have already expanded Medicaid may look to amend their plans. This could include Arkansas,
which is in the process of reevaluating their private option approach to Medicaid expansion.
“We’re going to see states say, ‘We didn’t know that was on the menu. If we had known we could do that we would
have done it,”’ he said.
Indiana’s expansion is not the first to use a health savings account model, but Salo said this is the first one that has
real teeth. CMS rejected other proposals, including one by Iowa, to penalize residents who fall behind on payments. This
is also the first time a state has been allowed to lock those residents out of the program for six months instead of allowing
them to immediately reenroll.
Salo said the different options and penalties in the Indiana plan for those above the poverty line could be an aspect of
future proposals.
“What this expansion looks like below 100 percent of federal poverty and above 100 percent may look very different,” Salo said.
“We’re well aware of the fact that other states are interested to see how our negotiations with Health and Human
Services shook out,” said Jim Gavin, spokesman for Indiana’s Family and Social Services Administration, though he
declined to say which states might be most interested.
Salo said he heard Tennessee and Utah have already gotten verbal agreement from HHS on a number of core
concepts they’d like to implement, and Idaho, Wyoming, Montana and Alaska are also about to enter into negotiations
and may seek to go about them in a similar manner to Indiana. Salo said states such as Florida, and perhaps Alabama and
Texas, might be open to similar options.
A spokesman for Medicaid Health Plans of America, which represents manage care organizations, said they are
supportive of the plan’s expansion model and believe it should encourage states like Tennessee move forward with expansion.
Indiana’s Medicaid system continues to operate through managed care providers. In addition to enrollee’s 2 percent
contributions, the state will fund the health savings accounts up to $2,500 annually. The managed care organization will
be responsible for paying providers out of that account. Expenses after the initial $2,500 will be covered by insurance.
Once the 100 percent federal match ends, Indiana will pay its portions of the cost with existing taxes on hospitals and cigarettes.
Although the plan is largely what the state proposed, Pence did not get everything he wanted. CMS rejected
part of the plan that would have required enrollees to work in order to be eligible for benefits. Indiana will start a separate
Gateway to Work program that will connect members of the Health Indiana Plan to the state’s workforce training programs, work search resources and potential employers.
The state will also soon start the Healthy Indiana Plan Link option, in which those over 21 years old who earn up to
138 percent of poverty can receive up to $4,000 in their state-run health savings account to use for the monthly premiums
of their employer-offered insurance. — Rebecca Beitsch
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Seniors, Unions Want Gov’t Rx Price Controls Added To ‘Cures’ Bill
Seniors advocates and labor unions are urging House lawmakers to include in their upcoming 21st Century Cures bill
provisions that would control the cost of innovative drugs in order to protect both seniors and taxpayers from skyrocketing prices for treatments. In a letter sent Wednesday (Jan. 21) to House Energy and Commerce chair Frank Upton (R-MI)
and Rep. Diana DeGette (D-CO), who are spearheading the cures initiative, 11 groups ask that lawmakers use caution if
expanding market exclusivity; address drug prices as a barrier to access; work closely with FDA on any clinical trial
reforms; hike funding for FDA and the National Institutes of Health; require that companies reveal drug development
costs; and strengthen the Medicare Part D appeals process by including the Part D Beneficiary Appeals Fairness Act
introduced in the last Congress. The letter also calls for giving the HHS secretary at the very least limited authority to
negotiate drug prices in the Medicare program.
Signatories to the letter, which include AARP, Medicare Rights Center, American Federation of State, County and
Municiapl Employees and AFL-CIO, say they support the Cures Initiative’s goals of promoting innovation and ensuring
new medicines, devices and other health care therapies are readily explored and made available to patients, but these
goals must be balanced with safety, accessibility and affordability especially given the financial restraints many Medicare
beneficiaries find themselves in. They say spurring innovation alone won’t ensure pharmaceutical access unless drug
prices are also tackled.
The seniors advocates and unions note in their letter the more-than $100,000 annual cost of 12 new cancer therapies
and the high cost of new hepatitis C drugs Sovaldi, Harvoni and Viekira Pak — $84,000, $94,500, and $83,320 respectively. They go on to point out that half of Medicare beneficiaries have incomes below $23,500 a year and a quarter have
incomes less than $14,400 a year, noting that the annual out-of-pocket health care costs for seniors in 2012 was $5,118.
“Given the limited incomes for a large percentage of the Medicare population, the high costs often associated with
new, specialized prescription drugs can create a serious barrier to access. Access to safe, effective, life-saving cures and
treatments must be accessible to all those afflicted, regardless of income,” the letter says.
The letter asks that lawmakers “proceed with caution in expanding incentives,” saying that proposals to expand
market exclusivity should only be used in “extremely limited circumstances and only to reward drug companies for
innovations that substantially improve on existing therapies.” The letter contends that there is little evidence that market
exclusivity results in increased innovation, and that current incentives may favor market potential and profitability.
“With this in mind, we oppose any new provisions that are not targeted in nature and would increase the current
exclusivity period for new chemical entities and/or grant additional exclusivity for changes to existing products,” the
letter says.
Additionally, the letter says it is “critically important” that accelerated pathways don’t compromise safety and
effectiveness, and that lawmakers work with FDA to “carefully consider” changes to clinical trials.
In order to help control costs so that they aren’t a barrier to patients receiving new medicines the letter
supports giving the HHS secretary the ability to negotiate drug prices for the Medicare program. At the very least
the letter calls for limited authority for HHS to “negotiate drug prices when an innovative new drug therapy addressing a
great need does not have an alternative on the market.”
The letter notes that states are able to negotiate prices for their Medicaid programs, but HHS cannot do the same for
Medicare.
“We also encourage you to examine legislative solutions such as the Medicare Drug Savings Act, which would
require manufacturers to provide Part D drugs to low-income people at the same prices they provide to Medicaid beneficiaries,” the letter says.
The letter calls for the upcoming bill to increase funding for FDA and NIH. It notes that the spending bill passed
in December gives NIH funding a less than 1 percent increase that falls fall short of the expected rise in research costs in
2015, and that FDA has been given many new obligations under the Food and Drug Administration Safety and Innovation
Act of 2012 and the Prescription Drug and User Fee Act that same year, while the agency is working with massive
staffing shortages.
As drug manufacturers site research and development costs as a primary driver of high prices, the letter calls
for requiring greater transparency of manufacturers’ actual drug development costs as a new lever to spur innovation and competition.
“[I]ncreased transparency could provide much-needed clarity and a better understanding of the industry’s pricing
methods. At the same time, as more high cost drug therapies come on the market, it is critical to increase transparency in
the marketplace to empower consumers with more price information to place downward pressure on prices,” the letter
says.
The letter also calls for strengthening the Medicare Part D appeals process to make it easier for beneficiaries
to navigate. It encourages lawmakers to promote increased transparency and data collection on plan-specific appeals,
INSIDE CMS — www.InsideHealthPolicy.com — January 29, 2015
15
and look for opportunities to streamline the appeals process “such as by treating the presentation of a prescription at the
pharmacy counter as a coverage determination.’
It also asks that the “Cures” legislation include the bipartisan Part D Beneficiary Appeals Fairness Act, introduced in
both the House and Senate in 2013, that would allow beneficiaries to request an exception to plans’ tiered cost-sharing
structures, especially for high-cost specialty medications.
“Our organizations have long observed that people with Medicare struggle to navigate an overly onerous Part D
appeals process, a conclusion recently supported by the Medicare Payment Advisory Commission,” the letter says.
— Todd Allen Wilson
Draft Does Not Deal With Meaningful Use . . . begins on page one
Health Information Technology will publish a rule at the same time, and ONC is also expected to release an
interoperability roadmap in the near future.
Burgess says his office will be taking the ONC’s work on interoperability into account, but he doesn’t “feel bound by
the structure of the meaningful use program as it currently exists as we undertake this effort.”
While some say they are pleased the 21st Century Cures draft legislation indicates lawmakers plan to address
interoperability, others say they are disappointed the initiative does not yet address the so-called meaningful use of
electronic health records program.
The draft legislative language says the section on interoperability is “to be supplied,” and a fact sheet on the discussion
draft says that Burgess “continues to work toward the goal of a national interoperable health information infrastructure.”
Burgess told Inside Health Policy the his office has been working on interoperability for health information
technology for several months, and that it is a “substantial legislative undertaking” that will continue for the next
several months and will include stakeholder feedback.
“I am happy that chairman Upton has asked me to work with him and hopefully across the aisle to develop language
that actually will help build a foundation on which the promise of EHRs and new technologies can realize their full
potential,” Burgess said in an email.
A white paper released alongside the discussion draft notes the draft isn’t complete and says discussions will continue.
Health IT Now, a broad coalition of patient groups, providers, payers, vendors and others, says they are happy that
lawmakers plan to address interoperability and are encouraged by the draft. But the College of Health Information
Management Executives says that while many of the 21st Century Cures draft provisions will be helpful, “we are concerned this discussion draft neglects to mention one of the marquee policy drivers meant to modernize the US health care
system — Meaningful Use.”
“It is unclear how the Committee could envision a 21st Century healthcare system that delivers cures to
patients and access to data without a robust health IT infrastructure, facilitated through participation in the Meaningful Use program,” CHIME says.
CHIME says meaningful use is the federal government’s strongest policy lever to modernize healthcare delivery, and
later drafts of the 21st Century Cures legislation should address it. Stakeholders, including CHIME, have been asking for
more flexibility around the reporting period for 2015. — Michelle M. Stein
HHS: 9.5M Now Enrolled Via State, Federal Insurance Exchanges
HHS announced Tuesday that 9.5 million consumers chose or were automatically re-enrolled in health insurance
plans through state and federal marketplaces in the first two months of 2015 open enrollment, including more than 7.1
million in states using Healthcare.gov and 2.4 million in states with their own exchange platforms.
The department also announced that 2.5 million young adults under age 35 have signed up for coverage as several
stakeholders group are preparing to target that population in the coming days.
In response to the announcement, Avalere Health says “it seems safe to say that exchange enrollees will hit the
Administration’s goal of 9.1 million paid enrollees by the end of 2015 open enrollment; however, enrollment is likely to
fall short of the Congressional Budget Office’s latest prediction of 12 million enrollees.”
The data included in HHS’ second detailed enrollment report runs through Jan. 16 for the 37 states using
Healthcare.gov or partnership exchanges, and through Jan. 17 for 12 states and the District of Columbia, which use
locally run marketplaces. California’s data runs through Jan. 18. The report does not include effectuated enrollment.
Of those who chose a plan through Healthcare.gov, HHS said in a press release:
• 87 percent selected a plan with financial assistance.
• 35 percent or 2.5 million were under 35 years of age.
• 58 percent (4.16 million) reenrolled in a marketplace plan.
• 42 percent (3 million) selected a plan for the first time.
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INSIDE CMS — www.InsideHealthPolicy.com — January 29, 2015
Of those enrolled in plans through state-based exchanges:
• Around 300,000 exchange plan selections are in the four states reporting data on new consumers and consumers
actively reenrolling in marketplace coverage — Hawaii, Idaho, Maryland and Massachusetts.
• Nearly 2.1 million marketplace plan selections are in the 10 states reporting data on new enrollees, consumers
actively reenrolling in marketplace coverage and automatic reenrollees — California, Colorado, Connecticut, District of
Columbia, Kentucky, Minnesota, New York, Rhode Island, Vermont, and Washington.
• California and Florida have had the highest plan selections to date at 1.2 million and nearly 1.3 million, respectively.
Massachusetts extended its payment deadline for coverage beginning Feb. 1 to Jan. 30 because of the recent
winter storm. The state’s Health Connector reported nearly 407,000 total eligibility determinations by Jan. 25,
including more than 88,000 who qualified for QHPs and more than 206,000 who qualified for its MassHealth
Medicaid program.
Oregon’s Insurance Division reported Jan. 23 that nearly 176,000 residents had enrolled in plans from Nov. 15
through Jan. 18, more than half of whom found a plan outside of Healthcare.gov. Around 90,000 people chose an offexchange plan, while nearly 86,000 found a plan on the exchange.
Kentucky’s kynect exchange also said Jan. 23 that nearly 93,000 new or renewed private plan enrollments came
through the state exchange in the 2015 open enrollment period. More than 38,000 residents enrolled in Medicaid as of
Jan. 22.
Minnesota passed the 100,000 mark with 100,754 enrolled in health insurance through MNsure as of Jan. 20. Nearly
44,000 residents are enrolled in a QHP, more than 16,000 in Medicaid through MinnesotaCare and 40,441 in Medical
Assistance. The state exchange reached the same point a full month later during 2014 open enrollment, though the sign-up
period started six weeks earlier than it did for 2015.
More than 185,000 Marylanders enrolled through the state’s Health Connection exchange as of Jan. 22, including
nearly 94,000 in private QHPs and more than 91,000 in Medicaid.
In Rhode Island, HealthSource RI had enrolled 7,660 new customers in a plan by Jan. 17, nearly 5,700 of whom
had paid their first month’s premium. More than 21,000 customers renewed their coverage, and 18,460 paid for that
renewal. The state has enrolled a total of nearly 29,000 residents this year, more than 24,000 of whom effectuated
their plan.
Vermont Health Connect officials said that as of Jan. 19, more than 9,000 people had “checked out” a 2015 plan,
meaning that they must still make their first premium payment and have their selection processed before their plan is
activated. While 3,791 people have chosen a QHP, 2,506 completed the enrollment process. Only about 200 of the 5,663
people who signed up for Medicaid still need to finalize their enrollment. — Rachel S. Karas
IRS Waives Penalties For Late Repayments Of Excess ACA Tax Credits
Individuals who were overpaid advanced payment tax credits (APTCs) to purchase exchange coverage will not
receive additional penalties if they are unable to pay in full by April 15 under a new waiver the IRS quietly announced
Monday. Typically, individuals must pay in full by the due date or be subject to a penalty for failure to pay or
underpaying.
“This is the first year Americans will take some additional steps related to the Affordable Care Act when they file
their taxes, and the Administration is committed to making the process as smooth as possible.,” says a Treasury spokesperson. “We are providing tools and information necessary for individuals to understand the new system. Starting this
year, just like taxpayers reconcile their tax withholding with their actual tax liability and get refunds or make an additional payment accordingly, individuals benefiting from tax credits for Health Insurance Marketplace coverage will
follow the same process,” the spokesperson adds.
The staffer continues: “Normally, taxpayers may owe certain penalties for late payments or underpayment of estimated tax. However, to help smooth the process for the first year of the Affordable Care Act, the IRS will waive these
penalties for eligible taxpayers if they resulted from repayment of excess advance payments of the premium tax credit for
Marketplace coverage. Taxpayers who receive a waiver for this late payment penalty are still required to pay their full tax
liability, including any interest. They will also have access to the available repayment options, such as a payment plan or
an installment agreement,” the aide said.
In order to receive the waiver, a taxpayer must be up to date on payments and must have reported the excess payments to the IRS in a timely fashion.
The exchange provided tax credits based on estimated income which could differ from the actual income and create a
discrepancy. This difference is reconciled via the IRS form.
“The IRS has discretionary authority to grant relief from both of these penalties. It obviously decided to exercise this
discretion with respect to premium tax credit overpayments for 2014 because the reconciliation process is new and
individuals have no prior experience with it,” health expert Tim Jost wrote in a Health Affairs blog. “ There are no
INSIDE CMS — www.InsideHealthPolicy.com — January 29, 2015
17
assurances that the IRS will waive the penalties again for 2015, however. Enrollees receiving tax credits should be careful
to ensure that their eligibility information is kept up to date with the marketplace to avoid an overpayment.
Under the law, individuals who received excess payments must re-pay the federal government.
Congress had originally limited the subsidy recapture amount to $400 per family, but later increased the cap to
$2,500 per family as a way to offset the 2010 Medicare physician payment fix, and later to help cover the costs of
repealing the ACA’s unpopular 1099 reporting provision. — Amy Lotven
ACA Cost Projections Drop By $101M; Enrollment To Rise
The Congressional Budget Office Monday (Jan. 26) lowered its expectations of exchange enrollment from 13 million
Americans to 12 million who are projected to buy a health care plan through a state or federal marketplace in 2015. The
ACA’s coverage provisions will cost the federal government $76 billion in 2015 and will grow to $145 billion in 2022
before leveling off, likely due to a policy that will limit the government spending on subsidies as well as downward
pressure from the so-called “Cadillac tax” on high cost plans, CBO says.
That marks a $101 billion, or 7 percent, drop from an April 2014 projection which calculated the net costs by 2024,
CBO says.
CBO also for the first time broke its enrollment projections into subsidized and unsubsidized numbers, possibly due
to the King v. Burwell U.S. Supreme Court case that will rule on whether the Treasury Department can offer tax credits to
qualifying low-income customers who buy health insurance through the federal exchange. CBO believes that of the 12
million consumers, three-quarters, or 9 million, will have the subsidies.
CBO says it reduced its enrollment estimates because attrition from on-exchange plans during calendar 2014
was greater than the administration had anticipated, and because enrollment between Nov. 15 and Dec. 15 was also
lower than expected. Although, enrollment had peaked in 2014 when CMS reported 8 million people had selected
plans, only about 6 million, on average, were covered through the exchanges over the course of the calendar year,
CBO said.
HHS this week said that 7.1 million people had selected a plan through Healthcare.gov as of Jan. 16. Officials
expect to see an enrollment surge before the final deadline of open enrollment on Feb. 15.
CBO also projects average annual enrollment of 21 million people in 2016 and 24 million to 25 million people each
year through 2024. Around three-quarters of those enrollees are expected to receive insurance subsidies, the report said.
CBO also lowered the cost projections for the insurance coverage provisions.
Changes that contributed to the $101 billion reduction include a $68 billion drop in the net cost of exchange subsidies and related spending and revenues; a $59 billion increase in federal spending for Medicaid and CHIP; and a $97
billion net increase in revenues due to expected changes in employer-based coverage.
Subsidies in the exchanges are expected to average around $5,000 per recipient from 2016 to 2018 and could reach
almost $8,000 in 2025.
The net costs of the coverage provisions are expected to grow from $76b billion in 2015 to $145 billion in 2022, at
which point the costs are expected to level off.
CBO attributes the projected leveling off to two policies: the indexing of the ACA subsidies and the excise tax
on the high-cost plans — or the Cadillac tax. “The ACA specifies that if total exchange subsidies exceed a certain
threshold in any year after 2017—a condition that CBO and JCT expect may be satisfied in some years—people will be
required to pay a larger share of premiums in the following year than would otherwise be the case thus restraining the
amount that the federal government pays in subsidies,” the outlook says.
“In addition, CBO and JCT expect that premiums for health insurance will tend to increase more rapidly than the
threshold for determining liability for the high-premium excise tax, so the tax will affect an increasing share of coverage
offered through employers and thus generate rising revenues,” the report adds.
CBO found that the annual number of uninsured Americans will drop from 36 million non-elderly individuals in
2015 to between 29 million and 31 million non-elderly people by 2025. Without passage of the ACA, 24 million to 27
million more individuals would have been uninsured in that time period.
Under current law, exchange subsidies and related spending and revenues will total a net cost of $32 billion in fiscal
2015. The estimate is preliminary because the average number of who will be subsidized this fiscal year is still unknown,
as are demographics and income data for those who were subsidized last year.
CBO and JCT expect to revise estimates of premiums in the baseline projections this spring. They anticipate lowering the projected average costs of premiums and the federal costs of exchange subsidies from 2016 to 2025. The current
estimate for the second-cheapest silver plan is around $4,000 in calendar 2015. — Rachel S. Karas
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Excerpts of Inside Health Policy Blogs
Thomas Mason Joins ONC As Chief Medical
Officer
The Office of the National Coordinator for Health IT
announced Wednesday (Jan. 28) that Thomas Mason will be
the office’s new chief medical officer.
Mason will “lead and champion clinical oversight of
ONC programs and clinical coordination within ONC,”
National Coordinator for HIT and Acting Assistant Secretary
for Health Karen DeSalvo says in an email to staff. He will
also work with physician organizations, she adds.
Mason works with the Cook County Health and Hospitals System in Chicago.
“Tom, as am I, is a huge champion for advancing a
person-centered, interoperable, learning health system that
results in better care, better quality and better outcomes for
individual, community and population health,” DeSalvo
says. — Michelle Stein
Carper Tells Finance Panel Bipartisanship
Possible In Two Reform Areas
Sen. Tom Carper (D-DE) told Senate Finance members
Wednesday (Jan. 28) that he thinks bipartisan agreement is
possible in two Medicare and Medicaid areas: behavioral
health interventions for foster children in the Medicaid
program and Medicare program integrity.
Carper urged the committee to take up a set of proposals
similar to the bipartisan “Preventing and Reducing Improper
Medicare and Medicaid Expenditures Act” (PRIME). The
wide-ranging bill was previously introduced by Rep. Peter
Roskam (R-IL), and included provisions requiring HHS to
prioritize Medicare payment vulnerabilities based on the risk
to the program, and giving 5 percent of recoveries to the HHS
Office of Inspector General to investigate improper Medicare
or Medicaid payments, among many others.
“By cracking down on vulnerabilities that put tax dollars
at risk to waste, fraud and abuse, this measure would ensure
that Medicare and Medicaid remain sustainable for years to
come, and continue to provide quality care and services on
which so many Americans depend,” Carper said.
Parts of the PRIME Act were included in the Senate
Finance Committee’s version of a replacement to the flawed
Medicare physician pay formula, as well as House Ways &
Means health subcommittee Chair Kevin Brady’s (R-TX).
“Protecting the Integrity of Medicare Act,” which was
introduced late last session.
Carper also proposed a requirement for HHS to issue
guidance to states clarifying coverage of behavioral health
care interventions for children in foster care that are also
Medicaid beneficiaries. Carper says clarifying behavioral
health interventions that could help resolve underlying issues
could also lead to cut backs on psychotropic drugs that the
Government Accountability Office has found are often overprescribed for this population. The guidance would encourage
states to offer qualitative treatments that have been shown to
be effective in treating behavioral health issues, Caper said.
“It is critical that we understand and treat these
underlying problems affecting these children first, through
qualitative care, and not simply through medication,”
Carper said. — Michelle M. Stein
Bills Loosen Requirements For Rural And Critical
Access Hospitals
Two bills affecting rural hospitals were introduced in the
Senate Tuesday (Jan. 28), including one allowing more
leniency in terms of physician supervision for outpatient
services in rural areas and another removing the 96-hour
requirement for critical access hospitals.
Medicare currently requires physicians to certify that
patients admitted to a CAH will be discharged or transferred
to another hospital within 96 hours in order for the CAH to
receive Medicare payments. Under “The Critical Access
Hospital Relief Act” (S. 258), a physician would not be
required to state that the patient will be discharged or
transferred in less than 96 hours in order for the hospital to be
paid. Hospitals would continue to need to meet the other
certification requirements, including a 96-hour annual
average length of stay.
The bill is sponsored by Sens. Pat Roberts (R-KS) and
Jon Tester (D-MT). Rep. Adrian Smith (R-NE) previously
introduced companion legislation in the House.
The American Hospital Association said in a recent letter
to Congress that critical access hospitals offer some medical
services that have standard lengths of stay greater than 96
hours and the financial pressure from the 96-hour requirement affects the hospitals’ ability to serve rural communities.
“The Protecting Access to Rural Therapy Services Act”
(S. 257) would loosen regulations requiring direct supervision
of outpatient therapeutic services. It also would create an
advisory panel to establish an exceptions process for risky
and complex outpatient services which require a higher, direct
level of supervision. The legislation would also hold critical
access hospitals harmless from any civil or criminal action for
failure to meet CMS’ supervision requirements from 2001
through 2015. — Rebecca Beitsch
Bipartisan Bill Improves Care For Medicaid Kids
With Complex Conditions
A group of bipartisan senators and representatives is
introducing a bill that would would help children on Medicaid with complex medical conditions get better treatment.
Medicaid covers approximately two-thirds of the 3
million children with complex medical conditions, such as
cancer, cystic fibrosis and congenital heart defects.
Medicaid’s state-by-state variability can create problems,
particularly due to gaps in coverage or when children seek
care across state lines for specialized services.
The Advancing Care for Exceptional Kids Act would
allow health care providers to form coordinated care networks
across state lines. By employing quality standards and
creating the networks, the bill is expected to save $13 billion
INSIDE CMS — www.InsideHealthPolicy.com — January 29, 2015
19
over 10 years by reducing unnecessary hospitalizations and
emergency room visits.
The ACE Kids Act is sponsored by Reps. Joe Barton (RTX), Kathy Castor (D-FL), Anna Eshoo (D-CA), Jaime
Herrera Beutler (R-WA), Gene Green (D-TX), and Dave
Reichert (R-WA) and Sens. Charles Grassley (R-IA) and
Michael Bennet (D-CO). — Rebecca Beitsch
Senate Finance Plans Hearing On HHS Budget,
ACA Implementation
The Senate Finance Committee will hold a hearing to
consider HHS’ budget request and examine the agency’s
operations – including the implementation of the Affordable
Care Act – on Wednesday (Feb. 4). Finance Committee Chair
Orrin Hatch (R-UT) announced Tuesday (Jan. 27) that HHS
Secretary Sylvia Burwell is expected to testify.
–Michelle M. Stein
DeLauro, Higgins Push Bill To Boost NIH
Funding, Adjust Budget Cap
Reps. Rosa DeLauro (D-CT) and Brian Higgins (DNY) introduced Monday (Jan. 26) a bill that would boost
the National Institutes of Health’s budget by 10 percent for
the first two years after enactment, garnering the support of
over 100 advocacy groups and research institutions.
Delauro is the ranking Democrat on the Appropriations
subcommittee in charge of HHS funding.
The legislation, “Accelerating Biomedical Research
Act,” which had Rep. Peter King (R-NY) as an original
cosponsor, creates a new budget cap adjustment so that any
funding provided in excess of $29.4 billion would trigger a
cap increase to accommodate the additional funding.
The bill will allow appropriators to increase NIH
funding by 10 percent for the first two years and about 6
percent each year thereafter through 2021.
“The historic 5-year doubling of Federal funding for
NIH ended in fiscal year 2003,” states the bill. “Despite the
widely recognized benefits of NIH-funded research, NIH
funding has declined by nearly 25 percent since then, when
adjusted for inflation.”
According to a press release from DeLauro’s office,
the bill is substantively the same legislation introduced by
the lawmaker in September. Her office said that a coalition
of over 100 advocacy groups and research institutions
support the legislation.
The American Cancer Society Cancer Action Network
(ACS CAN) hopes that the bill will prioritize cancer
research. “The bill would help to restore the NIH’s lost
purchasing power — precipitated by the decline of
regularly appropriated funds for research in recent years —
and would provide stable and predictable funding increases
to ensure that promising medical research would be
supported,” says ACS CAN President Chris Hansen in a
released statement.
House lawmakers have talked about either increasing or better targeting NIH funding as part of the Energy
and Commerce Committee’s upcoming 21st Century
Cures bill, but the details of the upcoming draft bill
remain unclear.— Erin Durkin
20
CMS Sets QHP Conference For Late February
CMS will hold a two-day conference for Qualified health
plan (QHP) issuers seeking to certification or re-certification
to participate in the federal exchanges the agency announced
Thursday. The Annual Health Plan Certification Conference
will take place in Baltimore Feb. 23-24.
Issues to be discussed at the conference include: the
certification process, rate review, market-wide reforms,
essential health benefits, actuarial value and cost-sharing
reduction calculations.
CMS outlined the timeline for the certification process in
a December draft letter. The agency proposed that the issuers
submit QHP applications starting March 16 through April 15.
Issuers in their Jan. 12 response urged CMS to push back the
date, saying that more time was needed to design plans and
develop accurate rates. America’s Health Insurance Plans
(AHIP) suggested a window of May 1 through June 1, while
Blue Cross Blue Shield said applications should be submitted
at least through May 15.
Insurers also urged CMS to finalize other guidance related
to plan design - including the final 2016 actuarial value calculator and methodology as soon as possible. CMS posted the final
AV calculator and other materials on Jan. 16. — Amy Lotven
Burwell, Butterfield Hopeful More States Will
Expand Medicaid
HHS Secretary Sylvia Burwell told an audience of health
care consumer advocates Thursday (Jan. 22) that the ACA is
working and she is hopeful more states will choose to expand
Medicaid in the coming year. Burwell, whose speech kicked
off Families USA’s annual conference Thursday (Jan. 22),
also stressed that delivery system and payment reform are the
next hurdle to improving health care.
Despite the differences of opinion on the Affordable
Care Act, there is “unanimous” agreement that the pre-ACA
system had under-delivered on quality, access and
affordability, Burwell said.
Burwell hopes to see all 50 states expand Medicaid in ways
that work for their residents and increase partnership with other
public and private groups. She reiterated that advocates
should continue their work to help consumers understand the
process of obtaining and effectively using health insurance.
Rep. G.K. Butterfield (D-NC), chair of the Congressional
Black Caucus and co-chair of the State Medicaid Expansion
Caucus, said it makes “no sense not to expand” Medicaid and
pointed to a case where a local hospital closed because its
business model depended on bringing in more low-income
patients through the expansion.
He stressed that two-thirds of the uninsured now live in
non-expansion states, and said he hopes that the 35 members
of his caucus can work with others in both parties to bring
more states on board.
Alan Weil, editor-in-chief of Health Affairs, echoed his
support for state flexibility, saying that some states will only
expand Medicaid if they feel like they have a larger hand in it
than the federal government. As states have to kick in more
funding after 2016, though, he said the politics of supporting
expansion shift.
Weil said that the Medicaid expansion and the funding
for the Children’s Health Insurance Program (CHIP) are both
pressing needs for advocates. CHIP funding is set to expire
this fall if Congress does not act. — Rachel S. Karas
INSIDE CMS — www.InsideHealthPolicy.com — January 29, 2015
CMS Unveils Number Of Adult Medicaid Enrollees Linked To Expansion
The Medicaid program had about 4.8 million beneficiaries enrolled in the new adult group created by the ACA’s
Medicaid expansion by the end of the first quarter of 2014, out of which 3.2 million (or two-thirds) were “newly eligible,” and another 1.5 million were not, according to numbers released by CMS on Friday (Jan. 23). This is the first time
CMS has broken out that data since the Medicaid expansion went into effect; departing CMS Administrator Marilyn
Tavenner told Congress members in December that the information could be out within a month.
The data is a state-reported account of unduplicated individuals enrolled at any time during each month of the
quarterly reporting period, and includes the break-out of the newly eligible adults only in states that adopted the Medicaid
expansion, CMS says. Under the expansion, the federal government will pay 100 percent of the costs for states to cover
all residents, including adults, earning up to 138 percent of the poverty level until 2016 after which the federal government will kick in about 90 percent. The report includes numbers from January, February and March 2014 that were
reported to CMS by states in April 2014.
The data show that in that January there were about 3.9 million adult enrollees, out of which 2.5 million (or
about 65 percent) were “newly eligible,” meaning that the federal government will be responsible for 100 percent of
their claims. The remaining 1.4 million were not newly eligible. In February, there were more than 4.2 million enrollees in
the adult group, out of which about 2.8 million were newly eligible and 1.5 million were not.
The data show that some states had far more newly eligible enrollees and others had the opposite. New York, for
example, had 876,019 individuals in the new adult group as of March, out of which only 70,141 were in the newly
eligible category. In Colorado, however, 187,838 of the 212,502 adult group enrollees were newly eligible.
In total there were 54 million Medicaid enrollees by the end of March 2014, including new enrollees.
Dee Mahan, Medicaid program director for Families USA, says that her group is happy to see that nearly 5 million
people, many who had previously had no other options, have gotten coverage due to the expansion. She says that the
numbers of people who had been eligible but not enrolled in coverage prior to the ACA shows how the news surrounding
the enrollment provides a real opportunity for more people to learn that coverage is available.
Still, she says, the data show that there are still a lot of people who could be helped by the expansion and it’s
unfortunate that not every state has taken advantage of the ACA’s provision.
Mahan said Families also plans to use the new data to identify gaps and successes in state outreach efforts. Staff
plans to compare CMS’ enrollment data to information Families has on eligible enrollees in each state to see if any states
may be lagging in outreach and leaving people behind. Conversely, Families hopes to pinpoint states that have been the
most successful with enrollment to find out what they’ve been doing right, she said.
The data do not include California, North Dakota or the District of Columbia where officials are still working to
validate the numbers. The data do also not include information on the “spillover effect” of increased expansion in other
eligibility groups that is happening due to the simplifications of the application process, CMS says.
“The Affordable Care Act will continue to provide accessible, affordable, quality health care for millions of Americans, in part through the expansion of the Medicaid program. As part of our commitment to transparency, we are releasing
enrollment data as of March 2014 on individuals who gained health coverage under the new Medicaid eligibility category,” CMS said in a statement on the report.
The agency notes that the data may not perfectly align with other sources of enrollment data, but will still help to
provide a complete picture of the impact of the Medicaid expansion. The data complements a recent CMS report showing
that 9.7 million additional Americans were covered under Medicaid and CHIP in October 2014 as compared to a preACA baseline, CMS says. — Amy Lotven
Congress Likely To Patch ACA If Subsidies Ruled Illegal
The GOP-led Congress would likely act on a short-term legislative fix to the health care law that would allow federal
subsidies to continue flowing through the federal exchanges up to a set date, albeit in exchange for certain concessions
from Democrats in the event that the Supreme Court rules against the administration in King v. Burwell, several sources
are suggesting.
On Friday, both Joe Antos, health care scholar at the conservative American Enterprise Institute, and Judy Feder, a
former Clinton staffer and public policy professor at Georgetown University, agreed that the government has to find some
type of “workaround” if the administration loses in King v. Burwell, for which oral arguments are set to begin March 4.
And on Monday, Sen. John Barrasso (R-WY) said in an interview with the Washington Examiner that if the Supreme
Court rules against the subsidies, “Obama would likely push Republicans to pass a simple technical ‘fix’ that would
change the language of the statute to allow for subsidies to be used toward purchasing coverage on the federal exchange.”
Barrasso said he doesn’t see a permanent measure passing but suggested a temporary fix was possible if the president
made some concessions.
Republicans are likely to demand that Obama agree on changes to the law that would end the individual mandate and
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other provisions widely disliked by the GOP in exchange for a “temporary restoration of the subsidies,” Barrasso told the
Examiner.
“‘This president is going to try to force Republicans to pass a one-page fix that says, ‘make all that he has done
illegal, and make it legal with a one-page bill,’” Barrasso said. “‘I don’t see Republicans doing that. I think if he does
want to continue subsidies for some period of time — which will be a limited period of time — that he’s going to have to
agree to make some significant, what he would consider concessions, that I would consider differently. I’d consider as
removing more damaging parts of the healthcare law. And that would be eliminating the mandates, giving more freedom
and flexibility to those 37 states who haven’t set up their own exchanges.’”
Multiple bills aiming to change parts of the ACA are already filed, and Barrasso said he is working on transitional legislation with Senate committees, the Republican Policy Committee and House Ways and Means Chairman Rep.
Paul Ryan (R-WI).
“‘I think between now and the time the Court rules, we need to show the American people that we want to limit the
damage done by the healthcare law and prevent future damage,’” Barrasso told the Examiner. “‘There are a number of
people who have gotten subsidies. We want to make sure that there is a transition for them as we try to transition the
entire healthcare law to a more free market system.’”
According to a recent Urban Institute study, about 8.2 million people would become uninsured if the Supreme Court
rules against the administration. The majority if those impacted would be white, working full or part-time and living in
the South, according to the report.
Feder said she doesn’t see a major negotiation on the horizon. “They can’t trade away a lot. They have to be looking
at a workaround,” she said, adding that a short-term legislative fix may be best to keep fighting another day.
“I’m rooting for a surprisingly good thing,” Feder said of the lawsuit. “It seems to me it’s a freaking disaster … if you
don’t have the subsidy leg, then the rest comes apart.”
Joe Antos suggested that if the subsidies are pulled, perhaps a deal could be struck in which “states that didn’t
want to do this could be exempted from all the ACA rules and requirements, but they still would get the responsibility
of dealing with people losing insurance. “They just have to do it their way. Truly localized, exactly the same objectives
down to the state level. … That would be very interesting for Republicans,” Antos said.
Local officials are going to pressure their congressional representatives for a solution because they don’t want to be
saddled with fixing the health care system post-King, Antos said.
Barrasso believes President Obama would try to bully governors in states that use the federal exchange to set up their
own state marketplaces, or redefine state exchanges to say that all marketplaces qualify to give subsidies.
Though Antos and Feder agreed that the health care system is still a long way from providing affordable access to
meaningful care for everyone, they were less harmonious on ACA implementation thus far.
“I have been astounded at how successful the Affordable Care Act has been,” Feder said. Covering about 10 million
people, with premiums rising slower than anticipated and a slower rise of health care costs is a major accomplishment,
she added.
Antos is less impressed with enrollment, pointing out that 7.1 million people is around the total number of consumers
who signed up for coverage through the exchanges in 2014. How many are newly insured because of the law is hard to
know, he said, and the ACA needs changes to be more efficient.
What last year’s open enrollment period showed is that people who really wanted insurance were willing to jump
through hoops to get it, he said.
Antos believes health care officials need to more effectively target Americans who need the most help, saying that the
government is oversubsidizing those who need less and undersubsidizing those who need more. ACA subsidies are “not
particularly generous,” Feder agreed, creating a significant problem for participation.
Antos said the employer mandate is the most pressing problem in the ACA and he backs the 40-hour workweek bills in both congressional chambers.
Feder argued that while it is bad that some workers’ hours are being cut to comply with the employer mandate,
evidence shows that is not happening on a large scale. “This line was drawn at 30 hours to avoid affecting a lot of
people,” she said of the point at which employers must start providing insurance under the ACA. “You raise it to 40 hours
and you’re potentially affecting most workers.
Antos contends that those lower-wage workers who tend to work fewer hours would be better off in the exchanges
than receiving employer-based insurance. Even those who originally supported the mandate agree it isn’t doing what they
intended, he added.
“This was a pure Washington political ploy,” he said. “The fact is, large employers are not going to get out of the
business of offering insurance to employees” — and small businesses have a hard enough time staying open without extra
regulations.
When asked if it is now too late to repeal the ACA, Antos replied that “it’s never too late to take a vote on anything.”
The system doesn’t have to be run by the government, he said. It should instead put the impetus for change in the hands
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of providers, hospitals and other stakeholders to improve delivery and payment systems.
“Yes, it’s the current law of the land, but the question is, ‘What is the it?’” Antos said. “It will be changing. I think the
next president will be making a lot of changes. The general outlines are going to be there and I think Republican leadership has already said a lot of things they wouldn’t touch anymore.” — Rachel S. Karas
CMS Reviewing Privacy Policies, Adds Encryption Layer To Healthcare.gov
CMS has launched a review of its privacy policies, contracts for third-party tools and website construction following
concerns raised after the Associated Press reported that Healthcare.gov has been sharing consumer information with
advertising and analytic firms. The agency also added an extra layer of encryption to the “window shopping” portion of
Healthcare.gov to help prevent third parties from viewing consumer data, Marketplace CEO Kevin Counihan wrote in a
Saturday blog post. The AP reported the change on Friday.
Counihan’s post acknowledged that CMS had contracted for “third-party tools” to help improve the consumer
experience by doing things such as seeing when consumers are having difficulty or understanding when website traffic is
building during busy periods. “To do this well, we have contracts with companies that help us to connect interested
consumers to Healthcare.gov and continuously measure and improve site performance and our outreach efforts,”
Counihan writes.
The blog says CMS took seriously the questions the AP story raised about the contracts, which is why the agency
“immediately launched a review of our privacy policies, contracts for third-party tools and URL construction.”
“We are looking at whether there are additional steps we should take to improve our efforts. While this process is
ongoing, we have taken action that we believe helps further increase consumer privacy,” the blog adds.
The action the agency took was to add another layer of encryption meant to reduce the information available to third
parties from the URLs.
Counihan explained that information consumers had put into the “window shopping tool,” such as age, income, zip
code, smoking and pregnancy status, had previously been included in the URL created when a person got their application results. “This URL is now encrypted and helps prevent third parties from viewing the data the consumer entered,” he
said.
Last week, the AP reported that Healthcare.gov was sending information to companies that specialize in advertising
and analyzing Internet data. While the scope of the data being sent was not clear at the time, the AP wrote that it could
contain age, income, zip code as well as smoking or pregnancy status.
Senate Finance Committee Chair Orrin Hatch (R-UT) and Charles Grassley (R-IA) responded to the story by
asking CMS Administrator Marilyn Tavenner if any personal information was being shared with third parties, and if so
what type of information and to whom. The senators also asked Tavenner if CMS conducted audits to ensure no personally identifiable information was shared or used inappropriately.
CMS responded to the story by stressing that consumer privacy is a top priority and pointed out that HealthCare.gov
uses some of the same tools as private-sector websites to help effectively respond to system errors and to improve website
performance.
Vendors are prohibited from using any of the information for other business purposes, CMS pointed out.
— Amy Lotven
Children Advocates Aim To Extend CHIP Funding By March
Children’s advocate Bruce Lesley said Friday (Jan. 23) that he and his colleagues will be pushing Congress to pass
by March legislation that would extend funding for the Children’s Health Insurance Program (CHIP) for four years, or
through 2019. Lawmakers could then have a complete debate about CHIP along with the maintenance-of-effort provisions for Medicaid and CHIP that also expire in 2019, Lesley, president of the children’s advocacy organization First
Focus, said during a panel at Families USA’s annual conference.
He hopes to see extensions passed as early as the end of March. “We’re trying to get both those things extended as
soon as possible in this first quarter,” Lesley said of CHIP and related provisions. “There’s some urgency around this,” he
said. The ACA reauthorized CHIP through 2019, but only funded the program through 2015 at which point Congress
believed beneficiaries could be moved into qualified health plans (QHPs).
Lesley said that it might one day be possible to move more children into Affordable Care Act coverage, but only
once the law is older and its politics less contentious. He added that moving children into the ACA now would cause their
cost of care to rise and benefits to drop because CHIP is set up to help lower-income families more than those in exchange plans.
“We would love to see the ACA extended in a way and improved so that CHIP kids would not be worse off than they
might have been,” he said. “Congress is still trying to repeal Obamacare … They’re not going to go back and try to make
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improvements to it yet.”
Governors and CHIP directors are supportive of the program, Lesley said, which provides low-cost health coverage
for children in families that earn too much money to qualify for Medicaid. CHIP also covers parents and pregnant women
in some states. Both sides of the aisle are supportive of CHIP: Last week, Sen. Orrin Hatch (R-Utah) called extending
CHIP funding before it ends Sept. 31 a priority, and Lesley said even Republican Kansas Gov. Sam Brownback has
spoken in favor of a five-year extension. Sen. Sherrod Brown (D-OH) told the conference later that day that funding
CHIP is smart public policy and crucial to health equity.
Many stakeholders worried that GOP members who oppose Obamacare would try to nix other health programs too, spelling the end for CHIP, but Lesley said they found that isn’t the case.
Lesley also said advocates should fight for more states to tap into resources from the Legal Immigrant Children’s
Health Improvement Act (ICHIA), legislation included in the 2009 CHIP reauthorization that gives states the optional
ability to enroll legal immigrant children and pregnant women in Medicaid and CHIP instead of requiring them to legally
reside in the U.S. for five years before they can receive major federal public benefits.
Lesley said the program is well-received on a local level, but that not all states are signed on because of little
awareness.
Many members of Congress were not around for the reauthorization of CHIP or passage of the Affordable Care Act,
Lesley said. He added that advocates need to educate members of Congress on who the program covers and its success. “I
think it’s the very simple message of ‘Let’s pass it.’”
A 2012 Public Opinion Strategies Poll found that 67 percent of those who answered disapproved of cutting CHIP,
while 73 percent disapproved of cutting Medicaid, Lesley said.
He and Mike Perry, panel member and partner at the research and communication firm PerryUndem, agreed that
their biggest threat is lack of information as those who don’t know what the programs do are more likely to oppose them.
Distrust in government and unhappiness with the ACA — which makes all health care programs a punching bag — also
fuel a dislike of Medicaid, Perry said, so successful Medicaid expansion efforts need to focus on educating the public.
Most people in non-expansion states do not know about federal funding to grow Medicaid or their governor’s stance
on the issue, and many assume that the eligibility levels are higher, Perry said.
Advocates hope giving correct information to residents in non-expansion states can convince them to pressure
leaders to sign onto the program. — Rachel S. Karas
Counihan: CMS Eyes Ways To Avoid Overwhelming Consumers With QHPs
CMS is trying to find ways to promote choice in the exchanges while also limiting it enough to avoid overwhelming
consumers, Kevin Counihan, the CEO of the federal health insurance marketplace said on Thursday (Jan. 22) in an
indication that the agency may be considering standardizing plan benefits. Counihan also warned that the upcoming tax
season will likely be “clunky,” and said CMS is considering creating a special enrollment period (SEP) for people who
discover after the end of the open enrollment that they are on the hook for a penalty in 2015, but stayed silent on potential
contingency plans should the Supreme Court rule against the administration in King v. Burwell.
Counihan made the remarks as part of a panel at a Families USA meeting that also featured Virginia Health and
Human Services Secretary Bill Hazel, Washington D.C. exchange director Mila Kofman and Catherine Teare, senior
program officer at the California Healthcare Foundation.
Counihan listed some improvements made to Healthcare.gov and consumer engagement, including reducing the
number of screens to sign up for coverage from 76 to 16 and automatically populating 90 percent of the application. HHS
Secretary Sylvia Burwell drives staff hard on improving customer experience, he said, and he thinks the department has
made progress. “We’ve got a ways to go,” Counihan said. “Infrastructure is getting better … It’s not where we want it to
be, though.”
He also said that HHS officials are beginning to understand the details of the Affordable Care Act from the administrative and operational side for the first time this year, and stood by his belief that rolling out the ACA is a five-year
implementation process, and that the administration is now in the bottom inning of the first year.
Every year is going to get better, he said.
CMS is now trying to figure out how to offer more choice for consumers while limiting it enough so as to not
overwhelm them, Counihan said. People are asking more sophisticated questions about products and network size that
show more understanding of how their coverage works, he added.
He provided no details in what CMS has been considering. However, in Connecticut — where Counihan headed the
exchange during the first open enrollment period — plans were required to have standardized benefit design, meaning
they had the same out-of-pocket cost limits and deductibles. In a September interview with Inside Health Policy,
Counihan said it was too early to comment on whether that was something that could be adopted by the federal marketplace, but he did say that the concept is consistent with the goal of keeping things as easy as possible for consumers. “We
will be more successful the simpler we make it,” he said.
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Counihan also affirmed that HHS is still considering creating a SEP for someone who discovers too late that
they may be subject to penalties in 2015. This could happen if a person files taxes after the Feb. 15 deadline for open
enrollment, and many consumer advocates — including Families USA and Enroll America — and other stakeholders have
urged HHS to take action.
“It’s something that has been raised many times and something that’s being considered,” Counihan said. “There’s no
decision on that yet. It’s got a bunch of implications both to our system and to the issuers because we’re all in this together. It’s a
very important type of systemic relationship but that interest is clearly something we’re very aware of,” he added.
Though states have much to celebrate in terms of enrollment, officials still worry about what lies ahead with
tax season and pending lawsuits. Mila Kofman, executive director of the DC Health Benefit Exchange Authority, said the
exchange will begin sending out the first 1095-A tax forms in print and online to consumers next week “with a cover
letter that we think is in English, but we’re not sure … we’re preparing for a lot of confusion.”
Kofman expressed disappointment with the IRS, saying it seems like they lack the resources needed to educate the
public about ACA tax credits. “None of the states can provide tax advice so there are limits to what we can say to our
customers,” she added.
Counihan replied that tax season is “going to get a little clunky,” but “we’re going to ride it out.”
Kofman also said provider directories remain a large challenge for DC’s exchange: “Garbage in, garbage out,” she
said of data provided and the ability for consumers to understand it. “That is one area where we have to do better.”
Others on the panel agreed. A lot of people want to know if their provider is in the plan that they are looking at, and
that is still difficult to tell, Teare said.
Counihan said that tools to help consumers with provider directories are becoming more readily available and more
sophisticated. “Consumers are actually fairly patient,” he said. “We’re not there yet, but we’re going to get there.”
During his comments, Hazel asked Counihan for help in the case that the Supreme Court rules against the
administration in King v. Burwell and finds that subsides cannot be accessed via the federal marketplace. Virginia is one of 34
states that uses Healthcare.gov as its state exchange, and Hazel said he can’t be the only one worried about the impact of King.
“We’re starting from zero,” Hazel said of the prospect of having to build a state-run exchange. Though Virginia’s
politicians once considered the state starting its own marketplace, the idea was later scrapped because many did not want
to accept federal funds to create a local exchange. “At this point we’re going to need some quick training, and I’m
guessing there are a lot of states that are going to need a contingency,” Hazel added.
Administration officials have consistently said that they believe they will emerge victorious in the case, and have not
provided any insights into contingency plans.
Also during the panel, Kofman debuted enrollment numbers that showed more than 75,000 people had enrolled
through DC Health Link in private health plans or Medicaid from Oct. 1, 2013 through Monday (Jan. 19). Nearly 20,000
signed up in QHPs and around 40,000 were deemed eligible for Medicaid, she said. Almost 16,000 people, including
congressional offices, enrolled through the small business marketplace.
The District’s uninsured rate dropped by as much as 43 percent during the exchange’s first year in operation, and more
than 18,000 previously uninsured residents were covered through Health Link.— Rachel S. Karas
More Than 100 Lawsuits Have Threatened To Reshape ACA
Since the Affordable Care Act’s passage, opponents have turned to the court system to challenge the legality of its
mandates, clauses, subsidies and effects on congressional authority, with many lawsuits pending in addition to the highprofile Supreme Court suit on whether subsidies are available in federally facilitated exchanges. A recent report by Ann
Purvis, a senior research fellow at the National Center for Policy Analysis, details the numerous lawsuits that could
change the face of the ACA without Congress even having to step in.
“From the reach of congressional power to the scope of religious freedom, litigation over the Affordable Care Act has
spanned judicial doctrines, with plaintiffs of all stripes — nuns, small businessmen, states and corporations — challenging the law’s many mandates and requirements that make it one of the most intrusive and far-reaching pieces of legislation
in American history,” Purvis wrote. “But the many lawsuits surrounding the Affordable Care Act are a reflection not only
of the law’s complexity and controversy but also of the unprecedented amount of executive action surrounding the
legislation. Some of these lawsuits are as much about executive overreach and the rule of law as they are about substance.”
The ACA has been amended via executive fiat 24 times, Purvis continues, from delaying the requirement that
employers provide employees with health insurance to allowing insurers to re-offer the plans the law required them to
cancel. In her view: “The administration has blatantly ignored the text of the legislation when necessary.”
Here’s a rundown of parts of Obama’s signature achievement that have been reviewed by the courts or are currently
in jeopardy, per Purvis’ report:
• Individual mandate: The U.S. Supreme Court in 2012 upheld an ACA provision that American citizens must
purchase health plans with specific features required by law. In National Federation of Independent Business v. Sebelius,
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the court found that the penalty for failing to buy an insurance plan was better classified as a tax, and fell under the
federal government’s power to tax and spend. SCOTUS also ruled that expanding Medicaid under the ACA was unconstitutional coercion of the states, therefore making such expansion optional.
• Employer mandate: Hotze v. Sebelius, currently in the U.S. Fifth Circuit Court of Appeals, alleges that the
employer mandate violates the Fifth Amendment’s clause that prohibits taking private property for public use without just
compensation. “Hotze argues the mandate requires employers, under threat of penalty, to purchase ACA-compliant
insurance, transferring their wealth (private property) to private insurance companies and the many individuals, such as
those with preexisting conditions, whose costs are subsidized by others’ premium payments,” Purvis writes.
• Contraceptive mandate: Employers’ opposition to the requirement that they provide their workers with insurance
that covers contraceptives have resulted in some of the most high-profile cases before the courts — including Burwell v.
Hobby Lobby Stores, Inc., which held that the government was violating religious freedom by asking groups to go against
their pro-life beliefs. The administration later exempted houses of worship from the mandate entirely and allowed certain
religiously affiliated organizations to place the burden of contraceptive coverage on their insurers. SCOTUS ruled in the
June 2014 Hobby Lobby decision that the government cannot require closely-held corporations with religious objections
to provide contraceptives. That August, Obama administration also proposed rules to allow such corporations to apply for
a religious accommodation.
• Religious accommodation: That accommodation, however, is making its own waves in 29 lawsuits. Little Sisters
of the Poor v. Burwell claims that by signing the form to shift the cost of covering birth control to their insurers, the
Catholic organizations are complicit in instructing a third party to provide the objectionable contraceptives — and
therefore are still acting against their religious beliefs. The Little Sisters case is currently being heard in the Tenth Circuit
Court of Appeals, while the similar Wheaton College v. Burwell is before the Seventh Circuit Court of Appeals. Both
earned a SCOTUS injunction exempting them from the birth control mandate while their cases are pending.
• Federal exchange subsidies: Perhaps the most threatening cases are those that challenge the IRS decision to
unilaterally grant subsidies to qualifying enrollees in the federal marketplace. The law states that tax credits are available
to people who sign up in a health exchange “established by the State.” While the administration says that was a drafting
error, Purvis says the law was written that way to create an incentive for states to create their own marketplaces. But since
only 14 states started local exchanges, lawsuits like King v. Burwell and Halbig v. Burwell contend that subsidies given to
the 36 other states that use the FFM are invalid based on the plain text of the law. Oral arguments in King v. Burwell are
scheduled for March 4. A decision is expected this summer, leaving nearly 10 million people who receive those federal
subsidies hanging in the balance. Economic modeling found that more than 99 percent of Americans who qualify for
subsidies would not be able to afford health insurance without them. Further consequences for employers are also
pending, since employers would not be penalized for failing to offer coverage if none of their employees receive subsidies.
• Origination clause: Sissel v. U.S. Department of Health and Human Services challenges Obamacare on the basis
that revenue-raising measures came from the Senate, not the House as required by the Constitution. SCOTUS ruled in
NFIB v. Sebelius, that the individual mandate was valid because it was a tax, and therefore generating revenue. Though
the D.C. Circuit Court of Appeals struck down Sissel’s case, the plaintiff filed a petition in October for a rehearing with
the full court. Hotze v. Sebelius, the case against the employer mandate, also challenges this alleged violation of the
Constitution’s origination clause.
• Independent Payment Advisory Board: Coons v. Lew argues that the creation of an Independent Payment
Advisory Board, which makes Medicare budgetary recommendations, is an “unconstitutional delegation of congressional
authority.” The case was dismissed in September before being appealed to SCOTUS. Opponents dislike IPAB because its
recommendations would become law unless Congress and the president agree to an alternative or the Senate gets a threefifths majority to override the suggestions. IPAB’s cost-cutting authority, however, has not yet been invoked.
• Legislative authority: The House of Representatives is also suing over what its sees as an attack on its power to
make law, after the administration delayed the employer mandate and allegedly expended $4 billion in offset payments to
insurers without congressional appropriations. On Monday (Jan. 26), the Justice Department asked the U.S. District Court
for D.C. to throw out the House’s lawsuit because they haven’t proven that they have been hurt by the administrative
changes and can’t move forward with the suit. The DOJ lawyers also allege that “a House of Congress may not - as it
seeks to do here - [file suit] against the executive branch concerning its implementation of a statute.”
The report offers a brief overview of the slew of cases — more than 100 by some counts, Purvis said — that the
administration has and continues to field regarding the ACA.
“How the courts — and primarily, the Supreme Court — ultimately address the administration’s unilateral rewriting
of the law will greatly influence executive and agency power, not to mention the public’s perception and understanding of
laws and lawlessness,” Purvis says in the report. —Rachel S. Karas
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INSIDE CMS — www.InsideHealthPolicy.com — January 29, 2015
Pharmacists’ 2015 Agendas Clash Over Preferred Pharmacy Networks, MTM
Pharmacy groups, including community pharmacists and pharmacy benefit managers, laid out conflicting agendas for
2015, with the groups squaring off over preferred pharmacy network arrangements, though CMS backed away from plans
to open those networks up to more pharmacies last year. Pharmacists also are focusing on provider status, concerns
around medication therapy management — which CMS has also backed away from expanding— and policies around
maximum allowable costs.
The National Community Pharmacists Association, Pharmaceutical Care Management Association and Academy of
Managed Care Pharmacy recently released their 2015 priorities, and all three named preferred pharmacy networks as an
issue area to watch in 2015.
NCPA has pushed to open up preferred pharmacy networks, which the group says often exclude independent community pharmacists, and a survey of NCPA members named opening up these networks to any pharmacy willing to meet
insurance plans’ terms and conditions — or discounts — as a top issue for 2015. NCPA President John T. Sherrer said
that “ensuring reasonable reimbursement for generic drugs and greater patient choice of pharmacy are vital to sustain
continued patient access to community pharmacies.”
NCPA will also be focus on Maximum Allowable Cost reimbursement issues and generic drug prices, which
IHP has previously reported will also be a focus for independent long term care pharmacies.
CMS showed support for opening preferred networks to any pharmacy willing to provide the necessary discounts in
a proposed 2014 rule, but ultimately the agency didn’t include the proposal in the final version of the rule. CMS said it
needed to further study the preferred pharmacy issue before making a decision whether to move forward with such a
policy.
The rule included more than 40 provisions that were not finalized — including some of the more controversial
proposals like reducing the number of Medicare protected drug classes and limiting the number of Part D plans
insurers could offer. The White House Office of Management and Budget in November began reviewing a final rule
that the OMB notice says “implements the remaining policies not finalized in the Medicare Advantage (MA) and
Prescription Drug Benefit Programs for Contract Year 2015 final rule.” However, stakeholders have said that with
the large number of proposals kept out of the final Part D rule, it is hard to know what might be included in this
rule.
Outgoing CMS Administrator Marilyn Tavenner said in September that the agency has no interest in re-introducing
the controversial proposals the agency previously pulled back. But CMS late last month released the results of a study on
beneficiaries’ convenient access to lower cost sharing in plans’ preferred pharmacy networks and the agency said the
study reinforced concerns about preferred pharmacy access in urban areas. The Pharmaceutical Care Management
Association, which represents pharmacy benefit managers, said the study should lead to a new round of questions from
lawmakers about whether CMS intends to make changes to plans with these preferred pharmacy networks for 2016. The
PBMs have pushed CMS not to force plans to open up the preferred pharmacy networks.
An NCPA spokesperson said that even as it continues to urge CMS to open up preferred pharmacy networks,
the group will also look at Congress and the states as potential avenues to move the issue forward.
“While the drugstore lobby is pressuring Congress and regulators to eliminate these [preferred pharmacy network]
plans, this would violate CMS’ pledge to avoid controversial changes to Part D,” PCMA President Mark Merritt says in a
statement. PCMA also says opening up preferred pharmacy networks would increase premiums for most beneficiaries and
raise overall program costs.
AMCP agrees with PCMA, and in a letter to the National Association of Insurance Commissioners late last year, said
the preferred pharmacy networks “represent another important innovation and tool developed by managed care pharmacy,
and, if effectively implemented, there is strong data that indicates it reduces the high cost of prescription drug coverage.”
An AMCP official also says improving Medication Therapy Management will also be a focus for 2015. The
official says AMCP will work to recommend some improvements to MTM, including considering ways to use and
develop electronic standards and quality metrics to improve the delivery of services; cataloging best practices; identifying
the best ways and settings for pharmacists to take the lead on MTM while working with other health care providers; and
providing education resources and tools for MTM.
Medicare beneficiaries are only eligible for MTM if they have two or more chronic conditions and spend more than
$3,000 a year on drugs. An Avalere study showed that few of those eligible for MTM actually receive the services, and
other critics of the current program say the criteria for MTM doesn’t target those who might benefit the most. The focus
shouldn’t be on the amount of money beneficiaries spend, some have argued.
Expanding the MTM program was also included in last year’s proposed controversial Part D rule, but not finalized.
Carol Kelly, senior vice president for government affairs and public policy at the National Association of Chain Drug
Stores, said NACDS was encouraged by the Part D rule even though the proposal to expand MTM wasn’t finalized. She
added that the pharmacists are continuing to talk with the administration about both the rule and the CMS innovation
INSIDE CMS — www.InsideHealthPolicy.com — January 29, 2015
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center’s interest in an enhanced MTM demonstration.
Kelly said one of the group’s big priorities for 2015 is expanding medication therapy management to those with a
single chronic condition, and the group is looking for a new lead sponsor for such legislation in the Senate. Former Sen.
Kay Hagan (D-NC) previously sponsored such a measure, but she lost her re-election race in 2014 to Republican Thom
Tillis. Rep. Cathy McMorris Rodgers (R-WA) sponsored the House version of the legislation last Congress and remains
in the House.
Kelly said a continued focus on Medicare provider status legislation is also a priority for pharmacists in 2015.
House legislation was introduced Wednesday (Jan. 28) recognizing pharmacists as providers and reimbursing them for
certain services in medically underserved areas. NCPA and AMCP have also said provider status for pharmacists remains
on their 2015 agendas. — Michelle M. Stein
AdvaMed Survey Shows Device Tax Responsible For 18,500 Layoffs
The Advanced Medical Technology Association (AdvaMed) said Wednesday (Jan. 28) that it estimates the Affordable Care Act’s medical device tax forced companies to lay off roughly 18,500 employees and could result in up to
39,000 fewer device sector jobs within the next five years. The electronic survey also says more than half of respondents
said they cut research and development. AdvaMed President and CEO Steven Ubl said industry will use the survey to
lobby for repealing the device excise tax.
Ubl said 20 percent of AdvaMed member companies responded to the survey, and the results were extrapolated from
those respondents. Companies that responded represent 85 percent of domestic sales revenue and 49 percent of total U.S.
revenues of the medical device and diagnostics industry. The survey shows the “real-world” effects of the medical device
tax, he said. AdvaMed conducted a similar survey at the end of 2013, following the implementation of the device tax at
the beginning of that year.
“This survey on the effects of the tax after two years makes it clear that the passage of time has only added to the
negative effects of this burdensome tax on American jobs and R&D — the very building blocks our country needs to
discover the treatments and cures of tomorrow,” Ubl said.
AdvaMed said based on the results of the survey the tax could also lead to as many as 156,000 job cuts in indirect
employment related to the industry such as suppliers. The survey said this extrapolation was based on a ratio — based on
independent estimates — of four indirect jobs for each direct job related to the industry.
Besides job losses and R&D reductions, 75 percent of respondents said they faced other negative impacts of the tax
that caused them to defer or cancel capital investments and to cut employee pay or delay pay raises.
Jane Kiernan, president and CEO of Salter Labs, said her company couldn’t get hospitals and group purchasing
organizations to agree to higher prices on its oxygen delivery systems, so the company relocated roughly 170 jobs to a
manufacturing plant in Juarez, Mexico, and cut research and development.
David Nexon, senior executive vice president for AdvaMed, said a number of “theoretical” studies predicted that the
device tax would have very little impact on jobs because manufacturers would pass on the costs of the tax to consumers.
However, he said that was an unrealistic expectation because the medical device industry is highly competitive with tight
profit margins.
“The idea that we could pass on the tax in an environment when our prices are actually being forced down by
competition and our purchasers are facing extreme cost pressures of their own simply doesn’t make sense,” Nexon said.
While 46 percent of respondents to the survey said they would consider further job cuts if the tax stays in place and
58 percent said they consider more R&D cuts, Ubl said there is a silver lining in the results. He said the survey shows that
71 percent of respondents said they would hire more workers and 85 percent said they would reinvest in R&D if the tax is
repealed.
Ubl said AdvaMed supports bipartisan efforts to repeal the tax and will work closely with lawmakers on the legislation. The House measure to repeal the device tax, introduced by Rep. Erik Paulsen (R-MN), includes 27 Democratic
cosponsors, and the Senate version of the legislation has five Democratic cosigners, which appears to be just one Democratic vote shy the 60-vote filibuster proof majority needed for passage.
Another piece of House legislation recently introduced by Rep. Micheal Turner (R-OH) would exempt certain
“emergency medical devices” from the tax. Details and language of this measure have not yet been released, and
Turner’s office has not responded to requests from Inside Health Policy for specifics on the bill.
When asked if AdvaMed would support a partial repeal of the medical device tax, Ubl said the organization is not
“ready to go down that road” and will continue to work for a full repeal. — Todd Allen Wilson
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INSIDE CMS — www.InsideHealthPolicy.com — January 29, 2015