InsideHealthPolicy.com’s Inside CMS exclusive news on the most powerful agency in health care Vol. 18, No. 7 - February 19, 2015 CMS Changes Calculation Of Nursing Home Star Ratings; Adds Quality Measures CMS is changing the calculation of nursing home star ratings so fewer facilities get higher ratings, which angers industry, but agency staff said Thursday (Feb. 12) that the change is needed to keep Nursing Home Compare useful to consumers, who otherwise would have a difficult time differentiating among facilities if too many have high ratings. The agency also is adding two measures on the use of antipsychotic drugs to the existing list of nine quality measures. Plus, CMS is changing how it judges staffing levels and making it more difficult to achieve higher scores on staffing measures, and the agency is doing more of the on-site surveys that it uses to calculate scores and to verify information facilities report. “These thresholds were set so that the overall proportion of nursing homes would be approximately 25 percent 5-star, 20 percent for each of 2, 3 and 4-stars and 15 percent 1-star in February 2015 when the antipsychotic QMs are first included in the QM rating and hence rebasing was required,” according to the technical user guide that CMS posted Friday morning — QM stands for quality measure. In October (under the former thresholds), 28 percent of facilities were rated as five-star, 26 percent were four-star, 17 percent were three-star, 20 percent were two-star, continued on page 6 As Feb. 20 MA pay rule deadline nears, Senators Circulate Letter Urging CMS To Not Cut MA Pay A bipartisan group of senators are circulating a sign-on letter warning against further Medicare Advantage pay cuts as the Feb. 20 date nears for the notice that CMS uses to propose policies for next year’s MA county pay rates, America’s Health Insurance Plans President and CEO Karen Ignagni said Thursday (Feb. 12). Industry also is urging CMS to include a temporary policy that pays MA plans more for treating a large share of poor and minority enrollees. CMS is scheduled to release on Feb. 20 the draft Call Letter that proposes guidance affecting the MA program. Forty-five days later CMS issues the continued on page 8 CMS Delays Final Rule On Collecting Medicare Overpayments To 2016 CMS’ recent decision to push back a final rule on collecting Medicare overpayments could be a positive sign for some providers concerned about how the agency structured the original proposed rule, though one attorney noted that providers’ obligations around returning overpayments continue. One provider lobbyist said the one-year delay — which means four years will have passed between the proposed and final rule — is necessary for CMS to carefully put together the final rule, as providers gave the agencies many recommendations to consider. The timeline for the rule was extended to Feb. 16, 2016. CMS in 2012 released a proposed rule with stiff sanctions for providers continued on page 10 Oncology Pay-Bundle Demo Helps CMS Meet Value-Based Pay Goals CMS’ Center for Medicare and Medicaid Innovation announced Thursday (Feb. 12) a pay bundle demonstration for oncologists that helps the administration meet its goal of getting 30 percent of Medicare fee-for-service providers into value-based pay systems by next year. The Oncology Care Model, which is a five-year demonstration, is scheduled to start in spring 2016. In addition to the episode-based and performance-based payments, Medicare will give oncologists monthly care-management payments for each fee-for-service beneficiary during an episode to help them with the cost of changing their practices to accommodate the new pay system. Both group practices and solo oncologists may participate, and the program is open to continued on page 12 DME Suppliers Meet With OIG Ahead Of Expected OIG Report American Association for Homecare officials recently told the HHS Office of Inspector General that CMS’ requirements in the durable medical equipment competitive bidding program have caused some Medicare beneficiaries to pay out of pocket for needed DME, while diabetes advocates say suppliers aren’t providing all of the equipment required by law. AAHomecare officials believe an upcoming OIG study will show the competitive bidding program negatively affects beneficiary access. AAHomecare, in an email update to members, said 11 of the trade group’s officials met with the OIG about its planned study on CMS’ competitive bidding program for DME. Following a request from lawmakers last summer, the OIG said earlier this year it would probe the bidding program to see how it affects beneficiary access to supplies. DME suppliers have long held that the program would hurt beneficiaries’ access, but when the second round of the program was gearing up, then-CMS Medicare chief Jon Blum said the agency had virtually no complaints from beneficiaries about the program. The OIG and Government Accountability Office have also given favorable reviews to the first rebid of the program. “AAHomecare shared examples of how CMS requirements make the process of acquiring or supplying necessary home medical equipment extremely burdensome and have caused many patients to start paying out of pocket for the supplies they need. The [home medical equipment] community knows that this is not a positive shift for many of the patients that can’t afford to do so,” the email says. The group pointed to a study by the American Association of Diabetes Educators that says many contract suppliers don’t make insulin pumps and the associated replacement supplies available to Medicare beneficiaries, and some of those that do offer the pumps only have one brand. “While the program is saving money, it may be having unintentional negative impacts on Medicare beneficiary access to insulin pumps and related supplies,” the AADE says. The AADE surveyed DME suppliers in the Medicare program for their study. The AADE says these findings raise concerns about the expansion of competitive bidding. CMS should immediately enforce the requirement that contract suppliers make the necessary products within a product category available, AADE says, as that would increase the number of suppliers who offer DME like insulin pumps. AADE also says the insulin pumps should be placed in a new category in future bidding rounds to make sure suppliers have to stock the pumps. AAHomecare officials say they believe the OIG’s upcoming study will show that the program negatively affects beneficiary access. “We in the [home medical equipment] industry know the situation is much more complicated than simply stating providers are not carrying the necessary supplies,” said Kim Brummett, AAHomecare vice president of regulatory affairs. “Low-ball bidding has made it impossible for honest suppliers to carry certain products when the reimbursement rate is lower than the cost of the product, and documentation requirements from Medicare make the process difficult.” — Michelle M. Stein 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. Roberts Bill Would Block HHS From Using CER To Limit Treatment Democratic Lawmakers Call For SEP For Those Subject To Penalty HealthPocket Study Finds Open Enrollment Front-Loaded, Suggests Shorter Timeframe Aligned With Tax Season IRS Delays Until July 1 Employer Penalties For Small Businesses Using HRAs To Reimburse Coverage Governors Ask Congress To Extend CHIP Funding Not an online subscriber? Inside CMS subscribers can get a free, two-week trial to InsideHealthPolicy.com by calling 1-800-424-9068 or signing up at http://www.insidehealthpolicy.com/health_signup.asp. 2 INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015 Ryan Says Medicare Anti-Fraud Bill On Ways & Means 2015 Agenda House Ways & Means Committee Chair Paul Ryan (R-WI) said he expects his committee to add provisions to the Medicare anti-fraud bill that health subcommittee Chair Kevin Brady (R-TX) introduced last year. Brady will likely hold more hearings on Medicare waste, fraud and abuse, Ryan said. “We like that bill a lot, we’re going to pick up where we left off,” Ryan said of the Protecting the Integrity of Medicare Act at a press briefing Friday (Feb. 13). “We’re looking at adding reforms to it,” Ryan said, without provide further details about potential additions. “Kevin is leading that, he’s assembling that bill, and he’s out there getting other ideas.” Brady released a draft of the Medicare program integrity bill in August and introduced the bill in December with Ways & Means ranking Democrat Jim McDermott (WA) as a cosponsor. However, McDermott said at the time that he had “reservations regarding certain provisions,” and wanted to continue the conversation this legislative session. The bill included aspects from a number of bills from both parties. Provisions in the bill included removing Social Security numbers from Medicare cards, easing durable medical equipment face-to-face requirements, setting up a Medicare Administrative Contractor outreach and education program, extending MAC contracts for 10 years and requiring home health agencies to carry surety bonds of at least $50,000, although home health agencies registered some concerns. The bill also covered some of the same ground as the 21st Century Cures draft, released in late January. Both bills would set up programs to lock beneficiaries into certain pharmacies or “safe pharmacy networks” for drugs that are commonly abused, such as opioids. Beneficiary advocates expressed concerns with the lock-in provision in Brady’s draft, but one advocate said the lockin program was much improved when the bill was introduced. Stacy Sanders, federal policy director for the Medicare Rights Center, previously said Brady’s bill had better beneficiary protections around the pharmacy lock-in provision and gave clearer instructions to HHS on stakeholder engagement than the House Energy & Commerce Committee’s 21st Century Cures draft. DME lobbyists liked the face-to-face changes in Brady’s bill, and the National Coalition on Health Care praised the legislation as well. Ryan was also asked about Brady’s draft hospital reform bill, but he didn’t say how the committee will proceed with that draft. — Michelle M. Stein Ryan’s Health Care Priority Is Preparing Bill For SCOTUS’ Obamacare Ruling House Ways & Means Chair Paul Ryan (R-WI) said his first order of business on health care is providing an alternative to Obamacare for states with federally facilitated exchanges in the event the U.S. Supreme Court rules against HHS this year, but he nevertheless also plans to pass an SGR-replacement bill by the end of March when the current doctor pay patch expires. Ryan told Inside Health Policy he plans to reintroduce soon and without changes last year’s bipartisan deal to replace the Sustainable Growth Rate formula. Ryan spoke to reporters Friday (Feb. 13) about his priorities during a one-hour meeting. He said trade is his top priority, and he talked at length about tax reform. Ryan believes there is the potential for common ground with Democrats on tax reform, but if Republicans don’t at least negotiate a deal that includes big and small businesses by this fall, he doubts there is much chance of tax reform this year. Dan Elling, who until last year was the Ways & Means health subcommittee majority staff director, said last week that reaching a deal on tax reform is key to reaching a deal on entitlement reform, which most lobbyists believe would be needed to pay for SGR. Ryan became chair of Ways & Means this year. The work that Republicans must do to help states in the event of a Supreme Court ruling against the administration is a pressing matter, Ryan said. When asked whether he would go along with the bicameral Obamacare replacement plan by House Energy & Commerce Chair Fred Upton (R-MI) and Senate Finance Committee Chair Orrin Hatch (R-UT), Ryan said he doesn’t know because that’s a problem for a later date and he instead is focused on preparing for the Supreme Court ruling. Ryan also said he prefers refundable tax credits for health insurance, which he proposed in 2010. Provider lobbyists doubt Congress can reach a deal on an SGR replacement by April 1, and they expect Congress to temporarily override looming pay cuts and possibly work them out in tax reform and budget reconciliation near the end of the year. Ryan said he doesn’t think tax reform will be included in budget reconciliation because, if it’s a bipartisan agreement, reconciliation isn’t needed. Using budget reconciliation to pass tax law avoids the threat of Senate filibuster. — John Wilkerson INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015 3 NCPA Asks Lawmakers To Reconsider 21st Century Cures Draft Provisions The National Community Pharmacists Association is asking House lawmakers to reconsider or change provisions in their draft 21st Century Cures bill, including measures to lock beneficiaries into specific pharmacies for obtaining certain drugs, suspend pharmacies’ Part D payments when there is suspicion of fraud and require e-prescribing for Part D drugs. “There is widespread, bipartisan support for taking steps to realize more cures through the development of new medication and NCPA applauds that work. However, the legislation being drafted includes several provisions that appear unrelated to drug development that may inadvertently undermine patient access to prescription drugs today as well as the ability of community pharmacists to serve them,” NCPA CEO Douglas Hoey says in a statement. The 21st Century Cures draft bill released by House Energy & Commerce Chair Fred Upton (R-MI) late last month includes a wide range of provisions on drug development, anti-fraud proposals and CMS reimbursement. Rep. Diana DeGette (D-CO), who spearheaded the initiative alongside Upton, did not endorse the draft because it was incomplete but said she fully stands behind the work done so far. NCPA says it is concerned about the pharmacy lock-in program laid out by the draft bill, which the group says would lock into a pharmacy or pharmacies Medicare beneficiaries who need coverage of certain classes of drugs that are frequently abused. The community pharmacists say this would would presumably affect all beneficiaries who are looking to obtain these schedule II, III, IV and V drugs. “While we share the common goal of cracking down on the endemic prescription drug abuse problem in the United States, we have serious concerns with this approach,” NCPA says in its Feb. 10 comment letter to Upton. Beneficiary lock-in programs are used in commercial and Medicaid plans, and tend lock high risk beneficiaries in to a certain pharmacy or pharmacies for drugs that could be abused like opioids. Ways & Means health subcommittee Chair Kevin Brady (R-TX) also included a beneficiary lock-in proposal that targets high risk beneficiaries in his program integrity bill introduced late last year. Stacy Sanders, federal policy director at the Medicare Rights Center, previously told Inside Health Policy that Brady’s bill includes more-developed beneficiary protections than the 21st Century Cures draft and gives clearer direction to the agency about stakeholder involvement. The Pharmaceutical Care Management Association, which represents pharmacy benefit managers, has been supportive of lock-in pharmacy proposals. NCPA says that “at the forefront of prevention efforts must be a focus on reducing the inappropriate prescribing or the overprescribing of controlled substances and the prevention of ‘doctor shopping,’” because patients cannot get a drug from a pharmacy without first obtaining a prescription. Rather than a pharmacy lock-in policy, NCPA says the group would “support carefully constructed prescriber lock-in policies; as this is the root cause of many patients being able to obtain multiple prescriptions for the same or similar medications leading to overuse and possible diversion.” NCPA says it has concerns around pharmacy lock-in policies that let drug plans choose a pharmacy for beneficiaries. Under this approach, a plan could assign beneficiaries to a pharmacy in which the plan has a commercial or financial interest, including a mail-order pharmacy, NCPA says, which is a concern for community pharmacists. The community pharmacists say CMS already has criteria in place to identify high-risk Part D beneficiaries, and the agency should build off that program before giving plans the authority to create and operate lock-in programs. However, former CMS Medicare chief Jon Blum previously expressed interest in a lock-in policy, and the administration’s fiscal 2016 budget also includes a lock-in proposal. HHS’s budget in brief says that the agency’s overutilization program can identify results from inappropriate activity, but there’s not much CMS can do on a preventive basis with that program. NCPA also raises concerns with a provision in the draft cures bill that gives plans the ability to suspend payments to pharmacies pending an investigation of fraud. The definition of a “credible allegation of fraud” includes complaints made on the 1-800-Medicare hotline, and NCPA says that shouldn’t be the case. “Certainly, a faceless allegation made on a 1-800 phone number should not automatically be considered ‘credible’ SUBSCRIPTIONS: 703-416-8500 or 800-424-9068 custsvc@iwpnews.com NEWS OFFICE: 703-416-8577 Fax: 703-416-8543 insidecms@iwpnews.com 4 Health Group Publisher: Senior Health Group Editor: Chief Editor: Associate Editor: Contributing Editors: Donna Haseley (donna.haseley@iwpnews.com) John Wilkerson (jwilkerson@iwpnews.com) Michelle M. Stein (mstein@iwpnews.com) Rebecca Beitsch (rbeitsch@iwpnews.com) Amy Lotven (alotven@iwpnews.com) Rachel S. Karras (rkarras@iwpnews.com) Production Manager: Production Specialists: Lori Nicholson (lori.nicholson@iwpnews.com) Daniel Arrieta, Michelle Moodhe Inside CMS is published every Thursday by Inside Washington Publishers, P.O. Box 7167, Ben Franklin Station, Washington, DC 20044. Subscription rates: $705 per year in U.S. and Canada; $755 per year elsewhere (air mail). © Inside Washington Publishers, 2015. All rights reserved. Contents of Inside CMS are protected by U.S. copyright laws. No part of this publication may be reproduced, transmitted, transcribed, stored in a retrieval system, or translated into any language in any form or by any means, electronic or mechanical, without written permission of Inside Washington Publishers. INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015 and be sufficient to suspend payment to a Medicare Part D provider — which could result in disruptions in the access to needed medications,” NCPA says. The community pharmacists say they oppose giving Part D plans the “unilateral authority to suspend payment” because doing so could limit patient access to needed medications. NCPA says CMS’ guidance from 2011 that says plans can withhold payment on claims they suspect to be fraudulent already provides plans the necessary tools for blocking fraudulent claims. NCPA also says that e-prescribing should not be required, as suggested by the 21st Century Cures draft. “Until systems are widely in place to implement this provision, NCPA opposes mandated use, as this will place undue burdens on physicians, pharmacies, and create serious access concerns for patients,” NCPA says. CMS’ e-prescribing incentives ended in 2013 and 2014 was the last year those participating in the eRx Incentive Program faced cuts. CMS notes in its website that electronic prescribing is still part of the meaningful use of electronic health records program. — Michelle M. Stein State Exchange Officials, Experts Reflect On Enrollment Experience As the country prepared to end the second open enrollment season under the Affordable Care Act this past weekend, states were trying to move past the failures of the first sign-up season and channel lessons learned into future best practices. State health officers and researchers reflected on what caused success — or not — in the fledgling year of their federally and state-run insurance exchanges at an AcademyHealth National Health Policy Conference last week, while looking ahead to possibilities for everything from Medicaid expansion to benefit tweaks. Michael Sparer, a Columbia University researcher who compared the first years of Massachusetts’ Health Connector and the New York State of Health exchanges, said that Massachusetts struggled through its first year of implementation because it had “too many cooks in the kitchen,” lacked communication and had an “extraordinarily ambitious” agenda because it was seen as the long-running model for universal coverage. While New York Gov. Andrew Cuomo appointed one woman to lead the state’s exchange, Massachusetts split the task of running its exchange among the Connector, the state Medicaid agency and the University of Massachusetts medical school. Each had very different missions, Sparer said, with conflicting change orders, no stable decision makers and inexperienced project management. The state was filled with people and groups that wanted the Health Connector to be a success and nobody wanted to ask questions or say it wasn’t working, Sparer said. State officials who were concerned with being seen as the national leader in health care swept problems under the rug until it was too late. Massachusetts also hired CGI Federal — the same company that set up the glitch-ridden federal exchange — to facilitate the Health Connector. It brought in an outside contractor and got a fiasco, Sparer said, while New York hired the smaller Computer Sciences Corp. Inc., which the state had worked with before on Medicaid projects. Successful states first chose to take care of what needed to be done instead of seeking what would be nice to have, the experts said. “I think in the first year, the folks are so caught up in sort of avoiding catastrophes and getting something up and running … not letting perfection get in the way of anything good,” Wake Forest University researcher Mark Hall said. He added that setting up standards for qualified health plan participation and other implementation details, was put off until year two or three. “Often when states tried to get everything just right ... [they] sometimes completely fell on their face before they got to the finish line,” Hall said. Other states have had successes with exchanges despite widespread opposition to the Affordable Care Act and Medicaid expansion in their legislatures. Florida State University researcher Carol Weissert said groups in the state are very well-organized and engaged, targeting geographic areas where the most uninsured live. Because Florida did not expand Medicaid, low-income residents flocked to the exchanges and led the nation in enrollment at 1.4 million noneffectuated plans as of Feb. 6. But Florida’s current concern is a promise from CMS that the federal government “will not extend Florida’s Low Income Pool in its current form beyond June 30,” as indicated by CMS last Tuesday. The government may choose to green-light a different funding system, adding that it would work with state officials to “develop payment approaches for Florida’s Medicaid beneficiaries to ensure adequacy, equity, accountability and sustainability for Florida’s Medicaid funding.” The federal government currently funds $1.3 billion of the $2.2 billion Low Income Pool program (LIP), which pays for charity treatment of poor and uninsured residents. LIP will expire if ongoing negotiations for an extension agreement fail, leaving Gov. Rick Scott (R-FL) to find the remaining funds elsewhere or cut it from his proposed budget altogether. Weissert called it a double whammy if the state loses both its LIP money as well as Medicaid expansion money, though a J.P. Morgan Research report noted on Wednesday (Feb. 11) that “a lack of extension would add significant INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015 5 pressure to close the gap that we believe could spur some additional conversations on Medicaid expansion.” Top state lawmakers have vowed not to consider Medicaid expansion, despite a health coalition proposal that would secure funding from the Florida Hospital Association. The problem also stems not from a “lack of ideas from Florida, but lack of flexibility in Washington,” Weissert said. The previous day, Indiana gubernatorial health policy adviser Brian Neale detailed parts of the newly approved Healthy Indiana expansion, and said that while health savings accounts and their restrictions on patient choice are a problem for Congress, he supports any and all efforts to promote the consumer-driven model and called it key to long-term fiscal sustainability of the health care system. He added that there is a lot of room for state-based reform. “We can be siblings without having to be identical twins,” Neale said. “We’re also hopeful that some of the waivers we were able to achieve can service other states as they continue to have these conversations.” — Rachel S. Karas Nursing Homes Upset By Star Ratings Changes . . . begins on page one and 9 percent were one-star. The two new quality measures raise the total score possible because facilities receive up to 100 points for each measure. The scale topped out at 900 points before, and now it goes to 1,100. Following are the thresholds. (Former thresholds are in parentheses.): five star = 760 - 1,100 (616 - 900); four stars = 690 - 759 (508 - 615); three stars = 630 689 (436 - 507); two stars = 545 - 629 (356 - 435); one star = <545 (<356). Even these cutoffs might be changed soon. The technical user guide states that CMS will keep the update thresholds for at least a year. The American Health Care Association, which represents nursing homes, said the change is both unfair to nursing homes, which have improved the quality of care and cut costs, and confusing to consumers, who will likely assume that the lower scores are due to a drop in performance. “We are concerned the public won’t know what to make of these new rankings. If centers across the country start losing star ratings overnight, it sends a signal to families and residents that quality is on the decline when in fact it has improved in a meaningful way,” AHCA President and CEO Mark Parkinson said. Although CMS designed star ratings to help consumers choose facilities, managed care plans also base reimbursement on the ratings so a lower rating might mean lower pay, AHCA spokesman Greg Crist said. CMS officials said they’re emphasizing to users of the star ratings, including other government agencies, that changes in ratings aren’t due to a change in performance. However, they also said what might have been good performance in December of 2008, when CMS launched the program, is mediocre by today’s standards. — John Wilkerson Finance Presses HHS On King Contingencies; GOP, Stakeholders Eye Fixes Senate Finance Republicans are the latest to press the Obama administration on how it would deal with the fallout if the Supreme Court rules that subsidies cannot flow through exchanges established by the federal government, coming as GOP lawmakers and stakeholders increasingly focus on potential legislative and administrative fixes should such a ruling surface. Key GOP lawmakers say their top priority is to create a pathway for states using Healthcare.gov to continue offering enrollees’ assistance, potentially without an insurance mandate, in the wake of such a ruling, and health care stakeholders are floating several potential fallback options. The need for Republicans to help states in the event of a Supreme Court ruling against the administration is a pressing matter, House Ways and Means Chair Paul Ryan (R-WI) told reporters on Friday. House Majority Leader Kevin McCarthy (R-CA) recently tasked Ryan, as well as his fellow chairs of the committees of jurisdiction, to come up with a King contingency plan in addition to a developing an ACA “replacement” bill. Ryan suggested that effort is taking precedence over Medicare physician payment reform legislation, even though the current “doc fix” is scheduled to expire at the end of March. Senate GOP members have also been working on Supreme Court contingency plans. Sen. John Barrasso (R-WY) recently told the Washington Examiner that a short-term ACA fix is under discussion. “We are working on a transition plan from what the President’s health care law is now, that does provide for those people who are getting subsidies and would possibly be abruptly cut off, as we transition to a more market-based health care plan,” he said. Ryan’s comments align with what conservative-leaning health expert Avik Roy said he has been hearing from the GOP. I think if the challengers win, I think there’s more likelihood than a lot of people seem to think that Republicans do propose some sort of legislative patch,” Roy said. “The level of urgency that I’ve seen among Republicans … is certainly much higher I would have expected, say, two months ago. That’s probably my surprise,” Roy said at 6 INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015 AcademyHealth’s National Health Policy Conference last week. He noted that Republicans, particularly in the Senate, feel the pressure as they face polling data that suggest the GOP would get blamed if subsidies are stopped. Roy said, “They are concerned about that.” A ruling against the administration could impact at least 6.5 million people, the number of people who selected plans via the Healthcare.gov platform who are currently eligible for subsidies, according to a recent HHS report that examined sign-ups from Nov. 15 through Jan. 30. Roy said Republicans could propose something that allows subsidies to flow as long as states are able to dole out subsidies in a manner that works for them and their own regulatory processes. “If states have that latitude but the dollars are the same, I think the public’s going to look at that as a fairly reasonable alternative,” he said. If Democrats are then put in the position of opposing any subsidies without an individual mandate in place, they would be under a lot of pressure to go along with the GOP alternative to provide any tax credits instead of none at all, Roy said. If Republicans are successful at coming up with an alternative that states could use to keep subsidies flowing in the wake of King v. Burwell, it would be a substantial source of policy innovation to watch, Roy added. But some key Democratic stakeholders have cast doubt that the GOP would take any action. Families USA Chair Ron Pollack recently said he could not see a GOP Congress, which is “hell-bent” on repealing the law, taking quick action to make it work. The Center for American Progress pointed out that a fix would carry a high price tag — $340 billion, according to a recent Urban Institute report — because the Congressional Budget Office would immediately take the high court’s ruling into consideration. State officials are also apparently in the dark on next steps should the Supreme Court rule against the administration. Last week, Virginia health secretary Bill Hazel said that Democratic Gov. Terry McAuliffe would want to do whatever is possible to keep people covered should the subsidies disappear. He said state officials want to know whether the state could rent federal technology — instead of developing its own — and also if the governor could act unilaterally to set up a state exchange. Those are the big questions we’re wrestling with right now, he said during a Feb. 4 conference call. The administration has consistently expressed confidence that the court will rule in its favor and provided no other insights, leaving stakeholders to speculate on potential paths forward if that does not happen. Consulting firm Leavitt Partners floated a few ideas in a recent white paper. Under the first, HHS would be a “technology administrator” and endorse a hybrid state-based marketplace that allows FFM and partnership states to use the FFM technology platform, but requires states to assume or retain ownership of the other marketplace functions. This would require a clearer definition of a state exchange. CMS does have some discretion, and “we believe that CMS would be willing to re-evaluate the anatomy of what has been considered a statebased marketplace to date,” Leavitt writes. A second option is relying on regional marketplaces, a scenario in which several states would join under one marketplace umbrella. Leavitt Partners suggested that several states had indicated an interest in the idea, which is allowed under the law. States could also potentially adopt a “multi-tenant shared service marketplace solution” that allows two or more states to roll out the exchange technology platform and finance the costs through user fees. Unlike the regional market, this “marketplace as a service” (MaaS) scenario would provide states with autonomy and control of their exchanges. Key benefits of this model would be faster and more reliable implementation, as well as lower costs. Leavitt Partners and other stakeholders have also discussed using the state innovation waivers as a solution. These allow states to use funding that would have been provided under the ACA to be exempted from several provisions as long as they continue to support the law’s core coverage goals. However, health experts have noted that if SCOTUS rules that the subsidies are not legal, that funding would also disappear — killing it as a viable solution. Leavitt also points out that any plan put forth by a state must be approved by CMS. Additionally, the innovation waivers do not take effect until 2017. In the years following enactment of the ACA, the administration supported legislation that would have moved the implementation date to 2014, but there was no action on that bill. The Republican Senate Finance senators in their Feb. 9 letter ask the administration to provide details about any contingency plans and also request details on any communication with health plans about the possibility that the subsidies may end. Their letter to HHS Secretary Sylvia Burwell, Treasury Secretary Jack Lew and IRS Commissioner John Koskinen comes after all three declined to reveal plans to lawmakers during recent hearings. “Given multiple opportunities to inform the Senate committee charged with oversight of HHS, we find Ms. Burwell’s lack of candor to be remarkable,” the Finance Republicans wrote. “Secretary Burwell’s testimony — or lack thereof — deepens our concern about the Administration’s readiness to respond to the King v. Burwell ruling.” “Congress cannot perform its oversight role if agency heads repeatedly refuse to answer straightforward questions about matters of great import. Moreover, a lack of planning for contingencies that could affect millions of Healthcare.gov INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015 7 enrollees would be irresponsible, and a failure to perform basic risk management is unacceptable,” they said. The letter then asks if the administration has a contingency plan, and if so asks officials to provide the details, how it was developed and how it would be implemented. If there is no plan, the GOP members ask the administration to explain why not. The lawmakers also ask whether the administration communicated with insurers that participate in Healthcare.gov about the possibility that the Supreme Court may rule against the government. “If yes, please describe the communications and explain the manner in which affected insurers will be given the option of ending their participation in the federal exchange. If not, please explain why not,” the letter says. The senators want a response by Friday (Feb. 20). The QHP agreement for issuers participating in the FFM for 2015, which was signed last fall, does include a clause in which the administration acknowledges that the issuer has developed its products for the FFM “based on the assumption that (advanced payment tax credits) and (cost-sharing reduction payments) will be available to qualifying (e)nrollees.” “In the event that this assumption ceases to be valid during the term of this Agreement, CMS acknowledges that Issuer could have cause to terminate this Agreement subject to applicable state and federal law,” the contract says. CMS told Inside Health Policy in October that the new clause was inserted at the request of issuers, and that both parties believe the language is critical. Several other GOP lawmakers have also pressed CMS on contingency plans, either in hearings or in writing. — Amy Lotven and Rachel Karas AHIP Urges Against MA Cuts . . . begins on page one 2016 Final Notice, Call Letter and MA county rates. Before the Affordable Care Act, Medicare paid about 14 percent more for beneficiaries in MA plans than those in traditional Medicare so the law phases in pay cuts to bring fee-for-service Medicare and MA on par. About two-thirds of the pay cuts have taken effect, and the rest are scheduled to be phased in over the next two years. Last year, CMS backed off pay cuts to Medicare Advantage plans, although industry analysts said the overall effect of the 2015 MA call letter was, on average, a net reduction in reimbursement to MA plans. Since the law was passed, MA plans have figured out how to deliver services at a lower cost while improving performance on the quality of care, according to Michael Chernew, a professor of health care policy at Harvard University. They’ve also done away with some of the benefits they had offered seniors. Ignagni said at a briefing on Capitol Hill attended mostly by lawmakers’ staff that MA plans will be forced to drop many of the programs they use to improve care if CMS does not halt further reimbursement cuts in pay rules for 2016. “We are staring over into the abyss,” Ignagni said. The letter that Sens. Mike Crapo (R-ID) and Chuck Schumer (D-NY) are circulating for signatures asks CMS to stop further pay cuts to the MA program, Ignagni said. Several policies affecting MA pay are included in annual pay regulations, and it’s not clear what policies the lawmakers will include in their letter. Calls to the offices of Crapo and Schumer requesting a copy of the letter were not returned. One change that MA plans are lobbying for is a policy that would bump up star ratings for plans that treat a large portion of poor and minority patients. Pat Wang, CEO of HealthFirst, a not-for-profit plan in New York, said research shows the star ratings program disadvantages plans with unusually large numbers of poor enrollees. HealthFirst is a 4-star SUBSCRIPTION ORDER FORM Sign me up to receive Inside CMS at $705 per year in the U.S. and Canada; $755 per year elsewhere (air mail). Name __________________________________________________ Affiliation _______________________________________________ Address _________________________________________________ City/State/Zip ____________________________________________ Phone __________________________________________________ E-mail __________________________________________________ To order by mail: Send this coupon to Inside CMS, P.O. Box 7167, Ben Franklin Station, Washington, DC 20044. To order by phone, fax or e-mail: Call 800-424-9068 (in the Washington, DC area, 703-416-8500). Fax to 703-416-8543. E-mail at custsvc@iwpnews.com Please check one: Visa MasterCard Bill me Check enclosed (DC subscribers add 6% sales tax) Card number _________________________________________ Name on the card _____________________________________ Signature _______________________________________________ 8 Exp. date ____________________________________________ INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015 MA plan with an unusually high percentage of poor and minority enrollees — more than 60 percent of enrollees are dually eligible for Medicare and Medicaid. However, Wang said she is not sure the plan will hold on to that strong rating if CMS does not quickly develop a way to account for the difficulty in meeting quality measures in the star ratings program. For example, the program scores plans in part on how they follow up with beneficiaries, yet many of HealthFirst enrollees don’t have phones or computers. She said it will take too long to develop a permanent risk adjustment measure for poor and minority enrollees, but CMS could include a temporary fix in the pay rules this year. She said CMS could increase scores based on the number of duals in MA plans. The agency could develop tiers, topping out at 50 percent dual enrollment. — John Wilkerson Ramlet: Fortune 500s Likely To Move Workers To ACA Exchanges Many Fortune 500 companies are likely to shift their employees to the health insurance exchanges by June 2016 as a way to cut costs and qualify workers for premium tax credits, predicts health policy expert Michael Ramlet, director of health care policy at the conservative American Action Forum. “It’s more of a question of when, not if,” Ramlet told Inside Health Policy in an email Wednesday (Feb. 11). Ending the longstanding practice of offering health coverage to employees — which began as a powerful, unionbacked hiring incentive — would be a major step away from business as usual and could add hundreds of thousands or millions of people to state and federal insurance marketplaces. As Congress considers several bills aimed at softening the blow of Affordable Care Act mandates on businesses’ bottom line, dropping health coverage could work more immediately by lowering or eliminating companies’ health care spending. The U.S. Chamber of Commerce did not respond to a request for comment. “I would imagine it’s going to happen at the retail or other very competitive low-wage industries,” Ramlet said at a National Health Policy Conference panel Tuesday (Feb. 10). “I think that’s going to be a really big kind of moment.” Health care costs are significant operating expenses in highly competitive, low-wage, low-skill, labor-intensive industries, he added Wednesday. Ramlet, who was an outside adviser to the Republican Governors Public Policy Committee and the National Republican Senatorial Committee, believes a number of large retailers and service-oriented companies have already done impact analyses for the business model. “They are not afraid of being able to attract talent as many companies are when it comes to health benefits,” he wrote of the low-wage and low-skill industries. “CFOs generally prefer certainty over anything else so this means that paying a penalty like the employer mandate is less of penalty and more of a budgeting mechanism. As compared to the uncertainty of rising healthcare premiums/costs especially as the economy recovers and elective procedures kick up in self-insured plans.” Timing is key: Many Fortune 500 employers begin their fiscal year July 1 instead of Jan. 1, making it easier to file annual financial reports that account for and project health care costs between open enrollment periods. That gives them time between open enrollment months to create and execute a plan to transition employees before the next sign-ups begin. Companies so far have largely shied away from moving their employees to the exchanges because of the system’s rocky rollout in 2014, but are likely gaining confidence that they can smoothly drop health coverage as the exchanges work out their kinks, he suggested. “The uncertainty surrounding the King decision, may have a similar effect,” Ramlet said. “But I would bet the farm that a Fortune 500 drops by June of 2016, which would have a seismic effect.” A survey of more than 200 chief human resource officers at Fortune 500 companies, conducted by business school researchers at the University of South Carolina last summer, found that 78 percent reported a rise in health insurance costs; 73 percent reported having moved or planned to move employees to consumer-directed health plans; 71 percent reported raising or planned to raise employee contributions to health insurance; 30 percent reported moving or planned to move pre-65 retirees to ACA health exchanges; and 27 percent reported cutting back health insurance coverage eligibility. Ramlet pointed to Verizon Communications and Caterpillar Inc. as two big employers who have already evaluated what a similar change would do to their liabilities and operating costs. Verizon has no plans to move employees to health insurance exchanges, a company spokesman said in an email Thursday (Feb. 13). Caterpillar officials declined to comment. First-movers take an initial hit in the media, Ramlet said, but then gain a competitive advantage. Their competitors follow suit soon after. He pointed to the trend of companies who moved from defined-benefit pension plans to 401K plans, noting that some of the same types of large-scale, low-wage industry employers like Target have already switched to the exchanges. Target Corp. announced in January 2014 that it would stop offering health plans to part-time workers as of April 1, 2014, saying that giving them the option of job-based coverage could disqualify them from being eligible for premium subsidies. Less than 10 percent of Target’s 361,000 employees participated in the insurance plan that would be discontinINSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015 9 ued, the company said in a blog. “Target will provide U.S. stores’ part-time team members who are currently enrolled in Target’s health coverage and who are losing access to that coverage a $500 cash payment,” Executive Vice President of Human Resources Jodee Kozlak said in the blog post. “Second, we have partnered with a highly respected company that has extensive benefits expertise and asked them to develop a personalized approach to provide one-on-one support to every affected team member. This includes sharing information that is customized to each team member about what insurance is available to them, the differences between plans and their impact, any off-sets available to the team member, and ultimately walking them through every step of the sign-up process.” — Rachel S. Karas Medicare Overpayments Rule Pushed Back . . . begins on page one and suppliers that failed to repay Medicare overpayments within 60 days after they were identified, and it also proposed a 10-year look-back period under which providers are responsible for keeping track of claims and checking for any overpayments that need to be returned. The rule is CMS’ third attempt to change regulations on overpayments, as the other two rules proposed in 1998 and 2002 were never finalized. Paula Sanders, an attorney with Post & Schell, said CMS is likely struggling with how to make a longer lookback period workable. Some providers including the American Hospital Association and American Health Care Association in 2012 asked CMS to shorten the proposed 10-year look-back period. Sanders said most providers have shifted in one form or another how they handle accounts in the last 10 years, so the older records could be difficult to track. In 2012, the AHA said it was a possibility that neither CMS nor providers have the institutional memory to correctly audit 10 years worth of coding. Hospitals also raised concerned that the inclusion of a 60-day limit on returning overpayments providers knew about or should have known about could leave providers accountable for overpayments without realizing a problem existed. “Based on both public comments received and internal stakeholder feedback, we have determined that there are operational issues that need to be resolved in order to address all of the issues raised by comments to the proposed rule and to ensure appropriate coordination with other government agencies,” CMS says in a Federal Register notice published Feb. 17. However, CMS says its decision to extend the timeline for issuing a final rule beyond three years, something the agency notes it only does in exceptional circumstances, “should not be viewed as a diminution of the Department’s commitment to timely and effective rulemaking in this are. Our goal remains to publish a final rule that provides clear requirements for persons to report and return Medicare overpayments.” Sanders said that one problem with CMS’ delay is that providers still have a statutory obligation under the Affordable Care Act to repay overpayments in the 60-day timeframe despite the ambiguity around finding and identifying them. Sanders said there are lots of ambiguities around how far back providers should look for overpayments and how to know when the 60-day clock starts. But she added that the delay itself can also help providers acting in good faith, as a delay wouldn’t be necessary if the issues around returning overpayments were clear. — Michelle M. Stein More Healthcare.gov Testing Called For In Wake Of Privacy Concerns Web privacy experts recommended Thursday (Feb. 12) that the Obama administration conduct an end-to-end security check on the production system behind Healthcare.gov and implement a number of other protective measures outlined in a September 2014 report from the Government Accountability Office, following news that a trove of personal information has been shared with up to 50 third-party entities embedded in the federal exchange website. CMS conducted end-to-end testing in the fall prior to the launch of the second enrollment period — and per the suggestion of the GAO and various members of commerce — but the web experts told members of the House Science, Space and Technology Committee that additional action is needed to shore up security of the site. Michelle De Mooy, deputy director of consumer privacy at the Center for Democracy and Technology, also told lawmakers that the number of outside parties given access to the personal data of millions of Americans through the federal marketplace’s application process was troubling and avoidable. That information includes age, income, location, whether someone smokes or is pregnant. Following an Associated Press report that the information was being shared with outside entities, Marketplace CEO Kevin Counihan explained in a blog post that the personal data, which consumers input while in the “window shopping tool,” 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,” Counihan said in a January blog post. The blog also acknowledged that CMS had contracted for “third-party tools” to help improve the consumer experi- 10 INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015 ence 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 wrote. Counihan further revealed in that post that CMS had launched a review of its privacy policies, contracts for third-party tools and website construction. De Mooy testified that it is unclear whether the federal government let third-party companies have private information for “retargeting” or tracking people’s preferences to tailor ads to their personal data as they surf the Web in hopes of bringing them back to a particular site or brand. But she said it appears to be likely that the administration wanted outside companies to collect data and retarget shoppers as a way to identify underinsured communities and make sure they continue to see marketplace advertising. Having that many entities for retargeting is “inexplicable,” she said, calling it the “easiest” and “laziest” ways of designing the site. Creating the platform in-house makes it safer and less prone to outside penetration, De Mooy said. She believes the government’s rationale for allowing so many outside companies to embed was probably to make the site more intuitive and user-friendly, though she said they “went far beyond what was necessary and far beyond what was prescribed.” “(The site design) feels, to me, a bit lazy,” De Mooy said. “The easiest thing is to allow rampant sharing.” In comparison, cybersecurity expert Morgan Wright said White House and IRS websites have fewer than five thirdparty connections embedded. De Mooy said disadvantaged communities are at the greatest risk of being profiled in data banks, while Wright added that the public is largely unable to sue the federal government as it could in the case of a private company’s security breach. The experts said the government should be held to a higher standard. People who visit Healthcare.gov do it because they have no other choice when purchasing a health plan, and should be given the option not to share their data with outside vendors. CMS has claimed that outside companies are not allowed to use information from Healthcare.gov tools for their own purposes, but did not say how the government ensures that privacy and security policies are being followed. Healthcare.gov defers to the privacy policies of the third-party entities to explain what is at stake, De Mooy said. That puts the onus on consumers to look at other sites’ policies despite not knowing they were there in the first place, she added. People rarely read those often long and complex policies even when they are aware they exist, she added. De Mooy suggested the government create an iron-clad privacy policy for Healthcare.gov to replace its current vague version. She and Wright also recommended that the CMS follow the sensible privacy guidance already available, limit third-party sharing that is not needed for the site to function, use in-house software and honor individuals’ browser choice not to be tracked. “There are ways to limit it to certain data points,” De Mooy said. “It was overkill. There was no need for the leakage that occurred.” GAO had laid out six recommendations for CMS to improve the website’s security last year: follow National Institute of Standards and Technology (NIST) information guidelines in the FFM and data hub security plans; analyze and document all privacy risks in privacy impact assessments; develop separate computer matching agreements with the Office of Personnel Management and the Peace Corps to oversee the data that is compared with CMS data used to verify eligibility for subsidies and cost-sharing reductions; perform a comprehensive security assessment of the FFM’s infrastructure, platform and software; quickly create and make operational a planned alternate processing site for the systems behind Healthcare.gov; and create detailed security roles and responsibilities for contractors to increase communication between the parties responsible for FFM security and its infrastructure. Wright noted that though he testified before the committee in 2013, he found himself making the same suggestions two years later — much of them in line with what the GAO called for. Democrats on the committee stressed that while they acknowledge there are legitimate problems with the federal exchange platform, the Affordable Care Act is more than a website. Its benefits for millions of Americans should be kept in mind as well when discussing security issues, they said. Others warned that this may be the beginning of a string of unintended consequences stemming from open data initiatives and faulty program management. “I think we’ve opened the proverbial barn door, and the cows are going to get out,” Ohio Republican Rep. Bill Johnson said. The House science committee signaled it would grill CMS staff on privacy issues at a future hearing. The administration is also expected to release a revised Consumer Privacy Bill of Rights legislative proposal in March. That would govern online interactions with “principles that look at the context in which data is collected and ensure that users’ expectations are not abused,” the White House said in a January release. — Rachel S. Karas INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015 11 CMS Announces Oncology Pay-Bundle . . . begins on page one commercial payers, including Medicare Advantage, Medicaid plans, and other government payers such as TRICARE. Episodes are for periods of six months, with patients entering a new six-month period if treatment must continue past the first episode. For fee-for-service beneficiaries, Medicare will pay $160 a month or up to $960 per episode. Performance-based pay will be made retroactively based on a practice’s target price, which would be based on actual Medicare expenditures. CMS will apply a 4 percent discount to that price and retain the savings, and participants will be eligible to retain a portion of the difference between the target price and actual expenditures. Payments will be risk-adjusted to account for the higher cost of treating more severely ill patients. Some groups already indicated an interest in working with the Innovation Center on the proposal. “The new Oncology Care Model that the administration announced today holds the potential to advance cancer treatment and the coordination of care. The model will leverage the growing adoption of patient-centered care systemwide, with a critical emphasis on shared decision-making, advanced care planning, participation in clinical trials, outcomes measurement and other essential improvements in health care delivery that could save more lives from cancer. We urge the Innovation Center to work closely with patient advocacy groups and other stakeholders as the model moves forward,” Christopher Hansen, president of the American Cancer Society Cancer Action Network, said in a statement. Letters of intent to participate in the program are due March 19 for payers and April 23 for oncology practices. —Rebecca Beitsch Vit als: A Vitals continued on next page Health P olicy Blog Po Excerpts of Inside Health Policy Blogs Recovery Auditors Blame ‘Frequent Filers’ For ALJ Backlog Recovery Auditors are again alleging that hospital “frequent filers” are the cause of the backlog at the third level of the appeals system, and point to a coalition analysis that found only a small percentage of RAC denials were appealed to the Administrative Law Judges in recent years. “A backlog of 750,000 cases afflicting the Center for Medicare and Medicaid Service’s (CMS) most effective Medicare integrity program is due to the volume of provider appeals at the Administrative Law Judge (ALJ) level, not systemic flaws in the Recovery Audit Contractor (RAC) program as hospital groups have previously alleged,” the American Coalition for Healthcare Claims Integrity, which represents RACs, says in a statement. The coalition says analysis of CMS data finds that in 2012 and 2013, 2.3 percent and 10.6 percent of RAC denials were appealed to the ALJ level as the number of appeals overall rose. Hospitals sued over the ALJ backlog — though their case was dismissed — and have said the backlog is a result of overly aggressive RACs. The coalition also says it supports a number of reforms to the Medicare appeals system in the administration’s fiscal 2016 budget, including sampling and consolidating claims, expediting procedures for claims with no material fact in dispute and charging a refundable filing fee to those appealing. — Michelle M. Stein CBO Suggests Cutting Insurance Subsidies, Tax Preference For Employer Coverage The Congressional Budget Office floated general options for curbing health care spending growth, including cutting federal subsidies for health insurance, during a presentation to the Organisation for Economic Co-operation and Development in Paris. The United States also could cut tax prefer- 12 ences for employment-based health insurance, pay Medicare providers differently, make structural changes to health care programs and improve the health of its population, according to slides accompanying a presentation by CBO Deputy Assistant Director for Health Jessica Banthin. By 2024, CBO projects that 43 percent of the growth in federal spending will be due to the aging population and 44 percent of the growth will be due to expanding federal health care programs, and the increase in spending per person is expected to account for 13 percent of that growth. By 2039, those factors shift significantly, with the aging population accounting for 55 percent of spending growth, program expansion accounting for 21 percent of growth and 24 percent of growth due to an increase in per-person costs. — John Wilkerson House Panel Asks Departing Governor To Save Documents Related To Cover Oregon The House oversight committee is asking Oregon’s outgoing Democratic Gov. John Kitzhaber to “preserve all documents and communications related to the implementation of Cover Oregon” and halt any destruction or alteration of those records by any state employee or contractor, according to a letter sent Feb. 13 that seeks more insight into how what is considered one of the country’s most dysfunctional health insurance exchanges was run before state officials dumped it and moved to the federal exchange. Citing a need to better understand the role of campaign advisers in the state’s once-disastrous marketplace, the committee asks Kitzhaber to hand over all communications to or from any current or former governor’s office employee referring or related to the exchange, Healthcare.gov or the Affordable Care Act, including: anyone associated with Kitzhaber’s re-election campaign; any current or former Cover Oregon employee, including its chief executive officer and members of the board of directors; and any current or INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015 former state employee, contractor or consultant. All documents and communications about meetings or phone calls regarding Cover Oregon, Healthcare.gov or the ACA, like calendar appointments, meeting minutes and notes, must also be given to the House oversight committee, the letter says. The lawmakers want the requested material sent no later than Feb. 27. The congressional request comes after Cover Oregon officials voted in April 2014 to scrap the state exchange in favor of the federal marketplace, a move that state leadership said was meant to give residents easier access to health care despite the failed local exchange, but which the oversight lawmakers allege may have been orchestrated by Kitzhaber’s consultants to bolster his re-election chances instead. “(C)ampaign advisors working on your re-election campaign may have coordinated the State’s response to the Cover Oregon rollout,” oversight leaders wrote to Kitzhaber. “In fact, media reports indicated campaign staff even edited the testimony of a witness who testified before the Committee about Cover Oregon on April 3, 2014. It has also come to our attention that an employee in the Governor’s office instructed State officials to remove emails from your personal account from State servers.” Kitzhaber resigned Feb. 13 amid a growing state ethics scandal around whether first lady Cylvia Hayes violated state rules and laws regarding private business clients and official state business, as well as whether she failed to pay income taxes. Secretary of State Kate Brown will take his place Wednesday. — Rachel S. Karas Democrats Introduce Bill To Fund CHIP Through Fiscal 2019 Democrats in the House and Senate introduced a fouryear extension to funding of the Children’s Health Insurance Program Thursday (Feb. 12), and senators urged lawmakers to fund the program as soon as possible. Sen. Sherrod Brown (D-OH), along with Senate Minority Leader Harry Reid (D-NV), Senate Finance ranking Democrat Ron Wyden (OR) and Sen. Bob Casey (D-PA) introduced the Protecting & Retaining Our Children’s Health Insurance Program Act, and Brown’s office says the bill has already picked up almost 40 Democratic co-sponsors. No Republican co-sponsors were listed. CHIP is authorized through 2019, but funding the program runs out at the end of this fiscal year. At a recent Senate Finance hearing, Brown noted that more than 40 governors from both parties had asked lawmakers to renew the funding. Senate Finance Committee Democrats brought up an amendment to the Hire More Heroes Act that would extend funding for CHIP through 2019, but stopped short of offering the amendment. “We can’t turn out backs on health coverage that allows children to grow into healthy, active adults,” Brown said in a statement. “It’s clear that letting this program expire is not an option. I hope my colleagues will join me in doing the right thing for our kids and extend CHIP funding without delay.” Brown’s office says more than 10 million children and pregnant women could lose their health insurance if CHIP funding isn’t renewed. Along with extending CHIP funds through fiscal 2019, the bill would extend the CHIP contingency fund to protect states that have a funding shortfall and the Childhood Obesity Research Demonstration through fiscal 2019. The current qualifying states option would be preserved, as well. It would extend the CHIP performance incentive program through fiscal 2019 and would update the list of qualifying options. The Pediatric Quality Measures Program, which develops and refines pediatric quality measures, also would be extended. The “PRO-CHIP Act” would extend outreach and enrollment grants and maintains the express lane eligibility option. States would have the option to use cross-program information to simplify eligibility determinations through fiscal 2019 for states that want to streamline CHIP eligibility and enrollment. The March of Dimes and the Children’s Hospital Association back the Senate bill, and the CHA said it supports both versions of CHIP funding. — Michelle Stein KY Gov Touts Economic, Health Benefits Of Medicaid Expansion Democratic Kentucky Gov. Steve Beshear on Thursday (Feb. 12) praised the state’s decision to expand Medicaid as a driver of economic and job growth while touting a new report that found that the expansion will more than pay for itself in budget savings and new revenue. The expansion is expected to add 40,000 jobs and bring in $30 billion to the state’s economy through 2021, and providers have already seen a 55 percent decline in uncompensated care and received an additional $1.6 billion in payments due to the decision, according to report by Deloitte Consulting and the University of Louisville’s Urban Studies Institute The report - commissioned by Kentucky’s Cabinet for Health and Family Services (CHFS) - looked at the impact of the expansion in 2014 and made estimates on impacts through 2021. “For all the naysayers who claimed that expanding Medicaid was a budget-busting boondoggle, take a look at the facts. It’s working, and it’s literally paying off. The state is saving money, hospitals are earning more, and our people are getting healthier,” Beshear said in a statement. “The facts are overwhelming. We would have lost money in the state budget and lost opportunities for job growth, not to mention allowed our people to suffer continued poor health, if we had allowed this opportunity to pass.” The first enrollment period added 310,000 people to the state’s Medicaid rolls due to the expansion, or nearly double the expected number, and another 17,000 residents previously eligible for the program signed up, according to the governor’s office. As of the end of the 2014, more than 375,000 residents were enrolled in Medicaid through the expansion. The report also found that the new Medicaid members brought a pent-up demand, and received care at a rate 55 percent higher than existing beneficiaries, many getting services for chronic conditions like high blood pressure and diabetes. Health care providers received $1.6 billion in additional payments due to the expansion, the report said. It also found that the expansion will more than pay for itself. “We reviewed Deloitte’s findings and considered them in the context of our current biennial budget as well as possible implications for next year’s budget construction,” said budget INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015 13 director Jane Driskell. “The bottom line is that the analysis shows expansion creates both savings and new revenue, totaling more than double the amount the state will need to pay for Medicaid expansion in the next budget cycle.” The report estimated that Kentucky’s share of the expansion costs will be $74.4 million in 2017 and $173.2 million in 2018, or a total of $247.6 million that is expected to be offset by $511.8 million in general fund savings as well as from revenue due to the boosted economic activity. — Amy Lotven Vendors Praise CMS’ Delay Of Cost-Sharing Reduction Reconciliation Vendors working with issuers on payment and other back-end exchange issues said CMS’ Friday announcement that the cost-sharing reduction payment reconciliation process scheduled to take place in April has been delayed for one year — until April 30, 2016 — is great news for the industry, as it gives more time for issuers to get their calculations right. CMS also said that it would allow issuers to switch from the “simplified” accounting method, which was based on estimates and is less accurate, to the standard method. Under ACA implementing regulations, monthly advance cost-sharing reduction payments to issuers were authorized starting in 2014, and a process was provided for issuers to reconcile these advance payments to actual cost-sharing reductions provided to eligible enrollees. In a Friday memo, CMS said the process would be delayed in an effort to enhance the accuracy of the CSR payments and to fully reimburse issuers for the reductions in out-of-pocket expenses provided for qualified individuals. Low income individuals enrolled in certain Silver-level plans, and Native Americans/Alaskans are eligible for reduced out-ofpocket payments. “This is great news for the insurers and I’m not surprised that it came to this,” says Bobby Koritala, chief product officer for the data analytics firm Infogix. He notes that while the decision will not directly impact plans’ members, it “packs a lot of good benefits” for the issuers. Most large plans had opted to use the standard methodology, he said, but those that did not quickly discovered that the simplified method could “leave money on the table.” CMS’ announcement is positive because it gives those that picked the simplified approach the option to switch methodologies, Koritala said. CMS’ decision also provides issuers that opted to use the standard methodology more time to get their calculations right. The companies — and their investors — should be pleased that they will now have more predictability in their financial reports, he suggested. “We have heard for months that some issuers who chose the Simplified methodology for the 2014 plan year originally did so largely because they weren’t confident they would be ready for Standard,” says Infogix Director of Operations Emily Washington. “We spoke with a couple issuers this afternoon, who were happy to hear this new development both from a submission deadline extension and methodology adjustment perspective. CMS listened to the issuers, who can breathe a little easier since they now have more time to prepare,” she adds. A spokesperson with America’s Health Insurance Plans (AHIP) said Friday that just receiving the guidance in and of itself is important. Staff will need to check the details on how it will work operationally, but plans had been waiting on the additional clarity, the spokesperson said. Under the ACA implementing regulations, CMS had allowed plans to use either a standard methodology, or a “simplified” methodology, which is based on less-precise formulas. According to CMS, if a plan has less than 12,000 members in a particular subset of enrollees, issuers that chose the simplified CSR reconciliation method must use a formula based on the plan’s actuarial value — which may result in companies receiving less in reimbursements than was actually provided. CMS says it has learned that more plans than expected are falling short of the 12,000-member limit. The agency has also been told that issuers using the standard methodology are having difficulty upgrading their systems, which puts the accuracy of those calculations at risk. “Therefore,” CMS writes, “to enhance the accuracy of reconciliation of reductions in out-of-pocket expenses that issuers provided to eligible low- and moderate-income enrollees and American Indian/Alaska Native enrollees, CMS will permit issuers that selected the simplified methodology to switch to the more accurate standard methodology, and will reconcile 2014 benefit year cost-sharing reductions for all issuers beginning on April 30, 2016. This new reconciliation deadline for all issuers will promote accurate reimbursement of cost-sharing reductions by permitting issuers that switch to, or previously selected, the more accurate standard methodology to complete their operational upgrades.” CMS says issuers that are switching from the simplified to the standard methodology can notify the agency of that decision upon submission of the required files on April 30. However, issuers that chose the standard methodology last year may not switch to the simplified approach. “Because these changes will help promote accurate payments for cost-sharing reductions, they will not alter the 14 INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015 ultimate liability for cost-sharing reductions from issuers or the federal government,” CMS says. “We continue to provide technical assistance to issuers and, in advance of pilot testing for 2016 cost-sharing reduction reconciliation data submission for benefit years 2014 and 2015, we will provide technical data submission standards and appropriate instruction,” CMS says in the memo. — Amy Lotven Advocates Seek Meeting With CMS Following Avalere Study On Drug Tiers An advocate for patients living with HIV/AIDS tells Inside Health Policy he plans to seek a meeting with CMS Marketplace CEO Kevin Counihan to discuss concerns that qualified health plans (QHPs) are increasingly placing all drugs for certain diseases into high-cost specialty tiers, a practice that a recent Avalere analysis indicates has become more prevalent for plans in 2015. Patient advocates have for months been asking HHS to enforce its non-discrimination provision, and the pharmaceutical lobby last week also urged the agency to step up its enforcement while the insurance lobby pointed to high drug prices as the culprit. Counihan told reporters last Wednesday that while he looked forward to reading Avalere’s analysis of QHP drug coverage, he had not “heard too much” on that issue. Carl Schmid, deputy executive director of the AIDS Institute, says he can’t understand why Counihan would say that since the group has raised the issue repeatedly in its communication with CMS, and the topic has been the subject of press coverage. It seems as if he is not familiar with the plans that CMS reviews and “out of touch with what patients are going through,” Schmid said. He said he would send a follow-up letter to request a meeting with Counihan, noting that the CEO had been unable to make an earlier meeting at the last minute. Schmid also said it appears that CMS is downplaying the issue. The complaint “fortunately” is with HHS’ Office of Civil Rights, but “we still need action by CCIIO,” he said. CMS says Counihan is aware of the issue but was been caught off-guard by the question that came during a conference call that focused on enrollment efforts. An agency spokesperson stressed under the ACA “(p)lans are prohibited from discriminating against individuals with significant health needs in their benefit design.” “We analyze plan information submitted by insurance companies to uncover discriminatory benefit designs, and work with outlier plans to update formularies so they do not discourage enrollment of consumers with specific medical conditions,” the spokesperson said. CMS also pointed out that in its March 2015 letter to issuers, the agency had said it would do an “outlier analysis” on cost-sharing as part of the certification process. Plans identified as outliers may be given the opportunity to modify cost sharing for certain benefits if CMS determines that the cost-sharing structure of the plan submitted for certification could have the effect of discouraging the enrollment of individuals with significant health needs, CMS wrote. CMS did not say how many outliers were identified. HHS’ 2016 Notice of Benefit and Payment Parameters, which was proposed in November and is currently under Office of Management and Budget review, also said that plans placing most or all drugs used to treat a certain condition on a high-cost tier violates the ACA non-discrimination provision. The advocates say they appreciate that HHS is highlighting the problem but add that such language neither has the force of law nor compels issuers to stop those practices. Last May, the AIDS Institute and the National Health Law Program (NhELP) filed the complaint against Coventry One, Cigna, Humana and Preferred Medical charging they had unlawfully discriminated against people with HIV/AIDS by placing all HIV drugs — even generics — on high-cost tiers. Since then the four issuers have reached agreements with Florida’s insurance office to limit the cost of the drugs. However, the AIDS Institute and NheLP point out that the agreements are only with the state of Florida and do not address the underlying complaint. HHS has not taken enforcement action. In a Jan. 8 letter to HHS’ civil rights office, the AIDS Institute and NhELP called on the administration to send a stronger message that discrimination will not be tolerated. In that letter the groups also noted that the same plans — and many others — appeared to be adopting the same practices. In a statement on the Avalere study, Schmid says the analysis “ confirms what patients are learning first hand,” which is that some insurance companies are making it very difficult for patients to access their medications because they are pricing them out of reach with high co-insurance and placing them on the highest tier. “What is new about this analysis is that the plans in 2015 are much worse than in 2014,” Schmid said. “We believe some insurers are purposefully designing plans in such a way that discourages patients, particularly those with chronic healthcare conditions, from signing up for them,” he added. “This is clear discrimination and a violation of the (ACA),” Schmid said. “We need the ACA to work for all patients and for the federal government to enforce the strong non-discrimination provisions contained in the ACA. Without INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015 15 enforcement, how will patients afford their medications and who knows what the 2016 plans will look like?” he added. In a blog post last Wednesday on the Avalere study, the Pharmaceutical Research and Manufacturers of America also suggested that CMS step up enforcement. “We remain concerned about patient access to medicines in health insurance exchange plans and this new analysis highlights the increasing rate at which insurers are using discriminatory practices at the expense of patients with chronic conditions. While the administration has acknowledged that placing all or most medicines on the highest cost tiers is discriminatory, now is the time to take the next step to ban this discriminatory practice,” PhRMA wrote. But the insurance industry argues that the study leaves out a major factor — the price of the drugs. “This report ignores a fundamental barrier to patient access of prescription drugs: the unsustainable prices of these medications,” says America’s Health Insurance Plans (AHIP) spokesperson Clare Krusing. “Health plans offer a wide range of coverage choices, including those with lower levels of cost-sharing, so patients can choose the option that works best for their health and financial needs. But benefit design alone cannot address the underlying cost and dramatic increases in the cost of prescriptions,” she said. AHIP also notes that the study only looked at Silver level plans, yet consumers do have the option of purchasing Gold- or Platinum-level products, which typically have lower out-of-pocket costs. The Avalere analysis examined the coverage offered for 20 drug classes in six states that relied on Healthcare.gov (Florida, Georgia, Illinois, North Carolina, Pennsylvania and Texas) and in California and New York, and compared 2014 coverage to 2015 coverage. The analysis concludes that some exchange plans are placing all drugs — even generics — used to treat certain condition in high-cost specialty tiers. The study found that in five of the 20 drug classes, some plans placed all drugs on a specialty tier. In 2015, 29 percent of plans placed protease inhibitors used to combat HIV — even generics — on the highest-cost tiers, while 51 percent of plans placed all multiple sclerosis agents on the highest tier. However, in 2014 all protease inhibitors and MS agents were placed in the highest-cost tiers in 16 percent and 42 percent of plans, respectively. The remaining three of the five classes do not have generics. Avalere further found that a subset of plans in 10 of the drug classes it reviewed placed all single-source branded drugs in a class — or those without a generic equivalent — on a specialty tier. In eight of the 10 classes, 2015 exchange plans were more likely than those in 2014 to do this, according to the report. Avalere found that the practice is most common for some cancer drugs and drugs used to treat multiple sclerosis. About 30 percent of plans also place all single-source drugs for HIV/AIDS on the specialty tier, Avalere found. — Amy Lotven GPhA To Form Biosimilar Division, Hopes To Attract Brand Drug Makers MIAMI — The Generic Pharmaceutical Association (GPhA) is creating a new division designed to deal exclusively with biosimilars with a separate board of directors, the association’s leaders announced at the group’s annual conference in Miami this week, and sources say the trade group is courting brand biologic giant Amgen to join, but Amgen says it is “satisfied with the balanced policies promoted by our existing trade associations.” Craig Wheeler, GPhA board of directors chair and president of Momenta Pharmaceuticals, said the biosimilars division will start operating as soon as it is approved by membership. An industry consultant speaking on background said that GPhA is in talks with Amgen and said the company may join once the division is off the ground. But Amgen says it was just talking about common policy interests with the generic lobby. “Amgen recognizes that manufacturers of biosimilar products may have some common interests in advocating for sound government policies. To that end, we’ve engaged in selected consensus building discussions with members of various trade groups, including GPhA.The recent consensus position among BIO and GPhA on state substitution policies is a good example. However, there remain important differences in perspective about a sustainable framework for biosimilars. We are satisfied with the balanced policies promoted by our existing trade associations,” Amgen said Thursday (Feb. 12). Amgen may soon face biosimilar competition on three of its products and is eying its own biosimilars as well. GPhA’s move comes as FDA is expected to approve the first biosimilar next month — Sandoz’s filgrastim biosimilar of Amgen’s biologic Neupogen. The agency is also reviewing a biosimilar of Amgen’s Neulasta and on Wednesday FDA agreed to review Hospira’s biosimilar of Amgen’s Epogen. “Like our industry, our association must evolve,” Wheeler said. “Our mission to ensure rapid access to fair and open markets for affordable medicines is the same. But the structure and membership must evolve to ensure we remain relative to this new world.” Wheeler said the biosimilars division will have a separate board and budget, but will share most staff with the association as a whole. The chair of the biosimilar division board will also sit on the full GPhA board, and new members 16 INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015 to the biosimilar division will have full membership rights and responsibilities in the lobbying organization, Wheeler said. “Our association again will increase its diversity as we welcome biosimilar competitors from the traditional brand industry into our association,” Wheeler said. “Without them it will be impossible to serve as the representative voice of the industry.” Ralph Neas, outgoing GPhA CEO and president, echoed Wheeler’s statements, saying, “We need to continue transforming into an association that represents the interests of all companies engaged in manufacturing and generic and biosimilar medicines.” “It includes the smaller and midsized companies as well as the large cap global firms. And it includes those who operate only in the generic space as well as those hybrid companies that market both generic and branded drugs,” he said. GPhA’s announcement of its biosimilar division comes as FDA is expected to approve the first biosimilar. In January an FDA advisory panel unanimously recommended that the agency approve Sandoz’s filgrastim biosimilar of Amgen’s Neupogen. Given the timeline established by the Biologic Price Competition and Innovation Act, FDA has until March to make a decision on Sandoz’s application and most stakeholders expect the agency to approve it as the first U.S. biosimilar. Including Sandoz’s filigrastim FDA is considering five biosimilar applications that were submitted in 2014. The agency’s Arthritis Advisory Committee will review the second application for Celltrion, Inc.’s infliximab biosimilar of Janssen Biotech Inc.’s Remicade used to treat Crohn’s Disease on March 17. If approved, Celltrion’s biosimilar will be marketed and sold by Hospira Inc. Other biosimilar applications quickly making their way through the pipeline include Apotex’s pelfilgrastim biosimilar of Amgen’s Neulasta and Hospira’s epoetin alfa biosimilar of Amgen’s Epogen and Janssen’s Procrit. The fifth biosimilar application submitted to FDA in 2014 has not been made public. As the agency prepares for the first biosimilar approvals many issues are still left unresolved including labeling, interchangeability and naming. Wheeler and Neas said GPhA will continue to work on these issues this year. FDA has said it will release draft guidance on labeling and interchangeability in 2015, and many stakeholders have said they expect the agency to show its hand in the naming debate when it approves the first application. In his state of the association address Tuesday Neas also pointed to GPhA’s success in drafting compromise language with the Biotechnology Industry Organization (BIO) and the Pharmaceutical Research and Manufacturers of America (PhRMA) concerning states’ attempts to regulate biosimilar substitution. “I believe without a doubt that this association’s strong resolve and unyielding commitment to assuring unimpeded access to biosimilars, and our victories in a substantial majority of the state contests, are responsible for driving the parties to the negotiating table,” Neas said. — Todd Allen Wilson PwC Study Shows Industry Shift In Thinking On FDA Considering Rx Costs In a dramatic attitude shift more than 40 percent of pharmaceutical and life sciences executives are open to the idea of FDA using economic and clinical values as a factor in drug approval, according to a recent survey by PricewaterhouseCoopers’ (PwC) Health Research Institute. Cost and economic value are outside the FDA’s purview when evaluating drugs for approval but 43 percent of respondents told PwC they would approve of the agency factoring economic value into the approval process. This marks a 29 percentage point jump from a 2010 PwC survey where only 14 percent of respondents said they would be on board. Michael Mentesana, principal and research and development advisory leader at PwC, told Inside Health Policy that the shift in attitudes of industry leaders is a “natural evolution” as the market place has evolved since the Affordable Care Act passed with a focus on containing costs in health care. The change in thinking can be related to a number of factors, including: the ACA; consumer, provider and payer pressures; and other European countries using cost as a factor in drug approval, he said. Mentesana said the results of the survey don’t mean the the pharmaceutical is saying FDA should be considering cost as a factor, just that the industry is less hostile to the idea, noting that the agency probably isn’t going to start looking at cost any time soon. “This is a measure they would accept, or they’re coming around to the idea of looking at in addition to clinical benefit: looking at long-term value, and what does that total cost of care position look like in the marketplace,” Mentesana said. “I really think it’s a marketplace and attitude shift between the industry and its regulator.” The study finds that continued movement in healthcare from fee-for-service payment to a value-based model is placing new demands on pharma and life sciences companies to demonstrate value and justify their costs. “Rising concerns about the price of new therapies reinforces this push,” concludes the study, “The FDA and industry: A recipe for collaborating in the New Health Economy.” High-priced specialty drugs like new hepatitis C cures are spurring the debate, the study notes. Gilead Sciences’ hepatitis C cure Harvoni came in at over $90,000 for a 12-week treatment regimen, and AbbVie’s Viekera Pak cost about INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015 17 $84,000 for a full course. State Medicaid programs and private payers have been scrambling to figure out how to pay for these drugs. In December America’s Health Insurance Plans CEO Karen Ignagni said cost-cutting goals in the health care industry will be unachievable if the pharmaceutical industry continues to have a “blank check.” “The recognition of the problem is the idea that we can no longer continue a system where one sector expects a blank check,” Ignagni said at an IIR-sponsored FDA/CMS Summit in Washington. “That’s the way the system has been organized, and that doesn’t work if the goal is affordability.” The PwC study notes that payers are asking drug manufacturers to justify their prices before placing them on their formularies. In December, Express Scripts cut a deal with AbbVie to get a discount on Viekera Pak in exchange for including it exclusively on its formularies at the expense Harvoni. The study says Scott Josephs, national medical officer at insurance company Cigna Corp., summed up the dynamic at an Advanced Medical Technology Association meeting in October saying, “We don’t want to squelch innovation. But tell me what I’m getting for my health care costs. Show me that these new technologies are superior.” PwC’s study also noted 51 percent of consumers surveyed said FDA should take cost of a drug or medical device into account when considering approval. This was the first time PwC included consumers in its periodic study, Mentesana noted. The study points out that providers are also taking drug costs into account before prescribing a product. A separate recent PwC survey showed that 54 percent of clinicians said they “considered cost to a significant degree,” and only 1 percent of respondents said they didn’t consider cost at all before writing a prescription. As drug and device manufacturers now function in the global marketplace to a large degree, the study notes, they deal with regulators that do consider cost as part of the approval process, like Germany and the United Kingdom. Mentesana said it is difficult to apply those countries’ regulatory schemes to FDA, because they operate in single payer markets, but it is a factor in shifting attitudes within the industry. — Todd Allen Wilson FDA Takes Up Hospira Biosimilar Of Epogen, Must Decide By October FDA has agreed to review Hospira, Inc.’s biosimilar application for an epoetin alfa biosimilar called Retacrit, according to a letter Wednesday (Feb. 11), coming in the wake of the agency’s announcement it will hold an advisory committee meeting next month on a separate infliximab biosimilar that Hospira is developing with Celltrion. This marks the fourth biosimilar application that industry has said FDA has agreed to review, although the agency recently alluded that it has received a fifth application. Hospira filed the application for its epoetin alfa biosimilar in December 2014, and FDA said its user fee goal date for the application is this October. The drug, a biosimilar of Amgen’s Epogen and Janssen’s Procrit, is designated to treat anemia associated with chronic renal failure and chemotherapy, according to a 2007 press release announcing its approval in Europe. This is the second of Hospira’s biosimilar applications to be taken up by the agency, with the first application, filed by the company’s business partner Celltrion, to be discussed at an advisory committee meeting in March. “Together with our partner, Celltrion, Hospira looks forward to continuing our work with the FDA on the approval pathway for biosimilar infliximab,” said the Hospira spokesperson, referring to the company’s first application. Hospira believes FDA should approve its infliximab biosimilar with the trade name Inflectra and with the same International Nonproprietary Name as the reference product, infliximab, while noting the naming decision, including its INN, will ultimately be determined by the agency. Hospira says this had been its experience in other regulated markets and “leads to greater patient safety and less healthcare provider confusion on biosimilars.” Hospira’s infliximad drug is a biosimilar of Jansen Biotech’s Remicade. Hospira and Celltrion entered a business cooperation agreement for biogeneric products, according to a 2009 press release, which states that after regulatory approval, both companies would co-exclusively market the drugs, with the products independently commercialized under each party’s brand name. In addition to Hospira’s two biosimilar applications, FDA is also looking at Sandoz’s filgrastim biosimilar of Amgen’s Neupogen and Apotex’s pelfilgrastim biosimilar of Amgen’s Neulasta, and the agency alluded in a recent report on work hours needed to review applications that there may be a fifth. The agency is expected to approve Sandoz’s filgrastim biosimilar for Amgen’s Neupogen in March following an FDA advisory panel’s recommendation last month that Sandoz had shown biosimilarity to Neupogen. Should FDA approve Sandoz’s product it would be the first biosimilar approved in the United States since passage of the Biologics Price Competition and Innovation Act created a pathway for biosimilars in 2010. The FDA does not publicly announce the submission of drug and device applications, but individual sponsors can announce their submissions if they choose. — Erin Durkin 18 INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015 AdvaMed Builds on Cures Bill’s Breakthrough Devices Plan In 2015 Wish List The Advanced Medical Technology Association’s wish list for 2015 encompasses key provisions in the House Energy and Commerce Committee’s 21st Century Cures draft bill, the group said this week, including a proposal to expand FDA’s proposed priority review program for premarket approval devices to also include 510(k)s and de novo products. AdvaMed suggested the change last year in comments on a draft guidance outlining FDA’s intent to expedite medical device applications that address an unmet Medical need for life-threatening or irreversibly debilitating diseases or conditions. AdvaMed suggested the priority designation be expanded to include more devices — a proposal that ultimately made it into the draft Cures bill. The device industry group argued that 510(k) devices should be included because some meet clinical criteria for breakthrough products. AdvaMed’s proposal builds on the FDA guidance by adding a designation process and clarifying the criteria for designating a breakthrough technology. “The expedited review guidance document that FDA has issued provides a great foundation. We think our pathway proposal just builds on that,” said Janet Trunzo, AdvaMed’s senior executive vice president of technology and regulatory affairs. “It provides more clarity around what products meet the criteria for breakthrough designation, it provides a process of how a designation can occur,” she added. Stephen Ubl, AdvaMed president and CEO, said his group views the House bill as an opportunity to further the industry’s goals of increasing patient access and streamlining innovation approvals. Another FDA-centric priority by AdvaMed in its innovation agenda is to push a Cures bill provision, which lawmakers are still working out language for, that would essentially allow third-parties discern if changes made to a device are small enough that the product can skip the 510(k) process. The idea, according to AdvaMed, is to relieve FDA of the burden of that seemingly tedious responsibility. AdvaMed’s other priorities include calling for FDA to: • Meet and exceed the groundbreaking 2012 user fee agreement goals for such key objectives as reductions in total review times and more frequent and substantive interactions between FDA and product sponsors. • Revitalize the “least burdensome standard” for regulatory review through enhanced reviewer training and encouraging the use of valid scientific evidence from such sources as registries, experience in foreign markets, and peer-reviewed journal articles where appropriate to support safety or effectiveness determinations. • Accept international consensus standards. • Streamline the CLIA waiver process to accelerate the availability of point-of-care, rapid diagnostic information to physicians and patients. • Allow the use of central Institutional Review Boards to facilitate the conduct of multicenter clinical trials. • Improve the advisory committee process to reduce delays in product approvals and enhance the fairness and transparency of the process. • Encourage the development of technologies for rare diseases and pediatric populations. • Work with industry to assure that post-market surveillance is effective and efficient; provides timely, reliable, and actionable data; minimizes unnecessary burdens on providers and industry; and is facilitated by smooth implementation of the Unique Device Identifier program. Still top of the group’s 2015 wish list is repealing the ACA’s medical device tax that Ubl said has caused about 18,500 jobs to close down. He noted that repealing the tax has bipartisan support in Congress. The ACA provision imposes a 2.3 percent sales tax on medical devices manufactured by about 7,000 companies nationwide, AdvaMed says. Although there have been several legislative efforts to repeal the tax, no solution has been found to make up for the almost $30 billion deficit a full repeal would create over the next seven years. “Repealing the medical device tax may or may not require an offset,” Ubl said. “If it does require a pay-for, we are going to be working very closely with those legislative champions in the development of ideas. But they’re the ones that are ideally positioned to survey the landscape of overall possible offsets.” — David Hood HHS Waits To Decide On Tax Filing Special Enrollment Period HHS Secretary Sylvia Burwell said Wednesday (Feb. 18) that the department is still weighing whether to create a special enrollment period for those who file their taxes after Feb. 15 and realize they will be penalized for failing to buy health coverage for 2014, but this week officials were busy touting enrollment figures in the wake of the Feb. 15 enrollment deadline. Lawmakers and consumer advocates have pushed the Obama administration to issue a SEP for Americans who were unaware of the individual mandate, which requires people to purchase coverage or face a fine, in the first year of insurance sign-ups under the Affordable Care Act. Anyone who did not purchase health insurance last year and did not earn a hardship exemption will be required to pay the higher of two amounts when filing their 2014 federal tax return: either 1 percent of their yearly household INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015 19 income, with a maximum penalty equaling the national average premium for a bronze plan; or $95 per adult for the year and $47.50 per child, with a maximum penalty of $285 per family. Those amounts are set to increase each year. A new SEP for the previously uninsured could bump up the total number of sign-ups in the 2015 open enrollment period — currently at 11.4 million people nationwide as of Feb. 15, HHS said Tuesday. Around 8.6 million of those consumers bought coverage or were automatically re-enrolled through the federal marketplace, while about 2.8 million consumers did so through state-based exchanges, HHS announced in its preliminary analysis Wednesday. Florida and Texas led the FFM states in enrollment at 1.6 million and 1.2 million, respectively. Health Access CA also reported Tuesday that 1.4 million people are enrolled through the Covered California exchange, accounting for half of state exchange sign-ups in preliminary estimates. HHS is giving those who were still “in line” to purchase coverage through Healthcare.gov at midnight Sunday — fewer than 150,000 people — an extra week to finish enrolling by Feb. 22. Nearly every state extended its enrollment deadline to allow residents to finish their applications, with new cutoff dates spanning from Tuesday (Feb. 17) in Vermont to April 15 in Washington state. Sign-ups hit a snag Feb. 14 when a site glitch stopped an estimated 500,000 first-time customers from verifying their income, a technical problem more reminiscent of the exchanges’ initial rollout than their smoother second year. The issue affected hundreds of thousands of consumers using Healthcare.gov and other state-based marketplaces like Massachusetts’ Health Connector and Washington state’s Healthplanfinder for at least six hours Saturday evening. HHS said it worked with the IRS to solve “intermittent issues with external verification sources,” and the glitch was cleared up in time for the last day of open enrollment. While HHS said Tuesday that Sunday’s deadline spurred the most sign-ups in one day since the federal marketplace opened for business in October 2013, Burwell told reporters the official daily enrollment total has not been confirmed. Burwell did not have a final count of Americans who were eligible for subsidies. She cited Jan. 30 numbers that showed 87 percent of 2015 enrollees, or 6.5 million people, received tax credits toward their premiums. HHS will analyze the most recent numbers and release an updated, higher figure of subsidized customers, Burwell said. The total number of Americans who effectuated, or paid for, their 2015 coverage has yet to be seen. Burwell said HHS is focused on hitting its goal of 9.1 million paid enrollments, around 2.5 million more sign-ups than the exchanges saw in the first open enrollment period. Because customers are added and dropped throughout the year, there will not be a complete picture until shortly before 2016 open enrollment begins. Burwell declined to say what that date would be, as the administration is preparing to release its final 2016 benefits and payment parameters regulation in the next few weeks — including new guidance that could set standardized open enrollment dates in stone for future plan years. HHS proposed establishing a sign-up period from Oct. 1 to Dec. 15 each year, a move supported by many states, consumer groups and other advocates for its uniformity and simplicity. Other stakeholders believe the open enrollment period should extend through the end of tax filing season on April 15. Burwell added that the total effectuated enrollments in 2014 will drop to a minimum of 6.5 million, after as many as 200,000 people whose immigration status cannot be verified lose coverage at the end of the month. Those people are not included in the 8.6 million federal enrollment figure. — Rachel S. Karas AdvaMed Pushes For Coverage Of Clinical Trials, Costs Of New Tech The Advanced Medical Technology Association is lobbying to get Medicare to cover beneficiaries’ costs of participating in clinical trials and to help pay hospitals for the cost of new technology. Don May, a lobbyist for AdvaMed, said Medicare pays beneficiaries to participate in drug trials, and AdvaMed is asking CMS to treat medical devices the same. Unlike with drug trials, “to get the study covered for new technology they have to go through a lengthy process,” May said. He said device-trial participation is usually approved, and industry merely wants CMS to get rid of the red tape. AdvaMed is also hoping to make changes to new technology add-on payments, which pay hospitals to offset the costs of using new medical devices. In addition to the rate Medicare normally pays for procedures, it reimburses hospitals for half of the additional cost of using new technology. AdvaMed wants Medicare to cover the entire additional cost of new technology. The group also wants more coverage of their telehealth devices, which May said allow doctors to remotely monitor patients and could help coordinate care. May said these devices would be useful for patients who struggle to make it to the doctor because devices instead allow physicians monitor those patients. AdvaMed wants the devices temporarily covered for three to five years, and Medicare only would pay long-term for devices that demonstrate that they save the system money. Finally, the group wants to work on the product codes, which determines how Medicare pays for them. May said companies should be given 60 days to comment on proposed local coverage determinations and Medicare Administrative Contractors should be required to explain coverage decisions. — Rebecca Beitsch 20 INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015
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