A&B Healthcare Week in Review, April 18, 2014

I. REGULATIONS, NOTICES, & GUIDANCE

• On April 16, 2014, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule entitled “Medicare and Medicaid Programs; Fire Safety Requirements for Certain Health Care Facilities”. The proposed rule would amend fire safety standards for Medicare and Medicaid participating hospitals, critical access hospitals (CAHs), long-term care facilities, intermediate care facilities for individuals with intellectual disabilities (ICF-IID), ambulatory surgery centers (ASCs), hospices which provide inpatient services, religious non-medical health care institutions, and programs of all-inclusive care for the elderly (PACE) facilities. Further, the proposed rule would adopt the 2012 edition of the Life Safety Code (LSC). The LSC sets out fire safety requirements for new and existing buildings, and is issued by the National Fire Protection Association (NFPA), a private, nonprofit organization dedicated to reducing loss of life due to fire. Currently, CMS applies the standards set out in the 2000 edition of the LSC. In a fact sheet describing the proposal, CMS asserts that the update “…would reduce burden on health care providers, as the 2012 edition of the LSC also is aligned with the international building codes and would make compliance across codes much simpler for Medicare and Medicaid-participating facilities”. Comments on the proposed rule are due June 16, 2014.
• On April 17, 2014, CMS issued a notice announcing the reopening of the application period for the Comprehensive ESRD Care initiative letters of intent and application. Through the Comprehensive ESRD Care Model, the agency seeks to identify ways to improve the coordination and quality of care for the ESRD population, while lowering total per-capita expenditures to the Medicare program. The letter of intent submission date for End-stage Renal Disease Seamless Care Organizations (ESCOs) that include a dialysis facility from a large dialysis organization (LDO) is June 23, 2014, and the submission deadline for the LDO application is June 23, 2014. The letter of intent submission date for ESCOs that include a non-LDO facility is September 15, 2014, and the submission deadline for the non-LDO application is September 15, 2014.
• On April 14, 2014, Food and Drug Administration (FDA) announced that an information collection entitled “Adverse Event Program for Medical Devices (Medical Product Safety Network)” had been submitted to the Office of Management and Budget (OMB) for review and clearance. The Federal Food, Drug, and Cosmetic Act (the FD Act) authorizes FDA to require (1) manufacturers to report medical device-related deaths, serious injuries, and malfunctions, and (2) user facilities to report device-related deaths directly to manufacturers and FDA and serious injuries to the manufacturer. The legislation provides FDA with the opportunity to design and implement a national surveillance network, composed of well-trained clinical facilities, to provide high-quality data on medical devices in clinical use. This system is called the Medical Product Safety Network (MedSun). FDA is seeking OMB clearance to continue to use electronic data collection to obtain the information on Form FDA 3500A (approved under OMB control number 0910-0291) related to medical devices and tissue products from the user facilities participating in MedSun, to obtain a demographic profile of the facilities, and for additional questions which will permit FDA to better understand the cause of reported adverse events. Participation in the program is voluntary and currently includes 250 facilities. Comments are due May 14, 2014.
• On April 14, 2014, the FDA Center for Devices and Radiological Health (CDRH) issued a final order to reclassify stair-climbing wheelchairs, a Class III device, into a Class II device based on new information and subject to premarket notification, and further clarify the identification. The order went into effect April 14, 2014. More information on the Agency’s reclassification may be found here.
• On April 16, 2014, FDA issued a proposed information collection entitled “Orphan Drugs Products: Common European Medicines Agency/Food and Drug Administration Application Form for Orphan Medicinal Product Designation”. FDA is amending the 1992 Orphan Drug Regulations, part 316. The 1992 regulations specify the procedures for sponsors of orphan drugs to use in obtaining the incentives provided for in the FD Act and set forth the procedures that FDA will use in administering the FD Act. The amendments are intended to clarify regulatory provisions and make minor improvements to address issues that have arisen since the issuance of the regulations in 1992. They are intended to assist sponsors who are seeking and who have obtained orphan drug designations, as well as FDA in its administration of the orphan drug program. Comments are due June 16, 2014.
• On April 17, 2014, FDA announced the availability of draft guidance entitled “Live Case Presentations During Investigational Device Exemption (IDE) Clinical Trials”. This guidance is intended, in part, to improve the quality of information submitted by sponsors in an IDE application or supplement to an IDE application and to ensure consistency in the review of those submissions. This draft guidance is intended to clarify FDA's regulations and policies regarding live case presentations using unapproved or uncleared investigational devices in the United States. Comments on the draft guidance must be received by July 16, 2014.
• On April 17, 2014, FDA announced the availability of draft guidance entitled “Endotoxin Testing Recommendations for Single-Use Intraocular Ophthalmic Devices.” National outbreaks of Toxic Anterior Segment Syndrome (TASS) have been associated with single-use intraocular ophthalmic devices (IODs) and single-use intraocular ophthalmic surgical instruments/accessories that are contaminated with endotoxins. These devices can become contaminated as part of the manufacturing, sterilization, or packaging processes. This guidance document provides recommendations for endotoxin limits as well as endotoxin testing to manufacturers and other entities involved in submitting premarket applications (PMAs) or premarket notification submissions (510(k)s) for different categories of IODs to mitigate future outbreaks of TASS. Comments on the draft guidance must be received by July 16, 2014.
• On April 18, 2014, CMS announced that an information collection request entitled “Prospective Evaluation of Evidence-Based Community Wellness and Prevention Programs” had been submitted to OMB for review. In the notice the agency requests comments on the burden of collecting information from Medicare beneficiaries on community wellness and prevention programs after it re-evaluated and made some changes to a previous beneficiary survey. Comments are due May 19, 2014.
• On April 18, 2014, CMS issued several information collection requests. CMS proposes to extend a currently approved collection entitled “Basic Health Program Report for Health Insurance Exchange Premium”; to revise a currently approved collection entitled “Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Competitive Bidding Program”; and to extend an information collection entitled “Home Office Cost Statement Form”. Comments on the proposed collections are due June 17, 2014.

Event Notices:

• April 22, 2014: CMS will hold a Special Open Door Forum April 22nd to allow physicians and other interested parties to give feedback on data elements for the Suggested Electronic Clinical Template for Home Health. CMS has developed a list of clinical elements within a Suggested Electronic Clinical Template that would assist physicians when documenting the Home Health (HH) face-to-face encounter for Medicare purposes. While not intended to be a data entry form, the template will describe the clinical elements that CMS believes would be useful in supporting the documentation requirements for coverage of Home Health services. CMS will work in collaboration with the Department of Health and Human Services (HHS) Office of the National Coordinator for Health IT (ONC) and the electronic Determination of Coverage (eDoC) workgroup which are focused on giving practitioners access to payer approved tools for the electronic submission of medical documentation. The proposed document may be found here, and comments on the document may be sent to eclinicaltemplate@cms.hhs.gov. The forum will take place from 3:00 PM to 4:00 PM. More information on the forum may be found here.
• May 12, 2014: FDA announced the rescheduling of a February 13, 2014, public workshop convened by the Institute of Medicine (IOM) entitled “Characterizing and Communicating Uncertainty in the Assessment of Benefits and Risks in Drug Regulatory Decision-Making”. The workshop will be held on May 12, 2014 from 9:00 AM to approximately 5:00 PM at FDA’s White Oak Campus in Silver Spring, Maryland.
• May 13-14, 2014: FDA announced that it will hold a public workshop entitled “Proposed Strategy and Recommendations for a Risk-Based Framework for Food and Drug Administration Safety and Innovation Act Health Information Technology”. FDA, the Office of the National Coordinator for Health Information Technology (ONC), and the Federal Communication Commission (FCC) seek broad input from stakeholders and experts on the proposed strategy and recommendations for a risk-based framework for the Food and Drug Administration Safety and Innovation Act (FDASIA) Health Information Technology (IT). The topic to be discussed is the FDASIA Health IT report that contains a proposed strategy and recommendations on an appropriate, risk-based framework for health IT that promotes innovation, protects patient safety, and avoids regulatory duplication.
• June 3, 2014: FDA announced the rescheduling of a one-day public workshop entitled “Advancing the Development of Pediatric Therapeutics (ADEPT): Pediatric Bone Health”. The purpose of this initial workshop is to provide a forum to consider issues related to advancing pediatric regulatory science in the evaluation of bone health in pediatric patients. The workshop scheduled for March 4, 2014, was postponed due to unanticipated weather conditions and rescheduled for June 3, 2014. The public workshop will be held on June 3, 2014, from 8:00 AM to 5:30 PM at FDA’s White Oak Campus in Silver Spring, Maryland.

LEGISLATION & COMMITTEE ACTION

U.S. Senate

• The Senate adjourned for recess this week and will reconvene for regular legislative business on Monday April 28, 2014.
  • On April 17, 2014, Senators Lamar Alexander (R-TN), John Thune (R-SD), and Orrin Hatch (R-UT) sent a letter to Census Bureau Director John H. Thompson urging the administration to continue asking the existing health insurance coverage questions in the Census Bureau’s annual survey, along with its planned new questions, for two years. The New York Times reported Tuesday that the Census Bureau is this year changing its annual Current Population Survey questions regarding health insurance coverage. The Senators write: “We respectfully request that you continue to collect data using both the old and new survey questions for this year and next year. Of course we always want the best statistical information, but the collection of only one year of comparable data is insufficient. Continuing to collect data using both the old and new survey questions will help ensure that you do not conflate a change in measurement with changes due to implementation of the new health care law.” In a separate letter to Thompson regarding the changes, House Oversight and Government Reform Committee Chairman Darrell Issa (R-CA) and Committee Member Blake Farenthold (R-TX) assert that "Numerous experts from across the political spectrum claim that the Census's new measure will limit the effectiveness of the survey to measure the effects the Affordable Care Act (ACA) has had on the number of people with health insurance over time. We have serious concerns about the timing of this revision given the purported input and approval of officials at the White House and HHS of these revamped survey questions."

House of Representatives

• The House adjourned for recess this week and will reconvene for regular legislative business on Monday April 28, 2014.
• A bicameral group of eleven Democratic lawmakers—including Senator Dick Durbin (D-IL) and Representative Henry Waxman (D-CA)—released a report on electronic cigarette marketing on April 11 entitled “Gateway to Addiction? A Survey of Popular Electronic Cigarette Manufacturers and Marketing to Youth.” In a press release announcing the report, lawmakers said that the research constitutes the “…first comprehensive investigation of e-cigarette marketing tactics and was compiled using responses from eight e-cigarette manufacturers received by the lawmakers from their investigation into the industry and other publicly available information”. The report finds that e-cigarette companies “appear to use various marketing practices that appeal to youth”. The document outlines six recommendations for action on e-cigarettes, including FDA-regulation.

III. REPORTS, STUDIES, & ANALYSES

• On April 14, 2014, the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) issued updated estimates of the budgetary effects of the provisions of the ACA that relate to health insurance coverage. The new estimates, which are included in CBO’s latest baseline projections, reflect CBO’s most recent economic forecast, account for administrative actions taken and regulations issued through March 2014, and incorporate new data and various modeling updates. Relative to their previous projections made in February 2014, CBO and JCT now estimate that the ACA’s coverage provisions will result in lower net costs to the federal government. The agencies currently project a net cost of $36 billion for 2014, $5 billion less than the previous projection for the year; and $1,383 billion for the 2015–2024 period, $104 billion less than the previous projections. On Monday, White House Press Secretary Jay Carney characterized the projections as a signal of the success of the President’s health law, stating, “This is historic progress and shows the Affordable Care Act is working as it was supposed to”. CBO also released updated budget projections for 2014 to 2024. The report finds that projected net outlays for Medicare Parts A and B are slightly higher (by a total of $14 billion) from 2015 through 2017 and lower in subsequent years than they were in the previous baseline. The higher projected spending in the next few years is largely the result of recent data that show greater than-anticipated spending for physicians’ services in 2013. The lower projected spending in subsequent years stems from two factors: First, although recent legislation temporarily (through March 2015) overrides the formula used to determine payment rates for physicians’ services, that formula—if left in place—will reduce payment rates in subsequent years to recoup the higher spending in the next few years. Second, after analyzing recent trends, CBO has slightly reduced projected rates of growth for many other categories of Part A and Part B services.
• On April 15, 2014, the Urban Institute issued an analysis of Health Reform Monitoring Survey data which expands on the “quick take” results released April 3, 2014. The authors used March 2014 Health Reform Monitoring Survey (HRMS) data to examine changes in health insurance coverage in early March 2014 relative to coverage over the prior year. The results show that the number of uninsured nonelderly adults fell by an estimated 5.4 million between September 2013 and early March 2014. In early March 2014, the uninsurance rate for nonelderly adults was estimated to be 15.2% for the nation, a drop of 2.7 percentage points since September 2013. Because this estimate does not capture the surge in enrollment that occurred in the Marketplace in late March, the drop in the uninsurance rate and number of uninsured by the end of March was likely even higher. The results show that there were also strong gains in coverage for young adults (age 18 to 30) and nonwhite, non-Hispanic adults, groups that have historically had higher than average uninsurance rates.
• On April 16, 2014, the Office of Inspector General (OIG) issued a report entitled “Medicare and Beneficiaries Could Save Billions If CMS Reduces Hospital Outpatient Department Payment Rates for Ambulatory Surgical Center-Approved Procedures to Ambulatory Surgical Center Payment Rates”. Medicare generally saves when outpatient surgical procedures that do not pose significant risk to patients are performed in an ambulatory surgical center (ASC) instead of an outpatient department. The report finds that Medicare saved almost $7 billion during calendar years (CYs) 2007 through 2011 and could potentially save $12 billion from CYs 2012 through 2017 because ASC rates are frequently lower than outpatient department rates for surgical procedures. In addition, OIG finds that Medicare could generate savings of as much as $15 billion for CYs 2012 through 2017 if CMS reduces outpatient department payment rates for ASC-approved procedures to ASC payment levels for procedures performed on beneficiaries with low-risk and no-risk clinical needs.
• On April 16, 2014, Gallup released the results of a survey which shows that uninsured Americans’ likelihood of signing up for insurance differs depending on the amount of the fine they would have to pay for not carrying insurance. At a hypothetical $95 fine level, uninsured Americans are as likely to say they would not get insurance (46%) as to say they would (47%). At a $500 fine level, the percentage saying they would get insurance jumps to 60%, but this percentage levels off at a $1,000 fine level at 62%. The authors suggest that the increase in the ACA fine next year to a minimum $325, or 2% of one's yearly household income, could compel a significant amount of still-uninsured Americans who did not sign up during the open enrollment period to do so in 2015. This increase could begin to taper off between the 2015 and 2016 tax years if the average fine moves between $500 and $1,000. At this point, there is a distinct possibility that the growth in the insurance coverage rate will either slow down or stall based on expected future fine levels.
• On April 17, 2014, CBO issued an analysis of the proposals in the President’s budget request for fiscal year 2015, submitted to Congress on March 4, 2014. The analysis is based on CBO’s economic projections and estimating models (rather than the Administration’s), and it incorporates estimates of the effects of the President’s tax proposals that were prepared by the staff of the Joint Committee on Taxation (JCT). The CBO analysis significantly raises the savings estimates for a Part D low-income subsidy copay policy and a Medigap surcharge on first dollar coverage compared with OMB’s figures. A list of CBO’s estimated effects on direct spending and revenues for health care programs in the President’s 2015 budget proposal may be found here.
• On April 18, 2014, the Government Accountability Office (GAO) issued a report entitled “Medicare Imaging Accreditation: Effect on Access to Advanced Diagnostic Imaging (ADI) Is Unclear amid Other Policy Changes”. The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) required that beginning January 1, 2012, suppliers that produce the images for Medicare-covered ADI services in office settings, such as physician offices, be accredited by an organization approved by CMS. In the report, GAO examined trends in the use of the three ADI modalities— magnetic resonance imaging (MRI); computed tomography (CT); and nuclear medicine (NM), including positron emission tomography (PET) services—provided to Medicare beneficiaries from 2009 through 2012 that were subject to the ADI accreditation requirement. GAO found that the number of advanced diagnostic imaging (ADI) services provided to Medicare beneficiaries in the office setting—an indicator of access to those services—began declining before and continued declining after the accreditation requirement went into effect on January 1, 2012. In particular, the rate of decline from 2009 to 2010 was similar to the rate from 2011 to 2012 for MRI; CT; and NM, including PET services. These results suggest that the overall decline was driven, at least in part, by factors other than accreditation. The percentage decline in the number of ADI services provided in the office setting was generally similar in both urban and rural areas during the period GAO studied.

IV. OTHER HEALTH POLICY NEWS

• On April 17, 2014, President Barack Obama met with state insurance commissioners to discuss preparations for 2015 enrollment in the Health Insurance Exchanges, which begin November 15, 2014. The National Association of Insurance Commissioners (NAIC) subsequently issued a press release highlighting some of the major points of the discussion. Later, the President announced at the White House that 8 million Americans had signed up for private health coverage under the ACA, of which 35% are under 35 years old. CBO originally projected that enrollment would reach 7 million, but the agency reduced its projection to 6 million in February following the troubled rollout of the Federally-Facilitated Exchanges. In a corresponding fact sheet on the new enrollment figures, the Administration notes that 5.7 million people will remain uninsured in 2016 because 24 states have not expanded Medicaid under the ACA.
• On April 17, 2014, the American Hospital Association (AHA) issued a letter to the CMS Innovation Center suggesting that the current models for Accountable Care Organizations (ACOs) will not be sustainable in the long-term unless CMS makes significant changes to encourage provider participation. AHA says the group has “…significant concerns about the design of the current Pioneer ACO Model and the Medicare Shared Savings Program (MSSP)” which “…place too much risk and burden on providers with too little opportunity for reward in the form of shared savings.”

This advisory is published by Alston & Bird LLP’s Health Care practice area to provide a summary of significant developments to our clients and friends. It is intended to be informational and does not constitute legal advice regarding any specific situation. This material may also be considered attorney advertising under court rules of certain jurisdictions.