A&B Healthcare Week in Review, February 20, 2015

I. REGULATIONS, NOTICES, & GUIDANCE

• On February 20, 2015, the Centers for Medicare and Medicaid Services (CMS) released the “Advance Notice of Methodological Changes for Calendar Year (CY) 2016 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies and 2016 Call Letter”. In accordance with section 1853(b)(2) of the Social Security Act, CMS is notifying the public of planned changes in the MA capitation rate methodology and risk adjustment methodology applied under Part C of the Act for CY 2016. Also included with this notice are proposed changes in the payment methodology for CY 2016 for Part D benefits and annual adjustments for CY 2016 to the Medicare Part D benefit parameters for the defined standard benefit. For 2016, CMS will announce the MA capitation rates and final payment policies on Monday, April 6, 2015, in accordance with the timetable established in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. CMS seeks comments on the document by Friday March 6, 2015, which may be submitted to AdvanceNotice2016@cms.hhs.gov. A CMS press release on the proposed payment and policy updates may be found here; an accompanying fact sheet may be found here. In the fact sheet, CMS explains that the agency expects that the proposed policy changes will have a -0.95% impact on plan payments relative to last year, but that plans will experience an average +1.05% change in revenue overall when coding trends are taken into account. 
• On February 20, 2015, CMS released a final rule entitled “Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2016”. This final rule sets forth payment parameters and provisions related to the risk adjustment, reinsurance, and risk corridors programs; cost sharing parameters and cost-sharing reductions; and user fees for Federally-facilitated Exchanges. It also finalizes additional standards for the individual market annual open enrollment period for the 2016 benefit year, essential health benefits, qualified health plans, network adequacy, quality improvement strategies, the Small Business Health Options Program, guaranteed availability, guaranteed renewability, minimum essential coverage, the rate review program, the medical loss ratio program, and other related topics. The regulations go into effect in sixty days, except the amendments to §§156.235, 156.285(d)(1)(ii), and 158.162, which are effective on January 1, 2016. A CMS fact sheet on the final rule may be found here. CMS simultaneously issued the Final 2016 Letter to Issuers in the Federally-Facilitated Marketplaces, which may be found here. 
• On February 18, 2015, the Food and Drug Administration (FDA) released a notice entitled “Supplemental Applications Proposing Labeling Changes for Approved Drugs and Biological Products; Public Meeting; Request for Comments; Reopening of the Comment Period”. In the notice the Agency is announcing a 1-day public meeting entitled ‘‘Supplemental Applications Proposing Labeling Changes for Approved Drugs and Biological Products” (see the next section, Event Notices, for more information). The purpose of the meeting is to provide a public forum for FDA to listen to comments on the proposed rule on ‘‘changes being effected’’ (CBE-o) supplements that was published in the Federal Register of November 13, 2013, and alternatives offered to this proposed rule. The notice also states that FDA is reopening the comment period for the proposed rule to receive submissions of additional written comments on the proposed rule as well as alternative proposals presented during the public meeting. In the proposed rule, FDA proposed to amend its regulations to revise and clarify procedures for application holders of an approved drug or biological product to change the product labeling to reflect certain types of newly acquired information in advance of FDA's review of the change. The proposed rule would create parity among application holders with respect to such labeling changes by permitting holders of abbreviated new drug applications (ANDAs) to distribute revised product labeling that differs in certain respects, on a temporary basis, from the labeling of its reference listed drug (RLD) upon submission to FDA of a “changes being effected” (CBE-0) supplement. The comment period now extends to April 27, 2015. 
• On February 13, 2015, CMS released a guidance entitled “Timing of Reconciliation of Cost-Sharing Reductions for the 2014 Benefit Year”. The Affordable Care Act (ACA) requires issuers of qualified health plans (QHPs) to provide cost-sharing reductions to eligible enrollees in such plans, and provides for issuers to be reimbursed for the value of those cost-sharing reductions. Under 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 these enrollees. Under CMS regulations, as a transitional measure, issuers were permitted to elect either to calculate cost sharing that an enrollee would have paid under a standard plan using the standard methodology – the most accurate approach – or to estimate that cost sharing using a simplified methodology based on actuarial estimates of certain key cost-sharing parameters. CMS notes in the guidance that the simplified methodology may produce inaccurate estimates of cost-sharing reductions. Therefore, 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. Issuers that do not switch to the standard methodology must use the simplified methodology, including using the “AV methodology,” as applicable. Issuers that selected the standard methodology last year may not switch to the simplified methodology. 
• On February 19, 2015, CMS filed a final rule entitled “Basic Health Program: Federal Funding Methodology for Program Year 2016”. This document provides the methodology and data sources necessary to determine federal payment amounts made in program year 2016 to states that elect to establish a Basic Health Program under the ACA to offer health benefits coverage to low-income individuals otherwise eligible to purchase coverage through Affordable Insurance Exchanges. These regulations are effective January 1, 2016. 
• On February 20, 2015, the Office of Personnel Management (OPM) filed a final rule entitled “Patient Protection and Affordable Care Act; Establishment of the Multi-State Plan Program for the Affordable Insurance Exchanges”. OPM is issuing a final rule implementing modifications to the Multi-State Plan (MSP) Program based on the experience of the Program to date. OPM established the MSP Program pursuant to the ACA. This rule clarifies the approach used to enforce the applicable standards of the ACA with respect to health insurance issuers that contract with OPM to offer MSP options; amends MSP standards related to coverage area, benefits, and certain contracting provisions under section 1334 of the ACA; and makes non-substantive technical changes. The rule will be published in the Federal Register on February 24th, and will be effective thirty days thereafter. 
• On February 18, 2015, the Internal Revenue Service (IRS) released a guidance document entitled “Guidance on the Application of Code § 4980D to Certain Types of Health Coverage Reimbursement Arrangements”. This notice reiterates the conclusion in previous guidance addressing employer payment plans, including Notice 2013-54, 2013-40 I.R.B. 287, that employer payment plans are group health plans that will fail to comply with the market reforms that apply to group health plans under the ACA. For this purpose, an employer payment plan refers to a group health plan under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy or directly pays a premium for an individual health insurance policy covering the employee. This notice also provides transition relief from the assessment of excise tax under Internal Revenue Code (Code) § 4980D for failure to satisfy market reforms in certain circumstances. This notice also provides additional guidance on the tax treatment of employer payment plans. This notice supplements and clarifies the guidance provided in Notice 2013-54 and other guidance in response to comments and questions from taxpayers and stakeholder groups about certain aspects of that guidance. 
• On February 19, 2015, FDA announced the availability of draft guidance for industry entitled ‘‘Adverse Event Reporting for Outsourcing Facilities Under Section 503B of the Federal Food, Drug, and Cosmetic Act.’’ Under the Federal Food, Drug, and Cosmetic Act (the FD&C Act), an outsourcing facility must submit adverse event reports to FDA. This guidance explains FDA’s current thinking on adverse event reporting for outsourcing facilities. Comments should be submitted by May 20, 2015. More information may be found here. 
• On February 19, 2015, FDA announced the availability of a draft guidance entitled ‘‘Guidance for Entities Considering Whether to Register as Outsourcing Facilities Under Section 503B of the Federal Food, Drug, and Cosmetic Act.’’ This draft guidance is intended to inform entities that are considering registering as outsourcing facilities under section 503B of the Federal Food, Drug, and Cosmetic Act (the FD&C Act), as added by the Drug Quality and Security Act (DQSA), of the regulatory implications of registration as an outsourcing facility. Comments should be submitted by May 20, 2015. More information may be found here. 
• On February 19, 2015, FDA announced the availability for public comment of a draft standard memorandum of understanding (MOU) entitled ‘‘Memorandum of Understanding Addressing Certain Distributions of Compounded Human Drug Products Between the State of [insert State] and the U.S. Food and Drug Administration.’’ The draft standard MOU describes the responsibilities of the State that chooses to sign the MOU in investigating and responding to complaints related to compounded human drug products distributed outside the State and in addressing the interstate distribution of inordinate amounts of compounded human drug products. FDA is also announcing the withdrawal of an earlier draft standard MOU entitled ‘‘Memorandum of Understanding on Interstate Distribution of Compounded Drug Products,’’ which was issued in January 1999. The January 1999 draft standard MOU is superseded by the new draft standard MOU. Comments should be submitted by June 19, 2015. 
• On February 19, 2015, FDA announced the availability of a draft guidance for industry entitled ‘‘Mixing, Diluting, or Repackaging Biological Products Outside the Scope of an Approved Biologics License Application.’’ This draft guidance describes the conditions under which FDA does not intend to take action against a state-licensed pharmacy, a Federal facility, or outsourcing facility that mixes, dilutes, or repackages certain biological products without obtaining an approved biologics license application (BLA). Comments should be submitted by May 20, 2015. More information may be found here. 
• On February 19, 2015, FDA announced the availability of a draft guidance for industry entitled ‘‘Repackaging of Certain Human Drug Products by Pharmacies and Outsourcing Facilities.’’ This guidance describes the conditions under which FDA does not intend to take action for violations of the Federal Food, Drug, and Cosmetic Act (the FD&C Act), when a state-licensed pharmacy, a Federal facility, or an outsourcing facility repackages human drug products. When this guidance becomes final, the Agency may also consider withdrawing or revising other guidance documents that address human drug repackaging, including section 446.100 of the Compliance Program Guidance (CPG) Manual, entitled ‘‘Regulatory Action Regarding Approved New Drugs and Antibiotic Drug Products Subjected to Additional Processing or other Manipulations,’’ which was issued in January 1991, and section 460.100 of the CPG Manual, entitled ‘‘Hospital Pharmacies—Status as Drug Manufacturer,’’ which was issued in October 1980. Comments should be submitted by May 20, 2015. More information may be found here. 
• On February 17, 2015, FDA announced the availability of a guidance for industry entitled ‘‘Complicated Urinary Tract Infections: Developing Drugs for Treatment.’’ The purpose of this guidance is to assist sponsors in the clinical development of drugs for the treatment of complicated urinary tract infections (cUTIs). This guidance finalizes the revised draft guidance of the same name issued on February 24, 2012. More information may be found here. 
• On February 17, 2015, FDA released a notice entitled “Regulatory Site Visit Training Program”. FDA’s Center for Biologics Evaluation and Research (CBER) is announcing an invitation for participation in its Regulatory Site Visit Training Program (RSVP). This training program is intended to give CBER regulatory review, compliance, and other relevant staff an opportunity to visit biologics facilities. These visits are intended to allow CBER staff to directly observe routine manufacturing practices and to give CBER staff a better understanding of the biologics industry, including its challenges and operations. The purpose of this document is to invite biologics facilities to contact CBER for more information if they are interested in participating in this program. Submit either an electronic or written request for participation in this program by March 19, 2015. The request should include a description of your facility relative to products regulated by CBER. 
• On February 19, 2015, the Department of Veterans Affairs (VA) announced an opportunity for the public to comment on an information collection activity entitled “Expanded Access to Non-VA Care Through the Veterans Choice Program”. Comments are due April 20, 2015.

Event Notices

• March 27, 2015: On February 18, 2015, the Food and Drug Administration (FDA) released a notice entitled “Supplemental Applications Proposing Labeling Changes for Approved Drugs and Biological Products; Public Meeting; Request for Comments; Reopening of the Comment Period”. In the notice the Agency is announcing a 1-day public meeting entitled ‘‘Supplemental Applications Proposing Labeling Changes for Approved Drugs and Biological Products”. The purpose of the meeting is to provide a public forum for FDA to listen to comments on the proposed rule on ‘‘changes being effected’’ supplements that was published in the Federal Register of November 13, 2013, and alternatives offered to this proposed rule. The public meeting will be held on March 27th from 8:00 AM to 5:00 PM at the FDA White Oak Campus in Silver Spring, Maryland. 
• May 6-8, 2015: The FDA Cincinnati District, in co-sponsorship with Xavier University, is announcing a public conference entitled ‘‘FDA/Xavier University Global Medical Device Conference (MedCon).’’ This 3-day public conference includes presentations from key FDA officials and industry experts with small group breakout sessions. The conference is intended for companies of all sizes and employees at all levels. The public conference will be held on the campus of Xavier University, 3800 Victory Pkwy., Cincinnati, OH 45207.
• June 20-24, 2015: The Detroit District Office, in co-sponsorship with the Association of Food and Drug Officials (AFDO), is announcing a public conference entitled ‘‘In Motion: Science Transforming Policy in Food, Drug, and Medical Device Regulation.’’ The conference Web site is http://indy.afdo.org/. This conference is intended to provide information about FDA food, drug, and device regulation to the regulated industry. The public conference will be held on June 20 to 24, 2015. Times will vary. The conference will be held at the Sheraton Indianapolis Hotel at Keystone Crossing, Indianapolis.

II. LEGISLATION & COMMITTEE ACTION

• The House and Senate were adjourned for a weeklong recess beginning with the President’s Day holiday Monday, and will resume regular legislative business next week. The House of Representatives calendar may be accessed here; the Senate calendar may be accessed here.

III. REPORTS, STUDIES, & ANALYSES 

• On February 18, 2015, the Better Medicare Alliance released the results of a study, conducted by Miliman, Inc., entitled “Medicare Advantage Funding Cuts and the Impact on Beneficiary Value”. The report finds that overall, Medicare Advantage “value add” for beneficiaries has been decreasing every year from 2012 to 2015. (“Value add” is defined as the value of benefits provided to a plan’s beneficiaries above traditional Medicare that are not funded through member premiums). According to the report, the cumulative change in average annual premium and average annual value add, and for all general enrollment beneficiaries nationwide, from 2012 to 2015, is $18.96 and -$180.24, respectively. The cumulative change in average annual premium and average annual value add, for general enrollment beneficiaries nationwide while excluding the impact of member migration for continuing plans, from 2012 to 2015 is $157.32 and -$295.20, respectively. “The Medicare Advantage market will continue to evolve with the increased pressure on MAO revenue resulting from the ACA, the [American Taxpayer Relief Act (ATRA)], sequestration, the end of the Quality Bonus Payment Demonstration, and other regulatory changes,” the report concludes. Many changes currently scheduled to occur in 2016 “…will put continued pressure on revenue payments to MAOs and, consequently, possibly on beneficiaries as well through additional benefit reductions and premium increases.
• The Centers for Disease Control and Prevention (CDC) released a survey this week entitled “Progress With Electronic Health Record Adoption Among Emergency and Outpatient Departments: United States, 2006–2011”. This report describes the adoption of EHRs in hospital emergency departments (EDs) and outpatient departments (OPDs) from 2006 through 2011 using the National Hospital Ambulatory Medical Care Survey (NHAMCS). The study concludes that adoption of EHRs by hospital EDs and OPDs has increased over this period, with 84% of EDs and 73% of OPDs using an EHR system by 2011. In addition, the percentage of hospitals reporting having an EHR system that met the criteria for a basic system increased significantly among EDs (from 19% to 54%) and OPDs (from 9% to 57).
• On February 18, 2015, the CMS Office of Inspector General (OIG) released a report entitled “CMS Made Payments Associated with Individual Physicians After Referring their Medicare Debts to the Department of the Treasury for Collection”. In its review, OIG identified 82 Medicare individual physicians with delinquent debts totaling $29,406,588 that CMS had referred to Treasury for collection. The report found that CMS made Medicare and Medicaid payments associated with 23 of 82 individual physicians with delinquent debts after CMS had referred their Medicare debts to Treasury for collection. Specifically, CMS directly paid 5 individual physicians after having referred their Medicare debts to Treasury, and 21 individual physicians provided services for an entity that received Federal reimbursement. In addition, 13 of the 23 individual physicians whose debts were referred to Treasury had ownership interest and/or managing control of 15 Medicare Part B entities that received Medicare reimbursement from CMS after CMS referred the individual physicians’ debts to Treasury. OIG made four recommendations for CMS to address these findings, including: 1) consider authorizing Treasury to use its administrative wage garnishment authority to collect delinquent debts; and 2) consider promulgating Federal regulations to prevent entities for which individual physicians with delinquent debts that have any ownership interest and/or managing control from enrolling in Medicare.

IV. OTHER HEALTH POLICY NEWS 

• On February 17, 2014, the White House announced that approximately 11.4 million individuals signed up for health coverage during the 2015 Open Enrollment period, which formally ended February 15th. However, CMS announced earlier this week that the enrollment deadline would be extended until February 22nd for consumers seeking to obtain coverage on the Federal Exchange who may have been impacted by a technological glitch. "We are pleased that the vast majority of consumers were able to apply and pick a plan through HealthCare.gov or its call center without a problem," said Aaron Albright, CMS spokesman at the time. "For those consumers who were unable to complete their enrollment because of longer than normal wait times at the call center in the last three days or because of a technical issue such as being unable to submit an application because their income could not be verified, we will provide them with a time-limited special enrollment period for March 1 coverage." Then, on February 20th, CMS announced a new Special Enrollment Period for “individuals and families who were unaware or didn’t understand the implications of this new requirement to enroll in 2015 health insurance coverage through the [Federal Marketplace]”. For these individuals, CMS is offering an extended enrollment period that will run from March 15 to April 30. "We recognize that this is the first tax filing season where consumers may have to pay a fee or claim an exemption for not having health insurance coverage," said CMS Administrator Marilyn Tavenner. “Our priority is to make sure consumers understand the new requirement to enroll in health coverage and to provide those who were not aware or did not understand the requirement with an opportunity to enroll in affordable coverage this year.” Of note, a number of State-Based Exchanges—including those in California, DC, Rhode Island, Massachusetts, New York—have also offered consumers an extended Open Enrollment deadline. 
• On February 20, 2015, CMS Principal Deputy Administrator Andy Slavitt explained in a blog post that approximately 800,000 individuals who obtained tax credits to reduce their premiums in the Federal Marketplace have received an incorrect version of Form 1095-A, which is used to reconcile ACA subsidies with an individual’s income. The notice indicates that the original version used an incorrect benchmark plan premium amount. “Based upon preliminary estimates,” Slavitt writes, “we understand that approximately 90-95% of these tax filers haven’t filed their tax return yet. We are advising them to wait until the first week of March when they receive their new form or go online for correct information before filing.” 
• On February 20, 2015, CMS announced that the agency has “strengthened the Five Star Quality Rating System for Nursing Homes on the Nursing Home Compare website to give families more precise and meaningful information on quality when they consider facilities for themselves or a loved one”, as part of its efforts to improve the CMS Five Star Rating system in 2015, as announced last October. Effective immediately, nursing home star ratings will: 1) include use of antipsychotics in calculation of the star ratings; 2) have improved calculations for staffing levels; and 3) higher standards for nursing homes to achieve a high rating on the quality measure dimension on the website. CMS acknowledges that as a result of increased standards, many nursing homes will see a decline in their quality measures star rating. Specifically, about two thirds of nursing homes will see a decline in their quality measures rating and about one third of nursing homes will experience a decline in their Overall Five Star Rating.