A&B Healthcare Week in Review, February 27, 2015

I. REGULATIONS, NOTICES, & GUIDANCE

• On February 27, 2015, the Centers for Medicare and Medicaid Services (CMS) released a final rule entitled “Medicare Program; Right of Appeal for Medicare Secondary Payer Determinations Relating to Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation Laws and Plans”. This final rule implements provisions of the Strengthening Medicare and Repaying Taxpayers Act of 2012 (SMART Act) which require CMS to provide a right of appeal and an appeal process for liability insurance (including self-insurance), no-fault insurance, and workers’ compensation laws or plans when Medicare pursues a Medicare Secondary Payer (MSP) recovery claim directly from the liability insurance (including self-insurance), no-fault insurance, or workers’ compensation law or plan. These regulations are effective on April 28, 2015. Applicable plans are parties to initial determinations issued on or after April 28, 2015 where CMS pursues recovery directly from an applicable plan. 
• On February 23, 2015, the Internal Revenue Service (IRS) released temporary regulations providing rules for the definition of a covered entity for purposes of the fee, imposed by section 9010 of the Patient Protection and Affordable Care Act (ACA), on covered entities that provide health insurance for United States health risks. Simultaneously, the IRS released a notice of proposed rulemaking by cross-reference, the text of which also serves as the text of the proposed regulations. On August 12, 2014, the Treasury Department and the IRS issued Notice 2014-47, 2014-35 IRB 522, to provide further guidance for the 2014 fee year on the definition of a “covered entity” for purposes of the insurer fee. The temporary regulations provide further guidance on the definition of a covered entity for the 2015 fee year and subsequent fee years. Of note, the regulations generally impose a consistency requirement that binds an entity to its original selection of either the data year or the fee year (its test year) to determine whether it qualifies for an exclusion under section 9010(c)(2) for the 2015 fee year and each subsequent fee year. In addition, the regulations impose a special rule for an entity that uses the fee year as its test year. A special rule is important in this context because the fee is due by September 30th of the fee year, and it may not be clear until the end of the fee year whether an entity will in fact qualify for an exclusion. The Treasury Department and the IRS request comments on the regulations, including comments on whether there are any circumstances in which an entity should be permitted by the IRS to change its test year, and if so, what conditions and limitations should apply to any such change. The provisions are effective immediately. Public comments must be received by May 27, 2015. 
• On February 25, 2015, the Food and Drug Administration (FDA) announced the availability of a draft guidance entitled ‘‘Technical Performance Assessment of Digital Pathology Whole Slide Imaging Devices.’’ This draft guidance provides industry and Agency staff with recommendations regarding the technical performance assessment data that should be provided for regulatory evaluation of a digital whole slide imaging (WSI) system. Comments on the draft guidance should be submitted by May 26, 2015. More information may be found here. 
• On February 24, 2015, FDA released a final order entitled “Medical Devices; Physical Medicine Devices; Classification of the Powered Exoskeleton”. The FDA is classifying the powered exoskeleton into class II (special controls). The special controls that will apply to the device are identified in this order and will be part of the codified language for the powered exoskeleton’s classification. The Agency is classifying the device into class II (special controls) in order to provide a reasonable assurance of safety and effectiveness of the device. This order is effective March 26, 2015. The classification was applicable on June 26, 2014. 
• On February 24, 2015, the Department of Health and Human Services (HHS) submitted an information collection request to the Office of Management and Budget (OMB) for review, entitled “Summary of Benefits and Coverage and Uniform Glossary”. Section 2715 of the Public Health Service (PHS) Act directs HHS, the Department of Labor (DOL), and the Department of the Treasury, in consultation with the National Association of Insurance Commissioners (NAIC) and a working group comprised of stakeholders, to ‘‘develop standards for use by a group health plan and a health insurance issuer in compiling and providing to applicants, enrollees, and policyholders and certificate holders a summary of benefits and coverage explanation that accurately describes the benefits and coverage under the applicable plan or coverage.’’ To implement these disclosure requirements, collection of information requests relate to the provision of the following: Summary of benefits and coverage, which includes coverage examples; a uniform glossary of health coverage and medical terms; and a notice of modifications. Comments are due March 26, 2015. 
• On February 25, 2015, FDA announced that it has submitted an information collection activity entitled “Current Good Manufacturing Practice Regulations for Finished Pharmaceuticals” to OMB for review. Comments are due March 27, 2015. 
• On February 26, 2015, FDA released a final order entitled “Medical Devices; Obstetrical and Gynecological Devices; Classification of the Assisted Reproduction Embryo Image Assessment System”. FDA is classifying the Assisted Reproduction Embryo Image Assessment System into class II (special controls). The special controls that will apply to the device are identified in this order, and will be part of the codified language for the Assisted Reproduction Embryo Image Assessment System classification. The Agency is classifying the device into class II (special controls) in order to provide a reasonable assurance of safety and effectiveness of the device. This order is effective February 26, 2015. The classification was applicable June 6, 2014. 
• On February 25, 2015, FDA issued a notice and request for comments entitled “National Medical Device Postmarket Surveillance System Planning Board Report; Availability, Web Site Location and Request for Comments”. FDA is announcing the availability of the report and Web site location where the Agency has posted the report entitled ‘‘Strengthening Patient Care: Building an Effective National Medical Device Surveillance System,’’ developed by the National Medical Device Postmarket Surveillance System Planning Board. In addition, FDA has established a docket where stakeholders may provide comments. Submit either electronic or written comments by April 27, 2015. The report ‘‘Strengthening Patient Care: Building an Effective National Medical Device Surveillance System’’ can be found at FDA’s Web site http://www.fda.gov/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco/CDRH/CDRHReports/ucm301912.htm. 
• On February 27, 2015, the Department of Labor (DOL) announced that it is submitting the Employee Benefits Security Administration (EBSA) sponsored information collection request (ICR) titled, ‘‘Affordable Care Act Section 2715 Summary Disclosures,’’ to OMB for review and approval for continued use, without change, in accordance with the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq. Public comments on the ICR are invited. The OMB will consider all written comments that agency receives on or before March 30, 2015. 
• On February 27, 2015, DOL announced that it is submitting the Office of Workers’ Compensation Programs (OWCP) sponsored ICR revision titled, ‘‘Notice of Controversion of Right to Compensation,’’ to OMB for review and approval for use in accordance with the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501 et seq.). Public comments on the ICR are invited. The OMB will consider all written comments that agency receives on or before March 30, 2015. 
• On February 27, 2015, DOL announced that it is submitting the Employee Benefits Security Administration (EBSA) sponsored ICR titled, ‘‘Coverage of Certain Preventive Services Under the Affordable Care Act,’’ to OMB for review and approval for continued use, without change, in accordance with the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq. Public comments on the ICR are invited. The OMB will consider all written comments that agency receives on or before March 30, 2015. 
• On February 27, 2015, CMS announced an opportunity for the public to comment on CMS’ intention to collect information for the public. CMS has released the following information collection activities to OMB for review: 1) Affordable Care Act Information and Collection Requirements for Section 1115 Demonstration Projects; and 2) Executive Summary Form for Research Identifiable Data. Comments on the collections of information must be received by the OMB desk officer by March 30, 2015. More information may be found here. 
• On February 27, 2015, CMS announced an opportunity for the public to comment on CMS’ intention to collect information from the public. CMS requests to extend two currently approved collections, entitled 1) Appointment of Representative; and 2) Medicare Fee-for-Service Prepayment Medical Review. Comments must be received by April 28, 2015. More information may be found here.

Event Notices 

• March 18-19, 2015: The Centers for Disease Control and Prevention (CDC) will convene a meeting of the ICD–10 Coordination and Maintenance (C&M) Committee meeting on March 18th and 19th. The ICD–10 Coordination and Maintenance (C&M) Committee is a public forum for the presentation of proposed modifications to the International Classification of Diseases, Tenth Revision, Clinical Modification and ICD–10 Procedure Coding System. The meeting will take place at the CMS Auditorium in Baltimore Maryland from 9:00 AM to 5:00 PM. More information on the meeting may be found here.

II. LEGISLATION & COMMITTEE ACTION

U.S. Senate

• On February 24, 2015, the Senate Finance Committee Chairman Orrin Hatch (R-UT), along with House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Health Subcommittee Chairman Joe Pitts (R-PA) released a discussion draft of legislation to extend the State Children’s Health Insurance Program (SCHIP). Funding for the program is scheduled to expire on September 30, 2015. An overview of the policies included in the draft may be found here. 
• On February 23, 2015, Senate Finance Committee Chairman Orrin Hatch (R-UT), House Energy and Commerce Committee Chairman Fred Upton (R-MI), and Senator Richard Burr (R-NC) sent a letter to the nation’s governors seeking feedback on their recently releasedPatient Choice, Affordability, Responsibility, and Empowerment (CARE) Act, which would repeal and replace the ACA. "We believe health care reform will be most successful when accomplished in a transparent and inclusive manner, which is why we want to hear directly from the states,” write Upton, Hatch, and Burr in the letter. “…Whether in Medicaid or in the commercial health insurance market, we believe states have a key role to play in expanding access to coverage and helping to lower costs to consumers. The Patient CARE Act would return authority to regulate commercial health insurance to the states, where it best belongs. We would also give states new tools and authorities to help their citizens and manage their costs. Key among our reforms are policies to modernize Medicaid, increase state flexibility and control, and prioritize care for the most vulnerable. Our goal is to recover the proper balance between the federal and state governments in Medicaid and commercial health insurance.”

House of Representatives

• On February 26, 2015, the House Energy and Commerce Subcommittee on Health convened a hearing entitled “Examining the FY 2016 HHS Budget” with Sylvia M. Burwell, Secretary of HHS. During the hearing Health Subcommittee Chairman Joe Pitts (R-PA) raised concerns with the Secretary’s response to Congress regarding the Administration’s contingency plans if the Supreme Court rules against the IRS in King v. Burwell. Sec. Burwell said the Administration believes the Court will rule favorably for the IRS. If not, 87% of individuals in the Marketplace would lose their subsidies. Chairman Pitts expressed frustration with the Administration’s lack of a contingency plan and said an individual working at HHS has shared with the Committee a 100 page document related to potential actions HHS may take if the Supreme Court rules against the Administration in King v. Burwell. Sec. Burwell said she is not aware of such a document. With respect to the potential ramifications of an adverse ruling, Sec. Burwell said HHS does not believe they have any Administrative authority to address them without Congressional action. More information on the hearing may be found here. 
• On February 26th, the House Oversight and Government Reform Subcommittee on Health Care, Benefits, and Administrative Rules will convene a hearing entitled "From Health Care Enrollment to Tax Filing: A PPACA [Patient Protection and Affordable Care Act] Update." The sole witness for the hearing was Kevin Counihan, Director and Marketplace CEO at the Center for Consumer Information and Insurance Oversight (CIIO). More information on the hearing may be found here. 
• On February 26, 2015, the House Committee on Ways & Means convened a markup of four bipartisan Medicare-related bills: H.R. 1021, the “Protecting the Integrity of Medicare Act of 2015”; H.R. 284, the “Medicare DMEPOS Competitive Bidding Improvement Act of 2015”; H.R. 876, the “NOTICE Act”; and H.R. 887, the “Electronic Health Fairness Act of 2015.” As introduced by Ways & Means Health Subcommittee Chairman Kevin Brady (R-TX) and Ranking Member Jim McDermott (D-WA), the Protecting the Integrity of Medicare Act of 2015 would establish a number of statutory and procedural safeguards against Medicare fraud. Among other things, the legislation would prohibit the inclusion of Social Security account numbers on Medicare beneficiary cards, require Recovery Audit Contractor (RAC) reviews and recoupment of any wrongful Medicare payments made to incarcerated, not legally present, or deceased individuals, and establish programs to prevent prescription drug abuse under Medicare Part D. The legislation would also expand prior authorization efforts underway at CMS, modify Medicare’s surety bond requirements for home health agencies, and require that CMS publish guidance clarifying how the “Common Rule,” which provides protection for individuals involved in research, applies to information reported to clinical data registries for quality improvement purposes. More information on the markup may be found here. 
• On February 26, 2015, the House Appropriations Subcommittee on Labor, Health and Human Services, and Education convened a hearing on proposed fiscal appropriations for HHS. The sole witness for the hearing was HHS Secretary Sylvia Mathews Burwell. More information on the hearing may be found here.

III. REPORTS, STUDIES, & ANALYSES 

• On February 26, 2015, the Office of Inspector General (OIG) released a report entitled “Comparing Average Sales Prices and Average Manufacturer Prices for Medicare Part B Drugs: An Overview of 2013”. When Congress established average sales prices (ASPs) as the primary basis for Medicare Part B drug reimbursement, it also mandated that OIG compare ASPs with average manufacturer prices (AMPs) and directed CMS to substitute payment amounts for drugs with ASPs that exceed AMPs by a threshold of 5 percent. In the report, OIG identified drug codes that had price substitutions on the basis of data from 2013, as well as codes that exceeded the 5-percent threshold but were not eligible for price substitution under CMS's current criteria. They also estimated the financial impact of reducing reimbursement for each of the drug codes that exceeded the 5-percent threshold. OIG found that under CMS's price substitution policy, 15 drug codes were subject to reimbursement reductions on the basis of data from 2013, saving Medicare and its beneficiaries an estimated $13 million from the fourth quarter of 2013 through the third quarter of 2014. OIG estimates that if CMS had expanded its price substitution criteria to include drug codes with complete AMP data in a single quarter or certain codes with partial AMP data, the agency could have generated almost $6 million in additional savings. OIG recommended that CMS consider pursuing rulemaking to expand the price substitution policy to include at least some additional drug codes. CMS responded that more experience with the policy is needed before it is expanded. 
• On February 24, 2015, Gallup released the results of a survey which finds that nationwide, the uninsurance rate dropped 3.5 percentage points last year, from 17.3% to 13.8%, the lowest annualized rate across the seven years of Gallup’s Well-Being Index measurement. Collectively, the uninsured rate in states that have chosen to expand Medicaid and set up their own state exchanges or partnerships in the health insurance marketplace declined significantly more last year than the rate in states that did not take these steps. The uninsured rate declined 4.8 points in the 21 states that implemented both of these measures, compared with a 2.7-point drop across the 29 states that have implemented only one or neither of these actions. Arkansas and Kentucky reported the sharpest reductions in their uninsured rates among adult residents since the healthcare law's requirement to have insurance took effect at the beginning of 2014; Oregon, Washington and West Virginia round out the top five. Of the 11 states with the greatest reductions, 10 expanded Medicaid and established a state-based marketplace exchange or state-federal partnership. Montana, which is tied for 10th, is the only exception. 
• This week OIG released its Health Reform Oversight Plan for Fiscal Year 2015. The document describes OIG’s current and planned efforts to oversee the implementation and management of HHS programs under the ACA. The Plan outlines OIG’s (1) key tactical considerations; (2) key focus areas, both in the health insurance Marketplaces and in other ACA-related HHS programs; and (3) target timeframes for issuing reports on reviews related to the Marketplaces. This plan focuses primarily on OIG oversight through audits and evaluations.

IV. OTHER HEALTH POLICY NEWS 

• On February 26, 2015, CMS announced that it has conducted successful end-to-end testing of the International Classification of Diseases Tenth Revision (ICD-10) system. Approximately 660 providers and billing companies submitted nearly 15,000 test claims during the test. Overall, participants in the January 26 to February 3 testing were able to successfully submit ICD-10 claims and have them processed through CMS’ billing systems. To the extent that some claims were rejected, most didn’t meet the mark because of errors unrelated to ICD-9 or ICD-10, CMS reports. CMS also noted in the announcement that it plans to conduct two more testing sessions in advance of the October 1, 2015 compliance date for ICD-10. The results may be accessed here. 
• This week HHS released its final enrollment snapshot for the 2015 Open Enrollment period on the ACA Health Insurance Exchanges. Approximately 11.4 million consumers selected or were automatically enrolled in a plan through HealthCare.gov or State-Based Marketplaces between November 15, 2014 and February 15, 2015. Of note, 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. 
• On February 24, 2015, HHS issued a press release revealing that 9.4 million people with Medicare have saved over $15 billion on prescription drugs since 2010. In 2014, nearly 5.1 million seniors and people with disabilities saved $4.8 billion or an average of $941 per beneficiary. These figures are higher than in 2013, when 4.3 million saved $3.9 billion, for an average of $911 per beneficiary. “Thanks to the Affordable Care Act, seniors and people with disabilities have saved over $15 billion on prescription drugs, and these savings will only increase over time as we close the Medicare coverage gap known as the donut hole,” said HHS Secretary Sylvia M. Burwell of the results. “By providing access to affordable prescription drugs and preventive services with no cost sharing, the Affordable Care Act is working for seniors to help keep them healthier.” 
• This week CMS released results from the implementation of the first year of the Value-Based Payment Modifier, which provides comparative performance information to physicians and medical practice groups. For physician groups with 100 or more eligible professionals that are subject to the Value-Based Payment Modifier (VM) in 2015, the physician feedback reports include information about their VM adjustment. According to CMS, based on their 2013 performance on quality and cost measures, nearly 7,000 physicians in 14 group practices across the country are receiving an increase in their Medicare payments in 2015. While groups that exceeded the program’s benchmarks in quality and cost efficiency receive an increase in physician payments under the Medicare Physician Fee Schedule, those who do not perform well or failed to meet quality reporting requirements are seeing a decrease to their Medicare payments in 2015. Most physician groups nationwide met the quality reporting requirements and their Medicare payments remain unchanged. Physician groups getting an upward 2015 Value Modifier adjustment had, on average, lower (better) hospital readmissions rates—14.3 per 100 admissions—than the corresponding benchmark of 16.4 per 100 admissions. These groups also had on average lower hospital admissions rates for acute and chronic ambulatory care sensitive conditions. A CMS press release on the results may be found here. 
• On February 25, 2015, the Supreme Court ruled that the North Carolina Board of Dental Examiners is not entitled to invoke state-action antitrust immunity from potential liability under federal antitrust laws (North Carolina Bd. of Dental Examiners v. Federal Trade Commission (FTC)). The Court’s decision affirms a 2013 ruling by the U.S. Court of Appeal for the Fourth Circuit upholding a 2011 Decision and Order by the FTC that the North Carolina State Board of Dental Examiners sought to, and did, exclude non-dentist providers from the market for teeth whitening services, in violation of Section 5 of the Federal Trade Commission Act. The Commission found that the Dental Board's conduct constituted concerted action, and that the Dental Board had failed to advance a legitimate procompetitive justification for its conduct. Following the ruling, FTC Chairwoman Edith Ramirez issued a statement: “We are pleased with the Supreme Court’s recognition that the antitrust laws limit the ability of market incumbents to suppress competition through state professional boards. We will remain vigilant through our enforcement initiatives and advocacy to safeguard competition and ensure that American consumers benefit from entrepreneurial initiative.” 
• The Patient Centered Outcomes Research Institute (PCORI) announced this week that it has awarded $64 million for comparative effectiveness studies on cancer care, back pain, and stroke. Ranging from $7.75 million to $14.5 million each, the five awards will compare:
  • Primary care versus prompt referral to physical therapy combined with cognitive behavioral therapy to see which more effectively prevents acute low back pain from progressing to chronic pain; 
  • Whether breast cancer screening tailored to women’s individual risks and preferences detects cancer and minimizes screening-associated harms as or more effectively than annual screening; 
  • The ability of more intensive versus less intensive surveillance via CT scanning to minimize side effects and accurately detect lung cancer in patients with small, potentially cancerous growths discovered by screening scans of their lungs; 
  • Whether a comprehensive package of transitional care and in-home support services is more effective than usual care at improving stroke survivors’ functional abilities and preventing hospital readmissions; 
  • Whether use of a standing-order entry system advising physicians when to prescribe colony stimulating factors, a medication to prevent infections, reduces over- and underuse of this medication and reduces rates of potentially serious infections among patients with breast, lung, and colorectal cancer. 
• On February 24th and 25th, the FTC and the United States Department of Justice Antitrust Division convened an event entitled “Examining Health Care Competition”. The event covered a wide range of topics related to issues of competition in the healthcare sector, including provider consolidation trends, Health Insurance Exchanges established as part of the ACA, early results from Accountable Care Organizations (ACOs), and alternative payment models. In his opening remarks on day two of the event, William Baer, Assistant Attorney General the Department of Justice, explained that antitrust enforcement agencies are paying “...close attention to abuse of market power—for example, to contracting practices, such as anti-tiering, anti-steering and most favored nation clauses, that threaten competitive harm”. Baer acknowledged that the healthcare sector has seen a wave of vertical integration in recent years as hospitals acquire physician practices. He asserted that these are “best judged on a case-by-case basis”, and that the Department has a “strong preference’ for structural relief remedies when challenging horizontal mergers in healthcare. More information on the event may be found here.