Health Care Week in Review June 12, 2015

A&B Healthcare Week in Review, June 12, 2015

Healthcare Week in Review


  • On June 12, 2015, the Departments of Treasury, Labor, and Health and Human Services (HHS) released a final rule entitled “Summary of Benefits and Coverage and Uniform Glossary”. This document contains final regulations regarding the summary of benefits and coverage (SBC) and the uniform glossary for group health plans and health insurance coverage in the group and individual markets under the Patient Protection and Affordable Care Act (ACA). It finalizes changes to the regulations that implement the disclosure requirements under section 2715 of the Public Health Service Act to help plans and individuals better understand their health coverage, as well as to gain a better understanding of other coverage options for comparison. The rule was filed today and is expected to be published in the June 16th Federal Register; it will be effective in sixty days.
  • On June 9, 2015, the Government Accountability Office (GAO) released a notice on letters of nomination of candidates for the Physician-Focused Payment Model Technical Advisory Committee. The Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”) established the Physician-Focused Payment Model Technical Advisory Committee to provide comments and recommendations to the Secretary of Health and Human Services on physician payment models, and gave the Comptroller General responsibility for appointing the committee’s 11 members. The Advisory Committee members shall include individuals with national recognition for their expertise in physician-focused payment models and related delivery of care. No more than 5 members of the Committee shall be providers of services or suppliers, or representatives of providers of services or suppliers. A member of the committee shall not be an employee of the federal government. GAO is accepting nominations of individuals for this committee. Letters of nomination and resumes should be submitted by July 22, 2015 to ensure adequate opportunity for review and consideration of nominees. Acknowledgement of submissions will be provided within two weeks of submission. More information may be found here.
  • On June 11, 2015, the Food and Drug Administration (FDA) announced the availability of a document entitled ‘‘Considerations for the Design of Early-Phase Clinical Trials of Cellular and Gene Therapy Products; Guidance for Industry.’’ The guidance document is to assist sponsors and investigators in designing early-phase clinical trials for cellular therapy (CT) and gene therapy (GT) products (referred to collectively as CGT products). The guidance document provides recommendations regarding clinical trials in which the primary objectives are the initial assessments of safety, tolerability, or feasibility of administration of investigational products. The guidance announced in this notice finalizes the draft guidance of the same title dated July 2013.
  • On June 9, 2015, the Office of the National Coordinator for Health Information Technology (ONC) reissued a notice entitled “Acceptance and Approval of Non-Governmental Developed Test Procedures, Test Tools, and Test Data for Use Under the ONC Health IT Certification Program”. This document further informs the public of ONC’s policy that permits any person or entity to submit test procedures, test tools, and test data for approval and use under the ONC Health IT Certification Program.
  • On June 10, 2015, the Office of Personnel Management (OPM) released a final rule entitled “Federal Employees Health Benefits Program; Rate Setting for Community-Rated Plans”. The final rule makes changes to the Federal Employees Health Benefits Acquisition Regulation (FEHBAR). These changes: define which subscriber groups may be included for consideration as similarly sized subscriber groups (SSSGs); require the SSSG to be traditional community rated; establish that traditional community rated (TCR) Federal Employees Health Benefits (FEHB) plans must select only one rather than two SSSGs; and make conforming changes to FEHB contract language to account for the new medical loss ratio (MLR) standard for most community rated FEHB plans.
  • On June 8, 2015, the Office of Management and Budget (OMB) completed review of a proposed rule entitled “340B Civil Monetary Penalties for Manufacturers and Ceiling Price Regulations”. According to the summary on OMB’s website, “This proposed rule is required under the Affordable Care Act. It would amend section 340B of the Public Health Service Act to impose monetary sanctions (not to exceed $5000 per instance) on drug manufacturers who intentionally charge a covered entity a price above the ceiling price established under the procedures of the 340B Program and also define standards and methodology for the calculation of ceiling prices for purposes of the 340B Program.”
  • On June 9, 2015, the Office of Inspector General (OIG) released a fraud alert entitled “Physician Compensation Arrangements May Result in Significant Liability”. Physicians who enter into compensation arrangements such as medical directorships must ensure that those arrangements reflect fair market value for bona fide services the physicians actually provide. Although many compensation arrangements are legitimate, a compensation arrangement may violate the anti-kickback statute if even one purpose of the arrangement is to compensate a physician for his or her past or future referrals of Federal health care program business. The fraud alert notes that OIG recently reached settlements with 12 individual physicians who entered into questionable medical directorship and office staff arrangements. OIG alleged that the compensation paid to these physicians under the medical directorship arrangements constituted improper remuneration under the anti-kickback statute for a number of reasons, including that the payments took into account the physicians’ volume or value of referrals and did not reflect fair market value for the services to be performed, and because the physicians did not actually provide the services called for under the agreements.
  • On June 10, 2015, FDA announced that the Agency is extending the comment period for the notice of public hearing that appeared in the Federal Register of March 27, 2015, entitled “Homeopathic Product Regulation: Evaluating the Food and Drug Administration’s Regulatory Framework After a Quarter-Century”. The comment period has been extended until August 21, 2015.
  • On June 12, 2015, FDA announced the availability of a draft guidance for industry entitled ‘‘Assessment of Male-Mediated Developmental Risk for Pharmaceuticals.’’ This draft guidance provides recommendations to sponsors for assessing risks to embryo/fetal development resulting from administration of an active pharmaceutical ingredient (API) to males either through an effect on the male germ cell or from fetal exposure following seminal transfer of a potentially developmental toxicant to pregnant females. The need for measures to mitigate the risk to embryo/ fetal development posed by males participating in clinical trials is also addressed. Although you can comment on any guidance at any time (see 21 CFR 10.115(g)(5)), to ensure that the Agency considers your comment on this draft guidance before it begins work on the final version of the guidance, submit either electronic or written comments on the draft guidance by August 11, 2015.
  • On June 8, 2015, the CMS Center for Consumer Information and Insurance Oversight (CCIIO) published a Frequently Asked Questions (FAQ) document to provide recipients of grants under section 1311 of the Affordable Care Act with further guidance on the appropriate uses of establishment grant funds after January 1, 2015. These FAQs supplement and further clarify the first two Questions and Answers in prior CMS guidance entitled, “FAQs on the Use of 1311 Funds and No Cost Extensions,” published March 14, 2014. Questions addressed include: 1) “For current Marketplace Grantees, including those who have or are applying for a No Cost Extension, are there any activities that are not allowable?”; and 2) “May Marketplace Grantees seek an extension of their grant project period?”.


U.S. Senate

  • On June 10, 2015, the Senate HELP Committee convened a hearing entitled “Health Information Exchange: A Path Towards Improving the Quality and Value of Health Care for Patients”.Witnesses for the hearing included Thomas H. Payne, MD, FACP, FACMI; Board Chair-Elect, American Medical Informatics Association, and Medical Director, IT Services, UW Medicine, University of Washington School of Medicine; Craig D. Richardville, MBA, FACHE, Senior Vice President And Chief Information Officer, Carolinas HealthCare System, and Chair, Premier Healthcare Alliance; Christine Bechtel, MA, Advisor, National Partnership For Women & Families, and President, Bechtel Health; and Neal L Patterson, MBA, Cofounder, Chairman, Chief Executive Officer, Cerner Corporation. During the hearing Chairman Lamar Alexander (R-TN) noted that the Meaningful Use program’s stage 2 requirements are so complex that only about 11% of eligible physicians have been able to comply. Thus, he suggested, it may be appropriate to delay implementation of Stage 3. He said he hopes to work with physicians, hospitals, and the Administration to identify solutions over the course of hearings on the issue this summer. The first hearing, he said, will be chaired by Senator Bill Cassidy and will pertain to physician reporting burden, and the second hearing, which will be chaired by Senator Susan Collins, “…is on the question of whether you and I control information about our health”. More information may be found here.

House of Representatives

  • On June 10, 2015, the House Ways and Means Committee convened a hearing entitled “Obamacare Implementation and the Department of Health and Human Services FY16 Budget Request”. The sole witness for the hearing was HHS Secretary Sylvia Mathews Burwell. During the hearing Chairman Paul Ryan (R-WI) asked whether HHS has a contingency plan in case the Supreme Court rules against the Administration in King v. Burwell. Burwell insisted that the Court will rule in favor of the Administration, but she acknowledged that if this is not the case, HHS will “do everything we can” to work with states and other stakeholders to address the repercussions. She also suggested that states, governors, and Congress ultimately have the power implement a solution in the case of such a ruling. Representative Kevin Brady (R-TX) asked whether, in the case that the Court rules against the Administration in King, the President would sign legislation “other than merely extending subsidies to federal Exchanges.” Burwell insisted that the Supreme Court case deals only with the availability of subsidies, and declined to comment on the President’s willingness to sign any particular piece of legislation. More information on the hearing may be found here.
  • On June 10, 2015, the House Veterans Affairs Subcommittee on Oversight and Investigations convened a hearing entitled “Prescription Mismanagement and the Risk of Veteran Suicide”. Witnesses for the hearing included Carolyn Clancy, M.D., Interim Under Secretary for Health, U.S. Department of Veterans Affairs; Mr. Randall Williamson, Director, Health Care Issues, Government Accountability Office (GAO); and Jacqueline Maffucci, Ph.D., Research Director, Iraq and Afghanistan Veterans of America (IAVA). Clancy was accompanied by Mr. Michael Valentino, Chief Consultant, Pharmacy Benefits Management Service, Veterans Health Administration (VHA), and by Harold Kudler, M.D. Chief Consultant, Mental Health Services, VHA. During the hearing, GAO’s Williamson discussed the results of a November 2014 GAO report entitled “VA Health Care: Improvements Needed in Monitoring Antidepressant Use for Major Depressive Disorder and in Increasing Accuracy of Suicide Data”. Because GAO found diagnostic coding discrepancies in 11 of the 30 veterans' medical records it reviewed from six VA medical centers (VAMC), he explained, VA's data may understate the prevalence of major depressive disorder (MDD) among veterans being treated through VA, to the extent that such discrepancies may permeate VA's data. In addition, VA policy states that antidepressant treatment must be consistent with VA's current clinical practice guideline (CPG); however, GAO's review of 30 veterans' medical records identified deviations from selected MDD CPG recommendations for most veterans reviewed. More information on the hearing may be found here.
  • On June 11, 2015, the House passed the Trade Preferences Extension Act of 2015 (H.R. 1295) by a vote of 397-32. Among other things, the measure repeals a provision in the Trade Act of 2015 (H.R. 1314) which extends the Medicare sequester in 2024. H.R. 1295 replaces the savings from this offset by strengthening Federal tax compliance laws (specifically, increasing the penalty for failure to file correct tax returns). Despite this, the Trade Act was defeated in the House on June 12th by a vote of 126-302.


  • On June 8, 2015, Avalere released a study—commissioned by America’s Health Insurance Plans, or AHIP—entitled “An Analysis of the Impact of Breakthrough Therapies on Government Spending”. To evaluate public program spending on new medications in the drug development pipeline, Avalere projected the fiscal impact of 10 FDA breakthrough therapies to Medicare, Medicaid, and the health insurance exchanges created by the ACA. The research suggests that 10 selected medications are likely to result in medication costs to the government of $49.3 billion over a 10-year period, including: $31.3 billion in Medicare spend; $15.8 billion in state and federal Medicaid spend; and $2.1 billion as a result of subsidies provided through exchange plans.

    • On June 11, 2015, the American Journal of Public Health published a study entitled “National and State Treatment Need and Capacity for Opioid Agonist Medication-Assisted Treatment [MAT]”. The study shows that in 2012, the number of people who abused opioids or were dependent, had increased to an estimated 2.3 million people; however, the maximum number of people who could access opioid-agonist based MAT was approximately 1.4 million. The study concludes a number of actions that can be taken to address the treatment gap, including: expanding the addiction professionals workforce and the existing pool of MAT providers will increase access to opioid treatment programs; creating clinical practice and reimbursement environments to facilitate clinician provision of MAT services; and supporting programs that use onsite mentors and access to experienced clinicians to help provide the skills needed to implement office-based MAT.

    • The June issue of Health Affairs includes a study entitled, “Extreme Markup: The Fifty US Hospitals With The Highest Charge-To-Cost Ratios”. Using Medicare cost reports, the study examines the fifty US hospitals with the highest charge-to-cost ratios in 2012. These hospitals have markups (ratios of charges over Medicare-allowable costs) approximately ten times their Medicare-allowable costs compared to a national average of 3.4 and a mode of 2.4. Analysis of the fifty hospitals showed that forty-nine are for profit (98 percent), forty-six are owned by for-profit hospital systems (92 percent), and twenty (40 percent) operate in Florida. One for-profit hospital system owns half of these fifty hospitals. While most public and private health insurers do not use hospital charges to set their payment rates, uninsured patients are commonly asked to pay the full charges, and out-of-network patients and casualty and workers’ compensation insurers are often expected to pay a large portion of the full charges. Because it is difficult for patients to compare prices, market forces fail to constrain hospital charges. The authors conclude that federal and state governments may want to consider limitations on the charge-to-cost ratio, some form of all-payer rate setting, or mandated price disclosure to regulate hospital markups.
  • On June 11, 2015, Avalere released an analysis which finds wide geographic variation in 2016 premium increases for individual market exchange plans, based on proposed rate filings in eight states where complete data is available. Specifically, premiums for silver plans will increase 5.8 percent on average across the states analyzed, ranging from a 12.0 percent average increase in Oregon to a 5.3 percent decrease in Michigan. More than two-thirds (68 percent) of 2015 exchange enrollees picked silver plans. According to the study, premiums for the lowest and second lowest cost silver plans in the eight states analyzed will increase on average 4.5 percent and 1.0 percent respectively, compared to a 5.8 percent across all silver exchange plans.
  • On June 11, 2015, the Congressional Budget Office (CBO) published a cost estimate for the Protecting Seniors’ Access to Medicare Act of 2015 (H.R. 1190), which would repeal the provisions of the ACA that established the Independent Payment Advisory Board (IPAB) and that created a process by which the Board (or the Secretary of the Department of Health and Human Services) would be required under certain circumstances to modify the Medicare program to achieve specified savings. CBO estimates that enacting H.R. 1190 would not have any budgetary impact between 2015 and 2021, but would increase direct spending by $7.1 billion over the 2022-2025 period. That estimate is extremely uncertain because it is not clear whether the mechanism for spending reductions under the IPAB authority will be triggered under current law for most of the next ten years; under CBO’s current baseline projections such authority is projected to be triggered in 2025. However, given the uncertainty that surrounds those projections, it is possible that such authority would be triggered in more than one of those years; taking into account that possibility, CBO estimates that repealing the IPAB provision of the ACA would probably result in higher spending for the Medicare program in the years 2022 through 2025 than would occur under current law. CBO’s estimate represents the expected value of a broad range of possible effects of repealing the provision over that period.


  • On June 11, 2015, CMS updated its Inpatient Hospital Reviews website page to indicate that as of June 1st, CMS has executed settlements with more than 1,900 hospitals, representing approximately 300,000 claims. CMS has paid approximately $1.3 billion to providers. (In August 2014, CMS announced a policy to allow any acute care hospital or critical care access hospital to resolve pending patient status appeals for a partial payment equal to 68 percent of the net payable amount.)
  • On June 9, 2015, the Medicare Payment Advisory Commission (MedPAC) weighed in on the Medicare proposed rule entitled “Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System Policy Changes and Fiscal Year 2016 Rates; Revisions to Quality Reporting Requirements for Specific Providers, including Changes Related to the Electronic Health Record Incentive Program” published in the Federal Register on April 30, 2015. The rule revises the hospital inpatient prospective payment system, the long-term care hospital (LTCH) payment system, and quality reporting requirements for specific providers. In the proposed rule, CMS proposes to increase Medicare’s payment rates for LTCHs by 1.9 percent, reflecting a market basket increase of 2.7 percent, a 0.6 percentage point reduction for productivity adjustment as required by the ACA, and an additional 0.2 percentage point reduction also required by the law. In their letter, MedPAC notes that the Commission has previously recommended that the Secretary eliminate the market basket update to LTCHs for 2016, and urges the Secretary to adopt this recommendation.
  • On June 12, 2015, HHS announced the selection of nine regional Ebola and other special pathogen treatment centers. HHS’ Office of the Assistant Secretary for Preparedness and Response (ASPR) has awarded approximately $20 million through its Hospital Preparedness Program (HPP) to enhance the regional treatment centers’ capabilities to care for patients with Ebola or other highly infectious diseases. ASPR will provide an additional $9 million to these recipients in the subsequent four years to sustain their readiness. “This approach recognizes that being ready to treat severe, highly infectious diseases, including Ebola, is vital to our nation’s health security,” said Dr. Nicole Lurie, HHS assistant secretary for preparedness and response. “This added regional capability increases our domestic preparedness posture to protect the public’s health.” Each awardee will receive approximately $3.25 million over the full five-year project period. This funding is part of $339.5 million in emergency funding Congress appropriated to enhance state and local public health and health care system preparedness following cases of Ebola in the United States stemming from the 2014 Ebola epidemic in West Africa.
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