Health Care Week in Review July 31, 2015

A&B Healthcare Week in Review, July 31, 2015

Healthcare Week in Review


  • On July 31, 2015, the Centers for Medicare & Medicaid Services (CMS) published a final rule entitled “Medicare Program; FY 2016 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Requirements”. This final rule will update the hospice payment rates and the wage index for fiscal year (FY) 2016 (October 1, 2015 through September 30, 2016), including implementing the last year of the phase-out of the wage index budget neutrality adjustment factor (BNAF). Effective on January 1, 2016, this rule also finalizes CMS’ proposals to differentiate payments for routine home care (RHC) based on the beneficiary’s length of stay and implement a service intensity add-on (SIA) payment for services provided in the last 7 days of a beneficiary’s life, if certain criteria are met. In addition, this rule will implement changes to the aggregate cap calculation mandated by the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act), align the cap accounting year for both the inpatient cap and the hospice aggregate cap with the federal fiscal year starting in FY 2017, make changes to the hospice quality reporting program, clarify a requirement for diagnosis reporting on the hospice claim, and discuss recent hospice payment reform research and analyses. These regulations are effective on October 1, 2015 and the implementation date for the RHC rates and the SIA payment rates will be January 1, 2016.
  • On July 31, 2015, CMS published a final rule entitled “Medicare Program; Inpatient Psychiatric Facilities Prospective Payment System - Update for Fiscal Year Beginning October 1, 2015 (FY 2016)”. This final rule updates the prospective payment rates for Medicare inpatient hospital services provided by inpatient psychiatric facilities (IPFs) (which are freestanding IPFs and psychiatric units of an acute care hospital or critical access hospital). These changes are applicable to IPF discharges occurring during fiscal year (FY) 2016 (October 1, 2015 through September 30, 2016). This final rule also implements: a new 2012-based IPF market basket; an updated IPF labor-related share; a transition to new Core Based Statistical Area (CBSA) designations in the FY 2016 IPF Prospective Payment System (PPS) wage index; a phase-out of the rural adjustment for IPF providers whose status changes from rural to urban as a result of the wage index CBSA changes; and new quality measures and reporting requirements under the IPF quality reporting program. This final rule also reminds IPFs of the October 1, 2015 implementation of the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM), and updates providers on the status of IPF PPS refinements. These regulations are effective October 1, 2015. A CMS Fact Sheet on the final rule may be found here.
  • On July 31, 2015, CMS published a final rule entitled “Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2016”. This final rule updates the prospective payment rates for inpatient rehabilitation facilities (IRFs) for federal fiscal year (FY) 2016 as required by the statute. As required by section 1886(j)(5) of the Act, this rule includes the classification and weighting factors for the IRF PPS’s case-mix groups and a description of the methodologies and data used in computing the prospective payment rates for FY 2016. This final rule also finalizes policy changes, including the adoption of an IRF-specific market basket that reflects the cost structures of only IRF providers, a 1-year phase-in of the revised wage index changes, a 3-year phase-out of the rural adjustment for certain IRFs, and revisions and updates to the quality reporting program (QRP). These regulations are effective on October 1, 2015. The updated IRF prospective payment rates are applicable for IRF discharges occurring on or after October 1, 2015, and on or before September 30, 2016 (FY 2016). The updated quality measures and reporting requirements under the IRF QRP are effective for IRF discharges occurring on or after October 1, 2016. A CMS Fact Sheet on the final rule may be found here.
  • On July 30, 2015, CMS released a final rule entitled “Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities (SNFs) for FY 2016, SNF Value-Based Purchasing Program, SNF Quality Reporting Program, and Staffing Data Collection”. This final rule updates the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs) for fiscal year (FY) 2016. In addition, it specifies a SNF all-cause all-condition hospital readmission measure, as well as adopts that measure for a new SNF Value-Based Purchasing (VBP) Program, and includes a discussion of SNF VBP Program policies CMS is considering for future rulemaking to promote higher quality and more efficient health care for Medicare beneficiaries. Additionally, this final rule will implement a new quality reporting program for SNFs as specified in the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act). It also amends the requirements that a long-term care (LTC) facility must meet to qualify to participate as a skilled nursing facility (SNF) in the Medicare program, or a nursing facility (NF) in the Medicaid program, by establishing requirements that implement the provision in the Affordable Care Act (ACA) regarding the submission of staffing information based on payroll data. The provisions of this final rule are effective on October 1, 2015 with the exception of provisions in §483.75(u) which are effective on July 1, 2016.
  • On July 31, 2014, CMS released a final rule/ interim final rule with comment period entitled “Medicare Program; 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 of Quality Reporting Requirements for Specific Providers, including Changes Related to the Electronic Health Record Incentive Program; Extensions of the Medicare-Dependent, Small Rural Hospital Program and the Low-Volume Payment Adjustment for Hospitals”. CMS is revising the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals to implement changes arising from CMS’ continuing experience with these systems for FY 2016. CMS is addressing the update of the rate-of-increase limits for certain hospitals excluded from the IPPS that are paid on a reasonable cost basis subject to these limits for FY 2016. As an interim final rule with comment period, CMS is implementing the statutory extensions of the Medicare-dependent, small rural hospital (MDH) Program and changes to the payment adjustment for low-volume hospitals under the IPPS. The rule also updates the payment policies and the annual payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs) for FY 2016 and implementing certain statutory changes to the LTCH PPS under the Affordable Care Act and the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013 and the Protecting Access to Medicare Act of 2014. In addition, CMS is establishing new requirements or revising existing requirements for quality reporting by specific providers (acute care hospitals, PPS-exempt cancer hospitals, and LTCHs) that are participating in Medicare, including related provisions for eligible hospitals and critical access hospitals participating in the Medicare Electronic Health Record (EHR) Incentive Program. CMS is also updating policies relating to the Hospital Value-Based Purchasing (VBP) Program, the Hospital Readmissions Reduction Program, and the Hospital-Acquired Condition (HAC) Reduction Program. This final rule is effective on October 1, 2015. The provisions of the interim final rule with comment period portion of this rule are applicable for discharges on or after April 1, 2015 and on or before September 30, 2017. To be assured consideration, comments on the interim final rule with comment period must be received by September 29, 2015. A related CMS Fact Sheet may be found here.
  • On July 27, 2015, the Department of Defense published a final rule entitled “Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)/ TRICARE: TRICARE Pharmacy Benefits Program”. This final rule implements new authority for an over-the-counter (OTC) drug program, makes several administrative changes to the TRICARE Pharmacy Benefits Program regulation in order to conform it to the statute, and clarifies some procedures regarding the operation of the uniform formulary. Specifically, the final rule: Provides implementing regulations for the OTC drug program that has recently been given permanent statutory authority; conforms the pharmacy program regulation to the statute (including recent statutory changes contained in the Carl Levin and Howard P. ‘‘Buck’’ McKeon National Defense Authorization Act for Fiscal Year 2015) regarding point-of-service availability of non-formulary drugs and copayments for all categories of drugs; clarifies the process for formulary placement of newly approved drugs; and clarifies several other uniform formulary practices. This final rule is effective August 26, 2015.
  • On July 27, 2015, the Food and Drug Administration (FDA) announced the availability of a guidance for industry entitled ‘‘Analytical Procedures and Methods Validation for Drugs and Biologics.’’ This guidance supersedes the draft of the same name that published on February 19, 2014, and replaces the 2000 draft guidance for industry on ‘‘Analytical Procedures and Methods Validation’’ and the 1987 FDA guidance for industry on ‘‘Submitting Samples and Analytical Data for Methods Validation.’’ This guidance discusses how to submit analytical procedures and methods validation data to support the documentation of the identity, strength, quality, purity, and potency of drug substances and drug products.
  • On July 27, the Department of Veterans Affairs released a proposed rule entitled “Payment of Emergency Medication by VA”. The Department of Veterans Affairs (VA) proposes to amend its medical regulations that govern reimbursement of emergency treatment provided by non-VA medical care providers. VA proposes to clarify its regulations insofar as it involves the reimbursement of medications prescribed or provided to the veteran during the episode of non-VA emergency treatment. Comments must be received by VA on or before September 25, 2015.
  • On July 27, 2015, the CMS Center for Medicaid and CHIP Services released a letter to State Medicaid Directors entitled “New Service Delivery Opportunities for Individuals with a Substance Use Disorder”. The purpose of this letter is to inform states of opportunities to design service delivery systems for individuals with substance use disorder (SUD), including a new opportunity for demonstration projects approved under section 1115 of the Social Security Act (Act) to ensure that a continuum of care is available to individuals with SUD.
  • On July 28, 2015, CMS Center for Consumer Information & Insurance Oversight published a Frequently Asked Questions (FAQ) document entitled “State-based Marketplace Options for Implementing Exemptions from the Shared Responsibility Payment”.
  • On July 29-30, 2015, the Congressional Budget Office (CBO) published two blog posts that feature responses to questions that CBO received from Members of Congress after hearings last month before the House and Senate Budget Committees.: The July 29th post focused on telemedicine, and the July 30th post discussed the Center for Medicare and Medicaid Innovation.
  • On July 29, 2015, the CMS CCIIO released the “CO-OP Program Guidance Manual”. The purpose of this guidance manual is to provide CO-OPs with a resource to quickly access guidance issued by the CO-OP program. This manual contains guidance on the following subject matters: Core contract requirements including the review of employment agreements and executive compensation; Risk-based capital (RBC) requirements; Start-up Loan disbursements; and Semi-annual and quarterly reporting requirements.
  • On July 30, 2015, the Internal Revenue Service (IRS) published Notice 2015-52, entitled “Section 4980I — Excise Tax on High Cost Employer-Sponsored Health Coverage”. This notice is intended to continue the process of developing regulatory guidance regarding the excise tax on high cost employer-sponsored health coverage under § 4980I of the Internal Revenue Code (Code). Section 4980I, which was added to the Code by the Affordable Care Act, applies to taxable years beginning after December 31, 2017. Under this provision, if the aggregate cost of applicable employer-sponsored coverage (applicable coverage) provided to an employee exceeds a statutory dollar limit (dollar limit), which is adjusted annually, the excess benefit is subject to a 40 percent excise tax.
  • On July 31, 2015, FDA published the following user/ facility fees for 2016:
    • Animal Drug User Fee Rates and Payment Procedures for Fiscal Year 2016-2015-18913
    • Animal Generic Drug User Fee Rates and Payment Procedures for Fiscal Year 2016-2015-18909
    • Biosimilar User Fee Rates for Fiscal Year 2016-2015-18908
    • Food Safety Modernization Act Domestic and Foreign Facility Reinspection, Recall, and Importer Reinspection Fee Rates for Fiscal Year 2016-2015-18906
    • Generic Drug User Fee: Abbreviated New Drug Application, Prior Approval Supplement, Drug Master File, Final Dosage Form Facility, and Active Pharmaceutical Ingredient Facility Fee Rates for Fiscal Year 2016-2015-18915
    • Medical Device User Fee Rates for Fiscal Year 2016-2015-18907
    • Outsourcing Facility Fee Rates for Fiscal Year 2016-2015-18916
    • Prescription Drug User Fee Rates for Fiscal Year 2016-2015-18914
  • On July 30, 2015, the CMS Center for Medicaid and CHIP Services issued an informational bulletin entitled “Annual Re-determination of Medicare Part D Low-Income Subsidy Deemed Status (Re-deeming)”. CMS is now preparing for the annual redetermination of Medicare Part D low-income subsidy (LIS) deemed status, also known as “redeeming.” The information in the bulletin is to help states understand the process and their role in ensuring that dual eligible beneficiaries have timely, affordable, and comprehensive coverage under the Medicare Part D prescription drug benefit.

Event Notices

  • August 24, 2015: The FDA Center for Drug Evaluation and Research (CDER) and Center for Biologics Evaluation and Research (CBER), is announcing the availability of a draft guidance for industry entitled ‘‘Request for Quality Metrics’’ and a public meeting regarding the Agency’s plans associated with a quality metrics reporting program. The draft guidance and public meeting are intended to gain stakeholders’ perspectives on various aspects of the development and planned implementation of a quality metrics program launched under the authority of the Food, Drug, and Cosmetic Act (the FD&C Act). The guidance includes an explanation of how FDA intends to use quality metrics data to further develop the FDA’s risk-based inspection scheduling, to identify situations in which there may be a risk for drug supply disruption, to improve the efficiency and effectiveness of establishment inspections, and to improve FDA’s evaluation of drug manufacturing and control operations. FDA expects that the initial use of the metrics will be to consider a decreased surveillance inspection frequency for certain establishments. For example, establishments that have highly controlled manufacturing processes have the potential to be inspected less often (as a lower priority for inspection) than similar establishments that demonstrate uncontrolled processes (as a higher priority for inspection). In addition, FDA intends to consider whether these metrics may provide a basis for FDA to use improved risk-based principles to determine the appropriate reporting category for post-approval manufacturing changes. FDA intends to consider the input from this public meeting as we finalize this guidance and the planned implementation of this program, including FDA’s initial set of requests for quality metrics data. More information may be found here.


U.S. Senate

  • On July 26th, Senators voted 49-43 to block a proposal—which would have been attached to the Highway Trust Fund’s authorizing bill, H.R. 22—to repeal the ACA. Senate Majority Leader Mitch McConnell (R-KY) proposed the Affordable Care Act repeal amendment as he also agreed to allow a vote on an amendment sought by Democrats to extend the charter of the Export-Import Bank. McConnell said July 26th that the health law is “filled with higher costs, fewer choices and broken promises” and “continues to hammer hardworking middle-class families.”
  • On July 30th, President Obama signed into law the Medicare Independence at Home Medical Practice Demonstration Improvement Act (S. 971), as well as the Steve Gleason Act (S. 984), which, among other provisions, provides Medicare beneficiary access to eye-tracking accessories for speech-generating devices.

House of Representatives

The House of Representatives adjourned this week for the August recess. The House is expected to reconvene regular legislative business on September 8th.

  • On July 28, 2015, the Ways and Means Health Subcommittee convened a hearing to discuss the impact of Medicare regulations on rural health care delivery. Witnesses for the hearing included Tim Joslin, CEO, Community Regional Medical Centers; Shannon Sorensen, CEO, Brown County Hospital; Carrie Saia, CEO, Holton Community Hospital; and Daniel Derksen, Director, Arizona Center for Rural Health. During the hearing Subcommittee Chairman Kevin Brady (R-TX) stated that overregulation and bureaucracy in Medicare exacts a disproportionate toll on providers in rural areas. Specifically, he said that the so-called “96-hour rule” for Critical Access Hospitals (CAHs) represents an “arbitrary cutoff that doesn’t always match the medical reality for patients seeking treatment at facilities near their homes”. Further, he said, the effect of physician shortages are exacerbated by regulations related to physician supervision. “Rules that change the way routine therapeutic services are handled in rural areas or rules that bar physician assistants from providing services, like hospice, disrupt access and the continuity of care for rural beneficiaries,” said Brady. More information on the hearing may be found here.
  • On July 28, 2015, the House Committee on Education & the Workforce convened a hearing entitled “Reviewing the Policies and Priorities of the U.S. Department of Health and Human Services”. The sole witness was Health and Human Services (HHS) Secretary Sylvia M. Burwell. More information may be found here.
  • On Tuesday July 28 and Wednesday July 29, 2015, the House Energy and Commerce Committee convened a markup of several bills:
    • HR 985 — Concrete Masonry Products Research, Education, and Promotion Act
    • HR 3154 — A bill to allow manufacturers to meet warranty and labeling requirements for consumer products by displaying the terms of warranties on Internet websites, and for other purposes.
    • HR 1344 — A bill to amend the Public Health Service Act to reauthorize a program for early detection, diagnosis, and treatment regarding deaf and hard-of-hearing newborns, infants, and young children.
    • HR 1462 — Protecting Our Infants Act
    • HR 1725 — National All Schedules Prescription Electronic Reporting Reauthorization Act
    • HR 2820 — Stem Cell Therapeutic and Research Reauthorization Act

More information may be found here.


  • On July 30, 2015, the CMS Office of the Actuary published an annual update on projections of healthcare spending growth in the United States is projected to average 5.8 percent for 2014–24, reflecting the Affordable Care Act’s coverage expansions, faster economic growth, and population aging. Recent historically low growth rates in the use of medical goods and services, as well as medical prices, are expected to gradually increase. However, in part because of the impact of continued cost-sharing increases that are anticipated among health plans, CMS finds, the acceleration of these growth rates is expected to be modest. The health share of US gross domestic product is projected to rise from 17.4 percent in 2013 to 19.6 percent in 2024. A Health Affairs article in which the findings were published may be found here. A CMS Fact Sheet on the report may be found here.
  • On July 24, 2015, Avalere published a brief entitled “Medicare Advantage: 2015 National Snapshot”. According to Avalere’s analysis, 94 percent of Medicare beneficiaries choose from at least 5 MA plan options, 76 percent have a choice of more than 10 MA plans, and nearly 58 percent choose from at least 15 plans. Overall, Medicare beneficiaries have a choice of more than 18 plans on average in 2015. Medicare beneficiaries who live in counties with high MA enrollment have a significant choice of plans in 2015, the analysis shows. Indeed, the nearly 11 million Medicare beneficiaries who live in one of the 30 U.S. counties with the highest MA enrollment have an average of 29 plan options.
  • On July 30, 2015, the Government Accountability Office (GAO) released a report entitled “Patient Protection and Affordable Care Act: IRS Needs to Strengthen Oversight of Tax Provisions for Individuals”. In January 2015, the Internal Revenue Service (IRS) began verifying taxpayers' premium tax credit (PTC) claims using marketplace data on enrollments and advance payments of the PTC. IRS is using its standard examination processes to check the coverage, exemption, or shared responsibility payment (SRP) information taxpayers report. GAO found that Incomplete and delayed marketplace data limited IRS's ability to match taxpayer PTC claims to marketplace data at the time of return filing. Complete marketplace data for the 2014 coverage year were due to IRS in January, but due to marketplace delays in transmitting the data and IRS technical difficulties with processing the data for matching, as of March 21, 2015, IRS had complete data available for verification of taxpayer PTC claims for 4 of the 51 marketplace states (i.e., the 50 states and the District of Columbia). In addition, GAO reported, IRS does not know the total amount of advance PTC payments made to insurers for 2014 marketplace policies because marketplace data are incomplete.
  • On July 27, 2015, the HHS Office of Inspector General (OIG) released a report entitled “Medicare Part B Overpaid Millions for Selected Outpatient Drugs”. Medicare contractors in 13 jurisdictions overpaid providers $35.8 million for selected outpatient drugs during OIG’s audit period (July 1, 2009, through June 30, 2012). For the majority of the overpayments (88 percent), providers billed either incorrect units of service or a combination of incorrect units of service and incorrect Healthcare Common Procedure Coding System (HCPCS) codes.
  • On July 29, 2015, OIG released a report entitled “Actual Enrollment and Profitability Was Lower Than Projections Made by the Consumer Operated and Oriented Plans and Might Affect Their Ability to Repay Loans Provided Under the Affordable Care Act”. To expand the number of health insurance plans available in the marketplaces, the ACA established the Consumer Operated and Oriented Plan (CO-OP) program and directed the Secretary of Health and Human Services to provide loans to help establish new consumer-governed, nonprofit health insurance issuers, or CO-OPs, in every State. This report examines whether CO-OP enrollment and profitability met initial program projections. Factors such as low enrollments and net losses could limit the ability of some CO-OPs to repay startup and solvency loans and to remain viable and sustainable.
  • On July 27, 2015, HHS released a report entitled “Competition and Choice in the Health Insurance Marketplaces, 2014-2015: Impact on Premiums”. In this issue brief, authors offer a progress report on the evolution of the competitive dynamics of the Marketplaces.
  • On July 30, 2015, GAO released a report entitled “Medicaid: Key Issues Facing the Program”. GAO identified four key issues facing the Medicaid program, based on prior work. They are:
    • Access to care
    • Transparency and oversight
    • Program integrity
    • Federal financing approach


  • On July 27, 2015, Covered California announced a proposed 4 percent statewide weighted average rate increase for plans offered in 2016 on their Health Insurance Marketplace. “We are encouraged by Covered California’s proposed rates for the 2016 plan year and pleased that consumers in California will continue to have access to quality, affordable health coverage,” said Kevin Counihan, CEO of the Health Insurance Marketplaces. “Today’s announcement demonstrates that the Affordable Care Act is working as intended to spur competition and transparency in the Marketplaces, keeping premium increases low and leading to affordable new choices for consumers. We are committed to working closely with other states as they review rate proposals and finalize rates for the 2016 plan year.” More information may be found in a CMS press release here.
  • On July 29, 2015, CMS projected that the average premium for a basic Medicare Part D prescription drug plan in 2016 will remain stable, at an estimated $32.50 per month. CMS said premiums will remain stable despite the fact that total Medicare Part D costs per capita grew by almost 11 percent in 2014. To view the Part D Base Beneficiary Premium, the Part D National Average Monthly Bid Amount, the Part D Regional Low-Income Premium Subsidy Amounts, the De Minimis Amount, the Part D income-related monthly adjustment amounts, and the Medicare Advantage Regional Benchmarks, go to: and select “2016.”
  • On July 30, 2015, CMS announced a new partnership with the State of Rhode Island to test an initiative to improve services for Medicare-Medicaid enrollees. The new demonstration will allow Rhode Island and CMS to contract with a Medicare-Medicaid Plan to provide an integrated set of Medicare and Medicaid benefits for enrolled beneficiaries. Approximately 30,000 Medicare-Medicaid enrollees in Rhode Island will be eligible for the demonstration. The Rhode Island demonstration builds on the state’s existing Integrated Care Initiative. Under Phase I of the Integrated Care Initiative, Rhode Island established the Rhody Health Options (RHO) Medicaid managed care program. In RHO, Medicaid members – including those dually eligible for Medicaid and Medicare – enroll in a health plan that coordinates their Medicaid services, including long-term services and supports. Under the demonstration announced today, a qualifying RHO plan will cover integrated Medicare and Medicaid benefits for enrollees. More information may be found here.
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