Washington Watch for July 2018
Carter L. Alleman, J.D.
CMS Examines Changes to Stark Law
CMS issued a request for information (RFI) inviting comments and input regarding the physician self-referral law (the “Stark Law”). CMS has advised that it welcomes comments in order to assist with CMS’ “efforts to assess and address the impact and burden of the physician self-referral law, including whether and, if so, how it may prevent or inhibit care coordination.”
The RFI contains twenty (20) specific areas in which CMS requests public input, including comments regarding arrangements involving alternative payment models and other arrangements that may involve the integration and coordination of care; input regarding existing exceptions, including the exceptions for risk-sharing arrangements, physician incentive plans, remuneration unrelated to DHS; and input on certain existing concepts/definitions already contained in the Stark Law. CMS has also asked for comments regarding studies that may assess the effect of the Stark Law on the healthcare industry, the compliance costs for parties regulated by the Stark Law, and “whether CMS should measure the effectiveness of the physician self-referral law in preventing unnecessary utilization and other forms of program abuse relative to the cost burden….”
The CMS press release may be found here.
The Federal Register publication may be found here.
New MedPAC Commissioners Appointed and 2018 Medicare Trustees Report Released
The Government Accountability Office (GAO) has announced the appointment of five new members to the Medicare Payment Advisory Commission (MedPAC). Karen DeSalvo served as acting assistant secretary for health at the U.S. Department of Health and Human Services (HHS) from 2014 to 2017, and national coordinator for health information technology from 2014 to 2016. She currently works as a professor of medicine and population health at the University of Texas at Austin. Jonathan Perlin is a former undersecretary for health at the Department of Veterans Affairs (VA), and the current president of clinical services and chief medical officer of HCA Healthcare. Marjorie Ginsburg is a nurse, researcher, and the founding executive director of the Center for Healthcare Decisions, Inc., which works to foster civic engagement around health policy. Jonathan Jaffery is a professor of medicine at the University of Wisconsin School of Medicine and Public Health and chief population health officer at the University of Wisconsin Health. Jaewon Ryu is the executive vice president and chief medical officer for Geisinger integrated health system. MedPAC’s next meeting is scheduled for September 6-7.
The 2018 Medicare Trustees Report finds that Medicare’s Hospital Insurance (HI) trust fund which funds Medicare Part A will be depleted in 2026, three years earlier than last year’s report predicted.
At this point, it is estimated that Medicare will only be able to cover 91 percent of program costs. The report cites the repeal of the individual mandate as one factor responsible for the state of the program; Medicare will face increased payments to hospitals for uncompensated care costs as a result of an increased number of uninsured individuals. Diminishing revenues from payroll and Social Security taxes are also responsible for the trust fund’s decline.
The Trustees recommend that Congress and the administration take steps in the near future to address the depletion of the trust fund and projected growth in program spending. In response to the report, many congressional Republicans acknowledged the need to reform the Medicare program to ensure its fiscal sustainability.
Senate Cancels August Recess
Senate Majority Leader Mitch McConnell announced his decision to officially cancel the chamber’s scheduled August recess. The plan is for senators to recess the week of August 6 before returning to work the following week and remaining in session for the rest of the month. Senators were previously scheduled to recess until after Labor Day.
Trump Administration Won’t Defend Key Provisions of ACA
Attorney General Jeff Sessions has told Congress that the Justice Department will no longer defend the constitutionality of the Affordable Care Act’s (ACA) individual health insurance mandate. The plaintiffs in a Texas-led lawsuit are arguing that Congress’ repeal of the mandate penalty last year means that all of Obamacare should be repealed. Sessions sent a letter to House Speaker Paul Ryan (R-Wis.), explaining that the Department of Justice (DOJ) will argue that certain parts of the ACA are inseverable from the individual mandate, which would impact the guaranteed-issue and community rating provisions of the law. While the Attorney General acknowledges that the DOJ has a longstanding tradition of defending federal laws, this is “a rare case where the proper course is to forgo defense” of the law. Seventeen Democratic- led states have already intervened to defend Obamacare in DOJ’s absence.
Legal experts are skeptical about the potential success of the DOJ’s strategy, given that Congress itself indicated that the rest of the law could still stand without the mandate when lawmakers repealed the individual mandate tax penalty last year.
Drug Spending Rises, Despite Decrease in Prescriptions
The HHS Office of the Inspector General (OIG) released new data indicating that Medicare spending on brand-name drugs rose by 62 percent between 2011 and 2015, even though the number of brand-name drug prescriptions in Medicare Part D decreased over the same period. The increase does consider discounts and rebates paid by manufacturers to insurers and pharmacy benefit managers (PBMs). Medicare spending increased from $49 billion in 2011 to $80 billion in 2015, while the number of prescription fell 17 percent and the total amount of rebates doubled during the five-year period. The report also finds that seniors’ out-of-pocket (OOP) costs are increasing. Part D beneficiaries spent 40 percent more on brand-name drugs from 2011 to 2015 and the percentage of beneficiaries with OOP costs of $2,000 or more per year doubled. The average OOP cost per brand name drug rose by 40 percent, from $161 to $225. In addition, the average unit cost of brand-name drugs increased by 29 percent.
Ways and Means Holds Physician Red Tape Roundtable
The House Ways and Means Committee held a roundtable to discuss how lawmakers can remove unnecessary regulatory burdens in the Medicare program. Panel members met with physician groups and medical advocacy associations to identify ways to improve quality of care through modernization of the Medicare program. Participants specifically critiqued the program’s duplicative reporting requirements, federal standards and prior authorization guidelines, and the Stark Law and anti-kick back statutes. The committee previously convened similar roundtables with post-acute care medical professionals as well as hospital representatives.
Lawmakers Enter Debate on Protections for Preexisting Conditions
Lawmakers are once again debating the merits of Obamacare’s consumer protections in light of the recent announcement by the Trump administration that the Department of Justice will argue that the community rating and guaranteed issue provisions of the law are unconstitutional. Senate Majority Leader Mitch McConnell (R-Ky.) stated that “everybody” in the Senate wants to preserve the Affordable Care Act’s (ACA) consumer protections. Chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee Lamar Alexander (R-Tenn.) explicitly criticized the decision, characterizing the Administration’s argument as “far-fetched” and stating that there is “no way Congress is going to repeal protections for people with pre-existing conditions who want to buy health insurance.”
Opioid Legislation Update
The House of Representatives completed two-weeks of scheduled votes on more than 70 opioid-related bills. The effort culminated in passage of H.R. 6, the Substance Use Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act, by a vote of 396-14. Thirteen Republicans and one Democrat voted against the legislation. This bipartisan bill aims to advance addiction treatment and recovery initiatives, improve prevention, and strengthen efforts to combat synthetic opioids like fentanyl. The package is comprised of 58 individual bills previously approved by the House. While the majority of legislation considered by the House had bipartisan support, many Democrats complained that the enough to address the crisis.
H.R. 6 is now expected to be sent to the Senate for consideration. It is unclear when it could receive a vote by the upper chamber, which has been working on its own legislative solutions to the opioid crisis. The White House issued a statement urging the Senate to “swiftly pass” the SUPPORT for Patients and Communities Act.
Proposal to Reorganize Federal Government Released
The Trump administration formally released its plan to reorganize parts of the federal government last week. The proposal from the Office of Management and Budget (OMB) aims to merge agencies with overlapping or duplicative responsibilities and eliminate agencies deemed unnecessary as a means of modernizing the federal government.
The U.S. Department of Health and Human Services (HHS) would become the Department of Health and Public Welfare and would absorb nutrition assistance programs into its mission. The plan would create a Council on Public Assistance within the department, which would likely work to advance the administration’s recent efforts to impose and strengthen work requirements in safety net assistance programs. The Food and Drug Administration’s (FDA) food-related responsibilities would be moved to the Department of Agriculture, and the FDA would be renamed the Federal Drug Administration.
The White House also calls for moving the Agency for Healthcare Research and Quality (AHRQ), the National Institute for Occupational Safety and Health, and the National Institute on Disability, Independent Living, and Rehabilitation Research into the National Institutes of Health (NIH). Many of the proposals would require congressional approval. Republican lawmakers have said that they would review the administration’s plan, but it is unlikely the proposal will be a high priority in the coming months. The plan faces significant opposition from Democrats.
Regulation to Allow Association Health Plans Released
The Department of Labor released a final rule last week that will make it easier for small businesses and individuals to create association health plans (AHPs), which are exempt from certain Affordable Care Act (ACA) consumer protection requirements. The plans allow small groups to band together to purchase health insurance and do not have to comply with essential health benefit (EHB) standards that dictate which health care services a plan must cover. The rule will allow small businesses and self-employed individuals in the same industry, state, or region to obtain health coverage as if they were a single large employer. Previously, a much greater “commonality of interest” was required among entities that wished to be treated as a large group when buying insurance. The new plans will be allowed to start taking effect beginning on September 1.
The Congressional Budget Office (CBO) estimates that four million people will join the new AHPs. Because AHP enrollees are likely to be healthier people with higher incomes, premiums for people remaining in Obamacare’s individual market are expected to rise two to three percent. State insurance regulators have raised concerns about fraud and abuse; historically, such plans have been criticized for unscrupulous business practices. New York and Massachusetts plan to sue the federal government, arguing that the expansion of AHPs will lead to fewer critical consumer health protections. A separate rule related to short-term health plans, which would also be exempt from many Obamacare requirements, is expected to be released in the coming weeks.
CMS Issues New Road Map to Address Opioid Epidemic
The Centers for Medicare & Medicaid Services (CMS) published a road map that outlines the agency’s plan to combat the misuse and abuse of prescription opioids. The “CMS Opioids Roadmap” provides information on CMS’ three-pronged approach to the crisis, which focuses on prevention of new cases of opioid use disorder, treatment of patients who have already become dependent on or addicted to opioids and use of data from across the nation to target prevention and treatment activities. CMS will monitor prescription opioid trends, strengthen controls at the time of opioid dispensing, and encourage health care professionals to engage in safe and effective pain management practices, including opioid-sparing treatments.