1. health and fitness

InsideHealthPolicy.com’s
Inside CMS
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Vol. 17, No. 46 - November 13, 2014
CMS Makes It Easier To
Delay Meaningful Use
Exemption Request
Deadline
CMS left the door open to extend
the period for providers to request
exemptions from the so-called
meaningful use requirements of the
electronic health records program.
The agency says it had to write a
regulation to re-open the hardship
exemption this time, but that regulation states that CMS may delay
deadlines subsequently without the
cumbersome rulemaking process.
Nevertheless, the agency told providers not to count on further delays.
CMS in August delayed the
deadline requiring updated electronic
health record technology by one year
for all providers, but because of a
technical glitch in CMS’ computer
system, some physicians who are new
to the meaningful use program faced
penalties anyway. To fix the situation,
CMS is letting individual providers
request exemptions from the program
even though the deadline to do so has
passed, though the exemptions are
only available to those who are trying
to show meaningful use for the first
time.
“We believe that the flexibility to
specify a later hardship exception
application submission deadline as set
forth above will prevent situations
such as the one addressed under this
IFC where, for example, an unforeseen circumstance occurred, which
could justify a hardship exception, but
the hardship exception application
submission deadline has passed,”
continued on page 10
Lame Duck Provides An Opportunity To Pass
SGR Deal, Lawmakers Say
The GOP Doctors Caucus and more than 110 lawmakers are urging House
leadership to resume negotiations on the stalled Medicare physician payment
reform deal when Congress resumes following the elections, and one Democratic Ways & Means staffer said the lame duck session is a prime opportunity
for Congress to pass a deal to replace the Sustainable Growth Rate before new
committee leaders take over. The staffer also said that Rep. Sander Levin
(MI), the ranking Democrat on Ways & Means, would like to pass the SGR
deal without offsetting the entire package, though lobbyists say it is unlikely
that Republicans would allow that to happen.
The Doctors Caucus on Monday (Nov. 3) sent a letter to House Speaker
continued on page 12
Express Scripts Explains Plan To Drive Down
Hep C Rx Prices
Gilead Sciences paid roughly 85 percent of the nation’s hepatologists to
test hepatitis C medications on their patients, instead of testing the drug at
facilities with large clinical trial arms, and that decentralized approach will
make it difficult for makers of other brand-name hepatitis C medications to
break into the market, Express Scripts Chief Medical Officer Steve Miller
said. Miller told Inside Health Policy that Express Scripts hopes to get makers
of competing hepatitis C drugs, expected to enter the market soon, to significantly undercut Gilead on price in exchange for Express Scripts steering
market share their way — the company administers benefits for some 85
million Americans.
continued on page 16
CMS Pulls Back Draft Guidance On Part D Price
Concessions For 2016
CMS backed away Thursday (Nov. 6) from draft guidance issued at the
end of September laying out how Part D sponsors starting in 2016 should
report price concessions negotiated with pharmacies — a little-notice technical guidance that was praised by pharmacies but lambasted by pharmaceutical
benefit managers as a dramatic Part D shift that violated the “non-interference
clause” of the Social Security Act. In a Nov. 6 memo to Part D sponsors, the
agency says it will look further into the issue with an eye toward developing
new guidance for 2017 and future years.
CMS says it decided to hold off issuing a final version of the document
after the PBM lobby and other critics complained the draft guidance would
continued on page 18
AMA Urges States Not Expanding Medicaid To Find Ways To Cover People
States that don’t expand Medicaid should find other ways to cover those who otherwise would be covered by such an
expansion, the American Medical Association said Monday (Nov. 10). AMA historically has advocated for giving people
income-adjusted tax credits to help buy private insurance over public sector expansions as a means of providing coverage
to the uninsured.
“A new AMA policy passed today encourages policymakers at all levels to focus their efforts on working together to
identify realistic coverage options for adults currently in the coverage gap, even if states choose not to adopt the Medicaid expansion outlined in the Affordable Care Act,” the physician lobby announced at it’s Interim Meeting in Dallas.
The Affordable Care Act called for expanding Medicaid to adults with incomes up to 138 of the federal poverty
level, but it’s voluntary and 24 states have yet to expand the program. AMA members said they are concerned about the
estimated 7.6 million residents who are without insurance because those states aren’t expanding, and they urged those
states to use waivers to expand coverage in lieu of outright Medicaid expansion. They also urged states to publicly report
annually on efforts to cover the uninsured.
AMA is particularly worried about adults in non-expansion states with incomes below 100 percent of poverty
because they aren’t eligible for federal premium subsidies to purchase private exchange coverage. Medicaid
expansion states reduced the uninsured rate among those below the poverty line from 28 percent to 17 percent, according
to the Commonwealth Fund, yet AMA notes that the rate of uninsured is the same, at 36 percent, in states that haven’t
expanded Medicaid.
States that are reluctant to expand Medicaid may use “Section 1115 demonstration waivers” to cover residents while
introducing market competition and experimenting with benefit and cost-sharing designs. CMS approved such waivers for
Arkansas, Iowa, and Michigan. CMS also approved a waiver for Pennsylvania, which is scheduled to begin its expansion
next year, and Indiana is developing a proposal that would be based on its existing Healthy Indiana Plan, which requires lowincome beneficiaries to contribute a portion of their income to individual accounts that are similar to health savings accounts.
“In general, states have requested approvals for waivers related to premium assistance, premium and cost sharing requirements, healthy behavior incentives, benefit changes and work requirements,” AMA states in a report accompanying the policy.
One alternative that some states are considering is so-called premium assistance, also called the “private
option.” This approach lets states use Medicaid expansion funding to purchase private coverage for newly eligible
beneficiaries through exchanges or the private insurance market. CMS premium assistance waivers require wrap-around
coverage for benefits and cost-sharing consistent with Medicaid requirements, and beneficiaries must be allowed to
choose from at least two plans.
Arkansas and Iowa use Medicaid expansion funds to purchase “silver level” private coverage for newly eligible
adults through their exchanges. Pennsylvania contracts with private managed care plans to cover newly eligible beneficiaries, but the waiver does not specify that plans will be part of the health insurance exchange. Newly eligibles in Arkansas
and Pennsylvania must enroll in the private option, but Iowa requires enrollment in the private option only for newly
eligible adults with incomes between 100 and 138 percent of poverty.
States may use waivers for premium requirements, too. Medicaid prohibits states from charging premiums to beneficiaries with incomes below 150 percent of poverty, but CMS let Iowa, Michigan and Pennsylvania charge monthly
premiums equal to 2 percent of income to newly eligible beneficiaries with incomes more than 100 percent of poverty.
Despite the wrap-around requirements, Iowa and Pennsylvania for one year get to exclude coverage for non-emergency medical transportation.
Wisconsin is not expanding Medicaid, but the state restructured its program and none of its residents fall into the
coverage gap. Wisconsin was one of the few states to offer Medicaid coverage to childless adults up to 200 percent of
poverty, even before the Affordable Care Act, but enrollment caps left 157,259 adults without coverage, as of August
2013. CMS let Wisconsin cover very-poor residents with Medicaid by moving higher-income residents from Medicaid to
private coverage with federal premium subsidies that the Affordable Care Act made possible. — John Wilkerson
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CMS Rescinds Draft Guidance On 2016 Rx Price Concession Reporting
Premiere: ACA Cuts Have Less Impact On Hospital Finances Than ACOs, Consolidation
MedPAC Requests Comments On Children’s Coverage
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INSIDE CMS — www.InsideHealthPolicy.com — November 13, 2014
Plans Say Duals Bring Down Star Ratings, Beneficiary Advocates Not Sure
As CMS looks at possible changes to the Medicare Advantage star ratings program, health plans say that poorer
beneficiaries are causing lower-than-appropriate star ratings for some MA plans, though the Medicare Rights Center says
that current data do not show that beneficiaries’ low income is the root cause of lower quality care for those beneficiaries.
America’s Health Insurance Plans tells CMS, in response to a CMS Request For Information on the differences
between plans serving beneficiaries dually eligible for Medicare and Medicaid and others, that plans focused on lowincome beneficiaries have overall star ratings that are half a star less than plans not focused on serving low-income
beneficiaries, and while overall star ratings are improving, the disparity between the two types of plans is growing. But
the Medicare Rights Center says risk adjusting for socio-economic status under the MA star ratings program might not be
appropriate because “the root cause of disparities in care is not likely to be addressed if the differences are concealed
through adjustment in performance scores.”
CMS released an RFI in September asking stakeholders to provide any data showing that beneficiaries’ dual status
causes lower MA and Part D quality measure scores after the National Quality Forum recommended that CMS risk-adjust
for socio-economic status. CMS comments on the draft report indicated the agency was against the idea of risk-adjusting
for socio-demographic factors.
“While there is evidence of an association between higher dual-eligible enrollment (and higher LIS [low-income
subsidy] beneficiary enrollment) and lower Star Ratings, this association does not prove causality,” CMS says in the RFI.
“Indeed, it may be that dual-eligible and LIS beneficiaries are experiencing lower quality care, which would be of
paramount concern to CMS.”
The agency says it will evaluate the responses to the RFI and findings of CMS’ own research to decide if any
adjustments to the star ratings quality measures should be made.
The Medicare Rights Center applauded CMS for looking carefully at the issue, and urged the agency to consider potential
pitfalls to risk-adjustment — including disparities in care being masked by risk-adjustment in performance scores, perpetuating
unequal care for low-income beneficiaries, and creating two different standards of care for beneficiaries based on their wealth.
“While we share CMS’ concern that some high-quality health plans may be deterred from serving low-income
beneficiaries under the existing quality framework, we remain skeptical that across-the-board adjustment of quality
measurements for SDS [socio-demographic status] factors is the appropriate solution,” the Medicare Rights Center says.
Medicaid Health Plans of America, which says its members are branching out into the MA space and Special Needs
Plans to serve duals, points not only to the NQF report, but also an Inovalon Report released last month to show that
housing, geographic location, race and household income are associated with worse health outcomes. These findings,
MHPA says, give CMS evidence to use to improve the star ratings system.
“Absent a significant change, there is a risk the quality-based payments put into place by the ACA will have the
unintended consequence of discouraging organizations from focusing on low-income beneficiaries, and reducing access
to health plans’ care coordination, focus on prevention, and emphasis on person-centered care for the vulnerable populations that need it most,” AHIP says. AHIP says its members are working to provide CMS with evidence to show that lowincome status causes lower quality ratings, and MHPA says it is prepared to bring plans to the table to help discuss how
the star ratings program could be changed.
The Medicare Rights Center says that if CMS finds evidence to show that beneficiaries’ low-income status causes
lower MA and Part D plan quality measurement scores, there are other alternatives to simply risk-adjusting the quality
measures that the agency should consider. The center says that plans with similar proportions of low-income beneficiaries
could be compared with each other rather than comparing them to the entire universe of health plans. — Michelle M. Stein
MedPAC Eyes Making 17 Conditions Site-Neutral At IRFs, SNFs
Congressional Medicare advisers are pushing forward with creating a draft recommendation for site-neutral payments
for 17 conditions treated at inpatient rehabilitation facilities (IRFs) and skilled nursing facilities (SNFs), but failed to
reach a consensus on adding strokes to the list. The Medicare Payment Advisory Commission (MedPAC) has not yet
specified which 17 conditions it wishes to recommend for site neutral payments, saying only that they will be a mix of
orthopedic, pulmonary, cardiac and infectious conditions that make up roughly 10 percent of IRF cases and spending,
according to commission staff.
Rather than paying IRFs at the lower SNF rate for the site-neutral conditions MedPAC is considering paying a
blended rate and relieving IRFs of some of their site-specific requirements — such as doctors’ visits 3 times a week,
round the clock registered nurse coverage and three hours a day of intensive therapy — when providing rehabilitative
services for the 17 conditions.
SNF advocates applauded MedPAC’s moves at its Friday (Nov. 7) meeting, but IRF and beneficiary advocates
say the commission is failing to recognize the higher level of care and different outcomes based on individual patients’
needs that IRFs offer compared to SNFs. One beneficiary advocate said MedPAC’s decision to move forward with draft
INSIDE CMS — www.InsideHealthPolicy.com — November 13, 2014
3
recommendations for site-neutral payments is “extremely dangerous.”
MedPAC staff told commissioners that if the 17 conditions were accepted for site-neutral payments at the SNF rate
— in addition to orthopedic conditions of joint replacement and hip and femur procedures the commission decided to
recommend for site-neutral payments in June — aggregate IRF spending would decrease by $497 million or 7.1 percent.
The American Health Care Association/National Center for Assisted Living (AHCA/NCAL), which advocates for
SNFs, said MedPAC’s work on site-neutral payments is in line with the IMPACT Act on post-acute care delivery and
payment reform signed into law by President Barack Obama last month.
“There were many positive developments to come out of Friday’s MedPAC session. AHCA/NCAL supports the
Commission’s consensus to move forward with the formulation of a site-neutral policy recommendation, which includes
certain orthopedic conditions as well as 17 additional conditions,” AHCA/NCAL spokesman Greg Crist said. “The
recently-enacted IMPACT law laid the groundwork for achieving our ultimate goal: a sustainable, predictable payment
system for our members. Site neutral is a vital building block within the payment reform discussion and is crucial for
Medicare’s fiscal future.”
While some commissioners approved of adding strokes to the list of site-neutral conditions, many felt that the
complexity of strokes and the differences in patients who are sent to either an IRF or SNF for rehabilitation following a
stroke makes the condition an unlikely candidate for site-neutral payments.
MedPAC staff found that IRFs tend to treat less-severe stroke patients who can benefit from the facilities’ intense
physical therapy requirements, while SNFs tend to treat more severely ill stroke patients that have more complications.
Commission staff found that patients with paralysis were more likely to be sent to IRFs, unless they had a type of paralysis that is harder to recover from like dominant-side paralysis.
Commissioner Alice Coombs, a critical care specialist and anesthesiologist at Milton Hospital and South Shore
Hospital in Weymouth, MA, said vast differences in the severity of strokes in patients and the individual likelihood of
recovery outcomes based on a vast array of factors make the condition one that doesn’t qualify for site-neutral status.
“I’m not quite sure stroke fits into the site-neutral category,” Coombs said.
Beneficiary advocate Judith Stein, executive director of the Center for Medicare Advocacy, is opposed to site-neutral
payments and told Inside Health Policy that MedPAC commissioners should look at all conditions in the way it is
viewing strokes, and recognize that IRFs and SNFs provide significantly different levels of care based on individual
patient’s needs and severity of illness.
“You shouldn’t make a decision based just on diagnosis,” Stein said. “That just isn’t appropriate. It should always be
an individual assessment of what the patient needs and where that care can be provided given that medical analysis.”
Stein said adopting site-neutral policies for IRFs and SNFs could be “extremely dangerous.”
“I hope they will continue to think through the analysis being done for stroke and apply it to people with any other
primary diagnosis who also have all sorts of other considerations and comorbidities,” Stein said.
The American Medical Rehabilitation Providers Association (AMRPA), which advocates for IRFs, echoed Stein’s
statements and said it hoped Congress would ignore recommendations from MedPAC to make some conditions siteneutral between IRFs and SNFs.
“We encourage Congress to challenge MedPAC’s recommendation to push patients into a less-capable care setting
that produces poorer outcomes because it is the cheapest option. Instead, the policy should be based on improving patient
health outcomes and ensuring patients receive the right care that allows them to return more quickly to their family, work
and community,” said AMRPA chairman Bruce Gans. “Rehabilitation hospitals and nursing homes are not the same and
should not be treated as such by Congress or Medicare. The differences between the two care settings can be found in the
intensity of professional services provided as well as their mandated approach to rehabilitation. And, more importantly,
the difference is in the resulting patient outcomes.”
MedPAC chair Glenn Hackbarth said the commission would look at a draft recommendation on making the 17 conditions
site-neutral between IRFs and SNFs, as developed by staff at MedPAC’s December meeting. — Todd Allen Wilson
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INSIDE CMS — www.InsideHealthPolicy.com — November 13, 2014
Plans, Pharmacies Want More Flexibility To Target Beneficiaries For MTM
Beneficiary advocates, plans and pharmacies are urging CMS to launch a demonstration through its innovation center
to fix long-standing problems with the medication therapy management program, with plans and pharmacies seeking more
flexibility to target beneficiaries while beneficiary advocates urge safeguards to ensure plans don’t cherry pick the
healthiest beneficiaries.
Pharmacists and plans also tell CMS, in response to a Request For Information on potential innovation center
demonstrations, that a well-constructed MTM program could help Medicaid managed care programs. The Academy of
Managed Care Pharmacy also says its members would be better able to help with saving money through MTM if they
were recognized as providers.
CMS, in its recent RFI, said innovation in Medicare and Medicaid plans has in some instances been more limited
than innovation in private plans, and asked for feedback on ways to improve the MTM program among other ideas. The
agency had previously looked to expand the program as part of a controversial Part D rule, but ended up scrapping that
plan as well as other controversial pieces of the proposed rule.
While the National Community Pharmacists Association and National Association of Chain Drug Stores had supported the idea of expanding the MTM program, others had urged CMS to revamp the program prior to an expansion.
“It is generally acknowledged that Medicare’s Medication Therapy Management (MTM) programs are not living up
to desired expectations, and it remains difficult to gauge the relative success of the MTM programs, given lower than
expected enrollment and limited evidence on the program’s efficacy,” the Medicare Rights Center says in its comments.
An Avalere Health analysis released earlier this year found only half of eligible beneficiaries received MTM services, and
the NCPA says it is concerned with the low enrollment numbers for the program.
The Medicare Rights Center says beneficiaries question if the program is worth enrolling in because they aren’t sure
what it does and how it could help them.
“These questions reflect a general lack of understanding about how MTM programs can assist beneficiaries in
managing multiple medications and a lack of effective education about the program and its purpose,” the MRC says. A
demonstration could address the shortfalls in the program, MRC says, but all stakeholders, including beneficiary advocates, need to be involved in designing the program.
NACDS asks CMS to launch a demo that expands the MTM benefit to those with a single chronic condition.
CMS currently requires beneficiaries to have two or more chronic conditions and to spend more than $3,000 on medications per year before they can be part of the MTM program. But both groups also say better targeting could help make the
program work better.
Joel White, president of the Council for Affordable Health Coverage and who works with the medication-adherence
coalition Prescriptions for a Healthy America, has previously said the current criteria for the MTM program are outdated,
and costs many not be the best way to target beneficiaries who don’t have their medications under control.
America’s Health Insurance Plans say the cost requirements “dilute the ability of plans to identify and focus their
MTM program (MTMP) resources on beneficiaries who are the most likely to participate and benefit from the services.”
AHIP says Part D plans should be able to use data analytics systems to identify which beneficiaries would benefit the
most from MTM. Plans should also be able to access Medicare Part A and B claims data, and be allowed to use that
information in their MTM programs, AHIP say. Targeting criteria proposed by plans should be approved by CMS, the
group adds.
MRC says that additional MTM flexibility should be given to plans that meet the requirements of the current program and have successfully provided these services. But only plans rated four stars or higher should be able to participate
in any enhanced MTM demo, MRC suggests.
The Academy of Managed Care Pharmacy says that beneficiaries should be targeted based on their diseases,
as well as adverse drug events and non-adherence to their medication. Like AHIP, the AMCP says this approach
could be combined with predictive modeling, like data analytics, to identify which beneficiaries should receive MTM.
This would move the focus of the the MTM program from targeting beneficiaries based on regulatory requirements to a
more clinical focus, AMCP says. The group also says that interoperability of health information among stakeholders
would be help improve MTM.
NCPA and NACDS agree that pharmacists could look at specific diseases where beneficiaries are the most helped by
MTM. NCPA says community pharmacists should also be able to target beneficiaries for enrollment into a MTM program
when there is a qualifying event like a hospitalization in the last month, any transition of care, or side effects from
medications. Claim metrics such as acute to chronic medication ratios, the number of medications within a class, new
therapies in high risk categories, or the use of more than three chronic medications could also help target which beneficiaries would be most helped by MTM, the group adds.
NACDS says that the current criteria should not be repealed without implementing other targeting criteria.
CMS also asked stakeholders in the RFI if financial incentives should be included in MTM programs. NCPA
INSIDE CMS — www.InsideHealthPolicy.com — November 13, 2014
5
says pharmacists should get an incentive payment for good outcomes after 3-6 months of a beneficiary enrolling in MTM.
AHIP suggests Part D plans should get bonuses for achieving higher quality, better rates of medication adherence or
reduced health care costs, since they don’t see the benefits of lower overall health costs the way Medicare Advantage
plans do — though these would have to be evaluated for their impact on low-income focused plans. NACDS says CMS
should look into allowing Part D plans to share in savings to Medicare Parts A and B attributed to MTM, as this would
incentivize plans to more aggressively promote MTM services.
Beneficiaries should also be given incentives to opt in to MTM programs, AHIP says. NACDS says any demo should look
at incentives across the entire program for beneficiaries, prescribers, plans and pharmacies. This could include decreases in copayments or monthly premiums for beneficiaries that complete comprehensive medication reviews and incentives for pharmacists who educate beneficiaries about MTM. MRC, however, says financial incentive programs, or bonuses for participation, may be inappropriately marketed to beneficiaries to steer them to plans participating in a CMS demo. For example,
MRC says, plans could also use the bonuses to cherry pick a healthier group of beneficiaries. — Michelle M. Stein
Industry, Patients United In Opposing CMS’ Dialysis Star-Rating Program
Dialysis facilities and patients criticized CMS on Monday (Nov. 10) for sticking to a dialysis star-rating program that
they say confuses patients, makes good facilities appear to be poor performers and disadvantages facilities in poor
neighborhoods.
Industry and patient groups started criticizing the star-rating plan when it was described in a CMS blog in July. They
dislike that the program is graded on a curve, which forces 30 percent of facilities into one and two-star ratings irrespective of their performance, and say its metrics are poorly designed and out-of-sync with the end-stage renal disease Quality
Incentive Program that has been in place for more than a decade. They also complain that CMS created the program
without going through public rulemaking, and even the Medicare Payment Advisory Commission criticized CMS for
abruptly creating the program without input from dialysis facilities, patients and others.
CMS delayed the program shortly before it was supposed to take effect in October. The agency said it needed time to
explain the program to the public and stressed that the delay did not indicate it was changing the program. CMS expects
to post ratings on Dialysis Facility Compare in January.
Kidney Care Partners, which represents industry and patients, the Dialysis Patient Citizens, which represents
patients, and the Kidney Care Council, which represents industry, all issued strongly worded statements in
opposition to CMS’ latest announcement.
“Kidney Care Partners (KCP) expressed deep concern over the surprise announcement last week by the Centers for
Medicare and Medicaid Services (CMS) to hold firm on use of a methodology that distorts the actual quality performance
of dialysis facilities when the Agency launches its star-based ranking system in January,” the industry and patient coalition stated.
Likewise, the Dialysis Patient Citizens complained that CMS is moving ahead with a performance-scoring methodology, even though agency officials acknowledge that many patients will misconstrue one- and two-star ratings as poor.
Executive Director Hrant Jamgochian said star ratings are supposed to be easy for patients to understand, but the system
that CMS developed is so confusing that his group is developing resources that explain the ratings to patients.
“We are particularly disheartened that CMS is introducing yet another quality measurement that forces providers in
disadvantaged and less healthy regions into a nationwide competition, only a week after seeming to open the door to a
more rational ranking system in the ESRD Final Rule,” the patient group states, referring to end-stage renal disease.
The Kidney Care Council Executive Director Cherilyn Cepriano said industry suggested fixes to the “fundamental
flaws” of the program
“CMS listened, but has chosen to ignore every concern of the kidney community,” Cepriano said. — John Wilkerson
CMS Proposes Covering Low-Dose CT Lung Cancer Screening
Radiation stakeholders are pleased with CMS’ proposed decision, released Monday (Nov. 10), to add lung cancer
screening coverage for high-risk seniors, bringing CMS’ coverage in line with private health insurance coverage requirements for 2015. Dozens of lawmakers — including expected Senate Majority Leader Mitch McConnell (R-KY) — cancer
doctors and patients had urged CMS to cover the low-dose computed tomography (CT) lung cancer screening, and the
Medical Imaging and Technology Alliance says that as screenings for high-risk individuals could save up to 20,000 lives
per year, CMS should finalize the decision to offer the benefits to Medicare beneficiaries.
A summary of CMS’ proposed decision says the evidence is sufficient for Medicare to cover lung cancer screening
counseling and a shared decision making visit. Screening should be covered once a year as an additional preventive
service under Medicare if a beneficiary is between 55-74, asymptomatic, has a history of tobacco smoking of at least 30pack-years (smoking 20 cigarettes per day for a year counts as a pack year), and is a current smoker or has quit within the
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INSIDE CMS — www.InsideHealthPolicy.com — November 13, 2014
last 15 years. For the first screening, CMS says, the beneficiary must first discuss screening during counseling. For other
screenings, beneficiaries can receive a written order for screening during a Medicare annual wellness exam, tobacco
cessation counseling services, or other appropriate visit.
During counseling, CMS says, beneficiaries should discuss the benefits, harms, concerns with over-diagnosis, the
false positive rate and radiation exposure. Beneficiaries must also be counseled on the importance of adhering to annual
lung cancer screenings and the willingness to undergo diagnosis and treatment. CMS says the discussion should include
how a beneficiary who has quit smoking can continue to do so and how a current smoker can stop.
CMS is collecting comments on its proposed decision.
The United States Preventive Services Task Force has recommended screening similar high-risk groups earlier this
year, though CMS proposed a narrower coverage age and will require providers to submit clinical and follow-up data to an
approved registry, the American College of Radiology notes. The ACR says it will apply to be a Medicare recognized registry.
Due to the USPSTF recommending the service, the Affordable Care Act requires private insurers to cover CT
lung cancer screening as an essential health benefit in 2015. MITA is urging CMS to finalize its proposal so that
Medicare beneficiaries can also have coverage.
Oncologists groups and lung cancer patient advocates in April urged the Medicare Evidence Development and
Coverage Advisory Committee (MEDCAC) to recommend that Medicare cover these screenings for high-risk beneficiaries, though IHP has previously reported that MEDCAC did not support coverage of the scans at its April meeting. This
summer, 179 lawmakers added pressure on CMS to cover the services. McConnell, the incoming Senate Majority Leader
when the Republicans take control in January, also asked CMS to “make an informed, timely decision” about coverage in
late September.
ACR says that the screenings are the first and only cost-effective test proven to significantly reduce lung cancer
deaths.
“Lung cancer will kill 160,000 Americans this year — more than breast, colon and prostate cancers combined. Medicare
coverage of these exams helps complete the first major blow against this terrible disease,” Ella Kazerooni, chair of the
ACR Lung Cancer Screening Committee and ACR Thoracic Imaging Panel, says in a statement. — Michelle M. Stein
MedPAC Explores Fixes To Part B Drug Payment Policy
Congressional Medicare advisers are looking at policy alternatives to CMS’ current payment model for Part B drugs
— those medications administered in doctors’ offices such as oncology drugs — that the Medicare Payment Advisory
Commission (MedPAC) chair called troubling because the model incentivizes physicians to opt for more expensive drugs.
At their recent meeting MedPAC commissioners looked at consolidating payment codes for Part B drugs, paying a flat fee
to physicians for managing Part B medications and bundling options based on a recent pilot done by UnitedHealthcare in
its private insurance plans in lieu of CMS’ current average sales price plus 6 percent policy.
Under the current ASP plus 6 percent approach, if the average sales price of a Part D drug is $100 a physician would
get $106 from Medicare, regardless of the price the physician actually pays for the medication. In situations where there
are two drugs that have a similar health effect for a given condition, MedPAC analysts explained Friday (Nov. 7), doctors
will make more money from Medicare by administering the more expensive product. Given the choice between two
alternatives — one drug with an ASP of $100 and one with an ASP of $200 — many providers will choose the latter
because they would be payed an add on of $12 for the more expensive drug as opposed to $6 for the lesser-priced
medication, MedPAC staff said.
MedPAC commissioners agreed that this payment policy creates a “perverse incentive” for providers to use more
expensive medications rather than trying to control costs.
“In terms of incentives created by the payment policy I think we’re depending a lot on the professionalism of our
physicians,” MedPAC chair Glenn Hackbarth said.
Commissioner Rita Redberg, of the University of California San Francisco School of Medicine, agreed and said
while many providers try to “do the right thing,” they are still human and under a fee-for-service system that rewards high
volume are prone to try to make the most money they can.
The commission first looked at tweaking current policy to a consolidated payment model in which CMS would
take the average weighted cost of two drugs that give similar outcomes plus 6 percent and pay based on that formula.
That means in the previous scenario detailed by staff the average price of the two drugs would be $150 and providers
would be paid $159 regardless of which medicine they chose.
But many commissioners were lukewarm to the idea of the consolidation model. Commissioner Jay Crosson, of the
American Medical Association, pointed out that this means a physician could make $59 if he or she chose the lowerpriced drug, but would lose $41 in choosing the higher-priced medication.
“That seems to be a pretty draconian design for changing incentives,” Crosson said.
Commissioner Katherine Baicker, of the Harvard School of Public Health, worried that under this system patients
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would not be able to pay out of pocket if they wanted the more expensive drug, or, if they were allowed to pick up the
cost difference themselves, lower income beneficiaries wouldn’t be able to afford it.
This led commissioners to suggest that rather than consolidating prices MedPAC should offer providers a flat
fee for Part B medication management. They said such an approach should be designed in a way to incentivize physicians
to control costs, which in turn might also incentivize drug manufacturers to lower the cost of drugs based on market
competition — especially as more follow-up biologics come on line.
Commission staff said they would research the flat fee medication management option for further discussion at a
future meeting.
MedPAC commissioners also looked at bundling payments for Part B drugs, and were intrigued by a pilot done
by UnitedHealthcare in its private plans that saw savings of $33 million dollars for cancer treatments, of which providers
got $11 million in shared savings.
In the UnitedHealthcare model, the insurer bundled payments for oncology drugs where the medications were paid
for at the ASP plus 0 percent and included a flat per-episode fee instead of the drug add-on. Under this model, MedPAC
staff said, drug usage actually increased, but hospital admissions went down while survivability rates remained stable.
Commissioners were unconcerned about drug usage going up in the UnitedHealthcare model, because ultimately the
quality of care wasn’t negatively affected and savings were achieved. They wondered how a similar bundling system
could be applied in Medicare Part B.
Commissioner Craig Samitt suggested that the UnitedHealthcare model could be tried through accountable care
organizations (ACOs).
Hackbarth responded that there is an inherent limitation in the ACO model: ACOs would need to bring oncologists
on board with the program and then if cost savings were achieved they would have to go back and ask the oncologists for
their share of the savings.
This led to commissioners suggesting that perhaps an oncology-specific ACO demo could be set up that mirrored the
dialysis ACO demo that CMS has planned.
MedPAC staff said it would further research how a UnitedHealthcare-style bundling program could be applied to
Medicare Part B.
A small number of commissioners voiced support for allowing CMS to return to the controversial “least costly
alternative” model it used from 2005 to 2010 that MedPAC discussed at its September meeting, although this wasn’t the
focus of Friday’s discussion.
In response to MedPAC’s meeting, the Partnership to Improve Patient Care (PIPC), which includes pharmaceutical
manufacturers and providers, said it was concerned that reauthorizing CMS to use the least costly alternative model was
still on the table.
Other commissioners said they felt the least costly alternative model would not work well for oncology, because
many patients respond differently to various cancer treatments and doctors often combine drugs and therapies to find
what works best for a given individual.
“As the Commission moves forward in their deliberations to improve outcomes and reduce costs in the Medicare
program, PIPC hopes that MedPAC will pursue policies that activate patients and lead to long-term health improvements,
rather than focusing on those that could threaten to jeopardize the nature of the doctor-patient relationship,” said PIPC
chairman Tony Coelho.
Hackbarth stressed that the discussion was part of a wider-ranging effort to overhaul Part B payment policy.
Ideas explored were by no means an exhaustive array of options, he said, and initial policy recommendations could take
many forms as part of a multi-track approach.
“There’s a much larger universe of potential options that goes way beyond what we’ve talked about here,” Hackbarth
said. “What I’m wrestling with is how do we get traction.” — Todd Allen Wilson
MedPAC Looks To Extend Primary Care Bonus As Per-Beneficiary Payment
Congressional Medicare advisers agreed to put together a draft recommendation to create a per-beneficiary, permonth payment for primary care providers of $31 per beneficiary to replace the current primary care incentive payment
that expires at the end of 2015. In order to fund the proposal the Medicare Payment Advisory Commission (MedPAC) is
looking at reducing payments for all non-evaluation and management services — such as procedures, imaging and tests
— and non-eligible evaluation and management services — such as inpatient hospital stays — by 1.4 percent.
MedPAC chair Glenn Hackbarth said Thursday (Nov. 6) that ultimately the per-beneficiary payment could be put
forward by the panel as a short-term, “stop gap” measure for primary care providers while the commission looks into other
policies to incentivize primary care providers, which MedPAC has concluded are under paid in relation to other specialties.
“Even if this isn’t a huge amount of money, it’s important to continue and not allow it to expire allowing Medicare to
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backslide on these issues,” Hackbarth said.
The commission plans to have the draft recommendation ready for discussion at its December meeting, with
the goal of approving a final recommendation on the issue in January to include in its March report to Congress.
Under the current incentive payment, which expires at the end of 2015, primary care practitioners receive a 10
percent bonus from Medicare on a quarterly basis. In 2012, MedPAC staffers said, bonus payments totaled $664 million
paid out to 170,000 primary care providers with the average payment per practitioner being $3,400.
The panel said rather than a percentage bonus going forward it wants to convert the $664 million into a per-beneficiary, per-month bonus for primary care providers — paid periodically throughout the year — which works out to $31 per
patient.
Some commissioners questioned whether the bonus should be paid just to primary care providers or also to
specialists like cardiologists who may provide primary care for a large number of their patients.
If the bonus does not include a specialty restriction, Hackbarth said, then the amount of funding needs goes up quite
a bit. Additionally he said the goal is to incentivize a growth in primary care providers.
In order to keep the process fair, however, commissioners decided that payment cuts would not affect evaluation and
management services (E&M) provided by specialists. Had the panel decided to include those services in the payment
reductions — exempting only E&M furnished by primary care providers the cuts — 90 percent of the physicians fee
schedule would have been cut by 1.1 percent. Instead the commission plans to recommend a 1.4 percent payment
reduction for all non-E&M and non-eligible E&M services, or about 75 percent of the physicians fee schedule.
Commissioners in their June discussion on the issue considered using a reduction in overpriced services as a funding
source for the bonus. However, after that meeting Congress decided to use some of the savings from overpriced services
to pay for the Sustainable Growth Rate patch, MedPAC staff noted. Hackbarth said that savings from overpriced services
may be an alternative funding mechanism in the future, but cannot be be viewed as viable for rolling out the per-beneficiary payment program.
Commissioners also decided not to tie practice requirements — such as extended office hours or beneficiaries being
able to communicate directly with providers via email — to the per-beneficiary bonus payments. Staff noted that initial
bonus payments would be modest and evidence is mixed on the effectiveness of practice requirements. Hackbarth said
that, given the expected low amount of the per-beneficiary bonus, many providers would forgo the incentive if practice
requirements were included.
“The reason we didn’t go so far as to attach practice requirements is the amount of money is relatively small,”
Hackbarth said. “It’s easy to get to the point where people say that the requirements are just to onerous.”
Under MedPAC’s plan beneficiaries would be assigned to a primary care provider prospectively based on the
previous year’s data. While some beneficiaries may switch primary care providers after they have been assigned to one
for purposes of the bonus in a given year, MedPAC staff noted that the majority of patients do not switch within a given
year or from year to year. Additionally, staff said that practitioners tend to care for about the same number of beneficiaries
from year to year.
“It’s not perfect, but we thought the benefits of prospective attribution outweighed the harm of having some churning,” Hackbarth said.
Hackbarth said MedPAC staff will put together the draft recommendation based on the consensus reached Thursday
(Nov. 6) in order for the panel to discuss it at its December meeting. — Todd Allen Wilson
Burgess: Passage Of Bipartisan SGR Deal Could Be A Win For Obama
Rep. Mike Burgess (R-TX), the sponsor of bipartisan legislation to replace the flawed Medicare physician payment
formula, tells Inside Health Policy that if President Barack Obama wants a win following Tuesday’s election that flipped
the Senate to GOP control he should tell Senate leaders to come back to the negotiating table on the Sustainable Growth
Rate deal. The American Medical Association, which has been pushing hard for a replacement to the SGR, said that
moving a bipartisan SGR deal through this fall would give lawmakers an example to show they can get something done.
AMA President Robert Wah says there’s an expectation after Tuesday’s mid-term election for Congress to make
improvements, and the bipartisan, bicameral deal to replace the SGR would be one way for lawmakers to show they are
capable of working together to achieve good results.
Burgess, in an exclusive interview with IHP, said that he would like to see the SGR deal pass during the lame duck
session. The SGR deal is tee-ed up and ready to go, so Obama should call the Senate leadership to action, he added.
The House passed the SGR deal — a result of Senate Finance, House Ways & Means, and Energy & Commerce
negotiations — in March, but attached it to a delay of the Affordable Care Act’s individual mandate. The Senate responded by proposing not to pay for the bill, a tactic that Republicans refused to go along with, or by paying for it with
the Overseas Contingency Operations war savings account.
Republicans viewed the OCO as a budget gimmick, and Burgess said there were problems with using the OCO to
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offset the cost of the SGR deal even before overseas contingencies changed when Obama authorized military action
against Islamic militants fighting in Iraq and Syria. Lobbyists and analysts tell Inside Health Policy that, with the changing situation in the Middle East, using OCO funds for the SGR deal is likely off the table.
The GOP Doctors Caucus, of which Burgess is a part, on Thursday (Nov. 6) urged House Speaker John Boehnor (ROH) and Majority Leader Kevin McCarthy (R-CA) to take up negotiations again during the lame duck session, and more
than 110 lawmakers from both parties signed a letter asking Boehnor and Minority Leader Nancy Pelosi (D-CA) to do the
same. But Burgess noted that the House has passed the SGR deal and the next step is for the Senate to step up to the
plate.
If lawmakers in the Senate don’t like the offset that the Republicans attached, they need to explain how they
would like to offset the deal, Burgess said, so that lawmakers from both sides of Congress can negotiate.
At this point, Burgess said he is not taking anything off the table, though he said discussions about passing the deal
without paying for it are not helpful right now. Lawmakers ought to do the responsible thing and try to find a way to pay
for the bill, Burgess said, though he wouldn’t dismiss a path forward on the SGR deal in the event the entire cost is not
offset.
A Democratic staffer for the Ways & Means Committee said Thursday (Nov. 6) that the bill should be passed without
being offset — or at least the SGR portion, which CBO has estimated to cost $124 billion over 10 years, shouldn’t be
offset. Coming up with enough money to pay for such a deal would require cuts across providers and beneficiaries, the
staffer said, and it’s not clear that the industry wants lawmakers to do so or that such cuts would be good for the Medicare
program. But lobbyists tell Inside Health Policy it’s unlikely that Republicans would allow the SGR deal to go forward
without being offset.
Wah said he would support creative solutions to get the legislation through Congress and to the president, though he
would like to see the details. It’s the job of Congress to make these tough decisions on how to pay for legislation like the
SGR deal, Wah said, and lawmakers need the fortitude to get past the final step.
If the SGR deal does not get passed during the lame duck session, Burgess said he is prepared to start the ball rolling
again next year. The concept and policy agreements reached during this session provide a strong backbone for work next
Congress if it becomes necessary, Burgess said, though additional discussions would have to take place as the House
Ways & Means Committee would have a new chair, the House Energy & Commerce would have a new ranking Democrat
and Sen. Orrin Hatch (R-UT) — who participated in the last round of negotiations as the Senate Finance Committee’s
ranking member — would likely take the Finance Committee’s gavel. — Michelle M. Stein
MU Exemption Delay Helps First-Time Users . . . begins on page one
CMS stated in the physician fee schedule, released Oct. 31. “However, we emphasize that we do not intend to exercise
this flexibility to extend the hardship exception application submission deadline frequently.”
CMS told providers they should not expect further deadline delays for exemptions. The hardship exemptions for
hospitals are normally due April 1, doctors’ hardship exemption requests are due July 1 and critical access hospital
applications are due at the end of November.
Robert Tennant, senior policy adviser for the Medical Group Management Association, said CMS is wise to give
itself flexibility because so few providers can meet the more rigorous health information technology criteria for stage two
and it’s unclear what will happen with the program next year.
MGMA, the American Medical Association, College of Healthcare Information Management Executives and the
Healthcare Information and Management Systems Society (HIMSS) warned CMS that providers need a lot more time
than CMS gave them to upgrade their technology and meet the more difficult requirements in the second stage of the
program, and the trade groups recommended that CMS shorten the reporting period for 2015. Tennant said MGMA
appreciates the flexibility provided to providers new to the meaningful use program, but flexibility for all providers must
be extended into 2015.
CMS last month announced it would reopen the meaningful use hardship exemption period to help those new
to the meaningful use program who couldn’t access new EHR technology avoid pay cuts in 2015.
CMS published a rule this summer that gives providers an extra year to install new 2014 certified electronic health
records. For 2014, the agency said providers could use the older 2011 version of electronic health records or a combination of the older technology and the 2014 technology to show meaningful use. But physicians attesting to meaningful use
for the first time in 2014 that planned to take advantage of the rule and use 2011 technology could not attest to meaningful use until after the rule went into effect on Oct. 1, according to CMS. Because of this, some physicians who may have
avoided 2015 penalties by attesting to meaningful use for the first time before Oct. 1 faced pay cuts — a prospect that did
not sit well with some lawmakers.
CMS sent an email Friday (Nov. 7) saying that only hospitals and doctors who have never met meaningful use
before may apply for this exemption — a shift from October’s announcement when CMS said providers who had
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previously attested to meaningful use could also apply for an exemption. CMS’ website says that providers who attested
to meaningful use in 2011 or 2012 are not eligible to apply for the exemption, and those who attested in 2013 should not
apply because they are already exempt from the 2015 meaningful use cut.
One health care technology lobbyist says the exemption will be more helpful for physicians than hospitals because
hospitals’ hardship exemption deadline was in April, and the rule offering flexibility around implementation of the 2014
updated electronic health records was not proposed until late May. — Michelle M. Stein
MedPAC Split Over Axing Hospital Observation-Status Pay Category
Congressional Medicare advisers on Thursday (Nov. 6) were split over whether Medicare should do away with the
observation-status pay category for hospitals. Medicare Payment Advisory Commission Chair Glenn Hackbarth said he
does not expect the commission to finish recommendations on short-stay policies in time for its March report to Congress
because it will take a while to work out the complicated package of policies on pay, audits and nursing home admission
criteria. Commissioners also were presented with offset ideas, but Hackbarth said those were less developed than the
short-stay policies and commissioners did not spend much time on them.
Hospital short stay policies have created a headache for hospitals, beneficiaries and the government. Recovery Audit
Contractors have often retroactively denied hospitals Medicare reimbursement for admitting patients who the RACs say
should have been treated as outpatients at cheaper rates, though those RAC reviews have temporarily been put on hold.
However, hospitals often disagree with the judgment of auditors, and the backlog of appeals is so large that CMS has
tried to settle multiple years’ worth of appeals in one fell swoop — at least 110,000 of more than 800,000 appeals will be
settled with that process. Also, Medicare does not pay for nursing home services unless seniors have been admitted to
hospitals for at least three days, which means that when hospitals keep patients in observation status to avoid claim
denials, patients often are stuck with huge nursing home bills.
Commissioners spent much of their time debating whether to get rid of the observation-status category. The idea is to
pay the same for observation status and one-day inpatient stays. If a patient stays at a hospital for just one day, whether
for observation or admitted as a patient, hospitals would be paid the same, under MedPAC’s proposal. RACs currently
target one-day inpatient stays in their audits, and the policy change would allow them to target longer stays.
“The notion of eliminating observation status altogether is in many respects the most elegant solution,” said
Commissioner Craig Samitt, who added that he had only begun thinking about that approach minutes earlier.
Some of the other commissioners said, at first blush, eliminating the observation category sounds promising, but
others worried that removing observation status would create bigger problems without solving anything. Some said
patients would likely be stuck with higher cost sharing — inpatient services costs more than outpatient service — and
other said there are genuine differences in the health status of patients whom hospitals admit and whom they keep on
observation.
“I think of this as the unraveling of the DRG system,” Commissioner Kathy Buto warned.
Commissioners also discussed the possibility of RACs targeting reviews of short stays to hospitals with the highest rate of
short-stay admissions. The targeted approach would relieve the administrative burden placed on hospitals that aren’t outliers,
but it would likely result in the government recovering less from hospitals so it would increase Medicare spending.
Another RAC-policy possibility is allowing hospitals to rebill denied inpatient claims as outpatient claims
after RACs deny claims. Hospitals may retroactively rebill inpatient claims as outpatient claims, but they have one year
following discharge to change the status of claims and RACs are allowed to deny claims on services up to three years
following discharge. Another option is to shorten the RAC look-back. These options also would likely increase Medicare
spending.
MedPAC also is considering penalizing RACs for higher overturn rates by basing part of their contingency
fee on that rate. Providers complain that RACs are “bounty hunters” because they’re paid based on how much they
recover. There’s no penalty for denied claims that are later deemed to have been recovered improperly so RACs are
overly aggressive, providers say. As with the other ideas, this policy also would increase Medicare spending.
Commissioners also discussed possibly lowering the three-day inpatient stay requirement for nursing home coverage
to one inpatient day, as long as patients are in the hospital a total of three days (the other two on observation status).
MedPAC researchers estimate that about 11,000 patients in 2012 were discharged to nursing homes, even though they
weren’t admitted for the three days. That means those patients had to pay for their nursing home stays. The expanded
eligibility for nursing home services also would increase Medicare spending.
Self-administered drugs was the fourth policy area commissioners covered. Medicare’s hospital pay systems
cover self-administered drugs for inpatients but not outpatients. MedPAC discussed letting hospitals waive charges for
self-administered drugs for patients who are in outpatient observation.
MedPAC researchers listed options for offsetting the cost of the policy options they discussed. For hospitals,
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Medicare could extend post-acute care transfer policy to hospice transfers, or Medicare could adjust the base rate for
inpatient services. Nursing home-related offsets include redesigning benefits to increase beneficiary liability. Nursing
home pay also could be reduced by recovering overpayments to nursing homes in 2011, penalizing facilities that inappropriately recertify long-term residents or adjusting the nursing home base pay rate. — John Wilkerson
HHS Launches Window-Shopping Ahead Of Open Enrollment
The federally-facilitated marketplace will launch this week a window-shopping feature that provides consumers
detailed information on available plans, including rate estimates based on expected income, CMS Administration Marilyn
Tavenner announced Sunday (Nov. 9). Consumers will also be able to view a description of the available provider
networks, a breakdown of plans by tier, and information on disease management programs offered by each plan.
With more issuers offering coverage this year, the majority of consumers will find more affordable options, CMS
says. The agency also encourages existing consumers to shop coverage and to enroll by Dec. 15 in order to have coverage
on Jan. 1, 2015.
The shopping features unveiled Sunday allow users to enter their zip code, age, family size and income in order to
get a personalized premium estimate.
The site also allows people to opt to view the plans after entering only their zip code, but a message informs users
that they could be eligible for assistance and suggests entering the additional data. “If you go to plan results without
answering these questions the cost estimates for the plans you’ll see won’t include the cost savings you might qualify for,
like a premium tax credit,” the message reads “Also the plan results won’t be specific to you and your household. You’ll
see plans for a single non parent age 35,” the site says.
Once directed to the page with a list of available plans, users will be able to quickly view the plan name and whether
it has a broad or tiered provider network. Users will also be able to easily see the estimated premiums, deductibles, and
out-of pocket maximums. Listed plans maximums will also include brief information on coinsurance and co-payments for
primary care doctors, specialists, emergency room treatment and generic drugs.
Consumers will be able to pull up additional details by clicking on the plan. Consumers can also choose a number of
plans to toggle among for quick comparisons. The plans can be filtered by metal tier, premium costs, insurance company,
plan type, and medical management programs offered.
Consumers will also be able to pull up their existing plan by entering their 14-digit ID code. A user who finds a
plan that they like during the window-shopping process can print or email the needed information (plan name and ID), in
preparation for being able to select the plan once open enrollment launches on Saturday (Nov. 15).
The window shopping feature will also be available on smart phones and tables, CMS says.
“Window shopping remains the single most popular section on Healthcare.gov and regularly has three times the
amount of traffic than any other page on the Marketplace website. CMS has improved the scalability and performance of
the tool for high volumes of traffic. Additionally, the site has gone through usability and mobile testing that has been key
in improving the website’s features,” the agency says. — Amy Lotven
Bipartisan Support To Get SGR Deal Done . . . begins on page one
John Boehnor (R-OH) and Majority Leader Kevin McCarthy (R-CA) urging “all possible efforts be made to reach an
agreement that will allow H.R. 4015, the SGR Repeal and Medicare Provider Payment Modernization Act, to be signed
into law.”
The lawmakers say Congress has a unique opportunity to bring stability to the Medicare program, and they point out
that the cost for fixing the flawed SGR formula is still very low. The Congressional Budget Office raised the cost of
repealing the SGR from the 10-year $116.5 billion cost estimate in December 2013, to a 10-year cost of $124 billion in
April shortly after a bipartisan, bicameral deal to permanently replace the SGR formula stalled because lawmakers
couldn’t agree on how to pay for the broader deal’s more-than $150 billion price tag.
“We understand that discussions with the Senate have been derailed in the past by disagreements over offsets, but
those negotiations must resume,” the Doctors Caucus letter says. “We appreciate that hard decisions must be made on
how to offset this proposal.”
More than 110 lawmakers also signed onto a letter, led by Reps. Kurt Schrader (D-OR) and Reid Ribble (R-WI),
asking Boehnor and Minority Leader Nancy Pelosi (D-CA) to immediately move forward with the SGR deal.
Erin Richardson, health counsel for the Ways & Means Democratic minority, said at a Politico “Emerging Health
Care Leaders” event on Thursday (Nov. 6) that the lame duck is the prime opportunity to pass the SGR deal. But she
added that Levin would prefer not to offset the bulk of the bill and would perhaps push to only pay for the extenders
package that typically passes alongside patches to the SGR formula.
If the deal isn’t passed now, there will be a new chair of the Ways & Means Committee, as Rep. Dave Camp (R-MI)
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is retiring in January, and the ranking Democrat on Energy & Commerce, Rep. Henry Waxman (CA), is also retiring. The
gavel for the Senate Finance Committee will likely go to Sen. Orrin Hatch (R-UT) with the Republican take-over of the
Senate, but he helped negotiate the bipartisan, bicameral SGR deal.
There isn’t much time after the new Congress is sworn in for new committee leaders to set up their shops and
negotiate over the patch before SGR cuts kick in April 1, 2015, Richardson said. If one committee leader says they
want to renegotiate, the whole deal could fall apart, and another series of patches would likely come into play through
2017, she said.
“If we couldn’t do [a] permanent [SGRT fix] before the election this year, I don’t know why we’d be able to do it
before a 2016 election,” she said, which brings lawmakers into 2017, spending $20 billion on patches and coming no
closer to a permanent SGR fix, Richardson said.
Richardson expressed hope that the SGR deal could be passed during the lame duck session. Provider pressure could
play a big role in urging lawmakers to act months ahead of when the most recent SGR patch expires, she said.
Tessie Abraham, legislative counsel for Sen. Pat Toomey (R-PA), said she anticipates that the SGR deal will move to
the floor with bipartisan bicameral support, and although that could happen this fall, it could also occur at a later date.
American Medical Association President Robert Wah told Inside Health Policy the AMA plans to be very vocal in
pushing for the passage of an SGR deal. It’s always better to pass this type of legislation earlier rather than close to the
deadline, Wah said, and using the lame duck window to move forward on such a deal continues the momentum from the
Senate Finance, House Ways & Means and Energy & Commerce’s work earlier this year. It’s important to capitalize on
this Congress’ work, because trying to get big legislation through during the first three months of a new Congress is “suboptimal,” Wah said. Lawmakers know why SGR should be replaced, and now they need the fortitude to get past the final
step and find ways to pay for the deal, he added.
Before the election, trying to have a difficult conversation about how to pay for the deal was just too much a touchy
subject to go forward, Laura Wooster, associate vice president for government relations at the American Osteopathic
Association, said at the Politico event. Since some of the ways to pay for SGR are likely to be controversial, the lame
duck is the best time to pass such a bill, she added.
Richardson noted that $150 billion for an SGR deal and extenders is difficult to offset. She questioned whether some
lawmakers and stakeholders would really want Congress to offset the package because it would mean cuts across Medicare for providers and beneficiaries.
Lobbyists told Inside Health Policy it is very unlikely that the Republicans would allow the SGR deal to go forward
without being offset. — Michelle M. Stein
SCOTUS Takes Up Pivotal Case On Scope Of ACA Subsidies
The Supreme Court shocked many observers by announcing Friday (Nov. 7) that it would take up the high-stakes
ACA case — King v. Burwell — the outcome of which will determine if the Obama administration overstepped its
authority by offering tax credit subsidies to those buying insurance through federally administered exchanges. Many
stakeholders supportive of the ACA had assumed the high court would allow similar cases to wind their way through the
lower courts before deciding whether to take up the issue, and argue that Friday’s decision is an unusual and potentially
politicized move; while those supporting the plaintiffs had argued the case needed immediate review to mitigate uncertainty surrounding the issue.
Friday’s decision means the court will rule on the question in its current term, with arguments likely to take place in
the spring with a decision next summer.
A Supreme Court decision that the ACA’s subsidies are only available in the 16 state-run marketplaces would deal a
devastating blow to the ACA, essentially nullifying the law’s individual mandate in the 34 states with federally-run
exchanges.
Plaintiffs in four existing cases, including King, Halbig v. Burwell and two others currently winding their way
through the lower courts, argue that the subsidies should be limited to the state exchanges because that it what is specified
in the ACA. The administration and others — including some attorneys generals from GOP-run states — argue that,
despite the narrow language in the statute, Congress clearly intended to provide the subsidies to all Americans, regardless
of what entity administered the marketplace.
The administration expressed confidence Friday that its stance will be upheld. “This lawsuit reflects just another
partisan attempt to undermine the Affordable Care Act and to strip millions of American families of tax credits that
Congress intended for them to have,” White House Press Secretary Josh Earnest said.
“We are confident that the Supreme Court will recognize both the clear reading of the entire law, and the certain
intent of Congress in crafting it,” Earnest added. “Indeed, with uninsured rates plummeting across the country, it’s clear
that the Affordable Care Act is already working. American families who have already enrolled, or are planning to sign up
during the open enrollment period beginning on November 15th should know that nothing has changed: tax credits and
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affordable coverage remain available,” he adds.
Stakeholders were taken by surprise.
“It’s looks like we’ve got another interesting development,” health expert Tim Jost of Washington and Lee University
says of the news. “I think this is really unfortunate and surprising. In the normal course the Supreme Court would wait for
the lower courts to decide,” Jost adds.
Jost says Friday’s decision may be a “bad sign” that politics are trumping the law. The justices are taking a case that
is highly political and doing so in a manner outside their normal procedure, he notes.
It is also possible, he says, that they’ve decided that it’s an important issue that isn’t going away — and there’s the
potential that five or more of the justices will uphold the federal rule. It only takes four justices to grant the review, but
more than that may have decided to do so in order to settle uncertainty, he says.
“I’m hoping the conclusion will ultimately lead to the upholding of the rule,” Jost says, arguing that the Supreme
Court judges will come to that conclusion if they follow normal procedure and look at the entire statute rather than just
individual phrases.
“Unfortunately, though, we now have further uncertainty that we’re going to have to deal with just as we enter open
enrollment,” he adds.
Families USA Executive Director Ron Pollack says in a statement that the SCOTUS decision is “in and of
itself an unusual political act.” Open enrollment is slated to start next Saturday (Nov. 15) and wrap up Feb. 15, 2015.
He cited three reasons for that belief: “First, there is no serious constitutional issue presented in this case — and,
indeed, there is no constitutional issue presented at all. Second, there are no current conflicting decisions by the Circuit
Courts of Appeals. And third, appellate arguments are already scheduled in front of two Circuit Courts, the D.C. Circuit
and the Tenth Circuit. Clearly, therefore, at least four Justices of the Supreme Court have decided to put aside the normal
guidelines for accepting a case, and they have decided to jump the usual process about which cases they should hear.”
“From a legal standpoint, this is a specious lawsuit,” Pollack continues. “It is surprising therefore that some members
of the Court — which is supposed to represent the branch of government that is not supposed to be political — have
decided to enter the political fray.”
Stephen Weiner, chair of the law firm Mintz Levin’s health law practice, also found the timing of the SCOTUS
decision odd.
“The case is pivotal to the ability to implement the ACA effectively. A finding against the government will create
hardship (f)or a large number of individuals seeking to obtain coverage through the federally-facilitated exchanges (a
large majority of states),” he said.
“The timing of the decision to undertake review by the Supreme Court is peculiar,” Weiner added.
The move comes days after the midterm elections, and as the incoming Senate GOP leadership pledges to
bring an ACA-repeal measure to a vote.
The high court’s decision to take up the case was immediately praised by Rep. Marsha Blackburn (R-TN). “This
Administration has repeatedly ignored Congress and the legislative process in order to fit their agenda and it is long past
time for this President to uphold his oath to enforce the laws as written,” she said.
Michael Cannon, health policy director of the Cato Institute and one of the most enthusiastic supporters of the
subsidy cases, also applauded the high court’s decision.
“The Supreme Court’s decision is a rebuke to the Obama administration and its defenders, who dismissed as frivolous the plaintiffs’ efforts to defend their right not to be taxed without congressional authorization,” he wrote in a Forbes
column.
He added: “Since January, the Obama administration has been spending billions of unauthorized federal dollars, and
subjecting nearly 60 million Americans to unauthorized taxes, all to hide the full cost of the Patient Protection and
Affordable Care Act, or ObamaCare. The administration’s actions have not only violated the law and caused massive
economic disruption, they have also subverted the democratic process. The plaintiffs in Pruitt v. Burwell, Halbig v.
Burwell, King v. Burwell, and Indiana v. IRS seek to put an end to those unlawful taxes and spending,” he said.
“It is essential that these cases receive expedited resolution, if only to eliminate the uncertainty currently facing
states, employers, insurers, and taxpayers,” Cannon added.
Oklahoma Attorney General Scott Pruitt, who was the first to sue over the issue in 2012, praised the high court’s
decision. A district court recently ruled in Pruitt’s favor and the administration has since appealed to the Tenth Circuit
Court of Appeals in Denver. A Pruitt spokesperson had previously told Inside Health Policy that briefings in that case
were due by Dec. 22 and oral arguments were expected in January. On Friday, the aide said that while the Tenth Circuit
has made no official statement, an assumption that case will be on hold until the high court rules is “not incorrect.”
The administration had also been set to argue its position before the U.S. Court of Appeals for the District of Columbia following a three-judge panel decision against the White House in the Halbig case.
The Halbig case had come out in July, the same day a Richmond appeals court ruled in favor of the administration in
the King case. The administration then asked for, and was granted, a full court review of the Halbig case, while the King
14
INSIDE CMS — www.InsideHealthPolicy.com — November 13, 2014
plaintiff’s petitioned the Supreme Court.
The insurance industry did not respond to a query by press time. Issuers participating in the federally-facilitated
exchange were set to receive counter-signed agreements from CMS on Wednesday (Nov. 5). This year, issuers and CMS
included a clause in the QHP contract stating the plans were developed with the understanding that subsidies would be in
place. The clause allows issuers to terminate the contract, subject to state law, should they cease to flow. — Amy Lotven
Burwell Sets 2015 Enrollment Target At 9.1M
HHS Secretary Sylvia Burwell on Monday (Nov. 10) said the department has set a goal of about 9.1 million enrollees
on the exchanges by the end of 2015, a figure considerably lower than the 13 million the Congressional Budget Office
had projected in April but slightly higher than the 8-9 million CMS had said it expected in a question and answer document provided to vendors interested in taking over the main site earlier this year.
Burwell cited lower-than-expected shifting from employer-sponsored coverage to the market as one reason the
numbers are lower than CBO’s April estimate. “We actually have data,” she told an audience at a Center for American
Progress forum on the forthcoming open enrollment period.
“We also have what the market did last year,” she said. “And we had a huge growth of the market. And what we did,
was settled that probably the market will grow between 25-30 percent this year. And if you take that number, and add that
number, we said around 28 percent. If you take those two numbers, the number we are going to aim for is 9.1 million,”
she said.
Recent data show that as of October there are about 7.1 million people who have effectuated coverage in the
exchange, down 200,000 from August when Marilyn Tavenner announced that 7.3 million from the original 8 million-plus
enrollees were still covered, according to HHS’ policy shop. HHS also says that it is assuming a 83 percent retention rate
for re-enrollment, meaning that the baseline coming in will be about 6 million.
HHS’ policy shop’s paper points out that the CBO had assumed a “ramp up” for coverage taking three years. However, if that is extended to four or five years, the numbers change to 11.5 million or 9 million, respectively.
The secretary expressed confidence that open enrollment will be a positive experience for consumers this year. “Will
there be challenges, yes,” she said. But, she pointed out, last year there were 10 days to test the system, while this year the
testing has occurred for five weeks. She also noted that the application has been shortened and streamlined for the
majority of consumers, and that healthcare.gov has already launched its window shopping feature. — Amy Lotven
Employers Eye Cadillac Tax Changes Under New Congress
Several business interests tell Inside Health Policy that pushing for changes to the so-called “Cadillac tax” before it
goes into effect will be part of their lobbying efforts in the coming months. The 40 percent excise tax on health benefits
that exceed a certain threshold is not set to go into effect until 2018, but several recent reports — including one out
Monday (Nov. 10) from the American Health Policy Institute (AHPI) — find that employers are already taking action to
avoid the tax.
According to the AHPI, based on interviews with 350 large employers, 17 percent of all businesses — and 38 percent
of large employers — could be subject to the tax in 2018 if they do not make changes to their plans. Businesses hit in
2018 will pay an average $1 million that year and an average $2.1 million, or $2,700 per employee, from 2018 to 2024.
Last month the firm Towers Watson released a survey finding that nearly half of large employers could be hit by the
tax in 2018, and that figure could rise to 82 percent by 2023 despite business efforts to control costs. The employee
benefits consulting firm says 73 percent of companies in a recent survey said they were worried about the excise tax, with
62 percent of respondents saying it will have a “moderate or greater” impact on their health strategies over the next two
years.
Under the ACA, plans whose values exceed $10,200 for individuals and $27,500 for families will be subject to a 40
percent excise tax starting in 2018. The value is indexed to the Consumer Price Index plus one percentage point for 2019
and then increases at just CPI in 2020 and thereafter, AHPI points out.
While the tax was aimed at more generous plans, Towers Watson experts say the way it is designed even a “Chevy”
plan could be affected by the tax.
This potential has already caused businesses to make changes to plans. The National Business Group said recently
that 29 percent of large employers are implementing a surcharge for spouses who can get coverage through their own
employer for 2015, mainly due to efforts to avoid the tax. However, employers still provide coverage for spouses and
dependents who do not have another available source for coverage, NBGH says.
American Benefits Council Senior Vice President of Health Policy Katy Spangler says that while the group would
love to see a full repeal of the Cadillac tax, it is cognizant that repealing it would be expensive. According to AHPI, the
Congressional Budget Office most recently estimated that the tax would bring in $120 billion, although the Office of
INSIDE CMS — www.InsideHealthPolicy.com — November 13, 2014
15
Management and Budget estimates it would yield only $88 billion.
Therefore, Spangler says, ABC is working a multi-track strategy. The preferred solution is repeal, but if that’s
not possible the group will strive to ensure the tax is more workable for business.
One potential change would be to alter the inflation index so that the threshold for the tax is tied to medical inflation
instead of CPI, which is typically much lower.
Also, the current structure of the tax applies it to the costs of all benefits provided by an employer, including on-site
medical clinics, and ABC would like to see that changed. More employers should be encouraged to create clinics, and
including them in the calculation discentivizes that approach, she says. The ABC is pursuing a legislative track to carve
the clinics out of the calculation, and Spangler says she is hopeful that as more offices are educated on the issue that the
logic will resonate.
Another option would be to create a “safe harbor” that, for example, could exempt plans certified as having a 90
percent actuarial value from the tax. Without such a move, she says, some employers in high-cost areas that have older,
sicker group members could get hit by the tax as early as 2018. “I don’t think that was Congress’ intention,” she adds.
The Business Round Table has also called for changes in the tax “that would align employers and employees to
drive the marketplace toward effective solutions that safely reduce total costs and premiums.”
Katie Mahoney of the Chamber of Commerce says the tax has been on the group’s radar screen as she has anticipated talks about forthcoming regulations. It’s now on our radar in a new capacity given the new makeup of Congress, she
says. Neil Trautwein of the National Retail Federation says that the tax will not impact most NRF members when it is first
implemented. However, he says, because the tax will hit lower-cost plans at a very steep progression, “we would support
repealing the tax.”
Despite the coming efforts, consultants and analysts say little is likely to happen anytime soon.
Ipsita Smolinski of Capitol Street says that the impact of the Cadillac tax is pretty far out, and while issuers and
employers will be talking about it, it’s not likely their first priority right now. Smolinski also points out that prior to the
tax’s implementation there is another election, in 2016, where the outcome could lead to additional changes in the ACA,
and specifically the Cadillac tax.
Another consultant made a similar point. The Cadillac tax will be on the agenda and employers and unions will circle
the wagons on it eventually, says the source. But timing and opportunity are key, the source adds. Because 2016 is such a
highly politicized year it is not likely that anything will be done after this coming spring.
On whether the tax will become a 2015 issue, the source was of two minds. On the one hand, it seems early for
lawmakers to worry about it since the effective date is three years away. On the other hand, Democrats may want to
dispense with it next year so that it does not become an election year issue. The source believes that 2015 likely will be
considered too early to address the issue. But it could be looked at if there’s a tax deal later in the year, the source adds.
“So I wouldn’t rule it out. I would just say that it is a matter of time before it surfaces,” the consultant says.
Chris Condeluci, of CC Law & Policy, helped draft the section when he was tax counsel for Senate Finance Committee. He notes that the tax was developed as an alternative after the White House squelched the Finance Committee’s plans
to offset the ACA by placing a cap on the existing tax exclusion for health benefits. Unions and private employers
objected to that idea, he says, so we came up with an indirect method to cap the exclusion.
Issuers pass through the costs of the tax, however, so it is the consumer that really pays, he says.
As for whether Congress would be willing to tackle the tax, he notes that many in the GOP agree that limiting
the preferred tax treatment of health benefits could curb usage, which was a key goal of Cadillac tax.
Republicans would want to get rid of it in a way that promotes consumer-driven health decisions, he says. There
could be an effort to change the current structure to one based on a sliding-scale tax credit — which could include a
radical restructuring of the subsidies. But that would be a ‘big deal” and likely only contemplated as part of a larger
proposal. —Amy Lotven
Unclear If Competing Hep C Rx Will Bring Down Costs . . . begins on page one
Miller spoke Wednesday (Nov. 5) at a National Association of Medicaid Directors conference where he was asked
whether he expects the price of hepatitis C drugs that are close to approval to be lower than the $94,500 price for a 12week course of Harvoni. That question is on the minds of many policymakers because, if competition drives down prices
significantly, Congress will face less pressure to step in, and lawmakers — especially Republicans, who now control
Congress — are loath to mess with drug prices.
Miller said it’s not clear whether competing brand-name hepatitis C drugs will drive down the price of the treatments.
Historically, drug makers have shadow-priced drugs already on the market. PBMs have succeeded in negotiating lower
prices for drugs that treat more common conditions, such as diabetes, but Miller said it wasn’t until about five years ago
that Express Scripts began getting rebates on expensive specialty drugs. In that case, the company negotiated rebates for
hormone drugs, and there were 10 makers of brand hormone drugs on the market with similar efficacy that Express
16
INSIDE CMS — www.InsideHealthPolicy.com — November 13, 2014
Scripts could play off one another.
AbbVie is expected to receive FDA approval of its hepatitis C drug near the end of the year, but AbbVie executives
have said they don’t intend to compete on price because the market is big enough for multiple drugs — the Centers for
Disease Control and Prevention estimates that 3.2 million Americans are infected with hepatitis C, and Gilead executives
said that estimate is low.
Analysts say AbbVie’s drug likely will work roughly as well as Sovaldi, but the treatment regimen will be less
convenient for patients. AbbVie executives have downplayed the importance of convenience.
“AbbVie will have the next product on the market, and they’ve already publicly announced that they’re not going to
negotiate on price,” Miller said. “The irony is that Gilead has already bought the liver doctors off.”
Drug companies typically run clinical trials at a couple of major centers because they want the data to be uniform,
Miller said. However, Gilead’s hepatitis C drugs work extremely well and are easy to use. “So what they did is they went
to every liver doctor in the United States and they said, ‘Would you like to be an investigator?’” Miller said.
“It was brilliant on their part,” he said. “They [doctors] feel loyal, and they’ve gotten used to the drug!”
A Gilead spokesperson said the company selected a range of clinical trial sites to enroll a diverse population
that reflects the real-world population of hepatitis C patients, including significant numbers of African-Americans,
Latinos, women, and older adults not previously seen in phase-three trials of hepatitis C medicines.
“Having a broad range of clinical trial sites is common practice in our industry, in part because it enables clinical trial
results to better predict results in clinical practice,” the spokesperson said.
A drug industry lobbyist said, although it’s not common for companies to test drugs in that manner, industry
and policymakers aspire to Gilead’s drug testing approach. A cornerstone of the House Energy & Commerce
Committee’s “Path To Cures” initiative is revamping the clinical trial process. With electronic health record systems
improving, industry hopes to make the approach taken by Gilead commonplace.
Miller hopes Gilead’s move will actually help him in extracting rebates from new entrants.
“AbbVie is in a really tough spot,” he said. “They’re going to get no market share unless they deal, right. So that’s
the threat we’re holding over them, and we’re gonna see if we can get someone to blink.”—John Wilkerson
Advocates Applaud Cigna QHP Changes In FL, Want HHS To Ensure Access
Health advocates that had a filed an anti-discrimination complaint with HHS over four Florida exchange plans’ high
cost-sharing and other limits on HIV/AIDs drugs applauded news out Friday (Nov. 7) that the Florida Insurance Commissioner and one of the plans — Cigna — had agreed to revamp some of the practices, and called on HHS and issuers to
ensure all plans sold in the exchange are abiding by federal regulations.
The complaint, filed in May, argued that CoventryOne, Cigna, Humana and Preferred Medical violated the ACA and
federal civil rights laws by placing all HIV/AIDs drugs — even generics — in high-cost tiers. In a consent order announced Friday, Cigna agreed to alter the structure for its 2015 plans and will limit co-pays for four HIV drugs to $200 a
month, rather than the 40 to 50 percent co-insurance in place this year, eliminate prior authorization and step therapy for
HIV medications and place generic drugs in the generic tier.
“We thank the Florida Insurance Commissioner for taking these first steps to ensure that people living with HIV/
AIDS will have greater access to essential medicines in Florida at a more affordable cost,” said Carl Schmid, deputy
executive director for The AIDS Institute, which filed the complaint along with the National Health Law Program (NheLP).
“However,” he adds, “much work needs to be done by the insurance companies to address additional barriers to care
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for people with HIV/AIDS, including inadequate drug formularies, high co-insurance and deductibles.”
He continued: “In the next week, we will learn how Cigna and other insurers in Florida and across the country will
structure their 2015 qualified health plans. We are looking forward to seeing plans that will make health insurance work
for people living with HIV/AIDS and others with chronic health conditions.”
The advocates note that the consent order does not address the specific legal claims that are pending in the federal
complaint, including claims regarding discriminatory plan benefit designs. It also does not affect the complaints pending
against the three other companies.
“We will continue working so that all health plans comply with federal non-discrimination laws that prohibit egregious insurance company practices,” NheLP staff attorney Wayne Turner said. “It remains the responsibility of federal
officials to ensure that these federal protections are properly monitored and fully enforced,” he added. — Amy Lotven
PBMs Praise Decision To Put Guidance On Ice . . . begins on page one
have a chilling effect on price concessions and came as many Part D sponsors are in the process of finalizing their 2016
contracts with pharmacists.
“After consideration of these comments and to provide time to fully assess the various payment arrangements that
Part D sponsors have with pharmacies, we have determined that, for 2016, we are not finalizing any guidance proposed in
our September 29th memorandum. For contract year 2016, therefore, Part D sponsors will evaluate what can be reasonably determined at the point of sale and include those amounts in the negotiated price. Amounts that cannot be reasonably
determined at the point-of-sale will be reported as Direct and Indirect Remuneration,” CMS says in the Nov. 6 memo.
The Pharmaceutical Care Management Association immediately praised CMS’ decision to put the draft
guidance on ice. “This would have disrupted millions of seniors in low premium, preferred pharmacy plans and contradicted CMS’ promise to Congress to forgo controversial regulatory changes to Medicare Part D,” PCMA said in a
statement to Inside Health Policy.
The draft guidance on “Direct and Indirect Remuneration (DIR) and Pharmacy Price Concessions,” released Sept 29,
explained CMS’ interpretation of the revised definition of “negotiated prices” that was part of “Contract Year 2015 Policy
and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs” final rule that
was released in May.
Currently negotiated prices are reported as part of Part D sponsors’ prescription drug event (PDE) data, which
include drug discounts at the point-of-sale. Price concessions, such as incentive fees, are reported after the fact as DIR.
The revised definition in the final rule says reported negotiated prices, starting in 2016, “(a)re inclusive of all price
concessions from network pharmacies except those contingent price concessions that cannot reasonably be determined at
the point-of-sale.”
In the draft guidance, CMS stated that price concessions that “can reasonably be approximated at the point of sale”
based on Part D sponsors’ recent experience fit the definition of a price concession that can reasonably be determined at
the point of sale. CMS said it believed price concessions that included enhanced payment rates based on generic utilization, pharmacy market share and pharmacy network size could “be reasonably determined at the point of sale.” CMS said
the difference between the approximation reported as part of the negotiated price and the amount determined in the final
reconciliation of the price would then be reported as DIR.
“We believe that most pharmacy price concessions can reasonably be determined at point of sale and, therefore,
should be reported through the negotiated prices,” the CMS draft guidance stated.
But CMS signaled Thursday that the debate is not over. The agency said it would move forward in developing
guidance on the issue for 2017 and beyond after evaluating which types of pharmacy concessions and incentive payments
“can and cannot be reasonably determined at the point of sale.” The agency asked stakeholders to submit comments on
specific examples of what concessions and incentives can and cannot be reasonably reported at the point of sale. Comments are due to CMS by Jan. 31, 2015.
Pharmacist organizations like the National Community Pharmacists Association and the National Association of
Chain Drug stores had supported CMS’ draft guidance, saying it would increase transparency and standardize the
reporting of price concessions.
But critics like PCMA had alleged the draft guidance not only violated the “non-interference clause” of the SSA but
would also lead to price increases for beneficiaries because pharmacies would back away from pushing generic drugs
over brand-name products.
PCMA had complained that the draft guidance would not increase transparency because the reported approximations
of price concessions would be based on pure speculation. The organization also worried that the guidance would hurt
efforts to control drug costs because sponsors would be wary of reporting-price concessions if they didn’t think they
could make reasonable approximations of the cost on their DIRs, and that sponsors would be called on the carpet for
reported approximations that ended up being wrong. Plus, “if the concession is reported as DIR, CMS could take the
18
INSIDE CMS — www.InsideHealthPolicy.com — November 13, 2014
position that the concession should have been reported on the PDE instead, relying on the fact that all price concessions
can be approximate,” PCMA said in its comments on the draft guidance.
The issuance of the draft guidance in late September reopened a Part D price negotiation debate that some
thought had been silenced when CMS scrapped key pieces of a Part D rule earlier in the year. The agency backed away
from opening up preferred pharmacy networks to “any willing pharmacy” and other controversial changes in the May
final rule after lawmakers and many stakeholders expressed serious concerns that provisions in the rule would violate the
“non-interference clause.” CMS said in the final rule that the issue needed further study.
When CMS quietly issued the draft guidance in late September, PCMA President and CEO Mark Merritt told IHP
the document marked a major shift in Part D policy. “Although this sounds like it’s just a small technical issue, the reality
of it is it has the potential to be more disruptive to Part D than anything that’s out there right now,” Merritt said at the
time. — Todd Allen Wilson
Vit
als: A
Vitals
continued on next page
Health P
olicy Blog
Po
Excerpts of Inside Health Policy Blogs
Two Energy & Commerce Ebola Hearings
Slated For Next Week
The House Energy and Commerce Committee will
examine the status of Ebola treatments and the government’s
response to the ongoing outbreak at two hearings next week.
The health subcommittee will discuss the status of vaccines,
diagnostics and treatments during a Wednesday (Nov. 19)
hearing and the oversight subcommittee will review the
United States’ response and preparedness during a hearing
Tuesday (Nov. 18).
Centers for Disease Control and Prevention Director
Tom Frieden, HHS Assistant Secretary for Preparedness and
Response Nicole Lurie and Acting Surgeon General Boris
Lushniak are scheduled to testify at the oversight hearing.
Witnesses for the health subcommittee hearing have not been
announced.
The Energy and Commerce hearings come as the
president seeks more than $6 billion in emergency appropriations to respond to the Ebola outbreak. The request includes
money that would go toward clinical trials and treatment
procurement. The Senate Appropriations Committee will hold
a hearing on the government’s response to Ebola on Wednesday (Nov. 12), with HHS Secretary Sylvia Burwell slated to
testify. — Alaina Busch McBournie
AdvaMed Officially Opens Office In China,
Eyes Partnerships
The Advanced Medical Technology Association Monday
(Nov. 10) officially opened its office in Shanghai, China, the
medical device lobby group said, with goals of setting up
partnerships with regulators and Chinese stakeholders and
harmonizing ethical business practices. The office has been
recognized by Chinese authorities since May, but the group
held a Beijing event Monday to announce the new facility.
Many member companies have their China headquarters
in Shanghai and the new facility will facilitate partnerships
with Chinese authorities and stakeholders, AdvaMed President and CEO Stephen Ubl said in a statement.
“Key policy issues in China include the need to ensure
appropriate regulation and reimbursement for life-saving and
life-enhancing medical devices and diagnostics, and to
harmonize ethical business practices in the country,” Ubl
said. “Our efforts in China will help ensure patient access to
advanced medical technologies and will benefit both local
Chinese companies and importers.”
AdvaMed last year established a China Council of
member company senior representatives in China and Lynn
Jiao, executive director of AdvaMed’s China program, has
been on board for two years, the lobby group said.
— Alaina Busch McBournie
CDC Adds To Personal Protective
Equipment Stockpile
The Centers for Disease Control and Prevention has
ordered $2.7 million in personal protective equipment to
increase Strategic National Stockpile (SNS) supplies to assist
U.S. hospitals caring for Ebola patients, the agency said
Friday (Nov. 7). The move comes amid growing worries
among health care workers that hospitals lack adequate
supplies of equipment, and as CDC pushes new guidelines
for PPE use (see related story).
It was not immediately clear Friday how the stockpile
would be distributed in the event of a major Ebola outbreak.
CDC said products are being configured into 50 kits that
can be “rapidly delivered” to hospitals. Each kit can provide
the PPE needed by clinical teams to manage the care of one
Ebola patient for up to five days, the agency said. The
purchases are based on PPE guidance for caring for Ebola
patients that was issued by CDC on Oct. 20, CDC said. “As
product is delivered to SNS facilities, it is assembled into kits
by SNS personnel. The kits can be rapidly delivered from the
SNS as requested to those hospitals that receive suspected or
confirmed Ebola cases but may need additional PPE supplies
that otherwise are not immediately available.”
The agency said while “the number of kits is limited,
they will help address short-term PPE needs.” The purchases
include impermeable gowns, coveralls, and aprons; boot
covers; gloves; face shields and hoods; N95 respirators;
powered-air purifying respirator systems and ancillaries; and
disinfecting wipes.
Since the guidance went out, CDC said, there has been a
“sudden increase in demand” for PPE. “We are making
certain to not disrupt the orders submitted by states and
hospitals, but we are building our stocks so that we can assist
INSIDE CMS — www.InsideHealthPolicy.com — November 13, 2014
19
when needed. Some of these products are not normally used
by hospitals for regular patient care,” said Greg Burel,
director of CDC’s Division of SNS, in a statement.
The agency said it “continues to coordinate with
manufacturers, distributors and health care facilities to
monitor the availability of products in the supply chain. No
products are being held by manufacturers or distributors
specifically for SNS orders, and SNS orders are not being
prioritized ahead of orders placed by hospitals.”
— Christopher Cole
OSHA Drafts ‘Matrix’ On Proper Use Of PPE As
Feds Stockpile 50 Ebola Equipment Kits
OSHA is preparing to issue a “matrix” regarding proper
use and supply of personal protective equipment (PPE) to
shield workers from potential exposure to the Ebola virus in
the event suspected or known cases of the highly infectious
disease continue to appear in the United States, a key OSHA
official working on Ebola concerns said Thursday. The move
comes as the Centers for Disease Control and Prevention
orders $2.7 million in PPE — to be configured into 50 kits,
each providing PPE needed for clinical teams to manage the
care of one Ebola patient for up to five days — for rapidly
delivery to hospitals as needed.
OSHA experts are working closely with NIOSH and
CDC, which oversees NIOSH, on the planned document,
according to Amanda Edens, OSHA’s director of technical
support and emergency management. The matrix should be
coming out shortly, she said.
OSHA chief David Michaels also said Thursday that
“OSHA is very much involved in the response.”
Health care worker advocates — particularly in the
nursing field, where alarm broke out after two Texas nurses
became infected while treating the first diagnosed Ebola
patient in the United States — are putting intense pressure on
federal agencies including OSHA to put tough, binding
measures in place with regard to PPE use.
They say CDC guidance on the issue, though becoming
much more strongly worded and going further in its recommendations after U.S. cases of Ebola appeared, does not go
far enough because the guidelines have no teeth. Worker
advocates, arguing that most hospitals will go the cheapest
voluntary route given a multitude of options by CDC, say
OSHA must put compulsory protections in place.
CDC recently issued comprehensive new guidance on
the issue that received broad support from the worker
community despite their calls for more aggressive action.
OSHA crafted guidance as well for non-health care employers
regarding infection prevention during decontamination work
at sites of possible Ebola exposure (see related story).
OSHA’s PPE matrix underwent review by CDC/NIOSH,
20
according to Edens, who said it will be available “soon” and
address many of the union and stakeholder concerns about
whether hospitals are supplying adequate protective equipment and training for workers. “Our (interagency) coordination has been at multiple levels,” she told a group of advisors
to OSHA on federal worker concerns. Edens, who is managing the OSHA efforts on Ebola, cited meetings at the White
House level; participation in calls with CDC; and the work
with CDC/NIOSH on the matrix.
Edens suggested the matrix will prescribe both minimum
and upper levels of protection that should be provided, and in
a further detail noted that using powered air-purifying
respirators (PAPR) “gives you the ability to have a hood
around you.” A requirement on hospitals for PAPR use is one
of the objectives of the group National Nurses United, which
is urging a host of PPE mandates — including full hazmat
suits that leave no skin exposed and meet several protective
standards. Edens did not precisely indicate how the forthcoming matrix would approach that issue.
Nurses’ advocates are also taking their case directly to
OSHA that “CDC has waffled” on whether coughing or
sneezing can spread Ebola. That was a concern they relayed
after early CDC guidance after the West Africa outbreak,
though the more recent CDC guidance at least partly
addresses that issue by recommending full N95 or airpurifying respirator use in any suspected or known Ebola
environment. — Christopher Cole
ANA Hails Election Of Nurse-Friendly Candidates
The American Nurses Association (ANA) on Thursday
(Nov. 6) estimated that 85 percent of candidates endorsed by
its political action committee, ANA-PAC, have won election
to Congress. The nursing group describes the incumbent and
upcoming lawmakers as proving to be “advocates for a
stronger health care system and improved patient care.”
ANA-PAC-endorsed candidates elected to the House
include incumbents Greg Walden (R-OR), David Joyce (ROH), Richard Hanna (R-NY), Jim McDermott (D-WA), Lois
Capps (D-CA), and newly elected Gwen Graham (D-FL) and
Norma Torres (D-CA).
Senate winners backed by ANA-PAC include incumbents
Jeff Merkley (D-OR), Al Franken (D-MN), and Susan Collins
(R-ME).
As of late Thursday there were 19 races where the
outcome was yet to be determined, including five races with
ANA-PAC-endorsed candidates, the group said.
“These newly elected lawmakers support health care
policies that ANA champions and recognize the important
role nurses play in transforming the American health care
system,” ANA President Pamela Cipriano said in a
statement. — Christopher Cole
INSIDE CMS — www.InsideHealthPolicy.com — November 13, 2014
Medicaid Stakeholders Praise CMS’ Move To Codify 90 Percent Match
Medicaid stakeholders and consumer advocates praise CMS’ plan to draft regulations codifying a policy, which was
set to expire next year, of providing states a 90 percent funding match for designing Medicaid enrollment and eligibility
systems, as unveiled in a recent letter to Medicaid directors. Stakeholders are also happy that CMS extended for three
years a so-called A87 waiver letting states use that funding to help integrate Medicaid eligibility and enrollment through
other social services per the “no wrong door” policy envisioned in the law.
States had worried they might lose matching funds after Kathleen Sebelius signaled back in April, just hours before
resigning as HHS secretary, that states yet to enroll thousands of Medicaid beneficiaries deemed eligible by
healthcare.gov could see reductions in their matching funds if they were unable — or unwilling — to quickly clear the
logjam. Sebelius’ warning, during an April 10 Senate Finance Committee hearing, was criticized at the time by state
Medicaid sources who argued the federal government was largely responsible for states’ Medicaid enrollment backlog
due in part to healthcare.gov’s initial glitches.
CMS then stepped up the pressure this summer by sending letters to a handful of states demanding they provide an
updated plan to fix the backlogs. The move increased states’ fears that matching funds might be reduced. At the same
time, states were pressing the agency for an extension of the A87 waiver authority and the Medicaid funding.
CMS Medicaid chief Cindy Mann agreed both to continue the 90 percent match and grant the waiver extension in an Oct. 28 letter to the National Association of Medicaid Directors (NAMD) and the American Public Human
Services Association (APHSA). “I am pleased to let you know that we will provide a three-year extension of the A87
waiver authority to enable states to complete their work on eligibility and enrollment systems integration through December 2018,” Mann said.
Future guidance on the A-87 waiver, including updated application procedures, will be issued through a joint letter
from HHS Administration for Children and Families and the Department of Agriculture’s Food and Nutrition Service, she
added.
Mann added: “In addition, we intend to issue new regulations that will codify the availability of the 90/10
federal matching funds for Medicaid eligibility and enrollment systems on a permanent basis.”
In order to ensure the funds continue to support efficient, high-functioning eligibility and enrollment systems, Mann
added, the agency will propose updated criteria states must meet to quality for the enhanced rate. This will include having
completed work on critical Modified Adjusted Gross Income-based system functionality and incorporating system
planning and development best practices, Mann said.
She said CMS would hold a cross-agency call with states on the new guidance in greater detail, and said that the
agency looked forward to working with stakeholders as officials design the new criteria.
NAMD Executive Director Matt Salo says the decision will help Medicaid directors preserve their options for
improving systems in the near future. “Integrating the eligibility systems for multiple health and social services
programs is the ultimate goal for many states and helps moves us in the direction of better government,” he said. ‘
“However,” he added, “the complexity of the roll-out of the ACA and the related systems challenges have put this
larger goal on the back burner while we all (states and the federal government) prioritized more immediate fixes...(I)t will
be important for states to know that the opportunity for enhanced matching funds will continue over the next few years,
when they can begin to focus attention on those aspects of the program,” Salo said. “We appreciate CMS’ efforts to keep
this funding in place for as long as possible, as it will certainly help many states better prepare for future.”
Rachel Klein of the advocacy group Families USA called the move “really good news” for states as “the
technology is clearly taking a lot longer to get right.”
In looking around the country there has been some progress made, but there are still clear examples of the need for
systems to improve so that the exchanges and Medicaid are working together. “More work needs to be done and it is good
news that CMS is giving states the incentives they need to continue that progress,” she said of the 90/10 match.
Klein also applauded the waiver extension, saying that advocates understand a key best practice for enrollment is
catching people when they apply to other programs so that they don’t have to fill out multiple applications. Such horizontal integration is better for consumers, she says.
Terri Shaw, director of policy for the non-profit company Social Interest Solutions (SIS), which provides technology
support to help connect beneficiaries to public and private social programs, also praised the move as a “renewed opportunity” for states. SIS had advocated for a extension of the A87 waiver in a July issue brief on the subject.
“As we move beyond the initial roll-out of the ACA’s coverage provisions, greater attention to the “No Wrong Door”
philosophy at the heart of this legislation is essential,” the paper argued.
Shaw says that up to this point states have understandably been more focused on essential activities needed to
implement the ACA — and ensure millions of Americans have access to health coverage. “Clearly that has been a big
challenge and states have learned many lessons and are continuing to make improvements,” she says.
“But,” she adds, “once the upcoming 2015 open enrollment period is complete, states will hopefully have additional
INSIDE CMS — www.InsideHealthPolicy.com — November 13, 2014
21
breathing room to leverage all the improvements in their health programs to make sure that people also have access to
healthy foods, child care, job training, and other human services.”
“This extension gives states the ability to make those improvements in a thoughtful way that will lead to long-term
efficiencies and better outcomes,” Shaw says.
CMS first came up with the idea of the 90 percent match back in 2011 as a way to encourage modernization of
Medicaid eligibility and enrollment systems, including ensuring the systems communicate with the exchanges and
determine eligibility under the new MAGI-based methodology. The final Medicaid eligibility rule included a list of seven
conditions that states had to meet to obtain the funding.
Then in 2012 the White House Office of Management and Budget created a waiver from its “A87” Circular, which,
according to CMS, allowed states to build integrated systems “without having to allocate the costs of developing shared
eligibility services to human services programs.” The majority of states requested and received approval for the A87
waivers, CMS says.
CMS also established a 75 percent matching rate for the maintenance of the modernized systems, and explained in its
earlier guidance that that rate would be permanent as long as all requirements were met.
But the 90 percent match and the A-87 waiver were set to expire in December 2015, according to a November
2012 CMS Frequently Asked Questions document.
The FAQ also affirmed that states that did not choose to expand Medicaid could still get the 90 percent match as long
as they met the necessary conditions — including the ability to electronically pass information to the exchange, whether it
be state-based or federal, and to determine eligibility based on MAGI.
But over the following year many states — as well the federal government — faced problems with the account
transfer process. States also faced challenges in their eligibility determination systems and encountered other problems
that resulted in application backlogs. As a result, states were upset when CMS demanded to see state fixes this summer
and suggested the funding match might be reduced. The Oct. 28 letter from the agency allowing flexibility drew a
collective sign of relief from state Medicaid officials. —Amy Lotven
Senate Panel Steps Up Probe Of Generic Drug Pricing Hikes, Plans Hearing
The Senate health committee’s panel on primary health and aging will probe the increasing cost of generic drugs at a
hearing Nov. 20, which follows the launch of a bicameral investigation into the issue. The generic drug industry has
countered allegations of high prices, saying lawmakers are focusing on a narrow set of drugs and that generic drugs
overall have saved the healthcare system hundreds of billions of dollars each year. However, a congressional staffer noted
that even though generic drugs have saved money, recent price increases contribute to government costs.
Subcommittee Chairman Bernie Sanders (I-VT) and Rep. Elijah Cummings (D-MD), ranking member of the House
oversight committee, last month sent letters to 14 generic drug manufacturers asking for information about the increasing
price of drugs. The lawmakers drew from data generated by the Healthcare Supply Chain Association focusing on group
purchasing organization purchases of 10 generic drugs.
The manufacturers targeted were: Actavis, Apotex, Dr. Reddy’s Laboratories, Endo International, Global Pharmaceuticals, Heritage Pharmaceuticals, Lannett Company, Marathon Pharmaceuticals, Mylan, PAR Pharmaceutical Companies,
Sun Pharmaceutical Industries, Teva Pharmaceutical Industries, West-Ward Pharmaceutical, Zydus Pharmaceuticals.
The lawmakers also have called on the administration to take action and sent a letter to HHS Secretary Sylvia
Burwell last month. The Department of Justice reportedly also has shown interest in investigating the issue, according to
the Wall Street Journal.
In response to the congressional investigation, the Generic Pharmaceutical Association has said the HSCA data is
narrowly focused; purchasing organizations, pharmacy benefit managers, distributors and other supply chain stakeholders
play a role in drug pricing; and many marketplace factors influence the price of a drug.
GPhA pointed to IMS Institute for Healthcare Informatics studies showing that generic drugs saved $239 billion in
2013 and $209 billion in 2012. Further, the price of generic drugs has been cut in half while brand drug prices have
almost doubled since 2008, according to an Express Scripts report issued this year.
GPhA also recently highlighted findings published in Health Affairs that Medicare Part D has played a big part in the
recent slowdown in Medicare costs since 2011. The study attributes the Part D trends to the high number of generic drug
prescriptions and number of brand-name drugs going off-patent, which allows generic copies to come to market. However, the analysis cautioned that the increasing cost of so-called specialty drugs, like the Hepatitis C treatment Sovaldi,
could shift the trend.
A congressional staffer said that even though the HSCA focused only on 10 drugs, they were illustrative of a
broader trend. Further, even though generic drugs have saved government programs money, rising generic drug prices
also contribute to higher costs. — Alaina Busch McBournie
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INSIDE CMS — www.InsideHealthPolicy.com — November 13, 2014
Obama Open To ACA Fixes, But Draws Line On Individual Mandate
President Barack Obama on Wednesday (Nov. 5) expressed openness to supporting changes in his signature health
care law, but drew the line at policies that would take away benefits or that would undermine the structure of the Affordable Care Act — including a repeal of the individual mandate. Repealing the individual mandate is included in incoming
Majority Leader Mitch McConnell’s short list of priorities, as is repealing the medical device tax and altering the definition of a workweek, as the lawmaker outlined in a recent TIME interview, and many lobbyists and consultants have also
expected the GOP to focus on those issues, as well as potentially repealing the employer mandate.
Repealing the ACA’s 30-hour workweek will be a near-term priority, McConnell (R-KY) and House Speaker John
Boehner (R-OH) indicated in a jointly penned Wall Street Journal Op-Ed piece published late Wednesday. The GOP
leaders write that they will move early on a “proposal to restore the traditional 40-hour definition of full-time employment, removing an arbitrary and destructive government barrier to more hours and better pay created by the Affordable
Care Act of 2010.” They add that enacting this other bipartisan measures “early in the new session will signal that the
logjam in Washington has been broken, and help to establish a foundation of certainty and stability that both parties can
build upon.”
The president on Wednesday (Nov. 5) indicated that he is open to some ACA changes. In a White House briefing
with reporters, the president said that due to the contentious nature of the way that the law was passed there are places
where things perhaps could have been done differently. If Boehner and McConnell proposed responsible changes, Obama
said, the White House would be “open and receptive.”
But the individual mandate is a line “I can’t cross,” he said, explaining that the policy is needed in order to prevent
people from “gaming the system” by purchasing coverage only after getting sick.
Obama also told reporters that the administration is working hard to make sure the health insurance exchange web
site is up and running well by the time open enrollment kicks in Nov.15. He said officials are double and even triple
checking that all is ready in order to avoid the glitches that plagued the site in the early months last year.
On Friday (Nov. 7), Obama and HHS Secretary Sylvia Burwell held a conference call with ACA supporters to
discuss open enrollment, according to Politico.
McConnell and Boehner, in their Wednesday Op-Ed piece, also pledged to pass ACA repeal legislation. But the
president has vowed to veto legislation that attempts to repeal the law.
Jay Angoff, the former head of the Office of Consumer Information and Insurance Oversight (OCCIO) — which later
became CMS’ Center for Information and Insurance Oversight — predicts in an election analysis memo that, despite
continued rhetoric from some in the GOP, Republicans will not act on ACA repeal for several reasons: Insuers are making
money; consumers already have their benefits; and the law is too intertwined with provisions of pre-existing law.
And while reconciliation is a possible method to push through a full repeal, even that is not viewed as likely.
But Angoff does expect piecemeal ACA changes. He outlines six policies that he believes could get through
Congress. He suggests the new Congress could allow issuers to sell less-generous plans — or Copper plans — that would
cover about 50 percent of costs. Angoff notes that the idea has been sponsored by conservative Democrats — the bill was
spearheaded by Sen. Mark Begich (D-AK) — but surmises that the support was more of a way to separate Democrats
from “Obamacare” than a serious legislative proposal. Insurers are doing well enough without the policy so it is unlikely
to be a top priority for industry, he said.
Angoff includes reducing the subsidies available to help people purchase coverage as a potential move, but notes that
there has actually been little talk of that on the GOP side. Republicans have criticized the risk corridor program, but
Angoff also says that provision is unlikely to be repealed due to insurance industry support.
Several lobbyists say that repealing the employer mandate has strong potential and Angoff agrees. “Republicans have never liked the employer mandate — at least not since President Nixon included it in his health reform
plan,”Angoff wrote. “And it is gradually becoming conventional Democratic wisdom that the employer mandate is not an
essential element of the ACA and that its political costs outweigh the benefits it would confer on workers. So eliminating
or limiting the employer mandate really could have bipartisan support,” he said.
Another former administration official concurred, noting that an Urban Institute report shows the employer mandate
is not essential for the law’s insurance coverage expansion. The employer mandate is also administratively complex, and
now that the mid-term election has passed it is possible the two parties could come together on that issue.
In May, the Urban Institute put out a paper saying that scrapping the controversial mandate would have little impact
on coverage for most Americans while offering some major policy benefits: chiefly, dampening employers’ interest in
cutting work hours or making other changes to their workforce and weakening the business community’s opposition to the
law. The most difficult challenge would be finding a way to cover the $130 billion cost of the change, the left-leaning
Washington think tank concludes in the study.
The steep price-tag is one reason why some sources suggest that Congress will try, but may not succeed, in removing
the policy. Sources also point out that the employer mandate brings other political dynamics because the House is
INSIDE CMS — www.InsideHealthPolicy.com — November 13, 2014
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working to sue the president for his decision to delay the measure. Republicans have said the suit is due to the president’s
aggressive executive actions, and that it does not mean that they are against repeal of the ACA.
Avalere CEO Dan Mendelson recently said that repealing the device tax and the employer mandate could be
possible if packaged with other Democrat-supported proposals. Except for Democrats from states with a lot of device
makers, repealing the device tax hasn’t fit into the goals of most Democrats, but he believes Democrats would be open to
repealing the tax if it were part of a package not intended to undermine the law. Expected Democratic White House
contender Hillary Clinton also recently delivered the same message to a device industry audience.
Mendelson also said that repealing the employer mandate would be a double-edged sword. It would cost money
because some companies would tell employees to seek insurance on the exchanges, where some would get government
subsidies. However, repealing the mandate also would improve the risk pools for exchange insurance. Next year the
employer mandate starts phasing in for businesses with more than 100 full-time equivalent employees.
In a recent election analysis, consultancy group Leavitt Partners suggests the device tax and employer mandate would
most likely be dealt with during the debt ceiling fight or potentially by eliminating IRS enforcement funding during
appropriations.
Leavitt says altering the definition of a workweek from the current ACA definition of 30 hours up to 40 hours
could move as part of the debt ceiling fight. The measure also has bipartisan support and a bill has already passed the
House. Most recently, a coalition of employer groups launched an initiative titled “More Time for Full-Time” to shine
light on the issue. Groups involved in the initiative include the National Restaurant Association, National Retail Federation, U.S. Chamber of Commerce, National Grocers Association and International Franchise Association. — Amy Lotven
Virginia HHS Secretary: Medicaid Expansion A ‘Matter Of When’
Virginia’s Health and Human Services Secretary William Hazel, Jr. said during a call sponsored by advocacy group
Families USA on Thursday (Nov. 6) that he expects the state will eventually expand the Medicaid program, it’s just a
matter of when. Hazel said that the state budget is a pressure point that could be used in favor of expansion: The state is
facing a deficit due to defense cutbacks, but if we were to expand Medicaid in June it would save $160 billion, he said.
“I think it will happen, the question will be when,” Hazel said, referring to the state’s expansion of Medicaid.
Hazel — who has served as Virginia HHS secretary since 2010 — pointed out that historically Virginia has been
slow to take up public insurance programs. It took four years for the state to agree to participate in Medicaid, a couple
years for it to get involved with the Children’s Health Insurance Program and a few years after that to really work to
encourage enrollment in CHIP, he noted.
Virginia has a Democratic governor — Terry McAuliffe — strongly supportive of Medicaid expansion but his efforts
have been blocked by the state legislature.
Stakeholders from two other states that have also so far refused to expand the program were less confident
that their state governments would bend, although the stakeholders planned to continue to work toward that goal.
When asked whether her state would eventually expand the program, Jodi Ray, project director of Florida Covering
Kids & Families, said she had no answer. Ray stressed that there is a need to do the expansion, as many people are falling
into the “gap” - which was created due to the ACA subsidies only being available to those earning 100 percent of poverty
or more, and leaving out those earning less. But, whether it will happen, she said, “I honestly don’t know.”
Florida had been on a short list of states that could have seen a renewed Medicaid expansion effort following the
election. But those hoped were dashed when GOP Gov. Rick Scott beat back a challenge from former GOP governorturned Democrat Charlie Christ. Scott had tried to push through an expansion in 2013 but was blocked by the GOP-held
legislature.
Ryan Barker, vice president of health policy for the Missouri Foundation for Health, said the political landscape for
Medicaid expansion did not change much following Tuesday’s election. The state has a Democratic Governor — Jay
Nixon — supportive of expansion but a GOP-held legislature that has refused to act.
Barker said that expanding Medicaid is vital to his group’s goal of reducing the rate of uninsured Missourians to 5
percent. The foundation continues to work with other stakeholders, including providers, advocates and business interests,
to push for the expansion. — Amy Lotven
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INSIDE CMS — www.InsideHealthPolicy.com — November 13, 2014