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Vol. 18, No. 7 - February 19, 2015
CMS Changes
Calculation Of Nursing
Home Star Ratings;
Adds Quality Measures
CMS is changing the calculation
of nursing home star ratings so fewer
facilities get higher ratings, which
angers industry, but agency staff said
Thursday (Feb. 12) that the change is
needed to keep Nursing Home
Compare useful to consumers, who
otherwise would have a difficult time
differentiating among facilities if too
many have high ratings.
The agency also is adding two
measures on the use of antipsychotic
drugs to the existing list of nine
quality measures. Plus, CMS is
changing how it judges staffing levels
and making it more difficult to
achieve higher scores on staffing
measures, and the agency is doing
more of the on-site surveys that it uses
to calculate scores and to verify
information facilities report.
“These thresholds were set so that
the overall proportion of nursing
homes would be approximately 25
percent 5-star, 20 percent for each of
2, 3 and 4-stars and 15 percent 1-star
in February 2015 when the antipsychotic QMs are first included in the
QM rating and hence rebasing was
required,” according to the technical
user guide that CMS posted Friday
morning — QM stands for quality
measure.
In October (under the former
thresholds), 28 percent of facilities
were rated as five-star, 26 percent
were four-star, 17 percent were
three-star, 20 percent were two-star,
continued on page 6
As Feb. 20 MA pay rule deadline nears,
Senators Circulate Letter Urging CMS To Not Cut
MA Pay
A bipartisan group of senators are circulating a sign-on letter warning
against further Medicare Advantage pay cuts as the Feb. 20 date nears for the
notice that CMS uses to propose policies for next year’s MA county pay rates,
America’s Health Insurance Plans President and CEO Karen Ignagni said
Thursday (Feb. 12). Industry also is urging CMS to include a temporary policy
that pays MA plans more for treating a large share of poor and minority
enrollees.
CMS is scheduled to release on Feb. 20 the draft Call Letter that proposes
guidance affecting the MA program. Forty-five days later CMS issues the
continued on page 8
CMS Delays Final Rule On Collecting Medicare
Overpayments To 2016
CMS’ recent decision to push back a final rule on collecting Medicare
overpayments could be a positive sign for some providers concerned about
how the agency structured the original proposed rule, though one attorney
noted that providers’ obligations around returning overpayments continue.
One provider lobbyist said the one-year delay — which means four years
will have passed between the proposed and final rule — is necessary for CMS
to carefully put together the final rule, as providers gave the agencies many
recommendations to consider. The timeline for the rule was extended to Feb.
16, 2016.
CMS in 2012 released a proposed rule with stiff sanctions for providers
continued on page 10
Oncology Pay-Bundle Demo Helps CMS Meet
Value-Based Pay Goals
CMS’ Center for Medicare and Medicaid Innovation announced Thursday
(Feb. 12) a pay bundle demonstration for oncologists that helps the administration meet its goal of getting 30 percent of Medicare fee-for-service providers into value-based pay systems by next year. The Oncology Care Model,
which is a five-year demonstration, is scheduled to start in spring 2016.
In addition to the episode-based and performance-based payments,
Medicare will give oncologists monthly care-management payments for each
fee-for-service beneficiary during an episode to help them with the cost of
changing their practices to accommodate the new pay system. Both group
practices and solo oncologists may participate, and the program is open to
continued on page 12
DME Suppliers Meet With OIG Ahead Of Expected OIG Report
American Association for Homecare officials recently told the HHS Office of Inspector General that CMS’ requirements in the durable medical equipment competitive bidding program have caused some Medicare beneficiaries to pay
out of pocket for needed DME, while diabetes advocates say suppliers aren’t providing all of the equipment required by
law. AAHomecare officials believe an upcoming OIG study will show the competitive bidding program negatively affects
beneficiary access.
AAHomecare, in an email update to members, said 11 of the trade group’s officials met with the OIG about its
planned study on CMS’ competitive bidding program for DME. Following a request from lawmakers last summer, the
OIG said earlier this year it would probe the bidding program to see how it affects beneficiary access to supplies.
DME suppliers have long held that the program would hurt beneficiaries’ access, but when the second round of the
program was gearing up, then-CMS Medicare chief Jon Blum said the agency had virtually no complaints from beneficiaries about the program. The OIG and Government Accountability Office have also given favorable reviews to the first
rebid of the program.
“AAHomecare shared examples of how CMS requirements make the process of acquiring or supplying necessary
home medical equipment extremely burdensome and have caused many patients to start paying out of pocket for the
supplies they need. The [home medical equipment] community knows that this is not a positive shift for many of the
patients that can’t afford to do so,” the email says.
The group pointed to a study by the American Association of Diabetes Educators that says many contract suppliers
don’t make insulin pumps and the associated replacement supplies available to Medicare beneficiaries, and some of those
that do offer the pumps only have one brand.
“While the program is saving money, it may be having unintentional negative impacts on Medicare beneficiary
access to insulin pumps and related supplies,” the AADE says. The AADE surveyed DME suppliers in the Medicare
program for their study.
The AADE says these findings raise concerns about the expansion of competitive bidding.
CMS should immediately enforce the requirement that contract suppliers make the necessary products within a
product category available, AADE says, as that would increase the number of suppliers who offer DME like insulin
pumps. AADE also says the insulin pumps should be placed in a new category in future bidding rounds to make sure
suppliers have to stock the pumps.
AAHomecare officials say they believe the OIG’s upcoming study will show that the program negatively
affects beneficiary access.
“We in the [home medical equipment] industry know the situation is much more complicated than simply stating
providers are not carrying the necessary supplies,” said Kim Brummett, AAHomecare vice president of regulatory
affairs. “Low-ball bidding has made it impossible for honest suppliers to carry certain products when the reimbursement rate is lower than the cost of the product, and documentation requirements from Medicare make the process
difficult.” — Michelle M. Stein
Hot Documents Now Available on InsideHealthPolicy.com
The following new documents are available on InsideHealthPolicy.com, our new online health news service.
Subscribers to InsideHealthPolicy.com also have access to hundreds of other health-related documents, daily news
updates, and a searchable archive of back issues.
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Roberts Bill Would Block HHS From Using CER To Limit Treatment
Democratic Lawmakers Call For SEP For Those Subject To Penalty
HealthPocket Study Finds Open Enrollment Front-Loaded, Suggests Shorter Timeframe Aligned
With Tax Season
IRS Delays Until July 1 Employer Penalties For Small Businesses Using HRAs To Reimburse
Coverage
Governors Ask Congress To Extend CHIP Funding
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INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015
Ryan Says Medicare Anti-Fraud Bill On Ways & Means 2015 Agenda
House Ways & Means Committee Chair Paul Ryan (R-WI) said he expects his committee to add provisions to the
Medicare anti-fraud bill that health subcommittee Chair Kevin Brady (R-TX) introduced last year. Brady will likely hold
more hearings on Medicare waste, fraud and abuse, Ryan said.
“We like that bill a lot, we’re going to pick up where we left off,” Ryan said of the Protecting the Integrity of Medicare Act at a press briefing Friday (Feb. 13).
“We’re looking at adding reforms to it,” Ryan said, without provide further details about potential additions. “Kevin
is leading that, he’s assembling that bill, and he’s out there getting other ideas.”
Brady released a draft of the Medicare program integrity bill in August and introduced the bill in December
with Ways & Means ranking Democrat Jim McDermott (WA) as a cosponsor. However, McDermott said at the time
that he had “reservations regarding certain provisions,” and wanted to continue the conversation this legislative
session.
The bill included aspects from a number of bills from both parties. Provisions in the bill included removing Social
Security numbers from Medicare cards, easing durable medical equipment face-to-face requirements, setting up a
Medicare Administrative Contractor outreach and education program, extending MAC contracts for 10 years and requiring home health agencies to carry surety bonds of at least $50,000, although home health agencies registered some
concerns.
The bill also covered some of the same ground as the 21st Century Cures draft, released in late January. Both bills
would set up programs to lock beneficiaries into certain pharmacies or “safe pharmacy networks” for drugs that are
commonly abused, such as opioids.
Beneficiary advocates expressed concerns with the lock-in provision in Brady’s draft, but one advocate said the lockin program was much improved when the bill was introduced. Stacy Sanders, federal policy director for the Medicare
Rights Center, previously said Brady’s bill had better beneficiary protections around the pharmacy lock-in provision and
gave clearer instructions to HHS on stakeholder engagement than the House Energy & Commerce Committee’s
21st Century Cures draft.
DME lobbyists liked the face-to-face changes in Brady’s bill, and the National Coalition on Health Care praised the
legislation as well.
Ryan was also asked about Brady’s draft hospital reform bill, but he didn’t say how the committee will proceed with
that draft. — Michelle M. Stein
Ryan’s Health Care Priority Is Preparing Bill For SCOTUS’ Obamacare Ruling
House Ways & Means Chair Paul Ryan (R-WI) said his first order of business on health care is providing an alternative to Obamacare for states with federally facilitated exchanges in the event the U.S. Supreme Court rules against HHS
this year, but he nevertheless also plans to pass an SGR-replacement bill by the end of March when the current doctor pay
patch expires. Ryan told Inside Health Policy he plans to reintroduce soon and without changes last year’s bipartisan deal
to replace the Sustainable Growth Rate formula.
Ryan spoke to reporters Friday (Feb. 13) about his priorities during a one-hour meeting. He said trade is his top
priority, and he talked at length about tax reform. Ryan believes there is the potential for common ground with Democrats
on tax reform, but if Republicans don’t at least negotiate a deal that includes big and small businesses by this fall, he
doubts there is much chance of tax reform this year.
Dan Elling, who until last year was the Ways & Means health subcommittee majority staff director, said last week
that reaching a deal on tax reform is key to reaching a deal on entitlement reform, which most lobbyists believe would be
needed to pay for SGR. Ryan became chair of Ways & Means this year.
The work that Republicans must do to help states in the event of a Supreme Court ruling against the administration is
a pressing matter, Ryan said. When asked whether he would go along with the bicameral Obamacare replacement plan by
House Energy & Commerce Chair Fred Upton (R-MI) and Senate Finance Committee Chair Orrin Hatch (R-UT),
Ryan said he doesn’t know because that’s a problem for a later date and he instead is focused on preparing for the
Supreme Court ruling. Ryan also said he prefers refundable tax credits for health insurance, which he proposed in
2010.
Provider lobbyists doubt Congress can reach a deal on an SGR replacement by April 1, and they expect Congress to temporarily override looming pay cuts and possibly work them out in tax reform and budget reconciliation
near the end of the year. Ryan said he doesn’t think tax reform will be included in budget reconciliation because, if it’s a
bipartisan agreement, reconciliation isn’t needed. Using budget reconciliation to pass tax law avoids the threat of Senate
filibuster. — John Wilkerson
INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015
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NCPA Asks Lawmakers To Reconsider 21st Century Cures Draft Provisions
The National Community Pharmacists Association is asking House lawmakers to reconsider or change provisions in
their draft 21st Century Cures bill, including measures to lock beneficiaries into specific pharmacies for obtaining certain
drugs, suspend pharmacies’ Part D payments when there is suspicion of fraud and require e-prescribing for Part D drugs.
“There is widespread, bipartisan support for taking steps to realize more cures through the development of new
medication and NCPA applauds that work. However, the legislation being drafted includes several provisions that appear
unrelated to drug development that may inadvertently undermine patient access to prescription drugs today as well as the
ability of community pharmacists to serve them,” NCPA CEO Douglas Hoey says in a statement.
The 21st Century Cures draft bill released by House Energy & Commerce Chair Fred Upton (R-MI) late last month
includes a wide range of provisions on drug development, anti-fraud proposals and CMS reimbursement. Rep. Diana
DeGette (D-CO), who spearheaded the initiative alongside Upton, did not endorse the draft because it was incomplete but
said she fully stands behind the work done so far.
NCPA says it is concerned about the pharmacy lock-in program laid out by the draft bill, which the group says would
lock into a pharmacy or pharmacies Medicare beneficiaries who need coverage of certain classes of drugs that are
frequently abused. The community pharmacists say this would would presumably affect all beneficiaries who are looking
to obtain these schedule II, III, IV and V drugs.
“While we share the common goal of cracking down on the endemic prescription drug abuse problem in the United
States, we have serious concerns with this approach,” NCPA says in its Feb. 10 comment letter to Upton.
Beneficiary lock-in programs are used in commercial and Medicaid plans, and tend lock high risk beneficiaries in to
a certain pharmacy or pharmacies for drugs that could be abused like opioids. Ways & Means health subcommittee Chair
Kevin Brady (R-TX) also included a beneficiary lock-in proposal that targets high risk beneficiaries in his program
integrity bill introduced late last year. Stacy Sanders, federal policy director at the Medicare Rights Center, previously
told Inside Health Policy that Brady’s bill includes more-developed beneficiary protections than the 21st Century Cures
draft and gives clearer direction to the agency about stakeholder involvement. The Pharmaceutical Care Management
Association, which represents pharmacy benefit managers, has been supportive of lock-in pharmacy proposals.
NCPA says that “at the forefront of prevention efforts must be a focus on reducing the inappropriate prescribing or
the overprescribing of controlled substances and the prevention of ‘doctor shopping,’” because patients cannot get a drug
from a pharmacy without first obtaining a prescription.
Rather than a pharmacy lock-in policy, NCPA says the group would “support carefully constructed prescriber lock-in
policies; as this is the root cause of many patients being able to obtain multiple prescriptions for the same or similar
medications leading to overuse and possible diversion.”
NCPA says it has concerns around pharmacy lock-in policies that let drug plans choose a pharmacy for beneficiaries.
Under this approach, a plan could assign beneficiaries to a pharmacy in which the plan has a commercial or financial
interest, including a mail-order pharmacy, NCPA says, which is a concern for community pharmacists.
The community pharmacists say CMS already has criteria in place to identify high-risk Part D beneficiaries, and the
agency should build off that program before giving plans the authority to create and operate lock-in programs. However,
former CMS Medicare chief Jon Blum previously expressed interest in a lock-in policy, and the administration’s fiscal
2016 budget also includes a lock-in proposal. HHS’s budget in brief says that the agency’s overutilization program can
identify results from inappropriate activity, but there’s not much CMS can do on a preventive basis with that program.
NCPA also raises concerns with a provision in the draft cures bill that gives plans the ability to suspend
payments to pharmacies pending an investigation of fraud. The definition of a “credible allegation of fraud” includes
complaints made on the 1-800-Medicare hotline, and NCPA says that shouldn’t be the case.
“Certainly, a faceless allegation made on a 1-800 phone number should not automatically be considered ‘credible’
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INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015
and be sufficient to suspend payment to a Medicare Part D provider — which could result in disruptions in the access to
needed medications,” NCPA says.
The community pharmacists say they oppose giving Part D plans the “unilateral authority to suspend payment”
because doing so could limit patient access to needed medications. NCPA says CMS’ guidance from 2011 that says plans
can withhold payment on claims they suspect to be fraudulent already provides plans the necessary tools for blocking
fraudulent claims.
NCPA also says that e-prescribing should not be required, as suggested by the 21st Century Cures draft.
“Until systems are widely in place to implement this provision, NCPA opposes mandated use, as this will place undue
burdens on physicians, pharmacies, and create serious access concerns for patients,” NCPA says.
CMS’ e-prescribing incentives ended in 2013 and 2014 was the last year those participating in the eRx Incentive
Program faced cuts. CMS notes in its website that electronic prescribing is still part of the meaningful use of electronic
health records program. — Michelle M. Stein
State Exchange Officials, Experts Reflect On Enrollment Experience
As the country prepared to end the second open enrollment season under the Affordable Care Act this past weekend,
states were trying to move past the failures of the first sign-up season and channel lessons learned into future best
practices. State health officers and researchers reflected on what caused success — or not — in the fledgling year of their
federally and state-run insurance exchanges at an AcademyHealth National Health Policy Conference last week, while
looking ahead to possibilities for everything from Medicaid expansion to benefit tweaks.
Michael Sparer, a Columbia University researcher who compared the first years of Massachusetts’ Health Connector
and the New York State of Health exchanges, said that Massachusetts struggled through its first year of implementation
because it had “too many cooks in the kitchen,” lacked communication and had an “extraordinarily ambitious” agenda
because it was seen as the long-running model for universal coverage.
While New York Gov. Andrew Cuomo appointed one woman to lead the state’s exchange, Massachusetts split
the task of running its exchange among the Connector, the state Medicaid agency and the University of Massachusetts
medical school. Each had very different missions, Sparer said, with conflicting change orders, no stable decision makers
and inexperienced project management.
The state was filled with people and groups that wanted the Health Connector to be a success and nobody wanted to
ask questions or say it wasn’t working, Sparer said. State officials who were concerned with being seen as the national
leader in health care swept problems under the rug until it was too late.
Massachusetts also hired CGI Federal — the same company that set up the glitch-ridden federal exchange — to
facilitate the Health Connector. It brought in an outside contractor and got a fiasco, Sparer said, while New York hired the
smaller Computer Sciences Corp. Inc., which the state had worked with before on Medicaid projects.
Successful states first chose to take care of what needed to be done instead of seeking what would be nice to have,
the experts said.
“I think in the first year, the folks are so caught up in sort of avoiding catastrophes and getting something up and
running … not letting perfection get in the way of anything good,” Wake Forest University researcher Mark Hall said. He
added that setting up standards for qualified health plan participation and other implementation details, was put off until
year two or three. “Often when states tried to get everything just right ... [they] sometimes completely fell on their face
before they got to the finish line,” Hall said.
Other states have had successes with exchanges despite widespread opposition to the Affordable Care Act and
Medicaid expansion in their legislatures. Florida State University researcher Carol Weissert said groups in the state are
very well-organized and engaged, targeting geographic areas where the most uninsured live. Because Florida did not
expand Medicaid, low-income residents flocked to the exchanges and led the nation in enrollment at 1.4 million noneffectuated plans as of Feb. 6.
But Florida’s current concern is a promise from CMS that the federal government “will not extend Florida’s Low
Income Pool in its current form beyond June 30,” as indicated by CMS last Tuesday. The government may choose to
green-light a different funding system, adding that it would work with state officials to “develop payment approaches for
Florida’s Medicaid beneficiaries to ensure adequacy, equity, accountability and sustainability for Florida’s Medicaid
funding.”
The federal government currently funds $1.3 billion of the $2.2 billion Low Income Pool program (LIP), which pays
for charity treatment of poor and uninsured residents. LIP will expire if ongoing negotiations for an extension agreement
fail, leaving Gov. Rick Scott (R-FL) to find the remaining funds elsewhere or cut it from his proposed budget
altogether.
Weissert called it a double whammy if the state loses both its LIP money as well as Medicaid expansion money,
though a J.P. Morgan Research report noted on Wednesday (Feb. 11) that “a lack of extension would add significant
INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015
5
pressure to close the gap that we believe could spur some additional conversations on Medicaid expansion.”
Top state lawmakers have vowed not to consider Medicaid expansion, despite a health coalition proposal that would
secure funding from the Florida Hospital Association. The problem also stems not from a “lack of ideas from Florida, but
lack of flexibility in Washington,” Weissert said.
The previous day, Indiana gubernatorial health policy adviser Brian Neale detailed parts of the newly approved Healthy Indiana expansion, and said that while health savings accounts and their restrictions on patient choice
are a problem for Congress, he supports any and all efforts to promote the consumer-driven model and called it key to
long-term fiscal sustainability of the health care system.
He added that there is a lot of room for state-based reform. “We can be siblings without having to be identical twins,”
Neale said. “We’re also hopeful that some of the waivers we were able to achieve can service other states as they continue
to have these conversations.” — Rachel S. Karas
Nursing Homes Upset By Star Ratings Changes . . . begins on page one
and 9 percent were one-star.
The two new quality measures raise the total score possible because facilities receive up to 100 points for each
measure. The scale topped out at 900 points before, and now it goes to 1,100. Following are the thresholds. (Former
thresholds are in parentheses.): five star = 760 - 1,100 (616 - 900); four stars = 690 - 759 (508 - 615); three stars = 630 689 (436 - 507); two stars = 545 - 629 (356 - 435); one star = <545 (<356).
Even these cutoffs might be changed soon. The technical user guide states that CMS will keep the update thresholds
for at least a year.
The American Health Care Association, which represents nursing homes, said the change is both unfair to nursing
homes, which have improved the quality of care and cut costs, and confusing to consumers, who will likely assume that
the lower scores are due to a drop in performance.
“We are concerned the public won’t know what to make of these new rankings. If centers across the country start
losing star ratings overnight, it sends a signal to families and residents that quality is on the decline when in fact it has
improved in a meaningful way,” AHCA President and CEO Mark Parkinson said.
Although CMS designed star ratings to help consumers choose facilities, managed care plans also base reimbursement on the ratings so a lower rating might mean lower pay, AHCA spokesman Greg Crist said. CMS officials said
they’re emphasizing to users of the star ratings, including other government agencies, that changes in ratings aren’t due to
a change in performance. However, they also said what might have been good performance in December of 2008, when
CMS launched the program, is mediocre by today’s standards. — John Wilkerson
Finance Presses HHS On King Contingencies; GOP, Stakeholders Eye Fixes
Senate Finance Republicans are the latest to press the Obama administration on how it would deal with the fallout if
the Supreme Court rules that subsidies cannot flow through exchanges established by the federal government, coming as
GOP lawmakers and stakeholders increasingly focus on potential legislative and administrative fixes should such a ruling
surface. Key GOP lawmakers say their top priority is to create a pathway for states using Healthcare.gov to continue
offering enrollees’ assistance, potentially without an insurance mandate, in the wake of such a ruling, and health care
stakeholders are floating several potential fallback options.
The need for Republicans to help states in the event of a Supreme Court ruling against the administration is a
pressing matter, House Ways and Means Chair Paul Ryan (R-WI) told reporters on Friday. House Majority Leader Kevin
McCarthy (R-CA) recently tasked Ryan, as well as his fellow chairs of the committees of jurisdiction, to come up with a
King contingency plan in addition to a developing an ACA “replacement” bill.
Ryan suggested that effort is taking precedence over Medicare physician payment reform legislation, even though the
current “doc fix” is scheduled to expire at the end of March.
Senate GOP members have also been working on Supreme Court contingency plans. Sen. John Barrasso (R-WY)
recently told the Washington Examiner that a short-term ACA fix is under discussion. “We are working on a transition
plan from what the President’s health care law is now, that does provide for those people who are getting subsidies and
would possibly be abruptly cut off, as we transition to a more market-based health care plan,” he said.
Ryan’s comments align with what conservative-leaning health expert Avik Roy said he has been hearing from the
GOP.
I think if the challengers win, I think there’s more likelihood than a lot of people seem to think that Republicans do propose some sort of legislative patch,” Roy said. “The level of urgency that I’ve seen among Republicans …
is certainly much higher I would have expected, say, two months ago. That’s probably my surprise,” Roy said at
6
INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015
AcademyHealth’s National Health Policy Conference last week. He noted that Republicans, particularly in the Senate,
feel the pressure as they face polling data that suggest the GOP would get blamed if subsidies are stopped. Roy said,
“They are concerned about that.”
A ruling against the administration could impact at least 6.5 million people, the number of people who selected plans
via the Healthcare.gov platform who are currently eligible for subsidies, according to a recent HHS report that examined
sign-ups from Nov. 15 through Jan. 30.
Roy said Republicans could propose something that allows subsidies to flow as long as states are able to dole
out subsidies in a manner that works for them and their own regulatory processes. “If states have that latitude but
the dollars are the same, I think the public’s going to look at that as a fairly reasonable alternative,” he said. If
Democrats are then put in the position of opposing any subsidies without an individual mandate in place, they
would be under a lot of pressure to go along with the GOP alternative to provide any tax credits instead of none at
all, Roy said.
If Republicans are successful at coming up with an alternative that states could use to keep subsidies flowing in the
wake of King v. Burwell, it would be a substantial source of policy innovation to watch, Roy added.
But some key Democratic stakeholders have cast doubt that the GOP would take any action. Families USA
Chair Ron Pollack recently said he could not see a GOP Congress, which is “hell-bent” on repealing the law, taking quick
action to make it work. The Center for American Progress pointed out that a fix would carry a high price tag — $340
billion, according to a recent Urban Institute report — because the Congressional Budget Office would immediately take
the high court’s ruling into consideration.
State officials are also apparently in the dark on next steps should the Supreme Court rule against the administration.
Last week, Virginia health secretary Bill Hazel said that Democratic Gov. Terry McAuliffe would want to do whatever is possible to keep people covered should the subsidies disappear. He said state officials want to know whether the
state could rent federal technology — instead of developing its own — and also if the governor could act unilaterally to
set up a state exchange. Those are the big questions we’re wrestling with right now, he said during a Feb. 4 conference
call.
The administration has consistently expressed confidence that the court will rule in its favor and provided no other
insights, leaving stakeholders to speculate on potential paths forward if that does not happen.
Consulting firm Leavitt Partners floated a few ideas in a recent white paper.
Under the first, HHS would be a “technology administrator” and endorse a hybrid state-based marketplace that
allows FFM and partnership states to use the FFM technology platform, but requires states to assume or retain ownership
of the other marketplace functions. This would require a clearer definition of a state exchange. CMS does have some
discretion, and “we believe that CMS would be willing to re-evaluate the anatomy of what has been considered a statebased marketplace to date,” Leavitt writes.
A second option is relying on regional marketplaces, a scenario in which several states would join under one marketplace umbrella. Leavitt Partners suggested that several states had indicated an interest in the idea, which is allowed under
the law.
States could also potentially adopt a “multi-tenant shared service marketplace solution” that allows two or more
states to roll out the exchange technology platform and finance the costs through user fees. Unlike the regional market,
this “marketplace as a service” (MaaS) scenario would provide states with autonomy and control of their exchanges. Key
benefits of this model would be faster and more reliable implementation, as well as lower costs.
Leavitt Partners and other stakeholders have also discussed using the state innovation waivers as a solution. These
allow states to use funding that would have been provided under the ACA to be exempted from several provisions as long
as they continue to support the law’s core coverage goals. However, health experts have noted that if SCOTUS rules that
the subsidies are not legal, that funding would also disappear — killing it as a viable solution. Leavitt also points out that
any plan put forth by a state must be approved by CMS.
Additionally, the innovation waivers do not take effect until 2017. In the years following enactment of the ACA, the
administration supported legislation that would have moved the implementation date to 2014, but there was no action on
that bill.
The Republican Senate Finance senators in their Feb. 9 letter ask the administration to provide details about any
contingency plans and also request details on any communication with health plans about the possibility that the subsidies
may end.
Their letter to HHS Secretary Sylvia Burwell, Treasury Secretary Jack Lew and IRS Commissioner John Koskinen
comes after all three declined to reveal plans to lawmakers during recent hearings.
“Given multiple opportunities to inform the Senate committee charged with oversight of HHS, we find Ms. Burwell’s
lack of candor to be remarkable,” the Finance Republicans wrote. “Secretary Burwell’s testimony — or lack thereof —
deepens our concern about the Administration’s readiness to respond to the King v. Burwell ruling.”
“Congress cannot perform its oversight role if agency heads repeatedly refuse to answer straightforward questions
about matters of great import. Moreover, a lack of planning for contingencies that could affect millions of Healthcare.gov
INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015
7
enrollees would be irresponsible, and a failure to perform basic risk management is unacceptable,” they said.
The letter then asks if the administration has a contingency plan, and if so asks officials to provide the details, how it
was developed and how it would be implemented. If there is no plan, the GOP members ask the administration to explain
why not.
The lawmakers also ask whether the administration communicated with insurers that participate in Healthcare.gov
about the possibility that the Supreme Court may rule against the government. “If yes, please describe the communications and explain the manner in which affected insurers will be given the option of ending their participation in the federal
exchange. If not, please explain why not,” the letter says.
The senators want a response by Friday (Feb. 20).
The QHP agreement for issuers participating in the FFM for 2015, which was signed last fall, does include a
clause in which the administration acknowledges that the issuer has developed its products for the FFM “based on the
assumption that (advanced payment tax credits) and (cost-sharing reduction payments) will be available to qualifying
(e)nrollees.”
“In the event that this assumption ceases to be valid during the term of this Agreement, CMS acknowledges that
Issuer could have cause to terminate this Agreement subject to applicable state and federal law,” the contract says.
CMS told Inside Health Policy in October that the new clause was inserted at the request of issuers, and that both parties
believe the language is critical.
Several other GOP lawmakers have also pressed CMS on contingency plans, either in hearings or in writing.
— Amy Lotven and Rachel Karas
AHIP Urges Against MA Cuts . . . begins on page one
2016 Final Notice, Call Letter and MA county rates.
Before the Affordable Care Act, Medicare paid about 14 percent more for beneficiaries in MA plans than those in
traditional Medicare so the law phases in pay cuts to bring fee-for-service Medicare and MA on par. About two-thirds of
the pay cuts have taken effect, and the rest are scheduled to be phased in over the next two years. Last year, CMS backed
off pay cuts to Medicare Advantage plans, although industry analysts said the overall effect of the 2015 MA call letter
was, on average, a net reduction in reimbursement to MA plans.
Since the law was passed, MA plans have figured out how to deliver services at a lower cost while improving
performance on the quality of care, according to Michael Chernew, a professor of health care policy at Harvard University. They’ve also done away with some of the benefits they had offered seniors.
Ignagni said at a briefing on Capitol Hill attended mostly by lawmakers’ staff that MA plans will be forced to drop
many of the programs they use to improve care if CMS does not halt further reimbursement cuts in pay rules for 2016.
“We are staring over into the abyss,” Ignagni said.
The letter that Sens. Mike Crapo (R-ID) and Chuck Schumer (D-NY) are circulating for signatures asks CMS to stop
further pay cuts to the MA program, Ignagni said. Several policies affecting MA pay are included in annual pay regulations, and it’s not clear what policies the lawmakers will include in their letter.
Calls to the offices of Crapo and Schumer requesting a copy of the letter were not returned.
One change that MA plans are lobbying for is a policy that would bump up star ratings for plans that treat a large
portion of poor and minority patients. Pat Wang, CEO of HealthFirst, a not-for-profit plan in New York, said research
shows the star ratings program disadvantages plans with unusually large numbers of poor enrollees. HealthFirst is a 4-star
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INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015
MA plan with an unusually high percentage of poor and minority enrollees — more than 60 percent of enrollees are
dually eligible for Medicare and Medicaid.
However, Wang said she is not sure the plan will hold on to that strong rating if CMS does not quickly develop a way
to account for the difficulty in meeting quality measures in the star ratings program. For example, the program scores
plans in part on how they follow up with beneficiaries, yet many of HealthFirst enrollees don’t have phones or computers.
She said it will take too long to develop a permanent risk adjustment measure for poor and minority enrollees, but
CMS could include a temporary fix in the pay rules this year. She said CMS could increase scores based on the number of
duals in MA plans. The agency could develop tiers, topping out at 50 percent dual enrollment. — John Wilkerson
Ramlet: Fortune 500s Likely To Move Workers To ACA Exchanges
Many Fortune 500 companies are likely to shift their employees to the health insurance exchanges by June 2016 as a
way to cut costs and qualify workers for premium tax credits, predicts health policy expert Michael Ramlet, director of
health care policy at the conservative American Action Forum. “It’s more of a question of when, not if,” Ramlet told
Inside Health Policy in an email Wednesday (Feb. 11).
Ending the longstanding practice of offering health coverage to employees — which began as a powerful, unionbacked hiring incentive — would be a major step away from business as usual and could add hundreds of thousands or
millions of people to state and federal insurance marketplaces.
As Congress considers several bills aimed at softening the blow of Affordable Care Act mandates on businesses’
bottom line, dropping health coverage could work more immediately by lowering or eliminating companies’ health care
spending. The U.S. Chamber of Commerce did not respond to a request for comment.
“I would imagine it’s going to happen at the retail or other very competitive low-wage industries,” Ramlet said
at a National Health Policy Conference panel Tuesday (Feb. 10). “I think that’s going to be a really big kind of
moment.”
Health care costs are significant operating expenses in highly competitive, low-wage, low-skill, labor-intensive
industries, he added Wednesday. Ramlet, who was an outside adviser to the Republican Governors Public Policy Committee and the National Republican Senatorial Committee, believes a number of large retailers and service-oriented companies have already done impact analyses for the business model.
“They are not afraid of being able to attract talent as many companies are when it comes to health benefits,”
he wrote of the low-wage and low-skill industries. “CFOs generally prefer certainty over anything else so this means
that paying a penalty like the employer mandate is less of penalty and more of a budgeting mechanism. As compared to
the uncertainty of rising healthcare premiums/costs especially as the economy recovers and elective procedures kick up in
self-insured plans.”
Timing is key: Many Fortune 500 employers begin their fiscal year July 1 instead of Jan. 1, making it easier to file
annual financial reports that account for and project health care costs between open enrollment periods. That gives them
time between open enrollment months to create and execute a plan to transition employees before the next sign-ups begin.
Companies so far have largely shied away from moving their employees to the exchanges because of the system’s
rocky rollout in 2014, but are likely gaining confidence that they can smoothly drop health coverage as the exchanges
work out their kinks, he suggested.
“The uncertainty surrounding the King decision, may have a similar effect,” Ramlet said. “But I would bet the
farm that a Fortune 500 drops by June of 2016, which would have a seismic effect.”
A survey of more than 200 chief human resource officers at Fortune 500 companies, conducted by business school
researchers at the University of South Carolina last summer, found that 78 percent reported a rise in health insurance
costs; 73 percent reported having moved or planned to move employees to consumer-directed health plans; 71 percent
reported raising or planned to raise employee contributions to health insurance; 30 percent reported moving or planned to
move pre-65 retirees to ACA health exchanges; and 27 percent reported cutting back health insurance coverage eligibility.
Ramlet pointed to Verizon Communications and Caterpillar Inc. as two big employers who have already evaluated
what a similar change would do to their liabilities and operating costs.
Verizon has no plans to move employees to health insurance exchanges, a company spokesman said in an email
Thursday (Feb. 13). Caterpillar officials declined to comment.
First-movers take an initial hit in the media, Ramlet said, but then gain a competitive advantage. Their
competitors follow suit soon after. He pointed to the trend of companies who moved from defined-benefit pension plans
to 401K plans, noting that some of the same types of large-scale, low-wage industry employers like Target have already
switched to the exchanges.
Target Corp. announced in January 2014 that it would stop offering health plans to part-time workers as of April 1,
2014, saying that giving them the option of job-based coverage could disqualify them from being eligible for premium
subsidies. Less than 10 percent of Target’s 361,000 employees participated in the insurance plan that would be discontinINSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015
9
ued, the company said in a blog.
“Target will provide U.S. stores’ part-time team members who are currently enrolled in Target’s health coverage and
who are losing access to that coverage a $500 cash payment,” Executive Vice President of Human Resources Jodee
Kozlak said in the blog post. “Second, we have partnered with a highly respected company that has extensive benefits
expertise and asked them to develop a personalized approach to provide one-on-one support to every affected team
member. This includes sharing information that is customized to each team member about what insurance is available to
them, the differences between plans and their impact, any off-sets available to the team member, and ultimately walking
them through every step of the sign-up process.” — Rachel S. Karas
Medicare Overpayments Rule Pushed Back . . . begins on page one
and suppliers that failed to repay Medicare overpayments within 60 days after they were identified, and it also proposed a
10-year look-back period under which providers are responsible for keeping track of claims and checking for any
overpayments that need to be returned. The rule is CMS’ third attempt to change regulations on overpayments, as the
other two rules proposed in 1998 and 2002 were never finalized.
Paula Sanders, an attorney with Post & Schell, said CMS is likely struggling with how to make a longer lookback period workable. Some providers including the American Hospital Association and American Health Care Association in 2012 asked CMS to shorten the proposed 10-year look-back period. Sanders said most providers have shifted
in one form or another how they handle accounts in the last 10 years, so the older records could be difficult to track. In
2012, the AHA said it was a possibility that neither CMS nor providers have the institutional memory to correctly audit
10 years worth of coding.
Hospitals also raised concerned that the inclusion of a 60-day limit on returning overpayments providers knew
about or should have known about could leave providers accountable for overpayments without realizing a problem
existed.
“Based on both public comments received and internal stakeholder feedback, we have determined that there are
operational issues that need to be resolved in order to address all of the issues raised by comments to the proposed rule
and to ensure appropriate coordination with other government agencies,” CMS says in a Federal Register notice published Feb. 17.
However, CMS says its decision to extend the timeline for issuing a final rule beyond three years, something the
agency notes it only does in exceptional circumstances, “should not be viewed as a diminution of the Department’s
commitment to timely and effective rulemaking in this are. Our goal remains to publish a final rule that provides clear
requirements for persons to report and return Medicare overpayments.”
Sanders said that one problem with CMS’ delay is that providers still have a statutory obligation under the Affordable
Care Act to repay overpayments in the 60-day timeframe despite the ambiguity around finding and identifying them.
Sanders said there are lots of ambiguities around how far back providers should look for overpayments and how to know
when the 60-day clock starts. But she added that the delay itself can also help providers acting in good faith, as a delay
wouldn’t be necessary if the issues around returning overpayments were clear. — Michelle M. Stein
More Healthcare.gov Testing Called For In Wake Of Privacy Concerns
Web privacy experts recommended Thursday (Feb. 12) that the Obama administration conduct an end-to-end security
check on the production system behind Healthcare.gov and implement a number of other protective measures outlined in
a September 2014 report from the Government Accountability Office, following news that a trove of personal information
has been shared with up to 50 third-party entities embedded in the federal exchange website.
CMS conducted end-to-end testing in the fall prior to the launch of the second enrollment period — and per the
suggestion of the GAO and various members of commerce — but the web experts told members of the House Science,
Space and Technology Committee that additional action is needed to shore up security of the site.
Michelle De Mooy, deputy director of consumer privacy at the Center for Democracy and Technology, also told
lawmakers that the number of outside parties given access to the personal data of millions of Americans through the
federal marketplace’s application process was troubling and avoidable. That information includes age, income, location,
whether someone smokes or is pregnant.
Following an Associated Press report that the information was being shared with outside entities, Marketplace CEO
Kevin Counihan explained in a blog post that the personal data, which consumers input while in the “window shopping
tool,” had previously been included in the URL created when a person got their application results.
“This URL is now encrypted and helps prevent third parties from viewing the data the consumer entered,” Counihan
said in a January blog post.
The blog also acknowledged that CMS had contracted for “third-party tools” to help improve the consumer experi-
10
INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015
ence by doing things such as seeing when consumers are having difficulty or understanding when website traffic is
building during busy periods. “To do this well, we have contracts with companies that help us to connect interested
consumers to Healthcare.gov and continuously measure and improve site performance and our outreach efforts,”
Counihan wrote. Counihan further revealed in that post that CMS had launched a review of its privacy policies, contracts
for third-party tools and website construction.
De Mooy testified that it is unclear whether the federal government let third-party companies have private information for “retargeting” or tracking people’s preferences to tailor ads to their personal data as they surf the Web in hopes of
bringing them back to a particular site or brand. But she said it appears to be likely that the administration wanted outside
companies to collect data and retarget shoppers as a way to identify underinsured communities and make sure they
continue to see marketplace advertising.
Having that many entities for retargeting is “inexplicable,” she said, calling it the “easiest” and “laziest” ways
of designing the site. Creating the platform in-house makes it safer and less prone to outside penetration, De Mooy said.
She believes the government’s rationale for allowing so many outside companies to embed was probably to make the site
more intuitive and user-friendly, though she said they “went far beyond what was necessary and far beyond what was
prescribed.”
“(The site design) feels, to me, a bit lazy,” De Mooy said. “The easiest thing is to allow rampant sharing.”
In comparison, cybersecurity expert Morgan Wright said White House and IRS websites have fewer than five thirdparty connections embedded.
De Mooy said disadvantaged communities are at the greatest risk of being profiled in data banks, while Wright added
that the public is largely unable to sue the federal government as it could in the case of a private company’s security
breach.
The experts said the government should be held to a higher standard. People who visit Healthcare.gov do it
because they have no other choice when purchasing a health plan, and should be given the option not to share their
data with outside vendors. CMS has claimed that outside companies are not allowed to use information from
Healthcare.gov tools for their own purposes, but did not say how the government ensures that privacy and security
policies are being followed.
Healthcare.gov defers to the privacy policies of the third-party entities to explain what is at stake, De Mooy
said. That puts the onus on consumers to look at other sites’ policies despite not knowing they were there in the first
place, she added. People rarely read those often long and complex policies even when they are aware they exist, she
added.
De Mooy suggested the government create an iron-clad privacy policy for Healthcare.gov to replace its
current vague version. She and Wright also recommended that the CMS follow the sensible privacy guidance already
available, limit third-party sharing that is not needed for the site to function, use in-house software and honor individuals’
browser choice not to be tracked.
“There are ways to limit it to certain data points,” De Mooy said. “It was overkill. There was no need for the leakage
that occurred.”
GAO had laid out six recommendations for CMS to improve the website’s security last year: follow National
Institute of Standards and Technology (NIST) information guidelines in the FFM and data hub security plans; analyze and
document all privacy risks in privacy impact assessments; develop separate computer matching agreements with the
Office of Personnel Management and the Peace Corps to oversee the data that is compared with CMS data used to verify
eligibility for subsidies and cost-sharing reductions; perform a comprehensive security assessment of the FFM’s infrastructure, platform and software; quickly create and make operational a planned alternate processing site for the systems
behind Healthcare.gov; and create detailed security roles and responsibilities for contractors to increase communication
between the parties responsible for FFM security and its infrastructure.
Wright noted that though he testified before the committee in 2013, he found himself making the same suggestions
two years later — much of them in line with what the GAO called for.
Democrats on the committee stressed that while they acknowledge there are legitimate problems with the federal
exchange platform, the Affordable Care Act is more than a website. Its benefits for millions of Americans should be kept
in mind as well when discussing security issues, they said.
Others warned that this may be the beginning of a string of unintended consequences stemming from open data
initiatives and faulty program management. “I think we’ve opened the proverbial barn door, and the cows are going to get
out,” Ohio Republican Rep. Bill Johnson said.
The House science committee signaled it would grill CMS staff on privacy issues at a future hearing.
The administration is also expected to release a revised Consumer Privacy Bill of Rights legislative proposal in
March. That would govern online interactions with “principles that look at the context in which data is collected and
ensure that users’ expectations are not abused,” the White House said in a January release. — Rachel S. Karas
INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015
11
CMS Announces Oncology Pay-Bundle . . . begins on page one
commercial payers, including Medicare Advantage, Medicaid plans, and other government payers such as TRICARE.
Episodes are for periods of six months, with patients entering a new six-month period if treatment must continue past
the first episode. For fee-for-service beneficiaries, Medicare will pay $160 a month or up to $960 per episode. Performance-based pay will be made retroactively based on a practice’s target price, which would be based on actual Medicare
expenditures. CMS will apply a 4 percent discount to that price and retain the savings, and participants will be eligible to
retain a portion of the difference between the target price and actual expenditures. Payments will be risk-adjusted to
account for the higher cost of treating more severely ill patients.
Some groups already indicated an interest in working with the Innovation Center on the proposal.
“The new Oncology Care Model that the administration announced today holds the potential to advance cancer
treatment and the coordination of care. The model will leverage the growing adoption of patient-centered care systemwide, with a critical emphasis on shared decision-making, advanced care planning, participation in clinical trials, outcomes measurement and other essential improvements in health care delivery that could save more lives from cancer. We
urge the Innovation Center to work closely with patient advocacy groups and other stakeholders as the model moves
forward,” Christopher Hansen, president of the American Cancer Society Cancer Action Network, said in a statement.
Letters of intent to participate in the program are due March 19 for payers and April 23 for oncology practices.
—Rebecca Beitsch
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Excerpts of Inside Health Policy Blogs
Recovery Auditors Blame ‘Frequent Filers’ For
ALJ Backlog
Recovery Auditors are again alleging that hospital
“frequent filers” are the cause of the backlog at the third level
of the appeals system, and point to a coalition analysis that
found only a small percentage of RAC denials were appealed
to the Administrative Law Judges in recent years.
“A backlog of 750,000 cases afflicting the Center for
Medicare and Medicaid Service’s (CMS) most effective
Medicare integrity program is due to the volume of provider
appeals at the Administrative Law Judge (ALJ) level, not
systemic flaws in the Recovery Audit Contractor (RAC)
program as hospital groups have previously alleged,” the
American Coalition for Healthcare Claims Integrity, which
represents RACs, says in a statement.
The coalition says analysis of CMS data finds that in
2012 and 2013, 2.3 percent and 10.6 percent of RAC denials
were appealed to the ALJ level as the number of appeals
overall rose. Hospitals sued over the ALJ backlog — though
their case was dismissed — and have said the backlog is a
result of overly aggressive RACs.
The coalition also says it supports a number of
reforms to the Medicare appeals system in the
administration’s fiscal 2016 budget, including sampling
and consolidating claims, expediting procedures for claims
with no material fact in dispute and charging a refundable
filing fee to those appealing. — Michelle M. Stein
CBO Suggests Cutting Insurance Subsidies, Tax
Preference For Employer Coverage
The Congressional Budget Office floated general options
for curbing health care spending growth, including cutting
federal subsidies for health insurance, during a presentation
to the Organisation for Economic Co-operation and Development in Paris. The United States also could cut tax prefer-
12
ences for employment-based health insurance, pay Medicare
providers differently, make structural changes to health care
programs and improve the health of its population, according
to slides accompanying a presentation by CBO Deputy
Assistant Director for Health Jessica Banthin.
By 2024, CBO projects that 43 percent of the growth in
federal spending will be due to the aging population and 44
percent of the growth will be due to expanding federal health
care programs, and the increase in spending per person is
expected to account for 13 percent of that growth. By 2039,
those factors shift significantly, with the aging population
accounting for 55 percent of spending growth, program
expansion accounting for 21 percent of growth and 24
percent of growth due to an increase in per-person costs.
— John Wilkerson
House Panel Asks Departing Governor To Save
Documents Related To Cover Oregon
The House oversight committee is asking Oregon’s
outgoing Democratic Gov. John Kitzhaber to “preserve all
documents and communications related to the implementation of Cover Oregon” and halt any destruction or alteration
of those records by any state employee or contractor, according to a letter sent Feb. 13 that seeks more insight into how
what is considered one of the country’s most dysfunctional
health insurance exchanges was run before state officials
dumped it and moved to the federal exchange.
Citing a need to better understand the role of campaign
advisers in the state’s once-disastrous marketplace, the
committee asks Kitzhaber to hand over all communications to
or from any current or former governor’s office employee
referring or related to the exchange, Healthcare.gov or the
Affordable Care Act, including: anyone associated with
Kitzhaber’s re-election campaign; any current or former
Cover Oregon employee, including its chief executive officer
and members of the board of directors; and any current or
INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015
former state employee, contractor or consultant. All documents and communications about meetings or phone calls
regarding Cover Oregon, Healthcare.gov or the ACA, like
calendar appointments, meeting minutes and notes, must also
be given to the House oversight committee, the letter says.
The lawmakers want the requested material sent no later than
Feb. 27.
The congressional request comes after Cover Oregon
officials voted in April 2014 to scrap the state exchange in
favor of the federal marketplace, a move that state leadership
said was meant to give residents easier access to health care
despite the failed local exchange, but which the oversight
lawmakers allege may have been orchestrated by Kitzhaber’s
consultants to bolster his re-election chances instead.
“(C)ampaign advisors working on your re-election
campaign may have coordinated the State’s response to the
Cover Oregon rollout,” oversight leaders wrote to Kitzhaber.
“In fact, media reports indicated campaign staff even edited
the testimony of a witness who testified before the Committee
about Cover Oregon on April 3, 2014. It has also come to our
attention that an employee in the Governor’s office instructed
State officials to remove emails from your personal account
from State servers.”
Kitzhaber resigned Feb. 13 amid a growing state ethics
scandal around whether first lady Cylvia Hayes violated state
rules and laws regarding private business clients and official
state business, as well as whether she failed to pay income
taxes. Secretary of State Kate Brown will take his place
Wednesday. — Rachel S. Karas
Democrats Introduce Bill To Fund CHIP Through
Fiscal 2019
Democrats in the House and Senate introduced a fouryear extension to funding of the Children’s Health Insurance
Program Thursday (Feb. 12), and senators urged lawmakers to
fund the program as soon as possible.
Sen. Sherrod Brown (D-OH), along with Senate Minority
Leader Harry Reid (D-NV), Senate Finance ranking Democrat
Ron Wyden (OR) and Sen. Bob Casey (D-PA) introduced the
Protecting & Retaining Our Children’s Health Insurance
Program Act, and Brown’s office says the bill has already
picked up almost 40 Democratic co-sponsors. No Republican
co-sponsors were listed.
CHIP is authorized through 2019, but funding the
program runs out at the end of this fiscal year. At a recent
Senate Finance hearing, Brown noted that more than 40
governors from both parties had asked lawmakers to renew
the funding. Senate Finance Committee Democrats brought
up an amendment to the Hire More Heroes Act that would
extend funding for CHIP through 2019, but stopped short of
offering the amendment.
“We can’t turn out backs on health coverage that allows
children to grow into healthy, active adults,” Brown said in a
statement. “It’s clear that letting this program expire is not an
option. I hope my colleagues will join me in doing the right
thing for our kids and extend CHIP funding without delay.”
Brown’s office says more than 10 million children and
pregnant women could lose their health insurance if CHIP
funding isn’t renewed.
Along with extending CHIP funds through fiscal
2019, the bill would extend the CHIP contingency fund to
protect states that have a funding shortfall and the Childhood Obesity Research Demonstration through fiscal 2019.
The current qualifying states option would be preserved, as
well. It would extend the CHIP performance incentive
program through fiscal 2019 and would update the list of
qualifying options. The Pediatric Quality Measures
Program, which develops and refines pediatric quality
measures, also would be extended.
The “PRO-CHIP Act” would extend outreach and
enrollment grants and maintains the express lane eligibility
option. States would have the option to use cross-program
information to simplify eligibility determinations through
fiscal 2019 for states that want to streamline CHIP eligibility
and enrollment.
The March of Dimes and the Children’s Hospital
Association back the Senate bill, and the CHA said it
supports both versions of CHIP funding. — Michelle Stein
KY Gov Touts Economic, Health Benefits Of
Medicaid Expansion
Democratic Kentucky Gov. Steve Beshear on Thursday
(Feb. 12) praised the state’s decision to expand Medicaid as a
driver of economic and job growth while touting a new report
that found that the expansion will more than pay for itself in
budget savings and new revenue. The expansion is expected
to add 40,000 jobs and bring in $30 billion to the state’s
economy through 2021, and providers have already seen a 55
percent decline in uncompensated care and received an
additional $1.6 billion in payments due to the decision,
according to report by Deloitte Consulting and the University
of Louisville’s Urban Studies Institute
The report - commissioned by Kentucky’s Cabinet for
Health and Family Services (CHFS) - looked at the impact of
the expansion in 2014 and made estimates on impacts
through 2021.
“For all the naysayers who claimed that expanding
Medicaid was a budget-busting boondoggle, take a look at the
facts. It’s working, and it’s literally paying off. The state is
saving money, hospitals are earning more, and our people are
getting healthier,” Beshear said in a statement. “The facts are
overwhelming. We would have lost money in the state budget
and lost opportunities for job growth, not to mention allowed
our people to suffer continued poor health, if we had allowed
this opportunity to pass.”
The first enrollment period added 310,000 people to the
state’s Medicaid rolls due to the expansion, or nearly double
the expected number, and another 17,000 residents previously
eligible for the program signed up, according to the
governor’s office. As of the end of the 2014, more than
375,000 residents were enrolled in Medicaid through the
expansion.
The report also found that the new Medicaid members
brought a pent-up demand, and received care at a rate 55
percent higher than existing beneficiaries, many getting
services for chronic conditions like high blood pressure and
diabetes. Health care providers received $1.6 billion in
additional payments due to the expansion, the report said.
It also found that the expansion will more than pay for itself.
“We reviewed Deloitte’s findings and considered them in
the context of our current biennial budget as well as possible
implications for next year’s budget construction,” said budget
INSIDE CMS — www.InsideHealthPolicy.com — February 19, 2015
13
director Jane Driskell. “The bottom line is that the analysis
shows expansion creates both savings and new revenue,
totaling more than double the amount the state will need to
pay for Medicaid expansion in the next budget cycle.”
The report estimated that Kentucky’s share of the
expansion costs will be $74.4 million in 2017 and $173.2
million in 2018, or a total of $247.6 million that is expected
to be offset by $511.8 million in general fund savings as well
as from revenue due to the boosted economic activity.
— Amy Lotven
Vendors Praise CMS’ Delay Of Cost-Sharing Reduction Reconciliation
Vendors working with issuers on payment and other back-end exchange issues said CMS’ Friday announcement that
the cost-sharing reduction payment reconciliation process scheduled to take place in April has been delayed for one year
— until April 30, 2016 — is great news for the industry, as it gives more time for issuers to get their calculations right.
CMS also said that it would allow issuers to switch from the “simplified” accounting method, which was based on
estimates and is less accurate, to the standard method.
Under ACA implementing regulations, monthly advance cost-sharing reduction payments to issuers were authorized
starting in 2014, and a process was provided for issuers to reconcile these advance payments to actual cost-sharing
reductions provided to eligible enrollees.
In a Friday memo, CMS said the process would be delayed in an effort to enhance the accuracy of the CSR payments
and to fully reimburse issuers for the reductions in out-of-pocket expenses provided for qualified individuals. Low
income individuals enrolled in certain Silver-level plans, and Native Americans/Alaskans are eligible for reduced out-ofpocket payments.
“This is great news for the insurers and I’m not surprised that it came to this,” says Bobby Koritala, chief product
officer for the data analytics firm Infogix.
He notes that while the decision will not directly impact plans’ members, it “packs a lot of good benefits” for
the issuers. Most large plans had opted to use the standard methodology, he said, but those that did not quickly discovered that the simplified method could “leave money on the table.” CMS’ announcement is positive because it gives those
that picked the simplified approach the option to switch methodologies, Koritala said.
CMS’ decision also provides issuers that opted to use the standard methodology more time to get their calculations
right. The companies — and their investors — should be pleased that they will now have more predictability in their
financial reports, he suggested.
“We have heard for months that some issuers who chose the Simplified methodology for the 2014 plan year originally did so largely because they weren’t confident they would be ready for Standard,” says Infogix Director of Operations Emily Washington. “We spoke with a couple issuers this afternoon, who were happy to hear this new development
both from a submission deadline extension and methodology adjustment perspective. CMS listened to the issuers, who
can breathe a little easier since they now have more time to prepare,” she adds.
A spokesperson with America’s Health Insurance Plans (AHIP) said Friday that just receiving the guidance in
and of itself is important. Staff will need to check the details on how it will work operationally, but plans had been
waiting on the additional clarity, the spokesperson said.
Under the ACA implementing regulations, CMS had allowed plans to use either a standard methodology, or a
“simplified” methodology, which is based on less-precise formulas. According to CMS, if a plan has less than 12,000
members in a particular subset of enrollees, issuers that chose the simplified CSR reconciliation method must use a
formula based on the plan’s actuarial value — which may result in companies receiving less in reimbursements than was
actually provided.
CMS says it has learned that more plans than expected are falling short of the 12,000-member limit. The
agency has also been told that issuers using the standard methodology are having difficulty upgrading their systems,
which puts the accuracy of those calculations at risk.
“Therefore,” CMS writes, “to enhance the accuracy of reconciliation of reductions in out-of-pocket expenses that
issuers provided to eligible low- and moderate-income enrollees and American Indian/Alaska Native enrollees, CMS will
permit issuers that selected the simplified methodology to switch to the more accurate standard methodology, and will
reconcile 2014 benefit year cost-sharing reductions for all issuers beginning on April 30, 2016. This new reconciliation
deadline for all issuers will promote accurate reimbursement of cost-sharing reductions by permitting issuers that switch
to, or previously selected, the more accurate standard methodology to complete their operational upgrades.”
CMS says issuers that are switching from the simplified to the standard methodology can notify the agency of that
decision upon submission of the required files on April 30. However, issuers that chose the standard methodology last
year may not switch to the simplified approach.
“Because these changes will help promote accurate payments for cost-sharing reductions, they will not alter the
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ultimate liability for cost-sharing reductions from issuers or the federal government,” CMS says.
“We continue to provide technical assistance to issuers and, in advance of pilot testing for 2016 cost-sharing reduction reconciliation data submission for benefit years 2014 and 2015, we will provide technical data submission standards
and appropriate instruction,” CMS says in the memo. — Amy Lotven
Advocates Seek Meeting With CMS Following Avalere Study On Drug Tiers
An advocate for patients living with HIV/AIDS tells Inside Health Policy he plans to seek a meeting with CMS
Marketplace CEO Kevin Counihan to discuss concerns that qualified health plans (QHPs) are increasingly placing all
drugs for certain diseases into high-cost specialty tiers, a practice that a recent Avalere analysis indicates has become
more prevalent for plans in 2015. Patient advocates have for months been asking HHS to enforce its non-discrimination
provision, and the pharmaceutical lobby last week also urged the agency to step up its enforcement while the insurance
lobby pointed to high drug prices as the culprit.
Counihan told reporters last Wednesday that while he looked forward to reading Avalere’s analysis of QHP drug
coverage, he had not “heard too much” on that issue.
Carl Schmid, deputy executive director of the AIDS Institute, says he can’t understand why Counihan would say that
since the group has raised the issue repeatedly in its communication with CMS, and the topic has been the subject of
press coverage. It seems as if he is not familiar with the plans that CMS reviews and “out of touch with what patients are
going through,” Schmid said. He said he would send a follow-up letter to request a meeting with Counihan, noting that
the CEO had been unable to make an earlier meeting at the last minute.
Schmid also said it appears that CMS is downplaying the issue. The complaint “fortunately” is with HHS’ Office of
Civil Rights, but “we still need action by CCIIO,” he said.
CMS says Counihan is aware of the issue but was been caught off-guard by the question that came during a
conference call that focused on enrollment efforts.
An agency spokesperson stressed under the ACA “(p)lans are prohibited from discriminating against individuals with
significant health needs in their benefit design.”
“We analyze plan information submitted by insurance companies to uncover discriminatory benefit designs, and
work with outlier plans to update formularies so they do not discourage enrollment of consumers with specific medical
conditions,” the spokesperson said.
CMS also pointed out that in its March 2015 letter to issuers, the agency had said it would do an “outlier
analysis” on cost-sharing as part of the certification process. Plans identified as outliers may be given the opportunity
to modify cost sharing for certain benefits if CMS determines that the cost-sharing structure of the plan submitted for
certification could have the effect of discouraging the enrollment of individuals with significant health needs, CMS wrote.
CMS did not say how many outliers were identified.
HHS’ 2016 Notice of Benefit and Payment Parameters, which was proposed in November and is currently under
Office of Management and Budget review, also said that plans placing most or all drugs used to treat a certain condition
on a high-cost tier violates the ACA non-discrimination provision.
The advocates say they appreciate that HHS is highlighting the problem but add that such language neither
has the force of law nor compels issuers to stop those practices.
Last May, the AIDS Institute and the National Health Law Program (NhELP) filed the complaint against Coventry
One, Cigna, Humana and Preferred Medical charging they had unlawfully discriminated against people with HIV/AIDS
by placing all HIV drugs — even generics — on high-cost tiers. Since then the four issuers have reached agreements with
Florida’s insurance office to limit the cost of the drugs. However, the AIDS Institute and NheLP point out that the
agreements are only with the state of Florida and do not address the underlying complaint.
HHS has not taken enforcement action.
In a Jan. 8 letter to HHS’ civil rights office, the AIDS Institute and NhELP called on the administration to send a
stronger message that discrimination will not be tolerated. In that letter the groups also noted that the same plans — and
many others — appeared to be adopting the same practices.
In a statement on the Avalere study, Schmid says the analysis “ confirms what patients are learning first
hand,” which is that some insurance companies are making it very difficult for patients to access their medications
because they are pricing them out of reach with high co-insurance and placing them on the highest tier.
“What is new about this analysis is that the plans in 2015 are much worse than in 2014,” Schmid said.
“We believe some insurers are purposefully designing plans in such a way that discourages patients, particularly
those with chronic healthcare conditions, from signing up for them,” he added.
“This is clear discrimination and a violation of the (ACA),” Schmid said. “We need the ACA to work for all patients
and for the federal government to enforce the strong non-discrimination provisions contained in the ACA. Without
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enforcement, how will patients afford their medications and who knows what the 2016 plans will look like?” he added.
In a blog post last Wednesday on the Avalere study, the Pharmaceutical Research and Manufacturers of
America also suggested that CMS step up enforcement. “We remain concerned about patient access to medicines in
health insurance exchange plans and this new analysis highlights the increasing rate at which insurers are using discriminatory practices at the expense of patients with chronic conditions. While the administration has acknowledged that
placing all or most medicines on the highest cost tiers is discriminatory, now is the time to take the next step to ban this
discriminatory practice,” PhRMA wrote.
But the insurance industry argues that the study leaves out a major factor — the price of the drugs. “This
report ignores a fundamental barrier to patient access of prescription drugs: the unsustainable prices of these medications,” says America’s Health Insurance Plans (AHIP) spokesperson Clare Krusing. “Health plans offer a wide range of
coverage choices, including those with lower levels of cost-sharing, so patients can choose the option that works best for
their health and financial needs. But benefit design alone cannot address the underlying cost and dramatic increases in the
cost of prescriptions,” she said.
AHIP also notes that the study only looked at Silver level plans, yet consumers do have the option of purchasing
Gold- or Platinum-level products, which typically have lower out-of-pocket costs.
The Avalere analysis examined the coverage offered for 20 drug classes in six states that relied on Healthcare.gov
(Florida, Georgia, Illinois, North Carolina, Pennsylvania and Texas) and in California and New York, and compared 2014
coverage to 2015 coverage. The analysis concludes that some exchange plans are placing all drugs — even generics —
used to treat certain condition in high-cost specialty tiers.
The study found that in five of the 20 drug classes, some plans placed all drugs on a specialty tier. In 2015, 29
percent of plans placed protease inhibitors used to combat HIV — even generics — on the highest-cost tiers, while 51
percent of plans placed all multiple sclerosis agents on the highest tier. However, in 2014 all protease inhibitors and MS
agents were placed in the highest-cost tiers in 16 percent and 42 percent of plans, respectively. The remaining three of the
five classes do not have generics.
Avalere further found that a subset of plans in 10 of the drug classes it reviewed placed all single-source branded
drugs in a class — or those without a generic equivalent — on a specialty tier. In eight of the 10 classes, 2015 exchange
plans were more likely than those in 2014 to do this, according to the report.
Avalere found that the practice is most common for some cancer drugs and drugs used to treat multiple sclerosis.
About 30 percent of plans also place all single-source drugs for HIV/AIDS on the specialty tier, Avalere found.
— Amy Lotven
GPhA To Form Biosimilar Division, Hopes To Attract Brand Drug Makers
MIAMI — The Generic Pharmaceutical Association (GPhA) is creating a new division designed to deal exclusively
with biosimilars with a separate board of directors, the association’s leaders announced at the group’s annual conference
in Miami this week, and sources say the trade group is courting brand biologic giant Amgen to join, but Amgen says it is
“satisfied with the balanced policies promoted by our existing trade associations.” Craig Wheeler, GPhA board of
directors chair and president of Momenta Pharmaceuticals, said the biosimilars division will start operating as soon as it
is approved by membership.
An industry consultant speaking on background said that GPhA is in talks with Amgen and said the company may
join once the division is off the ground. But Amgen says it was just talking about common policy interests with the
generic lobby.
“Amgen recognizes that manufacturers of biosimilar products may have some common interests in advocating for
sound government policies. To that end, we’ve engaged in selected consensus building discussions with members of
various trade groups, including GPhA.The recent consensus position among BIO and GPhA on state substitution policies
is a good example. However, there remain important differences in perspective about a sustainable framework for
biosimilars. We are satisfied with the balanced policies promoted by our existing trade associations,” Amgen said
Thursday (Feb. 12).
Amgen may soon face biosimilar competition on three of its products and is eying its own biosimilars as well.
GPhA’s move comes as FDA is expected to approve the first biosimilar next month — Sandoz’s filgrastim biosimilar
of Amgen’s biologic Neupogen. The agency is also reviewing a biosimilar of Amgen’s Neulasta and on Wednesday FDA
agreed to review Hospira’s biosimilar of Amgen’s Epogen.
“Like our industry, our association must evolve,” Wheeler said. “Our mission to ensure rapid access to fair and open
markets for affordable medicines is the same. But the structure and membership must evolve to ensure we remain relative
to this new world.”
Wheeler said the biosimilars division will have a separate board and budget, but will share most staff with the
association as a whole. The chair of the biosimilar division board will also sit on the full GPhA board, and new members
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to the biosimilar division will have full membership rights and responsibilities in the lobbying organization,
Wheeler said.
“Our association again will increase its diversity as we welcome biosimilar competitors from the traditional brand
industry into our association,” Wheeler said. “Without them it will be impossible to serve as the representative voice of
the industry.”
Ralph Neas, outgoing GPhA CEO and president, echoed Wheeler’s statements, saying, “We need to continue
transforming into an association that represents the interests of all companies engaged in manufacturing and generic and
biosimilar medicines.”
“It includes the smaller and midsized companies as well as the large cap global firms. And it includes those who
operate only in the generic space as well as those hybrid companies that market both generic and branded drugs,” he said.
GPhA’s announcement of its biosimilar division comes as FDA is expected to approve the first biosimilar. In January
an FDA advisory panel unanimously recommended that the agency approve Sandoz’s filgrastim biosimilar of Amgen’s
Neupogen. Given the timeline established by the Biologic Price Competition and Innovation Act, FDA has until March to
make a decision on Sandoz’s application and most stakeholders expect the agency to approve it as the first U.S.
biosimilar.
Including Sandoz’s filigrastim FDA is considering five biosimilar applications that were submitted in 2014. The
agency’s Arthritis Advisory Committee will review the second application for Celltrion, Inc.’s infliximab biosimilar of
Janssen Biotech Inc.’s Remicade used to treat Crohn’s Disease on March 17. If approved, Celltrion’s biosimilar will be
marketed and sold by Hospira Inc.
Other biosimilar applications quickly making their way through the pipeline include Apotex’s pelfilgrastim biosimilar
of Amgen’s Neulasta and Hospira’s epoetin alfa biosimilar of Amgen’s Epogen and Janssen’s Procrit. The fifth biosimilar
application submitted to FDA in 2014 has not been made public.
As the agency prepares for the first biosimilar approvals many issues are still left unresolved including labeling,
interchangeability and naming. Wheeler and Neas said GPhA will continue to work on these issues this year. FDA has
said it will release draft guidance on labeling and interchangeability in 2015, and many stakeholders have said they
expect the agency to show its hand in the naming debate when it approves the first application.
In his state of the association address Tuesday Neas also pointed to GPhA’s success in drafting compromise language
with the Biotechnology Industry Organization (BIO) and the Pharmaceutical Research and Manufacturers of America
(PhRMA) concerning states’ attempts to regulate biosimilar substitution.
“I believe without a doubt that this association’s strong resolve and unyielding commitment to assuring unimpeded
access to biosimilars, and our victories in a substantial majority of the state contests, are responsible for driving the
parties to the negotiating table,” Neas said. — Todd Allen Wilson
PwC Study Shows Industry Shift In Thinking On FDA Considering Rx Costs
In a dramatic attitude shift more than 40 percent of pharmaceutical and life sciences executives are open to the idea
of FDA using economic and clinical values as a factor in drug approval, according to a recent survey by
PricewaterhouseCoopers’ (PwC) Health Research Institute. Cost and economic value are outside the FDA’s purview when
evaluating drugs for approval but 43 percent of respondents told PwC they would approve of the agency factoring
economic value into the approval process. This marks a 29 percentage point jump from a 2010 PwC survey where only
14 percent of respondents said they would be on board.
Michael Mentesana, principal and research and development advisory leader at PwC, told Inside Health Policy that
the shift in attitudes of industry leaders is a “natural evolution” as the market place has evolved since the Affordable Care
Act passed with a focus on containing costs in health care. The change in thinking can be related to a number of factors,
including: the ACA; consumer, provider and payer pressures; and other European countries using cost as a factor in drug
approval, he said.
Mentesana said the results of the survey don’t mean the the pharmaceutical is saying FDA should be considering
cost as a factor, just that the industry is less hostile to the idea, noting that the agency probably isn’t going to start looking
at cost any time soon.
“This is a measure they would accept, or they’re coming around to the idea of looking at in addition to clinical
benefit: looking at long-term value, and what does that total cost of care position look like in the marketplace,”
Mentesana said. “I really think it’s a marketplace and attitude shift between the industry and its regulator.”
The study finds that continued movement in healthcare from fee-for-service payment to a value-based model is
placing new demands on pharma and life sciences companies to demonstrate value and justify their costs. “Rising
concerns about the price of new therapies reinforces this push,” concludes the study, “The FDA and industry: A recipe for
collaborating in the New Health Economy.”
High-priced specialty drugs like new hepatitis C cures are spurring the debate, the study notes. Gilead Sciences’
hepatitis C cure Harvoni came in at over $90,000 for a 12-week treatment regimen, and AbbVie’s Viekera Pak cost about
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$84,000 for a full course. State Medicaid programs and private payers have been scrambling to figure out how to pay for
these drugs.
In December America’s Health Insurance Plans CEO Karen Ignagni said cost-cutting goals in the health care industry
will be unachievable if the pharmaceutical industry continues to have a “blank check.”
“The recognition of the problem is the idea that we can no longer continue a system where one sector expects
a blank check,” Ignagni said at an IIR-sponsored FDA/CMS Summit in Washington. “That’s the way the system has
been organized, and that doesn’t work if the goal is affordability.”
The PwC study notes that payers are asking drug manufacturers to justify their prices before placing them on
their formularies. In December, Express Scripts cut a deal with AbbVie to get a discount on Viekera Pak in exchange for
including it exclusively on its formularies at the expense Harvoni.
The study says Scott Josephs, national medical officer at insurance company Cigna Corp., summed up the dynamic at
an Advanced Medical Technology Association meeting in October saying, “We don’t want to squelch innovation. But tell
me what I’m getting for my health care costs. Show me that these new technologies are superior.”
PwC’s study also noted 51 percent of consumers surveyed said FDA should take cost of a drug or medical device into
account when considering approval. This was the first time PwC included consumers in its periodic study, Mentesana
noted.
The study points out that providers are also taking drug costs into account before prescribing a product. A
separate recent PwC survey showed that 54 percent of clinicians said they “considered cost to a significant degree,” and
only 1 percent of respondents said they didn’t consider cost at all before writing a prescription.
As drug and device manufacturers now function in the global marketplace to a large degree, the study notes, they
deal with regulators that do consider cost as part of the approval process, like Germany and the United Kingdom.
Mentesana said it is difficult to apply those countries’ regulatory schemes to FDA, because they operate in single payer
markets, but it is a factor in shifting attitudes within the industry. — Todd Allen Wilson
FDA Takes Up Hospira Biosimilar Of Epogen, Must Decide By October
FDA has agreed to review Hospira, Inc.’s biosimilar application for an epoetin alfa biosimilar called Retacrit,
according to a letter Wednesday (Feb. 11), coming in the wake of the agency’s announcement it will hold an advisory
committee meeting next month on a separate infliximab biosimilar that Hospira is developing with Celltrion. This marks
the fourth biosimilar application that industry has said FDA has agreed to review, although the agency recently alluded
that it has received a fifth application.
Hospira filed the application for its epoetin alfa biosimilar in December 2014, and FDA said its user fee goal date for
the application is this October.
The drug, a biosimilar of Amgen’s Epogen and Janssen’s Procrit, is designated to treat anemia associated with
chronic renal failure and chemotherapy, according to a 2007 press release announcing its approval in Europe.
This is the second of Hospira’s biosimilar applications to be taken up by the agency, with the first application, filed
by the company’s business partner Celltrion, to be discussed at an advisory committee meeting in March.
“Together with our partner, Celltrion, Hospira looks forward to continuing our work with the FDA on the approval
pathway for biosimilar infliximab,” said the Hospira spokesperson, referring to the company’s first application.
Hospira believes FDA should approve its infliximab biosimilar with the trade name Inflectra and with the
same International Nonproprietary Name as the reference product, infliximab, while noting the naming decision,
including its INN, will ultimately be determined by the agency. Hospira says this had been its experience in other regulated markets and “leads to greater patient safety and less healthcare provider confusion on biosimilars.” Hospira’s
infliximad drug is a biosimilar of Jansen Biotech’s Remicade.
Hospira and Celltrion entered a business cooperation agreement for biogeneric products, according to a 2009 press
release, which states that after regulatory approval, both companies would co-exclusively market the drugs, with the
products independently commercialized under each party’s brand name.
In addition to Hospira’s two biosimilar applications, FDA is also looking at Sandoz’s filgrastim biosimilar of
Amgen’s Neupogen and Apotex’s pelfilgrastim biosimilar of Amgen’s Neulasta, and the agency alluded in a recent
report on work hours needed to review applications that there may be a fifth. The agency is expected to approve Sandoz’s
filgrastim biosimilar for Amgen’s Neupogen in March following an FDA advisory panel’s recommendation last month
that Sandoz had shown biosimilarity to Neupogen. Should FDA approve Sandoz’s product it would be the first biosimilar
approved in the United States since passage of the Biologics Price Competition and Innovation Act created a pathway for
biosimilars in 2010.
The FDA does not publicly announce the submission of drug and device applications, but individual sponsors can
announce their submissions if they choose. — Erin Durkin
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AdvaMed Builds on Cures Bill’s Breakthrough Devices Plan In 2015 Wish List
The Advanced Medical Technology Association’s wish list for 2015 encompasses key provisions in the House
Energy and Commerce Committee’s 21st Century Cures draft bill, the group said this week, including a proposal to
expand FDA’s proposed priority review program for premarket approval devices to also include 510(k)s and de novo
products.
AdvaMed suggested the change last year in comments on a draft guidance outlining FDA’s intent to expedite medical
device applications that address an unmet Medical need for life-threatening or irreversibly debilitating diseases or
conditions. AdvaMed suggested the priority designation be expanded to include more devices — a proposal that ultimately made it into the draft Cures bill. The device industry group argued that 510(k) devices should be included because
some meet clinical criteria for breakthrough products. AdvaMed’s proposal builds on the FDA guidance by adding a
designation process and clarifying the criteria for designating a breakthrough technology.
“The expedited review guidance document that FDA has issued provides a great foundation. We think our pathway
proposal just builds on that,” said Janet Trunzo, AdvaMed’s senior executive vice president of technology and regulatory
affairs. “It provides more clarity around what products meet the criteria for breakthrough designation, it provides a
process of how a designation can occur,” she added.
Stephen Ubl, AdvaMed president and CEO, said his group views the House bill as an opportunity to further the
industry’s goals of increasing patient access and streamlining innovation approvals.
Another FDA-centric priority by AdvaMed in its innovation agenda is to push a Cures bill provision, which lawmakers are still working out language for, that would essentially allow third-parties discern if changes made to a device are
small enough that the product can skip the 510(k) process. The idea, according to AdvaMed, is to relieve FDA of the
burden of that seemingly tedious responsibility.
AdvaMed’s other priorities include calling for FDA to:
• Meet and exceed the groundbreaking 2012 user fee agreement goals for such key objectives as reductions in total
review times and more frequent and substantive interactions between FDA and product sponsors.
• Revitalize the “least burdensome standard” for regulatory review through enhanced reviewer training and encouraging the use of valid scientific evidence from such sources as registries, experience in foreign markets, and peer-reviewed
journal articles where appropriate to support safety or effectiveness determinations.
• Accept international consensus standards.
• Streamline the CLIA waiver process to accelerate the availability of point-of-care, rapid diagnostic information to
physicians and patients.
• Allow the use of central Institutional Review Boards to facilitate the conduct of multicenter clinical trials.
• Improve the advisory committee process to reduce delays in product approvals and enhance the fairness and
transparency of the process.
• Encourage the development of technologies for rare diseases and pediatric populations.
• Work with industry to assure that post-market surveillance is effective and efficient; provides timely, reliable, and
actionable data; minimizes unnecessary burdens on providers and industry; and is facilitated by smooth implementation
of the Unique Device Identifier program.
Still top of the group’s 2015 wish list is repealing the ACA’s medical device tax that Ubl said has caused about
18,500 jobs to close down. He noted that repealing the tax has bipartisan support in Congress. The ACA provision
imposes a 2.3 percent sales tax on medical devices manufactured by about 7,000 companies nationwide, AdvaMed says.
Although there have been several legislative efforts to repeal the tax, no solution has been found to make up for the
almost $30 billion deficit a full repeal would create over the next seven years.
“Repealing the medical device tax may or may not require an offset,” Ubl said. “If it does require a pay-for, we are
going to be working very closely with those legislative champions in the development of ideas. But they’re the ones that
are ideally positioned to survey the landscape of overall possible offsets.” — David Hood
HHS Waits To Decide On Tax Filing Special Enrollment Period
HHS Secretary Sylvia Burwell said Wednesday (Feb. 18) that the department is still weighing whether to create a
special enrollment period for those who file their taxes after Feb. 15 and realize they will be penalized for failing to buy
health coverage for 2014, but this week officials were busy touting enrollment figures in the wake of the Feb. 15 enrollment deadline. Lawmakers and consumer advocates have pushed the Obama administration to issue a SEP for Americans
who were unaware of the individual mandate, which requires people to purchase coverage or face a fine, in the first year
of insurance sign-ups under the Affordable Care Act.
Anyone who did not purchase health insurance last year and did not earn a hardship exemption will be required to
pay the higher of two amounts when filing their 2014 federal tax return: either 1 percent of their yearly household
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income, with a maximum penalty equaling the national average premium for a bronze plan; or $95 per adult for the year
and $47.50 per child, with a maximum penalty of $285 per family. Those amounts are set to increase each year.
A new SEP for the previously uninsured could bump up the total number of sign-ups in the 2015 open enrollment period — currently at 11.4 million people nationwide as of Feb. 15, HHS said Tuesday.
Around 8.6 million of those consumers bought coverage or were automatically re-enrolled through the federal
marketplace, while about 2.8 million consumers did so through state-based exchanges, HHS announced in its preliminary
analysis Wednesday. Florida and Texas led the FFM states in enrollment at 1.6 million and 1.2 million, respectively.
Health Access CA also reported Tuesday that 1.4 million people are enrolled through the Covered California exchange, accounting for half of state exchange sign-ups in preliminary estimates.
HHS is giving those who were still “in line” to purchase coverage through Healthcare.gov at midnight Sunday
— fewer than 150,000 people — an extra week to finish enrolling by Feb. 22. Nearly every state extended its enrollment deadline to allow residents to finish their applications, with new cutoff dates spanning from Tuesday (Feb. 17) in
Vermont to April 15 in Washington state.
Sign-ups hit a snag Feb. 14 when a site glitch stopped an estimated 500,000 first-time customers from verifying their
income, a technical problem more reminiscent of the exchanges’ initial rollout than their smoother second year. The issue
affected hundreds of thousands of consumers using Healthcare.gov and other state-based marketplaces like Massachusetts’ Health Connector and Washington state’s Healthplanfinder for at least six hours Saturday evening.
HHS said it worked with the IRS to solve “intermittent issues with external verification sources,” and the glitch was
cleared up in time for the last day of open enrollment.
While HHS said Tuesday that Sunday’s deadline spurred the most sign-ups in one day since the federal marketplace
opened for business in October 2013, Burwell told reporters the official daily enrollment total has not been confirmed.
Burwell did not have a final count of Americans who were eligible for subsidies. She cited Jan. 30 numbers that
showed 87 percent of 2015 enrollees, or 6.5 million people, received tax credits toward their premiums. HHS will
analyze the most recent numbers and release an updated, higher figure of subsidized customers, Burwell said.
The total number of Americans who effectuated, or paid for, their 2015 coverage has yet to be seen. Burwell said
HHS is focused on hitting its goal of 9.1 million paid enrollments, around 2.5 million more sign-ups than the exchanges
saw in the first open enrollment period. Because customers are added and dropped throughout the year, there will not be a
complete picture until shortly before 2016 open enrollment begins.
Burwell declined to say what that date would be, as the administration is preparing to release its final 2016 benefits
and payment parameters regulation in the next few weeks — including new guidance that could set standardized open
enrollment dates in stone for future plan years. HHS proposed establishing a sign-up period from Oct. 1 to Dec. 15 each
year, a move supported by many states, consumer groups and other advocates for its uniformity and simplicity. Other
stakeholders believe the open enrollment period should extend through the end of tax filing season on April 15.
Burwell added that the total effectuated enrollments in 2014 will drop to a minimum of 6.5 million, after as
many as 200,000 people whose immigration status cannot be verified lose coverage at the end of the month. Those
people are not included in the 8.6 million federal enrollment figure. — Rachel S. Karas
AdvaMed Pushes For Coverage Of Clinical Trials, Costs Of New Tech
The Advanced Medical Technology Association is lobbying to get Medicare to cover beneficiaries’ costs of participating in clinical trials and to help pay hospitals for the cost of new technology.
Don May, a lobbyist for AdvaMed, said Medicare pays beneficiaries to participate in drug trials, and AdvaMed is
asking CMS to treat medical devices the same. Unlike with drug trials, “to get the study covered for new technology they
have to go through a lengthy process,” May said. He said device-trial participation is usually approved, and industry
merely wants CMS to get rid of the red tape.
AdvaMed is also hoping to make changes to new technology add-on payments, which pay hospitals to offset the costs
of using new medical devices. In addition to the rate Medicare normally pays for procedures, it reimburses hospitals for
half of the additional cost of using new technology. AdvaMed wants Medicare to cover the entire additional cost of new
technology.
The group also wants more coverage of their telehealth devices, which May said allow doctors to remotely monitor
patients and could help coordinate care. May said these devices would be useful for patients who struggle to make it to
the doctor because devices instead allow physicians monitor those patients. AdvaMed wants the devices temporarily
covered for three to five years, and Medicare only would pay long-term for devices that demonstrate that they save the
system money.
Finally, the group wants to work on the product codes, which determines how Medicare pays for them. May said
companies should be given 60 days to comment on proposed local coverage determinations and Medicare Administrative
Contractors should be required to explain coverage decisions. — Rebecca Beitsch
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