Capital Thinking: Health Care Legislative Update

House Committee on Energy and Commerce to Mark Up Health Legislation

The House Committee on Energy and Commerce has announced that it will hold a markup on Tuesday, July 28. Several health bills are on the agenda: H.R. 1344, the Early Hearing Detection and Intervention Act of 2015, which reauthorizes a program for early detection, diagnosis, and treatment regarding deaf and hard-of-hearing newborns, infants, and young children; H.R. 1462, the Protecting Our Infants Act of 2015, which seeks to reduce the rise of prenatal opioid abuse and neonatal abstinence syndrome through improving data and developing recommendations for prevention and treatment; H.R. 1725, the National All Schedules Prescription Electronic Reporting Reauthorization Act of 2015, which amends and reauthorizes the controlled substance monitoring program under the Public Health Service Act; and H.R. 2820, the Stem Cell Therapeutic and Research Reauthorization Act of 2015, which reauthorizes the National Cord Blood Inventory program and the C.W. Bill Young Cell Transplantation Program.

Potential Senate Vote on Obamacare Repeal This Week

On Sunday, July 26, the Senate Republicans failed to attach an Affordable Care Act (ACA) repeal provision to the highway funding bill. The amendment fell on a partisan 49-43 vote, but eight senators were absent from the weekend proceedings. Sen. Mike Lee (R-UT) is expected to propose a procedural motion early this week that would allow approval of the Obamacare repeal provision with a simple majority vote.

House Committee on the Judiciary Announces Fall Hearings on Health Care Competition

On Thursday, July 23, House Committee on the Judiciary Chairman Bob Goodlatte (R-VA), Ranking Member John Conyers Jr. (D-MI), Subcommittee on Regulatory Reform, Commercial and Antitrust Law Chairman Tom Marino (R-PA), and Subcommittee on Regulatory Reform, Commercial and Antitrust Law Ranking Member Hank Johnson (D-GA) announced that the Committee plans to hold a series of hearings to explore competition in the U.S. health care marketplace. According to the Committee, the first hearing in September will consider the role the ACA has played in the consolidation of the industry. It will also examine any impacts on care accessibility and affordability for consumers. The second hearing will focus on consolidation within the industry, including the proposed mergers between Aetna and Humana and Anthem and Cigna.

Last week, Anthem Inc. agreed to purchase Cigna Corp. for $48.4 billion, which would create the largest health insurer in the country if the deal passes regulatory muster. Several weeks ago, Aetna Inc. agreed to buy Humana Inc. for $34 billion.

This Week’s Hearings:

  • Tuesday, July 28: The House Committee on Ways and Means Subcommittee on Health will hold a hearing to discuss rural health care disparities created by Medicare regulations.
  • Tuesday, July 28: The House Committee on Education and the Workforce will hold a hearing titled “Reviewing the Policies and Priorities of the U.S. Department of Health and Human Services.” The Honorable Sylvia Mathews Burwell is slated to testify.
  • Tuesday, July 28: The House Committee on Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing titled “Continuing Concerns with the Federal Select Agent Program: Department of Defense Shipments of Live Anthrax.”
  • Tuesday, July 28: The House Committee on the Judiciary Subcommittee on Crime, Terrorism, Homeland Security, and Investigations will hold a hearing titled “America’s Growing Heroin Epidemic.”
  • Tuesday, July 28: The House Committee on Energy and Commerce will hold a markup to consider H.R. 985, Concrete Masonry Products Research, Education, and Promotion Act of 2015; H.R. 1344, Early Hearing Detection and Intervention Act of 2015; H.R. 1462, Protecting Our Infants Act of 2015; H.R. 1725, National All Schedules Prescription Electronic Reporting Authorization Act of 2015; H.R. 2820, Stem Cell Therapeutic and Research Reauthorization Act of 2015; and H.R. 3154, E-Warranty Act of 2015.
  • Wednesday, July 29: The Senate Committee on Indian Affairs will hold a hearing titled “Examining the True Costs of Alcohol and Drug Abuse in Native Communities.”
  • Thursday, July 30: The House Committee on Agriculture Subcommittee on Livestock and Foreign Agriculture will hold a hearing titled “Examination of Federal and State Response to Avian Influenza.”
  • Friday, July 31: The Senate Special Committee on Aging will hold a field hearing in St. Louis, Missouri titled “Celebrating Medicare: Strengthening The Program For The Next 50 Years.”

Capital Thinking: Health Care Legislative Update

Republicans Postpone Reconciliation Actions Until After August Recess

With the August District Work Period only weeks away, House Committee on the Budget Chairman Tom Price (R-GA) announced this past week that the House Committee on the Budget would not act on reconciliation until after the lawmakers reconvene in September. The three House committees and two Senate committees with health care jurisdiction are not expected to report their proposals until after the August recess.

Some Republican lawmakers have been proponents of using this fast-track budget maneuver to repeal the Affordable Care Act (ACA), while others have questioned whether this process could be better used to achieve other policy objectives, such as tax reform. The budget resolution provided for a July 24 deadline for the committees with health care jurisdiction to determine a repeal plan, though there are no consequences for missing this deadline. Senate Majority Leader Mitch McConnell (R-KY) has supported the use of reconciliation to dismantle portions of the ACA, but has stated that there is no definitive timeline.

This Week’s Hearings:

  • Wednesday, July 22: The House Committee on Veterans’ Affairs will hold a hearing titled “To Receive the Secretary’s Testimony Regarding the Pending VA Health Care Budget Shortfall and System Shutdown.”
  • Wednesday, July 22: The House Committee on Ways and Means Subcommittee on Health will hold a hearing with the Medicare Payment Advisory Commission (MedPAC) to discuss hospital payment issues, rural health issues, and beneficiary access to care.
  • Wednesday, July 22: The House Committee on Veterans’ Affairs Subcommittee on Health will hold a markup of pending health care legislation.
  • Wednesday, July 22: The Senate Special Committee on Aging will hold a hearing titled “The Doctor’s Not In: Combating Medicare Provider Enrollment Fraud.”
  • Wednesday, July 22: The Senate Committee on Veterans’ Affairs will hold a markup of pending legislation. The following bills are on the agenda: S. 1493, Veterans’ Compensation Cost-of-Living Adjustment Act of 2015; S. 1203, 21st Century Veterans Benefits Delivery and Other Improvements Act; S. 1028, Department of Veterans Affairs Accountability Act of 2015; S. 833, Department of Veterans Affairs Medical Facility Earthquake Protection and Improvement Act; S. 627, a bill to prohibit the Secretary of Veterans Affairs from awarding bonuses to employees of the Department of Veterans Affairs with respect to whom an adverse finding has been made by the Secretary, and for other purposes; and S. 469, Women Veterans and Families Health Services Act of 2015.
  • Thursday, July 23: The Senate Committee on Health, Education, Labor, and Pensions (HELP) will hold a hearing titled “Achieving the Promise of Health Information Technology: Information Blocking and Potential Solutions.”
  • Friday, July 24: The House Committee on Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing titled “An Overdue Checkup: Examining the ACA’s State Insurance Marketplaces.”

Capital Thinking: Health Care Legislative Update

Republicans Consider Obamacare Repeal Through Reconciliation

Some GOP lawmakers continue to advocate for an Affordable Care Act repeal via the budget reconciliation process. Others, however, have been questioning whether this budget tactic would be better used for different policy objectives, such as tax reform.

The budget resolution provided a July 24 deadline for the committees with health care jurisdiction to determine a repeal plan. House Committee on Ways and Means Chairman Paul Ryan (R-WI) is reportedly planning to meet the deadline. He has said that many House Republicans “want to use reconciliation to go after Obamacare.” However, Sen. John Barrasso (R-WY) has noted there is “no timeline on the reconciliation bill, so it can be used at any point.” Senate Committee on Finance Chairman Orrin Hatch (R-UT) and Senate Committee on Health, Education, Labor, and Pensions (HELP) Chairman Lamar Alexander (R-TN) have both stated that they have not written reconciliation plans. Both chairmen believe such plans should be drawn up by Senate leadership.

This Week’s Hearings:

  • Tuesday, July 14: The House Committee on Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing titled “Medicare Part D: Measures Needed to Strengthen Program Integrity.”
  • Tuesday, July 14: The House Committee on Veterans’ Affairs Subcommittee on Health will hold a hearing focused on health care legislation titled “H.R. 272; H.R. 353; H.R. 359; H.R. 421; H.R. 423; H.R. 1356; H.R. 1688; H.R. 1862; H.R. 2464; H.R. 2914; H.R. 2915; H.R. 2016; and, Draft Legislation to Authorize VA Major Medical Facility Construction Projects for FY 2015 and to Make Certain Improvements in the Administration of VA Medical Facility Construction Projects.”
  • Tuesday, July 14: The Senate Committee on Commerce, Science, and Transportation Subcommittee on Space, Science, and Competitiveness will hold a hearing titled “Unlocking the Cures for America’s Most Deadly Diseases.”
  • Wednesday, July 15: The Senate Special Committee on Aging will hold a hearing titled “Diabetes Research: Improving Lives on the Path to a Cure.”
  • Thursday, July 16: The Senate Committee on Finance will hold a hearing titled “Reviewing HealthCare.gov Controls.”

CMS Surreptitiously Proposes to Amend the Two-Midnight Rule Before the Fourth of July Weekend

Like an episode of The West Wing, CMS followed the venerable tradition of announcing “bad news” before the start of a long holiday weekend.  Last Monday, we predicted that the Medicare Payment Advisory Commission’s (MedPAC) June Report would be the final straw to pressure CMS to amend its controversial Two-Midnight Rule.

Two days later, on July 1st, CMS succumbed to that pressure by proposing changes to the Rule in the CY 2016 OPPS proposed rule.[i]  CMS proposed to allow hospitals, “on a case-by-case basis,” to receive Part A reimbursement for patients whose stay is expected to last less than two midnights.  The following factors would be considered in determining whether a patient stay of less than two midnights qualified for Part A reimbursement:

  1. The severity of the signs and symptoms exhibited by the patient;
  2. The medical predictability of something adverse happening to the patient; and
  3. The need for diagnostic studies that are typically outpatient services.

CMS also proposed that Quality Improvement Organization (QIO) contractors, rather than Medicare Administrative Contractors (MACs) or Recovery Audit Contractors (RACs), conduct reviews of short inpatient stays.  QIOs would refer claim denials to MACs for payment adjustments.  Provider appeals of denied claims would be covered under the provisions of 42 U.S.C. § 1395ff.  In addition, providers with consistently high denial rates would be referred to RACs for further claims auditing.

Despite these proposed changes to the Rule, CMS declined to reconsider its 0.2% reduction to the IPPS standardized amount that it instituted during the FY 2014 IPPS rulemaking to offset the effects of the Rule.  Specifically, CMS estimated that as a result of the new policy, 40,000 net new patient encounters of more than two midnights would shift from being reimbursed on an outpatient basis to an inpatient basis.  Put another way, CMS somehow calculated that increasing the minimum expected inpatient stay from one to two midnights would also increase the number of inpatients.  Several hospitals and trade associations are challenging CMS’s “fuzzy math” in federal court; as a result, we recommend that all providers preserve their appeal rights by protesting, at a minimum, the 0.2% reduction to the standardized amount in their cost reports.  We also recommend that providers protest any reimbursement amounts lost as a result of complying with the Rule.  A refresher on the cost report appeals process for both self-disallowance and late NPRs is available here.  As we discussed last week, it’s not too late to challenge the 0.2% reduction for FY 2014, and doing so now on a cost report can be viewed as a cost-effective call option to challenge the Rule after pending cases have been resolved.

Lastly, if you are interested in submitting comments on the proposed changes to the Two-Midnight Rule, CMS will accept comments until 5 p.m. EST on August 31, 2015.  The Final Rule is expected to be issued around November 1st.

[i] The Fact Sheet for the Rule available is available here.

Context is King: Analysis of the US Supreme Court Decision in King v. Burwell

Our public policy and healthcare teams recently published a piece analyzing the King v. Burwell decision and its implications. See Context is King:  Analysis of the US Supreme Court Decision in King v. Burwell.

 In this piece, we discuss (1) the highlights of the decision’s rationale; and (2) immediate implications of the decision. There are, however, implications of the decision that will not be immediately apparent. If you would like to remain informed of our continuing analysis and publications regarding this issue, please subscribe here.

Capital Thinking: Health Care Legislative Update

House to Consider 21st Century Cures Act

Majority Leader Kevin McCarthy (R-CA) has announced that the House of Representatives will consider H.R. 6, the 21st Century Cures Act, this week. The House Committee on Rules will meet to consider the rules for the debate on Wednesday, July 8. Amendments to the legislation are to be filed by Tuesday, July 7.

This legislation that was released in advance of the Committee on Rules consideration includes changes to the regulatory authority of the Food and Drug Administration, as well as provisions focused on health information technology, research, telemedicine, drug manufacturing and development, and young scientists.

While the legislation would increase funding for the National Institutes of Health by approximately $8.75 billion over the next five years, this figure falls short of the $10 billion that the House Committee on Energy and Commerce approved in May. Three Democratic supporters of the legislation – House Committee on Energy and Commerce Ranking Member Frank Pallone (D-NJ), Rep. Diana DeGette (D-CO), and Rep. Gene Green (D-TX) – have expressed their disappointment with this decrease in funding and vowed to find additional means to fill the “funding hole.”

This new version of the legislation includes a Sense of Congress which states that the HIPAA regulation should not be used to prevent proper data sharing. Additionally, new electronic health record interoperability language would require the Department of Health and Human Services to provide rules for interoperability standards and implementation specifications. It would also abolish the Standards Committee and restrict the role of the Office of National Coordinator Policy Committee.

Policymakers have wrestled with how to pay for the bill’s large price tag and some of the offsets have been controversial. A Congressional Budget Office estimate from July 2 states that the legislation would cut federal spending by about $470 million through 2025. The legislation includes the following offsets: drawing down the Strategic Petroleum Reserve; limiting Medicaid payments for durable medical equipment to Medicare rates; changing payments for Part B drugs administered through durable medical equipment and for X-ray imaging; excluding authorized generics from calculation of average manufacturer price; and establishing programs aimed at preventing prescription drug abuse under Medicare Parts C and D. Unlike the previous version of the bill, the current version would not delay certain Medicare prescription drug plan prepayments. America’s Health Insurance Plans (AHIP) had come out against the Medicare Part D offset, and the Advanced Medical Technology Association (AdvaMed) has expressed concerns on the durable medical equipment offset.

The bill currently has 230 bipartisan cosponsors.

This Week’s Hearings:

  • Tuesday, July 7: The Senate Committee on Health, Education, Labor, and Pensions (HELP) Subcommittee on Primary Health and Retirement Security will hold a hearing titled “Small Business Health Care Challenges and Opportunities.”
  • Wednesday, July 8: The House Committee on Energy and Commerce Subcommittee on Health will hold a hearing titled “Medicaid at 50: Strengthening and Sustaining the Program.”
  • Wednesday, July 8: The House Committee on Rules will meet to determine the rules for debate of H.R. 6, the 21st Century Cures Act.
  • Wednesday, July 8: The Senate Committee on Homeland Security and Governmental Affairs will hold a hearing titled “Stopping an Avian Influenza Threat to Animal and Public Health.”

The Hits Keep On Coming for CMS – MedPAC Supports Rescission of the Two- Midnight Rule

The Medicare Payment Advisory Commission (MedPAC), recently issued its June Report to Congress.  Echoing the comments of the healthcare community, MedPAC recommended that CMS rescind its Two-Midnight Rule.

As a reminder, CMS implemented the Two-Midnight Rule in the FY 2014 IPPS Rulemaking. There are three main elements to the Rule:

  1. Amended the definition of “inpatient” to mean an admitted patient who is expected to require a minimum stay spanning two midnights.
  2. Implemented a new policy on when a hospital can request – and receive – payment if a patient is improperly classified under the Rule as an inpatient, versus an outpatient.
  3. Implemented a requirement that there be a written physician order for every inpatient admission.

Not surprisingly, the Two-Midnight Rule has been controversial, and its enforcement has been delayed by both CMS and Congress.  Multiple pending cases are also challenging aspects of the Two-Midnight Rule.  As a result, MedPAC’s recommendation may be the final straw to pressure CMS to rescind the Rule.

Even if CMS rescinds the Two- Midnight Rule, providers should, at a minimum, remember to protest the 0.2% reduction to the standardized amount that CMS instituted in FY 2014 to finance the implementation of the Rule.  (In addition to the 0.2% reduction, providers can also protest the reimbursement amount lost as a result of complying with the Rule.)  A refresher on the cost report appeals process for both self-disallowance and late NPRs is available here.

It’s not too late to challenge the 0.2% reduction for FY 2014!

Largest National Health Care Fraud Take-Down in History Focuses on Medicare Part D

On the heels of its announcement that it is “hiring additional lawyers to look into taking more administrative actions against” physicians, the Office of Inspector General (OIG) recently filed 75 indictments and 14 complaints against various parties.  See the Fact Sheet.  The OIG’s “national sweep” yielded prosecution of $712 million in false billings and led to charges against 46 doctors and 197 others.  Most prosecutions were for egregious violations —billing for medically unnecessary and often never provided items or services.

This operation was unique in that it focused on Medicare Part D prescription drugs.  This is no surprise since spending for Part D has more than doubled since 2006, from $51.3 billion to $121.1 billion.  See HHS OIG Data Brief, June 2015.  Part of this increase is attributed to prescription drug abuse. Accordingly, prescription drug fraud schemes were one-third of the investigations.

Capital Thinking: Health Care Legislative Update

House to Continue Consideration of IPAB Repeal

Majority Leader Kevin McCarthy (R-CA) has announced that the House of Representatives will complete consideration of H.R. 1190, the Protecting Seniors’ Access to Medicare Act of 2015, this week. This bill repeals the sections of the ACA that establish the Independent Payment Advisory Board (IPAB), an entity to develop proposals to reduce spending growth in the Medicare program. The Congressional Budget Office (CBO) has estimated that the repeal would cost $7.1 billion from FY 2016 to FY 2025. The House Committee on Rules adopted an amendment, offered by Rep. Joe Pitts (R-PA), which offsets the repeal costs with funds from the ACA’s prevention and public health fund. The House began considering the bill last week but a vote was postponed. It currently has 235 bipartisan cosponsors.

Appropriations Committees Mark Up Health Legislation

Following Subcommittee action last week, the House Committee on Appropriations has announced it will hold a markup of the FY 2016 Labor, Health and Human Services, and Education bill on Wednesday, June 24. The draft legislation includes $153 billion in discretionary funding ($14.6 billion below the President’s budget request), with $71.3 billion for the Department of Health and Human Services (HHS) ($3.9 billion below the President’s budget request). The bill includes over $6 billion in funds for the Health Resources and Services Administration (HRSA) ($413 million below the President’s budget request), including $265 million for the Children’s Hospital Graduate Medical Education Program. Additionally, the bill provides the Centers for Disease Control and Prevention (CDC) $7 billion (equal to the President’s budget request), including $1.56 billion for Public Health Preparedness and Response; $31.2 billion for the National Institutes of Health (NIH) to increase several research initiatives ($100 million above the President’s budget request); and $3.3 billion for the Centers for Medicare and Medicaid Services (CMS) ($919 million below the President’s budget request). The bill does not include additional funding to implement the ACA. It prohibits funds from going to the “Center for Consumer Information and Insurance Oversight” and “Navigators” programs.

The Senate Committee on Appropriations Subcommittee on Departments of Labor, Health and Human Services, Education, and Related Agencies will hold a markup on its appropriations language on Tuesday, June 23. The legislation has yet to be released.

Chairman Upton Expected To Release Manager’s Amendment for 21st Century Cures Act

After announcing that the House floor will not consider the 21st Century Cures Act this month, Committee on Energy and Commerce Chairman Fred Upton (R-MI) stated that he plans to file a manager’s amendment for the bill this coming week. Lawmakers have been in discussions over the bill’s offsets, which have remained controversial since the Committee advanced the legislation last month. Offsets currently include delaying certain Medicare Part D plan prepayments, drawing down the Strategic Petroleum Reserve, limiting federal Medicaid reimbursement to states for durable medical equipment to Medicare payment rates, and limiting federal payment for X-ray imaging services that use film.  America’s Health Insurance Plans (AHIP) has come out against the Medicare Part D offset, which is expected to lower Medicare spending by about $5 billion to $7 billion. The Advanced Medical Technology Association (AdvaMed) has expressed concerns on the durable medical equipment offset, which is expected to save $2.8 billion.

Chairman Upton expects the Committee on Ways and Means to waive jurisdiction and agree to his manager’s amendment. He predicted a floor vote would occur in early July.

Stakeholder Comments Due for Senate Finance Committee’s Chronic Care Working Group

In May, the Senate Committee on Finance Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) announced the formation of a chronic care working group, to be co-chaired by Sens. Johnny Isakson (R-GA) and Mark Warner (D-VA). The committee’s working group has requested stakeholder input on strategies to improve outcomes for Medicare patients with chronic conditions, including the use of telehealth and remote monitoring technology. The deadline to respond to the committee’s working group is this Monday, June 22.

This Week’s Hearings:

  • Tuesday, June 23: The Senate Committee on Appropriations Subcommittee on Departments of Labor, Health and Human Services, Education, and Related Agencies will hold a markup on the Labor, Health and Human Services, Education, and Related Agencies Appropriations Act, 2016.
  • Wednesday, June 24: The House Committee on Ways and Means Subcommittee on Oversight will hold a hearing titled “Rising Health Insurance Premiums Under Obamacare.”
  • Wednesday, June 24: The House Committee on Energy and Commerce Subcommittee on Health will hold a hearing titled “Examining the Administration’s Approval of Medicaid Demonstration Projects.”
  • Wednesday, June 24: The House Committee on Appropriations will hold a markup on the FY 2016 Labor, Health and Human Services, and Education bill.
  • Wednesday, June 24: The Senate Committee on Veterans’ Affairs will hold a hearing titled “Pending Health Care and Benefits Legislation.”
  • Thursday, June 25: The House Committee on Energy and Commerce Subcommittee on Health will hold a hearing titled “Examining Public Health Legislation: H.R. 2820, H.R. 1344, and H.R. 1462.” H.R. 2820, the Stem Cell Therapeutic and Research Reauthorization Act, provides federal support for cord blood donation and research so as to increase patient access to transplant. H.R. 1344, the Early Hearing Detection and Intervention Act of 2015, reauthorizes a program for early detection, diagnosis, and treatment regarding deaf and hard-of-hearing newborns, infants, and young children. H.R. 1462, the Protecting Our Infants Act of 2015, develops recommendations and improves prevention, treatment, and data on prenatal opioid abuse and neonatal abstinence syndrome.

OIG Puts Muscle Behind Its Alert

Only two days after releasing its latest fraud alert, a deputy director from HHS’s Office of Inspector General announced that the OIG will be hiring additional attorneys to look into taking more administrative actions against physicians in their individual capacity. This announcement emphasizes that the OIG means serious business – not only is the OIG shifting its focus to the physicians themselves, but it is hiring a team of attorneys as further enforcement. In a related development, the Department of Justice recently reached a record settlement with a skilled nursing facility for paying physicians as medical directors under false contracts. This confirms that while the OIG is broadening its enforcement to individual physicians, the entities are not off the hook.

According to the Deputy Administrator and Director with CMS’s Center for Program Integrity, waste accounts for 30% of overall healthcare costs. It is increasingly clear that HHS intends to significantly reduce that percentage by now focusing on individual physicians rather than only going after the organizations that pay them.

Last week, we wrote about the OIG advising physicians to ensure their compensation arrangements reflect fair market value for bona fide services the physicians actually provide. In particular, the OIG mentioned medical directorships, which put physicians in a key position to generate business for the entity.

For those who missed our previous blog post, we noted that physicians should be careful to ensure their medical director agreements – in fact, any financial arrangement, such as office staff arrangements, contain fair market value compensation for services they actually provide. Moreover, it important for all physicians to begin building evidentiary support (e.g., documenting time spent performing tasks under the agreement) in case the agreement is challenged. Documentation will be important in order to show that compensation was in fact based on the services provided rather than for a physician’s past or future referrals.

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