Health Policy Report

The Week in Review

House and Senate lawmakers long ago abandoned Washington to hit the campaign trail. Both chambers are scheduled to resume legislative business one week after the midterms on Tuesday, November 13th. While the House’s schedule has yet to be announced, Senators are slated to take up the legislative vehicle (S.140) for Coast Guard reauthorization and consider the nomination of Michelle Bowman to be a member of the Board of Governors of the Federal Reserve.

The Week Ahead

Candidates in both parties are gearing up for an historic midterm election as voters will head to the polls and cast their ballots tomorrow (Tuesday). The 2018 midterms are widely viewed as a referendum on President Trump’s first two years in office — a dynamic that provides opportunities and challenges for both parties. 

For Democrats, recent polling suggests that the minority party is poised to take the House. FiveThirtyEight’s aggregate generic ballot poll currently shows Democrats leading by 8.1 points. A national margin of six points or greater usually indicates a “wave” election similar to results in 2006 when Democrats gained 31 seats in the House and six in the Senate. In addition to strong polling numbers, Democratic hopes for capturing the lower chamber are buoyed by favorable special election results, a slew of prominent GOP retirements, and strong anti-Trump sentiment in suburban districts held by Republican incumbents.

However, the outlook for the Senate paints a different picture as recent data indicates that the GOP is likely to retain their Senate Majority. Republicans came into 2018 with a favorable Senate map as Democrats have to defend 26 seats compared to the GOP’s eight. Of the 26 Democratic senators up for re-election, President Trump won 10 of their states — including five by double digits. Additionally, issues such as the Supreme Court and immigration appear to have boosted Republican Senatorial candidates in the closing weeks of the election.

As polling data and predictions continue to trickle in, it’s important to remember that dozens of races remain within the polling margins of error into the final hours of the 2018 campaign. High levels of enthusiasm on both sides have complicated the traditional political forecasting model for a midterm election, leaving election forecasters weary of repeating 2016 mistakes. Additionally, it remains to be seen how the unusually high number of “October surprises” — such as the deadliest anti-Semitic attack in US history, the divisive battle to confirm Supreme Court Justice Brett Kavanaugh, a wave of pipe bombs being mailed to critics of President Trump, and the emergence of a caravan of Central American asylum seekers — have impacted the overall political landscape.

CMS Finalizes Medicare Physician Payment and Quality Policies

The Centers for Medicare and Medicaid Services (CMS) released the final rule for the calendar year (CY) 2019 physician fee schedule (PFS) and Quality Payment Program (QPP) last Thursday. The two thousand page rule finalized policies around provider burden reduction, a payment reduction for new Part B drugs, alignment of interoperability policies for physicians and hospitals, site-neutral payment policies for nonexcepted off-campus provider-based departments, and coverage expansions for telehealth and virtual care. CMS released the proposed CY 2019 PFS and QPP rule on July 12, 2018, with several significant changes to payment methodologies, including for Part B drugs and evaluation and management outpatient visits. Most of the provisions of the final rule take effect January 1, 2019; however, CMS pushed the start date until CY 2021 for certain burden reduction proposals in response to concerns from the provider community and Congress.

CMS’ announcement of the rule emphasized the continuation of the administration-wide focus on burden reduction. The agency projects that overall the rule will save providers $87 million in administrative costs in 2019 through burden reduction, including through updated billing practices and requiring physicians participating in the Medicare Improvement Program (MIPS) to use recent certified electronic health record (EHR) technology to streamline data sharing to patients and between providers. Additionally, the administration is expected to highlight the payment reduction for new Part B drugs as consistent with its comprehensive drug pricing strategy. In a statement accompanying the rule, Health and Human Services (HHS) Secretary Alex Azar stated that, “Among other advances, improving how CMS pays for drugs and for physician visits will help deliver on two HHS priorities: bringing down the cost of prescription drugs and creating a value-based healthcare system that empowers patients and providers.” CMS invites comments and information on a few new or outstanding policies under considerations, with comments due 60 days after publication in the Federal Register.

HHS Sets January Implementation for Long-Delayed 340B Rule 

The Department of Health and Human Services (HHS) reversed its plans to delay a final rule on the 340B Drug Pricing Program, and announced in a notice of proposed rulemaking (NPRM) that the so-called ceiling price rule will go into effect January 1, 2019, instead of July 1, 2019 as announced earlier this year. HHS has delayed the effective date of the rule five times, leading the American Hospital Association and several other medical trade groups to sue the agency in September to force it to publish the delayed regulations. The pharmaceutical industry has opposed the rule, noting that the program needed stricter patient definition, eligibility requirements, and oversight.

The rule penalizes drug manufacturers for “knowingly and intentionally” charging a participating provider more than the ceiling price for a covered outpatient drug and outlines how ceiling prices are to be calculated. Additionally, the rule establishes a “penny pricing policy” for drugs when the price of a drug rises faster than the rate of inflation. HHS explained in its notice that that the finalization of the 340B rule "will not interfere with the development of additional drug pricing policies for Medicare, Medicaid, or the 340B program"— an indication that the agency is unlikely to pursue additional regulatory action on 340B. 

The Trump administration originally delayed the Obama-era rule by two years over concerns that drug pricing programs in development for Medicare and Medicaid would impact the 340B rule, and to allow for “a more deliberate process of considering alternative and supplemental regulatory provisions.” The rule was originally proposed in June 2015, and was not published as a final rule until January 2017. Although intended to go into effect March 2017, the rule was pushed back five times to July 1, 2019. Last week’s proposed rulemaking will bump up compliance by six months to January 1, 2019.

CMS Approves Wisconsin Request to Implement Medicaid Work Requirements

More than a month after Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma teased a new “innovative community engagement demonstration” in a speech at the 2018 Medicaid Managed Care Summit, CMS has approved an 1115 waiver application that allows Wisconsin’s Medicaid program to implement work requirements. The waiver will permit Wisconsin to mandate 80 hours per month of “community engagement activities” for certain childless adult beneficiaries as well as implement incentives to maintain healthy lifestyles. The approved language also included a benefit package expansion to cover substance abuse disorder (SUD) services, including care provided in an institution for mental diseases (IMD). Wisconsin is the first non-expansion state to receive CMS approval for waivers allowing work requirements for Medicaid.

The announcement of Wisconsin’s approval came less than a week after the Medicaid and CHIP Payment and Access Commission (MACPAC), a Congressionally-chartered legislative branch commission charged with advising Congress, CMS, and the states, recommended to Department of Health and Human Services (HHS) Secretary Alex Azar that HHS halt all new approvals of work requirement policies, citing concerns with their implementation in Arkansas and what commissioners perceived as an inadequate plan for evaluating work requirement policies. “We will not retreat from this position,” wrote Administrator Verma in a blog post published alongside the announcement, amid criticism from MACPAC and other observers. “Community engagement requirements in Medicaid are not a blunt instrument,” she added. “We have set high expectations for an independent evaluation to determine if the demonstration is delivering the results for which it was designed. We won’t rush to rash conclusions based on early findings, but will use those to discern best practices and inform our evaluative work.”

CMS Finalizes CY 2019 OPPS, ASC Payment System Rule

The Centers for Medicare and Medicaid Services (CMS) last Friday released Medicare’s Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System final rule for calendar year (CY) 2019. The final rule implements several policies that have drawn attention from stakeholders, including proposals for site neutral payment policies, extending the 340B Drug Pricing Program payment policies to hospital outpatient departments, and permitting payment for non-opioid therapies following a surgical procedure.

Consistent with other rules, CMS advanced changes to facilitate transition to value-based care, lower costs for patients – particularly costs incurred by Medicare beneficiaries – and administrative burden reduction for providers. The rule will reduce the volume of measures that ASCs and hospital outpatient departments must collect and report under Medicare’s quality reporting programs. CMS stated in a press release that it believes that these changes will reduce providers’ administrative burden by $27 million over two years. CMS Administrator Seema Verma also touted the site-neutral payment policies finalized in the rule, which CMS hopes will create a level playing field among different providers. “The final policies remove unnecessary and inefficient payment differences so patients can have more affordable choices and options,” she said. The rule is scheduled to be published in the Federal Register on November 21, 2018. It is being finalized with a comment period, and CMS welcomes comments on certain payment classifications until December 3, 2018. The provisions of this finalized rulemaking will take effect on January 1, 2019.