Health Policy Report

July 13, 2015

The Week in Review
Upon reconvening on Tuesday, both houses of Congress set to work on education bills that aim to provide a major update to the “No Child Left Behind” initiative that was a cornerstone of President George W. Bush’s domestic policy. The House version (H.R. 5) includes language that gives states much more flexibility in setting standards for teacher accountability, but per the bill’s language, those standards must include standardized test scores. While some Republicans rebelled against the bill, claiming that it did not allocate enough authority to the states, the measure passed on Wednesday by a narrow margin, 218-213. The Senate’s version (S. 1177) remains unfinished business and will be further debated this week.

Aside from education, the House considered sweeping healthcare legislation known as “21st Century Cures” last week, leading to a much-anticipated vote on Friday. The bill (H.R. 6) has enjoyed broad bipartisan support—passing unanimously out of the Energy and Commerce Committee in May—but was endangered by a contentious amendment proposed by Rep. David Brat (R-VA) that would have designated increases to the NIH and FDA budgets as discretionary spending rather than mandatory as had originally been proposed. However, on Friday, Brat’s amendment failed and the bill passed with a resounding vote of 344-77. Action now moves to the Senate, where the measure faces an uncertain future. 
The Week Ahead
Next week, debate on highway funding will heat up as the Senate Commerce, Science, and Transportation Committee is due to mark up a six-year funding measure on Wednesday. The bill (S. 1732) is part of the Senate’s work to address federal highway funding, which is currently slated to expire at the end of the month. Senators on the Banking, Housing, and Urban Affairs Committee are also due to hear from Consumer Financial Protection Bureau (CFPB) Director Richard Cordray in his semi-annual report to Congress.
On the other side of the Capitol, the appropriations battle is set to continue as a Financial Services spending bill reaches the House floor. The bill would provide $20.2 billion in discretionary funding—a cut of $1.3 billion from 2015 totals—including an eight percent reduction to the IRS’s budget, in order to limit the agency’s ability to implement the Affordable Care Act (ACA). The measure would also target the Federal Communications Commission’s power to implement its net neutrality order and prevent the Treasury Department’s Financial Stability Oversight Council from designating some nonbank entities systemically important financial institutions (SIFIs).
21st Century Cures Passes House Overwhelmingly
The high-profile 21st Century Cures Act reached the House floor last week, concluding with a vote Friday morning that saw the bill approved by an impressive margin, 344-77. Sponsors had been ambitiously hoping for 350 yeas. The broad-reaching healthcare measure is intended to speed the discovery, development, and delivery of new medical treatments by streamlining clinical research and creating more flexible medical device and drug approval pathways. It was not smooth sailing the entire week for the sweeping legislation, as a proposed amendment from Rep. David Brat (R-VA) to make the funding discretionary, rather than mandatory, threatened to undermine the bill’s support, especially from Democrats. The contentious amendment attracted the support of some conservatives and fears over Cures’ potential unraveling grew throughout the week, but in the end, Brat’s amendment was defeated, clearing the way for the bill to pass with broad bipartisan support.
The measure now heads to the Senate, where lawmakers are moving at a more methodical pace on their own effort to accelerate medical research. Nonetheless, last week’s House vote could go a long way toward pressuring Senate leaders to expedite their consideration of the House-passed measure – a stated goal of House Energy and Commerce Chairman Fred Upton (R-MI). The White House has also issued a statement offering its support, despite its concerns over funding levels established at the National Institutes of Health (NIH) and Food and Drug Administration (FDA), and the offsetting of the bill through sales of the Strategic Petroleum Reserve.
Medicare Proposes Compensating Doctors for End-of-Life Counseling
Medicare proposed last week for a new payment mechanism to doctors for the time they spend counseling patients on end-of-life treatment options for terminal diseases or severe declines in health. The new payment option has been considered for years, including as a part of the ACA, but it was dropped after some politically motivated detractors likened the initiative to the creation of “death panels.” Members of Congress from both sides, including Sens. Mark Warner (D-VA) and Susan Collins (R-ME), and numerous organizations from the medical industry, have renewed the push for payment for end-of-life counseling and are confident that it will survive this round of scrutiny.
The Centers for Medicare and Medicaid Services’ (CMS) proposal would establish reimbursement rates for two kinds of advance care planning through its 2016 update of payment policies for doctors. A fee structure would be set up covering an initial counseling session and provide for follow-up discussions as needed. The new system would also expand the limited coverage for advance care planning that is currently available, which will theoretically help people understand the pros and cons of certain treatments, such as the use of ventilation machines. CMS has opened the rule for public comment through September 8.
Senate Republicans Reconsider Using Reconciliation on ACA Repeal
After the government’s victory in King v. Burwell, many political observers expected Senate Republicans to force a repeal of the ACA to President Obama’s desk through a budgetary procedure known as reconciliation, which avoids the 60-vote filibuster hurdle typically required of major legislation. But Republican Committee leaders have downplayed expectations that they will use reconciliation to target the ACA, instead using the procedure to pass something that may be more palatable to the President. This could include more minor changes to the law, such as a repeal of the medical device tax, which is unpopular among many Democrats as well as Republicans. Many Democrats are open to making changes to the law, but given the rare opportunity reconciliation presents, anything short of a repeal may be seen as disappointing to the Republican base.
However, there’s a chance that the delay in using reconciliation may just be a simple case of the Senate having a very busy July ahead – with education, highway funding, and negotiations with Iran taking precedence. There is no deadline for using the reconciliation procedure and Senate Republicans may revive discussions on using the tactic for an ACA repeal after the August recess.
CMS Creates Grace Period for ICD-10 Implementation; Enlists AMA for Educational Help
As the nation’s healthcare providers prepare for the switch from ICD-9 to ICD-10 before the October 1 deadline, CMS and the American Medical Association (AMA) have announced new efforts to support physicians in the transition. In addition to its educational efforts, CMS answered the calls of the healthcare industry by officially announcing a 12-month grace period before it will punish providers for improper coding. Providers and the AMA had both pushed CMS to create a grace period and the provision was also the subject of legislation introduced by Reps. Diane Black (R-TN) and Gary Palmer (R-AL). The grace period will allow for providers to continue receiving payments from CMS, even if they didn’t use a “specific enough” ICD-10 code.
Many providers have asked for another delay in ICD-10 implementation, but it seems that CMS is committed to the October deadline, with the agency releasing additional guidance last week that aims to allow for flexibility in claims auditing and quality reporting processes. Additionally, CMS and the AMA’s recently announced partnership aims to educate providers on the updated codes and best practices in the transition through webinars, on-site training, educational articles, and national provider calls.
Other highlights from the CMS announcement include:

  • Setting up an ICD-10 communications and coordination center, learning from best practices of other large technology implementations, that will be in place to identify and resolve issues arising from the ICD-10 transition.
  • Sending a letter in July to all Medicare fee-for-service providers encouraging ICD-10 readiness and notifying them of these flexibilities.
  • Completing the final window of Medicare end-to-end testing for providers this July.
  • Offering ongoing Medicare acknowledgement testing for providers through September 30th.
  • Providing additional in-person training through the “Road to 10” for small physician practices.
  • Hosting an MLN Connects National Provider Call on August 27th.

CMS Reimbursement Proposal Draws Criticism from Biosimilars Group
In another announcement last week, CMS promulgated a proposed rule to give multiple biosimilars of the same biological medicine the same reimbursement code for Medicare Part B payments. This drew the ire of the Biosimilars Forum, an industry organization that claims the new payment rule could reduce investments in biosimilar development and limit patient options. Under the new rule, proposed to go into effect for 2016, CMS would reimburse biosimilars covered under Part B based on the average sales price (ASP) of the drug plus 6 percent of the innovator biologic’s ASP. The Biolsimilars Forum also contends that the rule contradicts language in the ACA, which established the biosimilar pathway and made clear that each biosimilar receive its own unique reimbursement code. The public comment period for the rule is open until September 8.
President Obama Announces Slavitt as Pick for CMS Administrator
The President named Andrew Slavitt as his nomination for CMS administrator last week, the position that he has held on an interim basis since Marilyn Tavenner resigned in February. Republicans have already signaled that Slavitt will face intense scrutiny in the confirmation process, which will likely become a medium for Republicans to voice their general concerns over ACA implementation. Despite the worries of Republicans, Slavitt’s nomination has been welcomed by industry organizations and providers. Before arriving at CMS, Slavitt was an executive vice president in the UnitedHealth Group, and was a key part of the team that sought to fix after its disastrous launch – experiences that are sure to be questioned during Slavitt’s confirmation hearing.