By Melissa Attias and Paul M. Krawzak, CQ Roll Call

April 8, 2015 -- Momentum is building among conservative senators to scrap an exemption from budget laws in the House-passed "doc fix" deal, a move that would pressure Congress to offset $141 billion of the package's cost not currently paid for later this year, outside groups say.

A Senate conservative aide said senators are considering offering an amendment to require the bill (HR 2) to be fully offset. Among the Republicans involved in the effort, the aide said, are Ben Sasse of Nebraska, Jeff Sessions of Alabama, Mike Lee of Utah, Ted Cruz of Texas, and David Vitter of Louisiana.

Sessions and Sasse both expressed opposition to the House-passed bill before senators left for their two-week recess, citing the fact that it’s not fully paid for. The measure would replace the oft-criticized formula Medicare uses to pay physicians known as the sustainable growth rate, or SGR, which would otherwise dictate reimbursement cuts of 21 percent this month.

The Senate is expected to turn to the measure quickly next week, having punted on addressing it after a marathon series of votes on the chamber's fiscal 2016 budget resolution (S Con Res 11). The House passed the bill to replace the SGR on March 26 in an overwhelming 392–37 vote.

Dan Holler, communications director for Heritage Action for America, said he thinks striking the exemption from pay-as-you-go rules seems to be the "most viable path" given the compressed timeframe for action. His group opposes the House-passed bill because it’s not fully offset, but he said it’s very unlikely Congress will come together quickly and settle on changes to entitlement programs to cover the rest of the cost.

The temporary payment patch (PL 113-93) averting cuts to Medicare doctors dictated by the formula formally expired March 31, but the Centers for Medicare and Medicaid Services is holding claims so doctors don't feel the cuts until April 15. With senators returning the afternoon of April 13, that leaves the Senate with only a couple of days to get the bill done.

Stripping out the pay-as-you-go exemption in the House bill would result in sequester cuts next year unless the additional spending was offset later this year.

Holler also said conservatives are trying to refute the idea that the legislation saves money. In a March 25 blog post, Speaker John A. Boehner’s office said the Congressional Budget Office (CBO) confirmed that the measure "will save taxpayers money and put the nation’s budget on a more sustainable path," because it costs $900 million less than freezing physician payment rates. The CBO also projected that the measure would add $141 billion to the deficit through fiscal 2025.

Marc Goldwein, senior vice president and senior policy director of the Committee for a Responsible Federal Budget, said striking the pay-as-you-go exemption is one way to improve the bill. Alternatively, he said, senators could also add offsets to cover the price tag or strengthen the bill over the long term by making some temporary cuts in the bill permanent, in order to reap additional savings. There’s also the option of scrapping the House deal and passing another short-term "doc fix" deal to avert the scheduled fee cuts.

Goldwein noted that he thinks many senators are concerned about the cost even though they want to dispense with the "doc fix" and the threat of physicians dropping out of Medicare.

"I think if there was more time it would be easier," he said.

But eliminating the pay-as-you-go provision could offer a workable solution to potential threats by conservatives to oppose the bill. It would give Congress until the end of the year to come up with more offsets, allowing the SGR bill to pass as is after the exemption is deleted.

That means the Ways and Means and Finance committees could explore ways to offset the spending through the regular committee process in coming months.

Under the 2010 PAYGO law (PL 111-139), across-the-board sequester cuts are required to eliminate any increase in the deficit caused by legislation that raises the cost of mandatory spending programs or tax cuts that are not paid for. The cuts would reduce Medicare spending by up to 4 percent and other mandatory spending that is not exempt from sequester.

It’s also possible that the senators who are formulating a strategy on the SGR could attempt to use as leverage a threat not to vote for a conferenced version of the fiscal 2016 budget resolution. The Senate adopted its budget with 52 Republican yes votes before the recess. Two Republicans voted no—Cruz and Rand Paul of Kentucky. The budget needs a simple majority to be adopted in the Senate.

The Senate budget resolution contemplates trillions of dollars in reductions in spending growth with the goal of eliminating the deficit within 10 years.

House and Senate leaders are expected to appoint budget conferees next week.

By Rebecca Adams, CQ Roll Call

April 6, 2015 --- Republican Gov. Rick Scott is reversing his support for expanding Medicaid coverage to 800,000 residents in Florida, and blamed his change of heart on what he said were failed negotiations with federal officials over the U.S. funding for so-called safety-net hospitals that provide care for indigent and uninsured patients.

Difficulty in the safety-net, or low-income pool, hospital talks, he said, led him to agree with other Republican governors and lawmakers who say that one reason they oppose expanding Medicaid in their states under the 2010 health care law is that they don’t believe the federal government will continue to pay for at least 90 percent of the cost of expansion.

Under the federal law, state Medicaid programs can be expanded to enrollees with incomes up to 138 percent of the federal poverty line. The expansion's cost in the state is 100 percent covered by the federal government through 2016. Federal support phases down until states that expanded will be responsible for 10 percent of the cost starting in 2020. Twenty-eight states and the District of Columbia are participating in the expansion.

"Our priority is to cut more than $600 million in taxes this session and get K–12 education funding up to record levels while holding the line on college tuition," Scott said in an e-mailed statement. "We still have several weeks left for budget negotiations; however, given that the federal government said they would not fund the federal [Low Income Pool] program to the level it is funded today, it would be hard to understand how the state could take on even more federal programs that [the Centers for Medicare and Medicaid Services] could scale back or walk away from."

Florida senators have advanced a bill that would allow the state to accept $51 billion from the federal government to add more Floridians to the Medicaid rolls. The state has been closely watched for Medicaid expansion because it has one of the largest uninsured populations in the country.

State lawmakers have reconsidered expansion plans this legislative session as federal funding for their state safety-net hospitals under the Low Income Pool is slated to end June 30.

CMS extended the Low Income Pool program last year as part of the renewal of Florida’s Managed Medical Assistance Program. The one-year extension was meant to give providers stability as the state transitioned to statewide managed care.

Lawmakers planned to allocate $1.3 billion from the Medicaid expansion funding toward the safety-net hospitals if federal officials denied funding. Scott and federal officials were negotiating to keep that federal funding in place. Florida officials say those talks have recently come to a halt. CMS officials say that those talks haven’t stopped.

Ben Wakana, press secretary for the U.S. Department of Health and Human Services said in an e-mail statement that the health law has made it clear that federal funding "will never fall below 90 percent."

"HHS has proven itself willing to work with any state interested in expanding Medicaid, and we have consistently said that a Florida solution would reduce costs for hospitals that are typically passed on to taxpayers and expand access to quality health care for more Floridians," Wakana said. "That’s a common sense path that’s good for taxpayers and the economy of the Sunshine state."

Scott’s announcement could also ruin budget talks between the House and Senate. House members have refused to include Medicaid expansion as part of their budget proposal, making looming reconciliation talks an uphill battle. The two chambers’ budgets are $4.2 billion apart.

By Rebecca Adams, CQ Roll Call

April 10, 2015 -- The Obama administration warned Friday that any health IT developers, medical providers, or others who might be deliberately making it hard to share electronic health records could pay a price for obstruction in the future.

Hospitals and other providers have often found it challenging to transfer electronic health records to other systems. The Office of the National Coordinator (ONC) said in a 39-page report to Congress Friday that in addition to the typical technical and practical hurdles to achieving interoperability, some IT developers and providers are deliberately interfering with the exchange of electronic health information.

ONC officials outlined a series of steps that federal agencies are taking or considering to prevent the blocking of information. Options include creating new rules to discourage the blocking of health record-sharing, referring any illegal business practices to law enforcement agencies and coordinating with the Health and Human Services Office of Inspector General to deter any interference with record transfers.

The report also said ONC officials may work with the Centers for Medicare and Medicaid Services to affect the pay of groups that are blocking the sharing of information. CMS could coordinate health care payment incentives to reward interoperability and penalize those who block information.

Congress also should step in, according to the report.

"Successful strategies to prevent information blocking will likely require congressional intervention," the report stated.

One example of blocking is when IT developers charge high transaction fees that hit every time a user sends, obtains or searches for a patient’s electronic health information. Some health IT developers also may charge high fees for creating common interfaces that can communicate easily with other systems.

The ONC already proposed in a certification criteria rule issued last month that accrediting boards should do more surveillance and require that providers be informed of what any transaction fees could be before they sign contracts.

Another example is when a hospital or physician’s practice blocks information in order to control referrals and enhance their market dominance.

The report noted that sometimes "even conscious decisions that prevent information exchange may be motivated by and advance important interests, such as protecting patient safety, that further the potential to improve health and health care. These interests must be carefully balanced with the potential benefits from sharing of electronic health information."

But ONC officials said that often there are not any reasonable justifications for obstacles to record-sharing.

"It is a serious problem—and one that is not being effectively addressed," said the report, which called on Congress to change the status quo.

By Rebecca Adams, CQ Roll Call

April 6, 2015 -- Medicare officials announced Monday that they stuck to their proposed payment cuts for the private Medicare Advantage plans that serve seniors and people with disabilities. But they unveiled updated cost estimates that show that the plans will get higher payments than the agency previously estimated.

In February, the Centers for Medicare and Medicaid Services (CMS) proposed cuts of 0.95 percent that officials said would translate into an average 1.05 percent increase for most plans after changes in the way that insurers code patients’ conditions are considered. In the final policy that was released Monday, CMS officials said new health spending growth estimates now show that the cut of 0.95 percent will actually be a 1.25 percent increase. And Medicare officials say that will translate into a 3.25 percent per-capita increase for most plans. "The final revenue increase is larger than the February advance notice largely because the Medicare actuaries recently updated Medicare per capita spending estimates for 2014 and 2015," said a CMS press release. "Medicare per capita spending in 2014, 2015, and 2016 is still expected to be below historical standards." 

In recent years, CMS has proposed cuts, only to soften or reverse them when the policies are later finalized. The payment updates were part of two significant documents, a notice, and call letter, released on Monday that affects Medicare Advantage plans, prescription drug plans, pharmacies, and consumers. Medicare officials abandoned a proposal to change the quality ratings of Medicare Advantage plans and tweaked provisions affecting the preferred cost-sharing networks.

In the proposed version that was released Feb. 20, CMS officials outlined changes to plans’ quality ratings because of concerns that plans that serve low-income beneficiaries could be disadvantaged. CMS wanted to cut in half the weight of seven measures for 2016. But CMS Deputy Administrator Sean Cavanaugh said on a call with reporters Monday that most groups that commented criticized the plan. So the agency scrapped it for now but said CMS will continue studying the issue.

Cavanaugh noted that there’s a long history of low-income people getting lower quality care than others. "If that’s what’s going on here, we wouldn’t want to mask that" with adjustments, said Cavanaugh. Although there’s not a consensus on what’s driving differences in star quality ratings among plans that serve low-income people, "this is an issue we’ve made a firm commitment to continuing to explore," he said. 

CMS officials also clarified expectations that insurance plans update their provider directories in real time, and have regular, ongoing communications with providers to determine whether they are accepting new patients. In the proposal released in February, CMS proposed to publish information on whether beneficiaries have sufficient access to preferred cost- sharing pharmacies. CMS also proposed to work with plans that are outliers and either improve beneficiaries’ access or prevent plans from marketing themselves as offering preferred cost sharing in areas where the benefit is not really available. CMS finalized the policies but tweaked them. Rather than working with outliers individually during bid negotiations, CMS said it will require plans that are outliers and have limited access to tell seniors about this in the plans’ marketing materials next year. And plans that are extreme outliers will have to work with CMS to improve access before the agency will approve their ability to offer coverage in Medicare next year.

Lobbying for Higher Payments

Agency officials also said they would essentially keep their proposed phase-in of a new system that will cut many plans’ payments. Plans are paid more for patients who are sicker, and Medicare officials have been moving toward an updated methodology for those payment adjustments. CMS officials say the new risk-coding system is more accurate than the previous one, but health plans have said it will reduce their funding and could detract from programs to manage patients’ diseases. Health plan industry officials, through groups such as the Better Medicare Alliance and the Coalition for Medicare Choices, have lobbied CMS and Congress to block payment cuts and move slowly on the new risk-coding system. America’s Health Insurance Plans, the industry trade group, said that the initial CMS proposal would have the most impact on beneficiaries in New York, Texas and Louisiana. The industry group said that people in those states could face reduced benefits or higher costs totaling more than $120 per month. Lawmakers sent letters urging CMS to prevent any additional cuts, with a letter from senators gathering 53 signatures and one from House members collecting 239 signatures.

By Kerry Young, CQ Roll Call

April 6, 2015 -- The Centers for Medicare and Medicaid Services (CMS) on Monday released a proposed rule intended to create consistency between the commercial and Medicaid markets regarding mental health services.

In a statement, CMS said the agency intends to apply certain provisions of current federal law to requirements for Medicaid managed care organizations, Medicaid alternative benefit plans, and the Children’s Health Insurance Program, known as CHIP. Medicaid, a state and federal program that serves those living in or near poverty, is the nation's single biggest purchaser of mental health services. Under the proposed rule, all beneficiaries who receive services through managed care organizations, alternative benefit plans, or CHIP will have access to mental health and substance use disorder benefits regardless of whether services are provided through the managed care organization or another service delivery system.

States that have contracts with managed care organizations will be required to meet the parity requirements regarding financial and treatment limitations consistent with the regulation applicable to private insurers.

By Kerry Young, CQ Roll Call

April 6, 2015 -- One of the few regrets that Glenn M. Hackbarth has about his 15-year tenure on the influential Medicare Payment Advisory Commission (MedPAC) is how it approached efforts to better align doctors' reimbursements with their performance.

"There is too much weight placed on process measures, an ever-growing list of process measures, across all provider groups," said Hackbarth, whose term as chairman of the MedPAC expires this month, in an interview with CQ HealthBeat on Monday. "There should be more of a focus on outcomes." Hackbarth is closely identified with the commission, which he first began leading as chairman in 2001 after joining as a member the previous year. "Medicare and many private payers as well have gotten on a track that is unproductive in some ways. I don’t think we are doing a good job collectively" in linking payment and performance on quality, Hackbarth said. "Many of the measures used are not very strong." 

In recent years, both the Centers for Medicare and Medicaid Services and insurance companies have sought to move toward "pay-for-performance" models, in which reimbursement policies could be structured to drive care that produces the best results for patients. As the nation’s single largest buyer of health care with annual outlays exceeding $600 billion, Medicare has great sway over the health system of the United States. "To the extent that MedPAC was an early contributor in the movement towards pay-for-performance, there are things that I would do differently if I had it to do over again," said Hackbarth, who also sees some of the administrative burden of these efforts as particularly tough on private practices. 

The Government Accountability Office likely will announce the new MedPAC chair at the end of April. Overall, Hackbarth was positive as he reviewed his years with MedPAC. MedPAC’s work is respected by members of both parties on Capitol Hill, something that Hackbarth attributes in part to the panel being able to achieve "an extraordinary degree of consensus." "We have created a culture where commissioners see their role as providing expertise and experience, not representing particular interests, whether they be providers' groups or health plans or geographic interests," he said. "It’s a culture of expertise, not representation."

Before joining the commission, Hackbarth served in various positions at the Department of Health and Human Services, including deputy administrator of the Health Care Financing Administration, now known as CMS. Hackbarth, who holds a law degree from Duke University, also was a founder of Harvard Vanguard Medical Associates, a multi-specialty group practice in Boston that serves as a major teaching affiliate of Harvard Medical School.