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August 10, 2015

Washington Health Policy Week in Review Archive 4aee231d-ee09-40bc-a063-2020c33dc49e

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Hospitals Take Aim at Big Health Insurance Mergers

By Jad Chamseddine, CQ Roll Call

August 7, 2015 – The American Hospital Association (AHA) has urged a review of the recent spate of health insurance mergers, raising concerns that massive consolidation would ravage competition and harm the commercial health insurance industry.

In a letter to Assistant Attorney General Bill Baer of the Justice Department, released on Aug 6., the association said proposed mergers between four of the five major health insurers would be a radical shift for the industry. In the past month, Anthem Inc. announced it will acquire Cigna Corp. for $54 billion and Aetna Inc. said it will buy Humana Inc. for $37 billion.

AHA — the largest trade organization representing hospitals, health systems and other health care organizations—said it would address the mergers in separate letter, focusing on the larger tie-up between Anthem and Cigna.

The trade group urged the Justice Department to "thoroughly investigate" the merging companies due to their size and scope. "The potential harm to consumers from this loss of competition is large and durable," the organization said. "Because the two companies generate more than $100 billion in combined revenues, even a modest price increase would cost consumers billions of dollars in higher health care costs."

AHA says the deal would reduce competition for the sale of commercial health insurance in 817 markets serving roughly 45 million consumers. An equation used by the Justice Department and Federal Trade Commission to measure market concentration indicates the deal would enhance market power of the combining companies, it said.

"The risk of harm to these tens of millions of consumers is further enhanced because new entry is unlikely to prevent, or even partially offset, the transaction's potential anticompetitive effects," the trade group said.

The government often requires merging parties to divest assets and sell them to third-party competitors to lessen the anticompetitive effects of a tie-up. AHA argues that in this case, the high barriers to entry and lack of competitive alternatives in several markets make divestitures an unlikely possibility. Any "fix" suggested by the merging parties should be examined closely, it said.

The merger has been criticized by several other health lobbies, including the American Medical Association and the American Academy of Family Physicians, both urging action by antitrust regulators. Sen. Richard Blumenthal, D-Conn., urged Baer to review health insurance mergers in a larger context and emphasized the importance the decision will have in shaping the health care market.

The House Judiciary Committee and The Senate Judiciary Antitrust Subcommittee expected to hold hearings in early September.

AHA also brushed away comparison between health insurance mergers and a recent spate of hospital mergers, saying that the "size, scope and enduring impact" of health insurance mergers differ fundamentally.

"Hospital realignment is essential to providing patients with high-quality, well-coordinated care, and it's contributing to lower cost growth," AHA General Counsel Melinda Reid Hatton said in a post on the organization's website on Aug. 3. The FTC has cracked down on hospital mergers, successfully blocking several transactions and forcing divestitures or complete separation of combined entities.

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Drugstore Doctors

By Marissa Evans, CQ Staff

August 5, 2015 -- Pharmacists in California and Oregon will soon be able to prescribe birth control to women right over the counter, encroaching on another medical service that was once the exclusive province of doctors.

The two states will be the first in the country to allow pharmacists to prescribe contraceptives on their own, without a doctor's prescription.

California legislators passed their bill in 2013 and the law goes into effect Oct. 1. Oregon Gov. Kate Brown, a Democrat, signed her state's bill July 6 and it takes effect Jan. 1.

The two laws are part of a broader trend in states seeking efficiencies in health care as more residents become insured and doctors struggle with increased demands for their services. For instance, 21 states and the District of Columbia have given nurse practitioners the ability to practice without doctor supervision.

Krystalyn Weaver, director of policy and state relations for the National Alliance of State Pharmacy Associations, says pharmacists receive universal training in pharmacology school but most states don't take advantage of that experience. "Pharmacists are very highly trained and that education is focused on optimizing drug therapy to make health outcomes as good as they can be," Weaver says. "It does take time, not everyone is meant to be on certain kinds of birth control. There's some brainwork involved with prescribing medication."

The expansion of authority for pharmacists in California and Oregon, as well as greater roles for nurse practitioners in other states, have drawn criticism from physicians who argue that only they have the proper training to prescribe certain medications or provide primary services. Others, they say, should be required to give such care only under a doctor's supervision.

"The American Medical Association encourages physician-led health care teams that ensure health care clinicians work together as the ideal way to provide high quality and efficient care," the organization said in an email statement. "Innovative physician-led team models across the country are achieving improved care and patient health, while reducing costs. Pharmacists are valuable members of this team, and patients win when each member of their health care team plays the role they are educated and trained to play."

Oregon and California are "trying to bring pharmacists more into the fold of utilizing their skills," says John Norton, director of public relations for the National Community Pharmacists Association. "Pharmacists are the most accessible health care provider out there. You can drop by anytime you want and get your services.... It makes health care more accessible and easier to do from a patient perspective."

California's new law allows pharmacists to get additional training to prescribe contraceptives and establishes new training and licensing standards for "advanced practice pharmacists."

Oregon's bill allows pharmacists to prescribe birth control medication and devices to women and amends the definition of "practice of pharmacy" in the licensing statutes to include prescribing such products.

Even as California prepares for the law to go into effect in October, questions loom regarding the kind of training pharmacists will have to complete, how consumers will find advanced practice pharmacists, whether consumers will pay more to pharmacists for counseling and whether such fees will be covered by insurance companies.

Other states will be watching the two states closely, says Elizabeth Nash, senior state issues associate at the Guttmacher Institute, a nonprofit that advocates for reproductive health services.

"We haven't seen it implemented, so it's hard for other states to envision how it would work in their state," Nash says. "We're going to have two examples and there might be momentum to see if this is an option for them. Once you have a couple of examples, people want to take a wait-and-see approach so they have an idea of what to expect and how to make it a smooth process."

Pharmacists in other states do have some experience with contraceptives. A Guttmacher report last month found that Alaska, California, Hawaii, Massachusetts, New Hampshire, Vermont and Washington allow pharmacists to provide emergency contraception without a prescription when acting under a collaborative-practice agreement with a physician. California, Maine and New

Mexico allow pharmacists to do so under state-approved protocols.

Arizona, Arkansas, Georgia, Idaho, Mississippi, and South Dakota are among states that allow pharmacists to refuse to give contraceptives, including emergency contraception.

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CMS, Hospitals Fight Over Payment for Short Stays

By Kerry Young, CQ Roll Call

August 4, 2016 -- Medicare is sparring with hospitals over attempts to reduce excess payments for short patient stays, in what could be a prelude to a broader reimbursement overhaul reflecting advances that have made many surgical procedures less invasive.

The American Hospital Association (AHA) last week said it was "dismayed" that Medicare could let a new set of contractors begin reviewing short-stay claims under rules that will quickly become outdated. In response to earlier complaints from the industry group, the Centers for Medicare and Medicaid Services (CMS) made plans to shift major responsibility for this work from recovery audit contracting (RAC) firms that are paid on commission to quality improvement organizations (QIO)—often nonprofit groups staffed by doctors and other health professionals that focus on ensuring best practices are widely adopted.

CMS is setting rules for the QIOs through the 2016 payment rule for hospital outpatient stays, which takes effect Jan. 1. AHA has suggested the agency wait at least that long to get the QIOs moving on this work, to avoid having the organizations begin working under an outdated version of what's known as the "two-midnight" rule on inpatient stays. AHA was disappointed that CMS didn't include a special provision regarding the "two-midnight" rule in a hospital inpatient rule that takes effect Oct.1.

Medicare officials and hospital administrators have been at odds for years on how care should be reimbursed for people who don't need to spend many days admitted as patients. Advances in technology that have substantially shortened hospitals' average inpatient lengths of stay, according to the Medicare Payment Advisory Commission. "Because hospitals generally receive higher payments for clinically similar patients served in the inpatient setting as compared with the outpatient setting, hospitals may have a financial incentive to admit patients," the commission stated in May testimony to Congress.

The procedure for implanting stents in coronary arteries, for example, can be covered under often less generous outpatient, or Part B, reimbursement, for uncomplicated cases, CMS stated last year. Yet, hospitals have sometimes billed for overnight stays connected with uncomplicated cases as inpatient care, which CMS classifies as an improper payment. One-day inpatient hospital stays remain relatively common in Medicare, accounting for more than 1 million inpatient admissions, or 13 percent of the total, in 2012, according to MedPAC.

In 2013, CMS had hoped to settle what constituted a proper claim for more generous inpatient Medicare pay and what should be billed under outpatient care. But hospitals have protested the original design of the rule that generally calls for a minimum stay of two midnights to trigger inpatient payments. Congress and CMS have since stopped audit contractors from targeting claims of short inpatient stays.

Conflicts over the audits are something of a sideshow to the larger issue of getting CMS and hospitals to agree on reimbursement for overnight and other short stays, said Dan Mendelson, chief executive of consultant Avalere Health and a former associate director for health at the White House Office of Management and Budget.

"The issue is the payment policy, not the RACs in my opinion," he said in a Monday interview. "It's a lot easier to fire at the RACs. Ultimately, CMS will need the tools to make sure there is appropriate billing for these short stays."

With the 2016 outpatient rule, CMS intends to modify the two-midnight rule to allow more flexibility for physicians' judgment in making claims for inpatient reimbursement. "However, we continue to expect that stays under 24 hours would rarely qualify for an exception to the 2-midnight benchmark," CMS said in the draft payment rule.

Before being put on hold, the RACs had disputed many short stay claims in their audits, and hospitals have contested their decisions in many cases. That helped trigger a backlog of about 75,000 appeals, with some cases taking more than five years to resolve. Lawmakers in Congress have heard many complaints from leaders of hospitals in their districts about the RAC work, which CMS says is carried out by four firms: Performant Recovery, CGI Federal, Inc., Connolly Inc., and HealthDataInsights, Inc.

"I must tell you that when the contractors ride into town in western Kansas, the doors shut," said Sen. Pat Roberts, R-Kansas, at a hearing earlier this year. People in hospitals hope that "no RAC person comes and knocks on the door. I think they put hospital administrators on the rack, if you will."

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Reconciliation to Target Part of Health Law, McConnell Says

By Paul M. Krawzak, CQ Roll Call

August 6, 2015 -- Senate Majority Leader Mitch McConnell last week offered his most specific comments yet on using budget reconciliation to try to repeal the Affordable Care Act.

The Kentucky Republican said GOP leaders have determined they cannot use the expedited budget process to repeal the entire law, but they intend to repeal at least a portion.

"Now, the entire law, we believe, based on discussions with the parliamentarian, is not reconcilable, but much of it is," McConnell said in a news conference.

In general, reconciliation legislation is limited to measures that would result in changes in revenue or spending. A major challenge for Republicans is to write a reconciliation bill that would reduce the deficit, as required by the reconciliation instructions, given that the Congressional Budget Office has estimated that a full-scale repeal of the law would add to the deficit.

McConnell said Republicans in both chambers are actively discussing how they will use the procedure, which allows budget-related legislation to pass in the Senate with a simple majority rather than the usual 60 votes needed to consider a measure.

House Republicans hope to write and potentially pass a reconciliation bill when Congress returns in September. Senate GOP leaders have not said when the Senate will act.

Acknowledging that President Barack Obama is almost sure to veto the bill, McConnell said, "It's still important to us."

It remains unclear from McConnell's comments how much of the health law Congress may try to repeal. Just last month, McConnell in a joint statement with Mike Lee, R-Utah, pledged to use reconciliation "to bring an end to the nightmare of Obamacare" and said Republicans "will continue our effort to use reconciliation—as the budget makes clear—to fulfill the promise we made to our constituents."

On Thursday, he said the "biggest candidate" for reconciliation "would be try to repeal as much of Obamacare as is reconcilable."

What that means is that while the GOP will use reconciliation for an attempted repeal of portions of the health care law, Republicans have not indicated whether they will employ a sweeping approach that would involve repealing every part of the law that could potentially be ended through reconciliation. The alternative would be to take a more selective approach that could involve repealing discrete elements of the law such as the mandates for individuals to be insured and employers to offer insurance.

McConnell did not say whether he is considering a plan for the Senate to take up a reconciliation bill that would be crafted and passed in the House and then sent over to the Senate, as opposed to the usual practice of the House and Senate each writing and passing their own reconciliation legislation before agreeing on a compromise reconciliation bill.

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Medicare Rejects Most Bids for New Technology Add-On Payment

By Kerry Young, CQ Roll Call

August 5, 2015 -- Medicare last month approved only two of six pending requests for special payments that are meant to encourage hospitals to more quickly adopt expensive new breakthrough products. This falls in line with an historically low acceptance rate that's sparked industry complaints about the new technology add-on payment program.

In the case of one of the successful fiscal 2016 applications, influential trade groups joined Amgen Inc. in countering Medicare officials' skepticism about a special payment for the Blincyto cancer drug. The Biotechnology Industry Organization told the Centers for Medicare and Medicaid Services (CMS) that the agency has "taken an increasingly cramped interpretation" of regulations for the new technology add-on payment program (NTAP). The Pharmaceutical Research and Manufacturers of America, concurred, calling CMS' approach "too restrictive."

It "creates a significant barrier for innovators, as illustrated by the proposed denial of a NTAP designation for Blincyto, a precision medicine for treatment of a rare and aggressive form of leukemia," PhRMA argued in a June letter to CMS.

CMS as of last year had approved only about a third—19 of 53—applications for new technology add-on payments since 2001, when the program began, according to a study published in the February issue of Health Affairs. About $202 million was paid between fiscal 2002 and 2013 through the NTAP program, for which the Congressional Budget Office once projected a ten-year cost of $500 million, wrote John Hernandez, a research executive at medical-device maker Abbott Vascular and lead author of the paper, and his colleagues.

The biggest hurdle to securing NTAP payments, though, appears to be persuading Medicare officials that a new drug or medical device offers a true advantage to existing treatments.

CMS cited that as a factor last month in explaining rejections of NTAP applications in the fiscal 2016 hospital inpatient rule. CMS officials have taken steps to make companies aware of the high bar set for NTAP payments, while also allowing them to try to make their strongest case for their applications.

"We only want to make an add-on payment if those technologies are really a substantial clinical improvement or better than what is already out here," Marc Hartstein, CMS' director of the hospital and ambulatory group, reminded attendees at a February public meeting on the NTAP applications for fiscal 2016.

The NTAP program is meant to partially compensate hospitals for using new products that are not reflected already in Medicare's regular reimbursement calculations. CMS uses data from previous years, Hartstein explained. The NTAP payments cover about half of the estimated extra cost of using a product that's too new to the market to have been added into CMS' payments, which are pegged to diagnosis-related groups.

To qualify for add-on payments, the new products also must be expensive enough that hospital staff might balk at using them without some softening of the financial hit.

"If they are not particularly costly, there are not substantial barriers to adopting that technology so there is really no reason to make an add-on payment," Hartstein said.

Lawmakers are interested in possible revisions to the rules. The staff of the House Ways and Means Committee is taking a look at the program as it prepare to move legislation to overhaul certain Medicare payment practices for hospital care. In January, the House Energy and Commerce Committee also included a proposal addressing NTAP appeals in a discussion draft of its so-called Cures bill. This does not appear in the version (HR 6) that passed the House last month.

The Advanced Medical Technology Association said it is seeking more of an understanding about how Medicare officials make the decisions on NTAP. This would help companies in crafting their applications, said Don May, executive vice president for payment and health care delivery policy at AdvaMed, which represents makers of medical devices.

"There seems to be a disconnect between what CMS considers to be acceptable evidence and what others outside in the peer-review community think is a significant improvement," he said.

CMS has pleased AdvaMed by showing a willingness to make allowances for expensive new technologies in the agency's attempt to reshape Medicare through pilot programs, which sometimes offer hospitals and doctors a chance to share in savings.

Medicare last year decided to excluded new technology add-on payments that it allowed for an Abbott device, the MitraClip, used when certain heart valves don't close tightly enough, from calculations involved in its Bundled Payment for Care Improvement program, AdvaMed said. The agency since has expanded the policy to expand other NTAP payments when calculating target prices and other measures for the program, the group said.

Not all of the new technologies subsidized through NTAP have worked out. Among the first products was Eli Lilly & Co.'s sepsis drug Xigris, for which the additional reimbursement was cleared in fiscal 2003 and 2004, according to CMS. In 2011, the drug was withdrawn worldwide when new research failed to prove it could help prevent death in people suffering from septic shock.

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Makers of Medical Tests Likely to Wait for Clarity on Oversight Rules

By Kerry Young, CQ Roll Call

August 6, 2015 -- Federal regulators and legislators may keep makers of high-tech medical diagnostics waiting for months for a clear signal on how oversight of some of the products could evolve, even amid complaints from industry about the effects of prolonged uncertainty.

The Food and Drug Administration doesn't have an estimate on when it will unveil a final framework for regulatory oversight of laboratory-developed tests, a spokeswoman said last week. The draft proposal was released in October 2014, and the agency is in the midst of reviewing more than 200 comments submitted about the plan.

Industry watchers see FDA officials as likely to hold off on finalizing the proposal until they know whether lawmakers will act on policies for laboratory-developed tests. The Bipartisan Policy Center last month suggested that the Senate Health, Education, Labor, and Pensions (HELP) Committee clarify the rules on laboratory-developed tests. This suggestion was made as part of a package of recommendations regarding the committee's planned legislation on medical innovation.

Senate HELP Chairman Lamar Alexander, R-Tenn., and committee Democrat Michael Bennet of Colorado expressed interest in the laboratory-developed tests at a May hearing. Bennet, whose state is home to several companies working in the field, spoke of a need to "create predictability" in regulatory practices.

"There is some concern that the draft framework could require the FDA to register and approve thousands of labs, or at a minimum thousands of tests," Bennet said.

Laboratory-developed tests are monitored through the Centers for Medicare and Medicaid Services (CMS), while the FDA approves other diagnostics. Critics of this bifurcated approach have said that CMS' oversight, guided by the Clinical Laboratory Improvement Amendments, or CLIA, check only on how well a test measures for a marker, and that FDA approval procedures are better designed to gauge how meaningful that marker is in helping doctors and patients make health decisions.

The FDA had long left alone lab-developed tests, which once were largely limited to tests done within hospitals and single medical organizations. But with increased knowledge of human genetics, laboratory-developed tests now also include many commercial services with significant sales. Sequenom Inc., for example, makes almost all of its money from laboratory-developed tests (LDTs) designed to detect specific fetal abnormalities and genetic conditions. Revenue for the San Diego-based company last year rose by 27 percent to $151.6 million.

A more aggressive FDA approach to regulating laboratory-developed tests could put that revenue at risk and limit Sequenom's potential for growth, the company said Thursday in a regulatory filing. It's possible that the company would have to cease its testing services, Sequenom said, repeating a caution that it has included in previous filings.

"We cannot predict the extent of the FDA's final guidance on regulation of LDTs in general or with respect to our LDTs in particular," the firm said, adding that it can't predict at this time if it could meet a new FDA standard and be able to continue to sell its testing services. "(O)ur ability to generate revenues from providing such products may be delayed and we may never be able to generate significant revenues from providing diagnostic products."

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