By Kerry Young, CQ Roll Call

June 1, 2016 -- An influential advisory panel says a Medicare proposal will make it more difficult to compare different settings for post-hospital care. This could hinder efforts to overhaul payments and incentives for services that help elderly and disabled people recover after hospital stays for strokes, surgeries, and serious illnesses, the advisers say.

The Medicare Payment Advisory Commission (MedPAC) this week made public its concerns about proposals in draft fiscal 2017 payment rules. These Centers for Medicare and Medicaid Services (CMS) proposals are part of a broader effort to set the groundwork for a unified payment for so-called post-acute care, a roughly $59 billion annual expense for Medicare. Different reimbursement rules and rates cover similar care provided by four groups: skilled nursing centers, inpatient rehabilitation facilities, home health agencies and long-term care hospitals. The fragmentation can be needlessly costly for Medicare, while leaving people without information needed to choose the right care settings, analysts have said.

The IMPACT Act of 2014 (PL 113-185) directed CMS and MedPAC to shape a robust set of data that would allow comparisons among the different settings. Through the draft fiscal 2017 payment rules, CMS proposed separate Medicare spending per beneficiary measures for each of the different post-acute settings as part of this work. MedPAC disagrees with this approach.

"We believe a uniformly defined resource use measure for all four PAC settings, rather than separate measures for each PAC setting, will better meet the intent of the IMPACT Act and enable comparisons," wrote Francis J. Crosson, the chairman of MedPAC, in a comment to CMS on its proposed payment rule for inpatient rehabilitation facilities.

Crosson made a similar observation in the MedPAC comment on the proposed rule for payment for skilled nursing facilities. CMS is accepting comments through June 20 on both rules. The agency likely will respond to MedPAC's concerns when it issues the final versions of these rules, which are slated to be released in late July or early August.

The suggestions from MedPAC and the expected responses from CMS highlight some of the technical challenges ahead in carrying out the IMPACT Act. There may be intense lobbying by industry groups and companies, which will seek to influence how CMS carries out the mandates of the IMPACT Act. Congress seems intent on having the agency create a unified payment. 

The IMPACT Act had a level of bipartisan support rarely seen in recent years, given that Democrats and Republicans are bitterly divided on the 2010 health overhaul. It breezed through the House in Sept.16, 2014, on a voice voice and was cleared by the Senate by unanimous consent two days later. Ways and Means Chairman Kevin Brady, R-Texas, was as one of its chief backers.

The giants in the field of post-acute care are closely monitoring the implementation of the law. "CMS is struggling to meet the deadlines for specific performance under the enactment," Genesis Healthcare Inc., which operates about 475 skilled nursing centers, said in a March regulatory filing. 

The stakes are high for Genesis and rival providers of post-acute care as CMS sets the groundwork for a new payment system. "Depending on the final details, the costs of implementation could be significant," Kennett Square, Pennsylvania-based Genesis said.  "The failure to meet implementation requirements could expose providers to fines and payment reductions." 

The cumbersome work in preparing to overhaul of post-acute care is meant to pay off for the people who need these services, according to the MedPAC letters on fiscal 2017 skilled nursing and inpatient rehabilitation payments. Owners and operators of post-acute care organizations will have more incentive to consider what will happen to the often frail people that they treat and then release to return to their homes.

In both MedPAC letters, for example, Crosson expressed support for CMS' plan to track Medicare spending during the time post-acute care is delivered and then for 30 days afterward. This "will ready providers for broader payment reforms," such as bundled payments," Crosson wrote.

By Kerry Young, CQ Roll Call

June 1, 2016 -- An independent panel that advises Congress is pushing for an alteration in how penalties are assessed on hospitals for excessive readmission rates. The commission wants to prevent continued shaving of reimbursements if the overall quality of hospital care improves.

The Medicare Payment Advisory Commission (MedPAC) wants to adjust the overall readmission penalties such that they could decline if hospitals' collective performance improves. The influential panel previously raised this idea in a June 2013 report, and repeated it in a comment letter made public on Tuesday. MedPAC suggested that members of Congress pass legislation to allow the Centers for Medicare and Medicaid Services (CMS) to use an all-condition readmission measure with a fixed target. 

MedPAC said it strongly supports the hospital readmission penalty program, which was created by the 2010 health overhaul. The penalty was designed to give hospital officials and staff added incentives to consider what would happen to their patients after their discharges. Patients who are readmitted for certain conditions within 30 days can trigger a readmission penalty of 3 percent of hospitals' Medicare payments.

The program "has been a success as hospitals have worked to improve care transitions which has helped to lower hospital readmission rates," wrote Francis J. Crosson, MedPAC's chairman, in comments to CMS on the proposed fiscal 2017 rule for payments for hospitals' inpatient services. 

CMS is accepting comments through June 17 on the payment rule.

By Marissa Evans, CQ Roll Call

May 31, 2016 -- Oklahoma medical providers are winning a financial reprieve through the state's legislative budget agreement, but Medicaid expansion will have to wait another year.

On May 27, the Oklahoma legislature passed a budget that plugged up a looming $1.3 billion hole but stopped short of expanding the joint federal–state health insurance program for the poor to 175,000 people even after days of national speculation that it could happen.

Oklahoma Gov. Mary Fallin, a Republican, said in a news release that the budget helped prevent the closing of nursing homes and hospitals.

"We worked hard to protect key core services—common education, health and human services, corrections and the Oklahoma Health Care Authority," she said. "My top priorities in my second term are strengthening education and workforce, reducing the state's incarceration rates and improving its health outcomes."

Fallin also noted in her statement that she was disappointed that the legislature did not approve a personal consumption tax for cigarettes which she said "would have been the most important thing we could have done to improve Oklahoma's health ranking." The consumption tax would have also been key to paying for the state's Medicaid expansion plan.

Under the plan proposed by Oklahoma Health Care Authority, or OHCA, the state would have applied for a federal waiver to cover 175,000 uninsured adults and offer them help to pay for a health plan using a subsidy under Oklahoma's Medicaid program. Provisions of the plan also eventually would have folded coverage of more children and pregnant women into Medicaid. Funding for some children and pregnant women is slated to expire under the Children's Health Insurance Program after Sept. 30, 2019.

The plan was also intended to soften a 25 percent provider rate cut in Medicaid reimbursements, a move that could have closed provider doors around the state. Nico Gomez, CEO for OHCA, said in a statement that those cuts are off the table for now as the agency figures out how else to tighten their fiscal belts.

"Against overwhelming circumstances, the governor and the legislature are protecting health care access for thousands of Oklahoma kids, pregnant moms, seniors and individuals with disabilities," Gomez said. "It is now time for the Oklahoma Health Care Authority to deliver on leadership's priority declaration and minimize the impact to the health care professionals we count on to serve our SoonerCare members."

Under the health law, states could expand Medicaid eligibility to individuals with incomes up to 138 percent of the poverty level starting in 2014. The cost of covering the additional beneficiaries is fully covered by the federal government until 2017, when states that expanded will have to start chipping in. By 2020, states will have to cover 10 percent of the cost. So far, 30 states and the District of Columbia have implemented expansion.

Louisiana will be the latest state to go forward with expansion as of June 1, bringing the total to 31 states and the district.

Matt Salo, executive director for the National Association of Medicaid Directors, said in an interview that Oklahoma's Medicaid expansion failure this session did not mean it was the end. He said the presidential election leaves the remaining non-expansion state holdouts in limbo over whether or not to expand soon or wait for a new administration.

"It's predictably difficult to get a lot done in the run up to an election cycle, because maybe things will be different after the election," Salo said. "At the state level once you get through the election and primary season, which is generally more important, that frees up state legislatures to openly and publicly engage on these issues."

By Marissa Evans, CQ Roll Call

May 31, 2016 -- After watching spending and enrollment balloon in his state's Medicaid program, the chairman of the House Energy and Commerce Committee's Medicaid task force says he is determined to find a way to curb costs in the entitlement program.

Kentucky Republican Brett Guthrie said in an interview that his vision for overhauling the joint federal–state health insurance program for the poor is summed up in three words: sustainable, transitional, and flexible.

"We don't want [beneficiaries] there forever because it's not fair to them to be trapped in a program," Guthrie told CQ Roll Call. "If we can transition them to where they can be productive for themselves and improve themselves, I think upward mobility is what they're looking for."

Since November, the eight-member Republican task force has been conducting an informational deep dive, wrestling with how to overhaul the program. So far, no draft legislation or hearings have been scheduled.

With the Obama administration winding down, Guthrie acknowledged that any overhaul efforts will have to wait until a new president takes office in 2017. Ideas being floated include changing Medicaid entitlement spending to a system with per-capita spending caps and giving states more room for creativity. It is a heavy legislative lift that Guthrie said could be on par with the welfare rewrite in the 1990s.

Guthrie said Republicans will push hard for changes that he hopes will help people move up the economic ladder and save states money.

"It's just not sustainable to have the growth that Medicaid has had," Guthrie said of the program's $495.8 billion price tag.

Home State Growth

Guthrie's own state is a prime example of dramatic growth.

Under an executive order from former Democratic Kentucky Gov. Steve Beshear, the state expanded eligibility for the program. The state saw its uninsured rate drop 8.4 percentage points between 2013 and 2014, according to a Kaiser Family Foundation report. Enrollment in Medicaid and the Children's Health Insurance Program grew by 87 percent.

The 2010 federal health care law allowed states to expand Medicaid eligibility to individuals with incomes up to 138 percent of the poverty level. By 2020, states will have to cover 10 percent of the cost. Thirty states and the District of Columbia have taken up the offer.

While Kentucky has been long lauded as a federal health care law darling, Republican Gov. Matt Bevin is considering waivers to remake the expansion but has not detailed how he would change the program. He dialed back campaign rhetoric when he said in 2015 that he wanted to roll back expansion altogether for 400,000 Kentuckians.

Guthrie said the problem is the Kentucky legislature expanded the program before overhauling it.

"They want to be fiscally responsible, they want to be sustainable and they're trying to figure out how to do that," Guthrie said. "If they can't do that they're going to have to make their own decisions on how it moves forward."

That "states know best" approach is something Guthrie said he wants to bring to a Medicaid revamp. He hesitates to call Medicaid expansion a mistake, as "every state has to decide can they make it work for their population." However, Guthrie said that given the enormous federal debt, state governments should be cautious about relying on federal matching funds that he predicted could decline below promised amounts.

More federal leniency is something task force members are considering. Guthrie said talks so far with former and sitting governors have revealed long-held desires for more flexibility with Medicaid. Federal waivers have been a point of hope and contention for many Republican governors who are considering Medicaid expansion. The Department of Health and Human Services has shot down Republican aspirations such as mandatory employment and work training program enrollment for expansion beneficiaries as part of waivers.

Indiana's Medicaid expansion has been particularly intriguing for the task force, according to Guthrie. The Hoosier State's expansion provisions include requirements for beneficiaries to pay premiums and denials of re-enrollment for six months if beneficiaries do not pay their premiums. Guthrie said paying small amounts for their insurance is one way to help beneficiaries eventually transition to private coverage. Sometimes beneficiaries have the chance to earn more income but choose not to because they would be disqualified from receiving Medicaid, Guthrie said.

"It puts people into a tough economic decision," Guthrie said. "What you hear from governors with flexibility is the whole idea is that people, even though in Medicaid, they are still kind of in the insurance world so it lets them transition."

For now, Guthrie said the task force is aiming to be the go-to experts in the House on all things Medicaid. If the group writes legislation, Democrats will likely be invited to the table.

"You're going to see from both sides of the aisle ... if we don't give reforms to the program that it's going to be difficult for all governors, whether you're Republican or Democrat, to be able to have this program," Guthrie said. "It has to be financially stable for everybody, or else it's not going to work."

By Kerry Young, CQ Roll Call

June 1, 2016 -- Pharmaceutical industry giants, including Pfizer Inc., are seeking to influence an eventual overhaul of Medicare payments for prescription medicines.

The companies asked for revisions in several federal rules, including the anti-kickback statute and restrictions on marketing, if Medicare changes its system for paying for Part B outpatient drugs.  Johnson & Johnson, Merck & Co., and rival drugmakers asked the Centers for Medicare and Medicaid Services (CMS) to scrap entirely the plan that it unveiled in March to test alternative payments. They want CMS to start over and rework its ideas from the second part of its proposal, which focuses on pegging payments for medicines to judgments about how well they work for patients.

"Many biopharmaceutical manufacturers want to participate in value-based drug pricing arrangements with public and private payers, but are inhibited by several barriers which are well known," including the kickback law, wrote Kirsten Axelsen, vice president of worldwide policy at Pfizer Inc., in a May 9 letter to CMS.

Drugmakers appear to have accepted that they will eventually face the same kind of competitive demands from Medicare that they already do from private insurers, said Dan Mendelson, president of Avalere Health and a former health adviser at the White House Office of Management and Budget in the Clinton administration. "It's a shift that represents the changing markets in the U.S.," he said in a Tuesday interview with CQ HealthBeat.

For now, Medicare directly handles about $22 billion in annual purchases of drugs administered in doctors' offices. The program adds a premium of about 4.3 percent to the reported average sales price for drugs that are administered in doctors' offices and covered by Medicare's Part program. This includes many forms of chemotherapy and glaucoma treatments.

Insurers that administer Medicare's separate Part D plans oversee roughly $90 billion in prescriptions that people fill at pharmacies. These companies are expected to negotiate to get lower prices. 

Suggestions from Drugmakers

France's Sanofi, a maker of cancer drugs, said it "would be happy to discuss with CMS in more detail about how to promote better value in the Medicare Part B program" if the agency would withdraw its current proposal. Sanofi said CMS will need to address the challenge that federal anti-kickback law presents. There could be questions about how to account for some of the services that drugmakers would offer under a value-based plan, such a program to check on patients' health, wrote Edward Greissing, vice president for government affairs in North America for Sanofi, in a May 9 letter to CMS.

Drugmakers also argued that they would need more flexibility from the Food and Drug Administration (FDA) about promoting their products under a value-based pricing system. This appears to be part of a broader push to allow drugmakers to provide information beyond what the FDA approves in labels for drugs. 

"FDA has not provided formal guidance on the circumstances under which manufacturers may proactively share clinical and pharmacoeconomic information with payers or risk-bearing providers," wrote Bob Filippone, vice president of global public policy and government relations at Merck & Co., in a May 9 comment to CMS. "Many questions remain about the information manufacturers can share with providers and payers related to clinical and economic outcomes that is not in the product's FDA-approved labeling."

Merck and other drugmakers asked CMS to move slowly and consider taking small steps as it moves toward value-based pricing. Genentech Inc., a biotech pioneer, said its officials have worked with CMS and commercial insurers on value-based test programs for years. That's given the firm a broad understanding of the challenges in this approach, including those related to data collection, wrote Fritz Bittenbender, senior vice president for government affairs at Genentech, in a May 9 letter.

"Even sophisticated partners, who share CMS' goal of devising new and workable strategies for sustainable access, are rolling out these pilots out on a much smaller and more manageable scale than CMS proposes" in its Part B model, Bittenbender wrote.

CMS is likely to greatly scale back the first part of its Part B proposal, which would change some doctors' reimbursements for the drug they administer, Mendelson said. The second part may not advance at this time, but federal officials and lawmakers are likely to revisit this issue, perhaps in the next Congress, he said. There's great political pressure to address drug costs, and many elderly people are struggling now to pay their share for costly Part B drugs.

"The safe bet is always that it takes longer to shift off these things than you think," Mendelson said. "That said, there has been a lot of discussion about competitive markets" for medicines.

By Erin Mershon, CQ Roll Call

May 31, 2016 -- Republicans in Congress are beginning to escalate their attacks against proposed health insurance premium hikes, months before the election and long before full data on the proposals is available.

Energy and Commerce Committee Chairman Fred Upton, R-Mich., highlighted one 89 percent requested increase in a press release. Republicans on the Senate Finance Committee blasted similar increases late last week. And Sen John Barrasso, R-Wyo., the GOP policy chairman, brought up the issue in weekly press conferences for each of the last three weeks. Last week, he blasted an 80 percent proposed increase. Those proposed rates could be lowered before the premiums are finalized but provide fodder for GOP criticism.

The critiques are even louder off the Hill. Republican presidential frontrunner Donald Trump highlighted premiums that are "through the roof" in an interview with Fox News earlier this month. A National Republican Senatorial Committee  (NRSC) Thursday highlighted 40 percent proposed rate hikes in Florida, where there's a contentious battle for the seat being vacated by Republican Sen. Marco Rubio.

It's "unequivocably" going to be a big issue on the trail, NRSC spokesman Greg Blair said.

"Costs continue to rise and insurers continue to leave state exchanges and cancel plans because Obamacare has regulated them out of the market," he said. "Any Democrat who loyally stands by this unmitigated disaster will be held accountable by voters."

The rate setting season, launched last month, provides Republicans with an easy opening to launch further attacks against the Affordable Care Act. Most people who bought insurance on the law's public exchanges are satisfied with that coverage, but affordability issues, like rising premiums and deductibles, remain a key concern, a Kaiser Family Foundation survey of enrollees found earlier this month.

Reasons for Rising Rates

The affordability issue is especially potent this year, and not just because it is an election year. Premiums are expected to rise by higher percentages than in the past, according to recent analyses from the health consulting firm Avalere and the data blogger Charles Gaba, who is a supporter of the law. Gaba looked at proposals in 15 states and is projecting a 15.6 percent average increase across the country. The separate Avalere analysis, which examined all the plans on the so-called "silver" level in nine states, found plans requested hikes averaging 16 percent. The increases were much lower, though, for the least expensive silver plans, which are more popular.

Last year at this time, Avalere was predicting increases around 5.8 percent. A few months later, Gaba was projecting an 11.9 percent increase nationwide, based on 25 states. Ultimately, the average increase last year was 11.6 percent.

The higher hikes come in part because insurers are still figuring out how to adjust to the new insurance markets. And they come in part because of the expiration of two programs that were intended to help mitigate some of the uncertainty insurers faced, the reinsurance and risk corridor programs. Those programs protected insurers from steep losses. An American Academy of Actuaries report pointed to those factors, as well as higher medical costs, as key drivers of the expected increases.

"For the individual and small group markets as a whole, the factors driving premium increases dominate," said Cori Uccello, a senior fellow at the American Academy of Actuaries, in a statement.

Democrats argue that Republicans don't have a viable alternative to the law they have spent the last six years opposing—and that they have put up roadblocks to Democratic efforts to protect Americans from premium increases.

"Simply put, Democrats remain the only ones fighting to make health care as accessible as possible, and that's the choice voters will have this November," Democratic Senatorial Campaign Committee spokesman Sam Lau said.

The Obama administration got in front of the issue in statements and reports beginning last month that emphasized that for most exchange customers, even double-digit premium increases won't hit as hard—because as premiums rise, so do the premium tax credits that the vast majority of enrollees receive. Those subsidies reduce the final costs for consumers.

Consumers facing higher premiums can also switch their plan during open enrollment, as many did last year.

Administration officials also note that the premium increases are still merely proposals, and that in some states, regulators have the power to reject hikes they feel are not actuarially sound. Insurers might also walk back hikes that spike public outcry. Final rates won't be available in some cases until the exchanges open for 2017 enrollment on Nov. 1, a week before the election.