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May 16, 2016

Washington Health Policy Week in Review Archive 1bfdcc64-4256-4139-9175-f02b50f2f26e

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Judge Sides with House in Obamacare Spending Lawsuit

By Todd Ruger, CQ Roll Call

May  12, 2016 -- A federal judge on Thursday sided with the House in an appropriations dispute over funding for the 2010 health care overhaul law, ruling that the Obama administration is unconstitutionally spending $175 billion over 10 years without congressional approval.

House Republicans filed the lawsuit in 2014 as a response to a series of President Barack Obama's unilateral executive actions that lawmakers say are unconstitutional. The ruling sets up a showdown at the appeals court that will test the boundaries of separation of powers and when the courts can step into disputes between the branches of government.

U.S. District Judge Rosemary M. Collyer entered a judgment in favor of the House in the lawsuit that stops the use of certain funds to reimburse insurers under a section of the law. Collyer put that injunction on hold, however, pending an appeal that the Obama administration is certain to file.

The ruling represents a victory for the Republican-led House, which has tried to strike down the law since it was enacted. But the Supreme Court has upheld the constitutionality of the law and numerous efforts to repeal it legislatively have stalled.

"This is an historic win for the Constitution and the American people," Speaker Paul D. Ryan, R-Wis., said in a statement. "The court ruled that the administration overreached by spending taxpayer money without approval from the people's representatives. Here, the executive branch is being held accountable to We the People, and that's why this decision is very good news."

The Obama administration has said the law is here to stay. 

White House Press Secretary Josh Earnest said critics continue to "go through the motions." He said they "have been losing this fight for six years. They will lose again."

Subsidizing Coverage

The dispute focuses on two sections of the health care law that subsidize people who buy insurance coverage. The law provides tax credits to subsidize the monthly premiums of people with income between one and four times the federal poverty level. It also provides extra help to the lowest-income people, those with income between one and 2.5 times the federal poverty level, to help them with their out-of-pocket costs such as deductibles. 

The ruling struck down the additional help for the poorest people. 

The Obama administration said it could make Section 1402 payments for out-of-pocket costs out of the same account as Section 1401 Refundable Tax Credit Program payments for premiums. House Republicans say the health care law, known as the Affordable Care Act, doesn't permit that.

The administration, during the fiscal 2014 appropriations process, initially asked Congress for a separate line item for payments to help the poorest people with their cost-sharing such as deductibles and copayments. Congress did not include money for such a line item. The House then filed the lawsuit against the Department of Health and Human Services and the Department of Treasury, along with the secretaries of those agencies.

Collyer ruled that Section 1402 can't be funded through the same, permanent appropriation that Section 1401 is funded through.

"The Affordable Care Act unambiguously appropriates money for Section 1401 premium tax credits but not for Section 1402 reimbursements to insurers. Such an appropriation cannot be inferred," Collyer wrote in the ruling. "None of Secretaries' extra-textual arguments—whether based on economics, 'unintended' results, or legislative history—is persuasive."

Collyer did not accept the Obama administration's argument that reading the two sections with different appropriations would yield "absurd economic, fiscal and healthcare-policy results." The only result of the law is that Section 1402 must be funded annually, Collyer wrote.

"Far from absurd, that is a perfectly valid means of appropriation," Collyer wrote. "The results predicted by the Secretaries flow not from the ACA, but from Congress' subsequent refusal to appropriate money."

The Justice Department did not immediately return a request for comment.

The Obama administration had already moved to take the case to the U.S. Court of Appeals for the District of Columbia Circuit on a previous ruling in the case. The Justice Department lawyers disagreed with Collyer's decision early in the case that the House had the legal right to sue the Obama administration, arguing that ruling was "a momentous step" that unnecessarily plunges the judiciary into a dispute between the political branches.

The case is U.S. House of Representatives v. Sylvia Mathews Burwell, et al., Case No. 14-1967. Collyer is an appointee of President George W. Bush.

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Lines Sharpen in Battle over Medicare Part B Drug Pricing Model

By Kerry Young, CQ Roll Call

May 10, 2016 -- Two Republican Senate Finance Committee members on Tuesday said they will look for opportunities to block proposed changes to Medicare's payments for drugs administered by doctors.

In separate interviews, Sens. Richard M. Burr of North Carolina and Charles E. Grassley of Iowa registered deep continued objections to the proposal.

"I am going to do everything in my power" to stop the Centers from Medicare and Medicaid Services (CMS) from putting the payment test into effect, Burr told CQ HealthBeat. "The question is do we have any legitimate vehicles" to block CMS.

Burr said CMS should decide on its own to withdraw the proposed test. He joined other Senate Finance Republicans last week in signing a letter to CMS asking the agency to do so.  "I am hoping that CMS might rethink what they are doing," Burr said.


In the House, Rep. Larry Bucshon, R-Ind., introduced a bill (HR 5122) to block CMS. The Energy and Commerce Health Subcommittee on May 17 will hold a hearing about the Medicare drug test, including a review of Bucshon's bill. There likely would be significant support for it, Grassley said.

"It would probably pass," Grassley told CQ HealthBeat.

In Grassley's view, the CMS proposal could make it more difficult for people in rural communities to get care. Oncology groups have said a plan to lower a premium paid on the reported average sales price of drugs would be difficult for smaller practices, which often don't get the volume discount that larger practices enjoy.

Doctors say they would lose money on some medicines. As a result, some patients might be referred to larger more distant centers to get their medicines.

CMS "isn't taking into consideration the problems of rural America," Grassley said. "If people have to go to the hospital to get their drugs, it is going to cost more."

Medicare advisers and lawmakers have for some years been concerned about increased consolidation of physician practices as part of hospital outpatient departments. Medicare pays more for care provided to the hospital-affiliated doctors than to those in private practices.

Burr raised this point. "It would push everything back into the hospital," where patients might also be at higher risk for infections, he said.

Reactions to the Rule

So far, agency officials have given indications that they plan to proceed, although there likely will be some changes the proposal first unveiled in March.

But Medicare officials face increasingly steep odds as trade associations, medical specialty groups and Republican lawmakers line up to stop the proposal, although it does enjoy the support of AARP and some House Democrats.

The American Hospital Association was among the medical groups recommending that CMS scale back its plan by eliminating cancer treatment from the proposed change and reducing the number of regions in which it would take effect.

The Pharmaceutical Research and Manufacturers of America (PhRMA) and the Federation of American Hospitals asked CMS to scrap the plan. Democrats on the Senate Finance Committee, whose support may be key to the proposal's survival, also had raised questions about the scope of CMS plans.

Backers of the Medicare drug test, including AARP, argue that it's a solid step toward addressing concerns about rising drug prices, particularly for elderly and disabled Americans. The median annual income for people enrolled in Medicare is less than $25,000, AARP said in a letter supporting CMS.

The CMS program would change how Medicare pays for drugs covered by Part B that are provided in doctors' offices, such as infusions and injections to treat rheumatoid arthritis.  The Part B outpatient program pays for more than $20 billion in drugs annually.

The most expensive Part B drugs include some cancer drugs, such as Yervoy, a medicine that cost about $93,000 and triggered an out-of-pocket cost for people on Medicare of about $19,000, the Government Accountability Office said last year.

"For too many Americans, a diagnosis of cancer or other dread disease is a prognosis of financial ruin," said Rep. Lloyd Doggett of Texas, who was one of about 20 House Democrats to sign a letter to CMS supporting the Part B test.

The Medicare Part B test takes a two-part approach. It is designed to move quickly within months to alter how many doctors are paid for drugs across the nation. Some doctors still would be paid through the current approach, in which a premium of about 4.3 percent is added to the reported average sale price. Others would be switched to a roughly 0.9 percent premium and also get a flat fee of about $16.80. 

Advocates for the Part B drug model argue that it would address concerns about the current pricing structure about whether it gives doctors a perhaps unconscious motivation to prescribe more costly drugs. Opponents question whether doctors' actions are driven by these types of financial incentives.

Another part of the Part B test calls for looking at more sweeping changes in how drug prices could be pegged to the results that they deliver for patients. PhRMA argued in its comment to CMS that such an approach may deprive people of needed treatments. It urged CMS to withdraw the proposed model, a demand also made in a letter signed by more than 240 members of the House, including four Democrats.

Lawmakers opposed to the Part B model have several paths for blocking it, including the appropriations process, in which a rider could be used to block the use of federal funds for it.

The Medicare Part B test marks one of the last major fights over health policy that the Obama administration may fight in its final months. At this time, it appears that there would be more than enough support in the House for a move to derail or alter the proposal. While Democrats on the Senate Finance Committee raised concerns about the program, they stopped short of seeking its immediate withdrawal. If the House moves a bill on the program, Senate Democrats will have to decide whether to back the Obama administration.

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Top Obama Administration Officials Press for Health IT Advances

By Kerry Young, CQ Roll Call

May 9, 2016 -- Top officials of the Obama administration on Monday pressed Silicon Valley investors, software developers and others in the technology community for help in making medical records easier to understand and share. Improved use of the information underpins many of the president's major goals for health policy.

Vice President Joseph R. Biden Jr., Health and Human Services (HHS) Secretary Sylvia Mathews Burwell and Karen DeSalvo, the national coordinator for health information technology, all made appeals at the seventh annual Health Datapalooza conference in Washington.

Biden sought to apply to his so-called cancer "moonshot" initiative the lessons from successes already attributed to the Centers for Medicare and Medicaid Services' (CMS) decision in recent years to make its data more available to entrepreneurs. Biden is leading a campaign to better unify resources to battle the disease that last year claimed the life of his 46-year-old son. 

More than 2,100 data sets have been made available, unveiling much about almost all aspects of the workings of traditional government-run Medicare program, Biden said. 

"Looks at what it's led to. Using publicly available Medicare data, innovators like you in this room have launched companies that give information about hospital and doctors' performance," Biden said. "Emergency medicine doctors are using information about E.R. visits and wait times and outcomes to help create an app to guide ambulances and even the public to the best places for emergency care. Well, folks, why can't we do the same kind of thing in the battle against cancer?"

Biden also singled out former HHS chief technology officer Todd Park, who was in the audience, for kicking off this change in attitude. Health Datapalooza has grown from a small gathering in 2010 of officials from the White House and federal agencies and members of tech community to a highly anticipated annual IT event. Datapalooza also bears the stamp of Niall Brennan, who in 2014 was named the first CMS chief data officer. Brennan is a strong advocate for CMS working with the tech entrepreneurs as partners in analyzing medical data in search of ways to improve medical care.

"Think health care data is important? How many events do @JoeBiden, @SecBurwell, @KBDeSalvo & I all speak at?" tweeted Andy Slavitt, the acting administrator of CMS, on Monday ahead of his own appearance Tuesday at the conference.

Burwell and DeSalvo each on Monday highlighted contests intended to stir the interest of companies and organizations in developing products that would simplify the practice of medicine from the views of doctors and patients. DeSalvo spoke of two funding opportunities worth $1.5 million to work toward common standards that support the sharing of health information.

"We have made significant progress in the flow of health information, but we still have work to do to ensure different systems speak the same language," DeSalvo said.

Burwell promoted an AARP-sponsored contest meant to make medical bills easier for consumers to understand. The winning designs for new bills will be featured at the Health 2.0 annual fall conference this September. Six medical networks, including Pennsylvania's Geisinger Health System, have agreed to test the winning designs. 

Advanced information technology underpins the efforts Burwell is leading to tie Medicare payments more closely to judgments about the quality of service provided to elderly and disabled Americans. 

"We still have work to do to get the kind of open connected health system that is needed for lasting system transformation, but we know what we need to improve," Burwell said at the meeting.

CMS estimates that almost $1 of every $3 spent in the traditional fee-for-service program now runs through one of the special projects that include measures of how often doctors and other providers of health care follow certain practices and coordinated care, and how their patients fared. The foundation of these efforts is having the technology to make these assessments, Burwell said.

"You can't improve quality, or pay for it, if you don't know what quality is," Burwell said.

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Lawmakers Question How New Medicare Pay Plan May Affect Doctors

By Kerry Young, CQ Roll Call

May 11, 2016 -- Members of a key House panel on Wednesday questioned a top Obama administration official about what steps the Medicare program can take to ease the transition for doctors to a new system of payment, which will tie their reimbursement more closely to quality judgments.

Several members of the House Ways and Means health subcommittee, including Rep. Sam Johnson, R-Texas, questioned at a hearing how doctors in small practices will fare under new Medicare payment rules. The Centers for Medicare and Medicaid Services (CMS) has estimated that it will be hard for doctors, especially those in solo practice, to avoid penalties that kick in in 2019. A Medicare draft rule released last month includes a chart that shows most doctors in solo practices facing reduced pay under the new merit-based incentive payment system, while the majority of those at very large practices would fare better economically.

"We know that there is a burden on us to make reporting as easy as possible," said acting CMS Administrator Andy Slavitt at the hearing, addressing the toughest challenges ahead for doctors in small practices to adapt to the new system.

Rep. Tom Price, R-Ga., asked whether the Centers for Medicare and Medicaid Services could broaden its view on when participation in alternative test programs will allow doctors to be exempted from the new rules. Slavitt said the agency is looking at the experimental programs it now has underway, with an eye toward being generous in these determinations while sticking with the mandates of last year's congressional overhaul of Medicare payments to doctors (PL 114-10).

CMS last month unveiled a detailed draft rule to show how doctors' pay may be raised or docked starting in 2019, depending on how their performance is judged. Another frequent complaint about the draft proposal is how often it proposes to give doctors feedback on their performance. The draft rule "continues the problem of delayed feedback for physicians," said the American Medical Association in a summary of the more than 960-page rule.  

Many health organizations, including Premier Inc., Athenahealth Inc. and several medical societies, asked CMS last year to move toward quarterly feedback reports in designing its merit-based incentive payment system for doctors. However, CMS intends to stick with annual reporting, said analysts at the Brookings Institution in a recent report. Doctors may not have enough time under annual reporting to adjust their practices in order to benefit patients and avoid penalties under the new MIPS rule.

"Quarterly reporting and feedback periods could have made the incentive programs more `actionable' for providers, alerting them to their performance closer to the time the services were rendered and providing more opportunities to improve performance," wrote Brookings researchers Kavita Patel, Paul Ginsburg, and their colleagues in a recent report on the rule.

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HHS Finalizes Rule on Discrimination

By Erin Mershon, CQ Roll Call

May 13, 2016 -- The Obama administration on Friday finalized a regulation prohibiting discrimination on the basis of sex in federally funded health programs like Medicare, Medicaid, and Tricare.

The rule prohibits discrimination based on sex, including gender identity, sex stereotyping and pregnancy. It implements Section 1557 of the Affordable Care Act. Previously, the Department of Health and Human Services (HHS) only enforced laws against discrimination based on race, color, national origin, age, and disability.

The rule will prohibit insurers participating in the insurance marketplaces from marketing practices or benefit designs that discriminate on those characteristics, and will outlaw discriminatory practices by hospitals and doctors that participate in federal programs. Other provisions of the health law keep insurers from charging women more for insurance than men, but this is the first time requirements prohibiting gender discrimination will apply to providers.

The rule also includes provisions that will require providers and insurers to make their websites and any new facilities accessible to individuals with disabilities, and to provide auxiliary aids for those with disabilities. They are also required to take reasonable steps to assist individuals with limited English proficiency.

Secretary Sylvia Mathews Burwell called the rule a "key step toward realizing equity within our health care system" and said it "reaffirms this Administration's commitment to giving every American access to the health care they deserve."

The provisions will be enforced by the HHS Office of Civil Rights.

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Federal Judge Rejects FTC Effort to Stop Hospital Merger

By Jad Chamseddine, CQ Roll Call

May 10, 2016 -- A federal judge denied the Federal Trade Commission’s (FTC) request to block Penn State Hershey Medical Center and PinnacleHealth System from merging assets, arguing the commission misjudged the affected market area.

The decision is a rare setback in the FTC's efforts in the past five years to stop hospital mergers it considers harmful to competition. The agency was joined by the Pennsylvania attorney general's office in blocking the proposed combination between the two hospitals in December on grounds the combination would hurt consumers.

District Judge John E. Jones III of the U.S. District Court for the Middle District of Pennsylvania rejected the request for a preliminary injunction to block the deal, questioning whether the FTC was correct in its relevant market determination. Competitive effects in a merger analysis cannot be conducted properly “without a well-defined relevant market" which takes into consideration a "product market and a geographic market," the judge said, citing case law.

The FTC said the deal would hurt competition in the “Harrisburg area,” which takes into account the counties of Dauphin, Cumberland, Perry, and Lebanon. Patients “want to be hospitalized near their families and homes” and would chose nearby hospitals, the FTC argued, saying the area's two large commercial health insurance payors, Capital Blue Cross and Highmark, “recognize the Harrisburg area” as a distinct market.

But Jones sided with the argument put forward by the two hospitals that the FTC's relevant market area was “far too narrowly drawn.” He pointed to facts showing 43.5 percent of Hershey’s patients came from outside the FTC’s defined market area and a similar number of Pinnacle patients also came from outside the Harrisburg area. The judge also said at least half of Hershey’s patients drive at least 30 minutes to the hospital, with 20 percent of those driving about an hour for care.

“These salient facts controvert the FTC’s assertion that general acuity services are 'inherently local' and strongly indicate that the FTC has created a geographic market that is too narrow,” Jones said in his ruling.

The FTC said in a statement in December when it filed for a preliminary injunction “the merger would create a dominant provider of general acute care inpatient hospital services sold to commercial health plans in the area of south-central Pennsylvania.” But the judge said Pennsylvania would not lack competition between hospitals if the deal is approved.

Jones added that 19 hospitals exist within a 65-minute drive of Harrisburg and will maintain a competitive landscape and offer an alternative to patients unhappy with the service, quality or price at the merging hospitals.

“Given the realities of living in Central Pennsylvania, which is largely rural and requires driving distances for specific goods or services, it is our view that these 19 hospitals  . . .  provide a realistic alternative,” the judge said in his ruling.

The judge also took into account the merger would be able to alleviate capacity constraints experienced by Hershey. In its complaint, the FTC said the merged entity “would control 64 percent of the southern Pennsylvania market, affecting the health care costs of about 500,000 residents and patients.”

But the merging parties took into account the possibility of rising health care costs, with rates frozen for at least five years. The judge criticized the FTC for speculating what would happen after five years. “In the rapidly changing arena of health care and health insurance, to make such a prediction would be imprudent,” the court said.

A loss at the preliminary injunction stage means the FTC was not able to “show a likelihood of ultimate success” in a trial on the merits of the case, and the government agency could still appeal. The FTC has yet to comment, but the hospitals said they would proceed with the merger.


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