A&B Healthcare Week in Review, October 10, 2014

I. REGULATIONS, NOTICES, & GUIDANCE

• On October 6, 2014, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule entitled “Medicare and Medicaid Program: Conditions of Participation for Home Health Agencies”. The proposed rule would revise the current conditions of participation (CoPs) that home health agencies (HHAs) must meet in order to participate in the Medicare and Medicaid programs. The proposed requirements would focus on the care delivered to patients by home health agencies, reflect an interdisciplinary view of patient care, allow home health agencies greater flexibility in meeting quality care standards, and eliminate unnecessary procedural requirements. CMS’ notice states, “These changes are an integral part of our overall effort to achieve broad-based, measurable improvements in the quality of care furnished through the Medicare and Medicaid programs, while at the same time eliminating unnecessary procedural burdens on providers”. Comments on the proposed rule are due December 5, 2014.
• On October 10, 2014, CMS announced the monthly actuarial rates for aged (age 65 and over) and disabled (under age 65) beneficiaries enrolled in Part B of the Medicare Supplementary Medical Insurance (SMI) program beginning January 1, 2015. In addition, this notice announces the monthly premium for aged and disabled beneficiaries as well as the income-related monthly adjustment amounts to be paid by beneficiaries with modified adjusted gross income above certain threshold amounts. The monthly actuarial rates for 2015 are $209.80 for aged enrollees and $254.80 for disabled enrollees. The standard monthly Part B premium rate for all enrollees for 2015 is $104.90, which is equal to 50 percent of the monthly actuarial rate for aged enrollees or approximately 25 percent of the expected average total cost of Part B coverage for aged enrollees. (The 2014 standard premium rate was $104.90.) The Part B deductible for 2015 is $147.00 for all Part B beneficiaries. If a beneficiary has to pay an income-related monthly adjustment, they may have to pay a total monthly premium of about 35, 50, 65, or 80 percent of the total cost of Part B coverage. More information may be found here. An HHS press release on the announcement may be found here.
• On October 10, 2014, CMS announced the inpatient hospital deductible and the hospital and extended care services coinsurance amounts for services furnished in calendar year (CY) 2015 under Medicare’s Hospital Insurance Program (Medicare Part A). The Medicare statute specifies the formulae used to determine these amounts. For CY 2015, the inpatient hospital deductible will be $1,260. The daily coinsurance amounts for CY 2015 will be: (1) $315 for the 61st through 90th day of hospitalization in a benefit period; (2) $630 for lifetime reserve days; and (3) $157.50 for the 21st through 100th day of extended care services in a skilled nursing facility in a benefit period. This notice is effective on January 1, 2015. More information may be found here.
• On October 10, 2014, CMS announced Medicare’s Hospital Insurance (Part A) premium for uninsured enrollees in calendar year (CY) 2015. This premium is paid by enrollees age 65 and over who are not otherwise eligible for benefits under Medicare Part A and by certain disabled individuals who have exhausted other entitlement. The monthly Part A premium for the 12 months beginning January 1, 2015, for these individuals will be $407. The premium for certain other individuals as described in the notice will be $224. This notice is effective January 1, 2015. More information may be found here.
• On October 6, 2014, the United States Preventive Services Task Force (USPSTF) issued a draft recommendation updating the 2008 recommendation on screening for diabetes in asymptomatic adults with hypertension (sustained blood pressure of >135/80 mm Hg). Since the previous recommendation, six new lifestyle intervention studies have shown consistent benefit of lifestyle modifications to prevent or delay progression to diabetes, and longer-term follow up has increased confidence that such interventions can improve clinical outcomes (see USPSTF Systematic Review here). This new body of evidence led the USPSTF to conclude that there is moderate net benefit to measuring blood glucose in adults at increased risk for diabetes—including those age 45 years or older, the overweight and obese, and those with first-degree relatives with diabetes. The Task Force gave the recommendation a “B” grade. USPSTF is seeking comments on the draft recommendations through November 3, 2014, which may be submitted here.
• On October 7, 2014, the Food and Drug Administration released a notice announcing that a collection of information entitled “Orphan Drugs; Common European Medicines Agency/Food and Drug Administration Application Form for Orphan Medicinal Product Designation—21 CFR Part 316 (OMB Control Number 0910–0167)—Revision” has been submitted to the Office of Management and Budget (OMB) for review and clearance. FDA is amending the 1992 Orphan Drug Regulations, part 316 (21 CFR part 316). The amendments are intended to clarify regulatory provisions and make minor improvements to address issues that have arisen since the issuance of the regulations in 1992. They are intended to assist sponsors who are seeking and who have obtained orphan drug designations, as well as FDA in its administration of the orphan drug program. Comments on the proposed revisions are due November 6, 2014.
• On October 7, 2014, FDA released a notice entitled “Laboratory Site Tours Program”. FDA’s Center for Tobacco Products’ (CTP) Office of Science is announcing an invitation for participation in its Laboratory Site Tours Program. This program is intended to give CTP staff an opportunity to visit facilities involved in the testing and analysis of tobacco products and tobacco smoke. These visits are intended to provide CTP staff with the opportunity to gain a better understanding of tobacco science and laboratory operations and are not intended as regulatory inspections or facility visits for the purposes of developing Tobacco Product Manufacturing Practice regulations. The purpose of this notice is to invite parties interested in participating in the Laboratory Site Tours Program to submit their requests to CTP by December 8, 2014.
• On October 8, 2014, FDA announced the availability of a draft guidance for industry entitled “Critical Path Innovation Meetings.’’ This draft guidance describes a Critical Path Innovation Meeting (CPIM), a means by which FDA’s Center for Drug Evaluation and Research (CDER) and investigators from industry, academia, government, and patient advocacy groups can communicate to improve efficiency and success in drug development. The goals of the CPIM are to discuss a methodology or technology proposed by the meeting requester and for CDER to provide general advice on how this methodology or technology might enhance drug development. The discussions and background information submitted through the CPIM are nonbinding on both FDA and CPIM requesters. Comments on the draft guidance are due December 8, 2014. More information may be found here.
• On October 8, 2014, FDA announced the availability of a draft guidance for industry entitled “The Effect of Uniform National Policy on Drug Producing Tracing and Wholesale Drug Distributor and Third-Party Logistics Provider Standards and Requirements: Questions and Answers”. ’ FDA is issuing these questions and answers to assist industry and State governments in understanding the effects of section 585 (Uniform National Policy) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) added by Title II of the Drug Quality and Security Act (DQSA), which was enacted on November 27, 2013, on State product tracing requirements and on standards, requirements, and regulations with respect to wholesale distributor and third-party logistics provider (3PL) licensing. Title II is also referred to as the Drug Supply Chain Security Act (DSCSA). Comments on the draft guidance are due December 8, 2014. More information may be found here.
• On October 8, 2014, FDA announced the availability of a draft guidance for industry entitled “Over-the-Counter Pediatric Liquid Drug Products Containing Acetaminophen”. The draft guidance is intended to help drug manufacturers, packagers, and labelers minimize the risk to consumers of acetaminophen-related liver damage associated with the use of nonprescription, also known as over-the-counter (OTC), acetaminophen-containing pediatric liquid drug products. This guidance provides recommendations for acetaminophen concentration, container labels and carton labeling, packaging of such products, and recommendations regarding any associated delivery devices. FDA’s recommendations are designed to encourage safer use of these products by minimizing the potential for acetaminophen overdosing due to medication errors or accidental ingestion. Comments on the draft guidance are due December 8, 2014. More information may be found here.
• On October 8, 2014, FDA issued a notice and request for comments related to FDA’s patient-focused drug development initiative. This initiative is being conducted to fulfill FDA performance commitments made as part of the fifth authorization of the Prescription Drug User Fee Act (PDUFA V). This effort provides for a more systematic approach under PDUFA V for obtaining the patient perspective on disease severity and currently available treatments for a set of disease areas. FDA is publishing a preliminary list of nominated disease areas for consideration in patient-focused drug development meetings during fiscal years (FYs) 2016–2017. The public is invited to comment on this preliminary list through December 5, 2014. More information may be found here.
• On October 7, 2014, CMS released a frequently asked questions (FAQ) document entitled “Medicaid and CHIP FAQs: Health Insurance Providers Fee for Medicaid Managed Care Plans”. CMS has received a number of questions from states, their actuaries, and health plans about the Health Insurance Providers Fee added by Section 9010 of the Affordable Care Act (ACA), and its interaction with Medicaid managed care rate setting. CMS believes that this fee, like other similar fees, should be considered a business cost to health plans. CMS prepared the FAQs to provide guidance to the states as they consider the impact to their managed care plans.
• On October 6, 2014, CMS released a guidance document entitled “Hardship Exemptions, Age Offs, and Renewal of Catastrophic Coverage”. The ACA establishes statutory exemptions from the individual shared responsibility payment, including an exemption that is available where the Secretary determines the consumer experiences a “hardship” obtaining coverage through a qualified health plan (QHP). The majority of hardship exemptions that the Department of Health and Human Services (HHS) granted to individuals in 2014 will expire on December 31, 2014, and consumers will not be able to use them to enroll or re-enroll in catastrophic coverage in 2015 with the exception of the hardship exemption for individuals who are eligible for services through the Indian Health Service. Each exemption had a unique Exemption Certificate Number (ECN). As explained in the guidance, the hardship exemption that was granted to consumers as a result of the consumer’s plan being cancelled because the plan was not compliant with the market reforms contained in the Affordable Care Act will also continue to be valid for enrollment in or renewal of catastrophic coverage with a plan year that begins on or before October 1, 2016. In the document, CMS provides the process for issuers to follow for renewing or reenrolling consumers in a catastrophic, or non-catastrophic, plan as appropriate. In addition to hardship exemptions, we also provide information on the renewal or reenrollment process for those catastrophic plan enrollees who turned age 30 during the 2014 plan year.

Event Notices

• November 18, 2014: FDA will hold a meeting of the Drug Safety and Risk Management (DSaRM) Advisory Committee on November 18th from 9:00 AM to 4:00 PM at FDA’s White Oak Campus in Silver Spring, Maryland. The Committee will discuss the Food and Drug Amendments Act of 2007, which requires FDA to bring, at least annually, one or more drugs with Risk Evaluation and Mitigation Strategies (REMS) with elements to assure safe use (ETASU) before the DSaRM Advisory Committee. The Agency plans to discuss the risk management of eculizumab (SOLIRIS). The Agency will seek public input whether the REMS with ETASU for this drug assures safe use of the drug, is not unduly burdensome on patient access to the drug, and to the extent practicable, minimizes the burden on the health care delivery system. More information may be found here.
• November 19, 2014: The Science Board to the Food and Drug Administration will hold a public meeting on November 19th from 8:30 AM to 5:30 PM. During the meeting, the Science Board will review the existing nonclinical and clinical data related to the use and potential toxicity of anesthetics and sedation drugs in the pediatric population. The Science Board will be asked to make recommendations on steps the FDA should take to further evaluate and to mitigate the risks associated with the use of these drugs in the pediatric population and mechanisms to best communicate with the public regarding this issue. More information on the meeting may be found here.
• October 16, 2014: The Administration for Community Living (ACL) and the Office of the National Coordinator for Health Information Technology (ONC) announced the following workshop: “Putting the Person at the Center: Integrating Plans for Long-Term Services and Supports and Health Care Delivery through Health Information Technology” will take place on October 16th at the Hubert H. Humphrey Building in Washington DC. More information on the meeting may be found here.

II. LEGISLATION & COMMITTEE ACTION

U.S. Senate

• The Senate is not in session. More information about the Senate schedule may be found here.

House of Representatives

• The House is not in session. More information about the House schedule may be found here.
• On October 6, 2014, President Barack Obama signed into law the Improving Medicare Post-Acute Care Transformation (IMPACT) Act (HR 4994). Among other provisions, the measure requires post-acute care (PAC) providers to report interoperable, standardized patient assessment data, data on quality measures, and data on resource use. The IMPACT Act also strengthens Medicare’s oversight of hospice care.

III. REPORTS, STUDIES, & ANALYSES

• On October 6, 2014, the Government Accountability Office (GAO) released a report entitled “The Range of Base Premiums in the Individual Market by County in January 2013”. GAO is reporting the range of base premiums prior to underwriting for individual market health insurance plans as displayed on the HealthCare.gov Plan Finder in January 2013 for every county in each of the 50 states and the District of Columbia. The data represent the base premium amount, rather than the actual premium amount, an individual may have been charged, because in 2013 insurers could have imposed different premiums on individuals on the basis of a variety of factors. These data were reported for fourteen different categories of consumers including: smoking and nonsmoking males and females ages 19, 30, and 64; a family of four with parents aged 40; and a couple aged 55. This supplements state-level data presented in two previous reports, one issued in July 2013 (see GAO-13-712R) and the other issued in January 2014 (see GAO-14-263R). An interactive tool displaying the information may be found here.
• A study published in the journal Health Affairs this week finds that despite the high cost of specialty drugs, they may “still offer reasonable value for money” given their relative benefits compared to traditional drugs. Researchers identified and published estimates of additional health gains (measured in quality-adjusted life-years, or QALYs) and increased costs of drug and healthcare resource use that were associated with 58 specialty drugs and forty-four traditional drugs, compared to preexisting care. They found that specialty drugs offered greater QALY gains (0.183 versus 0.002 QALYs) but were associated with greater additional costs ($12,238 versus $784), compared to traditional drugs. The two types of drugs had comparable cost-effectiveness. However, the distributions across the two types differed, with 26% of specialty drugs—but only 9 percent of traditional drugs—associated with incremental cost-effectiveness ratios of greater than $150,000 per QALY. The results suggest that “…specialty drugs can offer good value for various complex and burdensome diseases”. Authors acknowledge that the high costs of specialty drugs are placing an increasing burden on payers, employers, and patients, and they lay out recommendations for cost management strategies, including expanding coverage with evidence development.
• On October 7, 2014, the Office of Inspector General (OIG) published a report entitled “Medicare Beneficiaries Paid Nearly Half of the Costs for Outpatient Services at Critical Access Hospitals”. The Critical Access Hospital (CAH) certification was created to ensure that rural beneficiaries would have access to hospital services. Medicare reimburses CAHs at 101 percent of their "reasonable costs," rather than at the predetermined rates set by the Outpatient Prospective Payment System (OPPS). OIG analysts used 2009 and 2012 claims data to calculate the percentages and amounts of coinsurance that Medicare beneficiaries paid toward the costs for outpatient services at CAHs. Additionally, they calculated the percentages and amounts of coinsurance that beneficiaries would have paid at acute-care hospitals for 10 outpatient services that were frequently provided at CAHs. The results showed that because coinsurance amounts were based on charges, Medicare beneficiaries paid nearly half the costs for outpatient services at CAHs. In 2012, beneficiaries paid approximately $1.5 billion of the estimated $3.2 billion cost for CAH outpatient services. Additionally, the average percentage of costs that beneficiaries paid in coinsurance for these services increased 2 percentage points between 2009 and 2012. Finally, for 10 frequently provided outpatient services at CAHs, beneficiaries paid between 2 and 6 times the amount in coinsurance that they would have for the same services at acute-care hospitals. To reduce the percentage of costs that Medicare beneficiaries pay in coinsurance, OIG recommended that CMS seek legislative authority to modify how coinsurance is calculated for outpatient services received at CAHs.

IV. OTHER HEALTH POLICY NEWS

• On October 6, 2014, CMS announced a series of changes to its Nursing Home Five Star Quality Rating System. Effective January 2015, CMS and states will implement focused survey inspections nationwide for a sample of nursing homes to enable better verification of both the staffing and quality measure information that is part of the Five-Star Quality Rating System. In addition, CMS will increase both the number and type of quality measures used in the System: the first additional measure, starting January 2015, will be the extent to which antipsychotic medications are in use. Also of note, in 2015 CMS will revise the scoring methodology by which the agency calculates each facility’s quality measure rating, which is used to calculate the overall Five Star rating. More information on these changes may be found here.
• CMS and ONC have announced that the submission period for hardship exception applications for eligible professionals and eligible hospitals to avoid the 2015 Medicare payment adjustments for not demonstrating meaningful use of Certified Electronic Health Record Technology (CEHRT) has been reopened. The new deadline will be November 30, 2014. Previously, the hardship exception application deadline was April 1, 2014 for eligible hospitals and July 1, 2014 for eligible professionals. This reopened hardship exception application submission period is for eligible professionals and eligible hospitals that: have been unable to fully implement 2014 Edition CEHRT due to delays in 2014 Edition CEHRT availability; and eligible professionals who were unable to attest by October 1, 2014 and eligible hospitals that were unable to attest by July 1, 2014 using the flexibility options provided in the CMS 2014 CEHRT Flexibility Rule.
• This week CMS released financial and quality results from Performance Years 1 and 2 of the Medicare Pioneer Accountable Care Organization (ACO) Models.
• This week the Medicare Payment Advisory Commission (MedPAC) convened a series of meetings in Washington, DC to discuss Medicare payment policy. The agenda, as well as staff presentations and transcripts as they become available, may be found here.

This advisory is published by Alston & Bird LLP’s Health Care practice area to provide a summary of significant developments to our clients and friends. It is intended to be informational and does not constitute legal advice regarding any specific situation. This material may also be considered attorney advertising under court rules of certain jurisdictions.