Legislative Activity

With both chambers returning from recess this week, attention is focused on Senate consideration of the House-passed bill to permanently repeal Medicare’s physician payment system. While the last “doc fix” expired March 31, the Centers for Medicare and Medicaid Services (CMS) indicated it would hold claims for two weeks to allow Congress to return from the district work period and resume consideration of the legislation. The Senate has until Wednesday to take action on the bill to avoid steep cuts to physicians’ reimbursement rates, though an additional short-term patch may be utilized in order to consider Senate amendments to the House-passed legislative package.

While there is concern that changing any of the House language could slow down and undermine the viability of the legislation, there are key modifications that would bolster support in the Senate. Some Democrats are advocating for a four-year funding extension for the Children’s Health Insurance Program (CHIP), as opposed to the two-year extension included in the House-passed bill, and some Republicans are seeking out ways to fully offset the entire cost of the legislation.

This Week’s Hearings:

• Tuesday, April 14: The House Committee on Education and the Workforce Subcommittee on Health, Employment, Labor, and Pensions will hold a hearing titled “Five Years of Broken Promises: How the President’s Health Care Law is Affecting America’s Workplaces.”

• Tuesday, April 14: The House Committee on Appropriations Subcommittee on Defense will hold a hearing titled “Defense Health Program Budget.”

• Tuesday, April 14: The House Committee on Ways and Means Subcommittee on Health will hold a hearing on the individual and employer mandates in the President’s health care law.

• Tuesday, April 14: The Senate Committee on Finance will hold a hearing titled “Creating a More Efficient and Level Playing Field: Audit and Appeals Issues in Medicare.”

• Wednesday, April 15: The House Committee on Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies will hold a budget hearing on Ebola.

• Wednesday, April 15: The House Committee on Veterans’ Affairs will hold a hearing titled “Denver VA Medical Center: Constructing a Way Forward.”

• Wednesday, April 15: The House Committee on Foreign Affairs Subcommittee on Africa, Global Health, Global Human Rights, and International Organizations will hold a hearing titled “The Continuing Threat of Neglected Tropical Diseases.”

• Thursday, April 16: The House Committee on Energy and Commerce Subcommittee on Health will hold a hearing titled “Medicare Post Acute Care Delivery and Options to Improve It.”

Regulatory Activity

CMS Proposes Extending Mental Health Parity to Medicaid and CHIP

On Monday, April 6, CMS released a proposed rule titled “Medicaid and Children’s Health Insurance Programs; Mental Health Parity and Equity Act of 2008; the Application of Mental Health Parity Requirements to Coverage Offered by Medicaid Managed Care Organizations, the Children’s Health Insurance Program (CHIP), and Alternative Benefit Plans.”

The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) is a federal law that prohibits health insurance providers from imposing more restrictions on mental health and substance use disorder benefits as compared to medical and surgical benefits in the same classification of services (e.g., inpatient, emergency care). In 2013, the Departments of Health and Human Services (HHS), Labor, and Treasury issued final regulations which implemented the MHPAEA to health insurance and group health plans. The proposed rule would extend mental health parity to coverage offered by Medicaid Managed Care Organizations (MCOs), Medicaid Alternative Benefit Plans (ABPs) and CHIP. The mental health parity requirements would not apply, however, to Medicaid beneficiaries who are provided services on a fee for service (FFS) basis.

Comments on the proposed rule should be submitted on or before June 9, 2015.

Medicare Advantage Rates Bumped Up

On Monday, April 6, CMS announced that in 2016 it will increase Medicare Advantage (MA) payments by 1.25 percent, reversing a 0.9 percent decline proposed by the agency in February. During the past two years, CMS has similarly proposed a MA payment cut and ended up increasing the rate. Each year, the insurance industry has pushed back on the proposed decline, asserting that payment reductions would block access to care for seniors and other Medicare beneficiaries. CMS stated that 2016 MA payment rate increase is based on updated actuarial estimates, which stem from higher than expected spending on inpatient hospitalization and intermediary services, including therapy, rural health clinics, and federally qualified health centers.

CMS Actuary Forecasts Obstacles with SGR Repeal Bill

On Thursday, April 9, the CMS Office of the Actuary released a report on the “Estimated Financial Effects of the Medicare Access and CHIP Reauthorization Act of 2015 (H.R. 2).” In addition to reauthorizing CHIP and other Medicare reforms, H.R. 2 would replace the Sustainable Growth Rate (SGR) with a new value-based payment system.

The report cautions that although the new payment system would avoid the significant short-term problems raised by SGR, there would be “important long-range concerns that almost certainly need to be addressed by future legislation.” Specifically, the report states that physicians would experience a significant payment reduction in 2025 when the proposed additional updates and a 5 percent annual bonus would be scheduled to expire. Additionally, the report calls out H.R. 2 for failing to consider underlying economic conditions, which would make physician payments inadequate during years with higher inflation. The report predicts that under the new payment system, the rates would be lower than scheduled under the current SGR formula by 2048, and “would continue to worsen thereafter.” If these concerns are not addressed by future legislation, the report predicts that “access to, and quality of, physicians’ services would deteriorate over time.”

Robert Wah, President of the American Medical Association, spoke out against the report, calling its argument “illogical, flawed, and dangerous for patient access to high quality health care.” Specifically, he challenged the report’s assumption that payment rates would rise in the future under SGR.

CMS Shortens Meaningful Use Reporting Period

On Friday, April 10, CMS released a proposed rule titled “Medicare and Medicaid Programs; Electronic Health Record Incentive Program – Modifications to Meaningful Use in 2015 through 2017,” which would modify the Medicare and Medicaid Electronic Health Record (EHR) Incentive Program. The rule proposes streamlining the Meaningful Use (MU) reporting requirements, and aligning the requirements for Stages 1 and 2 with the approach for Stage 3 that CMS released last month.

Starting in 2015, the rule proposes moving both physicians and hospitals to an EHR reporting period based on the calendar year with a continuous 90-day reporting period, rather than in set quarters. Additionally, the rule proposes modifying the Stage 2 patient engagement objective by reducing the number of patients who must access their records electronically from five percent to one person. This would demonstrate that the system is “fully enabled” without penalizing providers for external factors which are beyond their control.

Comments on the proposed rule should be received by 60 days after the date of publication in the Federal Register.