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Washington Outlook

March 3, 2012

Congress returned this week to a reprieve from pressing legislative deadlines, after the president signed the payroll tax, unemployment compensation and physician payment extension bill, pushing off longer-term decisions on those items until after the elections.

The House Energy and Commerce Health Subcommittee approved a bill that would repeal the health overhaul law’s Independent Payment Advisory Board (IPAB), while two House committees focused on the fiscal year 2013 budget and the Senate Budget Committee examined ideas to put healthcare spending on a sustainable path. Other congressional action this week included hearings on access to dental care and its impact on hospital emergency rooms, as well as prescription drug abuse.

The administration this week released proposed rules on the second stage of “meaningful use” of electronic health records and made an announcement on steps it is taking that build on earlier Food and Drug Administration initiatives to increase the supply of critically needed drugs that are in shortage.

Meanwhile, Premier joined other organizations in appealing to Congress to take action on antimicrobial resistance and medical liability reform.

With March here, MedPAC will soon be submitting to Congress its annual report of recommendations on Medicare provider payment updates, which will include a proposal to cut outpatient payments for evaluation and management services. The Supreme Court will also hear the healthcare reform case in six hours of oral argument, from March 26 to March 28.

Congress begins 2013 budget process

Department of Health and Human Services (HHS) Secretary Kathleen Sebelius twice this week was called to the Hill to defend the Obama administration’s budget before House committees, while a group of economists discussed ways to rein in healthcare spending during a Senate Budget Committee hearing.

On March 1, the House Energy & Commerce Health Subcommittee convened a hearing to discuss the administration’s fiscal year (FY) 2013 budget request for HHS, featuring Sebelius as the sole witness.  Sebelius testified that the FY 2013 budget request builds-upon the package of deficit reduction proposals detailed by the administration last fall, saving roughly $360 billion over 10 years, with most of the savings stemming from reforms to the Medicare and Medicaid programs.  As with the administration’s prior year budget request, in written testimony Secretary Sebelius again reiterated how the current fiscal environment has led the administration to make cuts to programs that “were difficult to make,” such as the $177 million cut to the Children’s Hospital Graduate Medical Education (CHGME) Payment Program and the $327 million cut to Community Services Block Grants.

Rep. Schakowsky (D-IL) called upon the Secretary to consider ways in which to educate Medicare beneficiaries regarding their “outpatient hospital status” in light of the coverage and cost implications and how such status may impact their transfer to a nursing home or ambulance, for example.  Additionally, Rep. Schakowsky called to the Secretary’s attention “little tweaks” that she deems necessary to ensure that the ‘Hospital Compare’ ratings of certain safety-net hospitals are not diminished due to the unique populations they serve.  Rep. Eliot Engel (D-NY) expressed his concerns regarding the challenges to providing oral health care and the access issues plaguing the country, which have had a profound financial impact, referencing the latest Pew research that cites the costs associated with increased emergency room utilization among children with preventable dental issues. Engel’s bill, the Special Care Dentistry Act of 2011 (H.R. 1606), amends the Medicaid statute to require states to provide oral health coverage for aged, blind, or disabled individuals through a separate state adult dental program. 

In the Senate Budget Committee hearing, three economists, including David Cutler from Harvard University, all concluded that moving from a fee-for-service system to one that pays more for better outcomes is essential to controlling healthcare spending. Cutler specifically called for aggressive use of bundled payments in Medicare and Medicaid, recommending that 80 percent of all program payments be bundled payments within five to seven years.  The other two economists suggested controlling costs through medical liability reform, a permanent physician payment fix and a premium support model for the non-drug portions of the Medicare program. Committee Chairman Kent Conrad (D-ND) said that the best approach for reducing healthcare spending is to eliminate the tax deduction for employer healthcare costs.

Meanwhile, Congress must finalize its FY 2013 budget blueprints in April in time for appropriators to take action on annual spending bills, which must be completed or extended by October 1. Congress is also beholden to provisions of the Budget Control Act this year, which places limits on appropriations and sets in motion the automatic sequestration process that impacts hospitals and other Medicare providers.

CMS announces proposed rule for stage 2 meaningful use of EHRs

The Centers for Medicare & Medicaid Services (CMS) released on February 23 the proposed rule for stage 2 criteria for the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs.  Premier is pleased to make available to its members a detailed summary of the proposed stage 2 meaningful use rule. 

The American Recovery and Reinvestment Act of 2009 (ARRA) established this incentive payment program for eligible hospitals and physicians to become meaningful users of health information technology (HIT) and proposed three stages to implementation. Final regulations addressing the first stage of requirements to qualify healthcare providers for the HIT EHR meaningful use incentives were released in July 2010.

In the proposed rule released last week, CMS proposes to specify stage 2 criteria that eligible professionals, eligible hospitals, and critical access hospitals must meet in order to qualify for an incentive payment, change the program timeline, and describe the payment adjustments.  

More specifically:

·       The proposed stage 2 criteria for meaningful use focus on increasing the electronic capturing of health information in a structured format, as well as increasing the exchange of clinically relevant information between providers of care at care transitions. CMS proposes to require that eligible hospitals and critical access hospitals (CAHs) meet or qualify for exclusion to 16 core objectives and 2 of 4 menu objectives. Eligible professionals must meet or qualify for exclusion to 17 core objectives and 3 of 5 menu objectives. With a few exceptions, all the stage 1 core menu objectives have been retained for stage 2. In addition, the proposed rule includes new objectives that have greater applicability to many specialty providers.

·       CMS is also proposing an extension of stage 1, so that providers have an additional year for implementation of stage 2 criteria.  In CMS’ July 28, 2010 final rule, the agency established that any provider who first attested to stage 1 criteria in 2011 would have to begin using stage 2 criteria in 2013. This proposed rule delays the onset of those stage 2 criteria for those providers until 2014.

·       Medicare payment adjustments are required by statute to take effect in 2015. The rule proposes that any eligible professional or hospital that demonstrates meaningful use in 2013 would avoid a Medicare payment adjustment in 2015. Also, eligible hospitals that meet the criteria by July 3, 2014 and eligible professionals that meet the criteria by October 3, 2014 would avoid the Medicare payment adjustment. CMS is also proposing exceptions to the payment adjustment in certain circumstances.

CMS has made available a display copy of the rule, as well as a fact sheet which provides an overview of the proposed rule.

As a companion rule to the meaningful use proposal, the Office of the National Coordinator (ONC) for Health Information Technology released on February 24 a proposed rule for the standards and certification criteria for electronic health record technology.  ONC’s rule revises EHR certification criteria to reduce regulatory burden and increase flexibility.  For example, while eligible professionals and hospitals are currently expected to own certified EHR technology that is capable of supporting all meaningful use objectives, ONC proposes to only require eligible professionals and hospitals to own certified EHR technology that supports the objectives they have chosen to achieve meaningful use.  ONC specifically seeks public comment on ways to improve data portability, as well as feedback on price transparency, regarding the cost of EHR technology.  For more information on the ONC rule, click here.  Premier will also provide a detailed summary of this proposed rule for its member in the coming days.

Premier calls for protection of healthcare professionals providing emergency care across state lines

Premier joined other healthcare providers in endorsing bipartisan legislation that would ensure that vital healthcare services are available to disaster victims.  The Good Samaritan Health Professionals Act (H.R. 3586), introduced by Congressmen Cliff Stearns (R-FL) and Jim Matheson (D-UT), would close the gap in the Volunteer Protection Act that leaves healthcare providers who cross state lines to aid disaster victims at risk for liability suits.

Premier, as part of the Health Coalition on Liability and Access (HCLA), sent a February 22 letter to the lawmakers in support of the bill. Members of HCLA also include physician and insurance groups.

“Your legislation is greatly needed to address this oversight and ensure that health professionals who wish to provide voluntary care in response to a disaster are able to do so and not face uncertainty about potential liability,” the groups wrote.

Premier joins 50 organizations in urging Congress to address antimicrobial resistance

Premier recently joined 50 broad-based organizations in urging leaders of the U.S. House of Representatives to address the problem of antimicrobial resistance and the integral need for antibiotic research and development (R&D).  Up to 50 percent of antimicrobial use is inappropriate, significantly contributing to the growing problem of antimicrobial resistance, according to the Centers for Disease Control and Prevention. In a February 22 letter to lawmakers, the organizations underscored that an increasing number of patients are suffering from antimicrobial-resistant infections as a result of inappropriate antibiotic use, and there are a shrinking number of antibiotics, often none, which are effective in treating such infections. 

Low incentives to develop new antibiotics have caused a significant reduction in the number of antibiotic R&D programs, according to the letter.  The groups highlighted the financial dynamics that contribute to the problem, specifically that antibiotics are typically used by patients for a short period of time and are sold at low prices, thus providing little financial incentive for companies to produce them.  Moreover, antibiotic R&D poses scientific and regulatory challenges, which make the achievement of FDA standards uniquely difficult, according to the letter. 

“A combination of push-and-pull incentives is needed to sufficiently raise the net present value of antibiotics so that they may compete on a level playing field with other drug categories for companies’ R&D  resources,” wrote the groups.  Premier, as one of 50 organizations to sign the letter, is advocating for economic incentives to be included in the reauthorization of the Prescription Drug User Fee Act to encourage antibiotic R&D. 

FDA announces steps to alleviate critical drug shortages

The Food and Drug Administration announced a series of steps it has initiated to increase the supply of critically needed drugs, including actions to make the critical cancer drugs Doxil and methotrexate immediately available to patients in the U.S.

As part of these efforts, FDA is allowing temporary importation of a drug, Lipodox, to replace Doxil, which FDA expects will meet the supply needs for a few weeks. For methotrexate, FDA has approved prioritized review of and approved a preservative-free generic drug manufactured by APP Pharmaceuticals. In addition, Hospira has expedited the release of 31,000 vials of new product, which were shipped to hundreds of hospitals and treatment centers on February 21.

In conjunction with these efforts, the FDA also issued draft guidance to the industry outlining detailed requirements for both mandatory and voluntary notifications to the agency of issues that could result in a drug shortage of supply disruption. These efforts build on President Obama’s Executive Order issued last October, followed by the interim final rule released in mid-December that addresses issues regarding shortages in which there is only one manufacturer.

In a press conference call announcing the administration’s latest actions, Dr. Margaret Hamburg, Commissioner of Food and Drugs, reported that there had been a six-fold increase in the number of voluntary notifications since Obama issued his Executive Order and FDA simultaneously sent a letter to manufacturers. According to Hamburg, these and other actions averted 114 potential drug shortages. 

House subcommittee votes to repeal IBAP

The House Energy and Commerce Health Subcommittee, by a vote of 17 to 5, advanced a bill to the full committee that would repeal the healthcare reform law’s Independent Payment Advisory Board (IPAB).  The full House Energy and Commerce Committee has announced it will mark up the IPAB repeal bill starting Monday.

While opposition to the board generally originated from Republican ranks, a bi-partisan group of lawmakers is now sympathetic to doing away with the panel that is tasked with recommending Medicare payment changes if spending exceeds targeted growth rates. In the subcommittee, Ranking Member Frank Pallone (D-NJ) and Rep. Edolphus Towns (D-NY) joined Republicans in supporting the repeal bill, the Medicare Decisions Accountability Act (H.R. 452). 

House Republicans plan to vote on the IPAB repeal bill during the third week of March, prior to the Supreme Court considering the reform law. H.R. 452, introduced by Phil Roe (R-TN), has 226 cosponsors, including 17 Democrats. While the measure may have enough support to pass the House, it faces a less favorable fate in the Senate, where Democrats are staunch champions of the board.

Beginning in 2014 and continuing in subsequent years, if Medicare spending exceeds the target growth rate, the board must submit a draft report to MedPAC and to the Secretary by September 1 of each year with a proposal to reduce Medicare spending by targeted amounts compared to current law and present a final proposal to Congress and the President by the following January 15. Hospitals and other providers and suppliers that are subject to update reductions under reform are exempt from any recommended cuts until 2020.

During a House Ways and Means Committee hearing on the budget, Department of Health and Human Services (HHS) Secretary Kathleen Sebelius signaled that the board may not be operational until 2018 or later. Even if the board is up and running, recent Congressional Budget Office projections that show Medicare spending growth is slowing could mean recommendations may not be immediately required. When asked about the status of appointees to the IPAB, Sebelius said that HHS is having active negotiations with potential nominees, but it is slow going. 

The American Hospital Association and the American Medical Association, among other provider groups, have voiced support for H.R. 452.

“America’s hospitals support the repeal of IPAB because its existence permanently removes Congress from the decision-making process, and threatens the important dialogue between hospitals and their elected officials about how hospitals can continue to provide the highest quality care to their patients and communities,” AHA wrote.

Weekly legislative and regulatory round-up

The round-up for the week of March 2, 2012 is available here.

The round-up for the week of February 17, 2012 is available here.