Health Policy Report (11/12)

The Week in Review

While House lawmakers left Washington for their Veterans Day district work period, Senators resumed consideration of pending presidential nominations. In a floor speech early last week, Majority Leader Mitch McConnell (R-KY) indicated that confirming nominees will be the focus of the Senate’s work so long as appropriations talks are deadlocked. Nominations that cleared the upper chamber last week include: (1) Lee Rudofsky to be a District Judge for the Eastern District of Arkansas; (2) Jennifer Wilson to be a District Judge for the Middle District of Pennsylvania; and (3) William Nardini to be a Circuit Judge for the Second Circuit. 

The Week Ahead

Both chambers of Congress will reconvene for legislative business this afternoon while government funding talks off the floor continue. With less than two weeks left to avert a funding lapse, House Appropriations Chairwoman Nita Lowey (D-NY) and Senate Appropriations Chairman Richard Shelby (R-AL) are expected to meet today to continue negotiations on another continuing resolution (CR), as well as broader spending allocations for each one of the fiscal year (FY) 2020 spending bills. While “poison pill” issues —namely border security — have largely stymied FY 2020 funding talks, lawmakers have coalesced around another stopgap measure that would fund the government through Dec. 13 or Dec. 20 in hopes of providing appropriators with more time to hammer out a deal.

On the floor, House lawmakers will consider a Financial Services bill that would reauthorize the Export-Import Bank. The newly-revamped measure — which cleared (30-27) the Financial Services Committee on a near party-line vote — would: (1) reauthorize the bank for 10 years; (2) increase the agency’s lending authority to $175 billion; (3) rename it the United States Export Finance Agency; and (4) make a number of tweaks to the bank’s operations. Meanwhile, the Senate will resume consideration of presidential nominations, starting with Chad Wolf’s nomination to be Under Secretary for Strategy, Policy, and Plans at the Department of Homeland Security.

CMS Finalizes 2020 Payment Rules for Physicians, Hospital Outpatient Services

The Centers for Medicare & Medicaid Services (CMS) has issued a pair of final Medicare payment rules for calendar year (CY) 2020 covering reimbursement for physicians, Medicare Part B drugs, and hospital outpatient services as well as updates to Medicare quality initiatives. The rules finalize policies around new Opioid Treatment Programs (OTPs), a new framework for the Quality Payment Program (QPP), a payment reduction for new Part B drugs, and alignment of interoperability policies for physicians. Notably, CMS is continuing with two controversial policies which have been separately invalidated by the courts: site-neutral payment policy impacting hospital outpatient clinics and reductions for certain 340B payments. The two proposed rules released November 1, 2019 include: the Medicare Physician Fee Schedule (MPFS) and Quality Payment Program (QPP) Final Rule; and the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Final Rule.

CMS released the proposed CY 2020 PFS and QPP rule and the OPPS rule on July 28, 2019, with several significant changes to payment methodologies. Most notable, the rule includes a controversial realignment of payments for evaluation and management (E/M) services — a policy which backed by the American Medical Association (AMA), but decried by certain physician specialties (e.g. radiologists, physical therapists, and psychologists) which are estimated to experience cuts of eight percent or more under the rule. Most of the provisions of the final MPFS rule take effect January 1, 2019; however, CMS pushed the start date until CY 2021 for certain burden reduction proposals in response to concerns from the provider community and Congress.

The CY 2020 OPPS rule finishes phasing in the use of the site-neutral rate (40% of the OPPS rate) for clinic visits provided in certain off-campus departments. In doing so, CMS acknowledged that the district court vacated its site-neutral clinic visit cut for CY 2019 and notes that it is "working to ensure affected CY 2019 claims for clinic visits are paid consistent with the court's order" but is still considering "whether to appeal from the final judgment." CMS also continued its current policy of cutting the payment rate for certain drugs purchased under the 340B program to average sales price minus 22.5%. With respect to the price transparency requirements in the proposed payment rule for hospital outpatient departments and ambulatory surgical centers, CMS has separated this policy and intends to advance a distinct, final rule.

Several provisions in the OPPS rule implement directives in President Trump’s Executive Order, entitled “Protecting and Improving Medicare for Our Nation’s Seniors.” HHS is preparing to address other directives with new policy proposals contained in a Medicare Advantage and Part D rule currently under review at the Office of Management and Budget (OMB). With respect to the MPFS and OPPS rules, the agency will continue to assess stakeholder feedback as it considers further modifications to the MIPS and shared savings programs. OMB is also currently reviewing CMS’ proposal to require hospitals to make public a list of their payer-specific negotiated rates. The MPFS and OPPS final rules go into effect on January 1, 2020.

New Kentucky Governor Vows to Reverse Medicaid Work Requirements

Newly elected Kentucky Governor Andy Beshear (D) vowed to rescind the state’s Medicaid work requirements within his first week in office. The issue of Medicaid work requirements was big in the gubernatorial race, and incoming Gov. Beshear ran on defending Medicaid expansion. His father, former Gov. Steve Beshear, brought Medicaid expansion to Kentucky in 2014. Current Gov. Bevin has yet to concede the election and has cited “irregularities” in the results.

Gov. Bevin was a close ally of President Trump and sued his own constituents to defend Kentucky’s work requirements. He also threatened to pull out of Medicaid expansion altogether if work requirements were struck down by the courts. A federal judge has blocked the work requirement waiver twice, and its legality is now on review at the U.S. Court of Appeals for the D.C. Circuit. Gov. Bevin’s waiver would have reduced beneficiary enrollment by 95,000 and saved $300 million over five years.

HHS Sues Gilead for Over HIV Medication

The Department of Health and Human Services (HHS) sued Gilead last week for patent infringement, alleging that the drug manufacturer used patents owned by the federal government to profit off of HIV prevention medication. The administration claimed in the lawsuit that Gilead reaped the profits of Truvada and Descovy after the Centers for Disease Control and Prevention (CDC) developed the innovative therapies. Additionally, the lawsuit noted that Gilead has refused to obtain licenses for the use of government patents. HHS Secretary Alex Azar explained that Gilead “must respect the U.S. patent system, the groundbreaking work by CDC researchers, and the substantial taxpayer contributions to the development of these drugs.” The government is asking for damages and royalties, which would be used to lower the prices and distribute the drugs to more people. President Trump set a goal in his State of the Union address earlier this year to end the HIV epidemic within ten years and is a tough critic of high drug prices like the $20,000 price tag of Gilead’s drugs. Gilead has responded to the lawsuit, noting that the federal government’s claims are false and should be handled through the official patent review board and not the courts.

CMS Issues Guidance on SUD Treatment in IMDs

Last Wednesday, the Centers for Medicare and Medicaid Services (CMS) sent a letter to state Medicaid directors providing guidance on coverage for substance use disorder (SUD) treatment in institutions for mental disease (IMD) under Medicaid programs. The State Medicaid Director Letter (SMDL) outlines CMS’ vision for implementing Section 5052 of the SUPPORT Act (P.L. 115-271), which created a new state plan option for states to access federal financial participation (FFP) for IMD services in order to combat the opioid epidemic. States must submit a state plan amendment (SPA) for review and approval by CMS in order to take advantage of the new option.

The Medicaid statute generally prohibits the federal government from paying for Medicaid services provided to an IMD resident under age 65. This prohibition applies even to services provided outside the IMD setting if the beneficiary is residing in an IMD. The IMD exclusion became law along with the Medicaid program and was intended to emphasize that inpatient psychiatric services were the domain of the states, not the federal government. As the opioid crisis grew, policymakers grew concerned about the availability of SUD services. In addition to Section 1115 waiver demonstrations permitting IMD care for SUDs, CMS clarified that Medicaid managed care organizations could provide limited reimbursement for IMD residents. Then, with the passage of the SUPPORT Act, the federal government offered a more robust state plan option for covering IMD patients.

Section 5052 of the SUPPORT Act provides for FFP for individuals with a SUD residing in an IMD. The provision is time-limited, beginning October 1, 2019 and expiring September 30, 2023. The IMD exclusion exemption is intended to increase access to withdrawal management and SUD treatment services. In the SMDL, CMS clarifies that in order to be eligible for FFP under the statute, beneficiaries must be residing in the IMD primarily to receive withdrawal management or SUD treatment services. Eligible IMDs must offer two forms for medication-assisted treatment (MAT) onsite and should offer behavioral health services as a complement to MAT. States are required to ensure that beneficiaries’ placement in an IMD facilitates their transition back to the community. Additionally, states must maintain their non-Medicaid expenditures on IMDs and other SUD treatment options to ensure that they are expanding access to SUD treatment services, not simply shifting costs to the federal government.