Congress Reaches Year-End Agreement on Spending and Tax Bills.   This week Congress passed a $1.1 trillion spending bill and a $629 billion tax package to wrap up the year.  The spending bill, which will fund the government through September 2016, was paired with a separate tax deal to revive a series of expiring tax breaks.   “In divided government, you don’t get everything you want,” new House Speaker Paul Ryan said of the 2,200-page budget agreement which contained a series of wins and losses for both parties. “I think everybody can point to something that gives them a reason to be in favor of both of these bills.” At the White House, press secretary Josh Earnest sounded a similar note, saying President Obama would sign the package despite elements opposed by the administration. Those include a GOP provision lifting the 40-year-old ban on exporting crude oil from the U.S. and delays and suspensions of several taxes put in place by the Affordable Care Act. “The president is pleased with the final product, even if it does reflect the kind of compromise that’s necessary when you have a Democratic president negotiating with large majorities of Republicans,” Earnest said.

Congress Trims Budgets at AHRQ and Keeps ONC Funding at 2015 Levels. The omnibus appropriations bill passed this week includes budget cuts for the Agency for Healthcare Research and Quality (AHRQ).  It provides AHRQ with $334 million in budget authority in FY16, down from $364 million in FY15—a cut of about 8 percent.  However, it is a far cry from the heavy budget cuts and even termination the agency had been facing.   The Office of National Coordinator for Health IT (ONC), fared better but did not receive any increase in funding for 2016. ONC’s appropriation is $60.3 million, approximately the same as last year’s funding level.

Omnibus Policy Riders: What Made it In? For weeks, lawmakers and industry groups have been negotiating for the inclusion of several healthcare-related policy riders.  Many policy riders made it into the final package, but certain riders did not make the cut.

  • Cadillac tax delay. The Omnibus includes a two-year delay of the Cadillac tax on high-cost employer-sponsored health coverage.  The tax will now take effect in 2020, and when it does, it will be a deductible expense for employers and health plans, ultimately making the Cadillac tax less financially onerous.
  • 1-year Moratorium on Health Insurance Industry Fee.  The package also puts in place a 1-year moratorium on assessment of the annual fee on health insurance providers, otherwise called the health insurance tax.  The moratorium will be in place for the 2017 calendar year.  Industry representatives say that the moratorium was agreed to as a means to lessen the blow on insurers from a separate provision to restrict risk corridor payments to insurers.
  • Device tax suspension.  The tax extenders package included a two-year suspension of the ACA’s medical device tax.

What the Omnibus Left Out.

Hospital Site Neutrality Fix.  Despite weeks of intense lobbying by hospital groups, Congress ultimately did not include language to fix the grandfathering provision of the site neutrality law enacted earlier this year as part of the Bipartisan Budget Act.   The site neutrality law will prevent off-campus hospital outpatient facilities not in operation as of November 2 from receiving higher outpatient hospital rates for their services.  Hospitals had been pushing for an amendment to grandfather off-campus outpatient facilities that are under development, thus allowing these facilities to bill at outpatient rates once complete.  The American Hospital Association (AHA) blamed House Republicans for failing to advance the amendment language, and sources say the fix was omitted due to disagreements over a separate provision that would lift the moratorium on physician-owned hospitals.   The AHA was lobbying to get the amendment language into another Medicare reform package that moved on Friday afternoon, but was not successful in doing so.

Meaningful Use Tweaks. Lawmakers had hoped to include some relief for physicians and hospitals subject to Meaningful Use penalties, such as giving the Centers for Medicare & Medicaid Services the ability to grant a blanket hardship exemption for those failing to meet Meaningful Use requirements.  The meaningful use provisions did not make it into the omnibus package, but Congress got a second bite at the apple in a Medicare bill, which passed Friday afternoon and includes the hardship exemption language.

Congress Passes Medicare Bill with Meaningful Use Hardship Exemption, but Without Site Neutrality Fix. On Friday afternoon a bipartisan group of Senators used the “hotline” process to advance a bill that includes a number of Medicare policies that were left out of the Omnibus.  The Patient Access and Medicare Protection Act (S. 2425), passed both chambers on Friday and includes, among other provisions, and blanket hardship exception for providers subject to meaningful use penalties for 2015.   Democrats in the House and Senate had sought support for a bill that would have also included  the site-neutrality language sought by the AHA to exempt facilities that are under development from the new site neutrality payment rules.  This bill was the last shot for a fix to the site neutrality rules this year, and its omission from this package means that negotiations will continue in 2016.

House Delays Reconciliation Votes.  Republican leaders have decided to delay until January a House vote to unravel the Affordable Care Act and block federal money for Planned Parenthood, hoping to increase attention on their drive against two of conservatives’ favorite targets. The measure has already cleared the Senate, and House passage seems assured. Though the House and Senate have voted dozens of times to repeal all or part of the ACA, this measure would be the first to reach the president’s desk and be vetoed.  GOP Aides say they are planning for a House vote on January 6, days before President Obama’s State of the Union address to Congress.  President Obama would have 10 days to veto the bill, which the White House has promised he will do.

Administration Issues State Innovation Waiver Guidance Limiting States with Federally-Facilitated Exchanges. This week the administration issued guidance on the Affordable Care Act’s state innovation waivers which will limit the ability of states with federally facilitated exchanges to use the waivers to avoid many of the ACA’s federal mandates.   Under a provision of the ACA, states can ask to opt out of most of the law’s major insurance components including the insurance exchanges, minimum benefit packages and the individual and employer mandate if they demonstrate that coverage will remain accessible, comprehensive and affordable.  The guidance issued this week by CMS and the Treasury Department said certain reforms that would affect the federally facilitated exchange platform are not feasible to implement at this time.  “Until further guidance is issued, the Federal platform cannot accommodate different rules for different states,” CMS said. “For example, waivers that would require changes to the calculation of Exchange financial assistance, non-standard enrollment period determinations, customized plan management review options, or changes to the design used to display plan options are generally not feasible at this time due to operational limitations. ”  States contemplating a waiver that requires such changes may consider establishing their own state-based exchange instead, the administration suggested.

Veterans Affairs Moves Toward Value Based Payments. The Veterans Affairs Department on Wednesday presented a plan to Congress for overhauling the way veterans receive care outside the VA. It would move toward value-based provider payments and would need at least $1.5 billion to get it started. The three-phase multiyear plan calls for the VA to adopt Medicare rates on outside services as much as possible and to develop value-based payments as the concept matures. The VA would remain the primary payer and for services not covered by Medicare the agency would negotiate rates.  Outside providers would be evaluated on performance and quality metrics and potentially receive higher reimbursement or be dropped from the list of eligible providers. “Providers may be penalized for poor outcomes, medical errors, or increased costs. The CMS is currently piloting various models of value-based care, which the VA can work to replicate, as appropriate,” according to the proposal.

CMS Expands Qualified Entity Program to Include Amino.  This week CMS announced the approval of a second nationwide Qualified Entity, Amino.  The Qualified Entity (QE) program, established by the ACA, provides publicly available performance reports and data.  There are currently 12 certified QEs, 11 reporting regionally and now two reporting nationally.  In the announcement, CMS Chief Data Officer Niall Brennan indicated that CMS was “looking forward to the future release of a Notice of Proposed Rulemaking (NPRM) that will implement changes to the QE program enacted by Congress under the Medicare Access and CHIP Reauthorization Act of 2015.”  He did not indicate when the NPRM will be released.

National Quality Forum Head Christine Cassel to Step Down.  Christine Cassel, MD, president and CEO of the National Quality Forum (NQF), will leave her post March 1 to join the leadership team designing the new Kaiser Permanente School of Medicine in Southern California.  Dr. Cassel joined NQF in 2013.

Hold Lifted on DeSalvo Vote. Karen DeSalvo’s nomination for Assistant Secretary of Health had been on hold up until today.  Senator Ben Sasse (R-NE) had put a hold on the administration’s nominees for the Assistant Secretary and FDA Commissioner slots pending a document request related to the Affordable Care Act’s failed co-op program.   The Administration has not announced its plans to replace DeSalvo as head of the Office of National Coordinator.

Growth In Health Care Spending Accelerates, Tops $3 Trillion.   After five years of historically low growth, national health expenditures increased by 5.3 percent in 2014, and now exceed $3 trillion according to a report issued this week from actuaries at the Centers for Medicare & Medicaid Services.    These new figures show a major uptick in growth from the 2.9 percent growth rate in 2013, which marked the lowest rate since the government began tracking the gains 55 years ago.    The acceleration in spending growth in federal health care spending is largely attributed to the millions of Americans who have gotten health coverage under the Affordable Care Act.   The report found that health care spending grew faster than the economy as a whole, reaching 17.5 percent of GDP, and currently amounts to $9,523 for every man, woman and child.   The report, based on 2014 government numbers and published in the journal Health Affairs, follows five consecutive years where average spending growth was less than 4 percent annually.   Below are some of the report’s major findings:

  • Medicare spending increased by 5.5 percent last year, the fastest rate of growth since 2009. The two biggest reasons were the rising cost of prescription drugs, and more spending for doctors’ services and other outpatient care.
  • Spending on Medicaid jumped by 11 percent in 2014, the fastest growth in more than a decade. That was mainly driven by the health law’s Medicaid expansion, which is optional for states. In some reassuring news for states, the report found that per-person spending declined due to healthier people signing up in the program. Also, the federal government picked up nearly all the new costs.
  • Prescription Drug Spending.  Prescription drug spending shot up by 12.2 percent in 2014, driven by a handful of new, expensive treatments for Hepatitis C infection, cancer and multiple sclerosis.
  • Growth in Per-Person Health Care Spending. The growth in per-person health care spending was driven mainly by greater use of medical services, which outpaced increases in the price of those services. One possible explanation for this surge in utilization is that some newly insured people got care they had previously gone without. Additionally, already-insured people may have gotten elective treatments they had postponed earlier during leaner economic times.

CMS Issues RFI on Improvements to Resource Use Measurement.  As required by Section 101(f) of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), CMS is soliciting comments on episode groups, and on specific clinical criteria and patient characteristics to classify patients into care episode and patient condition groups. CMS is also seeking stakeholder input on the future role of episode groups in resource use measurement.  Comments are due by February 15, 2016.  For more information, click here.

CMS Finalizes Rules for Mandatory Hip and Knee Bundled Payment Demo;  The Centers for Medicare & Medicaid Services (CMS) finalized its rule for the 5-year Comprehensive Care for Joint Replacement (CCJR) demonstration program, which will make mandatory at certain hospitals bundled payments for episodes of care that include hip or knee replacement surgery or other major leg procedures.  These payments cover all services provided during the hospitalization and 90 days of post-discharge care. Hospitals, physicians, and post-acute care providers in mandatory demonstration regions will be paid fee for service, and their total payments will be reconciled against a target amount.  If the hospitals that are accountable for the bundled payments come in under budget, they will receive a bonus.  If they spend more than the target, they will owe money to CMS.  Hospitals must also meet quality benchmarks for the episode of care.  In the final rule, CMS delayed the start date of the CCJR for 3 months, until April 1, 2016.  CMS also reduced the number of regions where the CCJR will be mandatory, from 75 regions to 67 regions.  CMS spared 8 regions, including Colorado Springs, Colorado; Richmond, Virginia; and Las Vegas, Nevada because there were too few joint replacement cases in those areas that were not already covered under CMS’ ongoing Bundled Payments for Care Improvement Initiative.

CMS Provides New Details on EHR Incentive Program Final Rule.   The Centers for Medicare & Medicaid Services has issued three new FAQs clarifying how to attest to certain meaningful use measures for the Medicare and Medicaid Electronic Health Record Incentive Programs under the final rule modifying meaningful use requirements for 2015-2017. The clarifications pertain to certain measures for health information exchange, patient electronic access and other objectives that require patient action.

*Want more info? Register Here for The Health Collaborative’s learning session on January 16 – everything you need to know about Modified Stage 2 and Stage 3 MU requirements and how to prepare.

New ACO Rules Out in Near-Term.   CMS is working on a set of new rules for the Next Generation ACO model and the agency expects to announce entities that will participate in the program in the near term.  The next generation of ACOs will have prospective attribution, so medical providers know their population; a choice of capitated payments up to full population-based payments per member or payments based on a lower amount of risk; and be allowed to use “voluntary attribution” in which patients select their ACO, which allows rebates to be made to beneficiaries to stay within networks as well as enhanced care coordination.