Washington Watch

Carter L. Alleman, J.D.

Senators Seek Action on Drug Abuse

A recent Senate committee hearing supported the need for legislation to address an epidemic of addiction to heroin and prescription pain-killers. A group of senators highlighted the Comprehensive Addiction and Recovery Act (CARA) which seeks to mobilize a federal response to the epidemic. The hearing was joined by calls for the final CDC guidance on prescribing opioids for chronic pain. CARA would expand educational and prevention efforts, increase access to drugs that can reverse the effects of overdoses and launch evidence-based treatment and intervention programs. The measure also would give states incentives to strengthen prescription drug-monitoring programs, which can help track at-risk individuals and track prescription drug diversion.

CMS Releases Hardship Application

Centers for Medicare & Medicaid Services (CMS) posted new, streamlined hardship applications on the Payment Adjustments and Hardship Information webpage, reducing the amount of information that eligible professionals, eligible hospitals, and critical access hospitals (CAHs) must submit to apply for an exception from the 2017 payment adjustment. Application timeline:

•    Eligible professionals: March 15, 2016
•    Eligible hospitals and CAHs: April 1, 2016

Groups of providers may apply for a hardship exception on a single application. Under the group application, multiple providers and provider types may apply together using a single submission. The hardship exception categories are the same as those applicable for the individual provider application.

Health Spending Continues to Grow

Though Congress has taken steps to control Medicare spending, more sweeping efforts will be needed to keep government health programs from consuming ever-larger shares of the economy, according to the Congressional Budget Office (CBO).

In a report released on Monday, the CBO stated that the latest overview of the nation's economy reveals Medicare spending on each beneficiary is expected to grow at an average annual rate of 1.6 percent from fiscal 2016 to 2026. This is a significant drop from the 4 percent annual gains seen routinely between 1985 and 2007, but spending by federal health programs will consume about 6.6 percent of the gross domestic product in 2026, up from an estimated 5.5 percent this year.

Medicare could itself account for 4.7 percent of GDP in 2026 when factoring in federal spending and beneficiaries' out-of-pocket expenses. That will make it more difficult to pay for other priorities. Discretionary spending on non-entitlement programs may shrink from 6.5 percent of the economy to 5.2 percent in the 2016-2026 period, according to the report. CBO estimates that payments for Medicare, Medicaid, and other major health programs will nearly double to $2 trillion by fiscal 2026.

Under CBO's economic projections, those payment rates are expected to increase by about 2 percent per year on average, roughly 1 percentage point lower than the rate at which prices of inputs to Medicare services are projected to increase. Another approach to controlling Medicare costs has been to seek more contributions from those enrolled in the program. Spending for Medicare, excluding premiums and other offsetting receipts and adjusted for shifts in the timing of certain payments, will rise by $28 billion, or 5.2 percent, a drop from last year's 6.8 percent increase.

Cigna Medicare Missteps Posed Serious Threat, CMS Says

Cigna Corp.'s mishandling of coverage disputes through its Medicare plans posed a "serious threat" to its customers, who were denied access to health services and medicines due to "widespread and systemic failures" on the insurer's part, a top federal official said. The Centers for Medicare and Medicaid Services (CMS) last week sanctioned Cigna by suspending its enrollment and marketing efforts to recruit new patients for its Medicare Advantage health and Part D drug plans. Its current Medicare operations are not affected by this action.

Insurers, such as Cigna, have been vying in recent years to expand their Medicare portfolios, seeing a path to profit through managing health care and the purchases of medicines for the nation's elderly and disabled. Members of these often vulnerable populations were left in frustrating and potentially dangerous situations through Cigna's missteps in handling disputes, according to details in CMS Jan. 21 letter announcing the sanctions. Cigna's violations also include failing to take extra steps to determine whether a Medicare Advantage customer needed a certain service, such as calling doctors to gather more information. In numerous cases, these decisions were based only on information provided in the initial request, denying appropriate care, CMS said.

Indianapolis-based Anthem announced a plan in July to buy Cigna for about $54 billion.

Federal Support for South Carolina Certificate of Need Repeal

The Department of Justice (DOJ) and Federal Trade Commission (FTC) are backing legislation in South Carolina that would limit the state’s certificate-of-need laws, a move that could ultimately lead to the state's repeal of a program started in 1971 to regulate health care providers on a state-by-state basis.

Republican Governor Nikki R. Haley invited the two antitrust agencies to comment on a bill in the South Carolina House (H 3250) that would change existing laws that require new health care providers to be state-sanctioned before they can build new facilities. The agencies are concerned the laws not only force new entrants to await state sanctioning, but let existing companies try to solidify their market position by filing challenges to a potential rival's application.

Certificate-of-need laws differ among the 36 states that use them. The laws, "when enacted, had the laudable goals of reducing health care costs and improving access to care,” the agencies said in a joint statement, though they "can prevent the efficient functioning of health care markets in several ways that may undermine those goals."

The FTC and DOJ have opposed certificate-of-need laws, arguing they hurt competition and help entrench health care providers by making it difficult for competitors to enter a market. The agencies said in a letter to the South Carolina legislature that the state's existing process "can be time-consuming and costly.” The agencies added that repeal or retrenchment of South Carolina’s certificate-of-need laws would eliminate or mitigate the opportunity for businesses to try to fight off new competitors by filing challenges.

Congressional Republicans Look to Update Stark Law

Republicans on the Senate Finance and the Ways and Means committees are considering updating federal anti-kickback statutes including the Stark Law to make them work with the new alternative payment models.

The two committees are seeking input from provider groups on the Stark Law, which prevents doctors from referring patients to interests in which they have a financial relationship. They are looking at two broad issues: First, the difference between technical violations and more serious infractions, and second, the changes needed to harmonize the law with new payment schemes under the Medicare Access and CHIP Reauthorization Act.

CMS, for its part, has been working to scale back the Stark law as it affects delivery system reform. The administration loosened some restrictions in a November regulation focused on Stark, and it has offered waivers of the anti-kickback statutes to participants in more aggressive accountable care organizations and in its new bundled payments demonstration for hip and knee surgeries.

Insurance Mega-Mergers May Face Tough Review from States

State regulators could significantly alter, or perhaps derail, blockbuster insurance mergers that would reduce the number of major, national health plans from five down to three.

Most attention has focused on whether the Department of Justice (DOJ) might block Aetna's $37 billion acquisition of Humana and Anthem's $54 million takeover of Cigna on antitrust grounds. Antitrust experts point out that health plans are typically regulated by the states, which have a broader mandate to scrutinize issues raised by the deals.

States are looking beyond just antitrust concerns. Their exact scope of authority depends on state law, but local regulators are more likely to focus on consumer protection issues such as limiting premium increases, bolstering benefits or even requiring charitable contributions.

About 15 state attorney generals are working with the DOJ to heighten scrutiny of the blockbusters deals. State attorney generals played a similar role in Comcast's proposed acquisition of Time Warner, which was ultimately abandoned last year after federal regulators came out against the deal.