Medicare and Medicaid reform issues are expected to loom large this year on Capitol Hill and in many states. Congress’ short-term Medicare physician payment patch ends after March and funding for the Children’s Health Insurance Program runs out Oct. 1. Legislation to avoid those pitfalls, especially physician payment cuts driven by the Sustainable Growth Rate formula, could be vehicles for other Medicare and Medicaid reforms, including bills on hospital reimbursement, anti-fraud reforms and funding for graduate medical education. New House Ways & Means Chair Paul Ryan (R-WI) had a history of pushing major Medicare and Medicaid reforms in his former position of Budget Committee chair, and now he is better placed to achieve those goals, likely within budget reconciliation.

Drug pricing issues are also expected to remain in the spotlight in 2015. Hospitals and drug makers are anxiously awaiting the Health Resources and Services Administration’s regulations and guidance on the 340B drug discount program, drug companies are threatening to go to Congress if they dislike the upcoming guidance, and the House Ways & Means health subcommittee chair is considering 340B reforms to help pay for speeding drug and medical device development under the panels 21st Century Cures Initiative. Most lobbyists don’t expect Congress to propose government drug-price controls in reaction to the price of Gilead Science’s hepatitis C drugs, but they also don’t expect that debate to go away, and most are watching the market for whether new competition will sufficiently drive down the price of hepatitis C drugs and whether the makers of new specialty drugs will follow Gilead’s lead on pricing policies.

Stakeholders are also closely watching for any new hints of flexibility from the administration on Medicaid, as many states are still considering Medicaid expansion and will likely ask HHS for waivers that allow them to expand coverage without hewing closely to the ACA’s Medicaid expansion parameters.

The biggest Medicare reform efforts are expected to be driven by an SGR fix because of the some $120 billion in offsets needed to pay for that legislation. Lobbyists for trade groups representing physicians, hospitals, pharmacies, insurers, beneficiaries, medical equipment suppliers, post-acute care providers, and drug and medical device makers — as well as ancillary sectors that support providers, such as health information technology vendors — are gearing up to push for policy riders on SGR legislation or to defend against cuts to pay and services.

Physicians are still trying to convince lawmakers that an SGR replacement bill doesn’t have to be offset, but many believe that effort is a long-shot. Many lobbyists say the most likely route to replacing the SGR formula is budget reconciliation at year’s end. That would require Congress to patch the SGR again before March 31, then work out Medicare and Medicaid reforms during budget negotiations to pay for a replacement to the formula near the end of the year. Just two weeks after the current pay patch ends, the Budget Committee must give appropriations and authorizing committees instructions for hitting budget goals. Those budget instructions may include savings targets for Medicare, Medicaid and tax reform, which Congress has until the end of the year to pass.

Ryan, while Budget chair, turned to Medicare and Medicaid for the brunt of savings in his past proposed budgets, and as Ways & Means Chair Ryan is in a better position to accomplish his goal of overhauling those public programs.

When Congress negotiates major budget deals, it typically includes titles on the parts of Medicare. Some of that started happening late last year when Ways & Means health committee Chair Kevin Brady (R-TX) drafted hospital legislation that could be a placeholder for the Part A title, a health care lobbyist said. That draft bill incorporated 19 Republican bills, including a proposal for a Medicare short-stay pay system and changes to how recovery audit contractors operate.

Brady and ranking Democrat Jim McDermott (WA) also introduced in December sweeping Medicare anti-fraud legislation that includes proposals to remove Social Security numbers from Medicare cards, ease requirements on ordering durable medical equipment, allow drug plans to lock beneficiaries in to specific pharmacies and physicians and require surety bonds worth at least $50,000 for home health agencies. Meanwhile, a U.S. federal claims court is deliberating whether to let CMS award three recovery audit contracts that have been held up by a protest from CGI Federal Inc. CGI protested the contracts over a proposal to make auditors wait longer during the appeals process to collect their fees.

Meanwhile, a bipartisan group of House Energy & Commerce Committee members is considering changing the way Medicare pays hospitals for training residents. The lawmakers, led by health subcommittee Chair Joe Pitts (R-PA) and ranking Democrat Frank Pallone (D-NJ), said they plan to review this year the Institute of Medicine’s recommended overhaul of graduate medical education reimbursement.

As GOP lawmakers begin looking seriously at ACA tweaks, the chances that Congress will repeal the health law’s excise tax on medical devices are viewed as good. Health plans are lobbying for repeal of the tax on their industry, as well.

Last year’s raging drug pricing debate is also expected to continue on and off Capitol Hill.Many consider Gilead’s hepatitis C drugs Sovaldi and Harvoni the test case for how much drug companies can charge and whether they can maintain high prices in the face of competing brands and public scrutiny. In the latter half of December, Express Scripts announced it would includeAbbVie’s hepatitis C drug Viekira Pak on its National Preferred Pharmacy formulary in exchange for a “significant” discount on the drug, although a company spokesperson declined to specify the amount of the discount. On Monday (Jan. 5), the Wall Street Journal reported that CVS worked out a similar deal to give preferred treatment to Gilead’s hepatitis C drugs on four of its formularies. A CVS spokesperson confirmed that only Gilead’s drugs will be on the CVS/caremark Standard Commercial, Exchange (Marketplace), Medicare Part D and Medicaid formularies. However, she did not say whether Gilead is discounting the drugs or whether CVS is restricting coverage.

Lobbyists also expect more regulatory action, and possibly congressional action, on the 340B drug discount program. The Health Resources and Services Administration in November pulled back its anticipated “mega-reg.” Instead, HRSA plans to write rules on civil monetary penalties for manufacturers, calculation of the 340B ceiling price, and administrative dispute resolution; and the agency will release only guidance covering other policy areas, including the definition of a 340B patient. Pharmaceutical Research and Manufacturers of America said Congress needs to “engage with oversight and reform of the program.”

Pharmacy stakeholders and states are looking for CMS to finalize the Medicaid Average Manufacturer Price-based Federal Upper Limits this year after the agency said in November it would release the final FULs around the same time as the Medicaid Covered Outpatient Drug final rule.

CMS is required by the Affordable Care Act to recalculate the FUL amounts. CMS had planned to finalize the FULs last July, but later pushed the date back — a decision that some saw as a result of congressional pressure.

National Association of Chain Drug Stores Senior Vice President for Government Affairs and Public Policy Carol Kelly said the group will be watching for the final FULs to make sure they are consistent with the statute. Kelly says NACDS will also be looking to make sure states have enough time to implement the new pricing. Pharmacy groups had previously asked CMS to allow for a year-long transition to the new FULs, as states need to adjust both the drug reimbursement and dispensing fees for Medicaid reimbursement.

Doctors, hospitals and others will also be closely watching the thorough “end-to-end” ICD-10 testing CMS has planned for this month before the move to the new ICD-10 code set in October. American Medical Association President Robert Wah told Inside Health Policy that, in light of the technological issues plaguing healthcare.gov, one concern is that CMS’ system won’t be ready to process the ICD-10 claims. If there are flaws in the end-to-end testing, there will need to be a discussion about what to do next as the industry won’t want to move to a system that isn’t ready, Wah said. Robert Tennant, senior policy adviser with the Medical Group Management Association, has also said the results of CMS’ January end-to-end testing will either lessen concerns about ICD-10 implementation or “fuel the fire.”

Lawmakers previously delayed ICD-10 as part of the SGR patch last spring. House Energy & Commerce Chair Fred Upton (R-MI) and House Rules Committee Chair Pete Sessions (R-TX) say they plan to hold a hearing in 2015 on the industry’s preparations for ICD-10, and some say another ICD-10 delay could pop up. Hospitals have urged lawmakers not to delay the implementation of the new codes again.

Some recalcitrant states might expand Medicaid this year, although not all of them will call it an expansion. Alaska Gov. Bill Walker, who took office Dec. 1, views Medicaid expansion as a top priority, according to press reports. Arkansas, Iowa, Michigan, and Pennsylvania have approved Section 1115 waivers for Medicaid expansion, according to an analysis by the Kaiser Family Foundation. The Pennsylvania plan, which took effect Jan. 1, expands Medicaid coverage to about 500,000 residents with private managed care plans. The demonstration covers all newly eligible adults ages 21 to 64 with incomes up to 138 percent of poverty. Indiana has a waiver pending at CMS for an alternative Medicaid expansion plan.

Montana Gov. Steve Bullock (D) included Medicaid expansion in his state’s 2016 executive budget proposal. New Hampshire implemented Medicaid expansion as of July 1, 2014, and the state requested a waiver to move the expansion population to premium assistance. Tennessee’s Governor Bill Haslam (R) proposed an alternative Medicaid expansion scheme in December. Utah Governor Gary Herbert (R) proposed an alternative to Medicaid expansion. Herbert did not submit that plan to CMS, but has discussed it with CMS, according to the Kaiser analysis. The Wyoming Department of Health recommended in November an alternative Medicaid expansion plan.

Personnel

• The Government Accountability Office named Marsha Gold, senior fellow emeritus at Mathematica Policy Research, as the vice chair of the Medicaid and CHIP Payment and Access Commission, as well as naming five other new members to the commission. New MACPAC commissioners include: Gustavo Cruz, senior advisor for the Health Equity Initiative in New York; Yvette Long, case manager at the Philadelphia Welfare Rights Organization; Charles (Chuck) Mulligan, senior vice president enterprise government programs at Presbyterian Healthcare Services in Albuquerque, NM; Sheldon Retchin, CEO of Wexner Medical Center at Ohio State University; and Peter Szilagyi, vice chair for research, department of pediatrics at University of California at Los Angeles.
• Paul Kusserow has been named CEO of home health and hospice company Amedisys Inc. Most recently Kusserow was vice chairman of Alignment Healthcare, and before that he was senior vice president and chief strategy, innovations and corporate development officer at Humana.
• Rima Cohen, former counselor for health policy at HHS, has been named to the board of directors of Social Interest Solutions.
• Terry McInnis, founder and president of Blue Thorn Inc., has joined Health2Resources as senior advisor.
• Washington Strategic Consulting announced that Terrence Cox has joined the firm as vice president and will deliver federal government relations and policy analysis services to the firm’s health care provider and higher education clients.

Calendar

Wednesday

• CMS holds an open door forum for physicians, nurses and others.
• FDA holds an Oncologic Drugs Advisory Committee meeting that will address key biosimilars application issues.

Thursday

• FDA holds a public workshop on the framework for regulatory oversight of laboratory developed tests.

Friday

• FDA meeting on laboratory developed tests continues.

Click here to see the original article on the Inside Health Policy website.