U.S. Supreme Court and PPACA

As previously reported, the U.S. Supreme Court will take up and render a decision this term in the case of King v. Burwell in which the U.S. Court of Appeals for the District of Columbia Circuit held that the Internal Revenue Service (IRS) did not adhere to the black letter of the health care law when it ruled that individuals who buy health insurance on the federal HealthCare.gov exchange are eligible for tax credit subsidies even though they reside in states electing not to establish their own health insurance exchanges. Democrats on the House Committee on Energy and Commerce released a staff report which estimates that individuals in 35 states will lose up to $65 billion in 2016 PPACA tax credit premium subsidies if the high court agrees with the appeals court decision and overturns the IRS ruling. The high court also said that on January 9th it will hear arguments in the Association of American Physicians & Surgeons, Inc. v. Burwell case in which the plaintiffs argue that the individual mandate also violates the takings clause under the Constitution.

Senate Committee Reports on Generic Drug Use

The Senate Special Committee on Aging issued a final report under the chairmanship of Sen. Bill Nelson (R-FL) which asks the Government Accountability Office (GAO) to investigate the reasons why certain generic drug prices have recently increased. The report also made recommendations that could lead to greater generic drug use by seniors under Medicare Part D: providing incentives to prescription drug plan sponsors who increase the use of generics; finding innovative ways to expand generic drug usage among low-income subsidiary beneficiaries; increasing education of beneficiaries and health professionals on the safety, effectiveness and cost benefits of generic drugs; and improving investigations of questionable pharmacy billing practices that thwart efforts to provide incentives for generic usage.

MedPAC on PCIP, SGR, Payment Setting Differentials, Payment Freezes

At its December 18th meeting, the Medicare Payment Advisory Commission (MedPAC) indicated support for elevating primary care service reimbursement rates by replacing the current primary care bonus under the Primary Care Incentive Payment Program (PCIP). The recommended substitute would provide for a prospective per-beneficiary payment under the PCIP accompanied by an offset that would reduce by 1.4% the fees for all services in the fee schedule, except for evaluation and management (E&M). While MedPAC will not vote in January on replacing the Medicare physician payment regime based on the sustainable growth rate (SGR), it is expected that the commission will again include in its March 2015 report a previous recommendation that the SGR be replaced by a 10-year path of legislative updates with higher updates for primary care than other services. The commission also said it intends to include in its March report to Congress: a reduction or elimination of differences in payment rates between outpatient departments and physician offices for selected ambulatory payment classifications; a change that would set long-term care hospital base payment rates for non–chronically critically ill (CCI) cases equal to those of acute care hospitals and redistribute the savings to create additional inpatient outlier payments for CCI cases in inpatient prospective payment system hospitals with the change phased in over a three-year period from 2016 to 2018; and an increase in payment rates for the acute care hospital inpatient and outpatient prospective payment systems in 2016 by 3.25% concurrent with the change to the outpatient payment system and also an installation of the change to the long-term care hospital payment system. In addition, the commission may also recommend that there be no update in the current payment rates in 2016 for kidney dialysis, hospice care and services provided by stand-alone surgical centers.

CMS Announces Penalties for Failure to Reduce Hospital Errors

CMS announced that 724 hospitals will have their Medicare payments reduced by 1% for FY 2015 for failing to adequately control hospital-acquired medical conditions. The agency also announced updates to the Hospital Compare website and the Physician Compare website.

FDA Proposes Electronic-Based Rule on Product Labeling

The Food and Drug Administration (FDA) has asked for comments by March 18 on a proposed rule that would require the electronic distribution to health care professionals of prescribing information for drug and biological products, rather than require their distribution in paper form (with some exceptions). Every time there is a change in labeling, drug manufacturers would be required to submit the prescribing information to the FDA for posting on the FDA’s labeling repository website.

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