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March 2015

President’s 2016 Budget Would Reduce Health Care Spending by $400 Billion Over Ten Years:

According to White House estimates, the President’s budget for the Department of Health and Human Services (HHS), released in early February, would reduce health care spending by over $400 billion over ten years. Although unlikely to be passed by Congress, the President’s budget provides insights into the Administration’s priorities and areas where Republicans and Democrats may find agreement. It includes a request that Congress to pass last year’s bi-partisan, bi-cameral agreement on replacement of the Medicare Sustainable Growth Rate (SGR) formula. The biggest savings in the budget would come from prescription drug rebates ($116.1 billion), pay cuts to post-acute care providers ($102.1 billion) and increased Medicare means-testing ($66.4 billion). An additional $29.5 billion in savings would come from reducing payments to hospital outpatient services performed at off-campus locations to physician fee schedule rates or the rates paid to ambulatory surgery centers.

Blue Cross Blue Shield Association Study Shows Wide Price Variation in Hip and Knee Replacement Surgeries:

A three-year study conducted by Blue Cross Blue Shield Association (BCBSA) of hospitals in the United States showed large price variations for hip and knee surgeries across geographic areas and even within market areas. For example, the study reports that the average cost for a knee replacement is $31,126; however prices ranged from a low of $11,317 in Alabama to a high of $69,654 in New York City. The purpose of the study is to increase transparency on quality and price and encourage insurers and insureds to be more cost conscious in their selection of providers.

HHS Approves Indiana Medicaid Expansion Alternative:

The Administration has approved a plan by the state of Indiana to expand Medicaid by subsidizing private insurance and requiring beneficiaries to contribute to a health savings account. This is the 9th state with a Republican governor to participate in Medicaid expansion. The state estimates that the number of covered individuals, currently capped at 60,000, will increase to 350,000. At the same time, Indiana will raise Medicaid provider rates by 25%, bringing them on a par with Medicare.

Health Insurer Anthem Data Breach- 80 million members:

Anthem Health Insurance, the second largest health insurer in the United States, was the victim of a hacker attack exposing as many as 80 million customer records, one of the biggest breaches in the industry’s history. Even though medical information was not compromised, the U.S. Department of Health and Human Services Office for Civil Rights (OCR) considers the kind of personal data stolen by the Anthem hackers as covered by HIPAA. According to a recent Washington Post report, Chinese hackers are suspected to be behind the Anthem attack. Anthem believes its database was infiltrated through use of an employee password by a Chinese state-sponsored operation with the goal of stealing personal information of specific groups of people. Class action lawsuits against Anthem have been filed in at least four states: Indiana, California, Alabama, and Georgia, alleging that Anthem failed to take adequate and reasonable measures to ensure its data systems were protected and that timely notice of the data breach was not provided to customers; Anthem waited eight days before going public with information about the cyberattack. The National Association of Insurance Commissioners announced that it will review Anthem’s security systems and procedures to ensure protection of consumers.

Senate Health Committee Leaders Announce Oversight Initiative On Security Of Health Information Technology:

In the wake of the Anthem breach, U.S. Senate Health Education Labor and Pensions (HELP) committee Chairman Lamar Alexander (R-Tenn.) and Ranking Member Patty Mur (D-Wash.) announced a bipartisan initiative focused on examining the security of health information technology and the health industry’s preparedness for cyber threats. The goal of the initiative is to find ways to ensure the safety of health information technology, including electronic health records (EHRs), hospital networks, insurance records, and network-connected medical devices, like pacemakers and continuous glucose monitors.

CMS and the Office of the National Coordinator for Health IT (ONC) announce several policy developments relating to EHR and meaningful use issues:

CMS and the Office of the National Coordinator for Health IT (ONC) announced several policy developments recently relating to EHR technology issues. On January 22, CMS updated its FAQ on the third Meaningful Use Stage 2 Summary of Care Measure. In order to satisfy that measure, an eligible provider must transmit at least one summary of care record to another provider that uses a different certified EHR product, or must conduct at least one successful test transmission to CMS’s Designated Test EHR. The FAQ also provides a “work-around” to address difficulties some eligible providers have had in sending transmissions to the CMS Designated Test EHR. On January 29, CMS announced certain modifications to the Medicare and Medicaid EHR Incentive Programs, including shortening the 2015 reporting period to 90 days, as well as aligning hospital and eligible professional reporting periods to the calendar year (eligible hospitals currently report on a federal fiscal year basis). Finally, on January 30, ONC released Connecting Health and Care for the Nation: A Shared Nationwide Interoperability Roadmap Version 1.0. The draft Roadmap is a proposal to deliver better care through EHR interoperability, and calls for ONC to identify the best available technical standards for core interoperability functions. Comments on the draft report are due to ONC no later than April 3, 2015.

HHS Announces Goal of Tying 50% of Medicare Reimbursement to Value-Based Payment:

The Department of Health and Human Services (HHS) recently announced a goal of tying 30 percent of Medicare payments to value-based payment models by the end of 2016 and 50 percent by the end of 2018. Secretary Sylvia Burwell also released an article in the New England Journal of Medicine further detailing HHS’ strategy to improve health care quality and reduce costs, including through the use of incentive payments to improve quality and cost of care.

Oncology Pay-Bundle Demo First Step in Helping CMS Meet Value-Based Payment Goals:

To advance its goal of basing Medicare reimbursement on value-based payments, CMS recently announced a new oncology care initiative and payment model developed by the CMS Innovation Center to promote coordinated higher-quality care for patients receiving chemotherapy. Participating physician practices will receive “a monthly per-beneficiary-per-month (PBPM) payment” during the program and will be eligible to receive performance-based payments to encourage the coordination of cancer patients’ care and thereby improve outcomes, increase quality, and lower costs.

9th Circuit Orders St. Luke’s Health System in Idaho to Reverse its Acquisition of a Large Medical Group:

The 9th Circuit recently affirmed a federal District Court’s ruling that the 2012 acquisition of the Saltzer Medical Group, P.A., “the largest independent multi-specialty physician group in Idaho,” by St. Luke’s Health Systems, a non-profit hospital system, violated federal antitrust law. The case had been brought by two other Idaho hospitals along with the Federal Trade Commission and the State of Idaho. The 9th Circuit also affirmed the District Court’s order requiring St Luke’s to divest or sell its interest in Saltzer Medical Group. This is just the latest in court ordered divestitures of hospital mergers and acquisitions. In April of 2014, the 6th Circuit affirmed a District Court ordering the ProMedica health system to divest itself of another St. Luke’s hospital in Toledo, Ohio. ProMedica has requested a rehearing en banc from the 6th Circuit.