Leg-Reg Update

Legislative, Regulatory, and
Political Update
Michaela Sims, President, Sims Strategies
Cynthia Morton, Executive Vice President, NASL
NASL Winter Conference
February 7, 2018
Washington, DC

Agenda
• Legislative Update
▫ Where Are We Now
• Regulatory News
▫ Issues Affecting You
• Political Landscape
▫ The Road Ahead
NASL Winter Conference
February 7, 2018
Washington, DC

Legislative Update
• Where Are We Now
• Therapy Caps
NASL Winter Conference
February 7, 2018
Washington, DC

Where Are We Now
• 2017 End of Year Items Have Become 2018 Items in Limbo
▫ Package did not materialize at end of 2017
▫ Dominos of Budget Caps, Appropriations, CHIP, Health Extenders
and DACA
▫ But is breakthrough coming?
NASL Winter Conference
February 7, 2018
Washington, DC

Where Are We Now
• Items Left Over from 2017
▫ FY2019 Appropriations
▫ Budget Caps
▫ Therapy Caps and Health Extenders
▫ DACA
▫ ACA Stabilization
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February 7, 2018
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Where Are We Now
• With little agreement in Congress, FY2018 has had:
▫ 4 Continuing Resolutions (+1 This Week)
▫ 3-Day Shutdown
• Some Issues Partially Addressed
▫ CHIP
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February 7, 2018
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Where Are We Now
• Negotiations Tumultuous, But Trending in Bipartisan Direction
▫ Option 1 – Small Package, Issues Being Resolved Individually
▫ Option 2 – Medium Package, With Health Extenders
▫ Option 3 – Grand Bargain, Including Budget Caps and Offsets
NASL Winter Conference
February 7, 2018
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Where Are We Now
• 2018 Congressional Legislative Agenda is Thin
▫ If/When Leftover Items from 2017 Completed, Few Other Items
Likely To Move
▫ President’s Budget Likely to be Released Next Month
• Budget Cuts and Program Changes Unlikely to be Implemented
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February 7, 2018
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Where Are We Now
• Congress Could Work On:
▫ Infrastructure – President Will Propose Plan
• Proposal May Include $1.5 Trillion in Spending
• Unclear If Anything Will Come of It, Particularly Due to Deficits of Tax Cut Bill
▫ Welfare/Entitlement Reform – Speaker Ryan Remains Interested In This,
But Leader McConnell Is not; Unclear What Programs Would be Affected
• Medicare and Social Security – No
• Medicaid – No, but possibly greater work requirements
• Social Service Programs – Food Stamps, TANF – More Likely to be Affected
• Unless Congress Passes Budget Resolution Unlocking Reconciliation Again
(Unlikely), Any Reform Will Need 60 Votes (And at Least 9 Democrats) in
Senate
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Where Are We Now
• Will Repeal And Replace of ACA Continue?
▫ Not likely a focus for 2018. Republicans achieved major victories in
repealing or delaying key parts of the law.
▫ Repealed the individual mandate (effective in 2019) in 2017 Tax bill.
▫ Recent (Jan 2018) Continuing Resolution Delayed Medical Device
Tax by 2 Years.
• Administration may continue chipping away at the health
insurance program
▫ Refusing to make cost-sharing reduction (CSR) payments to insurers.
▫ But Congress may consider stabilization legislation proposed by
Senate.
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February 7, 2018
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Therapy Caps
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February 7, 2018
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Committee “Discussion Draft”
• October 26th – Three committees (Senate Finance Committee,
House Energy & Commerce Committee and House Ways &
Means Committee) announce agreement on “discussion draft”
that will repeal Therapy Cap and continue medical review.
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February 7, 2018
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Committee “Discussion Draft” Details
• Repeals Therapy Cap as of January 1, 2018.
• Continues the KX modifier indicating services are medically necessary over
$2,010 (the previous therapy cap amount).
• Medical review process above a dollar threshold is continued.
• Threshold for medical review is lowered to $3,000 (currently at $3,700) for
PT and SLP claims and $3,000 for OT claims.
• After 2028, the $3,000 threshold can increase by the Medicare Economic
Index.
NASL Winter Conference
February 7, 2018
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Therapy Caps - Status
• Therapy Caps Linked to Health Extenders
▫ Expected to move together
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February 7, 2018
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Therapy Caps – Advocacy Efforts
• Full Court Press to Support Repeal
▫ NASL and Therapy Cap Coalition supports the
language.
▫ Email campaign
▫ Social media campaigns– Twitter,
Thunderclap
▫ Patient stories sent to committees to illustrate
the urgency
▫ Signed and sent multiple letters with various
coalitions up to the Hill supporting repeal
▫ Paid ad in Politico and Roll Call newspapers
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Therapy Caps - Conclusion
• History In the Making – Therapy Caps Permanent Policy
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Regulatory Update
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February 7, 2018
Washington, DC

Medicare Access and CHIP Reauthorization Act of
2015 (MACRA) --Quality Payment Program.
• Providers can choose one of two methods for reimbursement in
the value-based payment world.
▫ Advanced Alternative Payment Model (AAPM)—
• Medicare Shared Savings Program (Tracks 2 &3) Next Gen ACO, BPCI-
Advanced
▫ Merit-based Incentive Payment System (MIPS)--adjusts a physician’s
payment based on an evaluation against four performance categories.
PFS payment update is .5% until 2020 when update is 0
• Clinicians earn scores based on quality, improvement activities, cost and
EHR Incentive program. Earn incentives for exceptional performers
• Most clinicians will use MIPS.
NASL Winter Conference
February 7, 2018
Washington, DC

MACRA’s QPP – 2018 is Year 2 continued
• Only 38% of physicians are expected to participate in MIPS, making
reform slower than anticipated and could lead to physicians pushing
back on the complexities of value-based reimbursement. HHS could
delay compliance in response.
• PA/LTC based physicians have difficulty meeting the MIPS measures
as they don’t take long term care patients into account.
• Need a APM model to get LTC docs out of MIPS.
• NASL commented on need to solve “facility based measurement”
• CMS answered – the facility based measurement proposal delayed
until year 3 of the Quality Payment Program (2019 performance year
and 2021 payment year).
NASL Winter Conference
February 7, 2018
Washington, DC

TKR Removed from Inpatient Only List
• OPPS 2018 Final Rule -- Removed total knee replacement from
the inpatient-only list
• Gives patients greater choice to decide which site of service Doc
remains in control of where performed.
• TKR is one of the most common and costly procedures.
• Removal from the list does not disqualify TKR for a SNF stay; if
performed as an outpatient procedure, patient not eligible for a
SNF stay.
• Purpose - option to seek care in a lower cost setting of care,
outpatient setting rather than a more expensive inpatient setting.
NASL Winter Conference
February 7, 2018
Washington, DC

Medicaid
• Reform remains a high priority for CMS Administrator Seema Verma
• Want to grant states new Medicaid program flexibilities
through regulations and section 1115 and 1332 demonstration
waivers
▫ Eligibility
▫ Enrollment
▫ Cost Sharing
▫ Program Incentives
▫ Drug Coverage
▫ Plan Design
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February 7, 2018
Washington, DC

Bundled Payment for Care Initiative – Advanced
(BPCI-Advanced)
• Single payment model.
• Begins October 1, 2018 when BPCI expires.
• Accepting applicants through March 12, 2018.
• Goal --incentivize financial accountability, care redesign, data analysis
and feedback, provider engagement, and patient engagement through
the use of bundled payments, care redesign activities, and
accountability for performance on quality measures.
• Retrospective bundle. Fee-for-service payments are made to
participating, Medicare-enrolled providers and suppliers, and the total
FFS payments for each clinical episode are then retrospectively
reconciled against a predetermined target price.
NASL Winter Conference
February 7, 2018
Washington, DC

BPCI-Advanced continued
• Episode begins on the first day of the triggering inpatient stay or
outpatient procedure and extends through the 90-day period starting
on the day of discharge from the inpatient stay or the completion of
the outpatient procedure.
• No “model 3” meaning no PAC-only bundle.
• PAC providers can participate as Convener Participants.
• Convener Participants bring together and coordinate multiple
downstream “Episode Initiators,” which must be either physician
group practices (“PGPs”) or acute care hospitals (“ACHs”).
▫ Not sure those entities will allow PAC to manage the bundle!
NASL Winter Conference
February 7, 2018
Washington, DC

Resident Classification System (RCS-1)
• Contracted with Accumen in 2012
• Scope expanded to entire PPS in 2014
• Advance Notice published April, 2017
• When will it be released?
▫
CMS could release around time of the April/May 2018 Proposed Rule
unless Congress pre-empts.
• Final model will differ from the Advance Notice
• CMS let a contract for a grouper software
• Implementation???? 10/19, 10/20
NASL Winter Conference
February 7, 2018
Washington, DC

Telemedicine
• Activity at the state level
• Resistance at federal level
• Veterans E-Health and Telemedicine Support Act of 2017, or
VETS Act of 2017 (S. 925/H.R. 2123). Senators Joni Ernst (R-IA)
and Sen. Mazie Hirono (D-HI), Rep. Glenn Thompson (R-PA) and
Julia Brownley (D-CA).
▫ This bill allows a licensed health care professional of the Department
of Veterans Affairs to practice his or her profession using
telemedicine at any location in any state, regardless of where the
professional or patient is located.
NASL Winter Conference
February 7, 2018
Washington, DC

FCC Repeal of Net Neutrality
• Federal Communications Commission (FCC) vote to repeal Net
Neutrality could be problematic for telehealth
▫ Internet Service Providers (ISPs) could speed up or slow down, or
potentially charge more for certain Internet content
▫ Allowing ISPs to control internet speed based on users, services, sites
visited or content, may negatively affect seniors or LTPAC providers
▫ New York Attorney General to challenge in the courts
NASL Winter Conference
February 7, 2018
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21st Century Cures Act –Trusted Exchange
Framework & Common Agreement (TEFCA)
• Purpose is to advance information exchange and interoperability.
• Significant that LTPAC is highlighted …LTPAC and behavioral
health input is solicited.
• Creates a network of networks
• Not sure it fits into the big picture.
• Will tie into certification but that is unknown.
• One way ONC will mitigate barriers that could result in
Information blocking.
NASL Winter Conference
February 7, 2018
Washington, DC

60-Day Rule
• In 2016 the Centers for Medicare & Medicaid Services finalized a rule
that required Medicare providers to report and repay any
overpayments from the government within 60 days of identifying them.
• Recent enforcement efforts and compliance audits however, have
shown that implementation of the so-called “60-day rule” will continue
to be a topic of interest to health lawyers in 2018, board members said.
“Recent high-profile OIG hospital compliance audits have highlighted
the conflicting positions of providers and the government with respect
to the obligation to identify additional overpayments following an audit
and the appropriate lookback period, given the conflict between the
statutory 4-year claims reopening window for Medicare claims and the
60-day repayment rule’s 6-year lookback period,”
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February 7, 2018
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Health IT Makes OIG’s “Top 10”
Included Office of the
Inspector General “top 10
challenges for HHS
Implication is more
enforcement efforts
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February 7, 2018
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Cybersecurity
• Ransomware attacks grow in heath care.
• A ransomware attack is considered a breach by the HHS Office
for Civil Rights (OCR) unless the entity can demonstrate a low
probability that PHI has been compromised.
• 2017: 477 data breaches reported to OCR up slightly from the
450 reported in 2016
• 2017: 5.6 million records implicated down from 27.3 million in
2016.
• Providers made up the vast majority of OCR reports at 80%.
Health plans represented 12%.
NASL Winter Conference
February 7, 2018
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NDAA & TRICARE
• Fiscal Year (FY) 2018 National Defense Authorization Act
(NDAA) was signed into law by President Trump on December
12, 2017.
• Recognizes physical therapy assistants (PTAs) and occupational
therapy assistants (OTAs) as authorized providers under
TRICARE program.
• Huge win for NASL members.
• Need to understand how will be implemented.
NASL Winter Conference
February 7, 2018
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MedPAC
• Preparing recommendations for 2018 Report to Congress
• 2016: 15,000 SNFs and 1.6 million beneficiaries used SNF
• Spending on these stays was $29.1 billion
• 11% of days were FFS
• 20% of revenues were FFS
• Remainder was Med Advantage plans, or impacted by bundling or
ACOs
• SNF total margins have decreased to 1.6%
• Length of stay decreased by 4.0%
▫ Impacted by Med Advantage plans, bundling or ACOs
NASL Winter Conference
February 7, 2018
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MedPAC – SNF report
• Therapy -- share of days assigned to intensive therapy casemix
groups continues to increase.
▫ “Payments for therapy exceed the cost of therapy services”
▫ RU & RV Therapy Use by Year and Percent of Days
Fiscal year
2002 27%
2010 69%
2016 83%
Percent of Days Assigned to RU or
RV RUGs
▫ Recommendations: Eliminate the MB in FY19 & FY20
▫ Direct Sec to implement a redesigned PPS in FY19
▫ Direct Sec to report on the impacts of the revised PPS and make
adjustments in FY21
NASL Winter Conference
February 7, 2018
Washington, DC

MedPAC – Unified PAC Payment System (U-PAC)
• Need to address payment variations among the 4 PAC payment
systems.
▫ Similar patients treated
▫ Separate payment systems pay differently for similar patients.
▫ Encourages therapy services unrelated to care needs
• Fully implemented U-PAC would redistribute payments among
conditions while total payments to a setting would remain same.
• Draft Recommendation: Congress should direct the Sec to begin
to base Medicare payments on a blend of the setting specific
relative weights and the U-PAC PPS relative weights in FY19.
NASL Winter Conference
February 7, 2018
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Fraud Cases…Recent Wins
• HCR Manor Care – DOJ asked for case to be dismissed. Judge “huge
waste of money…I don’t think this case ever should have been
brought…I’m appalled, I’m embarrassed, I’m ashamed that the DOJ
would rely on this kind of nonsense by a nurse reviewer…”
• US ex rel. Ruckh v. Salus Rehab., $350 million judgment overturned.
“For this reason (among others), as Escobar emphasizes, the
government’s payment to a vendor despite knowledge of a defect ‘very
strongly’ evidences the defect’s immateriality.”
▫ If the government pays, the presumption is any deficiencies are not
material and therefore it’s not a false claim.
NASL Winter Conference
February 7, 2018
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Political Landscape
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February 7, 2018
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Political Landscape
• November 6, 2018 – Election Day
• 435 House Seats Up for Election
• 34 Senate Seats Up for Election
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February 7, 2018
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Political Landscape
• Fight Over Majority in Both Chambers
▫ High Number of Retirements from House Republicans
▫ Tight Margin in the Senate
▫ Midterm Benefits Party Out of Power
• (Think 2010)
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February 7, 2018
Washington, DC

Political Landscape
• House Race Ratings – Cook Political Report
▫ Number Needed For Majority is 218
Solid
D
Likely
D
Lean
D
Toss
Up
Lean
R
Likely
R
Solid
R
D Held
Seats (194)
174 11 5 4
R Held
Seats (241)
4 16 20 26 175
• High Number of Republican Retirements
▫ 22 Retiring (7 for Democrats)
▫ 11 Running for Other Office (7 for Democrats)
NASL Winter Conference
February 7, 2018
Washington, DC

Political Landscape
• Senate Race Ratings – Cook Political Report
Solid
D
Likely
D
Lean
D
Toss
Up
Lean
R
Likely
R
Solid
R
D Held
Seats (26)
13 5 4 4
R Held
Seats (8)
3 1 4
• Tight Control of Senate
▫ 51-49
▫ With VP Pence as Tie Breaker, Democrats Need 51 Seats to Take
Majority – Republicans Retain at 50
NASL Winter Conference
February 7, 2018
Washington, DC

Political Landscape
• Both Parties See 2017 Differently
▫ Republicans:
• Supreme Court Justice Gorsuch
• Tax Cuts and Jobs Act
• Regulatory Changes
▫ Democrats
• Affordable Care Act Partially Preserved
• Highly Motivated Electorate
• Wins in Virginia and Alabama
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February 7, 2018
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Political Landscape
• Key Number in Senate Shifts from 50 to 60
▫ While Reconciliation Needed 50 Votes, With No Budget Resolution
This Year, Major Issues Need 60 Votes
▫ Harder to Pass Bills – 60 Vote Threshold Means All Successful Votes
Must Be Bipartisan
▫ Senate Will Not Change Filibuster Rules – McConnell and Other
Republicans Oppose, Even As President Urges Change
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February 7, 2018
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Political Landscape
• President’s Personnel Now in Place At HHS
▫ HHS Secretary Alex Azar
▫ FDA Commissioner Scott Gottlieb
▫ CMS Administrator Seema Verma
• CMS Deputy Administrator and Director of Center for Medicare
Demetrious Kouzoukas
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February 7, 2018
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Political Landscape
• Alex Azar, Secretary of Health and Human
Services (HHS)
▫ Confirmed by the Senate 55-43
▫ An attorney.
▫ Served as Deputy Secretary of HHS under George
W. Bush from 2005 to 2007.
▫ President of the U.S. division of Eli Lilly and
Company.
▫ Open to mandatory pilot programs under CMMI.
▫ Drug pricing (mention in SOTU), affordable health
insurance opioid crisis, use of HIT to bring better
outcomes and better value.
▫ Bringing a sense of order and ethics to HHS.
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February 7, 2018
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Political Landscape
• X Factor Political Earthquakes
▫ Me Too Movement
• Revelations Quickly Shake Up Congress
• Resignations and Retirements in Both Parties
▫ Special Prosecutor’s Investigation
• Unclear If Revelations Will Upend 2018 or 2019 Legislative Agenda
• Impeachment a Circus – Recall Clinton Impeachment and Trial In
Senate
▫ North Korea
• ???
NASL Winter Conference
February 7, 2018
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Political Landscape
• Party Polarization In Congress Continues
▫ Radical Wings in Both Parties Emboldened
▫ But “Stick Talkers” Show Moderates Still Matter
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February 7, 2018
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Political Landscape
• Republicans in Congress Acquiesce to Trump Amid Successes
▫ Ryan and McConnell Focused on Accomplishments
▫ Dynamic May Change with Major Legislation Done
NASL Winter Conference
February 7, 2018
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In Conclusion…
• 2018 political year will be as terrible as you expect.
NASL Winter Conference
February 7, 2018
Washington, DC