Weekly Washington Healthcare Update

July 13, 2012

Pardon Our Dust

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In this issue:

1. Congress
House of Representatives


2. Administration

ACA Implementation

Centers for Medicare and Medicaid Services

3. State Activities

4. Regulations Open for Comment

5. Reports

General Accountability Office (GAO)

Congressional Budget Office (CBO)

Center for Studying Health System Change

1. Congress

House of Representatives

House Repeals the Affordable Care Act (ACA). . . Again

On Wednesday, July 11, 2012, the House held, according to Republicans, the 33rd vote to repeal or dismantle the Affordable Care Act, passing H.R. 6079 by a vote of 244-189. Similar to a previous repeal vote (H.R. 2), the vote was largely along party lines, though five Democrats supported the bill, two more than in the last full repeal vote. Democratic Reps. Ross, McIntyre and Boren, who supported repeal last year, were joined by Reps. Kissel and Matheson in supporting H.R. 6079 (Short Titled: The Repeal of Obamacare Act). The bill likely represents another legislative vehicle passed by the Republican House that will not receive consideration in the Democrat-controlled Senate. However, Republicans believe repeal of the law is central to their message in order to take control of the Senate and White House in the November elections. So it is not surprising that the Republican-controlled House decided to schedule a repeal vote after the U.S. Supreme Court upheld the law. Whether the tactic is effective or not remains to be seen.

Oversight Committee Probes ACA Impact on Doctors and Patients

Also on Wednesday, the House Oversight and Government Reform Subcommittee on Health Care and the District of Colombia held a hearing to explore the impact of the Affordable Care Act on doctors and patients. The witnesses were:

Hon. Jeff Colyer, M.D.
Kansas Lt. Governor

Dr. Eric Novack
Phoenix Orthopedic Consultants

Dr. Dick Armstrong
Chief Operating Officer, Docs4PatientCare

Ms. Sally Pipes
President and CEO, Pacific Research Institute

Kevin Cullimore Jr.
President and CEO, Dynatronics (a medical device company)

Ron Pollack
Executive Director, Families USA

Democrats criticized Republicans for failing to invite a physician practicing in Massachusetts, who they argued would have offered an important perspective given that the Massachusetts health system is regarded as a model for the national Affordable Care Act. Members adhered largely to a party-line discussion of the ACA’s merits, or lack thereof. With the exception of Pollack, whom Chairman Gowdy notably grilled on tort reform policies, the panel supported Republican claims of the ACA’s role in adding bureaucracy and cost to the health care system, necessitating its repeal. For his part, Mr. Pollack testified on behalf of the law’s consumer protections, including the prohibition on discriminating against individuals with pre-existing conditions and removing caps on lifetime benefits. Full written testimonies and a webcast of the hearing are available online.

Ways and Means Committee Explores SCOTUS Ruling Implications

On Tuesday, July 10, 2012, the Ways and Means Committee held a hearing to explore the implications of the Supreme Court’s ruling that the individual mandate is constitutional, particularly as it relates to Congress’ authority to lay and collect new taxes. The witnesses were:

Steven G. Bradbury
Partner, Dechert LLP

Carrie Severino
Chief Counsel, Policy Director, Judicial Crisis Network

Lee A. Casey
Partner, Baker Hostetler

Walter Dellinger
Partner, O’Melveny & Myers LLP

The hearing focused on the continuing disagreement between Republicans and Democrats over whether or not the fine levied against an individual for not purchasing health insurance is a tax or a penalty. For their part, Democrats adhered to the approach that the question was moot at this point, elaborated on the benefits they see resulting from consumer protection provisions of the Affordable Care Act, and insisted that the GOP stop their assault on the law so that Congress can focus on job creation. Republicans, led by Chairman Camp, maintained that though the Supreme Court held the individual mandate was not a proper exercise of the Commerce Clause, the court’s finding that the function of the penalty dictated it was a tax, applicable to the non-action on the part of an individual — in this case not purchasing health insurance — represents an unprecedented expansion of Congressional taxation powers, and warrants concern that the federal government has grown beyond its Constitutional role. Full written testimonies and additional background information are available online.


Finance Committee Roundtable Discussion on Medicare Payment Models

A roundtable discussion is less formal than a hearing and it was in this format the Senate Finance Committee chose to discuss with invited participants new payment models. The discussion focused on the ability of the Centers for Medicare and Medicaid Services (CMS) to process the kind of meaningful data physicians need to make the best decisions for their patients. One participant, W. Douglas Weaver, vice president and system medical director at Henry Ford Health System in Detroit, noted, “My feeling is that CMS is currently promoting a lot more transparency with data, but the measures — readmission, smoking cessation — are very crude and don’t tell you if you have a good doctor or a great doctor.” Frank Opelka of Louisiana State University Health Science Center in New Orleans was more conciliatory, acknowledging, “We started with measures that were less than perfect, but we had to start somewhere. The current data sets they have don’t get them the answers that they want,” he said. On a more pressing issue, Chairman Baucus pressed the witnesses unsuccessfully for suggestions to address the looming cuts called for under the Sustainable Growth Rate (SGR) formula that will have to be addressed in the lame duck session.

Franken Introduces Health Privacy Legislation for Mobile Apps

Senator Al Franken (D-MN) introduced legislation late last month aimed at protecting patient privacy as the focus on shifting from paper to electronic health records. His bill, S. 3351, “the Protect Our Health Privacy Act of 2012,” would update existing health privacy laws to ensure that patient data doesn’t become unnecessarily shared or compromised. Among other provisions, the legislation would require health providers to encrypt portable devices that store health information. The bill has been referred to the Senate Health, Education, Labor, and Pensions (HELP) Committee.

2. Administration

ACA Implementation

Medicaid: To Expand, or Not to Expand?

In the wake of the Supreme Court’s ruling on the ACA, which ruled states have the option of expanding their Medicaid programs without the risk of forfeiting existing federal Medicaid funding, most states are weighing whether or not to expand Medicaid. A handful of governors have already stated they will not be implementing any portion of the Affordable Care Act, including the provision providing for an expansion of state Medicaid programs up to 133 percent of the federal poverty line. Citing excessive cost, the governors of Texas, South Carolina, Mississippi, Florida and Louisiana have stated they will not expand their programs.

Though the federal government will pay the entire cost of the newly eligible population, declining to 90 percent in 2019, some states have expressed concern that administrative costs and an increase in program utilization by individuals already eligible (for whom the enhanced federal payments would not apply) make the expansion unaffordable. Look for additional guidance from the U.S. Department of Health and Human Services and an updated score on the legislation from the Congressional Budget Office to shape the debate leading up to the elections. In some states, the election outcomes will potentially impact the course for state actions to implement the Medicaid expansion. As a reference, please see the chart, which offers a brief overview of which states may be more inclined to pursue expansion, including statements by state officials, and political makeup.

Sebelius Says Maintenance of Effort Still in Effect

On Tuesday, July 10, 2012, Secretary of Health and Human Services Kathleen Sebelius sent state governors a letter reminding them of their options in setting up health insurance exchanges, and acknowledging questions she received from states wondering what the Supreme Court’s ruling on the health care law will mean for them. While not offering any specific guidance outside of restating that current Medicaid funding no longer hinged on a state’s decision to comply with the ACA’s Medicaid expansion, the Secretary made it clear that no other provision of the law was affected by the court’s ruling. It appears the letter was intended to address a claim by Maine Gov. Paul LePage that the existing Medicaid maintenance of effort (MOE) provision, which prevents states from changing program eligibility standards prior to the fully implemented Medicaid expansion in 2014, is no longer binding. Gov. LePage currently has a state waiver application, hotly contested by Rep. Chellie Pingree, submitted to HHS requesting permission to remove roughly 21,000 individuals from Maine’s Medicaid program by adjusting eligibility standards.

States Move Forward with Exchanges

On Wednesday, July 11, 2012, Governors from California, Colorado, Connecticut, Hawaii, Massachusetts, Maryland, Minnesota, New York, Oregon, Rhode Island, Vermont and Washington state have notified HHS indicating their intention to set up a state-based exchange, according to a statement from the department. These states also appear to be among those most certain to comply with the health law’s Medicaid expansion provisions.

Centers for Medicare and Medicaid Services

Medicare Releases Names of New ACOs

CMS announced 89 new accountable care organizations (ACOs), provider organizations designed to coordinate care delivery through a shared savings model intended to reward quality. The latest announcement brings the approved ACO total to 154, which HHS estimates will serve 1.2 million individuals. For more information, click here.

Concerns Raised about Dual Eligible Demonstration Project

In two letters sent to HHS on July 10, Senator Rockefeller (D-WV) and the Medicare Payment Advisory Commission (MedPAC) raised concerns about a demonstration program to address the fragmented system of care for individuals covered under Medicare and Medicaid (dual eligibles). Senator Rockefeller, who authored the provision in the law that created the demonstration project, requested that CMS halt the demonstration project. You can view Sen. Rockefeller’s letter here.

MedPAC Chair Glen Hackbarth, in his letter to Acting CMS Administrator Marilyn Tavenner, expressed concern, specifically noting that if all pending state applications for integrated care demonstration projects are approved, roughly 3 million dual eligible individuals, 40 percent of the overall dual eligible population, would find themselves enrolled in a demonstration project. Among other concerns, MedPAC is worried such a large scope could complicate the process of terminating the demonstrations should they be found ineffective. To view the letter, please visit www.medpac.gov

3. State Activities

Governors Convene Annual Meeting, Will Discuss Medicaid

On the heels of a Supreme Court ruling that somehow managed to add more ambiguity to a complex law with arguably less-than-concrete guidance from the administration, this weekend’s 104th Annual National Governors Association convention promises to be laden with talk of provisions of the Affordable Care Act, particularly controversial provisions related to the expansion of Medicaid and state exchanges. While roughly a handful of states have already stated they will reject the Medicaid expansion, and a similarly small, though slightly larger, group has continued to move forward with their expansion plans, the majority of states continue to mull their options. Given the billions of dollars at stake and with a list of rumored possible solutions that grows by the day, it will come as no surprise if the Medicaid conversation dominates the dialogue of the convention.

Republican Governors Have Questions for President Obama

On behalf of the Republican Governors Association, RGA Chairman Gov. Bob McDonnell of Virginia sent a letter Tuesday, July 10, 2012, asking President Obama for answers to 30 questions regarding the establishment of state health insurance exchanges, and implementation of an expansion of state Medicaid programs. While the tone of the letter takes a partisan tact, many of the questions are issues most states will want to know answers to before proceeding. Acting Administrator of CMS Marilyn Tavenner quickly responded to at least some of the more major questions, explaining that states are not required to notify HHS by any specific deadline as to whether they will be expanding their Medicaid programs.

To view Gov. McDonnell’s letter, click here.

To view Acting Administrator Tavenner’s response, click here.

4. Regulations Open for Comment

CMS Proposes Policy and Payment Changes for OPPS and ASC Payment System

Last week, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule that would update payment policies and rates for both hospital outpatient departments and ambulatory surgical centers (ASCs) for CY 2013. The proposed rule will appear in the July 30, 2012, Federal Register. CMS will accept comments on the proposed rule until Sept. 4, 2012. A final rule is expected by Nov. 1, 2012. For more information on the CY 2013 proposals for the OPPS and the ASC payment system, click here.

CMS Issues Medicare Physician Fee Schedule Proposed Rule

Also last week, CMS issued a proposed rule that would update payment policies and payment rates for services furnished under the Medicare Physician Fee Schedule (MPFS) on or after Jan. 1, 2013. The rule proposes changes to several of the quality initiatives associated with MPFS payments — the Physician Quality Reporting System, the Electronic Prescribing Incentive Program, and the PQRS-EHR Incentive Pilot — as well as changes to the Physician Compare tool on the Medicare.gov website. The proposed rule will appear in the July 30, 2012, Federal Register. CMS will accept comments on the proposed rule until Sept. 4, 2012. A final rule is expected by Nov. 1, 2012. For more information, click here

CMS Proposes Changes to Medicare Home Health PPS for CY 2013

Last week, CMS announced proposed changes to the Medicare Home Health Prospective Payment System for CY 2013. Among the changes in the proposed rule:

  • Reduce Medicare payments to home health agencies by 1 percent, or $20 million. The proposed decrease reflects the combined effects of the home health market basket and wage index updates, and coding changes finalized previously.
  • Rebase and revise the home health market basket which would result in a labor-related share of 78.5 percent and a non labor-related share of 21.5 percent.
  • A 1 percent reduction to the CY 2013 home health market basket update of 2.5 percent, resulting in a 1.5 percent increase for home health agencies next year.

The proposed rule can be viewed here and will be published on July 13, 2012 in the Federal Register. CMS will accept comments on the proposed rule until Sept. 4, 2012.

CMS Proposes Policy and Payment Rate Changes for End-Stage Renal Disease Facilities in 2013

On July 3, 2012, CMS issued a proposed rule that would update Medicare policies and payment rates for End-Stage Renal Disease (ESRD) facilities paid under the ESRD Prospective Payment System (PPS) for calendar year (CY) 2013. The proposed rule would also make changes to the ESRD Quality Incentive Program (QIP). Performance scores on the QIP measures during a proposed CY 2013 performance period would affect payments to dialysis facilities in CY 2015. CMS will accept comments on the proposed rule until Aug. 31, 2012. To read the proposed rule, click here.

5. Reports

Government Accountability Office (GAO)

Ryan White Care Act: Additional Oversight Necessary

Last month, the GAO issued a report that found the Health Resources and Services Administration (HRSA) has not adequately adhered to HHS regulations regarding oversight of the Ryan White Comprehensive AIDS Resources Emergency Act of 1990. As a result of the study, GAO made several recommendations to HRSA to improve program operation. To view a summary or to read the full report, click here.

Congressional Budget Office(CBO)

CBO Expected to Score Post-SCOTUS ACA

In light of the changes imposed by the Supreme Court on the Affordable Care Act, the CBO announced it will continue to assess the budgetary impact of the Court-modified ACA, with the expectation that a score will be available during the week of July 23. While the score obviously was not available for debate during House consideration of a bill to repeal the Act, CBO’s findings will undoubtedly be cited by Democrats and Republicans alike during a future floor debate. Governors are likely anxiously awaiting the score as they continue to weigh their options for implementing health insurance exchanges and expanding their Medicaid programs.

Center for Studying Health System Change

Medicaid Patients Not Overutilizing Emergency Departments

A new study by the Center for Studying Health System Change seeks to debunk the conventional wisdom that Medicaid patients too often seek non-urgent services through their local emergency room, driving overutilization and cost in the process. According to the study, Medicaid beneficiaries tend to use emergency services largely in response to serious maladies, or at least in response to problems they believe to be serious, with roughly 10 percent of non-elderly Medicaid patients accessing emergency department services for non-urgent needs. This compares with roughly 7 percent non-urgent ER utilization among the privately insured. The full report can be viewed here.


If you have any questions, please contact Stephanie Kennan, Senior Vice President, or Brian Looser, Assistant Vice President, at McGuireWoods Consulting.

Founded in 1998, McGuireWoods Consulting LLC (MWC) is a full-service public affairs firm offering state and federal government relations, national/multistate strategies, infrastructure and economic development, strategic communications and grassroots issue management services. McGuireWoods Consulting is a subsidiary of the McGuireWoods LLP law firm and in 2010 was ranked in the Top 20 of The National Law Journal’s “The Influence 50,” an annual report of the top public affairs firms in Washington, D.C.

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