Weekly Washington Healthcare Update

July 27, 2012

Pardon Our Dust

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This Week:

1. Congress

House of Representatives


2. Administration

Health and Human Services (HHS)

Centers for Medicare and Medicaid Services (CMS)

3. State Activities

4. Regulations Open for Comment

5. Reports

General Accountability Office (GAO)

Congressional Budget Office (CBO)

Health Affairs

1. Congress

House of Representatives

Ways and Means Health Subcommittee Explores Physician Reimbursement

On Tuesday, the Ways and Means Health Subcommittee held its third hearing to explore the flaws of the current Medicare physician reimbursement model by convening a panel of physician group representatives to gain perspective on what Congress can do to promote quality and efficiency. Witness testimony focused on the need for Medicare payments to reflect quality of care instead of volume and to recognize existing physician-led initiatives aimed at improving overall patient care. In addition, there was broad agreement that payment model reforms should reduce administrative burdens on providers and provide physicians with flexibility to address unique patient needs.

Witness List:

Colonel (Retired) Lawrence Riddles, M.D.
President of the Board, American College of Physician Executives

David L. Bronson, M.D.
President, American College of Physicians

Michael L. Weinstein, M.D.
Chair, Registry Board, American Gastroenterological Association

Peter J. Mandell, M.D.
Chair, American Academy of Orthopaedic Surgeons Council on Advocacy

Aric R. Sharp, FACHE, CMPE
CEO, Quincy Medical Group

John Jenrette, M.D.
CEO, Sharp Community Medical Group

Rep. Burgess Offers Temporary SGR Fix

Highlighting the difficulty of finding a permanent solution to the flawed Medicare payment system, Rep. Burgess (R-TX), Chairman of the Congressional Health Care Caucus, introduced legislation to stave off, once again, the scheduled reduction in physician payments called for under the Sustainable Growth Rate (SGR) formula, for one year. Requiring a 30 percent reduction in physician payments, the cut threatens to further complicate already tenuous spending negotiations shaping up for the end-of-Congress lame duck session. By enacting a one-year fix now, the bill aims to keep seniors’ access to care from being dragged into those decidedly political discussions. A separate “doc fix” proposal was introduced by Reps. Heck (R-NV) and Schwartz (D-PA) in May.

Labor-HHS Appropriations Stalled

In an appropriations cycle overshadowed by presidential election year politics, the House Appropriations Committee is taking its time in reporting an FY 2013 Labor, Education, and Health and Human Services spending bill. Last week, the House Appropriations Labor, Education, and Health and Human Services Subcommittee favorably reported its FY 2013 appropriations legislation along a largely party-line vote. The next step, action by the full House Appropriations Committee, is unlikely to happen before the August recess since a full-committee markup has not been scheduled. Congress is due to leave for recess on Aug. 3. In addition, Congress is now discussing the passage of a continuing resolution to keep all government agencies funded beyond the Sept. 30 end to FY 2012. The full Senate Appropriations Committee has already passed its version of the Labor-HHS funding legislation (S. 3295).


Commerce Panel Holds Hearing on Secondary Market Pharmaceuticals

On Wednesday, the Senate Committee on Commerce, Science and Transportation held a hearing on drug wholesalers and the secondary “gray” pharmaceutical market. The hearing centered on a joint House-Senate investigation launched by Rep. Cummings (D-MD) seeking information related to alleged practices by secondary market providers that have resulted in questionable price markups when drug shortages occur. In addition to Rep. Cummings’ testimony, the committee heard testimony from six other witnesses to explore the subject.


Panel 1

The Honorable Elijah E. Cummings (D-MD)
Ranking Member
U.S. House Committee on Oversight and Government Reform

Panel 2

Ms. Virginia Herold
Executive Officer
California Board of Pharmacy

Dr. David Mayhaus
Chief Pharmacy Director
Cincinnati Children’s Hospital Medical Center

Mr. John Gray
President and CEO
Healthcare Distribution Management Association

Dr. John Coster
Senior Vice President of Government Affairs and Director
NCPA Advocacy Center, National Community Pharmacists Association

Ms. Patricia Earl
Principal and CEO
Secure Pharma Distributor Network

2. Administration


HHS Announces $4 Billion in “Donut Hole” Savings for Seniors

This week, the administration took the opportunity to highlight a pharmaceutical industry-supported provision within the Affordable Care Act (ACA) that gradually reduces Medicare Part D beneficiaries’ out-of-pocket costs for prescription drugs when they are in the “donut hole.” Specifically, the announcement noted that nearly 1 million seniors and persons with disabilities have saved, on average, $629 each since the beginning of the year, and that overall beneficiary savings have reached nearly $4 billion.

HHS/DOJ Announce Health Care Anti-Fraud Partnership

On Thursday, the Administration announced that the Department of Health and Human Services and the Department of Justice will be partnering with state officials, private health insurers and other antifraud groups to assist in combating health care fraud, which has been estimated to cost the federal government upwards of $50 billion each year. One objective of the partnership is to share information on specific schemes, through billing codes and geographical fraud hotspots so action can be taken to prevent losses to both government and private health plans before they occur. Another potential goal of the partnership is the ability to spot and stop payments billed to different insurers for care delivered to the same patient on the same day in two different cities. A potential long-range goal of the partnership is to use sophisticated technology and analytics on industry-wide health care data to predict and detect health care fraud schemes. The following organizations and government agencies are among the first to join this partnership:

  • America’s Health Insurance Plans
  • Amerigroup Corporation
  • Blue Cross and Blue Shield Association
  • Blue Cross and Blue Shield of Louisiana
  • Centers for Medicare & Medicaid Services
  • Coalition Against Insurance Fraud
  • Federal Bureau of Investigations
  • Health and Human Services Office of Inspector General
  • Humana Inc.
  • Independence Blue Cross
  • National Association of Insurance Commissioners
  • National Association of Medicaid Fraud Control Units
  • National Health Care Anti-Fraud Association
  • National Insurance Crime Bureau
  • New York Office of Medicaid Inspector General
  • Travelers
  • Tufts Health Plan
  • UnitedHealth Group
  • U.S. Department of Health and Human Services
  • U.S. Department of Justice
  • WellPoint, Inc.


CMS Announces Payment Updates for Inpatient Rehabilitation Facilities (IRFs) for FY 2013

On Wednesday, the Centers for Medicare & Medicaid Services (CMS) announced updated payment rates for Inpatient Rehabilitation Facilities (IRF) for FY 2013. These updated rates will affect more than 200 freestanding IRFs and almost 1,000 IRF units of acute care hospitals, including a small number of IRF units in critical access hospitals (CAHs) that are paid under the IRF Prospective Payment System (PPS). The new rates will apply to services furnished to Medicare beneficiaries with discharges on or after Oct. 1, 2012.

CMS will increase payments to IRFs by a total of 2.1 percent, which reflects the combined effects of a 2.7 percent market basket update, minus a 0.7 percentage point productivity adjustment, a 0.1 percentage point reduction required by the Affordable Care Act and a 0.2 percentage point increase due to an update to the outlier threshold amount.

A link to the notice, which will be published in the Federal Register on July 30, 2012, is available online.

CMS Issues Hospice Wage Index Notice for FY 2013

On Tuesday, the Centers for Medicare & Medicaid Services (CMS) issued a notice updating the Medicare Hospice Wage Index for fiscal year 2013. Hospices serving Medicare beneficiaries will see an estimated 0.9 percent increase in their payments for FY 2013. The hospice payment increase is the net result of a 1.6 percent increase in the “hospital market basket” update, which is offset by a 0.7 percentage point decrease in payments to hospices due to updated wage index data and the fourth year of CMS’s seven-year phaseout of its wage index budget neutrality adjustment factor.

The new Hospice Wage Index will be effective for services furnished on or after Oct. 1, 2012. A link to the notice, which will be published in the Federal Register on July 27, 2012, will be available online.

3. State Activities

Michigan Gov. Snyder Presses Legislature for Exchange

With a Republican legislature adamantly opposed to President Obama’s signature health law, many experts expect Michigan Gov. Rick Snyder, a rare Republican governor pushing to establish a health insurance exchange, will have to establish the state’s insurance exchange through executive order.

States Look to Medicaid for Budget Savings

Facing continued budget shortfalls, 13 states, including Illinois, Alabama, California and Florida, have indicated they will cut funding for their states’ Medicaid programs to ease fiscal burdens. While a spokesperson for the National Association of State Budget Officers notes that overall, fewer states cut Medicaid spending this year as opposed to last, the spending reductions underscore ongoing disagreements between states and the federal government as to the affordability of further expanding the program, as provided for through the Affordable Care Act (ACA).

The Minnesota Department of Human Services to Audit Medicaid Payments

In response to concerns that Medicaid managed care plans, which administer care for the majority of Minnesota Medicaid patients, are being overpaid, the state’s Department of Human Services is seeking bids for an audit of Minnesota’s Medicaid payments to third-party managed care companies for the fiscal years of 2003 through 2011.

Massachusetts Seeks Last-Minute Health Care Cost Compromise

As the Massachusetts state legislature approaches the end of its legislative session, Gov. Patrick and state lawmakers are scrambling to address major drivers of health care costs, particularly large hospitals and doctors’ groups with disproportionate market share. In a proposal offered by Gov. Patrick, the state would conduct “cost and market impact reviews” of providers, looking for signs of excessive pricing. His proposal would provide state officials authority similar to that provided to the U.S. Secretary of Health and Human Services (HHS) to review premium increases by insurance providers under the Affordable Care Act (ACA). Under the Massachusetts proposal, entities found to have engaged in anticompetitive behavior would be reported to the state Attorney General.

4. Regulations Open for Comment

FDA Proposes Unique Device Identifier (UDI) Rule

The FDA will accept comments on the proposed rule to implement a Unique Device Identifier system for medical devices distributed in the United States. Comments on the proposed rule will be accepted either electronically or written until Nov. 7, 2012.

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

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

CMS will accept comments on the proposed rule until Sept. 4, 2012. A final rule is expected by Nov. 1, 2012.

CMS Proposes Changes to Medicare Home Health PPS for CY 2013

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

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

CMS will accept comments on the proposed rule until Aug. 31, 2012.

5. Reports


Characteristics of Providers Awarded Medicare Incentive Payments

On Thursday, the Government Accountability Office (GAO) released a report profiling entities that were awarded portions of $2.3 billion in Medicare Electronic Health Record (EHR) incentive payments in 2011. The report found that among the 761 hospitals receiving funds, nearly two-thirds were located in urban areas, the vast majority of which were acute care hospitals. Among the 56,585 providers awarded funding, about half were specialty physicians and nearly 90 percent practiced in urban areas.


Post-SCOTUS Affordable Care Act Score Lower, Fewer Insured

On Monday, the Congressional Budget Office (CBO) released a much-anticipated reworking of its analysis of the cost of the Affordable Care Act (ACA) in response to last month’s Supreme Court ruling. The Court’s ruling requires states to have the option of expanding their Medicaid populations, as provided for under the law, without jeopardizing the federal funding they receive to care for existing Medicaid populations. CBO found that the option to expand Medicaid would lower the overall cost of the law by $84 billion and simultaneously lower the cost of repealing the law by $101 billion. In addition, the report estimates that roughly 3 million fewer individuals would obtain insurance coverage under the law.

Health Affairs

Notable Reduction in Imaging Services

In a report published in Health Affairs this week, researchers found the growth of imaging services use among both Medicare beneficiaries and the non-Medicare insured slowed to 1 to 3 percent per year through 2009. The report attributes the reduction in growth, which had previously averaged about 6 percent per year, to policies requiring prior authorization for imaging reimbursements and cost-sharing measures implemented in 2006 and 2007.

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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