Weekly Washington Healthcare Update

August 10, 2012

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This Week:

1. Congress

House of Representatives


2. Administration

Centers for Medicare and Medicaid Services (CMS)

3. State Activities

4. Regulations Open for Comment

5. Reports

General Accountability Office (GAO)

Health Affairs

6. Special Report

1. Congress

House of Representatives

Ways and Means Chair Asks for Probe of Administration’s Insurance Office

On Thursday, Ways and Means Chairman Camp (R-MI), Health Subcommittee Chairman Herger (R-CA) and Oversight Subcommittee Chairman Boustany (R-LA) sent a letter to Comptroller General Gene Dodaro asking GAO’s Financial Management and Assurance (FMA) team to review funds that are being directed to implement major portions of the Affordable Care Act (ACA). Citing concerns that the Center for Consumer Information and Insurance Oversight (CCIIO) could be responsible for funds being diverted from the at-risk populations currently served by CMS, which now houses CCIIO, Reps. Camp, Herger and Boustany have asked the GAO to report back to them by Oct. 15 with data on the sources, and overall levels, of funding for CCIIO activities.


“Track and Trace” Discussions Resume on Capitol Hill

This week, staff members on the House Energy and Commerce Committee and the Senate HELP Committee resumed discussions on a “track and trace” system for monitoring the nation’s pharmaceutical supply chain. The system would label prescription drugs with unique serial numbers that could be used to keep a closer eye on drugs as they move from manufacturers to patients. Differing views among stakeholders sidelined the measure from ultimately being included in the FDA user fee reauthorization signed into law earlier this year, though ongoing drug shortages have kept pressure on lawmakers to reach an agreement.


2. Administration


Medicare Rx Drug Premiums Remain Steady

The Obama Administration announced Medicare prescription drug premiums are expected to remain stable, at $30 per month in 2013, the same as in 2012. Health and Human Services Secretary Kathleen Sebelius credited the 2010 health reform law with helping seniors cover their drug costs. According to the federal government, seniors and people with disabilities have saved $3.9 billion on drugs since the health care law passed in 2010, with an average savings of $600 per year per senior.

3. State Activities

Massachusetts Enacts Law to Address Health Care Costs

On Monday, Massachusetts Gov. Deval Patrick signed into law legislation aimed to address growing health care costs in the state by imposing a cap, through 2017, on health spending tied to the state’s economic growth. Beyond that, for five years, health spending must be held to a half-percentage point below growth of the economy, though state officials would have the authority to soften that requirement. Officials hope the measure will assist in moving away from a heavily fee-for-service-based reimbursement system and encourage quality outcomes over volume.

4. Regulations Open for Comment

NEW — HHS Releases Electronic Funds Transfer (EFT) Rule

On Tuesday, HHS released an interim final rule with comment period offering guidance on the operation of electronic health care transactions under HIPAA. The rule implements portions of Sec. 1104 of the Affordable Care Act (ACA), and it is expected to save $9 billion over the next 10 years “by reducing inefficient manual administrative processes for physician practices, hospitals, and health plans,” HHS said. Comments on the rule, which is scheduled to be published in the Aug. 10 Federal Register, are due Oct. 9. 

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, please visit the Office of the Federal Register website.

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. For more information, please visit the Office of the Federal Register website.

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. To read the proposed rule, please visit the Office of the Federal Register website.

5. Reports


Reassess Mobile Phone Exposure and Testing Requirements

On Tuesday, Reps. Waxman (D-CA), Eshoo (D-CA) and Markey (D-MA) released a GAO report on the health effects of radio-frequency (RF) energy from mobile phone use. While scientific research to date has not demonstrated adverse health effects of RF exposure, ongoing research may increase understanding of possible unknown effects. In this report, the GAO found that the Federal Communications Commission’s (FCC) RF energy exposure limit may not reflect the latest research, and testing requirements may not identify maximum exposure in all possible usage conditions. As a result, the GAO recommends that the FCC should formally reassess and, if appropriate, change its current RF energy exposure limit and mobile phone testing requirements related to likely usage configurations, particularly when phones are held against the body. FCC noted that a draft document currently under consideration by FCC has the potential to address GAO’s recommendations.

Health Affairs

Hospital Safety Net Doesn’t Work for Everyone

The Emergency Medical Treatment and Active Labor Act (EMTALA) requires hospitals to stabilize any patient who comes to an emergency department, regardless of their ability to pay. However, 25 years after its passage a study in Health Affairs finds evidence that some hospitals consistently “dump” patients who can’t pay for care to other facilities, particularly hospitals that regularly serve the poor. The authors argue for a more effective system for reporting and acting on potential violations as well as clearer standards to enable compliance with the law. The full report is available online (subscription required).

6. Special Report

Center for Medicare and Medicaid Innovation (CMI): A Primer

With budget deficits assuming a prominent role in both state and federal politics, due at least in part to rapid growth in spending on entitlement programs such as Medicare and Medicaid, coupled with a Congress that has grown tired of both hearing complaints about the misaligned incentives of Medicare’s fee-for-service payment model, as well as addressing the persistent need to fix the sustainable growth rate (SGR) formula, which itself was intended to remedy Medicare’s broken reimbursement system, it comes as no surprise that when Congress undertook health reform they wanted some part of the reform to focus on testing new payment and delivery models.

Under Section 3021 of the Patient Protection and Affordable Care Act (P.L. 111-148), also known as the Affordable Care Act (ACA), CMS was directed to establish the Center for Medicare and Medicaid Innovation.

The purpose of CMI is to test and evaluate innovative payment and service delivery models to reduce program expenditures under Medicare, Medicaid and the Children’s Health Insurance Program (CHIP) while preserving or enhancing the quality of care furnished under these programs. In addition, the Secretary of Health and Human Services (HHS) is directed to give preference to payment models that also improve coordination, quality and efficiency in the delivery of health care services. In order to achieve this goal, the law provided $10 billion for FY 2011-2019, and an additional $10 billion for each subsequent 10 fiscal years period to expand successful demonstration programs. Of note, the law explicitly allows the Secretary to test payment models that are not initially budget-neutral.

Formally established in November 2010, CMI is led by Acting Director Richard Gilfillan. Prior to leading CMI, Dr. Gilfillan served as President and CEO of Geisinger Health Plan and Executive Vice President for System Insurance Operations at the Geisinger Health System in Danville, PA. Dr. Gilfillan is assisted in his capacity as director by Acting Deputy Director of Programs and Policy Sean Cavanaugh and Deputy Director, Programs and Policy Thomas Reilly.

Under the broad authority granted by the law, CMI has begun numerous initiatives. Below is a list of each program and a brief description. For a more in-depth look at the status of individual programs, including funding levels and timelines, please see CMI’s “One Year of Innovation” report.

Accountable Care Organization (ACO): Advance Payment Model
The Advance Payment Model is an initiative for those ACOs entering the Medicare Shared Savings Program to test whether and how prepaying a portion of future shared savings could increase participation in the Medicare Shared Savings Program.

ACO: Pioneer ACO Model
The Pioneer ACO Model focuses on testing a new payment and care delivery model for health care organizations and providers that are already experienced in coordinating care for patients across care settings.

Bundled Payments for Care Improvement
This program aims to improve patient care through four models of payment innovation that foster improved coordination and quality through a patient-centered approach.

Comprehensive Primary Care Initiative
The Comprehensive Primary Care Initiative is a multipayer initiative fostering collaboration between public and private health care payers to strengthen primary care for all Americans.

Federally Qualified Health Center (FQHC) Advanced Primary Care Practice Demonstration
This demonstration will test the patient-centered medical home as a model to improve quality of care, promote better health and lower costs.

Graduate Nurse Education Demonstration
Under the Graduate Nurse Education Demonstration, CMS will provide reimbursement to up to five eligible hospitals for the reasonable cost of providing clinical training to advanced practice registered nursing (APRN) students added as a result of the demonstration.

Health Care Innovation Awards
This initiative, awarding up to $1 billion, focuses on testing creative ways to deliver high-quality health care services and to lower costs. Priority will be given to projects that rapidly hire, train and deploy new types of health care workers.

Independence at Home Demonstration
Under the Independence at Home Demonstration, the CMS Innovation Center will work with medical practices to test the effectiveness of delivering comprehensive primary care services at home and if doing so improves care for Medicare beneficiaries with multiple chronic conditions. Additionally, the Demonstration will reward health care providers that provide high-quality care while reducing costs.

Initiative to Reduce Avoidable Hospitalizations among Nursing Facility Residents
This program focuses on improving the quality of care for people residing in nursing facilities.

Innovation Advisors Program
The Innovation Advisors Program aims to establish a network of experts trained, supported and charged by CMS to improve the delivery system for Medicare, Medicaid and CHIP beneficiaries.

Medicaid Emergency Psychiatric Demonstration
The Medicaid Emergency Psychiatric Demonstration was established under Section 2707 of the Affordable Care Act to test whether Medicaid programs can support higher-quality care at a lower total cost by reimbursing private psychiatric hospitals for certain services for which Medicaid reimbursement has historically been unavailable.

Medicaid Incentives Program for the Prevention of Chronic Diseases
This program awards grants to states to provide incentives to Medicaid beneficiaries of all ages who participate in prevention programs and demonstrate changes in health risk and outcomes.

Partnership for Patients
Partnership for Patients is a public-private partnership that seeks to support physicians, nurses and other clinicians in an attempt to make patient care safer, focusing on supporting effective transitions of patients from hospitals to other settings.

State Innovation Models Initiative
The State Innovation Models initiative is a competitive funding opportunity for states to design and test multipayer payment and delivery models that deliver high-quality health care and improve health system performance.

Strong Start for Mothers and Newborns
Strong Start for Mothers and Newborns is an initiative aiming to improve health outcomes for mothers and infants across the country.

CMI has been subject to criticism that, in the interest of political expediency and fear that a Republican Congress and White House would repeal the agency’s authorization and funding, it has not properly vetted applications for funding. In one instance, an application was awarded $1.9 million with an expected savings of $1.7 million, and another was awarded $4.5 million with an aim to save $5 million. In January, House Ways and Means Chairman Camp (R-MI) and Health Subcommittee Chairman Herger (R-CA) sent a letter to Secretary Sebelius requesting information regarding CMI’s activities in designating grant awardees. When the ACO model was first proposed, many in the health community decided they could not participate. CMI created the Pioneer program in part to respond to those criticisms.

While this Congress is in its closing days, the next Congress will continue to deliberate over ways to address incentives in Medicare and Medicaid to better coordinate care and reduce costs. The outcome of the November election may impact the work being done at CMI. Given the relatively large pool of money for CMI, even absent potential GOP majorities in the House and Senate and control of the White House, the likelihood exists that CMI funding would find itself a target with other piecemeal repeal efforts.

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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