Weekly Washington Healthcare Update

September 7, 2012

Pardon Our Dust

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This Week:

1. Congress

House of Representatives


  • District Work Period

2. Administration

Health and Human Services (HHS)

Internal Revenue Service (IRS)

Centers for Medicare and Medicaid Services (CMS)

Department of Veterans Affairs (VA)

Patient Centered Outcomes Research Institute (PCORI)

3. State Activities

4. Regulations Open for Comment

5. Reports

General Accountability Office (GAO)

Centers for Disease Control and Prevention (CDC)

Health Affairs

Heritage Foundation

National Institute for Health Care Reform

1. Congress

House of Representatives

Ways and Means Schedules Hearing on ACA

Ways and Means Oversight Subcommittee Chairman Boustany (R-LA) has announced his subcommittee will hold a hearing to explore Internal Revenue Service (IRS) activities to implement provisions of the Affordable Care Act (ACA). The hearing, which comes on the heels of testimony offered by IRS Commissioner Shulman to the House Oversight and Government Reform Committee regarding the agency’s activities in July, is expected to focus on the capacity of the IRS to meet both its existing duties and those required under the ACA. Republicans have expressed concerns that the IRS has become politicized in the debate over health reform, a move they say could compromise the agency’s core mission of revenue collection and tax administration. Witnesses have not been announced.


  • District Work Period

2. Administration


Public Health Training Awards Announced

Last week, HHS Secretary Sebelius announced that nearly $50 million in combined funding through the Health Resources and Services Administration (HRSA) and CDC would be made available to support the public health workforce. Specifically, HRSA is awarding $23 million in grants to 37 Public Health Training Centers to assist in training public health workers in fields including nutrition and epidemiology. In addition, CDC has made $25 million available in funding for state and local public health department fellowships in an effort to address public health challenges such as community screenings and education activities. 

HHS Issues Guidance on ACA “90-Day Waiting Period Limitation”

On Friday, Aug. 31, HHS, working in coordination with the Treasury and Labor Departments, released guidance on a provision within the ACA to limit the amount of time before an employee must become eligible for coverage under an employer or group health insurance plan. Under the guidance, starting Jan. 1, 2014, group health plans and health insurance issuers offering group health insurance coverage may not apply a waiting period (defined in the guidance as “the period of time that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of the plan can become effective”) that exceeds 90 days. The guidance also outlines unique scenarios in which the waiting period limitation may exceed 90 days. HHS will accept comments until Sept. 30, 2012. To view the entire guidance document, please click here. [Embed “HHS Group Plan…”]

Stage Two Meaningful Use Final Rule Released

HHS released the final rules for Stage 2 of Meaningful Use on Aug. 23 and published it in the Federal Register on Sept. 4. It will become effective no earlier than 2014. Meaningful Use is an incentive program to encourage the use of Electronic Health Records (EHRs). Stage Two is designed to move beyond data collection and to use EHRs as a tool to improve quality of care. Group providers will no longer have to attest to participation in the program, one by one. The timing for the start of Stage 2 continues to be 2014 as in the proposed rule. Also retained is the focus on health information exchange and access to health data. The Stage 1 measure for a test of exchange of key clinical information is eliminated for a more robust core objective for transitions of care in Stage 2. And instead of providing patients with an “electronic copy of their health information,” Stage 2 requires “electronic or online access” to their health data.

The final rule adds “outpatient lab reporting” as a menu option for hospitals and “recording clinical notes” as a menu objective for both physicians and hospitals.

The final rule also reduces some thresholds for some measures and modifies some criteria for exclusions based on difficulty. For example, CMS had proposed that providers send a summary of care record for more than 65 percent of transitions of care and referrals. The final rule decreases that threshold to 50 percent.

CMS also finalized two new core objectives from the proposal for physicians to use secure electronic messaging to communicate relevant health information with patients, and for hospitals to automatically track medications from order to administration using assistive technologies with an electronic medication administration record.


ACA Guidance Issued For Employers

Last week, the IRS issued guidance to assist employers in defining who counts as a full-time employee for purposes of the ACA’s “shared responsibility” provisions, including the mandate that certain employers provide health insurance benefits for employees or face a financial penalty. Of note, the guidance would allow employers to use W-2 forms to determine whether an offer of insurance meets the ACA’s “affordability” definition, and offers an explanation of safe harbor provisions for variable hour employees. IRS will accept comments until Sept. 30, 2012.


Medicare Payment Advisory Commission (MedPAC) Meeting

This week, MedPAC held a day-and-a-half-long series of discussions at the Ronald Reagan Building in Washington, D.C., to address Medicare issues and policy questions, and to develop its recommendations to Congress. Topics included geographic adjustment of payments for the work of physicians and other health professionals, approaches to bundling postacute care and refining the hospital readmissions program. Look for a recap of discussions in next week’s McGuireWoods Consulting Weekly Healthcare Update.

Move to Educate States on Uninsured

HHS launched the first in a series of teleconferences this week to engage regional stakeholders on “Health Insurance Marketplace & Expanded Insurance Options.” The calls, which are scheduled to take place over the next week, aim to update stakeholders on the latest information regarding implementation of the Health Insurance Marketplace (Exchanges) and to start discussions on strategies to educate the uninsured, underinsured and small businesses about expanded insurance coverage options.


President Issues Executive Order on Mental Health Care

In response to rising military suicide numbers, President Obama issued an executive order last week aiming to expand mental health services to service members, veterans and military families. Specifically, the order directs the VA to hire new veteran support counselors and to work with HHS to develop pilot programs to reduce VA waiting lists in service areas characterized by a shortage of VA service providers. In addition, VA, the Department of Defense, HHS and the Department of Education must collaborate to draft a National Research Action Plan targeting early diagnosis and effective treatments for traumatic brain injury and post-traumatic stress disorder.


The Patient-Centered Outcomes Research Institute (PCORI) is launching a new initiative aimed at engaging patients and other health care stakeholders as meaningful and active partners in PCORI’s efforts to build a patient-centered research community and refine its research agenda. Specifically, PCORI announced Wednesday that it is hosting three workshops to collect feedback from patients and other stakeholders in selecting its areas of research.

3. State Activities

Maine Medicaid Lawsuit

On Friday, CMS asked Maine to have patience as the federal agency reviewed the state’s request to roll back Medicaid eligibility in three categories. Maine Attorney General William Schneider announced Wednesday that the state would make good on its promise to sue CMS if it didn’t approve its requested Medicaid cuts by Sept. 1. “Maine explained to CMS that an expedited decision was needed so that Maine could achieve its budget savings as directed by the Legislature and achieve a balanced budget as required by the Maine Constitution,” said Schneider, adding that CMS’s failure to act was essentially a rejection. Now, he’s asking the First Circuit to order CMS to approve the cuts.


Will Kansas Entertain an Exchange?

Kansas insurance officials will hold a three-hour hearing Thursday to get public comments on how to define the essential health benefits. The insurance department says it will send its recommendation to Gov. Sam Brownback, the Wichita Business Journal reports. The Governor has taken a hands-off approach to the health law so far. To view local press coverage, please visit:

Minnesota Medicaid Draws Attention From Congress

Sen. Chuck Grassley (R-Iowa), Rep. Darrell Issa (R-Calif.) and Rep. Trey Gowdy (R-S.C.) recently expressed concern regarding potential overpayments to providers serving Minnesota’s Medicaid patients. The members of Congress want to know whether state officials tried to “disguise” overpayments as a donation rather than return the federal portion to the U.S. Treasury. In April, Minnesota relented and returned the federal funds to CMS, a day before Issa’s committee held a hearing on the matter. Grassley, Issa and Gowdy have asked Minnesota’s health commissioner, Lucinda Jesson, to “clarify contradictory testimony” about the way federal funds were managed and to produce more documents.

Missouri Ballot Question: “Argument is Over”

The fight over the wording of a ballot question regarding whether Missouri voters support blocking efforts to establish a health insurance exchange is officially over. Attorney General Chris Koster will not appeal a state court’s ruling to reword the language, despite the urging of Secretary of State Robin Carnahan, whose initial wording was rejected by Cole County Circuit Judge Daniel Green. “Judge Greene’s [sic] summary more accurately reflects the legislative intent than does the Secretary’s proposed language. My job is to call balls and strikes in an impartial manner. The argument is over,” Koster said in a statement.

New Hampshire Joins Ranks of Medicaid Managed Care States

This week, New Hampshire Gov. John Lynch said that the federal government has approved the state’s plan to implement a managed care plan statewide. Currently the state operates a fee-for-service model in which providers are generally paid for each service they provide. However, under the new arrangement, which is similar to plans adopted in many other states, New Hampshire will work with three managed care organizations, which will be responsible for coordinating all health care services for enrollees through a network of providers in an effort to better coordinate care and contain program costs.

California Self-Insurance Law Halted; Exchange or Co-op?

California Insurance Commissioner Dave Jones and key state lawmakers have agreed to put on hold a contentious bill that would set some of the nation’s toughest standards for self-insurance. According to an email the Self-Insurance Institute of America sent to members yesterday, Jones and the Legislature agreed to delay action on the bill until a special session later this year or 2013. Jones’s bill would set the minimum “attachment point” for self-insurance at $60,000 — about three times the current National Association of Insurance Commissioners’s (NAIC) model, but equal to a recommendation advisers made to the NAIC last year. ACA supporters say more small businesses are opting for self-insurance to avoid some of the health law’s requirements, but others say that is not true since self-insurance plans are still highly regulated.

Also, California has indicated the idea of creating a Basic Health Plan may be replaced by a co-op system under provisions contained in the ACA. According to California Healthline, “That [co-op] proposal, like BHP, is an option under the federal health reform law with a lot of questions surrounding it. Unlike BHP, the COOPs bill is a floor vote away from the governor’s desk and appears to have widespread support.”

Georgia: No Deal on Medicaid

Joining Florida, South Carolina, Texas and Iowa, Georgia is the latest state to reject Medicaid expansion.

DC Exchange Raises Anti-Competitive Concerns

The exchange being developed in Washington, D.C., under local direction is on a unique path. Outside of Vermont, which is pursuing a single-payer system, D.C.’s exchange is shaping up to be one of the most progressive ones in the country. The recommendations made by D.C. exchange advisers and city officials would send all the district’s small businesses into the exchange, expand the definition of small businesses and merge risk pools for the small group and individual markets. This has raised concerns among both businesses and insurers, which say the exchange would choke off competition in favor of propping up an unproven marketplace.

4. Regulations Open for Comment

HHS Releases Electronic Funds Transfer (EFT) Rule

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.

5. Reports


Asset Data Collection Varies by State and May Be Insufficient

GAO recently released a report regarding state collection of asset data for the purposes of calculating Medicaid eligibility. Among the agency’s findings, GAO reported that:

On the basis of states’ responses to questions about the extent of documentation required from applicants and information obtained from third parties, it is unclear whether some states obtain sufficient information to implement certain provisions of the Deficit Reduction Act of 2005 (DRA). For example, 31 states reported requiring less than 60 months of documentation from applicants and financial institutions. The results of GAO’s survey raise questions about states’ implementation of the DRA, but are not conclusive. CMS officials said that it is reasonable for states to only conduct reviews when there is reason to believe a transfer of assets occurred. GAO has additional work planned related to Medicaid long-term care financial eligibility.


One-Third of Americans Battling High Blood Pressure

On Tuesday, the CDC released a report finding about one-third of American adults have high blood pressure and more than half of them don’t have it under control. Hypertension is a leading risk factor for cardiovascular disease, a major cause of morbidity and mortality, and costs $131 billion annually in health care expenditures. CDC is working with pharmacists to counsel patients with the condition and has also made it a priority of its Million HeartsTM Initiative, which aims to prevent 1 million heart attacks and strokes by 2017.

Health Affairs

Fee-For-Service: Here To Stay?

In a recent Health Affairs article, Paul Ginsburg, president of the Center for Studying Health System Change, calls into question the conventional wisdom that existing fee-for-service (FFS) payment systems will eventually be replaced by innovative reimbursement aimed at improving coordination among providers and delivering higher quality patient care. Noting that new payment reforms called for in the ACA, like bundled payments and ACOs, still contain FFS elements, Ginsburg asserts that FFS is likely to remain at the core of many physician reimbursements. This, he says, underscores the need to address the current shortcomings in the Medicare physician fee schedule, because it will affect physician incentives and will continue to play an important role in determining the payment amounts under payment reform.

Heritage Foundation

To States: Be Wary of Medicaid Expansion

The conservative-leaning Heritage Foundation late last month issued a report warning states that seemingly generous funding from the federal government in exchange for what has become a voluntary measure on the part of states to expand their Medicaid programs may not be as generous after all. The report, by Heritage analyst Drew Gonshorowski, illustrates three potential scenarios states could encounter depending on potential future fluctuations in federal Medicaid match rates, suggesting that states could be on the hook for far more than the 10 percent match that the Affordable Care Act calls for by 2020. To view the report, please click here.

National Institute for Health Care Reform

Ways to Lower Rx Drug Costs

The United States could lower drug costs by using reference pricing and comparative-effectiveness and cost-effectiveness research, the National Institute for Health Care Reform says in a new report. The strategies have been used effectively in numerous countries, and comparative effectiveness is built into the ACA. According to the report, however, unique political pressures in the United States prevent the government from using the research to determine health decisions. To view the full report, please visit:

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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