Weekly Washington Healthcare Update

September 14, 2012

Pardon Our Dust

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This Week:

1. Congress

House of Representatives

Senate

2. Administration

Health and Human Services (HHS)

Census Bureau

3. State Activities

4. Regulations Open for Comment

5. Reports

Kaiser Family Foundation

Commonwealth Fund

6. Medicare Payment Advisory Commission (MedPAC)


1. Congress

House of Representatives

Ways and Means Explores IRS Role in ACA

On Tuesday, Ways and Means Oversight Subcommittee Chairman Boustany (R-LA) held a hearing to explore Internal Revenue Service (IRS) activities to implement provisions of the Affordable Care Act (ACA). The hearing focused on the IRS’s implementation of various tax provisions enacted under the ACA, and considered how the agency’s implementation of the law will affect taxpayers and its core revenue-collection mission.

Witness List

PANEL 1:

Steven T. Miller
Deputy Commissioner for Services and EnforcementInternal Revenue Service

PANEL 2:

Mr. Fred Goldberg, Jr.
Partner
Skadden, Arps, Slate, Meagher & Flom LLP

Ms. Kathy Pickering
Executive Director
The Tax Institute at H&R Block

Mr. Scott A. Hodge
President
The Tax Foundation

Mr. Seth T. Perreta
Partner
Crowell and Moring LLP

Summary

The hearing, which comes on the heels of testimony offered by IRS Commissioner Shulman to the House Oversight and Government Reform Committee in July, focused on the capacity of the IRS to meet both its existing duties and those required under the ACA. As has become a common theme, the hearing highlighted a disparate level of confidence between committee Republicans and IRS officials in the ability of the agency to enforce new tax policies enacted as part of the ACA. Though Republicans expressed concerns regarding the impact of the law on the married couples, privacy, and IRS enforcement capabilities, Deputy Commissioner Miller dismissed their concerns and conveyed confidence in the ability of the IRS to meet its duties under the law.

The second panel, comprised of industry experts including former IRS Commissioner Fred Goldberg, Jr., largely criticized tax policies contained with the ACA such as the penalty for not possessing health insurance and the tax on medical devices. That said, Mr. Perreta praised the IRS’s work, such as establishing safe harbor rules to protect employee privacy.

Ways and Means Holds Hearing on Health Insurance Exchange Implementation

On Wednesday, the House Ways and Means Subcommittee on Health met to hear from experts on the progress being made to implement health insurance exchanges, pursuant to the ACA. Rep. Johnson (R-TX) presided over the hearing in Chairman Herger’s (R-CA) stead while the chairman undergoes hip replacement surgery.

Witness List

The Honorable Michael Consedine
Commissioner
Pennsylvania Department of Insurance

E. Neil Trautwein
Vice President and Employee Benefits Policy CounselNational Retail Federation

Daniel T. Durham
Executive Vice President, Policy and Regulatory AffairsAmerica’s Health Insurance Plans

James F. Blumstein
University Professor of Constitutional Law and Health Law & PolicyVanderbilt Law School

Heather Howard
Director
State Health Reform Assistance Network
Lecturer In Public Affairs, Woodrow Wilson School of Public and International AffairsPrinceton University

Summary

Opinions varied, predictably, on whether the activities being conducted by the Dept. of Health and Human Services (HHS) are helping or harming state efforts to establish exchanges. Republicans on the panel expressed concern that a lack of detail in guidance documents represented a hurdle to states and other stakeholders looking for clear direction from the Administration before moving forward with what could potentially be far-reaching and expensive plans to implement exchanges. Democrats viewed the approach of offering guidance in lieu of hard-and-fast rules as an opportunity for states to work flexibly with the federal government in an attempt to overcome what all agreed is a complicated task. Commissioner Consedine’s testimony generally supported the Republican’s position, which was countered by the minority’s witness, Ms. Howard.

Keeping up what has become a central theme to Republican efforts to combat implementation of the law, one witness, Mr. Blumstein’s testimony focused on the Internal Revenue Service’s (IRS) recently enacted rule declaring that all exchanges, whether established by a state or the federal government, be allowed to issue subsidies to individuals purchasing insurance through an exchange. Meanwhile, Mr. Trautwein expressed retailers continued opposition to the ACA, and discussed their difficulties in complying with provisions of the ACA. He asked that “implementing agencies . . . follow the normal notice and comment procedures under the Administrative Procedure Act (APA) between now and the end of the year.” Mr. Durham echoed that statement, though his members do not oppose the law.

Small Business Explores Impact of Durable Medical Equipment Competitive Bidding

On Tuesday, the House Small Business Healthcare and Technology Subcommittee held a hearing to discuss the impact of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) competitive bidding program (CBP) on patients and small suppliers and the implications for program expansion.

Witness List

PANEL1:

Laurence Wilson
Director of the Chronic Care Policy Group
Center for Medicare, Centers for Medicare & Medicaid Services

PANEL 2:

Peter Cramton, Ph.D.
Professor of Economics
University of Maryland, College Park, MD

Tammy Zelenko
President/CEO
Advacare Home Services (American Association for Home Care)

Randy Mire
Owner
Gem Drugs (National Community Pharmacists Association)

Summary

The Medicare DMEPOS competitive bidding program has run into frequent controversy over the structure of the bidding process and concerns over the role of small providers in catering to the special needs of certain Medicare beneficiaries. Members of Congress on the panel, including Chairwoman Ellmers (R-NC), queried witnesses on aspects of the program such as the use of non-binding bids, which industry supporters claim encourage ‘low-balling,’ and discussed whether the market pricing program (MPP) offered by some economists would provide a better structure for the program.

Energy and Commerce Health Subcommittee Marks Up Broker Bill, Others

On Tuesday, the Energy and Commerce Health Subcommittee favorably reported H.R. 1206, the Access to Professional Health Insurance Advisors Act of 2011. The bill, which would exclude from the calculation of the Medical Loss Ratio (MLR), commissions paid to independent insurance brokers and agents who work to find individuals and small businesses affordable insurance options, was approved by voice vote.

In addition to the broker bill, the subcommittee marked up several other bills: (1)a proposal to provide grants to states with Emergency Medical Technician (EMT) shortages and eliminate duplicative EMT training requirements for veterans; (2) a proposal to permit the National Institutes of Health (NIH) to fund a pediatric research consortia; (3) a bill intended to promote research on “recalcitrant cancers”; (4) a bill to help resolve disputes when Medicare is called upon as a secondary payer; (5) and a bill to update laws dealing with testing by clinical laboratories.

Senate

Kohl, Grassley Seek Answers on Sunshine Rule

At a roundtable discussion convened by Sens. Kohl (D-WI) and Grassley (R-IA) Wednesday, CMS director of the Policy and Data Analysis Group, Niall Brennan provided few details surrounding the long-delayed rule to require manufacturers to disclose financial relationships with doctors. Though the senators referenced rumors that CMS had already finalized its rule and sent it to the Office of Management (OMB), and that that agency intended to withhold publication of the rule, potentially until after the November election, Brennan stated that CMS was in fact still working through technical details in order to get the policy right. Brennan said that he “hopes” manufacturers will begin collecting data at some point in 2013. The aim of the provision is to provide a publicly available database so that patients can see any conflicts of interest their physicians may have in recommending certain treatments.

2. Administration

Health and Human Services (HHS)

Consumers Saved $2.1 Billion As Result of ACA

On Tuesday,HHS announced that consumers had benefited to the tune of $2.1 billion as a result of insurance reform provisions contained in the ACA. Beginning Sept. 1, 2011, the health care law established federal rate review standards in an attempt to prevent insurers from implementing excessive premium increases. While HHS initially attributed $1 billion in savings to the rate review provision, on Wednesday, the Center for Consumer Information and Insurance oversight (CCIIO) Director Gary Cohen admitted during a conference call that the report did not distinguish between savings from rate reviews that would have been achieved by the state systems in place before the ACA was implemented. In addition, the law requires insurers to spend no less than 80% of premium revenue directly on health benefits for policy holders. The Administration attributed $1.1 billion in savings to this provision.

Census Bureau

New Data on Uninsured Released

According to data released by US Census Bureau this week, the number of Americans without health insurance decreased to 15.7 percent last year, down from 16.3 percent in 2010. The report also noted that more people were covered by federal health care programs overall, including Medicare and Medicaid. Perhaps the most politically salient finding in the report is the 2.2 percent increase in the rate of young adults, ages 19-25, possessing health insurance. However, while nearly 40% of those newly insured young adults acquired their coverage through their parent’s health insurance plans, the number of newly insured attributable to the expanded dependant coverage under the ACA is unclear as some states and major insurers have voluntarily implemented such policies.

3. State Activities

Maine Medicaid Lawsuit Dismissed

While most states are crunching numbers to determine whether an optional expansion of their Medicaid program is an advantageous move, Maine requested that HHS relieve the state of its requirement to maintain Medicaid eligibility requirements. When HHS did not respond by September 1, Maine filed suit against CMS to lift provisions established under the American Recovery and Reinvestment Act, and subsequently extended by the ACA, which essentially prohibit the state from adjusting program eligibility requirements in order to remove individuals from its Medicaid rolls. However, on Thursday, A federal appeals court ruled that the state will have to wait for CMS to review the state’s request to cut almost 30,000 people from the Medicaid rolls.View the court ruling.

Arkansas Gov. Moves Toward Medicaid Expansion

Gov. Mike Beebe said Tuesday he supports expanding Medicaid eligibility in Arkansas under the federal health care law after officials assured him the state could later opt out, setting up a potentially heated fight with state Republican lawmakers as they try to win control of the state legislature.

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 theproposed 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

Kaiser Family Foundation

Insurance Premiums Increase, But Slowly
According to the Kaiser Family Foundation’s annualEmployer Health Benefits Survey released Tuesday, the average employer-provided health insurance premium increased by only low-single digits last year. The slow up-tick is consistent with relatively slow growth in health insurance premiums in recent years that while some attribute to the economic recession, still has many health policy experts puzzled. The 3 percent to 4 percent growth reported in 2012 was less than half of last year’s increase and is more in line with the figures reported in other years since the recession began in 2007.

Commonwealth Fund

Study Cast Doubt on Viability of High-Risk Pools

According to a report recently published by the Commonwealth Fund, high-risk health insurance pools established to cover a portion of the nation’s sickest residents during the years leading up to the effective date of the ACA’s main coverage provisions have proven expensive but necessary for a small population. However, the report warns that “Republican proposals to set up more widespread high-risk pools would not work.” “Using high-risk pools as an alternative to the provisions in the Affordable Care Act to cover the substantial remaining uninsured population with pre-existing conditions would be extremely expensive and likely unsustainable,” according to the report’s authors, Jean P. Hall and Janice M. Moore.”

6. MedPAC Discusses March 2013 Report to Congress

Last week, the Medicare Payment Advisory Commission (MedPAC) held a day-and-a-half long series of discussions to address Medicare issues and policy questions as it develops its recommendations for its March 2013 report to the Congress. Topics included:

I. Context for Medicare Payment Policy

II. Mandated Report: Geographic Adjustment of Payments for the Work of Physicians and Other Health Professionals

III. Mandated Report: Medicare Payment for Ambulance Services

IV. Approaches to Bundling Post-Acute Care

V. Benefit Design: Competitively-Determined Plan Contributions

VI. Mandated Report: Improving Medicare’s Payment System for Outpatient Therapy Services

VII. Refining the Hospital Readmissions Program

McGuireWoods Consulting has compiled a comprehensive summary of the full MedPAC meeting.


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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