Weekly Washington Healthcare Update

November 19, 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)

Internal Revenue Service (IRS)/Dept. of Treasury

Department of Health & Human Services (HHS)

3. State Activities

4. Regulations Open for Comment

5. Reports

General Accountability Office (GAO)

Congressional Research Service (CRS)

Mercer Survey


1. Congress

House of Representatives

Energy and Commerce Explores Meningitis Outbreak

On Wednesday, the House Energy and Commerce Committee kicked off its return to Washington by convening a panel of experts to discuss the recent meningitis outbreak, which originated from the New England Compounding Center (NECC) and has resulted in more than 30 deaths and hundreds of illnesses. Central to the discussion was what specific agencies should be responsible for regulating compounding pharmacies, and whether the responsible agencies have the statutory authority to effectively exercise that responsibility.

Panel I:
Ms. Joyce Lovelace

Panel II:
Mr. Barry J. Cadden
President, Co-Owner and Director of Pharmacy
New England Compounding Center

Panel III:
The Honorable Margaret A. Hamburg, M.D.
U.S. Food and Drug Administration (FDA)

Dr. Lauren Smith, M.D., MPH
Interim Commissioner
Massachusetts Department of Public Health (MDPH)

Science Committee Investigates Health Information Technology

On Wednesday, the Subcommittee on Technology and Innovation held a hearing to examine progress on the development and implementation of health information technology (HIT) systems under the direction of the Office of the National Coordinator for Health Information Technology (ONC) and the National Institute of Standards and Technology (NIST). The subcommittee also examined the implementation of the Health Information Technology for Economic and Clinical Health (HITECH) Act, including the recently announced final rule for Stage 2 meaningful use of HIT under the Act.

Dr. Farzad Mostashari
National Coordinator for Health Information Technology
The Office of the National Coordinator for Health Information Technology

Dr. Charles H. Romine
Director, Information Technology Laboratory
National Institute of Standards and Technology

Mr. Marc Probst
Chief Information Officer and Vice President, Information Systems
Intermountain Healthcare

Ms. Rebecca Little
Senior Vice President

Dr. Willa Fields
DNSc, RN, FHIMSS, Professor, School of Nursing
San Diego State University

GOP Questions to HHS Regarding Health Exchanges

Last week, House Energy and Commerce Committee Chairman Upton (R-MI) and Oversight and Investigations Subcommittee Chairman Stearns (R-FL) wrote a letter to Secretary Sebelius asking for information related to the selection of Quality Software Services, Inc. (QSSI), an entity recently acquired by UnitedHealth Group, to support health insurance exchanges, raising concerns about a possible conflict of interest. The members wrote, “As United Health Group’s insurance plans will likely try to be named as Qualified Health Plans in the health exchanges, including the federal exchange, please describe the processes and procedures that will be in place to guarantee that United Health Group will not receive preferential treatment by its subsidiary QSSI.”

Members Propose House Special Committee on Health Care

Last week, several House Republicans wrote a letter indicating their desire to establish a new House Committee on Health Care, citing, among other reasons, the lengthy list of individual committees with jurisdiction over the ACA and the procedural hurdles that presents when dealing with the health reform law specifically.  “By taking the simple and dramatic step of establishing a new House Committee on Health Care, into which all health care jurisdiction is consolidated, we can most effectively challenge ObamaCare and create a forum for generating positive health care solutions for our nation.” Saving and strengthening Medicare was another goal of the new committee proposed in the letter, which was authored by Reps. Hastings (R-WA), Reid Ribble (R-WI) and Woodall (R-GA). Because two House committees already have jurisdiction over health care (Ways and Means Committee and the Energy and Commerce Committee), this has set off a jurisdictional discussion among the existing committees and the House Republican leadership.

Ways and Means Subpoena for Secretary Sebelius

In what has become an ongoing saga, on Wednesday the House Ways and Means Committee issued a subpoena to HHS Secretary Kathleen Sebelius demanding that she disclose details related to HHS’s use of tax dollars to promote President Obama’s signature health reform law. According to a statement by Chairman Camp, “This Administration has repeatedly stonewalled Congress and refused to allow a public review of how these tax dollars were spent. The lack of response leads me to believe that this Administration is either unwilling to disclose why they are using taxpayer dollars to market their unpopular law or are unable to keep track of how those taxpayer dollars are being spent.” To view the Ways and Means press release:


HELP Committee Also Has Meningitis Concerns

A three-panel hearing was quickly reduced to two when the owner of the Massachusetts compounding pharmacy at the center of a nationwide meningitis outbreak declined his invitation to appear before the Senate HELP Committee. Similar to the hearing held one day earlier by the House Energy and Commerce Committee, this hearing focused on the appropriate role and authority of state and federal regulatory agencies in identifying and policing pharmaceutical suppliers. Of note, at the conclusion of the first panel, Chairman Harkin noted that the committee would be sending a letter to each of the 50 state boards of pharmacy to get information regarding the prevalence of compounding pharmacies and the information those pharmacies are required to disclose.

Panel I:
Dr. Beth Bell
Director, National Center for Emerging and Zoonotic Infectious Diseases
U.S. Centers for Disease Control and Prevention

Dr. Peggy Hamburg
U.S. Food and Drug Administration

Dr. Lauren Smith
Interim Commissioner
Massachusetts Department of Public Health

Panel II:
Barry Cadden (Did Not Appear)
Owner and Director of Pharmacy
New England Compounding Center

Panel III:
Dr. Marion Kainer
Director, Healthcare Associated Infections & Antimicrobial Resistance Program Tennessee Department of Health

David G. Miller
Executive Vice President and CEO
International Academy of Compounding Pharmacy

Dr. Kasey K. Thompson
Vice President, Office of Policy, Planning and Communications
American Society of Health-System Pharmacists

Bill Approved Giving CMS Flexibility in Laboratory Sanctions

Last week, the Senate passed, by unanimous consent, legislation that would give the Centers for Medicare and Medicaid Services (CMS) additional flexibility in imposing sanctions on laboratory testing facilities that refer to other labs for analysis. Among other provisions, the legislation would give CMS the discretion to determine if a one-year ban on labs that refer work to other labs should be applied and the flexibility to impose intermediate sanctions instead of a two-year ban against lab ownership or operation. The bill, titled the Taking Essential Steps for Testing Act of 2012 and passed by the House on Sept. 19, will now go to President Obama’s desk.

2. Administration


States Given Additional Time on Exchange Decisions

As states worked up against a Nov. 16 deadline for submission of a formal decision on whether to establish their own state-run exchange to assist individuals purchasing health insurance, as provided for under the ACA, late last week HHS announced that it would push back the deadline for these decisions to Dec. 14. In response to a letter from the Republican Governors Association, HHS Secretary Sebelius confirmed that though the deadline extension is not as flexible as some would like, “We’re confident governors will have enough time to decide whether they want to establish an exchange, work in partnership with the federal government or have a federally facilitated exchange in their state,” noting also that additional guidance for states would be made available in the coming “days and weeks.”

For more information, see this week’s “State Activities” section for an update on where each stands on its health insurance exchange decision. We will be updating that document as information becomes available.


On Friday, CMS announced three final rules effective Jan. 1, 2013:

Inpatient Hospital Deductible and Hospital and Extended Care Services Coinsurance Amounts for CY 2013

Federal statute governing the Medicare program provides for an inpatient hospital deductible to be subtracted from the amount payable by Medicare for inpatient hospital services furnished to a beneficiary. It also provides for certain coinsurance amounts to be subtracted from the amounts payable by Medicare for inpatient hospital and extended care services. The Medicare statute also specifies the formulae used to determine these amounts. For CY 2013, the inpatient hospital deductible will be $1,184. The daily coinsurance amounts for CY 2013 will be: $296 for the 61st through 90th day of hospitalization in a benefit period; $592 for lifetime reserve days; and $148 for the 21st through 100th day of extended care services in a skilled nursing facility in a benefit period.

Medicare Part B Monthly Actuarial Rates, Premium Rate and Annual Deductible Beginning Jan. 1, 2013

The standard monthly Part B premium rate for all enrollees for 2013 is $104.90, which is equal to 50 percent of the monthly actuarial rate for aged enrollees or approximately 25 percent of the expected average total cost of Part B coverage for aged enrollees. (The 2012 standard premium rate was $99.90.) The Part B deductible for 2013 is $147. for all Part B beneficiaries. If a beneficiary has to pay an income-related monthly adjustment, they may have to pay a total monthly premium of about 35, 50, 65 or 80 percent of the total cost of Part B coverage.

Medicare Part A Premiums for CY 2013 for the Uninsured Aged and for Certain Disabled Individuals Who Have Exhausted Other Entitlement

Medicare Part A Premiums for CY 2013 for the Uninsured Aged and for Certain Disabled Individuals Who Have Exhausted Other Entitlement
This premium is paid by enrollees age 65 and older who are not otherwise eligible for benefits under Medicare Part A (hereafter known as the “uninsured aged”) and by certain disabled individuals who have exhausted other entitlement. The monthly Part A premium for the 12 months beginning Jan. 1, 2013, for these individuals will be $441. The reduced premium for certain other individuals as described in this notice will be $243. The CY 2013 premium of $441 is approximately 2.22 percent lower than the CY 2012 premium of $451. 

Internal Revenue Service (IRS)/Department of the Treasury

Treasury, IRS Plan to Finalize ACA Rules in Coming Months

The Department of the Treasury and the IRS are working to finalize regulations proposed in February dealing with the 2.3 percent excise tax the ACA imposes on medical devices and expects to issue them soon, according to Tax Legislative Counsel Lisa Zarlenga, speaking at the New York University 71st Institute on Federal Taxation. She also indicated that action was expected on other ACA-related provisions, including the fee imposed on health plans and self-insured employers, and the requirement for tax-exempt hospitals to perform a community health assessment.


Nursing Facilities’ Inappropriate Billing Cost Medicare $1.5 Billion in 2009

On Tuesday, HHS Office of the Inspector General released a report finding that skilled nursing facilities (SNFs) inappropriately billed Medicare $1.5 billion in 2009, roughly 5 percent of total payments to SNFs. The report, “Inappropriate Payments to SNFs Cost Medicare More Than a Billion Dollars in 2009,” recommended that CMS do more to reduce inappropriate payments to SNFs, and raised the possibility of additional scrutiny of SNF claims by Medicare contractors. According to the OIG, CMS stated that it has taken and continues to take proactive steps to reduce inaccurate, medically unnecessary and fraudulent claims by SNFs.

3. State Activities

4. Regulations Open for Comment

Final Hospital Outpatient Department and Ambulatory Surgical Centers Rule Issued with Comment Period

The Centers for Medicare & Medicaid Services (CMS) issued two final regulations updating Medicare payment rates and policies in calendar year (CY) 2013 for services furnished by physicians and other practitioners, as well as the rule for hospital outpatient departments and ambulatory surgical centers. Both rules were issued as final rules with a comment period until Dec. 31, 2012. The rules will take effect Jan. 1, 2013.

To read the final CY 2013 Medicare Physician Fee Schedule (MPFS) rule with comment period, please visit the Office of the Federal Register.

To read the final CY 2013 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) rule with comment period, please visit the Office of the Federal Register.

5. Reports


Medicare: High-Expenditure Part B Drugs

According to the GAO, in 2010 the Medicare program and its beneficiaries spent about $19.5 billion on Part B drugs, which are those commonly administered by a physician or under a physician’s close supervision in physicians’ offices and hospital outpatient departments. Medicare bases its payments for most Part B drugs on the average sales price (ASP), after rebates and discounts, of all sales of a specified drug in the United States. In other words, Medicare’s payment rates for Part B drugs are based on prices set by the private market. The report found that the 55 highest-expenditure Part B drugs represented $16.9 billion in spending, or about 85 percent of all Medicare spending on Part B drugs. 

Medicaid: States Made Multiple Program Changes, and Beneficiaries Generally Reported Access Comparable to Private Insurance

Another GAO report, released last week, found that in 2008 and 2009 less than 4 percent of Medicaid beneficiaries with full-year coverage said they had trouble getting care — about similar to private insurance rates. In addition, from 2008 to 2011 more than half of the 39 states surveyed reported maintaining or decreasing their average Medicaid application processing times, with the average number of calendar days between the receipt of a new application and the final determination of eligibility being made between 11 and 45 calendar days.

Medicare Fraud Prevention: CMS Has Implemented a Predictive Analytics System, But Needs to Define Measures to Determine Its Effectiveness

As required by the Small Business Jobs Act, CMS implemented its Fraud Prevention System (FPS) in July 2011 to identify potentially fraudulent claims by analyzing Medicare claims data using models of fraudulent behavior. However, according to a recent GAO report, “CMS had not defined an approach for quantifying benefits or measuring the performance of FPS. Further, agency officials had not conducted a post-implementation review to determine whether FPS is effective in supporting efforts to prevent payment of fraudulent claims. Until program officials review the effectiveness of the system based on quantifiable benefits and measurable performance targets, they will not be able to determine the extent to which FPS is enhancing CMS’s ability to accomplish the goals of its fraud prevention program.”


Budget Sequestration Alternatives

The Congressional Research Service recently released a report outlining the various policies and proposals that have been considered with regard to replacing the across-the-board spending cuts, known commonly as sequestration, set to take effect beginning the first of the year. The proposals include packages put forth by President Barack Obama, Rep. Paul Ryan (R-WI), Rep. Van Hollen (D-MD) and Rep. West (R-FL).


Employers Hold Health Benefit Cost Increases to Lowest Level in 15 Years

According to a report issued last week by Mercer, based on the National Survey of Employer-Sponsored Health Plans, growth in the average total health benefit cost per employee dropped to 4.1 percent from 6.1 percent in 2011, with a 2012 cost of $10,558 per employee. The report cites aggressive cost-control measures being taken by employers, such as a shift toward low-cost, consumer-directed health plans and an increased focus on employee wellness programs, as reasons for the slowed growth rate. For more information, please visit: 


Medical Device Tax Will Cost Manufacturers $2.5 Billion

Last week, stakeholders in the medical device community blitzed Capitol Hill in hopes of convincing lawmakers of the need to repeal the 2.3 percent excise tax on medical device manufacturers. Bolstering their case is a report issued by AdvaMed that finds that the tax will add $2.5 billion to the $8.7 billion that medical technology companies will already pay in federal income taxes in fiscal year 2013, which is approximately 29 percent of the industry’s current federal income tax liability. This figure stands in contrast with the Joint Committee on Taxation’s (JCT) conclusion that the tax would raise $1.7 billion in fiscal year 2013.

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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