Weekly Washington Healthcare Update

December 3, 2012

Pardon Our Dust

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This Week:

1. Congress

House of Representatives


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2. Administration

Health and Human Services (HHS)

Office of the Inspector General (OIG)

Food and Drug Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

General Accountability Office (GAO)

Congressional Budget Office (CBO)

Centers for Disease Control and Prevention

Oliver Wyman

Journal of American Medicine

National Hospice and Palliative Care Organization (NHPCO)

Kaiser Family Foundation

1. Congress

House of Representatives

Energy and Commerce Examines Medicare Fraud

On Wednesday, the Health Subcommittee will hold a hearing entitled “Examining Options to Combat Health Care Waste, Fraud and Abuse” to assess current antifraud measures employed by CMS and explore potential new approaches to address these substantial and ongoing threats. Specifically, the hearing focused on the implementation of data analytics concepts such as predictive modeling, retrospective modeling, rules (based on algorithms), predictive scoring models, data mining queries and billing patterns to combat fraud. By running large amounts of data against specific algorithms, analysts can pinpoint cases of potential fraud and abuse for follow-up and further investigation before inappropriate payments are made.


Ms. Kathleen M. King
Director, Health Care
Government Accountability Office

Mr. Dan Olson
Director of Fraud Prevention
Health Information Designs

Ms. Alanna Lavelle
Director Investigations, East Region/Special Investigations Unit

Mr. Louis Saccoccio
Chief Executive Officer
National Health Care Anti-Fraud Association

Mr. Neville Pattinson
Senior Vice President Government Affairs, Standards and Business Development,
Gemalto, Inc.
on behalf of the Secure ID Coalition

Mr. Michael Terzich
Senior Vice President, Global Sales and Marketing
Zebra Technologies

Dr. Kevin Fu
Associate Professor of Computer
Science and Engineering
University of Massachusetts Amherst

Top House Committees Welcome New GOP Members

Republicans on the House Ways and Means Committee have announced four new members for the 113th Congress: Reps. Tim Griffin of Arkansas, Mike Kelly of Pennsylvania, Tim Scott of South Carolina and Todd Young of Indiana. And on the Energy and Commerce panel, the new members are Reps. Hall (TX), Bilirakis (FL), Ellmers (NC), Johnson (OH) and Long (MO).



2. Administration


New Federal Medical Assistance Percentage (FMAP) Rates Released

The Federal Medical Assistance Percentages (FMAP), Enhanced Federal Medical Assistance Percentages (eFMAP) and disaster-recovery FMAP adjustments for fiscal year 2014have been calculated pursuant to the Social Security Act (the Act). These percentages will be effective from Oct. 1, 2013, through Sept. 30, 2014. This notice announces the calculated FMAP and eFMAP rates that the U.S. Department of Health and Human Services (HHS) will use in determining the amount of federal matching for state medical assistance (Medicaid) and Children’s Health Insurance Program (CHIP) expenditures, Temporary Assistance for Needy Families (TANF) Contingency Funds, Child Support Enforcement collections, Child Care Mandatory and Matching Funds of the Child Care and Development Fund, Foster Care Title IV-E Maintenance payments and Adoption Assistance payments.


Electronic Medical Records (EHRs) System Needs Improved Oversight

According to HHS’s inspector general’s office, the CMS and the Office of the National Coordinator for Health Information Technology at HHS need to improve their oversight of the Medicare EHR incentive payment program. According to the report, “CMS faces obstacles to overseeing the Medicare EHR incentive program that leave the program vulnerable to paying incentives to professionals and hospitals that do not fully meet the meaningful use requirements. Currently, CMS has not implemented strong prepayment safeguards, and its ability to safeguard incentive payments postpayment is also limited. The Office of the National Coordinator for Health Information Technology (ONC) requirements for EHR reports may contribute to CMS’s oversight obstacles.”


Progress on International Device/Drug Safety

In ablog post dated Nov. 28, FDA Commissioner Margaret Hamburg outlined recent actions taken to partner with drug and device regulators in Brazil, Australia and Canada to develop standard procedures for inspecting medical device facilities so that the countries will be able to rely on their counterparts’ inspections. “What is expected is increased understanding of each other’s regulatory systems and an opportunity to explore how to leverage each country’s resources to expand the safety net for both countries,” Hamburg wrote.

Premarket Review “Plan of Action”

In response to frequent concerns about the adequacy of FDA’s premarket review system, the agency recently released a report demonstrating progress in that area of responsibility. According to the report, “[t]he FDA’s Plan of Action to modernize and improve the FDA’s premarket review of medical devices has successfully increased the predictability, consistency, transparency, efficiency, and timeliness of premarket review …. With the improvements in the predictability and efficiency of FDA review as a result of the Plan of Action and MDUFA III, the industry will be able to bring safe and effective devices to market more quickly and at lower cost, providing better healthcare for Americans.”

Meningitis Hearing Scheduled

Last week, the FDA announced it will hold a Dec. 19 hearing from 3 p.m. to 5 p.m. to explore the recent fungal meningitis outbreak linked to the New England Compounding Center. According to the announcement, “[h]istorically, regulation of pharmacy compounding has focused on drawing a line between traditional pharmacy compounding and other manufacturing …. Going forward, FDA believes the focus should be shifted from attempting to draw a bright line between traditional pharmacy compounding and other manufacturing to clearly defining traditional pharmacy compounding that should be primarily overseen by the States and higher risk non-traditional pharmacy compounding that would require compliance with Federal standards.”

3. State Activities

Arizona Opts for Federal-Only Exchange

Arizona Governor Jan Brewer (R) announced on Nov. 28 that the state will not create a state-based exchange. Brewer said she made the decision because Arizona will likely have little control over the exchange. She stated that “the federal government would maintain oversight and control over virtually every aspect of our exchange, limiting our ability to meet the unique needs of Arizonans and the Arizona insurance market.” Brewer’s decision comes after a two-year planning process in which the state received more than $31 million from HHS.

Missouri Will Expand Medicaid

Gov. Nixon announced Missouri will expand Medicaid, which could provide coverage to 300,000 people and create 24,000 new jobs in 2014. Nixon stated that expanding Medicaid is “the smart thing to do, and it’s the right thing to do.” The Governor will submit his budget to the Missouri state legislation in January. However, it may be a challenge to get it passed, since Republicans control both houses.

Michigan Legislature at Odds with Governor on Exchange

Last week, the Michigan House Health Policy Committeedefeated a bill to create a state health exchange, reestablishing distance between the state’s legislative body and Gov. Rick Snyder as they grapple with the difficult decision of whether to establish a state-run exchange or allow the federal government to operate the exchange for them.

Kansas Insurance Commissioner to Retire

Kansas Insurance Commissioner Sandy Praeger, who succeeded Kathleen Sebelius as insurance commissioner in 2003 and has been one of few Republicans to support implementation of the ACA, says she won’t run for reelection in 2014 and will step down when her four-year term expires. “I’m 68, I’ve earned the right to retire,” she said. “Part of me would love to stay on and be a part of the discussion. I have grandkids that are in Denver, Colorado and Chicago. A part of me would love to be out there debating this because I think I’m on the right side of the issue — because I don’t think my position’s political.”

Oregon Budgets for Medicaid Expansion…

In a budget filed last week, Gov. John Kitzhaber made room to implement an expansion of his state’s Medicaid program, a move he expects will add an additional 200,000 Oregonians to the state’s Medicaid program, the Oregon Health Plan. “[B]y covering almost 30 percent of the uninsured there will be a reduction in costs borne by private employers, families and individuals who buy insurance through the commercial market,” according to the proposal.

…Wyoming Does Not

In much the opposite fashion from Oregon’s Gov. Kitzhaber, Wyoming Gov. Matt Mead announced he will not request federal funds for Medicaid expansion in 2014, but he encouraged the Wyoming state Legislature to debate the issue. “I cannot and will not commit the state to a Medicaid expansion, until and if our questions are answered” by the federal government, Mead wrote in his supplemental budget recommendations for 2013 and 2014.

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 theOffice 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 theOffice of the Federal Register.

OPM Releases Multi-State Plan Proposal

Last week, OPM issued a proposed rule to implement the Multi-State Plan Program (MSPP). Through contracts with OPM, health insurance issuers will offer at least two multi-State plans (MSPs) on each of the Affordable Insurance Exchanges (Exchanges). Under the law, an MSPP issuer may phase in the States in which it offers coverage over four years, but it must offer MSPs on Exchanges in all States and the District of Columbia by the fourth year in which the MSPP issuer participates in the MSPP. OPM aims to administer the MSPP in a manner that is consistent with State insurance laws and that is informed by input from a broad array of stakeholders. The deadline for submitting comments on the proposed regulation is Dec. 30, 2012. OPM will review the comments and issue a final regulation next year. A fact sheet isavailable online.

Additional Medicare Tax for Wealthy Beneficiaries

This document contains proposed regulations relating to Additional Hospital Insurance Tax on income above threshold amounts (“Additional Medicare Tax”), as added by the Affordable Care Act. Specifically, these proposed regulations provide guidance for employers and individuals relating to the implementation of Additional Medicare Tax. This document also contains proposed regulations relating to the requirement to file a return reporting Additional Medicare Tax, the employer process for making adjustments of underpayments and overpayments of Additional Medicare Tax, and the employer and employee processes for filing a claim for refund for an overpayment of Additional Medicare Tax. The document also provides notice of a public hearing scheduled for April 4, 2013, on theseproposed rules. The deadline for submitting comments on the proposed regulation is March 1, 2013.

HHS Issues Notice of Benefit and Payment Parameters for 2014

Last week, HHS released a Notice of Benefit and Payment Parameters proposed rule that would expand upon standards set forth in the Premium Stabilization Rule (77 FR 17220) and the Establishment of Exchanges and Qualified Health Plans Final Rule (77 FR 18310) released earlier this year. The proposed rule issued today includes additional guidance on risk adjustment methodology, reinsurance, risk corridors, affordability, Exchange user fees and Medical Loss Ratio. Comments on draft Notice of Benefit and Payment Parameters are invited from the general public, consumers, states, industry and other stakeholders and must be submitted by Dec. 31, 2012.

CMS Requests Information on Health Plan Quality

CMS has issued a request for information to seek public comments regarding health plan quality management in Affordable Insurance Exchanges. While new quality reporting standards for exchanges are on hold until 2016, in the meantime, HHS is asking for feedback on a number of topics, including: improvement strategies used by health plans, how exchanges could further National Quality Strategy goals, the exchange health plan rating system and calculating health plan value. Public comments are due by Dec. 27, 2012.

Essential Health Benefits (EHBs), Wellness Program, Health Insurance Market Regulations Open for Comment

CMS has published three proposed rules to implement several provisions of the Affordable Care Act (ACA) that, among other things,disallow the discrimination of patients based on preexisting conditions, help consumers shop for and compare non-grandfathered private health insurance options in the individual and small group markets bypromoting consistency across plans, and encourage consumer-protectivewellness programs in group health coverage. Comments are due by Dec. 26, 2012.

5. Reports


Medicaid: Data Sets Provide Inconsistent Picture of Expenditures

The GAO found that $43 billion in Medicaid spending in 2009 could not be linked to beneficiaries. While some of the discrepancy is a result of different data collection methods, billions of dollars still did not go to beneficiaries. Researchers discovered that states usually don’t report Medicaid spending until three years after the fact. GAO stated that this leaves the Medicaid program at “high risk” for fraud and abuse.


Sustainable Growth Rate (SGR) Fix Cost Increases

As negotiations over the looming fiscal cliff slowed last week, a relatively high-profile component of the talks, the SGR formula’s current pending physician payment reduction, received anunwelcome revision in its estimated cost from the CBO. The cost of offsetting the scheduled cut of 26.5 percent is now estimated at $25.2 billion, or $7 billion higher than previous estimates.

Offsetting Effects of Prescription Drug Use on Medicare’s Spending for Medical Services

The CBOreleased a report on the correlation between prescription drug use and Medicare’s spending for medical services. According to the report, “a 1 percent increase in the number of prescriptions filled by beneficiaries would cause Medicare’s spending on medical services to fall by roughly one-fifth of 1 percent.” As a result, CBO estimates that $35 billion in federal spending for medical services under Medicare will be saved over a 10-year period.

Centers for Disease Control and Prevention

HIV Rate Persistently High Among Youth

According to a report issued by the CDC last week, despite a shift in public-health messaging to emphasize that early detection and early treatment can help the HIV-positive person stay healthy, young Americans continue to display higher-than-normal rates of HIV infection. The report found that “[i]n 2010, of the estimated 47,500 new HIV infections, 12,200 (25.7 percent) were among youths,” particularly young men.

Oliver Wyman

Accountable Care Organizations (ACOs) Cover 10 Percent of Patients

An estimated 25 million to 31 million people are treated by organizations already participating in ACOs of some kind, according to a report released by the consulting group Oliver Wyman last week. This data stands in contrast, the authors say, to allegations by opponents that the popularity of these health delivery units established by the ACA is low.

Journal of the American Medical Association (JAMA)

Physician Salaries Not to Blame for Growth in Health Spending

A JAMA study recently found that physicians’ salaries are not increasing as rapidly as those of other health professions. According to the study, physician salaries increased 9.6 percent from 1987 to 2010, whereas other health professionals experienced a much larger growth. For example, pharmacists’ incomes increased by 44 percent in that same time frame.

Unintended Consequences of Eliminating Medicare Payments for Consultations

JAMA found that eliminating consultation payments and increasing fees for office visits is not budget neutral as expected. In January 2010, Medicare made this transition, hoping to decrease payments to specialists and increase payments to primary care physicians. No additional costs were to be acquired. However, JAMA found that on average, $10.20 more was spent per beneficiary per quarter on this policy. This results in a 6.5 percent increase in spending. JAMA explained the increased costs as “high office-visit fees from the policy and a shift toward higher-complexity visits to both specialists and primary care physicians.”

National Hospice and Palliative Care Organization (NHPCO)

Increase in Hospice Deaths

According to a report issued last week by the National Hospice and Palliative Care Organization, 44.6 percent of deaths last year occurred under hospice care, up from 41.9 percent in 2010. According to the report, NHPCO Facts and Figures: Hospice Care in America, the average hospice stay was relatively short: 35.7 percent died or were discharged within a week (up from 35.3 percent in 2010) and half (50.1 percent in 2011, versus 49.4 percent in 2010) were in hospice care for less than two weeks.

Kaiser Family Foundation

Medicaid Expansion Might Save States Money

Last week, Kaiser Family Foundation released a report finding that states’ Medicaid spending would increase by less than 3 percent nationally between 2013 and 2022 if all states expand the program, though costs would vary by state. According to the report, “Accounting for factors that reduce costs, states as a whole are likely to see net savings from the Medicaid expansion. Combining Medicaid costs with a conservative estimate of $18 billion in state and local non-Medicaid savings on uncompensated care, the Medicaid expansion would save states a total of $10 billion over 2013-2022, compared to the ACA without the expansion. Net state savings are likely to be even greater because of other state fiscal gains that we could not estimate based on 50-state data.”

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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