Weekly Washington Healthcare Update

August 19, 2013

Pardon Our Dust

We recently launched this new site and are still in the process of updating some of our archived content. Some details of this article may be incomplete, links may be broken, and other elements may not display properly yet. We appreciate your patience and understanding.

1. Congress

House of Representatives


2. Administration

Health and Human Services (HHS)

Centers for Medicare and Medicaid Services (CMS)

Office of Personnel Management (OPM)

Office of Management and Budget (OMB)

Food and Drug Administration (FDA)

3. State Activities

4. Regulations Open for Comment

5. Reports

Dept. of Health and Human Services (HHS-OIG)

1. Congress

House of Representatives

District Work Period — No Votes

The House of Representatives is in recess until Sept. 9, 2013. For more information on House activities, please visit: majorityleader.gov/floor/.


State Work Period — No Votes

The Senate is out of session until Sept. 9, 2013. For more information on Senate activities, please visit: democrats.senate.gov/floor/.

2. Administration


“Navigator Grants” Awarded to 105 Organizations

On Aug. 15, HHS awarded $67 million in grants to “navigator” organizations that will assist future enrollees in shopping for plans on the online health insurance exchanges. Created under the Affordable Care Act to deliver unbiased information about available insurance options on the federally facilitated marketplaces and the state partnership marketplaces, the grants awarded vary by state and were given to fund training for business groups and community groups to educate the public about the ACA. “These navigators will help consumers apply for coverage, answer questions about coverage options, and help them make an informed decision about which option is best for them,” HHS Secretary Kathleen Sebelius said in a telephone press briefing. To the vocal dissatisfaction of many Democrats and Republicans in Congress, grant awards were $13 million more than HHS originally estimated in its April 22 announcement, with funds being relocated from the HHS prevention fund through normal process. A full list of the grant recipients can be found here.


Permanent Error Rate Measurement (PERM) Eligibility Guidance Issued

On Aug. 15, CMS’s Center for Medicaid and Children’s Health Insurance Program (CHIP) Services published a guidance entitled “Payment Error Rate Measurement (PERM) Eligibility Reviews, Medicaid Eligibility Quality Control (MEQC) Program, and Development of an Interim Approach for Assessing Payment Error for Eligibility,” in which the agency provided guidance to states on eligibility reviews under the Payment Error Rate Measurement (PERM) and the Medicaid Eligibility Quality Control (MEQC) programs. CMS developed the PERM Program in response to the Improper Payments Information Act (IPIA) of 2002, which focuses on reducing improper payments across the federal government. PERM reviews calculate error rates within three aspects of the Medicaid and CHIP programs — fee-for-service (FFS), managed care payments and program eligibility.


Federal Employees Health Benefits Program Identifies Underserved States

According to OPM’s annual determination of states that qualify as Medically Underserved Areas under the Federal Employees Health Benefits Program (FEHBP), 14 states in which enrollees in certain FEHBP plans will qualify for special consideration, including a requirement that non-HMO FEHB plans reimburse beneficiaries, subject to contract terms, for covered services obtained from any licensed provider in these states. The law requires that a state be designated as a Medically Underserved Area if 25 percent or more of the population lives in an area designated by the Department of Health and Human Services (HHS) as a primary medical care manpower shortage area.


Basic Health Plan Rule Lands at OMB

Last week, OMB received a proposed rule from HHS establishing a provision from the ACA that would create a program allowing states to offer public health insurance to individuals whose incomes are too high to qualify for Medicaid but are also below 200 percent of the federal poverty level, also known as the Federal Basic Health Program Option. The provision, modeled after a program implemented almost three decades ago in Washington state, was championed by Sen. Cantwell (D-WA). Though the ACA would have had the program up and running on Jan. 1, 2014, as currently proposed, the rule would allow for open enrollment beginning in October 2014. 


Radio Frequency Wireless Technology in Medical Devices Guidance Issued

On Aug. 14, FDA issued guidance for industry and agency staff to assist industry and FDA staff in identifying and appropriately addressing specific considerations related to the incorporation and integration of radio frequency (RF) wireless technology in medical devices. This guidance highlights and discusses RF wireless technology considerations that can have an effect on the safe and effective use of medical devices. These considerations include the selection of wireless technology, quality of service, coexistence, security and electromagnetic compatibility (EMC). Consideration of these areas can help provide reasonable assurance of safety and effectiveness for medical devices that incorporate RF wireless technology and are supplementary to other device-specific guidelines.

3. State Activities

DC Exchange Enrollment Assistance Grants Awarded

On Aug. 13, the DC Health Benefit Exchange Authority Executive Board today approved grants to 35 DC-based organizations to provide in-person expert assistance to individuals, families and small businesses looking to enroll in health insurance coverage through DC Health Link, the District’s new online health insurance marketplace. The grants awarded today total $6.4 million to support more than 150 trained experts across the District in 2013 and 2014. These experts will undergo approximately 30 hours of rigorous training to enable them to answer questions about the new health law. Once trained, they will help people use the online marketplace to determine their eligibility for private insurance, financial help to reduce monthly premiums, help with out-of-pocket expenses or Medicaid.

Massachusetts Finds Prior Rate Increases, Though ACA Impact Minimal

Massachusetts’ Center for Health Information and Analysis (CHIA) has released its first Annual Report on the Massachusetts Health Care Market, finding that health coverage available through Massachusetts employers in 2011 cost more and had a lower benefit value for consumers. Specifically, between 2009 and 2011, premiums rose by 9.7% to pay for benefits that decreased by 5%; and deductibles grew in Massachusetts by more than 40% between 2009 and 2011, approaching the national average. The report, mandated by the Commonwealth’s 2012 health care cost-containment law, examines trends in the commercial health care market between 2009 and 2011, including changes in premiums and benefit levels, spending and retention, and market concentration. In addition, the state announced that health insurance rates will rise less than 2 percent when new ACA programs take effect in January. That average includes a 25 percent drop in rates from the state’s largest insurer, Blue Cross Blue Shield of Massachusetts.

4. Regulations Open for Comment

Proposed Rule on Exchange Coverage for Members of Congress, Staff

On Aug. 8, 2013, the Office of Personnel Management (OPM) published a proposed rule to amend the Federal Employees Health Benefits (FEHB) Program regarding health insurance requirements for Members of Congress and their staff under the Affordable Care Act (ACA). The proposed rule would require, consistent with the ACA, that Members of Congress and their staff purchase health coverage on ACA-created exchanges beginning Jan. 1, 2014; however, they would not lose employer contributions to their health plans, as many had previously been concerned would happen. The proposed rule defines a “Member of Congress” as a member of the Senate or of the House of Representatives, a Delegate to the House of Representatives (which includes delegates from the District of Columbia and the territories), and the Resident Commissioner of Puerto Rico. In addition, the proposed rule utilizes the statutory definition for Congressional staff. Because there is no existing statutory or regulatory definition of “official office,” the proposed rule delegates to the employing office of the Member of Congress the determination as to whether an employed individual meets the statutory definition. OPM seeks comment on the proposal by Sept. 9, 2013.

Proposed Rule, Medicare Physician Fee Schedule (PFS) and Hospital Outpatient Prospective Payment System (OPPS)

CMS has issued the calendar year (CY) 2014 Medicare Physician Fee Schedule (PFS), Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System proposed rules. The proposed PFS regulation would continue to expand access to primary care services by proposing to provide payment for complex chronic care coordination services, beginning in CY 2015. It proposes to adjust payment rates for over 200 codes where Medicare pays more for services furnished in an office than in a hospital outpatient department or ASC, as part of the misvalued codes initiative. It also would make refinements to the Physician Quality Reporting System (PQRS) program, the Medicare Shared Savings Program and the Medicare EHR Incentive Program.

PFS: CMS projects an across-the-board reduction in payment rates based on the Sustainable Growth Rate (SGR) formula. If the SGR goes into effect, Medicare payment rates are projected to be reduced by 24.4 percent for services in 2014. The final projection, based on more recent data, will be made available in the final rule.

OPPS: CMS proposes to update the OPPS market basket by 1.8 percent for CY 2014. The proposed hospital market basket increase published in the fiscal year (FY) 2014 Inpatient Prospective Payment System (IPPS)/Long-Term Care Hospital Prospective Payment System (LTCH PPS) proposed rule is 2.5 percent. The Medicare statute requires a productivity adjustment reduction of 0.4 percentage points and a 0.3 percentage point reduction to the CY 2014 OPPS market basket, so the proposed CY 2014 OPPS market basket update would be 1.8 percent.

ASC: ASC payments are annually updated for inflation by the percentage increase in the consumer price index for all urban consumers (CPI-U). The Medicare statute specifies a multifactor productivity (MFP) adjustment to the ASC annual update. For CY 2014, the CPI-U update is projected to be 1.4 percent. The MFP adjustment is projected to be 0.5 percent, resulting in an MFP-adjusted CPI-U update of 0.9 percent for CY 2014. In addition, CMS is proposing that certain ancillary or adjunctive services that would be packaged under the OPPS for CY 2014 also would be packaged under the ASC payment system for CY 2014.

In the OPPS/ASC proposed rule, total CY 2014 OPPS payments are projected to increase by $4.37 billion or 9.5 percent, and CY 2014 Medicare payments to ASCs are projected to increase by approximately $133 million or 3.51 percent as compared to CY 2013. The CY 2014 OPPS/ASC proposed rule would also expand the categories of related items and services packaged into a single payment for a primary service under the OPPS; create 29 comprehensive APCs to replace 29 existing device-dependent APCs; streamline the current five levels of outpatient visit codes; and continue paying at ASP+6 percent for non-pass-through drugs and biologicals that are covered separately under the OPPS.

The proposed rule would add five new measures for the Hospital Outpatient Quality Reporting (OQR) program, affecting payment in CY 2016, with data collection beginning in CY 2014. It seeks comment on proposed changes to the Quality Improvement Organization regulations.

CMS will accept comments on these proposed rules until Sept. 6, 2013, and will respond to comments in final rules to be issued by Nov. 1, 2013.

IRS Proposed Rule For Tax Credits Issued on Exchanges

On June 28, the IRS issued a proposed rule on specific information regarding premium tax credits the insurance exchanges must report to IRS and to the person receiving the tax credit. Under the proposed rule, IRS explains what specific information regarding the tax credits the exchanges must report to IRS and to the person receiving the tax credit. Under ACA, tax credits can be made available to eligible recipients each month. The proposed rule would require the exchanges to report the required information to the IRS on a monthly basis and to the recipient on an annual basis. The information the exchanges must report would include, among other things, the name, address, taxpayer identification — i.e., Social Security — number (or date of birth if a taxpayer ID number is not available), the monthly premium for the applicable benchmark plan used to compute the tax credit and the monthly premium for the plan or plans in which a taxpayer, responsible adult or family member enrolls, without reduction for advance credit payments. According to the proposed rules, the exchange would report the information to the IRS on or before the 15th day following each month of coverage. The exchange must also send the tax credit recipient an annual statement including the same information on or before Jan. 31 of the year following the calendar year of coverage. Comments are due Aug. 31.

CMS Proposed Dialysis Payment Rule

CMS has issued the proposed End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) rule for renal dialysis services furnished to beneficiaries on or after Jan. 1, 2014. CMS projects the updated calendar year (CY) 2014 ESRD bundled market basket increase will be 2.9 percent, which is reduced by an estimated multi-factor productivity (MFP) adjustment for CY 2014 of 0.4 percent, for a projected update of 2.5 percent to the ESRD PPS base rate in CY 2014. Section 632(a) of the American Taxpayer Relief Act of 2012 requires the Secretary to make reductions to the ESRD PPS base rate to reflect the Secretary’s estimate of the change in the utilization of ESRD-related drugs and biologicals by comparing per patient utilization data from 2007 with such data from 2012. This adjustment results in an overall 12 percent reduction in Medicare payments for CY 2014. The rule seeks comment on whether this change should be phased in over more than one year.

As a result of the application of the ESRD bundled market basket update reduced by the MFP adjustment, the wage index budget-neutrality adjustment and the drug utilization adjustment, CMS projects the proposed updates for CY 2014 would decrease total payments to all ESRD facilities by 9.4 percent compared with CY 2013.

The rule also proposes changes to the ESRD Quality Incentive Program (QIP) for payment year (PY) 2016.

The proposed rule also addresses issues related to the coverage and payment of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS), including clarification of the definition of routinely purchased DME; clarification of the grandfathering provision related to the three-year minimum lifetime requirement; and implementation of budget-neutral fee schedules for splints, casts and intraocular lenses (IOLs) inserted in a physician’s office.

View the proposed rule. CMS will accept comments on the proposed rule until Aug. 30, 2013.

Proposed Rule on Home Health Payments

On June 27, CMS published a proposed rule to update Medicare’s Home Health Prospective Payment System (HH PPS) payment rates and wage index for calendar year (CY) 2014. The rule proposes rebasing adjustments, with a four-year phase-in, to the national, standardized 60-day episode payment rates, the national per-visit rates and the NRS conversion factor. Payments to home health agencies (HHAs) are estimated to decrease by approximately 1.5 percent, or $290 million in CY 2014, reflecting the combined effects of the 2.4 percent HH payment update percentage ($460 million increase); the rebasing adjustments to the national, standardized 60-day episode payment rate; the national per-visit payment rates; the NRS conversion factor ($650 million decrease); and the effects of ICD-9 coding adjustments ($100 million decrease). This proposed rule would also establish home health quality reporting requirements for CY 2014 payment and subsequent years and proposes to specify that Medicaid responsibilities for home health surveys be explicitly recognized in the State Medicaid Plan, which is similar to current regulations for surveys of Nursing Facilities (NF) and Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF-IID). Comments must be received by Aug. 26.

Final CMS Rule on Improving Coordination Between Long-Term Care Hospitals and Hospices

CMS issued a rule June 26 that aims to improve care coordination between long-term care (LTC) hospitals and hospice facilities; the new rule, which goes into effect Aug. 26, 2013, clearly defines the role of each provider in delivering and maintaining the continuity of care for each patient. Because LTC facilities and hospitals provide many of the same services, there is a high possibility that residents could receive duplicative and/or conflicting services. In general, LTC facilities are usually responsible for nursing services, dietary services, physician services, dental service, pharmacy services, specialized rehabilitative services and, when necessary, laboratory and social services. The new rule mandates that LTCs that choose to arrange for the provision of hospice care enter into written agreements with Medicare-certified hospice providers of the specific services to be provided by each entity in order to reduce overlap. “We believe that a clear division of responsibilities and increased communication required by this rule will help eliminate duplication of and/or missing services,” CMS said in the rule. As the rule stands, the written agreement of care will unanimously be applied to all residents within the LTC facility, not individual patients. Criticisms of the new rule are largely based on the extra burden to providers, as it will take staff time to develop the language for the one written agreement describing the allocated care services. It is estimated that the burden associated with first-year implementation of this rule is 80,695 hours or $5.5 million for the 16,139 LTC facilities affected.

Proposed Rule to Clarify Long-Term Care Ombudsman Program

The Administration on Aging (AoA) of the Administration for Community Living (ACL) within the Department of Health and Human Services (HHS) has issued a Notice of Proposed Rulemaking, with request for comments, to implement provisions of the Older Americans Act, the State Long-Term Care Ombudsman program. This proposed rule replaces AoA’s 1994 Notice of Proposed Rulemaking. The proposed rule contains two main parts, both related to the ombudsman program:

An amendment to existing regulations promulgated under the Older Americans Act at 45 C.F.R. Part 1321, and a new Part 1327, which would be added to the existing regulations. The proposed amendment to existing regulations addresses responsibilities of state agencies housing long-term care ombudsman offices not to disclose the identity of any person sending a complaint to the ombudsman or the identity of any resident of a long-term care facility. In addition, the proposed amendment would extend the disclosure protections to include “files, records, and other information” instead of only “files” as the existing rule provides.

The newly proposed Part 1327 would define the following terms included in the Older Americans Act, including “immediate family,” “office of the state long-term care ombudsman” and “representative of the office of the state long-term care ombudsman.” Comments are due Aug. 19.

5. Reports


Most Critical Access Hospitals (CAHs) Would Not Meet the Location Requirements if Required to Re-enroll in Medicare

According to a report released by the HHS-OIG, nearly two-thirds of all critical access hospitals (CAHs) would not have met location requirements for Medicare certification if they had been required to re-enroll in 2011. In addition, if CMS were authorized to reassess whether all CAHs should maintain their certifications and concluded that some should be decertified, Medicare and beneficiaries could realize substantial savings. For example, if CMS had decertified CAHs that were 15 or fewer miles from their nearest hospitals in 2011, Medicare and beneficiaries would have saved $449 million. Among other corrective actions, OIG recommends that CMS ask Congress to remove the permanent exemption from the distance requirement for necessary provider CAHs and to revise CAH conditions of participation to include alternative location-based requirements. For example, if a CAH did not meet location requirements, but served a population with elevated levels of poverty, it could still be certified.

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.

To sign up for the Weekly Washington Healthcare Update, use our online subscription form.

McGuireWoods Consulting LLC
2001 K Street
Suite 400
Washington, DC 20006-1040