Weekly Washington Healthcare Update

August 26, 2013

Pardon Our Dust

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***No Weekly Washington Health Care Update Next Week (Labor Day)***

1. Congress

House of Representatives


2. Administration

Health and Human Services (HHS)

Centers for Medicare and Medicaid Services (CMS)

Internal Revenue Service (IRS)

3. State Activities

4. Regulations Open for Comment

5. Reports

Dept. of Health and Human Services Office of the Inspector General (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 the 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


Survey Finds Doctors Still Willing to Accept New Medicare Patients

According to anHHS survey released Aug. 22, the rate of doctors willing to treat new Medicare patients has stayed relatively stable over the past two years. The 2012 Data from the National Ambulatory Medical Care Survey revealed that 90.7 percent of doctors admitted new Medicare patients, compared to only 87.9 percent in 2005. Also of note in the report, the rates of new Medicare patient acceptance are similar to those of physicians accepting new privately insured patients for the same time period, 2005-2012. “Overall, Medicare beneficiary access to care has been consistently high over the last decade and continues to be high today,” the issue brief said. Currently, there are 650,000 physicians who participate in and bill Medicare, and including non-physician providers like nurse practitioners, more than 1 million providers are active in the Medicare program.


Emergency Review of Burden of Breach Reports by State Marketplaces

In anotice published in the Federal Register Aug. 21, the Centers for Medicare and Medicaid Services (CMS) called for an emergency review of the burden posed by an information collection request that would force state-based health insurance marketplace administering agencies to report to the federal government within one hour any report incident involving the loss of financial or consumer information. As it is currently designed, state-based agencies administering the enrollment process will have access to a wealth of personal information collected by many federal agencies (including Social Security Administration, DoD, DHS, Veterans Affairs and several others) and stored in CMS’ data services hub; consumer and financial information will be used to make eligibility determinations for insurance applications. In the proposed agreement, CMS would require the state administering agency to notify its designated CCIIO representative, who will then inform the IRS and the Department of the Treasury within 24 hours of discovering the potential breach or misuse of information. CMS said it expects 936 annual responses to its information collection request from 18 state, local or tribal governments, with a total annual burden of 234 hours. CMS’s information collection request from state agencies is due by Sept. 25, with a 180-day approval period. Public comment will be accepted until Sept. 20.


Website Tracks ACA Tax Provision Implementation

The IRS has launched anew website aimed to help inform the public on progress implementing the many tax-related provisions contained within the ACA. The page is customized for groups including individuals/families and employers, with topics ranging from premium tax credits for individuals and new benefits and responsibilities for employers to tax provisions for insurers, tax-exempt organizations and other types of businesses. 

3. State Activities

Kentucky, Connecticut Exchanges Undergo “Operational Readiness Review”

With just over a month left until health insurance exchanges are expected to begin open enrollment, CMS has begun conducting “operational readiness reviews” in Kentucky and Connecticut to assess whether exchanges in those states are prepared to carry out complex consumer protection provisions required under the ACA. According to CMS, the mission of the reviews is to “assure that an exchange’s policies, procedures, operations, technology and other administrative capacities have been implemented and scaled to meet the needs of the state’s exchange population.”

Utah Medicaid Expansion Decision Delayed Until 2014

Utah Gov. Herbert has been reluctant, as many Republican governors have, to make a decision on whether to expand his state’s Medicaid program, as provided for under the ACA. However, last week,he confirmed that he would not make such a decision until at least after the first of the year. Herbert said he was still trying to determine the cost to the state of the expansion, which would cover up to 123,000 of the state’s 400,000 low-income uninsured. “I assure you, I am not going to be rushed in this,” Herbert said.

4. Regulations Open for Comment

IRS Proposed Rule — ACA Small Business Tax Credit

The IRS has issuedproposed rules on the ACA’s small-business tax credit, available only to certain businesses with 25 or fewer full-time employees purchasing health coverage through a SHOP exchange. Under the proposed rule, for taxable years beginning during or after 2014, the maximum credit for an eligible small employer other than a tax-exempt eligible small employer is 50 percent of the eligible small employer’s premium payments made on behalf of its employees under a qualifying arrangement for QHPs offered through a SHOP exchange. For a tax-exempt eligible small employer for those years, the maximum credit is 35 percent. The employer’s tax credit is subject to several adjustments and limitations as set forth in this preamble.

In addition, all employees (determined under the common law standard) who perform services for the employer during the taxable year are taken into account in determining FTEs and average annual wages, including those who are not performing services in the employer’s trade or business. An employee’s hours of service for a year include hours for which the employee is paid, or entitled to payment, for the performance of duties for the employer during the employer’s taxable year. Hours of service also include hours for which the employee is paid for vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence. Hours of service do not include the hours of seasonal employees who work for 120 or fewer days during the taxable year, nor do they include hours worked for a year in excess of 2,080 for a single employee.

Comments are due Nov. 21, 2013.

Proposed Rule on Exchange Coverage for Members of Congress, Staff

On Aug. 8, 2013, the Office of Personnel Management (OPM) published aproposed 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 theseproposed 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 aproposed 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.

5. Reports


No Anti-Kickback Sanctions for Proposed Ambulance Service Arrangements

On Aug. 21, the Department of Health and Human Services Office of Inspector Generalreleased an opinion on a township’s proposed Ambulance Service Arrangements. The township’s first proposed arrangement allows ambulance service providers to waive any cost-sharing amounts, such as copays and deductibles to residents. Alternatively, the township would instead use tax revenue to make a yearly donation (equivalent of the waived cost-sharing amounts) to the EMS provider. The second proposed arrangement would let the ambulance service provider give the same waiver to nearby towns, under a mutual aid agreement. The Mutual Aid Partner would only apply to towns that provide the same services for residents free of charge or engage in “insurance-only” billing. In its decision, OIG argued that the township’s two proposed arrangements to grant cost-sharing subsidies and mutual aid cost-sharing waivers to an ambulance service provider would not violate the anti-kickback statute. It is noted that the township’s current ambulance system is not-for-profit, providing EMS to residents free of charge by covering operating costs through donations from its residents.

Advisory Opinion on Patient Discharge Care Program

On Aug. 16, the Department of Health and Human Services Office of Inspector General released an advisory opinion (No. 13–10) that a health record vendor’s plan to sell customizable software and patient care services to hospitals would not generate anti-kickback law sanctions. OIG argued that the arrangement to help hospitals and patients adhere to post-discharge care plans has a low risk of fraud to federal health care programs. In fact, OIG said it will hopefully reduce federal health spending by decreasing hospital readmissions from improper post-discharge care. The vendor, (“a subsidiary of a major pharmaceutical manufacturer”), will design patient-specific programs that will allow hospitals and caretakers to better monitor a patient’s progress after discharge. With use of the program, the patient will now have specific guidelines and an assigned personal liaison to help the patient receive needed services (scheduling follow-up care, transportation needs, etc.).

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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