Weekly Washington Healthcare Update

September 16, 2013

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1. Congress

House of Representatives


2. Administration

Health and Human Services (HHS)

3. State Activities

4. Regulations Open for Comment

5. Reports

Congressional Budget Office (CBO)

Dept. of Health and Human Services Office of the Inspector General (HHS-OIG)

Government Accountability Office (GAO)

Federal Commission on Long Term Care

1. Congress

House of Representatives

Legislation Passed to Tighten ACA Income Verification

Last week, the House passed legislation introduced by Rep. Black (R-TN) that would impose stricter income verification requirements on individuals seeking health insurance tax credits through ACA-created insurance exchanges. The bill was authored in response to a recent announcement by CMS that it would allow exchanges to require follow-up verification from a “statistically significant sample” of applicants who were unable to provide the initial verification information, a position Republicans viewed as inadequate fraud protection. As originally drafted, the bill would have required the HHS Secretary to certify to Congress the existence of a program in place to verify household income of applicants for coverage subsidies on the exchanges. However, Black offered an amendment requiring the HHS Office of Inspector General to provide the certification instead of the HHS Secretary, despite the objections of some Democrats citing concerns of scarce resources at OIG to evaluate an income verification system. The bill was passed by a 235-191 margin, with five Democrats joining a united Republican caucus. The Senate is not expected to consider the bill, which President Obama has advised he would veto, were it sent to his desk.

Health Subcommittee Holds Hearing on ACA Implementation

On Sept. 10, the Energy and Commerce Subcommittee on Health held a hearing entitled “PPACA Pulse Check: Part 2,” in order to examine the progress being made to implement key portions of the ACA. Republicans highlighted examples of missed deadlines and delays on the part of the Administration as evidence that the health reform law is too cumbersome, while Democrats viewed the Administration’s approach to implementation as being flexible, confident that the ACA will be effective. Open enrollment in the ACA exchanges begins Oct. 1, 2013, with coverage effective Jan. 1, 2014.


Lynn Spellecy
Corporate Counsel
Equifax Workforce Solutions

John Lau
Program Director

Cheryl Campbell
Senior Vice President
CGI Federal

Michael Finkel
Executive Vice President of Program Delivery

Brett Graham
Leavitt Partners

Edward A. Lenz
Senior Counsel
American Staffing Association
Testifying on behalf of the Employers for Flexibility in Health Care Coalition

Antoinette Kraus
Pennsylvania Health Access Network

For more information, or to view the hearing, please visit:energycommerce.house.gov

Upcoming Energy and Commerce Hearing — ACA Insurance Reforms

Energy and Commerce Subcommittee on Oversight and Investigations Chairman Murphy (R-PA) has announced his subcommittee will hold a hearing entitled “Two Weeks Until Enrollment: Questions for CCIIO” on Thursday, Sept. 19, 2013, at 10 a.m. in 2123 Rayburn House Office Building. Witnesses will be announced. For more information, please visit:energycommerce.house.gov .


HELP Subcommittee on Aging Hearing on Dental Care Cost

On Sept. 12, the Senate HELP Subcommittee on Primary Health and Aging under Chairman Sanders (I-VT) held a hearing to explore costs and insurance coverage for dental care. According to a recent report (a summary of which can be found in this week’s Health Care Update) prepared by the Government Accountability Office (GAO), Americans spent about $108 billion on dentists in 2011.


Frank A. Catalanotto, DMD
Professor and Chair, Department of Community Dentistry and Behavioral Science, University of Florida College of Dentistry
Vice Chair of the Board of Directors
Oral Health America

Greg Nycz
Executive Director
Family Health Center of Marshfield, Inc.

Cathi Stallings, MSW
Falls Church, VA

Debony Hughes, DDS
Program Chief
Dental Health Program and Deamonte Driver Dental Project
Prince George’s County Health Department

For more information, or to view the hearing, please visit:www.help.senate.gov

Upcoming HELP Committee Hearing on Healthcare-Associated Infections

On Tuesday, Sept. 24, the Senate HELP Committee will hold a hearing entitled “U.S. Efforts to Reduce Healthcare-Associated Infections.” The hearing will take place at 10 a.m. in 430 Dirksen Senate Office Building.


Panel I
Patrick Conway, MD, MSc
Chief Medical Officer and Director
Center for Clinical Standards and Quality
Acting Director
Center for Medicare and Medicaid Innovation

Beth Bell, MD, MPH
National Center for Emerging and Zoonotic Infectious Diseases
Centers for Disease Control and Prevention

Panel II
Ciaran Staunton
The Rory Staunton Foundation
New York, NY

For more information, or to view the hearing, please visit:www.help.senate.gov

2. Administration


2014 – 2018 HHS Strategic Plan Proposal Released

On Sept. 9 HHS released its updated 2014 through 2018strategic plan draft, which contains revised initiatives aimed at strengthening program integrity, continuing ACA implementation and improving patient health. As part of the Government Performance and Results Modernization Act of 2010, federal agencies are required to prepare and seek public comment on proposed strategic plans. Updated every four years, this document articulates how the Department will achieve its mission through four strategic goals: (1) Strengthen Health Care; (2) Advance Scientific Knowledge and Innovation; (3) Advance the Health, Safety, and Well-Being of the American People; and (4) Ensure Efficiency, Transparency, Accountability, and Effectiveness of HHS Programs. Each goal is reinforced by objectives and strategies. Comments on the draft plan are due on Oct. 15, 2013.

Annual Report Estimates $1.2 Billion Savings in Insurance Premiums

In itsRate Review Annual Report released Sept. 12, HHS Office of the Assistant Secretary for Planning and Evaluation estimates that 6.8 million consumers saved approximately $1.2 billion on health insurance premiums in 2012 as a result of the rate review provisions in ACA. Provisions within the ACA require insurers to submit rate increases for review either to HHS or to states that have rate review processes approved by HHS; while ACA does not give HHS the ability to disprove the rates, insurers must publically defend rate increases greater than 10 percent. The report also found that the average rate request for the individual market dropped from 8.1 percent to 7.1 percent and the small group market from 5.8 percent to 4.7 percent, respectively. Also of note is the estimated $500 million in medical loss ratio rebates estimated for 2012, a savings associated with a provision of the ACA that requires insurers to devote at least 80 percent of premiums on medical claims or quality enhancements or refund the difference to consumers. ACA appropriates $250 million for rate review grants to states from FY2010 through FY2014.


Guidance on Part A Inpatient Medical Review Criteria

CMS hasissued guidance clarifying a policy that requires physician certification of the medical necessity of inpatient services as a condition of Medicare payment. The guidance clarifies what types of practitioners can furnish orders for inpatient services and what information must be included in those orders. In addition CMS outlines timing restraints for physician certification of medical necessity, which is required for reimbursement under Medicare Part A. Specifically, the certification must be completed, signed, dated and documented in the medical record prior to patient discharge, except in outlier cases.

Medicaid Disproportionate Share Hospital (DSH) Rule Finalized

Last week, CMS issued a final rule entitled “Disproportionate Share Hospital Payment Reductions,” in which the agency establishes an annual reduction methodology for the first two years, effective for fiscal year (FY) 2014 and FY 2015 DSH allotments. By way of background, the ACA requires aggregate reductions to state Medicaid DSH allotments annually from FY 2014 through FY 2020, at the same time as the Marketplace and Medicaid provide increased coverage options aimed at reducing uncompensated care levels for hospitals. State Medicaid programs make DSH payments to qualifying hospitals that serve a large number of low-income individuals. This final rule outlines the methodology CMS will use to implement the annual reductions for the first two years, FY 2014 and FY 2015. The final rule can be found online at theFederal Register’s website.

More information:www.cms.gov

New Projects Funded By PCORI, Including Methodology Improvements for CER

On Sept. 10 the Patient-Centered Outcomes Research Institute (PCORI)announced the approval of 71 new projects that will cover four of the institute’s five research priorities. PCORI, an independent nonprofit organization created under the ACA to conduct research for patients and caregivers on the best health care outcomes, is on target to pledge about $400 million in research support in 2013; for these announced projects, a total of $114 million in funding will be awarded over three years to 48 institutions in 20 states and the District of Columbia. Projects selected include studies on treatments for expensive and preventable diseases including obesity, cancers, heart disease, autism, kidney diseases, mental health conditions and others. “Each of these projects will engage patients and other stakeholders in meaningful ways with researchers to tackle critical health problems that affect tens of millions of people nationwide. We are confident these studies will lead to meaningful improvement in the quality and efficiency of care and to improvements in outcomes that are important to patients,” said PCORI Executive Director Joe Selby. In addition to the latest research projects approved for funding, PCORI’s Board also approved a $9 million contract to a consortium that will serve as the Coordinating Center for a new national data network intended to improve the nation’s capacity to conduct comparative effectiveness research (CER).

3. State Activities

Pennsylvania Gov. Rethinks Medicaid Expansion

According to health industry and legislative sources, Pennsylvania Gov. Corbett, a longtime opponent of the ACA and the law’s optional expansion of Medicaid, has indicated he may be ready to embrace anArkansas-style Medicaid expansion, in which federal dollars are used to purchase private insurance for those newly eligible for the program.

The administration also has reportedly pushed a plan to require the poor to seek employment and be responsible for some sort of copay. Corbett would not need the state legislature’s approval to expand Medicaid, though a law could be passed prohibiting his proposal. 

Arizona Medicaid Expansion Opponents Fall Short on Ballot Initiative

Arizona Gov. Brewerscored a victory last week as opponents of the state’s Medicaid expansion fell short of the 86,400 signatures necessary to get an initiative on the ballot that would block the expansion from taking effect as scheduled on Jan. 1. The group fell roughly 5,000 signatures short. “It’s validation that Arizonans see Medicaid restoration as the right thing for Arizona’s future,” Brewer said in a statement.

4. Regulations Open for Comment

IRS Proposed Rule — ACA Employer Information Reporting Mandates

On Sept. 5, the IRS issuedproposed regulations providing guidance to employers that are subject to the information reporting requirements under Section 6056 of the Internal Revenue Code (Code), enacted by the Affordable Care Act. Section 6056 requires those employers to report to the IRS information about their compliance with the employer shared responsibility provisions of Section 4980H of the Code and about the health care coverage they have offered employees. Section 6056 also requires those employers to furnish related statements to employees so that employees may use the statements to help determine whether, for each month of the calendar year, they can claim on their tax returns a premium tax credit under Section 36B of the Code (premium tax credit). In addition, that information will be used to administer and ensure compliance with the eligibility requirements for the employer shared responsibility provisions and the premium tax credit. The proposed regulations affect applicable large employers (generally meaning employers with 50 or more full-time employees, including full-time equivalent employees, in the prior year), employees and other individuals.

IRS will accept comments on specific aspects of the proposed rule, such as whether the proposed collection of information is necessary for the proper performance of the functions of the IRS, including whether the information will have practical utility, and how the quality, utility and clarity of the information to be collected may be enhanced. A public hearing will be held at 10 a.m. on Nov. 18.

IRS Proposed Rule — Reporting On ACA Minimum Essential Coverage

On Sept. 5, the IRS issuedproposed regulations providing guidance to providers of minimum essential health coverage that are subject to the information reporting requirements of Section 6055 of the Internal Revenue Code (Code), enacted by the Affordable Care Act. Health insurance issuers, certain employers and others that provide minimum essential coverage to individuals must report to the IRS information about the type and period of coverage and furnish related statements to covered individuals. These proposed regulations affect health insurance issuers, employers, governments and other persons that provide minimum essential coverage to individuals. Under the proposed rules, health insurance issuers are not required to submit Section 6055 information returns on minimum essential coverage they provide in the individual market through the ACA health insurance exchanges, or marketplaces; however, sponsors of self-insured group health plans are required to report minimum essential coverage under the proposed rule. In addition, self-insured group health plans or arrangements covering employees of related corporations are treated as sponsored by more than one employer and each employer must report for its employees.

IRS will accept comments on specific aspects of the proposed rule, such as whether the proposed collection of information is necessary for the proper performance of the functions of the IRS, whether the information will have practical utility, and how the quality, utility and clarity of the information to be collected may be enhanced. A public hearing will be held at 10 a.m. on Nov. 19.

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.

5. Reports


Sustainable Growth Rate Bill Would Cost $175 Billion

According to CBO, legislation recently introduced by Rep. Burgess to permanently fix the flawed sustainable growth rate (SGR) formula for Medicare physician reimbursement would cost an estimated $175 billion over the 2014-2023 period. The bill, H.R. 2810, the Medicare Patient Access and Quality Improvement Act of 2013, would replace the Sustainable Growth Rate (SGR) formula, which determines the annual updates to Medicare’s payment rates for physician services, with new systems for establishing those payment rates. The bill was passed unanimously by the Energy and Commerce Committee in July. CBO had previously estimated the that repealing the SGR would cost $140 billion.


Observations Noted During the OIG Review of CMS’s Implementation of the Health Insurance Exchange — Data Services Hub

According to arecent report by the HHS-OIG, while CMS is addressing and testing security controls of the “Data Services Hub” during the development process, several critical tasks remain to be completed in a short period of time. These tasks include the final independent testing of the Hub’s security controls, remediating security vulnerabilities identified during testing and obtaining the security authorization decision for the data hub before opening the exchanges. CMS’s current schedule is to complete all its tasks by Oct. 1, 2013, in time for the expected initial open enrollment period. The data hub was designed to act as a conduit for exchanges to access the data necessary to support the exchanges by providing a single point where exchanges may access data from different sources, primarily federal agencies.

Medicare Could Collect Billions if Pharmaceutical Manufacturers Were Required to Pay Rebates for Part B Drugs

According to a recentHHS-OIG report, Medicare could have collected $3.1 billion if pharmaceutical manufacturers had been required in 2011 to pay AMP-based rebates for 60 high-expenditure Part B drugs, representing 22 percent of spending for those drugs. Requiring manufacturers to pay ASP-based rebates for the same 60 drugs could have garnered Medicare $2.7 billion in rebate payments, representing 20 percent of spending. However, several implementation issues related to claims and data would need to be addressed if such a rebate program were implemented. OIG recommends that CMS examine the additional potential impacts of establishing a prescription drug rebate program under Medicare Part B and, if appropriate, seek legislative change. As part of its consideration, CMS should address administrative issues that may hinder rebate collections. CMS did not concur with this recommendation.


Dental Services: Information on Coverage, Payments and Fee Variation

According to aGAO report issued Sept. 6, trends in dental coverage show little change from 1996 to 2010, with around 62 percent of individuals having had coverage. The percentage of the population with private dental coverage decreased from 53 to 50 percent. Dental coverage through Medicaid or the State Children’s Health Insurance Program (CHIP), which was established in 1997, rose from 9 to 13 percent. In addition, GAO’s analysis showed that average annual dental payments — the total amount paid out of pocket by individuals and by other payers — increased 26 percent, inflation-adjusted, from $520 in 1996 to $653 in 2010. Average annual out-of-pocket payments increased 21 percent, from $242 to $294, for individuals with private insurance and 32 percent, from $392 to $518, for individuals with no dental coverage.

Federal Commission on Long Term Care

Long Term Care Commission Issues Recommendations to Congress

The federal Commission on Long Term Care hasreleased its recommendations, as required under the fiscal cliff agreement reached early this year, in which the CLASS Act, created under the ACA, was formally repealed. The recommendations outline the Commission’s “vision” for key areas of long-term care, including service delivery, finance and workforce. For example, the Commission recommends the creation of a uniform standard assessment mechanism across care settings (acute, post-acute and long-term support services). In addition, the Commission recommends the establishment of a “subsequent national advisory committee … to continue this work and consider the Commission’s recommendations and potential financing frameworks as a starting point for its own assessments and recommendations.”

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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