Weekly Washington Healthcare Update

September 23, 2013

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1. Congress

House of Representatives


2. Administration

CMS Office of the Actuary

Food and Drug Administration (FDA)

3. State Activities

4. Regulations Open for Comment

5. Reports

Government Accountability Office (GAO)

Congressional Budget Office (CBO)

U.S. Census Bureau

1. Congress

House of Representatives

House Passes Continuing Resolution with ACA-Defunding Language

Last week, House Republicans passed a Continuing Resolution (CR) that would keep the federal government funded beyond the current Sept. 31 appropriations expiration; however, the bill also contains language that would defund President Obama’s signature health care law, a measure that has been labeled dead-on-arrival in the Democratic-controlled Senate. The bill, H.J.Res. 59, passed by a vote of 230-189, with Republican Rep. Rigell of Virginia as the only Republican to vote against the $986 billion, three-month package. Democratic Reps. McIntyre (D-NC) and Matheson (D-UT) were the only two Democrats voting yes.

Energy and Commerce Examines Readiness of ACA Insurance Systems

On Sept. 19, the Energy and Commerce Oversight and Investigations Subcommittee held a hearing to explore the current state of preparedness of health insurance exchanges, the marketplaces central to the ACA’s expansion of health insurance coverage, as the Oct. 1 open enrollment deadline approaches. During the hearing, entitled “Two Weeks Until Enrollment: Questions for CCIIO,” the subcommittee heard from Gary Cohen, who runs CMS’s Center for Consumer Information and Insurance Oversight (CCIIO). According to Cohen, “Over the last three and a half years, CMS and our Federal partners have been hard at work drafting policy, implementing consumer protections, working with stakeholders, and building information technology systems that will enable Americans to shop and apply for health insurance coverage beginning twelve days from now, on October 1.”


Mr. Gary Cohen
Deputy Administrator and Director
Center for Consumer Information and Insurance Oversight
Centers for Medicare and Medicaid Services
U.S. Department of Health and Human Services

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

Judiciary Committee Hearing on Health Care Mergers

During a hearing in the Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law, witnesses testified about the potential impact of increased consolidation among health care providers, and how it may affect the health care system and consumers. While a representative of America’s Health Insurance Plans (AHIP), a health insurance industry trade group, claimed the merging of health care providers increases overall costs and decreases quality, a witness testifying on behalf of the American Hospital Association said hospital mergers can be “procompetitive” and lower costs. Chairman Bachus (R-AL) said he believes the ACA “will further consolidate” the health care industry, noting that Congress has a responsibility to ensure that the laws it enacts don’t suppress competition. In addition, Rep. Conyers (D-MI), ranking member of the full Judiciary Committee, also said during the hearing that the McCarran-Ferguson Act, which grants limited antitrust privilege to the health care industry, should be repealed, and he introduced a bill (H.R. 99) in January to repeal the antitrust exemption.


Prof. Barak D. Richman
Edgar P. and Elizabeth C. Bartlett Professor of Law
Duke University School of Law

Mr. Thomas P. Miller
Resident Fellow
American Enterprise Institute for Public Policy and Research

Sharis A. Pozen
Skadden, Arps, Slate, Meagher & Flom LLP (Representing American Hospital Association)

Mr. Joseph Miller
General Counsel
America’s Health Insurance Plans

Prof. Thomas L. Greaney
Chester A. Myers Professor of Law
Saint Louis University School of Law

Mr. David A. Balto
Law Offices of David Balto

For more information, please visit:judiciary.house.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

Upcoming HELP Committee Hearing on Newborn Screening

On Thursday, Sept. 26, the Senate HELP Committee will hold a hearing entitled “Newborn Screening Saves Lives: The Past, Present, and Future of the Newborn Screening System.” The hearing will take place at 10 a.m. in 430 Dirksen Senate Office Building.


Ms. Natasha Bonhomme
Baby’s First Test

Dr. Rodney Howell
Professor of Pediatrics
University of Miami School of Medicine

Dr. Jennifer Howse
March of Dimes

Mrs. Joye Mullis
Raleigh, NC

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

2. Administration

CMS Office of the Actuary

Health Spending Expected to Increase Over 2012-2022 Period

According to CMS, health care spending is expected to increase by 3.8 percent in 2013, as a result of ACA implementation, an improving economy and increased Medicare enrollment. The analysis, released Sept. 18, further predicts that health spending will increase by 6.1 percent in 2014, which would be the first year since 2009 in which health spending grew by more than 4 percent. CMS indicated that the current trend of historically low rates of growth in health care spending are the result of the recent recession and slow recovery, increases in cost-sharing requirements for the privately insured, and slow growth in public programs. Over the long term, CMS expects health spending will grow an average 5.8 percent annually from 2012 to 2022. With regard to spending on public health programs, CMS expects Medicare spending to grow at a rate of 4.2 percent, largely as a result of the 2 percent cut to provider payments under sequestration, while spending on Medicaid will increase by 4.8 percent. Private health insurance spending is expected to grow by just 3.4 percent in 2013. In addition, CMS expects that by 2022 health spending financed by federal, state and local governments will reach 49 percent of total national health care spending, and that health care’s share of the GDP will rise to 19.9 percent in 2022 from 17.9 percent in 2012. Report (Health Affairs subscription required for full report):content.healthaffairs.org


Medical Device Unique Device Identifier Final Rule

FDA has issued a final rule to establish a system to adequately identify devices through distribution and use. This rule requires the label of medical devices to include a unique device identifier (UDI), except where the rule provides for an exception or alternative placement. The labeler must submit product information concerning devices to FDA’s Global Unique Device Identification Database (GUDID), unless subject to an exception or alternative. The system established by this rule requires the label and device package of each medical device to include a UDI and requires that each UDI be provided in a plain-text version and in a form that uses automatic identification and data capture (AIDC) technology. The UDI will be required to be directly marked on the device itself if the device is intended to be used more than once and intended to be reprocessed before each use.

3. State Activities

Maryland Explores Web-Based Entity Partnerships

A study committee established by the Maryland Health Benefits Exchange isrecommending that the state’s exchange partner with web-based entities (WBEs) to sell qualified health plans, with some conditions. While the committee recommends collaboration with WBEs, which the committee believes can provide a range of tools, including ways to help consumers estimate out-of-pocket costs and call center services to help with plan selection, the committee cautioned against relying on WBEs too heavily. In addition to calling for strong consumer protections in its recommendations, the committee also noted that, due to limited resources and oversight, “it would be prudent to start with a limited number of WBEs and expand overtime.”

4. Regulations Open for Comment

NEW – Basic Health Plan Proposed Rule

On Sept. 20, CMS issued aproposed rule to guide the introduction of Basic Health Plans, as required by Section 1331 of the Affordable Care Act. The Basic Health Program provides states the flexibility to establish a health benefits coverage program for low-income individuals who would otherwise be eligible to purchase coverage through the state’s Affordable Insurance Exchange (Exchange, also called a Health Insurance Marketplace). The Basic Health Program would complement and coordinate with enrollment in a Qualified Health Plan (QHP) through the Exchange, as well as with enrollment in Medicaid and the Children’s Health Insurance Program (CHIP). This proposed rule sets forth a framework for Basic Health Program eligibility and enrollment, benefits, delivery of health care services, transfer of funds to participating states and federal oversight. Additionally, this rule would amend other rules issued by the Secretary of the Department of Health and Human Services (Secretary) in order to clarify the applicability of those rules to the Basic Health Program. Comments are due by Nov. 19, 2013.

NEW – CMS Proposed Rule for Federally Qualified Health Center Payments

On Sept. 18, CMS released aproposed rule that establishes a new Prospective Payment System (PPS) and increases Medicare reimbursement payments for federally qualified health centers (FQHC). In the rule, Medicare payments would increase 30 percent for FQHC services provided to beneficiaries in medically underserved areas. Under the PPS, Medicare would pay the FQHCs a single encounter-based rate per beneficiary per day for all services provided. The proposed rate would be calculated based on an average cost per encounter, which is estimated to be $155.90, adjusted for geographic variation, with additional consideration given to new Medicare beneficiaries.

“These health centers serve some of our most vulnerable populations,” HRSA Administrator Mary Wakefield said in a Sept. 18 statement. “We are excited about our collaboration with CMS to create a payment system that enables these vital health centers to keep doing such important work.” CMS estimates that during the first five years of implementation, the annual Medicare spending for the FQHCs would be $33 million in 2014, increasing to at least $200 million every year afterward until 2018. Comments on the proposed rule are due on Nov. 18, 2013.

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


Health Care Workforce: Federally Funded Training Programs in Fiscal Year 2012

According to theGAO report released Sept. 16, in FY2012 the federal government spent $14.2 billion financing 91 programs for postsecondary training or education for direct care health professionals. The majority of the funding was allocated to programs that supported graduate medical education. GAO said two programs administered by HHS’s Centers for Medicare & Medicaid Services accounted for 66 percent of total reported health care workforce training funding in fiscal year 2012. The remaining funding went to 84 programs that provided or supported instruction or clinical training. The report does not contain any recommendations.


Long-Term Budget Outlook Estimates Health Care Spending to Reach 8 Percent of GDP in 2038

In its annuallong-term budget outlook report released Sept. 17, the Congressional Budget Office (CBO) estimated that federal health care programs will reach 8 percent GDP in 2038, up from the current rate of 4.6 percent in 2013. Despite the recent trend of the slowing growth rate for Medicare and Medicaid spending since 2009, future rising health costs will be largely driven by the aging of the population and subsequent rise in Medicare enrollment, and the increase in availability of subsidies to help individuals purchase health insurance on the exchanges under the Affordable Care Act, CBO said. Moreover, the report also warns that national health care spending (both private and public sending) is expected to rise faster than the rise in GDP, representing a larger proportion of individuals’ incomes and thereby reducing other types of consumer spending. On the upside, however, the “mounting pressure’ to slow health care cost growth will be likely eventually, the report forecasts, as the private sector will try to limit cost increases by working collaboratively with insurers to make insurance more efficient, through limiting coverage or by offering a fixed contribution for coverage purchased on the exchanges.

A Premium Support System for Medicare: Analysis of Illustrative Options

According to arecent report from CBO, implementation of a premium support plan could save the Medicare program as much as $45 billion in 2020. Specifically, CBO analyzed two models of a Medicare premium support system, each distinguished by the type of benchmark that would determine the federal contribution to beneficiaries’ private insurance plans. One model would peg the government’s contribution to be the lower of a pair of bids — the region’s second-lowest bid submitted to the federal government by a private insurer and Medicare’s fee-for-service (FFS) bid. The other model would set the government benchmark at a level equal to the weighted average of all bids, including the current Medicare fee-for-service bid. CBO estimates that the second-lowest-bid option would reduce net federal spending for Medicare by about $45 billion in 2020 and that the average-bid option would reduce such spending in that year by about $15 billion, assuming implementation in 2018.

U.S. Census Bureau

Census Reports Number of Uninsured Declined Since 2012

According to aU.S. Census Bureau Report released Sept. 17, the percentage of people in the United States without health insurance declined to 15.4 percent in 2012 from 15.7 percent in 2011. The number of people without health insurance increased to 263 million in 2012 from 260.2 million in 2011 estimated the report, which explicitly focused on the income and poverty levels in America. “The big changes are in health insurance,” David Johnson, chief of the Census Bureau’s Social, Economic, and Housing Statistics Division, said. “That’s probably the most significant changes from 2011 to 2012 in the report.” While some of the increase can likely be attributed to the increase in government coverage as a result of the baby boomers coming of age into the Medicare system, the report showed little change on a macroeconomic level of poverty and incomes in the United States.

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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