Weekly Washington Healthcare Update

October 7, 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


  • N/A


2. Administration

Centers for Medicare and Medicaid Services (CMS)

3. Regulations Open for Comment

4. Reports

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

Government Accountability Office (GAO)

1. Congress

House of Representatives

House Measure Would Delay ACA Individual Mandate

Last week, the House once again passed a measure to restore funding for federal agencies and programs, this time with a provision that would delay implementation of the ACA’s requirement for all individuals to possess qualifying health coverage. The legislation would also remove the federal government’s contribution to the health insurance premiums of Members of Congress and their staffs, despite the Office of Personal Management (OPM) recently finalizing a rule that would explicitly allow such a contribution. Senate Majority Leader Reid (D-NV) made good on his promise that his chamber would not approve any funding measure that would undermine the ACA by quickly taking up, and defeating, the House-passed measure. Shortly afterward, as federal funding expired and the government began to shutter its doors, the House agreed to a motion to go to conference with the Senate in order to resolve differences between the respective chambers. The House spent the weekend passing narrowly tailored individual spending measures to restore funding to federal activities, such as providing nutrition assistance to low-income women and children, though it’s unlikely the Senate will agree to such piecemeal strategy.

2. Administration


CMS Rule Changes Method for Distributing Uncompensated Care Payments to Hospitals

In August, CMS issued an IPPS final rule that would distribute interim uncompensated care payments under the IPPS on a per-discharge basis through CMS’s claims processing system, with a reconciliation of the hospitals’ uncompensated care payments at-cost to ensure that hospitals receive no more than the estimated amount. However, when preparing to implement the rule, CMS realized the rule wouldn’t work for hospitals that do not have cost reporting periods that are not concurrent with the federal fiscal year. Thus, CMS issued an interim final rule that revises the methodology for calculating Medicare DSH reimbursements. According to CMS, the rule would align uncompensated care payments with an individual hospital’s cost reporting periods. Thus, if hospitals have cost reporting periods that span more than one federal fiscal year, the hospital will not run into delays and administrative challenges in receiving DHS payments. This rule is effective Oct. 1, though CMS will accept comments on the measure until Nov. 29.

CMS Finalizes CED for Some Uses of Imaging Agents in PET Scans

CMS announced they will cover only one amyloid-beta PET scan per beneficiary under coverage with evidence development (CED) to rule out Alzheimer’s disease in narrowly defined diagnoses. CMS will also cover the PET scan is if the scan will enrich clinical trials seeking better treatments or prevention strategies for AD. The clinical study must meet certain criteria, including be approved by CMS, involve subjects from appropriate populations and be comparative, prospective and longitudinal. Moreover, the study must develop better treatments or preventions strategies for AD or resolve clinically difficult differential diagnoses where the use of amyloid-beta PET imagining appears to improve health outcomes.

OPM Issues Final Rule on ACA Coverage for Members of Congress, Staff

The Office of Personnel Management issued the final rule requiring members of Congress and their staffs to join the Affordable Care Act health exchanges. The final rule amends Federal Employees Health Benefits (FEHB) Program regulations to comply with the ACA. Members of Congress and their staffs must join the District of Columbia health exchange beginning on Jan. 1, 2014. The rule specifies that Members and staff will receive contributions toward the cost of their health care from the federal government and they will move back to the FEHB upon retirement. The proposed rule, which was issued in August, received 59,000 comments regarding the coverage of abortion services. The OPM wrote that under current law this was prohibited.

3. Regulations Open for Comment

Basic Health Plan Proposed Rule

On Sept. 20, CMS issued a proposed 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.

CMS Proposed Rule for Federally Qualified Health Center Payments

On Sept. 18, CMS released a proposed 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 issued proposed 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 issued proposed 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 issued proposed 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.

4. Reports


The First Level of the Medicare Appeals Process, 2008-2012: Volume, Outcomes and Timeliness

According to findings derived by the HHS-OIG from CMS’s Contractor Reporting of Operational and Workload Data system, in 2012 Medicare contractors processed 2.9 million redeterminations, which involved 3.7 million claims, an increase of 33 percent since 2008. Although 80 percent of all redeterminations in 2012 involved Part B services, redeterminations involving Part A services have risen more rapidly. By 2012, appeals involving recovery audit contractors accounted for 39 percent of all appealed Part A claims. HHS-OIG also found that contractors decided in favor of Part A appellants at a lower rate than that for Part B appellants. In addition, contractors largely met required timeframes for processing redeterminations and paying appeals decided in favor of appellants, but they fell short of meeting timeframes for transferring case files for second-level appeals. The report recommends that CMS use the MAS to monitor contractor performance, continue to foster information sharing among Medicare contractors and monitor the quality of redetermination data in MAS. CMS concurred with all three recommendations.


Use of Limited Benefit Plans to Provide Mental Health Services and Efforts to Coordinate Care

According to a recent GAO study on the use of limited benefit plans by states to provide mental health services to Medicaid beneficiaries, 13 states reported that in fiscal year 2012 they paid a total of about $5.6 billion to limited benefit plans to provide mental health services to about 4.4 million adult Medicaid beneficiaries. GAO found that while using these plans to provide mental health services may control costs, it can also increase the risk that these services will not be coordinated with physical health care services. Coordinated care is important for Medicaid beneficiaries with mental illnesses because they are more likely than others to have ongoing health conditions. In addition, GAO found that the CMS did not take direct steps to facilitate care coordination, because its role is to oversee and provide technical assistance. In its oversight role, CMS reviewed and approved state-submitted documents, such as contracts with mental health limited benefit plans, some of which contained care coordination requirements.

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