Weekly Washington Healthcare Update

October 28, 2013

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1. Congress

House of Representatives


2. Administration

Office of Management and Budget (OMB)

3. State Activities

4. Regulations Open for Comment

5. Reports

Office of Inspector General (OIG)

Government Accountability Office (GAO)

Congressional Budget Office (CBO)

1. Congress


Energy and Commerce Hearing with Healthcare.Gov Contractors

On Oct. 24, the House Energy and Commerce Committee held a hearing to examine the role of private contractors in the recent computer “glitches” that have plagued the rollout of the ACA’s health insurance exchanges. Witnesses testified that, among other things, CMS made the call to turn off the anonymous shopping feature just two weeks before the launch. Republicans have suggested that the decision to require people to sign up for an account before being able to view insurance plans was political, made by HHS in order to mask the high cost of health plans. None of the contractors testifying suggested delaying the launch, despite worries they had about inadequate testing.


Cheryl Campbell
Senior Vice President
CGI Federal

Andrew Slavitt
Group Executive Vice President

Lynn Spellecy
Corporate Counsel
Equifax Workforce Solutions

John Lau
Program Director

For more information, please visit:energycommerce.house.gov

Bill Would Allow All U.S. Citizens to Enroll in Federal Employees Health Plan

On Oct. 24, House Oversight and Government Reform Committee Chairman Darrell Issa (CA-R) along with Reps. Mick Mulvaney (SC-R) and Lacy Clay (MO-D) introduced a bill that would allow all U.S. citizens the opportunity to enroll in the Federal Employees Health Benefits Program (FEHBP). “The Equal Access Act offers Americans access to the same health insurance plans long enjoyed by members of Congress and their families. This is a free market approach to health care with government playing the very limited role of helping small businesses and individuals come together to get a better price for healthcare,” Rep. Issa said in a statement. Lawmakers say the advantages of the bill would include nationwide coverage with a high participation rate among physicians, affordable options fostering great competition to lower price and improve quality, the expansion of consumer choice given the 256 plans available in 2014 in the FEHBP, additional flexibility options for private-sector employers, and low administrative costs. On the other hand, critics of the bill say that FEHBP has many flaws including extremely high premiums, making it unrealistic for most Americans, and that many of the FEHBP’s advantages exist within the Affordable Care Act. According to Office of Personnel Management charts, in 2014 the average premium costs for the FEHBP will be $183.07 for a family and $83.12 for an individual per two-week pay period.

Upcoming Ways and Means Hearing on the Status of ACA Implementation

House Committee on Ways and Means Chairman Dave Camp (R-MI) has scheduled a hearing to examine difficulties Americans are experiencing with the launch of the ACA. The Committee will hear testimony from Marilyn Tavenner, Administrator of the Centers for Medicare & Medicaid Services (CMS) at the U.S. Department of Health and Human Services (HHS). CMS is the federal agency that oversees the operation of the exchanges through the Center for Consumer Information and Insurance Oversight (CCIIO). The hearing will take place on Tuesday, Oct. 29, 2013, in 1100 Longworth House Office Building, beginning at 10 a.m.


Hon. Marilyn Tavenner
Centers for Medicare and Medicaid Services

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

Secretary Sebelius to Appear Before Energy and Commerce

The Committee on Energy and Commerce has scheduled a hearing on Wednesday, Oct. 30, 2013, at 9 a.m. in 2123 Rayburn House Office Building. The title of the hearing is “PPACA Implementation Failures: Answers from HHS.” The hearing will focus on the recent enrollment issues that have hindered individuals’ access to health insurance through ACA-created health exchanges.


Hon. Kathleen Sebelius
U.S. Department of Health and Human Services

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


Upcoming HELP Committee Consideration of Children’s Hospital GME

On Oct. 30, theSenate HELP Committee will meet for executive session in which Chairman Harkin (D-IA) intends to consider, among other bills, legislation to reauthorize the Children’s Hospital Graduate Medical Education (GME) law, which authorizes payments to children’s hospitals for operating training programs that provide graduate medical education. The session will take place at 10 a.m. in Room 430 of the Dirksen Senate Office Building. Other legislation to be considered includes the Older Americans Reauthorization Act and H.R 2094, School Access to Emergency Epinephrine Act.

2. Administration

2014 Medicare Pay Rules Likely Delayed Due to Government Shutdown

On Oct. 23,CMS announced that four 2014 Medicare rules will be delayed, possibly until Nov. 27 as a result of the recent government shutdown. The rules will be effective on Jan. 1, 2014. The four rules that will be delayed are: (1) Revisions to Payment Policies under the Physicians Fee Schedule and other Revisions to Part B for CY 2014 Final Rule With Comment Period (CMS-1600-FC); (2) CY 2014 Home Health Prospective Payment System Final Rule (CMS-1450-F); (3) CY 2014 Changes to the Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System (CMS-1601-FC); and (4) Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (CMS-1526-F).

Final Rule Would Implement Exchange Risk-Adjustment, Reinsurance Provisions

HHS hasreleased a final rule to implement provisions of ACA, outlining financial integrity and oversight standards with respect to Affordable Insurance Exchanges, qualified health plan (QHP) issuers in federally facilitated exchanges (FFEs), and states with regard to the operation of risk adjustment and reinsurance programs. It also establishes additional standards for special enrollment periods, survey vendors that may conduct enrollee satisfaction surveys on behalf of QHP issuers, and issuer participation in an FFE, and makes certain amendments to definitions and standards related to the market reform rules. These standards, which include financial integrity provisions and protections against fraud and abuse, are consistent with Title I of the Affordable Care Act. This final rule also amends and adopts as final,,certain interim provisions set forth in the Amendments to the HHS Notice of Benefit and Payment Parameters for 2014 interim final rule, published in the Federal Register on March 11, 2013, related to risk corridors and cost-sharing reduction reconciliation.


Mental Health Parity Final Rule Under Review

OMB isreviewing a final rule on the Mental Health Parity and Addiction Equity Act of 2008, which would finally implement regulations released nearly four years ago. The law requires insurers to offer mental health benefits that are comparable to the benefits offered to cover physical health services. However, mental health advocates have been looking for some additional details in the final regulations, such as requiring that all plans adhere to objective standards for covering mental health services and provide a full continuum of care.

3. State Activities

Ohio Gov. Subverts Legislature to Expand Medicaid, Challenges Pending

Despite opposition among fellow Republicans in the state legislature, Ohio Governor Kasich has seemingly found a way to achieve anexpansion of his state’s Medicaid program for which he has been fighting. He used authority given to the state’s Controlling Board, a seven-member panel comprising select state lawmakers, which voted 5-2 to accept $2.5 billion in Medicaid matching funds from the federal government to provide expanded coverage for an estimated 275,000 Ohio residents. Republican opponents in the state legislature have already signaled that they intend to file suit, arguing that the board overstepped its authority.

4. Regulations Open for Comment

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. 25, 2013.

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


Spinal Devices Supplied by Physician-Owned Distributors: Overview of Prevalence and Use

In a report released on Oct. 24 by the Department of Health and Human Services Office of Inspector General (OIG), titled “Spinal Devices Supplied by Physician-Owned Distributors: Overview of Prevalence and Use,” OIG officials found that approximately 20 percent of all spinal fusion surgeries in FY 2011 used devices supplied by physician-owned distributorships (PODs). The report also discovered that between FY 2004 and FY 2012, hospitals that began using POD devises had a 21 percent increase in spinal fusion surgery, compared with a 9 percent increase in spinal fusion surgeries for hospitals overall. “Taken together, these factors may increase the cost of spinal surgery to Medicare over time,” the report said. Moreover, the report provides data on the average cost of six spinal devices, and found that none of them were cheaper when provided by a POD, a differentiation that could eventually raise a hospital’s Medicare reimbursement through higher device costs.


Medicare Supplemental Coverage: Medigap and Other Factors Are Associated with Higher Estimated Health Care Expenditures

According to arecent GAO report, total health care expenditures were higher for beneficiaries with Medigap or employer-sponsored coverage than for beneficiaries with traditional fee-for-service (FFS) Medicare only. The findings, based on CMS’s 2010 Medicare Current Beneficiary Survey (MCBS), also noted that those who were enrolled in Medicare’s Part D prescription drug program had higher average health care expenditures than those without Part D. Although some research has found similar patterns of higher health care expenditures for those with supplemental coverage, other studies have found that certain characteristics, such as health status and age, may influence the decision to purchase supplemental coverage, which could provide a partial explanation of the differences in expenditures. Furthermore, some studies suggest that increasing cost sharing for those with supplemental coverage could decrease the utilization of (and associated health care expenditures for) certain types of health care, such as physician visits, but increase the utilization of (and expenditures for) other types of health care, such as inpatient hospitalizations.

Health Records: Numbers and Characteristics of Providers Awarded Medicare Incentive Payments for 2011–2012

The GAO provides information on certain providers, including hospitals and professionals, that were awarded Medicare electronic health records (EHR) technology incentive payments for 2011 and 2012. The incentive payments are given to hospitals and professionals that demonstrate meaningful use of certified EHR technology and meet other program requirements under the Health Information Technology for Economic and Clinical Health (HITECH) Act, enacted as part of the American Recovery and Reinvestment Act of 2009. The GAO found that hospitals and health care professionals, such as physicians, were awarded a total of approximately $6.3 billion in Medicare EHR incentive payments for 2012, which is more than twice the $2.3 billion awarded in 2011. In 2012, 2,291 hospitals were awarded payments, which constitute 48 percent of eligible hospitals. This compares to only 777 hospitals or 16 percent of those eligible that were awarded payments in 2011. In 2012, 183,712 professionals were awarded payments, which represents 31 percent of eligible professionals and an increase compared to 2011, when 58,331 professionals, or 10 percent of those eligible, were awarded incentive payments. Of note, general practice physicians were 1.5 times more likely than specialty practice physicians to have been awarded an incentive payment for 2012. The GAO did not provide any recommendations to HHS.


Raising the Age of Eligibility for Medicare to 67: An Updated Estimate of the Budgetary Effects

In the course of preparing its forthcoming report on options for reducing the budget deficit, the Congressional Budget Office (CBO)updated its analysis of an option to raise the eligibility age for Medicare from 65 to 67. The option that CBO analyzed would raise the age of eligibility for Medicare by two months every year, beginning with people who were born in 1951 (who will turn 65 in 2016), until the eligibility age reached 67 for people born in 1962 (who will turn 67 in 2029). According to estimates by CBO and the staff of the Joint Committee on Taxation, implementing this option would reduce federal budget deficits by $19 billion between 2016 and 2023. That figure represents the net effect of a $23 billion decrease in outlays and a $4 billion decrease in revenues over that period. The decrease in outlays includes a reduction in federal spending for Medicare as well as a slight reduction in outlays for Social Security retirement benefits. This updated estimate of the savings to Medicare from this option is much lower than its earlier estimates for proposals to raise Medicare’s eligibility age. For example, in a report published in January 2012, CBO estimated that such a policy change would produce budgetary savings of $113 billion over 10 years.

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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