Weekly Washington Healthcare Update

November 18, 2013

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1. Congress

House of Representatives


2. Administration

Department of Health and Human Services

3. State Activities

4. Regulations Open for Comment

5. Reports

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

Medicaid and CHIP Payment and Access Commission (MACPAC)

1. Congress


House Passes Bill to Preserve Previously Canceled Health Plans

Last week, the House passed legislation that would permit insurers to continue selling, through 2014, health plans previously canceled under the ACA due to noncompliance with the law’s minimum essential benefit requirements. The bill, H.R. 3350, the “Keep Your Health Plan Act of 2013,” passed by a vote of 261-157, with 39 House Democrats joining 222 Republicans in voting in favor of the bill. According to a Statement of Administrative Policy, President Obama would veto the bill because it “rolls back the progress made by allowing insurers to continue to sell new plans that deploy practices such as not offering coverage for people with pre-existing conditions, charging women more than men, and continuing yearly caps on the amount of care that enrollees receive.”

Oversight Committee Hearing Explores Healthcare.gov Launch

On Nov. 13, the House Committee on Oversight & Government Reform held a hearing entitled “ObamaCare Implementation: The Rollout of Healthcare.gov.” The hearing focused on issues associated with the troubled rollout of the federal government’s web portal for individuals to view and purchase qualifying health insurance, as required by the ACA. Republicans pressed witnesses on the degree to which the website underwent security testing before being launched, and whether the decision to disable a “window-shopping” feature was politically motivated.


Mr. Frank Baitman
Deputy Assistant Secretary for Information Technology
Department of Health and Human Services

Mr. Henry Chao
Deputy Chief Information Officer and Deputy Director of the Office of Information Services
Centers for Medicare and Medicaid Services

Mr. Todd Park
U.S. Chief Technology Officer
Office of Science and Technology Policy, The White House

Mr. Steve Van Roekel
U.S. Chief Information Officer and Administrator, Office of Electronic Government
Office of Management and Budget

Mr. David Powner
Director, Information Technology Management Issues
Government Accountability Office

Mr. Richard A. Spires
Former Chief Information Officer
U.S. Department of Homeland Security

Ms. Karen Evans
KE&T Partners, LLC

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

Upcoming Oversight Subcommittee Hearing on Healthcare.gov

The Subcommittee on Oversight and Investigations will hold a hearing on Tuesday, Nov. 19, 2013, at 10:15 a.m. in Room 2123, Rayburn House Office Building. The hearing is entitled “Security of Healthcare.gov.” Witnesses will be announced and are by invitation only. The hearing webcast will be available at:energycommerce.house.gov

Upcoming Health Subcommittee Hearing on Mobile Apps

Energy and Commerce Subcommittee on Health Chairman Pitts (R-PA) has announced his committee will hold a hearing entitled “Examining Federal Regulation of Mobile Medical Apps and Other Health Software.” The hearing will take place on Tuesday, Nov. 19, 2013, at 10:00 a.m. in Room 2322, Rayburn House Office Building. This hearing will focus on the Food and Drug Administration’s (FDA) final medical app guidance published in September 2013 and H.R. 3303, Sensible Oversight for Technology which Advances Regulatory Efficiency (SOFTWARE) Act of 2013.


Panel One
Jeffrey E. Shuren, M.D., J.D.
Center for Devices and Radiological Health
Food and Drug Administration

Panel Two
Mike Marchlik
Vice President, Quality Assurance and Regulatory Affairs
McKesson Technology Solutions

Jim Bialick
Executive Director
Newborn Coalition

The Honorable Zachary J. Lemnios
Vice President, Research Strategy
IBM Research

Robert Jarrin
Senior Director, Government Affairs
Qualcomm Incorporated

J. Leonard Lichtenfeld
Deputy Chief Medical Officer
American Cancer Society, Inc.

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


Children’s Hospital GME Reauthorization Clears Senate

On Nov. 12, the Senate passed by unanimous consent, a bill to reauthorize funding for graduate medical education programs in children’s hospitals. Specifically, the bill, S. 1557, the Children’s Hospital GME Support Reauthorization Act of 2013, would reauthorize funding for five years at up to $300 million each year. The program’s existing authorization expired in 2011, but funding has continued to flow through annual appropriation measures. The House passed its own bill (H.R. 297) in February to reauthorize the program, and lawmakers are hopeful that a conference committee will convene to reconcile differences between the two chambers.

“Track and Trace,” Compounding Legislation Clears Senate Hurdle

Last week, the Senate agreed, by a vote of 97-1, to invoke cloture on the motion to proceed on H.R. 3204, legislation that combines two smaller bills aimed at implementing a secure prescription drug supply chain, and adding clarity and additional regulation to the practice of pharmaceutical compounding. The Senate is expected to consider and pass the bill early in the week of Nov. 18. The lone vote in opposition to cloture was Sen. Vitter (R-LA).

2. Administration

Data Shows ACA Enrollment Falling Short of Expectations

Last week, the White Housereleased much-awaited data on how many individuals have been able to successfully select a health insurance option through federally run health insurance exchanges. According to HHS Secretary Kathleen Sebelius, 106,185 people “selected” health plans from the Affordable Care Act health insurance marketplaces between Oct. 1 and Nov. 2, and another 975,407 applied for coverage and received an eligibility determination but have not yet selected a plan. Republicans seized on the numbers as an indication of the ACA’s unworkable nature. In a statement, House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) said that the 27,000 enrollments through the federally facilitated marketplace “pale in comparison to the millions who have lost their health insurance under ObamaCare.”

White House Policy Change to Address Plan Cancellations Due to ACA

In a press conference on the health care law implementation with President Obama on Nov. 14, the President announced an “administrative fix” to the Affordable Care Act that would allow insurers to renew current plans in the individual market through 2014 that do not meet the law’s criteria for essential health benefits. The change is intended to reassure people who have been receiving plan cancellation notices, as it is aimed at allowing more people to keep their health plans. Moreover, the change was also clarified in aNov. 14 Centers for Medicare and Medicaid Services (CMS) letter to state insurance commissioners and mandated that insurers alert consumers what protections their renewed plans do not include and offer alternative plan options that fall within ACA guidelines, including the opportunities for federal tax credits or Medicaid coverage. Policymakers are worried that the change may negatively impact insurer risk pools on the exchanges, given that healthier policyholders may choose to keep their older, usually less expensive, noncompliant policies.

3. State Activities

Alaska Rejects Medicaid Expansion

Last week, Alaska Gov. Parnell again rejected an expansion of his state’s Medicaid program, as provided for by the ACA. Such an expansion would have potentially covered up to 40,000 low-income residents, though Parnell said he made the decision after reviewing state-commissioned study by The Lewin Group, which estimated it would cost the state just over $200 million over a seven-year period to expand Medicaid. “All those federal dollars are really enticing, but they’re not free,” said the Republican governor, who stressed the need to reform the program. Thereport was made public on Friday minutes before Parnell began talking to reporters.

4. Regulations Open for Comment

NEW — CMS Requests Comments on Quality Measures for Plans on Exchanges

In a notice set to be published in the Nov. 19 Federal Register, the Centers for Medicare and Medicare Services is soliciting comments on quality measures for the health plans offered through the insurance exchange. The list of proposed quality rating system (QRS) quality measures has 42 measures for family/adult and 25 measures for child-only. CMS is also soliciting comments on the “hierarchical structure of the measure sets,” the elements of the QRS methodology and the integrity of the QRS ratings. CMS also said it would provide “future technical guidance” for the quality health plan issuers and exchanges related to QRS measure specifications, detailed rating methodology guidelines and data reporting and procedures. CMS previously issued rules in the March 27, 2012, Federal Register directing the exchanges to oversee the ratings. Comments on the QRS quality measures are due Jan. 21, 2013.

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


Advisory Opinion on Anesthesiology, Psychiatric Arrangement

According to anadvisory opinion made public on Nov. 12 by the Department of Health and Human Services Office of the Inspector General (HHS-OIG), a proposed arrangement involving anesthesia services being provided to a psychiatric practice, as well as reassigning billing rights to the psychiatric practice, might violate federal statute prohibiting kickbacks. Specifically, between 1993 and the beginning of 2011, the anesthesia provider in question contracted with a hospital to provide all its anesthesia services with the exception of chronic pain management. However, in late 2010, a psychiatric practice that offered electroconvulsive therapy (ECT) began operating in the hospital, and when the anesthesia provider negotiated its 2011 contract with the hospital, the hospital inserted a provision that allowed the head of the psychiatric practice to provide anesthesia services to ECT patients, outside the anesthesia provider’s relationship with the hospital. “The Proposed Arrangement therefore presents the significant risk that the remuneration Requestor would provide to the Psychiatry Group — i.e., the opportunity to generate a fee equal to the difference between the amounts the Psychiatry Group would bill and collect for Requestor’s anesthesia services, and the per diem amounts the Psychiatry Group would pay to Requestor — would be in return for the Psychiatry Group’s anesthesia referrals to Requestor,” the opinion stated. 


MACPAC November Meeting

On Nov. 14-15, 2013, the Medicaid and CHIP Payment and Access Commission (MACPAC) held itsregular monthly meeting to discuss issues in advance of the commission’s annual report to Congress. The meeting consisted of six sessions: the Future of CHIP: Views from CHIP Directors; the Future of CHIP: Part II; the Long-Term Care Commission: Report from the Commission’s Leadership; Short- and Long-Term Issues for CHIP; Medicaid Interactions with the ACA: Issues and Analyses for Further Consideration; and Medicaid Non-DSH Supplemental Payments.

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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