Weekly Washington Healthcare Update

November 25, 2013

Pardon Our Dust

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Programming note: There will be no Weekly Washington Healthcare Update next week due to the Thanksgiving holiday

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

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

1. Congress


Energy and Commerce Hearing on Security of Healthcare.gov

On Nov. 19, the House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing entitled “Security of Healthcare.gov.” The hearing focused on technological failures and potential data security concerns associated with the launch of Healthcare.gov, the federal website for individuals seeking to obtain tax-subsidized health insurance coverage on federally facilitated exchanges (FFEs). Henry Chao, who has found himself at the center of the technical issues that have plagued the rollout of the ACA, testified that up to 40 percent of the federal health exchange website work remains, but that essential enrollment functions are working.

Panel I
Mr. Henry Chao
Deputy Chief Information Officer and Deputy Director of the Office of Information Services
Centers for Medicare and Medicaid Services (CMS)

Panel II
Mr. David Amsler
President and Chief Information Officer
Foreground Security, Inc.

Ms. Maggie Bauer
Senior Vice President, Health Services
Creative Computing Solutions, Inc. (CCSi)

Mr. Jason Providakes
Senior Vice President and General Manager
Center for Connected Government
MITRE Corporation (MITRE)

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

Hearing Examines Public Health Legislation Focused on Local Communities

On Nov. 20, the House Energy & Commerce Subcommittee on Health held a hearing entitled “Examining Public Health Legislation to Help Local Communities.” The hearing focused on seven pieces of legislation:

  • H.R. 610: To provide for the establishment of the Tick-Borne Diseases Advisory Committee
  • H.R. 669: To amend the Public Health Service Act to improve the health of children and help better understand and enhance awareness about unexpected sudden death in early life
  • H.R. 1098: To amend the Public Health Service Act to reauthorize certain programs relating to traumatic brain injury and trauma research
  • H.R. 2703: To amend the Public Health Service Act to provide liability protections for volunteer practitioners at health centers under Section 330 of such Act
  • H.R. 1281: To amend the Public Health Service Act to reauthorize programs under Part A of Title XI of such Act
  • Discussion Draft: To amend the Public Health Service Act to reauthorize the poison center national toll-free number, national media campaign and grant program, and for other purposes
  • Discussion Draft: To amend and reauthorize the controlled substance monitoring program under Section 3990 of the Public Health Service Act

Marsha Ford, M.D., FACMT
American Association of Poison Control Centers

Edward R.B. McCabe, M.D., Ph.D.
Senior Vice President and Chief Medical Officer
Office of Medicine and Health Promotion
March of Dimes Foundation

Laura Crandall
Sudden Unexplained Death In Childhood Program
CJ Foundation for SIDS

Robert Mt. Joy
Cornerstone Care Inc.

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

Health Subcommittee Hearing on Mobile App

On Nov. 19, Energy and Commerce Subcommittee on Health Chairman Pitts (R-PA) held a hearing entitled “Examining Federal Regulation of Mobile Medical Apps and Other Health Software.” The hearing focused 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, which would codify FDA regulatory authority over medical applications.


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


Finance Committee Schedules Physician Payment Legislation Markup

Senate Finance Committee Chairman Baucus has announced his committee will hold a markup of the Sustainable Growth Rate (SGR) repeal bill on Dec. 12. Last month, leading lawmakers on the Senate Finance and House Ways and Means Committees released a discussion draft outline of a legislative fix to the flawed SGR formula. The formula was initially designed as a mechanism to control Medicare spending tying physician reimbursement to overall program spending. Congress regularly overrides the formula, which has virtually always called for increasingly high reductions in physician reimbursements. The markup will be held at 10 AM in Room 215, Dirksen Senate Office Building. The discussion draft would permanently repeal the SGR update mechanism, reform the fee-for-service (FFS) payment system through greater focus on value over volume, and encourage participation in alternative payment models (APM). The revised FFS system would freeze current payment levels through the 10-year budget window, though individual physicians and other health care professionals could earn performance-based incentive payments through a compulsory budget-neutral program.

“Track and Trace,” Compounding Legislation Clears Senate

On Nov. 18, the Senate passed, by voice vote, H.R. 3204, the Drug Safety and Security Act, 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. Specifically, the legislation would amend FDA regulatory oversight authority over compounding pharmacies, creating a new category of “outsourcing facilities” for certain sterile compounders. The legislation also contains provisions establishing a “track and trace” system for pharmaceutical drugs, including a new requirement by which pharmaceutical manufacturers, distributors and other entities involved in the drug supply chain must transmit certain information to aid in the verification of prescription drug safety and quality. The House passed the measure in October, and it awaits the president’s signature, which it’s expected to receive.

Senate Small Business Committee Hearing on ACA

On Nov. 20, the Senate Small Business and Entrepreneurship Committee held a hearing entitled “Affordable Care Act Implementation: Examining How to Achieve a Successful Rollout of the Small Business Exchanges.” The hearing focused on implementation of ACA-established SHOP Health Insurance Exchanges for small businesses, with Chairman Landrieu (D-LA) highlighting success stories in states that have embraced the health reform law. The second panel of witnesses consisted of CCIIO Director Gary Cohen and Phyllis C. Borzi, an assistant secretary at the U.S. Department of Labor. It was Cohen’s first time testifying in front of Congress since Oct. 1.


Panel 1
Mr. David Allen
President & CEO
David Allen Enterprises, LLC

Sheila A. Salter
Founder & CEO

Ms. Connie Evans
President & CEO
Association for Enterprise Opportunity

Mr. Drew Greenblatt
Marlin Steel Wire Products

Mr. Martin Hickey, M.D.
New Mexico Health Connections

Ms. Mila Kofman
Executive Director
DC Health Benefit Exchange Authority

Mr. William Nold
Deputy Executive Director
Office of the Kentucky Health Benefit Exchange

Panel 2
The Honorable Phyllis C. Borzi
Assistant Secretary
Employee Benefits Security Administration

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

Ms. Marianne O’Brien Markowitz
Regional Administrator
U.S. Small Business Administration

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

2. Administration

Forms Are More Accurate, Healthcare.gov Enrollment Simpler

On Nov. 21, Centers for Medicare and Medicaid Services announced software fixes to 834 forms that will allow insurers to process applications received from the federal health insurance marketplace faster. The fixes solved problems of inaccurate or unreadable data being transmitted to insurers, which slowed the enrollment process. In addition, many repairs have been made to the marketplace website, healthcare.gov. Julie Bataille, a spokeswoman for CMS, said the repairs are “making a meaningful difference in the consumer experience.” Despite the around-the-clock work on the website, the federal marketplace unexpectedly shut down for three hours on Nov. 20. Bataille reiterated that healthcare.gov will “be working for the majority of Americans” by Dec. 1.

Final 2014 Home Health Prospective Payment Rule

On Nov. 22, CMS issued a final rule to update Medicare’s Home Health Prospective Payment System (HH PPS) payment rates and wage index for calendar year (CY) 2014. The rule implements rebasing adjustments, with a four-year phase-in, to the national, standardized 60-day episode payment rates; the national per-visit rates; and the NRS conversion factor. Payments to home health agencies (HHAs) are estimated to decrease by approximately 1.05 percent, or $200 million, in CY 2014, reflecting the combined effects of the 2.3 percent HH payment update percentage ($440 million increase); the rebasing adjustments to the national, standardized 60-day episode payment rate; the national per-visit payment rates; the NRS conversion factor ($520 million decrease); and the effects of ICD-9-CM HH PPS Grouper refinements ($120 million decrease). This final rule also discusses our transition to ICD-10-CM coding, establishes home health quality reporting requirements for CY 2014 payment and subsequent years, specifies that Medicaid responsibilities for home health surveys be explicitly recognized in the State Medicaid Plan, and revises the methodology for calculating state Medicaid programs’ fair share of Home Health Agency (HHA) survey costs.

Physician Fee Schedule Final Rule at OMB

On Nov. 21, the White House Office of Management and Budget (OMB) received a final rule on 2014 physician fee schedule from the Centers for Medicare and Medicaid Services. The rule was supposed to be published on Nov. 1, but was delayed due to the federal government shutdown. It will take effect on Jan. 1, 2014. The CMS will host two National Provider calls in December to discuss the rule; one will focus on the physician value-based payment modifier and the other will focus on how physicians and professionals can meet the criteria. In addition, the Senate Finance Committee will mark up legislation on Dec. 12 to change the physician payment system. If Congress fails to enact a new system or extend the current system, physician reimbursement rates will drop by 24 percent in January 2014.

Final ESRD Payment Rule for 2014 Reaches White House Budget Office

On Nov. 14, OMB received a final rule on Medicare prospective payment system reimbursement for end-stage renal disease (ESRD) facilities for 2014. The rule updates the ESRD payments and addresses issues related to coverage and payment of durable medical equipment, prosthetics, orthotics and supplies. The final rule was expected to be published Nov. 1, but was delayed due to the government shutdown. The rule will go into effect for services furnished on or after Jan. 1, 2014.

White House Report Credits ACA with Slowdown in Health Care Spending

In a report released Nov. 20 by the White House Council of Economic Advisors (CEA), officials revealed that the Affordable Care Act (ACA) has been a factor in the recent slowdown in health care cost growth. The report found that the estimated annual per capita health care spending rate has grown only 1.3 percent over the past three years, less than one-third the long-term historical average rate since 1965. CEA’s report stressed that slowdown in spending is not likely just a result of the 2007-2009 recession, given that “health cost slowdown has persisted so long even as the economy is recovering, the fact that it is reflected in health care prices — not just utilization or coverage, and the fact that it has also shown up in Medicare — which is more insulated from economic trends.” Other outside contributing factors to the slowing rate mentioned in the report include increased patient cost sharing in private plans and the loss of patent protection for important prescription drugs. Specifically cited ACA contributions to the decreasing cost growth trend include reductions in Medicare overpayments to private insurers and providers, a reduction in hospital readmission rates and provider participation in more efficient payment models. “The direct effect of ACA provisions that reduce Medicare overpayments to private insurers and medical providers has been to reduce health care price inflation by an estimated 0.2 percent per year since 2010. Accounting for the ‘spillover effects’ discussed above raises this estimate to 0.5 percent per year, which represents a substantial fraction of the recent slowdown,” the report found.

Additional Week Allowed for Health Insurance Signup

On Nov. 22, CMS announced that the new deadline for individuals to select the health insurance plan and still be covered on Jan. 1 will be Dec. 23, adding an eight-day cushion to the previous Dec. 15 cutoff. The change comes as CMS continues to work through technical issues related to the launch of healthcare.gov on Oct. 1. Insurers have indicated the change could create time constraints in application processing. Only those individuals desiring coverage on Jan. 1, 2014, are impacted. The final deadline for coverage in 2014 remains March 31, 2014.

2015 ACA Enrollment Delayed One Month

In another change of ACA enrollment deadlines, HHS has announced it will delay by one month the start of the second year of the ACA’s qualified health benefits requirements, in order to give insurers additional time to assess 2014 plan experiences and set rates for 2015. Specifically, enrollment for the 2015 plan year is now expected to begin on Nov. 15, 2014, and end on Jan. 15, 2015, instead of beginning on Oct. 15 and ending on Dec. 7 as previously announced. The shift means open enrollment would not start before the November midterm election, which has led to some Republicans’ claims that the move is politically motivated.

3. State Activities

States Unconvinced of Administration’s ACA Insurance Cancellation “Fix”

Though President Obama may believe he’s made good on his promise that Americans would be able to keep their existing health insurance if they liked it, having announced a recent administrative “fix” to the ACA that would allow insurers to reinstate health plans previously canceled as a result of noncompliance with consumer protection provisions enacted as part of the health reform law, state insurance commissioners are not yet sold on the viability of Obama’s plan. In fact, while at least nine states have said they will comply with Obama’s offer to allow insurers to extend existing policies, at least four others do not plan to implement the fix. “These proposed changes are creating a level of uncertainty that we must work together to alleviate,” Jim Donelon, National Association of Insurance Commissioners (NAIC) president and Louisiana insurance commissioner, said in a statement.

4. Regulations Open for Comment

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, 2014.

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 or requests for a public hearing on the proposed rules must be received by Nov. 25.

5. Reports


OIG Strategic Plan for Fiscal Years 2014-2018

The Department of Health and Human Services Office of Inspector General released its Strategic Plan for Fiscal Years 2014-2018. The plan’s four broad goals include fighting fraud, waste and abuse; promoting quality, safety and value; securing the future; and advancing excellence and innovation. OIG plans to maximize fraud recoveries by building on the work of the Medicare Fraud Strike Force teams, educating healthcare providers on compliance issues and billing and payment errors, and evaluating healthcare programs. OIG will also use data analytics to deter fraud and ensure patient privacy. Inspector General Daniel Levinson said the strategic plan “allows for flexibility to assess, anticipate, and respond to new challenges.” OIG was scheduled to publish in early October its annual work plan, which discusses specific issues OIC will focus on during the fiscal year; however, the work plan will not be released until January 2014.

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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