Weekly Washington Healthcare Update

December 9, 2013

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1. Congress

House of Representatives


2. Administration

Dept. of Health and Human Services

Internal Revenue Service (IRS)

3. State Activities

4. Regulations Open for Comment

5. Reports

Congressional Budget Office (CBO)

Government Accountability Office (GAO)


1. Congress


Ways and Means Hearing Examines Status of ACA Rollout

On Dec. 4, the House Ways and Means Health Subcommittee held a hearing to examine the status of the implementation of the ACA. The hearing focused on the immediate and long-term challenges to providing the affordable, quality health coverage envisioned by the architects of the ACA. Scott Gottlieb of the American Enterprise Institute testified that he believed that consumers may find that many of the plans available to consumers under the ACA will restrict their choices of doctors. However, Commissioner Kreidler highlighted his successes, having enrolled 100,000 individuals in Washington’s exchange, where individuals can choose from 46 different plans. Though supportive of the ACA, Kreidler stated that he did not support the president’s proposal to allow insurance plans the option to reinstate plans that had been previously canceled due to noncompliance with the ACA’s consumer protection provisions.


Grace-Marie Turner
Founder, President and Trustee
Galen Institute

Scott Gottlieb
Resident Fellow
The American Enterprise Institute

Chris Carlson, FSA, MAAA
Oliver Wyman Actuarial Consulting, Inc.

The Honorable Mike Kreidler
Insurance Commissioner
Washington State Office of The Insurance Commissioner

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

Energy and Commerce Examines Impact of ACA on Medicare Advantage

On Dec. 4, the Energy and Commerce Health Subcommittee held a hearing entitled “Medicare Advantage: What Beneficiaries Should Expect Under the President’s Health Care Plan,” in which members of the subcommittee debated whether the ACA would have a helpful or harmful impact on the Medicare Advantage program. Douglas Holtz-Eakin, president of the American Action Forum, expressed concerns that the ACA’s spending reductions could force insurers to adjust their provider networks, or in some cases to go out of business. However, Joe Baker with the Medicare Rights Center said insurers adjust their provider networks regularly, and that MA companies also regularly enter and exit the market for reasons outside the scope of the ACA. ACA cuts of about $200 billion, phased in over 10 years, are aimed at aligning per capita spending in MA with that of fee-for-service Medicare.


Douglas Holtz-Eakin
American Action Forum

Bob Margolis
CEO, HealthCare Partners
Co-Chairman, DaVita HealthCare Partners

Jon Kaplan
Senior Partner & Managing Director
Boston Consulting Group

Joe Baker
Medicare Rights Center

Marsha Gold
Senior Fellow
Mathematica Policy Research

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

Small Business Committee Hearing on Business Aggregation Rules

On Dec. 4, the House Small Business Committee held a hearing entitled “The Health Care Law: The Effect of the Business Aggregation Rules on Small Employers.” During the hearing, members of the committee examined the administration’s process of determining whether businesses are considered single or multiple entities under the health care law, and heard suggestions on what could be done to reduce confusion. According to Deborah Walker of Cherry Bekaert, LLP, “[T]he mechanical tests used for qualified plan discrimination testing are overly complex and understood for only a limited number of tax professionals. A small business would not be able to apply those rules without professional help and many of the advisers to small business would not be familiar with the rules.”


Ms. Deborah Walker, CPA
National Director, Compensation and Benefits
Cherry Bekaert, LLP

Ms. Sibyl Bogardus
Chief Compliance Officer, Western Region Employee Benefits
Hub International Insurance Services, Inc.

Mr. Ellis Winstanley
Chief Executive Officer
Tradelogic Corporation

Ms. Donna Baker, CPA
Donna Baker & Associates
Adrian, MI

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

Upcoming Health Subcommittee Markup of Poison Control, Brain Injury Bills

The Energy and Commerce Subcommittee on Health has scheduled a markup on Tuesday, Dec. 10, 2013, at 2:00 p.m. in 2322 Rayburn House Office Building. The subcommittee will consider the following:

  • H.R. 3527, “Poison Center Network Act of 2013”;
  • H.R. 1098, “Traumatic Brain Injury Reauthorization Act”; and,
  • H.R. 1281, “Newborn Screening Saves Lives Reauthorization Act of 2013.”

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

Secretary Sebelius Set to Appear for Energy and Commerce Committee

The Ways and Means Subcommittee on Health will hold a hearing entitled “PPACA Implementation Failures: What’s Next?” The hearing will take place on Wednesday, Dec. 11, 2013, at 10:00 a.m. in 2123 Rayburn House Office Building.


The Honorable Kathleen Sebelius
U.S. Department of Health and Human Services

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


Finance Committee Schedules Markup of SGR “Doc Fix” Legislation

Senate Finance Committee Chairman Baucus (D-MT) has announced his committee will mark up itsversion of legislation to address the persistent problems presented by the sustainable growth rate (SGR) formula currently used in the calculation of payment rates for physicians under Medicare Part B. The markup follows upon the release of an updated draft produced by the Finance Committee in conjunction with the House Ways and Means Committee. Among other changes, the new draft would adjust the level of payment bonuses and payment penalties that would be applicable to physician payments under the proposal’s Value-Based Performance (VBP) Program. It would also reduce the minimum target for “misvalued services” that the HHS Secretary is required to identify each year.

For more information, or to view the markup, please visit:www.finance.senate.gov

2. Administration

Centers for Medicare and Medicaid Services (CMS)

ACA Responsible for 1.5 Million New Medicaid/CHIP Beneficiaries

According to areport released by CMS on Dec. 3, in the month of October over 1.46 million people were determined eligible to enroll in Medicaid or CHIP through state Medicaid and CHIP agencies and through state-based marketplaces. Under the ACA, states have the option to expand their Medicaid programs to include individuals with incomes up to 133 percent of the federal poverty level (FPL). The report breaks down the total number of newly enrolled beneficiaries, showing further that 763,348 people who were determined to be eligible for Medicaid or CHIP in October reside in states that have opted for Medicaid expansion under the ACA, while 697,019 newly enrolled reside in states that did not expand Medicaid.

Nurse Training Grant Awards Totaling $55 Million Announced

Last week,HHS announced it would award $55.5 million to various entities under a program created by the ACA designed to help bolster the nation’s health care workforce in response to the extension of health insurance to new potential patients. The awards included $22.1 million for low-interest loans for nurse training and loan cancelation, $5.2 million for educational opportunities for “students from disadvantaged backgrounds”; $6.7 million for collaborative models of care; $2.2 million for nurse anesthetists traineeships; and $9.2 million for advanced nurse education programs. 

Internal Revenue Service (IRS)

Final Rules Implementing ACA Health Insurance Fee

On Nov. 26, the IRS issuedfinal rules implementing an ACA fee on health insurers. The fee, which will total $8 billion in 2014 and rise to $14.3 billion by 2018, will be levied on all fully insured health plans excepting self-funded plans. Health insurers are generally liable for annual fees based on premiums, with the aggregate fee amount for all covered entities being $8 billion for 2014, $11.3 billion each for 2015 and 2016, $13.9 billion for 2017 and $14.3 billion for 2018, according to the rules. The fee for subsequent years will be increased by the rate of premium growth. The rule also affirms that insurers will receive their final tax calculations from the IRS no later than Aug. 31 of each year, and that covered entities must remit payment by Sept. 30 via electronic funds transfer. The fee is to be levied on all fully insured health plans. Self-funded plans are exempt.

3. State Activities

Idaho Allows Insurers to Extend Previously Canceled Health Plans

Many states have opted to side with the message from the National Association of Insurance Commissioners in opposing President Obama’s “fix” to problems caused by canceled insurance plans, despite the president’s previous promise that his signature health law would not cause anyone to lose insurance coverage that they currently enjoyed. However, Idaho Gov. Butch Otter said his state will allow health insurers to extend nongrandfathered health plans by a year. “We’re not going to tell them how to run their business,” Otter said in a statement. “I proposed and the Legislature enacted a state-based healthcare insurance exchange law that was designed to maximize flexibility for consumers and carriers under Obamacare. If they can see their way clear, I hope they’ll consider reinstating those policies.”

Maryland Health Exchange Executive Director Resigns

Last week, the executive director of the Maryland health exchange, Rebecca Pearce, resigned in the wake of a shaky rollout to the state’s health insurance exchange, the Maryland Health Connection.According to officials, Carolyn Quattrocki, executive director of the governor’s health care reform office, will serve as interim director of the exchange. 

Pennsylvania Medicaid Expansion Proposal Released

Last week, Pennsylvania Gov. Tom Corbettreleased a plan to allow more than 500,000 uninsured residents to access Medicaid in the form of government-subsidized health insurance from the state’s private health insurance marketplace. The plan requires premiums of at least $13 for most individuals and families earning at least 50 percent of the federal poverty level. It also requires able-bodied adults working less than 20 hours a week to engage in “work search-related activities” during their first six months of Medicaid enrollment. In addition, premiums could be reduced for participants who abide by certain guidelines, including taking regular health assessments and maintaining employment.

4. Regulations Open for Comment

Proposed Rule for Advance Premium Tax Credit, Reinsurance Parameters

HHS has announced itsNotice of Benefit and Payment Parameters for 2015 Proposed Rule, which establishes the major provisions and parameters for eligibility for advance tax credits to pay for health care premiums in 2015. The proposed HHS Notice of Benefit and Payment Parameters includes payment parameters applicable to the 2015 benefit year, and proposes, among other topics, standards relating to the premium stabilization programs; advance payments of the premium tax credit; cost-sharing reductions; composite rating; privacy and security standards; the annual open enrollment period for 2015; the actuarial value (AV) calculator; the annual limitation on cost sharing for stand-alone dental plans and the Small Business Health Options Program (SHOP). Included in the rules are provisions that would, among other things, decrease the reinsurance attachment point from $60,000 to $45,000 for the 2014 benefit year due to updated estimates that allow for greater payments from the contribution fund, and modify the contribution collection schedule for the reinsurance program. The proposed rule would also establish a methodology for estimating average per capita premiums for calculating the premium adjustment percentage for 2015.

Public comments on the proposed rule will be accepted through Dec. 26.

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.

5. Reports


Medicare’s Payment to Physicians: the Budgetary Impact of Alternative Policies Relative to CBO’s May 2013 Baseline Updated for Final Rule

CBO hasreleased an update to its previous estimate of the cost to repeal the sustainable growth rate (SGR) formula. According to CBO, full repeal would now cost $116.5 billion over 10 years — down from the already “reduced” estimate of $139 billion. The CBO also published an estimate of the Energy and Commerce SGR repeal bill at $153.2 billion over 10 years. A short-term update at 0 percent for 2014 would cost $19.6 billion and a 0.5 percent update for 2014 would cost $18.7 billion, according to the CBO.


Medicaid: CMS Should Ensure That States Clearly Report Overpayments

According to aDec. 6 GAO report, states recovered $9.8 million in Medicaid overpayments, but they did not clearly report the overpayments and the return of the federal share to the Centers for Medicare & Medicaid Services (CMS) within the Department of Health and Human Services (HHS). Specifically, federal audits initially identified about $20.4 million in potential Medicaid overpayments across the 19 states with identified overpayments from June 2007 through February 2012. Of the $13.3 million in net overpayments, states recovered $9.8 million and were in the process of recovering the remaining $3.5 million. In response, GAO recommends that the CMS Administrator increase efforts to ensure that states are clearly reporting overpayments identified by federal audits in the designated location of the CMS-64 form. HHS concurred with this recommendation.


Medicare Contractors Nationwide Overpaid Millions to Providers for Full Vials of Herceptin

According to aNov. 29 report from the HHS-OIG, Medicare contractors overpaid $24 million to providers for full vials of Herceptin (trastuzumab), a Medicare-covered drug that is used to treat breast cancer that has spread to other parts of the body and that is supplied in multiuse vials. Multiuse vials are typically used for more than one date of service and can be stored for up to 28 days. Therefore, a payment for an entire multiuse vial is likely to be incorrect. A prior pilot review found that $3.3 million, or 78 percent, of the payments that the contractor made to providers were incorrect. The OIG recommended the CMS ensure that Medicare contractors collect the identified overpayment amounts as recommended in OIG’s individual reports; review payments made to providers after OIG’s audit period ended Dec. 31, 2010, for full vials of Herceptin, and recover any identified overpayments; require that Medicare contractors implement a Herceptin-specific system edit to identify for review claim lines billed for HCPCS code J9355 with unit counts in multiples of 44 that represent billings equivalent to entire multiuse vial(s); and review other multiuse-vial drugs to determine whether system edits are needed to prevent incorrect billings.

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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