Weekly Washington Healthcare Update

December 16, 2013

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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)

Dept. of Health and Human Services (HHS)

Medicare Payment Advisory Commission (MedPAC)

Medicaid and CHIP Payment and Access Commission (MACPAC)

1. Congress


Ryan-Murray Budget Deal Sails Through House, Senate Action Pending

On Dec. 12, the House passed by a bipartisan vote of 332-94 a two-year budget agreement reached between House and Senate Budget Committee Chairmen Ryan (R-WI) and Murray (D-WA) that sets spending for the Pentagon and other federal agencies at $1.012 trillion for Fiscal Year (FY) 2014 while realigning the sequester spending levels. Attached to the budget deal were several health-related provisions, including a short-term patch to avert looming payment cuts to Medicare physicians. This short-term physician payment fix would increase Medicare physician payment rates by 0.5 percent through March 2014. The deal also contains a number of other “health extenders,” such as a three-month extension to several add-on payments for ground ambulance services furnished under Medicare, as well as some changes to Medicaid. McGuireWoods will release a comprehensive analysis of any final budget agreement once it is enacted.

Ways and Means Unanimously Advances Physician Payment Replacement

On Dec. 12, the House Ways and Means Committee unanimously approved, by a vote of 39-0, legislation to permanently repeal the flawed sustainable growth rate (SGR) formula and to replace it with a “value-based performance program” in an attempt to move away from traditional fee-for-service (FFS), better aligning Medicare physician payments with patient outcomes. Specifically, the bill, the Medicare Patient Access and Quality Improvement Act of 2013 (H.R. 2810), would provide physicians a 0.5 percent payment increase for three years while they transition to a new payment system, at which point, the new Value-Based Performance Incentive Program would take effect. The Value-Based Performance Incentive Program, which consolidated the Physician Quality Reporting System, provides incentives to professionals to report on quality of care measures, the Value-Based Modifier, which adjusts payments based on quality and resource use, and the meaningful use of electronic health records (EHR). Also on Dec. 12, the Senate Finance Committee approved a version of physician payment reform legislation with provisions that mirror many of those in H.R. 2810. Additionally, the House Energy and Commerce Committee passed in July a version of SGR replacement legislation that will need to be reconciled as lawmakers optimistically pursue a solution to the outsized cuts, which continually threaten doctors, called for under the existing physician reimbursement formula. For more information, or to view the hearing, please visit:waysandmeans.house.gov

Secretary Sebelius Testifies Before Energy and Commerce Subcommittee

On Dec. 11, 2013, the House Energy and Commerce Subcommittee on Health held a hearing entitled “PPACA Implementation Failures: What’s Next?” in which the subcommittee examined implementation of the ACA, including the rollout of HealthCare.gov, and the challenges facing the Department of Health and Human Services (HHS) as it works to demonstrate the benefits of the president’s signature health law. The lone witness, HHS Secretary Kathleen Sebelius, informed members of the committee that the administration has obligated $677 million through October 2014 to build the federal health insurance web portal. She also stated that the HealthCare.gov infrastructure in mid-January will be capable of sending insurers both Obamacare premium subsidies and cost-sharing payments. However, Sebelius was unable to provide the actual number of people who have received health coverage, as opposed to the number of those who have signed up for coverage but haven’t yet paid. Those numbers will be made available in January 2014.


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

Small Business Committee Hearing on ACA Health Options Program

On Dec. 11, the House Small Business Committee held a hearing entitled “The Small Business Health Options Program: Is It Working for Small Businesses?” in which members of the committee heard testimony from Gary Cohen, the Obama administration’s insurance exchanges director, as to the status of the establishment of both federally run and state-based Small Business Health Options Program (SHOP) exchanges. Cohen testified that his team was not responsible for the decision to delay for one-year online enrollment in the federal small business exchanges. Cohen also stated that he doesn’t yet have enrollment figures for the federally run small businesses exchanges, in part because online enrollment isn’t set up yet.


Gary Cohen
Deputy Administrator and Director
Centers for Medicare and Medicaid Services (CMS)

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

Oversight Committee Explores FDA Drug Development Challenges

On Dec. 12, the House Oversight and Government Reform Subcommittee on Energy Policy, Health Care and Entitlements held a hearing entitled “FDA [Food and Drug Administration] Checkup: Drug Development and Manufacturing Challenges” in which the committee heard from witnesses as to the challenges currently facing the life sciences industry, including the FDA’s process of reviewing new drug applications. Dr. Janet Woodcock from FDA indicated in her written testimony that increased reliance on both foreign sources of bulk pharmaceutical ingredients and finished products, as well as additional activities being pursued to head off drug shortages have strained FDA’s resources. Woodcock also described efforts by FDA, such as the Quality by Design (QbD) approach to drug manufacturing oversight that allows FDA to proactively design manufacturing controls and develop methods to assess process capability and make improvements.

Janet Woodcock, M.D.
Center for Drug Evaluation and Research, Food and Drug Administration

Scott Gottlieb, M.D.
Resident Fellow
American Enterprise Institute

Peter Huber, Ph.D.
Senior Fellow
Manhattan Institute

Paul Hastings
President and Chief Executive Officer
OncoMed Pharmaceuticals, Inc.

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


Finance Committee Advances Physician Payment Reform Bill

On Dec. 12, the Senate Finance Committee held a markup of its version of the Sustainable Growth Rate (SGR) reform bill, the SGR Repeal and Medicare Beneficiary Access Improvement Act of 2013. The committee approved the measure by voice vote on the same day that the House Ways and Means Committee approved a similar measure. The two committees had previously released a joint framework for SGR replacement, though the final versions that were approved by each committee differ in their annual payment increases for physicians. The Senate Finance Committee’s plan would freeze the regular increases for 10 years, while the Ways and Means Committee would provide a 0.5 percent increase during each of the first three years of the new program. The Senate Finance Committee also approved a number of amendments to the proposal, including the addition of permanent funding for health programs that otherwise would expire at the end of the year. For more information, or to view the markup, please visit:www.finance.senate.gov

Special Committee on Aging Examines Medication Labeling Errors

On Dec. 11, the Senate Special Aging Committee held a hearing entitled “Protecting Seniors From Medication Labeling Mistakes,” in which members of the committee heard witness testimony regarding the threat posed to seniors by medication errors through labeling. According to Dr. Janet Woodcock from the FDA’s Center for Drug Evaluation and Research, recommendations from FDA’s Risk Communication Advisory Committee and input from stakeholders have demonstrated merit in adopting the use of a single document, standardized with respect to content and format, referred to as the Patient Medication Information (PMI).


Gerald McEvoy, Pharm.D.
Editor in Chief
AHFS Drug Information and Consumer Medication Information, American Society of
Health-System Pharmacists

Richard Scholz
Jacobs Scholz and Associates, LLC

Doris Peter, Ph.D.
Associate Director
Consumer Reports Health Ratings Center

Dr. Janet Woodcock
Director, Center for Drug Evaluation and Research
U.S. Food and Drug Administration

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

2. Administration

HHS to Offer Grants to Health Centers for Expansion of Behavioral Health Services

On Dec. 10,HHS announced that $50 million in grants will be made available to help community health centers expand mental health treatments and services. According to the HHS, about 1,200 community health centers operate out of nearly 9,000 sites and serve about 21 million low-income patients each year. Mary Wakefield, administrator of the Health Resources and Services Administration at HHS, said “these new Affordable Care Act funds will expand the capacity of our network of community health centers to respond to the mental health needs in their communities.”

Stage 3 of Meaningful Use Delayed; Medicare EHR Penalties Remain for 2015

According to arecent announcement by Jacob Reider, Acting National Coordinator for Health Information Technology (ONC), and Robert Tagalicod, Director, Office of E-Health Standards and Services at CMS, a new timeline will govern the implementation of meaningful use for the Medicare and Medicaid EHR Incentive Programs and the ONC proposed a more regular approach to update ONC’s certification regulations. Under the revised timeline, Stage 2 will be extended through 2016 and Stage 3 will begin in 2017 for those providers that have completed at least two years in Stage 2. The revised timeline is intended to allow CMS and ONC to focus efforts on the successful implementation of the enhanced patient engagement, interoperability and health information exchange requirements in Stage 2; and second, to utilize data from Stage 2 participation to inform policy decisions for Stage 3.

HHS Loosens ACA Timelines to Accommodate Ongoing Difficulties

The Department of Health and Human Services has issued aninterim final rule that extends the deadline to sign up for health insurance coverage in the Marketplaces from Dec. 15 to Dec. 23. The rule also requires that insurers accept payment through Dec. 31 for coverage that will begin on Jan. 1 and encourages them to grant enrollees coverage retroactively. The last provision of the rule is a one-month extension for the Pre-existing Condition Insurance Plan (PCIP), which is set to expire on Dec. 31. PCIP is a federal program that offers health insurance coverage for Americans who have been refused coverage by private insurers, which was set to expire Dec. 31, but has been extended while the federal government continues to fix the ACA’s health insurance exchange. The rule takes effect on Dec. 15 and will be published in the Federal Register on Dec. 17.

3. State Activities

Missouri Legislature Continues to Mull Medicaid Expansion Strategies

According to statements from a select group of Missouri Senate democrats, if a full expansion of the state’s Medicaid program, as originally envisioned by the authors of the ACA, is not “politically feasible,” a hybrid model similar to what has been pursued by Arkansas could be an acceptable substitute. Under the alternative plan, Missouri would place individuals with incomes below the poverty level into the traditional Medicaid program and cover those making up to 138 percent of poverty by paying their premiums for private insurance in the federally run insurance marketplace.

4. Regulations Open for Comment

CMS Considering Independent Reviewer for Hospice, Part D Drug Payment Disputes

In a Dec. 6 memorandum to Part D plan-sponsored and hospice providers,CMS announced it is considering implementing an independent review process for hospice and Medicare Part D disputes regarding the financial responsibility for a drug given to a hospice patient. According to CMS, hospice patients should be taking drugs covered by Part D only if the patient needs treatment for a condition that is unrelated to the terminal or related conditions. CMS recently became aware that the duplicative payment issue was so common. In the meantime before the review process can be implemented, CMS expects hospice and the Part D sponsor to coordinate their benefits and follow proper protocol on providing documentation. Public comments must be submitted by Jan. 6, 2014, at noon EST. Please submit your comments to the CMS Part D mailbox at:PartDBenefitImpl@cms.hhs.gov, using the subject “Request for Comments: Part D Payment for Drugs for Beneficiaries Enrolled in Hospice.”

CMS Proposal on Use of Civil Monetary Penalties in Medicare Secondary Payer Program

CMS has issuedadvance notice of proposed rulemaking regarding civil monetary penalties and the Medicare Secondary Payer system. Under the Medicare law, as enacted in 1965, Medicare was the primary payer for certain designated health care services except those covered by workers’ compensation. In 1980, Congress added Section 1862(b) of the Act, which defined when Medicare is the secondary payer to certain primary plans. These provisions are known as the Medicare Secondary Payer (MSP) provisions. Section 1862(b) of the Act prohibits Medicare from making payment if payment has been made or can reasonably be expected to be made by the following primary plans when certain conditions are satisfied: Group health plans; workers’ compensation plans; liability insurance (including self-insurance); or no-fault insurance. CMS is seeking public comment and proposals on mechanisms and criteria that they would employ to evaluate whether and when the agency would impose civil monetary penalties CMPs. CMS is specifically soliciting comments and proposals from insurers, third-party administrators for GHPs, other applicable plans and the public. Comments are due Feb. 10.

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


Not All Recommended Fraud Safeguards Have Been Implemented in Hospital EHR Technology

The Office of the National Coordinator for Health Information Technology (ONC), which coordinates the adoption, implementation and exchange of EHRs, contracted with RTI International (RTI) to develop recommendations to enhance data protection; increase data validity, accuracy and integrity; and strengthen fraud protection in EHR technology. However, according to aDec. 10 report from the HHS-OIG, nearly all hospitals with EHR technology had RTI-recommended audit functions in place, but they may not be using them to their full extent. In addition, all hospitals employed a variety of RTI-recommended user authorization and access controls. Nearly all hospitals were using RTI-recommended data transfer safeguards. Almost half of hospitals had begun implementing RTI-recommended tools to include patient involvement in anti-fraud efforts. Finally, only about one-quarter of hospitals had policies regarding the use of the copy-paste feature in EHR technology, which, if used improperly, could pose a fraud vulnerability. In response, OIG recommends that audit logs be operational whenever EHR technology is available for updates or viewing. OIG also recommends that ONC and CMS strengthen their collaborative efforts to develop a comprehensive plan to address fraud vulnerabilities in EHRs. Finally, OIG recommends that CMS develop guidance on the use of the copy-paste feature in EHR technology. CMS and ONC concurred with all recommendations.


HHS Releases December ACA Enrollment Numbers

According to aDec. 11 report issued by HHS, nearly 365,000 individuals had selected plans from the state and federal Marketplaces by the end of November. Other highlights of the report include:

  • Nearly 1.2 million Americans, based only on the first two months of open enrollment, have selected a plan or had a Medicaid or CHIP eligibility determination.
    • Of those, 364,682 Americans selected plans from the state and federal Marketplaces; and
    • 803,077 Americans were determined or assessed eligible for Medicaid or CHIP by the Health Insurance Marketplace.
  • 39.1 million visitors have visited the state and federal sites to date.
  • There were an estimated 5.2 million calls to the state and federal call centers.


Medicare Payment Advisory Commission (MedPAC) — December 2013 Meeting

TheMedicare Payment Advisory Commission (MedPAC) met on Dec. 12-13 to discuss payment adequacy and updates for physician, ambulatory surgical center, hospital inpatient and outpatient, long-term care hospital, outpatient dialysis services, skilled nursing facility services, hospice and inpatient rehabilitation facility services; Medicare Advantage; and post-acute care. In addition, MedPAC is considering the merits of increasing Medicare spending on acute care hospital payments by 3.2 percent, cutting payments to long-term acute care hospitals and reducing reimbursement for certain hospital outpatient department services.


Medicaid and CHIP Payment and Access Commission (MACPAC) — December 2013 Meeting

TheMedicaid and CHIP Payment and Access Commission (MACPAC) met on Dec. 12-13 to discuss items related to the interplay between Medicaid, CHIP and the ACA, including issues in pregnancy coverage under Medicaid and Exchange plans, Medicaid eligibility changes 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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