Weekly Washington Healthcare Update

January 6, 2014

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1. Congress

House of Representatives

  • District Work Period — No Legislative Activity


  • State Work Period — No Legislative Activity

2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports




1. Congress


District Work Period — No Legislative Activity


State Work Period — No Legislative Activity

2. Administration

White House OMB Releases Proposed HHS Rule on Gun Background Check Information Sharing

The White House Office of Management and Budget (OMB) ended its review December 31 of a proposed Department of Health and Human Services (HHS)rule that tries to decrease existing barriers in the release of mental health information for the purposes of gun safety checks. OMB began reviewing the rule in September 2013, and the release of the review could indicate the rule will be published soon. As it stands, the HHS proposal would amend the Health Insurance Portability and Accountability Act of 1996 (HIPPA) Privacy Rule to specifically allow certain HIPAA-covered entities and states to release to the National Instant Criminal Background Check System (NICS) the identities of persons who are subject to a federal “mental health prohibitor” that disqualifies them from possessing or receiving a firearm. This rule comes out of a January 2013 Presidential announcement of 23 executive actions to reduce gun violence and in particular a promise to tackle burdensome legal barriers relating to HIPPA. OMB expects the rule will create no new requirements and is expected to be cost neutral.

HHS: Two Million More Enrolled in ACA Health Coverage Since October 2013

In a Dec. 31 call with reporters, Department of Health and Human Services (HHS) Secretary Kathleen Sebelius announced that more than 2.1 million people have enrolled in private health insurance plans through federal and state-based health insurance marketplaces. Moreover, a separate Dec. 31 blog post by Centers for Medicare & Medicaid Services Administrator Marilyn Tavenner announced that more than 3.9 million people were found eligible for health insurance coverage through Medicaid and the Children’s Health Insurance Program (CHIP) in October and November. While Administration health officials praised new enrollment figures, the announcement numbers fall below the Congressional Budget Office’s March 2013 estimate of 7 million state and federal exchange enrollees and 8 million Medicaid enrollees by the December 23 enrollment deadline. Critics of the Affordable Care Act and the lagging enrollment figures have pointed to the millions of Americans losing their health coverage and the associated problems of navigating and signing up for coverage on the Healthcare.gov marketplace website. The same figures point to enrollment numbers surging in December, with 975,000 people signing up for coverage on the federal exchange alone. December enrollment figures for Medicaid and CHIP were not yet available.

IRS Makes Corrections to Final Rules Implementing ACA Individual Mandate

On Dec. 26, 2013, the Internal Revenue Serviceissued a correction to the final rules implementing the ACA’s individual mandate. The final rule that was issued in August requires that people maintain minimum essential coverage or make a shared responsibility payment. The correction to the final rule amended typographical errors and made a few textual revisions.

OMB Receives for Review Proposed Rule on DME Prior Authorization Requirements

The Centers for Medicare and Medicaid Services sent OMB aproposed rule for review that would establish a prior authorization process under Medicare for certain durable medical equipment (DME) items. The proposed rule will be published in February. Since September 2012, CMS has run a demonstration in seven states aimed at reducing fraud and improper payments in the DME industry. Under the demonstration, physicians and suppliers submit their DME request to CMS. CMS will then review and postmark notification of the decision with a prior authorization number, and then notification is sent to physician, supplier and beneficiary.

3. State Activities

Massachusetts Attorney General Reports on Nonprofit Health CEO Salaries

Massachusetts Attorney General Martha Coakley released a report on Dec. 23 highlighting CEO compensation of the 25 largest nonprofit health plans and hospitals. CEOs earned anywhere from $487,000 to $8 million, according to the report. Coakley said high CEO compensation can hurt public perception of the nonprofit and increase the gap between CEO and employee compensation. Coakley plans to require more extensive reporting by nonprofits on their state tax form PC, on Schedule EC, about CEO compensation. This is not the first time nonprofit health CEO compensation has made headlines. The Massachusetts Nurses Association fielded a citizen’s ballot measure to limit nonprofit health plan CEO pay, which will appear on the 2014 ballot unless passed by the legislature. What is more, a 2012 law requires acute-care hospitals to publically disclose the 2014 salaries of their 10 highest paid executives by July 2015. Attorney General Coakley’s full report can be foundhere.

4. Regulations Open for Comment

Proposed Rules Extend “Sunset” of Anti-Fraud Laws

On Dec. 23, the Department of Health and Human Services released two rules that extend the “sunset” for protection from certain anti-fraud laws to encourage the use of electronic health records. Onerule amends the safe harbor regulation concerning electronic health records items and services, which defines certain conduct that is protected from liability under the federal anti-kickback statute. The otherrule revises the exception to the physician self-referral law that permits certain arrangements involving the donation of electronic health records items and services. In the case of OIG, the rules remove from the safe harbor the requirement related to electronic prescribing capability, and, in the case of the CMS, the rules remove from the exception the requirement related to e-prescribing capability. Both rules extend the sunset until Dec. 31, 2021.

Basic Health Program: Proposed Funding Methodology for Program Year 2015

On Dec. 18, HHSreleased a document providing the methodology and data sources necessary to determine federal payment amounts made to states that elect to establish a Basic Health Program (BHP) as provided for under Section 1331 of the ACA, to offer health benefits coverage to low-income individuals otherwise eligible to purchase coverage through Affordable Insurance Exchanges. The BHP will make affordable health benefits coverage available for individuals under age 65 with household incomes between 133 percent and 200 percent of the federal poverty level (FPL) who are not otherwise eligible for Medicaid, the Children’s Health Insurance Program (CHIP) or affordable employer-sponsored coverage. Specifically, under the proposed methodology, the total federal BHP payment amount would be based on multiple “rate cells” in each state. Each “rate cell” would represent a unique combination of age range, geographic area, coverage category (for example, self-only or two-adult coverage through BHP), household size and income range as a percentage of FPL. Thus, in each coverage category and within a particular age range there would be distinct rate cells for individuals who reside in a specific geographic rating area and are in households of the same size and income range. Comments are due Jan. 22.

IRS, HHS, Labor Proposed Rule Defines “Exempted Benefits”

On Dec. 20, the Internal Revenue Service, the Department of Health and Human Services and the Department of Laborproposed rules that would amend the regulations regarding excepted benefits under the Employee Retirement Income Security Act of 1974, the Internal Revenue Code and the Public Health Service Act. Excepted benefits are generally exempt from the health reform requirements that were added to those laws by the Health Insurance Portability and Accountability Act (HIPAA) and the ACA. Specifically, the rules amend the limited excepted benefits category of excepted benefits, which may include limited scope vision or dental benefits, and benefits for long-term care, nursing home care, home health care or community-based care. For an individual to be excepted under this second category, the statute provides that limited benefits must either: (1) be provided under a separate policy, certificate or contract of insurance; or (2) otherwise not be an integral part of a group health plan, whether insured or self-insured. The proposed regulations would eliminate the requirement under the HIPAA regulations that participants pay an additional premium or contribution for limited scope vision or dental benefits to qualify as benefits that are not an integral part of a plan (and therefore as excepted benefits). The Departments invite comments on this approach. Comments are due Feb. 21.

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.

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


Semiannual Report to Congress

The Department of Health and Human Services Office of Inspector General released itsSemiannual Report to Congress on Dec. 23, 2013. The report states that OIC generated more than $5.8 billion in recoveries through audits and investigations. According to the report, OIG excluded 3,214 individuals and organizations from participating in federal health care programs, worked on 960 criminal actions for those who participated in illegal activity against federal health care programs and worked on 472 civil actions. The report also highlighted the Medicare Fraud Strike Force efforts, which operated in nine cities and recovered $333 million through its investigations,, and prescription drug investigations, including one that led to conviction of a pharmacist who submitted almost $58 million in fraudulent Medicare claims.


Report on Medical Device Tax Suggests Minor Effects on Industry

In a report released Jan. 2 by the Congressional Research Service (CRS), researchers concluded that the 2.3 percent excise tax imposed on medical device companies would have very little economic impact on jobs, industry growth and profits. The report, entitled “The Medical Device Excise Tax: Economic Analysis,” found that output and employment within the device market would reduce no more than 0.2 percent, as costs would presumably be passed along to consumers in the form of higher prices. The industry levy has strong opponents in both the House of Representatives and the Senate, and has had repeated attempts for repeal in both chambers. The report’s findings seem to refute arguments from critics of the tax, who have warned of potentially harmful economic effects on the industry such as job losses, reduced research and development activities, and problems for smaller businesses. The tax is estimated to raise $38 billion in the next 10 years and was one of the most controversial revenue streams established to offset the costs of the Affordable Care Act.


National Preparedness: HHS Is Monitoring the Progress of Its Medical Countermeasure Efforts but Has Not Provided Previously Recommended Spending Estimates

According to a Dec. 27GAO report, HHS has established timelines and milestones for the 72 Public Health Emergency Medical Countermeasures Enterprise (PHEMCE) priorities — 33 activities, 25 threat-based approaches and 14 capabilities — that HHS selected as key to fulfilling PHEMCE strategic goals. However, HHS has not made spending estimates for its medical countermeasure development or procurement priorities (priority countermeasures) publicly available. In 2011, GAO recommended that HHS provide more specific anticipated spending information in an updated plan to assist with long-term planning. HHS’s 2012 plan contains information on how countermeasures may be funded, such as through advanced development funds, but does not include estimates of how much PHEMCE may spend to develop specific countermeasures. HHS officials said they are hesitant to provide estimates because they do not want to create the expectation that estimates would reflect final contract amounts. HHS is working to find a compromise solution that provides more transparency while allowing for flexibility in the contracting process, and anticipates including more specific information in its 2014 documents.

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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