Weekly Washington Healthcare Update

January 21, 2014

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1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

Medicare Payment Advisory Commission (MedPAC)



1. Congress


House Bill Would Require Reports on Health Exchange Operations

On Jan. 16, the House passed a bill (H.R. 3362) that would require the Obama administration to submit weekly reports on the status and operation of the federal online health insurance website, HealthCare.gov. Among the data that would be included in the status reports are the number of unique website visits, the number of individuals creating an account, the number of enrollees in each ZIP code and the level of coverage obtained. The Senate is not expected to take up the measure, and the White House opposes the bill, though no veto threat was issued. Opponents claim the bill would impose burdensome new requirements on the administration. Rep. Waxman (D-CA), ranking member on the Energy and Commerce Committee, said, “It’s an effort to slow down implementation of the new law by drowning the Department of Health and Human Services in red tape.” Sixty-seven Democrats joined a united Republican caucus in supporting the bill, as it passed by a vote of 259-154.

Energy and Commerce Oversight Hearing Examines ACA Exchange Status

On Jan. 16, the Energy and Commerce Oversight and Investigations Subcommittee held a hearing entitled “2014: Seeking PPACA Answers,” in which members of the subcommittee heard testimony from Gary Cohen, Director of the Center for Consumer Information and Insurance Oversight (CCIIO) at CMS. CCIIO is the lead agency in the establishment of the health insurance marketplaces (Exchanges) that began enrollment on Oct. 1, 2013. The hearing focused on activities being conducted at CCIIO in response to the troubled rollout of the federally facilitated exchange, as well as assessing the current status of ACA implementation.


Mr. Gary Cohen
Center for Consumer Information and Insurance Oversight, CMS
U.S. Department of Health and Human Services

For more information, or to view the hearing, please visitenergycommerce.house.gov.

Veterans Affairs Committee Hearing on Surgical Implant

On Jan. 15, the House Veterans Affairs Oversight and Investigations Subcommittee held a hearing entitled “Vendors in the O.R. – VA’s Failed Oversight of Surgical Implants,” in which the committee examined problems associated with the tracking and handling of surgical implants within the VA, including procurement issues revealed in a previous hearing by the subcommittee. Specifically, the Government Accountability Office (GAO) found that the Veterans Housing Administration (VHA) requires each medical facility to develop its own policy on vendor access, resulting in varying degrees of specificity regarding their participation in patient care.


Panel 1
Mr. Randall Williamson
Director, Health Care
U.S. Government Accountability Office (GAO)

Mr. Wayne McElrath
Director, Forensic Audit and Investigative Services
U.S. Government Accountability Office

Mr. Roscoe Butler
Assistant Director for Health Care, National Veterans Affairs and Rehabilitation Commission
The American Legion

Panel 2
Mr. Philip Matkovsky
Assistant Deputy Under Secretary for Health for Administrative Operations
U.S. Department of Veterans Affairs

Dr. Thomas Lynch
Assistant Deputy Under Secretary for Health Clinical Operations
U.S. Department of Veterans Affairs

For more information, or to view the hearing, please visitveterans.house.gov.


$1.1 Trillion Appropriation Bill Relieves Government Funding Uncertainty

On Jan. 16, two days before the scheduled expiration of existing appropriations, the Senate approved a roughly $1.1 trillion spending bill to provide funding for federal programs and agencies through Sept. 2014. By a vote of 72-26, the Senate easily passed the bill, which had passed the House on a 359-67 vote one day earlier, after just an hour of debate conducted under a closed rule allowing no amendments. The legislation provides a total of $156.8 billion for health programs, or roughly $100 million less than the FY 2013 level enacted by Congress. Among the health agencies and programs that would receive increases in the appropriations measure are the National Institutes of Health (NIH), the Centers for Disease Control and Prevention (CDC), community health centers and mental health programs. NIH would receive $29.9 billion, about $1 billion more than the FY 2013 level enacted by Congress. An additional $160 million is provided for Preventive Health & Health Services block grants to states, and $30 million would go to support the Advanced Molecular Detection Initiative at CDC.

Wyden Bill Aims to Improve Care of Chronically Ill Medicare Patients

On Jan. 15 Senator Wyden (D-OR) introduced the Better Care, Lower Cost Act, aimed at lowering costs for caring for chronically ill Medicare patients. Medicare enrollees with two or more chronic illnesses account for 93 percent of Medicare spending, or $487 billion, according to CMS. This legislation would remove barriers that prevent Medicare providers from building on existing care delivery models, such as ACOs, for these chronically ill patients. It would give providers one payment for each patient and allows for targeted enrollment of beneficiaries. In addition to removing barriers, the legislation would utilize telemedicine and knowledge networks to increase access in rural areas. Senator Isakson (R-GA), Representative Paulsen (R-MN) and Representative Welch (D-VT) are cosponsors of the legislation. According to the cosponsors, the Better Care, Lower Cost Act could save Medicare $25 billion; however, the bill has not yet been scored by the Congressional Budget Office.

2. Administration

Privacy and Transparency Weighed in Medicare Payment Disclosure

According to aJan. 17 Federal Register notice, CMS has instated a new policy for releasing data on amounts of Medicare payment to doctors under the Freedom of Information Act that will rely on an individual approach to requests. A ruling in May 2013 by the U.S. District Court for the Middle District of Florida lifted a 1979 injunction, based on the Privacy Act of 1974, which had prohibited HHS from releasing Medicare physician reimbursement data that would identify specific physicians. In August 2013, the agency sought public comment on the most appropriate path regarding the release of data, with comments due Sept. 5. In noticing the new policy, CMS stated it will make case-by-case determinations as to whether Exemption 6 of the Freedom of Information Act applies to a given request for such information. Exemption 6 requires the CMS to weigh the privacy interest of individual physicians and the public interest in disclosing such information.

Meaningful Use Incentive Payments Reach Nearly $18 Billion, CMS Says

According to a recent update from CMS, the agency has paid $17.7 billion in incentives to 334,081 hospitals and health care providers to use electronic health records, as of the end of November 2013. Of the $17.7 billion, almost $11 billion has gone to 4,300-plus hospitals that have achieved meaningful use status, while $4 billion has gone to about 210,000 physicians and health professionals qualifying under Medicare and $2.5 billion has gone to 107,000 professionals qualifying under Medicaid. According to draft estimates by the CMS, 3,500 health care providers and 70 hospitals registered in December to participate in the Medicare meaningful use program and 3,500 health care providers registered to participate in the Medicaid meaningful use program.

HHS Suspends New Medicare Appeals As Backlog Grows

HHS’s Office of Medicare Hearings and Appeals (OMHA) announced that it is suspending the assignment of new Medicare appeals for at least two years as it works through its backlog of more than 460,000 pending appeals. The suspension was effective as of July 15, 2013. It will not affect appeals fielded directly by Medicare beneficiaries; those appeals will continue to be processed. OMHA has been working on updating an electronic case processing system that will greatly increase efficiency, according to OMHA’s Chief Administrative Law Judge Nancy Griswold. OMHA will hold anappellant forum in Washington on Feb. 12 to address the impact of the appeals suspension.

3. State Activities

Wyoming Mulls Medicaid Expansion

Two bills that would expand Wyoming’s Medicaid program have been approved by a health care committee, and could be taken up by the full House as soon as next month. Republican Gov. Matt Mead hasn’t ruled out a Medicaid expansion this year, citing concerns about the ACA’s early rollout while remaining “open-minded” to expansion if improvements are made.

Maine Study Recommends Opposition to Medicaid Expansion

A consultant’s report commissioned by Gov. Paul LePage recommends against the Medicaid expansion, citing costs to the state and federal governments. Just parts of the report were released Friday, despite the state’s attorney general pushing LePage’s office for more disclosure. Democratic lawmakers, who control both chambers, indicated they will continue to pressure the Republican governor to expand Medicaid this year.

New Hampshire Legislature Advances Medicaid Expansion

House Democrats used their first day back in session to pass legislation that would expand the state’s Medicaid program, as provided by the ACA. Republicans, who control the Senate, say they have no interest in rushing the process, though they’re still open to expansion options.

4. Regulations Open for Comment

Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule and the National Instant Criminal Background Check System (NICS)

On Jan. 7, HHS issued a notice ofproposed rulemaking to modify the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule to expressly permit certain HIPAA-covered entities to disclose to the National Instant Criminal Background Check System (NICS) the identities of individuals who are subject to a Federal “mental health prohibitor” that disqualifies them from shipping, transporting, possessing or receiving a firearm. The NICS is a national system maintained by the Federal Bureau of Investigation (FBI) to conduct background checks on persons who may be disqualified from receiving firearms based on federally prohibited categories or State law. Among the persons subject to the Federal mental health prohibitor are individuals who have been involuntarily committed to a mental institution; found incompetent to stand trial or not guilty by reason of insanity; or otherwise have been determined by a court, board, commission or other lawful authority to be a danger to themselves or others or to lack the mental capacity to contract or manage their own affairs, as a result of marked subnormal intelligence or mental illness, incompetency, condition or disease. Under this proposal, only covered entities with lawful authority to make adjudication or commitment decisions that make individuals subject to the Federal mental health prohibitor, or that serve as repositories of information for NICS reporting purposes, would be permitted to disclose the information needed for these purposes. Comments are due March 10, 2014.

Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs

On Jan. 6, CMS released aproposed rule that would revise the Medicare Advantage (MA) program (Part C) regulations and prescription drug benefit program (Part D) regulations to implement statutory requirements; strengthen beneficiary protections; exclude plans that perform poorly; improve program efficiencies; and clarify program requirements. Specifically, the proposal includes a requirement establishing U.S. citizenship and lawful presence as eligibility requirements for enrollment in MA and Part D plans. In addition, the proposed rule would modify the administration of payments to agents and brokers who assist Medicare beneficiaries in selecting plans to discourage beneficiaries from enrolling in plans without regard to ensuring plan benefits would meet the beneficiaries’ health care needs. Comments are due March 7, 2014.

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 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. Report


MedPAC Approves Final FY 2015 Hospital Payment Recommendations

Last week, the Medicare Payment Advisory Commission approved a final recommendation that Congress increase Medicare payment rates for the hospital inpatient and outpatient prospective payment systems by 3.25 percent in 2015. The Commission also recommended that Congress reduce the differences in compensation rates between hospital outpatient departments and physician offices for a variety of services, known as “site-neutral” payments. Currently Medicare pays as much as 140 percent more for an echocardiogram offered in a hospital outpatient department than it does for the same service in a freestanding physician’s office. Beneficiaries also pay higher copayments for the same services in different settings. MedPAC also recommended that Congress pay long-term care hospitals the same rates as general acute-care hospitals for cases involving patients who are not deemed “chronically critically ill,” defined as an intensive care unit stay of at least eight days. The changes could reduce Medicare spending and beneficiary cost-sharing by $1.1 billion a year. The recommendations will appear in the advisory panel’s annual March report to Congress.


VA Surgical Implants: Purchase Requirements Were Not Always Followed at Selected Medical Centers and Oversight Needs Improvement

According to aJan. 13 GAO report, clinicians at the four Department of Veterans Affairs Medical Centers (VAMC) visited said that patient need and their clinical expertise were the main factors influencing their decisions of which surgical implants to use. Also, clinicians in certain specialties said they typically used one of the implants available on VA-negotiated national committed-use contracts, which generally establish a fixed price for several models of nine types of surgical implants that the Veterans Health Administration (VHA) commits to using nationally. However, none of the four VAMCs fully complied with requirements for obtaining waivers for open-market purchases of surgical implants, and three of the four VAMCs did not comply with a VHA requirement pertaining to agreements with vendors that provided surgical implants to them on consignment. GAO recommends that VA identify implants and establish a timeline to expand the volume that can be purchased from VA-negotiated contracts and improve compliance with and oversight of purchasing requirements. VA concurred with these recommendations.

Medicare: Continuous Insurance Before Enrollment Associated with Better Health and Lower Program Spending

According to GAO, Medicare beneficiaries with continuous health insurance coverage for approximately six years before enrolling in Medicare were more likely than those without prior continuous insurance to report being in good health or better during the first six years in Medicare. In particular, having prior continuous insurance raised the predicted probability that a beneficiary reported being in good health or better by nearly 6 percentage points during the first six years in Medicare. Specifically, during the first year in Medicare, beneficiaries with prior continuous insurance had approximately $2,300, or 35 percent, less in average predicted total spending than those without prior continuous insurance. In addition, during the first five years in Medicare, the difference in the average predicted number of physician office visits between beneficiaries with and without prior continuous insurance ranged from 1.3 to 2.5, or 23 to 46 percent.


Local Coverage Determinations Create Inconsistency in Medicare Coverage

According to a recent report by the HHS-OIG, the local coverage determination (LCD) process associated with Medicare Part B benefits has led to inconsistent treatment of items and services across various states. For example, the report found that in some states, LCDs affect as few as 5 percent of Part B items and services, although they affect more than 50 percent in others. As a result, beneficiaries in some states didn’t have access to items and services that had significant use among beneficiaries in other states. While CMS has taken steps to increase consistency among LCDs, it lacks a plan to evaluate new LCDs for national coverage as called for by the Medicare Modernization Act (MMA). The report recommends that CMS establish a plan to evaluate new LCD topics for national coverage consistent with MMA requirements. In addition, CMS should continue efforts to increase consistency among existing LCDs. Finally, the report recommends that CMS consider requiring MACs to jointly develop a single set of coverage policies. CMS concurred with all the recommendations.

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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