Weekly Washington Healthcare Update

January 27, 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

Government Accountability Office (GAO)


1. Congress


District Work Period — No Legislative Activity


State Work Period — No Legislative Activity

2. Administration

Latest Figures Show 3 Million Enrolled in ACA Coverage

According to CMS Administrator Tavenner, the most recent data indicates that approximately 3.0 million people have now enrolled in a private health insurance plan through the federal and state-based marketplaces since Oct. 1. Additionally, between October and December over 6.3 million individuals were determined eligible to enroll in Medicaid or CHIP through state agencies and through state-based marketplaces. These numbers include both Medicaid and CHIP new eligibility determinations in states that expanded coverage, determinations made on prior law and, in some states, Medicaid renewals and groups not affected by the health care law. CMS said people between 18 and 34 years old accounted for a quarter of signups, significantly less than the 40 percent the White House had hoped for.

CMS Awards $200 Million for Insurance Exchanges

According to CMS, nine states will share $201.2 million in new federal grants to support state-run and partnership exchanges. Three states will use the grant award to help support new marketplaces over the next two years. Mississippi will use its funds to establish an enrollment portal for its SHOP-only exchange, and Arkansas will transition from a partnership to a state-based exchange. CMS intends to award establishment grants through 2014.

Senior White House Health Aid Jennings Resigns

Chris Jennings, a former Clinton administration aide and senior health care adviser to the president, is resigning his post, citing “a recent health scare and other serious family considerations.” Jennings began working in the White House in July as part of a staffing expansion in advance of the Oct. 1 rollout of HealthCare.gov. He served as a point of contact to the insurance industry. Jennings’s portfolio will now be handled by Phil Schiliro and Jeanne Lambrew.

U.S.-UK Health Information Technology Agreement

HHS Secretary Sebelius and UK Secretary of State for Health Jeremy Hunt signed abilateral agreement for the use and sharing of health IT information and tools. The goal of the agreement is to strengthen efforts to increase the use of health IT tools and information to improve the quality and efficiency of the delivery of health care in both countries. The two Secretaries of Health signed the agreement at the Annual Meeting of the HHS Office of the National Coordinator for Health IT. The agreement signals a formal commitment by both countries to collaborate to advance the applications of data and technology to improve health. Originally identified at the June 5, 2013, bilateral summit meeting between the United States and United Kingdom, the collaboration focuses on four key areas for health IT, including the sharing of quality indicators and adopting digital health records systems.

3. State Activities

Washington State Exchange Enrollment Figures Released

According theDecember 2013 Health Coverage Enrollment Report released by officials in Washington, the state’s exchange has enrolled more than 67,000 people in private coverage between Oct. 1 and Dec. 31, including a 40,000-sign-up surge in December. The report also found that more than 77,000 new individuals had enrolled in Medicaid. Of the newly enrolled, about 30 percent were between the ages of 18 and 35. Eighty percent of enrollees in silver-level plans also qualified for subsidies.

Missouri Law Regarding Navigator Requirements Blocked by Judge

A Missouri federal district judge hastemporarily blocked enforcement of a state law placing additional requirements on navigators and other in-person assisters, finding that “[s]tate laws that make operation of the [federally facilitated exchange] more difficult or onerous run afoul of the ACA’s purpose and are subject to preemption.” U.S. District Court Judge Ortrie Smith, a Clinton nominee, noted that since Missouri ceded control of its exchange to the feds, it gave up the ability to place additional requirements or limitations on the exchange.

Utah Continues Toward Medicaid Expansion

According to arecent statement by Republican Utah Governor Herbert, “doing nothing” with regard to his state’s Medicaid program is not an option, signaling he is ready to embrace an expansion of the program, as provided for in the ACA. However, Herbert did not indicate which of two expansion strategies endorsed by a legislative Health Reform Task Force he prefers. That panel has offered a slate of options to Herbert including an option similar to a public-private hybrid in place in Arkansas. The full Medicaid expansion anticipated by the ACA would cover 111,000 Utah adults who earn up to 138 percent of the federal poverty level, or $32,000 for a family of four. The federal government pays 100 percent of those costs through 2017, and then declining amounts, but no less than 90 percent.

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.

IRS, HHS, Labor Proposed Rule Defines “Excepted 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.

5. Report


CMS Should Implement Revised Federal Upper Limits and Monitor Their Relationship to Retail Pharmacy Acquisition Costs

According to aJan. 22 GAO report, CMS should implement revised federal upper limits (FULs) for Medicaid pharmacy reimbursement. Specifically, as of September 2009, the formula the CMS uses to calculate FULs is based on 150 percent of the lowest price published in national drug pricing compendia, and the CMS continues to apply these FULs. Additionally, the GAO said the relationship between ACA-based FULs and NADACs may be affected by several factors, including rebates and discounts that aren’t reflected on pharmacy invoices. The GAO said it recommends that the CMS monitor this relationship on an ongoing basis. The report was prepared at the request of Max Baucus (D-MT), chairman of the Senate Finance Committee, and Charles Grassley (R-IA), ranking member of the Senate Judiciary Committee. HHS agreed with the GAO’s recommendations that the CMS should implement the revised FULs and monitor the relationship between FULs and NADACs on an ongoing basis.

Medicare Advantage: Special Needs Plans Were More Profitable, on Average, than Plans Available to All Beneficiaries in 2011

According to aGAO report released Jan. 22, special needs plans (SNP) reported having higher profit margins and spending a lower percentage of total revenues on medical expenses, on average, than Medicare Advantage (MA) plans available to all beneficiaries in 2011. For instance, SNPs’ average profit margin was 4.0 percentage points higher than plans available to all beneficiaries — 8.6 percent versus 4.6 percent. SNPs also had a higher plan-level median profit margin compared to MA plans available to all beneficiaries — 7.1 percent versus 3.2 percent. In addition, all three types of SNPs — dual-eligible SNPs, chronic condition SNPs and institutional SNPs — spent, on average, a lower percentage of total revenue on medical expenses and had higher profit margins relative to MA plans available to all beneficiaries. GAO made no recommendations in the report.


Cost Estimates of Various SGR Replacement Bills

CBO hasreleased scores for three versions of legislation designed to replace the existing Medicare physician payment model. The House Energy and Commerce Committee version of the bill, which would replace the Sustainable Growth Rate (SGR) formula with new systems for establishing those payment rates, is now estimated to cost $146 billion, down from $175 billion. CBO estimates that the House Ways and Means SGR repeal bill would cost $121 billion over 10 years. Lastly, CBO estimates the Senate Finance Committee bill, S. 1871, which would extend a number of health care and human services programs and provisions that would otherwise expire, in addition to replacing the SGR, would increase direct spending by $150.4 billion over the 2014-2023 period. The budget analysis said that the Ways and Means cost as well as the new Energy and Commerce cost reflect the 2014 physician fee schedule and the current patch to prevent the SGR cuts through March 31, 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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