Washington Healthcare Update

February 3, 2014

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1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

1. Congress


Ways and Means Examines ACA’s Full-Time Employee Requirements

On Jan. 28, the House Ways and Means Committee held a hearing on the impact of the Affordable Care Act’s (ACA) employer mandate, which defines full-time employment as 30 hours per week for the purposes of applying the employer mandate. The ACA imposes a requirement that employers with more than 50 full-time employees (FTEs) offer health coverage to their workers or be subject to one of two new penalty taxes. Republicans have cited concerns that the law’s requirements create incentives for employers to depress workers’ hours. Supporters of the ACA note that similar hour thresholds defining full-time employees imposed by states like Hawaii have resulted in significantly higher rates of employer-sponsored coverage.


Lanhee J. Chen, Ph.D.
Research Fellow
Hoover Institution, Stanford University

Peter Anastos
Owner and Co-Founder
Maine Course Hospitality Group

Neil Trautwein
Vice President and Employee Benefits Counsel
National Retail Federation

Thomas J. Snyder
Ivy Tech Community College

Helen Levy, Ph.D.
Research Associate Professor
Institute for Social Research, University of Michigan

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

Upcoming Ways and Means Hearing with IRS Commissioner Koskinen

House Ways and Means Oversight Subcommittee Chairman Boustany (R-LA) has announced his subcommittee will hold a hearing with Internal Revenue Service (IRS) Commissioner John Koskinen. The hearing will take place at 9:30 a.m. on Wednesday, Feb. 5, 2014, in Room 1100 of the Longworth House Office Building. The hearing will focus on a variety of issues facing the IRS, including the ongoing investigation into the IRS’s targeting of certain tax-exempt organizations, proposed regulations regarding 501(c)(4) groups, IRS responsibilities under the ACA, the 501(c)(3) backlog and improper payments.


John Koskinen
U.S. Internal Revenue Service

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

Rep. Waxman Will Not Seek Reelection

On Jan. 30, Rep. Waxman (D-CA)announced that after 40 years in office, he will not seek House reelection this November. During his tenure in Congress, Waxman has championed many major pieces of health care legislation, spanning a wide spectrum of issues, including health policy, consumer protection, environmental protection and telecommunications policy. The Energy and Commerce Minority Staff released a report on Waxman’s accomplishments, such as legislation to combat tobacco use and modernize food safety programs.


GOP Senators Offer Legislative Alternative to ACA

Last week, Senators Burr (R-NC), Coburn (R-OK) and Hatch (R-UT)released a proposal they say would repeal the ACA and implement reforms they claim will lower the cost of health care. The plan focuses on a combination of expanded use of high-risk reinsurance pools and underwriting protections for continuous coverage to protect consumers against insurance discrimination for pre-existing conditions. Other components of the proposal include medical liability reform, expanded use of health savings accounts (HSAs) and capped allotments of funds to states for their Medicaid programs, which the bill’s authors claim will allow states more flexibility to address unique needs.

2. Administration

Results of CMS Review of Delivery System Reforms

On Jan. 30, CMSreleased findings on a number of its initiatives to reform the health care delivery system. These include interim financial results for select Medicare Accountable Care Organization (ACO) initiatives, an in-depth savings analysis for Pioneer ACOs, results from the Physician Group Practice demonstration and expanded participation in the Bundled Payments for Care Improvement Initiative. Savings from both the Medicare ACOs and Pioneer ACOs exceed $380 million. While evaluation of the program’s overall impact is ongoing, the interim results are currently within the range originally projected for the program’s first year. A great majority of the program’s overall net impact was projected to phase in over the program’s ensuing performance years.

OIG FY2014 Work Plan Released

The Department of Health and Human Services Office of the Inspector General (HHS-OIG) has released itFY2014 Work Plan, which outlines the agency’s current focus areas and states the primary objectives of each project it conducts. Among the issues OIG is monitoring are hospital inpatient admission criteria, competitive bidding post-award audits and questionable billing practices among ambulatory service providers.

CMS Exercises Moratorium Authority for Home Health Agency Enrollment

On Jan. 30, CMS announcednew temporary moratoria on the enrollment of home health agencies in four metropolitan areas (Fort Lauderdale, Detroit, Dallas and Houston). This new temporary moratoria also includes the enrollment of new ground ambulance suppliers in the Greater Philadelphia area. In addition, CMS is extending for six months the current enrollment moratoria of home health agencies in Chicago and Miami and for Houston-area ground ambulance supplier enrollments in its Medicare, Medicaid and Children’s Health Insurance Program (CHIP) operations. This is the second wave of the agency’s use of this powerful tool to fight fraud and safeguard taxpayer dollars while ensuring patient access to care is not interrupted. CMS Administrator Marilyn Tavenner said this action demonstrates how the Affordable Care Act continues to protect taxpayer dollars by moving the agency beyond “pay and chase” to preventing fraud in areas of known risk. In July 2013, CMS’s initial use of the temporary enrollment moratoria authority focused on three fraud “hot spot” metropolitan areas.

3. State Activities

Hawaii Legislators Assemble Package of Bills to Rescue Health Connector

According to state lawmakers, at least seven pieces of legislation aimed at assisting the state’s troubled health insurance exchange, the Hawaii Health Connector, have been introduced, with two such bills coming from the leaders of key health and commerce committees. One bill would make the Hawaii Health Connector a state entity, and another would change the composition of the board that runs the Health Connector.

Pennsylvania Gov. Corbett Extends ACA Medicaid Transition Deadline

Under a deal reached between HHS and Republican Pennsylvania Gov. Corbett, approximately 30,000 Pennsylvania families will have the option to keep their CHIP coverage until their next scheduled renewal, but they must still be Medicaid-enrolled by 2015. The agreement comes after months of negotiating over a provision in the ACA mandating all children in families between 100 and 133 percent of the federal poverty level be enrolled under Medicaid. Corbett had originally asked HHS to waive the requirement for Pennsylvania, but his administration has said it will transition CHIP enrollees between 100 and 133 percent of the federal poverty level to the state’s Medicaid program next year. The ACA provision took effect Jan. 1, but CMS gave states some leeway for the transition.

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.

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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