Washington Healthcare Update

February 24, 2014

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1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

Congressional Budget Office (CBO)

Government Accountability Office (GAO)

1. Congress


Upcoming Energy and Commerce Hearing Explores Proposed Part D Changes

On Feb. 26, the Energy and Commerce Subcommittee on Health will hold a hearing entitled “Messing with Success: How CMS’ Attack on the Part D Program Will Increase Costs and Reduce Choices for Seniors.” The hearing will likely focus onrecent changes proposed by HHS, which Part D architects Energy and Commerce Chairman Upton (R-MI), Ways and Means Chairman Camp (R-MI) and Senate Finance Committee Ranking Member Hatch (R-UT) claim, in a letter to HHS Secretary Sebelius, will “fundamentally undermine the program.” For more information, or to view the hearing, please visitenergycommerce.house.gov.

Oversight Subcommittee to Examine Illicit Suppliers of Rx Drugs

On Feb. 27, the Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing entitled “Counterfeit Drugs: Fighting Illegal Supply Chains.” Witnesses to be announced. For more information, or to view the hearing, please visitenergycommerce.house.gov.


Upcoming HELP Committee Hearing on Mental Health Treatment Options

On Feb. 25, the HELP Committee will hold a hearing entitled “Examining Mental Health: Treatment Options and Trends.” The hearing will take place at 10 a.m. in 430 Dirksen Senate Office Building.


William O. Cooper, M.D., M.P.H.
Professor of Pediatrics
Vanderbilt University Medical School

Benjamin S. Fernandez, M.S. Ed.
School Psychologist
Loudoun County Public Schools, Ashburn, VA

John K. Arch, FACHE
Executive Vice President of Health Care and Director
Boys Town National Research Hospital and Clinics

Tiffany Martinez
University of Southern Maine

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

2. Administration

Medicare Suspending RAC Document Requests Pending New Contracts

The Centers for Medicare and Medicaid Services announced on Feb. 18 that Feb. 21 would be the final day for recovery account contractors (RAC) to send additional documentation requests for claims reviews until the agency finalizes its procurement process for new RAC contracts. This administrative hold allows CMS to finish its current RAC contracts and encourages current RACS to complete their outstanding claims reviews. CMS also said the suspension would help efforts to improve the RAC program by “reviewing the Addition Documentation Request (ADR) limits, timeframes for review, and communications between Recovery Auditors and providers.” Also released in the announcement were some changes to the RAC program to be instituted with new contracts, which are expected to run from 2014 until 2018. One of the most important rule changes requires that RACS wait 30 days after making a claims determination before sending the claim to the Medicare Administrative Contractors (MACs), which gives providers the opportunity to choose between starting a discussion or an appeal. RAC contracts were supposed to expire in February; however in January CMS extended contracts for several months.

Proposed Medicare Advantage Rates for 2015 Include Sizable Reductions

On Feb. 21,CMS announced planned changes in the Medicare Advantage (MA) capitation rate methodology and risk adjustment methodology applied under Part C of the Act for CY 2015. The announcement also contained preliminary estimates of the national per capita MA growth percentage and other MA payment methodology changes for CY 2015, changes in payment methodology for CY 2015 for Part D benefits, and annual adjustments for CY 2015 to the Medicare Part D benefit parameters for the defined standard benefit. For 2015, CMS will announce the MA capitation rates on the first Monday in April 2014, in accordance with the timetable established in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).

3. State Activities

Pennsylvania Files Medicaid Expansion Waiver Application

Pennsylvania Governor Corbett hasofficially filed a waiver application for his state’s Medicaid program, asking permission to expand the program as allowed under the ACA by using federal dollars to purchase private, subsidized coverage for as many as 520,000 adults. It also includes cost-sharing and job-search requirements. Some Democratic state legislators have opposed Corbett’s plan, asking the governor to instead expand Medicaid in a wholly public fashion, as envisioned by the authors of the ACA. According to Corbett’s administration, the plan, called the Healthy Pennsylvania Plan, would cover 500,000 state residents.

Arkansas House Struggles with Privatized Medicaid Expansion Plan

The Arkansas House failed four times last week to pass the state’s private-sector version of Medicaid expansion, which is broadly supported by Republicans, as well as Democratic Gov. Beebe. The state Senate hasapproved the plan, but the House has been unable to muster the three-fourths vote necessary to pass spending measures. Arkansas’s private option would accept Obamacare’s Medicaid expansion funding but use the funds to buy private insurance for the eligible population. House Speaker Davy Carter has indicated he intends to continue calling for votes on the bill until he secures its passage.

4. Regulations Open for Comment

FDA Public Docket for Interoperable Rx Tracking System

FDA has established a public docket to receive information and comments onstandards for the interoperable exchange of information associated with transactions involving human prescription drugs in a finished dosage form (prescription drugs) to comply with new requirements in the Drug Supply Chain Security Act (DSCSA). FDA is seeking information from drug manufacturers, repackagers, wholesale distributors, dispensers (primarily pharmacies) and other drug supply chain stakeholders and interested parties, including standards organizations, State and Federal agencies, and solution providers. In particular, stakeholders and other interested parties are requested to comment about the interoperable exchange of transaction information, transaction history and transaction statements, in paper or electronic format, for each transfer of product in which a change of ownership occurs. This action is related to FDA’s implementation of the DSCSA. Comments are due April 21, 2014.

IRS, HHS, DOL: Guidance Issued with Final Proposed Rules on 90-Day Waiting Periods Under ACA

On Feb. 20, the Internal Revenue Service (IRS), Department of Health and Human Services (HHS) and Department of Labor (DOL) released their final proposed rule clarifying the relationship between a plan’s eligibility criteria and the 90-day waiting period limitation. In order to be in compliance with the Affordable Care Act (ACA), in the rule, insurers offering group health insurance coverage cannot institute a waiting period that surpasses 90 days. The final rule, which goes into effect on April 25, applies to plan years starting Jan. 1, 2015, or after. “This is a common sense measure that helps workers access employer-sponsored health insurance while providing employers flexibility,” said DOL’s Assistant Secretary of Employee Benefits Security Administration Phyllis C. Borzi. Also of note, the rule limits the maximum allowed length for the employment-based orientation period to no more than one month. Comments on the proposed rules are due by April 25, and the rule is expected to be published in the Federal Register on Feb. 24.

Children’s Hospital Graduate Medical Education (CHGME) Information Collection

The Health Resources and Services Administration (HRSA) hasannounced plans to submit an Information Collection Request (ICR) to the Office of Management and Budget (OMB) in which data will be collected on the number of full-time equivalent residents in applicant children’s hospitals’ training programs to determine the amount of direct and indirect medical education payments to be distributed to participating children’s hospitals. Assessment of the hospital data ensures that appropriate CMS regulations and Children’s Hospitals Graduate Medical Education (CHGME) program guidelines are followed in determining which residents are eligible to be claimed for funding. The audit results impact final payments made by the CHGME Payment Program to all eligible children’s hospitals. Indirect medical education payments will also be derived from a formula that requires the reporting of discharges, beds and case mix index information from participating children’s hospitals. The CHGME Payment Program was enacted to provide federal support for graduate medical education (GME) to freestanding children’s hospitals. This program attempts to provide support for GME comparable to the level of Medicare GME support received by other, non-children’s hospitals. Comments are due April 11, 2014.

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.

5. Reports


Federal Minimum Wage Hike Would Boost Worker Income, But Cost Jobs

The Congressional Budget Officereleased a report on Feb. 18 on the federal minimum wage increase. The report found that raising the federal minimum wage would increase earnings for “most” of the 16.5 million low-wage workers, but also cause 500,000 employees to lose their jobs. The CBO also found that the increase in higher revenues from workers seeing higher earnings and a reduction of dependence on government services would be mostly offset by declining tax revenue and increased demand for government benefits from workers who lose their jobs because of the wage increases. Proponents argue that the job loss is not inevitable and the benefits of the increase, such as moving 900,000 people above the poverty threshold, are significant. Meanwhile, opponents argue that the legislation, sponsored by Senator Tom Harkin (D-IA), Chairman of the Senate Committee on Health, Education, Labor, and Pensions, which would increase federal minimum wage to $10.10 an hour, is a job killer. The Senate is expected to vote on the legislation in early March. Read the full CBO report here.


Medicaid: Demographics and Service Usage of Certain High-Expenditure Beneficiaries

The GAO conducted a study on high-expenditure Medicaid-only beneficiaries to determine their key characteristics, what states spend on them and the service usage compared with all other Medicaid-only beneficiaries. Residing in a long-term care facility, having HIV or AIDS, having a disability, and/or being a mother of an infant were the top characteristics that increased the probability of being a high-expenditure Medicaid-only beneficiary. In addition, the report found that states spend nearly a third of all Medicaid expenditures on the most expensive Medicaid-only beneficiaries, who compose only 4.3 percent of total Medicaid beneficiaries. As for service usage, hospital services and long-term services and supports in non-institutional and institutional settings composed nearly 65 percent of total expenditures for this high-expenditure population. GAO hopes understanding the demographics and service usage will help Medicaid enhance efforts to manage expenditures.

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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