Washington Healthcare Update

March 10, 2014

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1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

Government Accountability Office (GAO)

1. Congress


Energy and Commerce Hearing on Medicare Program Management

On March 4, the Energy and Commerce Health Subcommittee held a hearing entitled “Keeping the Promise: How Better Managing Medicare Can Protect Seniors,” in which members of the committee heard testimony from officials with GAO and the HHS-OIG regarding the challenges facing officials responsible for administering and modernizing the Medicare program. Witnesses described the existing activities being conducted by CMS in contracting with organizations to process and pay claims in the original Medicare fee-for-service (FFS) system. CMS also contracts with private organizations to provide covered health services under the Medicare Advantage (MA) program, and outpatient prescription drug coverage under Medicare Part D.


Kathleen King
Director, Health Care
Government Accountability Office

James Cosgrove
Director, Health Care
Government Accountability Office

Robert Vito
Regional Inspector General
Department of Health and Human Services, Office of Inspector General

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

Upcoming Ways and Means Hearing to Examine President’s FY2015 Budget

Ways and Means Committee Chairman Camp (R-MI) has announced his committee will hold a hearing on Wednesday, March 12, to examine President Obama’s budget proposals for the Department of Health and Human Services (HHS) for fiscal year 2015. The hearing will take place in 1100 Longworth House Office Building, at 10 a.m. The sole witness will be the Honorable Kathleen Sebelius, Secretary, U.S. Department of Health and Human Services. For more information, or to view the hearing, please visitwaysandmeans.house.gov.


Finance Committee Hearing on President’s FY2015 Budget

On March 5, the Senate Finance Committee held a hearing on the President’s proposed fiscal year 2015 budget. The sole witness for the hearing, Treasury Secretary Jacob Lew, testified that under the FY2015 Budget Request, the deficit will decline to less than 2 percent of GDP by 2024. In addition, debt held by the public as a share of the economy will stabilize in FY2015 and decline steadily thereafter until the end of the forecast horizon to 69 percent of GDP in 2024.


The Honorable Jacob J. Lew
United States Department of the Treasury

For more information or to view the hearing, please visitwww.finance.senate.gov.

Budget Committee Hearing on President’s FY2015 Budget

On March 5, the Senate Budget Committee held a hearing on the President’s 2015 budget. U.S. Office of Management and Budget Director Sylvia Mathews Burwell testified about specific programs within the budget, including a four-year, $302 billion surface transportation reauthorization proposal paid for with the transition revenue from business tax reform, a proposal to strengthen manufacturing and a proposal to maintain U.S. leadership in research by making the R&D tax credit permanent and continuing to support groundbreaking basic and applied research.


Sylvia Mathews Burwell
Office of Management and Budget

For more information, or to view the hearing, please visitwww.budget.senate.gov.

Upcoming HELP Subcommittee Hearing Explores International Health Systems

The Senate HELP Subcommittee on Primary Health and Aging will hold a hearing entitled “Access and Cost: What the U.S. Can Learn from Other Countries.” The hearing will take place at 10 a.m. in 430 Dirksen Senate Office Building.


Tsung-Mei Cheng, LL.B., M.A.
Health Policy Research Analyst
Woodrow Wilson School of Public and International Affairs, Princeton University

Ching-Chuan Yeh, M.D.
Former Minister of Health for Taiwan
Professor, School of Public Health, College of Medicine
Tzu-Chi University

Sally C. Pipes
President and CEO
Pacific Research Institute

Danielle Martin, M.D., M.P.P.
Vice President, Medical Affairs & Health System Solutions
Women’s College Hospital

Jakob Kjellberg, M.Sc.
Program Director for Health
KORA-Danish Institute for Local and Regional Government Research

David Hogberg, Ph.D.
Health Care Policy Analyst
National Center for Public Policy Research

Victor G. Rodwin, Ph.D., M.P.H.
Professor of Health Policy and Management
Robert F. Wagner School of Public Service

For more information, or to view the hearing, please visitwww.help.senate.gov.

Upcoming HELP Committee Hearing on FDA Priorities

Senate HELP Committee Chairman Harkin (D-IA) has announced his committee will hold a hearing March 13 entitled “Protecting the Public Health: Examining FDA’s Initiatives and Priorities.” Witnesses have not been announced. For more information, please visitwww.help.senate.gov.

2. Administration

Administration Announces Canceled Health Plans Given 2-Year Reprieve

In a March 5announcement by Gary Cohen, Director, Center for Consumer Information and Insurance Oversight at the Centers for Medicare and Medicaid Services (CMS), the Obama Administration revealed that it would continue to allow insurers to sell health care plans that do not meet the minimum coverage requirements defined within the Affordable Care Act (ACA). Under the new policy, some people who would have previously received cancellation notices could renew their plans until 2016, extending their coverage to 2017. The decision, however, could be limited in impact as the extension is optional for both states’ board of insurance commissioners and the health insurers themselves. In a statement explaining the extension, CMS officials said, “The goal is to implement the Affordable Care Act in a common-sense way and to try to provide a smooth transition for consumers and employers.” CBO estimates that 1.5 million Americans are enrolled in pre-2014 coverage plans, either in the individual or small group markets; it is not known, however, how many could be affected by this change in policy through 2016.

ACA Exchange Chief to Resign March 31 Following End of Open Enrollment

In an email sent to CMS staff March 5, Marilyn Tavenner, the Administrator of the Centers for Medicare and Medicaid Services (CMS), announced that Gary Cohen, Director of the Center for Consumer Information and Insurance Oversight at CMS would be leaving his position at the end of the month. Cohen is the official in charge of the federal Obamacare exchanges, who oversaw the insurance marketplaces through their troubled rollout. In her memo to staff, Administrator Tavenner said, “Under his leadership, CIIO established the rules which have made the promise of the Affordable Care Act a reality for millions of Americans, who now can have the security of health coverage without regard to their previous health condition, and can know that their insurance will cover all the most common services they will need.” Administrator Tavenner said that CMS will conduct a nationwide search for Cohen’s replacement. In the interim, Cohen will be replaced by Dr. Mandy Cohen, who currently is in charge of consumer assistance at the insurance oversight office of the Department of Health and Human Services.

3. State Activities

Arkansas Succeeds in Fifth Attempt to Pass Medicaid Expansion Plan

Finally garnering the 75-vote threshold necessary to pass any spending legislation, the Arkansas House passed by a 76-24 vote a measure toexpand the state’s Medicaid program using federal funds to purchase private health insurance for nearly 100,000 low-income residents. Democratic Gov. Beebe is expected to sign the bill into law.

Pennsylvania Gov. Adjusts Work Requirement in Medicaid Waiver Request

In aMarch 5 letter to HHS Secretary Sebelius, Pennsylvania Gov. Corbett proposed an alternative to a controversial provision included as part of the state’s request to use federal Medicaid funds to buy private insurance for low-income residents. Under the proposal, roughly a half-million Pennsylvanians could become eligible for coverage. In his initial proposal, Gov. Corbett included a requirement that able-bodied beneficiaries without full-time work participate in an employment program as a condition of their health coverage. Corbett’s new plan involves a one-year pilot program that would be voluntary and offer reduced premiums for those who enroll.

4. Regulations Open for Comment

HHS Proposes Health Information Technology Certification Requirements

On Feb. 26,HHS published a notice of proposed rulemaking to introduce the beginning of the Office of National Coordinator for Health Information Technology’s (ONC’s) more frequent approach to health information technology certification regulations. Under this approach ONC intends to update certification criteria editions every 12 to 18 months in order to provide smaller, more incremental regulatory changes and policy proposals. The 2015 Edition EHR certification criteria proposed in this rule would be voluntary. No EHR technology developer who has certified its EHR technology to the 2014 Edition would need to recertify to the 2015 Edition in order for its customers to participate in the Medicare and Medicaid EHR Incentive Programs (EHR Incentive Programs). Furthermore, eligible professionals, eligible hospitals and critical access hospitals that participate in the EHR Incentive Programs would not need to “upgrade” to EHR technology certified to the 2015 Edition in order to have EHR technology that meets the Certified EHR Technology (CEHRT) definition. Instead, the 2015 Edition EHR certification criteria would accomplish three policy objectives: 1) They would enable a more efficient and effective response to stakeholder feedback; 2) they would incorporate “bug fixes” to improve on 2014 Edition EHR certification criteria in ways designed to make rules clearer and easier to implement; and 3) they reference newer standards and implementation specifications consistent with promoting innovation and enhancing interoperability.

Comments must be received by April 28, 2014.

CMS Seeks Comment on Expansion of Competitive Bidding Program

On Feb. 24,CMS announced that it will seek public comment as it moves toward nationwide implementation of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program. The Competitive Bidding Program, established by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Medicare Modernization Act or MMA), has saved more than $400 million for beneficiaries and taxpayers in its first two years of operation and is projected to save an additional $17.2 billion for beneficiaries and $25.8 billion for the Medicare program over the next 10 years.

Currently, competitive bidding is in effect for a national mail order program for diabetic testing supplies and for additional items in 100 areas across the country. By 2016, Medicare must implement competitive bidding or competitive bidding pricing for included items to non-competitive bidding areas. CMS is soliciting public comment on the methodology it would use to comply with the statute when using competitive bidding pricing information to adjust payment amounts in non-competitive bidding areas. In addition, CMS is requesting comments regarding ideas for potentially simplifying the payment rules and enhancing beneficiary access to items and services under the competitive bidding programs for certain durable medical equipment (DME) and enteral nutrition.

Comments are due March 28.

FDA Public Docket for Interoperable Rx Tracking System

FDA has established a public docket to receive information and comments on standards 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) has announced 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 of proposed 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.

5. Reports

Medicare: Contractors and Private Plans Play a Major Role in Administering Benefits

According to aMarch 4 report, CMS, the agency that administers Medicare, has contracted with private entities in various ways to meet beneficiary needs. From its inception, the process for selecting Medicare fee-for-service (FFS) claims administration contractors was stipulated by Congress and differed from most other federal contracts in that, among other things, the Medicare contracts were not awarded through a competitive process. The Medicare Modernization Act (MMA) repealed limitations on the types of contractors CMS could use and required that CMS use competitive procedures to select new contracting entities to process medical claims and provide incentives for contractors to provide quality services. CMS has implemented the MMA contracting reform requirements by shifting and consolidating all claims administration tasks to new entities called Medicare Administrative Contractors. CMS is currently in the process of further consolidating these contracts. The agency also uses other contractors to review claims to ensure payments are proper and to investigate potential fraud.

Electronic Health Record Programs: Participation Has Increased, but Action Needed to Achieve Goals, Including Improved Quality of Care

According to aGAO report released March 6, based on the number of providers awarded incentive payments, participation in the Department of Health and Human Services’ (HHS) Medicare and Medicaid Electronic Health Record (EHR) programs increased substantially from their first year in 2011 to 2012. For hospitals, participation increased from 45 percent of those eligible for 2011 to 64 percent of those eligible for 2012. For professionals, such as physicians, participation increased from 21 percent of those eligible for 2011 to 48 percent of those eligible for 2012. While increases occurred, a substantial percentage of providers that participated in 2011 did not participate in 2012. In addition, the lack of a comprehensive strategy limits HHS’s ability to ensure the department can reliably use the clinical quality measures (CQM) collected in certified EHRs for quality measurement activities.

VA Health Care: Actions Needed to Improve Administration and Oversight of Veterans’ Millennium Act Emergency Care Benefit

The Veterans Millennium Health Care and Benefits Act (Millennium Act) authorizes the Department of Veterans Affairs (VA) to cover emergency care for conditions not related to veterans’ service-connected disabilities when veterans who have no other health plan coverage receive care at non-VA providers. However, GAO identified a number of instances where VA staff who processed claims did not comply with applicable requirements of the Millennium Act, its implementing regulations or VA policies when they denied the claims. Specifically, at the four VA facilities included in this review, GAO found 66 instances of noncompliance among the 128 denied claims reviewed, which led some claims to be inappropriately denied. VA facilities subsequently reconsidered and paid 25 of these claims. GAO also found that VA facilities may not be notifying veterans as required that their Millennium Act claims have been denied. In addition, 83 claims out of 128 that GAO reviewed lacked documentation that the veteran was notified of the denial or of his or her appeal rights.

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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