Washington Healthcare Update

April 7, 2014

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House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


Children’s Hospital GME Bill Cleared for President

On April 1, the Houseapproved legislation (S. 1577) to reauthorize the Children’s Hospital Graduate Medical Education Program, by voice vote. The measure would reauthorize appropriations through FY2018 for payments to children’s hospitals associated with operating approved graduate medical residency training programs. In addition, the bill would establish a quality bonus system for distribution of excess payments to such hospitals, which may include a focus on quality measurement and improvement, interpersonal and communications skills, delivering patient-centered care and practicing in integrated health systems. S. 1557 was approved by the Senate late last year, and now awaits the president’s signature.

House Bill Would Amend ACA’s “Full-Time Employee” Definition

On April 3, the House passed legislation that would amend the current 30 hour-per-week definition of a full-time employee, as established by the ACA for purposes of determining for which employees an employer must provide health insurance. Under the bill (H.R. 2575), only those employees who work an average of 40 hours per week would count as full-time for purposes of the mandate requiring employers to provide health care coverage for their employees.

Ryan Releases FY2015 Budget Proposal

On April 1, House Budget Committee Chairman Ryan (R-WI) released hisFY2015 budget outline, in which he proposes to balance the federal budget in the next 10 years by cutting $5.1 trillion in spending. Ryan’s “Path to Prosperity,” as he has come to label the proposal, would repeal the ACA, which Ryan claims would allow for the enactment of patient-centered health reform. In addition, the budget calls for reforms to safety net programs, most notably transitioning Medicare to a “premium-support” system for individuals age 55 and over, and moving Medicaid to a block grant formula based on a state’s low-income population.

Energy and Commerce Hearing Explores FDA’s Generic Labeling Proposal

On April 1, the Energy and Commerce Health Subcommittee, led by Chairman Pitts (R-PA), held a hearing in which members of the subcommittee heard testimony regarding a recent proposal by the FDA to allow manufacturers of generic drugs to make changes to their product’s safety-related labeling, when under current regulations, a generic can change labeling only when the branded version of that drug does so. According to FDA, the change will help expedite getting newly acquired safety information about drugs to consumers. However, Chairman Pitts expressed his concerns that the proposed rule undermines the Hatch-Waxman Act’s “sameness” requirement, and could result in unnecessary confusion and litigation.


Panel I
Janet Woodcock, M.D.
Center for Drug Evaluation and Research
U.S. Food and Drug Administration

Panel II
Michael D. Shumsky
Kirkland & Ellis LLP

Ralph G. Neas
President and CEO
Generic Pharmaceutical Association

Allison M. Zieve
General Counsel
Public Citizen

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

Health Subcommittee Examines Ongoing Mental Health

On April 3, the Energy and Commerce Health Subcommittee held a hearing focused on H.R. 3717, the “Helping Families in Mental Health Crisis Act of 2013.” The bill would establish a new position, the Assistant Secretary for Mental Health at the Department of Health and Human Services, to oversee and coordinate the mental health work across the department, including the work of Substance Abuse and Mental Health Services Administration. The bill also proposes changes to privacy regulations that would allow parents and caregivers to access health and educational information when there is a threat of harm.


Michael Welner, M.D.
Founder and Chairman
The Forensic Panel

Sylvia Thompson
Patient Advocate, President
National Alliance on Mental Illness
Westside Los Angeles

Nancy Jensen
Person with Lived Experience
Wichita, KS

Dr. David L. Shern
Interim President and CEO
Mental Health America
Alexandria, VA

Mary T. Zdanowicz
North Easham, MA

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

Oversight Committee Examines State Exchange Rollout Troubles

On April 3, the House Oversight Subcommittee on Economic Growth, Job Creation and Regulatory Affairs held a hearing focused on recent challenges encountered by the heads of five particularly troubled state-based health insurance exchanges.


Mr. Tom Matsuda
Interim Executive Director
Hawaii Health Insurance Exchange

Joshua Sharfstein, M.D.
Chairman, Maryland Health Benefit Exchange Board
Maryland Health Insurance Exchange

Ms. Jean Yang
Executive Director
Massachusetts Health Insurance Exchange

Mr. Scott Leitz
Interim Chief Executive Officer
Minnesota Health Insurance Exchange

Mr. Greg Van Pelt
Advisor to the Governor
Oregon Health Insurance Exchange

Mr. Peter Lee
Executive Director
California Health Insurance Exchange

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


One-Year SGR Patch Enacted Despite Industry Efforts at Long-Term Fix

On March 31, theSenate passed a bill (H.R. 4302) to extend current Medicare physician reimbursement rates for one year, staving off a scheduled 24 percent cut called for under the sustainable growth rate (SGR) formula. Many stakeholders opposed the measure, holding out hope that a permanent fix being negotiated by Senate Finance Chairman Wyden (D-OR) would emerge. However, consensus on a method of offsetting the cost of such a fix could not be found. The measure includes a 0.5 percent pay increase for the rest of this year along with several Medicare extenders. The legislation also includes implementation delays for the CMS “two-midnight” policy and the ICD-10 diagnostic coding system. The president enacted the bill on April 1, one day after Senate passage. The House had previously approved the bill by voice vote.

Senate Finance Marks Up “Tax Extenders” Legislation

Boasting bipartisan compromise, Senate Finance Committee Chairman Ron Wyden (D-OR) last week oversaw hisfirst markup of legislation since taking over the chairmanship in February. The panel restored almost all of the 55 expired tax breaks known as “extenders” for two years, applying retroactively to the beginning of 2014 through the end of the 2015 tax year. Finance Committee members voted to adopt seven provisions in addition to those contained in a modified version of the “Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act.”

2. Administration

Draft Report On Risk-Based Approach to HIT Regulation

On April 3, HHS released adraft report that includes a proposed strategy and recommendations for a health information technology (health IT) framework, which is designed to promote product innovation while maintaining appropriate patient protections and avoiding regulatory duplication. The congressionally mandated report was developed in consultation with health IT experts and consumer representatives and proposes to clarify oversight of health IT products based on a product’s function and the potential risk to patients who use it. The report was developed by the U.S. Food and Drug Administration (FDA) in consultation with two other federal agencies that oversee health IT: HHS’s Office of the National Coordinator for Health IT (ONC) and the Federal Communications Commission (FCC). The FDA seeks public comment on the draft document. 

CMS to Release Specific Medicare Physician Payment Data

In response to a May 2013 court order lifting a 33-year-old injunction barring the government from giving the public access to a confidential database of Medicare insurance claims,CMS announced it will make available data on more than $77 billion in Medicare payments to more than 880,000 providers for about 6,000 different procedures and services. The database, known as the Carrier Standard Analytic File, contains information on physicians and other health care providers participating in Medicare who are paid on a fee-for-service basis. The data will include information on payments made under Medicare Part B in 2012 to all providers who participated, including physicians’ names and addresses, summaries of the services provided and the amount providers were paid for the services.

3. State Activities

Maryland Health Exchange Audit Based on Limited Information

According tolocal reports, Maryland auditors who examined the state’s troubled health exchange website were given redacted documents to review, leading to a report that is limited and provides an incomplete understanding of the development of the site. Specifically, Thomas Barnickel, the state’s legislative auditor, wrote that about 26 percent of the documents were redacted. Procurement documents were “heavily redacted,” he wrote in a letter accompanying the report. However, Dr. Joshua Sharfstein, the state’s health secretary, claims his office provided the information that was requested, and the redactions were developed in consultation with the attorney general’s office.

4. Regulations Open for Comment

NEW – FDA Guidance With Comment Period for Human Compounding Outsourcing Facilities

On April 1, the Food and Drug Administration (FDA) announced the availability of a guidance for industry entitled “Fees for Human Drug Compounding Outsourcing Facilities Under Sections 503B and 744K of the FD&C Act.” The guidance is intended for entities that compound human drugs and elect to register as outsourcing facilities (outsourcing facility) under Section 503B of the Federal Food, Drug, and Cosmetic Act (FD&C Act), as added by the Drug Quality and Security Act (DQSA). Entities that elect to register as outsourcing facilities must pay certain fees to be considered outsourcing facilities. This guidance describes the annual establishment fee, the reinspection fee, annual adjustments to fees required by law, how to submit payment, the effect of failure to pay fees and how to qualify as a small business to obtain a reduction of the annual establishment fee. Comments on the draft guidance must be submitted by June 2, 2014.

FDA Proposed Rule on Medical Device Classification Procedures

On March 25, the Food and Drug Administration (FDA) issued a proposed rule to amend its regulations governing classification and reclassification of medical devices to conform to the applicable provisions in the Food and Drug Administration Safety and Innovation Act (FDASIA). FDA is also proposing changes unrelated to the new FDASIA requirements to update its regulations governing classification and reclassification of medical devices. FDA is taking this action to codify the procedures and criteria that apply to classification and reclassification of medical devices and to provide for classification of devices in the lowest regulatory class consistent with the public health and the statutory scheme for device regulation. Comments are due June 23, 2014.

Patient Protection and Affordable Care Act; Exchange and Insurance Market Standards for 2015 and Beyond

On March 14,CMS issued a proposed rule to address various requirements applicable to health insurance issuers, Affordable Insurance Exchanges (“Exchanges”), Navigators, non-Navigator assistance personnel and other entities under the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively referred to as the Affordable Care Act). Specifically, the rule proposes standards related to product discontinuation and renewal, quality reporting, non-discrimination standards, minimum certification standards and responsibilities of qualified health plan (QHP) issuers, the Small Business Health Options Program and enforcement remedies in Federally-facilitated Exchanges. It also proposes: a modification of HHS’s allocation of reinsurance contributions collected if those contributions do not meet projections; certain changes to the ceiling on allowable administrative expenses in the risk corridors calculation; modifications to the way CMS calculates certain cost-sharing parameters, rounding those parameters down to the nearest $50 increment; certain approaches CMS is considering to index the required contribution used to determine eligibility for an exemption from the shared responsibility payment under Section CMS-9949-P 2 5000A of the Internal Revenue Code; grounds for imposing civil money penalties on persons who provide false or fraudulent information to the Exchange and on persons who improperly use or disclose information; updated standards for the consumer assistance programs; standards related to the opt-out provisions for self-funded, non-Federal governmental plans and the individual market provisions under the Health Insurance Portability and Accountability Act of 1996; standards for recognition of certain types of foreign group health coverage as minimum essential coverage; amendments to Exchange appeals standards and coverage enrollment and termination standards; and time-limited adjustments to the standards relating to the medical loss ratio program. Comments are due April 18, 2014.

Interim Final Rule – Patient Protection and Affordable Care Act; Third-Party Payment of Qualified Health Plan Premiums

On March 19,HHS issued an interim final rule requiring issuers of qualified health plans (QHPs), including stand-alone dental plans (SADPs), to accept premium and cost-sharing payments made on behalf of enrollees by the Ryan White HIV/AIDS Program, other Federal and State government programs that provide premium and cost-sharing support for specific individuals, and Indian tribes, tribal organizations and urban Indian organizations. Comments will be accepted until May 18; however, the interim final rule is effective as of March 14, 2014.

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.

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.

5. Reports

Veterans’ Health Care: Oversight of Tissue Product Safety

According to anApril 2 report from GAO, data from the Veteran’s Health Administration (VHA), within the Department of Veterans Affairs (VA), do not show evidence of VHA receiving contaminated tissue products, although, it is difficult to link adverse events in recipients to such products. In addition, VA’s National Center for Patient Safety (NCPS), which began operation in 1999, has not issued any patient safety alerts — mandates for action to address actual or potential threats to life or health — or advisories — guidance to address issues such as equipment design and product failure — related to tissue products potentially received by VA medical centers (VAMC) in the last 10 years. NCPS issues patient safety alerts and advisories for recalls that require specific clinical actions to ensure patient safety. Since NCPS began issuing and recording data on recalls in November 2008, NCPS has notified VAMCs of 13 recalls for tissue products from vendors from which VHA could have received affected products — none of these recalls have resulted in patient safety alerts or advisories. For six of the recalls, 27 VAMCs reported to NCPS that they had identified and removed the recalled products from their inventories. For the other seven recalls, none of the VAMCs had the affected tissue products in their inventories.

Medicare Payment Advisory Commission (MedPAC) April 2014 Meeting

The Medicare Payment Advisory Commission (MedPAC)held a public meeting April 3-4 to consider the results of staff research, presentations by policy experts and comments from interested parties in preparation for the panel’s June 2014 Report to Congress. The meeting was composed of six sessions: 1) Impact of home health payment rebasing on beneficiary access to and quality of care; 2) Team-based primary care; 3) Per-beneficiary payment for primary care; 4) Measuring quality of care in Medicare; 5) Beneficiary choice and decision-making; and 6) Measuring the effects of medication adherence for the Medicare population.

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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