Washington Healthcare Update

April 14, 2014

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1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


House-Passed Budget Includes Major Revisions to Medicare, Medicaid

On April 10, the House passed a budget proposal for FY 2015 by a vote of 219-205. The proposal would reduce the nation’s deficit by $5.1 trillion over 10 years. It would create a voluntary private plan option for Medicare that would begin in 2024 and allow seniors a choice of private plans with traditional coverage or the traditional fee-for-service Medicare program. Another major health-related provision is that the proposal would shift Medicaid’s current federal matching payments to states into a block grant program. Opponents say this would shift too much uncertainty on the states. The proposed budget would also repeal the ACA and require means-testing for Medicare premiums paid by higher-income beneficiaries. No Democrats voted for the measure, and it is unlikely to advance in the Senate.

Energy and Commerce Hearing Examines FDA, DEA Drug Oversight

On April 7, 2014, the House Energy and Commerce Subcommittee on Health held a hearing entitled “Improving Predictability and Transparency in Drug Enforcement Administration (DEA) and Food and Drug Administration (FDA) Regulation.” The hearing focused on specific legislation aimed to address issues related to FDA and DEA regulation of drugs and consumer products. Specifically:

  • H.R. 4299, the “Improving Regulatory Transparency for New Medical Therapies Act”
    Chairman Pitts and Ranking Member Pallone introduced H.R. 4299 on March 26, 2014. Currently, new drug products containing substances that previously have not been marketed in the United States and that have abuse potential must be scheduled under the Controlled Substances Act (CSA) by the Drug Enforcement Agency (DEA) prior to being marketed. Under the CSA, there is no deadline for the DEA to make a scheduling decision after receiving a recommendation from the Food and Drug Administration (FDA), and the delays in DEA’s decisions have increased significantly. H.R. 4299 would rectify that problem by ensuring DEA acts in a timely manner.
  • H.R. 4069, the “Ensuring Patient Access and Effective Drug Enforcement Act”
    H.R. 4069 was introduced by Representative Marino and Representative Blackburn on March 20, 2014. The bill would help prevent prescription drug abuse while ensuring that patients have access to needed medications by fostering better collaboration between drug manufacturers, wholesalers, pharmacies, DEA and FDA.
  • H.R. 4250, the “Sunscreen Innovation Act”
    Representative Whitfield and Representative Dingell introduced H.R. 4250 on March 13, 2014, as a solution to the current backlog of sunscreen ingredients currently pending at FDA. FDA has not approved a new sunscreen ingredient since the late 1990s, and this bill would reform the process to ensure that new sunscreen ingredients are reviewed in a timely manner.


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

Mr. Joseph T. Rannazzisi
Deputy Assistant Administrator
Office of Diversion Control
Drug Enforcement Administration

Panel II
Dr. Nathan B. Fountain
Medical Advisory Board
Epilepsy Foundation

Mr. John M. Gray
President and CEO
Healthcare Distribution Management Association

Mr. D. Linden Barber
Partner and Director
DEA Compliance Operations
Quarles & Brady

Ms. Wendy K.D. Selig
President and CEO
Melanoma Research Alliance

Mr. Scott Faber
Vice President, Government Affairs
Environmental Working Group

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

Ways and Means Hearing Examines Final ACA Employer Mandate Requirements

On April 8, 2014, the House Committee on Ways and Means Subcommittee on Health held a hearing to explore the Treasury Department’s final employer mandate and employer reporting requirements regulations. The hearing focused on the administration’s delays and other changes made to the statutory guidelines and deadlines concerning the employer mandate and reporting requirements.


Mr. J. Mark Iwry
Sr. Advisor to the Secretary and Deputy Assistant Secretary for Retirement and Health Policy
United States Department of the Treasury

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


Finance Committee Hearing on FY 2015 HHS Budget Request

On April 10, 2014, the Senate Finance Committee held a hearing on 2015 budget proposals for HHS. HHS Secretary Sebelius, who recently announced her resignation as head of the department, testified that the budget request invests in areas that are critical to long-term prosperity, and also helps address the deficit with legislative proposals that would save an estimated net $356 billion over 10 years. The budget request totals $1.0 trillion in outlays and proposes $77.1 billion in discretionary budget authority, a reduction of $1.3 billion from FY 2014 enacted.

The Honorable Kathleen Sebelius
United States Department of Health and Human Services (HHS)

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

2. Administration

CMS Reports Increase in Actual Enrollments in Medicaid, CHIP

During the first five months (October through February) of open enrollment, the number of people enrolled in Medicaid or the Children’s Health Insurance Program (CHIP) increased by three million. For Medicaid, the increase in enrollment was significantly higher in states that have expanded Medicaid. Those states averaged an 8.3 percent increase in enrollment compared to 1.6 percent in non-expansion states. Of the states expanding Medicaid, Oregon and West Virginia were the states with the largest increase in enrollment, 34.8 percent and 33.5 percent respectively. Health and Human Services Secretary Kathleen Sebelius said HHS expects the enrollment in March to be even higher.

Announcement of Calendar Year (CY) 2015 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter

On April 7, 2014, CMS announced the annual Medicare Advantage (MA) capitation rate for each MA payment area for CY 2015 and the risk and other factors to be used in adjusting such rates. The capitation rate tables for 2015 are posted on theCenters for Medicare & Medicaid Services (CMS) website under Ratebooks and Supporting Data. The statutory component of the regional benchmarks, transitional phase-in periods for the Affordable Care Act rates, qualifying counties and each county’s applicable percentage are also posted at this website.

ACA Enrollment Reaches 7.5 Million

Since the Obama Administration extended the enrollment deadline for those who tried to sign up before the March 31 deadline, about 400,000 people have signed up for private health insurance under the Affordable Care Act. This brings the total number of enrollees to 7.5 million. Individuals who tried to sign up before March 31 have until April 15 to complete their applications.

HHS Secretary Sebelius Resigns

Last week, HHS Secretary Sebelius announced she will resign from her post just days after the ACA reached its first-year enrollment goal of seven million enrollees in exchange-based health insurance plans. She spent five years running the Health and Human Services Department, during the critical implementation of President Obama’s signature health law. Sylvia Mathews Burwell, director of the Office of Management and Budget, will be nominated to succeed Sebelius. Despite initial glitches in the ACA’s rollout, in total, 7.5 million Americans signed up for health insurance coverage through the exchanges, half a million more than some early optimistic estimates.

Medicare Data on Physician Payments Released to Public

According to payment data released by the government on April 9, Medicare paid almost 4,000 doctors and medical professionals more than $1 million each in 2012. Seven doctors received more than $10 million. Eye doctors were among the highest compensated professionals, likely due to new treatments for macular degeneration, the leading cause of blindness in the senior citizens. Internal medicine doctors and cardiologists are also at the top of the list. California and Florida lead the states in receiving the largest payments, with each state getting more than $7 billion from Medicare. Payment records to doctors had not been released to the public for over three decades, until a federal judge lifted the injunction on the data following a lawsuit by Dow Jones & Co. Proponents of the data release hope this information will shed light on fraud and waste by doctors. The American Medical Association is one of the leading opponents, arguing misinterpretation of the data could ruin doctors’ careers.

Bill Enacted to Reauthorize Funds for Children’s Hospital GME Program

On April 7, President Obama signed into law S. 1557, the Children’s Hospital GME Support Reauthorization Act of 2013. The bill reauthorizes the children’s hospital graduate medical education (GME) program and provides $300 million in funding through 2018. The Health Resources and Services Administration (HRSA) at the HHS oversees the program. The reauthorization allows HRSA to expand the program by making special payments to certain hospitals that are currently excluded from the Medicare inpatient hospital prospective payment system and whose inpatients are predominantly under 18 years old. The GME program operates at 55 hospitals, and the recipient hospitals train 49 percent of all pediatricians and 51 percent of all pediatric specialists, according to the Children’s Hospital Association (CHA). Mark Wietecha, President and CEO of CHA, said the reauthorization “represents a commitment to ensure that children throughout the nation have access to the high-quality care they need and deserve.”

3. State Activities

Maine Gov. LePage Again Vetoes Medicaid Expansion Bill

On April 10, Maine Gov. Paul LePage againvetoed legislation that would expand Medicaid, as provided for in the ACA. LePage has previously vetoed two similar efforts backed by the state’s Democratic-controlled legislature. Consistent with the prior two attempts, the legislature was unable to produce the two-thirds vote to override LePage’s veto. LePage has argued that expansion is unaffordable as well as unfair to disabled Mainers currently on a long waiting list for coverage. Expanding the program is estimated to increase Medicaid enrollment by roughly 70,000.

4. Regulations Open for Comment

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.

5. Reports

Medicare: Second Year Update for CMS’s Durable Medical Equipment Competitive Bidding Program Round 1 Rebid

According to a recently releasedreport by GAO studying the impact of the Medicare competitive bidding program (CBP) for durable medical equipment (DME), the round 1 rebid’s first two years achieved Medicare cost savings of about $400 million as estimated by CMS, and did not appear to have adversely affected beneficiary access to CBP-covered items. However, with CBP’s national mail-order diabetic testing supplies program and expansion into an additional 100 bidding areas in July 2013, it will be important for CMS to continue its efforts to monitor the effects of the CBP. In addition, the total number of DME suppliers and Medicare-allowed charges decreased more in the CBP areas than in the comparator areas. For example, the number of suppliers in the CBP areas with Medicare-allowed charges of $2,500 or more decreased, on average, 27 percent, whereas in the comparator areas, supplier numbers decreased by 5 percent.

HHS-OIG: Limited Compliance with Medicare’s Home Health Face-to-Face Documentation Requirements

According the HHS-OIG, for 32 percent of home health claims that required face-to-face encounters, available documentation did not meet requirements under the program necessary to justify payment for services rendered, resulting in $2 billion in payments that should not have been made. Furthermore, physicians inconsistently completed the narrative portion of the face-to-face documentation. Some face-to-face documents provide information that, although not required by Medicare, could be useful, such as a printed name for the physician and a list of the home health services needed. CMS oversight of the face-to-face requirement is minimal. The OIG recommends that CMS (1) consider requiring a standardized form to ensure that physicians include all elements required for the face-to-face documentation, (2) develop a specific strategy to communicate directly with physicians about the face-to-face requirement and (3) develop other oversight mechanisms for the face-to-face requirement. CMS concurred with all three of these recommendations.

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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