Washington Healthcare Update

May 5, 2014

Pardon Our Dust

We recently launched this new site and are still in the process of updating some of our archived content. Some details of this article may be incomplete, links may be broken, and other elements may not display properly yet. We appreciate your patience and understanding.

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


Energy and Commerce Hearing Explores Rx Drug and Heroin Abuse

On April 29, the House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing to examine the rising rate of overdose and death attributable to prescription drugs and heroin. Almost half of drug overdose deaths in 2010 were attributed to prescription painkillers, according to the Centers for Disease Control and Prevention. But data from the National Institute on Drug Abuse also finds that heroin use has been increasing since 2007, with nearly double the number of Americans using heroin in 2012 as did in 2006.


Mr. Joseph T. Rannazzisi
Deputy Assistant Administrator
Office of Diversion Control
Drug Enforcement Agency
U.S. Department of Justice

Mr. Michael Botticelli
Acting Director
Office of National Drug Control Policy
Executive Office of the President

Dr. Daniel M. Sosin
Acting Director
National Center for Injury Prevention and Control
Centers for Disease Control and Prevention

Dr. Nora D. Volkow
National Institute on Drug Abuse
National Institutes of Health

Dr. H. Westley Clark
Center for Substance Abuse Treatment
Substance Abuse and Mental Health Services Administration

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

Health Subcommittee Explores Potential Telehealth Technology

On May 1, 2014, the House Energy and Commerce Subcommittee on Health held a hearing entitled “Telehealth to Digital Medicine: How 21st Century Technology Can Benefit Patients.” Witnesses’ testimony centered on a growing body of evidence demonstrating the capacity of telemedicine to assist in improving access to quality health care, and promoting patient-centered care at lower cost, which can contribute to stabilizing local health resources and economies. Telehealth can also help promote development of integrated care systems to assure quality, continuity of care, and safety.


Dr. Rashid Bashshur
Executive Director for eHealth, University of Michigan Health System
Professor Emeritus, University of Michigan School of Public Health

Dr. Ateev Mehrotra
Policy Analyst, Rand Corporation
Associate Professor of Health Care Policy and Medicine, Harvard Medical School

Dr. Tom Beeman
President and Chief Executive Officer
Lancaster General Health

Gary Chard
Delaware State Director
Parkinson’s Action Network

Kofi Jones
Vice President of Public Affairs
American Well

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

Ways and Means Health Subcommittee Examines Medicare Fraud and Abuse

On April 30, 2014, the House Ways and Means Subcommittee on Health held a hearing on Medicare oversight and policies intended to reduce waste, fraud and abuse. The hearing provided members of the subcommittee the opportunity to hear from the U.S. Office of the Inspector General at the Department of Health and Human Services (OIG-HHS), the U.S. Government Accountability Office (GAO) and the Centers for Medicare and Medicaid Services’ Center for Program Integrity (CPI) about the different recommendations and approaches to curb abuses within Medicare. According to the 2014 March Medicare Payment Advisory Commission (MedPAC) report, the Medicare program paid out approximately $574 billion each year to more than a 1.5 million doctors, hospitals and medical suppliers; the MedPAC report also cited GAO estimates that about $44 billion a year is lost to improper payments within the system.

Witness List:

Gloria L. Jarmon
Deputy Inspector General for Audit Services
Office of the Inspector General, Department of Health and Human Services

Kathleen King
Director of Health
U.S. Government Accountability Office

Shantanu Agrawal, M.D.
Deputy Administrator and Director, Center for Program Integrity
Centers for Medicare and Medicaid Services

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

House Passes Expatriate Health Coverage Clarification Bill to Amend ACA

On April 29, 2014, the House passed H.R. 4414, the Expatriate Health Coverage Clarification Act of 2014 by a vote of 268-150. The legislation would exempt from the health care coverage requirements of the AC plans such as expatriate health plans, employers acting as sponsors of such plans and health insurance issuers providing coverage under such plans. In addition, the bill would deem expatriate health coverage to be minimum essential coverage under an eligible employer-sponsored plan according to the Internal Revenue Code. It is unclear whether the Senate will consider the bill; however, the White House does not support the legislation, claiming it would “reduce consumer protections and create even more loopholes in the tax code.”


Upcoming Finance Committee Hearing on Nomination of HHS Secretary-Designate, Sylvia Matthews Burwell

Senate HELP Committee Chairman Harkin (D-IA) has announced his committee will hold a hearing to explore the nomination of Sylvia Matthews Burwell to replace outgoing HHS Secretary Kathleen Sebelius. The hearing will take place on May 8, 2014, at 10:00 a.m. in Room 106 Dirksen Senate Office Building.

2. Administration

Health Insurance Marketplace Summary Enrollment Report

On May 1, 2014, the HHS Assistant Secretary for Planning and Evaluation (ASPE) released its sixth issue brief on national and state-level enrollment-related information for ACA Health Insurance Marketplaces since October 2013. The report contains detailed state-level tables highlighting cumulative enrollment-related information for the Health Insurance Marketplace (Marketplace) during the initial open enrollment period (10-1-13 to 3-31-14), including activity associated with individuals who qualified for a Special Enrollment Period (SEP) through 4-19-14. The data on SEP activity include information for those who qualified for an SEP because they were “in line” on 3-31-14, as well as those who qualified for an SEP for other reasons. These tables include data for states that are implementing their own Marketplaces (also known as State-Based Marketplaces or SBMs), and states with Marketplaces that are supported by or fully run by the Department of Health and Human Services (including those run in partnership with states, also known as the Federally-facilitated Marketplace or FFM).

3. State Activities

Arkansas Private Option Medicaid Expansion Enrollment

According to state officials, more than two-thirds, or roughly 155,000 out of 225,000, of Arkansans have applied for and been deemed eligible to enroll for the state’s “private option” Medicaid expansion. Nearly all had incomes below the poverty line, which means they wouldn’t have qualified for exchange subsidies. Three-fifths of enrollees are women, and nearly two-thirds are ages 19 to 44. In addition, on May 2, the Department of Human Services announced that Andy Allison, who has been state Medicaid director since 2011, would leave, as of June 1, to pursue other opportunities. Allison led the Medicaid program through adoption of the private option health insurance program, as provided for under the ACA. The state Medicaid director of Health Care Innovation, Dawn Zekis, will step in as interim director.

Kansas Joins Consortium of States Implementing Major Health Programs

Republican Gov. Sam Brownback has signed legislation that would add Kansas to a consortium of states seeking to break away from federal health laws and run their own programs using block grants. The bill, HB 2553, allows the state to enact legislation to suspend any federal laws or requirements that are inconsistent with state laws. It also would mean the state would receive a block grant of health care funding, which the Legislature would then allocate. Governor Brownback cited the ACA’s cuts to Medicare as justification for the move. Currently, seven other states have decided to administer their own health programs, including Medicare. Critics argue that the move was politically motivated and is unlikely to receive the necessary approval from Congress.

4. Regulations Open for Comment

CMS Proposed Rule FY 2015 Hospice Payment Rate Update

On May 2, 2014, CMS issued a proposed rule [CMS-1609-P] that would update fiscal year (FY) 2015 Medicare payment rates and the wage index for hospices serving Medicare beneficiaries. As proposed, hospices would see an estimated 1.3 percent ($230 million) increase in their payments for FY 2015. The hospice payment increase would be the net result of a proposed hospice payment update to the hospice per diem rates of 2 percent (a “hospital market basket” increase of 2.7 percent minus 0.7 percent for reductions mandated by law), and a 0.7 percent decrease in payments to hospices due to updated wage data and the sixth year of CMS’ seven-year phase-out of its wage index budget neutrality adjustment factor (BNAF). This rule also provides an update on hospice payment reform analyses and solicits comments on “terminal illness” and “related conditions” definitions, and on a process and appeals for Part D payment for drugs, while beneficiaries are under a hospice election. In addition, the rule proposes timeframes for filing the notice of election and the notice of termination/revocation; adding the attending physician to the hospice election form; a requirement that hospices complete their hospice inpatient and aggregate cap determinations within five months after the cap year ends, and remit any overpayments; and updates for the hospice quality reporting program.

Public comments on the proposal will be accepted until July 1, 2014.

CMS Final Rule — Federally Qualified Health Center Prospective Payment System

On May 2, 2014, CMS issued a final rule with comment period to implement methodology and payment rates for a prospective payment system (PPS) for federally qualified health center (FQHC) services under Medicare Part B beginning on Oct. 1, 2014, in compliance with the statutory requirement of the Affordable Care Act. In addition, it establishes a policy that allows rural health clinics (RHCs) to contract with nonphysician practitioners when statutory requirements for employment of nurse practitioners and physician assistants are met, and makes other technical and conforming changes to the RHC and FQHC regulations. Finally, this final rule with comment period implements changes to the Clinical Laboratory Improvement Amendments (CLIA) regulations regarding enforcement actions for proficiency testing (PT) referrals. Comments will be accepted through July 1, 2014.

CMS Issues Proposed Hospital Inpatient Payment Regulation

CMS issued a proposed rule that would update fiscal year (FY) 2015 Medicare payment policies and rates for inpatient stays at general acute care and long-term care hospitals (LTCHs). This rule builds on the Obama administration’s efforts through the Affordable Care Act to promote improvements in hospital care that will lead to better patient outcomes while slowing the long-term health care cost growth. CMS projects that the payment rate update to general acute care hospitals will be 1.3 percent in FY 2015. The rate update for long-term care hospitals will be 0.8 percent. The difference in the update is accounted for by different statutory and regulatory provisions that apply to each system.

The rule’s most significant changes are payment provisions intended to improve the quality of hospital care, which reduce payment for readmissions and hospital acquired conditions (HACs). The rule also includes proposed changes to the Hospital Inpatient Quality Reporting (IQR) Program. The rule also describes how hospitals can comply with the Affordable Care Act’s requirements to disclose charges for their services online or in response to a request, supporting price transparency for patients and the public.

CMS will accept comments on the proposed rule until June 30, 2014, and will respond to comments in a final rule to be issued by Aug. 1, 2014.

Fiscal Year 2015 Inpatient Psychiatric Facilities Prospective Payment System

On May 1, 2014, CMS issued a proposed rule that would update the prospective payment rates for Medicare inpatient hospital services provided by inpatient psychiatric facilities (IPFs). These changes would be applicable to IPF discharges occurring during the fiscal year (FY) beginning Oct. 1, 2014, through Sept. 30, 2015. This proposed rule would also address implementation of ICD-10-CM and ICD-10-PCS codes; propose a new methodology for updating the cost of living adjustment (COLA); and propose new quality measures and reporting requirements under the IPF quality-reporting program. The proposed rule will appear in the May 6, 2014, Federal Register and will be open to public comment for 60 days.

Proposed Fiscal Year 2015 Payment and Policy Changes for Medicare Inpatient Rehabilitation Facilities

On May 1, 2014, CMS issued a proposed rule that would update the prospective payment rates for inpatient rehabilitation facilities (IRFs) for federal fiscal year (FY) 2015 (for discharges occurring on or after Oct. 1, 2014, and on or before Sept. 30, 2015) as required by the statute. The rule also proposes to collect data on the amount and mode (that is, Individual, Group and Co-Treatment) of therapy provided in the IRF setting according to therapy discipline, revise the list of impairment group codes that presumptively meet the “60 percent rule” compliance criteria, provide for a new item on the Inpatient Rehabilitation Facility-Patient Assessment Instrument (IRF-PAI) form to indicate whether the prior treatment and severity requirements have been met for arthritis cases to presumptively meet the “60 percent rule” compliance criteria, and revise and update quality measures and reporting requirements under the IRF quality reporting program (QRP). The proposal also addresses the implementation of the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM), for the IRF prospective payment system (PPS), effective when ICD-10-CM becomes the required medical data code set for use on Medicare claims and IRF-PAI submissions. The proposed rule will appear in the May 7 Federal Register and will be open to public comments for 60 days.

FDA Proposed Rule on Deeming Tobacco Products To Be Subject to the Federal Food, Drug, and Cosmetic Act

FDA has issued a proposed rule that would deem products meeting the statutory definition of “tobacco product,” except accessories of a proposed deemed tobacco product, to be subject to the Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended by the Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act). The Tobacco Control Act provides FDA authority to regulate cigarettes, cigarette tobacco, roll-your-own tobacco, smokeless tobacco and any other tobacco products that the Agency by regulation deems to be subject to the law. Option 1 of the proposed rule would extend the Agency’s “tobacco product” authorities in the FD&C Act to all other categories of products, except accessories of a proposed deemed tobacco product, that meet the statutory definition of “tobacco product” in the FD&C Act. Option 2 of the proposed rule would extend the Agency’s “tobacco product” authorities to all other categories of products, except premium cigars and the accessories of a proposed deemed tobacco product, that meet the statutory definition of “tobacco product” in the FD&C Act. FDA also is proposing to prohibit the sale of “covered tobacco products” to individuals under the age of 18 and to require the display of health warnings on cigarette tobacco, roll-your own tobacco and covered tobacco product packages and in advertisements. FDA is taking this action to address the public health concerns associated with the use of tobacco products. Comments are due July 9, 2014.

CMS Proposed Rule on Life Safety Codes for Medicare, Medicaid Providers

On April 14, 2014, CMS announced a proposed rule on the adoption of an updated life safety code (LSC) that CMS would use in its ongoing work to ensure the health and safety of all patients, family and staff in every provider and supplier setting. The updated code contains new provisions that are vital to the health and safety of all patients and staff. CMS intends to adopt the National Fire Protection Association’s (NFPA) 2012 editions of the (LSC) and the Health Care Facilities Code (HCFC), as the 2012 edition of the LSC also is aligned with the international building codes to make compliance across codes much simpler for Medicare- and Medicaid-participating facilities.

Currently, CMS applies the standards set out in the 2000 edition of the LSC to facilities in order to ensure patients’ and caregivers’ health and safety. CMS is now proposing to adopt the 2012 editions of the LSC and the Health Care Facilities Code. The LSC sets out fire safety requirements for new and existing buildings, and is issued by the NFPA, a private, nonprofit organization dedicated to reducing loss of life due to fire. The new edition of the LSC applies to: hospitals, long-term care facilities (LTC), critical access hospitals (CAHs), Programs for All-Inclusive Care for the Elderly (PACE®), religious nonmedical healthcare institutions (RNHCIs), hospice inpatient facilities, ambulatory surgical centers (ASCs) and intermediate care facilities for individuals with intellectual disabilities (ICF-IIDs).

Comments are due June 16, 2014.

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.

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.

5. Reports

Compounded Drugs Under Medicare Part B: Payment and Oversight

On April 29, the HHS-OIG released the results of a survey conducted of CMS staff and Part B MACs to assess their oversight of Medicare claims for compounded drugs. CMS and MACs were asked whether they track the number of claims and the amount paid for compounded drugs, and to describe their policies and procedures for reviewing and processing claims for compounded drugs. The HHS-OIG found that neither CMS nor MACs tracked the number of claims for compounded drugs under Part B or the corresponding amounts paid, and that Part B claims do not contain information that can be used to systematically identify claims for compounded drugs. The survey also found that claims for compounded drugs do not identify the compounding pharmacy; however, this information may be included in documentation kept by the provider. Finally, we found that most MACs manually reviewed Part B claims containing “not otherwise classified” codes, which can represent compounded drugs, to determine payment amounts. The report recommends that CMS establish a method to identify Part B claims for compounded drugs; (2) explore the possibility of requiring providers to identify on the Part B claim the pharmacy that produced the compounded drug; and (3) explore the possibility of conducting descriptive analyses of Part B claims for compounded drugs. CMS concurred with the first recommendation, did not concur with the second and conditionally concurred with the third.

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.

To sign up for the Weekly Washington Healthcare Update, use our online subscription form.

McGuireWoods Consulting LLC
2001 K Street
Suite 400
Washington, DC 20006-1040