Washington Healthcare Update

January 26, 2015

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This Week: Energy and Commerce Holds Two-Day Hearing on SGRReplacement…CDC Report Finds Providers Making Progress on Lowering Rates ofHospital Infections…Montana Governor Introduces Plan for Medicaid Expansion

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


Energy and Commerce Holds Two-Day Hearing on SGR Replacement

On Jan. 21-22, the House Energy and Commerce Subcommittee on Health held a hearing entitled “A Permanent Solution to the SGR: The Time Is Now.” Thesubcommittee will hear testimony from key thought leaders and representatives of the health care community about the need to advance a permanentlegislative solution to the broken Medicare physician reimbursement formula known as the Sustainable Growth Rate (SGR). Witnesses discussed steps toadvance bipartisan, bicameral SGR legislation, including a discussion of offsets. Republicans largely advocated offsetting the nearly $140 billion cost ofa permanent legislative solution. However, Democrats noted that House Republicans recently passed legislation related to the definition of a full-timeemployee without offsetting some $50 billion in estimated cost.



Joseph I. Lieberman
former United States Senator

Alice Rivlin
Co-Chair, Bipartisan Policy Center, Delivery System Reform Initiative
Director; Engelberg Center for Health Reform, The Brookings Institution

Marilyn Moon
Institute Fellow
American Institutes for Research


Richard Umbdenstock
President and Chief Executive Officer
American Hospital Association

Alan Speir, M.D.
Medical Director of Cardiac Surgical Services for Inova Health System
Chair, Workforce on Health Policy, Reform, and Advocacy
The Society of Thoracic Surgeons

Eric Schneidewind

Geraldine O’Shea, D.O.
First Vice President
AOA Board Of Trustees
Medical Director
Foothills Women’s Medical Center in California

Barbara McAneny, M.D.
AMA Board of Trustees
CEO, New Mexico Oncology Hematology Consultants, Ltd

Ken P. Miller, Ph.D., R.N.
Board President
American Association of Nurse Practitioners

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

House W&M Committee Holds Organizational Meeting to Set Oversight Plans and Rule Changes

On Jan. 21, House Ways and Means Committee Chairman Paul Ryan (R-WI) held an organizational meeting for consideration of the Committee’s Rules andOversight Plan for the 114th Congress. According to aletter sent to the Rules Committee and House AdministrationCommittee Leadership, overhauling the tax code, overseeing the Affordable Care Act and scrutinizing the Internal Revenue Service’s handling of tax-exemptorganizations will continue to get committee oversight attention in 2015-2016. Moreover,rule changes chosen by Chairman Ryan include growingthe membership of the health and trade subcommittees to 16 from 14, with Republicans and Democrats each adding one member, and removal of a three-daynotice requirement on committee documents. For more information on the rules and agenda of the committee, visitwaysandmeans.house.gov.


HELP and Finance Committee Leaders Among Sponsors of Bill to Repeal ACA’s Individual Mandate

On Jan. 21, twenty-two Republican senators, including Chairmen of the Finance and Health, Education, Labor, and Pensions (HELP) Committees, Orrin Hatch(UT) and Lamar Alexander (TN) respectively, introduced legislation to repeal the individual mandate found with the Affordable Care Act (ACA). The AmericanLiberty Restoration Act, S. 203, would simply strike sections 1501 and 1502 and subsections (a), (b), (c), and (d) of section 10106 of the PatientProtection and Affordable Care Act, which requires individuals to purchase health insurance. “Forcing Americans to purchase insurance goes against ournation’s history of individual liberty. This legislation strikes Obamacare’s individual mandate and restores the freedoms outlined in the Constitution.Washington should continue to work towards finding a way to equip patients with the tools needed to obtain access to health insurance, but not in a waythat attacks the spirit of the Constitution and our treasured history of limited government,” said Sen. Hatch in apress release. For the 2014 tax filingseason, individuals who did not purchase health insurance will face a fine of $95 or 1% of their income, whichever is higher; for the 2015 tax filingseason, that penalty will increase to $325 or 2% of their income, whichever is higher.

Senate HELP Committee Holds Hearing on Definition of Employer-Sponsored Health Insurance and Full-Time Work Definition

On Jan. 22, Chairman of the Senate Committee on Health, Employment, Labor, and Pensions (HELP) Lamar Alexander (R-TN) held a hearing, entitled “ExaminingJob-Based Health Insurance and Defining Full-Time Work,” to discuss employer-sponsored health insurance, the definition of full-time work and the effect ofthe employer mandate on jobs. The hearing comes in light of a bill, introduced Jan. 6, by Sens. Susan Collins (R-ME) and Joe Donnelly (D-IN), which wouldraise the threshold for “full-time” work to 40 hours. Under the Affordable Care Act’s employer responsibility requirements, employers with at least 100full-time or full-time equivalent employees are now required to provide health insurance meeting certain ACA standards to their full-time employees or paya penalty. For employers with 50 to 100 full-time employees, this pay-or-play employer mandate becomes effective in 2016. The ACA considers a worker“full-time” if he or she works 30 hours or more per week, instead of the customary 40 per week.


Panel I

Dr. Betsy Webb
Bangor School Department

Mr. Andrew F. Puzder
Chief Executive Officer
CKE Restaurants

Dr. Doug Holtz-Eakin
American Action Forum

Mr. Joe Fugere
Tutta Bella Pizzeria

Senate Appropriations Chairman Announces Majority Subcommittee Leadership Positions

In aJan. 20 press release, Chairman ofthe Senate Appropriations Committee Thad Cochran (R-MS) announced subcommittee chairmen for the 114th Congress, indicating he expects this team to helpproduce and advance individual appropriations bills that are in the public interest and that reflect credit on the Senate. “I am optimistic about workingwith this team and appreciative of the leadership they will provide the committee. I also look forward to working with Vice Chairwoman Mikulski and theentire committee to produce individual bills and give all Senators an opportunity to review and offer input on them,” Cochran said. Sen. Roy Blunt (R-MO)will chair the Labor, Health and Human Services subcommittee, and Sen. Jerry Moran (R-KS) will lead the Agriculture subcommittee, which includes the Foodand Drug Administration (FDA). Sen. Blunt’sstatement noted, “Almost all of the president’shealth care law is paid for by mandatory spending, and therefore falls under the jurisdiction of the Senate Finance Committee. However, this subcommitteewill have a chance to directly address some of the most pressing issues brought forth by Obamacare, including the administration’s proposed cuts to cancerscreenings and immunization programs.”

2. Administration

CMS Launches Dialysis Facility Compare Star Rating System

On Jan. 22,CMS announced the addition of star ratings to the Dialysis Facility Compare (DFC) website. These ratings summarize performance data, making iteasier for consumers to use the information on the website. These ratings also spotlight excellence in health care quality. In addition to posting the starratings, CMS updated data on individual DFC quality measures to reflect the most recent data for the existing measures. DFC joined Nursing Home Compare andPhysician Compare in expanding the use of star ratings on CMS websites. The DFC rating gives a one- to five-star rating based on information about thequality of care and services that a dialysis facility provides. Currently, nine DFC quality measures are being used collectively to compose the DFC starratings. DFC quality measure data is updated either quarterly or annually. CMS plans to update the DFC’sstar rating on an annual basis beginning in October 2015.

ACA Open Enrollment Week 9: January 10, 2015 – January 16, 2015

On Jan. 21,HHS announced that since ACA Open Enrollment began on November 15, more than 7.1 million consumers selected a plan or were automaticallyre-enrolled through the HealthCare.gov platform, which includes the Federally Facilitated Marketplace (FFM),State Partnership Marketplaces and supported State-Based Marketplaces. Theweekly and cumulative metrics provide a preliminary total of those who havesubmitted an application and selected the plan that best fits their needs.In addition, totals now include those consumers who were automaticallyre-enrolled into their current plan or a plan with similar benefits.

CDC Report Finds Providers Making Progress on Lowering Rates of Hospital Infections

Areport released this week by the Centers for Disease Control andPrevention (CDC) found that significant progress has been made by state and national health care providers to combat six types of infections commonlyacquired in hospital. The report, entitled the National and State Healthcare-Associated Infections Progress Report, expands and provides an update onprevious reports detailing progress on central line-associated bloodstream infections (CLABSI), catheter-associated urinary tract infections (CAUTI),select surgical site infections (SSI), hospital-onset Clostridium difficile infections (C. difficile), and hospital-onset methicillin-resistantStaphylococcus aureus (MRSA) bacteremia (bloodstream infections). The report, which also includes newly added state-by-state data, found that between 2008and 2013 there was a 46 percent decrease in CLABSI and a 19 percent decrease in SSIs related to the 10 select procedures. Also significant, between 2011and 2013 there was an 8 percent reduction in hospital-onset MRSA bacteremia and a 10 percent decrease in hospital-onset C. difficile infections. More than14,500 hospitals and other health care facilities provide data to CDC’s National Healthcare Safety Network. Moreover, the report helps measure progresstoward the five-year HAI prevention goals outlined in the National Action Plan to Prevent Health Care-Associated Infections: Road Map to Elimination, implemented in 2009 by the Department of Health andHuman Services (HHS).

POTUS Launches Precision Medicine Initiative in His State of the Union Address

In his Jan. 20State of the Union Address, President Barack Obama announced the beginningof a new initiative that he said would give patients “access to the personalized information” they need to stay healthy and receive the “right treatment atthe right time.” The president offered few specifics about the new initiative, which comes as the House Energy and Commerce Committee is gearing up torelease its draft legislation aimed at spurring the development of new medical treatments as part of the committee’s 21st Century Cures Initiative. In ablog post released by the White House Jan.21, the President’s Associate Director for Science at the White House Office of Science and Technology, Jo Handelsman, said when describing the initiative,“Precision medicine is an emerging approach to promoting health and treating disease that takes into account individual differences in people’s genes,environments, and lifestyles, making it possible to design highly effective, targeted treatments for cancer and other diseases. In short, precisionmedicine gives clinicians new tools, knowledge, and therapies to select which treatments will work best for which patients … Precision medicine aims toleverage advances in medical imaging, such as MRI and 3D X-ray technologies, and utilize advances in health information technology, as well as otherfields, to better understand each of these factors and to apply this knowledge in the development of new treatments. The potential for precision medicineto improve care and produce new treatments has only begun to be tapped. Translating initial successes to a larger scale will require a coordinated andsustained national effort.” Specific details about the new initiative are expected in the coming weeks.

Annual Update of the HHS Poverty Guidelines

On Jan. 22,HHS published notice providing an update of the federal poverty guidelines to account for last calendar year’s increase in prices as measuredby the Consumer Price Index. Section 673(2) of the Omnibus Budget Reconciliation Act (OBRA) of 1981 requires the Secretary of HHSto update the poverty guidelines at least annually, adjusting them on thebasis of the Consumer Price Index for All Urban Consumers (CPI–U). Theguidelines in this 2015 notice reflect the 1.6 percent price increasebetween calendar years 2013 and 2014. After this inflation adjustment, theguidelines are rounded and adjusted to standardize the differences betweenfamily sizes. For 2015, the federal poverty line for a family of four is$24,250.

3. State Activities

Arkansas Gov. Plans to Wind Down Medicaid Expansion After 2016

Recently elected Republican Gov. Hutchinson hasannounced he intends to terminate Arkansas’s “private option” Medicaid expansion by the end of 2016, thoughhe will explore other state reforms aimed at improving the low-income health program. Hutchinson’s Democratic predecessor, Gov. Beebe, was a strongadvocate of the hybrid expansion plan, which attempted to please the state’s conservative legislature by using federal expansion funds provided by the ACAto purchase private insurance plans for the state’s low-income population.Nearly 200,000 individuals have participated in the expansion.

Oregon: Medicaid Coordinated Care Program Showing Notable Results

In areport released this week by the Oregon Health Policy Board, the policy-makingand oversight body for the state’s health care agency, the board found significant cost and quality improvements in its Medicaid overhaul, started in 2012,through coordinated-care organizations (COO). A coordinated care organization is a network of multi-jurisdictional health care providers (physical healthcare, addictions and mental health care and sometimes dental care providers) who have agreed to work together in their local communities to serve peoplewho receive health care coverage under the Oregon Health Plan (Medicaid). The report, which compares a baseline year of 2011 to the year that began in July1, 2013, shows per member, per month cost reductions of 5.7 percent for inpatient hospital services and a 21 percent reduction in emergency room visits bythose on CCO plans. There were also declines in hospital admissions for short-term complications from diabetes and chronic obstructive pulmonary disease.Moreover, data in the report shows that enrollment in primary care homes has risen by 55 percent since 2011, and primary care costs are increasing, “whichmeans more health care services are happening within primary care rather than other settings.” The state is tracking 17 CCO incentive metrics and 16additional state performance metrics. It is also studying financial data, displayed both by cost and by utilization. The fifth update report released onthe state’s COOs thus far is the first report to include data on some key measures on enrollees of the Oregon Health Plan since the Affordable Care Act(ACA) and the state’s Medicaid expansion took effect on Jan. 1, 2014.

Montana Governor Introduces Plan for Medicaid Expansion

On Jan. 19, Montana Governor Steve Bullock (D) introduced his proposal to expand Medicaid coverage to an additional 70,000 additional low-income Montanans.The governor’s proposal, called the Healthy Montana Plan, was introduced in legislation sponsored by Rep. Pat Noonan (Ramsay-D). UnderHouse Bill 249, adults making up to $16,105 a year and a family of four earning up to $32,913would qualify for Medicaid. The legislation also includes a significant measure that would end expanded coverage if federal funding levels drop below 90percent. “An overwhelming majority of Montanans—including a majority in the legislature—support this effort to use our tax dollars to extend coverage toour neighbors instead of providing coverage to uninsured in other states. It’s time that the legislature allows a full debate, and an up-or-down vote onthis important issue,” Gov. Bullock said of his proposal. The Healthy Montana Plan has its basic roots in the Healthy Montana Kids program, which providescoverage of children in low-income families. The Healthy Montana Plan would extend Medicaid coverage to adults through competitive state contracts withprivate insurance companies for care at negotiated rates. Other provisions of note in the plan include requiring payment and delivery reforms for thestate’s existing Medicaid program through targeted care management and coordination and the development of a multipronged fraud and abuse reporting system.Since the passage of the Affordable Care Act (ACA), the District of Columbia and 27 states have expanded Medicaid to adults making up to 138 percent of thefederal poverty level.

4. Regulations Open for Comment

Medicare and Medicaid Program;Revisions to Certain Patient’s Rights Conditions of Participation andConditions for Coverage Overview

On Dec. 11, the Centers for Medicare & Medicaid Services (CMS) issued aproposed rule to revise selected conditions of participation (CoPs) forproviders, conditions for coverage (CfCs) for suppliers, and requirementsfor long-term care facilities, by proposing to clarify that where state lawor facility policy provides or allows certain rights or privileges to apatient’s opposite-sex spouse under certain provisions, a patient’s same-sexspouse must be afforded equal treatment if the marriage is valid in thejurisdiction in which it was celebrated. The proposal was made in responseto a Supreme Court decision, United States v. Windsor, which held thatSection 3 of the Defense of Marriage Act (DOMA) is unconstitutional becauseit violates the Fifth Amendment. Section 3 of DOMA provided that indetermining the meaning of any Act of the Congress, or of any ruling,regulation or interpretation of the various administrative bureaus andagencies of the United States, the word “marriage” meant only a legal unionbetween one man and one woman as husband and wife, and the word “spouse”could refer only to a person of the opposite sex who was a husband or awife. To be assured consideration, comments must be received no later than 5p.m. on Feb. 10, 2015.

CMS Releases Proposed Rule Aimed to Strengthen ACOs

In aDec. 1 press release, the Centers for Medicare & Medicaid Services (CMS)announced a newproposed rule looking to improve the Shared Savings Program (SSP) forAccountable Care Organizations (ACOs) through a greater emphasis on primarycare services and promoting transitions to performance-based riskarrangements. Through the Affordable Care Act (ACA), ACOs encourage doctors,hospitals and other health care providers to work together to bettercoordinate care when people are sick and keep people healthy, which helps toreduce growth in health care costs and improve outcomes. CMS AdministratorMarilyn Tavenner said, “This proposed rule is part of our continuedcommitment to rewarding value and care coordination — rather than volumeand care duplication. We look forward to partnering with providers andstakeholders to continuously refine and improve the Medicare Shared Savingsprogram.” Other goals of the rule include providing more flexibility forACOs seeking to renew their participation in the program, encouraging ACOsto take on greater performance-based risk and reward, creating alternativemethodologies for benchmarks, and streamlining data sharing and reducingadministrative burden. The SSSP now includes more than 330 ACOs in 47states, providing care to more than 4.9 million beneficiaries in Medicarefee for service. Recently, CMS announced first-year SSP results, findingthat 58 SSP ACOs held spending below their benchmarks by a total of $705million and earned shared savings payments of more than $315 million, andthat another 60 ACOs had expenditures below their benchmark, but not by asufficient amount to earn shared savings. Comments on the proposed rule aredue by Feb. 6. A fact sheet accompanying the proposed rule can be found here.

5. Reports

Federal Marketplace: Inadequacies inContract Planning and Procurement

According to arecent report issued by the Department of Health and Human Services Officeof the Inspector General, when awarding the Federal Marketplace contracts, CMSdid not always meet contracting requirements. For example, CMS did not developan overarching acquisition strategy for the Federal Marketplace or perform allrequired oversight activities. Moreover, for a project of this size andimportance, CMS missed opportunities to leverage all available acquisitionplanning tools and contracting approaches to identify and mitigate risks.Specifically, CMS did not exercise the option to plan for a lead systemsintegrator to coordinate all contractors’ efforts prior to the launch of theFederal Marketplace. The complexity of the Federal Marketplace underscored theneed for CMS to select the most qualified contractors. However, CMS did notperform thorough reviews of contractor past performance when awarding two keycontracts. CMS also made contracting decisions that may have limited the numberof acceptable proposals for much of the key Federal Marketplace work. Inaddition, CMS selected contract types that placed the risk of cost increases forthis work solely on the Government. HHS and CMS concurred with all of OIG’srecommendations, which included having CMS assess whether to assign a leadsystems integrator for complex IT projects, and instructing HHS to limit oreliminate regulatory exceptions to acquisition planning requirements.

MACPAC January 2015 Public Meeting

On Jan. 22-23, the Medicaid and CHIP Payment and Access Commission (MACPAC)met to discuss Medicaid and CHIP policy issues. MACPAC is responsible forreviewing state and federal Medicaid and CHIP access and payment policies andmaking recommendations to Congress, the Secretary of Health and Human Services (HHS)and the states concerning Medicaid and CHIP policies, met recently to discussissues including emergency department utilization and enrollment data.
The agenda consisted of 10 sessions:

  • Draft March Report Chapter: Sources of Coverage for Children if CHIP Funding Expires
  • Draft March Report Chapter: Affordability of Exchange Coverage for Children Now Covered by CHIP
  • Draft March Report Chapter: Comparing CHIP Benefits to Other Sources of Coverage
  • Draft March Report Chapter: Network Adequacy and the Future of CHIP
  • Draft March Report Chapter: Medicaid’s Role in Behavioral Health
  • Draft March Report Chapter: The Effect of Medicaid Coverage of Medicare Cost Sharing on Access to Care
  • Draft March Report Chapter: An Update on the Medicaid Primary Care Payment Increase
  • Medicaid Listening Project
  • Feedback from CHIP Stakeholders
  • Policy Issues and Preliminary Options for the Future of CHIP

For more information, please visitwww.macpac.gov.

If you have any questions, contact the following individuals atMcGuireWoods Consulting:

StephanieKennan, Senior Vice President
Charlyn Iovino, VicePresident
BrianLooser, Assistant Vice President
Amanda Anderson,Research Assistant

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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