CONSISTENTLY DELIVERS

Jan 14, 2013

Weekly Washington Healthcare Update

This Week:

1. Congress

House of Representatives

  • N/A

Senate

  • N/A

2. Administration

White House

Health and Human Services (HHS)

Health and Human Services Office of the Inspector General (HHS-OIG)

Centers for Medicare and Medicaid Services (CMS)

Department of Labor

3. State Activities

4. Regulations Open for Comment

5. Reports

General Accountability Office (GAO)

Medicare Payment Advisory Commission (MedPAC)

Congressional Research Service (CRS)

Commonwealth Fund

Health Affairs


1. Congress

House of Representatives

  • N/A

Senate

  • N/A

2. Administration

White House

President Signs Medicare Secondary Payer Reform Legislation

As one of the final accomplishments of a relatively underperforming 112th Congress, President Obama signed into law last week a bill to reform the way Medicare arranges for insurers other than Medicare to cover injury-related settlements, also known as the Medicare secondary payer process. In instances where Medicare pays for the treatment of a beneficiary who then subsequently receives a settlement as a result of their injury, the beneficiary must pay Medicare back for a certain amount of the cost of the treatment. However, critics of the process have noted that it is complicated and can often take far longer than necessary to resolve. Specifically, the new law requires Medicare to disclose the total cost of the beneficiary's medical care prior to any settlement, enabling beneficiaries to win claims more quickly. Passed as part of a legislative package that included provisions for a Medicare coverage for in-home administration of intravenous immune globulin (IVIG), the secondary payer reform will reduce Medicare spending by an estimated $45 million, according to the Congressional Budget Office (CBO).
 

Health and Human Services (HHS)

Sebelius to Remain HHS Secretary

Last week, HHS Secretary Sebelius announced she would be retaining her position as Secretary for President Obama's second term. In this capacity, Sebelius will continue to oversee the ongoing implementation of the Affordable Care Act (ACA), as the president's signature health reform law becomes fully operational.

106 New Accountable Care Organizations (ACOs) Approved

On Jan. 10, HHS announced it had approved 106 new accountable care organizations (ACOs) this year under the Medicare Shared Savings Program. A major component of the ACA, ACOs represent an attempt by the government to encourage enhanced coordination of health care services by allowing vertically integrated treatment systems the opportunity to share in savings achieved by more effectively delivering care. The addition of the 106 new ACOs, several sponsored by recognizable names in health care such as Geisinger and Cedars-Sinai, brings the total number of approved ACOs to 250. HHS estimates the ACO model could save the federal government $940 million over the next four years. 

Medicare Spending Growth Remained Slow in 2012

Last week, the HHS Office of the Assistant Secretary for Planning and Evaluation said 2012 continued a trend of slow growth in Medicare spending observed in 2010 and 2011. According to HHS, Medicare spending per beneficiary grew by a low 0.4 percent in 2012. For 2010 and 2011, the rate of growth in cost per beneficiary was 1.8 percent and 3.6 percent, respectively. The trend mirrors lower-than-usual growth in overall health care spending in recent years, a phenomenon some have attributed to changes ushered in by the ACA while others blame the slowed growth on the weakened U.S. economy. 

And Overall Health Spending Grew Slowly, Too

Also last week, HHS published its National Health Expenditures report in Health Affairs, which found that overall health care spending in the United States grew a relatively low 3.9 percent in 2011, reaching a total expenditure level of $2.7 trillion, or roughly $8,680 per person, and composing 17.9 percent of gross domestic product (GDP). This is the same rate at which health spending grew in 2009 and 2010. Full report (subscription required).

Health and Human Services Office of the Inspector General (HHS-OIG)

Medicare Drug Integrity Contractor (MEDIC) Benefit Integration Activities

This month, HHS-OIG issued findings in its review of the Medicare Drug Integrity Contractor (MEDIC), which is responsible for identifying waste and fraud in Medicare Parts C and D. The report, which serves as an update of a review conducted by HHS-OIG in 2009, found that only a small percentage of the MEDIC's investigations and case referrals resulted from proactive methods, indicating there is significant room for improvement of the contractor's activities. According to the report:

Although the MEDIC has benefit integrity responsibility for both Medicare Parts C and D, its Part C investigations and case referrals represented a small percentage of its benefit integrity activities. In addition, a small percentage of the MEDIC's investigations and case referrals resulted from proactive methods. Moreover, barriers exist regarding data availability, access to information, and the recovery of inappropriate payments. Specifically, the lack of a centralized Part C data repository hinders the MEDIC's ability to identify and investigate Part C fraud.

In order to remedy the problem, among other suggestions, HHS-OIG recommends that CMS provide the MEDIC with centralized Part C data, clarify its policy and instruct the MEDIC as to under what circumstances the MEDIC may share specific information with other entities, and amend regulations to authorize the MEDIC to directly obtain information from entities such as pharmacies, physicians and pharmacy benefit managers.

Centers for Medicare and Medicaid Services (CMS)

CMS Delays Enforcement of Two New HIPAA Electronic Transaction Rules

Earlier this month, CMS Office of E-Health Standards and Services (OESS) announced it would delay, by three months, enforcement of new operating rules, intended to make the application of the HIPAA standards more consistent and efficient, for certain electronic health care transactions. "Industry feedback suggests that HIPAA covered entities have not reached a threshold whereby a majority of covered entities would be able to be in compliance with the operating rules by Jan. 1," according to a CMS statement. "This enforcement discretion period does not prevent applicable HIPAA covered entities that are prepared to conduct transactions using the adopted operating rules from doing so."

Department of Labor

Solis Resigns as Labor Secretary

Calling it one of the most difficult decisions she has ever made, Secretary Hilda Solis announced last week she was resigning her post as head of the Department of Labor. "As the daughter of parents who worked in factories, paid their union dues and achieved their goal of a middle class life, and as the first Latina to head a major federal agency, it has been an incredible honor to serve," she added. President Obama will also have to replace Secretary of State Clinton, Treasury Secretary Geithner and Defense Secretary Panetta as he begins his second term later this month.

3. State Activities

Idaho Says No Medicaid Expansion Right Now

In his recent State of the State speech, Idaho Gov. Butch Otter (R) announced he has no intention of expanding his state's Medicaid program right now, though he notably left the possibility on the table. "We face no immediate federal deadline .... We have time to do this right, and there is broad agreement that the existing Medicaid program is broken. So I'm seeking no expansion of those benefits," the governor said.

New Mexico Governor Signals Support for Medicaid Expansion

Unlike many of her Republican governor colleagues, New Mexico Gov. Susana Martinez has indicated she supports pursuing an optional Medicaid expansion under the ACA that would extend program coverage to 170,000 low-income adults. Though nearly one-fourth of the state's residents are already enrolled in Medicaid, that population is largely composed of children and the disabled. Under the ACA, all individuals with income levels of up to 133 percent of the federal poverty line, roughly $26,000 for a family of three, would be eligible for the program.

South Dakota Says No to Medicaid Expansion for Now

Similar to the approach taken by other Republican governors, South Dakota Gov. Dennis Daugaard has decided that an expansion of his state's Medicaid program is not an appropriate course to follow, at least right now, on account of doubts the governor has over the ability of the federal government to keep its promise to fund nearly all of the additional cost presented by the expansion.

Massachusetts May Relax Employer Health Coverage Penalties

In order to more closely align a Massachusetts state law requiring certain employers to extend health insurance to their employees and a similar provision found in the ACA that will take effect in 2014, Massachusetts Gov. Deval Patrick has proposed legislation that would adjust his state's law, relaxing some of its employer requirements. State law currently requires employers with 11 or more employees to offer health coverage or pay a penalty. However, the ACA places that requirement on businesses with 50 or more employees. Gov. Patrick hopes that by eliminating his state's existing requirements, known as the "Fair Share Contribution Program," he will help employers avoid double-penalties under state and federal law.

Maine Medicaid Waiver Partially Approved

While most states have been busy trying to decide whether they will expand their current Medicaid program eligibility to take advantage of an enhanced federal contribution to cover the cost of caring for any newly enrolled individuals, Maine officials have been busy trying to trim down their existing rolls. In response to a request to adjust eligibility standards, which would remove roughly 36,000 individuals from the state's Medicaid program, CMS ruled that Maine could reduce income eligibility levels for certain groups. However, citing a "maintenance of effort (MOE)" provision established by the ACA, which prohibits states from making certain adjustments to eligibility, the agency rejected Maine's request to effectively remove eligibility for many 19- and 20-year-old adults that had previously been covered. According to CMS's response, "Because the individuals were previously covered by the state based on their status as children, reduction of eligibility for these individuals is not permitted..."
 

4. Regulations Open for Comment

NEW - Employer Health Care Coverage of Dependents Under ACA

Treasury and IRS released a notice of proposed rules (REG-138006-12) Dec. 28 on employer-provided health care coverage related to ACA's employer "shared responsibility" provisions, which were added to the tax code under Section 4980H. Starting in 2014, employers with at least 50 full-time and/or full-time equivalent employees (FTEs) will be required to offer affordable health care coverage that provides a minimum level of coverage or pay a penalty. These proposed regulations would affect only employers that meet the definition of "applicable large employer" as described in these proposed regulations. As discussed in section X of this preamble, employers may rely on these proposed regulations for guidance pending the issuance of final regulations or other applicable guidance. This document also provides notice of a public hearing on these proposed regulations.

Comments on the proposed rule must be received by March 18, 2013.
 

NEW - Guidance for Industry Abuse-Deterrent Opioids -- Evaluation and Labeling

The FDA has issued guidance intended to assist sponsors who wish to develop formulations of opioid drug products with potentially abuse-deterrent properties (abuse-deterrent formulations). Specifically, the guidance explains FDA's current thinking about the studies that should be conducted to demonstrate that a given formulation has abuse-deterrent properties, how those studies will be evaluated, and what labeling claims may be approved based on the results of those studies. FDA will accept comments on the guidance received by March 11, 2013. See FDA's press release

Food and Drug Administration (FDA) Proposes New Food Safety Rules

The FDA has proposed new rules on food safety, including regulations on good manufacturing practices standards for growing, handling and packaging produce. Specifically, to minimize the risk of serious adverse health consequences or death from consumption of contaminated produce, the FDA is proposing to establish science-based minimum standards for the safe growing, harvesting, packing and holding of produce, meaning fruits and vegetables grown for human consumption. FDA is proposing these standards as part of its implementation of the FDA Food Safety Modernization Act (FSMA). These standards would not apply to produce that is rarely consumed raw, produce for personal or on-farm consumption, or produce that is not a raw agricultural commodity. The proposed rule would also set forth procedures, processes and practices that minimize the risk of serious adverse health consequences or death, including those reasonably necessary to prevent the introduction of known or reasonably foreseeable biological hazards into or onto produce and to provide reasonable assurances that the produce is not adulterated on account of such hazards.

Another proposed rule would amend FDA's current regulation for Current Good Manufacturing Practice In Manufacturing, Packing, or Holding Human Food (CGMPs), which requires domestic and foreign facilities that are required to register under the Federal Food, Drug, and Cosmetic Act (FD&C Act) to establish and implement hazard analysis and risk-based preventive controls for human food. FDA also is proposing to revise certain definitions in FDA's current regulation for Registration of Food Facilities to clarify the scope of the exemption from registration requirements provided by the FD&C Act for "farms."

Comments on both proposed rules are due by May 16, 2013.

Additional "Meaningful Use" Guidance Issued

HHS has issued an interim final rule with comment period revising the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs, updating a few technical specifications for EHR systems participating in the meaningful use program, in addition to adjusting some elements for hospital Stage 2 reporting requirements. The rule also provides notice of CMS's intention to issue technical corrections to the electronic specifications for clinical quality measures (CQMs) released on Oct. 25, 2012. A 60-day public comment period will expire Feb. 4, 2013.

Additional Medicare Tax for Wealthy Beneficiaries

This proposed regulation addresses issues relating to Additional Hospital Insurance Tax on income above threshold amounts ("Additional Medicare Tax"), as added by the Affordable Care Act. Specifically, the proposed regulation provides guidance for employers and individuals relating to the implementation of Additional Medicare Tax. This document also contains proposed regulations relating to the requirement to file a return reporting Additional Medicare Tax, the employer process for making adjustments of underpayments and overpayments of Additional Medicare Tax, and the employer and employee processes for filing a claim for refund for an overpayment of Additional Medicare Tax. The document also provides notice of a public hearing scheduled for April 4, 2013, on these proposed rules. The deadline for submitting comments on the proposed regulation is March 1, 2013.

5. Reports

GAO

Preventive Health Activities: Available Information on Federal Spending, Cost Savings and International Comparisons Has Limitations

In recent years, preventive health activities have received attention for their potential to improve health outcomes or lower health care expenditures. Moreover, researchers, reports and articles have indicated that some preventive health activities may result in cost savings -- that is, the costs averted, such as medical costs to treat a disease or condition, exceed the cost of implementing it -- and a number of preventive health activities, while not necessarily cost saving, may be cost-effective -- that is, the activity provides good value at low cost relative to alternative activities. However, according to a recent GAO report, estimates of cost savings or cost-effectiveness can be difficult to ascertain because those estimates are often affected by multiple factors, such as how an activity is targeted. In addition, many federal officials have reported that a lack of key data may affect estimates of cost savings or cost-effectiveness and reported taking steps toward improving available information. In addition, data for international comparisons of countries' spending specifically for preventive health activities are not available.

Children's Mental Health: Concerns Remain about Appropriate Services for Children in Medicaid and Foster Care

According to a recently issued report by GAO, nearly one in five kids in foster care is taking psychotropic medications, compared with only 5 percent of nonfoster kids with private insurance. In addition, based on data from HHS's Medical Expenditure Panel Survey (MEPS), GAO found that most children whose emotions or behavior, as reported by their parent or guardian, indicated a potential need for a mental health service did not receive any services within the same year. While the Centers for Medicare & Medicaid Services (CMS) and many states have initiatives under way to help ensure that children receive appropriate mental health treatments, CMS's ability to monitor children's receipt of mental health services is limited because CMS does not collect information from states on whether children in Medicaid have received services for which they were referred. In the past, GAO has recommended that CMS identify options for collecting such data from state Medicaid programs. 

Enrollment and Expenditures for Qualified Individual and Transitional Medical Assistance Programs

The Qualified Individual (QI) and Transitional Medical Assistance (TMA) are particular programs within Medicaid that are targeted to specific groups of low-income individuals. In response to a request from Congress, GAO recently issued a report finding:

The QI program enrolled about 426,000 individuals nationwide in 2009 -- the most recent year for which comprehensive enrollment data were available -- with expenditures of about $431 million. While QI enrollment increased 30 percent from fiscal year 2006 to fiscal year 2009, program expenditures increased at a slightly faster rate, rising 39 percent during this time. On average, one quarter of individuals potentially eligible for the QI program were enrolled during fiscal years 2006 through 2009. However, the percentage of eligible individuals enrolled in the program climbed from 21 percent in fiscal year 2006 to 29 percent in fiscal year 2009.

However, some questions about overall enrollment in the programs exist because CMS does not have comprehensive national data on TMA enrollment and expenditures.

MedPAC

MedPAC Recommends Changes to Three Types of MA Special Needs Plans

Last week, the Medicare Payment Advisory Commission (MedPAC) unanimously approved a recommendation that Congress overhaul the authority for Medicare Advantage special needs plans (SNPs). Set to expire at the end 2013, but subsequently reauthorized for an additional year by the American Taxpayer Relief Act of 2012, at a cost of $300 million, the SNP program created special rules for private health insurance providers to tailor benefit packages to unique populations, such as individuals with institutional needs or certain chronic conditions, seeking Medicare coverage under Part C (Medicare Advantage). If Congress chooses not to reauthorize SNPs, as of Jan. 1, 2015, they could operate as regular MA plans, rather than having the authority to serve special beneficiary groups. Reauthorization would increase Medicare costs because spending on beneficiaries in SNPs is generally higher than on those in traditional Medicare, according to staff. MedPAC will deliver this and other recommendations to Congress in the annual March report.

Congressional Research Service (CRS)

State Rx Drug Monitoring Programs Reduce Drug Abuse, CRS Report Says

According to a Congressional Research Service report released Jan. 7, state prescription drug monitoring programs (PDMPs) reduce prescription drug abuse through the maintenance of statewide electronic databases of prescriptions dispensed for controlled substances. The report also examines the effectiveness of PDMPs, outlines federal grants supporting them and discusses relevant considerations for policymakers, such as interstate data sharing, interoperability and protection of health information.

"The available evidence suggests that PDMPs are effective in reducing the time required for drug diversion investigations, changing prescribing behavior, reducing 'doctor shopping,' and reducing prescription drug abuse; however, research on the effectiveness of PDMPs is limited," the report said.

Commonwealth Fund

Comprehensive Payment Reforms Could Trim Overall Health Cost Growth

According to a report released by the Commonwealth Fund last week, savings generated from a comprehensive set of payment reforms in the health care system affecting Medicare, Medicaid and private insurance would more than offset the cost of repealing Medicare's scheduled cuts in physician payments. The United States "pays much higher prices for health services than do other countries, whether for drugs, medical devices, diagnostic tests, or other services," the report said, adding there is "wide variation in the prices paid by different payers for the same services." Recommendations in the report center on three "synergistic" payment reform strategies, including provider payment reforms to promote value, policies to expand options and encourage high-value choices by consumers, and systemwide action to improve how health care markets function.

Health Affairs

Physicians Spend 11 Percent of Their Careers with Open Malpractice Claim

A report recently published in Health Affairs finds that medical malpractice claims, and the time required to resolve them, are placing a significant burden on doctors in the U.S. "Analyzing data from 40,916 physicians covered by a nationwide insurer, we found that the average physician spends 50.7 months -- or almost 11 percent -- of an assumed forty-year career with an unresolved, open malpractice claim." The report notes that while the overall cost associated with malpractice cases presents a burden, reducing the time necessary to adjudicate malpractice claims, so long as the needs of the patient are not affected, should be a component of any medical liability policies.


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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