May 13, 2013
Weekly Washington Healthcare Update
House of Representatives
Health and Human Services (HHS)
Centers for Medicare and Medicaid Services (CMS)
3. State Activities
4. Regulations Open for Comment
General Accountability Office (GAO)
Congressional Budget Office (CBO)
House of Representatives
Ways and Means Hearing on Physician Payments
On Tuesday, the Ways and Means Health Subcommittee held a hearing to examine options in the development of a viable Medicare physician payment policy. Members focused on building upon a framework proposal established by the Ways and Means Committee in conjunction with the Energy and Commerce Committee. Witnesses urged Congress to adopt a new Medicare physician payment system that includes a five-year transition from the current payment formula and provides positive payment updates during that time while financially rewarding doctors for providing high-quality care. However, even with the Congressional Budget Office (CBO) recently scoring a 10-year freeze of physician payments, in lieu of drastic cuts called for by the sustainable growth rate (SGR) formula, offsetting the cost of a permanent fix to Medicare physician payments remains a significant obstacle.
David Hoyt, M.D.
American College of Surgeons
Kim Allan Williams, M.D.
American Society of Nuclear Cardiology
Charles Cutler, M.D.
Chair, Board of Regents
American College of Physicians
Frank G. Opelka, M.D.
Vice-Chair, Consensus Standards Approval Committee
National Quality Forum
Patrick Courneya, M.D.
HealthPartners Health Plan
For more information: waysandmeans.house.gov
Energy and Commerce Rx Security Markup Scheduled
The Energy and Commerce Committee has scheduled a full committee markup in order to consider, among other legislation, a bill introduced by Rep. Latta (R-OH) to establish a national regulatory framework to enhance the safety and integrity of the nation's pharmaceutical distribution system. The legislation was reported out of the Health Subcommittee by voice vote on Wednesday, despite opposition from some Democrats, who largely fear that the legislation doesn't provide enough certainty that unit-level tracing will be achieved, and that it could hamper ongoing efforts to implement similar policies.
GOP Not Interested in IPAB Nominations
Last week, House Speaker Boehner (R-OH) and Senate Minority Leader McConnell (R-KY) sent a letter to President Obama confirming that they would not be nominating any potential appointees to the Independent Payment Advisory Board (IPAB) established under the ACA as a cost control mechanism for Medicare. The board would make binding spending reduction proposals when Medicare spending exceeds an indexed threshold. Congress would have to replace the recommendations with equal or greater cuts if it disagreed with the panel's recommendations. Though the CMS Actuary recently affirmed that Medicare spending growth was not sufficient in recent years to trigger such action on the part of IPAB, Republicans have consistently criticized the board as unelected bureaucrats who would interfere with beneficiary access to care. "We believe Congress should repeal IPAB," Boehner and McConnell wrote, "just as we believe we ought to repeal the entire health care law."
Small Business Committee Hearing on Health Insurance Tax
Last week, the Small Business Subcommittee on Health and Technology held a hearing titled "The Health Insurance Fee: Impact on Small Businesses," in which members explored a fee on fully insured health insurance that starts in 2014 under ACA, with concern over whether the fee will hurt small businesses more than large companies. According to a study conducted by the National Federation of Independent Business (NFIB) the fee will raise premiums of employer-sponsored insurance by as much as 3 percent, costing nearly $5,000 per family over a decade. The fee and other ACA taxes on businesses that will benefit from health reform are levied to pay for expanding coverage under the law to an estimated 27 million people.
Mr. William Dennis, Jr.
Senior Research Fellow
Mr. Ryan P. Thorn
Ryan P. Thorn Insurance Planning
Testifying on behalf of the National Association of Health Underwriters
Mr. Paul N. Van de Water
Center on Budget and Policy Priorities
Mr. Dean Norton
New York Farm Bureau
For more information, or to view the hearing, please visit: smallbusiness.house.gov
HELP Hearing on Pharmaceutical Compounding
On Thursday, the Senate HELP Committee held a hearing to explore efforts on the part of the FDA and industry groups to oversee the operation of pharmaceutical compounders, such as the New England Compounding Center, which was responsible for more than 50 deaths as a result of contaminated drugs. Chairman Harkin (D-IA) has circulated a draft of legislation that would require compounding pharmacies that produce drugs without a prescription and then sell them across state lines to be licensed under a newly created category of compounding manufacturers. Compounding pharmacies have long been the subject of regulatory confusion between the FDA and state authorities as a result of the unique space in which they operate, it often being difficult to distinguish whether the compounder is operating as a bulk manufacturer or serving specific patients in response to a prescription. Chairman Harkin expects to formally mark up his draft legislation before the Memorial Day recess.
Dr. Janet Woodcock
Director, Center for Drug Evaluation and Research
Food and Drug Administration, U.S. Department of Health and Human Services
Carmen S. Catizone
National Association of Boards of Pharmacy, Mount Prospect, IL
Director, Medical Programs
The Pew Charitable Trusts
David G. Miller
Executive Vice President and CEO
International Academy of Compounding Pharmacy
Dr. Kasey K. Thompson
Vice President, Office of Policy, Planning and Communications
American Society of Health-System Pharmacists
For more information, or to view the hearing, please visit: help.senate.gov
Tavenner Confirmation Vote Scheduled
After repeated threats from senators on both sides of the aisle, including a hold proposed by HELP Chairman Harkin (D-IA) as a result of HHS's decision to tap into funds Harkin championed for prevention activities in the ACA, CMS Acting Administrator Tavenner seems to have cleared the final hurdles remaining before a final confirmation vote by the full Senate. The Finance Committee approved her nomination earlier this year by voice vote. Tavenner would become the first confirmed administrator since 2006.
Finance Committee Asks Docs for Medicare Payment Reform Ideas
On Friday, Finance Committee Chairman Baucus (D-MT) and ranking member Hatch (R-UT) posed a request for information to physicians and other stakeholders as the committee works to develop a sustainable policy for Medicare physician payments. "The Committee invites input from the provider community and other key stakeholders as we develop a more viable alternative to the SGR that will provide stability for physician reimbursement and lay the necessary foundation for a performance-based payment system. Comments containing specific suggestions will be of the most value to the Committee as we continue to work on physician payment reform," the senators wrote. The Finance Committee has scheduled a hearing for Tuesday, May 14, to explore the payment reform policies more thoroughly.
New PCORI Grants Awarded
Last week, the Patient-Centered Outcomes Research Institute (PCORI) announced the award of $88.6 million in comparative effectiveness research funds to institutions in 21 states. The grants are for 51 research projects over three years, and include studies of care for kidney disease, cancers, obesity, asthma, diabetes and mental health conditions. The awards are part of PCORI's second cycle of primary research funding, which opened for submissions in September 2012, and were selected from among more than 400 completed applications. In total, PCORI has awarded $129.3 million in primary research grants and another $30 million for a series of pilot projects. "PCORI and our merit reviewers believe that patients and those who care for them will greatly benefit from the comparative information these projects will provide," said PCORI Executive Director Joe Selby, M.D., MPH.
Hospital Data Reveals Wide Variation in Treatment Costs
Last week, HHS released data on the rates charged for common procedures by more than 3,000 hospitals that receive payments for Medicare inpatient services, revealing that wide variation exists for the same procedures across the spectrum of hospitals. In many cases, two patients with seemingly identical conditions receiving the same treatment could have very different bills, and their insurers could make very different payments. "Currently, consumers don't know what a hospital is charging them or their insurance company for a given procedure, like a knee replacement, or how much of a price difference there is at different hospitals, even within the same city," Sebelius said in a statement. "This data and new data centers will help fill that gap."
$150 Million in Community Health Center Outreach Grants
HHS announced it is making $150 million available to community health centers for outreach and education activities related to the new health insurance marketplaces. The May 9 announcement informed stakeholders that activities including hiring new staff and training existing staff to help consumers understand their coverage options for health insurance in the online insurance exchanges would be permitted as part of the funding. The funding may not be used to provide primary health care services or pay for personnel other than outreach and enrollment assistance workers. The grant awards will be handled by the Health Resources and Services Administration (HRSA), which oversees federally funded community health centers. Applications are due May 31.
Utah Exchange Format Accommodated
CMS's Center for Consumer Information and Insurance Oversight (CCIIO) has announced it will issue new regulations regarding the small business health exchange operated by Utah. According to CCIIO Director Cohen, his agency will allow Utah to operate its existing small-business exchange as the Small Business Health Options Program (SHOP) as the feds run the state's individual exchange. CCIIO also outlined how the feds and Utah will split responsibilities on navigator programs and plan management. Cohen indicated other states are welcome to explore similar arrangements.
3. State Activities
Oregon Announces Health Insurance Rates
With exchange enrollment expected to begin in October, Oregon officials have posted proposed health insurance rates that would be available to individuals purchasing coverage through the newly created health insurance marketplaces, created under the ACA. The Oregon insurance department also posted examples of expected premiums by age and region. In all, 16 insurers and two CO-OPs filed rates with the department. "Oregon has one of the nation's most competitive health insurance markets, and one of its most rigorous and public rate reviews," Oregon Insurance Commissioner Lou Savage said in a statement. "We will be looking closely at what rates are justified in this reset of the market with new plans and new prices."
Update on State Decisions Regarding ACA's Expansion of Medicaid
Though HHS has set no firm deadline on state expansion decisions, further decision delays could make states ineligible for federal financial assistance. To date, 24 states and the District of Columbia appear likely to participate in ACA's Medicaid expansion, while 26 states are unlikely to do so. Most recently, the Missouri legislature passed a bill to effectively block Medicaid expansion, which would expand coverage to an estimated 250,000 residents. Florida, Montana, Idaho, South Dakota and Wyoming lawmakers have all indicated that no activity on the issue will occur until 2014. In some states, committees charged with studying the impact of a potential expansion are virtually assured that no functional expansion will take place before health insurance exchanges are expected to become operational, on Jan. 1, 2014. If all 26 negatively leaning states opt out of the expansion, which is set to begin in January, an estimated 5.5 million individuals nationwide will gain access to Medicaid coverage compared with about 10.7 million who would gain coverage if all states took part in the expansion.
4. Regulations Open for Comment
NEW - Tanning Bed Warning Label Proposal
Last week, the FDA issued a proposal that would elevate tanning beds from a low-risk to high-risk medical device and would add a warning label to them. If the order is finalized, manufacturers would have to submit a pre-market notification (510(k)) to the FDA for these devices, which are currently exempt from any pre-market review. Manufacturers would have to show that their products have met certain performance testing requirements, address certain product design characteristics and provide comprehensive labeling that presents consumers with clear information on the risks of use. The order proposes to include a contraindication against use on people under 18 years old, and the labeling would have to include a warning that frequent users of sunlamp products should be regularly screened for skin cancer.
The FDA will take comments on the proposed order until Aug. 7.
To view the Proposed Order, called "Reclassification of Ultraviolet Lamps for Tanning, Henceforth To Be Known as Sunlamp Products," please visit: www.fda.gov
Skilled Nursing Facility FY 2014 Payment Rule
CMS has issued a proposed rule that would raise payments to skilled nursing facilities (SNF) by $500 million or 1.4 percent in fiscal year 2014. The rate reflects an estimated increase of 2.3 percent market basket increase, reduced by a 0.5 percentage point forecast error correction and further reduced by a 0.4 percentage point productivity adjustment required by law. CMS said the proposal would both revise and rebase the payment by requiring the establishment of an updated SNF marketplace index that would reflect changes over time in the prices of an appropriate bundle of goods and services for covered SNF services within the Medicare system. The proposed changes to the SNF market basket would reflect FY 2010 allowable Medicare total cost data (routine, ancillary and capital-related), shifting from FY 2004 base year, as it is the most recent year for which relatively complete Medicare cost report data is available. Other significant changes within the rule would establish a Minimum Data Set (MDS) to record the number of distinct calendar days of therapy for all rehabilitation disciplines to be linked to each beneficiary; such a proposal would clarify the qualifying conditions for "Medium Rehab Category" and "Low Rehab Category" to five and three distinct calendar days respectively. Comments are due by July 1, 2013.
Hospice Payment Rule Proposed
CMS issued a proposed rule addressing hospice payment rates and the wage index for fiscal year (FY) 2014. The proposed rule would increase Medicare payments to hospices by an estimated 1.1 percent for FY 2014, amend hospice quality reporting requirements, clarify coding requirements and update stakeholders on hospice payment reform. As proposed, hospice providers would receive an estimated 1.1 percent increase in their payments for FY 2014, a net result of a proposed hospice payment update to the hospice per diem rates of 1.8 percent (a "hospital market basket" increase of 2.5 percent minus 0.7 percentage point for reductions mandated by the Affordable Care Act), and a 0.7 percent decrease in payments to hospices due to updated wage data and the fifth year of CMS's seven-year phaseout of its wage index budget neutrality adjustment factor. CMS will accept comments on the proposed rule until June 28, 2013.
IRS Proposed Rule -- Employer-Sponsored Plan Value
The Internal Revenue Service has published a proposed rule on the minimum required value of employer-sponsored coverage that won't trigger the employer mandate penalty and other provisions involving the premium tax credits on the exchanges. The proposed regulations affect individuals who enroll in qualified health plans through Affordable Insurance Exchanges (Exchanges) and claim the premium tax credit, and Exchanges that make qualified health plans available to individuals and employers. These proposed regulations also provide guidance on determining whether health coverage under an eligible employer-sponsored plan provides minimum value and affects employers that offer health coverage and their employees. Comments will be accepted until July 1, 2013.
Inpatient Rehabilitation Facility Prospective Payment Proposed Rule
CMS has announced proposed changes to update the Medicare Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) rates for fiscal year (FY) 2014. CMS proposes to increase Medicare payments to IRFs in FY 2014 by 2.0 percent, or $150 million. This proposed increase reflects the combined effects of a 2.5 percent market basket increase factor, a 0.4 percent reduction due to the multifactor productivity adjustment and an additional 0.3 percent reduction as required under the Affordable Care Act. CMS is proposing an update to the outlier threshold, which would increase IRF payments by an estimated 0.2 percent.
CMS is also proposing to update the presumptive methodology used in determining whether an IRF has met the requirements of the "60-percent rule" by removing a number of codes from the presumptive compliance list. This revised list is meant to reflect only those codes that can be identified presumptively as both representing one of 13 conditions and requiring intensive rehabilitation. The proposed revisions fall in the following categories: nonspecific diagnosis codes, arthritis diagnosis codes, unilateral upper extremity diagnosis codes, some congenital anomalies diagnosis codes and other miscellaneous diagnosis codes. Public comments on the proposals will be accepted until July 1, 2013.
Inpatient Prospective Payment System (IPPS) Proposed Rule
CMS has issued a proposed rule to revise the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals to implement changes arising from continuing experience with these systems. These proposed changes would be applicable to discharges occurring on or after Oct. 1, 2013, unless otherwise specified in this proposed rule. The proposed rule includes an update to the rate-of-increase on limits for certain hospitals excluded from the IPPS that are paid on a reasonable cost basis subject to these limits. The proposed updated rate-of-increase limits would be effective for cost reporting periods beginning on or after Oct. 1, 2013. In addition, the proposed rule includes a number of changes relating to direct graduate medical education (GME) and indirect medical education (IME) payments. Specifically, CMS proposes to establish new requirements or revised requirements for quality reporting by specific providers (acute care hospitals, PPS-exempt cancer hospitals, LTCHs and inpatient psychiatric facilities (IPFs) that are participating in Medicare. Lastly, the proposed rule includes updated policies relating to the Hospital Value-Based Purchasing (VBP) Program and the Hospital Readmissions Reduction Program. Rates for inpatient stays at hospitals that participate in the quality reporting system would increase by 0.8 percent in 2014 under the proposed Prospective Payment System rule. Rates at long-term care hospitals would go up by 1.1 percent. The proposed IPPS rule also clarifies that a hospital inpatient admission spanning two midnights -- more than one Medicare utilization day -- would be paid for under Part A. Comments must be submitted by 5 p.m. on June 25, 2013.
Medicare Fraud Tip Proposed Rule Would Increase Financial Reward
CMS has issued a proposed rule that would revise the Medicare Incentive Reward Program (IRP) to increase the potential financial reward for successful Medicare fraud tips to $9.9 million, up from $1,000 or 10 percent of recovered amount, whichever is less. The new standard would apply a formula of up to 15 percent of the first $66 million recovered. The Medicare Incentive Reward Program was created under the Health Insurance Portability and Accountability Act (HIPAA), which stated the HHS Secretary should implement a program to reward individuals who report potential Medicare fraud. Comments are due no later than 5 p.m. on June 28.
Charitable Hospital Rule
CMS has announced a proposed rule providing guidance to charitable hospital organizations on the community health needs assessment (CHNA) requirements, and related excise tax and reporting obligations enacted as part of the Patient Protection and Affordable Care Act of 2010. The proposed regulation also clarifies the consequences for failing to meet these and other requirements for charitable hospital organizations. These regulations will affect charitable hospital organizations.
Comments and requests for a public hearing must be received by July 1.
CMS Proposed Rule Would Increase Oversight of Accrediting Organizations
CMS has issued a proposed rule that would revise the survey, certification and enforcement procedures related to CMS oversight of national accreditation organizations (AOs). These revisions would implement certain provisions under the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). The proposed revisions would also clarify oversight of AOs that apply for, and are granted, recognition and approval of an accreditation program in accordance with the Social Security Act. According to the proposed rule, health care facilities, with the exception of kidney transplant centers, end-stage renal dialysis facilities and providers of medical equipment and supplies, can demonstrate their compliance with Medicare conditions of participation, conditions of certification or conditions of coverage by being accredited by a CMS-approved organization. The proposed rule would implement, among other things, provisions requiring prospective or existing accreditation organizations seeking CMS approval of their programs to submit documentation proving they are a national accreditation organization, defined as an organization that accredits health care facilities under a specific program and whose accredited health care facilities under each program are widely located geographically across the United States. Comments on the proposed rule are due June 4.
IRS, HHS, DOL Issue Proposed Health Coverage Waiting Periods Rules
Under proposed rules issued jointly by the Internal Revenue Service, the Department of Labor's Employee Benefits Security Administration and the Department of Health and Human Services, no group health plan or group health insurance issuer could impose a waiting period that exceeds 90 days after employment. The rules also would amend regulations to conform to ACA provisions already in effect, as well as those that will become effective beginning in 2014, barring discrimination against people with pre-existing medical conditions. Comments are due by May 20.
FDA Proposed Rule on Defibrillator Premarket Approval Applications
The FDA filed notice of of a proposed rule to require the filing of a premarket approval application (PMA) or a notice of completion of a product development protocol (PDP) for the following class III preamendment devices: automated external defibrillators systems (AEDs), which include the AED device and its accessories (i.e., pad electrodes, batteries and adapters). The Agency is also summarizing its proposed findings regarding the degree of risk of illness or injury designed to be eliminated or reduced by requiring this device to meet the statute's premarket approval requirements and the benefits to the public from the use of the device. In addition, FDA is announcing the opportunity for interested persons to request that the Agency change the classification of the AED based on new information. This action implements certain statutory requirements. Comments will be accepted until June 20.
Proposed Rule for Part A Payment Appeals
On March 13, CMS issued a proposed rule that would allow CMS to pay for additional hospital inpatient services under Medicare Part B after it was denied under Part A because the beneficiary should have been treated as an outpatient. According to CMS, the rule would result in a $4.8 billion decrease in Medicare program expenditures over five years. The proposed rule will be published in the March 18 Federal Register, and comments are due May 17. Additionally, CMS Administrator Marilyn Tavenner issued an Administrator's Ruling to address the number of appeals of Part A hospital inpatient reasonable and necessary denials. The ruling sets a standard process for pending appeals and billing for the additional Part B inpatient services while the proposed rule is vetted.
CMS Request for Information (RFI) on Health Information Technology
CMS and the Office of the National Coordinator for Health Information Technology released a request for information on a number of options to further push the exchange of health information. Suggested options include requiring or encouraging Medicare ACOs to include health information exchange components, requiring health information exchange components in care models for dual eligibles and promoting the use of "Blue Button," which is a way for consumers to securely access their health information.
FDA Draft of Risk-Benefit Plan Published
The FDA filed a draft of its five-year plan for developing and implementing a benefit-risk framework that will guide its review of drugs. The notice was provided for in last year's prescription drug user fee agreement. Drug companies and some patient advocates have argued that FDA is overly concerned with risks that the market is willing to bear. FDA agreed to go through a public process of developing a framework that would factor those concerns into its review process.
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.
Medicaid: Alternative Measures Could Be Used to Allocate Funding More Equitably
According to a report recently issued by GAO, multiple data sources could be used to develop measures to allocate Medicaid funding to states more equitably than the current funding formula -- known as the Federal Medical Assistance Percentage (FMAP) -- which is based solely on per capita income (PCI). To be equitable from the perspective of beneficiaries and allow states to provide a comparable level of services to each person in need, a funding allocation mechanism should take into account the demand for services in each state and geographic cost differences among states. To be equitable from the perspective of taxpayers, an allocation mechanism should ensure that taxpayers in poorer states are not more heavily burdened than those in wealthier ones, by taking into account state resources. Medicaid is the largest federal program assisting states in financing medical and health-related services for certain low-income individuals. States and the federal government share in the financing of the Medicaid program, with the federal government matching most state expenditures for Medicaid services on the basis of a statutory formula known as the FMAP, which is based solely on state PCI in relation to national PCI. Prior GAO work has raised concerns about the FMAP, noting that PCI does not accurately represent states' populations in need of Medicaid services or states' ability to finance services, and does not account for geographic cost differences among states.
New 10-Year Baseline to be Released May 14
CBO plans to release its updated 10-year baseline projections of federal spending, revenues and budget deficits on Tuesday, May 14. The projections reflect new information obtained since "The Budget and Economic Outlook: Fiscal Years 2013-2023" was issued in February and will be available on CBO's website Tuesday afternoon. Also, each year, CBO works together with the staff of the Joint Committee on Taxation to estimate the budgetary impact of the changes to spending programs and the tax code that were proposed in the President's budget. That analysis of the budgetary outlook under the President's proposals will be available on CBO's website Friday afternoon, May 17.
If you have any questions, please contact Stephanie Kennan, Senior Vice President, or Brian Looser, Assistant Vice President, at McGuireWoods Consulting.
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