Jun 16, 2014

Washington Healthcare Update

1. Congress

House of Representatives


2. Administration

3. State Activities

4. Regulations Open for Comment

5. Reports

1. Congress


House E&C Subcommittee Holds Hearing on ACA Patient Access

On June 12, 2014, House Energy and Commerce Committee's Subcommittee on Health held a hearing exploring the challenges patients face accessing providers, medicines and treatments through coverage obtained in the Affordable Care Act's (ACA) health insurance exchanges. The hearing gave members on the committee the opportunity to ask questions concerning the cost reduction tools providers are using to offset some of the higher costs resulting from the law's benefit mandates and the effects those cost-cutting tools are having on patients' premiums, cost-sharing and access to specialty physicians and medications. In his opening statement, Chairman Joe Pitts (R-PA) said that the administration is not upholding its promise that patients can keep their current physician or health care plan. The honorable Scott Gottlieb, M.D., mirrored the chairman's sentiments in his testimony, saying that the ACA has allowed insurers to narrow the networks of coverage for patients.

Witness List:

Scott Gottlieb, M.D.
Resident Fellow
American Enterprise Institute

Monica Lindeen
Montana Office of the Commissioner of Securities and Insurance

William F. Harvey, M.D.
Chair, Government Affairs Committee
American College of Rheumatology

For more information, or to view the hearing, please visit

Energy and Commerce Approves Trio of Health Bills

On June 10, 2014, the House Energy and Commerce Committee marked up three health-related pieces of legislation aimed at promoting innovation and modernize public health programs, reporting each bill affirmatively by voice vote. Introduced by Health Subcommittee Chair Joe Pitts (R-PA) and Ranking Member Frank Pallone (D-NJ), the Improving Regulatory Transparency for New Medical Therapies Act (HR 4299) would require the Drug Enforcement Administration (DEA) to make interim scheduling decisions for new drugs within 45 days of receiving an FDA scheduling recommendation, and to make final decisions on applications for registration to manufacture or distribute a controlled substance within 180 days. A second bill, Ensuring Patient Access and Effective Drug Enforcement Act of 2014 (H.R. 4709), introduced by Reps. Marino (R-PA), Blackburn (R-TN), Welch (D-VT) and Chu (D-CA) is intended to help fight prescription drug abuse by establishing a collaborative and coordinated approach among government agencies and stakeholders. Last, the Combating Autism Reauthorization Act of 2014 (H.R. 4631), introduced by Reps. Chris Smith (R-NJ) and Doyle (D-PA), would continue autism-related research, early identification and intervention, education and the activities of the Interagency Autism Coordinating Committee.

Latest Energy and Commerce Hearing on "21st Century Cures"

On June 11, 2014, the House Energy and Commerce Subcommittee on Health, chaired by Rep. Joe Pitts (R-PA), held its second hearing of the 21st Century Cures initiative, "Examining the Role of Incentives in Advancing Treatments and Cures for Patients." Subcommittee members heard from a number of experts and stakeholders on what role incentives for drug and device development play in accelerating the discovery of cures for disease. As part of the 21st Century Cures initiative, the subcommittee will issue a series of white papers seeking input and soliciting ideas on how Congress can help accelerate the discovery, development and delivery of promising new treatments to patients.

Witness List:

Dr. Sam Gandy
Mt. Sinai Health System

Marc Boutin
Executive Vice President and Chief Operating Officer
National Health Council

Alexis Borisy
Third Rock Ventures

Mike Carusi
General Partner
Advanced Technology Ventures on behalf of National Venture Capital Association

Dr. Fred Ledley
Natural & Applied Sciences and Management Director
Center for Integration of Science and Industry

C. Scott Hemphill
Professor of Law
Columbia Law School

Dr. Steven Miller
Senior Vice President and Chief Medical Officer
Express Scripts Holding Company.

For more information, or to view the hearing, please visit


Appropriations Committee Advances Labor-HHS Spending Bill

Last week, the Senate Appropriations Subcommittee on the Departments of Labor, Health and Human Services, and Education, and Related Agencies (Labor-HHS-Education) approved the (FY) 2015 Labor-HHS-Education appropriations bill, which provides $156,773,000,000 in base discretionary budget authority, the same as the FY 2014 level. The bill, which allots $30.5 billion to NIH, would force members to vote on several controversial issues concerning Obamacare during primary season; subsequently Committee Chairwoman Barbara Mikulski (D-MD) decided to delay the vote. In addition, the bill would give $600 million in additional funding to NIH; it would keep total labor-health spending identical to the FY 2014 level at $156 billion. The increase in proposed funding would effectively replace cuts made to NIH during sequestration, which caused NIH to slash 5 percent from its budget in March 2013. The increase in funding will allow NIH to, among other things, double the funding for certain research programs dealing with the brain, as well as with Alzheimer's disease.

Veterans Affairs Health Reform Passes the Senate

On Wednesday, June 11, the Senate passed a bill that would implement reforms to certain health programs within the Department of Veterans Affairs. The bill, S. 1982, which resembles legislation recently approved by the House on June 10, passed easily by a vote of 93-3. The legislation will cost a reported $50 billion annually, according to the Congressional Budget Office. This increased funding would cover the costs necessary to build more VA facilities, hire more medical staff and allow veterans to see doctors outside of the VA system if they live more than 40 miles from a VA location or experience too long of a wait. Lawmakers are hoping to have the bill to the president by the end of the month. In the wake of public outcry over failings with the veteran's health system, lawmakers involved in crafting the bills say they're hopeful that the two chambers can swiftly resolve their differences on issues such as how to fire incompetent VA executives, in order to get a bill to the president's desk.

2. Administration

Administration Delays ACA SHOP Employee Choice for 18 States

The White House on June 10 gave permission to 18 states not to implement part of the Affordable Care Act's (ACA) small business health insurance exchange for the second straight year. SHOP, the Small Business Health Options Program, is meant to encourage small businesses with up to 100 employees to provide health insurance to their workers, by giving them a menu of insurance options through an insurance exchange. The announcement marks the second delay to the SHOP exchanges, as states that relied on the federal SHOP exchange saw a similar delay for 2014. This most recent delay comes after state insurance commissioners raised concerns that insurers would charge higher prices for policies in 2015 under "employee choice" due to concerns about admitting sick consumers. Specifically, the decision will allow state insurance commissioners to request that the SHOP in their state abandon "employee choice" in 2015. States awarded the 2015 delay include: Alabama, Alaska, Arizona, Delaware, Illinois, Kansas, Louisiana, Maine, Michigan, Montana, New Hampshire, New Jersey, North Carolina, Oklahoma, Pennsylvania, South Carolina, South Dakota and West Virginia. This decision comes as no surprise, as Department of Health and Human Services (HHS) put out a release in May allowing states to petition for waivers to delay the "employee choice" portion of SHOP.

CMS: $60 Million in Grants Available for ACA Navigators

The Centers for Medicare & Medicaid Services (CMS) released an announcement that the agency is providing up to $60 million for the next round of grants to support health care navigators in certain states under the Affordable Care Act (ACA); this funding is $7 million less than was awarded in 2014 and comes after CMS released final regulations, protecting navigators' ability to provide face-to-face assistance to consumers in May. Navigators can be individuals, as well as public or private entities, who provide information to consumers about health insurance, the marketplace, qualified health plans and public programs like Medicaid and the Children's Health Insurance Program. "Navigators have been an important resource for the millions of Americans who enrolled in coverage in 2014. This funding ensures this work will continue next year, including during the open enrollment period for the marketplaces," said CMS Administrator Marilyn Tavenner in the press release. A letter of intent to apply is due by June 30, and applications are due by July 10.

3. State Activities

Virginia Budget Won't Feature Medicaid Expansion

Suddenly in the minority, Democrats in the Virginia State Senate have conceded to Republican demands to drop Medicaid expansion from the long-delayed state budget that passed out of both chambers on June 13. Although Medicaid expansion was Gov. Terry McAuliffe's top priority, the resignation of Democratic Sen. Phillip Puckett last week gave Republicans a 20-19 edge, allowing the GOP to slash the potential expansion of health care coverage to 400,000 low-income Virginia residents. Puckett's resignation came with much controversy, and he has had to withdraw his name from consideration for a post with the Virginia Tobacco Commission in response to allegations that he traded his Senate seat for the job. Questions still remain over whether Gov. McAuliffe will approve the bipartisan budget sans expansion in order to avert a government shutdown before July 1.

Data Show 95 Percent of Minnesotans Insured

The number of uninsured Minnesotans dropped from 445,000 to 264,500, according to a report released by the State Health Access Data Assistance Center at the University of Minnesota. A majority of the newly insured have enrolled in state programs such as Medicaid and MinnesotaCare -- an insurance program for low-income residents. The remainder got individual coverage directly from a health plan, or through MNsure, the state's health insurance exchange. This data follows national trends. Through May, 8 million people have now signed up for insurance through the federal health insurance marketplace.

4. Regulations Open for Comment

Draft Guidance for Industry on Drug Supply Chain Security Act Implementation: Identification of Suspect Product and Notification; Availability

On June 11, 2014, FDA announced the availability of a draft guidance for industry entitled "Drug Supply Chain Security Act Implementation: Identification of Suspect Product and Notification." The draft guidance addresses new provisions in the Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended by the Drug Supply Chain Security Act (DSCSA). The draft guidance is intended to aid certain trading partners (manufacturers, repackagers, wholesale distributors and dispensers) in identifying a suspect product and terminating notifications regarding illegitimate product. This draft guidance identifies specific scenarios that could significantly increase the risk of a suspect product entering the pharmaceutical distribution supply chain; provides recommendations on how trading partners can identify the product and determine whether the product is a suspect product as soon as practicable; and for product that has been determined to be illegitimate, or (for manufacturers) has a high risk of illegitimacy, sets forth the process by which trading partners should notify FDA of illegitimate product and how they must terminate the notifications, in consultation with FDA. Public comments on the draft guidance will be accepted through Aug. 11, 2014.

CMS Proposed Rule: Medicare, Medicaid EHR Incentive Program

On May 23, 2014, CMS issued a proposed rule that would change the meaningful use stage timeline and the definition of certified electronic health record technology (CEHRT). It would also change the requirements for the reporting of clinical quality measures for 2014. Certified EHR technology is defined for the Medicare and Medicaid HER Incentive Programs at 42 CFR 495.4, which references the Office of the National Coordinator for Health Information Technology's (ONC) definition of CEHRT under 45 CFR 170.102. For Stages 1 and 2 of meaningful use, CMS and ONC worked closely to ensure that the definition of meaningful use of CEHRT and the standards and certification criteria for CEHRT were coordinated. The definition of CEHRT under 45 CFR 170.102 requires, beginning with federal fiscal year (FY) and calendar year (CY) 2014, EHR technology certified to the 2014 Edition EHR certification criteria. Therefore, all EPs, eligible hospitals and CAHs must use 2014 Edition CEHRT to meet meaningful use under the Medicare and Medicaid EHR Incentive Programs, beginning with FY 2014 and CY 2014. Beginning in 2015, all eligible hospitals and professionals would still be required to report using the 2014 Edition CEHRT. The proposed rule also includes a provision that would formalize CMS' and ONC's previously stated intention to extend Stage 2 through 2016 and begin Stage 3 in 2017.

To view the CMS press release on the proposed rule, visit

Medicare Program; Prior Authorization Process for Certain Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Items

On May 23, 2014, CMS issued a proposed rule that would establish a prior authorization process for certain durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) items that are frequently subject to unnecessary utilization and would add a contractor's decision regarding prior authorization of coverage of DMEPOS items to the list of actions that are not initial determinations and therefore not appealable.

The proposed rule is intended to replicate the Medicare Prior Authorization of Power Mobility Device Demonstration. Launched in 2012, the demonstration established a prior authorization process for certain power mobility devices. Based on September 2013 claims data, monthly expenditures for certain power mobility devices decreased from $12 million in September 2012 to $4 million in August 2013 across the seven demonstration states (California, Florida, Illinois, Michigan, New York, North Carolina and Texas) with no reduction in beneficiary access to medically necessary items. CMS seeks to leverage this success by extending the demonstration to an additional 12 states. These states include Arizona, Georgia, Indiana, Kentucky, Louisiana, Maryland, Missouri, New Jersey, Ohio, Pennsylvania, Tennessee and Washington. This will bring the total number of states participating in the demonstration to 19.

CMS also proposes to establish a prior authorization process for certain durable medical equipment, prosthetics, orthotics and supplies items that are frequently subject to unnecessary utilization. Through a proposed rule, CMS will solicit public comments on this prior authorization process, as well as criteria for establishing a list of durable medical items that are frequently subject to unnecessary utilization that may be subject to the new prior authorization process. CMS will launch two payment model demonstrations to test prior authorization for certain non-emergent services under Medicare. These services include hyperbaric oxygen therapy and repetitive scheduled non-emergent ambulance transport. Information from these models will inform future policy decisions on the use of prior authorization.

The deadline to submit comments is July 28, 2014.

OIG Proposed Rule to Promote Civil Monetary Penalties for Health Fraud

On May 12, the Department of Health and Human Services Office of Inspector General published a rule in the Federal Register that would expand the use of civil monetary penalties (CMPs). Under the rule, CMPs could be applied to entities for failing to provide OIG with quick access to documents, ordering or prescribing medication or services while excluded from participation in federal health care programs, making false statements on enrollment applications, failing to report or return overpayments, and making a false statement that is part of a fraudulent claim. In addition, the proposed rule would also allow CMPs to be imposed on Medicare Advantage and Medicare Part D organizations. Comments on the rule are due July 11.

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 until June 30, 2014.

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.

5. Reports

Medicare Payment Advisory Commission: June 2014 Report to Congress

As part of its mandate from the Congress, each June the Medicare Payment Advisory Commission (MedPAC) reports on refinements to Medicare payment systems and on issues affecting the Medicare program, including broader changes in health care delivery and the market for health care services. In the seven chapters of the June 2014 Report to the Congress on Medicare and the Health Care Delivery System are:

  • Synchronizing Medicare policy across payment models
  • Improving risk adjustment in the Medicare program
  • Measuring quality of care in Medicare
  • Financial assistance for low-income beneficiaries
  • Paying for primary care using a per beneficiary payment
  • Medicare payment differences across post-acute settings
  • Measuring the effects of medication adherence on medical spending for the Medicare population

The Medicare Payment Advisory Commission (MedPAC) is an independent congressional agency established by the Balanced Budget Act of 1997 (P.L. 105-33) to advise the U.S. Congress on issues affecting the Medicare program. In addition to advising the Congress on payments to health plans participating in the Medicare Advantage program and providers in Medicare's traditional fee-for-service program, MedPAC is also tasked with analyzing access to care, quality of care and other issues affecting Medicare.

Medicaid and CHIP Payment and Access Commission: June 2014 Report

On June 13, 2014, the Medicaid and CHIP Payment and Access Commission (MACPAC) released its June 2014 Report to the Congress on Medicaid and CHIP. MACPAC is statutorily required to submit two reports to the Congress by March 15 and June 15 of each year. The reports include MACPAC's policy recommendations and also provide the Congress and the public with a better understanding of the Medicaid and CHIP programs, their roles in U.S. health care, and the key policy and data issues outlined in the Commission's statutory charge. Specifically, this report examines ongoing efforts to consider the interactions between Medicaid, CHIP and the exchanges established under the ACA. In addition, the report also focuses on the care of high-cost, high-need enrollees, exploring Medicaid's unique role in financing long-term services and supports (LTSS), among other issues. MACPAC is a non-partisan, federal agency charged with providing policy and data analysis to the Congress on Medicaid and CHIP, and with making recommendations to the Congress, the Secretary of the U.S. Department of Health and Human Services, and the states on a wide range of issues affecting these programs. Appointed by the U.S. Comptroller General, the 17 commissioners have diverse backgrounds, offer broad perspectives on Medicaid and CHIP, and represent different regions across the United States.

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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