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Jan 17, 2017

Washington Healthcare Update

This Week: Congress wraps up the first step to the unraveling of the Affordable Care Act…HHS continues to release regulations that may or may not stay when the Trump administration takes over.

Health Care Reform Takeaway From the Week of January 3

  • The Senate and House finished consideration of the Budget Resolution. The Budget Resolution paves the way for the unraveling of the Affordable Care Act. In the Senate, Democrats offered a number of amendments—mostly “message amendments” designed to make Republicans take votes against popular parts of the Affordable Care Act.
  • Of significance was an amendment offered and then withdrawn by Sen. Bob Corker (R-TN) to extend the resolution’s timeline to March 3 from Jan. 27 for committees of jurisdiction to respond to the resolution’s instructions to repeal the ACA. This was part of the concern on part of some members that there needed to be a replacement bill ready after the ACA was repealed. Corker withdrew the amendment after being assured that Jan. 27 was “only a placeholder” date.
  • While there are many moving parts to repeal and replace, more members are becoming concerned about how long it might take to get a replacement bill together.
  • Next step will be “reconciliation”—legislation that will repeal parts of the Affordable Care Act. What is not known is if a replacement plan will be ready to go after repeal.

1. Congress



2. Courts

3. Administration

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress


House Passes Budget Resolution

On Jan. 13, the House of Representatives passed the Budget Resolution 227 to 198 paving the way for the next step—Budget Reconciliation. The Senate had passed the resolution earlier in the week. The resolution contains instructions to the four House and Senate health-related committees that allow them to repeal the Affordable Care Act. While the instructions include Jan. 27 as the date to report back to the House and Senate Budget Committees with legislation, that date is expected to slip.

House Members Introduce Bipartisan Bill on Health Insurance Tax

The insurance industry and business stakeholders praised the recent reintroduction of legislation that would fully repeal the ACA’s tax on health insurance plans. Reps. Kristi Noem (R-SD) and Kyrsten Sinema (D-AZ) introduced the insurance tax repeal bill (HR 246), which has 81 original cosponsors. A full repeal of the tax was also included in last year’s reconciliation bill (HR 3762), which is seen as the baseline for lawmakers’ upcoming ACA repeal package.

The fee on insurance plans, which is based on market share, went into effect in 2014, but is currently on hold until 2018 due to a provision in last year’s omnibus spending bill.

The U.S. Chamber of Commerce recently launched a campaign urging Congress to end the HIT, as well as the ACA’s medical device tax and 40 percent excise tax on high-cost health plans. The campaign kicked off with a focus on the HIT since members will be impacted as early as February when businesses begin renewing health plans.


OMB Analysis Shows Senate Budget Resolution Increases Debt, Deficit

The Senate budget resolution paving the way for Obamacare repeal will drive up the public debt and national deficit over the next decade, the White House budget office wrote in a Jan. 9 letter.

The budget resolution would increase the public debt from $14.2 trillion in 2016 to $23.7 trillion in 2026, according to the Office of Management and Budget analysis. The annual on-budget deficit would increase to more than $1 trillion by 2026, OMB also found.

2. Courts

Court Blocks North Carolina Medicaid Expansion

A federal court has temporarily blocked an effort by North Carolina Gov. Roy Cooper to expand Medicaid under Obamacare.

The temporary restraining order Jan. 15 from U.S. District Court Judge Louise Wood Flanagan came soon after Republicans in the North Carolina Legislature sued to halt the new Democratic governor’s plan, which aimed to make North Carolina the 32nd state to expand under the ACA.

North Carolina GOP say Cooper’s plan to submit a Medicaid state plan amendment to the Obama administration to expand runs afoul of a 2013 state law that blocks him from acting on his own. Cooper, a former state attorney general, has argued that the state law does not apply to his plan.

The federal court order is in effect for two weeks and was issued before North Carolina officially submitted its plan to federal officials. The state was expected to do so early this week after a 10-day public comment period. Under the plan, expansion would take effect at the start of 2018.

Texas Judge Approves Delay of Final Rule for Dialysis Facilities

On Jan. 12, a Texas judge approved a request by dialysis companies to delay a new regulation, issued by the Department of Health and Human Services and expected to take effect Jan. 13, that would have required them to disclose to health plans when premium assistance was being offered to patients who sign up for private health insurance. The suit claims the rule, issued in the final weeks of the Obama administration, violates the Administrative Procedures Act.

Providers said if the rule was finalized as planned, insurers would use such information to refuse coverage to dialysis patients. HHS has said dialysis companies and other health care providers have steered patients away from Medicare and Medicaid health plans and into these private plans, offered through the Affordable Care Act health exchange programs, to boost profits.

U.S. District Judge Amos Mazzant granted the temporary restraining order, filed by dialysis providers Fresenius Medical Care, DaVita Inc. and U.S. Renal Care, along with Dialysis Patient Citizens, saying the group did show that HHS “likely violated the procedures of the Administrative Procedures Act” in pushing the final rule through without adequate time for feedback and review. The judge also said the providers showed evidence that patients would “suffer irreparable injury if the injunction is denied.” The rule, if approved, could force patients to shift to public insurance options, potentially disrupting insurance for themselves and members of their family now covered under private plans. Mazzant said HHS “will suffer no comparable harm if the Rule’s implementation is delayed while the Court addresses the merits of Plaintiffs’ challenges to the Rule.”

CMS issued the rule in December after requesting information from stakeholders on the potential impact of Medicare- or Medicaid-eligible patients’ being steered into commercial plans. The agency sought input after issuers complained about skyrocketing costs for ESRD and other services that they attributed to third parties helping patients pay premiums for exchange plans, which have higher provider reimbursement rates.

Addressing third-party payments has consistently topped the list of policy changes that the health insurance industry says would help stabilize the exchange market.

3. Administration

President-elect Trump Picks VA Health Chief Shulkin for VA Secretary

On Jan. 11, President-elect Donald Trump named David Shulkin, the top health official in the Department of Veterans Affairs, to be VA secretary. A physician, Shulkin serves as VA’s undersecretary of health, a position he has held in the Obama administration since 2015. Trump announced the surprise pick during a long-awaited press conference at Trump Tower in New York.

Shulkin is also one of the few, if only, holdovers from the Obama administration so far tapped by the Republican president-elect. Trump’s transition team is also weighing keeping Bob Work as the Pentagon’s deputy secretary for several months in the new administration, while a search goes on for a permanent appointee.

As undersecretary of health, Shulkin oversees the largest integrated health care system in the country. Before joining VA, Shulkin was president of the Morristown Medical Center in New Jersey and, earlier, president and chief executive of the Beth Israel Medical Center in New York City.

CMS Provides More Information on Calculations for Patient Action Objectives and Measures

CMS recently updated an FAQ to provide information about calculations for EHR Incentive Programs’ objectives and measures requiring patient action. More specifically, CMS provides an answer to the question: In calculating the meaningful use objectives requiring patient action, if a patient sends a message or accesses his/her health information made available by their eligible professional (EP), can the other EPs in the practice get credit for the patient’s action in meeting the objectives?

To see the FAQ, click here.

CMS Finalizes New Medicare and Medicaid Home Health Care Rules and Beneficiary Protections

On Jan. 9, CMS finalized rules governing home health agencies that will improve the quality of health care services for Medicare and Medicaid patients and strengthen patients’ rights. The Medicare and Medicaid Conditions of Participation are the minimum health and safety standards a home health agency must meet in order to participate in the Medicare and Medicaid programs.

Home health care allows patients to receive needed health care services within their own homes. Patients receive coordinated services ranging from skilled nursing to physical therapy to medical social services, all under the direction of their physician. Currently, there are more than 5 million Medicare and Medicaid beneficiaries receiving home health care from nearly 12,600 Medicare- and Medicaid-participating home health agencies nationwide.

The final rule includes:

  • A comprehensive patient rights condition of participation that clearly enumerates the rights of home health agency patients and the steps that must be taken to assure those rights.
  • An expanded comprehensive patient assessment requirement that focuses on all aspects of patient well-being.
  • A requirement that assures that patients and caregivers have written information about upcoming visits, medication instructions, treatments administered, instructions for care that the patient and caregivers perform, and the name and contact information of a home health agency clinical manager.
  • A requirement for an integrated communication system that ensures that patient needs are identified and addressed, care is coordinated among all disciplines, and there is active communication between the home health agency and the patient’s physician(s).
  • A requirement for a data-driven, agency-wide quality assessment and performance improvement (QAPI) program that continually evaluates and improves agency care for all patients at all times.
  • A new infection prevention and control requirement that focuses on the use of standard infection control practices, and patient/caregiver education and teaching.
  • A streamlined skilled professional services requirement that focuses on appropriate patient care activities and supervision across all disciplines.
  • An expanded patient care coordination requirement that makes a licensed clinician responsible for all patient care services, such as coordinating referrals and assuring that plans of care meet each patient’s needs at all times.
  • Revisions to simplify the organizational structure of home health agencies while continuing to allow parent agencies and their branches.
  • New personnel qualifications for home health agency administrators and clinical managers.

The final rule can be viewed here.

SAMHSA Issues Rule on Sharing of Substance Abuse Treatment Records

The Substance Abuse and Mental Health Service Administration (SAMHSA) on Jan. 13, issued a final rule that eases sharing of substance abuse treatment records among providers and restores researchers’ access to CMS data on the disorders. The rule lifts an old restriction that prevented certain data on substance abuse in Medicare and Medicaid from being accessed for research purposes. The rule also allows easier sharing of substance abuse treatment records among providers, while maintaining protections required under HIPAA for other medical records.

Under current law, providers have to get approval from patients each time substance abuse-related information is shared. Under the final rule, patients sign one consent form that establishes which information they are disclosing. Patients still have the right to know who sees that data.

Doctors have been pushing SAMHSA for years to change the restrictive regulation to make it easier to share information with different providers, saying it is difficult to practice medicine holistically when vital mental health information is lacking.

Privacy and patient advocates have been leery of changes that could put sensitive information in places where patients don’t want it seen.

SAMHSA also issued a supplemental notice of proposed rulemaking to make additional changes to the final rule. These would deal with restrictions on use and disclosure of Part 2-covered data for the purpose of payment and health care operations for contractors and subcontractors.

4. State Activities

California: Health Affairs Studies Find Consumers Missing out on Potential Benefits of Covered California

Consumers can find cheaper health plans in the California’s exchange if they shop around, but many are still missing out on the chance to get financial help to pay for their premiums, two studies released by the journal Health Affairs found. The average price that consumers actually paid for plans in Covered California was less than the average premium increase, and that gap has widened over time, the findings showed. Consumers paid 11.6 percent less on health plan premiums than the average offered price in 2014, 13.2 percent less in 2015 and 15.2 percent less than last year. The study’s authors attributed the discrepancy to enrollees switching to lower cost plans within the bronze and silver tiers, and steering away from gold and platinum plans. While plan prices in Covered California increased by four percent on average in both 2015 and 2016, this year’s increase averaged 13.2 percent, a three-fold spike but far lower than the average 22 percent rate hike reported nationwide. A separate Health Affairs study estimated that 31 percent of individual market consumers in California who were likely eligible for financial assistance missed out on potential savings, either because they purchased plans that were not silver tier, or they purchased their insurance outside Covered California.

New Jersey: Gov. Christie Lays Out Health Care Plans in State of State Speech

New Jersey Gov. Chris Christie devoted the majority of his annual State of the State speech to laying out a comprehensive plan to fight drug addiction. Christie, who has previously opposed insurance mandates, came out in support of requiring health insurers to cover six months of inpatient and outpatient rehab. Once drafted, the bill will most likely face opposition from the insurance industry. Christie also irked the state’s doctors by directing the state attorney general to use emergency rulemaking to limit initiation opioid prescriptions for acute pain to a five-day supply. In the speech, he talked about how his decision to expand Medicaid has allowed for a change in the availability of drug treatment for low-income New Jerseyans, but has yet to comment publicly on the ACA repeal process and the future of the half a million residents who gained coverage.

Pennsylvania: State Closing Two Mental Health Facilities

Pennsylvania Gov. Tom Wolf’s administration announced it will be closing as many as two residential mental health facilities and shifting patients into the community as the state grapples with a $1.7 billion budget deficit. Pennsylvania has decreased its state hospital population by 70 percent over the past 20 years. “The closures are part of the Wolf administration’s commitment to serve more people in the community, reduce reliance on institutional care, and improve access to home and community-based services for Pennsylvanians,” Department of Human Services Secretary Ted Dallas said in a statement. Once these centers close only four will remain, leaving some patient advocacy groups concerned that it will further exasperate the state’s psychiatric bed shortage.

Pennsylvania:CMS Announces Pennsylvania Rural Health Model

On Jan. 10, CMS and Pennsylvania announced the Pennsylvania Rural Health Model, a new initiative of the CMS Center for Medicare and Medicaid Innovation (Innovation Center). The model is designed to improve health and health care in rural Pennsylvania under an agreement signed by Governor Tom Wolf and Pennsylvania Secretary of Health Karen Murphy.

Specifically, the model seeks to increase rural Pennsylvanians’ access to high-quality care and improve their health, while also reducing the growth of hospital expenditures across payers, including Medicare, and increasing the financial viability of the state’s rural hospitals to ensure continued access to care facilities. Pennsylvania, through its Department of Health, will be a key partner in jointly administering this model with CMS.

Under this model, participating rural hospitals will receive all-payer global budgets—or a fixed amount of money that is set in advance and funded by all participating payers—to cover the inpatient and outpatient services they provide. Rural hospitals will use this predictable funding to deliberately redesign the care they deliver to improve quality and meet the health needs of their local communities.

The model is open to critical access hospitals and acute care hospitals in rural Pennsylvania. In addition, other payers covering individuals in the commonwealth, including Medicaid and commercial health plans, are eligible to participate in the model by paying participating rural hospitals through global budgets.

CMS intends to provide Pennsylvania with $25 million, which is a portion of the funding to begin implementing the Pennsylvania Rural Health Model. Pennsylvania will use this funding to operate the model, including data analytics, quality assurance and technical assistance to help rural hospital participants create and implement plans to improve quality of care and address the most prevalent health needs in the communities they serve.

For more information, click here.

Utah: 1115 Waiver Proposal Will Fall to Trump Administration

A decision on the Utah’s 1115 waiver proposal to enact a limited Medicaid expansion will fall to the Trump administration. The smaller scale expansion is expected to cover roughly 10,000 state residents who are in need of substance abuse and mental health treatment, are chronically homeless or involved in the criminal justice system. The plan was agreed to by Utah legislative leaders and Gov. Gary Herbert after ACA Medicaid expansion repeatedly failed in the state Legislature.

5. Regulations Open for Comment

CMS Releases Proposed Notice With Changes to Medicaid National Drug Rebate Agreement

On Nov. 7, CMS issued a proposed notice announcing changes that would be made to the Medicaid National Drug Rebate Agreement (NDRA) for use by the Secretary of the Department of Health and Human Services and manufacturers under the Medicaid Drug Rebate Program. The NDRA is being updated to incorporate legislative and regulatory changes that have occurred since the agreement was published in February 1991, as well as to make editorial and structural revisions, such as references to the updated Office of Management and Budget (OMB)-approved data collection forms and electronic data reporting. There is a 90-day comment period for this proposed notice that will end on Feb. 7, 2017.

For more information, click here.

Comments Due on IMPACT Act Cross-Setting Quality Measure

On Nov. 4, CMS announced that public comments are due Nov. 17 on a cross-setting post-acute care measure under the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) to further develop and refine the percentage of residents or patients with pressure ulcers that are new or worsened and language modifications being explored with the term “Pressure Injury.” CMS seeks feedback on potential updates to measure specifications and items used to calculate the quality measure. Visit the Public Comment webpage for more information.

CMS Issues Interim Final Rule to Delay Inclusion of U.S. Territories in Definitions of States and United States

CMS published the Covered Outpatient Drug Final Rule with Comment Period in the Federal Register on Feb. 1, 2016. As part of that final rule with comment, CMS amended the regulatory definitions of “States” and “United States” to include the U.S. territories (American Samoa, the Northern Mariana Islands, Guam, the Commonwealth of Puerto Rico and the U.S. Virgin Islands) beginning April 1, 2017. However, the agency said those territories could not be ready to implement the program by this date.

Therefore, CMS issued an Interim Final Rule with comment period that delays the inclusion of the territories in the definitions of “States” and “United States” from April 1, 2017, until April 1, 2020, which is effective on Nov. 15, 2016. There is a 60-day comment period that will end on Jan. 17, 2017.

For more information visit the Covered Outpatient Drugs Policy page on

CMS Issues Proposed Rule for Medicaid Managed Care Plans

CMS has issued a new proposed rule detailing regulations for pass-through payments to providers from Medicaid managed care plans. The guidance builds on the Medicaid managed care rule finalized by the Obama administration in May.

Read the proposed rule here.

CMS Announces PACE Innovation Act Request for Information

On Jan. 4, CMS released a Request for Information (RFI) seeking public input on potential adaptations of the model of care employed by the Program of All-Inclusive Care for the Elderly (PACE) for new populations, including individuals with physical disabilities, under the authority provided by the PACE Innovation Act. The PACE Innovation Act of 2015 (PIA) provides authority to test application of PACE-like models for additional populations, including populations under the age of 55 and those who do not qualify for a nursing home level of care, under Section 1115A of the Social Security Act.

The RFI includes two parts:

  • In the first part, CMS seeks comment on potential elements of a five-year PACE-like model test for individuals dually eligible for Medicare and Medicaid, age 21 and older, with disabilities that impair their mobility and who are assessed as requiring a nursing home level of care, among other eligibility criteria. We have provisionally named this model “Person Centered Community Care” or P3C. This potential model is designed to meet the requirements of a model test under Section 1115A of the Social Security Act and to adapt the PACE model of care for one population of focus. In addition to feedback on the potential elements of the P3C model described in the RFI, CMS seeks comment on the types of technical assistance that potential P3C organizations and states would require to participate in the model test.
  • In the second part of the RFI, CMS seeks information on additional specific populations whose health outcomes could benefit from enrollment in PACE-like models, and how the PACE model of care could be adapted to better serve the needs of these populations and the currently eligible population.

CMS is accepting feedback on this RFI until 5 p.m. EST on Feb. 10, 2017. Comments should be submitted electronically in PDF form to with the organization or individual submitting comments on the title of the document.

CMS Proposes Rule for Prosthetics and Orthotics Suppliers

On Jan. 11, CMS issued a proposed rule that would implement statutory requirements and specify: the qualifications needed for practitioners to furnish and fabricate prosthetics and custom-fabricated orthotics, and for qualified suppliers to fabricate prosthetics and custom-fabricated orthotics; accreditation requirements that qualified suppliers must meet in order to bill for prosthetics and custom‑fabricated orthotics; requirements that an organization must meet in order to accredit qualified suppliers to bill for prosthetics and custom-fabricated orthotics; and a timeframe by which qualified practitioners and qualified suppliers must meet the applicable licensure, certification and accreditation requirements. This rule would also remove the exemption from quality standards and accreditation that is currently in place in accordance with Section 1834(a)(20) of the Act for certain practitioners and suppliers who furnish or fabricate prosthetics and custom‑fabricated orthotics. In addition, this rule also includes authority for the Centers for Medicare & Medicaid Services (CMS) to revoke the Medicare enrollment of Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) suppliers that submit claims for items that do not meet the requirements of the statute and this proposed rule.

Only qualified practitioners who furnish or fabricate prosthetics and custom‑fabricated orthotics and qualified suppliers that fabricate or bill for prosthetics and custom‑fabricated orthotics would be subject to these requirements.

CMS will accept comments on the proposed rule until March 13, 2017, and will respond to comments in a final rule.

To see the proposed rule, click here .

6. Reports

CDC Report Shows Rural Americans at Higher Risk of Preventable Death

According to a new CDC report, Americans living in rural areas have higher death rates and suffer more preventable deaths from the leading causes of mortality compared to people in urban areas.

Mortality rates for the leading causes of death—heart disease, stroke, cancer, unintentional injury and chronic lower respiratory disease—were all higher among people living in rural areas compared to people living in metropolitan areas between 1999 and 2014, the CDC’s latest Morbidity and Mortality Weekly Report shows.

Figures from 2010 to 2014 also show that a higher percentage of those deaths were potentially preventable among people who lived in rural areas. For example, 42.6 percent of heart disease deaths among people in rural areas in 2014 were potentially preventable, compared to just 27.8 percent in metropolitan areas. Likewise, roughly 50 percent of deaths from unintentional injuries among people in rural areas were potentially preventable, compared to 30.9 percent in metropolitan areas.

The report authors said people in rural areas are more likely to report less access to health care and lower quality of care, compared to those in metropolitan areas where there are more health providers and more specialists.

GAO Report Finds Indian Health Service Has Limited Oversight of Quality of Care

In a new report, GAO found that the Indian Health Service (IHS) has limited, inconsistent oversight over the quality of care at its facilities. Among other things, a lack of agency-wide performance standards and significant leadership turnover have affected its oversight of quality. GAO recommended that IHS develop agency-wide standards for quality care, monitor facility performance in meeting these standards and develop succession plans for the replacement of key personnel.

American Indians and Alaska Natives die at higher rates than other Americans from preventable causes—such as diabetes and influenza.

To see the report, click here.

GAO Report Finds HHS Needs to Improve Communication and Revise Plans for Public Health Emergencies

In a new report, GAO found that staff at state and local health departments may need extra help responding to public health emergencies such as a flu pandemic or natural disaster. In such cases, personnel funded by certain Health and Human Services programs may be reassigned from their regular duties to help with emergency response. While no state has needed to request this help yet, GAO looked at how HHS plans to approve reassignment requests and to analyze whether reassignment was helpful during the emergency. GAO found that HHS has no plans to analyze the impact of reassignments on emergency response and recommended it develop such a plan.

To see the report, click here.

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

Stephanie Kennan, Senior Vice President
Charlie Iovino, Vice President
Caroline Perrin, Research Assistant

Founded in 1998, McGuireWoods Consulting LLC (MWC) is a full-service public affairs firm offering infrastructure and economic development, strategic communications & grassroots, and government relations services. McGuireWoods Consulting is a subsidiary of the McGuireWoods LLP law firm and has been named in The National Law Journal's special annual report, "The Influence 50," for the past several years. In the most recent report, McGuireWoods Consulting was ranked 15th of the 1,900 government relations firms in Washington, D.C.

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