1. Congress

House of Representatives

Boustany Inquires About Voter Registration Requirement in ACA

Last week, Ways and Means Oversight Subcommittee Chairman Boustany wrote a letter to HHS Secretary Sebelius inquiring about a voter registration question on the form individuals must fill out in order to access health insurance subsidies. Specifically, in his letter, Boustany expressed concerns over the presence of the question "Would you like to register to vote?" in a 61-page draft of the "List of Questions in the Online Application to Support Eligibility Determinations for Enrollment," noting that the Affordable Care Act (ACA) does not mention voter registration, and asked Sebelius to answer questions relating to the process leading up to the decision to include the question in the online subsidy application. "While the health care law requires that government agencies collect vast information about Americans' personal lives, it does not give your department an interest in whether individual Americans choose to vote," wrote Boustany.

Small Business Chairman Asks About Impact of SHOP Delay

On Wednesday, House Small Business Committee Chairman Sam Graves (R-MO) wrote a letter to acting CMS Administrator Marilyn Tavenner regarding the impact of a proposed one-year delay, announced by CMS on March 1, on the implementation of the Small Business Health Option Program (SHOP) for small business exchanges. In that proposal, CMS noted that this new "transitional policy" for SHOP exchanges was intended to provide flexibility with additional time for an employee choice model and to increase the stability of the small group market while simultaneously providing small groups with the benefits of SHOP in 2014. However, Rep. Graves asked various questions in his letter outlining his concerns over the progress of establishing SHOP exchanges, the options of coverage that would be available and whether SHOP exchanges would indeed be fully ready by 2015.

Oversight Committee Continues Query into CO-OP Program

Last week, Oversight and Government Reform Committee Chairman Issa (R-CA); Subcommittee on Energy Policy, Health Care, and Entitlements Chairman Lankford (R-OK); and Subcommittee on Economic Growth, Job Creation, and Regulatory Affairs Chairman Jordan (R-OH) wrote to HHS Secretary Sebelius to inquire about the ACA's CO-OP program, demanding records from both HHS and the eight applicants that received funding. "The high projected loss rate of the CO-OP program as well as the lack of transparency surrounding the awarding of these loans raises serious questions about the program," the chairmen wrote.


GOP Questions about Impact of Sequester on Insurance Exchanges

Senate Finance Committee and Senate Judiciary Committee Ranking Members Orrin Hatch (UT-R) and Chuck Grassley (IA-R), respectively, sent a joint letter to HHS Secretary Kathleen Sebelius on March 27 asking whether the online health insurance exchange markets will be open and operational by Jan. 1, 2014. The letter also asked discerning questions such as how federal budget cuts will limit available federal grants to states for the planning of exchanges under provisions within the Patient Protection and Affordable Care Act. Requesting a response by April 22, the Republican senators asked whether the agency will be discontinuing or lessening the "unlimited amount of exchange grants given to state to implement exchanges" and added, "If not, why not?"

2. Administration

Centers for Medicare and Medicaid Services (CMS)

CMS Releases Details on Available Private Options to Medicaid Expansion

Last week, CMS released guidance to states looking to expand their Medicaid programs by putting enrollees into private plans. CMS would require that states provide cost information to show that these premium assistance models are comparable in cost-sharing safeguards and benefits provided. States also must have a fail-safe coverage device in place to "wrap around" the private coverage plans that do not provide these requirements, the CMS briefing stated. A guidance memo from HHS said, "HHS will consider approving a limited number of premium assistance demonstrations since their results would inform policy for the State Innovation Waivers that start in 2017." The agency cautions, however, that it will consider these plans only if more than two qualified health plans are offered and "wrap around" benefits and premium support exist within the archetype. Furthermore, CMS affirmed that preference will be given to state proposals that target populations earning between 100 percent and 133 percent of the federal poverty level.

Medicare Chronic Conditions Dashboard Launched

According to CMS Acting Administrator Marilyn Tavenner, a new Medicare Chronic Conditions Dashboard launched last week will further the ACA's goals for "health promotion and the prevention and management of multiple chronic conditions." Specifically, the tool offers researchers, physicians, public health professionals and policymakers a location to access current data on where multiple chronic conditions occur, which services they require and how much Medicare spends helping beneficiaries with multiple chronic conditions.

CMS Proposes Medicare Coverage of Anti-Nausea Drugs

CMS has proposed an expansion of its Medicare benefit to include anti-nausea and vomiting therapy for beneficiaries undergoing chemotherapy. According to CMS, the decision is being considered because poorly controlled nausea and vomiting can result in "significant and severe physiologic consequences, including nutritional derangements, metabolic imbalances, anorexia, esophageal tears, fractures, and wound dehiscence." CMS said Medicare Administrative Contractors may determine coverage for an oral three-drug anti-vomiting regimen of aprepitant, a 5HT3 antagonist and dexamethasone with other anticancer chemotherapeutic agents that are approved by the Food and Drug Administration and are defined as "highly or moderately emetogenic."

3. State Activities

Virginia Sets Stage for Medicaid Expansion Pending Fed Approval

Last week, Virginia Gov. Bob McDonnell signed a bill into law that would create a pathway to Medicaid expansion in Virginia. However, that expansion hinges on approval of major Medicaid reforms being requested by the state. McDonnell's plan would create a 10-member panel of state legislators to certify that the Medicaid reform requirements have been met before expansion can occur.

Tennessee Governor Wants Medicaid Expansion with Private Market Twist

As many Republican governors are looking for ways to leverage their option to expand Medicaid to seize generous federal contributions to the program, Tennessee Gov. Bill Haslam has decided to support the use of Medicaid expansion dollars for private coverage within his state's health insurance exchange, as Arkansas Gov. Mike Beebe has proposed. "I fundamentally believe that people having health care coverage is better for our citizens and state than people not having coverage," Haslam said. The request has been endorsed by Tennessee Sens. Lamar Alexander and Bob Corker, both Republicans. "Nashville is the health care services capital of the country, and if your department would support Tennessee in doing what the state does best, Tennessee will continue to find innovative ways to provide better care for its citizens," they wrote in a letter to HHS Secretary Kathleen Sebelius. In response, HHS said it continues to talk with Haslam about his conditions for accepting the funds. "We welcome continued conversations with Tennessee about developing a state-based solution that meets both the state's unique needs and the requirements of the Medicaid program, while providing much needed coverage to thousands of Tennesseans," according to an HHS official.

California Dual-Eligible Demonstration Request Approved

On Wednesday, HHS announced that California will partner with CMS to test a new model for providing dual eligibles with "a more coordinated, person-centered care experience, along with access to new services." Under the demonstration, of which five have now been approved nationwide, California and CMS will contract with Medicare-Medicaid Plans to coordinate the delivery of and be accountable for the health care of covered Medicare and Medicaid services for participating Medicare-Medicaid enrollees. Roughly 456,000 dual eligibles in eight counties will be moved into the new model, with enrollment starting in October.

Louisiana Health Department Report Casts Doubt on Medicaid Expansion Fears

The Louisiana Department of Health and Hospitals has released a report that projects that accepting the ACA Medicaid expansion would deliver between $197 million and $368 million in state savings over the next 10 years while covering nearly 600,000 residents. While the report supports arguments that accepting the federal funds is a no-brainer, it also notes that Louisiana would need to produce $1.7 billion of its own money to round out the deal. Louisiana Gov. Jindal has stood in opposition to the expansion, noting that the expansion is not affordable.

4. Regulations Open for Comment

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

On Friday, 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 last week 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

Last week, 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.

HHS Interim Final Rule -- 2014 Notice of Benefit and Payment Parameters

HHS has issued an interim final rule with comment that builds upon standards set forth in the HHS Notice of Benefit and Payment Parameters for 2014. The interim final rule will adjust risk corridors calculations that would align the calculations with the single risk pool provision, and set standards permitting issuers of qualified health plans the option of using an alternate methodology for calculating the value of cost-sharing reductions provided for the purpose of reconciliation of advance payments of cost-sharing reductions. Comments are due by May 1, which is also when the rule becomes effective.

ACA's "Whistleblower" Protection Rule Proposed

On Friday, DOL published an interim final rule that would implement the employee protection (whistleblower) provision of Section 1558 of the Affordable Care Act, to provide protections to employees of health insurance issuers or other employers who may have been subject to retaliation for reporting potential violations of the law's consumer protections (e.g., the prohibition on denials of insurance due to pre-existing conditions) or affordability assistance provisions (e.g., access to health insurance premium tax credits). The interim rule also establishes procedures and time frames for the handling of retaliation complaints, including procedures and time frames for employee complaints to the Occupational Safety and Health Administration (OSHA), investigations by OSHA, appeals of OSHA determinations to an administrative law judge (ALJ) for a hearing de novo, hearings by ALJs, review of ALJ decisions by the Administrative Review Board (ARB) (acting on behalf of the Secretary of Labor) and judicial review of the Secretary's final decision. Comments will be received until April 23, 2013.

DOL's press release

View the rule

CMS Seeks Information on Brokers and Agents

CMS has announced it will collect licensing and other identifying information to register health insurance brokers and agents for federal health insurance exchanges. According to a notice published Feb. 7, health insurance brokers and agents would submit "basic identifying information on the exchange portal during the initial registration phase." When registration is completed, brokers and agents would be routed to CMS's Learning Management System "to access and complete required training and exams." User names and ZIP Codes for the brokers and agents would then be used to record training history and to communicate the results with the federally facilitated exchange (FFE). Comments are due by April 8.

Medicare Part C and Part D Payment Policy Guidance Released

On Friday, CMS announced proposed payment and policy guidance for Medicare Advantage (Part C) and Medicare prescription drug (Part D) plans for 2014. In its 2014 Advance Notice and draft Call Letter, CMS noted that in addition to reductions in Medicare Advantage premiums extending through 2013, costs of the defined standard Part D plan will be lower in 2014 than they are in 2013. The standard Part D deductible will be $310, down from $325 in 2013, and cost-sharing amounts will also be lower. Comments on the proposed Advance Notice and draft Call Letter must be submitted by March 1, 2013. The final 2014 Rate Announcement and Call Letter, including the final MA and FFS growth percentage and final benchmarks, will be published on Monday, April 1, 2013. For more information, please visit:

CMS also announced a proposed rule implementing the Affordable Care Act's medical loss ratio requirements for Part C and Part D plans. Specifically, Medicare health and drug plans will be required to meet a minimum medical loss ratio of at least 85 percent of revenue on clinical services, prescription drugs, quality improvements and/or direct benefits to beneficiaries in the form of reduced Medicare premiums beginning in 2014.

Comments on the proposed rule must be received by April 16. To view the proposed Medical Loss Ratio Requirements for MA and Part D go to www.ofr.gov.

Clinical Laboratory Rule

CMS has issued a proposed rule that would change existing regulations governing the proficiency testing (PT) process mandated by the Clinical Laboratory Improvement Amendments of 1988 (CLIA). As currently written, regulations dictate that any laboratory that intentionally refers a PT sample to another laboratory for analysis will automatically lose its CLIA certificate for at least one year. The proposed rule would reform Medicare regulations that CMS has identified as unnecessary, obsolete or excessively burdensome on health care providers and suppliers, as well as certain regulations under CLIA. This proposed rule would increase the ability of health care professionals to devote resources to improving patient care, by eliminating or reducing requirements that impede quality patient care or that divert resources away from providing high-quality patient care.

The proposed rule includes a related provision to existing regulations that would implement the recently enacted Taking Essential Steps for Testing Act of 2012 (TEST Act), which gives CMS the express authority to impose alternative sanctions in the event of a PT referral.

Comments will be accepted until April 8, 2013.

Draft Guidance for Alzheimer's Drug Development

As part of the National Plan to Address Alzheimer's Disease, the FDA has issued draft guidance to help drugmakers develop treatments for Alzheimer's disease before dementia sets in. "The purpose of this guidance is to assist sponsors in the clinical development of drugs for the treatment of various stages of Alzheimer's disease (AD) that occur before the onset of overt dementia. Specifically, this guidance addresses the FDA's current thinking regarding the selection of patients with early AD, or patients who are determined to be at risk of developing AD, for enrollment in clinical trials." Comments will be accepted until April 8.

IRS Propose Rules Individual Mandate Exemptions

On Jan. 30, IRS issued a proposed rule outlining exemptions from the individual mandate requirement of the Affordable Care Act. The proposed rule will "help to ensure that the [individual mandate penalty] applies only to the limited group of taxpayers who choose to spend a substantial period of time without coverage despite having ready access to affordable coverage," according to a joint CMS-IRS fact sheet. Specifically, the proposed rule would allow exemptions from the penalty for nine categories of individuals, including those who would have been eligible for Medicaid under the expansion allowed by the ACA, but live in a state that opts to not expand.

Other notable provisions include:

Religious Conscience: Under the proposed rule, the religious conscience exemption would apply to members of religious sects that are recognized as conscientiously opposed to accepting insurance benefits. The Social Security Administration currently administers the process for recognizing the groups under the law.

Family Subsidies: The proposed IRS rule states that the agency will consider individual coverage affordable if there is an offer for insurance where the premiums are 9.5 percent of household income or less, and assumes that the spouse or children of the individual would have affordable coverage as well. Family premium subsidies will not be available to the families of workers who can afford individual insurance through their employers.

Comments are due May 2 for the IRS proposed rule. IRS has scheduled a public hearing May 29.

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.

5. Reports

Government Accountability Office (GAO)

Patient-Centered Outcomes Research Institute (PCORI): Review of the Audit of the Financial Statements for 2012 and 2011

As part of its requirements under the ACA, the Patient-Centered Outcomes Research Institute (PCORI), which was also created by the health reform law, must undergo an annual Comptroller General financial statement audit. In a report released last week by the GAO, PCORI was found to have been fully compliant with all accounting requirements in 2011 and 2012. According to the report, "GAO did not find any instances in which the Patient-Centered Outcomes Research Institute's (PCORI) independent public accountant (IPA) did not comply, in all material respects, with U.S. generally accepted auditing standards and generally accepted government auditing standards in conducting PCORI's financial statement audit. PCORI's IPA provided an unmodified audit opinion on its 2012 and 2011 financial statements."

HHS Office of the Inspector General (HHS-OIG)

Physician-Owned Distributorships (PODS) Receive OIG Warning

The HHS Office of the Inspector General has issued a Special Fraud Alert regarding physician-owned distributorships (PODs). The alert stated that HHS-OIG considers PODS "inherently suspect under the anti-kickback statute." According to the report, "this Special Fraud Alert reiterates our longstanding position that the opportunity for a referring physician to earn a profit, including through an investment in an entity for which he or she generates business, could constitute illegal remuneration under the anti-kickback statute."

Medigap Deductible Coverage Through PPO Network Not Kickback

The Department of Health and Human Services Office of Inspector General stated that PPO network hospitals can provide discounts on Medicare Part A inpatient deductibles to Medicare Supplemental Insurance (Medigap) enrollees in partnership with the PPO network without violating anti-kickback statute. In-network hospitals can provide the discounts, and Medigap providers would pay an administrative fee to contract PPOs. Enrollees still have their choice of hospital, and Medigap providers will still cover enrollees' entire deductible no matter which hospital they choose. Because enrollees can choose which hospital to obtain services from, without additional payments, the risk for fraud and abuse is lowered, and the Medigap deductible does not violate the anti-kickback statute, according to HHS OIG.

Institute of Medicine (IOM)

Stigma Surrounding Mental Health Care for Returning Soldiers

An IOM report, requested by Congress, found that the stigma surrounding mental illness prevents members of the military from seeking mental health care. According to the report, "[a]ctive-duty military fear that visits to a mental health provider will jeopardize their careers because of the military's long-standing policy of reporting mental health and substance abuse problems to the chain of command." The report calls for standardized mental health screenings by the Department of Defense and the VA, as well as a greater focus on evidence-based medical treatments. It also encourages more data sharing between DoD and the VA to track service members' readjustment.

Society of Actuaries

Cost of the Future Newly Insured Under ACA

The Society of Actuaries released a report entitled "Cost of the Future Newly Insured Under the Affordable Care Act." The report made three major findings. First, it found that the percentage of uninsured will decrease from 16.6 percent to between 6.6 and 6.8. Second, as a result of the Affordable Care Act, the individual nongroup market will grow 115 percent. Of that growth, 80 percent of that enrollment will be in the Exchanges. Last, the nongroup cost per member per month will increase 32 percent. However, both supporters and critics of the law have pointed out that important considerations are missing from the report, including the impact of insurance subsidies and minimum coverage requirements.