1. Congress

House of Representatives

Ways and Means Announces Hearing Series on Entitlements

On Wednesday, Ways and Means Chairman Camp (R-MI) announced his committee will hold a series of hearings this month to explore entitlement reform policies with the hope that a deal to slow the cost growth in programs like Medicare and Social Security can be found. "The president has repeatedly called on Congress to act on policies we can agree on, and he has stated that we should not let our differences get in the way of making progress," Camp said. "Given the bipartisan support for various reforms to these programs, there is no reason we cannot roll up our sleeves and get this done." Specific proposals noted in the announcement include using the "Chained" Consumer Price Index (CPI) to calculate cost-of-living adjustments and reducing subsidies to high-income seniors.

Energy and Commerce/Ways and Means Release Updated SGR Document

Last week, the Energy and Commerce and Ways and Means Committees continued their quest to find a permanent fix to the sustainable growth rate formula (SGR) by building on a framework released in February. Specifically, the document provides guidance on how the chairmen of each full committee and their respective health subcommittee chairmen would pay doctors based on performance rather than the volume of services they provide. Maintaining the three-phase process outlined in the original draft, the updated document indicates a need for a stable period of statutory reimbursements in phase one, while phase two would pursue quality-based payment updates through the implementation of what the document refers to as the "Update Incentive Program" (UIP). Finally, phase three would allow for bonus payments to providers who demonstrate efficient use of health care resources. The committees are asking providers to submit comments on the second draft by April 15 to sgrcomments@mail.house.gov.

Pitts and Burgess Offer Suggestions for Affordable Health Insurance

On Friday, Energy and Commerce Health Subcommittee Chairman Pitts (R-PA) and Health Subcommittee Vice-Chairman Burgess (R-TX) released a list of proposals under the heading "Affordable Health Insurance Shouldn't be an Oxymoron," in which they outlined various policy recommendations aimed at giving individuals options should the ACA fail to achieve its goals. According to Pitts and Burgess, "[t]o date, over 30 studies and analysis from the Congressional Budget Office, independent actuaries, health plans, benefit consultants, and others show the cost of health care premiums will rise even more once the law is fully implemented next year." In response, the Congressmen have suggested implementing additional reforms, such as lifting coverage requirements when insurance premiums rise more than 10 percent, and an option for individuals to purchase Federal Employee Health Benefits (FEHB), as Members of Congress can.

Sebelius to Testify on President's FY2014 Budget

Ways and Means Committee Chairman Camp (R-MI) has announced that his committee will hold a hearing on President Obama's budget proposals for the Department of Health and Human Services for fiscal year 2014. The hearing will take place on Friday, April 12, 2013, in 1100 Longworth House Office Building, beginning at 9:00 a.m. For more information, please visit: http://www.waysandmeans.house.gov/.


Finance Committee to Hold Tavenner Confirmation Hearing

The Senate Finance Committee has scheduled a confirmation hearing for CMS Acting Administrator Marilyn Tavenner, to be held on Thursday, April 11 at 10:00 a.m. The hearing is significant because the position of CMS Administrator has been notoriously difficult to garner Senate confirmation for, with the last confirmation coming in 2006. Tavenner, who has received endorsements from both Democrats and Republicans, including House Majority Leader Cantor (R-VA), is the only scheduled witness.

GOP Questions HHS Failure to Impose Enrollment Moratorium

Sens. Hatch (R-UT), Grassley (R-IA) and Coburn (R-OK) have sent a letter to HHS Secretary Sebelius asking her to explain why she has not utilized her authority to temporarily freeze enrollment of new moderate and high-risk Medicare providers and suppliers "when ample evidence exists to justify moratoria in these high fraud areas." The letter serves as a follow-up to similar requests the senators have made of HHS officials, including CMS Acting Administrator Tavenner, dating back to October 2011. "The answers that we received from both you and Acting Administrator [of the Centers for Medicare & Medicaid Services Marilyn] Tavenner have not provided us with satisfactory answers about when [CMS] might begin using this authority," the senators wrote. They also requested information related to CMS's anti-fraud activities in the absence of a moratorium on new providers, asking that a response be provided by April 19.

Grassley Asks About Hospitals Profiting From 340B Discount Program

On Wednesday, Sen. Grassley (R-IA) wrote a letter to the Health Resources and Services Administration (HRSA) asking whether certain hospitals are profiting from the 340B drug discount program, building on information he received from three North Carolina hospitals in response to a request the senator made in September 2012. In his letter to HRSA, Grassley stated that the information he received from the hospitals "paint[s] a very stark picture of how hospitals are reaping sizeable 340B discounts on drugs and then turning around and upselling them to fully insured." Moreover, "[i]f 'non-profit' hospitals are essentially profiting from the 340B program without passing those savings to their patients then the 340B program is not functioning as intended," Grassley wrote. In order to address his concerns, Grassley has asked HRSA to provide data used by the agency to ensure hospitals are using their discounts as Congress intended when the 340B program was established.

2. Administration


Medicare Advantage Rates See Significant Reversal

In the face of criticism from the insurance industry, and under pressure from Republicans and Democrats in Congress, including the chairman and ranking member of the Senate Finance Committee, CMS announced on Monday that Medicare Advantage (MA) payment rates will increase by more than 3 percent in 2014, rather than decline by more than 2 percent as the agency had previously proposed. Under CMS's initial calculation of the payment rates, officials assumed that the Medicare physician fee schedule would be cut by 25 percent in 2014 under the sustainable growth rate (SGR) formula. Because MA rates are linked to Medicare fee-for-service spending, when physician rates are cut, there is a related reduction in MA rates.

However, CMS reversed course and instead will now assume that Congress will override the scheduled cut, as it has many times before, implementing instead a zero percent change for the physician fee schedule for 2014. The increase for MA plans for 2014 is similar to that for 2013, when it was 3.07 percent. In a related story, Sen. Grassley has written a letter to CMS Acting Administrator Tavenner asking for details related to CMS's decision to recalculate the MA rates; traders of insurance stocks appeared to begin trading more intensely 45 minutes before the regulation was announced. "This raises questions regarding political intelligence brokers' ability to gather information from CMS in order to predict market moving events," Grassley wrote.

3. State Activities

Health Exchange Partnership by Any Other Name

Though the Administration has required states to decide if a state-run, federally facilitated or wholly federal health insurance exchange is in the state's best interest, some states have chosen to pursue federal assistance in the form of "marketplace plan management," which would give states a role in reviewing health plans sold on the federal-run exchanges operating in their state. Last week, Maine, South Dakota and Virginia all received approval for such an arrangement, which allows the states to remain opposed to arranging a partnership with the federal government when it comes to health exchange operation, while still maintaining some authority in overseeing health plans sold in their states. As South Dakota Insurance Director Merle Scheiber made clear in accepting the federal offer for assistance, "I am writing to accept your offer ... to conduct plan management functions on the federal exchange without taking part in what HHS has termed the 'State Partnership Insurance Exchange Model.' " Kansas, Montana, Nebraska and Ohio received HHS approval in March to join the federal government in such an arrangement.

North Carolina Governor Announces Medicaid Reforms, Expansion Excluded

North Carolina Republican Gov. Pat McCrory has announced plans to reform his state's Medicaid program, though he's not talking about an ACA-driven expansion of the program to include all individuals earning up to 138 percent of the federal poverty line, having previously signed a bill blocking just such an expansion. "Medicaid reform is long overdue and essential for the future health of North Carolina," said Governor McCrory. "We're bringing all partners together to improve care, customer service and efficiency, but most importantly, to deliver right care at the right place at the right time to improve results for our state's most vulnerable citizens."

Oregon Sets Universe of Insurers Approved to Operate in Exchange

According to an announcement made by the state last week, Oregon has granted initial approval to roughly two dozen health insurers to offer medical and dental plans on Oregon's health insurance exchange, known as "Cover Oregon," though another set of reviews and approval must be conducted before final approval is made. Available plans include United HealthCare, Kaiser Foundation Health Plan of the Northwest and Regence BlueCross BlueShield of Oregon.

Massachusetts Granted Phase-In Waiver for ACA Rating Standards

As the only state to have previously established policies to provide health insurance to essentially all its residents, Massachusetts has had unique challenges in implementing the ACA, which was modeled after the state's own health care system. Most recently, Massachusetts's framework for limiting the ways in which insurers adjust premiums, known as "rating factors," based on age, family size, geography and tobacco use, were found to be at odds with provisions within the ACA. In response, federal health officials will allow Massachusetts to phase in certain ACA rules that the state warned would have harmed small businesses because of a conflict with the state's 2006 health care overhaul.

Vermont Posts Insurance Coverage Rates Expected in Exchange

Vermont wins the prize for first state to release proposed rates for coverage offered on the exchange. According to reports, a family of four with an annual income of $32,000 would pay $45 a month, while a single person making $40,000 would pay $317 a month. The rates are being calculated in the context of the state's plan to implement a first-of-its-kind single-payer system in Vermont starting in 2017, and have been proposed by two health insurance companies that are working with the state to offer plans through the exchange.

4. Regulations Open for Comment

CMS Releases Health Exchange Navigator Rule

Last week, CMS issued a proposed rule that would create conflict-of-interest, training and certification, and meaningful access standards applicable to Navigators and non-Navigator assistance personnel in federally facilitated exchanges, including state partnership exchanges, and to non-Navigator assistance personnel in state-based exchanges that are funded through federal exchange establishment grants. These proposed standards would help ensure that Navigators and non-Navigator assistance personnel will be fair and impartial, will be appropriately trained, and will provide services and information in a manner that is accessible.

The proposed regulations would also make two amendments to the existing regulation for Navigators that would apply to all Navigators in all Affordable Insurance Exchanges (Exchanges), including State-based Exchanges, clarifying that any Navigator licensing, certification or other standards prescribed by the state or Exchange must not prevent the application of the provisions of Title I of the Affordable Care Act; and adding to the list of entities ineligible to become Navigators those entities with relationships to issuers of stop-loss insurance, including those who are compensated directly or indirectly by issuers of stop-loss insurance in connection with enrollment in Qualified Health Plans or non-Qualified Health Plans. The proposed regulations would also clarify that the same ineligibility criteria that apply to Navigators would also apply to non-Navigator assistance personnel providing services in any Federally facilitated Exchanges, including in State Consumer Partnership Exchanges, and to federally funded non-Navigator assistance personnel in State-based Exchanges. Comments on the proposed rule are due by May 6.

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 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

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 April 30, which is also when the rule becomes effective.

ACA's "Whistleblower" Protection Rule Proposed

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 29, 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

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 http://www.ofr.gov/inspection.aspx.

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


Oversight of Private Health Insurance Submissions to the Healthcare.gov Plan Finder

According to a report issued by the HHS-OIG, CMS should take measures to improve its oversight of private insurers' compliance with reporting requirements related to the online portal that assists consumers in comparing their health insurance coverage options, called the "Plan Finder" on Healthcare.gov. Specifically, about 13 percent of insurers in the individual and small-group markets didn't submit required pricing and benefit data, and CMS did not conduct targeted follow-up with those insurers that did not report detailed pricing and benefit information. In order to address the problems, the OIG recommends that CMS establish and implement procedures to identify and pursue private insurers that do not submit required data to the Plan Finder, ensure that each private insurer's Chief Executive Officer or Chief Financial Officer certifies to the completeness of data submitted to the Plan Finder, design and implement additional strategies to ensure Plan Finder data accuracy, and validate that products and plans submitted to the Plan Finder are available for sale. CMS generally concurred with OIG's recommendations and is taking steps to address them.


MedPAC Considers Beneficiary Assignment, Competition With Medicare Advantage (MA) Plans

In its April 2013 meeting, the Medicare Payment Advisory Commission (MedPAC) expressed concerns about accountable care organizations (ACOs), mainly regarding how beneficiaries are assigned to providers, as well as how ACOs can compete in the marketplace alongside MA plans. According to MedPAC Chairman Hackbarth, "MA plans can steer patients to high performers. This is a good thing to do." However, Hackbarth also said the ACO model "falls short" because the current statutory language is too constraining. Commissioners also discussed concerns over how beneficiaries are notified that they are in an ACO. Statute requires prospective beneficiary assignment and notification, so ACOs are aware of the identities of their patients before the start of the performance period and can then send out notification letters to those beneficiaries.

Department of Labor

DOL Issues ACA-Mandated Report on Self-Insured Group Health Plans

Last week, Acting Labor Secretary Seth Harris issued a report to Congress on self-insured employee health benefit plans and their sponsors' financial information, as required by the Affordable Care Act. According to the report, self-insured plans covered about 30 million participants in 2010 and held assets of about $58 billion, the report said. Mixed-insured group health plans covered about 26 million participants and held assets of about $136 billion. The report is based on data DOL received on Form 5500 filings from 2010, which determined that more than 49,000 health plans filed a Form 5500 in 2010, down from 50,000 in 2009. Health benefit plans covering private-sector employees must file a Form 5500 Annual Return/Report of Employee Benefit Plan -- generally, if they cover 100 or more participants or hold assets in trust. Of all health plans that filed in 2010, about 19,800 were self-insured and 4,000 mixed self-insurance with insurance.