Highlights this week include President Obama's Fiscal Year (FY) 2014 budget request, CMS Acting Administrator Tavenner's Finance Committee Confirmation hearing, and potential action on an Arkansas initiative to expand Medicaid with a private insurance market twist.

1. Congress

House of Representatives

Ways and Means Hears From Sebelius on FY2014 Budget Request

On Friday, the Ways and Means Committee heard testimony from the Department of Health and Human Services (HHS) Secretary Kathleen Sebelius in order to discuss President Obama's FY2014 budget request for HHS. The hearing was decidedly partisan, with Democrats largely voicing their support for the ACA and the work Sebelius is doing to implement it, while Republicans took the opportunity to pose pointed questions regarding, among other things, delays in ACA implementation and the long-term solvency of the Medicare Part A trust fund. A question was also raised regarding HHS's position on a bill that recently passed Arkansas's state House that would expand Medicaid using federal dollars to buy private insurance for those newly eligible. Sebelius responded that she would formally consider the proposal if it were to be enacted.



Hon. Kathleen Sebelius


U.S. Department of Health and Human Services

For more information, or to view the hearing, please visit waysandmeans.house.gov.

Health Subcommittee Explores Medicare Benefit

On Thursday, the Energy and Commerce Health Subcommittee held a hearing to examine the current state of the Medicare program's benefit offering to seniors, with testimony given by Chairman of the Medicare Payment Advisory Commission (MedPAC) Glenn Hackbarth. Members agreed that the existing Medicare benefit structure needs to be updated to reflect changes in care delivery and payment, though Ranking Member Waxman (D-CA) expressed opposition to any proposal that would impose additional costs on beneficiaries. Hackbarth reiterated that MedPAC supports proposals that would not increase overall beneficiary liability, and is interested in pursuing strategies to allow for reduced beneficiary cost for treatments that have been demonstrated to be of high value to patients.



Glenn M. Hackbarth, J.D.


Medicare Payment Advisory Commission (MedPAC)

For more information, or to view the hearing, please visit energycommerce.house.gov.


Smooth Confirmation Hearing for Tavenner, Finance Vote Pending

Following an uneventful hearing in which members of the Senate Finance Committee had their opportunity to pose questions to CMS Acting Administrator Marilyn Tavenner, Chairman Baucus (D-MT) indicated he is hopeful to have a committee vote on her nomination the week of April 15. Though Republicans have maintained their opposition to the ACA, none voiced opposition to Tavenner's confirmation. In fact, House Majority Leader Cantor (R-VA) introduced Tavenner at the hearing, along with fellow Virginia lawmakers, Sens. Kaine (D-VA) and Warner (D-VA). Should she receive an affirmative vote from the Finance Committee, and subsequently from the full Senate, Tavenner would become the first confirmed CMS head since 2006.

Senate HELP Committee Approves Mental Health Awareness Bill

On April 10, the Senate Committee on Health, Education, Labor and Pensions approved the Mental Health Awareness and Improvement Act of 2013, S. 689. The bill aims to promote awareness of and education about mental illness. Specifically, the bill would create, reauthorize or upgrade programs administered by HHS or the Department of Education, such as prevention programs and education programs in Elementary and Secondary schools. The bill also reauthorizes grants for the Youth Suicide Early Intervention and Prevention Strategies Program as well as the Mental Health and Substance Use Disorders Services and Outreach on Campus Program. Additionally, the Mental Health Awareness and Improvement Act would require the Government Accountability Office (GAO) to study and report on mental health services for children. During markup, Sen. Sheldon Whitehouse (D-RI) said that when the bill reaches the Senate floor he plans to offer an amendment that will include in the health IT system patients with mental disorders. There is currently no similar legislation in the House. Senate leaders have not commented on when the bill will be taken up on the floor.

HELP Committee Hearing on ACA Insurance Regulations

Last week, the Senate HELP Committee held a hearing, titled "A New, Open Marketplace: The Effect of Guaranteed Issue and New Rating Rules," in which members of the committee heard from experts, including Center for Consumer Information and Insurance Oversight (CCIIO) Director Gary Cohen. The hearing gave the senators an opportunity to receive an update from Cohen on the progress his agency has made in implementing key aspects of the 2010 health reform law.


Panel I:

Gary Cohen


Center for Consumer Information and Insurance Oversight (CCIIO)

Panel II:

Kevin Counihan

Chief Executive Officer

Connecticut Health Insurance Marketplace

Sabrina Corlette

Research Professor and Project Director

Georgetown Health Policy Institute, Center on Health Insurance Reform

Stacy Cook

Carroll, IA

Chris Carlson

Principal and Consulting Actuary

Oliver Wyman Consulting

For more information, or to view the hearing, please visit: www.help.senate.gov.

2. Administration

White House

President Delivers FY2014 Budget Request to Congress

On Wednesday, President Obama delivered his Fiscal Year (FY) 2014 budget request to Congress. Though it simply represents a formal version of the president's spending priorities, the document will likely play a significant role in ongoing discussion over entitlement reform and other health-related policy negotiations in Congress this year. Specifically, the president has called for $80.1 billion in discretionary funds for HHS in 2014, which is about $3.9 billion more than was allocated in 2012. Other notable provisions include a one-year delay in disproportionate share hospital (DSH) payment reductions, previously expected to occur in 2014 under the ACA; $803.5 million for CMS's insurance exchange operations; an additional 280 full-time employees at CMS to handle an influx of new Medicare beneficiaries; and raising $78 billion over 10 years from new cigarette taxes. The president also calls for a more aggressive means testing structure for Medicare Parts B and D, in which premiums for higher income beneficiaries would rise. Additionally, the budget calls for $2 billion in spending for online health insurance exchanges; a $15 billion reduction in payments to Medicare Advantage (MA) plans; and an expedited closing of Medicare Part D prescription drug "donut hole," paid for by an increase in manufacturer discounts on brand-name drugs from 50 percent to 75 percent in 2015. View the budget: http://www.whitehouse.gov/omb/budget/


$275.6 Million in Exchange Funds Awarded

HHS has announced that five states will receive a combined $275.6 million in funding to assist with the construction of health insurance exchanges, which are scheduled to begin enrolling customers in October. Hawaii and Rhode Island, who have chosen to operate their own state-run exchanges, will receive $128.1 and $9.8 million, respectively, to develop technical infrastructure. Meanwhile, Illinois received $115.8 million to continue implementation of its exchange, which is slated to be a state-federal partnership. Also choosing to operate partnership exchanges, Arkansas was awarded $16.5 million, while New Hampshire's partnership will be able to apply $5.4 million to its exchange development.


340B Compliance Deadline Delayed

Last week, HRSA announced that hospitals and other safety-net providers who rely on the 340B drug discount program to provide affordable medications to eligible patients would have an additional four months to come into compliance with a new rule in the program that bans providers from obtaining drugs through a group purchasing organization (GPO). GPOs are entities comprised of multiple providers/purchasers, created to leverage the purchasing power of the group in order to obtain discounted prices.


CMS Announces Exchange Navigator Funding

Last week, CMS announced it would provide up to $54 million in funding for a "navigator" program that will assist people using online exchange markets to enroll in health plans. CMS is offering one-year grants to navigators, individuals or organizations that are authorized by the ACA to provide information regarding the federally facilitated exchanges and the state partnership exchanges. Navigators have the responsibility to "maintain expertise in eligibility, enrollment, and program specifications, conduct public education activities to raise awareness about exchanges, and provide information and services in a fair, accurate, and impartial manner," among other things. According to the CMS, "navigators' most important role is to help consumers prepare electronic and paper applications to establish eligibility and enroll in coverage through the Marketplaces and potentially qualify for an insurance affordability program." Navigators cannot be connected to health insurers and must meet certification requirements. Applications are due June 7, 2013.

DME Competitive Bidding Expansion

On April 9, CMS announced the winning 799 suppliers now eligible to participate in the 91-city expansion of Medicare's durable medical equipment (DME) competitive bidding program. Additionally, CMS said 18 suppliers have accepted contracts to provide mail-order diabetic testing supplies. More than 2,641 suppliers bid to be a part of the program, which begins on July 1, 2013, in cities like New York, Chicago and Los Angeles. According to the agency, the suppliers have 2,988 locations to serve beneficiaries. CMS said that competitive bidding is expected to save $25.7 billion between 2013 and 2022 on Medicare Part B, and beneficiaries are expected to save $17 billion as a result of lower coinsurance and premium payments.

3. State Activities

Update on State Health Exchange and Medicaid Expansion Decisions

With states working through decisions of how to, or whether to, implement key provisions of the ACA, McGuireWoods Consulting created a quick-reference chart outlining what form of health insurance exchange the states will establish (state-run, federal-run or partnership), and whether or not the state will expand its Medicaid program. Also included is a figure representing the potential number of residents in the state that would receive coverage under a fully expanded Medicaid program, as provided for by the ACA.

Arkansas House Passes Hybrid Medicaid Expansion Plan

The Arkansas state House last week passed, by a 62-37 vote, a plan to expand Medicaid coverage pursuant to the ACA, using federal dollars to buy private health insurance. However, in order to receive funding, the legislature must also pass a bill to actually fund the proposal, and they must pass it with at least 75 votes. House Speaker Davy Carter said Friday that a vote on funding would be delayed until Monday. The vote is expected to be closely watched, as Arkansas has spearheaded the idea of such an expansion, and HHS Secretary Sebelius has acknowledged she will review the potential compromise should it be enacted by the state.

4. Regulations Open for Comment

CMS Releases Health Exchange Navigator Rule

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 www.ofr.gov.

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


April Meeting Reveals Commission's Concern with Physician Payment Increase

Last week, during their April meeting, MACPAC commissioners discussed federal efforts to address concerns over primary care physician reimbursement rates in Medicaid. However, the commissioners were critical of an ACA provision that required primary care physicians to receive Medicaid payments equal to what they would receive under the slightly more generous Medicare reimbursement schedule, with one commissioner's labeling the pay bump "a failed experiment." The commission largely based its criticisms of the policy on a survey conducted by MACPAC staff of state Medicaid officials and provider groups that revealed concerns over the temporary nature of the payment increase, and doubts that the rate increase would be a sufficient incentive to bring nonparticipating physicians into the Medicaid program. The MACPAC overview of the Medicaid primary care payment increase, including any commission recommendations, is set to be part of MACPAC's June report to Congress.