1. Congress

House of Representatives

House Votes to Repeal ACA Again

On Thursday, the Republican-controlled House voted 229-195 in favor of H.R. 45, the Patients' Rights Repeal Act, marking the 37th time the House has voted to repeal President Obama's signature health law. The united GOP caucus was joined by Democratic Reps. Matheson (D-UT) and McIntyre (D-NC). The legislation is unlikely to advance in the Senate, which is controlled by Democrats. In addition, The White House said it ''strongly opposes House passage of H.R. 45 because it would cost millions of hard-working middle class families the security of affordable health coverage and care they deserve. It would increase the deficit and detract from the work the Congress needs to do to focus on the economy and create jobs.''

Energy and Commerce Passes Rx Distribution, Animal Drug Bills

On Thursday, the Energy and Commerce Committee passed two health-related bills by voice vote. The first would create a nationwide system of monitoring to enhance the security of drug distribution, and the other would reauthorize FDA user fees for animal drugs and animal generic drugs. Under the user fee authority of the Animal Drug User Fee Act (ADUFA I), FDA collects funds to help expedite the new animal drug approval process, reduce the application backlog and improve communications with drug sponsors. The drug security bill would enhance the security of the pharmaceutical distribution supply chain while preventing duplicative Federal and State requirements. It also would establish a collaborative process between the FDA and stakeholders to ensure a reasonable, practical transition to unit-level traceability of prescription drugs. Both bills are expected to receive consideration by the full House soon. For more information: http://energycommerce.house.gov/markup/hr-271-resolving-environmental-and-grid-reliability-conflicts-act-2013-hr-1407-animal-drug

Upcoming Energy and Commerce Health Hearings

The Energy and Commerce Committee has announced it will hold several health policy-related hearings next week, including one slated for Thursday to explore oversight of drug compounders. Specifically, the Health Subcommittee will meet at 10 a.m. on May 23 in 2322 Rayburn for a hearing titled ''Examining Drug Compounding.'' Witnesses have not been announced (http://energycommerce.house.gov/hearing/examining-drug-compounding). In addition, the Oversight and Investigations Subcommittee will hold a hearing to examine health insurance premiums under the ACA.


Cori E. Uccello

Senior Health Fellow

American Academy of Actuaries

Chris Carlson

Actuarial Principal

Oliver Wyman Group

Daniel T. Durham

Executive Vice President

Policy and Regulatory Affairs

America's Health Insurance Plans

Topher Spiro

Vice President, Health Policy

Center for American Progress

For more information, please visit: http://energycommerce.house.gov/hearing/health-insurance-premiums-under-patient-protection-and-affordable-care-act

Upcoming Ways and Means Health Hearings

Subcommittee on Health Chairman Kevin Brady (R-TX) announced that on Tuesday, May 21, the Subcommittee will hold its first in a series of hearings to explore the bipartisan proposals, including those contained in President Obama's Fiscal Year 2014 Budget to reform Medicare. This hearing will focus on review of proposals to change cost sharing for services received under the Medicare program. The hearing will take place on Tuesday, May 21, 2013, in 1100 Longworth House Office Building, beginning at 10 a.m.

Witness List:

Joseph R. Antos, Ph.D.

Wilson H. Taylor Scholar in Health Care and Retirement Policy

American Enterprise Institute

Alice M. Rivlin, Ph.D.,

Senior Fellow, Economic Studies


Mr. Joe Baker


Medicare Rights Center

For more information:http://waysandmeans.house.gov/news/documentsingle.aspx?DocumentID=333775

In addition, Social Security Subcommittee Chairman Johnson (R-TX) announced the third in a series of hearings on the President's and other bipartisan entitlement reform proposals. This hearing will focus on proposed adjustments to Social Security benefits, as included in the President's Fiscal Year 2014 Budget, the report by the National Commission on Fiscal Responsibility and Reform and the report of the Bipartisan Policy Center's Debt Reduction Task Force. The hearing will take place on Thursday, May 23, 2013, in B-318 Rayburn House Office Building, beginning at 9:30 a.m. Witnesses have not been announced. For more information: http://waysandmeans.house.gov/news/documentsingle.aspx?DocumentID=334289


Tavenner Confirmed as CMS Administrator

Last week, the Senate confirmed, by a vote of 91-7, Marilyn Tavenner as CMS administrator. Tavenner is the first head of CMS to be confirmed since 2006. The seven senators who voted against the nomination were Minority Leader Mitch McConnell (R-Ky.), Mike Crapo (R-Idaho), Ted Cruz (R-Texas), Ron Johnson (R-Wis.), Mike Lee (R-Utah), Rand Paul (R-Ky.) and James E. Risch (R-Idaho). As the head of CMS, she is responsible not only for Medicare and Medicaid, but also for implementing the insurance reforms and marketplaces, or exchanges, included in the Affordable Care Act.

HELP Committee Set to Consider Drug Compounding, Rx Distribution Bills

HELP Committee Chairman Harkin (D-IA) has announced that, starting Wednesday, May 22, at 10 a.m., his committee will formally consider legislation that would increase oversight of drug compounders and another bill that would enhance the safety and security of our nation's drug distribution system. http://www.help.senate.gov/hearings/hearing/?id=96c56d5d-5056-a032-52c5-e7208991a71a

  1. Administration


CMS Offers $1 Billion in Second Round of Health Care Innovation Grants

On May 15, the Centers for Medicare and Medicaid Services announced they will offer up to $1 billion in grants to test payment and delivery models for Medicare, Medicaid and the Children's Health Insurance Program (CHIP). The Center for Medicare and Medicaid Innovation is administering the grants. Health and Human Services Secretary Kathleen Sebelius said, ''These awards will continue our work to drive down health care costs while providing high quality care to all Americans.'' Applicants must submit their letter of intent by June 28, and their application by August 15.

Open Period for Bundled Payment Model

On Thursday, CMS announced an open period for additional organizations to be considered for participation in the first model of a new payment initiative under the Affordable Care Act. The initiative is administered under the Center for Medicare and Medicaid Innovation (CMMI). Its goal is to align payments for services delivered across an episode of care, such as heart bypass or hip replacement, rather than paying for services separately. Bundled payments will give doctors and hospitals new incentives to coordinate care and improve care quality. Organizations interested in participating in Model 1 of the Bundled Payments for Care Improvement initiative must submit an intake form for CMS screening by July 31. Earlier this year, CMS announced the selection of 32 awardees in Model 1, which began testing bundled payments for acute care hospital stays in April. CMS has been reviewing applications for the first model since the October 2011 submission deadline.

Medicare Advantage Medical Loss Ratio (MLR) Final Rule

On Friday, CMS issued a final rule to implement a provision of the ACA requiring Medicare Advantage plans to spend a specific percentage of premiums collected on medical expenses for beneficiaries. Under these new requirements, MA organizations and Part D sponsors are required to report their MLR, and are subject to financial and other penalties for a failure to meet a new statutory requirement that they have an MLR of at least 85 percent. The Affordable Care Act requires several levels of sanctions for failure to meet the 85 percent minimum MLR requirement, including remittance of funds to the Secretary, a prohibition on enrolling new members, and ultimately contract termination. View the final rule: http://www.ofr.gov/(X(1)S(2zp4glzpco5drgatg4rwdiyp))/OFRUpload/OFRData/2013-12156_PI.pdf


Final Rules on Tax Credits, Small Business Plans, Mental Health

According to OMB, the agency received from CMS, on May 14, final rules that would address issues related to eligibility requirements for individuals seeking tax credits for health insurance under the ACA, implementation of the Small Business Health Insurance Options Program (SHOP) exchanges and the conditions of participation for community mental health centers. Specifically, the ACA allows for the subsidies for exchange coverage for people who have to pay more than 9.5 percent of their income for employer coverage, and whose household income is between 100 percent and 400 percent of the federal poverty level. Under the SHOP proposal, implementation of an employee choice model would be delayed for a year in the federally facilitated SHOP exchanges, and the one-year delay would be an option in state-based SHOP exchanges. Lastly, the rule on community mental health centers and their conditions for participating in Medicare was proposed in June 2011; CMS said the rule is designed to improve the quality and safety of treatment provided to more than 25,000 Medicare beneficiaries who receive care at such mental health centers each year.

  1. State Activities

New Approach Taken in Utah Exchange Agreement

Under an agreement proposed by Utah Governor Herbert, a fourth option for states seeking creative ways to implement provisions of the ACA has been created. Previously, there were three options: a state-run exchange, a federally run model or a state-federal partnership. However, in Utah, provisions of the ACA will be split, with Utah running the official state-based health insurance marketplace for small businesses. Meanwhile, the federal government will service the individual market. According to Herbert, ''The only way this was going to work was if we were granted flexibility. Fortunately for all, HHS proved to be flexible, concurring with everything we proposed to be able to operate an exchange that meets the needs of Utah residents.''

  1. Regulations Open for Comment

New - Pre-Existing Condition Insurance Plan (PCIP) Interim Final Rule

CMS has issued an interim final rule with comment period sets the payment rates for covered services furnished to individuals enrolled in the Pre-Existing Condition Insurance Plan (PCIP) program administered directly by HHS beginning with covered services furnished on June 15, 2013. The rule sets most reimbursement rates in federally administered PCIPs at Medicare levels. This interim final rule also prohibits facilities and providers who, with respect to dates of service beginning on June 15, 2013, accept payment for most covered services furnished to an enrollee in the federally-administered PCIP from charging the enrollee an amount greater than the enrollee's out-of-pocket cost for the covered service as calculated by the plan. The rule also bans ''balance billing'' enrollees of the federal-run PCIPs to protect them ''from having to potentially shoulder significant costs that could be shifted to them as a result of this new payment policy.'' Comments will be accepted through July 19. View the interim final rule: http://www.ofr.gov/OFRUpload/OFRData/2013-12145_PI.pdf

New - Disproportionate Share Hospital Proposed Rule

CMS has issued a proposed rule on Disproportionate Share Hospital (DSH) payment reductions required by the ACA, applying a methodology that would not distinguish between states that have chosen to expand their Medicaid programs, pursuant to the ACA. According to the proposed rule, data reflecting the effects of the decision to implement the new coverage group may not be available to consider the impact of a state's decision to expand or not until 2016. Once finalized, this rule will go into effect on Oct. 1, unless Congress enacts the president's budget proposal to begin the Medicaid DSH allotment reductions in fiscal year 2015 instead of FY 2014, while retaining the same total amount of reductions through 2020. The Affordable Care Act requires aggregate reductions to state Medicaid DSH allotments annually from FY 2014 through FY 2020. Comments on the proposed rule are due July 12. View the proposed rule: http://www.ofr.gov/OFRUpload/OFRData/2013-11550_PI.pdf

Tanning Bed Warning Label Proposal

The FDA issued a proposal that would elevate tanning beds from a low-risk to high-risk medical device and would add a warning label to them. If the order is finalized, manufacturers would have to submit a pre-market notification (510(k)) to the FDA for these devices, which are currently exempt from any pre-market review. Manufacturers would have to show that their products have met certain performance testing requirements, address certain product design characteristics and provide comprehensive labeling that presents consumers with clear information on the risks of use. The order proposes to include a contraindication against use on people under 18 years old, and the labeling would have to include a warning that frequent users of sunlamp products should be regularly screened for skin cancer.

The FDA will take comments on the proposed order until Aug. 7.

To view the Proposed Order, called "Reclassification of Ultraviolet Lamps for Tanning, Henceforth To Be Known as Sunlamp Products," please visit: www.fda.gov

Skilled Nursing Facility FY 2014 Payment Rule

CMS has issued a proposed rule that would raise payments to skilled nursing facilities (SNF) by $500 million or 1.4 percent in fiscal year 2014. The rate reflects an estimated increase of 2.3 percent market basket increase, reduced by a 0.5 percentage point forecast error correction and further reduced by a 0.4 percentage point productivity adjustment required by law. CMS said the proposal would both revise and rebase the payment by requiring the establishment of an updated SNF marketplace index that would reflect changes over time in the prices of an appropriate bundle of goods and services for covered SNF services within the Medicare system. The proposed changes to the SNF market basket would reflect FY 2010 allowable Medicare total cost data (routine, ancillary and capital-related), shifting from FY 2004 base year, as it is the most recent year for which relatively complete Medicare cost report data is available. Other significant changes within the rule would establish a Minimum Data Set (MDS) to record the number of distinct calendar days of therapy for all rehabilitation disciplines to be linked to each beneficiary; such a proposal would clarify the qualifying conditions for "Medium Rehab Category" and "Low Rehab Category" to five and three distinct calendar days respectively. Comments are due by July 1, 2013.

Hospice Payment Rule Proposed

CMS issued a proposed rule addressing hospice payment rates and the wage index for fiscal year (FY) 2014. The proposed rule would increase Medicare payments to hospices by an estimated 1.1 percent for FY 2014, amend hospice quality reporting requirements, clarify coding requirements and update stakeholders on hospice payment reform. As proposed, hospice providers would receive an estimated 1.1 percent increase in their payments for FY 2014, a net result of a proposed hospice payment update to the hospice per diem rates of 1.8 percent (a "hospital market basket" increase of 2.5 percent minus 0.7 percentage point for reductions mandated by the Affordable Care Act), and a 0.7 percent decrease in payments to hospices due to updated wage data and the fifth year of CMS's seven-year phaseout of its wage index budget neutrality adjustment factor. CMS will accept comments on the proposed rule until June 28, 2013.

IRS Proposed Rule -- Employer-Sponsored Plan Value

The Internal Revenue Service has published a proposed rule on the minimum required value of employer-sponsored coverage that won't trigger the employer mandate penalty and other provisions involving the premium tax credits on the exchanges. The proposed regulations affect individuals who enroll in qualified health plans through Affordable Insurance Exchanges (Exchanges) and claim the premium tax credit, and Exchanges that make qualified health plans available to individuals and employers. These proposed regulations also provide guidance on determining whether health coverage under an eligible employer-sponsored plan provides minimum value and affects employers that offer health coverage and their employees. Comments will be accepted until July 1, 2013.

Inpatient Rehabilitation Facility Prospective Payment Proposed Rule

CMS has announced proposed changes to update the Medicare Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) rates for fiscal year (FY) 2014. CMS proposes to increase Medicare payments to IRFs in FY 2014 by 2.0 percent, or $150 million. This proposed increase reflects the combined effects of a 2.5 percent market basket increase factor, a 0.4 percent reduction due to the multifactor productivity adjustment and an additional 0.3 percent reduction as required under the Affordable Care Act. CMS is proposing an update to the outlier threshold, which would increase IRF payments by an estimated 0.2 percent.

CMS is also proposing to update the presumptive methodology used in determining whether an IRF has met the requirements of the "60-percent rule" by removing a number of codes from the presumptive compliance list. This revised list is meant to reflect only those codes that can be identified presumptively as both representing one of 13 conditions and requiring intensive rehabilitation. The proposed revisions fall in the following categories: nonspecific diagnosis codes, arthritis diagnosis codes, unilateral upper extremity diagnosis codes, some congenital anomalies diagnosis codes and other miscellaneous diagnosis codes. Public comments on the proposals will be accepted until July 1, 2013.

Inpatient Prospective Payment System (IPPS) Proposed Rule

CMS has issued a proposed rule to revise the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals to implement changes arising from continuing experience with these systems. These proposed changes would be applicable to discharges occurring on or after Oct. 1, 2013, unless otherwise specified in this proposed rule. The proposed rule includes an update to the rate-of-increase on limits for certain hospitals excluded from the IPPS that are paid on a reasonable cost basis subject to these limits. The proposed updated rate-of-increase limits would be effective for cost reporting periods beginning on or after Oct. 1, 2013. In addition, the proposed rule includes a number of changes relating to direct graduate medical education (GME) and indirect medical education (IME) payments. Specifically, CMS proposes to establish new requirements or revised requirements for quality reporting by specific providers (acute care hospitals, PPS-exempt cancer hospitals, LTCHs and inpatient psychiatric facilities (IPFs) that are participating in Medicare. Lastly, the proposed rule includes updated policies relating to the Hospital Value-Based Purchasing (VBP) Program and the Hospital Readmissions Reduction Program. Rates for inpatient stays at hospitals that participate in the quality reporting system would increase by 0.8 percent in 2014 under the proposed Prospective Payment System rule. Rates at long-term care hospitals would go up by 1.1 percent. The proposed IPPS rule also clarifies that a hospital inpatient admission spanning two midnights -- more than one Medicare utilization day -- would be paid for under Part A. Comments must be submitted by 5 p.m. on June 25, 2013.

Medicare Fraud Tip Proposed Rule Would Increase Financial Reward

CMS has issued a proposed rule that would revise the Medicare Incentive Reward Program (IRP) to increase the potential financial reward for successful Medicare fraud tips to $9.9 million, up from $1,000 or 10 percent of recovered amount, whichever is less. The new standard would apply a formula of up to 15 percent of the first $66 million recovered. The Medicare Incentive Reward Program was created under the Health Insurance Portability and Accountability Act (HIPAA), which stated the HHS Secretary should implement a program to reward individuals who report potential Medicare fraud. Comments are due no later than 5 p.m. on June 28.

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.

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 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.

  1. Reports


Medicare: Legislative Modifications Have Resulted in Payment Adjustments for Most Hospitals

In 1983, Congress created the Inpatient Prospective Payment System (IPPS) to help curb hospital spending and ensure efficient care. Under IPPS, Medicare reimburses certain hospitals for patient care. In a recent GAO report, GAO found that there are numerous adjustments or exemptions that increased Medicare payments to hospitals. While these adjustments and exemptions are supposed to apply to only a small subset of hospitals, the GAO found that 91 percent of hospitals were subject to these adjustments and exemptions in 2012. According to the report, the adjustments or exemptions include: provisions that allow ''hospitals to be paid under a different geographic wage index''; provisions that ''modified the classification criteria allowing IPPS hospitals to qualify for supplemental payments through the Medicare disproportionate share hospital (DSH) program''; and provisions that change ''criteria for classifying small rural providers as Critical Access Hospitals (CAH).'' Full report: http://www.gao.gov/products/GAO-13-334


More Oversight of Home Health Surveys Needed

According to OIG, CMS should consider conducting ''look-behind'' surveys of home health agencies that have been recertified by state agencies. The report, ''Home Health Agencies Received Timely Surveys and Corrected Deficiencies as Required,'' found that state recertification surveys displayed a wide variation in terms of citing HHAs for serious, or condition-level, deficiencies and said that ''the lack of look-behind surveys for oversight of State agencies could present a vulnerability to program effectiveness and quality of care for Medicare beneficiaries.'' The report also found that state agencies and accreditation organizations conducted on time recertification surveys for 98 percent of HHAs in fiscal years 2010 and 2011. For the remaining 2 percent of HHAs, recertification surveys were past the 36-month deadline by a median of three months. OIG recommended that CMS ''analyze existing survey data'' to help determine if it should begin conducting routine look-behind surveys of HHAs that have been recertified by state agencies.

Dialysis Payment Inaccuracies Cost Medicare $529 Million

According to OIG, CMS could have saved $529 million in 2011 by adjusting the ESRD base payment rate to account for the actual utilization rate of four anemia management drugs. The report, ''Medicare and Beneficiaries Could Save Millions If Dialysis Payments Were Adjusted for Anemia Management Drug Utilization,'' said 25 percent of the ESRD base payment rate represented reimbursements for Epogen, Aranesp, Venofer and Ferrlecit, drugs used to treat anemia in ESRD patients. Specifically, during 2011, ''the average per-treatment utilization of these anemia management drugs was generally significantly less than the quantities of these drugs reflected in the base rate,'' the report said. OIG recommended that CMS adjust the ESRD base payment rate to incorporate actual drug utilization rates, stress to dialysis facilities the importance of claims accuracy and establish new policies and procedures for reporting drug waste and overfilling on ESRD claims. CMS agreed with the recommendations and said it is working on a proposal to reduce the ESRD payment rate that will be included in the 2014 ESRD prospective payment system proposed rule.