1. Congress

House of Representatives

Ways and Means Examines Medicare Post-Acute Payments

On Friday, Ways and Means Health Subcommittee Chairman Brady (R-TX) held a hearing to examine proposals to reform Medicare post-acute care payments. The hearing focused on the president's FY2014 budget proposal, which included an outline of how to reform Medicare's post-acute payment model by reducing Medicare market basket updates for home health, nursing homes, rehab hospitals and long-term care hospitals; creating site-neutral payments between rehab hospitals and nursing homes; establishing more stringent criteria for rehab hospitals; addressing readmissions from nursing homes; and creating bundled payments.

Witness List:

Jonathan Blum

Deputy Administrator and Director, Center of Medicare

Centers for Medicare and Medicaid Services (CMS)

Mark Miller

Executive Director

Medicare Payment Advisory Commission

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

Energy and Commerce Examines Medicaid Reform Proposals

As part of the Energy and Commerce Committee's continuing efforts to reform the Medicaid program, the Subcommittee on Health, chaired by Rep. Joe Pitts (R-PA), today held a hearing on "The Need for Medicaid Reform: A State Perspective." Witnesses testified that the current structure of Medicaid does not guarantee quality care for those who need it most. "Despite growing outlays of public funds, a Medicaid card does not guarantee access or quality of care. In a survey of primary care providers, only 31 percent indicated willingness to accept new Medicaid patients. ... Anothy Keck, Director of the South Carolina Health and Human Services Department, noted the work states are already doing on Medicaid and asked for increased flexibility. Keck told the subcommittee, 'I believe there is a developing bi-partisan interest among states for flexibility to manage programs locally in exchange for more accountability for improved health and more predictability in expenditures at the state and federal level.' "


Tony Keck, Director

Department of Health and Human Services

State of South Carolina

Seema Verma, M.P.H.


SVC, Inc.

Joe Thompson

Surgeon General

State of Arkansas

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

Upcoming Ways and Means Hearing on Medicare Trustees Report

House Ways and Means Health Subcommittee Chairman Kevin Brady (R-TX) announced that the Subcommittee on Health will hold a hearing on the recently released 2013 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. This hearing will allow the Subcommittee to focus specifically on the Medicare program's financial status and changes from the Trustees' previous reports. The Subcommittee will hear testimony from Medicare's two public trustees. The hearing will take place on Thursday, June 20, 2013, in 1100 Longworth House Office Building, beginning at 9:30 a.m.


Wyden Tackles Chronic Disease in Medicare

Sen. Ron Wyden (D-OR) is working on legislation to change current Medicare policy, so beneficiaries with chronic illnesses can get more coordinated care. "Medicare faces unsustainably high costs because the program has never been about what most drives costs--chronic disease," Wyden told the conference. "Seniors entering the Medicare program today are sicker than when their parents enrolled, with more cancer, more heart disease, and more diabetes. Unfortunately, too few policymakers and health providers have recognized this fact, and that needs to change." Wyden said current Medicare policy makes it difficult to adequately treat those with chronic disease. After an initial visit to a physician, which is fully paid for by Medicare, a beneficiary with a chronic disease such as diabetes often then goes to a specialist, which requires a 20 percent copay after he or she reaches the Part B deductible.

Upcoming Finance Committee Hearing on Health Care Costs

The Senate Finance Committee has a scheduled hearing entitled "High Prices, Low Transparency: The Bitter Pill of Health Care Costs." The hearing will take place at 10 a.m. on Tuesday, June 18, in 215 Dirksen Senate Office Building. Witnesses listed below.


Dr. Steven Brill, J.D.

Contributing Editor


Dr. Suzanne Delbanco, Ph.D.

Executive Director

Catalyst for Payment Reform

Dr. Paul Ginsburg, Ph.D.


Center for Studying Health System Change

Dr. Giovanni Colella, M.D.

CEO and Co-Founder

Castlight Health

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

  1. Administration


OMB Receives Final Rule Regarding "Navigators," Issuance Upon Its Review

OMB has received a final rule that establishes standards for "navigators" and other assistance personnel tasked with helping people enroll in online marketplace health insurance. OMB's review stands as the final hurdle in the process through which rules are issued, and according to Gary Cohen, director of the Center for Consumer Information and Insurance Oversight (CCIIO), its issuance will be "very soon."

The proposed rule creates "conflict-of-interest and training standards for navigators authorized by the Affordable Care Act and for non-navigator assistance personnel in federally facilitated marketplaces, as well as state partnership marketplaces."

OMB's Review of Medical Device Identifier Rule Underway

The FDA has submitted to OMB a final rule governing unique device identification (UDI). The rule, which would require that most U.S.-distributed medical devices have a unique identifier, awaits final approval by the OMB. According to the FDA, the rule is necessary to ease the search process for medical device errors, which is made difficult by many being reported by sources other than the device manufacturer. In a statement issued on their website, the FDA noted that the UDI system would "help the FDA identify product problems more quickly, better target recalls and improve patient safety." Device manufacturers have asked the FDA for additional time to implement the requirements.


CMS Ups Coverage of PET Scans

The Centers for Medicare and Medicaid Services (CMS) announced that it will cover three FDG-PET scans during a patient's lifetime, after that patient has undergone initial cancer treatment. This decision represents a departure from the CMS's earlier position, in which they proposed coverage of only one scan for solid tumors. This initial position was motivated by the CMS's desire to avoid having Medicare pay for "routine surveillance" carried out by FDG-PET scans. "Medicare generally does not cover diagnostic testing used for routine screening or surveillance," said the CMS, but in light of comments made by experts in the health care field, the CMS reconsidered their stance -- "we recognize, however, that the use of a diagnostic test to assess a patient's response to treatment can be distinguished from 'routine screening or surveillance.' " In addition to increasing their coverage to three scans, the CMS also agreed to give local MACs the option of providing coverage for additional scans beyond the first three.

  1. State Activities

Mississippi Medicaid on the Verge of Expiration

With a battle over whether or not to expand the state's Medicaid program under ACA provisions, Mississippi lawmakers are finding themselves on the verge of allowing the entire program to expire, which would occur on July 1, if a deal is not reached. Democrats want a chance to vote on expanding the program before they'll consider reauthorizing the status quo. But Republicans, who run the Legislature, say expansion could be a bad deal for Mississippi and don't want to call a vote without an agreement first.

Arizona Legislature Approves Medicaid Expansion

Last week, the Arizona legislature approved a plan aggressively pushed by Republican Gov. Brewer to expand the state's Medicaid program, as provided for by the ACA. Brewer has said Arizona had no choice but to agree to provide care to 300,000 poor and disabled residents through the federal-state program. Arizona is among the 29 states and the District of Columbia with chief executives who support expanding Medicaid, but convincing her legislature to go along with the plan had proven difficult.

Michigan House Passes Medicaid Expansion Measure

Michigan's Republican-led House has passed legislation that would expand the state's Medicaid program, pursuant to the ACA. The proposal still faces an uncertain future in the Senate, where it will be voted on next week, but the upper chamber has at times been more tolerant of Obamacare. The House approved the compromise bill 76-31 on Thursday night. The plan, which would still require HHS approval, would give the potential 470,000 new enrollees coverage under Medicaid for four years, after which the individual would have to choose whether to remain on the program and pay more out of pocket, or to buy exchange coverage with help from federal subsidies.

Gov. Snyder Extends Michigan's Tax on Health Insurance Claims

Michigan governor Rick Snyder renewed a 1 percent tax on health insurance claims that was set to expire at the beginning of next year. Established in 2011 and extended until Jan. 1, 2018, the Health Insurance Claims Assessment is used by the state of Michigan to fund Medicaid. The extension of the tax, which covers most paid health claims, helps the state offset a projected revenue shortfall it would have otherwise incurred.

  1.  Regulations Open for Comment

NEW - Program Integrity Guidelines for Exchanges, Premium Stabilization Program

CMS has released a proposed rule outlining program integrity guidelines for the Health Insurance Marketplace (Marketplace) and premium stabilization programs. The proposed rule sets forth financial integrity and oversight standards with respect to Affordable Insurance Exchanges; Qualified Health Plan (QHP) issuers in federally facilitated exchanges (FFEs); and states with regard to the operation of risk adjustment and reinsurance programs. It also proposes additional standards with respect to agents and brokers. These standards, which include financial integrity provisions and protections against fraud and abuse, are consistent with Title I of the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act of 2010, referred to collectively as the Affordable Care Act. The proposed rule says that in states running only the SHOP exchange while HHS operates the exchange for the individual market, data sharing requirements between the SHOP and individual exchange won't apply. There's only one state that plans to have such an arrangement -- Utah -- and the data issue was a key concern. The rule would also allow the state to set up a navigator program for the SHOP exchange, exclusively for outreach to small businesses, that is completely separate from the one for the individual exchange. Comments must be submitted by July 15.

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.

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.

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.

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.

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.

  1. Reports


June 2013 Report to Congress

The Medicaid and CHIP Payment and Access Commission (MACPAC) released its June 2013 Report to the Congress on Medicaid and CHIP. The report examines Medicaid and CHIP eligibility and coverage for maternity services, the newly implemented increase in Medicaid physician payment for primary care services, access to care for persons with disabilities, the availability of data on Medicaid and CHIP that can be used for oversight and program monitoring, and ways to improve the effectiveness of program integrity efforts. According to the report, in 2010 Medicaid and CHIP paid for almost half of all births in the United States (about 1.8 million hospital births). Depending on the eligibility pathway, services covered under Medicaid and CHIP range from full Medicaid benefits to coverage of only services related to the pregnancy to emergency coverage for labor and delivery. Because separate eligibility pathways based on pregnancy will continue under the ACA, the possibility of churning exists among Medicaid, CHIP, exchange coverage and uninsurance as women gain and lose eligibility based on pregnancy. More information:


Medically Unlikely Edit Claims Could Be Reduced in Medicare

The Government Accountability Office (GAO) revealed in a June 11 report that less than 0.1 percent of the payments Medicare made in 2011 were for amounts of services that exceeded a payment threshold known as a Medically Unlikely Edit (MUE). The Centers for Medicare and Medicaid Services's (CMS) MUEs are based on the maximum unit of service that may be billed by a provider for a beneficiary on a single date of service and often take into account biological considerations such as number of limbs or organs; as it stands, durable medical equipment services, services provided by physicians and other practitioners, and outpatient services in a hospital setting are currently limited by the MUEs. The report reveals that payments of $14 million out of a total $23.9 billion in Medicare payments were made for services that exceeded MUE limits and that most MUEs were found to be concentrated among certain types of specialties and/or certain providers. GAO advised CMS that applying more restrictive local limits utilized by some contractors on a national basis could lower payments by an additional $7.8 million. Other recommendations by GAO include CMS's examining contract edits to determine whether national MUE limits should be revised and to consider reviewing claims to identify the providers that exceed unpublished MUE limits and determine whether their billing was proper.


Anti-Kickback Penalties Are Not a Risk for Podiatrist Plan to Supply Orthotics

According to an advisory opinion issued June 4 by the Department of Health and Human Services's Office of the Inspector General (OIG), there is "low risk of fraud and abuse" from a podiatry clinic's plan to set up a separate limited liability company (LLC) to sell orthotics to manufacturing companies for employee use at market rates and without reimbursement from federal health care programs. The clinic was originally concerned about the potential for anti-kickback law's exclusionary sanctions under the Social Security Act and/or other monetary penalties. In their report, OIG said that the joint ownership between the LLC and the clinic necessitated an evaluation of whether any correlation existed between the prices of the LLC's orthotics and any potential business the arrangement generated for the clinic that might be reimbursed through federal health care programs, such as Medicare or Medicaid. The report found that the arrangement would not include "suspect swapping arrangements" that might be reimbursed by federal health care programs, as it would be forbidden for LLC employees to give employee referrals to the clinic, even in cases where there was a medical need. Moreover, any additional financial incentives for LLC employees based on clinic referral would be prohibited, which would help further reduce the potential for abuse.

$910 Million Overspent on Medicare Lab Tests in 2011

In a report released June 11 by the Department of Health and Human Services's Office of the Inspector General (OIG), OIG officials disclosed that Medicare could have saved $910 million in 2011 if it had paid the same rate as the lowest-paying insurer for each test in each geographic locality. Surveying 20 clinics in 56 geographic locations, OIG compared those Medicare payment rates to three fee-for-service Federal Employees Health Benefit Plans. As it currently stands, Congressional authority is required to adjust any major payment rate changes, including reimbursement rates for clinical lab tests. The report recommended that Centers for Medicare and Medicaid Services (CMS) ask Congress to create lower payment rates for clinical lab tests by implementing pilot programs to ascertain the value of lower payment rates and/or by establishing rate changes on a test-by-test basis. Other OIG recommendations included CMS's asking Congress to implement copays and deductibles for Medicare clinical lab tests.