1.  Congress

House of Representatives

Ways and Means Hearing on 2013 Medicare Trustees Report

On Thursday, the Ways and Means Health Subcommittee held a hearing to examine the 2013 Medicare Trustees Report to Congress. According to the trustees, Medicare spending growth per beneficiary from 2009 to 2012 was only 1.9 percent per year on average; however, the report assumes current law spending trajectory, including a 25 percent reduction in physician payments resulting from the sustainable growth rate (SGR) formula that Congress routinely overrides. The report notes that the entire health care system, not just Medicare, spending has changed from about a 10 percent yearly increase 30 years ago, to just 3.2 percent in 2011. The principal witness, Robert D. Reischauer, noted there are reasons to be "cautiously optimistic" that health care spending will continue growing at historically low rates, but other factors, such as provider consolidation and the introduction of costly new medical treatments, could cause growth to again accelerate. The trustees attribute between 37 and 77 percent of the slowdown in health spending to the 2008--2009 recession.


Charles P. Blahous, Ph.D.
Public Trustee
Social Security and Medicare Boards of Trustees

Robert Reischauer, Ph.D.
Public Trustee
Social Security and Medicare Boards of Trustees

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

Bipartisan Request for Post-Acute Payment Suggestions

Ways and Means Chairman Dave Camp (R-MI), Senate Finance Chairman Max Baucus (D-MT), Ways and Means Ranking Member Sander Levin (D-MI) and Senate Finance Ranking Member Orrin Hatch (R-UT) have written a letter to stakeholders soliciting policy suggestions on how to strengthen post-acute care (PAC), which includes care settings such as Long-Term Care Hospitals (LTCHs), Inpatient Rehabilitation Facilities (IRFs), Skilled Nursing Facilities (SNFs) and Home Health Agencies (HHAs). Specifically, the lawmakers are seeking ideas on how to improve payment accuracy, combat fraud, address variation in utilization and advance the goal of improving patient quality of care and care transitions, while rationalizing payment systems and improving program efficiency. Comments should be sent by Aug. 19, 2013, to postacutecarereform@mail.house.gov and postacutecarereform@finance.senate.gov.


Senators Pursue New Definition of "Full-Time Employee" Under ACA

Sens. Collins (R-ME) and Donnelly (D-IN) have introduced legislation that would redefine "full-time employee" as part of the ACA's requirement for employers to provide health insurance to employees. Currently, the law considers any individual working more than 30 hours per week as full time, but business owners have complained that the definition could lead to more workers having their hours cut as a way for employers to avoid some of the law's requirements. The bill (S. 1188) would also change the number of hours considered to equal one "full-time equivalent" employee from 120 per month to 174. Under current law, starting in 2014, employers with at least 50 full-time and/or full-time equivalent employees will be required to offer affordable health care coverage that provides a minimum level of coverage or to potentially pay a penalty.

Legislation Would Make Medicare Claims Data Publicly Available

On June 18, legislation was introduced by Sens. Wyden (D-OR) and Grassley (R-IA) that would make Medicare claims data available to the public via a searchable database. The bill (S. 1180), known as the Medicare Data Access for Transparency and Accountability (Medicare DATA) Act, would require the Secretary of Health and Human Services to issue regulations governing a database of information on all Medicare payments to providers and suppliers, beginning with data from fiscal year 2014 and continuing with each subsequent fiscal year. The database would also contain a description of the items or services for which the payments were made, and the location of the providers and suppliers, organized based on the specialty of the providers and suppliers.

Finance Committee Hearing on Health Care Costs

On Tuesday, the Senate Finance Committee held a hearing entitled "High Prices, Low Transparency: The Bitter Pill of Health Care Costs." The hearing focused on a story published in TIME in March, which found the health care marketplace is not functioning adequately because prices do not appear to be based on the costs of producing a product, the laws of supply and demand, or the quality of the products and services. Witnesses testified that a lack of transparency about what providers charge for health care products and services is hampering efforts to increase competition and lower costs. Steven Brill, the author of the March article, noted, "Indeed, this is no marketplace at all, if we define a marketplace as involving buyers and sellers who enter into transactions with something approaching a balance of power."


Mr. Steven Brill, J.D.
Contributing Editor

Dr. Suzanne Delbanco
Executive Director
Catalyst for Payment Reform

Dr. Paul Ginsburg
Center for Studying Health System Change

Dr. Giovanni Colella
CEO and Co-Founder
Castlight Health

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

Upcoming Finance Committee Hearing on Health Care Quality, Audit Contractors

The Senate Finance Committee will hold two hearings, on June 25 and 26, to examine issues related to oversight of Recovery Audit Contractors (RACs) and health care quality, respectively. Witnesses in the quality-focused hearing, entitled "Health Care Quality: The Path Forward," include Mark McClellan, M.D., Ph.D., Senior Fellow, Brookings Institution; Dr. Christine K. Cassel, President and CEO, National Quality Forum; Dr. David Lansky, President and CEO, Pacific Business Group on Health; and Dr. Elizabeth A. McGlynn, Director, Kaiser Permanente Center for Effectiveness and Safety Research. Witnesses for the RAC hearing will be Ms. J.J. Carmody, Director of Reimbursement, Billings Clinic; Ms. Suzie Draper, Vice President, Business Ethics and Compliance, Intermountain Healthcare; and Mr. Robert Rolf, Vice President, CGI Federal Inc.

  1. Administration


Medical Loss Ratio (MLR) Returns $500 Million in Consumer Savings

According to a June 20 HHS press release, health insurers must pay rebates of about $500 million for not meeting the Affordable Care Act's Medical Loss Ratio (MLR) requirement in 2012. Specifically, 8.5 million people will receive rebates, averaging about $100 per family, as a result of insurers' failing to meet requirements under the ACA that prohibit spending on non-benefit-related items in excess of 20 percent of premiums collected. In addition to the MLR savings, HHS said that for 2012, 77.8 million consumers saved $3.4 billion as a result of other ACA programs, bringing total savings to $3.9 billion. The MLR rebates must be paid by Aug. 1.


Guidance Would Allow States to Alter Exchange Applications

Last week, CMS issued guidance outlining the ways in which states may follow the model, single, streamlined application for federally facilitated exchanges or develop an alternative, single, streamlined application that is approved by CMS. According to the guidance, "[s]tates may submit for approval an alternative application that can be tailored to accommodate state preferences and policies, while also reflecting the general principles of the model application and complying with the applicable provision of law .... States must adhere to regulations implementing the Affordable Care Act in the area of applications, eligibility standards, verifications, determinations, and coordination in developing alternative applications."

  1. State Activities

Mississippi Medicaid Showdown Escalates

Negotiations continue over whether Mississippi will expand its Medicaid program, as provided for under the ACA, or whether the current program will even exist after July 1. At issue is an opinion by Attorney General Jim Hood, who, in response to a request by state Democratic lawmakers, ruled that in the absence of legislative action "the Division of Medicaid and the position of its executive director will no longer exist." Republicans and Democrats alike favor continuation of the program, but Democrats want a vote on an expansion of Medicaid before they'll consider a straight reauthorization. Republicans oppose such an expansion.

Maine Medicaid Expansion Fails Veto Override Attempt

Last week, the Maine state legislature failed to override Gov. LePage's veto of legislation to expand the state's Medicaid program, as allowed under the ACA, all but guaranteeing the program will not be expanded before 2014. The final 95-52 vote fell three votes short of overriding the veto. Four Republicans voted with the Democratic majority to override the veto. It takes two-thirds of the lawmakers present and voting in both chambers to override a veto. 

Michigan Senate Adjourns Before Passing Medicaid Expansion

Gov. Snyder's presence in the capitol was not enough to help the Michigan state senate approve legislation to expand the state's Medicaid program before adjourning for the summer. Despite the governor's urging, Republicans in the GOP-controlled chamber, though potentially supportive of the measure, were not able to vote, since the Senate Majority Leader refused to call a vote. The chamber could take up the measure when they return from recess.

Iowa Governor Inks Medicaid Expansion Law

Last week, Iowa Gov. Branstad signed his state's Medicaid expansion law, ending months of negotiations with Democratic lawmakers. Branstad had been pushing for a plan that would use state dollars to fund a scaled-back health care expansion, despite Democrats' insistence that ACA dollars made available for expansion be drawn down first. The final agreement would require that a portion of the newly insured purchase private insurance through the state's exchange.

  1. Regulations Open for Comment

NEW - Proposed Rule to Clarify Long-Term Care Ombudsman Program

The Administration on Aging (AoA) of the Administration for Community Living (ACL) within the Department of Health and Human Services (HHS) has issued a Notice of Proposed Rulemaking, with request for comments, to implement provisions of the Older Americans Act, the State Long-Term Care Ombudsman program. This proposed rule replaces AoA's 1994 Notice of Proposed Rulemaking. The proposed rule contains two main parts, both related to the ombudsman program:

An amendment to existing regulations promulgated under the Older Americans Act at 45 C.F.R. Part 1321, and a new Part 1327, which would be added to the existing regulations. The proposed amendment to existing regulations addresses responsibilities of state agencies housing long-term care ombudsman offices not to disclose the identity of any person sending a complaint to the ombudsman or the identity of any resident of a long-term care facility. In addition, the proposed amendment would extend the disclosure protections to include "files, records, and other information" instead of only "files" as the existing rule provides.

The newly proposed Part 1327 would define the following terms included in the Older Americans Act, including "immediate family," "office of the state long-term care ombudsman" and "representative of the office of the state long-term care ombudsman." Comments are due Aug. 19.

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 22.

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.

  1. Reports


Patient Protection and Affordable Care Act: Status of CMS Efforts to Establish Federally Facilitated Health Insurance Exchanges

According to a GAO report issued June 19, CMS is behind schedule in completing key activities necessary to establish federally facilitated health insurance exchanges (FFEs) in 34 states by the Oct. 1 open-enrollment deadline. Though CMS completed many activities necessary to establish FFEs by Oct. 1, 2013, many remain to be completed and some were behind schedule. CMS issued numerous regulations and guidance and took steps to establish processes and data systems necessary to operate the exchanges; however, the activities remaining cross the core exchange functional areas of eligibility and enrollment, plan management, and consumer assistance. In commenting on a draft of the GAO report, CMS emphasized the progress it has made in establishing exchanges and expressed its confidence that exchanges will be open and functioning in every state by Oct. 1, 2013.

Patient Protection and Affordable Care Act: Status of Federal and State Efforts to Establish Health Insurance Exchanges for Small Businesses

GAO reported June 19 that many activities to establish small business exchanges are still not completed, and some are behind schedule. Specifically, while CMS issued regulations and guidance necessary to establish SHOPs and took steps to establish processes and data systems necessary to operate the FF-SHOPs, many activities remain to be completed in the core functional areas of eligibility and enrollment, plan management and consumer assistance, and while the agency has established timelines for completion of these activities, some were behind schedule. For example, funding awards and development of a training curriculum for a key program that will provide outreach and enrollment assistance to small employers and employees have been delayed by about two months. SHOP exchanges are intended to allow small businesses and their employees to obtain health insurance on a more competitive basis than is currently the case. CBO has estimated that about 2 million individuals will enroll in employer-based coverage through the SHOP exchanges in 2014.


June 2013 Reports to Congress

This month, the Medicare Payment Advisory Commission (MedPAC) issued its June 2013 Report to Congress outlining the Commission's most recent recommendations regarding Medicare payment policy. The report contains nine chapters, addressing both broad questions confronting the program, such as how to incorporate private plan and fee-for-service Medicare in one system, and more sector-specific issues, such as the new hospital readmissions policy. In addition, the Medicaid and CHIP Payment and Access Commission (MACPAC) has issued its June 2013 Report to Congress. In this report, the Commission examines several fundamental issues including Medicaid and CHIP eligibility and coverage for maternity services, the newly implemented increase in physician payment for primary care services, access to care for non-elderly persons with disabilities, the availability of Medicaid and CHIP data that can be used for oversight and program monitoring, and improving the effectiveness of program integrity activities. Summaries available here: