1. Congress

House of Representatives

Medicare Physician Payment Policy Hearing Announced

Ways and Means Health Subcommittee Chairman Brady (R-TX) has scheduled a hearing for May 7 at 10 a.m. in 1100 Longworth House Office Building to discuss issues related to developing long-term reforms to Medicare physician payment policies. Chairman Brady has solicited comments on a framework of policies intended to replace the Sustainable Growth Rate (SGR) formula, drafted in conjunction with key members of the House Energy and Commerce Committee.

Witness List:

David Hoyt, M.D.
Executive Director, American College of Surgeons

Kim Allan Williams, M.D.
Past President, American Society of Nuclear Cardiology

Charles Cutler, M.D.
Chair, Board of Regents, American College of Physicians

Frank G. Opelka, M.D.
Vice-Chair, Consensus Standards Approval Committee, National Quality Forum

Patrick Courneya, M.D.
Medical Director, HealthPartners Health Plan

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


Drug Compounding Hearing Announced

Senate HELP Committee Chairman Harkin (D-IA) has announced his committee will hold a hearing on Thursday, May 9, at 10 a.m. to discuss a legislative proposal aimed at enhancing regulation and oversight of pharmaceutical compounding. Last month, the committee circulated a bipartisan draft of legislation that would, among other things, create a separate category of licensure for compounding pharmacies that produce drugs without a prescription for sale across state lines.


Panel I
Dr. Janet Woodcock
Center for Drug Evaluation and Research (CDER)
U.S. Food and Drug Administration (FDA)

Panel II
Carmen S. Catizone
Executive Director
National Association of Boards of Pharmacy

Allan Coukell
Director, Medical Programs
The Pew Charitable Trusts

David G. Miller
Executive Vice President and CEO
International Academy of Compounding Pharmacy

Dr. Kasey K. Thompson
Vice President, Office of Policy, Planning and Communications
American Society of Health-System Pharmacists

Top GOP Health Lawmakers Release Medicaid Reform Proposal

Last week, Senate Finance Committee Ranking Member Hatch (R-UT) and House Energy and Commerce Committee Chairman Upton (R-MI) released a proposal they say would modernize the Medicaid program by giving states more flexibility to operate the program, while placing caps on federal contributions. Hatch and Upton say their proposal is rooted in effective aspects of welfare reform enacted in the early 1990s under the Personal Responsibility and Work Opportunity Reconciliation Act, while also incorporating suggestions received from a survey of governors, as well as input from providers and patients. "Governors need the flexibility to deal with the quality and spending challenges posed by Medicaid costs and the American taxpayers need a reliable safety-net program," the report states.

  1. Administration


Latest ACA FAQs Address Provider Nondiscrimination, Clinical Trials

Last week, the Departments of Labor, Health and Human Services (HHS) and the Treasury released the 15th frequently asked questions (FAQs) document related to implementation of the ACA, addressing questions regarding provider nondiscrimination, coverage provided to individuals participating in approved clinical trials and "transparency in coverage reporting requirements." Of note, the guidance document explains that group health plans or health insurance issuers receiving waivers or waiver extension under Public Health Service Act section 2711(1), a section created under the ACA, cannot modify the expiration dates of their waivers by simply changing their plan year, noting that "[a]nnual limit waivers under PHS Act section 2711(1) were approved by HHS for the plan or policy year in effect when the plan or issuer applied for the waiver." View the document: http://www.dol.gov/ebsa/faqs/faq-aca15.html


Sequestration Memo for Medicare Advantage and Part D Organizations

On Wednesday, May 1, CMS issued a memo to, among others, Medicare Advantage Organizations, prescription drug plan sponsors and Employer/Union-Sponsored Group Health Plans explaining that the payment terms of existing contracts with providers and pharmacies will remain steady, despite payments to the plans being reduced by 2 percent under sequestration. The memo was issued to clarify questions posed by plan representatives as to CMS's intentions with regard to existing contracts between plans and providers, with which CMS is prohibited from interfering, in light of the across-the-board spending cuts. "We note that MAOs must follow the prompt pay provisions established in their contracts with providers and to pay providers under the terms of those contracts," the memo stated.

ACA's Medicare Cost-Cutting Panel Not Needed This Year

According to the CMS Office of the Actuary, expected Medicare spending in 2015, based on the projected five-year average growth in per capita Medicare program spending from 2011-2015, will not exceed the spending target that would trigger binding spending reductions required of the Independent Payment Advisory Board (IPAB). IPAD was created as a cost-saving mechanism in the ACA, directed to establish any cost-saving provisions necessary to keep Medicare spending below an indexed threshold. Congress would be required to replace IPAB's recommendations with provisions that would achieve the same level of savings, lest IPAB's policies become law. "Because the projected five-year Medicare per capita growth rate does not exceed the Medicare per capita target growth rate, there is no applicable savings target for implementation year 2015 (determination year 2013)," Acting Actuary Paul Spitalnic wrote.

Internal Revenue Service (IRS)

2014 High-Deductible Health Savings Accounts Contributions Limits

Last week, the IRS announced that for 2014, the deduction limit on health savings accounts for high-deductible plans is $3,300 for an individual with self-only coverage and $6,550 for an individual with family coverage. Qualifying high-deductible plans are those for which the annual deductible is not less than $1,250 for self-coverage or $2,500 for family coverage, and the annual deductibles, copayments and other out-of-pocket expenses excluding premiums are less than $6,350 for self-only coverage or $12,700 for family coverage. In 2013, the individual deduction limit was $3,250 for individuals and $6,450 for families.

  1. State Activities

West Virginia Governor Becomes Last Democrat to Embrace Medicaid Expansion

Last week, West Virginia Governor Tomblin became the final Democratic governor to formally support the ACA's Medicaid expansion. The expansion is expected to cover an additional 90,000 West Virginia residents, with help from $1.3 billion in federal matching funds over the first three years of the expansion. Tomblin noted that he intends to engage in further negotiations with the Administration to explore options for expanded managed care.

  1. Regulations Open for Comment

NEW -- 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.

NEW - Hospice Payment Rule Proposed

Last week, 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.

NEW - 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.

NEW - 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.

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.

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.

  1. Reports


CMS Improper Payment Reporting Accuracy Needs Improvement

On April 1, GAO released a report detailing suggested actions CMS can take to improve the accuracy and reliability of the reporting process for improper payments within the Medicaid program. As it stands, CMS's Payment Error Rate Measurement (PERM) process places states in one of three rotational groups; each year, one of the state groups reports new state-level data based on the last year's sample data; from there, the CMS calculates a national Medicaid program improper payment estimate using new data for one-third of the states and older data for two-thirds of the states. Detailed recommendations to increase reporting accuracy within PERM include updating PERM Medicaid reporting procedures to include adjustments to previous years' data following the mandated reporting date; finalizing draft procedures and policies to better delineate the role and obligations of CMS in monitoring states' corrective actions once payment errors have been identified; and editing and clarifying guidance within the PERM manual and website to better address policies concerning corrective action plans and future data precision. According to GAO, CMS's estimated national improper payment error rate for fiscal year 2011 for Medicaid was 8.1 percent or $21.9 billion (approximately $21.4 billion in overpayments and $453 million in underpayments).