1. Congress

House of Representatives

Energy and Commerce to Hold Hearing on ACA

This week, the Energy and Commerce Committee will hold a hearing to explore the difficulties states have encountered as they navigate various provisions of the ACA, namely establishing health insurance exchanges and expanding Medicaid. According to the announcement, "[w]ith less than 13 months until implementation, the committee intends to press the administration to finally respond to the numerous critical questions that remain unanswered nearly 1,000 days since enactment of the health care law." The hearing is scheduled for 10 a.m. on Dec. 13 in Rayburn. 

Compounding Pharmacy Legislation Introduced

In response to the recent outbreak of fungal meningitis linked to a compounding pharmacy in Massachusetts, Reps. DeLauro (D-CT) and Lowey (D-NY) have introduced legislation that would, among other things, require compounders to register with the FDA, require labeling of compounded drugs and encourage the FDA to develop minimum production standards.

Energy and Commerce Questions for Compounding Pharmacists

House Energy and Commerce Chairman Fred Upton and ranking member Rep. Henry Waxman sent a letter this morning to the International Academy of Compounding Pharmacists (IACP), asking the group to answer for reports that it has worked with pharmacies to impede FDA regulation in the past. In particular, the bipartisan pair of legislators want to know about any interaction the association had with New England Compounding Pharmacy -- the company at the center of the fungal meningitis outbreak that has sickened more than 540 people and killed 36 -- and its sister companies. IACP suggested that its members withhold samples of compounded drugs from FDA, according to media reports. "Allegations that your association may have attempted to encourage pharmacists to impede the FDA from evaluating the efficacy and safety of their products, if true, raise serious concerns about your actions," the letter states.

Small Business Reports Impact of ACA

Last week, the House Small Business Committee released two documents outlining "select Patient Protection and Affordable Care Act provisions that will become effective in 2013.and 2014, and the consequences for small businesses." Among the 2013 items: The medical device tax, a lower deduction for medical expenses and lower DSH payments.

New Energy and Commerce Health Subcommittee Members Named

On Thursday, Energy and Commerce Committee Chairman Upton (R-MI) announced the roster of committee members for the 113th Congress. The Health Subcommittee will again be chaired by Rep. Pitts (R-NJ) and co-chaired by Rep. Burgess (R-TX). The other members are: Reps. Hall (R-TX), Whitfield (R-KY), Shimkus (R-IL), Rogers (R-MI), Murphy (R-PA), Blackburn (R-TN), Gingrey (R-GA), Lance (R-NJ), Cassidy (R-LA), Guthrie (R-KY), Griffith (R-VA), Ellmers (R-NC), Barton (R-TX) and Upton.


Senators Encourage Rural Aid in Sustainable Growth Rate (SGR) Fix

A bipartisan group of 26 senators has sent a letter to Senate Finance Committee Chairman Max Baucus and ranking member Orrin Hatch asking that any doc-fix legislation include an extension of two programs aimed at increasing payments to rural hospitals. The letter's authors wrote that "[t]he network of health providers that serves rural America is fragile and more dependent on Medicare revenue because of the high percentage of Medicare beneficiaries who live in rural areas." Legislation referenced in the letter, S. 2620, currently has 25 co-sponsors, including Senators Grassley (R-IA), Harkin (D-IA) and Durbin (D-IL).

Baucus to Hold Hearing on Dual Eligibles

This week, the Senate Finance Committee will hold a hearing titled "Improving Care for Dually-Eligible Beneficiaries: A Progress Update." Slated to appear before committee are:

Ms. Melanie Bella

Director, Medicare-Medicaid Coordination Office

Centers for Medicare & Medicaid Services, Washington, D.C.

Mr. Tom Betlach

Director, Arizona Health Care Cost Containment System

Phoenix, AZ

Ms. Mary Anne Lindeblad

Director, Washington State Health Care Authority

Olympia, WA

Mr. John McCarthy

Director, Ohio Department of Job and Family Services, Office of Health Plans

Columbus, OH

2. Administration

White House

President Obama Reestablishes Health Advisory Group

On Friday, President Obama issued an executive order renewing the "Advisory Group on Prevention, Health Promotion, and Integrative and Public Health." The 22-member panel initially created by the ACA is now authorized through September 2013.

Treasury/Internal Revenue Services (IRS)

Patient-Centered Outcomes Research Institute

Last week, the Treasury Department and Internal Revenue Service issued final rules outlining the fees health insurers and health plan sponsors will have to pay in order to fund the Patient-Centered Outcomes Research Trust Fund, which will pay for activities conducted by the Patient-Centered Outcomes Research Institute (PCORI) pursuant to the ACA. The institute is responsible for conducting comparative effectiveness research on the benefits of medical treatments, services, procedures and drugs. The regulations took effect Dec. 6.

Health and Human Services Office of the Inspector General (HHS-OIG)

Unimplemented Recommendations Would Have Saved Billions in HHS Programs

According to an OIG report released Dec. 5, recommendations from the HHS-OIG on Medicare, Medicaid and other public health programs could have saved billions of dollars and improved efficiencies had they been implemented. Of specific note are policies such as eliminating or reducing Medicare payments to hospitals for bad debt ($35.9 billion over 10 years) and reducing the rental period for oxygen equipment ($3.2 billion over 10 years), as well as adjustments to the Medicare Advantage program and the Part D prescription drug benefit. 

$5 Billion in "Doughnut Hole" Savings Due to ACA

Last week, HHS announced that savings from the ACA's prescription drug benefit reached $5.1 billion, with roughly 5.8 million people having received assistance as a result of the law. In the first 10 months of 2012, nearly 2.8 million individuals saved an average of $677 on prescription drugs. 

Food and Drug Administration (FDA)

Agency Forms Medical Device Alliance

FDA has announced the creation of the Medical Device Innovation Consortium (MDIC), a partnership with LifeScience Alley, a bioscience trade group, focused on funding research intended to speed the development and regulatory review of medical devices. According to FDA, "[t]he MDIC will bolster the country's investment in regulatory science research by pooling people, funding, resources, and ideas to develop new tools, models, and methods that may be utilized to better and more efficiently evaluate new devices. FDA staff may collaborate with the MDIC on MDIC-supported research and other projects." 

Internal Revenue Service (IRS)

Medical Device Tax Final Rule

The Internal Revenue Service (IRS) issued final regulations to implement the medical device excise tax that takes effect Jan. 1, 2013. As part of the funding for the Affordable Care Act, Congress included a 2.3 percent excise tax on the sale of medical devices by the manufacturer, producer or importer of a medical device. The tax is calculated based on gross sales. It is anticipated that the tax will raise $29 billion over 10 years. The statute included explicit exemptions for eyeglasses, contact lenses and hearing aids and also exempts devices purchased by the general public at retail for individual use. Proposed regulations were issued by the IRS concerning how the excise tax would be applied in February (REG-113770-10). The IRS also held a hearing on May 16, 2012, after the comment period had closed. The final rule does request further comment on several issues.

Congressional Budget Office (CBO)

CBO Assumed All Individuals Would Receive Health Insurance Subsidies

According to a letter transmitted last week from CBO Director Doug Elmendorf to House Oversight and Government Reform Chairman Issa (R-CA), his agency did not take into account the possibility that health insurance subsidies would not be available to all individuals. The issue has recently gained attention in light of a pending lawsuit brought by the state of Oklahoma asserting that the text of the ACA specifically allows for health insurance tax credits for individuals purchasing insurance through exchanges established by states. The suit argues that federally established exchanges are not authorized to provide the subsidies. However, an IRS rule issued earlier this year asserts that the credits are available to all individuals, regardless of the type of exchange their state utilizes.

Department of Justice (DOJ)

DOJ Asks Supreme Court to Dismiss Oklahoma ACA Suit

The Administration last week pressed the U.S. District Court for the Eastern District of Oklahoma to dismiss a lawsuit filed in September 2012 by Oklahoma Attorney General Scott Pruitt arguing that the Affordable Care Act does not allow tax credits for the purchase of health insurance when an individual utilizes a federally established exchange. The lawsuit goes on to challenge the validity of rules promulgated by the IRS allowing consumers to get tax subsidies through exchanges that will be fully or partially run by the federal government in 2014. DOJ says Oklahoma cannot challenge the law because it's not a citizen who is subject to the individual mandate or employer responsibility, nor is it eligible for the tax subsidies.

Social Security Administration (SSA)

SSA Adds 35 New Conditions to Compassionate Allowance Program

Last week, SSA Administrator Michael Astrue announced that his agency added 35 new conditions to the "Compassionate Allowances Program," a list of diseases designed to expedite disability benefits to people suffering from them. The program was started in 2008, with an initial list of 50 conditions, and has grown to nearly 200. For a complete list of CAP conditions, please visit the SSA website.

3. State Activities

New Jersey's Gov. Christie Vetoes Exchange Bill

As was the case last time a bill to establish a state-run health insurance exchange was sent to his desk, New Jersey Governor Chris Christie vetoed a second exchange bill last week, though he left open the option to establish an exchange at some point in the future. However, Assemblyman Herb Conaway, a Democrat who sponsored the two exchange bills, said he doesn't expect the state will take any action on an exchange while Gov. Christie is in office.

South Dakota Passes on Medicaid Expansion

Meanwhile, South Dakota's Republican governor, Dennis Daugaard, has opted to refrain from expanding the state's Medicaid population, despite generous federal matching incentives to do so. In much the same manner as New Jersey's Gov. Christie, however, Daugaard has left open the future option of expanding the program. "We can decide not to expand in fiscal year '14, which I am proposing," the governor said to the Legislature. "Then we can still do it in '15, or we could do it in '17 or '18...."

4. Regulations Open for Comment

Final Hospital Outpatient Department and Ambulatory Surgical Centers Rule Issued with Comment Period

The Centers for Medicare & Medicaid Services (CMS) issued two final regulations updating Medicare payment rates and policies in calendar year (CY) 2013 for services furnished by physicians and other practitioners, as well as the rule for hospital outpatient departments and ambulatory surgical centers. Both rules were issued as final rules with a comment period until Dec. 31, 2012. The rules will take effect Jan. 1, 2013.

To read the final CY 2013 Medicare Physician Fee Schedule (MPFS) rule with comment period, please visit the Office of the Federal Register website.

To read the final CY 2013 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) rule with comment period, please visit the Office of the Federal Register website.

OPM Releases Multi-State Plan Proposal

Last week, OPM issued a proposed rule to implement the Multi-State Plan Program (MSPP). Through contracts with OPM, health insurance issuers will offer at least two multi-State plans (MSPs) on each of the Affordable Insurance Exchanges (Exchanges). Under the law, an MSPP issuer may phase in the States in which it offers coverage over four years, but it must offer MSPs on Exchanges in all States and the District of Columbia by the fourth year in which the MSPP issuer participates in the MSPP. OPM aims to administer the MSPP in a manner that is consistent with State insurance laws and that is informed by input from a broad array of stakeholders. The deadline for submitting comments on the proposed regulation is Dec. 30, 2012. OPM will review the comments and issue a final regulation next year. A fact sheet is available at the OPM website.

Additional Medicare Tax for Wealthy Beneficiaries

This document contains proposed regulations relating to Additional Hospital Insurance Tax on income above threshold amounts ("Additional Medicare Tax"), as added by the Affordable Care Act. Specifically, these proposed regulations provide guidance for employers and individuals relating to the implementation of Additional Medicare Tax. This document also contains proposed regulations relating to the requirement to file a return reporting Additional Medicare Tax, the employer process for making adjustments of underpayments and overpayments of Additional Medicare Tax, and the employer and employee processes for filing a claim for refund for an overpayment of Additional Medicare Tax. The document also provides notice of a public hearing scheduled for April 4, 2013, on these proposed rules. The deadline for submitting comments on the proposed regulation is March 1, 2013.

HHS Issues Notice of Benefit and Payment Parameters for 2014

Last week, HHS released a Notice of Benefit and Payment Parameters proposed rule that would expand upon standards set forth in the Premium Stabilization Rule (77 FR 17220) and the Establishment of Exchanges and Qualified Health Plans Final Rule (77 FR 18310) released earlier this year. The proposed rule issued today includes additional guidance on risk adjustment methodology, reinsurance, risk corridors, affordability, Exchange user fees and Medical Loss Ratio. Comments on draft Notice of Benefit and Payment Parameters are invited from the general public, consumers, states, industry and other stakeholders and must be submitted by Dec. 31, 2012.

CMS Requests Information on Health Plan Quality

CMS has issued a request for information to seek public comments regarding health plan quality management in Affordable Insurance Exchanges. While new quality reporting standards for exchanges are on hold until 2016, in the meantime, HHS is asking for feedback on a number of topics, including: improvement strategies used by health plans, how exchanges could further National Quality Strategy goals, the exchange health plan rating system and calculating health plan value. Public comments are due by Dec. 27, 2012.

Essential Health Benefits (EHBs), Wellness Program, Health Insurance Market Regulations Open for Comment

CMS has published three proposed rules to implement several provisions of the Affordable Care Act (ACA) that, among other things, disallow the discrimination of patients based on preexisting conditions, help consumers shop for and compare non-grandfathered private health insurance options in the individual and small group markets by promoting consistency across plans, and encourage consumer-protective wellness programs in group health coverage. Comments are due by Dec. 26, 2012.

Additional "Meaningful Use" Guidance Issued

Last week, HHS issued an interim final rule with comment period revising the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs, updating a few technical specifications for EHR systems participating in the meaningful use program, in addition to adjusting some elements for hospital Stage 2 reporting requirements. The rule also provides notice of CMS's intention to issue technical corrections to the electronic specifications for clinical quality measures (CQMs) released on Oct. 25, 2012. A 60-day public comment period will expire Feb. 4, 2013.

5. Reports


Consumer Protection Requirements Affecting Dual-Eligible Beneficiaries Vary Across Programs, Payment Systems and States

On Dec. 5, the GAO released a report finding that Medicare and Medicaid programs are not aligned in regards to consumer protections for dual eligibles. The report examined consumer protection requirements in Medicare and Medicaid, as well as compliance and enforcement actions taken by the Centers for Medicare & Medicaid Services for states. GAO found that enrollment choices and eligibility requirements for dual-eligible beneficiaries varied across programs, and across states as well. In addition, between Jan. 1, 2010, and June 30, 2012, GAO found that CMS took 547 compliance actions against Medicare Advantage providers relating to various consumer protection issues. To enforce Medicaid consumer protection measures, the four states examined by GAO -- Arizona, California, Minnesota and North Carolina -- required managed care plans to take 91 corrective action plans, more than half of which concerned problems with the plans' appeals and grievance processes, GAO said.

National Center for Health Statistics

Electronic Health Record Use on the Rise

According to a National Center for Health Statistics brief released last week, in 2012, "... [a]bout 40% of physicians reported having a system that met the criteria for a basic system, a 17% increase over the 2011 estimate (34%)." In addition, 72 percent of office-based physicians have used electronic medical record or electronic health record (EMR/EHR) systems, up from 48 percent in 2009. The study also found that EMR/EHR use varies by state, ranging from 54 percent in New Jersey to 89 percent in Massachusetts.

Health Affairs

Hospice Provider Policies Deter Enrollment

According a recent survey in "Health Affairs" authored by researchers from Mount Sinai School of Medicine, Yale and Johns Hopkins, 78 percent of hospices had at least one enrollment policy that may restrict access to care for patients with potentially high-cost medical care needs, such as chemotherapy or total parenteral nutrition, with smaller hospices, for-profit hospices and hospices in certain regions of the country consistently reporting more limited enrollment policies. Moreover, hospice providers' own enrollment decisions may be an important contributor to previously observed underuse of hospice by patients and families. Recommended policy changes included increasing the Medicare hospice per diem rate for patients with complex needs, which could enable more hospices to expand enrollment. Full report (subscription required).

Medicare Advantage May Use Services More Efficiently

Findings from a recent study in "Health Affairs" indicate that Medicare Advantage HMO enrollees may use health services more efficiently than those enrolled in traditional Medicare. According to researchers at Harvard Medical School, individuals enrolled in Medicare Advantage HMOs use some services 20 to 30 percent less often than their counterparts. The study concludes, "[a]lthough we could not assess the appropriateness of services, some of our findings suggest that the use of services may be more appropriate within Medicare Advantage HMOs." Yet it notes "one possible alternative reason for the findings: Medicare Advantage HMO enrollees may be using fewer medical services because generally healthier people enroll in Medicare Advantage HMOs." Full report (subscription required).


December Meeting

Last week, MedPAC held its December meeting as it continues to work on recommendations for its March 2013 Report to Congress. An agenda is available on the MedPac site and summaries of each session will be added to this page as information becomes available.

America's Health Insurance Plans (AHIP)

AHIP Warns About Impact of Health Insurance Tax

Last week, AHIP released a state-by-state breakdown of the potential consumer impact of the ACA's health insurance tax. According to the insurance industry trade group, the tax could amount to $100 billion over the next 10 years. According to the study, "[f]amilies purchasing coverage in the individual market will be hit the hardest in New York while those getting coverage from a small employer will be most impacted in West Virginia. Medicare Advantage beneficiaries in New Jersey and the Medicaid managed care program in Washington, D.C., top those lists."

Commonwealth Fund

Medical Loss Ratio (MLR) Provisions Responsible for $1.5 Billion in Consumer Savings

The Commonwealth Fund recently released a report finding that the MLR provision implemented as a consumer protection component of the ACA saved consumers nearly $1.5 billion in 2011, via both insurer rebates ($1.1 billion) and reductions in overhead cost ($350 million). The provision sets a minimum percentage of premium dollars collected by insurers that must be spent on enrollee medical services, as opposed to advertising or profit.

Robert Woods Johnson Foundation

More Kids Eligible for Public Health Programs

According to a report by the Robert Woods Johnson Foundation, the number of uninsured children who are eligible for public insurance fell 10 percent from 2008 to 2010 -- from 4.9 million to 4.4 million. Specifically, in 2010, 14 states (Arizona, Connecticut, Delaware, D.C., Hawaii, Illinois, Louisiana, Maine, Massachusetts, Michigan, New York, Tennessee, Vermont and West Virginia) had Medicaid/CHIP participation rates of 90.0 percent or higher. In contrast, six states (Colorado, Idaho, Montana, Nevada, Texas and Utah) had participation rates below 80 percent. Several states saw increases close to or more than 10 percentage points. No state had a statistically significant decline in their Medicaid/CHIP participation rate for children between 2008 and 2010.

Insured Retirement Institute (IRI)

Few Generation Xers Confident About Long-Term Care

A study released last week by the Insured Retirement Institute finds that only 28 percent of Generation Xers and 24 percent of baby boomers are confident that they'll be able to meet their long-term care costs. Those individuals are even less confident about their ability to provide care for their parents, with just 21 percent of Gen-X and 14 percent of boomers confident in that area. However the study did find somewhat of a silver lining: the IRI found that among boomers who work with a financial adviser, 30 percent are extremely or very confident they will have enough money to pay for their own long-term care costs compared with only 19 percent who did not work with an adviser.