1. Congress

House of Representatives

"Public Option" Legislation Introduced as Deficit Reduction

Though many Democrats in Congress favored a health reform law that contained a publicly run health insurance option for consumers, alongside private options available through health insurance exchanges, the Affordable Care Act, as enacted, contains no such policy. However, last week, Rep. Schakowsky (D-IL) reintroduced legislation, H.R. 261 -- the Public Option Deficit Reduction Act -- championed last Congress by retiring Rep. Woolsey (D-CA), which would establish a public health insurance option to compete against the private market. The bill is being touted, as is common in today's difficult fiscal environment, as a way to help bring down the deficit, ostensibly by eliminating private insurance company profit. Schakowsky, though, is openly un-optimistic about the bill's chances of passage.

McDermott will be Ranking Member of Ways and Means Health Subcommittee

Last week, Rep. McDermott (D-WA) officially became the ranking member of the Ways and Means Health Subcommittee, replacing the defeated Rep. Stark (D-CA). No stranger to the issues he'll be overseeing in his capacity as ranking member, McDermott noted, "I have participated in health policy ever since I was a state legislator in Olympia, Wash., and I look forward to playing an even more central role in our national debate here in Congress as ranking member."

Rep. Speier to be Ranking Member on New Health Subcommittee

In response to a shift made by Chairman Issa (R-CA) in the subcommittee structure of the House Oversight and Government Reform Committee, Rep. Speier (D-CA) will assume the role of ranking member of the newly created Subcommittee on Energy Policy, Health Care and Entitlements. Speier stated, "The next few years will see major changes and opportunities, in health care, Medicare, Social Security, food safety, and energy policy. I look forward to working with my colleagues on both sides of the aisle to ensure these programs are transparent, accountable, and sustainable, and that any cuts do not jeopardize important consumer protections."


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2. Administration

White House

New Gun-Violence Reduction Package Highlights Mental Health Parity

In a move aimed at ensuring that private health plans cover benefits for mental health treatments at the same levels they cover other medical care, President Obama last week announced his administration would issue guidance outlining how group health plans offering mental health services must cover them "at parity" with other health coverage they offer. The statutory authority to do so exists under the Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008. "We are going to need to work on making access to mental health care as easy as access to a gun," President Obama said at the White House, where he announced the plan, which included 23 separate executive actions and proposed legislation. Subsequently, CMS issued a letter to state health officials and Medicaid directors providing "guidance on the applicability of the requirements under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 to Medicaid non-managed care benchmark and benchmark-equivalent plans."

Health and Human Services (HHS)

HHS Announces $1.5 Billion for Health Insurance Exchanges

Last week, HHS announced that 11 states would be awarded a combined $1.5 billion in grants to assist with the establishment of online exchange markets under the Affordable Care Act that will start enrolling people for health insurance Oct. 1. According to HHS, Delaware ($8.5 million), Iowa ($6.8 million), Michigan ($30.7 million), Minnesota ($39.3 million), North Carolina ($74 million) and Vermont ($2.1 million) received "Level One" exchange establishment grants, which are one-year grants states will use to build exchanges. California ($673.7 million), Kentucky ($182 million), Massachusetts ($81.3 million), New York ($185.8 million) and Oregon ($226.5 million) each received "Level Two" exchange establishment grants -- multiyear awards to help further the progress already being made on exchanges in those states. For more information on state exchange progress, visit cciio.cms.gov

HHS Releases Long-Awaited HIPAA Final Rule

On Jan. 17, 2013, the Department of Health and Human Services (HHS) released the long-awaited omnibus final rule pursuant to the Health Information Technology for Economic and Clinical Health Act (HITECH Act) and the Genetic Information Non-Discrimination Act of 2008 (GINA). The omnibus final rule settles some of the questions that remained open after the publication of the proposed regulations on July 14, 2010. The final rule will be effective on March 26, 2013, and covered entities and business associates must comply with the applicable requirements of the final rule by Sept. 23, 2013. Covered entities and business associates will have up to one year following the compliance date to modify business associate agreements in accordance with the requirements of the final rule.

CO-OPs Want Help Getting Their Funding Back

As part of the package passed earlier this year to avert the "fiscal cliff," Congress and President Obama removed unobligated funds provided for under the ACA that were previously available for a loan program to provide start-up capital to private, nonprofit health insurance CO-OPs. In response, last week, the National Alliance of State Health CO-OPs (NASHCO) sent a letter to Secretary Sebelius requesting that funding for the program be restored. While the group acknowledges the 24 CO-OPs that have already signed loan agreements with HHS will not be affected by the recent measure, residents of the remaining 26 states and the District of Columbia, in which no CO-OP would be available, deserve "the benefits of increased competition" that NASHCO believes CO-OPs will create.

Centers for Medicare and Medicaid Services (CMS)

Quality Measure Guidelines for ACA's Health Home Program Released

Last week, CMS sent a letter to state Medicaid directors outlining core quality measures for health homes while formal regulations are pending. The health home provision, authorized by the ACA, aims to build a person-centered care delivery model to improve outcomes and disease management for beneficiaries with chronic conditions. Among the core quality measures states will be asked collect are Adult Body Mass Index (BMI) Assessment, Follow-Up After Hospitalization for Mental Illness and All-Cause Readmissions. CMS will use the data to improve health homes and inform periodic evaluations of program performance.

Federal Trade Commission (FTC)

Record Number of "Pay for Delay" Settlements in FY2012

According to a report issued last week by the FTC, there were 40 patent settlements in FY 2012 in which a brand drug company paid a generic competitor in order to restrict generic marketing of a drug, up from 28 in 2011. The most recent figure is the highest since the agency started gathering settlement data in 2003. Though the FTC claims that such arrangements increase costs by delaying utilization of lower-cost generic medication, Ralph Neas, CEO of the Generic Pharmaceutical Association, criticized the report. "The FTC is continuing to perpetuate the myth that pro-competitive, pro-consumer patent settlements are harmful to consumers -- an unsubstantiated position that has repeatedly failed to receive support in both Congress and the Courts," Neas said in a statement. "Patent settlements have never prevented competition beyond the patent expiry, and generally have resulted in making lower-cost generics available months and even years before patents have expired."

3. State Activities

No Medicaid Expansion Likely for Indiana

Last week, Indiana Gov. Mike Pence released a set of budget recommendations that were markedly devoid of funding for an expansion of his state's Medicaid program. According to Chris Atkins, whom Pence appointed as the new director of the Office of Management and Budget, "[t]his budget does not specifically address the Medicaid expansion." Many Republican governors have indicated at least an initial apprehension to committing state funds for Medicaid expansion, which is an option, pursuant the ACA.

Nebraska Budget Contains No Funds for Medicaid Expansion

Similar to several other Republican governors, Nebraska Gov. Dave Heineman included no funding for the health care law's Medicaid expansion in budget recommendations he released last week. According to Heineman, implementing the health care law for the state's existing Medicaid program alone would add $72 million to the budget, funds he believes, as indicated in his State of the State address, "should be going to state aid to education or higher education."

Mississippi Insurance Commissioner Allowed to Build Exchange

A ruling by Mississippi Attorney General Jim Hood gave Republican Mississippi Insurance Commissioner Mike Chaney a legal victory Friday in his long-running effort to build a state-run health insurance exchange over the objection of Gov. Phil Bryant. In his ruling, Hood, a Democrat stated, "[I]t is the opinion of this office that [the Mississippi Insurance Department] is vested with authority to submit the application to establish a health insurance exchange .... It is the opinion of this office that the Legislature delegated authority to [the Mississippi Insurance Department] and the commissioner free from any approval or veto power to the governor." Bryant, a Republican, had argued that only he had the constitutional authority to apply to the federal government for an exchange.

4. Regulations Open for Comment

NEW -- HHS Issues Medicaid, CHIP, Exchange Eligibility Rule

On Jan. 1, HHS posted a proposed rule to implement provisions of the ACA and the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA). Notable provisions include:

Eligibility Appeals Process

The rule proposes a coordinated Exchange and Medicaid appeals process such that enrollees will first have the opportunity for a preliminary case review by appeals staff, referred to as "informal resolution." State-based Exchanges would have the flexibility to implement their own appeals processes in accordance with the NPRM's standards, with individuals retaining the right to a federal appeal at HHS after exhausting the state-based appeals process.


The rule proposes that notices to applicants and beneficiaries would include combined, clear and accurate information about eligibility for all insurance affordability programs, including Medicaid, CHIP, advance payments of the premium tax credit and cost-sharing reductions, as well as eligibility to enroll in a qualified health plan through the Exchange. This coordinated process would not be required to be in place until Jan. 1, 2015, or, optionally, at an earlier date if all relevant agencies have the necessary systems in place.

Medicaid Benefits

The proposed rule modifies existing "benchmark" regulations applicable to Medicaid programs, as previously described in a letter to state health officials, to implement the benefit options available to low-income adults beginning Jan. 1, 2014.

Verification of Employer-sponsored Coverage

The proposed rule includes detail on the procedures for the Exchange to verify access to employer-sponsored coverage. It also proposes that an Exchange may opt to fulfill the employer-sponsored coverage verification process by relying on HHS.

Comments must be received no later than Feb. 13, 2013.

A fact sheet is available from www.cms.gov.

Employer Health Care Coverage of Dependents Under ACA

Treasury and IRS released a notice of proposed rules (REG-138006-12) Dec. 28 on employer-provided health care coverage related to ACA's employer "shared responsibility" provisions, which were added to the tax code under Section 4980H. Starting in 2014, employers with at least 50 full-time and/or full-time equivalent employees (FTEs) will be required to offer affordable health care coverage that provides a minimum level of coverage or pay a penalty. These proposed regulations would affect only employers that meet the definition of "applicable large employer" as described in these proposed regulations. As discussed in section X of this preamble, employers may rely on these proposed regulations for guidance pending the issuance of final regulations or other applicable guidance. This document also provides notice of a public hearing on these proposed regulations.

Comments on the proposed rule must be received by March 18, 2013.

Guidance for Industry Abuse-Deterrent Opioids -- Evaluation and Labeling

The FDA has issued guidance intended to assist sponsors who wish to develop formulations of opioid drug products with potentially abuse-deterrent properties (abuse-deterrent formulations). Specifically, the guidance explains FDA's current thinking about the studies that should be conducted to demonstrate that a given formulation has abuse-deterrent properties, how those studies will be evaluated, and what labeling claims may be approved based on the results of those studies. FDA will accept comments on the guidance received by March 11, 2013. See FDA's press release.

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.

Additional "Meaningful Use" Guidance Issued

HHS has 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.

Additional Medicare Tax for Wealthy Beneficiaries

This proposed regulation addresses issues relating to Additional Hospital Insurance Tax on income above threshold amounts ("Additional Medicare Tax"), as added by the Affordable Care Act. Specifically, the proposed regulation provides 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.

5. Reports


VA Health Care: Reliability of Reported Outpatient Medical Appointment Wait Times and Scheduling Oversight Need Improvement

GAO released a report in December on outpatient medical appointment wait times reported by the Veterans Health Administration (VHA), within the Department of Veterans Affairs. The report found that the wait times reported are unreliable, as they are dependent on the consistency with which schedulers record the desired date in the system. GAO noted that VHA's scheduling policy and training documents are unclear, and implementation of the policy is inconsistent. GAO stated that "without reliable measurement of how long patients are waiting for medical appointments ... VHA is less equipped to identify areas that need improvement and mitigate problems that contribute to wait times." VHA is creating new initiatives to improve veterans' access to appointments, such as having contracts with community providers and expanded use of technology.

Institute of Medicine

Child Vaccination Schedule Found to be Safe

Last week, the Institute of Medicine released a report finding no evidence that all those immunizations given to young children pose a health threat. According to the report, The Childhood Immunization Schedule and Safety: Stakeholder Concerns, Scientific Evidence, and Future Studies, "[u]pon reviewing stakeholder concerns and scientific literature regarding the entire childhood immunization schedule, the IOM committee finds no evidence that the [vaccination] schedule is unsafe. The committee's review did not reveal an evidence base suggesting that the U.S. childhood immunization schedule is linked to autoimmune diseases, asthma, hypersensitivity, seizures, child developmental disorders, learning or developmental disorders, or attention deficit or disruptive disorders." However, the report also recommended that the National Vaccine Program Office collect more detailed data and information 'with the goal to improve communication ... regarding the safety of the schedule.' "


CRS Says New Coverage Under ACA May Intensify Physician Supply Concerns

In a report released Jan. 15, CRS finds the demands of the Affordable Care Act may result in a physician shortage. According to the report, "... experts suggest that there are too few physicians overall, too few primary care physicians specifically, and that physicians are inadequately distributed throughout the United States." Additionally, the report addressed how the ACA increased funding, made changes to physician training programs, increased support for primary care and appropriated funds to programs that placed physicians in different regions. It concluded that "it is not yet known whether and how these provisions will affect physician supply ... many of the programs established by the ACA have not yet been implemented, and others may not have immediate effects."

Medicare Payment Advisory Commission (MedPAC)

January Meeting

The Medicare Payment Advisory Commission (MedPAC) is an independent Congressional agency established by the Balanced Budget Act of 1997 (P.L. 105-33) to advise the U.S. Congress on issues affecting the Medicare program. On Jan. 10-11, 2013, the commission met to finalize recommendations on select policy initiatives to be published in its March 2013 Report to Congress. The meeting was divided into 10 sessions, summarized here.

In brief, MedPAC last week voted on Medicare payment changes:

  • Inpatient and outpatient hospital pay - 1 percent increase
  • Physicians - SGR repeal (reiterated from 2011 recommendation)
  • Long-term care hospitals - no update
  • Inpatient rehabilitation - no update
  • Home health providers - no update
  • Outpatient dialysis - no update
  • Ambulatory surgery centers - no update