1. Congress

House of Representatives

Energy and Commerce Seeks Answers on Exchanges, Medicaid Expansion

On Dec. 13, 2012, the Energy and Commerce Health Subcommittee held a hearing entitled "State of Uncertainty: Implementation of PPACA's Exchanges and Medicaid Expansion," to review the status of the federal rules implementing the Patient Protection and Affordable Care Act's (ACA) provisions related to health insurance exchanges and Medicaid expansion. Health Subcommittee Vice Chairman Mike Burgess (R-TX) chaired the hearing due to Chairman Joe Pitts' (R-PA) illness. The hearing highlighted the strong disagreement between Democrats and Republicans over the activities being conducted within the Department of Health and Human Services related to the establishment of health insurance exchanges and Medicaid expansion, pursuant to the ACA.


Mr. Gary Cohen


Center for Consumer Information and Insurance Oversight

Ms. Cindy Mann

CMS Deputy Administrator/Director

Center for Medicaid and CHIP Services - Centers for Medicare and Medicaid Services

Department of Health and Human Services

Mr. Bruce D. Greenstein


Department of Health & Hospitals

State of Louisiana

Mr. Dennis G. Smith


Department for Health Services

State of Wisconsin

Mr. Gary D. Alexander


Department of Public Welfare

Commonwealth of Pennsylvania

Mr. Joshua M. Sharfstein, M.D.


Department of Health & Mental Hygiene

State of Maryland

Mr. Andrew Allison, Ph.D.

Director, Division of Medical Services

Department of Human Services

State of Arkansas

Small Business Chairman Says Essential Health Benefits Are Unaffordable

Last week, Small Business Committee Chairman Graves (R-MO) wrote a letter to HHS Secretary Kathleen Sebelius stating that small businesses will have difficulty supplementing health insurance benefits that have traditionally not been covered, such as mental health and substance abuse coverage, habilitative services, and pediatric dental and vision care. According to Graves, "There are many small business owners who will struggle to afford any coverage, let alone the comprehensive or 'supplemental' coverage envisioned by the proposed rule."

Herger Introduces Medicare Reform Bill

Retiring Chairman of the Ways and Means Subcommittee on Health Rep. Herger (R-CA) recently introduced legislation consisting of several Medicare policy reforms long embraced by many Republicans, including premium support, increased means testing, IPAB repeal and raising the Medicare age to 67. According to Herger, the bill, called the Save and Strengthen Medicare Act (H.R. 6645), "is not a purely Republican effort, but rather a serious attempt to find a way forward before the entitlement crisis completely detonates."


GOP Senators Request More Time for Comment on Regs

Last week, a group of 10 Republican Senators wrote to Treasury Secretary Geithner, HHS Secretary Kathleen Sebelius and Department of Labor Secretary Hilda Solis asking for additional time to comment on rules recently released by their respective departments regarding essential health benefits, actuarial value and insurance market reforms. "Considering the significance of these rules indicated by the Administration it is surprising that the Administration would use what is considered the bare minimum, 30 day comment period for stakeholders to comment on these important regulations," the senators wrote. Currently, comments on those pending regulations are due by Dec. 26.

Finance Committee Hearing on Dual-Eligibles

On Dec. 13, the Senate Finance Committee held a hearing to examine state and federal efforts to improve health care delivery for dual-eligible individuals, who are eligible for both Medicare and Medicaid. The hearing focused on implementation of the Centers for Medicare and Medicaid Services (CMS) Financial Alignment Initiative (FAI) in which CMS and the states are partnering to implement integrated Medicare and Medicaid delivery system reforms for dual-eligibles. To date, CMS has finalized memoranda of understanding (MOU) with three states, Massachusetts, Washington and Ohio, to implement FAI demonstrations beginning in 2013. Additional state demonstration proposals are pending consideration at CMS.


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

New Committee Assignments for Senate Democrats Announced

Last week, Senate Democrats Brown (OH) and Bennett (CO) joined the Senate Finance Committee, effective at the start of the 113th Congress. In addition, Sens. Baldwin (WI), Murphy (CT) and Warren (MA) will occupy seats on the Senate HELP Committee. Sen. Murray (WA) will take over the gavel of the Budget Committee.

Questions Remain in HHS Contract for Data Services

Following up on questions posed to HHS Secretary Sebelius regarding the potential for conflicts of interest in the award of a data services contract to a company recently acquired by UnitedHealth Group, Sen. Grassley (R-IA) and Rep. Upton (R-MI) recently sent letters to both UnitedHealth Group and the contract awardee, Quality Software Services, Inc. (QSSI), requesting information regarding what steps the companies have taken to mitigate possible conflicts of interest, and whether they've ever talked with the feds about possible conflicts.

16 Democrats Request Delay in Medical Device Tax

Citing "significant uncertainty and confusion for businesses," a group of 16 Senators led by Sen. Klobuchar (D-MN) sent a letter last week to Senate Majority Leader Reid (D-NV) asking for a delay in the enactment of a 2.3 percent excise tax scheduled to take effect for certain medical devices on Jan. 1, 2013. IRS recently issued a final rule to implement the tax, which was included in the ACA as a revenue provision collecting roughly $29 billion over 10 years.

2. Administration


HHS Grants "Conditional" Approval to Nine State Health Insurance Exchanges

Last week, HHS granted conditional approval to nine applications for state-based exchanges. Colorado, Connecticut, Maryland, Massachusetts, Oregon, Washington, Kentucky, New York and the District of Columbia all won conditional approval to run their own exchanges. According to HHS, the department expects to grant similar approval to "many more" applications, and expects that "the majority of states will play an active role operating their Exchanges."

HHS Exchange and Medicaid "Frequently Asked Questions" Answered

In addition to approving several applications for state-based exchanges, HHS is also out with a lengthy "Frequently Asked Questions" document to guide state officials as they work through decisions related to implementation of the ACA, particularly with regard to the establishment of health insurance exchanges and the expansion of their respective Medicaid programs. Of particular note, states will not receive an enhanced federal match for a partial expansion of their Medicaid program.


CMS Approves Kansas Medicaid Proposal

Arguing that it would allow for better coordinated and more comprehensive services while controlling costs, Kansas officials received CMS approval of an overhaul plan that would turn over the care of its 395,000 Medicaid-eligible residents to three private managed-care insurance providers. Also known as KanCare, Kansas's Medicaid program currently costs the state about $2.9 billion per year. However, state officials have projected that the changes will save the state's Medicaid more than $1 billion over the next five years.

CMS Approves Ohio "Dual-Eligible" Proposal

Similar to its approval of a Kansas Medicaid overhaul plan, CMS last week agreed with Ohio's proposal to move to create an integrated care delivery system (ICDS) to manage benefits for the state's dual-eligible population -- those individuals qualifying for both Medicare and Medicaid. The plan consists of a three-year demonstration project in seven geographic regions to "identify and incentivize innovative techniques for improving care to a highly-acute population."

3. State Activities

Utah Asks Administration to Approve Exchange

After an exchange of letters consuming less than a week, uncertainty remains as to whether Utah will be allowed to continue to operate its existing health insurance exchange, despite its significant deviation from HHS's vision of an effective exchange, as provided for by the ACA. However, according to Secretary Sebelius, her office is eager to help Utah create an exchange that offers plans for businesses and individuals.

Utah Will Not Expand Medicaid

While Gov. Gary Herbert's proposed budget for next year does include an additional increase of $19.4 million to fund anticipated enrollment of those already Medicaid eligible, but not enrolled, no additional budget allotment was included to fund the state's ACA Medicaid expansion program.

Arkansas Chooses State-Federal Partnership

Democratic Gov. Mike Beebe, who had previously been planning a state-run exchange, will be partnering with the federal government to run a hybrid state/federal exchange. With a lack of support by the Republican legislature and an unchanging political climate in the recent election, Gov. Beebe has been cornered, but said that the state could always revisit the decision in the future.

Pennsylvania Rejects State-based Exchange

In a letter sent to HHS this week, Gov. Tom Corbett submitted his decision that Pennsylvania will not pursue a state-based health insurance exchange in 2014. In a statement, Corbett reasoned that "it would be irresponsible to put Pennsylvanians on the hook for an unknown amount of money to operate a system under rules that have not been fully written."

GOP-Leaning Nevada Expands Medicare

Republican Gov. Brian Sandoval, in a press interview, has voiced support for the expansion of the Medicaid program in Nevada, one of the few GOP states opting to run its own exchange. The Medicaid program in Nevada is expected to gain 78,000 newly eligible enrollees in addition to the 68,000 individuals who have not signed up yet.

Idaho Governor Opts for State-Run Exchange

Citing the desire to preserve the state's autonomy from overreaching federalism, Republican Gov. Butch Otter says his state will run its own exchange. In a statement, he said, "I cannot willingly surrender a role for Idaho in determining the impact on our own citizens and businesses." A long-time supporter of a state-run exchange, he'll need to rally additional support from the legislature.

Tennessee Elects for Federal Exchange

Gov. Haslam decided that due to the ambiguous nature of the requirements needed to set up its own exchange, Tennessee will not be doing so, despite the state's having been given $10 million worth of planning grants to set up its own exchange. He did not, however, rule out the possibility of an eventual transition to a different model, "if conditions warrant and it makes sense at a later date."

Iowa Chooses Partnership-Exchange

Changing his last month's decision to pursue an individually run state exchange, Gov. Terry Branstad stated in a letter to HHS that Iowa will be electing to enroll in a state-federal partnership exchange. His decision was based on a desire to curtail the absolute role of a federally run exchange; in keeping to this principle he wrote, "We will continue to regulate insurance plans in Iowa and retain control over our Medicaid and Children's Health Insurance Plan eligibility."

Virginia Declines State-Run Exchange

Gov. Bob McDonnell today informed HHS that Virginia will not set up its own exchange. However, he stopped short of ruling out all state participation, saying, "We are hopeful for the opportunity of continued dialogue between your staff and mine in order to ensure that input is considered from governors and from participating health plans that choose to be qualified to participate in any form of health benefits or hybrid exchange."

Florida Still Not Sure About Running an Exchange

Even as the previously extended deadline for state decisions on whether to run their own exchange or allow the federal government to do it for them passed, Florida Gov. Rick Scott does not believe he has enough information to make a decision and instead is holding out hope for a meeting with Secretary Sebelius to discuss his options for exchange establishment, as well as a potential Medicaid expansion.

GOP Govs Want More Flexibility in Medicaid

In response to an announcement that HHS would not provide an enhanced federal payment to states that only partially expand their Medicaid programs, Louisiana Gov. Bobby Jindal sent a letter to President Barack Obama last week requesting a meeting to discuss state Medicaid flexibility. Jindal wrote, "Frankly, it is in the best interests of both the President and the states for a serious meeting about the future of Medicaid to occur as soon as possible."  

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 issues 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 online

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


Medicaid Anti-Fraud Activities Duplicating State Obligations

GAO recently released a report finding that despite its efforts to root out fraud, waste and abuse in Medicaid, certain CMS policies may actually be adding to the amount of waste in the system. Specifically, the report found that government employees and contractors are simultaneously conducting some of the same work for the Medicaid program, which has led to an unnecessary burden on states. According to the report, "the Medicaid Integrity Group's (MIG) hiring of separate review and audit contractors for its National Medicaid Audit Program (NMAP) was inefficient and led to duplication because key functions were performed by both entities."

American Enterprise Institute (AEI)

ACA "Too Misguided" to Succeed

Tom Miller of the American Enterprise Institute is out with a 62-page report outlining a "replace" agenda for the Republicans, consisting of market-based alternatives, a defined-contribution approach to federal health programs, and well-targeted assistance to the most vulnerable. According to Miller, "The Affordable Care Act (ACA) is too misguided to succeed, too dangerous to maintain, and far too flawed to fix piecemeal." Miller recommends replacing the ACA by retargeting taxpayer subsidies for health coverage, improving the performance of a consumer-based health system, and making Medicare and Medicaid more accountable and sustainable.

American Hospital Association

Medicare Beneficiaries Getting Older, Sicker

According to a report released by the American Hospital Association last week, Medicare patients are living longer, but they are also getting sicker. Specifically, while life expectancy has increased by 1.8 percent (or approximately 17 months) for the general population since 2000, about four out of five seniors are affected by a chronic condition, such as heart disease and cancer, hypertension, stroke and diabetes.


Majority of Insured Will Be Covered By At Least Partial Federal Exchanges

According to a study released last week by Avalere Health, nearly two out of three individuals covered under plans purchased through health insurance exchanges will do so through an exchange run, at least in part, by the federal government. The report explains that currently only 17 states and the District of Columbia are on track to operate a wholly state-based exchange. Based on Avalere's calculations, this would mean that of the 8.2 million individuals expected to access health insurance through an exchange in 2014, 5.4 million will do so through an exchange with at least partial federal control.

Health Affairs

After-Hours Primary Care Access Reduces ER Use

A study recently reported in Health Affairs finds that patients who reported less difficulty contacting a clinician after hours had significantly fewer emergency department visits (30.4 percent compared to 37.7 percent) and lower rates of unmet medical need (6.1 percent compared to 13.7 percent) than people who experienced more difficulty. According to a survey used to construct the report, among people with a usual source of primary care, 40.2 percent reported that their practice offered extended hours, such as at night or on weekends. Full report (Subscription required).

Commonwealth Fund

Health Insurance Premiums Continue to Rise

Last week, the Commonwealth Fund released a report assessing the latest available state-by-state data on private employer premiums, concluding those premiums are still rising rapidly. According to info from the Medical Expenditure Panel Survey, premiums rose by an average of 62 percent from 2003 to 2011. Further, if that trend continues, the study predicts the average family premium could hit almost $25,000 by 2020. Alternatively, if annual growth slowed by 1 percentage point by then, it could mean annual savings of more than $2,000 for a plan.

Heritage Foundation

States Advised to Avoid ACA Implementation

As the clock expired on the window of opportunity for states to declare their intentions to operate their own health insurance exchange, or allow the federal government to do it for them, the Heritage Foundation has released a report encouraging states to avoid any participation in the ACA, or take the risk that the policies will fail. Citing problems related to cost, control and coverage, Heritage's Nina Owcharenko concludes, "it is no surprise that barely more than one-fifth of states have publically agreed to both establish a state exchange and expand their Medicaid programs. The other states would be wise to decline those risky steps and instead prepare better alternatives for health care reform." Full report available online.