1. Congress

House of Representatives

GOP Delays Vote on Pre-Existing Condition Insurance Program

A bill that had been expected to receive consideration in the House last week was delayed at the last minute due to concerns that the legislation would not receive enough votes to pass. The bill, H.R. 1549, the Helping Sick Americans Now Act, would have shifted funding away from the federal Prevention and Public Health Fund, created by the ACA, in order to fund a different ACA program, the Pre-Existing Condition Insurance Program (PCIP), designed to provide access to health insurance for individuals who have been denied coverage due to health factors. PCIP was intended to serve as a bridge to cover individuals with pre-existing conditions who had been uninsured for six months or longer; however, a shortfall in program funds has caused it to halt new enrollment. Democrats, including Senate HELP Committee Chairman Harkin who championed the provision, objected to shifting funds away from the Prevention Fund. In addition, many Republicans felt the bill was an attempt to fix the ACA, which they believe must be fully repealed as a first step in any health reforms.

Health Subcommittee Hearing on Drug Distribution Security

On Thursday, the Energy and Commerce Health Subcommittee held a hearing to explore the current state of the nation's prescription drug supply chain, and hear testimony on a draft of drug distribution security legislation being circulated by Reps. Latta (R-OH) and Matheson (D-UT). The legislation, which was generally supported by members of both expert panels, would implement a "track and trace" system, which would require drug distribution entities to verify the drug's transaction history prior to taking ownership, among other safeguards. Concerns were voiced by some California Democrats, who fear the bill as currently drafted would preempt strict drug tracking policies already being implemented in their state.


Panel I

Janet Woodcock, M.D.
Center for Drug Evaluation and Research (CDER)
Food and Drug Administration (FDA)

Panel II

Elizabeth A. Gallenagh, J.D.
Vice President, Government Affairs and General Counsel
Healthcare Distribution Management Association

Christine M. Simmon
Senior Vice President, Policy & Strategic Alliances
Generic Pharmaceutical Association

Michael Rose
Vice President
Supply Chain Visibility
Johnson and Johnson Health Care Systems, Inc.

Tim Davis, Pharm.D.
Owner, Beaver Health Mart Pharmacy
On behalf of:
National Community Pharmacists Association

Allan Coukell
Medical Programs
Pew Health Group, The Pew Charitable Trusts

Carmen A. Catizone, M.S., R.Ph., D.Ph.,
Executive Director and Secretary
National Association of Boards of Pharmacy

Walter Berghahn
President, SmartRmeds for Life
Executive Director, Healthcare Compliance Packaging Council

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

Democrats Push FDA to Meet Unique Device Identifier Rule Deadline

Last week, Reps. Schwartz (D-PA), Owens (D-NY) and Schrader (D-OR), co-chairs of the New Democratic Health Care Task Force, wrote a letter to FDA Commissioner Hamburg asking that the agency meet its statutory obligation to promulgate final rules necessary for a unique medical device identifier system, pursuant to last year's FDA user fee law. The authors expressed concern about recent statements by FDA officials they felt indicated the agency may not meet the deadline, and asked for an update on FDA's progress toward Stage 3 of the "meaningful use" electronic health records program.

Does HIPAA Help or Hinder Patient Care and Public Safety?

On Friday, the Energy and Commerce Subcommittee on Oversight and Investigations held a hearing entitled "Does HIPAA Help or Hinder Patient Care and Public Safety?" in which committee members explored how the Health Information Portability and Accountability Act's (HIPAA) could be interfering with patient care and public safety, either through misunderstanding, or proper application, of the law. The hearing arose from a recent field hearing held by the subcommittee focused on mental illness and violence in the context of the Newtown school shooting tragedy. At that forum, parents and psychiatrists raised concerns that HIPAA's privacy rule may interfere with the timely and continual flow of health information between health care providers, patients and families, thereby impeding patient care and, in some cases, public safety.


Panel I

Leon Rodriguez
Office for Civil Rights
Department of Health and Human Services

Professor Mark A. Rothstein
Herbert F. Boehl Chair of Law and Medicine
Director, Institute for Bioethics, Health Policy and Law
University of Louisville School of Medicine

Panel II

Dr. Richard Martini, M.D.
Professor of Pediatrics and Psychiatry
University of Utah School of Medicine
Chair, Department of Psychiatry and Behavioral Health
Primary Children's Medical Center

Carol Levine
Families and Health Care Project
United Hospital Fund

Gregg Wolfe
Father of a son with mental illness and substance addiction

Edward Kelley
Father of a son with mental illness

Jan Thomas
Family impacted by HIPAA

Deven McGraw
Director of the Health Privacy Project
Center for Democracy and Technology

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


Finance Committee Approves Tavenner Nomination, Harkin Places Hold

On Tuesday, the Senate Finance Committee approved, by unanimous voice vote, CMS Acting Administrator Marilyn Tavenner's nomination, seemingly setting the stage for prompt consideration of her confirmation by the full Senate. However, later in the week, Sen. Harkin (D-IA) indicated he would hold up the process as a result of HHS Secretary Sebelius' decision to use funds from the Prevention and Public Health Fund, a program Harkin championed for inclusion in the ACA, to backfill needed funding for development and operation of federally facilitated health insurance exchanges. It remains unclear how or when the two sides will resolve their differences, but Harkin has indicated a solution could be found. "I'm meeting with them about this issue and ... I think there's other places they can get the money." Harkin said. All told, Sebelius would take about $332 million out of the prevention fund this year.

Draft Legislation to Address Compounding Pharmacy Oversight

On Friday, HELP Committee leadership released a draft of legislation intended to fill holes in the regulatory oversight of compounding pharmacies. Under the draft, a new category of compounding manufacturer would be created to assist in the monitoring of entities that produce large batches of sterile drugs without individual prescriptions, engaging in sales across state lines, as in the case of the New England Compounding Center, which produced tainted batches of an injectable drug that led to the deaths of more than 50 people. Those companies would be required to register with the FDA, pay an annual establishment fee to cover the cost of FDA oversight, label their products as compounded drugs and comply with federal good manufacturing practices. Traditional compounders, like typical community and chain pharmacies, that make individual formulations according to a doctor's prescription would remain primarily under the purview of state boards of pharmacy. The draft was released by HELP Chairman Tom Harkin (D-Iowa) and ranking member Lamar Alexander (R-Tenn.), as well as Sens. Al Franken (D-Minn.) and Pat Roberts (R-Kan.), and asks for feedback from stakeholders.

Subcommittee Hearing on Medicare Payments for Medical Equipment

On Wednesday, the Senate Homeland Security and Government Affairs Subcommittee on Financial and Contracting Oversight held a hearing to examine payments by the CMS to suppliers of durable medical equipment under Medicare Part B. The hearing focused on a review of marketing and promotional practices of companies as well as efforts to control costs and prevent improper payments. The hearing was the first before the new Subcommittee on Financial and Contracting Oversight, which was created to look at waste, fraud and abuse in the federal government. Peter Budetti, CMS deputy administrator and director of the Center for Program Integrity, criticized the impact of fraud, waste and abuse on the DME industry, but noted that CMS has various initiatives, such as risk-based screening of new applicants and reevaluation of existing suppliers that help "root out bad actors." Laurence Wilson, director of CMS's Chronic Care Policy Group, noted that as CMS expands its competitive bidding program, more effective screening of contractors will further reduce fraudulent activity. Statistics show that 66 percent of the $8.8 billion in 2012 Medicare payments for DME were considered improper.


Panel I
Jon Letko (Invited)
U.S. Healthcare Supply, LLC

Dr. Steve Silverman (Invited)
Med-Care Diabetic & Medical Supplies

Panel II
Peter Budetti
Deputy Administrator and Director
Center for Program Integrity, Centers for Medicare & Medicaid Services

Laurence Wilson
Chronic Care Policy Group, Center for Medicare, Centers for Medicare & Medicaid Services

Charlene Stanley
Zone Program Integrity Contractor Operations Director
AdvanceMed Corporation

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

Finance Committee Offers Health Care Fraud Report

On Thursday, a bipartisan group of senators on the Finance Committee issued a report providing an analysis of industry recommendations to help combat fraud in Medicare and Medicaid. The report, "Senate Finance Program Integrity White Papers: Summary and Overview of Recommendations," follows responses from industry to a solicitation for recommendations from Senate Finance members in May 2012. The report notes that the majority of industry comments reflected a need "to improve the processes for preventing, detecting, and deterring improper payments," including a focus on high-cost services and high-risk providers. The report was authored by Finance Chairman Baucus (D-MT) and Ranking Member Hatch (R-UT), as well as Sens. Wyden (D-OR), Carper (D-DE) and Grassley (R-IA).

Hatch Questions HHS Secretary About ACA Waiver for Just One State

Sen. Hatch (R-UT) has sent a letter to HHS Secretary Sebelius asking why the department granted a unique waiver to Massachusetts allowing flexibility on rating rules for health insurance, as called for under the ACA. Specifically, the health reform law prohibits insurance providers from considering factors other than age, geographic area, number of family members and tobacco use for purposes of calculating premiums. However, Massachusetts law, which some view as a model for the ACA, allows insurers to consider up to nine factors when determining rates. Hatch wants to know why Massachusetts is the only state to receive a waiver from the ACA's stricter requirements. "State regulators throughout the country have expressed to you their concerns about the impact of rating reforms on the operations of their markets and have requested a similar transition as the one given to Massachusetts," Hatch said. "It seems only reasonable then that the Department has the same authority to offer flexibility to all states, regardless of whether or not the states had an established exchange prior to January 1, 2010."

2. Administration


Sebelius Letter to Senator Details Timeline for Basic Health Program

HHS Secretary Sebelius has released a letter to expand upon a general timeline for implementation of the Basic Health Plan (BHP) option recently publicized by its chief proponent in the Senate, Washington Democrat Maria Cantwell. In her letter, Sebelius explains that the federal plan enabling states to provide health care coverage to low-income people under the Affordable Care Act, delayed by a year, will begin open enrollment in October 2014. The document sets forth a schedule of events beginning with ongoing state and stakeholder engagement followed by forthcoming regulations in September 2013. Final rules are expected in March of 2014, with the program becoming fully operational Jan. 1, 2015.


CMS Stays Firm on Pioneer ACO Accountability Timeline

According a letter issued on April 23, CMS will not delay making 2013 a pay-for-performance year for Pioneer accountable care organizations; however, the agency will make changes in some quality metrics required of participating health care organizations. Specifically, CMS responded to a February letter signed by dozens of providers enrolled in the Pioneer ACO program, which expressed concerns that CMS's proposed quality benchmarks for 2013 lacked measurable performance data in many areas on which ACOs would be required to report, threatening to leave the program if CMS did not delay penalties associated with failure to meet benchmarks. In response, CMS said its efforts to set benchmarks based on the real-world experiences of providers would be accelerated, but that the agency will continue to enforce performance standards for 2013, as originally planned. CMS argued that more than 200 organizations have complied with the required reporting process.

Affordable Care Act: State Resources FAQ Document

Last week, CMS issued a "Frequently Asked Questions" document to states, informing them of the agency's views on several items related to ACA implementation, including federal contributions to state efforts to operate health exchanges, and what policies might apply under "assessment" and "determination" models of federally facilitated exchanges. Of particular note, CMS indicated it will not approve enrollment caps or periods of ineligibility in Section 1115 waivers. "Enrollment caps limit enrollment in coverage on a first come, first serve basis. Periods of ineligibility delay or deny coverage for otherwise eligible individuals. These policies do not further the objectives of the Medicaid program, which is the statutory requirement for allowing section 1115 demonstrations," CMS wrote.


HHS Rule on Safety Net Hospital Reductions Under Review

According to the Office of Management and Budget, an HHS rule on payment reductions for safety-net hospitals has been received for review. The proposal, Disproportionate Share Hospital Payment Reduction, would describe the "statutory aggregate reductions to State Medicaid Disproportionate Share Hospital (DSH) allotments" for fiscal years 2014 through 2020. The annual reduction amounts would be implemented using a DSH health care reform methodology determined by the health and human services secretary. The rule, a requirement of the ACA starting Oct. 1, was designated as economically significant. OMB also received a proposed regulation titled "Requirements for the Medicare Incentive Reward Program and Provider Enrollment," and another titled "Changes to the Hospital Inpatient and Long-Term Care Prospective Payment System for FY 2014." Both have been deemed economically significant, with the latter being labeled as an "annual major proposed rule [that] would revise the Medicare hospital inpatient and long-term care hospital prospective payment systems for operating and capital-related costs," according to OMB.

The Departments of Labor, Treasury, and Health and Human Services

Agencies Issue ACA Guidance On Second-Year SBC for Health Plans

Last week, the Departments of Labor, Treasury, and Health and Human Services jointly issued a FAQ document on the summary of benefits and coverage (SBC) required of group health plans and individual coverage by the ACA. The document includes guidance for plans after Jan. 1, 2014, and before Jan. 1, 2015, on disclosing whether a plan or individual coverage "provides minimum essential coverage (MEC) and whether the plan's or coverage's share of the total allowed costs of benefits provided under the plan or coverage meets applicable minimum value (MV) requirements."

3. State Activities

Connecticut Plans to Launch SHOP Exchange Despite Federal Delay

Last week, Kevin Counihan, chief executive officer of the state's health care exchange, Access Health CT, said Connecticut is determined to set the standard for state health exchanges. "We understand the importance of choice and affordability to small businesses and their employees," Counihan said. "We know that one size doesn't always fit all and that individual employees have different needs. Our SHOP products offer broad carrier choice while allowing employers to budget and fix their costs for health insurance." The decision comes in spite of a federal proposal to delay implementation of the small business health options program (SHOP) until 2015 in states with federally facilitated exchanges.

Maryland Spends $24 Million on ACA Outreach

Maryland recently announced that six groups will split roughly $24 million in grants for exchange navigators and in-person assisters to inform people about their new insurance options in 2014. The groups include about 50 subcontractors who will assist with outreach, education and enrollment efforts, with 300 new jobs anticipated.

4. Regulations Open for Comment

NEW - 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.

NEW - 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.

HHS Interim Final Rule -- 2014 Notice of Benefit and Payment Parameters

HHS has issued an interim final rule with comment that builds upon standards set forth in the HHS Notice of Benefit and Payment Parameters for 2014. The interim final rule will adjust risk corridors calculations that would align the calculations with the single risk pool provision, and set standards permitting issuers of qualified health plans the option of using an alternate methodology for calculating the value of cost-sharing reductions provided for the purpose of reconciliation of advance payments of cost-sharing reductions. Comments are due by April 30, which is also when the rule becomes effective.

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.

5. Reports

Treasury Inspector General for Tax Administration

IRS Needs Improved System for Employer Reported Health Insurance Info

According to a report issued by the Treasury Department Inspector General for Tax Administration, though the Internal Revenue Service (IRS) has adequately implemented many of the ACA's reporting requirements, the tax-collecting agency has struggled somewhat with portions of Section 9002, which requires employers to report the cost of employee insurance on W-2s. "The IRS continues to make progress in implementing the information reporting requirements relating to Provisions 1502, 1514, 9002, and 9010 of the Affordable Care Act. However, the implementation plan for Provision 9002 that requires the inclusion of employer health coverage on Form W-2, Wage and Tax Statement, does not address how the IRS will use the information and how the IRS will ensure employer compliance with this information reporting provision .... Therefore, the IRS should consider collecting additional third-party information that could expand its ability to ensure taxpayer compliance with the Affordable Care Act provisions and requirements," the report found.