United States: Weekly Washington Healthcare Update: June 9, 2014

Last Updated: June 13 2014
Article by Stephanie A. Kennan and Brian J. Looser



District Work Period -- No Legislative Activity


Senate Easily Confirms Burwell as HHS Secretary

On June 5, Sylvia Mathews Burwell was confirmed on the Senate floor by a vote of 78-17 as the next Secretary of the Department of Health and Human Services (HHS). Burwell, who previously served as the director of the Office of Management and Budget after terms as president of the Walmart Foundation and President Bill Clinton's chief of staff 1997-1998, replaces current HHS secretary Kathleen Sebelius. The newly elected secretary enjoyed bipartisan support throughout her confirmation, although a minority of Republican senators, led by Senate Minority Leader Mitch McConnell (R-KY), voted against Burwell's confirmation in protest of the Affordable Care Act. When debate on Burwell's nomination ended June 4, 14 Republicans crossed the aisle in the procedural vote, which passed 67-28. Burwell will be sworn into her new role on June 9.

Bipartisan Veterans Affairs Reform Proposal

Senators Bernie Sanders (I-VT) and John McCain (R-AZ) led a bipartisan agreement on June 5 on proposed legislation to reform the Department of Veterans Affairs. The bill includes legislation that passed the House in May and portions of three bills that were previously seen by the Senate. The agreement would make it easier to fire VA officials, and would expand veterans' access to health care. It would also allow certain veterans to see private doctors if they experience long wait times or live farther than 40 miles from a VA facility; would mandate the construction of 26 new VA facilities across 18 states; and would use $500 million in unobligated VA funds to hire additional VA doctors and nurses. The proposal would cost an estimated almost $2 billion, funded by emergency appropriations, and still faces potential roadblocks in amendments from senators unsatisfied with the compromise. The proposal comes in the aftermath of an investigation into wait times for health care at VA facilities that resulted in Eric Shinseki's stepping down as the head of the Department of Veterans Affairs in May.


OMB: Review of Medicare Home Health Care Reimbursement Rule

On June 5, 2014, the Office of Management and Budget (OMB) received a proposal from the Centers for Medicare & Medicaid Services (CMS) that would set FY2015 Medicare payment rates for home health agencies. The proposal would update figures including the 60-day national episode rate and national per-visit rates centered on applicable home health marketbasket updates and a case-mix adjustment. The reimbursement changes would apply to services furnished on or after Jan. 1, 2015. CMS estimates that about 3.5 million beneficiaries received care from home health services from 12,000 home health administrators in 2012, at a cost of $18.2 million to Medicare. The CMS final rule is due Nov. 1.

Health Information Technology Coordinator Plan for Interoperability, Data Sharing

On June 5, the Office of the National Coordinator for Health Information Technology (ONC) released a broad 10-year plan for a national interoperable health IT infrastructure as it moves to create health technologies that allow providers, patients, researchers and the government to share and use data for advancing clinical and public health decision-making processes. "Electronic health information needs to be available for appropriate use in solving major challenges such as providing more effective care and informing and accelerating scientific research," the report says. The aggressive ONC plan hones in on improving technology interoperability by infusing IT into new payment and reimbursement models as an essential criterion for improving care, saving money and creating efficiencies. Over the next three years, ONC will focus on ensuring providers and patients can send, receive, find and use basic health information to improve treatment quality. Long-term goals focus on sharing data among patients, providers and public health departments, and improving patient monitoring via remote devices.

Three New MedPAC Commissioners Appointed

On May 29, the Government Accountability Office (GAO) announced the appointments of Kathy Buto, Francis "Jay" Crosson and Warner Thomas to the Medicare Payment Advisory Commission (MedPAC). Current members Willis D. Gradison Jr. and William J. Hall were also reappointed, and the five members will serve terms that expire in April 2017. The three new appointees bring a wealth of experience to MedPAC; Buto is an expert in U.S. and international health policy, Crosson serves as group vice president for the American Medical Association and Thomas is the president and CEO of Oschsner Health System in New Orleans. Current member Jon Christianson was named vice chair of the commission, which will meet next Sept. 11-12. MedPAC advises Congress on payments, cost and quality, other key issues in Medicare and providers with plans participating in Medicare Advantage.

HHS $300 Million for Federally Qualified Community Health Centers

Department of Health and Human Services (HHS) Secretary Kathleen Sebelius announced June 4 that HHS will award up to $300M under the Affordable Care Act (ACA) to 1,300 federally qualified community health centers (FQHC) across the country. The funds will support increased access to comprehensive primary health care services through expanded service hours; increased number and greater availability of medical providers; and provision of services like oral and behavioral health, pharmacy, vision services, etc., at existing health care sites. FQHCs requesting expanded services funds must reveal how these funds will be utilized to grow primary care programs and services to underserved populations in the communities in which they operate. "Health centers are key to ACA's goal of expanding access to health care," said Secretary Sebelius. "They are critical providers of care and have also been instrumental in linking people to coverage through the Health Insurance Marketplace." These health centers operate more than 9,000 service delivery sites that provide care to over 21 million patients in every state and the U.S. territories.


New York Medicaid Waiver Funds Hinge on State Matching Requirement

New York's $8 billion Medicaid arrangement with the federal government, which requires Medicaid providers across the state to meet predetermined metrics -- aimed at decreasing in-patient hospitalizations by 25 percent over five years, is viewed by many as a lifesaver for institutions such as the financially troubled Interfaith Medical Center in Brooklyn. However, state matching funds are required in order to secure the full $8 billion, and as a result, the state's five major health systems -- the New York City Health and Hospitals Corporation, SUNY, Westchester Medical Center, Nassau University Medical Center and Erie County Medical Center -- will play an outsized role in determining how, and whether, New York actually receives the maximum amount.

Maryland Approves New Xerox Exchange Contract, Insurers Mull Rates

The Maryland Health Benefit Exchange Board, which oversees the state's broken insurance exchange, approved $43.5 million in contracts late last week with the hope that a move to new technology, which is currently used successfully in the Connecticut exchange, will help overcome problems that have plagued Maryland's efforts thus far. The agreement also includes a five-year contract for Xerox to host technology used by the highly successful Connecticut exchange. At the same time, five Maryland health insurers are considering dramatic changes in their rates next year, reflecting volatility that is likely to greet the second year of ACA coverage nationwide. Specifically, CareFirst BlueChoice and CareFirst of Maryland want to raise rates by 22.8 percent and 30.2 percent, respectively, while Kaiser Foundation Health Plan is pitching a 12.1 percent cut and Evergreen Health Cooperative wants a 10.3 percent cut. A fifth insurer, All Savers Insurance, which is a United Healthcare company, wants a 4.8 percent increase. Maryland is one of the first states to release its proposed rates for next year.


CMS Proposed Rule: Medicare, Medicaid EHR Incentive Program

On May 23, 2014, CMS issued a proposed rule that would change the meaningful use stage timeline and the definition of certified electronic health record technology (CEHRT). It would also change the requirements for the reporting of clinical quality measures for 2014. Certified EHR technology is defined for the Medicare and Medicaid HER Incentive Programs at 42 CFR 495.4, which references the Office of the National Coordinator for Health Information Technology's (ONC) definition of CEHRT under 45 CFR 170.102. For Stages 1 and 2 of meaningful use, CMS and ONC worked closely to ensure that the definition of meaningful use of CEHRT and the standards and certification criteria for CEHRT were coordinated. The definition of CEHRT under 45 CFR 170.102 requires, beginning with federal fiscal year (FY) and calendar year (CY) 2014, EHR technology certified to the 2014 Edition EHR certification criteria. Therefore, all EPs, eligible hospitals and CAHs must use 2014 Edition CEHRT to meet meaningful use under the Medicare and Medicaid EHR Incentive Programs, beginning with FY 2014 and CY 2014. Beginning in 2015, all eligible hospitals and professionals would still be required to report using the 2014 Edition CEHRT. The proposed rule also includes a provision that would formalize CMS' and ONC's previously stated intention to extend Stage 2 through 2016 and begin Stage 3 in 2017.

To view the CMS press release on the proposed rule, visit cms.gov.

Medicare Program; Prior Authorization Process for Certain Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Items

On May 23, 2014, CMS issued a proposed rule that would establish a prior authorization process for certain durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) items that are frequently subject to unnecessary utilization and would add a contractor's decision regarding prior authorization of coverage of DMEPOS items to the list of actions that are not initial determinations and therefore not appealable.

The proposed rule is intended to replicate the Medicare Prior Authorization of Power Mobility Device Demonstration. Launched in 2012, the demonstration established a prior authorization process for certain power mobility devices. Based on September 2013 claims data, monthly expenditures for certain power mobility devices decreased from $12 million in September 2012 to $4 million in August 2013 across the seven demonstration states (California, Florida, Illinois, Michigan, New York, North Carolina and Texas) with no reduction in beneficiary access to medically necessary items. CMS seeks to leverage this success by extending the demonstration to an additional 12 states. These states include Arizona, Georgia, Indiana, Kentucky, Louisiana, Maryland, Missouri, New Jersey, Ohio, Pennsylvania, Tennessee and Washington. This will bring the total number of states participating in the demonstration to 19.

CMS also proposes to establish a prior authorization process for certain durable medical equipment, prosthetics, orthotics and supplies items that are frequently subject to unnecessary utilization. Through a proposed rule, CMS will solicit public comments on this prior authorization process, as well as criteria for establishing a list of durable medical items that are frequently subject to unnecessary utilization that may be subject to the new prior authorization process. CMS will launch two payment model demonstrations to test prior authorization for certain non-emergent services under Medicare. These services include hyperbaric oxygen therapy and repetitive scheduled non-emergent ambulance transport. Information from these models will inform future policy decisions on the use of prior authorization.

The deadline to submit comments is July 28, 2014.

OIG Proposed Rule to Promote Civil Monetary Penalties for Health Fraud

On May 12, the Department of Health and Human Services Office of Inspector General published a rule in the Federal Register that would expand the use of civil monetary penalties (CMPs). Under the rule, CMPs could be applied to entities for failing to provide OIG with quick access to documents, ordering or prescribing medication or services while excluded from participation in federal health care programs, making false statements on enrollment applications, failing to report or return overpayments, and making a false statement that is part of a fraudulent claim. In addition, the proposed rule would also allow CMPs to be imposed on Medicare Advantage and Medicare Part D organizations. Comments on the rule are due July 11.

CMS Proposed Rule FY 2015 Hospice Payment Rate Update

On May 2, 2014, CMS issued a proposed rule [CMS-1609-P] that would update fiscal year (FY) 2015 Medicare payment rates and the wage index for hospices serving Medicare beneficiaries. As proposed, hospices would see an estimated 1.3 percent ($230 million) increase in their payments for FY 2015. The hospice payment increase would be the net result of a proposed hospice payment update to the hospice per diem rates of 2 percent (a "hospital market basket" increase of 2.7 percent minus 0.7 percent for reductions mandated by law), and a 0.7 percent decrease in payments to hospices due to updated wage data and the sixth year of CMS' seven-year phase-out of its wage index budget neutrality adjustment factor (BNAF). This rule also provides an update on hospice payment reform analyses and solicits comments on "terminal illness" and "related conditions" definitions, and on a process and appeals for Part D payment for drugs, while beneficiaries are under a hospice election. In addition, the rule proposes timeframes for filing the notice of election and the notice of termination/revocation; adding the attending physician to the hospice election form; a requirement that hospices complete their hospice inpatient and aggregate cap determinations within five months after the cap year ends, and remit any overpayments; and updates for the hospice quality reporting program.

Public comments on the proposal will be accepted until July 1, 2014.

CMS Final Rule -- Federally Qualified Health Center Prospective Payment System

On May 2, 2014, CMS issued a final rule with comment period to implement methodology and payment rates for a prospective payment system (PPS) for federally qualified health center (FQHC) services under Medicare Part B beginning on Oct. 1, 2014, in compliance with the statutory requirement of the Affordable Care Act. In addition, it establishes a policy that allows rural health clinics (RHCs) to contract with nonphysician practitioners when statutory requirements for employment of nurse practitioners and physician assistants are met, and makes other technical and conforming changes to the RHC and FQHC regulations. Finally, this final rule with comment period implements changes to the Clinical Laboratory Improvement Amendments (CLIA) regulations regarding enforcement actions for proficiency testing (PT) referrals. Comments will be accepted through July 1, 2014.

CMS Issues Proposed Hospital Inpatient Payment Regulation

CMS issued a proposed rule that would update fiscal year (FY) 2015 Medicare payment policies and rates for inpatient stays at general acute care and long-term care hospitals (LTCHs). This rule builds on the Obama administration's efforts through the Affordable Care Act to promote improvements in hospital care that will lead to better patient outcomes while slowing the long-term health care cost growth. CMS projects that the payment rate update to general acute care hospitals will be 1.3 percent in FY 2015. The rate update for long-term care hospitals will be 0.8 percent. The difference in the update is accounted for by different statutory and regulatory provisions that apply to each system.

The rule's most significant changes are payment provisions intended to improve the quality of hospital care, which reduce payment for readmissions and hospital acquired conditions (HACs). The rule also includes proposed changes to the Hospital Inpatient Quality Reporting (IQR) Program. The rule also describes how hospitals can comply with the Affordable Care Act's requirements to disclose charges for their services online or in response to a request, supporting price transparency for patients and the public.

CMS will accept comments on the proposed rule until June 30, 2014, and will respond to comments in a final rule to be issued by Aug. 1, 2014.

Fiscal Year 2015 Inpatient Psychiatric Facilities Prospective Payment System

On May 1, 2014, CMS issued a proposed rule that would update the prospective payment rates for Medicare inpatient hospital services provided by inpatient psychiatric facilities (IPFs). These changes would be applicable to IPF discharges occurring during the fiscal year (FY) beginning Oct. 1, 2014, through Sept. 30, 2015. This proposed rule would also address implementation of ICD-10-CM and ICD-10-PCS codes; propose a new methodology for updating the cost of living adjustment (COLA); and propose new quality measures and reporting requirements under the IPF quality-reporting program. The proposed rule will appear in the May 6, 2014, Federal Register and will be open to public comment for 60 days.

Proposed Fiscal Year 2015 Payment and Policy Changes for Medicare Inpatient Rehabilitation Facilities

On May 1, 2014, CMS issued a proposed rule that would update the prospective payment rates for inpatient rehabilitation facilities (IRFs) for federal fiscal year (FY) 2015 (for discharges occurring on or after Oct. 1, 2014, and on or before Sept. 30, 2015) as required by the statute. The rule also proposes to collect data on the amount and mode (that is, Individual, Group and Co-Treatment) of therapy provided in the IRF setting according to therapy discipline, revise the list of impairment group codes that presumptively meet the "60 percent rule" compliance criteria, provide for a new item on the Inpatient Rehabilitation Facility-Patient Assessment Instrument (IRF-PAI) form to indicate whether the prior treatment and severity requirements have been met for arthritis cases to presumptively meet the "60 percent rule" compliance criteria, and revise and update quality measures and reporting requirements under the IRF quality reporting program (QRP). The proposal also addresses the implementation of the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM), for the IRF prospective payment system (PPS), effective when ICD-10-CM becomes the required medical data code set for use on Medicare claims and IRF-PAI submissions. The proposed rule will appear in the May 7 Federal Register and will be open to public comments for until June 30, 2014.

FDA Proposed Rule on Deeming Tobacco Products To Be Subject to the Federal Food, Drug, and Cosmetic Act

FDA has issued a proposed rule that would deem products meeting the statutory definition of "tobacco product," except accessories of a proposed deemed tobacco product, to be subject to the Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended by the Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act). The Tobacco Control Act provides FDA authority to regulate cigarettes, cigarette tobacco, roll-your-own tobacco, smokeless tobacco and any other tobacco products that the Agency by regulation deems to be subject to the law. Option 1 of the proposed rule would extend the Agency's "tobacco product" authorities in the FD&C Act to all other categories of products, except accessories of a proposed deemed tobacco product, that meet the statutory definition of "tobacco product" in the FD&C Act. Option 2 of the proposed rule would extend the Agency's "tobacco product" authorities to all other categories of products, except premium cigars and the accessories of a proposed deemed tobacco product, that meet the statutory definition of "tobacco product" in the FD&C Act. FDA also is proposing to prohibit the sale of "covered tobacco products" to individuals under the age of 18 and to require the display of health warnings on cigarette tobacco, roll-your own tobacco and covered tobacco product packages and in advertisements. FDA is taking this action to address the public health concerns associated with the use of tobacco products. Comments are due July 9, 2014.

CMS Proposed Rule on Life Safety Codes for Medicare, Medicaid Providers

On April 14, 2014, CMS announced a proposed rule on the adoption of an updated life safety code (LSC) that CMS would use in its ongoing work to ensure the health and safety of all patients, family and staff in every provider and supplier setting. The updated code contains new provisions that are vital to the health and safety of all patients and staff. CMS intends to adopt the National Fire Protection Association's (NFPA) 2012 editions of the (LSC) and the Health Care Facilities Code (HCFC), as the 2012 edition of the LSC also is aligned with the international building codes to make compliance across codes much simpler for Medicare- and Medicaid-participating facilities.

Currently, CMS applies the standards set out in the 2000 edition of the LSC to facilities in order to ensure patients' and caregivers' health and safety. CMS is now proposing to adopt the 2012 editions of the LSC and the Health Care Facilities Code. The LSC sets out fire safety requirements for new and existing buildings, and is issued by the NFPA, a private, nonprofit organization dedicated to reducing loss of life due to fire. The new edition of the LSC applies to: hospitals, long-term care facilities (LTC), critical access hospitals (CAHs), Programs for All-Inclusive Care for the Elderly (PACE®), religious nonmedical healthcare institutions (RNHCIs), hospice inpatient facilities, ambulatory surgical centers (ASCs) and intermediate care facilities for individuals with intellectual disabilities (ICF-IIDs).

Comments are due June 16, 2014.


CBO: Payments of Penalties for Being Uninsured Under the Affordable Care Act: 2014 Update

The number of people penalized under the Affordable Care Act by 2016 will be significantly fewer than originally predicted, according to a Congressional Budget Office (CBO) report released June 4. The CBO now estimates that four million people will be liable for penalties in 2016 -- two million fewer than the Office reported in September 2012 -- and that $4.2 billion will be collected in penalties. That figure is $3 billion less than the CBO had previously predicted, and an estimated 61 percent of the collected penalties will be from households with incomes that are 400 percent or more of the federal poverty line. The CBO attributed the decrease in its estimate in part to technical updates from the Department of Health and Human Services and changes in the economic outlook. While 30 million non-elderly residents will be uninsured by 2016, 23 million of them will qualify for exemptions, according to the report. While this would leave an estimated seven million still uninsured, the number of residents penalized would be shrunk further through additional granted exemptions. The current administration has been allowing exemptions from the individual penalty for several reasons, including policies that were cancelled because they did not meet ACA requirements and technical malfunctions with the ACA websites that inhibited those trying to enroll. Also of note in the report was that the CBO and Joint Commission "can no longer determine exactly how the provisions of the ACA that are not related to the expansion of health insurance coverage have affected their projections of direct spending and revenues."

OIG: Vulnerabilities in Medicare's Interrupted-Stay Policy for Long-Term Care Hospitals

In a report released June 4 by the Office of Inspector General (OIG), the agency found that Medicare made an estimated $4.3 million in improper payments to long-term care hospitals (LTCH) in 2010 and 2011 as a result of vulnerabilities in its interrupted-stay policy. The majority of the $4.3 million ($3.8 million) went to long-term care hospitals as a result of reimbursement for two separate stays even if patients qualified for one uninterrupted stay. The remaining $523,000 in payments resulted from CMS's improperly reimbursing intervening facilities for services provided during interruptions of three days or less, despite current policies that mandate those payments be made by the hospital. While the LTCH interrupted-stay policy is designed to save CMS money by counting an LTCH stay with multiple interruptions as a single stay, the OIG said its review "identified several vulnerabilities in the LTCH interrupted-stay policy, including inappropriate payments, financial incentives to delay readmissions, and potential overpayments to collated LTCHs." In its report, OIG recommended several LTCH payment policy oversight changes to help reduce improper payments, including: taking action against LTCHs with high readmission rates immediately following the end of a fixed-day period, evaluating safeguards aimed to prevent inappropriate payments to LTCHs that are currently in place, and creating a system to ensure that payment adjustments for LTCHs occur with subsequent providers that exceed the 5 percent threshold.

Medicare Physical Therapy: Self-Referring Providers Generally Referred More Beneficiaries but Fewer Services per Beneficiary

According to a report recently released by the GAO, from 2004 to 2010, non-self-referred physical therapy (PT) services increased at a faster rate than self-referred PT services. During this period, the number of self-referred PT services per 1,000 Medicare fee-for-service beneficiaries was generally flat, while non-self-referred PT services grew by about 41 percent. Similarly, the growth rate in expenditures associated with non-self-referred PT services was also higher than for self-referred services. In addition, the relationship between provider self-referral status and PT referral patterns was mixed and varied on the basis of referring provider specialty, Medicare beneficiary practice size and geography. GAO examined three measures of PT referral for each referring provider for the three provider specialties that referred nearly 75 percent of PT services in 2010 -- family practice, internal medicine and orthopedic surgery. GAO also found that in the year a provider began to self-refer, PT service referrals increased at a higher rate relative to non-self-referring providers of the same specialty. For example, family practice providers that began self-referring in 2009 increased PT referrals 33 percent between 2008 and 2010. In contrast, non-self-referring family practice providers increased their PT service referrals 14 percent during this same period.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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