United States: Washington Healthcare Update: June 23, 2014

Last Updated: July 3 2014
Article by Stephanie A. Kennan and Brian J. Looser

1. Congress

House

Medical Providers Expanding Use of Narrower Networks

On June 12, House Energy and Commerce Committee's Subcommittee on Health held a hearing exploring the challenges patients face accessing providers, medicines and treatments through coverage obtained in the Affordable Care Act's (ACA) health insurance exchanges. In his opening statement, Chairman Joe Pitts (R-PA) said that the Administration is not upholding its promise that patients can keep their current physician or health care plan. Physician and American Enterprise Institute resident fellow Scott Gottlieb mirrored the chairman's sentiments in his testimony, saying that the ACA has allowed insurers to narrow the networks of coverage for patients. Gottlieb added that narrowing networks has become one of medical providers' few remaining tools to cut costs, and that he believed that more networks would narrow because he feels that the political environment will prevent any backlash.

Ways and Means Hearing Examines MedPAC June 2014 Report to Congress

On June 18, the House Ways and Means Health Subcommittee held a hearing to examine the Medicare Payment Advisory Commission's (MedPAC) June report to the Congress. The lone witness in the hearing, MedPAC Executive Director Mark Miller, testified that in this year's report, the MedPAC has begun to explore the concept of synchronizing Medicare policy across the three major Medicare payment models -- traditional fee-for-service (FFS), Medicare Advantage (MA) and the newest model, the accountable care organization (ACO). The Commission's interest in this topic is motivated by concern that Medicare's payment rules and quality measurement programs are different across the three models.

Witness List:

Mark Miller
Executive Director, Medicare Payment Advisory Commission

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

Senate

Senators Wyden and Grassley Look to Improve Healthcare Transparency

On June 12, 2014, Senate Finance Committee Chairman Ron Wyden, D-Ore., and senior Finance Committee member Chuck Grassley, R-Iowa, released a statement asking providers, patients and advocates for new ideas to improve overall transparency in health care. To help generate suggestions, the letter included four questions for stakeholders: What data should be made more publicly available; how should the data be presented to the public; what reforms should be undertaken to improve the accessibility and usability of data for consumers, payers and providers; what is currently preventing access to data and how can these obstacles be removed? "This data has great potential for use by consumers who can be empowered to choose providers that best fit their specific needs; by providers who can improve and deliver higher-quality care; and by payers who can design the most efficient and effective delivery models," the letter reads. The letter, sent to a broad spectrum of health care stakeholders, asks for input on how to make health care data more useful and readily available. Stakeholders and the public should submit comments by email to data@finance.senate.gov by Aug. 12, 2014. The Centers for Medicare & Medicaid Services (CMS) has taken steps on its own to open the payment database to the public and released over 9 million rows of data on more than 880,000 physicians and other providers.

2. Administration

Premium Affordability, Competition and Choice in the Health Insurance Marketplace, 2014

A report published by the Obama Administration on June 18 detailed the range in average premiums for subsidized coverage among the 36 states that use Healthcare.gov. After tax credits, the average premium cost users $82 per month. New Jersey had the highest monthly average ($148), while Mississippi averaged the lowest monthly premium ($23). The report also asserted that 96 percent of Healthcare.gov users lived in markets with between two and 11 plan choices, while 56 percent lived in markets with five or more options. The report also stated that competition between plan providers was lowering premiums.

CMS Initiative Teaches Public About New ACA Coverage

CMS launched a national initiative, "From Coverage to Care" (C2C), on June 16, 2014, designed to help answer questions that people may have about their new health coverage to help them make the most of their new benefits. "Helping to ensure that new health care consumers know about the benefits available through their coverage, and how to use it appropriately to obtain primary care and preventive services is essential to improving the health of the nation and reducing health care costs," said Dr. Cara V. James, director of the CMS Office of Minority Health. Dr. James noted that, "to achieve these goals, we need to make sure that people who are newly covered know that their coverage can help them stay healthy, not just help them get better if they get sick." The CMS also released a document for consumers, "A Roadmap to Better Care and a Healthier You" that lists eight steps to help consumers be informed about the benefits available under their coverage. Among other things, the "Roadmap" contains information on health care coverage terms, the differences between primary care and emergency care, and the cost differences of decisions to seek care in and out of network, where applicable to the consumer's health plan.

FDA Guidance: Internet/Social Media Platforms with Character Space Limitations

In a draft report published June 17, FDA released proposed guidelines for social media use in promoting medical products. Regardless of limited character space -- i.e., Twitter's 140-character limit -- companies would have to highlight both the benefits and potential risks of their products. Companies would also have the ability to post reminder notifications and corrections of third-party misinformation, and these posts would not be subject to the same level of required information. The FDA is currently taking comments on the guidelines before finalizing them before a July deadline.

3. State Activities

Washington State Exchange Hits Turbulence After Smooth Take-Off

Washington state's health exchange is facing technical problems after successfully enrolling hundreds of thousands of people upon its initial launch. Administrators are nervous about the second enrollment season as they are now faced with technical shortcoming, a shortage of providers and issues of financial sustainability. Richard Onizuka, CEO of the state's marketplace, is worried about bugs in the system that are delivering incorrect bills to insurers and consumers. He also has to contend with financing the exchange, with federal support set to expire at year's end. Exchanges are required to be self-sufficient by 2015 but can request an extension of federal funding into next year. Health care providers, too, are feeling the pressure as the influx of newly insured patients look to be treated. "There are no open appointments. I am frantically recruiting primary care providers and nurses and frontline staff to meet the need that's there," says Anita Monoian, CEO of Yakima Neighborhood Health Services. Despite the challenges, however, the overall outlook is optimistic. More than 170,000 people have signed up on the exchange and 320,000 have enrolled in the state's expanded Medicaid program.

Colorado "Connect for Health" Approves Tax to Fund State Exchange

Colorado's Connect for Health board approved, on June 10, 2014, a tax on all insurance carriers in the state Monday in order to fund the exchange once federal funding runs out. The exchange will charge insurance carriers $1.25 monthly on each insurance policy sold in the state in order to generate an expected $13 million for the Obamacare exchange's 2015 funding. Approval was critical as federal startup grants are exhausted and state exchanges are required to be self-sufficient by year's end. Colorado isn't the first state to tax all insurance carriers in order to fund the select few that operate on the state's Obamacare exchange. The state also hopes to generate funding for 2015 by charging a tax of 1.4 percent on Obamacare exchange customers' monthly premiums. The enrollment or administrative fee is expected to raise $6.9 million for the 2015 budget.

California Expands Eligibility for "Covered California" Board

On June 18, the California Assembly passed a bill to open up the Covered California Board, which oversees the implementation of the state's health insurance exchange. The bill expands the qualifications necessary to be on the board to allow informational technology experts, health insurance marketers and enrollment counselors skilled in reaching out to poor and minority Californians to join. Currently, the five-member board is staffed by health care and insurance administrators. The bill comes in response to complaints that the board is not representative enough and that it has not done enough to reach out to the state's Spanish-speaking population. The bill is currently awaiting the governor's approval.

4. Regulations Open for Comment

Draft Guidance for Industry on Drug Supply Chain Security Act Implementation: Identification of Suspect Product and Notification; Availability

On June 11, 2014, FDA announced the availability of a draft guidance for industry entitled "Drug Supply Chain Security Act Implementation: Identification of Suspect Product and Notification." The draft guidance addresses new provisions in the Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended by the Drug Supply Chain Security Act (DSCSA). The draft guidance is intended to aid certain trading partners (manufacturers, repackagers, wholesale distributors and dispensers) in identifying a suspect product and terminating notifications regarding illegitimate product. This draft guidance identifies specific scenarios that could significantly increase the risk of a suspect product entering the pharmaceutical distribution supply chain; provides recommendations on how trading partners can identify the product and determine whether the product is a suspect product as soon as practicable; and for product that has been determined to be illegitimate, or (for manufacturers) has a high risk of illegitimacy, sets forth the process by which trading partners should notify FDA of illegitimate product and how they must terminate the notifications, in consultation with FDA. Public comments on the draft guidance will be accepted through Aug. 11, 2014.

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.

5. Reports

OIG: Senior Medicare Patrol Recovered $9 Million in 2013

In a report released June 16 by the Department of Health and Human Services Office of the Inspector General (OIG), the agency found that Senior Medicare Patrol (SMP) activities have resulted in the recovery of $9 million in expected Medicare and Medicaid savings in 2013, an increase of $3 million in expected recoveries since 2012. Worth noting, "total savings to beneficiaries and others [actually] decreased from $133,971 in 2012 to $41,718 in 2013," the report said. The SMPs, which have been funded by the Department of Health and Human Services' Administration on Aging, recruit and train retirees who then educate fellow seniors on identifying and reporting Medicare fraud. There are currently 54 SMP projects up and running, which vary by state and program type.

OIG Report Outlines Market Share Determination for Mail-Order Diabetes Test Strips Competitive Bidding

On June 13, the Department of Health and Human Services Office of the Inspector General (OIG) released a report that outlines market share determination for mail-order diabetes test strips. The report comes before the third round of the Competitive Bidding Program under the Medicare Improvements for Patients and Providers Act (MIPPA). OIG found that Prodigy, OneTouch Ultra Blue and TRUEtest, the top three test strips, compose 59 percent of market share and that the top 10 mail order test strips combined to account for approximately 90 percent of market share. The findings were derived from a three-month study from July to September 2013, analyzing 1,210 claims from a sample size of 505,000 claims for mail order diabetes test strips provided to beneficiaries. CMS may choose to consider this data when determining whether subsequent rounds of suppliers' mail-order diabetes test strip bids comply with the MIPPA 50 percent requirement. As it stands, suppliers' bids must cover at least 50 percent of market share in order to win competitive bidding from Centers for Medicare and Medicaid Services under Section 154(d)(3)(B) of MIPPA and must demonstrate suppliers' bid price, financial stability and eligibility. Medicare currently covers 80 percent of allowable charges for test strips and has an implemented July 2013 second-round competitive bid price of $10.41 for a 50-unit box.

CBO: Estimating the Budgetary Effects of the Affordable Care Act

CBO Director Douglas W. Elmendorf published his response to a series of questions submitted for the record from a Feb. 5 hearing before the Senate Budget Committee. An important point following that hearing resulted from a footnote in the CBO's February report, The Budget and Economic Outlook: 2014 to 2024, in which the CBO stated that it would no longer be able to calculate the cost of the Affordable Care Act. In the response, published June 17, Elmendorf stated that because the ACA has become such an established part of the budgetary baseline, it has proven too difficult for the CBO to estimate what the budget would be like without the ACA.

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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