United States: Washington Healthcare Update - July 21, 2014

Last Updated: July 25 2014
Article by Stephanie A. Kennan and Brian J. Looser

1. Congress


Energy and Commerce Hearing Examines ACA Eligibility System

On July 16, 2014, the House Energy and Commerce Subcommittee on Health held a hearing titled "Failure to Verify: Concerns Regarding PPACA's Eligibility System." The hearing on the state of the health care law's exchange eligibility system, and in particular the accuracy of the exchanges' information verification systems, focused on two reports released July 1, 2014, from the Office of Inspector General (OIG) at the Department of Health and Human Services. Witnesses from OIG were questioned on the report's findings of the serious gaps and lack of internal controls for verifying Social Security numbers, citizenship and other sources of health coverage for beneficiaries enrolled in the federal and state exchanges. By law in the ACA, exchanges must use federal and state data to facilitate eligibility determinations for the premiums and cost-sharing subsidy programs. Members sought answers on the reasons for the inconsistencies and steps that Centers for Medicare & Medicaid Services must take to remedy the more than four million inconsistencies identified by the committee since May 27.


Kay Daly,

Assistant Inspector General,

Office of Audit Services, Office of Inspector General -- Health and Human Services; and,

Joyce Greenleaf

Regional Inspector General,

Office of Evaluation and Inspections, Office of Inspector General -- Health and Human Services

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

Energy and Commerce: 21st Century Technology for 21st Century Cures

On July 17, 2014, the Health and Communications and Technology Subcommittees of the House Energy and Commerce Committee held a joint hearing titled "21st Century Technology for 21st Century Cures." The two subcommittees came together to explore ways to improve health technology, focusing in particular on data sharing and connectivity. The first topic investigated was the interoperability of electronic health records (EHRs). Members of the witness panel said that limited capacity to share medical information between EHR systems not only makes medical research and health IT development more difficult, but it also can hurt patients by restricting their ability to get the necessary medical information to those who can help them. The hearing also investigated the use of broadband and wireless connectivity to increase access to telemedicine and other health services.


Robert Jarrin

Senior Director

Government Affairs Qualcomm Incorporated

Paul Misener

Vice President, Global Public Policy


Dr. Jonathan Niloff

Chief Medical Officer and Vice President

McKesson Connected Care and Analytics

McKesson Corporation

Dan Riskin


Health Fidelity

Dave Vockell

Chief Executive Officer


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

Upcoming -- 21st Century Cures Roundtable on Personalized Medicine Scheduled

The Energy and Commerce Committee will continue its efforts on 21st Century Cures with a roundtable on Wednesday, July 23, 2014, at 10 a.m., in Room 2123 of the Rayburn House Office Building. Members and participants will discuss how the rise of personalized medicine and advances in science and technology can shape the health care system in the 21st century. Specifically, the roundtable will explore how genomic sequencing and diagnostic testing, as well as the regulation of these continually evolving areas, affects innovative product development and delivery.

In addition, the Energy and Commerce Subcommittee on Health, chaired by Rep. Joe Pitts (R-PA), has scheduled a hearing for Tuesday, July 22, 2014, at 3 p.m. in Room 2123 of the Rayburn House Office Building. The hearing is titled "21st Century Cures: Barriers to Ongoing Communication and Evidence Development."


Mary Grealy


Healthcare Leadership Council

Michael A. Mussallem

Chairman and CEO

Edwards Lifesciences

Gregory Schimizzi, M.D.


Carolina Arthritis Associates, On Behalf of the Alliance for Specialty Medicine

Josh Rising, M.D., M.P.H.

Director, Medical Devices

The Pew Charitable Trusts

Louis Jacques

Senior Vice President and Chief Clinical Officer


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


HELP Subcommittee Primary Health and Aging Hearing -- More Than 1,000 Preventable Deaths a Day Is Too Many: The Need to Improve Patient Safety

The Senate HELP Subcommittee on Primary Health and Aging held a hearing July 17 to investigate patient safety and the estimated 440,000 deaths that occur in hospitals every year due to preventable medical errors. Witnesses on the panel, some of whom have lost family members to preventable medical errors, testified that progress on patient safety has advanced very little since the National Institutes of Health's last major study on deadly preventable medical errors in 1999. In his opening statement, Subcommittee Chairman Bernie Sanders (D-VT) said, "Medical harm is a major cause of suffering, disability, and death -- as well as a huge financial cost to our nation. This is a problem that has not received anywhere near the attention that it deserves, and today I hope that we can focus a spotlight on this matter of such grave consequence." He also noted data from the Journal of Health Care Finance reporting that medical errors cost the U.S. health care system as much as $17 billion directly in 2008 and almost $1 trillion when including lost productivity due to lost work days.


John James, Ph.D.


Patient Safety America

Ashish Jha, M.D., M.P.H.

Professor of Health Policy and Management

Harvard School of Public Health

Tejal Gandhi, M.D., M.P.H.


National Patient Safety Foundation

Associate Professor of Medicine

Harvard Medical School

Peter Pronovost, M.D., Ph.D.

Senior Vice President for Patient Safety and Quality and Director of the Armstrong Institute for Patient

Safety and Quality

Johns Hopkins Medicine

Joanne Disch, Ph.D., R.N.

Professor ad Honorem,

University of Minnesota School of Nursing

Lisa McGiffert

Director, Safe Patient Project

Consumers Union

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

Finance Committee Hearing on Chronic Illness

On July 15, the Senate Finance Committee held a hearing titled "Chronic Illness: Addressing Patients' Unmet Needs." Members of the committee are working to help the Medicare program keep pace with the changing needs of patients. For example, rather than broken ankles or pneumonia, Medicare is now dominated by chronic conditions such as a cancer, diabetes and heart disease, with more than two-thirds of Medicare beneficiaries now dealing with multiple chronic conditions, which accounts for almost all -- 93 percent -- of Medicare spending. In his opening statement, Chairman Wyden expressed hope that in the months ahead, his committee can find bipartisan solutions to meet the challenges and strengthen the American health care system.


Ms. Stephanie Dempsey


Blairsville, GA

Mrs. Mary Margaret Lehmann


Minneapolis, MN

Dr. William A. Bornstein

Chief Quality and Medical Officer

Emory Healthcare

Atlanta, GA

Ms. Cheryl DeMars

President and CEO

The Alliance

Fitchburg, WI

Mr. Chet Burrell

President and CEO

CareFirst BlueCross BlueShield

Baltimore, MD

For more information, or to view the hearing, please visit www.finance.senate.gov.

Veterans Affairs Committee Hearing Explores Status of VA Health Care

On July 16, the Senate Veterans Affairs Committee held a hearing titled "The State of VA Health Care," in which members of the committee were updated on activities within the Department of Veterans Affairs regarding recent concerns of excessive patients' wait lists. The Department of Veterans Affairs needs $17.6 billion to hire 10,000 doctors, nurses and other health care providers and make other reforms in order to meet the needs of a growing number of veterans and reduce long waiting times for health care, Acting Secretary Sloan Gibson told the Senate Committee on Veterans' Affairs today.


Honorable Sloan D. Gibson

Acting Secretary

Department of Veterans Affairs

For more information, or to view the hearing, please visit www.veterans.senate.gov.

2. Administration

CMS: Next Phase of Quality Improvement Program Launched

CMS has awarded additional contracts as part of a restructuring of the Quality Improvement Organization (QIO) Program to create a new approach to improve care for beneficiaries, families and caregivers. QIOs are private, mostly not-for-profit organizations staffed by doctors and other health care professionals trained to review medical care and help beneficiaries with complaints about the quality of care and to implement improvements.. The new contracts being awarded to 14 organizations represent the second phase of QIO restructuring. The awardees will work with providers and communities across the country on data-driven quality initiatives. These QIOs will be known as Quality Innovation Network (QIN)-QIOs. The U.S. Department of Health and Human Services' (HHS) National Quality Strategy (NQS) and the CMS Quality Strategy provide the framework for the contracts along with the companion, recommendations and priorities.

AHRQ: Healthcare Premiums Rose in 2013

According to a Medical Expenditure Panel Survey published by the Department of Health and Human Services' Agency for Healthcare Research and Quality (AHRQ), premiums for employee-sponsored insurance increased by 3.5 percent in 2013. That is a slower rate of increase than the 8.3 percent spike in 2012, but out-of-pocket costs also rose by 4 percent in 2013. The average yearly employee premium contribution in 2013 was $1,170 for single coverage (21 percent of the total premium) and $4,421 for family coverage (27.6 percent of the total). These numbers do not, however, reflect the majority of Obamacare's market reforms.

White House Proud of HIV/AIDS Progress

On July 15, 2014, the White House released a fact sheet touting the nation's progress towards eliminating new HIV infection in a lead-up to the 20th International AIDS Conference starting July 20. Four years ago, the Obama Administration unveiled the National HIV/AIDS Strategy, and it said that Obamacare has increased access to HIV testing and allowed those with HIV/AIDS to receive coverage despite their preexisting conditions. The fact sheet also discussed the $100 million given to the National Institutes of Health to research vaccines, as well as the Administration's work to reduce the HIV burden on disproportionately affected populations, such as gay and bisexual men, African Americans and Latinos.

HHS Announces Funding for HIV and Primary Care Integration

Department of Health and Human Services (HHS) Secretary Sylvia Burwell announced $11 million in grant funding from the Patient Protection and Affordable Care Act (PPACA) and the secretary's Minority AIDS Initiative Fund to integrate HIV services into primary care settings. The Florida, Massachusetts, Maryland and New York state health departments will receive this funding during three-year-long partnerships with health centers serving areas with communities deeply impacted by HIV. The Health Resources and Services Administration within HHS is currently accepting applications for these Partnerships for Care, and eligible health centers have until Aug. 12, 2014, to apply for supplemental funding.

3. State Activities

Wisconsin Medicaid Reform Report

A July 16, 2014, release by the Wisconsin Department of Health Services titled " Department Provides Update Regarding Operationalization of Governor Walker's Entitlement Reforms" sought to explain why some low-income citizens in Wisconsin were unaccounted for during their attempted switch from Medicaid to the federal exchange. Under Gov. Scott Walker's alternative to Medicaid expansion, adults who make more than 100 percent of the federal poverty level were supposed to get subsidized exchange coverage. However, only 24,660 adults selected an exchange plan or re-qualified for Medicaid -- out of the 62,776 adults removed from the Medicaid rolls. Some of those people may have found other coverage, according to the department. The release noted that 34,915 of these former BadgerCare Plus members had incomes above 133 percent of the poverty line and would have had to transition to the marketplace regardless of whether or not Wisconsin had accepted the Medicaid expansion.

Missouri: "Right to Try" Legislation Enacted

On July 14, 2014, Missouri Governor Jay Nixon signed legislation for a "Right to Try" law for experimental drugs; the law, which is the third such law enacted by a state, will allow terminally ill Missourians to try experimental medications that have been deemed safe by the Federal Drug Administration, yet are still far from receiving market approval. Colorado and Louisiana led the way, as both recently passed their own "Right to Try" laws. Arizonans will vote on the issue in the November election, while the Michigan state legislature was set to begin considering the Right to Try Act this week. The Act has been introduced in several other states as well.

4. Regulations Open for Comment

Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule, Clinical Laboratory Fee Schedule, Access to Identifiable Data for the Center for Medicare and Medicaid Innovation Models & Other Revisions to Part B for CY 2015

CMS released its proposal for the 2015 Medicare physician fee schedule on July 3 with suggested changes relating to Chronic Care Management (CCM) and Accountable Care Organizations (ACO). Medicare doctors who provide CCM services may be required starting in 2015 to use an electronic health record or other health information exchange platform to ensure their patients" care plans are electronically accessible to any provider caring for those patients. Medicare providers would also be required to use electronic health records certified under the Office of the National Coordinator for Health Information Technology"s certification program as having the capabilities to capture and report CCM data. ACOs were also addressed in the new fee schedule, as the proposed rule would increase the number of ACO quality measures with an increased focus on outcomes. Under the proposal, the total number of measures for quality reporting would increase from 33 to 37. Under the Medicare Shared Savings Program (MSSP), ACOs must meet certain quality targets to claim shared savings bonuses. Specifically, new measures would be added to focus on avoidable admissions for patients with multiple chronic conditions, heart failure and diabetes; depression remission; all-cause readmissions to a skilled nursing facility; and stewardship of patient resources, the agency said. The agency added that the existing composite measures for diabetes and coronary artery disease would also be updated. Comments must be received by Sept. 2, 2014.

Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Physician-Owned Hospitals: Data Sources for Expansion Exception; Physician Certification of Inpatient Hospital Services; Medicare Advantage Organizations and Part D Sponsors: Appeals Process for Overpayments Associated with Submitted Data

CMS has issued a proposed rule that would revise the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for CY 2015 to implement applicable statutory requirements and changes arising from continuing experience with these systems. The proposed rule describes the proposed changes to the amounts and factors used to determine the payment rates for Medicare services paid under the OPPS and those paid under the ASC payment system. In addition, this proposed rule would update and refine the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program.

CMS is also proposing changes to the data sources used for expansion requests for physician-owned hospitals under the physician self-referral regulations; changes to the underlying authority for the requirement of an admission order for all hospital inpatient admissions and changes to require physician certification for hospital inpatient admissions only for long-stay cases and outlier cases; and changes to establish a three-level appeals process for Medicare Advantage (MA) organizations and Part D sponsors that would be applicable to CMS-identified overpayments associated with data submitted by these organizations and sponsors. Comments must be received by Sept. 2, 2014.

Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies

This rule proposes to update and make revisions to the End-Stage Renal Disease (ESRD) prospective payment system (PPS) for calendar year (CY) 2015. This rule also proposes to set forth requirements for the ESRD quality incentive program (QIP), including payment years (PYs) 2017 and 2018. This rule also proposes to make a technical correction to remove outdated terms and definitions. In addition, this rule proposes to set forth the methodology for adjusting Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) fee schedule payment amounts using information from the Medicare DMEPOS Competitive Bidding Program (CBP); make alternative payment rules for DME and enteral nutrition under the Medicare DMEPOS CBP; clarify the statutory Medicare hearing aid coverage exclusion and specify devices not subject to the hearing aid exclusion; update the definition of minimal self-adjustment regarding what specialized training is needed by suppliers to provide custom fitting services if they are not certified orthotists; clarify the Change of Ownership (CHOW) and provides for an exception to the current requirements; revise the appeal provisions for termination of a contract and notification to beneficiaries under the Medicare DMEPOS CBP, and add a technical change related to submitting bids for infusion drugs under the Medicare DMEPOS CBP. Comments must be received by Sept. 2, 2014.

HHS Proposed Rule: Annual Eligibility Redeterminations for Exchange Participation and Insurance Affordability Programs

HHS has issued a proposed rule that would specify additional options for annual eligibility redeterminations and renewal and re-enrollment notice requirements for qualified health plans offered through the Exchange, beginning with annual redeterminations for coverage for plan year 2015. Specifically, in the notice of proposed rulemaking entitled "Patient Protection and Affordable Care Act; Annual Eligibility Redeterminations for Exchange Participation and Insurance Affordability Programs; Health Insurance Issuer Standards Under the Affordable Care Act, Including Standards Related to Exchanges," HHS proposes that a Marketplace must conduct annual redeterminations using either the procedures described in 45 CFR §155.335(b) through (m), alternative procedures specified by the Secretary for the applicable plan year, or alternative procedures approved by the Secretary based on a showing by the Exchange that such procedures meet specified criteria. This guidance specifies alternative procedures for plan year 2015 that, if a final rule is promulgated permitting a Marketplace to elect such process, will constitute the alternative procedures designated in proposed 45 CFR §155.335(a)(2)(ii). If permitted under such a final rule, the federally facilitated Marketplace (FFM) will adopt the alternative procedures specified in this guidance for plan year 2015, consistent with proposed 45 CFR §155.335(a)(2)(ii)2.

These alternative procedures are intended to preserve a feature of the annual redetermination process specified in 45 CFR §155.335(g), namely, that an enrollee may take no action and still have his or her coverage renewed for 2015, which is important in promoting continuity of coverage while limiting administrative burden for enrollees, issuers and Marketplaces.

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.

5. Reports

Wide Variation Among State Medicaid Spending Per Enrollee, Per GAO Report

A study published July 16, 2014, by the Government Accountability Office (GAO) suggests a wide variation among states in Medicaid spending per enrollee, both overall and in each of the four main eligibility groups -- children, adults, disabled and aged. The report, which used Medicaid spending estimates from the Centers for Medicare & Medicaid Services (CMS), suggested several factors that influence overall per enrollee Medicaid spending -- such as distribution of enrollees among eligibility groups, enrollee health service needs and scope of benefits offered -- varied widely by state. Of the 49 states for which data was included -- Massachusett's data was excluded from the report -- six states reported per enrollee spending of less than $6,000. Eight states spent more than $10,500.

Medicaid Payments Under Fee-for-Service and Managed Care Lower Than Private Insurance

According to a U.S. Government Accountability Office (GAO) report published July 15, 2014, payments to physicians under Medicaid fee-for-service (FFS) and managed care for the 26 evaluation and management (E/M) services, such as office visits and emergency care, that were reviewed were generally lower than private insurance prior to the temporary increases mandated by the Health Care and Education Reconciliation Act of 2010 (HCERA). Specifically, in the 40 states where the GAO compared Medicaid FFS payments to private insurance, FFS payments were 27 to 65 percent lower than private insurance in 31 states. Although the GAO found that Medicaid payments were generally lower than private insurance for the three main types of evaluation and management services -- office visits, hospital care and emergency care -- the range was widest between payments for emergency care and smallest for office visits.

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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