What does it mean for Donald Trump if he wins Iowa?

Winning Iowa would mean a great deal for Donald Trump. As we have seen since the advent of the modern presidential primary system winning Iowa or New Hampshire matters. In fact, since then, every single nominee but one in both parties won either Iowa or New Hampshire. For Trump, it would mean that he stopped his chief rival, Texas Sen. Ted Cruz, in a state where evangelicals made up nearly 60 percent of self-identified GOP caucusgoers in 2012. Evangelicals are an audience Cruz has courted heavily, and Iowa, which supported Mike Huckabee and Rick Santorum in the past, appears tailor-made for his Christian conservative message. There Cruz has built a traditional field organization aimed at mobilizing his supporters on caucus day, but Trump has taken an unconventional approach. Instead of boots-on-the-ground, Trump has relied in significant part on earned media to build enthusiasm, and he received a boost last week with a well-timed endorsement from Sarah Palin, a darling among tea-party supporters and evangelicals. A CNN/ORC poll released on Thursday showed Trump opening up a 9-point lead, but Cruz still fares better among evangelicals. In a recent NBC News/Wall Street Journal/Marist Poll, Cruz leads Trump 33%-19%. Arguably, a Cruz win is less of a predicament for the other GOP candidates, but a Trump win would be very problematic. Right now, Trump is a 20-point favorite in New Hampshire. He’s led in every poll there since last July and has even gained ground recently. Since 1976, no GOP presidential candidate, excluding incumbents, has ever won both early states. Winning Iowa and then New Hampshire this year, in this political climate, could make Trump very difficult to stop.

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Politics Slow Federal Action on Cybersecurity

Expectations were raised last month that the federal government would soon enact legislation to address the legal and regulatory obstacles that prevent private companies and government agencies from working together to prevent cyberattacks. President Obama announced he was forwarding a set of revised proposals to Congress, and congressional committee leaders announced hearings on a wide range of cyber issues. It appeared that both parties felt cybersecurity was an area where they could work together.

A month later, very little progress has been made. The President and his team put forward a revised version of their 2011 proposal, taking into account all that has been learned in the intervening years from specific cyber breaches and industry feedback. But that proposal has been met with little enthusiasm by Congress. Even members of the President’s own party have refused to introduce the proposal, choosing instead to support committee hearings. Thus far, those hearings have highlighted the need for action and, ironically, demonstrated the high level of agreement between the parties and between the President and Congress on the goals of good legislation – share information, limit liability, restrict access to shared information under the Freedom of Information Act, and protect privacy.

The holdup, essentially, is not substantive, it is political. There is one contingent who believe that reform of the National Security Agency should come before legislation. Among those who agree that information must be shared more widely now, there are disagreements are over who should share it, when should it be shared, and how will it be protected after it is shared. And then there is the classic congressional fight over turf. At last count, three committees in the Senate and two committees in the House claim jurisdiction over this issue.

The one positive note is that several members seem determined to shake loose the stuck gears. Senator Angus King of Maine, an Independent, has called on Congress to set an internal deadline for compromise legislation on the issue. He sees a need to force an agreement between committee chairs and leadership in order to move forward. Senator Tom Carper of Delaware (D) is not waiting for such an agreement and is moving forward with his own legislation based on the President’s proposals. Neither senator’s approach is sure to work, but their efforts to move ahead where there is so much fundamental agreement are appreciated.

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Health Care Reform Implementation Update December 23, 2014

The 113th Congress concluded its final legislative work with a $1.1 trillion spending bill, a tax extenders package, and a flurry of nomination confirmations including a new surgeon general. Additionally, the Affordable Care Act (ACA) was the focus for the last House Oversight and Government Reform Committee hearing in the 113th Congress. The Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) also had a busy end of the year agenda with announcements and guidance regarding ACA enrollment numbers, health center and state innovation grant awards, and a plan for health care technology advancement in the next year.


On December 13, the Senate passed a $1.1 trillion spending bill for Fiscal Year 2015. Significant health policy changes some lawmakers wanted in the bill, such as a permanent repeal of the sustainable growth rate (SGR) formula, a continuation of increased reimbursement to Medicaid providers, and funding for the Children’s Health Insurance Program (CHIP) were not included. The spending bill does however, cap the risk corridor program, allow nonprofit health care plans, namely Blue Cross Blue Shield, to maintain their special tax status even if their medical loss ratios fall below 85 percent, and allows plans sold to Americans living abroad to be exempt from many ACA requirements.

On December 9, the House Oversight and Government Reform Committee held a hearing. Lawmakers questioned CMS Administrator Marilyn Tavenner about the incorrect ACA enrollment numbers announced by HHS for 2013. Jonathan Gruber, an economist who served as a government consultant during the drafting of the ACA and who recently made controversial statements about the law’s enactment, was also a witness at the hearing. In her testimony, Administrator Tavenner apologized to the committee for the incorrect numbers released by HHS, however, the majority of the hearing was focused on Gruber. In his testimony and throughout his responses to questions, Gruber apologized for his remarks and claimed that his prior statements regarding the ACA were “arrogant” and “mean.” Darrell Issa, the outgoing chairman for the committee, has since subpoenaed Gruber’s financial statements after Gruber declined to provide details regarding money he received from the federal government for his consultant services.

On December 15, the Senate approved Vivek Murthy as surgeon general by a narrow 51-43 vote. Dr. Murthy’s nomination came under scrutiny from several lawmakers after it was revealed that he supported stricter gun control laws and was an active supporter of the ACA. Opponents of Murthy’s nomination were primarily Republican members, but three Democrats also voted “no” on his appointment.


On December 19, HHS, and the Departments of Labor and Treasury published a proposed rule that would allow, in certain circumstances, group health sponsors to offer wraparound coverage to employees purchasing individual health insurance in the private market or through health insurance exchanges. Comments will be accepted for 30 days from the proposed rule’s publication on December 23.

Cindy Mann, deputy administrator and director for Medicaid and the Children’s Health Insurance Program (CHIP), announced that she will be leaving CMS at the end of January. Vikki Wachino, deputy director of Medicaid and CHIP, will be acting director until a permanent replacement for Mann is found.

On December 11, CMS released information regarding its plan for implementing a star ratings program for home health agencies (HHAs). Under the proposal, CMS will calculate a rating based on 10 of the 27 process and outcome measures that HHAs already report to the agency. CMS plans to ask for input on the methodology and to implement the ratings program in the summer of 2015.

On December 15, CMS released new guidance on the Open Payments program regarding payments made by manufacturers and group purchasing organizations (GPOs) to medical education suppliers that are then paid to physicians as speaking fees. The guidance states that those payments would have to be reported if the identity of the physicians receiving the fees was learned by the manufacturer or GPO during current reporting year or the first six months of the following reporting year. The guidance is somewhat at odds with the agency’s October 2014 Final Rule that said that payments for educational events were not reportable if not directed to specific physicians.

On December 11, CMS released a proposed rule to revise its existing Medicare and Medicaid participating provider and supplier regulations to clarify that same-sex spouses need to be given equal treatment as opposite-sex spouses in situations where state law or the providers’ policies give certain rights or privileges to patients’ opposite-sex spouses. The proposed rule was issued in light of the Supreme Court’s invalidation of certain provisions of the Defense of Marriage Act. The proposed rule would apply to nearly all hospitals, nursing homes, surgery centers, hospices and mental health clinics that accept either program.

On December 9, CMS announced that it had awarded $36.3 million in funding mandated by the Affordable Care Act to more than 1,100 health centers to reward those centers’ achievements in quality improvement and to invest in ongoing quality improvement activities. The awardees were selected based on their quality performance achievements in a variety of clinical measures and on the awardees use of electronic health records to report clinical quality measure data.

On December 8, HHS’s Office of the National Coordinator for Health Information Technology (ONC) released its “2015 – 2020 Federal Health IT Strategic Plan.” Under the plan, the ONC will expand use of health information technology, and improve interoperability, care delivery and research and innovation. Public comments on the plan are due by February 6, 2015, and the ONC will release a final version of the plan later in 2015.

On December 16, HHS reported that almost 2.5 million people had chosen a health plan on HealthCare.gov as of December 12. The entire open enrollment period ends on February 15, 2015 but for those individuals that would like health insurance coverage on January 1, 2015, the deadline for enrollment was December 15. Some states, such as Idaho and New York, have extended that deadline to December 20 and beyond so that more individuals can start receiving benefits January 1.


On December 18, the U.S. District Court for the District of Columbia dismissed a lawsuit brought by the American Hospital Association (AHA) against HHS where the AHA had sought an order to compel the HHS to process hospitals’ administrative appeals according to timelines set in statute. The court said that HHS’s delay in processing the appeals was “not so egregious as to warrant intervention.”


On December 16, HHS announced that it will be providing $665 million in grants to states under its State Innovation Models initiative fund. These funds will be used to improve quality, affordability and expand the use of health information technology. The grants will be given to 28 states and the District of Columbia, as well as three U.S. territories.

Vermont’s Governor Peter Shumlin stated that due to the large tax increases that would be needed to pay for a single-payer system in the state, Vermont will not be pursuing such a system at this time. Pushback from big business in the state and uncertainty over state lawmakers’ ability to craft a deal to pay for the single-payer program also contributed to the decision.

Arkansas, Connecticut, Massachusetts, New Hampshire, New York and Rhode Island will receive about $189 million in exchange establishment grants to develop their state ACA exchanges, HHS announced December 15. Arkansas is receiving most of the funding as it attempts to transition from a federal to a state-run ACA exchange.


According to a report released by the Urban Institute, primary care physicians may experience average Medicaid reimbursement cuts of about 40 percent after the ACA primary care Medicaid fee bump expires on December 31 of this year. The ACA included a mandatory two-year increase in Medicaid reimbursement for primary care services to match Medicare payment levels.


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Health Care Reform Implementation Update December 9, 2014

We are now more than two weeks into the Affordable Care Act (ACA’s) second open enrollment period, and 765,000 individuals have obtained coverage through HealthCare.gov. On Capitol Hill, House lawmakers filed a lawsuit against the Obama administration concerning aspects of ACA implementation, and the House Oversight Committee found discrepancies in the enrollment numbers for ACA exchanges that the Department of Health and Human Services (HHS) reported for last year’s enrollment period. The Centers for Medicare and Medicaid Services (CMS) finalized rules regarding disproportionate share hospitals and proposed rules on requirements for Medicare Shared Savings Program (MSSP) accountable care organizations (ACOs); and the Food and Drug Administration released rules implementing the ACA’s menu-labeling requirements.


On December 3, HHS reported that 765,000 individuals have chosen ACA exchange plans through HealthCare.gov during this current enrollment period so far. This number is made up of roughly half new enrollees and half ACA exchange customers that are renewing their plans for the second year. HHS’s Office of the Assistant Secretary released a report on December 4 that encourages both new enrollees and current enrollees to shop the ACA exchanges for potential savings (instead of allowing themselves to automatically be renewed into plans whose prices may have increased). According to the report, if current enrollees would shop and switch to lower cost plans it could potentially save $2 billion in premium costs.

On November 24, CMS announced that it will give hospitals until December 31 to attest to Medicare meaningful use program requirements for 2014 — extending the deadline by one month. Under the program, hospitals that meet program requirements regarding electronic health record utilization will receive incentive payments, and those that do not will have their Medicare reimbursement cut by 1 percent.

On December 3, CMS issued a final rule that will prevent providers and suppliers with unpaid Medicare debt from re-entering the Medicare program and will revoke the billing privileges of providers and suppliers with histories of abusive billing.

On November 24, the Office of Personnel Management released a proposed rule that makes changes to the ACA’s Multi-State Plan (MSP) program. The proposed rule provides information on the approach used to enforce requirements of the program and modifies coverage area, benefits and contracting provisions of the MSP program.

On November 21, CMS published its 2016 Notice of Benefit and Payment Parameters Proposed Rule. The proposed rule proposes, among other things, payment parameters and new standards related to essential health benefits, prescription drug coverage, default re-enrollment, the medical loss ratio, the Small Business Health Options Program, risk adjustment, reinsurance, risk corridors, user fees for the federally facilitated exchange, network adequacy and minimum essential coverage. Comments must be submitted by December 26, 2013.

On November 21, the Internal Revenue Service (IRS) issued a final rule that finalizes and clarifies the ACA’s minimum essential coverage requirements. The rule addresses coverage for the medically needy, Section 1116 (of the Social Security Act) demonstration projects and certain exemptions for individuals who cannot afford coverage.

On the same date, the IRS also released a Revenue Procedure that updates the 2016 applicable percentage table that is used to calculate premium tax credits and also updated the percentage of income used to determine eligibility for “affordable employer-sponsored minimum essential coverage.”

CMS released a final rule on November 28 regarding Medicaid disproportionate share hospital (DSH) payments. The final rule clarifies the definition of “uninsured,” which is used to calculate hospital-specific DSH limits. The rule states that the DSH limits cannot be greater than the uncompensated costs of providing hospital services to those who are Medicaid eligible or have no health insurance or other source of third-party coverage for the services provided.

On December 1, CMS released its long-awaited Medicare Shared Savings Program (MSSP) proposed rule. The rule proposes to allow MSSP ACOs to choose to remain in the one-sided risk ACO model for an additional three years (however with a maximum shared savings rate of 40 percent instead of 50 percent), creating a new shared savings model with upside and downside risks and higher savings rates as well as prospective beneficiary attribution, proposes a streamlined process for ACOs to access beneficiary information, and requests comments on alternative methodologies for establishing and updating the benchmarks used to determine ACOs’ success.

On December 2, a report released by the Agency for Healthcare Research and Quality found that the rate of hospital-acquired conditions between 2010 and 2013 fell by 17 percent, resulting in savings of approximately $12 billion and 50,000 fewer patient deaths.

According to HHS’s Fiscal Year 2014 Agency Financial Report, the Medicare fee-for-service improper payment rate increased to 12.7 percent in fiscal year 2014. The Medicaid improper payment rate also increased to 6.7 percent.

On November 25, the Food and Drug Administration (FDA) released rules for posting caloric information on menus in an effort to better inform consumers about their food choices. These rules were expected to be released months ago. The new rules apply to food establishments that have 20 or more locations nationwide. Before the rule’s release it was unclear whether convenience stores and movie theatres would also be subject to the new menu labeling requirements, but the final rules clearly include these businesses under the new requirements. The new rules also include calorie counts for vending machines and alcoholic beverages.


On November 21, Republicans in the House filed a lawsuit against President Obama, the Department of Health and Human Services, and the Department of the Treasury. The lawsuit has been months in the making with two law firms announcing in recent months that they would not represent the House in this lawsuit. Jonathan Turley, a George Washington University law professor, is now the outside counsel on this case for the House. The lawsuit alleges that the president, HHS, and Treasury overstepped their constitutional authority by delaying the employer mandate provision under the ACA without permission from Congress. The lawsuit also alleges that the federal government has not properly appropriated funds to offset the cost of discounts and deductibles to insurance companies as was outlined in the ACA.

On November 20, HHS Secretary Burwell publically admitted that CMS had mistakenly inflated the final enrollment numbers for individuals enrolled in ACA plans by 400,000. The mistake was due to inclusion of dental plan enrollment. Secretary Burwell stated that the mistake was “unacceptable” and agreed that dental plan enrollment should not have been included in the 7.1 million tally touted by HHS throughout the year. The House Oversight and Government Reform Committee was the first to indicate the discrepancy after the committee received and reviewed additional information from HHS upon request. Secretary Burwell has requested ideas for improving transparency from her senior officials within HHS. CMS Administrator Marilyn Tavenner is scheduled to testify in front of the House Oversight Committee on December 9 to address the inflated enrollment number issue.


On December 2, the panel for the 11th Circuit Court of Appeals rejected a challenge to the postponement of the employer mandate under the ACA. In the case, Kawa Orthodontics argued that they were “injured” when they adopted ACA compliance standards before President Obama’s administration made the decision to delay the mandate until 2016. Kawa claims that it would have used the resources for compliance differently had they known the mandate would be delayed. The 11th Circuit panel found that Kawa was not injured by the delay and therefore Kawa lacked legal standing to move forward with the case.


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Health Care Reform Implementation Update November 18, 2014

Over the past several days, the second open enrollment period through the Affordable Care Act’s (ACA’s) health insurance exchanges began; Republican lawmakers, now with majorities in both the House and the Senate, explored legislative avenues for rolling back or delaying parts of the Affordable Care Act (ACA); and the Supreme Court agreed to hear a case that challenges the ACA’s subsidies in all states without state-run exchanges.


With a new Congress there will be a shift of committee leadership in both the House and the Senate. Of particular note for health care are changes to leadership at the Senate Health education Labor and Pensions (HELP) Committee and the Senate Finance Committee. Retiring Senate HELP (HELP) Committee Chair Senator Tom Harkin (D-Iowa) is likely to be replaced by Senator Lamar Alexander (R-Tenn.), who is currently the Ranking Member on the HELP committee. For the Senate Finance Committee, which also oversees health care policy, Senator Ron Wyden (D-Ore.) will likely be replaced by Senator Orrin Hatch (R-Utah).

Some Capitol Hill staff members have recently reported that the end of this congressional session, known as a “lame duck” session, could present the best opportunity for repealing the sustainable growth rate (SGR) formula. Repealing the SGR, also known as a permanent “doc fix,” would require a new method for determining the correct physician fee schedule in a given year – and more challengingly, a way to pay for it. Although there has been continued congressional support for permanently repealing the SGR, there is no agreement on an offset for the cost of this repeal. Some in Congress have raised the idea of passing permanent repeal without an offset; however, other legislators and their staffs do not think this is a good strategy.


On November 7, CMS announced the final methodology that it will utilize for its Dialysis Facility Compare (DFC) Star Ratings Program. CMS provided dialysis facilities that participate in Medicare with a preview of their ratings, which the facilities can review. The agency also announced that it expected to begin posting DFC ratings on its website in January of 2015.

CMS said that it had matched 95 percent of the enrollment files from healthcare.gov’s first enrollment period (for 2014) with insurer records. On December 15, individuals who have not enrolled in a new plan will be automatically enrolled in the same type of plan they had previously enrolled in. The agency said it would continue to work with insurers to ensure that its records are accurate.

On November 13, the Government Accountability Office released a report on the Small Business Health Options Program (SHOP). GAO reported that enrollment in SHOPs was lower than CMS and stakeholders expected. By June 1, 2014, the 18 states that had created their own SHOPs had enrolled 76,000 individuals. Data was not available for federally facilitated SHOPs.

On November 10, CMS issued a Proposed Decision Memo, in which it proposed to allow Medicare coverage for low-dose computed tomography (LDCT) scans on an annual basis for Medicare beneficiaries between 55 and 74 years of age who smoked a minimum of one package of cigarettes per day for 30 years.

On November 10, CMS said that it expected between 9 and 9.9 million individuals to enroll in ACA health coverage during the 2014-2015 open enrollment period — a figure that is 3 million individuals less than what was previously projected by the Congressional Budget Office. The lower figure is the result of a slower than expected movement from employer-sponsored and individual coverage outside of the federal exchange.

On November 6, the Health Resources and Services Administration (HRSA), within HHS, announced that it had awarded $51.3 million in funding to 210 health centers across the country to provide behavioral health services, including hiring mental health professionals and expanding the provision mental health and substance abuse services.

During the Medicare Payment Advisory Commission’s (MedPAC’s) most recent public meeting, the commissioners discussed recommending to Congress a per-beneficiary per month payment incentive for primary care providers. The incentive, which would be in the amount of $31 per month, would replace the current Medicare primary care incentive payment, which expires at the end of next year. The Commission plans to vote on this recommendation at its December meeting.


On November 7, the Supreme Court announced that it would hear the King v. Burwell case. The plaintiffs in this case argue that subsidies for ACA exchanges are only allowed in states with state-run exchanges and that the federal government cannot provide such subsidies. Given that only 13 states currently run their own exchanges, if the Supreme Court ruled in the plaintiff’s favor, millions of Americans would become ineligible for subsidies. The Supreme Court is expected to hear the case in the spring and rule by the end of June 2015.

On November 14, the U.S. Court of Appeals for the District of Columbia ruled that nonprofit religious organizations must officially opt-out of providing contraception coverage to their employees. The plaintiff, a local D.C. Catholic diocese and several of its affiliated organizations, brought the case to express its objection to the opt-out requirement under the ACA, which triggers contraception coverage from the government, instead of simply being able to exclude contraception coverage in their offered health plans. The plaintiffs argued that by participating in the process to officially opt-out, that this was in turn condoning the use of contraception. The court unanimously disagreed, and ruled that the opt-out provision was not overly burdensome to nonprofit organizations and that it adequately expressed a nonprofit’s objection to providing contraception coverage.


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Health Care Reform Implementation Update November 7, 2014

Looming midterm elections have made the past several months difficult for Democrats and Republicans alike when it comes to the Affordable Care Act. With most of the midterm elections now wrapped up, lawmakers can turn their attention to concerns they have with the law. Even with control of both the House and the Senate, Republicans will not be able to repeal the entire Affordable Care Act. They may, however, push to repeal or improve parts of it when the new congressional session begins in January. We will be tracking health policy developments, as well as congressional leadership elections, closely and keep you posted. Also this week, while Americans were trick-or-treating and the country was in the midst of intense midterm re-election races, the Centers for Medicare & Medicaid Services (CMS) released final 2015 Medicare payment rules for physicians, hospital outpatient services, ambulatory surgical centers, dialysis providers and home health agencies, as well as some guidance on accountable care organizations, and the Small Business Health Option Program (SHOP) began allowing small businesses in five states to access some of its features before open enrollment begins on November 15.


CMS released final payment rules outlining how Medicare will pay major health care providers and suppliers in 2015, including home health agencies, physicians, hospital outpatient services, ambulatory surgical centers and end stage renal disease providers.

Under the physician fee schedule final rule, Medicare payments to physicians will be reduced by 21.2 percent after March of 2015, as required under the sustainable growth rate (SGR) formula. Legislation passed last April provided for no cuts to physician payments between January and March of 2015. Congress has repeatedly overturned cuts resulting from the SGR formula and in the final rule, CMS wrote that it will continue to work with Congress to fix this “untenable” situation. The rule also finalizes a separate chronic care management payment of $40.39 per month for physicians that manage care of beneficiaries with two or more chronic conditions. The agency also finalized a new process that will be fully implemented in 2017 that will allow for greater public comment prior to setting payment rates. Lastly, the agency finalized requirements related to its quality reporting initiatives.

Under the home health final rule, CMS finalized a 0.3 percent payment cut to home health agencies for 2015, an approximately $60 million reduction in payments. The rule also finalizes the elimination of the physician face-to-face narrative requirement, modifies therapy reassessment policies, formalizes the program integrity reform included in the proposed rule, and continues to implement ACA rebasing policy (though CMS notes that it plans to evaluate claims data for CY 2014 when it is available and will provide an update on the impact of these cuts).

Under the end stage renal disease (ESRD) final rule, CMS will increase overall payments to dialysis facilities by an average 0.3 percent for 2015. Separately, payments to hospital-based ESRD facilities are expected to increase by 0.5 percent, and payments to freestanding facilities will increase by 0.3 percent. The agency also finalized payment adjustments to durable medical equipment providers.

Under the outpatient payment final rule, CMS will increase overall payments by 2.2 percent for 2015. The agency also finalized plans for bundling payments for certain primary procedures and finalized payment rates for Part B outpatient drugs. For ambulatory surgical centers, payment rates will be increased under the ASC payment system by 1.4 percent. Finally, the rule establishes a process for CMS to recover overpayments made to Medicare Advantage and Medicare Part D plans.

After a yearlong delay, CMS launched the Small Business Health Options Program (SHOP) exchanges in five states. Small businesses in Delaware, Illinois, Missouri, New Jersey and Ohio now have early access to certain features of the online marketplaces, which will allow CMS to trouble shoot any problems before open enrollment begins on November 15. The SHOP is the federal program that allows companies with up to 50 workers negotiate better health insurance deals for their employees.

The Department of Health and Human Services Office of the Inspector General (OIG) released a report that found that current Medicare rules permit payments for prescriptions with dates of service within 32 days after a beneficiaries’ death. The rule cost CMS almost $300,000 in 2012 just on Medicare payments for HIV drugs of deceased beneficiaries. The number is likely significantly larger when analyzed across the entire Medicare Part D program. CMS agreed with the OIG’s recommendation that the rule be changed.

In other OIG news, the OIG’s fiscal year 2015 work plan indicates that it will conduct a risk assessment of Pioneer accountable care organizations, as well as a review of Medicaid managed care plans’ collection of prescription drug rebates from drug manufacturers.

The Medicaid and CHIP Payment and Access Commission (MACPAC), which is tasked with reviewing state and federal Medicaid and CHIP access and payment policies and making recommendations to Congress, the Secretary of HHS, and the states on a wide range of issues affecting these programs, held a public meeting on October 30 and 31. In this meeting, MACPAC focused on the current status of CHIP, behavioral health services in the Medicaid program, standards for access to care in Medicaid managed care, Medicaid provider payments, Medicaid primary care payment increase, and HHS reports on adult and child quality in Medicaid and CHIP.


A second firm hired to prepare the Republican House Leadership’s lawsuit against President Barack Obama announced on October 29 that they are no longer working on the case. Republican House Leadership was arguing President Obama has overstepped his constitutional authority, specifically in terms of his administration’s implementation of the Affordable Care Act. In response to this news, a spokesman for House Speaker John Boehner, Kevin Smith, revealed that the House is considering handling the legal preparation directly by using inside counsel.

Congresswoman Rosa DeLauro (D-Conn.) and Senator Richard Blumenthal (D-Conn.) participated in a telephone conference with the Medicare Rights Center on October 28 and promoted their bill, the Medicare Advantage Participant Bill of Rights Act. The legislation would prevent Medicare Advantage plans from dropping providers at will without cause. Currently Medicare Advantage plans may drop providers in the middle of the year, not just during open enrollment periods. The legislation would also require that Medicare Advantage plans finalize their provider networks within 60 days of the annual open enrollment period. The lawmakers plan to ask for a vote on the measure before the 113th Congress ends on December 31.


On October 27, the U.S. Attorney for the Southern District of New York filed a civil health care fraud lawsuit against Computer Sciences Corporation and the city of New York, alleging billing fraud. The government alleged that the two used computer programs to alter billing data to increase the payments the city received from the Medicaid program.


On October 31, Massachusetts announced that it will extend the state’s Medicaid waiver, which had expired this summer. The five-year waiver extension deal was struck between Massachusetts and the Department of Health and Human Services and is worth $41.4 billion. Of the $41.4 billion, $20 billion will be federal funding, and Massachusetts will pay the rest. The previous three-year waiver was only worth $26.75 billion, which annualized was about $640 million more per year than the new agreement provides. The agreement provides for care delivery transformation initiatives, improvements to Medicaid-eligible programs like homeless supports, substance abuse and rehabilitation and chronic disease interventions.

To view our compilation of recent health care reform implementation news, click here.

To view and search our library of Health Care Reform Implementation Updates, visit our Affordable Care Act Databook.

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Health Care Reform Implementation Update October 25, 2014

The Centers for Medicare and Medicaid Services (CMS) began sending reminders last week that open enrollment begins on November 15; CMS’s Marketplace CEO, Kevin Counihan, said that end-to-end testing of HealthCare.gov was encouraging but that the Department also has a variety of backup plans in case HealthCare.gov does not function properly during open enrollment. CMS announced the Accountable Care Organization (ACO) Investment Model, through which some ACOs can receive upfront shared savings, and released an interim final rule extending certain waivers for ACOs. The Department of Health and Human Services Office of Inspector General (HHS OIG) released a report this week regarding Medicare payments for outpatient services at critical access hospitals. And, the American Medical Association asked CMS to reevaluate its regulatory penalty structure towards providers.


On October 15, CMS announced details on its Accountable Care Organization (ACO) Investment Model, which will be open to certain types of ACOs in the Medicare Shared Savings Program. Under the initiative, CMS will provide some ACOs with pre-paid shared savings to encourage ACOs in rural and underserved areas to join the program and encourage current ACOs to take on additional financial risk. The initiative can provide up to $114 million in upfront investments to up to 75 ACOs. In other ACO news, on October 16 the HHS Office of Inspector General (OIG) announced that it would extend until November 2, 2015 the waivers that it had established in 2011 regarding the federal anti-kickback statute, the physician self-referral (Stark) law and certain civil monetary penalty provisions. The HHS OIG is also requesting input on the waivers’ effectiveness and whether any changes should be made to them.

On October 15, one month before open enrollment begins, CMS kicked off its education campaign regarding the health insurance renewal process. Individuals who were already enrolled in exchange coverage last year began to receive notices on the renewal process last week. Additionally, when those who were previously enrolled return to Healthcare.gov, they will find that approximately 90 percent of the information in their application has been pre-populated. Notwithstanding efforts made by HHS to make reenrollment simple, if individuals who signed up last year take no action by December 15, HHS will automatically reenroll them in a plan the same or similar to the one they were in last year.

CMS released its annual agency enforcement report on October 16. It reported that its imposition of civil monetary penalties (CMPs) on Medicare Advantage organizations and prescription drug plans had increased by more than 300 percent between 2012 and 2013. In 2012, the agency had imposed CMPs on 10 occasions, while in 2013, there were 33 instances. Additionally, between 2012 and 2013, CMS imposed almost $8.4 million in civil monetary penalties.

On October 23, HHS announced the launch of the “Transforming Clinical Practice Initiative,” a program intended to improve health care quality while lowering costs. The program will provide grants to group practices, health care systems and provider associations to explore solutions for lowering costs and improving care to patients. The grants will total $840 million and will be disbursed through the CMS Innovation Center. The program will focus on the creation of a peer-to-peer system in which successful, innovative approaches to improving care and lowering cost would be shared with all providers nationwide.

The HHS OIG also released a report regarding Medicare beneficiary payments for outpatient services received at critical access hospitals (CAH). Currently, CAHs are reimbursed at 101 percent of their reasonable costs, while most other types of hospitals are paid under the Medicare outpatient prospective payment system. Beneficiaries that receive services at CAHs pay 20 percent of the hospitals’ charges, which tend to be higher than the CAH’s “reasonable costs.” The OIG found that in 2012, Medicare beneficiaries paid approximately $1.5 billion in co-insurance for CAH outpatient services, an amount that was nearly 50 percent of the cost of the services. The OIG recommended that CMS request from the Congress the authority to modify the methodology used to calculate CAH reimbursement.


On October 21, the American Medical Association (AMA) sent a letter to CMS requesting that the agency synchronize and simplify the requirements for avoiding regulatory penalties that providers face over the next 10 years. The letter claims that providers could see payments cut by more than 13 percent over that 10-year period. In the letter, the AMA highlights the Electronic Health Record program, the Physician Quality Reporting System and the Value-Based Modifier program as the three key Medicare programs that could affect provider payments and access to care.

To view our compilation of recent health care reform implementation news, click here.

To view and search our library of Health Care Reform Implementation Updates, visit our Affordable Care Act Databook

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Health Care Reform Implementation Update October 15, 2014

In the past week, CMS has released several advisories including updates to the rating system for nursing homes, premium and deductible information for Medicare Part B and Part D for 2015, Pioneer ACO results, payment dispute settlements, and insurance fee FAQs. Even though they are out of session, a group of congressional members asked the Government Accountability Office (GAO) for a legal opinion regarding the risk corridor program under the Affordable Care Act (ACA). The Medicare Payment Advisory Commission held its most recent round of meetings on October 9 and 10. Countdown to the second open enrollment period under the ACA is one month now.


In response to a letter from Senator Jeff Sessions (R-Ala.) and Representative Fred Upton (R-Mich.), GAO’s general counsel released a legal opinion regarding the ACA’s risk corridor program. Under the risk corridor program, insurance companies that make 3 percent less than their premium revenue can recoup some of those lower than expected revenues from the risk corridor fund. In order to pay for the fund, insurance companies that make over 3 percent more than their premium revenue must contribute to the risk corridor fund. Many Republican lawmakers have referred to the risk corridor program as a “bailout” for insurance companies. In the letter, the lawmakers had requested that GAO clarify whether or not the Department of Health and Human Services (HHS) had the legal right to collect and distribute funds from the risk corridor program. GAO’s legal opinion is that Congress must draft and approve specific bill language that allows HHS to collect and distribute risk corridor funds.

On October 9 and 10, the Medicare Payment Advisory Commission (MedPAC), whose primary mandate is to advise Congress on Medicare payments, held a public meeting to discuss policy issues and work on recommendations to Congress regarding the Medicare program. The two-day meeting focused on the following topics: international comparison of hospital rates, Medicare Part D risk sharing, opioid use under Medicare Part D, the next generation of Medicare beneficiaries, Medicare entitlements for disabilities, private-sector post-acute care management, and the validity of relative value units in the Medicare fee schedule. MedPAC’s next regular meeting will be held November 6 and 7.


On October 9, CMS’s Director of Provider Compliance Melanie Combs-Dyer had a call with hospital representatives in which she discussed clarifications regarding the settlement offer CMS made to providers for disputed Medicare claims. Under the settlement, CMS has offered to pay 68 percent of all of providers’ outstanding disputed claims, if the provider drops all of their disputed claim appeals. During the call, Combs-Dyer said that the interest in the settlement has been good and they expect to see a significant participation rate in the settlement by the October 31 deadline. Combs-Dyer also made sure to clarify certain aspects of the settlement process including ensuring that rebilled claims under Part B would be eligible for settlement. Combs-Dyer also advised participants on the call that denied claims from Medicare administrative contractors, zone program integrity contractors, and the Comprehensive Error Rate Testing program of the HHS Office of Inspector General were also eligible for the settlement, not just those claim denials from recovery audit contractors.

On October 6, CMS announced that it will be making changes to its five-star rating program for nursing homes, Nursing Home Compare. CMS will, for example, develop an auditable quarterly electronic reporting system that nursing homes can use to report payroll data, which will be used to calculate overall staffing ratios, retention and turnover rates, and staffing mix. The payroll data will be collected starting in 2015 and reported on starting in 2016. Two additional changes to the rating program regarding quality measures and auditing will be added 2015. Under these additional changes, CMS will increase the number of quality measures it uses for the ratings program and add data on use of anti-psychotics and rehospitalization rates. CMS will also audit and validate the quality of nursing home data reporting on a national basis. CMS had previously piloted such an auditing system in a handful of states.

On October 10, CMS released star ratings information for Medicare Advantage and Medicare stand-alone drug plans for 2015. The plans are rated based on quality and performance on a scale of 1 to 5, with 5 stars as the highest rating possible. According to CMS, approximately 60 percent of MA enrollees are enrolled in plans with four or more stars for 2015 and 53 percent of Part D enrollees are enrolled in stand-alone prescription drug plans with four or more stars for 2015. The star ratings information can be found on CMS’s Medicare Plan Finder tool website.

On October 9, CMS also released information on Medicare premiums and deductibles for 2015. The standard monthly Part B premium for 2015 will be $104.90, the same amount as last year and the standard Part B deductible will also remain at $147 for 2015, the same amount as last year. For those who pay Part A premiums, the premium will decrease to $407 per month, and the Part A inpatient deductible will increase slightly to $1,260 for 2015.

CMS will be penalizing 2,610 hospitals under the latest round of the Hospital Readmissions Reduction Program. The penalty is based on the 30-day readmission rate for patients with certain medical conditions. Under the program, CMS will decrease future payments to the hospitals for hospital stays between October 2014 and September 2015. This is the third year of the program, and the maximum penalty this year is 3 percent of the hospital’s Medicare payments.

On October 7, CMS released a Frequently Asked Questions (FAQ) document that provides information on how states can cover the ACA’s health insurance tax. Under the ACA, most health insurers — including Medicaid managed care plans — are required to pay the tax based on their market share starting in 2014. In the FAQ, CMS wrote that states can incorporate the tax in their capitated payment rates to Medicaid managed care plans because the tax is a reasonable business cost.

On October 8, CMS released information on the financial and quality performance of accountable care organizations (ACOs) participating in the Pioneer ACO program. According to the results, first year health spending decreased by as much as 7 percent for some ACOs and increased as much as 5 percent for other ACOs. In the second year of the program, spending slowed by as much as 5.4 percent for ACOs that had cost decreases and grew by as much as 5.6 percent for ACOs that had cost increases. Overall, the Pioneer ACOs saved Medicare approximately $41 million for 2013.


On October 9, 2014, the Pharmaceutical Research and Manufacturers of America (PhRMA) filed a new complaint against HHS in the U.S. District Court for the District of Columbia regarding the Health Resources and Services Administration’s (HRSA’s) July 2014 interpretive rule on the 340B program. HRSA’s interpretation said that the ACA’s exemption of orphan drugs from the 340B program for safety net hospitals does not apply when the drugs are used to treat non-orphan conditions. PhRMA contends that HRSA’s interpretation of the statute is incorrect and that manufacturers are not permitted to provide the discounts to the providers.

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Health Care Reform Implementation Update October 3, 2014

Congress is in recess and therefore much of the action surrounding the Affordable Care Act (ACA) is at the agency level.  However, Congressman Darrel Issa (R-CA) did subpoena the U.S. Department of Treasury for their records on the Internal Revenue Service (IRS) regulation regarding ACA subsidies.  The Department of Health and Human Services (HHS) reported on hospital savings under the ACA and touted the increase in number of insurance companies that have decided to participate in this year’s exchanges for the upcoming ACA enrollment period; the HHS Office of Inspector General released a report regarding security at Healthcare.gov and two state exchange websites; and the IRS, HHS and the Department of Labor finalized regulations on health care benefits exempt from certain ACA and Health Insurance Portability and Accountability Act (HIPAA) requirements.


HHS released a report on September 24 that estimated that hospitals will save $5.7 billion in uncompensated care costs in 2014.  Approximately three-fourths of the savings will go to hospitals located in the 26 states that had expanded Medicaid before the ACA’s first open enrollment period.  The hospitals had major decreases in the number of uninsured patients they treated and increases in Medicaid-covered admissions.

On September 23, HHS announced that there will be a 25 percent increase in the number of health insurance issuers offering health coverage through ACA exchanges for 2015, based on preliminary data from 43 states and the District of Columbia.  For 2015, a total of 248 health insurance issuers will be offering coverage through the federally facilitated exchange, and 67 will be offering coverage in the 8 states with state-based exchanges that had available information.

The HHS Office of the Inspector General (OIG) released a report on September 23 on the security of information technology on HealthCare.gov as well as the exchange websites of Kentucky and New Mexico.  The OIG concluded that while CMS had implemented controls to secure personally identifiable information on HealthCare.gov, there were still areas where the Centers for Medicare and Medicaid Services (CMS) needed additional oversight and management.  The OIG found that Kentucky had “sufficiently protected” the information but that opportunities still existed for improvement.  It also found that New Mexico’s information technology policies and procedures did not always meet federal requirements regarding securing and processing of sensitive information.  The OIG did not release the specific details of the vulnerabilities it uncovered due to the sensitivity of the information.

According to a report released by CMS on September 29, Medicare recovery audit contractors (RACs) identified and corrected improper payment claims that enabled them to collect $3.65 billion in overpayments in fiscal year 2013.  The RACs also identified and returned  $102.4 million in underpayments during the same time period.

On September 26, the IRS, HHS and the Department of Labor issued final rules regarding health care benefits exempt from certain ACA and Health Insurance Portability and Accountability Act (HIPAA) requirements.  The final rules address limited excepted benefits which include limited scope vision and dental benefits, and long term care benefits.  Overall, the agencies finalized the proposed rules that had been issued last year, with only minor modifications.  Under the final rules, vision, dental and long term care benefits qualify as excepted benefits if employees can decline the benefits or if claims for the benefits are administered under a contract that is separate from other plan benefits.  The agencies postponed addressing limited wraparound coverage, saying that rules for such coverage would be forthcoming after the agencies take into account the extensive comments that were received on the subject.

The ACA’s Sunshine Act section authorizes CMS to make public information on payments physicians and hospital receive from pharmaceutical companies and medical device manufactures. The Open Payments website, through which CMS is doing this, launched on September 30.  The website contains information on payments that physicians and hospitals received from pharmaceutical companies and medical device manufacturers.  Approximately 40 percent of the information on the site is currently de-identified, meaning that the payments are not linked to specific providers.  CMS said that the data was de-identified in situations where there were questions about the payments or when the providers did not have time to review the data before publication.

On September 19, CMS announced that between the end of 2011 and 2013, the use of antipsychotic drugs to sedate nursing home residents had decreased by 15 percent.  CMS and other members of the National Partnership to Improve Dementia Care said they are working so that there will be a 25 percent decrease in antipsychotic use by the end of 2015 and a 30 percent decrease by the end of 2016.  CMS is planning to include data on the use of antipsychotic drugs in its nursing home quality rating system.


Congressman Darrell Issa (R-CA), Chairman of the House Oversight and Government Reform Committee, subpoenaed U.S. Treasury documents regarding IRS regulation on subsidies for health insurance exchanges.  The IRS regulation allows individuals to use their subsidies in all 50 states and the District of Columbia even if the states did not create their own state-run exchanges.  In a letter submitted by Issa on September 23 to the Secretary of Treasury Jack Lew, Issa questions whether the ACA allows subsidies to be used nationwide or only in those states that have created their own exchanges.  This same argument is being used in legal challenges to the ACA such as the Halbig v. Burwell case, which is currently under review by U.S. Circuit Court of Appeals by the District of Columbia.


On September 19, the U.S. Court of Appeals for the Seventh Circuit affirmed a lower court’s dismissal of a suit brought by the Association of American Physicians and Surgeons challenging the IRS’s delay of enforcement of the ACA’s employer mandate.  The Seventh Circuit said that the plaintiffs did not have standing to bring the suit.  The court said that since the plaintiffs were not personally harmed by the delay, the suit had to be dismissed.

On September 30, a federal court in Oklahoma held that the text of the ACA required the court to strike down an IRS rule that provided tax subsidies to federal exchange enrollees.  The case and the ruling are similar to the initial panel decision of the U.S. Court of Appeals for the District of Columbia.  Oklahoma had brought suit earlier this year alleging that the IRS could not impose penalties on employers of residents of states that did not establish their own exchanges.  The federal government is expected to appeal the decision.


The Virginia General Assembly voted against expanding Virginia’s Medicaid program.  Governor McAuliffe (D-VA) had proposed a modified Medicaid expansion plan that would insure a reduced amount of Virginians from previous plans he had proposed.  The primarily Republican General Assembly voted in a special session not to move forward with the modified plan.


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Health Care Reform Implementation Update September 15, 2014

Congress is back in session, and work on a Continuing Resolution is underway. The Affordable Care Act (ACA) is back center stage with House Republicans attaching a medical device tax repeal provision to a jobs package set for a floor vote this week and the House Ways and Means Committee holding a hearing to discuss the status of the ACA’s implementation with CMS Deputy Administrator Andy Slavitt and IRS Commissioner John Koskinen. On the adminsitrative front, the Department of Health and Human Services (HHS) responded to an unfavorable Government Accountability Office (GAO) report regarding the Arkansas Medicaid waiver plan, and the Centers for Medicare and Medicaid Services (CMS) made announcements regarding the Star Ratings Program for Medicare Advantage and prescription drug plans and dialysis centers, and released another rule regarding electronic health records.


On September 10, CMS Deputy Administrator Andy Slavitt and IRS Commissioner John Koskinen testified at a House Ways and Means Hearing regarding the upcoming enrollment period for ACA exchanges. Slavitt testified that CMS is focused on improving the consumer experience overall and will streamline the enrollment process for new and reenrolling customers. Slavitt did not promise a mistake-free ACA marketplace, and warned that there would “always be ongoing challenges.” IRS Commissioner Koskinen focused his testimony on premium tax credit and the individual mandate and was questioned by members on the process for ensuring that taxpayer income information is correct so that they receive the subsidy amount for which they are eligible. The commissioner testified that the IRS plans to update its website to provide clarification to taxpayers on how they can update their income data if needed.

On September 9, the House passed a bill that would delay enforcement through 2014 of a CMS rule that requires physician supervision of certain therapeutic services at Critical Access Hospitals. Congresswoman Lynn Jenkins (R-Kan.) is the sponsor of the bill and claims that the rule, which CMS began enforcing in January, places an undue burden on hospitals and providers in rural areas by requiring physician supervision of services such as drawing blood. The Senate has passed similar legislation, but it is unclear whether the Senate will take up the House bill version for a vote.

The Medicare Payment Advisory Commission (MedPAC) met for the first time since April to discuss Medicare payment policy, service provision based on clinical evidence, Accountable Care Organizations, Medicare Advantage, hospital short stat policy issues and the impact of home health payment rebasing on beneficiary access to and quality of care.


On September 8, the Government Accountability Office (GAO) released a report criticizing HHS for not ensuring that Arkansas’ Medicaid waiver plan was budget neutral. According to the report, Arkansas will be spending $778 million more than a normal Medicaid expansion would have cost in the state. GAO also highlighted that HHS did not require Arkansas to provide any data to justify its funding levels. In response to the report, HHS claimed that its analysis was based on other states’ experiences and that GAO’s $778 number is inaccurate because it used only a small subset of available data to estimate cost levels. 

CMS announced that it was creating two new special enrollment periods (SEPs) for those individuals who were asked to submit documentation regarding immigration-related issues by September 5. The individuals who were required to clear up their immigration status with HealthCare.gov were supposed to be dropped from enrollment at the end of September if they did not resolve the issues; however the Obama administration is providing leeway for those who could not get the documents in on time. The first SEP is for individuals who can attest that they attempted to submit the necessary documents by the September 5 deadline and who have been verified as eligible for coverage through the exchanges. The second SEP is for individuals who cannot make such an attestation but who do submit the necessary documentation within 60 days.

On September 8, CMS announced that it would delay by one year terminations of Medicare Advantage and prescription drug plans with continual low star ratings. Under the Star Ratings Program, the agency was to terminate plans that received less than three out of five stars in the ratings program for three consecutive years. CMS said that it was delaying the terminations because of concerns that the program disadvantages plans that serve disproportionately high numbers of low-income beneficiaries. 

CMS announced that it would delay a Star Ratings Program for dialysis facilities by three months, until January 2015.  CMS said that the delay would be used to educate the public about the program, and not be used to modify program metrics, which disappointed dialysis providers and patient groups, who argue that the agency, which announced the program in July of 2014, should have gone through notice and comment rulemaking procedures before introducing this program.

HHS’s Office of the National Coordinator for Health Information Technology released a final rule on September 10 that modifies the 2014 certification requirements that electronic health record (EHR) systems must meet to qualify for Medicare and Medicaid meaningful use programs. The Office decided not to adopt a new version of EHR certification and not to implement a new procedure to certify EHR technology outside of the meaningful use program.

On September 8, HHS awarded $60 million in grants to navigators to assist with enrollment in federally facilitated and state partnership exchanges before and during the 2015 open enrollment period. A total of 90 organizations, including charities, universities and nonprofits, tribal, and religious groups, received the grants.

On September 8, HHS Secretary Sylvia Matthews Burwell made a speech on the ACA and committed to improving the open-enrollment process for 2015 and stressed her belief in effective management, transparency and working across party lines. She also said that she intends to respond to Congressional information requests within 30 days.


On September 9, New York state settled with GHI, a subsidiary of EmblemHealth Inc. and New York’s largest health insurer, regarding the company’s inadequate disclosure of out-of-network benefits to its customers. New York state Attorney General Schneiderman announced that GHI will have to establish a $3.5 million dollar fund to reimburse GHI customers who were affected, improve its disclosure of benefits to its customers, and pay $300,000 in fines to the Attorney General’s Office.

On September 8, Governor Terry McAuliffe (D-Va.) unveiled a plan for partial Medicaid expansion in Virginia. The plan would extend coverage to 25,000 Virginia citizens, but falls far short of the governor’s original plan to fully expand Medicaid in the state. The Virginia General Assembly will resume debate on Medicaid expansion and the governor’s new plan during the third week of September.


On September 5, the Federation of State Medical Boards released a final model “compact” that would facilitate physician licensure and practice in more than one state. The compact outlines a process for licensing physicians to practice in more than one state.

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