Health Care on the Hill – Week of October 7, 2013

With the ongoing government shutdown, the Congressional calendar has been up in the air. A number of hearings scheduled for last week were postponed, and we recommend that you reconfirm that the following hearings are still scheduled to happen the day prior.

Tuesday, October 8, 2013

10:00 a.m.
“Transforming Medicare Post-Acute Care: Issues and Options”
Senate Finance Committee Hearing
219 Dirksen Senate Office Building

Wednesday, October 9, 2013

1:00 p.m.
“The Effects of the Health Law’s Definitions of Full-Time Employee on Small Businesses”
House Small Business Subcommittee on Health and Technology Hearing
2360 Rayburn House Office Building

Thursday, October 10, 2013

10:00 a.m.
“Between Peril and Promise: Facing the Dangers of VA’s Skyrocketing Use of Prescription Painkillers to Treat Veterans”
House Veterans’ Affairs Subcommittee on Health Hearing
334 Cannon House Office Building

October 1st – Huge Day for Healthcare

The first day of the federal government shutdown occurred on October 1, 2013, the same day as the start of the open enrollment period for the health insurance exchanges.  This blog post focuses on some of the top issues impacting health care policy on this date.

HHS Operating Status

Like most other federal agencies, the Department of Health and Human Services (HHS) has implemented a contingency plan, which calls for 52% of HHS employees to be placed on furlough.

Medicare Reimbursement

Despite the government shutdown, most Medicare fee-for-service reimbursement will continue as scheduled.

On October 1, 2013, the Medicare Administrative Contractors (MACs) indicated they would “continue to perform all functions related to Medicare fee-for-service claims processing and payment.”  However, according to the HHS contingency plan, health care fraud and abuse efforts will cease during the government shutdown.  In addition, CMS will be curtailing the number of recertification and initial surveys for Medicare and Medicaid providers.

ACA Implementation

Despite the HHS furlough, October 1st marked the first day of open enrollment for the health insurance exchanges.  Initially individuals were reporting that many of the individual state-based health insurance exchange sites were not working properly and the healthcare.gov website and toll-free number were experiencing problems or longer than average wait times.  However, as of yesterday afternoon, HHS informed reporters that more than 2.8 million individuals had visited the healthcare.gov website since it launched earlier that morning, the call centers received more than 81,000 calls, and there were more than 61,000 live chat requests.  HHS did not announce how many individuals had successfully enrolled in a health insurance plan offered through the exchange on this first day.

Medicare and Medicaid Provider Policies

In addition to the establishment of the new health insurance exchanges, the ACA also mandated certain Medicare and Medicaid cuts to begin on October 1, 2013, including:

  • Medicare readmissions reductions:  Under the Hospital Readmissions Reduction Program (HARP) hospitals are assessed a penalty for patients with certain conditions who return to the hospital within 30 days of discharge.  When the program began on October 1, 2012, hospitals were assessed a maximum penalty of one percent of total revenue.  As of October 1, 2013, the penalty increases to two percent of total revenue.  CMS data suggests that more than 2,200 hospitals will have their Medicare payments reduced under this program.  (More information on the program is available here.)
  • Medicaid Disproportionate Share Hospital (DSH) payments:  The Medicaid program provides additional payments—DSH payments—to hospitals that see a higher than average share of low-income beneficiaries.  The ACA reduced the overall level of Medicaid DSH payments beginning October 1, 2013 when cumulatively states will receive a $500 million cut in DSH payments.

Medicaid Expansion

Under the ACA, states who choose to do so may expand their Medicaid programs to cover uninsured individuals up to 133 percent of the federal poverty level (2013 federal poverty level figures are available here).  More than half the states have chosen to expand their Medicaid programs, as seen in this map.  Expanded Medicaid coverage begins in most states on January 1, 2014.

MedPAC 101

As the Medicare Payment Advisory Commission (MedPAC) is meeting today (Thursday, September 12th) and tomorrow (Friday, September 13th), Capitol Health Record has prepared the following primer. Information on MedPAC’s public meeting this week is available here.

As part of the Balanced Budget Act of 1997, Congress established an independent 17-member Commission tasked with recommending to Congress changes in Medicare policies.  MedPAC is charged with determining Medicare’s payment adequacy for physicians, hospitals, and other providers as well as determining whether Medicare beneficiaries have adequate access to Medicare services.

Does MedPAC have the force of law?  MedPAC’s recommendations are not law.  Congress must adopt MedPAC’s recommendations in order for them to be fully implemented.  However, MedPAC’s recommendations are often influential among policymakers as they develop new legislative proposals.

How does one become a MedPAC Commissioner?  The Government Accountability Office (GAO) annually publishes a notice inviting individuals to become a MedPAC Commissioner.  GAO’s announcement is generally published in January and nominations are generally due in mid-March of each year.  New Commissioners are generally announced in late May or early June each year.

Where can I find more information about MedPAC’s recommendations?  Each year MedPAC publishes at least two reports.  MedPAC’s March report contains recommendations on payment changes on a range of issues.  In June MedPAC publishes a report providing analysis on other policy issues and additional information on other recommendations.  (More information on MedPAC’s March 2013 report is available here and information on its June 2013 report is available here.)  In addition, MedPAC generally submits comments on the Centers for Medicare & Medicaid Services’ (CMS’) proposed rules implementing Medicare payment policies.  All of MedPAC’s reports and comment letters are available on its website (www.medpac.gov).

Does MedPAC provide recommendations on all health care issues?  No.  MedPAC is limited to providing recommendations regarding the Medicare program.  MedPAC can, and does, make recommendations to address issues arising with so-called “dual eligibles” (e.g., individuals who are eligible for both the Medicare and Medicaid programs).  However, MedPAC generally does not provide recommendations solely related to other payers or services (like the Medicaid program or employer-sponsored health care).

How does MedPAC differ from the Independent Payment Advisory Board (IPAB)?  MedPAC makes recommendations to improve the Medicare program.  IPAB, if convened, would be limited to making recommendations to limit the per capita rate of growth in Medicare spending.  In other words, MedPAC can make recommendations to add policies and services to Medicare (regardless of whether these new policies result in additional federal spending).  IPAB can only make recommendations to cut Medicare spending.

House Energy and Commerce Committee Passes SGR Bill

On Wednesday, July 31, 2013, by a vote of 51-0, the full House Energy and Commerce Committee passed H.R. 2810, legislation that would repeal the sustainable growth rate (SGR) formula and impose a new mechanism by which Medicare would reimburse physicians and other health care professionals.  Background information on the SGR is available here and more information on the legislation as passed out of the Energy and Commerce Health Subcommittee is available here.

While the legislation enjoys bipartisan support, it is important to note that there currently are no provisions on how to pay for the cost of the legislation.  Earlier this year, the Congressional Budget Office (CBO) estimated a ten year freeze to physician payments would cost $139.1 billion.  While an official CBO score on H.R. 2810 has not been made available, the legislation is expected to cost significantly more than $140 billion.

Before the full House of Representatives votes on the legislation, the House Ways and Means Committee (which has joint jurisdiction with the House Energy and Commerce Committee on Medicare Part B issues) is expected to release its own version of the legislation.  The Senate Finance Committee also will work on legislation to address this issue.

Unless Congress acts by the end of the year, physicians who treat beneficiaries will face an estimated 25 percent reduction in their Medicare reimbursements.

Drinker Biddle Alert on June MedPAC Report

Anna Howard, Drinker Biddle Lobbying and Advocacy Team Medicare Reimbursement and Health Policy Director, collaborated with Drinker Biddle Associate Jeanna Palmer Gunville and Partner Jennifer Breuer on a Health Care Insights article on “MedPAC Highlights Multiple Policy Options to Address Payment Differences Across Ambulatory Settings.” The client alert examines the payment recommendations made by the Medicare Payment Advisory Commission’s (MedPAC’s) in their June 2013 report to Congress.

House Committee Prepares SGR Legislation

On Thursday, July 18, 2013, the House Energy and Commerce Committee released an updated draft of their “legislative framework” to repeal and replace the sustainable growth formula (SGR).  More information from the Committee is available here and the latest draft of the legislative framework is available here.  Background information on the SGR is available here and information on the previous iterations of the legislative framework is available here.

The Congressional Budget Office (CBO) estimates that a ten year freeze to physician payments would cost $139.1 billion.  More information on the CBO score is available here.

Unless Congress acts by the end of the year, physicians who treat Medicare beneficiaries will face an estimated 24.4 percent reduction in their reimbursement.  The exact amount of the reduction will be announced when the Centers for Medicare & Medicaid Services (CMS) releases the Medicare Physician Fee Schedule final rule, which is expected in November 2013.  More information on the proposed rule is available here.

As with similar proposals, the latest draft of the legislative framework would repeal the SGR and replace it with a stable 0.5 percent payment update during the period 2014-2018.  At the end of this period, Medicare would implement an enhanced Physician Quality Reporting System (PQRS) system, under which provider reimbursement would be linked to the quality of the care they provide.

Alternatively, providers can choose to participate in an alternative payment model (e.g., patient-centered medical home, bundled episodes of care, etc.).  These new alternative payment models will encourage high value and high quality health care.

The latest draft legislative framework is authored by Rep. Mike Burgess (R-TX), Energy and Commerce Health Subcommittee Chairman Joseph Pitts (R-PA), Energy and Commerce Health Subcommittee Ranking Member Frank Pallone (D-NJ), Energy and Commerce Committee Chairman Fred Upton (R-MI), Energy and Commerce Ranking Member Henry Waxman (D-CA), and Rep. John Dingell (D-MI).  The revised framework does not include any pay-fors.

The Committee plans to markup the legislation on Monday, July 22nd and Tuesday, July 23rd.  A link to the background memo prepared by the Committee can be found here.

CMS Releases Hospital Outpatient Payment Rule

On July 8, 2013, the Centers for Medicare & Medicaid Services (CMS) released its proposed rule implementing changes to the Medicare Hospital Outpatient Prospective Payment System (HOPPS) and Ambulatory Surgical Center (ASC) Payment System for calendar year (CY) 2014.  According to CMS, relative to payments in 2013, Medicare payments for outpatient services are expected to increase 9.5 percent, or $4.37 billion, in CY 2014, and payments to ASCs are expected to increase by 3.5 percent, or $133 million.

Comments on the proposed rule are due September 6, 2013.  A copy of the proposed rule is available here and will be published in the Federal Register on July 19, 2013.  A CMS fact sheet on the proposed rule is available here.

CMS Releases Physician Payment Rule

On Monday, July 8, 2013, the Centers for Medicare & Medicaid Services (CMS) released its proposed rule implementing changes to the Medicare Physician Fee Schedule for calendar year (CY) 2014.  CMS estimates that absent Congressional action, physicians who treat Medicare beneficiaries will face a 24.4 percent cut in their reimbursement due to the Sustainable Growth Rate (SGR).  More information on the SGR is available here.

As part of this proposed rule, CMS is also proposing several changes to the Physician Quality Reporting System (PQRS), the Medicare Electronic Health Record (EHR) Incentive Program, the physician compare website, and the physician value-based payment modifier.  A CMS fact sheet on these proposed changes is available here.

Comments on the proposed rule are due on September 6, 2013.  A copy of the proposed rule is available here and will be published in the Federal Register on July 19, 2013.  A CMS fact sheet highlighting the proposed rule is available here.

CMS Releases ESRD Payment Rule

On Monday, July 1, 2013, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule implementing payment and other policy changes to the Medicare End-Stage Renal Disease (ESRD) Prospective Payment System (PPS).  The proposed rule seeks to implement the ESRD payment reductions provided under the American Taxpayer Relief Act (ATRA) enacted earlier this year.  (More information on the ATRA is available here.)

In addition, CMS also proposes changes to the ESRD Quality Incentive Program (QIP).  A CMS fact sheet highlighting the proposed changes to the QIP is available here.

Comments on the proposed rule are due on August 30, 2013.  A copy of the proposed rule is available here.  A CMS fact sheet highlighting the proposed rule is available here.

Home Health Payment Rule Released

On Thursday, June 28, 2013, Medicare released its proposed rule implementing fiscal year (FY) 2014 payment rates for the Home Health Prospective Payment System.  The rule proposes to cut home health payment rates by 1.5 percent relative to FY 2013 payment rates.  In its March 2013 report to Congress, the Medicare Payment Advisory Commission (MedPAC) urged Congress to reduce home health payments.  A copy of the relevant MedPAC chapter is available here.

A copy of the 123-page proposed rule is available here.  Comments are due to CMS no later than 5:00 pm on Monday, August 26, 2013.