July 2, 2013

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Health Care News

Congressional Activity

Senate Passes HIV Organ Donation Bill
The Senate unanimously passed S. 330, the HIV Organ Policy Equity (HOPE) Act on June 17. The House companion legislation, H.R. 698, is pending before the House Committee on Energy and Commerce and Judiciary Committee. The HOPE Act would effectively reverse a provision in the Health Omnibus Program Extension of 1988 that banned all organ donations from persons with HIV. It would allow the Department of Health and Human Services (HHS) to research effective ways to transplant organs from HIV-positive persons to other individuals with HIV. For data and links to reports related to AIDS and HIV-positive individuals, see Department of Health and Human Services (HHS) Secretary Kathleen Sebelius' statement regarding the 19th annual National HIV Testing Day (June 27).

Medicare Trustees Report: Solvency until 2026
The Health Subcommittee of the House Committee on Ways and Means held a hearing on June 20 regarding the Medicare Board of Trustees' 2013 report. The report, released at the end of May, estimated that the Hospital Insurance trust fund will remain solvent until 2026, two more years than previously estimated, due to lower Medicare Part A spending. Trustees Robert Reischauer and Charles Blahous testified at the hearing. Reischauer argued that policy-makers can only moderate cost growth over time if both Medicare and the private sector are equal partners in slowing growth. Blahous stated that Medicare costs will continue to grow past current projections if Congress continues to override physician payment reductions under the SGR formula. He also urged Congress to advance legislation to address the financing shortfall of Medicare's Hospital Insurance Trust Fund and rising budgetary pressures of Medicare's Supplementary Medical Insurance.

Senate Passes Immigration Bill
Immigration reform legislation, S.744, passed in the Senate on June 27. The legislation, Border Security, Economic Opportunity, and Immigration Modernization Act, was recently scored by the Congressional Budget Office (CBO) that calculated a 10 year cost of $82.3 billion for insurance subsidies and $29.3 billion for Medicaid spending. The legislation includes restrictions on immigrant insurance subsidies and means-tested benefits, such as children's health insurance and Medicaid.

Higher Topline Spending Plan Passes in Senate Appropriations Committee
The Senate Appropriations Committee passed a $1 trillion spending plan on June 20 in a 15-14 partisan vote. The plan, authored by Chairwoman Sen. Barbara Mikulski (D-MD), allocates a topline spending level of $1.058 trillion for 12 annual 2014 bills funding federal departments and agencies. The House of Representatives is using a lesser spending plan of $967 billion. If Senate passes the Appropriations Committee's spending plan, future Congressional standoff between the two Houses could lead to another round of automatic sequester cuts and a government shutdown on Oct. 1, the start of the new fiscal year.

Legislation to Redefine Full-Time Employee under ACA
Senators Susan Collins (R-ME) and Joe Donnelly (D-IN) introduced S. 701, the Forty Hours is Full Time Act of 2013, a bill which would change the definition of full-time work in the Affordable Care Act (ACA) from 30 to 40 hours per week or 174 hours per month for a full-time equivalent employee. Starting in 2014, large employers with more than 50 full-time employees will be required to provide employees with basic level health insurance or face financial penalties. Senators Collins and Donnelly also co-authored a letter to President Obama urging his Administration to provide transition flexibility without penalties for employers who cannot meet the January 1, 2014 deadline.

Regulatory Activity

CBO: Medicare's Managed Care Programs Could Reduce Costs for Dual-Eligibles
The Congressional Budget Office (CBO) published a report on June 17 suggesting options to improve health care programs for dual beneficiaries eligible for both Medicare and Medicaid. Some of the proposed options include offering federal block grants to states to provide care for all dual-eligibles, selecting either Medicare or Medicaid to take full control of dual beneficiary efforts, or contracting with a third-party, such as managed care plans or accountable care organizations, to pay a blended rate covering services from both programs. The CBO report concluded that requiring dual-eligible beneficiaries to participate in Medicare's managed care program could simultaneously improve services provided and reduce costs.

Payment Increases for Primary Care Providers Face Challenges
The Affordable Care Act (ACA) required that starting on January 1, 2013, Medicaid increase payments to at least match Medicare payments for certain primary care physicians. With the exception of four states, primary care physicians have not seen Medicaid payment increases, according to Charles Cutler, Chair of the Board of Regents of the American College of Physicians (ACP), who testified before the Ways and Means committee in May. States face a myriad of issues that prevented the timely implementation of this policy. State officials say that they could not act quickly enough. Some states balked at the price tag as the federal government covered on average only 57 percent of the new costs. It also proved troublesome for some states to change managed care payments and contracts.

Comments Due: Insurance Company Compensation Deduction Limits; Medicare Enrollment Changes; and Inpatient Rehabilitation Rule
Comments are due on various CMS and ACA related provisions. Comments on an IRS proposed rule limiting health insurance providers deduction of $500,000 per individual paid to officers, directors, employees and certain service providers (26 CFR Part 1), are due July 1. CMS is requesting comments on the FY 2014 Proposed Inpatient Rehabilitation Payment Rule (42 CFR Part 412), due July 1. CMS is also requesting comments related to the Medicare incentive program and enrollment changes. The proposed rule creates stronger incentives for reporting fraud and abuse (42 CFR Parts 405, 420, 424, and 498); CMS plans to impose restrictions on Medicare enrollment to bar existing providers and suppliers who have a current Medicare overpayment from enrolling another site or company. The rule also proposes to revoke Medicare billing privileges for providers and suppliers demonstrating an overall "pattern or practice" of submitting erroneous claims. Comments were due June 28.

GAO Report Questions CMS's Ability to Meet Insurance Marketplaces Deadline
The Government Accountability Office (GAO) issued a report on June 19 concluding that the Centers for Medicare & Medicaid Services (CMS) is behind schedule with preparations to establish federally facilitated health insurance exchanges (FEEs) in 34 states by the October 1 deadline. CMS will operate FEEs in the 34 states electing not to operate their own and will collaborate with 15 other states to complete some FEE functions in partnership agreements. The GAO reported delays in the three major areas of marketplace development-eligibility and enrollment, plan management, and consumer assistance. A spokesperson from the Department of Health and Human Services insisted that despite missed interim deadlines, the marketplaces are on track to open on time.

In the Courts

Supreme Court's "Pay-for-Delay" Ruling Permits Both Generic Drugmaker Settlements and FTC Actions Challenging Them
The Supreme Court answered two questions that have vexed pharmaceutical manufacturers and regulators for some time. In FTC v. Activis, Inc. the Supreme Court addressed whether "pay-for-delay" settlements are permissible between branded and generic drug manufacturers and whether the Federal Trade Commission can file suits against these settlements despite patent protection. In a 5-3 decision, the Court held that settlements in which a branded drug manufacturer settles a patent dispute with a generic drug manufacturer by paying the generic drug manufacturer to refrain from challenging the patent are not inherently impermissible. However, the FTC may use facts specific to each case to bring suit challenging these settlements.

Insurance Plan Administrator Sues Surgical Group Over "Fee Forgiveness" Practices
The ongoing conflict between providers and insurers over discounts provided to patients has now sparked a lawsuit in Illinois. A subsidiary of CIGNA that manages self-funded health insurance plans filed suit against an out-of-network Chicago-area surgical group alleging that the group's practice of not collecting deductibles, co-payments, and/or co-insurance due from plans' enrollees reduces the amount owed by the plan for the related procedures. Insurers and plan administrators often allege that this discounting practice results in overpayments because their payment responsibility for out-of-network care is often based on a percentage of the pre-discount charge. On the flipside, class action suits are being pursued by providers, alleging that insurers' adverse benefit determinations in fee-forgiveness settings violate the Racketeering-Influenced and Corrupt Organizations Act (RICO) and the Employment Retirement Income Security Act (ERISA).

Unlicensed CBP Bids for DME Prompts Lawsuit against HHS
AAHomecare and Home Mediservice, Inc. filed a lawsuit on June 19 against the Department of Health and Human Services concerning license irregularities in the Medicare competitive bidding program (CBP) for durable medical equipment (DME) provider contracts. The lawsuit alleges that the Centers for Medicare and Medicaid Services (CMS) violated the rules of the CBP and authorized contracts with unlicensed state and local DME providers. The Medicare CBP expanded to 91 new areas on July 1 and the lawsuit urges a delay in further expansion and bidding until the license irregularities can be more closely examined.

For More Information

For further information on any topics discussed or publications listed, or to get copies of the alert, please call (202) 466-6550 and ask for Sara Rosta of the Legislative Practice Group.

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