WASHINGTON WIRE

May 14, 2013

Congressional Activity

House Ways and Means Holds SGR Hearing
The House Ways and Means subcommittee on Health held a hearing on May 7, 2013 entitled, "Developing a Viable Medicare Physician Payment Policy." Testifying at the hearing were the physician leaders from the American College of Surgeons, American Society of Nuclear Cardiology, American College of Physicians, National Quality Forum, and HealthPartners Health Plan (MN). With long-standing and bipartisan support in both the House and Senate, repealing and replacing the SGR remains a primary focus for all relevant Congressional committees of jurisdiction, according to each committee chair and ranking member. While the cost to replace the SGR stands now at its lowest point in many years, serious budget issues remain the major and continuing stumbling block for passage of repeal legislation this year.

Representative McDermott Willing To Cut Medicare Part D Payments to Fix SGR
Rep. Jim McDermott (D-WA), ranking member of the Ways and Means Subcommittee on Health, says he would like to pay for fixing the Sustainable Growth Rate formula by cutting Medicare Part D payments to drug companies; although, he's against paying for the solution by raising costs for seniors. Although Democrats and Republicans are both eager to fix the long-broken doctor Medicare pay formula, McDermott's comments underscore the fact that partisan clashes may occur over how to find the needed $138 billion to pay for it. The Committee on Ways and Means as well as the Energy and Commerce Committee Majority Staff released a basic framework for repealing and replacing the SGR, but a detailed legislative draft is yet to come.

Senate Finance Seeking SGR Physician Input
On Friday, May 10, 2013, the Senate Finance committee Chairman Max Baucus (D-MT) and ranking member Orrin Hatch (R-UT) sent a letter asking physicians for ideas on replacing the SGR. Submissions are requested by May 31, 2013. The letter asks three specific questions of physicians. 1) What specific reforms should be made to the physician fee schedule to ensure that physician services are valued appropriately? 2) What specific policies should be implemented that could co-exist with the current FFS physician payment system and would identify and reduce unnecessary utilization to improve health and reduce Medicare spending growth? 3) Within the context of the current FFS system, how specifically can Medicare most effectively incentivize physician practices to undertake the structural, behavioral and other changes needed to participate in alternative payment models?

Harkin Lifts Tavenner Hold Despite White House Refusal to Restore Prevention Fund
Senator Tom Harkin (D-IA) lifted the hold he placed on CMS Acting Administrator Marilyn Tavenner's Senate nomination. In a statement on the Senate floor, Harkin objected to the Obama administration's use of the health care law's prevention and public health fund for other purposes. The HELP Committee chairman was instrumental in adding the prevention fund to the Affordable Care Act and said that he placed the hold on Tavenner's nomination in order to bring attention to this issue. See a compilation of reports from Kaiserhealthnews.com.

Energy & Commerce Health Subcommittee Marks Up Drug Tracking Bill
In combination with reauthorizations of user fees for the FDA, the Energy and Commerce Subcommittee on Health advanced legislation to create a national system for tracking prescription drugs throughout the supply chain. The Energy and Commerce Health Subcommittee, chaired by Rep. Joe Pitts (R-PA), passed legislation to change the current drug-tracking system at the lot level, which can contain thousands of units, to a unit-level system. It also lays out requirements for drug manufacturers, repackagers, wholesale manufacturers and dispensers, who each would have to pass along information about products at the lot level whenever there is a change of ownership. The legislation is scheduled for a full committee vote and expected to pass in both the House and Senate.

Congressional Republican Leaders Refuse to Submit Names for IPAB
In response to the President's request for Congressional leaders to submit names of individuals to serve on the ACA-created Independent Payment Advisory Board (IPAB), Speaker Boehner and Senate Republican Leader McConnell responded in a letter with an unequivocal and not unexpected "no." Legislation was introduced again this session in the House and Senate to repeal IPAB. "Protecting Seniors' Access to Medicare Act" (H.R. 351) was introduced by Representatives Phil Roe (R-TN) and Allyson Schwartz (D-PA) and companion legislation was introduced by Senator John Cornyn (R-TX). To date, the House legislation has 173 co-sponsors and Senate legislation has 31.

Congress and States Continue Work on Compounding Pharmacy Legislation and Regulations
In the wake of a meningitis outbreak last fall which was linked to a New Englang compounding pharmacy, five states enacted laws to increase oversight of compounding pharmacies and nine states are actively reviewing such measures. In addition to state efforts to regulate compounding pharmacies, Senators from the Senate Health, Education, Labor and Pensions (HELP) Committee introduced draft legislation to subject compounding pharmacies to more federal oversight. The legislation delineates a new category of "compounding manufacturers," those entities that produce large numbers of compounding products without a prescription and distribute them across state lines. These manufacturers will need to register with the federal Food and Drug Administration (FDA) and submit an annual oversight fee to support inspections and oversight activities. The full HELP committee held a hearing on May 9, to discuss the draft bill.

Regulatory Activity

Proposed Rule on Medicaid DSH Allotment Reductions
CMS released a proposed rule on Medicaid Disproportionate Share Hospital (DSH) Allotment Reductions on May 13. As amended by the Affordable Care Act, the statute requires a gradual reduction in special federal payments to state Medicaid DSH providers. This proposed rule delineates a methodology to limit the reductions to two years, implementing the reductions for FY 2014 and FY 2015. The rule also proposes to add additional DSH reporting requirements for use in implementing the DSH health reform methodology.

PCORI Awards $88.6M in Funding for Comparative Effectiveness Research Projects
The Patient-Centered Outcomes Research Institute (PCORI) approved 51 new awards, totaling $88.6 million over three years, to fund patient-centered comparative clinical effectiveness research (CER) projects under the first four areas of its National Priorities for Research and Research Agenda. This announcement brings the total that PCORI has awarded for projects addressing these priorities to $129.3 million. PCORI committed another $30 million in funding for a series of pilot projects. The approved projects were selected through a review process in which scientists, patients, caregivers, and other stakeholders helped to evaluate proposals.

Community Health Centers Receive Funds for Insurance Marketplace Outreach
Department of Health and Human Services Secretary Kathleen Sebelius announced on Thursday, May 9 that $150 million in grant funding is marked for community health centers (CHCs). Grants will be awarded in order to provide outreach and education to the 21 million patients served by CHCs. The funding is being invested in health centers to expand current outreach and enrollment assistance activities and facilitate enrollment of eligible health center patients into exchanges. The funds will be used to double the number of outreach workers in up to 1,200 community health centers (CHC). Interested health centers must apply for funds through HRSA. Minimum awards are $50,000.

OIG Updates Special Advisory Bulletin: Effect of Exclusion from Medicare, Medicaid
The Office of the Inspector General (OIG) updated its 1999 special advisory bulletin clarifying liability for claims linked to individuals excluded from participation in the Medicare, Medicaid or other Federal health care programs. The OIG exclusion mandates that no Federal health care payment may be issued for items or services furnished (1) by an excluded person or (2) at the medical direction or on the prescription of an excluded person. The Special Advisory Bulletin clarifies that the prohibition extends to services beyond direct patient care such as administrative and management functions under certain circumstances. Liability extends to laboratories, imaging centers, durable medical equipment suppliers and pharmacies if they fill an order or prescription written by an excluded physician, the report notes. It also emphasizes that liability extends to all types of provider arrangements and that the test for determining liability is whether federal health care programs pay, directly or indirectly, for the services or items rendered by the excluded provider. To avoid liability, the OIG recommends that providers check the exclusion database on a monthly basis.

DOL's Office of Disability Employment Policy Partners with Higher Education Recruitment Consortium
An alliance agreement designed to improve the employment of people with disabilities through increased engagement with the higher education community was signed on April 29 by Kathy Martinez, Assistant Secretary of the U.S. Department of Labor's Office of Disability Employment Policy and Paula Alfone, Mid-Atlantic Director of the Higher Education Recruitment Consortium. This alliance is a result of the Higher Education Sector Summit organized by ODEP and the College and University Professional Association last year where panelists and participants discussed and debated the reasons why people with disabilities are consistently underrepresented in staff and faculty positions of higher learning institutions. These two groups are now coordinating efforts and sharing knowledge in order to increase recruitment, hiring, retention and advancement at colleges, universities, hospitals, research labs, government agencies and related organizations.

SAMHSA Releases Recovery Support Definitions
The Substance Abuse and Mental Health Service Administration (SAMHSA) released Recovery Support Definitions aimed at furthering the roles of Peer Specialists with regard to integration of behavioral health and primary healthcare. The definition of Relapse Prevention/Wellness Recovery Support builds upon the foundation of a professional peer workforce with experience and furthers their scope to create new opportunities for Peer Support in healthcare. Peer Support Whole Health and Resiliency promotes developing whole health and wellness behaviors through the development of whole health and resiliency goals.

State Activity

Senator Nelson to Governor Scott: Call Special Session on Medicaid Expansion
Sen. Bill Nelson (D-FL) and democratic members of the Florida Senate are calling on Gov. Rick Scott (R-FL) to bring the Florida legislature back into session after it adjourned without expanding Medicaid in Florida. Scott announced last month that he would support Medicaid expansion for Florida. However, the Florida legislature passed a budget without the Medicaid expansion and adjourned on May 3. In his letter to Scott, Senator Nelson called on the governor to call the legislature back for a special session to take up the Medicaid expansion.

Colorado Signs Medicaid Expansion into Law; Kentucky Governor Backs Medicaid Expansion
On Monday, the Colorado legislature passed a law expanding Medicaid eligibility in that state. The expansion is authorized under the Affordable Care Act and is scheduled to go into effect at the start of 2014. Last week, Democratic Kentucky Governor Steve Beshear announced his administration would expand Medicaid in Kentucky.

Court Rulings

EEOC: $240 Million in Damages against Company for Abuse of Workers with Intellectual Disabilities
On May 1, a jury awarded the U.S. Equal Employment Opportunity Commission (EEOC) damages totaling $240 million for disability discrimination and severe abuse. The Davenport, Iowa jury agreed with the EEOC that Hill County Farms (operating under the name: Henry's Turkey Service) subjected 32 workers with intellectual disabilities to abuse and discrimination between 2007 and 2009. The Goldthwaite, Texas based company was found responsible for the abuse which occurred at its West Liberty and Atalissa, Iowa facilities. The jury awarded each of the claimants $2 million in punitive damages and $5.5 million in compensatory damages. The verdict follows a September 2012 order that Henry's Turkey pay the same 32 workers $1.3 million for unlawful disability-based wage discrimination.

Federal Court Permanently Enjoins CA's Mandatory 340B Medicaid Billing and Reduced Reimbursement Statute
The District Court for the Central District of California ruled that California violated the federal Medicaid statute when it enacted reimbursement cuts specific to entities enrolled in the "340B program," the drug discount program established under section 340B of the Public Health Service Act (PHSA). California law required all entities participating in the 340B program to dispense drugs purchased through the 340B program to Medi-Cal recipients. The law also set reimbursement for those drugs at their actual acquisition cost, typically the 340B price, plus a dispensing fee established by statute. AIDS Healthcare Foundation challenged the statute on the grounds that it violated the equal protection clause of the Constitution and the federal Medicaid statute. By order dated May 3, 2013, Judge Manuel Real enjoined enforcement of the statute, finding that California violated the Medicaid statute because it failed to receive federal approval of a state plan amendment before reducing provider reimbursement. Medi-Cal has not yet issued a public statement or indicated whether it plans to appeal.

Tuomey Healthcare Found Guilty of Violating Stark Law
After a four week retrial, a jury found South Carolina based Tuomey Healthcare System, Inc. guilty of violating the Stark Physician's Self-Referral Law and False Claims Act by submitting $39 million in improper Medicare claims. The case stemmed from part-time employment agreements that were entered into for long terms, requiring physicians to perform all services at Tuomey facilities, while offering them incentive bonuses based on productivity. In 2010, a jury found the contracts to be in violation of the Stark Law and the False Claims Act. A federal judge entered a $45 million judgment against the hospital for the improper referrals. On appeal, the Fourth Circuit Court of Appeals vacated the decision and ordered a retrial, holding that the judgment violated Tuomey's constitutional rights to a jury trial. Tuomey may appeal or enter into a settlement agreement with the federal government to reduce the amount of the potential judgment. The False Claims Act would allow the federal government to recoup an $11,000 fine per false claim plus treble damages.

Other Health Care News

Dementia Among Costliest Diseases in America
According to a RAND study published in The New England Journal of Medicine (NEJM) the direct health care and long-term care costs of dementia are similar to heart disease and cancer. When including the value of unpaid care, the estimate of total dementia care costs were as much as $215 billion in 2010. Researchers note that disaggregating data in this research area is complicated by the high degree of co-morbid conditions among people with dementia and the cognitive impairment tends to complicate the management and treatment of other conditions. As a result, the researchers said that the estimates may be conservative and the costs of dementia are likely to more than double in the next 30 years.

Proposed 'Medicare Essential' Plan Estimated To Save $180 Billion Over 10 Years
According to a new study by researchers at The Johns Hopkins Bloomberg School of Public Health and The Commonwealth Fund, combining Medicare's hospital, physician, and prescription drug coverage with commonly purchased private supplemental coverage into one health plan could produce national savings of $180 billion over a decade. The report was published in the May edition of Health Affairs. Under the proposed plan entitled, "Medicare Essential," Medicare beneficiaries could save a total of $63 billion between 2014 and 2023, with total premium and out-of-pocket costs for beneficiaries estimated to be 17 percent to 40 percent lower than current costs.

Report Outlines Impact of ACA on State Mental Health Systems
The National Association of State Mental Health Program Directors (NASMHPD) released a report stating that safety net hospitals could see reductions close to $22 billion from 2014 to 2021 due to ACA provisions on disproportionate share hospital (DSH) payments. According to the report, NASMHPD informed policymakers that a number of state mental health agencies depend on DHS payments as a significant source of Medicaid funding for state psychiatric hospitals, outlining the impact of the Affordable Care Act on state mental health system.

HHS: National Women's Health Week
May 12 - 18 is National Women's Health Week, an annual event when the Department of Health and Human Services' Office of Women's Health encourages women to get active, eat healthy, and have regular checkups. HHS also suggests that women make health a priority, find an event in your community, or view the interactive screening chart for women online to learn about available screenings.

UCP Releases Report on Disability Services State Rankings
United Cerebral Palsy (UCP) released their report, entitled The Case for Inclusion, which ranks all 50 states and the District of Columbia on outcomes for people with intellectual and developmental disabilities. UCP weighed each state's track record in ensuring quality and safety, promoting independence and productivity, keeping families together, and reaching people in need. Top performing states were largely clustered in the Northeast and on the West Coast. As in past years, the standouts represented both big and small states as well as those with high and low tax burdens. The report, produced annually, is based on data from 2011, the most recent available.

Powers in the News

Speaking Engagements and Publications
POWERS Attorneys released a memo on the IPPS Proposed Rule recently issued by CMS, the proposed annual update to the inpatient prospective payment system (IPPS) and long-term acute care prospective payment system (LTCH-PPS) for federal fiscal year 2014. POWERS Principals Susan Philp, Ron Connelly and Barbara Straub Williams, with Associate Christina Hughes analyzed the proposed rule and prepared a memo summarizing key provisions. Comments on the proposed rule are due June 25.

POWERS Principal William von Oehsen is slated to participate in several upcoming SNHPA 340B Regional Roundtables, dates will be announced shortly for TN, LA, IA, and WI. SNHPA is hosting a series of complimentary, three-hour regional roundtables throughout the country. These events, facilitated by SNHPA 340B experts, are a great way to keep updated on current developments within the 340B program and learn how to utilize and ensure compliance with this complex federal program. Roundtables are open to both current and prospective hospital members and SNHPA Corporate Partners. Due to their smaller size, they also offer a valuable opportunity for networking and dialogue.

POWERS Principal Robert M. Portman will lead a live, 90-minute CLE - Strafford Legal Webinar with interactive Q&A on Wednesday, May 22, 2013 at 1PM EST, entitled: Concierge Medicine Legal Considerations - Complying With Medicare Regulations, Insurance Laws and the Anti-Kickback Statute.

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.

Powers Pyles Sutter & Verville (POWERS) P.C. is a full service law firm specializing in health care and education law and located at 1501 M St., NW 7^th Floor, Washington DC 20005