HHS is proposing to expand the scope of the Health Insurance Portability and Accountability Act by requiring business associates and subcontractors that have in the past not been subject to the law to follow most of the rules that apply to covered entities, according to proposed rules unveiled last week. This conforms to provisions of the Health Information Technology for Economic and Clinical Health Act (HITECH), which was folded into last year's stimulus package.

More than half of the Senate agrees with the hospital lobby that CMS' decision to move forward with a $3.7 billion payment cut to the industry in 2011 to offset "coding creep" is premature, raising the specter that the higher coding might legitimately reflect a rise in serious patient illnesses, according to a letter sent to CMS Friday. This follows a lobby day by the industry and coincides with broadcast and cable network advertisements worth $2.5 million that criticized the cuts to hospitals, which come on top of a $155 billion payment cut the industry agreed to as part of health reform.

Hospitals are spending about $2.5 million on television ads to fight provisions in CMS' inpatient prospective payment system proposed rule that would impose a $3.7 billion cut in their payments in 2011, an offset CMS says is a result of "coding creep" related to the Medicare Severity Diagnosis Related Group policy. Hospitals already agreed to $155 billion in cuts over 10 years as part of the health reform legislation, and the coding creep offsets -- which the industry was aware of during the debate over health reform -- were not part of the deal.

A little-noticed grant awarded by the Obama administration will test a controversial tort reform idea that President Barack Obama briefly floated during the presidential campaign, then retracted, under which physicians who follow a set of clinical guidelines would be shielded from medical malpractice suits. Under the grant, one of 20 awarded in June by the Agency for Healthcare Research and Quality, Oregon's health policy office will craft a legislative proposal offering physicians who follow clinical guidelines "safe harbors," meaning the provider satisfied the legal standard of care.

The Obama administration launched the largest medical malpractice reform demonstration in decades in late June when it awarded $25 million for 20 projects that largely attempt to reduce physicians' exposure to medical malpractice suits by improving patient safety -- a precursor to future grants authorized by the health reform law. The grants' primary focus on reducing medical errors is applauded by trial lawyers who had urged the administration to refrain from funding projects that limit a patient's right to sue, but physician groups say the projects fall short of true medical malpractice reform.

Power wheelchair suppliers are lobbying Congress for a delay in the new reimbursement system that the health overhaul created so credit markets will have time to thaw, industry sources say, and they are willing to take a payment cut over the year to offset the savings that Medicare would have reaped under the new approach. Under the new reimbursement system, starting in January beneficiaries will pay in monthly installments instead of also having the option to buy a power wheelchair upfront, and as a result medical suppliers fear they will be unable to get loans needed to cover the up-front costs of the equipment in this tight credit market.

Health care stakeholders are seeking additional assurance from CMS that the agency will not attempt to recoup payments made for services and equipment that were referred by physicians who had failed to enroll in an identification program by July 6. CMS on June 30 announced that it would not immediately enforce part of a health reform regulation that required all referring physicians to be enrolled in the Provider, Enrollment, Chair and Ownership System (PECOS) -- a decision that pleased stakeholders but failed to assuage all of their concerns.

The White House hit the reset button on Donald Berwick, renominating him on July 19 for the post of CMS administrator after President Obama used a recess appointment to install the pediatrician as Medicare chief. Some observers are speculating the move might help the controversial new CMS chief build a rapport with moderate Republicans as he moves forward on health reform implementation during his 18-month recess appointment.

HHS made it easier for hospitals and doctors to receive incentive payments for using electronic health records by reducing the number of requirements they must meet to be considered "meaningful users" of EHR in a pair of rules released July 13. But hospital advocates are disappointed that CMS will give a single base payment to hospitals with multiple campuses if those campuses are registered under the same CMS certification number. Adoption of EHRs is a key goal of health reform.

Administration officials reasserted on July 20 that multicampus hospitals would not receive multiple payments as an incentive for adopting electronic health records, and tried to assuage lawmakers' concerns that CMS eased off on requirements for receiving EHR incentives by pledging to tighten the rules in future phases of the program. Stakeholders are closely watching how HHS officials move forward on EHRs, which they consider a foundation of health reform.

Home health agencies are in for significant payment cuts in 2011 as a result of provisions in the health reform law and other adjustments CMS announced as a result of case-mix growth, according to a proposed rule issued by CMS Friday July 16.

CMS on July 12 proposed a rule, mandated by health reform, that will govern civil money penalties (CMPs) imposed on nursing homes and includes provisions that would allow the agency to collect the penalties and place them in escrow accounts pending formal appeals, but also return the penalties with interest if the nursing home successfully appeals, the agency pointed out in an e-mail blast to lawmakers. The provisions stem from legislation sponsored by Senate Aging Committee Chair Herb Kohl (D-WI) that was folded into the health reform law.

CMS plans to collect $1.2 million in overpayments to inpatient rehabilitation facilities identified by the HHS Inspector General and will instruct Medicare Administrative Contractors to go back and review claims, which the IG estimates could lead to the recovery of $32.8 million in overpayments, according to CMS' response to an IG report. The overpayments were the result of IRFs coding for discharges instead of transfers, with the former receiving higher Medicare reimbursement rates.

The HHS Inspector General signaled July 8 it is continuing to target doctors who enter into illegal investment "opportunities" or other self-referral schemes by announcing a $7.3 million settlement under which three physician-owned urology, lithotripsy and laser surgery companies based in Chicago and "certain physician investors" in those companies will pay the government to settle claims that they entered into an illegal kickback scheme to refer patients to hospitals in exchange for contracts that favored their businesses over other competitors.

A federal appeals court struck one of two District of Columbia laws that make pharmacy benefit managers act as "fiduciaries" for their clients, a requirement that PBMs and the Federal Trade Commission say would result in higher drug prices. Supporters of the law, however, say the decision by the U.S. Court of Appeals for the District of Columbia undermines consumer protections, restricts transparency in prescription drug purchasing and should spur Congress to strengthen PBM controls beyond the limited transparency provisions included in health reform.

A House Appropriations subcommittee on July 15 voted to give HHS an 80 percent funding increase for its efforts to fight fraud and abuse in the Medicare and Medicaid programs. The panel's fiscal 2011 HHS spending bill also allocates $594 million of the health reform law's $750 million prevention and public trust fund to the Centers for Disease Control and Prevention.

Pharmacy groups are urging CMS to be flexible as it implements the health reform law's mandate for a shorter-cycle pharmaceutical dispensing technique aimed at alleviating waste, saying the new requirement will be costly for them to implement and dramatically change their business. Long-term care pharmacists say the requirement should only apply to expensive generic drugs, and community pharmacists are calling for a two-year transition period for the new requirement, which one pharmacist said was as big to pharmacists as the Part D program.

Advocates for Medicare beneficiaries are strongly backing a new bipartisan bill to further expand off-label Part D drug coverage by modifying the rules in the prescription drug program to mirror those used in Part B. The bill would modify the Part D rules to allow plan sponsors to pay for drugs used off label to treat diseases other than cancer -- such as Alzheimer's, multiple sclerosis (MS) and muscular dystrophy -- if they are not in Medicare-approved compendia, but are supported by peer-reviewed literature.

A story in the June 10 edition on physician-supervision of outpatient services incorrectly referred to a guidance that updates CMS manual as a proposed rule. CMS issued the final 2010 supervision policy last November. The document in the June 10 story is guidance on that 2010 policy. The guidance addresses lingering issues from the final policy that CMS issued in November. It is not a new policy document.

The House on July 14 passed a bare-bones tax extenders package that would speed up the health reform law's implementation of a new Medicare payment system for skilled nursing facilities (SNF), slightly modify the 340B drug discount program and extend the 508 hospital reclassification program, which is set to expire in September, among other revisions. The bill was supported by Republicans, with one GOP member saying he expects more health reform technical fixes to follow.

Doctors apparently have something to fear about the accuracy of claims-data based, insurer-prepared physician ratings after RAND recently published three studies in prominent journals questioning the accuracy of the numbers crunched by the commercial payers. The American Medical Association also cited three other studies it claims show that "profiling" physicians with the tools available to researchers result in flawed findings, according to a letter sent July 19 to 47 major insurers.

In the latest example of increased Part D oversight, Fox Insurance Company this month paid community pharmacies $13.6 million in overdue payments for Medicare Part D drug claims, according to the National Community Pharmacists Association. The company made the payments after CMS and Senate Finance Committee leaders leaned on the company.

The National Coverage Analysis that CMS opened for Provenge represents two firsts, analysts and consultants say. It's the first time CMS has opened an NCA so soon after an FDA drug approval, and it's the first time CMS has opened an NCA for a drug over questions of how well it works, as opposed to safety questions.

Clinical laboratories and advocates for diabetics are hopeful a health reform measure that lets the U.S. Preventive Services Task Force make Medicare payment recommendations based on lower standards will help get Medicare to pay for hemoglobin A1c tests that are used to screen for diabetes and prediabetes. Reimbursing for hemoglobin A1c screenings would save Medicare money in the long run by helping the estimated 57 million people on the brink of getting diabetes, which could delay or avoid the cost of treating the full-blown disease later on, according to industry-backed Results for Life.

Nursing homes will get a 1.7 percent increase in Medicare payments next fiscal year and inpatient rehabilitation facilities will see a 0.25 percentage point reduction, according to notices that CMS released shortly before the close of business July 16.

Hospice payments under Medicare will increase by 1.8 percent beginning Oct. 1, 2010, the beginning of the fiscal year, but would have been higher had it not been for a budget neutrality adjustment, CMS announced Friday.

Nearly 60 medical equipment suppliers and patient groups -- mostly equipment suppliers -- urged Congress to do away with the Medicare competitive bidding program that CMS says will save $17 billion over 10 years and lawmakers expanded as part of health reform legislation. The groups asked House leaders to support Florida Democrat Kendrick Meek's bill, (HR 3790), which they say would end the competitive bidding program for durable medical equipment in a budget-neutral manner. -- John Wilkerson

The Justice Department announced July 16 the biggest-yet snag by its Medicare fraud strike force: a five-state "health care fraud takedown" involving $251 million in false claims. The fraud schemes involve HIV infusion clinics, physical therapy/ occupational therapy, home health, pharmaceutical drug as well as further indictments for durable medical equipment, DOJ announced. The indictments come on the heels of House appropriators' decision July 15 to hike funding for the anti-fraud teams by 80 percent to $561 million and to expand the task force's scope from seven to 20 cities.

The National Alliance on Mental Illness (NAMI) on Thursday joined Louisiana health officials in calling for BP to pony up $10 million to help fund mental health treatment for those in communities affected by the oil spill. On July 9, the Louisiana Department of Health and Hospitals (LDHH) wrote to HHS Secretary Kathleen Sebelius explaining that the state has twice written to BP -- May 28 and June 28 -- asking for the funding but has received "not even a courtesy call" in reply.

Senate Finance Committee Chair Max Baucus (D-MT) "fully expects that CMS Administrator Berwick will testify before the Committee … in the near future," a Finance Committee aide said. Yesterday, House and Senate Republicans demanded that lawmakers be given an opportunity to question Berwick, who narrowly missed a Senate confirmation hearing after the White House decided on a recess appointment last week.

Senate health committee Chair Tom Harkin (D-IA) praised the creation of a 24-member committee that will review criteria used to define "medically underserved populations " and health professional shortage areas (HPSAs). The committee was called for by the health reform law.

The HHS secretary earlier this month told Republicans they are wrong to compare a government Medicare brochure from this past spring to a Medicare Advantage mailing critical of health reform that the government stopped private insurance companies from sending to their customers. The Medicare brochure is the second item that Republicans have pointed to as representative of a double standard, and Senate Minority Leader Mitch McConnell (R-KY) had planned to block the nomination of Donald Berwick to head CMS until its "gag order" on the insurers' MA mailers was lifted. The president sidestepped a Senate floor battle by announcing a recess appointment of Berwick.

CMS quietly announced that it has awarded a controversial $243 million, five-year contract to a subsidiary of CIGNA to act as a Medicare Administrative Contractor (MAC). In an e-mail to House and Senate health staffers sent early on Friday (July 9), CMS Office of Legislation officials wrote that this contract was the subject of some controversy because CMS had originally awarded the contract to another insurance company, but CIGNA had filed a protest, which was eventually upheld.

AHIP has elected Vicky Gregg, president and CEO of BlueCross BlueShield of Tennessee and an electronic health records expert, as chair of the insurance trade group's Board of Directors -- putting Gregg in a key position to help shape the insurance industry's implementation of health reform. Karen Ignagni, president and CEO of America's Health Insurance Plans (AHIP), points out that Gregg takes on the role as the industry works to implement the new law in a way that minimizes disruption for the 200 million beneficiaries already covered while also bringing new people into the system.

The final rule on electronic health records that HHS released last Tuesday (July 13) hampers efforts to make health information technology systems compatible by allowing multiple standards for key aspects of electronic medical record systems, an industry source said. "Interoperability" is an important aspect of the government's plan to spur health IT because doctors and hospitals will be less likely to pay for those systems if they are unable to replace those systems without significant cost and headaches.