Sen. Charles Grassley (R-IA) opted against joining a majority of his GOP Senate Finance Committee colleagues in asking CMS to withdraw its proposed rule on accountable care organizations because an Iowa health care system is interested in the Pioneer ACO model that CMS announced last week and the senator did not want to complicate the situation, a source close to Grassley says.

State Medicaid sources say new regulations meant to ensure Medicaid beneficiary access have not given states the relief they were hoping for, with one source saying the regulations could pose "unlimited legal liability" if beneficiaries perceive access problems, regardless of what provider payment rates may be. The proposed rule, which includes requirements for states to ensure sufficient access if provider payments are cut but also calls for ongoing access reviews, could have "very serious consequences," especially at a time when states are gearing up for the health reform law's Medicaid expansion, a Medicaid source said.

The Congressional Budget Office complicated efforts to repeal health reform's Independent Payment Advisory Board on Friday (May 13) when it put the cost of doing so at $2.4 billion. House Republicans and some Washington lobbyists have been discussing the potential of repealing IPAB as part of the debt ceiling negotiations in an effort to pit Senate Democrats against the administration, which has proposed a beefed-up IPAB, health care lobbyists said, but that idea is in the nascent stages.

Physician group practice demonstration participants may have little incentive to join CMS' newly unveiled Pioneer accountable care organization initiative due to more favorable terms they have negotiated for round two of the PGP demo, a source familiar with the terms says, but an internal insurance industry analysis shows there are many other clinically integrated entities across the country that include private payers, signaling these entities may be well situated for the agency's new bid to combine public and private payers in its Pioneer demo.

CMS Medicare chief Jonathan Blum indicated that the agency would give accountable care organizations more time to phase in the two-sided risk model and potentially other requirements in the proposed rule on the Medicare Shared Savings Program. Provider groups and GOP lawmakers have blasted key elements of the proposed rule, and CMS is trying to figure out whether the proposal's requirements are right and providers merely need more time to attain them or are too strict for now and in the future, Blum said at a webinar sponsored by VHA Inc.

The insurance industry plans to urge CMS to lower the market share threshold for mandatory review of accountable care organizations (ACOs) in health reform's Medicare Shared Savings Program from 50 percent to 40 percent, and to set the safe harbor threshold at 20 percent instead of the 30 percent threshold called for in the ACO program proposed rule, an official with America's Health Insurance Plans told Inside Health Policy. AHIP also wants ACOs to submit data that would indicate whether they are shifting costs from Medicare to private health insurers, and wants all entities that are the result of joint ventures or mergers that decide to participate in the ACO program to be subject to the antitrust scrutiny outlined in the health reform law.

Allowing beneficiaries to opt out of data sharing in accountable care organizations (ACOs) will hinder care coordination efforts under CMS' shared savings program, according to stakeholders drafting comments on the agency's proposed rule, with multiple groups saying major goals of the ACO concept could be impossible to meet if data is withheld. Under the Medicare Shared Savings Program proposed rule, ACOs can only request certain claims data if the beneficiary does not opt out of data sharing and certain notification requirements are met.

CMS will let existing clinically integrated provider groups, which already operate under shared-savings contracts with commercial payers, also contract with Medicare, and eventually Medicaid -- an idea that many health care policy experts have been pushing for a long time to ensure that accountable care organizations succeed. CMS Administrator Donald Berwick said Tuesday (May 17) he hopes that up to 30 such public-private payer accountable care organizations will be up and running under the Center for Medicare and Medicaid Inoovation's (CMMI) demonstration by fall, and the payment arrangements and beneficiary assignment in the ACO demo will be more flexible than in the separate, Medicare-only ACO program.

All 10 participants of CMS' Physician Group Practice (PGP) Demonstration program, which includes some of the most well-known integrated systems in the country, jointly sent a letter to CMS saying that while they support the goals of accountable care organizations, they have "serious reservations" about the economics and complexity of the agency's proposed rule on the key health reform delivery reform. Each hospital plans to respond separately to the rule, but as a group they expressed broad agreement that several aspects of the rule are problematic, including the downside risk model, large number of quality metrics, and retrospective beneficiary assignment, among others.

The Health Resources and Services Administration has proposed loosening the interpretation of the health reform law's 340B orphan drug exclusion, letting certain rural hospitals purchase orphan drugs at a discounted price to treat non-rare conditions. Rural hospital advocates call the proposal "consistent with common sense," though they say they are working with Congress to do away with the orphan drug discount ban altogether.

Several Senate Finance Committee Republicans asked the Obama administration to withdraw its proposed rule on accountable care organizations and craft a new rule that "fulfills the promise of ACOs," with the request coming as several major health care providers are also raising strong concerns with the rule and prepare to submit formal comments to HHS over the next few days. The GOP lawmakers made the request in a May 24 letter to CMS Administrator Don Berwick and HHS Secretary Kathleen Sebelius.

Sen. Jon Kyl (R-AZ) on Monday (May 23) introduced legislation that includes repealing a health reform-mandated annual fee on health insurance plans that opponents say is a tax that unfairly targets small businesses, as a new business coalition gears up to likewise oppose the fee. Kyl's bill, the Small Business Health Relief Act, comes as groups such as the National Federation of Independent Business and the U.S. Chamber of Commerce launch a new advocacy group called "Stop the HIT" Coalition that aims to repeal the same "health insurance tax."

The Hawaii Medical Service Association, a non-profit health plan that provides coverage to 700,000 of the state's 1.3 million residents and a network of state hospitals, recently announced a new value-based purchasing initiative that aims to improve care and reduce costs by linking 15 percent of hospital payments to quality outcomes by 2015. The new Advanced Hospital Care program will use methodologies and metrics designed by the Premier hospital alliance, which have already led to a reduction in costs and saved lives via Premier's value-based purchasing collaborative, and are also aligned with goals of the health reform law, say officials involved with the project.

The Center for Consumer Information and Insurance Oversight (CCIIO) granted both Nevada and New Hampshire waivers from the health reform law's requirement that insurance spend at least 80 percent of premiums received on medical and quality services, but applied larger percentages to both states than requested by the insurance department. The health reform law allowed the HHS secretary to offer waivers to states if implementing the MLR would cause market disruption.

The House Energy and Commerce health subcommittee recently approved on party lines a Republican bill to repeal the health reform law's Medicaid maintenance of effort requirements while rejecting Democratic efforts to exempt at-risk populations from the repeal. The bill responds to governors' complaints about the requirements, which prohibit states from reducing Medicaid and CHIP eligibility before the programs' 2014 expansion.

The HHS Office of Inspector General is raising concern about the lack of information technology security in health IT standards for Medicare contractors, state Medicaid agencies and hospitals, but HHS' health IT office and an information privacy lawyer say the report doesn't address security standards mandated by the Health Insurance Portability and Accountability Act, so additional standards would be duplicative.

Seventeen CEOs of health systems across the country wrote to CMS Administrator Don Berwick saying that their organizations would be more likely to participate in the ACO program if the final rule allows for prospective attribution, narrows the initial quality measures, makes the shared savings percentages more favorable to providers, and further eases antitrust limits.

CMS recently clarified how states will get a 90 percent federal match in funding for creating state health information exchanges as part of electronic health records incentives. States must divide costs equitably across payers based on the fair share principle, leverage efficiencies and set deadlines, the agency wrote in a May 18 letter to state Medicaid directors.

CMS issued May 16 an analysis of inconsistencies between Medicare and Medicaid as part of efforts to improve care for beneficiaries who are dually eligible for the two programs. Aligning Medicare and Medicaid is a major goal of the Medicare-Medicaid Coordination Office, formerly the Federal Coordinate Health Care Office, and that effort fits in with other duals initiatives, such as giving states Medicare prescription drug data and the duals demonstration for which CMS' innovation center recently handed out planning grants.

A group of 57 senators is urging CMS to reduce the paperwork involved in certifying face-to-face encounters for home health services, and a small bipartisan group of House lawmakers just started drumming up support for a similar dear-colleague letter to CMS.

States considering using the average acquisition cost (AAC) measurement to determine product costs for Medicaid reimbursement must include surveys of what it costs to fill prescriptions, according to Joseph Fine, technical director of CMS' Medicaid Pharmacy Division. Fine said CMS will not accept state plan amendments that do not include surveys of dispensing costs, but he stopped short of saying that states are required to use those surveys to set dispensing fees.

WellPoint's state-sponsored insurance division convened it's inaugural National Medicaid Advisory Panel earlier this month, which featured discussions on the impact of health reform as well as a discussion on recommendations the panel could give CMS on ways to modernize the program.

Indiana's insurance commissioner requested a permanent waiver from the reform law's 80 percent medical loss ratio for all consumer-driven health plans (CDHPs) in the state. The commissioner also asked HHS to grant a four-year waiver -- ending in 2015 -- for other plans, and an exemption for new market entrants until 2014, according to a May 13 letter from the state Insurance Department. With Indiana's request, a total of 11 states and one territory have now requested a waiver from the medical loss ratio, and HHS has approved three.

The National Conference of State Legislatures (NCSL) is urging federal lawmakers to either repeal the Medicaid maintenance of effort requirement or establish a permanent counter cyclical assistance program that automatically kicks in when states face increased enrollment due to recession or natural disaster. The state lawmakers outline their request in a May 19 letter thanking Sen. Orrin Hatch (R-UT) and Rep. Phil Gingrey (R-GA) for introducing the State Flexibility Act, which would repeal MOE requirement, as the enhanced Medicaid matching funds for states are set to expire on June 30.

CMS is seeking stakeholder input on whether to extend its rate review rule, issued Thursday (May 19), to individual and small group plans offered by associations. Steve Larsen, director of CMS' Center for Consumer Information and Insurance Oversight (CCIIO), says the agency is inclined to make the expansion, which wasn't discussed in the proposed version of the rule, but first wants to reach out to the public.

CMS on May 19 issued a finalized rate review regulation that replaces a proposed requirement that states look at risk-based capital (RBC) in order to be considered an effective reviewer, and adds a mandate that states have a mechanism for public input. The final rule retains the earlier proposal's 10-percent threshold after which proposed increases would be subject to review, and slightly delays the effective date from July 1 to Sept. 1, 2011, yet otherwise largely hews to the proposed regulation that asks states to take the lead on the rate review process, but sets up a process for HHS review and pubic disclosure.

NCPA Outlines Lobbying Agenda For Hill Visits

Many states that have successfully enacted legislation establishing the health reform law's insurance exchanges are looking at financing them through assessments on insurers or other parties rather than relying on state funding to help sustain the exchanges' operation in future years, sources familiar with the states' plans say. Many of the bills that establish state exchanges punt on deciding which financing approach will be taken, leaving it up to further study and future recommendations, but several sources have said their states do not intend to rely on state funding and expect the exchanges will be supported through assessments.

CMS is strongly encouraging state Medicaid agencies to contract with private clinical entities seeking to become "pioneer" accountable care organizations under a newly unveiled demonstration, and, according to materials released Tuesday (May 17), plans to work with states to see if they need technical assistance to help them pursue such arrangements.