Governors Convene For NGA Meeting As States' Exchange Plans Come Into Focus

Posted: February 19, 2013

The nation’s governors flock to Washington this week for the National Governors Association’s winter meeting as states chart their directions on the health reform law's insurance exchanges and continue to ponder Medicaid expansion decisions. The meeting comes on the heels of HHS' Friday (Feb. 15) deadline for states to submit applications if they plan to pursue a partnership exchange model in 2014 and after Senate Finance Committee Chair Max Baucus (D-MT) made clear that his committee would be keeping a very close eye on exchange implementation.

CMS’ insurance oversight office by Tuesday is supposed to provide the committee a detailed breakdown of benchmark goals and related dates on exchange implementation activity. As it stands, HHS is poised to be heavily involved in states' exchanges operations next year because only 17 states and DC have had full state-based exchanges conditionally approved.

New Jersey and Tennessee on Friday rejected the idea of running partnership exchanges with the federal government in 2014, according to letters each state sent HHS, and North Carolina has also rejected that model. But some questions remain on what type of exchanges Ohio and Virginia will have next year, with both states indicating that they want to run the plan management function of a partnership model.

States that have officially committed to a partnership exchange are Arkansas, Illinois, Iowa, Delaware, Michigan, New Hampshire and West Virginia, according to HHS.

In other ACA implementation, health care insiders are busy poring over two important regulatory documents that CMS released late Friday – a proposed rule on implementing medical loss ratio requirements for Medicare Advantage and Part D plans, and an advanced notice and draft call letter for MA and Part D that dipped rates and deductibles. And, a newly announced CMS demonstration focusing on kidney care is facing some uncertainty because a key dialysis center, DaVita, is signaling it may not participate unless the agency makes changes to the initiative, Inside Health Policy has learned.

Cohen In The Hot Seat Over ACA

CMS insurance chief Gary Cohen faced tough questions from Democratic Senate Finance Committee members during a lively hearing on exchange implementation Thursday (Feb. 14): Sen. Maria Cantwell (D-WA) interrogated Cohen on why HHS defied the statute and punted implementation of the law's Basic Health Plan until 2015, Sen. Bill Nelson (D-FL) grilled Cohen for information on what happened to the remaining CO-OP funding during the fiscal cliff negotiations, and Sen. Ron Wyden (D-OR) asked what the administration planned to do to help families ineligible for subsidies due to a recent IRS rule.

Republican members, as expected, expressed skepticism that HHS would be fully prepared to move forward on exchanges, despite Cohen's assertion that the exchanges would be ready to enroll people by Oct. 1. Republicans also complained about HHS' slow pace in answering states' questions about the federally facilitated exchanges as well as the short time frame stakeholders have been given to respond to complex regulations. Still, the deepest frustration about the health law's implementation so far appeared to come from the Democrats.

Baucus suggested the committee would be keeping a very close eye on exchange implementation activity, asking Cohen to provide the committee a detailed breakdown of benchmark goals and related dates by Tuesday (Feb. 19).

SGR

House Energy and Commerce Chairman Fred Upton (R-MI) told the American Medical Association last week that he hopes to have a “doc fix” bill on the floor by the end of July or the first week of August, as that committee and Ways and Means continue work on fleshing out their three-tiered SGR repeal and replace proposal.

Several House Energy and Commerce Republicans on Thursday (Feb. 14), during a health subcommittee SGR hearing, suggested that Medicare Advantage be looked at for insights on reforming the Medicare physician pay system. Rep. Bill Cassidy (R-LA) is working on a gain sharing proposal catered to smaller practices that uses MA physician contracts as a model, an aide tells IHP. Cassidy told lawmakers that his gain sharing proposal would allow independent physician practices to participate in new payment models without being part of a larger accountable care organization.

The congressman signaled during the hearing that he worries hospital-heavy ACOs would lead to independent physician practices being “absorbed” by bigger ACOs in order to pursue new payment models, or the only other choice they would have is to remain in fee-for-service. There has to be another delivery model for physicians to participate in apart from just fee-for-service or an ACO, the GOP aide says, pointing to gain sharing. The aide adds that the way Medicare Advantage works now, where physicians can contract with the plan, could be expanded so that physicians could plug into the ACO-type reforms without technically being a part of that organization.

ACOs were a large focus of the hearing because Medicare Payment Advisory Commission Chairman Glenn Hackbarth in his testimony urged Congress to repeal the SGR now and begin rewarding physicians as they shift their practices away from fee-for-service to ACOs.

During recent meetings on the committees' joint proposal, staff indicated they wanted advice from providers on how a new Medicare physician payment system that bases payment on quality performance would take into account differences among specialties and whether they think some form of risk and reward should be tied to performance on quality care measures.

House Republicans are open to replacing CMS' quality reporting programs, such as PQRS, with registries developed by physician societies, physician lobbyists say, and the administration already is seeking public input on ways to allow doctors to participate in registries developed by their own societies instead of reporting to the Physician Quality Reporting System. A registry provision in the fiscal cliff deal could lay the foundation for a system that lets CMS pay physicians based on their performance and which would be measured against quality-reporting systems that physician groups develop.

The committees are taking comments on their SGR proposal until Feb. 25. The SGR plan crafted by the two committees includes three phases -- the first would provide a period of stable payment rates, the second phase would reform the fee-for-service reimbursement system to reward doctors who provide better care by tying payment updates to performance on quality measures and participation in clinical improvement activities, and phase three would move into accounting for efficient care.

Rockefeller Plans Part D Rebates Bill

President Obama's indication during his State of the Union address that he will push to extend Medicaid drug rebates to Part D pleased supporters of the controversial deficit-cutting policy but sparked immediate strong protests from the pharmaceutical lobby, which criticized the proposal as “radical” price controls that would destroy Part D's success. In a move that would build on the president's call, sources say Sen. Jay Rockefeller (D-WV) plans to introduce a Part D rebates bill after lawmakers return from Presidents Day recess.

Rockefeller introduced a Part D rebates bill in 2011 that contained the approach the president has endorsed -- extending Medicaid rebates to Part D for the Medicare low-income subsidy population -- and the senator said at the time that the bill would help reduce the deficit “without resorting to Republican proposals to dramatically cut Medicare and Medicaid benefits.” Rockefeller's office confirmed Wednesday (Feb. 13) that he plans to reintroduce his bill “in the near future.”

A beneficiary advocate said they were happy the president mentioned Part D rebates yet was surprised that he got that specific on Medicare policies during the State of the Union. The advocate acknowledged that the politics of rebates are still very difficult and said there is a sense among many in Congress that there should not be an open push on Part D rebates because such a push would unleash the wrath of the pharmaceutical industry.

The Pharmaceutical Research and Manufacturers of America has called for policymakers to keep Part D intact, touting the market-based model as one that can provide insight into how the overall Medicare program can be made more efficient and affordable. Yet rebates have been looked to by several Democrats as a major budget saver for the federal government, with the president's proposal estimated to save $137 billion over 10 years.

HHS Says Delivery Reforms Leading To Lower Spending

HHS Secretary Kathleen Sebelius and CMS Medicare chief Jonathan Blum told stakeholders last week that the success of delivery system reforms are responsible for the recent slowdown in the growth of health care spending -- though the spending is often credited to the economy. Sebelius said more efforts to accelerate the transformation of care are needed to prevent blunt budget cuts in the future that could hit providers, beneficiaries or private payors.

“There's growing evidence that the slowdown isn't just the result of the ongoing economic recovery, but a reflection of a fundamental transformation in care delivery across the country,” Sebelius told attendees at the American Medical Association's advocacy conference.

Blum and Sebelius specifically pointed to larger-than-expected enrollment in the bundling and ACO demonstrations. Transformational care models including bundling and ACOs are no longer isolated pilots, but are becoming the face of medicine, Sebelius said, and she challenged physicians to do more than required to accelerate the transformation of care delivery.

Health spending was in the spotlight because of the president's remarks during the State of the Union, in which he expressed a desire to extend Medicaid rebates to Part D, increase means testing in Medicare and focus on delivery reforms in Medicare as ways to lower the federal government's financial burden on health programs.

Kidney Care ACO Faces Dissension

CMS' first attempt to set up a specialty-led ACO is facing some hurdles. Through CMS' innovation center, the agency is hoping to set up kidney care ACOs, but a major player, kidney care provider DaVita, told investors recently it may not participate in the demonstration announced earlier this month. DaVita raised concerns on a recent earnings call that CMS' plan penalizes large organizations and those that have achieved savings in the past. They said they remain hopeful CMS will agree to make adjustments to the program, but based on its current understanding of the terms the company would not participate.

“The proposal is incomplete, first of all. But second, some of the stuff that is there and is definitive is sufficiently negative to make the program unattractive, and we'll have to hope there are some changes,” Kent Thiry, the CEO of DaVita CEO, said, according to a transcript of the call provided by Seeking Alpha.

Bank of America Merrill Lynch Global Research, however, said in an investors note that it believes CMS and DaVita will reach common ground and that DaVita will end up participating in the kidney care ACOs.

Wellness Regs Generate Ire Of House Dems

Proposed regulations implementing new health reform provisions on employer wellness programs under which employees can receive rewards for achieving better health outcomes -- health-contingent wellness programs -- are taking heat from employers as well as from top Democrats on key congressional health committees, the latter pushing the administration to limit those wellness programs and related premium variations to ones aimed at reducing tobacco use.

Reps. Henry Waxman (CA), Sander Levin (MI), George Miller (CA), Frank Pallone (NJ), Jim McDermott (WA) and Robert Andrews (NJ) want the regulations laying out premium variation for health-contingent wellness programs to be revised to match the ACA insurance rules, which state that health status premium variation in the individual and small group markets is limited to tobacco use. The health law says that rates can vary 1.5:1 based on tobacco use starting next year.

In the health law, there is an exception for employer wellness programs from the rules that generally prohibit health status underwriting by insurers. But the Democrats say wellness programs need to be structured in a way that complements the new rules of the road in 2014, when insurers will no longer be able to discriminate against individuals with pre-existing conditions and will only be able to vary premiums in the individual and small group markets based on a small number of factors, with tobacco use being the only health status factor. They worry that health-contingent wellness programs, if not structured properly, could enable employers to avoid people who are costly and only cover people with very low BMIs, normal levels of cholesterol and other positive health status factors that would lead to lower premiums, a Democratic aide tells Inside Health Policy. Anyone who doesn't have those things could also be charged a lot more, resulting in discrimination against a wide array of people, the aide says.

340B Oversight

A group of key GOP lawmakers -- including Senate Finance ranking member Orrin Hatch (UT) and Finance members Charles Grassley (IA) and Mike Enzi (WY) -- has asked the Health Resources and Services Administration to detail its audits of hospitals covered by the 340B drug discount program as well as the 2012 certification process, including a description of any entities decertified by the agency. The group representing 340B hospitals applauds the congressional interest in HRSA's work, but adds that several other program integrity provisions supported by Congress -- including price transparency, establishment of a meaningful dispute resolution process and drug manufacturer audits -- have never been implemented.

Congress established the 340B program in 1992 to assist hospitals that serve a disproportionate number of low-income and uninsured or underinsured patients. The program allows certain federally qualified health centers and other entities to receive the same drug discounts mandated by the state Medicaid program. Since 1992, the program has grown: Most recently it was expanded into more outpatient clinics under the health reform law. The expansion has led to tougher congressional scrutiny of the program, including from Grassley, who has launched several investigations.

The program's “exploding growth” has raised questions about whether ineligible entities are taking part in the program and whether HRSA has does an adequate job of oversight, Grassley's office said Jan. 31. The Government Accountability Office recently revealed that, prior to 2012, HRSA had never audited the program and failed to engage in a recertification program, according to Grassley's office.

HHS: No More Comment Time On Regs

HHS Secretary Kathleen Sebelius brushed off GOP senators' call for the department to give stakeholders at least 60 days to comment on health care reform rules, writing to them Tuesday (Feb. 12) that a shorter comment period is sufficient given the more-than-a year of guidance, bulletins and other forms of stakeholder engagement and feedback on ACA-related issues.

A GOP aide noted that it took HHS 63 days to respond to the senators' request, longer than the 60-day comment period they sought for the rules. The senators made the request to HHS, Department of Labor and Treasury in December after the agencies issued two proposed rules (Essential Health Benefits and Health Insurance Market Reforms: Rate Review) and long-awaited notice of benefits and parameters but gave stakeholders only 30 days to provide comment. The senators also raised concerns about the regulatory impact analyses (RIAs) accompanying the rules.

Sebelius, in her Tuesday response, pointed out that HHS issued two bulletins – one on Essential Health Benefits and another on Actuarial Value and Cost Sharing – which showed an intent to propose many of the policies in formal rules.

Other Headlines

Personnel

Dan Elling, the majority staff director of the House Ways and Means health subcommittee, has been hired by law firm Alston & Bird and will start on March 13.

The Campaign to Fix the Debt has created a Congressional Fiscal Leadership Council that includes more than 85 former lawmakers, including former Sens. Olympia Snowe (R-ME), Kay Bailey Hutchison (R-TX), Kent Conrad (D-ND) and John Sununu (R-NH).

Joseph Swedish has been named the new CEO of WellPoint.

Gary Moss has joined Baker Tilly as a director in the Risk Advisory and Internal Audit Services practice.

Calendar

Lawmakers are on their Presidents Day recess and will return Feb. 25.

Wednesday

The American College of Physicians releases a report on the state of the U.S. health care system.

Friday

Start of the National Governors Association winter meeting.

10 a.m. Center for American Progress holds an event called, “The Real-World Effect of the 'Sequester.'”

12 p.m. The Children's Hospital Association and other groups hold the first panel in a series of briefings titled, “Medicaid Matters for Kids.”

-– Rachana Dixit

Health Insider -- February 19, 2013