Bill Finerfrock, Pam Jackson, Zhaneta Mansaku, Danny Randell

Washington Report – April, 2013

Bill Finerfrock, Pam Jackson, Zhaneta Mansaku, Danny Randell

ACA Train Wreck?

Baucus Announces he will Not Seek Re-election in 2014

Congress, President Meet Budget Deadlines but no Agreement in Sight

Sequester and Medicare – Will it last?

What Does Medicare Have That Christopher Columbus Did Not?

URAC Seeks Public Comment on Accountable Care Accreditation Standards

Legislator Proposes Bill To StopMove To ICD-10

HHS Announces Proposal to Increase Rewards For Reporting Fraud

Long-term Reformsof Medicare

HHS issues EFT andRemittance Advice Transactions Interim Final Rule

CMS Transmittals

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ACA Train Wreck?

As a young boy, there was a cartoon that my siblings and I watched regularly on Saturday mornings entitled, “George of the Jungle”. George was a hapless Tarzan-like character who would be called upon each week to save jungle dwellers from one disaster after another. At various times throughout each episode, George would invariably be swinging through the jungle on vines when suddenly he would slam face-first into a tree – and all the while the show’s theme song could be heard in the background – and just before disaster would befall George, the words, “watch out for that tree…” would blare out over the TV.

I was reminded of the “George of the Jungle” cartoon recently as I listened to Senate Finance Committee Chairman Max Baucus (D-MT) discussing with HHS Secretary Kathleen Sebelius the quickly approaching deadline for the start-up of the Health Insurance Marketplaces (nee Exchanges). Baucus expressed the fear that this was going to be a “train wreck.” Put another way, Senator Baucus was warning Secretary Sebelius to “watch out for that tree…”

In addition to the technical challenges the Department has faced in trying to set up federally operated Health Insurance Marketplaces in the 25 states that have declined to run these entities themselves, the Department has, according to Baucus, failed to provide adequate information to the American public to demonstrate why these are a good idea.

Baucus said, “The administration’s public information campaign on the benefits of the Affordable Care Act, I think, deserves a failing grade.”

Baucus expressed concern that unless the Administration provided consumers with more (and better) information, small businesses and individuals won’t be able to access insurance through the Marketplaces.

Not surprisingly, Secretary Sebelius defended her Department’s work, and tried to shift blame from her agency to the Congress (both Democrats and Republicans) for failing to provide her with the budgetary resources she believes are necessary to adequately carry the requirements of the Affordable Care Act. Just days before the public exchange between Baucus and Sebelius, the House and Senate both rejected an HHS request for nearly $1 Billion in additional funding to carry out ACA implementation related activities.

The federal government will, either totally or in partnership with certain states, operate 33 Health Insurance Marketplaces beginning October 1, 2013. It is expected that the vast majority of people in the individual or small group market will use the Marketplaces as the place they will “shop” for health insurance.

Sebelius was unfazed by Baucus’ criticism and maintained both during the hearing and afterwards when talking with reporters, that the Department would meet it’s obligation to have the Marketplaces up and running on October 1, 2013. At that time, individuals will be able to sign-up for health insurance that will commence on January 1, 2014.

It is not clear from the Secretary’s remarks whether these marketplaces will be physical locations throughout a state where individuals will have a face-to-face experience with a “navigator”; or whether these will be “virtual” locations where individuals will shop on-line for the best health insurance products and the relationship between the consumer and the navigator will be on-line.

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Baucus Announces he will Not Seek Re-election in 2014

Shortly after the above exchange between Senator Max Baucus and HHS Secretary Kathleen Sebelius occurred, Senator Baucus announced to friends, family and staff that when his current term ends in 2014, it will be his last. He will not seek re-election to a new 6-year term in November, 2014.

It is not clear whether there was any correlation between Baucus’ decision to retire and his unusually frank (at least by Washington standards) assessment of the ACA implementation efforts at HHS. Most observers think Baucus’ decision to retire at the end of his current term was driven more by his low “re-elect’ polling numbers after nearly 40 years in Congress, than anything to do with ACA implementation concerns.

Regardless, Baucus’ announcement resulted in tremendous speculation on who would succeed Baucus as Chair of the powerful Senate Finance Committee. Traditionally the Senate has followed a strict seniority process when selecting Committee Chairs. Using this approach, the next Democrat in line would be Senator Jay Rockefeller (D-WV); however, earlier this year, Senator Rockefeller announced that he was not seeking re-election. Rockefeller has been a state-wide elected official in West Virginia for nearly 4 decades having served two terms as Governor of the state prior to being elected to the United States Senate in 1984.

Again, using a strict seniority based process, the next in line after Rockefeller would be Senator Ron Wyden (D-Oregon). Wyden, too, is a long-time Washington insider having served for many years in the House of Representatives prior to being elected to the Senate in 1996.

Of course, who ascends to the Chairmanship of the Finance Committee in 2015 will also depend on who has the majority in the Senate in 2015. Currently, the Democrats enjoy a 55 – 45 seat majority. Should the Republicans take control of the Senate in 2015, the Finance Committee would likely be headed by Senator Orin Hatch (R-UT). Senator Hatch is not the most senior GOP member of the Finance Committee, however, the Republican Conference adopted strict term limits on Committee Chairs several years ago. Due to the GOP’s self-imposed term limits, the most senior Republican on the Finance Committee, Chuck Grassley (R-IA) is ineligible to serve as Chair of the Committee should the Republicans retake the majority in 2015.

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Congress, President Meet Budget Deadlines but No Agreement in Sight

In April, the House, Senate and President each fulfilled their statutory obligation to submit (in the case of the President) and adopt (in the case of the House and Senate) budget plans for Fiscal Year 2014. Unfortunately, the law does not require that the House, Senate and President actually agree on a budget.

So at the time the Washington Report is being written, the House had considered and passed a budget prior to April 15th as required by law. The Senate also considered and passed a budget prior to April 15th as required by law. And, the President, albeit two months late, submitted his budget proposal, as required by law.

Each of these documents is vastly different in terms of overall spending, spending priorities, level of taxation and spending reforms.

These differences are particularly acute when it comes to Medicare spending.

Below is a side-by-side chart that compares some of the specific Medicare recommendations put forward by the President, the House and the Senate. It is important to note that at this point, all of these are simply options for the Congress to consider and none of these proposals has been enacted or under active consideration for adoption.

Medicare Assumptions

According to the Congressional Budget Office (CBO), Medicare spending in 2013 will accountfor16 percent of total federal spending. Looking down the road, CBO estimates that Medicare spending as a percentage of our nation’s Gross Domestic Product (GDP), will grow from an estimated 4.1 percent of GDP in 2013 to 7.1 percent of GDPby 2040.

CBO estimates that 60 percent of the growth in total federal health spending over the next 25 years will be attributable to the aging of the U.S.population. The remaining 40 percent is projected to come from “excess cost growth.”

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Sequester and Medicare – Will it last?

The automatic spending cuts that went into effect in March and April (aka sequester) were an attempt to “bend the federal cost curve” in order to reduce long-term spending. For Medicare, sequester means a reduction of more than $11 Billion in Medicare spending. All-in-all, the $11.3 Billion sequester related cuts from Medicare provider payments represented more than 25% of the total domestic non-defense spending cuts ($42 Billion) mandated under sequestration. This despite the fact that the Medicare cuts were capped at 2% of program spending whereas most other federal agencies saw sequester related cuts of approximately 4%.

Some people have asked whether the Sequester related cuts will be on-going or temporary. The sequester related cuts are one-time cuts in spending; however, the effects of those cuts will be permanently reflected in future Medicare spending unless rescinded or repealed by a future Congress.

This chart seeks to illustrate that point. Under sequester, total Medicare spending for FY 2013 will be lower than it would have been absent sequester. The 2% reduction is a one-time adjustment that is not scheduled to be repeated next year. However, because the Medicare baseline spending level for 2013 has been adjusted downward, any future growth in Medicare spending will be based upon the sequester-adjusted baseline rather than the pre-sequester baseline.

Although providers should not anticipate a second round of sequester related cuts to provider payments in 2014, this does not mean that payment cuts are not possible.

Congress has yet to come up with a permanent fix to the Sustainable Growth Rate (SGR) problem that has plagued Medicare provider payments since 2000. Current estimates are that a cut of approximately 24% in provider payments will be necessary to comply with the SGR law. Historically Congress has intervened to prevent these SGR related cuts from occurring but past action is no guarantee of future action.

HBMA continues to encourage Congress and the President to work together to come up with a permanent SGR fix prior to next January.

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What Does Medicare Have That Christopher Columbus Did Not?

When Christopher Columbus set out from Spain to discover a “new world” he didn’t really know where he was going. Indeed, when he got there, he didn’t really know where he was. One of the reasons Columbus got “lost” was that he did not have a skilled navigator to guide his journey across the Atlantic Ocean.

Due to the generosity of the United States Congress, millions of individuals who will, for the first time, be purchasing health insurance, have something Columbus did not – Navigators.

Under the Affordable Care Act, Health Insurance Marketplaces will be established by either the states or, if a state declines, the federal government. Millions of individuals will go to these government operated Marketplaces to purchase health insurance. Congress, anticipating that many of the people who will be purchasing health insurance in the Marketplace will have questions about the different plans, definitions, coverage available, etc. authorized millions of dollars for the hiring of Navigators.

Navigators will provide either in-person or on-line assistance to consumers who have questions about health insurance. It is estimated that several thousand Navigators will be hired by the federal government over the next few months.

Initially the cost of the Navigators is being born by the taxpayers. Eventually, the cost of the Navigators will be borne by health insurance purchasers as the ACA authorizes the Marketplaces to impose a fee on Marketplace approved Health Plans (known as Qualified Health Plans) to help cover the administrative costs of operating the Marketplace. Health plans are specifically prohibited from providing any type of incentive, bonus or gifts to Navigators in order to ensure that the recommendations of the Navigators are not influenced by any outside considerations.

According to CMS, Navigators: will be individuals familiar with each of the plans available in the marketplace; will be familiar with the cultural and social needs of the populations with whom they deal; and, be able to offer neutral, unbiased information that consumers can use to help make an informed decision on what health plan is right for them or their family.

CMS is currently accepting applications from companies (for-profit and non-profit) who would like to serve as the Marketplace Navigator for different markets. The deadline for submitting an application is June 7th. CMS will enter into a “cooperative agreement” with the successful applicant(s).

Insurance companies or their subsidiaries are prohibited from receiving a Navigator contract. Successful candidates should be organizations or companies that are familiar with insurance products, and can attract and retain employees who fit the criteria mentioned above.

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URAC Seeks Public Comment on Accountable Care Accreditation Standards

It seems as though no matter what it is in healthcare, there’s an organization that will certify or accredit that entity. We accredit hospitals, health professions education programs, health plans and managed care organizations. We certify clinics, health professionals and even billing company executives. So it was only a matter of time before someone stepped up and announced plans to accredit Accountable Care Organizations.

URAC, an independent accreditation organization “advancing quality and value throughout health care,” has announced a call for public comments on its new Accountable Care Accreditation Standards and Measures. URAC’s new program is described as a “roadmap for health providers to achieve clinical integration and accountable care.”

Public comments are due no later than May 17, 2013.

Increasingly, payers, employers, and consumers are seeking greater quality and value for every health care dollar spent. This, along with the rising cost of healthcare, appears to be driving sweeping changes in how health care is organized, integrated, coordinated and reimbursed. If any of this sounds familiar, it is.

One of the most recent entrants into this changing world of healthcare delivery is what is referred to as an Accountable Care Organization. Generically, the payment model behind the ACO is called value-based purchasing.

To its supporters, ACOs are organized delivery systems that seek to balance the cost of healthcare, with the quality of healthcare to create a value proposition that is good for the producers of healthcare, the consumers of healthcare and the payers for healthcare.

To its detractors, ACOs are just HMOs with lipstick that are just the latest attempt to shift financial risk for clinical decision making from the payer to the provider. ACO critics, will, no doubt, point out that URAC was originally established as a managed care accreditation organization so an announcement that they are now in the ACO accreditation business does not come as a surprise.

In theory, ACO participants will be rewarded for a commitment to care excellence by making these providers eligible for financial incentives.

In a statement announcing the new accreditation program, URAC officials said,