HHS Secretary Kathleen Sebelius Resigns, OMB Director Sylvia Mathews Burwell to Step In

Health and Human Services Secretary Kathleen Sebelius announced her resignation Friday, ending a tumultuous tenure as the public face of the Affordable Care Act. In a Rose Garden ceremony, President Obama nominated his budget director as her successor.

According to federal health officials, Sebelius approached Obama in early March and told him that, with the insurance enrollment period ending that month, the time had come for new leadership at HHS. A White House official, who spoke on the condition of anonymity to discuss internal deliberations, said Sebelius told the president that “she felt confident in the trajectory for enrollment and implementation of the Affordable Care Act.”

Obama on Friday nominated Office of Management and Budget Director Sylvia Mathews Burwell to take Sebelius’s place. Although Burwell does not have an extensive background in healthcare policy, she is known for her strong management skills and has experience in issues of poverty and global health issues from her time at the Bill and Melinda Gates Foundation. Moreover, she is popular on Capitol Hill. The Senate confirmed her as OMB director 96 to 0 almost exactly a year ago. Her nomination to lead HHS will require Senate confirmation as well. Read the full article in The Washington Post.

With ICD-10 Delayed, Answers Needed from CMS

As part of the House's Protecting Access to Medicare Act of 2014, which delays cuts in physician's Medicare rates (SGR) by another year, the national implementation of the next-generation medical coding system known as ICD-10 has also been pushed out. This delay has focused intense attention on the Centers for Medicare and Medicaid Services (CMS) to provide clarity for how hospitals, doctors, insurance companies should move forward.

The bill signed by President Obama on Tuesday prohibits CMS from enforcing any mandate to switch to the newer system until at least Oct. 1, 2015, but the act leaves CMS with many questions to answer. Among them:

• Will Oct. 1, 2015, become the new deadline?
• Will the agency allow organizations that are ready to implement ICD-10 to do so voluntarily?
• Would the agency scrap ICD-10 altogether and instead wait for ICD-11, which is due to be released in 2017?

Read the article in Modern Healthcare here.

Update from the National Rural Health Association on HR 3402

On Monday the Senate passed a 12-month delay of cuts scheduled to take affect under the Medicare Sustainable Growth Rate (SGR). In addition to the delay of these cuts, the bill (H.R. 3402) would extend the Medicare Dependent Hospital Program, Low-Volume Hospital adjustment, current rural and “super-rural” ambulance payment rates, and the rural “work floor” in the geographic practice cost index. The National Rural Health Association (NRHA) is appreciative of efforts made to extend these programs permanently in the Senate as well as the one year extension of the programs.

NRHA also sought to include regulatory relief as part of this bill, including addressing issues with the 96-hour condition of payment rule currently experienced by Critical Access Hospitals as well as mandating that supervision levels for outpatient therapy services be reverted to a level of “general.” While these issues were not included in the package passed Monday, NRHA will continue to advance these efforts through NRHA-supported legislation that has already been introduced in both the House and Senate.​

Update on the Doc Fix

From the National Rural Health Association (NRHA): Early this morning the House Rules Committee posted a bill that would delay all scheduled cuts under the Sustainable Growth Rate (SGR) for 12 months. In addition to the delay in SGR cuts, the bill includes a number of rural Medicare extenders that NRHA has been advocating for. Specifically, the current ambulance payment rates for rural and super-rural trips, the "work floor" in the geographic practice cost index, the Medicare Dependent Hospital program, and the Low-Volume Hospital adjustment were included in the package. The therapy cap exception process is also included in this bill. 

While NRHA had hoped that a permanent fix for the SGR and permanent extension of the rural Medicare programs could be accomplished, we are pleased that the House has decided to include these critical programs in another patch. The inclusion of these programs will stave off draconian Medicare cuts for rural providers throughout the nation. It is important to note, however, that some of the offsets or "pay-fors" proposed in this bill would harm rural providers. Extension of the Medicare sequester and modification of Medicaid DSH payments will harm many providers.

Read what Modern Healthcare had to say about the doc fix in this article posted yesterday.

Immigration Bill Has Healthcare Workforce Implications

A bipartisan Senate immigration bill could boost the nation's healthcare workforce, in addition to expanding coverage to millions of newly legal residents. If passed, the law is expected to increase both visas and green card access for a broad range of healthcare workers. Specifically, it would make it easier for foreign physicians who come to the U.S. for their medical residencies to stay on after their training (if they’ll serve three years in medically underserved areas).

According to American Medical Association President Jeremy Lazarus, MD, “The AMA strongly supports the permanent reauthorization of the J-1 visa waiver program outlined in the Senate immigration bill that will allow International Medical Graduates to continue providing much needed healthcare to people in communities across the country. “IMGs play an integral part in American medicine, often joining physicians in practices serving patients in rural and low-income urban areas.”

Read more about the immigration bill and the two kinds of visas that foreign doctors can get: an H-1B visa for specialty workers or a J-1, which is an educational or cultural visa in Modern HealthCare (free subscription required) or Politico.

Response to Study Finding CAHs Had a Slightly Worse Mortality Rate Than Major Medical Centers

A recent research report in the Journal of American Medicine stated that Critical Access Hospitals (CAHs) had a slightly worse mortality rate than major medical centers. Dr. Wayne Myers, a retired pediatrician and rural medical educator, responds in The Daily Yonder stating that the report gave the wrong reasons for the small difference in survival between the rural CAHs and larger regional hospitals. Read Dr. Myers's insightful response here.

Interim Report Says There is Little Support for Medicare Payments That Vary

An interim report recently issued by the Institute of Medicine concluded Medicare should not adjust payments on a broad regional basis to reward hospitals and doctors that spend less to achieve high-quality care. 

The study was conducted at the request of the secretary of Health and Human Services, Kathleen Sebelius, in response to a push by some members of Congress to revisit how Medicare pays hospitals and doctors. The report’s authors were responding to the argument that Medicare should pay higher levels of reimbursement to areas of the country that deliver measurably good care at low cost and less to regions where costs are high and outcomes are poor. Read more about the study in the New York Times.

Will Medicare Cost Slow Down Close the US Budget Gap?

New evidence that the slowdown in healthcare costs over the past five years is happening not only because of a weak economy comes from the Economic Report of the President report, recently released by the President’s Council of Economic Advisers.  The report found that if the slowdown were to continue in the future, Medicare spending would basically remain flat as a share of the economy. Read more here about the Economic Report of the President as it examines changes in healthcare spending and unemployment rates across states.

CO-OP Opportunity for Insurance Coverage

When policy-makers decided not to include a public health insurance option in the Affordable Care Act, they compromised by adding the Consumer Operated and Oriented Plan (CO-OP) program to the law. Sponsored by consumer groups and other nonprofits, CO-OPs aim to offer consumers more options in states where few health insurers cater to individuals and small businesses. Colorado received a loan to create a CO-OP. 

A new policy brief from Health Affairs and RWJF reviews the challenges facing CO-OPs as they prepare for open enrollment in October. Read the brief.

Sequester Digest

News outlets around the country are covering the sequester and its impacts.  A collection of news articles relative to sequestration can be found below.  

The Washington Post: Republican Goal To Balance Budget Could Mean Deep Cuts To Health Programs
Anxiety is rising among House Republicans about a strategy of appeasement toward fiscal hard-liners that could require them to embrace not only the sequester but also sharp new cuts to federal health and retirement programs. Letting the sequester hit was just the first step in a pact forged in January between conservative leaders and Speaker John A. Boehner (R-Ohio) to keep the government open and the nation out of default. Now comes step 2: adopting a budget plan that would wipe out deficits entirely by 2023 (Montgomery, 3/4).

Politico: Paul Ryan Floats Change To Medicare Plan
Paul Ryan's budget will show how Republicans can balance a budget that's trillions of dollars out of whack. But the most significant unresolved issue comes down to a minuscule number: one year. Ryan — the House Budget Committee chairman — has privately been floating the idea of allowing his changes to Medicare to kick in for Americans younger than 56. In previous budgets, those 55 and older were exempted from his plan to turn Medicare into a premium-support — or voucher — program (Sherman and Allen, 3/4).

The Hill: GOP Centrists Balk At Ryan Medicare Shift
House Republican centrists are furious that GOP leaders are considering abandoning their pledge not to change Medicare retirement benefits for people 55 years and older. According to several sources, a handful of centrist GOP lawmakers attending a recent Tuesday Group luncheon erupted when Budget Committee Chairman Paul Ryan (R-Wis.) and House Majority Whip Kevin McCarthy (R-Calif.) broke the news (Hooper, 3/5).

The Medicare NewsGroup: Distrust Of Government Is A Hard Hurdle To Jump In Medicare Reform
One reason that changes to the Medicare program will be hard to make is because people distrust the federal government yet cherish what it offers them. This is a hard conundrum to overcome. The latest polling makes this point with great vigor. And the discussions among experts within different parts of the political spectrum illustrate why President Obama and Congress have scant prospect of success in producing any alterations to Medicare. … Skepticism about government is the deepest since the Pew Foundation began polling in 1958, when it found that 73 percent of Americans trusted the government in Washington, D.C., "all the time or most of the time." Today, the level of trust has shrunk to a meager 26 percent, according to the latest polling, conducted last month (Rosenblatt, 3/4).

Impact of Medicare Cuts on Colorado Rural Hospitals

As federal employees are contemplating smaller paychecks this week, administrators at rural hospitals are struggling just to keep their balance sheets in the black, thanks to the sequester.

In 2011, Medicare payments to Colorado hospitals were $253 million less than in 2009, according to the Colorado Hospital Association.  Now those same institutions are facing another 2 percent decrease in reimbursement for Medicare services.  That one-two punch could knock some hospitals out of the ring, according to Russ Johnson, CEO of San Luis Valley Regional Medical Center in Alamosa, Colorado.  Read the full article from ABC news here.  

Commission on Doc Pay Urges End to FFS, SGR

The National Commission on Physician Payment Reform released a dozen recommendations to ultimately change how physicians are paid by public and private payers, starting with the premise that physician salary and expenses account for 20% of healthcare spending, but the decisions doctors make influence another 60% of that spending.

The Society of General Internal Medicine convened the commission a year ago to suggest new ways to pay the nation's physicians that could improve patient outcomes and lower healthcare costs.  In the report released Monday, the commission concluded that the problems of physician payment are based on systemic issues, such as the traditional fee-for-service payment model, and problems pertaining specifically to Medicare, including the sustainable growth-rate formula to pay physicians and the operation of the Relative Value Scale Update Committee (RUC), which makes recommendations to the CMS. Read more here (may need free subscription).

Final Rule on Essential Health Benefits Released

The Obama administration released the final rule on essential health benefits this week, which sets the parameters for the types of benefits that must be offered by insurers starting in 2014. Kaiser Health News is tracking the news coverage; read capsules from Politico and The Hill, as well as link to the proposed rule here.  A bill will be introduced in the Colorado legislature this session which will allow the Division of Insurance to promulgate rules around essential health benefits, as well as align state law with federal statutes for implementation of healthcare reform.

Dueling Legislative Approaches to Fixing the Doc Pay Emerge

Dueling legislative approaches to overhaul the Medicare physician payment formula emerged this week. The new movement on the stubborn problem comes as the Congressional Budget Office revised the 10-year cost of fixing it down by more than 40%, to $138 billion from $245 billion, based on lower spending on physician services in recent years. 

There are some general similarities in the proposals, but there are also critical differences between an approach contained in bipartisan legislation introduced Wednesday by Rep. Allyson Schwartz (D-Pa.) and a Republican bill expected from Ways and Means Health subcommittee Chairman Kevin Brady (R-Texas) in the coming months.

Both the bills would replace the sustainable growth-rate formula with temporary increases while replacement methodologies were devised, but the bills differ on important points, including whether federal officials or physician groups would take the lead in developing new payment systems and the degree to which fee-for-service payments would be eliminated.

Read the article in Modern Affairs here (account may be needed), or link to the proposals from Rep. Schwartz or Rep. Brady.

AHA Rural Chair Says Reimbursement Top Challenge

Alvin Hoover, CEO of King's Daughters Medical Center in Brookhaven, MS, chairs the American Hospital Association's Section for Small or Rural Hospitals. Read his interview in "Health Leaders" about the reimbursement challenges facing rural hospitals in the reform landscape. Hoover says the overarching challenge is going to be to helping the legislators understand that massive cuts to reimbursement to try to lower the deficit can't all be on the backs of hospitals.  Read the interview here. 

Congress Looks at SGR Repeal

Repealing the sustainable growth rate (SGR) formula for physician reimbursement under Medicare is a high priority for the new leader of the House Ways and Means Subcommittee. Rep. Kevin Brady (R-Texas), says he wants to work with the House Energy and Commerce Committee to craft legislation to permanently repeal the SGR and replace it with, "a reliable physician reimbursement formula that rewards quality." Read more about the idea of a SGR repeal here.

Medicaid Officials Release Rule Affecting Cost-Sharing and Coordination

The Centers for Medicaid and Medicare Services (CMS) released their 474-page proposed rule affecting cost-sharing and coordination with Exchanges earlier this month.  The proposed rule states officials would be able to charge Medicaid patients higher cost-sharing for some services than current regulations allow.

The proposed rule also affects a wide range of other Medicaid provisions, including appeals of eligibility determinations; coordination between Medicaid and the new healthcare law's insurance exchanges; the role of counselors to assist people with their coverage applications; procedures to verify employer-sponsored coverage; and the use of updated Medicaid eligibility categories.  You can read more in the Commonwealth Fund's blog. 

HHS Releases Long-awaited Privacy Rule

The US Department of Health and Human Services (HHS) released its highly anticipated and long-awaited privacy rule yesterday.  The rule expanded liability of business associates of hospitals, physicians and other Health Insurance Portability and Accountability Act (HIPAA) covered entities if they release data in ways that violate patient privacy.  Called the “omnibus” privacy and security rule because of its broad reach, it updates earlier HIPAA rules with more stringent privacy and security measures passed under the American Recovery and Reinvestment Act of 2009.

Read Secretary Kathleen Sebelius's news release here, or link to the 563 page rule in the Federal Register. 

Many of these changes will affect your current privacy and security policies and procedures. CRHC's Senior Advisor, David Ginsberg, will be reviewing the changes and providing summaries. Stay posted for further updates and resources.

Questions? Contact: David Ginsberg, Senior Advisor, Colorado Rural Health Center

Roughly 12,000 Jobs to be Added Statewide with Expansion of Medicaid

A proposal to expand Medicaid to cover 160,000 more Coloradans will add roughly 12,000 jobs statewide, according to a rough estimate by economic development leader Tom Clark.  Legislators will be debating whether to accept the federal offer this session, which as part of the Affordable Care Act, offers states the option to expand Medicaid to persons living below 133% of the federal poverty level. Gov. Hickenlooper recently gave the expansion his support and estimated it would bring $12.28 billion in federal funds back to Colorado taxpayers over 10 years. Read more here.

MedPAC Recommends 1% Pay Increase for Hospitals

Congress' primary Medicare advisory body recommended last week that HHS Secretary Kathleen Sebelius should limit hospital cuts she was required to make under a year-end fiscal cliff law to leave those facilities with a 1% payment increase next fiscal year.

The Medicare Payment Advisory Commission (MedPAC) unanimously recommended that Congress direct Sebelius to increase inpatient and outpatient prospective payments by the 1%, which is technically a reduction from the pre-existing legislative formula that said hospitals should receive a 1.8% increase starting next October.

Under the year-end American Taxpayer Relief Act of 2012, Sebelius was required to find $11 billion in savings from hospitals within four years through rate reductions. If the cut was evenly spread out over the four years—as the Congressional Budget Office assumed it would be—then it would reduce the fiscal 2013 update to a 0.6% cut.

However, if the MedPAC recommendation is followed, Medicare hospital spending would increase in the next fiscal year by up to $2 billion, according to the advisory body. Link to the full article here.