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Weekly Health Policy Update: Exchange Funding, Co-Ops, and HIT

Weekly Health Care Wrap-Up.

HHS Announces Exchange Funding…

This week, the Department of Health and Human Services (HHS) awarded $229 million in Level One Exchange Establishment grants to 10 states. For four states — Arkansas, Colorado, New Jersey and Pennsylvania — it was their first Level One award. Several states received their second round of Level One funding (states are permitted to reapply for a second year of funding under the Level One grants if necessary to meet the criteria to apply for Level Two awards). States receiving a second round of Level One funding, include: Kentucky, Minnesota, New York, Nevada and Tennessee. In addition, Massachusetts received a little over $11 million to conduct analysis on coverage transitions and operational interfaces between the Connector and the Massachusetts Medicaid program in preparation for 2014.

…Indicates Delay in Exchange Grant Funding Timeline…

The Center for Consumer Information and Insurance Oversight (CCIIO) indicated this week that it will extend the availability of Exchange Establishment grants (both Level One and Level Two) through the end of 2014. Previously, Level One funding was expected to close by the end of June. While CCIIO has yet to formally announce the policy change (a formal announcement is expected soon), the timeline shift is likely to figure into state exchange planning processes across the country, particularly as some states choose to “wait and see” how the Supreme Court rules on the ACA.

…And Provides More Detail on Processes for Medicaid, ACA Waivers

Also this week, HHS offered revised rules for the increased transparency requirements for Medicaid 1115 waivers as well as state “innovation waivers” included as part of the Affordable Care Act (ACA). Neither rule offered significant revisions. On the Medicaid front, states and the federal government will be required to adhere to new transparency and public input standards for the 1115 waiver negotiation process beginning April 22 of this year. More broadly, states beginning in 2017 will have the opportunity to pursue a state “innovation waiver” under the ACA if they can demonstrate that their plans will provide coverage that is at least as comprehensive and affordable as the coverage that would have been provided under the ACA; cover at least as many residents as would have otherwise been covered; and will not increase the federal deficit. Senators Wyden (D-OR) and Brown (R-MA) have supported legislation to move the timeline for the innovation waivers up to 2014. While the Obama administration has backed this approach publicly, Congress has yet to vote on the measure.

Eight Co-Ops Receive Start-Up Funding

Earlier this week, the Center for Consumer Information and Insurance Oversight  (CCIIO) announced $639 million in funding to help start co-ops in eight states. The winners of the awards were: Freelancers CO-OP of Oregon, New Mexico Health Connections, Montana Health Cooperative, Midwest Members Health, Common Ground Healthcare Cooperative, Freelancers CO-OP of New Jersey and Freelancers Health Service Corporation. CCIIO officials indicated that several applicants are “retooling” their proposals in advance of the next round of funding. There is $3.4 billion in seed funding available for co-ops under the Affordable Care Act.

State 2 Meaningful Use Proposed Rules Released…

The Centers for Medicare and Medicaid Services (CMS) this week released the long-awaited Stage 2 proposed rule for meaningful use. After a comment period, the proposed rules are expected to be finalized sometime this summer, perhaps June or July. The new rules are slated to take effect in 2014, a year later than originally intended.  Beginning in 2015, Medicare will start to reduce hospital and physician payments by one percent for providers not achieving meaningful use.

…While Use Of HIT Increasing

Also this week, HHS Secretary Sebelius reported that the number of hospitals using health information technology has more than doubled in the past two years. In addition, almost 2,000 hospitals and upwards of 41,000 doctors have received $3.1 billion in meaningful use incentive payments.

From the States

For full coverage of state exchange activities, check out this week’s State of the States: Health Insurance Exchange Developments here.

Alabama. Republican Representative Greg Wren, Vice Chair of the House Insurance Committee, introduced legislation authorizing the establishment of the Alabama Health Insurance Exchange (AHIE), as a non-profit independent state entity and requiring the AHIE to set up a separate Small Employer Insurance Exchange. Currently the legislation has no cosponsors and has been referred to the House committee on Health.

North Carolina. Early data for a Medicaid pregnancy medical home initiative in the state suggests the new approach has led to fewer emergency room visits by pregnant women and less use of neonatal intensive care units.  Implemented less than a year ago, the North Carolina program incentivizes physicians to identify pregnant women at risk and refer them to case managers to coordinate health care as well as social services throughout their pregnancy. To encourage physician participation, doctors receive an additional $200 per patient from Medicaid.


Weekly Health Policy Update: Exchange Funding, Co-Ops, and HIT

Governors Update: Judging Performance

In 2010, 37 states had gubernatorial elections with 26 of those resulting in newly elected governorships.

Governing Magazine, which provides intelligence and analysis on management, policy, and politics to help guide and inspire innovative leaders across state and local government, recently published four installments focused on the 26 newly elected governors. They broke these stories into four categories based on first year performance: who’s doing very well, who’s doing well, who’s record in mixed, and who’s struggling. Governing gauged these governors’ performances based on several dozen experts in the states, analyzed news coverage, and considered overall gubernatorial performance from two key criteria – how popular the governor is and how much of their agenda was enacted.

Here is a break-down of how these newly elected governors size up after their first year in office according to Governing Magazine:

Who’s doing very well. Governing concluded that six governors – three Republicans and three Democrats – are doing very well after their first year in office.

Who’s doing well. Governing concluded that six governors – five Republicans and one Democrat – are doing well after their first year in office.

Who’s record is mixed. Governing concluded that seven governors – five Republicans and two Democrats – have had mixed success in their first year in office.

Who’s struggling. Governing concluded that seven governors – four Republicans, two Democrats, and one Independent – are struggling after their first year in office.

While the analysis from Governing may be insightful to some, we all know that one year in office certainly does not define the dreaded L word (legacy) for any governor.

This weekend, many of our nation’s governors will gather in Washington, DC for the annual winter meeting of the National Governors Association (NGA). This annual meeting brings together both Republicans and Democrats, fresh faces, and tenured veterans of the statehouse for an opportunity to collaborate and discuss the many challenges and issues states are facing across the country. NGA chair Governor Dave Heineman (R-NE) has laid out an ambitious agenda with lots of attention on Growing State Economies. Governor Heineman’s Growing State Economies platform “provides proven policy options to assess the economic environment in each state and strategies designed to foster business growth. High-growth businesses are a driving force of the modern global economy and are a primary source of job creation, prosperity and economic competitiveness.”

While jobs and the economy remain atop of the policy agenda, many other topics such as education, early childcare and learning, workforce development, and healthcare also plan to be discussed, debated, and addressed during the course of the NGA weekend. Though many governors are in the midst of their chaotic legislative sessions, many governors do make the trip to Washington for what many consider a policy packed weekend. One of the perks for attending governors is the opportunity for each governor and his/her spouse to attend the Sunday evening dinner at the White House with the President. Regardless of party, this is always the capstone event of the weekend and enjoyed by all those attending. And after a night of fellowship with the commander-in-chief, a private, governors only meeting occurs the following morning at the White House where the President and his top aides and Cabinet Members come together with the attending governors to discuss the pressing issues of the season.

This year, we certainly expect jobs and the economy to be on the agenda and possibly the upcoming Supreme Court ruling on the Affordable Care Act. Obviously, this is out of the hands of the Administration but many states are keenly interested in the high Court’s ruling as it has huge impacts on state budgets.

Governors Update: Judging Performance

Campaign Finance Update: Court Defines “Express Advocacy”

On Monday, the  Colorado Supreme Court issued a major campaign finance opinion in Colorado Ethics Watch v. Senate Majority Fund, LLC.

The Court held that “express advocacy” for purposes of Colorado campaign finance law, covers only those communications that explicitly advocate for the election or defeat of a candidate in an upcoming election. Such communications must use the “magic words” articulated by the United States Supreme Court in Buckley v. Valeo, or substantially similar synonyms, such as “vote for,” “elect,” “support,” “cast your ballot for,” “Smith for Congress,” “vote against,” “defeat,” “reject.”

The Court rejected the argument that “express advocacy” encompasses any advertisement that is the functional equivalent of “express advocacy.”

Of note, one of the ads that the Court deemed not to be express advocacy was an ad that stated, “Local leaders endorse Dave Kerber.” The Court stated, “[u]nlike an ad that urges the reader to “endorse” the candidate at the ballot box, the phrase in this…ad does not exhort the reader to vote for or against Mr. Kerber.”

The practical effect of the decision is that, in Colorado, 527 political organizations, which can receive unlimited contributions, will be able to engage in significant political activity, including electioneering communications, without being subject to the contribution limits of political committees (presently, persons, including corporations, may contribute only $525 to political committees per house of representatives election cycle), so long as they do not engage in “express advocacy,” via the use of the “magic words” set forth above.

The decision will certainly not diminish the amount of money spent in Colorado by independent organizations (527 political organizations may not coordinate with candidates) during the 2012 election year.

Campaign Finance Update: Court Defines “Express Advocacy”

EU Releases New Data Protection Regulations: Who Will it Affect?

The European Commission recently published a proposal for the Data Protection Reform Package, including proposals for the new Data Protection Regulation and Police and Criminal Justice Data Protection Directive.

In addition to leading to a uniform and coherent data protection law applicable in all EU Member States, the new regulation will also introduce stricter rules and procedures and will entail many significant changes and costs for both EU and non-EU companies.

Click here for our report outlining the main points of interest for industry regarding the proposal.

EU Releases New Data Protection Regulations: Who Will it Affect?

Weekly Health Policy Update: FY13 Budget, SGR Formula, and ACA-compliant Exchanges

Weekly Health Care Wrap-Up.

President Releases FY13 Budget

President Obama this week released his FY13 budget with mixed implications for health programs. The Centers for Disease Control and Prevention (CDC) took the biggest hit, experiencing cuts totaling about 20 percent. In addition, the CDC budget cut funding for the Community Transformation Grant program, the signature initiative of the Prevention and Public Health Fund. The Prevention and Public Health Fund included as part of the Affordable Care Act (ACA) is also targeted in the budget and will likely experience significant cuts as part of the SGR deal discussed further below. While funding for the National Institutes of Health (NIH) was held flat, other health agencies received funding increases. The Agency for Healthcare Research and Quality (AHRQ) experienced a small bump, while the Centers for Medicare and Medicaid Services (CMS) emerged the big budget winner. Specifically, CMS received a $1 billion funding increase, with an estimated $574 million of that allocated for “federally facilitated exchange operations and oversight of state-based Exchanges in FY 2013.” In addition, the Department of Treasury request includes $267 million for new IT and 573 FTEs to monitor compliance with the individual mandate and determine who might be eligible for exemptions. The debate will now shift to Congress, where many eyes will turn to Senate Democrats who have failed to pass a budget in more than 1,000 days. House Budget Chairman Paul Ryan is expected to release his budget sometime this spring. The President’s budget can be found here.

Congress Approves SGR, Payroll Tax Cut Deal

House and Senate conferees this week reached a deal on a 10-month extension of the payroll tax cuts put in place by the Obama administration as well as a 10-month fix of the sustainable growth rate (SGR) formula, among other provisions. While the payroll tax cuts will be extended without “offsets,” the deal pays for the SGR fix and other provisions by cutting the Prevention and Public Health Fund by $5 billion; “rebasing” Medicaid DSH in 2021; repealing the Medicaid provisions in the ACA specific to Louisiana – aka the “Louisiana Purchase;” as well as a cut to Medicare “bad debt” payments. The House and Senate passed the deal earlier today (Friday). The package received 293 votes in the House and just 60 votes in the Senate. The legislation is now headed to President Obama for his signature.

From the States

For full coverage of state exchange activities, check out this week’s State of the States: Health Insurance Exchange Developments here.

North Carolina. On Thursday, the Department of Health and Human Services (HHS) granted the state partial approval of its medical loss ratio (MLR) waiver request. HHS has granted seven states some form of an MLR waiver. North Carolina will operate with a 75 percent MLR in 2011, moving to the full 80 percent in 2012.

Wisconsin. Also on Thursday, the Obama administration denied Wisconsin’s request for a waiver from the MLR requirements included as part of the ACA. The state was the tenth to be denied a MLR waiver, joining Delaware, Florida, Indiana, Kansas, Louisiana, Michigan, North Dakota, Oklahoma and Texas.

Around Town

The Small Business Majority has released a report examining design issues for California’s small business exchange. The report can be found here.

The Kaiser Family Foundation has released a new analysis exploring how the coverage expansion provisions in the ACA will impact local communities. The analysis can be found here.

Jeff Zients, Acting Director of the Office of Management and Budget, offers an overview of the president’s budget on the OMB blog. The overview is available here.

Diane Archer and Theodore Marmor discuss the differences between Medicare and private insurance on the Health Affairs Blog, while Chris Fleming promotes a new Health Affairs report exploring the effectiveness of using NCQA guidelines to evaluate PCMH. Diane and Theodore’s discussion can be found here, Chris’ post can be found here.

ASPE is out with a report detailing the number of people who have gained access to preventive health benefits under the ACA. The report can be found here.

Weekly Health Policy Update: FY13 Budget, SGR Formula, and ACA-compliant Exchanges

Will LNG Exports be the Next Divisive Energy Issue?

In 2005, Congress passed the Energy Policy Act of 2005, a piece of legislation intended to streamline the process from approving applications for LNG import terminals. The legislation provided the Federal Energy Regulatory Commission (“FERC”) with exclusive authority to approve the construction, expansion, or operation of an LNG terminal. At the time, the United States was facing declining domestic natural gas production and policymakers believed we would need to depend on LNG imports to meet our domestic needs for the fuel.

What a difference six and a half years make.

With technological improvements, domestic natural gas production has surged in recent years with activity focused around the Marcellus, Utica, Eagleford, and Haynesworth Shales.

The meteoritic rise in production has had a number of effects.

First, domestic natural gas prices have plummeted from $14.00 BTUs  in 2005 to current prices that are under $3.00. Low natural gas prices are great for the fuel’s varied consumers, including power plants and industrial manufacturers, but these prices have made it more difficult for producers to turn a profit. Secondly, increased domestic production has significantly decreased our country’s need for LNG imports.

These factors are contributing to a new push to retrofit existing LNG terminals from import to export facilities. Six facilities have applied with the Department of Energy’s (“DOE”) Office of Fossil Energy for permission to export LNG. (FERC shares authority with DOE over permitting LNG terminals; FERC approves the siting for terminals, while DOE determines whether the import or export of LNG is in the national interest.) One of the facilities – Cove Point in Maryland – is significant for the fact that it would be the first terminal that would export shale gas produced from the Marcellus to overseas markets.

Efforts to export LNG exports, however, are facing increased opposition from a variety of sources, including Congress, NGOs, and industrial and electrical users. In Congress, Representative Edward Markey (D-MA) introduced several bills this week addressing LNG exports. The first bill would prohibit FERC from approving applications for LNG export facilities until 2025. Under the second bill, the Department of the Interior would prohibit the export of natural gas that is produced on federal lands. Senator Ron Wyden (D-OR) is indicating that he will introduce similar legislation. Notably, Senator Wyden could become Chair of the Senate Energy and Natural Resources Committee next year with the retirement of the current Chair Jeff Bingaman.

Industrial and electrical consumers have also expressed concern about the expansion of LNG exports. This week the American Public Gas Association released a letter praising Representative Markey’s LNG bills. In addition, the Industrial Energy Consumers of America and the American Public Gas Association filed motions to intervene against several terminals’ applications to export LNG. These associations contend that their members, who rely on natural gas, could be adversely affected if prices spike due to LNG exports.

Finally, NGOs are likely to become more active in challenging efforts to export LNG. Earlier this month, the Sierra Club filed a motion to intervene in DOE’s consideration of whether to grant the Cove Point facility a license to export LNG. Sierra Club’s petition argues that an export license for the facility is not in the national interest and that DOE is required to prepare an environmental impact statement, among other claims. It is unclear whether DOE will grant Sierra Club’s motion to intervene, but one can expect similar challenges in the future.

All of these developments reflect the challenges facilities and producers will face in their efforts to export LNG. That being said, LNG exports provide an economic opportunity for the natural gas industry at a time in which producers are struggling with the economics of historically low prices.

The Marcellus and other shale plays are a tremendous resource for the U.S., but the industry must continue to educate stakeholders and the public that LNG exports will not threaten domestic use or significantly increase domestic prices.

Will LNG Exports be the Next Divisive Energy Issue?

FY 2012 Requests for TIFIA Loans Outpace Amount Available 12-to-1

The TIFIA Joint Program Office at the U.S. Department of Transportation (USDOT) has announced that 26 potential applicants have submitted letters of interest requesting more than $13 billion in TIFIA loans for Fiscal Year 2012. With around $120 million available for TIFIA subsidies, USDOT can theoretically support about $1 billion in TIFIA loans. While this continues the three-year long trend of very strong interest in the TIFIA credit program, it also means that for the third year in a row, the vast majority of projects will be turned down and the few projects that move forward will be invited to apply for far less support than they requested.

The future for the TIFIA program is brighter, however. President Obama’s Fiscal Year 2013 budget seeks to increase the amount available for TIFIA subsidies to $560 million and one of the few areas where the vastly different House and Senate surface transportation authorization bills find agreement is in language to increase TIFIA subsidies tenfold, to $1 billion annually.

Staff from the various agencies at USDOT are now working in multimodal groups to evaluate the letters of interest. It has been reported that Transportation Secretary Ray LaHood has issued a March/April deadline for an announcement on projects to be invited to apply for TIFIA financing.

Click here to see the list of applicants who have submitted letters of interest.

FY 2012 Requests for TIFIA Loans Outpace Amount Available 12-to-1

The Stock Act: Congress Acts Against ‘Insider Political Trading’…on Capitol Hill

Proponents of ethics reform and increased political transparency in Washington don’t often see reform proposals pass through Congress by overwhelming margins, and rarely does anyone bemoan an excess of “political intelligence” in Washington.

But with Congressional passage of the so-called ‘STOCK Act’ last week, that is exactly what happened.

The impetus to act was largely driven by public outcry following a November CBS 60 Minutes report focusing on the practice by Members of Congress, and their staffs, of trading stock “based on non-public information from Capitol Hill.”

While the reform community can’t quite be sure what version of reform will survive the ongoing tug of war between the U.S. Senate and U.S. House of Representatives, it is clear that those trading on “insider political knowledge” are now in the transparency crosshairs.

In this interview with LexBlog Network Television, I explain the Stop Trading on Congressional Knowledge (STOCK) Act, including the different House and Senate proposals, the bills’ actual potential to prevent insider trading, and its likelihood of being signed into law.

The Stock Act: Congress Acts Against ‘Insider Political Trading’…on Capitol Hill

New Revenues Make Up Half of Obama Budget Savings

Although key details have yet to emerge on corporate tax proposals, the President’s just-released budget calls for half of its $3 trillion in cuts over ten years to come from revenues.

Nearly two-thirds of this $1.5 trillion would come as a result of permitting the Bush-era (2001 and 2003) tax cuts for families earning over $250,000 annually to expire as scheduled at the end of this year. The remaining $500 billion is to be derived from other sources, a large portion of which would hinge on changes to corporate taxation – changes due to be released later this month.

The Administration’s long-awaited corporate tax overhaul proposal will certainly become fodder for the debate on tax policy in this election year, although the outlook for passage is highly doubtful – at least until an anticipated post-election session in December. Clearly, a great deal depends on the results of the election, but at least some of these corporate proposals will have “legs” as Congress considers how to avoid mandated budget cuts before January 2013.

What may reasonably be inferred about soon to be released Treasury proposals is that the Administration will likely propose lowering the 35% top corporate rate to somewhere in the mid-to upper 20% range, in return for which an array of revenue-raising changes would be made to encourage investment in the U.S. and to discourage parking of overseas profits outside of the U.S. from active or, “non-Subpart F, income. As mentioned, specific proposals will be released later this month by Treasury. What we know is that the Administration will also likely propose:

  • Deductions on interest expenses on foreign earnings would no longer be allowed on deferred income taxes.
  • Pooling would be required for calculating tax credits from dividends paid to a parent company, instead of on an individual basis.
  • The ability to shelter profits overseas from U.S. taxation using intangibles, such as royalties, would be eliminated.
  • Deductions for the costs of moving operations overseas would be limited (while a tax credit for moving operations to the U.S. would be provided).
  • A new minimum tax on overseas profits would be imposed.
  • A standard litany of oil and gas company provisions would be repealed, including depletion allowances, the domestic manufacturing deduction on oil and gas production, and intangible drilling costs expensing.
  • LIFO accounting would be repealed.

Given the anticipated timeline for serious consideration (as early as December 2012), corporations – in fact, all businesses – need to focus now on the “markers” being set out by both sides and ensure that attention is paid to how proposals might affect operations and business plans in a world with lower corporate rates. Businesses that assiduously educate policymakers in the near term – particularly as constituents – may derive enormous dividends when Congress considers tax reform in this era when revenue needs have consistently exceeded revenues.

New Revenues Make Up Half of Obama Budget Savings

Congress Sends FAA Authorization to President

1,590 Days and 23 Extensions…

No, it’s not a song title from a hit Broadway show; rather, it’s the length of time and effort it took lawmakers on Capitol Hill to complete their work on a long-term extension of the nation’s aviation programs. The House passed the Federal Aviation Administration (FAA) conference report last Friday and the Senate did the same on Monday.

The bill, which extends existing taxes on fuel, cargo, flights, and tickets and authorizes $64.3 billion in capital spending at the FAA over the next four years now goes to President Obama for his signature. It passed despite labor opposition to a deal reached between the Democratic-led Senate and the Republican-controlled House on rules governing union elections at airlines and railroads.

The legislation authorizes approximately $11 billion for the switchover of the nation’s air traffic control from World War II-era ground radar to a system based on GPS technology known as “NextGen.” It requires aircraft flying in congested airways to use the new technology by 2020 and sets a June 2015 deadline for the FAA to develop more efficient arrival procedures into the nation’s 35 busiest airports so planes can land using the more-precise GPS navigation.

Other issues that delayed completion of the bill – landing and takeoff slots at Washington, DC’s Reagan National Airport, subsidized service to very small markets, and lithium battery regulations – were resolved at the staff level late last year.

According to the bill, federal regulators cannot adopt rules for shipping lithium batteries that are any stricter than those of the United Nations, though the Secretary of Transportation can institute a one-year emergency standard if it is determined that batteries have caused fires. Funding for the Essential Air Service (EAS), which subsidizes air travel to small airports was maintained, but no new destinations were added the program. A provision to add eight additional round trip flights a day from Reagan National Airport to cities more than 1,250 miles away was also included in the bill, expanding the number of daily long-distance round-trip flights from 12 to 20.

Provisions intended to benefit the flying public were also included in the agreement.

First, the bill codifies into law the U.S. Department of Transportation’s (USDOT) current tarmac-delay regulations. Airlines and airports must have a plan to provide food, water, restroom facilities, comfortable cabin temperatures, and access to medical treatment on delayed aircraft and must also allow passengers to deplane within a time-frame determined by the Secretary of Transportation. Second, the bill establishes a consumer protection committee to advise USDOT on providing service improvements to benefit air passengers. A third consumer-friendly provision calls upon USDOT’s Inspector General to investigation the reasons behind the cell phone ban on airplanes and to make recommendations on whether the policy should be continued.

After years of delay, the FAA, the airlines, airport operators across the nation, and those interested in improving airport infrastructure and implementing the next air traffic control system can finally move forward with a sense of certainty that federal funding is secure for the near future.

Congress Sends FAA Authorization to President