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Navigating The Cyber Maze – Hacking, Compliance and Legislation

With the policy debates surrounding cybersecurity heating up and legislation currently making its way through Congress, it is vitally important that businesses stay current on a number of high priority issues that can affect their operations, including data privacy, data security and related liabilities.

To that end, we’re hosting an event in Los Angeles this Wednesday, May 2 together with the White Collar Crime Committee of the American Bar Association entitled “Navigating The Cyber Maze – Hacking, Compliance & Legislation.”

I’ll be speaking on the event’s panel about the changing policy landscape in Washington, DC that will likely change cybersecurity-related reporting requirements, compliance obligations and liability.

Navigating The Cyber Maze – Hacking, Compliance and Legislation

Secretary Salazar Defends Administration’s Energy Track Record, Urges Congressional Action

Today, at a luncheon hosted by the New Democrat Network (NDN), Department of the Interior Secretary Ken Salazar offered a strong defense of the Obama Administration’s record on energy policy.

The timing of Secretary Salazar’s speech was not lost on the audience.  For instance, The Hill reporter Ben Geman asked Secretary Salazar why he was making two relatively high-profile energy speeches in as many days. Yesterday, Secretary Salazar had accused Republicans of living in an “energy fairytale” in another speech. Of course, Mitt Romney all but secured the Republican Presidential nomination with victories yesterday in five primary contests and Romney and other Republicans are sharply criticizing the Administration’s energy record. According to Secretary Salazar though, his speeches are an attempt to provide an “honest appraisal” of the Administration’s energy record.

In discussing gasoline prices, Secretary Salazar acknowledged that there is no “silver bullet” to insulate the U.S. from oil shocks like the country is currently experiencing.  Consequently, Secretary Salazar spoke of the Administration’s long-term “all-of-the above” energy strategy. Secretary Salazar touted increased domestic oil and gas development, stating that natural gas production is at an all-time high. Anticipating critics’ responses, he argued that the increase is due to development on both federal and private lands. With regard to renewable energy, he noted that Interior has permitted 29 solar, geothermal and wind projects on federal lands that total approximately 10,000 MW in new power.

Despite the looming elections, Secretary Salazar urged Congress to take action on what he described as three non-controversial measures. First, he called on Congress to codify reforms Interior made following the Deepwater Horizon accident. Second, he requested that Congress approve the trans-boundary agreement with Mexico related to offshore development in the Gulf of Mexico. Finally, he called on Congress to extend the production tax credits for renewable energy production, which are set to expire at the end of this year.

The Secretary speech today is unlikely to quell Republican criticism of the Administration’s energy policy. Nonetheless, it does demonstrate that the Administration is intent on forcefully defending its record on energy policy over the next several months.

Secretary Salazar Defends Administration’s Energy Track Record, Urges Congressional Action

Weekly Health Policy Update: Deficit Reduction Plan, CMS Bidding Program, and “Unreasonable” Rate Increases

Weekly Health Care Wrap-Up. Conrad Introduces Simpson-Bowles Budget

Senate Budget Chair Kent Conrad (D-ND) this week introduced the Bowles-Simpson deficit reduction plan as a framework for the FY13 Budget Resolution. The Budget Committee went on to hold a “markup” of the bill; however, no votes were cast on amendments or the plan itself. According to Politico, Conrad held the hearing with “hopes of reaching a bipartisan compromise after the election.” Democrats have come under scrutiny as of late after failing to pass a long-term budget resolution in recent years. Before Congress’ last recess, the House approved House Budget Chairman Paul Ryan’s (R-WI) plan largely along party lines.

CMS Releases DME Competitive Bidding One-Year Implementation Update

Earlier this week, the Centers for Medicare and Medicaid Services (CMS) released a 16-page report on the Durable Medical Equipment (DME) competitive bidding program. Notably, the report finds that DME competitive bidding has saved the Medicare program $202 million in year one and expenditures have dropped 42 percent in the nine markets currently participating in the program.  The CMS Office of the Actuary predicts $22.7 billion in savings from 2013-2022 under the approach.  The complete report can be found here.

More Insurers Come Under Rate Review Scrutiny

The Department of Health and Human Services (HHS) this week announced two more insurers had proposed “unreasonable” rate increases.  In particular, HHS said Time Insurance proposed unreasonable hikes in five states and that United Security did not have enough data to explain a rate hike in Arizona. While HHS does not have the authority to prevent rate increases under the program, several other insurers have come under scrutiny for “unreasonable” rate increases, including Trustmark Life, John Alden Life Insurance and Everence. After seven months of the program, the nation’s largest insurers have not yet been identified by HHS for proposing unreasonable increases.

Around Town

The American College of Physicians and Consumer Reports released its new “High Value Care” resources that will be published on the websites of Consumer Reports, the College and its journal.  More information can be found here.

The Commonwealth Fund is out with a new report evaluating the potential for consumer oriented and operated plans (CO-OPs) to succeed in the market. The issue brief can be found here.

The George Washington University School of Public Health and Health Services released a paper taking a look at multistate plans under the Affordable Care Act (ACA).  The Office of Personnel Management (OPM) will contract  with two multistate plans that will be offered through ACA health insurance exchanges across the country.  The report can be found here.

The Kaiser Family Foundation has launched a new online tool to track funds received by the states, local governments, employers, community organizations, and other entities to implement provisions in the ACA.  The federal funds tracker can be found here.

From the States

For full coverage of this week’s exchange activities, check out this week’s State of the States – Health Insurance Exchanges here.

Alabama. On Wednesday, the Alabama House Committee on Health voted to pass exchange enabling legislation, HB245. The Exchange, officially called the “Alabama Health Insurance Exchange,” would operate as a non-profit and be governed by a 21-member board. The bill also makes a nod to the Supreme Court’s upcoming ruling on the ACA. Specifically, the legislation states should any part of the ACA “requiring the operation of the exchange…[be] repealed, defunded, or declared unconstitutional by the United States Supreme Court,” HB245 would be repealed. The bill now heads to the House floor for consideration.

Kansas.  In an effort to move more residents out of institutional settings and back into the community, the Kansas Department on Aging has identified 800 residents they believe could be transitioned to home-based care and assigned each of them a case manager.  Case management organizations will receive $2000 from the state for each Medicaid beneficiary they are able to successfully transition into more independent living environments. The state believes that as many as 15 percent of its Medicaid- eligible nursing home residents could be well-served in a more community-based setting.

Massachusetts. A coalition of providers in the state have launched “Roadmap to Reform,” a plan to implement “disclosure and offer” programs in seven hospitals as an alternative to the traditional medical malpractice tort system. Under the approach, medical professionals are encouraged to admit medical errors, apologize and offer patients compensation for their injuries.  If patients accept the offer, they agree to forgo litigation.  The approach draws heavily on the program implemented by the University of Michigan Health System, which experienced declines in the number of lawsuits filed as well as the average time necessary to resolve claims as a result.

Oregon. Oregon’s Health Insurance Exchange is debating a plan to train insurance agents to enroll small businesses and uninsured individuals in the Exchange. Under the proposed plan, agents will be allowed to sell insurance for the Exchange once they meet yet to be determined criteria. After being approved by the Exchange, they will be trained on the insurance plans available on the Exchange. As for agent compensation, agents will be compensated for any “signups” directly by the Exchange to maintain agent impartiality.

Health Insurance Exchanges: State of the States update.

This was an interesting week for exchange activity, with Alabama advancing exchange legislation and Congress revisiting issues surrounding exchange subsidies.

In Alabama, the House Committee on Health advanced exchange enabling legislation, HB245, to create the “Alabama Health Insurance Exchange.” The Exchange would be chartered as a non-profit and be governed by a 21-member board. However, critics are concerned that at least nine of the 21 members of the board will be tied to the health care or insurance industry. Amendments that would require the Governor to appoint consumer advocates to the board of directors and make state sunshine laws applicable to board meetings have been introduced, but so far, they have not received a vote. HB245 now heads to the House floor, but even proponents say that legislators may not address the bill until they tackle pending issues related to immigration and charter schools.

All eyes are still on California to see who will receive the contract to design the IT infrastructure for the California Health Benefit Exchange. The earliest the Exchange could have announced its choice was April 17, but the Exchange technically has 180 days to make a decision. Stay tuned. Also, next Friday is the final day to respond to Nevada’s RFP for a Business Operations Solution to support the information technology and business functions of the Exchange.

In an interesting move that could be a sign of things to come, BlueCross BlueShield of Tennessee launched a “FAQ” website to educate the general public on health insurance exchanges. In addition to having basic information describing the concept of exchanges, the website includes targeted information for individuals, health care providers, brokers and employers. The website firmly announces BlueCross BlueShield of Tennessee’s support for an ACA exchange created by the state. The state of Tennessee has made very little legislative progress toward planning for an exchange. While the Tennessee Department of Finance and Administration established the “Insurance Exchange Planning Initiative” in late 2010 to plan for an exchange, the legislature failed to introduce exchange-enabling legislation in either 2011 or 2012. In the future, it will be interesting to see if BlueCross BlueShield of Tennessee forms a single-carrier private exchange, like some other “Blue” plans, or continues to focus on ACA exchanges.

Finally, on Capitol Hill this week, the House Ways and Means committee passed legislation by a voice vote that would require individuals to repay overpayments in federal health insurance subsidies. Federal actuaries estimate the measure would reduce the deficit by $44 billion over 10 years, but Democrats counter that according to estimates by the Joint Committee on Taxation, the legislation could increase the number of uninsured by 350,000. This action was a result of reconciliation instructions included in Chairman Paul Ryan’s (R-WI) budget plan. Further action is not expected from the Senate; however, the Committee’s decision to focus on exchange subsidies as a means for deficit reduction, could foreshadow things to come in the 2013 tax and entitlement reform debate.

Weekly Health Policy Update: Deficit Reduction Plan, CMS Bidding Program, and “Unreasonable” Rate Increases

Campaign Finance Update: FEC Defends Ban on Contributions from Government Contractors

On Monday, Judge James Boasberg of the U.S. District Court for the District of Columbia denied a motion for preliminary injunction challenging a 70-year old federal ban on campaign contributions from government contractors in Wagner v. FEC, No. 11-cv-1841. Key to the 26-page opinion was the judge’s finding that the three plaintiffs were unlikely to succeed in arguing that the ban violates the Constitution.

The ban, found at 2 U.S.C. § 441c(a) and instituted in 1940 as part of the Federal Election Campaign Act (“FECA”), bars individuals holding government contracts from making contributions to candidates, committees or political parties in connection with federal elections. The ban has received increased attention in the recent election cycle in the wake of the 2010 Citizens United decision, which recognized the right of corporations and unions to make certain political expenditures and struck down a broad ban on such spending similar to that in WagnerPresidential hopeful Mitt Romney received attention recently when his campaign accepted a donation from super PAC Restore Our Future, a combined $890,000 of which came from companies holding government contracts.

Whether the FEC will bring an enforcement action is not clear, as the Commission struggles with determining the constitutionality of an FEC regulation (11 C.F.R. § 115.2) passed in the 1970s that extended the ban to all campaign expenditures. One of the federal contractors has stated that it is confident the contribution was legal under Citizens United, another plans to ask for its donation back, and the commission appears to be split on the issue. As the L.A. Times reports: “The current confusion shows how a deadlocked FEC has been unable to keep up with tens of millions of dollars of outside money that has flooded the system since the Citizens United ruling legalized political spending by corporations and unions.”

For the time being, however, the FEC is steadfastly defending the 1940 ban in the Wagner litigation. The Wagner plaintiffs are three individuals holding small personal services contracts with the Administrative Conference of the U.S. (“ACUS”) and the U.S. Agency for International Development (“USAID”). Their complaint challenges the law on Equal Protection and 1st Amendment grounds:

  • Equal Protection Claim: The thrust of the equal protection argument is that the ban unfairly discriminates against individual government contractors, since federal employees (alongside whom plaintiffs work), corporate government contractor PACs and even officers, employees and stockholders of corporations with government contracts may make contributions within certain limits.
  • First Amendment Claim: The plaintiffs argue that any interest in preventing corruption is not addressed by the ban on individual contributions because it bans contributions to elected officials (i.e. the President and Congress), not the actual individuals that negotiate with plaintiffs, sign their contracts and ensure their performance on such contracts

The FEC insists that Citizens United did not affect the ban, as it was not at issue in that case and involves contributions, not expenditures (e.g., “electioneering communications” broadly protected under Citizens United). The judge in Wagner seemed to agree, pointing to a string of scandals in the 1930s that prompted the ban in the first place. The possibility of such corruption provided the judge with sufficient justification for upholding the ban:

“There can…be no doubt that preventing ‘pay-to-play’ deals or pressure on contractors to give – or the appearance of either occurring – is sufficiently important to warrant restrictions on political contributions by federal contractors.”

The plaintiffs have pointed out that elected officials (i.e. U.S. Representatives, Senators, the President and Vice President) are not tied in any meaningful way to the government officers who actually make contract award decisions, but this rationale did not sway the court. The judge held that the ban was “closely drawn” to the government’s interest in anticorruption, however stretched this possibility may be in reality.

Alan Morrison, co-counsel for plaintiffs and a George Washington University law professor, has indicated that the judge’s denial of the preliminary injunction was “not the last word” in the matter.

The judge’s decision may be appealed to the D.C. Circuit.

Campaign Finance Update: FEC Defends Ban on Contributions from Government Contractors

Governors’ Annual State of the State Addresses: Job Creation and Education Among The Top Issues

Yesterday, the National Governors Association (NGA) released its summary of the nation’s Governors’ annual State of the State addresses covering the major issues of focus by governors in 47 states and territories.

Clearly, job creation and competitiveness sit atop most gubernatorial agendas. As the report indicates, “although no governors were enthusiastic about the revenue outlook, they appeared to feel less pressure than last year, and 17 governors had surpluses in their state, were able to increase money held in reserve or rainy day funds, or had positive cash balances after overcoming last year’s shortfalls.” As Hawaii Governor Neil Abercrombie said, “we now have the luxury of weighing solutions…on their own merits. We can ask ourselves what will be most effective…without the distraction of having to balance the budget.”

The report gives an in-depth look into what governors are focusing their attention on for the year.

Job Creation:  Virtually all governors will focus on job creation as their top priority for 2012. Thirty-three governors pointed to low taxes as an important factor in providing direct support to businesses and increasing consumer spending. There were 22 proposals to increase spending or coordinate and develop new workforce training programs. Michigan Governor Rick Snyder said that 2012 “will be different from last year, which focused on dramatic policy improvements over the broken model of the past. This year is all about finishing the work left over from 2011, tackling unaddressed challenges.”

Education:  In 26 speeches, governors said that education is the basis of their jobs plan, and 19 governors emphasized college and career readiness as an education goal. Seventeen governors are proposing to either increase funding for education or to maintain funding despite low revenues. Governors also are focused on accountability measures for teachers, principals and districts; early childhood and ensuring children learn to read by third grade; and increasing local control and school choice. Georgia Governor Nathan Deal said, “we must clarify the mission of our schools…I believe students graduating from our high schools…those young men and women who have done everything asked of them by our k-12 system…should be fully ready for postsecondary study or a job!” New Jersey Governor Chris Christie said, “…replacing underperforming teachers with even an average teacher raises each classroom’s lifetime earnings by over a quarter of a million dollars” and proposed reforming tenure “by measuring teacher effectiveness, both with professional observation and objective, quantifiable measures of student achievement.”

Health and Human Services:  Governors discussed health in 32 speeches, including 17 governors who proposed reducing costs, 11 who proposed increasing access to care and 10 who proposed initiatives focusing on specific issues such as obesity or infant mortality. Twenty-six governors mentioned human services—such as child protection and anti-poverty programs—but in most cases the governors did not propose large-scale changes to these programs. Kansas Governor Sam Brownback announced long-term care coordinators for people with disabilities, a consolidated Department of Aging and Disability Services to efficiently administer Medicaid programs, and increasing the number of medical professionals in areas with shortages through tax incentives.

Public Safety:  Thirty governors discussed measures focused on criminal justice issues. Oklahoma Governor Mary Fallin said she would commit funds to “alternate sentencing for nonviolent offenders with substance abuse issues, as well as to ‘crisis centers’ provided by the Department of Mental Health. These initiatives are smart, effective at reducing repeat offenders, and will save the state money by treating addicts and helping them to once again become productive citizens, parents and taxpayers.”

Energy and Environment:  Governors discussed energy in 22 speeches. Those governors almost always mentioned job creation as a benefit of increasing domestic energy production and several of the innovation or industry clusters discussed earlier were focused on energy technology. Governors mentioned environmental goals in 19 speeches. For example, California Governor Jerry Brown proposed investing in renewable energy infrastructure and specifically cited the economic and health cost of imported oil.

While each state is unique, this report shows that governors do tend to address similar challenges and opportunities. As the country continues to rebuild, keep an eye on states and expect governors to take the lead on building centers of innovation within their boundaries. It is not uncommon for governors to participate in healthy competition with their neighbors, particularly as they compete for jobs and investment, both foreign and domestic. In order to remain an attractive destination for investment, governors understand that leading on these issues is critical to their success.

Click here for the full NGA report.

Governors’ Annual State of the State Addresses: Job Creation and Education Among The Top Issues

Weekly Health Policy Update: Medicare Advantage Rates, CO-OPs, and Exchange Supporting States

Weekly Health Care Wrap-Up.

Slow Week in Washington, DC

With members of Congress back in their states and districts for two weeks and much of the area on “spring break,” Washington, DC was eerily quiet this week with little, if any, news from Congress and the administration. Supreme Court speculation continues, although experts still largely agree that it is nearly impossible to truly predict the High Court’s ruling on the Affordable Care Act. Followers of the Court proceedings were particularly disappointed, but not necessarily surprised, when Justice Sotomayor offered no comment on the case in a guest lecture on Monday at the University of the District of Columbia.  The decision is still expected to be released sometime in late June or early July.

CMS Finalizes 2013 Medicare Advantage Rates…

Earlier this week, the Centers for Medicare and Medicaid Services (CMS) finalized 2013 Medicare Advantage rates. CMS settled on a +3.07% growth rate, compared to the +2.47% that was proposed. The upcoding adjustment remained constant at -3.41%. The Affordable Care Act calls for minimum risk score reductions of -4.71% in 2014.

…And Names Three New CO-OPs

Late last week, CMS announced it had awarded funding to three new Consumer Owned and Operated Plans (CO-OPs) in Maine, Oregon and South Carolina, bringing the total number of states with ACA-funded CO-OPs to 10.  CMS anticipates awarding additional funding through the remainder of the year.  A complete list of CO-OPs is available here.

From the States

For full coverage of this week’s exchange activities, check out this week’s State of the States – Health Insurance Exchanges here.

California. The state announced that Los Angeles, Orange, San Diego and San Mateo counties were chosen to participate in a three-year “Coordinated Care Initiative” that would shift 1.1 million dual eligibles into Medicaid managed care plans. Legislation is currently pending to expand the pilot program into a total of 10 counties, adding Alameda, Contra Costa, Riverside, Sacramento, San Bernardino and Santa Clara. California hopes to get the program up and running by 2013. The proposed timeline is available here.

Maryland. On Thursday, Maryland’s General Assembly approved final legislation, the Maryland Health Benefit Exchange Act of 2012, setting the rules and regulations for Maryland Health Exchange. Governor Martin O’Malley has said he will sign the bill. The legislation outlines the types of health and dental plans that can be offered in the Exchange; allows the Exchange to use active purchasing strategies after the first two years; operates individual and small business markets separately; establishes a “Navigator Program”; and addresses other issues such as risk adjustment, market rules, and the prevention of fraud, waste and abuse. The final legislation is available here.

Around Town

The ABIM Foundation, along with a host of provider and consumer groups, launched the Choosing Wisely campaign, which targets misuse in the health care system by revealing 45 procedures that should not be performed under certain conditions.  Details can be found here.

The Kaiser Family Foundation released a report on the generosity of the Medicare benefit package versus the typical employer-sponsored plan. The Foundation is also out with two updated reports on dual eligible beneficiaries — one exploring Medicare’s role, the other focused on Medicaid benefits.

The RWJF released a new issue brief focused on engaging employers in efforts to improve health care quality and reduce costs and also released the latest video installment of its Medicaid Leadership Institute (MLI). The brief can be found here and visit rwjf.org to watch the video and read the profiles of MLI fellows.

The Commonwealth Fund reports that consumers would have received about $2 billion back from health insurers if the Affordable Care Act’s medical loss ratio requirements were in effect in 2010. The report authors say 53 percent of the individual market would have received rebates, much more than 24 percent of the small-group and 15 percent of the large group markets. The report can be foundhere.

Health Insurance Exchanges: State of the States update.

After a chorus of Governors and legislators last week indicated they intend to wait for the Supreme Court to rule on the Affordable Care Act (ACA) before moving forward with setting up a health insurance exchange, this week two other states strongly affirmed their support for exchanges, regardless of the High Court’s ruling. In California, Health and Human Services Secretary Diana Dooley said that even if the Supreme Court found the ACA unconstitutional, California would consider enacting its own health care legislation, including an individual mandate requirement. A few days later in Maryland, Governor Martin O’Malley (D) put out a statement saying that even if the ACA was struck down Maryland would “be in the forefront of those states that move forward” creating exchanges.  Yesterday, Maryland’s legislature passed a final version of the Maryland Health Benefit Exchange Act of 2012, which sets the rules and regulations for the Maryland Health Exchange.  Governor O’Malley is expected to sign the bill.

Meanwhile in Oregon, the Oregon Health Insurance Exchange (ORHIX) is now seeking comment from the general public on the top three priorities considered when choosing health insurance. ORHIX says it will use the survey information to understand how people differentiate and compare insurance plans. Comments close on April 13.

Finally in Arkansas, a funny thing happened on the way to the statehouse when a House Committee accidently approved two contracts to help build the state’s exchange.

The state Legislative Council’s Review Committee accidently voted that two contracts to plan for the state’s exchange were “reviewed” before committee members were able to consider testimony or debate the contracts.  After realizing his error, Representative Jonathan Barnett (R) tried unsuccessfully to reopen the issue, but the motion failed by a voice vote. Republicans opposing health insurance exchanges had planned to use the hearing to delay the awarding of contracts for the state’s exchange. Both federally-funded contracts are with the Public Consulting Group of Boston, with one contract focused on management planning and the other focused on developing a Navigators program for the state.

Even with the error, exchange opponents still have an opportunity to derail the process. Before being awarded, the two contracts will still need to be approved by the full Legislative Council.

Arkansas has indicated it will pursue a federal-state partnership in executing its exchange, wherein the state will utilize a federally-facilitated exchange for some functions  while retaining control over other issues.

Weekly Health Policy Update: Medicare Advantage Rates, CO-OPs, and Exchange Supporting States

DOHA is Dead. Long Live DOHA.

This morning, when many in Washington, DC were on spring break or otherwise off to make Easter or Passover plans, the Center for Strategic and International Studies hosted its annual “Conversation with Former U.S. Trade Representatives.” John Hamre, President of CSIS, joked that he thought nobody would show up on such a Friday, and yet the room was packed to capacity with journalists, trade policy wonks and those who apparently have already decorated all the eggs they are going to decorate.

Former U.S. Trade Representatives (USTR) from four different Presidencies (Reagan, Bush (41), Clinton, and Bush (43)) were on hand to discuss the current state of global trade, U.S. trade policy (or a lack thereof) and the prospects for new trade deals, such as the Trans-Pacific Partnership (TPP) that is currently being negotiated. The panel included Mickey Kantor, Carla Hills, Clayton Yeutter, Bill Brock, Charlene Barshefsky and Susan Schwab.

Despite their political differences, the six former USTRs strongly agreed on several things:  first – it takes Presidential leadership to make progress in global trade agreements;  second – the U.S. is currently lacking a coherent approach to trade policy;  third – free and open trade is absolutely key to the future security and prosperity of the U.S. and the world; and fourth – DOHA is dead, or almost dead, and we need to move past it.

As for the state of the TPP, all six agreed that Canada, Mexico and Japan should be added to the negotiations but that Japan needed to demonstrate progress on beef and postal issues before the U.S. should agree to allow Japan into the talks. The panel did not address Mexico but did observe that Canada is further along than Japan in committing to make progress on its domestic trade issues (such as supply management of dairy) and should be included in the talks as soon as possible.

Ambassador Hills called for the U.S. and China to enter into a bilateral trade and investment agreement “yesterday” given the magnitude of commerce and intellectual property that is flowing into China.

All agreed that the U.S. needs to strongly support free trade as 95 percent of the world’s consumers live outside our borders.

DOHA is Dead. Long Live DOHA.

Addressing Health Care Spending: ‘Withholds As An Alternative to Provider Cuts

On the heels of the Affordable Care Act debate before the Supreme Court, one thing seems increasingly clear in Washington, DC: both sides of the aisle appear to agree that tax and entitlement reform are coming in 2013, regardless of how the justices rule this summer or who wins the White House in 2012.

The tax and entitlement reform debate will put a host of health care issues center stage – the Affordable Care Act (particularly the premium subsidies), Medicare and Medicaid programs and perhaps even medical malpractice reform.

As we gear up for this critical national conversation, expect various policy ideas to emerge as options to address health care spending. Of note recently was a presentation by Dr. Elliott Fisher at a National Coalition on Health Care forum. A member of the Dartmouth Atlas team, Fisher is one of the nation’s most recognized leaders on Accountable Care Organizations (ACOs) and Medicare spending. Interestingly, Fisher’s presentation focused on a concept recently published in the Journal of American Medicine known as “withholds.” Sharing some characteristics with “shared savings” models, withholds could be on the table as an alternative to across-the-board provider cuts as entitlement reform approaches.

Specifically, under the scenario put forth by Dr. Fisher, a specified percentage of provider payments could be “withheld” and later distributed to providers if savings and quality targets are reached. (Targets could be developed based on regional baselines or historical ACO spending, among other options.) If savings and quality targets are not achieved, Medicare keeps the “withholds,” driving the same result as provider cuts. The program could be structured so that Medicare saves under either scenario with the key being that under a withhold approach – as opposed to across-the-board payment rate cuts – providers have an opportunity to recoup some or all of the withheld amount.

This option, much like the Medicare Shared Savings Program, allows providers to continue to get paid on a fee-for-service basis, while introducing cost and quality incentives. Many analysts agree that since many providers are not prepared to go “at risk” for patient care at the current time, this type of “bridge” payment reform is a necessary element of broader system transformation and sustainable costs.

Of course, provider payment reform will only be a small, though key, portion of the entitlement reform debate.

Check back on our blog for more emerging payment reform ideas as 2013 approaches.

Addressing Health Care Spending: ‘Withholds As An Alternative to Provider Cuts

Weekly Health Policy Update: Supreme Court ACA Consideration, CMS Innovation Challenge Grants, and Ryan Budget Approval

Weekly Health Care Wrap-Up.

Supreme Court Dominates Week in Washington, DC

The Supreme Court’s consideration of the Affordable Care Act dominated the policy dialogue and media airwaves this week in Washington, DC. With hearings Monday, Tuesday and Wednesday the health care and legal communities were abuzz with the potential implications of various decisions. General consensus among commentators and legal scholars is that, while tempting, it is important not to read too much into the oral arguments.  Nonetheless, to help decipher the chatter, MLA Partner Bruce Brown, former clerk to Chief Justice Warren Burger, and Senior Managing Director Cindy Gillespie break things down in a 30 minute “Quick Take” session – the Supreme Court’s Consideration of the ACA: Legal Arguments, Policy Implications and Political Repercussions, which can be foundhere.

CMS Officially Delays Innovation Challenge Grants

Not surprisingly, the Centers for Medicare and Medicaid Services (CMS) officially announced this week that it would delay the release of Center for Medicare and Medicaid Innovation (CMMI) “Innovation Challenge” grant awards.  CMMI received approximately 3,000 applications for $1 billion in funding for payment and delivery reforms under the program. More information on the delay is available here.

House Approves Ryan Budget

On Thursday, the House of Representatives approved Budget Chair Paul Ryan’s FY13 budget by a vote of 228-191. The budget plan is not expected to gain traction in the Senate. Meanwhile, Representatives Jim Cooper (D-TN), Steven LaTourette (R-OH), Charlie Bass (R-NH), Tom Reed (R-NY), Kurt Schrader (D-OR), and Mike Quigley (D-IL) released an alternative budget plan modeled on the Simpson-Bowles Fiscal Commission’s recommendations. While this budget is unlikely to gain significant momentum, it demonstrates that past deficit reduction proposals will likely remain “at the table” throughout future tax and entitlement reform debates. More information on the Simpson-Bowles alternative budget is available here.

From the States

For full coverage of this week’s exchange activities, check out this week’s State of the States – Health Insurance Exchanges here.

New York. At a press conference earlier this week, Governor Andrew Cuomo (D) was quoted saying that since “the Legislature has declined to include a health exchange in the budget, we will set it up by executive order.” He expects to issue the order this week.

Maryland. On Monday, Maryland’s House and Senate approved their respective versions of the Maryland Health Benefits Exchange Act of 2012, which sets the standards that will govern the operation of Maryland’s Exchange. The Senate passed its version of the bill, Senate Bill 238, by a 35-12 vote, while the House passed House Bill 443 by a 94-44 vote.  Differences between the House and Senate versions of the legislation will need to be reconciled in conference committee.

Texas. A new interactive tool using data from the Texas Department of State Health Services tracks the number of primary care physicians per 100,000 Texas residents. In addition, the Texas Tribune calculates the number of Medicaid providers per 1,000 people in Texas cities.  The primary care physician date is available here; the Medicaid data here.

Around Town

A new report from the Urban Institute examines how many Americans would be impacted by the individual mandate if it is upheld by the Supreme Court. The report can be found here.

New polling data from the Kaiser Family Foundation examines public opinion of the individual mandate.  The full Data Note is available here.

Booz and Co released a whitepaper this week on private exchanges and large employers. In particular,  the paper focuses on defined contribution, employers’ attitudes toward exchanges, the potential impact on the payer industry as well as possible strategies for interested companies.  The report can be found here.

A new blog post from NAISCO follows up with remaining ”Early Innovator” states’ efforts to develop IT for exchanges, checking in with New York, Oregon, New England and Maryland. The blog post can be found here.

Deloitte released a new report on mobile devices and the health care industry.  In particular, the report presents selected findings from a highly targeted survey of senior executives on the challenges and opportunities the mobile industry will face in the coming three to five years. The report can be found here.

Health Insurance Exchanges: State of the States update.

Even with all eyes focused on the Supreme Court’s consideration of the Affordable Care Act, there was plenty of activity in the states this week on the exchange front. In particular, Democratic governors had a rough week moving exchange legislation forward, and in some cases, are now threatening to use Executive Orders to create exchanges.

In Minnesota, Governor Mark Dayton (D) sent a harshly worded letter to Republican legislators, accusing them of obstructing the legislative progress in favor of scoring political points. In his letter, Governor Dayton wrote that, “unfortunately, there are some who would rather play politics with this exchange in an election year, than work sincerely and cooperatively to advance it in Minnesota.” According to the Grand Forks Herald, Governor Dayton also informed Republican lawmakers that if the legislature did not pass exchange legislation he would “utilize the legal executive actions necessary to satisfy the federal law, as has already been done in other states.”

Governor Andrew Cuomo (D) in New York had a similarly difficult week after reaching a tentative State budget deal. With Senate Republicans unwilling to include language authorizing the creation of an exchange in the State’s budget, Governor Cuomo announced on Wednesday afternoon his intention to create a health care exchange by Executive Order. He planned to issue the order by the end of the week, but as of 4PM Friday 3/30, it has not been issued publicly.

Bucking the trend by making progress, Maryland’s House and Senate were able to approve their respective versions of the Maryland Health Benefits Exchange Act of 2012, which sets the standards that will govern the operation of Maryland’s Exchange. However, even though the bills were passed by strong margins, votes were cast largely along party lines with Democrats benefiting from their strong majorities in both the House and the Senate. Differences between the House and Senate versions of the legislation will need to be reconciled in conference committee before heading to Governor Martin O’Malley (D).

As for RFPs/RFIs, next week Oregon will stop accepting responses to an RFI it released to gauge the necessary technological issues for the implementation of its SHOP exchange. Also, Nevada is scheduled to release an RFP on April 2 to procure a “Software as a Service Business Operations Solution” to support the business functions of the Individual and SHOP exchanges. Interested parties should check the Silver State Health Insurance Exchange website next week.

On the private exchange front, Booz & Co released a White Paper this week discussing issues that employers providing health insurance, insurance companies and brokers will face if they embrace private exchanges. The paper also includes highlights from a Booze & Co survey of employers and consumers to gauge their interest in using private exchanges.  Interestingly, the survey finds that 80 percent of employers would prefer to purchase insurance from a private exchange than from a public exchange and while employers generally favor a defined contribution approach, less than 20 percent plan to move to a pure defined contribution arrangement in which they would have little to no involvement in benefits selection and management.

Weekly Health Policy Update: Supreme Court ACA Consideration, CMS Innovation Challenge Grants, and Ryan Budget Approval