WASHINGTON WIRE

In this issue, you'll find:

• President Issues Executive Order on Price Transparency
• CMS Releases Report on Specialty Hospitals
• New Initiative to Design Quality Standards for Managed Care Plans
• Plan B Approved Over the Counter
• CMS Releases Quality Standards on DMEPOS
• Congress in Recess Until September 5, 2006

Top Story

President Issues Executive Order on Price Transparency

On Tuesday, August 22, 2006, President Bush issued an executive order addressing health care price transparency and health information technology that will impact federal health care programs under the Department of Health and Human Services (HHS), the Department of Defense, the Veterans Administration, and the Office of Personnel Management, as well as their private health care contractors.

By January 2007, the four federal agencies must have programs established to collect information on the cost and quality of health care, including information on the amounts paid to physicians, other providers, and hospitals for procedures. Each agency will share this information with its beneficiaries and develop programs that measure quality of care with the data collected. These practices may lead to a "pay-for-performance" system of reimbursement.

All agencies, as they implement or upgrade their health information technology, will be required to utilize health information technology systems that recognize "interoperability" standards. Furthermore, the agencies will require that private health care providers and insurers recognize the interoperability standards if they enter contracts with the federal health care programs.

Meanwhile, the House and Senate have both passed legislation to encourage the use of electronic medical records, although neither the House nor the Senate legislation includes provisions on price transparency. Calling the executive order "inadequate," Senate Finance Committee Ranking Member Max Baucus (D-MT) stated that Congress must draft legislation to improve price transparency and encourage the use of interoperable health information technology. Senator Baucus also stated that legislation is necessary to provide proper incentives for health care providers to follow quality standards.

Currently, the Centers for Medicare and Medicaid Services (CMS) collect data on quality measurements only from hospitals in order for the hospital to receive full payment.

Health Care News

CMS Releases Report on Specialty Hospitals

On Tuesday, August 8, 2006, the Centers for Medicare and Medicaid Services (CMS) released a final report to Congress on specialty hospitals -- inpatient facilities that focus on one type of surgical procedure in which a physician has partial ownership or financial interest. Congress requested the regulatory plan to address Medicare payments to specialty hospitals in the Deficit Reduction Act of 2005 (DRA).

Under the plan, doctors would be required to disclose to their patients any financial involvement in specialty hospitals, including how much interest the physician has in the facility and how much the physician is paid. In addition, if the physician's percentage of profits from the specialty hospital exceeds the percentage of his or her ownership stake in the facility, CMS can seek legal action against the hospital for violating anti-kickback laws.

The DRA implemented a moratorium on specialty hospitals until the release of CMS' final report to Congress. The draft specialty hospital report was released in May, 2006 and although the final report was due to Congress by August 8, 2006, the law allowed for a two-month extension. Congressional leaders had urged the agency to utilize the extension.

Prior to the release of the final plan, Senate Finance Committee Chairman Charles E. Grassley (R-IA) and Ranking Member Max Baucus (D-MT) expressed concern with CMS's survey methods used to collect data on specialty hospitals. The data would ideally be used to draft legislation addressing the impact of these hospitals on the health care system.

New Initiative to Design Quality Standards for Managed Care Plans

On Tuesday, August 15, 2006, the National Committee for Quality Assurance (NCQA), a nonprofit organization focused on improving the quality of care, announced a new initiative to develop quality standards for managed care plans.

NCQA aims to create a single uniform set of quality standards to be used for health maintenance organizations (HMOs) and preferred provider organizations (PPOs). Currently, 130 million Americans are members of a managed plan and the majority of the PPOs do not release quality control information to their beneficiaries.

Between August 15 and September 29, 2006, NCQA is seeking public comment to assist with drafting the quality standards. NCQA hopes to have a set of accreditation standards for all types of health plans by 2008. NCQA would like comments to address how PPOs should be accredited on a national or state level, how benefit differences should be addressed, how performance reporting should be conducted, and how to convey plan performance to the public.

Additional information and instructions on submitting comments can be found at www.ncqa.org.

Plan B Approved Over the Counter

On Thursday, August 24, 2006, the Food and Drug Administration (FDA) approved the over-the-counter sale of the emergency birth control for women, Plan B, also referred to as the "morning after pill." Only individuals over the age of 18 will be able to purchase Plan B.

Barr Laboratories, the manufacturer of Plan B, had submitted several applications to the FDA to sell the drug without a prescription beginning in 2003. However, concerns regarding the minimum age requirement prevented the agency from reaching a final decision.

Following the resignation of former FDA Commissioner Lester Crawford, Senators Hillary Clinton (D-NY) and Patty Murray (D-WA) announced they would block a vote on the nomination of then Acting Commissioner Andrew C. von Eschenbach until a decision was reached on Plan B. Thursday's decision is expected clear the way for a confirmation vote on von Eschenbach to head the FDA.

CMS Releases Quality Standards on DMEPOS

On Monday, August 14, 2006, the Centers for Medicare and Medicaid Services (CMS) issued the quality standards for suppliers of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS). This follows shortly after the CMS release of the proposed rule on accreditation of suppliers of DMEPOS. In order to receive reimbursement under Medicare Part B, a supplier must comply with the new quality standards. Additionally, the quality standards will be used in tandem with the new competitive bidding program, scheduled to begin later this fall.

In response to more than 5,000 comments, CMS surprisingly cut the final document from the original 104 pages to 14 pages, aiming to simplify the standards. CMS also appeared to relax some of its proposed requirements that many of the comments identified as too restrictive. For example, CMS eliminated a proposed requirement mandating suppliers to be open at least 40 hours per week. Under the final standards, the business instead must maintain their posted business hours. CMS also reduced the number of product specific standards from fifteen to three. Product specific standards ensure that patients are receiving the proper equipment and that the suppliers are trained and educated to provide patients with the best service.

In addition to the quality standards, CMS released a notice inviting DMEPOS accreditation organizations to apply for deeming authority to apply the new quality standards to suppliers. Applications are due October 2, 2006 and must include the types of DMEPOS suppliers, products and services for which the organization is requesting approval.

The final DMEPOS quality standards can be found at http://www.cms.hhs.gov/CompetitiveAcqforDMEPOS.

Upcoming Events

Congress in Recess Until September 5, 2006

For More Information

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