MEMORANDUM TO: Trudy Larkins, Executive Director, American-European Congress of Ophthalmic Surgery Jeffrey J.

Kimbell & Associates Friday, May 31, 2013 An Eye on Washington

FROM: DATE: RE:

This monthly report is designed to capture a selection of recent legislative and regulatory activities of interest to the American-European Congress of Ophthalmic Surgery (ACOS). Key Legislative and Regulatory Developments Senate Finance Committee Outlines Tax Reform Proposals, Including Device Tax Repeal On May 23, the Senate Finance Committee released an options paper including tax reform proposals for entitlements and health care. The options paper comes after several Committee meetings and hearings to discuss an overhaul of the tax system. The Committee suggested modifications to provisions of the Affordable Care Act (ACA), including a full repeal of the 2.3% medical device tax and the minimum essential coverage requirement for employers. Some of the additional options discussed include options to simplify the tax code, enforcing identity theft and privacy protections, increasing employee participation in employer-sponsored retirement plans, and efforts to slow the increase in compensation for corporation executives. Other legislative efforts to repeal the device tax have remained at a standstill throughout this month, but there continue to be some conversations on Capitol Hill regarding a path forward to move either the House or Senate repeal bill to the floor for a vote. Currently, the Senate bill (S. 232) has 34 cosponsors, including 4 Democrats, while the House bill (H.R. 523) has 243 cosponsors, including 27 Democrats. The full listing of options is available HERE.

House Energy and Commerce Committee Republicans Release Draft Legislation to Repeal SGR; Senate Finance Committee Solicits Comments from Physician Community On May 28, the House Energy & Commerce (E&C) Committee released a draft legislative proposal to repeal and replace the Sustainable Growth Rate (SGR) formula determining Medicare physician payment. The proposal would first repeal the SGR and replace it with a stable period of fixed payments. A new payment model would then be implemented which incorporates specialty-specific quality measures, as determined by the Department of Health and Human Services (HHS) via rulemaking in collaboration with physician specialty societies and academic publications. Physician payment would then be tied to

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JEFFREY J. KIMBELL & ASSOCIATES ST. N.W., SUITE 650 NORTH | WASHINGTON, DC, 20005 | 202.735.2590 www.kimbell-associates.com

performance in relation to those quality measures. The proposal would also create a process where physicians could choose to opt-out of the new fee-for-service (FFS) model to pursue an alternative payment model that would be approved by HHS. The Committee is soliciting feedback for many elements of the proposal, including timeframes for the stable payment period as well as methods to tie physician payment to the new quality measures. The full draft can be found HERE. Earlier this year, the House Energy and Commerce and Ways and Means Committees indicated they would work together to develop legislation reforming the Medicare physician payment system, but this week's proposal was released by E&C alone. It is unclear how Ways and Means plans to move forward. Both committees share jurisdiction over Medicare Part B, including physician payment. On May 10, Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) released a public letter requesting feedback from physicians and other providers from across the country to bring ideas to the table on how to improve Medicares physician payment system. The full letter can be found HERE.

Bipartisan Concerns Continue over ACA Implementation and Outreach; CMS Finalizes Medical Loss Ratio Requirements for Medicare Advantage (MA) Plans During the month of May, many stakeholders have expressed fear that Centers for Medicare and Medicaid Services (CMS) is ill-equipped and unprepared for health insurance exchange enrollment beginning on October 1, 2013 and full implementation of the exchanges themselves on January 1, 2014. CMS has denied these claims, and has continued rolling out new regulations to implement the exchanges. On April 29, CMS released three versions of the application forms which will be used by consumers to apply for insurance on the state and federal health exchanges created by the. The new applications are between three and seven pages in length, a significant reduction compared to the complex 21-page application the Administration previously released. The Center for Consumer Information and Insurance Oversight (CCIIO) released a guidance document on April 30 giving details on the roles of agents and brokers in health insurance exchanges. Regulatory proceedings for other areas of the law have continued as well. On May 17, CMS finalized rules regarding the medical loss ratio (MLR) requirements for Medicare Advantage (MA) and Part D Plans. This final rule formalized the requirement for MA and Part D plans to spend at least 85% of their revenue on medical expenses a standard which commercial plans are already held accountable for. Implementation of the ACA has also remained a topic of speculation in Congressional hearings as well. On May 21, a House Oversight and Government Reform Subcommittee held a joint hearing where they questioned CCIIO Director Gary Cohen on the Administrations outreach and funding efforts for federal exchanges. This inquisition followed claims that Department of Health and Human Services (HHS) Secretary Kathleen Sebelius reached beyond the legal scope of her authority by soliciting funds from private businesses and charities to help pay for public outreach efforts. Cohen acknowledged that HHS is looking for additional means to fund consumer assistance after Congress denied the Administrations request for an additional $1.5 billion in 2014 to fund the federal exchanges. In the hearing, Republicans also said that training and qualifications for exchange navigators and brokers need to be further clarified as well as increasing oversight for the program.

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JEFFREY J. KIMBELL & ASSOCIATES ST. N.W., SUITE 650 NORTH | WASHINGTON, DC, 20005 | 202.735.2590 www.kimbell-associates.com

Marilyn Tavenner Confirmed as CMS Administrator On May 15, the Senate voted to confirm Marilyn Tavenner as the Administrator of CMS by a vote of 91-7. Tavenners confirmation had been stalled by Senator Tom Harkin (D-IA) for one week due to his opposition to the Administration removing money from the Affordable Care Act (ACA) Public Health and Prevention Fund to help fund health exchange implementation efforts.

CMS Announces that IPAB Spending Triggers Wont Be Hit this Year; Republican Lawmakers Refuse to Nominate IPAB Panel Members The Centers for Medicare and Medicaid Services (CMS) Office of the Chief Actuary announced on April 30 that 2013 Medicare spending did not exceed the level which would mandate a recommendation to Congress for Medicare spending cuts by the Independent Payment Advisory Board (IPAB). This year, the Actuary determined the level which would call for spending cuts was 3.03%, while actual spending per beneficiary was 1.15%. This was the statutory deadline under which the CMS Actuary had to determine, for the first time, whether Medicares per capita growth rate exceeded the targets to require IPAB action. Although there is no immediate action necessary from IPAB, Republicans are not backing down in their efforts to dismantle the panel. On May 17, Senate Minority Leader Mitch McConnell (R-KY) and House Majority Leader John Boehner (R-OH) sent a letter to the Administration stating their refusal to recommend appointees to the Independent Payment Advisory Board (IPAB). In the letter, these lawmakers reiterated their dissent with authorizing an unelected panel to make decisions which would limit seniors access to services and their opinion that IPAB and ACA should be repealed entirely. Senate Minority Whip John Cornyn (R-TX) and Congressman Phil Roe (R-TN) have pointed to the potential conflict of interest that could arise if the Department of Health and Human Services (HHS) is tasked with making cost-cutting recommendations upon failure of a decision made by IPAB, or failure to form the panel altogether. These Senators sent a letter to HHS Secretary Kathleen Sebelius suggesting that she recuse herself from involvement in cost cutting recommendations so as to not show favoritism for future policy decisions of the Administration. The letter is available HERE.

FDA Approves B+L TRULIGN Toric IOL On May 21, Bausch and Lomb (B+L) received Food and Drug Administration (FDA) approval for its TRULIGN Toric posterior chamber intraocular lens (IOL) Pre-Market Approval (PMA) panel track supplement. Following criticism about the accommodative properties of the lens during B+Ls April advisory panel meeting, FDA opted to drop B+Ls true accommodation claim from the approval order statement. More information regarding the approval can be found HERE. Valeant Pharmaceuticals announced an agreement to buy B+L from Warburg Pincus LLC for $8.7 billion on May 28. Ophthalmic Interest Group Activity National Eye Institute

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JEFFREY J. KIMBELL & ASSOCIATES ST. N.W., SUITE 650 NORTH | WASHINGTON, DC, 20005 | 202.735.2590 www.kimbell-associates.com

The National Advisory Eye Council (NAEC), the federal advisory council to the National Eye Institute, will hold a meeting with both open and closed sessions. General Council discussion topics include, novel science opportunities, issues that affect progress in vision research, and advice to the NEI Staff. Date and Time: Thursday, June 13; 8:30 a.m. 2:00 p.m. Location: Natcher Conference Center F1/F2, 45 Center Drive, Bethesda, MD

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JEFFREY J. KIMBELL & ASSOCIATES ST. N.W., SUITE 650 NORTH | WASHINGTON, DC, 20005 | 202.735.2590 www.kimbell-associates.com