Washington Report –January, 2009



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Washington Report –February, 2009

An HBMA Government Relations Publication

Obama Health Team – Part Deux

Economic Stimulus Includes Numerous Health initiatives

Health issues at top of the agenda for the 111th Congress

Comparative Effectiveness, It’s all Relative

National Coordinator Position Formally Established

CIGNA agrees to discontinue use of Ingenix database

Congress Continues To Organize

HHS Announces – Full Steam Ahead on ICD-10

CMS Transmittals

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Obama Health Team – Part Deux

President Obama announced that his nominee for Secretary of Health and Human Services (HHS) is Kansas Governor, Kathleen Sebelius. Sebelius is in her second term as Governor and has developed a reputation as someone who can reach across the aisle and work with Republicans. For example, during her two terms in office, her Lieutenant Governor running mates have been former Republicans.

Sebelius comes from a very political family. Her father is a former Democrat Congressman and Governor of Ohio. Her father-in-law is a former Republican Congressman from Kansas and her husband is a federal magistrate judge for the U.S. District Court for the District of Kansas.

In addition to her executive experience running the state of Kansas, Sebelius was the state’s elected Insurance Commissioner prior to being elected Governor. Sebelius’ nomination is expected to generate opposition from the right-to-life community which has been at odds with Sebelius throughout her two terms as Governor. There is every reason to believe – at this time – that the Senate will confirm Governor Sebelius as the next Secretary of Health and Human Services. However, as we learned from recent experience, nothing is guaranteed.

One thing Governor Sebelius did not get was a dual appointment as the White House Healthcare Reform Czar. When President Obama announced that former Senator Tom Daschle (D-SD) was his original choice to be Secretary of Health and Human Services, he also announced that Daschle would serve as the White House Healthcare Reform Czar. Sebelius was not so lucky. The Healthcare Reform Czar appointment went to Nancy Ann DeParle. White House appointments do not require Senate confirmation.

Many will remember DeParle from her days in the Clinton Administration as the Administrator of the Healthcare Financing Administration (now known as the Centers for Medicare and Medicaid Services or CMS). In addition to her HCFA/CMS experience, DeParle was an Associate Administrator of the Office of Management and Budget under President Clinton and prior to that, served as Commissioner of the Tennessee Department of Human Services where she was responsible for overseeing the Tennessee Medicaid program. DeParle has, for the last few years, been a member of the Medicare Payment Advisory Commission (MedPAC). DeParle is married to New York Times reporter Jason DeParle.

President Obama also announced the appointment of Mary Wakefield, PhD. as Administrator of the Health Resources and Services Administration (HRSA). HRSA is the second largest agency within HHS and oversees those federal programs aimed at improving access to health care and healthcare research. The Community Health Center, Health Professions and Nursing Education, National Health Service Corps, Agency for Healthcare Policy and Research and Office of Rural Health all fall under Wakefield’s authority. Wakefield is expected to play a major role in the development of healthcare policy for the Obama Administration.

A former MedPAC member, Wakefield comes to the HRSA Administrator position as a recognized expert on rural health issues. As the former Chief-of-Staff to U.S. Senator Kent Conrad (D-ND) Wakefield has strong ties to Capitol Hill. Most recently, she has been the Director of the Center for Rural Health at the School of Medicine and Health Sciences, University of North Dakota.

Finally, as the Washington Report was about to go to print, there were reports that President Obama had selected Jon Blum to be the next Director of the Center for Medicare Management. This is a position previously held by Herb Kuhn during the Bush Administration. Blum has been a consultant with Avalere Health for the past few years.

Prior to joining Avalere, Blum served on the professional staff of the Senate Finance Committee where he was the lead advisor on Medicare prescription drug and health plan issues. 

Prior to working for the Finance Committee, Mr. Blum served as an analyst with the Office of Management and Budget (OMB), advising OMB and White House policy officials on Medicare payment policy for providers and health plans and on Medicare reform options.

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Economic Stimulus Includes Numerous Health initiatives

On February 17th President Obama signed H.R. 1, the American Recovery and Reinvestment Act (AKA economic stimulus bill), into law. With one stroke of the pen, the President signed the single largest spending bill ever passed in the history of our country.

The bill is over 1,000 pages long and it includes nearly $800 BILLION in new spending. It should be noted that President Obama never submitted a formal economic stimulus plan to Congress. Instead, this particular piece of legislation was introduced in the House of Representatives days after the President was sworn into office and reflected the collective wisdom of the House Democrat leadership under the direction of Speaker Nancy Pelosi (D-CA). The official description of H.R. 1 reads as follows: “Making supplemental appropriations for job preservation and creation, infrastructure investment, energy efficiency and science, assistance to the unemployed, and State and local fiscal stabilization, for fiscal year ending September 30, 2009, and for other purposes. The official sponsor of the bill is Rep. David Obey (D-WI), Chairman of the House Appropriations Committee.

Just two days after the bill was introduced, it was brought to the House floor for a vote where it passed by the comfortable margin of 244 – 188. Of note, the bill passed the House without any Republican support, despite the President’s stated desire to move a bi-partisan piece of legislation.

On February 10th the Senate passed it’s version of H.R. 1 by a vote of 61 – 37. Unlike the House version, the Senate bill was able to draw the support of 3 Republican Senators who were joined by all Democrats and Independents. The 61 vote tally was important because it enabled the legislation to pass despite an effort by the GOP Senate leadership to mount a filibuster.

Some of the key health provisions in the Economic Stimulus

◆ Expands HIPAA privacy protections to include business associates as statutorily covered entities.

◆ Directed $400 Million dollars to the Department of Health and Human Services to conduct comparative effectiveness research. In addition the Institute of Medicine is directed to produce and submit a report to the Congress that includes recommendations on the national priorities for comparative effectiveness research.

◆ Establishes the Federal Coordinating Council for Comparative Effectiveness Research.

◆ Provides financial incentives for physicians, hospitals and certain other providers for the “meaningful use” of certified EHR systems beginning in 2011.

◆ Directs HHS through the National Coordinator for Health Information Technology, to set standards for ensuring the interoperability of Health Information Technology.

◆ Provides $1.5 Billion in NEW spending for Community Health Center construction and renovation.

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Health issues at top of the agenda for the 111th Congress

On February 24th, President Obama appeared before a joint session of Congress to outline his agenda for the 111th Congress. Healthcare Reform was a major theme of his address.

Although not technically a “State of the Union” address, the speech was just that for President Obama. After presenting his views on what ails the nation and a critique of just how we got to where we are, the President laid out his goals for the next two years. The President noted that “…we must realize that fixing what’s wrong with our health care system is no longer just a moral imperative, but a fiscal imperative." The President went on to note, "Health care reform that reduces costs while expanding coverage is no longer just a dream we hope to achieve – it’s a necessity we have to achieve."

Later in his address, the President said healthcare costs cause, “a bankruptcy in America every thirty seconds.  By the end of the year, it could cause 1.5 million Americans to lose their homes.  In the last eight years, premiums have grown four times faster than wages.  And in each of these years, one million more Americans have lost their health insurance.  It is one of the major reasons why small businesses close their doors and corporations ship jobs overseas.  And it’s one of the largest and fastest-growing parts of our budget. Given these facts, we can no longer afford to put health care reform on hold.”

If you visit the White House health reform page, you can see more information about the president’s plans.



In brief, according to the website,

“The Obama-Biden plan provides affordable, accessible health care for all Americans, builds on the existing health care system, and uses existing providers, doctors, and plans. Under the Obama-Biden plan, patients will be able to make health care decisions with their doctors, instead of being blocked by insurance company bureaucrats. Under the plan, if you like your current health insurance, nothing changes, except your costs will go down by as much as $2,500 per year. If you don’t have health insurance, you will have a choice of new, affordable health insurance options.”

In addition, the website identifies some priorities for the Administration:

• Require insurance companies to cover pre-existing conditions so all Americans regardless of their health status or history can get comprehensive benefits at fair and stable premiums.

• Create a new Small Business Health Tax Credit to help small businesses provide affordable health insurance to their employees.

• Lower costs for businesses by covering a portion of the catastrophic health costs they pay in return for lower premiums for employees.

• Prevent insurers from overcharging doctors for their malpractice insurance and invest in proven strategies to reduce preventable medical errors.

• Make employer contributions more fair by requiring large employers that do not offer coverage or make a meaningful contribution to the cost of quality health coverage for their employees to contribute a percentage of payroll toward the costs of their employees' health care.

• Establish a National Health Insurance Exchange with a range of private insurance options as well as a new public plan based on benefits available to members of Congress that will allow individuals and small businesses to buy affordable health coverage.

• Ensure everyone who needs it will receive a tax credit for their premiums.

The White House also announced that during the month of March it would conduct a series of regional healthcare reform summits to solicit ideas from the American people on what they would like in a reformed healthcare delivery system.

Finally, in late February, the President submitted a budget outline to Congress identifying the President’s budgetary priorities during his term in office. The formal budget is expected some time in April. If you would like to review the budget outline, go to:



Below are some of the highlights for healthcare:

• Establish a Healthcare Reform Fund with $630 Billion as a “down payment” on healthcare reform.

• Accelerate the adoption of health information technology and utilization of electronic health records.

• Expand research comparing the effectiveness of medical treatments to give patients and

physicians better information on what works best.

• Invest over $6 billion for cancer research at the National Institutes of Health as part of the

Administration’s multi-year commitment to double cancer research funding.

• Invest $330 million to increase the number of doctors, nurses, and dentists practicing in areas of the country experiencing shortages of health professionals.

• Strengthens the Medicare program by encouraging high quality and efficient care, and improving program integrity.

The Healthcare Reform fund the President talks about would be funded by a combination of spending reductions and tax increases.

The Medicare payment reductions referenced in the President’s budget would not come from cuts in provider payments. Instead, he proposes that the cuts should come primarily from the Medicare Advantage program. The President’s proposal would be to move from a formula driven payment model for determining MA plan payments, to a competitive bidding model similar to the one proposed for Durable Medical Equipment during the Bush Administration.

The tax increase the President proposed was a limitation on the deductibility of charitable contributions by “high income” taxpayers defined as individual making over $200,000 (or families making more than $250,000).

Reaction to the tax and Medicare ideas was lukewarm at best. Many, including those in the philanthropic community, expressed concern about tax deduction limitation proposal and the effect it would have on charitable contributions from wealthy individuals.

On the spending side, rural legislators expressed concerned about the competitive bidding proposal as this could lead to MA plans pulling out of the less attractive rural markets.

Some Congressional leaders have stated that they want healthcare reform legislation on the floor of the House and Senate before the scheduled August recess.

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Comparative Effectiveness, It’s All Relative

There’s an old saying, “where you stand, depends upon where you sit.” To some policy makers sitting at a table in Washington, DC, the comparative effectiveness (CE) language in the economic stimulus bill is merely intended to help physicians and other providers gain access to the information they need to make appropriate clinical decisions. To some physicians, drug manufacturers and medical equipment suppliers sitting in their offices, that same language is intended to restrict how physicians practice medicine.

Opponents of the comparative effectiveness language are concerned that it is merely the first step in a long-term strategy that allows the government to dictate how medicine in practiced. The worst fears of the CE opponents appeared to be justified by language connected to an early draft of the bill suggesting that the CE research could be used by the government to pay for the least costly treatment options rather than the most effective treatments.

Supporters of CE argued that the descriptive language was inartfully drafted and was not intended to suggest that CE would be used to direct payments to the least costly treatment option.

The final Conference Report accompanying the bill tried to put to rest the concerns of those worried about how comparative effectiveness will be used. The Conference Report states,

“The conferees do not intend for the comparative effectiveness research funding included in the conference agreement to be used to mandate coverage, reimbursement, or other policies for any public or private payer. The funding in the conference agreement shall be used to conduct or support research to evaluate and compare the clinical outcomes, effectiveness, risk, and benefits of two or more medical treatments and services that address a particular medical condition. Further, the conferees recognize that a `one-size-fits-all' approach to patient treatment is not the most medically appropriate solution to treating various conditions and include language to ensure that subpopulations are considered when research is conducted or supported with the funds provided in the conference agreement.”

President Obama’s first budget seeks to further calm fears about the intent of the comparative effectiveness research. The budget document states, “the Administration will continue efforts to produce state-of-the-science information on what medical treatments work best for a given condition. When coupled with electronic health records, these findings can form the basis for clinical decision support tools—distilling all available evidence on the outcomes of different treatment options into user-friendly pop-up alerts for physicians at the point of care.

Comparative Effectiveness research was funded in the economic stimulus bill and the Obama Administration appears intent on building on that initiative. Just how that money will be spent and more importantly, how the findings of that research will be used remains to be seen.

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National Coordinator Position Formally Established

The Office of the National Coordinator for Health Information Technology (ONCHIT) provides counsel to the Secretary of HHS for the development and implementation of an interoperable health information technology infrastructure.

Although we have had a National Coordinator since 2005, the position was created by a Presidential Order rather than by law. This was significant because it affected the financial resources available to conduct the various activities assigned to the office.

ONCHIT provides “management of and logistical support for the American Health Information Community (AHIC).” AHIC is a federally-chartered advisory committee that makes recommendations to the Secretary of HHS on how to make health records digital and interoperable,

As part of the American Recovery and Reinvestment Act, Congress formally chartered the office, identified its areas of responsibility and, more importantly, provided specific funds for the work of this office.

Under the new authority, ONCHIT will be headed by a National Coordinator who shall be appointed by the Secretary and report directly to the Secretary. Through the efforts of this office, it is hoped that

(1) each patient's health information will be secure and protected;

(2) health care costs resulting from inefficiency, medical errors, inappropriate care, duplicative care, and incomplete information will be reduced;

(3) the coordination of care and information among hospitals, laboratories, physician offices, and other entities through an effective infrastructure for the secure and authorized exchange of health care information will be improved;

(4) the early identification and rapid response to public health threats and emergencies, including bioterror events and infectious disease outbreaks will be improved;

(5) the early detection, prevention, and management of chronic diseases will be promoted;

(6) a more effective marketplace, greater competition, greater systems analysis, increased consumer choice, and improved outcomes in health care services will be fostered.

It is expected that once ONCHIT accomplishes these objectives, it will move on to eliminating poverty, world hunger and fostering the end of wars between nations…

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CIGNA agrees to discontinue use of Ingenix database

Under and agreement with New York Attorney General Andrew Cuomo, Cigna Health has agreed to end its use of the Ingenix database to determine reimbursement rates for out-of-network medical services. Critics of the Ingenix database have argued that it has led to underpayments to providers.

Typically when a beneficiary obtains services from an out-of-network provider, the insurer pays only a certain percentage of the usual and customary rates for such services. Determining the “usual and customary” rates has been a controversial component of this model of insurance.

Ingenix, a subsidiary of a major health insurer, runs the Prevailing Healthcare Charges System, a database used by many health insurers to determine the usual and customary rates. According to the Attorney General’s office, the Ingenix database contains information on billions of medical claims it has obtained from dozens of health insurers.

Through the Ingenix system, health insurers are able to compare their out-of-network claims with one another and typically reduce the claim to what the insurer considers a "reasonable" amount.

Many consider this price fixing and a violation of anti-trust laws.

Under the agreement negotiated with the New York AG, Cigna will end use of the database and pay $10 million to help finance the development of a new independent database. Cigna officials said that they hope the new database will make prices for medical services more transparent.

Similar agreements with UnitedHealth, Aetna and several other health insurers were reached earlier this year.

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Congress Continues To Organize

The fast legislative pace of the first few months of the 111th Congress has caused the Senate and to a lesser degree, the House, to delay some of the organizational work that typically would occur in the first few weeks of a new Congress. Recently, Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Chuck Grassley (R-Iowa) announced the panel’s subcommittees for the 111th Congress.  The Senate Finance Committee has jurisdiction over the Medicare and Medicaid programs, as well as U.S. tax policy.

Of particular interest to the health community are those Members who have been appointed to the Healthcare Subcommittee.

 

John D. Rockefeller, IV, West Virginia, Chairman

Orrin G. Hatch, Utah, Ranking Member

Jeff Bingaman, New Mexico

John F. Kerry, Massachusetts

Blanche L. Lincoln, Arkansas

Ron Wyden, Oregon

Charles E. Schumer, New York

Debbie Stabenow, Michigan

Maria Cantwell, Washington

Bill Nelson, Florida

Robert Menendez, New Jersey

Thomas R. Carper, Delaware

Olympia J. Snowe, Maine

John Ensign, Nevada

Michael B. Enzi, Wyoming

John Cornyn, Texas

Jon Kyl, Arizona

Jim Bunning, Kentucky

Mike Crapo, Idaho

Historically, all legislative work to come before the Senate Finance Committee occurs at the full Committee level; however, Subcommittees hold hearings and serve as a sounding board for legislative proposals that may make their way to the full committee for consideration. If you live in a state represented by one of these Senators, you are strongly encouraged to communicate your opinions about healthcare reform to these individuals. They will play a major role in developing the policies and ideas that could be included in any healthcare reform legislation considered by the 111th Congress.

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HHS Announces – Full Steam Ahead on ICD-10

Within minutes of being inaugurated, President Barack Obama’s Chief of Staff, Rahm Emanuel, issued a directive to all agencies that they immediately cease work on all pending regulations. In effect, the Obama Administration wanted to put a halt to any work carried over from the Bush Administration.

The directive from Emanuel addressed those regulations or policy documents in the development stage and clearly applied to anything that had not bee finalized. What was less clear was whether this policy applied to regulations that had been finalized but not yet implemented.

Fro example, just days before they left office, the Bush Administration issued final rules mandating adoption of the ICD-10 and 5010 Code Set transaction standards. Although the final rule was released, the effective date for these rules does not occur for several years.

The Emanuel memo asked agency staff to review all pending actions and permit Obama Administration officials to review the proposals. In addition, agencies were given the discretion to reopen public comment periods if the agency felt this was warranted.

Would the Obama Administration moratorium apply to the ICD-10 and 5010 rules? Would the ICD-10 and 5010 rulemakings and comment period be reopened?

Recently, HHS answered that question. The following announcement was sent out by HHS officials”

In accordance with the White House Chief of Staff’s memorandum of January 20, 2009 entitled “Regulatory Review,” a determination has been made that the effective date (of the ICD-10 and 5010 rules) will not be extended and the comment period will not be reopened for either of these rules.

The first rule finalizes new code sets to be used for reporting diagnoses and procedures on health care transactions.  This final rule replaces the ICD-9-CM code sets, developed nearly 30 years ago, with greatly expanded ICD-10 code sets.  The second final rule adopts updated versions of the standards governing electronic transactions under the authority of the Health Insurance Portability and Accountability Act of 1996.  The updated versions replace the current standards and will promote greater use of electronic transactions.  In response to public comments suggesting that more time would be needed for effective industry implementation, the final rules include later compliance dates.  More specifically, the final rules provide compliance dates of Jan. 1, 2012, for the transaction standards and Oct. 1, 2013, for the ICD-10 code set.

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CMS Transmittals

The following transmittals were issued by CMS in February, 2009.

|Transmittal No. |Subject |Effective Date |

|R1690CP |Reporting the National Provider Identifier (NPI) on Claims for Reference Laboratory and |03/27/2009 |

| |Purchased Diagnostic Services Performed Outside the Billing Jurisdiction. | |

|R1689CP |New Waived Tests |04/06/2009 |

|R451OTN |Incorporation of the National Provider Identifier (NPI) into the National Supplier Clearinghouse|07/06/2009 |

| |(NSC) Enrollment System and Related Instructions | |

|R24COM |Implementation of New Provider Authentication Requirements for Medicare Contractor Provider |N/A |

| |Telephone and Written Inquiries. | |

|R1687CP |Healthcare Common Procedure Coding System (HCPCS) Codes Subject to and Excluded from Clinical |04/06/2009 |

| |Laboratory Improvement Amendments (CLIA) Edits | |

|R1686CP |New Non-physician Practitioner Specialty Code for Speech Language Pathologists |07/06/2009 |

|R103BP |Ambulance Services and Expiration of the Ambulance Fee Schedule Transition Period |03/20/2009 |

|R1685CP |April 2009 Quarterly Average Sales Price (ASP) Medicare Part B Drug Pricing Files and Revisions |04/06/2009 |

| |to Prior Quarterly Pricing Files | |

|R450OTN |System Network Architecture (SNA) Requirements for New CMS-Net Wide Area Network (WAN) |07/31/2009 |

|R1688CP |Clarification of the Medicare Redetermination Notice for Partly or Fully Unfavorable |03/20/2009 |

| |Redeterminations | |

|R57GI |Implementing Validated Workarounds for Shared System Claims Processing by Medicare |03/20/2009 |

| |Administrative Contractors (A/B MACs), Durable Medical Equipment Medicare Administrative | |

| |Contractors (DMEMACs), Carriers, Regional Home Health Intermediaries (RHHIs) and Fiscal | |

| |Intermediaries (FIs) | |

|R448OTN |Request for Common Working File (CWF) to Continue Sending Common Working File Medicare Quality |07/06/2009 |

| |Assurance (CWFMQA) the Existing 4010 File Formats after the CWF July Implementation of 5010 File| |

| |Formats | |

|R284PI |Model Letter Updates |03/20/2009 |

|R1678CP |Outpatient Therapy Caps With Exceptions in CY 2009 |04/06/2009 |

|R443OTN |Payment for Repair, Maintenance and Servicing of Oxygen Equipment as a Result of the Medicare |04/06/2009 |

| |Improvements for Patients and Providers Act (MIPPA) of 2008 | |

|R446OTN |Clarification on Use of National Drug Codes (NDCS) in 837 I Billing |07/06/2009 |

|R1682CP |Clarification of Date of Service (DOS) of Ambulance Services. |03/13/2009 |

|R1681CP |Payments to Institutional Providers with Multiple Service Delivery Locations |07/06/2009 |

|R1683CP |Heartsbreath Test for Heart Transplant Rejection |04/06/2009 |

|R99NCD |Heartsbreath Test for Heart Transplant Rejection |04/06/2009 |

|R447OTN |Corrections to the Inpatient Prospective Payment System (IPPS) Wage Index for Fiscal Year (FY) |05/18/2009 |

| |2009 and the Outpatient Prospective Payment System (OPPS) Wage Index for Calendar Year (CY) 2009| |

|R445OTN |Claims Processing Instructions for Diagnostic Tests Subject to the Anti-Markup Pricing |07/06/2009 |

| |Limitation | |

|R1677CP |Shipboard Services Billed to the Carrier and Services Not Provided Within the United States. |03/13/2009 |

| |This CR rescinds and fully replaces CR 6217. | |

|R102BP |Shipboard Services Billed to the Carrier and Services Not Provided Within the United States. |03/13/2009 |

| |This CR rescinds and fully replaces CR 6217. | |

|R1684CP |Changes to the Laboratory National Coverage Determination (NCD) Edit Software for April 2009 |04/06/2009 |

|R442OTN |Modifier 79 |03/16/2009 |

|R1680CP |Instructions for Downloading the Medicare ZIP Code Files for July 2009 |07/06/2009 |

|R441OTN |Influenza Pandemic Emergency Preparedness -- Additional Guidance Concerning Medicare |03/16/2009 |

| |Fee-For-Service Payment Policies and Billing Instructions | |

|R23COM |Implementation of New Provider Authentication Requirements for Medicare Contractor Provider |N/A |

| |Telephone and Written Inquiries | |

|R435OTN |VMS Modifications to Implement the Common Electronic Data Interchange (CEDI) System, Final |04/06/2009 |

| |Implementation | |

|R438OTN |New "";WW""; Code to Identify a New Source for Topotecan |07/06/2009 |

|R147FM |Chapter 7-Internal Control Requirements Update |03/09/2009 |

|R440OTN |Facet Joints |03/09/2009 |

|R439OTN |Influenza Pandemic Emergency- Additional Guidance Concerning the Medicare Prescription Drug |03/09/2009 |

| |Program (Part D) and Medicare Advantage (Part C) | |

|R436OTN |Re-design of FISS Edits for Hemophilia Clotting Factors on Inpatient Claims |07/06/2009 |

|R437OTN |Health Insurance Portability and Accountability Act (HIPAA) 837 5010 Coordination of Benefits |10/05/2009 |

| |(COB) Requirements---Multi-Carrier System (MCS) | |

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