Hot Button Blog: A Bipartisan Government Relations Firm

On May 17, President Obama issued a presidential memorandum to aid in streamline permitting processes for infrastructure projects.  The memorandum creates a steering committee whose goal is to cut project completion times in half. Among the departments participating are the Departments of Agriculture, Commerce, Defense, Energy, Homeland Security, Interior and Transportation.

ON THE HILL

The Water Resources Development Act of 2013 (WRDA, S. 601) passed the Senate on Thursday by a vote of 83-14. WRDA is estimated to cost $12 billion and provides the U.S. Army Corps of Engineers greater authority in choosing which projects will be pursued. WRDA also streamlines the reviewing and issuance of permits, including environmental permits, for new water projects and authorizes funds for deepening harbors and waterways in preparation for the Panama Canal expansion. WRDA also includes a new program based on the Transpiration Infrastructure Finance and Innovation Act (TIFIA) named the Water Infrastructure Finance and Innovation Act (WIFIA). WIFIA loans and loan guarantees will provide access to low-cost capital for water projects. Finally, WRDA creates a new national levee safety program. Differing from the version passed by the Senate Environment and Public Works (EPW) Committee, an amendment in the final bill would increase Harbor Maintenance Trust Fund (HMTF) funding for port and harbor maintenance $100 million per year for the next six years, starting at $1 billion in FY2014. The EPW version of the bill mandated that all revenues received by the HMTF be used solely for harbor and port maintenance.

Sen. Tom Udall (D-N.M.) withdrew his amendment on Wednesday that would have turned the  streamlining of infrastructure projects into a five-year pilot program. Senate Environment and Public Works Chairwoman Boxer (D-Calif.) and Sen. Udall arrived at a deal that the streamlining provisions would expire after 10 years. Sens. David Vitter (R-La.) and Mary Landrieu (D-La.) withdrew their amendment to suspend flood insurance premiums increases over the next five years after Sen. Pat Toomey (R-Pa.) placed a hold on it.  Sen. Toomey regarded the amendment as a step backwards from flood insurance reform that passed last year. Two amendments from Sen. Tom Coburn (R-Okla.) failed. One was an amendment to strike a provision in WRDA that would increase the time allowed for beach replenishment programs from 50 years to 65. The other would remove restrictions placed on the aforementioned commission to shut down floundering projects so that all Army Corps of Engineers projects are subject to shutdown from the commission.

Of the 14 senators voting nay, only one was a Democrat, Sen. Patrick Leahy (D-Vt.), who objected to the streamlining provisions even with the Boxer-Udall agreement to have them expire after 10 years. Some environmental groups have castigated the streamlining as injurious to environmental surveys. The remaining 13 nays were Republicans. Heritage Action had added the WRDA vote to its influential scorecard based on the premise that the true cost of the bill is over the Congressional Budget Office (CBO) estimation of $12 billion, among other objections. The U.S. Chamber of Commerce endorsed S. 601, and may include it on its annual scorecard. The Obama administration has been critical of the bill. On May 6, the White House released a castigation of WRDA, particularly over its streamlining of new corps projects while a $60 million backlog exists. WRDA does, however, create a commission to deauthorize projects that are no longer feasible or in the federal interest. The House Transportation and Infrastructure Committee will draft its own version of WRDA instead of taking up the Senate bill. Chairman Bill Shuster (R-Pa.) has stated that he will take up WRDA in the summer.

Tomorrow, the Senate Commerce Committee will consider the nomination of Charlotte Mayor Anthony Foxx to Secretary of Transportation.

Seventeen Republicans Senators have written a letter to FAA Administrator Michael Huerta, requesting that he explain why pre-sequester payments were given to FAA employees prior to sequestration cuts. The FAA insists that the payments were not bonuses.

Rep. Earl Blumenauer (D-Ore.) penned an op-ed recently in favor of a national vehicle miles traveled (VMT) tax, lauding Oregon’s VMT pilot program. 

This afternoon, the House Transportation and Infrastructure Subcommittee on Railroads, Pipelines and Hazardous Materials will hold a hearing titled “Understanding the Cost Drivers of Passenger Rail.” Amtrak CEO and President Joseph H. Boardman, among others, will testify.  Testimony and streaming will be available here.

On May 9, Sen. Rand Paul (R-Ky.) introduced S. 911, the Emergency Transportation Safety Fund Act.  The bill would create an emergency transportation fund to repair existing infrastructure, funded by repatriated capital at a repatriation rate of 5 percent. 

On May 7, Sen. Frank Lautenberg (D-N.J.) introduced S. 880, the Safe Highways and Infrastructure Preservation Act of 2013, which would impose an 80,000 lb. limit on the National Highway System. The bill would also render state laws that grant exemptions to such a limit powerless. 

AT THE AGENCIES

President Obama has nominated Michael Whitaker to Deputy Administrator of the FAA.

Maritime Administrator David Matsuda has announced that he is stepping down. He has served as Administrator since 2010.  Beginning at the end of May, interim Deputy Administrator Chip Jaenichen will become the Acting Administrator.

The Department of Transportation announced that it will delay a rule for electronic logging requirements for trucks. The “Electronic Logging Devices and Hours of Service Supporting Documents” rule derived from MAP-21, has been delayed until November 18.

CBO released a new projection for the Highway Trust Fund. After FY2014, when the Moving Ahead for Progress in the 21^st Century Act (MAP-21) expires, the highway account will only have an estimated $4 billion and the transit account will only have an estimated $2 billion. CBO adds that, “Under CBO’s baseline projections, the highway and transit accounts of the Highway Trust Fund will have insufficient revenues to meet all obligations starting in fiscal year 2015. Under current law, the Highway Trust Fund cannot incur negative balances and has no authority to borrow additional funds.”

Yesterday, United Airlines flew a Boeing 787 Dreamliner for the first time in more than four months. The Dreamliner was grounded in January due to a fire caused by its lithium-ion battery. Thus far, Boeing, the FAA and the NTSB have not found a root cause of the fire.  However, Boeing has modified the battery system, the FAA has approved the modifications, the Dreamliner has flown several successful domestic test flights, and the planes have already resumed commercial service overseas.

IN THE STATES

In 39 states, legislators have submitted 85 bills to curb the use of unmanned aerial vehicles, or drones, to protect privacy rights. 

California: The Los Angeles City Council has approved the Southern California International Gateway and its environmental analysis.  The rail yard proposal, however, is mired in controversy, and is expected to be the subject of lawsuits by environmental and social justice groups. The $500 million rail yard proposal would be capable of handling up to 2.8 million 20-foot shipping containers a year by 2035 and 8,200 trucks a day.

Illinois: An audit of the Illinois Department of Transportation has found that in the past two years, less than half of the money spent from the state road fund went directly to road construction costs. The majority of funds expended by the road fund went to Illinois DOT salaries and bond debt. 

Maryland: On May 16, Governor Martin O’Malley has signed the Transportation Infrastructure Investment Act of 2013.  The $4 billion, six-year transportation legislation phases in the higher wholesale gasoline taxes over several years, with the first increase of 1 percent occurring in July and eventually reaching 3 percent in July 2016.  Additionally, it indexes the 23.5¢ per gallon tax on gasoline and 24¢ per gallon on diesel to inflation, allowing automatic increases each year. The increased taxes are expected to generate more than $800 million per year. The law also relies on a federal action to allow states to collect out-of-state sales tax on Internet retailers. If Congress does not pass legislation empowering states to levy this tax by 2015, then Maryland’s sales tax on gasoline will automatically increase an additional 2 percent.

Governor O’Malley has announced $1.2 billion of “first round” in new highway and transit projects to fund.

Virginia: On May 13, Governor Bob McDonnell signed the $6 billion transportation bill into law.  The legislation eliminates the 17.5¢ per gallon retail gasoline tax  and imposes in its stead a 3.5 percent wholesale gasoline tax and a 6 percent tax on diesel. The law also raises titling fees and increases the sales taxes from 5 percent to 5.3 percent. Similar to the Maryland transportation law, it assumes revenues from online sales tax with automatic tax increases if it does not receive that authority from Congress. 

On May 15, the Commonwealth Transportation Board released its working draft of the “Fiscal Years 2014-2019 Six-Year Improvement Program,” which increases transportation funding by $4 billion to $15.4 billion over the next six fiscal years beginning July 1.

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Last week the Senate agreed to vote on Marilyn Tavenner’s nomination to lead the Centers for Medicare and Medicaid Services (CMS); the Department of Health and Human Services (HHS) announced an initiative that will give consumers information on what hospitals charge and posted an initial set of data on CMS’ website; two major Medicare authorizing committees launched significant sustainable growth rate (SGR) reform initiatives; HHS opened the door to a bifurcated exchange approach by allowing Utah to operate its small business exchange itself with the federal government operating the individual exchange; Kentucky Gov. Steve Beshear and West Virginia Gov. Earl Ray Tomblin announced that their states would expand Medicaid; and the Florida legislature closed its session without passing a bill to expand Medicaid.

ON THE HILL

On May 10, the bipartisan leadership of the Senate Finance Committee announced a hearing on May 14 to address ways to reform the SGR, including witness testimony from the Medicare Payment Advisory Commission’s (MedPAC’s) Executive Director Mark Miller, health care consultant and former Government Accountability Office (GAO) analyst Bruce Steinwald, and the Brookings Institution’s Kavita Patel.  It also solicited feedback in an open letter to stakeholders, which asks for specific solutions to improving the Medicare Physician Fee Schedule.  Submissions are due by May 31 to the dedicated mailbox at sgrcomments@finance.senate.gov.

After repeated rejections from Congress for additional funds to set up the Affordable Care Act (ACA), HHS Secretary Sebelius has been reaching out over the past few months to ask health industry executives, community organizations and church groups to make donations to groups like Enroll America that are working to enroll those without insurance and increase awareness of the law.  On May 11, the ranking Republican on the Senate Committee on Health, Education, Labor and Pensions, Sen. Alexander (R-Tenn.), said that Sec. Sebelius’s “fundraising and coordinating with private entities to implement the new health care law may be illegal.”

On May 8, the House Ways and Means Subcommittee on Health discussed ideas for reforming Medicare’s SGR with a group of influential medical practitioners and experts.  Subcommittee Chairman Kevin Brady (R-Texas) said the system "fails to take into account the quality of the care provided or how efficiently that care was furnished."  The committee’s ranking member, Rep. Jim McDermott (D-Wash.) said "we need a policy that rewards quality, not just quantity.  We need a policy that incentivizes team-based, coordinated care, with a strong primary care component."

On May 7, Sen. Tom Harkin (D-Iowa) said he would allow Marilyn Tavenner’s nomination to head CMS to go forward.  He had previously put a hold on Marilyn Tavenner’s nomination because he was upset about cuts the administration had made to the ACA’s prevention and public health fund.  The Senate agreed to vote on Tavenner after an hour of debate, although a specific date for the vote has not been set.

Health care also has taken a place in the immigration debate in which Senators have been engaged.  Part of the debate focuses on the economic impact of allowing undocumented illegal immigrants to become legal immigrants – many lawmakers have expressed concern over the cost of providing Medicare, Medicaid or subsidies for the new health marketplaces to a large group of newly legalized immigrants.  Sen. Orrin Hatch (R-Utah) filed an amendment that would bar the group from receiving ACA subsidies for five years after becoming legal.  Sen. Jeff Flake (R-Ariz.) filed an amendment that would require HHS to ensure those with registered provisional immigration status are not receiving means-tested public benefits and would revoke the registered provisional immigrant status of anyone in that status convicted of fraudulently claiming or receiving federal means-tested benefits.  Other lawmakers are concerned that if this group is denied these subsidies, some of them may get health care in emergency rooms, which could be more costly. 

In response to instances of counterfeit drugs and stolen – and then spoiled – drugs being sold in pharmacies, Congress is working on “track and trace” legislation to help ensure the authenticity and safety of prescription drugs.  Committees in the House and Senate have released draft versions of bills that would require manufacturers to place bar codes on packages of drugs they ship.  The bar codes would be scanned by wholesalers and other middlemen on their way to the pharmacy, at which point the pharmacy would track the drug by its barcode to ensure its authenticity and safety.

On May 7, Rep. Bill Cassidy (R-La.) filed legislation to attempt to create more financial and efficiency accountability for Medicaid funding.  The first version of Rep. Cassidy’s Medical Accountability and Care Act died in Congress last year.

House Majority Leader Eric Cantor (R-Va.) said that the House will vote again to repeal the Affordable Care Act.  The House has already voted more than 30 times to repeal the law, but freshmen congressmen have not yet had an opportunity to vote on the issue.

Conservative House Republicans are exploring options for delaying the Affordable Care Act as part of the debt ceiling fight.  Members of the Republican Study Committee met with the Congressional Budget Office (CBO) to inquire how much savings could be generated from delaying exchange and Medicaid expansion.

IN THE WHITE HOUSE

On May 10 in a Mother's Day-themed event at the White House, President Obama targeted women and young people to promote the benefits of the Affordable Care Act for women – free cancer screenings and contraceptives, among the major perks.  President Obama urged mothers to encourage their adult children to sign up for the health insurance exchanges that open this fall.

On May 9, the Obama administration pledged $150 million for community health centers to provide in-person enrollment assistance to uninsured patients.

AT THE AGENCIES

On May 8, as part of the agency’s efforts to make health care more affordable and accountable, HHS Secretary Sebelius announced a three-part initiative that will, for the first time, give consumers information on what hospitals charge.  New data was released and posted on the CMS website for the 100 most common Medicare inpatient stays, that shows significant variation across the country and within communities in what hospitals charge for common inpatient services.

HHS also announced that it has made about $87 million available to states to enhance their rate review programs and further health care pricing transparency.  The Robert Wood Johnson Foundation, a nonprofit focused on public health issues, is planning a data visualization challenge that would further the dissemination of the data to a larger audience.

IN THE STATES

Notwithstanding the Missouri Governor’s support of Medicaid expansion, the Missouri legislature did not include expansion measures in its 2014 budget.  Neither the state House or Senate included expansion in their blueprints.  They have opted instead to create committees to study the issue for the remainder of the year and report on the impact of expansion in early 2014, which delays any decision on the matter to after the January 1 start date.

On May 9, the Idaho health insurance exchange board met.  The board is working to determine how it can set up a state exchange even with very little done so far.  It has been discussing possibly partnering with the federal government in some ways, while still remaining a “state-based exchange and remaining in control.”

On May 9, Kentucky Governor Steve Beshear announced that his state will expand the Medicaid program to adults earning up to 133 percent of the federal poverty level, covering an additional 300,000 people. 

On May 9, West Virginia Governor Earl Ray Tomblin announced that West Virginia would expand its Medicaid program, making him the 26^th governor to back the expansion.  Governor Tomblin’s office expects the expansion to cover more than 91,000 people in the state.

After months of discussions with state leaders in Utah, HHS agreed on May 10 to let the state run its own small business health exchange but for the federal government to run the individual exchange, as the state requested, potentially opening the door to a bifurcated exchange approach for other states as well.

California has delayed its plan to launch a program to test new ways to coordinate care for dual eligbiles.

IN THE COURTS

On May 7, Dr. Steven Hotze of Houston sued the United States over the Affordable Care Act.  Dr. Hotze argues that the law violates the U.S. Constitution’s origination and takings clause, which were not part of the arguments before the Supreme Court in June.  He also argues that the ACA violates the constitutional requirement that revenue bills originate in the House.

IN THIRD PARTIES

The Urban Institute is out with a new proposal to curb deficit spending.  The report says that capping the tax exclusion for employer-sponsored health coverage could save hundreds of millions of dollars annually.  The proposal is controversial, with some arguing that this would change the health insurance market.

An article from May’s issue of Health Affairs by David Cutler and Nikhil Sahni argued that if the slowed rate of health care spending growth persists, public-sector health spending will be as much as $770 billion less than predicted.

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To view our compilation of recent health care reform implementation news, click here.

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Last week the Centers for Medicare & Medicaid Services (CMS) issued new proposed regulations on FY 2014 payment updates and regulatory policy changes for inpatient and long term care hospitals, skilled nursing facilitates, hospices and inpatient rehabilitation facilities; the Internal Revenue Service (IRS) released a proposed rule on the minimum value of coverage employers must provide to their employees; the Center for Consumer Information and Insurance Oversight (CCIIO) issued guidance explaining the role agents and brokers will play in health insurance marketplaces; Hill leadership, while technically out of session, was busy debating how federal employees will interact personally with insurance marketplaces; and the Department of Health and Human Services (HHS) shortened the application for health coverage in response to concerns that initial enrollment forms were too long.

ON THE HILL

A provision of the Affordable Care Act (ACA) requires lawmakers and their staff to participate in the health-insurance marketplaces. At the end of last week, questions were raised about whether, under the ACA, congressional employees will be able to continue having their health insurance premiums subsidized by the government, or whether they will have to pay 100 percent of their premiums in 2014. Congressional leaders are discussing possible exemptions for Capitol Hill staffers but are sensitive to the potential for political backlash from a decision to exempt them.

On May 1, House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) and Senate Finance Committee Ranking Member Orrin Hatch (R-Utah) released Making Medicaid Work, a blueprint to modernize the Medicaid program. 

IN THE WHITE HOUSE

Speaking at a news conference at the White House on April 30, President Obama said the Affordable Care Act is already benefitting most Americans, even if they do not know it. Major provisions of the Affordable Care Act, however, do not take effect until 2014.

AT THE AGENCIES

CMS announced that the application for health coverage has been simplified and significantly shortened. The application for individuals without health insurance has been reduced from 21 to three pages, and the application for families was reduced by two-thirds. Also, CMS announced that for the first time consumers will be able to fill out one simple application to see their entire range of health insurance options, including plans in the Health Insurance Marketplace, Medicaid, the Children’s Health Insurance Program (CHIP) and tax credits that will help pay for premiums.

This week, CMS, as is usual, issued proposed rules for FY 2014 for inpatient and long term care hospitals, skilled nursing facilitates, hospices and in-patient rehabilitation facilities.  In general, the rules propose modest positive updates and appear to be in line with initial expectations, notwithstanding some novel policy proposals. As always, the rules are proposed and will not be finalized until later this summer. Cozen O’Connor Public Strategies has evaluated the inpatient and long term care hospital rule, and a summary is available here. We will be writing similar summaries of the other rules in the days ahead. Please be advised that there is ample opportunity to comment on these proposals before they go into effect on October 1.

On April 30, the IRS released a proposed rule on the health insurance premium tax credit enacted by the Affordable Care Act. Under the Affordable Care Act, some employees will be eligible for premium tax credits if the coverage provided by the employer does not provide “minimum value.” The rule spells out how to determine the value of coverage an employer must provide in order not to trigger the employer mandate penalty by proposing inputs that will be used to determine whether minimum value has been met.

The Center for Consumer Information and Insurance Oversight (CCIIO) issued a document explaining the role agents and brokers will play in the health insurance marketplaces. The guidance suggests that agents and brokers, including web brokers, will be a major source of marketplace assistance for individual consumers using the marketplaces.

On April 30, the Food and Drug Administration (FDA) eased requirements for purchase of Plan B emergency contraception. Those who are 15 years and older will not need a prescription to get this emergency contraception, which lowers the current age restriction by two years. 

IN THE STATES

House Bill 818 passed through the Pennsylvania House by a vote of 144-53.  The bill is designed to prevent health plans on Pennsylvania’s insurance exchange, when the law kicks in, from including abortion services. The bill reads, “No qualified health plan offered in this Commonwealth through the health insurance exchange shall include coverage for the performance of any abortion.” The Pennsylvania Senate will consider the bill soon.

On April 24, a Louisiana house health panel voted along party lines to defeat a measure that would expand the state’s Medicaid program. A parallel discussion took place in the state Senate Health and Welfare Committee. The senators moved to delay a vote on the bill because they would like to have a representative from the Department of Health and Hospitals answer questions first.

Legislation that would let optometrists, pharmacists and nurse practitioners perform medical tasks currently reserved for doctors passed through the California Senate Business, Professions and Economic Development Committee on April 29.

The dominant insurer in Maryland, CareFirst BlueCross BlueShield, says proposed premiums for new policies for individuals are going to rise by 25 percent on average next year.

IN THE COURTS

On May 2, a group of small business owners and self-employed individuals from six states filed a lawsuit against the federal government arguing that the IRS did not have the authority to impose an employer coverage requirement or the associated penalties in those states with a federally facilitated exchange. The lawsuit was filed in D.C. District Court.

IN THIRD PARTIES

A new study from the Brookings Institution, Bending the Curve, outlines reforms designed to reduce health care spending by improving care and promoting value-based payments.

Forty-two percent of those surveyed in a new Kaiser Family Foundation poll did not know that the Affordable Care Act continues to be the law. Some responded that it had been repealed by Congress; others said it was overturned by the Supreme Court.

A new study from The New England Journal of Medicine, The Oregon Experiment – Effects of Medicaid on Clinical Outcomes, received a lot of press attention this week. The study compares thousands of low-income people in Oregon receiving Medicaid with an identical population that did not. The study shows that those with Medicaid coverage spent more on health care, but were not, however, healthier. A 2008 Medicaid expansion in Oregon based on lottery drawings from a waiting list provided a unique opportunity for this randomized-controlled trial.

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To view our compilation of recent health care reform implementation news, click here.

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President Obama has nominated Anthony Foxx, the Mayor of Charlotte to replace Ray LaHood as Secretary of Transportation.  Mayor Foxx oversaw several large transportation projects during his tenure as mayor, including the construction of a new runway at Charlotte Douglas International Airport, an expansion of the city’s streetcar system and the creation of the Charlotte Regional Intermodal Facility. 

On the Hill

Both the House and the Senate passed S. 853, the Reducing Flight Delays Act of 2013, a bill that directs the FAA to move $253 million from the Airport Improvement Program account to pay for air traffic controller salaries.  The FAA reported hundreds of slowdowns and delayed flights last week due to the furloughs. Under budget sequestration, 15,000 air traffic controllers were furloughed, but this reallocation of funds will allow the furloughs to end at least until October 1. While the bill does not specifically require the funding be used to end the furloughs, the money is expected to be used for at least that purpose.  Overall, the FAA budget will be required to cut the same amount under sequestration, but those cuts have merely been reapportioned. In an infrequent act of speedy legislating, the bill was introduced and passed by unanimous consent in the Senate on April 25, and was passed in the House on a 361-41 vote on April 26.  (The President would have already signed the bill, but the Senate had to pass the bill again due to a typo.)

The bill does not address specifically, however, the future of the funding for the 149 air traffic control towers that the FAA has identified will lose federal funding June 15.  After alleviating the furloughs, the remainder of the $253 million reallocated by the bill, about $21 million, would be enough to continue to fund the towers, but the FAA has not made its intentions clear. 

The House Committee on Transportation and Infrastructure’s Panel on 21st Century Freight held its first hearing on April 24. The Panel on 21st Century Freight, created by Transportation and Infrastructure Chairman Bill Shuster (R-PA), will hold several hearings over the next six months, create a national intermodal freight plan, and recommend legislation to the full committee. Shuster has named six House members to the panel: Rep. John Duncan, Jr. (R-Tenn.), who leads the panel, Rep. Gary Miller (R-Calif.), Rep. Rick Crawford (R-Ark.), Rep. Richard Hanna (R-N.Y.), Rep. Daniel Webster (R-Fla.) and Rep. Markwayne Mullin (R-Okla.). Transportation and Infrastructure Ranking Member Nick Rahall II (D-W.V.) named Jerold Nadler (D-N.Y.) as the lead Democrat for the panel, and appointed Rep. Corrine Brown (D-Fla.), Rep. Daniel Lipinski (D-Ill.), Rep. Albio Sires (D-N.J.), and Rep. Janice Hahn (D-Calif.) as well. In the hearing, Rep. Duncan stressed that the panel will focus on the “multi-modal nature of freight movement,” and seek to relieve the bottlenecks in moving goods across ocean vessels, highways, railroads, air carriers, inland waterways, ports and pipelines.

Rep. Darrell Issa (R-Calif.) and Rep. Zoe Lofgren (D-Calif.) introduced H.R. 1663, the Promoting Automotive Repair, Trade and Sales (PARTS) Act of 2013. The PARTS Act would reduce the exclusivity period that automobile companies currently have on replacement parts for their models from 14 years to 2 ½ years. The bill would allow parts manufacturers other than the original equipment manufacturer to build replacement parts in an effort to increase competition and innovation and decrease price.

A cloture vote has been scheduled for S. 601, the Water Resources Development Act (WRDA) of 2013, on May 6. The U.S. Chamber of Commerce and 169 signees have written a letter of support of the WRDA reauthorization bill. 

Rep. Shuster and Rep. Issa, Chairman of the House Oversight Committee, have requested the Department of Transportation and the FAA provide specificity in their implementation of budget sequestration. Sen. John Rockefeller (D-W.V.), Chairman of the Committee on Commerce, Science, and Transportation, and Sen. John Thune (R-S.D.), Ranking Member of the Committee on Commerce, Science, and Transportation, also requested more specific information on the implementation of budget cuts to the FAA.

At the Agencies

The FAA has formally approved the lithium-ion battery system upgrades to the Boeing 787 Dreamliner.  The upgrades are estimated to cost about $500,000 per plane and take about five days for installation. Ten of the 50 Dreamliners in current operation are presently having the improvements installed. Internationally, however, the Boeing 787 has officially returned to commercial flight, as a Dreamliner departed from Ethiopia this weekend.

The Department of Transportation has released its Notice of Funding Ability for National Infrastructure Investments, although the Department of Transportation is continuing to refer to them as TIGER Discretionary Grants. The continuing resolution passed at the end of March appropriates $473 million in TIGER grants for FY 2013. TIGER grant applications are due June 3.

In the States

New York: On April 24, The Port Authority of New York and New Jersey approved contracts totaling $3 billion of work on the Bayonne Bridge, Goethals Bridge and Outerbridge Crossing.  The Bayonne Bridge needs to be raised to accommodate ships from the expanded Panama Canal. The Goethals Bridge will be entirely reconstructed. Both the Bayonne Bridge and the Goethals Bridge will have pedestrian walkways added. Construction for all three projects is expected to begin by the end of 2013.

Louisiana: Mitch Landrieu, Mayor of New Orleans, announced new $650 million terminal will be created at Louis Armstrong New Orleans National Airport. The terminal is expected to begin construction in early 2014 and open in May 2018.

Virginia & Maryland: Under the transportation plans passed this year under both Maryland Governor Martin O’Malley and Virginia Governor Bob McDonnell, state gasoline taxes for each states are linked to federal action on Internet sales taxes. Both transportation bills that passed this year assume a certain amount of revenue that can be collected in sales tax from out-of-state, online retailers, and if Congress doesn’t pass a bill that permits states to collect Internet sales taxes by the end of 2015, then gasoline taxes are automatically increased. Currently, the Senate is considering S. 743, the Marketplace Fairness Act of 2013. On April 25, the Senate voted to end debate on the bill 63-30, which sets up a final (simple majority) vote on May 6. President Obama supports the bill, but it may face opposition from Republicans in the House if they consider it a tax increase.

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Marilyn Tavenner received bipartisan support from members of the Senate Committee on Finance in her confirmation hearing to lead the Centers for Medicare and Medicaid Services (CMS) though a full Senate vote is being held up, the president released his FY 2014 budget proposal with health care reform and specified reimbursement reductions to providers and manufacturers totaling $400 billion over 10 years sprinkled throughout it, and Department of Health and Human Services (HHS) Secretary Sebelius received a warm welcome from the Senate Committee on Health, Education, Labor & Pensions but faced tough questions from members of the House Committee on Ways and Means and Senate Finance Committee Chair Max Baucus, who announced his retirement this week but called the secretary’s health reform implementation efforts a “train wreck.”

IN THE WHITE HOUSE
On April 10, the president released his FY 2014 budget proposal. As is always the case, the president’s budget is a non-binding proposal meant to serve as a guide for Congress to the president’s priorities. The budget would give HHS about $1.5 million for setting up marketplaces and helping consumers navigate them. It also would reduce growth in Medicare spending by $371 billion over the next decade. Changes to Medicare include requiring higher cost sharing for new Medicare beneficiaries, making wealthier seniors pay more of their Part B and D premiums, closing the doughnut hole by 2015 instead of 2020 as in the Affordable Care Act, and cutting payments to hospitals and other providers for bad debt and graduate medical education over the next 10 years. The budget also suggests delaying the planned reduction to hospitals in disproportionate share payments to offset the charity care they provide. The proposal would eliminate the Center for Disease Control and Prevention’s Preventive Health and Health Services Block Grant Program, and expand and simplify the tax credits provided to small businesses for their non-elective contributions to employee health insurance. The budget requests $305 million for the IRS to pay for IT to implement the health law – in total, the plan calls for about $440 million and nearly 2,000 more workers to implement the law.

AT THE AGENCIES
On April 9, the Senate Finance Committee held a confirmation hearing for President Obama’s nominee to lead CMS, Marilyn Tavenner. Tavenner has been the CMS acting administrator on an interim basis for over a year.  It has been about six years since the Finance Committee last held a confirmation hearing for a CMS administrator.  Tavenner is expected to be confirmed.  Sen. Orrin Hatch, the ranking Republican on the Senate Finance Committee, said he supports Tavenner’s nomination.  House Majority Leader Eric Cantor introduced Tavenner and expressed strong support in his introduction.  Tavenner said she would run the agency as a business.  On April 23, the Senate Finance Committee voted to approve Tavenner’s nomination. Then on April 24, Sen. Harkin delayed Tavenner’s full vote in response to CMS’s use of the public health and prevention money for ACA implementation. We do not expect this to be a permanent problem for Tavenner and expect her to be confirmed in the near future.

On April 8, CMS issued a pair of proposed rules that would extend the safe harbor exception for donated electronic health records systems from December 31, 2013 to December 31, 2016, when the Medicare meaningful use incentive program also ends.

ON THE HILL
On April 24, bipartisan members of the Senate Committee on Finance released an analysis outlining a comprehensive overview of the policy and legislative recommendations received from 146 stakeholders in the health care community on ways to improve federal efforts to combat waste, fraud, and abuse in the Medicare and Medicaid programs.

On April 12, Sec. Sebelius testified at a hearing before the House Ways and Means Committee on the president’s budget.  She told the committee that the federally run insurance exchange would be up and running by October 1.  Sec. Sebelius explained that the exchange data hub was “basically built and paid for” but also that implementation funding was still a challenge. Though many expect House Republicans will be unwilling to provide additional funding for reform implementation, members of the committee did not explicitly say so at the hearing.

On April 17, Secretary Sebelius testified before the Senate Committee on Finance. Chairman Max Baucus questioned the law’s implementation and said he “see[s] a huge train wreck coming down.” Sen. Baucus was a key architect of the Affordable Care Act. Then on April 23, Sen. Baucus announced that he would not seek reelection in 2014.

House Republicans were pushing H.R. 1549, The Helping Sick Americans Now Act, which would divert money from the ACA's Prevention and Public Health Fund to fund the Pre-Existing Condition Insurance Plan through the remainder of the year. In February, HHS had announced it was suspending enrollment because its $5 billion appropriations were depleted. The House canceled a vote on the bill on April 24, when it became clear there were not enough votes.

On April 24, CMS Center for Consumer Information and Insurance Oversight (CCIIO) Director Gary Cohen testified before the House Energy and Commerce oversight subcommittee. House Republicans expressed deep concern to Cohen that the health insurance exchanges would not be ready in time for open enrollment, and Cohen assured them that HHS was on schedule.

IN THE STATES
Five states were awarded $275.6 million from the Obama administration to continue building health insurance exchanges.  Hawaii received $128.1 million, Illinois received 115.8 million, Arkansas received $16.5 million, New Hampshire received $5.4 million and Rhode Island received $9.8 million.

On April 18, the Ohio House of Representatives passed its budget in House Bill 59 without Governor Kasich's proposed Medicaid expansion. The House is calling for a separate debate on this issue and the budget includes an amendment that will make it possible to revisit the issue.

On April 16, the Arkansas House voted 77-23 to approve an appropriation bill that plans on Medicaid expansion in the state, and on April 17 the Arkansas Senate approved a "private option" Medicaid expansion as well, 28-7.  Unlike traditional Medicaid or the expanded Medicaid originally envisioned by the ACA's drafters, the Medicaid expansion proposed in Arkansas would use federal Medicaid dollars to buy private coverage in insurance exchanges.  On April 23, Arkansas Gov. Mike Beebe signed the plan into law.  The Obama administration has agreed to the plan in principle but has not yet given final approval.  Arkansas officials will travel to Washington soon to present the plan.

On April 16, North Dakota Governor Jack Dalrymple(R) signed legislation to expand Medicaid in the state. The expansion is expected to grow the program from covering about 65,000 a month to 85,000 a month.

On April 16, the Iowa Senate Ways and Means Committee advanced a bill that would extend a state tax break to small businesses that cover their employee's health care costs.

IN THIRD PARTIES
A new study by the Kaiser Family Foundation predicts that by 2019, annual health care cost growth will be over 7 percent, compared to the 3.9 percent between 2009 and 2011.  The study attributes most of this disparity to the poor economy, but suggested that structural changes in the health care system may be playing a role as well.

A new study from Families USA says that almost 26 million individuals will be eligible for tax credits through the ACA to help them purchase health insurance in marketplaces.

On Friday (4/19), Alan Simpson and Erskine Bowles, who lead President Obama's 2010 National Commission on Fiscal Responsibility and Reform, released a new deficit reduction proposal.  The plan aims to cut the deficit by a total of $5.2 trillion over 10 years.   The proposal is similar to the original Simpson-Bowles plan but more modest.  It would cut deficits by $2.5 trillion.

The Bipartisan Policy Center issued a report on health care cost containment with recommendations for the next phase of health reform.  The plan suggests over 50 recommendations, which would cut the federal deficit by about $560 billion over the next 10 years.

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Last week, President Obama released his FY2014 budget, outlining several proposals to fund new infrastructure programs.  The budget proposes $40 billion for “Fix it First” projects to repair existing infrastructure, as well as $10 billion for new infrastructure spending.  The proposal also includes a call for the creation of a National Infrastructure Bank, a policy he alluded to in his State of the Union address this year.  The National Infrastructure Bank would utilize both loans and loan guarantees and would operate as “an independent, wholly-owned Government entity outside of political influence.”  The budget additionally proposes an America Fast Forward (AFF) Bonds program to attract private capital for infrastructure investment, such as public pension funds or foreign investor funds.  The budget includes $40 billion over five years to fund development of passenger rail programs, particularly high-speed rail, and $1 billion for the implementation of the Next Generation Air Transportation System (NextGen).  Absent from the budget proposal, however, were methods to fund the aforementioned infrastructure programs.

The International Longshoremen’s Association (ILA) has approved a new six-year contract that would cover about 15,000 dockworkers on the Atlantic and Gulf coasts.  The negotiations between the  ILA and the U.S. Maritime Alliance (USMX) have been ongoing for over a year and have nearly resulted twice in strikes, first in December 2012, then again in February 2013.  The contract includes a $1 hourly wage increase in 2014, 2016 and 2017, a new payment advancement scale, protection of ILA members displaced by new technology, container royalties split between the ILA and USMX exceeding $225 million, and employer contributions of $1 per hour to local pensions and benefits. 

ON THE HILL
Members of Congress wrote Secretary of Transportation Ray LaHood and the Federal Aviation Administration (FAA) last week expressing their opposition to federal funding cuts to 149 air traffic control towers on June 15.  Most notable of the signatories of the bipartisan letter were Sen. Jay Rockefeller (D-W.V.), Chairman of the Senate Commerce Committee, Sen. John Thune (R-S.D.), Ranking Member of the Senate Commerce Committee, Rep. Bill Shuster (R-Pa.), Chairman of the House Transportation and Infrastructure Committee, and Rep. Nick Rahall (D-W.V.), Ranking Member of the House Transportation and Infrastructure Committee.

Several bills have been introduced to continue funding some or all of the towers.  In the House, Rep. Tom Cotton (R-Ark.) introduced H.R. 1432, the Air Traffic Control Tower Funding Restoration Act, which would prevent the cuts and provide the $50 million in funding through cutting the FAA’s research and facilities funding.  In the Senate, Sens. Richard Blumenthal (D-Conn.) and Jerry Moran (R-Kan.) introduced S. 687 to prohibit the closing of air traffic control towers.  The bipartisan S. 687 currently has 29 cosponsors. 

The Senate voted 87-11 to confirm Sally Jewell to head the Department of Interior.  Prior to her confirmation, Jewell was the CEO of REI.  The confirmation comes after Sen. Lisa Murkowski (R-Alaska) and the Department of Interior negotiated a deal to revisit the Department of Interior’s decision to block construction of a road that would provide health care access to Aleutian villagers through the Izembek National Wildlife Refuge.  Sen. Murkowski had been considering placing a hold on the nomination prior to this agreement.

The Congressional Budget Office has scored S.601, the Water Resources Development Act (WRDA) of 2013.  Whereas the WRDA of 2007 was scored at $23.2 billion over 10 years, S.601 has been scored as costing $12.5 billion over the next 10 years (while requiring $135 million in offsets).  The WRDA reauthorization bill lacks earmarks, which contributed to the higher WRDA of 2007 score.  To avoid earmarking, S.601 grants authority to the U.S. Army Corps of Engineers to determine which projects will receive authorized funds.

Rep. Rosa DeLauro (D-Conn.) released a statement announcing her intention to reintroduce her bill, the National Infrastructure Development Bank Act, this Congress.  In the 112th Congress, H.R. 402 had 78 co-sponsors, all of whom were Democrats. 

AT THE AGENCIES
The FAA has postponed its air traffic control tower funding cuts for two months.  The FAA has announced that it will stop funding all of the 149 air traffic control towers on its list on June 15, achieving about $600 million in budget cuts to satisfy budget sequestration.  Originally, the FAA intended to cut funding at three staggered dates: 24 towers would have lost funding April 7, another 46 towers would have lost funding April 21, and the remaining 79 towers would have lost funding on May 5.  The delays, however, are still prompting criticism from several lawmakers and industry groups.  The American Association of Airport Executives and several individual airports have filed suit against the FAA in an effort to prevent some of the funding cuts.  The loss of funding does not necessarily mean that all of these towers will close; some state governments are considering funding some towers in lieu of federal funding.

Amtrak ridership has increased by one percent in the first half of FY2013.  Amtrak has seen ridership increases in 26 of its 45 routes.  In FY2012, Amtrak recorded a record ridership high of 31.2 million passengers.  March also set a record for the most ridership in Amtrak’s history.  2.8 million riders used Amtrak in March, a 1.9 percent increase from March 2012.

Boeing completed its sole test flight for the FAA’s re-rectification process of the 787 Dreamliner.  The flight was reportedly “uneventful” and was to demonstrate that the newly redesigned lithium ion battery system is safe and not prone to the battery fire issues that grounded the plane in January.  The FAA has not indicated what the review process timeline will be moving forward.  Regardless, British Airways has committed to purchasing 18 new Dreamliners.

On March 29, the Department of Transportation released a total of $1.4 billion in Superstorm Sandy aid to the Metropolitan Transportation Authority, PATH, New Jersey Transit, and the New York City Department of Transportation.  By statute, $2 billion had to be allocated to reimburse transit agencies by the April 1 deadline.  Prior to these transfers, $554 billion had been allocated to transit agencies in New York, New Jersey, Pennsylvania and Connecticut in early March. 

Customs and Border Protection has delayed its implementation of furloughs and overtime cuts in response to increased funding over sequestration levels in the continuing resolution.

BEFORE THE COURTS
The Supreme Court denied certiorari to Spirit Airlines v. U.S. Department of Transportation, an airline challenge to a 2012 Department of Transportation rule requiring airlines to display the total price of a ticket most prominently including in the largest type size.  The plaintiffs claimed that rule is a violation of speech rights as it prevents airlines from suitably demonstrating the impact of taxes and fees on the final price of a flight, as well as unfair because other industries are not required to demonstrate prices and taxes in such a manner.

The merger of American Airlines and US Airways has cleared federal bankruptcy court.  The merger still requires approval from the Department of Justice and US Airways shareholders.  The merger will give shareholders of the AMR Corporation 3.5 percent  of the new airline.

IN THE STATES
After the failed Port of Virginia privatization, Fitch Ratings believes that future “port privatizations will be similarly challenging.”

California: Los Angeles has completed a 30-year, $400 million software synchronization of all of its 4,500 traffic signals.  The effort to boost commuter and vehicle efficiency will reportedly raise the average automobile speed to 17.3 miles per hour from 15 miles per hour and significantly reduce average driving times. 

Maryland:  The Maryland Senate has joined the House of Delegates in passing the transportation bill, on a vote of 27-20.  The bill would phase in the higher gasoline taxes over several years, with the first increase of 4¢ occurring in July.  The bill indexes the 23.5¢ per gallon tax on gasoline to inflation, allowing automatic increases each year.  The bill also relies on a federal action to allow states to collect out-of-state sales tax on Internet retailers, as does an early passed Virginia transportation bill.  If Congress does not pass legislation empowering states to levy this tax by 2015, then Maryland’s sales tax on gasoline will automatically increase an additional 2 percent.

Massachusetts: State lawmakers are considering various tax increases to fund transportation.  The $500 million package would raise the gasoline tax by 3¢, increase taxes on tobacco products, including an additional $1 tax per pack of cigarettes, and modify the tax code with respect to computer software design.  The increased revenue is projected to create more than $300 million to invest in infrastructure by 2018.  Governor Deval Patrick has an alternative package that would increase the income tax to 6.25 percent and lower the sales tax to 4.5 percent to fund $1.9 billion in  education and  transportation projects.

Michigan: Governor Rick Snyder signed SB 233, granting $21 million to dredge 58 harbors.  He also signed SB 252, which provides low-interest loans to dredge private marinas.

New Hampshire: The New Hampshire House of Representatives has given its final approval of a 12¢ gasoline tax increase on a 206-158 vote.  The bill originally passed in the House on March 6 and touted a 15¢ tax.  As the bill involves state revenue, it had to return to the House Ways and Means Committee again, and be voted on a second time to pass. The bill advances to the Republican-controlled Senate, where it faces little chance of advancing to the Governor.

New York:  The New York Metropolitan Transportation Authority is constructing a two-mile long steel seawall to prevent future flooding.  The $38 million project will stretch along the A subway line to the Rockaway peninsula, and be seven feet taller than the rails. 

Virginia: Governor Bob McDonnell’s proposed changes to the General Assembly-passed transportation bill have been approved by both houses of the General Assembly.  Among Gov. McDonnell’s changes is a reduction to the proposed hybrid vehicle annual fee, reducing the proposed fee from $100 to $64.  In the original General Assembly-passed package, the motor vehicle sales tax was increased from 3 percent to 4.4 percent, but Gov. McDonnell’s submitted changes proposed an increase from 3 percent to 4.15 percent.  The plan is expected to raise almost $6 billion over five years.

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While Congress was in recess, the Centers for Medicare and Medicaid Services (CMS) surprised many when it changed course on Medicare Advantage payment rates – switching from a 2.3 percent reduction to a 3.3 percent increase, the Department of Health and Human Services (HHS) announced a one-year delay for the small business health options program exchange to offer multiple health plans, and HHS released a final rule detailing the expanded Medicaid program and confirming that the federal government would cover 100 percent of the expenses for newly eligible Medicaid beneficiaries.

AT THE AGENCIES

On Monday (4/1), CMS surprised many when it announced that it would change the 2.3 percent cut to Medicare Advantage rates to a 3.3 percent increase.  Prior to the news, health insurers were predicting painful changes for Medicare Advantage customers.  The initial rates included in the proposed regulation assumed that there would be significant cuts in physician payments, and in turn lower Medicare costs, because of the Sustainable Growth Rate.  The switch follows a report from the Congressional Research Service, which said CMS could assume that Congress would avoid major cuts to Medicare physician reimbursements at the end of the year, and letters from Senate Finance Committee Chairman Max Baucus, Ranking Member Orrin Hatch and 98 House members to CMS expressing concern about the proposed rates.

On Wednesday (4/3), CMS released a proposed rule that outlines standards for navigators in federally facilitated and state partnership markets.  Navigators will help educate consumers on available health coverage options and will assist them in shopping for health insurance.

On Tuesday (4/2), CMS published an update to the clinical quality measures for hospitals participating in the meaningful use program for electronic health records (EHRs).  Prior to the update, hospitals were required to use EHR systems that met the clinical quality measure specifications of the December 2012 interim final rule.  Now, however, CMS is encouraging the use of updated clinical quality measures.

HHS announced a one-year delay to a requirement of the small business health options program (SHOP) exchange this week.  Though small businesses were supposed to be able to choose from multiple health plans through insurance exchanges beginning in 2014, HHS granted an extra year for the requirement to offer multiple plans on SHOP exchanges.

On Friday (3/29),  HHS released a final rule describing the methodology states will use for claiming a higher match rate for newly eligible Medicaid beneficiaries.  The regulation implements the ACA provision that authorizes states to expand Medicaid to adults under 65 with incomes up to 135 percent of the federal poverty level.  The federal government will cover the full cost of newly eligible beneficiaries for the next three years, and afterward the federal contribution will gradually be phased down to 90 percent by 2020.

The National Association of Insurance Commissioners had its annual spring meeting on Friday (4/5).  At the meeting, a draft paper titled "Rate Increase Mitigation Strategies" was presented.  The paper addresses the "rate shock" that may be caused by the ACA.

ON THE HILL

On Thursday (4/4), Sen. Chuck Grassley (R-Iowa) sent a letter pressing CMS for information about how a Wall Street analyst was able to learn about the Medicare Advantage rates in advance of CMS’s official announcement.

On Friday (4/5), Reps. Joe Pitts (R-Pa.) and Michael Burgess (R-Texas) of the House Ways and Means Subcommittee on Health released a press release offering suggestions for making health reform more affordable.  Suggestions offered in the release include creating a premium increase safety valve, allowing state coverage compacts, giving Americans coverage options like those of members of Congress, ensuring consumers who like their insurance can keep it, prioritizing coverage for Americans with pre-existing conditions over wasteful spending, and replacing price controls with market-based solutions and incentives.

IN THE STATES

Vermont posted its partnership plan proposals this week, listing the prices residents can expect for health insurance coverage  in 2014.  The Vermont Department of Financial Regulation posted a summary sheet that compares what Blue Cross Blue Shield Vermont and MVP Health Care – two carriers that have filed proposed rates with the department – might charge for coverage for singles, couples, single parents with children, and couples with children.

An amendment to a bill that lays out health care exchanges passed the Virginia House and Senate.  The amendment bars health insurance plans sold through a federal exchange from covering most abortions.

Pennsylvania Gov. Tom Corbett met with Sec. Sebelius on Tuesday (4/2) to discuss Medicaid expansion.  Neither HHS nor Gov. Corbett publicly reported any developments after the meeting.  Gov. Corbett said the meeting was “meaningful,” that he asked the secretary for  answers to key questions and that he is still considering the options for Pennsylvania.

On Friday (4/5), Center for Consumer Information & Insurance Oversight (CCIIO) Director Gary Cohen sent Massachusetts a letter granting it permission to phase in certain rules Massachusetts business leaders had argued would have led to rate shock in 2014.  Massachusetts will be permitted to phase out certain rating standards such as age, smoking status and wellness.

IN THE COURTS

On Thursday (4/4), the Department of Justice filed a brief in the 4^th Circuit Court of Appeals arguing that the Anti-Injunction Act prevents the court from hearing the case of Liberty University, which continues to challenge the ACA’s employer mandate and argues that the reform law provided federal funding for abortions.

Federal Judge Edward Korman ruled on Friday (4/5) that the most common morning after pill be made available over the counter for all ages, rather than requiring a prescription for girls 16 and younger.  The Food and Drug Administration has recommended this type of unrestricted access for years, however both President Obama and Sec. Sebelius have supported restricting over the counter access to morning after pills for those younger than 17.

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This Friday, President Obama will visit the Port of Miami. On July 19, 2012, President Obama put the Port of Miami on his “We Can’t Wait” list of expedited infrastructure projects to instruct the Army Corps of Engineers to deepen the federal navigation channel at the port from 42 feet to 50 feet.

The American Society of Civil Engineers released its 2013 Report Card for America’s Infrastructure, awarding a D+.  In 2012, the ASCE gave America’s Infrastructure a flat D.  This year, the ASCE added ports as a new category, which received a grade of C.

ON THE HILL

Yesterday, President Obama signed the continuing resolution (CR) that Congress passed last week, funding the government for the remaining six months of FY2013.  The final version mostly funds the Moving Ahead in Progress for the 21st Century Act (MAP-21).  Whereas the original CR passed by the House included cuts to transit, roads and transportation safety at MAP-21 levels, the CR fully funds those programs.  The Projects of National and Regional Significance Program, which was created by MAP-21 and authorized $500 million for the program, was eliminated in the continuing resolution. Federal aid for highways and transit formula grants are fully funded at MAP-21 levels under the CR.  

This past weekend, the Senate passed S.Con.Res 8, the Senate FY2014 budget bill, on a vote of 50-49.  The budget proposal includes $50 billion to repair the nation’s infrastructure, through fixing roads bridges and airports, updating transit systems, and making room for pedestrians and bicyclists.  The proposal also includes $10 billion for an infrastructure bank and $10 billion to repair dams and dredge ports.

Of the 500+ amendments proposed to the Senate budget, several were infrastructure-related.  Sen. Al Franken (D-Minn.)’s amendment to bring broadband infrastructure investments to rural areas was agreed to by unanimous consent.  Sen. Pat Toomey (R-Pa.)’s amendment to increase funding for the inland waterways system was also agreed to by unanimous consent.  Sen. Rand Paul (R-Ky.) proposed an amendment to fund $8 billion to repair deficient bridges and $8 billion to pay down the federal deficit, offset by $15 billion in cuts to foreign aid and $1 billion in cuts to the Department of Energy loan guarantee program.  The amendment failed by a vote of 26-72. 

Many of the infrastructure-related amendments did not receive a vote, including the following.  Sen. Paul introduced an amendment to privatize the Transportation Security Administration (TSA).  Several amendments were introduced to reverse the TSA’s ruling that some small knives would be permitted on flights.  Sen. Jim Inhofe (R-Okla.) introduced an amendment to modify the methodology of the Department of Transportation’s compliance, Safety, Accountability Program.  Sen. Inhofe also introduced an amendment to create a point of order against legislation that would impose a user fee with respect to general aviation.  Sen. David Vitter (R-La.) proposed an amendment aimed at improving the solvency of the Highway Trust Fund by imposing fees on federal agencies that fail to meet specified deadlines relating to surface transportation projects under the National Environmental Policy Act of 1969.  Sen. Vitter also introduced an amendment to improve the solvency of the Highway Trust Fund through net increase federal revenues from onshore and offshore domestic energy leasing on federal land.

Sen. Amy Klobuchar (D-Minn.), Chairwoman of the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights, and Sen. Vitter have introduced S. 638, the Railroad Antitrust Enforcement Act, to end the antitrust status of freight rail.  Shippers have lauded the bill, and the effects of ending railroad antitrust exemptions may save consumers an average of about $100 yearly.  The Association of American Railroads has castigated the bill, saying it unnecessarily complicates the law and undermines private investments made to America’s freight rail.

On March 20, the Senate Environment and Public Works Committee unanimously approved S. 601, the Water Resources Development Act of 2013 in a 15 minute markup.  The bill includes provisions to require new taxes collected for the Harbor Maintenance Trust Fund be exclusively spent on dredging and other port maintenance projects.  The bill, co-sponsored by Chairwoman Barbara Boxer (D-Calif.) and Ranking Member David Vitter (R-La.), would also streamline environmental reviews through requiring the Army Corps of Engineers to coordinate with other involved agencies and to simultaneous perform the environmental reviews.  Agencies that miss deadlines in the environmental permitting process will be penalized $10,000 to $20,000 per week, capped at 5 percent of the office’s yearly funding.  The bill also authorizes a two-year study on inland waterways revenue collection and more efficient ways to collect it.  The last Water Resources Development Act passed in 2007 over President Bush’s veto.

On March 13, Rep. Maxine Water (D-Calif.) introduced H.R. 1124, the TIGER Grants for Job Creation Act.  The bill would, upon enactment, provide an additional $1 billion to the Department of Transportation’s TIGER grant program, and exempt that money from budget sequestration.

Rep. Ed Whitfield (R-Ky.) and Rep. Daniel Lipinski (D-Ill.) introduced H.R. 1149, the Waterways are Vital for the Economy, Energy, Efficiency, and Environment Act of 2013 (WAVE 4).  If enacted, WAVE 4 will modernize the lock and dam infrastructure on the inland waterways system.  The bill would reform the U.S. Army Corps of Engineers’ internal project delivery process, prioritize essential construction and major rehabilitation projects, and revise current beneficiaries’ cost-sharing for these projects.  To fund improvements, the bill would impose a 30-45 percent increase in the existing user fee.

On March 14, a bipartisan coalition of Illinois legislators introduced the Water Infrastructure Now Public Private Partnership Act. Sen. Dick Durbin (D) and Sen. Mark Kirk (R) introduced S. 566, and Rep. Cheri Bustos (D) and Rep. Rodney Davis (R) introduced its companion bill, H.R. 1153.  The bill would create a pilot program to explore alternatives to traditional financing, planning, design, and construction models for the Army Corps of Engineers and encourage public-private partnerships.  If enacted, the bill would authorize the pilot program for five years to identify up to 15 previously authorized navigation, flood damage reduction, and hurricane and storm damage reduction projects for participation. 

AT THE AGENCIES

The Federal Aviation Administration (FAA) has reduced the number of air traffic control towers it will close from 179 to 149.  The FAA released a statement that the closures are necessary to pare the $600 million from its budget under sequestration.  Administrator Michael Huerta has reiterated that all sequestration-related budget cuts, including these tower closings, will be and have been made without compromising safety.  The FAA has cut its travel budget by 30 percent and canceled conference attendance for the rest of the calendar year.

Sen. Lisa Murkowski (R-Alaska) announced that she and the Department of the Interior have arrived at agreement, and Interior will take a “second look” at its decision to prevent the construction of a road through the Izembek National Wildlife Refuge in Alaska.  The Department of the Interior originally blocked the road because of an environmental impact study by the Fish and Wildlife Service, which they will revisit.  The road would provide those in the Aluetian village of King Cove with access to an all-weather airport in Cold Bay.  The deal comes in light of Sen. Murkowksi considering to hold Sally Jewel’s nomination to Secretary of Interior to force action on this issue.

The Environmental Protection Agency has stated that model year 2012 for cars and trucks has set the record for the highest real-world average fuel economy at about 23.8 miles per gallon.  The previous real world high was model year 2010, which was 1.2 miles per gallon lower.

On March 25, the beleaguered Boeing 787 Dreamliner embarked on the first of two scheduled test flights for its new battery.  The changes improve battery ventilation and insulation.  The FAA announced earlier this month that the proposed lithium battery redesign for the Dreamliner had been approved and would undergo extensive testing to ensure that the design is safe for aviation.  The FAA grounded the Dreamliner in mid-January following a battery fire.  Boeing has stated that it expects commercial flights of its 787 fleet to resume in weeks, not months.

IN THE STATES

On March 20, House Majority Leader Eric Cantor delivered a speech to the National Association of State Treasurers that he will support maintaining the tax exemption of interest paid by municipal bonds.  For the past two years, President Obama has suggested limiting the exemption to increase federal tax revenues. 

Maryland: The Maryland House of Delegates approved a bill to raise gasoline taxes to bolster the rapidly depleting state transportation fund.  The bill would phase in the higher gasoline taxes over several years, with the first increase of 4¢ occurring in July.  For the average motorist, the total cost of increased gasoline taxes would begin at $19 per annum at its first increase, and rise to $100 per annum once the maximum tax increase is enacted in mid-2016.  The measure passed the House of Delegates by a vote of 76-63.  All of the 76 delegates in favor were Democrats, and the other 22 Democrats voted in the negative. 

The bill indexes the 23.5¢ per gallon tax on gasoline to inflation, allowing automatic increases each year.  The bill also relies on a federal action to allow states to collect out-of-state sales tax on Internet retailers, as does an early passed Virginia transportation bill.  If Congress does not pass legislation empowering states to levy this tax by 2015, then Maryland’s sales tax on gasoline will automatically increase an additional 2 percent.

Pennsylvania: Governor Tom Corbett and Amtrak have struck a deal to continue daily passenger service between Pittsburgh and Harrisburg.  The “Pennsylvanian” will also continue to run from Harrisburg to Philadelphia and New York.  Pennsylvania’s share for maintaining the Pennsylvanian route was going to rise to $6.5 million in October, but the deal lowers that expected share to $3.8 million annually. 

Wisconsin: Governor Scott Walker’s budget proposal would allow the state to borrow $994.2 million over two years to bolster the state transportation fund.  Wisconsin is anticipating a decrease of $21 million over the next two years in transportation aid from the federal government.  Included in the $994.2 million bond for transportation is $404 million for highways, $302 million for the Zoo Interchange, $200 million for the Hoan Bridge, and $60 million for rail.

Gov. Walker’s plan also includes about $445 million in spending from other sources.  His plan would take $94.4 million from the state’s main account, made up of income and sales taxes.  His plan would also move the cost of transit programs out of the transportation fund and into the general fund, saving the transportation fund $106.4 million in this budget, and more in years to come.  The transportation plan would use $44.5 million for roads from an account that draws on a 2¢ per gallon gasoline surcharge to clean leaking subterranean fuel tanks.  The Governor and the Republicans who control the Legislature have expressed staunch opposition to increasing the state’s 32.9¢ gasoline tax, which the Governor’s transportation plan does not alter.

Virginia: Governor Bob McDonnell has submitted his proposed changes to the transportation funding package passed by the General Assembly.  The regional funding proposals are the most contentious, and Gov. McDonnell has proposed an alteration to the formula that satisfies constitutional concerns and justifies a regional funding district to allow for districts other than Northern Virginia and Hampton Roads to qualify in the future.  Among Gov. McDonnell’s changes is a reduction to the proposed hybrid vehicle annual fee, reducing the proposed fee from $100 to $64.  In the General Assembly passed package, the motor vehicle sales tax was increased from 3 percent to 4.4 percent, but Gov. McDonnell’s submitted changes proposed an increase from 3 percent to 4.15 percent. 

Gov. McDonnell met with his state’s Congressional delegation to discuss federal legislation to permit states to collect state sales taxes on out-of-state Internet retailers.  Governor McDonnell’s bipartisan transportation plan (as well as the above Maryland transportation proposal) relies on federal government allowing states to collect this tax by the end of 2015, or else an automatic wholesale gasoline tax increase will be triggered at the onset of 2016.

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Last week, as the Affordable Care Act turned three, the drumbeat of concern over Medicare Advantage cuts grew louder when Senate Finance Committee Chairman Max Baucus and Ranking Member Orrin Hatch – as well as 98 house members – wrote to the Centers for Medicare and Medicaid Services (CMS) expressing concern about rates for Medicare Advantage plans, MedPAC released its March report to Congress, the House and Senate passed a continuing resolution to fund the government through September 2013 at current law levels including sequestration, and the House and Senate each passed a 2014 budget.

ON THE HILL

Rep. Paul Ryan's (R-Wis.) budget passed the House of Representatives on Thursday (3/21).  No Democrats voted for the plan.  The bill would balance the budget in 10 years by cutting domestic spending and reforming Medicare.  The budget would reform Medicare starting in 2024 by giving seniors a choice between traditional Medicare coverage or a private plan with similar benefits.  The House budget would also convert Medicaid into a block grant program such that states would receive a lump sum for their programs instead of the open-ended federal medical assistance percentages they now receive.  Though the budget does not eliminate the entire Affordable Care Act, it does assume that Congress would eliminate the parts of the Affordable Care Act that subsidize insurance coverage for the uninsured.

On Saturday (3/23) just before 5:00 a.m., the Senate passed its first budget in four years, with no Republicans voting for it and four Democrats voting against it.  The four Democrats, all of whom are up for re-election in 2014, were Mark Pryor (Ark.), Kay Hagan (N.C.), Mark Begich (Alaska) and Max Baucus (Mont.).  The Senate budget would boost infrastructure spending by $100 billion to bolster the economy and raise taxes to bring $975 billion over 10 years into the government.  The budget trims spending modestly and includes an expedited track for passing tax increases.  The Senate budget includes health care cuts as well – accelerating payment reforms that tie provider reimbursement to patient outcomes, reducing waste and fraud, and encouraging greater provider engagement.

The drumbeat of concern over Medicare Advantage cuts grew louder on (3/15) when Senate Finance Committee Chairman Max Baucus and Ranking Member Orrin Hatch sent a letter to CMS Acting Administrator Tavenner raising concerns about the proposed Medicare Advantage cuts and 98 bipartisan House members sent a separate letter to Tavenner, also requesting changes to the Medicare Advantage rates.  These rates are expected to be finalized by April 1, 2013.

The Director of CMS’s Center for Medicare and Medicaid Innovation (CMMI), Dr. Richard Gilfillan, testified before the Senate Finance Committee on Wednesday (3/20).  At the hearing, Dr. Gilfillan said the results of the Pioneer Accountable Care Organization demonstration will be available this summer.  Dr. Gilfillan also said that CMMI was currently analyzing data from the multi-payer advanced primary care practice and federally qualified health center advanced primary care practice demonstrations.

Last week, the House and Senate approved a continuing resolution to prevent a government shutdown and keep agencies funded through the end of the fiscal year and sent it to the White House to be signed into law.

AT THE AGENCIES

Health and Human Services (HHS) Sec. Sebelius announced that the third anniversary of the Affordable Care Act saw more than 6.3 million Medicare beneficiaries save over 6.1 billion on prescription drugs, and 71 million Americans in private health insurance plans receive coverage for at least one free preventive health care service.

On Monday (3/18), the Departments of Health and Human Services, Labor and Treasury issued a proposed rule under the Affordable Care Act that prohibits health plans from imposing waiting periods over 90 days on enrollees before coverage begins.

On Friday (3/15), the Medicare Payment Advisory Commission (MedPAC) released its March report to Congress.  In the past, the commission’s recommendations have formed the basis for payment changes later in the year.

IN THE STATES

The Colorado state exchange board approved a 1.4 percent fee on all health policies sold through the state’s health exchange.  The revenue would be used to fund the exchange after federal backing runs out.  The board expects the exchange to cost between $22 and $24 million per year to run.

On Saturday (3/23), the Maryland House of Delegates gave initial approval to a measure that would expand Medicaid eligibility to 133 percent of the federal poverty line and create a funding mechanism for the state's health marketplace.  The funds will come from an existing state-regulated 2 percent tax on insurance plans.

On Thursday (3/21), the Michigan State Senate Health Policy Committee approved a bill that would allow health care providers and institutions to refuse to provide service on moral, religious or conscientious grounds.  This bill already passed the state Senate in December.

IN THE COURTS

Tom Monaghan and his company, Domino's Farm Corp., sued the federal government in December 2012, arguing that complying with the Affordable Care Act’s mandate requiring employee insurance plans to provide coverage for contraception violated his legal rights.  On March 15, U.S. District Judge Lawrence P. Zatkoff found that the company and Monaghan could be irreparably harmed if the mandate was enforced while the lawsuit is pending and issued a preliminary injunction.

IN THIRD PARTIES

This month's tracking poll from the Kaiser Family Foundation shows that the public is more confused about the Affordable Care Act than ever, in particular about items that are or are not part of reform.

The Health Care Incentive Improvement Institute issued a report card evaluating states on the requirements state laws put on hospitals and providers for transparency in health care costs.  The report gave 29 states failing marks and seven a D.  Two states, Massachusetts and New Hampshire, received an A.

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Last week, the Department of Health and Human Services (HHS) conditionally approved state partnership marketplaces in Iowa, Michigan, New Hampshire and West Virginia; Accountable Care Organizations wrote to the Centers for Medicare & Medicaid Services (CMS) arguing that the quality targets set by the Center for Medicare & Medicaid Innovation (CMMI) were arbitrary; and legislation implementing Medicaid expansion in Florida struggled to get through the state legislature.

ON THE HILL

On Wednesday (3/6), the Republican controlled House of Representatives passed a continuing resolution that would fund the government through the end of the fiscal year.  The measure allows the Food and Drug Administration (FDA) to fully collect medical device and generic drug user fees.  Senator Ted Cruz (R-Texas) is planning to offer an amendment to the legislation that would delay funding of the ACA.

Senators Alexander and Corker are pushing S.11, the Fiscal Sustainability Act, which would save an estimated $689 billion in health savings over 10 years and reform Medicaid and means-test Medicare.

AT THE AGENCIES

In response to CMMI’s quality metrics for ACOs, which are the targets pioneer Accountable Care Organizations (ACOs) have to meet in order to receive bonus payments in 2013, many of the ACOs wrote to CMS arguing that at least 19 of the targets were arbitrary or unreasonable due to a lack of data to support them.  The Pioneer ACOs received payments in 2012 for reporting on the 33 metrics. In 2013 though, the ACOs will be paid for performance, not just reporting.

IN THE STATES

HHS conditionally approved state partnership marketplaces in Iowa, Michigan, New Hampshire and West Virginia.  The partnership marketplaces (formerly exchanges) will allow these states to control various marketplace components, while the federal government runs others.  Seven states have now been approved for partnership marketplaces.

On Thursday (3/7), the Minnesota Senate approved a bill implementing the state health insurance marketplace. A companion bill passed in the House on Monday (3/4).  Unlike the  House bill, which would fund the exchanges’ operating costs with a tax on exchange premiums up to 3.5 percent, the Senate bill would fund it by diverting money from an existing 75-cent state fee on a pack of cigarettes.

On Monday (3/4), the Florida House of Representatives signaled it does not plan to go along with Gov. Rick Scott's turnaround on Medicaid.  On Monday, the House Select Committee on the Patient Protection and Affordable Care Act expressed substantial doubts that the federal promises for Medicaid funding assistance could be relied on long term.

On Tuesday (3/5), hundreds of protesters marched in Austin to protest Texas Governor Rick Perry's decision not to support Medicaid expansion in his state.

IN THIRD PARTIES

In health care industry heavy Massachusetts, the Retail Association of Massachusetts and the South Shore Chamber of Commerce are urging the White House to reconsider its proposed rule on rate review, which prevents health plans from denying coverage or setting rates based on certain factors.  The Massachusetts groups argue that holding small businesses to the same rating standards as large businesses is discriminatory.  Specifically, the group’s request that nothing in the rule should be construed to preclude a state from allowing health insurance carriers to offer additional discounts and incentives if approved by the state insurance regulator.

The Urban Institute argues in a new paper that the government could save close to $90 billion over 10 years if it allowed 65 and 66-year olds to buy into Medicare if they choose to, but asking middle and high income earners to share more of the cost.

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