Health Industry Washington Watch : Washington DC Healthcare Industry Law Firm : Reed Smith : Health Industry Washington Watch : Regulations, Medicare/Medicaid, Governmental Organizations

This post was written by Scot T. Hasselman and Susan A. Edwards.

The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) issued an updated “Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs ” (Updated Bulletin) on May 8, 2013, answering certain questions the OIG has received from providers and suppliers regarding exclusions and addressing other issues related to exclusions. The Updated Bulletin follows on a Special Advisory Bulletin regarding the same topic published by the OIG in September 1999. Since the OIG issued the 1999 Special Advisory Bulletin, Congress has enacted various statutory provisions that have strengthened the OIG’s authority to exclude individuals from federal health care programs and impose civil monetary penalties (CMPs) related to exclusion. The OIG states that in the development of the Updated Bulletin, it also relied on comments it received in response to a 2010 solicitation of comments on this topic.

The Updated Bulletin reflects a continuation of the OIG’s expansive view of the scope of the federal exclusion authorities, particularly relating to the prohibition against employing or contracting with excluded individuals and entities. The bulletin explains the statutory background of the exclusion and CMP authorities; describes the effect of exclusion; emphasizes the implications of violations of exclusion by an excluded individual and the implications for violating the prohibition against employment or contracting with an excluded individual for the furnishing of items or services paid for by a federal health care program; explains the scope of what conduct involving excluded individuals may lead to overpayment liability and CMPs; and provides guidance to providers and suppliers regarding how to screen for excluded individuals.

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On April 10, 2013, the Centers for Medicare & Medicaid Services (CMS) published its proposed rule updating Medicare inpatient prospective payment system (IPPS) and long-term acute care hospital prospective payment system (LTCH PPS) rates and policies for fiscal year (FY) 2014, which begins October 1, 2013. Comments on the proposed rule will be accepted until June 25, 2013. Highlights of the sweeping rule include the following: 

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On May 6, 2013, CMS published a proposed rule to update Medicare skilled nursing facility PPS rates for FY 2014 and make other updates to SNF reimbursement policy. CMS estimates that the proposed rule would increase aggregate Medicare payments to SNFs in FY 2014 by $500 million, or 1.4%, compared to FY 2013. Specifically, SNF PPS rates would be updated to reflect a 2.3% market basket increase that is reduced by a 0.4 percentage point multifactor productivity adjustment required by the ACA, and that is further reduced by a proposed 0.5 percentage point forecast error correction. Specifically, CMS proposes a technical change in the methodology for determining whether to make a forecast error correction when the difference between the actual and projected market basket percentage change exceeds 0.5%. By modifying how CMS determines the forecast error when it rounds to 0.5%, this policy would result in a 0.5 percentage point reduction in the FY 2014 market basket update. CMS also proposes to rebase the SNF market basket to reflect FY 2010 data, rather than data from FY 2004, and to make changes to the components of the SNF market basket index. With regard to therapy services, CMS proposes to add an item to the Minimum Data Set (MDS) to record the number of distinct calendar days of therapy provided to a beneficiary by all rehabilitation disciplines over the 7-day look-back period, and to specify the number of calendar days of therapy required to qualify for the Medium Rehab (RM) and Low Rehab (RL) Category Resource Utilization Group (RUG). CMS will accept comments on the proposed rule until July 1, 2013.

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This post was written by Scot T. Hasselman and Susan A. Edwards.

The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) has issued a revised version of its Provider Self-Disclosure Protocol (Updated SDP), dated April 17, 2013, which established a process for health care providers to voluntarily identify, disclose, and resolve instances of potential fraud involving federal health care programs.  Specifically, this protocol is intended to address:  (1) conduct involving potential false billings; (2) conduct regarding excluded persons; (3) conduct involving potential violations of the Anti-Kickback Statute (AKS); and (4) conduct involving potential violations of the AKS and the Stark Law.

The Updated SDP provides guidance on how to investigate the conduct described above, quantify damages, and report such conduct to OIG to resolve the provider’s liability under OIG’s civil monetary penalty authorities.  The document supersedes the previous OIG Provider Self-Disclosure Protocol issued in 1998 and three previous “Open Letters to Health Care Providers.”  The OIG notes that over the past 15 years, it has resolved over 800 disclosures, resulting in recoveries of more than $280 million to federal health care programs.  The Updated SDP reflects the OIG’s experience with the protocol since 1988, along with feedback it received from the public in response to a June 18, 2012 comment solicitation.  

A summary of the Updated SDP, highlighting notable statements and requirements, is available in our Client Alert.

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CMS published a proposed rule on May 10, 2013 that would increase Medicare hospice reimbursement by 1.1% -- or $180 million -- in FY 2014. Specifically, CMS would update the hospice per diem rates by 1.8% (reflecting a 2.5% market basket increase that is reduced by 0.7 percentage points for adjustments mandated by the ACA), but this update is partially offset by a 0.7 percentage point cut resulting from the use of updated wage data and CMS’s continued phase-out of its wage index budget neutrality adjustment factor (as set forth in prior rulemaking).

The proposed rule also would clarify ICD–9–CM coding guidelines and CMS’s expectations for diagnosis reporting on hospice claims, especially regarding the use of nonspecific symptom diagnoses. CMS restates its expectation that hospice providers will “code the most definitive, contributory terminal illness in the principal diagnosis field with all other related conditions in the additional diagnoses fields for hospice claims reporting.” For instance, CMS clarifies that “debility” and “adult failure to thrive” would not be used as principal hospice diagnoses on the hospice claim form. CMS specifically solicits comments on its coding guideline clarifications.

CMS also proposes revisions to its hospice quality reporting requirements. By way of background, under the ACA, hospices that fail to meet quality reporting requirements will receive a 2 percentage point reduction to their market basket update beginning in FY 2014. In 2013, hospices began reporting data on two quality measures (a pain management measure and a structural measure on participation in a Quality Assessment and Performance Improvement Program) for the FY 2014 payment determination. Beginning with the 2016 payment determination, CMS is proposing to replace these two measures with a standardized patient-level data collection instrument called the Hospice Item Set (HIS). The proposed rule also discusses, among other things, CMS’s plans to require the use of a Hospice Experience of Care Survey beginning in 2015 for the FY 2017 payment determination, and its efforts to reform the hospice payment framework. Comments will be accepted until June 28, 2013.

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CMS published a proposed rule on May 8, 2013 that would update Medicare inpatient rehabilitation facility (IRF) prospective payment system (PPS) rates for FY 2014. CMS proposes a 1.8% payment update for FY 2014, reflecting a 2.5% market basket increase factor, reduced by a 0.4% multi-factor productivity adjustment and an additional 0.3 percentage point reduction required by the ACA. The update would establish a standard payment conversion factor of $14,865 for discharges occurring in FY 2014, which is an increase from the FY 2013 standard payment conversion factor of $14,343. CMS also is proposing to update the outlier threshold, which would increase IRF PPS payments by an estimated 0.2%, for a total estimated increase of 2%. In addition, the proposed rule would revise and update quality measures and reporting requirements under the IRF quality reporting program. Beginning in FY 2014, CMS will apply a 2 percentage point reduction to the applicable market basket increase factor for IRFs that fail to comply with the quality data submission requirements. In the rule, CMS also proposes to revise the list of diagnosis codes that are used to determine presumptive compliance under the “60 percent rule” for a facility to be excluded from the IPPS and be paid under the IRF PPS. Under the proposed rule, CMS would remove from the “presumptive compliance” list certain non-specific diagnosis codes, arthritis diagnosis codes, unilateral upper extremity diagnosis, some congenital anomalies diagnosis codes, and other miscellaneous diagnosis codes. In addition, CMS proposes revisions to the conditions of payment for IRF units of acute care hospitals to specify a minimum number of hospital beds that the IPPS hospital must have to meet the regulatory standard for having an IRF unit. Under the rule, the institution of which the IRF unit is a part would be required to have at least 10 staffed and maintained hospital beds that are not excluded from the IPPS, or at least 1 staffed and maintained hospital bed for every 10 certified IRF beds, whichever number is greater. If the institution does not meet this threshold, CMS proposes that the IRF unit should instead be classified as an IRF hospital. CAHs that have IRF units would be excluded from these requirements because they already have specific bed size restrictions. The proposed rule also would, among other things: update the IRF facility-level adjustment factors; revise the Inpatient Rehabilitation Facility-Patient Assessment Instrument; and clarify various regulatory provisions.  CMS will accept comments on the rule until July 1, 2013.

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On May 3, 2013, the Internal Revenue Service (IRS) published proposed regulations implementing the ACA’s health insurance premium tax credit, as amended by subsequent legislation. These proposed regulations affect individuals who enroll in qualified health plans through Affordable Insurance Exchanges (Exchanges) and claim the premium tax credit, and Exchanges that make qualified health plans available to individuals and employers. The proposed regulations also address determinations of whether health coverage under an eligible employer-sponsored plan provides minimum value. Comments and requests for a public hearing will be accepted until July 2, 2013. These regulations are proposed to apply for taxable years ending after December 31, 2013, and taxpayers may apply the proposed regulations for taxable years ending before January 1, 2015.

In separate document published May 13, 2013, the IRS proposed regulations that provide guidance to Blue Cross and Blue Shield organizations, and certain other health care organizations, on computing and applying the medical loss ratio added to the Internal Revenue Code by the ACA, applicable to tax years beginning after December 31, 2013). Comments on the regulations will be accepted until August 12, 2013, and a September 17, 2013 public hearing has been scheduled on the regulations.

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CMS is requesting public comments on how to define service areas for Medicare Quality Improvement Organizations (QIOs). Specifically, CMS wants input on four potential options CMS may use to divide work among a varying number of QIO contractors into service areas that are focused on quality-improvement-related work only. CMS is also seeking “fresh new ideas” regarding other options for organizing QIO contractors. According to CMS, this review is triggered by the evolution of the field of health care quality improvement and changes in health delivery systems. Comments will be accepted until May 31, 2013.

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CMS has posted data on hospital charges associated with the 100 most common Medicare inpatient stays. In a fact sheet announcing the availability of the data, CMS highlighted the “significant variation in charges from hospital to hospital -- including those within the same community -- for inpatient services that may be provided in connection with a given inpatient stay.” For instance, a CMS fact sheet notes that the range in average inpatient charges for services associated with joint replacement (MS-DRG 470) range from $5,300 to $223,000.
 

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CMS has issued guidance to state survey agencies explaining adjustments CMS is making to survey and certification operations to "accommodate sequestration with as little impact on the public as possible." The guidance discusses revisions in the frequency and timelines for various surveys and other survey changes in light of a 5% reduction to the FY 2013 survey and certification Medicare budget. CMS also issued a May 1, 2013 memo to Part C and D plans on sequestration, covering rules regarding reducing payments to contracted and non-contract providers, beneficiary liability under sequestration, coverage gap discount program payments, Part D risk corridor reconciliation, and Electronic Health Records (EHR) Incentive Program payments, among other topics. In a related development, President Obama has signed the sequestration order for FY 2014, as required by law, although the Obama Administration's proposed FY 2014 budget, if adopted, would replace sequestration.

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On May 9, 2013, CMS announced a 60-day comment period on gapfill payment amounts for new molecular pathology codes under the Clinical Laboratory Fee Schedule (CLFS) for 2013 and 2014. The data includes Medicare Administrative Carrier (MAC) payment amounts and the MACs’ rationale for certain tests. CMS invites the public to submit specific cost, test methodology, and any other information relevant to the pricing review. CMS will post the final gapfill pricing decisions in September 2013, which will apply to payments for these test codes in 2013 and 2014. The public will have an additional 30 days to request reconsideration of decisions in the September file.

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HHS has released enhanced “National Standards for Culturally and Linguistically Appropriate Services in Health and Health Care,” which is a series of guidelines to inform and facilitate practices related to culturally and linguistically appropriate health services. The 15 standards, which were developed by the HHS Office of Minority Health, comprehensively update earlier national standards released over a decade ago. The principal standard is for organizations to “provide effective, equitable, understandable, and respectful quality care and services that are responsive to diverse cultural health beliefs and practices, preferred languages, health literacy, and other communication needs.” In a related, development, the HHS Office for Civil Rights (OCR) has announced a national compliance review initiative, “Advancing Effective Communication in Critical Access Hospitals,” to support language access programs in these hospitals.
 

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The ACA established the Early Retiree Reinsurance Program (ERRP) as a temporary program to reimburse employer and union sponsors of participating employment-based plans for a portion of the cost of health benefits for early retirees and their spouses, surviving spouses, and dependents. CMS has published a notice that sets forth termination dates for several operational processes in preparation for the January 1, 2014 ERRP program sunset date. These operational processes include: the submission of changes to information in a plan sponsor’s ERRP application; the reporting of plan sponsor change of ownership; the submission of reimbursement requests; the reporting and correction of data inaccuracies; and the request for reopenings of reimbursement determinations. The notice is effective April 19, 2013.

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CMS is now accepting quality measure suggestions for potential inclusion in the Physician Quality Reporting System (PQRS) in future years. In particular, CMS is seeking outcome-based quality measures addressing measure and performance gaps, including clinical outcomes, patient-reported outcomes, care coordination, safety, appropriateness, efficiency, and patient experience and engagement. Measure suggestions will be accepted until July 1, 2013. In order to be considered, each measure must include all required supporting documentation.

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CMS and ONC have posted a fact sheet that details progress HHS has made in promoting the growth of health information technology since the enactment of the Health Information Technology for Economic and Clinical Health (HITECH). The fact sheet addresses, among other things, statistics on participation in the Electronic Health Record Incentive Programs and electronic prescribing and information on HHS plans to accelerate health information exchange development.

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Following a similar initiative on the House side, leaders of the Senate Finance Committee are inviting provider input on Medicare physician payment system reform. Specifically, Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) are requesting information on: (1) what specific reforms should be made to the physician fee schedule to ensure that physician services are valued appropriately; (2) what specific policies should be implemented that could co-exist with the current physician payment system and would identify and reduce unnecessary utilization to improve health and reduce Medicare spending growth; and (3) within the current fee-for-service system, how can Medicare most effectively incentivize physician practices to undertake the structural, behavioral, and other changes needed to participate in alternative payment models? Additional information, including a full copy of letter from Senators Baucus and Hatch to the health care provider community, is available here.  Responses are due by May 31, 2013.  The panel also has scheduled a May 14 hearing on "Advancing Reform: Medicare Physicians Payments."  

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On May 8, 2013, the House Energy and Commerce Subcommittee on Health approved by voice vote H.R. 1407, legislation to reauthorize and combine the Animal Drug User Fee Act and the Animal Generic Drug User Fee Act. TheEnergy and Commerce Committee also recently held hearings on: the Administration’s HHS budget proposal; the Center for Consumer Information and Insurance Oversight and implementation of the ACA; the lack of transparency and consumer driven market forces in U.S. health care system; and the impact of HIPAA on patient care and public safety. The House Ways and Means Health Subcommittee held a hearing on Medicare physician payment reform, and the Senate Finance Committee has scheduled a May 14 hearing on this topic.  Other Senate panels also recently held hearings on health policy issues, including: a HELP Committee hearing on "Successful Primary Care Programs: Creating the Workforce We Need"’ a Homeland Security Committee hearing on “Oversight and Business Practices of Durable Medical Equipment Companies”; and a Special Committee on Aging hearing on "The National Plan to Address Alzheimer's Disease: Are We On Track to 2025?"

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HHS is soliciting comments on whether to amend the HIPAA Privacy Rule to expressly permit covered entities holding information about the identities of individuals who are disqualified from possessing or receiving firearms on mental health grounds to disclose limited information to the National Instant Criminal Background Check System. Comments on the rule will be accepted until June 7, 2013. Additional information about the notice is available on Reed Smith’s Life Sciences Legal Update blog.

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The ACA’s controversial Independent Payment Advisory Board (IPAB) is charged with submitting detailed proposals to Congress and the President to reduce Medicare per-capita spending if projected spending growth exceeds a specified target based initially on inflation and then growth in the economy. IPAB’s proposals will go into effect automatically unless Congress enacts alternative legislation to achieve the required savings (with certain exceptions). The ACA authorizes the IPAB’s first recommendations to be submitted by January 2014 for implementation in 2015 if the Medicare per capita target growth rate is exceeded. The CMS Office of the Actuary has just determined, however, that the Medicare spending target will not be triggered for 2015, and as a result IPAB savings proposals will not be needed for that year. Specifically, in an April 30, 2013 memo, the Actuary explained that because the projected 5-year Medicare per capita growth rate (1.15%) for the period of 2011 to 2015 does not exceed the Medicare per capita target growth rate (3.03%), there is no applicable savings target for 2015. Note that to date, no members have been appointed to the IPAB, and there have been repeated legislative attempts to repeal the IPAB provision (although the Obama Administration’s proposed FY 2014 budget would strengthen the IPAB by reducing the target rate of Medicare cost growth that triggers IPAB recommendations).

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CMS has posted the draft February 2013 FULs and Draft February 2013 Three-Month Rolling Average FULs. CMS will continue to accept comments on the draft average manufacturer price-based FULs and the draft three-month rolling average FULs, along with the methodologies used to calculate them.

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Beginning in July 2013, CMS will be posting downloadable data on from various Medicare.gov Compare websites (Dialysis Facility Compare, Home Health Compare, Hospital Compare, and Nursing Home Compare) at Data.Medicare.Gov. On May 16, 2013, CMS is hosting a webinar to provide an introduction to Data.Medicare.Gov and to demonstrate options for accessing the data. CMS notes that the webinar is aimed at both technical and non-technical users of Compare website data, such as researchers, health care administrators, and quality improvement professionals.

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CMS has released a list of teaching hospital “covered recipients” to which payments and other transfers of value must be reported by applicable drug and device manufacturers under the ACA Physician Payment Sunshine Act Final Rule, as discussed in a posting on our Life Sciences Legal Update blog. The posting also discusses industry efforts to obtain CMS clarification on various outstanding questions related to the reporting requirements. In addition, CMS has announced a May 22 National Provider Call on the Sunshine Act reporting requirements, directed to physicians and teaching hospitals and covering the Final Rule, key dates, the role of covered recipients, and resources available to covered recipients.

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This post was written by Paul W. Pitts.

On April 26, 2013, the Centers for Medicare & Medicaid Services (“CMS”) released the proposed update to the Medicare long-term acute care hospital prospective payment system (“LTCH PPS”) policies and payment rates for fiscal year (“FY”) 2014. The proposed changes would apply to discharges occurring on or after October 1, 2013 through September 30, 2014. CMS will accept comments on the proposed rule until June 25, 2013, and will respond to comments in a final rule to be issued by August 1, 2013. Reed Smith has prepared a Client Alert that provides a summary of the most significant proposed changes to the LTCH PPS in the proposed rule.

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On April 25, 2013, CMS announced that, due to technical issues, it is delaying implementation of the Phase 2 ordering and referring deniial editsntil further notice. By way of background, CMS plans to implement edits that will deny claims for Medicare Part B services (including the technical/non-interpretation component of imaging services, lab services, and durable medical equipment) and Part A home health agency services if the ordering/referring physician or other professional is not identified, is not in Medicare's enrollment records, or is not of a specialty type that may order/refer the service/item being billed. While CMS intended to require Medicare contractors to activate these edits effective May 1, 2013, concerns had been raised by physicians and suppliers that they could experience claims denials and delays based on discrepancies between the names of the ordering physician on the 1500 claim form and in Medicare’s enrollment records. CMS expects to announce a new implementation date in the near future.

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This post was written by Scot T. Hasselman, Andrew C. Bernasconi, Susan A. Edwards and Debra A. McCurdy.

Yesterday the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would dramatically increase the potential reward to an individual who provides a tip leading to the recovery of Medicare funds from a current maximum of $1,000 to a maximum of $9.9 million under the Medicare Incentive Reward Program.  Since 1998, an individual providing information regarding potential Medicare fraud and abuse to the Department of Health & Human Services’ Office of  Inspector General or the Medicare contractor with jurisdiction over the suspected fraudulent provider or supplier may be eligible to receive 10 percent of the Medicare funds ultimately collected from the tip, or $1,000, whichever is less.  Pursuant to the proposed rule CMS issued yesterday, an individual furnishing information that otherwise satisfies the requirements set forth in 42 C.F.R. § 420.405 would be eligible to receive 15 percent of a recovery up to $66 million.  Therefore, a tipster could receive up to a $9.9 million reward for any information provided regarding suspected Medicare fraud and abuse.

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This post was written by Kevin Madagan and Debra McCurdy.

Key members of the Senate Health, Education, Labor, and Pensions Committee have released a bipartisan draft legislative proposal intended to improve drug distribution security. The legislation addresses, among other things: lot-level product tracing requirements for “downstream” pharmaceutical supply chain members (drug manufacturers, repackagers, wholesale distributors, and dispensers); a requirement that manufacturers serialize prescription drugs at the unit level; national licensure standards for wholesale distributors and third-party logistics providers; a requirement that members of the supply chain only transact with registered or licensed entities; and preemption of state product tracing requirements, including paper or electronic pedigree systems. The lawmakers will accept comments on the draft legislation until April 26, 2013. In a related development, the House Energy and Commerce Subcommittee on Health has scheduled an April 25 hearing on "Securing Our Nation's Prescription Drug Supply Chain,” which will focus on a House companion version of the draft “track and trace” legislation intended to secure pharmaceutical distribution. 

Update:  On May 8, 2013, the House Energy and Commerce Health Subcommittee approved by voice vote an amended version of its “track and trace” legislation intended to secure pharmaceutical distribution.

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The Reed Smith Health Industry Washington Watch blog has been updated to report on recent health policy developments, including the following:

• Proposed FY 2014 Budget. The Obama Administration has released its proposed federal budget for fiscal year 2014, which includes proposals that would save $401 billion from federal health programs over 10 years. A Reed Smith alert on the proposal is available here.
   
• Regulatory Developments. Recent CMS regulations have addressed federal funding for Medicaid expansion under the Affordable Care Act, Health Insurance Exchange “Navigators,” electronic health record (EHR) donation protections, and oversight rules for accreditation organizations. Reed Smith has issued a special alert regarding recent CMS policies on hospital Part B inpatient billing. The IRS has published hospital community health needs assessment regulations, and a HRSA rule addresses reporting to the Healthcare Integrity and Protection Data Bank and the National Practitioner Data Bank.
   
• Other HHS Developments. CMS has: announced the winners of the Medicare DMEPOS competitive bidding round 2/national mail order competition; announced 2014 rates and policies for Medicare Advantage and Part D prescription drug plans; provided resources on EHR incentive program audits; released guidance on participation in Federally-Facilitated and State Partnership Exchanges; and launched a “Medicare Chronic Conditions Dashboard.” FDA has issued draft guidance on biosimilar product development.
   
• Legislative Developments. Recent Congressional hearings have addressed a number of health policy issues; a Senate panel has approved the Mental Health Awareness and Improvement Act; and House committee leaders have released additional details on their Medicare physician fee schedule reform proposal.
   
• OIG Developments. The OIG has issued reports on Medicare supplier surety bonds, private insurer reporting to the HealthCare.Gov plan finder portal, and the Medicaid Integrity Program.
   
• Health Industry Events. Upcoming events include meetings/calls on EHR billing and coding, the Medicare ESRD low-volume payment adjustment, transitioning to ICD-10, HCPCS code applications, the comparative effectiveness data infrastructure, and medical device labeling.

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On April 9, 2013, CMS announced the names of 799 suppliers that have been awarded 3-year contracts under Round 2 of the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program, along with the 18 suppliers that accepted contracts under the national mail order competition for diabetic testing supplies. Under competitive bidding, only suppliers that are winning bidders, meet licensing and other standards, and enter into a contract with CMS may furnish selected categories of DMEPOS to Medicare beneficiaries in competitive bidding areas (CBAs), with very limited exceptions. Winning bidders who sign contracts are paid based on the median of the winning suppliers’ bids in the CBA, rather than the DMEPOS fee schedule amount. Contracts under Round 2 and national mail-order contracts begin on July 1, 2013. As previously reported, Medicare reimbursement will be cut by an average of 45% for suppliers participating in Round 2, which covers eight product areas in 100 CBAs. Mail-order diabetic testing supplies contracts cover all 50 States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and American Samoa. Medicare reimbursement for diabetic testing supplies will fall 72% compared to current fee schedule amounts (the new prices will be applied in the retail setting as well under separate legislative authority). CMS notes that Round 2 contract suppliers have 2,988 locations to serve Medicare beneficiaries in the CBAs, and about 63% of these suppliers are “small suppliers,” with gross revenues of $3.5 million or less. CMS will now step up educational efforts aimed at suppliers, referral agents, and beneficiaries in preparation for the expansion of competitive bidding this summer.

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On April 1, 2013, CMS released the 2014 rate announcement and final call letter for Medicare Advantage (MA) and Part D prescription drug plans. Notably, under final rate announcement, CMS is forecasting that the final estimate of the combined effect of the Medicare Advantage (MA) growth percentage and the fee-for-service (FFS) growth percentage is 3.3%, compared to -2.2% in the advance call letter, which has the effect of increasing MA plan payment rates. This reversal is a result of CMS building into its spending forecast the assumption that Congress will once again override scheduled cuts in Medicare payments to physicians under the sustainable growth rate formula (thereby allowing MA plan payments to be compared to higher expected FFS spending levels). CMS also is phasing in the alignment of MA benchmarks with Medicare FFS costs and adjusting for diagnostic coding differences between MA plans and FFS providers, along with revising the risk adjustment model.

With regard to Part D, CMS notes that for the first time in the Part D program’s history, the costs of beneficiary coverage are falling, with the 2014 defined standard Part D prescription drug benefit having lower co-payments and deductible than in 2013. CMS also is adopting a number of policy changes for 2014, including requiring Part D plan retail and mail pharmacies to obtain patient consent to deliver a prescription, new or refill, prior to each delivery (CMS also encourages Part D plans to implement this consent requirement for the remainder of this year). While CMS had proposed requiring Part D sponsors to place beneficiary-level prior authorization requirements on certain categories of drugs which may be covered under the hospice or end stage renal disease (ESRD) benefits, so as to ensure that these drugs are appropriately payable under Part D before the prescriptions are filled, the final policy permits sponsors to use other approaches, such as pay-and-chase, to resolve payment responsibility in these situations.

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