CMS Proposes 1.7% Increase in Medicare IRF PPS Payments for FY 2016

On April 23, 2015, CMS released its proposed rule to update Medicare prospective payment system (PPS) rates for inpatient rehabilitation facilities (IRFs) for FY 2016, which begins October 1, 2015. CMS estimates that rates would increase by 1.7% overall ($130 million) under the proposed rule compared to FY 2015 levels. This proposed increase reflects a 2.7% market basket update (using a proposed new IRF-specific market basket) that is reduced by a 0.6 percentage point multi-factor productivity adjustment and an additional 0.2 percentage point reduction required by the Affordable Care Act, with an additional 0.2% decrease resulting from an update to the outlier threshold.

CMS proposes to revise quality measures and reporting requirements under the IRF quality reporting program, including adopting measures to satisfy the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act). Specifically, CMS is proposing to adopt measures in the following three domains for FY 2016: (1) skin integrity and changes in skin integrity; (2) incidence of major falls; and (3) functional status, cognitive function, and changes in function and cognitive function. The reporting of data for these measures would affect the payment determination for FY 2018 and subsequent years. These measures are also being implemented for long-term care hospitals, skilled nursing facilities, and home health agencies. CMS also is proposing other IRF quality provisions, including implementing public reporting of IRF quality data beginning in 2016 and temporarily suspending a current quality data validation policy. In addition, the proposed rule would phase in revised wage index changes. CMS is not proposing changes to the facility-level adjustment factors for FY 2016; CMS will maintain the facility-level adjustment factors at FY 2014 levels.  The official version of the proposed rule will be published on April 27, 2015, and comments will be accepted until June 22, 2015.

CMS Releases 2016 Medicare Advantage/Part D Drug Plan Rates and Policies

CMS has released the 2016 Medicare Advantage (MA) and Part D Rate Announcement and Call Letter.  According to a CMS fact sheet, the final policies increase Medicare Advantage rates by 1.25% (compared to an earlier forecast of a 0.95% reduction), although considering coding trends the agency expects revenues to increase by 3.25%. In addition, CMS also, among other things, finalized proposed updates to the Part D risk adjustment model, required more public information on preferred cost sharing pharmacies, addressed plan requirements to maintain accurate provider directories, and discussed promoting valued-based payment models among health plans.

FDA Draft Guidance on Acceptance of Medical Device Clinical Data from Studies Conducted Abroad

As discussed on our Life Sciences Legal Update blog, the FDA has released draft guidance clarifying its acceptance of medical device clinical data from studies conducted outside of the United States. The draft guidance highlights special considerations that apply when using foreign clinical data, including applicability to populations within the US, and provides recommendations to assist sponsors in ensuring their data are adequate under applicable FDA standards.  Comments on the guidance are due by July 20, 2015.

Congressional Health Policy Hearings

Congressional committees have held a number of hearings recently on health policy issues, include the following

Looking ahead, the following hearings are scheduled next week:

CMS Proposes Mental Health Parity Rules for Medicaid Managed Care/Alternative Benefit Plans, CHIP Coverage

CMS has published a proposed rule that would apply provisions of the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) to Medicaid beneficiaries who receive services through managed care organizations or alternative benefit plans and to the Children’s Health Insurance Program (CHIP). In general, such programs will be required to meet the mental health and substance use disorder benefits parity requirements regarding financial and quantitative and nonquantitative treatment limitations consistent with regulation applicable to private insurers. CMS also proposes to require such plans to make available upon request to beneficiaries and contracting providers the criteria for medical necessity determinations with respect to mental health and substance use disorder benefits. The proposed rule also would require the state to make available to the enrollee the reason for any denial of reimbursement or payment for services with respect to mental health and substance use disorder benefits. The proposed rule was published on April 10, 2015, and comments are due by June 9, 2015.

CMS Issues First Hospital Compare Star Ratings

CMS is now posting star ratings on Hospital Compare to help consumers assess hospital performance related to patient experience of care. The Hospital Compare star ratings are based on data from the Hospital Consumer Assessment of Healthcare Providers and Systems Survey (HCAHPS) measures on patients’ perspectives of hospital care, including such topics as: how well nurses and doctors communicated with patients; how responsive hospital staff were to patient needs; how clean and quiet hospital environments were; and how well patients were prepared for post-hospital settings. CMS is posting 12 HCAHPS Star Ratings on Hospital Compare: one for each of the 11-publicly reported HCAHPS measures and a summary star rating. The ratings will be updated each quarter.

House Approves "Ensuring Patient Access and Effective Drug Enforcement Act"

On April 21, 2015, the House of Representatives approved H.R. 471, the Ensuring Patient Access and Effective Drug Enforcement Act of 2015. The bipartisan legislation would clarify the Controlled Substances Act to establish consistent enforcement standards intended to protect against diversion while promoting patient access to medically-necessary controlled substances. 

CMS Proposes Extension of Enhanced Funding for Certain Medicaid Eligibility & Enrollment Systems

On April 16, 2015, CMS published a proposed rule that would revise the definition of Medicaid mechanized claims processing and information retrieval systems to include Medicaid eligibility and enrollment (E&E) systems, which would make enhanced federal financial participation (FFP) available for such systems on an ongoing basis (current regulatory authority for such enhanced funding expired December 31, 2015). The proposed rule would set forth standards and conditions for qualifying for this enhanced funding. According to CMS, the proposed rule “would allow states to improve customer service and support the dynamic nature of Medicaid eligibility, enrollment, and delivery systems.” CMS will accept comments on the proposed rule through. June 15, 2015.

CMS Announces Open Door Forum on Home Health Patient Survey Star Ratings (May 7)

On May 7, 2015, CMS is hosting a Special Open Door Forum to discuss its plans to use Home Health CAHPS survey results to create Patient Survey Star Ratings for the Home Health Compare website. CMS will provide an overview of the HHCAHPS Patient Survey Star Ratings, describe the methods for calculating the ratings and assigning stars, and take questions.

CMS, FDA Establishing Interagency Task Force on LDT Quality Oversight

CMS and FDA are establishing an interagency task force to reinforce their collaboration regarding the oversight of laboratory-developed tests (LDTs), which are tests intended for clinical use and designed, manufactured, and used within a single lab. According to an FDA blog post, the goals of the FDA/CMS task force include: (1) identifying areas of similarity between the FDA quality system regulation and requirements under the Clinical Laboratory Improvement Amendments (CLIA); (2) working together to clarify responsibilities for laboratories that fall under the purview of both agencies; and (3) leveraging joint resources to avoid duplication and maximize efficiencies.

CMS Announces Recompete of Round 1 of the Medicare DMEPOS Competitive Bidding Program for 2017

On April 21, 2015, CMS announced its plans to recompete the supplier contracts awarded under the Round 1 Recompete of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program, as the statute requires CMS to do at least every three years.  The current Round 1 Recompete contract period expires December 31, 2016; the new “Round 1 2017” contracts are scheduled to go into effect January 1, 2017. 

For the recompete, CMS is making limited changes to the composition of the product categories and the number of competitive bidding areas (CBAs). The product categories to be included in the Round 1 2017 competition are as follows:

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OIG Partners with Industry Associations by Issuing Practical Guidance for Health Care Governing Boards on Compliance Oversight

This post was written by Trey Andrews, Elizabeth Carder-Thompson, and Carol C. Loepere.

On April 20, 2015, the Office of the Inspector General of the Department of Health and Human Services (“OIG”) released educational guidance designed to assist governing boards of health care organizations (“Boards”) in their compliance oversight functions. This guidance, entitled “Practical Guidance for Health Care Governing Boards on Compliance Oversight” (the “Guidance”), was developed in a collaborative effort among the OIG, the Association of Healthcare Internal Auditors (“AHIA”), the American Health Lawyers Association (“AHLA”), and the Health Care Compliance Association (“HCCA”).

The Guidance updates previous guidance issued by OIG and AHLA, and incorporates insight from the AHIA and HCCA to help assist the internal auditors, compliance officers, and lawyers that report to the Boards. The document addresses four key issues relating to a Board’s oversight and review of compliance program functions: (1) the roles and relationships among an organization’s audit, compliance, and legal departments; (2) the mechanisms and processes for reporting to the Board; (3) identifying and auditing regulatory risk; and (4) methods to encourage organization-wide accountability for achieving compliance goals and objectives.  

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OIG Releases Medicaid Fraud Control Units Fiscal Year 2014 Annual Report

The OIG has released its Medicaid Fraud Control Units (MFCU) Fiscal Year 2014 Annual Report, which highlights statistical achievements of the 50 MFCUs nationwide, along with related OIG oversight activities. With regard to criminal cases, the report notes:

  • MFCUs reported 1,318 criminal convictions, most frequently involving home health care aides, certified nursing aides, and other medical support;
  • Three-quarters of MFCU criminal convictions were for fraud; and
  • MFCU recoveries from criminal cases in FY 2014 reached nearly $300 million.

With regard to civil cases, the report explains:

  • MFCUs reported 874 civil settlements and judgments, with 52 percent of cases involving pharmaceutical companies;
  • Two-thirds of MFCU civil settlements and judgments were global settlements (civil false claims cases brought by the U.S. Department of Justice involving a group of State MFCUs); and
  • FY 2014 recoveries from civil cases totaled $1.7 billion; recoveries from global cases accounted for 69 percent of these recoveries.

In addition, the OIG excluded 1,337 providers from federal health programs in FY 2014 as a result of MFCU investigations, prosecutions, and convictions.

CMS Reschedules Call on Home Health Clinical Templates (April 28)

On April 28, 2015, CMS is hosting its final call to discuss paper and clinical templates intended to assist physicians and practitioners in documenting patient eligibility for Medicare home health benefits.  CMS had previously planned on hosting a May 6 call on this topic; that call has been cancelled.

President Obama Signs MACRA: Permanently Reforms Medicare Physician Reimbursement Framework, Includes Other Health Policy Provisions

This Client Alert was written by Deb McCurdy, Elizabeth Carder-Thompson, Dan Cody, Gail Daubert, Tom Greeson, Paul Pitts, Trey Andrews, Katie Hurley and Rahul Narula.

On April 16, 2015, President Obama signed into law H.R. 2, the “Medicare Access and CHIP Reauthorization Act of 2015” (MACRA), which reforms Medicare payment policy for physician services and adopts a series of policy changes affecting a wide range of providers and suppliers.

Most notably, MACRA permanently repeals the statutory Sustainable Growth Rate (SGR) formula, achieving a goal that has eluded Congress for years. This step overrides a 21.2 percent across-the-board cut in Medicare physician payments that briefly took effect April 1, 2015, and ends a long cycle of Medicare physician fee schedule (MPFS) cuts being triggered automatically and Congress then responding with temporary patches. Instead, after a period of stable payment updates, MACRA will link physician payment updates to quality, value measurements, and participation in alternative payment models. MACRA also extends certain expiring Medicare and other health policy provisions, including a two-year extension of the Children’s Health Insurance Program (CHIP).

To finance these provisions, MACRA reduces market basket updates for post-acute care providers, revises inpatient hospital payment rate updates, restructures Medicaid disproportionate share hospital (DSH) reductions, imposes additional income-related adjustments for Medicare Part B and Part D premiums, and bars first-dollar Medigap coverage policies. Finally, MACRA includes a number of policy provisions, including: new program integrity policies; a binding bid requirement under the durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program; an additional delay in enforcement of the “two midnight” hospital inpatient status policy; and revisions to payment for global surgical packages.

This Client Alert summarizes the major Medicare and Medicaid provisions of MACRA, focusing on those provisions we believe to be of most interest to our clients. We would be pleased to provide additional details upon request.

To read the full Client Alert, click here.

HRSA Moving Ahead on 340B Program Enforcement Rule, Including Manufacturer CMPs for Overcharges to 340B Entities

The Health Resources and Services Administration (HRSA) is seeking White House review of its proposed rule to implement new Affordable Care Act 340B drug discount program enforcement authorities and pricing policies. More than four years after soliciting comments on the planned rulemaking, the HRSA proposal will address its authority to impose civil monetary penalties (CMPs) on drug manufacturers that intentionally charge a covered entity a price above the ceiling price, and define standards and the methodology for the calculation of ceiling prices for purposes of the 340B Program. The text of the rule will be available when the Office of Management and Budget completes its review and the rule is sent to the Federal Register.

New Postings on the Reed Smith Health Industry Washington Watch Blog

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

  • Regulatory Developments. HHS has published proposed Stage 3 EHR Incentive Program and health information technology certification rules, along with a final health insurance wraparound coverage rule. CMS has updated its list of DME items subject to face-to-face encounter/written order prior to delivery requirements and published corrections to the 2015 Medicare physician fee schedule (MFPS) final rule. A number of major CMS proposed rules are in the pipeline.
  • Other HHS Developments. The Obama Administration has announced its plan to combat antibiotic resistant bacteria, CMS has launched its Health Care Payment Learning and Action Network, and CMS proposes removing two National Coverage Determinations.
  • OIG & GAO Developments. The OIG has released the FY 2014 Health Care Fraud and Abuse Control Program Report and its Compendium of Unimplemented Recommendations.  The GAO reported on Medicare payments to certain cancer hospitals.
  • Legislative Developments. The House approved legislation to reform Medicare reimbursement policy for physician services, but the Senate has not yet acted to avert pending MPFS cuts. The House and Senate have approved budget resolutions with Medicare, Medicaid, and ACA provisions. The House approved DMEPOS competitive bidding, hospital observation, controlled substances, and trauma care bills. Congressional panels have held hearings on health policy issues. 
  • Health Industry Events. Upcoming CMS events will focus on HCPCS coding applications, home health clinical templates, Open Payments/Sunshine Act Data, the Next Generation ACO Model, and the Medicare Shared Savings Program. MedPAC is meeting to discuss various Medicare policies.

HHS Publishes Proposed Stage 3 EHR Incentive Program, Health IT Certification Rules

On March 30, 2015, the Centers for Medicare & Medicaid Services (CMS) published its proposed rule on Stage 3 meaningful use criteria, which focus on the advanced use of Electronic Health Record (EHR) technology to promote improved outcomes for patients. The proposed rule would establish the requirements that eligible professionals (EPs), eligible hospitals, and critical access hospitals must achieve to demonstrate meaningful use, qualify for Medicare and Medicaid EHR Incentive Program incentive payments, and avoid downward Medicare payment adjustments. CMS generally intends for the proposed changes to respond to provider concerns regarding the burden associated with the number of program requirements, the multiple stages of program participation, and the timing of EHR reporting periods. 

Notably, while CMS had previously announced that Stage 3 would begin in 2017, CMS is making Stage 3 compliance optional for 2017. Instead, beginning in 2018 all providers would report on the same definition of meaningful use at the Stage 3 level regardless of their prior participation. The proposed rule also would reduce the overall number of meaningful objectives to eight to focus on advanced use of EHRs (Protect Patient Health Information, Electronic Prescribing (eRx), Clinical Decision Support (CDS), Computerized Provider Order Entry (CPOE), Patient Electronic Access to Health Information, Coordination of Care through Patient Engagement, Health Information Exchange (HIE), and Public Health and Clinical Data Registry Reporting). In addition, CMS would align clinical quality measure reporting with other CMS quality reporting programs that use certified EHR technology (e.g., the Hospital Inpatient Quality Reporting and Physician Quality Reporting System programs), enhance alignment across care settings, and remove measures that are redundant or topped out. 

CMS expects net incentive payment spending under the Medicare and Medicaid EHR Incentive Programs to total $3.7 billion between 2017 and 2020 (which reflects $0.8 billion in negative payment adjustments for Medicare providers who do not achieve meaningful use). The comment period ends on May 29, 2015.

In a related development, on March 30 the Office of the National Coordinator for Health Information Technology (ONC) published a proposed rule to establish the 2015 edition health information technology certification criteria, establish a new 2015 Edition Base EHR definition, and modify the ONC Health Information Technology (IT) Certification Program to make it more broadly applicable to other types of health IT health care settings and programs. Among other things, the rule would: (1) adopt new and updated vocabulary and content standards for the structured recording and exchange of health information; (2) include enhanced data portability, transitions of care, and application programming interface capabilities in the 2015 Edition Base EHR definition; (3) align certification criteria with proposals for Stage 3; (4) provide certification to standards for the collection of social, psychological, and behavioral data to address health disparities; (5) provide for the exchange of sensitive health information and for the accessibility of health IT; (6) ensure all health IT presented for certification possesses the relevant privacy and security capabilities; (7) take a series of steps to improve patient safety; and (8) establish surveillance and disclosure requirements. Comments are due May 29, 2015.

House and Senate Approve Budget Resolutions with Medicare, Medicaid, ACA Provisions

On March 25, 2015, the House of Representatives approved (with no Democratic votes) H.Con.Res. 27, a budget resolution providing instructions to Congressional committees on the federal spending framework for FY 2016. Among other things, the resolution calls for repealing the ACA “in its entirety,” transforming Medicare into a premium-support program, and replacing the ACA Medicaid expansion with “State Flexibility Funds” to support state Medicaid reforms. The Senate approved a separate budget resolution, S.Con.Res. 11, on March 26 (also with no Democratic support). The Senate version would also repeal the ACA, but would not make structural reforms to Medicare (Committees would be directed to achieve more than $400 billion in unspecified Medicare savings over 10 years, the same level included in the President’s proposed FY 2016 budget).  While the budget resolutions are intended to guide Congressional budget activities in the coming year, they do not actually effect policy changes; any subsequent legislation in conformance with the resolution would be subject to future Congressional debate (and potentially Presidential veto).

Health Care Fraud and Abuse Control (HCFAC) Program Reports $3.3 Billion in Recoveries

According to the FY 2014 HCFAC program report, more than $3.3 billion was recovered in FY 2014 as a result of the government’s health care fraud judgments and settlements, including $2.3 billion won or negotiated by the federal government in FY 2014. Since the HCFAC program began in 1997, it has returned more than $27.8 billion to the Medicare Trust Funds. In FY 2014, the Department of Justice (DOJ) opened 924 new criminal health care fraud investigations, with criminal charges filed in 496 cases and 734 defendants convicted of health care fraud-related crimes. The report also notes that the Federal Bureau of Investigation efforts led to “the dismantlement of the criminal hierarchy of more than 142 health care fraud criminal enterprises.” With regard to civil cases, DOJ opened 782 new civil health care fraud investigations and had 957 civil health care fraud cases pending at the end of the year.

In addition, HHS Office of Inspector General (OIG) investigations resulted in 867 criminal actions related to Medicare and Medicaid and 529 civil actions (e.g., false claims and unjust-enrichment lawsuits filed in federal district court, civil monetary penalties settlements, and administrative recoveries related to provider self-disclosure matters). The OIG also excluded more than 4,000 individuals and entities from participation in Medicare, Medicaid, and other federal health care programs for criminal convictions for crimes related to these programs, patient abuse or neglect, or as a result of licensure revocations.

Beyond enforcement activities, the annual report discusses CMS preventive measures to combat health program fraud and abuse, including enhanced screening provisions that have resulted in deactivation of 470,000 enrollments and revocation of 28,000 enrollments. CMS also has continued the temporary moratoria on the enrollment of new home health or ambulance service providers in specific geographic locations and applied advanced analytics to Medicare fee-for-service claims to identify and suspicious billing patterns, among other initiatives.

Obama Administration Announces Plan to Combat Antibiotic Resistant Bacteria

On March 27, 2015, the Obama Administration released its National Action Plan for Combating Antibiotic Resistant Bacteria (NAP), a five-year, government-wide plan to address the spread of resistant bacteria. The main components of the strategy, which identifies roles for the public and private sectors, are as follows:

  1. Slow the emergence of resistant bacteria and prevent the spread of resistant infections through the judicious use of antibiotics in health care and agriculture settings;
  2. Strengthen national “One-Health” surveillance efforts to track resistant bacteria in diverse settings in a timely fashion.
  3. Advance development and use of rapid and innovative diagnostic tests to allow health care providers to distinguish between viral and bacterial infections and recommend appropriate, targeted treatment.
  4. Accelerate basic and applied research and development, including through streamlining the drug development process and increasing the number of candidate drugs in development.
  5. Improve international collaboration and capacities to monitor antibiotic resistance, spur therapeutics and diagnostics development, and strengthen regional networks and global partnerships that help prevent and control the emergence and spread of resistance.

CMS Launches Health Care Payment Learning and Action Network

On March 25, 2015, CMS formally launched the Health Care Payment Learning and Action Network, a public-private partnership intended to support HHS’s goal of moving Medicare and the broader health industry from a fee-for-service model towards alternative payment models that emphasize value. According to CMS, more than 2,800 entities have registered to join the Network, with 44 state, payer, health system, corporate, association, and other stakeholder partners already adopting organization-specific goals for alternative payment models.

OIG Issues 2015 Compendium of Unimplemented Recommendations

The OIG has released its March 2015 “Compendium of Unimplemented Recommendations,” which highlights the OIG’s top 25 recommendations for cost savings and/or quality improvements in HHS programs, along with other significant unimplemented recommendations. High-priority recommendations address the following areas, among others:

  • Payment Policies and Practices: Expand the DRG window to include additional days prior to the inpatient admission and other hospital ownership arrangements; establish a hospital transfer payment policy for early discharges to hospice care; and reduce hospital outpatient department payment rates for ambulatory surgical center-approved procedures.
  • Billing and Payment: Develop oversight mechanisms for the home health face-to-face requirement; change the method for determining how much therapy is needed to ensure appropriate skilled nursing facility payments; detect and recoup improper Medicare payments made for services rendered to incarcerated beneficiaries; implement an automated system to recalculate outlier claims to facilitate reconciliations; and provide states with definitive guidance for calculating the federal upper payment limit (UPL), including using facility-specific UPLs that are based on actual cost report data.
  • Contractor Oversight: Utilize and report Zone Program Integrity Contractors’ (ZPICs') workload statistics in ZPIC evaluations.
  • Grants and Contracts: The National Institutes of Health (NIH) should promulgate regulations addressing institutional financial conflict of interest.
  • Program and Financial Management: Reduce significant variation in states’ personal care services laws and regulations; and standardize administrative law judge level case files and make them electronic.
  • Quality of Care and Safety: Broaden patient safety efforts to include all types of adverse events; require states to report on vision and hearing screening data; strengthen oversight of state access standards for Medicaid managed care; and expand regulatory authority and oversight of dietary supplements.
  • Emergency Preparedness: Establish effective hospital emergency preparedness and response policies.
  • Health Information Technology: Improve the Transformed Medicaid Statistical Information System; and address fraud vulnerabilities in EHRs.
  • Program Integrity: Increase reviews of clinicians associated with high cumulative payments; and restrict certain beneficiaries to a limited number of pharmacies or prescribers.
  • Affordable Care Act: Improve internal CMS controls related to determining applicants’ eligibility for enrollment in quality health plans and eligibility for insurance affordability programs.

While some of these recommendations could be achieved administratively, other policies would require legislative changes to implement. 

GAO Calls for Changes to Medicare Payments to PPS-Exempt Cancer Hospitals

A recent Government Accountability Office (GAO) report, “Medicare: Payment Methods for Certain Cancer Hospitals Should Be Revised to Promote Efficiency,” examines the Medicare reimbursement methodology for cancer hospitals exempt from the acute inpatient prospective payment systems (PPS). The GAO determined that Medicare payments were substantially higher at PPS-exempt cancer hospitals (PCHs) in 2012 than at PPS teaching hospitals in the same geographic area for beneficiaries with the same diagnoses or services. GAO estimated that PCHs were paid an average of about 42% more for inpatient services and 37% more for outpatient services than a local PPS teaching hospital would have received for a similar patient. According to the GAO, the PCH inpatient and outpatient reimbursement methodologies “provide little incentive for efficiency.” The GAO therefore recommends that Congress consider requiring Medicare to pay PCHs on the same basis as PPS teaching hospitals or otherwise authorize the HHS Secretary to modify how Medicare pays PCHs. 

MedPAC Meeting on Medicare Policy (April 2-3, 2015)

 On April 2-3, 2015, the Medicare Payment Advisory Commission (MedPAC) is meeting to discuss various Medicare policy issues, including: hospital short stay policy; polypharmacy/multiple drug use (focusing on Part D opioid use); Medicare Part D risk sharing; measuring low-value care; using episode bundles to improve care efficiency (including potential refinements to the Medicare spending per beneficiary measure); bundling oncology services; and synchronizing Medicare policy across payment models.

CMS Publishes Update to DME Items Subject to Face-to-Face Encounter, Written Order Prior to Delivery Requirements

Today CMS published a notice updating the Healthcare Common Procedure Coding System (HCPCS) codes on the Durable Medical Equipment (DME) List of “Specified Covered Items” that require a face-to-face encounter and a written order prior to delivery (although CMS still is delaying enforcement of the face-to-face examination – but not the detailed written order – requirement). 

By way of background, in the 2013 Medicare physician fee schedule final rule, CMS established a list of Specified Covered Items that require a written order prior to delivery and a face-to-face encounter with a physician or other specified health care professional during the 6 months prior to the written order, and the conditions for compliance.  The initial items subject to this provision included:  items that require a written order prior to delivery under the Medicare Program Integrity Manual; items that cost more than $1,000; and items identified as particularly susceptible to fraud, waste, and abuse.  CMS announced its intention to update the list through rulemaking as necessary.  Today’s notice removes two codes from the original list because they represent items that are no longer payable by Medicare:  E0457 (Chest shell) and E0459 (Chest wrap).  The updated list is available here.

Senate Recesses Without Taking up House-Approved SGR Fix Legislation

The Senate has adjourned until April 13, 2015 without taking action on the House-approved Medicare Access and CHIP Reauthorization Act, which would repeal the Sustainable Growth Rate (SGR) formula, reform Medicare physician payments, and make other policy changes.  In the interim, the 21.2% physician fee schedule cut mandated by the SGR will be triggered for services furnished on or after April 1, 2015.   In a recent update, CMS reminded providers that electronic claims are not paid earlier than 14 calendar days (29 days for paper claims) after the date of receipt, so applicable claims will be held at least until the Senate returns, but the timing of any Senate action is still unclear.  CMS intends to provide an update by April 11, 2015 on the status of Congressional action to avert the negative update and the agency’s next steps.  

House Approves Medicare Access and CHIP Reauthorization Act

Repeals SGR Formula, Adopts Medicare and Other Policy Changes

Today the U.S. House of Representatives approved a major Medicare package, the Medicare Access and CHIP Reauthorization Act (MACRA), which would reform Medicare reimbursement policy for physician fee schedule services and adopt a series of policy changes affecting a wide range of providers and suppliers.

Most notably, the bill would repeal the statutory Sustainable Growth Rate (SGR) formula, which has called for deep cuts in Medicare rates in recent years, but Congress has routinely stepped in to override the full application of the formula. Instead, after a period of stable payment updates, MACRA would link physician payment updates to quality and value measurements and participation in alternative payment models. MACRA also would extend certain expiring Medicare and other health policy provisions, including a two-year extension of the Children’s Health Insurance Program.

To finance these provisions, MACRA would reduce Medicare market basket updates for post-acute care providers, revise Medicare inpatient hospital payment rate updates, restructure Medicaid disproportionate share hospital (DSH) reductions, require additional income-related adjustments for Medicare Part B and Part D premiums, and bar first-dollar Medigap coverage policies.

Finally, the bill includes a number of other health policy provisions, including: new program integrity policies (including eliminating civil money penalties for inducements to physicians to limit services that are not medically necessary); a requirement that suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) that bid in a competitive bidding program obtain a bid surety bond that would be forfeited if the supplier does not accept a contract under certain circumstances; a delay in enforcement of the “two midnight” inpatient status policy; and revisions to Medicare payment for global surgical packages (including blocking a CMS decision to eliminate 10- and 90-day global surgical packages).

President Obama has promised to sign the bill if approved by the Senate. Timing is critical given that the latest short-term SGR “fix” expires at the end of the month, and physicians face a 21% across-the-board cut on April 1, 2015 in the absence of Congressional action.

CMS Publishes Corrections to 2015 Medicare Physician Fee Schedule Final Rule

CMS has published corrections to its final 2015 Medicare physician fee schedule rule. Among other things, the rule reflects a previously-announced correction to the conversion factor for the first quarter of 2015 ($35.7547), revises the April 1 – December 31, 2015 conversion factor to $28.1872 (assuming that Congress does not take action to avert this pending cut), makes numerous code-specific relative value unit corrections, and revises quality measure details. CMS is also adding regulatory text that had been inadvertently omitted regarding general supervision of non-face-to-face aspects of transitional care management services. 

CMS Proposed Rules in the Pipeline

CMS recently sent several major proposed rules to the White House Office of Management and Budget for regulatory clearance – the last step before publication in the Federal Register. OMB is reviewing proposed rules to update the skilled nursing facility, inpatient rehabilitation facility, and inpatient psychiatric facility prospective payment systems (PPS) for fiscal year (FY) 2016, and the FY 2016 acute inpatient PPS proposed rule also should be joining them in the near future. Other CMS regulations pending at OMB include proposed rules updating the Medicare and Medicaid Electronic Health Record (EHR) Incentive Program meaningful use requirements for 2015 through 2017 and Medicaid managed care regulations.