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:

  • Circuit Split on Availability of ACA Tax Credits in Federal Exchanges. Two circuit court panels have handed down conflicting decisions on whether Affordable Care Act (ACA) insurance premium tax credits are available for insurance purchased on federal, rather than state, insurance Marketplaces/Exchanges.
  • HHS Regulatory Developments. CMS has issued major proposed rules to update Medicare payment and other policies under the physician fee schedule (including proposed changes to Physician Payment Sunshine Act regulations), hospital outpatient prospective payment system, the ambulatory surgical center prospective payment system (PPS), the home health PPS, and the end-stage renal disease PPS (including provisions impacting DMEPOS reimbursement and coverage). The HHS OIG is seeking comments on potential revisions to its permissive exclusion criteria. HHS has proposed ACA eligibility redetermination and renewal process rules for 2015.
  • Other HHS Developments. CMS has released information on the next phase of Medicare DMEPOS competitive bidding, revised its policy on Medicare Part D drugs for hospice enrollees, and modified ACA requirements for health plans in the territories, and the CMS Sunshine Act Open Payments System review/dispute process is underway. HHS has announced a “Settlement Conference Facilitation” pilot as an ALJ hearing alternative and a Medicaid Innovation Accelerator Program. HRSA has published an interpretative ruling on the 340B orphan drug exclusion. FDA has released draft guidance on Medical Device Data Systems.
  • OIG Reports. Recent OIG reports have focused on questionable billing for Medicare clinical lab claims and manufacturer reporting of average sales price (ASP) data.
  • Legislative Developments. A Senate committee report calls for Medicare audit and local coverage policy reforms. Congress is considering a number of bipartisan public health bills, and committee hearings have addressed various health policy issues.
  • Odds & Ends. MedPAC has released its 2014 data book.
  • Health Industry Events. Upcoming CMS events will focus on Medicare hospital outpatient payments and policies. FDA events will address 3-D printing of medical devices and biomarker development.
  • @ReedSmithHealth is on Twitter. For the latest news on health policy issues involving Medicare, Medicaid, HIPAA, OIG, FDA, and more, follow us at @ReedSmithHealth.

CMS Issues Proposed CY 2015 Medicare OPPS/ASC Rule

On July 14, 2014, the Centers for Medicare & Medicaid Services (CMS) published its proposed rule to update the Medicare Hospital Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) Payment System rates and policies for calendar year (CY) 2015. The following are highlights of this major rulemaking:

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CMS Publishes Proposed MPFS Rule for 2015

On July 11, 2014, CMS published its proposed rule to update the Medicare physician fee schedule for CY 2015. The proposed rule reflects enactment of the Protecting Access to Medicare Act (PAMA) of 2014, which provides for a 0% update to the conversion factor (CF) for MPFS services furnished between January 1, 2015 and March 31, 2015. In the Proposed Rule, CMS estimates that with the application of a budget neutrality adjustment, the CF for the first quarter of 2015 would be $35.7977 (compared to $35.8228 in 2014). Under PAMA, the CF will be adjusted on April 1, 2015 according to the Sustainable Growth Rate (SGR) formula unless Congress takes additional legislative action. CMS does not speculate on the CF that will be applicable April 1, 2015 through December 31, 2015, but CMS previously estimated that the SGR would result in about a 20.9% cut in MPFS payments for 2015 if Congress does not again intervene. There is an expectation that Congress eventually will override this payment cut, but the timing and extent of any such relief cannot be assured at this time. Other key provision in the proposed rule include the following:

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Circuit Split on Availability of ACA Tax Credits in Federal Exchanges

As has been widely reported, on July 22, 2014, two circuit court panels handed down conflicting decisions on whether ACA insurance premium tax credits are available for insurance purchased on federal, rather than state, insurance Marketplaces/Exchanges. On the one hand, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit ruled 2-1 that insurance tax credits established by the ACA are “unambiguously: restricted to insurance purchased on Exchanges “established by the State.” The Court therefore vacated IRS regulations making tax credits available as a form of subsidy to individuals who purchase health insurance on an Exchange established by the federal government.  Hours later, a three-judge panel of the Fourth Circuit Court of Appeals ruled unanimously that IRS can indeed extend credits to federal Exchanges; given that the “applicable statutory language is ambiguous and subject to multiple interpretations,” the IRS determination is “a permissible exercise of the agency’s discretion.”  The Obama Administration will seek an en banc hearing before the D.C. Circuit, but the issue may ultimately be left to the Supreme Court. At stake is the continued availability of subsidies for individuals purchasing health insurance in the 36 states where the federal government – rather than the state -- operates the health insurance Exchange.

Questionable Billing for Medicare Clinical Lab Claims

According to an OIG report, “Questionable Billing for Medicare Part B Clinical Laboratory Services,” Medicare allowed $1.7 billion for clinical laboratory claims in 2010 associated with eight types of “questionable billing.” Such indicators of questionable billing identified by the OIG include: claims for beneficiaries with no associated Part B service with ordering physician; claims with beneficiaries living more than 150 miles from the ordering physician; duplicate lab tests; claims with ineligible or invalid ordering-physician numbers; claims with compromised beneficiary, ordering-physician, or lab provider number. More than 1,000 labs had unusually high billing for five or more measures of questionable billing for Medicare lab service, and almost half of these labs were located in California and Florida. The OIG notes that while “some of this billing may be legitimate, all labs that exceeded thresholds on five or more measures of questionable billing may warrant further scrutiny.” The OIG recommends that CMS: review the labs identified as having questionable billing and take appropriate action; review the effectiveness of existing program integrity strategies; and ensure that existing edits prevent claims with invalid and ineligible ordering-physician numbers from being paid. CMS concurred with these recommendations.

OIG Examines Manufacturer Reporting of Average Sales Price (ASP) Data

The OIG has issued a report entitled “Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs.”  The OIG determined that at least one-third of 200 manufacturers did not submit required ASPs for some of their products in the third quarter of 2012, despite being required to do so, and another 45 manufacturers were not required to report ASPs because they have not signed a Medicaid drug rebate agreement (although 22 of these manufacturers voluntarily reported ASPs). In addition, the OIG asserts that inaccuracies in CMS’s ASP files may have affected Medicare payments for a small number of drugs. The OIG made a series of recommendations, including that CMS continue to work with OIG to identify and penalize manufacturers that do not meet ASP reporting requirements (CMS concurred). CMS did not agree with an OIG recommendation to seek a legislative change to directly require all manufacturers of Part B drugs to submit ASPs.

Senate Aging Committee Calls for Medicare Audit, Local Coverage Policy Reforms

The Senate Aging Committee has released a staff report entitled “Improving Audits: How We Can Strengthen the Medicare Program for Future Generations.”  The report describes the burden audits can impose on providers, and raises concerns that CMS’s current efforts are “aimed more at identifying and recovering improper payments that have already occurred, rather than a proactive strategy to ensure that those errors are not made in the first place.” For instance, the Recovery Audit Contractor (RAC) contingency fee structure “could be viewed as providing an incentive to keep improper payment rates high.” The report also notes that inconsistent local coverage determinations (LCDs) can increase the burden on providers and contractors, since different rules apply depending on the location of the service provided. Moreover LCDs have not been targeted to the most costly, highly-utilized services in a consistent way and may lead to discrepancies in access to care based on the beneficiary’s location. The report includes a series of recommendations for reforms of the audit and local coverage decision processes, including consolidating post-payment review activities; revising the RAC incentive structure to focus on reduced improper payment rates; assessing the effectiveness of pre-payment review processes; improving provider education; and ensuring that LCDs are targeted and do not create inconsistent access to care. The report was issued in connection with a hearing on improving the Medicare audit program.

July Congressional Health Policy Hearings

Congressional panels have held numerous hearings on health policy issues this month, including the following:

  • The House Energy and Commerce Committee held a series of hearings on its “21st Century Cures” initiative, focusing on personalized medicine, barriers to evidence development and communication, technological innovations, the patient perspective, and modernizing clinical trials. A separate hearing focused on ACA’s insurance eligibility verification system. Coming up, the Committee will examine plan “bailouts” and cancellations under the ACA (July 28) and the status of ACA payment and verification systems (July 31).
  • The Ways and Means Committee held hearings on the integrity of the ACA’s premium tax credit verification system and the future of Medicare Advantage health plans.
  • The House Oversight Committee held a hearing on Medicare appeals reform.
  • The House Science, Space, and Technology Committee examined “Policies to Spur Innovative Medical Breakthroughs from Laboratories to Patients.” 
  • A Senate Finance Committee hearing focused on chronic illness and patients’ unmet needs.
  • The Senate Health, Education, Labor and Pensions Committee examined preventable deaths and improving patient safety. The Committee also approved a number of bipartisan bills, including S. 315, the "Paul D. Wellstone Muscular Dystrophy Community Assistance, Research and Education Amendments; S 2154, the Emergency Medical Services for Children Reauthorization Act; S. 2405, the Trauma Systems and Regionalization of Emergency Care Reauthorization Act; S. 2406, the Improving Trauma Care Act; and S. 2539, the Traumatic Brain Injury Reauthorization Act.

CMS Proposes ESRD PPS Update for CY 2015

On July 11, 2014, CMS published a proposed rule to update the Medicare end-stage renal disease (ESRD) PPS for CY 2015, which CMS anticipates would increase total payments to all ESRD facilities by 0.3% compared to CY 2014. While CMS projects that the ESRD market basket update, as adjusted for MFP, would have been 1.6%, the “Protecting Access to Medicare Act of 2014” (PAMA) sets the CY 2015 ESRD payment update at 0.0 percent. After applying a proposed wage index budget-neutrality adjustment factor, CMS estimates that the CY 2015 ESRD PPS base rate would be $239.33 under the proposed rule. The proposed rule also would, among other things: rebase the ESRD bundled market basket using 2012 data; update outlier Medicare Allowable Payment (MAP) and fixed dollar loss amounts (which will increase payments to ESRD facilities for beneficiaries requiring higher resource utilization); revise the market basket measures; update the labor -related share value with a two-year transition; clarify the eligibility criteria for the low volume payment adjustment ; and implement a PAMA provision providing that payment for ESRD-related oral-only drugs will not be made under the ESRD PPS prior to January 1, 2024. CMS also proposes updates to the ESRD Quality Incentive Program (QIP) for payment years 2017 and 2018. Finally, the proposed rule would make significant changes to Medicare reimbursement policy for DME, prosthetics, orthotics, and supplies (DMEPOS). CMS will accept comments on the proposed rule until September 2, 2014.

HHS "Settlement Conference Facilitation" Pilot Provides Alternative to ALJ Hearing

The HHS Office of Medicare Hearings and Appeals (OMHA) has announced the Settlement Conference Facilitation (SCF) program, a pilot alternate dispute resolution process designed to bring the appellant and CMS together to discuss the potential of a mutually-agreeable resolution to the claims appealed to an Administrative Law Judge (ALJ) hearing. If a resolution is reached, a settlement document is drafted by the facilitator (an employee of OMHA) to reflect the agreement and the document is signed by the appellant and CMS at the settlement conference session. As part of the agreement, the requests for an ALJ hearing for the claims covered by the settlement will be dismissed.

HHS Launches Medicaid Innovation Accelerator Program

On July 14, 2014, HHS announced a $100 million Medicaid Innovation Accelerator Program to assist state health system reform efforts designed to improve health care while reducing costs. The initiative, which is intended to complement other federal-state delivery system reform efforts, will “help jumpstart innovation” by providing data analytics, quality measurement, and other technical supports, and advancing timely dissemination of best practices among states.

Territories Not Bound by Key ACA Insurance Market Provisions

CMS has reversed course on the applicability of certain ACA provisions to health insurance issuers in the territories. While HHS previously used the Public Health Service Act definition of "state" that applied ACA market reforms to the territories, CMS has modified this interpretation in light of concerns that it is undermining the stability of the territories' health insurance markets. Specifically, on July 16, 2014, CMS announced that HHS now concludes that the territories are not states for purposes of ACA health insurance market provisions related to guaranteed availability, community rating, single risk pool, rate review, medical loss ratio, and essential health benefits. CMS intends to issue regulations to affirm this interpretation.

Proposed ACA Eligibility Redetermination/Renewal Process for 2015

HHS has issued a proposed rule that would specify additional options for annual eligibility redeterminations and renewal and re-enrollment notice requirements for qualified health plans offered through the ACA insurance Exchange/Marketplace, beginning with annual redeterminations for coverage for plan year 2015.  Comments are due July 28, 2014.

Revised CMS Policy on Medicare Part D Drugs for Hospice Enrollees

CMS has revised its earlier policy on Medicare Part D payments for drugs used by beneficiaries enrolled in Medicare hospice. In a July 18, 2014 memo, CMS is modifying its March 10, 2014 guidance to Part D sponsors that imposed a prior authorization (PA) requirement for all drugs for hospice beneficiaries in light of operational issues and access concerns.  The revised guidance narrows the Part D hospice PA provision to four categories of drugs that the OIG, in consultation with hospice providers, has identified as nearly always covered under the hospice benefit. Specifically, CMS will now “strongly encourage” Part D sponsors to place beneficiary-level PA requirements only on: analgesics, antinauseants (antiemetics), laxatives, and antianxiety drugs (anxiolytics). Part D sponsors are not expected to place hospice PA requirements on other categories of drugs or take special measures beyond normal compliance and utilization review activities to retrospectively review paid claims to determine whether drugs in the other categories were unrelated to the hospice beneficiary’s terminal illness and related conditions or payment recovery.

Sunshine Act Open Payments System Review/Dispute Process Underway

CMS has made a series of announcements related to the Sunshine Act Open Payments system, including information about the Open Payments review, dispute and correction process that runs from July 14 through August 27, 2014. This period allows physicians and teaching hospitals to review and initiate any disputes they may have regarding the data reported about them by applicable manufacturers and applicable group purchasing organizations. CMS has also extensively updated the Open Payments User Guide, which is intended to provide industry, physicians, and teaching hospitals with a comprehensive understanding of the Open Payments system and reporting requirements.

OIG Seeks Input on Potential Revisions to its Permissive Exclusion Criteria

The OIG published a notice July 11, 2014 announcing that it is considering revising its nonbinding criteria, established in 1997, outlining the circumstances under which the OIG may exercise its permissive authority under Section 1128(b)(7) of the Social Security Act to exclude an individual or entity from participation in the federal health care programs for engaging in conduct described in sections 1128A and 1128B of the Act (e.g., submitting or causing the submission of false or fraudulent claims or soliciting or paying kickbacks in violation of the Federal Anti-Kickback Statute). Since 1997, OIG has used these criteria in False Claims Act cases and administrative matters to evaluate whether to impose a permissive exclusion or release this authority in exchange for the defendant’s entering into a Corporate Integrity Agreement with OIG. The OIG suggests that “updated guidance could better reflect the state of the health care industry today, including the changes in legal requirements and the emergence of the health care compliance industry.” The OIG is particularly interested in input on: (1) whether there should be differences in the criteria for individuals and entities and (2) whether and how to consider a defendant's existing compliance program. The OIG will accept comments through September 9, 2014. After reviewing comments, the OIG will decide whether and how to revise its non-binding exclusion criteria.

HRSA Issues Interpretive Rule on 340B Orphan Drug Exclusion

On July 21, 2014, the Health Resources and Services Administration (HRSA) released an “interpretive rule” reiterating that 340B-covered entities affected by the orphan drug exclusion may purchase orphan drugs at 340B prices when those orphan drugs are used for indications other than the rare disease or condition for which the drug received an orphan designation. HRSA’s previous regulations implementing this policy were vacated by a May 23, 2014 U.S. District Court ruling because of a lack of statutory authority to engage in such rulemaking.

Under the interpretive rule, HRSA reiterates that section 340B(e) of the Public Health Service Act (PHSA) excludes drugs with an orphan designation only when those drugs are transferred, prescribed, sold, or otherwise used for the rare condition or disease for which the drug was designated as an orphan drug under section 526 of the Federal Food, Drug, and Cosmetic Act (FFDCA). The agency holds that Section 340B(e) does not exclude drugs used for conditions or diseases other than for which the drug was designated under section 526 of the FFDCA. According to HRSA, “interpreting the statutory language to exclude all indications for a drug that has an orphan drug designation would be contrary to the Congressional intent of section 340B(e) to balance the interests of orphan drug development and the expansion of the 340B Program to new entities.” To facilitate identification of drugs with an orphan designation for 340B Program purposes, HRSA will publish and update on a quarterly basis a listing of orphan drug designations, providing the name of the drug and the designated indication. If a covered entity lacks the ability to track drug use by indication, it would be unable to purchase drugs with orphan designations through the 340B Program.

The interpretive rule is effective July 21, 2014. Note that the Pharmaceutical Research and Manufacturers of America (PhRMA), which filed the original lawsuit on the 340B orphan drug regulation, has filed a motion asserting that “HHS’s actions are in direct circumvention” of the prior court ruling, and challenging HRSA’s authority to implement this policy through an interpretive rule.

Proposed ACA Eligibility Redetermination/Renewal Process for 2015

HHS has issued a proposed rule that would specify additional options for annual eligibility redeterminations and renewal and re-enrollment notice requirements for qualified health plans offered through the ACA insurance Exchange/Marketplace, beginning with annual redeterminations for coverage for plan year 2015.  Comments are due July 28, 2014.

MedPAC Issues 2014 Medicare/Health Spending Data Book

The Medicare Payment Advisory Commission (MedPAC) has released its 2014 Data Book on Health Care Spending and the Medicare Program. The volume provides detailed information regarding national health care and Medicare spending and utilization, sector profit margins, Medicare and dual-eligible beneficiary demographics, Medicare quality, Medicare beneficiary and other payer liability, and related issues.

FDA Meeting on Biomarker Development (Sept. 5)

On September 5, 2014, the FDA is holding a public meeting at the Washington Plaza Hotel, in Washington DC, to discuss current scientific and regulatory approaches to biomarker development, acceptance, and utility in the development of therapeutic products (e.g., drugs and biologics). Specifically, FDA will focus on (1) identifying challenges for biomarker applications in early- and late- phase clinical trials, and (2) emerging best practices for successful biomarker-based programs (including codevelopment of in vitro diagnostic devices and use of biomarkers as outcome measures in clinical trials). Public input from the meeting will be used to identify opportunities for biomarker-related regulatory guidance, improve understanding and consistency in regulatory review of therapeutic product applications that incorporate biomarkers in clinical trial designs, and identify potential strategies to facilitate scientific exchanges in regulatory and non-regulatory contexts. For more information on the meeting, which is being held in collaboration with Brookings Institution, and for early registration deadlines to attend the live meeting, see the FDA announcement.  FDA will also accept comments on this topic through November 5, 2014.

CMS Announces Plans for Medicare DMEPOS Competitive Bidding Round 2 Recompete and National Mail-Order Recompete

On July 15, 2014, the Centers for Medicare & Medicaid Services (CMS) announced its plans to recompete the supplier contracts awarded in Round 2 of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program and the National Mail-Order diabetic testing supplies competition, as it is required by statute to do at least every three years.  The current contract period expires June 30, 2016; the new contracts will begin on July 1, 2016.  For the recompete, CMS is making changes to both the composition of the product categories (including adding new products) and the number of competitive bidding areas (CBAs).

The product categories to be included in the Round 2 Recompete are as follows:

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CMS Proposes Major Changes to Medicare DMEPOS Payment/Coverage Policy Inside/Outside of Competitive Bidding Areas

On July 2, 2014, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule that would make a series of significant changes to Medicare coverage and payment policies for durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS). Notably, the proposed rule would establish a methodology for adjusting Medicare DMEPOS fee schedule payment amounts across the country using information from the Medicare DMEPOS Competitive Bidding Program (CBP) – which CMS estimates would cut Medicare DMEPOS reimbursement by more than $7 billion in FYs 2016 through 2020. The proposed rule also would: test the use of bundled monthly payment amounts for DME and enteral nutrition under the CBP; modify CBP change of ownership (CHOW) and termination of contract rules; clarify qualifications for providing custom fitting services for orthotics; and revise Medicare hearing aid coverage policy. These provisions, which were part of a broader proposed rule that would also update the Medicare end-stage renal disease prospective payment system for 2015, are summarized in our Client Alert.

CMS Proposes Changes to Sunshine Act "Open Payments" Regulations in 2015 Medicare Physician Fee Schedule Rule

This post was written by Elizabeth Carder-Thompson, Katie C. Pawlitz, and Nancy E. Bonifant.

Today the Centers for Medicare & Medicaid Services (CMS) issued an advance copy of the CY 2015 Medicare Physician Fee Schedule (PFS) proposed rule, which includes certain changes to the regulations implementing the Physician Payment Sunshine Act, also known as the Open Payments program. These proposed changes come just three days after the inaugural deadline for applicable manufacturers and group purchasing organizations (GPOs) to report to CMS detailed information regarding payments and transfers of value made to physicians and teaching hospitals, as well as physician ownership information.

As previously reported, the Physician Payment Sunshine Act and related regulations require pharmaceutical and medical device manufacturers and GPOs to register with and submit to CMS data on their financial relationships with physicians and teaching hospitals. This financial data will be made publicly available on the CMS Open Payments website.

In the PFS proposed rule, CMS proposes the following changes to the Physician Payment Sunshine Act regulations:

  • Deleting the definition of “covered device” as duplicative of the definition of “covered drug, device, biological or medical supply”
  • Deleting the reporting exclusion for payments made to speakers at accredited continuing medical education events when certain requirements are met. Although CMS is deleting this express exclusion, it notes that such payments may still be excluded generally from reporting under the separate exclusion for indirect payments, which applies in those instances in which the applicable manufacturer is unaware of the identity of the covered recipient. In other words, the practical impact of this change may not be significant in the long run.
  • Requiring the reporting of the marketed name of the drug, device, biological, or medical supply related to the payment being reported. Previously, CMS finalized that for drugs and biologicals, manufacturers must report the market name of a related product, but that for devices and medial supplies, manufacturers could report either the name under which the product is marketed or the general therapeutic area or product category associated with the device or medical supply.
  • Requiring manufacturers to report stocks, stock options or any other ownership interest as distinct categories.

The proposed rule will be published in the Federal Register on July 11, 2014, and comments are due to CMS by September 2, 2014.

CMS Proposes Discontinuing 2 HCPCS Codes under New Demonstration

As recently announced, CMS is conducting what it describes as a “limited demonstration” of an internet-based notice and comment mechanism on internally-generated requests to discontinue Level II HCPCS codes.   CMS has just released details regarding the first two HCPCS codes it is proposing to remove under this process:

  • A7042 Implanted Pleural Catheter, Each.  CMS rationale:  the catheter is included in the procedure and therefore a separate code is unnecessary.
  • A9586 Florbetapir f18, diagnostic, per study dose, up to 10 millicuries.  CMS rationale:  HCPCS code A9599 “Radiopharmaceutical, Diagnostic, for beta-amyloid positron emission tomography (pet) imaging, per study dose” adequately describes this product.

CMS will accept public comments on the proposed HCPCS discontinuations until July 21, 2014.  Comments should be submitted to hcpcs@cms.hhs.gov, and include the following text in the subject line:  “COMMENT RE: DISCONTINUATION OF CODE _____.” 

FDA Will Not Enforce Compliance for Mobile Device Data Systems and Other Low Risk Devices, Agency Reports

This post was written by Jennifer Pike.

In a new draft guidance document, the Food and Drug Administration (FDA) has announced that it does not intend to enforce compliance with general regulatory controls that apply to Medical Device Data Systems (MDDS), medical image storage devices and medical image communications devices.

MDDS refers to hardware and software that transfers, stores, converts format and displays medical device data, but that does not modify the data or control the functions or parameters of any connected medical device. In 2011, MDDS were classified by FDA as Class I medical devices subject to general regulatory controls under the Federal Food, Drug and Cosmetic Act. FDA has since determined that MDDS pose a low risk to the public and play an important role in advancing health.  The agency has therefore decided not to enforce compliance with the controls that apply to MDDS, medical image storage devices and medical image communications devices (e.g., registration and listing, premarket review, postmarket reporting and quality system regulation).

The draft guidance also proposes changes to FDA’s draft guidance titled “Mobile Medical Applications” issued on September 25, 2013 to conform with the new draft guidance.

Comments regarding the draft guidance should be submitted to FDA by August 25, 2014.

CMS Proposes 0.3% Cut in Medicare Home Health PPS Rates for CY 2015

Today CMS released its proposed rule to update Medicare home health prospective payment system (HH PPS) rates for CY 2015. CMS estimates that the rule would reduce Medicare payments to home health agencies by approximately $58 million (-0.3%) in 2015 compared to 2014 levels. Specifically, while CMS anticipates a 2.2% home health payment update percentage ($427 million increase), the increase would be more than offset by implementation of the second year of a four-year phase-in of the rebasing adjustments to the HH PPS rates, which would result in a -2.5% adjustment ($485 million decrease).

The proposed rule also includes a number of policy proposals, including: simplification of the face-to-face encounter documentation requirements and clarification of when such documentation is required; changes to the HH PPS case-mix weights; revisions to the home health quality reporting program; simplification of therapy reassessment timeframes; a revision to the Speech-Language Pathology personnel conditions of participation; and limitations on the reviewability of CMS’s decision to impose a civil monetary penalty for noncompliance with federal participation requirements. Finally, the rule discusses insulin injections under the HH PPS and the delay in implementation of ICD-10-CM, and it solicits comments on the HHA value-based purchasing.

The official version of the rule is scheduled to be published on July 7, 2014. CMS will accept comments until September 2, 2014.

CMS Plans Series of Calls this Month on Medicare Dialysis Quality Programs

On July 10, 2014, CMS is hosting a national provider call to discuss the new Five Star Rating system that will be added to Dialysis Facility Compare (DFC) in October 2014. Among other things, the call will address the methodology used to calculate the ratings and how to access and preview the ratings.  In addition, CMS is holding a provider call on July 16 on the End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP), a pay-for-performance initiative that ties a facility's quality scores to payment during a payment year (PY). The call will focus on the preliminary ESRD QIP PY 2015 Performance Score Report, which previews how well facilities scored on the relevant quality measures.  Finally, a July 23 call will focus on PY 2017 and PY 2018 ESRD QIP provisions in the upcoming ESRD prospective payment system proposed rule.

CMS Planning Changes to Medicare Shared Savings Program/Accountable Care Organization (ACO) Rules

Yesterday CMS submitted to the White House Office of Management and Budget (OMB) a proposed rule to make changes to the Medicare Shared Savings Program, including provisions relating to Medicare payments to providers participating in ACOs. These changes would apply to existing ACOs and approved ACO applicants participating in the program beginning January 1, 2016. The text of the rule is not available until it is cleared by OMB and 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:

  • HHS Regulatory Developments. HHS has released its spring semiannual regulatory agenda, along with a final rule on the employment orientation limit applicable to Affordable Care Act (ACA) health coverage waiting periods. CMS has announced Medicare payment adjustments for low-volume hospitals and Medicare-dependent hospitals.
  • Other HHS Developments. Secretary Sylvia Mathews Burwell has been sworn in as HHS Secretary. HHS has provided updates on ACA insurance costs and choices and announced management changes. HRSA is standing by its interpretation of the 340B orphan drug exclusion despite a court ruling. CMS is adding a “Provider Relations Coordinator” for MAC/RAC auditor process issues, and it plans to expand Medicare quality “star” ratings. CMS also has released Medicare Part B drug payment files and a variety of Medicare charge and other data. FDA has announced its “openFDA” data initiative, and it has released draft social media guidance documents and guidance on communicating new risk information about drugs.
  • OIG & GAO Developments. The OIG has issued a Special Fraud Alert on lab payments to referring physicians, along with reports on drug manufacturers’ Medicaid AMP determinations, state Medicaid drug rebate reporting, Medicare long-term care hospital interrupted stay policy, mail-order competitive bidding for diabetes test strips, and Medicare Part D drug formularies. The GAO has issued reports on Medicaid nursing home qualification, Medicaid managed care, and Medicare physical therapy self-referrals.
  • Legislative Developments. The Finance Committee is inviting comments on health care data transparency. Congress is considering a number of bipartisan public health bills, and committee hearings have addressed various health policy issues.
  • Odds & Ends. MedPAC has issued Medicare delivery reform recommendations, and Medicare contractors are cracking down on DMEPOS supplier violations.
  • Health Industry Events. Upcoming CMS events will focus on clinical laboratory payments, home health orders, and Medicare hospital outpatient payments and policies. An FDA workshop will address 3-D printing of medical devices.
  • @ReedSmithHealth is on Twitter. For the latest news on health policy issues involving Medicare, Medicaid, HIPAA, OIG, FDA, and more, follow us at @ReedSmithHealth.

OIG Issues Special Fraud Alert on Lab Payments to Referring Physicians

Today the HHS OIG issued a Special Fraud Alert highlighting its concerns regarding two trends involving transfers of value from laboratories to physicians that the OIG believes “present a substantial risk of fraud and abuse under the anti-kickback statute.” Specifically, the OIG details risks involved with certain compensation paid by laboratories to referring physicians and physician group practices for (1) blood specimen collection, processing, and packaging, and (2) submitting patient data to a registry or database. The Special Fraud Alert reiterates the OIG’s “longstanding concerns” when payments from laboratories to physicians exceed the fair market value of the physicians’ services or reflect the volume or value of referrals of federal health care program business.  Reed Smith is preparing an analysis of the Alert.