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:

  • Legislative Developments. President Obama has signed a government funding bill with health spending/policy provisions. Congress has approved bills to incentivize Ebola treatments and vaccines, extend an enforcement moratorium on rural hospital supervision requirements, and use certain Medicare offsets to pay for a bill to allow individuals with disabilities to establish tax free savings accounts. Congressional panels are seeking input on legislation impacting Medicare fraud and abuse authorities, lab-developed tests, and graduate medical education. Congressional hearings have focused on various health policy issues.
  • Regulatory Developments. CMS has published rules/notices regarding: the Medicare Shared Savings Program/ACOs; Medicare provider enrollment requirements; revisions to certain Medicare/Medicaid policies to recognize same-sex marriages; 2016 ACA Marketplace plan benefit and payment parameters; disproportionate share hospital payment limits; provider enrollment application fees; a hyperbaric oxygen prior authorization pilot program, and federal financial participation matching amounts, among other issues. HHS has posted its latest regulatory agenda, and it is seeking comments on ethical implications of the public health response to the Ebola outbreak.
  • Other HHS Developments. Recent CMS policies have addressed DMEPOS competitive bidding, Medicare coverage with evidence development, Medicare Part D drug prescriber enrollment requirements, the status of Medicaid federal upper limits, Medicare Part B pricing, and Medicare DMEPOS fees.  The Office of the National Coordinator for Health Information Technology is seeking comments on its strategic plan.
  • Fraud & Abuse Developments. The OIG has issued a semiannual report to Congress, along with reports on Medicaid managed care, Medicare mail order diabetes test strips, and various Medicare drug policies. GAO reports have addressed Medicare DMEPOS competitive bidding, health care cost and quality transparency, group purchasing organizations, and Medicare Part D policies. The Department of Justice has released FY 2014 fraud recovery statistics.
  • Health Industry Events. MedPAC is meeting to discuss Medicare payment policy, the FDA is holding a workshop on laboratory-developed tests, and CMS is holding a meeting on hospital outpatient payment policy.
  • @ReedSmithHealth is on Twitter. For the latest health policy news, follow us at @ReedSmithHealth.

President Signs Government Funding Bill with Health Spending/Policy Provisions

On December 16, 2014, President Obama signed a $1.1 trillion spending bill that funds most government agencies through the end of the fiscal year on September 30, 2015 (funding for the Department of Homeland Security is funded through February 27, 2015). With regard to HHS funding, the bill, among other things: holds CMS funding at FY 2014 levels; provides no new funding for Affordable Care Act implementation and blocks the use of CMS program management funds to support risk corridor payments; provides emergency funding to address the Ebola crisis; increases National Institutes of Health funding by $150 million over FY 2014 levels; provides funds to FDA to investigate counterfeit drugs within the United States and internationally; and reduces funding for the Independent Payment Advisory Board (IPAB) by $10 million.  The explanatory statement also includes a number of health policy provisions. For instance, the report: expresses concerns about a CMS proposal to eliminate critical access hospital status for certain rural facilities; requests CMS to report on the impact of competitive bidding on treatment patterns of enteral nutrition patients residing in LTC facilities; directs CMS to review billing rules regarding implantable pain pump drugs; requests that CMS develop proposals to encourage short-cycle dispensing of outpatient prescription drugs in LTC facilities; directs CMS to educate providers on how to reduce Medicare claims errors, develop procedures to reduce the Office of Medicare Hearings and Appeals (OMHA) appeals backlog, and improve the appeals and audit processes; requests that CMS reconsider changes to payment for surgical procedures included in the annual Medicare physician fee schedule rule; and directs HRSA to work with covered entities under the 340B drug program “to better understand the way these entities support direct patient benefits from 340B discounted sales.”

CMS Proposes Changes to Medicare Shared Savings Program/ACO Payment Regulations

On December 8, 2014, CMS published a proposed rule that would revise the regulations governing the Medicare Shared Savings Program, which is intended to encourage physicians, hospitals, and certain other types of providers and suppliers to form Accountable Care Organizations (ACOs) to provide cost-effective, coordinated care to Medicare beneficiaries. The Shared Savings Program now includes more than 330 ACOs in 47 states and serves more than 4.9 million Medicare fee for service (FFS) beneficiaries.

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Congress Approves "ABLE Act" with Medicare Offsets

On December 16, 2014, Congress gave final approval to H.R. 5771, a tax extender bill that includes the “Achieving a Better Life Experience (ABLE) Act of 2014.” The ABLE Act provisions allow individuals with disabilities to establish tax free savings accounts to pay for qualified expenses (e.g. medical, post-secondary education, housing, and transportation expenses). Prior to House consideration, three Medicare “offsets” were added to help pay for the bill – despite the concerns among a number of lawmakers about the need to reserve such offsets for helping to pay for future Medicare physician fee schedule (MPFS) sustainable growth rate formula reform legislation. The three Medicare provisions would: (1) accelerate the start date for payment adjustments for MPFS misvalued services to 2016 and revise the annual targets (saving $365 million); (2) prohibit Medicare coverage of vacuum erection systems until such time as Medicare covers erectile dysfunction drugs under Part D (saving $444 million); and (3) delay implementation of oral-only end stage renal disease (ESRD)-related drugs in the ESRD PPS until January 1, 2025. The bill is now awaiting the President’s signature.

OIG Report: Access to Care, Provider Availability in Medicaid Managed Care

The OIG has issued a report entitled “Access to Care: Provider Availability in Medicaid Managed Care,” which found that more than half of Medicaid managed care providers could not offer appointments to Medicaid enrollees, and one third could not be found at the location listed by the plan. The OIG observed that there could be long waits for appointments at those providers who offered appointments; while the median wait time was two weeks, 10% had wait times longer than two months. Primary care providers were less likely to offer an appointment than specialists, but specialists tended to have longer wait times. The OIG notes that access to care has taken on heightened importance as enrollment grows in Medicaid managed care programs. The OIG therefore urged CMS to work with states to (1) assess the number of providers offering appointments and improve the accuracy of plan information, (2) ensure that plans' networks are adequate, and (3) ensure that plans are complying with existing state standards and assess whether additional standards are needed. CMS concurred.

MedPAC Meeting on Medicare Payment Updates (Dec. 18 & 19)

On December 18-19, 2014, the Medicare Payment Advisory Commission (MedPAC) is meeting to discuss payment adequacy and payment update recommendations for Medicare payment systems.

CMS Proposes Updating Certain Medicare/Medicaid Policies to Recognize Same-Sex Marriages

On December 12, 2014, CMS published a proposed rule to revise selected conditions of participation (CoPs) for providers, conditions for coverage (CfCs) for suppliers, and requirements for long-term care (LTC) facilities to conform with the Supreme Court decision in United States v. Windsor, and ensure that same-sex spouses in legally-valid marriages are recognized and afforded equal rights in Medicare and Medicaid participating facilities. The proposed rule addresses nine specific provisions located in the CoPs and CfCs for ambulatory surgical centers, hospices, hospitals, LTC facilities, and community and mental health centers that CMS believes could be interpreted to support the denial of federal rights and privileges to a same-sex spouse if the state of residence does not recognize same-sex marriages. CMS states that its “goal is to provide equal treatment to spouses, regardless of their sex, whenever the marriage was valid in the jurisdiction in which it was entered into, without regard to whether the marriage is also recognized in the state of residence or the jurisdiction in which the health care provider or supplier is located, and where the Medicare program explicitly or impliedly provides for specific treatment of spouses.”   Comments on the proposed rule will be accepted until February 10, 2015.

GAO Examines Hospital Reporting of GPO Fees

The GAO has issued a report, "Group Purchasing Organizations: Funding Structure has Potential Implications for Medicare Costs,” that examines the effects of group purchasing organization (GPO) contracting practices and their funding structure. The five GPOs in GAO’s review reported being predominately funded by administrative fees collected from vendors (totaling $2.3 billion in 2012), which were almost always based on a percentage of the purchase price of products obtained through GPO contracts. The five GPOs reported that nearly 70% of these fees were passed on to GPO customers or owners. The GAO points out that literature and expert views on the effects of this funding structure vary. To the extent that the vendor fee-based funding structure affects prices for medical products and services, Medicare payment rates could be affected since hospital cost reports impact annual payment updates. The GAO notes that repealing the safe harbor that allows administrative fees could eliminate the potential effects of the GPO funding structure on Medicare payment rates, but the agency cited concerns that this could be disruptive to the health care supply chain at least in the short term. The GAO recommends that the HHS Secretary determine whether hospitals are appropriately reporting administrative fee revenues on their Medicare cost reports and take steps to address any under-reporting that may be found.

GAO Catalogues CMS Medicare Part D Program Integrity Practices

A recent GAO report, “Medicare Program Integrity: CMS Pursues Many Practices to Address Prescription Drug Fraud, Waste, and Abuse,” lists current and planned CMS prevention, detection, and monitoring policies intended to promote program integrity in the Medicare Part D prescription drug program. The report does not include new recommendations.

CMS Announces Timeline for Next Phase of DMEPOS Competitive Bidding

CMS has announced its detailed timeline for recompeting the supplier contracts awarded under 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. All current Round 2 and National Mail-Order diabetic testing supplies contracts will be up for rebidding. The current contract period expires on June 30, 2016; the new contracts will begin on July 1, 2016. The first key date in the recompete cycle is December 18, 2014, when supplier registration for bidding opens, and the actual bid window opens on January 22, 2015. The full timeline is as follows (note that dates are subject to change):

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Comment Opportunity on Federal Health IT Strategic Plan

The HHS Office of the National Coordinator for Health Information Technology (ONC) is seeking comments on its Federal Health IT Strategic Plan 2015-2020. The plan represents a broad federal strategy for collecting, sharing, and using interoperable health information to improve health care and public health, and advance research within the federal government and in collaboration with private industry.  Comments will be accepted until February 6, 2015

CMS Proposes 2016 ACA Marketplace Plan Benefit & Payment Parameters

CMS has issued a proposed rule that would establish ACA Marketplace health plan payment parameters and essential benefit standards for 2016. Specifically, the wide-ranging proposed rule addresses, among other things: the risk adjustment, reinsurance, and risk corridors programs; cost sharing parameters; user fees for federally-facilitated exchanges; standards for qualified health plans, including network adequacy and quality improvement; the Small Business Health Options Program; guaranteed availability and renewability, rate review; the medical loss ratio program; and minimum essential health benefits (including new policies and procedures for enrollee requests for prescription drugs not included on a plan’s formulary).  CMS will accept comments on the proposed rule until December 22, 2014.

Congressional Panels Seek Input on Medicare Fraud & Abuse, LDT, GME Legislation

In preparation for legislative activity early next year, various lawmakers have issued open requests for feedback on several health policy initiatives. For instance:

  • The House Ways and Means Health Subcommittee chairman and ranking member have released a bipartisan bill including a variety of Medicare fraud/abuse provisions, covering such issues as recovery audit contractors, prevention of Medicare Part D prescription drug abuse, elimination of civil monetary penalties for inducements to physicians to limit services that are not medically necessary, and others.
  • The House Energy and Commerce Committee is seeking feedback on the regulation of in vitro diagnostic test kits and laboratory developed tests (LTDs); comments are due by January 5, 2015.
  • The Energy and Commerce Committee also is requesting comments on graduate medical education (GME) financing, federal program governance and structure, and how it might be improved or restructured. Feedback is due by January 16.

GAO Analyzes Medicare DMEPOS Competitive Bidding Results

The GAO has released a report entitled “Medicare: Bidding Results from CMS’s Durable Medical Equipment Competitive Bidding Program,” which includes a wide variety of data on level of savings in each bidding round, characteristics of suppliers, reasons for disqualification of bids, and related data. The report does not include recommendations.

OIG Issues Fall 2014 Semiannual Report to Congress

The OIG has issued its Semiannual Report to Congress for the period of April 1 – September 30, 2014, in which it highlights significant investigation, audit, and enforcement activities and achievements across HHS programs during the six-month period and for all of FY 2014. The OIG reports expected recoveries exceeding $4.9 billion during FY 2014, consisting of almost $834.7 million in audit receivables and about $4.1 billion in investigative receivables (including about $1.1 billion in non-HHS investigative receivables, such as states’ shares of Medicaid restitution). In FY 2014, the OIG also reported: exclusions of 4,017 individuals and entities from participation in federal health care programs; 971 criminal actions against individuals or entities; and 533 civil actions (including false claims and unjust-enrichment lawsuits filed in federal district court, CMP settlements, and administrative recoveries related to provider self-disclosure matters). In addition to discussing legal and investigative activities, the report recaps various reports issued by the OIG over the 6–month period. It also responds to public suggestions for new anti-kickback safe harbors related to hospital continuing medical education programs, clinical trial participant compensation, and contracts between clinically integrated networks (CINs) and commercial third party payors for value-based payments.

HHS Posts Fall 2014 Regulatory Agenda

The Administration has posted its fall regulatory agenda listing major pending or planned regulatory actions and anticipated timing of rulemaking. The agenda lists numerous pending HHS proposed and final rules in a range of policy areas, including Medicare payment updates, revisions to provider conditions of participation, and changes to fraud and abuse authorities, among many others. Note that the anticipated release dates set forth in the agenda are subject to change.

FY 2016 Federal Financial Participation Matching Amounts Released

HHS has published the FY 2016 Federal Medical Assistance Percentages (FMAP), Enhanced FMAP, and disaster-recovery FMAP adjustments. These percentages, which will apply from October 1, 2015 through September 30, 2016, apply in determining the federal matching for state expenditures for Medicaid and certain other medical and other social services.

Extension of Enforcement Moratorium on Rural Hospital Supervision Requirements

On December 4, 2014, President Obama signed into law H.R. 4067, which requires the Secretary of HHS to continue to instruct Medicare contractors not to enforce requirements for direct physician supervision of outpatient therapeutic services in critical access and small rural hospitals through 2014.

Congressional Health Policy Hearings

Recent Congressional health policy hearings have addressed the following issues:

Looking ahead to 2015, House Energy and Commerce Committee Chairman Fred Upton has indicated that his panel will hold a hearing on preparation for ICD-10 implementation

OIG Faults Medicare Payment for HIV Drugs after Beneficiaries' Death

Based on a review of Prescription Drug Event (PDE) records for human immunodeficiency virus (HIV) drugs and other beneficiary records, the OIG determined that Medicare Part D paid for HIV drugs for over 150 deceased beneficiaries in 2012, most of which were dispensed by retail pharmacies. The OIG identified shortcomings in CMS claims edits that reject PDE records for drugs with dates of service more than 32 days after death that allowed payment for drugs that do not meet Medicare Part D coverage requirements. The OIG recommends that CMS eliminate or, if necessary for administrative processing, shorten the window in which it accepts PDE records for drugs dispensed after a beneficiary's death; CMS concurred. The OIG also observes that while its report focuses on HIV drugs, the issues raised are relevant to all Part D drugs.

Congress Approves Bill to Incentivize Ebola Treatment/Vaccine Developments; Congressional Hearings Address Ebola Response

In light of the recent Ebola outbreak and concerns over health safety, Congress has approved a bill (S. 2917) that would add Ebola to the Food and Drug Administration’s (FDA) priority review voucher program, which is designed to incentivize the development of treatments and vaccines for neglected tropical diseases. The legislation was approved by the Senate on December 2, 2014, followed by the House on December 3, and is now awaiting the President’s signature.

The Ebola outbreak has also been the subject of several recent Congressional hearings. For instance, the Senate Homeland Security and Governmental Affairs Committee recently held a hearing entitled "Preparedness and Response to Public Health Threats: How Ready Are We?”  In addition, the House Energy and Commerce Committee has held hearings on medical product development in the wake of the Ebola epidemic and the U.S. public health response to the Ebola outbreak.

CMS Call on Adding Star Ratings to Medicare Home Health Compare (Dec. 17)

On December 17, 2014, CMS is hosting a Special Open Door Forum (SODF) call to allow stakeholders to provide feedback on the planned addition of star ratings to the Medicare.gov Home Health Compare web site. 

CMS Posts January 2015 Update to Medicare Part B Drug Pricing Files

CMS has posted the January 2015 update to the Medicare average sales price (ASP) drug pricing files, which contain the payment amounts that CMS will use to pay for Part B covered drugs for the first quarter of 2015. CMS notes that prices for the top Part B drugs decreased by 0.1 % on average this quarter, and prices changed 2% or less for 26 of the top 50 higher-volume drugs.

CMS Finalizes Rule to Strengthen Medicare Provider Enrollment Regulations and Permit Revocations for Patterns/Practices of Improper Claims Submissions; Defers Expanded Awards for Medicare Fraud Tipsters

This post was authored by Elizabeth Carder-Thompson and Debra McCurdy.

On December 5, 2014, the Centers for Medicare & Medicaid Services (CMS) published a final rule that expands the circumstances under which it may deny or revoke the Medicare enrollment of entities and individuals on program integrity grounds, effective February 3, 2015.  

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CMS Delaying Enforcement of Medicare Part D Drug Prescriber Enrollment Requirements

CMS has announced that it is delaying a provision of its 2015 Medicare Advantage/Medicare Part D final rule, published on May 23, 2014, that requires physicians and other eligible professionals who prescribe Part D drugs to be enrolled in Medicare (or have a valid opt-out affidavit on file) for their prescriptions to be covered under Medicare Part D. While the final rule stated that the effective date for this requirement would be June 1, 2015, CMS has announced that it is delaying enforcement of this provision until December 1, 2015. CMS notes that Part D drug prescribers must submit their Medicare enrollment applications or opt-out affidavits to their Medicare Administrative Contractors by June 1, 2015 to provide sufficient processing time and prevent prescription drug claims from being denied beginning December 1, 2015.

CMS Announces 2015 Provider Enrollment Application Fee Amount

Today CMS published a notice announcing that the CY 2015 provider enrollment application fee is $553, up from $542 in 2014. This application fee is required for institutional providers that are initially enrolling or revalidating enrollment in the Medicare or Medicaid program or the Children's Health Insurance Program (CHIP) or adding a new Medicare practice location on or after January 1, 2015 and on or before December 31, 2015. Note that CMS uses a broad definition of institutional entities subject to the application fee; it applies to “[a]ny provider or supplier that submits a paper Medicare enrollment application using the CMS-855A, CMS-855B (not including physician and non-physician practitioner organizations), CMS-855S, or associated Internet-based PECOS enrollment application,” along with additional categories of Medicaid-only and CHIP-only institutional providers. 

Presidential Bioethics Commission Seeks Comments on Ethical Implications of Public Health Response to Ebola Outbreak & Other Emergencies

On December 8, 2014, HHS is publishing a notice announcing that the Presidential Commission for the Study of Bioethical Issues is requesting public comment on ethical considerations related to public health emergency response, focusing on the current Ebola virus disease (EVD) epidemic. In particular, the Commission is examining:

  • U.S. public policies that restrict association or movement (e.g., quarantine), which have been proposed and/or employed for health care workers and military personnel returning from countries affected by EVD in western Africa;
  • The ethics of placebo-controlled trials in the context of public health emergencies, and the EVD epidemic specifically, where the tested drug might be effective against the disease in question; and
  • The ethical considerations relevant to collecting and storing biospecimens during a public health emergency such as the EVD epidemic, and sharing these specimens and associated data internationally for future research.

Comments will be accepted for 60 days after publication.

CMS Issues Final Medicare Coverage with Evidence Development (CED) Guidance

On November 20, 2014, CMS released its final Medicare coverage document entitled “Guidance for the Public, Industry, and CMS Staff: Coverage with Evidence Development.”  CED policy provides the framework for Medicare coverage of items or services on the condition that they are furnished in the context of approved clinical studies or with the collection of additional clinical data. CMS notes that the CED process “can expedite earlier beneficiary access to innovative technology while ensuring that systematic patient safeguards” are in place. The final guidance describes, among other things, the history of CED, its statutory basis, governing principles, requirements for studies under the CED framework, coverage of control groups in CED studies, and transparency of such studies. CMS also responds to public comments received on a draft guidance document published on November 12, 2012. For instance, CMS notes that it has deleted a previous statement that it expects to use CED infrequently, since technology is being presented to the agency for coverage earlier in the technology lifecycle, and requesters more frequently ask CMS to consider using CED for their particular technology. CMS also agrees with commenters that CED should not be used when other forms of coverage are justified, should not duplicate efforts of other agencies or existing medical evidence, and should generally expand access to technologies. CMS also clarified that Medicare Administrative Contractors may use LCDs to determine coverage of items and services to the extent that they do not conflict with national Medicare policy.

CMS Adopts Changes to Medicaid DSH Rules

On December 3, 2014, CMS published a final rule that defines “uninsured” for purposes of calculating the Medicaid hospital-specific disproportionate share hospital (DSH) payment limit. Under the Social Security Act, DSH payments to a hospital cannot exceed the uncompensated costs of furnishing hospital services by the hospital to individuals who are Medicaid-eligible or “have no health insurance (or other source of third party coverage) for the services furnished during the year.” The final rule provides this test will be applied on a service-specific basis; that is, the calculation of uncompensated care for purposes of the hospital-specific DSH limit will include the cost of each service furnished to an individual by that hospital for which the individual had no health insurance or other source of third party coverage. Although the final rule’s definition of uninsured may affect the calculation of the hospital-specific DSH limit, the rule does not modify the DSH allotment amounts and will have no effect on a state’s ability to claim federal financial participation (FFP) for DSH payments made up to the published DSH allotment amounts. The final rule also provides additional clarification to states and hospitals regarding costs eligible for inclusion in the calculation of the hospital-specific DSH limit. The rule is effective on December 31, 2014.

CMS Publishes Corrections to Home Health PPS, DMEPOS Surety Bond Rules

On December 2, 2014, CMS published a correction to its November 6, 2014 final 2015 Medicare home health prospective payment system (PPS) rule to correct a technical error related to the applicability date for a therapy reassessment provision.  Separately, on November 24, 2014, CMS published a notice making technical amendments to durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) supplier surety bond requirements under 42 CFR 424.57. According to the preamble, the notice corrects non-substantive regulatory paragraph designations, an omission, and a technical correction to previously published regulatory text, and makes terminology and cross-references changes.