CMS Schedules August 24-25, 2015 OPPS Advisory Panel Meeting

CMS has announced that it is holding a meeting of the Advisory Panel on Hospital Outpatient Payment on August 24-25, 2015. The purpose of the Panel is to advise HHS and CMS on the clinical integrity of the Ambulatory Payment Classification (APC) groups and their associated weights and hospital outpatient therapeutic services supervision issues. Presentation forms are due by July 24 and the meeting registration timeframe runs from June 29 through July 31, 2015.  During the scheduled meeting, webcasting is accessible online.   

House Energy and Commerce Committee Unanimously Approves 21st Century Cures Bill

Today the House Energy and Commerce Committee approved H.R. 6, the “21st Century Cures Act,” by a bipartisan, unanimous 51-0 vote. This major legislation is intended to accelerate the pace of medical cures in the United States through a variety of reforms addressing drug and device development and approval, clinical trial design, research funding, interoperability of health technology, and other issues  It also would exclude journals, reprints, and other education-related items and payments from Physician Payment Sunshine Act reporting.

During markup, the panel approved an amendment offered by Chairman Upton making a number of policy revisions and offsets, including, among other things, provisions that:

  • Limit Medicaid durable medical equipment reimbursement rates to Medicare fee-for-service rates applicable in the state, effective January 1, 2020;
  • Make various changes to Medicare imaging reimbursement policy, including modification of Medicare physician fee schedule and outpatient prospective payment system payments to incentivize the transition from traditional x-ray imaging to digital radiography (with payment reductions for the use of non-digital technology) and a requirement that the Secretary conduct an empirical analysis before applying the multiple procedure payment reduction to the professional component of imaging services;
  • Implement OIG recommendation to delay certain Medicare Part D prescription drug plan prepayments;
  • Establish a Cures Innovation Fund equal to $110 million for each of fiscal years 2016 through 2020; and
  • Exempt certain FDA user fees from sequestration.

The bill now moves on to the full House.

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. Recent CMS regulations have addressed Medicare hospice payments and Part D prescribing regulations, and CMS has published a notice clarifying the FY 2016 IPPS/LTCH proposed rule comment deadline.  HRSA has published a final rule to implement the HIV Organ Policy Equity Act, and OMB is reviewing new HRSA 340B omnibus guidelines.
  • Other CMS Developments. CMS has announced savings levels for the Pioneer ACO Model, and it is proceeding with the application process for the next round of the Medicare Shared Savings Program. CMS also is soliciting quality measure suggestions for potential use in the PQRS.
  • OIG & GAO Developments. Recent OIG reports have addressed FDA oversight of generic drug manufacturers, incorrect physician place-of-service coding, home health agency background check policies, and drug rebate policies. GAO reports have examined Medicaid payments to hospitals and section 1115 demonstrations.
  • Legislative Developments. Congress has approved its FY 2016 budget framework, a House panel is marking up the 21st Century Cures Act, and committees have held hearings on various health policy issues. 
  • Health Industry Events. Upcoming CMS events will focus on HCPCS coding applications, the National Partnership to Improve Dementia Care, potential elimination of CMNs/DIF forms, hospice quality reporting, ICD-10 implementation, and Medicare clinical laboratory fee schedule payments.

CMS Call: Potential Elimination of CMS and DIF Forms (May 27)

CMS is hosting a Special Open Door Forum call on May 27, 2015 to discuss eliminating the Certificate of Medical Necessity (CMN) and Durable Medical Equipment (DME) Information (DIF) formsComments on the forms also can be sent to

CMS Proposes Updates to Medicare Hospice Wage Index/Rates for FY 2016

CMS published a proposed rule on May 5, 2015 that would update Medicare hospice payment rates and the wage index for fiscal year (FY) 2016. CMS estimates that the proposed rule would increase overall payments to hospices by about 1.3%, or $200 million, in FY 2016. This increase reflects a 1.8% proposed FY 2016 hospice payment update, which is reduced by the use of updated wage index data and the last year of the phase-out of the wage index budget neutrality adjustment factor (-0.7% decrease), and further increased as a result of a transition to new Office of Management and Budget Core Based Statistical Area (CBSA) delineations for the FY 2016 hospice wage index (0.2% increase).

In addition, CMS proposes to create two different payment rates for routine home care (RHC) that would provide a higher base payment rate for the first 60 days of hospice care and a reduced base payment rate for subsequent days. CMS also would establish a service intensity add-on (SIA) payment for services provided in the last 7 days of a beneficiary's life, if the following criteria are met: (1) the day must be billed as a RHC level of care day; (2) the day must occur during the last 7 days of life (and the beneficiary is discharged dead); (3) direct patient care must be provided by a RN or a social worker; and (4) the service may not be provided in a skilled nursing facility or nursing facility. The proposed SIA payment would equal the continuous home care (CHC) hourly payment rate multiplied by the amount of direct patient care provided by a RN or social worker for up to 4 hours total, per day, as long as the four criteria are met.

The proposed rule also would, among other things: implement Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) changes to the aggregate cap calculation; align the cap accounting year for both the inpatient cap and the hospice aggregate cap with the federal fiscal year starting in FY 2017; make changes to the hospice quality reporting program; and clarify requirements for diagnosis reporting on the hospice claim.  CMS will accept comments on the proposed rule until June 29, 2015.

Final Rule Implements HIV Organ Policy Equity Act

On May 8, 2015, the Health Resources and Services Administration (HRSA) published a final rule to implement the HIV Organ Policy Equity Act (HOPE Act), which modifies standards related to Organ Procurement Transplantation Network (OPTN) acquisition of organs from individuals known to be infected with human immunodeficiency virus (HIV). Under the final rule, organs from individuals infected with HIV may be transplanted into individuals who are infected with HIV before receiving such organs and who are participating in clinical research approved by an institutional review board. While the HOPE Act provides the Secretary with discretion to determine what criteria should apply to the conduct of such research, the Secretary is not promulgating research criteria at this time. The rule also provides that the Secretary may determine in the future that participation in clinical research as a requirement for transplants of organs from individuals infected with HIV is no longer warranted. Because the changes made by this rule directly implement changes made by the HOPE Act, and because the Secretary is not undertaking discretionary rulemaking, the Secretary is waiving the public notice and comment procedures with regard to this policy. The rule is effective June 8, 2015. 

Medicare Shared Savings Program Applications for January 1, 2016 Start Date

CMS is proceeding with the application process for the Medicare Shared Savings Program for the January 1, 2016 program start date. Applicants interested in participating must submit a Notice of Intent to Apply by May 29, 2015, and complete the application by July 31, 2015.  A CMS call regarding the Shared Savings Program application review process is scheduled for June 9.

CMS Clarifies FY 2016 IPPS/LTCH Proposed Rule Comment Deadline

CMS has published a correction notice that clarifies that the comment deadline for the FY 2016 Medicare inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) PPS proposed rule is June 16, 2015 (as the agency announced when the rule was released). The version of the rule published in the Federal Register on April 30 incorrectly stated that the comment deadline is June 29, 2015.

CMS Invites Suggestions for Potential PQRS Measures

CMS is soliciting quality measure suggestions for potential use in the Physician Quality Reporting System (PQRS) and other quality programs in future years. Measures submitted by June 15, 2015 may be considered for inclusion on the 2015 Measures Under Consideration (MUC) list for implementation in PQRS as early as 2017. CMS notes that it will give priority to measures that are outcome-based, address a measure gap, and reflect the most up-to-date clinical guidelines. CMS is not accepting claims-based only reporting measures in this process.

OIG Examines Medicaid/Part D Drug Rebate Policy

The OIG has issued a report, Medicaid Rebates for Brand-Name Drugs Exceeded Part D Rebates by a Substantial Margin,” comparing statutory Medicaid rebate amounts for brand name drugs with rebates Part D plan sponsors negotiate with drug manufacturers for such drugs. Based on 2012 data, the OIG determined that total rebates under Medicaid were substantially higher than total rebates under Medicare Part D ($16.7 billion vs. $10.3 billion), even though Medicaid drug expenditures were much lower than Medicare Part D expenditures in 2012 ($35.7 billion vs. $66.5 billion). Rebates accounted for 47% of Medicaid expenditures in 2012, while rebates totaled 15% of Part D expenditures. The OIG also noted that more than half of Medicaid rebates owed by manufacturers for selected brand-name drugs were attributed to inflation-based add-on rebates. While recognizing the statutory limits on Part D rebate collection, the OIG recommends that “CMS and Congress to explore the costs and benefits of obtaining additional rebates under Part D,” potentially addressing beneficiaries eligible for both Medicare and Medicaid. “

CMS Touts Pioneer ACO Model Savings and Potential Expansion

On May 4, 2015, CMS announced that the Pioneer Accountable Care Organization (ACO) Model generated $384 million in savings to Medicare over two years. Under the Pioneer ACO Model, which was authorized by the ACA, health care organizations and providers with experience coordinating care across settings may share in Medicare savings generated if they meet quality performance standards, but they are at risk of paying a share of any losses generated. While the 32 individual Pioneer ACOs had different levels of savings relative to local markets during their first two years, they collectively saved about $300 per participating beneficiary per year on average, with most savings accruing in the first performance year.

CMS also announced that the CMS Office of the Actuary has certified that the Pioneer ACO model is the first to meet the ACA criteria for expansion to a larger population of Medicare beneficiaries. According to an HHS press release, CMS intends to look for ways to apply elements of this model to permanent Medicare programs.

OIG Flags Overpayments Due to Incorrect Physician Place-of-Service Coding

According to a recent OIG report, "Incorrect Place-of-Service Coding Resulted in Potential Medicare Overpayments Costing Millions,” physicians did not always correctly code the place of service on Part B claims.  This resulted in potential overpayments of approximately $33.4 million for services provided from January 2010 through September 2012. The OIG explains that physicians performed these services in facility locations, but physicians incorrectly coded the services as performed in higher-paying nonfacility locations. The OIG attributes these overpayments to physician internal control weaknesses and insufficient contractor postpayment reviews. The OIG therefore recommends that CMS direct its Medicare contractors to recover identified overpayments, educate physicians and billing personnel on the importance of internal controls to ensure correct place-of-service coding, and expand data matches to identify potentially miscoded claims. CMS concurred with the recommendations. 

OIG Reviews HHA Background Check Policies

In response to a Congressional request, the OIG has reviewed the extent to which home health agencies (HHAs) have employed individuals with criminal convictions and whether state requirements should have disqualified such individuals from HHA employment. The OIG points out that there are no federal requirements that HHAs conduct background checks on employees, and state requirements vary. The OIG conducted an analysis of a sample of Medicare-certified HHAs and the individuals they employed as of January 1, 2014. All HHAs reviewed conducted background checks of varying types on their prospective employees, and about half also conducted periodic rechecks after hiring. The OIG found that 4% of HHA employees had at least one criminal conviction, but FBI criminal history records were not detailed enough to enable the OIG to determine whether all of the employees should have been disqualified. The OIG recommend that CMS promote minimum standards in HHA employee background check procedures by encouraging more states to participate in the National Background Check Program; CMS concurred.

GAO Report on Oversight of Medicaid Payments to Hospitals

The Government Accountability Office (GAO) has released a report entitled “Medicaid: CMS Oversight of Provider Payments Is Hampered by Limited Data and Unclear Policy.”  The report examines how state Medicaid payments to government hospitals compare to those made to private hospitals in selected states (Illinois, New York, and California) and CMS oversight of such payments. Because states receive federal matching funds for their payments to health providers, the GAO observes that states “may have incentives to make excessive Medicaid payments to certain institutional providers such as hospitals operated by local governments.” The GAO notes that its assessment was hampered by inaccurate and incomplete data on payments. For example, the GAO notes that large supplemental payments states often make to hospitals are not reported by the hospital. While some of the available data was inconclusive, the GAO believes that a small number of government hospitals it identified as receiving high payments warrants oversight. With regard to CMS oversight, the GAO observes that CMS has insufficient information on payments, lacks a policy and process for assessing payments to individual providers, and lacks a policy and standard process for determining whether Medicaid payments to individual providers are economical and efficient. The GAO recommends that CMS take steps to ensure states report provider-specific payment data, establish criteria for assessing payments to individual providers, develop a process to identify and review payments to individual providers, and expedite review of the appropriateness of New York's hospital payments. HHS concurred with the recommendations.

GAO Calls for Tighter Reins on Section 1115 Demonstrations

A recent GAO report examined expenditure authorities in “section 1115” demonstrations approved by HHS between June 2012 and October 2013. Section 1115 of the Social Security Act gives HHS broad authority to approve “expenditure authorities” that allow states to receive federal funds for costs that would not otherwise be matchable under Medicaid if the Secretary believes the authorities are likely to promote Medicaid objectives. In FY 2014, section 1115 demonstrations accounted for almost one-third of total Medicaid expenditures. The GAO is concerned, however, that HHS has not issued specific criteria for making such determinations, and HHS approval documents are not always clear as to precisely what approved expenditures are for and how they will promote Medicaid objectives. In the absence of clear criteria and documentation, the GAO warns that “the bases for HHS’s decisions involving tens of billions of Medicaid dollars are not transparent to Congress, states, or the public.” The GAO therefore recommends that HHS issue criteria for assessing whether expenditure authorities are likely to promote Medicaid objectives and document the use of these criteria in HHS’s approvals of demonstrations.

CMS Updates Part D Prescribing Regulations

CMS published an interim final rule with comment period (IFC) on May 6, 2015 that modifies a previously-adopted regulatory requirement regarding qualifications to prescribe Part D drugs. By way of background, under a final rule published May 23, 2014, Part D sponsors must deny a pharmacy claim for a Part D drug if the physician or eligible professional who wrote the prescription is neither enrolled in nor validly opted-out of Medicare. CMS previously announced that it was not enforcing the enrollment requirement until December 2015 to allow additional time for Part D prescribers to enroll in or opt-out of Medicare.

CMS has subsequently learned that certain pharmacists and other provider types who do not meet the statutory definitions of “physician” or “eligible professional” to enroll in Medicare may prescribe drugs under state law, but their prescriptions would be denied under the CMS rule because the prescriber is neither enrolled in nor opted-out of Medicare. In response, the May 6 IFC provides that pharmacy claims and beneficiary requests for reimbursement for Medicare Part D prescriptions, written by prescribers other than physicians and eligible professionals who are permitted by state or other applicable law to prescribe medications, will not be rejected at the point of sale or denied by the plan if all other requirements are met. In addition, to mitigate potential interruptions to beneficiaries’ access to medications, the IFC requires Part D sponsors to cover a provisional supply of drugs (3 months) and provide beneficiaries with individualized written notice before denying a Part D claim or beneficiary request for reimbursement on the basis of a prescriber’s Medicare enrollment status. The IFC applies the enrollment policy effective January 1, 2016. Comments will be accepted until July 6, 2015.

OIG Early Alert on State-Based ACA Marketplace Funding Use

The OIG has issued an “Early Alert” warning regarding the use of federal funding by state-based marketplaces under the Affordable Care Act (ACA). The OIG notes that the ACA clearly prohibits marketplaces from using grant funds to support ongoing operations after January 1, 2015. The OIG expresses its “concerns that, without more detailed guidance from CMS, state-based marketplaces (SBMs) might have used, and might continue to use, establishment grant funds for operating expenses after January 1, 2015, contrary to law.” The OIG recommends that CMS consider establishing clear guidance on what constitutes (1) operational costs and (2) design, development, and implementation costs to minimize the marketplaces' improper use of establishment grant funding for operational expenses after January 1, 2015. In developing this guidance, the OIG encourages CMS to review SBM plans for using establishment grant funds to ensure that the guidance addresses real-world examples (e.g., call centers, in-person assisters, bank fees, and printing and postage expenses). Finally, the OIG encourages CMS to monitor SBMs' use or potential use of establishment grant funds for operational costs and take appropriate action. 

CMS Call on Hospice Quality Reporting (June 17)

CMS is hosting a June 17, 2015 provider call to discuss the Hospice Quality Reporting Program and the new Hospice Item Set (HIS) Manual (V1.02).  The target audience includes quality staff at Medicare-certified hospice programs, including quality and compliance staff, and Quality Assurance and Performance Improvement (QAPI) program coordinators.

CMS Call: ICD-10 Implementation and ICD-10-PCS Section X (June 18)

CMS is hosting a call on June 18, 2015 to present strategies and resources to prepare for ICD-10 implementation. The call will also provide an overview of ICD-10-PCS Section X for new technologies, which will be used by hospitals.

CMS Call: National Partnership to Improve Dementia Care and QAPI (June 16)

On June 16, CMS is holding a call on the National Partnership to Improve Dementia Care and Quality Assurance and Performance Improvement (QAPI).  The target audience for the call is consumer and advocacy groups, nursing home providers, the surveyor community, prescribers, professional associations, and other interested stakeholders.

Congress Passes Budget Resolution Conference Report with ACA, Medicare Provisions

On May 5, 2015, the Senate approved the conference report to accompany S.Con.Res. 11, the concurrent resolution setting forth the federal budget for FY 2016 and establishing budgetary target levels for FYs 2017 through 2025, following earlier House approval. The conference agreement, which was approved on largely party-line votes, includes nonbinding language supporting Affordable Care Act (ACA) repeal (including specific reference to repeal of the Medicare Independent Payment Advisory Board and Medicare spending cuts contained in the ACA, as long as the measure is deficit-neutral). The agreement calls for $430 billion in unspecified Medicare savings, as the Senate had proposed, rather than structural reforms included in an earlier House version.  While the conference report is intended to guide Congressional budget activities in the coming year and facilitates floor consideration in the Senate, the measure does not actually effect policy changes; any subsequent legislation to implement the instructions would be subject to future Congressional debate (and potential Presidential veto).

Action Continues on 21st Century Cures Act; Hearings on Medicare Competition, ACA Implementation, Opioid Abuse

Later today, the full House Energy and Commerce Committee is scheduled to begin markup of the 21st Century Cures Act, following Health Subcommittee approval on May 14. Votes are expected tomorrow (markup was subsequently delayed until May 21).  Also today, the House Ways and Means Subcommittee on Health is holding a hearing on "Improving Competition in Medicare: Removing Moratoria and Expanding Access.”

Tomorrow the House Ways and Means Committee has scheduled a hearing on the use of administrative actions in Affordable Care Act implementation. On May 21, the Energy and Commerce Oversight Subcommittee will address state government efforts to combat opioid abuse.

Upcoming 21st Century Cures Markup, Hearings on Medicare Chronic Care, Competition

Tomorrow the House Energy & Commerce Health Subcommittee is scheduled to mark up the 21st Century Cures Act; the Subcommittee has posted a substitute amendment that will be considered by the panel.  Also tomorrow, the Senate Finance Committee is holding a hearing on improving care for Medicare patients with chronic conditions.

Looking ahead to next week, the House Ways and Means Subcommittee on Health is holding a hearing on May 19 entitled “Improving Competition in Medicare: Removing Moratoria and Expanding Access.”

FDA Issues Three Biosimilar Final Guidances

This post was written by Vicki Morris and Jennifer Pike.

On April 28, 2015, the federal Food and Drug Administration (FDA) finalized three guidances for industry on developing biosimilar drugs. The guidances, which follow the FDA’s first approval of a biosimilar drug in March, are intended to clarify both scientific and regulatory considerations for a broad range of stakeholders, including drug companies, in manufacturing biosimilars. The guidances include: Scientific Considerations in Demonstrating Biosimilarity to a Reference Product; Quality Considerations in Demonstrating Biosimilarity of a Therapeutic Protein Product to a Reference Product; and Biosimilars: Questions and Answers Regarding Implementation of the Biologics Price Competition and Innovation Act of 2009.

Scientific Considerations

The guidance on scientific considerations provides an overview of FDA’s approach to determining biosimilarity. Specifically, this guidance purports to assist sponsors in demonstrating that a proposed therapeutic protein product is biosimilar to a reference product for the purpose of submitting a marketing application through an abbreviated licensure pathway under section 351(k) of the Public Health Service Act. Under the guidance, FDA highlights the Agency’s intention to consider the totality of the evidence submitted in a 351(k) application. FDA also notes the importance of particular scientific considerations in demonstrating biosimilarity, including a stepwise approach to demonstrating biosimilarity and general scientific principles in conducting comparative structural analyses, functional assays, animal testing, human pharmacokinetics and pharmacodynamics studies, clinical immunogenicity assessment, and comparative clinical trials, including clinical study design issues.

Quality Considerations

The guidance on quality considerations provides sponsors with an overview of analytical factors that are relevant to assessing whether a proposed biosimilar product (i.e., a therapeutic protein product) and the reference product are highly similar for the purpose of submitting a marketing application through the 351(k) abbreviated licensure pathway. By way of background, biosimilarity is defined to mean that the biological product is highly similar to the reference product notwithstanding minor differences in clinically inactive components and that there are no clinically meaningful differences between the biological product and the reference product in terms of the safety, purity, and potency of the product. In making this highly similar determination, FDA deemed the following factors important: expression system, manufacturing process, assessment of physiochemical properties, functional activities, receptor binding and immunochemical properties, impurities, reference product and reference standards, finished drug product, and stability.

Questions and Answers

Lastly, FDA issued answers to common questions from sponsors interested in developing proposed biosimilar products, biologic license application (BLA) holders, and other interested parties regarding FDA’s interpretations of the Biologics Price Competition and Innovation Act of 2009, which created the abbreviated licensure pathway for biosimilar products. The Q&A’s cover biosimilarity vs. interchangeability, provisions related to requirement to submit a BLA for a “biological product,” and exclusivity. FDA also noted that an alternative approach may be used if such approach satisfies the requirements of the applicable statutes and regulations.

CMS Call: Medicare Acute Care Quality and Reporting Programs (May 12)

On May 12, 2015, CMS is hosting a call that will provide an overview of all Medicare hospital inpatient quality reporting and value-based purchasing programs. Specifically, the call will cover: the Hospital Inpatient Quality Reporting (IQR) Program; the Hospital Value-Based Purchasing (HVBP) Program; the Hospital Acquired Condition Reduction Program (HACRP); the Hospital Readmission Reduction Program (HRRP); and the Electronic Health Records (EHR) Incentive Program. The target audience for this call is hospital administrators, executive-level leaders, quality professionals, and staff new to quality reporting programs. Registration closes at noon on the day of the call or when available space has been filled.

OIG Assesses FDA Progress on Oversight/Inspections of Generic Drug Manufacturers

In a recent report, the HHS OIG concludes that FDA has made progress in improving oversight of generic drug manufacturers, including greater parity in inspections of foreign and domestic generic drug manufacturers. A summary of the report, FDA Has Made Progress on Oversight and Inspections of Manufacturers of Generic Drugs, is available on our Life Sciences Legal Update blog. 

CMS Schedules July 16 Meeting on Medicare Clinical Laboratory Fee Schedule Payments

CMS has just announced that it is holding a public meeting on July 16, 2015 to discuss Medicare clinical laboratory fee schedule (CLFS) payment for new or substantially revised HCPCS codes for calendar year 2016. At the meeting, the public also will have an opportunity to comment on certain reconsideration requests regarding test code payment determinations made last year. Presenters must register and submit presentations to CMS by July 2, 2015. CMS intends to publish its proposed determinations for new test codes and preliminary determinations for reconsidered codes for CY 2016 by early September 2015; a public comment period will follow. Final determinations for new test codes to be included for payment on the CLFS for CY 2016 and reconsidered codes will be released in November 2015.


OMB Reviewing New HRSA 340B Omnibus Guidelines

Today the Health Resources and Services Administration (HRSA) officially requested White House Office of Management and Budget (OMB) review of new “omnibus guidelines” on the 340B drug discount program. While the guidelines are not yet available to the public, the document will presumably fulfill HRSA’s pledge last year to address “key policy issues raised by various stakeholders committed to the integrity of the 340B program.” This latest action follows HRSA’s request last month for OMB clearance of its proposed rule implementing 340B program enforcement authorities and pricing policies under the Affordable Care Act; that rule is still pending at OMB.

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:

  • CMS Regulatory Developments. CMS has issued several proposed rules to update Medicare prospective payment systems (PPS) for FY 2016, including the Medicare inpatient PPS, the long-term care hospital PPS, the skilled nursing facility PPS, the inpatient rehabilitation facility PPS, and the inpatient psychiatric facility PPS. CMS has also proposed updating Medicare and Medicaid Electronic Health Record Incentive program rules, mental health parity rules, and funding for Medicaid eligibility and enrollment systems.
  • Other HHS Developments. CMS has released information on Medicare DMEPOS competitive bidding, 2016 Medicare Advantage/Part D rates and policies, and Hospital Compare star ratings. The ONC has issued updated electronic health information privacy/security guidance. The FDA and CMS are establishing an interagency task force on laboratory-developed test oversight, and FDA draft guidance addresses medical device clinical data from studies conducted abroad.
  • OIG Developments. The OIG has partnered with industry associations to issue guidance for health care governing boards on compliance oversight, and the OIG has issued its Medicaid Fraud Control Units FY 2014 Annual Report. 
  • Legislative Developments. President Obama has signed legislation to permanently reform the Medicare physician reimbursement framework and make other policy changes. Pending trade legislation would extend Medicare sequestration. The House has approved the “Ensuring Patient Access and Effective Drug Enforcement Act.” Congressional panels have held hearings on several health policy issues.
  • Health Industry Events. Upcoming CMS events will focus on home health star ratings and HCPCS coding applications.

CMS Issues Proposed Rule to Update FY 2016 IPPS, LTCH PPS Rates, Policies

On April 30, 2015, the Centers for Medicare & Medicaid Services (CMS) is publishing its proposed rule to update the Medicare acute hospital inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) for fiscal year (FY) 2016.  CMS will accept comments on the proposed rule until June 16, 2015. The final rule will be published by August 1, 2015, and generally will apply to discharges occurring on or after October 1, 2015.

With regard to the IPPS, CMS projects that the rate and policy changes in the proposed rule would increase IPPS operating payments by approximately 0.3%, or about $120 million in FY 2016. The proposed rule would provide for a 1.1% operating payment rate update for hospitals that submit quality data and are meaningful users of Electronic Health Records (EHR). This update reflects a 2.7% market basket update, adjusted by a -0.6 percentage point multi-factor productivity (MFP) cut and an additional -0.2 percentage point cut (as mandated by the Affordable Care Act, or ACA), with an additional -0.8 percentage point documentation and coding recoupment adjustment required by the American Taxpayer Relief Act of 2012.

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