CMS Finalizes Medicare Hospice Wage Index/Rates for FY 2016

On August 6, 2015, CMS is publishing its final rule to update Medicare hospice payment rates and the wage index for fiscal year (FY) 2016.  CMS estimates that the final rule will increase overall payments to hospices by about 1.1%, or $160 million, in FY 2016.  This increase reflects a 1.6% hospice payment update percentage, which in turn 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 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 the final rule, CMS adopts its proposal to create two different payment rates for routine home care (RHC), effective January 1, 2016.  Under this policy, CMS will apply a higher base payment rate for the first 60 days of hospice care and a reduced base payment rate for subsequent days. CMS also adopted 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); and (3) direct patient care must be provided by a registered nurse or a social worker.  In a change from the proposed rule, CMS will consider episodes provided in a skilled nursing facility or nursing facility to be eligible for the SIA payment.  The SIA payment will equal the continuous home care (CHC) hourly rate multiplied by the hours of nursing or social work provided (up to 4 hours total per day) that occurred on the day of service.  The SIA payment provision also is effective January 1, 2016. The RHC rates and the SIA payment are being implemented on a budget-neutral basis and will not result in an overall payment impact for the Medicare program or hospices.

CMS intends for the RHC and SIA payment policies to more accurately align Medicare payments the typically greater visit intensity and costs associated with providing care in the first 60 days of hospice care and the last 7 days of hospice care, respectively. Commenters on the proposed rule expressed concerns, however, that hospices will attempt various methods for “gaming” the new reimbursement methodology, e.g., accepting patients in order to receive the initial, higher RHC rates and then discharging them. CMS states in the preamble that it will “monitor the impact of this proposal, including trends in discharges and revocations, and propose future refinements if necessary,” and it also reminds hospices that there are limited circumstances during which they permissibly can discharge patients. In response to commenters’ concerns with hospices “churning” patients by discharging and then readmitting them, the final rule – as with the proposed rule – states that the 60-day count of days reimbursed at the higher initial rate will follow the patient. While gaming is still possible if hospices seek to transfer patients to second hospices at the close of the 60 day period (i.e., the first hospice keeps the patient long enough to receive the higher rate), CMS stated “Allowing for a higher payment for the first seven days of a new hospice election without a gap in hospice care of greater than 60 days goes against our intent to mitigate the incentive to discharge and readmit patients at or around day 60 for the purposes of obtaining a higher payment. As we stated above, we will monitor the impact of the new RHC rates policy based on claims data, including trends in discharges and revocations….”

In addition to these payment rate changes, the final rule, among other things:  implements changes to the aggregate cap calculation as mandated by the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act); aligns the cap accounting year for both the inpatient cap and the hospice aggregate cap with the federal fiscal year starting in FY 2017; makes changes to the hospice quality reporting program; and clarifies that hospices must report on the hospice claim all diagnoses identified in the initial and comprehensive assessments on hospice claims, whether related or unrelated to the terminal prognosis of the individual.

CMS Again Extends Moratoria on Enrollment of HHAs, Ambulance Suppliers in Designated Areas

CMS has announced another 6-month extension of its current temporary enrollment moratoria for new ground ambulance suppliers and home health agencies (HHAs), subunits, and branch locations in designated metropolitan areas. The moratoria, which affect enrollment in Medicare, Medicaid, and the Children’s Health Insurance Program, apply to:

  • New ground ambulances in the Houston and Philadelphia metropolitan areas, and
  • New HHAs in the Fort Lauderdale, Miami, Chicago, Detroit, Dallas, and Houston metropolitan areas.

The extension is effective July 29, 2015. CMS may lift the moratoria before the end of the 6-month period or announce additional extensions.

President Obama Signs Speech Generating Device Coverage, Independence at Home Acts

On July 30, 2015, President Obama signed into law:

  • S. 984, “Steve Gleason Act of 2015” – a bill to cover as durable medical equipment eye tracking and gaze interaction accessories for speech generating devices furnished to individuals with a demonstrated medical need for such accessories; and
  • S. 971, “Medicare Independence at Home Medical Practice Demonstration Improvement Act of 2015” – a bill to extend from a three-year to a five-year period the limit on the length of agreements under the Medicare Independence at Home Medical Practice Demonstration Program.

MedPAC Issues 2015 Medicare Data Book

The Medicare Payment Advisory Commission (MedPAC) has released its 2015 Data Book on Health Care Spending and the Medicare Program. The publication provides information on national health care and Medicare spending, Medicare and dual-eligible beneficiary demographics, Medicare quality, and Medicare beneficiary liability, along with Medicare Advantage and Medicare Part D drug program data. The report also includes detailed utilization and financial performance information regarding various Medicare provider types (e.g., acute care, ambulatory care, and post-acute care providers).

CMS Proposes Revisions to Stark Law Rules: Will they Provide Flexibility to Achieve Health Reform Goals?

The Centers for Medicare & Medicaid Services (CMS) has proposed regulations “to reduce burden and to facilitate compliance” under the physician self-referral law known as the Stark Law.  The proposed changes, which are included in the annual proposed update to the Medicare physician fee schedule, are a summarized in a new Reed Smith Client Alert.  The Client Alert notes that while it is encouraging that CMS solicits comments on the impact of the Stark Law on health care delivery and payment reform, “the fact remains that the Stark Law is still too complex, too unwieldy, and too susceptible to differing interpretations.”

CMS Call: Countdown to ICD-10 (Aug. 27)

On August 27, 2015, CMS is hosting a call to help health care providers prepare for ICD-10 implementation on October 1, 2015. CMS staff will be joined by representatives of the American Health Information Management Association (AHIMA) and the American Hospital Association (AHA). The call will cover: the status of implementation, coding guidance; how to get answers to coding questions; claims that span the implementation date; testing results, and provider resources.

CMS Call on Proposed Reform of LTC Facility Requirements (Aug.11)

On August 11, 2015, CMS is hosting a provider call to discuss its proposed rule to reform the Medicare and Medicaid participation requirements for long-term care (LTC) facilities. A question and answer session will follow the CMS presentation. Registration is required.

Analysis of CMS’ Proposed Medicare “Comprehensive Care for Joint Replacement” Model

As promised in our July 21st post, our team has compiled a comprehensive analysis of the Centers for Medicare and Medicaid Services’ (CMS) proposed rule to establish a Medicare Comprehensive Care for Joint Replacement (CCJR) model, under which CMS would provide a bundled payment to hospitals for an episode of lower extremity joint replacement surgery.

Under this rule, some providers would be required to participate. To help clarify this complex rule, our analysis covers:

  • Which hospitals and beneficiaries are subject to the CCJR model
  • Covered episodes and services
  • The role of hospitals as episode initiators
  • Beneficiary incentives and financial arrangements with collaborators
  • Parameters for gainsharing payments involving collaborators
  • Medicare waivers
  • Comment opportunities (CMS is accepting comments on the proposed rule until September 8, 2015).

You can read Reed Smith’s white paper on the proposed “Comprehensive Care for Joint Replacement” model here.

Final FY 2016 Medicare Payment Rules on the Horizon

Despite the recent flurry of activity on Medicare payment rules, more are in the pipeline. CMS has sent the final fiscal year (FY) 2016 Medicare skilled nursing facility, hospice, inpatient rehabilitation facility, and inpatient psychiatric facility payment rules to the White House Office of Management and Budget for final regulatory clearance. The FY 2016 final rule for inpatient acute and long-term care hospitals is due soon. While the rules are not available for review yet, they should be going on display at the Federal Register in the near future.

Medicare/Medicaid Requirements for Long-Term Care Facilities

On July 13, 2015, CMS issued a much-anticipated proposed rule seeking to consolidate the long-term care (LTC) facility participation requirements for the Medicare and Medicaid programs. This major proposal marks the first comprehensive changes to the LTC conditions of participation since 1991. As noted by CMS, the revisions are designed to align with current clinical practice standards in an effort to improve the safety, quality, and effectiveness of care delivered to facility residents. Strikingly, CMS estimates in its regulatory impact statement that the total projected cost of this rule would be almost $730 million in the first year and more than $638 million annually thereafter. Comments regarding the proposed rule are due to CMS by September 14, 2015. Given the significance of the proposed rule, we are preparing a client alert to assist the LTC industry in assessing the implications of the proposal.

CMS Proposes “Comprehensive Care for Joint Replacement” Model

On July 14, 2015, CMS published a proposed rule to establish a Medicare Comprehensive Care for Joint Replacement (CCJR) model.  Under the proposed rule, CMS would provide a bundled payment to hospitals in selected geographic areas for an episode of care for lower extremity joint replacement (LEJR) surgery, covering all services provided during the inpatient admission through 90 days post-discharge. CMS proposes that the bundled payment would be paid retrospectively through a reconciliation process; hospitals and other providers and suppliers would continue to submit claims and receive payment via the usual Medicare fee-for-service (FFS) payment systems. A participant hospital would have the opportunity to receive a “reconciliation payment” if its actual episode payments were below the target price for the episode, but the hospital would have to repay the difference to CMS if the target price were exceeded (with certain exceptions). CMS estimates that the five-year CCJR model will cover about 25% of all lower extremity joint replacement procedures nationally, and will involve about $2.26 billion in episode spending in 2016, rising to $2.71 billion by 2020. The proposed rule is extremely complex, both in terms of the implications for Medicare payment to participating hospitals and the parameters for relationships between hospitals and other providers that may furnish care to beneficiaries under the model.  Comments regarding the proposed rule are due September 8, 2015.  We are currently preparing an analysis of the rule.

CMS Fraud Prevention System Credited with $820 Million in Medicare Savings to Date

CMS has announced that its Fraud Prevention System identified or prevented $820 million in inappropriate Medicare payments during its first three years, including $454 million in 2014 alone. The Fraud Prevention System uses predictive analytics technologies to identify fraudulent claims before they are paid. CMS also intends to expand the Fraud Prevention System and its algorithms in future years “to identify lower levels of non-compliant health care providers who would be better served by education or data transparency interventions.”

House Approves 21st Century Cures Act

On July 10, 2015, the House of Representatives passed on a 344-77 vote the 21st Century Cures Act, H.R. 6, legislation intended to improve the drug and device development processes and expedite patient access to medical treatments. A blog post highlighting key drug and device development provisions of the bill is available on our Life Sciences Legal Update blog.  Other provisions of the bill addressing a variety of Medicare and Medicaid policies, including Medicaid drug and durable medical equipment payment policy, Medicare imaging reimbursement, and civil monetary penalties in cases of HHS grant or contract fraud, are discussed in previous posts.  The Senate is operating on a separate track, and is expected to consider this issue later this year.

Congress Clears Bipartisan DME & Home Care Bills

On July 15, 2015, the House of Representatives approved by voice vote the following two bills:

  • S. 984, “Steve Gleason Act of 2015” – a bill to cover as durable medical equipment eye tracking and gaze interaction accessories for speech generating devices furnished to individuals with a demonstrated medical need for such accessories; and
  • S. 971, “Medicare Independence at Home Medical Practice Demonstration Improvement Act of 2015” – a bill to extend from a three-year to a five-year period the limit on the length of agreements under the Medicare Independence at Home Medical Practice Demonstration Program.

Both bills were approved by the Senate in April, and they are now awaiting the President’s signature.

FDA Final Rule Mandates Drug Manufacturer Notification of Impending Drug Shortages

On July 8, 2015, the federal Food and Drug Administration (FDA) published a final rule requiring drug manufacturers to report to the Agency any supply chain disruptions that could lead to drug shortages. The final rule implements provisions of the Food and Drug Administration Safety and Innovation Action of 2012 (FDASIA) (Pub. L. No. 112-144). FDA believes that this final rule will improve its ability to identify potential drug shortages and to prevent or mitigate the impact of these shortages. Continue Reading

FDA Requests RSVP for Public Meetings on PDUFA Reauthorization

The federal Food and Drug Administration (FDA) has issued a notice requesting that public stakeholders –including patient and consumer advocacy groups, health care professionals, and scientific and academic experts– notify FDA of their intent to participate in monthly consultation meetings on the reauthorization of the Prescription Drug User Fee Act (PDUFA). When the statutory authority for PDUFA expires in September 2017, new legislation will be required for FDA to continue collecting user fees for the prescription drug program. The monthly consultation meetings FDA plans to hold are meant to ensure continuity and progress by establishing consistent stakeholder representation. Interested parties can submit notification of intention to participate by August 28, 2015 by email to:  FDA anticipates that the meetings will commence in September or October 2015.

Proposed CY 2016 MPFS Rule Takes First Steps in Implementing MACRA Reforms

On July 15, 2015, the Centers for Medicare & Medicaid Services (CMS) published its proposed rule to update the Medicare physician fee schedule (MPFS) for CY 2016 – the first rulemaking since the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) repealed the sustainable growth rate (SGR) formula.  Under the proposed rule, the 2016 MPFS conversion factor (CF) would be $36.1096, compared with the 2015 CF of $35.9335, reflecting a 0.5% update factor specified under MACRA and a budget neutrality adjustment of 0.9999.  Note that the CF is subject to change in the final rule, however, if CMS does not meet a statutory target for expenditure reductions related to its review of misvalued procedures (discussed below).

The proposed rule addresses numerous aspects of Medicare Part B and other CMS program policies.  Highlights include the following:  Continue Reading

CMS Extends Medicare Prior Authorization for Power Mobility Devices Demonstration through August 2018

CMS has announced that it is extending its Medicare Prior Authorization for Power Mobility Devices (PMDs) demonstration for three years, through August 31, 2018. This demonstration was launched on September 1, 2012 in seven states that CMS describes as having “high levels of improper payments and incidents of fraud related to PMDs” – California, Illinois, Michigan, New York, North Carolina, Florida, and Texas. CMS extended the program to 12 additional states beginning October 1, 2014: Pennsylvania, Ohio, Louisiana, Missouri, Washington, New Jersey, Maryland, Indiana, Kentucky, Georgia, Tennessee, and Arizona. Under the demonstration, a 25% reduction is made in the applicable Medicare payment for failure to receive a prior authorization decision before the submission of a claim.

White House Releases Proposed Precision Medicine Initiative Privacy Framework

Earlier this year, President Obama launched a high-profile “Precision Medicine Initiative” (PMI) to develop treatments, diagnostics, and prevention strategies tailored to the individual genetic characteristics of each patient.  On July 8, 2015 the White House released for public comment a draft document entitled “Precision Medicine Initiative: Proposed Privacy and Trust Principles,” which provides broad guidance concerning:  governance; transparency; reciprocity; respect for participant preferences; data sharing, access and use; data quality and integrity; and security within the context of the PMI.  The principles include “strategies for engendering public trust and maximizing the possible benefits of a large national research cohort, while minimizing the risks inherent in large-scale data collection, analysis, and sharing.”  The White House is accepting public comments on the proposed principles through August 7, 2015.