CMS has announced a new Accountable Care Organization “Investment Model” that was developed in response to concerns that some providers lack adequate access to the capital needed to invest in infrastructure necessary to successfully implement population care management. CMS will provide as much as $114 million in upfront investments to up to 75 ACOs across the country to help these ACOs make infrastructure investments and develop new ways to improve care for Medicare beneficiaries.
OIG and CMS Extend Fraud/Abuse Waivers for Medicare Shared Savings Program/ACOs; Invite Feedback on Waiver Policy
Today the OIG and CMS published a joint notice continuing the effectiveness of fraud and abuse law waivers granted in 2011 in connection with 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).
By way of background, in a November 2, 2011 joint OIG-CMS interim final rule with comment period, the agencies established waivers of the application of the federal physician self-referral law, the federal anti-kickback statute, and certain civil monetary penalties law provisions to specified arrangements involving ACOs participating in the Shared Savings Program (the Waiver IFC). In 2011 Reed Smith prepared an in-depth analysis of the Medicare Shared Savings Program, including an analysis of the Waiver IFC. Because of a general 3-year deadline for publishing Medicare final rules after the publication of a proposed or interim final rule, the agencies are extending the timeline for publication of a final rule concerning Shared Savings Program waivers to avoid “creating legal uncertainty for ACOs participating in the Shared Savings Program and potentially disrupting ongoing business plans or operations of some ACOs.” The notice also states that CMS is developing a proposed rule to make certain modifications to the Shared Savings Program regulations; in order to ensure that the final waiver regulations align with the Shared Savings Program rules, the agencies believe “the prudent course of action at this time is to extend the effectiveness of the Waiver IFC.” Thus the Waiver IFC will remain in effect through November 2, 2015, unless a final waiver rule becomes effective on an earlier date.
In the notice, the agencies also suggest that they would benefit from additional stakeholder input to inform their understanding of:
- how and to what extent ACOs are using the waivers;
- whether the existing waivers serve the needs of ACOs and the Medicare program;
- whether the waivers adequately protect the Medicare program and beneficiaries from the types of harms associated with referral payments or payments to reduce or limit services; and
- whether there are new or changed considerations that should inform the development of additional notice and comment rulemaking.
No deadline is specified for providing feedback on these considerations.
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:
- The proposed rule includes numerous proposals to review addition codes as being potentially misvalued, and to revise the data considered by CMS in assessing the value of procedures. CMS proposes to add about 80 codes to its list of potentially misvalued codes, most of which are high-expenditure specialty services that have not been recently reviewed. CMS also discusses implementation of a PAMA provision authorizing CMS to use alternative approaches to establish practice expense (PE) relative value units (RVUs), including the use of data from other suppliers and providers of services. CMS is specifically seeking comments on the possible use of the Medicare hospital outpatient cost data in the PE valuation methodology. In addition, CMS is proposing to transform all 10- and 90-day global surgery codes to 0-day global codes. Under this provision, CMS would include in the value for these procedures all services provided on the day of surgery, and pay separately for visits and services actually furnished after the day of the procedure, effective beginning in CY 2017.
- CMS proposes a new process intended to enhance transparency in MPFS ratesetting and ensure that all payment input revisions are subjected to public comment prior to being used for payment. In short, beginning with the MPFS proposed rule for CY 2016, CMS will include proposed values for all new, revised, and potentially misvalued codes for which it has complete American Medical Association’s Relative Value Update Committee (RUC) recommendations by January 15th of the preceding year (thus for the CY 2016 rulemaking, CMS would include in the proposed rule proposed values for services for which it has RUC recommendations by January 15, 2015). CMS would delay consideration of RUC recommendations received after January 15th of a year. For codes that describe wholly new services, CMS will work with the RUC to try to receive recommendations in time to include proposed values in the proposed rule; if not, and CMS determines that it is in the public interest for Medicare to begin using the code, CMS would establish values for the code’s initial year as under current policy. CMS is also revising how it accounts for costs associated with radiation therapy equipment and x-ray services.
- CMS proposes numerous changes to the Physician Quality Reporting System (PQRS), including the addition of 28 new individual measures and two measure groups, and removal of 73 measures. CMS also proposes that eligible professionals who see at least one Medicare patient in a face-to-face encounter report measures from a new cross-cutting measures set in addition to other required measures. The proposed rule also includes revisions to Shared Savings Program/accountable care organization (ACO) quality requirements, including changes to the scoring strategy to recognize quality improvement, revisions to quality measure benchmarks, and revisions to individual quality measures.
- CMS proposes changes to the Physician Value-Based Payment Modifier program, under which CMS will adjust payment to physicians based on the quality of care compared to costs. For 2017 (the last year in a three-year phase-in period), CMS proposes to apply the Value Modifier to physicians in groups with two or more eligible professionals (EPs) and to physicians who are solo practitioners. CMS also would apply the Value Modifier beginning in CY 2017 to non-physician EPs in groups with two or more EPs and to non-physician EPs who are solo practitioners. Moreover, CMS proposes a number of changes to the payment adjustment framework for 2017, increasing the potential upward and downward adjustment to +/- 4%.
- CMS raises concerns about “operational and program integrity issues” arising from the use of substitute (locum tenens) physicians to fill staffing needs or to replace a physician who has permanently left a medical group, particularly with regard to potentially inappropriate use of the departed physician’s Provider Transaction Access Numbers (PTAN) or National Provider Identifier (NPI). CMS solicits comments on specific questions associated with substitute physician billing arrangements as the agency considers whether to adopt regulations in this area, including with regard to implications for the physician self-referral law.
- CMS is proposing changes to its Physician Payment Sunshine Act regulations, also known as the Open Payments program. These provisions are discussed in a separate post.
- Among many other things, the proposed rule also would: establish a revised local coverage determination (LCD) process for all new draft clinical diagnostic laboratory test LCDs published on or after January 1, 2015; require physicians (and hospitals) to report a modifier for services furnished in an off-campus provider-based department; update malpractice RVUs; revise Geographic Practice Cost Indices; reduce beneficiary cost-sharing associated for anesthesia related to screening colonoscopies; and add to the list of services that can be furnished to Medicare beneficiaries under the telehealth benefit annual wellness visits, psychoanalysis, psychotherapy, and prolonged evaluation and management services.
CMS will accept comments on the rule until September 2, 2014.
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.
On June 13, 2014, the Medicare Payment Advisory Commission (MedPAC) released its June 2014 Report to the Congress on Medicare and the Health Care Delivery System. Among other things, MedPAC addresses ways to align Medicare fee-for-service (FFS), Medicare Advantage, and accountable care organization policies on payment, risk adjustment, and quality measurement. MedPAC also discusses various FFS reforms, including post-acute care reforms to promote payment consistency across settings and bonus payments to support primary care. Finally, MedPAC discusses changing income eligibility standards for the Medicare Savings Programs to help low-income Medicare beneficiaries afford out-of-pocket costs, and it examines the impact of medication adherence on health spending.
On May 22, 2014, CMS announced the second round of funding under the State Innovation Models Initiative. This initiative was announced in 2013 to support state design and testing of multi-payer payment and delivery models -- such as accountable care organizations, accountable care communities, patient centered medical homes and bundled payments -- intended to generate savings and improve care for Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) beneficiaries. Under round two, CMS will award as much as $30 million for 15 Model Design cooperative agreements (providing funding and technical assistance as states assess system improvement options) and up to $700 million in funding for 12 state-sponsored Model Test cooperative agreements (intended to assist in implementing developed models).
In early April, Reed Smith hosted an enlightening, industry-leading conference on post-acute care in Washington, D.C. The conference, entitled “Reed Smith 2014 Washington Health Care Conference: Focus on Post-Acute Care," brought together a panel of experts to discuss episodic care, bundling models, and alternative payment and delivery systems. The conference also featured other speakers who presented from the perspective of investors and Capitol Hill, along with a keynote address from American Enterprise Institute resident scholar Dr. Norman Ornstein.
Policy Discussion on Payment Models
The conference started with a panel discussing bundling initiatives and other alternative payment models. The panel featured Barbara Gage, Ph.D., Fellow and Managing Director of Engelberg Center for Health Care Reform at the Brookings Institution; Judy Feder, Ph.D., Professor at Georgetown University; Vincent Mor, Ph.D., Professor at Brown University School of Medicine; and James Michel, Director for Medicare Research & Reimbursement at the American Health Care Association (“AHCA”). The panel brought with them decades of experience in health care policy and research, and a deep knowledge of post-acute care providers’ current reimbursement systems, in addition to models expected to reform payment for post-acute services in the future.
Dr. Gage spoke first, and introduced bundling by discussing the triple aim adopted by the Centers for Medicare & Medicaid Services (“CMS”): achieve better care for patients, better communities’ health, and lower costs by improving the health care system. She explained how new payment models—including bundled payment initiatives and accountable care organizations—strive to accomplish the above-mentioned triple aim. Gage discussed whether the post-acute setting in which a patient receives treatment distinguishes the patient’s outcome and the level of resources that different post-acute settings (e.g., home health, skilled nursing facilities (“SNF”), inpatient rehabilitation facilities (“IRF”), or long-term acute care hospitals (“LTCH”)) furnish to patients. Gage described in great detail the arguments in favor of bundled payments, emphasizing that one of the benefits of a bundled payment model is that it forces communication across all care settings.
Dr. Feder, on the other hand, urged caution as reimbursement moves to new models. She stressed that bundled payment models, for example, create powerful incentives to potentially reduce or limit the care furnished to patients, and therefore could result in reduced quality of care. Feder explained that bundling is not new, and that, e.g., payers have bundled in the inpatient hospital setting for 30 years. Feder pointed out that when Medicare implemented diagnosis-related groups in the inpatient hospital prospective payment system, hospital length of stay “dropp[ed] like a stone.” Feder underscored that the biggest challenges arise from patients whose health is deteriorating, and explained that the number of home health visits, for instance, are the lowest when patient acuity is the highest. In order to ensure adequate, appropriate, and high-quality care for patients, Feder suggested that policymakers thoughtfully develop and implement any new payment system over time, and incorporate quality mechanisms that serve to protect patients. Feder suggested that good patient data and strong accountability measures are essential to any bundled payment program.
After Feder spoke, Dr. Mor took the podium and analogized capitation versus fee-for-service as being “between the devil and the deep blue sea.” He further explained that fee-for-service reimbursement models have encouraged runaway costs and increased utilization, and that there is a lack of provider accountability and responsibility. In contrast, he explained that in capitation reimbursement models, there is an inherent incentive to deny care. Mor discussed how policymakers can ensure patients receive quality care from providers, and raised a number of thought-provoking questions, such as whether a SNF or other post-acute provider should be responsible for rehospitalization after the discharge of a patient, and whether low rehospitalization reflects overall high-quality care. Mor urged the development of a common assessment tool that includes hospital assessment data in order to more accurately measure post-acute quality and case-mix. He also recommended that CMS use the “Welcome to Medicare” assessment and other periodic beneficiary assessments to obtain risk profiles for patients. Mor ended his presentation by suggesting that while capitation models—such as bundling—are preferable to fee-for-service because one entity is responsible for patients’ care, capitation models face challenges as well, including how to properly measure case-mix and outcomes.
James Michel from AHCA noted the operational challenges associated with bundled payments. For example, it is difficult for post-acute providers to assume the responsibility for patients after the post-acute provider discharges a given beneficiary. Michel also stated that the Center for Medicare & Medicaid Innovation Bundled Payments for Care Improvement initiative’s models incentivize low-cost providers to participate, but providers who recognize they have higher costs than the community average will not participate because of the risk that they will miss the spending target, resulting in a payment to the government. Michel noted that AHCA has developed its own bundled payment proposal, in part to preserve a process in which patients and their families can decide where the patient should be treated after an acute stay. The AHCA bundled payment proposal includes four proposed episodes (e.g., major respiratory condition and septicemia) that would account for approximately 60 percent of all SNF care and more than 50 percent of all post-acute care.
Wall Street Perspective
Jay Barnes, a Senior Vice President for Healthcare Investment Banking at Jefferies, LLC, spoke from the Wall Street perspective, addressing the current appetite for deals in the post-acute space. He described a tepid outlook for post-acute investment stemming from the uncertainty of the future payment models and the changing regulatory landscape, particularly with regard to LTCHs. He informed attendees that the private equity market has been non-existent in the post-acute space because it is challenging to create projection models when future reimbursement for post-acute care remains murky. He explained that the post-acute transactions occurring are largely driven by real estate. For example, Barnes described the recently announced Emeritus Senior Living and Brookdale Senior Living merger as driven by real estate.
Cate McCanless, Senior Policy Analyst at Brownstein Hyatt Farber Schreck, provided an insightful overview of Medicare activity on Capitol Hill. She explained that Congress has focused on post-acute care because of the perceived “comfortable” margins achieved by post-acute providers (according to the Medicare Payment Advisory Commission). McCanless also described the outlook for the discussion draft of the Improving Medicare Post-Acute Care Transformation (“IMPACT”) Act of 2014, released by the House Ways and Means Committee Chairman Dave Camp (R-Mich.) and Ranking Member Sandy Levin (D-Mich.), along with Senate Finance Committee Chairman Ron Wyden (D-Ore.) and Ranking Member Orrin Hatch (R-Utah), March 18, 2014. The IMPACT Act draft includes one measure discussed by Mor during the bundling panel: the reporting of common data across post-acute providers, and the required reporting by acute-care hospitals of patient assessment data gathered in advance of discharge. McCanless also explained that while there has been some Congressional momentum in eliminating Medicare's sustainable growth-rate (“SGR”) formula in order to move to an alternative payment model, such momentum may lose steam this year now that a temporary patch has been enacted, because eliminating the SGR would be expensive, and it is an election year. McCanless pointed out certain post-acute policy proposals that would result in cost savings, such as reducing the SNF payment update by 1.1 percent, which would save an estimated $12 billion, and equalizing certain payments for SNFs and IRFs, which would save an estimated $1 billion; these provisions could be targets for offsets for future Medicare reforms.
Impact of Political Polarization on Health Policy
Dr. Norman Ornstein, noted observer of Congress and politics, and keynote speaker at Reed Smith’s inaugural Health Care Conference, closed the session with a thoughtful discussion regarding the current state of American politics. He described not just the polarization, but also the tribalism, of American politics today, depicting a broken American political system where opposing parties have adopted a mantra of, “if you support it, I am against it.” Despite Ornstein’s bleak description of the current state of politics, he offered some suggestions for reform, including incentivizing citizens to vote. He argued that if more of the American public is engaged, politicians must meet in the middle on at least some policy debates.
In all, the inaugural Reed Smith Health Care Conference led to provocative discussions and a deeper understanding of the political climate and policy recommendations likely to impact—or even transform—post-acute care in the not-so-distant future. We look forward to next year’s conference.
On April 8, 2014, CMS is hosting a call on how to prepare for the Medicare Shared Savings Program application process for the January 1, 2015 start date. Among other things, the call will cover accountable care organization (ACO) structure and governance, application key dates, and the Notice of Intent to Apply submission process.
CMS is inviting public input on “the evolution of Accountable Care Organization (ACO) initiatives” at CMS, including feedback on a second round of applications for the current Pioneer ACO Model along with new ACO models that encourage greater care integration and financial accountability. Responses should be submitted by March 1, 2014.
CMS has posted a November 22, 2013 letter to state health officials on “Quality Considerations for Medicaid and CHIP Programs,” the fourth in a series of guidance documents intended to assist states with designing and implementing integrated care models, such as medical/health homes, accountable care organizations, and managed care. The latest letter provides a framework for quality improvement and measurement as states develop care payment reforms ranging from risk-based shared savings methodologies to performance-based bonus payments to providers. Specifically, the letter describes: key components of state quality improvement strategies (goals, interventions, metrics, targets, transparency, and feedback); the impact of this framework on CMS policies for payment delivery models and accountability; a description of existing quality measurement and improvement efforts that impact Medicaid and CHIP; an example of a measurement matrix; and a description of alignment with existing quality initiatives and funding to support data infrastructure.
CMS has scheduled two calls to discuss the application process for the ACA’s Medicare Shared Savings Program for the January 1, 2014 start date. This initiative is designed to help providers participate in accountable care organizations to improve quality of care for Medicare patients. A June 20 call will feature an overview and updates to the Shared Savings Program application process, and a July 18 call will provide an opportunity to ask questions of CMS subject matter experts.
CMS is hosting two calls in April on the Medicare Shared Savings Program, which in intended to help providers participate in Accountable Care Organizations (ACOs) in order to improve quality of care for Medicare patients. First, an April 9, 2013 call will focus on preparing for the Shared Savings Program application process for the January 1, 2014 start date. Second, an April 23 call will cover tips for completing a successful ACO application.
On the Reed Smith Life Sciences Legal Update blog, Health Care team members Thomas Greeson and Paul Pitts have written about post-election implications for the radiology industry. The report describes their assessments of the short and mid-term time horizon for a number of health policy developments such as integration (e.g., accountable care organizations), government enforcement, antitrust, and self-referrals. For additional details, see our full post.
The CMS Center for Medicare and & Medicaid Innovation is holding an Open Door Forum on August 27, 2012 to receive input on designing educational opportunities for providers interested in participating in accountable care organizations (ACOs) or other coordinated care initiatives.
The CMS Center for Medicare and & Medicaid Innovation is holding an Open Door Forum on August 27, 2012 to receive input on designing educational opportunities for providers interested in participating in accountable care organizations (ACOs) or other coordinated care initiatives.
On July 31, CMS is hosting a call on the Medicare Shared Savings Program application and Advance Payment Model application processes for the January 1, 2013 Shared Savings Program start date. These two initiatives are designed to help providers participate in Accountable Care Organizations (ACOs) to improve quality of care for Medicare patients. Registration is required.
On July 10, 2012, CMS released two letters to state Medicaid agencies on “Developing and Implementing Integrated Care Models in Medicaid Programs.” The first letter describes the concept of “Integrated Care Models,” which could include medical/health homes, accountable care organizations (ACOs), ACO-like models, and other arrangements that emphasize person-centered, continuous, coordinated, and comprehensive care. The second letter describes flexibility in the Medicaid statute that supports delivery system and payment reforms in fee-for-service systems. CMS expects future communications to states to address methodologies for shared savings arrangements, a quality and cost measures framework, achieving results through managed care contracts, and alignment with other federal initiatives.
On July 16, 2012, CMS is hosting a National Provider Call on the Shared Savings Program application and Advance Payment Model application processes for the January 1, 2013 Shared Savings Program start date. These two initiatives are designed to help providers participate in Accountable Care Organizations (ACOs) to improve quality of care for Medicare patients. Registration is required.
On June 15, 2012, MedPAC released its June 2012 Report to the Congress on “Medicare and the Health Care Delivery System.” Unlike most MedPAC reports that focus on provider payments, this report examines the role of beneficiaries and their impact on the Medicare program. In particular, MedPAC recommends reforms to Medicare’s benefit design/cost-sharing structure to protect beneficiaries against high out-of-pocket spending while creating incentives for beneficiaries to make better decisions about discretionary care. The report also assesses different care coordination models, such as bundling and ACOs, and ways to reward outcomes resulting from coordinated care (or penalize fragmented care). In addition, MedPAC examines programs designed to integrate care for Medicare/Medicaid dual-eligible beneficiaries, including the Program of All-Inclusive Care for the Elderly and dual-eligible special needs plan. MedPAC also includes separate chapters on care for beneficiaries in rural areas and options for reforming Medicare coverage of home infusion service, as requested by Congress.
Through the Advance Payment Accountable Care Organization (ACO) initiative, CMS is testing the extent to which pre-paying a portion of future shared saving could increase participation in CMS’s Medicare Shared Savings Program (MSSP). While CMS previously announced that applications would only be accepted for April 1, 2012 and July 1, 2012 start dates, CMS now plans accept applications beginning August 1, 2012 for an additional round of Advance Payment ACOs that would begin on January 1, 2013.
A recent GAO report focuses on how federal fraud and abuse laws affect the implementation of financial incentive programs intended to improve quality and efficiency, such as pay-for-performance programs that reward physicians for adherence to clinical protocols or shared savings programs that offer physicians a percentage of a hospital’s cost savings attributable to the physicians. The GAO finds that stakeholders’ compliance concerns may hinder implementation of financial incentive programs to improve quality and efficiency on a broad scale. The report notes that while properly structured financial incentive programs can potentially improve quality and reduce costs, however, improperly structured programs might disguise payments for referrals or adversely affect patient care. The GAO concludes that government agencies and health care providers are likely to “continue to have different perspectives about the optimal balance between innovative approaches to improve quality and lower costs and retaining appropriate patient safeguards.”