According to the latest Health Care Fraud and Abuse Control Program (HCFAC) Annual Report, federal health care fraud prevention and enforcement efforts resulted in the recovery of a record $4.3 billion in FY 2013, up from $4.2 billion in FY 2012. In announcing detailed enforcement achievements, the Administration cites new ACA authorities – including enhanced provider screening requirements, limited enrollment moratoria, and authority to suspend Medicare payments during pending investigations -- that have improved the government’s ability to clamp down on health care fraud. The report also notes the successes of coordinated Department of Justice (DOJ) and HHS efforts such as the Health Care Fraud Prevention & Enforcement Action Team (HEAT) and interagency Medicare Fraud Strike Force teams.
On February 24, 2014, the Departments of HHS, Labor, and Treasury published final regulations that generally bar employer-sponsored group health plans and group health insurance issuers from imposing a health coverage waiting period of more than 90 days after an employee is otherwise eligible for coverage. Other conditions for eligibility are generally permissible, such as being in an eligible job classification, achieving job-related licensure requirements specified in the plan's terms, or satisfying a reasonable and bona fide employment-based orientation period. Note that the rules do not require coverage be offered to any particular individual or class of individuals, nor do they require any waiting period to be imposed). The 90-day waiting period limitation provisions apply to group health plans and group health insurance issuers for plan years beginning on or after January 1, 2015. A companion proposed rule would limit to one month the length of a bona fide employment-based orientation period for purposes of the waiting period rules. Comments on the proposed regulations will be accepted until April 25, 2014.
CMS has announced that in light of persistent problems individuals have had enrolling in qualified health plans (QHPs) through some state-run Marketplaces, it will now allow individuals to access premium tax credits and cost-sharing reductions on a retroactive basis in certain circumstances. Specifically, in guidance dated February 27, 2014, CMS states that if a Marketplace was unable to provide timely eligibility determinations during the initial open enrollment period for the 2014 coverage year, it may be considered an “exceptional circumstance” for individuals who were unable to enroll in a QHP as a result. In such cases, CMS will make available advance payments of the premium tax credit and advance payments of cost-sharing reductions on a retroactive basis once the Marketplace has determined that the individual is eligible for such assistance and the individual has enrolled in a QHP through the Marketplace. Notably, CMS also provides an individual in this exceptional circumstance who is enrolled in a QHP offered outside of the Marketplace when he or she receives a determination of eligibility will be treated as having been enrolled through the Marketplace since the initial enrollment date.
On February 4, 2014, CMS released draft operational and technical guidance to health insurance issuers that seek to offer Qualified Health Plans (QHPs) in a Federally-Facilitated Marketplace (FFM) and/or a Federally-Facilitated Small Business Health Options Program (FF-SHOP) in 2015 and beyond (unless superseded in future years by subsequent regulations or guidance). Among many other things, the draft guidance addresses: the certification process and standards for QHPs (including the rate review process and network adequacy standards); QHP performance and oversight policies; and various consumer protection requirements. CMS will accept comments on the policies set forth in the guidance (to the extent that they are not the subject of separate rulemaking processes) until February 25. 2014.
On February 14, 2014, CMS published a notice announcing an open period for additional organizations to be considered for participation in Models 2, 3, and 4 of the Bundled Payments for Care Improvement initiative. The three models are described as follows:
- Model 2--Retrospective bundled payment models for hospitals, physicians, and post-acute providers for an episode of care consisting of an inpatient hospital stay followed by post-acute care.
- Model 3--Retrospective bundled payment models for post-acute care where the episode does not include the acute inpatient hospital stay.
- Model 4--Prospectively administered bundled payment models for the acute inpatient hospital stay and related readmissions.
Interested parties must submit the requisite forms by April 18, 2014.
IRS Issues ACA Employer "Shared Responsibility" Guidance; Delays Compliance Deadlines for Certain Employers
On February 12, 2014, the Internal Revenue Service (IRS) published final regulations modifying the timeline under which certain employers will be required to make “shared responsibility” payments if they do not provide qualified health insurance for their full-time employees and dependents pursuant to the Affordable Care Act (ACA). Specifically, under a new “transition relief” policy, the IRS is delaying the shared responsibility payment obligation for employers with 50 to 99 full-time equivalent employees from 2015 until 2016, although such employers will have to submit reports regarding their employees’ coverage in 2015. In order to qualify for transition relief, employers must certify that they have not laid-off workers to drop below the 100 employee threshold and must not eliminate or materially reduce their coverage offerings. The regulations also provide that employers subject to the employer responsibility provisions in 2015 (i.e., employers with 100 or more full-time equivalent employees) must offer coverage to at least 70% of full-time employees to avoid a penalty, rather than 95% (the 95% threshold will take effect in 2016). The regulations also clarify whether certain types of employees or employees in certain occupations are considered full-time (such as volunteer firefighters and emergency responders, educational employees, and seasonal workers) and clarify other open questions from the prior proposed regulations.
The GAO recently issued a report on CMS efforts to implement Medicaid drug pricing reforms mandated by the Affordable Care Act (ACA). Specifically, the report discusses CMS development of the National Average Drug Acquisition Cost (NADAC) benchmark of retail pharmacy acquisition costs, and how NADAC amounts compare to ACA-based federal upper limits (FULs). Based on first quarter 2013 data, GAO found that draft FUL amounts calculated under the ACA formula were about 1.4% lower than the total NADAC amount in aggregate for 1,035 outpatient drugs. On the other hand, ACA-based FULs for individual drugs ranged from 96% lower than to 404% higher than the NADACs for the same drugs. The GAO also found large differences between the total ACA-based FUL amount and the total NADAC amount for generic and for branded generic versions. According to the GAO, total ACA-based FUL amount for the generic versions was 19% higher than the total NADAC amount, but for the branded generic versions the ACA FUL amount was 26% lower than the NADAC.
The GAO concluded that CMS is close to having a formula under which FULs would better reflect pharmacy acquisition costs, but it observes that CMS continues to apply FULs that were calculated more than four years ago. The GAO also observed that the relationship between ACA-based FULs and NADACs may be affected by factors such as rebates and discounts that are not reflected on pharmacy invoices, which will necessitate continued CMS monitoring. The GAO therefore recommended that CMS (1) expeditiously implement the ACA-based FUL formula and (2) monitor the relationship between the ACA-based FULs and the NADACs on an ongoing basis. HHS concurred with these recommendations; noting that it intends to finalize the ACA Medicaid FULs for multiple source drugs in July 2014 (CMS indicated to GAO that the agency was still considering how the ACA-based FULs would apply to branded generic versions in the final rule).
CMS Considering Innovative Episode-Based Payment Models for Outpatient Specialty Practitioner Services
CMS is requesting public comments on ways to structure new models for delivering and paying for Medicare outpatient specialty practitioner services. The first broad model CMS is considering is a procedural episode-based payment model, where the episode of care would be defined around an outpatient surgical or interventional procedure such as colonoscopy or cardiac catheterization. Payment under this model would include all related services furnished during the episode, such as practitioners’ services (e.g., anesthesia, pathology, and/or radiology), diagnostic tests, Medicare-covered prescription drugs, and if applicable, ambulatory surgical center or hospital outpatient department facility payments.
A second model being considered is described as a complex and chronic disease management episode-based payment model. In this case, the episode would be defined as a prolonged period of time for management of the condition by a specialist practitioner, and the bundle could contain the same comprehensive services as contemplated under the procedural interventional model. In both models, CMS is concentrating on care by specialist practitioners other than medical oncologists, since a potential oncology model is being developed on a separate track.
CMS is exploring these options under its Affordable Care Act authority to test innovative payment and service delivery models that have the potential to reduce program expenditures while preserving or enhancing the quality of care for Medicare, Medicaid and Children’s Health Insurance Program beneficiaries.
** Note that CMS has extended the comment period from March 13, 2014 until April 10, 2014.
Recent Congressional hearings have addressed a number of health policy issues, including the following:
- House Science, Space, and Technology Committee hearing entitled “Healthcare.gov: Consequences of Stolen Identity”;
- A House Energy and Commerce Oversight Subcommittee hearing on implementation of the ACA, including a discussion of insurance exchange issues;
- Two House Oversight and Government Reform Committee hearings on HealthCare.gov information security issues;
- A Senate Aging Committee hearing on “Medicare Advantage: Changing Networks and Effects on Consumers”; and
- A House Ways and Means Committee hearing on the impact of the ACA’s employer insurance mandate’s definition of full-time employee on jobs.
The Access Board's Medical Diagnostic Equipment Accessibility Standards Advisory Committee has issued its final report on “Advancing Equal Access to Diagnostic Services: Recommendations on Standards for the Design of Medical Diagnostic Equipment for Adults with Disabilities.” The report includes detailed recommendations on standards for access to equipment such as examination tables and chairs, weight scales, and diagnostic equipment. Among other things, the report address transfer access, armrests, lift compatibility, and other features for accessibility. The standards, which are being developed as directed under the ACA, still must be approved by the full Access Board.
CMS has published its proposed methodology and data sources necessary to determine federal payment amounts made to states that elect to establish a Basic Health Program (BHP) under the Affordable Care Act (ACA) to offer health benefits coverage to low-income individuals otherwise eligible to purchase coverage through Affordable Insurance Exchanges. The BHP, which will be available for states to implement effective January 1, 2015, is intended to make affordable health benefits coverage available for individuals under age 65 with household incomes between 133% and 200% of the federal poverty line who are not otherwise eligible for Medicaid, the Children’s Health Insurance Program, or affordable employer sponsored coverage. Comments will be accepted until January 22, 2014.
CMS has published an interim final rule with comment period that sets a December 23, 2013 deadline for individuals to select a qualified health plan through an Exchange for an effective coverage date of January 1, 2014, to conform to a previously-announced policy. The prior regulation imposed a December 15, 2013 deadline. State Exchanges may select a different deadline. The rule pertains to the individual market and Small Business Health Options Program in both the Federally-facilitated Exchanges and State Exchanges; it does not change the plan selection or premium payment dates for coverage offered outside of the Exchanges.
The Obama Administration has announced a “hardship” exemption for certain individuals who have been notified that their individual health insurance policies have been cancelled and will not be renewed. In such cases, if the individual believes that the plan options available in the ACA Health Insurance Marketplace/Exchange are more expensive then the cancelled health insurance policy, the individual will be eligible for a hardship exemption from the “shared responsibility” payment and will be able to enroll in catastrophic coverage, if available (catastrophic coverage plans previously were limited to individuals under age 30 meeting certain conditions).
On December 10, 2013, CMS published its final rule updating Medicare physician fee schedule (PFS) rates and polices for calendar year (CY) 2014, which includes a 20.1% across-the-board cut in PFS rates in 2014 (down from 24.4% projected under the proposed rule). The cuts are largely due to the statutory Sustainable Growth Rate (SGR) update formula, although lawmakers are seeking agreement on legislation to block the automatic cuts. The rule also includes a number of significant Part B policy changes, including the following highlights:
- The final 2014 conversion factor (CF) is $27.2006, compared to the 2013 CF of $34.0230, mainly as a result of the statutory SGR formula. Congress is expected to override this formula, either on a temporary or permanent basis, but final action is still uncertain (see legislative update below). CMS estimates that if Congress freezes the PFS update for 2014, it would actually result in a CF of $35.6446, an increase compared to 2013, due to the application of a budget neutrality adjustment. Reimbursement changes for individual procedures vary based on numerous other policies.
- CMS did not finalize a controversial proposal under its potentially misvalued code initiative to reduce PFS rates for more than 200 codes if Medicare physician office payment exceeds the payment under the hospital outpatient prospective payment system (OPPS) or ambulatory surgical center (ASC) prospective payment system (PPS). CMS expects to develop a revised proposal for using OPPS and ASC rates in establishing physician practice expense relative value units, which CMS will propose through future notice and comment rulemaking. CMS is continuing its efforts to identify and adjust payment for potentially misvalued codes, however, including by adopting on an interim basis work relative value units for approximately 200 additional codes. These interim values are subject for public comment until January 27, 2014.
- CMS will make payment for non-face-to-face complex chronic care management services for Medicare beneficiaries who have multiple (two or more) significant chronic conditions, beginning in 2015. CMS will establish practice standards for such chronic care management services through future rulemaking.
- CMS is modifying the definition of eligible telehealth originating sites to include health professional shortage areas (HPSAs) located in rural census tracts of urban areas as determined by the Office of Rural Health Policy, which CMS expects to result in the inclusion of additional HPSAs as areas for telehealth originating sites. CMS is adding transitional care management services to the list of eligible Medicare telehealth services.
- CMS will continue implementation of the physician value-based payment modifier, which was mandated by the Affordable Care Act (ACA) to reward physicians for providing higher quality and more efficient care. The value modifier is being phased in from CY 2015 to CY 2017. CY 2014 is the performance period for the CY 2016 value modifier. CMS is finalizing plans to apply the value modifier to groups of 10 or more eligible physicians in 2016 (compared to groups of 100 or more in 2015), and increase the amount of payment at risk from 1% to 2% in 2016. CMS also is refining the methodologies used to calculate the value modifier to better identify both high and low performers for upward and downward payment adjustments.
- CMS has adopted its proposal to amend the “incident to” regulations to require that services and supplies be furnished in accordance with applicable state law, and that the individual performing “incident to” services meet any applicable requirements to provide the services, including state licensure requirements. The policy is intended to ensure that auxiliary personnel providing services to Medicare beneficiaries “incident to” the services of other practitioners do so in accordance with applicable state requirements, and that Medicare payments can be recovered when such services are not furnished in compliance with the state law.
- CMS has adopted without change its proposed process to systematically reexamine payment amounts under the Clinical Laboratory Fee Schedule to determine if changes in technology for the delivery of that service (e.g., changes to the tools, machines, supplies, labor, instruments, skills, techniques, and devices by which laboratory tests are produced and used) warrant an adjustment to the payment amount. Beginning with the CY 2015 PFS proposed rule, CMS will identify the test code, discuss how it has been impacted by technological changes, and propose an associated payment adjustment. CMS will solicit comments, and any payment adjustment would be adopted in the final rule, beginning with the CY 2015 final rule.
- CMS is establishing a centralized review process under which a single entity will make Investigational Device Exemption (IDE) coverage decisions, although the policy will not be implemented until 2015. The rule also establishes minimum standards for IDE studies and trials for which Medicare coverage of devices or routine items and services is provided (but CMS dropped earlier references to pivotal study and superiority study design criteria).
- CMS will apply the outpatient therapy cap limitations and related policies to outpatient therapy services furnished in a critical access hospital beginning on January 1, 2014, in conformance with the American Taxpayers Relief Act (ATRA).
- The final rule also addresses, among many other things: updates to the geographic practice cost indices; revisions to the calculation of the Medicare Economic Index; revisions to the Physician Quality Reporting System and the Electronic Health Record (EHR) Incentive program; revisions to regulations regarding liability for overpayments to conform to ATRA provisions with regard to the timing of the triggering event for the ‘‘without fault’’ and ‘‘against equity and good conscience’’ presumptions; and updates to the ambulance fee schedule regulations to conform with statutory requirements.
In light of the late release of the final Medicare PFS rule, CMS is extending the annual Medicare participation enrollment period for 2014 through January 31, 2014 (instead of the window ending on December 31, 2013). During this period, eligible physicians, practitioners, and suppliers may change their participation status, but the effective date for any participation status changes remains January 1, 2014.
On December 2, 2013, CMS published a proposed rule that would establish 2015 payment parameters and oversight provisions for federally-facilitated Health Insurance Exchanges under the ACA. The rule specifically addresses risk adjustment, reinsurance, and risk corridors programs; cost-sharing parameters and cost-sharing reductions; and user fees for federally-facilitated Exchanges. It also proposes additional standards for composite rating, privacy and security of personally-identifiable information, the annual open enrollment period for 2015, the actuarial value calculator, cost sharing for dental plans, the meaningful difference standard for qualified health plans offered through a federally-facilitated Exchange, patient safety standards for issuers of qualified health plans, and the Small Business Health Options Program. Comments will be accepted until December 26, 2013.
Recent Congressional hearings on health policy issues have included the following, among others:
- A House Small Business Committee hearing focused on the ACA’s Small Business Health Options Program.
- A House Ways and Means Health Subcommittee hearing reviewed “the Challenges of the Affordable Care Act,” focusing on “immediate and long-term challenges Americans face in finding affordable, quality health coverage as a result of the ACA.”
- A December 11 House Energy and Commerce Health Subcommittee hearing is entitled “PPACA (Patient Protection and Affordable Care Act) Implementation Failures: What's Next?”
- A House Oversight and Government Reform Committee hearing was entitled “Roll Out of HealthCare.gov: The Limitations of Big Government,” while a December 12 hearing will focus on “ObamaCare’s Impact on Premiums and Provider Networks.”
- Earlier this month, a House Energy and Commerce Committee hearing reviewed the impact of the ACA on the Medicare Advantage program.
On November 15, 2013, the House of Representatives voted 261 to 157 to approve H.R. 3350, the “Keep Your Health Plan Act,” which would allow health plans available on the individual market as of January 1, 2013 to continue in 2014 without meeting new ACA plan standards. Continued enrollment in such a grandfathered policy would be considered to satisfy the ACA’s minimum essential coverage requirement, exempting the enrollee from the “shared responsibility” penalty under the ACA. . The Obama Administration has stated that the president would veto H.R. 3350 because it “rolls back the progress made by allowing insurers to continue to sell new plans that deploy practices such as not offering coverage for people with pre-existing conditions, charging women more than men, and continuing yearly caps on the amount of care that enrollees receive.” As previously reported, the Obama Administration has announced an alternative transition policy that would allow insurance issuers, subject to state insurance commissioners’ approval, to continue coverage that would otherwise be terminated or cancelled, and affected individuals and small businesses may choose to re-enroll in such coverage if the coverage was in effect on October 1, 2013 and the insurer meets certain conditions.
Congressional Panels Continue Focus on ACA Insurance Enrollment, Security, and Cost Issues, and Other Health Policy Topics
Congress continues to examine issues associated with enrollment in qualified health plans under Healthcare.gov. For instance:
- The House Science, Space, and Technology Committee held a hearing entitled “Is My Data on Healthcare.gov Secure?” (see).
- The Senate Small Business and Entrepreneurship Committee focused on “Affordable Care Act Implementation: Examining How to Achieve a Successful Rollout of the Small Business Exchanges”; and
- The House Oversight and Government Reform Committee has held hearings entitled “ObamaCare Implementation: Sticker Shock of Increased Premiums for Healthcare Coverage,” and “ObamaCare Implementation: High Costs, Few Choices for Rural America,” while on December 6 the panel has scheduled a hearing entitled “ObamaCare Implementation, The Broken Promise: If You Like Your Current Plan You Can Keep It.”
In other policy areas, the Senate Special Committee on Aging has scheduled a December 11 hearing on “Protecting Seniors From Medication Labeling Mistakes,” along with a December 18 hearing entitled “The Future of Long-Term Care Policy: Continuing the Conversation.” In addition, on November 20, the House Energy and Commerce Subcommittee on Health held a hearing on public health legislation. Specifically, the Subcommittee is considering the following bills: H.R.610, to provide for the establishment of the Tick-Borne Diseases Advisory Committee; H.R.669, to enhance awareness about unexpected sudden death in early life; H.R. 1098, to reauthorize certain traumatic brain injury and trauma research programs; H.R.2703, to provide liability protections for volunteer practitioners at community health centers; H.R.1281, to reauthorize newborn screening programs; draft legislation to reauthorize the poison center national toll-free number, national media campaign, and grant program; and draft legislation to reauthorize a controlled substance monitoring program.
On November 19, 2013, CMS published a notice seeking comments on its proposed Quality Rating System (QRS) framework for rating Qualified Health Plans (QHPs) offered through an ACA Affordable Insurance Exchange. Specifically, CMS lists proposed QRS quality measures that QHP issuers would be required to collect and report, and describes the hierarchical structure of the measure sets and elements of the QRS rating methodology. In addition, the notice solicits comments on how to ensure the integrity of QRS ratings, along with priority areas for future QRS measure enhancement and development. CMS will accept comments on the QRS framework until January 21, 2014.