Health Industry Washington Watch : Washington DC Healthcare Industry Law Firm : Reed Smith : Health Industry Washington Watch : Regulations, Medicare/Medicaid, Governmental Organizations

CMS Administrator Donald Berwick is resigning as CMS Administrator, effective December 2, 2011 (under his recess appointment, Dr. Berwick could only serve until December 31, 2011 without Senate confirmation, which Senate Republicans pledged to block). President Obama has announced his intention to nominate Marilyn B. Tavenner to fill the CMS Administrator’s position. Ms. Tavenner currently is Principal Deputy Administrator at CMS and she earlier served as Acting CMS Administrator. Ms. Tavenner previously served as the Commonwealth of Virginia’s Secretary of Health and Human Resources. She spent most of her career with the Hospital Corporation of America (HCA), where she started as a staff nurse, worked her way to become the chief executive officer of two Richmond, Virginia-based HCA hospitals, and finished her service as group president of outpatient services.

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This post was written by Scot T. Hasselman, Carol C. Loepere, Daniel A. Cody, Paul Pitts, Debra A. McCurdy and Susan A. Edwards.

The Patient Protection and Affordable Care Act (“PPACA”), enacted in March 2010, requires that the Secretary (“Secretary”) of the Department of Health & Human Services (“HHS”) establish a Medicare “Shared Savings Program” by January 1, 2012.  The Shared Savings Program is intended to encourage physicians, hospitals, and certain other types of providers and suppliers to form accountable care organizations (“ACOs”) to provide cost-effective, coordinated care to Medicare beneficiaries. Physicians, hospitals, physician groups, other providers, policymakers, and many other stakeholders in the health care industry have eagerly anticipated the issuance of the ACO proposed rule. On March 31, 2011, under the authority of the Secretary, the Centers for Medicare & Medicaid Services (“CMS”) issued the proposed rule.

Reed Smith attorneys and analysts have prepared a comprehensive Client Alert which first provides a brief overview of the ACO model, then summarizes the proposed rule, listing areas of comment solicited by CMS and identifying the practical impact of the proposed rule, as well as questions and concerns that may emerge. Finally, this Client Alert summarizes the jointly issued CMS and OIG notice with comment period discussing the waiver of the physician self-referral law, the anti-kickback statute, and certain provisions of the civil monetary penalty law in connection with the Medicare Shared Savings Program. The Alert provides a summary and analysis of those provisions of the proposed rule and the proposed waiver that we believe are of greatest interest to health care providers, and medical device and pharmaceutical manufacturers. Click here to read the full Alert (PDF).

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On January 26, 2011, President Obama again submitted to the Senate his nomination of Dr. Donald M. Berwick to be Administrator of CMS. Dr. Berwick has been serving as Administrator since July 2010 through a recess appointment, which bypassed the Senate confirmation process.

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On November 30, 2010, CMS formally withdrew its controversial May 29, 2007 final rule entitled “Medicaid Program; Cost Limit for Providers Operated by Units of Government and Provisions To Ensure the Integrity of Federal-State Financial Partnership,” which sought to limit federal Medicaid payments to government health care providers and restrict certain state Medicaid financing arrangements. CMS is withdrawing the 2007 rule and restoring previous regulatory language in light of a U.S. District Court ruling that vacated the rule, along with language in the American Recovery and Reinvestment Act that expressed the sense of Congress that the cost rule should not be finalized. The withdrawal regulation is effective November 30, 2010.

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On November 16, 2010, CMS formally established a new Center for Medicare and Medicaid Innovation (Innovation Center). Created by the ACA, the Innovation Center will examine new ways of delivering health care and paying health care providers that can save money for Medicare and Medicaid while improving the quality of care. Richard Gilfillan, MD, has been named Acting Director of the Innovation Center. CMS also announced the launch of new demonstration projects that will support efforts to better coordinate care and improve health outcomes for patients. 

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This post was written by Carol C. Loepere and Catherine A. Hurley.

In an “Alert” dated November 9, 2010, the Centers for Medicare and Medicaid Services (CMS) has published a revised implementation timeline applicable to liability insurance (including self-insurance) “responsible reporting entities” (RREs) under Section 111 of the Medicare, Medicaid and SCHIP Extension Action of 2007 (MMSEA). Specifically, the obligation to report “total payment obligation to claimant” (TPOC) amounts subject to the reporting requirement has been extended from the first calendar quarter of 2011 to the first calendar quarter of 2012. Moreover, under the revised implementation timeline, only TPOC amounts established on or after October 1, 2011 (instead of October 1, 2010) must be reported. Earlier reporting (i.e., reporting prior to the first calendar quarter of 2012), and reporting of TPOC amounts established prior to October 1, 2011 is now optional. CMS has also delayed the staggered phase-out of its interim threshold dollar amounts for TPOC amounts that liability insurance (including self-insurance) and workers’ compensation RREs must report by one year. 

Mandatory reporting of ongoing responsibility for medicals (ORM) by liability insurance (including self-insurance) RREs has not been delayed. Similarly, mandatory reporting by other types of RREs (such as group health plans, no-fault insurance, and workers’ compensation) has not been delayed. Finally, this implementation delay does not affect liability insurance (including self insurance) RREs’ status as “primary payers” under section 1862(b) of the Social Security Act.

According to CMS, this Alert will be incorporated into a forthcoming revision to CMS’s MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting “User Guide” for Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers’ Compensation. 

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On November 17, 2010, the Senate Finance Committee is holding a hearing on "Strengthening Medicare and Medicaid: Taking Steps to Modernize America’s Health Care System," at which CMS Administrator Donald Berwick, M.D. is scheduled to testify.  Also on November 17, the Senate Health, Education, Labor and Pensions Committee is scheduled to consider a number of health policy and other bills, including the following: H.R. 5710, the National All Schedules Prescription Electronic Reporting Reauthorization Act of 2010; H.R. 2941, to reauthorize and enhance Johanna's Law to increase public awareness and knowledge with respect to gynecologic cancers; S. 3199, the Early Hearing Detection and Intervention Act of 2010; S. 3036, the National Alzheimer's Project Act; and S. 259, the Vision Care for Kids Act.

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On October 26, 2010, CMS is hosting a “Special Forum” on development of the Medicare hospital value-based purchasing (VBP) program, as required by Section 3001 of the ACA.  Under Section 3001, an inpatient hospital quality incentive payment program must be established effective with the FY 2013 inpatient prospective payment system (IPPS) payment determination for Medicare discharges occurring on or after October 1, 2012. Under the VBP program, payments to high-performing hospitals will be larger than those to lower performing hospitals, which CMS observes will use “financial incentives to drive improvements in clinical quality, patient centeredness and efficiency.” During this forum, CMS is asking for input from attendees on all aspects of the Hospital VBP program development and implementation.

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Richard Gilfillan, MD, has been named Acting Director of a new Center for Medicare and Medicaid Innovation (CMI) within CMS. The Affordable Care Act established the CMI to research, develop, test, and expand innovative delivery arrangements to reduce program expenditures under federal health care programs while enhancing the quality of care furnished to beneficiaries.

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CMS has announced its annual adjustment in the amount in controversy (AIC) threshold amounts for Administrative Law Judge (ALJ) hearings and judicial review under the Medicare appeals process. The 2011 AIC threshold amounts are $130 for ALJ hearings and $1,300 for judicial review. The new threshold amounts are effective for requests for ALJ hearings and judicial review filed on or after January 1, 2011.  

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According to a recent OIG report, CMS does not always comply with the statutory requirement to report adverse actions against providers to the HIPDB, a national data bank administered by the Health Resources and Services Administration (HRSA) that contains reports of adverse actions against health care practitioners, providers, and suppliers. With regard to specific provider types, CMS failed to report 148 adverse actions against laboratories in 2007 and 30 adverse actions against managed care and prescription drug plans between January 1, 2006 and July 31, 2009. None of the adverse actions against durable medical equipment (DME) suppliers taken after 2008 had been reported to HIPDB at the time of the OIG review, and none of the 45 nursing homes terminated from Medicare from 2004 through 2008 were reported to the HIPDB until 2009, well after the required reporting timeframe. The CMS Division of National Systems, which is responsible for reporting adverse actions against provider types subject to state survey or accreditation, did not report any actions between 2001 and 2008. The OIG recommended that CMS report all adverse actions to the HIPDB as required and educate staff and contractors about reporting requirements; CMS concurred with the recommendations. 

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On August 24, 2010, CMS is hosting a listening session regarding the recent trend of Medicare beneficiaries receiving extended observation care as a hospital outpatient. Pre-registration is required.

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On August 24, 2010, CMS is hosting a Special Open Door Forum on the Medicare End Stage Renal Disease (ESRD) Quality Incentive Program (QIP) for payment year 2012. The call, which is designed for ESRD facilities and provider, supplier, and laboratory groups, will focus on CMS’s August 12 proposed rule that would establish performance standards and a scoring methodology for the QIP.

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This post was written by Paul Sheives and Areta Kupchyk.

The FDA and CMS have entered into a Memorandum of Understanding (MOU), effective June 25, 2010, to promote collaboration and enhance knowledge and efficiency by sharing information and expertise. In particular, the MOU highlights the agencies’ “common needs for evaluating the safety, efficacy, utilization, coverage, payment, and clinical benefit of drugs, biologics, and medical devices.” Included among the action items in the MOU are the appointment of a liaison for each agency, the establishment of a joint agency meeting to discuss implementing the MOU, an agreement to set reasonable expectations on responses to requests for information, and the implementation of certain safeguards to protect the transmittal and use of trade secret and confidential information. 
 

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On July 13, 2010, CMS issued a letter to state Medicaid directors on implementation of Section 6506 of the ACA, which gives states up to one year from the date of discovery of an overpayment for Medicaid services to recover, or to attempt to recover, the overpayment before making an adjustment to refund the federal share of the overpayment.

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On July 7, 2010, President Obama announced the recess appointment of Dr. Donald Berwick to be CMS Administrator, bypassing the Senate confirmation process. 

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CMS has announced that it is not implementing at this time changes that would have automatically rejected certain Medicare claims based on orders, certifications, and referrals made by providers that have not had their PECOS enrollment applications approved by July 6, 2010. Nevertheless, the Affordable Care Act provides that only a Medicare enrolled physician or eligible professional may certify or order home health services, DMEPOS, and certain other Part B items and services effective July 1, 2010. Therefore while CMS is taking “a more deliberative approach to using the PECOS enrollment system,” the agency will employ a contingency plan to meet the ACA requirement that written orders and certifications are only issued by eligible professionals effective July 1. Background information on CMS’s interim final rule implementing the ACA’s enrollment requirements is available here. 

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The ACA provides a tax-free, one-time $250 check for beneficiaries who reach the Part D coverage gap during 2010 and are not eligible for low-income subsidies. A June 10, 2010 CMS memo to Part D plan sponsors provides additional information on implementation of coverage gap rebate. The memo notes that prompt submission of prescription drug event (PDE) records is necessary to ensure that eligible beneficiaries receive rebates in a timely manner. CMS also instructs sponsors on how to prepare to address situations such as: the enrollee has not received a rebate check because of an address change or unsubmitted PDE records; the enrollee does not understand how they reached the coverage gap; or the enrollee mistakenly believes they reached the coverage gap, but did not. HHS also has announced a media campaign and other outreach efforts to protect beneficiaries from potential scams associated with the rebate checks. In addition to rebate checks, the ACA provides for a Part D drug discount program under which Medicare beneficiaries in the Part D coverage gap will have access to manufacturer discounts equal to 50% of the negotiated price of the drug (except generic drugs), effective January 1, 2011. CMS continues to provide guidance on this program, including a June 2, 2010 memo to Part D plan sponsors addressing: determinations regarding the applicable discount if the sponsor offers Part D supplemental benefits with fixed copays in the coverage gap; Employer Group Waiver Plan requirements to submit attestations and to make benefit information available for audit; the application of the discount before Platino coverage is applied; and coordination of benefits with other non-Part D payers that incorrectly paid primary to Medicare.

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CMS has issued a series of guidance documents on the Medicare Secondary Payer (MSP) mandatory reporting provisions in section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA). The new guidance documents address: risk management write-offs by providers, physicians, suppliers, and non-provider/supplier entities; reporting health reimbursement arrangements; what entities are MMSEA Section 111 Responsible Reporting Entities (RRE) for liability insurance (including self-insurance), no-fault insurance, and workers’ compensation; and the new direct data entry (DDE) option for reporting non-group health plan information under Section 111. 

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CMS’s Office of Legislation has released preliminary questions and answers on the ACA’s provisions to encourage the development of Accountable Care Organizations (ACOs) to facilitate coordination and cooperation among providers to improve the quality of care for Medicare beneficiaries and reduce unnecessary costs. Participating ACOs that meet specified quality performance standards will be eligible to receive a share of Medicare savings if established criteria are met. CMS anticipates holding an “open door forum” listening session this summer to solicit stakeholder ideas. CMS expects to issue a proposed rule to implement the program this fall, and the program is slated to begin by January 1, 2012.

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On June 7, 2010, CMS announced the availability of $51 million in Affordable Care Act Health Insurance Premium Review Grants, the first round of grants under a new $250 million ACA grant program intended to strengthen insurance rate review processes. To be eligible for a $1 million first round grant, a state must submit a plan for how it will use grant funds to develop or enhance its process of reviewing and approving, disapproving, or modifying health insurance premium requests.

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CMS is soliciting state applications for the “Multi-payer Advanced Primary Care Practice Demonstration,” under which Medicare and Medicaid, along with private insurers, will join together in state-based efforts to improve the delivery of primary care and lower health care costs. HHS describes an Advanced Primary Care (APC) practice, also referred to as a patient-centered medical home, as seeking to promote coordinated family-centered care utilizing a team approach and emphasizing prevention, health information technology, care coordination and shared decision making among participating patients and their providers. CMS is hosting an open door forum to discuss the program on June 9, 2010.

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CMS has revised its survey and certification guidance on corridor width requirements associated with the installation of wall-mounted computer touch screens (commonly used to input medical records) in health care facilities. CMS notes that since its last guidance on this issue six years ago, science and technology in this areas have advanced, expanding the use and variety of these devices. In response to inquiries, CMS has adopted new specifications for wall-mounted technologies and other wall mounted items for all health care facilities, effective immediately.

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CMS is hosting a Special Open Door Forum May 19, 2010 to discuss a variety of Medicare provider enrollment issues. Topics to be covered include: CMS’s May 5, 2010 interim final rule on Medicare/Medicaid provider and supplier enrollment, ordering and referring, and documentation requirements; and changes in provider agreements; internet-based Provider Enrollment, Chain and Ownership System (PECOS); pharmacy accreditation issues; advanced diagnostic imaging accreditation; provider and supplier reporting responsibilities; and revalidation efforts.

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CMS has issued guidance to State Medicaid Directors on the Medicaid prescription drug rebate provisions of the Patient Protection and Affordable Care Act (PPACA). Specifically, the letter addresses the increased rebate percentages for covered outpatient drugs dispensed to Medicaid patients, the extension of prescription drug rebates to covered outpatient drugs dispensed to enrollees of Medicaid managed care organizations, and the rebate offset associated with the increase in the rebate percentages (designed to ensure that savings resulting from the increases in the rebate percentages will flow to the federal government rather than the states). CMS also released an informational announcement on PPACA provisions impacting institutional providers. The announcement includes a brief overview of PPACA section 3401, which imposes a 0.25 percentage point reduction to the market basket updates for inpatient acute hospitals, long-term care hospitals (LTCHs), and inpatient rehabilitation facilities for fiscal year (FY) 2010, effective for discharges on or after April 1, 2010. The update also addresses PPACA sections 3137 and 10317, modifying certain hospital reclassification policies with October 1, 2009, and April 1, 2010 effective dates. While additional information will be forthcoming, CMS notes that providers will begin seeing payments under these provision in late April or early May. Finally, HHS has posted a fact sheet on the PPACA’s new temporary high risk pool program for individuals who are uninsured because of pre-existing conditions, including the estimated state allotments under this program.

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On April 26, 2010, HHS published its semiannual regulatory agenda outlining its planned regulatory initiatives in a number of health policy areas. Among other things, the agenda includes listings for Office of the Secretary health information technology rules, a variety of Food and Drug Administration (FDA) regulatory actions involving prescription drugs, and CMS regulations updating Medicare provider payments. 

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President Obama has nominated Dr. Donald Berwick to be CMS Administrator. Dr. Berwick currently serves as President and CEO of the Institute for Healthcare Improvement, and is a professor at Harvard Medical School and the Harvard School of Public Health. Among many other appointments, Dr. Berwick has served as Chair of the National Advisory Council of the Agency for Healthcare Research and Quality as an elected member of the Institute of Medicine, and as a member of the Advisory Commission on Consumer Protection and Quality in the Healthcare Industry. Dr. Berwick’s nomination still must be approved by the Senate; the Senate Finance Committee has not yet scheduled a hearing on the nomination.

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A number of recent Congressional hearings focused on health policy issues, including the following:

• A Senate Homeland Security and Governmental Affairs Committee hearing on CMS contract management.
• A Senate Aging Committee hearing on “Aging in Place: The National Broadband Plan and Bringing Health Care Technology Home.”
• A Senate Health Education Labor and Pensions Committee hearing on “Protection from Unjustified Premiums.”
• A House Appropriations Subcommittee on Agriculture, Rural Development, FDA, and Related Agencies hearing on drug safety.
• A House Energy and Commerce Health Subcommittee on "Antibiotic Resistance and the Threat to Public Health."

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On May 26, 2010, CMS is hosting a “Nationwide Section 935 Limitation on Recoupment Call for all Providers.”  The call will to address a provision of the Medicare Modernization Act (MMA) of 2003 that prohibits the government from recouping Medicare overpayments when an appeal is received from a provider until a final decision is made.

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