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

• DMEPOS Competitive Bidding.  MIPPA delays and reforms the Centers for Medicare & Medicaid Services’ (CMS) competitive bidding program for certain categories of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS).  H.R. 6331 terminates contracts awarded under round one, rebids those areas in 2009, and delays round two bidding until 2011.  The delay is financed by cutting fee schedule payments for round one items by 9.5% nationwide beginning January 1, 2009.  MIPPA also includes a series of procedural improvements to the bidding process. A detailed Reed Smith analysis of the MIPPA DMEPOS bidding provisions is available on our website.
• Therapy Caps Exception Process.  MIPPA extends through December 31, 2009 the outpatient therapy service cap exceptions process.
• Clinical Laboratory Services.  The act repeals the clinical lab competitive bidding demonstration project and reduces the clinical lab fee schedule update by 0.5% in each of the next 5 years.
• Medicare Advantage (MA) Provisions.  MIPPA makes a series of MA payment and policy changes, including a $1.8 billion cut in the regional MA stabilization fund in 2012 and a phase-out of the adjustment for indirect medical education. 
• Medicare Part D Drug Plans.  MIPPA sets timeframes for plan payments to pharmacies and long-term care pharmacy submission of claims; mandates coverage of certain classes of drugs; clarifies the use of Part D drug data; limits certain sales and marketing activities; and makes other Part D reforms. 
• End-Stage Renal Disease (ESRD) Provisions.  The law updates the ESRD composite rate by 1.0% for 2009 and 2010, and mandates a fully-bundled ESRD payment system and quality incentive program by January 1, 2011.
• Medicaid Drug Reimbursement.  MIPPA delays the adoption of Medicaid payment based on average manufacturer price (AMP) for multiple source drugs and prevents publication of AMP data until October 1, 2009.

Reed Smith is preparing a client memo analyzing the new law, which will be available on our web site.  

The following are highlights of the legislation:

• Physician Fee Schedule: MIPPA maintains physician payment rates for 2008 (rather than implement the 10.6% cut that was triggered on July 1, 2008), and provides a 1.1% increase for 2009 (rather than the forecasted 5.4% cut). The law also extends for two years the Physician Quality Reporting Initiative (PQRI), increases incentive payments for reporting by 2%, and makes other reforms to the program. The act promotes electronic prescribing (e-prescribing) by providing incentive payments for practitioners who use a qualified e-prescribing systems in 2009 through 2013, and reducing payments by 2% for providers practitioners who fail to e-prescribe beginning in 2011 (with limited exceptions). MIPPA also requires non-hospital advanced imaging providers to be accredited by 2012 and establishes a voluntary demonstration program to test the use of appropriateness criteria for advanced diagnostic imaging services.
• DMEPOS Competitive Bidding.  MIPPA delays and reforms the Centers for Medicare & Medicaid Services' (CMS) competitive bidding program for certain categories of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). The first round of the program went into effect in 10 geographic areas on July 1, 2008. H.R. 6331 terminates contracts awarded under round one and rebids those areas in 2009, with bidding for round two delayed until 2011. The delay is financed by cutting fee schedule payments for all items covered by round one bidding program by 9.5% nationwide beginning January 1, 2009, followed by a 2% increase in 2014 (with certain exceptions). MIPPA also includes a series of procedural improvements to the bidding process, and addresses quality by, among other things, requiring subcontractor accreditation, excluding complex rehabilitation wheelchairs and negative pressure wound therapy from bidding, and exempting of certain rural and low-population areas from bidding. Separately, MIPPA repeals current oxygen equipment transfer of ownership requirements.
• Therapy Caps Exception Process.  MIPPA extends through December 31, 2009 the exceptions process relative to the annual per-beneficiary limitations on outpatient therapy services.
• Clinical Laboratory Services. The act repeals the competitive bidding demonstration project for clinical laboratory services and instead reduces the fee schedule update for clinical lab services by 0.5% in each of the next 5 years.
• Medicare Advantage (MA) Provisions. MIPPA makes a series of payment and policy changes affecting Medicare Advantage plans, including a $1.8 billion cut in the MA stabilization fund for regional preferred provider organizations in 2012 and a phase-out of the adjustment for indirect medical education. 
• Medicare Part D Drug Plans. MIPPA establishes timeframes for plan payments to pharmacies and long-term care pharmacy submission of claims; codifies current coverage of certain “protected classes” of drugs; clarifies the use of Part D drug data for research and other purposes; limits certain sales and marketing activities; and makes other Part D reforms. 
• End-Stage Renal Disease Provisions. The law provides a 1.0% update to the composite rate for renal dialysis services for 2009 and 2010, requires the Secretary to establish a fully bundled ESRD payment system by January 1, 2011, and establishes a quality incentive payment program for ESRD providers, effective January 1, 2011.
• Medicaid Drug Reimbursement. MIPPA delays the adoption of Medicaid payment based on average manufacturer price (AMP) for multiple source drugs and prevent publication of AMP data until October 1, 2009.

Additional details regarding the legislation are available on the House Ways and Means Committee web site.

Specifically, H.R. 6252/S. S.3118 would, among other things:

• Terminate contracts awarded under round one and rebid those areas. New round one contracts would take effect in 18 to 24 months. Round two contracts could not take effect before January 2011 and payment adjustments for DMEPOS in non-competitive bid areas could not take effect until round two is completed.
• Fully offset the costs of the bill by eliminating the inflation update for all items covered by Round 1 of the competitive bidding program and reducing payment rates for those items by 9.5 percent nationwide beginning January 1, 2009, followed by a 2 percent increase in 2014 (except where bidding is in effect or CMS has otherwise adjusted rates). 
• Make a series of procedural improvements to the bidding process, including requiring CMS to notify bidders about paperwork discrepancies and giving suppliers the opportunity to correct problems.
• Include a number of quality improvements, including subcontractor accreditation requirements and disclosure of subcontracting arrangements, exclusion of complex rehabilitation wheelchairs and negative pressure wound therapy from bidding, and exemption of certain rural and low-population areas from bidding.

Lawmakers are seeking to include this legislation in broader physician payment reform legislation, but it also could be considered as a stand-alone measure before the July 1, 2008 implementation date for round one. Additional information about the legislation is available here.