Posted on December 13, 2011 by Debra A. McCurdy

December Congressional Health Policy Hearings

A number of Congressional committees have held hearings recently on a variety of health policy issues, including the following:

Three additional hearings are scheduled for December 15: a Senate Health, Education, Labor and Pensions Committee hearing on prescription drug shortages; a House Small Business Investigations Subcommittee hearing on new medical loss ratio rules; and a Senate Aging Committee hearing on implementing the Physician Payment Sunshine Act (rescheduled from December 8).
 

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Posted on December 1, 2011 by Debra A. McCurdy

Reed Smith Analysis and Overview of the Medicare Shared Savings Program for Accountable Care Organizations

This post was written by Scot T. Hasselman, Paul W. Pitts, Susan A. Edwards and Nancy E. Bonifant.

The Centers for Medicare & Medicaid Services’ (“CMS”) Medicare Shared Savings Program final rule offers potential opportunities as well as risks to health care providers and suppliers interested in forming accountable care organizations (“ACOs”). While the core principle of the Medicare Shared Savings Program is simple—reward improvements in quality and cost containment through a share of the resulting savings—the regulatory and operational requirements associated with the program are much more complex.

Reed Smith attorneys have prepared a comprehensive Client Alert summarizing and analyzing the final rule, focusing on provisions we believe are of greatest interest to health care providers and medical device and pharmaceutical manufacturers. We also summarize companion guidance documents published by various federal agencies, including the Office of Inspector General, the Department of Justice, the Federal Trade Commission, and the Internal Revenue Service. Our Alert details changes from the proposed rule, discusses CMS’s response to public comments, identifies the practical impact of the final rule, and flags questions and concerns associated with the program. 

In addition, Reed Smith will be hosting a teleseminar on this topic Wednesday, December 7, 2011. For more information or to register for this program, please click here.

Click here to read the full Alert (PDF).

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Posted on October 20, 2011 by Debra A. McCurdy

CMS Releases Final Medicare Shared Savings Program/ACO Rule

This post was written by Paul W. Pitts, Susan A. Edwards, and Debra A. McCurdy.

Today the Centers for Medicare & Medicaid Services (CMS) released its long-awaited final rule to implement the Medicare Shared Savings Program as authorized by Section 3022 of the Affordable Care Act (ACA).  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.  Under the final rule, an ACO that meets established quality and performance standards and surpasses a minimum savings target will be able to share a percentage of savings (in addition to traditional fee-for-service payments under Medicare Parts A and B).  While the ACA requires CMS to "establish" the Shared Savings Program no later than January 1, 2012, CMS has indicated that it will begin accepting applications for the Shared Savings Program January 1, 2012, but the start date will be later in 2012. In the final rule, CMS made a number of notable changes to the proposed rule, as highlighted after the jump.

 

The final Medicare Shared Savings Program rule responds to comments and concerns raised by the public in response to the April 7, 2011 proposed rule on this subject. The regulation addresses numerous policy and operational issues associated with the Medicare Shared Savings Program, including, among other things: the entities that may form an ACO; beneficiary assignment to an ACO; establishment and measurement of quality standards; and calculation of incentive payments.

In the final rule, CMS made a number of notable changes to the proposed rule, including the following:

  • CMS had initially proposed two program “tracks” for calculating savings. In Track 1 an ACO would share in only the saving for the first two years, and would be required to assume the risk for shared losses in the third year. In Track 2 an ACO would share in savings and risk liability for losses beginning in its first performance year, in return for a higher share of the savings it generates. Under the final rule, participating ACOs still will have the choice of two “tracks” with regard to savings, but Track 1 will not have downside risk; that is, Track 1 participants will only share savings, not losses. The final rule stipulates that after the initial agreement period, if an ACO voluntarily continues to participate in the Medicare Shared Saving Program, it must participate in Track 2, which has a higher sharing rate but also has downside risk.
  • CMS is also modifying the method of assigning beneficiaries to the ACO for purposes of determining the population of Medicare fee-for-service beneficiaries for whose care the ACO is accountable and for determining whether an ACO has achieved saving. CMS had proposed retrospective assignment based on utilization of primary care services with prospective identification of a benchmark population. Under the final rule, CMS will provide ACOs with a preliminary prospective assignment of beneficiaries that would historically have been assigned to an ACO. CMS will provide ACOs aggregate reports on preliminary prospective assignment quarterly, which will include the names, dates of birth, sex, and health insurance claim numbers of beneficiaries that, based on historical data, would be assigned to the ACO. CMS will conduct a final reconciliation of assigned beneficiaries after each performance year based on actual patient utilization.
  • Instead of 65 measures to assess ACO quality in 5 “domains,” the final rule adopts 33 measures in 4 domains. In addition, pay for quality performance will be phased in gradually over the ACO’s first agreement period.
  • Under both Track 1 and Track 2, ACOs will share savings with Medicare from the first dollar saved as long as the minimum savings rate has been reached.
  • CMS expanded the entities eligible to form and participate in an ACO to include Federally Qualified Health Centers and Rural Health Clinics.
  • The first ACO agreements will have start dates of either April 1, 2012 or July 1, 2012, and the first performance “year” will be 18 or 21 months. The final rule does not specify application deadlines; instead, CMS will release sub-regulatory guidance laying out the applicable deadlines. ACOs starting either April 1, 2012 or July 1, 2012 will have the option to receive an interim payment if they report CY 2012 quality measures. All ACOs participating in the Medicare Shared Savings Program with April 1, 2012 or July 1, 2012 start dates must report quality measures for CY 2013 to qualify for shared savings in the first performance “year.”
  • The proposed rule would have required that 50 percent of primary care physicians be defined as meaningful electronic health record users by the start of the second performance year, but the final rule removed this requirement.
  • The final rule modifies the process of assigning beneficiaries to a two-step process. If a beneficiary has received primary care services from a primary care physician, ACO assignment is made based on which primary care physician accounts for the plurality of a beneficiary’s “allowed charges.” If a beneficiary has not received any primary care services from a primary care physician, assignment is based on which ACO professional (such as a specialist) accounts for the plurality of a beneficiary’s “allowed charges.”

In addition to the final Medicare Shared Savings Program rule released by CMS, the federal government released several other documents related to ACOs today, including:

  • CMS and the Office of Inspector General (OIG) jointly issued an interim final rule with comment period titled “Final Waivers in Connection With the Shared Savings Program.” The document establishes the conditions for waivers of certain provisions of the physician self-referral law, the anti-kickback statute, and certain provisions of the civil monetary penalty law in connection with specific arrangements developed pursuant to the Medicare Shared Savings Program. The interim final rule sets forth five waivers addressing: (1) start-up arrangements, (2) ACO-related arrangements during the term of the ACO’s participation agreement, (3) distribution of the shared savings, (4) compliance with exceptions under the physician self-referral law, and (5) the civil monetary penalty law’s prohibition on beneficiary inducement.
  • CMS also released a notice announcing an Advance Payment Model within the Shared Savings Program framework. Only certain ACOs participating in the Medicare Shared Savings Program (namely, physician-owned organizations, critical access hospitals, and rural providers participating in the Shared Savings Program) can participate in this Model. The Model is designed to test whether pre-payment could improve the coordination of care and generate savings more quickly and to a greater extent. Further, the Model is structured to test whether and how pre-payment of future shared savings could bolster physician-owned and rural provider participation in the Medicare Shared Savings Plan. Selected ACOs will receive three types of payments: (1) an upfront, fixed payment; (2) an upfront, variable payment; and (3) a monthly payment of varying amount depending on of the number of Medicare beneficiaries historically attributed to the ACO.
  • The Federal Trade Commission (FTC) and the Department of Justice (DOJ) jointly issued a final Antitrust Policy Statement titled, "Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program." In the final Policy Statement, the agencies clarify that the policy applies to all provider collaborations that are eligible and intend, or have been approved, to participate in the Medicare Shared Savings Program, not only collaborations formed after March 23, 2010. In addition, the final Policy Statement no longer contains provisions relating to mandatory antitrust review. The Medicare Shared Savings Program final rule no longer requires a mandatory antitrust review for certain collaborations as a condition of entry into the Shared Savings Program.
  • The Internal Revenue Service (IRS) issued a fact sheet titled “Tax-Exempt Organizations Participating in the Medicare Shared Savings Program through Accountable Care” (FS-2001-11) providing guidance on ACO participation by tax-exempt organizations. In the fact sheet the IRS confirms that the guidance provided in its Notice 2011-20 issued on April 18, 2011 continues to reflect the agency’s expectations for participation in the Medicare Shared Savings Program. The fact sheet also responds to a number of frequently asked questions.

Reed Smith will be preparing a comprehensive Client Alert on the final rule and other related policy guidance issued by the Administration. In the meantime, for additional background on the ACO program, see our previous reporting at http://www.healthindustrywashingtonwatch.com/tags/accountable-care-organizations/. Please do not hesitate to contact us if you have specific questions about the new regulations.

 
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Posted on May 3, 2011 by Debra A. McCurdy

FTC Workshop on ACO Policy Scheduled for May 9

On May 9, 2011, the FTC is hosting a workshop to seek input on its "Proposed Statement of Antitrust Enforcement Policy," which discusses how the federal antitrust agencies will enforce U.S. antitrust laws when competing health care providers create new Accountable Care Organizations (ACOs) under the Affordable Care Act.  Note that attendees will be admitted on a first-come basis, but the event also will be webcast.

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Posted on April 1, 2011 by Debra A. McCurdy

CMS Proposes Long-Awaited Accountable Care Organization (ACO) Regulations

This post was written by Susan A. Edwards and Debra A. McCurdy.

On March 31, 2011, the Centers for Medicare & Medicaid Services (CMS) proposedhighly anticipated regulations setting forth the details of the implementation of new “accountable care organizations” under Section 3022 of the Affordable Care Act (ACA). Specifically, the proposed rule would establish a “Shared Savings Program” intended to encourage physicians, hospitals, and other providers and suppliers to ACOs to create ACOs to provide cost-effective, coordinated patient care. Under the proposed rule, an ACO that meets established quality and performance standards and surpasses a minimum savings target will be able to share a percentage of savings (in additional to traditional fee-for-service payments under Medicare Parts A and B).

The proposed rule addresses numerous policy and operational issues associated with the entities that may form an ACO, beneficiary assignment to an ACO, establishment of quality standards, and calculation of incentive payments, among many others. With regard to calculation of payments, CMS intends to develop a benchmark for expected expenditures for ACO beneficiaries in the absence of the ACO. Each ACO’s performance will be measured against the benchmark to determine whether the ACO qualifies for savings or is accountable for losses (although CMS intends to establish a minimum savings rate that must be exceeded in order for an ACO to qualify for shared savings). If an ACO meets quality standards and achieves savings exceeding the minimum saving rate, the ACO would share in savings, based on the quality score of the ACO. Notably, CMS is proposing that ACOs would be able to choose between one of two program “tracks” for calculating savings: (1) an ACO could operate on a shared saving only track for the first two years, and would be required to assume the risk for shared losses in the third year; (2) an ACO could share in savings and risk liability for losses beginning in its first performance year, in return for a higher share of savings it generates. The quality score used to determine eligibility for incentive payments would be based on quality measures in five key areas designed to align with current CMS incentive programs: patient experience, care coordination, patient safety, preventive health, and at-risk population/frail elderly health.

The proposed rule will be published in the April 7, 2011 issue of the Federal Register. CMS will accept comments on the proposed rule until June 6, 2011, and will respond to comments and issue a final rule later this year. CMS anticipates that the Shared Savings Program will begin operating on January 1, 2012, as mandated by the ACA.  In addition to the CMS proposed rule, the federal government released several other documents related to ACOs yesterday, including: 

Reed Smith has prepared an in-depth analysis of the proposed ACO rule. If you have any specific questions about the new rule, please feel free to contact any Reed Smith attorney with whom you work.

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Posted on February 17, 2011 by Debra A. McCurdy

FTC Issues FAQs on Medical Identity Theft

The FTC recently released "Medical Identity Theft FAQs for Health Care Providers and Health Plans". The publication addresses how providers and insurers can minimize the risk of medical identity theft and help patients if they are victimized.

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Posted on December 28, 2010 by Debra A. McCurdy

President Signs into Law Physician Fee Schedule Fix/Extenders Bill, Red Flag Rule Relief, Health Policy Bills

On December 15, 2010, President Obama signed into law H.R. 4994, the “Medicare and Medicaid Extenders Act of 2010.” The new law averts a 25% Medicare physician fee schedule cut previously scheduled to take effect January 1, 2011 under the statutory “sustainable growth rate” formula. The law also continues a variety of expiring Medicare provisions and makes other health policy changes, funded primarily through a change in limits on recoveries of excessive tax credits provided to subsidize insurance premiums under the ACA. A CMS summary of the new law with additional implementation details is available here. In addition, on December 18, the President signed into law the “Red Flag Program Clarification Act of 2010,” which is intended to clarify that health care providers and other non-financial businesses are not subject to the Federal Trade Commission’s (FTC) “Red Flag” identity theft rule simply because they extend credit to patients who do not pay for all services at the time services are received. The President also has signed into law H.R. 2941, to reauthorize and enhance Johanna's Law to increase public awareness and knowledge with respect to gynecologic cancers, and S. 3199, the “Early Hearing Detection and Intervention Act.” More information on these bills is available here. 

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Posted on December 15, 2010 by Debra A. McCurdy

Congress Clears Legislation to Exempt Health Care Providers from "Red Flags" Rule

The House and Senate have approved legislation intended to clarify that health care providers and other non-financial businesses are not subject to the Federal Trade Commission’s (FTC) “Red Flag” identity theft rule simply because they extend credit to patients who do not pay for all services at the time services are received. Specifically, S. 3987 would amend the Fair Credit Reporting Act (FCRA) to define the term creditor and exempt from the creditor identity theft protection requirements any person who “advances funds on behalf of a person for expenses incidental to a service provided by the creditor to that person.” The legislation is now awaiting the President’s signature. 

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Posted on December 15, 2010 by Debra A. McCurdy

Congressional Hearings

On December 9, 2010, the House Energy and Commerce Committee held a hearing on "Alzheimer's Disease: The Ongoing Challenges." On December 1, the House Judiciary Subcommittee on Courts and Competition Policy held a hearing on “Antitrust Laws and Their Effects on Healthcare Providers, Insurers and Patients.”

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Posted on September 17, 2010 by Debra A. McCurdy

FTC/CMS/OIG Workshop on Accountable Care Organizations (Oct. 5, 2010)

On October 5, 2010, the FTC, CMS, and the OIG are holding a workshop on accountable care organizations (ACOs). These organizations, authorized by the ACA, are designed to deliver high-quality and efficient health care services to consumers. The workshop is intended to assess how the variety of possible ACO structures in different health care markets could affect the prices and the quality of health care delivered to privately insured consumers, as well as to Medicare and Medicaid beneficiaries. The workshop also will address antitrust, physician self-referral, anti-kickback, and civil monetary penalty considerations associated with the various ACO models, and whether safe harbors, exceptions, exemptions, or waivers from these laws may be warranted. Physicians, physician associations, hospitals, health systems, payers, consumers, and other interested parties are invited to participate in the workshop. The deadline for registration and submission of comments to be considered for discussion at the workshop is September 27, 2010.  The workshop is scheduled to be webcast.

* * Transcripts from the ACO workshop are now available.

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Posted on June 2, 2010 by Debra A. McCurdy

FTC Again Delays Red Flags Rule Enforcement

This post was written by Brad Rostolsky.

On May 28, 2010, just shy of the June 1st compliance deadline, the Federal Trade Commission (FTC) announced that it would again be postponing enforcement of the Red Flags Identity Theft Prevention Rule through December 31, 2010. This delay comes at the request of Congress, which has been considering legislation that would affect the scope of entities covered by the Rule. The FTC "urges Congress to act quickly to pass legislation that will resolve any questions as to which entities are covered by the Rule and obviate the need for further enforcement delays." If Congress passes legislation that limits the scope of the Red Flags Rule with an effective date earlier than December 31, 2010, the Commission will begin enforcement as of the legislation's effective date.

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Posted on January 27, 2010 by Debra A. McCurdy

FTC Report on Drug Company "Pay-for-Delay" Agreements

The Federal Trade Commission has released a “staff study” entitled “Pay for Delay: How Drug Company Pay-Offs Cost Consumers Billions.” The report examines agreements in patent litigation settlements in which a brand-name pharmaceutical company compensates a generic pharmaceutical company for delays in generic entry. According to the study, over the past six years, such agreements delayed generic entry by an average of 48 months. Over the next 10 years, the study concluded that pay-for-delay agreements will cost American consumers an estimated $35 billion ($3.5 billion per year). While the FTC intends to continue litigating pay-for-delay cases under antitrust laws, the report contends that “a legislative solution offers the quickest and clearest way to deter these agreements and obtain the benefits of generic competition for consumers.”

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Posted on November 11, 2009 by Debra A. McCurdy

Red Flag Rule Enforcement Extended Until June 1, 2010

The Federal Trade Commission (FTC) has announced it is extending its enforcement date for its Red Flag identity theft rules from November 1, 2009 until June 1, 2010. This extension, which was made at the request of members of Congress, will provide affected industries – including certain health care providers and suppliers -- with additional time to develop identity theft protection programs. Additional background information is available on our web site. 

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Posted on October 30, 2009 by Debra A. McCurdy

House Passes Bill to Exclude Small Health Practices from Identity Theft "Red Flags" Rule

On October 20, 2009, the House of Representatives passed H.R. 3763, which would amend the Fair Credit Reporting Act to exclude certain businesses from the “Red Flag” identity theft guidelines, including health care practices with 20 or fewer employees. The bill also would require the Federal Trade Commission to establish a process to allow businesses to apply for an exclusion from the rules. The legislation, which was approved by a 400-0 vote, now moves to the Senate.  Note that while the Federal Trade Commission (FTC) had stated that it will begin enforcing the Red Flag Rules effective November 1, 2009, the agency recently announced it was extending the Red Flag Rules enforcement date until June 1, 2010.

 

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Posted on August 17, 2009 by Debra A. McCurdy

FTC Further Postpones Identity Theft Red Flags Rule

The Federal Trade Commission (FTC) has announced that it is delaying until November 1, 2009 enforcement of its Identify Theft Red Flags Rule. According to the FTC, this three-month delay will “give creditors and financial institutions more time to review this guidance and develop and implement written Identity Theft Prevention Programs.” The FTC staff also will "redouble" its education efforts and seek to ease compliance by providing additional resources and guidance to clarify whether businesses are covered by the Rule and what they must do to comply.

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Posted on July 7, 2009 by Debra A. McCurdy

FTC Report on "Authorized Generic" Drugs

The Federal Trade Commission (FTC) has issued an interim report on the impact of authorized generic drugs on competition in the prescription drug marketplace. Authorized generics are drugs sold by a pharmaceutical manufacturer under both a brand-name and generic label. In short, the FTC found that retail drug prices average 4.2% lower when authorized generics are marketed against a single generic drug during the 180-day marketing exclusivity period than when they are not. Authorized generic entry during this period also reduces the revenues of a first-filer generic firm by 47% to 51% – much greater than the price decline for consumers. To prevent this loss of revenue, generic firms may agree to delay entry in return for a brand manufacturer’s agreement not to launch an authorized generic during the 180-day marketing exclusivity period. According to the report, between fiscal years 2004-08, about 25% of the final patent settlements reviewed by the FTC contained provisions related to authorized generics. 

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Posted on June 10, 2009 by Debra A. McCurdy

FTC Issues Report on Follow-On Biological Drug Competition

A lengthy new FTC report on “Follow-on Biologic Drug Competition" issued June 10, 2009 concludes that:

  • Competition between a biologic drug and a follow-on biological (FOB) is much more likely to resemble brand-to-brand competition than the dynamics of brand-generic competition under Hatch-Waxman.
  • Existing incentives that support brand-to-brand competition among biologic drugs – patent protection and market-based pricing – are likely to be sufficient to support FOB competition and biologic innovation.
  • A 12-14-year exclusivity period is unnecessary to promote innovation by pioneer biologic drug manufacturers.
  • Special procedures to resolve patent issues between pioneer and FOB drug manufacturers prior to FDA approval are unnecessary and they could undermine patent incentives and harm consumers.
  • FOB drug manufacturers are unlikely to need additional incentives to develop interchangeable FOB products.

The FTC paper will be the subject of a June 11 Energy and Commerce Health Subcommittee hearing.

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Posted on May 1, 2009 by Debra A. McCurdy

Identity Theft Red Flag Rule Further Postponed

This post was written by Carol Loepere.

On April 30, 2009 the Federal Trade Commission (FTC) issued a News Release announcing that it is granting industries under the FTC's jurisdiction an additional 3 months to develop and implement their identity theft prevention programs as required under the FTC's so-called Identify Theft Red Flag Rule. The FTC also stated that that some entities, particularly those that are small, non-traditional creditors, would benefit from the availability of a template Red Flags program in developing their programs. The Commission staff intends to publish such a template for low-risk entities shortly. The FTC said that the extension, coupled with the release of the template, should be sufficient to enable low-risk entities to prepare their programs without undue burden. The announcement of the extension is also available at www.ftc.gov.

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