A recent Government Accountability Office (GAO) report, “Medicare: Payment Methods for Certain Cancer Hospitals Should Be Revised to Promote Efficiency,” examines the Medicare reimbursement methodology for cancer hospitals exempt from the acute inpatient prospective payment systems (PPS). The GAO determined that Medicare payments were substantially higher at PPS-exempt cancer hospitals (PCHs) in 2012 than at PPS teaching hospitals in the same geographic area for beneficiaries with the same diagnoses or services. GAO estimated that PCHs were paid an average of about 42% more for inpatient services and 37% more for outpatient services than a local PPS teaching hospital would have received for a similar patient. According to the GAO, the PCH inpatient and outpatient reimbursement methodologies “provide little incentive for efficiency.” The GAO therefore recommends that Congress consider requiring Medicare to pay PCHs on the same basis as PPS teaching hospitals or otherwise authorize the HHS Secretary to modify how Medicare pays PCHs.
The Government Accountability Office (GAO) has issued a report examining the extent to which antipsychotic drugs are prescribed for older adults with dementia in nursing homes and other settings. The GAO found that, according to Medicare Part D data, about one-third of older adults with dementia who spent more than 100 days in a nursing home in 2012 were prescribed an antipsychotic, compared to about 14% of Medicare Part D enrollees with dementia living outside of a nursing home were prescribed an antipsychotic that year. While several agencies within HHS have taken steps to address antipsychotic drug use in nursing homes as part of the National Alzheimer's Plan, these efforts have not applied to older adults in other settings, such as assisted living facilities or individuals' homes. The GAO therefore recommends that HHS update its National Alzheimer's Plan to expand outreach and educational efforts to reduce antipsychotic drug use among older adults with dementia residing outside of nursing homes; HHS concurred. For details, see the full report, “Antipsychotic Drug Use: HHS Has Initiatives to Reduce Use among Older Adults in Nursing Homes, but Should Expand Efforts to Other Settings.”
Based on a review of 10 state Medicaid Management Information Systems (MMIS) used to process claims and support program integrity efforts, the GAO has concluded that the effectiveness of these systems is not known because CMS does not require states to measure results related to detecting and preventing improper payments. The GAO therefore recommends that CMS require states to measure and report quantifiable benefits of program integrity systems when requesting federal funds; CMS agreed.
According to a recent GAO report, CMS has taken numerous steps to prepare industry for the October 1, 2015 transition to ICD-10 codes, such as developing checklists, timelines, and other educational materials and hosting training sessions for Medicare providers. CMS also has monitored covered entity and vendor readiness through stakeholder collaboration meetings, focus group testing, and surveys. With regard to Medicaid, CMS has provided technical assistance to Medicaid agencies, although GAO observes that as of November 2014, not all state Medicaid agencies had started testing their systems’ abilities to accept and adjudicate claims with ICD-10 codes. Stakeholder organizations continue to have concerns about the comprehensiveness of CMS testing and the extent to which entities are using CMS educational materials. The GAO notes that CMS has taken steps to address these concerns by expanding end-to-end testing, promoting awareness of its educational materials, and developing more training options.
Note that CMS announced on February 25, 2015 that Medicare FFS providers, clearinghouses, and billing agencies successfully participated in the first successful ICD-10 end-to-end testing week (from January 26 through February 3, 2015) with all Medicare Administrative Contractors (MACs) and the Durable Medical Equipment (DME) MAC Common Electronic Data Interchange (CEDI) contractor. CMS was able to accommodate all volunteers, which represented a broad cross-section of provider, claim, and submitter types.
The Government Accountability Office (GAO) has released its latest update to its “High-Risk Series” reports, which again lists Medicare as a high-risk program, in part because of the program’s substantial size and scope, and its wide-ranging effects on beneficiaries, the health care industry, and the U.S. economy. The latest report highlights five areas of particular concern to the GAO:
- Payments and provider incentives in original Medicare (specifically referencing physician feedback reports, physician self-referral policy, high-expenditure Part B drugs, end stage renal disease (ESRD) bundled payments, and low-volume payment adjustments for dialysis facilities);
- Medicare Advantage (MA) and other Medicare health plans (including concerns about MA plan payment adjustments and excess payments to Special Needs Plans);
- Program design effects on beneficiaries (addressing coordination for dual-eligible beneficiaries, dual-eligible special needs plans, and access to preventive services);
- Program management (including implementation of durable medical equipment competitive bidding and oversight of Centers for Medicare & Medicaid Services (CMS) contracts); and
- Oversight of patient care and safety (including the use of clinical data registries and oversight of vulnerable Medicare beneficiaries in nursing homes and long-term care hospitals (LTCHs)).
The GAO makes a series of recommendations to Congress and CMS to address program risks. Specifically, GAO recommends that Congress consider directing the HHS Secretary to require providers who self-refer intensity-modulated radiation therapy services to disclose to their patients that they have a financial interest in the service. The GAO also recommends that Congress better align Medicare beneficiary cost-sharing requirements with U.S. Preventive Task Force recommendations.
Specific recommendations for CMS include:
- Disseminating physician performance feedback reports more frequently;
- Improving the timeliness and efficacy of CMS’s monitoring of the accuracy of ESRD low volume payment adjustments;
- Improving the accuracy of the adjustment made for differences in diagnostic coding practices between MA and Medicare fee-for service (FFS) programs;
- Establishing specific plans for using MA encounter data to risk adjust payments or for other purposes;
- Evaluating the extent to which dual-eligible special needs plans have provided appropriate care to the population they serve; and
- Expanding validation surveys at LTCHs to assess accreditation organization identification of deficiencies.
In addition, the GAO lists the following recommendations for CMS to exercise Affordable Care Act authorities to reduce the risk of improper Medicare payments:
- Require a surety bond for certain types of at-risk providers and suppliers;
- Publish a proposed rule for increased disclosures of prior actions taken against providers and suppliers enrolling or revalidating enrollment in Medicare, such as whether the provider or supplier has been subject to a payment suspension from a federal health care program;
- Establish core elements of compliance programs for providers and suppliers;
- Improve automated edits that identify services billed in medically unlikely amounts;
- Develop performance measures for the Zone Program Integrity Contractors who explicitly link their work to the agency’s Medicare FFS program integrity performance measures and improper payment reduction goals;
- Reduce differences between contractor postpayment review requirements when possible;
- Monitor the database used to track Recovery Auditor activities to ensure that all postpayment review contractors are submitting required data and that the data the database contains are accurate and complete;
- Require Medicare administrative contractors to share information about the underlying policies and savings related to their most effective edits; and
- Efficiently identify and implement an information technology solution that addresses the removal of Social Security numbers from Medicare beneficiaries’ health insurance cards.
On January 28, 2015, the Government Accountability Office (GAO) released a report entitled “Private Health Insurance: Geographic Variation in Spending for Certain High-Cost Procedures Driven by Inpatient Prices.” In the report, the GAO examines: (1) how spending per episode of care for certain high-cost procedures varies across geographic areas for private payers, and (2) how the mix of service types, and the volume, intensity, and price of services contribute to variation in episode spending across geographic areas for private payers. Specifically, using a large private sector claims database, GAO examined 2009 and 2010 spending by metropolitan statistical areas (MSA) for episodes of care for three commonly performed inpatient procedures -- coronary stent placement, laparoscopic appendectomy, and total hip replacement. The GAO examined spending by service category: hospital inpatient, hospital outpatient, post-discharge, professional, and ancillary services. For inpatient and professional services, GAO examined the volume, intensity, and price of services.
According to the GAO, its investigation found that spending for an episode of care in the private sector varied across MSAs for the three procedures, even after GAO adjusted for geographic differences in the cost of doing business and differences in enrollee demographics and health status. MSAs in the highest-spending quintile had average adjusted episode spending that was 74% to 94% higher than MSAs in the lowest-spending quintile, depending on the procedure. The price of the initial hospital inpatient admission was the key driver of differences in episode spending in high- and low-spending MSAs. Professional services (office visits and other services provided by a physician or other health professional) were the second largest contributor to geographic differences, but accounted for only 7% or less of the difference in total episode spending between MSAs in the lowest- and highest-spending quintiles. The report does not include recommendations, and GAO notes that its findings may not be generalizable to all private insurers due to data limitations.
The GAO has issued a report, "Group Purchasing Organizations: Funding Structure has Potential Implications for Medicare Costs,” that examines the effects of group purchasing organization (GPO) contracting practices and their funding structure. The five GPOs in GAO’s review reported being predominately funded by administrative fees collected from vendors (totaling $2.3 billion in 2012), which were almost always based on a percentage of the purchase price of products obtained through GPO contracts. The five GPOs reported that nearly 70% of these fees were passed on to GPO customers or owners. The GAO points out that literature and expert views on the effects of this funding structure vary. To the extent that the vendor fee-based funding structure affects prices for medical products and services, Medicare payment rates could be affected since hospital cost reports impact annual payment updates. The GAO notes that repealing the safe harbor that allows administrative fees could eliminate the potential effects of the GPO funding structure on Medicare payment rates, but the agency cited concerns that this could be disruptive to the health care supply chain at least in the short term. The GAO recommends that the HHS Secretary determine whether hospitals are appropriately reporting administrative fee revenues on their Medicare cost reports and take steps to address any under-reporting that may be found.
A recent GAO report, “Medicare Program Integrity: CMS Pursues Many Practices to Address Prescription Drug Fraud, Waste, and Abuse,” lists current and planned CMS prevention, detection, and monitoring policies intended to promote program integrity in the Medicare Part D prescription drug program. The report does not include new recommendations.
The GAO recently examined the effectiveness of health cost and quality transparency tools available to consumers, including two private consumer health cost/quality websites and CMS “Compare” databases. The GAO determined that the CMS tools — Nursing Home Compare, Dialysis Facility Compare, Home Health Compare, Hospital Compare and Physician Compare — are limited in their provision of relevant and understandable consumer cost and quality information. For instance, the sites do not allow consumers to combine cost and quality information to assess the value of health care services or anticipate costs, and the sites lack clarity in how information is presented to consumers. The GAO also charges that CMS's process for developing and selecting cost and quality measures included in the Compare sites “has been heavily influenced by the concerns of providers rather than consumers.” With regard to the private sites, the GAO notes that the private consumer sites suggest a wide range of provider costs for the same service in the same geographic area, regardless of quality. The GAO recommends that CMS take steps to improve the information in its transparency tools and develop procedures and metrics to ensure that tools address consumers' needs. For instance, the GAO suggests that the CMS Compare websites include, to the extent feasible, estimated out-of-pocket costs for Medicare beneficiaries for common treatments that can be planned in advance, and allow consumers to customize information presented. For more information, see the full report, “Health Care Transparency: Actions Needed to Improve Cost and Quality Information for Consumers.”
The Government Accountability Office (GAO) has assessed the effectiveness of CMS controls intended to protect the security and privacy of the information and information technology (IT) systems used to support Healthcare.gov. The GAO determined that while CMS has taken steps to protect Healthcare.gov security and privacy, “weaknesses remain both in the processes used for managing information security and privacy as well as the technical implementation of IT security controls.” The GAO warns that until such weaknesses are fully addressed, risks remain with regard to unauthorized access, disclosure, or modification of the information collected and maintained by Healthcare.gov and related systems, along with potential disruption of services. The GAO made a series of recommendations to implement security and privacy management controls related to Healthcare.gov. For details, see the full report, “Healthcare.gov: Actions Needed to Address Weaknesses in Information Security and Privacy Controls.”
A new GAO report reviews CMS’s collection of Medicare Advantage (MA) encounter data, which includes detailed information on services and items furnished to enrollees. CMS plans to use MA encounter data in addition to current diagnosis data to risk adjust capitated payments to MA organizations in 2015. The GAO determined that CMS has not yet developed requirements for completeness and accuracy of the encounter data, nor has it performed statistical analyses that could detect complex data validity issues. The GAO recommends that CMS establish specific plans for using MA encounter data and thoroughly assess data completeness and accuracy before using the data to risk adjust payments or for other purposes.
The Government Accountability Office (GAO) has issued a report entitled “Medicare Program Integrity: Increased Oversight and Guidance Could Improve Effectiveness and Efficiency of Postpayment Claims Reviews." In the report, the GAO assesses CMS policies and procedures to prevent certain Medicare contractors (Medicare Administrative Contractors, Zone Program Integrity Contractors, Recovery Auditors, and the Comprehensive Error Rate Testing contractor) from conducting duplicative postpayment claims reviews. According to the GAO, while CMS has taken steps to avoid duplicative reviews, the agency “neither has reliable data nor provides sufficient oversight and guidance to measure and fully prevent duplication.” Since ineffective requirements and lack of oversight in this area create “an unnecessary administrative and financial burden for Medicare-participating providers and the Medicare program,” the GAO recommends that CMS provide additional oversight and guidance regarding contractor claims review data collection, duplicative reviews, and contractor correspondence with providers.
The OIG has issued two reports on implementation of the ACA health insurance “Marketplaces.” The first report, “Marketplaces Faced Early Challenges Resolving Inconsistencies with Applicant Data,” looked at the extent to which the federal and state health insurance marketplaces ensured the accuracy of information submitted by insurance applicants, including information related to eligibility for premium tax credits and cost sharing reductions. According to the OIG, marketplaces were unable to resolve most data inconsistencies, particularly involving citizenship and income information (although the OIG cautions that inconsistencies do not necessarily indicate that incorrect information was provided or that financial assistance is inappropriate). The report recommends additional planning and oversight to resolve inconsistencies.
A related OIG report questions the effectiveness of internal controls implemented by the federal, California, and Connecticut marketplaces in ensuring that individuals were enrolled in qualified health plans (QHPs) according to federal requirements. In particular, the OIG identified deficiencies in internal controls that could limit the marketplaces’ ability to prevent the use of inaccurate or fraudulent information when determining applicant’s eligibility for enrollment in a QHP. The OIG recommended steps to verify applicant data, determine enrollment and cost sharing assistance eligibility, and maintain and update enrollment data.
Finally, the GAO released a report that concentrates on contractor performance related to the Healthcare.gov portal. The GAO points cost increases and delayed system functionality for the federally facilitated marketplace that resulted from CMS’s lack of effective planning, changing requirements and oversight gaps. GAO recommends that CMS take immediate steps to address contract costs, acquisition strategies, and use of oversight tools. In its response to the report, CMS discussed improvements it was making in the management of the Marketplace (including a stronger CMS management structure, an improved structure of Marketplace contracts, and a strengthened acquisition workforce). CMS expressed confidence that “its contractors will deliver the needed capabilities for the 2015 open enrollment period in a timely and cost-efficient manner.”
The Government Accountability Office (GAO) has released data comparing retail prescription drug prices paid by the Department of Defense (DOD), Medicaid, and Medicare Part D for a sample of 78 high-utilization/high-expenditure drugs. In general, the GAO determined that Medicaid paid the lowest average net prices for both brand-name and generic drugs in the sample based on data for the third quarter of 2010. For the entire sample, Medicare Part D paid an estimated 32% higher average net price than Medicaid, while DOD paid 60% more than Medicaid (although Medicare Part D paid more for brand-name drugs than did DOD). Key factors affecting net prices paid by each program included the amount of any post-purchase price adjustments (e.g., refunds, rebates, or price concessions received by each program from drug manufacturers), which equaled approximately 15% of the gross price for Medicare Part D, 31% for DOD, and almost 53% for Medicaid across the entire sample.
The GAO recently examined “self-referral” for outpatient physical therapy (PT) services, which the GAO defines as a provider referring patients to entities in which the provider or the provider's family members have a financial interest. According to the GAO, non-self-referred PT services per 1,000 Medicare FFS beneficiaries increased by 41% from 2004 to 2010, while the number of self-referred PT was generally flat. Expenditures associated with non-self-referred PT services also grew at a higher rate than for self-referred services. The GAO observed that these findings differ from its prior reviews of self-referrals involving advanced imaging, anatomic pathology, and intensity-modulated radiation therapy, in which the GAO found that self-referred services and expenditures grew faster than non-self-referred services and expenditures. The GAO suggests that a potential reason for this difference is that non-self-referred PT services can be performed by providers who can directly influence the amount, duration, and frequency of PT services through the Medicare written plan of care, whereas radiologists, for example, generally do not have the discretion to order more imaging services or more intense imaging procedures.
In addition, the GAO found that the relationship between provider self-referral status and PT referral patterns was mixed, and varied on the basis of referring provider specialty, Medicare beneficiary practice size, and geography. Self-referring providers in the three specialties that GAO examined (family practice, internal medicine, and orthopedic surgery) generally referred more beneficiaries for PT services on average than non-self-referring providers, but ordered fewer PT services per beneficiary compared to non-self-referring providers. The GAO also found that PT service referrals in the year a provider began to self-refer increased at a higher rate relative to non-self-referring providers of the same specialty.
In the report, “Medicare Physical Therapy: Self-Referring Providers Generally Referred More Beneficiaries but Fewer Services per Beneficiary,” the GAO concluded that regardless of referral patterns, the substantial growth in PT services raises concerns about costs for Medicare and beneficiaries. The GAO suggests that CMS’s initiative to collect additional information on beneficiary functional status on all PT claims may help CMS better assess the appropriateness of PT treatment provided by both self-referring and non-self-referring providers.
The GAO has issued a report entitled “Medicaid: Financial Characteristics of Approved Applicants and Methods Used to Reduce Assets to Qualify for Nursing Home Coverage.” The report highlights ways applicants in Florida, New York, and South Carolina reduce their countable assets to qualify for Medicaid nursing home coverage, including (1) spending countable resources on goods and services that are not countable towards financial eligibility, such as prepaid funeral arrangements; (2) converting countable resources into noncountable resources that generate an income stream for the applicant (e.g., an annuity or promissory note); (3) giving away countable assets as a gift to another individual (which could lead to a penalty period that delays Medicaid nursing home coverage); and (4) for married applicants, increasing the amount of assets a spouse remaining in the community can retain (e.g., through the purchase of an annuity). The report does not include recommendations.
A recent GAO report, “Medicaid Program Integrity: Increased Oversight Needed to Ensure Integrity of Growing Managed Care Expenditures," identified gaps in both state and federal Medicaid managed care program integrity efforts. For instance, based on a review of Medicaid activities in seven states, the GAO found that five state program integrity units and four Medicaid Fraud Control Units focused on Medicaid FFS claims and do not closely examine Medicaid managed care activities. Likewise, the GAO concluded that federal entities have taken few steps to address Medicaid managed care program integrity. As a result, federal and state entities may not be able to ensure that managed care organizations are taking appropriate actions to identify, prevent, or discourage improper payments. Given the expanding role of Medicaid managed care, inadequate managed care program integrity efforts “will leave a growing portion of federal Medicaid dollars vulnerable to improper payments.” The GAO therefore recommended that CMS: require states to audit payments to and by managed care organizations; update its guidance on Medicaid managed care program integrity; and provide states additional support for managed care oversight, such as audit assistance from existing contractors.
A recent GAO report looked at how private health care entities provide performance data to physicians, and how such practices could be used to improve CMS efforts to provide feedback to providers. The GAO determined that the nine health insurers and statewide collaboratives it reviewed typically employ multiple benchmarks (e.g., peer group averages or past performance), while CMS only compares results to the national average rates of all physician groups that submitted data on any given measure. The GAO observes that CMS’s approach precludes physicians from viewing their performance in fuller context. The private entities also sent reports more than once a year, in contrast to CMS annual reports that may limit physicians' opportunity to make improvements in advance of their annual payment adjustments. The GAO suggests that as CMS implements and refines its physician feedback and Value Modifier programs, it should consider comparing physicians' performance against additional benchmarks, such as state or regional averages, and disseminating performance reports more frequently. The report is entitled “Medicare: Certain Physician Feedback Reporting Practices of Private Entities Could Improve CMS's Efforts.”
The Government Accountability Office (GAO) has issued its second statutorily-mandated report regarding implementation of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) accreditation requirement for Medicare suppliers that furnish the technical component of advanced diagnostic imaging (ADI) services. The first report assessed CMS's standards for ADI accreditation and the agency’s oversight of the accreditation requirement. In the second report, "Medicare Imaging Accreditation: Effect on Access to Advanced Diagnostic Imaging Is Unclear amid Other Policy Changes," the GAO concentrates on the Medicare beneficiary impact of the accreditation requirement, focusing on beneficiary use of magnetic resonance imaging, computed tomography, and nuclear medicine (including positron emission tomography services). The GAO found that the number of such ADI services provided to Medicare beneficiaries in the office setting declined at similar rates both before and after the accreditation requirement went into effect on January 1, 2012, which suggests that the overall decline was driven at least in part by factors other than accreditation. The GAO also observed that the effect of accreditation on access is unclear given the other recent policy changes implemented by CMS and private payers (e.g., payment reductions and prior authorization requirements) that also could have contributed to the decline in the number of these services. CMS officials, accrediting organization representatives, and accredited ADI suppliers that the GAO interviewed suggested that any effect of accreditation on access was likely limited.
On April 8, 2014, the OIG and GAO each issued reports focusing on different aspects of the “Round 1 Rebid” of the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program. By way of background, under DMEPOS competitive bidding, only suppliers that are winning bidders, meet licensing and other standards, and enter into a contract with CMS may furnish selected categories of DMEPOS to Medicare beneficiaries in competitive bidding areas (CBAs), with very limited exceptions. Contract suppliers are paid based on the median of the winning suppliers’ bids in the CBA, rather than the DMEPOS fee schedule amount. The Round 1 Rebid was in effect for a 3-year period, from 2011 through 2013, involving nine DME product categories in nine CBAs. CMS subsequently “recompeted” contracts in the Round 1 areas (including additional products), with three-year contracts effective January 1, 2014. CMS also established a second round of bidding covering 100 CBAs, along with a national mail-order diabetic testing supplies competitive bidding program; those three-year contracts went into effect July 1, 2013.
The OIG report assesses CMS compliance with DMEPOS bidding rules in the Round 1 Rebid. The OIG concluded that CMS generally followed its competitive bidding program rules when it selected suppliers and computed single payment amounts for the Round 1 Rebid – although a number of CMS errors were identified. Specifically, the OIG conducted a review based on a random sample of 100 of the 3,011 established DMEPOS single payment amounts in the Round 1 Rebid Program and the selection process for 266 winning suppliers associated with the sampled payment amounts. The OIG determined that CMS followed all applicable requirements for 255 of the 266 winning suppliers, but nine winning suppliers did not meet financial documentation requirements, and CMS incorrectly used two suppliers in one single payment computation. While the OIG characterizes the overall effect on Medicare payments to suppliers as “immaterial,” the OIG estimates that CMS paid suppliers $34,000 less than they would have received without any errors (less than 0.1 percent of the $113 million paid under the Round 1 Rebid Program during the first 6 months of 2011). The OIG recommends that CMS: (1) follow its established program procedures and applicable federal requirements consistently in evaluating the financial documents of all suppliers, and (2) ensure that all bids of winning suppliers are included in the calculation of single payment amounts before offering contracts. CMS concurred with the recommendations, and pointed out that it has enhanced the financial review process to ensure that all reviewers are accountants or certified public accountants. Looking ahead, the OIG will be conducting a similar analysis for Round 2 of competitive bidding; this analysis may include an analysis of CMS’s procedures for ensuring supplier compliance with applicable state licensure requirements (depending on the results of an ongoing limited scope review).
The GAO issued a broader review focusing on data from the second year of the Round 1 Rebid contracts, covering the Round 1 Rebid’s effects on Medicare beneficiaries, contract suppliers, and non-contract suppliers. Among other things, the GAO observed that:
- The number of beneficiaries furnished DME items included in the competitive bidding program generally decreased more in CBAs than in demographically similar “comparator” areas. CMS suggests that such declines may be attributable to reduced inappropriate usage of DME and do not necessarily reflect beneficiary access issues. In fact, CMS stated in comments on the report that its “sophisticated real-time claims monitoring system has continuously found that beneficiary access to all necessary and appropriate competitive bid items has been preserved since the program began” – a conclusion generally disputed by industry.
- A small number of contract suppliers generally had a large proportion of the market share in the nine competitive bidding areas.
- The total number of DME suppliers and Medicare allowed charges decreased more in CBAs than in the comparator areas. For instance, the number of suppliers with Medicare allowed charge amounts of $2,500 or more per quarter decreased an average of 27% in the CBAs compared to 5% in the comparator areas.
- The number of grandfathered suppliers had so diminished that CMS was no longer monitoring them after the second quarter of 2012.
- The program did not appear to have adversely affected beneficiary access to covered items, although additional monitoring would be needed to monitor the impact of the national mail-order diabetic testing supplies program and Round 2.