Ways and Means Committee to Markup Medicare Fraud, Competitive Bidding, and other Medicare Policy Bills

On February 26, 2015, the House Ways and Means Committee is scheduled to vote on the following bills:

  • H.R. 1021, “Protecting the Integrity of Medicare Act of 2015” – a sweeping bill to promote Medicare program integrity and efficiency. Among many other things, the bill would: eliminate civil money penalties for inducements to physicians to limit services that are not medically necessary; create a Part D drug management program for beneficiaries at risk of prescription drug abuse; require MACs to establish improper payment outreach and education programs for providers; expand the Senior Medicare Patrol program; require the HHS Secretary to issue guidance on the application of the “Common Rule” protecting individuals involved in research; and require the Secretary to issue a report on how to establish a permanent physician-hospital gainsharing program.
  • H.R. 284, “Medicare DMEPOS Competitive Bidding Improvement Act of 2015” -- which would require Medicare suppliers that bid under a durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program to submit binding bids or risk forfeiture of a surety bond.
  • H.R. 876, “NOTICE Act” – which would require hospitals to provide certain notifications to individuals classified as being under observation status rather than admitted as inpatients.
  • H.R. 887, “Electronic Health Fairness Act of 2015” -- which addresses the treatment of patient encounters in ambulatory surgical centers in determining meaningful electronic health record use.

Hospital Engagement Network Contract Solicitation

CMS is requesting proposals for Hospital Engagement Network (HEN) contracts from qualified entities to work on reducing preventable hospital acquired conditions and readmissions through the Partnership for Patients initiative. HENs will engage the hospital, provider, and broader care-giver communities to quickly implement tested, evidence-based, and measured best practices in order to reduce hospital-based harm and preventable readmissions. 

CMS Hospital Industry Call Today to Focus on RAC Improvements

Today CMS is hosting an Open Door Forum call to discuss several Medicare developments impacting hospitals, including changes CMS has made to the recovery audit program to strengthen oversight, reduce the provider burden, and enhance program transparency. The call begins at 2:00 eastern.

Obama Administration Releases FY 2016 Budget Proposal with Medicare/Medicaid Provisions

On February 2, 2015, the Obama Administration released its proposed federal budget for fiscal year (FY) 2016. The budget would impact all types of health care providers, health plans, and drug manufacturers if adopted as proposed – which is unlikely given Republican control of the House and Senate. Nevertheless, Congress can be expected to consider the Medicare and Medicaid savings proposals (many of which are carry-overs from prior budgets) during expected debate in the coming months on Medicare physician fee schedule (MPFS) reform legislation or during future budget negotiations.

The following is a summary of the major Medicare, Medicaid, and related policy proposals contained in the FY 2016 budget proposal.

Medicare Delivery & Payment Reforms

The proposed FY 2016 budget includes a package of Medicare legislative proposals estimated to save $423.1 billion over 10 years (note that the proposals are scored off an adjusted baseline that assumes a zero percent update to Medicare physician payments). Highlights include the following (all savings estimates are for the 10-year period of FYs 2016-2025):

  • Repeal the Sustainable Growth Rate (SGR) formula used to update MPFS payments, and replace it with reforms contained in recent bipartisan reform legislation (including a period of predictable payments followed by reimbursement tied to alternative payment models and value-based purchasing). The Administration estimates that this would cost $44 billion over 10 years.
  • Reduce Medicare payment for services provided in off-campus hospital outpatient departments under the Outpatient Prospective Payment System to either the MPFS-based rate or the rate for surgical procedures covered under the Ambulatory Surgical Center (ASC) payment system. The provision would be phased in over four years beginning in 2017 ($29.5 billion in savings).
  • Implement bundled payment for post-acute care providers, including long-term care hospitals (LTCHs), inpatient rehabilitation facilities (IRFs), skilled nursing facilities (SNFs), and home health agencies (HHAs) beginning in 2020. Payments would be bundled for at least half of the total payment for post-acute care providers, with rates set to produce a permanent and total cumulative adjustment of -2.85% by 2022, with beneficiary coinsurance equal to current levels ($9.3 billion).
  • Allow the Centers for Medicare & Medicaid Services (CMS) to assign more Medicare fee-for-service (FFS) beneficiaries to Federally Qualified Health Centers and Rural Health Clinics that participate in an Accountable Care Organization (ACO) under the Medicare Shared Savings Program ($80 million), and expand the basis for beneficiary assignment for ACOs to include nurse practitioners, physician assistants, and clinical nurse specialists ($60 million).
  • Implement a budget neutral value-based purchasing program for additional provider types, including SNFs, HHAs, ASCs, hospital outpatient departments, and community mental health centers beginning in 2017. At least 2% of payments must be tied to the quality and efficiency of care in the first two years, rising to at least 5% in 2019 (no budget impact).
  • Eliminate the 190-day lifetime limit on inpatient psychiatric facility services: ($5 billion in costs).
  • Reduce market basket updates for IRFs, LTCHs, and HHAs by 1.1 percentage points each year from 2016 through 2025 (the update could not fall below 0%), and reduce SNF updates by -2.5% in FY 2016, tapering down to a -0.97% update in FY 2023 ($102.1 billion).
  • Increase the minimum Medicare Advantage coding intensity adjustment ($36.2 billion).
  • Reduce Medicare coverage of bad debts from 65% in most cases to 25% over three years starting in 2016 ($31.1 billion).
  • Strengthen the Independent Payment Advisory Board (IPAB) by reducing the target rate of Medicare cost growth from gross domestic product plus one percentage point to plus 0.5 percentage point, which would make it easier to trigger Affordable Care Act (ACA) provisions requiring reductions to Medicare provider reimbursement ($20.9 billion).
  • Reduce Medicare indirect medical education add-on payments ($16.3 billion).
  • Exclude radiation therapy, therapy services, advanced imaging, and anatomic pathology services from the in-office ancillary services exception to the prohibition against physician self-referrals (Stark law), except in cases where a practice is “clinically integrated” and demonstrates cost containment, as defined by the Secretary ($6 billion).
  • Adjust the standard for classifying a facility as an IRF; at least 75% of patient cases admitted would be required to meet one or more of 13 designated conditions beginning in 2016 ($2.2 billion).
  • Reduce critical access hospital (CAH) reimbursement to 100% of costs ($1.7 billion) and limit CAH designation eligibility for hospitals within 10 miles of another hospital ($770 million).
  • Expand the Part B benefits to cover short-term scheduled dialysis at a Medicare-certified End Stage Renal Disease (ESRD) facility for the treatment of acute kidney injury ($200 million).
  • Modify documentation requirement for face-to-face encounters for durable medical equipment (DME), orthotics, prosthetics, and supplies (DMEPOS) to allow certain non-physician practitioners to document the face-to-face encounter (no budget impact).

Medicare, Medicaid, & Other Prescription Drug Provisions

  • Provide Medicaid-level drug rebates for brand name and generic drugs provided to Medicare beneficiaries who receive Part D low-income subsidies, beginning in 2017 ($116.1 billion).
  • Accelerate manufacturer Medicare Part D “coverage gap” discounts from 50% to 75% beginning in plan year 2017 ($9.4 billion).
  • Reduce payment for physician-administered Medicare Part B drugs from 106% to 103% of average sales price (ASP) starting in 2016. If a physician’s cost for purchasing the drug exceeds 103% of ASP, the drug manufacturer would be required to provide a rebate to ensure that the provider’s net cost to acquire the drug equals 103% of ASP minus an overhead fee to be determined by the Secretary. The Secretary would be authorized to pay a portion of the entire amount above ASP as a flat fee rather than a percentage in a budget-neutral manner ($7.4 billion).
  • Extend Medicare Secondary Payer reporting requirements to group health plans offering prescription drug coverage ($480 million).
  • Authorize the Secretary to negotiate Part D prices for biologics and high-cost prescription drugs eligible for placement on a plan’s specialty tier (no budget impact).
  • Authorize the Secretary to require high-risk Medicare beneficiaries to use certain prescribers and/or pharmacies to obtain controlled substance prescriptions under Part D; allow the Secretary to suspend coverage and payment for Part D drugs prescribed by providers who have misprescribed or overprescribed drugs with abuse potential, or that that pose an imminent risk to patients; and allow the Secretary to require additional information on certain Part D prescriptions, such as diagnosis and incident codes, as a condition of coverage (no budget impact).
  • Encourage the use of generic drugs by Part D low-income subsidy beneficiaries by modifying copayments ($8.9 billion).
  • Increase the availability of generic drugs and biologics by authorizing the Federal Trade Commission (FTC) to stop companies from entering into “pay for delay” agreements ($10.1 billion) and modifying the length of exclusivity on brand name biologics ($4.4 billion).
  • Lower Medicaid drug costs by clarifying the definition of brand drugs, collecting an additional rebate for generic drugs when prices grow faster than inflation, and including certain prenatal vitamins and fluorides in the rebate program. The plan also would make a technical correction to the ACA alternative rebate for new drug formulations; limit to 12 quarters the timeframe for which manufacturers can dispute drug rebate amounts; exclude authorized generic drugs from average manufacturer price calculations for determining rebate obligations for brand drugs; calculate Medicaid federal upper limits based only on generic drug prices; and exempt emergency drug supply programs from the Medicaid rebate calculations. ($6.3 billion.)
  • Require manufacturers to pay Medicaid rebate equal to the entire amount that the state has paid for the drugs in cases where the state improperly reported non-drug products as covered outpatient drugs, or where the state improperly reported drugs that the Food and Drug Administration (FDA) has found to be less than effective. The budget also would allow more regular audits and surveys of manufacturers to ensure compliance with Medicaid drug rebate agreement requirements; require drugs to be electronically listed with the FDA to receive Medicaid coverage; and increase penalties for reporting false information for the calculation of Medicaid rebates. ($10 million.)
  • Fully fund a nationwide retail pharmacy survey incorporating prices paid by cash-paying, third-party insured, and Medicaid insured consumers. The funding also permits collection of actual invoice prices from retail community pharmacies to enable states to set reasonable payment rates to pharmacies. CMS would be authorized to collect wholesale acquisition costs for all Medicaid covered drugs. ($30 million in costs.)
  • Requires states to track high prescribers and utilizers of Medicaid prescription drugs ($710 million).

Major Program Integrity Provisions

  • Expand funding for the Health Care Fraud and Abuse Control (HCFAC) program, the Medicaid Integrity Program, and Medicaid Fraud Control Units, and other HHS program integrity efforts.
  • Expand the current authority to exclude individuals and entities from federal health programs if they are affiliated with a sanctioned entity by closing a “loophole” that allows an officer, managing employee, or owner of a sanctioned entity to avoid exclusion by resigning his or her position or divesting his or her ownership; and extending the exclusion authority to entities affiliated with a sanctioned entity ($70 million).
  • Authorize civil monetary penalties for providers who do not update enrollment records ($29 million).
  • Establish a registration process for clearinghouses and billing agents that act on behalf of Medicare providers and suppliers (no budget impact).
  • Expand CMS’s authority to require prior authorization for all Medicare FFS items, and mandate prior authorization of advance imaging services and power mobility devices ($90 million).
  • Increase the minimum amount of the HHA surety bond to $50,000 (no budget impact).
  • Authorize Medicaid Fraud Control Units to investigate and prosecute allegations of abuse or neglect of Medicaid beneficiaries in non-institutional settings (no budget impact).
  • The budget includes several provisions to reform the Medicare appeals process, including allowing Department of Health and Human Services (HHS) to retain a portion of Recovery Audit Contractor recoveries to fund related appeals; increasing the minimum amount in controversy required for Administrative Law Judge adjudication; allowing the Office of Medicare Hearings and Appeals (OMHA) to use attorney adjudicators for certain claims; establishing expedited OMHA procedures for claims with no material fact in dispute; remanding an appeal to the first level of review when new documentary evidence is submitted into the administrative record at the second level of appeal or above; and authorizing the Secretary to adjudicate appeals through the use of sampling and extrapolation techniques

Other Medicare & Medicare Reforms

  • Revise beneficiary cost-sharing requirements, including increased income-related premiums under Parts B and D ($66.4 billion).
  • Increase Part B deductible for new enrollees ($3.7 billion), and increase premiums for beneficiaries with Medigap policies with particularly low cost-sharing requirements ($4 billion).
  • Establish a new home health copayment ($830 million).
  • Base Medicaid rates for DME on Medicare rates ($4.3 billion).
  • Rebase future Medicaid Disproportionate Share Hospital allotments to account for levels of uncompensated care under ACA coverage expansion ($3.3 billion).

Precision Medicine Initiative

The President proposes a high-profile “Precision Medicine Initiative,” which would provide $215 million to focus on developing treatments, diagnostics, and prevention strategies tailored to the individual genetic characteristics of each patient. This effort includes $200 million for the National Institutes of Health to launch a national research cohort of a million or more Americans who volunteer to share their genetic information, expand current cancer genomics research, and initiate new studies on how a tumor’s DNA can inform prognosis and treatment choices. The budget provides $10 million for the FDA to modernize its regulatory framework to support the development and use of molecular diagnostics in precision medicine, and it provides the HHS Office of the National Coordinator for Health Information Technology (ONC) with $5 million to define standards to enable the exchange of genomic data. The Office for Civil Rights will also work with the participating agencies to ensure that privacy protections are in place.

Note that the budget proposal includes numerous other proposals impacting programs and operations throughout the HHS agencies.

OIG Reviews Oversight of Compounded Pharmaceuticals Used in Hospitals

The OIG has issued another report examining the safety of compounded sterile preparations (CSPs) used in hospitals, in response to a 2012 meningitis outbreak caused by contaminated injections. This report, "Medicare’s Oversight of Compounded Pharmaceuticals Used in Hospitals," assesses the extent to which Medicare's oversight of hospitals addresses 55 practices for CSP oversight in acute-care hospitals recommended by various expert guidelines. While CMS and the four CMS-approved hospital accreditors addressed most of the recommended CSP-related practices at least some of the time, the OIG identified certain gaps, particularly with regard to review of hospital contracts with stand-alone compounding pharmacies. The OIG also questioned the human capital available by oversight entities to thoroughly review hospitals' preparation and use of CSPs, and the adequacy of surveyor training related to compounding. The OIG recommends that CMS: (1) ensure that hospital surveyors receive training on standards from nationally recognized organizations related to safe compounding practices; and (2) amend its interpretive guidelines to address hospitals' contracts with standalone compounding pharmacies. CMS concurred with the recommendations.

GAO Examines Geographic Variation in Private Payer Spending on High-Cost Procedures

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. 

OIG Examines CMS Payments to Hospitals for Clinic Visits

The HHS Office of Inspector General (OIG) estimates that CMS made $4.6 million in incorrect Medicare outpatient payments to hospitals for established patients’ clinic visits in 2012. According to the OIG, hospitals attributed the incorrect payments to staff making clerical and programing errors, not verifying whether the patient was registered as an inpatient or outpatient of the hospital within the past 3 years (and thus considered an established rather than new patient), not following hospital procedures, not fully understanding Medicare billing requirements for clinic visits, and relying on the code that the treating physician billed for that visit. The OIG also observes that CMS does not have edits in place to identify Medicare payments for patients who were already registered at a facility. The OIG recommends that CMS work with its Medicare administrative contractors to recover identified incorrect payments and resolve additional potential overpayments to the extent feasible. For more information, see the full report, “CMS Did Not Always Correctly Make Clinic Visit Payments to Hospitals During Calendar Year 2012.” 

OIG Questions Potentially Duplicative Hospital Quality Improvement Efforts

The OIG recently issued a report that examined the extent to which Quality Improvement Organizations (QIOs) duplicate other CMS hospital quality improvement efforts, particularly Hospital Engagement Networks (HENs) and the Community-Based Care Transitions Program (CCTP). Based on a questionnaire sent to a random sample of 410 Medicare hospitals, more than half of responding hospitals reported that that they participated with QIOs on quality improvement projects in 2013, but the majority also worked with other federally-funded and non-federally-funded entities on the same topics. The OIG observes that the overlap in the CMS quality improvement efforts raises concerns about duplication of efforts and complicates attributing quality improvements to any one effort. The OIG therefore recommends that CMS: (1) take steps to coordinate and reduce overlap between the QIO program and CMS’s other quality improvement efforts; and (2) determine the relative contribution of each of its quality improvement efforts. CMS concurred with the recommendations, which were set forth in the report, “Quality Improvement Organizations Provide Support to More Than Half of Hospitals but Overlap with Other Quality Improvement Programs.” 

IRS Issues Additional ACA Requirements for Tax-Exempt Hospitals

On December 31, 2014, the IRS published final regulations providing guidance on the community health needs assessment and financial assistance policy requirements for charitable hospitals under the ACA. The regulations address the entities that must meet these requirements, related reporting obligations, and the consequences for failing to satisfy these ACA requirements. The regulations apply to taxable years beginning one year after December 29, 2014.

Extension of Enforcement Moratorium on Rural Hospital Supervision Requirements

On December 4, 2014, President Obama signed into law H.R. 4067, which requires the Secretary of HHS to continue to instruct Medicare contractors not to enforce requirements for direct physician supervision of outpatient therapeutic services in critical access and small rural hospitals through 2014.

CMS Offers Settlement to Acute Care Hospitals, CAHs to Resolve Patient Status Denial Appeals

In an effort to reduce the backlog in Medicare appeals related to certain short-stay hospital claims, CMS is offering an "administrative agreement" providing partial payment to hospitals that drop their appeals. Specifically, CMS would provide a payment equal to 68% of the net payable amount to acute care hospitals or critical access hospitals (CAH) willing to resolve their pending appeals (or waive their right to request an appeal) for inpatient-status claim denials with dates of admissions prior to October 1, 2013, and where the patient was not a Part C enrollee. Such denials involve services that may have been reasonable and necessary, but the contractor contends that treatment on an inpatient basis was not. A hospital may not choose to settle some claims and continue to appeal others, and certain hospitals could be excluded from participating in the settlement based on pending False Claims Act investigations. Also note that PPS-excluded hospitals are not eligible to participate in this program. CMS is encouraging eligible hospitals with such claim denials "to make use of this administrative agreement to alleviate the burden of current appeals on both the hospital and Medicare system." Hospitals should send their request for agreement by October 31, 2014 or request an extension from CMS. CMS is hosting a national provider call on September 9, 2014 to discuss the settlement process.

CMS Finalizes Medicare IPPS/LTCH PPS Update for FY 2015

On August 22, 2014, CMS is publishing a final rule to update the Medicare acute hospital inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) for fiscal year (FY) 2015, which begins October 1, 2014.  The following are highlights of the sweeping regulations.

With regard to the IPPS, the final rule provides for a 1.4% operating payment rate update for hospitals that submit quality data and are meaningful Electronic Health Record (EHR) users. This update reflects a 2.9% market basket update, adjusted by a -0.5 percentage point multi-factor productivity (MFP) cut and an additional -0.2 percentage point cut (both mandated by the Affordable Care Act), with an additional -0.8 percentage point documentation and coding recoupment adjustment. Despite the positive operating rate update, total IPPS payments (capital and operating payments) are projected to decrease by about $756 million in FY 2015 as a result of reductions under the Hospital Readmissions Reduction Program, the Hospital Acquired Condition (HAC) Reduction Program, Medicare disproportionate share hospital (DSH) payment changes, and other policy changes. Moreover, CMS is revising the labor market areas used in the wage index, but adopting a 1-year transition policy for FY 2015 to mitigate potential negative payment impacts.

The rule makes numerous changes to hospital quality programs, including updating measures aligning certain reporting requirements in both the EHR Incentive Program and the Hospital Inpatient Quality Reporting Program. In addition, the rule modifies the Hospital Value-Based Purchasing Program to increase the applicable percent reduction (the portion of Medicare payments available to fund incentive payments under the program) to 1.5% of the base operating DRG payment amounts to all participating hospitals, which will generate approximately $1.4 billion for value-based incentive payments in FY 2015. In addition, the rule increases the maximum reduction in payments under the Hospital Readmissions Reduction program from 2% to 3%. The rule also implements the ACA HAC Reduction Program, which will reduce by 1% Medicare inpatient payments to hospitals with the highest rates of certain conditions that are reasonably preventable when those conditions are acquired after the beneficiary has been admitted to the hospital for a different condition.

Other IPPS policies in the rule address, among other things, the low-volume hospital payment adjustment and the Medicare Dependent Hospital program, graduate medical education funding, and critical access hospital payments. CMS also reminds hospitals of their statutory obligation to establish and make public a list of its standard charges for items and services.

With regard to the LTCH PPS, CMS estimates that estimated payments per discharge will rise by 0.8% in FY 2015, and total payments will increase by 1.1%, or approximately $62 million. This increase is attributable to several factors, including a 2.2% rate update, which is based on a market basket update of 2.9% adjusted by a -0.5 percentage point MPF adjustment and an additional adjustment of -0.2 percentage points. CMS is also applying a “one-time” prospective budget neutrality adjustment to standard federal rate of approximately -1.3% under the last year of a three-year phase-in. For 2015, the standard federal rate will be $40,240.51 (compared to the FY 2014 rate of $40,607.31), and the fixed-loss amount for high cost outlier cases will be $14,972 (compared to the FY 2014 amount of $13,314). Note that LTCHs are subject to a 2.0 percentage point reduction for failure to submit required quality data for FY 2015.

The final rule also eliminates the 5 percent readmissions policy for LTCH patients discharged on or after October 1, 2014. Under this policy readmissions from co-located providers in excess of 5 percent are paid a single LTCH payment instead of separate admission and readmission payments. CMS indicated that this policy is not needed in light of recent statutory changes establishing clinical criteria for standard LTCH-PPS payments that will be implemented for discharges beginning on or after October 1, 2015. CMS did not finalize an earlier proposal to change the fixed-day threshold under the LTCH PPS greater than 3-day interrupted stay policy.

Separately, CMS has published corrections to the August 19, 2013 FY 2014 IPPS/LTCH final rule to restore regulatory text related to the administration of pneumococcal vaccines that had been inadvertently removed.

Two Health Policy Laws Enacted, Additional Bills Advance

On August 8, 2014, President Obama signed into law the following two bills approved by the Senate in July:

  • H.R. 4631, the Autism CARES Act, to continue federal research, early identification and intervention, and education related to autism; and
  • H.R. 3548, the Improving Trauma Care Act, to include in the Public Health Service Act definition of trauma injuries caused by thermal, electrical, chemical, or radioactive force.

In addition, prior to beginning the August recess, the House of Representatives approved the following bills:

  • H.R. 4250, the Sunscreen Innovation Act, which is intended to establish a more efficient FDA review process for new sunscreen ingredients; 
  • H.R. 594, the Paul D. Wellstone Muscular Dystrophy Community Assistance, Research and Education Amendments of 2014; and
  • H.R. 4709, the Ensuring Patient Access and Effective Drug Enforcement Act, which would amend the Controlled Substances Act to improve enforcement efforts related to prescription drug diversion and abuse while ensuring patient access to necessary medications.

The House Energy and Commerce Committee also voted in favor of the following legislation:

  • H.R. 4701, the Lyme and Tick-borne Diseases Act of 2014, which would convene working groups to focus on vector-borne disease and develop strategic plans for prevention and treatment.
  •  H.R. 3522, the Employee Health Care Protection Act, which would allow health insurance issuers to continue to offer non-ACA compliant group coverage that was in effect during 2013.
  • H.R. 4067, which would continue to delay for the remainder of 2014 the enforcement instruction regarding supervision requirements for outpatient therapeutic services offered in critical access and small rural hospitals.
  • H.R. 5214, a bill to require the HHS Secretary to make recommendations for the development and use of clinical data registries for the improvement of patient care.

Sunshine Act Open Payments System Review/Dispute Process Underway

CMS has made a series of announcements related to the Sunshine Act Open Payments system, including information about the Open Payments review, dispute and correction process that runs from July 14 through August 27, 2014. This period allows physicians and teaching hospitals to review and initiate any disputes they may have regarding the data reported about them by applicable manufacturers and applicable group purchasing organizations. CMS has also extensively updated the Open Payments User Guide, which is intended to provide industry, physicians, and teaching hospitals with a comprehensive understanding of the Open Payments system and reporting requirements.

CMS Plans Medicare Quality "Star" Ratings for Hospitals, Dialysis Facilities, Home Health

On June 18, 2014, CMS announced in a blog posting that it is planning to add a “Five Star” quality rating system to the Hospital Compare, Dialysis Facility Compare, and Home Health Compare websites on Medicare.gov. The agency will start making the new quality ratings available later this year and into early 2015. CMS already maintains star ratings on its Nursing Home Compare and Physician Compare sites.

CMS Releases Updated Hospital Charge Data, New Chronic Conditions & Geographic Variations Files

Earlier this month, CMS released its first annual update to its Medicare inpatient and outpatient hospital charge databases. Specifically, the updated CMS databases include information on 2012 average hospital charges for the 100 most common Medicare inpatient services and 30 most common Medicare outpatient services. The database now includes two years of data, allowing researchers to begin to look at trends. CMS also has released a variety of information on chronic conditions among Medicare fee-for-service (FFS) beneficiaries, including data on prevalence, utilization, and Medicare spending. In addition, the CMS Geographic Variation Dashboards present Medicare FFS per-capita spending at the state and county levels in interactive formats, and a CMS Research Cohort Estimate Tool is intended to help researchers and other stakeholders estimate the number of Medicare beneficiaries with certain demographic profiles or health conditions.

Medicare Payment Adjustments for Low-Volume Hospitals and Medicare-Dependent Hospitals

On June 17, 2014, the Centers for Medicare & Medicaid Services (CMS) published a notice making changes to the Medicare payment adjustment for low-volume hospitals and to the Medicare-dependent hospital (MDH) program under the inpatient prospective payment system (IPPS). The adjustments, which were mandated by the Protecting Access to Medicare Act of 2014, apply to the second half of fiscal year (FY) 2014, or April 1, 2014 through September 30, 2014. The payment adjustments are expected to increase overall IPPS payments in FY 2014 by $227 million (an additional 0.24%) compared to the previous estimate of FY 2014 payments to all IPPS hospitals published in the IPPS final rule for FY 2014. Specifically, CMS estimates that approximately 600 hospitals qualifying as low-volume hospitals through September 30, 2014 will experience an increase in payments of approximately $161 million compared to CMS’s earlier estimate in the FY 2014 IPPS final rule, and 118 MDHs will experience an overall increase of approximately $66 million compared to CMS’s estimate in the final IPPS rule.

CMS Adopts Final Rule to Reduce Provider Regulatory Burdens

On May 12, 2014, the Centers for Medicare & Medicaid Services (CMS) published a final rule that reforms federal health policy regulations that CMS has identified as unnecessary, obsolete, or excessively burdensome on health care providers and suppliers. The rule also is intended to eliminate or reduce requirements that impede quality patient care or that divert resources away from providing high quality patient care. CMS estimates that the rule will result in annual recurring savings of about $660 million, plus a $22 million one-time savings to long-term care facilities from a sprinkler deadline extension. Highlights of the wide-ranging rule include the following:

  • Two provisions of the rule address imaging services offered in ambulatory surgical centers (ASCs) and hospitals. First, CMS is reducing the requirements that ASCs must meet in order to provide radiological services to patients. Under the new rule radiology services performed as an integral part of surgical procedures in a ASCs are no longer required to be supervised by a radiologist. Instead, the ASC’s governing body must appoint an individual qualified in accordance with state law and the ASC’s policies who is responsible for assuring that all radiologic services are provided in accordance with the ASC Conditions of Coverage. Second, CMS is modifying hospital requirements for in-house preparation of radiopharmaceutical to remove the “direct” supervision requirement; that is, while the preparation remains under the general supervision of a pharmacist, doctor of medicine, or doctor of osteopathy, their physical presence will no longer be required during the delivery of off-hour nuclear medicine tests.
  • CMS is permitting qualified dietitians and qualified nutrition professionals to order patient diets under the hospital conditions of participation.
  • The rule eliminates a requirement that critical access hospitals (CAHs), rural health clinics, and federally qualified health centers (FQHC) have a physician on site at least once in every two-week period. It also eliminates the requirement that a CAH develop its patient care policies with the advice of at least one member who is not a member of the CAH staff.
  • Under the rule, long-term care facilities may apply for an extension of the August 13, 2013 deadline for installing automatic sprinkler systems.
  • The rule removes a redundant transplant center data submission requirement. In addition, the rule eliminates an automatic re-approval survey requirement for transplant programs, which CMS states will allow the agency to better focus survey activities.
  • CMS makes a number of clarifications pertaining to CMS regulations governing proficiency testing (PT) referrals under the Clinical Laboratory Improvement Amendments (CLIA) of 1988, including establishing policies under which certain PT referrals by laboratories would not generally be subject to revocation of a CLIA certificate, clarifying the restriction on referrals of PT samples to other laboratories, and revising the standard for what constitutes an “intentional” referral of PT samples.
  • Other issues addressed in the rule include, among others, hospital reclassification of swing-bed services, the composition of hospital medical staff and hospital governing bodies, and practitioners permitted to order hospital outpatient services.

House Panel to Examine Medicare Hospital Issues (May 20)

On May 20, the House Ways and Means Health Subcommittee is holding a hearing on current Medicare hospital issues, including the CMS two-midnights policy, short inpatient stays, outpatient observation stays, Recovery Audit Contractor audits, and the appeals backlog.

CMS Proposes Updated Life Safety Code for Health Care Facilities

On April 16, 2014, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule that would amend fire safety standards applicable to the following types of Medicare- and Medicaid-participating health care facilities: hospitals, critical access hospitals, long-term care facilities (skilled nursing facilities, nursing facilities, and distinct part skilled nursing facilities or nursing facilities), intermediate care facilities for individuals with intellectual disabilities, ambulatory surgery centers, hospices that provide inpatient services, religious nonmedical health care institutions, and programs of all-inclusive care for the elderly facilities. As part of the rulemaking, CMS intends to adopt the National Fire Protection Association’s (NFPA) 2012 editions of the Life Safety Code (LSC) and the Health Care Facilities Code (HCFC). CMS notes in a press release that this change “would reduce burden on health care providers, as the 2012 edition of the LSC also is aligned with the international building codes and would make compliance across codes much simpler for Medicare and Medicaid-participating facilities.” Among other things, the LSC requires that all existing high-rise buildings containing health care occupancies be protected throughout by an approved, supervised automatic sprinkler system. CMS estimates the total cost of implementation of the rule will be $119.6 million, although the costs associated with installing sprinklers in high rise health care facilities would be distributed over a 12-year phase-in period. Comments will be accepted until June 16, 2014.

Older Entries

April 28, 2014 — CMS Posts First Medicare Inpatient Psychiatric Facility Quality Data

April 8, 2014 — HHS OIG Identifies "Top 25" Priorities

April 8, 2014 — OIG Faults CMS for Incorrect Medicare Payments for Hospital Clinic Visits

April 8, 2014 — Children's Hospital GME Reauthorization Act Signed

March 20, 2014 — CMS Expands Medicare EHR "Meaningful Use" Hardship Exception to Cover Vendor Issues

March 20, 2014 — CMS Rule Increases FY 2014 Medicare Payments for Low-Volume Hospitals

March 20, 2014 — MACPAC Issues Annual Report to Congress on Medicaid, CHIP Policy

March 20, 2014 — Two-Midnight Inpatient Admissions Policy Guidance

March 5, 2014 — Obama Administration Proposes FY 2015 Budget with Medicare, Medicaid Savings Provisions

March 4, 2014 — OIG Recommends Expanding the Medicare "DRG Window"

March 4, 2014 — CMS Continues to Modify Implementation of 2-Midnight Inpatient Admissions Policy

February 17, 2014 — CMS Seeks New Participants for Bundled Payments for Care Improvement Initiative

February 13, 2014 — CMS Again Extends "Probe & Educate" Phase for 2-Midnight Inpatient Admissions Criteria Implementation; Clarifies Physician Certification Requirements

January 30, 2014 — Advisory Panel Recommends Access Standards for Medical Diagnostic Equipment

January 28, 2014 — CMS Special Open Door Forum on Hospital Inpatient Criteria/2-Midnight Benchmark (Feb. 4)

January 7, 2014 — CMS Proposes Emergency Preparedness Requirements for Medicare/Medicaid Providers

January 7, 2014 — CMS Revises Hospital Equipment Maintenance Requirements

January 7, 2014 — OIG Report Addresses Potential Hospital EHR Technology Vulnerabilities

January 6, 2014 — House Panel to Examine Medicare "Extenders" Policy

January 6, 2014 — CMS Call: 2-Midnight Benchmark for Inpatient Hospital Admissions (Jan. 14)

December 30, 2013 — President Signs 2-Year Funding Bill with Medicare SGR Patch, Sequestration Extension for Medicare Providers

November 25, 2013 — OIG Examines Medicare Acute Hospital Outlier Payments

November 11, 2013 — CMS Call on Inpatient Hospital Admissions 2-Midnight Policy (Nov. 12)

October 30, 2013 — IPPS New Technology Add On Applications for FY 2015 Due November 25

October 30, 2013 — GAO Reports Jump in Medicare EHR Payments

October 30, 2013 — OIG Highlights Volume of Spinal Surgeries Tied to Physician-Owned Distributors (PODs)

October 10, 2013 — CMS Final Rule Refines FY 2014 DSH Payment Calculations

October 10, 2013 — CMS Limits Compliance Reviews under New "2 Midnight" Inpatient Admissions Policy

October 9, 2013 — CMS Corrects FY 2014 Medicare Payment Rules

September 24, 2013 — CMS Call on Two Midnight Benchmark for Inpatient Hospital Admissions (Sept. 26)

September 17, 2013 — CMS Issues Guidance on Admission Order and Certification Requirements for Inpatient Admissions

September 16, 2013 — OIG Report Examines Critical Access Hospital Qualifications

September 3, 2013 — Recent Updates to the Hospital Readmissions Reduction Program

August 28, 2013 — CMS Finalizes FY 2014 Medicare IPPS, LTCH Rates

August 27, 2013 — CMS Issues Final FY 2014 Inpatient Psychiatric Facility PPS Rates

August 27, 2013 — Medicare Billing For Cancelled Elective Surgeries

August 27, 2013 — OIG Questions Hospital Use of Observational Stays

August 27, 2013 — Medicaid Disproportionate Share Hospital Allotments

June 11, 2013 — OIG Reports Review Medicare Hospice Inpatient Care, Hospital Discharges to Hospice Care

June 11, 2013 — CMS Invites Comments on Proposed PPS-Exempt Cancer Hospital Quality Measures

May 14, 2013 — CMS Proposes Medicare IPPS and LTCH PPS Rates/Policies for FY 2014

May 13, 2013 — CMS Proposes Updated FY 2014 Medicare Payments and Other Policies for IRFs

May 13, 2013 — CMS Releases Hospital Charge Data

May 13, 2013 — HHS Releases Enhanced National Standards for Culturally and Linguistically Appropriate Services (CLAS) in Health Care, Highlights Compliance Efforts

April 15, 2013 — IRS Proposes Hospital Community Health Needs Assessment Regulations

March 8, 2013 — National Provider Call: Hospital Value-Based Purchasing FY 2015 Overview (March 14)

January 4, 2013 — Fiscal Cliff Deal Includes Medicare Cuts and Other Health Policy Changes

November 29, 2012 — OIG Finds Overwhelming Hospital Compliance with Present on Admission (POA) Indicator Reporting

October 16, 2012 — GAO Spotlights Top Provider Types for Criminal/Civil Health Fraud

October 16, 2012 — OIG Issues FY 2013 Work Plan

October 10, 2012 — IRS Schedules Hearing on Proposed Rules for Charitable Hospitals (Dec. 5)

September 24, 2012 — CMS Call: Hospital Value-Based Purchasing for FY 2013 (Oct. 4).

August 4, 2012 — CMS Announces August 27, 2012 Start Date for Recovery Audit Prepayment Review Demonstration; Provider Call Scheduled for Aug. 9

July 19, 2012 — CMS Issues Proposed OPPS, ASC Policies for 2013

June 27, 2012 — IRS Proposes ACA Standards for Charitable Hospitals

June 27, 2012 — Health IT Pilot Targets Prescription Drug Abuse

June 27, 2012 — CMS Outlines Conditions for Provider Use of Repackaged Medications

June 22, 2012 — National Provider Call: Hospital Value-Based Purchasing (July 11)

June 18, 2012 — Medicare Payments for Outpatient Services Before/During Inpatient Stay

May 23, 2012 — Hospital Readmissions Reduction Program May Impact Post-Acute Providers

May 14, 2012 — CMS Issues Final Rules to Ease Regulatory Burdens on Hospitals, Other Providers

April 23, 2012 — Patient Safety Events: Common Formats for Reporting, Reporting Challenge Announced

April 23, 2012 — HHS Report On Wage Index Reform

April 23, 2012 — Extension of Hospital Wage Index Reclassifications and Special Exceptions

April 2, 2012 — CMS Initiative Targets Avoidable Nursing Facility Resident Hospitalization

February 14, 2012 — President Obama Proposes FY 2013 Budget

February 13, 2012 — GAO Examines Price Transparency for Implantable Medical Devices

February 10, 2012 — CMS Seeks Comments on Application of EMTALA Rules to Inpatients

February 10, 2012 — IPPS/LTCH FY 2012 Final Rule Corrections

February 10, 2012 — CMS Call on Hospital Value-Based Purchasing Program Performance Reports (Feb. 28)

February 8, 2012 — CMS Call on New Medicare Hospital Spending Per Beneficiary Measure (Feb. 9)

January 25, 2012 — Fall 2011 Regulatory Agenda (Belatedly) Released

January 25, 2012 — CMS Proposes Changes to Medicaid DSH Rules

January 25, 2012 — OIG Reviews Hospital Incident Reporting Systems

January 5, 2012 — CMS Delays Recovery Audit Prepayment Review, Power Mobility Device Prior Authorization Demonstrations

January 4, 2012 — CMS Guidance to Surveyors on ACA Physician-Owned Hospital Provisions

December 1, 2011 — Reed Smith Analysis and Overview of the Medicare Shared Savings Program for Accountable Care Organizations

November 30, 2011 — CMS Renames APC Advisory Panel, Seeks Nominees

November 30, 2011 — New CMS Demonstration Programs Target Medicare Improper Payments

November 29, 2011 — FY 2013 IPPS New Technology Payment Town Hall Meeting (Feb. 14, 2012)

November 22, 2011 — Hospital Value Based Purchasing National Provider Call

November 13, 2011 — OIG Examines Medicare's Response to Hospital Adverse Events

October 28, 2011 — Upcoming MedPAC Meeting (Nov. 3-4)

October 27, 2011 — CMS Call on ICD-10 Implementation Strategies and Planning (Nov. 17)

October 20, 2011 — CMS Releases Final Medicare Shared Savings Program/ACO Rule

September 27, 2011 — OIG Reviews Place-of-Service Coding for Physician Services

September 1, 2011 — HHS Issues Final Plan to Reduce Regulatory Burdens

August 31, 2011 — CMS Seeks Applicants for ACA Bundled Payment Initiative

August 16, 2011 — CMS Issues Final Medicare Inpatient Hospital PPS Rule for FY 2012

August 16, 2011 — OIG Follow-Up Report on Medicaid Hospital Outlier Payments

August 9, 2011 — CMS Call on Medicare and Medicaid EHR Incentive Programs: Understanding Meaningful Use (Aug 18, 2011)

July 18, 2011 — IRS Seeks Comments on ACA Community Health Needs Assessment (CHNA) Requirements for Tax-Exempt Hospitals

July 18, 2011 — Inpatient Hospital PPS, Value-Based Purchasing Program Correction Notices

July 18, 2011 — CMS Announces Updated RAC Recovery Amounts

July 18, 2011 — CMS Demonstration Seeks to Reduce Preventable Hospitalizations of Nursing Facility Residents

July 15, 2011 — CMS Special Open Door Forum on FY 2013 Hospital Value-Based Purchasing Program (July 27)

June 24, 2011 — Upcoming Markup of GME, Autism Policy Legislation

June 14, 2011 — CMS Final Rule on ACA Medicaid Provider-Preventable Condition Policy

May 31, 2011 — Federal Agencies Outline Regulatory Review Plans

May 18, 2011 — CMS Seeks Comments on Advance Payments to ACOs, Announces "Pioneer" ACO Model and ACO Training Sessions