CMS has posted the draft February 2013 FULs and Draft February 2013 Three-Month Rolling Average FULs. CMS will continue to accept comments on the draft average manufacturer price-based FULs and the draft three-month rolling average FULs, along with the methodologies used to calculate them.
On April 2, 2013, CMS published a final rule establishing increased Federal Medical Assistance Percentage (FMAP) rates for certain adult populations under states’ Medicaid programs effective January 1, 2014, as authorized by the Affordable Care Act (ACA). The rule sets forth the method states will use to claim the matching rate that is available for Medicaid expenditures of individuals with incomes up to 133% of the federal poverty level and who are defined as “newly eligible” and are enrolled in the new eligibility group. Under the rule, the federal government will pay 100% percent of the cost of this newly eligible adult population through 2016, and this rate will be phased down to a permanent 90% matching rate by 2020. The rule also describes a temporary general increase in FMAP rates for certain expansion states that meet required statutory criteria. The rule is effective June 3, 2013. Comments will be accepted until June 3, 2013 on a limited number of provisions of the rule, including the threshold methodology states will be required to use to document claims for the increased FMAP rate.
The OIG has released its Medicaid Integrity Program Report for FY 2012, which provides information on the OIG's Medicaid program integrity funding, summarizes significant OIG Medicaid-related reviews and investigations, and highlights Medicaid-related projects included in the OIG’s Work Plan for FY 2013.
The Medicaid and CHIP Payment and Access Commission (MACPAC) has released its “March 2013 Report to the Congress on Medicaid and CHIP,” including both policy recommendations and data updates. The policy recommendations address implementation of ACA provisions designed to expand health insurance coverage. First, MACPAC recommends that Congress create a statutory option for states to implement 12-month continuous eligibility for children enrolled in CHIP and adults enrolled in Medicaid, in conformance with policies in effect for children in Medicaid (the report notes that the option will otherwise be removed under new income-counting eligibility standards). Second, MACPAC recommends that Congress permanently fund Transitional Medical Assistance (TMA), while allowing states to opt out of the program if they expand to the new adult group added by the ACA. The report also includes a discussion of various policy issues involving the dually eligible Medicare and Medicaid population, and it provides an update to its MACStats data supplement.
On January 22, 2013, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule designed to provide states with additional flexibility in administering their Medicaid, Children’s Health Insurance Program (CHIP), and Affordable Care Act (ACA) Exchange programs. Among many other things, the rule would enhance the ability of states to coordinate eligibility determinations, appeals processes, beneficiary notifications, and other related administrative procedures for these health programs. The proposed rule also would give states more options with regard to benefits, through policies on the use of benchmark and benchmark-equivalent plans (now known as Alternative Benefit Plans) for newly-eligible low-income adults, and the relationship between Alternative Benefit Plans and Essential Health Benefits under the ACA. In addition, CMS proposes a series of changes to Medicaid premium and cost-sharing requirements to enhance state flexibility, including updating maximum allowable cost-sharing levels and consolidating and streamlining all Medicaid premium and cost sharing rules. The proposed rule also would allow states to establish higher cost sharing for non-preferred drugs and for non-emergency use of emergency departments. The rule also addresses a number of other related policies, including: streamlining eligibility categories; simplifying the citizenship documentation process; and establishing procedures for Exchanges to verify access to employer-sponsored coverage. Note that while the proposed rule states that comments are due February 13, 2013, CMS subsequently issued a correction notice extending the comment period until February 21, 2013.
The OIG has reviewed the extent to which states have improved collection of third-party liability (TPL) payments in situations where Medicaid beneficiaries have additional sources of health insurance that are responsible for payment. According to the OIG report, Medicaid Third-Party Liability Savings Increased, But Challenges Remain, states reported that TPL savings increased from almost $34 billion in 2001 to more than $72 billion in 2011. Nevertheless, states generally were not able to recover all of third-party obligations, leaving an estimated $4 billion at risk of not being recovered. The OIG recommends that CMS: work with states to address longstanding challenges related to identification of insurance coverage and recovery of payments; address states' challenges with 1-year timely filing limits for Medicare and TRICARE; and strengthen enforcement mechanisms designed to deal with uncooperative third parties. CMS concurred with the recommendations.
CMS has posted the September 2012 draft average manufacturer price (AMP)-based Medicaid federal upper limit (FUL) files, along with updated three-month rolling average FUL file consisting of the weighted average of the current and two previous monthly draft AMP-based FULs. CMS continues to accept comments on the monthly and three-month rolling average draft AMP-based FULs and the methodologies used to calculate them.
A recent GAO report, “Medicaid Integrity Program: CMS Should Take Steps to Eliminate Duplication and Improve Efficiency,” points to a number of shortcomings in CMS Medicaid program integrity efforts. Among other things, the GAO found that Medicaid Integrity Group's (MIG) oversight and support activities had mixed results in achieving the goal of enhancing program integrity efforts. Moreover, the MIG’s hiring of separate review and audit contractors for its National Medicaid Audit Program was inefficient and duplicative. The GAO recommends that CMS: eliminate duplication by merging contractor functions, use comprehensive reviews to better target audits; work with states to ensure reliable reporting of their program integrity recoveries; discontinue state program integrity assessments that overlap other, more current data sources; and reevaluate its return on investment methodology.
The Health Information Technology for Economic and Clinical Health (HITECH) Act provided funding to promote the adoption and meaningful use of certified EHR technology, including a Medicaid EHR program. In 2011, the first year of the Medicaid EHR program, 1,964 hospitals and 45,962 professionals were awarded a total of approximately $2.7 billion in Medicaid EHR incentive payments, according to a GAO report describing the characteristics of providers that participated in the program in 2011. Hospitals claimed $1.7 billion in these Medicaid EHR incentive payments, with a median payment amount of $613,512. Almost half of the hospitals (46%) receiving payments were located in the south, while the smallest proportion (15%) were located in the northeast. Also among hospitals receiving payments, 62% were located in urban areas, 80% were acute care hospitals, 57% percent were nonprofits, and 57% were not members of a chain, while hospitals with the highest number of total beds were twice as likely to receive an incentive payment than those with the fewest number of beds. With regard to professionals, who were awarded a total of $967 million in incentive payments, more than three times as many eligible professionals participated in the Medicaid EHR program than in the Medicare EHR program. The largest proportion of professionals who received a Medicaid EHR incentive payment for 2011 were in the south (37%), compared to 20% in the midwest. As with hospitals, most professionals receiving EHR incentive payments (83%) were located in urban areas. Additional details can be found in the full report, “Electronic Health Records: Number and Characteristics of Providers Awarded Medicaid Incentive Payments for 2011."
On December 10, 2012, CMS issued guidance to states on state-based and federally-facilitated Affordable Insurance Exchanges, market reforms and Medicaid. The frequently-asked questions document is available here.
The OIG’s December 2012 Compendium of Unimplemented Recommendations highlights unimplemented OIG recommendations that the OIG believes represent significant opportunities for action in FY 2013. The report includes recommendations made through FY 2011 that were not fully implemented as of December 2012. The OIG’s priority open recommendations, which in the OIG’s view represent the most significant opportunities to positively impact HHS’s programs, include the following:
- Medicare Parts A and B: Eliminate or reduce Medicare payments for hospital bad debts; adjust global surgery fees to reflect the number of evaluation and management services actually being provided by physicians; reduce the rental period for Medicare home oxygen equipment; ensure that hospice claims for beneficiaries in nursing homes comply with Medicare coverage requirements; implement unannounced site visits and other actions to prevent improper payments to independent diagnostic testing facilities; and ensure that claims for lower limb prostheses meet requirements.
- Medicare Part C/Medicare Advantage (MA): Modify payments to MA organizations; and MA aggressive marketing/ensure that new enrollees understand plan rules.
- Medicare Part D Prescription Drug Benefit: Develop a comprehensive safeguard strategy for overseeing Part D prescription drug plans; ensure the accuracy of sponsors’ cost estimates in Part D bids; ensure the validity of prescriber identifiers on claims; and ensure that Part D sponsors have information needed to make accurate coverage and reimbursement determinations for atypical antipsychotic drugs.
- Medicaid Reviews: Develop national pharmacy acquisition cost data as a benchmark for reimbursing prescription drugs; establish a connection between the calculations of Medicaid drug reimbursements and rebates; extend the additional rebate payment provisions for brand-name drugs to generic drugs; limit Medicaid payments to costs and require that payments returned by public providers be used to offset the federal share; and improve Medicaid children’s utilization of preventive screening services.
- Public Health Reviews: Centers for Disease Control and Prevention/improve states’ and localities’ medical surge preparedness for pandemics; FDA/ensure that clinical investigators disclose all financial interests; FDA/improve and strengthen food facilities’ compliance with records requirements for traceability of food products; Indian Health Service/reduce overpayments for contract health services hospital claims and cap payments for nonhospital services at Medicare rates; and National Institutes of Health (NIH)/Require NIH grantee institutions to identify, report, and address institutional financial conflicts of interest.
On December 13, 2012, the Senate Finance Committee held a hearing to focus on improving care for beneficiaries dually eligible for Medicare and Medicaid. In addition, the House Energy and Commerce Subcommittee held a hearing entitled "State of Uncertainty: Implementation of Patient Protection and Affordable Care Act Exchanges and Medicaid Expansion." On December 20, 2012, the Senate Judiciary Committee was scheduled to consider S. 1560, the Nursing Home Resident Pain Relief Act of 2011, which would make amendments to the Controlled Substances Act that are intended to help ensure that nursing home residents have timely access to pain medication in emergency situations. Note that the markup has been postponed and not rescheduled at this time.
On December 13, 2012, the House Energy and Commerce Health Subcommittee is holding a hearing entitled “State of Uncertainty: Implementation of PPACA's Exchanges and Medicaid Expansion." The hearing announcement states that “With less than 13 months until implementation, the committee intends to press the administration to finally respond to the numerous critical questions that remain unanswered nearly 1,000 days since enactment of the health care law.”
HHS Proposes Standards for Essential Health Benefits, Actuarial Value, and Accreditation under the ACA
The Department of Health and Human Services (HHS) has published a major proposed rule that would, among other things, implement key provisions of the Affordable Care Act (ACA) related to essential health benefits (EHBs), calculation of actuarial value (AV), and accreditation standards. By way of background, the ACA requires health plans offered in the individual and small group markets -- in and out of new Affordable Insurance Exchanges (Exchanges) -- to offer a core package of “essential health benefits.” The EHB package must include items and services in at least the following 10 broad categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services (including behavioral health treatment); prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services (including oral and vision care). EHB must be comparable to benefits offered by a “typical employer plan.” HHS proposes in a November 26, 2012 proposed rule that EHB be defined based on a state-specific benchmark plan, with several options for selection of a benchmark plan set forth in the proposed rule. All plans that cover EHB would be required to offer benefits that are substantially equal to the benefits offered by the benchmark plan. The proposed rule includes a framework for supplementing the benchmark plan if it is missing any of the 10 statutory benefit categories, and it includes safeguards to prevent benefit designs that could discriminate against certain enrollees. HHS also proposes a specific standard for prescription drug coverage that is broader than the potential approach set forth in HHS’s December 16, 2011 “EHB Bulletin.” In the EHB Bulletin, HHS indicated it would require insurance issuers to cover at least one drug in each United States Pharmacopeia (USP) category and class in which the EHB-benchmark plan covered at least one drug. In response to concerns raised about the comprehensiveness of this coverage, the proposed rule would provide that, to meet the EHB standard, a plan would need to cover at least the greater of: (1) one drug in every category and class; or (2) the same number of drugs in each category and class as the EHB-benchmark plan.
The proposed rule also discusses how AV will be calculated under the ACA to facilitate consumer comparisons of plans with similar levels of coverage. The AVs vary by “metal level” – 60% for a bronze plan, 70% for a silver plan, 80% for a gold plan, and 90% for a platinum plan (with special standards for catastrophic-only coverage). To provide flexibility in meeting the metal levels, HHS proposes to allow a plan to qualify for a particular metal level if its AV is within 2 percentage points of the standard. In addition, the proposed rule includes a timeline for when issuers offering coverage in Exchanges must become accredited and an application process for accrediting entities seeking to be recognized to accredit issuers offering coverage in any Exchange. Comments on the proposed rule will be accepted until December 26, 2012. HHS also released guidance to state Medicaid programs on how existing private plans in Medicaid will have to meet the EHB standards.
The OIG has released what it dubs a “Portfolio Report” entitled “Personal Care Services: Trends, Vulnerabilities, and Recommendations for Improvement.” The report synthesizes the OIG’s previous work on this topic and offers new recommendations to address vulnerabilities associated with personal care services. A related podcast and OIG web site “spotlight” page on Medicaid personal care services also have been posted on the OIG web page.
CMS has developed a web page for information on the use of Medicaid data in the ACA Branded Prescription Drug Fee Program. By way of background, under the ACA, the Secretary of the Treasury determines the amount of the fee to be paid by each manufacturer according to the manufacturer’s share of branded prescription drug sales to specified government programs, including Medicaid. The CMS web page describes how CMS calculates Medicaid sales for reporting to the Treasury Department, and how manufacturers can dispute state utilization data prior to calculation of the sales fee, including tips for manufacturers to submit complete and responsive data in connection with a dispute.
On November 6, 2012, CMS published a final rule implementing an ACA provision requiring states to reimburse certain primary care physicians in CYs 2013 and 2014 at rates not less than the applicable Medicare rates. This minimum payment level applies to specified primary care services furnished by a physician with a specialty designation of family medicine, general internal medicine, or pediatric medicine, and it also applies to services rendered by these providers under Medicaid managed care plans. CMS will provide 100% federal matching funds for the difference in payment between the applicable Medicare payment and the Medicaid rate in effect as of July 1, 2009. The final rule specifies which services and types of physicians qualify for the minimum payment level, and the method for calculating the payment amount and any increase for which increased federal funding is due. The final rule also updates the interim regional maximum fees that providers may charge for the administration of pediatric vaccines to federally vaccine-eligible children under the Vaccines for Children program. CMS estimates that in CY 2013, the federal cost of the rule will be approximately $5.835 billion with $235 million in state savings, while in CY 2014, the federal cost will be approximately $6.055 billion with $310 million in state savings.
The Medicaid and CHIP Payment and Access Commission (MACPAC) is meeting November 15, 2012 to discuss a variety of Medicaid policy issues, including: health care delivery system issues for Medicaid beneficiaries with disabilities; Medicaid primary care physician payments; Medicaid/CHIP Exchange interactions; the Medicaid/Medicare dually eligible population; and state Medicaid payment policies for Medicare cost sharing.
The OIG has issued a report on Medicaid pharmacy reimbursement that compares FUL amounts based on published prices to FUL amounts based on AMP and pharmacy acquisition costs. According to the OIG, FUL amounts based on published prices (from the fourth-quarter 2011 Redbook file) were more than four times greater than sampled pharmacy acquisition costs. Moreover, FUL amounts based on AMPs were 61 percent lower than FUL amounts based on published prices, at the median, but still exceeded sampled pharmacy acquisition costs by 43 percent in the aggregate. Notably, however, the study was subject to a number of limitations, including use of AMP-based FULs that have not been published by CMS (data for November 2010 was used, whereas CMS began releasing draft FULs in September 2011). While CMS has been issuing draft AMP-based FUL amounts for review and comment, the OIG recommends that CMS complete implementation of AMP-based FUL amounts, in conformance with the ACA. CMS concurred, and stated that it plans to implement FUL amounts based on AMPs “in the near future.”