The Government Accountability Office (GAO) has released a report entitled “Medicaid: CMS Oversight of Provider Payments Is Hampered by Limited Data and Unclear Policy.” The report examines how state Medicaid payments to government hospitals compare to those made to private hospitals in selected states (Illinois, New York, and California) and CMS oversight of such payments. Because states receive federal matching funds for their payments to health providers, the GAO observes that states “may have incentives to make excessive Medicaid payments to certain institutional providers such as hospitals operated by local governments.” The GAO notes that its assessment was hampered by inaccurate and incomplete data on payments. For example, the GAO notes that large supplemental payments states often make to hospitals are not reported by the hospital. While some of the available data was inconclusive, the GAO believes that a small number of government hospitals it identified as receiving high payments warrants oversight. With regard to CMS oversight, the GAO observes that CMS has insufficient information on payments, lacks a policy and process for assessing payments to individual providers, and lacks a policy and standard process for determining whether Medicaid payments to individual providers are economical and efficient. The GAO recommends that CMS take steps to ensure states report provider-specific payment data, establish criteria for assessing payments to individual providers, develop a process to identify and review payments to individual providers, and expedite review of the appropriateness of New York's hospital payments. HHS concurred with the recommendations.
A recent GAO report examined expenditure authorities in “section 1115” demonstrations approved by HHS between June 2012 and October 2013. Section 1115 of the Social Security Act gives HHS broad authority to approve “expenditure authorities” that allow states to receive federal funds for costs that would not otherwise be matchable under Medicaid if the Secretary believes the authorities are likely to promote Medicaid objectives. In FY 2014, section 1115 demonstrations accounted for almost one-third of total Medicaid expenditures. The GAO is concerned, however, that HHS has not issued specific criteria for making such determinations, and HHS approval documents are not always clear as to precisely what approved expenditures are for and how they will promote Medicaid objectives. In the absence of clear criteria and documentation, the GAO warns that “the bases for HHS’s decisions involving tens of billions of Medicaid dollars are not transparent to Congress, states, or the public.” The GAO therefore recommends that HHS issue criteria for assessing whether expenditure authorities are likely to promote Medicaid objectives and document the use of these criteria in HHS’s approvals of demonstrations.
CMS Proposes Mental Health Parity Rules for Medicaid Managed Care/Alternative Benefit Plans, CHIP Coverage
CMS has published a proposed rule that would apply provisions of the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) to Medicaid beneficiaries who receive services through managed care organizations or alternative benefit plans and to the Children’s Health Insurance Program (CHIP). In general, such programs will be required to meet the mental health and substance use disorder benefits parity requirements regarding financial and quantitative and nonquantitative treatment limitations consistent with regulation applicable to private insurers. CMS also proposes to require such plans to make available upon request to beneficiaries and contracting providers the criteria for medical necessity determinations with respect to mental health and substance use disorder benefits. The proposed rule also would require the state to make available to the enrollee the reason for any denial of reimbursement or payment for services with respect to mental health and substance use disorder benefits. The proposed rule was published on April 10, 2015, and comments are due by June 9, 2015.
On April 16, 2015, CMS published a proposed rule that would revise the definition of Medicaid mechanized claims processing and information retrieval systems to include Medicaid eligibility and enrollment (E&E) systems, which would make enhanced federal financial participation (FFP) available for such systems on an ongoing basis (current regulatory authority for such enhanced funding expired December 31, 2015). The proposed rule would set forth standards and conditions for qualifying for this enhanced funding. According to CMS, the proposed rule “would allow states to improve customer service and support the dynamic nature of Medicaid eligibility, enrollment, and delivery systems.” CMS will accept comments on the proposed rule through. June 15, 2015.
President Obama Signs MACRA: Permanently Reforms Medicare Physician Reimbursement Framework, Includes Other Health Policy Provisions
On April 16, 2015, President Obama signed into law H.R. 2, the “Medicare Access and CHIP Reauthorization Act of 2015” (MACRA), which reforms Medicare payment policy for physician services and adopts a series of policy changes affecting a wide range of providers and suppliers.
Most notably, MACRA permanently repeals the statutory Sustainable Growth Rate (SGR) formula, achieving a goal that has eluded Congress for years. This step overrides a 21.2 percent across-the-board cut in Medicare physician payments that briefly took effect April 1, 2015, and ends a long cycle of Medicare physician fee schedule (MPFS) cuts being triggered automatically and Congress then responding with temporary patches. Instead, after a period of stable payment updates, MACRA will link physician payment updates to quality, value measurements, and participation in alternative payment models. MACRA also extends certain expiring Medicare and other health policy provisions, including a two-year extension of the Children’s Health Insurance Program (CHIP).
To finance these provisions, MACRA reduces market basket updates for post-acute care providers, revises inpatient hospital payment rate updates, restructures Medicaid disproportionate share hospital (DSH) reductions, imposes additional income-related adjustments for Medicare Part B and Part D premiums, and bars first-dollar Medigap coverage policies. Finally, MACRA includes a number of policy provisions, including: new program integrity policies; a binding bid requirement under the durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program; an additional delay in enforcement of the “two midnight” hospital inpatient status policy; and revisions to payment for global surgical packages.
This Client Alert summarizes the major Medicare and Medicaid provisions of MACRA, focusing on those provisions we believe to be of most interest to our clients. We would be pleased to provide additional details upon request.
To read the full Client Alert, click here.
The HHS Office of Inspector General (OIG) has released detailed statistical data on MFCU enforcement actions, recoveries, and expenditures for fiscal year 2014. Overall, state MFCUs reported more than $2 billion in criminal and civil recoveries (settlements, judgments, or prefiling settlements) in FY 2014, more than $1.7 billion of which were civil recoveries. The states also had a total of 16,464 open fraud or abuse/neglect investigations at the end of FY 2014, and they reported 1,318 convictions and 874 civil settlements and judgments during the year. State-specific data also is available in interactive map form.
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.
The OIG has issued a report entitled “Access to Care: Provider Availability in Medicaid Managed Care,” which found that more than half of Medicaid managed care providers could not offer appointments to Medicaid enrollees, and one third could not be found at the location listed by the plan. The OIG observed that there could be long waits for appointments at those providers who offered appointments; while the median wait time was two weeks, 10% had wait times longer than two months. Primary care providers were less likely to offer an appointment than specialists, but specialists tended to have longer wait times. The OIG notes that access to care has taken on heightened importance as enrollment grows in Medicaid managed care programs. The OIG therefore urged CMS to work with states to (1) assess the number of providers offering appointments and improve the accuracy of plan information, (2) ensure that plans' networks are adequate, and (3) ensure that plans are complying with existing state standards and assess whether additional standards are needed. CMS concurred.
The OIG has issued a report evaluating state standards for access to care for Medicaid managed care program enrollees, an issue which the OIG notes has taken on heightened importance as enrollment in such programs grows. Based on a review of the 33 states with comprehensive, "full risk" Medicaid managed care, the OIG concluded that state standards for access to care vary widely. For example, state standards for primary care providers range from one primary care provider for every 100 enrollees to one provider for every 2,500 enrollees. The OIG also pointed out varying state strategies to assess compliance with access standards, and noted that most states did not identify any violations of such standards over a five-year period. The OIG recommend that CMS: (1) strengthen its oversight of state standards, including ensuring that states develop standards for key provider types; (2) strengthen its oversight of states' methods to assess access standard compliance; (3) improve states' efforts to identify and address violations of access standards; and (4) provide technical assistance to states. CMS concurred with the recommendations.
The OIG has created a “Spotlight” page on its internet site focusing on “Medicaid: State Policies that Result in Inflated Federal Costs.” The page compiles OIG reports that highlighted “State policies that distort the cost-sharing arrangement, causing the Federal Government to pay more than its share of Medicaid expenditures.” According to the OIG, such mechanisms do not increase benefits to beneficiaries, but they increase states' funds at the expense of the federal government. The OIG discusses steps that have been taken to close loopholes in this area, but it notes that more work remains. The OIG continues to recommend that CMS seek legislation to strengthen its ability to curb wasteful federal spending stemming from states claiming reimbursement for excessive payments.
CMS Seeks Input on Potential Delivery Innovations in Medicare Part D, Medicare Advantage, & Other Programs
CMS is seeking input on initiatives to test care delivery innovations in the Medicare Part D program, Medicare and Medicaid managed care plans, and other government programs. CMS notes that while “[h]ealth plans increasingly have responded to market developments and fiscal pressures with innovations in care delivery, plan design, beneficiary and provider incentives, and network design,” adoption of such innovations has been more limited in stand-alone Medicare Prescription Drug Plans (PDP), Medicare Advantage (MA) and Medicare Advantage Prescription Drug plans (MA-PD), Medicaid managed care plans, Medigap plans, and Retiree Supplemental health plans. CMS therefore is seeking responses to a request for information (RFI) on potential of models to test innovations in these plans related to: (1) plan design, (2) care delivery, (3) beneficiary and provider incentives; and/or (4) network design.
For instance, with respect to drug plans, CMS is considering a PDP model that will test the impact of “robust medication therapy management programs and cost sharing differentials that effectively target Part D beneficiaries and will better coordinate care, manage health care costs, and improve outcomes.” CMS is likewise exploring potential initiatives to collaborate with Medigap and Retiree Supplemental plans on models to manage the care of complex, high-cost beneficiaries. CMS also may explore innovations in MA and MA-PD health plan design for Medicare beneficiaries, including:
- Value-based insurance design to incentivize beneficiaries with specific health conditions to use high-value health care services and/or providers;
- Inclusion of remote access technologies beyond what is covered by original Medicare; and
- Integration of hospice care benefits concurrently with curative care in the basic benefit package.
CMS points out that testing such models will require collaboration with health plans, states, and other stakeholders. Comments will be accepted on the RFI until November 3, 2014. The RFI does not commit CMS to contracting or making a grant award in this area.
On July 14, 2014, HHS announced a $100 million Medicaid Innovation Accelerator Program to assist state health system reform efforts designed to improve health care while reducing costs. The initiative, which is intended to complement other federal-state delivery system reform efforts, will “help jumpstart innovation” by providing data analytics, quality measurement, and other technical supports, and advancing timely dissemination of best practices among states.
The OIG issued a report today entitled “Inconsistencies in States’ Reporting of the Federal Share of Medicaid Drug Rebates.” States are eligible for higher federal financial participation (FFP) rates for certain Medical Assistance services, such as those related to family planning, Indian Health Services, and breast and cervical cancer care. Based on prior work, the OIG was concerned that states may not always use the higher FFP rates when refunding to the federal government its share of drug rebates that drug manufacturers paid to the states, which could result in a loss of federal share. The new OIG report assesses whether states reported drug rebates at the applicable FFP rates for the period July 1, 2011 through June 30, 2012. According to the OIG, while states claimed drug expenditures at higher FFP rates, they did not consistently report the federal share of drug rebates at those higher FFP rates for one or more quarters during the review period. The OIG also found that states used different methodologies to determine the federal share of drug rebates, which could be attributed to a lack of specific national CMS guidance instructing states to report drug rebates at the FFP rates at which drugs were originally reimbursed or that identifies acceptable methods to determine the federal share of drug rebates. The OIG recommended that CMS issue guidance that clearly instructs states to report drug rebates at the applicable FFP rates and identify acceptable methods to determine the federal share of drug rebates; CMS concurred.
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.
On the heels of its proposed rule to expand its health program exclusion authority, the Office of Inspector General (OIG) of the Department of Health and Human Services has published a proposed rule that would amend the health care program civil monetary penalty (CMP) regulations. The rule would codify the OIG’s expanded statutory authority under the Affordable Care Act to impose CMPs on providers and suppliers and would allow for significant penalties in a variety of scenarios, some of which could extend beyond what is currently permitted.
Reed Smith attorneys have prepared a Client Alert summarizing and analyzing the OIG’s proposed rule, including the various scenarios under which CMPs could be issued under the proposed regulations, such as: failure to report and return an overpayment; failure to grant OIG timely access to records upon request; ordering or prescribing items or services while excluded from a federal health care program, as well as arranging or contracting with an individual or entity who meets this criteria; making false statements or omitting or misrepresenting material facts in an application, bid, or contract; and failing to submit or certify drug-pricing and product information in a timely manner. In addition, the alert covers the changes in technical language proposed by OIG to clarify and more clearly define the scope of CMP regulations.
The Client Alert is available here.
The OIG’s “Medicaid Integrity Program Report for Fiscal Year 2013,” released earlier this month, provides details on funding for the OIG's Medicaid program integrity efforts, summarizes significant OIG Medicaid-related reviews and investigations, highlights Medicaid Fraud Control Unit activities, and notes Medicaid-related projects included in the OIG’s Work Plan for FY 2014.
The OIG has released its Medicaid Fraud Control Units Fiscal Year 2013 Annual Report, which highlights achievements from the investigations and prosecutions conducted by the 50 MFCUs along with related OIG oversight activities. In FY 2013, MFCUs nationwide reported a total of 1,341 criminal convictions in cases involving Medicaid fraud and patient abuse and neglect, and nearly $1 billion in criminal recoveries. Criminal convictions involved a variety of provider types, most notably home health agencies. MFCUs also obtained 879 civil settlements and judgments in FY 2013. Civil recoveries totaled over $1.5 billion, with cases involving a variety of provider types, particularly pharmaceutical companies. More than 1,000 Medicaid providers convicted in MFCU cases were excluded from federal health care programs by the OIG in FY 2013. The OIG notes that a lack of fraud referrals to MFCUs from Medicaid managed care organizations (MCOs) presents challenges, and MCFU officials expressed concern that some MCOs may not have incentive to refer providers suspected of fraud. The OIG also determined that ACA provider payment suspension rules require more coordination between MFCUs and State Medicaid agencies.
On March 14, 2014, the Medicaid and CHIP Payment and Access Commission (MACPAC) recommended that Congress take steps to promote continuity in Medicaid coverage, such as by providing states with an option for 12-month continuous eligibility for adults and extending the current transitional medical assistance program. Among other things, the report also discusses at length the policy implications of Medicaid non-disproportionate share hospital supplemental payments, and calls for additional data collection related to these payments to promote transparency, support program integrity efforts, and facilitate assessments of Medicaid payment adequacy. In addition, the report includes a statistical supplement containing detailed Medicaid data.
On January 16, 2014, CMS published a final rule that implements expanded federal support for HCBS offered as an optional benefit through state Medicaid programs, as authorized by the Affordable Care Act (ACA) and the Deficit Reduction Act. Specifically, the rule establishes eligibility requirements for Medicaid HCBS provided under sections 1915(c), 1915(i), and 1915(k) of the Social Security Act. In a fact sheet accompanying the rule, CMS emphasized the important stakeholder input it received during the rulemaking process, which resulted in CMS “moving away from defining home and community-based settings by ‘what they are not,’ and toward defining them by the nature and quality of individuals’ experiences” (although certain institutional facilities, including nursing facilities, institutions for mental diseases, intermediate care facilities for individuals with intellectual disabilities, and hospitals generally are not considered to meet the definition of a home and community-based setting).
Under the rule, CMS intends to promote access to the most integrated settings that provide alternatives to services provided in institutions, using an “outcome-oriented definition” of HCBS settings instead of one based on location, geography, or physical characteristics. Under the rule, home and community-based settings must: be integrated in and support full access to the greater community; be selected by the individual from among setting options; ensure individual rights of privacy, dignity and respect, and freedom from coercion and restraint; optimize autonomy and independence in making life choices; and facilitate choice regarding services and who provides them. Note that the rule includes additional requirements for provider-owned or controlled home and community-based residential settings, including that the individual has a lease or other legally enforceable agreement, and standards related to the individual’s privacy, control over schedule and visitors, and physical accessibility of the setting.
In addition to defining home and community-based settings, the final rule addresses many other aspects of Medicaid HCBS programs, including requirements that services under section 1915(c) and 1915(i) be established through a person-centered planning process that addresses health and long-term services and support needs in a manner that reflects individual preferences and goals. It also implements new flexibility for states to target services to specific populations and to combine multiple target populations in one waiver, while streamlining waiver administration.
The rule is effective March 17, 2014, but CMS is providing transition periods both for states adopting new programs, and for those states with currently-approved waivers and state plans that may need to develop a plan to bring their program into compliance. The text of the rule is available at , and additional materials are posted at http://www.medicaid.gov/HCBS. CMS also stresses that there will be continued opportunities for stakeholder input as it works with states to implement this final rule.