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.
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.
HHS has published a notice announcing the Federal Medical Assistance Percentages (FMAP), Enhanced Federal Medical Assistance Percentages (eFMAP), and disaster-recovery FMAP adjustments for fiscal year (FY) 2015. The new amounts will be used in the calculation of federal matching for state Medicaid and Children's Health Insurance Program (CHIP) expenditures and other HHS programs, beginning October 1, 2014.
CMS has announced the 2014 application fee for institutional providers that are initially enrolling in the Medicare or Medicaid program or the Children's Health Insurance Program (CHIP); revalidating their Medicare, Medicaid or CHIP enrollment; or adding a new Medicare practice location (unless a hardship exemption applies). The fee for 2014 is $542, up from $532 in 2013. CMS uses a broad definition of institutional entities subject to the application fee; it applies to “any provider or supplier that submits a paper Medicare enrollment application using the CMS-855A, CMS-855B (not including physician and non-physician practitioner organizations), CMS-855S or associated Internet-based PECOS enrollment application,” along with additional categories of Medicaid-only and CHIP-only institutional providers.
CMS has posted a November 22, 2013 letter to state health officials on “Quality Considerations for Medicaid and CHIP Programs,” the fourth in a series of guidance documents intended to assist states with designing and implementing integrated care models, such as medical/health homes, accountable care organizations, and managed care. The latest letter provides a framework for quality improvement and measurement as states develop care payment reforms ranging from risk-based shared savings methodologies to performance-based bonus payments to providers. Specifically, the letter describes: key components of state quality improvement strategies (goals, interventions, metrics, targets, transparency, and feedback); the impact of this framework on CMS policies for payment delivery models and accountability; a description of existing quality measurement and improvement efforts that impact Medicaid and CHIP; an example of a measurement matrix; and a description of alignment with existing quality initiatives and funding to support data infrastructure.
On November 13, 2013, HHS issued its first report on ACA Health Insurance Marketplace/Exchange enrollment statistics. According to the Administration, 106,185 individuals have selected health plans during the first 33 days of the open enrollment period (October 1 through November 2, 2013), although this figure also includes individuals who have not yet purchased a policy and who are technically not yet enrolled in a plan. Note that the majority of the individuals who have selected a plan – almost 75% -- have gone through a state-based marketplace, with fewer than 27,000 individuals selecting a plan through the federally-facilitated marketplace (where HHS is running the marketplace alone or in partnership with the state). State numbers vary significantly, with 35,364 individuals in California selecting a plan through the state-run marketplace (about a third of all insurance selections nationwide for the period), compared to only 42 North Dakota residents selecting a plan through the federal marketplace. An additional 396,261 individuals nationwide have been assessed to be eligible for Medicaid or CHIP, representing 26% of the total applicants for coverage through the marketplaces. HHS also reports high volumes of traffic on marketplace websites and call centers, with almost 25 million unique visitors on marketplace websites and more than 3.1 million calls to state and federal marketplace call centers.
Two recent OIG reports point out the savings that state Medicaid programs could attain if they based reimbursement for DME, prosthetics, orthotics, and supplies (DMEPOS) on Medicare competitive bidding payment amounts – although at least one state is pushing back on this idea. In the first report, “Medicaid DMEPOS Costs May be Exceeding Medicare Costs in Competitive Bidding Areas,” the OIG calculated the potential savings Texas could have achieved in 2011 if it adopted Medicare DMEPOS bidding prices for selected items of DMEPOS. According to the OIG, Texas Medicaid fee-schedule could have saved approximately $2 million (state/federal shares combined) in the Dallas/Fort Worth area if it had based Medicaid rates on the Medicare DMEPOS competitive bidding amounts for 32 DMEPOS items covered under both programs. The OIG states that its report provides “a tangible example of potential State and Federal savings for Medicaid programs if the programs were to use the Medicare Competitive Bidding payment amounts for DMEPOS items.” This report did not include recommendations or state reaction.
In the second report, “New Jersey Medicaid Program Could Achieve Savings by Reducing Home Blood-Glucose Test Strip Prices,” the OIG estimates that the New Jersey Medicaid program could have saved approximately $1.8 million to $2.7 million in 2011 by reducing home blood-glucose test strip reimbursement rates to retail rates or by establishing a competitive bidding program for test strips. Such policy changes for test strips also could reduce Medicaid managed care organization reimbursement rates by up to 70%. However, the New Jersey Department of Human Services disagreed with the OIG’s recommendations to align state Medicaid reimbursement with average retail price or Medicare competitive bidding pricing, citing, among other things, doubts about the feasibility of attaining such savings and concerns about patient access and the impact on proper diabetes management.
CMS has suspended Part I of its National Average Retail Price (NARP) survey, through which the agency collected prices paid for drugs to retail community pharmacies for individuals with Medicaid, cash paying customers, and those with certain third party insurance. CMS notes that the survey is being suspended, effective July 1, 2013, “pending funding decisions.” While the resulting draft NARPs file will not be published, archive files will remain on the CMS website. CMS also has suspended posting of the monthly draft New Drug Report file that listed newly marketed single-source drugs.
On July 26, 2013, CMS published a notice announcing the final federal share disproportionate share hospital (DSH) allotments for federal fiscal year (FY) 2012 and the preliminary federal share DSH allotments for FY 2013. CMS also announces the final FY 2012 and the preliminary FY 2013 limits on aggregate DSH payments that states may make to institutions for mental diseases (IMDs) and other mental health facilities.
On July 15, 2013, CMS published a final rule to implement various provisions of the ACA related to Medicaid and CHIP essential health benefits, enrollment, and eligibility rules. Among other things, the rule: finalizes new Medicaid eligibility provisions; streamlines existing Medicaid eligibility, cost-sharing, and premium rules; amends requirements for benchmark and benchmark-equivalent benefit packages to ensure that they include essential health benefits and meet certain other minimum standards; and implements provisions related to authorized representatives, notices, and verification of eligibility for qualifying coverage in an eligible employer-sponsored plan in Affordable Insurance Exchanges. The rule has various effective dates and includes transition policies for 2014.
Recent Congressional hearings have addressed the following health policy issues:
- The House Energy and Commerce Committee has held hearings on Medicaid reform, implementation of the ACA, and reform of drug compounding regulations. An August 1 hearing entitled “PPACA Pulse Check” will feature testimony by CMS Administrator Marilyn Tavenner.
- The Senate Finance Committee held two hearings on health information technology, along with a hearing on repealing the SGR.
- The Senate Judiciary Committee examined “pay for delay” settlements between generic and brand-name drug companies.
- The House Ways and Means Committee held two hearings on the Administration’s delay of the ACA employer insurance mandate, and an August 1 hearing will focus on the status of ACA implementation. The House Education and the Workforce Committee also held a hearing on the ACA employer mandate delay.
- The House Oversight and Government Reform Committee and House Homeland Security Committee are holding a joint hearing on July 30 entitled on “Evaluating Privacy, Security, and Fraud Concerns with ObamaCare's Information Sharing Apparatus.”
- The Senate Budget Committee is holding a July 30, 2013 hearing on containing health care costs.
The Medicaid and CHIP Payment and Access Commission (MACPAC) has released its June 2013 Report to the Congress on Medicaid and CHIP, covering issues such as Medicaid and CHIP eligibility, coverage for maternity services, increased Medicaid payment for primary care physicians services, access to care for persons with disabilities, Medicaid and CHIP data for use in oversight and program monitoring, and program integrity efforts. This report also includes the latest MACStats data supplement.
CMS has published a proposed rule setting forth a methodology to implement aggregate reductions to state Medicaid Disproportionate Share Hospital (DSH) allotments for FY 2014 and 2015, as required by the ACA. The rule also proposes to add additional DSH reporting requirements for use in implementing the DSH health reform methodology. Comments on the proposed rule will be accepted until July 12, 2013.
CMS has issued a memo outlining optional strategies states can use to make progress toward reducing the number of uninsured individuals and transition to new eligibility and enrollment systems and coverage of new Medicaid enrollees. The letter describes how states can adopt (with enhanced federal matching) the following five specific targeted enrollment strategies: accelerating adoption of Modified Adjusted Gross Income (MAGI)-based rules, extending the Medicaid renewal period, enrolling individuals into Medicaid based on Supplemental Nutrition Assistance Program (SNAP) eligibility, enrolling parents into Medicaid based on children’s income eligibility; and adopting 12-month continuous eligibility for parents and other adults. CMS intends to use a streamlined review and approval process for states interested in implementing these approaches.
Recent Congressional hearings focusing on health policy include the following:
- The House Energy and Commerce Committee held hearings on health insurance premiums under the ACA and drug compounding. The House Energy and Commerce Health Subcommittee also held a hearing on "Reforming SGR (Sustainable Growth Rate): Prioritizing Quality in a Modernized Physician Payment System," which reviewed draft SGR reform legislative language. A June 12 hearing will focus on the state perspective on the need for Medicaid reform, and a June 14 hearing will examine the federal government's response to the prescription drug abuse crisis.
- A House Ways and Means Committee Health Subcommittee hearing addressed the “President's and Other Bipartisan Proposals to Reform Medicare," and the panel has scheduled a June 14 hearing to concentrate on proposals to reform Medicare post-acute care payments.
- The Homeland Security Committee held a second hearing on “Oversight and Business Practices of Durable Medical Equipment Companies.”
- The Senate Special Committee on Aging held a hearing entitled “10 Years Later: A Look at the Medicare Prescription Drug Program."