On January 15-16, 2015, the Medicare Payment Advisory Commission (MedPAC) is meeting to discuss a number of Medicare topics, including, among others: post-acute care trends; payment updates for a number of provider types; relative costs of Medicare Advantage, accountable care organizations, and fee-for-service Medicare; hospital short stay policy; and quality measurement.
CMS has posted the 2015 Medicare Star Ratings for Medicare Advantage (MA) and Medicare Part D prescription drug plans (PDPs). According to a CMS fact sheet, there are increases in the number of Medicare beneficiaries in high-performing MA plans and PDPs for 2015, while CMS notes “dramatic improvement” among plans that had received the low performing icon in 2014. CMS also is interested in receiving information from the public regarding potential data differences in MA and Part D quality measurements for dual-eligible versus non-dual-eligible enrollees. Information is due November 3, 2014. Finally, CMS has released the MA and PDP annual audit and enforcement report for 2013. According to the report, CMS imposed 43 CMPs totaling almost $8.4 million on 39 different organizations and 5 cases of immediate suspension of enrollment and marketing activities for issues identified in 2012 and 2013. Most violations cited in enforcement actions related to inappropriate delays or denials of access to health services and medications for enrollees.
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.
A new GAO report reviews CMS’s collection of Medicare Advantage (MA) encounter data, which includes detailed information on services and items furnished to enrollees. CMS plans to use MA encounter data in addition to current diagnosis data to risk adjust capitated payments to MA organizations in 2015. The GAO determined that CMS has not yet developed requirements for completeness and accuracy of the encounter data, nor has it performed statistical analyses that could detect complex data validity issues. The GAO recommends that CMS establish specific plans for using MA encounter data and thoroughly assess data completeness and accuracy before using the data to risk adjust payments or for other purposes.
Congressional panels have held numerous hearings on health policy issues this month, including the following:
- The House Energy and Commerce Committee held a series of hearings on its “21st Century Cures” initiative, focusing on personalized medicine, barriers to evidence development and communication, technological innovations, the patient perspective, and modernizing clinical trials. A separate hearing focused on ACA’s insurance eligibility verification system. Coming up, the Committee will examine plan “bailouts” and cancellations under the ACA (July 28) and the status of ACA payment and verification systems (July 31).
- The Ways and Means Committee held hearings on the integrity of the ACA’s premium tax credit verification system and the future of Medicare Advantage health plans.
- The House Oversight Committee held a hearing on Medicare appeals reform.
- The House Science, Space, and Technology Committee examined “Policies to Spur Innovative Medical Breakthroughs from Laboratories to Patients.”
- A Senate Finance Committee hearing focused on chronic illness and patients’ unmet needs.
- The Senate Health, Education, Labor and Pensions Committee examined preventable deaths and improving patient safety. The Committee also approved a number of bipartisan bills, including S. 315, the "Paul D. Wellstone Muscular Dystrophy Community Assistance, Research and Education Amendments; S 2154, the Emergency Medical Services for Children Reauthorization Act; S. 2405, the Trauma Systems and Regionalization of Emergency Care Reauthorization Act; S. 2406, the Improving Trauma Care Act; and S. 2539, the Traumatic Brain Injury Reauthorization Act.
On June 13, 2014, the Medicare Payment Advisory Commission (MedPAC) released its June 2014 Report to the Congress on Medicare and the Health Care Delivery System. Among other things, MedPAC addresses ways to align Medicare fee-for-service (FFS), Medicare Advantage, and accountable care organization policies on payment, risk adjustment, and quality measurement. MedPAC also discusses various FFS reforms, including post-acute care reforms to promote payment consistency across settings and bonus payments to support primary care. Finally, MedPAC discusses changing income eligibility standards for the Medicare Savings Programs to help low-income Medicare beneficiaries afford out-of-pocket costs, and it examines the impact of medication adherence on health spending.
On May 23, 2014, CMS published a final rule revising the Medicare Advantage (MA) and Part D prescription drug program regulations to implement various statutory requirements, strengthen beneficiary protections, improve program efficiencies and payment accuracy; and clarify program requirements, generally effective for contract year 2015. CMS estimates that the proposed rule would reduce Medicare spending by $1.615 billion between 2015 and 2024. Among many other things, the final rule:
- Requires that Part D “negotiated prices” be inclusive of all price concessions from network pharmacies except contingent price concessions that cannot reasonably be determined at the point-of-sale, effective beginning with contract year 2016. CMS also specifies that additional contingent amounts, such as incentive fees, that increase prices and that cannot reasonably be determined at the point-of-sale are always excluded from the negotiated price.
- Implements an ACA requirement that MA plans and Part D sponsors report and return identified Medicare overpayments.
- Addresses prescription drug abuse by, among other things, authorizing CMS to revoke a physician’s or eligible professional’s Medicare enrollment if he or she has a pattern of prescribing Part D drugs that is abusive and represents a threat to beneficiary health and safety or otherwise fails to meet Medicare requirements, or if the prescriber’s Drug Enforcement Administration (DEA) certificate of registration or state license is suspended or revoked. The rule also requires prescribers of Part D drugs to enroll in Medicare or have a valid record of opting out of Medicare as a condition of coverage for their prescriptions, effective June 1, 2015.
Note that CMS is not finalizing its proposed changes to the ACA “drug categories or classes of clinical concern” requirement; instead, CMS will maintain the existing six protected classes. CMS also is not finalizing its proposal to require consistently lower negotiated prices at pharmacies offering preferred cost sharing in light of its adoption of a different definition of negotiated price than originally proposed. Moreover, CMS is not finalizing its proposed “any willing pharmacy” contracting provisions, nor the proposed changes to limit the authorized levels of cost sharing, pending further study.
According to a recent OIG report, CMS made $26.2 million in payments to Medicare Advantage (MA) organizations for approximately 1,600 unlawfully present beneficiaries from 2010 through 2012, even though federal health care benefits are not allowable for individuals who are not lawfully present in the United States. The OIG attributes to inappropriate payments to CMS’s failure to notify the MA organizations of the unlawful-presence information in its data systems; as a result, MA organizations could not prevent unlawfully present beneficiaries from enrolling or disenroll beneficiaries whose unlawful-presence status changed after they had enrolled. The OIG recommends that CMS recoup these payments and implement policies and procedures (consistent with policies under the fee-for-service program) to notify MA organizations of unlawful-presence information.
The Centers for Medicare & Medicaid Services (CMS) has released its 2015 rate announcement and final call letter for Medicare Advantage (MA) and Part D prescription drug plans. Notably, the final rate announcement increases 2015 MA rates by 0.4% compared to 2014 levels and compared to an estimated 1.9% reduction anticipated in the advance notice released in February 2014. Factors contributing to the rate boost include a modified phase-in schedule for a new risk-adjustment model, a refined risk adjustment methodology to account for the impact of baby boomers, and CMS’s decision not to finalize a proposal to exclude diagnoses from enrollee risk assessments. CMS also is not adopting at this time earlier proposals to implement a new Part D risk adjustment model; make changes to star ratings; or require additional coverage in the gap for generic and brand drugs in Enhanced Alternative plans. On the other hand, CMS is adopting a number of policies intended to strengthen beneficiary protections when MA plans make significant changes to their provider networks. Beginning in 2015, CMS will require MA organizations to provide CMS with 90 days notice of any significant changes to their provider networks. CMS also will allow enrollees to switch plans when they are affected by significant mid-year provider network terminations initiated by their MA plan without cause. In addition, the call letter establishes “best practices” for MA organizations to follow when they make significant changes to provider networks.
The OIG has released its “Compendium of Priority Recommendations,” which lists 25 priority issues for which the OIG has open recommendation and that, if implemented, would best protect the integrity of HHS programs. The 25 top priorities are as follows:
- Medicare Policies and Payments: address wasteful Medicare policies and payment rates for clinical laboratories, hospitals, and hospices; improve controls to address improper Medicare billings by community mental health centers, home health agencies, and skilled nursing facilities; detect and recover improper Medicare payments for services to incarcerated, unlawfully present, or deceased individuals; maximize recovery of Medicare overpayments; improve monitoring and reconciliation of Medicare hospital outlier payments; ensure that Medicare Advantage Organizations are implementing programs to prevent and detect waste, fraud, and abuse; and improve controls to address questionable billing and prescribing practices for Part D prescription drugs.
- Medicare Quality of Care and Safety Issues: address adverse events in hospital settings; improve care planning and discharge planning for beneficiaries in nursing home settings; address harm to patients, questionable resident hospitalizations, and inappropriate drug use in nursing homes; improve nursing home emergency preparedness and response; and ensure hospice compliance with Medicare conditions of participation.
- Medicaid Program Policies and Payments: ensure that state claims and practices do not inappropriately inflate federal reimbursements; ensure that states prevent, detect, and recover improper payments and return the federal share of recoveries to the federal government; assist states to better align Medicaid drug reimbursements with pharmacy acquisition costs; ensure that Medicaid Information Systems are fully functional; and address Medicaid managed care fraud and abuse concerns.
- Medicaid Quality of Care and Safety Issues: ensure that Medicaid home- and community-based care service providers comply with quality and safety requirements; and ensure that States improve utilization of preventive screening services for eligible children.
- Oversight of Food Safety: improve oversight of dietary supplements; and improve oversight of food inspections and traceability.
- HHS Grants and Contracts: improve oversight of grantee compliance, quality assurance, and conflicts of interest; and improve oversight of Medicare contractor performance and conflicts of interest.
- HHS Financial Stewardship: reduce improper payments and fraud; and correct deficiencies found in financial statement audits.
Note that some of these recommendations would require additional authority or other legislative change.
The Medicare Payment Advisory Commission (MedPAC) has released its annual report to Congress on Medicare payment policy, including payment update recommendations for all the major Medicare fee-for-service payment (FFS) systems, limited recommendations related to the Medicare Advantage (MA) program, and a status report on the Medicare Part D program. The following are highlights of the recommendations for 2015 (many of which were recommended previously):
- MedPAC recommends a 3.25% update to inpatient and outpatient hospital payment rates, concurrent with two changes that would institute site-neutral payments among settings. First, Congress should direct the HHS Secretary to reduce or eliminate differences in payment rates between outpatient departments and physician offices for selected ambulatory payment classifications. Second, MedPAC recommends reducing payment for long-term care hospital (LTCH) services furnished to patients whose illness is not characterized as chronically critically ill (CCI) to the same rate that an acute care hospital would be paid for such care; savings from this provision would fund an outlier pool for acute care hospitals that treat costly CCI patients.
- Congress should repeal the sustainable growth rate (SGR) system for physician services and replace it with a 10-year path of statutory updates that includes a higher update for primary care services than for specialty care services. MedPAC also endorsed the collection of data to establish more accurate work and practice expense values; budget-neutral changes to improve data on which relative value unit weights are based and to redistribute payments from overpriced to underpriced services; and relative value unit reductions to achieve fee schedule savings.
- Congress should eliminate the ambulatory surgical center (ASC) payment update for 2015, require ASCs to submit cost data, and direct the Secretary to implement a value-based purchasing program for ASCs by 2016.
- Congress should eliminate the skilled nursing facility (SNF) market basket update. Congress also should direct the Secretary to revise the prospective payment system for SNFs and begin a process of rebasing with an initial reduction of 4% and subsequent reductions until Medicare’s payments better align with providers’ costs. Moreover, Congress should direct the Secretary to reduce payments to SNFs with relatively high risk-adjusted rates of rehospitalization during Medicare-covered stays.
- MedPAC reiterates previous recommendations to rebase home health rates, eliminate the market basket update, revise the home health case-mix system to rely on patient characteristics to set payment for therapy and nontherapy services, and establish a per episode copay for home health episodes not preceded by hospitalization or post-acute care use. In addition, Congress should direct the Secretary to reduce payments to home health agencies with relatively high risk-adjusted rates of hospital readmission.
- Congress should eliminate the update to hospice rates for FY 2015 and adopt a series of previous MedPAC payment reform recommendations.
- Congress should eliminate the 2015 updates for outpatient dialysis services and direct the Secretary to establish a quality measure that assesses poor outcomes related to anemia in the End-Stage Renal Disease Quality Incentive Program, revise the low-volume adjustment, and audit dialysis facilities’ cost reports.
- Congress should eliminate the FY 2015 payment updates for inpatient rehabilitation facilities and LTCHs.
- With regard to Medicare Advantage (MA), MedPAC recommends that Congress: (1) direct the Secretary to determine payments for employer-group MA plans in a manner more consistent with the determination of payments for comparable non-employer group plans; and (2) include the Medicare hospice benefit in the MA benefits package beginning 2016.
Note that while MedPAC’s recommendations are not binding, Congress and CMS often take into account MedPAC’s assessments when updating Medicare payment policies.
Congressional panels continue to hold hearings to address various health policy issues, including the following:
- The House Energy and Commerce Committee held a hearing on “Allowing Seniors to Keep Their Medicare Advantage Plans If They Like Them." In addition, on March 26, the panel is holding a hearing entitled “Where Have All the Patients Gone? Examining the Psychiatric Bed Shortage,” and on April 1, the Committee will focus on the Food and Drug Administration’s (FDA) proposed changes to generic drug labeling.
- The Obama Administration’s proposed FY 2015 budget for HHS was the subject of hearings by the House Appropriations Committee and the House Ways and Means Committee.
- The Senate Health, Education, Labor and Pensions Committee held hearings on FDA initiatives and priorities, and what the U.S. health care system can learn from other countries.
- On March 26, the Senate Special Committee on Aging is holding a hearing on “Preventing Medicare Fraud: How Can We Best Protect Seniors and Taxpayers?”
On March 18, 2014, CMS published an interim final rule with comment period that implements changes to the payment adjustment for low-volume hospitals and to the Medicare-dependent hospital (MDH) program for fiscal year 2014 in accordance with the Pathway for SGR Reform Act of 2013. The rule, which applies to discharges on October 1, 2013 through March 31, 2014, is estimated to increase Medicare inpatient prospective payment systems (IPPS) payments to these hospitals by an additional 0.24%, or $227 million. Comments on the rule will be accepted until May 13, 2014.
On March 6-7, 2014, the Medicare Payment Advisory Commission (MedPAC) is meeting to discuss a number of Medicare payment and policy issues, including: site-neutral payments for select conditions treated in inpatient rehabilitation facilities and skilled nursing facilities; developing payment policies to promote the use of services based on clinical evidence; measuring quality in Medicare delivery systems; payment for primary care; aligning Medicare benchmarks across payment models; and Medicare Advantage risk adjustment.
CMS has posted its advance rate announcement and draft call letter for Medicare Advantage (MA) and Part D prescription drug plans for 2015. These documents detail updates to payment methodologies, other policies, and program operations for MA organizations and Part D drug plan sponsors. While the factors that impact 2015 rates are complex, CMS generally intends to more closely align MA payments with fee-for-service (FFS) Medicare and improve payment accuracy through a series of rate adjustments. Among other things, CMS notes that its preliminary estimate of the combined effect of the MA growth percentage and the FFS growth percentage is -1.9%. CMS also proposes to apply a -5.16% adjustment to MA plan payments to account for diagnostic coding differences between MA and FFS providers. The call letter addresses numerous policy issues, including encouraging MA organizations to adopt best practices that improve enrollee notification of significant changes in the MA’s provider network (CMS indicates it will consider rulemaking that could limit the timing of such network changes). Comments on the documents will be accepted until March 7, 2014, and the final rate announcement and call letter will be published on April 7, 2014. Also looking ahead, CMS announced in the call letter that it intends to issue a request for information in the coming months about an initiative to partner with private payers to test innovations in health plan design for CMS beneficiaries, including to value-based arrangements, beneficiary engagement and incentives, and/or care coordination.
Recent Congressional hearings have addressed a number of health policy issues, including the following:
- House Science, Space, and Technology Committee hearing entitled “Healthcare.gov: Consequences of Stolen Identity”;
- A House Energy and Commerce Oversight Subcommittee hearing on implementation of the ACA, including a discussion of insurance exchange issues;
- Two House Oversight and Government Reform Committee hearings on HealthCare.gov information security issues;
- A Senate Aging Committee hearing on “Medicare Advantage: Changing Networks and Effects on Consumers”; and
- A House Ways and Means Committee hearing on the impact of the ACA’s employer insurance mandate’s definition of full-time employee on jobs.
On January 6, 2014, CMS released a proposed rule that would revise the Medicare Advantage (MA) and Part D prescription drug program regulations to implement various statutory requirements, strengthen beneficiary protections, improve program efficiencies and payment accuracy; and clarify program requirements. CMS estimates that the proposed rule would reduce Medicare spending by $1.3 billion between 2015 and 2019. The sweeping proposed rule is summarized after the jump.
Among many other things, the proposed rule would:
- Revise the definition of “negotiated prices” to require that all price concessions from pharmacies are reflected in these prices. Under the proposed rule, negotiated prices would mean prices for covered Part D drugs that: (1) the Part D sponsor (or other intermediary contracting organization) and the network dispensing pharmacy or other network dispensing provider have negotiated as the amount such network entity will receive, in total, for a particular drug; and (2) are inclusive of all price concessions and any other fees charged to network pharmacies; and (3) include any dispensing fees; but (4) exclude additional contingent amounts, such as incentive fees, only if these amounts increase prices and cannot be predicted in advance; and (5) may not be rebated back to the Part D sponsor (or other intermediary contracting organization) in whole or in part.
- Modify CMS’s interpretation of the Affordable Care Act’s (ACA) “drug categories or classes of clinical concern” requirement. Instead of mandating coverage of all drug products in a particular class on all Part D formularies, CMS generally would limit protected classes to those meeting criteria established under the regulation. The proposed criteria generally would result in formulary inclusion of all drugs within the antineoplastic, anticonvulsant, and antiretroviral drug classes (subject to proposed exceptions), but the rule would not require all drugs from the antidepressant and immunosuppressant drug classes to be included on all Part D formularies. While antipsychotics would not meet the criteria, CMS proposes that they remain protected at least through 2015 to ensure that CMS has “not overlooked a need for any transitional consideration.”
- Modify rules for “preferred pharmacies” within Part D plans’ pharmacy networks, so as to allow Part D sponsors to reduce copayments or coinsurance at such pharmacies only if they offer consistently lower negotiated prices than are available from other pharmacies in the pharmacy network.
- Modify the “any willing pharmacy” requirement to require plan sponsors to contract with any willing pharmacy able to meet one set of the terms and conditions offered by that plan for that type of pharmacy. CMS also would require that, in establishing its contracted pharmacy network, a Part D sponsor must offer and publicly post standard terms and conditions for network participation for each type of pharmacy in the network, and (1) may not require a pharmacy to accept insurance risk as a condition of participation in the PDP sponsor's contracted pharmacy network, and (2) must offer payment terms for every level of cost sharing offered under its plans (consistent with CMS limitations on the number and type of cost sharing levels) and for every type of similarly-situated pharmacy.
- Limit prescription drug plans sponsors to offering no more than two Part D plans in the same service area.
- Implement an ACA requirement that MA plans and Part D sponsors report and return identified Medicare overpayments.
- Address prescription drug abuse by, among other things, authorizing CMS to revoke a physician’s or eligible professional’s Medicare enrollment if he or she has a pattern of prescribing Part D drugs that is abusive and represents a threat to beneficiary health and safety or otherwise fails to meet Medicare requirements, or if the prescriber’s Drug Enforcement Administration (DEA) certificate of registration or state license is suspended or revoked. The rule also would require that prescribers of Part D drugs enroll in Medicare as a condition of coverage for their prescriptions.
- Establish U.S. citizenship and lawful presence as an eligibility requirement for enrollment in MA and Part D plans.
The official version of the rule will be published on January 10, 2014. CMS will accept comments on the proposed rule until March 7, 2014.
Recent Congressional hearings on health policy issues have included the following, among others:
- A House Small Business Committee hearing focused on the ACA’s Small Business Health Options Program.
- A House Ways and Means Health Subcommittee hearing reviewed “the Challenges of the Affordable Care Act,” focusing on “immediate and long-term challenges Americans face in finding affordable, quality health coverage as a result of the ACA.”
- A December 11 House Energy and Commerce Health Subcommittee hearing is entitled “PPACA (Patient Protection and Affordable Care Act) Implementation Failures: What's Next?”
- A House Oversight and Government Reform Committee hearing was entitled “Roll Out of HealthCare.gov: The Limitations of Big Government,” while a December 12 hearing will focus on “ObamaCare’s Impact on Premiums and Provider Networks.”
- Earlier this month, a House Energy and Commerce Committee hearing reviewed the impact of the ACA on the Medicare Advantage program.
CMS published a final rule on May 23, 2013 that implements new medical loss ratio (MLR) requirements for the Medicare Advantage (MA) program and the Part D prescription drug program. Under the new requirements, which were mandated by the ACA, MA organizations and Part D plan sponsors are required to report their MLR (percentage of revenue used for patient care), and are subject to financial and other penalties for a failure to meet a new statutory requirement that they have an MLR of at least 85%. The rule is generally effective for contract years beginning on or after January 1, 2014.
The OIG has issued an ACA-mandated report on Medicare Part D prescription drug plan and MA drug plan coverage of drugs commonly used by full-benefit dual-eligible individuals (that is, individuals eligible for Medicare and Medicaid and who receive full Medicaid benefits and Medicare premium and cost-sharing assistance). The OIG determined that for 2013, Part D/MA plan formularies include 96% of 195 commonly-used drugs, with 64% of the commonly-used drugs included in all such formularies. Plans applied utilization management tools to 28% of the unique drugs reviewed in 2013, compared to 24% in 2012 (mainly attributable to an increase in the use of quantity limits).