GAO Examines Self-Referral of Anatomic Pathology, IMRT Services

The Government Accountability Office (GAO) has issued two reports on trends in physician referrals to entities in which the provider or the provider's family members have a financial interest – both of which conclude that financial incentives are likely a major factor driving increases in referrals. In the first report, “Medicare: Action Needed to Address Higher Use of Anatomic Pathology Services by Providers Who Self-Refer,” the GAO concentrates on three provider specialties -- dermatology, gastroenterology, and urology -- that in 2010 accounted for 90% of referrals for self-referred anatomic pathology services (the preparation and examination of tissue samples to diagnose disease). Among other things, the report found that referrals for anatomic pathology services by these specialists (specifically services represented by CPT code 88305) substantially increased the year after they began to self-refer, compared both to before they started self-referring and to those specialists who continued to self-refer or never self-referred services. Self-referring providers of these specialties also referred more services on average than non-self-referring providers, even taking into account geography and patient characteristics. In response to the GAO’s suggestion that CMS improve its ability to identify self-referred anatomic pathology services and limit financial incentives for high levels of referrals, HHS notes that it identified CPT code 88305 as a potentially misvalued code and reduced its reimbursement by approximately 30% percent in 2013, which HHS believes has significantly reduced the financial incentives associated with self-referral for these procedures.

In a second report, “Higher Use of Costly Prostate Cancer Treatment by Providers Who Self-Refer Warrants Scrutiny,” the GAO examined self-referral of prostate cancer-related intensity-modulated radiation therapy (IMRT) services. According to the GAO, from 2006 to 2010, the number of IMRT procedures performed by self-referring groups increased rapidly (from about 80,000 to 366,000), while it declined for non-self-referring groups. This growth in self-referred services was primarily due to limited-specialty groups, particularly urologists, rather than multispecialty groups. Self-referring groups also were more likely to refer their patients for IMRT than other less costly treatments (e.g., radical prostatectomy or brachytherapy). Because Medicare providers are generally not required to disclose that they self-refer IMRT services, the GAO states that “beneficiaries may not be aware that their provider has a financial interest in recommending IMRT over alternative treatments that may be equally effective, have different risks and side effects, and are less expensive for Medicare and beneficiaries.” The GAO recommended that CMS require providers to disclose their financial interests in IMRT to their patients; which HHS does not support because, among other things, it could be complex to administer and would not address overutilization. HHS also noted that the President has proposed excluding certain services from the in-office ancillary services exception to the physician self-referral law.

CMS Releases Physician Payments Sunshine Act Final Rule

This post was written by Elizabeth Carder-Thompson, Katie C. Pawlitz, and Nancy E. Bonifant.

The Centers for Medicare & Medicaid Services (CMS) released late today its final rule implementing the physician payment transparency provisions of the Patient Protection and Affordable Care Act (Section 6002), commonly referred to as the "Physician Payments Sunshine Act." Among other things, the Act requires drug, device, biological or medical supply manufacturers to report payments or other transfers of value to physicians and other covered recipients. In addition, the Act requires manufacturers and group purchasing organizations (GPOs) to report certain information regarding ownership or investment interests held by a physician in the manufacturer or GPO.

The official version of the final rule, titled “Transparency Reports and Reporting of Physician Ownership of Investment Interests” (the “Final Rule”), will be published in the Federal Register on February 8, 2013. A proposed rule was previously published in the Federal Register on December 19, 2011, for which CMS received over 300 comments from a wide range of stakeholders.

The Final Rule provides important guidance to manufacturers and GPOs regarding the Physician Payments Sunshine Act, resolves several questions remaining after publication of the Proposed Rule, and raises some new ones. Notably, CMS has announced that manufacturers and GPOs will not be required to collect required information until August 1, 2013. Manufacturers and GPOs will be required to report the data for August through December of 2013 to CMS by March 31, 2014 and CMS will release the data publicly by September 30, 2014

We are in the process of conducting a full review of the lengthy Final Rule and will release shortly a Client Alert providing a detailed analysis of the Rule. In the meantime, please contact Elizabeth Carder-Thompson (202-414-9213), Katie C. Pawlitz (202-414-9233), Nancy E. Bonifant (202-414-9353) or any other member of the Reed Smith Health Care Group with whom you work, if you would like additional information or if you have any questions. 

GAO Report Examines Medicare Costs From Self-Referrals of Advanced Imaging Services

A recent GAO report examines the growing prevalence of physician self-referral (referral to the physician’s own practice) for advanced imaging services (e.g., magnetic resonance imaging (MRI) and computed tomography (CT) services) and its effect on Medicare spending. The GAO reports that while the number of both self-referred and non-self-referred advanced imaging services increased from 2004 through 2010, the growth rate was much higher for self-referred services. For instance, the number of self-referred MRI services increased by more than 80% during this period, compared to a 12% growth rate for non-self-referred MRI services. Self-referring providers referred about twice as many MRI and CT services as providers who did not self-refer in 2010, and these differences persisted even after accounting for practice size, specialty, geography, or patient characteristics. The GAO also found that providers' referrals of MRI and CT services substantially increased the year after they purchased or leased imaging equipment or joined a group practice that self-referred. The GAO estimates that providers who self-referred likely made 400,000 more referrals for advanced imaging services in 2010 than they would have if they were not self-referring, increasing Medicare costs by about $109 million. The GAO points out that any unnecessary referrals “pose unacceptable risks for beneficiaries, particularly in the case of CT services, which involve the use of ionizing radiation that has been linked to an increased risk of developing cancer.” The GAO recommends that CMS take steps to improve its ability to identify self-referral of advanced imaging services and address increases in these services, including: inserting a self-referral flag on Medicare Part B claims form to indicate whether or not an advanced imaging service is self-referred; implementing a payment reduction for self-referred advanced imaging services to “recognize efficiencies when the same provider refers and performs a service”; and determining how to ensure the appropriateness of advanced imaging services referred by self-referring providers.

CMS Announces Data Collection for the Physician Payments Sunshine Act Will Not Be Required Before 2013

This post was written by Elizabeth Carder-Thompson, Katie C. Pawlitz, Nancy E. Bonifant and Debra A. McCurdy.

The Centers for Medicare & Medicaid Services (CMS), tasked with implementing the Physician Payments Sunshine Act, announced yesterday that it will not require pharmaceutical, device, and other applicable manufacturers and group purchasing organizations (GPOs) to begin collecting reportable data before 2013.

Once implemented, the Physician Payments Sunshine Act (Section 6002 of the Affordable Care Act) will require manufacturers and GPOs to report information regarding payments to physicians and physician ownership and investment interests.

In a blog entry on its website, CMS noted that it received over 300 comments from stakeholders in response the proposed rule published in December 2011, and that it is committed to addressing the input received in such comments.  In order to provide organizations sufficient time to prepare for data submission and to address input received, CMS stated that data collection will not be required before January 1, 2013. CMS also noted that it intends to release the final rule later this year.

To read our previous post regarding the Physician Payment Sunshine Act, click here

New Hampshire Quietly Considers Prohibition Of Physician Relationships With Medical Device Companies

On March 29, 2012, the New Hampshire House of Representatives recommended for passage HB 1725.  If passed, HB 1725 would prohibit all health care practitioners from prescribing or referring any U.S. Food and Drug Administration class II or class III implantable medical device if the practitioner stands to profit, directly or indirectly, from the sale of the device, or from performing any procedure involving the device.  For more information, see Reed Smith's summary on our Life Sciences Legal Update Blog.

CMS Releases Information on Physician Self-Referral Prohibition Exception Process for Physician-Owned Hospitals

The final CY 2012 Medicare Outpatient Prospective Payment System (OPPS) final rule implemented a statutory mandate that CMS develop an exceptions process related to the ACA’s prohibition on expanding an existing physician-owned hospital’s facility capacity. The rule provided that in order to be eligible for an exception, the physician-owned hospital must satisfy eligibility criteria to qualify as an “Applicable Hospital” or “High Medicaid Facility.” CMS has published additional guidance addressing the process for accessing data, along with sample computations for determining whether a hospital satisfies the respective criteria.

Overview and Analysis of the Proposed Federal Sunshine Regulations

This post was written by Elizabeth B. Carder-Thompson, Katie C. Pawlitz, Nancy E. Bonifant and Debra A. McCurdy.

On December 19, 2011, the Centers for Medicare & Medicaid Services (“CMS”) published a proposed rule (the “Proposed Rule”) related to section 6002 of the Affordable Care Act, commonly referred to as the “Physician Payment Sunshine Act” (so referenced herein, or as the “Act”). The Physician Payment Sunshine Act requires applicable manufacturers of drugs, devices, biologicals, or medical supplies covered under Medicare, Medicaid, or CHIP to report annually to the Secretary of the Department of Health and Human Services (“Secretary”) certain payments or other transfers of value to physicians and teaching hospitals. Additionally, applicable manufacturers and applicable group purchasing organizations (“GPOs”) must report certain information regarding the ownership or investment interests in them that are held by physicians or their immediate family members.

The Proposed Rule comes more than two months after CMS’s statutory deadline of October 1, 2011. CMS proposes an expansive reading of its statutory authority, arguably extending reporting requirements to manufacturers and payments not contemplated by Congress. Moreover, while offering some much-needed clarification regarding certain tracking and reporting obligations under the Act, it leaves many questions unanswered. Indeed, CMS solicits comments on almost every aspect of the Proposed Rule – 60 topic areas in all. Accordingly, significant ambiguity still remains in terms of compliance with certain aspects of the Act. Comments to the Proposed Rule are due no later than 5 p.m. ET February 17, 2012.

This Client Alert outlines the guidance and proposals included in the Proposed Rule. As further discussed in this Alert, CMS has delayed implementation of tracking requirements under the Physician Payment Sunshine Act, but applicable manufacturers and GPOs still are advised to continue to prepare for implementation of the Act, potentially occurring during this calendar year 2012. Applicable manufacturers and applicable GPOs may do so by taking steps to ensure that tracking and reporting systems conform to the requirements of the Act and the Proposed Rule, to the extent clarity is currently available, and by closely monitoring future CMS guidance in this area.

To read the full Alert, click here.

 

CMS Guidance to Surveyors on ACA Physician-Owned Hospital Provisions

CMS has issued guidance to state survey agencies on limitations on new and expanded physician-owned hospitals (PoHs) under the ACA. The memo notes that the ACA provision does not prohibit licensure by the states or Medicare certification by the CMS of new or expanded PoHs. Specifically, survey agency and regional office survey and certification personnel are not required under ACA Section 6001 to investigate whether a hospital seeking Medicare certification is a new PoH or has increased the number of licensed beds or operating/procedure rooms beyond those licensed on the applicable date, or to advise PoHs during the Medicare certification process of the limitations on physician referrals and related billing.

CMS Releases Long-Awaited Physician Payments Sunshine Act Proposed Rule

This post was written by Elizabeth B. Carder-Thompson, Katie C. Pawlitz and Debra A. McCurdy.

The Centers for Medicare & Medicaid Services (“CMS”) released today a proposed rule implementing the physician payment transparency provisions of the Patient Protection and Affordable Care Act (Section 6002), commonly referred to as the "Physician Payments Sunshine Act." Among other things, the Act requires drug, device, biological or medical supply manufacturers to report payments or other transfers of value to physicians and other covered recipients. In addition, the Act requires manufacturers and group purchasing organizations (GPOs) to report certain information regarding ownership or investment interests held by a physician in the manufacturer or GPO.

The official version of the proposed rule, titled “Transparency Reports and Reporting of Physician Ownership of Investment Interests” (the “Proposed Rule”), will be published in the Federal Register on December 19, 2011. Comments on the Proposed Rule are due no later than 5:00 PM EST on February 17, 2011.

Although released later than the statutory deadline for the regulations (October 1, 2011), upon initial review, the Proposed Rule appears to provide important guidance to manufacturers regarding several aspects of the Physician Payments Sunshine Act. Notably, CMS has announced that manufacturers and GPOs will not be required to collect required information until after the final rule is published (rather than the statutory January 1, 2012 deadline). CMS anticipates publishing the final rule “as soon as possible” in 2012.

We are in the process of conducting a full review of the Proposed Rule and will release shortly a Client Alert providing a detailed analysis of the proposal. In the meantime, please contact Elizabeth Carder-Thompson (202-414-9213 or ecarder@reedsmith.com), Katie C. Pawlitz (202-414-9233 or kpawlitz@reedsmith.com), or any other member of the Reed Smith Health Care Group with whom you work, if you would like additional information or if you have any questions.
 

House Approves Tax/Jobs Bill with Medicare Provisions; Fate Uncertain

On December 13, 2011, the House of Representatives approved H.R. 3630, the Middle Class Tax Relief and Job Creation Act of 2011, a wide-ranging bill making payroll tax, unemployment insurance, energy, and other policy changes. Among many other things, the bill would avert a scheduled 27.4% cut in Medicare physician fee schedule (MPFS) payments in 2012 under the statutory Sustainable Growth Rate (SGR) formula and instead provide for a 1% payment update in 2012 and 2013. The costs of the MPFS fix would be offset through a variety of health care policy changes, including reducing funding for the ACA prevention and public health fund and ACA insurance subsidies, cutting Medicare reimbursement for hospital outpatient evaluation and management office visit services; reducing bad debt reimbursement, and rebasing Medicaid disproportionate share hospital allotments. The legislation also would extend: the Medicare outpatient therapy cap exceptions process; certain ambulance add-on payments; the floor used in the physician work geographic adjustment; the Qualified Individual program that reimburses states for certain Part B premiums; and the Transitional Medical Assistance program. In addition, the bill would relax certain restrictions on the expansion of physician-owned hospitals. The measure also would increase Medicare Part B and D premiums for higher-income beneficiaries beginning in 2017.  Note that the Senate is not expected to approve the House bill, and President Obama has announced that he would veto the bill if it does reach his desk. While Congress ultimately is expected to pass an SGR fix, the scope and timing of any such bill is uncertain at this time.

ACA "Physician Payment Sunshine Act" Rule at OMB

The Centers for Medicare & Medicaid Services (CMS) has sent to the White House Office of Management and Budget (OMB) its long-awaited proposed rule to implement the Transparency Reports and Reporting of Physician Ownership of Investment Interests (also called the Physician Payment Sunshine Act) provisions of the ACA. These provisions are intended to encourage greater transparency in the relationships between drug and device companies and physicians by (among other things) requiring covered drug, device, biological or medical supply manufacturers that provide a payment or other transfer of value to a “covered recipient” – a physician or a teaching hospital – to submit detailed reports to the HHS Secretary. In addition, the provision requires certain manufacturers and group purchasing organizations (GPOs) to report to the Secretary certain information regarding ownership or investment interests held by a physician in the manufacturer or GPO. The text of the rule is not available at this stage, but the rule could reach the Federal Register in the near future. As noted in a separate posting, the Senate Aging Committee has scheduled a December 15 hearing on this issue.

CMS Finalizes CY 2012 OPPS/ASC Rates, Policy Changes

On November 30, 2011, CMS is publishing its final rule updating the Medicare hospital outpatient prospective payment system (OPPS) and the ASC payment system rates and policies for CY 2012. The following are highlights of the lengthy rule:

  • The final OPPS update for 2012 is 1.9%, which reflects a 3.0% market basket update reduced by two adjustments mandated by the ACA: (1) a 0.1 percentage point reduction for 2012, and (2) a “multi-factor productivity” (MFP) adjustment of 1% for 2012. The impact of the rule on individual procedures varies, however. There also are special payment adjustments for cancer hospital OPPS payments and for partial hospitalization services provided in hospital-based programs and freestanding community mental health centers.
  • The OPPS update is reduced by 2.0 percentage points for certain hospitals that do not meet quality reporting requirements. CMS is expanding the set of measures that must be reported by hospital outpatient departments in 2012 and 2013 to qualify for the full payment update in 2014 and 2015, respectively. CMS also has modified the process for validating hospital reporting of chart-abstracted measures. In addition, CMS is updating the measures and scoring methodology for the Hospital Value-Based Purchasing Program for inpatient stays.
  • CMS is increasing from $70 to $75 the cost-per-day threshold for separate payment of hospital outpatient drugs and biologicals (under the proposed rule, the threshold would have been $80). Payment for separately-payable drugs and biologicals without pass-through status will equal the ASP plus 4% (compared to the 2011 rate of ASP plus 5%). This amount reflects an adjustment under which CMS is redistributing $240.3 million of pharmacy overhead costs from packaged to separately-payable drugs and biologicals. 
  • CMS is establishing an independent advisory review process for consideration of stakeholder requests for assignment of supervision levels other than direct supervision for specific outpatient hospital therapeutic services.  Under this process, CMS will seek recommendations from the Ambulatory Payment Classification (APC) Panel, which will be expanded to include representatives of critical access hospitals solely for deliberations relating to supervision levels. 
  • The final rule updates the requirements under the ACA’s Hospital Value-Based Purchasing Program for fiscal year 2014, including measures, performance standards, and scoring methodology. 
  • With regard to ASC services, CMS is increasing rates by 1.6 % in 2012, reflecting a 2.73% inflation update offset by a 1.1% productivity adjustment mandated by the ACA.  The rule also establishes a new quality reporting program for ASCs, which require reporting of five quality measures (down from 8 in the proposed rule) beginning in 2012 for the 2014 payment determination. The measures include four outcome measures and one surgical infection control measure. Two structural measures will be added for reporting beginning in 2013 (impacting payment in 2015 and 2016) pertaining to use of a safe surgery checklist and ASC facility volume data on selected surgical procedures.
  • The rule implements an ACA requirement that CMS develop an exceptions process related to the ACA’s prohibition on expanding an existing physician-owned hospital’s facility capacity.

CMS Proposes CY 2012 OPPS/ASC Rates, Policy Changes

On July 18, 2011, CMS published its proposed rule updating the Medicare hospital outpatient prospective payment system (OPPS) and the ASC payment system rates and policies for CY 2012 Highlights of the lengthy rule are discussed after the jump.

  • The proposed OPPS update for 2012 is 1.5%, which reflects a 2.8% market basket update reduced by two adjustments mandated by the ACA: (1) a 0.1 percentage point reduction for 2012, and (2) a “multi-factor productivity” (MFP) adjustment that is projected to be 1.2% in 2012. CMS proposes special payment adjustments for cancer hospital OPPS payments and for partial hospitalization services provided in hospital-based programs and freestanding community mental health centers. Furthermore, the impact of the proposed rule on reimbursement for individual procedures varies. 
  • The OPPS update is reduced by 2.0 percentage points for certain hospitals that do not meet quality reporting requirements. CMS is proposing to expand the set of measures that must be reported by hospital outpatient departments to qualify for the full payment update. To allow hospitals more time to prepare, CMS is proposing measures for reporting in CYs 2014 and 2015. CMS also proposes to modify the process for validating hospital reporting of chart-abstracted measures. In addition, the proposed rule would update the measures and scoring methodology for the Hospital Value-Based Purchasing Program for inpatient stays.
  • CMS proposes to increase the threshold for separate payment of hospital outpatient drugs and biologicals to those with a cost-per-day that exceeds $80, up from $70 currently. Payment for separately-payable drugs and biologicals without pass-through status would equal the ASP plus 4% (compared to the current rate of ASP plus 5%). This amount reflects the cost of separately-payable drugs and biologicals, calculated from hospital claims and cost reports, with an adjustment for pharmacy overhead cost that reflects the redistribution of $215  million of pharmacy overhead costs currently attributed to packaged drugs and biologicals to separately-payable drugs and biologicals. 
  • In response to concerns about policies adopted in 2011 modifying supervision requirements for outpatient therapeutic services, CMS is proposing to establish an independent advisory review process for consideration of stakeholder requests for assignment of supervision levels other than direct supervision for specific outpatient hospital therapeutic services.  CMS would refer such requests to the Ambulatory Payment Classification (APC) Panel, which would be expanded to include representatives of critical access hospitals solely for deliberations relating to supervision levels. 
  • With regard to ASC services, CMS estimates that the ASC factor for CY 2012 would be 0.9%, based on a 2.3% inflation update offset by a 1.4% productivity adjustment mandated by the ACA.  CMS also proposes a new quality reporting program for ASCs, which require reporting of eight quality measures beginning in CY 2012 for the CY 2014 payment determination.
  • The proposed rule would implement an ACA requirement that CMS develop an exceptions process related to the ACA’s prohibition on expanding an existing physician-owned hospital’s facility capacity.

Comments on the proposed rule will be accepted until August 30, 2011. 

MedPAC Meeting

The Medicare Payment Advisory Commission (MedPAC) met on October 8 and 9, 2009 to discuss a variety of Medicare payment and policy issues, including the in-office ancillary exception to the physician self-referral law, provider consolidation, physician fee schedule prices, and medical education. 

MedPAC Report on Medicare Payment Policy

MedPAC has issued its June 2009 "Report to the Congress: Improving Incentives in the Medicare Program."   Among other things, the report addresses follow-on biologicals, chronic care management, physician self-referrals involving imaging services, physician resource use measurement, graduate medical education, accountable care organizations, Medicare benefit design, and Medicare Advantage payment policy.

Upcoming MedPAC Meeting (April 8-9, 2009)

The Medicare Payment Advisory Commission (MedPAC) is meeting April 8-9, 2009 to discuss a variety of Medicare payment and policy issues, including the impact of physician self-referral on use of imaging services, potential Medicare savings associated with follow-on biologics, and Medicare Advantage payments, among others.

MedPAC Report to Congress -- Medicare Payment/Transparency Provisions

On February 27, 2009, MedPAC released its March 2009 Report to the Congress: Medicare Payment Policy. The report includes a series of recommendations for Medicare payments designed to assure beneficiaries’ access to care and preserve Medicare’s long-term sustainability, particularly through reductions in payment updates for 2010. The report also includes recommendations to increase transparency of physician financial relationships. A listing of key recommendations follows after the jump. 

Hospitals

  • The Congress should increase payment rates for the acute inpatient and outpatient prospective payment systems in 2010 by the projected rate of increase in the hospital market basket index, concurrent with implementation of a quality incentive payment program.
  • The Congress should reduce the indirect medical education adjustment (IME) in 2010 by 1 percentage point to 4.5 percent per 10 percent increment in the resident-to-bed ratio. The funds obtained by reducing the IME adjustment should be used to fund a quality incentive payment program.

Physicians and Ambulatory Surgical Centers

  • The Congress should update payments for physician services in 2010 by 1.1 percent.
  • The Congress should establish a budget-neutral payment adjustment for primary care services billed under the physician fee schedule and furnished by primary-care-focused practitioners. Primary-care-focused practitioners are those whose specialty designation is defined as primary care and/or those whose pattern of claims meets a minimum threshold of furnishing primary care services. The Secretary would use rulemaking to establish criteria for determining a primary-care-focused practitioner.
  • The Congress should direct the Secretary to increase the equipment use standard for expensive imaging machines from 25 to 45 hours per week. This change should redistribute RVUs from expensive imaging to other physician services.
  • The Congress should increase payments for ambulatory surgical centers (ASC) services in calendar year 2010 by 0.6 percent. In addition, the Congress should require ASCs to submit to the Secretary cost data and quality data that will allow for an effective evaluation of the adequacy of ASC payment rates.

Dialysis Services

  • The Congress should maintain current law and update the composite rate in calendar year 2010 by 1 percent.

Skilled Nursing Facility Services

  • The Congress should eliminate the update to payment rates for skilled nursing facility services for fiscal year 2010.
  • The Congress should require the Secretary to revise the skilled nursing facility (SNF) prospective payment system by: adding a separate nontherapy ancillary (NTA) component, replacing the therapy component with one that establishes payments based on predicted patient care needs, and adopting an outlier policy.
  • The Secretary should direct SNFs to report more accurate diagnostic and service-use information by requiring that: claims include detailed diagnosis information and dates of service, services furnished since admission to the SNF be recorded separately in the patient assessment, and SNFs report their nursing costs in the Medicare cost report.
  • The Congress should establish a quality incentive payment policy for SNFs in Medicare and to improve quality measurement for SNFs, the Secretary should: add the risk-adjusted rates of potentially avoidable rehospitalizations and community discharge to its publicly reported post-acute care quality measures; revise the pain, pressure ulcer, and delirium measures currently reported on CMS’s Nursing Home Compare website; and require SNFs to conduct patient assessments at admission and discharge.

Home Health Services

  • The Congress should eliminate the market basket increase for 2010 and advance the planned reductions for coding adjustments in 2011 to 2010, so that payments in 2010 are reduced by 5.5 percent from 2009 levels.
  • The Congress should direct the Secretary to re-base rates for home health care services in 2011 to reflect the average cost of providing care.
  • The Congress should direct the Secretary to assess payment measures that protect the quality of care and ensure incentives for the efficient delivery of home health care. The study should include alternative payment strategies such as blended payments and risk corridors and outcome-based quality incentives.

Inpatient Rehabilitation Facilities

  • The update to the payment rates for inpatient rehabilitation services should be eliminated for fiscal year 2010.

Long-Term Care Hospitals

  • The Secretary should update payment rates for long-term care hospitals for fiscal year 2010 by the projected rate of increase in the rehabilitation, psychiatric and long-term care hospital (RPL) market basket index less the Commission’s adjustment for productivity growth.

Recommendations on Medicare Advantage Payments

  • The Congress should: Eliminate the stabilization fund for regional PPOs. Remove the effect of payments for indirect medical education from the MA plan benchmarks. Set the benchmarks that CMS uses to evaluate MA plan bids at 100 percent of FFS costs. Pay-for-performance should apply in MA to reward plans that provide higher quality care. Clarify that regional plans should submit bids that are standardized for the region’s MA-eligible population.
  • The Secretary should calculate clinical measures for the FFS program that would permit CMS to compare the FFS program with MA plans.

Recommendations on Public Reporting of Physician Financial Relationships

  • The Congress should require all manufacturers and distributors of drugs, biologicals, medical devices, and medical supplies (and their subsidiaries) to report to the Secretary their financial relationships with: physicians, physician groups, and other prescribers; pharmacies and pharmacists; health plans, pharmacy benefit managers, and their employees; hospitals and medical schools; organizations that sponsor continuing medical education; patient organizations; and professional organizations.
  • The Congress should direct the Secretary to post the information submitted by manufacturers on a public website in a format that is searchable by: manufacturer; recipient’s name, location, and specialty (if applicable); type of payment; name of the related drug or device (if applicable); and year.
  • The Congress should require manufacturers and distributors of drugs to report to the Secretary the following information about drug samples: each recipient’s name and business address; the name, dosage, and number of units of each sample; and the date of distribution. The Secretary should make this information available through data use agreements.
  • The Congress should require all hospitals and other entities that bill Medicare for services to annually report the ownership share of each physician who directly or indirectly owns an interest in the entity (excluding publicly traded corporations). The Secretary should post this information on a searchable public website.
  • The Congress should require the Secretary to submit a report, based on the Disclosure of Financial Relationships Report, of the types and prevalence of financial arrangements between hospitals and physicians.

Recommendations on Reforming the Hospice Benefit

  • The Congress should direct the Secretary to change the Medicare payment system for hospice to: have relatively higher payments per day at the beginning of the episode and relatively lower payments per day as the length of the episode increases; include a relatively higher payment for the costs associated with patient death at the end of the episode; and implement the payment system changes in 2013, with a brief transitional period. These payment system changes should be implemented in a budget neutral manner in the first year.
  • The Congress should direct the Secretary to: require that a hospice physician or advanced practice nurse visit the patient to determine continued eligibility prior to the 180th-day recertification and each subsequent recertification and attest that such visits took place, require that certifications and recertifications include a brief narrative describing the clinical basis for the patient’s prognosis, and require that all stays in excess of 180 days be medically reviewed for hospices for which stays exceeding 180 days make up 40 percent or more of their total cases.
  • The Secretary should direct the Office of Inspector General to investigate: the prevalence of financial relationships between hospices and long-term care facilities such as nursing facilities and assisted living facilities that may represent a conflict of interest and influence admissions to hospice, differences in patterns of nursing home referrals to hospice, the appropriateness of enrollment practices for hospices with unusual utilization patterns (e.g., high frequency of very long stays, very short stays, or enrollment of patients discharged from other hospices), and the appropriateness of hospice marketing materials and other admissions practices and potential correlations between length of stay and deficiencies in marketing or admissions practices.
  • The Secretary should collect additional data on hospice care and improve the quality of all data collected to facilitate the management of the hospice benefit. Additional data could be collected from claims as a condition of payment and from hospice cost reports.

CHIP Expansion

On February 4, 2009, President Obama signed into law H.R. 2, the Children's Health Insurance Program (CHIP) Reauthorization Act of 2009. The legislation extends the CHIP program through FY 2013, expands funding to cover an additional 3.9 million uninsured children, and makes a number of reforms to the program. Note that the legislation does not include an earlier House provision that would have limited the "whole hospital" exception to the Stark law's self-referral prohibition to those hospitals with physician ownership or investment on January 1, 2009, and would have added significant new conditions to that exception for existing hospitals with physician ownership. A Senate Finance Committee summary is available here.

CHIP Expansion/Specialty Hospitals

On January 14, 2009, the House approved H.R. 2, the Children's Health Insurance Program (CHIP) Reauthorization Act of 2009. The legislation would extend the CHIP program through FY 2013 and expand funding to cover an additional 4 million uninsured children. The House bill also would limit the "whole hospital" exception to the Stark law's self-referral prohibition to those hospitals with physician ownership or investment on January 1, 2009, and add significant new conditions to that exception for existing hospitals with physician ownership. The version of the CHIP reauthorization bill approved by the Senate Finance Committee and currently being debated by the full Senate does not include specialty hospital provisions. 

Finance Chairman Baucus Outlines Health Reform Priorities

On November 12, 2008, Senate Finance Committee Chairman Max Baucus released a white paper entitled "Call to Action: Health Reform 2009." The document details Senator Baucus’ goals for health care reform in the broad areas of coverage, quality, and cost. Highlights of the lengthy plan include the following.  

  • Ensuring Health Coverage for All Americans. The Baucus plan seeks universal health insurance coverage by supplementing the current employer-based system with a nationwide insurance pool called the Health Insurance Exchange. Premium subsidies would be available to qualifying families and small businesses. While the Exchange is being created, individuals aged 55 to 64 could buy in to Medicare, and access would be expanded to Medicaid and the State Children’s Health Insurance Program (CHIP). Once affordable health insurance options are available, all individuals would be required to have insurance coverage. 
  • Improving Value by Reforming the Health Care Delivery System. Among other things, the plan calls for strengthening the role of primary care and chronic care management; refocusing payment incentives toward quality and value; and encouraging providers in different settings to collaborate in a way that improves quality and saves money (e.g., gainsharing). As part of the payment reforms, Baucus calls for overhaul of the Medicare physician fee schedule formula, greater surveillance of high-growth services, expanded use of pay-for-performance methodologies, and global payments for services provided to a patient during hospitalization and post-discharge. The Baucus plan also seeks to improve the health care infrastructure by supporting comparative effectiveness research through a new Health Care Comparative Effectiveness Research Institute and by promoting the adoption of health information technology. 
  • Financing a More Efficient Health Care System. The Baucus plan seeks to prevent Medicare fraud, waste, and abuse through: more stringent enrollment criteria; enactment of payment methodologies that discourage waste (such as the DMEPOS competitive bidding program); encouraging provider and supplier compliance; vigilant government oversight of government health programs; and strong punishment for program abuses. The plan also seeks to increase transparency in the health system by mandating disclosure of gifts and other transfers of value made by drug and device companies to physicians and other health care professionals; increasing scrutiny of physician self-referrals (including a focus on physician-owned hospitals); and requiring public reporting and disclosure of health care price and quality information. With regard to private plans in Medicare, the Baucus plan also would address overpayments to Medicare Advantage (MA) plans, promote performance measures for Part D prescription drug plans and the application of pay-for-performance principles to these plans, and extend Medicaid price discounts to the drugs used by the dual-eligible population in the Part D program. In addition, the plan addresses long-term care reforms, including policies to continue to shift care from institutional settings to home and community settings, malpractice reform, and reforms of the tax code designed to make incentives more efficient, distribute benefits more fairly, and promote smarter consumer spending of health care dollars.

Health care reform promises to be a high-profile issue for the new Congress and the incoming Obama Administration. The broad scope of the Baucus white paper suggests that Congress intends to focus beyond access to insurance or the immediate problem of fixing the Medicare physician fee schedule and examine fundamental policy questions concerning how to promote quality and value throughout the health system at a time of limited federal resources.