Health Industry Washington Watch : Washington DC Healthcare Industry Law Firm : Reed Smith : Health Industry Washington Watch : Regulations, Medicare/Medicaid, Governmental Organizations

On January 20, 2012, the Obama Administration posted its Fall 2011 Regulatory Agenda, outlining its planned regulatory initiatives in a number of policy areas. Priorities for the Department of Health and Human Services (HHS) include, among many others:

• Implementing Affordable Care Act (ACA) insurance reforms, including establishing Affordable Insurance Exchanges, establishing risk adjustment criteria for health plans, and expanding Medicaid coverage;
• Improving health care quality and patient safety, including implementing value-based purchasing programs for hospitals and other health care providers and promoting health information technology adoption and electronic health records;
• Improving response to adverse events, including establish a unique identification system to track medical devices
• Advancing scientific research by revising ethical rules governing research on human subjects; and
• Streamlining regulations to reduce regulatory burdens, including Food and Drug Administration (FDA) rules designed to reduce reporting and data submission requirements for drug and medical device manufacturers, and streamlined Medicare conditions of participation for hospitals and other providers.

A listing of specific HHS rules under consideration (including a variety of Medicare payment update rules) also is available.

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POSTPONED.  CMS has postponed its scheduled December 6, 2011 national provider call on Hospital Value Based Purchasing (VBP). Prior to the call, eligible hospitals will receive a CMS-created simulated, hospital-specific report that is designed to help hospitals anticipate how the VBP will affect hospital payments in fiscal year (FY) 2013. The Simulated Hospital VBP Program reports will include, among other things, the hospital's estimated incentive payment percentage and the hospital’s total and individual performance scores. The provider call will include a walk-through of the hospital specific report and a question and answer session.  Additional information will be available when a new date is set.

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A new GAO report, “Value in Health Care: Key Information for Policymakers to Assess Efforts to Improve Quality While Reducing Costs,” examines the availability of evidence that various health care interventions (e.g., provider payment restructuring, chronic care management, patient safety initiatives, care transitions management, and prevention programs, and care coordination activities) impact the quality and cost of health care. In brief, the GAO found that at least some information on both cost and quality effects was available for about half of the 127 interventions examined. In many cases, however, the credibility of this information is questionable due to widespread reliance on studies that did not incorporate rigorous designs that could isolate the effect of an intervention from other factors. According to the GAO, the findings suggest that “successful efforts to encourage the widespread adoption of value-enhancing interventions will need to take into account a complex mix of factors, including leadership support, organizational culture, and staff resources, that facilitate the implementation of health care interventions across a wide range of organizational contexts.”  

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On July 13, 2011, CMS published a document correcting technical errors that occurred in its May 5, 2011 proposed rule to update the Medicare hospital inpatient prospective payment system and the long-term care hospital prospective payment system for fiscal year (FY 2012). The corrections address the calculation of the outmigration adjustment and the listing of hospitals eligible for this adjustment (which also impacts the provider’s wage index value). The correction of this error results in an additional 104 providers being eligible for the outmigration adjustment in the FY 2012 proposed wage index. The final rule also should be released in the near future. Separately, CMS has published a notice correcting technical errors in its May 6, 2011 final rule implementing the Medicare Hospital Inpatient Value-Based Purchasing Program. The notice is effective July 1, 2011.

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On July 27, 2011, CMS will host a Special Open Door Forum on the 2013 Hospital Value-Based Purchasing Program, under which quality of care factor into hospital Medicare reimbursement. Note that the period of performance for the FY 2013 program began on July 1, 2011. The call will cover, among other things, hospital eligible for the program, key dates, clinical process of care and patient experience measures, calculation of performance scores, and determination of incentive payments.

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On May 5, 2011, the Centers for Medicare & Medicaid Services (CMS) is publishing its proposed rule to update Medicare inpatient prospective payment system (IPPS) hospital and long-term care hospital prospective payment system (LTCH-PPS) payment and other policies for FY 2012. Overall, CMS estimates that FY 2012 payments to general acute care hospitals for operating expenses would decrease by $498 million (0.5%) under the proposed rule, while Medicare payments to LTCHs are projected to increase by $95 million (1.9%). CMS addresses a wide variety of policies in the more than 1000-page advance version of the rule. 

Highlights of the proposal are available after the jump.

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On April 29, 2011, CMS released its final rule to implement a Hospital Value-Based Purchasing (VBP) program, as mandated by the ACA. The VBP program will build on the current pay-for-reporting program by tying Medicare payments to the quality of hospital services. Specifically, under the rule, starting in FY 2013 (which begins October 1, 2012), CMS will make value-based incentive payments to acute care hospitals based either on: (1) how well the hospital performs on certain quality measures, or (2) how much the hospital’s performance improves compared to its performance during a baseline period. The rule addresses the proposed quality measures, performance standards, scoring scheme, and framework for translating scores into value-based incentive payments. In general, the higher a hospital’s performance or improvement during the performance period for a fiscal year, the higher the hospital’s incentive payment will be. The initial measures CMS is adopting are a subset of the measures being used for the existing IQR program. As mandated by the ACA, the VBP program is deficit-neutral; that is, aggregate hospital VBP payments are funded through a reduction in base DRG payments for each discharge. The DRG reduction will be 1% in FY 2013 ($850 million, which is redistributed in VBP incentive payments), rising to 2% by FY 2017. CMS anticipates that out of 3,092 participating hospitals in FY 2013, payment increases will range from 0.0236% to 1.817%. When the base DRG payment reduction is factored in, about half of participating hospitals will receive a net increase in payments and half will receive a net decrease in payments, with no hospital experiencing a net change of more than 1%. The official version of the rule will be published May 6, 2011.

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The HHS Secretary has submitted a report to Congress outlining the Department’s plan to implement a value-based purchasing (VBP) program for Medicare payments to ambulatory surgical centers (ASCs), as mandated by the ACA. The report describes current efforts to improve quality and payment efficiency in ASCs, and examines steps required in designing and implementing a Medicare ASC VBP program, including measure development, performance scoring and public reporting, and phase-in of the VBP program. 

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On March 10, 2011, CMS is hosting a public call on implementation of an ACA requirement that HHS develop a plan to implement a value-based purchasing program for Medicare SNF services. On the call, CMS is seeking stakeholder input on such issues as: the development, selection, and modification process for measures of quality and efficiency; the reporting, collection, and validation of quality data; the structure of value-based payment adjustments and the sources of funding for the value-based bonus payments; and methods for the public disclosure of information on SNF performance.

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On February 24, 2011, CMS is hosting a Special Open Door Forum on “Designing A Home Health Value-Based Purchasing Program.” The event is designed to solicit input from interested parties regarding the development of the plan for implementing a value-based purchasing program for home health agencies as mandated by the Affordable Care Act.

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On February 10, 2011, CMS is holding a Special Open Door Forum to discuss its January 13, 2011 proposed rule to establish the Hospital Inpatient Value-Based Purchasing (VBP) Program.

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On January 13, 2011, the Centers for Medicare & Medicaid Services (CMS) is publishing a proposed rule that would implement the Hospital Value-Based Purchasing (VBP) program, as mandated by the Affordable Care Act (ACA). The VBP program will build on the current pay-for-reporting program by tying Medicare payments to the quality of hospital services. Specifically, under the rule, starting in fiscal year (FY) 2013 (which begins October 1, 2012), CMS would make value-based incentive payments to acute care hospitals based either on: (1) how well the hospital performs on certain quality measures, or (2) how much the hospital’s performance improves compared to its performance during a baseline period. The rule addresses the proposed quality measures, performance standards, scoring scheme, and framework for translating scores into value-based incentive payments. In general, the higher a hospital’s performance or improvement during the performance period for a fiscal year, the higher the hospital’s incentive payment would be. The initial measures CMS is proposing to adopt are a subset of the measures being used for the existing Medicare Hospital Inpatient Quality Reporting Program (formerly known as the Reporting Hospital Quality Data for the Annual Payment Update Program, or RHQDAPU). As mandated by the ACA, aggregate hospital VBP payments must be funded through a reduction in base diagnosis related group (DRG) payments for each discharge, which will be 1% in FY 2013, rising to 2% by FY 2017. CMS anticipates that out of 3,092 participating hospitals in FY 2013, payment increases will range from 0.0236% to 1.817%. When the base DRG payment reduction is factored in, about half of participating hospitals will receive a net increase in payments and half will receive a net decrease in payments, with no hospital experiencing a net change of more than 1%. CMS will accept comments on the proposed rule until March 8, 2011.

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On October 26, 2010, CMS is hosting a “Special Forum” on development of the Medicare hospital value-based purchasing (VBP) program, as required by Section 3001 of the ACA.  Under Section 3001, an inpatient hospital quality incentive payment program must be established effective with the FY 2013 inpatient prospective payment system (IPPS) payment determination for Medicare discharges occurring on or after October 1, 2012. Under the VBP program, payments to high-performing hospitals will be larger than those to lower performing hospitals, which CMS observes will use “financial incentives to drive improvements in clinical quality, patient centeredness and efficiency.” During this forum, CMS is asking for input from attendees on all aspects of the Hospital VBP program development and implementation.

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On October 14, 2010, CMS is hosting a Special Open Door Forum on its ACA-mandated report to Congress on Ambulatory Surgery Center (ASC) Value Based Purchasing. The purpose of the call is to receive comments from ASCs, hospitals, physicians, physician associations, consumer groups, and others interested in the development of CMS’s plan for implementing value-based purchasing in ASCs. CMS is particularly interested in stakeholder input on: the development of measures of quality and efficiency; reporting, collection, and validation of quality data; the structure of value-based payment adjustments; and methods for public disclosure of the information. 

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On June 15, 2010, the Medicare Payment Advisory Commission (MedPAC) issued a report to Congress on “Aligning Incentives in Medicare.” Among other things, the report addresses: Medicare payment accuracy and moving away from volume incentives in fee-for-service Medicare; the Stark law in-office ancillary exception policy and options to change incentives that induce physicians to provide more ancillary services; performance-based payments; impediments to coordinated care for beneficiaries dually eligible for both Medicare and Medicaid; improvements to graduate medical education; ways to redesign Medicare benefit to encourage beneficiaries to seek higher value services; informing beneficiaries about their health care choices; and the role of CMS in a reformed delivery system.

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On June 24, 2010, CMS is holding a Special Open Door Forum provider call on the Medicare Shared Savings Program/Accountable Care Organizations (ACOs).   The call will focus on the formation and use of ACOs to enhance the quality and efficiency of physician services. CMS will solicit comments from physicians, physician associations, hospitals, consumer groups, and other interested parties on:  joint accountability among providers in the formation and use of ACOs; cost and quality measures to assess performance; risk adjustment; attribution of Medicare beneficiaries to ACOs; benchmarks for purposes of defining shared savings; coordination with other value-based purchasing initiatives; and Medicare beneficiary protections.

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