Obama Administration Finalizes Changes to Home Health Conditions of Participation

CMS has finalized extensive changes to the conditions of participation (CoPs) that home health agencies (HHAs) must meet to participate in the Medicare and Medicaid programs. The rule is intended to provide HHAs with enhanced flexibility while focusing on “a patient-centered, data-driven, outcome-oriented process that promotes high quality patient care at all times for all patients.”  CMS is finalizing new CoPs on patient rights; quality assessment and performance improvement; infection protection and control; and care planning, coordination of services, and quality of care.  The care planning CoP includes a new requirement that the HHA must provide written instructions to the patient and care giver outlining the visit schedule, medication and patient care instructions, and treatments administered and providing HHA contact information.  CMS also is, among many other things, streamlining a number of current COPs, establishing various new personnel requirements, and revising written notice requirements.  CMS estimates that the final rule will increase costs to HHAs by $293.3 million in year one and $290.1 million annually thereafter; the largest costs result from new information collection requirements (particularly the written instructions to patients and care givers) and notification of patient rights.

SAMHSA Releases Final and Supplemental Proposed Rules on Substance Abuse Records Privacy Protections

A new Substance Abuse and Mental Health Services Administration (SAMHSA) final rule is intended to modernize federal regulations governing the confidentiality of substance abuse records. SAMHSA explains in the preamble that it the agency “wants to ensure that patients with substance use disorders have the ability to participate in, and benefit from health system delivery improvements, including from new integrated health care models while providing appropriate privacy safeguards.” In particular, the final rule seeks to facilitate the electronic exchange of substance use disorder information for treatment and other legitimate health care purposes, while ensuring appropriate confidentiality protections for records that might identify an individual as having or having had a substance use disorder. The rule is effective February 17, 2017. In a related development, SAMHSA published a supplemental notice of proposed rulemaking proposing additional clarifications on disclosures of covered data to contractors, subcontractors and legal representatives to carry out payment and other health care related activities. Comments will be accepted until February 17, 2017.

CDC Issues Final Quarantine Rule to Strengthen Control of Communicable Diseases

The Centers for Disease Control and Prevention (CDC) has issued a final rule to strengthen the federal government’s ability to prevent the introduction, transmission, and spread of communicable diseases into the United States and interstate. The regulation is intended to both aid public health responses to outbreaks of new or re-emerging communicable diseases and provide due process to individuals subject to federal public health orders. The rule is effective February 21, 2017.

CMS Guidance on Off-Campus Provider-Based Department Policy Changes

CMS recently released guidance on how hospitals can request from their CMS Regional Office a relocation exception from site-neutral payment rates for an excepted off-campus department of a provider due to an extraordinary circumstance, in conformance with the 2017 Medicare Outpatient Prospective Payment System Final Rule. A separate CMS document discusses implementation of 21st Century Cures Act provisions that establish additional criteria by which off-campus departments of a provider will be excepted from the site-neutral payment rules.

CMS Again Extends HHA/Ambulance Enrollment Moratoria in Selected States

The Centers for Medicare & Medicaid Services (CMS) is extending for six months its current moratoria on the Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) enrollment of new nonemergency ground ambulance suppliers and home health agencies (HHAs) in selected states, effective January 27, 2017.  The temporary moratoria on new HHA enrollment (including new subunits and branch locations) applies to Florida, Illinois, Michigan, and Texas, while the moratoria on enrollment of non-emergency ground ambulance providers and suppliers applies to New Jersey, Pennsylvania, and Texas.  CMS has determined, in consultation with the Office of Inspector General, that “a significant potential for fraud, waste, and abuse continues to exist regarding those provider and supplier types in these geographic areas.”  According to a January 9, 2017 CMS notice, since the imposition of the initial moratoria on July 31, 2013, CMS has denied 1,147 HHA and 19 ambulance company enrollment applications in the affected geographic areas.


CMS to Host Call on Transitioning Physician Quality Reporting to MIPS (Jan. 24)

On January 24, 2017, CMS is hosting a call to discuss how to complete the final reporting period for the “legacy” Medicare physician quality reporting programs (Physician Quality Reporting System, Medicare Electronic Health Record Incentive Program, and Value-Based Payment Modifier) and transition to the new Merit-based Incentive Payment System (MIPS).  Registration is required to participate.

OIG Issues Annual Solicitation of Suggestions for New Fraud Alerts, Anti-Kickback Safe Harbors

The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) is inviting public recommendations for new or modified safe harbor provisions under the federal anti-kickback statute.  The OIG also invites suggestions for new OIG Special Fraud Alerts to provide guidance to health care providers regarding “practices OIG finds potentially fraudulent or abusive.”  The notice summarizes the factors the OIG considers when considering recommendations for safe harbors and fraud alerts.  The OIG will accept proposals until February 27, 2017. 


CMS Corrects Final 2017 OPPS/ASC Rule, Results in Slight Payment Increase

CMS has published a notice correcting technical errors in its November 14, 2016 final rule with comment period updating the Medicare hospital outpatient prospective payment system (OPPS) and ambulatory surgical center payment systems for 2017.  Among many other things, CMS is correcting the OPPS weight scaler, which very slightly increases OPPS rates that are adjusted for budget neutrality.  CMS has released updated addenda with the corrected payment rates. 

21st Century Cures Act: Focus on Drug/Device Provisions

As previously reported, President Obama has signed into law the 21st Century Cures Act (PL 114-255), which is intended to spur the discovery and availability of new medical treatments. Reed Smith has prepared a client alert summarizing the major drug, device, and biologic development and approval provisions contained in the Cures Act. The alert is available here.

CMS Issues Final Mandatory Episode Payment Models for Cardiac and Orthopedic Cases, Plus New Cardiac Rehabilitation Incentive Payment Model and CJR Program Refinements

In the waning days of the Obama Administration, the Centers for Medicare & Medicaid Services (CMS) has unveiled a lengthy and complex final rule to establish mandatory Medicare bundled payment programs for acute myocardial infarction (AMI), coronary artery bypass graft (CABG), and surgical hip/femur fracture treatment (SHFFT) procedures furnished in designated geographic areas.  The rule also includes provisions to promote the use of cardiac rehabilitation services, refine current Comprehensive Care for Joint Replacement Model (CJR) rules, and integrate bundled payment programs into the new physician Quality Payment Program. The 1,606-page advance version of the rule was released on December 20, 2016; the official version is scheduled to be published January 3, 2017.

Note that President-elect Donald Trump’s designee for Secretary of Health and Human Services, Rep. Tom Price, M.D., has been highly critical of the proposed version of the rule published in August 2016, and has called on the CMS Center for Medicare and Medicaid Innovation (CMMI) to “stop experimenting with Americans’ health, and cease all current and future planned mandatory initiatives within the CMMI.” It is therefore uncertain whether all provisions of the final rule will actually be implemented as CMS currently envisions.  Nevertheless, impacted providers need to be prepared for potentially significant changes.

Mandatory Episode Payment Models for Cardiac Care, Hip/Femur Fractures

The final rule establishes new “episode payment models” (EPMs) that seek to “advance CMS’ goal of improving the efficiency and quality of care for Medicare beneficiaries and encourage hospitals, physicians, and post-acute care providers to work together to improve the coordination of care from the initial hospitalization through recovery.” CMS estimates that the EPMs will save $159 million during the duration of the program (July 1, 2017 through December 31, 2021).

CMS will “test” the EPMs beginning July 1, 2017 and ending December 31, 2021. CMS has selected 98 metropolitan statistical areas (MSAs) for the CABG and AMI EPMs, and will implement the SHFFT model in the same 67 MSAs where the CJR program is already underway. Acute care hospitals in these areas will participate in the models if they are paid under the Inpatient Prospective Payment System (IPPS) and are not concurrently participating in Models 2, 3, or 4 of the Innovation Center’s Bundled Payment for Care Improvement (BPCI) initiative for AMI, CABG, or SHFFT episodes. CMS estimates that approximately 1,120 hospitals will participate in the AMI and CABG models, and 860 hospitals will participate in the SHFFT model.

Under the final rule, an AMI, CABG, or SHFFT model episode will begin with an inpatient admission to an “anchor hospital” for the following specified Medicare Severity-Diagnosis Related Groups (MS-DRG): Continue Reading

OIG Semiannual Report Highlights FY 2016 Fraud Recoveries, Enforcement Actions

The HHS Office of Inspector General’s (OIG) latest Semiannual Report to Congress highlights top audits, investigations, and enforcement activities for the period of April 1 to September 30, 2016 and summarizes overall accomplishments for fiscal year (FY) 2016. Notably, the OIG reports:

  • Expected FY 2016 recoveries will exceed $5.66 billion, including nearly $1.2 billion in audit receivables and about $4.46 billion in investigative receivables.
  • A total of 844 criminal actions against individuals or entities that engaged in crimes against HHS programs.
  • A total of 708 civil actions, including false claims and unjust-enrichment lawsuits filed in federal district court, civil monetary penalty settlements, and administrative recoveries related to provider self-disclosure matters.
  • Exclusions of 3,635 individuals and entities from participation in federal health care programs

During the period of April 1, 2016, to September 30, 2016, the OIG received 20 requests for advisory opinions and issued six opinions. The report also features the OIG’s response to proposals for new or revised safe harbors to the anti-kickback statute.

GAO Highlights Barriers to Small & Rural Provider Participation in Medicare Value-Based Payment Models

CMS has developed a variety of Medicare value-based payment models that tie payments to quality and efficiency metrics, and the importance of such models to physicians will increase under the new Quality Payment Program. The Government Accountability Office cautions, however, that small and rural physician practices face a number of unique challenges when participating in value-based payment models.  A recent GAO report catalogues five particular areas of concern for small and rural physician practices, based on a literature review and stakeholder interviews: Continue Reading

OIG Finalizes Expanded CMP Authorities under the ACA

The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) has published a final rule to codify the OIG’s expanded authority under the Affordable Care Act (ACA) to impose civil monetary penalties (CMPs) on providers and suppliers under a variety of additional scenarios. For example, for failure to timely report and return an identified overpayment, the final rule permits the OIG to impose a penalty of up to $10,000 for each item or service (rather than $10,000 per day as proposed).  Furthermore, the rule establishes up to $10,000 per day penalties—at the National Drug Code (NDC) product Identifier level—for drug manufacturers who fail to timely report and certify drug-pricing data.

Likewise, the final rule codifies the OIG’s expanded authority under the ACA to permit CMPs for conduct including: Continue Reading

GAO Calls for Improvements to CMS Nursing Home Rating System

 The Government Accountability Office (GAO) has reviewed the Medicare Five-Star Quality Rating System for nursing homes and identified several factors that may prevent consumers from using the website “as an easy way to understand nursing home quality and identify high- and low- performing homes.”  In particular, GAO concluded:

  • The Centers for Medicare & Medicaid Services’ (CMS) formula for determining overall ratings “is not intuitive, which can make interpreting overall ratings difficult for consumers by both complicating the comparison of overall ratings and masking the importance of the component ratings.”
  • A nursing home’s rating “is a point-in-time picture of performance based on a prior snapshot of the home’s performance and may not reflect a nursing home’s current status.”
  • The ratings do not allow consumers to compare the quality of homes across states, limiting their usefulness for consumers who live near state borders or have multistate options.
  • The system does not include consumer satisfaction survey information.

The GAO recommends that CMS add information to the Five-Star System that allows homes to be compared nationally (which the Department of Health and Humans Services (HHS) contends is difficult because of variations in state surveys).  The GAO also recommends that CMS evaluate adding consumer satisfaction information to the Five-Star System and develop introductory explanatory information for the Five-Star System web site; HHS concurred.  Furthermore, the GAO recommends that CMS establish a process to evaluate and prioritize website improvements; HHS agreed to create a more formal process for making such improvements.

The report, “Nursing Homes: Consumers Could Benefit from Improvements to the Nursing Home Compare Website and Five-Star Quality Rating System,” is available on the GAO website.

CMS Announces Three New Innovation Models, Focusing on Patient Engagement and Dual-Eligible Population

The CMS Center for Medicare & Medicaid Innovation (CMMI) continues to launch initiatives to test ways to improve the quality of health care while controlling cost, despite an uncertain fate under the future Trump Administration and Republican-controlled Congress.

Specifically, two new CMMI Beneficiary Engagement and Incentives (BEI) Models seek to promote “shared decision making,” which CMS describes as a process of physician-patient communication and deliberation regarding treatment options in light of best medical evidence, tailored to support the beneficiary’s values and preferences. The first BEI model, the Shared Decision Making Model (SDM Model), will test the use of decision aids and the integration of a structured Four Step shared decision making process into the clinical practice of practitioners participating accountable care organizations (ACOs). The SDM Model will focus on six conditions: stable ischemic heart disease, hip osteoarthritis, knee osteoarthritis, herniated disk and spinal stenosis, clinically localized prostate cancer, and benign prostate hyperplasia. The SDM Model will pay participating ACOs $50 for each SDM service furnished if all required SDM Activities are completed. In the second BEI model, the Direct Decision Support (DDS) Model, CMS will partner with a maximum of seven Decision Support Organizations (DSOs), organizations that provide health management and decision support services, to test shared decision making provided outside of the clinical delivery system. The DSOs will receive a fixed per beneficiary per month payment for each beneficiary in the geographic region assigned to them. CMS expects the DSOs to provide direct decision support to about 700,000 beneficiaries annually, focusing on the same medical conditions as under the SDM Model.

CMS has also launched a new Medicare-Medicaid ACO Model, under which CMS will partner with up to six states to use ACOs to improve quality of care and lower costs for beneficiaries enrolled in both Medicare and Medicaid (dual-eligible beneficiaries). In these states, new and existing Medicare Shared Savings Program ACOs will have the opportunity to be held accountable for Medicaid costs and quality of care for their assigned Medicare-Medicaid enrollees in addition to Medicare costs and quality. If Medicare-Medicaid ACOs generate Medicare savings, states and the ACO may be eligible to share in those savings. Medicare-Medicaid ACOs that qualify as “Safety-Net ACOs” may receive pre-payment of Medicare shared savings to support investment in their care coordination infrastructure.

CMS Announces New Medicare Prior Authorization Requirements for Two Types of Power Wheelchairs

Beginning in March 2017, CMS is phasing in new Medicare prior authorization (PA) requirements for two types of power wheelchairs under a policy adopted in a final rule issued late in 2015. As previously reported, CMS finalized regulations to require Medicare PA for certain durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS) items that the agency characterizes as “frequently subject to unnecessary utilization.” CMS issued a “Master List” of equipment that could potentially be subject to this requirement, but the agency did not announce the specific selected items.

In a notice to be published December 22, 2016, CMS has announced the first two codes that will be subject to the new PA requirement: Continue Reading

GAO Assesses Impact of Medicare DMEPOS Competitive Bidding Program on Beneficiary Access, OIG Documents Market Share for Diabetes Testing Supplies

The number of Medicare beneficiaries who received durable medical equipment (DME) items generally fell after Round 2 of competitive bidding program (CBP) and the national mail-order program for diabetes testing supplies were implemented July 1, 2013, according to a Government Accountability Office (GAO) report issued this fall. Specifically, from 2012 to 2014, the number of beneficiaries receiving covered items in Round 2 competitive bidding areas (CBAs) decreased 17 percent, compared with a 6 percent decrease in non-CBAs. Likewise, the number of beneficiaries who received diabetes testing supplies through the national mail-order program decreased 39 percent between 2012 and 2014, compared to a 13 percent increase the number of beneficiaries receiving these items through retail locations. Despite these decreases, CMS argued that “its routine monitoring of beneficiary access has not identified access issues.” On the other hand, four out of five beneficiary advocacy groups interviewed reported that their members experienced access issues related to competitive bidding (e.g., delays in delivery of CBP-covered DME items and trouble locating contract suppliers to provide specific DME items). Furthermore, discharge planners and state hospital associations echoed these concerns, with discharge planners and referral agents from the Florida and California hospital associations stating that delays in delivery of needed DME resulted in an increase in the length of hospital stays for some beneficiaries.

Separately, the HHS Office of Inspector General (OIG) issued a Congressionally-mandated report on Medicare market shares of mail order diabetes test strips for the period of April to June 2016. This market share data helps CMS determine if competitive bidding contract suppliers meet the statutory requirement that they provide at least 50 percent, by volume, of the types of diabetes test strips provided to Medicare beneficiaries. According to the OIG, two types of test strips accounted for about half of the mail order market during this period, five types accounted for 81 percent of the market, and 10 types accounted for 93 percent of the market.

CMS Issues Final ACA Benefit and Payment Policies for 2018; Questions Loom Over Implementation

On December 16, 2016, CMS released its Affordable Care Act (ACA) Notice of Benefit and Payment Parameters final rule and the final Annual Letter to Issuers for the 2018 plan year. Notably, the final rule revises the risk adjustment methodology to “further promote stable premiums in the individual and small group markets.” The final risk adjustment changes address: use of prescription drug utilization data; transfers to better account for the risk of high-cost enrollees; a reduction in the statewide average premium in the transfer formula by a portion of administrative costs; and, beginning in 2017, a refinement in the estimate of risk associated with enrollees who are not enrolled for a full 12 months. CMS also adopted provisions related to, among many other things: the risk adjustment data validation process; the premium adjustment percentage; limits on cost-sharing; standardized plan options; enrollment periods and options; oversight; changes to child age rating; revisions to the guaranteed renewability regulations related to market withdrawals; and medical loss ratio reporting and rebates.

According to CMS Acting Administrator Andy Slavitt, the “Administration will leave the Marketplace on a stable path that, when fully implemented, will ensure quality coverage is available for all Americans well into the future.” Whether these changes are in fact fully implemented, however, will depend on the contours of Republican efforts to “repeal and replace” the ACA, including the details of any transition period adopted to unwind the current insurance Marketplace framework.

OIG Issues CMP, Anti-kickback Safe Harbor Final Rules

The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) has published a final rule amending the safe harbors to the Anti-Kickback Statute (AKS) and the Civil Monetary Penalty (CMP) rules to protect certain payment practices and business arrangements from criminal prosecution or civil sanctions under the AKS (Final Rule).  The Final Rule finalizes all of the anti-kickback statute safe harbors proposed in an October 3, 2014 proposed rule, with certain modifications, and all of the beneficiary inducement CMP exceptions proposed in the Proposed Rule.

With regard to the AKS, the Final Rule finalizes:

  • A technical correction to the existing safe harbor for referral services;
  • Protection for certain cost-sharing waivers, including: pharmacy waivers of cost-sharing for financially needy Medicare Part D beneficiaries, and waivers of cost-sharing for emergency ambulance services furnished by state- or municipality-owned ambulance services;
  • Protection for certain remuneration between Medicare Advantage organizations and federally qualified health centers;
  • Protection for discounts by manufacturers on drugs furnished to beneficiaries under the Medicare Coverage Gap Discount Program; and
  • Protection for free or discounted local transportation services that meet specified criteria.

In the Final Rule, the OIG also amends the definition of “remuneration” in the CMP regulations at 42 CFR 1003 by adding certain statutory exceptions for: Continue Reading

Conflict of Interest Concerns Prompt New CMS Restrictions on Dialysis Facility Payment of Beneficiary Health Plan Premiums; Allows Plans to Reject Third-Party Payments

Citing “differences between providers’ and suppliers’ financial interests and patients’ interests” that “may result in providers and suppliers taking actions that put patients’ lives and wellbeing at risk,” CMS is imposing stringent new requirements on Medicare-certified dialysis facilities that seek to make payments of premiums for individual market health plans.

By way of background, earlier this year CMS received anecdotal reports that some dialysis providers were paying Medicare- or Medicaid-eligible patients’ private insurance premiums to take advantage of higher private payer reimbursement rates. According to a CMS fact sheet, individual market reimbursement for dialysis treatment can be four times higher than Medicare and Medicaid rates – a difference of $100,000 to $200,000 or more per patient per year, which “easily dwarfs the several thousand dollar cost of providing premium assistance.” CMS published a request for information on August 23, 2016 to receive more information on the prevalence of such arrangements, which CMS believed could increase health system costs and be financially disadvantageous for beneficiaries.

In an interim final rule with comment period published December 14, 2016, CMS states that commenters indicated widespread facility involvement in end-stage renal disease (ESRD) patients’ coverage decisions. While the agency acknowledged receiving letters from patients satisfied with such premium arrangements, CMS cited other commenters who documented that providers and suppliers were “influencing enrollment decisions in ways that put the financial interest of the supplier above the needs of patients.” Commenters argued that such arrangements can harm patients by negatively impacting their determination of readiness for a kidney transplant; potentially exposing patients to additional costs for health care services; and putting them at significant risk of a mid-year disruption in health care coverage.

Continue Reading