Trump Administration’s Proposed FY 2019 Budget Targets Medicare, Medicaid for Savings, Seeks (Again) to Repeal/Replace ACA

The Trump Administration has released its fiscal year (FY) 2019 budget proposal, which includes extensive health policy provisions. While most of the President’s policy proposals for Department of Health and Human Services (HHS) programs would require Congressional approval, others are characterized as administrative proposals that presumably would not involve Congress.

President Trump once again seeks to “repeal and replace” the Affordable Care Act (ACA). This year’s budget calls for a “Market-Based Health Care Grant Program” (modeled on pending Graham-Cassidy-Heller-Johnson legislation) as an initial step to help states stabilize their insurance markets during a transition period. The second step of the plan would repeal the ACA’s Medicaid expansion and significantly restructure Medicaid by allowing states to choose between a per capita cap or a block grant. The Administration estimates that these provisions would save $679.7 billion over 10 years, although the Medicaid cuts would total almost $1.4 trillion over 10 years. The budget also proposes a mandatory appropriation for cost-sharing reduction payments to plan sponsors for FYs 2018 through the end of calendar year (CY) 2019, and full funding of the Risk Corridors Program, including exempting the program from sequestration (an $812 million spending increase in FY 2018).

The budget proposal also includes numerous Medicare policy reforms that would save $493.7 billion over 10 years. Many of these reforms involve cuts in Medicare provider reimbursement, including the following proposals (budget savings figures are over the 10-year period of FYs 2019-2028): Continue Reading

CMS Cancels Another Pending CMS Innovation Project: the Direct Decision Support (DDS) Model

CMS will not proceed with its planned Direct Decision Support (DDS) innovation model “due to operational and technical issues with the proposed Model design.” When this model was announced in December 2016, it was expected to test a shared decision-making approach outside of the clinical delivery system. On February 2, 2018, CMS announced that it has determined that “design and operational changes necessary to continue with the DDS Model would be too significant and burdensome for participants, and would require a new solicitation.” This announcement follows cancellation of the higher-profile planned cardiac/hip fracture episode payment model and cardiac rehabilitation incentive payment models.

Cancellation of the DDS initiative suggests that the Trump Administration’s recent launch of its first innovation model — Bundled Payments for Care Improvement Advanced — does not mean that the Administration has embraced other innovation models in the pipeline.

CMS Plans Q&A Session on Low Volume Appeals Settlement Option (Feb. 13)

As previously reported, CMS has initiated a “low volume appeals (LVA) settlement” option as part of broader HHS efforts to improve the Medicare appeals process. This option is available for appellants with fewer than 500 total Medicare Part A or Part B claim appeals pending at the Office of Medicare Hearings and Appeals and the Medicare Appeals Council at the Departmental Appeals Board as of November 3, 2017 with a total billed amount of $9,000 or less per appeal, subject to other conditions. Eligible appeals will be settled at 62% of the net allowed amount.

CMS is hosting a call on February 13, 2018 to discuss the status of the LVA process and explain how to identify claims that are eligible for settlement. A question and answer session will follow the presentation. Registration is required to participate in the call.

VA and HHS Team Together to Combat Health Care Fraud, Waste, and Abuse

The Department of Veterans Affairs (VA) and the Centers for Medicare & Medicaid Services (CMS) have announced a partnership to leverage CMS’s program integrity tools to detect and prevent fraud within VA programs.  The collaboration will focus on applying state-of-the-art data analytics tools and best practices identified by CMS to VA claims payment processes.  In addition to capitalizing on the lessons learned by CMS, the VA has also indicated that it will invite industry experts to demonstrate their capabilities for detecting and preventing fraud, waste, and abuse and recovering improper payments later this spring. 

New “Granston Memorandum” Outlines Factors DOJ May Consider in Dismissing Qui Tam Cases Brought by Relators

A top Department of Justice (DOJ) official has recently issued a much-anticipated memo explaining the factors DOJ will consider when deciding whether to dismiss FCA suits brought by relators in qui tam cases. Specifically, the memo by Michael Granston, Director of the Commercial Litigation Branch within the DOJ Fraud Section sets forth seven non-exhaustive factors that DOJ lawyers should consider when deciding whether to seek dismissal of all or part of a FCA qui tam suit under 3730(c)(2)(A), addressing the following areas:

  • Curbing meritless qui tams
  • Preventing parasitic or opportunistic qui tam actions and controlling litigation
  • Preventing interference with agency policies and programs
  • Certain procedural and policy concerns

For more information on this important topic, please read the full blog post here, and the Granston memorandum dated January 10, 2018 here.

Stopgap Government Funding Law Includes Reprieve from ACA Medical Device, Insurance Taxes, Extends CHIP Funding

In addition to keeping the federal government operating through February 8, 2018, the newly-enacted Continuing Appropriations Act provides temporary relief from three health-related taxes imposed by the Affordable Care Act (ACA) and funds the Children’s Health Insurance Program (CHIP) through fiscal year 2023. With regard to the ACA taxes, the Continuing Appropriations Act:

  • Imposes a two-year moratorium on the ACA’s 2.3% excise tax on the sale of medical devices. The device tax will not apply to sales during calendar years 2018 and 2019.
  • Delays for two years the excise tax on certain high-cost employer-sponsored health coverage (the so-called “Cadillac tax”). Under the law, the tax will be effective in 2022 rather than 2020.
  • Provides a one-year moratorium on the annual excise tax imposed on health insurers, applicable to calendar year 2019.

Since the Continuing Appropriations Act only keeps the government open for less than three weeks, Congress will be facing another budget deadline in the near future. It is anticipated that there will be a push to use the next funding bill as an opportunity to address a number of expired Medicare payment and policy provisions (often called “extenders”), such as the extension of the outpatient therapy cap exceptions process.

House Panel Approves Off-Label Communication, OTC Monograph User Fee, Good Samaritan Health Professionals Bills

The House Energy and Commerce Health Subcommittee voted to approve the following health policy bills on January 18, 2017:

  • H.R. 2026, the Pharmaceutical Information Exchange (PIE) Act. This bill would create a safe harbor that would allow drug and medical device companies to share certain health care economic or scientific information with payers, formularies, and other coverage, reimbursement, and population-based health care decision makers prior to FDA approval. Such information – including clinical and pre-clinical data and results relating to an unapproved drug therapy, or drug indication, or other condition of use being investigated or developed – must be based on competent and reliable scientific evidence and relate to an investigational use of a new drug or device or an investigational use of an approved drug or device. The safe harbor would allow for such information to be shared only if a supplemental application has been submitted to FDA for such use or, at a minimum, the study or studies needed to support the submission of a supplemental application have been completed “with the intention that a supplemental application will be submitted to [FDA] for approval of the use.” The bill was approved by a vote of 18 to 14.  If it becomes law, H.R. 2026, the PIE Act, would partly codify current FDA policy governing pre-approval communications with payors, formulary committees, and similar entities. FDA’s policy, announced in a draft guidance issued January 2017 (Drug and Device Manufacturer Communications with Payors, Formulary Committees, and Similar Entities – Questions and Answers), states that pre-approval information “may help payors plan and budget for future coverage and/or reimbursement decisions prior to FDA approval of investigational products,”  The policy also clarifies that FDA “does not intend to object” to the dissemination of this information under 21 C.F.R. § 312.7(a).  FDA’s policy permits the following information to be disclosed pre-approval:  (1) product information (e.g., drug class); (2) information about the indication sought, such as information from the clinical study protocol(s) about endpoint(s) being studied and the patient population under investigation (e.g., number of subjects enrolled, subject enrollment criteria, subject demographics); (3) factual presentations of results from clinical or preclinical studies (i.e., no characterizations or conclusions should be made regarding the safety or effectiveness of the product); (4) anticipated timeline for FDA action and/or possible FDA approval; (5) product pricing information; (6) targeting/marketing strategies (e.g., outreach activities planned to generate prescriber awareness about the product); and (7) anticipated product-related programs/services (e.g., patient support programs, including information about copay/savings cards).
  • H.R. __, the Over-the-Counter Monograph Safety, Innovation, and Reform Act. The legislation would make what many consider to be long-overdue reforms to the FDA over-the-counter (OTC) monograph program for nonprescription drugs marketed without an approved new drug application. To modernize and streamline the process, the legislation would create a system for future changes to drug monographs through an administrative order procedure with the opportunity for development meetings or other consultations, submission of comments on proposed orders, and dispute resolution procedures. To enhance public health, the legislation would create a mechanism for faster safety label changes, and establish a pathway for innovations under monographs. The bill would establish an OTC monograph user fee program to support related reforms. The bill was approved by a voice vote.
  • H.R. 1876, the Good Samaritan Health Professionals Act. This bill would provide limited liability protection for health care professionals providing services as a volunteer during a federally-declared disaster. The bill was approved by a voice vote.

The bills now advance to the full Energy and Commerce Committee.

SAMHSA Finalizes Changes to Rules for Disclosure of Substance Abuse Records to Support Health Care Operations

The Substance Abuse and Mental Health Services Administration (SAMHSA) has issued a final rule addressing the disclosure of substance use disorder patient records that is intended to facilitate health care activities while protecting patient privacy.  The final rule identifies the circumstances under which lawful holders of patient identifying-information may disclose such information to their contractors, subcontractors, and legal representatives to support payment, health care operations, and audit and evaluation activities.  In addition, the final rule establishes an optional abbreviated notice of the prohibition on redisclosure that must accompany each disclosure made with the patient’s written consent.  Finally, the rule makes a number of technical corrections to a related January 18, 2017 final rule.  The rule is effective February 2, 2018.


ONC Proposes Trusted Exchange Framework for Health Information Networks

The Office of the National Coordinator (ONC) for Health Information Technology has released a draft trusted exchange framework that proposes policies, procedures, and technical standards to further Congressionally-mandated efforts to establish a nationwide, interoperable health system under the 21st Century Cures Act of 2016.  Currently, there are dozens of Health Information Networks (HINs) that operate locally, regionally, or nationally, but that do not exchange health information with each other.  The draft framework focuses on principles for trusted exchange of electronic health information and minimum required terms and conditions for trusted exchange among the nation’s multiple health information networks.  The trusted exchange framework aligns with HIPAA requirements, but also specifies terms and conditions to enable broader exchange of health information among both regulated (i.e., covered entities and business associates) and non-regulated entities.  The framework indicates that additional and faster progress is necessary in developing interoperability, especially in the case of medical specialties—such as long-term services and supports providing post-acute care or in lieu of institutionalization, behavioral health, and other ambulatory services.

Public comments are being accepted electronically at until February 18, 2018.  Subsequently, the ONC will select a Recognized Coordinating Entity (RCE), which will develop a single common agreement that qualified health information networks and their participants may voluntarily agree to adopt. Following the comment period and refinements to the draft framework, HHS expects to release a final draft of the combined trusted exchange framework and common agreement later this year.

Trump Administration Unveils Its First Bundled Payment Initiative — BPCI Advanced

The Trump Administration has rolled out its first CMS Innovation Center Medicare bundled payment initiative, the Bundled Payments for Care Improvement Advanced (BPCI Advanced). Under the new voluntary model, CMS will test whether bundled payments for 29 inpatient and 3 outpatient clinical episodes will lead to reduced Medicare expenditures while improving quality of care for Medicare beneficiaries. CMS anticipates that the performance period of the BPCI Advanced model will begin on October 1, 2018 and run through December 31, 2023.

BPCI Advanced builds on the ongoing Bundled Payments for Care Improvement (BPCI) initiative, which was launched in 2013 and runs through September 30, 2018. As in the BPCI model, BPCI Advanced seeks to incentivize providers to coordinate care to furnish services more efficiently while maintaining quality. Specifically, participants may either realize a gain or loss depending both on (1) how successfully they manage total Medicare fee-for-service costs of care (with limited exceptions) throughout each 90-day episode of care and (2) performance on specified quality measures.

There are key differences between the original BPCI and BPCI Advanced models, including the following (among others): Continue Reading

CMS Clears the Way for States to Add Medicaid Work/Community Engagement Requirements

CMS has announced a new initiative allowing states to propose demonstrations to “improve Medicaid enrollee health and well-being through incentivizing work and community engagement.” Specifically, states may propose Section 1115 waivers to make participation in work or other community engagement a requirement for continued Medicaid eligibility or coverage for non-elderly, non-pregnant adult Medicaid beneficiaries who are eligible for Medicaid on a basis other than disability.  CMS explains the criteria it will use to evaluate state proposals, including:  alignment with Temporary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Program (SNAP) programs; population subgroups included in the demonstration (including observance of all federal civil rights laws); the proposed range of activities that would satisfy the work and community engagement requirement; the proposed beneficiary supports in meeting the new requirements; and local employment market conditions.  CMS also specifies that any section 1115 waiver program must be budget neutral; states will not be permitted to accrue savings from an associated reduction in enrollment.

The day after announcing the new Medicaid option, CMS approved a Kentucky waiver allowing the state to implement a community engagement requirement as a condition of eligibility for Medicaid beneficiaries aged 19 to 64, with a number of exceptions (former foster care youth, pregnant women, primary caregiver of a dependent, beneficiaries considered medically frail, certain beneficiaries with acute medical conditions, and full time students).  To remain eligible for coverage, non-exempt Medicaid recipients in Kentucky must complete 80 hours per month of community engagement activities (e.g., employment, education, job skills training, and community service).

HHS Creates Conscience and Religious Freedom Division within OCR

On January 18, 2018, HHS announced it has established a new Conscience and Religious Freedom Division within the HHS Office for Civil Rights (OCR).  The Division will focus on enforcement of (1) existing protections for health care providers who refuse to perform certain health care services on religious or moral grounds, and (2) laws that prohibit discrimination on the basis of religion in various HHS programs. 


Congress Holds More Hearings on Opioid Crisis and Public Health Threats

A number of recent Congressional hearings focused on the opioid crisis, including the following:

In addition, the Senate HELP Committee recently held the first of two hearings on public health threats, focusing on the country’s preparedness and response capabilities.  Part two of the hearing is scheduled for January 23, 2018.

CMS Invites Medicaid Stakeholders to Participate in Call on New Medicare Card Project (Jan. 23)

CMS is hosting a call on January 23, 2018 to brief state Medicaid agencies, Medicaid providers, managed care organizations, and other Medicaid stakeholders about the new Medicare card project. Under this initiative, CMS is moving away from Social Security Number-based Health Insurance Claim Numbers to new Medicare Beneficiary Identifiers (MBIs).

1/22 update:  this call has been postponed indefinitely.

CMS Gives States Options for Complying with Cures Act Mandate to Cap Medicaid DME Rates

As previously reported, the 21st Century Cures Act prohibits federal financial participation (FFP) payments to the states for certain Medicaid durable medical equipment (DME) expenditures that exceed what Medicare would have paid for such items, either on a fee schedule basis or under competitive bidding.  The provision is effective January 1, 2018.

CMS recently provided guidance to the states on the scope of the FFP limitation, noting that it only applies to DME covered by a state’s Medicaid program on a fee-for-service (FFS) basis that is also covered by Medicare. The FFP limitation does not apply to prosthetics, orthotics, or medical supplies, nor does it apply to items for which Medicaid is not the primary payer.  Medical equipment and appliances provided in an institutional setting and paid as a component of the institutional payment are not subject to the FFP limitation, but DME items paid on a FFS basis separate from the institutional payment will be subject to the limit.

CMS presents two basic options available to the states to demonstrate compliance with this provision. First, states may base their Medicaid DME payment rates on Medicare fee schedule or competitive bid rates, or on a lesser percentage of those rates (if this requires a state plan amendment, the amendment must be submitted by March 31, 2018).  Second, the state could conduct a “robust” comparison of Medicare and Medicaid rates, using both rate and unit utilization data; CMS expects the first comparative analysis to be submitted to CMS by March 31, 2019 (pending certain regulatory approvals).  CMS also would consider alternative approaches designed to meet a state’s specific needs.

Under any of these methods, if a state discovers that its payments for relevant DME items exceed the FFP limit, CMS directs that the overpayment must be returned to CMS.

CMS Mulling Changes to CLIA Personnel, Proficiency Testing Referral Rules

CMS is requesting information from the public on potential changes to longstanding Clinical Laboratory Improvement Amendments of 1988 (CLIA) personnel, histocompatibility, and related policies, which have not been comprehensively updated since 1992. With regard to personnel requirements, CMS seeks information that will enable it to revise the regulations to “better reflect current knowledge, changes in the academic context and advancements in laboratory testing,” particularly with regard to nursing and physical science degrees, competency assessment, laboratory training and experience requirements, and documentation. Regarding CLIA histocompatibility requirements, CMS asks for comments regarding potential updates to crossmatching requirements (including whether virtual crossmatching should be an acceptable alternative to physical crossmatching) and other rules that may not reflect current laboratory practice.

In addition, CMS requests feedback regarding CMS’s flexibility to impose alternative sanctions for laboratories issued a Certificate of Waiver (CoW) that are determined to have participated in prohibited proficiency testing (PT) referral. CMS also seeks comments on appropriate sanctions when a laboratory has referred its PT samples to another laboratory and has reported the other laboratory’s result as their own. Furthermore, CMS invites input on existing and potential new CLIA-related fees.

CMS will accept comments until March 12, 2018. CMS will consider submitted comments in a future related rulemaking.

OIG Invites Anti-kickback Safe Harbor, Fraud Alert Recommendations

The HHS Office of Inspector General (OIG) has published its annual solicitation of recommendations for new or revised anti-kickback statute safe harbors and new Special Fraud Alerts. The OIG states that in considering any recommendations, it will seek to determine potential financial benefits to health care providers in ordering or referring health care services. The OIG also will weigh the extent to which the proposals would increase or decrease:

  • Access to health care services,
  • Quality of health care services,
  • Patient freedom of choice among health care providers,
  • Competition among health care providers,
  • Costs to federal health care programs,
  • Potential overutilization of health care services, and
  • The ability of health care facilities to provide services in medically underserved areas or to medically underserved populations.

Comments will be accepted until February 26, 2018. In its most recent semiannual report, the OIG provided a status report on the response to last year’s safe harbor solicitation. The OIG received 11 recommendations for new or modified safe harbors — none of which are being adopted at this time.

DOJ Recouped $2.4 billion in Health Care Industry False Claims Act Settlements in FY 2017

The Department of Justice (DOJ) obtained $3.7 billion in False Claims Act (FCA) settlements and judgments in fiscal year (FY) 2017, with $2.4 billion coming from health care industry cases. The $2.4 billion amount includes only federal recoveries; additional funds were recovered for state Medicaid programs.  The largest health care industry recoveries in FY 2017– more than $900 million – involved the drug and medical device industry.  Most of the government’s FCA settlements and judgments ($3.4 billion) related to qui tam lawsuits in FY 2017, with individual whistleblowers receiving $392 million.  The DOJ notes that 669 qui tam suits were filed this past year.