CMS Delays Start Date for Medicare Cardiac/Hip Fracture Episode Payment Model Until 2018; Parallel CJR Changes Also Pushed Back

The Centers for Medicare & Medicaid Services (CMS) is delaying until January 1, 2018 implementation of mandatory Medicare episode payment models (EPMs) for acute myocardial infarction, coronary artery bypass graft, and surgical hip/femur fracture treatment procedures furnished in designated geographic areas.  Conforming changes to the Comprehensive Care for Joint Replacement (CJR) program also are being pushed back to 2018, as is the start of a new Cardiac Rehabilitation (CR) Incentive Payment Model.  These policies initially were scheduled to be implemented July 1, 2017, but the Trump Administration subsequently postponed them until October 1, 2017.

In the rule announcing new 2018 start date, CMS again raised the possibility that it will propose additional modifications to the programs; indeed, a Trump Administration proposed rule to revise the EPM, CJR, and CR programs is currently under Office of Management and Budget review.  Thus, the delay until 2018 is intended to ensure program participants have “a clear understanding of the governing rules before episodes begin and have the opportunity to take additional steps to adjust to any potential changes that maybe effectuated.”

Deadline Extended: Hospitals and Other Non-Federal Entities Given Another Year to Comply with New OMB Procurement Standards

The Office of Management and Budget (OMB) recently announced that it is giving hospitals and other non-federal entities that receive federal assistance an additional year to comply with revised procurement standards for grants and federal funding. While the deadline has been extended until December 25, 2017, federal grant recipients should be taking steps to ensure compliance with the OMB standards before that date.

For more information, please view our Global Regulatory Enforcement Law Blog post on this topic, Non-Federal Entities Receive Extra Year to Comply with Overhauled OMB Procurement Standards for Federal Assistance Agreements authored by Reed Smith partner, Holly Roth and associate Sarah Wronsky.

CMS Proposes 1% Update to Medicare IRF PPS Payments for FY 2018

CMS has published a proposed rule to establish FY 2018 Medicare prospective payment system (PPS) rates for inpatient rehabilitation facility (IRF) services.  CMS estimates that IRF PPS payments would increase by 1.0% overall ($80 million) under the proposed rule compared to FY 2017 levels.  As mandated by the  Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), CMS proposes a 1.0% increase factor for FY 2018, although an IRF that does not submit required quality data to CMS is subject to a 2.0 percentage point decrease in its annual update.  The proposed FY 2018 standard payment conversion factor is $15,835, up from $15,708 in FY 2017.  The proposed fixed-loss amount for high cost outlier cases is $8,656, compared to $7,984 in FY 2017.  CMS also proposes updates to the IRF wage index and case-mix group relative weights in a budget-neutral manner.  As in FY 2017, CMS is not proposing changes to facility-level adjustment factors; CMS will continue to monitor the effects of FY 2014 adjustments. 

CMS proposes a number of refinements to how facilities demonstrate compliance with the patient classification requirement that at least 60% of a facility’s patient population have one of 13 qualifying conditions.  Specifically, CMS proposes to revise the lists of ICD–10–CM diagnosis codes that are used to determine presumptive compliance and provide for automatic annual updates to presumptive methodology diagnosis code lists.  CMS also solicits public comments on the 60% rule, including the list of conditions, to assist CMS “in generating ideas and information for analyzing refinements and updates to the criteria used to classify facilities for payment under the IRF PPS.” 

Furthermore, CMS proposes to make a number of changes to the IRF PAI and eliminate the 25% payment penalty that applies to late IRF patient assessment instrument (IRF-PAI) submissions.  In addition, CMS proposes revisions to the quality measures under the IRF quality reporting program.

Finally, as in other recent proposed Medicare payment rules, CMS invites suggestions for ways CMS can improve the health care delivery system and decrease burdens on providers and patients.

The proposed rule was published on May 3, 2017; the comment deadline is June 26, 2017.

CMS Gives States Three More Years to Comply with HCBS Rules

CMS has announced that states may take an additional three years — until March 17, 2022 — to demonstrate compliance with the Medicaid home and community based services (HCBS) settings criteria established in a January 16, 2014 final rule.  In a memo to states announcing this extension, CMS cites the “difficult and complex nature” of the transition and CMS’s interest in helping states “ensure compliance activities are collaborative, transparent and timely.”

Rose Garden Ceremony Notwithstanding, Finish Line Not in Sight for ACA Repeal Legislation

Although President Trump and House Republican leaders held a White House Rose Garden ceremony to celebrate House passage of legislation to partially repeal the Affordable Care Act (ACA), the prospects for actual enactment of the bill into law are highly uncertain. The American Health Care Act of 2017 (HR 1628), approved by the House May 4, 2017 on a 217 to 213 vote, generally follows the contours of an earlier version of the bill pulled from House consideration in March due to insufficient support. To gain the votes of more conservative Republican members, the updated version of the bill makes it easier for states to obtain federal approval to waive various ACA requirements, including provisions related to essential health benefits and premium protection for individuals with pre-existing medical conditions, in order “to encourage fair health insurance premiums.” In response to concerns about the potential impact of state waivers on rates for individuals with pre-existing conditions, leadership agreed to add $8 billion over five years to offset increased costs to such consumers – an amount which critics contend is insufficient to meaningfully reduce premiums. The revised legislation also retained steep cuts in Medicaid spending and is still expected to result in a significant increase in the uninsured population. Adding to the uncertainty of the impact of the legislation is the lack of a Congressional Budget Office (CBO) score for the revised bill; CBO does not expect to have an updated score until the week of May 22.

The action now moves to the Senate, where lawmakers from both parties have indicated that they intend to significantly revise the House plan, if not start from scratch. Recent news of major health plans exiting the ACA insurance exchanges keeps the spotlight on the uncertain future of the ACA. Given that senators are awaiting the CBO score and Senate parliamentary guidance on the scope of policy changes that can be made under archaic Senate procedural rules, however, formal Senate action is likely weeks or even months away. A House-Senate conference committee will be likely if the Senate does pass a health care measure, further delaying when a bill might reach the President’s desk.

CMS Retroactively Revises DMEPOS Fee Schedule to Implement Cures Act

CMS has announced revised Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) fee schedule amounts for the period of July through December 2016, as required by the 21st Century Cures Act. By way of background, the Affordable Care Act mandated that CMS use pricing information from competitive bidding to adjust certain DMEPOS fee schedule amounts for items furnished in areas where the competitive bidding program (CBP) is not implemented.  A CMS rule implemented these adjustments in two steps:

  • January 1, 2016 – June 30, 2016: Blend of 50% of the unadjusted fee schedule amount that would have gone into effect on January 1, 2016 and 50% of the adjusted fee schedule amount.
  • Beginning July 1, 2016: 100% adjusted fee schedule amounts, incorporating data from the most recent round of competitive bidding.

The Cures Act requires the Secretary to extend the transition period retroactively from June 30, 2016 to December 31, 2016, with full implementation of adjusted rates for dates of service or after January 1, 2017. CMS has posted the revised blended fee schedule amounts applicable July through December 2016.  Note that CMS did not simply extend the pre-July 2016 rates, since the statute and regulations specify that the adjusted fee schedule amounts must be updated each time new CBP pricing information becomes available (e.g., the recompeted Round 2 payment amounts that took effect on July 1, 2016). According to an AA Homecare analysis, this generally results in rates that are higher than CMS’s prior July 1, 2016 fee schedule, but below the amounts in effect January 1, 2016. Contractors have begun the adjustment process to reflect the revised blended rates; CMS is giving contractors six months to complete all adjustments.

Congressional Panels Tackle FDA Reauthorization Act and Other Health Policy Issues

On May 11, 2017, the Senate on Health, Education, Labor, and Pensions (HELP) Committee approved S 934, a bill extend Food and Drug Administration user-fee programs for prescription drugs, medical devices, generic drugs, and biosimilar biological products. The legislation also includes various policy changes, including provisions intended to improve the medical device inspection process and modify the regulation of hearing aids, among other things.  The bill now moves to the full Senate.  Previously, the HELP Committee approved:  S 652, to reauthorize a program for early detection, diagnosis, and treatment regarding deaf and hard-of-hearing newborns, infants, and young children; S 849, to support programs for mosquito-borne and other vector-borne disease surveillance and control; S 916, to amend the Controlled Substances Act with regard to the provision of emergency medical services; and S 920, to establish a National Clinical Care Commission.

The House Energy and Commerce Committee also held a hearing regarding improving the regulation of medical technologies. The hearing focused on the following bipartisan bills:  HR 1652, the Over-the-Counter Hearing Aid Act of 2017; HR 2009, the Fostering Innovation in Medical Imaging Act; HR 2118, the Medical Device Servicing and Accountability Act, and HR 1736, to amend the Federal Food, Drug, and Cosmetic Act to improve the process for inspections of device.  The panel held a separate hearing on “Combating Waste Fraud and Abuse in Medicaid Personal Care Services Program.”

In addition, the following hearings and markups are scheduled next week: Continue Reading

GAO: CMS, MACs Should Bolster Provider Education to Cut Improper Medicare Payments

In 2016, an estimated $41.1 billion in improper Medicare fee-for-services payments were made to providers. The Centers for Medicare & Medicaid Services (CMS) believes that provider education plays an important role in ensuring payments are made properly; CMS has delegated authority for provider education to the Medicare Administrative Contractors (MACs).

In a recent report, the Government Accountability Office (GAO) found that contrary to federal internal control standards, CMS has not required the MACs to report on specific provider education efforts, which left certain areas vulnerable to improper billing. In addition, CMS has not required the MACs to educate providers who refer patients for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) and home health services on supporting billing documentation and referral documentation, also contrary to federal internal control standards.

The GAO recommended that CMS take steps to strengthen oversight and to ensure that provider education efforts are focused on areas that are vulnerable to improper billing. The GAO recommended, and CMS concurred, that CMS should require MACs to provide detailed reports on their provider education efforts. In addition, the GAO called for all MACs to collaborate to educate referring providers regarding the documentation requirements for DMEPOS and home health services. Finally, the GAO recommended that CMS establish performance metrics to determine the effectiveness of certain reviews in reducing improper billing.

Telehealth/Remote Patient Monitoring Rarely Used in Federal Health Programs, but Innovative Programs May Provide Boost, GAO Reports

The GAO recently reported that fewer than 1% of Medicare and Department of Defense (DOD) beneficiaries and 12% of Veteran’s Administration (VA) beneficiaries utilized telehealth and remote patient monitoring services, even though patient and provider associations believe these services may improve or maintain quality of care. These associations cited payment and coverage restrictions as barriers, such as limiting the practice settings where patients may receive such services. The Centers for Medicare & Medicaid Services (CMS) has waived some of these coverage restrictions in eight innovative demonstration projects and payment and delivery models. One such model, the Merit-based Incentive Payment System (MIPS), reimburses clinicians based on quality and resource utilization beginning in 2017. MIPS allows clinicians to use telehealth and in some cases, remote patient monitoring, to help them meet the MIPS performance criteria. According to GAO, the outcomes of these payment models and demonstration projects will help CMS assess the potential benefits and possible expansion of telehealth and remote patient monitoring for Medicare beneficiaries.

GAO Encourages More CMS Collaboration with States on Medicaid Program Integrity Efforts

The GAO has had ongoing concerns about the integrity of the Medicaid program due to its size, diversity, and recent rapid growth as a result of the Affordable Care Act. It is the second largest health insurance program in the U.S. based on expenditures ($576 billion combined federal and state spending projected for 2016).  At the request of the Senate Finance Committee, the GAO reviewed and issued a report on its examination of CMS’s oversight and support of states’ Medicaid program integrity efforts.

The GAO found that CMS has improved its oversight and support of the states’ Medicaid program integrity needs and efforts through training initiatives and review and collaborative audit programs.  In fact, collaborative audits identified substantial potential Medicaid overpayments to health care providers in recent years, with identified overpayments increasing from $2 million in fiscal year 2012 to $36 million in fiscal year 2015.  The GAO contends, however, that improvements are still needed.  The GAO concluded, and CMS agreed, that CMS should work with states on addressing barriers that improve state participation in collaborative audits, improve communication during audits, continue offering training programs, and develop systematic approaches to collecting and communicating promising state program integrity practices.

CMS Proposes FY 2018 Update to Medicare Hospice Payment Rules; Solicits Ideas for Hospice Program Improvements

CMS has published a proposed rule to establish fiscal year (FY) 2018 Medicare hospice reimbursement rates, update hospice quality programs, and request public input on ways to improve the Medicare hospice program.

The proposed rule would increase FY 2018 hospice rates by 1% (approximately $180 million), as mandated by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA); CMS estimates that in the absence of MACRA, the market basket update would have been 2.2%. Note that the annual update is reduced by 2 percentage points for hospices that fail to report required quality data.  CMS also proposes updating the FY 2018 hospice cap to $28,689.04, an increase of 1%.

CMS proposes various updates to the Hospice CAHPS® Experience of Care Survey measures, and discusses the potential use of a new “Hospice Evaluation & Assessment Reporting Tool” (HEART) patient assessment instrument. Furthermore, CMS requests comments on potential future hospice quality measure “concepts” addressing potentially avoidable hospice care transitions and access to levels of hospice care.  The proposed rule also discusses details of CMS’s plans to begin public reporting of hospice quality measures on a Hospice Compare Site.

In addition, CMS solicits comments regarding possible future rulemaking to specify that: Continue Reading

CMS Proposes IPPS/LTCH Payment and Policy Changes for FY 2018; Requests Comments on Broader Policy Issues

CMS has published its proposed rule to update the Medicare acute hospital inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) for fiscal year (FY) 2018. CMS also solicits public comments on a range of policy issues related to physician-owned hospitals, inpatient and outpatient payment differentials for similar services, and ways to reduce the regulatory burden for providers and promote high quality care, as discussed below.

Acute Hospital Rate Update. With regard to the IPPS, CMS projects that the cumulative rate and policy changes in the proposed rule would increase total IPPS payments by about $3.1 billion in FY 2018 compared to FY 2017 levels. Rate changes would result from a number of adjustments, including:  a 2.9% market basket update reduced by a -0.4% multifactor productivity adjustment and a 0.75% cut mandated by the Affordable Care Act (ACA); a -0.6% adjustment related to the two midnight policy; and a +0.4588% increase to adjust for documentation and coding under the 21st Century Cures Act. CMS also proposed changes in uncompensated care payments that are expected to increase IPPS operating payments by another 1.2%.  Continue Reading

CMS Simultaneously Releases Proposed Rule to Update SNF PPS for FY 2018 & Advance Notice of Proposed Rulemaking (ANPRM) to Replace RUG-IV Case-Mix Methodology as Early as FY 2019

CMS has issued its proposed rule to update Medicare skilled nursing facility (SNF) prospective payment system (PPS) rates and policies for FY 2018, while at the same time soliciting comments regarding a forthcoming and potentially ground-breaking proposed rule to replace the SNF PPS RUG-IV case-mix classification methodology, which forms the basis for SNF payment, with the Resident Classification System, Version I (RCS-I), as early as FY 2019.

For nearly ten years, CMS, the Office of Inspector General, and the Medicare Payment Advisory Commission have raised concerns that the current SNF payment system encourages providers to deliver therapy to residents based on financial goals and not patient need.  The RCS-I case-mix model, which was developed during the SNF Payment Models Research initiative, attempts to address those concerns by removing service-based metrics from the SNF PPS and deriving payment, almost exclusively, from objective resident characteristics.  Most notably, the proposed RCS-I case-mix model would: Continue Reading

CMS Signals Potentially Big Changes Ahead for Medicare SNF Payment Policy

Using unusually blunt language, the Medicare Payment Advisory Commission (MedPAC) recently noted that it “is increasingly frustrated with the lack of statutory or regulatory action” to lower Medicare skilled nursing facility (SNF) payments and revise the payment system to link payments to patients’ characteristics and costs of care.  It appears, however, that the Centers for Medicare & Medicaid Services (CMS) is finally preparing to start a rulemaking process to reform the Medicare SNF payment system – separate from the annual prospective payment system (PPS) update process. 

Specifically, CMS has sent to the White House Office of Management and Budget (OMB) an advance notice of proposed rulemaking (ANPRM) to revise the SNF PPS case mix methodology, a regulatory step that enables CMS to formally obtain public input on specific aspects of policy prior to issuance of a proposed rule.  CMS has not yet announced the scope of the ANPRM, but presumably it will seeks to translate its ongoing SNF Payment Models Research initiative into regulatory policy replacing the SNF PPS with a methodology that more closely ties reimbursement to resident characteristics (rather than the amount of therapy provided).

Both the ANPRM and the fiscal year 2018 SNF PPS proposed rule are now pending at OMB.  The proposed 2018 SNF PPS update is likely to be released any day.  The ANPRM timeline is less predictable, but the associated reforms ultimately could have a more significant impact on reimbursement to SNFs.

Coming Soon: Proposed 2018 Medicare Payment Rules

CMS has sent several major proposed Medicare 2018 payment rules to the White House Office of Management and Budget (OMB) for regulatory clearance before publication in the Federal Register. OMB has already cleared the proposed fiscal year (FY) 2018 acute inpatient prospective payment system/long-term care hospital prospective payment system (PPS) rule; it could be released at any time.  Other proposed FY 2018 Medicare updates pending at OMB include the skilled nursing facility PPS, the inpatient rehabilitation facility PPS, and hospice rate rules.

Also, CMS has gotten an early start on the calendar year (CY) 2018 rules, with the proposed updates for outpatient hospital departments/ambulatory surgical centers, home health agencies, end-stage renal disease providers, and suppliers of durable medical equipment, prosthetics, orthotics, and supplies all pending at OMB.

CMS Issues Final Rule to Stabilize ACA Insurance Markets, While Emphasizing Marketplace Woes

The Centers for Medicare & Medicaid Services has published a final rule intended to help improve the risk pool and stabilize the Affordable Care Act (ACA) Insurance Exchanges for 2018 – even as CMS contends that consumers “have faced double-digit premium increases, fewer plans to choose from, and a market that continues to be threatened by insurance issuer exits.” Major provisions of the final rule will:

  • End the 2018 open enrollment period for the individual market on December 15, 2017 (instead of January 31, 2018) to require individuals to sign up for coverage before the beginning of the plan year (unless they are eligible for a special enrollment period);
  • Expand pre-enrollment verification of eligibility to all new consumers who seek to enroll through special enrollment periods to address “concerns from issuers about potential misuse and abuse of special enrollment periods,” and make other revisions to special enrollment period regulations;
  • Allow issuers to collect unpaid premiums prior to reenrolling an individual in the next year’s plan;
  • Increase the de minimis variation in the actuarial values used to determine levels of coverage; and
  • Revise the network adequacy review process and lower the minimum essential community provider (ECP) threshold from 30 percent to 20 percent of the available ECPs in a plan’s service area.

Additional announcements regarding the process issuers must follow for the 2018 plan year are posted on the CMS website.

CMS Finalizes 2018 Medicare Advantage/Part D Policies, Seeks Ideas for Improving Programs

CMS has released its 2018 Medicare Advantage (MA) and Part D Rate Announcement and Call Letter. CMS estimates that plan revenues will increase by 0.45 percent in 2018; when coding acuity is considered, plans can expect a total revenue change of 2.95 percent. CMS also adopted provisions intended to reduce opioid misuse under Medicare Part D, among other reimbursement methodology and policy changes.

Looking forward, CMS is inviting comments on ways to provide MA organizations and Part D plan sponsors with “flexibility to develop and implement innovative approaches for providing Medicare benefits to enrollees and empowering enrollees.” Specifically, CMS seeks ideas for policy and procedural changes in such areas as: benefit design; operational or network composition flexibility; supporting the doctor-patient relationship in care delivery; facilitating individual preferences; plan payment, monitoring, and measurement; how and when CMS issues regulations and policies; and how CMS can simplify rules and policies for beneficiaries, providers and plans. Responses to the request for information are due April 24, 2017.

OIG and HCCA Offer Suggestions for Measuring Health Organization Compliance Program Effectiveness

The OIG and the Health Care Compliance Association (HCCA) recently held a roundtable where the discussion focused on a broad range of ideas regarding how health care organizations can measure their compliance program effectiveness – while stressing that each organization must tailor its compliance program to reflect the organization’s specific circumstances. These ideas are contained in a document, “Measuring Compliance Program Effectiveness – A Resource Guide,” which addresses both what and how to measure compliance with the standard seven elements of a compliance program: Continue Reading

Roundup of Recent Congressional Health Policy Hearings

A number of Congressional committees have recently held hearings on health policy issues, including the following:

  • House Energy and Commerce Committee hearings on “Cybersecurity in the Heath Care Sector: Strengthening Public-Private Partnerships” and Food and Drug Administration (FDA) medical device user fees.
  • A House Oversight and Government Reform Committee hearing on “Federally Funded Cancer Research: Coordination and Innovation.”
  • Senate HELP Committee hearings on the nomination of Scott Gottlieb, MD, to serve as Commissioner of Food and Drugs, and on FDA user fee agreements.
  • A Senate Aging Committee hearing on Alzheimer’s disease, focusing on preventing cognitive decline in Americans to assuring quality care for those living with the disease.
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