Medicare Sequestration Extended through FY 2029 under New Budget Law

Debra A. McCurdyBy Debra A. McCurdy on Posted in Legislative Developments

While the latest federal budget agreement signed into law earlier this month provides a reprieve from statutory budget caps for certain defense and domestic programs, it extends Medicare sequestration cuts for an additional two years.  Specifically, section 402 of the Bipartisan Budget Act of 2019 (P.L. 116-37) extends the 2% across-the-board reduction to Medicare provider and plan payments through fiscal year 2029.  Note that for the last year of sequestration, the Medicare savings are “front loaded,” with a 4% reduction imposed during the first 6 months of the fiscal year and no reduction applied during the second half.

Congress has regularly relied on extension of the Medicare sequestration authority to offset the costs of unrelated budget bills.  Chances are that this extension will not be the last.

For background on Medicare sequestration policy, see this detailed Congressional Research Service report and our previous sequestration updates.

Medicare Payments to Inpatient Rehabilitation Facilities to Rise 2.5% in FY 2020 under Final CMS Rule

Debra A. McCurdyBy Debra A. McCurdy on Posted in Centers for Medicare & Medicaid Services Regulations

The Centers for Medicare & Medicaid Services (CMS) has published its final rule to update the Medicare inpatient rehabilitation facility (IRF) prospective payment system (PPS) for fiscal year (FY) 2020.  CMS expects IRF PPS payments to increase by $210 million – or 2.5% – relative to FY 2019 payments under the final rule, due to a 2.9% IRF market basket update reduced by a 0.4 percentage point multifactor productivity adjustment.  An IRF that does not submit required quality data to CMS would be subject to a 2.0 percentage point decrease in its annual update.  CMS finalized its proposal to rebase and revise the IRF market basket to use a 2016 base year, rather than the current 2012 base year.  The final FY 2020 standard payment conversion factor is $16,489, compared to $16,021 in FY 2019.  The final outlier threshold amount for FY 2020 is $9,300, down from $9,402 for FY 2019.

To align with other post-acute care settings and support the eventual transition to a unified post-acute care system, CMS adopted its proposal to use the concurrent (rather than prior year) FY inpatient prospective payment system wage index beginning with FY 2020.  Other policy updates include:  revisions to case-mix groups based on FY 2017 and FY 2018 data; updated relative weights and average length of stay values for the revised case-mix groups; revisions to IRF Quality Reporting Program (QRP) measures and standardized patient assessment data elements; and clarification that the determination as to whether a physician qualifies as a “rehabilitation physician” is made by the IRF.  After considering public comments, CMS did not adopt its proposal to expand QRP data collection to all patients regardless of payer, but CMS intends to revisit this policy in future rulemaking.

CMS Issues Final Medicare Inpatient Psychiatric Facility Update for FY 2020

Debra A. McCurdyBy Debra A. McCurdy on Posted in Centers for Medicare & Medicaid Services Regulations, Department of Health and Human Services

The Centers for Medicare & Medicaid Services (CMS) will increase Medicare inpatient psychiatric facility (IPF) prospective payment system (PPS) payments by 1.5%, or $65 million, in fiscal year (FY) 2020 under a recently-published final rule.  The final FY 2020 market basket increase is 2.9%, which is reduced by two statutory reductions for an IPF payment rate update of 1.75%.  CMS also projects that total payments to IPFs will be further reduced by 0.23 percentage points due to the final update to the outlier fixed dollar loss threshold amount, which increases from $12,865 in FY 2019 to $14,960 in FY 2020 under the final rule.  The IPF PPS federal per diem base rate will increase from $782.78 in FY 2019 to $798.55 in FY 2020, with a $782.85 per diem base rate for providers who fail to report quality data).  The final rule also:  rebases the IPF market basket using a 2016 base year (instead of 2012); updates IPF Quality Reporting Program requirements; and eliminates the current one-year lag in wage index data.

CMS Proposes Medicare DMEPOS Policy Updates, Including New Methodology for Pricing New Codes

Elizabeth B. Carder-ThompsonDebra A. McCurdyBy Elizabeth B. Carder-Thompson and Debra A. McCurdy on Posted in Centers for Medicare & Medicaid Services Regulations

The Centers for Medicare & Medicaid Services (CMS) is planning a potentially-significant overhaul of Medicare pricing rules for new items of durable medical equipment (DME), prosthetics, orthotics and supplies (DMEPOS) as part of its proposed annual DMEPOS policy update for calendar year (CY) 2020.  The proposed rule also includes DMEPOS competitive bidding program (CBP) updates and proposals to streamline requirements for ordering DMEPOS items.

Under a decades-old policy, CMS uses a highly imprecise “gap-fill” process to establish fees for new items of DMEPOS for which charges in the statutory “base year” are unavailable.  In such cases, CMS and its contractors use fees for comparable items, supplier prices, manufacturer’s suggested retail prices, or wholesale prices plus a markup to approximate current pricing.  To remove the impact of inflation, CMS next “deflates” the prices back to the base year period (1986 or 1987 depending on the item – well before the time the item was available or likely even invented).  CMS then applies the annual covered item update factors specified in the statute to establish current rates.

CMS notes that it has “heard frequently from manufacturers that do not agree that their newly developed DMEPOS item is comparable to older technology DMEPOS items and services.”  Nevertheless, CMS contends that there are benefits to identifying and basing rates on comparable items, including avoiding providing a competitive advantage to manufacturers of new items.  To improve transparency and predictability in the sources of data and selection of comparable items and services for gap-fill purposes, however, CMS proposes to codify a framework for establishing fees for new DMEPOS items (i.e., new Healthcare Common Procedure Coding System (HCPCS) codes) that do not have a fee schedule pricing history).

CMS’ proposal is complex.  In general, under the proposal, CMS would first seek to use existing fee schedule amounts for DMEPOS that it determines to be “comparable” based on one or more of the following “components and attributes”:

Comparable Item Analysis (Any combination of, but not limited to, the categories below for a device or its subcomponents)

Components Attributes
Physical Components Aesthetics, Design, Customized vs. Standard, Material, Portable, Size, Temperature Range/ Tolerance, Weight.
Mechanical Components Automated vs. Manual, Brittleness, Ductility, Durability, Elasticity, Fatigue, Flexibility, Hardness, Load Capacity, Flow-Control, Permeability, Strength.
Electrical Components Capacitance, Conductivity, Dielectric Constant, Frequency, Generator, Impedance, Piezo-electric, Power, Power Source, Resistance.
Function and Intended Function, Intended Use.
Additional Attributes and Features ‘‘Smart’’, Alarms, Constraints, Device Limitations, Disposable Parts, Features, Invasive vs. Non-Invasive

If CMS determines that there are no items with existing fee schedule amounts considered comparable to the new item, CMS would establish the fee schedule amount based on either: Continue Reading

CMS Proposes Medicare ESRD PPS Update for CY 2020

Debra A. McCurdyBy Debra A. McCurdy on Posted in Centers for Medicare & Medicaid Services Regulations

The Centers for Medicare & Medicaid Services (CMS) has proposed updating Medicare end-stage renal disease (ESRD) prospective payment system (PPS) rates by 1.7% for calendar year 2020.  This update reflects a proposed 2.1% market basket increase, partially offset by a -0.4% productivity adjustment.  After application of a wage index budget-neutrality adjustment, the proposed CY 2020 ESRD PPS base rate is $240.27, compared with the 2019 rate of $235.27.  The same rate would apply to renal dialysis services furnished by an ESRD facility to individuals with acute kidney injury (AKI).

CMS proposes to revise the eligibility criteria for the Transitional Drug Add-on Payment Adjustment (TDAPA).  In addition, CMS proposes to change the basis for TDAPA payment for calcimimetics (from average sales price (ASP) plus 6% to ASP without any markup..  The proposed rule also addresses:  a new transitional add-on payment adjustment for new and innovative equipment and supplies; discontinuation of the erythropoiesis-stimulating agent (ESA) monitoring policy; annual outlier payment adjustments; modifications to ESRD Quality Incentive Program policies; and comment solicitations regarding the ESRD PPS wage index and options for improving data collection to refine the ESRD PPS case-mix adjustment model.  CMS will accept comments on the proposed rule until September 27, 2019.

As part of this rulemaking, CMS proposes significant changes to Medicare payment policies for durable medical equipment, prosthetics, orthotics, and supplies; these provisions are summarized in a separate post.

Medicare Hospice Payments to Rise by $520 Million in FY 2020 under Final CMS Rule

Debra A. McCurdyBy Debra A. McCurdy on Posted in Centers for Medicare & Medicaid Services Regulations

The Centers for Medicare & Medicaid Services (CMS) has published its final fiscal year (FY) 2020 Medicare hospice payment rule.  CMS forecasts that the final rule will result in an estimated $520 million increase in FY 2020 payments to hospices due to the final hospice payment update percentage of 2.6%. The final FY 2020 hospice cap is $29,964.78, compared with the FY 2019 cap amount of $29,205.44.

The rule makes a number of modifications to the requirements for hospice election statement content, to provide additional transparency for patients regarding the scope of hospice benefits and their potential financial liability, effective for hospice elections beginning October 1, 2020.  Specifically, the hospice must provide notification of the individual’s (or representative’s) right to receive an election statement “addendum” if there are conditions, items, services, and drugs the hospice has determined to be unrelated to the individual’s terminal illness and related conditions and would not be covered by the hospice.  CMS sets forth detailed requirement for: content of the addendum, including a list and understandable rationale for such unrelated items; timelines for delivery of the addendum; and notification of the right for advocacy through a Medicare Beneficiary and Family Centered Care-Quality Improvement Organization (BFCC–QIO) if the individual disagrees with the hospice’s determination.

Among other things, the final rule also: Continue Reading

CMS Proposes Medicare Physician Fee Schedule Rates and Policies for CY 2020

Thomas W. GreesonDebra A. McCurdyBy Thomas W. Greeson and Debra A. McCurdy on Posted in Centers for Medicare & Medicaid Services Regulations

The Centers for Medicare & Medicaid Services (CMS) has published its proposed Medicare physician fee schedule (PFS) rule for calendar year (CY) 2020.  In addition to updating rates for physician services, CMS proposes changes to numerous other Medicare Part B policies.  Highlights of the proposed rule include the following:

  • The proposed 2020 conversion factor (CF) is $36.0896, up slightly from the 2019 CF of $36.0391. CMS also proposes updates to work and practice expense relative value units (RVUs) for numerous new, revised, and potentially misvalued codes.
  • CMS solicits feedback on contractor reports regarding the number and level of postoperative visits for surgical procedures. The data is intended to inform potential revisions to the global surgical package.
  • CMS requests comments on new opportunities for unspecified bundled payment rates for PFS services that are furnished together. Such bundles might include per-beneficiary payments for multiple services or condition-specific episodes of care.
  • CMS proposes additional updates to evaluation and management (E/M) visit coding and payment policies for 2021 to align with CPT Editorial Panel changes. CMS notes that the E/M changes would provide the greatest RVU increase to specialties that bill higher level established patient visits, while specialties that do not generally bill office/outpatient E/M visits, because of budget neutrality, could see large payment decreases.  For instance, CMS estimates that endocrinology charges could increase 16% and rheumatology charges could rise by 15%, while radiology charges would fall by 8% and ophthalmology charges would drop 10% as a result of the proposed E/M policies if implemented for CY 2021.  CMS adds that the 2021 implementation date allows “a year of preparatory time and time for potential refinement over the next year as we take into account any feedback from stakeholders on these proposed changes.”
  • CMS proposes to replace the current Medicare requirement for general physician supervision of physician assistants (PAs), including the immediate availability of the supervising physician to the PA for consultation, with medical direction and appropriate supervision as provided by State law.  In the absence of State law governing physician supervision of PA services, the physician supervision required by Medicare for PA services would be evidenced by documentation in the medical record of the PA’s approach to working with physicians in furnishing their professional services.
  • CMS proposes to streamline documentation requirements by allowing the physician, PA, or advanced practice registered nurse who furnishes and bills for his or her professional services to review and verify — rather than fully re-document — information included in the medical record by physicians, residents, nurses, students or other members of the medical team. This principle would apply to all Medicare-covered services paid under the PFS.
  • CMS continues to implement a statutory requirement that modifiers be reported to identify certain therapy services that are furnished in whole or in part by physical therapy (PT) and occupational therapy assistants (OTA), beginning January 1, 2020. CMS has adopted a de minimis standard under which a service is considered to be furnished in whole or in part by a PTA or OTA when more than 10% of the service is furnished by the PTA or OTA.  CMS proposes to make the 10% calculation based on the respective therapeutic minutes of time spent by the therapist and the PTA/ OTA, rounded to the nearest whole minute.  Beginning January 1, 2022, claims that contain a therapy assistant modifier will be paid at 85% of the otherwise applicable payment amount.
  • CMS proposes to establish bundled payments for opioid use disorder treatment services furnished by opioid treatment programs.
  • CMS proposes changes to Open Payments reporting requirements, including: codifying a statutory expansion of the definition of a covered recipient to include PAs, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives; adding Debt Forgiveness, Long-Term Medical Supply or Device Loan, and Acquisitions to the “nature of payment” categories; consolidating medical education program categories; and standardizing data reporting requirements for drugs, devices, biologicals, and medical supplies.
  • CMS requests comments on a series of potential changes to the physician self-referral (Stark Law) advisory opinion process.
  • CMS proposes a number of changes to the Quality Payment Program (QPP). Notably, CMS proposes establishing new Merit-based Incentive Payment System (MIPS) Value Pathways (MVPs) beginning in the 2021 performance period to allow clinicians to report on a smaller set of outcomes-based, specialty-specific measures.  The QPP proposals are detailed in a CMS fact sheet.
  • Other topics addressed by the rule include, among many others:documentation of beneficiary consent for cost sharing associated with communication technology-based services; collection of ground ambulance cost data; Medicare Shared Savings Program quality reporting requirements; and payment for chronic care management, transitional care management, and principal care management services.

CMS will accept comments on the proposed rule through September 27, 2019.

CMS Finalizes Medicare SNF PPS Rates and Policies for FY 2020

Debra A. McCurdyBy Debra A. McCurdy on Posted in Centers for Medicare & Medicaid Services Regulations

The Centers for Medicare & Medicaid Services (CMS) has published its final rule updating the Medicare skilled nursing facility (SNF) prospective payment system (PPS) for fiscal year (FY) 2020, which begins October 1, 2019.  CMS expects SNF PPS payments to increase by 2.4%, or $851 million, in FY 2020, down from the $887 million increase forecasted in the proposed rule.  The final update is based on a 2.8% market basket increase offset by a 0.4 percentage point multifactor productivity adjustment.

In the final rule, CMS discusses the October 1, 2019 implementation of the new SNF Patient-Driven Payment Model (PDPM), which focuses on a resident’s clinical condition and care needs rather than the volume of care provided.  CMS previously established a limit on group and concurrent therapy, which provides that for each therapy discipline (i.e., physical therapy, occupational therapy, and speech-language pathology), no more than 25% of the therapy services furnished to a SNF resident during a covered Medicare Part A stay may be in a group or concurrent setting.  While CMS initially defined group therapy for PDPM purposes as exactly four patients, CMS has adopted its proposal to modify the definition to align with the definition used under the Medicare Inpatient Rehabilitation Facility (IRF) PPS.  Specifically, under the final rule, group therapy under the SNF PDPM means treating two to six patients at the same time who are performing the same or similar activities.  CMS plans to monitor the usage of group and concurrent therapy and review clinical outcomes, noting that “[i]f the results of our monitoring efforts indicate substantial non-compliance with the 25 percent limit, we may consider taking additional action in future rulemaking.”  However, CMS expects “providers will pay close attention to the warning provided on their validation reports and be aware that we are monitoring their use of group and concurrent therapy as well.”

The final rule also, among other things, implements a subregulatory process for updating ICD-10 code lists used under the PDPM and updates various SNF Quality Reporting Program (QRP) and SNF Value-Based Purchasing Program requirements.  CMS discusses a previous request for comments on expanding data collection for SNF QRP quality measures to all SNF residents regardless of payer beginning with the FY 2022 program year; however, CMS is not finalizing such a proposal at this time.

CMS Proposes 2020 Medicare OPPS and ASC Update, Floats Plan for Hospital Disclosure of Payer-Specific Prices

Debra A. McCurdyBy Debra A. McCurdy on Posted in Centers for Medicare & Medicaid Services Regulations

The Centers for Medicare & Medicaid Services (CMS) has published its proposed Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) rates and policies for calendar year 2020.  In addition to making annual updates to the OPPS and ASC payment systems, CMS includes a controversial proposal to require all hospitals to disclose payer-specific pricing, including “consumer-friendly” information for hundreds of “shoppable” services.  CMS is accepting comments on the proposed rule through September 27, 2019.  The following are highlights of the proposed rule.

Hospital Outpatient Provisions

CMS proposes a 2.7% update to OPPS rates for 2020, with the update reduced by 2.0% for hospitals that fail to meet quality reporting requirements.  Payment changes for individual procedures vary.  CMS estimates total OPPS payments would increase by $6 billion in CY 2020 compared with 2019 under the rule.

Other OPPS policy proposals include the following, among many others: Continue Reading

HHS OIG Pulls CMP, Safe Harbor Proposed Regs Pending for More Than a Decade

Elizabeth B. Carder-ThompsonDebra A. McCurdyBy Elizabeth B. Carder-Thompson and Debra A. McCurdy on Posted in Office of Inspector General Regulations

Seeking to “eliminate any confusion,” the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) has formally withdrawn proposed civil money penalty (CMP) and anti-kickback (AKS) safe harbor regulations that it no longer intends to finalize.  Specifically, the OIG is withdrawing:

  • A 1994 proposed rule that would have codified the OIG’s authority to levy CMPs when a hospital knowingly makes incentive payments to a physician as an inducement for reducing services to Medicare or Medicaid beneficiaries.
  • A 2002 proposed rule that would have expanded an AKS safe harbor regulation at 42 CFR 1001.952(k) to include waivers of cost sharing amounts for Part A and B services for holders of Medicare SELECT policies.

According to the notices, the OIG has neither applied nor enforced the positions stated in the rules, and it does not intend to do so.  Moreover, to the OIG’s knowledge, the public is not currently relying on, and may be unaware of” the proposed rules.  If OIG were to finalize either proposal, updated public comments would be required, “as reimbursement methods and other aspects of the healthcare industry have changed in the interim.”

OIG states that the regulatory housecleaning is intended to comply with the Trump Administration’s goal of identifying regulations that can be repealed, replaced, or modified.  Nevertheless, the OIG also may be taking advantage of this opportunity to clear the decks of outdated policy proposals while the Office of Management and Budget (OMB) reviews a highly-anticipated OIG proposed rule to amend the AKS safe harbors and exceptions to the beneficiary inducement CMP provisions intended to support coordinated care.

CMS Issues Final Rule Repealing the Prohibition on the Use of Pre-Dispute Binding Arbitration Agreements

Kelly HibbertTaylor GrantBy Kelly Hibbert and Taylor Grant on Posted in Regulatory Developments

On July 18, 2019, the Centers for Medicare & Medicaid Services (CMS) issued a final rule repealing the agency’s ban on the use of pre-dispute arbitration agreements in the long-term care (LTC) setting.1 This final rule follows CMS’s proposed rule, issued on June 8, 2017, reversing course on CMS’s initial ban on pre-dispute, binding arbitration agreements in October 2016.2 (See CMS Reverses Course in Pre-Dispute Arbitration Agreement Ban for additional background and analysis on the June 8, 2017, proposed rule.)

As you may recall, CMS’s proposed rule offered to eliminate entirely the prohibition on pre-dispute binding arbitration agreements and provided no limitations on the use of arbitration agreements as a condition of admission (or continuing admission) to a LTC facility, provided certain “transparency” requirements were met. CMS received over 1,000 comments in response to the proposed rule and, in turn, delivered a final rule that makes concessions for both the proponents of a ban on pre-dispute arbitration agreements and the opponents seeking to preserve the legal right of the LTC facilities to freely contract with their residents. CMS explained in the final rule: “Although we are not finalizing a prohibition on pre-dispute, binding arbitration agreements, we believe that the requirements we are finalizing in this rule will provide the protections residents and their representatives will need to avoid being compelled to arbitrate disputes with LTC facilities without voluntarily and knowingly choosing to do so.”3

Continue Reading

CMS Proposes Rolling Back LTC Facility Requirements to Reduce Regulatory Burden

Debra A. McCurdyBy Debra A. McCurdy on Posted in Centers for Medicare & Medicaid Services Regulations

The Centers for Medicare & Medicaid Services (CMS) has proposed simplifying and streamlining long-term care (LTC) facility rules and survey processes to “increase provider flexibility and reduce excessively burdensome regulations, while also allowing facilities to focus on providing high-quality healthcare to their residents.”  In addition to numerous other provisions, CMS proposes the following changes that the agency anticipates would significantly reduce costs to LTC facilities:

  • Revising grievance policy requirements, including clarifying the difference between resident feedback and a grievance; removing the specific duties required of the grievance official who is responsible for overseeing the grievance process; paring the specific requirements for the content of written grievance decisions; and shortening the required document retention period related to results of grievances.
  • Limiting the conditions under which a facility must send a copy of a transfer or discharge notice to the State LTC Ombudsman to facility-initiated involuntary transfers or discharges.
  • Providing more flexibility in the required qualifications for a director of food and nutrition services.
  • Streamlining facility assessment requirements, including clarifying that data collected under the facility assessment requirement can be used to inform policies and procedures for other LTC requirements, removing duplicative requirements, and revising the requirement for the review of the facility assessment from annually to biennially.
  • Providing facilities with more flexibility in tailoring their Quality Assurance and Performance Improvement program to the specific needs of the facility.
  • Streamlining the regulatory requirements for compliance and ethics programs, including removing requirements for a compliance officer and compliance liaisons and reducing the frequency of mandatory program reviews.
  • Allowing LTC facilities that were Medicare or Medicaid certified before July 5, 2016, and that previously used the 2001 Fire Safety Equivalency System (FSES) to determine fire protection levels to continue to use the 2001 FSES scoring values when determining compliance with certain fire safety standards.
  • Limiting to newly-constructed facilities and newly-certified facilities that have never previously been a nursing home the current physical environment requirements that LTC facilities accommodate no more than two residents in a bedroom and equip each resident room with its own bathroom containing a commode and sink.
  • Revising the hearing process, including replacing the requirement for a facility to file a written waiver with a constructive waiver process that would operate by default when CMS has not received a timely request for a hearing.

CMS also proposes to delay implementation of certain “Phase 3” LTC requirements for participation that are scheduled to go into effect November 28, 2019; instead, they would be implemented one year following the effective date of the final rule.

CMS will accept comments on the proposed rule until September 18, 2019.

Trump Administration Launches Multi-Pronged Effort to “Transform Care Delivery for Patients with Chronic Kidney Disease”

Debra A. McCurdyBy Debra A. McCurdy on Posted in Other CMS Developments

The Trump Administration has announced a number of policy goals and innovation models that seek to “improve the lives of Americans suffering from kidney disease, expand options for American patients, and reduce healthcare costs,” according to the Department of Health and Human Services (HHS).  The broad policy framework was outlined in an executive order on “Advancing American Kidney Health” signed by President Trump on July 10, 2019.  The executive order includes as federal priorities:  preventing kidney failure whenever possible through better diagnosis, treatment, and incentives for preventive care; expanding affordable treatment alternatives for end stage renal disease (ESRD); encouraging the development of artificial kidneys, and updating the organ transplant system.

HHS is launching five new Medicare ESRD innovation models to jump-start the Advancing American Kidney Health initiative.  One model, a proposed ESRD Treatment Choices Model, would be mandatory for dialysis providers in randomly-selected geographic areas that account for about 50% of adult ESRD beneficiaries.  This model promotes home dialysis and kidney transplants by adjusting ESRD prospective payment system (PPS) payments upward or downward based on home dialysis and transplant rates, and increasing certain payments for home dialysis services.  This model is subject to a public comment period through September 16, 2019.  CMS also announced four optional models:  the Kidney Care First (KCF) Model, and three Comprehensive Kidney Care Contracting (CKCC) Models.  These models include incentives for coordinating care for beneficiaries with chronic kidney disease or ESRD and reducing total care costs, and for successful transplants.  Details about these models are available here.

CMS Proposes Easing State Requirements for Demonstrating Medicaid Beneficiary Access to Care

James SegrovesDebra A. McCurdyBy James Segroves and Debra A. McCurdy on Posted in Centers for Medicare & Medicaid Services Regulations

The Centers for Medicare & Medicaid Services (CMS) has proposed rescinding current procedural standards that must be met for states to demonstrate that Medicaid fee-for-service (FFS) payments are sufficient to assure beneficiary access to covered services.

As we previously reported, regulations adopted in 2015 require states to establish and periodically update access monitoring review plans (AMRPs) for certain categories of Medicaid services provided through a FFS delivery system to demonstrate the sufficiency of provider payment rates.  The regulations also include administrative requirements for states proposing to reduce or restructure Medicaid provider payments.  These regulations apply to the following categories of services:  primary care; physician specialist services; behavioral health; pre- and post-natal obstetric services including labor and delivery; home health; any services for which the state has submitted a state plan amendment to reduce or restructure provider payments that could result in diminished access; and additional services as determined necessary by the state or CMS.

Citing state concerns about the administrative burden associated with the current regulations, in March 2018 CMS proposed exempting states with high rates of Medicaid managed care enrollment from the AMRP requirements.  CMS did not finalize this plan.  Instead, in a proposed rule published July 15, 2019, CMS now proposes to rescind the regulatory process requirements for states to develop and update an AMRP and to submit certain access analysis when proposing to reduce or restructure provider payment rates.  However, states would not be exempt from the statutory requirements “to ensure access is consistent with the Act generally, and especially when seeking to reduce or restructure Medicaid payment rates.”  CMS will accept comments on the proposed rule until September 13, 2019.

Concurrent with release of the proposed rule, CMS issued an informational bulletin to states announcing CMS plans “to develop a new data-driven strategy to understand access to care in the Medicaid program across fee-for-service and managed care delivery systems, as well as in home and community-based services (HCBS) waiver programs.”  In the coming months, CMS expects to convene workgroups comprised of state and federal stakeholders to identify measures, benchmarks, and data that could be used as access indicators across Medicaid programs.

CMS Proposes CY 2020 Medicare Home Health PPS Update, Infusion Therapy Benefit Policies

Debra A. McCurdyBy Debra A. McCurdy on Posted in Centers for Medicare & Medicaid Services Regulations

The Centers for Medicare & Medicaid Services (CMS) has issued the proposed calendar year (CY) 2020 update to Medicare home health prospective payment system (HH PPS) rates and policies.  The proposed rule also would update transitional home infusion therapy rates for CY 2020 and institute permanent infusion therapy payment reforms beginning in CY 2021.

With regard to home health policy, CMS projects that aggregate CY 2020 HH PPS payments would increase by 1.3%, or $250 million, compared to 2019 levels under the proposed rule.  As established in the CY 2019 final rule, CMS will implement its new case mix methodology, the “Patient-Driven Groupings Model” (PDGM), effective January 1, 2020.  The proposed CY 2020 HH PPS update reflects the transition to the PDGM methodology and a new 30-day payment unit, with CMS proposing downward adjustments for certain anticipated “behavior changes” such as modifications to documentation and coding practices.  The proposed update also makes other adjustments, including to incorporate a new rural add-on policy, updated wage index data, and an updated fixed-dollar loss ratio for outlier payments.  The proposed 2020 national, standardized 30-day payment for an HHA that submits required quality data is $1,791.73 (compared to the CY 2019 national, standardized 60-day episode payment of $3,154.27). The proposed rate for an HHA that does not submit required quality data is $1,756.42.

In addition to the HH PPS rate update, CMS proposes to make a number of HHA policy changes, including:  streamlining home health plan of care content requirements; allowing physical therapy assistants to furnish maintenance therapy; modifying the split percentage payment policy (with elimination of split-percentage payments beginning in CY 2021); and updating Home Health Quality Reporting Program and Home Health Value-Based Purchasing Model requirements.

The proposed rule also continues to implement refinements to Medicare payment policy for home infusion therapy services, as mandated by the 21st Century Cures Act.  In the final 2019 rule, CMS established a new temporary transitional payment for home infusion therapy services in 2019 and 2020, in advance of implementation of a new home infusion therapy benefit in 2021.  The proposed 2020 rule would update the temporary transitional payment rates for 2020 based on corresponding CY 2020 Physician Fee Schedule (PFS) amounts (which are expected to be released in the near future).  For 2021, CMS proposes fully implementing the new home infusion therapy benefit, with home infusion drugs classified into three payment categories, each of which would have a single unit of payment based on PFS amounts (such amounts would be adjusted by the geographic adjustment factor).  CMS proposes establishing higher payment amounts for the first home infusion therapy visit; for subsequent visits, CMS would apply a small decrease to the payment amounts to maintain budget neutrality.

CMS will accept comments on the proposed rule until September 9, 2019.

CMS Proposes New Mandatory Medicare Radiation Oncology Payment Innovation Model

Thomas W. GreesonDebra A. McCurdyBy Thomas W. Greeson and Debra A. McCurdy on Posted in Centers for Medicare & Medicaid Services Regulations

The Centers for Medicare & Medicaid Services (CMS) has proposed a new Radiation Oncology (RO) innovation model (RO Model) to test whether prospective site neutral, episode-based payments for radiotherapy (RT) episodes of care would reduce Medicare expenditures while preserving or enhancing the quality of care for Medicare beneficiaries.  Importantly, the RO Model would be mandatory for providers and suppliers that furnish RT services within randomly selected Core Based Statistical Areas (CBSAs), with very limited exceptions.  CMS estimates that the RO Model would cover about 40% of Medicare RO episodes and reduce Medicare spending by $250 million – $260 million during the five-year program.

Key features of the proposed RO Model are summarized below.  CMS will accept comments on the model until September 16, 2019.

RO Provider/Supplier Participation

Medicare-participating physician group practices (PGPs), hospital outpatient departments (HOPD), and freestanding radiation therapy centers that furnish RT services in designated CBSAs generally would be required to participate in the RO Model.  CMS proposes exempting a provider or supplier that:

(1)    furnishes RT services only in Maryland, Vermont, or the U.S. territories;

(2)    is classified as an ambulatory surgery center (ASC), critical access hospital (CAH), or prospective payment system-exempt cancer hospital; or

(3)    is eligible to participate the Pennsylvania Rural Health Model.

In a proposed rule to be published on July 18, 2019; CMS expresses its view that mandatory participation “is necessary to obtain a diverse, representative sample of RT providers and RT suppliers and to help support a statistically robust test of the prospective episode payments made under the RO Model.”  CMS notes that because hospital outpatient prospective payment system (OPPS) rates are projected to increase substantially more than physician fee schedule (PFS) rates during the period of 2019 through 2023, it “would result in few to no HOPDs electing to voluntarily participate in the Model.”  CMS also expects that a voluntary program would attract only those freestanding radiation therapy centers with historically lower RT costs compared to the national average.

Providers and suppliers would participate in the RO Model as either a Professional participant, Technical participant, or Dual participant. Continue Reading

HHS Scraps Pending Rule to Remove Anti-Kickback Safe Harbor Protection for Drug Rebates to Health Plans, PBMs

Debra A. McCurdyBy Debra A. McCurdy on Posted in Other OIG Developments

The Trump Administration has decided against finalizing a controversial proposed Office of Inspector General (OIG) regulation that would have modified Federal Anti-Kickback Statute safe harbor protection for certain prescription drug rebates to health plans and pharmacy benefit managers (PBMs).  As we previously reported, the proposed rule would have (i) removed safe harbor protection for drug manufacturer rebates to Part D plans, Medicaid managed care organizations, and PBMs acting under contract with either type of entity, (ii) establish a new safe harbor protecting manufacturer “point of sale” price reductions on Part D and Medicaid managed care drug utilization, and (iii) establish a new safe harbor protecting certain service fees paid by drug manufacturers to PBMs.  

According to the White House Office of Management and Budget (OMB), the OIG officially withdrew the pending final rule on July 10, 2019.  Action to end consideration came after release of a Congressional Budget Office estimate that the rule as proposed would increase federal spending by about $177 billion over the 2020–2029 period while increasing beneficiary Part D drug plan premiums.

HHS “Quality Summit” to Focus on Overhauling Federal Quality Programs

Debra A. McCurdyBy Debra A. McCurdy on Posted in Other HHS Developments

The Department of Health and Human Services (HHS) has announced plans to hold a “Quality Summit” to foster dialogue between government leaders and health care industry stakeholders on how HHS quality programs “can be further evaluated, adapted, and ultimately streamlined to deliver a value-based care model focused on improving outcomes for American patients.”  Ultimately, the initiative is intended to help HHS formulate a “Health Quality Roadmap,” as directed by President Trump’s recent executive order on health care price and quality transparency.  In announcing the Quality Summit, HHS Deputy Secretary Eric Hargan observed that current HHS quality programs are “uncoordinated among the various agencies and inconsistent in their demands on healthcare providers.”  Through an external, systemic review, HHS believes the Quality Summit will both strengthen the protections offered to patients and improve value by reducing costs and onerous requirements for providers.

Summit participants will include government representatives and approximately 15 non-government health care industry leaders.  Nominations for participation in the summit will be accepted through July 31, 2019.

Congressional Committees Advance Multiple Bills Addressing Surprise Medical Billing, Prescription Drug Policy, and Other Health Policy Issues

Debra A. McCurdyBy Debra A. McCurdy on Posted in Legislative Developments

Prior to the 4th of July break, Senate and House Committees approved more than a dozen health policy bills, covering topics including:  surprise medical bills, health pricing transparency, drug prices and competition, various Medicare policies, and public health program reauthorization, among others.  The following are highlights of recent action.  Note that none of the bills has yet been considered by the full House or Senate, and all are subject to change during the legislative process.

Senate HELP Committee

The Senate Health, Education, Labor and Pensions (HELP) Committee approved S 1895, the Lower Health Care Costs Act of 2019.  This high-profile, bipartisan legislation would hold patients harmless from “surprise” medical bills for out-of-network services provided at an in-network facility, with payment to out-of-network providers set at the median contracted rate for in-network providers in the geographic area (a controversial “benchmark rate” proposal).  The bill contains separate protections regarding costs for emergency room and air ambulance services.  Additionally, S 1895 seeks to improve health care transparency by, among other things, banning what are described as “anticompetitive” terms in contracts between insurers and providers; providing patients with additional information on out-of-pocket costs; and regulating certain pharmacy benefit manager (PBM) pricing practices.  The legislation also includes numerous provisions intended to promote generic drug and biosimilar biological product innovation; improve health information exchange and strengthen health entity cybersecurity practices; and authorize various public health programs.  The Committee approved the bill on June 26, 2019 on a vote of 20-3.  Committee Chairman Lamar Alexander expressed hope for full Senate consideration of the bill in July.

During the same markup, the HELP Committee also approved S 1173, the Emergency Medical Services for Children Program Reauthorization Act, and S 1199, the Poison Center Network Enhancement Act of 2019.

Senate Judiciary Committee

The Senate Judiciary Committee approved the following four bills that are intended to help reduce prescription drug prices:

  • S 1227, the Prescription Pricing for the People Act of 2019, which would require the Federal Trade Commission (FTC) to study the role of PBMs in the pharmaceutical supply chain and provide Congress with related policy recommendations.
  • S 440, the Preserving Access to Cost Effective Drugs Act, which would bar patent owners from asserting sovereign immunity, including the sovereign immunity accorded to an Indian tribe, in certain drug patent disputes.
  • S 1224, the “Stop STALLING Act,” to authorize the FTC to take action against entities that file “sham” citizen petitions to attempt to interfere with approval of a competing generic drug or biosimilar.
  • S 1416, Affordable Prescriptions for Patients Act of 2019, which would authorize the FTC to challenge certain brand manufacturer practices (e.g., “product hopping” and “patent thickets”) that could discourage generic drug and biological use.

House Ways and Means Committee

The House Ways and Means Committee recently passed the following health policy bills: Continue Reading

States Banding Together on HIPAA Enforcement

Vicki TankleCatherine DavidBy Vicki Tankle, Catherine David and Colin Dolan on Posted in Regulatory Developments

In the first settlement of its kind, a medical software provider has agreed to pay $900,000 to 16 state attorneys general for alleged violations of state and federal privacy laws. The settlement, stemming from a federal lawsuit in the U.S. District Court for the Northern District of Indiana, demonstrates the resolution of the first-ever multistate data breach suit based on alleged violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as well as state deceptive trade practices acts, state personal information protection acts, and state breach notifications acts. The settlement is a result of a 2015 data breach resulting in compromised user ID and password data of the electronic protected health information of approximately 3.5 million individuals. The settlement was finalized shortly after the medical software provider agreed to pay $100,000 to the Office of Civil Rights (OCR), the agency tasked with enforcing HIPAA, for alleged HIPAA violations associated with the same breach.

To read more, please visit our Life Sciences Legal Update blog.

LexBlog