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.

House Republican Leaders Tout “Progress” on ACA Repeal/Replace Efforts Before Congressional Recess

The House of Representatives has adjourned for a two-week recess without a full House vote on the Republican party’s signature legislation — the American Health Care Act (AHCA) — to repeal and replace the Affordable Care Act (ACA). Since Republican leaders pulled the AHCA from House consideration on March 24, 2017 due to insufficient support, there have been attempts to revise the bill in a way that can muster enough votes to pass the House.  Most recently, on April 6, 2017 House leaders announced an amendment that would establish a $15 billion Federal Invisible Risk Sharing Program to make payments to health insurers in the individual market to subsidize high-cost enrollees.  The amendment was quickly adopted by the House Rules Committee before the House recessed. House Speaker Paul Ryan called the amendment “real progress” and suggested that the risk program provision “brings us closer to the final agreement,” but he admitted that lawmakers have “more work to do.” Republican lawmakers undoubtedly will continue to float revisions intended to change enough minds — and votes — to attempt another vote sometime after Congress reconvenes.

CMS Clarifies Medicaid DSH Rules for Treatment of Third Party Payments in Calculating Uncompensated Care Costs

CMS has published a final rule intended to codify its existing interpretation of how third-party payments are considered in the calculation of Medicaid uncompensated care costs for the purpose of making Medicaid disproportionate share hospital (DSH) payments. Under the final rule, CMS specifies that uncompensated care costs for purposes of calculating hospital-specific DSH limits are costs net of third-party payments received, including but not limited to payments from Medicare or private insurance. CMS does not anticipate that the rule will have a significant financial impact on states or providers since it does not represent a change in policy. The rule is effective June 2, 2017.

CMS Considering 6-Month Delay of Obama Administration Home Health COP Rule

As previously reported, in January 2017 the Obama Administration finalized major changes to the conditions of participation (CoPs) that home health agencies (HHAs) must meet to participate in Medicare and Medicaid. The rule is currently scheduled to go into effect July 13, 2017, except that the requirement to implement data-driven performance improvement projects is effective January 13, 2018. Furthermore, the final rule exempts administrators hired by HHAs prior to July 13, 2017 from new personnel requirements.

In response to HHA requests for additional time to comply with the sweeping changes in the rule (which CMS estimates will increase costs to HHAs by more than $290 million annually), CMS is proposing to delay the overall effective date of the rule until January 13, 2018. CMS also would give HHAs until July 13, 2018 to implement data-driven performance improvement projects, and it would extend the administrator personnel standard grandfathering provision for an additional six months (to January 13, 2018). Comments on the proposal will be accepted until June 2, 2017.

CMS Rolls Out New Form for Disclosing Potential Stark Act Violations

CMS has released a new Self-Referral Disclosure Protocol (SRDP) Form for disclosing actual or potential violations of the physician self-referral law (known as the “Stark Act”) under CMS’s existing self-disclosure process. According to CMS, the streamlined and standardized format “will reduce the burden on providers and suppliers submitting disclosures to the SRDP” and facilitate CMS review. Use of the form is mandatory effective June 1, 2017, although parties are encouraged to use this version of the form now.

CMS Pauses Medicare Home Health Pre-Claim Review Demonstration in Illinois, Puts Off Expanding Demo to Florida for Now

CMS has announced that it is “pausing” its Pre-Claim Review demonstration in Illinois for at least 30 days, effective April 1, 2017, and it is not expanding the demonstration to Florida in April as previously planned. During this pause period, Medicare contractors will not accept additional pre-claim review requests; instead, home health claims will be paid under normal claim processing rules. Any additional developments regarding this program will be announced on the CMS website.

House Overwhelmingly Approves Insurance Antitrust Reform Legislation

The House of Representatives has approved HR 372, the Competitive Health Insurance Reform Act of 2017, which would repeal the antitrust exemption for health insurance companies provided under the McCarran-Ferguson Act (although the antitrust exemption for certain collaborative activities between health insurance businesses would be retained). HR 372 was approved by a vote of 416-7, and now moves to the Senate.

CMS Encourages Providers/Suppliers Not To Put Off Emergency Preparedness Training Exercises; Educational Call Scheduled for April 27

CMS is reminding Medicare- and Medicaid-participating providers and suppliers that they will be expected to comply with training and testing requirements included in a September 2016 emergency preparedness final rule by November 15, 2017.  In particular, CMS warns providers and suppliers not to wait for interpretive guidance to begin planning emergency exercises, since those who are found to have not completed these exercises or other requirements of the final rule during a survey will be cited for non-compliance.  CMS also provides instructions for providers and suppliers who are unable to complete a full-scale, community-based exercise by that date. 

CMS is posting resources regarding the final rule on its website.  In addition, CMS has scheduled an April 27, 2017 call to discuss training and testing requirements in the final rule; registration is required to participate in the call.

Just Under the Wire, CMS Announces 60-Day Extension of PAMA Clinical Lab Reporting Deadline

The Centers for Medicare & Medicaid Services (CMS) has just announced that it is extending until May 30, 2017 the deadline for certain clinical laboratories to report to CMS private payor reimbursement information.  As required by the Protecting Access to Medicare Act of 2014 (PAMA) and its implementing regulations, this data will be used to set Medicare clinical lab fee schedule (CLFS) rates beginning in 2018.

CMS previously required applicable private payer data to be submitted by March 31, 2017. In a March 30 announcement, CMS stated that it is granting a 60-day extension in recognition that clinical labs need more time to review collected data, address any identified issues, and compile the data using CMS’s required reporting format.

During this extension period, CMS will exercise its “enforcement discretion” with respect to the potential assessment of civil monetary penalties for failure to report applicable information. According to CMS, 60 days is the longest delay that will still enable the agency to calculate CLFS payment rates based on the reported private payer data for calendar year 2018. Additional information regarding the PAMA CLFS data reporting requirements is available on the CMS web site.



House GOP Moving Ahead on Controversial ACA Repeal & Replace Bill; First of Three Planned Phases of Health Reform

The House of Representatives is moving ahead on the Republican plan -– the American Health Care Act (AHCA) – that would repeal and replace major provisions of the Affordable Care Act (ACA). On March 16, 2017, the House Budget Committee approved sending the bill to the full House as part of fiscal year 2017 budget reconciliation bill, and a vote is expected later this week. The fate of the bill is uncertain in the face of united Democratic opposition to the plan and the objections of various ideological and regional factions within the Republican party. The political challenge has been complicated by a Congressional Budget Office (CBO)/Joint Committee on Taxation (JCT) estimate that the AHCA would result in 14 million more uninsured individuals in 2018, rising to 24 million by 2026. The CBO and JCT project that more of half of the coverage loss would be a result of the steep –$880 billion – proposed cut in federal Medicaid outlays, which would result in 14 million fewer Medicaid enrollees by 2026. And yet one of the fundamental disputes among Republican lawmakers is whether the ACA’s Medicaid expansion should be phased out sooner than the legislation now contemplates (2020), or whether additional protections should be provided in Medicaid expansion states.

Due to complex budget reconciliation rules, the AHCA concentrates on tax and Medicaid spending provisions. The AHCA would repeal the tax penalties enforcing the ACA mandates that most individuals obtain health insurance coverage and that certain employers offer employees coverage meeting minimum essential coverage standards, retroactive to those impacted by the penalty in 2016. Instead, to encourage healthier people to purchase insurance, the AHCA would require insurers to impose a 30% premium penalty for individuals who have not maintained continuous insurance coverage. Insurers also generally would be permitted to charge older individuals five times more than younger individuals (instead of the current 3 to 1 cap), beginning in 2018. Furthermore, the AHCA also would replace ACA insurance premium subsidies with refundable tax credits beginning in 2020 and establish a Patient and State Stability Fund intended to lower patient costs and stabilize state markets. The CBO/JCT estimate that, by 2026, the average subsidy under the AHCA would be about half of the average subsidy under current law. As noted, the AHCA also includes significant Medicaid cuts in the form of reduced enhanced federal matching and limits on growth in per-enrollee payments starting in 2020. In light of the expected decrease in the number of individuals with Medicaid coverage, the AHCA would eliminate cuts in disproportionate share hospital spending imposed under the ACA, and thus increase outlays by $31 billion. The AHCA also would repeal various ACA taxes, including the medical device tax, the prescription drug manufacturers’ tax, the health insurance provider fee, and the surtax on high-income taxpayer’s net investment income. Overall, CBO/JCT estimate that the AHCA would decrease federal spending by $1.2 trillion and reduce federal revenues by $883 billion, resulting in a $337 billion reduction to federal deficits, over the 2017-2026 period. Continue Reading

Price, Verma Taking a Fresh Look at Obama Administration’s EPM/CJR Final Rule; Changes Pushed Back to at Least October 1, 2017

HHS Secretary Thomas Price and CMS Administrator Seema Verma have signaled that the Trump Administration is eyeing changes to one of the last major Medicare policies issued by the Obama Administration.  Specifically, CMS is delaying a January 3, 2017 final rule that established mandatory Medicare episode payment models (EPM) for acute myocardial infarction, coronary artery bypass graft, and surgical hip/femur fracture treatment procedures furnished in designated geographic areas. The rule also made conforming changes to the Comprehensive Care for Joint Replacement (CJR) program.  The rule was originally scheduled to go into effect February 18, 2017, but major provisions (including the EPM start date and CJR changes) were not scheduled to be implemented until July 1, 2017.  Last month, the Trump Administration published a notice pushing the effective date to March 21, but it did not impact the July 1, 2017 implementation date.

In an interim final rule with comment period published today, CMS is making the following changes to the EPM/CJR timeline: Continue Reading

Congressional Panels Examining Pharmaceutical Distribution Systems, FDA Drug User Fees

Two Congressional committees are holding hearings this week on FDA user fees: a March 21 Senate Health, Education, Labor, and Pensions Committee hearing and a March 22 Energy and Commerce Subcommittee on Health hearing. In addition, on March 22, 2017, the House Oversight Subcommittee on Health Care is holding a hearing on “Examining the Impact of Voluntary Restricted Distribution Systems in the Pharmaceutical Supply Chain.”

340B Ceiling Price/CMP Rule Effective Date Pushed Back to May 22, 2017 — “At the Earliest”

The Health Resources and Services Administration (HRSA) is delaying the effective date of its January 5, 2017 final rule on the calculation of the ceiling price and application of civil monetary penalties (CMPs) under the 340B drug pricing program until May 22, 2017 – with a longer delay being contemplated.  The January 5, 2017 final rule was scheduled to be effective  March 21, 2017 and enforced beginning April 1, 2017, pursuant to a March 6, 2017 notice conforming to the Trump Administration’s regulatory review policy.  However, a rule to be published March 20, 2017 further delays the effective date to May 22, 2017 – “at the earliest.”  Given that the agency previously expressed a preference for enforcing the new requirements at the start of a quarter, the latest change to the effective date is likely to push the actual enforcement date to at least July 1, 2017.

Furthermore, HRSA is soliciting comments for 30 days on whether a longer delay of the effective date — until October 1, 2017 — would be more appropriate.  The March 20 rule states that “after further consideration and to provide affected parties sufficient time to make needed changes to facilitate compliance, and because there are substantive questions raised, we intend to engage in longer rulemaking.”  HHS wants to ensure that the rulemaking “is coordinated with and takes into consideration overall 340B Program implementation.”  Furthermore, HHS will “consider questions of fact, law, and policy raised in the rule, consistent with the “Regulatory Freeze Pending Review” memorandum.”

Trump Administration Proposes 17.9% Cut to HHS Programs, Doubling of FDA User Fees

The Trump Administration is calling for deep cuts to Department of Health and Human Services (HHS) funding for fiscal year (FY) 2018 along with a $1 billion hike in Food and Drug Administration (FDA) user fees in its “budget blueprint,” dubbed “America First: A Budget Blueprint to Make America Great Again.”  The blueprint — which addresses only discretionary spending — seeks a 17.9% reduction in funding for HHS programs in FY 2018 (with certain spending outside these caps, including specific 21st Century Cures Act funding).  HHS cuts identified in the blueprint include:

  • A $5.8 billion reduction in the National Institutes of Health (NIH) budget and a reorganization to eliminate the Fogarty International Center and consolidate the Agency for Healthcare Research and Quality within NIH, among other changes.
  • A $403 million cut to in health professions and nursing training programs.
  • Elimination of Office of Community Services discretionary programs, including the Low Income Home Energy Assistance Program and the Community Services Block Grant, saving $4.2 billion.

On the other hand, the President proposes to increase funding in several areas, including:  the Health Care Fraud and Abuse Control (HCFAC) program ($70 million increase); Substance Abuse and Mental Health Services Administration opioid abuse prevention and treatment activities ($500 million increase); and a new $500 million Centers for Disease Control and Prevention state block grant to help states respond to public health challenges.  Other HHS programs are discussed in general terms without specific estimates of budget impact.

The President also proposes to increase FDA medical product user fees by about $1 billion to over $2 billion in 2018, asserting that “in a constrained budget environment, industries that benefit from FDA’s approval can and should pay for their share.”  The Administration would accompany the user fee increase with “a package of administrative actions designed to achieve regulatory efficiency and speed the development of safe and effective medical products.”

Note that this budget blueprint is not a traditional full federal budget and does not substantively address entitlement programs.  The Trump Administration is releasing the budget “sequentially” this year; the Administration asserts that a full budget will be released later this spring including “specific mandatory and tax proposals, as well as a full fiscal path.”  Various aspects of the budget blueprint have already come under fire by various lawmakers, who will ultimately craft the spending package.

Post-Acute Care Providers Targeted for Cuts in MedPAC’s Latest Report to Congress

The Medicare Payment Advisory Commission (MedPAC) has released recommendations to Congress regarding how Medicare fee-for-service payment system rates should be adjusted in 2018. One of the focus areas for MedPAC is post-acute care (PAC), which includes skilled nursing facility (SNF), home health agency (HHA), inpatient rehabilitation facility (IRF), and long-term care hospital (LTCH) services.  According to MedPAC, the “unnecessarily high level of spending and the inequity of payments across different types of patients” necessitate changes to both payment levels and overall system design.  MedPAC therefore reiterates its previous recommendation for a uniform Medicare PAC prospective payment system (PPS) that bases payments on patient characteristics; MedPAC believes that transition to the PAC PPS could begin as early as 2021. In the meantime, MedPAC recommends that Congress: Continue Reading