CMS Flags Potential Provider “Steering” of Medicare/Medicaid Beneficiaries to Favorable ACA Marketplace Plans to Obtain Higher Rates

CMS is putting health care providers on notice that it considers it “inappropriate” for providers to offer premium or cost-sharing assistance to Medicare or Medicaid beneficiaries in order to “steer” the patient to an individual market plan “for a provider’s financial gain.”  In a request for information to be published on August 23, 2016, CMS cites anecdotal reports that some health care providers have determined that private plan rates are sufficiently high compared to Medicare or Medicaid reimbursement to allow a provider to pay a Medicare- or Medicaid-eligible patient’s private insurance premiums and still benefit financially.

CMS has identified a series of potential problems with such arrangements, such as increased overall health system costs, harm to patient care and service coordination because of changes to provider networks and drug formularies, higher enrollee out-of-pocket costs, and negative impact on individual market risk pools.  More specifically, CMS warns that individuals who are steered into an individual market plan for renal dialysis services and have a kidney transplant while enrolled in the private plan will not be eligible for Medicare Part B coverage of their immunosuppressant drugs if they later enroll in Medicare; in a sign of the agency’s particular concern about this patient population, CMS has sent letters to all Medicare-enrolled dialysis facilities and centers informing them of the CMS notice. Continue Reading

CMS Announces Changes to Medicare Advantage Value-Based Insurance Design Model

CMS is announcing changes to the Medicare Advantage Value-Based Insurance Design (MA-VBID) model, which is testing how MA plans can use health plan design elements (e.g., supplemental benefits, disease management, or reduced cost sharing) to encourage enrollees with specified chronic conditions to use high-value clinical services or high-value providers that improve quality of care while reducing costs. As previously reported, this innovation model begins its first performance year in 2017 in seven states: Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee. CMS recently announced that it will expand this model to Alabama, Michigan, and Texas beginning in 2018. Among other changes, CMS also will add rheumatoid arthritis and dementia to the clinical categories for which participants may offer benefits in 2018, along with the current conditions (diabetes, congestive heart failure, chronic obstructive pulmonary disease, past stroke, hypertension, coronary artery disease, and mood disorders).

OIG Examines Adverse Events in Rehab Hospitals

According to a recent HHS Office of Inspector General (OIG) report, about 29% of Medicare beneficiaries experienced adverse or temporary harm events during their rehabilitation hospital stay, based on sample of 417 beneficiaries in March 2012. This rate is similar to the incidence of adverse events in acute-care hospitals and skilled nursing facilities. The OIG estimates that 46% of the rehab hospital adverse or temporary harm events were clearly or likely preventable, attributable to such factors as substandard treatment, inadequate patient monitoring, and failure to provide needed treatment. One quarter of impacted patients were transferred to an acute-care hospital for treatment.

To raise awareness of patient safety issues in rehab hospitals and reduce patient harm, the OIG recommends that CMS: (1) collaborate with the Agency for Healthcare Research and Quality (AHRQ) to create and disseminate a list of potential adverse events that occur in rehab hospitals and (2) include information about potential adverse events in quality guidance to rehab hospitals. CMS and AHRQ concurred with the OIG’s recommendations. CMS also noted that it plans to look into using the Quality Improvement Organization Program to assist with quality improvement efforts in rehab hospitals.

OIG Cautions that States May Be Claiming Matching Funds for Privately-Operated Hospitals

The OIG has issued a memo to CMS suggesting that some states may be claiming matching funds for government-owned but privately-operated hospitals, where no state or local government funds are used to operate the hospital. The OIG suggests that CMS consider requiring that an entity be operated by a unit of government in order to certify the expenditures as the state’s share of Medicaid expenditures.

CMS Proposes Reforms to PACE Program

CMS is proposing numerous changes to the regulations governing the Programs of All-Inclusive Care for the Elderly (PACE) program, which is a Medicare/Medicaid managed care service delivery model designed to enable nursing home-eligible elderly individuals to remain in the community.  Notably, the rule would require each PACE organization (PO) to develop compliance oversight requirements and adopt measures to prevent, detect, and correct waste, fraud, and abuse and address non-compliance with CMS’s program requirements.  In addition, CMS is proposing to streamline processes for oversight and monitoring of POs, including reducing the number of onsite visits by targeting POs for audit based on risk assessment.  The proposed rule also addresses dozens of other requirements, including:  application and waiver procedures; sanctions, enforcement actions, and termination; various administrative requirements; flexibility in the composition of PACE interdisciplinary teams; participant rights; quality assessment and performance improvement; participant enrollment and disenrollment; payment; and data collection, record maintenance, and reporting.  CMS will accept comments on the proposed rule until October 17, 2016.


OCR Plans to More Widely Investigate HIPAA Breaches Affecting Fewer than 500 Individuals

This month the HHS Office for Civil Rights (OCR) has launched an initiative “to more widely investigate the root causes” of HIPAA breaches affecting fewer than 500 individuals, according to an August 18, 2016 OCR email announcement. While Regional Offices will retain discretion to prioritize investigation of smaller breaches, each office is directed to “increase its efforts to identify and obtain corrective action to address entity and systemic noncompliance related to these breaches.” Factors to be considered in prioritizing such investigations include: the size of the breach; theft of or improper disposal of unencrypted personal health information (PHI); breaches that involve unwanted intrusions to information technology systems; the amount, nature and sensitivity of the PHI involved; or cases of numerous breach reports from a particular covered entity or business associate raising similar issues. According to the announcement, Regional Offices also may consider the lack of breach reports affecting fewer than 500 individuals when comparing a covered entities and business associates. Additional information about OCR HIPAA breach enforcement efforts is available on the OCR website.

CMS Proposes Clarification of Treatment of Third Party Payments in Calculating Uncompensated Care Costs under Medicaid DSH Payments Rules

CMS has proposed regulatory changes to specify that the hospital-specific limitation on Medicaid disproportionate share hospital (DSH) payments is based on uncompensated care costs net of third-party payments received. Under the proposed rule – which is intended to align with CMS’s existing interpretation – a hospital’s uncompensated care costs would not include care provided to Medicaid-eligible individuals for which the hospital received third party payments, such as payments from Medicare or private insurance. Therefore the hospital-specific limit calculation would reflect only the costs for Medicaid eligible individuals for which the hospital has not received payment from any source (other than state or local governmental payments for indigent patients).

CMS notes that at least one court has questioned whether it is a permissible interpretation of the statute to take third party payments into account when calculating Medicaid uncompensated care costs. CMS believes that its interpretation (that is, all third party payments should be taken into account) “better reflects the real economic burden of hospitals that treat a disproportionate share of low-income patients” and conforms to the statute. In light of the court’s opinion, however, CMS requests comments on this issue.  Because CMS does not consider the proposed rule to be a change in policy, it does not anticipate that the regulation would have significant financial effects on state Medicaid programs or providers.

CMS will accept comments on the proposed rule until September 14, 2016.

CMS ICD-10 Coding Flexibility Policy to End October 1, 2016. Period.

On October 1, 2016, CMS is definitively ending an ICD-10 coding “flexibility” policy announced last year that prevents practitioner Medicare Part B physician fee schedule claims from being denied based solely on the specificity of the ICD-10 diagnosis code, as long as the physician/practitioner uses a valid ICD-10 code from the right family.  According to a frequently-asked-questions document updated on August 18, 2016, “CMS will not extend ICD-10 flexibilities beyond October 1, 2016,” and CMS will not provide additional flexibility guidance or otherwise continue the phase in of the requirement to code to the highest level of specificity.  Effective October 1, 2016, providers must “code to accurately reflect the clinical documentation in as much specificity as possible, as per the required coding guidelines.”  CMS observes that many providers are already using specific ICD-10 codes since “[m]any major insurers did not choose to offer coding flexibility.”  CMS notes that it has posted additional information on the 2016 ICD-10-CM valid codes and code titles and 2017 coding details on its website.

CMS Schedules Next Meeting of Advisory Panel on Clinical Diagnostic Laboratory Tests for September 12

CMS has announced that the next meeting date of the Advisory Panel on Clinical Diagnostic Laboratory Tests will be September 12, 2016.  The meeting is expected to cover:

  • Payment options for routine chemistry tests that are currently paid as Automated Test Panels (ATPs) under the new payment system for clinical diagnostic laboratory tests effective January 1, 2018.
  • The application process for Advanced Diagnostic Laboratory Tests (ADLTs).

A detailed agenda will be posted approximately two weeks before the meeting.

MACRA Physician-Focused Payment Model Technical Advisory Committee to Meet September 16

The Physician-Focused Payment Model Technical Advisory Committee will meet on September 16, 2016.  The Committee will continue discussions about the process by which physician focused payment model proposals will be received and reviewed by the Committee in accordance with regulations implementing Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) physician payment reforms. 

CMS Proposes Three New “Episode Payment Models” for Cardiac Care, Hip/Femur Fracture Cases, Plus Changes to CJR Model

The Centers for Medicare & Medicaid Services (CMS) has announced proposals for three new “episode payment models” that, like the Comprehensive Care for Joint Replacement (CJR) model, would mandate provider participation in selected geographic areas. The episodes included in these payment models would address care for heart attacks, coronary artery bypass graft, and surgical hip/femur fracture treatment (excluding lower-extremity joint replacement). The performance period for these proposed episode payment models would begin July 1, 2017, giving hospitals and other providers a very short amount of time to prepare for these new payment methods. Comments are due October 3, 2016. Reed Smith is available to assist clients with preparation of comments or questions related to the proposed rule. Continue Reading

CMS Finalizes FY 2017 Update to Medicare IPPS, LTCH PPS Rates and Policies

The Centers for Medicare & Medicaid Services (CMS) has released its final rule to update Medicare acute hospital inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) payments and policies for fiscal year (FY) 2017.  With regard to the IPPS, CMS projects that the cumulative rate and policy changes in the final rule will increase total IPPS payments by about $746 million in FY 2017 compared to FY 2016. The rule provides a 0.95% operating payment rate update for hospitals that submit quality data and are meaningful users of Electronic Health Records (EHRs).  This update reflects a 2.7% market basket update, adjusted by a -0.3 percentage point multi-factor productivity (MFP) adjustment and an additional -0.75 percentage point adjustment (as mandated by the Affordable Care Act, or ACA), resulting in a 1.65% update.  This update is subject to an additional -1.5 percentage point documentation and coding recoupment adjustment (required by the American Taxpayer Relief Act of 2012) and a one-time increase of approximately 0.8 percentage points to permanently negate the cumulative impact of a “Two Midnight Policy” adjustment adopted in the final FY 2014 rule. Continue Reading

CMS Call: IMPACT Act: Data Elements and Measure Development (Aug. 31)

On August 31, 2016, CMS is hosting a call on “IMPACT Act: Data Elements and Measure Development,” to provide information on how data elements are used in measure development and how information from assessment instruments is used to calculate quality measures.  Registration is required.

CMS Proposes New Rule in an Effort to Address Significant Medicare Appeals Backlog

The Centers for Medicare & Medicaid Services (CMS) recently issued a proposed rule to address the significant backlog resulting from “an unprecedented and sustained increase” in its Medicare appeals. According to CMS, the Office of Medicare Hearings and Appeals (OMHA) had more than 750,000 pending appeals as of April 30, 2016, while it has only an adjudication capacity of 77,000 appeals per year. Given the current backlog, the statutory 90-day limit for a decision at the Administrative Law Judge (ALJ) level (the third level of the administrative appeal process) is routinely ignored by OMHA – the current average wait time is more than five times this congressionally mandated time limit.

CMS has previously identified four primary drivers for the growth in Medicare appeals – (1) an increase in the number of beneficiaries; (2) updates and changes to Medicare and Medicaid coverage and payment rules; (3) growth in appeals from State Medicaid Agencies; and (4) national implementation of the Medicare Recovery Audit Contractor Program. Under current resources (and without any additional appeals), CMS projects it would take 11 years for OMHA and six years for the Medicare Appeals Council (MAC) (the fourth and highest level of the administrative appeal process before federal district court) to process their respective backlogs.

To learn more about the proposed rule and how it plans to address the Medicare appeals backlog, read the Reed Smith Client Alert written by Scot Hasselman and Rahul Narula here.

CMS Announces Changes to HHA/Ambulance Supplier Enrollment Moratoria, New Exception Process Demo

CMS has announced a number of changes to its temporary Medicare enrollment moratoria for certain provider types in select geographic areas as a mechanism to address fraud, waste, and abuse. First, CMS is extending for six months and expanding statewide its current moratoria on the enrollment of new Medicare Part B nonemergency ground ambulance suppliers in New Jersey, Pennsylvania, and Texas, and enrollment of new Medicare home health agencies (HHAs) in Florida, Illinois, Michigan, and Texas. CMS states that the statewide expansion is intended to address situations in which providers circumvent a moratorium by enrolling in counties outside a moratorium and servicing beneficiaries within the moratorium area. Second, CMS is expanding these moratoria to Medicaid and Children’s Health Insurance Program (CHIP) enrollment. Third, CMS is lifting its current temporary moratoria on Part B emergency ground ambulance suppliers. These policies are effective July 29, 2016. Continue Reading

CMS Selects Regions for Primary Care Innovation Model

CMS has opened the application period for physician practices interested in participating in its new primary care model, Comprehensive Primary Care Plus (CPC+), which is intended to improve how primary care is delivered and reimbursed. CMS also announced that the following 14 regions have been selected to participate in CPC+ (statewide unless otherwise noted): Arkansas; Colorado; Hawaii; Kansas and Missouri (Greater Kansas City Region); Michigan; Montana; New Jersey; New York (North Hudson-Capital Region); Ohio (Statewide and Northern Kentucky Region); Oklahoma; Oregon; Pennsylvania (Greater Philadelphia Region); Rhode Island; and Tennessee. Eligible practices in these regions may apply to participate between August 1 and September 15, 2016. CMS estimates that up to 5,000 primary care practices serving 3.5 million beneficiaries may participate in CPC+.  CMS plans a series of educational calls to support participation in the model.

CMS Call on MPFS Global Services Data Collection (Aug. 11)

On August 11, 2016, CMS is hosting a call to discuss its plans, set forth in the proposed 2017 Medicare physician fee schedule rule, to collect data on resources used in furnishing global services as required by the Medicare Access and CHIP Reauthorization Act (MACRA). To register, visit the CMS website.

GAO Faults CMS’s Basis for Payments to Hospitals for Uncompensated Care Costs

The Government Accountability Office (GAO) recently examined the extent to which federal government payments to hospitals for uncompensated care aligned with hospital costs. This federal support, which totaled nearly $50 billion annually in FYs 2013 and 2014, mainly came in the form of Medicare and Medicaid payments to hospitals (about $14 million in Medicare payments and $35 million in Medicaid payments). According to the GAO’s analysis, Medicare’s Uncompensated Care (UC) payments are not well aligned with hospital uncompensated care costs because (1) payments are largely based on hospitals’ Medicaid workload rather than actual hospital uncompensated care costs, and (2) CMS does not account for hospitals’ Medicaid payments that offset uncompensated care costs. The GAO therefore recommends that CMS: (1) better align Medicare UC payments with hospital uncompensated care costs; and (2) account for Medicaid payments made when making Medicare UC payments to individual hospitals. HHS concurred with the GAO’s recommendations (note that the final FY 2017 Medicare inpatient prospective payment system rule discusses future plans to incorporate new data into the computation of hospitals’ uncompensated care costs). For details, see the full report, “Hospital Uncompensated Care: Federal Action Needed to Better Align Payments with Costs.”

CMS Finalizes Medicare IRF PPS Update for FY 2017

On August 5, 2016, CMS is publishing its final rule to update Medicare prospective payment system (PPS) rates for inpatient rehabilitation facilities (IRFs) for FY 2017, which begins October 1, 2016. CMS estimates that payments to IRFs will increase by 1.9% overall ($145 million) in FY 2017 compared to FY 2016 levels based on all policies and updates in the final rule.  Specifically, CMS finalized a 1.65% increase factor, derived from a 2.7% IRF-specific market basket update that is reduced by a 0.3 percentage point multi-factor productivity adjustment and an additional 0.75 percentage point reduction required by the Affordable Care Act.  Rates will be further increased by approximately 0.3 percentage points due to an update to the outlier threshold.  Note that an IRF that does not submit required quality data to CMS under the IRF Quality Reporting Program (QRP) is subject to a 2.0 percentage point decrease in its annual update. Continue Reading

CMS Issues Final Update to Medicare Hospice Payment Rules for FY 2017

CMS has released a final rule that updates the Medicare hospice wage index, payment rates, and cap amount for fiscal year (FY) 2017. CMS estimates that the final rule will increase overall Medicare payments to hospices by 2.1%, or $350 million, in FY 2017. This increase reflects a 2.7% market basket update, which will be reduced by a 0.3 percentage point productivity adjustment and an additional 0.3 percentage point adjustment required by the Affordable Care Act (ACA). Hospices that do not meet quality reporting requirements will receive a 2.0 percentage point reduction to their payment update. The final hospice cap amount for 2017 is $28,404.99, compared to the 2016 cap amount of $27,820.75. Continue Reading