Congressional Panels Schedule First Health Policy Hearings of 2019; Drug Pricing, Access to Care, Preexisting Condition Coverage on the Agenda

As the new 116th Congress gets underway, four House and Senate committees are holding hearings to examine health policy issues, including two hearings focusing on prescription drug prices.  Specifically, the following hearings are all scheduled for January 29, 2019:

CMS Restructures Medicare Shared Savings Program to Encourage Transition to Performance-based Risk

The Centers for Medicare & Medicaid Services (CMS) has finalized a major restructuring of the Medicare Shared Savings Program, dubbed “Pathways to Success.”  According to CMS, the program changes “are designed to increase savings for the Trust Funds and mitigate losses, reduce gaming opportunities, and promote regulatory flexibility and free-market principles.”  Most notably, CMS is accelerating the schedule for accountable care organizations (ACOs) to transition to two-sided risk models, under which the ACO is accountable for repaying shared losses in addition to qualifying for shared savings bonus payments.

By way of background, the Shared Savings Program is intended to encourage physicians, hospitals, and certain other types of providers and suppliers to form ACOs to provide cost-effective, coordinated care to Medicare beneficiaries.  The ACO agrees to be accountable for the quality and cost of the assigned Medicare fee-for-service beneficiary population.  The program has different “tracks” with varying frameworks for sharing savings or liability for losses depending on how spending compares to a benchmark.

Under the final rule, a participating ACO must select one of the following two tracks: Continue Reading

CMS Call on Clinical Diagnostic Laboratory Reporting of Private Payor Rates

On January 22, 2019, CMS is hosting a “refresher call” on Medicare requirements for certain clinical laboratories to report private payor rates and volume data for clinical diagnostic laboratory tests paid under the Clinical Laboratory Fee Schedule (CLFS).  Data collected during the period of January 1, 2019 and June 30, 2019 will be used to set Medicare CLFS rates effective January 1, 2021 under Protecting Access to Medicare Act of 2014 (PAMA) and its implementing regulations.   Register for the call here.

CMS Seeks Input on Potential Conflicts of Interest Arising from Accrediting Organizations Offering Consulting Services to Providers they Survey

The Centers for Medicare & Medicaid Services (CMS) is requesting public comments on actual or perceived conflicts of interest that could arise when Medicare-approved accrediting organizations (AOs) also offer fee-based consulting services for Medicare-participating providers and suppliers.  Such services — which CMS points out are not currently prohibited by law or regulation — may include:

  • Assistance for clinical and non-clinical leaders in understanding AO and CMS standards for compliance
  • Review of facility standards, processes, policies and simulation of a real survey
  • Identification of and technical assistance to address areas needing improvement
  • Educational consultative services

While CMS observes that such services “may be useful for entities to learn to comply with the requirements and identify gaps in compliance,” CMS is concerned that “this dual function may undermine, or appear to undermine, the integrity of the accreditation programs and could erode the public trust in the safety of CMS-accredited providers and suppliers.”  For instance, CMS notes that there could be circumstances in which an AO accredits a client facility as in compliance with the Medicare regulations at the same time the AOs consultancy service generates revenue assisting that facility in passing the AO’s accreditation surveys.  While some AOs have told CMS that firewalls exist between the arms of their businesses, CMS questions whether such firewalls are sufficient to prevent conflicts of interest.

CMS therefore is inviting feedback on whether it should issue regulations to address actual, potential, or perceived conflicts of interest as part of the AO application and renewal process.  CMS requests comments on a series of questions pertaining to the types of consultative services provided by AOs to the facilities they accredit; the effects of such arrangements; the potential impact of CMS rulemaking restricting such activities; and related topics.  Comments will be accepted until February 20, 2019.

HHS Proposes Rescinding Standard Unique Health Plan Identifier and Other Entity Identifier

The Department of Health and Human Services (HHS) is proposing to rescind the standard unique health plan identifier (HPID) and the other entity identifier (OEID), along with related implementation specifications and requirements for their use.

HHS adopted the HPID and OEID in a September 5, 2012 final rule, but HHS announced a delay in enforcement of the regulations in 2014.  While the rule was intended to improve the utility of the existing HIPAA transactions and reduce administrative burdens, concerns subsequently emerged from the National Committee on Vital and Health Statistics (NCVHS) and industry regarding the utility and costs of this framework.  In particular, HHS notes that industry has developed best practices for use of Payer IDs for purposes of conducting HIPAA transactions, but the “HPID does not have a place in these transactions, and from industry’s perspective, does not facilitate administrative simplification.”  Instead, HHS believes “it would likely be a costly, complicated, and burdensome disruption for the industry to have to implement the HPID because it would require mapping existing Payer IDs to the new HPIDs, which would likely result in the misrouting of claims and other transactions.”  HHS intends to consider “options for a more effective standard unique health plan identifier in the future” with input from industry.

HHS will accept comments on the proposal until February 19, 2019.

HHS OIG Recaps FY 2018 Enforcement Highlights  

The Office of Inspector General (OIG) of the Department of Health and Human Services has issued its Semiannual Report to Congress, which summarizes key program integrity efforts in fiscal year (FY) 2018.  Notably, during FY 2018, OIG achieved:

  • Expected investigative recoveries of $2.91 billion (compared to $4.13 billion in FY 2017)
  • Criminal actions against 764 individuals or entities for crimes against HHS programs
  • Civil actions against 813 individuals or entities
  • Exclusion of 2,712 individuals and entities from federal health care programs

The report also summarizes various audit reports issued and enforcement actions taken during the period of April 1, 2018 through September 30, 2018.  In addition, the OIG responds to recent public proposals for new and/or modified safe harbors.

CMS Announces 2019 Medicare Clinical Lab Fee Schedule Rates

CMS has finally posted the Medicare clinical laboratory fee schedule (CLFS) rates for 2019, which are based on private payer data as mandated by the Protecting Access to Medicare Act of 2014 (PAMA).  The files reflect payment rate changes announced in a December 14, 2019 CMS transmittal, which also discussed policy changes including revisions to the definition of “applicable laboratory.”

2019 Medicare DMEPOS Fee Schedule Released

CMS has posted calendar year 2019 Medicare fee schedule rates for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).  The 2019 update factor is 2.3%, although other pricing policies are applied in specific circumstances.  For instance, adjusted fee schedule amounts for former competitive bidding areas are based on single payment amounts in effect December 31, 2018 increased by 2.5%.  Additional details are provided in a CMS transmittal.

CMS to Host Call on Changes to HCPCS Coding Policies

CMS is hosting a Special Open Door Forum on December 18, 2018 to discuss changes to Healthcare Common Procedure Coding System (HCPCS) policies for the 2019-2020 coding cycle.  As previously reported, CMS expects the changes to increase transparency in the HCPCS coding process.  The Special Open Door Forum will provide stakeholders with an opportunity to ask questions regarding the HCPCS changes.

OCR Seeks Feedback on HIPAA Rule Reforms to Reduce Burdens, Promote Value-Based Care

The Office for Civil Rights (OCR) is requesting public input on reforms to Health Insurance Portability and Accountability Act (HIPAA) privacy and security rules to promote care coordination and the health system’s transformation to value-based health care while protecting the privacy and security of individuals’ protected health information (PHI).  Specifically, in a request for information (RFI) to be published on December 14, 2018, OCR seeks feedback on ways current policy could be modified the meet the following goals:

  • Promoting information sharing for treatment and care coordination and/or case management by amending the Privacy Rule to encourage or require covered entities to disclose PHI to other covered entities.
  • Encouraging covered entities to share treatment information with parents, loved ones, and caregivers of adults facing health emergencies, particularly with regard to the opioid crisis.
  • Implementing the HITECH Act requirement to include, in an accounting of disclosures, disclosures for treatment, payment, and health care operations from an electronic health record (EHR) in a manner that provides helpful information to individuals, while minimizing regulatory burdens/disincentives to interoperable EHR use.
  • Eliminating or modifying the requirement for covered health care providers to make a good faith effort to obtain individuals’ written acknowledgment of receipt of providers’ Notice of Privacy Practices.

Additional background information and more detailed questions are presented in the RFI.  Comments are due February 11, 2019.

CMS Tweaks HCPCS Coding Process to Promote Transparency, Ease Device Market Volume Requirement

Responding to longstanding industry criticisms, the Centers for Medicare & Medicaid Services (CMS) has announced a number of changes to the Healthcare Common Procedure Coding System (HCPCS) coding process for 2019.  Most of the new policies are intended to increase transparency regarding CMS HCPCS coding decisions.  The one substantive change of note is that CMS is eliminating its requirement that items other than drugs and biologicals demonstrate 3% market volume (although CMS will still require applicants to submit specified marketing data to support a new code).  With regard to improving transparency and clarity in the HCPCS decision process, CMS is:

  • Clarifying and updating web-site guidance associated with the application process
  • Developing a new electronic application process (which will be beta tested with a limited number of stakeholders in the 2019 cycle)
  • Providing more detailed responses to applications
  • Allowing remote participation in HCPCS public meetings
  • Archiving past years’ files/decisions on the HCPCS website

According to CMS, its changes to the HCPCS process seek to “facilitate the adoption of new technologies while balancing the burden on payers and providers and considers program needs.”  We would note, however, that these modifications to the application process do not address broader concerns that CMS’s standard for new codes is too rigid, particularly for medical devices, which results in insufficiently-granular codes and imposes a barrier to adoption of new medical technologies.

CMS is currently accepting applications for HCPCS codes that would go into effect January 1, 2020; the application deadline is January 7, 2019.

New Medicare Supervision Rules Applicable to both Physician Offices and Hospital Outpatient Departments

In a transmittal issued last week, the Centers for Medicare & Medicaid Services (CMS) extended newly-revised supervision rules for certain diagnostic tests paid via the Medicare Physician Fee Schedule (MPFS) to services paid under the Outpatient Prospective Payment System (OPPS) for hospital outpatient departments. The transmittal relates to services performed by a registered radiologist assistant who is certified and registered by the American Registry of Radiologic Technologists, or a radiology practitioner assistant who is certified by the Certification Board for Radiology Practitioner Assistants (RAs/RPAs).

Effective January 1, 2019, diagnostic tests paid under the MPFS that would otherwise require a “personal” level of supervision (Level 3, in the room throughout the procedure), may be furnished under a “direct” level of physician supervision to the extent permitted by state law and state scope of practice regulations for tests performed by RAs/RPAs. This policy was included in the final MPFS rule for calendar year (CY) 2019, which we summarized here.  There are currently 28 states that are reported to have such statutes or regulations relating to RAs/RPAs. CMS has followed up with additional guidance applying the new supervision requirements to tests performed by RA/RPAs for Medicare hospital outpatients. Transmittal 251 (Change Request 11043), dated November 30, 2018, updates the Medicare Benefit Policy Manual to provide that the technical component of all tests, except for Medicare inpatients, that must be performed under the personal (in the room) supervision of a physician, may be performed under direct physician supervision (defined below) if those services are performed by RAs/RPAs who are authorized to perform the test under state law.  Similar to the newly-revised supervision rules for diagnostic tests paid under the MPFS, the application of this new requirement to Medicare hospital outpatients becomes effective January 1, 2019.

The meaning of “direct supervision” differs in the MPFS and OPPS rules. For testing services performed for Medicare beneficiaries in physician offices and IDTFs under the MPFS, “direct supervision” is defined to mean that the supervising physician must be present in the office suite and immediately available to furnish assistance and direction throughout the performance of that test. For tests performed for Medicare hospital outpatients in an on-campus or off-campus outpatient department of the hospital under the OPPS, “direct supervision” means that the physician must be immediately available to furnish assistance and direction throughout the performance of the procedure. The OPPS does not impose a proximity requirement so long as the supervising physician can be immediately available to furnish assistance and direction.

It should be noted that the MPFS Final Rule – now also applicable to Medicare hospital outpatients – only impacts the supervision requirements associated with an RA’s/RPA’s performance of diagnostic tests.  It does not allow an RA/RPA to perform radiology interventional/surgical procedures or otherwise modify existing restrictions on an RA’s/RPA’s scope of services.  Additionally, even if state law permits RAs/RPAs to perform various non-test radiology procedures, the new Medicare rule is limited to the scope of physician supervision of diagnostic tests.

Although the new rules relax the standard for physician supervision of tests when an RA/RPA performs certain diagnostic tests, unchanged are CMS rules that state that only fully licensed physicians may supervise tests.  RAs/RPAs may perform a diagnostic test if permitted within their state scope of licensure, but they may not supervise technologists who perform diagnostic tests.  Such supervision must be performed by a physician.

It’s Official:  January 1, 2019 is Effective Date for HRSA 340B Ceiling Price/CMP Rule

The Health Resources and Services Administration (HRSA) has announced that it will implement its January 5, 2017 340B drug pricing program rule on January 1, 2019.  The oft-delayed final rule addresses:  (i) the calculation of the 340B “ceiling price” that may be charged to covered entities; (ii) the substantive standards applicable to civil monetary penalties (CMPs); and (iii) the procedures applicable to the imposition of CMPs.  In the preamble, HRSA indicated that it will “assess the need for further rulemaking and guidance after the rule is in effect.” HRSA also stated that it plans to release the 340B ceiling pricing reporting system “shortly,” and the agency will ensure all impacted stakeholders receive education and training on the reporting system.  Separately, HRSA projects that it will publish 340B ceiling prices on April 1, 2019.

HHS Deputy Secretary Hargan Names Innovation/Investment Summit Participants; First Meeting Scheduled for December 18, 2018

Health and Human Services Deputy Secretary Eric Hargan has selected 15 health industry and investment professionals to participate in the Deputy Secretary’s Innovation and Investment Summit (DSIIS), which will hold its inaugural meeting on December 18, 2018.  As previously reported, this initiative is intended to provide a forum for private sector and government experts to discuss ways to facilitate more investment and accelerated innovation in health care; the group will not be recommending HHS health care investments.

CMS Finalizes 2019 Medicare Clinical Lab Payment Determinations

CMS has released its final 2019 Medicare clinical laboratory fee schedule (CLFS) payment determinations for new and reconsidered clinical lab test codes.  Specifically, CMS finalized the basis for establishing the payment rate (crosswalking or gapfilling), along with the agency’s rationale for the decision.

CMS Publishes Final CY 2019 Medicare Physician Fee Schedule Rates and Policies

The Centers for Medicare & Medicaid Services (CMS) has issued its final Medicare physician fee schedule (PFS) rule for calendar year (CY) 2019.  In addition to updating rates for physician services, the rule adopts changes to numerous other Medicare Part B policies.  Highlights of the final rule include the following:

  • The final 2019 conversion factor (CF) is $36.0391, up slightly from the 2018 CF of $35.9996.  This rate is based on a statutory update of 0.25%, offset by a -0.14% relative value unit (RVU) budget neutrality adjustment.
  • The rule reduces from 6% to 3% the “add-on” payment for new, separately-payable Part B drugs and biologicals that are paid based on wholesale acquisition cost when average sales price during first quarter of sales is unavailable.
  • The rule makes a number of changes to the Appropriate Use Criteria (AUC) program, which requires that physicians who order outpatient advanced diagnostic imaging (ADI) services (diagnostic magnetic resonance imaging, computed tomography, and positron emission tomography/nuclear medicine) for a Medicare beneficiary consult with AUC developed by provider-led organizations approved by CMS via a qualified clinical decision support mechanism (CDSM).  Specifically, the final rule:
    • Extends the requirements to independent diagnostic testing facilities (joining physician offices, hospital outpatient departments, and ambulatory surgical centers).
    • Clarifies that AUC consultation information must be reported on all applicable technical component and professional component claims (i.e., not just reported on claims by furnishing facilities).
    • Provides that when delegated by the ordering professional, clinical staff under the direction of the ordering professional may perform the AUC consultation with a qualified CDSM (a modification to the proposed rule, which would have specified that AUC consultations may be performed by auxiliary personnel under the direction of the ordering professional and incident to the ordering professional’s services).
    • Uses established coding methods (e.g., G-codes and modifiers) to report required information.
    • Revises the significant hardship exception criteria to include (1) insufficient internet access; (2) electronic health record or CDSM vendor issues; (3) extreme and uncontrollable circumstances; and (4) self-attestation of hardship status for ordering professionals.

For information regarding the AUC implementation schedule, see our previous post. Continue Reading

CMS Finalizes Medicare OPPS, ASC Rates and Policies for 2019

The Centers for Medicare & Medicaid Services (CMS) has finalized Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) rates and policies for calendar year 2019.  Notably, CMS adopted some – but not all – of its proposed policies intended to promote more “site-neutral payments” for different types of providers.

Hospital Outpatient Provisions

CMS adopted a 1.35% update to Medicare OPPS rates for 2019, with the update reduced by 2.0% for hospitals that fail to meet quality reporting requirements.  Payment changes for individual procedures vary.

In the final rule, CMS reiterated its concern that “current payment incentives, rather than patient acuity or medical necessity, are affecting site-of-service decision-making.”  To that end, CMS adopted several policies intended to promote site neutrality, particularly with regard to off-campus hospital provider-based departments (PBD) that are “excepted” under section 603 of the Bipartisan Budget Act of 2015.  Section 603 provides that effective January 1, 2017 certain off-campus PBDs are generally paid under the physician fee schedule (PFS), rather than the typically higher-paying OPPS, unless an exception applies.  For 2019, CMS finalized policies to:

  • Reduce payment for clinic visit services (G0463, Hospital outpatient clinic visit for assessment and management of a patient) to a PFS-equivalent rate when provided at an “excepted” PBD. CMS notes that the clinic visit is the most common service billed under the OPPS, and by removing the “payment differential that may influence site-of-service decisionmaking, we anticipate an associated decrease in the volume of clinic visits provided in the excepted off-campus PBD setting.”  In response to comments, CMS is phasing in the payment reduction over two years, with the rate for HCPCS G0463 reduced by 30% for CY 2019 and reduced by 60% in 2020.  In other words, these excepted PBDs will be paid approximately 70% of the OPPS rate for clinic visit services in CY 2019, which CMS expects will results in CY 2019 savings of about $380 million (including $80 million in savings to Medicare beneficiaries).
  • Apply to excepted PBDs a current policy that reduces OPPS payment for separately payable, nonpass-through drugs and biologicals (other than vaccines) purchased through the 340B drug discount program from average sales price (ASP) plus 6% to ASP minus 22.5% (with certain exceptions).

CMS did not adopt its proposal to revise payment when an excepted PBD expands into new lines of service, although CMS stated that it will monitor expansion of services in off-campus PBDs and, if appropriate, the agency may propose future rulemaking in this area.  More broadly, CMS repeats its interest in future rulemaking “to systematically control for unnecessary increases in the volume of other hospital outpatient department services,” while maintaining “beneficiary access to new innovations.”

Other policies adopted in the final rule include the following:  Continue Reading

Medicare ESRD PPS Payments to Rise by 1.6% in 2019

Medicare end-stage renal disease (ESRD) prospective payment system (PPS) payments are expected to increase by 1.6% — or about $210 million — in calendar year (CY) 2019 under the final rule published on November 14, 2018.  The Centers for Medicare & Medicaid Services (CMS) has adopted a CY 2019 ESRD PPS base rate of $235.27, up from $232.37 in 2018.  This rate is based on a 1.3% productivity-adjusted market basket increase and the application of a wage index budget-neutrality adjustment factor of 0.999506.  CMS also expects that outlier policy changes in the final rule will increase payments by 0.3%.

The final rule updates a number of other ESRD policies, including:  expanded Transitional Drug Add-on Payment Adjustment (TDAPA) eligibility and a revised payment basis for new renal dialysis drugs and biological products beginning January 1, 2020; revised low-volume payment adjustment regulations; an update to the acute kidney injury dialysis rate to $235.27 (the same as the CY 2019 ESRD PPS base rate); and modifications to ESRD Quality Incentive Program (QIP) reporting requirements and measures.

Furthermore, this rule included significant changes to Medicare reimbursement policies pertaining to durable medical equipment, prosthetics, orthotics and supplies; these policies are summarized in a separate post.

Trump Administration International Pricing Index Plan for Medicare Part B Drugs:  Key Issues and Implications

The Trump Administration is considering a controversial plan, the International Pricing Index (IPI) model, which would tie Medicare Part B prescription drug payment rates to amounts paid for such drugs in other developed countries.  The Centers for Medicare and Medicaid Services’ proposed IPI model also would replace the current “buy and bill” system for Part B drugs with a new drug distribution and billing model.  Comments on the proposal are due December 31, 2018.

Reed Smith has prepared a client alert analyzing the IPI model; the alert is available here.

Two-Year Break in Store for Medicare DMEPOS Competitive Bidding Program, But CMS Gears Up for 2021 Restart with Expanded Product Categories and New Rules

The Centers for Medicare & Medicaid Services has confirmed that it expects to have a “temporary gap” in the durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) competitive bidding program (CBP) during calendar years 2010-2020.  As a result, beginning January 1, 2019, Medicare beneficiaries may receive DMEPOS items from any Medicare-enrolled supplier until such time as new CBP contracts go into effect.  When competitive bidding resumes, it will be under new program rules, as discussed below.  Furthermore, CMS has announced that it intends to include in the next round of the CBP the following new product categories:  ventilators, off-the-shelf back braces, and off-the-shelf knee braces.  CMS has posted the specific HCPCS codes it intends to subject to bidding within these new product categories, and the agency will accept comments on these codes through December 3, 2018. [Note — CMS subsequently extended the comment deadline until December 17, 2018.]

Future Competitive Bidding Program Rules.  In a final rule scheduled to be published on November 14, 2018, CMS adopted a number of “market-oriented reforms” and technical policy changes for future rounds of competitive bidding.  According to CMS, the new rules will simplify the bidding process, preserve beneficiary access to items and services, and make the DMEPOS CBP more sustainable.

Of particular note, CMS has finalized its proposed “lead item pricing” methodology.  Rather than bid on each item/HCPCS code in a product category for each competitive bidding area (CBA), suppliers will submit a single bid for the item in the product category designated by CMS to have the highest total nationwide Medicare allowed charges.  CMS will calculate a single payment amount (SPA) for that lead item in the CBA based on the highest amount bid within the winning bids, rather than the median of winning bids.  Thus under this methodology, suppliers in the winning range will be paid at least what they bid for the lead item, which CMS expects “will have a positive economic impact on bidding suppliers.”

Under the final rule, the SPAs for non-lead items will be based on the relative difference in the fee schedule amounts for the lead and non-lead items (prior to fee schedule adjustments based on CBP pricing).  CMS provides an example of a non-lead item such as a wheelchair battery with an average 2015 fee schedule amount of $107.25, and a lead item (Group 2, captains chair power wheelchair) with an average 2015 fee schedule amount of $578.51.  The ratio for these items would be computed by dividing $107.25 by $578.51 to get 0.18539. If the maximum winning bid/SPA for the power wheelchair (lead item) is $433.88, the SPA for the wheelchair battery (non-lead item) would be computed by multiplying $433.88 by 0.18539 to generate an SPA of $80.44.

Fee Schedule Updates.  In the Final Rule, CMS adopted without change its three proposed methodologies for updating the DMEPOS fee schedule, depending on the geographic area in which the items and services were furnished: Continue Reading