Update: Now it’s Wright out, Hargan in at HHS

President Trump has named Eric Hargan to serve as Acting HHS Secretary, replacing Don Wright (who was just named to the post on September 29, 2017).  The HHS Secretary vacancy was created when Tom Price, MD resigned the post September 29.  Hargan, an attorney who served at HHS during the George W. Bush Administration, was confirmed as Deputy HHS Secretary by the Senate last week.  Wright remains Acting Assistant Secretary for Health, Deputy Assistant Secretary for Health, and Director of the Office of Disease Prevention and Health Promotion.

HRSA Delays Final 340B Penalty Rule until July 1, 2018; Additional Rulemaking in the Works

The Health Resources and Services Administration (HRSA) has adopted its proposal to delay the effective date of its final rule revising the calculation of the 340B “ceiling price” that may be charged to covered entities and related civil money penalties.  As previously reported, while implementation of the January 5, 2017 rule was already delayed until October 1, 2017, HRSA has now pushed back the effective date to July 1, 2018.  HRSA states that this delay “provides regulated entities sufficient time to implement the requirements of the rule, as well as allowing a more deliberate process of considering alternative and supplemental regulatory provisions, and to allow for sufficient time for additional rulemaking.”  In fact, this new rulemaking is already in the works; HRSA sent a new 340B drug pricing/CMP proposed rule to the White House Office of Management and Budget for regulatory review on October 6, 2017. 

Price Out, Wright In at HHS (for Now)

In the wake of the resignation of former Secretary Tom Price, MD over concerns about his travel expenses, President Trump has named Don Wright, MD, MPH, as Acting Secretary of the Department of Health and Human Services (HHS). Wright previously served as Acting Assistant Secretary for Health.  The Administration has not yet indicated who will be nominated as a permanent replacement to lead the Department.

Separately, on October 4, the Senate confirmed attorney Eric Hargan as Deputy HHS Secretary, and he was sworn in by a 57-38 vote on October 5. Hargan previously served in various high-level HHS positions in the George W. Bush Administration.

Trump Administration Shelves Additional Obama Medicare/Health Plan Proposals

The Trump Administration has formally withdrawn a number of pending Department of Health and Human Services (HHS) proposals that never reached the final rule stage. This includes:  a controversial Part Medicare B drug payment innovation model; a proposal to protect same sex marriages in certain Medicare and Medicaid facilities (predating a related Supreme Court decision); a proposal to impose more stringent Medicare requirements related to the provision of orthotics and prosthetics; and a proposed rule regarding certification of compliance for health plans.  Each of the rules is withdrawn as of October 4, 2017.  Specifically: Continue Reading

Drug Pricing, Drug Costs, and the Opioid Crisis are the Focus of Upcoming Congressional Hearings

The Energy and Commerce Subcommittee on Health has scheduled an October 11, 2017 hearing to discuss how covered entities use the 340B drug pricing program. A second Subcommittee hearing on October 11 will consider proposals from House members on ways to address the opioid crisis.

On October 17, the Senate Health, Education, Labor, and Pensions Committee is holding hearing to examine the cost of prescription drugs, focusing on how the drug delivery system affects what patients pay.

CMS Corrects Final FY 2018 IPPS, LTCH, and SNF Payment Rules

CMS has released corrections to two major fiscal year (FY) 2018 Medicare payment rules. First, CMS has made numerous technical corrections to the FY 2018 inpatient prospective payment systems (IPPS) and long term care hospital (LTCH) prospective payment system (PPS) final rule. CMS has corrected MS-DRG and MS-LTCH-DRG relative weights, budget neutrality adjustment factors, fixed-loss amounts, wage indexes, national operating standardized amounts, capital federal rate, LTCH PPS standard federal payment rate, uncompensated care payment calculations, and quality measures, among many other things.  Furthermore, CMS is updating various tables that accompanied the final rule, and it is making corrections to the logic for the ICD-10 MS-DRG Grouper Version 35 Software.

Second, CMS has corrected the FY 2018 skilled nursing facility (SNF) prospective payment system (PPS) final rule to address a number of technical issues.  Among other things, CMS is correcting wage indexes, the wage index budget neutrality factor, and SNF PPS rates.  The corresponding SNF wage index tables have been updated on the CMS website.

CMS Announces CY 2018 Amount in Controversy Thresholds for Medicare Appeals

CMS has released the calendar year (CY) 2018 amount in controversy (AIC) threshold amounts for Administrative Law Judge (ALJ) hearings and judicial review under the Medicare appeals process. The CY 2018 AIC threshold amounts are $160 for ALJ hearings (the same as 2017) and $1,600 for judicial review (compared to $1,560 in 2017).  These amounts apply to requests for ALJ hearings and judicial review filed on or after January 1, 2018.

Chronic Care Legislation Approved by Senate

The U.S. Senate has unanimously approved S. 870, the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017 (as amended). The bill is intended to improve care for the chronically ill in fee-for-service Medicare, Medicare Advantage (MA) plans, and accountable care organizations (ACOs). In particular, the bill calls for increased use of telehealth by MA plans and ACOs, and for ESRD beneficiaries undergoing home dialysis. In addition, the legislation seeks to promote care coordination, including through a new ACO Beneficiary Incentive Program that permits certain incentive payments to beneficiaries to encourage the use of medically-necessary primary care services. Under the bill, the Affordable Care Act’s (ACA) Independence at Home program would be expanded and ACA Special Needs Plans would be permanently authorized (if certain conditions are met). Furthermore, the HHS Secretary would be required to establish a process to provide Part D prescription drug plans with Parts A and B claims data to promote the appropriate use of medications and improve health outcomes. The bill now moves to the House.

CMS Releases 2018 Open Payments/Sunshine Act Reporting Thresholds

CMS has announced inflation-adjusted de minimis reporting thresholds for 2018 under the Open Payments/Physician Payments Sunshine Act program.  Specifically, payments or transfers of value of less than $10.49 do not need to be reported in 2018, except when the total annual value of payments or other transfers of value to a covered recipient exceeds $104.90.  These amounts are up slightly from the 2017 thresholds of $10.32 and $103.22, respectively.

Recently Released Enhanced Regulatory Initiatives for Drug Compounders

On September 26, 2017, FDA Commissioner Scott Gottlieb, M.D. released a statement about FDA’s ramped up regulatory initiatives for drug compounders. These initiatives include: (1) publishing a report that provides a list of all the drugs that outsourcing facilities have compounded; (2) publishing a guide entitled “Outsourcing Facility Information,” which is a compilation of key regulatory information applicable to outsourcing facilities; and (3) conducting the sixth intergovernmental meeting on drug compounding allowing intergovernmental agencies to coordinate their regulatory efforts for all compounders. These efforts demonstrate that FDA is continuing to actively oversee the regulation of drug compounding and is looking to work closer with state boards of pharmacy to coordinate its various enforcement initiatives. Drug compounders should continue to closely monitor their compliance with all applicable state and federal regulation and guidance.

For more information on this important topic, please read the full client alert here.

Senate GOP Abandons Last-Ditch ACA Repeal/Replace Legislation in Face of Opposition

The latest Republican Congressional attempt to repeal and replace the Affordable Care Act (ACA) has foundered, as three Republican senators announced they will join Democratic senators in opposing the “Graham-Cassidy” repeal plan.

Very broadly, Graham-Cassidy would, among other things:

  • Eliminate the penalties and mandates that individuals buy insurance and certain employers offer insurance;
  • Replace insurance premium subsidies and funding for Medicaid expansion with block grants to the states (with greatly reduced federal contributions);
  • Give states wide latitude in determining the parameters of insurance coverage and premiums; and
  • Revise the tax treatment of certain medical expenses.

Senate GOP leaders intended to bring Graham-Cassidy to the floor for a vote this week – before special “budget reconciliation” rules that allow passage on a simple majority vote expire at the end of this month.  On September 25, 2017, the Congressional Budget Office released a preliminary estimate of the impact Graham-Cassidy would have on health insurance coverage and federal spending.  The CBO projects that the bill would cut Medicaid by $1 trillion and result in millions of individuals losing insurance coverage.  These projections prompted Senator Susan Collins (R-ME) to declare her opposition to the bill (joining Republican Senators John McCain and Rand Paul).  Congressional leaders have now shelved the vote in light of the dim prospects for passage.

Medicare Clinical Lab Fee Schedule Payments to Fall by $670 Million in 2018 Under Preliminary PAMA Rates

CMS has posted preliminary Medicare clinical laboratory fee schedule rates for 2018 – the first year rates will be based on private payer data under the Protecting Access to Medicare Act of 2014 (PAMA). CMS estimates that 2018 Medicare Part B payments will be reduced by about $670 million for calendar year 2018. In fact, for approximately 75 percent of the HCPCS codes on the CLFS, the 2018 rate based on the weighted median of private payor rates is a decrease from the CY 2017 CLFS national limitation amount. CMS will accept comments on preliminary rates until October 23, 2017.

CMS also posted preliminary determinations regarding the payment basis (crosswalk or gapfill) for new and existing laboratory HCPCS codes for which CMS received no applicable payment information. Comments on the preliminary determination also are due October 23, 2017.

OIG: “High-Performing” ACOs Point the Way for Medicare Shared Savings Program Savings

The OIG has examined the results of the first three years of the Medicare Shared Savings Program, under which accountable care organizations (ACOs) coordinate care to reduce Medicare costs and improve quality of care. The OIG reports that 428 participating ACOs serving 9.7 million beneficiaries saved almost $1 billion in net Medicare spending while generally improving quality of care.  The results among individual ACOs varied significantly, however.  The OIG determined that 58 “high-performing ACOs” reduced spending by an average of $673 per beneficiary for key Medicare services during the review period, while 122 other Shared Savings Program ACOs (and fee-for-service providers) increased per beneficiary spending for these services.  The OIG observed that understanding the success of high-performing ACOs “can inform not only the future direction of the Shared Savings Program, but also alternative payment models that seek to achieve high-quality care for lower costs.”

Roundup of Recent Congressional Health Policy Hearings

Several recent Congressional hearings have focused on health policy issues. For instance, the House Energy and Commerce Committee held hearings on Food and Drug Administration regulation of over-the-counter drugs and Public Health Service Act health workforce programs.

The Senate Finance Committee held hearings on the Graham-Cassidy health insurance reform bill, CHIP funding reauthorization, and health care costs and insurance coverage. The Senate Committee on Health, Education, Labor, and Pensions held a series of bipartisan hearings to get feedback from stakeholders on ways to stabilize and strengthen the individual health insurance markets. The panel also has scheduled an October 5, 2017 hearing on the federal response to the opioid crisis.

OIG Issues “Early Alert” on Potential Cases of SNF Abuse/Neglect

The Office of Inspector General has issued an “early alert” warning that “CMS procedures are not adequate to ensure that incidents of potential abuse or neglect of Medicare beneficiaries residing in [skilled nursing facilities] are identified and reported.” In the course an ongoing review, the OIG identified 134 Medicare beneficiaries with injuries resulting from potential abuse or neglect in 2015 or 2016. According to the OIG, 28 percent of these incidents were not reported to local law enforcement. The OIG suggests that CMS take a number of immediate actions to ensure that such potential instances of abuse or neglect are identified and reported, such as comparing Medicare claims for emergency room treatment with claims for SNF services. The OIG also called on CMS to pursue the authority to impose civil monetary penalties and exclusions under Section 1150B of the Social Security Act (which requires certain designated covered individuals in federally funded long-term care facilities to report immediately any reasonable suspicion of a crime committed against a resident of that facility). The OIG plans to make formal recommendations to CMS when its audit is complete.

CMS Calls for “New Direction” for Innovation Center, Invites Ideas for New Payment Models

The Centers for Medicare & Medicaid Services (CMS) has announced a “new direction” for the CMS Innovation Center that is intended to “promote patient-centered care and test market-driven reforms.” The goal of these reforms – which may be tested on a smaller scale than current innovation models – is to “empower beneficiaries as consumers, provide price transparency, increase choices and competition to drive quality, reduce costs, and improve outcomes.”

CMS is particularly interested in testing models in involving the following focus areas (although the Innovation Center may also test models in other areas):

  1. Increased participation in Advanced Alternative Payment Models under the Quality Payment Program.
  2. Consumer-directed care and market-based innovation models. This could include allowing Medicare beneficiaries to contract directly with healthcare providers, having providers propose prices for treatments to inform beneficiary choices, offering bundled payments for full episodes of care and allowing providers to bid on the payment amount, and establishing preferred provider networks.
  3. Physician specialty models (e.g., specialty physician management of a defined population of beneficiaries with complex or chronic medical conditions, or paying providers for limited episodes of care based on quality measure performance and competitive pricing).
  4. Prescription drug payment models under Medicare and state Medicaid programs. CMS is particularly interested in models involving “arrangements between plans, manufacturers, and stakeholders across the supply chain,” such as value based purchasing arrangements and models that would increase drug pricing competition while protecting beneficiaries’ access to drugs.
  5. Medicare Advantage (MA) innovation models that provide MA plans with flexibility to innovate and achieve better outcomes.
  6. State-based and local innovation, including Medicaid-focused models.
  7. Mental and behavioral health models that enhance care integration and/or utilize episode payment, particularly in focus areas such as opioids, substance use disorder, dementia, and improving mental healthcare provider participation in Medicare, Medicaid, and CHIP.
  8. Program integrity approaches to “help CMS find the ideal balance between burdens on patients and additional workload created for the physician and effectiveness of the review.”

CMS will accept comments through November 20, 2017.

House Panels Advance Medicare Policy Bills, including Hike in Civil/Criminal Penalties

The House Energy and Commerce Subcommittee on Health has approved the following seven bipartisan bills addressing the Medicare Part B program:

  • HR 3245, which would significantly increase various Medicare civil and criminal penalties under sections 1128A and 1128B of the Social Security Act, which sponsors note have not been updated in 20 years. Maximum penalties would at least double under the bill. For instance, CMPs that are now $10,000 would be increased to $20,000, while criminal fines that are now a maximum of $25,000 would increase to $100,000. Maximum sentences also would be doubled, from five years to 10 years.
  • HR 1148, the Furthering Access to Stroke Telemedicine Act, to provide for Medicare reimbursement of neurological consults via telemedicine for beneficiaries presenting at hospitals or mobile stroke units.
  • HR 2465, the Steve Gleason Enduring Voices Act, to make permanent the current Medicare coverage of speech generating devices under the “routinely purchased” durable medical equipment payment category.
  • HR 2557, the Prostate Cancer Misdiagnosis Elimination Act, to provide coverage of DNA Specimen Provenance Assay (DPSA) testing for prostate cancer.
  • HR 3120, to amend the Health Information Technology for Economic and Clinical Health (HITECH) Act to remove the mandate that meaningful use standards become more stringent over time.
  • HR 3263, to extend the Medicare Independence at Home Medical Practice Demonstration Program.
  • HR 3271, to revise Medicare competitive bidding rules pertaining to diabetes test strips (DTS), including stronger enforcement of requirement that bidders cover at least 50 percent of the types of diabetes test strips on the market.

Continue Reading

Ways & Means Committee Approves Alternative Pathway for Stark Act Technical Violations

The House Ways and Means Committee has approved legislation to create an alternative pathway to resolve certain technical violations of the Stark physician self-referral law. The bill, HR 3726, would allow an entity or individual to voluntarily disclose previous inadvertent technical noncompliance (e.g., the arrangement is not signed by one or more parties to the arrangement). If the disclosure were accepted by the Secretary, the entity would pay a civil monetary penalty ranging from $5,000 to $10,000, depending on the date of disclosure, to resolve resulting overpayments. The legislation has not yet been considered by the full House of Representatives.

CMS Corrects Sunshine Act CMP Regulations due to Inflation Adjustment Error

CMS has just corrected an error in a 2016 rulemaking that inadvertently called for a 10-fold increase in certain “Sunshine Act” civil monetary penalties (CMPs).

Under section 1128G of the Social Security Act, applicable manufacturers must report annually to CMS any payments or other transfers of value to covered recipients. In addition, the statute requires applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership investment interests held by physicians or their family members in such entities.  If an entity fails to report the required information in a timely manner, the statute authorizes a CMP amount between $1,000 and $10,000 for each payment or transfer of value or ownership or investment interest not reported, up to an annual cap of $150,000 per submission.

A September 6, 2016 interim final rule adjusting certain CMP amounts for inflation inadvertently changed the base penalty range from $1,000 and $10,000 to $10,000 and $100,000, respectively, for these Sunshine Act violations.  CMS is now correcting this error “to ensure that the regulations accurately reflect the statutory authority.”


CMS Unveils New Medicare Beneficiary Card, Encourages Providers to Prepare Systems for Transition to New Numbers

In order to protect Medicare beneficiaries from fraud and identity theft, CMS has unveiled a new Medicare card that removes the beneficiary’s Social Security number from the card. Specifically, the current Social Security-based number – the Health Insurance Claim Number or HICN – is being replaced with a randomly-assigned Medicare Beneficiary Identifier (MBI) beginning in April 2018. This change will require providers to ensure that their systems can accept the new MBI format.  CMS is providing a transition period during which providers can use either the HICN or the MBI on claims, after which the MBI must be used (with certain exceptions).  CMS expects the transition period to run from April 1, 2018 through December 31, 2019.  CMS is posting details about the transition here.