HHS OIG Report Touts FY 2019 Enforcement and Audit Accomplishments

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

According to its latest Semiannual Report to Congress, the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) expects fiscal year (FY) 2019 investigative recoveries from criminal and civil actions to top $5 billion – up from $2.9 billion in FY 2018.  Additionally, the OIG expects to recover $819 million as a result of audits.  During FY 2019, the OIG brought a total of 809 criminal actions and 695 civil actions, and excluded 2,640 individuals and entities from federal health care programs.  The Semiannual Report also notes the OIG’s preparations for changes in the health care industry, stating that “OIG is preparing to oversee emerging technology-enriched, value-driven health and human services programs with investments in the expertise of our people, as well as proven technologies and data capabilities.”

Government Funding Bill Signed by President Trump Extends Expiring Federal Health Programs through December 20

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

President Trump has signed into law a short-term continuing resolution that funds the federal government and extends certain expiring health care programs through December 20, 2019.  With regard to health care programs, the measure (HR 3055) delays a scheduled $4 billion reduction in Medicaid disproportionate share hospital allotments until December 21, 2019 and extends the current 100% Federal Medical Assistance Percentage for the territories.  It also temporarily extends funding for a variety of federal health care programs through December 20.  These programs include:  Community Health Centers; the National Health Service Corps; the Teaching Health Center Graduate Medical Education program; the Special Diabetes Program; the Community Behavioral Health Clinic demonstration program; outreach activities for low-income Medicare beneficiaries; the Health Profession Opportunity Grant demonstration; the Temporary Assistance for Needy Families; quality measurement and performance improvement activity contracts; and the Patient-Centered Outcomes Research Institute.

Additional legislative action – either in the form of another short-term package or an agreement to fund the government through the remainder of fiscal year 2020 – will be necessary in the coming weeks to avert a federal government shutdown.

Speakers from WebMD, CMS, PhRMA, AdvaMed, AHCA, and More to Present at Reed Smith’s Dec. 4 Washington Health Care Conference

Debra A. McCurdyBy Debra A. McCurdy on Posted in Health Care Industry Events

Reed Smith is hosting its 6th Annual Washington Health Care Conference on December 4, 2019 at The Almas Center in Washington, D.C., and is pleased to welcome another impressive line-up of speakers this year.

Our keynote speaker is Dr. John Whyte, Chief Medical Officer of WebMD, who will be discussing “Artificial Intelligence in Health Care: Disrupt but Don’t Be Disruptive.”

The conference also includes a particularly timely panel on the proposed rules to modernize Stark Law and the Anti-Kickback Statute. Our presenters include: Lisa Wilson, Senior Technical Advisor to the Centers for Medicare and Medicaid Services; David Gregory, Principal, Healthcare Practice, Baker Tilly Virchow Krause; Nancy Bonifant Halstead, Partner, Reed Smith; and moderator Nicole Aiken-Shaban, Senior Associate, Reed Smith.

We’re also pleased to be offering a session with representatives from major associations on how the industry is preparing for the next major shift in the health delivery continuum. Our presenters include: Terry Chang, MD, JD, Vice President, Assistant General Counsel, and Director, Legal & Medical Affairs, AdvaMed; Clif Porter, Senior Vice President, Government Relations, AHCA; Julie Wagner, Senior Assistant General Counsel, PhRMA; Katie Mahoney, Vice President, Health Policy at the U.S. Chamber of Commerce; and moderator Elizabeth Carder-Thompson, Senior Counsel, Reed Smith.

Additional conference sessions include:

  • A panel on some key privacy and regulatory issues surrounding connected devices and other digital health products, featuring Pearl Hsieh, Senior Counsel, U.S. Commercial, Smith & Nephew; Amy Westergren, Regulatory Counsel, Ro; and moderator Kim Gold, Partner, Reed Smith LLP.
  • A discussion on current trends in False Claims Act enforcement, featuring Rick Robinson, Partner, Reed Smith; Megan Engel, Senior Associate, Reed Smith; and Sarah Cummings, Senior Associate, Reed Smith.
  • A panel on top considerations in health care transactions, featuring Jeremy Alexander, Partner, Reed Smith; Cori Annapolen Goldberg, Partner, Reed Smith; and Ellie O’Brien-Fabeny, Counsel, Reed Smith.

Limited seating is available for this complimentary program. For more information or to register, please visit the event website.

Controversial CMS Final Rule Requires Hospitals to Disclose Payer-Specific Charge Data; New Proposed Rule Would Impose Health Plan Transparency Requirements

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

The Centers for Medicare & Medicaid Services (CMS) finalized a “price transparency” rule that requires hospitals to make detailed charge data – including payer-specific negotiated charges – available for all inpatient and outpatient services.  Additionally, the final rule mandates that hospitals make “consumer-friendly” charge information available for at least 300 “shoppable” services.  While CMS deferred implementation to 2021, rather than 2020 as contemplated in the proposed 2020 Medicare Hospital Outpatient Prospective Payment System rule, the agency expanded the cost data elements that hospitals must report.  Four major hospital associations have announced their intention to challenge the rule in court.  These hospital associations allege that the rule exceeds the Administration’s authority and would “introduce widespread confusion, accelerate anticompetitive behavior among health insurers, and stymie innovations in value-based care delivery America’s hospitals and health systems.”

The final rule requires hospitals to make available online in a machine-readable file the hospital’s gross charges and payer-specific negotiated charges for all items and services provided in the inpatient and outpatient department setting.  Each payer-specific negotiated charge must be clearly associated with the name of the third party payer and plan.  Additionally, the final rule expands the required data elements to include discounted cash prices and the de-identified minimum and maximum negotiated charge for all items and services provided by the hospital.

Second, hospitals must make public in a consumer-friendly manner their payer-specific negotiated charges for at least 300 “shoppable” services – defined as a service that can be scheduled by a health care consumer in advance.  CMS identified 70 shoppable services (the same as identified in the proposed rule) and the hospital must select the rest.  The required cost elements include:  payer-specific negotiated charges; discounted cash price; de-identified minimum and maximum negotiated charge for each shoppable service (and any ancillary service); and whether the charges differ based on whether the service is provided in the inpatient or outpatient setting. Hospitals in violation of these price transparency provisions would be subject to corrective action plans and civil money penalties of up to $300 per day.

Additionally, the Administration issued a separate proposed rule that would require group health plans and health insurance issuers in the individual and group markets to disclose certain cost-sharing information to participants, beneficiaries, or enrollees, through an internet-based self-service tool (and in paper form upon request).  This information would include a personalized estimate of the individual’s cost-sharing liability for covered items or services furnished by a particular provider.  Furthermore, plans would be required to disclose in-network provider negotiated rates and historical out-of-network allowed amounts through two public machine-readable files.  Finally, the Department of Health and Human Services proposes enabling issuers offering group or individual health insurance coverage “to receive credit in their medical loss ratio calculations for savings they share with enrollees that result from the enrollee’s shopping for, and receiving care from, lower-cost, higher-value providers.”  Comments on the proposed rule will be accepted until January 14, 2020.

CMS Adopts Medicare OPPS and ASC Rates, Policy Updates for 2020

Gail L. DaubertDebra A. McCurdyBy Gail L. Daubert and Debra A. McCurdy on Posted in Centers for Medicare & Medicaid Services Regulations

The Centers for Medicare & Medicaid Services (CMS) has finalized Medicare hospital outpatient prospective payment system (OPPS) and ambulatory surgical center (ASC) payment system rates and policies for 2020.  The final rule provided a 2.6% update to both OPPS and ASC rates for 2020 for facilities meeting quality reporting requirements (compared to an anticipated 2.7% update under the proposed rule).  Note that payment changes for individual procedures vary.  CMS estimated that total payments to OPPS providers will increase by approximately $6.3 billion and payments to ASCs will increase by about $230 million compared to estimated 2019 payments.

While CMS included in the OPPS proposed rule a controversial proposal to require all hospitals to disclose payer-specific pricing, including “consumer-friendly” information for hundreds of “shoppable” services, the agency finalized these policies (with modifications) in a separate final rule.  

Hospital Outpatient Provisions

Major OPPS policies adopted in the final rule include the following:

  • CMS adopted an alternative pathway for OPPS device pass-through payment status for “transformative” devices with Food and Drug Administration Breakthrough Device designation. CMS did not adopt changes to the OPPS substantial clinical improvement (SCI) criterion, as it had for the related inpatient prospective payment system SCI standard.
  • CMS removed total hip arthroplasty and six spine procedures (and associated anesthesia administration) from the inpatient only (IPO) list; these procedures may be performed in the outpatient hospital setting beginning in 2020. CMS finalized a policy to exempt procedures removed from the IPO list from Recovery Audit Contractor referrals and certain other medical review activities for two years (rather than one year as proposed).
  • The final rule increased the per-day cost threshold for separate payment for certain outpatient drugs to $130, up from $125 in 2019. CMS also discussed options for pricing certain drugs purchased through the 340B program in light of pending litigation challenging the average sales price minus 22.5% payment policy adopted in the final 2018 OPPS rule.
  • CMS completed the two-year phase of a policy it adopted in the 2019 final OPPS rule to reduce payment for certain clinical visit services provided by excepted off-campus provider based departments. CMS acknowledged that the policy for 2019 was vacated by a US District Court; the Administration is considering whether to appeal.
  • The final rule created two new comprehensive ambulatory payment classifications (C-APCs), one for Level 2 Vascular Procedures and one for Level 1 Neurostimulator and Related Procedures, raising the total number of C-APCs to 67.
  • CMS did not adopt reforms to its payment policy for packaged skin substitutes for 2020, as it had contemplated in the proposed rule.
  • CMS established a prior authorization process for five services that are “often cosmetic”:  blepharoplasty, botulinum toxin injections, panniculectomy, rhinoplasty, and vein ablation.
  • CMS lowered the required level of supervision for hospital outpatient therapeutic services from direct supervision to general supervision.
  • CMS adopted various updates to Hospital Outpatient Quality Reporting Program requirements.

 ASC Provisions

  • The final rule adds several procedures to the ASC list of covered surgical procedures, including total knee arthroplasty.
  • CMS adopted a policy to limit the ASC payment rate for low-volume, device intensive procedures to the procedure’s OPPS payment rate.
  • CMS updated various ASC Quality Reporting Program requirements.

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

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

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

  • The final 2020 conversion factor is $36.0896, up slightly from $36.0391 in 2019 (and the same as in the proposed rule). The final rule also updates work and practice expense (PE) relative value units (RVUs) for numerous new, revised, and potentially misvalued codes, and it revises various direct PE inputs based on submitted invoices.
  • CMS updated evaluation and management (E/M) visit coding and payment policies for 2021 to align with CPT Editorial Panel changes. These coding and payment policies are favored by some physician specialties and are controversial among others.  While CMS anticipates that specialties that bill higher level established patient visits will see significant RVU increases, those physician specialties that do not generally bill office/outpatient E/M visits could see large payment decreases (because of budget neutrality rules).  Future coding and valuation policies in the CY 2021 final rule could impact actual RVUs changes.
  • CMS replaced the current Medicare requirement for the general physician supervision of physician assistants (PAs), including the immediate availability of the supervising physician to the PA for consultation, with medical direction and appropriate supervision as provided by state law.  In the final rule, CMS clarified its proposed policy with regard to states with no explicit state law or scope of practice rules regarding physician supervision of PA services.  Specifically, in such states, CMS defined physician supervision as a process in which a PA has a working relationship with one or more physicians to supervise the delivery of their health care services.  Such physician supervision is evidenced by documenting at the practice level the physician assistant’s scope of practice and the working relationships the physician assistant has with the supervising physician(s) when furnishing professional services.
  • CMS streamlined documentation requirements for such physician supervision by allowing the physician, PA, or advanced practice registered nurse who furnishes and bills for his or her professional services to review and verify — rather than fully re-document — information included in the medical record by physicians, residents, nurses, medical, PA, and advanced practice registered nurse students, or other members of the medical team.
  • CMS continued to implement a statutory requirement that modifiers be reported to identify certain therapy services that are furnished in whole or in part by physical therapy (PT) and occupational therapy assistants (OTA), beginning January 1, 2020.  In the preamble, CMS noted that it received almost 9,000 public comments on this issue, and CMS modified a number of its proposed policies in response to these comments.  With regard to the de minimis standard under which a service is considered to be furnished in whole or in part by a PTA or OTA when more than 10% of the service is furnished by the PTA or OTA, the final rule provides that only the minutes that the PTA/OTA spends independent of the therapist will count towards the de minimis   Furthermore, based on comments, CMS will not require the treatment note to include an explanation of the application or non-application of the therapy assistant modifier for each therapy service furnished.  CMS also dropped a proposed requirement that the therapist and therapy assistant minutes be included in the documentation.  CMS committed to providing additional guidance regarding this policy.
  • CMS adopted a number of changes to Open Payments reporting requirements, including: expansion of the definition of a covered recipient to include PAs, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives; the addition of Debt Forgiveness, Long-Term Medical Supply or Device Loan, and Acquisitions to the “nature of payment” categories; consolidation of medical education program categories; and standardization of data reporting requirements for drugs, devices, biologicals, and medical supplies.
  • CMS made a series of changes to the physician self-referral (Stark Law) advisory opinion process. For instance, the rule:  established a 60 business-day timeframe for issuing an advisory opinion; provided that an advisory opinion is binding on the Secretary and precludes the imposition of sanctions under the Stark Act on the parties requesting the opinion and any individuals or entities that are parties to the arrangement; specified CMS’s right to rescind an advisory opinion; and clarified that individuals and entities may rely on an advisory opinion as non-binding guidance that illustrates the application of the physician self-referral law and regulations to the specific facts and circumstances described in the advisory opinion.
  • The final rule contained no rulemaking or commentary from CMS regarding the pending requirements for consultation of appropriate use criteria (AUC) using clinical decision support (CDS) mechanisms by physicians ordering advanced diagnostic imaging services for Medicare outpatients. Consequently, CMS left intact the timeline of its requirements for such consultation when physicians order CT, MRI, PET or nuclear medicine studies.  Next year, 2020, remains an “education and testing” year when such orders can be made without penalty even in the absence of an AUC consultation.  Beginning 2021, however, AUC consultation will be mandatory.
  • Among many other topics, the rule also addressed: establishment of a new Medicare Part B benefit for opioid use disorder treatment services (including medications for medication-assisted treatment) furnished by opioid treatment programs; beneficiary consent for communication technology-based services; ambulance cost data collection; Quality Payment Program and Medicare Shared Savings Program quality reporting requirements; and payment for chronic care, transitional care, and principal care management services.

CMS Plans Stakeholder Surveys to “Further Strengthen” the DMEPOS Competitive Bidding Program; Comment Opportunity through December 20, 2019

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

The Centers for Medicare & Medicaid Services (CMS) is seeking public input on surveys that are intended to “further strengthen the monitoring, outreach, and enforcement functions” of the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program – even though the agency has asserted that the program “has maintained beneficiary access to quality products from accredited suppliers in all competitive bidding areas.”

The new planned surveys will be sent to “key stakeholders,” such as beneficiaries, contract suppliers, and “referral agents” (e.g., Medicare enrolled providers, physicians, treating practitioners, discharge planners, social workers, pharmacists and other health care professionals who refer beneficiaries for services in a competitive bidding area).  The surveys are intended to determine whether, for instance:

  • The item/service was received and was compliant with the physician’s written order.
  • Beneficiary/referral agents had difficulty locating a contract supplier to provide the necessary item(s).
  • Beneficiaries experienced delays in receiving equipment or difficulty obtaining follow-up assistance.

CMS also requests feedback on “effective methods for contacting referral agents as they play a critical role in assisting beneficiaries in obtaining competitively bid DMEPOS items.”  CMS will accept comments emailed to DMEPOS@cms.hhs.gov through December 20, 2019; the subject line of the email must read “Competitive Bidding Surveys.”  CMS does not specify when it intends to conduct these surveys.

HHS Health Fraud Penalties Climb Again

Debra A. McCurdyBy Debra A. McCurdy on Posted in Fraud and Abuse Developments

Maximum civil monetary penalty (CMP) amounts that may be imposed by the Department of Health and Human Services (HHS) and its agencies have increased once again under the latest HHS inflation adjustment notice.  Specifically, in conformance with the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (“the Act”), HHS is applying a 1.02522 inflation “multiplier” (i.e., a 2.522% increase) to all its applicable monetary penalties in 45 CFR § 102.3, including CMPs assessed by the Office of Inspector General, the Centers for Medicare & Medicaid Services, the Office for Civil Rights, and the Food and Drug Administration, among others.  The increased CMP amounts apply to penalties assessed on or after November 5, 2019, if the violation occurred on or after November 2, 2015 (the Act’s date of enactment).

CMS Finalizes CY 2020 Medicare Home Health PPS, Infusion Therapy Policies

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

Aggregate Medicare home health prospective payment system (HH PPS) payments in calendar year (CY) 2020 will increase by 1.3%, or $250 million, compared to 2019 levels, under the Centers for Medicare & Medicaid Services’ (CMS) final CY 2020 rule.  In addition to updating home health agency (HHA) policies, the final rule establishes a permanent home infusion therapy benefit that begins in CY 2021.

With regard to HH PPS payments, the rule finalizes a 1.5% payment update percentage, which is offset by a -0.2% rural add-on adjustment.  In conjunction with implementation on January 1, 2020 of a new case mix methodology, the “Patient-Driven Groupings Model,” CMS had proposed an -8.01% budget neutrality adjustment in anticipation of expected “behavior changes,” such as modifications to documentation and coding practices.  Based on comments and additional analysis, CMS instead finalizes a -4.36% behavior change adjustment.  The final CY 2020 30-day payment rate for an HHA that submits required quality data is $1,864.03, up from the proposed rate of $1,791.73.

Other HHA policy changes CMS adopts in the final rule include:  streamlined home health plan of care content requirements; authorization for physical therapy assistants to furnish maintenance therapy; modification of the split percentage payment policy (with elimination of split-percentage payments beginning in CY 2021); and updates to Home Health Quality Reporting Program and Home Health Value-Based Purchasing Model requirements.

The rule also finalizes transitional home infusion therapy rates for CY 2020 and establishes eligibility and payment policies for the permanent home infusion therapy benefit that begins in CY 2021.  In response to stakeholder concerns regarding local Medicare policies that limit coverage of infused drugs, CMS requests comments on the criteria it could consider, within the scope of the durable medical equipment benefit, to allow coverage of additional home infusion drugs.  The deadline for comments on this topic is December 30, 2019.

Medicare ESRD PPS Payments to Rise 1.6% for 2020 under Final CMS Rule

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

The Centers for Medicare & Medicaid Services (CMS) has issued a final rule updating Medicare end-stage renal disease (ESRD) prospective payment system (PPS) rates for 2020 – which CMS expects to increase total payments to ESRD facilities by 1.6% compared with 2019.  The final 2020 ESRD PPS base rate is $239.33, compared with the 2019 rate of $235.27.  The same rate will apply to renal dialysis services furnished by an ESRD facility to individuals with acute kidney injury (AKI).

The final rule also:

  • Restricts drugs that may qualify for the Transitional Drug Add-on Payment Adjustment (TDAPA) “by focusing eligibility on those drugs that are innovative,” and modifies the payment basis for the TDAPA.
  • Establishes a new “Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies” to “support ESRD facilities in the uptake of certain new and innovative renal dialysis equipment and supplies under the ESRD PPS.”
  • Updates outlier services fixed-dollar loss and Medicare Allowable Payment amounts.
  • Discontinues the erythropoiesis-stimulating agent monitoring policy.
  • Modifies ESRD Quality Incentive Program policies.
  • Updates wage index values.

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

CMS Updates Basic Health Program Policies

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

The Centers for Medicare & Medicaid Services (CMS) has finalized the methodology and data sources it will use to determine 2019 and 2020 federal payment amounts to individual states that establish a Basic Health Program (BHP) under the Affordable Care Act.  A BHP provides health benefit coverage to low-income individuals otherwise eligible to purchase coverage through Affordable Insurance Exchanges in states that elect to operate such a program.  CMS expects the methodology for benefit year 2020 to shift a portion of BHP costs from the federal government to the states operating a BHP.

CMS Announces Final 2020 HCPCS Codes

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

The Centers for Medicare & Medicaid Services (CMS) released its final 2020 alphanumeric Healthcare Common Procedure Coding System (HCPCS) update. The file includes HCPCS procedure and modifier codes, their long and short descriptions, and associated information on Medicare coverage and pricing.  CMS also has summarized its final determinations regarding HCPCS applications discussed at its 2019 public meetings, including brief statements setting forth the agency’s rationale for final coding decisions.

House Clears Prescription Drug Price Transparency, Health Workforce Legislation

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

The House of Representatives has approved — without objection — a series of bills intended to promote prescription drug pricing transparency and invest in the health care workforce.

With regard to drug pricing transparency, the House approved HR 2115, the Public Disclosure of Drug Discounts Act, as amended to include HR 3415, the Real-Time Beneficiary Drug Cost Bill.  The legislation would require the Secretary of Health and Human Services to make public certain aggregate information regarding rebates, discounts, and price concessions that pharmacy benefit managers (PBMs) negotiate with prescription drug manufacturers, beginning January 1, 2020.  The stated purpose of the provision is “to allow the comparison of PBMs’ ability to negotiate rebates, discounts, direct and indirect remuneration fees, administrative fees, and price concessions and the amount of such rebates, discounts, direct and indirect remuneration fees, administrative fees, and price concessions that are passed through to plan sponsors.”  The information must be displayed in a manner (i.e., by drug class) that prevents the disclosure of proprietary or confidential information on rebates, discounts, direct and indirect remuneration fees, administrative fees, and price concessions with respect to an individual drug or an individual plan.

Furthermore, HR 2115 as approved would require the Medicare Part D program to implement by January 1, 2021 electronic, real-time benefit tools capable of integrating with prescribers’ electronic prescribing or electronic health record system and that transmit enrollee-specific, point-of-prescribing information.  Such information must include a list of any clinically-appropriate drug alternatives in the plan formulary; cost-sharing information for a drug and such alternatives; and formulary status, including any prior authorization or other utilization management requirements.  Additionally, the legislation expresses the “sense of Congress” that commercially available drug pricing comparison platforms that help patients find the lowest price for their medications at their local pharmacy “should be integrated, to the maximum extent possible, in the health care delivery ecosystem.”  Likewise, PBMs “should work to disclose generic and brand name drug prices to such platforms” so patients can benefit from the lowest available prices and “overall drug prices can be reduced as more educated purchasing decisions are made based on price transparency.”  The House approved the legislation by a vote of 403 – 0. Continue Reading

Three House Panels Approve HR 3, the Lower Drug Costs Now Act

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

Three House committees have approved drug pricing legislation that is a high priority of the House Democratic leadership.  Specifically, HR 3, the Lower Drug Costs Now Act of 2019, has been approved by the Energy and Commerce Committee, the Ways and Means Committee, and the Education and Labor Committee.  While the details of the committee-approved bills vary, they generally would require manufacturers of certain prescription drugs to negotiate prices with the Secretary of Health and Human Services or be subject to an excise tax on the sales of those drugs, under a complex framework.  The bills also would apply Medicare drug rebates for certain drugs with prices increasing faster than inflation in specific circumstances, and make various changes to the Medicare Part D benefit, including capping beneficiary out-of-pocket spending on drugs.  Differences in the bills need to be reconciled before floor consideration, which is targeted for November.

House leadership intends to use the savings from HR 3 – if enacted — to finance an expansion of Medicare benefits, including:  HR 4665, the Medicare Vision Act of 2019; HR 4618, the Medicare Hearing Act of 2019; and HR 4650, the Medicare Dental Act of 2019 (all of which have also been approved by the relevant committees).

CMS Updates Medicare DMEPOS Policies, Including Overhaul of Pricing Framework for New HCPCS Codes

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

The Centers for Medicare & Medicaid Services (CMS) has adopted — with limited changes — its controversial plan to rewrite Medicare pricing rules for new items of durable medical equipment (DME), prosthetics, orthotics and supplies (DMEPOS) as part of its annual DMEPOS policy update for calendar year (CY) 2020.  The rule also makes minor changes to DMEPOS competitive bidding program (CBP) rules, streamlines certain requirements for ordering DMEPOS items, and makes other related policy changes.  The rule is effective January 1, 2020.

Revised Pricing Policy for New DMEPOS

CMS currently uses an arcane “gap-fill” process to establish rates for new DMEPOS items.  In short, if pricing is not available for the item in the statutory “base year” (1986 or 1987, depending on the item), CMS considers current fees for comparable items, supplier prices, manufacturer’s suggested retail prices (MSRPs), or wholesale prices.  That amount is then subject to a series of deflation adjustments and statutory updates to achieve the new Medicare rate.  CMS’s reliance on the pricing of existing products has been a point of contention when a manufacturer does not believe any items currently on the market are comparable to the innovative technology.  At the same time, CMS does not believe that MSRPs “represent accurate pricing from actual retail markets.”

To “improve … transparency and predictability,” CMS is adopting a new framework for setting fees for new DMEPOS items (i.e., new Healthcare Common Procedure Coding System (HCPCS) codes that do not have a fee schedule pricing history).  As it proposed, CMS will first seek to use existing fee schedule amounts for DMEPOS that it determines to be “comparable” based on the following five components and attributes (the new product does not need to be comparable within each category, and there is no prioritization of the categories): Continue Reading

OIG, CMS Propose Changes to Stark, Anti-Kickback Rules to Promote Value-Based Arrangements:  Reed Smith Analysis

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

As previously reported, the Department of Health and Human Services has published highly anticipated proposed changes to align the regulations under the Physician Self-Referral Law, the federal Anti-Kickback Statute, and the Civil Monetary Penalties Law with value-based health care arrangements.  Reed Smith is providing a series of client alerts and teleseminars that analyze key aspects of the proposals and significant areas for comment (the comment period runs through December 31, 2019).

  • Part One, presented here, focuses on the new value-based arrangement framework proposed by the Office of Inspector General and the Centers for Medicare & Medicaid Services (CMS) and the new safe harbors and exceptions that would be available to persons and entities participating in those arrangements. Reed Smith will discuss these proposed changes in a teleseminar scheduled for October 31, 2019.
  • Part Two will address additional CMS proposed changes to the Stark Law regulations, with a teleseminar following on November 12, 2019.
  • Part Three will focus on what these proposals mean for digital health arrangements and companies, with a teleseminar following on November 21, 2019.

Additional analysis and details on the teleseminars will be available in the near future.

HHS to Rescind Standard Unique Health Plan Identifier and Other Entity Identifier

Debra A. McCurdyBy Debra A. McCurdy on Posted in Department of Health & Human Services Regulations

The Department of Health and Human Services (HHS) has adopted its proposal 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 in order to improve the utility of the HIPAA transactions, but subsequently delayed enforcement due to implementation concerns raised by health plan and other stakeholder.  HHS notes that in response to its December 19, 2018 proposed rule, 19 timely commenters, including major health plan and provider associations and vendors, all supported rescinding the HPID and OEID.

HHS states that it will continue to “explore options for a more effective standard unique health plan identifier,” as required by statute.  In the meantime, HHS will deactivate each HPID and OEID record in the Health Plan and Other Entity Enumeration System (HPOES) on behalf of each enumerated entity and will communicate to affected organizations and stakeholders about the deactivation process.

Wrap-Up of October Congressional Health Policy Hearings

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

October Congressional hearings have focused on the following health policy topics:

In addition, the following hearings and markups are scheduled for later this week:

  • The Energy and Commerce Subcommittee on Health will hold a hearing October 30 entitled “Safeguarding Pharmaceutical Supply Chains in a Global Economy.”
  • Also on October 30, the Senate Finance Committee will hold a hearing on compliance with Medicaid eligibility requirements (October 30).
  • On October 31, the Senate Health, Education, Labor, and Pensions Committee will markup the following bills: S 1657, to expand activities to combat Lyme disease and other tick and vector-borne diseases; S 2619, to reauthorize the Healthy Start program, S 1399, to revise and extend nursing workforce development programs, S 995, to reauthorize the Lifespan Respite Care program; S 1130, to fund programs and improve guidelines related to sudden death in early life; S 1608, to require HHS to publish physical activity recommendations; S 2629, to establish a Ready Reserve Corps within the Public Health Service Commissioned Corps; and an original bill titled “Over-the-Counter Drug Safety, Innovation, and Reform Act of 2019.”

Expansive New CMS Enrollment and Participation Rules Set to Go Live November 4, Although Comments Still Being Accepted

Debra A. McCurdyBy Debra A. McCurdy on Posted in Centers for Medicare & Medicaid Services Regulations, Fraud and Abuse Developments

The Centers for Medicare & Medicaid Services (CMS) has published a final rule with comment period establishing sweeping disclosure and monitoring obligations for providers and suppliers enrolled or enrolling in federal health programs, and expanding CMS’s authority to deny or revoke enrollment status.  In particular, the rule establishes an expansive new “affiliations” disclosure requirement that allows CMS to identify individuals and organizations that, according to CMS, pose an undue risk of fraud, waste or abuse based on their relationships (i.e., “affiliations”) with other enrolled or previously enrolled entities.  While the rule is scheduled to go into effect November 4, 2019, CMS is accepting public comments until that date.  A Reed Smith analysis of the rule highlighting key topics for comments is available here.

President Trump Signs Executive Order on “Protecting and Improving Medicare for Our Nation’s Seniors”

Debra A. McCurdyBy Debra A. McCurdy on Posted in Other Health Policy Developments

President Donald Trump has signed an executive order that commits the Department of Health and Human Services (HHS) to taking a series of regulatory and subregulatory actions intended to enhance the fiscal sustainability of the Medicare program, reduce regulatory burdens on providers, and increase beneficiary choice.  The planned initiatives, which would require further policy development and potentially statutory changes, generally are in line with market-based themes the Administration has emphasized previously.  The President also used the Executive Order to slam proposed “Medicare for All” legislation, which the Administration claims would “destroy our current Medicare program.”

In particular, the executive order provides that within one year, the HHS Secretary must propose regulations to:

  • Provide Medicare beneficiaries with diverse and affordable plan choices by: encouraging innovative MA benefit structures and plan designs (including allowing beneficiaries to share in cost savings); reducing barriers to obtaining Medicare Medical Savings Accounts; promoting supplemental benefit; and encouraging telehealth innovations.
  • Adjust MA plan network adequacy requirements to account for state health market competitiveness and access to telehealth services and other innovative technologies.
  • Eliminate rules that burden providers, create inefficiencies, or undermine patient outcomes. More specifically, HHS should eliminate burdensome billing requirements, conditions of participation, supervision requirements, benefit definitions, and Medicare licensure requirements that exceed statutory mandates.
  • Ensure appropriate Medicare reimbursement to primary and specialist health providers for time spent with patients and, to the extent allowed by law, reimburse clinicians based on work performed rather than the clinician’s occupation.
  • Streamline the approval, coverage, and coding processes to bring innovative products to market faster with appropriate reimbursement. This should include minimizing steps between Food & Drug Administration (FDA) approval and Centers for Medicare & Medicaid Services (CMS) coverage decisions; facilitating parallel FDA and CMS review; and clarifying Medicare coverage standards.  CMS also should modify the Value-Based Insurance Design payment model to remove disincentives to MA coverage of new technologies.
  • Improve the availability of quality and cost data to enable seniors to make better health care decisions and hold providers and plans accountable.

In addition to these regulatory mandates, the executive order directs HHS to:

  • Study how Medicare FFS payments could be modified to more closely reflect the prices paid by MA and commercial plans. Separately, the Secretary must study “approaches to transition toward true market-based pricing in the FFS Medicare program,” including through:  shared savings and competitive bidding in FFS Medicare; use of MA-negotiated rates to set FFS Medicare rates; and novel approaches to information development and sharing to enable markets to lower cost and improve quality for FFS Medicare beneficiaries.  Note that changes to the fundamental structure of Medicare FFS payments to providers (outside of an Innovation Center or other demonstration program) could require statutory changes.
  • Identify and remove unnecessary barriers to private contracts that allow Medicare beneficiaries to obtain the care of their choice and facilitate market-driven prices.
  • Ensure that Medicare policies promote site neutrality.
  • Use claims data to inform providers about practice patterns that may pose undue patient risks, are outliers, or are outside recommended standards of care.
  • Revise policies to preserve Social Security retirement benefits for seniors who choose not to receive Medicare Part A benefits, and propose administrative improvements to the Medicare beneficiary enrollment process.

The executive order also calls on HHS to enact policies to combat Medicare fraud, waste, and abuse, “including through the use of the latest technologies such as artificial intelligence.”  Citing the executive order, on October 21, 2019, CMS released a request for information (RFI) on “Using Advanced Technology in Program Integrity,” seeking “innovative, but fiscally prudent and operationally feasible, ways to conduct program integrity more effectively and efficiently.”  Among other things, the RFI requests comments on the potential impact of artificial intelligence medical record review technologies in reducing the burden of medical review; how to incorporate documentation requirement repositories; how to improve provider enrollment; and how to improve data analytic and data system capabilities.  Comments will be accepted until November 20, 2019.

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