OIG Spreads Holiday Cheer By Increasing “Nominal Value” Limits for Gifts to Medicare Beneficiaries

The Office of Inspector General (OIG) has increased the value of permissible gifts that may be made to Medicare beneficiaries without running afoul of the civil monetary penalty (CMP) provision prohibiting beneficiary inducements (Social Security Act § 1128A(a)(5)).  The statute provides for CMPs of up to $10,000 for offers or transfers to a Medicare or Medicaid beneficiary of any remuneration that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of Medicare or Medicaid payable items or services, with certain exceptions.

Congress authorized inexpensive gifts of nominal value to be provided without violating this provision, which the OIG interpreted in 2000 to mean a retail value of no more than $10 per item or $50 in the aggregate per patient on an annual basis.  The OIG has determined that these figures should be adjusted.  Specifically, in a December 7, 2016 statement, the OIG announced that it is now interpreting “nominal value” as having a retail value of no more than $15 per item or $75 in the aggregate per patient on an annual basis.  The OIG continues to state that such items may not be cash or cash equivalents.

CMS Releases 2017 Medicare DMEPOS and Clinical Lab Fee Schedules

 CMS has announced 2017 Medicare fee schedule rates for durable medical equipment (DME) prosthetic orthotics and supplies (DMEPOS) furnished in non-competitive bidding areas.  The calendar year 2017 DMEPOS update factor is 0.7 percent, although other specific coding and pricing policies are applied to numerous types of DMEPOS items, as detailed in a CMS transmittal.

In addition, CMS has posted the 2017 update to the Medicare clinical lab fee schedule.  Note that Medicare clinical lab rates are not established under the Protecting Access to Medicare Act (PAMA) framework until January 1, 2018. 


Out with the Old Rules? Will Trump and Republicans Target Health Care Regulations for Reversal in the New Year under Congressional Review Act?

The Congressional Review Act (CRA) has been used to overturn only one final rule in 20 years, but that situation may be about to change.  According to a new Congressional Research Service (CRS) analysis, a “specific set of circumstances” will occur when President-elect Trump is sworn in, namely, turnover in White House party control when the incoming President shares a party affiliation with a majority in both houses of Congress.  This highly-unique development means that conditions are right for successful use of the CRA authority to block certain Obama Administration rules in 2017.

By way of background, the CRA enables Congress to rescind a final rule within a specified period of time using expedited procedures.  Typically presidents can be expected to veto resolutions overturning their own regulations, as President Obama has on five occasions.  However, a party change provides a new opportunity to revisit controversial regulations, as when President George W. Bush signed into law a CRA resolution overturning a controversial Clinton Administration Occupational Safety and Health Administration ergonomics rule in 2001.

In a November 17, 2016 memo to Congress, CRS lists major rules issued by the Obama Administration that are potentially subject to consideration under the CRA procedures in the 115th Congress, which begins January 3, 2017.  CRS estimates that final rules submitted to Congress after May 30, 2016 will be subject to such review (although the specific timeline is subject to change). Department of Health and Human Services (HHS) rules that are potentially eligible for disapproval under the CRA as of November 16, 2016, include the following:

  • ONC Health IT Certification Program: Enhanced Oversight and Accountability (Oct. 19, 2016)
  • Medicare And Medicaid Programs; Reform Of Requirements For Long-Term Care Facilities (Oct. 4, 2016)
  • Emergency Preparedness Requirements For Medicare And Medicaid Participating Providers And Suppliers (Sept. 16, 2016)
  • Medication Assisted Treatment For Opioid Use Disorders (July 8, 2016)
  • Medicare Program; Medicare Clinical Diagnostic Laboratory Tests Payment System (June 23, 2016)
  • Medicare Program; Medicare Shared Savings Program; Accountable Care Organizations–Revised Benchmark Rebasing Methodology, Facilitating Transition To Performance-Based Risk, And Administrative Finality Of Financial Calculations (June 10, 2016)
  • Annual 2017 Medicare payment update regulations for inpatient hospital services, long-term care hospitals, skilled nursing facilities, inpatient rehabilitation facilities, hospices, and inpatient psychiatric facilities.

A number of other very recent HHS rules are not listed, including sweeping reforms to the Medicare physician fee schedule update framework and various updates to calendar year 2017 Medicare payment policies. Presumably these rules had not been formally submitted to Congress prior to the CRS analysis but would also be subject to the CRA process.  There are a number of other HHS final rules now undergoing regulatory clearance at the Office of Management and Budget, including final revisions to civil monetary penalty (CMP) rules, safe harbors under the Anti-Kickback Statute, changes to the provider enrollment process, Office of Inspector General’s exclusion authorities, and 340B program CMPs and ceiling price regulations.  Should these final rules be published before the end of the year, they also likely would be subject to review.

Of course, just because a rule is eligible for review does not mean it will be challenged by Congress, but it does present stakeholders with an opportunity to revisit regulations issued during the closing months of the Obama Administration.

Finally, more attention can be expected regarding the fate of existing regulations in the new Administration.  In a new video, President-elect Trump announced:  “I will formulate a rule which says that for every one regulation, two old regulations must be eliminated.”

CMS Proposes Restrictions on New Medicaid Managed Care Pass-Through Payments

CMS is proposing to prohibit states from adopting new or increased “pass-through” payments to hospitals, nursing facilities, and physicians under their Medicaid managed care contracts beyond those in place when the pass-through payment transition periods were established in a May 6, 2016 final Medicaid managed care rule. CMS considers pass-through payments to be amounts that states require to be added to the contracted payment rates between managed care organization and hospitals, physicians, or nursing facilities that are not for a specific service provided to a specific enrollee under the contract (and subject to certain other specifications).  According to CMS, a number of states integrated some form of pass-through payments as they moved their Medicaid programs from fee-for-service  to managed care – notwithstanding a prohibition on states directing managed care plans’ expenditures for provider payments.  CMS attributes such state requirements to an interest in (1) ensuring a consistent payment stream for certain critical safety-net hospitals and providers, and (2) avoiding disruption of existing intergovernmental transfers, certified public expenditures, or provider tax mechanisms.  In the May final rule, CMS required states to discontinue such arrangements, but provided a 10-year transition period for payments to hospitals and a 5-year transition period for payments to physicians and nursing facilities.  Since publication of the May 6 rule, CMS has received inquiries about states’ ability to integrate new or increased pass-through payments into Medicaid managed care prior to implementation of the final rule.  In a November 22, 2016 proposed rule, CMS is clarifying that no pass-through payments may be established beyond those in place when the pass-through payment transition periods were established in May 6 final rule.  CMS also is proposing other modifications, including establishing new maximum permitted pass-through payments for each year of the transition period.  CMS will accept comments on the proposed rule until December 22, 2016.

CMS Posts Final 2017 Medicare Clinical Lab Payment Determinations

CMS has released the final 2017 Medicare clinical laboratory fee schedule (CLFS) payment determinations for new and reconsidered test codes, including determinations regarding whether CMS will use crosswalking or gapfilling to establish payment rates for specific tests. Under the final determinations, all tests reviewed for 2017 are being crosswalked. CMS also released the final national limitation amount (NLA) for tests gapfilled for 2016 (Multianalyte Assays with Algorithmic Analyses and Genomic Sequencing Procedures).

GAO Calls for Easier Public Access to SNF Expenditure Data

The Government Accountability Office (GAO) recently issued a report highlighting concerns with the public accessibility and reliability of skilled nursing facility (SNF) expenditure data collected by CMS. While CMS has posted raw SNF cost report data in accordance with a statutory mandate, the GAO believes the data’s format, volume, and organization makes it difficult for stakeholders to use. The GAO also notes that “the agency performs minimal quality control” of this data to determine accuracy and completeness. The GAO recommends that CMS improve public stakeholders’ ability to locate and use SNF expenditure data, with which CMS concurred. The GAO also recommends that CMS take steps to ensure the accuracy and completeness of the SNF expenditure data, but CMS disagreed, citing the substantial resources that would be required without the potential of significant benefit.

The GAO also analyzed SNF cost report data for fiscal years (FYs) 2011 through 2014 to determine the extent to which SNF expenditures vary by characteristic type (e.g., for-profit versus nonprofit, chain versus independent). The GAO found that direct and indirect care costs were lower on average as a percentage of revenue at for-profit SNFs compared with nonprofit and government SNFs, and lower at chain SNFs compared with independent SNFs. In addition, the GAO determined that median margins were higher for for-profit and chain SNFs than for other SNFs each year reviewed. Based on data from FYs 2012 through 2014, the GAO found that for-profit SNFs generally had lower nurse staffing ratios than nonprofit and government SNFs.


CMS Releases 2017 Medicare Deductible and Coinsurance Amounts

CMS has announced Medicare Part A and B beneficiary cost sharing amounts for 2017. With regard to Part A, the 2017 deductible for hospital inpatient admissions for the first 60 days of care will be $1,316, followed by $329 per day for days 61-90 and $658 per day for stays beyond the 90th day in a benefit period.  The daily skilled nursing facility coinsurance for days 21 through 100 in a benefit period will be $164.50.  CMS also released 2017 Medicare Part A premium amounts for the uninsured aged and disabled individuals who have exhausted other entitlement.

Furthermore, 2017 Medicare Part B premiums and deductibles will again reflect a “hold harmless” policy that mitigates the premium increase for most beneficiaries because of a low Social Security cost-of-living adjustment applicable next year. For such beneficiaries, the average monthly premium will be about $109, compared to $104.90 in 2016.  For the roughly 30 percent of beneficiaries not subject to the hold harmless policy, the standard monthly Part B premium will increase from $121.80 in 2016 to $134 for 2017.  Higher-income beneficiaries (income greater than $85,000 individual/$170,000 joint) pay an income-related premium ranging from $187.50 to a maximum of $428.60 per month.  The 2017 Part B deductible is $183 all Part B beneficiaries.

CMS Publishes Final Rule Updating 2017 Medicare Physician Fee Schedule Rates and Policies

The Centers for Medicare & Medicaid Services (CMS) has issued its final Medicare physician fee schedule (MPFS) for calendar year (CY) 2017.  In addition to updating MPFS rates and policies, the final rule makes numerous other Medicare policy changes, including updates to Stark Law regulations related to unit-based compensation and new enrollment requirements for providers and suppliers furnishing services to Medicare Advantage (MA) enrollees.  Highlights of the rule include the following:

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CMS Finalizes Medicare OPPS, ASC Rates and Policies for 2017

CMS has published its final rule with comment period updating the Medicare Hospital Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) Payment System rates and policies for CY 2017.  CMS will accept comments on a limited number of provisions until December 31, 2016.

Major provisions impacting outpatient hospital department services include the following:  Continue Reading

Obama Administration Releases Regulatory Agenda – But Changes Expected Under Trump Administration

The Obama Administration has updated its regulatory agenda, listing the anticipated timing of pending and future regulatory actions, including a number of Department of Health and Human Services regulations. Note, however, that with the transition to the new Trump Administration, federal regulatory priorities can be expected to change.  Indeed, a new Administration often triggers a government-wide regulatory review or moratorium, so rules in the pipeline may stay in the pipeline longer than currently anticipated.

New OIG Investigations to Look at Wide Range of Medicare, Medicaid Services in FY 2017

The HHS Office of Inspector General (OIG) has issued its FY 2017 Work Plan, which lays out the OIG’s current audit, evaluation, and other legal and investigative priorities. The largest number of new initiatives by far target Medicare Parts A and B, including reviews focusing on the following:

  • Skilled nursing facility (SNF) issues, including:  complaint investigations; unreported incidents of potential abuse and neglect; use of the adverse event screening tool; durable medical equipment provided during non-Part A nursing home stays; and whether SNF documentation meets requirements for each resource utilization group.
  • Various provider payment policies, covering: inpatient psychiatric facilities, transitional care management, chronic care management, potential savings from inflation-based Medicare Part B drug rebates, and implementation of the physician Quality Payment Program.
  • Compliance with federal regulations, involving hospice services, hyperbaric oxygen therapy services, and positive airway pressure device supplies.
  • Other policy reviews, including such topics as: inpatient rehabilitation hospital patients not suited for intensive therapy, frequency of nurse on-site hospice visits, drug waste of single use vial drugs, payments for service dates after individuals’ dates of death, and financial interests reported under the Open Payments program.

New Medicare Part C and D reviews will address: Medicare Part C and D payments for service dates after individuals’ dates of death; the extent of denied care in Medicare Advantage; Medicare Part D rebates related to drugs dispensed by 340B pharmacies; and Part B billing for compounded topical drugs.

The OIG also plans a number of new Medicaid reviews, involving such issues as Medicaid managed care organization drug claims and compliance with hold-harmless requirements; delivery system reform incentive payments; Medicaid accountable care; third-party liability payment collections; Medicaid overpayment reporting and collections; and health-care-related taxes. OIG review subjects also will include programs administered by the Food and Drug Administration, the National Institutes of Health, and various other HHS-related reviews.

$20 Increase in Medicare Outpatient Therapy Cap Limits Announced for 2017

Medicare outpatient therapy limits are set to increase slightly in 2017. Specifically, the 2017 cap will be $1,980 for physical therapy and speech-language pathology combined and $1,980 for occupational therapy, compared to $1,960 for 2016. The therapy caps exceptions process continues through December 31, 2017 under the Medicare Access and CHIP Reauthorization Act of 2015.

CMS to Cut Medical Review Audits for Certain Advanced Alternative Payment Model Participants

In order to improve “clinician engagement” and minimize administrative burdens, CMS has announced an 18-month pilot program to reduce medical review audits for participants in selected Advanced Alternative Payment Models (Advanced APMs), beginning January 1, 2017. Under this program, CMS will direct Medicare Administrative Contractors (MACs), Recovery Audit Contractors (RACs), and the Supplemental Medical Review Contractor to make claims submitted by certain Advanced APMs providers a “low priority for medical record reviews.” CMS notes that automated reviews (which make up the majority of MAC and RAC reviews), reviews by other entities (e.g., Zone Program Integrity Contractors, the Office of Inspector General, and Department of Justice) and quality reviews will continue unchanged.

Advanced APMs included in this pilot program are: Next Generation Accountable Care Organizations (ACOs); Medicare Shared Savings Program Track 2 and Track 3 participants; Pioneer ACOs; and Oncology Care Model 2-sided Track participants. CMS selected these Advanced APMs because participating clinicians share financial risk with the Medicare program, providing “powerful motivation to deliver care in the most efficient manner possible, greatly reducing the risk of improper billing of services which exists under the Medicare fee-for-service program.” CMS has posted frequently-asked questions about the pilot program here.

CMS Proposes Updated Fire Safety Standards for Dialysis Facilities

CMS has issued a proposed rule that would require certain dialysis facilities participating in Medicare or Medicaid to meet updated fire safety standards.  The proposed fire safety rule, published November 4, 2016, would apply only to dialysis facilities that do not provide one or more exits to the outside at grade level from the treatment area level.  CMS notes that it updated fire safety standards for numerous provider types in a May 2016 rule, but CMS “inadvertently neglected to include updated provisions for dialysis facilities.” The November fire safety rule will require covered facilities to meet the National Fire Protection Association’s (NFPA) 2012 edition of the Life Safety Code (LSC), as well as provisions of the NFPA’s 2012 edition of the Health Care Facilities Code.  Significant requirements of the proposed rule address the use of alcohol based hand rubs; use of a fire watch or building evacuation if a sprinkler system is out of service for more than 10 hours; and a requirement that all doors to hazardous areas be self-closing or close automatically.  Furthermore, the rule would prohibit Medicare-approved dialysis facilities from being located adjacent to industrial high hazard facilities.  CMS will accept comments on the proposed rule until January 3, 2017.

CMS Schedules Meeting on FY 2018 IPPS New Technology Applications

CMS has announced a February 14, 2017 town hall meeting to discuss FY 2018 applications for add-on payments for new medical services and technologies under the Medicare hospital inpatient prospective payment system (IPPS). Registration details and deadlines are outlined in a November 9, 2016 Federal Register notice.

FY 2018 Federal Financial Participation Matching Amounts Published

The Department of Health and Human Services (HHS) has published the FY 2018 Federal Medical Assistance Percentages (FMAP), Enhanced FMAP, and disaster-recovery FMAP adjustments.  These amounts will be used to determine federal matching amounts for state expenditures for Medicaid, the Children’s Health Insurance Program, and certain other medical and other social services, applicable from October 1, 2017 through September 30, 2018.

CMS to Host Calls on Hospital Appeals Settlement Process (Nov. 16 & Dec. 12)

On November 16, 2016, CMS is hosting a call to provide an update on its latest plans to allow eligible providers to settle their inpatient status claims currently under appeal using the Hospital Appeals Settlement process. By way of background, this administrative settlement process will be available beginning December 1, 2016 for eligible hospitals that are “willing to withdraw certain pending appeals in exchange for timely partial payment (66% of the net allowable amount).” The deadline for hospitals to submit an “Expression of Interest” is January 31, 2017. CMS plans a follow-up call on the appeals process on December 12.

CMS Delays Expanding Medicaid Rebate Program, Price Reporting Requirements to Territories Until 2020

CMS has announced that it is delaying until April 1, 2020 its controversial change in the definitions of “States” and “United States” included in the February 1, 2016 Medicaid covered outpatient drug final rule with comment period.  Specifically, in that rulemaking CMS defined “States” and “United States” to include the U.S. territories (American Samoa, the Northern Mariana Islands, Guam, the Commonwealth of Puerto Rico, and the Virgin Islands) effective April 1, 2017.  The effect of this provision is to (1) include territories in the Medicaid drug rebate program (unless the territory obtains a waiver) and (2) require manufacturers to include eligible sales and associated discounts, rebates, and other financial transactions that take place in the U.S. territories in their calculations of average manufacturer price and best price.

CMS now acknowledges that “it has become evident that interested U.S. territories could not be ready to implement the program by April 1, 2017, although a few territories have expressed interest in participating once they have made the necessary systems changes.”  Without additional delay, CMS notes that “drug manufacturers will likely be prompted to increase drug prices, including prices paid by U.S. territory Medicaid programs.”  CMS therefore is issuing an interim final rule with comment period delaying until April 1, 2020 the inclusion of the territories in the definition of “States” and “United States.”  CMS will accept comments on the rule until January 17, 2017.   


CMS Seeks Input on Ways to Accelerate Medicaid Home and Community-Based Services

CMS is requesting public input on policy options it can consider to accelerate the provision of home and community-based services (HCBS) to Medicaid beneficiaries.  Note that while supporting increased availability of quality HCBS services has been a priority for the Obama Administration, it is unclear what priority future HHS and CMS leadership in the Trump Administration will place on such efforts.

In its request for information, CMS is focusing in particular on issues affecting beneficiary choice and control, program integrity, ratesetting, quality infrastructure, and the homecare workforce.  CMS includes a series of questions in the following general topic areas to inform future policies:

  • What are the additional reforms that CMS can take to accelerate the progress of access to HCBS and achieve an appropriate balance of HCBS and institutional services in the Medicaid long-term services and supports system to meet the needs and preferences of beneficiaries?
  • What actions can CMS take, independently or in partnership with states and stakeholders, to ensure quality of HCBS including beneficiary health and safety?
  • What program integrity safeguards should states have in place to ensure beneficiary safety and reduce fraud, waste and abuse in HCBS?
  • What specific steps could CMS take to strengthen the HCBS home care workforce, including establishing requirements, standards or procedures to ensure rates paid to home care providers are sufficient to attract enough providers to meet service needs of beneficiaries and that wages supported by those rates are sufficient to attract enough qualified home care workers?

CMS is accepting comments through January 9, 2017.

Looking Ahead to a Trump Administration: Health Care and Life Sciences Industry Perspectives

Observers are digesting what the Trump Administration will mean for the health care and life sciences industry.  Forecasting is more challenging for this incoming Administration than most given the relatively sparse policy details released during the campaign and the lack of a government service record to examine for clues.  Today President-elect Trump’s transition team released a one-page statement on health care policy, but many questions remain.  Nevertheless, we offer below our initial observations and issues to watch in the months to come.

  • Potential Sea Change. Uncertainty is, as some like to say, the “obvious comment” that characterizes the whole prospective Trump Administration.  Other than an intended “repeal and replacement” of the Affordable Care Act (ACA), President-elect Trump has provided relatively few details on a proposed health care agenda.  Until these policies are fleshed-out, expect an environment where some business decisions and investments may be delayed, with a resulting impact on merger and acquisition activity. That said, other transactions may become more likely, as the threat of new restrictions under a Clinton administration are removed, along with the prospect of potential regulatory relief under a Republican-controlled federal government.
  • Affordable Care Act Repeal and Replacement.  Trump has repeatedly indicated his desire to repeal and replace the ACA, including a vow to summon Congress into a special session for this task.  If the law is repealed, however, what would take its place, and how would Congress address the roughly 20 million Americans currently covered in some way under the ACA (and the potential rise in uncompensated care costs that also would result)?  Despite the call for repeal, certain parts of the law are popular. For instance, President-elect Trump noted on the campaign trail that he was in support of the ACA’s prohibition against the use of pre-existing health conditions to deny coverage (or as a basis for premium-setting).  Other proposals offered by Trump as candidate include allowing for the sale of health insurance across state lines as long as plans comply with state requirements, various tax benefits, and more transparency in health care pricing.  In today’s policy statement, President-elect Trump added support for high-risk pools, which he characterizes as “a proven approach to ensuring access to health insurance coverage for individuals who have significant medical expenses and who have not maintained continuous coverage.”  Congressional Republicans have offered a number of alternatives that are likely to be a springboard for reform, most notably the “Better Way” plan proposed by House Speaker Paul Ryan.  In fact, according to the Speaker’s office, “in the 114th Congress alone, House Republicans have introduced more than 400 individual bills that would improve our nation’s health care system” – demonstrating that Congress is not reticent about legislating on health care issues.  The new Senate’s Republican majority will not have the 60 votes required to override a potential Democratic filibuster of legislation to fully repeal the law. While Congress could use budget reconciliation authority (which requires only 50 votes in the Senate) to make significant changes, the drawn-out pace of the budget process may not satisfy those who want quick action in this area.  Regardless of the legislative vehicle, after years of calling for Obamacare repeal while President Obama was in office, the Republican Congress will be under tremendous pressure to act quickly – even if it is a “down-payment” on reform — now that Republicans will control the presidency and the Congress.

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