The recently passed “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act) is sweeping legislation that will have widespread impact on companies in the health care and life sciences space. In addition to expanding coverage of COVID-19 testing and preventive services, the Act includes provisions to address health care workforce needs, eases restrictions surrounding telehealth
The Medicare Payment Advisory Commission (MedPAC) released its 2021 Medicare provider rate update recommendations on March 13, 2020 – the same day President Trump declared a national emergency due to COVID-19. MedPAC’s recommendations were based on an assessment of various Medicare “payment adequacy indicators” that are unlikely to reflect the state of the health…
The Centers for Medicare and Medicaid Services (CMS) has announced a new voluntary Part D Senior Savings Model (the Model) intended to reduce Medicare beneficiary cost sharing for insulin. Under the Model, participating insulin manufacturers and participating sponsors of Medicare Part D prescription drug plans (PDPs) and Medicare Advantage Part D plans (MA-PDs) will make available 30-day supplies of insulin to beneficiaries of certain “enhanced benefit” PDPs and MA-PDs, with cost-sharing capped at no more than $35 during all phases of the Part D benefit, other than the catastrophic benefit.
The Model appears to reflect a balancing of plan and manufacturer concerns. If there is significant participation by Part D sponsors, the Model could provide meaningful relief to beneficiaries facing high out-of-pocket costs for insulin under Part D. As of the writing of this post, three of the largest insulin manufacturers – Eli Lilly, Novo Nordisk and Sanofi Aventis –have announced their intention to participate.
The Model, which was announced March 11, 2019, will be a five-year program, beginning in plan year 2021. CMS is offering the Model through the Center for Medicare and Medicaid Innovation (CMMI) pursuant to authority under section 1115A of the Social Security Act (added by the Affordable Care Act). The following is a summary of the new Model, along with our initial observations regarding some of its implications.Continue Reading CMS Rolls Out New Medicare Part D “Senior Savings Model” Designed to Drive Down Insulin Copayments
The Centers for Medicare & Medicaid Services (CMS) has issued a proposed rule that would extend and modify the Comprehensive Care for Joint Replacement (CJR) Model, under which CMS makes a “bundled” payment to participant hospitals for an “episode of care” for lower extremity joint replacement (LEJR) surgery, covering all services provided during the inpatient admission through 90 days post-discharge (with certain exceptions). Notably, CMS has proposed incorporating outpatient hip and knee replacements into the episode of care definition, now that these procedures are no longer on the CMS “inpatient only” list. CMS also requests comments on a potential future bundled payment model focusing on LEJR procedures performed in ambulatory surgical centers (ASCs). CMS will accept comments on until April 24, 2020.
Highlights of the proposed rule include the following:
- Extension of CJR Model. The CJR Model began April 1, 2016 and currently is scheduled to run through December 31, 2020. CMS has proposed extending the model for an additional three years, through December 31, 2023 for participant hospitals physically located in the 34 mandatory metropolitan statistical areas (MSAs), excluding rural or low-volume hospitals in those MSAs. CMS anticipates that approximately 350 participants would participate in the CJR model during the proposed three-year extension, compared with about 470 providers as of October 2019.
- Outpatient Joint Replacements. The proposed rule would expand the definition of a CJR “episode” to include outpatient total knee arthroplasty (TKA) and total hip arthroplasty (THA), in light of previously-adopted CMS policies that allow total knee and total hip replacements to be treated in the outpatient setting. This change would apply to episodes initiated by an “anchor procedure” furnished on or after October 4, 2020 (because the 90-day episode would end on or after January 1, 2021, the first day of proposed new plan year 6). CMS proposes to group all outpatient TKA procedures into MS-DRG 470 (LEJR without complications and/or comorbidities) without hip fracture historical episodes for purposes of calculating a single, site-neutral target price. Outpatient THA cases would be grouped into either MS-DRG 470 with hip fracture or MS-DRG 470 without hip fracture depending on hip fracture status.
- Target Price Calculation. CMS has proposed changing the basis for the target price from three years of claims data to the most recent one year of claims data. The proposed rule also would discontinue the use of the regional and hospital anchor weighting steps in the target price calculation methodology, and it would end the annual updates to the target prices. Furthermore, CMS proposes to incorporate additional risk adjustment to the target pricing and modify the high episode spending cap calculation methodology.
The proposed rule also would, among other things:
Continue Reading CMS Plans to Add Outpatient Hip/Knee Replacements to CJR Model, Seeks Comments on ASC Joint Procedure Bundled Payment Model
The Trump Administration’s proposed fiscal year (FY) 2021 budget calls for significant cuts to federal health spending, including a 10% decrease in Department of Health and Human Services (HHS) discretionary spending in FY 2021 and a $1.6 trillion net reduction in health entitlements over the next decade. House Budget Committee leaders have blasted the HHS provisions, and the package as a whole is unlikely to be advanced by Congress. Nevertheless, the document reflects the Administration’s current Medicare and Medicaid priorities, some of which are administrative and could be advanced without Congress. Furthermore, Medicare provider/supplier cost-saving recommendations could be incorporated into future budget agreements or potentially other entitlement reform efforts down the road.
Highlights of the Trump Administration’s major Medicare and Medicaid budget proposals are presented below.
Medicare Payment Policies
The Administration estimates that its proposed Medicare legislative package would result in $756 billion in Medicare Trust Fund savings over 10 years (net impact after offsets of $450 billion/10 years). Many of the legislative recommendations have been made in previous budget proposals. Budget provisions that would result in significant net Medicare savings include the following (net savings figures are over the 10-year period of FYs 2021-2030):
- Elimination of the Medicare Advantage (MA) benchmark cap and quality “double bonus” for plans in eligible counties [$1.2 billion].
- Reform of hospital uncompensated care payments, including basing payments on a hospital’s share of charity care and non-Medicare bad debt [$87.9 billion].
- Establishment of site neutral payments between on-campus hospital outpatient departments and physician offices for certain services (e.g., clinic visits) [$2 billion] and payment for all off-campus hospital outpatient departments under the physician fee schedule [$47.2 billion].
- Adoption of a unified post-acute care system for skilled nursing facilities (SNFs), home health agencies, inpatient rehabilitation facilities, and long-term care hospitals (LTCHs) beginning in FY 2026, with reduced annual Medicare payment updates from FYs 2021-2025 [$101.5 billion].
- Elimination of Medicare reimbursement for disproportionate share hospital (DSH) bad debt, with an exemption for rural hospitals [$33.6 billion].
- Reduced Medicare payment for hospice services under the SNF routine home care level of care. [$4.5 billion].
- An increase in the intensive care unit minimum stay threshold from three days to eight days to qualify for LTCH prospective payment system payment [$9.4 billion].
- Expansion of the durable medical equipment (DME), prosthetics, orthotics, and supplies competitive bidding program to all geographic areas and to inhalation drugs, payment of contract suppliers based on their own bids, and elimination of the surety bid bond requirement [$7.73 billion Medicare savings, $435 million in Medicaid savings]. Separate from the bidding program, the Centers for Medicare & Medicaid Services (CMS) would be authorized to update DME rates based on retail prices through rulemaking, without using the inherent reasonableness process [$1.6 billion Medicare savings, $85 million in Medicaid savings].
Other legislative proposals are intended to promote value-based care; in some cases, these proposals also would result in cost savings. For instance, the budget proposes the following:
- Basing Medicare beneficiary accountable care organization assignment on a broader set of non-physician primary care providers [$80 million].
- Consolidation of the four Medicare inpatient hospital quality programs into a single hospital quality payment program [budget neutral].
- Implementation of hospital outpatient department and ambulatory surgical center (ASC) value-based programs, with 2% of payments linked to quality/outcomes performance. Payment would be risk adjusted based on patient diagnosis severity to promote site neutrality [budget neutral].
- Creation of a risk-adjusted monthly Medicare Priority Care payment for providers eligible to bill for evaluation and management (E/M) services who provide ongoing primary care to beneficiaries. The payment would be funded by a 5% annual cut in valuations of non-E/M services [budget neutral].
Medicare Transparency, Quality, Coverage, and Benefits
The budget includes a series of proposals intended to increase access to price and quality information and/or clarify Medicare coverage and payment processes. For instance, the budget would:
Continue Reading Medicare/Medicaid Policy Provisions in Trump Administration’s FY 2021 Budget Proposal
CMS has put on display a proposed rule that would update Medicare Advantage (MA) and Medicare Part D prescription drug benefit policies for contract year 2021 and 2022. CMS projects that its proposed policies would decrease federal spending by $4.4 billion over 10 years, primarily as a result of a proposal to remove outliers prior…
The Centers for Medicare & Medicaid Services (CMS) has proposed updates to its standards for health plan issuers offering plans through federally-facilitated and state-based Exchanges for 2021. The proposed rule would, among other things: revise the risk adjustment methodology; update issuer user fees and cost-sharing limits; amend medical loss ratio regulations (including with regard to…
The Department of Health and Human Services (HHS) has modified HIPAA retail pharmacy transaction requirements to differentiate between partial fill and full refills of opioids and other Schedule II drug prescriptions. Specifically, HHS has finalized the requirements for use of the National Council for Prescription Drug Programs (NCPDP) Telecommunication Standard Implementation Guide, Version D, Release …
CMS is adding six types of lower limb prosthetics to the list of equipment subject to Medicare prior authorization (PA) requirements, and extending certain current PA requirements. Specifically, CMS is requiring PA as a condition of Medicare payment for the following items on the basis of their being “frequently subject to unnecessary utilization”:
The Centers for Medicare & Medicaid Services (CMS) has released the methodology and data sources it proposes to use to determine federal payment to states that establish a Basic Health Program (BHP) for 2021. Through the BHP, which was authorized by the Affordable Care Act (ACA), states may offer health benefits to certain low-income individuals…
The Centers for Medicare & Medicaid Services (CMS) has announced a controversial plan to allow states to apply to participate in a new Medicaid “Healthy Adult Opportunity” (HAO) Demonstration. In short, the HAO Demonstration will give participating states greater flexibility in the scope and administration of Medicaid benefits for certain beneficiary populations (i.e., the Affordable…
Health policy has been the focus of several House Energy and Commerce Committee hearings this month. Notably, the Energy and Commerce Health Subcommittee held its first legislative hearing on cannabis policy, although much of the hearing focused on the status of marijuana research under the Controlled Substances Act, as discussed in a recent Reed…
The Departments of Health and Human Services (HHS) has just published its “annual” inflation update to civil monetary penalty amounts (CMP) in its regulations – even though those penalties were just increased for inflation in November 2019. Under the latest update, CMPs are increased by a 1.01764 “multiplier” (that is, a 1.764% increase), applicable to …
The Centers for Medicare & Medicaid Services (CMS) has released a Request for Information (RFI) on how the Medicaid program can incorporate out-of-state providers in coordinating care for children with certain medically complex conditions under Medicaid. The RFI is intended to help CMS implement a provision of the Medicaid Services Investment and Accountability Act of…
The HHS Office of Inspector General (OIG) has issued its annual solicitation of recommendations for new or revised Anti-kickback Statute (AKS) safe harbors and new Special Fraud Alerts. In reviewing proposed safe harbor changes, the OIG will consider the extent to which the proposals would increase or decrease:
- Access to health care services
- Quality of
The Centers for Medicare & Medicaid Services (CMS) is inviting suggestions for how it can eliminate Medicare regulations that (1) impose more stringent supervision requirements than existing state scope of practice laws, or (2) restrict health professionals from practicing at the top of their license. This comment solicitation, which is part of the Administration’s “Patients…
The Centers for Medicare & Medicaid Services (CMS) has issued a “payment advisory” alerting approximately 1,400 clinicians who are Qualifying APM participants based on their 2017 performance that CMS does not have the participants’ banking information. This banking information is necessary for CMS to disburse their 5% Advanced APM Incentive Payments for 2019. …
The Centers for Medicare & Medicaid Services (CMS) has posted the final Medicare clinical laboratory fee schedule (CLFS) rates for 2020. The files reflect updates announced in a December 13, 2019 CMS transmittal, which also discusses payment policies for new CLFS codes effective January 1, 2020.
As reported previously, the final fiscal…
Congress has completed action on federal fiscal year (FY) 2020 spending, and President Trump has signed the two domestic and national security funding packages into law. The major health care policy provisions included in the domestic spending package, HR 1865, the “‘Further Consolidated Appropriations Act, 2020” (the “Act”), are summarized below.
Repeal of ACA Device, Insurance Taxes
The Act permanently repeals the Affordable Care Act’s (ACA) 2.3% excise tax on the sale of certain medical devices, which has been a top priority of the medical technology industry. It also permanently repeals the excise tax on certain high-cost employer-sponsored health coverage (the so-called “Cadillac tax”) and the annual excise tax imposed on health insurer providers.
Medicare Part B Policies
The Act incorporates provisions of the Laboratory Access for Beneficiaries (LAB) Act, which delays the next round of clinical laboratory private payer data reporting for one year. The Act also directs the Medicare Payment Advisory Commission (MedPAC) to study how to improve this data collection.
In addition, the Act excludes certain complex rehabilitative manual wheelchairs (e.g., HCPCS codes E1235, E1236, E1237, E1238, and K0008) from the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program. The Act also bars CMS from using competitive bidding rate information to adjust payment for certain wheelchair accessories and cushions furnished with complex rehabilitative manual wheelchairs.
The Act reimburses acute care hospitals on a reasonable cost basis for furnishing allogeneic hematopoietic stem cell transplants. It also extends outpatient hospital pass-through status for a number of diagnostic radiopharmaceuticals.
Medicare, Medicaid, and Public Health Extenders
The Act extends through May 22, 2020 a number of Medicare, Medicaid, and public health programs and policies, including the following:
Continue Reading FY 2020 Government Funding Bill Repeals ACA Health-Related Taxes, Extends Expiring Health Provisions, Makes Other Health Policy Updates
The Department of Health and Human Services (HHS) has released two proposed rules intended to increase the availability of organs for transplantation and improve the accountability of organ procurement organizations (OPOs), in conformance with President Trump’s Executive Order on Advancing American Kidney Health.
First, the Health Resources and Services Administration has proposed expanding the…