CMS Announces Plans to Restart DMEPOS Competitive Bidding Program in 2021; Trump Proposed Budget Seeks Authority for Lower Payments to “Winning” Suppliers

The Centers for Medicare & Medicaid Services (CMS) has announced its plans for Round 2021 of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP), featuring new “lead item” bidding rules and new product categories.  Following on the heels of this announcement, the Trump Administration proposed additional legislative changes to the CBP that would cut Medicare DMEPOS spending by more than $7 billion over 10 years.

Round 2021 of the CBP

As previously reported, there has been a “temporary gap” in the DMEPOS CBP since the last round of contracts expired on December 31, 2018.  Last week CMS confirmed that it will launch a new competition – dubbed Round 2021 – for contracts that will run from January 1, 2021 through December 31, 2023.  The competition will cover geographic areas included in Round 1 2017 and the Round 2 Recompete, for a total of 130 competitive bidding areas (CBAs).

For Round 2021, CMS is adding three product categories that have never been subject to competitive bidding:  off-the-shelf (OTS) back braces, OTS knee braces, and non-invasive ventilators.  The full list of the 16 product categories included in Round 2021 is as follows:

  1. Commode Chairs
  2. Continuous Positive Airway Pressure (CPAP) Devices and Respiratory Assist Devices (RADs)
  3. Enteral Nutrition
  4. Hospital Beds
  5. Nebulizers
  6. Negative Pressure Wound Therapy (NPWT) Pumps
  7. Non-Invasive Ventilators
  8. OTS Back Braces
  9. OTS Knee Braces
  10. Oxygen and Oxygen Equipment
  11. Patient Lifts and Seat Lifts
  12. Standard Manual Wheelchairs
  13. Standard Power Mobility Devices
  14. Support Surfaces (Groups 1 and 2)
  15. Transcutaneous Electrical Nerve Stimulation (TENS) Devices and Supplies
  16. Walkers

The specific HCPCS codes subject to this round of bidding is posted on the Competitive Bidding Implementation Contractor (CBIC) website.  Note that CMS is not including a national mail-order program for diabetes testing supplies in Round 2021, since the agency is working to implement separate statutory requirements for those items included in the Bipartisan Budget Act (BBA) of 2018.

CMS will use a new “lead item” bidding methodology in Round 2021.  That is, instead of bidding on each item/HCPCS code within a product category, suppliers will submit a single bid for that item in the product category designated by CMS to have the highest total nationwide Medicare allowed charges.  CMS will calculate a single payment amount (SPA) for that lead item in the CBA based on the highest amount bid within the winning bids, rather than the median of winning bids.  The SPAs for non-lead items will be based on the relative difference in the fee schedule amounts for the lead and non-lead items.  A “Lead Item Calculator” is available on the CBIC site to show the impact of the lead item bid amount on the non-lead items in the product category.

The following is the schedule for the Round 2021 competition (dates are subject to change): Continue Reading

Congressional Hearings on Drug Pricing, Other Health Policy Topics  

As we have previously reported, prescription drug pricing is an early focus for Congressional hearings this year.  This week the Senate Finance Committee held its second hearing on drug pricing, and the following hearings are on the schedule next week:

Other planned health policy committee hearings for the week of March 4 include the following:

In other Congressional action, earlier this week the Senate Appropriations Committee held a hearing on the opioid epidemic, focusing on prevention, treatment, and recovery at the state and local level.

CMS Sets Schedule for Public Meetings on 2020 HCPCS Code Applications

CMS has announced the schedule for public meetings on pending applications for new or revised HCPCS codes for calendar year 2020:

May 13-15, 2019 — Drugs/Biologicals/ Radiopharmaceuticals/Radiologic Imaging Agents.

June 11-12, 2019 — Durable Medical Equipment and Accessories, Orthotics and Prosthetics and Supplies, and Other

CMS intends to release the agenda and preliminary coding determinations at least four weeks before each meeting on the CMS HCPCS website.

Newest CMS Innovation Model Targets Medicare Payment for Emergency Ambulance Services

The Centers for Medicare & Medicaid Services (CMS) plans to test a new voluntary emergency ambulance service innovation model that seeks promote “the most appropriate level of care at the right time and place.”  In announcing the model, CMS noted that because Medicare regulations now only allow payment for emergency ground ambulance services for transportation to hospitals, critical access hospitals, skilled nursing facilities, and dialysis centers, most Medicare beneficiaries with a medical emergency who call 911 are transported to hospital emergency departments (ED), even if a lower-acuity destination would meet the individual’s needs.

Under the new CMS “Emergency Triage, Treat and Transport” (ET3) model, following a 911 call, participating ambulance suppliers and providers would either: (1) transport the individual to a hospital ED or other facility covered under current regulations; (2) transport the individual to an alternative destination (e.g., primary care physician or urgent care clinic); or (3) provide treatment in place, with a qualified health care practitioner either on the scene or connected via telehealth.  Participating ambulance suppliers and providers could earn up to a 5% payment adjustment in later years of the five-year model based on achievement on key quality measures.  CMS anticipates releasing a request for applications this summer and starting the model in early 2020.

Congressional Committees Focus on ACA and Other Health Policy Issues

Federal health policy is an early focus for Congressional committees.  In addition to several hearings held in January, Congressional hearings in February have concentrated on the Affordable Care Act (ACA) and primary care, including the following:

Additional health policy-related hearings are scheduled for this week, including:

HHS Proposes Updates to CLIA Proficiency Testing Rules

The Centers for Medicare & Medicaid Services (CMS) and the Centers for Disease Control and Prevention (CDC) have proposed updates to the Clinical Laboratory Improvement Amendments of 1988 (CLIA) proficiency testing (PT) regulations to address the evolution in laboratory testing technology since the CLIA PT regulations were initially established in 1992.  The proposed rule would, among other things, revise the list of analytes requiring PT and update the scoring criteria for acceptable laboratory performance.  Comments on the proposed rule will be accepted until April 5, 2019.

CMS Educational Event on New Part D Opioid Overutilization Policies

On February 14, 2019, CMS is hosting an educational call on new opioid policies for Medicare drug plans.  The call will focus on improved safety alerts when opioid prescriptions are dispensed at the pharmacy, and drug management programs for individuals at-risk for misusing or abusing “frequently abused drugs” (opioids and benzodiazepines).  The target audience for the call includes physicians, physician assistants, nurses, nurse practitioners, dentists, case managers, and other interested stakeholders.  To register, visit the CMS website.


OIG’s Proposed Drug Pricing Safe Harbor Amendments: “Hot Takes”

Late yesterday, the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) released a proposed rule to amend the anti-kickback safe harbors[1] in response to perceived risks that rebates paid by pharmaceutical manufacturers to payors and pharmacy benefit managers (PBMs) may contribute to pharmaceutical list price inflation and not benefit patients and payors.  The proposed rule would (i) remove safe harbor protection for drug manufacturer rebates to Part D plans, Medicaid managed care organizations, and PBMs acting under contract with either type of entity, (ii) establish a new safe harbor protecting manufacturer “point of sale” price reductions on Part D and Medicaid managed care drug utilization, and (iii) establish a new safe harbor protecting certain service fees paid by drug manufacturers to PBMs.  The proposed rule is scheduled to be published in the Federal Register on February 6, 2019, with a 60-day public comment period.

Reed Smith’s Life Sciences and Health Industry Group will be preparing a more detailed client bulletin analyzing the potential implications of the proposed rule and identifying areas for comment.  In the meantime, here are a few of our “hot takes” to consider as you review the proposal. Continue Reading

HHS Proposes Changes to HIPAA Transaction Standard for Prescriptions for Schedule II Drugs in Retail Pharmacy Transactions

The Department of Health and Human Services (HHS) has issued a proposed rule that would modify the current HIPAA transaction standard for retail pharmacy transactions (the August 2007 revision of NCPDP telecommunications standard D.0) with respect to claims and similar transactions for Schedule II drugs.  HHS states that the change would enable covered entities to clearly distinguish whether a prescription fill for a Schedule II drug is a “partial fill” (i.e., less than the full amount prescribed is dispensed) or a refill, which it believes is not consistently reflected under the current D.0 standard.  Specifically, HHS would change the current NCPDP D.0 requirements for use of an existing field in the D.0 standard, “Quantity Prescribed (460-ET),” to make the use of such field mandatory for Schedule II drugs.  HHS notes that the Comprehensive Addiction and Recovery Act (CARA), enacted on July 22, 2016, changed the criteria for partial fills of Schedule II drugs, and states that it believes “CARA’s implementation will result in an upsurge of partial refills, which supports the need for this proposed modification.”

HHS also believes this policy “would support and improve the Administration’s and the health care industry’s data collection and research efforts by, among other things, enabling policymakers, health care researchers, and other health care stakeholders that monitor the volume of opioids billed to health plans across the country to correctly identify partial fills in claims and prior authorization transactions.”  Notably, we are not aware of HHS having previously proposed a single change to one aspect of a HIPAA transaction standard, rather than adoption of an overall update recommended by the organization promulgating such standard.  In this case, HHS is not proposing to adopt the NCPDP October 2017 Telecommunication Standard Implementation Guide, Version F2 (Version F2), stating that it “requires further evaluation” and, given the other changes that it would require of covered entities, its adoption “would delay the ability of covered entities to accurately capture partial fills of Schedule II drugs.”

The proposed rule was published on January 31, 2019, and HHS will accept comments until April 1, 2019.

CMS Launches New Medicare Part D Payment Modernization Model

The Centers for Medicare & Medicaid Services (CMS) has announced a new Medicare Part D Payment Modernization Model (Part D Model), which will be tested by the CMS Center for Medicare and Medicaid Innovation.  CMS unveiled the Part D Model on January 18, 2019, at the same time the agency released details on extensive revisions to its current Medicare Advantage Value-Based Insurance Design (VBID) model. On January 31, 2019, CMS provided additional detail on the new Part D Model during a webinar (the webinar will be repeated on February 6, 2019).

The Part D Model is a voluntary, five-year (CY 2020-2024) model open to standalone prescription drug plans (PDPs) and Medicare Advantage Prescription Drug Plans (MA-PDs), on a nationwide basis.  As discussed below, the model is intended to decrease Part D program spending by:  (i) introducing two-sided risk to participating plans for spending in the catastrophic portion of the Part D benefit, and (2) enhancing plan flexibilities to propose clinically-based drug utilization management techniques, including through rewards and incentives programs for plan beneficiaries.

Two-sided risk for the catastrophic portion of the Part D benefit. 

For plans accepted into the program, CMS will retrospectively (after the plan year has been completed) establish a target benchmark representing the federal catastrophic reinsurance subsidy amount (80% of Part D catastrophic phase costs after manufacturer rebates and other Direct and Indirect Remuneration) that would have been paid to participating organizations if they were not participating in the model.  The benchmark will be calculated after adjustment for certain factors, such as enrollee health and low-income subsidy status, and separate benchmarks will be calculated for participating PDPs and MA-PDs.  If the reinsurance subsidy amount (after adjustment) for the organization’s participating PDPs or MA-PDs (as applicable), calculated at the parent organization level, is lower than the applicable target benchmark, the organization will receive a portion of the difference (referred to by CMS as “savings”), and if it is higher than the benchmark, the organization must pay to CMS a portion of the difference (referred to by CMS as “losses”).  Specifically: Continue Reading

CMS Announces Significant Expansion of and Increased Flexibility under Medicare Advantage Value-Based Insurance Design (VBID) Model

The Centers for Medicare & Medicaid Services (CMS) is making extensive revisions to its Medicare Advantage (MA) Value-Based Insurance Design model in order “to contribute to the modernization of Medicare Advantage through increasing choice, lowering cost, and improving the quality of care for Medicare beneficiaries.”

By way of background, the VBID innovation model was launched in 2017 to test how MA plans in seven states can use health plan design elements (e.g., supplemental benefits, disease management, or reduced cost sharing) to encourage enrollees with specified chronic conditions to use high-value clinical services or high-value providers that improve quality of care while reducing costs.  CMS subsequently expanded the program to additional states.

CMS recently announced that for CY 2020, the MA VBID model will be expanded to all 50 states, as was mandated by the Bipartisan Budget Act of 2018.  CMS also is expanding the model to other types of MA plans, including all types of Special Needs Plans.  Furthermore, CMS is allowing plans to test additional benefit modifications, including:

  • Non-uniform benefit design to provide reduced cost-sharing or additional supplemental benefits based on enrollees’ health condition and/or socioeconomic status factors (specifically, low-income subsidy eligibility or dual-eligible status). Plans may also propose supplemental benefits which are “non-primarily health related” for all enrollees by disease state, regardless of socioeconomic status.
  • Greater flexibility to offer “Rewards and Incentives” programs, with higher-value individual rewards more closely reflecting the expected benefit of the service/activity, in order “to better promote improved health, prevent injuries and illness, and promote the efficient use of health care resources.” For example, for MA prescription drug plans, Rewards and Incentives programs could be used to encourage use of disease state management programs, medication therapy management, preventive health services, and consideration of less costly clinically-equivalent medication alternatives.
  • Expanded use of telehealth networks, including allowing telehealth networks to comprise up to one-third of the required in-network providers for a specialty if certain conditions are met.
  • A mandatory requirement that participating organizations provide timely access to Wellness and Health Care Planning, including advance care planning (e.g., advance directives).

The CY 2020 VBID application period runs through March 1, 2019.  Looking ahead to 2021, CMS intends to use the VBID model to test the inclusion of the Medicare hospice benefit in Medicare Advantage.

New CMS Date of Service Coding and Billing Guidance Complicates Billing for Non-Global Radiology Claims

The Centers for Medicare & Medicaid Services (CMS) has issued new guidance on what date of service (DOS) should be billed for various Medicare Part B services.  For radiology services, CMS offers the option of reporting the DOS of either the date when the radiology study was performed on the patient or the date of the professional interpretation when a “global” claim is submitted for payment for both components. When the technical component (TC) or professional component (PC) of the service is billed separately, however, CMS now directs that the DOS on the claim for the TC must be the date the imaging study was performed and the DOS on the claim for the PC must be the date the professional interpretation is performed.

The radiology industry is disappointed by this guidance, since it would not allow the TC and PC be the same DOS, even when billed separately. Radiology industry billing professionals are concerned that reporting multiple DOS on claims for the separate components can create considerable confusion on the part of patients.  Furthermore, payers adjudicating claims can experience difficulty linking the TC and PC components when they report different dates of services. This is particularly concerning since the place of service indicated for the professional component on the claim may not be the same location as the technical component service.  We can expect future efforts to encourage CMS to revise this policy to facilitate billing for radiology services.

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

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

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

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

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

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

CMS Call on Clinical Diagnostic Laboratory Reporting of Private Payor Rates

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

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

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

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

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

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

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

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

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

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

HHS OIG Recaps FY 2018 Enforcement Highlights  

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

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

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

CMS Announces 2019 Medicare Clinical Lab Fee Schedule Rates

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

2019 Medicare DMEPOS Fee Schedule Released

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