Rose Garden Ceremony Notwithstanding, Finish Line Not in Sight for ACA Repeal Legislation

Although President Trump and House Republican leaders held a White House Rose Garden ceremony to celebrate House passage of legislation to partially repeal the Affordable Care Act (ACA), the prospects for actual enactment of the bill into law are highly uncertain. The American Health Care Act of 2017 (HR 1628), approved by the House May 4, 2017 on a 217 to 213 vote, generally follows the contours of an earlier version of the bill pulled from House consideration in March due to insufficient support. To gain the votes of more conservative Republican members, the updated version of the bill makes it easier for states to obtain federal approval to waive various ACA requirements, including provisions related to essential health benefits and premium protection for individuals with pre-existing medical conditions, in order “to encourage fair health insurance premiums.” In response to concerns about the potential impact of state waivers on rates for individuals with pre-existing conditions, leadership agreed to add $8 billion over five years to offset increased costs to such consumers – an amount which critics contend is insufficient to meaningfully reduce premiums. The revised legislation also retained steep cuts in Medicaid spending and is still expected to result in a significant increase in the uninsured population. Adding to the uncertainty of the impact of the legislation is the lack of a Congressional Budget Office (CBO) score for the revised bill; CBO does not expect to have an updated score until the week of May 22.

The action now moves to the Senate, where lawmakers from both parties have indicated that they intend to significantly revise the House plan, if not start from scratch. Recent news of major health plans exiting the ACA insurance exchanges keeps the spotlight on the uncertain future of the ACA. Given that senators are awaiting the CBO score and Senate parliamentary guidance on the scope of policy changes that can be made under archaic Senate procedural rules, however, formal Senate action is likely weeks or even months away. A House-Senate conference committee will be likely if the Senate does pass a health care measure, further delaying when a bill might reach the President’s desk.

CMS Retroactively Revises DMEPOS Fee Schedule to Implement Cures Act

CMS has announced revised Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) fee schedule amounts for the period of July through December 2016, as required by the 21st Century Cures Act. By way of background, the Affordable Care Act mandated that CMS use pricing information from competitive bidding to adjust certain DMEPOS fee schedule amounts for items furnished in areas where the competitive bidding program (CBP) is not implemented.  A CMS rule implemented these adjustments in two steps:

  • January 1, 2016 – June 30, 2016: Blend of 50% of the unadjusted fee schedule amount that would have gone into effect on January 1, 2016 and 50% of the adjusted fee schedule amount.
  • Beginning July 1, 2016: 100% adjusted fee schedule amounts, incorporating data from the most recent round of competitive bidding.

The Cures Act requires the Secretary to extend the transition period retroactively from June 30, 2016 to December 31, 2016, with full implementation of adjusted rates for dates of service or after January 1, 2017. CMS has posted the revised blended fee schedule amounts applicable July through December 2016.  Note that CMS did not simply extend the pre-July 2016 rates, since the statute and regulations specify that the adjusted fee schedule amounts must be updated each time new CBP pricing information becomes available (e.g., the recompeted Round 2 payment amounts that took effect on July 1, 2016). According to an AA Homecare analysis, this generally results in rates that are higher than CMS’s prior July 1, 2016 fee schedule, but below the amounts in effect January 1, 2016. Contractors have begun the adjustment process to reflect the revised blended rates; CMS is giving contractors six months to complete all adjustments.

Congressional Panels Tackle FDA Reauthorization Act and Other Health Policy Issues

On May 11, 2017, the Senate on Health, Education, Labor, and Pensions (HELP) Committee approved S 934, a bill extend Food and Drug Administration user-fee programs for prescription drugs, medical devices, generic drugs, and biosimilar biological products. The legislation also includes various policy changes, including provisions intended to improve the medical device inspection process and modify the regulation of hearing aids, among other things.  The bill now moves to the full Senate.  Previously, the HELP Committee approved:  S 652, to reauthorize a program for early detection, diagnosis, and treatment regarding deaf and hard-of-hearing newborns, infants, and young children; S 849, to support programs for mosquito-borne and other vector-borne disease surveillance and control; S 916, to amend the Controlled Substances Act with regard to the provision of emergency medical services; and S 920, to establish a National Clinical Care Commission.

The House Energy and Commerce Committee also held a hearing regarding improving the regulation of medical technologies. The hearing focused on the following bipartisan bills:  HR 1652, the Over-the-Counter Hearing Aid Act of 2017; HR 2009, the Fostering Innovation in Medical Imaging Act; HR 2118, the Medical Device Servicing and Accountability Act, and HR 1736, to amend the Federal Food, Drug, and Cosmetic Act to improve the process for inspections of device.  The panel held a separate hearing on “Combating Waste Fraud and Abuse in Medicaid Personal Care Services Program.”

In addition, the following hearings and markups are scheduled next week: Continue Reading

GAO: CMS, MACs Should Bolster Provider Education to Cut Improper Medicare Payments

In 2016, an estimated $41.1 billion in improper Medicare fee-for-services payments were made to providers. The Centers for Medicare & Medicaid Services (CMS) believes that provider education plays an important role in ensuring payments are made properly; CMS has delegated authority for provider education to the Medicare Administrative Contractors (MACs).

In a recent report, the Government Accountability Office (GAO) found that contrary to federal internal control standards, CMS has not required the MACs to report on specific provider education efforts, which left certain areas vulnerable to improper billing. In addition, CMS has not required the MACs to educate providers who refer patients for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) and home health services on supporting billing documentation and referral documentation, also contrary to federal internal control standards.

The GAO recommended that CMS take steps to strengthen oversight and to ensure that provider education efforts are focused on areas that are vulnerable to improper billing. The GAO recommended, and CMS concurred, that CMS should require MACs to provide detailed reports on their provider education efforts. In addition, the GAO called for all MACs to collaborate to educate referring providers regarding the documentation requirements for DMEPOS and home health services. Finally, the GAO recommended that CMS establish performance metrics to determine the effectiveness of certain reviews in reducing improper billing.

Telehealth/Remote Patient Monitoring Rarely Used in Federal Health Programs, but Innovative Programs May Provide Boost, GAO Reports

The GAO recently reported that fewer than 1% of Medicare and Department of Defense (DOD) beneficiaries and 12% of Veteran’s Administration (VA) beneficiaries utilized telehealth and remote patient monitoring services, even though patient and provider associations believe these services may improve or maintain quality of care. These associations cited payment and coverage restrictions as barriers, such as limiting the practice settings where patients may receive such services. The Centers for Medicare & Medicaid Services (CMS) has waived some of these coverage restrictions in eight innovative demonstration projects and payment and delivery models. One such model, the Merit-based Incentive Payment System (MIPS), reimburses clinicians based on quality and resource utilization beginning in 2017. MIPS allows clinicians to use telehealth and in some cases, remote patient monitoring, to help them meet the MIPS performance criteria. According to GAO, the outcomes of these payment models and demonstration projects will help CMS assess the potential benefits and possible expansion of telehealth and remote patient monitoring for Medicare beneficiaries.

GAO Encourages More CMS Collaboration with States on Medicaid Program Integrity Efforts

The GAO has had ongoing concerns about the integrity of the Medicaid program due to its size, diversity, and recent rapid growth as a result of the Affordable Care Act. It is the second largest health insurance program in the U.S. based on expenditures ($576 billion combined federal and state spending projected for 2016).  At the request of the Senate Finance Committee, the GAO reviewed and issued a report on its examination of CMS’s oversight and support of states’ Medicaid program integrity efforts.

The GAO found that CMS has improved its oversight and support of the states’ Medicaid program integrity needs and efforts through training initiatives and review and collaborative audit programs.  In fact, collaborative audits identified substantial potential Medicaid overpayments to health care providers in recent years, with identified overpayments increasing from $2 million in fiscal year 2012 to $36 million in fiscal year 2015.  The GAO contends, however, that improvements are still needed.  The GAO concluded, and CMS agreed, that CMS should work with states on addressing barriers that improve state participation in collaborative audits, improve communication during audits, continue offering training programs, and develop systematic approaches to collecting and communicating promising state program integrity practices.

CMS Proposes FY 2018 Update to Medicare Hospice Payment Rules; Solicits Ideas for Hospice Program Improvements

CMS has published a proposed rule to establish fiscal year (FY) 2018 Medicare hospice reimbursement rates, update hospice quality programs, and request public input on ways to improve the Medicare hospice program.

The proposed rule would increase FY 2018 hospice rates by 1% (approximately $180 million), as mandated by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA); CMS estimates that in the absence of MACRA, the market basket update would have been 2.2%. Note that the annual update is reduced by 2 percentage points for hospices that fail to report required quality data.  CMS also proposes updating the FY 2018 hospice cap to $28,689.04, an increase of 1%.

CMS proposes various updates to the Hospice CAHPS® Experience of Care Survey measures, and discusses the potential use of a new “Hospice Evaluation & Assessment Reporting Tool” (HEART) patient assessment instrument. Furthermore, CMS requests comments on potential future hospice quality measure “concepts” addressing potentially avoidable hospice care transitions and access to levels of hospice care.  The proposed rule also discusses details of CMS’s plans to begin public reporting of hospice quality measures on a Hospice Compare Site.

In addition, CMS solicits comments regarding possible future rulemaking to specify that: Continue Reading

CMS Proposes IPPS/LTCH Payment and Policy Changes for FY 2018; Requests Comments on Broader Policy Issues

CMS has published its proposed rule to update the Medicare acute hospital inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) for fiscal year (FY) 2018. CMS also solicits public comments on a range of policy issues related to physician-owned hospitals, inpatient and outpatient payment differentials for similar services, and ways to reduce the regulatory burden for providers and promote high quality care, as discussed below.

Acute Hospital Rate Update. With regard to the IPPS, CMS projects that the cumulative rate and policy changes in the proposed rule would increase total IPPS payments by about $3.1 billion in FY 2018 compared to FY 2017 levels. Rate changes would result from a number of adjustments, including:  a 2.9% market basket update reduced by a -0.4% multifactor productivity adjustment and a 0.75% cut mandated by the Affordable Care Act (ACA); a -0.6% adjustment related to the two midnight policy; and a +0.4588% increase to adjust for documentation and coding under the 21st Century Cures Act. CMS also proposed changes in uncompensated care payments that are expected to increase IPPS operating payments by another 1.2%.  Continue Reading

CMS Simultaneously Releases Proposed Rule to Update SNF PPS for FY 2018 & Advance Notice of Proposed Rulemaking (ANPRM) to Replace RUG-IV Case-Mix Methodology as Early as FY 2019

CMS has issued its proposed rule to update Medicare skilled nursing facility (SNF) prospective payment system (PPS) rates and policies for FY 2018, while at the same time soliciting comments regarding a forthcoming and potentially ground-breaking proposed rule to replace the SNF PPS RUG-IV case-mix classification methodology, which forms the basis for SNF payment, with the Resident Classification System, Version I (RCS-I), as early as FY 2019.

For nearly ten years, CMS, the Office of Inspector General, and the Medicare Payment Advisory Commission have raised concerns that the current SNF payment system encourages providers to deliver therapy to residents based on financial goals and not patient need.  The RCS-I case-mix model, which was developed during the SNF Payment Models Research initiative, attempts to address those concerns by removing service-based metrics from the SNF PPS and deriving payment, almost exclusively, from objective resident characteristics.  Most notably, the proposed RCS-I case-mix model would: Continue Reading

CMS Signals Potentially Big Changes Ahead for Medicare SNF Payment Policy

Using unusually blunt language, the Medicare Payment Advisory Commission (MedPAC) recently noted that it “is increasingly frustrated with the lack of statutory or regulatory action” to lower Medicare skilled nursing facility (SNF) payments and revise the payment system to link payments to patients’ characteristics and costs of care.  It appears, however, that the Centers for Medicare & Medicaid Services (CMS) is finally preparing to start a rulemaking process to reform the Medicare SNF payment system – separate from the annual prospective payment system (PPS) update process. 

Specifically, CMS has sent to the White House Office of Management and Budget (OMB) an advance notice of proposed rulemaking (ANPRM) to revise the SNF PPS case mix methodology, a regulatory step that enables CMS to formally obtain public input on specific aspects of policy prior to issuance of a proposed rule.  CMS has not yet announced the scope of the ANPRM, but presumably it will seeks to translate its ongoing SNF Payment Models Research initiative into regulatory policy replacing the SNF PPS with a methodology that more closely ties reimbursement to resident characteristics (rather than the amount of therapy provided).

Both the ANPRM and the fiscal year 2018 SNF PPS proposed rule are now pending at OMB.  The proposed 2018 SNF PPS update is likely to be released any day.  The ANPRM timeline is less predictable, but the associated reforms ultimately could have a more significant impact on reimbursement to SNFs.

Coming Soon: Proposed 2018 Medicare Payment Rules

CMS has sent several major proposed Medicare 2018 payment rules to the White House Office of Management and Budget (OMB) for regulatory clearance before publication in the Federal Register. OMB has already cleared the proposed fiscal year (FY) 2018 acute inpatient prospective payment system/long-term care hospital prospective payment system (PPS) rule; it could be released at any time.  Other proposed FY 2018 Medicare updates pending at OMB include the skilled nursing facility PPS, the inpatient rehabilitation facility PPS, and hospice rate rules.

Also, CMS has gotten an early start on the calendar year (CY) 2018 rules, with the proposed updates for outpatient hospital departments/ambulatory surgical centers, home health agencies, end-stage renal disease providers, and suppliers of durable medical equipment, prosthetics, orthotics, and supplies all pending at OMB.

CMS Issues Final Rule to Stabilize ACA Insurance Markets, While Emphasizing Marketplace Woes

The Centers for Medicare & Medicaid Services has published a final rule intended to help improve the risk pool and stabilize the Affordable Care Act (ACA) Insurance Exchanges for 2018 – even as CMS contends that consumers “have faced double-digit premium increases, fewer plans to choose from, and a market that continues to be threatened by insurance issuer exits.” Major provisions of the final rule will:

  • End the 2018 open enrollment period for the individual market on December 15, 2017 (instead of January 31, 2018) to require individuals to sign up for coverage before the beginning of the plan year (unless they are eligible for a special enrollment period);
  • Expand pre-enrollment verification of eligibility to all new consumers who seek to enroll through special enrollment periods to address “concerns from issuers about potential misuse and abuse of special enrollment periods,” and make other revisions to special enrollment period regulations;
  • Allow issuers to collect unpaid premiums prior to reenrolling an individual in the next year’s plan;
  • Increase the de minimis variation in the actuarial values used to determine levels of coverage; and
  • Revise the network adequacy review process and lower the minimum essential community provider (ECP) threshold from 30 percent to 20 percent of the available ECPs in a plan’s service area.

Additional announcements regarding the process issuers must follow for the 2018 plan year are posted on the CMS website.

CMS Finalizes 2018 Medicare Advantage/Part D Policies, Seeks Ideas for Improving Programs

CMS has released its 2018 Medicare Advantage (MA) and Part D Rate Announcement and Call Letter. CMS estimates that plan revenues will increase by 0.45 percent in 2018; when coding acuity is considered, plans can expect a total revenue change of 2.95 percent. CMS also adopted provisions intended to reduce opioid misuse under Medicare Part D, among other reimbursement methodology and policy changes.

Looking forward, CMS is inviting comments on ways to provide MA organizations and Part D plan sponsors with “flexibility to develop and implement innovative approaches for providing Medicare benefits to enrollees and empowering enrollees.” Specifically, CMS seeks ideas for policy and procedural changes in such areas as: benefit design; operational or network composition flexibility; supporting the doctor-patient relationship in care delivery; facilitating individual preferences; plan payment, monitoring, and measurement; how and when CMS issues regulations and policies; and how CMS can simplify rules and policies for beneficiaries, providers and plans. Responses to the request for information are due April 24, 2017.

OIG and HCCA Offer Suggestions for Measuring Health Organization Compliance Program Effectiveness

The OIG and the Health Care Compliance Association (HCCA) recently held a roundtable where the discussion focused on a broad range of ideas regarding how health care organizations can measure their compliance program effectiveness – while stressing that each organization must tailor its compliance program to reflect the organization’s specific circumstances. These ideas are contained in a document, “Measuring Compliance Program Effectiveness – A Resource Guide,” which addresses both what and how to measure compliance with the standard seven elements of a compliance program: Continue Reading

Roundup of Recent Congressional Health Policy Hearings

A number of Congressional committees have recently held hearings on health policy issues, including the following:

  • House Energy and Commerce Committee hearings on “Cybersecurity in the Heath Care Sector: Strengthening Public-Private Partnerships” and Food and Drug Administration (FDA) medical device user fees.
  • A House Oversight and Government Reform Committee hearing on “Federally Funded Cancer Research: Coordination and Innovation.”
  • Senate HELP Committee hearings on the nomination of Scott Gottlieb, MD, to serve as Commissioner of Food and Drugs, and on FDA user fee agreements.
  • A Senate Aging Committee hearing on Alzheimer’s disease, focusing on preventing cognitive decline in Americans to assuring quality care for those living with the disease.

House Republican Leaders Tout “Progress” on ACA Repeal/Replace Efforts Before Congressional Recess

The House of Representatives has adjourned for a two-week recess without a full House vote on the Republican party’s signature legislation — the American Health Care Act (AHCA) — to repeal and replace the Affordable Care Act (ACA). Since Republican leaders pulled the AHCA from House consideration on March 24, 2017 due to insufficient support, there have been attempts to revise the bill in a way that can muster enough votes to pass the House.  Most recently, on April 6, 2017 House leaders announced an amendment that would establish a $15 billion Federal Invisible Risk Sharing Program to make payments to health insurers in the individual market to subsidize high-cost enrollees.  The amendment was quickly adopted by the House Rules Committee before the House recessed. House Speaker Paul Ryan called the amendment “real progress” and suggested that the risk program provision “brings us closer to the final agreement,” but he admitted that lawmakers have “more work to do.” Republican lawmakers undoubtedly will continue to float revisions intended to change enough minds — and votes — to attempt another vote sometime after Congress reconvenes.

CMS Clarifies Medicaid DSH Rules for Treatment of Third Party Payments in Calculating Uncompensated Care Costs

CMS has published a final rule intended to codify its existing interpretation of how third-party payments are considered in the calculation of Medicaid uncompensated care costs for the purpose of making Medicaid disproportionate share hospital (DSH) payments. Under the final rule, CMS specifies that uncompensated care costs for purposes of calculating hospital-specific DSH limits are costs net of third-party payments received, including but not limited to payments from Medicare or private insurance. CMS does not anticipate that the rule will have a significant financial impact on states or providers since it does not represent a change in policy. The rule is effective June 2, 2017.

CMS Considering 6-Month Delay of Obama Administration Home Health COP Rule

As previously reported, in January 2017 the Obama Administration finalized major changes to the conditions of participation (CoPs) that home health agencies (HHAs) must meet to participate in Medicare and Medicaid. The rule is currently scheduled to go into effect July 13, 2017, except that the requirement to implement data-driven performance improvement projects is effective January 13, 2018. Furthermore, the final rule exempts administrators hired by HHAs prior to July 13, 2017 from new personnel requirements.

In response to HHA requests for additional time to comply with the sweeping changes in the rule (which CMS estimates will increase costs to HHAs by more than $290 million annually), CMS is proposing to delay the overall effective date of the rule until January 13, 2018. CMS also would give HHAs until July 13, 2018 to implement data-driven performance improvement projects, and it would extend the administrator personnel standard grandfathering provision for an additional six months (to January 13, 2018). Comments on the proposal will be accepted until June 2, 2017.

CMS Rolls Out New Form for Disclosing Potential Stark Act Violations

CMS has released a new Self-Referral Disclosure Protocol (SRDP) Form for disclosing actual or potential violations of the physician self-referral law (known as the “Stark Act”) under CMS’s existing self-disclosure process. According to CMS, the streamlined and standardized format “will reduce the burden on providers and suppliers submitting disclosures to the SRDP” and facilitate CMS review. Use of the form is mandatory effective June 1, 2017, although parties are encouraged to use this version of the form now.