CMS Releases Proposed 2018 Medicare Advantage/Part D Reimbursement Methodologies and Policies

CMS has released its 2018 Advance Notice and Call Letter, which outline proposed updates to Medicare Advantage (MA) and Part D plan reimbursement methodologies and policies. CMS notes that it its proposed policies focus on four major outcomes: (1) improvement in quality of care for individuals, (2) promotion of alternative payment models, (3) program integrity and beneficiary/tax-payer value, and (4) improvement in beneficiary experience. According to a CMS fact sheet, the update would increase MA plan payments by 0.25 percent on average, but revenue would increase by 2.75 percent on average considering coding trends. CMS proposes various MA Star Ratings program updates, MA cost sharing changes, revisions to the Part D risk adjustment model, and provisions intended to reduce unsafe opioid overutilization, among other policies. CMS will accept comments on the proposed Advance Notice and Draft Call Letter until March 3, 2017. CMS anticipates releasing the 2018 Final Rate Announcement and Call Letter on April 3, 2017.


OIG Assesses Diabetes Testing Supplies Market Share Data for Competitive Bidding Purposes

The HHS Office of Inspector General (OIG) has released another in series of Congressionally-mandated reports on Medicare market shares of mail order diabetes test strips, this one covering the three-month period after implementation of the National Mail-Order recompete on July 1, 2016. This market share data is intended to help CMS determine if competitive bidding contract suppliers meet a Medicare Improvements for Patients and Providers Act (MIPPA requirement that they provide at least 50 percent, by volume, of the types of diabetes test strips provided to Medicare beneficiaries. According to the OIG, the top strip type made up 43 percent of the mail-order market, and the top 10 types of strips accounted for 98 percent of the market during this period. A supplier could comply with the MIPPA 50-percent rule by committing to provide two strip types.

Trump Temporarily Tables Effective Date of the New Episode Payment Model Rule – But No Change to July 1, 2017 Implementation

As mandated by the Trump Administration’s regulatory review policy, CMS is delaying the effective date of its January 3, 2017 final rule establishing mandatory Medicare episode payment models (EPM) for acute myocardial infarction, coronary artery bypass graft, and surgical hip/femur fracture treatment procedures furnished in designated geographic areas.  Specifically, CMS is extending the effective date of the rule from February 18, 2017 to March 21, 2017.  Importantly, however, CMS is not modifying the implementation date of major provisions that take effect July 1, 2017, including the actual start date of the new EPM program and various changes to the Comprehensive Care for Joint Replacement Model. 

Reed Smith Client Alert: OIG Finalizes Expanded Exclusion Authorities under ACA

The Office of Inspector General (OIG) of the Department of Health and Human Services has issued a final rule implementing its statutory authority under the Affordable Care Act (ACA) to expand the exclusion regulations applicable to persons or entities receiving funds, directly or indirectly, from federal health care programs.

Specifically, the final rule expands OIG’s permissive exclusion regulations to reach individuals and entities convicted of interfering with or obstructing investigations and audits, failing to provide payment information, and making false statements and misrepresentations of material facts in applications to participate in the federal health care programs. Further, the final rule implements a 10-year limitations period, grounded in the False Claims Act limitations period, within which OIG must bring an exclusion action. Additionally, the final rule clarifies certain definitions and implements several changes to the aggravating and mitigating factors the OIG considers when determining whether to increase or decrease the length of a violator’s exclusion period.

Reed Smith has prepared a Client Briefing that provides an overview of the final rule, with a focus on substantive changes from the OIG’s 2014 proposed rule.

ICD-10 Coordination and Maintenance Committee Meeting Scheduled for March 7-8, 2017

The ICD-10 Coordination and Maintenance Committee is meeting on March 7 and 8, 2017, to discuss proposed code changes to ICD-10-CM and ICD-10-PCS. The March 7, 2017 session will focus on procedure codes, and the March 8 meeting will address diagnosis codes.  The registration deadline to attend the meetings is February 25, 2017.

CMS Provides Sneak Preview of Future DMEPOS Competitive Bidding Plans Before Retracting Announcement

One week after unveiling the next round of Medicare durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) competitive bidding, the Centers for Medicare & Medicaid Services (CMS) has announced a “temporary delay” in order “to allow the new administration further opportunity to review the program.” Specifically, on January 31, 2017, CMS revealed plans for “Round 2019” of the DMEPOS competitive bidding program, which would consolidate the following current rounds:  Round 1 2017, Round 2 Recompete, and the National Mail-Order Recompete.  CMS stated its intention to conduct bidding this summer for 11 product categories in 141 competitive bidding areas, with Round 2019 contracts in effect from January 1, 2019 through December 31, 2021.  CMS stated that it would implement a number of revisions to the bidding process with this round, including a new “lead item” bidding methodology and a surety bond requirement.  On February 7, CMS announced the delay in moving ahead on Round 2019, and the agency removed all related information on the CMS and Competitive Bidding Implementation Contractor (CBIC) websites.  CMS did not release any details on its timeline for making a determination on whether or how to proceed with the next round of bidding.

With Trump’s HHS Secretary in Place, Congress Turns to CMS Nominee

The Senate voted early on February 10, 2017 to confirm Thomas Price to be Secretary of Health and Human Services, on a party-line vote of 52 to 47. The Senate will now turn to the nomination of Seema Verma to be CMS Administrator, with a February 16 Senate Finance hearing scheduled to consider the nomination.

House Panel Votes to Tighten Medicaid Income Standards

The House Energy and Commerce Subcommittee on Health has approved two bills that would modify Medicaid eligibility rules to consider additional sources of income. First, HR 829 would establish standards for states to consider lottery winnings and other lump sum payments for purposes of determining Modified Adjusted Gross Income (MAGI) for Medicaid and CHIP eligibility.  Second, HR 181 would count half of the income from certain annuities of a community spouse as income available to institutionalized spouses for purposes of Medicaid eligibility.  The legislation now moves to the full Committee.

Regulatory Freeze Notwithstanding, Trump Administration Increases Health Fraud CMPs

The Department of Health and Human Services (HHS) is once again applying an inflation increase to maximum civil monetary penalty (CMP) amounts for HHS agencies and programs – less than five months after the last inflation hike and notwithstanding the Trump Administration’s recently-announced regulatory freeze.  Specifically, in a final rule to be published on February 3, 2017, HHS is applying a 1.01636 inflation “multiplier” to CMPs pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvement Act of 2015.  For instance, the penalty for submitting or causing to be submitted claims in violation of the Stark Law’s restrictions on physician self-referrals is being increased from $23,863 to $24,253 (the penalty had been $15,000 prior to a September 6, 2016 inflation update).  The adjusted CMP amounts apply to CMPs assessed on or after February 3, 2017, when the associated violation occurred after November 2, 2015 (the date of enactment of the 2015 law).

The Department of Justice (DOJ) also is making corresponding inflation updates to its CMPs, reflecting a 1.01636 inflation update to the CMP levels in effect since August 1, 2016.  For instance, the new maximum CMP for False Claims Act violations under 31 U.S.C. 3729(a) is $21,916, compared to the $21,563 level set in August.  The DOJ’s adjusted CMPs are applicable only to CMPs assessed after February 3, 2017, when the violation occurred after November 2, 2015.

Congressional Budget Resolution Provides Framework for ACA Repeal Legislation, Hearings Focusing on ACA Issues

The House and Senate have approved a budget resolution (S.Con.Res. 3) providing instructions to Congressional committees on the federal spending framework for fiscal years 2017 through 2026. Notably, the resolution would enable the Senate to repeal provisions of the ACA pertaining to spending and revenues on a simple majority vote, without opportunity for filibuster. Such procedural protection would not extend to certain policy-related changes that do not directly impact federal spending. While Republican Congressional leaders have called for repealing and replacing the ACA, legislative language spelling out the replacement package has not yet been released.

Various Congressional committees are considering different aspects of potential changes to the ACA. Last week the House Ways and Means Committee held a hearing on potential repeal of the ACA’s individual insurance mandate. The following hearings also have been scheduled this week:

CMS Call on Required Data Reporting for Global Surgery/Post-Operative Care (April 25)

CMS has scheduled an April 25, 2017 call to discuss new data reporting requirements for clinicians in selected states who furnish global surgery services, as authorized by the Medicare Access and CHIP Reauthorization Act (MACRA). Specifically, the 2017 Medicare physician fee schedule (MPFS) final rule established a data reporting requirement for practitioners furnishing specified global procedures in Florida, Kentucky, Louisiana, Nevada, New Jersey, North Dakota, Ohio, Oregon, and Rhode Island, beginning July 1, 2017. CMS intends to use the reported data and other information sources to establish payment rates under the MPFS. Registration is required to participate in the call.

DOJ/OIG Update on FY 2016 Health Care Fraud and Abuse Control (HCFAC) Program Recoveries

Federal health fraud recoveries for FY 2016 totaled $3.3 billion, according to the latest HCFAC program annual report.  The HCFAC program is credited with more than $31.0 billion in Medicare Trust Funds recoveries since it began in 1997. With regard to criminal fraud, the Department of Justice (DOJ) opened 975 new criminal health care fraud investigations in FY 2016, with criminal charges filed in 480 cases and 802 defendants convicted of health fraud-related crimes.  Federal Bureau of Investigation efforts also led to more than 555 “operational disruptions of criminal fraud organizations” in addition to “the dismantlement of the criminal hierarchy of more than 128 health care fraud criminal enterprises.”  The, DOJ also opened 930 new civil health care fraud investigations and had 1,422 such cases pending at the end of the year.

HHS Office of Inspector General (OIG) investigations also resulted in 765 criminal actions related to Medicare and Medicaid and 690 civil actions (e.g., false claims and unjust-enrichment lawsuits filed in federal district court, civil monetary penalties settlements, and administrative recoveries related to provider self-disclosure matters). The OIG excluded 3,635 individuals and entities from participation in Medicare, Medicaid, and other federal health care programs for criminal convictions for crimes related to these programs, patient abuse or neglect, or due to licensure revocations.

The report highlights tools the Administration continues to use to detect health program fraud and abuse, including: data mining, predictive analytics, trend evaluation, and modeling approaches. Stronger Medicare screening and enrollment requirements also have resulted in deactivation of more than 652,000 enrollments.

OIG Finalizes Expanded Exclusion Authorities under ACA

On January 12, 2017, the Office of Inspector General (“OIG”) of the Department of Health and Human Services issued a final rule to expand the exclusion regulations applicable to persons or entities receiving funds, directly or indirectly, from federal health care programs (“Final Rule”).  The Final Rule, which implements Affordable Care Act authority, was issued with an effective date of February 13, 2017; however, the Final Rule is subject to a temporary postponement of its effective date, until approximately March 21, 2017, pursuant to a memorandum issued by the Trump administration delaying implementation of pending regulations to allow the new administration time for review.

The Final Rule expands the OIG’s exclusion authority in order to protect the federal health care programs and their beneficiaries from payments to potentially “untrustworthy” health care providers.  Specifically, the Final Rule expands OIG’s permissive exclusion regulations to reach individuals and entities convicted of interfering with or obstructing investigations and audits, failing to provide payment information, and making false statements and misrepresentations of material facts in applications to participate in the federal health care programs.  Further, the Final Rule implements a 10-year limitations period, grounded in the False Claims Act limitations period, within which OIG must bring an exclusion action.  Additionally, the Final Rule clarifies certain definitions and implements several changes to the aggravating and mitigating factors the OIG considers when determining whether to increase the length of a violator’s exclusion period. Ultimately, the Final Rule significantly strengthens OIG’s exclusion authority by expanding the grounds for exclusion and the depth of its reach to individuals and entities.

CMS Proposes Stringent New Medicare Standards for Providers and Suppliers of Prosthetics and Custom-Fabricated Orthotics

CMS has issued a proposed rule that would set forth qualifications that providers and suppliers must meet in order to furnish, fabricate, or bill for prosthetics and custom-fabricated orthotics under the Medicare program. The very prescriptive rule comes more than a decade after the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 directed CMS to establish standards for such items.

Under the proposed rule, as a condition of Medicare payment, prosthetics and custom-fabricated orthotics (as defined by CMS) must be:

  • Furnished by a qualified practitioner. CMS proposes to define a qualified practitioner as an occupational therapist, ocularist, orthotist, pedorthist, physical therapist, physician, or prosthetist who meets specified standards. In particular, if the practitioner is not an enrolled Medicare DMEPOS supplier, the practitioner must be: (1) licensed in orthotics, pedorthics or prosthetics, or (2) in states without licensure, specifically trained and educated to provide and manage the provision of pedorthics, prosthetics, and orthotics, and certified by the American Board for Certification in Orthotics, Prosthetics and Pedorthics (ABC), the Board for Orthotist/Prosthetist Certification International, Incorporated (BOC), or an organization with equivalent standards. The proposed rule also would remove the current exemption from quality standards and accreditation for certain practitioners and suppliers who furnish or fabricate prosthetics and custom-fabricated orthotics.
  • Billed by a qualified supplier. CMS proposes to define a qualified supplier as a Medicare DMEPOS supplier that is accredited to furnish prosthetics and custom-fabricated orthotics by a CMS-approved accreditation organization (ABC or BOC, or a program the Secretary determines has standards essentially equivalent to those organizations or that employs or contracts with an individual who is certified by ABC or BOC to make the accreditation decision). Alternatively, the claim may be submitted by a Medicare beneficiary.
  • Fabricated by a qualified practitioner or qualified supplier at a fabrication facility meeting specific standards. The proposed, highly detailed fabrication facility requirements would include being located in US or its territories and meeting multiple recordkeeping, quality assurance, staffing, and physical facility standards.

CMS has released the list of specific HCPCS codes that would meet the rule’s definition of custom-fabricated orthotics and prosthetics and that would be subject to the requirements of the rule. CMS intends to update the DMEPOS quality standards to reflect the provisions of the final rule via a subregulatory process.  CMS also proposes that it may revoke a DMEPOS supplier’s Medicare enrollment for billing for prosthetics or custom-fabricated orthotics that are not (1) furnished by a qualified practitioner; and (2) fabricated by a qualified practitioner or qualified supplier at (3) a facility meeting the specified criteria.

CMS proposes to require qualified suppliers to comply with the rule no later than 1 year after final quality standards are issued (or by their next supplier revalidation, whichever is later). Qualified practitioners would be required to meet the licensure and certification requirements within 1 year of publication of the final rule.  CMS will accept comments on the proposed rule until March 13, 2017.

HRSA Publishes Final Rule on 340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties

The Health Resources and Services Administration (HRSA) has published a final rule to implement civil money penalty (CMP) provisions added to section 340B of the Public Health Service Act under the Affordable Care Act.  In particular, the final rule addresses:  (i) the calculation of the 340B “ceiling price” that may be charged to covered entities; (ii) the substantive standards applicable to CMPs; and (iii) the procedures applicable to the imposition of CMPs.  While the January 5, 2017 final rule sets forth a March 6, 2017 effective date, this rule is presumably impacted by the Trump Administration regulatory review policy, which will push back the effective date to March 21, 2017.

CMS Finalizes Rule to Reduce Medicare Appeals Backlog

In the face of growing scrutiny and now judicial pressure, the Centers for Medicare & Medicaid Services (CMS) published a final rule on January 17, 2017 implementing certain administrative and procedural actions in an effort to reduce the significant Medicare appeals backlog. The final rule comes on the heels of intense criticism from various branches of the federal government – including most recently a December 5, 2016 judicial order from the D.C. district court for the Department of Health and Human Services to achieve certain yearly reduction thresholds from the current backlog of cases pending at the ALJ level and file status reports to the district court every 90 days.   While not specifically referencing the court order in the final rule, according to CMS, the Office of Medicare Hearings and Appeals (OMHA) had more than 650,000 pending appeals as of September 30, 2016, while it has only a maximum adjudication capacity of 92,000 appeals per year.

In the final rule, CMS finalized a majority of the administrative and procedural modifications it outlined in its July 5, 2016 proposed rule. Specifically, the final rule:

  • Permits designation of certain Medicare Appeals Council Decisions as “precedential.”
  • Expands OMHA’s available adjudicator pool by allowing “attorney adjudicators.”
  • Simplifies proceedings when CMS or CMS contractors are involved by limiting hearing participants.
  • Clarifies areas of regulation, including when new evidence may be submitted and rules for filing appeals related to challenging statistical sampling and extrapolation.

The rule is effective March 20, 2017, although this date may be impacted by the Trump Administration’s recently announced regulatory review. Reed Smith is preparing an analysis of the rule.

House Takes Early Action on Noncontroversial Public Health Bills

Early in the new Congress, the House of Representatives has approved, without objection, the following bipartisan public health bills:

  • H.R. 309, the National Clinical Care Commission Act, to establish a National Clinical Care Commission to improve coordination of federal programs that support care for people with metabolic syndromes and related autoimmune disorders.
  • H.R. 315, the Improving Access to Maternity Care Act, to direct HHS to collect data to identify maternity health care professional shortage areas.
  • H.R. 302, the Sports Medicine Licensure Clarity Act of 2016, to clarify medical liability rules for sports medicine professionals.
  • H.R. 304, the Protecting Patient Access to Emergency Medications Act of 2016, which would clarify that emergency medical services professionals may administer controlled substances pursuant to standing or verbal orders in certain circumstances.

The legislation now awaits Senate action.