Trump Administration Signals More Administrative Flexibility for State Medicaid Programs, with Emphasis on “Most Vulnerable Populations”

In her first act as CMS Administrator, Seema Verma joined HHS Secretary Tom Price in writing to the nation’s Governors to urge collaboration on improving the Medicaid program, with an emphasis on services for “truly vulnerable” populations. Price and Verma contend that the “expansion of Medicaid through the Affordable Care Act (ACA) to non-disabled, working-age adults without dependent children was a clear departure from the core, historical mission of the program.”  Thus, they announced their intention to use existing Section 1115 authority to approve state innovations that “build on the human dignity that comes with training, employment and independence.”  They also encouraged states to align their Medicaid benefit designs for non-disabled adults with various commercial health insurance policy features (e.g., health savings accounts and premium/contribution requirements) “to help working age, nonpregnant, non-disabled adults prepare for private coverage.”  Furthermore, CMS committed to working with states to make the state plan amendment and waiver review processes more transparent and efficient.  On the regulatory front, CMS intends “to conduct a full review of managed care regulations in order to prioritize beneficiary outcomes and state priorities” and to give states additional time to comply with a 2014 Home and Community-Based Services (HCBS) rule. Finally, the letter outlines ways HHS is seeking to give states more tools to address the opioid epidemic.

Senate Confirms Verma as CMS Administrator; Trump Nominates Gottlieb for FDA, Hargan as Deputy HHS Secretary

The Senate has approved the nomination of Seema Verma to be CMS Administrator on a vote of 55 to 43. In other nomination news, President Trump has nominated Scott Gottlieb to be Commissioner of Food and Drugs. Dr. Gottlieb is a physician, resident fellow at the American Enterprise Institute, and venture capital firm partner who previously served as Deputy Commissioner for Medical and Scientific Affairs at the FDA. The President has also named Eric D. Hargan to serve as Deputy Secretary of Health and Human Services. Mr. Hargan previously served in various posts at HHS, including Deputy General Counsel and Acting Deputy Secretary, and currently is an attorney in private practice.


Regulatory “Freeze” Thaws for HHS: Medicare FY 2018 IPPS/LTCH Rulemaking Process Gets Underway

The Centers for Medicare & Medicaid Services (CMS) is moving ahead on its annual Medicare hospital payment update rule – and it actually is ahead of last year’s pace.  Specifically, on March 8, 2017 CMS sent to Office of Management and Budget (OMB) for regulatory clearance its proposed rule updating the Medicare hospital inpatient prospective payment system (IPPS) and long-term care hospital prospective payment system (LTCH PPS) for fiscal year 2018.  Presumably the Trump Administration’s regulatory freeze no longer applies to CMS since Health and Human Services Secretary Thomas Price is in place to review the regulations on behalf of the Administration.   

The proposed rule reached OMB almost two weeks earlier than during last year’s rulemaking cycle.  OMB staff should have plenty of time to review the CMS regulation, since it is the only rulemaking government-wide that currently is pending at OMB.  The text of the proposed rule is not available until it is sent to the Federal Register (which last year was on April 18).

Cuts to Medicare DMEPOS Payment Based on Competitive Bidding Prices – Opportunity to Comment

CMS is seeking input from stakeholders on how it should use data from the durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) competitive bidding program to adjust (cut) Medicare DMEPOS fee schedule amounts outside of bidding areas (CBAs), as required by the 21st Century Cures Act. The Cures Act mandates that CMS take such stakeholder feedback into account for fee schedule adjustments in non-CBAs beginning in 2019. CMS also must consider the highest amount bid by a winning supplier in a CBA, along with relative travel distances and costs, volumes of items and services, and number of suppliers in CBAs and non-CBAs.

CMS is hosting a call on March 23, 2017 to discuss these provisions; CMS also will accept comments until March 30, 2017. In addition, CMS published an educational article on how it is implementing a related Cures Act provision revising the schedule for phase-in adjustments to non-CBA DMEPOS rates based on competitive bidding.

OIG Tallies Medicaid Fraud Control Unit Achievements in FY 2016

The OIG has released national and state-by-state data quantifying State Medicaid Fraud Control Unit (MFCUs) accomplishments in fiscal year 2016. During this period MFCUs were credited with a total of:

  • 1,721 indictments (1,249 involving fraud and 472 involving abuse or neglect);
  • 1,564 convictions (1,160 involving fraud and 404 involving abuse or neglect);
  • 998 civil settlements and judgments; and
  • $1.88 billion in recoveries ($368 million of which were criminal recoveries).

MFCU expenditures totaled almost $259 million during this period, and Medicaid expenditures exceeded $571 million (state and federal expenditures).

OIG Warns Public: Do Not Fall for “OIG Hotline” Scammers

The HHS Office of Inspector General (OIG) is warning the public that scammers are spoofing the OIG’s hotline telephone number to obtain personal information from individuals that then can be used to steal money from the victim’s bank account or other fraudulent activity. The OIG stresses that it does not use the HHS OIG Hotline telephone number (1-800-HHS-TIPS/1-800-447-8477) to make outgoing calls and individuals should not answer calls from this number.

CMS Exploring Pediatric Alternative Payment Model Concepts

CMS is seeking public input on ways to improve the quality and reduce the cost of care for children and youth enrolled in Medicaid and the Children’s Health Insurance Program (CHIP). In particular, CMS is interested in comments on topics such as:

  • The potential to include the pediatric population in integrated service model concepts like accountable care organizations;
  • Flexibilities and supports states and providers may need to offer such care models; and
  • Approaches for states and providers to coordinate Medicaid and CHIP benefits and waivers with other health-related social services for this population.

CMS will accept related comments until March 28, 2017.

2018 “Next Generation” Accountable Care Organization (ACO) Models

CMS is soliciting applications for 2018 Next Generation ACOs, an Innovation Center initiative intended to promote Medicare quality improvement and care coordination. Letters of intent are due May 4, 2017. CMS is holding a series of calls to discuss the model and the application process, including the following:

House Judiciary Committee Advances Medical Liability, Insurance Antitrust Reform Bills

The House Judiciary Committee has approved HR 1215, the “Protecting Access to Care Act of 2017.” The bill includes a variety of medical liability reforms, including a $250,000 cap on noneconomic damages, limits on contingency fees, and allocation of damages in direct proportion to fault. The provisions would apply only to claims concerning the provision of goods or services for which coverage is provided in whole or in part via a federal program, subsidy, or tax benefit. The legislation would not preempt state laws that specify a particular monetary amount of economic or noneconomic damages, or that offer other specific types of protections. The panel also approved HR 372, the “Competitive Health Insurance Reform Act of 2017,″ which would repeal the antitrust exemption for health insurance companies provided under the McCarran-Ferguson Act.

The Fine Print of the Trump Administration “2-for-1” Regulatory Reduction Executive Order

President Trump has signed an executive order entitled “Reducing Regulation and Controlling Regulatory Costs,” also known informally as the “2-for-1 Order,” that directs agencies to take a number of actions aimed at deregulating a variety of industries.  The Order is considerably vague, relying instead on the Office of Management and Budget (OMB) to issue additional implementation guidance.  As a result, it remains unclear how this new regulatory approach will operate in practice.

2-for-1 Regulatory Identification Process

The Executive Order, signed January 30, 2017, directs each department or agency to identify two regulations to be repealed any time it proposes or finalizes a new regulation. It is worth noting that the Executive Order never expressly requires these regulations to actually be repealed; rather, merely identified.  Importantly, the Order provides that this 2-for-1 regulatory identification process need only be followed if it is permitted by law.  That is, Congress often passes laws that require certain administrative agencies to promulgate implementing regulations.  To this end, the Order cannot and does not block regulations required by statute.  Instead, only discretionary regulations would be eligible for elimination.

Critics of the Executive Order view this 2-for-1 regulatory identification process as an illogical approach to industry deregulation, arguing that this approach demonstrates a dearth of understanding about how and why regulations are actually issued. For example, in its examination of costs, the Executive Order ignores expected long-term cost savings, and only focuses on annualized regulatory costs.  Accordingly, agencies might be required to eliminate regulations whose benefits greatly outweigh their regulatory costs, simply to meet this arbitrary regulatory standard.  Supporters contend, however, that a requirement to eliminate regulations in order to promulgate new ones forces agencies to review and update existing regulations.  This perceived lack of periodic of review and update is something that has long troubled many in regulated industries. Continue Reading

Medicare & Medicaid Remain Vulnerable to Fraud and Abuse, GAO Warns

The Government Accountability Office (GAO) is out with the latest installment of its “High-Risk Series,” which identifies federal programs “that are especially vulnerable to waste, fraud, abuse, and mismanagement, or that need transformative change.” Once again, GAO flags Medicare and Medicaid as high-risk programs.

With regard to Medicare, GAO notes that while Congress, HHS, and CMS have taken steps to improve the fiscal integrity of Medicare over the years, “continued federal improvements to the oversight of Medicare are warranted given the size and complexity of the program as well as the number and scope of ongoing changes to the program.” Specific Medicare program integrity recommendations for Congress include:

  • Directing the HHS Secretary to require providers who self-refer intensity-modulated radiation therapy services to disclose to their patients that they have a financial interest in the service.
  • Paying for cancer hospitals exempt from the inpatient prospective payment system (PPS) on the same basis as teaching hospitals or otherwise modifying how Medicare pays these providers.
  • Directing the HHS Secretary to equalize payment rates for evaluation and management visits between physician office and hospital outpatient settings.
  • Requiring all Part B drug manufacturers paid at average sales price (ASP) to submit data to CMS and authorizing CMS to collect data from drug manufacturers on coupon discounts for Part B drugs paid based on ASP.
  • Increasing cost-sharing for services that are not recommended by the US Preventive Task Force..

GAO also offers Medicare program management recommendations to CMS and HHS, including:

  • Establishing a self-referral flag for advanced imaging services claims and reducing payments for self-referred advanced imaging services.
  • Improving Medicare Advantage (MA) data review and adjustments for differences in diagnostic coding practices between MA and Medicare fee-for-services.
  • Reforming dialysis facility low-volume payment adjustment policies.

In terms of Medicaid, the GAO identified as an “overarching challenge” CMS’s lack of accurate and timely data to oversee diverse and complex state Medicaid programs. To that end, GAO recommends that HHS take steps to improve reporting and oversight of supplemental payments, Section 1115 Medicaid demonstrations, and personal care services programs. GAO also recommends that CMS establishing criteria for determining when provider payments are “economical and efficient,” along with a process for identifying and reviewing payments to individual providers to determine if they meet that standard. Finally, to ensure “federal funding efficiently and effectively responds to the countercyclical nature of the Medicaid program,” Congress should consider federal matching formula changes to target variable state Medicaid needs and provide temporary increased federal assistance in response to national economic downturns.

CMS Schedules 2017 Meetings to Consider HCPCS Code Applications

CMS has just announced the dates for its annual meetings to discuss pending applications for new and revised HCPCS codes:

May 16 – 18, 2017: Drugs/Biologicals/Radiopharmaceuticals/Radiologic Imaging Agents

June 7 – 8, 2017: Durable Medical Equipment and Accessories/Orthotics and Prosthetics/Supplies/Other

Deadlines and instructions for speaker and general registration and submission of comments are set forth in a February 24 Federal Register notice. Additional information, include preliminary coding determinations, will be posted at least four weeks before each meeting at the CMS HCPCS website.

CMS Proposes Changes to Stabilize ACA Health Insurance Markets

At the same time Republican Congressional leaders are attempting to develop legislation to repeal and replace the Affordable Care Act (ACA), CMS has published a proposed rule that is intended to help stabilize the Affordable Insurance Exchanges for 2018. According to CMS, “[t]he health and competitiveness of the Exchanges, as well as the individual and small group markets in general, have recently been threatened by issuer exit and increasing rates in many geographic areas.” CMS notes that some issuers cite difficulties in “attracting and retaining healthy consumers necessary to provide for a stable risk pool that will support stable rates.” To help improve the risk pool and stabilize the individual and small group markets, CMS is proposing to: expand pre-enrollment verification of eligibility for individual market special enrollment periods; 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 metal levels of coverage; and shorten the 2018 open enrollment period for the individual market to end December 15, 2017 (instead of January 31, 2018) to require individuals to enroll in coverage prior to the beginning of the plan year. Furthermore, CMS proposes changes in network adequacy standards that are “are intended to affirm the traditional role of States in overseeing their health insurance markets while reducing the regulatory burden of participating in Exchanges for issuers.” The comment deadline is March 7, 2017.

CMS Teleconference to Discuss SNF Value-Based Purchasing Program (March 15)

On March 15, 2017, CMS is hosting a call to discuss the Skilled Nursing Facility (SNF) Value-Based Purchasing (VBP) Program, which is scheduled to begin in fiscal year 2019.  The call will focus on confidential quarterly feedback reports and implementation guidance.  Registration is required to participate in the call.

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.