Congressional Hearings, Markups Focus on Chronic Care, Drug Pricing, HHS Budget, Other Health Programs

House and Senate committees have held a number of hearings recently to focus on health policy topics, including the following:

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First Look at OIG’s FY 2017 Fraud Recoveries/Enforcement Activities

The HHS Office of Inspector General (OIG) expects its investigative recoveries during the first half of fiscal year (FY) 2017 to top $2.04 billion – which is down from $2.77 billion for the first half of FY 2016. During this period, the OIG reports 468 criminal actions against individuals or entities that engaged in crimes against HHS programs, along with 461 civil actions and 1,422 exclusions from participation in federal health care programs. Enforcement priorities during the first half of FY 2017 included prescription drug diversion, fraud in non-institutional settings, and grant fraud. The report also highlights major OIG audits of HHS programs, including reports covering quality of care, Medicare Part D spending, the hospital two midnight rule policy, and other Medicare and Medicaid payment policies.

OIG Estimates CMS Made $730 Million in Improper EHR Incentive Payments, Based on Small Sample of Claims

The HHS Office of Inspector General (OIG) estimates that CMS made $729.4 million in Electronic Health Incentive (EHR) payments to providers who did not meet meaningful use requirements from May 2011 to June 2014 – representing about 12% of the $6 billion in total EHR payments made during this period. This dramatic finding is based on a random sample of only 100 providers who received one or more payments during this timeframe; 14 providers in this sample received payments of $291,222 that did not meet the meaningful use requirements (e.g., insufficient attestation support, inappropriate reported meaningful use periods, or insufficiently used certified EHR technology). The OIG criticizes CMS for conducting “minimal documentation reviews of self-attestations, leaving the EHR program vulnerable to abuse and misuse of Federal funds.” The OIG also identified additional inappropriate EHR incentive payments made when eligible professionals (EPs) switched between Medicare and Medicaid incentive programs. The OIG recommends that CMS identify and recover inappropriate incentive payments, educate EPs on proper documentation requirements, and take additional steps to prevent inappropriate payments.

House Energy & Commerce Committee Unanimously Approves FDA Reauthorization, Public Health Bills

On June 8, 2017, the Energy and Commerce Committee voted unanimously to approve an amended version of HR 2430, the FDA Reauthorization Act (FDARA) of 2017. The bill would extend the FDA prescription drug, medical device, generic drug, and biosimilar biological product user fee programs, which are scheduled to expire at the end of September.  The bill also includes a variety of policy revisions, including provisions intended to improve the medical device inspection process and to establish a voluntary medical device safety/surveillance pilot project, and a “sense of Congress” resolution that the HHS Secretary and Congress should take steps to lower the cost of prescription drugs.

The Committee also voted to approve HR 1222, the Congenital Heart Futures Reauthorization Act; HR 2410, the Sickle Cell Disease Research, Surveillance, Prevention and Treatment Act; and HR 1492, the Medical Controlled Substances Transportation Act (to update the Drug Enforcement Administration registration process for mobile medical practitioners).

CMS Announces Summer Meetings on 2018 Clinical Lab Fee Schedule Update

CMS has scheduled two days of meeting this summer on updates to the Medicare clinical laboratory fee schedule (CLFS) for 2018. First, the public meeting on payment amounts for new or substantially revised HCPCS codes being considered for Medicare payment under the 2018 CLFS will be held on July 31, 2017. This meeting also will cover reconsideration requests regarding final determinations made last year on new test codes. If needed, the meeting will resume on August 1, 2017. In addition, the Clinical Diagnostic Laboratory Test (CDLT) Advisory Panel will hold a public meeting on August 1, 2017 to make recommendations regarding the test codes presented at the CLFS public meeting.

CMS Call: The IMPACT Act and Improving Care Coordination (June 20)

On June 20, 2017, CMS is hosting a Special Open Door Forum conference call to discuss implementation of the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act). According to a CMS announcement, the call will cover the goals of the IMPACT Act, RAND contract activities (including upcoming national testing), and identify opportunities for stakeholders to become involved over the next year.

CMS Reverses Course in Pre-Dispute Arbitration Agreement Ban

In a clear turnabout from its previous position, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule on June 5, 2017 that would lift the agency’s ban on pre-dispute arbitration agreements in the long term care (LTC) setting. By contrast, less than nine months earlier, CMS prohibited LTC facilities from entering into pre-dispute arbitration agreements with residents, conditioning admission to a facility on the execution of such agreements, or making a resident’s continuing right to remain at a facility contingent upon a post-dispute arbitration agreement.

The industry’s response to the ban was swift and resolute—on October 17, 2016, the American Health Care Association and a group of nursing homes filed a lawsuit in federal court seeking a preliminary and permanent injunction to prevent CMS from enforcing the ban on pre-dispute arbitration agreements. The U.S. District Court for the District of Mississippi granted the request for preliminary injunction on November 7, 2016, stalling enforcement of the final rule’s arbitration provisions. Continue Reading

CMS Extends Comment Period on SNF Case Mix Methodology ANPRM

CMS is extending the comment period on its May 4, 2017 advance notice of proposed rulemaking (ANPRM) discussing plans to revise the basis for the Medicare skilled nursing facility (SNF) prospective payment system (PPS).  As previously reported, the ANPRM set forth the outline of CMS’s plan to replace the current RUG-IV case-mix classification methodology with the Resident Classification System, Version I (RCS-I), as early as FY 2019.  CMS is extending the comment period from June 26, 2017 to August 25, 2017 in response to requests from national industry organizations for additional time to analyze this potentially far-reaching proposal.

As ACA Repeal/Replace Debate Drags On, Trump Seeks Advice on How to Make Improvements to Health Care Markets

In a tacit acknowledgement of the hurdles ahead for enactment of Affordable Care Act (ACA) repeal/replace legislation, the Trump Administration is soliciting suggestion for changes that could be made within the current legal framework to improve health insurance markets and meet Administration reform goals. In particular, the Department of Health and Human Services (HHS) is interested in potential changes to existing HHS rules to promote a “more patient-centered health care system that adheres to the key principles of affordability, accessibility, quality, innovation, and empowerment.” HHS highlights four potential areas for comments:

  1. Empowering patients and promoting consumer choice. For instance, what activities would help consumers choose a plan that best meets their needs? Which regulations currently reduce consumer choices regarding health care and health insurance financing?
  2. Stabilizing the individual, small group, and non-traditional health insurance markets. How can HHS stabilize the risk pool, promote continuous coverage, encourage younger and healthier consumers and other uninsured individuals to purchase plans, and reduce uncertainty and volatility?
  3. Enhancing affordability. How can HHS enhance the affordability of coverage for individual consumers and small businesses?
  4. Affirming the states’ regulatory authority to regulate the business of health insurance. Which HHS policies have unnecessarily interfered with states’ primary role in regulating health insurance markets?

Comments will be accepted until July 12, 2017.

CMS Expects Almost All Eligible Clinicians in Advanced APMs to Meet Qualifying APM Participant Status for 2017

CMS expects nearly 100% of eligible clinicians in Advanced Alternative Payment Models (APMs) to meet the Medicare Qualifying APM Participant (QP) standard for performance year 2017 and be eligible to receive a 5% APM incentive payment in 2019 under Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) rules. This projection is based on an analysis of Part B claims data from January – August 2016.  CMS expects to release formal initial QP status determinations later this year.

CMS Call to Focus on Changes to the Medicare Claims Appeal Process and Statistical Sampling (June 29)

CMS is holding a call on June 29, 2017 to discuss recent regulatory changes intended to streamline the Medicare administrative appeal processes, reduce the backlog of pending appeals, and increase consistency in decision-making across appeal levels. The call will also cover how certain appeals pending at the Office of Medicare Hearings and Appeals “may be eligible for more efficient adjudication through statistical sampling.”  Registration is required to participate in the call.

OIG Issues Top 25 Unimplemented Cost-Savings and Quality-Improvement Recommendations for HHS Programs

The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) has released the 2017 edition of its Compendium of Unimplemented Recommendations  (“Compendium”). In the Compendium, OIG identifies the top 25 unimplemented recommendations that HHS would need to prioritize in order to facilitate OIG’s recommendations on cost savings, program effectiveness, efficiency, and quality improvements in HHS programs. More than half of these top 25 recommendations focus on programs regulated by the Centers for Medicare & Medicaid Services (CMS), while others focus on programs regulated by other HHS agencies and states. The top priorities identified by the OIG in the Compendium include recommendations broadly aimed at:

  • Protecting beneficiaries from drug abuse, including opioid abuse
  • Ensuring program integrity, quality of care, and safety in programs that serve children
  • Reducing Medicaid fraud and patient harm, including in the delivery of personal care services
  • Reducing home health fraud
  • Promoting economy and efficiency in drug pricing and reimbursement

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President Trump’s Proposed FY 2018 Budget Spares Medicare, But Calls for Deep Medicaid Cuts & FDA User Fee Hikes

President Trump has released his FY 2018 budget proposal, which the Administration dubs “A New Foundation for American Greatness.”  The proposed budget – which received a generally chilly reception on Capitol Hill – offers a mixed bag for the health care industry.  On the one hand, a document summarizing the Department of Health and Human Services (HHS) provisions declares that, unlike other recent Administration budget proposals, the Trump budget “does not include any direct Medicare cuts.”  President Trump also calls for repeal of the Independent Payment Advisory Board (IPAB), which was established by the Affordable Care Act (ACA) to propose Medicare spending reductions if projected spending growth exceeds a specified economic target.  Furthermore, the President proposes to invest $1.3 billion over 10 years to address the Medicare appeals backlog and reform the appeals process.

On the other hand, the Administration proposes $250 billion in budget savings over 10 years as a result of repealing and replacing the ACA, although the budget commits to funding “necessary activities to continue to operate the Exchanges in 2018.”  The budget also would reduce net federal Medicaid spending by $627 billion over 10 years – on top of Medicaid savings included in the Administration’s ACA repeal plan.  The bulk of the Medicaid savings ($610 billion) would come from structural reforms that would allow states to choose between a per capita cap or a block grant beginning in FY 2020.  States would be given additional regulatory flexibility to “advance solutions that best serve their unique populations,” which might include provisions encouraging work and/or promoting personal responsibility.  Funding for the Children’s Health Insurance Program (CHIP) also would cut by $13.9 billion over 10 years.  Additionally, the Trump Administration proposes a new user fee that would fund provider survey and certification revisits resulting from deficiencies found during initial certification, recertification, or substantiated complaints surveys.  According to the HHS summary, this fee would give CMS “an increased ability to revisit poor performers, while creating an incentive for facilities to correct deficiencies and ensure quality of care.”  While the Administration expects a five month lag in collecting FY 2018 fees, it still projects $26 million in new user fee revenue in FY 2018.

With regarding to the Food and Drug Administration (FDA), the budget calls for $5.1 billion in total FY 2018 FDA funding.  This reflects an $854 million reduction in budget authority and a $1.3 billion increase in user fees so that such fees fund 100% of costs for premarket review and approval activities in the medical device, animal drug, animal generic, prescription and generic drug, and biosimilar programs.  The Budget also endorses reforms to “balance the demand for scientific rigor and access to reliable, life-saving cures” and provide “regulatory relief to the industry and speed the development of safe and effective medical products.”

Other notable provisions of the budget include:

  • An additional $70 million in 2018 to fund the Health Care Fraud and Abuse Control Program.
  • Updates to 340B drug pricing program rules intended to “increase transparency and improve program integrity.”
  • Unspecified medical liability reforms, which the Administration projects would save $31.8 billion over 10 years.
  • A $5.7 billion reduction in National Institutes of Health funding compared to FY 2017 levels and consolidation of the Agency for Healthcare Research and Quality (AHRQ) into NIH.

It is important to remember that the Administration’s budget is only a proposal; Congress ultimately determines the federal budget framework.

HRSA Pushes Back 340B Rule Implementation Until October 1, 2017

Changes to the rules governing calculation of the ceiling price and application of civil monetary penalties under the 340B drug pricing program will not be implemented until October 1, 2017 under a rule published by the Health Resources and Services Administration (HRSA) on May 19, 2017.  The rule initially was scheduled to go into effect March 6, 2017, but the Trump Administration had pushed that date back to May 22 while the additional delay was contemplated.  HRSA noted that while many commenters supported the October 1, 2017 date, some commenters opposed the delay due to concerns that it “would result in a lack of oversight, regulation and basic enforcements for manufacturers, which would continue to hamper the 340B Program and lessen covered entities’ ability to stretch scarce resources.”  The Trump Administration “disagrees that further delay of the final rule would result in a lack of oversight, regulation, and basic enforcements for manufacturers,” however, and instead continues to believe that delay “is necessary to provide adequate time for compliance and to mitigate implementation concerns.”

Medicare OPPS Advisory Panel to Meet August 21-22, 2017

CMS is holding its annual Advisory Panel on Hospital Outpatient Payment meeting on August 21-22 2017.  The purpose of the Panel is to advise HHS and CMS on ambulatory payment classification (APC) clinical integrity and weights and hospital outpatient therapeutic services supervision issues.  Topics that may be considered during the meeting include:

  • Whether procedures within an APC group are similar both clinically and in terms of resource use.
  • Packaging of OPPS services and costs, including the methodology and the impact on APC groups and payment.
  • Removing procedures from the inpatient-only list for payment under the OPPS.
  • Using single and multiple procedure claims data for APC group weights.
  • Technical issues concerning APC group structure.
  • The appropriate supervision level (general, direct, or personal) for individual hospital outpatient therapeutic services.

The panel will not consider comments related to the OPPS conversion factor, charge compression, cost report revisions, pass-through payments, correct coding, new technology applications, provider payment adjustments, supervision of hospital outpatient diagnostic services, or the types of practitioners that are permitted to supervise hospital outpatient services, nor will the panel recommend that services be designated as nonsurgical extended duration therapeutic services. Registration is required to participate in the meeting.


CMS Delays Start Date for Medicare Cardiac/Hip Fracture Episode Payment Model Until 2018; Parallel CJR Changes Also Pushed Back

The Centers for Medicare & Medicaid Services (CMS) is delaying until January 1, 2018 implementation of mandatory Medicare episode payment models (EPMs) for acute myocardial infarction, coronary artery bypass graft, and surgical hip/femur fracture treatment procedures furnished in designated geographic areas.  Conforming changes to the Comprehensive Care for Joint Replacement (CJR) program also are being pushed back to 2018, as is the start of a new Cardiac Rehabilitation (CR) Incentive Payment Model.  These policies initially were scheduled to be implemented July 1, 2017, but the Trump Administration subsequently postponed them until October 1, 2017.

In announcing the new 2018 start date, CMS again raised the possibility that it will propose additional modifications to the programs; indeed, a Trump Administration proposed rule to revise the EPM, CJR, and CR programs is currently under Office of Management and Budget review.  Thus, the delay until 2018 is intended to ensure program participants have “a clear understanding of the governing rules before episodes begin and have the opportunity to take additional steps to adjust to any potential changes that maybe effectuated.”

Deadline Extended: Hospitals and Other Non-Federal Entities Given Another Year to Comply with New OMB Procurement Standards

The Office of Management and Budget (OMB) recently announced that it is giving hospitals and other non-federal entities that receive federal assistance an additional year to comply with revised procurement standards for grants and federal funding. While the deadline has been extended until December 25, 2017, federal grant recipients should be taking steps to ensure compliance with the OMB standards before that date.

For more information, please view our Global Regulatory Enforcement Law Blog post on this topic, Non-Federal Entities Receive Extra Year to Comply with Overhauled OMB Procurement Standards for Federal Assistance Agreements authored by Reed Smith partner, Holly Roth and associate Sarah Wronsky.

CMS Proposes 1% Update to Medicare IRF PPS Payments for FY 2018

CMS has published a proposed rule to establish FY 2018 Medicare prospective payment system (PPS) rates for inpatient rehabilitation facility (IRF) services.  CMS estimates that IRF PPS payments would increase by 1.0% overall ($80 million) under the proposed rule compared to FY 2017 levels.  As mandated by the  Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), CMS proposes a 1.0% increase factor for FY 2018, although an IRF that does not submit required quality data to CMS is subject to a 2.0 percentage point decrease in its annual update.  The proposed FY 2018 standard payment conversion factor is $15,835, up from $15,708 in FY 2017.  The proposed fixed-loss amount for high cost outlier cases is $8,656, compared to $7,984 in FY 2017.  CMS also proposes updates to the IRF wage index and case-mix group relative weights in a budget-neutral manner.  As in FY 2017, CMS is not proposing changes to facility-level adjustment factors; CMS will continue to monitor the effects of FY 2014 adjustments. 

CMS proposes a number of refinements to how facilities demonstrate compliance with the patient classification requirement that at least 60% of a facility’s patient population have one of 13 qualifying conditions.  Specifically, CMS proposes to revise the lists of ICD–10–CM diagnosis codes that are used to determine presumptive compliance and provide for automatic annual updates to presumptive methodology diagnosis code lists.  CMS also solicits public comments on the 60% rule, including the list of conditions, to assist CMS “in generating ideas and information for analyzing refinements and updates to the criteria used to classify facilities for payment under the IRF PPS.” 

Furthermore, CMS proposes to make a number of changes to the IRF PAI and eliminate the 25% payment penalty that applies to late IRF patient assessment instrument (IRF-PAI) submissions.  In addition, CMS proposes revisions to the quality measures under the IRF quality reporting program.

Finally, as in other recent proposed Medicare payment rules, CMS invites suggestions for ways CMS can improve the health care delivery system and decrease burdens on providers and patients.

The proposed rule was published on May 3, 2017; the comment deadline is June 26, 2017.

CMS Gives States Three More Years to Comply with HCBS Rules

CMS has announced that states may take an additional three years — until March 17, 2022 — to demonstrate compliance with the Medicaid home and community based services (HCBS) settings criteria established in a January 16, 2014 final rule.  In a memo to states announcing this extension, CMS cites the “difficult and complex nature” of the transition and CMS’s interest in helping states “ensure compliance activities are collaborative, transparent and timely.”

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.