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As previously reported, the Department of Health and Human Services has published highly anticipated proposed changes to align the regulations under the Physician Self-Referral Law, the federal Anti-Kickback Statute, and the Civil Monetary Penalties Law with value-based health care arrangements.  Reed Smith is providing a series of client alerts and teleseminars that analyze key…

The White House Office of Management and Budget (OMB) is reviewing a long-awaited Trump Administration proposed rule to amend the safe harbors to the Anti-Kickback Statute (AKS) and exceptions to the beneficiary inducement provisions of the Civil Monetary Penalty (CMP) statute to better support coordinated care.  The proposed rule presumably builds on the related request…

The Office for Civil Rights (OCR) is requesting public input on reforms to Health Insurance Portability and Accountability Act (HIPAA) privacy and security rules to promote care coordination and the health system’s transformation to value-based health care while protecting the privacy and security of individuals’ protected health information (PHI).  Specifically, in a request for information…

As part of the Trump Administration’s fall regulatory agenda, the Department of Health and Human Services (HHS) emphasizes its commitment to “reducing and streamlining its regulations and improving the transparency, flexibility, and accountability of its regulatory processes.”  One of the specific deregulatory initiatives noted is a future proposed rule to remove outdated Medicare and…

Congressional panels continue to focus on federal health care policy topics, including cost, quality, and program integrity issues. Recent hearings have included the following:

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The House Ways and Means Health Subcommittee has scheduled a July 17, 2018 hearing on “Modernizing Stark Law to Ensure the Successful Transition from Volume to Value in the Medicare Program.”  In announcing the hearing, Subcommittee Chairman Peter Roskam stated that “the lack of Stark modernization is a clear barrier to reforms that reward better…

The Centers for Medicare & Medicaid Services (CMS) has announced a “new direction” for the CMS Innovation Center that is intended to “promote patient-centered care and test market-driven reforms.” The goal of these reforms – which may be tested on a smaller scale than current innovation models – is to “empower beneficiaries as consumers, provide…

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 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 developed a variety of Medicare value-based payment models that tie payments to quality and efficiency metrics, and the importance of such models to physicians will increase under the new Quality Payment Program. The Government Accountability Office cautions, however, that small and rural physician practices face a number of unique challenges when participating in value-based payment models.  A recent GAO report catalogues five particular areas of concern for small and rural physician practices, based on a literature review and stakeholder interviews:…
Continue Reading GAO Highlights Barriers to Small & Rural Provider Participation in Medicare Value-Based Payment Models

CMS is announcing changes to the Medicare Advantage Value-Based Insurance Design (MA-VBID) model, which is testing how MA plans can use health plan design elements (e.g., supplemental benefits, disease management, or reduced cost sharing) to encourage enrollees with specified chronic conditions to use high-value clinical services or high-value providers that improve quality of care while…

CMS has published its final rule to update Medicare skilled nursing facility (SNF) PPS rates and policies for FY 2017. CMS projects that the final rule will increase overall payments to SNFs by $920 million, or 2.4%, compared to FY 2016 levels (and compared to the $800 million/2.1% increase forecast in the proposed rule). The final update is based on a 2.7% market basket increase that is reduced by a 0.3 percentage point multifactor productivity adjustment.
Continue Reading CMS Adopts Final SNF PPS Rates and Policies for FY 2017

CMS has received questions from manufacturers regarding whether price concessions and services offered to payers within Value-Based Purchasing (VBP) arrangements in the pharmaceutical marketplace could impact their drug’s Medicaid best price and increase their Medicaid rebate obligations.  In recent guidance, CMS notes that, in general, prices included in best price include all prices, such…

CMS has published its proposed rule to update Medicare skilled nursing facility (SNF) PPS rates and policies for FY 2017. CMS projects that the proposed rule would increase overall payments to SNFs by $800 million, or 2.1%, compared to FY 2016 levels. This projected update is based on a proposed 2.6% market basket increase that would be reduced by a 0.5 percentage multifactor productivity adjustment. CMS does not propose making a forecast error correction for FY 2017, since the difference between its FY 2015 estimated market basket index increase (2.5 percentage points) and the actual change in the market basket (2.3 percentage points) did not exceed the 0.5 percentage point threshold to trigger an adjustment.…
Continue Reading CMS Releases Proposed Rule to Update SNF PPS Rates and Policies for FY 2017

CMS has released a complex and controversial plan – the Part B Drug Payment Model — to test new Medicare payment methods for certain Part B drugs to determine whether alternative payment designs will reduce Medicare expenditures while preserving or enhancing the quality of care provided to Medicare beneficiaries. CMS suggests that the current Medicare Part B drug reimbursement framework — based on the drug’s average sales price (ASP) plus 6 percent — provides a financial incentive to prescribe more expensive drugs without encouraging high-value care. To remove this incentive and promote value-based pricing, CMS is proposing to test a laundry list of reforms in selected geographic areas, such as basing payment on ASP plus a flat fee or incorporating a variety of value-based strategies used in many commercial plans.

The Part B Drug Payment Model (Model) would apply to the majority of drugs paid under Part B, including: drugs and biologicals with HCPCS codes that are nationally priced under section 1847A of the Social Security Act, including ASP, Wholesale Acquisition Cost (WAC), and Average Manufacturer Price (AMP) -based payment amounts; drugs and biologicals paid separately under the hospital outpatient prospective payment system (including pass-through drugs); non-infused drugs furnished by durable medical equipment (DME) suppliers; and intravenously- and subcutaneously-administered immunoglobulin G.  CMS proposes to exclude some categories of drugs, however, such as:  contractor-priced drugs; influenza, pneumococcal pneumonia and hepatitis B vaccines; drugs infused with a covered item of DME (excluded during phase 1 only “so that DME policy can focus on issues related to DME and so that the model does not interfere with decisions related to the inclusion or exclusion of these drugs in DME competitive bidding”); separately billable End-Stage Renal Disease drugs; blood and blood products; and certain drugs in short supply.  All providers and suppliers furnishing Part B drugs that are included in the Model will be required to participate (although in some cases the provider/supplier will continue to receive payment of ASP + 6 percent as part of a control group).
Continue Reading CMS Proposes Testing Medicare Part B Drug Payment Reforms to Promote Value

On February 9, 2016, the Obama Administration released its proposed fiscal year (FY) 2017 budget, which contains significant Medicare and Medicaid reimbursement and program integrity legislative proposals – including $419 billion in Medicare savings over 10 years. These proposed policy changes would require action by Congress, and Republican Congressional leaders have already voiced general…

CMS published its final CY 2016 Medicare Home Health Prospective Payment System (PPS) rule on November 5, 2015.  CMS projects that overall Medicare payments to home health agencies (HHAs) will be reduced by 1.4% — or $260 million – in CY 2016 compared to 2015 levels as a result of the policies finalized in the rule. The final 2016 home health payment update is 1.9%, reflecting a 2.3% home health market basket update that is reduced by a 0.4% multifactor productivity adjustment. This update is offset, however, by: (i) a 0.97% reduction to account for estimated case-mix growth unrelated to increases in patient acuity (this “nominal case-mix growth” adjustment also will be applied in CYs 2017 and 2018), and (ii) a -2.4% rebasing adjustment (the third year of a four-year phase-in). The final CY 2016 national, standardized 60-day episode payment rate is $2,965.12; the rate for an HHA that does not submit required quality data is reduced by 2 percentage points to $2,906.92. …
Continue Reading Medicare Home Health PPS Payments to Fall by $260 Million in 2016