September Update - 9/2016

CMS Announces MACRA Start Date

In a blog post, Acting Administrator of CMS Andy Slavitt announced that MACRA would be implemented starting January 1, 2017. The blog post is below. The ACOS will be working on programing and other support for our members as the implementation date approaches. As the baby boom generation ages, 10,000 people enter the Medicare program each day. Facing that demand, it is essential that Medicare continues to support physicians in delivering high-quality patient care. This includes increasing its focus on patient outcomes and reducing the obstacles that make it harder for physicians to practice good care. The bipartisan Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) offers the opportunity to advance these goals and put Medicare on surer footing. Among other policies, it repeals the Sustainable Growth Rate formula and its annual payment cliffs, streamlines the existing patchwork of Medicare reporting programs, and provides opportunities for physicians and other clinicians to earn more by focusing on quality patient care. We are referring to these provisions of MACRA collectively as the Quality Payment Program. We received feedback on our April proposal for implementing the Quality Payment Program, both in writing and as we talked to thousands of physicians and other clinicians across the country. Universally, the clinician community wants a system that begins and ends with what’s right for the patient. We heard from physicians and other clinicians on how technology can help with patient care and how excessive reporting can distract from patient care; how new programs like medical homes can be encouraged; and the unique issues facing small and rural non-hospital-based physicians. We will address these areas and the many other comments we received when we release the final rule by November 1, 2016. But, with the Quality Payment Program set to begin on January 1, 2017, we wanted to share our plans for the timing of reporting for the first year of the program. In recognition of the wide diversity of physician practices, we intend for the Quality Payment Program to allow physicians to pick their pace of participation for the first performance period that begins January 1, 2017. During 2017, eligible physicians and other clinicians will have multiple options for participation. Choosing one of these options would ensure you do not receive a negative payment adjustment in 2019. These options and other supporting details will be described fully in the final rule.

First Option: Test the Quality Payment Program

With this option, as long as you submit some data to the Quality Payment Program, including data from after January 1, 2017, you will avoid a negative payment adjustment. This first option is designed to ensure that your system is working and that you are prepared for broader participation in 2018 and 2019 as you learn more.

Second Option: Participate for part of the calendar year

You may choose to submit Quality Payment Program information for a reduced number of days. This means your first performance period could begin later than January 1, 2017 and your practice could still qualify for a small positive payment adjustment. For example, if you submit information for part of the calendar year for quality measures, how your practice uses technology, and what improvement activities your practice is undertaking, you could qualify for a small positive payment adjustment. You could select from the list of quality measures and improvement activities available under the Quality Payment Program.

Third Option: Participate for the full calendar year

For practices that are ready to go on January 1, 2017, you may choose to submit Quality Payment Program information for a full calendar year. This means your first performance period would begin on January 1, 2017. For example, if you submit information for the entire year on quality measures, how your practice uses technology, and what improvement activities your practice is undertaking, you could qualify for a modest positive payment adjustment. We’ve seen physician practices of all sizes successfully submit a full year’s quality data, and expect many will be ready to do so.

Fourth Option: Participate in an Advanced Alternative Payment Model in 2017

Instead of reporting quality data and other information, the law allows you to participate in the Quality Payment Program by joining an Advanced Alternative Payment Model, such as Medicare Shared Savings Track 2 or 3 in 2017. If you receive enough of your Medicare payments or see enough of your Medicare patients through the Advanced Alternative Payment Model in 2017, then you would qualify for a 5 percent incentive payment in 2019. However you choose to participate in 2017, we will have resources available to assist you and walk you through what needs to be done. And however you choose to participate, your feedback will be invaluable to building this program for the long term to achieve outcomes that matter to your patients. We appreciate the sincere and constructive participation in the feedback process to date and look forward to advancing step-by-step in that same spirit. We look forward to releasing the final details about the program this fall. Most importantly, we look forward to further engagement with physicians and other clinicians toward our shared goal of the highest quality of care and best outcomes for patients. – The CMS Blog, Plans for the Quality Payment Program

Preparing Health Policy Options

Congress will reconvene next week following a seven-week summer recess—and there is much work to be done. Though scheduled to be in session for four weeks before recessing again until after the election, there is speculation that even this abbreviated schedule could be cut short. Before Oct. 1, Congress must pass several bills to fund federal agencies or, more likely, enact a temporary continuing resolution to extend government funding until after the election. Among the top appropriations-related priorities for medicine is the need to provide funds to address the opioid crisis and the Zika virus outbreak. While Congress has been quick to publicize passage of the Comprehensive Addiction and Recovery Act earlier in the summer, none of the newly authorized programs in the bill will receive funding until separate appropriations legislation is enacted. Congress must also return to consideration of legislation to provide support for public health efforts to address the Zika threat, including support for prevention, mosquito control and vaccine research and development. In addition to appropriations work, Congress is also likely to face renewed efforts to force action on legislation to address gun violence, such as closing loopholes in the current background check system. Additionally, while the House of Representatives acted to make important reforms to the mental health system, legislation remains pending in the Senate.

Fight Over Kentucky Medicaid Overhaul

Kentucky Gov. Matt Bevin submitted his plan to overhaul coverage for the 400,000 low-income residents who qualified under Medicaid expansion, but it’s unclear if the Obama administration will approve it or how strong the political blowback would be for ending the program. On Aug. 24, Bevin, a Republican, turned in a long-awaited waiver application to the federal Department of Health and Human Services. The plan would provide stricter rules for beneficiaries who qualify but many of the proposed items are likely to be met with skepticism from the Obama administration. If the federal government does not budge on major conservative priorities such as work requirements and lock-out periods, Bevin has threatened to pull the plug on expansion altogether. Bevin has been keen to overhaul the program with a more conservative edge. His proposed changes include requiring beneficiaries to work or volunteer, a request that the Obama administration has denied for multiple states with similar wishes. Advocates have been troubled by the Bevin administration’s call for six-month lockout periods for beneficiaries who fail to make on-time payments or fill out Medicaid paperwork correctly. The plan also would allow consumers to use health savings accounts and receive dental and vision care if they practice specific healthy habits.

Hospital Group Sees Kickback Risk in Medicare Payment Change

Medicare officials are implementing an order to stop paying higher rates for care provided at new satellite doctors’ offices affiliated with hospitals. Last year’s budget deal (PL 114-74) directed Medicare to instead reimburse the new off-campus offices under the less-generous physician fee schedule or reimbursement rates for ambulatory surgical centers. Existing off-campus departments could continue to bill under the hospital outpatient rule. Lawmakers had the backing of many policy analysts for a provision that addresses a longstanding concern about unequal Medicare pay. The federal health program for senior citizens and the disabled could pay $492 for an echocardiogram performed in a doctor’s office classified as a hospital outpatient facility, but only $228 for the same service in a physician-owned office, the Medicare Payment Advisory Commission said in a report to Congress. The Congressional Budget Office estimated $9.3 billion in savings over a decade from including the provision on hospital outpatient departments in the budget deal. The newer satellite offices thus would face administrative limbo, with CMS signaling that it may develop a new pay system for them after 2017. The hospital outpatient departments (HOPDs) that opened, relocated or changed service lines after Nov. 2, 2015, also would assume substantial new legal risks, including the potential cost of defending against whistleblower suits.

Medicare Says $466 Million Saved in Alternative Pay Programs

Federal officials highlighted token Medicare savings as evidence of the success of alternative reimbursement tests, which are meant to lay the groundwork for a broader overhaul of how the nation’s single largest purchaser of health care pays for services. Savings rose to $466 million last year from $411 million the previous year from certain programs meant to tie Medicare payments to judgments about the quality of care. These are the combined results of 392 accountable care organizations (ACOs) participating in Medicare’s Shared Savings program and the dozen in what’s known as the Pioneer Accountable Care model. The savings represent only a sliver of Medicare’s roughly $600 billion in annual spending. These programs are among the most advanced tests done of alternative payment models by CMS. The results seen to date may yield clues about how doctors and other medical professionals and health organizations will fare as Medicare increasingly ties its payments to judgments about the quality of care provided. The agency is in the midst of creating a new framework for assessing medical care that was mandated by last year’s overhaul of Medicare physician payment. CMS also is working on a new unified payment approach for what’s called post-acute care, a roughly $60 billion expense for Medicare to cover services provided to people recovering after strokes and serious illnesses and surgeries.

Aetna Withdraws Obamacare Exchanges in 11 States

Health insurer Aetna Inc. announced late Monday it will largely withdraw from state exchanges set up under the 2010 health care overhaul, citing financial losses it attributes in part to a controversial premium stabilization program the law established. Aetna’s exodus from 11 state-based exchanges comes after a more dramatic 30-state withdrawal by UnitedHealth, the nation’s largest health insurer. The departures will reduce the market competition that authors of the health law. The decisions moreover underscore just how volatile the individual insurance market remains, three years after the exchanges were launched. Major health plans including Anthem Inc. and Humana Inc. have said that they, too, expect losses but have not said they plan to withdraw. Other insurers such as Cigna Corp. and Medicaid-focused plans like Molina Healthcare and Centene Corp. have said they are profiting from that part of their business. Earlier this year, even Aetna said it saw participation as a good investment.

Medicaid Expansion Didn’t Alter Overall ER Use, Study Finds

The health care overhaul’s Medicaid expansion didn’t significantly alter the overall use of hospital emergency rooms, according to a new Health Affairs study that suggests newly insured individuals don’t visit ERs more frequently. The study found that from 2012 through 2014, overall emergency department use differed by less than 1 percent between states that expanded their Medicaid programs and those that opted out. Some 17 million people gaining coverage through private insurance and expanded Medicaid, the joint health insurance for the poor and disabled. Researchers used monthly emergency department data from 478 hospitals. The authors noted some limitations, including that the number of hospitals assessed only represented about 10 percent of ERs nationwide. They also were not capable of distinguishing which patients had new insurance. And they were unable to track the longe-term effects of expansion. Emergency rooms in expansion states saw a 25.5 percent increase in Medicaid beneficiaries between 2012 and 2014 while non-expansion states saw a 1.7 percent increase. Among private insurance policy holders, researchers found a 1.3 decrease in emergency room use in expansion states while non-expansion states saw a 7.1 percent increase. Between expansion and non-expansion states there was a 6.7 percent overall decrease in visits paid by private insurance. Researchers said that may have been attributable to some policyholders becoming Medicaid-eligible under expansion and moving into the program.

Surgeon General Letter on Opioid Epidemic

The Office of the Surgeon General is sending a letter on the opioid epidemic to nearly 2.3 million physicians and other health professionals. The letter is a call to action on safe prescribing education, access to treatment for opioid use disorder, and compassionate care without stigma. The letter is available here.

August Update - 8/2016

Please Take the Global Surgery Payment Survey Today!

On July 15, 2016, the Centers for Medicare & Medicaid Services (CMS) announced a unilateral decision to implement a new sweeping mandate to collect data about global surgery services. According to the proposal (pp. 46192-46200), beginning just five months from now on Jan. 1, 2017, surgeons providing 10- and 90-day global surgery services to Medicare patients will be required to report a whole new set of codes to document the type, level and number of pre- and post-operative visits furnished during the global period for every global surgery procedure provided to Medicare beneficiaries. Under this system, surgeons would be required to use a new set of G-codes to report on each 10-minute increment of services provided. In an effort to demonstrate to CMS the enormity of this task and its impact on patient care delivery, the surgical community has launched this survey to collect information that will help with our advocacy efforts opposing this overly burdensome and unfunded data collection effort. Please take a few moments to complete this brief survey. Click here to access the survey or paste the following hyperlink into your web browser:

CMS at AOA House of Delegates

The CMS Acting Administrator Andy Slavitt spoke to the American Osteopathic Association House of Delegates. He highlighted his normal talking points: That administrators know they’ve lost the “hearts and minds” of doctors, and MACRA’s simplified reporting and other changes will help win them back. “Our job in implementing MACRA is to design policies that support the Cornerstones of the world in providing the care they think is best,” Slavitt said. His full speech is available here. CMS Releases Orthopedics Test Through Heart Model The Centers for Medicare and Medicaid Services included an expansion of an existing orthopedic payment test in the proposal for a new cardiac bundled payment released last week. Medicare in April kicked off its five-year Comprehensive Care for Joint Replacement Model, which compels participation for most hospitals in 67 regions of the country. CJR pegs future reimbursement to judgments about how well people enrolled in Medicare fare after hip and knee replacements. The new proposal would add other surgical treatments used for hip and femur fractures, known as arthroplasty and fixation, or “pinning.” With this change, CMS said the orthopedic payment project would cover “all surgical treatment options” for hip fractures.

Senate Bill Calls for Study of Surgeon Shortage Areas

Senator Charles Grassley (R-IA) and Senator Brian Schatz (D-HI), introduced S. 3166, legislation that would direct the Secretary of the U.S. Department of Health and Human Services (HHS) to conduct a study on the designation of Surgical Health Professional Shortage Areas (SHPSAs). The Ensuring Access to General Surgery Act of 2016 and its House companion bill, H.R. 4959, introduced in April by Representative Larry Bucshon, MD, FACS (R-IN), and Representative Ami Bera, MD (D-CA), specify that the study should include recommendations for legislative or administrative action regarding a general SHPSA designation. Designating a SHPSA would provide the Health Resources and Services Administration (HRSA) of HHS with a valuable tool to increase patient access to surgical care. Evidence indicates that the U.S. is experiencing a current and continued shortage of surgeons who are available to serve the needs of the nation’s patient population. A shortage of general surgeons is a clear component of the crisis in the health care workforce. Health Professional Shortage Area (HPSA) designations already exist for primary care, mental health, and dental care professionals. HRSA defines HPSAs to determine whether an area’s patient population is underserved.

CMS Publishes 2015 Open Payments Data

The Centers for Medicare & Medicaid Services (CMS) published Open Payments data from 2015 for physicians. According to the CMS Open Payments website, in 2015 health care industry manufacturers reported $7.52 billion in payments and ownership and investment interests to physicians and teaching hospitals. This amount encompasses 11.9 million records for 618,931 physicians and 1,116 teaching hospitals. Payments were broken down into three major categories: general/non-research related, $2.60 billion; research payments, $3.89 billion; and ownership or investment interests held by physicians or their immediate family members, $1.03 billion. In comparing the 2015 program year with the 2014 program year, charitable contributions increased by approximately 120 percent, while honoraria decreased by approximately 50 percent, and gifts decreased by more than 30 percent. The Open Payments website also comprises newly submitted and updated payment records for the 2013 and 2014 reporting periods. Open Payments, also referred to as the Sunshine Act, was established under the Affordable Care Act and seeks to increase transparency of the financial relationships between the medical industry and health care providers. Applicable manufacturers of drugs, medical devices, and biologicals are required to track payments or other transfers of value made to physicians and teaching hospitals, and report these data to CMS annually. The program relies on voluntary participation by physicians and teaching hospitals to review the information submitted by these companies.

Medicare Proposes Bundled Payment Test for Cardiac Cases

The Department of Health & Human Services (HHS) proposed new models that continue the Administration’s progress to shift Medicare payments from quantity to quality by creating strong incentives for hospitals to deliver better care at a lower cost. These models would reward hospitals that work together with physicians and other providers to avoid complications, prevent hospital readmissions, and speed recovery. The proposal creates new bundled payment models for cardiac care and an extension of the existing bundled payment model for hip replacements to other hip surgeries. Also, the proposal creates a new model to increase cardiac rehabilitation utilization. The rule proposed pathway for physicians with significant participation in bundled payment models to qualify for payment incentives under the proposed Quality Payment Program. The proposed bundled payment models for cardiac care includes medical as well as surgical services, which will offer new information on how these models affect quality and costs. Heart attacks and strokes cause one in three deaths and result in in over $300 billion of health care costs each year.

Justice Department Blocks Mergers of Major Health Insurers

The Justice Department is seeking to halt further health insurance industry consolidation by trying to block a pending merger between Anthem Inc. and Cigna Corp. and Aetna Inc.’s proposed acquisition of Humana Inc. The Justice Department brought suit in federal court to prevent Anthem from pursuing its agreement last summer to buy Cigna for about $54.2 billion, a move made within a month of Aetna reaching a deal to acquire Humana for $37 billion. While the insurers immediately said that they plan to fight the lawsuit, businesses in these situations typically embark on an analysis of whether it makes more financial sense to scrap the deals.

CMS Mulling Physician Payment Delay, Shorter Reporting Periods

Centers for Medicare and Medicaid Services Acting Administrator Andy Slavitt signaled a willingness to delay the start date for the program at a Senate Finance Committee. Lawmakers in both parties expressed concerns in the hearing about how small physician practices will fare under the new rules. “We remain open to multiple approaches,” Slavitt said. “Some of the things that are on the table, that we’re considering — they include alternative start dates, looking at whether shorter periods could be used, and finding other ways for physicians to get experience with the program before the impact of it really hits them.” Slavitt wasn’t specific on how long a delay the agency was considering. Currently, doctors face a potential 4 percent pay cut in 2019 if they perform poorly on the program’s quality reporting requirements next year. Implementing the overhaul — a system designed to replace the much maligned Sustainable Growth Rate formula — is among the Obama administration’s biggest remaining health priorities. The changes are designed to transition Medicare away from fee-for-service care and toward paying for quality. But the program’s proposed rules were heavily criticized by doctors in small and solo practices. An Obama administration analysis showed that about 87 percent of those doctors would face Medicare payment reductions under the new program, compared with 18 percent of doctors in practices with more than 100 physicians. Slavitt also said the agency hopes to make so-called alternative payment models more attractive to physicians — especially those that expect doctors to lower costs and improve quality. But he added that neither physicians nor policymakers should get too caught up with the details of different alternative payment models, but instead focus on the physician and the patient relationships. The models should “work in the background” within that relationship, he said. The agency is also considering changes to the threshold that would keep doctors who only see a few Medicare patients from being subject to the new reporting requirements.

July Update - 7/2016

CMS Doctor Pay Rule Timeline May Allow for Few Major Changes

A November deadline for creating a new Medicare payment system for doctors may leave federal officials little time to significantly change a draft proposal. The agency is required by law to finalize the rules by November if officials intend to implement them when the new payment year begins in January. CMS unveiled the proposed rules in April. Andy Slavitt, the acting administrator for CMS, on Monday tweeted that more than 3,100 responses had been submitted before a Monday deadline. Many physicians appealed to the agency to shorten the reporting period for doctors who will be covered by the most common reimbursement approach, the new merit-based incentive payment system. Instead of looking at a full year of data from doctors, a six-month period could be used, she said. The rule will carry out the mandate set in last year’s overhaul of physician pay (PL 114-10), known as the Medicare Access and CHIP Reauthorization Act. A key concern with MACRA has been helping doctors in small practices adapt to the new reporting requirements. Groups representing doctors have sought to persuade CMS to reconsider the standards for qualifying for alternative payment models, which may prove more profitable in the long term for doctors.

CMS Releases Proposed CY 2017 Medicare Physician Fee Schedule

The Centers for Medicare & Medicaid Services (CMS) released the proposed 2017 Medicare Physician Fee Schedule (MPFS) July 7. The rule includes essentially no change to the total payment for general surgery services next year and proposes a significant data-collection effort related to global codes. Two years ago, CMS finalized a policy that would have transitioned all 10- and 90-day global codes to 0-day codes. However, Congress intervened and prohibited the agency from implementing that policy but required CMS to collect data on global codes starting in 2017 and to use those data to revalue these codes starting in 2019. In this proposed rule, CMS sets forth a plan for data collection that would require all practitioners who provide 10- and 90-day global services to report data on these services to the agency CMS also proposes values for new moderate sedation codes. The agency said it appeared that practice patterns for certain endoscopic procedures were changing and that anesthesia was increasingly being reported for these procedures even though payment for these services was automatically included in payment to the physician furnishing the primary services. As a result, the agency proposes separate codes for moderate sedation. In addition, the rule includes quality-related proposals, such as updates to the Medicare Shared Savings Program, which facilitates coordination and cooperation among providers. Providers and hospitals may participate in the Shared Savings Program by creating or participating in an Accountable Care Organization (ACO). CMS proposes updates to ACO quality reporting measures that support alignment with the Quality Payment Program.

Medicare’s Hospital Fund Dire Report

Medicare’s hospital insurance trust fund will draw in enough revenue to cover its expenses only through 2028, the trustees said in their annual report released Wednesday. Last year, trustees projected that these hospital expenses could be covered through 2030. The trustees urged Congress to address the looming shortfall, noting that new legislation would be needed to allow transfers from the Treasury’s general fund to address the shrinking hospital fund. The hospital trust fund is considered a bellwether for the challenges facing the United States as baby boomers age into their retirement years. The trustees on Wednesday also reported that Social Security’s retirement and disability trust fund reserves are projected to be exhausted in 2034, the same year projected in last year’s report. Congress has not taken many actions in recent years to address the programs’ long-term funding. Medicare’s total expenses might reach $1.29 trillion in 2026, up from $ 683.2 billion this year, according to what the trustees term intermediate estimates. The mandatory spending involved in caring for senior citizens and the disabled are expected to crowd out other national priorities in future budget battles. The report could signal another congressional battle over raising the premiums that some people pay for Medicare Part B services, such as routine visits to doctors. The standard monthly premium may rise from $121.80 this year to $149.00 next year. The trustees in their 2015 report had predicted the Part B premium would rise to $159.30 for 2016, but Congress acted through last year’s budget deal to lower it. The projected 2017 hike would apply for only about 30 percent of people on Medicare, because the majority of beneficiaries would be protected by a “hold harmless” provision that keeps their premium increases in check. Under the provision, increases in Medicare Part B premiums can’t exceed the dollar increase in Social Security benefits. The cost-of-living adjustment for Social Security next year could be 0.2 percent, meaning about 70 percent of people would see only small increases in their Medicare payment, the trustees said. Among those potentially in line for a higher 2017 Medicare premiums are people enrolling in Part B for the first time, those that do not receive a Social Security benefit and people who qualify for both Medicare and the Medicaid program due their low incomes.

CMS Releases 2017 OPPS/ASC Proposed Rule

The Centers for Medicare & Medicaid Services (CMS) on July 6 released the proposed 2017 Outpatient Prospective Payment System (OPPS)/Ambulatory Surgical Center (ASC) payment rule. CMS projects that the OPPS proposals will lead to a reimbursement increase of 1.55 percent for 2017 for services provided in most hospital outpatient departments. CMS proposes that certain items and services furnished by off-campus provider-based departments would not be covered for OPPS payment. CMS also proposes new measures for the ASC Quality Reporting Program and Outpatient Quality Reporting Program, including five measures that are collected using the Outpatient and Ambulatory Surgical Center Consumer Assessment of Healthcare Providers and Systems survey. The patient experience-of-care survey assesses patients’ access to care, interactions with facility staff, and overall experience at the facility. Under the ASC payment system, CMS is projecting an increase of 1.2 percent in 2017 for services provided under the ASC payment system. CMS also calls for adding eight procedures to the ASC list of covered surgical procedures. In addition, CMS proposes to reduce the reporting period for demonstrating meaningful use (MU) of an electronic health record system in 2016 for previous participants in the MU program from a full year of reporting to any continuous 90-day period.

House Republicans Offer Details on Obamacare Replacement

House Republican leadership released a sweeping manifesto for overhauling the health care system, one that focuses on repealing the 2010 health care law but also hints at GOP priorities should Democrats win the election. The 37-page document contains a variety of proposals that have been floated before. Many, such as a tax credit for people purchasing health insurance in the individual market, aim to replace the features of the 2010 health care law designed to reduce the uninsured rate and improve access to coverage. But the document also includes proposed changes to Medicare, Medicaid, malpractice law and even medical research funding. The plan would fully repeal the health care law’s individual and employer coverage mandates and their associated penalties. It would keep popular provisions, such as its requirement that health plans keep young people on their parents’ plans until the age of 26 and the ban on insurers kicking sick consumers off their plans. Unlike the tax credits offered under the health law, these would be a flat, monthly credit available regardless of income. Older Americans, whose health costs are usually higher, would get larger credits. The proposal would forbid insurers from discriminating on the basis of pre-existing conditions, highlighting a requirement that insurers not increase costs for anyone who maintains continuous coverage under a health plan. They also propose $25 billion in funding to strengthen state-based high-risk pools for consumers otherwise priced out of the individual market, in which premiums would be capped. Under the new Republican plan, insurers would get regulatory relief from many of the law’s requirements related to essential health benefits, and they’d also get to charge older Americans up to five times more than younger Americans for their insurance. The health law sets that ratio at three. The proposal relies on the expansion of tax-preferred Health Savings Accounts, which are usually coupled with high- deductible health plans. It would expand regulations that let insurers sell products across state lines, and it would also allow small businesses to band together to offer association health plans. The proposal also takes aim at employer-sponsored health insurance by capping the health insurance tax exclusion for employers for the most generous health care plans. The move would rein in what some Republicans view as a problematic tax break for employers while discouraging high-end coverage. The blueprint also outlines $25 billion in funding for states looking at innovative ways to reduce insurance premiums. And it includes several restrictions on using taxpayer funding for abortions that go beyond those in the 2010 law. The outline would overhaul the Medicare program for the elderly and disabled by setting up a voucher program under which the federal government would pay a portion of the health insurance premium as a defined contribution. Beneficiaries would be liable for the remainder of the cost. Republican budgets and other proposals in recent years have described similar ideas. Other provisions take aim at uncompensated care and look to achieve performance parity between private Medicare Advantage plans and traditional fee-for-service Medicare. It would also give insurers more flexibility in benefit design under Medicare Advantage.

IPAB Lives on in Annual Medicare Report

Medicare trustees on Wednesday again gave prominence to the Independent Payment Advisory Board, a panel created under the 2010 health care law that’s never had members appointed and that’s been repeatedly targeted for termination by congressional Republicans, with the backing of some Democrats. The law mandates that IPAB or the Department of Health and Human Services put forward a package of spending cuts if growth in Medicare spending reaches a trigger point. The trustees on Wednesday reiterated an estimate that the IPAB trigger on spending would be reached for the first time in 2017, which would require that a package of cost-cutting proposals move forward in 2018. Lawmakers have a history of easing the terms of cost controls such as the IPAB. It did this with the so-called sustainable growth rate, created by a 1997 budget law. Moving to repeal the IPAB provision could trigger a debate about finding alternative savings in the budget to offset the loss of those estimated to result from the trigger provision. The 2010 law calls for making IPAB’s proposals take effect automatically unless Congress acts to stop them. Paying the cost for medical care for the aging baby boomers is seen as one of the largest challenges to the federal budget. Medicare’s annual outlays may jump to $1.29 trillion in fiscal 2026 from $695 billion in fiscal 2016, according to the Congressional Budget Office.

June Update - 6/2016


The Centers for Medicare and Medicaid Services released its proposed rule for carrying out last year’s congressional overhaul of payments for doctors, physician assistants and other providers of care routinely delivered in medical offices. The rule is intended to further tie payments for the care of more than 35 million Americans in traditional government-run Medicare to judgments about the quality of care by doctors and other providers. Medicare paid about $69 billion in 2014 for services covered by the physician fee rule, which sweeps in many related fields. CMS is trying to reach out to as many interested parties as possible. CMS launched a Quality Payment Program website which CMS is using as its central repository for all webinars and information provided to the public during the rulemaking process. The website is available here.


The Hospital Inpatient Prospective Payment System and Long Term Acute Care Hospital Proposed Rule, which the Centers for Medicare & Medicaid Services (CMS) released on April 18, includes a plan for implementing the Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act. The NOTICE Act requires that critical access hospitals (CAHs) and other institutions to provide notification to individuals who are receiving observation services as outpatients for more than 24 hours. Under the proposal, CAHs and other hospitals would be required to furnish the new CMS-developed notice, known as the Medicare Outpatient Observation Notice (MOON), to affected Medicare beneficiaries or enrollees no later than 36 hours after observation services begin. The notification should indicate why the patients are receiving these services, the cost-sharing implications, and post-hospitalization eligibility for Medicare coverage for skilled nursing facility services. The MOON must be provided to patients who are entitled to Medicare benefits, regardless of whether the outpatient observation services are payable under Medicare. A final rule will be issued no later than August 1, and the NOTICE Act’s requirements take effect August 6.


The nation’s uninsured rate fell below 10 percent for the first time in history last year, according to survey results published by the Centers for Disease Control and Prevention. The new figures, showing a 9.1 percent uninsured rate, are the latest to underscore the gains of the 2010 federal health overhaul (PL 111-148, PL 111-152). Before that law took effect, about 14.4 percent of Americans lacked health insurance, according to the same survey data. The study shows some 28.6 million Americans still go without insurance, about 16.2 million less than the tally before the law took effect. The Obama administration in February estimated that 20 million people gained coverage because of the overhaul. Among the insured, 9.1 million people gained private coverage through or the state-based exchanges, the study says. Those gains were slightly steeper among young adults, 18-24, than among older adults, and also slightly steeper among the poor and nearly poor than among wealthier Americans.


The U.S. Equal Employment Opportunity Commission on released two rules that largely endorse incentive provisions in employer wellness programs allowed under the 2010 health care overhaul. Genetic specialists, however, are at odds with employer groups over whether the rules penalize employees who choose not to participate in such programs. The rules also drew criticism from Congress, as one top lawmaker criticized the cap EEOC placed on allowable incentives and threatened legislative action to block them from going into effect. The health care law permitted employers, under employee wellness programs, to provide incentives based on the total cost of self-only coverage for consumers to meet health goals, such as reaching a certain body mass index or cholesterol level. The rules, which go into effect in 2017, largely amend Americans with Disabilities Act and Genetic Information Nondiscrimination Act policies to clarify the EEOC’s position on these incentives. Under the new rule, employers that run wellness programs that include medical examinations can offer incentives up to 30 percent of the cost of self-only coverage. The GINA rule caps the incentives for spouses at the same level of employees.


The Centers for Medicare & Medicaid Services (CMS) on April 15 released the 2014 Physician Quality Reporting System (PQRS) Experience Report, which summarizes the experiences of group practices and individual providers that participated in the PQRS program. A total of 585,037 providers within 45,723 practices successfully participated in PQRS in 2014, earning $224 million in PQRS incentive payments. The total number of PQRS participants increased by 28 percent between 2013 and 2014. Claims reporting was the most popular way to participate in PQRS in 2014, while the PQRS Group Reporting Option also saw a dramatic increase with nearly 3,000 practices registered to participate in 2014 versus 677 in 2013. Based on 2014 reporting, more than half of all providers avoided the 2 percent penalty on their 2016 charges. Providers who were unsuccessful or nonparticipants in PQRS in 2014 receive a 2 percent penalty on their 2016 claims.


Medicare intends to help doctors in solo or small practices adapt to the complex demands of a new system that will raise or lower their reimbursements, a federal official said. The Centers for Medicare and Medicaid Services is preparing to try to ease the burdens on small practices of the transition to a new physician payment system Congress created in an overhaul (PL 114-10) last year, said Kate Goodrich, director of the agency’s Center for Clinical Standards and Quality, on Friday. Doctors could face cuts of as much as 4 percent in 2019 if they do poorly next year on reporting measures and other requirements of the new system, known as the merit-based incentive payment system. The agency will soon put out a request for proposals for a $100 million pool of funds for technical assistance for small and rural practices and those in areas with shortages of doctors, she said. CMS also is seeking to establish informal partnerships with medical societies and companies that sell electronic health records systems to help doctors prepare for the change. CMS will release its decision on criteria for this exemption in the final rule. This is one of myriad decisions that the agency will need to hash out in the months ahead in order to have the rule done in time for use next year. CMS is accepting comments on the 962-page draft rule through June 27.


The Missouri Department of Insurance filed a preliminary motion opposing the merger, saying that the $37 billion proposed merger would “substantially lessen competition in the state” in the individual, small group, and Medicare Advantage markets. Twenty states — which do not include Missouri — have the power to stymie the merger. In those states, officials must agree to allow local Humana subsidiaries to be taken over by Aetna in what is known as a “change of control approval.” The Aetna-Humana deal has already been cleared by 15 of those 20 states. Those states and others where Aetna and Humana are major market players, like Missouri, can undertake a separate process to investigate the competitive impacts of the merger on consumers. If a state uses that process to oppose the merger, it can consider preventing the companies from combining within the borders of the state. State attorneys general can also launch their own antitrust investigations or work with the DOJ. In comments to the Missouri Department of Insurance, consumer advocates in the state outlined the higher premiums, fewer benefit choices and lessened quality they expect to result from the merger. Many focused specifically on the Medicare Advantage market, in which Humana is a major player and in which the two companies currently compete directly. Provider groups, including state and national hospital and physician organizations, also weighed in, opposing the merger.


The House Ways and Means Committee approved a package of changes to Medicare payment policies, including one designed to address long-standing concerns about how hospitals that serve poor communities are hit by readmission penalties. The panel first approved by voice vote a substitute amendment from House Ways and Means Chairman Kevin Brady, R-Texas, which was similar to the original bill (HR 5273). The committee then also approved by voice vote the legislative package. The legislation also would ease a new restriction on when hospitals can collect more generous Medicare outpatient reimbursements for off-campus offices. The measure would address cases where hospitals had substantial plans in place for new sites before the enactment of last year’s budget deal (PL 114-74), which required many hospital outpatient centers to receive the lower reimbursements that physicians get. The cut was projected to save $9.3 billion over a decade. Separately, certain hospitals and lawmakers have pushed for some flexibility in the Medicare rules on readmission penalties, which were established in the 2010 health law (PL 111-148, PL 111-152). Hospitals are penalized if the number of their patients that are readmitted within 30 days is considered excessive. The Ways and Means draft calls for officials to compare data among hospitals that serve a similar proportion of patients who are dually eligible for both Medicare and the state-federal Medicaid program for low-income people, according to a bill summary. The key for lawmakers and policy analysts is striking the right balance, which will maintain the benefits of the readmission penalty. The policy has given hospitals more incentive to help people obtain needed services to regain or maintain their health after treatment.


In an annual report to Congress, the Medicare Payment Advisory Commission took a comprehensive look at how the nation’s single biggest purchaser of health care can manage its prescription drug costs. MedPAC suggested steps for sharpening both the negotiations that insurers handle for the Part D program and Medicare’s approach to paying through the Part B program for drugs administered in doctors’ offices. The Part D guidance was within a set of formal recommendations, while MedPAC’s suggestions for addressing the prices of Part B drugs are not yet as developed. MedPAC suggested having Medicare remove two kinds of drugs, antidepressants and immunosupressants used by transplant patients, from the classes of medicines that are required to be broadly covered, which limits insurers’ ability to drive bargains. It also suggested making a Part D reinsurance program that shields insurance companies from steep losses less generous to insurers. Reinsurance provides funding to insurers when a customer of the Part D plans has pharmacy bills that top $7,517 a year, a threshold known as the catastrophic spending level. The reinsurance program accounted for about 38 percent of the $73.3 million Medicare spent for the Part D program in 2014, up from 17 percent of $46 billion in 2007, MedPAC said. In the report, MedPAC did not specifically address a controversial Medicare proposal regarding the payment for Part B drugs administered in doctors’ offices. Drugmakers and Republicans in Congress are pushing for Medicare to withdraw the plan, first released in March. Medicare has not given a timeline for when it will release a revised final version of the plan. The new report from MedPAC indicates a broader concern with the rising costs of drugs, beyond the relatively small initial step proposed in the Part B model. The proposal would switch some doctors away from the current reimbursement in which a premium of about 4.3 percent is added to the reported average sales price for medicine. They would instead get a premium of less than 1 percent with an added fee of $16.80 for administering drugs. Among the approaches MedPAC suggested is combining certain similar drugs into a single billing code, thus creating price competition. Drugmakers complain that this approach would erode the high prices, and thus profits, that manufacturers say they need to fund their research. MedPAC noted there’s not enough information for outside groups to assess how much money pharmaceutical companies require for these efforts, echoing a complaint that’s been raised by critics of the industry.


Chairman Orrin G. Hatch, R-Utah, ranking member Ron Wyden, D-Ore., and Sen. Richard M. Burr, R-N.C., highlighted a bill (S 2368) that would establish a separate appeals process and keep lower-cost cases out of court, among other changes. The Finance Committee advanced that bill last June, but it has not been scheduled for floor consideration. Their appropriations counterparts also are working to address the issue. The Senate Appropriations Committee on Thursday approved a $5 million increase to the $112.4 million budget for the Office of Medicare Hearings and Appeals, which handles the process, in a fiscal 2017 Labor-HHS-Education spending bill, although a tight budget cap makes it difficult to find extra funds. The report and the Senate action highlight an issue that has long plagued providers, who have seen billions of reimbursement dollars tied up in the appeals process. Just 2.4 percent of claims come from beneficiaries, who can get priority review for their appeals. Providers, meanwhile, often wait months for a decision. Medicare claims appeals at the third level, which are heard by administrative law judges after a case has gone through two prior reviews, skyrocketed by 936 percent between 2010 and 2014, GAO found. Many of those appeals came from appeals of hospital and other inpatient stays, which went up by 2,000 percent. Hospitals groups often attribute the increases to the so-called two-midnight rule, which determines when a hospital stay is paid under inpatient or outpatient reimbursements. That had been an area of intense scrutiny for contractors who audit Medicare claims. GAO also found that appeals are not being finalized within the 90-day timeframe required by current law — and emphasized that CMS won’t be able to keep up with the skyrocketing rates. GAO also said HHS could do a better job establishing procedures for repetitious claims to ensure that near-duplicate appeals need not go through the process over and over again. More recent HHS data shows that at the end of fiscal year 2015, some 884,000 third-level appeals were waiting to be adjudicated and another 14,874 were in limbo at the fourth level, the highest level of appeal. The agency can process about 75,000 third-level appeals and about 2,300 fourth level appeals in one year.


The Medicare Payment Advisory Commission this week made public its concerns about proposals in draft fiscal 2017 payment rules. These Centers for Medicare and Medicaid Services proposals are part of a broader effort to set the groundwork for a unified payment for so-called post-acute care, a roughly $59 billion annual expense for Medicare. Different reimbursement rules and rates cover similar care provided by four groups: skilled nursing centers, inpatient rehabilitation facilities, home health agencies and long-term care hospitals. The fragmentation can be needlessly costly for Medicare, while leaving people without information needed to choose the right care settings, analysts have said. The IMPACT Act of 2014 (PL 113-185) directed CMS and MedPAC to shape a robust set of data that would allow comparisons among the different settings. Through the draft fiscal 2017 payment rules, CMS proposed separate Medicare spending per beneficiary measures for each of the different post-acute settings as part of this work. MedPAC disagrees with this approach. The suggestions from MedPAC and the expected responses from CMS highlight some of the technical challenges ahead in carrying out the IMPACT Act. There may be intense lobbying by industry groups and companies, which will seek to influence how CMS carries out the mandates of the IMPACT Act. Congress seems intent on having the agency create a unified payment. The IMPACT Act had a level of bipartisan support rarely seen in recent years, given that Democrats and Republicans are bitterly divided on the 2010 health overhaul (PL 111-148, PL 111-152). It breezed through the House in Sept.16, 2014, on a voice voice and was cleared by the Senate by unanimous consent two days later. The cumbersome work in preparing to overhaul of post-acute care is meant to pay off for the people who need these services, according to the MedPAC letters on fiscal 2017 skilled nursing and inpatient rehabilitation payments. Owners and operators of post-acute care organizations will have more incentive to consider what will happen to the often frail people that they treat and then release to return to their homes.

May Update - 5/2016


The Centers for Medicare and Medicaid Services released its proposed rule for carrying out last year’s congressional overhaul of payments for doctors, physician assistants and other providers of care routinely delivered in medical offices. The rule is intended to further tie payments for the care of more than 35 million Americans in traditional government-run Medicare to judgments about the quality of care by doctors and other providers. Medicare paid about $69 billion in 2014 for services covered by the physician fee rule, which sweeps in many related fields. CMS is trying to reach out to as many interested parties as possible. CMS launched a Quality Payment Program website which CMS is using as its central repository for all webinars and information provided to the public during the rulemaking process. The website is available here.


Oklahoma legislators are racing against the clock in an effort to agree on a budget that could expand Medicaid and spare medical providers from severe payment cuts. The Republican-led legislature and GOP Gov. Mary Fallin are working to pass a budget that will plug a $1.3 billion budget hole. Lawmakers have until May 27 to pass the budget before the session ends. The Medicaid policy reversal, put forward by sharp Obama administration critics who have opposed the 2010 health law, could expand coverage for an additional 175,000 low-income residents. Medicaid is the federal-state program for the low-income and people with disabilities. The health care law gave states the choice of whether to expand the program. Under the plan that OHCA is proposing to expand Medicaid instead of proceeding with the hospital payment cut, the state would apply for a federal waiver to cover 175,000 uninsured adults and offer them help to pay for a health plan using a subsidy under Oklahoma’s Medicaid program. The expansion would take effect by Jan. 1. Enrollees would also be allowed to have an individual health savings account that would help them pay for co-pays, deductibles and more. The plan also would prepare to shift into Medicaid children and pregnant women who could lose coverage under the Children’s Health Insurance Program after Sept. 30, 2019.


The nation’s uninsured rate fell below 10 percent for the first time in history last year, according to survey results published by the Centers for Disease Control and Prevention. The new figures, showing a 9.1 percent uninsured rate, are the latest to underscore the gains of the 2010 federal health overhaul (PL 111-148, PL 111-152). Before that law took effect, about 14.4 percent of Americans lacked health insurance, according to the same survey data. The study shows some 28.6 million Americans still go without insurance, about 16.2 million less than the tally before the law took effect. The Obama administration in February estimated that 20 million people gained coverage because of the overhaul. Among the insured, 9.1 million people gained private coverage through or the state-based exchanges, the study says. Those gains were slightly steeper among young adults, 18-24, than among older adults, and also slightly steeper among the poor and nearly poor than among wealthier Americans.


The U.S. Equal Employment Opportunity Commission on released two rules that largely endorse incentive provisions in employer wellness programs allowed under the 2010 health care overhaul. Genetic specialists, however, are at odds with employer groups over whether the rules penalize employees who choose not to participate in such programs. The rules also drew criticism from Congress, as one top lawmaker criticized the cap EEOC placed on allowable incentives and threatened legislative action to block them from going into effect. The health care law permitted employers, under employee wellness programs, to provide incentives based on the total cost of self-only coverage for consumers to meet health goals, such as reaching a certain body mass index or cholesterol level. The rules, which go into effect in 2017, largely amend Americans with Disabilities Act and Genetic Information Nondiscrimination Act policies to clarify the EEOC’s position on these incentives. Under the new rule, employers that run wellness programs that include medical examinations can offer incentives up to 30 percent of the cost of self-only coverage. The GINA rule caps the incentives for spouses at the same level of employees.


The Hospital Inpatient Prospective Payment System and Long Term Acute Care Hospital Proposed Rule, which the Centers for Medicare & Medicaid Services (CMS) released on April 18, includes a plan for implementing the Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act. The NOTICE Act requires that critical access hospitals (CAHs) and other institutions to provide notification to individuals who are receiving observation services as outpatients for more than 24 hours. Under the proposal, CAHs and other hospitals would be required to furnish the new CMS-developed notice, known as the Medicare Outpatient Observation Notice (MOON), to affected Medicare beneficiaries or enrollees no later than 36 hours after observation services begin. The notification should indicate why the patients are receiving these services, the cost-sharing implications, and post-hospitalization eligibility for Medicare coverage for skilled nursing facility services. The MOON must be provided to patients who are entitled to Medicare benefits, regardless of whether the outpatient observation services are payable under Medicare. A final rule will be issued no later than August 1, and the NOTICE Act’s requirements take effect August 6.


The Centers for Medicare & Medicaid Services (CMS) has announced that the release of a new star system for rating overall quality at hospitals is being postponed until at least July. Originally scheduled for April 21, the star rating metric would be posted on the CMS Hospital Compare website and would assign hospitals a rating of one to five stars based on specific inpatient and outpatient reporting measures. The delay comes in response to concerns raised in congressional correspondence to CMS. A total of 60 senators signed the letter to CMS asking that the program be delayed because the overall ratings may not accurately take into account hospitals that treat low-income patients and patients with multiple, complex, chronic health care conditions. The letter also raises concerns that hospitals have insufficient data to replicate or evaluate CMS’ work to ensure that the methodology is accurate and fair.


The Centers for Medicare & Medicaid Services (CMS) on April 15 released the 2014 Physician Quality Reporting System (PQRS) Experience Report, which summarizes the experiences of group practices and individual providers that participated in the PQRS program. A total of 585,037 providers within 45,723 practices successfully participated in PQRS in 2014, earning $224 million in PQRS incentive payments. The total number of PQRS participants increased by 28 percent between 2013 and 2014. Claims reporting was the most popular way to participate in PQRS in 2014, while the PQRS Group Reporting Option also saw a dramatic increase with nearly 3,000 practices registered to participate in 2014 versus 677 in 2013. Based on 2014 reporting, more than half of all providers avoided the 2 percent penalty on their 2016 charges. Providers who were unsuccessful or nonparticipants in PQRS in 2014 receive a 2 percent penalty on their 2016 claims.

April Update - 4/2016

Check your 2015 Open Payments Data The Centers for Medicare & Medicaid Services’ continues to publish data from applicable manufacturers and group purchasing organizations (GPOs) about payments they make to physicians and teaching hospitals on its website, Doctors and teaching hospitals have the chance to review and dispute the information shared about them before we post the new and updated Open Payments data on June 30, 2016. The data posted on June 30th is now available for review through May 15, 2016. Since April 1, this is the only chance for these health care providers to dispute inaccurate or incomplete data before we post it. After that they only have until the end of the year that this financial data is published to review and dispute any payment records and how it was attributed from GPOs, drug and device manufacturers. Any doctor or teaching hospital that wants to look at the financial information reported on them by manufacturers and GPOs can register on the Open Payments website to create an account or log if they already have an account. Visit website for instructions and quick tips.

Medicare Expenses Outpaced Savings in Early Results of Key Test: Medicare on Wednesday reported disappointing early results from its Comprehensive Primary Care Initiative, which is designed to shape an eventual overhaul of federal payments for basic medical services for the elderly and disabled. The savings in the program’s first two years failed to offset its expenses, while the quality of medical care did not improve as expected, Medicare officials reported. Monthly expenses fell by an average of about $11 per patient in the program, with reductions ranging from $1 to $21, according to a Mathematica Policy Research report for the Centers for Medicare and Medicaid Services. That adds up to about $91.6 million in total savings, possibly because closer contact between doctors and patients reduced the need for hospitalizations and use of skilled nursing centers. The reduced costs, though, were not enough to offset a fee averaging $18 a month per person enrolled in Medicare, the report said. The New England Journal of Medicine published the initial results. The Obama administration is moving away from the traditional fee-for-service program, which some say results in uncoordinated patient care and needless expenses, such as duplicated tests and hospitalizations. The authors of the New England Journal of Medicine paper included Patrick Conway, the chief medical officer for the Centers for Medicare and Medicaid Services. Conway announced plans for another primary-care test program.

Republicans Still Drafting Health Care Law Replacement Key House Republicans are still having just preliminary conversations as they prepare to draft an alternative to the health care law before the Republican National Convention in July, but they remain optimistic about meeting their informal deadline. House Speaker Paul D. Ryan, R-Wis., tasked three committee chairmen – Kevin Brady, R-Texas, of the Ways and Means Committee; Fred Upton, R-Mich., of the Energy and Commerce Committee; and John Kline, R-Minn., of the Education and the Workforce Committee – with writing a replacement plan to the health law. The goal is to unite the conference behind a blueprint for early action in 2017, should a Republican win the White House. However, lawmakers are far from ready to start deciding exactly what will be in their white paper, following a closed-door meeting of the taskforce set up to draft the replacement. Many of the policies under discussion are familiar. Quite a few have been included in other Republican policy documents. GOP lawmakers and several lobbyists mentioned policies like expanding the use of health care savings accounts or ensuring coverage can be purchased across state lines. Several also mentioned the inclusion of tax credits to help consumers pay for their coverage. One policy under consideration that’s generating attention: a cap on the health care tax exclusion, which would limit the amount an employee could contribute to his or her health care premiums tax-free. Republicans want to continue allowing employers to deduct their health coverage costs from their tax expenditures, several sources off the hill said. Including that policy could raise a great deal of revenue to pay for other changes in the bill. The health care tax exclusion is one of the country’s biggest tax breaks. But the policy would have an effect much like the so-called Cadillac tax, an excise tax on the most expensive health plans. Advocates say both policies would help lower health care costs by reducing plan generosity and giving patients more skin in the game. But the tax is hugely unpopular among both business groups and labor unions, and sizeable bipartisan opposition led to Congress passing a two-year delay of the tax last year. But it’s a favorite policy of Ryan’s, who first included it in a 2010 budget proposal.

Hospitals Eye Unpaid Medical Bills Medicare is expected to release soon its draft of the fiscal 2017 rule on payment for hospital stays. These payments for so-called inpatient stays are among the federal government’s single biggest expenses of any kind, costing Medicare about $110 billion. The White House’s Office of Management and Budget has been reviewing the hospital pay rule since March 21. OMB checks on major rules before federal agencies release them. OMB also already is reviewing a payment rule for skilled nursing care and a rate update for hospice, services that combined cost Medicare more than $40 billion a year. The Centers for Medicare and Medicaid Services likely will outline steps for a new uncompensated care framework in the fiscal 2017 hospital payment rule, given the agency’s past statements, lobbyists said. Implementing a change may take several years. The Medicare Payment Advisory Commission in March recommended a slow shift to using hospitals’ cost reports for these calculations. CMS now relies on a proxy measure that reflects hospital stays of low-income and disabled people in the Medicaid program. The advisory panel found many flaws in the current CMS approach to uncompensated care payments for hospitals. Medicare’s subsidies of Medicaid costs sends states a signal that they can underpay hospitals through Medicaid, MedPAC said. This work on Medicare’s uncompensated care involves addressing thorny issues that echo from the 2010 health overhaul. The measure changed how the federal government helps hospitals cover the expenses of treating people who can’t afford to buy their services, while also moving to bring millions of Americans into private insurance and Medicaid plans. The pool of money directly designated for uncompensated care dropped to about $6.4 billion for this year from $9.4 billion in 2014, according to MedPAC.

MedPAC Approves Payment Changes Members of the Medicare Payment Advisory Commission voted unanimously by a show of hands to approve a report on the initial steps needed to move toward creating a unified payment for so-called post-acute care. They discussed the broad themes of this work, but left many of its details to be revealed when the report is published in June. Medicare payments for post-hospital care more than doubled, to $59 billion, between 2001 and 2013 despite concerns about fiscal waste. The absence of clear guidelines on appropriate post-hospital care is seen as one of the reasons for this growth. People can be assigned fairly randomly now to care in one of four tracks: skilled nursing centers, specialty inpatient rehabilitation centers, long-term care hospitals and services provided at home. Medicare often pays more in certain settings for care of similar patients, without establishing if there is an advantage to the more expensive care. Medicare officials and lawmakers may want to use an overhaul of payments to shift the program’s goals, according to MedPAC commissioner William J. Hall, a geriatrician and professor at the University of Rochester. An overhauled approach may need to weigh more carefully how well people maintain the abilities of daily life. The law mandates MedPAC to publish ideas for a payment overhaul– through the report the panel approved Thursday — by June 2016. The Department of Health and Human Services then must issue another report by 2022. MedPAC must respond by around 2023 with a design for a new post-hospital payment. Lawmakers in search of an offset for a future budget deal next year or beyond may be tempted to mandate changes in post-acute care that could save Medicare funding and allow more spending elsewhere in the federal government. Surgeons and hospitals until now have not needed to figure out which forms of post-hospital care work best for elderly people, said Blair Childs, senior vice president at Premier Inc., an alliance of about 3,600 U.S. hospitals and 120,000 other medical providers. The test program provides an incentive for hospital officials to determine which approaches to recovery after orthopedic surgery most benefit their patients, Childs said. It should foster a greater coordination of care.

CMS Shaves Estimated 2017 Medicare Advantage Pay Increase Medicare officials on Monday shaved their estimate for an expected increase in payments next year for insurer-run Advantage plans, but allowed a longer transition to reimbursement changes in a program in which some retirees benefit from contributions by their former employers. The average base payment increase for each person covered by Advantage plans in 2017 will be little changed from this year at 0.85 percent. That will rise to about 3.05 percent after accounting for additional payments allowed in the system, said Sean Cavanaugh, the director of Medicare, on a conference call with reporters. This is less than an earlier proposed increase of 1.35 percent in base payments and total increase of 3.55 percent that CMS had suggested in February. The change is due largely to new calculations regarding risk adjustment factors, CMS officials said. In the past, unlike this year, CMS officials’ final version had provided more funds for insurers in the final policy than in the proposed version. In the final policy, CMS altered a plan for judging how ill people in Medicare Advantage plans may be. A blended percentage based on actual medical experiences and certain risk scores was intended to constitute 25 percent of certain calculations, instead of 50 percent as earlier proposed. CMS also said that there will be a two-year transition to the new payment approach for what are called employer-group waiver plans. There’s been considerable opposition to proposals to overhaul the employer-group plans, which critics have said could make it more difficult for firms to offer this coverage. Under the new policy, the costs of these plans will be tied more to the cost of other Medicare Advantage plans, which don’t have the retiree subsidies. About 3.2 million people are enrolled in these employer-group waiver plans.

March Update - 3/2016

CMS Hip-Knee Pilot Program Starts in April:

Medicare will start in April a test program that will make about 800 hospitals financially responsible for how well people fare after knee and hip replacements. The will require that hospitals within 67 selected regions participate in the hip-and-knee program, despite complaints from providers. The 67 areas of the country sweep in hospitals in places such as New York, San Francisco and Los Angeles and greater Orlando, Florida, with limited exceptions. Under the program, the hospitals could get higher pay if their patients do well in the 90 days following hip and knee replacements, or have to repay Medicare if their patients are judged to have fared poorly. With the program, CMS is taking on a fairly common medical procedure for people on Medicare, with more than 400,000 procedures performed on those enrolled in the program in 2014 at a cost of $7 billion. Medicare officials long have been concerned about poor results in some regions, with rates of complications and infections three times higher at some hospitals than others. Expenses for surgery and recovery vary as well, ranging from $16,500 to $33,000, according to CMS. The hip-and-knee replacement project is one of the major initiatives led by the Center for Medicare and Medical Innovation, which was created by the 2010 health law. The goal of CMMI is to improve the medical care provided to senior citizens and the disabled by moving away from Medicare’s longstanding fee-for-service approach. Under the fee-for-service model, Medicare has given the same reimbursement regardless of whether the care was poor or exemplary.

Nearly 5 Million Enrollees in Exchanges Are New Customers:

Nearly 5 million new customers signed up for insurance under the exchanges established by the 2010 health care law, the Health and Human Services Department. A final report on the third open enrollment period shows that a total of 12.7 million people either signed up or automatically renewed their health care plans for 2016, with 4.9 million of those individuals being new customers. About 76 percent of enrollees got covered in the 38 states that use the website, while 24 percent are signed up through the state-based marketplaces. The vast majority of consumers signed up for coverage with tax credits, which is similar to past years. In the states, the average value of a tax credit is $290 per person per month. The administration touted figures that illustrate 3.5 million people who are signed up for coverage are between the ages of 18 and 34 – a key demographic to help sustain the health law. Among new enrollees, 33 percent are in that age range, up slightly from 31 percent the previous year. Health insurers would prefer a higher percentage of customers to be young adults, but HHS maintained in a press release that the “overall percentage of plan selections for those ages remains stable.” The report also highlighted statistics that show existing consumers who switched plans in 2016 saved an average of $40 per month, and that new customers signed up earlier this year compared to previous years.

House Committees Look to Adjust Medicaid Payments, Recover Subsidies:

The House Energy and Commerce Committee offered its approval on two spending reduction measures, including a bill (HR 4725) culling a range of Medicaid payment polices. The measure limits an expansion of Medicaid funding applied to prisoners and reduces the allowed level of state Medicaid provider taxes. The bill also eliminates a special fund for preventive health care services and adjusts Medicaid eligibility calculations to account for lottery winnings. Separately, the House Ways and Means Committee drafted a group of bills including a measure (HR 4723) seeking to recover health insurance subsidy overpayments due to underreported income estimates in health insurance exchange plan applications. House committee action on the bills signals possible committee action this week on a House budget resolution. The dual-track House compromise effort on the mandatory spending measures and a budget resolution is separate from possible Senate action on a budget plan, which could seek reconciliation process instructions to allow action next year on mandatory health care spending.

Senate Processes Research and Opioid Bill Amendments:

Senators performed some legislative maintenance on health policy measures. The Senate Health, Education, Labor and Pensions Committee approved updated versions of a batch of bills adjusting elements of the drug and medical device approval process. The bills are poised as components of a broader biomedical research promotion package. The committee quickly approved adjustments to measures reauthorizing the addition of rare pediatric diseases to a priority review process (S 1878) and adding Zika vaccine eligibility (S 2512), plus expedited reviews of medical devices (S 1077). The committee also approved updates to bills addressing regulations on combination products (S 1767), urging the FDA to assess patient engagement on new drugs (S 1597) and a measure encouraging the development of medical countermeasures in case of biological attack emergencies (S 2055). Meanwhile, the Senate has spent the week plodding through procedural steps to close debate on a bill (S 524) revamping prescription painkiller and heroin abuse programs. On Wednesday, amid procedural actions, senators approved a late amendment addressing follow-up services to people who have received opioid overdose reversal drugs. The late amendment goes along with earlier additions to the primary substitute amendment, covering transnational drug trafficking, Medicare opioid protection programs and consumer education. The Senate passed the opioid response bill. Separately, a House panel waits for action on a similar bill (HR 953) and the Senate HELP committee plans to markup a different set of opioid response and prescription bills (including S 1455, S 2256, S 480).

No Delay Likely for MACRA Deadlines:

Congress is unlikely to step in to ease the challenges facing doctors in the years ahead due to the implementation of last year’s overhaul of Medicare’s payments to physicians, a consultant said at a conference for insurers. MACRA is intended to spur doctors to embrace new payment systems such as accountable care organizations, which are pegged to judgments about the quality of the care they provide. Those who don’t agree to participate in these newer payment models will see the current Medicare fee-for-service system of payments replaced by one that will place more of an emphasis on meeting quality judgments. Congress in the past has changed many laws and delayed the implementation of regulations at the behest of doctors, such as holding off for several years on a switch to the new ICD-10 billing codes and staving off slated Medicare payment cuts through a series of what were known as “doc fix” bills. Lawmakers in both parties agree that Medicare needs to readjust its standards for paying doctors. The Centers for Medicare and Medicaid Services likely will ease the transition in some cases, seeking to make it easier for doctors to meet the standards, but is not expected to delay or undercut the requirements. CMS is in the process of implementing the first stage of the overhaul, working out the details of the so-called merit-based incentive payment system. Under the law, doctors who after 2019 fare well on quality measures set in initial rules will face rising expectations as new metrics are added as conditions of Medicare payment. The forces demanding a reshaping of Medicare’s payments, though, mean that they will have to adjust to the new reality of this law. The aging of the baby boomers added urgency to steps expected to rein in Medicare’s rising costs, whether through immediate pay reductions or through efforts to prevent disease and preserve health such as the quality measures.

Medicare Makes Ambitious Bid to Overhaul Its Drug Purchasing

The Obama administration has plunged into a contest with the pharmaceutical industry, putting forward a wide-ranging proposal for overhauling Medicare payments for chemotherapy, glaucoma treatments and other often costly drugs administered in doctors’ offices. The pharmaceutical tab doubled to $22 billion between 2015 and 2007 for Medicare’s Part B program, which covers services provided in private medical practices and hospital outpatient departments. The Centers for Medicare and Medicaid Services proposal not only seeks savings in Medicare’s Part B program but also opens discussion on a path for tying future drug payments to judgments about how much benefit a treatment provided patients, with rebates possible for poor outcomes. The new proposal builds on research that raised questions about how well patients may fare under Medicare’s current Part B reimbursement approach, which adds a premium to the reported average sales price of a drug. The fee, intended to be 6 percent of the average sales price, was reduced by the budget sequester to about 4.3 percent of the reported price. These financial incentives put a doctor or medical organization at a disadvantage for using a less costly drug when a similar, more expensive one is available or reducing the use of medicines. The Part B model goes a step further and is designed to sweep in much of the nation. CMS is seeking to create four comparison groups, including a control arm, for the model in selected geographic areas. Maryland will be excluded due to a large-scale test program already underway between the state and CMS regarding payments. That leaves about 7,000 separate areas in different parts of the country to participate. In the control arm, the current average sale price plus 6 percent model would persist. In the three other groups, the add-on payment would fall to 2.5 percent of reported prices with a flat fee added. CMS has proposed $16.80 as the flat fee, although the agency appears flexible to other suggestions. In some of these arms of the model, tools to spur a shift toward value-based purchasing could be added in later stages, CMS said, including procedures already used by insurers and pharmacy benefit managers to control costs. CMS said it intends to use a number of factors to judge the success of the alternative payment systems. It will examine whether the program has reduced costs, changed prescribing patterns or had unintentional consequences, the agency said.

A Push for Expansion of Telehealth Services:

Advisers to Medicare urged greater acceptance of telehealth services in the federal program for the elderly and disabled, although they are not yet at the point of issuing formal recommendations to spur greater use of computers and phones in delivering medical services. Advisers to Medicare urged greater acceptance of telehealth services in the federal program for the elderly and disabled, although they are not yet at the point of issuing formal recommendations to spur greater use of computers and phones in delivering medical services. Medicare Payment Advisory Commission commissioners on Thursday said they are concerned that current reimbursement policies are limiting access to more convenient access to their doctors. Medicare now largely limits telehealth payments through its traditional fee-for-service program to cases where people live some distance from providers, thus largely restricting this service to rural areas. Medicare Advantage programs and demonstration programs such as accountable care organizations also can provide medical consultations via computer or phone. Congress has responded with legislation, “Creating Opportunities Now for Necessary and Effective Care Technologies (CONNECT) for Health Act.” This would establish a bridge program to help physicians meet the goals of MACRA and the MIPS through the use of telehealth and remote patient monitoring. The Act would allow telehealth and RPM to be used by qualifying participants in APMs. Also, the Act will increase access to telehealth in remote communities and rural health clinics. The Act will still preserve state-based licensure for physicians. The Act will not address liability issues for physicians who are practicing telehealth across state lines.

House Prepares to Pass Medicaid Fraud Bill:

The House passed a measure that supporters say would protect state Medicaid programs from fraud. The bill (HR 3716) would require states and Medicaid managed care plans to identify and submit to the Health and Human Services secretary the name, type and specialty of providers terminated from Medicare, a state’s Medicaid or Children’s Health Insurance Program. Rep. Larry Bucshon, R-Ind., the bill’s sponsor, said the Health and Human Services Department’s inspector general found that 12 percent of providers terminated for cause from a state Medicaid program had continued participation in another state’s program for as long as two years after the initial termination. The administration said it supports passage because the bill would improve program integrity for Medicaid and the Children’s Health Insurance Program. The bill would improve “the ability of States to identify health care providers who have been terminated from participating in Medicare or in another State’s Medicaid or CHIP program,” the White House said in a statement of administration policy. The House approved a modified manager’s amendment by Rep. Larry Bucshon, R-Ind., that would give states until July 1, 2018, to comply with many of the bill’s provisions. It also would require the Health and Human Services Department’s inspector general to report to Congress by March 31, 2020, with an assessment of the extent to which providers terminated for fraud are terminated from participation in all state plans. Under the rule, the House was considering a version of the bill that includes provisions of a measure (HR 3821) by Rep. Chris Collins, R-N.Y., to require state Medicaid programs that operate fee-for-service or primary care case management programs to publish and periodically update an electronic directory of participating providers.

Governors’ Plan for Opioid Addiction

Governors from across the country from states battling the prescription drug abuse epidemic have come to Washington with a message for Congress and the federal government: We need more action to combat addiction. The governors are offering a broad set of recommendations, including calling on the Centers for Disease Control and Prevention to release updated opioid prescribing guidelines for primary care physicians and for the Department of Veterans Affairs to require its health care providers to report information about opioids to state prescription drug monitoring programs. The Department of Health and Human Services should also consider how Medicare surveys on patient satisfaction could pressure doctors to prescribe opioids, and assess whether or not the surveys need to be changed, the governors said. Congress should also amend the Drug Addiction Treatment Act of 2000 (PL 106-310), the governors said, so that nurse practitioners and physician assistants can prescribe buprenorphine, a treatment for opioid addiction. Prescribers also are limited in how many patients they can treat with buprenorphine, a limit that the governors want HHS to raise. Other regulatory tweaks the governors urge include granting doctors access to patients substance use disorder treatment information.

Officials Propose Increased Medicare Advantage Rates

Medicare officials proposed increases of 1.35 percent that would translate into an average 3.55 percent revenue increase for most plans. Medicare adjusts payments to take into account the way that insurers code patients’ conditions. In recent years, Medicare officials often have adjusted the payments to be more generous when they finalize the rates in April. Under the proposal, patients would be categorized into six groups of beneficiaries who live in the community or have been in an institution for less than 90 days. Three of the groups are: people who are older than 65 and are poor enough to be dually eligible for Medicaid; those over 65 who receive some help because they are partially eligible for Medicaid; and those over 65 who are not eligible for any Medicaid assistance. The other three groups are those younger than 65 who are fully, partially or not eligible for Medicaid. These changes could increase funding for plans with a large percentage of patients who also receive full Medicaid assistance in addition to Medicare benefits.

Medicare and Insurance Industry Merge Quality Metrics

Public and private health insurance providers announced a new set of quality measurements meant to make reporting requirements for doctors and care providers more consistent and efficient. By easing the reporting complexity for clinicians, insurers are also hoping to bring down costs for themselves and consumers. While individual payers currently utilize their own measurements, insurers have come together to agree on core measures in seven areas. The new measurements will be adopted by CMS as well as many private insurers, ultimately covering around 70 percent of all health care payers. CMS, which already uses some of the new measurements, will begin implementing the rest of the changes, including eliminating redundant measures, through its rulemaking process later this year. Private insurers are expected to phase in the changes starting in 2017. The core measures are in seven areas, including: primary care; cardiology; gastroenterology; HIV and Hepatitis C; medical oncology; obstetrics and gynecology; and orthopedics

February Update - 2/2016


Senators Seek Action on Drug Abuse

A recent Senate committee hearing supported the need for legislation to address an epidemic of addiction to heroin and prescription pain-killers. A group of senators highlighted the Comprehensive Addiction and Recovery Act (CARA) which seeks to mobilize a federal response to the epidemic. The hearing was joined by calls for the final CDC guidance on prescribing opioids for chronic pain. CARA would expand educational and prevention efforts, increase access to drugs that can reverse the effects of overdoses and launch evidence-based treatment and intervention programs. The measure also would give states incentives to strengthen prescription drug-monitoring programs, which can help track at-risk individuals and track prescription drug diversion.

CMS Releases Hardship Application

CMS posted new, streamlined hardship applications on the Payment Adjustments and Hardship Information webpage, reducing the amount of information that eligible professionals, eligible hospitals, and Critical Access Hospitals (CAHs) must submit to apply for an exception from the 2017 payment adjustment. Application timeline:

  • Eligible Professionals: March 15, 2016
  • Eligible Hospitals and CAHs: April 1, 2016

Groups of providers may apply for a hardship exception on a single application. Under the group application, multiple providers and provider types may apply together using a single submission. The hardship exception categories are the same as those applicable for the individual provider application.

“Vertical consolidation”

A report by the Government Accountability Office (GAO) found that “vertical consolidation”—an arrangement in which a hospital acquires a physician practice and/or has physicians on salary—is linked with more evaluation and management (E/M) visits occurring in a hospital setting. The trend leads to increased costs for Medicare, which pays providers at a higher rate when the same service is performed in a hospital outpatient department (HOPD) compared to a physician’s office. Between 2007 and 2013, the number of vertically consolidated hospitals grew from about 1,400 to 1,700, and the number of vertically consolidated physicians nearly doubled, from 96,000 to 182,000. In 2013, the Medicare payment for a midlevel E/M visit was $51 higher when it took place in a hospital. “Such excess payments are inconsistent with Medicare’s role as an efficient purchaser of health care,” the GAO stated. However, the agency noted, the Centers for Medicare & Medicaid Services “lacks the statutory authority to equalize total payment rates between HOPDs and physician offices and achieve Medicare savings.”

Quality Measures

CMS has released a draft CMS Quality Measure Development Plan (MDP) for comment. The MDP supports the transition to a new Merit-based Incentive Payment System (MIPS) and alternative payment models (APMs) for providers. The MDP arises from the passage earlier this year of the Medicare Access and CHIP Reauthorization Act of 2015, which repealed the Medicare sustainable growth rate formula, replacing it with MIPS and APMs, and phasing out the Physician Quality Reporting System, the Value-based Payment Modifier, and Meaningful Use. According to CMS, the MDP will address gaps in the quality measures identified in those programs, meet the statute’s requirements, and serve as a template for developing clinical quality measures to support MIPS and APMs. As stated in the MDP, the agency will apply a positive, negative, or neutral payment adjustment to each MIPS-eligible provider based on a composite performance score to include quality, resource use, clinical practice improvement activities, and meaningful use of EHR technology beginning in 2019. CMS is soliciting stakeholder comments on the draft plan through March 1, 2016; the final MDP will be posted to the CMS website by May 1, 2016 and updated annually or as otherwise appropriate.

Insurance Mega-mergers will get Tough Review from States

State regulators could significantly alter – or perhaps even derail – blockbuster insurance mergers that would reduce the number of major, national health plans from five down to three. Most attention has focused on whether the Justice Department might block Aetna’s $37 billion acquisition of Humana and Anthem’s $54 million takeover of Cigna on antitrust grounds. But antitrust experts point out that health plans are typically regulated by the states, which have a broader mandate to scrutinize issues raised by the deals. States are looking beyond just antitrust concerns. Their exact scope of authority depends on state law, but local regulators are more likely to focus on consumer protection issues such as limiting premium increases, bolstering benefits or even requiring charitable contributions. About 15 state attorney generals are working with the Justice Department to heighten scrutiny of the blockbusters deals. State attorney generals played a similar role in Comcast’s proposed acquisition of Time Warner, which was ultimately abandoned last year after federal regulators came out against the deal.

Congressional Republicans look to update Stark Law

Republicans on the Senate Finance and the Ways and Means committees are considering updating federal anti-kickback statutes including the Stark law to make them work with the new alternative payment models. The two committees are seeking input from providers groups on Stark, which prevents doctors from referring patients to interests in which they have a financial relationship. They are looking at two broad issues: First, the difference between technical violations and more serious infractions, and second, the changes needed to harmonize the law with new payment schemes under MACRA. CMS, for its part, has been working to scale back the Stark law as it affects delivery system reform. The administration loosened some restrictions in a November regulation focused on Stark, and it has offered waivers of the anti-kickback statutes to participants in more aggressive ACOs and in its new bundled payments demonstration for hip and knee surgeries.

August Update - 8/2015

Centers for Medicare and Medicaid Services (CMS) Publishes Medicare 2016 Physician Fee Schedule:

The Medicare 2016 proposed physician fee schedule was published on Wednesday, July 8, 2015. Comments from the public are being accepted through September 8, 2015. Some points of interest include:

  • The conversion factor for 2016 will increase by 0.5% to $36.1096 as called for in the Medicare Access and CHIP Reauthorization Act (“MACRA”) legislation passed earlier this year. The conversion factor is the dollar amount that is multiplied by a service’s relative value units to get the dollar reimbursement amount.
  • There are several new quality measures proposed under the Physician Quality Reporting System (“PQRS”).

If adopted, this will bring the total number of measures to 300 for 2016. New quality measures for surgery include:

  • Perioperative anti-platelet therapy;
  • Perioperative temperature management; and
  • Prevention of post-operative nausea and vomiting

CMS is expanding the scope of information reported on the Physician Compare website to include measures submitted to qualified clinical data registries and the physician’s ranking under the value based modifier program, among other things. Medicare Bundling of Hospital Outpatient Payments to Increase: In the proposed 2016 hospital outpatient rule released on July 2, CMS continues its efforts to package outpatient services into increasingly larger bundles. Nine new comprehensive ambulatory payment classifications (“C-APCs”) are proposed for 2016, including some surgical APCs and a new C-APC for comprehensive observation services. This is consistent with CMS’ goal of making the outpatient reimbursement system similar to the inpatient DRG system. In that same rule, CMS proposed that ambulatory surgery centers receive an update of 1.1 percent for 2016. Changes Proposed for Two-Midnight Policy: CMS has proposed significant changes to the controversial Medicare “two-midnight” rule as part of its 2016 hospital outpatient prospective payment rule for 2016. Specifically, CMS proposes to allow an inpatient admission of less than two midnights on a case-by-case basis based on the judgment of the admitting physician. It also plans to turn over enforcement of the policy to Quality Improvement Organizations with the Recovery Audit Contractors (“RACs”) focusing only on hospitals with high denial rates. CMS proposes initiative to bundle Medicare payments for hip and knee replacements: CMS is planning to require more than 800 hospitals in 75 geographic areas to participate in an initiative of bundled payments for hip and knee replacements in an effort to incentivize quality and improve outcomes. The program would begin January 1, 2016 and run for five years. Payment would be based on an episode of care that begins with the admission to the hospital and runs through 90 days after discharge. The hospitals would bear financial risk for the procedure, the inpatient stay and all care related to the patient’s recovery. Depending on the hospital’s quality and cost performance during the episode, the hospital may receive an additional payment or be required to repay Medicare for a portion of the episode costs. Critical-access hospitals would be excluded from the initiative. In a press release announcing the initiative, CMS noted that despite the fact that hip and knee replacement are very common, the quality and cost of care varies greatly. Specifically, the average Medicare payment for surgery, hospitalization, and recovery ranges from $16,500 to $33,000 across geographic areas. CMS stated that “[i]ncentives to coordinate the whole episode of care—from surgery to recovery—are not strong enough, and a patient’s health may suffer as a result.” House of Representatives Passes 21st Century Cures Bill: On July 10, 2015, the 21st Century Cures Act passed the House of Representatives by a vote of 344 to 77. The bill would give the National Institutes of Health an increase of $8.75 billion over five years, while the Food and Drug Administration would receive an additional $550 million over that period. While focused primarily on the NIH and the FDA, the legislation also includes “interoperability” language of direct interest to physicians. The language creates a framework of standards to encourage interoperability of HIT systems. It also includes decertification and pricing transparency provisions intended to give physicians assurances that EHR systems will properly exchange data, without hidden fees. In the case of a decertification of a vendor, a physician would receive a one-year automatic hardship exemption from Meaningful Use penalties. The Senate Health, Education, Labor, and Pensions (“HELP”) Committee has been engaged for the last several months in creating a Senate version of the 21st Century Cures legislation. Hurdles remaining include jurisdictional issues with Senate Finance, timing for introduction of a Senate bill, how the bill would be paid for, and whether the Senate bill will include all or just some of the provisions in the House bill. The Senate is expected to release a discussion document in the fall. MedPAC releases annual report to Congress: The Medicare Payment Advisory Commission (“MedPAC”) released its “Report to the Congress: Medicare and the Health Care Delivery System” on June 15, 2015 The report makes recommendations for hospital short-stay policy issues, payment policies for Part B drugs, value-based incentives for Part B drugs, polypharmacy and opioid use among Part D enrollees, risk-sharing in Part D, synchronizing policy across Medicare’s payment models, and the developing of new measures for quality of care within Medicare. Of particular interest are the recommendations for hospital short- stay policy issues, which were based partly in response to criticism over the Medicare Recovery Audit Contractor (“RAC”) Program audits and appeals process and the financial impact on beneficiaries associated with the growing use of outpatient observation day status. These recommendations include:

  • Withdrawal of the Two Midnight Rule;
  • Refocusing of RAC review on those hospitals with excess rates of short stays; and
  • Modification of the RAC contingency fees.

As noted above, CMS has already proposed changes to the Two Midnight policy as part of its 2016 outpatient hospital proposed rule. Cost Of New Medicaid Enrollees Higher Than Estimated: On July 10, 2015, CMS released its 2014 Actuarial Report on the Financial Outlook for Medicaid. The report found that health insurance costs for new Medicaid enrollees are higher than initially estimated. Earlier estimates assumed that the cost of new Medicaid enrollees would be 1% less than those already enrolled. However, adults who were newly eligible for Medicaid benefits cost the federal government $5,517 on average in 2014, while individuals already enrolled in Medicaid cost $4,650. In general, total Medicaid spending grew 9.4% between 2013 and 2014. These statistics may encourage future debate over whether Medicaid expansion is too costly.

CMS, AMA Announce Steps to Ease ICD-10 Transition/ Lawmakers Propose Transition Period for ICD-10

With the transition from ICD-9 to ICD-10 quickly approaching on October 1, 2015, CMS and the American Medical Association (“AMA”) announced several new policies to help ease the transition to ICD-10 coding. For one year, CMS will not deny Medicare Part B claims based solely on the specificity of the ICD-10 diagnosis code, provided the physician submits a valid code from the right family of codes. CMS will also provide a variety of training and educational resources, such as an ICD-10 Ombudsman to answer physician questions about ICD-10. In the meantime, Congress continues to consider a possible delay. Representatives Marsha Blackburn (R-Tenn.) and Tom Price (R-GA) introduced the Coding Flexibility in Healthcare Act of 2015 (HR 3018) on July 10, 2015, that would allow both ICD-9 and ICD-10 coding during a six-month transition period from October 1, 2015 to April 1, 2016. The bill would also require a report to Congress on the ICD-10 transition 90 days after the ICD-10 implementation date. LeapFrog Group Reports Results of 1500-Hospital Survey – Hospital-Acquired Conditions Remain a Problem: On July 9, 2015, the Leapfrog Group released its 2014 Hospital Survey of quality and safety measures. Of the 1,500 hospitals that responded, one in six had higher than expected rates for central-line infections. In addition, 48 percent of reporting hospitals had a higher than expected rate of catheter-associated urinary tract infections. Compliance with safety practices endorsed by the National Quality Forum is high among hospitals, but rural hospitals lag behind. About 20 percent more urban hospitals met Leapfrog’s standards for safety than rural hospitals. The survey found that while hospitals still face problems with hospital-acquired conditions, they are improving in other quality areas, such as hand washing compliance and intensive care unit staffing practices.

May Update - 5/11/2015
  1. SGR Physician Payment Fix Signed Into Law; CMS Announces Some Claims May be Reprocessed: On April 16, President Obama signed into law legislation that permanently replaces the controversial and flawed sustainable growth rate (SGR) formula for calculating physician payment under the Medicare program. The legislation (H.R. 2), which had broad bipartisan support, passed the House on March 26th and the Senate on April 14th. The law also extends funding for the Children’s Health Insurance Program (CHIP) for two more years. CMS had instituted a 10 -business day hold on processing of claims for services on or after April 1, 2015 while Congress finished its deliberations. However, some claims were paid during this period at the reduced rate. CMS has announced that those claims will be automatically reprocessed by the Medicare Administrative Contractors.
  2. SGR Bill Eases Gainsharing Rules; Delays Two Midnight Policy: The SGR legislation amends the civil monetary penalties (CMPs) law that prohibits the offering or accepting of inducements to reduce or limit services to Medicare or Medicaid beneficiaries to state that such inducements would be permissible provided the services being limited are not “medically necessary.” This will make it easier for physicians and hospitals to engage in certain “gainsharing” arrangements in which hospitals offer physicians a percentage share of any reduction in the hospital’s costs for patient care attributable in part to the physician’s efforts. The legislation also requires OIG and HHS to report to Congress, within a year, on options for further amending the Medicare and Medicaid fraud and abuse laws and regulations to allow for additional gainsharing arrangements that would otherwise be subject to CMPs. The legislation also delays the two-midnight rule until September 30, 2015. The two-midnight rule targets short-stays by providing that a hospital admission that does not encompass at least two midnights will be treated as outpatient observation care and will not be reimbursed at the higher inpatient DRG rates. The hospital community has been strongly opposed to this rule.
  3. ACO Report Shows Modest Savings: The New England Journal of Medicine recently released a study, Performance Differences in Year 1 of Pioneer Accountable Care Organizations, analyzing the cost savings results from the first year of the Pioneer ACO program. Under the Pioneer program, ACOs share in savings with Medicare if spending for attributed patient populations falls below a financial benchmark and incur losses if spending exceeds the benchmark. Overall, the study found that the program resulted in a reduction of 1.2% in spending on Medicare patients in its first year. Despite the modest savings, 13 of the original 32 enrolled provider organizations withdrew from the Pioneer program due to the unsustainability of the financial model for already efficient organizations and concerns that savings determined by CMS in comparison with benchmarks may underestimate the actual savings achieved by ACOs. Overall, one of the main conclusions from the study is that sustaining or expanding participation in a Pioneer-like ACO program will probably require greater and more reliable rewards for ACOs that reduce spending than those currently in place.
  4. Supreme Court Holds Providers Cannot Bring Suit Over Low Medicaid Rates: In a 5-4 decision issued on March 31, 2015, the Supreme Court, in Armstrong v. Exceptional Child Center, held that Medicaid providers may not sue state officials over the adequacy of Medicaid rates. The Medicaid Act’s “equal access” provision requires states to use rate methodologies that assure Medicaid payments are sufficient to enlist enough providers so that care and services are as available to Medicaid beneficiaries as they are to the general population in the same area. The Court held that Medicaid providers are not the intended beneficiaries of the Act and have no right to bring sue to enforce the Act.
  5. Florida to sue CMS for allegedly trying to force the state to expand Medicaid: Florida Governor Rick Scott indicated in a statement on April 16 that he plans to take legal action against CMS on the grounds that the agency under the leadership of President Obama has cut off Low Income Pool (LIP) healthcare funds to Florida to force the state to expand Medicaid under the Affordable Care Act. Governor Scott argued that this move by the Obama administration is contrary to the Supreme Court’s decision in National Federation of Independent Business v. Sebelius. This announcement occurs after CMS indicated last February that it would not renew Florida’s Medicaid waiver “in its present form.” Governor Scott had previously sent a letter to President Obama asking him to come to an agreement on a version of the LIP program that would work for both Florida and CMS going forward. The LIP program provides additional federal funding to Florida hospitals that provide a large amount of care to poor and uninsured patients. The funding expires at the end of June.
  6. EHR Interoperability: Government identifies blocking of the exchange of health information as a major concern; sets goal for interoperability across the United States by 2017: On August 10, 2015 the Office of the National Coordinator for Health Information Technology (ONC) submitted a report to Congress on “health information blocking” defined as “when persons or entities knowingly and unreasonably interfere with the exchange or use of electronic health information.” It could include, for example, IT developers charging fees to send, receive, or export electronic health information stored in an EHR. Since the passage of the HITECH Act, the government has invested over $28 billion to move the adoption of health IT forward and create an “interoperable learning health system.” According to the ONC, “health information blocking” interferes with the goals of the HITECH Act and health reform and that addressing information blocking “will likely require congressional intervention.” The ONC had previously released a “Nationwide Interoperability Roadmap” on January 30 that sets a goal for nationwide interoperability for “a majority of individuals and providers” by 2017.
  7. CMS proposes to simplify meaningful use program and realign its objectives and measures: On April 10, 2015, CMS introduced a second proposed rule to realign Stage 1 and Stage 2 of the meaningful use of EHR program with Stage 3 and to simplify meaningful use reporting requirements. CMS had previously introduced the Stage 3 proposed rule on March 30, 2015. The new rule would streamline reporting requirements by reducing the total number of objectives under the meaningful use rule, removing redundant measures, and realigning the reporting period as of 2015 to the calendar year as opposed to the fiscal year. The reporting period for 2015 has also been reduced to any 90-day period within the calendar year to give providers time to accommodate these changes. Like the ONC, CMS has also emphasized interoperability of electronic health record technology as part of its announcement of this proposed rule.
  8. CMS Issues Proposed Hospital Inpatient Rates for FY 2016; Hospital Payments Increase By Only 1.1%: On April 17, CMS released a proposed rule on the 2016 hospital inpatient prospective system rates. The proposed rule increases Medicare payments to hospitals by 1.1%, or $120 million. In order to receive the 1.1% payment increase, general acute hospitals must participate in the Hospital Inpatient Quality Reporting Program and be meaningful users of the electronic health record. Long-term care hospital payments are proposed to decrease by 4.6% or approximately $250 million.
  9. Uninsured Rate In Medicaid Expansion States Dropped by Half: The two-year Health Reform Monitoring Survey conducted by the Urban Institute showed that the number of uninsured individuals dropped by half in the 29 states with Medicaid expansion. Specifically, the percentage of uninsured dropped from 15.8% before the Marketplace opened in September 2013 to 7.5% in these states. The number of uninsured dropped by 30% in the 31 states without Medicaid expansion, from 20.7% uninsured in September 2013 to 14.4% uninsured in March 2015. The survey studied changes in insurance coverage for non-elderly adults from the first quarter of 2013 through the first quarter of 2015, which covered the first two Marketplace open enrollment periods. The largest coverage gains in coverage were from population subgroups that had low insurance coverage levels before the Affordable Care Act, such as young adults and those from racial and ethnic minority groups.
  10. CMS Administrator Slavitt Outlines Priorities for CMS As ACA Turns Five Years Old: On April 14, 2015, Andy Slavitt, the Acting Administrator of CMS, spoke at a Brookings Institution event on the five-year anniversary of the Affordable Care Act. Mr. Slavitt stated that CMS’ priorities should be focused on meeting consumers’ evolving needs and continuing to work with providers to improve cost and quality outcomes. Specifically, he mentioned the need to help newly insured individuals understand their benefits and highlighted the “From Coverage to Care” program which provides information to consumers and providers. He also stated that the delivery system needs to be better aligned with patient primary care and chronic care needs and providers must work to provide more appropriate and higher-quality care in order to receive higher Medicare payments. Finally, he summarized the achievements of the Affordable Care Act thus far, such as the reduction in the uninsured rate, cost containment, and improved health care quality.
March Update - 03/16/2015
  1. President’s 2016 Budget Would Reduce Health Care Spending by $400 Billion Over Ten Years: According to White House estimates, the President’s budget for the Department of Health and Human Services (HHS), released in early February, would reduce health care spending by over $400 billion over ten years. Although unlikely to be passed by Congress, the President’s budget provides insights into the Administration’s priorities and areas where Republicans and Democrats may find agreement. It includes a request that Congress to pass last year’s bi-partisan, bi-cameral agreement on replacement of the Medicare Sustainable Growth Rate (SGR) formula. The biggest savings in the budget would come from prescription drug rebates ($116.1 billion), pay cuts to post-acute care providers ($102.1 billion) and increased Medicare means-testing ($66.4 billion). An additional $29.5 billion in savings would come from reducing payments to hospital outpatient services performed at off-campus locations to physician fee schedule rates or the rates paid to ambulatory surgery centers.
  2. Blue Cross Blue Shield Association Study Shows Wide Price Variation in Hip and Knee Replacement Surgeries: A three-year study conducted by Blue Cross Blue Shield Association (BCBSA) of hospitals in the United States showed large price variations for hip and knee surgeries across geographic areas and even within market areas. For example, the study reports that the average cost for a knee replacement is $31,126; however prices ranged from a low of $11,317 in Alabama to a high of $69,654 in New York City. The purpose of the study is to increase transparency on quality and price and encourage insurers and insureds to be more cost conscious in their selection of providers.
  3. HHS Approves Indiana Medicaid Expansion Alternative: The Administration has approved a plan by the state of Indiana to expand Medicaid by subsidizing private insurance and requiring beneficiaries to contribute to a health savings account. This is the 9th state with a Republican governor to participate in Medicaid expansion. The state estimates that the number of covered individuals, currently capped at 60,000, will increase to 350,000. At the same time, Indiana will raise Medicaid provider rates by 25%, bringing them on a par with Medicare.
  4. Health Insurer Anthem Data Breach- 80 million members : Anthem Health Insurance, the second largest health insurer in the United States, was the victim of a hacker attack exposing as many as 80 million customer records, one of the biggest breaches in the industry’s history. Even though medical information was not compromised, the U.S. Department of Health and Human Services Office for Civil Rights (OCR) considers the kind of personal data stolen by the Anthem hackers as covered by HIPAA. According to a recent Washington Post report, Chinese hackers are suspected to be behind the Anthem attack. Anthem believes its database was infiltrated through use of an employee password by a Chinese state-sponsored operation with the goal of stealing personal information of specific groups of people. Class action lawsuits against Anthem have been filed in at least four states: Indiana, California, Alabama, and Georgia, alleging that Anthem failed to take adequate and reasonable measures to ensure its data systems were protected and that timely notice of the data breach was not provided to customers; Anthem waited eight days before going public with information about the cyberattack. The National Association of Insurance Commissioners announced that it will review Anthem’s security systems and procedures to ensure protection of consumers.
  5. Senate Health Committee Leaders Announce Oversight Initiative On Security Of Health Information Technology : In the wake of the Anthem breach, U.S. Senate Health Education Labor and Pensions (HELP) committee Chairman Lamar Alexander (R-Tenn.) and Ranking Member Patty Murray (D-Wash.) announced a bipartisan initiative focused on examining the security of health information technology and the health industry’s preparedness for cyber threats. The goal of the initiative is to find ways to ensure the safety of health information technology, including electronic health records (EHRs), hospital networks, insurance records, and network-connected medical devices, like pacemakers and continuous glucose monitors.
  6. CMS and the Office of the National Coordinator for Health IT (ONC) announce several policy developments relating to EHR and meaningful use issues: CMS and the Office of the National Coordinator for Health IT (ONC) announced several policy developments recently relating to EHR technology issues. On January 22, CMS updated its FAQ on the third Meaningful Use Stage 2 Summary of Care Measure. In order to satisfy that measure, an eligible provider must transmit at least one summary of care record to another provider that uses a different certified EHR product, or must conduct at least one successful test transmission to CMS’s Designated Test EHR. The FAQ also provides a “work-around” to address difficulties some eligible providers have had in sending transmissions to the CMS Designated Test EHR. On January 29, CMS announced certain modifications to the Medicare and Medicaid EHR Incentive Programs, including shortening the 2015 reporting period to 90 days, as well as aligning hospital and eligible professional reporting periods to the calendar year (eligible hospitals currently report on a federal fiscal year basis). Finally, on January 30, ONC released Connecting Health and Care for the Nation: A Shared Nationwide Interoperability Roadmap Version 1.0. The draft Roadmap is a proposal to deliver better care through EHR interoperability, and calls for ONC to identify the best available technical standards for core interoperability functions. Comments on the draft report are due to ONC no later than April 3, 2015.
  7. HHS Announces Goal of Tying 50% of Medicare Reimbursement to Value-Based Payment: The Department of Health and Human Services (HHS) recently announced a goal of tying 30 percent of Medicare payments to value-based payment models by the end of 2016 and 50 percent by the end of 2018. Secretary Sylvia Burwell also released an article in the New England Journal of Medicine further detailing HHS’ strategy to improve health care quality and reduce costs, including through the use of incentive payments to improve quality and cost of care.
  8. Oncology Pay-Bundle Demo First Step in Helping CMS Meet Value-Based Payment Goals: To advance its goal of basing Medicare reimbursement on value-based payments, CMS recently announced a new oncology care initiative and payment model developed by the CMS Innovation Center to promote coordinated higher-quality care for patients receiving chemotherapy. Participating physician practices will receive “a monthly per-beneficiary-per-month (PBPM) payment” during the program and will be eligible to receive performance-based payments to encourage the coordination of cancer patients’ care and thereby improve outcomes, increase quality, and lower costs.
  9. 9th Circuit Orders St. Luke’s Health System in Idaho to Reverse its Acquisition of a Large Medical Group: The 9th Circuit recently affirmed a federal District Court’s ruling that the 2012 acquisition of the Saltzer Medical Group, P.A., “the largest independent multi-specialty physician group in Idaho,” by St. Luke’s Health Systems, a non-profit hospital system, violated federal antitrust law. The case had been brought by two other Idaho hospitals along with the Federal Trade Commission and the State of Idaho. The 9th Circuit also affirmed the District Court’s order requiring St Luke’s to divest or sell its interest in Saltzer Medical Group. This is just the latest in court ordered divestitures of hospital mergers and acquisitions. In April of 2014, the 6th Circuit affirmed a District Court ordering the ProMedica health system to divest itself of another St. Luke’s hospital in Toledo, Ohio. ProMedica has requested a rehearing en banc from the 6th Circuit.
December Update - 12/03/14

Medicare Releases 2015 Physician Payment Rule; Changes for Global Surgery Services on the Horizon

  • In a final rule released on October 31, CMS announced that it will eliminate all 10-day global surgery codes by 2017 and all 90-day codes by 2018 and replace them with zero day codes. Thus, only services provided on the day of the procedure will be included in the code. Post-operative visits and other services will have to be billed separately. The impetus for this change was an OIG report finding many codes were over-valued and included more visits than were actually performed.
  • The final rule also establishes a new and more transparent policy for review of new and revised CPT Codes in which proposed RVUs will be included in the proposed rule for comment rather than being published for the first time in the final rule with no opportunity for comment. The new process will begin in 2016.
  • Physician fee schedule payments will remain stable through March 31 of 2015 with a conversion factor of $35.5018. This is due to the Protecting Access to Medicare Act (PAMA) passed by Congress last December that provided for a 0.5 percent update for 2014 and a zero percent update for services furnished in the first quarter of 2015. After March 31, by law, the conversion factor will drop by approximately 21.2 percent unless Congress takes action. As reported elsewhere in this issue, there is some momentum for SGR reform during the lame duck period.
  • The Value-Based Payment Modifier takes effect in 2017 for all physicians and will be based on their performance in 2015. Physicians could experience payment reductions of up to 4 percent if they do poorly under the quality tiering process that compares physicians to their peers based on quality and cost. However, CMS has stated that physicians in solo practice or in groups of nine or fewer who participate in PQRS will be held harmless from payment adjustments at least during 2017.
  • CMS will begin, in 2015, the tracking of claims submitted by off-campus, hospital-acquired practices.
  • In the meaningful use arena, CMS is eliminating the requirement that EPs who report clinical quality measures (“CQMs”) electronically utilize EHR technology that is recertified in CY 2015.

2015 Update for Hospital Outpatient and ASC Services

Medicare payments for hospital outpatient services will increase by 2.3% in 2015; ambulatory surgical center payment will increase by 1.4%. CMS also added a new outcome measure to the Hospital Outpatient Quality Reporting Program and the ASC Quality Reporting program for facility visits within 7 days of an outpatient colonoscopy, effective in 2018. Two measures related to prophylactic antibiotics for surgery patients were eliminated because compliance had topped out and they were no longer needed.

SGR Reform in the Lame Duck Period

National medical societies, Senate leaders, the GOP physicians’ caucus, and House Democrats are all calling for a repeal of the SGR in the lame duck session. While Congress is determining its respective leadership positions, committee assignments, and budget issues after the November elections, the pivotal question of how to pay for the repeal remains the greatest hurdle. After producing a substantive solution to the SGR earlier this year, Republicans advanced a delay in the individual mandate and Democrats sought to offset the cost of repeal by using costs savings from the overseas contingency fund. Neither option was palatable to the other party. On October 31, CMS issued a rule on the physician fee schedule noting that if Congress does not act to prevent the SGR cuts, physicians will face a 21.2% cut in Medicare reimbursement in April 2015, when the current patch expires. The Congressional Budget Office (CBO) determined on November 18 that the cost of repeal increased from $138 billion to $144 billion. A one year patch would cost $13.6 billion and a 2 year patch would cost $32 billion. The 2014 lame duck session remains the most attractive time to repeal the SGR given the expected increase in the cost to repeal it in 2015 and the stated interest of Republicans to “clear the decks” of pending legislation in anticipation of 2015 entitlement reforms going forward.

OIG Releases 2015 Work Plan

The HHS Office of Inspector General (OIG) has released its 2015 work plan. Targeted items include physician place of service coding errors, hospital compliance with the “two-midnight” rule, costs associated with defective medical devices, hospital privileging, and medical necessity of high-cost radiology tests.

CMS Begins New Round of Meaningful Use Attestation Audits

CMS has started the latest round of meaningful use program audits, which will continue into April 2015. Providers that have taken advantage of the Aug. 29 final rule allowing continued use of their 2011 edition-certified EHR to earn incentive payments should have documentation proving they were unable to upgrade their EHR systems to meet the latest federal standards for reasons beyond their control. Failing an audit could result in forfeiture of the entire year’s meaningful use incentive payments. Providers are able to appeal any unfavorable audits through a written application process.

Connecticut Supreme Court Recognizes Patient Right to Sue Under State Law for Federal HIPAA Violations

A Connecticut Supreme Court decision will allow a patient to bring suit under state tort law for a violation of HIPAA privacy rules. While it is a well-settled rule that HIPAA does not create a private right of action under federal law for individuals to sue their providers, a number of states are allowing cases to proceed under state law and using non-compliance with HIPAA as evidence of negligence. In the Connecticut case, a medical practice released a patient’s records in response to a subpoena in a paternity case without first notifying the patient, as required by HIPAA. The patient claimed that the practice violated state law by failing to use reasonable care in protecting her medical file, including disclosing the records in violation of the HIPAA Privacy Rule. Connecticut has now followed state court decisions in Missouri, West Virginia, and North Carolina, all of which have held that HIPAA can establish the standard of care in support of common law negligence claims.

CMS Will Refresh Sunshine Act Data by December 31, 2014

CMS has released, in beta form, its Sunshine Act Open Payments search tool, which is intended to facilitate public review of payments by drug and device manufacturers to medical providers. CMS will refresh the 2013 payment data system by December 31, 2014, and will include newly released data related to records that were in dispute as of September 11, 2014. Any records that were disputed after September 11 will not be refreshed until the next data publication in June 2015.

New States Expanding Medicaid Following the Mid-Term Elections?

The results of state gubernatorial elections from November of 2014 indicate that a rapid increase in Medicaid expansion under the Affordable Care Act is unlikely to happen anytime soon. Of 21 states that had previously chosen not to expand Medicaid, and two that were still debating the issue, fifteen had gubernatorial elections during the mid-terms. Fourteen of those states chose Republican governors. There are a few states, however, where Medicaid expansion is still on the table including Florida which, according to a Robert Wood Johnson Foundation Report, would stand to gain over $66 billion in federal Medicaid dollars if it expands. The election of a new Republican governor in Arkansas may throw into question that state’s continued participation in Medicaid expansion which, by law, must be reauthorized every year. Only in Alaska, where voters elected a third-party candidate in favor of Medicaid expansion, are we likely to see a state reconsider its decision not to expand Medicaid, at least for the next two years.

Supreme Court to take New Case challenging Affordable Care Act Subsidies

The Supreme Court granted review in early November of King v. Burwell, a case holding that the subsidy provisions of the Affordable Care Act (ACA) are available only to beneficiaries purchasing insurance through state-sponsored exchanges and not the federal exchange. The court took the case despite objections from the Obama administration, which wanted the Court to wait until lower courts had finished considering the issue. Currently, according to a Kaiser Family Foundation report, there are 27 exchanges fully operated by the federal government, seven exchanges operating under a federal/state partnership (under which beneficiaries enroll through the federal exchange but states may offer some consumer support), and three state-operated marketplaces where the state is using federal exchange technology. Should the court hold that subsidies cannot be offered to enrollees in the federally-operated exchanges, beneficiaries in up to 37 states, amounting to millions of people currently eligible for subsidies, could lose their federal support.

October Update - 10/28/14
President Obama Signs Bill Allowing Veterans to Access Non-VA Providers

President Obama signed the “Veterans Access, Choice, and Accountability Act of 2014” into law in August 2014. The law requires hospital care and medical services to be furnished to veterans through contracts with Medicare providers outside of the VA system when veterans have been unable to schedule appointments or face unreasonable wait times at Veterans facilities. The law also directs the Secretary of the Veterans Administration to work with the Secretary of Health and Human Services to develop, update, and make publicly available a comprehensive database containing all applicable patient safety, quality of care, and outcome measures for VA health care that are tracked by the Secretary.

Congress Recesses Until After Elections, SGR Hangs in Balance

After returning from its August congressional recess for two weeks, the House and Senate recessed again until after the elections, setting up a showdown over the Medicare physician fee schedule during what is expected to be a short, lame-duck session after the elections or early in 2015. For over a decade, Congress has relieved the cuts called for by the Sustainable Growth Rate (SGR), the element of the Medicare physician payment formula that would otherwise have resulted in significant cuts in these payments. In each case, Congress has implemented a fix to avoid the drastic effects of applying the SGR formula to the fee schedule. The current “patch” for the SGR expires on April 1, 2015. Leaders of the 5 largest medical societies – American Osteopathic Association (AOA), American Medical Association (AMA), American College of Surgeons (ACS), family physicians (AAFP), and ACP (internists) – banded together to meet with congressional leaders the last week before Congress recessed to advocate for SGR repeal during the lame duck session. 2014 presents the most plausible time to repeal the SGR given that the committees responsible for the Medicare physician fee schedule are in bipartisan, bicameral agreement on the means for doing so. However, SGR repeal remains a daunting proposition for members of Congress, mainly due to its cost. While agreement on the substance has been reached, there is significant disagreement among Republicans and Democrats about how to pay for the repeal. With the Senate majority in question, decisions about the fate of the SGR are on hold until after the elections.

Physician Groups Respond to IOM GME Report, Primary Versus Specialty Issues Arise

Following the July 2014 release of a report from the Institute of Medicine recommending sweeping changes to government financing of Graduate Medical Education (GME), several medical societies weighed in with their vision of GME reform. A number of Members of Congress also quickly weighed in on the issue, introducing legislation on the topic. The American Academy of Family Physicians (AAFP) held a briefing on Capitol Hill on September 15 to release its recommendations for the future of GME. AAFP calls for “limit(ing) payments for direct graduate medical education and indirect medical education (IME) to training for first-certificate residency programs,” setting up what is likely to be a pitched battle between primary and specialty medicine for scarce federal dollars. The American Association of Medical Colleges (AAMC) has been perhaps most vocal in its rebuke of the IOM report, saying that the “proposal’s major cuts to patient care will slash funding for vital care and services available almost exclusively at teaching hospitals.” The American Osteopathic Association (AOA) held a Congressional Hill briefing on September 17 to outline the issues facing the profession and Congress as it seeks to redesign and modernize the program. The AOA is “supportive of the IOM Committee’s recommendations to modernize the GME system in service of national health care objectives, and encourages members of Congress to pass legislation that aligns continued federal funding with these goals, while promoting accountability, transparency and innovation within the GME system.” Several members of Congress introduced legislation shortly after the IOM study’s release, led by Senator Murray’s proposal of S. 2728, “The Community-Based Medical Education Act of 2014.” While action is not expected in Congress on GME this year, the issue is likely to be the subject of congressional consideration and action in 2015.

CMS Issues Final Rule Granting Providers, Hospitals Relief From Meaningful Use Stage 2

The Centers for Medicare and Medicaid Services (CMS) and the Office of the National Coordinator for Health Information Technology (ONC) have issued a final rule on meaningful use that closely follows what the agencies included in their May 20, 2014, proposed rule. The final rule gives providers some flexibility to meet the meaningful use timeline for 2014 by allowing the use of 2011 Edition certified electronic health record technology (CEHRT), 2014 Edition CEHRT, or a combination of 2011 Edition and 2014 Edition CEHRT for their 2014 reporting year. Under the old rules, all physicians attesting to meaningful use in 2014 were required to use a 2014 edition CEHRT regardless of the stage of meaningful use to which they were attesting. Additionally, the final rule delays the January 1, 2016 deadline for implementation of Stage 3 meaningful use requirements for the first cohort of adopters to January 1, 2017. The delay is intended to give CMS and ONC the opportunity to analyze the data obtained during Stage 2 before setting Stage 3 requirements. Finally, the agencies have modified clinical quality measure reporting requirements to conform to the new CEHRT flexibility provisions. Many providers, and late EHR adopters, should benefit from the extension of the original stringent deadlines set by CMS.

RAC Contracting Turmoil: New Contracts on Hold; CMS authorizes re-start of automated audits

New RAC contracts designed to fix certain problems in the RAC audit program will be on hold while the a federal district court considers an appeal filed by one of the RAC Contractors – CGI, Inc. CMS had temporarily suspended RAC audits in June of this year to allow for transitioning to the anticipated new contracts. However, the court order prevents CMS from moving forward with new contracts until the appeal has been decided. As a result, CMS will re-start automated audits under the old contracts until the new RAC contracts can be awarded. CGI’s appeal could delay the new RAC contracts for up to a year.

Rural Hospitals May Get Reprieve on Physician Supervision Requirement

Both chambers of Congress have passed legislation that would allow small rural hospitals to provide outpatient services without having a physician on-site. The legislation is intended to reverse CMS’ January 1, 2014 lifting of its enforcement moratorium on the physician supervision rule. Under CMS policy now in effect, small rural hospitals must have a physician on-site to directly supervise outpatient services, such as drawing blood or providing activity therapy. The legislation would extend the enforcement moratorium through 2014 and prevent retroactive enforcement while Congress considers a more comprehensive solution. Both the AHA and the National Rural Health Association support the legislation.

HHS Issues Final Rule on 2014 Edition Release Electronic Health Record Certification Criteria and Program

On September 11, the ONC issued the 2014 Edition Release 2 EHR Certification Criteria final rule adopting ten optional certification criteria and two revised criteria that provide increased flexibility and clarity and enhance health information exchange. The final rule also made a few improvements to the ONC Health IT (HIT) Certification Program and removed outdated regulation text from the Code of Federal Regulations. The ONC Fact Sheet on the rule summarizes the new criteria and improvements.

Medical Community United in Opposition to Elimination of CME Exemption under Physician Sunshine Act

CMS has received thousands of letters from physicians and others urging it not to eliminate the reporting exemption for CME under the Physician Sunshine Act. That exemption allows manufacturers to avoid reporting funds that support CME programs if the programs are accredited by one of five named accrediting organizations. CME proposed to eliminate the exemption because of complaints that it unfairly excluded funding for CME programs that were accredited by entities other than the five accrediting organizations named in the regulation. CMS takes the position that the exemption is not needed because another exemption for “indirect” payments is sufficient for programs that do not allow industry sponsors to influence the choice of speakers or content. The CME Coalition, whose members include many physician and industry organizations, have recommended that instead of axing the exemption, CMS expand it to include CME accredited by any organization that meets certain recommended criteria. The CME Coalition asserts that if CMS does not reverse its position, CME providers would lose close to $200,000,000 in CME funding over three years – approximately 10.6 percent of their sponsorship funds.

MedPAC Questions CMS Efforts to Measure Quality at Individual Doctor Level

MedPAC, Congress’ adviser on the Medicare program, is questioning CMS efforts to measure quality at the individual physician level due to the complexity of the PQRS and Value-Based Modifier programs. In an August 28th, 2014 letter to CMS, MedPAC stated that if clinicians do not know how to improve their value-based modifier score, they will be unlikely to devote resources to improving quality and increasing efficiency. MedPAC also noted that some specialties lack clinically meaningful measures and stated that a better approach to improving quality of individual physicians is to encourage them to join groups such as ACOs or Medicare Advantage plans that are financially and clinically accountable for patients.

New ACO Data Shows Mixed Results

Performance results for ACOs in the Medicare Shared Savings Program were recently released by CMS and show mixed results. About one fourth of the 220 participating ACOs earned bonuses; another fourth saved money for the Medicare program but not by enough to share in savings. The remaining ACOs did not generate any savings for the program. Savings distributed to those ACOs earning bonuses totaled $445 million; savings retained by the Medicare program were $372 million. However, the ACO industry states that ACO participation will decline unless CMS changes the rules and does not require ACOs to be subject to downside risk during the second year of the contract. It also urges an increase in the shared savings percentage and criticizes CMS for the way it attributes beneficiaries to ACOs.

U.S. Court of Appeals for the District of Columbia Circuit to rehear ACA case AMITA

The full D.C. Circuit Court of Appeals has agreed to re-hear the case of Halbig v. Burwell. In July, a three-judge panel from the D.C. Circuit Court ruled that individuals in the 36 states that sign up for insurance through the federal health insurance exchange as part of the Affordable Care Act are ineligible for subsidized insurance. On the same day of this ruling, a Virginia federal appeals panel unanimously ruled the opposite way on the identical issue. The full D.C. Circuit Court of Appeals comprises of 13 judges. Eight of the 13 are Democratic appointees. The outcome of the case could affect more than half of the 8 million Americans who have purchased taxpayer-subsidized private insurance under the Affordable Care Act.