Tag: CMS

Trump Administration Takes First Steps to Support Healthcare Exchanges, but Key Questions Remain

healthcare exchangesIn an effort to stabilize the Exchanges and encourage issuer participation, the Centers for Medicare & Medicaid Services (CMS) recently extended the federal Exchange application and rate filing deadlines and published a proposed rule affecting the individual health insurance market and the Exchanges. While issuers will likely see these actions as encouraging signs of the Trump administration’s willingness to support the Exchanges, these actions do not resolve the political uncertainty regarding the Affordable Care Act’s fate or whether cost-sharing reductions will be funded for 2018. These outstanding questions will likely be a key factor in Exchange stability going forward.

In Depth

On February 17, 2017, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule in the Federal Register outlining a series of proposals intended to stabilize the individual health insurance market and the Exchanges created by the Affordable Care Act (ACA). Comments on the proposed rule are due to CMS on March 7, 2017.

On the same day as the proposed rule was published, CMS announced that it was extending the federal Exchange application and rate filing deadlines with the apparent goal of ensuring that the proposed rule changes could be finalized and taken into account when issuers make Exchange participation and rate decisions for 2018. Although issuers are likely to support the proposed rule and delayed federal filing deadlines, it is not clear what effect these changes will have since they do not resolve the ongoing uncertainty regarding the fate of the ACA repeal effort in Congress and federal funding of cost-sharing reductions in 2018.

CMS believes that the proposed “changes are urgently needed to stabilize markets, to incentivize issuers to enter or remain in the market and to ensure premium stability and consumer choice.” The agency’s urgency is underscored by recent reports that Humana would exit the Exchanges entirely for 2018 and other companies have publicly stated that they are uncertain about the extent of their participation in 2018. Looking just at states using healthcare.gov, there are 960 counties with only one issuer in 2017. Additional issuer defections for 2018 would increase the odds that certain counties will have no issuers participating on the Exchange. This would result in residents of such counties being unable to utilize premium or cost-sharing subsidies for which they otherwise qualify.

The proposed rule addresses long-standing issuer concerns about special enrollment periods and perceived gaming of the 90-day grace period available to enrollees receiving premium subsidies. Looking beyond the specific proposals, the proposed rule is significant for the simple fact that it is the Trump administration’s first concrete step to support and stabilize the Exchange market. This likely provides a measure of relief for industry stakeholders that were unsure whether Republicans would be willing to support the Exchanges, which were a key focus of Republican opposition to the ACA. There had been mixed signals during the Trump administration’s first weeks about how it would approach ACA implementation. President Trump issued an executive order his first day in office directing the Secretary of Health and Human Services (HHS) and other agencies to “exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of” ACA requirements, creating uncertainty regarding how this broad directive would be implemented. In addition, the administration reportedly pulled back on advertising healthcare.gov during the final weekend of open enrollment, leading some to speculate that the Trump administration would be less supportive of Exchange stability than the Obama administration. In the proposed rule, however, CMS tries to make clear that it shares issuers’ goals of “improv[ing] the risk pool and promot[ing] stability in the individual market.”

The question remains whether the proposed changes (and the directional signal of Trump administration support) are sufficient to achieve their stated policy goals. That question is significantly influenced by the status of the ongoing legislative process seeking to quickly repeal the ACA. Although CMS has in this proposed rule endorsed the goal of Exchange market stability in anticipation of CY 2018 open enrollment proceeding as planned, a Republican-led Congress and the Trump administration have continued to signal their commitment to repeal the ACA. Even with the recent delay in Exchange product and rate filing deadlines, the political process (and the related uncertainty about the ACA’s fate) may not be resolved by the time issuers need to begin developing their rates and making decisions on CY 2018 participation. The proposed rule also does not resolve lingering questions related to Exchange funding, such as the availability of cost-sharing reductions for 2018, that will likely be a key factor in Exchange stability going forward.

Summary of Proposed Rule Changes

The proposed rule changes are largely designed to close potential avenues of adverse selection and improve the overall risk pool by encouraging healthier individuals to enroll in coverage.

Open Enrollment

CMS proposes shortening the 2018 open enrollment period from November 1, 2017, through January 1, 2018, to November 1 through December 15, 2017. CMS originally proposed that the shortened open enrollment period would be effective for the 2019 open enrollment period, but the agency is now proposing to move this up by one year. CMS expects that this change would improve the risk pool by reducing enrollments late in the open enrollment period spurred by an applicant’s recent discovery of a need to access health care services. This policy would also increase premium payments to plans, as more enrollees would begin the year’s coverage in January instead of February.

CMS likely would need to extensively market the shortened enrollment period to ensure public awareness. It remains to be seen whether the Trump administration is comfortable with such a commitment to marketing the program given the pull back on marketing efforts for the end of CY 2017 open enrollment.

Special Enrollment

CMS proposes a series of limitations on special enrollment periods intended to reduce adverse selection. Previously, issuers had complained that many healthy individuals were forgoing coverage until they were sick, taking advantage of lax special enrollment period rules to enroll in coverage only when it was needed.

To limit gaming, CMS proposes to expand an enrollment verification pilot program for states using healthcare.gov, planned to begin in summer 2017. CMS proposes that applicants enrolling in coverage under a special enrollment period would have their enrollment pended until they provide documentation that they actually qualify for the special enrollment period. Where providing and processing documentation would result in a delay in coverage after the requested coverage effective date, this policy would result in retroactive coverage. As such, where verification results in a delay in coverage of two months or more, CMS proposes to permit enrollees to request a later effective date.

Guaranteed Availability

CMS also proposes to reinterpret the “guaranteed availability” standard, which requires health plans in the individual market to sell coverage to any willing buyer during open or special enrollment periods. CMS proposes to create an exception to guaranteed availability for individuals with unpaid premiums due to the issuer from which the individual is seeking to purchase new coverage. In part, this proposal seems to address issuers’ concern that some individuals have taken advantage of generous grace periods to discontinue premium payment towards the end of a benefit year only to reenroll with the same plan for the next benefit year. Individuals could still enroll in coverage without coming due on unpaid premium amounts by enrolling with a different issuer (if there is more than one issuer participating in the service area).

Accepting Comments on Continuous Coverage Proposals

CMS requests comments on potential policies it could implement to promote continuous coverage, but the agency is not proposing any specific policies at this time. A continuous coverage requirement is a central feature of many Republican ACA replacement proposals as an alternative to the ACA’s individual mandate. The ACA’s statutory guaranteed availability protections are broad, so adoption of a generally applicable continuous coverage requirement would likely require a legislative change. This is, however, a signal that CMS, under HHS Secretary Price and congressional Republicans, is considering similar policy solutions.

De Minimis Variation

CMS proposes to expand the definition of de minimis variation, the amount by which a qualified health plan’s (QHP’s) actuarial value may vary from the statutorily mandated value. CMS proposes to increase the amount of permissible variation to -4/+2 percentage points from the +/-2 percentage points currently permitted. CMS argues that this policy will promote market stability by permitting plans to maintain the same plan design year over year. CMS additionally argues that this policy may promote competition and put downward pressure on premiums, encouraging healthier individuals to participate in the plan.

Network Adequacy

CMS also proposes to defer to states with respect to network adequacy for Exchange plans in federally facilitated Exchange (FFE) and state-based Exchange states. In past years, CMS has proactively verified that QHPs in FFE states have an “adequate” network of providers. Through such reviews, CMS has enforced “maximum time and distance standards” requiring, for at least 90 percent of enrollees, that certain types of providers be within a specified distance and travel time. These quantitative standards mirrored the Medicare Advantage program requirements. CMS proposes to discontinue its analysis of QHP time and distance, instead deferring to state regulators and accrediting bodies.

Network adequacy requirements vary significantly across states, so this change will affect issuers differently. While the National Association of Insurance Commissioners has adopted a new Health Benefit Plan Network Access and Adequacy Model Act, it has not been adopted in any states and defers to individual states to set applicable time and distance standards. Thus, CMS’s deferral of network adequacy to states may permit narrower networks than under CMS’s quantitative standards.

Executive Order on Significant Regulatory Actions

Also of note is CMS’s approach to President Trump’s recent executive order, which requires that any “significant regulatory actions that [impose] costs” be offset through the elimination of costs associated with at least two prior rules. The proposed rule offers an early opportunity to examine how the administration will implement this executive order. CMS determined that the proposed rule “is not a significant regulatory action that imposes cost” under the recent executive order. The basis for this finding appears to be CMS’s belief that the proposed rule results in a net cost reduction. Thus, while CMS characterized the rule as “significant” for creating separate costs and benefits that exceed $100 million, the net cost reduction allows the agency to avoid eliminating two rules. Industry stakeholders should continue to monitor how CMS implements President Trump’s recent executive order.

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ARTICLE BY Ankur J. Goel, Jeremy Earl & Seth Schneer of McDermott Will & Emery

© 2017 McDermott Will & Emery

3 Takeaways from the Recent Ruling on Statistical Extrapolations in CMS Audits

On Jan. 20, 2016, a federal district court in the Western District of Texas affirmed a decision of the Medical Appeals Council (Appeals Council) affirming a CMS contractor’s extrapolation methodology used to assess an overpayment of more than $773,000 from a home health provider, Maxmed. Three key takeaways from the Court’s decision that may help health care providers avoid a similar situation include:

  1. Providers should be keenly aware of the rules limiting CMS’s participation as a party to an appeal when devising their appeal strategies, and its subsequent ability to appeal the ALJ decision on its own. Similarly, they should be aware of the Medicare Appeals Council’s ability to review any ALJ decision or dismissal on its own motion, or with referral from CMS.

  2. When disputing a statistical sample and/or extrapolation, submit an expert’s opinion as soon in the appeals process as practicable, preferably at the redetermination stage. When a statistical extrapolation is disputed, the Qualified Independent Contractor relies on its own statistical expert (often times an outside accounting firm). If you can overturn the extrapolation in the first two levels of appeal, and you don’t seek ALJ review, CMS cannot overturn the determination.

  3. CMS’s rules for statistical extrapolation balance its competing interests in reaching an accurate estimate of the overpayment: limited resources vs. accuracy. CMS admits in its manuals that it does not require the most accurate estimate, and will compromise on reaching the most accurate estimate by accepting a lower bound estimation. Therefore, CMS will trade a more imprecise statistical extrapolation for a lower overpayment estimate. Knowing this can help you and your statistical expert craft a more effective argument to try and get the statistical sampling thrown out.

Background

The case arose out of a post-pay investigation by the Zone Program Integrity Contractor (ZPIC) Health Integrity, which denied 39 of 40 sampled Maxmed claims in a post-payment audit. Health Integrity then used a statistical extrapolation to calculate an estimated overpayment of $773,967.00.

Appeals

After the Medicare Administrative Contractor Palmetto GBA and Qualified Independent Contractor confirmed Health Integrity’s findings, Maxmed appealed to an Administrative Law Judge (ALJ). The ALJ found one denied claim in favor of Maxmed, and also concluded that Health Integrity’s extrapolation methodology was not valid because it did not conform to the Medicare Program Integrity Manual (MPIM).

Parties’ Arguments

In the appeal, Maxmed argued that Health Integrity’s sampling and extrapolation methodology was invalid because Health Integrity failed to record the random numbers it relied upon in forming the sample, its choice of sampling units based upon clusters of claim-lines resulted in a skewed distribution, and its precision level of 8 percent resulted in an unacceptably imprecise extrapolation.

Court’s Decision

The court agreed with the Appeals Council, and granted summary judgment to HHS, finding that, “substantial evidence supported the Appeals Council’s overall determination that the ALJ erred by invalidating the statistical sampling and overpayment extrapolation.”

© Polsinelli PC, Polsinelli LLP in California
  • See more at: http://www.natlawreview.com/article/3-takeaways-recent-ruling-statistical-extrapolations-cms-audits#sthash.s4lBCnDo.dpuf

Over a Decade in the Making: CMS Releases Long-Awaited Medicaid Managed Care Rule

On May 27, 2015, the Centers for Medicare and Medicaid Services (“CMS”) published a 653-page proposed rule affecting the thirty-nine states (plus the District of Columbia) that use managed care organizations (“MCOs”) to administer their Medicaid benefits. This represents the first major overhaul of the Medicaid managed care system since the rules were established in 2002, now covering approximately seventy percent of all Medicaid enrollees.

Centers for Medicare & Medicaid Services, CMSPublic comments are due July 27, 2015, which gives health plans, providers, consumer groups, and even state Medicaid directors a narrow window to identify potential areas of concern and to propose solutions for formal CMS consideration. While some issues will align important stakeholder groups, others are likely to remain contested during the comment period and up to publication of the final rule.

As a backdrop leading to the publication of the proposed rules, the managed care landscape has become much more complex and variable among the states that have adopted this approach in their Medicaid programs. Because of this, CMS has been contemplating ways to ensure more consistent rules that promote adequate access to health services while also creating more synergy between Medicaid, Medicare, and even the commercial sector via delivery system reforms that improve quality and lower costs.

The proposed rule also addresses some areas of perceived inequity in the Medicaid program that range from behavioral and substance-abuse treatment to long-term care and insurance reforms akin to those in the Affordable Care Act (“ACA”), which was mostly targeted at commercial health plans.

But CMS’s ambitions in proposing the rules need to be tempered by the reality that state Medicaid programs are administered by the individual states: through federal regulations CMS can establish minimal standards for the state Medicaid managed care systems but states may enact state regulations or impose managed care contract terms that go farther than the federal requirements. The managed care community must view federal regulations as a starting, not an end, point.

CMS categorizes the massive Medicaid managed care proposed rule into several issue areas in its Fact Sheet:

Beneficiary Experience

  • Requires states to improve access to care through regular assessment and certification of a health plan’s provider network and time/distance standards to providers including behavioral health, pediatric dental, and pharmacy.

  • Updates communication rules directed towards Medicaid/CHIP beneficiaries to include electronic methods, non-English language options, and additional information in provider/drug formulary directories,

  • Sets standards for care coordination, assessments and treatment plans that include care transition services, initial health risk assessments within 90 days of enrollment, and regularly updated assessments and treatment plans for beneficiaries with special health care needs or long-term services and supports.

  • Creates a new enrollment selection period of 14 days to allow beneficiaries to research and select managed care plan options.

State Delivery System Reform

  • Encourages participation in Medicare-led alternative payment models and initiatives.

  • Establishes minimum reimbursement standards or fee schedules for providers that deliver a particular covered service.

  • Clarifies “short-term stay” rule that managed care plans are able to receive capitated payments for beneficiaries who are admitted to an institution for mental disease (“IMD”) for no more than 15 days so long as the facility is an inpatient hospital or sub-acute short-term crises residential service.

Quality Improvement

  • Creates a public notice and comment period to determine a core set of performance measures and improvement projects for states related to managed care plans.

  • Establishes a Medicaid managed care quality rating system in each state that would report performance information on all health plans, akin to the Medicare Advantage (“MA”) and marketplace ratings.

Program and Fiscal Integrity

  • Requires certain types of data to be used for rate setting purposes and the level of documentation and detail about the development of the capitation rates such as trend factors, adjustments and the development of non-benefit costs.

  • Establishes a medical loss ratio (“MLR”) for both Medicaid and CHIP plans using standards similar to Medicare Advantage and the commercial market.

  • Adds several components to fraud prevention efforts by implementing procedures for internal monitoring, auditing, and prompt referral of potential compliance issues, etc.

Managed Long-Term Services and Supports (“MLTSS”) Programs

  • Affirms recent updates such as Olmstead, stakeholder engagement requirements, and provider credentialing in the development and implementation of MLTSS programs.

  • Requires MLTSS-specific elements to be included in a state’s quality improvement strategy and reporting systems to protect MLTSS enrollees.

Children’s Health Insurance Program (“CHIP”)

  • CMS proposes to align the CHIP managed care regulations, where appropriate.

Alignment with Medicare Advantage and Private Coverage Plans

  • Importantly, CMS proposed where appropriate and possible, to align the Medicaid managed care regulations with those governing MA and private health insurance plans including the MLR, appeals and grievances, and marketing rules.

Finally, other highlights from the proposed rule include a requirement that Medicaid managed care entities offering outpatient drug coverage must now collect the necessary information for the states to include those managed care drugs in rebate invoices to drug manufacturers pursuant to the Medicaid Drug Rebate Program (“MDRP”) as well as modifications to the rules governing plan appeals and grievance procedures to increase uniformity with the procedures that apply to MA and commercial plans.

Discussion

Alignment with Medicare Advantage and Private Coverage Plans

CMS proposes numerous changes aimed at aligning Medicaid managed care with other health care programs… click here to continue reading…

ARTICLE BY Susan W. Berson, Andrew J. Shin, Ellyn L. Sternfield, Pamela Kramer, Lauren M. Moldawer & Bridgette A. Wiley of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Full Speed Ahead for Meaningful Use re: Medicare and Medicaid Electronic Health Records

Sheppard, Mullin, Richter & Hampton LLP

On Friday, March 20, 2015, the Centers for Medicare and Medicaid Services (“CMS”) issued a proposed rule which would make significant changes to the federal Medicare and Medicaid Electronic Health Records (“EHR”)Incentive Programs (collectively the “Meaningful Use Program”).

The Meaningful Use Program operates in 3 stages, with providers required to demonstrate increasing use/metrics at each stage to continue to receive payments.  Under the Meaningful Use Program, eligible professionals, eligible hospitals and critical access hospitals can receive incentive payments for demonstrating Meaningful Use of certified EHR technology.  Furthermore, starting in 2015, health care providers who are eligible to participate in the program, but choose not to participate or are not able to demonstrate Meaningful Use, may see downward payment adjustments to the amounts reimbursed by Medicare.  Thus, the Meaningful Use Program has been a source of additional income to some providers, but for many others it has been a serious concern due to the significant capital outlays required to demonstrate Meaningful Use of certified EHR and potential penalties that may be forthcoming.  The proposed rule from last Friday has some providers even more concerned about the feasibility of meeting Meaningful Use standards and the push to achieve Meaningful Use when so many are struggling.

Under the proposed rule, CMS will make several changes to the Meaningful Use Program.  The following are descriptions of some of CMS’ important proposals:

  • Stage 3 Meaningful Use will have an optional year in 2017 and starting in 2018, all providers will report on the same definition of Meaningful Use at Stage 3, regardless of prior participation. CMS intends this requirement to respond to stakeholder input re the complexity of the program, success to date and to set a long-term sustainable foundation for the Meaningful Use Program.

  • In order to align the Meaningful Use Program with other CMS incentives, such as the Physician Quality Reporting System or PQRS, CMS will require all providers to report on a calendar year EHR reporting period beginning in 2017.

  • CMS desires to promote improved patient outcomes and health information exchange in Stage 3 and thus the rule focuses on patient engagement. For example, providers must meet two of the following three requirements for patient engagement: (i) patients view, download or transmit their health information; (ii) secure messaging between providers and patients; and (iii) patient generated health data from a non-clinical setting is incorporated into a certified EHR.

While CMS sets forth many goals in support of its proposed rulemaking (e.g., the triple aim), one message comes through clearly, CMS is pushing forward with EHR and is not slowing down due to sluggish adoption by health care practitioners.  Accordingly, providers and their industry groups have been lamenting the onerous burdens of the Meaningful Use Program and the fact that less than 35% of hospitals and only a small fraction of physicians have met Stage 2 requirements. Furthermore, providers who fail to meet the minimum use thresholds could be subject to hundreds of millions of dollars in penalties.

Contrary to providers, those in the health information technology or digital health industry should be quite pleased with the rule as it may provide them with additional customers and markets as providers try to interface with and collect data from patients’ health wearables (e.g., smart watches with heart rate sensors).

In sum, the proposed rule clearly signifies that CMS is planning to take a stringent approach to ensure that providers are meaningfully compliant by 2018.  Providers can take steps to mitigate their exposure to penalties by investing in certified EHR, perhaps in conjunction with applying for hardship exemptions from the Meaningful Use Program’s requirements, to delay the date where they must comply or be subject to penalties.  Health information technology vendors generally and EHR vendors specifically should plan to modify and ensure that their technology is compliant and sufficiently differentiated to provide value to health care providers that must comply with the Meaningful Use Program’s requirements.

ARTICLE BY

Eric A. Klein
Vinay Bhupathy
Sheppard, Mullin, Richter & Hampton LLP

Gear Up for Increased CMS Scrutiny of Hospice Services for Assisted Living Facility Residents

Poyner Spruill LLP Attorneys at Law, a North Carolina Law Firm

A recent study issued by the evaluation and policy division of the U.S. DHHS Office of Inspector General (OIG) indicates that hospices can expect increased scrutiny regarding the services they provide to assisted living facility residents. The study, dated January 13, 2015, was based upon an evaluation of all Medicare hospice claims from 2007 through 2012. Key observations made by OIG included the following:

  • Hospices provided care significantly longer for individuals in the assisted living facility setting as compared with other settings such as private homes and skilled nursing facilities.

  • For-profit hospices received much higher Medicare reimbursement per beneficiary than did nonprofit hospices.

  • Residents of assisted living facilities often had medical diagnoses that required less complex care.

  • Hospices often furnished fewer than five hours of visits for routine home care patients in assisted living facilities.

The OIG study does not speak to the important reality that residents of assisted living facilities typically are healthier than residents of skilled nursing facilities, which would tend to support a higher median number of hospice days in the assisted living setting.

OIG recommends to CMS that, as part of its ongoing hospice payment reform efforts, it should reduce incentives for hospices to target assisted living facility residents with certain diagnoses and those likely to have extended periods of care. Of course, this follows a similar recommendation by MedPac. OIG’s study recommends that CMS “target certain hospices for review.” These include hospices with a high percentage of CMS payments for patients in assisted living facilities, and hospices with a high percentage of  patients receiving care over 180 days or patients with certain diagnoses. In the wake of this critical study, hospices, especially for-profit hospices, can expect increased scrutiny of the services they provide to assisted living facility residents.

Hospice providers whose patients include a high number of assisted living facility residents should expect to be subject to increased Medicare review. Hospices should consider taking preemptive defensive steps now, such as:

  • Evaluating their data on assisted living facility residents in order to identify any outliers or potentially unsupported distinctions from services provided in other settings; and

  • Conducting internal compliance reviews regarding the services provided to assisted living facility residents.

This is especially true of for-profit hospices that fall in or near the category of high service to assisted living facility residents.

ARTICLE BY

Pamela A. Scott
OF
Poyner Spruill LLP

Centers for Medicare and Medicaid Services (CMS) Issues Data Listing Medicare Payments To Individual Physicians

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As it had promised to do, the Medicare program issued data listing the amounts paid to individual physicians for services rendered by those physicians to Medicare beneficiaries for calendar year 2012.  CMS indicated that the data was issued “in order to make our healthcare system more transparent, affordable, and accountable.”  The Wall Street Journal has created a tool which allows users to search the CMS data set by name, specialty and location.  The Medicare announcement and data set link can be found here: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trend….

Article By:

Beth Christian
Of:
Giordano, Halleran & Ciesla, P.C.

Government Shutdown Aftermath: Centers for Medicare & Medicaid Services (CMS) Under Pressure to Finalize Medicare Payment Rules

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  • Because of the prolonged government shutdown, the Centers for Medicare & Medicaid Services (CMS) may encounter delays in promulgating final payment rules that would otherwise be effective January 1, 2014.
  • It is reasonable to expect that CMS will miss the November 1, 2013 statutory deadline to publish final rules due to the staff shortage from the shutdown as well as the complexity of many significant rule changes that were proposed earlier this year.
  • There is precedent for delaying the effective date of an entire payment rule to allow for the proper 60-day notice and comment period, and there are cases where only portions of a rule that represent significant changes have been delayed.
  • Providers should assess whether CMS has taken the requisite time to properly account for stakeholder input through the comment process, and, if not, they should identify possible remedies.

Despite the short-term resolution to the government budget and debt-ceiling “crisis,” health care providers serving approximately 50 million Medicare beneficiaries may be waiting longer than usual this year to see what rates they will be paid in 2014 as a result of the government shutdown. Any delay is likely to cause great angst amongst providers, including physicians, hospitals, laboratories, and post-acute care facilities such as home health agencies, whose livelihood depends to a significant degree on the terms of annual reimbursement rules. These include the Physician Fee Schedule (PFS), the Hospital Outpatient Prospective Payment System (HOPPS), the Clinical Laboratory Fee Schedule (CLFS) and the Home Health Prospective Payment System (HHPPS).

As we noted prior to the government shutdown, over three quarters of the staff at CMS, the federal agency that administers the Medicare and Medicaid programs, are subject to a furlough. Most of the remaining staff are funded through non-annual discretionary appropriations, such as those who are working to implement the health care marketplaces under the Affordable Care Act. Therefore, even though the government reopened on October 17, 2013, the likelihood that CMS and other executive branch offices will finalize a series of important 2014 Medicare payment rules by the November 1st statutory deadline is becoming increasingly doubtful.

Much depends on the progress executive branch officials had already made on specific payment rules before the shutdown, on how fast staff are able to ramp up now that it is over (for the time being), and on competing priorities and deadlines for the Administration. Adding to the complexity of finalizing the payment rules this year, CMS had proposed numerous significant changes that could greatly impact reimbursement for calendar year 2014. Some of the most significant changes that were proposed in earlier rulemaking include:

Home Health Prospective Payment System
  • Responding to this proposed rule, industry stakeholders have been vocal in their concerns over portions of the proposed rule, which imposes a 14% reduction in Medicare home health funding by means of the maximum allowable rebasing adjustment of 3.5% each year from 2014 to 2017. In comments submitted to the agency, numerous stakeholders from the home health sector specified methodological flaws in the rule including that it was drafted using outdated data and the wrong base year; its impact was only analyzed for 2014 even though it applies to 2014-2017; and that it failed to include an adequate small business impact analysis per the Regulatory Flexibility Act – in fact, the Small Business Administration has expressed concern with the proposed HHPPS rule.
Hospital Outpatient Prospective Payment System
  • Collapsing Outpatient Visits: Collapsing 20 hospital clinic visits, Type A emergency department (ED) and Type B ED visit codes into 3 new codes – one for each type of visit.
  • Packaging: Identifying seven new categories of items and services whose costs will be packaged into payment for other services to which they are integral, ancillary or supportive, including, among others, radiation oncology, clinical diagnostic laboratory tests, and drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure.
  • New Cost Centers: Using distinct cost-to-charge ratios (CCRs) for cardiac catheterizations, CT scans and MRIs to calculate OPPS payment weights – a change which represents significant cuts to CT and MRI reimbursement (approx. 26% and 11%, respectively).
Clinical Laboratory Fee Schedule
  • New National Limitation Amounts (NLAs) that will govern reimbursement for over 100 tier 1 molecular pathology codes, covering genetic testing ranging from cancers to rare diseases such as cystic fibrosis.
Physician Fee Schedule
  • Cuts in reimbursement for independent laboratories (-26%), radiation therapy centers (-13%), diagnostic testing facilities (-7%), radiation oncology (-5%), pathology (-5%), and interventional radiology (-4%), among others.
  • Capping for certain services in the PFS at the Outpatient Prospective Payment System (OPPS) or Ambulatory Surgical Center (ASC) rates for 2013.
  • Revisions to the Medicare Economic Index (MEI) that could cut reimbursement for diagnostic testing facilities, portable x-ray suppliers, and radiation therapy centers.

Legal Background for Payment Rule Timing

Various laws and executive orders govern when a Medicare payment rule must be posted for public comment, the required length of time of the notice and comment process, and when the final rule is to become effective.

The Administrative Procedure Act (APA) normally requires a 30-day delay in the effective date of a rule. Furthermore, the Congressional Review Act (CRA) generally requires an agency to delay the effective date of a major rule by 60 days in order to allow for congressional review of the agency action. Finally, in order to receive the proper stakeholder input, the Paperwork Reduction Act (PRA) requires CMS to provide a 60-day notice and comment period before promulgating a rule. Thus, CMS has a statutory deadline of November 1, 2013 if it wants to have an effective date of January 1, 2014 for a Medicare payment rule.

A comment period of at least 60 days is the default under Executive Order 12866, § 6(a)(1) (Sept. 30, 1993), Regulatory Planning and Review, as amended by Exec. Orders 13258 (Feb. 26, 2002) and 13422 (Jan. 18, 2007) (providing that “each agency should afford the public a meaningful opportunity to comment on any proposed regulation, which in most cases should include a comment period of not less than 60 days”).

If CMS finds good cause to waive the delay in the effective date of a final rule because the delay is unnecessary, impractical, or contrary to the public’s interest, or the statute permits waiving the delay, the final rule may become effective upon publication.

A History of Delays

CMS regularly misses the November 1 deadline, and in some cases the final rule is published in late November. In certain instances, CMS has delayed the effective date of a payment rule to account for the 60-day notice and comment period as well as the 30-day minimum effective date requirement. For example, for the CY 2003 PFS, CMS delayed the effective date from January 1 to March 3 after publishing the final rule on December 31, 2002. During the last government shutdown in 1995, CMS published the CY 1996 PFS on December 8th and retained an effective date of January 1, 1996 for the overall rule, but extended comments for new or revised payment codes until Feb 6th. The agency has used similar processes for other payment rules, such as the CY 2008 HOPPS rule that extended the comment period until the end of January for certain codes that were significantly changed.

Recent history seems to indicate that if the rules are delayed into December, there is a small, albeit infrequently used, possibility that rules/codes that are significantly changed may have a delayed comment and effective date. However, CMS has also ignored such deadlines in the past and, through a variety of methods, has been able to justify shorter notice and comment periods and effective dates less than 60 days from original publication.

Conclusion

It is reasonable to believe that due to the government shutdown and ensuing staff shortage, CMS could incur significant delays in publishing Medicare final payment rules, in some cases until well after the “standard” statutory November 1st deadline. While CMS has extended notice/comment periods and effective dates, it has done so rarely and only when delays relate to significant substantive changes made in the rules. Because a series of complex and economically significant changes to reimbursement rates and rules has been proposed for 2014, stakeholders should work to ensure that CMS provides adequate time for consideration of industry input via notice and comment in compliance with the spirit and letter of the law.

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CMS Releases its CY 2012 OPPS Final Rule

Posted recently in  the National Law Review by Scott J. Thill of von Briesen & Roper, S.C.  regarding  CY 2012 Outpatient Prospective Pzyment System:

 

CMS has released its CY 2012 Outpatient Prospective Payment System (OPPS) Final Rule, effective January 1, 2012.  Notable provisions of the Final Rule include:

  • A market basket update of 1.9%.
  • Adjustment to payment rates for certain cancer hospitals.
  • A process for the APC Panel to evaluate requests for alternative supervision levels for hospital outpatient therapeutic services and issue recommendations to CMS on the same.
  • The addition of three quality measures for hospital outpatient departments to report for purposes of the CY 2014 and CY 2015 payment determinations.  The new measures include: (i) a measure relating to cardiac rehabilitation patient referrals; (ii) a measure relating to the use of a safe surgery checklist; and (iii) a measure relating to hospital outpatient department volume for selected surgical procedures.
  • A reduction in the number of randomly selected hospitals (from 800 to 450) for validating hospital outpatient quality reporting data for the CY 2013 payment determination.
  • Revisions to the hospital value-based purchasing program.
  • A process for physician-owned hospitals to apply for an exception to the federal prohibition on expanding facility capacity in physician-owned hospitals.

Healthcare Alert: U.S. Announces Process for $3.8B in CO-OP Funds

Recently posted in the National Law Review an article by Mark E. Rust of Barnes & Thornburg LLP about the announcement that Medicare and Medicaid Services (CMS) will begin accepting applications for Consumer Oriented and Operated Plan (CO-OP) Start-Up Loans and Solvency Loans on Oct. 17, 2011 :

According to a recently released Federal Opportunity Announcement (FOA), TheCenter for Medicare and Medicaid Services (CMS) will begin accepting applications for Consumer Oriented and Operated Plan (CO-OP) Start-Up Loans and Solvency Loans on Oct. 17, 2011. Section 1322 of the Patient Protection and Affordable Care Act (PPACA) establishes the CO-OP program to foster the creation of nonprofit health insurance issuers. The CO-OP program will dispense $3.8 billion in Start-Up Loans and Solvency Loans to providers and buyers who sponsor new insurers regionally.

The FOA is subject to change pending the CO-OP final rule. Comments on the proposed CO-OP rule are due on Sept. 16, 2011.

The CO-OP program is designed to foster the creation of new consumer-governed, private, nonprofit health insurance issuers, known as CO-OPs. CO-OPs will offer plans under the Affordable Insurance Exchanges (Exchanges) by Jan. 1, 2014. Generally, CMS will provide Start-Up Loans for all costs associated with developing the CO-OP, and Solvency Loans for all state registered reserves (Loans) to CO-OP applicants in each state. The loans are awarded for the purpose of CO OP development and meeting state solvency requirements. The FOA provides general detail regarding the basis upon which loans are awarded.

FOA Application Timeline

Under the FOA, CO-OP applicants must immediately submit a Letter of Intent indicating intent to apply for joint Start-Up Loans and/or Solvency Loans. The CMS underscores the time urgency of application because the agency expects to provide notice of loan awards by Jan. 12, 2012 so that CO OP applicants can be prepared to accept contracts in late 2013. Because of this deadline, the first round of applications are due by Oct. 17, 2011.

Successful CO-OP applications receive a Notice of Award and a Loan Agreement. CO-OP applicants may request reconsideration of loan application to CMS within 30 days of receiving determination notice. CMS notes that redetermination results in a final decision that is not subject to further administrative review or appeal.

FOA CO-OP Loan Application Criteria

Generally, CMS will look for efficiencies and evaluate whether the business plan and budget is sufficient, reasonable, and cost effective to support activities proposed in the CO-OP application. CMS will review applications on a base total of 100 points weighted from five general criteria including: (1) statutory preferences (16 points); (2) project narrative (4 points); (3) business plan (62 points); (4) government and licensure (10 points); and (5) feasibility study (8 points). The feasibility study must be supported by an actuarial analysis.

FOA Loan Details

Both Loans are non-recourse and provided at a low interest rates. Start-Up Loans will be prepaid five years from startup and charged an interest rate equal to the average interest rate on marketable Treasury securities of similar maturity minus one (1%) percentage point (provided that interest shall not be less than 0 percent) on the amount of the drawdown. Solvency Loans will be repaid in 15 years and charged an interest rate equal to the average interest rate on marketable Treasury securities of similar maturity minus two (2%) percentage points (provided that the interest shall not be less than 0 percent) on the amount of the drawdown.

© 2011 BARNES & THORNBURG LLP