Health Industry Washington Watch

New Postings on the Reed Smith Health Industry Washington Watch Blog

Debra A. McCurdy — Tue, 11 Jun 2013 09:58:23 -0500

The Reed Smith Health Industry Washington Watch blog has been updated to report on recent health policy developments, including the following:

Regulatory Developments. CMS has issued rules addressing the Affordable Care Act (ACA) Pre-Existing Condition Insurance Plan Program and Small Business Health Option Program, Medicare Advantage and Part D plan medical loss ratio rules, the Bundled Payments for Care Improvement initiative, and state Medicaid disproportionate share hospital allotments. The OIG has issued a final rule on data mining by State Medicaid Fraud Control Units. The Administration has issued final ACA wellness program rules and guidance to employers on ACA insurance exchange notices, and a bioethics commission seeks comments on “incidental findings” in research and testing.
Other HHS Developments. The Medicare Board of Trustees has released a financial assessment of the Medicare trust fund. CMS has released updated Medicare Part B drug payment files, guidance to states on facilitating Medicaid and CHIP enrollment, and draft cancer hospital quality measures. FDA has issued draft guidance on access to investigational drugs.
OIG & GAO Developments. The OIG has issued its latest semiannual report to Congress, along with reports on high-risk compounded sterile preparations, hospice care, drugs commonly used by dual eligibles, Medicare Part B claims with “G” modifiers, Medicare dialysis payments, and inaccuracies in Medicare enrollment databases. GAO reports have examined state efforts to establish ACA insurance exchanges and government drug purchase prices.
Legislative Developments. The House of Representatives has approved a drug distribution security plan and ACA repeal legislation, the Senate has confirmed Marilyn Tavenner as CMS Administrator, and Congressional hearings have addressed a number of health policy issues.
Health Industry Events. Upcoming events include meetings/calls on Medicare clinical laboratory test payment determinations, Medicare hospital outpatient payments, PQRS and eRx Incentive Program payment adjustments, the Medicare Shared Savings Program application process, Medicare and Medicaid EHR Incentive Programs, the HHS insurance market risk adjustment data validation process, and Medicare orders for lower limb prostheses.

CMS Sets Provider Payment Rates Under the ACA Pre-Existing Condition Insurance Plan Program

Debra A. McCurdy — Tue, 11 Jun 2013 09:39:51 -0500

The ACA’s Pre-Existing Condition Insurance Plan (PCIP) program is a temporary high-risk health insurance program for uninsured individuals who have been denied health insurance because of a pre-existing condition. While the PCIP was intended to serve as a “bridge” until Affordable Insurance Exchanges are operational in 2014, the Department of Health and Human Services (HHS) suspended acceptance of new enrollment applications earlier this year due to funding limitations. HHS has now determined that additional adjustments to PCIP provider payment rates are needed to ensure there is sufficient funding to cover currently-enrolled individuals until the program ends. Payment rates for covered services (with the exception of covered prescription drug, organ/tissue transplant, dialysis, and durable medical equipment benefits) will be capped at Medicare payment rates, with special rules when Medicare payment rates cannot be implemented. Facilities and providers also will be prohibited from “balance billing” enrollees in the federally-administered PCIP for the difference between the PCIP plan allowance and their charges to other patients for those covered services, effective for dates of service beginning on June 15, 2013. CMS will accept comments on the rule until July 22, 2013.

CMS Publishes Final ACA Small Business Health Option Program (SHOP) Rule

Debra A. McCurdy — Tue, 11 Jun 2013 09:37:53 -0500

On June 4, 2013, CMS published a final rule that builds on and revises previously-adopted regulations on the administration of the ACA’s Small Business Health Options Program (SHOP), which will help small employers offer employees a variety of qualified health plans (QHPs). Specifically, the rule adds changes in eligibility for state premium assistance under Medicaid or CHIP to the list of triggering events that create a special SHOP enrollment period for qualified employees and/or their eligible dependents. In addition, the rule amends the duration of certain special enrollment periods for the SHOP to 30 days for most applicable triggering events. CMS also has finalized its proposal that SHOPs would not be required to provide an employee choice model in 2014; SHOPs must provide qualified employers the option to offer qualified employees a choice of any QHP at a single “metal level” starting with plan years beginning on or after January 1, 2015.

CMS Finalizes Medicare Advantage/Part D Plan Medical Loss Ratio Rules

Debra A. McCurdy — Tue, 11 Jun 2013 09:36:32 -0500

CMS published a final rule on May 23, 2013 that implements new medical loss ratio (MLR) requirements for the Medicare Advantage (MA) program and the Part D prescription drug program. Under the new requirements, which were mandated by the ACA, MA organizations and Part D plan sponsors are required to report their MLR (percentage of revenue used for patient care), and are subject to financial and other penalties for a failure to meet a new statutory requirement that they have an MLR of at least 85%. The rule is generally effective for contract years beginning on or after January 1, 2014.

CMS Seeks Additional Applicants for Bundled Payments for Care Improvement Program

Debra A. McCurdy — Tue, 11 Jun 2013 09:33:11 -0500

CMS has announced an open period for additional organizations to be considered for participation in Model 1 of the Bundled Payments for Care Improvement initiative. Under this program, participating organizations will focus on improving care coordination for Medicare beneficiaries who are hospitalized and, in certain cases, when they leave the hospital. In Model 1, the episode of care is defined as the inpatient stay in the acute care hospital, and Medicare pays participating hospitals a discounted amount from the fee-for-service Medicare inpatient prospective payment system payment. The open period will close on July 31, 2013.

State DSH Allotments Methodology

Debra A. McCurdy — Tue, 11 Jun 2013 09:32:02 -0500

CMS has published a proposed rule setting forth a methodology to implement aggregate reductions to state Medicaid Disproportionate Share Hospital (DSH) allotments for FY 2014 and 2015, as required by the ACA. The rule also proposes to add additional DSH reporting requirements for use in implementing the DSH health reform methodology. Comments on the proposed rule will be accepted until July 12, 2013.

OIG Final Rule on Data Mining by State Medicaid Fraud Control Units

Debra A. McCurdy — Tue, 11 Jun 2013 09:28:08 -0500

On May 17, 2013, the HHS Office of Inspector General (OIG) published a final rule amending current regulations prohibiting State Medicaid Fraud Control Units (MFCU) from using federal matching funds to identify fraud through screening and analyzing State Medicaid data (known as data mining). In order to “support and modernize MFCU efforts to effectively pursue Medicaid provider fraud,” the OIG is permitting federal financial participation (FFP) in costs of defined data mining activities under specified circumstances. In addition, the OIG is finalizing requirements that MFCUs annually report costs and results of approved data mining activities to the OIG. The rule is effective on June 17, 2013.

DOL Releases Insurance Exchange Notice Guidance and Model Notices

Debra A. McCurdy — Tue, 11 Jun 2013 09:23:55 -0500

On May 8, the Department of Labor (DOL) issued guidance regarding the ACA requirement that employers provide notice to employees describing the coverage options available under Health Insurance Marketplaces/Exchanges. DOL also has released model notices to employees of coverage options. A Reed Smith summary of DOL’s guidance is available here.

Medicare Trustees Forecast Longer Medicare Solvency

Debra A. McCurdy — Tue, 11 Jun 2013 09:21:55 -0500

On May 31, 2013, the Medicare Board of Trustees released its annual assessment of the financial condition of the Social Security and Medicare trust funds. The Board projects that the Medicare hospital insurance trust fund will remain solvent until 2026, which is two years later than forecast last year. The Board attributes the improved outlook in part to lower-than-expected Medicare Part A spending in 2012 (particularly for skilled nursing facilities) and lower projected Medicare Advantage costs. The Board points out, however, that projections of Medicare costs are highly uncertain due to a number of factors, including questions about whether Congress will continue to override the Medicare physician fee schedule/sustainable growth rate (SGR) formula and how the ACA will impact spending.

July 2013 Update to Medicare ASP Files

Debra A. McCurdy — Tue, 11 Jun 2013 09:20:30 -0500

CMS has posted the July 2013 Medicare Part B average sales price (ASP) files, containing the payment amounts that will be used to pay for Medicare Part B covered drugs for the third quarter of 2013. CMS observes that average drug prices in the market generally remain stable, with prices for the top Part B drugs decreasing by 1.4% compared to the second quarter of 2013.

CMS Guidance to States on Facilitating 2014 Medicaid, CHIP Enrollment

Debra A. McCurdy — Tue, 11 Jun 2013 09:17:10 -0500

CMS has issued a memo outlining optional strategies states can use to make progress toward reducing the number of uninsured individuals and transition to new eligibility and enrollment systems and coverage of new Medicaid enrollees. The letter describes how states can adopt (with enhanced federal matching) the following five specific targeted enrollment strategies: accelerating adoption of Modified Adjusted Gross Income (MAGI)-based rules, extending the Medicaid renewal period, enrolling individuals into Medicaid based on Supplemental Nutrition Assistance Program (SNAP) eligibility, enrolling parents into Medicaid based on children’s income eligibility; and adopting 12-month continuous eligibility for parents and other adults. CMS intends to use a streamlined review and approval process for states interested in implementing these approaches.

OIG Reports Review Medicare Hospice Inpatient Care, Hospital Discharges to Hospice Care

Debra A. McCurdy — Tue, 11 Jun 2013 09:06:33 -0500

Two recent OIG reports examine Medicare policies involving hospice services. The first report concentrates on hospice general inpatient care (GIP), under which short-term pain control or symptom management that cannot be managed in other settings is provided in an inpatient facility (a Medicare-certified hospice inpatient unit, a hospital, or a SNF). Medicare paid $1.1 billion for GIP in 2011, mainly for care in hospice inpatient units. Almost one-quarter of hospice beneficiaries received GIP that year, with one-third of the stays exceeding 5 days. On the other hand, 27% of Medicare hospices did not provide any GIP, and many of these hospices did not provide any level of hospice care other than routine home care. The OIG believes additional review is needed to ensure that hospices are using GIP as intended and providing the appropriate level of care. The OIG also suggests that CMS ensure that hospices that do not provide GIP are offering the necessary levels of care, such as through adoption of a quality measure regarding hospices’ ability to provide all hospice services.

The second report examined the growth in Medicare beneficiaries’ discharges from acute-care hospitals to hospice care, and its impact on hospital payment. While Medicare has “transfer payment policies” that adjust payments to hospitals for early discharges (i.e., sooner than a Medicare-established average length of stay) to other hospitals or postacute-care facilities, Medicare does not currently have a transfer payment policy for early discharges to hospice care. The OIG estimates that Medicare could have saved more than $602 million in 2009 and 2010 by applying a hospital transfer payment policy for early discharges to hospice care. The OIG recommends that CMS adopt regulations or pursue a legislative change, if necessary, to establish a hospital transfer payment policy for early discharges to hospice care. CMS will study the recommendations.

CMS Invites Comments on Proposed PPS-Exempt Cancer Hospital Quality Measures

Debra A. McCurdy — Tue, 11 Jun 2013 09:03:11 -0500

CMS has opened an “informal” comment period on potential quality of care measures for cancer hospitals exempt from the Medicare prospective payment system (PPS). A CMS contractor has developed the following candidate measures intended to address gap areas not covered by the current PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program: (1) Initiation of Osteoclast Inhibitors for Patients with Multiple Myeloma or Bone Metastases Associated with Breast Cancer, Prostate Cancer, or Lung Cancer; (2) Overuse of Imaging for Staging Breast Cancer at Low Risk of Metastasis; and (3) Potentially Avoidable Admissions and Emergency Department Visits Among Patients Receiving Outpatient Chemotherapy. Comments are due July 3, 2013.

OIG Issues Semiannual Report for First Half of FY 2013

Debra A. McCurdy — Tue, 11 Jun 2013 09:01:44 -0500

The OIG has issued its latest Semiannual Report to Congress, covering the period of October 1, 2012 to March 31, 2013. For the first half of FY 2013, the OIG reported expected recoveries of about $3.8 billion, consisting of more than $521 million in audit receivables and about $3.28 billion in investigative receivables (which includes $642.3 million in non-HHS investigative receivables, such as states’ shares of Medicaid restitution). The OIG excluded 1,661 individuals and entities from participation in federal health care programs; 484 criminal actions for crimes against HHS programs; and 240 civil actions (including false claims and unjust-enrichment lawsuits filed in federal district court, civil monetary penalty settlements, and administrative recoveries related to provider self-disclosure matters). The report also summarizes significant investigation and audit activities for the period.

OIG Finds Medicare Plans Generally Cover Drugs Commonly Used by Dual Eligibles

Debra A. McCurdy — Tue, 11 Jun 2013 08:59:59 -0500

The OIG has issued an ACA-mandated report on Medicare Part D prescription drug plan and MA drug plan coverage of drugs commonly used by full-benefit dual-eligible individuals (that is, individuals eligible for Medicare and Medicaid and who receive full Medicaid benefits and Medicare premium and cost-sharing assistance). The OIG determined that for 2013, Part D/MA plan formularies include 96% of 195 commonly-used drugs, with 64% of the commonly-used drugs included in all such formularies. Plans applied utilization management tools to 28% of the unique drugs reviewed in 2013, compared to 24% in 2012 (mainly attributable to an increase in the use of quantity limits).

OIG Identifies Vulnerabilities with Part B Claims with "G" Modifiers

Debra A. McCurdy — Tue, 11 Jun 2013 08:58:17 -0500

Providers and suppliers use G modifiers on claims they expect to be denied as either not “reasonable and necessary” (GA and GZ modifiers) or because the items or services are not covered by Medicare (GY and GX modifiers). Such modifiers may be used when the provider is uncertain if a claim should be paid (for instance, when the provider does not know if a beneficiary already has had a test that is covered only one per year), or if the beneficiary needs Medicare to deny the claim so it can be submitted to the beneficiary’s secondary insurance. Medicare paid about $744 million for Part B claims with G modifiers in 2011. The OIG found vulnerabilities payments for such claims, since Medicare contractors often do not consider the modifiers to indicate that providers expect the services or items to be denied as not reasonable and necessary or not covered by Medicare. The OIG also reports that Medicare paid $4.1 million for claims with inappropriate combinations of G modifiers from 2002 to 2011. The OIG discusses ways CMS and its contractors could address the vulnerabilities presented in this report through automatic claims denials.

OIG Recommends Changes to Medicare Dialysis Payments to Reflect Lower Drug Utilization

Debra A. McCurdy — Tue, 11 Jun 2013 08:55:51 -0500

The OIG has issued a report entitled “Medicare and Beneficiaries Could Save Millions If Dialysis Payments Were Adjusted for Anemia Management Drug Utilization.” The OIG estimates that if CMS had adjusted the payments for dialysis services to incorporate anemia management drug utilization in 2011 -- rather than use 2007 data reflecting higher utilization -- the Medicare program could have saved $510 million for erythropoiesis-stimulating agents (ESAs) and $19 million for iron supplements. The OIG also identified limitations in the use of ESRD claims data for program oversight, including inaccuracies in the quantities of drugs claimed and the inability to determine the extent of drug waste or overfill usage. The OIG recommends that CMS: (1) adjust the bundled dialysis base rate to capture savings from decreased utilization of ESAs and iron supplements, (2) remind dialysis facilities of the importance of claims accuracy, and (3) develop guidance for recording drug waste and overfill on ESRD claims. CMS concurred with the recommendations.

Obama Administration Issues Final ACA Wellness Program Rules

Debra A. McCurdy — Tue, 11 Jun 2013 08:51:03 -0500

On May 29, 2013, the Internal Revenue Service and the Department of Labor (DOL) and HHS released final regulations regarding wellness programs integrated with employer-sponsored health plans. The new wellness program standards apply to insured and self-insured programs, grandfathered and non-grandfathered, and are effective for plan years beginning on and after January 1, 2014. A Reed Smith Client Alert summarizing the regulations is available here.

OIG Highlights Inaccuracy in Medicare Enrollment Databases

Debra A. McCurdy — Tue, 11 Jun 2013 08:49:26 -0500

According to the OIG, Medicare provider enrollment databases include inaccurate, incomplete, and inconsistent provider data, and -- coupled with insufficient oversight -- “present vulnerabilities in all health care programs.” The OIG reviewed heath care provider information maintained in the National Plan and Provider Enumeration System (NPPES) and the Provider Enrollment, Chain and Ownership System (PECOS). For instance, provider data was inaccurate in 48% of NPPES records and 58% of PECOS records, and this data was inconsistent between NPPES and PECOS for 97% of records (addresses were the source of most inaccuracies and inconsistencies). The OIG recommends that CMS: require Medicare Administrative Contractors to implement program integrity safeguards for Medicare provider enrollment; require more verification of NPPES and PECOS data; and detect and correct inaccurate and incomplete provider data. CMS concurred with the recommendations. The title of the OIG report is: “Improvements Are Needed To Ensure Provider Enumeration and Medicare Enrollment Data Are Accurate, Complete, and Consistent.”

GAO Assesses State Efforts to Establish ACA Insurance Exchanges

Debra A. McCurdy — Tue, 11 Jun 2013 08:39:28 -0500

The Government Accountability Office (GAO) has provided a status report on seven states’ efforts to establish health insurance exchanges -- online marketplaces mandated by the ACA to enable eligible individuals and small business employers to compare and select health insurance coverage offered by qualified health plans. States can establish and operate an exchange themselves or partner with HHS, otherwise HHS will operate a federally-facilitated exchange for the state. As of March 14, 2013, 18 states had announced they would be establishing a state-based exchange, 7 states intend to partner with HHS, and HHS will establish a federally-facilitated exchange in 26 states. The GAO report provides details on the implementation efforts of the District of Columbia, Iowa, Minnesota, Nevada, New York, Oregon, and Rhode Island. Six of the states will operate a state-based exchange, while the seventh -- Iowa -- will partner with HHS. The seven selected states expect they will be ready for enrollment by the October 1, 2013 deadline, with health insurance coverage effective January 1, 2014. The report addresses the states’ efforts to: decide which QHPs will be included in the exchange; develop an information technology infrastructure; implement a consumer outreach and assistance program; and sustain their exchange financially.