Proposed Physician Fee Schedule Contains Significant Stark Law Revisions

Late on July 8, the Centers for Medicare & Medicaid Services (“CMS”) published the Physician Fee Schedule for 2016 in the form of a proposed rule.  While the measure would make changes to the Physician Fee Schedule and other Medicare Part B payment policies, it also proposes significant revisions to the Stark Law.  These include the creation of new exceptions and guidance on CMS’s interpretation of existing Stark Law exceptions, several of which deal with unwritten, unsigned and lapsed arrangements. Correction of how these three types of Stark Law violations are treated by CMS make up the heart of the Stark Administrative Simplification Act of 2015 (H.R. 776),  a bill that was introduced by Rep. Charles Boustany (R-LA) and Rep. Ron Kind (D-WI) after significant lobbying by members of the Hall Render Stark Law Correction Coalition.  A summary of the proposed rules’ revisions to the Stark Law can be found in this article published by Hall Render.

House Passes 21st Century Cures Act but Long Road Still Ahead

On July 10, the House passed the 21st Century Cures Act (H.R. 6) by an overwhelming margin of 344-77.  The bipartisan legislation, which had 230 cosponsors, would reform biomedical research at the National Institutes of Health and overhaul the drug approval process at the Food and Drug Administration while designating $9.3 billion in mandatory funding for the agencies over five years that would be fully offset.

Earlier this week, the White House released a statement of Administration Policy generally supporting the bill.  A Senate source has indicated that a similar bill will be introduced before the end of the year.  If that is the case, the earliest the measure can be expected to pass the Senate is during the first few months of next year.  Should the Senate pass a measure that is different from the House-passed version, the two bills would have to be reconciled before the legislation could go to the President for signature.  Thus, despite strong bipartisan support in the House, there is still a long way to go before 21st Century Cures becomes law.

GAO Report Critical of 340B Financial Incentives

On July 6, the Government Accountability Office (“GAO”) released a report suggesting congressional action to make changes to the 340B Drug Discount Program. The GAO report found that, per beneficiary, Medicare Part B drug spending was substantially higher at 340B disproportionate share hospitals (“DSHs”) than at hospitals that don’t participate in the drug discount program.

GAO says that without any changes to financial incentives in the 340B program, potential inappropriate spending on drugs may continue, and CMS and the Health Resources and Services Administration (“HRSA”) don’t have the authority to make changes to diminish incentives for 340B hospitals to prescribe more expensive drugs.  The 340B program is administered by HRSA within HHS.

The report found average spending was $144 per patient at 340B DSHs in 2012, more than double the $60 per patient spent in 2012 at non-340B DSH hospitals and $62 at other non-340B hospitals.  The report found overall program spending has risen dramatically since 2004.

Changes to the 340B program were considered in earlier additions to the 21st Century Cures Act, which was voted on by the House this week; however, 340B language was not included in the bill that passed out of committee. Industry groups, including the American Hospital Association, have offered strong support for the 340B program and how it helps hospitals improve access to comprehensive health care services for more patients.  These groups and HHS took issue with the GAO’s analysis of patients’ health status and observed that the GAO failed to examine whether patients in 340B hospitals had better outcomes.

CMS Announces Plans to Reimburse ICD-10 Mistakes Post Transition Deadline

On July 6, CMS announced a concession in the transition from ICD-9 to ICD-10.  The announcement states that for one year past the October 1, 2015 deadline, CMS will not deny payments to doctors because they didn’t use a sufficiently specific ICD-10 code after the new code set is implemented.  Additionally, CMS said that providers will be able to apply for advance payment in the event that Medicare Part B contractors aren’t able to process claims because of ICD-10 implementation.

CMS also announced the creation of an ICD-10 Ombudsman and various online resources and guidance to aid the medical community in the transition.

CMS Publishes Home Health Payment Rule

On July 6, CMS released the proposed rule for home health services in CY 2016.  The proposal would cut the standardized 60-day episode payment rate that for-profit, free-standing home health agencies receive in CY 2016 and CY 2017 by 1.72 percent in each year.

Also included in the proposed rule is a demonstration program testing value-based purchasing in nine states.  The program would enable CMS to either reduce or raise Medicare payments to home health agencies by up to 8 percent based on their performance across a series of quality metrics, including care coordination, clinical quality of care, efficiency and cost reduction.  The program is part of HHS’s goal to shift 30 percent of fee-for-service Medicare payments to alternative payment models like value-based purchasing.

The rule will be published in the July 10 Federal Register with public comments accepted through September 4, 2015.  The final rule is likely due in late October.

Health-Related Bills Introduced This Week

Rep. Mike Thompson (D-CA) introduced the Medicare Telehealth Parity Act of 2015.  The bill (H.R. 2948) seeks to phase in the expansion of telehealth services by:  expanding the list of providers and related covered services that are eligible to provide telehealth services; allowing remote patient monitoring for patients with certain chronic conditions; expanding access to telestroke services regardless of the patient location; and removing geographic barriers under current law.

Next Week in Washington

The House and Senate return on July 13 for the second of a four-week July session.