1. Congress

House of Representatives

Lawmakers Request that OIG Investigate DME Competitive Bidding Expansion

CMS's preparation for the expansion of Medicare's durable medical equipment competitive bidding program has come under scrutiny from Congress this week, following the exposure of potential inadequate screening of some winning suppliers in Tennessee, Maryland, Ohio and Michigan. In a letter dated June 20, 2013, to Health and Human Services Office of the Inspector General (OIG), Reps. Glenn Thompson (R-PA) and Bruce Braley (D-IA) implored OIG Inspector General Daniel Levinson to examine these issues and begin an investigation immediately as "CMS has awarded contracts to suppliers in several bidding areas that have not been compliant with the program guidelines." Round Two's expansion of the bidding system is slated to begin July 1 and increases bidding areas from 70 to 91. Moreover, another referral to OIG pertaining to DME companies was sent by Sen. Claire McCaskill (MO-D). In her letter, dated June 19, she alerted Inspector Levinson to 21 businesses in various states, including Missouri and Florida, that are suspected of participating in "inappropriate and aggressive marketing." OIG says it is reviewing the letter from Reps. Thompson and Braley, and is expecting Sen. McCaskill's letter in the near future.

Energy and Commerce Panel Set to Release New Draft of Doc Pay Bill

On June 28, the House Energy and Commerce Committee released its second legislative draft of a Medicare physician payment fix, which would repeal the sustainable growth rate physician payment option and replace it with one based on quality-of-care measures. This legislation aims to create a new system envisioned by Energy and Commerce that is a three-phase system. The first phase repeals the physician payment system's sustainable growth rate formula. The next phase would make quality-of-care measures the base of the payments. The third phase calls for further reform of Medicare's fee-for-service payment system. The Energy and Commerce Committee will mark up the legislation in July. If Congress fails to act, physicians' Medicare reimbursement will be reduced by about 25 percent.

Bipartisan, Bicameral Bill Aims to Reward Medicare Beneficiaries for Improving Health

The Medicare Better Health Rewards bill, (S. 1228/H.R. 2524), introduced June 26 by a bipartisan coalition of Senate and House members, would pay Medicare beneficiaries up to $400 for maintaining their own health as quantified. The proposed bill would offer Medicare enrollees financial rewards for achieving their health care goals, and rewards would be allocated entirely from savings generated by seniors getting healthy and reducing use of health care services. Criteria for financial reward would be based on six key indicators identified by medical experts as essential predictors of future health challenges, including tobacco usage, diabetes indicators, body mass index, cholesterol, vaccinations and screening, and blood pressure. The program would be administrated through goals established by the beneficiaries' own physicians, and progress would be evaluated during subsequent wellness visits in year two (when a maximum $200 reward would be administered) and year three of the program (when a maximum $400 reward would be administered). "By changing the focus of Medicare from dealing with people when they're sick to incentivizing seniors to lead healthier lives, our Better Health Reward bill with reduce Medicare's soaring costs and save taxpayers' money since healthier seniors who voluntarily opt into the program will have fewer doctor and hospital visits and fewer chronic diseases," said Sen. Rob Portman (OH-R), one of the bill's cosponsors.  


Finance Committee Holds Hearing on Health Care Quality Measurements

On June 26, the Senate Finance Committee held a hearing to discuss modifying the current Medicare system to downsize and simplify the number of quality-based reporting measurements. Chairman Baucus (MT-D) expressed concern that "Medicare currently uses 1,100 different quality measures to assess provider performance." He went on to ask, "Do we need more than a thousand measures?" Similarly, Ranking Member Hatch (UT-R) describes an unorganized system with a lack of streamlined data and an excessive burden to routine clinician workflow. The witness panel as a whole expressed that the quality measure criteria should be narrowed to better reflect the quality of patients' experiences, health status and ability to function properly, instead of the "tsunami of reporting requirements" and inundation for data requests. "We have no clearly articulated plan for how measurement contributes to goals that propel the health system forward," said Elizabeth McGlynn, director for the Center for Effectiveness and Safety Research at Kaiser Permanente. All the witnesses testified to finding a better system that works to establish a consensus among sectors on which measures should be used to improve care. Recently, assessing quality in health care programs has gained more attention as lawmakers have begun composing strategies for possible changes to the physician payment formula under Medicare, including a proposal being considered in the House Energy and Commerce Committee to repeal the sustainable growth rate (SGR) formula.

Witness List:

The Honorable Mark McClellan, M.D., Ph.D.

Senior Fellow

Brookings Institution

Dr. Christine K.

Cassel President and CEO

National Quality Forum

Dr. David Lansky

President and CEO

Pacific Business Group on Health

Dr. Elizabeth A. McGlynn


Kaiser Permanente Center for Effectiveness and Safety Research

For more information, or to view the hearing, please visit finance.senate.gov. 

Finance Committee Hearing on Medicare RAC Program

On Tuesday, June 25, Senate Finance Committee Chairman Max Baucus (MT-D) held a hearing to discuss the Medicare Recovery Audit Contractor (RAC) program, which seeks to find ways to prevent improper payments in Medicare and Medicaid and reduce fraud among service providers and auditors. In his opening statement, Chairman Baucus said that "CMS should give its contractors incentives to focus on the riskiest providers and services, improve provider education, and make the RAC appeal process more efficient." Moreover, Ranking Member Hatch (UT-R) touted limiting the amount of medical records RACs can request from providers, as well as allowing providers to send electronic copies of medical records. Throughout the hearing, witness testimony focused on the increasing administrative costs and burdens the RAC program creates for providers and the increasing denial rate of legitimate claims due to burdensome government red tape. Suggested improvements to the program from the witnesses included issuing clear and concise guidelines on coding and other billing criteria, limiting the number of medical records RACs can request and preventing RACs from continuing to audit claims that have historically low error rates.

Witness List:

JJ Carmody

Director of Reimbursement

Billings Clinic

Suzie Draper

Vice President Business Ethics and Compliance

Intermountain Healthcare

Robert Rolf

Vice President

CGI Federal Inc.

For more information, or to view the hearing, please visit: finance.senate.gov 

  1. Administration


Online Services for ACA Insurance Coverage Education Available

In preparation for the online health insurance marketplace open enrollment, due to take place Oct. 1, HHS has launched a new HealthCare.gov website. The website will provide Americans with information on how to prepare for open enrollment and will allow them to create accounts, complete applications online and web chat with consumer support staff. It also comes equipped with social media integration and content-sharing capability and is available in more than 150 languages. In order to prepare Americans for the upcoming open enrollment, nearly $200 million will be spent on outreach, enrollment and consumer resources over the next few months.

HHS Provides Blueprint for Individuals Seeking Certain ACA Payment Exemption

Last week, HHS released final rules outlining their policies regarding individual exemption from the "shared responsibility" payment provision of the Affordable Care Act. The proposed rules, which become effective Aug. 26, implement and enumerate the exemptions that can be claimed by an individual from the ACA's "minimum coverage" provision -- a provision that stipulates an individual either have a policy providing "minimum essential coverage" or pay the shared responsibility fee. The Congressional Budget Office estimates that these fees will generate $7 billion in tax revenues (in 2016), to be paid by the nearly 6 million people whom the CBO estimates will lack coverage. Exemptions for the shared responsibility payment will be granted if an individual cannot afford a coverage plan, or for a variety of qualifying reasons. Among these exemptions are those for religious beliefs or "hardship," an exemption that will be applied on a case-by-case basis. In an effort to aid those who may have trouble affording coverage, the ACA also provides tax credits for "low- to moderate-income people" to help purchase a plan from the soon-to-be-established online marketplaces.  


CMS Sponsors Funding for State Ombudsman

A new initiative sponsored by the Centers for Medicare & Medicaid Services (CMS) will provide eligible states with $12 million in grants to fund state ombudsmen. Announced on June 27, these grants will help ombudsmen in assisting Medicare and Medicaid enrollees who receive care through the CMS Financial Alignment Initiative, a program that will test care delivery methods. The money will also allow ombudsmen to monitor their experiences, and make recommendations to CMS on how to improve its services. Applications for the grants are due July 30, with 26 states having already submitted project proposals and 6 already being cleared.

Durable Medical Equipment Services Face-to-Face Requirement Start Date

Due to concerns that suppliers and physicians won't be prepared in time, the Centers for Medicare and Medicaid Services has said it will delay the July 1 requirement that health care providers meet face-to-face with Medicare beneficiaries in order to receive Medicare reimbursement for the use of certain durable medical equipment (DME). CMS is hoping that delaying the requirement till Oct. 1 will give health care providers time to establish necessary operational protocols. CMS has said that this will not affect the expansion of DME competitive bidding, which is still set to start July 1.


Guidance on Premium Tax Credit, Relief for Shared Responsibility Payment

In anticipation of the full implementation of health care reform next year, IRS recently released an advance copy of two notices. The first notice defines minimum essential coverage under certain government health plans and other coverage designated as minimum essential coverage for purposes of the Section 36B premium tax credit. "Under Notice 2013-41, individuals who are in a waiting period but cannot yet enroll in CHIP are eligible for qualified health plan coverage subsidized by the premium tax credit," IRS said. The notice then explains that individuals who qualify for CHIP or Medicaid are considered not eligible for health coverage subsidized by the premium tax credit during the "lockout" period; during this period, they are not eligible to re-enroll in either program after they have failed to pay their premiums.

The second notice provides relief from the shared-responsibility penalty under Section 5000A for individuals who are eligible for coverage in plans that are not on a calendar year (Notice 2013-42). This notice provides transition relief during the first year (Jan. 1, 2014) for those who fail to maintain "minimum essential coverage" for themselves and any non-exempt family members or to include an individual shared-responsibility payment with their federal income tax return. Of note, this relief is designed for employees (or other individuals) who are eligible to enroll in employer-sponsored health plans but do not, when the health plan has a plan year that is not based on the calendar year. Moreover, the relief applies only for determining a taxpayer's Section 5000A shared-responsibility payment for not maintaining minimum essential coverage, which includes coverage under an eligible employer-sponsored plan.

  1. State Activities

Missouri Medicaid Expansion Update

Those hoping for Medicaid expansion in the state need not despair -- as reported by the AP, a group of state legislators have assembled three committees that are currently studying the issue and are aiming to have something workable "early next legislative session." This comes despite the legislative body's rejection of Medicaid expansion earlier this year.

Virginia Medicaid Settlement

The state is owed $105 million as result of a Medicaid settlement, and Attorney General Ken Cuccinelli is asking the Treasury Department to release it as soon as possible. The state has already been paid $10 million from the settlement, but before paying out the rest, the Treasury would like more details about how Virginia will spend it.

  1. Regulations Open for Comment

NEW - Proposed Rule on Home Health Payments

On June 27, CMS published a proposed rule to update Medicare's Home Health Prospective Payment System (HH PPS) payment rates and wage index for calendar year (CY) 2014. The rule proposes rebasing adjustments, with a four-year phase-in, to the national, standardized 60-day episode payment rates, the national per-visit rates and the NRS conversion factor. Payments to home health agencies (HHAs) are estimated to decrease by approximately 1.5 percent, or $290 million in CY 2014, reflecting the combined effects of the 2.4 percent HH payment update percentage ($460 million increase); the rebasing adjustments to the national, standardized 60-day episode payment rate; the national per-visit payment rates; the NRS conversion factor ($650 million decrease); and the effects of ICD-9 coding adjustments ($100 million decrease). This proposed rule would also establish home health quality reporting requirements for CY 2014 payment and subsequent years and proposes to specify that Medicaid responsibilities for home health surveys be explicitly recognized in the State Medicaid Plan, which is similar to current regulations for surveys of Nursing Facilities (NF) and Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF-IID). Comments must be received by Aug. 26.

NEW - Final CMS Rule on Improving Coordination Between Long-Term Care Hospitals and Hospices

CMS issued a rule June 26 that aims to improve care coordination between long-term care (LTC) hospitals and hospice facilities; the new rule, which goes into effect Aug. 26, 2013, clearly defines the role of each provider in delivering and maintaining the continuity of care for each patient. Because LTC facilities and hospitals provide many of the same services, there is a high possibility that residents could receive duplicative and/or conflicting services. In general, LTC facilities are usually responsible for nursing services, dietary services, physician services, dental service, pharmacy services, specialized rehabilitative services and, when necessary, laboratory and social services. The new rule mandates that LTCs that choose to arrange for the provision of hospice care enter into written agreements with Medicare-certified hospice providers of the specific services to be provided by each entity in order to reduce overlap. "We believe that a clear division of responsibilities and increased communication required by this rule will help eliminate duplication of and/or missing services," CMS said in the rule. As the rule stands, the written agreement of care will unanimously be applied to all residents within the LTC facility, not individual patients. Criticisms of the new rule are largely based on the extra burden to providers, as it will take staff time to develop the language for the one written agreement describing the allocated care services. It is estimated that the burden associated with first-year implementation of this rule is 80,695 hours or $5.5 million for the 16,139 LTC facilities affected.

Proposed Rule to Clarify Long-Term Care Ombudsman Program

The Administration on Aging (AoA) of the Administration for Community Living (ACL) within the Department of Health and Human Services (HHS) has issued a Notice of Proposed Rulemaking, with request for comments, to implement provisions of the Older Americans Act, the State Long-Term Care Ombudsman program. This proposed rule replaces AoA's 1994 Notice of Proposed Rulemaking. The proposed rule contains two main parts, both related to the ombudsman program:

An amendment to existing regulations promulgated under the Older Americans Act at 45 C.F.R. Part 1321, and a new Part 1327, which would be added to the existing regulations. The proposed amendment to existing regulations addresses responsibilities of state agencies housing long-term care ombudsman offices not to disclose the identity of any person sending a complaint to the ombudsman or the identity of any resident of a long-term care facility. In addition, the proposed amendment would extend the disclosure protections to include "files, records, and other information" instead of only "files" as the existing rule provides. The newly proposed Part 1327 would define the following terms included in the Older Americans Act, including "immediate family," "office of the state long-term care ombudsman" and "representative of the office of the state long-term care ombudsman." Comments are due Aug. 19.

Program Integrity Guidelines for Exchanges, Premium Stabilization Program

CMS has released a proposed rule outlining program integrity guidelines for the Health Insurance Marketplace (Marketplace) and premium stabilization programs. The proposed rule sets forth financial integrity and oversight standards with respect to Affordable Insurance Exchanges; Qualified Health Plan (QHP) issuers in federally facilitated exchanges (FFEs); and states with regard to the operation of risk adjustment and reinsurance programs. It also proposes additional standards with respect to agents and brokers. These standards, which include financial integrity provisions and protections against fraud and abuse, are consistent with Title I of the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act of 2010, referred to collectively as the Affordable Care Act. The proposed rule says that in states running only the SHOP exchange while HHS operates the exchange for the individual market, data sharing requirements between the SHOP and individual exchange won't apply. There's only one state that plans to have such an arrangement -- Utah -- and the data issue was a key concern. The rule would also allow the state to set up a navigator program for the SHOP exchange, exclusively for outreach to small businesses, that is completely separate from the one for the individual exchange. Comments must be submitted by July 15.

Pre-Existing Condition Insurance Plan (PCIP) Interim Final Rule

CMS has issued an interim final rule with comment period sets the payment rates for covered services furnished to individuals enrolled in the Pre-Existing Condition Insurance Plan (PCIP) program administered directly by HHS beginning with covered services furnished on June 15, 2013. The rule sets most reimbursement rates in federally administered PCIPs at Medicare levels. This interim final rule also prohibits facilities and providers who, with respect to dates of service beginning on June 15, 2013, accept payment for most covered services furnished to an enrollee in the federally-administered PCIP from charging the enrollee an amount greater than the enrollee's out-of-pocket cost for the covered service as calculated by the plan. The rule also bans ''balance billing'' enrollees of the federal-run PCIPs to protect them ''from having to potentially shoulder significant costs that could be shifted to them as a result of this new payment policy.'' Comments will be accepted through July 22.

Disproportionate Share Hospital Proposed Rule

CMS has issued a proposed rule on Disproportionate Share Hospital (DSH) payment reductions required by the ACA, applying a methodology that would not distinguish between states that have chosen to expand their Medicaid programs, pursuant to the ACA. According to the proposed rule, data reflecting the effects of the decision to implement the new coverage group may not be available to consider the impact of a state's decision to expand or not until 2016. Once finalized, this rule will go into effect on Oct. 1, unless Congress enacts the president's budget proposal to begin the Medicaid DSH allotment reductions in fiscal year 2015 instead of FY 2014, while retaining the same total amount of reductions through 2020. The Affordable Care Act requires aggregate reductions to state Medicaid DSH allotments annually from FY 2014 through FY 2020. Comments on the proposed rule are due July 12.

Tanning Bed Warning Label Proposal

The FDA issued a proposal that would elevate tanning beds from a low-risk to high-risk medical device and would add a warning label to them. If the order is finalized, manufacturers would have to submit a pre-market notification (510(k)) to the FDA for these devices, which are currently exempt from any pre-market review. Manufacturers would have to show that their products have met certain performance testing requirements, address certain product design characteristics and provide comprehensive labeling that presents consumers with clear information on the risks of use. The order proposes to include a contraindication against use on people under 18 years old, and the labeling would have to include a warning that frequent users of sunlamp products should be regularly screened for skin cancer.

The FDA will take comments on the proposed order until Aug. 7.

Skilled Nursing Facility FY 2014 Payment Rule

CMS has issued a proposed rule that would raise payments to skilled nursing facilities (SNF) by $500 million or 1.4 percent in fiscal year 2014. The rate reflects an estimated increase of 2.3 percent market basket increase, reduced by a 0.5 percentage point forecast error correction and further reduced by a 0.4 percentage point productivity adjustment required by law. CMS said the proposal would both revise and rebase the payment by requiring the establishment of an updated SNF marketplace index that would reflect changes over time in the prices of an appropriate bundle of goods and services for covered SNF services within the Medicare system. The proposed changes to the SNF market basket would reflect FY 2010 allowable Medicare total cost data (routine, ancillary and capital-related), shifting from FY 2004 base year, as it is the most recent year for which relatively complete Medicare cost report data is available. Other significant changes within the rule would establish a Minimum Data Set (MDS) to record the number of distinct calendar days of therapy for all rehabilitation disciplines to be linked to each beneficiary; such a proposal would clarify the qualifying conditions for "Medium Rehab Category" and "Low Rehab Category" to five and three distinct calendar days respectively. Comments are due by July 1, 2013.

IRS Proposed Rule -- Employer-Sponsored Plan Value

The Internal Revenue Service has published a proposed rule on the minimum required value of employer-sponsored coverage that won't trigger the employer mandate penalty and other provisions involving the premium tax credits on the exchanges. The proposed regulations affect individuals who enroll in qualified health plans through Affordable Insurance Exchanges (Exchanges) and claim the premium tax credit, and Exchanges that make qualified health plans available to individuals and employers. These proposed regulations also provide guidance on determining whether health coverage under an eligible employer-sponsored plan provides minimum value and affects employers that offer health coverage and their employees. Comments will be accepted until July 1, 2013.

Inpatient Rehabilitation Facility Prospective Payment Proposed Rule

CMS has announced proposed changes to update the Medicare Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) rates for fiscal year (FY) 2014. CMS proposes to increase Medicare payments to IRFs in FY 2014 by 2.0 percent, or $150 million. This proposed increase reflects the combined effects of a 2.5 percent market basket increase factor, a 0.4 percent reduction due to the multifactor productivity adjustment and an additional 0.3 percent reduction as required under the Affordable Care Act. CMS is proposing an update to the outlier threshold, which would increase IRF payments by an estimated 0.2 percent. CMS is also proposing to update the presumptive methodology used in determining whether an IRF has met the requirements of the "60-percent rule" by removing a number of codes from the presumptive compliance list. This revised list is meant to reflect only those codes that can be identified presumptively as both representing one of 13 conditions and requiring intensive rehabilitation. The proposed revisions fall in the following categories: nonspecific diagnosis codes, arthritis diagnosis codes, unilateral upper extremity diagnosis codes, some congenital anomalies diagnosis codes and other miscellaneous diagnosis codes. Public comments on the proposals will be accepted until July 1, 2013.

Charitable Hospital Rule

CMS has announced a proposed rule providing guidance to charitable hospital organizations on the community health needs assessment (CHNA) requirements, and related excise tax and reporting obligations enacted as part of the Patient Protection and Affordable Care Act of 2010. The proposed regulation also clarifies the consequences for failing to meet these and other requirements for charitable hospital organizations. These regulations will affect charitable hospital organizations.

Comments and requests for a public hearing must be received by July 1.

  1. Reports


Review of CPAP Supply Replacement Schedule Could Cut Wasteful Spending

The Office of Inspector General (OIG) has conducted a study in which it concludes that Medicare programs are being overgenerous in their replacement of CPAP (Continuous Positive Airway Pressure) supplies, a treatment mechanism primarily used to treat sleep apnea. The report released June 25 advises CMS to review and revise its Medicare replacement rate for CPAP. Moreover, the study reveals that in comparison to Medicaid, Medicare is shipping out replacements for CPAP supplies 39 percent more frequently. CMS's "beneficiaries receiving CPAP treatment for obstructive sleep apnea may have received more supplies (e.g. masks, tubing) than medically necessary," often several months of supplies at once, the report details. Also included was information gathered from five interviewed clinicians who deem that once proper fitting is done for CPAP supply, replacements supplies should be provided on an as-needed basis, which would likely be less frequently than is currently allowable through Medicare's current policy. CMS, however, disagrees with OIG's findings and claims that possible noncompliance and supplier fraud/abuse issues have not been factored into the report and that OIG fails "to consider [that] noncompliance or the potential impact of supplier fraud or abuse would bias the estimate of a clinically appropriate refill rate."

Medicare Part D Paid $5M for Drugs Ordered by Non-prescribers

The Department of Health and Human Services Office of Inspector General released a report on June 24 that found Medicare Part D paid $5 million for prescription drugs that were authorized by individuals without prescribing authority. More than 73,000 unauthorized prescriptions were paid by Medicare. Massage therapists, athletic trainers, dietitians, audiologists and opticians were among the 14 job categories that wrote the prescriptions. OIG recommended to CMS that it ensure Medicare Part D plan sponsors verify prescribers, that Medicare Drug Integrity Contractors (MEDIC) closely monitor prescribers and that CMS ensures it does not pay for prescription drugs ordered by individuals with no authority to prescribe. CMS agreed to comply with all recommendations.


Participation in Insurance Exchanges Unavailable for Multiemployer Plans

Union workers who purchase multiemployer health plans, also known as "Taft-Hartley" plans, will not have the ability to buy these plans through the health insurance exchanges created under the Affordable Care Act, according to a recent Congressional Research Service analysis. Many multiemployer plans are self-insured, which makes them ineligible for "qualified health plan status," an insurance exchange requirement. This is worrying to many unions, who believe many workers will instead opt for enrollment in the state exchanges, where they can get insurance subsidies. In response to this analysis, the National Coordinating Committee for Multiemployer Plans is currently lobbying the Department of Health and Human Services to add an exception and allow these multiemployer plans to participate in the insurance exchanges.