CMS Issues Proposed Rule on Quality-Based Payment Program

On April 27, CMS released a notice of proposed rulemaking to update how Medicare payments are linked to the quality and cost of care provided to beneficiaries. Hall Render has published a summary of the key provisions on its website. The proposal is the first step in implementing the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”), which helps providers transition from payment programs based on volume to a system based on quality and value. The agency’s proposed rule would implement MACRA provisions through the Quality Payment Program, a unified framework that includes the Merit-Based Incentive Payment System and Advanced Alternative Payment Models. CMS will accept public comments on the proposal until June 27. 

CMS Issues Final Rule for Medicaid Managed Care

On April 25, CMS released its final rule on Medicaid and CHIP managed care plans. The rule, which is the first major update to Medicaid and CHIP managed care in over ten years, introduces new standards for provider networks, enrollee protections, quality measures, external quality review and medical loss ratios.

The final rule also removed the Institutions for Mental Diseases (“IMD”) exclusion, which prohibited Medicaid reimbursement for patients in facilities with more than 16 beds, giving states more flexibility to allow managed care beneficiaries to receive mental health services in inpatient psychiatric hospitals or short-term crisis residential facilities. Under the rule, states will be allowed to cover managed care enrollees who stay no more than 15 days in an inpatient facility providing mental health services.

The CMS rule was released as Congress debates how to pay for a mental health system overhaul that would potentially allow coverage of inpatient services in a psychiatric setting. On April 28, the Senate Finance Committee held a hearing on mental health reform to consider ways to pay for lifting the IMD ban. The Finance Committee, which has jurisdiction over Medicaid, is responsible for finding bipartisan offsets that would be needed to pay for services if the IMD provision is added to the mental health bill.

House Approves Advances of Opioid, Telemedicine Legislation

On April 28, the House Energy and Commerce Committee completed its markup of three bills that address prescription drug abuse and the opioid epidemic. One bill included in the markup (H.R. 3680) would establish federal grants for health care providers to prescribe overdose reversal drugs concurrently with opioids in areas with high rates of opioid abuse and deaths. A second bill (H.R. 4586) would provide grants for states to have standing orders from pharmacies for overdose reversal medications. The third bill (H.R. 3691) would reauthorize grants for residential treatment programs for pregnant and postpartum women and children affected by substance abuse.

The Energy and Commerce Committee also passed H.R. 4111, the Rural Health Care Connectivity Act of 2015 sponsored by Rep. Leonard Lance (R-NJ). The telemedicine-related legislation would include skilled nursing facilities as a type of health care provider that can access funding for telecommunications through the Universal Service Fund’s Rural Health Program. The legislation will join a number of other substance abuse-related bills already passed by the Energy and Commerce and House Judiciary Committees. A final package of bills is expected to reach the House floor during the week of May 9.

CMS Announces Round 2 Contracts for DMEPOS Competitive Bidding Program

On April 28, CMS awarded contracts for Medicare’s Durable Medical Equipment, Prosthetics, Orthotics and Supplies (“DMEPOS”) Competitive Bidding Program. The bidding program serves as a tool to help the agency determine payment rates for DMEPOS products, improve access to quality supplies and save money for Medicare beneficiaries. The contracts begin on July 1 and go through December 31, 2018, after which another recompete will take place.

Health-Related Bills Introduced

Late last week, Sen. Johnny Isakson (R-GA) introduced budget-neutral legislation to correct a Medicare payment formula that results in disproportionately low reimbursements to hospitals in rural and low-income areas. The Fair Medicare Hospital Payments Act of 2016 (S. 2832) would create a national minimum area wage index to measure differences in hospital wage rates across different labor markets. The bill would implement a 0.874 area wage index based on the relative hospital wage level in a hospital’s geographic region compared to the national average.

Rep. Renee Ellmers (R-NC) introduced a bill, H.R. 5045, that would impose a moratorium on the implementation of a proposed Medicare local coverage determination on lower limb prostheses. The Preserving Access to Modern Prosthetic Limbs Act of 2016 would delay the implementation of changes to reimbursements for lower limb prosthetics under Medicare and would give stakeholders more time to provide feedback on CMS’s proposed guidelines.

Reps. Jackie Speier (D-CA) introduced a bill to close a Medicare loophole that allows physicians to refer patients to ancillary medical services in which the physician has an ownership interest. The Promoting Integrity in Medicare Act (H.R. 5088) would bar physicians from referring Medicare beneficiaries to in-office ancillary services, including advanced imaging, anatomic pathology, radiation therapy and physical therapy.

Next Week in Washington

The House and Senate are out of session next week and return on May 9. The Senate appropriations process is scheduled to continue throughout May, but progress on the first appropriations measure to reach the floor, the Energy and Water Appropriations Bill, was halted over a controversial policy rider putting the Senate floor schedule in limbo.


Last week’s edition of This Week in Washington incorrectly stated that CMS had ended its Two-Midnight policy through the proposed payment rule covering inpatient hospital stays and long-term care hospitals. The proposed rule only removed the negative impact from the policy’s payment adjustment. It did not end the Two-Midnight policy altogether. Additional information regarding the proposed rule can be found here.