1. Administration

CMS Clarifies Medicaid Disproportionate Share Hospital Payments in Proposed Rule

The Centers for Medicare and Medicaid Services (CMS) issued a proposed rule on Aug. 12 that clarifies that Medicaid disproportionate share hospital payments are to be based only on uncompensated care costs for Medicaid-eligible patients who are not covered by another source. The proposal refers to an existing rule that determines disproportionate share payments based on the total of uncompensated costs hospitals incur for treating patients who are Medicaid eligible and for whom hospitals have not received payments from Medicare or other third parties. That rule excludes payments hospitals receive from state or local governments for indigent patients.

For more information, click here.

CMS Proposes Changes to the ACA’s Risk Adjustment Program

On Aug.11, the Centers for Medicare and Medicaid Services (CMS) said it would propose changes to the ACA’s risk adjustment program to better adjust for high-cost enrollees. The agency will modify the program to absorb some of the cost for claims above a $2 million threshold, according to a blog post by Kevin Counihan, the Health Insurance Marketplace CEO. The costs would be funded by insurer payments.

The permanent risk adjustment program has been criticized by smaller plans, especially nonprofit co-ops that have argued the program essentially forces them to subsidize larger, better-established competitors. Several co-ops have sued over the program. CMS argues that the risk adjustment program “worked as intended” in its first two years. However, the blog post acknowledges some states’ struggles with premium hikes—driven by high-cost customers—and the fact that the Affordable Care Act’s reinsurance program ends after this year.

Counihan suggests that states may want to follow in Alaska’s footsteps by establishing their own reinsurance funds to stabilize markets. Alaska set up a $55 million program to shore up its individual market, at risk of collapse because only one insurer will remain on the exchange next year. Without the fund, Alaska officials said, premiums couldn’t be raised enough to cover the sickest individuals’ medical claims.

To see the blog, click here.

CMS Updates Nursing Home Five-Star Quality Ratings

On Aug. 10, the Centers for Medicare and Medicaid Services (CMS) announced six new quality measures on the Nursing Home Compare website as part of an initiative to broaden the amount of quality information available on that site. CMS is including five of those six new quality measures in the calculations for the Five-Star Quality Rating. The five measures include:

  1. Percentage of short-stay residents who were successfully discharged to the community (Medicare claims- and Minimum Data Set (MDS)-based)
  2. Percentage of short-stay residents who have had an outpatient emergency department visit (Medicare claims- and MDS-based)
  3. Percentage of short-stay residents who were rehospitalized after a nursing home admission (Medicare claims- and MDS-based)
  4. Percentage of short-stay residents who made improvements in function (MDS-based)
  5. Percentage of long-stay residents whose ability to move independently worsened (MDS-based)

The sixth new quality measure, the antianxiety/hypnotic medication measure, is not incorporated into the Five-Star Quality Rating because it has been difficult to determine appropriate nursing home benchmarks for the acceptable use of these medications.

The nursing home five-star ratings rely on health inspections, staffing and quality measures. The agency said the new measures will likely change existing nursing home ratings on the Nursing Home Compare tool.

For more information, click here.

Home-based Care Demo Saves $10 Million in Second Performance Year

The Independence at Home pilot, which provides primary care to chronically ill Medicare patients in their homes, saved over $10 million—an average of $1,010 per beneficiary—in its second performance year. Additionally, all 15 of the Independence at Home practices improved quality from the first performance year in at least two of the six quality measures. Four practices met the performance measures for all six quality measures.

For more information on the demonstration, click here.

CMS Announces Refinements to the Medicare Advantage Value-Based Insurance Design Model

On Aug. 10, the Centers for Medicare and Medicaid Services (CMS) Center for Medicare and Medicaid Innovation announced refinements to the design of the second year of the Medicare Advantage Value-Based Insurance Design (MA-VBID) model. The MA-VBID model is an opportunity for Medicare Advantage plans (MA plans), including Medicare Advantage plans offering Part D benefits (MA-PD plans), to offer clinically nuanced benefit packages aimed at improving quality of care while also reducing costs.

In the second year of the model, beginning Jan. 1, 2018, CMS will: open the model test to new applicants; conduct the model test in three new states—Alabama, Michigan and Texas; add rheumatoid arthritis and dementia to the clinical categories for which participants may offer benefits; make adjustments to existing clinical categories; and change the minimum enrollment size for some MA and MA-PD plan participants.

As part of the “better care, smarter spending, healthier people” approach to improving health care delivery, CMS will test VBID in Medicare Advantage and measure whether structuring patient cost sharing and other health plan design elements encourages enrollees to use health care services in a way that improved their health and reduces costs.

The first year of the MA-VBID model will begin Jan. 1, 2017, and run for five years. CMS will announce the MA plans participating in the test’s first year in September 2016. CMS expects to release a request for applications for the second year of the model test in the fall of 2016, and will accept proposals from MA and MA-PD plans to offer VBID benefits in 2018.

In its first year, CMS will test the model in seven states: Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania and Tennessee. Beginning Jan. 1, 2018, CMS will also test the model in Alabama, Michigan and Texas.

The MA-VBID model will provide flexibility for MA and MA-PD plans accepted into the model to develop clinically nuanced benefit designs for enrollee populations that fall within certain clinical categories.

The conditions are:

  • Diabetes
  • Chronic Obstructive Pulmonary Disease (COPD)
  • Congestive Heart Failure (CHF)
  • Patient with Past Stroke
  • Hypertension
  • Coronary Artery Disease
  • Mood Disorders
  • Rheumatoid Arthritis (starting in 2018)
  • Dementia (starting in 2018)

Eligible Applicants

The MA-VBID model test is open to all qualifying MA and MA-PD plans in the test states that submit acceptable programmatic proposals to CMS. Only certain MA and MA-PD plan types are eligible and certain restrictions apply to multi-state plans.

CMS will generally restrict the model test to plans with a minimum enrollment in the test states of 2,000 enrollees. However, beginning in 2018, an MA organization participating in the model test with at least one plan with enrollment over 2,000 enrollees may have additional plan benefit packages (PBPs) participate with a minimum enrollee requirement of 500 enrollees; an additional plan benefit package using this lower enrollment requirement may be from that MA organization or other organizations with the same parent organization. CMS may also grant an exception upon request.

Additionally, plans must meet minimum quality thresholds, including: being rated by CMS at three stars or higher, not consistently low performing, not an outlier in the CMS past performance analysis, not under sanction, and able to pass a program integrity screening.

The plan must have been offered in at least three annual coordinated election (open enrollment) periods prior to the open enrollment period for the year for which the plan is applying to participate. There is no cap on the total number of participating plans.

More Information and Application Process

More information about the MA-VBID model test can be found in the model’s announcements and other documents, available at http://innovation.cms.gov/initiatives/VBID.

The announcement includes instructions for providing CMS with feedback on this model test’s design. A webinar on the MA-VBID model test will be held on Aug. 25, 2016. Registration information is available on the same site.

CMS will accept applications for the second year of the MA-VBID model via a request for applications (RFA), to be released shortly. Once released, application materials will be available at: http://innovation.cms.gov/initiatives/VBID.

CMS Delays Medicare Requirement to Notify Patients of Loophole in Nursing Home Coverage

A new Medicare law that requires hospitals to notify patients when they are not formally admitted was to take effect on Aug. 6, but has been delayed. CMS delayed the requirement at the request of the American Hospital Association (AHA). Patients can expect to start receiving these warnings in January.

Patients must be admitted for at least three days for Medicare to cover subsequent nursing home stays, but hospitals often place patients under observation—which counts as outpatient care—rather than admitting them. Those patients then are surprised when they learn that Medicare will not pay for their nursing home stays, so Congress passed the NOTICE Act to require hospitals to notify patients of their status within 36 hours of being placed under observation. Hospitals are also required to explain the implications of outpatient status on how much their treatment will cost and how it could affect eligibility for nursing home coverage. The notice must be signed by either the beneficiary, their representative or, if the beneficiary refuses to sign the notice, hospital staff.

The final rule implementing this requirement says hospitals must notify only those patients receiving observation services as outpatients, not all outpatients. The notice, while informing beneficiaries of their status, does not give them the right to appeal that outpatient status—however, the Center for Medicare Advocacy encourages beneficiaries to “take action” once they receive notice.

CMS Announces Participants in Frontier Community Health Integration Project Demo

On Aug. 4, the Centers for Medicare and Medicaid Services (CMS) announced the participants in the Frontier Community Health Integration Project (FCHIP) Demonstration, an effort to increase access to care for Medicare beneficiaries in areas of the country where access to health services can be limited because of distance from providers. Ten critical access hospitals (CAHs) in Montana, Nevada and North Dakota will participate in the demonstration, which begins this August.

The FCHIP Demonstration, a statutory mandate launched by the CMS Innovation Center in collaboration with the Federal Office of Rural Health Policy, located in the Health Resources and Services Administration, will test new models of integrated, coordinated health care in the most sparsely populated rural counties in the nation over three years. This demonstration program will encourage the 10 CAHs to provide essential services that are often not financially viable in rural communities, with the goals of improving quality of care, increasing patient satisfaction in rural communities and spending health care dollars more wisely. The demonstration will provide financial incentives for care coordination activities for local CAHs to reduce unnecessary admissions and readmissions across their networks of care.

Applications were received from CAHs in Montana, Nevada and North Dakota (although eligible, CAHs in Alaska or Wyoming did not apply).

Specifically, the demonstration aims to:

  • support the CAH and local delivery system in keeping patients within the community who might otherwise be transferred to distant providers;
  • test whether payments for certain services will enhance access to care for patients, increase the integration and coordination of care among providers, and reduce avoidable hospitalizations, admissions and transfers; and
  • test new CAH activities in three service categories: skilled nursing care, telehealth and ambulance services.

HRSA’s Federal Office of Rural Health Policy will monitor the work of the technical assistance provider, Montana Health and Research Education Foundation, and collect information on key policy challenges facing frontier providers, while CMS will test alternative payment and administrative strategies.

For more information, click here.

CMS Issues Final Hospital Inpatient IPPS and LTCH Policy and Payment Changes for FY 2017

On Aug. 2, the Centers for Medicare and Medicaid Services (CMS) issued a final rule to update fiscal year (FY) 2017 Medicare payment policies and rates under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS). The final rule, which would apply to approximately 3,330 acute care hospitals and approximately 430 LTCHs, would affect discharges occurring on or after Oct. 1, 2016.

The IPPS pays hospitals for services provided to Medicare beneficiaries using a national base payment rate, adjusted for a number of factors that affect hospitals’ costs, including the patient’s condition and the cost of hospital labor in the hospital’s geographic area.

For a fact sheet on the rule, click here.

The final rule is available on the Federal Register.

CMS Opens Application Period for Comprehensive Primary Care Plus

On Aug. 1, the Centers for Medicare and Medicaid Services (CMS) opened the application period for practices to participate in the new nationwide primary care model, Comprehensive Primary Care Plus (CPC+). CPC+ is a five-year primary care medical home model beginning January 2017 that will enable primary care practices to care for their patients the way they think will deliver the best outcomes and to pay them for achieving results and improving care. CPC+ is an opportunity for practices of diverse sizes, structures and ownership who are interested in qualifying for the incentive payment for Advanced Alternative Payment Models through the proposed Quality Payment Program. CMS estimates that up to 5,000 primary care practices serving an estimated 3.5 million beneficiaries could participate in the model.

CPC+ is a public-private partnership in 14 regions across the nation. CPC+ is a multi-payer model—Medicare, state Medicaid agencies and private insurance companies partner together to support primary care practices—so CMS selected the regions based on payer interest and coverage.

The following regions were selected for CPC+. Eligible practices in these 14 regions may apply between Aug. 1 and Sept. 15, 2016, to participate in CPC+:

  1. Arkansas: statewide
  2. Colorado: statewide
  3. Hawaii: statewide
  4. Kansas and Missouri: Greater Kansas City Region
  5. Michigan: statewide
  6. Montana: statewide
  7. New Jersey: statewide
  8. New York: North Hudson-Capital Region
  9. Ohio: statewide and Northern Kentucky Region
  10. Oklahoma: statewide
  11. Oregon: statewide
  12. Pennsylvania: Greater Philadelphia Region
  13. Rhode Island: statewide
  14. Tennessee: statewide

Practices may participate in one of two CPC+ tracks. In Track 1, CMS will pay practices a monthly fee in addition to regular Medicare fee-for-service payments. In Track 2, practices will receive the monthly fee, as well as a hybrid of reduced Medicare fee-for-service payments and up-front comprehensive primary care payments to allow greater flexibility in how practices deliver care. Practices in Track 2 will provide more comprehensive services for patients with complex medical and behavioral health needs, including, as appropriate, a systematic assessment of their psychosocial needs and an inventory of resources and supports to meet those needs. To promote high-quality and high-value care, practices in both tracks will also receive prospective performance-based incentive payments that they will either keep or have to pay back to CMS based on their performance on quality and utilization metrics. In addition, practices that participate in CPC+ may qualify for the additional incentive payments available for the Advanced Alternative Payment Models in the proposed Quality Payment Program beginning 2019.

For more information, click here.

HHS Shifts Funds to Zika

On Aug. 11, the Administration announced that it is moving an additional $81 million to fight the Zika virus. HHS Secretary Sylvia Mathews Burwell will transfer $34 million within NIH and $47 million to BARDA in order to ensure that neither is forced to delay their Zika vaccine work as the fiscal year closes. The Administration told congressional leaders that the failure to pass a Zika emergency supplemental has forced the Administration to choose between delaying critical vaccine development work and raiding other worthy government programs to temporarily avoid these delays.

NIAID director Anthony Fauci said at the National Press Club that funding Zika this way is not the best way to pay for science. “All of that is extremely damaging to the biomedical enterprise,” he said. “We’re taking money away from cancer, diabetes, all of those kinds of things.”

CDC Director Publishes Article on Zika Progress

CDC director Tom Frieden and colleagues published an article in JAMA Current about takeaways from this year’s fight against the Zika virus, including lessons on prevention, testing and mosquito cleanup. For example, researchers have developed new laboratory algorithms, including the need to test urine specimens for weeks after symptoms appear.

Overall, Frieden’s article is a clarification of what we still do not know. CDC is still not certain how the disease leads to some complications, including a neurological condition called Guillain-Barre syndrome. The center is not even sure how much awareness of the virus exists in places like Puerto Rico, due to widespread misinformation. It is also very difficult for providers to stay informed amidst rapidly changing guidance.

Frieden and his colleagues urge action in Puerto Rico, vigilance within southern parts of the U.S. and continued caution among pregnant women, their partners and health care professionals regarding travel and mosquito protection.

By Aug. 4, nearly 1,700 cases of travel-associated Zika infection, including 479 pregnant women, had been reported in the U.S, according to the article.

HRSA Proposes Rules for Dispute Resolution Process in 340B Program

The Health Resources and Services Administration (HRSA) issued a proposed rule on Aug. 11 that would establish a binding administrative dispute resolution process when drug companies or health care organizations have disagreements regarding the 340B drug discount program.

The process would help resolve claims by health care facilities that they are being overcharged by drug companies, as well as claims by the companies that a health care facility is violating the prohibition on diversion of 340B drugs to patients who are not being served by covered health facilities or duplicate discounts. Drug companies have to conduct an audit before initiating a dispute.

The 340B drug program requires drug companies to offer steep discounts on outpatient medicines to federally qualified health centers, nonprofit safety-net hospitals, state AIDS Drug Assistance Programs and other qualified health entities that provide care for the uninsured and low-income patients. 340B health care faculties and drug companies are often at odds as to whether the program is truly serving the patients it was intended to assist.

HRSA said it has always encouraged both sides to voluntarily try to resolve disputes in good faith and this rule is not intended to replace those efforts, but instead should be considered a last resort.

HHS plans to establish a 340B ADR Panel that will review disputes, and it is not intended to be like a trial.

The rule proposes that disputes must be filed within three years of the sale of drug or payment at issue. Comments are due in 60 days.

For more information, click here.

  1. State Activities

Alabama: Gov. Bentley Announces Special Session to Consider Additional Medicaid Funding

Alabama Gov. Robert Bentley has called a special legislative session starting Aug. 15 to consider a lottery proposal that would provide additional funding for the state’s Medicaid agency, among other things. The Alabama Legislature passed a budget that appropriates $700 million for Medicaid for the fiscal year beginning Oct. 1, but Bentley says another $85 million is needed. In announcing the session, the governor said, “I will not, as your governor, and also as a physician, watch as our most vulnerable and most helpless, go without a doctor’s care.”

California: Residents Have Issues Finding Mental Health Treatment Covered by Insurance

Many California residents seeking mental health care are having trouble finding treatment covered by their insurance, despite federal and state insurance parity laws. Insurers are reportedly routinely denying coverage for expensive inpatient treatment, often claiming it is “medically unnecessary.” Patients then have the option to appeal that decision to the state. According to the Department of Managed Health Care, California has received nearly 900 appeals since 2010 from patients who said their insurer unfairly denied coverage for inpatient mental health treatment. Almost 47 percent of those decisions have been overturned.

Colorado: Single-Payer Plan Not Fully Funded

According to an independent analysis released by the Colorado Health Institute, a single-payer health care proposal on Colorado’s ballot this fall would not raise enough money to cover the program’s costs. The proposed universal coverage system—ColoradoCare—would see a $253 million deficit in the first year. The deficit would grow each year as health care costs outpace revenue, which would mostly come from a new 10 percent payroll tax. The tax is expected to bring in $25 billion annually, but the funding would fall short without additional tax increases. The state would also use federal funding now spent on Medicaid expansion and ACA insurance subsidies.

ColoradoCare would achieve one of its goals of reducing administrative costs, saving physicians and hospitals $946 million in insurance-related administrative expenses in 2019. Savings from cutting insurer profit and administration are estimated to be $2.9 billion that year. The plan would make Colorado the first state to achieve universal coverage. But structurally, the new system would continue to be plagued by not being able to control rising health spending.

Florida: Gov. Scott Calls for Free Zika Testing of All Pregnant Women

Gov. Rick Scott has called on the Florida Department of Health to provide free Zika testing for all pregnant women at each of the state’s county health departments. The Florida Department of Health is allotting more resources for lab services, so that tests can be processed quickly. This announcement came two days following the CDC caution against pregnant women’s travelling to a one-square-mile area of Miami just north of downtown, where multiple people have been infected with Zika by local mosquitos. Florida currently has at least 15 homegrown cases of the virus. Also, 336 people have contracted the virus abroad, with 55 of those involving pregnant women.

Additionally, the Obama administration argues it has fulfilled the entirety of Florida’s request for help in fighting the Zika virus, even as Sen. Marco Rubio (R-FL) asks the White House to do more for the state. HHS sent more than $8 million in funding to help Florida respond to the virus. The administration also dispatched an emergency response team with experts on the virus, birth defects, mosquito control and laboratories.

Illinois: Gov. Rauner Signs Democrat-Sponsored Birth Control, Abortion Bills

Illinois Republican Gov. Bruce Rauner recently surprised legislators and angered conservative groups when he signed two pieces of reproductive health legislation: one expanding birth control coverage and one expanding access to abortions. The birth control bill extends insurance coverage to almost all contraceptives. The abortion bill requires physicians who refuse to perform them for moral or religious purposes to give patients information on other providers who perform the procedure.

Indiana: CMS Rejects Indiana’s Requests for Six-Month Coverage Lockout Provision, Discontinuation of Prior Claims Payment Program

CMS recently told Indiana it will not approve a six-month coverage lockout provision or a request by the state to discontinue the prior claims payment program. Indiana sent a letter to CMS on April 28 asking the agency to allow for a six-month lockout of coverage for individuals who do not complete the eligibility redetermination process in its Medicaid expansion demo—the state says 95 percent of HIP members comply with the redetermination process. CMS says it will not approve this policy because many low-income individuals face challenges that make it hard to complete their redetermination process. These can include language access issues, frequent moves and other obstacles to getting mail, according to the agency. CMS says under the state’s proposed lockout approximately 18,850 people would be excluded from coverage each year.

Indiana has also said that the prior claims payment program—one that retroactively covers parents’ and caretakers’ medical costs incurred prior to Medicaid coverage—has low participation and therefore CMS should allow the state to discontinue it. CMS is sticking to its requirement that the program continue until only 5 percent of the eligible population uses it.

Kentucky: Gov. Bevin Delays Submission of Medicaid Waiver Application

Citing an influx of comments, Kentucky Gov. Matt Bevin said he is delaying the submission of the Kentucky HEALTH Medicaid expansion waiver to CMS. In the initial public comment period, the plan was widely criticized by health advocacy groups and others. The proposal would make several changes to Kentucky’s Medicaid expansion population, but the waiver also includes children and non-disabled adults covered by traditional Medicaid. After Kentucky submits the waiver to CMS, there will be another 30-day comment period.

Massachusetts: Massachusetts Sends CMS Request for Changes to 1115 Waiver

Massachusetts has sent CMS a request to make changes to its current MassHealth 1115 waiver and to extend the entire demonstration for five years beginning in July 2017. The state wants the authority to implement accountable care organizations (ACOs), increase benefits for treating substance abuse disorders and modify how Medicaid funding is paid to safety net providers through its Safety Net Care Pool. The safety net funding is set to expire after June 30, 2017. CMS will accept comments on the proposal until Sept. 3.

Minnesota: Insurers Reassess Premiums After Blue Cross Exits Marketplace

The exit of Blue Cross and Blue Shield of Minnesota from the individual market is prompting health insurers to delay the release of their rate requests as they consider premiums. Insurers are contemplating whether to set higher premiums for 2017 if they are going to take on some of Blue Cross and Blue Shield’s higher-cost consumers. Premium proposals, which were expected to be out on Aug, 1, are now likely to be posted by Sept. 1.

New Hampshire: GOP Candidates for Governor Divided Over Pledge Opposing the ACA

Republican gubernatorial candidates in New Hampshire are divided on a pledge from Americans for Prosperity (AFP), a conservative group backed by the Koch brothers, due to reservations about what it would mean for Medicaid expansion. AFP has routinely circulated the document in which candidates pledge to cut taxes and spending, as well as oppose the ACA. GOP candidates Jeanie Forrester and Frank Edelblut have signed the pledge, but Ted Gatsas and Chris Sununu have not. The latter two are hesitant to sign without having an alternative for the people currently covered under expansion.

New Mexico: Mental Health Providers Continue Fight Over Medicaid Funds

Three former mental health providers that were accused of Medicaid fraud in 2013 are still fighting back against the allegations and have taken the battle to the state legislature. They were among 15 mental health providers cut off from state funding in an alleged Medicaid service shake-up leading them to close their doors. They were all cleared of criminal wrongdoing but are still expected to repay millions of dollars to the state. They are now challenging the state’s allegations and are asking state lawmakers to review the actions taken by New Mexico’s Human Services Department.

New York: New York Enforcing Mental Health Parity

On July 27, New York’s Department of Financial Services sent a letter to insurers reminding them to cover mental health and substance abuse treatment at the same level they cover medical and surgical care. This guidance comes after Gov. Andrew Cuomo signed legislation that limits insurance barriers for substance abuse treatment and medication. Under the ACA, insurers are required to cover mental health under the 10 essential benefits. However, some insurers are still denying coverage for behavioral health treatment.

Wisconsin: Audit Reveals Overpayments by Medicaid to Family Planning Clinics

On Aug. 3, the Wisconsin Department of Health Services Office of the Inspector General (OIG) announced a recent audit of eight family planning clinics in the state. The audits revealed significant overpayments by Medicaid in the member accounts reviewed. A number of Planned Parenthood clinics were among the facilities that Medicaid overpaid. The audit found about half of the $131,543 in sample payments were overpayments. The agency found a handful of discrepancies, including prescriptions that had not been signed and no proof of prescriptions being dispensed, among other issues. Wisconsin’s OIG said it intends to recover those payments.

  1. Regulations Open for Comment

CMS Proposes Rule to Improve Quality of Care and Health Equity in Hospitals

On June 13, the Centers for Medicare and Medicaid Services (CMS) proposed new standards to improve the quality of care and advance health equity in the nation’s hospitals. The proposal applies to the 6,228 hospitals and critical access hospitals that participate in Medicare or Medicaid.

The rule proposes to reduce overuse of antibiotics and implement comprehensive requirements for infection prevention. CMS estimates that these new requirements could save hospitals up to $284 million annually, while also improving care and potentially saving lives. The proposed rule builds on the Department of Health and Human Services (HHS) quality initiatives, including the National Quality Strategy, the Center for Disease Control’s strategy to combat antibiotic-resistance bacteria and the Partnership for Patients.

The proposed rule also advances protections for traditionally underserved and excluded populations based on race, color, religion, national origin, sex (including gender identity), age, disability or sexual orientation.

The proposed rule also requires critical access hospitals to implement and maintain a Quality Assessment and Performance Improvement (QAPI) program. This program monitors and improves a hospital’s care by collecting data to identify opportunities for improvement and develop corrective plans. Other hospitals participating in Medicare or Medicaid already maintain these types of programs.

CMS will accept comments until Aug. 15, 2016. Comments can be submitted here.

To see a fact sheet on the proposed rule, click here.

CMS Releases Proposed Changes to the Payment Error Rate Measurement and Medicaid Eligibility Quality Control Programs

On June 20, the Centers for Medicare and Medicaid Services (CMS) issued a notice of proposed rulemaking outlining proposed changes to the Payment Error Rate Measurement (PERM) and Medicaid Eligibility Quality Control (MEQC) programs to implement provisions in the Affordable Care Act’s (ACAs) changes to the way states adjudicate eligibility for Medicaid and the Children’s Health Insurance Program (CHIP). The proposed rule addresses the new eligibility provisions of the ACA and makes other general improvements to the PERM and MEQC programs. The proposed rule also includes policies that, if implemented, would reduce state burden and increase the focus on the continuous reduction of improper payment rates. Comments on this proposed rule are due by Aug. 22, 2016.

Proposed changes to the PERM program in the proposed rule include:

  • Review Period: The PERM program will review Medicaid and CHIP payments made by states July through June of a given year. Under the current rule, the PERM program reviews payments made in a federal FY (October through September).
  • Eligibility Review Responsibility: A federal contractor will conduct PERM eligibility reviews with support from each state. Under the current rule, states are required to conduct eligibility reviews and report the results to CMS.
  • Eligibility Universe: The PERM program will conduct eligibility reviews (in addition to medical and data processing reviews) on FFS and managed care payments sampled for the PERM program. The eligibility review will be conducted on the beneficiary associated with the sampled claim. Under the current rule, states create separate universes of eligible individuals that are sampled for eligibility review.
  • Federal Improper Payments: Improper payments will be cited if the federal share amount is incorrect (even if the total computable amount is correct). Under the current rule, improper payments are cited only on the total computable amount (i.e., federal share + state share).
  • Sample Sizes: A national sample size will be calculated to meet national Medicaid and CHIP improper payment rate precision requirements. The national sample size will then be distributed across states to maximize precision at the state level, and state-specific sample sizes would be based on factors such as each state’s expenditures and previous improper payment rate. Under the current rule, state-specific sample sizes are calculated based on the state’s previous improper payment rate and state level precision and combined to total the national sample size.
  • Corrective Action: States will continue to implement Corrective Action Plans (CAPs) for all errors and deficiencies; however, there will be more stringent requirements added for states that have consecutive PERM eligibility improper payment rates over the 3 percent national standard established under Section 1903(u) of the Social Security Act (the Act).
  • Payment Reductions/Disallowances: Potential payment reductions/disallowances under Section 1903(u) of the Act will be applicable for eligibility reviews conducted during PERM years in cases where a state’s eligibility improper payment rate exceeds 3 percent. CMS will pursue disallowances only if a state does not demonstrate a good faith effort to meet the national standard, which is defined as meeting PERM CAP and MEQC pilot requirements.

Changes to the MEQC program in the proposed rule include:

  • The MEQC program will be restructured into a pilot program that states must conduct during their off years from the PERM program to ensure continual oversight of both Medicaid and CHIP state eligibility determinations.
  • States will be required to review a number of items not fully reviewed through the PERM program (e.g., negative cases).
  • States will have flexibility in different areas to focus pilot reviews; however, should a state have consecutive PERM eligibility improper payment rates over the 3 percent national standard per Section 1903(u) of the Act, the state will lose this flexibility and CMS will provide direction for reviews.
  • States must submit corrective actions for identified errors.

To see the notice of proposed rulemaking, click here.

CMS Proposed Updates to Policies and Payment Rates for ESRD PPS, QIP, Coverage and Payment for Acute Kidney Injury, DMEPOS Competitive Bidding Program and Fee Schedule, and Comprehensive ESRD Care Model

On June 24, 2016, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule that would update payment policies and rates under the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for renal dialysis services furnished on or after January 1, 2017. This rule also proposes new quality measures to improve the quality of care by dialysis facilities treating patients with end-stage renal disease.

This rule also implements the Trade Preferences Extension Act of 2015 provisions regarding the coverage and payment of renal dialysis services furnished by ESRD facilities to individuals with acute kidney injury.

In addition, the ESRD PPS proposed rule proposes changes to the ESRD Quality Incentive Program (QIP), including for payment years (PYs) 2018, 2019, and 2020, under which payment incentives are made to dialysis facilities to improve the quality of care that they provide. Under the ESRD QIP, facilities that do not achieve a minimum Total Performance Score (TPS) with respect to quality measures receive a reduction in their payment rates under the ESRD PPS.

This rule also addresses issues related to the durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) Competitive Bidding Program (CBP).

CMS is proposing to require bidding entities to obtain and provide proof of a bid surety bond for each competitive bidding area (CBA) in which the entity submits its bid(s), in accordance with Section 1847(a)(1)(G) of the Social Security Act, as added by section 522(a) of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

The rule also proposes revisions to the existing state licensure requirement at §414.414(b)(3), and proposes to expand suppliers’ appeal rights in the event that CMS takes one or more of the breach of contract actions specified in §414.422(g)(2).

Finally, the proposed rule would change the methodologies for adjusting DMEPOS fee schedule amounts using information from the DMEPOS Competitive Bidding and for establishing single payment amounts under the Competitive Bidding Programs for certain groups of similar items (e.g., various types of walkers) with different features (e.g., walkers with wheels versus walkers without wheels). Changes are also proposed to the methodology for establishing bid limits for items under the DMEPOS Competitive Bidding Program.

In addition, CMS announced a request for Applications for the Comprehensive ESRD (CEC) Model.

The proposed rule will be issued in the June 24, 2016 Federal Register and can be seen here.

CMS Releases Proposed Rule on the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System

On July 6, the Centers for Medicare and Medicaid Services (CMS) proposed updated payment rates and policy changes in the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System. Several of the proposed policy changes would improve the quality of care Medicare patients receive by better supporting their physicians and other health care providers. These changes are based on feedback from stakeholders, including beneficiary and patient advocates, as well as health care providers, including hospitals, ambulatory surgical centers and the physician community.

In addition to the payment provisions and quality reporting program changes for the proposed rule, CMS is also proposing:

  • Several changes to the objectives and measures of the Medicare EHR Incentive Program. These changes are only applicable for eligible hospitals and critical access hospitals (CAHs) attesting under the Medicare EHR Incentive Program and would not impact eligible hospitals and CAHs attesting under a state’s Medicaid EHR Incentive Program.
  • To align the definition of “eligible death” and the aggregate donor yield metric in the Organ Procurement Organization (OPO) Conditions for Coverage (CfC) with those of the Organ Procurement and Transplantation Network (OPTN) and Scientific Registry of Transplant Recipients (SRTR), as well as revise the OPO CfC to reduce the amount of hard copy documentation that must be sent with the organ, as much of this information is now available to the transplant center electronically.

CMS will accept comments on the proposed rule until Sept. 6, 2016.

To see the proposed rule, click here.

For a fact sheet on the proposed rule, click here.

IRS, Treasury Release Proposed Rule on QHP Benchmarks

The IRS and Treasury Department, in a proposed rule released July 6, proposed to alter how qualified health plan (QHP) benchmarks are determined so that they account for the costs of pediatric dental benefits. If finalized, the rule would go into effect for the 2019 plan year.

Although pediatric dental care is one of the 10 “essential health benefits” that plans are required to cover under the Affordable Care Act (ACA), several plans do not include such coverage, and consumers instead buy stand-alone dental products. Meanwhile, the marketplace determines the amount of tax credits a family can receive to cover the cost of coverage based on the second-cheapest silver-level plan.

However, as the proposed rule said, “because qualified health plans that do not offer pediatric dental benefits tend to be cheaper than qualified health plans that cover all ten essential health benefits, the second lowest-cost silver plan (and therefore the premium tax credit) for taxpayers purchasing coverage through a Marketplace in which stand-alone dental plans are offered is likely to not account for the cost of obtaining pediatric dental coverage.”

Treasury and IRS added that the existing rules “frustrate” the goal of making all essential health benefits affordable to those receiving premium tax credits, so the administration wants to update its interpretation to ensure all 10 services are addressed.

“Consistent with this interpretation, the proposed regulations provide that for taxable years beginning after December 31, 2018, if an Exchange offers one or more silver-level qualified health plans that do not cover pediatric dental benefits, the applicable benchmark plan is determined by ranking (1) the premiums for the silver-level qualified health plans that include pediatric dental benefits offered by the Exchange and (2) the aggregate of the premiums for the silver-level qualified health plans offered by the Exchange that do not include pediatric dental benefits plus the portion of the premium allocable to pediatric dental benefits for stand-alone dental plans offered by the Exchange,” the proposal said.

The rule aims to create the ranking by adding the premium for the lowest-cost silver plan that does not include a pediatric dental benefit to the premium for the cheapest stand-alone dental plan, and the premium for the second-cheapest silver plan without pediatric dental benefits to that of the second-lowest stand-alone dental plan. The second-cheapest amount from this combined ranking would be the taxpayer’s applicable benchmark plan premium, the rule said.

CMS Announces Proposed Payment Changes for Medicare Home Health Agencies

On June 27, the Centers for Medicare and Medicaid Services (CMS) announced proposed changes to the Medicare home health prospective payment system (HH PPS) for calendar year 2017 to foster greater efficiency, flexibility, payment accuracy and improved quality. Approximately 3.4 million beneficiaries received home health services from approximately 11,400 home health agencies, costing Medicare approximately $17.8 billion in 2015.

In the rule, CMS projects that Medicare payments to home health agencies in CY 2017 would be reduced by 1.0 percent, or $180 million, based on the proposed policies. The proposed decrease reflects the effects of the 2.3 percent home health payment update percentage ($420 million increase); the rebasing adjustments to the national, standardized 60-day episode payment rate, the national per-visit payment rates and the non-routine medical supplies (NRS) conversion factor ($420 million decrease); the effects of the -0.97 percent adjustment to the national, standardized 60-day episode payment rate to account for nominal case-mix growth for an impact of -0.9 percent ($160 million decrease); and the effects of the proposed increase to the fixed-dollar loss (FDL) ratio used in determining outlier payments from 0.45 to 0.56 for an estimated impact of -0.1 percent ($20 million decrease).

To be eligible for the home health benefit, beneficiaries must need intermittent skilled nursing or therapy services and must be homebound and under the care of a physician. Covered home health services include skilled nursing, home health aide, physical therapy, speech-language pathology, occupational therapy, medical social services and medical supplies. Home Health Agencies (HHAs) are paid a national, standardized 60-day episode payment for all covered home health services, adjusted for case-mix and area wage differences.

The HH PPS proposed rule is one of several rules for calendar year 2017 that reflect a broader administration-wide strategy to create a health care system that results in better care, smarter spending and healthier people.

For more information, click here.

Click here to see the proposed rule.

CMS Extends Comment Deadline for RFI on Modular Solutions for Medicaid IT Enterprise and Pre-Certification of Solutions

CMS extended the deadline for information the agency is seeking on the availability of modular solutions and the ability and interest in producing and offering solutions for Medicaid enterprise systems, specifically for clinical and administrative data warehouse and identity management solutions. CMS is developing a process for vendors to voluntarily obtain pre-certification for their Medicaid Management Information Systems (MMIS) modules in order to streamline the development and eventual certification of MMIS. CMS is now seeking suggestions for structuring such a pre-certification program. The information gathered from this RFI will inform the CMS process for implementing voluntary vendor pre-certification.

The original due date was July 14, 2016. The comment period for this RFI has now been extended to Aug. 15, 2016.

To see the RFI, click here.

CMS Releases Proposed Mandatory Bundled Payment Program

On July 25, CMS proposed new models to mandate bundled payments for cardiac care. This is the agency’s second program requiring providers to accept set payments for an episode of care. CMS also proposed extending its existing mandatory bundled payment initiative for hip replacements to other hip surgeries.

CMS clarified that under the new Medicare physician payment system starting in 2018, both mandatory bundled payment models could qualify as Advanced Alternative Payment Models, which would allow participating physicians to be excluded from a new proposed quality reporting program and instead receive a lump-sum payment from Medicare.

The agency also announced a new initiative to encourage hospitals to increase cardiac rehabilitation, in hopes of improving patient outcomes and reducing readmissions.

To see the proposed rule, click here. CMS will accept comments on the proposed rule until 5 p.m. on Oct. 3.

NIH Could Lift Ban on Human-Animal Chimera Research

The National Institutes of Health (NIH) is seeking feedback on a proposal to lift a moratorium on funding research in which animal embryos are used to grow human tissue and organs. In a blog post on Aug. 4, NIH associate director for science policy Carrie Wolinetz said, “Formation of these types of human-animal organism, referred to as ‘chimeras,’ holds tremendous potential for disease modeling, drug testing, and perhaps eventual organ transplant.”

This research, however, raises ethical concerns—including that it could blur the lines between human and animal species. Human stem cells could be introduced into animals’ brains, potentially altering their cognitive state. There is also concern about the ramifications of chimeras reproducing.

The Aug. 4 announcement is a reversal of the September 2015 decision to halt such research funding. NIH explained that at that time, it wanted to evaluate the state of science and ethical issues. NIH plans to outline new limitations on the stages at which human stem cells can be introduced into animal embryos. It will not fund research involving the breeding of animals where the introduction of any type of human cell could result in human egg or sperm developing.

Comments on the proposal are due by Sept. 4.

IRS Publishes Draft Regulations on Reporting of Catastrophic Health Coverage

The Internal Revenue Service (IRS) published new draft health coverage reporting regulations in the Federal Register on Aug. 2. The new draft regulations call for the health insurers that sell catastrophic medical insurance to report any catastrophic coverage they have provided to the enrollees and the IRS on Form 1095-B. The rule would first apply to the coverage in effect in 2017—issuers would then send out the first catastrophic plan 1095-B forms in early 2018.

Catastrophic plans are higher-deductible, lower-value plans that insurers can sell to people under 30, and to people of any age who earn too much to qualify for ACA exchange plan premium subsidies. The new draft regulations also call for the government agencies that offer Basic Health Plans—which are similar to managed Medicaid programs for people who earn too much to qualify for Medicaid—to report Basic Health Plan coverage to the IRS.

A third piece of the draft regulations clarifies that an employer providing two or more types of coverage that come under the minimum essential coverage rules would just have to report the richest form of coverage.

Comments on the draft regulations are due by Oct. 3.

  1. Reports

Low-Income Adults Reporting Health Improvements Two Years After Medicaid Expansion  

According to a new study from the Harvard School of Public Health, low-income adults in Arkansas and Kentucky began to report improved health two years after Medicaid was expanded under the Affordable Care Act (ACA). Researchers in the study say the data reinforces evidence that coverage expansions, in addition to making care more affordable and accessible, improves individuals’ self-reported health and the quality of care they receive. Certain benefits of coverage expansion became much more evident in the second year of the program.

The study, published in JAMA Internal Medicine, compared Arkansas and Kentucky—two states that expanded Medicaid in 2014 and have seen huge drops in their uninsured rates—to Texas, which is one of 19 states that has refused expansion.

Similar benefits were seen in Kentucky and Arkansas even though they used different approaches to expand coverage. The number of residents in both states reporting excellent health increased by 4.8 percent between 2013 and 2015. The number of residents saying the emergency department was their usual location to receive care declined by 6.1 percentage points.

A drop in individuals saying the ER was their usual source for care was seen after the first year of expansion, but Harvard researchers said the decline was statistically significant after two years.

Researchers also found that there was a 6 percentage point decline in those reporting any emergency room visits in Arkansas and Kentucky, and the number of office visits increased slightly.

Researchers surveyed roughly 9,000 low-income adults in the three states between late 2013 and 2015.

Survey Shows Employer Health Care Costs Anticipated to Increase 5 Percent in 2016, 2017

According to a Willis Towers Watson survey released Aug. 8, employers anticipate that health care costs for businesses and workers will increase by 5 percent in both 2016 and 2017—this is up from the 4 percent increase in 2015. Employers estimate that annual average employee costs will be $12,338 this year and up to $13,000 in 2017. A top priority for the 88 percent of those surveyed was managing the cost of expensive prescription drugs. Planned actions include addressing specialty pharmacy spending that occurs through a worker’s medical benefit, and using new tactics to ensure high-cost drugs are used appropriately.

GAO Report Finds Federal Action is Necessary to Align Uncompensated Care Payments with Costs 

The Government Accountability Office (GAO) released a report examining federal support for hospital uncompensated care. GAO examined the key sources and amounts of federal support for uncompensated care costs, the basis for determining hospital UC payments made under Medicaid and Medicare, and the extent to which Medicare UC payments align with hospital UC costs.

Ultimately, the report found that there is additional federal action needed to better align payments with costs. GAO made two recommendations to CMS: 1) improve the alignment of Medicare UC payments with hospital UC costs; and 2) account for Medicaid payments made when making Medicare UC payments to individual hospitals. HHS agreed with both recommendations.

GAO Report Finds CMS Should Verify Accuracy of Data Used to Set Pay Rates for Part B Drugs

The Government Accountability Office (GAO) recently released a report finding that CMS needs to take additional steps to verify accuracy of data used to set payment rates for drugs in Medicare Part B. The report describes Medicare spending and utilization for Part B drugs that are paid based on ASP and examines the steps CMS takes to ensure the accuracy of the sales price data reported by drug manufacturers. GAO recommended that Congress should require all manufacturers of drugs paid at ASP to submit sales price data to CMS and that CMS should verify that data by requesting source documentation.

  1. Other Developments

AEH Announces Partnership with Premier

On Aug. 1, America’s Essential Hospitals (AEH) announced a partnership with Premier for the company to become the preferred group purchasing organization for association members. According to AEH, the partnership will “help academic medical centers and other essential hospitals improve health care quality, reduce delivery costs and succeed in alternative payment models that promote population health.” AEH members will now have access to Premier’s financial, operational and clinical data and analytics, as well as the company’s supply chain and integrated pharmacy programs. AEH and Premier will collaborate on testing new care models to improve outcomes and lower costs. The groups would not disclose the financial terms of the agreement but said they should not affect Premier’s fiscal 2017 financial results.

Aetna, Humana to Sell Medicare Advantage Plans to Molina Healthcare

On Aug. 2, Aetna and Humana announced they will sell certain Medicare Advantage plans to Molina Healthcare. The plans represent 290,000 Medicare Advantage customers across 21 states. The $117 million deal is contingent on the completion of Aetna’s $37 billion acquisition of Humana, CMS approvals and actions, and state and other regulatory approvals.

In July, the Department of Justice sued to stop the Aetna-Humana deal, citing concerns about reduced competition—especially in the Medicare Advantage market. Federal antitrust officials filed a separate suit against Anthem’s planned $54 billion acquisition of Cigna. Additionally, Aetna is not expanding its exchange business in 2017—the insurer is evaluating its future participation in the exchanges. Aetna is creating a $65 million premium deficiency reserve to make up for anticipated losses in the individual market this year.

A Guide to the Presidential Candidates on Health Care

As always, health care policy is a significant issue in the presidential campaign. Below is a brief “pocket” guide to the positions of the Republican and Democratic presidential candidates on health care issues.

Donald J. Trump, Republican

  1. Repeal and replace the coverage provisions of the Affordable Care Act
  2. Repeal ACA taxes
  3. Repeal Medicare savings from the ACA
  4. Allow insurance to be purchased across state lines
  5. Create deduction for individual insurance premiums
  6. Allow importation of prescription drugs
  7. Require price transparency and promote the use of health savings accounts
  8. Block grant Medicaid
  9. Enforce immigration laws and restrict granting of visas to relieve costs for illegal immigrants’ health care on state and local governments
  10. Assumes that growing the economy will reduce “dependence on public health programs”
  11. Reform metal health programs and institutions

Hillary Rodham Clinton, Democrat

  1. Build off the Affordable Care Act by increasing Medicaid access in every state
  2. Allow families to purchase health insurance on the exchange regardless of immigration status
  3. Provide the Secretary of Health and Human Services authority to override or modify premium increases
  4. Cap prescription drug costs for those paying out of pocket
  5. Work for long-term solutions to reduce drug costs while not stifling innovation
  6. Provide a public option health plan in every state and allow those over 55 to opt into Medicare while protecting traditional Medicare
  7. Address lack of access to primary care, dental care, mental health services and affordable prescription drugs
  8. Expand community health centers and double the funding provided to them
  9. Supports President Obama’s proposal to triple the size of the National Health Services Corps