The American Clinical Laboratory Association (“ACLA”) challenged the final rules promulgated by the Department for Health and Human Services (“HHS”) pertaining to how the Medicare Clinical Laboratory Fee Schedule (“CLFS”) payment rates are established for laboratory services (Am. Clinical Lab. Ass’n v. Azar, No. 17-2645 ABJ, 2018 U.S. Dist. LEXIS 161639, 2018 WL 4539681 (D.D.C. Sept. 21, 2018)). The U.S. District Court of the District of Columbia granted HHS’ motion for summary judgment to dismiss the complaint after concluding that the court lacked subject matter jurisdiction to hear the case. This is a significant set-back for the laboratory industry that has been fighting against the reductions in Medicare reimbursement under the new payment methodology, but it is not the end of the road.

In accordance with Section 216 of Protecting Access to Medicare Act of 2014 (“PAMA”), beginning January 1, 2018 the Medicare CLFS payment rate was established using a volume-weighted median of private payor rates for laboratory services as reported by applicable laboratories. What laboratories met the definition of an “applicable laboratory” and whether HHS had the authority to redefine the term was at the center of the challenge by the ACLA.

In December 2017, ACLA filed a lawsuit arguing that in the final rule HHS redefined the term “applicable laboratory” from the plain text of the statute and in doing so excluded almost 90% of hospital laboratories which reduced private-payment data reported and in turn resulted in lower CLFS payment rates. HHS argued that the terms “laboratory” and “revenue” relevant to determining an “applicable laboratory” were ambiguous and regardless PAMA includes a statutory bar to judicial review.

While ACLA presented multiple claims and arguments, the court focused on the threshold question: whether PAMA bars judicial review of HHS’ authority in “establishment of payment amounts under this section [of PAMA].” The court concluded that the statute did not permit judicial review; relying heavily on Florida Health, a D.C. Circuit case (Fla. Health Scis., Ctr., Inc. v. Sec’y of HHS, 830 F.3d 515 (D.C. Cir. 2016)). In Florida Health, the D.C. Circuit found that the statute gave HHS the power to make the choice as to what data should be used to calculate payment for hospitals’ uncompensated patient care. The reasoning in Florida Health is sound as it relates to the statutory authority granted under at issue in that case. Florida Health, however, seems to be easily distinguishable from the case brought by ACLA because, as the court itself recognized, “Florida Health did not involve a rule about how the Secretary would obtain the data needed … like this case does.” That is, Congress already defined under PAMA what data to be reported and who should report that data. In doing so, we believe the court conflated the breadth of the judicial review bar under PAMA and failed to differentiate between challenging the validity of HSS’ decisions made in the rulemaking process and contesting how and what data must be received and processed as per statutory procedure.

Here, ACLA argued that HHS overstepped its authority by redefining a clear statutory term; however, this was essentially ignored by the court by using the statutory judicial bar as a red-herring and conveniently limiting its analysis. Even though the court acknowledged that ACLA’s arguments “raise important questions,” the court refused to answer those very questions upon its determination that it could not hear the case. The court’s failure to address these issues likely gives ACLA grounds for appeal.

ACLA’s statement, released in response to the decision, reports that the association is exploring further legal options. The statement expresses concern that the decision “sets a harmful precedent that allows agencies to circumvent Congress’ express directions at the expense of patient care.” The association also urged Congress to take immediate action to resolve the issues raised in the lawsuit; specifically, the impact the reduction in Medicare CLFS payment rates will have on the laboratory industry. In the meantime, ACLA must seriously and carefully consider filing an appeal to request their central arguments be addressed and prepare to show the D.C. Circuit how this case can easily be distinguished from Florida Health and the underlying notion of judicial deference for an agency’s implementation of a complex statute.

Of course, even if successful, the ACLA must still address the other jurisdictional issues raised by HHS, such as whether ACLA had standing to bring suit on behalf of its members and if injury to labs or impact on Medicare rates had been proven.

 

Sydney Reed, a Law Clerk (not admitted to the practice of law) in the firm’s Houston office, contributed significantly to the preparation of this post.

The Medicare Payment Advisory Commission (“MedPAC”) met in Washington, D.C., on September 6-7, 2018. The purpose of this and other public meetings of MedPAC is for the commissioners to analyze existing challenges and issues within the Medicare program and to provide future policy recommendations to Congress. MedPAC issues these recommendations in two annual reports, one in March and another in June. These meetings offer a comprehensive perspective on the current state of Medicare as well as future outlooks for the program.

As thought leaders in healthcare law, Epstein Becker Green monitors MedPAC developments to determine how regulations and policies will impact the health care marketplace. Here are our five biggest takeaways from the September meeting:

  1. MedPAC Discusses Trends in the Growth of Medicare and Total Healthcare Spending

MedPAC examined recent growth trends in Medicare and total healthcare spending in order to determine the budgetary impact of its recommendations. As part of their analysis, MedPAC reviewed the effects of healthcare spending on Medicare beneficiaries, households, and federal and state budgets as well as discussed evidence on ineffective spending and the opportunities it presents to lower health care spending without adversely impacting health outcomes.

MedPAC projects that the Medicare program will nearly double in size over the next decade, rising from “about $700 billion in total spending to 2017 to $1.3 trillion 2026.” At the same time, MedPAC expects that Medicare’s financing will become increasingly strained. Indeed, MedPAC projects that Medicare spending could rise from roughly 3 percent of our economy today to about 6 percent by 2048. The Commission estimates that Medicare, Medicaid, Social Security, and other major health program spending as well as net interest will reach nearly 20 percent of the economy and exceed total federal revenues by themselves.

Finally, the Commission found that Medicare may face a number of challenges in achieving savings down the road. The Commission points to Medicare’s fragmented payment systems across multiple health care settings, which the Commission believes contributes to a reduction in incentives to provide patient-centered coordinated care. Furthermore, Medicare’s benefit design is comprised of several parts, each of which cover different services and require different levels of cost sharing.

  1. MedPAC Provides Recommendations to Revise Statutory and Regulatory Requirements for PAC Providers

MedPAC presented recommendations for adopting a more unified payment system as well as ideas for creating common requirements for all Post-Acute Care (“PAC”) providers that would align the proposed system goals. The current system is comprised of four prospective payment systems (“PPS”). MedPAC’s concerns with the existing system is relative to differences in statutory and regulatory requirements for each. MedPAC found the requirements to be quite different across the four PPS settings while relatively similar in other cases. MedPAC also referenced other differences among PPSs relative to setting-specific and nursing requirements as well as Inpatient Rehabilitation Facilities (“IRF”) and Long-term Care Hospitals (“LTCH”). MedPAC’s theory rested on the idea that a unified PAC PPS would determine payments based “solely on patient characteristics and minimize the role of site of care in setting payments.”

MedPAC proposed establishing new requirements that could establish “separate categories to acknowledge that delivering care in the institution has some responsibilities that care in the home does not have . . . .” The proposed requirements were split into two tiers: (1) the first tier forming general requirements for services necessary to serve the majority of Medicare PAC patients and (2) the second tier for patients requiring more specialized care. Altogether, MedPAC believed that such a system could enhance the possibility of creating a more cohesive, unified payment system that could best determine patient payments.

  1. MedPAC Expresses Concerns Regarding Spending and Utilization of Long-term Care Hospitals

Congress mandated MedPAC to examine the effect of the LTCH dual-payment policy on the following issues:

  • The quality of care provided in long-term hospitals
  • The use of hospice care and post-acute-care settings
  • The effect on different types of LTCH, and
  • The growth in Medicare spending for services in LTCHs

MedPAC expressed concerns relative to LTCH spending and use over the past two decades as more than one LTCH would be located in one region of the country whereas some areas had none. Further concerns focused on research findings that failed to show a clear advantage in terms of outcomes or episode spending for LTCH users compared to those who used other PAC provider types. LTCHs are quite expensive—total Medicare spending totaled “just over $5.1 billion for about 126,000 cases in 2016.” Thus, due to the high expenses and unclear health outcome advantage of LTCHs, MedPAC suggested Medicare payers should better define the appropriate patients for LTCH care.

The Commission also expressed concerns relative to the growth of LTCHs. Though spending began to decrease after 2012, CMS never fully implemented policies to set limits on the share of cases being admitted to LTCHs from single referring acute-care hospitals. Thus, MedPAC is concerned as to whether the most appropriate patients are receiving care in LTCHs given that policymakers have failed to define this class of patients.

MedPAC plans to analyze new measures to determine quality of care in LTCHs, the use of hospice and other post-acute-care settings, use and spending data across different types of LTCHs, and the impact of the elimination of threshold policies in order to address these issues.

  1. MedPAC begins review of Medicare clinician payment updates under MACRA mandate

In 2015, the Medicare Access and CHIP Reauthorization Act (“MACRA”) repealed the sustainable growth rate formula for Medicare clinician fees and created permanent statutory updates for such fees. MACRA required MedPAC to conduct a report on clinician payment that reviews these updates and considers their impact on four indicators: (1) the efficiency and economy of care, (2) supply, (3) access, and (4) quality.

MedPAC first examined the efficiency and economy of care by analyzing Medicare spending trends. It identified the payment updates as affecting Medicare spending—the payment updates apply to Medicare’s conversion factor for the clinician services fee schedule used by Medicare. However, MedPAC also acknowledged that other factors might impact spending in addition to the payment updates, including policy adjustments (e.g., converting payment incentive programs to penalty programs), site-of-service shifts (i.e., moving services from “the physician office setting to the hospital outpatient department” decreases Medicare physician fee schedule spending but still increases total Medicare spending), and clinician increases in volume and intensity of services provided.

MedPAC then reviewed the effect of the payment updates on supply, which it measured as the “number of clinicians billing Medicare.” It found that despite “relatively modest” payment updates (averaging about a half percent annually), supply has been steadily growing since 2009, from a 1.5% increase in specialty physicians billing Medicare per year to a robust 10.1% increase in advanced practice registered nurses and physician assistants billing per year.

In order to track access to care, MedPAC analyzed the results of its yearly telephone survey of Medicare beneficiaries and individuals with private insurance, closely tracking the ease of finding new primary care physicians as a key indicator of access to care. It found that “diverging payment rates” between Medicare and private insurance “have not appeared to have resulted in a difference in patient-reported access to care” based on MedPAC’s survey results.

Finally, MedPAC reviewed statutory updates and their impact on quality. MedPAC reported “little evidence” that higher payments translate to higher quality for clinician services. MedPAC also emphasized its recommendation to repeal Medicare’s current quality program for clinicians, the Merit-based Incentive Payment System (“MIPS”) since MIPS does not allow for comparison of quality performance across clinicians. Overall, MedPAC concluded that impact on quality is indeterminate.

MedPAC plans to revisit this review in the spring of 2019 with a presentation analyzing updated data and a “site-of-service adjusted volume analysis.”

  1. MedPAC reviews its new Hospital Value Incentive Program and requests feedback regarding quality measures and monitoring hospital-acquired conditions

MedPAC was tasked with the potential redesign of the hospital quality and value program, which currently involves four complex and overlapping quality payment and reporting programs. Based on quality incentive principles laid out by the Commission, MedPAC created the Hospital Value Incentive Program (“HVIP”). MedPAC reviewed the design of its new clear and focused HVIP:

Combined

  • Hospital Readmissions Reduction Program (“HRRP”) and
  • Hospital Value-based Purchasing Program (“VBP”)

Eliminated

  • Inpatient Quality Reporting Program (“IQRP”) and
  • Hospital-Acquired Condition Reduction Program (“HACRP”)

MedPAC described four outcome, patient experience, and cost measures of quality in the HVIP: (1) readmissions, (2) mortality, (3) spending, and (4) patient experience. MedPAC also asserted the following characteristics of its HVIP:

  • Translation of quality measure performance into payment by adhering to clear performance standards.
  • “Peer grouping” to account for provider population differences (“Peers” are those providers that “treat a similar share of fully dual-eligible beneficiaries”)
  • Redistribution of a budgeted amount based on the hospitals’ performance
  • Public reporting of quality results

MedPAC explained that its model of the HVIP projected a 50:50 reward-penalty ratio. The model weighted each of the four measures of quality equally when determining a HVIP “score” for the hospital, but MedPAC reasoned that policymakers could prioritize certain measures to appropriately balance the interests of Medicare and its beneficiaries. MedPAC then offered suggestions for changing the withhold amount to align to the budget neutral goal of the HVIP, instead of the current maximum 3% reward and 6% penalty assessed to hospitals. MedPAC discussed the “patient experience” measure, which it stated would be based on the Hospital Consumer Assessment of Healthcare Providers and Systems (“HCAHPS”) national survey, which consists of ten core measures. MedPAC explained two alternatives for incorporating this survey data: (1) using the overall HCAHPS score or (2) scoring multiple select individual HCAHPS measures. MedPAC did caution that several hospital quality leaders favored the single overall HCAHPS rating due to better avoidance of bias. MedPAC subsequently requested the Commission’s thoughts on patient experience data to be used in the HVIP.

Finally, MedPAC expressed hospital quality leaders’ concern over Medicare’s hospital-acquired conditions (“HAC”) reduction program and its connection to payment. MedPAC suggested removing these financial incentives associated with limiting HACs and instead continue public reporting of results and allow financial incentives indirectly through HVIP’s readmissions measure. MedPAC requested feedback from the Commission on this issue.

A variety of traditional and non-traditional investors are starting to capitalize on the stability of the Medicare Advantage Program and expansion of the Medicare Advantage Health Plan Market.  These companies are leveraging sophisticated technological interfaces, data, and telemedicine to help improve the patient experience and to maximize the Triple Aim.

Why Medicare Advantage?

Medicare Advantage plans are offered by private insurance companies subject to certain standards established by the Centers for Medicare & Medicaid Services (“CMS”).  While the Medicare Advantage health plans are responsible for meeting specified levels of benefits and service standards and receive premium funding from the government, they have a high degree of autonomy on how they administer the plans to cover enrolled Medicare beneficiaries.  Medicare Advantage funding is risk adjusted for the health status of the enrollee and as a result, effective Medicare Advantage plans (“MA Plans”) are highly dependent upon real time data sharing.

Disfavored no more

Recent developments show that Medicare Advantage has more bipartisan support than the ACA Marketplace and is less susceptible to political intrigues.  However, this was not always the case. Not too long ago, Medicare Advantage was considered a “privatization of Medicare” and insurance companies were accused of making a profit off of the Medicare Program.  In February 2013, federal officials announced a 2.2% cut to Medicare Advantage reimbursement.  The political attacks on Medicare Advantage were not well received by the Medicare Advantage enrolled seniors who vocally began to defend their beleaguered program.  The patients began a campaign of communication to members of Congress, touting the benefits of engaged Medicare Advantage healthcare providers and health related initiatives such as fitness and nutrition counseling.  This caught the skeptics between a rock and a hard place.  Some Congressional Democrats have noted that they support killing the program but cannot because senior constituents love it.  After significant grassroots lobbying, coalition building, and industry efforts, the proposed 2.2% reduction was transformed into a minor increase by April 2013.  This turnaround was primarily due to patient and provider advocacy with thousands of seniors participating in letter writing campaigns to protect their Medicare Advantage Program.  Medicare Advantage went from a political pariah to a bipartisan tolerated program within a few years.

Medicare Advantage is here to stay

Fast forward to 2018, Medicare Advantage is marketed as an innovative health care option that will provide more choices and lower premiums.  The Trump Administration is providing greater flexibility to companies offering benefits in Medicare Advantage plans.  Medicare Advantage is expanding beyond the retiree states of Florida, Arizona, and California with significant inroads in all fifty states.  The growth has caught the eye of innovative healthcare investors and market consolidation has produced larger plans with stronger infrastructure including captive staff-model delivery systems.  Medicare Advantage continues to grow with 33% of Medicare eligible beneficiaries currently enrolled in MA Plans.  Significant opportunities exist for companies which already possess sophisticated data analytics and coordinated care systems.  Notably, one such player, Clover Health, announced on August 27, 2018 that it is also launching Medicare Advantage plans in six new markets in 2019.  Clover Health is a San Francisco based startup that uses data analytics and artificial intelligence to deliver health care.  Currently, Clover Health provides services for 30,000 seniors and others eligible for Medicare in parts of Georgia, New Jersey, Pennsylvania and Texas.  Only time will tell how successful starts ups such as Clover Health will be in the Medicare Advantage marketplace.  However, this investment is one indicator that despite the rhetoric around health care in America, Medicare Advantage is here to stay.

The long-running saga of the Medicare appeals backlog added a new chapter that may give frustrated stakeholders a new remedy.[1]  On March 27, 2018, the United States Court of Appeals for the Fifth Circuit ruled that a home health agency may pursue a claim against the Secretary of HHS for failing to provide a hearing before an Administrative Law Judge within a reasonable time.  Family Rehabilitation, Incorporated v. Azar, No. 17-11337 (5th Cir., Mar. 27, 2018).

In this case, Family Rehabilitation (“Family”) received a notice from a Medicare Zone Integrity Program Contractor (“ZPIC”) in 2016 alleging that it had been overpaid $7.88 million based on an extrapolation from a sample of 43 claims.  It pursued its administrative appeal rights, and after the second level of review the overpayment was reduced to $7.62 million. At that point, its Medicare Administrative Contractor began recouping the alleged overpayment; at the same time, Family requested a hearing before an Administrative Law Judge. However, due to the backlog of Medicare Part B appeals, the Secretary conceded that it would take between three and five years to schedule a hearing even though the Social Security Act requires that an ALJ issue a decision within 90 days of a timely hearing request.[2]

Family was caught in a bind: if it waited for a hearing, it would likely have gone out of business without any Medicare reimbursement while over seven million dollars was being recouped. It took the drastic step of seeking an injunction to prevent CMS from recouping the alleged overpayments until its appeal had been decided. It alleged that because the recoupment would force it to go out of business before it had any chance to have its appeal heard, this amounted to irreparable harm and authorized the injunctive relief to prevent the Secretary from acting beyond the scope of his authorityAlthough the District Court dismissed the case on jurisdictional grounds, the Court of Appeals reversed the judgment and concluded that Family could state a cause of action based on the Secretary’s alleged failure to comply with the statute.

The Court of Appeals explained that although there is a presumption that all Medicare appeals will follow the established four levels of administrative appeals before a federal court will review the Secretary’s actions, there are exceptions. One well-established caselaw exception allows for direct judicial review of matters that are “entirely collateral” to a claim for benefits, and where the full relief requested cannot be obtained in an after-the-fact hearing.  The Court agreed that both elements were met, and that Family could argue that this provided a separate cause of action for relief. It agreed that the relief sought for alleged due process and equal protection violations could not be obtained through the administrative hearing process, and did not require a court to “wade into the Medicare Act and regulations” governing home health coverage and reimbursement; as a result, since the claims made by Family were unrelated to the merits of the alleged overpayment and recoupment because Family was not challenging the authority of CMS to recoup overpayments, they were entirely collateral.  The Fifth Circuit then sent the case back to the district court for a ruling on Family’s request for an injunction.

Although the Fifth Circuit did not rule on Family’s requests for an injunction, the decision is significant for stakeholders because it may give them an avenue for interim relief when CMS acts first, offers after-the-fact appeals, but then forces them to wait for years before deciding an appeal or even scheduling a hearing. The decision is narrow, but would be useful in circumstances where CMS is moving forward with recoupment of disputed Medicare funds that may ruin a provider or supplier because it would be out of business before it could even get a hearing. It may offer providers and suppliers a targeted remedy to forestall a recovery of disputed Medicare funds before a provider or supplier can have a hearing. This is different from an action that seeks to block CMS from taking any action before the administrative appeals process has been exhausted, because it does not challenge the merits of an alleged overpayment or the Secretary’s authority to recover overpayments.   In its decision, the court expressly rejected the Secretary’s arguments that Family was really seeking to prevent the recoupment of an overpayment, and was not persuaded that Family’s motivation was to short-circuit the appeals process. It noted that the relief sought was limited to suspending the recoupment before a hearing, which is different from a request to prohibit the recoupment altogether.

The slow pace of any executive or legislative remedy for the Medicare auditing and administrative appeals process may mean that in these circumstances federal courts may be less inclined to be deferential to agencies, and are open to finding that agency non-compliance may rise to the level of a constitutional violation.

[1] The ongoing history of the Medicare appeals backlog and attempts to remedy the situation are discussed in American Hospital Association v. Burwell, 209 F. Supp. 2d 221 (D.D.C. 2016).

[2] 42 U.S.C. § 1395ff(d)(1)(A).

The Centers for Medicare and Medicaid Services (“CMS”) issued on April 2, 2018, an advanced copy of the final rule title “Medicare Program; Contract Year 2019 Policy and Technical Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-for-Service, the Medicare Prescription Drug Benefit Programs, and the PACE Program” (“Final Rule”). This Final Rule will be published in the April 16, 2018 issue of the Federal Register.

This Final Rule implements provisions of the proposed rule that CMS released titled “Medicare Program; Contract Year 2019 Policy and Technical Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-for-Service, the Medicare Prescription Drug Benefit Programs, and the PACE Program” (“Proposed Rule”), which was published in the Federal Register on November 28, 2017.

Upon review of over 1,600 comments, CMS finalized many of the provisions as proposed or with minor revisions, deferred addressing some proposals until a later date, or opted not to finalize some provisions as proposed in the Proposed Rule.

We have summarized major provisions of the Proposed Rule in a three part Client Alert which EBG published earlier this year. For the provisions summarized in our Client Alert, the following chart reflects CMS’s actions in the Final Rule:

Provision CMS Action
Part 1 Client Alert: Negotiated Prices
Request for Information Regarding the Application of Manufacturer Rebates and Pharmacy Price Concessions to Drug Prices at the Point of Sale

 

Not Finalized

 

CMS is not finalizing any proposal at this time. Any new requirements would be addressed through future rulemaking.

Part 2 Client Alert: Beneficiary Cost, Access, and Protection
Part D Tiering Exceptions Finalized as proposed
Expedited Substitutions of Certain Generics and Other Midyear Formulary Changes Finalized with minor revisions
Treatment of Follow-On Biological Products as Generics for Non-Low Income Subsidy (“LIS”) Catastrophic and LIS Cost Sharing Not Finalized

 

CMS is not finalizing its proposed revision to the definition of generic drug. Instead, CMS is finalizing a different approach by modifying language at 42 § 423.782(a)(2)(iii)(A) and § 423.782(b)(2), to achieve the same desired goal of setting the copay amounts for biosimilars and interchangeable products to those of generics.

“Any Willing Pharmacy” Standard Terms and Conditions and Better Definitions of Pharmacy Types Finalized with minor revisions
Elimination of Meaningful Difference Requirement Finalized as proposed
Medicare Medical Loss Ratio Finalized with minor revisions
Part 3 Client Alert: Implementation of Comprehensive Addiction and Recovery Act of 2016 (“CARA”)
Drug Management Program for At-Risk Beneficiaries-
1. Identification of “At-Risk Beneficiaries” Finalized with minor revisions
2. Requirements of Drug Management Programs:
  • Written policies and procedures
Finalized with minor revisions
  • Case management/clinical contact/prescriber verification
Finalized with minor revisions
  • Limitations on Access to Coverage for Frequently Abused Drugs
Finalized with minor revisions
  • Requirements for Limiting Access to Coverage for Frequently Abused Drugs
Finalized with minor revisions
  • Beneficiary Notices
Finalized with minor revisions
  • Provisions Specific to Limitations on Access to Coverage of Frequently Abused Drugs to Selected Pharmacies and Prescribers
Finalized  with minor revisions
  • Drug Management Program Appeals
Finalized with minor revisions
  • Termination of a Beneficiary’s Potential At-Risk or At-Risk Status
Finalized with minor revisions
  • Data Disclosure and Sharing of Information for Subsequent Sponsor Enrollments
Finalized with minor revisions
Special Enrollment Period Limitations for At-Risk Dually-Eligible or Low-Income Subsidy-Eligible Beneficiaries Finalized with minor revisions
Part D Opioid Drug Utilization Review Policy and Overutilization Monitoring System Finalized as proposed[1]

The Final Rule will be effective for Medicare Advantage and Part D plans for the 2019 contract year. For additional information about the issues discussed above, please contact one of the authors or the Epstein Becker Green attorney who regularly handles your legal matters.

[1] Additional policies for plan year 2019 related to opioid drug utilization review controls were included in the Final Call Letter issued on April 2, 2018, available at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2019.pdf.

The Medicare Payment Advisory Commission (“MedPAC”) met in Washington, DC, on March 1-2, 2018. The purpose of this and other public meetings of MedPAC is for the commissioners to review the issues and challenges facing the Medicare program and then make policy recommendations to Congress. MedPAC issues these recommendations in two annual reports, one in March and another in June. MedPAC’s meetings can provide valuable insight into the state of Medicare, the direction of the program moving forward, and the content of MedPAC’s next report to Congress.

As thought leaders in health law, Epstein Becker Green monitors MedPAC developments to gauge the direction of the health care marketplace. Our five biggest takeaways from the March meeting are as follows:

  1. MedPAC gives an update on CMS’s financial alignment demonstration for dual-eligible beneficiaries

MedPAC provided an update to CMS’s demonstration for dual-eligible beneficiaries.  The purpose of the demonstration is to improve the quality of care in the dual-eligible program and reduce costs in both Medicare and Medicaid programs.  MedPAC briefly reported on the two demonstration models tested among 13 states: (1) Medicare-Medicaid Plans (“MMPs”) and (2) Managed Fee-for-Services (“FFS”).

For MMPs, the rates appeared to be adequate following a 2016 increase in the Part A/B rates (5-10%).  Enrollment has been lower than expected because many beneficiaries chose to either opt out before passive enrollment took effect or disenroll from their MMP.  Although overall participation rate was 29 percent of eligible participants, the total MMP enrollment has been stable since mid-2015.  Plan participation in MMPs has decreased.  Eighteen MMPs have left the demonstration largely because participation and enrollment were very low.  Regarding the effects of MMPs on service use, quality, and cost, CMS is still collecting reports and data.  However, MedPAC expects that the reports from the first and second year of the demonstration will provide little insight since implementing the demonstrations were challenging.  Some MMPs reported that it took 18 to 24 months before they could see changes in patterns of service use among their enrollees.

For Managed FFS, CMS estimated that there was a reduction in Medicare spending by $67 million during its first 2.5 years of operation in Washington state.  But MedPAC believed that the savings was inflated because the savings figure is based on an estimate of what Medicare would have otherwise spent on roughly 20,000 dual eligibles enrolled, while actual numbers of enrolled dual eligibles was closer to 3,000.  MedPAC recalculated the total savings to be approximately $9,000 per year.  In contrast, CMS found that Colorado state’s demonstration increased Medicare Part A/B spending.

Overall, MedPAC thought that the limited data showed that the demonstrations were going well despite the challenges at the start of the programs.

  1. MedPAC’s mandated report regarding the effects of the Hospital Readmissions Reduction Program

As part of the 21st Century Cures Act mandate, MedPAC provided a report on whether the Hospital Readmission Reduction Program (“HRRP”) had any effect on readmission rates.  MedPAC found that readmission rates declined faster after the program was enacted.  Although some critics of the program suggested that HRRP only shifted patients from readmission hospital stays to observation stays and emergency department (“ED”) visits.  However, MedPAC stated that its analysis showed rapid growth in use of observation and ED with and without an inpatient stay, suggesting that HRRP did not drive the increase.  Additionally, MedPAC also reported that overall, HRRP decreased mortality rates.  The one mortality that increased was heart failure, but MedPAC explained that the reason for the increased heart failure mortality was probably because of the decline in initial admissions (easier cases being treated on an outpatient basis), thereby increasing the raw readmission rates for more complicated conditions (e.g., heart failure).

  1. MedPAC discusses modifying Medicare rules to allow Discharge Planners to recommend higher-quality PAC providers

MedPAC discussed the possibility of modifying Medicare’s rules to permit discharge planners, under some circumstances, to recommend certain Post-Acute Care (“PAC”) providers. Beneficiaries served by low-quality providers are at an increased risk of re-hospitalization and more likely to experience negative clinical outcomes than beneficiaries served by higher quality providers. As such, it is central to both the integrity of the Medicare program and wellbeing of the beneficiaries that the value of the dollars spent on PAC is maximized.

Although the IMPACT Act required hospitals to use quality data during the discharge process and provide it to beneficiaries with the hopes that they would choose higher-quality PAC providers, preliminary reviews and data have shown that this method has failed to gain traction. MedPAC found that beneficiaries prefer to rely on information from trusted sources, such as their health care provider, families and friends over the reported quality data when it comes to choosing a PAC provider. This can be partially attributed to the fact that, as it stands, a discharge planner cannot recommend a specific PAC provider, but can only present the data to the beneficiary.

Thus, by modifying the rules to permit discharge planners to proactively recommend “higher-performing” PAC providers, discharge planners could assist beneficiaries in understanding the extent to which the quality of care varies among PAC providers within the beneficiary’s geographical area. Along with such a policy, the definition of “higher-quality” or “higher-performing” PAC would have to be established and quantified. MedPAC proposed both a “flexible” and “prescriptive” approach to defining a “higher-quality” PAC provider, and is awaiting Commissioner reaction to the different approaches or any other models that should be further considered.

  1. MedPAC discusses payment accuracy for sequential PAC stays

The Commission has long advocated for implementing a unified prospective payment system (“PPS”) for all four settings of post-acute care (“PAC”). Under such a system, each stay is considered an independent event, and payment is based on the average cost of stays. To reflect their much lower cost, the unified PPS would have a large adjustment for home health agencies. However, sequential stays, defined as a PAC stay within 7 days of a previous PAC stay, pose two challenges to payment accuracy. First, payments should track the cost of each stay in a sequence of care. Over the course of care, a beneficiary’s care needs are likely to fluctuate, with initial stays having different average costs than later stays. MedPAC found that the cost per stay for home health agencies are much lower for later stays in a sequence than the earlier stays. Thus, without some sort of an adjustment, profitability under a PAC PPS would be higher for later home health stays. If payments do not accurately reflect these fluctuations in care, providers may base their care on financial reasons rather than on the best course of care for the patient. Second, as regulations are aligned, some providers may opt to treat patients over a continuum of care, which makes it difficult to ensure that providers are accurately paid for each phase of care without improperly inducing volume of PAC admission. MedPAC discussed various strategies to counter the incentive to increase subsequent PAC stays, including redefining a “stay” as a long duration, requiring physician attestation of continued need of care, and implementing value-based purchasing that would include a resource use measure.

  1. MedPAC proposes two draft recommendations related to Emergency Department Use

MedPAC presented two draft recommendations related to improving efficiency and preserving access to emergency department (“ED”) care in both rural and urban areas. The primary objective has long been to preserve access to care in rural areas, by providing for higher inpatient rates to providers for rural PPS hospitals, and implementing a cost-based payment for critical access hospitals. However, these strategies have become increasingly inefficient and do not always preserve emergency access, as seen by declining admissions at critical access hospitals over the last 12 years. Thus, MedPAC proposed establishing a 24/7 ED in outpatient-only hospitals for isolated hospitals (those more than 35 miles from other hospitals). Such a program would be funded by outpatient PPS rates per service, as well as Medicare fixed subsidies to fund standby costs, emergency services, and physician recruitment. Such a policy would maintain emergency access in isolated areas and offset the cost of the additional ED payments with efficiency gains from consolidating inpatient services.

MedPAC’s second policy option addresses urban stand-alone EDs, where MedPAC is concerned that Medicare is encouraging overuse of ED services. MedPAC found that urban stand-alone EDs appear to have lower patient severity and lower standby costs than on-campus EDs (“OCEDs”) even though they are paid on the same basis as OCEDs. Thus, MedPAC recommended that policymakers consider either of two options for urban OCEDs in close proximity to on-campus hospital EDs (within six miles).  One option would be to have Medicare pay OCEDs a reduced Type A payment rate by using a fixed percentage across each of the five levels of ED service. The second option would be to pay these facilities Type B rates, which would lower ED payments, on average, by 28% across all five ED levels. For urban OCEDs that are more isolated from on-campus hospital EDs, MedPAC suggested permitting them to receive the higher-paying Type A rates as they currently do. The rationale for these policies would be to better align payments with the cost of care, to reduce incentives to build new EDs near existing sources of emergency care, and to preserve access to ED services where they are truly needed.

This is part 4 of 7 in the Medicare Secondary Payer Compliance series. All titles in this series can be viewed below. Subscribe to our blog to receive these future updates. Prior installments of this series can be accessed using the links provided.

Our next blog installment turns to Non-Group Health Plans (NGHPs). While the reporting requirements for Group Health Plans are largely uniform, the same cannot be said for NGHPs. If professionals are not aware of the requirements and the potential consequences, these distinctions can lead to confusion, or worse, to double damages and a minimum fine of $1000 per day per unreported beneficiary. The most recent NGHP policy guidance covers several forms of liability insurance (including self-insurance), no-fault insurance, and workers compensation in several states of existence and decay, such as NGHPs that are in bankruptcy, those that are acquired by larger entities, those that are in the liquidation process, and those that are general self-insurance pools.[1]  Although we cannot cover every conceivable variation here, we set forth below what NGHPs are and what generally they will be required to report, so that counsel and compliance professionals can identify whether their organization is affected.

Generally, NGHPs are liability insurance (including self-insurance), no-fault insurance, and workers’ compensation laws or plans.[2]  The intent behind the NGHP reporting requirements is that if a Medicare beneficiary is injured and another payer (such as a workers’ compensation plan) is responsible for paying for the medical treatment of the beneficiary, then the other party should be the primary payer.  Unlike GHPs, there is no blanket requirement that all NGHPs register with Medicare, but those that have reportable information must register at least a quarter before submitting a report.  NGHPs are required to submit a report when there is an Ongoing Responsibility for Medicals (ORM) or there is a Total Payment Obligation to the Claimant (TPOC).

An ORM must be reported when there is ongoing compensation to a party for medical care associated with a claim.  ORM reports do not include dollar amounts, but do report the start and end dates for payments made for ongoing medical expenses.  Additionally, an ORM report should include information about the cause of illness, injury, or incident associated with the claim so that Medicare can determine those claims for which the NGHP is the primary payer and those claims for which Medicare or another payer is designated as primary.  An ORM report is separate and distinct from a TPOC report.  TPOC reports are made when the sum of a total settlement, judgment, award, or other payment obligation is established.  Notably, the TPOC “date” is not when the funds are actually paid, but when the obligation is established.  There are various Mandatory Reporting Thresholds that are outlined by CMS in Chapter III of its NGHP User Guide, depending on the type of insurance and the date of payment.[3]  All dates listed in the User Guide have passed as of the date of this post and all thresholds have been reached (April 1, 2017 was the last listed date in the charts).  However, while a TPOC may have been technically established before a listed date, it may not have been paid or technically reported at the present time.  As an example of the reporting requirement, the User Guide provides that after January 1, 2017, where the total TPOC amount is over $750.00 for Liability Insurance (including self-insurance), Section 111 Reporting is or was required in the quarter beginning April 1, 2017.[4]

NGHPs should be aware of these reporting requirements, and the person or group responsible for overseeing compliance should be well versed in the intricacies of the payment structure and the CMS’s manual guidance, which is set out in six detailed reporting manuals issued on December 15, 2017.[5]

As discussed earlier, NGHPs are the primary payer in certain instances, and failure to uphold this responsibility can result in litigation.  GEICO, an NGHP, is currently involved in litigation for allegedly failing to reimburse a Medicare Advantage plan which made payments to beneficiaries.[6]  The plaintiffs filed two separate class action suits against GEICO—one involving injured beneficiaries covered by GEICO and another involving tortfeasors carrying GEICO insurance who later settled with the beneficiaries.  In both suits, the plaintiffs allege that Medicare Advantage plans made payments to beneficiaries that GEICO was statutorily required to pay in the first instance.  GEICO filed a motion to dismiss, arguing that the plaintiffs lacked standing because the plaintiffs did not suffer an injury.[7]  The plaintiffs responded that the Medicare Advantage plans assigned their rights of recovery to the plaintiffs, convincing the court that this assignment gives the plaintiffs standing.  GEICO also argued that the amended complaint lacks the necessary specificity to proceed.  The court noted that while the plaintiffs did not include a lot of detail in their amended complaint, the information included was sufficient to overcome a motion to dismiss, and that more specific information would need to be produced in discovery or the defendants would be entitled to file for summary judgment.[8]

Another example of a potential NGHP is a clinical research sponsor. Clinical research sponsors, such as pharmaceutical manufacturers, can be liable under the Medicare secondary payer laws and regulations if the sponsor affirmatively agrees—whether through an informed consent document, a clinical trial agreement, or some other contract—that the sponsor will pay for the costs associated with the diagnosis or treatment of any injuries or illnesses suffered by a research subject as a result of participation in the study. CMS has indicated in its Section 111 guidance that it considers that the commitment by sponsors to pay for these costs represents a form of liability insurance; therefore, a sponsor that assumes responsibility to pay for these costs is a Responsible Reporting Entity (RRE) and must meet the reporting requirements of an NGHP.[9] Generally, while a clinical research sponsor may decide to use a vendor to perform the bulk of the work required for the reporting process, the sponsor is ultimately responsible and liable for noncompliance with NGHP reporting requirements and the implementation of a functioning system of reporting.

The rules governing NGHPs are summarized in the following chart:

Acting Party Responsibilities Liabilities for Non-Compliance
Non-Group Health Plans

(NGHPs) (Liability Insurance, No-Fault Insurance, and Workers’ Compensation)

·         Reporting requirements differ among NGHPs and are fact specific

·         Must register with BCRC on the COBSW if NGHP has a reasonable expectation of having to report in the future

·         May register on behalf of itself or its direct subsidiary (may not register on behalf of its sibling or parent company)

·         May use agent for administrative duties, but RRE retains liability.

·         Ongoing Responsibility for Medicals (ORM) Reporting: Must report existence of ongoing payments associated with medicals to beneficiaries

·         Total Payment Obligation to the Claimant (TPOC) Reporting: Must report the sum of a total settlement, judgment, etc. in accordance with price and date schedules found in NGHP User Guide Chapter III: Policy Guidance

·         Must report all claims where injured party is or was a Medicare Beneficiary

·         Failure to report results in a minimum fine of $1,000 a day per unreported beneficiary, with CMS reserving the right to collect double damages

Andrew Kuder, a Law Clerk (not admitted to the practice of law) in the firm’s Newark office, contributed significantly to the preparation of this post.

[1] CMS, MMSEA Section 111 MSP Mandatory Reporting: NGHP User Guide 6-1—6-7 (v5.3 2017).

[2] 42 USC § 1395y(b)(8).

[3] CMS, MMSEA Section 111 MSP Mandatory Reporting: NGHP User Guide Ch. III (v5.3 2017).

[4] CMS, MMSEA Section 111 MSP Mandatory Reporting: NGHP User Guide 6-17 (v5.3 2017).

[5] https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Mandatory-Insurer-Reporting-For-Non-Group-Health-Plans/NGHP-User-Guide/NGHP-User-Guide.html.

[6] Recovery v. Gov’t Emples. Ins. Co., No. PWG-17-711 (D. Md. Feb. 21, 2018).

[7] Id. at *10.

[8] Id. at *24, *45.

[9]  “Centers for Medicare and Medicaid Services, MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting, Chap. III, Policy Guidance, 6-26 (V. 5.3, Rev. Dec. 15, 2017).

 

 

Recent settlement agreements between the United States Department of Justice (the “DOJ”) and two urologist business partners suggests that the government may be focusing increased enforcement efforts on the Stark Law’s “group practice” requirements and the Stark exception for “in-office ancillary services.”  The urologists agreed to pay over $1 million to resolve the allegations.

In early January 2018, the DOJ entered into settlement agreements with Dr. Aytac Apaydin and Stephen Worsham to resolve allegations that the physicians submitted improper claims to Medicare for image-guided radiation therapy (“IGRT”) services provided between 2008 and 2014.  IGRT uses imaging to improve the accuracy of radiation therapy during cancer treatment. IGRT is reimbursable by Medicare and is considered a “designated health service” under the Stark Law.

Drs. Apaydin and Worsham jointly owned two businesses: Salinas Valley Urology Associates (“SVUA”), a California medical practice, and Advanced Radiation Oncology Center (“AROC”), a facility where IGRT services were performed.  The settlement agreements highlight two types of problematic arrangements involving these entities:

  1. SVUA, the private medical practice, billed Medicare for IGRT services performed at AROC. However, the government contends that the financial relationship between SVUA and AROC failed to comply with an applicable Stark Law exception.
  2. AROC entered into “lease arrangements” with other local urologists and urology practices (the “Lessee Urologists”) pursuant to which the Lessee Urologists billed Medicare for IGRT services performed at AROC on patients that were referred by the Lessee Urologists’ own practice.  The government contends that providing the IGRT services at AROC did not meet the Stark Law “location requirements” applicable to the Lessee Urologists’ practices, and also contends that the lease arrangements violated the Anti-Kickback Statute.

The settlement agreements provide only brief descriptions of the allegedly improper arrangements and do not specifically describe or explain the government’s theory as to why the arrangements violated the Stark Law and AKS.  However, the reference to the Stark Law “location requirements” provides a clue.

As a general matter, the Stark Law permits a physician to profit from the physician’s referral of a designated health service if the service is performed within the referring physician’s “group practice” and in a building that is used by the group practice for providing physician services or other centralized designated health services.  These services are referred to as “in-office ancillary services” and are the subject of a statutory exception to the Stark Law, as well as a more detailed exception under the Stark Law regulations.   By stating that AROC did not meet the “location requirements,” the government appears to be alleging that that the urology practices could not satisfy the requirements of the Stark “in-office ancillary services” exception, which was likely the only exception available to protect the arrangement from Stark Law liability.

Stark’s “in-office ancillary services” requires compliance with the following three requirements (codified at 42 U.S.C. § 1395nn(b)(2)):

  1. Performance. The services must be performed personally by:
    • The referring physician;
    • A physician who is a member of the same group practice as the referring physician; or
    • Individuals who are directly supervised by the referring physician or by another physician in the group practice.
  2. Location. The services must be furnished in one of the following locations:
    • In a building in which the referring physician (or another physician who is a member of the same group practice) furnishes physicians’ services unrelated to the furnishing of the designated health services; or
    • In the case of a referring physician who is a member of a group practice, in another building which is used by the group practice: (a) for the provision of some or all of the group’s clinical laboratory services, or (b) for the centralized provision of the group’s designated health services.
  3. Billing. The services must be billed by:
    • The physician performing or supervising the services;
    • A group practice of which such physician is a member under a billing number assigned to the group practice; or
    • An entity that is wholly owned by such physician or such group practice.

Before a practice can take advantage of the “in-office ancillary services” exception, it must be structured to comply with Stark’s comprehensive definition of a “group practice.” The Stark regulations at 42 C.F.R. § 411.352 set forth detailed requirements related to how the practice is owned and operated, covering topics such as:

  • Corporate structure;
  • The range of care provided by physicians within the group, as well as the amount of time such physicians spend providing services through the group;
  • Distribution of the group’s expenses and income;
  • Centralized decision-making;
  • Consolidated billing, accounting and financial reporting; and
  • Physician compensation.

This settlement is significant because there have been very few enforcement actions or settlement agreements alleging violations of the Stark Law based on a group practice’s failure to comply with the “in-office ancillary services” exception.  If you are a physician or physician group that relies on the “in-office ancillary services” exception to share profits from ancillary services that you may refer, this settlement should be a wake-up call —  make it a priority to review and confirm that: (i) your group meets the Stark definition of a “group practice” and all of its detailed requirements, and (ii) all ancillary services are provided in locations that meet the requirements of the Stark “in-office ancillary services” exception.

This is part 3 of 7 in the Medicare Secondary Payer Compliance series. All titles in this series can be viewed below. Subscribe to our blog to receive these future updates. Prior installments of this series can be accessed using the links provided.

In our previous posts, we mentioned that the Medicare Secondary Payer (MSP) law imposes obligations upon Group Health Plans (GHPs).   This post will explain those obligations, both provided for in the regulations and in the CMS guidance, in more detail, and highlight the potential compliance pitfalls for GHPs. Given recent enforcement trends, and the risk of raising damages for non-compliance from double to treble, including a minimum fine of $1000 per day per unreported beneficiary, GHPs may want to review and audit their compliance with MSP requirements.

Generally, a GHP is sponsored by an employer to provide healthcare to employees and their families.[1]  These include self-insured plans that may be administered through a third party administrator (TPA) and plans arranged by employers through a health insurer.  The MSP requires that GHPs with 20 or more employees report certain information to CMS to avoid payment conflicts (although smaller companies have certain limited reporting obligations).  CMS refers to these plans as Responsible Reporting Entities (RREs), and they must report all Active Covered Individuals to Medicare.  An Active Covered Individual is defined as:

  • Those between 45 and 64 years of age covered through the GHP based on their own or a family member’s current employment status;
  • Those 65 and older covered based on their own or their spouse’s current employment status;
  • All individuals covered under a GHP who have been receiving kidney dialysis or have received a kidney transplant (ESRD); and
  • All individuals covered under a GHP who are under 45, are known to be entitled to Medicare, and have coverage in the plan based on their own or a family member’s current employment status.[2]

There are exceptions to this definition for (i) employers with less than 20 employees, who need not report unless a covered individual has ESRD, in which case the ESRD covered individuals must be reported, and (ii) employers with less than 20 employees who must report if they are part of a multi-employer/multiple employer GHP.[3]

CMS recognizes that this will constitute a large class of individuals for many GHPs, and also recognizes that many people who are currently not eligible for Medicare will have their information reported as a part of this process.[4]  Retirees and their spouses who are covered under a GHP do not count as Active Covered Individuals, but are termed Inactive Covered Individuals and do not need to be reported in the same manner as Active Covered Individuals.  The reason for this is that in most cases Inactive Covered Individuals (retirees) have Medicare as a primary payer.

GHP RREs have multiple reporting options, but the basic option requires a GHP RRE to submit an MSP Input File containing information about each Active Covered Individual, as outlined in the CMS manual.  The GHP RRE submits reports to a CMS website known as the Coordination of Benefits Secure Website (COBSW).[5]  The GHP may submit a Query Only Input File to the website, which helps the GHP assess if potential employees are covered by Medicare.

There are many situations that create potential pitfalls for GHPs.  For example, if an employer hires several new employees and adds them to its health plan, a GHP administrator may fail to ask the essential questions necessary to determine if any employee is an Active Covered Individual.  While it is clear that those over the age of 45 need to be reported, if the plan does not inquire about the current health coverage for an employee’s family, the plan might fall out of compliance with MSP reporting requirements if it did not know that a family member receives health care coverage due to a disability or has ESRD. In addition, while a GHP with less than 20 employees generally does not have to submit a report, the small GHP may forget to inquire about the coverage status of a new employee’s family.

The basic rules are summarized in the following chart:

Acting Party Responsibilities Liabilities for Non-Compliance
Group Health Plans (GHPs) (Generally Employer-Sponsored Plans)

 

 

·         20+ GHPs[6] must generally be the primary payer for all Active Covered Individuals except for ESRD patients

·         100+ GHPs[7] must generally be the primary payer for all Active Covered Individuals

·         20+ GHPs must report quarterly all Active Covered Individuals (includes all covered individuals over 45, including employees or spouses/partners, and those with ESRD regardless of age, and those under 45 who are known to be entitled to Medicare.)

·         Failure to report results in a minimum fine of $1000 a day per unreported beneficiary, with CMS reserving the right to collect double damages

 

Andrew Kuder, a Law Clerk (not admitted to the practice of law) in the firm’s Newark office, contributed significantly to the preparation of this post.

[1] 26 USC § 5000(b)(1).

[2] CMS, MMSEA Section 111 MSP Mandatory Reporting: GHP User Guide 7-2—7-3 (v5.0 2017).

[3] CMS, MMSEA Section 111 MSP Mandatory Reporting: GHP User Guide 7-3 (v5.0 2017).

[4] CMS, MMSEA Section 111 MSP Mandatory Reporting: GHP User Guide 7-2 (v5.0 2017).

[5] https://www.cob.cms.hhs.gov/Section111/LoginWarning.action

[6] 20+” means GHPs with 20 or more employees

[7] 100+” means GHPs with 100 or more employees

On February 9, 2018, President Trump signed into law the Bipartisan Budget Act of 2018 (“BBA”). Among the most notable changes that will occur with the enactment of the BBA is the inclusion of certain provisions taken from the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (“CHRONIC”) Care Act of 2017 bill (S.870) which the Senate passed in September 2017. Among other things, the CHRONIC Care provisions will have the effect of redefining new criteria for special-needs plans (“SNPs”), in particular the special-needs Medicare Advantage (“MA”) plans for chronically ill enrollees. The CHRONIC Care provisions also will expand the integration and coverage under Medicare for certain telehealth-based chronic care services.

Impact on MA Special Needs and Other MA Plans

The BBA includes provisions taken from the CHRONIC Care Act that largely affect MA SNPs, though other types of MA plans may also be affected by the enacted changes.

The critical issue Congress finally settled through the enactment of the BBA is the long-term status of the MA SNP Program (the “Program”).  Congress created the Program through the Medicare Modernization Act of 2003 (enacted Dec. 8, 2004).  However, the Program was time limited, with a scheduled end date of December 2008.  The Program has since been extended a total of 7 times, with Congress generally pushing out the Program’s end date by a year or two but never giving stakeholders a clear signal of support for the Program, leaving many stakeholders hesitant in making large investments in a program that was scheduled to terminate.[1]

The amendments made by the BBA have provided not only a more secure future to encourage plan sponsors and other stakeholders to further invest in the Program, but have also made changes to strengthen these programs. With respect to those SNPs targeting the dual eligible population (“Dual SNPs”), statutory changes provide for:  increasing integration through use of mechanisms to better coordinate contact with and information dissemination to State partners; requiring the Secretary to develop a unified grievances and appeals process for Dual SNPs to implement by 2021; and imposing more stringent standards to demonstrate integration. With respect to those SNPs focused on serving the chronically ill (“Chronic SNPs”), the BBA broadens the definition of beneficiaries who qualify to enroll in a Chronic SNP, imposes more stringent care management standards, and authorizes Chronic SNPs to provide certain Supplemental Benefits. The BBA further amends the Social Security Act to authorize the Secretary to require quality reporting at the plan level for SNPs, and, subsequently, for all MA plan offerings.

Impact on Accountable Care Organizations

The BBA makes several statutory changes impacting Accountable Care Organizations (“ACOs”) and beneficiary participation in such entities. Specifically, under the terms of the Act, fee-for-service (“FFS”) beneficiaries will be able to prospectively and voluntarily select an ACO-participating professional as their primary care provider and for purposes of being assigned to that ACO. The BBA further authorizes ACOs to provide incentive payments to encourage fee-for-service beneficiaries to obtain medically necessary primary care services.

Expansion of Medicare FFS Telehealth Coverage for Chronic Care Services

Additionally, the BBA includes certain provisions taken from the CHRONIC Care Act that will provide a needed expansion of Medicare FFS coverage for certain telehealth-based chronic care services. The BBA preserves many of the telehealth-focused aspects of the original 2017 bill equivalent and, seemingly, reflects a commitment by the federal government to improving access to telehealth services for qualified Medicare beneficiaries and further integrating these services into the U.S. health care system. For example, with the enactment of the BBA, Medicare coverage of telehealth services will be expanded to include services provided at home for beneficiaries dealing with end-stage renal disease (“ESRD”) or those being treated by practitioners participating in Accountable Care Organizations (“ACOs”). Additionally, with the enactment of the BBA, some of the geographic requirements traditionally required by Medicare’s coverage rules for telehealth services (e.g., originating sites, rural health professional shortage areas, counties outside Metropolitan Statistical Areas) will be lifted if such telehealth services are rendered to beneficiaries with ESRD, or who are being treated by ACO practitioners, or who are being diagnosed, evaluated, or treated for symptoms of an acute stroke. There are some important caveats to these changes in the coverage rules. For example, for ESRD beneficiaries who utilize telehealth services from their homes, an in-person clinical assessment will be required for such beneficiaries every month for the first 3 months and then once every 3 months thereafter. Likewise, payments will not be made for any telehealth services rendered by ACO practitioners to beneficiaries in their homes if such services typically are furnished in inpatient settings (e.g., hospitals).

As part of increasing benefits offered to special needs MA plan enrollees (as discussed above), the enactment of the BBA also will allow MA plans to offer more telehealth services to its enrollees, including services provided through supplemental health care benefits, starting in the year 2020. However, this provision requires that the same types of items and services an MA plans offers to its enrollees via telehealth are also offered to enrollees in-person. CMS is required to solicit public comments regarding this particular provision by November 30, 2018.

*          *          *

With the BBA establishing a long-term MA SNP Program, we are more likely to see increased investment into the Program by stakeholders and plan sponsors, thus growing and strengthening the Program. But, as explained above, the BBA also introduces several amendments that will certainly affect Dual and Chronic SNP standards, benefits, and coordination of care.  Although CMS has not formally solicited public comments regarding implementation of the referenced changes to SNP requirements, stakeholders and plan sponsors may want to consider the impact these changes may have on them and their industry and submit comments and input to help CMS in developing its proposed regulations.

For telehealth advocates, the inclusion of so many meaningful provisions in the BBA signals a newly energized willingness on the part of policymakers to work to expand use of telehealth services for Medicare beneficiaries, even in an environment where there are financial incentives for providers and health plans to restrain costs. Although lawmakers have historically resisted expanding these types of services in a FFS context, the belief being that doing so would add to (and not replace) services already otherwise being delivered, the enactment of the BBA signals strong potential for change in this regard.  As telehealth integration into various Federal programs increases, the enactment of the BBA being a critical step in this process, stakeholders and plan sponsors may want to consider the various implementation strategies by which telehealth items and services will be offered since each program carries its own set of standards and requirements.

[1] Pub. L. 110–173, §[  ], substituted ‘‘2010’’ for ‘‘2009’’; Pub. L. 110–275, §164(a), substituted ‘‘2011’’ for ‘‘2010”; Pub. L. 111–148, § 3205(a), substituted “2014” for “2011”;  P.L. 112-240, §607, struck out “2014” and inserted “2015”; P.L. 113-67, §1107, struck out “2015” and inserted “2016”; P.L. 113-93, §107, struck out “2016” and inserted “2017”; P.L. 114-10, §206 struck “2017”, inserted “2019″.