The Medicare Payment Advisory Commission (“MedPAC”) met in Washington, DC, on October 5-6, 2017. 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 October meeting are as follows:

  1. MedPAC reports the results from its recently conducted survey regarding telehealth utilization across the healthcare system.

This past summer, MedPAC identified several large health programs, Medicare beneficiaries, primary care physicians, and home health agencies to survey with the goal of better understanding their use and attitudes toward telehealth.  Results of this survey show that despite the success of certain telehealth programs for health plans (e.g., telestroke, telemental health) and the increased use of telehealth services among home health agencies, many of those surveyed believe that telehealth provides convenience and improves care only in limited circumstances.  There appears to be a consensus among plans, providers, and beneficiaries that there is little incentive to employ direct-to-consumer (“DTC”) telehealth services.  Even health systems that use telehealth services for pre-operation and follow-up visits, and observed reductions in hospital inpatient readmissions, reported that telehealth services are only financially justified if they help avoid Medicare’s inpatient readmission penalties.  Among surveyed beneficiaries, a majority reported that they are unlikely to use DTC telehealth services because they already have access to their normal physicians via email and telephone.  The beneficiaries’ reported that their primary concern is DTC services only provide them access to random physicians who would not be familiar with their medical histories.  Primary care physicians (“PCPs”) appeared to be concerned that DTC services would only add to their already burdened caseloads.  This sentiment seems founded in PCPs’ reports that electronic medical record systems add time and technical complications to their days instead of simplifying or making their jobs more effective or efficient.

The health plans surveyed by MedPAC cited various factors they believe hinder adoption of telehealth services, such as: federal and state regulations that limit Federal health care program coverage of telehealth services according to geographic locations or originating sites; the elimination of broadband subsidizing programs; and a perceived increased in administrative burden (i.e., complicated Medicare billing practices, required licensing for telehealth clinicians in each state, and credentialing telehealth providers for each facility.)  The health plans’ responses also suggest that state laws that mandate payment parity between in-person and telehealth services are more likely to encourage expansion of telehealth use than laws that merely mandate coverage parity between the two.

  1. MedPAC discusses commercial health plans’ telehealth coverage.

In MedPAC’s September meeting, MedPAC commenced discussion concerning Medicare payments for telehealth services, as mandated under Congress’ 21st Century Cures Act of 2016.  This month, MedPAC continued that discussion by addressing coverage of telehealth services by commercial health plans.  MedPAC’s discussion included the analysis of 48 individual plans available across all 50 states.  The plans included managed care products and various types of commercial health plans such as employer, individual, small and large group, and exchange plans.[1]

Interestingly, MedPAC’s findings do not indicate a significant difference between Medicare and commercial health plans in telehealth utilization and coverage.  The majority of health plans reported less than 1% of their plan enrollees using some form of telehealth service during the year.  The highest reported use was still less than 5% of enrollees.

Unlike Medicare, commercial health plans are more likely to cover urban-originating sites. However, only approximately half of the surveyed plans cover a patient’s residence as an originating site.  MedPAC found the most commonly covered telehealth services are basic Evaluation and Management (E&M) physician visits, mental health visits, and pharmacy management visits, but few cover a broad range of telehealth services.

The MedPAC report demonstrates that commercial health plans do not implement telehealth services to reduce costs, but rather to keep up with competitors who offer these services.  However, while the plans also did not report actual reductions in costs resulting from telehealth services, they did report improvements in convenience and access and increased telehealth use would eventually translate into cost reductions.

  1. MedPAC proposes eliminating the Merit-Based Incentive Payment System.

MedPAC proposed a drastic policy change to the Medicare Access and CHIP Reauthorization Act (“MACRA”); specifically to its Merit-Based Incentive Program (“MIPS”). MedPAC is concerned that the MIPS will not achieve the goal of identifying and rewarding high-value clinicians because it is overly complex and places an excessive burden on clinicians who wish to comply with reporting standards. Moreover, MedPAC states that the measures used are not proven as associated with high-value patient care or improved patient outcomes. Finally, because clinicians choose on which measures they are evaluated, each clinician’s composite score is comprised of performance on different measures. This leads to inconsistencies in how clinicians are compared to each other, and therefore inequities in their payment adjustments.

Given the above, MedPAC proposed a policy option to eliminate individual-level reporting requirements of the MIPS and to establish a voluntary value program in its place. The new voluntary value program would encourage fee-for-service clinicians to join other clinicians and assume responsibility for the health outcomes of their collective patient panels. Clinicians would have the option of being measured as part of a larger group, comprised of other clinicians in their area or affiliated hospitals. Moreover, population-based measures would easily be extracted from the claims submitted by the clinicians – significantly reducing their reporting burden.

MedPAC is considering formalizing this policy proposal as a draft recommendation in December.

  1. MedPAC proposes limiting the use of Physician-Owned Distributors through the Stark law.

MedPAC proposed two policy approaches to limit the use of Physician-Owned Distributors (“PODs”) through the Stark law. PODs currently operate under the indirect compensation exception and “per unit of service” rule of the Stark law, which allows their business model to avoid self-referral liability. However, MedPAC is concerned that this “loophole” contradicts the spirit of the law because it has the potential to influence care based on financial incentives.

The first proposed policy approach would eliminate the application of the “per unit of service” rule to PODs, which would result in PODs no longer meeting the indirect compensation exception. CMS took this type of direct action before when, after reports of abuse, they explicitly eliminated the application of the per unit of service rule to space and equipment leases. The second proposed policy approach redefines PODs as Designated Health Service entities under the Stark law, thereby prohibiting physician ownership of PODs. Under this new definition, physicians with stakes in PODs would be prohibited from referring patients for services using devices supplied by their POD unless another exception applied.

To address the concerns regarding the effect of these policy changes on medical device innovation, MedPAC proposed an exception for large, publicly traded PODs and for PODs that meet specified, limited criteria – for example, if less than 40% of a POD’s business is generated by physician-owners.

If Congress, or more likely, CMS, implements these changes to the Stark Law, hospitals will have a strong incentive to monitor their supply chain to avoid denial of payment and False Claims Act liability. Further, although such changes would limit PODs, some PODs would likely survive on the ability to sell to non-DHS entities, such as ambulatory surgical centers.

  1. MedPAC recommends paying for sequential stays and aligning regulatory requirements in a unified payment system for post-acute care.

MedPAC discussed the continuation of its efforts for a Post-Acute Care (“PAC”) unified payment system. Specifically, MedPAC addressed two important implementation efforts: 1. the effect of sequential stays in PAC on payment; and 2. how to align the relevant regulatory requirements with the new payment system.

The unified payment system would make payments based on patient characteristics rather than patient settings. As a result, sequential PAC stays in different settings would present challenges to accurate payment. MedPAC wants to ensure that the new payment system would not inadvertently shortchange or influence the care that beneficiaries receive. As such, MedPAC plans to examine the cost of stays over the next year, comparing the length of initial stays and the length of later stays, and to consider policies that adjust payments to more accurately reflect the cost of care.

Similarly, regulatory requirements would need to be reformed to align with a new unified PAC payment system. MedPAC proposed various possibilities, such as eliminating the 25-day average length of stay requirement for long-term care hospitals or eliminating the 60% rule for inpatient rehabilitation facilities, as payment would no longer be based on the setting of the care provided.

MedPAC will conduct research on the implementation of a PAC unified payment system in the coming months for inclusion in the June 2018 report.

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[1] MedPAC did not include fee-for-service plans in its report.

The Medicare Payment Advisory Commission (“MedPAC”) met in Washington, DC, on September 7-8, 2017. 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 September meeting are as follows:

  1. MedPAC opens the new season with daunting challenges facing the Medicare program.

MedPAC began the 2017-2018 MedPAC year by providing context to the issues MedPAC will address this coming year. Starting from 2014, healthcare spending has modestly accelerated, driven in part by health insurance expansions under the ACA and increases in prescription drug spending.  Additionally, because of increased enrollment,  the size of the Medicare program will nearly double within the next decade; rising from approximately $700 billion in total spending in 2017 to more than $1.3 trillion in 2026.  The increasing cost to the Medicare program, in conjunction with the decreasing workforce contribution per beneficiary, is projected to deplete several Medicare funds such as the HI Trust Fund, which covers Part A services, by 2029.  Unless federal revenues, which are historically approximately 17 percent of GDP, increase above 19 percent, Medicare, Medicaid, other major federal health programs, Social Security, and net interest are projected to outpace total federal revenues by 2039.  Also, MedPAC showed that out-of-pocket spending for healthcare services by Medicare beneficiaries and by individuals and families in private insurance plans, are continuing to increase.

  1. MedPAC discusses two comparative clinical effectiveness research programs that may address low-value spending.

MedPAC presented two sponsor comparative clinical effectiveness research initiatives: (1) the Patient-Centered Outcomes Research Institute (“PCORI”); and (2) the Institute for Clinical and Economic Review (“ICER”). PCORI was established and funded by the Patient Protection and Affordable Care Act to identify, fund, and disseminate comparative clinical effectiveness research.  As of July 2017, it has awarded $1.69 billion to approximately 580 comparative clinical effectiveness research, data infrastructure, and methods projects.  Additionally, PCORI launched pragmatic clinical trials, which compare two or more alternatives for preventing, diagnosing, treating, or managing a particular clinical condition.  To date, $289 million has funded 24 pragmatic clinical trials.  PCORI’s funding will expire September 30, 2019 if it is not reauthorized by Congress.

ICER is an independent nonprofit organization mostly funded 70% by various other nonprofit organizations, but also funded 30% by health care industry entities, i.e., life science companies, health plans, and pharmacy benefit management companies.  ICER compares clinical and cost-effectiveness of a treatment versus its alternative.

Because most of the studies are still ongoing, it is unknown how Medicare’s utilization of data from these programs implicates or will implicate low-value spending.

  1. MedPAC begins Medicare payments for telehealth services discussions under Congress’ 21st Century Cures Act of 2016 mandate.

Congress mandated MedPAC to answer the following questions by March 15, 2018:

  • What telehealth services are covered under the Medicare Fee-for-Service program Parts A and B?
  • What telehealth services do commercial health plans cover?
  • In what ways can commercial health plan coverage of telehealth services be incorporated into the Medicare Fee-for-Service program?

MedPAC briefly addressed the first question at the meeting. Medicare covers telehealth in four areas of the program with varying degrees: (1) physician fee schedule (“PFS”); (2) other fee-for-service payment systems (“FFS”); (3) Medicare Advantage (“MA”); and (4) the Center for Medicare and Medicaid Innovation (“CMMI”) initiatives.  Medicare coverage for PFS is constrained.  Medicare will cover PFS only if the telehealth services: (i) originate in rural areas and take place at one of several types of facilities; (ii) are conducted via two-way video or store-and-forward technology; and (iii) are for particular fee schedule service codes (i.e., office visits, mental health, substance abuse, and pharmacy management).  The reason for coverage parameters is because there is no incentive to curb the use of telehealth services, and therefore there is concern of a volume incentive.  In contrast, there is flexible coverage for FFS, MA, and CMMI initiatives because the incentive to use telehealth services exists only if it reduces costs.  The latter two questions will be addressed in the following two months.

  1. MedPAC addresses the Specialty Pharmacy Industry, and recommends reform in management and data disclosure.

MedPAC began with a general overview of the specialty drug market before shifting to specific specialty drug policy issues within the context of Medicare. In sum, pharmacy benefit managers (“PBMs”) and specialty drug management will have to be reformed in order to contain increased drug spending.

First, MedPAC discussed the use of exclusive specialty pharmacy networks in Part D. Although the “any-willing provider” rule in Part D precludes the use of exclusive networks, MedPAC found that PBMs could get around the rule by “setting fees that discourage certain specialty pharmacies from participating in their network.” Thus, MedPAC recommends Congress to consider the effect of such exclusive networks on the availability of specialty drugs for Medicare beneficiaries. If more of the rebates and fees for specialty drugs shift from PBMs to specialty pharmacies, it may mean increased Medicare program costs.Second, MedPAC recommends CMS provides Plan D sponsors increased access to data related to the amounts of rebates or fees received by PBMs. Plan D sponsors currently do not have access to such information when requested and such disclosures would be “essential for accurate payment, program integrity, and…in evaluating PBM performance.”Third, MedPAC proposed allowing Medicare Advantage Prescription Drug plans (“MA-PDs”) to manage specialty drugs as medical benefits, as is done within the commercial sector. Increased integration in how medical and pharmacy benefits are managed would cap drug spending and facilitate better care. However, MedPAC recognizes that in order for such integration to be feasible, “programmatic changes” within Medicare would have to occur.

  1. Use of High Quality Post-Acute Care Providers by Medicare Beneficiaries

Post-acute care (“PAC”) in the United States is delivered primarily through skilled nursing facilities (“SNFs”), home health agencies (“HHAs”), patient rehab facilities, and long-term acute care hospitals. About 40% of hospital discharges use one or more of these services, and approximately $60 billion was spent on PAC in 2015. MedPAC’s concern lies not in the availability of PAC facilities, but in the quality of care provided by the majority of PAC facilities. The rate of rehospitalization doubles between a SNF in the bottom quartile of performance and a SNF in the top percentile. As such, ensuring adequate placement of beneficiaries in high quality PAC facilities is imperative in ensuring long-term health and decreasing repeated hospitalizations. However, the challenge lies in just how to incentivize beneficiaries to choose higher-quality PAC facilities upon discharge.

Medicare has publicly released data rating various SNFs and HHAs; however, the data reflects broad categories of patients and does not report results for specific conditions. Indeed, MedPAC found that such data generally fails to influence which PAC facility a beneficiary will choose. MedPAC considered a wide array of policies and incentives that could positively impact which PAC facilities beneficiaries will attend after discharge.

First, MedPAC supports granting hospitals greater flexibility to recommend PAC providers as part of the discharge process. Hospitals are currently prohibited from recommending specific PAC providers. Granting such flexibility would align discharge planning with the accountability for post-hospital care that hospitals have under programs such as the Hospital Reduction Program or within ACOs. MedPAC also recommends strengthening and implementing current requirements, such as those set forth by the IMPACT Act, which require hospitals to use quality measures as a factor in discharge planning and require providing such quality data to beneficiaries. Furthermore, MedPAC recommends expanding the financial incentives for hospitals and PAC providers to provide higher-quality care. For example, the Hospital Reduction program currently penalizes hospitals with high rates of readmission for six conditions. MedPAC suggested expanding the number of conditions subject to the penalty could encourage hospitalize to scrutinize the quality of the PAC provider to which patients are referred. Finally, MedPAC suggested expanding value-based purchasing programs for PAC facilities.

Post-Acute Care in Transition:  Tackling the Legal/Regulatory Transformation of the Industry

Health Care Entities and the ADA:  Part 2 – Complex Issues in the Reasonable Accommodation of Patients, Residents & Guests with Disabilities

Wednesday, July 16, 2014, at 12:00 PM – 1:00 PM (EDT)

Presenters:
Andrea R. Calem, Epstein Becker Green
Frank C. Morris, Jr., Epstein Becker Green

In part two of the webinar series, Epstein Becker Green attorneys explain the laws, regulations, enforcement considerations and hot-button issues relating to the accommodation of individuals with disabilities (be they patients, customers, or members of the public).

Their discussion will focus on the public access provisions of the Americans with Disabilities Act, the Rehabilitation Act, and state statutes, which require health care entities and other public accommodations to make their goods and services fully accessible to individuals with disabilities. Some of the issues to be explored will include:

  • Must a health care provider incur construction costs to reconfigure its treatment rooms?
  • Can hospitals or post-acute care facilities be sued if their websites or online scheduling tools are not accessible to those with sight impairments?
  • Must health care facilities modify diagnostic equipment to make it more accessible to individuals using wheelchairs?
  • What are the required dimensions for accessible changing rooms?
  • Must a skilled nursing facility hire a sign language interpreter for hearing-impaired patients or companions?

We hope that you will join us as we explore these and other hot-button issues confronting post-acute care facilities and all other health care businesses today.

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To register for this webinar, please click here.