On October 24, 2018, President Trump signed sweeping bipartisan legislation to combat the opioid epidemic. The Substance Use–Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act, or the SUPPORT for Patients and Communities Act (“H.R. 6” or “the Law”), aims to “reduce access to the supply of opioids by expanding access to prevention, treatment, and recovery services.”[1] Congress has already appropriated $8.5 billion to implement this “landmark legislation” in 2018 and 2019.

In a series of Client Alerts, Epstein Becker Green will provide an overview of key components of H.R. 6, focusing on substantive requirements impacting an array of providers, manufacturers, health care professionals, community services organizations, and other health care entities. Forthcoming topics include the impact on treatment measures for opioid use disorders, addiction prevention measures, clarifications to U.S. Food and Drug Administration and U.S. Drug Enforcement Administration regulation and enforcement authority over opioid products, Medicare and Medicaid funding provisions, enhanced health care fraud protection, new data & reporting provisions, and telehealth requirements.

H.R. 6’s breadth requires impacted entities to take careful note of the Law’s requirements and varying effective dates.

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[1] Press Release, The White House, President Donald J. Trump Signed H.R. 6 into Law (Oct. 24, 2018), available at https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-signed-h-r-6-law/.

[2] Press Release, U.S. Senate Committee on Health, Education, Labor & Pensions, President Trump Signs Alexander Bill to Fight Opioid Crisis (Oct. 24), available at https://www.help.senate.gov/chair/newsroom/press/president-trump-signs-alexander-bill-to-fight-opioid-crisis.

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.

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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″.

 

The Medicare Payment Advisory Commission (“MedPAC”) met in Washington, DC on November 2-3, 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 November meeting are as follows:

  1. MedPAC refines an alternative to MIPS.

MedPAC discussed the potential implementation of a new value-based program, described as a voluntary value program (“VVP”), for clinicians in Medicare fee-for service (“FFS”) if the Merit-based Incentive Payment System (“MIPS”) is eliminated, as was proposed by MedPAC in its October meeting. The VVP would encourage clinicians to form voluntary groups that would receive payment depending on the group’s overall performance. MedPAC did not anticipate recommending restrictions on the size or markup of the voluntary group beyond a minimum threshold, which would depend on specific quality measures, clinician specialties, and attribution rules. MedPAC also discussed the potential of a CMS-established voluntary fallback group for isolated or low-volume clinicians who want to join a group. With respect to different quality measures on which the VVP would reward payments, MedPAC proposed that Congress focus on measuring population-based outcomes, patient experience, and cost. Lastly, to incentivize clinicians to switch from the Medicare FFS, MedPAC proposed that any policy should cap the total value payment as to make it less attractive than an alternative payment model.

  1. MedPAC recommends rebalancing Medicare’s physician fee schedule towards primary care services.

MedPAC expressed concern that the current physician fee schedule disfavors primary care practice, often underpricing primary care relative to other Medicare health care services, and thus potentially contributing to the decrease of primary care clinicians. In response, MedPAC proposed two approaches towards rebalancing the fee schedule in favor of primary care services. The first approach would increase fee schedule payments for primary care clinicians and psychiatric services provided by all specialties and clinicians. The payment increase would be distributed on a per service basis, to achieve the goal of spreading the increased dollars among clinicians. Eligible primary care services would include: evaluation and management codes for office visits, home visits, and visits to patients in long-term care settings; chronic care management and transitional care management codes; and “Welcome to Medicare” visits and annual wellness visits.

The second approach would increase fee schedule payments for primary care and psychiatric services provided only by certain specialties and certain clinicians within those specialties. Payment increases could be distributed either on a service-by-service basis or on a per beneficiary basis. While the former may incentivize more discrete primary care visits, the latter would encourage non-face-to-face care coordination and would be consistent with MedPACs 2015 recommendation to Congress. However, as the size of a per beneficiary payment increases, questions would arise about how to attribute patients and whether to risk-adjust the payments.

  1. MedPAC makes payment policy recommendations for non-competitively bid DMEPOS.

MedPAC discussed the proposed recommendations it intends to make to the Centers for Medicare and Medicaid Services (“CMS”) to address the durable medical equipment, prosthetics, and orthotics (“DMEPOS”) fee schedule rates, which MedPAC finds to be excessive. As proposed, the recommendations would shift more DMEPOS products currently paid on a fee schedule basis to a competitive bidding program (“CBP”). MedPAC’s recommendations also call for immediate reduced payment rates for certain non-CBP products while CMS works on incorporating them into the CBP. Alternatively, MedPAC recommends a policy option that aligns balance billing and participation rules for DMEPOS suppliers with the rest of Medicare and that further protects beneficiaries. This policy option would have CMS consider capping balance billing at a percentage of the fee schedule rate and reducing the allowed amount by five percent for non-participating suppliers.

  1. MedPAC makes coverage-gap discount policy recommendations for biosimilars in Medicare Part D.

Consistent with its 2016 recommendations and the Chairman’s draft recommendation, MedPAC’s proposed policy for Part D would have the manufacturing coverage gap discount apply to both originator biologics and biosimilars, which currently applies only to originator biologics. However, the discount would no longer apply to the beneficiary’s out-of-pocket spending for either originator biologics or biosimilars. MedPAC believes that the standardized use of the coverage gap discount will better align the incentives. Because the discount would no longer distort price signals between the two products, there would be slightly lower plan liability for biosimilars than originator biologics, therefore incentivizing sponsors to put the lower-priced biosimilars on their formulary. This change would also result in Medicare paying lower reinsurance. Although some enrollees would have higher cost sharing, cost sharing above the out-of-pocket threshold would be eliminated, creating a hard cap. Because prices for biologics have been outpacing Part D as a whole, MedPAC anticipates the hard cap would become more valuable over time.

  1. MedPAC provides principles for evaluating the expansion of Medicare’s coverage of telehealth services.

This month is MedPAC’s third and last address to Congress’ mandate concerning telehealth expansion under Medicare. MedPAC discussed three principles that policy makers should consider when evaluating telehealth services or policies for potential incorporation into the FFS Medicare program: 1. increased access; 2. improved quality; and 3. reduced costs. Through examples, MedPAC appears to recommend (1) expanding telehealth services into urban areas; and (2) covering direct-to-consumer (“DTC”) services across all areas and for all beneficiaries. According to MedPAC, Medicare’s coverage of urban telehealth and DTC services would increase beneficiary access and convenience, especially in areas with certain service coverage shortages (i.e., stroke specialists, mental practitioners). For programs like telestroke, MedPAC notes that expanding access would likely improve quality by reducing mortality or more serious disability. MedPAC acknowledges that expanding telehealth services may increase costs, and noted that policy makers would need to decide whether the benefits in access and quality that result from telehealth services justify the extra costs of those services.

MedPAC also briefly reported its take on FFS Medicare’s telehealth service expansion for Medicare Advantage (“MA”). Rather than changing the MA program or its payment policy, MedPAC focuses on addressing the question of whether the Medicare benefit should be the same regardless of whether a beneficiary enrolls for FFS Medicare or MA. One option would keep the benefit between FFS Medicare and MA the same. Another option would allow MA plans to include telehealth services in their bids, thereby making the Medicare payment for telehealth services included in the program’s base payment and not financed by rebate dollars. This would mean all plan members would have access to the telehealth benefits, but not be able to opt out in exchange for lower premiums.

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.

After July 1, 2017, optometrists and ophthalmologists (“Ophthalmic Providers”) in Virginia will be able to practice through telehealth. Va. Code § 54.1-2400.01:2 permits Ophthalmic Providers to establish a bona fide provider-patient relationship “by an examination through face-to-face interactive, two-way, real-time communication” or through “store-and-forward technologies.” Licensed Ophthalmic Providers may establish a provider-patient relationship so long as the provider conforms to the in-person standard of care.  To the extent that an Ophthalmic Provider actually writes a prescription, the Ophthalmic Provider must also obtain an updated patient medical history and make a diagnosis at the time of prescribing.  However, like most telehealth laws in other states, the Virginia law prohibits issuing a prescription solely by use of an online questionnaire.

By comparison to other telehealth laws, the Virginia law is progressive not only because it permits Ophthalmic Providers to establish a valid provider-patient relationship through store-and-forward technologies, but that it addresses the need for telehealth laws that specifically apply to Ophthalmic Providers. As of July 1, Ophthalmic Providers in Virginia can begin prescribing eyeglasses or contact lenses using real time and store-and-forward telehealth modalities. Since Virginia already has remote prescribing and parity laws in place, Ophthalmic Providers should feel free to immediately begin using these technologies to prescribe in accordance with the new law.  While it is hard to say how many Ophthalmic Providers are ready to immediately incorporate these technologies into their practices, telehealth optometry will most certainly expand patient access to eye care services in Virginia.

This post was written with assistance from Lauren Farruggia, a 2017 Summer Associate at Epstein Becker Green.

On December 14, 2015, the U.S. District Court for the Western District of Texas denied the Texas Medical Board’s (“TMB”) motion to dismiss an antitrust lawsuit brought by Teladoc, one of the nation’s largest providers of telehealth services.[1]  Teladoc sued the TMB in April 2015, challenging a rule requiring a face-to-face visit before a physician can issue a prescription to a patient.  Following two recent Supreme Court cases stringently applying the state action doctrine, this case demonstrates the latest of the continued trend where state-sanctioned boards of market participants face increased judicial scrutiny with respect to the state action doctrine.

The Board Rule at Issue – “New Rule 190.8”

In April 2015 the TMB adopted revisions to various chapters of the Texas Administrative Code governing the practice of medicine.  Specifically, Section 190.8(1)(L) (“New Rule 190.8”) sets forth practices the TMB deems to be violations of the Texas Medical Practices Act and prohibits prescription of any “dangerous drug or controlled substance” without first establishing a “proper professional relationship.”  A “physician-patient relationship” is defined to require, among other things, a physical examination that must be performed by “either a face-to-face visit or in-person evaluation” (defined elsewhere to require that the patient and physician be in the same physical location).

Teladoc filed a lawsuit, alleging that New Rule 190.8 violated Section 1 of the Sherman Act, prohibiting anticompetitive agreements among competitors to restrain trade (the TMB is a group comprised of competing physicians).  Teladoc then obtained a preliminary injunction in May 2015, preventing the TMB from “taking any action to implement, enact and enforce” New Rule 190.8 until Teladoc’s claims are resolved.  In issuing the injunction, the court found that Teladoc demonstrated a substantial likelihood of success on the merits of its antitrust claims, a substantial threat of irreparable injury, that the threatened injury outweighed any damage that the injunction might cause the TMB, and that the injunction would not disserve the public interest.  The TMB then moved to dismiss, claiming, among other things, entitlement to state action antitrust immunity.

State Action Antitrust Immunity

State action antitrust immunity for professional board regulatory actions has two requirements: the actions must be conducted under “active state supervision,” and they must follow a “clearly articulated state policy” to displace competition.  The court held that the TMB could not claim state action immunity because the state did not exercise sufficient control over it.  The court did not address the second requirement.

The court’s order devotes significant attention to rejecting the TMB’s state action defense.  In North Carolina State Board of Dental Examiners v. FTC, which we previously covered, the Supreme Court reaffirmed that the state action exemption would not insulate the activities of state boards or regulatory agencies comprised of market participants absent active state supervision of the entity’s challenged conduct.

Both Teladoc and the TMB agreed that active state supervision is a state action requirement, but disagreed as to whether it existed.  The district court followed North Carolina State Board of Dental Examiners, noting that in order to constitute active supervision, “the supervisor must have the power to veto or modify particular decisions to ensure they accord with state policy.”

The TMB argued that it is indeed subject to active state supervision since its decisions are subject to judicial review by the courts of Texas, the Texas legislature, and the State Office of Administrative Hearings. The court found these purported review mechanisms to be focused on the mere validity/invalidity of rules—not allowing for an evaluation of the policies underlying the rules or bestowing the state with power to modify particular Texas Medical Board decisions to accord with state policy.  The court also rejected the TMB’s argument that state supervision exists by way of the Texas legislature’s “sunset review” process (where the legislature votes on whether there is a public need for continuation of a state agency) because the legislature has no authority to veto or modify any TMB rules.

Implications

Rules promulgated by state-sanctioned boards comprised of market participants are going to continue facing increased antitrust scrutiny when challenged in court.  These rulings continue to show that significant and meaningful state oversight mechanisms are a vital and scrutinized element for agencies seeking state action antitrust immunity. However, this case is far from over, and the TMB thus remains enjoined from implementing, enacting, or enforcing New Rule 190.8 until Teladoc’s claims are resolved.  While the Texas Medical Board has announced plans for appeal to the U.S. Court of Appeals for the Fifth Circuit, such a reversal would be highly unlikely at this point—meaning that the case can be expected to proceed into discovery and perhaps trial.

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[1] Teladoc, Inc. v. Texas Medical Board, 1-15-CV-343 RP (W.D. Tex. Dec. 14, 2015) (order denying motion to dismiss).

Perhaps in recognition of its benefits to areas affected by shortfalls in specialists and primary care physicians or the need for remote monitoring, telemedicine received significant funding in the ARRA. For instance, the Rural Utilities Service was allocated $2.5 billion to fund “shovel-ready” distance learning, telemedicine, and broadband program; the Indian Health Services received $85 million to fund telemedicine; and a portion of the $2 billion allocated to the Office of the National Coordinator is to be used to support the “infrastructure and tools for the promotion of telemedicine.” However, in contrast to the ARRA, the current reform proposals publicly available are missing language facilitating telemedicine which otherwise could be a key component to one of the goals of health reform, bending the cost curve

 

The only attention telemedicine receives in the House Tri-Committee Bill – the America’s Affordable Health Choices Act of 2009 – is in the creation of the Telehealth Advisory Committee. This Committee will advise and make recommendations to the HHS Secretary regarding policies for payment of telemedicine services. However, the Senate HELP’s Bill – the Affordable Choices Act – does not even mention telemedicine. 

           

Should something be done regarding this missing health reform element? A group of experts have eloquently made the argument that the present infatuation with electronic health records (“EHRs”) should be expanded to focus on improving the quality of care and equities of care, while decreasing the cost and fragmentation of such care by encouraging the development of telemedicine (which includes, as a component, EHRs). 

           

Also, Intel CEO Paul Otellini provides a sensible guide for achieving comprehensive health reform – and two of his recommendations are reliant on telemedicine. First, he suggests paying providers for outcomes, not just face-to-face visits. If payment was outcome based – even if the correct outcome was achieved in part by utilizing email, the financial interests of the provider would be more closely aligned with the desired goal of the patient, i.e., better health. The other recommendation that involves telemedicine is the development of a nationally-licensed cadre of “virtual care clinicians” to provide care to patients in their home. In the case of an elderly individual with a chronic disease, this could be the difference between staying in their home and moving into a skilled nursing facility and, obviously, the cost between the two options is significant.