United States: Weekly Washington Healthcare Update: August 4, 2014

This Week: Energy and Commerce Committee examines ACA program integrity measures... CMS issues final Medicare payment rules for inpatient psychiatric facilities, skilled nursing facilities, and inpatient rehabilitation facilities... Medicare Trustees issue 2014 Annual Report

***Programming Note: The Weekly Washington Health Care Update will move to a biweekly schedule for the month of August***

1. CONGRESS

House

Energy and Commerce Examines ACA Implementation

On July 31, 2014, the House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing entitled "PPACA Implementation: Updates from CMS and GAO," in which members of the committee examined various aspects of implementation of the ACA. Among the concerns discussed in the hearing was a report from GAO assessing CMS's oversight of the website and the actions taken by the administration to identify and address contractor performance issues. An official with CMS also laid out the agency's plan for Year Two of ACA operations.

For more information, or to view the hearing, please visit energycommerce.house.gov.

Small Business Committee Explores Role of Telemedicine

On July 31, 2014, the House Small Business Committee held a hearing entitled "Telemedicine: A Prescription for Small Medical Practices?" The hearing gave members of the committee an opportunity to examine how small medical practices are using telemedicine to expand their reach and grow their businesses. "Over the past few years, there has been a lot of debate about reforming America's health care system," said Chairman Collins. "One of the best ways to reform health care and reduce costs is to allow the private sector to improve the industry through innovation and increased access. Telemedicine is the type of tool that does this, and we should fully embrace it."

For more information, or to view the hearing, please visit smallbusiness.house.gov.

Senate

Senate Aging Committee Hearing on Hospital Admissions Policies

On July 30, 2014, the Senate Special Aging Committee held a hearing entitled "Admitted or Not? The Impact of Medicare Observation Status on Seniors." During the hearing, members of the committee expressed concern regarding hospital inpatient admission policies that can expose beneficiaries to unexpected costs. CMS has made efforts to clarify conditions under which patients must be admitted, as opposed to being given "Observation Status," via a controversial "two-midnight" rule; however, Dr. Sheehy testified that such an approach would not fix the observation problem.

For more information, or to view the hearing, please visit www.aging.senate.gov.

Veterans Affairs Reform Bill Clears Congress

On July 31, 2014, the Senate took up an amended version of HR 3230, the Veterans' Access to Care through Choice, Accountability, and Transparency Act of 2014, following House passage of the bill the day before. The bill would appropriate $15 billion to increase veterans' access to health care by expanding the use of care provided by entities other than the Department of Veterans Affairs (VA); to improve the department's infrastructure; to hire medical staff; and to extend the Health Professionals Educational Assistance Program. The Act would also authorize VA to enter into a number of leases for medical facilities and would modify a number of veterans' benefits programs. A CBO estimate of the bill's cost can be found at www.cbo.gov.

2. ADMINISTRATION

CMS Adds Over 4,000 Providers to Bundled Payments Pilot Study

CMS has added 4,122 providers to a list of health systems eligible to test the first phase of a bundled payments pilot program created by the Affordable Care Act (ACA). The Bundled Payments for Care Improvement (BPCI) initiative allows health providers to "enter into payment arrangements that include financial and performance accountability for episodes of care," a CMS fact sheet says. The BPCI includes four models, which focus on all acute patients and diagnosis-related groups (DRGs) in model one, and selected DRGs and specified patient groups in the other models. In addition, models two through four are divided into Phase one and Phase two. Raymond Thorn, a health insurance specialist at the Innovation Center, outlined the agency's intent to include more providers. Over 6,000 providers (across all models) are currently in Phase 1 of the initiative, which indicates "widespread interest in aligning payment and quality incentives." As for Phase 2 participation levels, Thorn said that currently there are "105 awardees, including 38 conveners of health care organizations, representing 243 providers (across all models)."

CMS Halts Enrollment of Certain Home Health Agencies, Ambulance Suppliers under ACA

In an effort to tackle fraud, the Centers for Medicare & Medicaid Services (CMS) announced the extension of its temporary moratoria on the enrollment of ambulance suppliers and home health agencies in Florida, Illinois, Michigan, Texas, Pennsylvania, and New Jersey under the Patient Protection and Affordable Care Act. The announcement extends the moratoria for six months, with the moratoria generally enacted in metropolitan areas or neighboring counties. The first moratoria were enacted on July 31, 2013, against home health agencies in Miami, Florida, and Chicago, Illinois, and against ambulance suppliers in Houston, Texas. On Feb. 4 of this year, additional moratoria were placed on the enrollment of ambulance suppliers in Philadelphia, Pennsylvania, and against the enrollment of home health agencies in counties around Dallas, Texas,, and Detroit, Michigan.

CMS Final Rule: Medicare Program; Inpatient Psychiatric Facilities Prospective Payment System - FY 2015

On July 31, 2014, the Centers for Medicare & Medicaid Services (CMS) issued the Inpatient Psychiatric Facilities Prospective Payment System (IPF PPS) final rule for fiscal year (FY) 2015. The IPF PPS applies to inpatient psychiatric facilities across the United States, including both free-standing psychiatric hospitals and psychiatric units of acute care hospitals or critical access hospitals. The updated rates would generally be effective for discharges occurring on or after Oct. 1, 2014. Under the final rule, payments to IPFs are estimated to increase by 2.5 percent compared to FY 2014.

The final rule also updates the Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program, which requires IPFs to report on quality measures or incur a reduction in their annual payment update. This rule expands the measure sets for use in future fiscal years and discusses CMS's plans to collect data to help better target future measures. These regulations are effective on Oct.1, 2014. For more information, please visit www.cms.gov.

CMS Final Rule: Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2015

On July 31, 2014, the Centers for Medicare & Medicaid Services (CMS) issued a final rule updating fiscal year (FY) 2015 Medicare payment policies and rates for the Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) and the IRF Quality Reporting Program (IRF QRP). The rule finalizes a policy to collect data on the amount and mode (that is, Individual, Concurrent, Group and Co-Treatment) of therapy provided in the IRF setting according to therapy discipline; revises the list of diagnosis and impairment group codes that presumptively meet the "60 percent rule" compliance criteria; provides a way for IRFs to indicate on the Inpatient Rehabilitation Facility- Patient Assessment Instrument (IRF-PAI) form whether the prior treatment and severity requirements have been met for arthritis cases to presumptively meet the "60 percent rule" compliance criteria; and revises and updates quality measures and reporting requirements under the IRF quality reporting program (QRP). This rule also delays the effective date for the revisions to the list of diagnosis codes that are used to determine presumptive compliance under the "60 percent rule" that were finalized in FY 2014 IRF PPS final rule and adopts the revisions to the list of diagnosis codes that are used to determine presumptive compliance under the "60 percent rule" that are finalized in this rule. This final rule also addresses the implementation of the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM), for the IRF prospective payment system (PPS), which will be effective when ICD-10-CM becomes the required medical data code set for use on Medicare claims and IRF-PAI submissions. For more information, please visit www.cms.gov.

CMS Final Rule: Medicare Program; Inpatient Psychiatric Facilities Prospective Payment System - FY 2015

On July 31, 2014 the Centers for Medicare & Medicaid Services (CMS) issued the Inpatient Psychiatric Facilities Prospective Payment System (IPF PPS) final rule for fiscal year (FY) 2015. The IPF PPS applies to inpatient psychiatric facilities across the United States, including both free-standing psychiatric hospitals and psychiatric units of acute care hospitals or critical access hospitals. The updated rates would generally be effective for discharges occurring on or after Oct. 1, 2014. Under the final rule, payments to IPFs are estimated to increase by 2.5 percent compared to FY 2014. The final rule also updates the Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program, which requires IPFs to report on quality measures or incur a reduction in their annual payment update. This rule expands the measure sets for use in future fiscal years and discusses CMS's plans to collect data to help better target future measures. The rule is effective Oct. 1, 2014. For more information, please visit www.cms.gov.

3. STATE ACTIVITIES

North Carolina Medicaid Reform Focuses on Cost Containment

On July 24, 2014, the North Carolina Senate passed a bill that would establish commercial managed care for Medicaid patients, with a goal of reining in cost. The bill would also move the Medicaid program from the control of the state Department of Health and Human Services and instead be run by a paid board of directors who would oversee the $13 billion program, which serves 1.7 million low-income children, select parents, the elderly and disabled. The House has agreed to a system of regional managed care networks but wants to have only provider-led groups running them, barring commercial Medicaid managed care.

Pennsylvania Continues Work on "Private Option" Medicaid Expansion

Despite an ongoing review of the state's application ("Healthy PA") to expand Medicaid using a combination of public funds and private insurance coverage, Pennsylvania has decided it will drop a proposed component of the plan related to a program to help people with disabilities keep their Medicaid coverage even if they get a job. Medical Assistance for Workers with Disabilities (MAWD) is a state health insurance program for individuals who have chronic health problems and are working. The Healthy PA proposal initially would have eliminated MAWD, which provides assistance for about 33,000 low and middle income Pennsylvanians with disabilities, but after hearing from voters, Gov. Corbett decided to keep the program as is.

4. REGULATIONS OPEN FOR COMMENT

Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule, Clinical Laboratory Fee Schedule, Access to Identifiable Data for the Center for Medicare and Medicaid Innovation Models & Other Revisions to Part B for CY 2015

CMS released its proposal for the 2015 Medicare physician fee schedule on July 3 with suggested changes relating to Chronic Care Management (CCM) and Accountable Care Organizations (ACO). Medicare doctors who provide CCM services may be required starting in 2015 to use an electronic health record or other health information exchange platform to ensure their patients" care plans are electronically accessible to any provider caring for those patients. Medicare providers would also be required to use electronic health records certified under the Office of the National Coordinator for Health Information Technology"s certification program as having the capabilities to capture and report CCM data. ACOs were also addressed in the new fee schedule, as the proposed rule would increase the number of ACO quality measures with an increased focus on outcomes. Under the proposal, the total number of measures for quality reporting would increase from 33 to 37. Under the Medicare Shared Savings Program (MSSP), ACOs must meet certain quality targets to claim shared savings bonuses. Specifically, new measures would be added to focus on avoidable admissions for patients with multiple chronic conditions, heart failure and diabetes; depression remission; all-cause readmissions to a skilled nursing facility; and stewardship of patient resources, the agency said. The agency added that the existing composite measures for diabetes and coronary artery disease would also be updated. Comments must be received by Sept. 2, 2014.

Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Physician-Owned Hospitals: Data Sources for Expansion Exception; Physician Certification of Inpatient Hospital Services; Medicare Advantage Organizations and Part D Sponsors: Appeals Process for Overpayments Associated with Submitted Data

CMS has issued a proposed rule that would revise the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for CY 2015 to implement applicable statutory requirements and changes arising from continuing experience with these systems. The proposed rule describes the proposed changes to the amounts and factors used to determine the payment rates for Medicare services paid under the OPPS and those paid under the ASC payment system. In addition, this proposed rule would update and refine the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program.

CMS is also proposing changes to the data sources used for expansion requests for physician-owned hospitals under the physician self-referral regulations; changes to the underlying authority for the requirement of an admission order for all hospital inpatient admissions and changes to require physician certification for hospital inpatient admissions only for long-stay cases and outlier cases; and changes to establish a three-level appeals process for Medicare Advantage (MA) organizations and Part D sponsors that would be applicable to CMS-identified overpayments associated with data submitted by these organizations and sponsors. Comments must be received by Sept. 2, 2014.

Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies

This rule proposes to update and make revisions to the End-Stage Renal Disease (ESRD) prospective payment system (PPS) for calendar year (CY) 2015. This rule also proposes to set forth requirements for the ESRD quality incentive program (QIP), including payment years (PYs) 2017 and 2018. This rule also proposes to make a technical correction to remove outdated terms and definitions. In addition, this rule proposes to set forth the methodology for adjusting Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) fee schedule payment amounts using information from the Medicare DMEPOS Competitive Bidding Program (CBP); make alternative payment rules for DME and enteral nutrition under the Medicare DMEPOS CBP; clarify the statutory Medicare hearing aid coverage exclusion and specify devices not subject to the hearing aid exclusion; update the definition of minimal self-adjustment regarding what specialized training is needed by suppliers to provide custom fitting services if they are not certified orthotists; clarify the Change of Ownership (CHOW) and provides for an exception to the current requirements; revise the appeal provisions for termination of a contract and notification to beneficiaries under the Medicare DMEPOS CBP, and add a technical change related to submitting bids for infusion drugs under the Medicare DMEPOS CBP. Comments must be received by Sept. 2, 2014.

Draft Guidance for Industry on Drug Supply Chain Security Act Implementation: Identification of Suspect Product and Notification; Availability

On June 11, 2014, FDA announced the availability of a draft guidance for industry entitled "Drug Supply Chain Security Act Implementation: Identification of Suspect Product and Notification." The draft guidance addresses new provisions in the Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended by the Drug Supply Chain Security Act (DSCSA). The draft guidance is intended to aid certain trading partners (manufacturers, repackagers, wholesale distributors and dispensers) in identifying a suspect product and terminating notifications regarding illegitimate product. This draft guidance identifies specific scenarios that could significantly increase the risk of a suspect product entering the pharmaceutical distribution supply chain; provides recommendations on how trading partners can identify the product and determine whether the product is a suspect product as soon as practicable; and for product that has been determined to be illegitimate, or (for manufacturers) has a high risk of illegitimacy, sets forth the process by which trading partners should notify FDA of illegitimate product and how they must terminate the notifications, in consultation with FDA. Public comments on the draft guidance will be accepted through Aug. 11, 2014.

CMS Proposed Rule: Medicare, Medicaid EHR Incentive Program

On May 23, 2014, CMS issued a proposed rule that would change the meaningful use stage timeline and the definition of certified electronic health record technology (CEHRT). It would also change the requirements for the reporting of clinical quality measures for 2014. Certified EHR technology is defined for the Medicare and Medicaid HER Incentive Programs at 42 CFR 495.4, which references the Office of the National Coordinator for Health Information Technology's (ONC) definition of CEHRT under 45 CFR 170.102. For Stages 1 and 2 of meaningful use, CMS and ONC worked closely to ensure that the definition of meaningful use of CEHRT and the standards and certification criteria for CEHRT were coordinated. The definition of CEHRT under 45 CFR 170.102 requires, beginning with federal fiscal year (FY) and calendar year (CY) 2014, EHR technology certified to the 2014 Edition EHR certification criteria. Therefore, all EPs, eligible hospitals and CAHs must use 2014 Edition CEHRT to meet meaningful use under the Medicare and Medicaid EHR Incentive Programs, beginning with FY 2014 and CY 2014. Beginning in 2015, all eligible hospitals and professionals would still be required to report using the 2014 Edition CEHRT. The proposed rule also includes a provision that would formalize CMS' and ONC's previously stated intention to extend Stage 2 through 2016 and begin Stage 3 in 2017.

To view the CMS press release on the proposed rule, visit cms.gov.

5. REPORTS

Medicare Trustees 2014 Annual Report

According to a report released on July 28, 2014, by the Medicare Board of Trustees, the estimated depletion date for the HI trust fund is 2030, four years later than was shown in last year's report. As in past years, the Trustees have determined that the fund is not adequately financed over the next 10 years. HI taxable earnings in 2013 were slightly higher than last year's estimate; after 2013, however, projections of earnings throughout the period are lower mostly due to lower GDP based on lower assumptions for the GDP deflator and real GDP. HI expenditures in 2013 were significantly lower than the previous estimate, and through 2016 the projected level grows more slowly than shown in last year's report largely due to reductions in utilization assumptions, reflecting recent trends. For the 75-year projection period, the HI actuarial deficit has decreased from 1.11 percent of taxable payroll, as shown in last year's report, to 0.87 percent of taxable payroll.

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