United States: Washington Healthcare Update - November 3, 2014

This Week: $60 Million Pay Cut Implemented in CMS' Final 2015 Home Health Rule... SHOP Exchanges Open Early in Five States... CMS Releases Final Rule for Medicare Program: Physician Fee Schedule OPPS, ASC Payments, End-Stage Renal Disease

1. Congress


  • District Work Period -- No Legislative Activity


  • State Work Period -- No Legislative Activity

2. Administration

60 Million Pay Cut Implemented in CMS' Final 2015 Home Health Rule

In a final rule (CMS-1611-F) released Oct. 30, CMS announced 2015 home health final payment rates, with Medicare reimbursements to home health agencies decreasing by approximately $60 million. The new rule, which will cut Medicare payments by about 0.3 percent in 2015, also changes face-to-face encounter requirements for providers and modifies the 60-day episode payment rate by nearly $40 when compared with proposed rule. Other changes in the rule include modification to OASIS assessments, a tool used for quality measurement purposes, and revision to the Home Health Conditions of Participation (CoPs) for speech language pathologist (SLP) personnel. The Home Health Agency (HHA) Value-based Purchasing (VBP) model that is introduced in this rule would be an opportunity to test whether carefully designed payment incentives would lead to higher quality of care for beneficiaries, CMS says. In a fact sheet accompanying the rule, CMS said approximately 3.5 million beneficiaries received home health services from nearly 12,000 home health agencies, costing Medicare approximately $18 billion in 2013. The final rule is one of several rules for calendar year 2015 that reflect a broader Administration-wide strategy to deliver better care at lower cost by finding better ways to deliver care, pay providers and use information. The changes outlined in the final rule will take effect on Jan. 1, 2015, and the final rule will be published in the Federal Register on Nov. 6.

CMS Provides Hospitals New Avenue to Settle Patient Status Appeals

In a revised frequently asked questions document released Oct. 27, CMS reiterated an earlier policy decision that hospitals can now request that the agency send them a list of claims potentially eligible for the patient status appeals offer, as another means to pursue an administrative agreement to settle patient status appeals and receive partial payment. CMS is offering this "administrative agreement" of partial payment to give hospitals incentive to drop their appeals related to certain short-stay hospital claims in an effort to reduce the backlog in Medicare payment appeals. The FAQ document says that providers should submit the required documents by October 31, however revisions made on Oct. 27 say that a request for a potential list "will be accepted as an intent to participate" in the administrative agreement. "Responses to potential requests can be expected 2 business days after submission of the request," the FAQ said. Previously, CMS' inpatient hospitals review website said, effective Oct. 15, the Centers for Medicare & Medicaid Services would allow hospitals unable to produce a list of all eligible claims in a timely manner to submit a request for a "Potential List." Any potential list will include claims identified by the CMS as potentially eligible for the administrative agreement, the website said. However, the FAQ said a high number of requests may mean that it will take longer than two days for hospitals to receive their list of potentially eligible claims. In addition, the FAQ document explicitly said appealed claims originally denied by quality improvement organizations (QIOs) are eligible for the administrative agreement offer.

CMS: CCIIO to Continue to Allow Paper-Based Appeals Through December 2015

The federal exchange will continue using a paper-based system for individual and SHOP consumer and employer appeals through December 2015 and state-based exchanges may choose to do the same, Centers for Medicare and Medicaid Services (CMS) Center for Consumer Information and Insurance Oversight (CCIIO) announced in an Oct. 23 guidance document. CCIIO says the decision "strikes a balance" between an appellant's rights and the demands on entities dealing with appeals. The guidance, titled "Marketplace Eligibility Appeals--Options for Paper-based Processes," applies to consumers' appeals of eligibility and enrollment decisions in the individual market, employer appeals of tax liability decisions and SHOP employer and employee eligibility appeals. "We understand that Marketplaces face many challenges and competing priorities regarding system development, which may delay completion of systems to implement the electronic functions of an eligibility appeals program," CCIIO writes. The extended flexibility "will enable appeals entities to continue operating under existing capabilities, which CCIIO says protects the due process rights of appellants and also allows more time for entities to complete the system development work needed to implement the electronic requirements." CMS had previously said that exchanges could use the paper-based appeals method through December 2014.

OSHA Releases Draft Framework for Infectious Disease Rule, Pushes Ebola Control Issue For Health Workers

The Occupational Safety and Health Administration (OSHA) released a draft framework for an envisioned rule to help prevent the spread of infectious diseases in health care work settings. OSHA has been considering how to devise an infectious disease rule for years, though the issue has gained more traction recently, given the Ebola outbreaks. The next step in the process toward a final decision will be to put the plan before small business advocates; in the framework, OSHA foresees the development of a written infection control plan and the integration of qualified personnel within hospitals to oversee disease control efforts on behalf of workers. In the framework, OSHA notes that "occupational exposure of workers to contact, droplet, or airborne transmissible infectious agents during provision of direct patient care or performance of other covered tasks (as defined) would be covered," as the planned rule's scope. Also worth noting, occupational exposure as defined in OSHA's Bloodborne Pathogens standard, 29 CFR 1910.1030, would not be covered.

SHOP Exchanges Open Early in Five States

In a notice sent to Congressional staff on Oct. 27, the Department of Health and Human Services (HHS) announced that small businesses, agents and brokers in Delaware, Illinois, Missouri, New Jersey and Ohio will have early access to online functionality for the Small Business Health Options Program (SHOP) Marketplace on the federal healthcare.gov enrollment site for the 2015 coverage year. The "soft launch" will allow Obama administration officials to troubleshoot the system before it becomes more widely available. Specifically, the new features being piloted will allow small businesses to establish a Marketplace SHOP account, assign a SHOP agent/broker to their account, complete an employer SHOP eligibility application, obtain an eligibility determination from the FF-SHOP and upload an employee roster, HHS said. Employers will also be able to browse 2015 SHOP plans and pricing when the information is released in November. "The users of Early Access are helping us to test the new online features which will give the SHOP Marketplace important information about the user experience to begin the continuous quality improvement process before the site goes live in mid-November," said Rhett Buttle, Director of Private Sector Engagement at HHS in an Oct. 27 blog post. A mandate instituted by the Affordable Care Act (ACA), the small business health exchange insurance market is available for businesses with 1 to 50 employees. While the SHOP was previously available through healthcare.gov, the federal exchange website, during the first open enrollment period in fall 2013, Nov. 15, 2014, is the first time that employers will be able to shop and enroll in plans via a SHOP online portal.

3. State Activities

California Voters to Consider Election Ballot Measure Allowing Insurance Rate Veto Power for State Insurance Officials

Election Day will allow California voters more influence in their health insurance rates, as a new ballot initiative could give state officials the authority to veto health insurance rate increases for individual and small group plans. Proposition 45, if passed, would hand broad new control of the individual health insurance market to the state insurance commissioner, who could reject health insurance rate increases deemed excessive. Also worth noting, Proposition 45 would go further than related initiatives in other states because even after the insurance commissioner approved a rate increase, members of the public could sue to stop it. The measure is designed to keep costs down for consumers in a state where health care premiums have spiked in recent years, raising public concern. Opponents of the ballot measure, on the other hand, warn that it could undermine the early successes of Covered California, the state's health insurance exchange, which enrolled more than 1.1 million people for the 2014 coverage period.

4. Regulations Open for Comment

Basic Health Program; Federal Funding Methodology for Program Year 2016

On Oct. 21, CMS issued a proposed rule outlining the agency's methodology for determining federal payment amounts to states that establish a Basic Health Program (BHP) for 2016. Under the proposed methodology, in determining the federal BHP payment amount, CMS will take into account the age and income of the enrollee, whether the enrollment is for self-only or family coverage, geographic differences in average spending for health care across rating areas, the health status of the enrollee for purposes of determining risk adjustment payments and reinsurance payments that would have been made if the enrollee had enrolled in a qualified health plan through an Exchange, and whether any reconciliation of the credit or cost-sharing reductions would have occurred if the enrollee had been so enrolled. The proposed payment methodology takes each of these factors into account. In addition, the proposed methodology that is the same as the 2015 payment methodology, with updated values but no changes in methods. States that elect to operate a BHP will make affordable health benefits coverage available for individuals under age 65 with household incomes between 133 percent and 200 percent of the FPL who are not otherwise eligible for Medicaid, the Children's Health Insurance Program (CHIP) or affordable employer-sponsored coverage. Comments are due Nov. 24. CMS plans to issue a final notice by February.

CMS Releases Proposed Rule on Revised Conditions of Participation for Home Health Agencies

The Centers for Medicare & Medicaid Services (CMS) released a proposed rule on Oct. 6 revising and modernizing the current conditions of participation for home health care agencies that want to take part in the Medicare and Medicaid programs. The CMS rule, published in the Federal Register on Oct. 7, "reflects the most current home health agency practices by focusing on the care provided to patients and the impact of that care on patient outcomes. This proposed regulation focuses on assuring the protection and promotion of patient rights; enhances the process for care planning, delivery, and coordination of services; streamlines regulatory requirements; and builds a foundation for ongoing, data-driven, agency-wide quality improvement." Specific new provisions in the proposed rule include patients' rights measures, coordination of services and quality of care measures utilizing an interdisciplinary team approach, quality assessment and performance improvement (QAPI) measures, and infection prevention and control measures, among others. Comments on the proposed rule are due to CMS by Dec. 8, 2014.

CMS Seeks Stakeholder Input on Innovative Health Plan Designs

On Oct. 2, the Centers for Medicare and Medicaid Services issued a request for information (RFI) for input from health plans and other stakeholders to explore innovative ways to improve Medicare. The CMS specifically would like information about stand-alone Medicare prescription drug plans (PDPs), Medigap and retiree supplemental health plans, Medicare Advantage and Medicare Advantage prescription drug plans, and Medicaid managed care plans. The request is intended to help CMS improve Medicare plan design, care delivery, beneficiary and provided engagement, and network design. CMS would like to receive the information by Nov. 3.

OIG Proposed Rule Would Expand Medicare Anti-Kickback Statute Safe Harbors

The Department of Health and Human Services Office of the Inspector General (OIG) released a proposed rule (RIN 0936-AA06) on Oct. 2 that would add new safe harbors to the anti-kickback statute covering some Medicare Part D activities and expand the list of conduct exempted from civil monetary penalties (CMPs). The proposed rule would cover a variety of behaviors, including: pharmacy cost-sharing waivers for impoverished Medicare Part D beneficiaries; cost-sharing waivers for emergency ambulance services offered by state or municipal-owned organizations; manufacturer discounts for drugs provided through the Medicare Coverage Gap Discount Program; and certain interactions between Medicare Advantage plans and federally qualified health centers (FQHCs). Lewis Morris, former chief counsel to the OIG, said the rule illustrates that the "inspector general is really working hard to find ways to promote quality of care in an integrated delivery system while still protecting the integrity of the program and its beneficiaries." Comments on the proposed rule are due Dec. 2.

CMS Releases Final Rule for Medicare Program: Physician Fee Schedule OPPS, ASC Payments, End-Stage Renal Disease

On Oct. 31, the Centers for Medicare and Medicaid Services (CMS) released its final rule for CY 2015 Medicare reimbursement payments to physicians and non-physician practitioners, hospital outpatient departments (OPPS), ambulatory surgical centers (ASCs), and home health agencies and dialysis facilities that treat patients with end-stage renal disease. Specifically, the CY 2015 OPPS/ASC final rule with comment period updates Medicare payment policies and rates for hospital outpatient department and ASC services and partial hospitalization services provided by community mental health centers (CMHCs), and refines programs that encourage high-quality care in these outpatient settings. In CY 2015, CMS is implementing a policy finalized last year regarding comprehensive Ambulatory Payment Classifications (C-APCs), with some refinements and updates.


Overall OPPS payments are expected to increase by 2.3 percent for CY 2015. Also noteworthy in the rule, CMS has finalized a proposal to package prosthetic supplies as it does implantable prosthetic devices, and all other supplies in the OPPS when used in conjunction with a surgical or other procedure. Other significant OPPS payment modifications addressed in the statute include reimbursements for skin substitutes, off-campus provider-based departments, hospital outpatient outlier payments, community mental health center outlier payments, ancillary services and Part B drugs in the outpatient department.

ASC Payment Updates

For CY 2015, ASC payments will increase by 1.4 percent, accounting for the MFP-adjusted CPI-U update factor, which accounts for inflation.

Partial Hospitalization Program (PHP) Rates

CMS will update the two payment rates for CMHCs and the two payment rates for hospital-based PHPs. For community health centers the final CY 2015 APC geometric mean per diem cost will be $100.15 for Level I (three services) and $118.54 for Level II (four or more services). For hospital-based PHPs, the final CY 2015 APC geometric mean per diem cost will be $185.87 for Level I and $203.01 for Level II.

End-Stage Renal Disease

The finalized provisions in End-Stage Renal Disease (ESRD) Prospective Payment System rule introduce new quality and performance measures for outpatient dialysis facilities; moreover, the rule incorporates in 2017 a Standardized Readmission Ratio, which assesses the rate at which ESRD dialysis patients return to an acute care hospital within 30 days of discharge from an acute care hospital.

Other Policy Changes

CMS has finalized an internal process, to be used in limited circumstances, that will allow CMS to recover overpayments from erroneous payments made by Medicare Advantage (MA) organizations or Part D prescription drug plan sponsors; CMS has also finalized an appeals process for MA organizations and Part D sponsors to seek review of CMS' determination that the payment data are erroneous. The appeals process will have three levels of review that would include reconsideration, an informal hearing and an Administrator review.

CMS also finalized a proposal that requires the physician certification only for outlier cases and long-stay cases of 20 days or more. A hospital admission order will continue to be required for all inpatient admissions when a patient has been formally admitted as an inpatient of the hospital.

The final rule is slated to be published in the Federal Register on Nov. 6. The provisions in the rule will generally take effect on Jan. 1, 2015, and the public comment period will close on Dec. 30, 2014.

More information on the rule can be found in a CMS factsheet that accompanies the rule's release.

5. Reports

OIG Releases Report on FDA Computer Network; Finds Vulnerabilities for Possible Future Data Leaks

In an effort to improve network security and prevent information security breaches, the Department of Health and Human Services' Office of the Inspector General (OIG) unearthed several vulnerabilities in the Food and Drug Administration's (FDA) computer network -- including error messages revealing sensitive system information and lack of assessments on all external servers -- that it warns would lead to unauthorized disclosure of FDA data and mission-detailed critical systems' being made available. Specifically, OIG identified five cyber vulnerabilities on FDA's computer network, including: Web page input validation was inadequate, external systems did not enforce account lockout procedures, security assessments were not performed on all external servers, error messages revealed sensitive system information and demonstration programs revealed sensitive information. While OIG provided FDA with a more detailed account of its findings and offered suggestions for closing security gaps, it also concurrently published a scrubbed version of the report for the public on Oct. 21. "In general, we recommended that FDA fix the Web vulnerabilities identified, implement more effective procedures to protect its computer systems from cyber-attacks, and periodically assess the security of all its Internet-facing systems," OIG said in the report. The report comes a year after a wide-scale security breach involving an FDA system occurred that exposed sensitive information in 14,000 user accounts; the findings also come as FDA struggles to address cybersecurity issues that could potentially affect the safety and efficacy of medical devices.

OIG Report: Medicare Paid for HIV Drugs for Deceased Beneficiaries

In a report released Oct. 31 by the Department of Health and Human Services' Office of the Inspector General (OIG), the agency found that Medicare paid for HIV drugs for over 150 deceased beneficiaries in 2012. This occurred because CMS pays for drugs that have dates of service within 32 days of a beneficiaries' death; OIG found that this calendar loophole cost CMS approximately $300,000 in 2012. While the lost dollars are a fraction of total Medicare drug spending, if the rate of paying for the drugs after death is the same for the larger Part D program of 37.9 million beneficiaries, then Medicare would have paid for 436,700 dead beneficiaries' drugs in 2012. The report also noted that most of these drugs were dispensed by retail pharmacies. OIG recommended that CMS change its practice of paying for drugs that have a date of service within 32 days after the beneficiary's death and should eliminate or -- if necessary for administrative processing issues -- shorten the window in which it accepts prescription drug event (PDE) records for drugs dispensed after a beneficiary's death. Considering the enormous number of Part D drugs, OIG said that a change in practice would affect all Part D drugs and could result in significant cost savings for the program and for taxpayers.

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