HHS Ups The Ante: Announces Percentages And Time Frames On Goals For Medicare Pay-For-Value Efforts

Posted by Chris Raphaely on January 27, 2015
Accountable Care Organizations, Affordable Care Act, CMS, HHS, Medicaid, Medicare / No Comments

On January 26, 2015, the Secretary of the United States Department of Health and Human Services (“HHS”), Sylvia Mathews Burwell, announced two important goals for the Department:

  1. Increase the percentage of Medicare provider payments that are made through alternative payment models based on how well the providers care for patients, rather than the amount of care provided. The percentage goals for these alternative payment models are 30% by 2016 and 50% by 2018.
  2. Tie virtually all Medicare fee-for-service payments (85% in 2016 and 90% in 2018) to quality and value.

This announcement puts hard numbers on the goal to move away from traditional fee-for-service Medicare payments that has been stated generally since at least 2010 when the Affordable Care Act was enacted. By clearly delineating specific figures for alternative payment models, such as accountable care organizations and bundled payment arrangements, from those figures for payment methods, HHS has made it clear that providers should be thinking not just about different forms of payment but different forms of organizations and relationships with other providers. Alternative payment models generally require coordination among different types of providers who may not otherwise be related to each other.

While the announced goals focus on the Medicare fee-for-service system, it is clear that HHS intends the impact of these goals to be far broader. Ms. Burwell also announced the creation of a Health Care Payment Learning and Action Network to facilitate a public-private sector partnership to “continue to build on our work with state Medicaid agencies, private payers, employers, consumers and other partners,” while welcoming the fact that “our partners in the private sector have the opportunity to be even more aggressive” in establishing alternative payment models and pay-for-value compensation systems. On the same day as Ms. Burwell’s announcement, the Centers for Medicare and Medicaid Services released a fact sheet stating that it is taking action with a goal to spend “our health dollars” more wisely, citing the importance of the goal for patients, families, providers, tax payers, employers, states and insurance companies, and making it clear that HHS and CMS fully intend to have their efforts to transform health care delivery and payment systems to reverberate well beyond the Medicare program.

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CMS Releases Final Rule That Increases Difficulty of Medicare Enrollment

Posted by J. Nicole Martin on December 16, 2014
CMP, HHS, Medicaid, Medicare / No Comments

In early December, CMS released a final rule that implements certain provider (i.e., Hospitals, SNFs, physicians, etc.) and supplier (i.e., DME companies, etc.) enrollment requirements  (“Rule”). The goal of CMS’ implementation of the Rule is two-fold: to (i) “[s]trengthen program integrity;” and (ii) “help ensure that fraudulent entities and individuals do not enroll in or maintain their enrollment in the Medicare program.” The new requirements make obtaining and maintaining Medicare billing privileges for providers and suppliers more cumbersome.

For providers or suppliers treating Medicare patients, enrollment in the Medicare program is required in order to obtain Medicare billing privileges. A provider or supplier may enroll electronically using the Provider Enrollment, Chain, and Ownership System, known as PECOS, or by submitting a paper CMS enrollment form. CMS provides specific enrollment forms for institutional providers (CMS Form-855A: i.e., hospitals, SNFs); other providers (CMS Form 855-B: i.e., clinics/group practices); and physicians and other practitioners (CMS Form 855-I). Further, under Section 6401(a) of the Affordable Care Act, Medicare providers and suppliers that enrolled prior to March 25, 2011 are required to undergo a revalidation process in order to maintain their Medicare billing privileges, wherein the providers or suppliers essentially complete the applicable Medicare enrollment application as if they are a “new” provider or supplier enrollee. However, new enrollee providers and suppliers that submitted their enrollment applications on or after March 25, 2011 are exempt from this revalidation process. MACs are continuing to send out revalidation “requests” on a regular basis to enrollees until March 23, 2015.

The following selected updates to the provider and supplier enrollment requirements in the Rule parallel the recent trend of the federal government expanding its existing authority (i.e., the proposed rule to expand the OIG of the HHS’ exclusion authority) and cracking down on impermissible practices:

  •  “[a]llowing revocation of Medicare billing privileges if the provider or supplier has a pattern or practice of submitting claims that fail to meet Medicare requirements”;
  •  “expanding the instances in which a felony conviction can serve as a basis for denial or revocation of a provider[’s] or supplier’s enrollment”;
  • “if certain criteria are met, enabling [Medicare] to deny enrollment if the enrolling provider, supplier, or owner thereof had an ownership relationship with a previously enrolled provider or supplier that had a Medicare debt”;  and
  • “enabling [Medicare] to revoke Medicare billing privileges if [Medicare] determine[s] that the provider or supplier has a pattern or practice of submitting claims that fail to meet Medicare requirements.”

In addition, CMS clarified in the Rule that any final decision regarding the revocation of a provider’s or supplier’s Medicare billing privileges would come from the “CMS central office” rather than the provider’s or supplier’s MAC. CMS further explained that the re-enrollment bar does not apply to a provider’s or supplier’s failure to timely respond to a revalidation request or request for other information.

The regulations implementing this Rule will be effective February 3, 2015. For additional information regarding the new provider and supplier enrollment requirements under the Rule, contact Cozen O’Connor’s health law team.

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OIG Releases Proposed Gainsharing Regulation

Posted by Chris Raphaely on December 15, 2014
CMP, HHS, Medicaid, Medicare, OIG / No Comments

In early October, the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) released a proposed rule that included, among other provisions, a proposed gainsharing regulation (“Proposed Rule”), and a specific request for comments on a definition of what it means to “reduce or limit services” under the statutory prohibition against certain “gainsharing” arrangements among hospitals and physicians. The OIG’s goal with this Proposed Rule and subsequent final rule is to “interpret the statutory [gainsharing] prohibition broadly enough to protect beneficiaries and the Federal health care programs, but narrowly enough to allow low risk programs that further the goal of delivering high quality health care at a lower cost.” More specifically, the OIG seeks to implement a “narrower interpretation of the phrase “reduce or limit services.” Industry analysts are touting the final regulation as a potential game changer in the battle to deliver “high quality health care at a lower cost.”

The existing gainsharing civil monetary penalty statute (“Gainsharing CMP”) is a law that broadly “prohibits hospitals and critical access hospitals from knowingly paying a physician to induce the physician to reduce or limit services provided to Medicare or Medicaid beneficiaries who are under the physician’s direct care.” Violation of the Gainsharing CMP by a hospital that makes such payment, and a physician that in turn knowingly accepts the payment, results in CMPs that are no greater than $2,000 per each beneficiary for whom such payment is made.

Determining what does and what does not constitute a payment designed to reduce or limit services can be difficult, particularly because, as HHS has taken pains to point out, the statute technically prohibits payments from hospitals to physicians to limit any services, not just medically necessary services. However, as far back as 2005 the Medicare Payment Advisory Commission and the Chief Counsel to the OIG have supported gainsharing when safeguards are in place to evaluate risks posed by such programs, including “measures that promote accountability, adequate quality controls, and controls on payments that may change referral patterns,” and to date, the OIG has approved 16 gainsharing arrangements through the advisory opinion process.

More recently, under Section 3022 of the Affordable Care Act, the secretary of HHS established  waivers under the Medicare Shared Savings Program (MSSP) with respect to the Gainsharing CMP under certain conditions. These waivers have limited applicability as they apply only to accountable care organizations that participate in the MSSP. The final gainsharing regulations presumably will cover all hospitals and could potentially have a much broader impact upon hospital physician compensation arrangements. Overall, the Proposed Rule and the OIG’s request for comments on what should and should not constitute prohibited payments from hospitals to physicians to reduce or limit services is yet another example of how the regulatory  landscape is changing to adapt to a reimbursement model that is evolving from a fee-for-service dominated model to one in which pay-for-performance will play a much larger role.

The comment period closed under the Proposed Rule in early December, and the final rule is expected in 2015.


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With a New Year Rolls in a New OIG Work Plan

Posted by Robert A. Chu on December 12, 2014
ACA, HHS, HIPAA, Medicaid, Medicare, OIG / No Comments

Recently, the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) released its Work Plan for Fiscal Year 2015 (“Work Plan”).  The OIG protects the integrity of HHS programs by identifying fraud and abuse and by suggesting improvements to HHS programs.  The Work Plan informs the public of new and ongoing reviews that OIG plans to pursue during the current fiscal year.

For Fiscal Year 2015 and beyond, OIG intends to focus on emerging payment, eligibility, management, and IT systems security vulnerabilities in the ACA programs, such as the health insurance marketplace.  OIG stated that it would also focus on the efficiency and effectiveness of payment policies in inpatient and outpatient settings, for prescription drugs, and in managed care.

Some specific new items of note include: (1) identifying clinical laboratories that routinely submit improper Medicare claims, (2) reviewing the rate of and reasons for transfers from group homes or nursing facilities to emergency departments as a potential indicator of poor quality, (3) identifying Medicaid MCO payments made on behalf of deceased or ineligible beneficiaries, and (4) assessing the extent to which hospitals comply with the contingency planning requirements of HIPAA.

The Work Plan is a valuable resource annually published by the OIG for providers to identify potential compliance risk areas.

Cozen O’Connor recently published another blog of the Work Plan with the Work Plan’s specific focus on HIPAA and/or information technology that the OIG will examine and address during Fiscal Year 2015.

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Skilled Nursing Facility Reaches Largest Failure of Care Settlement in DOJ History

Posted by J. Nicole Martin on October 13, 2014
DOJ, HHS, Medicaid, Medicare / No Comments

On Friday October 10, 2014, the Department of Justice (DOJ) and the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) jointly announced a $38 million settlement with a skilled nursing facility (SNF), Extendicare Health Services Inc. (Extendicare) and its subsidiary Progressive Step Corporation (ProStep). Extendicare owns and operates 146 SNFs in eleven states. Prostep offers Extendicare residents occupational, physical and speech rehabilitation services.

The settlement stemmed from allegations in two qui tam cases: United States ex rel. Lovvorn v. EHSI, et. al. C.A. 10-1580 (E.D. Pa); and United States ex rel. Gallick et al., v. EHSI et al., C.A. 2:13cv-092 (S.D. Ohio). The allegations were that Extendicare (1) “billed Medicare and Medicaid for materially substandard nursing services that were so deficient that they were effectively worthless”; and (2) “billed Medicare for medically unreasonable and unnecessary rehabilitation therapy services.” Continue reading…

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CMS Approves Pennsylvania’s Medical Assistance (Medicaid) Waiver

Posted by J. Nicole Martin on September 08, 2014
Medicaid, Medical Assistance / No Comments

CMS approved Pennsylvania’s Medical Assistance (“Medicaid”) waiver request entitled Healthy Pennsylvania (“Waiver” or “Healthy Pennsylvania”) by letter dated August 28, 2014.  Governor Tom Corbett and the Pennsylvania Department of Welfare submitted the waiver application in February. The approval paves the way for a five-year demonstration project that begins on January 1, 2015 and is intended to “expand access to coverage to adults in Pennsylvania with incomes through 133 percent of the federal poverty level.” The Waiver includes changes that will be implemented through state Medicaid plan amendments and the demonstration project.

Waiver Priorities

  • Improving access;
  • Ensuring quality; and
  • Providing affordability.

Waiver Objectives

  • Promoting access to health insurance through the private insurance marketplace;
  • Encouraging healthy behaviors and appropriate care, including early intervention, prevention, and wellness; and
  • Increasing quality of care and efficiency of the health care delivery system.

Waiver Highlights (applicable to individuals enrolled in Medicaid and Healthy PA PCO)

  • Inclusion of a private coverage option, Healthy PA PCO, which will make coverage available through a private commercial market that will operate outside of the Pennsylvania’s federally-run exchange
  • Commercial insurance carriers, who are likely to be HealthChoices MCOs, will offer at least two health plans for individuals eligible for Healthy PA PCO
  • Inclusion of Medicaid plan options categorized as “low risk” or “high risk” (these plans are not yet finalized and the parameters will be subject to negotiation with CMS)
  • No premiums are required in year one
  • Monthly premiums are required in year two for eligible individuals who have incomes greater than 100% of the federal poverty level (up to 2% of their income with the ability to reduce the premium based on healthy behaviors)
  • Individuals enrolled in Healthy PA PCO and Medicaid will pay an amount equal to currently existing Medicaid copayments in year one of Healthy Pennsylvania’s implementation
  • Elimination of copayments, except for $8 co-payments for non-emergency visits to emergency rooms, beginning in year two of Healthy Pennsylvania’s implementation

The Hospital & Healthsystem Association of Pennsylvania recently announced its support of Healthy Pennsylvania’s goals. Despite those who oppose Healthy Pennsylvania because among other reasons, it is viewed as not being the “traditional” Medicaid expansion as envisioned by the Affordable Care Act, Governor Tom Corbett anticipates that Healthy PA PCO will increase access to health care for over 600,000 eligible Pennsylvanians. Notably, CMS did not approve the proposed work search requirement, which would have required certain adults to undertake work search activities in order to qualify and remain eligible for health coverage under Healthy Pennsylvania. According to CMS, the approval of Pennsylvania’s Waiver makes it one of 28 states, including the District of Columbia, to expand Medicaid.

For more information regarding the Waiver, please contact Mark Gallant, Chris Raphaely, or J. Nicole Martin.

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Is $210 Million Enough? How About $54.2 Million?

Posted by Ryan Blaney on June 25, 2014
Affordable Care Act, Fraud and Abuse, HHS, Medicaid, Medicare, OIG, Uncategorized / No Comments

Year #2 Report on Medicare Fraud Prevention System

On June 25, 2014, the Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services Office of Inspector General (OIG) issued and certified, as required by the Small Business Jobs Act of 2010 (SBJA) their second implementation year report  for the Fraud Prevention System (FPS) along with a press release.  By way of background, CMS is under pressure from Congress and the United States Government Accountability Office (GAO) to enhance their health care fraud, abuse and waste prevention and detection success through the use of predictive analytics technologies while at the same time monitoring the expenditures and costs by government contractors and auditors such as ZPICs to prevent fraud.  Last October, GAO published a Report concerning CMS’s Medicare Program Integrity titled, “Contractors Reported Generating Savings but CMS Could Improve Its Oversight.” 

CMS and OIG’s Report to Congress on the FPS responds to many, but not all, of GAO’s criticisms.  Here are a few of the noteworthy findings and observations in the Report:

  • CMS reports that they “identified or prevented” $210.7 million in Medicare payments attributed to FPS.  This is a return on investment of $5 to $1 for the second implementation year and an increase ROI from Year 1.
  • OIG disagrees with CMS’s use of “identified savings” to calculate the success of the FPS and instead recommends using “adjusted savings” as a measure of savings and return on investment related to the Department’s use of FPS.
  • Under OIG’s adjusted savings analysis, OIG only certified $54.2 million of the $210.7 million as attributed to the Department’s use of FPS. 
  • OIG found that the “Department’s use of its predictive analytics technologies resulted in a return on investment of $1.34 (not $5) for every dollar spent on the FPS.
  • Based on criticism received by OIG and GAO, CMS reported that they changed the methodology to require ZPICs (Zone Program Integrity Contractors) to submit provider-specific outcome data to be able to conduct more quality control reviews prior to reporting savings.
  • OIG disagreed with CMS and stated, “[A]lthough the Department has made significant progress in addressing the challenges of measuring actual and projected savings, its procedures were not always sufficient to ensure that its contractors provided and maintained reliable data to always support FPS savings.”  Interestingly, OIG initially included a much stronger statement but revised the final statement based on CMS’s objections.  The original statement was “[T]he Department could not ensure that its contractors always provided and maintained reliable data to support FPS savings.”   
  • CMS expects that future activities of the FPS will substantially increase savings by expanding the use of predictive analytics and modeling beyond identifying FRAUD and into areas of WASTE and ABUSE.   This will require more refined predictive models and modifications from insights from field investigators, policy experts, clinicians, and data analysts.  In Year 3, CMS will convene workgroups with federal agency, states, and private partners to develop and expand FPS’s capabilities.
  • In Year 3, CMS also will explore the cost-effectiveness and feasibility of expanding predictive analytics technology to Medicaid and the Children’s Health Insurance Program (CHIP).  CMS anticipates working with State Medicaid Agencies to train and explore opportunities for expanding predictive analytics. 

Practice Tip: CMS’s FPS is more fully integrated into the Medicare FPS payment system and allows CMS to monitor and deny individual claims in the prepayment stage.  ZPICs and other government contractors will continue to be the government’s “boots on the ground” but they will be armed with better information and real time data to investigate.  Providers need to take any and all inquiries by ZPICs seriously.  Anticipate more coordinated investigations by the FBI, ZPICs, States AGs, State Medicaid Fraud Agencies, and Federal agencies and faster freezing or rejections of provider claims.  Anticipate the expansion of FPS’s predictive analytics to the areas of waste and abuse. 


Please check back with the Health Law Informer Blog and Cozen O’Connor for additional analysis of CMS’s Second Implementation Year Report in the coming weeks. 

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CMS Solicits Comments on How to Impose Penalties for Failure to Comply with the MSP Act’s Reporting Requirements

Posted by Gregory M. Fliszar on December 19, 2013
Medicaid, Medicare / No Comments

On December 11, 2013 the Centers for Medicare & Medicaid Services (CMS) published an advance notice of proposed rulemaking concerning the circumstances under which civil money penalties may be imposed for failure to comply with Medicare Secondary Payer Act (the “MSP Act”) Section 111 reporting requirements.  Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 amended the MSP Act by establishing  mandatory reporting requirements for certain group health plans (GHPs) and for liability insurance (including self-insurance) no fault insurance and workers compensation (collectively NGHPs) arrangements.  The Section 111 amendments require GHPs and NGHPs to notify CMS when they pay a claim on behalf of a Medicare beneficiary.  Failure to comply with the reporting requirements resulted in a civil monetary penalty of $1,000 for each day of noncompliance.

The Strengthening Medicare and Repaying Taxpayers Act of 2012 (the “SMART Act”) amended the penalty provision of the Section 111 reporting requirements by stating that applicable plans that fail to comply with the reporting requirements may be subject to a civil monetary penalty of up to $1,000 per day of non-compliance.  Thus, the SMART Act made the penalty discretionary instead of mandatory and allowed for penalties below $1,000.  As a result,  CMS is soliciting public comments and proposals on the practices for which civil monetary penalties may or may not be imposed.  Specifically, CMS is seeking comments on how to define “noncompliance” with reporting requirements; what mechanisms and criteria should be used to evaluate whether a civil money penalty can be imposed; what methods should be used to determine the dollar amount of such a penalty; and what actions on the part of a primary payer would constitute a “good faith effort” to identify a Medicare beneficiary for purposes of reporting under the MSP Act.  Comments can be submitted to CMS until February 10, 2014.

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Ruminations on Observation: OIG Report Highlights Inpatient vs. Observation Status

Posted by Judy Mayer on August 22, 2013
Medicaid / No Comments

On July 29, 2013, the OIG released a memorandum report finding that Medicare paid more on average for short inpatient stays than for observation stays in 2012.  The report, Hospitals’ Use of Observation Stays and Short Inpatient Stays for Medicare Beneficiaries, OEI-02-12-00040, touches on observation versus inpatient status, which has been and continues to be a hot button issue.


Medicare beneficiaries receiving care at a hospital are classified as either inpatients or observation patients.  Observation patients are outpatients who receive treatments and assessments to determine whether they require further treatment as inpatients or can be discharged.  CMS policy provides that observation services are usually needed for 24 hours or less.   Continue reading…

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Screen Early, Screen Often: OIG Updates its Advice on How to Avoid Liability for Employing or Contracting with Individuals Excluded from Participation in Federal Health Care Programs

Posted by William P. Conaboy Jr. on June 03, 2013
Fraud and Abuse, Medicaid, Medicare / No Comments

On May 8, 2013, the Office of Inspector General (“OIG”) of the Department of Health & Human Services issued an updated Special Advisory Bulletin (the “Updated Bulletin”)[1]  on the effect of exclusion from participation in Medicare, Medicaid and other Federal health care programs (collectively “FHPs).  The Updated Bulletin, which replaces and supersedes guidance originally provided by OIG in a 1999 Special Advisory Bulletin (the “1999 Bulletin”), details OIG’s broad interpretation of the scope and effect of its exclusion authority under the Civil Monetary Penalties Law (“CMPL”).[2]  The Updated Bulletin addresses many of the questions OIG has received about exclusions and purports to convey insight gained from resolving self-disclosure cases since publishing the 1999 Bulletin. Continue reading…

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