Health Law Informer

The recent Medicare Payment Advisory Commission (“MedPAC” or “Commission”) report should serve as a shot across the bow to telehealth advocates seeking broader Medicare coverage of telehealth. In reading the telehealth chapter, it is clear to me that the MedPAC commissioners are not fully sold on telehealth because, among other reasons, they recommend that the Medicare program proceed cautiously before any expansion of the telehealth benefit. The report also makes certain conclusions that are sure to vex many in the telehealth community.

For those not familiar with MedPAC, it is an independent congressional agency that advises Congress on Medicare-related issues, and it is influential in lawmakers’ consideration of Medicare issues.  By way of quick background, the 21st Century Cures Act of 2016 required the Commission to provide information regarding: 1) the extent to which Medicare covers telehealth; 2) the extent to which commercial insurers cover telehealth; and 3) ways in which the telehealth coverage policies of commercial insurance plans may be incorporated into the Medicare program. This required the Commission to do a broad-reaching examination of the telehealth sector beyond Medicare.

As a preliminary matter, the Commission notes that in 2016, 108,000 beneficiaries accounted for approximately 300,000 telehealth visits totaling $27 million in reimbursement under the Medicare physician fee schedule. Most of the services were basic physician office and mental health services.  More interesting was the Commission’s observation that Medicare beneficiaries using telehealth tended to be under the age of 65, Medicare/Medicaid dual eligibles, and “to disproportionately have chronic mental health conditions.”

Continue reading…

Word spread quickly Monday (December 20, 2016) about CMS’ issuance of final regulations (to be published in the Federal Register on January 3, 2017) rolling out new mandatory bundled payments models for Acute Miocardial Infarction (AMI), Coronary Artery Bypass Graft (CABG), Surgical Hip and Fracture Treatment (SHFFT), a Cardiac Rehabilitation (CR) incentive model and Track 1+ Accountable Care Organizations. Speculation that President-elect Donald Trump’s nominee for HHS secretary, Rep. Tom Price, would move to roll the regulations back spread just as quickly.

The new regulations mandate bundled payment models (covering the period from admission to ninety days post-discharge) for AMI and CABG in 98 geographies covering 1,120 hospitals; for SHFFT in the 67 geographies where the Comprehensive Joint Replacement (CJR) has already been mandated covering 850 hospitals and for CR in 90 geographies covering 1,320 hospitals. CMS’ chart of geographies covered by each program is set forth here. The AMI, CABG and SHFFT programs give participant clinicians the opportunity to be excluded from Medicare and CHIP Reauthorization Act of 2015’s (MACRA) Medicare Incentive Payment System (MIPS) and to qualify under MACRA’s Advanced Alternative Payment Model (AAPM). Continue reading…

On September 8, 2016, CMS announced in its blog that it will allow physicians to select their level of participation for the first performance year of the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”) Quality Payment Program, which begins January 1, 2017. Importantly, during the first performance year (2017), “[c]hoosing one of these options would ensure [physicians] do not receive a negative payment adjustment” under MACRA in 2019.

Under the Quality Payment Program physicians will fall under the Merit-Based Incentive Payment System (“MIPS”) if they do not qualify under the Advanced Alternative Payment Model (“Advanced APM”) option.  In 2019, physicians who are in the MIPS default option could face Medicare rate adjustments of up to 5% based on their performance under four weighted performance categories: quality (50%); resource use (10%); advancing care information (25%); and clinical practice improvement (15%). Advanced APMs include, for example, Track 2 and 3 MSSP ACOs; next generation ACOs; and bundled payment models, and physicians who qualify under the Advanced APM option earn a 5% incentive, are excluded from MIPS adjustments and receive higher fee schedule updates after 2024.

Recognizing that many physicians may face negative payment adjustments under MIPS as a result of participating under the Quality Payment Program, CMS is going to allow eligible physicians to “pick their pace of participation” and ensure they do not receive such negative payment adjustments in 2019 by choosing one of four options for the first performance year:

1. Test the Quality Payment Program;
2. Participate for part of the calendar year;
3. Participate for the full calendar year; or
4. Participate in an Advanced APM in 2017.

The first three options fall under MIPS, while the fourth option falls under the Advanced APM. In the first option, physicians could “submit some data to the Quality Payment Program”, avoid negative payment adjustments and test the waters before broader participation in subsequent years. Under option two, the performance year could begin later than January 1, 2017, a physician practice “could qualify for a small positive payment adjustment”, and a physician would submit Quality Payment Program information for fewer days. The third option is ideal for those physician practices that are ready to participate beginning January 1, 2017 and who are able to submit a full year of quality data. Additionally, physicians “could qualify for a modest positive payment adjustment.” The fourth option would be viable for those physicians or physicians groups who treat enough Medicare beneficiaries and who receive enough of their Medicare payments through an Advanced APM (e.g., MSSP ACOs). Through the Advanced APM option, physicians/physician groups would “qualify for a 5 percent payment in 2019.” It remains unclear what the difference is between a “small” and “modest” payment adjustment. However, CMS may address this in the final rule along with how it will implement MIPS and the Advanced APM. CMS will release the final rule by November 1, 2016.

For more information about MACRA, contact Chris Raphaely, Nicole Martin or a member of Cozen O’Connor’s Health Law team.

On July 23, 2015, the Third Circuit invalidated, as being contrary to the Medicare statute, the U.S. Department of Health and Human Services’ (HHS) Medicare wage index “reclassification rule,” 42 C.F.R. § 412.230(a)(5)(iii). That rule was designed to prevent (and did prevent) urban hospitals that had strategically reclassified as being rural from being reclassified again (based on their newly acquired rural status) to a particular urban area, to benefit from a higher Medicare standardized amount and wage index.

In Geisinger Community Medical Center v. Secretary United States Department of Health and Human Services, the hospital first reclassified, successfully, as a Section 401 hospital (i.e., an urban hospital that elects to be treated as rural). It then sought to reclassify, based on its newly acquired rural status, to the Allentown urban wage index area. The hospital estimated that such a reclassification would increase its Medicare reimbursements by approximately $2.6 million per year. The Allentown urban area is 27 miles from the hospital. To be reclassified to that area, the hospital had to rely on the relaxed 35 mile maximum distance applicable to rural hospitals; it would not qualify under the maximum 15 mile distance applicable to urban hospitals. The reclassification rule, however, prohibited Section 401 hospitals from reclassifying based on their acquired rural status.

The Third Circuit panel majority, under a Chevron Step One analysis, agreed with the hospital that HHS’ reclassification rule is unlawful. It specifically held that the statutory text of Section 401 unambiguously requires HHS, through broad and mandatory language, to treat Section 401 hospitals like hospitals that are actually located in rural areas. The reclassification rule, therefore, unlawfully prevented the Section 401 hospital from being considered as a rural hospital in its application to reclassify to a different wage index area.

On July 7, 2015, U.S. Reps. Mike Thompson, Gregg Harper, Diane Black, and Peter Welch announced the introduction of a new version of the July 2014 telehealth legislation (H.R. 5380) called the Medicare Telehealth Parity Act of 2015 (H.R. 2948) (the “Act”). The Act has already been referred to each of the House Energy and Commerce Committee and the House Committee on Ways and Means.

According to Congressman Thompson’s press release, this Act would phase in and expand upon existing telehealth services under Medicare, by, among other changes:

• Removing the geographic barriers under current law and allowing the provision of telehealth services in rural, underserved, and metropolitan areas;

• Expanding the list of providers and related covered service that are eligible to provide telehealth services to include respiratory therapists, physical therapists, occupational therapists, speech language pathologists, and audiologists;

• Allowing remote patient monitoring for patients with chronic conditions such as heart failure, chronic obstructive pulmonary disease, and diabetes; and

• Allowing the beneficiary’s home to serve as a site of care for home dialysis, hospice care, eligible outpatient mental health services, and home health services.

For quite some time reimbursement barriers prevented the expanded use of telehealth/telemedicine under Medicare beyond reimbursement for limited services, limited modes of telehealth, and the “originating site” restriction. Over the last few years, legislation expanding access and reimbursement under Medicare for telemedicine/telehealth services has been introduced, but never passed. This time could be different as the legislation has not only bipartisan support, but also the support of industry groups, including among others, the American Telemedicine Association and the American Heart Association. Stay tuned for additional updates regarding the Act. For further information, contact J. Nicole Martin or any member of Cozen O’Connor’s healthcare law team.

Somehow, although certainly not from a clear reading of the Medicare statute, there was long a perceived rule that Medicare would only cover certain services if the patient was making measurable improvement. This created the perverse circumstance that a provider was discouraged from delivering services that would maintain a patient’s current health level even if the absence of those services would result in the patient declining and then needing even greater services.

Through the hard work and perseverance of six named individual plaintiffs, led by Glenda Jimmo of Vermont, and seven advocacy organizations, the perceived “improvement rule” has been struck down.  (For information on the settlement of the case and the legal ramifications, see information available through the Center for Medicare Advocacy. That’s the good news given the importance of keeping certain patients from getting worse, the bad news is that the settlement of the Jimmo case is not widely enough known.

Reports suggest that claims for skilled maintenance services are still being denied, or, in many instances, providers do not even offer these services to patients based on the assumption that reimbursement will be withheld. As a result of the Settlement, CMS agreed to embark on an education campaign around this ruling. That educational effort will need to be redoubled to get the message out, especially given the reality that many service providers themselves think only in terms of patient improvement and not maintenance, as improvement has long been the primary measure of their effectiveness.

Earlier this week, the Center for Medicare Advocacy convened a group of providers and patient advocates to identify barriers to implementing the Jimmo decision and how to circumvent them. Stay tuned for more!

Tomorrow, the Centers for Medicare and Medicaid Services (“CMS”) will publish final regulations (“Final Rule”)  for its flagship pay-for-performance program, the Medicare Shared Savings Program, in the Federal Register. The Final Rule generally applies to performance years 2016 and beyond and the second three year “agreement period” for the over 400 accountable care organizations (“ACO”) currently in the program.

Stakeholders watched very closely the development of the Final Rule, so they can now begin sizing up future opportunities with some certainty and determine the longer term complexion of the program itself. The regulations contained in the Final Rule were published in proposed form in December 2014, and, the Final Rule adopts most, but not all, of what CMS initially proposed.  It continues the pattern of easing CMS’ ultimate push towards the two-sided risk model for most, if not all, ACOs and contains adjustments that many will consider to be favorable to ACOs.

Among the most significant developments is one in which, as proposed, ACOs that are currently in their first three year agreement period with CMS for participation in the program’s “upside only” risk model, Track 1, will be permitted to remain under the same model for another three years. This covers the majority of ACOs currently in the program. Significantly, however, CMS declined to institute the 10% cut (from 50% to 40%) to the Maximum Savings Rate for the second term Track 1 ACOs that it proposed last December.  The Final Rule comes none too soon for the first set of Track 1 ACOs who will have to make a decision whether or not to re-up for another three years in the program before the end of 2015.

In the other major structural change to the program, CMS, as it proposed to do, created a third double-sided risk, Track 3, for more highly developed ACOs desiring to trade greater upside opportunity (up to a 75% share of savings generated) for greater risk (up to 75% of losses) with both savings and losses being subject to a cap of 15% and 20% of benchmark, respectively. The new track includes a prospective beneficiary assignment model as opposed to the retrospective model that will continue to be used in Tracks 1 and 2. CMS also gives ACOs who choose the new track the option to waive Medicare’s three day hospital stay requirement for reimbursement of skilled nursing services. CMS stated that it will be considering additional waivers in areas like tele-health for Track 3 ACOs in the future.

CMS also included many technical adjustments to the program, some of which will have a significant impact on how the program and ACOs operate. Among the more significant are the following:

• Adjusting the savings benchmark calculation so second term ACOs that generated savings in their first term are not “penalized” by tougher savings targets in the second term as a result;
• Track 2 and Track 3 ACOs will be given new options for setting Minimum Savings and Loss Rates;
• Greater emphasis on primary care services provided by non-physician practitioners such as licensed nurse practitioners in the beneficiary assignment process;
• Enhanced information in the aggregate data reports supplied to ACOs and the inclusion of patients who had one primary care visit with an ACO in the assignment period even if they were not
  preliminarily assigned to the ACO in the aggregate reports supplied to Track 1 and 2 ACOs; and
• A streamlined data opt-out process in which (i) beneficiaries opt out of data sharing only by notifying CMS directly; and (ii) ACOs no longer have to wait thirty days after notifying beneficiaries of their opt-out rights before requesting detailed claims data on such beneficiaries.

The balance of 2015 and 2016 will be critical to the future of the Medicare Shared Savings Program as ACOs who currently participate in the program and others who are considering participation now have definitive guidance as to what the program will look like at least through 2018.

We wrote in late March about the U.S. House of Representatives passing SGR legislation intended to be a permanent cure to Medicare’s “doc fix” legislation. Yesterday evening, the Senate finally passed the SGR legislation to avoid a rate cut. Congress anticipates President Obama will sign the SGR legislation into law fairly quickly. Among other measures, the SGR legislation will amend Title XVIII of the Social Security Act, pertaining to Medicare, to:

• “remove sustainable growth rate (SGR) methodology from the determination of annual conversion factors in the formula for payment for physicians’ services; and
• revise the update in rates for 2015 and subsequent years.”

Notably, the SGR legislation extends the two-midnight Medicare rule through FY2015. The two-midnight Medicare rule only provides coverage for hospital stays when a beneficiary remains in a hospital over two midnights because the beneficiary requires care over this minimum period of time. Medicare generally denies coverage for care provided during shorter length hospital stays. The SGR legislation also extends the CHIP program through FY2017.

For further information contact Cozen O’Connor’s health care team.

On April 6, 2015, the Centers for Medicare & Medicaid Services (“CMS”) released a proposed rule that would extend provisions of the Mental Health Parity and Addiction Equity Act of 2008 (the “Mental Health Parity Act”) to Medicaid managed care organizations (“MCOs”) and the Children’s Health Insurance Program (“CHIP”). The Mental Health Parity Act requires health plans that provide mental health and substance abuse disorder benefits to ensure that any financial requirements (e.g., co-pays, deductibles) and treatment limitations (e.g., limitations on visits) applicable to those benefits are no more restrictive than the requirements or limitations applied to medical/surgical benefits. The proposed rule was published in the Federal Register on April 10, 2015 at 80 Federal Register 19418. (Proposed rule). Comments to the proposed rule are due on June 9, 2015.

The proposed rule was drafted to ensure that all Medicaid beneficiaries who receive benefits through MCOs or under alternative benefit plans would have access to mental health and substance use disorders benefits regardless of whether they received those benefits through an MCO or another system. In addition, the proposed rule would also apply to CHIP, whether the care is provided through an MCO or a fee-for-service program.

Presently, a number of states that provide medical benefits through Medicaid MCOs carve out mental health and substance abuse services through other arrangements, which can include prepaid inpatient health plans (“PIHPs”), prepaid ambulatory health plans (“PAHPs”), or even fee-for-service. Under the proposed rule, states would continue to have flexibility in selecting different delivery systems to provide services to Medicaid beneficiaries, but would have to ensure that enrollees of a Medicaid MCOs receive the benefit of mental health and substance abuse parity when provided through these alternative models. States, for example, would be required under the proposed rule to include contract provisions requiring compliance with the Mental Health Parity Act in all applicable contracts with Medicaid MCOs and entities providing services through alternative arrangements such as PIHPs and PAHPs. Further, states would have to provide CMS with evidence of compliance with the Mental Health Parity Act in their provision of mental health and substance services to Medicaid beneficiaries.

In addition, the proposed rule would require Medicaid, MCOs, PIHPs, PAHPs and other alternative benefit plans to make their medical necessity criteria for mental health and substance abuse disorder benefits available to any enrollee or contracted provider upon request. Such Medicaid plans must also make available to enrollees the reason for any denial of reimbursement for services related to mental health and substance use disorder benefits.
For further information contact the author Gregory M. Fliszar (Philadelphia, PA) or other members of Cozen O’Connor’s healthcare team.

In a historic bipartisan moment, the U.S. House of Representatives passed a nearly 300-page bill that is intended to “repeal the Medicare sustainable growth rate [“SGR”] and strengthen Medicare access by improving physician payments and making other improvements.” The legislation, titled the Medicare Access and CHIP Reauthorization Act of 2015, which is referred to as the Medicare “doc fix”, is the result of ongoing bipartisan efforts to resolve an unpopular physician reimbursement system that if not overridden each year would cut Medicare doctor’s pay by a notable percentage. The annual reimbursement cut would occur as required under the federal Balanced Budget Act of 1997 (the “BBA”), if not for the annual fixes set into motion by Congress. In a March 25, 2015 letter from the Congressional Budget Office (“CBO”) to House Speaker Boehner, the CBO explained that the BBA established the SGR formula “to ensure that real—that is, adjusted for inflation—spending per [Medicare] beneficiary for physicians’ services would grow on average at a rate of increase in gross domestic protect per capita minus the expected rate of increase in productivity for the economy as a whole.”

According to news outlets and press conferences, President Obama is ready to sign the bill once the Senate passes it. In the CBO’s letter to House Speaker Boehner, it estimated that this bill will increase:

• The federal budget deficits by $141 billion;
• Direct spending by approximately $145 billon; and
• Revenues by approximately $4 billion.

Under the Bill, Medicare’s payment rates for services on the physician fee schedule would increase by 0.5 percent a year for services furnished through 2019.  From 2019 through 2025 payments will remain the same but Medicare doctors will be eligible for merit-based bonus payments consistent with Medicare initiatives such as care models that shift away from fee for services.

Many expected the Bill to pass the Senate on Friday, March 27th but the Bill was not put up for a vote and Senate Minority Leader Harry Reid and Majority Leader Mitch McConnell said the bill will not get a vote until mid-April when the Senate returns from its recess.  CMS has provided notice that they will be able to hold payment for 14 calendar days to avoid a rate cut.

For further information contact Cozen O’Connor’s health care team.  We will continue to monitor and provide updates.