On May 3, 2012, the Centers for Medicare and Medicaid Services (CMS) officially announced that it will delay data-collection and reporting requirements under the Patient Protection and Affordable Care Act’s (ACA) Physician Payments Sunshine Act (the “Sunshine Act”), due in part to the large number of comments received in response to CMS’s December 19, 2011, proposed rules. Data collection by CMS will not start until at least January 1, 2013. 

The Sunshine Act imposes two reporting requirements:
(1) Covered manufacturers must annually report payments or gifts to physicians or teaching hospitals; and
(2) Covered manufacturers and group purchasing organizations must annually report physician ownership and investment interests.

Although the Sunshine Act does not require report submissions until March 31, 2013, the first reporting period will cover payments made during fiscal year 2012. Thus, even though CMS will not promulgate final rules until later this year, covered manufacturers and group may want to create internal procedures to collect the necessary data as soon as possible. 

On January 17, 2012 the Centers for Medicare & Medicaid Services (“CMS”) adopted as a final rule changing Medicare’s Extra Help Program.  The Extra Help Program is a prescription drug coverage low-income subsidy created through the Affordable Care Act (“ACA”).  Effective January 18, 2012, the final rule incorporates the ACA’s changes to the Extra Help Program by extending eligibility for one year after the death of a beneficiary’s spouse that would otherwise decrease or eliminate the subsidy.  The final rule also implements changes to the Medicare Improvements for Patients and Provider Act of 2008 by excluding from a resource (for purposes of Extra Help eligibility) the value of life insurance policies or income for food, shelter, and certain household bills.   

Read the full notice from the federal register here.    

The Centers for Medicare and Medicaid Services (“CMS”)  released its proposed rule regarding the required reporting of device, biologics and pharmaceutical manufacturer payments to physicians on December 14, 2011.  The proposed rule includes templates for physicians and manufacturers to use when logging payments and gifts.

On October 20, 2011, the federal government released final rules for the formation and operation of accountable care organizations (ACOs) under the Medicare Shared Savings Program (MSSP).  ACOs represent a key component of the Patient Protection and Affordable Care Act, the healthcare reform legislation enacted in 2010.  In connection with the release of the final rules by the Centers for Medicare and Medicaid Services (CMS), the Internal Revenue Service (IRS) issued a new Fact Sheet (FS-2011-11), “Tax-Exempt Organizations Participating in the Medicare Shared Savings Program through Accountable Care Organizations,” that provides additional information for IRC Section 501(c)(3) organizations, such as tax-exempt hospitals, that will be participating in the MSSP through an ACO.

The Centers for Medicaid & Medicare Services (“CMS”) recently released a final rule establishing the new medical loss ratio requirements under the Affordable Care Act (“ACA”).   Under the ACA, individual and small group market insurers are required to spend at least 80 percent of premium dollars on medical care and quality improvement, and large group market insurers must spend at least 85 percent of premium dollars on the same services.  The final rule describes the technical process for calculating medical loss ratio and also provides details on insurers’ annual medical loss ratio reporting requirements, as well as the ACA’s requirement that insurers grant rebates to consumers in the event the insurer fails to meet the required medical loss ratio. 

Read the full text of the rule here, or HHS’ fact sheet on the ACA’s changes to medical loss ratios here. 

Medicare Recovery Audit Contractors (RACs) mine data using automated systems to detect and recover improper Medicare payments.  RAC audits pick up billing and coding errors and deny claims based on those errors.  In many instances, the service was provided and was billable.  In some cases, the coding error makes no difference in reimbursement, sometimes reimbursement should be higher, sometimes lower, but still reimbursable, under some code. In some cases, the RAC’s automated systems deny claims that were properly billed, because of software coding flaws.  RAC auditors don’t correct billing errors, they just take the money back.

Recently the Centers for Medicare and Medicaid Services (“CMS”) announced new coverage under the Medicare program for preventive services for the reduction of cardiovascular disease.  CMS’ decision details that Medicare will now cover one-to-one cardiovascular disease risk reduction visits that may include three components: (1) encouraging aspirin use; (2) high blood pressure screening for adults 18 years or older, and (3) intensive behavioral counseling to encourage healthy diets. 

The new coverage is part of a joint initiative between CMS and the Centers for Disease Control, the Million Hearts Initiative.  Read more about the initiative here, and access CMS’ entire coverage decision here. 

Two weeks ago, the Centers for Medicare and Medicaid Services (“CMS”) issued the final rule (“Final Rule”) for accountable care organizations (“ACO’s”).  CMS released the Final Rule after receiving more than 1,300 comments to the proposed regulations (“Proposed Rule”) published more than seven (7) months ago.  As compared with the Proposed Rule, the Final Rule contains a number of revisions designed to encourage more physicians to become involved with ACO’s, including the following:

·       Physicians are not required to be meaningful users of electronic medical records (“EMR”) as a condition of participating in an ACO, although EMR is now a quality measure and is weighted higher than others.  Essentially, CMS elected not to add an extra requirement to ACO participation, preferring instead to permit participating physicians to discover and decide for themselves how best to manage patient data and other information in order to provide coordinated care for their patients.

·       Allows prospective assignment of patients to ACO’s on a quarterly basis, rather than using a retrospective method for selecting patients to participate in an ACO, as had been originally proposed.  In the Final Rule, prospective assignment of patients is permitted in order that physicians shall know in advance which patients are in an ACO, thereby enabling physicians and patients to partner together in order to better address health problems, both in terms of objectives and how to achieve them.  In this regard, it should be noted that, according to the Final Rule, only persons enrolled in the Medicare fee-for-service program may be assigned to an ACO.

·       Eliminates participant risk in the first of the two (2) ACO shared-savings’ models.  The Proposed Rule had required that, after the first two (2) years, an ACO choosing the one-sided model (i.e., shared savings among participants without any sharing of losses) would transition into the two-sided model (i.e., shared savings and losses) during the third year.  However, the Final Rule provides for shared savings among the participants in the one-sided model during the entire initial agreement period with no sharing of losses in the third year.  The two-sided model, where participants share savings and losses for the entire initial agreement period (the first “year” of the initial agreement for ACO’s starting in 2012 will be to 18 to 21 months) continues to include risk- or loss-sharing for participants, but also offers them larger potential rewards than they would have received under the Proposed Rule.

·       Reduces from 65 to 33 the number of quality measures ACO-participating physicians must report.  The Proposed Rule required providers to report on 65 quality measures in five (5) categories so as to enable CMS to assess the quality of care furnished by ACO’s.  In response to the comments it received – the majority of which favored utilizing fewer quality measures in order to reduce reporting burdens and attain more focused and meaningful improvements to the Medicare program – CMS reduced to 33 in four (4) categories the required number of quality measures subject to reporting.  These categories are as follows:  (i) patient/caregiver experience; (ii) care coordination/patient safety; (iii) preventive health; and (iv) at-risk population that includes subcategories of reporting requirements regarding the following disease states:  diabetes, hypertension, ischemic vascular disease, and coronary artery disease.

·       Ensures that all ACO’s shall receive a share of any first-dollar savings generated to Medicare once a minimum amount of savings is achieved, known as the Minimum Savings Rate (“MSR”).  The MSR is on a sliding scale, ranging from 3.9% for ACO’s with 5,000-5,999 beneficiaries to 2% for ACO’s with 60,000 or more beneficiaries.

Finally, it should be noted that the Department of Justice and the Federal Trade Commission have issued a joint “Final Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program.”  This Final Statement addresses the application and enforcement of antitrust laws for ACO’s and supplements the Final Rule.  While the Justice Department and FTC promise to monitor the impact of ACO’s in order to protect competitive markets, they shall not require a regulatory antitrust review of ACO’s as had been originally mandated.  

Recently, the United States Department of Health and Human Services Office of Inspector General (“OIG”) published its Work Plan for fiscal year 2012 (“Work Plan”) and delineated focus points for nursing facilities and new enforcement in 2012.  The Work Plan is not much different than previous work plans with the exception of increased areas of enforcement, as well as a few new areas to be looked at by OIG. 

Expansion of CMS Never Events:  They’re Not Just For Medicare Or Just For Hospitals Anymore

In 2005 when “Never Events” were proposed for hospitals through the Deficit Reduction Act, no one knew what the overall effect would be on hospitals or patient care.  CMS later developed these and implemented these Never Events under the authority of the DRA to prevent Medicare payment to hospitals for certain “never events” or hospital acquired conditions (HACs) which were conditions that were high volume, involved higher payment, and which could be easily preventable.  Now, hospitals and other health care providers have to worry about Never Events in the Medicaid space.