Research-Related Payments and the Physician Payment Sunshine Act: How Reporting Works and What Applicable Manufacturers Should Consider

The Centers for Medicare & Medicaid Services on February 1, 2013, published long-awaited rules (the “Rules”) detailing manufacturers’ and group purchasing organizations’ reporting requirements under Section 6002 of the Patient Protection and Affordable Care Act, otherwise known as the Physician Payment Sunshine Act. This Alert is the second in Duane Morris’ series of Alerts on the new Sunshine Act reporting requirements, and addresses the unique reporting requirements for applicable manufacturers’ making payments or transfers of value related to clinical research and pre-clinical research. The Rules contain different reporting requirements for these research-related payments, so applicable manufacturers may want to analyze their relationships now in preparation for the August 1, 2013, data collection start date.

Click here to read more about the Rules and what every applicable manufacturer should know about reporting research-related payments.

CMS Awards Loans to First Seven CO-OPs

On February 21, 2012, CMS announced its first award of repayable loans to seven Consumer Operated and Oriented Plans (CO-OPs). The awards will help CO-OPs establish private, non-profit, consumer-governed health insurance companies with the goal of expanding health insurance options for consumers and small businesses. The CO-OPs will eventually operate in each states’ health insurance exchange under the Affordable Care Act, but will also offer plans outside of the exchange. Starting on January 1, 2014, the first seven CO-OPs will become operational in eight states.

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CMS Finalizes Rules Regarding Eligibility for Medicare Prescription Drug Subsidy

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.

Proposed Physician Payment Disclosure Rule Published

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.

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CMS Issues Final Rule on ACA’s New Medical Loss Ratio

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.

CMS Announces Coverage of Preventive Services to Reduce Cardiovascular Disease

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.

OIG’s 2012 Work Plan For Nursing Facilities: Same Fraud, Different Enforcement

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.

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Bundled Payments for Care Improvement Initiative Announced

On August 23, 2011, the U.S. Department of Health and Human Services announced the Bundled Payments for Care Improvement Initiative (“Initiative”). Developed by the Center for Medicare and Medicaid Innovation, the Initiative is designed to give providers “new incentives to coordinate care, improve the quality of care and save money for Medicare.” For providers participating in the Initiative, Medicare will bundle payments for a package of services provided during an episode of care instead of paying separately for each individual service provided. Four different models of bundled care are available. Providers can apply to participate in the program and will be able to choose which episodes of care and services will be bundled together. To apply, providers must submit a Letter of Intent by September 22, 2011 or November 4, 2011 and a completed application by October 21, 2011 or March 15, 2012, depending on which model of the Initiative they choose.

For more information please go to http://www.hhs.gov/news/press/2011pres/08/20110823a.html and http://www.innovations.cms.gov/areas-of-focus/patient-care-models/bundled-payments-for-care-improvement.html#.

CMS and HHS Release Final Rules Affecting Payment to Inpatient Rehabilitation Facilities and Skilled Nursing Facilities

On August 1, 2011, the Centers for Medicare & Medicaid Services (CMS) and the U.S. Department of Health and Human Services (HHS) released a Final Rule updating the prospective payment rates for inpatient rehabilitation facilities (IRFs). The rule also establishes a program that reduces the annual increase factor by 2 percent for failure to report quality data to HHS starting in 2014. The Final Rule implements section 3004 of the Affordable Care Act and will become effective on October 1, 2011.

The Final Rule affecting IRFs was published in the Federal Register on August 5, 2011 and can be found here: http://www.gpo.gov/fdsys/pkg/FR-2011-08-05/pdf/2011-19516.pdf.

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CMS Transmittal Clarifies that Critical Access Hospitals are Included in CMS Laboratory Demonstration Project

On July 29, 2011, CMS issued Transmittal 78 clarifying that critical access hospitals (CAH) are included in CMS’ laboratory demonstration project for certain complex diagnostic tests. Under standard rules, payment made for tests provided by a laboratory working under arrangement with a hospital or CAH would ordinarily be in the form of a bundled payment to the hospital or CAH, and not directly to the laboratory. However, the Affordable Care Act requires that CMS conduct a demonstration project that will allow laboratories to receive a separate, direct payment for certain complex tests. The demonstration project begins January 1, 2012 and continues for two years or until the $100 million in funding is exhausted. Transmittal 78 rescinds and replaces Transmittal 74 dated July 15, 2011.

To read Transmittal 78, please go to https://www.cms.gov/transmittals/downloads/R78DEMO.pdf.