In early April, Colorado joined multiple other states in passing a biosimilar substitution law that addresses the circumstances under which an FDA-approved interchangeable biosimilar product may be substituted for the prescribed biological product. The National Conference of State Legislatures (“NCSL”) reports that through the end of 2014, eight states have passed biosimilar substitution laws and a dozen or more states have bills pending in their current legislative sessions. Moreover, at least one State Board of Pharmacy (Idaho) has taken action on biosimilar substitution by proposing an amendment to the regulations governing the practice of pharmacy. Many of the state provisions focus on the type of notice required for biosimilar substitution, who must be notified of the substitution, and when that notice must be conveyed.
This is the fourth and final post in our series on the Medicare Access and CHIP Reauthorization Act (MACRA). Pub.L. No. 114-10. We’ve previously covered the repeal of the Sustainable Growth Rate (SGR) in our April 20th post, payment provisions and offsets in our April 21st post, and provisions relating to program integrity and fraud and abuse in our April 23rd post. In this post, we’ll be looking at other important provisions contained in MACRA, including the extension of CHIP funding through fiscal year 2017 and the advancement of interoperability in electronic health record (EHR) systems.
Section 106(a): Medicare Opt-Out and Private Contracts
Since 1998, Medicare has permitted physicians and certain other providers to enter into private contracts with Medicare beneficiaries under Part B and to bill for services without being limited by the upper payment limits established by Medicare. When providers make this “opt-out” decision, they also must agree to decline any reimbursement from Medicare for all Medicare beneficiaries for two years, except in cases of emergency or urgent care provided to a Medicare beneficiary with whom the provider does not have a private contract. MACRA allows private contracts between providers and Medicare beneficiaries to be automatically extended unless the provider furnishes the beneficiary with notice that the contract will not be extended 30 days prior to the expiration of the contract. Additionally, MACRA requires the Department of Health and Human Services (HHS) to make publicly available information regarding opt-out physicians. The information about opt-out physicians will include the number and specialties of opt-out physicians, as well as the proportion of opt-out providers billing for emergency or urgent care. HHS must post this information on its website and update it on an annual basis.
Section 106(b): EHR Interoperability
The Health Information Technology for Economic and Clinical Health Act of 2009 authorized Medicare and Medicaid to provide incentive payments to eligible hospitals and physicians who attest to “meaningfully using” certified EHR technology. Although the ostensible purpose of the Meaningful Use Program was to encourage physicians and hospitals to adopt EHR technology, the program also was used to drive a variety of quality delivery changes for these providers. While the incentives have accomplished the limited goal of expanding the use of EHR, the benefits have been limited due to ongoing problems with interoperability among EHR systems. (“Interoperability” refers to the capability of EHR systems to be able to use the information exchanged among systems based on common standards.) MACRA requires HHS to establish metrics by July 1, 2016, for measuring how hospitals and providers progress in moving toward the goal of widespread interoperability of EHR systems. HHS will have to submit a report to Congress if this goal has not been met by December 31, 2018. In this report, HHS would be required to make recommendations for achieving this goal, such as adjusting payments and de-certifying certain EHR technology. MACRA also requires the Meaningful Use Program to require attestations by eligible hospitals and physicians that they have “not knowingly and willfully taken action (such as to disable functionality) to limit or restrict the compatibility or interoperability of the certified EHR technology.” This is a standard in the Stark Law EHR exception and Anti-Kickback EHR safe harbor. Finally, HHS is also required to submit a report to Congress (within one year from the date of enactment of MACRA) on methods to aid providers in comparing and selecting certified EHR technology. Continue Reading
On Thursday April 16th, President Obama signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”). Pub.L. 114-10. In two previous posts, we discussed MACRA’s repeal of the Sustainable Growth Rate formula (the “SGR”) and physician payment reform, and the payment provisions and offsets established by MACRA. This third post will detail the Program integrity and fraud and abuse provisions of MACRA.
Section 101(e)(7): Promoting Alternative Payment Models – Study and Report on Fraud Related to Alternative Payment Models under the Medicare Program
Buried within Section 101, which is the provision repealing the SGR and authorizing various reforms to physician reimbursement, Subsection (e)(7) includes a required study and report on fraud related to alternative payment models under the Medicare Program. This study will be conducted by the Secretary of the Department of Health and Human Services (the “Secretary”) and examine the applicability of Federal fraud prevention laws to the items and services furnished to Medicare beneficiaries for which payment is made under an alternative payment model defined by MACRA. In addition, this study will identify aspects of those same alternative payment models that are vulnerable to fraudulent activity and consider the implications of waivers of federal fraud prevention laws in support of such alternative payment models.
Within two years of the enactment of MACRA, the Secretary is required to submit to Congress a report providing the results of this study, which will include recommended actions to reduce the identified vulnerabilities of the alternative payment models and, as appropriate, recommendations from the Inspector General of the Department of Health and Human Services (“HHS”) regarding possible changes in Federal fraud prevention laws to reduce those vulnerabilities.
Section 104: Empowering Beneficiary Choices Through Continued Access to Information on Physicians’ Services
Section 104 requires that beginning in 2015, the Secretary make publicly available on an annual basis, through a searchable database, information regarding physicians and, as appropriate, other eligible professionals (which are defined to include physicians, physical or occupational therapists, qualified speech-language pathologists, qualified audiologists, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, certified nurse-midwives, clinical social workers, clinical psychologists, and registered dietitians or nutrition professionals) on items and services furnished to Medicare beneficiaries.
Section 104 of MACRA requires the Secretary to provide at least the following types of information:
- The number of services furnished to beneficiaries of Medicare Part B by physicians or other eligible professionals (which may include information on the most frequent services furnished or groupings of services);
- Submitted charges and payments for services; and
- A unique identifier for the physician or eligible professional that is available to the public (e.g., NPI number).
Additional requirements of Section 104 include that the information made available under this Section must be searchable by at least:
- The specialty or type of physician or other eligible professional;
- Characteristics of the services furnished (e.g., volume or groupings of services); and
- The location of the physician or other eligible professional.
Beginning in 2016, the Secretary is required to integrate the information made available under this section on the Physician Compare website hosted by the Centers for Medicare & Medicaid Services (“CMS”).
This required publication of data will be similar to the 2012 Medicare Provider Utilization and Payment Data information made public by the Secretary in April 2014. As we discussed in a previous post dated April 10, 2014, HHS’s original and historic release of Medicare payment data last year was the result of multi-year litigation, which resulted in a federal judge overturning an injunction that had been in place since the late 1970s prohibiting HHS from disclosing information about Medicare payments to individual physicians.
Even recognizing the general merits of annual publication of this type of data, the information has the potential to cause confusion. For example, certain physicians, notably oncologists and retinal surgeons, dispense drugs through their practices. Because Medicare pays these physicians directly for these drugs, without a detailed look at the CPT codes in the published data, it appears at first glance that these physicians receive disproportionately large incomes from treating Medicare patients.
Another example of problems caused by this data is the publication of charges. Only those who follow reimbursement closely understand that charge data is almost meaningless. This is because very few patients pay providers based on charges, but rather payment is typically based on a fee schedule set by third party payors. As a result, providers set their charges based on a variety of measures. In some cases charges are very close to the payment rates, and in some cases they are set well above payment rates in order to recoup from a small number of charge-paying patients losses the provider incurs from private payor reimbursement. All this appears to have been irrelevant to Congress as it has now mandated annual publication of providers’ charge data. Continue Reading
Yesterday the HHS OIG, in collaboration with the Association of Healthcare Internal Auditors, the American Health Lawyers Association (AHLA), and the Health Care Compliance Association, released a guidance document entitled Practical Guidance for Health Care Governing Boards on Compliance Oversight (the Guidance). This publication follows two previous guidance documents published by the HHS OIG and AHLA in 2003 and 2007. Below we have summarized the top 5 takeaways from the latest guidance document. Continue Reading
This is the second post in our continuing series on the Medicare Access and CHIP Reauthorization Act (MACRA). Pub.L. No: 114-10. In addition to repealing the Sustainable Growth Rate (SGR), which was covered in our April 20th post, MACRA includes several other payment provisions and offsets totaling $39.5 billion in savings over ten years. This blog post highlights some of the key payment provisions and offsets in Title II and IV of MACRA:
Section 201: Extension of Work GPCI Floor
The Geographic Practice Cost Index (GPCI) adjusts Medicare payments for geographic variations in physicians’ costs of providing care. There are three GPCIs: Malpractice, Physician Work, and Practice Expense. MACRA would extend the 1.0 floor on the Physician Work GPCI until January 1, 2018. The 1.0 value represents the average across all geographic areas. By extending the 1.0 floor the GPCI extension would prevent cuts of up to 3 percent in areas with an index of less than 1.0. This would be in the localities where the labor cost would be lower than the national average or 1.0.
Section 204: Extension of Increased Inpatient Hospital Payment Adjustment for Certain Low-Volume Hospitals
MACRA also extends an inpatient hospital payment adjustment for low-volume hospitals through fiscal year 2017. A low-volume hospital is defined as a hospital with less than 1,600 Medicare discharges and more than 25 miles away from any nearby hospital. Section 1886(d)(12) of the Social Security Act requires adjustment for these hospitals, which is now extended through fiscal year 2017.
Section 205: Extension of the Medicare-Dependent Hospital (MDH) Program
Under the MDH program, Congress has provided a special payment rate to hospitals qualifying as a MDH hospital. To qualify, a hospital must be located in a rural area, have 100 beds or less, not be the “sole community hospital,” and have at least 60 percent of inpatient days or discharges covered by Medicare. They are paid on a blend of current the prospective payment system and cost. MACRA extends this favored reimbursement status through fiscal year 2017.
These provisions come as a relief to many rural hospitals and providers, which would have seen a decrease in their reimbursement if these provisions were not extended.
Section 221: Extension of Funding for Community Health Centers, the National Health Service Corps, and Teaching Hospitals
Funding for the Community Health Center (CHCs) program and the National Health Service Corps (NHSC) was set to expire at the end of September 2015. MACRA extends funding for these programs through fiscal year 2017, keeping the funding amounts for fiscal year 2016 and 2017 at the current fiscal year 2015 level. It also extends funding through fiscal year 2017 for the Teaching Health Center Graduate Medical Education Payment Program, which expanded residency training in community-based settings. It provides $60 million for direct and indirect graduate medical education (GME) payments to teaching health centers. Further, MACRA subjects the 2016 and 2017 funding to Public Law 113-235, which restricts the use of these funds for abortion services. Continue Reading
On April 16, 2015, President Obama signed into law, the “Medicare Access and CHIP Reauthorization Act of 2015” (MACRA), ending annual temporary patches and massive lobbying efforts since the late 1990s to prevent significant reimbursement cuts for physicians serving Medicare beneficiaries caused by the so-called Sustainable Growth Rate (SGR) formula. At the end, 392 Members of the U.S. House of Representatives and 92 Members of the U.S. Senate voted in favor of permanently replacing the Sustainable SGR formula in favor of a new system touted as promoting quality over volume.
MACRA also contains several provisions affecting reimbursement to other Medicare providers, program integrity, and fraud and abuse, as well as a mix of other important provisions including extension of the Children’s Health Insurance Program (CHIP). We will address these provisions in subsequent blog posts.
From the SGR “Patch” to MACRA
Health policy experts have long called for an end to the annual, or even sometime monthly, ritual of “patching” the SGR to avoid reimbursement cuts triggered by unsustainable growth in Medicare spending. While lawmakers were concerned about the unsustainability of the Medicare program due to costs that outpaced other economic indicators virtually every year, the notion of significantly cutting physician pay put legislators in an untenable situation, especially as the potential “fiscal cliff” increased well into double digit cuts.
The inevitability of Congressional intervention to hold physicians harmless from a SGR cut rose to new heights in 2013 during the annual rate-setting exercise for Medicare Advantage plans. The Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) was overruled amidst intense lobbying, including from senior members of the Senate, prior to the publishing the FY 2014 Medicare Advantage rule. The Actuary’s office had taken the position that the Medicare Advantage rates should be set on the premise that a SGR cut was actually taking place because the law mandated an automatic cut and Congress had not yet stepped in to patch it. In essence, any decision that relied on the assumption of the SGR cut actually taking place was now a matter of academics and not reality.
Although the SGR is now in the history books, it’s safe to assume that new tensions will arise as the need to control growth in Medicare spending continues amidst a rapidly evolving health care industry. Akin to how the ACA acted as a catalyst to nationalize certain payment and delivery reform trends, MACRA is likely to accelerate the current movement in health care towards value-based systems. Thus, stakeholders and policymakers are likely to focus even more on the evolution of payment and delivery reform initiatives due to their increasing relevance and scale.
The New Landscape for Medicare Cost Containment
The SGR tied Medicare physician spending to Gross Domestic Product growth in the overall economy, providing a benchmark that was supported at the time by health care economists. In reality, however, this measure had little to do with costs and quality in the health care system, and was not sustainable. MACRA replaces the SGR with a combination of automatic increases for physicians and incentives for them to participate in a variety of pay-for-performance programs and alternative payment models (e.g. medical homes and accountable care organizations).
Between 2015 and 2019, physicians in the Medicare program will receive an annual update of 0.5 percent. The base reimbursement rate will then hold steady at 2019 levels through 2025, while giving physicians the ability to supplement their reimbursement through payment adjustments in the newly created “Merit-Based Incentive Payment System” (MIPS) and participation in alternative payment models (APMs). Finally, starting in 2026 and beyond, physicians who receive a significant share of their revenues through an APM are eligible for one percent annual increases as opposed to 0.5 percent updates for those not participating in APMs.
|New Reimbursement Pathways|
|2015 – 2019||0.5% annual update|
|2019 – 2025||0% annual update||(MIPS)Negative payment adjustment capped at 4% – 9% (depending on year) for lowest performers. Positive payment adjustment capped at 3x the respective cut amount for that year for highest performers.||(APMs)Automatic 5% annual bonus for participation in qualifying APMs (exempt from MIPS and some EHR “meaningful use” requirements).|
|2026 -||0.5% annual update||(APMs)1% annual update (in lieu of 0.5% update)|
One way to view the new future for Medicare physician cost containment efforts is that it better aligns with existing initiatives to control costs within the context of improving quality. For example, from 2019 until 2025, reimbursement rates are held constant with no automatic increases or decreases. This leaves most physicians with two choices: 1) be subject to payment adjustments through MIPS, or 2) participate in qualifying APMs.
MIPS aims to streamline three incentive programs: 1) the Physician Quality Reporting System (PQRS); 2) the Value-Based Modifier (VBM); and 3) Meaningful Use for electronic health records. Assessments that eventually make up a physician’s composite score will be based on four categories: 1) quality; 2) resource use; 3) meaningful use of electronic health records; and 4) clinical practice improvement activities.
Those physicians with a composite score in the bottom quartile, as compared with a predetermined performance threshold (based on average of last year’s MIPS scores), will receive reimbursement cuts up to the cap set for each year (4% in 2019, 5% in 2020, 7% in 2021, and 9% in 2022). Negative and positive payment adjustments will be ratcheted up or down in a proportional manner for those scores closer to the threshold.
For physicians with a composite score above the threshold, they will receive a positive payment adjustment up to a maximum of three times the annual cap for the negative adjustments. Additionally, physicians receiving the top 75% of all scores above the threshold will receive an additional positive payment adjustment, allocated using a linear distribution formula. In essence, this allows for a greater number of physicians to be eligible for incentive payments, even if the vast majority of them are above the threshold score. Continue Reading
Next Thursday April 23rd at 12pm EST, Mintz Levin attorneys Dionne Lomax and Steve Weiner will be presenting a webinar, moderated by Bruce Sokler, on trends in antitrust enforcement in health care. Dionne and Steve will discuss recent antitrust enforcement initiatives by the Federal Trade Commission and Department of Justice Antitrust Division, how antitrust should affect different participants in the health care market as they develop and execute strategic plans (in light of changes in reimbursement, the requirements and incentives of the Affordable Care Act, and state-level reforms), as well as where antitrust enforcement in health care may be headed. You can register for the webinar by clicking here. We hope you can join us!
As states attempt to control increasing healthcare costs, many Medicaid programs are seeking approval from the Centers for Medicare & Medicaid Services (CMS) to implement Medicaid managed care programs. In 2013, nearly 68 percent of Medicaid beneficiaries were enrolled in some form of managed care, and this percentage is only expected to increase through 2016.
Federal regulations appearing at 42 CFR § 438.6(a) require that CMS review and approve all state Medicaid managed care contracts. In an effort to increase transparency, CMS recently released its State Guide to CMS Criteria for Managed Care Contract Review and Approval (State Guide), outlining the standards and criteria used by the applicable CMS Regional Office to review state Medicaid contracts with managed care entities. Specifically, this State Guide lists over 350 criteria or contract requirements, organized into 11 categories, that the Regional Office staff will specifically look for in approving state contracts. For each criterion, CMS provides the statutory or regulatory reference and which type of managed care entity it applies to.
Historically, CMS Regional Offices review and approve state managed care contracts against a current version of the “CMS Checklist for Managed Care Contract Approval (checklist).” Prior OIG Reports have found that CMS Regional Office staff failed to consistently utilize the entire checklist prior to approving contracts. The new State Guide appears to update, clarify, and better organize many of the same requirements in the checklist, which will likely prove beneficial for states, CMS, and managed care plans in developing and reviewing contracts.
On March 30, 2015, CMS released guidance addressing Medicare and Medicaid coverage for biosimilar drug products. The Medicare/Medicaid coverage guidance comes on the heels of the FDA’s landmark approval of a biosimilar version of the reference cancer drug Neupogen. Our colleague Tom Wintner previously wrote about the FDA’s review process for biosimilars, and the expected action on this product.
In its first biosimilar approval, the FDA found that the new product, Zarxio, was in fact a biosimilar to Neupogen and cleared it for use for the same indications as Neupogen. Zarxio’s manufacturer, Sandoz, did not seek, and the FDA did not determine, however, that Zarxio is interchangeable with Neupogen — meaning physicians will have to specifically prescribe the biosimilar; it may not be automatically substituted for the prescribed branded product.
Perhaps taking its cue from the FDA, CMS’s biosimilar guidance documents should be viewed as a first step: historic in some aspects, but at the same time tentative and incomplete.
Medicare Coverage Requirements
The Medicare Part B issuance notifies health care professionals that:
- Medicare Part B reimbursement to health care professionals for approved biosimilars will be based on Average Sales Price (ASP) methodology. Once the manufacturer’s Wholesale Acquisition Price (WAC) is available for the biosimilar, Medicare will pay 106% of the WAC before transitioning to payment based on 100% of the ASP plus 6% of the ASP for the reference product.
- CMS intends to create distinct codes for approved biosimilars to distinguish the biosimilar from the reference product. For the one approved biosimilar, CMS anticipates including a code for it in the coming weeks, retroactive to the FDA approval date.
Importantly, the Part B notice is specific to reimbursement for health care professionals; the materials are silent on Part B reimbursement for hospital outpatient use.
The spring of 2015 is shaping up to be a busy time in the field of food and nutrition. Issues relating to food labeling, food safety, dietary guidelines, dietary supplements, child nutrition, and nutrition education in medical schools are being examined by the FDA, Congress, the Obama administration, and some states. For an in-depth discussion of what is being considered by the agency, the houses of Congress, and the President, please click here for ML Strategies’ recent Update on Food Labeling, Food Safety, & Nutrition.
This week Mintz Levin also welcomed Joanne S. Hawana to its Health Law practice. Ms. Hawana represents clients in the food, drug, and biotechnology industries on issues ranging from prescription drug advertising to state licensing requirements for wholesale distribution and is well-positioned to work with clients on issues that may arise as a result of the matters currently being considered by the FDA, Congress, and President Obama.