Life Science Compliance Update

April 12, 2017

AHCA Failed…Now What?

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Moments before a scheduled vote on the bill, Republican House leaders announced that they were pulling the American Health Care Act (AHCA) from consideration. Such a move, made because of a shortage of votes needed to pass the bill, has thrown the political arena into disarray and uncertainty. As of right now, it looks like President Donald Trump is going to leave the Affordable Care Act (ACA) in place and move onto other priorities of his, such as tax reform. Even still, there are other options out there with respect to health care and what may happen next.

The Administration’s authority to make changes in the health arena is extremely broad. It includes: executive orders, rules, or other executive guidance based on the extensive body of statutes governing federal health care programs; pre-ACA demonstration and waiver authority; and demonstration authority given to the Center for Medicare & Medicaid Innovation (CMMI) under the ACA. The Trump Administration also has broad opportunities to aggressively interpret these authorities with minimal chance that its actions will be overridden by Congress.

Further, courts review executive actions with deference, thereby limiting actions subject to judicial modification.

Congress

For example, with respect to legislative possibilities, it is possible that key Senate leaders, such as Senator Lamar Alexander of Tennessee, could take a role in brokering an agreement that could pass the Senate with 60 votes. Under such a scenario, major changes would be likely to the House approach on Medicaid expansion, tax credits, and insurance reforms. Moreover, per-capita caps would be unlikely to pass bipartisan muster. Such efforts could be characterized as an attempt to “fix” the ACA, or could end up being a rebranding exercise altogether – even something to the tune of “Trumpcare,” perhaps. But significant challenges would exist in reconciling such a package with Republican promises to “repeal and replace” the ACA. It is also possible that Republicans could seek to pass a “clean” repeal of the ACA – something they have done before, which was vetoed by President Obama in Jan. 2016 – without any agreement on how to replace it.

Administrative Agencies

While the ACA remains in place, it is likely that Health and Human Services (HHS) Secretary Tom Price will look to his regulatory toolbox to provide “relief” from ACA regulations and reverse Obama administration regulations in general.

Additionally, the Trump administration has indicated they will seek to facilitate expedited approval of Medicaid waiver applications to reshape the program for the poor and disabled. Specifically, Secretary Price and CMS Administrator Seema Verma have suggested that states may consider policies imposing work requirements for able-bodies adults, “Health Savings Account-like features,” and various cost-sharing policies common in commercial insurance, like premium payments and emergency room copayments.

Executive Branch

Within hours of his inauguration, President Trump signed an Executive Order (EO) signaling his Administration’s policy of seeking “prompt repeal” of the ACA through wide-ranging executive action. The EO lays the groundwork for federal agencies’ efforts to take intermediate regulatory steps to unravel parts of the ACA, although no specific policies are implemented via the order itself.

The order says HHS and other ACA implementing agencies, such as the Internal Revenue Service (IRS) and Department of Labor (DOL), shall “exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement” of the ACA to the maximum extent permitted by law.”

The order identifies burdens on states and taxes and penalties on individuals, insurers, providers, or drug and device manufacturers and encourages flexibility for states as well as action to promote a “free and open market in interstate commerce,” including for health insurance.

February 20, 2017

Newly Released CMS Payment Models – What is to Come?

Right before the inauguration of the new President, the Centers for Medicare & Medicaid Services (CMS) finalized new Innovation Center models. The announcement finalizes significant new policies related to: (1) cardiac care; three new payment models will support clinicians in providing care to patients who receive treatment for heart attacks, heart surgery to bypass blocked coronary arteries, or cardiac rehabilitation following a heart attack or heart surgery; (2) orthopedic care; one payment model will support clinicians in providing care to patients who receive surgery after a hip fracture, other than hip replacement; (3) CMS is finalizing updates to the Comprehensive Care for Joint Replacement Model, which began in April 2016.

CMS is also now offering an Accountable Care Organization opportunity for small practices. In the new Medicare ACO Track 1+ Model will have more limited downside risk than Tracks 2 or 3 of the Medicare Shared Savings Program in order to encourage more practices, especially small practices, to advance to performance-based risk. However, it is unclear how far these models will go as they were proposed before President Trump took office.

HHS Support and Mixed Industry Reaction

As reported by the Advisory Board, HHS said CMS offer education and training to help prepare and support providers in complying with the new payment models. CMS will offer webinars addressing each payment model and the criteria providers must meet to qualify for incentive payments under MACRA. CMS also will release fact sheets explaining how clinicians can successfully comply with the models and will host open forums where CMS staff will answer questions about the new payment models.

Industry reaction, however, was mixed. The American Medical Association (AMA) applauded the new payment models. AMA President Andrew Gurman in a statement said the group "supports CMS as it expands the models that can qualify as Advanced APMs" and "is working with the agency to expand opportunities for different specialties and practices to participate in innovative care models." He added, "We hope that CMS will continue to expand the list of Advanced APMs in the future so new delivery and payment arrangements can be supported and promoted—a win for physicians and patients alike."

In contrast, Tom Nickels, executive vice president for government relations and public policy at the American Hospital Association (AHA), in a statement said, "The bundled-payment model for cardiac care is the second mandatory demonstration project [CMS] has finalized in just the past 15 months," adding, "This is too much too soon." Nickels continued, "Regrettably, at the same time, the agency finalized its plans to expand and further complicate its existing mandatory hip and knee bundled payment model less than a year after it began, and before fully evaluating its results." He said AHA will "continue to urge that any new bundled payment programs be of a voluntary nature."

New Models

The three Episode Payment Models (EPMs) include models for episodes of care surrounding an acute myocardial infarction (AMI), coronary artery bypass graft (CABG), and surgical hip/femur fracture treatment excluding lower extremity joint replacement (SHFFT). Episodes in the new models begin with admissions for hospitalizations in inpatient hospitals, and extend 90 days post-hospital discharge. Once the models are fully in effect, participating hospitals will be paid a fixed target price for each care episode, with hospitals that deliver higher-quality care receiving a higher target price. The goal for the payment models are to improve the quality of care provided to beneficiaries in an applicable episode while reducing episode spending through financial accountability.

CMS selected the EPM episodes based on their clinical homogeneity, site-of-service, and Medical Severity Diagnosis-Related Group (MS-DRG) assignment considerations. However, the AMI, CABG, and SHFFT models differ from previous CMMI payment models in a few ways. The Lower Extremity Joint Replacement model, while the procedures are common among the Medicare population, the majority of such procedures are elective. In contrast, the patient population included in the finalized episodes are substantially different from the patient population in CJR episodes, due to the clinical nature of the cardiac and SHFFT episodes.

Beneficiaries in these episodes commonly have chronic conditions that contribute to the initiation of the episodes, and need both planned and unplanned care throughout the EPM episode following discharge from the initial hospitalization that begins the episode. Both the AMI and CABG model episodes primarily include beneficiaries with cardiovascular disease, a chronic condition which likely contributed to the acute events or procedures that initiate the episodes. Additionally, beneficiaries in these episodes commonly have chronic conditions that contribute to the initiation of the episodes and need both planned and unplanned care throughout the EPM episode following discharge from the initial hospitalization that begins the episode.

Specifically, in CMS' Cardiac Rehabilitation (CR) incentive payment model, the agency will test the use of CR and intensive cardiac rehabilitation (ICR) services for beneficiaries hospitalized for treatment of an AMI or CABG for 90 days post-hospital discharge, where the beneficiary's overall care is paid under either an EPM or the Medicare Fee for Service program. CR incentive payments will be available to hospital participants in 45 geographic areas that were selected for the CABG and AMI EPMs and 45 geographic areas that were not selected for the EPM program, and it will cover the same period as the cardiac care EPMs.

Under this model, CMS will make standard Medicare payments to providers for CR/ICR services, with an additional retrospective payment to participant hospitals based on total CR service use by beneficiaries attributed to the hospital, subject to Medicare coverage limits. CMS will make an initial payment of $25 per CR/ICR service for each of the first 11 CR/ICR services paid for by Medicare during the care period; after 11 services, the per-service payment increases to $175. CMS estimates that 1,320 hospitals will participate in the CR Incentive Payment Model, and that the model's impact on Medicare spending could range between $29 million in net Medicare costs and $32 million in net Medicare savings from July 2017 through December 2024, depending on the change in utilization of CR/ICR services.

These new payment models, like the CJR model, require provider participation in selected geographic areas. The SHFFT model's 67 geographic areas are the same as the CJR's. The cardiac test is meant to apply to hospitals located in 98 metro areas of the nation, representing about a quarter of all these regions in the nation.

Existing CJR geographical areas are identified by stars:

Participant hospitals in these selected geographic areas are all acute care hospitals paid under the Inpatient Prospective Payment System (IPPS) that are not concurrently participating in Models 2, 3, or 4 of the Innovation Center's Bundled Payment for Care Improvement (BPCI) initiative for AMI, CABG, or SHFFT episodes. Additionally, geographic areas where all-payer models under the Innovation Center are operating — Maryland and Vermont — are excluded. Hospitals paid under a reasonable cost methodology, such as critical access hospitals, also are excluded. Notably, 17 of the selected MSAs have also been selected to participate in the CJR demonstration.

Medicare ACO Track 1+ Model

In its Final Rule announcement, CMS also outlined the basic parameters of a new "Track 1+" option that it intends to offer within the MSSP program beginning in 2018. The summary indicates that CMS intends to call for applications during the regular MSSP cycle in 2017 and that Letters of Intent to Apply will be due in May 2017. The model will be open to Track One ACOs that are in the current agreement period as well as new MSSP applicants and Track One ACOs that are renewing their agreements. CMS also explains that ACOs will have the opportunity to join during the 2019 and 2020 application cycles.

The Track 1+ model is designed to qualify as an Advanced APM for purposes of QPP and incorporates downside risk at a rate significant enough to meet the nominal risk criteria but less aggressively than MSSP Tracks Two and Three. It incorporates the 50% maximum savings sharing rate included in the current Track One but also includes some benefits of Track Three, such as prospective beneficiary assignment, symmetrical savings and loss thresholds and waiver of the 3-day SNF rule.

It offers a fixed 30% loss sharing rate with a maximum loss limit at either 8 percent of ACO participant Medicare fee-for-service revenue (for ACOs that are physician-led or include small, rural hospitals); or 4 percent of the ACO's updated benchmark depending on the composition of the ACO (for other ACOs now in Track 1 or new or renewing ACOs). In later years, ACOs eligible for the lower sharing limit could opt for a higher percentage of revenue in 2019 and 2020. The CMS announcement includes few details beyond the basic parameters but indicates that additional information on the model will be forthcoming.

MACRA

With these new alternative payment models, CMS continues to shift Medicare payments from traditional fee-for-service to value-based payments. The new payment models, including the Cardiac Care Model, the Cardiac Rehabilitation Incentive Payment Model and the expanded CJR, all qualify as Advanced Alternative Payment Models under MACRA, and thus present opportunities for clinicians who collaborate with participant hospitals to qualify for a five percent incentive payment.

Will Trump Dump the Models?

As reported, President-elect Donald Trump's choice to head the US Department of Health and Human Services (HHS) doesn't like Medicare experiments in which physicians, hospitals, and patients have no choice but to participate. That means four mandatory bundled payment models just approved by the Centers for Medicare & Medicaid Services (CMS) are on a collision course with the incoming Trump administration.

As we previously described, industry reaction to the CMS proposals was mixed. However, Perhaps the most significant protest from the ranks of medicine came from Donald Trump's pick for HHS secretary, Rep. Tom Price, MD, (R-GA), an orthopedic surgeon. In a September letter to CMS, Dr. Price as lead signatory and 178 other House members said that by proposing mandatory bundled payments, the Center for Medicare and Medicaid Innovation "has upset the balance of power between the legislative and executive branches." The new models don't represent limited, low-risk tests, as envisioned by the ACA, but sweeping changes that warrant Congressional say-so, the lawmakers argued. "Medicare providers and their patients are being forced into high-risk government-dictated reforms with unknown impacts." As Secretary of HHS Dr. Price could erase or rewrite the regulations for the mandatory bundled payments. He may also make them voluntary.

January 05, 2017

The Future of CMMIs

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The Affordable Care Act and the Medicare and CHIP Reauthorization Act (MACRA) provided the Centers for Medicare and Medicaid Services (CMS) with tremendous authority, by creating the Center for Medicare and Medicaid Innovation (CMMI). With the recent election leaving the executive and legislative branch in the hands of the Republicans, depending on who you ask, the future of that authority is in question.

CMMI was created under the ACA to test innovative payment and service delivery models to reduce program expenditures and improve health care. To meet that goal, the ACA allows CMMI to waive any Medicare provision of the Social Security Act, in addition to select Medicaid provisions, that may be necessary to carry out and evaluate demonstration policies. If the demonstrations prove effective, CMS may roll out the program nationally.

CMS has implemented numerous demonstration projects under CMMI’s authority over the past few years, including delivery reform demonstrations such as the Medicare Shared Savings Program and Pioneer ACO program, and the Financial Alignment Initiative (a program that integrates care for dual-eligible individuals in select states).

Demonstrations such as the Medicare Advantage Value-Based Insurance Design Model have focused on encouraging the use of high-value clinical services, while others, such as the Diabetes Prevention Program, focused more on preventive service models. In July 2016, CMS proposed expanding the Diabetes Prevention Program nationally.

Giving credence to the concerns of those who believe the future of CMMI authority hangs in the balance is the nomination of Representative Tom Price as Health and Human Services Secretary in the Trump Administration. In September 2016, Representative (and physician) Tom Price sent a letter to CMS condemning CMMI’s large mandatory demonstrations, stating that “CMMI has exceeded its authority, failed to engage stakeholders, and has upset the balance of power between the legislative and executive branches.”

Congressmen and women who signed off on the letter were concerned about the “potentially negative effects on patients, especially our vulnerable seniors” that the proposals made by CMMI may have. The letter insisted that “CMMI stop experimenting with Americans’ health, and cease all current and future planned mandatory initiatives within the CMMI.” Additionally, the letter requested CMS “commit to ensuring future CMMI models fully comply with current law.”

The letter, signed by roughly 150 members of Congress, specifically references the Cardiac Bundled Payment Model, the Comprehensive Care Joint Replacement Model, and the Part B Drug Payment model as problematic programs. The House Budget Committee also held a hearing criticizing the authority granted to CMS and CMMI, effectively usurping the role of Congress in creating public policy. They noted that by “focusing solely on cost-savings without adequate regard to the detrimental effects that the CJR Model, Part B Drug Payment Model, and Cardiac Models may potentially have, CMS at best has heeded only part of its statutory duty – “reduc[ing] program expenditures” – at the expense of its other duties – “preserving or enhancing the quality of care.”

Those who signed the letter also took issue with CMMI failing to meet its statutory requirements for implementing models, including starting with a limited, “Phase I” test, engaging stakeholders in model development, and describing the “defined population” and “deficits in care” the model seeks to address.

With new nominees and news coming out daily about various focuses of the Trump administration, it is possible that CMMI (and perhaps other programs) will soon be eliminated or modified.

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