Policy and Medicine

HHS Adoption of Standards for Health Care Electronic Funds

The U.S. Department of Health & Human Services (HHS) released a rule that adopts streamlined standards for the format and data content of the transmission a health plan sends to its bank when it wants to pay a claim to a provider through electronic funds transfers (EFT) and to issue a Remittance Advice notice, which may or may not accompany the payment itself.  The regulation became effective January 1, 2012 and any organization covered by HIPAA must comply with the new rule by Jan. 1, 2014. 

According to a press release from HHS, these efforts will save the healthcare system--including individual doctors, hospitals, and payers--billions of dollars over the next 10 years.  Specifically, the new standards for EFT required by the Affordable Care Act, will reduce up to $4.5 billion off administrative costs for doctors and hospitals, private health plans, states, and other government health plans, over the next ten years. 

For example, currently when a provider submits a claim electronically for payment, a health plan often sends a Remittance Advice separately from the Electronic Funds Transfers payment.  The disconnect between the two makes it difficult or sometimes impossible for the provider to match up the bill and the corresponding payment.  The new rule addresses this by requiring the use of a trace number that automatically matches the two.  The new tracking system will allow health care providers to eliminate costly manual reconciliation that must currently be done. 

The standards build upon regulations published earlier this year that set industry-wide standards for how health providers use electronic systems to quickly and easily determine a patient's eligibility for health coverage and check on the status of a health claim.  

HHS noted that Together, the two regulations implementing the Administrative Simplification provisions of the Affordable Care Act and the Health Insurance Portability and Accountability Act (HIPAA) are projected to save the health care industry more than $16 billion over the next 10 years.  These savings come from the adoption of electronic standards that will help eliminate inefficient manual processes and reduce costs.

The American Medical Association (AMA) and other groups have been calling for these improvements for years. In 2010, AMA wrote a white paper calling on the government to "eliminate significant administrative waste from the healthcare system by simplifying and standardizing the current healthcare billing and payment process."  

The study, published in the journal of Health Affairs, found that nearly 12 percent of every dollar physicians receive from patients goes to fund paperwork and administrative tasks. The study also found that simplifying these systems could save four hours per physician and five hours of support staff time every week. 

"As a nurse, I know the importance of giving health care professionals time to focus on patient care," said Centers for Medicare and Medicaid (CMS) Acting Administrator Marilyn Tavenner.  "The less time a physician has to spend on paperwork is that much more time that can be devoted to patient care. Having standardized procedures across the health care industry can only lead to lower costs and greater efficiencies all around."

The government promises similar actions to come.   

According to the press release, future simplification rules will call for: 

-          Adoption of standard unique identifiers for health plans,

-          A standard for claims attachments and

-          Will require health plans certify compliance with all HIPAA standards and operating rules,

CMS Innovation Center: One Year of Innovation

This month, the Centers for Medicare and Medicaid Services (CMS) Innovation Center, created by the Affordable Care Act, released a new report, entitled “One Year of Innovation: Taking Action to Improve Care and Reduce Costs.”  The Report was released on the same day as the Innovation Summit, held last week in Washington, DC.   The new report highlighted how the Innovation Center has already worked to test and support innovative new health care models that can reduce costs and strengthen the quality of health care. 

The day-long Care Innovations Summit, hosted jointly by CMS, the West Wireless Health Institute, and the journal Health Affairs, brought together over 1,000 medical professionals, health care policymakers, academics and investors to explore innovative ways to make health care both affordable and effective. 

“The Affordable Care Act gives us tremendous new tools to innovate and improve our health care system,” said Health and Human Services (HHS) Secretary Kathleen Sebelius.  “We’ll discuss how we can work together to make innovative ideas a reality in communities across the country.” 

The summit displayed nearly half a dozen announcements of major new initiatives by leading health care organizations.  Among these announcements are new “challenges” to reverse the trend of diabetes, advance the field of Alzheimer’s prevention and treatment, and bolster the battle against HIV/AIDS. 

“The level of real excitement surrounding this conference shows not only that people who know health care recognize the urgent need for better health and better care at lower cost, they also are ready to move forward with solutions,” said CMS Acting Administrator Marilyn Tavenner.  

 “The fact that all of these disparate interests share the aim of better health care and are willing to work for it not only means that we’re going to have the best ideas on the table, but also that we’re going to have the expertise and the resources that will ultimately ensure better health at a lower cost will be within the reach of every American,” said Richard J. Gilfillan, M.D., director of the Innovation Center.  

CMS Innovation Report

Through the Affordable Care Act, HHS has been helping providers improve how they deliver health care services, through hospital value-based purchasing, realigned and increased primary care payments, and greater coverage for preventive care. The Center for Medicare and Medicaid Innovation (the Innovation Center), is an important new resource for health care providers dedicated to improving how our health care system works. Its mission is to move quickly to identify, test, and spread delivery and payment models to help providers improve care while cutting costs. 

In the year since opening its doors, the Innovation Center has introduced 16 initiatives involving over 50,000 health care providers that will touch the lives of Medicare and Medicaid beneficiaries in all 50 states and will continue to expand its partnerships and reach in the years to come. These initial efforts are focused on 

• improving patient safety
• promoting care that is coordinated across health care settings,
• investing in primary care transformation,
• creating new bundled payments for care episodes, and
• meeting the complex needs of those dually eligible for Medicare and Medicaid.  

While the U.S. is the global leader in developing new ways to prevent, diagnose, manage, and cure illness, our academic institutions offer the finest education and training available, and our talented physicians, nurses, and clinicians work hard each day to deliver the highest quality care, our health care system is nonetheless full of “barriers, roadblocks, and red-tape.”  And despite having the world’s best hospitals, doctors and nurses, and most advanced medical technology, Americans continue to live sicker and die sooner than citizens of many other nations. 

The obstacles we face range from the way we pay for health care services to a lack of usable, reliable information for patients and clinicians alike—that often keep health care professionals from practicing medicine in a collegial, evidence-based, and patient-centered manner.  Many doctors, nurses, and other providers have had great ideas, good intentions, and determined efforts, but have been thwarted by disincentives and other obstacles to innovation, resulting in a disjointed, inefficient, and costly system. 

However, CMS recognized that some dedicated clinicians and innovative entrepreneurs around the country have found ways to work with other providers and payers in their local communities to break down barriers and redesign care for the benefit of their patients, themselves, and their communities.  For example, large employers and unions are working together to improve the health of their workers by investing in comprehensive primary care, which is decreasing the overall cost of healthcare. Similarly, some health systems have demonstrated that by keeping people healthy in the first place, providing a coordinated care experience, and striving to get care right every time, they can achieve better outcomes and lower costs for their patients. 

Innovative Partnership Options

CMS noted that there is growing consensus that we must move from a volume-based and fragmented health care system to one more based on achieving value for patients and providers through better care, better health, and lower cost.  The agency’s strategy is to partner with the patients, providers, and other payers to test new payment and care models that support providers in transitioning to that new system. 

To implement that strategy over the past year, the Innovation Center actively sought input from a broad array of stakeholders to identify some of the most promising ways to improve care and lower costs. The Innovation Center met with hundreds of outside innovators, held ten regional meetings with over 4,000 attendees, and received nearly 500 significant proposals for improving health care payment and delivery through the “Innovation Portal” on its website. 

Incorporating this rich feedback, the Innovation Center launched an initial menu of initiatives that engage different types of providers and payers at varying levels of experience with care coordination.  Each initiative holds the promise of reducing health care costs, improving quality, and improving health.  All of these models are tests to help identify which care and payment models deliver greater value for our health system and then to rapidly spread what works.  Some of the new initiatives launched by the Innovation Center this year are described below: 

Improving Patient Safety in Hospitals—The Partnership for Patients. Through the Partnership for Patients initiative, the Innovation Center is working with hospitals, physicians, nurses, other clinicians, consumer groups, and employers to reduce hospital-acquired conditions and preventable hospital readmissions. The program is a public-private partnership with over 7,100 organizations participating as of January 2012—including more than 3,200 hospitals. By joining the Partnership, these organizations have pledged to meet the Partnership’s two goals—to reduce preventable harm in hospitals by 40 percent and readmissions to hospitals within 30 days of discharge by 20 percent in the next three years. 

The Partnership is investing up to $500 million in public-private engagement networks that will help hospitals adopt proven strategies to reduce hospital-acquired conditions in their own facilities and systems. The Partnership’s second component, the Community-based Transitions Program, is a $500 million initiative to reward hospitals, physicians, and others who partner together to keep patients out of the hospital after discharge. Taken together, the Partnership has the potential to save 60,000 lives, reduce millions of preventable injuries and complications in patient care and, by meeting its goals, save our health care system as much as $50 billion over 10 years, according to the CMS Office of the Actuary. 

Encouraging Care Coordination—Pioneer Accountable Care Organizations (ACOs) and Advance Payment Models. Today’s system of paying on a per-service basis often discourages—and even financially penalizes—health care providers for working together to coordinate care and keeping patients healthy and out of the hospital or a nursing home. The Pioneer ACO Model tests the rapid transition to a new payment model where experienced organizations are paid according to their ability to improve the health of their patient population, rather than for each specific service they provide.  As we noted recently, starting on January 1, 2012, 32 organizations began participating in the Pioneer ACO Model to test what can be achieved through highly coordinated care for more than 850,000 Medicare fee-for-service beneficiaries. 

A closely related initiative, the Advanced Payment ACO Model, will test whether pre-paying a portion of future shared savings will allow more physician-based and rural ACOs to participate in the Medicare Shared Savings Program, to improve care for beneficiaries and generate greater Medicare savings more quickly.  In the Shared Savings Program, groups of providers come together as accountable care organizations to improve care coordination for Medicare beneficiaries and can share in savings they generate for Medicare if they meet certain quality improvement metrics. The Innovation Center is still accepting applications for Advanced Payment ACOs, which will start in April and July of this year in concert with the first two enrollment periods for the Shared Savings Program. 

Matching Payment to the Patient Experience—Bundled Payments for Care Improvement.  Patients experience care in episodes, often visiting multiple doctors’ offices, hospitals, and laboratories as they seek treatment and recovery.  But today’s system of paying separately for each service often leads to disjointed care, poor outcomes, and a confusing and frustrating experience for many patients. The Bundled Payments for Care Improvement initiative builds on episode-based payment models pioneered in the private sector by redesigning payment to match the patient experience. 

It offers providers four patient-centered episode of care models to choose from, allowing providers the flexibility to choose the conditions they believe make sense to bundle, decide how best to work together to deliver high-quality, coordinated episodes-of-care, and determine participating providers’ share of payment. Health care organizations will give Medicare a discount off the current cost of care for the episodes covered under the initiative, thereby ensuring Medicare Trust Fund savings. 

Revitalizing Primary Care—The Comprehensive Primary Care Initiative and The Federally Qualified Health Center Advanced Primary Care Practice Demonstration.  Communities with high-performing health systems share a common trait: a strong primary care backbone.  Through various investments such as free Medicare Wellness visits and enhanced reimbursement for primary care as a result of the Affordable Care Act among other initiatives, CMS has made the commitment to strengthen the primary care system.  However, general practitioners still often struggle to find time to spend with each patient due to the increasing demand from patients and lagging supply of primary care practitioners. The Innovation Center has launched multiple initiatives to strengthen primary care by supporting clinicians willing to comprehensively manage and coordinate the care of their patients, particularly those with serious or chronic diseases with the goal of reinvigorating the primary care system. 

The Comprehensive Primary Care Initiative is a collaboration between public and private payers and primary care practices to support patient-centered primary care in communities across the country.  Primary care practices will receive new, public, and private funding for primary care functions not currently supported by fee-for-service (FFS) payments, including an opportunity to share net savings generated through this program.  In return, participating practices will agree to give patients 24-hour access to care, create personalized care plans for their patients, and coordinate with other providers to ensure patients are getting healthy and staying well. 

The Federally Qualified Health Center Advanced Primary Care Practice Demonstration tests whether advanced primary care practice at community health centers can improve care and patients’ health, and reduce costs.  In October 2011, 500 community health centers in 44 States were selected to receive approximately $42 million over three years to reorganize as Patient Centered Medical Homes and improve the coordination and quality of care they give to people with Medicare and other patients. 

New Models of Care and Payment to Support Medicare-Medicaid Enrollees.  The Innovation Center is committed to working with other purchasers of health care—both private and public—to ensure care is improving across patient populations. Working with the CMS Medicare-Medicaid Coordination Office, the Innovation Center is empowering States to test new payment and service delivery models that will help improve quality of care, and reduce the costs of care, for the nearly nine million people enrolled in both the Medicare and Medicaid programs. These Medicare-Medicaid enrollees account for 21 percent of Medicare beneficiaries but 36 percent of Medicare spending, and 15 percent of Medicaid recipients but 39 percent of Medicaid cost. 

To date, 15 States have been awarded design contracts of up to $1 million to develop new ways to meet the needs of this complex population.  Additionally, the Innovation Center and the Coordination Office have offered States the opportunity to move beyond the design phase and test new models of payment and care coordination in their States. Thirty-eight States and the District of Columbia have expressed interest in working with CMS. 

Engaging Local Innovators—Health Care Innovation Challenge.  The Innovation Center recognizes that many of the best ideas will come from physicians, other health care providers, and innovative thinkers in communities across the country. Announced in November 2011, the Health Care Innovation Challenge award up to $1 billion in grants to applicants who put into practice the most compelling new ideas for rapidly delivering better health, improved care and lower costs to people enrolled in Medicare, Medicaid and CHIP, particularly those with the highest health care needs. The initiative is also looking for new models of workforce development and deployment to support the transition toward high-value care. Awards will range from $1 million to $30 million for a three-year period. 

Supporting Individuals to Help Transform Health Care—Innovation Advisors Program.  Crucial to the efforts of transforming the health care system is supporting individuals who can test and refine new models to drive delivery system reform. The Innovation Center seeks to deepen the capacity for transformation by creating a network of experts in improving the delivery system for Medicare, Medicaid, and CHIP beneficiaries. The Innovation Advisors will: 

• Utilize their knowledge and skills in their home organizations or communities in pursuit of the three-part aim of improving health, improving care, and lowering costs through continuous improvement;
• Work with other local organizations or groups in driving delivery system reform;
• Develop new ideas or innovations for possible testing of diffusion by the Innovation Center; and
• Build durable skill in system improvement throughout their area or region. 

In December 2011, the CMS Innovation Center selected 73 individuals out of 920 applications through a competitive process to participate in the initiative. The first group of Innovation Advisors is starting their six-month intensive orientation and applied research period in January 2012. 

Discussion 

The Innovation Center is not only testing new models of care delivery and payment, it is also changing the way CMS partners with providers and conducts demonstration projects.  Learning from previous CMS projects and feedback from the health care community, the Innovation Center is committed to providing participants more timely and useful data necessary to improve and coordinate care, rapid-cycle evaluations on their performance, and a new array of opportunities to learn from each other as they innovate. 

The Innovation Center is also piloting new ways to spread lessons learned, so that success is not just a report—but tangible to providers and patients across the country. That’s why every Innovation Center initiative includes a “diffusion” element that matches participating organizations with experts in the field and peer organizations to discuss successes and learn from mistakes. Providers will have tools and resources available to them and will be expected to help diffuse best practices, lessons learned, and improved care strategies so that innovation is not limited to a demonstration site or only one particular community.

 

HHS Publishes Medicaid Quality Measures

Recently, the Department of Health and Human Services (HHS) published a notice finalizing the initial core set of 26 care quality standards for Medicaid adult beneficiaries, as mandated by the Section 2701 of the Patient Protection and Affordable Care Act (PPACA), which added new section 1139B to the Social Security Act (the Act). 

The standards, which states can use to report on care quality, focus on six key clinical areas: prevention and health promotion, management of acute conditions, management of chronic conditions, family experiences of care, care coordination, and availability of care.  Another provision of the health care reform law requires HHS to create a uniform reporting format for these quality measures by Jan. 1, 2013. 

Background 

Section 2701 directs the Secretary of HHS to identify and publish for public comment a recommended initial core set of health care quality measures for Medicaid-eligible adults.  Additionally, the statute requires the initial core set recommendation to consist of existing adult health care quality measures in use under public and privately sponsored health care coverage arrangements or that are part of reporting systems that measure both the presence and duration of health insurance coverage over time and that may be applicable to Medicaid-eligible adults.  

By January 1, 2012, the Act requires the Secretary to Establish a Medicaid Quality Measurement Program to fund development, testing, and validation of emerging and innovative evidence-based measures. 

By January 1, 2013, the Act requires the Secretary to Develop a standardized reporting format for the core set of adult quality measures and procedures to encourage voluntary reporting by the States. 

By January 1, 2014 the Act requires the Secretary to Annually publish recommended changes to the initial core set that shall reflect the results of the testing, validation, and consensus process for the development of adult health quality measures. The Secretary must also include in the report to Congress the quality of health care of children in Medicaid and the Children’s Health Insurance Program (CHIP) similar information for adult health quality with respect to measures. This report must be published every 3 years thereafter in accordance with the statute. 

By September 30, 2013, the Secretary must Collect, analyze, and make publicly available the information reported by the States. 

HHS noted that, “States that chose to collect the initial core set will be better positioned to measure their performance and develop action plans to achieve the three part aims of better care, healthier people, and affordable care as identified in HHS’ National Strategy for Quality Improvement in Health Care. 

Medicaid Quality Measures 

The initial core set of quality measures for voluntary annual reporting by States has been determined based on recommendations from the Agency for Healthcare Research and Quality’s (AHRQ) Subcommittee to the National Advisory Council for Healthcare Research and Quality, as well as public comments, before being finalized by the Secretary. 

Over the next year, CMS will phase in components of the Medicaid Adult Quality Measures Program that will help to further identify measurement gap areas and begin testing the collection of some of the initial core measures. The Medicaid Adult Quality Measures Program will focus on developing and refining measures, where needed, so that future updates to the initial core set can meet a wider range of States’ health care quality measurement needs. 

By September 2012, CMS will release technical specifications as a resource for States that seek to voluntarily collect and report the initial core set of health care quality measures for Medicaid-eligible adults. Additionally, as required in statute, by January 1, 2013, CMS will issue guidance for submitting the initial core set to CMS in a standardized format. Lastly, the Secretary will launch a Technical Assistance and Analytic Support Program to help States collect, report, and use the voluntary core set of adult measures. 

To draft the measures, a subcommittee was broken into four groups, which represent the main dimensions of healthcare related to adults in Medicaid: 

• Adult health
• Maternal/reproductive health
• Complex health care needs
• Mental Health and Substance Use

A total of 35 measures received a majority vote from the full Subcommittee. The measures voted upon by the Subcommittee included recommendations from each workgroup that were based on the original 51 measures as well as new measures identified through public comment that were brought forth by each workgroup. The Adult Health work group recommended eleven measures for inclusion in the initial core set. The Maternal/Reproductive Health work group recommended six measures. The

Complex Health Care Needs work group recommended nine measures and the Mental Health and Substance Use recommended nine measures.

In the final round of voting, 24 measures ultimately received a majority vote by Subcommittee members. In order to ensure priority populations were fully represented and that the goals of planned initiatives could be monitored, we then added two measures originally proposed for the draft core set (PC-01 Elective Delivery and Timely Transmission of Transition Record). The Subcommittee deferred the decision to CMS and AHRQ on which of the two HIV-related measures under consideration (HIV/AIDS Screening: Members at High Risk of HIV/AIDS and HIV/AIDS: Medical Visits) would be included in the core set. Upon discussion with colleagues from the Centers for Disease Control and Prevention and the Health Resources and Services Administration, the decision was made to include the measure originally proposed for the core set, HIV/AIDS: Medical Visit.

A total of 26 are included in the initial core set including:

-          Breast cancer screening

-          Cervical cancer screening

-          Flu shots for adults ages 50-64

-          Controlling high blood pressure

-          Adherence to antipsychotics

Overall the list of quality measures is an step towards better quality in Medicaid patients this is a fairly truncated list for the most part attached to HEDIS measures.  It will be interesting to see how they are applied and implemented in the coming months.

CMS Selects 32 Pioneer Accountable Care Organizations

The Centers for Medicare & Medicaid Services (CMS) announced the final list of 32 Pioneer Accountable Care Organizations (ACO) to start in the new year. CMS estimates that care coordination between hospitals, physicians and other caregivers under the Pioneer ACO model could save Medicare up to $1.1 billion. 

CMS noted that the Pioneer ACO Model is a CMS Innovation Center initiative designed to support organizations with experience operating as ACOs or in similar arrangements in providing more coordinated care to beneficiaries at a lower cost to Medicare.  The Pioneer ACO Model is also designed to support organizations with a new payment model, allowing them to provide more coordinated care to beneficiaries at a lower cost to Medicare.  The Pioneer ACO Model will test the impact of different payment arrangements in helping these organizations achieve the goals of providing better care to patients, and reducing Medicare costs. 

The Innovation Center was created by the Affordable Care Act to test new models of health care delivery and payment. The Center also offers technical support to providers to improve the coordination of care and share lessons learned and best practices throughout the health care system.  It is committed to refining the Medicare, Medicaid and CHIP programs to deliver better care for individuals, better health for populations, and lower growth in expenditures. 

The Pioneer ACO Model was designed specifically for organizations with experience offering coordinated, patient-centered care, and operating in ACO-like arrangements.  The selected organizations were chosen for their significant experience offering this type of quality care to their patients, along with other criteria listed in the Request for Applications (RFA).  These organizations were selected through an open and competitive process from a large applicant pool that included many qualified organizations. 

According to a press release from the Department of Health and Human Services (HHS), the Pioneer ACO initiative will encourage primary care doctors, specialists, hospitals and other caregivers to provide better, more coordinated care for people with Medicare and could save up to $1.1 billion over five years. 

Under this initiative, Medicare will reward groups of health care providers that have formed ACOs based on how well they are able to both improve the health of their Medicare patients and lower their health care costs. 

Among the list are Banner Health Network in Arizona, Dartmouth-Hitchcock ACO in New Hampshire and Eastern Vermont, Monarch Healthcare in Orange County, Calif., as well as Beth Israel Deaconess Physician Organization, Partners Healthcare and Steward Health Care System, all in Massachusetts.  CMS chose 32 out of a pool of competitive applicants through a lengthy and open process, according to CMS. 

Selected Pioneer ACOs include physician-led organizations and health systems, urban and rural organizations, and organizations in various geographic regions of the country, representing 18 States and the opportunity to improve care for about 860,000 Medicare beneficiaries. 

"Pioneer ACOs are leaders in our work to provide better care and reduce health care costs," said Health & Human Services Secretary Kathleen Sebelius. "We are excited that so many innovative systems are participating in this exciting initiative - and there are many other ways that health care providers can get involved and help improve care for patients." 

The Medicare Shared Savings Program and the Advance Payment ACO Model, both announced in October 2011, are also ACO options for providers.  The Medicare Shared Savings Program, which was established by the Affordable Care Act, provides incentives for ACOs that meet standards for quality performance and reduce cost while putting patients first.  The Advance Payment ACO Model will provide additional support to physician-owned and rural providers participating in the Shared Savings Program who would benefit from additional start-up resources to build the necessary infrastructure, such as new staff or information technology systems.  More information about the full menu of options for providers and how to apply to participate is available here.  

As the forerunner to the Medicare Shared Savings Program, the Pioneer ACO model will allow those organizations and individual providers that already are experienced in coordinating care to reap the benefits earlier and more of them. These groups will move more rapidly from a Shared Savings model to a population-based payment model, according to the press release. 

The first performance period of the Pioneer ACO model will start Jan. 1, 2012.  In the first two performance years, the Pioneer Model tests a shared savings and shared losses payment arrangement with higher levels of reward and risk than in the Shared Savings Program. These shared savings would be determined through comparisons against an ACO’s benchmark, which is based on previous CMS expenditures for the group of patients aligned to the Pioneer ACO. 

In year three of the program, those Pioneer ACOs that have shown savings over the first two years will be eligible to move to a population-based payment model. Population-based payment is a per-beneficiary per month payment amount intended to replace some or all of the ACO’s fee-for-service (FFS) payments with a prospective monthly payment.  

The Pioneer ACO Model is distinct from the Shared Savings Program. The Shared Savings Program fulfills a statutory obligation set forth by the Affordable Care Act to establish a permanent program that develops a pathway forward for groups of health care providers to become ACO’s, while the Pioneer ACO Model is an initiative designed to test the effectiveness of a particular model of payment. Final rules for the Shared Savings Program were published in November 2011. 

The Pioneer ACO Model differs from the Medicare Shared Savings Program in the following ways, among others: 

• The first two years of the Pioneer ACO Model are a shared savings payment arrangement with higher levels of savings and risk than in the Shared Savings Program.
• Starting in year three of the initiative, those organizations that have earned savings over the first two years will be eligible to move to a population-based payment arrangement and full risk arrangements that can continue through optional years four and five.
• Pioneer ACOs are required to develop similar outcomes-based payment arrangements with other payers by the end of the second year, and fully commit their business and care models to offering seamless, high quality care. 

Additionally, during the application process, organizations were invited to propose alternative payment arrangements. CMS established two alternatives to the core payment arrangement discussed above based on this input. Both of these alternatives follow a shared savings model in years one and two, and provide an option for a partial population based payment that removes limits on rewards and risks in year three. These arrangements will allow Pioneer ACOs more flexibility in the speed at which they assume financial risk.  Under the Pioneer ACO Model, CMS will prospectively align beneficiaries to ACOs, allowing care providers to know at the beginning of a performance period for which patients’ cost and quality they will be held accountable. 

"We know that health care providers are at different stages in their work to improve care and reduce costs," said Marilyn Tavenner, acting Administrator of CMS. "That's why we've developed a menu of options for Medicare to meet doctors, hospitals, and other healthcare providers where they are, and begin the conversation of how to enhance the care they are offering to people with Medicare." 

In addition, under the Pioneer ACO Model, beneficiaries will maintain the full benefits available under traditional Medicare (fee-for-service), as well as the right to receive services from any healthcare provider accepting Medicare patients. 

Moreover, to ensure beneficiaries receive high quality care and enjoy a positive experience, CMS has established robust quality measures that will be used to monitor the quality of care provided and beneficiary satisfaction. These measures mirror those in the Shared Savings Program. 

To be eligible to participate in the Pioneer ACO Model, organizations are required to be providers or suppliers of services structured as: 

1)    ACO professionals in group practice arrangements;

2)    Networks of individual practices of ACO professionals;

3)    Partnerships or joint venture arrangements between hospitals and ACO professionals;

4)    Hospitals employing ACO professionals; or

5)    Federally Qualified Health Centers (FQHC).   

Health Information Technology 

By the end of 2012, Pioneer ACOs must attest and CMS will confirm that at least 50% of the ACO’s primary care providers have met requirements for meaningful use of certified electronic health records (EHR) for receipt of payments through the Medicare and Medicaid EHR Incentive Programs. 

Minimum Number of Aligned Beneficiaries  

Beneficiaries are aligned to ACOs through the healthcare providers that choose to participate. CMS will review where a beneficiary has been receiving the plurality of his/her primary care services, and use that information to establish which beneficiaries are aligned to a participating provider. If a primary care provider chooses to participate in an ACO, the beneficiaries aligned to him or her through this process would be aligned to the ACO. If a beneficiary receives less than 10 percent of their care from a primary care provider, CMS will review where a beneficiary has been receiving the majority of his/her specialty services to determine alignment. 

Participants generally must have a minimum of 15,000 aligned beneficiaries unless located in a rural area, in which case are to have a minimum of 5,000 beneficiaries. In order to be aligned, beneficiaries must be enrolled in original, fee for service Part A and B Medicare. They cannot be participating in Medicare Advantage plans. 

Participation of Other Payers  

The Innovation Center believes that Pioneer ACOs will be more effective in producing improvements in the three-part aim of better care for individuals, better health for populations, and slower growth in expenditures if they fully commit to a business model based on financial and performance accountability. The Innovation Center therefore requires Pioneer ACOs to enter similar contracts with other payers (such as insurers, employer health plans, and Medicaid) such that more than 50 percent of the ACO’s revenues will be derived from such arrangements by the end of the second Performance Period.

CMS and OMB Announce New Fraud Measures

In 2010, the President announced three goals for cutting improper payments in federal health programs by 2012: reducing overall payment errors by $50 billion, cutting the Medicare fee-for-service error rate in half, and recovering $2 billion in improper payments.  The Obama Administration put these goals into a program called the “Campaign to Cut Waste.” 

This month, the Office of Management and Budget (OMB) announced that the Administration cut wasteful improper payments by $17.6 billion dollars in 2011 as part of Campaign to Cut Waste, fueled by decreases in payment errors in Medicare, Medicaid, Pell Grants, and Food Stamps.  

Additionally, OMB Director Jack Lew recently issued a memo to agencies directing them to step up their oversight of contractors and grant recipients in order to eliminate unnecessary risk of waste, fraud and abuse. Specifically, the guidance directs agencies to strengthen their suspension and debarment procedures – tools that allow the Federal government to stop doing business with bad actors who put taxpayer dollars at risk. 

Fighting Fraud, Waste and Abuse 

Combined with the improper payment cuts in 2010, agencies have avoided making over $20 billion in improper payments in the two years since President Obama issued an Executive Order initiating an aggressive campaign against wasteful payment errors. Vice President Joe Biden said, “The sharp reduction in payment errors … demonstrates this Administration is serious about cutting waste.” 

“Because of the sustained commitment from the President, the Vice President, and leaders across the Administration – and the effective use of technology – we are seeing real progress cracking down on this waste of taxpayer dollars that has persisted for far too long,” said OMB Director Jack Lew. 

“Through aggressive and innovative solutions being deployed by Federal agencies, we are on track to meet the President’s bold directive to prevent $50 billion in payment errors by the end of 2012. This is a good step, but not the end. We will continue to work day and night to prevent taxpayer dollars from being wasted in payments to the wrong people or in the wrong amount.” 

In addition to OMB’s announcement, the Centers for Medicare & Medicaid Services (CMS) recently announced that it will launch demonstration programs beginning in January 2012 targeting some of the most common factors that lead to improper payments in health programs.  

Cost Saving Projects will Help Protect Medicare and Medicaid  

Beginning on January 1, 2012, CMS will conduct demonstration projects that will strengthen Medicare by aiming at eliminating fraud, waste, and abuse.   Reductions in improper payments will help ensure the sound future of the Medicare Trust Fund and protect Medicare beneficiaries who depend upon it.  

• Recovery Audit Prepayment Review: The Recovery Audit Prepayment Review demonstration will allow Medicare Recovery Auditors (RACs) to review claims before they are paid to ensure that the provider complied with all Medicare payment rules.  The RACs will conduct prepayment reviews on certain types of claims that historically result in high rates of improper payments.   These reviews will focus on  seven states with high populations of fraud- and error-prone providers (FL, CA, MI, TX, NY, LA, IL) and four states with high claims volumes of short inpatient hospital stays (PA, OH, NC, MO) for a total of 11 states. This demonstration will also help lower the error rate by preventing improper payments rather than the traditional “pay and chase” methods of looking for improper payments after they have been made. 
• Prior Authorization for Certain Medical Equipment: The second demonstration will require Prior Authorization for certain medical equipment for all people with Medicare who reside in seven states with high populations of fraud- and error-prone providers (CA, FL, IL, MI, NY, NC and TX).  This demonstration will help ensure that a beneficiary’s medical condition warrants their medical equipment under existing coverage guidelines. Moreover, the program will assist in preserving a Medicare beneficiary’s right to receive quality products from accredited suppliers.  

The Prior Authorization demonstration will be implemented in two phases. During the first phase (the first three to nine months), the Medicare Administrative Contractors will conduct prepayment reviews on certain medical equipment claims. The second phase, for the remainder of this three-year demonstration, will implement prior authorization, a tool utilized by private-sector health care payers to prevent improper payments and deter the fraudulent provision of items or services.   

• Part A to Part B Rebilling: The third initiative will allow hospitals to rebill for 90 percent of the Part B payment when a Medicare contractor denies a Part A inpatient short stay claim as not reasonable and necessary due to the hospital billing for the wrong setting.  Currently, when outpatient services are billed as inpatient services, the entire claim is denied in full.  

This demonstration will be limited to a representative sample of 380 hospitals nationwide that volunteer to be part of the program. This demonstration will allow hospitals to resubmit claims for 90 percent of the allowable Part B payment when a Medicare Administrative Contractor, Recovery Auditor, or the Comprehensive Error Rate Testing Contractor finds that a Medicare patient met the requirements for Part B services but did not meet the requirements for a Part A inpatient stay.  In addition, this demonstration is expected to lower the appeals rate which will protect the trust fund and reduce hospital burden.   Beneficiaries will be held harmless with respect to changes in hospital coinsurance liability. 

CMS also noted a pilot project announced by HHS this past May under the Partnership Fund for Program Integrity Innovation to test an automated tool to screen providers for the risk of fraud.  Currently, HHS and States lack standardized Medicaid provider data, which hampers detection of potential fraud. 

New Projects Build on 2011 Savings  

CMS asserted that the 2012 projects will build on accomplishments in 2011 to reduce Medicare and Medicaid improper payment rates. For example, the Medicare fee-for-service error rate fell from 9.1 percent in 2010 to 8.6 percent in 2011.  Since 2009, the error rate has fallen more than 2 percentage points.  The overall error rate for Medicare programs fell from 10.2 percent in 2010 to 8.6 percent in 2011.  Since 2009, the error rate has fallen nearly 3.2 percentage points. 

• Medicare fee-for-service avoided about $7 billion in payment errors.
• Medicare Part C avoided about $5 billion in payment errors.
• Medicare Part D reported a composite error rate for the first time, with an error rate of 3.2 percent, well below the government average.
• In addition, the error rate for Medicaid fell to 8.1 percent in 2011 from 9.4 percent in 2010, avoiding about $4 billion in payment errors since 2009.

CMS is also reporting for the first time a composite improper payment rate for the Medicare Part D prescription drug program.  Based on payment year 2009, the improper payment rate is 3.2 percent, or $1.7 billion.  The improper payment rate for the Children’s Health Insurance Program (CHIP) will not be published until 2012. 

Other Fraud/CMS Developments

Nine months ago, the President proposed in his 2012 Budget even more aggressive tools that will help drive down this waste. If Congress passes these proposals, they will result in more than $160 billion in savings to the Federal Government over the next decade.  HHS Secretary Sebelius applaued the announcement of these figures, but noted that her agency still needs Congress to act on the President’s proposal.  “Until Congress acts, we will continue doing everything in our power to save money on behalf of the American people.”

Secretary Sebelius announced that HHS will launch four additional pilots to reduce the error rate and cut Medicare and Medicaid waste and fraud:

Let private inspectors catch wasteful spending before it happens by expanding the use of Recovery Audit Contractors.  At HHS and other agencies, private recovery audit contractors normally review payments and identify errors after the payments are made.  Then, the agency must track down and recover the improper payments.  Last year, private companies recovered hundreds of millions of taxpayer dollars by finding improper payments that have already been paid out.  The agency will now allow private companies to screen certain hospital payments before they are made, which will prevent improper Medicare payments from happening in the first place.

Test changes to outdated hospital billing system to help prevent over-billing.  Hospitals sometimes perform services as inpatient that Medicare requires to be outpatient.  Right now, when those hospitals bill Medicare, HHS does not allow them to re-bill as outpatient.  Under this pilot, HHS will allow some claims that are incorrectly made under the inpatient program to be resubmitted under the outpatient program.  This mistake—incorrect billing of services—is a leading cause of error in the Medicare program and wastes time and money in appeals.

Change its process for approving payments for medical equipment with high error rates.  One contributor to the Medicare improper payment rate is incorrect reimbursement for medical equipment that is not medically necessary.  This change will allow HHS to pilot a new process for reviewing these medical equipment claims before they are made, thus helping to reduce Medicare improper payments.

 Work with States to improve fraud detection.  HHS is initiating a pilot project under the Partnership Fund for Program Integrity Innovation to test an automated tool to screen providers for the risk of fraud.  Currently, HHS and States lack standardized Medicaid provider data, which hampers detection of potential fraud.  If successful, this tool will not only help prevent improper payments by weeding out fraudulent providers, but it will help States focus their resources where fraud is most likely to occur.

CMS Answers Questions on Electronic Health Records

The Centers for Medicare & Medicaid Services (CMS) recently released eight new answers to frequently asked questions (FAQs) to keep providers informed about the Medicare and Medicaid electronic health record incentive programs.  Below is a summary of CMS’s responses.  CMS also has a document answering other questions about the electronic health record (EHR) incentive program, which is over 100 pages. 

Does a provider have to record all clinical data in their certified EHR technology in order to accurately report complete CQM data for the Medicare and Medicaid EHR Incentive Programs?

CMS does not require providers to record all clinical data in their certified EHR technology at this time. CMS recognizes that this may yield numerator, denominator, and exclusion values for clinical quality measures in the certified EHR technology that are not identical to the values generated from other methods (such as record extraction).  However, at this time CMS requires providers to report the clinical quality measure data exactly as it is generated as output from the certified EHR technology in order to successfully demonstrate meaningful use.   

Do providers have to contribute a minimum dollar amount toward their certified EHR technology for the Medicare and Medicaid EHR Incentive Programs? 

There is no general requirement under the Medicare and Medicaid EHR Incentive Programs for providers to contribute a minimum dollar amount toward the certified EHR technology that they use.  

The Medicare and Medicaid EHR Incentive Programs provide incentives to eligible professionals (EPs), eligible hospitals, and critical access hospitals (CAHs) for the meaningful use of certified EHR technology. Under the Medicaid program, EPs and eligible hospitals may receive an incentive for the adoption, implementation, or upgrade of certified EHR technology in their first year of participation. The incentives are not a reimbursement of costs, and providers are not required to contribute a minimum amount toward the purchase or maintenance of their certified EHR technology in order to participate in the EHR Incentive Programs.

In addition, physicians must comply with the Physician Self-Referral Law, commonly referred to as the "Stark Law." Under the EHR exception to the Stark Law, physicians who receive a donation of EHR items and services from a DHS entity must satisfy each element of the exception at 42 CFR 411.357(w), which includes paying 15 percent of the donor's cost for the items and services.

Where can I find a list of public health agencies and immunization registries to submit my data as required by the public health objectives for the EHR Incentive Programs? 

For information and/or instructions on where to submit your public health-related data, CMS told providers to contact local or state public health agencies and immunization registries. The EHR Incentive Programs include public health objectives for submitting electronic data to immunization registries or immunization information systems, submitting electronic syndromic surveillance data to public health agencies, and (for eligible hospitals and CAHs only) submitting electronic data on reportable lab results to public health agencies. 

Can two separate practices with two different TINs purchase a single certified EHR system and share it in order to participate in the Medicare and Medicaid EHR Incentive Programs?  

Yes. Incentive payments are made based on the demonstration of meaningful use by individual eligible professionals (EPs). Certified EHR technology will track each EP's performance on the individual meaningful use objectives. Multiple practices that do not share a business affiliation could use the same certified EHR technology for their respective EPs.

For the Medicare and Medicaid EHR Incentive Programs, how should an eligible professional (EP), eligible hospital, or critical access hospital (CAH) that sees patients in multiple practice locations equipped with certified EHR technology calculate numerators and denominators for the meaningful use objectives and measures? 

EPs, eligible hospitals, and CAHs should look at the measure of each meaningful use objective to determine the appropriate calculation method for numerators and denominators.  The calculation of the numerator and denominator for each measure is explained in the July 28, 2010 final rule (75 FR 44314).

For objectives that require a simple count of actions (e.g., number of permissible prescriptions written, for the objective of "Generate and transmit permissible prescriptions electronically (eRx)"; number of patient requests for an electronic copy of their health information, for the objective of "Provide patients with an electronic copy of their health information"; etc.), EPs, eligible hospitals, and CAHs can usually add the numerators and denominators calculated by each certified EHR system in order to arrive at an accurate total for the numerator and denominator of the measure.

For objectives that require an action to be taken on behalf of a percentage of "unique patients" (e.g., the objectives of "Record demographics", "Record vital signs", etc.), EPs, eligible hospitals, and CAHs may not be able to simply add the numerators and denominators calculated by each certified EHR system. The EP, eligible hospital, or CAH must include only unique patients in the numerators and denominators of each objective, and it is the responsibility of the EP, eligible hospital, or CAH to reconcile information from multiple certified EHR systems in order to ensure that each unique patient is counted only once for each objective. Please keep in mind that patients whose records are not maintained in certified EHR technology will need to be added to denominators where applicable in order to provide accurate numbers.

For more information about which objectives require a simple count of actions and which require an action taken on behalf of a percentage of unique patients, consult the Meaningful Use Specification Sheets for EPs and eligible hospitals and CAHs.

To report clinical quality measures, EPs who practice in multiple locations that are equipped with certified EHR technology should generate a report from each of those certified EHR systems and then add the numerators, denominators, and exclusions from each generated report in order to arrive at a number that reflects the total data output for patient encounters at those locations.

For the EHR Incentive Programs, how should an eligible hospital or CAH with multiple certified EHR systems report their CQMs? 

To report clinical quality measures, eligible hospitals and CAHs that have multiple systems should generate a report from each of those certified EHR systems and then add the numerators, denominators, and exclusions from each generated report in order to arrive at a number that reflects the total data output for patient encounters in the relevant departments of the eligible hospital or CAH (e.g., inpatient or emergency department (POS 21 or 23)).

Does the person who completes the registration for the EHR Incentive Programs need to be the same person who completes the attestation?  

No. For Medicare providers, CMS has determined that if there are multiple users approved to work on behalf of an eligible professional (EP), any of those authorized users can update the EP's registration or attestation. In addition, the EP could login and update the information him or herself.  For Medicaid, each State determines if they are allowing authorized third parties to attest on behalf of EPs.

For the meaningful use objective "Capability to submit electronic syndromic surveillance data to public health agencies," what is the definition of "syndromic surveillance"?

Syndromic surveillance uses individual and population health indicators that are available before confirmed diagnoses or laboratory confirmation to identify outbreaks or health events and monitor the health status of a community. For additional information about syndromic surveillance data, please visit: http://www.cdc.gov/EHRmeaningfuluse/Syndromic.html.

CMS Final Rule on Hospital Meaningful Use and Quality Reporting

The Centers for Medicare & Medicaid Services' final rule updating the hospital outpatient prospective payment system (OPPS) and payment rates contains a specific provision designed to make meeting Meaningful Use easier.  The rule finalizes the launch of a pilot program that would allow for the electronic reporting of clinical quality measures (CQMs) under the electronic health record incentive program.

The final rule with comment period, released Nov. 1, will allow eligible and critical access hospitals to report CQMs electronically to meet that core objective for Meaningful Use of their EHR systems, instead of having to calculate the CQM results and attesting to them.  If a hospital reported the CQMs electronically, CMS would calculate the results for them.  If, based on CMS' calculations, a hospital doesn't meet the CQMs, it still would have the opportunity to measure them itself and attest to the results.

Comments on the final rule will be accepted through January 3, 2012.

If the hospital successfully reports the CQMs electronically, it would meet that core objective, but still would need to meet and attest to the other core and menu set objectives required under the EHR program.

The pilot program would help hospitals test the interoperability and functionality of their certified EHR systems and help advance EHR reporting, according to the rule.  Participation in the pilot would be voluntary.

CMS reported in the final rule that it had received a lot of industry support for the pilot, which it had suggested in its proposed OPPS rule released July 18.  The agency acknowledged that it anticipated only those hospitals that are the most ready to transmit this information electronically would participate in the pilot, but encouraged hospitals to participate for the "valuable learning process."  CMS also indicated that it would provide education, outreach and testing of the reporting pilot.

According to a summary by CMS, the final rule also updates the revised Medicare ambulatory surgical center (ASC) payment system to implement applicable statutory requirements and changes arising from their continuing experience with this system. These changes are applicable to services furnished on or after January 1, 2012.

CMS is also revising the requirements for the Hospital Outpatient Quality Reporting (OQR) Program, adding new requirements for ASC Quality Reporting System, and making additional changes to provisions of the Hospital Inpatient Value-Based Purchasing (VBP) Program.

Finally, CMS announced changes to the rules governing the whole hospital and rural provider exceptions to the physician self-referral prohibition for expansion of facility capacity and changes to provider agreement regulations on patient notification requirements.

CMS Turns Medicare Cuts into Bonus Payments Based on Patient Experience

The Affordable Care Act includes a number of policies to help physicians, hospitals, and other caregivers improve the safety and quality of patient care and make health care more affordable.   Starting in October 2012, Medicare will reward hospitals that provide high quality care for their patients through the new Hospital Value-Based Purchasing Program. 

This program marks the beginning of an historic change in how Medicare pays health care providers and facilities—for the first time, hospitals across the country will be paid for inpatient acute care services based on care quality, not just the quantity of the services they provide.

Additionally, the initiative helps support the goals of the Partnership for Patients, a new public-private partnership that will help improve the quality, safety and affordability of health care for all Americans. The Partnership for Patients has the potential to save up to $35 billion in U.S. health care costs, including up to $10 billion for Medicare.  Over the next ten years, the Partnership for Patients could reduce costs to Medicare by about $50 billion and result in billions more in Medicaid savings. 

Last spring, Medicare finalized its plan to alter reimbursements based on the quality of care hospitals provide and patients’ satisfaction during their stays.

The initiative is the beginning of a transition from paying hospitals on the basis of the amount of care they provide. Many health care researchers believe this fee-for-service system has encouraged unnecessary care, driving up costs and giving hospitals no incentive to economize.

According to an article from Kaiser Health News, “this payment change affects twenty times more hospitals than would accountable care organizations (ACOs).  More than 3,000 acute care hospitals will have their payments adjusted starting in October 2012.”

Background

Under the final rules announced last April, Medicare will cut payments to hospitals 1 percent and set that money aside for a bonus pool.  In FY 2013, the Hospital Value-Based Purchasing Program will distribute an estimated $850 million to hospitals based on their overall performance on a set of quality measures that have been linked to improved clinical processes of care and patient satisfaction.  The bonus pool would increase to 2 percent of Medicare payments in October 2016.

This will be taken from what Medicare otherwise would have spent for hospital stays, and the size of the fund will gradually increase over time, resulting in a shift from payments based on volume to payments based on performance.  This redirection will encourage care quality improvement, and which is intended to result in significant, additional savings to Medicare, taxpayers, and enrollees over time.

The Hospital Value-Based Purchasing Program measures in FY 2013 focus on how closely hospitals follow best clinical practices and how well hospitals enhance patients’ experiences of care. When hospitals follow these types of proven best practices, patients receive higher quality care and see better outcomes.  And helping patients heal without complication can improve health and ultimately reduce health care costs.

Ashish Jha, a professor at the Harvard School of Public Health who has studied hospital quality noted that, “It’s a modest amount of money and not something that’s going to radically change the way we pay for hospital care in America. But it’s a really important step toward paying for better care and not just for more care.”

Seventy percent of the bonuses initially will be based on how often hospitals follow guidelines on 12 clinical care measures. These include:

-       Giving anti-clotting medication to heart attack patients within 30 minutes of arrival;

-       Providing antibiotics to surgery patients just before an operation; and

-       Taking steps to avoid blood clots in surgical patients.

The other 30 percent of the bonuses will be determined by how patients rate hospitals on their experiences.  Medicare will use hospital-conducted surveys that ask patients about:

-       how nurses and doctors communicated

-       how clean their rooms and bathrooms were and

-       how well their pain was controlled.

The ratings are based on Medicare-approved surveys, which hospitals hire companies to give to a random selection of patients after they are discharged. Some survey are given by phone, others by mail.  All ask the same questions: Did the doctors and nurses communicate well? Was pain well controlled? Was the room clean and the hospital quiet at night? The surveys go to both Medicare and younger patients.

In setting payment, CMS plans to be a tough grader. It is going to give hospitals credit only for patients who say their experiences were always good. The surveys also ask patients to rank their stay on a 10-point scale, and Medicare will only credit hospitals that receive a 9 or 10.

CMS estimated that 353 hospitals initially won’t be included in the new payment program because they don’t have enough cases to be measured accurately.  For the rest, CMS began looking at their scores in July, when it determined how much they’ve improved for the first year of the payment program.

When the final rules were announced, hospitals announced their concerns, especially those cash-poor hospitals that do not have as many resources to invest in quality improvements will lose money under this program, potentially exacerbating the rift between affluent and struggling institutions.

Discussion

Dr. Donald Berwick, the administrator of the Centers for Medicare & Medicaid Services (CMS), said the government already provides financial assistance to help hospitals improve qualities in areas such as reducing infections and unnecessary readmissions. He said hospitals that serve lots of indigent and uninsured patients will benefit financially when they improve their quality, because they’ll find ways to care for patients more efficiently.

“For the hospitals that are most strapped for resources, improvements of quality are the most important,” Berwick told reporters as he announced the final rules. “We know examples – Parkland Hospital in Texas, Denver Health in Denver, Colo. and others— that serve mainly Medicaid populations and nonetheless have been able to achieve real breakthroughs in quality and should be rewarded for that performance.”

The measures CMS plans to use are already published for each hospital on Medicare’s Hospital Compare website. CMS plans to add more measures to its payment rules in future years, including ones that sample how patients actually fared, and not just what procedures doctors and nurses followed.

Even simple strategies such as treating patients with respect and fully explaining what they don't understand can help boost patient satisfaction scores, said Tom Saladino, a member of Connecticut's Institute for Healthcare Communication, at a Radiology Business Management Association conference last month, according to Diagnostic Imaging.

Saladino recommended hospitals train staff to consider patients like customers, greeting them with smiles and making eye contact. And perhaps even more importantly, he suggested that care providers not shy away from taking responsibility for when situations erupt and offering a solution.

Even with strategies to boost patient satisfaction, some areas of the country show poor patient satisfaction rates. Recent Medicare data indicate that the least satisfied patients were at hospitals in New York City, Chicago, and parts of Florida, reports the NPR Shots blog. Theories on why range from older hospital buildings that are cramped and bound to make patients unhappy to teaching hospitals fussing over patients to simply the personality of those regions.

CMS-FDA Breast Cancer and Avastin: FDA Pulls Approval While CMS Pays

Food and Drug Administration (FDA) Commissioner Dr. Margaret Hamburg announced in a 69-page decision that the agency would withdraw the biologic medicine Avastin as a treatment option for women with metastatic breast cancer.  

Avastin (bevacizumab) is an injectable cancer medication manufactured and marketed by Genentech.  Avastin blocks a protein that is important for the formation of blood vessels and is thought to work by preventing the formation of new blood vessels that feed cancer tumors. 

Commissioner Hamburg’s decision will not affect Avastin’s approved indications for se in colon, lung, kidney, and brain cancers, and Avastin will remain on the market. As a result, physicians will be free to prescribe Avastin off-label for metastatic breast cancer. 

The controversy surrounding Avastin for use in metastatic breast cancer came to a climax this past summer when FDA’s advisory committee held an “appeal” hearing concerning its recommendation  that Avastin no longer be indicated for the treatment of breast cancer. 

Despite the committee’s announcement and the June 2011 public hearing, the Center for Medicare and Medicaid Services (CMS) announced that Medicare will continue to pay for Avastin when used to treat breast cancer.  According to a CMS spokesperson: “[t]he drug will still be on the market, doctors will still be prescribing it, and [CMS] will continue to pay for it,” adding that CMS often pays for off-label uses of drugs. 

According to a recent article from the Food and Drug Law Institute (FDLI), CMS’ announcement confirms what drug manufacturers have long argued in the context of civil False Claims Act (FCA) litigation involving claims for “off-label promotion”: Medicare coverage is not driven by FDA approval, but rather is—and should be—based upon physicians’ professional determinations that a given drug is reasonable and necessary” for use by a particular patient for a specific indication. 

The article asserted that, “CMS’decision to continue to provide reimbursement for breast cancer patients using Avastin also stands in contrast to legal and policy positions adopted by the Department of Justice (DOJ) in FCA cases involving promotional practices.” 

CMS’ Position Inherently Conflicts With DOJ’s Position In Recent FCA Investigations and Litigation 

CMS’ assertion that Medicare will continue to cover Avastin regardless of FDA’s decision—and regardless of an FDA finding that there is insufficient scientific evidence to support Avastin’s use in breast cancer—confirms that neither of these factors is dispositive of whether the use is medically “reasonable and necessary,” i.e., eligible for Medicare coverage by statute. 

The article recognized that, “CMS’ position is consistent with the argument that pharmaceutical and medical device companies have long made (with limited success) in FCA investigations and litigation: that neither the off-label status of a particular use nor the quantum of scientific support for that use determines whether the use is properly reimbursable under Medicare’s “reasonable and necessary” standard.” 

Accordingly, the authors asserted that, “the absence of FDA approval or specific scientific evidence supporting a particular use does not establish that those claims are “false” for purposes of FCA liability.”  As the authors explained, “This argument goes to the very heart of the Government’s and qui tam relators’ ability to state—and prove—a claim under the FCA.” 

That statute prohibits, in relevant part, “knowingly present[ing], or caus[ing] to be presented, a false or fraudulent claim for payment or approval.”  If a particular claim for Medicare reimbursement is neither false nor fraudulent, it cannot provide the predicate for an FCA violation. DOJ, however, has opposed this argument when raised by FCA defendants. 

For example, the article discussed the case United States ex rel. Strom v. Scios, Inc., in which DOJ alleged that Scios, Inc. violated the FCA by promoting the drug Natrecor for use in serial, scheduled outpatient infusions when Natrecor was only approved by FDA for intravenous treatment of patients with acutely decompensated congestive heart failure who have dyspnea at rest or with minimal activity.  DOJ alleged that during the period at issue, “serial, scheduled outpatient infusions of Natrecor were not eligible for payment by Medicare because this off-label use was neither ‘reasonable and necessary,’ nor ‘medically accepted.’” 

As the authors noted, “According to DOJ, the use failed to meet Medicare’s statutory standard because “the use was not supported by any credible study showing that the serial outpatient infusions were effective.”  DOJ alleged the claims were “false because the off-label use is not covered” by Medicare.” 

Almost by definition, a use is off-label precisely because there is insufficient evidence to support its approval by the FDA.  If the mere lack of conclusive evidence were sufficient to establish falsity, the article explained that “there would be no such thing as a legitimate off-label claim – much less a regulatory framework in which offlabel uses are an ‘accepted aspect of a physician’s prescribing regimen.’” 

Scios further argued that the scenario described in the Complaint is typical in the off-label context: “lacking data from a Phase III, double-blinded, placebo-controlled clinical trial, 4,000 physicians nonetheless determined— more than 170,000 times, based on their own first-hand observations of patients’ actual responses to the drug— that serial infusions of Natrecor were reasonable and necessary for the treatment of chronic heart failure.”   

As the article noted, “This argument espoused the principle that CMS appears to have embraced in its recent announcement regarding Avastin coverage: individual physician judgments determine whether particular uses are “reasonable and necessary.” 

Nevertheless, the court rejected Scios’s argument finding that “[b]ecause the [Medicare] statute permits reimbursement only for ‘reasonable and necessary’ treatments . . . a prescription of Natrecor in a context where it is not ‘reasonable’ or ‘necessary’ would be statutorily ineligible for reimbursement.  This satisfies the FCA’s requirement of a ‘false’ statement.” 

In reaching this conclusion, the authors noted that “the court appears to have relied, at least in part, on the Government’s allegations that Scios overstated the nature of the available scientific evidence to the physicians who prescribed Natrecor for outpatient infusions.  DOJ’s briefs in Strom, however, do not rely on any alleged misrepresentations on the part of Scios. Rather, DOJ argues that the alleged lack of scientific evidence, in and of itself, means that claims for Natrecor for outpatient infusion could not have been “reasonable and necessary” and therefore were not eligible for reimbursement by Medicare.” 

But as the authors explained, “CMS’ announcement regarding Avastin, however, highlights the flaw in DOJ’s theory: neither FDA approval nor the quantum of available scientific evidence, in isolation, determines Medicare coverage.” 

DOJ’s Position Overlooks the Key Role of Physicians 

The FDLI article asserted that, “DOJ’s briefs in Strom improperly ignore the central role that physicians and other health care providers play in determining whether the specific use of a given drug or medical device is “reasonable and necessary” for an individual patient, based upon each patient’s unique circumstances.  Under Medicare’s reimbursement scheme, however (and as CMS’ announcement regarding Avastin confirms), that determination does, and should, control.” 

To further this argument, the authors pointed to the U.S. District Court for the Southern District of Texas, which recently recognized this principle in two FCA cases involving allegations of off-label promotion by two medical device manufacturers.  In U.S. ex. rel Bennett v. Boston Scientific Corporation and U.S. ex rel. Bennett v. Medtronic, Inc., a qui tam relator alleged that medical device manufacturers unlawfully promoted the use of surgical ablation devices to treat atrial fibrillation. 

The authors noted that, “The relator further asserted that the defendants’ alleged off-label promotion “caused physicians and hospitals to submit claims to the government falsely stating that the use of the [devices at issue] was ‘reasonable and necessary’ or ‘medically necessary,’” but that the use of the surgical ablation devices to treat atrial fibrillation could not be medically necessary because the device was not FDA approved for such use. 

In separate opinions, the court granted the defendants’ motions to dismiss, finding among other things that “[t]he decision on medical necessity is made by individual physicians exercising independent professional judgment based on the knowledge of their particular patients. The cases recognize that off-label use of a drug or medical device is distinct from a medically unnecessary use of that drug or device.” 

The authors explained that, “While scientific evidence (or the lack thereof) may be determinative in certain instances, in others, a physician may decide that a particular off-label use of a medical device or drug is reasonable and necessary based upon his or her own observations or based on conversations with other physicians. In either case, the physician’s determination controls whether the use is reimbursable under Medicare.” 

DOJ’s Wrongful Theory Has Significant Impact for FCA Defendants 

The article noted that, DOJ has failed to respect and follow CMS’ policy as to how coverage determinations are made and “because DOJ is responsible for litigating FCA cases and prosecuting criminal off-label promotion cases, DOJ’s flawed theory has a real and substantial impact for pharmaceutical and medical device manufacturers.” 

For example, the authors noted how “DOJ possesses enormous leverage to demand settlements reaching into the millions, and sometimes billions, of dollars in cases involving alleged off-label promotion,” because “the FCA provides for both treble damages and statutory penalties for each false claim allegedly presented.”  Consequently, “DOJ’s financial threats are coupled with the potential for exclusion from participation in federal health care programs as well as FDA debarment.” 

The article noted that, “These pressures frequently force pharmaceutical and medical device manufacturer defendants to settle FCA cases in order to resolve claims that they have committed “fraud” against the federal government by allegedly promoting their products for uses that are not approved by FDA.” 

Ultimately, the authors noted that, “DOJ, both in legal briefs and in public statements, frequently equates alleged off-label promotion with fraud, without identifying allegedly false or misleading actions on the part of manufacturer defendants.  CMS’ recent announcement regarding Avastin, however, underscores that Medicare coverage turns on a particular physician’s determination, in his or her independent medical judgment, that a specific use is “reasonable and necessary” for a given patient.” 

Viewed in this light, the authors asserted that, “it is clear that claims for Medicare reimbursement are not “false or fraudulent” simply because FDA has not found sufficient scientific evidence to approve the underlying use.”  Instead, the authors maintained that “it is inherently unjust for DOJ—in its role as the FCA enforcement agency—to continue to claim that manufacturers are committing “fraud” when its sister agency, CMS, knowingly pays for the off-label use underlying an FCA enforcement action.”

Physician Payment Sunshine Act: CMS Proposed Rule - Impact on Continuing Medical Education, Medical Societies and Patient Organizations

Last week’s proposed rule for the Physician Payment Sunshine Act (Section 6002 of the Affordable Care Act) had some troubling provisions, particularly to the continuing medical education (CME) community.  Specific provisions of the proposed rule will also likely impact non-profit patient and disease advocacy organizations as well as professional medical associations.   

The Act lists the categories for the nature of payment or other transfer of value that “applicable manufacturers” must use to describe each payment they make to a “covered recipient” (physicians and teaching hospitals).   The Act and the proposed regulations use a general “catchall” provision that enables the Department of Health and Human Services (HHS) to add additional categories under the reporting. 

HHS unfortunately used this general provision in the proposed rule in a way that would require additional reporting from organizations, including but not limited to, CE providers, professional medical associations, patient advocacy groups, and other non-profit organizations.  Under this proposal, these organizations may become responsible for reporting to manufacturers all payments and transfers of value they make to covered recipients, even though these payments are indirect (third party payments) and these groups do not fall within the definition of “covered recipient.”   

As discussed in more detail below, if your group or organization receives from an “applicable manufacturer,” a research or educational grant, or any other kind of payment or transfer of value that falls within the “nature of payment” category, and you use any portion of that payment or transfer of value towards a covered recipient—physician or teaching hospital—and the applicable manufacturer is “aware” of the covered recipient’s identity, the applicable manufacturer is required to report how much your organization or group—even though you yourself is not a covered recipient—paid the covered recipient. 

This means that the applicable manufacturer may directly contact you or the covered recipient you employed for the designated services to find out the amount of the payment or transfer of value and the nature, magnitude, and extent of the payment. 

Accordingly, this proposal would create a great and unnecessary burden on these providers that is neither good public policy nor consistent with the intent of Congress.  Indeed, the Act as passed by Congress specifically exempted CME providers from reporting by specifying that only direct payments (payments from manufacture to physicians and teaching hospitals) be reported. 

CMS should be credited for listening to comments from CE providers and other stakeholders for excluding from reporting any offerings of buffet meals, snacks or coffee at booths at conferences or other similar events where it would be difficult for applicable manufacturers to definitively establish the identities of the individuals who accept the offerings.

The crux of the issue is:

• CMS lumped in Accredited and Non Accredited CME in the definition of direct payment for serving as faculty in continuing education program.
• CMS used a catch all section on awareness of identity of the recipient to force CME providers to report payments to teaching hospitals and

 The section, originally intended to support market research is being applied to all 3^rd party payments and transfers of value.

Here’s how it works.

1. Applicable manufacturer makes payment to a third party ie CME provider
   1. A third-party (CME provider) is anyone or group that is not a “covered recipient” meaning not a teaching hospital or physician as defined by the proposed rule
   2. The third pary -- CME provider then makes a payment to a “covered recipient”
      1. A teaching hospital or physician as defined by the rule
      2. Under the proposed rule, if the applicable manufacturer is aware of the identity of covered recipient being paid by the third party, that payment must be reported. 

Issues around CME 

1. CMS used broad criteria to define awareness: an applicable manufacturer is aware of a covered recipient’s identity if the individual’s identity is “publicly available.”
2. CMS gave no guidance as to when awareness of identity matters: before, during or after the transfer of value or payment
3. CMS gave no guidance as to how this will impact third parties
4. CMS gave no guidance about the process of applicable manufacturers contacting third party’s or the covered recipients they paid to inquire about such payments/transfers of value

Recommendation/Comment 

1.  Indirect payments made to “covered recipients” from third parties that received payments from an applicable manufacturer should be exempt from reporting.   In other words, payments made to accredited CE providers, patient and disease advocacy groups, and professional medical associations, who then indirectly pay “covered recipients,” should be exempt from reporting.  

Even though an applicable manufacturer may be aware of the identity of a covered recipient, payment is not direct; it is being made from a third party, and such payments were explicitly excluded in the Act.  These third parties all have in place significant regulations and rules in place to ensure that such payment is for objective, evidence-based, scientific activities that will benefit patients and health care professionals, and should be exempt from this reporting requirement.  Adding an additional layer of regulations would pose a significant burden on these groups, which would make it more difficult for them to fulfill their purposes and goals. 

2.  For a payment or transfer of value from an applicable manufacturer to a third party, who then indirectly pays a “covered recipient,” if the applicable manufacturer is unaware of the identity of the covered recipient at the time the payment or transfer of value is made, the third party and covered recipient should be exempt from reporting.  

A payment or transfer of value that is made to a third party indirectly—a third party that does not fall under the definition of “covered recipient”—should be exempt for reporting when the applicable manufacturer is unaware of the identity of the covered recipient at the time the payment or transfer of value is made.  Third parties, such as CE providers, non-profit patient advocacy or disease advocacy group, or professional medical organizations, all have in place significant firewalls, regulations, and rules of conduct to ensure independence, accountability, and objectivity in their activities. 

Provisions Adversely Affecting CE Providers and Other Groups 

1. CE providers and any other organization or group to which applicable manufacturers make payments to as third parties are not “covered recipients.”  

CE providers and other groups are not “covered recipients.”  They are not physicians or teaching hospitals as defined in the proposed rule.  This means that payments from an applicable manufacturer to a CE provider are not required under the law to be reported, since only those payments to a “covered recipient” are required to be reported.  

2.  CMS cannot interpret categories for “education” and “grant” to include payments to CE providers because CE providers are not “covered recipients.” 

3.  CMS has created a new category of nature of payments, using its “catchall” provision, requiring applicable manufacturers to report payments to a third party when the applicable manufacturer is “aware” of the identity of the covered recipient, who is receiving the payment directly from the third party.  

The Act excludes the reporting of payments or other transfers of value that an applicable manufacturer makes indirectly to a covered recipient through a third party when the applicable manufacturer is unaware of the identity of the covered recipient.  However, CMS maintained that when the “applicable manufacturer is aware of the covered recipient's identity,” the payment must be reported.  

Under this proposed interpretation of the exclusion, if a CE provider – who is not a covered recipient --received an educational grant from an applicable manufacturer, and either 1) the CE provider included names of faculty in a CE proposal or 2) the applicable manufacturer learned of the faculty’s participation in the CE event, the applicable manufacturer would have to report the payment to the faculty. This proposal is extremely problematic for a several reasons. 

First, how would the applicable manufacturer go about learning the amount of payment to the CE faculty?  Would every time that a CE company gets a CE grant, the applicable manufacturer would have to wait until the point they learned of the faculty/recipient, and then call the CE company and find out the amount the faculty was paid?  More importantly, CMS did not account for the fact that under CE regulations and rules, interaction and contact between CE providers and manufacturers is extremely limited, particularly in areas such as payments and faculty, and this would expose CE providers to a new burden that could compromise a CE provider’s ability to provide objective, high quality CE.  And as discussed below, if this is CMS’ interpretation, they have not calculated the regulatory burden or costs on CE providers and other groups. 

4.  CMS has provided no guidance as to the exact nature and timing of when an applicable manufacturer becomes “aware” of the covered recipient’s identity.   

CMS provides no explicit guidance on at what point during the process a CE grant is awarded, an applicable manufacturer is “aware” of the covered recipient’s identity.  Is it “awareness” at any time, prior to the payment or transfer or value, or after?  For example, say a CE provider applies for a CE grant, and there are no designated faculty, no faculty have been hired or reached out to, and only the CE scientific staff have worked on the proposal.  If the CE company is awarded a grant at this stage, the applicable manufacturer has awarded an educational grant in which they were “unaware” of the identity of a covered recipient.  

If a CE provider is awarded a grant from an applicable manufacturer, who is completely unaware of the payment to a covered recipient at the time it is awarding the grant, this should completely dispel any need to report payments to faculty.  There is no possible way for an applicable manufacturer to attempt to influence the content or faculty selection of such program, since they were unaware of any faculty to begin with.  There is no need to publish these payments when the applicable manufacturer is unaware of a covered recipient’s identity at the time they are awarding a grant because the grant was awarded based on the educational and practice gaps and the scientific evidence contained in the proposal, rather than the faculty chosen. 

Moreover, there are significant rules and regulations in place that CE providers follow to choose faculty, and to require the reporting of such payments to CE faculty will be burdensome, and have adverse consequences on CE providers (discussed more fully below).   

5.  CMS has set an overwhelmingly broad standard by stating that applicable manufacturers are “aware” of a payment from a third party to a covered recipient if the covered recipient’s identity is “publicly available.”  Such a standard almost guarantees that any applicable manufacturer will be aware of a payment to a covered recipient from a third party.   

CMS explained that the exclusion of third party payments “hinges on whether an applicable manufacturer is "unaware" of the identity of the covered recipient.” 

CMS proposed “that an applicable manufacturer is aware of the identity of a covered recipient if the applicable manufacturer has actual knowledge of, or acts in deliberate ignorance or reckless disregard of, the identity of the covered recipient.”  For example, CMS noted that, “if an applicable manufacturer provides a payment through a third party to the department chairs at a specific hospital, this payment would need to be reported because even though the applicable manufacturer did not name the recipients, their identities are publicly available.” 

However, CMS does not recognize the unique ways CE providers operate and the significant regulations CE providers follow to ensure objectivity.  Almost every CE faculty who will present at a program has publicly available identities.  That is the nature of CE: faculty are on websites, particularly CE ones; work for medical schools, private practice, or hospitals that all have websites; and are advertised so physicians know where to find the best and most relevant CE programs for their individual needs.  Under this definition and example, CMS appears to be casting a broad sweeping requirement for applicable manufacturers: if a CE faculty member’s identity is “publicly available,” then it must be reported, even though a CE grant did not name the covered recipients. 

This requirement will make significant problems for CE providers.  Under ACCME rules and regulations, and Standards for Commercial Support, faculty must be selected without any input or contact with an applicable manufacturer whom the CE provider is seeking support from.  This requirement has been embedded in CME for many years to ensure the objectivity of faculty and content selection to ensure that any CE programs are scientific and evidence-based, and there are no signs of marketing.  However, under CMS’ proposed rule, it would appear as if to force applicable manufacturers to know whom the faculty are at the outset, effectively erasing this requirement.  

For example, if an applicable manufacturer will be held to know the identity of a “covered recipient” – in this case a CE faculty – whose identity is “publicly available” (which is pretty much all CE faculty) – then an applicable manufacturer might begin to require (for oversight, regulatory, compliance, and legal purposes) listing of faculty in CE grant proposals.  As a result, applicable manufacturers may then be able to choose proposals based on faculty, or by including faculty into its consideration, instead of solely considering the scientific merits and evidence-based nature of the proposal. 

For many years now, CE providers have strived to keep the selection of faculty out of manufacturers hands, and this proposed CMS rule would return that control to them or at least make it such that manufacturers would be considering faculty in addition to science. 

6.  CMS effectively used the category of “direct compensation” as a way to require “applicable manufacturers” to report the amount of CE grants they are paying to CE providers, even though a) CE providers are not covered recipients and b) such payments are excluded since CE providers are third parties. 

CMS proposed that “Direct Compensation for Serving as a Faculty or as a Speaker for a Medical Education Program” be interpreted broadly to encompass all instances in which applicable manufacturers pay physicians to serve as speakers, and not just those situations involving "medical education programs."  Under this interpretation, CMS clearly identifies that the applicable manufacturer directly pays the physician to serve as a speaker for a medical education program, and not through a third party such as a CE provider.  CMS must ensure that this category does not include accredited CE programs, because these are not direct payments and CE providers are not covered recipients. 

7.  CMS proposed a broad interpretation of “Direct Compensation for Serving as a Faculty or as a Speaker for a Medical Education Program” to include payments to faculty for an accredited CE program even though a) CE providers are not covered recipients and b) such payments are excluded since CE providers are third parties. 

CMS acknowledged that its interpretation of “direct compensation … for medical education program[s]” does not allow for differentiation between continuing medical education (CME) accredited speaking engagements, and all other speaking engagements.   As a result, CMS must clearly show when reporting such payments to Congress, States, and the public, that direct payments for “medical education” and “speaking” are completely distinct and separate from accredited, third-party CE programs.  CMS should offer full explanations in its reports, electronic and print, about the differences of third party education and direct compensation programs. 

Moreover, CMS’ discussion of accredited CME programs in this nature of payment category is problematic in itself.  Accredited CME does not under any circumstances fall into the direct compensation category.  Payments made to faculty or speakers from a third party, such as a CE provider, is not direct compensation, and for the reasons noted above, should not fall into discussion of “awareness of identity.” 

8.  CMS has not calculated the regulatory burden on CE providers and other groups if it includes payments based on the “awareness” of identity standard.   

CMS did not calculate the financial impact or regulatory burden this requirement would impose on CE providers and similar groups.  CE providers, under this interpretation, would now need to dedicate staff to keeping track of payments to faculty, and maintaining oversight of when an applicable manufacturer becomes aware of a faculty’s identity, and then need to report that to the applicable manufacturer.  

CMS has not evaluated a) allowing CE providers or other groups making third party payments 45 days to review the accuracy of such payments if they are to be posted by applicable manufacturers b) the time, staff, costs, and resources on CE providers and other groups to communicate with applicable manufacturers about the nature and magnitude of such payments c) the adverse impact publishing faculty payments will have on the integrity, accountability, and independence in CE programs; and d) the burden this will place on recruiting faculty for CE programs.  In fact, CE providers under this proposal would have to track payments in accordance with the Sunshine regulations, such as travel, food, consulting, etc. 

We estimate that this would cost state accredited small CME providers such as community hospitals and local medical societies 300+ hours to collect and monitor this data.  And nationally accredited providers such as medical schools, medical associations and commercial CME providers 1600+ hours to comply.  Moreover, the vast majority of the 694 ACCME accredited CME providers are small businesses, who will face significant financial and resource difficulties implementing such work. 

9.  CMS did not define what an “agent of an applicable manufacturer” means. 

CMS proposed that awareness of the identity of the covered recipient by an agent of the applicable manufacturer will be attributed to the applicable manufacturer.  This is problematic because CMS does not offer guidance on what an “agent” means.  For example, if a physician who worked for Company X as a consultant, attended a CE program sponsored by Company X, does that mean that once the physician is “aware” of the faculty, he is acting in an “agent” role, and thus Company X must now find and report how much the faculty at that program were paid?  CMS needs to clearly define “agent” in this role, particularly with respect to being “aware” of a covered recipient’s payment at a third party function such as a CE event. 

Conclusion 

Ultimately, payments made to CE providers for education should not be reported because CE providers are not covered recipients.  Moreover, payments from CE providers to faculty of CE programs should not be published either because there are sufficient measures in place to ensure transparency, independence, and accountability within the CE community.  This is especially true considering CMS explicitly admitted that it has no empirical basis for estimating the frequency of such problems (inappropriate use), the likelihood that transparent reporting will reduce them, or the likely resulting effects on reducing the costs of medical care.