Life Science Compliance Update

October 05, 2017

CMS Announces the End of Part B Demonstration

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The Centers for Medicare & Medicaid Services (CMS) announced it will officially withdraw the controversial Obama-era Medicare Part B Drug Payment Model Demonstration, almost ten months after the Obama administration announced that they would not finalize the demo. Under President Obama, CMS ultimately decided to withdraw the proposed rule after an overwhelming backlash from bipartisan lawmakers, the pharmaceutical industry, and patient stakeholders.

The Demonstration

The two-phase nationwide demonstration, driven by the Center for Medicare and Medicaid Innovation (CMMI), would have tested reformed Average Sales Price (ASP) payment for Medicare Part B medicines using ASP plus 2.5 percent and a flat fee during Phase I. A planned Phase II had envisioned the application of value-based purchasing tools, potentially including reference-based pricing, indications-based pricing, risk-sharing agreements, and other methods.

Stakeholders Against Demonstration

Republicans and even some Democrats in Congress objected to the proposed demonstration, arguing that it could limit patient access to certain drugs, is too large in scope, and could harm independent, small and rural physician practices. Many pharmaceutical stakeholders, doctors, and some consumer groups opposed the demonstration, and will likely point to it as evidence to why Congress should consider curbing the wide-ranging authority of CMMI.

Example of Physician Position

Many physician groups opposed the Part B Demonstration, but the American College of Rheumatology’s statement explains the general concerns they held with the Demonstration.

Statement from Dr. Sharad Lakhanpal, MBBS, MD, President of the American College of Rheumatology:

"The American College of Rheumatology commends the Centers for Medicare and Medicaid Services (CMS) for finalizing its decision to withdraw the Part B Drug Payment Demonstration. We thank CMS leadership for listening to the rheumatology community's concerns about the negative impacts this proposal would have on patient choice and access to life-saving biologic therapies.

"For millions of Americans living with painful and debilitating rheumatic diseases, safe and reliable access to biologic infusion therapies is not a luxury but a necessity. That's why the ACR has strongly voiced opposition to this proposed rule and its potentially negative, unintended consequences for rheumatology patients and providers alike.

"The ability for our Medicare patients to access biologic therapy infusions - particularly in rural and underserved areas of the country - is already tenuous because the current payment structure does not fully cover the cost of procuring and administering these therapies in the outpatient setting. If the additional payment cuts from the demonstration project were to go through, many rheumatology providers would be forced to stop administering biologic infusion therapies altogether. This would in turn force patients to seek treatment in less safe and more expensive settings, if they were able to access biologic therapies at all.

"While the ACR has vigorously opposed the Part B demonstration project, we remain supportive of CMS' broader effort to improve healthcare quality, accessibility and affordability in the Medicare system while reining in excessive drug costs. In the future, we look forward to working with CMS to develop a payment model that achieves these goals while also ensuring patients can continue to access high-quality rheumatology care and treatments."

August 18, 2017

CMS Issues Proposed Rule on EHR Reporting Requirements

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A recent Centers for Medicare & Medicaid Services (CMS) proposed rule would ease EHR reporting requirements over the next two years. The proposed regulation, which covers the 2018 Medicare payments for hospital inpatient services, relaxes data reporting requirements for Clinical Quality Measures (CQMs) that are part of the EHR Incentive program. In 2017, eligible hospitals demonstrating meaningful use for the first time would need to submit two self-selected quarters of CQM data and report at least six selected CQMs, down from eight. CMS offered similar flexibility when it released its Hospital Outpatient Prospective Payment System Rule in November 2016.

Meaningful Use

For the EHR Incentive Program, CMS has proposed that the reporting period in CY 2017 will be two self-selected quarters. For CY 2018 the reporting period will be the first three quarters of 2018. For both CYs 2017 and 2018, hospitals must report on at least six Clinical Quality Measures. In CY 2018, for those hospitals only participating in the Medicare EHR Incentive Program, electronic CQM submission will be available for the two months following the close of the year ending on February 28, 2019. For eligible professionals reporting electronically, CMS proposes to modify the EHR Incentive Program reporting period from a full year to a minimum of a continuous 90-day period during the year. The Proposed Rule also aligns CQMs with the measures available under the Merit-based Incentive Payment System.

Additionally, CMS proposes that no payment adjustment will be made for professionals who render “substantially all” of their services in an ambulatory surgical center (ASC). CMS seeks public comment on the following two alternative definitions to determine the final definition regarding ASC services:

  • An EP who furnishes 75 percent or more of his or her covered professional services in sites of service identified by the codes used in the HIPAA standard transaction as an ASC setting in the calendar year that is two years before the payment adjustment year; and
  • An EP who furnishes 90 percent or more of his or her covered professional services in sites of service identified by the codes used in the HIPAA standard transaction as an ASC setting in the calendar year that is two years before the payment adjustment year.

Other Areas of Proposed Rule

CMS proposes to use data from its National Health Expenditure Accounts instead of data from the Congressional Budget Office to estimate the percent change in the rate of uninsurance, which is used in calculating the total amount of uncompensated care payments available to Medicare disproportionate share hospitals. CMS said this proposed change would result in DSH payments increasing by $1 billion in fiscal year 2018.

Additionally, CMS proposes using worksheet S-10 data to determine uncompensated care payments and distribution beginning in FY 2018. The agency further proposes to implement the socioeconomic adjustment approach mandated by the 21st Century Cures Act for the FY 2019 Hospital Readmissions Reduction Program.  Finally, CMS proposes removing one measure in FY 2019 and adopting one new measure in FY 2022 and another in FY 2023.

August 16, 2017

CMS Issues Proposed Rule on Physician Fee Schedule


Last month, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that includes proposals to update payment policies, payment rates, and quality provisions for services furnished under the Medicare Physician Fee Schedule (PFS) on or after January 1, 2018. The calendar year (CY) 2018 PFS proposed rule is one of several proposed rules that reflect a broader Administration-wide strategy to create a healthcare system that results in better accessibility, quality, affordability, empowerment, and innovation.

The wide-ranging proposed rule addresses reimbursement to off-campus departments under section 603 of the Bipartisan Budget Act of 2015, telehealth, and a range of other issues. It seeks comments on biosimilar coding, E/M guidelines, emergency department visit valuations, PAMA lab rate implementation, and more.

The proposed rule notes that overall CY 2018 rates will be updated by +0.31 percent. This reflects the Medicare Access and CHIP Reauthorization Act’s specification of a 0.50 percent update, reduced by -0.19 percent stemming from the misvalued code target recapture amount in the Achieving a Better Life Experience (ABLE) Act of 2014.

The -0.19 percent recapture across all services is necessary because CMS proposes -0.31 percent of misvalued code reductions, short of the 0.50 percent ABLE Act target. These adjustments are coupled with a statutory budget neutrality adjustment to yield a proposed 2018 PFS conversion factor of $35.99, up from $35.89 in CY 2017.

Highlights of the Rule

Off-Campus Departments 

CMS proposes to reduce current fee schedule payment rates for non-excepted items and services furnished by off-campus hospital outpatient provider-based departments by 50 percent. Specifically, the percent-of-OPPS rate currently paid under the current fee schedule for these services would decline from 50 percent to 25 percent, CMS explains, to “encourage fairer competition between hospitals and physician practices by promoting greater payment alignment.”

CMS says that “for CY 2019 and for future years, we intend to examine the claims data in order to determine not only the appropriate PFS Relativity Adjuster(s), but also to determine whether additional adjustments to the methodology are appropriate – especially with the goal of attaining site neutral payments to promote a level playing field under Medicare between physician office settings and non-excepted off-campus PBD settings, without regard to the kinds of services furnished by particular off-campus PBDs.” It seeks comment on methodology changes that would account for “specialty-specific patterns.”

E/M Guidelines

CMS notes “we continue to agree with stakeholders that the E/M documentation guidelines should be substantially revised” and adds that “a comprehensive reform of E/M documentation guidelines would require a multi-year, collaborative effort among stakeholders.” The agency says it is “especially seeking comment on how we might focus on initial changes to the guidelines for history and exam, because we believe documentation for these elements may be more significantly outdated.”

Emergency Department Visits 

Through a comment solicitation, CMS requests input on “whether emergency department visits are undervalued due to increasing heterogeneity of the settings under which emergency department visits are furnished and changes to the patient population.”

Office-based Behavioral Services

CMS proposes increasing payment for office-based behavioral health services, saying its proposal will “better recognize overhead expenses for office-based face-to-face services with a patient.”

Biosimilar Coding Request for Comments

CMS solicits public comments on its current policy of grouping all biosimilars under a single HCPCS code if they have the same reference product (and thus basing ASP on all biosimilars in that code). It says it seeks “comments on the effects of its payment policy based on experience with the United States’ biosimilar product marketplace since the regulations went into effect on January 1, 2016” and is “particularly interested in new or updated material, such as market analyses or research articles that provide evidence which supports positions expressed in comments.” It also asks about “data to demonstrate how individual HCPCS codes could impact the biosimilar market, including innovation, the number of biosimilar products introduced to the market, patient access, and drug spending” and asks about “other novel policies” that increase competition and reduce costs, such as “legislation, demonstrations, and administrative options.” No such policies are actually proposed in the rule.

In providing context for the comment solicitation, CMS says it anticipates growth in biosimilar approvals and use. It adds that it “seeks to promote innovation, to provide more options to patients and physicians, and competition to drive prices down, recognizing that even though these two goals may be difficult to achieve concurrently, to delink them would be counterproductive.”

The agency also says “CMS’s goal [is] to further investigate a solution that allows market forces to provide a robust and comprehensive selection of choices for patients at a fair price” and “we are interested in better understanding if and how the innate differences in biological products and their current regulatory environment should be reflected in Medicare payment policy for biosimilars, particularly as it relates to biosimilars that are licensed for fewer than all indications for which the reference product is licensed or situations where different biosimilars may be licensed for different subsets of indications for which the reference product is licensed.”

Request for Information

In addition to the payment and policy proposals, CMS is releasing a Request for Information (RFI) to welcome feedback on positive solutions to better achieve transparency, flexibility, program simplification, and innovation. This will inform the discussion on future regulatory action related to the PFS.

CMS is soliciting ideas for regulatory, sub-regulatory, policy, practice, and procedural changes to better accomplish these goals. Ideas could include recommendations regarding payment system re-design; elimination or streamlining of reporting; monitoring and documentation requirements; operational flexibility; and feedback mechanisms and data sharing that would enhance patient care, support the doctor-patient relationship in care delivery, and facilitate patient-centered care. Ideas could also include recommendations regarding when and how CMS issues regulations and policies and how CMS can simplify rules and policies for beneficiaries, clinicians, providers, and suppliers.

In responding to the RFI, provide clear and concise proposals – including data and specific examples. If the proposals involve novel legal questions, analysis regarding CMS’ authority is welcome. CMS will not respond to RFI comment submissions in the final rule, but rather will actively consider all input in developing future regulatory proposals or future sub-regulatory guidance. 

Comments on the proposed rule and RFI are due by September 11, 2017.


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